Property Rights Generally Recognized in the U.S. 1. The right to exclude 2. The right to possess 3. The right to transfer 4. The right to use 5. The right to fruits and profits 6. The right to destroy Examples of These Rights 1. Right to Exclude Security guards generally are given the right to exclude. 2. Right to Possess If you take one of the markers from the white board and put it into your bag, you have possession of it, but you don’t own it and don’t have a right to use it. That is an example of pure possession with no other property rights. You’re babysitting a dog – you’re in possession of the dog but you don’t have any of the other rights. Common law bailment is pure possession 3. Right to Transfer (“Power”) Power of attorney. When people create trusts, the trustee may be given power without ownership. A stockbroker – you have given them a stock power so they can transfer the stock even though they don't own it or have any other property rights to is. For the stock market to work, brokers have to have that power to transfer even though they don't own it. 4. Right to Use (“Easements”) Private easements – driving down a private road. You can drive across it, but you can’t stop. 5. Right to Fruits and Profits (“Profits”) You can have the mineral rights without having the rights to go on the property (like oil – you don’t actually have to go onto someone’s land to get the oil, but they still get the money). This way you can have the exclusive rights to a profit and nothing else. 6. Right to Destroy (“Powers, Government, Emergency”) Suppose there's a fire and state officials (firemen/policemen) have to destroy the property to put out the first for the public good. Or, if a flood is coming and the army comes in to build a levee to block the flood and destroys property in the process, they
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Property Rights Generally Recognized in the U.S.1. The right to exclude2. The right to possess3. The right to transfer4. The right to use5. The right to fruits and profits6. The right to destroy
Examples of These Rights1. Right to Exclude
Security guards generally are given the right to exclude.2. Right to Possess
If you take one of the markers from the white board and put it into your bag, you have possession of it, but you don’t own it and don’t have a right to use it.
That is an example of pure possession with no other property rights. You’re babysitting a dog – you’re in possession of the dog but you don’t have any of the
other rights. Common law bailment is pure possession
3. Right to Transfer (“Power”) Power of attorney. When people create trusts, the trustee may be given power without ownership. A stockbroker – you have given them a stock power so they can transfer the stock even
though they don't own it or have any other property rights to is. For the stock market to work, brokers have to have that power to transfer even
though they don't own it.4. Right to Use (“Easements”)
Private easements – driving down a private road. You can drive across it, but you can’t stop.
5. Right to Fruits and Profits (“Profits”) You can have the mineral rights without having the rights to go on the property (like oil
– you don’t actually have to go onto someone’s land to get the oil, but they still get the money).
This way you can have the exclusive rights to a profit and nothing else.6. Right to Destroy (“Powers, Government, Emergency”)
Suppose there's a fire and state officials (firemen/policemen) have to destroy the property to put out the first for the public good.
Or, if a flood is coming and the army comes in to build a levee to block the flood and destroys property in the process, they don’t have to pay for the land they damaged because they had the right to destroy.
This one gives the courts the most trouble because they don't like to recognize that people have a right to destroy property. But they do recognize it.
Property as a “Bundle of Rights”When you describe property, think in terms of the property rights, not the physicalness. It’s common to describe property as a “bundle of rights” in relation to things. The most important rights in this metaphorical bundle are: 1) right to exclude, 2) right to transfer, and 3) right to use and possess.
INTENTIONAL & REPEATED TRESPASS
Trespass Any intentional and unprivileged entry onto land owned or occupied by another.
A trespasser is strictly liable; good faith and fault are irrelevant. Doctrine only requires that D intend to enter the land as a matter of free choice, no that
he had intent to trespass.
To Prove Trespass:1. Possession (NOT ownership)2. Entry by D3. You can prove actual damages, but you don’t have to
Defenses to Trespass: Permission is a defense, not an element. Trespass tries for possession, not the right to exclude
others! Prior possession
Two Important Rules of Equity1. He who seeks equity must do equity (the clean hands requirement).2. Equity will intervene only when the remedy at law is inadequate.
Equity usually issues specific performance, common law courts usually award damages.
Baker v. Howard County Hunt Equity will relieve against continuing/repeated trespass (the damage was of a nature that
the Bakers could obtain no adequate remedy at law – you can’t really put a price on the enjoyment of your property rights).
Rights of the foxhunters were subordinate to the rights of the landowner, so if the hunter himself goes into the lands of another against the owner’s will, he is a trespasser.
Common law re: dogs on other people’s land = “the owner of a dog is not liable for its mere trespass on the land of its own volition.”
D ‘s believed that Bakers shouldn't be granted the injunction because they had unclean hands from shooting some of the dogs.
NORMALLY, YOU DO NOT HAVE THE RIGHT TO DESTROY SOMEONE ELSE’S PROPERTY WHEN IT COMES INTO YOUR LAND.
Owner is liable if he either takes the dog where he knows that it will probably damage the property or if with that knowledge he permits the dog to stray beyond his control.
BUILDING ENCROACHMENTS
Black Letter Definition: A trespassory invasion – the standard is Pile v. Pedrick; infringement on property of another, invasion of a property owner’s right to exclude (the main stick in bundle of rights).
Standard Encroachment First ask: Is there an encroachment? Always determined by the facts; important to separate
liability issues from remedy issues. Liability: Has party encroached? Common law says any encroachment creates
liability. Remedy: Can either be injunction or damages.
Then ask: If there is encroachment, what remedy should apply?
Remedies Injunction is the traditional remedy (box 1 or 3)
To impose damages as the default remedy would be the equivalent of forcing parties to contract (forced sale of encroach land). Absolute rule is necessary because cannot replace property regardless of price and land is a limited resource.
Damages awarded under equitable doctrines (box 2 or 4) – allow the encroachment but D has to pay P, either determined by bargaining or by court (market value).
Equitable Doctrine of Clean Hands “One who seeks equity must do equity.” Equitable relief is not granted to one who acts in
bad faith or bad conscience. Ex: Some courts have denied relief to Ps who have refused to let D onto property to
remedy the encroachment (although in Pile, the court granted relief).
Pile v. Pedrick Pile (true owner) sues Pedrick (encroacher) on the issue of a bill of equity, seeking
injunction compelling Pedrick to remove party wall that encroached on Pile’s land 2 inches under the surface of the land. Lower ct. granted injunction to Pile. Should loser bear burden of the court costs?
Held: No, each party should pay his own costs, and entitlement is given to Pile (Pedrick is given a year to remove that part of the wall).
Three available remedies: 1. Permanent trespass (Pedrick would continue paying damages); 2. Pedrick must remove part of the wall; or 3. The entire wall must be removed.
Court was mad at Pile for making Pedrick do the most expensive and impractical thing to remedy the problem, so they split the court costs.
Court viewed this as a pure property case and felt they had to grant the injunction so as to prevent a permanent trespass.
Golden Press v. Rylands Plaintiff Ryland owned parcel of land, alleged Defendant Golden Press’ foundation extends 1-
3 inches into their land for 160 feet. Sought injunction requiring D to remove all footings and foundations that's stuck over onto their property.Trial court properly denied mandatory injunction requiring D to remove the footings.
D’s encroachment was unintentional and slight, P’s use was not affected and his damages will be small and fairly compensable, while the cost of removing the footings will be huge and unjustifiable.
Court viewed this as a person vs. person situation as opposed to a pure property rights situation.
PROPERTY RULES & LIABILITY RULES
Three Types of Entitlement (Rights established and protected by law)1. Entitlements protected by property rules
One that must be brought in a voluntary transaction in which the value of the entitlement is agreed upon by the seller.
With an entitlement protected by a property rule, a collective decision is made as to who is to be given the initial entitlement, but not as to the value of the entitlement itself.
2. Entitlements protected by liability rules Involves a collective decision as to the value of the entitlement without the need for
a voluntary transaction. A destroyer of an initial entitlement protected by a liability rule must pay an
objectively valued sum to the holder of the entitlement.3. Inalienable entitlements
Says that an entitlement is inalienable to the extent that its transfer is not permitted between a willing buyer and a willing seller.
The state intervenes to determine the initial entitlement, to forbid its sale or purchase, and to determine compensation to be paid if sold or destroyed.
CALABRESIS & MELAMED – PROPERTY RULES, LIABILITY RULES, & INALIENABILITY
Addresses two questions: 1) Who gets entitlement; and 2) How to enforce it. Property Rule : Entitlement can't be removed from party unless he agrees to sell
it for a price he sets. Involves least amount of state intervention b/c once the decision is made as to who is given the initial entitlement, the state doesn't decide its value.
Liability Rule : Entitlement can be destroyed by a party willing to pay an objectively determined value for it. Has more state intervention.
PROPERTY LIABILITY INALIENABILITYDefinition Enforce entitlement through
injunction Right to transfer/sell
entitlement & set price Transfer/sale is a voluntary
transaction
Enforce entitlement through $ damages
Polluter can buy entitlement by objective value from ct.
Makes the Property Interest fungible by converting property right into $ amount
Enforce entitlement through injunction
Can’t sell the rights
Advantages Makes sure someone gets
what they think their right is worth (determining worth using market value could grossly undervalue property
Solves hold-out and free rider probs by determining value by market price.
Better than property rule b/c it facilitates combination of efficiency and distributive results that would be hard to achieve under property rule
Disadvantages Costs of establishing value of entitlement may be so great that transfer won’t occur (e.g. b/c holdout, free rider probs). In this case, go to liability rule.
Market value might grossly undervalue/overvalue “worth” of entitlement (e.g. personhood).
PROPERTY LIABILITY
True OwnerRule 1: True owner gets in injunction.
This is the rule at common law.Rule 2: True owner gets entitlement; encroacher gets land. Encroacher has to pay damages set by the true owner.(Good faith improver, clean hands)
EncroacherRule 3: Right to encroach is granted.
True owner must pay value at amount set by encroacher
No common law doctrine gets you to Rule 3
Rule 4: Encroacher gets the land True owner must pay
objective/market value (set by court) to get it back.
Hypo: We have Polluter and Resident, and Polluter’s actions have encroached upon Resident’s passive enjoyment of his property. The scheme of remedies looks like this:
Initial Entitlement
INJUNCTION/PROPERTY RULE DAMAGES/LIABILITY RULE
ResidentRULE 1: Court issues in injunction against Polluter.
RULE 2: Court finds a nuisance but permits pollution to continue if Polluter chooses to pay damages.
PolluterRULE 3: Court finds the pollution not to be a nuisance and permits the polluter to continue without paying damages.
RULE 4: Court permits Polluter to continue unless Resident chooses to pay Polluter damages in order to prohibit further pollution.
Example from the book: There’s a building encroachment – P is the encroached upon party, D is the encroacher (like Pile and Golden Press).
Initial Entitlement
Injunction/Property Rule Damages/Liability Rule
Plaintiff Rule 1 (Pile) Rule 2 (Golden Press)
Defendant Rule 3 (Hinman) Rule 4
Rule 1: Award entitlement to P and protect this by a property rule. This means P can insist on an injunction forcing D to tear the building down.
Like Pile – court ordered that encroacher tear down the wall.Rule 2: Award entitlement to P, but this time protect the entitlement with a liability rule. This means that D can take P’s entitlement without P’s consent, typically upon payment of court-determined damages, which here would probably be the fair market value of the land occupied by the encroachment.
So encroacher can stay, but has to pay damages and P can’t force D to tear building down. Like Golden Press – allows the encroacher to stay by makes them pay damages.
Rule 3: Award entitlement to D protected by a property rule. This means that the building stays put, and the P can have it removed only by getting D’s consent.
Like Hinman – court ruled that the airline companies have the entitlement to use the airspace and the surface owner would have to get their consent to stop them from using it.
Rule 4: Award entitlement to D, but P can force D to transfer the entitlement to P in return for money.
ADVERSE POSSESSION
When an owner sits on her right to exclude, and the statute of limitations for challenging the original unlawful entry expires, not only is the original owner barred from asserting the right to exclude, but a new title also springs up in the adverse possessor. Dispute of possession = action in ejectment.
Once the owner is barred from suing in ejectment, the adverse possessor has title to the land. In effect, the adverse possessor becomes the new true owner, and can now exercise the right
to exclude against the entire world, including the original property owner. This applies to real property and personal property.
Possession based upon physical entry is always superior to possession based just on title.
Possessor’s Rights Before Acquiring Title Before the statute of limitations bars the true owner, the adverse possessor has all
the rights of a possessor (he can evict a subsequent possessor who takes the possession away).
But before the expiration of the statutory period, an adverse possessor has no interest in the property valid against the true owner. The true owner may retake possession at any time (relativity of title).
REQUIREMENTS OF ADVERSE POSSESSION
To establish title by adverse possession, the possessor must show (1) an actual entry/possession (2) giving exclusive possession that is (3) open and notorious, (4) adverse or hostile under a claim of right, (5) continuous and uninterrupted for the statutory period, and (6) the statute of limitations has to have run out.
1. Actual entry giving possession The primary purpose of the entry requirement is to trigger the cause of action, which
starts the statute of limitations running. It also shows the extent of the adverse possessor’s claim.
Claimant must physically use the particular parcel of land in the same manner that a reasonable owner would, given its nature, character, and location.
Constructive Possession of Part If there is an actual entry on part of the land described in a deed, the possessor
may be deemed in constructive possession of the rest. But an actual entry on some part of the land is required. (See below for more detail on constructive possession).
2. Exclusive possession Possession must not be shared with either the true owner or the general public, but must
be as exclusive as would characterize an owner’s normal use for such land. If the adverse possessor were so sharing possession, the owner would probably not realize the adverse possessor was claiming ownership against him.
However, it is possible for two or more persons, acting in concert and sharing only among themselves, to acquire title by adverse possession as tenants in common.
3. Open and notorious possession The adverse possessor must occupy the property in an open, notorious, and visible
manner. Her acts must be such as will constitute reasonable notice to the owner that she is claiming dominion, so that the owner can defend his rights.
Generally, open and notorious acts are those that look like typical acts of an owner of property; they are acts from which the community, observing them, would infer the actor to be claiming ownership. This of course depends on the type of land involved; the acts must be appropriate to the condition, size, and locality of the land.
Possession of Minerals If the same person owns both the surface estate and the mineral rights when
adverse possession begins, the adverse possession of the surface includes possession of the minerals. The minerals are treated as part of the adversely possessed land.
On the other hand, if the minerals have been severed by sale to another prior to entry of the adverse possessor on the surface, possession of the surface does not carry possession of the minerals.
To start adverse possession running against the owner of the minerals, the adverse possessor must start removing them. Possession of the surface does not give a cause of action to the separate owner of the minerals until the minerals are disturbed.
4. Adverse of hostile possession under a claim of right To be an adverse possessor, a person must hold adversely to the owner and under a claim
of right. Sometimes the word hostile is inserted as an element of adverse possession – it means only that the possession is without the owner’s consent – it is not subordinate to the owner.
One purpose of the claim of right requirement is to help assure that the true owner is not lulled into believing an occupant will make no claim against him.
The key question in determining whether a person is adverse and under a claim of right is: Does the court apply an objective or subjective test?
Objective Test: The state of mind of the possessor is not important; what is important are the actions of the possessor. The possessor’s actions, including statements, must look like they are claims of ownership. If they look that way to the community, the claim is adverse and under a claim of right. Under this test, a person can be an adverse possessor even though he is not actually claiming title against the true owner. The important thing is that he is occupying the land without the permission of the owner. Permission negates a claim of right.
Subjective Test: Under this test, a claim of right means that the adverse possessor must have a bona fide or good faith belief that he has title. If the possessor knows he has no title, and that someone else has title, his possession is not adverse. Under this view, a mere squatter (a person who enters into possession knowing that the land belongs to someone else) cannot be an adverse possessor.
With this view, if the possessor mistakenly believes that he has title but, if he knew the truth, would not claim title, he is not occupying adversely.
Color of Title Color of title means that you have a written instrument that, in good faith, you
think is valid and purports to convey the land at issue in the adverse possession suit. But this instrument, by definition, is invalid. If it were valid, then you wouldn’t be an adverse possessor (because you would have a good deed).
So the instrument, unknown to the claimant, is invalid and defective. Ex: The grantor’s name is forged on the deed; the grantor does not
own the land deeded; grantor was mentally incompetent; deed is not properly executed, etc.
In all of these cases, the grantee without knowledge of the defect takes possession under color of title.
Where a person enters with color of title, no further claim of title or proof of adversity is required.
In most states, color of title is not required to be an adverse possessor. Even where a bona fide claim of title is required, color of title is not necessary. Ex: Where O orally gives Blackacre to A, A has no color of title but A – believing the oral transfer was valid – possesses under a claim of title.
The Mistaken Improver Suppose that A erects a building or part of a building on neighbor B’s property,
mistakenly believing that the building is on A’s own land. When B discovers this mistake, the encroachment has not existed for the period of the statute of limitations; therefore A does not have an adverse possession claim. But what are B’s rights?
At common law, B had the right to force A to remove the encroachment.
Under modern law, a good faith improver of a neighbor’s lot gets some relief. A court of equity may let A’s encroachment remain if A pays damages to B, or may award the building to B if B pays its value to A, or the court may give B the option of paying A the value of the house or selling A the land at fair market value.
If the encroachment is intentional, the person must remove the encroachment if the neighbor so demands. A cannot seize B’s land, but instead must bargain with B for it. Equitable relief is only available to those who act in good faith and improve the adjoining lot by mistake.
5. Continuous, uninterrupted possession Continuous possession requires only the degree of occupancy and use that the average
owner would make of the particular type of property given the nature, location, and character of the land. An adverse use is continuous when it’s made without a break in the essential attitude of mind required for adverse use. A person can be in continuous possession even though there are considerable intervals during which the property isn’t used.
The purpose of this requirement is to give the owner notice that the possessor is claiming ownership, and that the entries are not just a series of trespasses.
Seasonal Use Use of a summer home only during the summer for the statutory period
is considered continuous use. Similarly, seasonal use of a hunting cabin during the hunting seasons, or the grazing of cattle on rangelands in the summer, may be sufficiently continuous possession.
Abandonment Abandonment is the intentional relinquishment of possession. If the
possessor abandons the property for any period of time, without intent to return, then continuity of adverse possession is lost. The adverse possession comes to an end, and possession returns constructively to the true owner. If the adverse possessor later returns, the statute of limitations begins to run anew.
Tacking by Successive Adverse Possessors To establish continuous possession for the statutory period, an adverse possessor
can tack onto her own period of adverse possession any period of adverse possession by predecessors in interest. Thus, separate periods of actual possession by those holding hostilely to the owner can be tacked together, provided that there is privity of estate between the adverse possessors.
In this context, privity of estate means that a possessor voluntarily transferred to a subsequent possessor either an estate in land or physical possession.
Ex: A owns lot 1, but by mistake builds her house on the adjoining lot 2 owned by O. Five years later, A sells “her house” to B, giving B a
deed describing lot 1 and transferring to B physical possession of lot 2 (where the house is). B can tack A’s possession of lot 2 onto his own.
Ouster by a Third Party : When an adverse possessor (A) is ousted by a third party (X), X cannot tack on A’s period of prior possession because of lack of privity. Privity of estate requires a voluntary transfer for tacking.
Abandonment : Tacking is not permitted where one adverse possessor abandons the property, even though another enters immediately. The statute of limitations starts running anew on the entry. For tacking there must be privity of estate – a voluntary transfer between possessors.
Tacking on the Owner’s Side : Once adverse possession has begun to run against O, it runs against O and all of O’s successors in interest. Hence, if A enters against O in 1990, and O conveys to C in 1995, the statute continues to run against C – from 1990. Thus, successive ownerships are tacked on the owner’s side as well as on the adverse possessor’s side.
Interruption by True Owner If the true owner reenters the land openly and notoriously for the purpose of
regaining possession, an interruption has occurred. Interruption of possession by the true owner stops the statute of limitations from running.
In most states, interruption can occur without an actual intent to oust the possessor. Courts use the same sort of objective test for interruption as the use for establishing possession under a claim of right. If the owner’s acts are ordinary acts of ownership and would give notice of claim to the average person, they are an interruption. There is a presumption that the use of the land by the owner is the exercise of his right to use it, and therefore when the owner uses land, such use presumptively asserts ownership.
In some states (mostly in the west), the adverse possessor must pay taxes on the land in order to prevail.
6. Statute of limitations has to have run out Don’t forget about the possibility of tacking.
Constructive Possession & Doctrine of Constructive Adverse Possession With Color of Title Constructive Possession : A person is in constructive possession when the law treats him as
if he is in possession although, in fact, he is not or he is unaware of it. Constructive possession is a legal fiction that permits judges to reach a desired result. The owner or occupant of premises may constructively possess something on the premises of which he is unaware. If so, he is entitled to the benefit of the “prior possessor wins” rule.
If the good faith claimant goes into actual possession of some significant portion of the property under color of title (e.g., defective deed), she is deemed to be in adverse possession of the entire property described in the instrument provided the tract of land described in the deed is recognized in the community as one defined parcel of land.
On the theory that she intends to control all of the land described in the instrument, the adverse possessor is in constructive adverse possession of the part of the tract she does not actually possess.
Ex: X forges the names of O and B on a deed to A. A believes the signatures are genuine. The deed describes Blackacre (owned by O) and Whiteacre (owned by B). A moves into the house on Blackacre, but does not go onto Whiteacre. A has actual possession of the house on Blackacre and constructive possession of all the rest of Blackacre, for the house is a significant part. A does not have constructive adverse possession of Whiteacre. A has not entered Whiteacre, and B has no cause of action on which the statute of limitations has run. Therefore A has neither actual nor constructive possession of Whiteacre.
Ouster: The wrongful dispossession or exclusion of someone from property
If you want to oust someone’s possession, you have to do it by exercising superior possession.
For ejectment, you have to prove possession & that you’ve been ousted/dispossessed of the land.
When the owner is not in possession (occupying all of his land), the “trespasser’s” entry into part of the land ousts the owner from possession.
Ouster = superior possession
The universe of adverse possession claims can be divided into two types:1. Claims of possession under color of title2. Claims of possession without color of title
Color of titl e means a deed or other instrument of conveyance that purports to convey title to the land in question.
Ex: A delivers a deed to B. On its face, the deep purports the conveyance of Blackacre to B and contains a legal description of Blackacre. Pursuant to the deed, B takes possession of the property, however, A did not own any interest in the property. Because A held no interest, B’s deed did not convey any property right to B. Under these circumstances, B would be in possession of the property under color of title – i.e., by virtue of a deed that purports to convey title to Blackacre, but that is in fact invalid and thus passed no title.
Without color of title would be if X is in possession of land belonging to another person, but has not received any instrument purporting to convey title to that land.
Once the statute of limitations expires and the possessor has satisfied all of the elements in the adverse possession standard, the true owner can no longer bring legal action to recover possession of the land or the benefits of that possession, or even exercise self-help in order to recover possession of the land.
Once the statute of limitations expires, the adverse possessor’s possession ripens into good title, automatically, by operation of law.
Ex: O, who owned Blackacre in fee simple absolute, conveyed it “to X for life.” One week later, B took possession of Blackacre without X’s permission and occupied it for the next 25 years without objection from X. X then died. O can now recover possession from B, even though B has been in possession for 25 years.
B took possession from X, who only held a life estate. As a result, after the statutory period expires, B obtains precisely the title that X had – a life estate which then ended when X died. O, who held a reversion in fee simple absolute at the conclusion of X’s life estate, may now recover possession of Blackacre.
Interests Not Affected by Adverse PossessionRemember that the basic principle of adverse possession is that a statute of limitations is running on a person who has a cause of action and does not bring suit. If a person has no cause of action, he is not barred by any statute of limitations running. This is tricky especially with future interests.
Future Interests A future interest is a right to possession of the property in the future. The most common
example is where O transfers land to Child for life, and on Child’s death to Grandchild. Child has a life estate, and Grandchild has a future interest called a remainder. Only the life tenant, Child, has a right to possession while Child is alive. Until Child dies, Grandchild has no right to possession. Hence, the statute of limitations does not run against a remainder existing at the time of entry by an adverse possessor because the holder of the remainder has no right to eject the adverse possessor from possession.
Ex: O owns Whiteacre. In 1989, O conveys Whiteacre to Child for life, remainder to Grandchild. In 1990, A enters adversely. The statute of limitations is 10 years. In 2007, Child dies. Grandchild is now entitled to possession and has until 2017 (10 years from 2007) to eject A.
Liens, Easements, Equitable Servitudes
If the land is subject to outstanding liens, easements, or equitable servitudes when the adverse possessor enters, any title acquired by the adverse possessor remains subject to such interests. The owner of any such interest is not affected by adverse possession until he has a cause of action against the possessor.
SEQUENTIAL POSSESSION ISSUES
What happens if multiple persons serially claim property on some theory other than purchase or gift from the prior owner?
When this happens, sometimes its called the relativity of title and sometimes referred to as the rejection of the jus tertii defense (a defense based on the rights of third parties).
The finder acquires title to lost property that is superior to the claims of all other persons except:
1. The true owner; and2. Sometimes the land owner
Trover A common law action to recover the value of goods wrongfully converted (usually by selling
it to an unknown party) to another’s own use. Action was permitted against anyone who refuses to deliver up the P’s chattel. P was entitled to full value of the chattel at the time the conversion took place. In effect, P waives the right to the return of the chattel and insists that the D be subjected to a
forced purchase of it.a. Plaintiff has to prove possessionb. That it was wrongfully takenc. Person refuses to give back the chattel wrongfully taken
BakerPossessor wins against anyone except for the true owner.Always ask the question, Where are the goods found? Owner has the claim of the goods which are on his property.Trespassers often or almost always lose.
Armory v. Delamirie(most famous property case) The chimney sweeper’s boy found a jewel and took it to a goldsmith, who refused to
return it. Court concluded that the boy had title to the jewel, not the goldsmith. The finder has a better title or right to the property he found than anyone except the
true owner. Do not have to prove that you are the owner, but only that you had prior possession
Clark v. Maloney Action of trover to recover the value of 10 white pine logs. Rule: Finder of a lost chattel has property rights for the chattel against everyone
except the rightful owner.
Anderson v. Gouldberg Rule: A person who acquires possession, even wrongfully, has a right to retain the
property from a stranger to the property. If there is a prior possessor and a subsequent possessor, the prior possessor gets it
unless the subsequent possessor shows better title.
Fisher v . Steward ( 1804 ) p. 227 A. π (first possessor) discovered a bee hive on Δ’s land; marked it. Π cut it down and claimed the honeyB. Δ wins.
1. Accession of Wild Animalsa. Ownership of bees, because hives are fixed in one location, is closely tied with ownership of the land.b. Other wild animals, not so much (because they tend to roam).2. PLUS: Trespassers who find things on another’s land are not entitled to what they find.
If the bee hive was in a tree on Xs land but the branch the hive was on was hanging over onto Ys land, then Y is the owner of the bee hive.
Goddard v. Winchell (1892) p. 229A. Meteorite buried itself 3 feet under the ground of land lease to a
tenant. Tenant’s friend (First Possessor) dug it out and sold it. Tenant did not have mineral rights. Landlord (Landowner) sued and won.1. Nature causes soil and parts of it to move from one’s land to
another all the time.2. We don’t know/care about origins of rock – once it is imbedded
itself in soil, it becomes part of that soil.iii. Hannah v. Peel(Major in the army that owns a house) (1945) p. 234
A. Military occupant (Finder/First Possessor) of a house found a brooch in a window crevice; turned it into police. True Owner wasn’t found, so police gave the brooch to the house’s owner (Landowner). Land Owner never knew about the brooch.
B. Finder wins.1. Things physically IN the land have a special significance
compared to things found on top of it.a. LO never in possession of the brooch; wasn’t attached to the
land and he didn’t know about it.iv. Finder Wins Over Landowner If…
A. Thing was LOST in the ordinary sense (as opposed to being mislaid)1. Lost à Finder2. Mislaid à Landowner
a. Policy: getting it back to True Owner, but may reduce incentives for LO to act commendably.
B. Thing has been lost for a CONSIDERABLEAMOUNT OF TIME.1. If a considerable amount of time has passed, it doesn’t really
matter if Thing was lost or mislaid.a. Matters only for short periods of time b/c then, TO might still
be looking for it.C. Finder acted COMMENDABLY.
1. Finders who just keep it don’t really get sued (LO would never know about it).
2. Trespassing Finders do not get to keep the Thing.D. Landowner NEVER IN POSSESSION of premises.
1. Home has a very special place in property law; constructive possession of things inside a residence given to Homeowner. Private office also gives such possession, though not as strong.
2. Hannah court makes big deal about Peel never having lived on the premises.
E. Landowner NEVER KNEW of the Thing.1. Constructive Possession granted if Landowner knows that the
Thing is on their land. (Wouldn’t even be considered a “Finders case”)
2. If thing is IN/UNDER the ground, Landowner gets it.F. Finder is going to wind up losing to Landowner in MOST cases.
Finder does not win when…1. Landowner already owns the thing.2. Finder is a servant/agent of the Landowner.3. Finder trespassed (i.e. was on Landowner’s land without
permission).
LICENSES & BAILMENTS
LICENSES
A license is an informal permission that allows the licensee to use the land of another for a narrow purpose and on certain terms (like watching a football game, letting the plumber fix the sink, and guests at parties). A license may be created orally, but may generally be revoked at any time.
It is a waiver of one’s right to exclude. Occasionally supported by consideration in the form of payment by the licensee, but that
isn't a requirement for the creation of a valid license. A license NOT coupled with an interest is revocable (Wood v. Leadbitter, pg. 483).
Licenses are unilaterally revocable by the licensor. May be revoked without notice or reason.
Examples of Licenses You drive to the airport and park your car in the parking lot You buy a ticket to a movie and choose your seat You buy a ticket to a concert and your seat is designated You buy a ticket to an amusement park
The nature of these relationships suggest that they are intended to be short term, and that simply because you buy a ticket, you don't expect to have a perpetual right to enter the place.
License Coupled With an Interest A license is coupled with an interest when the license holder has a separate interest in the
licensor’s land. A license coupled with an interest is one that gives the licensee the right to remove a chattel of the licensee, which is on the licensor’s land. Thus, if O sells A a car located on O’s land, A has an irrevocable license to enter and remove the car.
The coupling of a license with such an interest will normally arise in one of two situations :1. The licensee has some personal property located on the licensor’s land and needs a
continued right to access that personal property. Ex: A has permission to keep his car in a garage on B’s property. B may not
revoke A’s license to come upon B’s land to gain access to the car.2. The licensee has a profit on the licensor’s land and needs a continued right to come
upon the land to “harvest” the profit. Ex: C has the right to extract minerals or timber from D’s land. Coupled with
that interest is the right of C to come upon D’s land to extract the minerals. D cannot unilaterally revoke C’s right to cross D’s land.
Marrone v. Washington Jockey ClubCitation. 227 U.S. 633 (1913).Synopsis of Rule of Law. A ticket for admission upon the property of another does not create a property right in the ticket holder, and the only right of the holder is in contract.Facts. Plaintiff was prevented from entering on the grounds of Bennings Race Track two days in a row after buying a ticket. The Plaintiff sued in trespass and also charged that the track had refused his entry because he accused the Defendants of a conspiracy to drug a horse he entered in a race. The court found that no evidence of such a conspiracy was introduced. The court found that the argument by Plaintiff was an attempt to overturn the common law rule that the purchase of a ticket does not create a property right.Issue. Can a ticket-holder sue for trespass for being denied entry by the ticket issuer?
Held. No. Judgment affirmed.The common law rule is that purchasing a ticket does not confer a property right.The contract may bind the maker of the ticket, but it does not act as a conveyance, because it is not under seal and does not have that effect by common understanding.The only right the Plaintiff might have, insofar as he was not subject to any more force than necessary on the part of Defendant, is to sue in contract for an alleged breach created by the purchase of the ticket.Discussion. Plaintiff, as the court pointed out, should have sought a remedy through a breach of contract action and not in trespass.
Wood v. Leadbitter P, who had purchased ticket to go to a race track maintained by D, brought action
for assault for excluding him from the premises in violation of the contract of license.
Court held that D was not liable for the assault, since the license is revocable at law.
Hurst v. Picture Theatres Held that the proprietor of the theater was liable for assault for forcibly removing
the ticket-holder from the theater using no more force than necessary. Justice Buckley says that Hurst had a license coupled with a grant.
The grant was to watch that specific performance. Justice Phillimore focuses on whether they have the right to eject him for trespass.
He said that it’s a contract interest so he could sue for damages. Says there’s a license and a contract interest but they are separate.
There's a license to go onto the premises AND a contract right to see the movie because the movie is being played in the theater – those are certainly related concepts but is there a license coupled with an interest?
If it’s only giving you a right to enter the premises, its immediately revocable.
BAILMENTS
A bailment arises when the owner of property (the bailor) temporarily transfers custody of the property to another (the bailee). A bailment is the rightful possession of goods by one who is not the owner.
There has to be an intent to possess or it has to be implied from the way you’re exercising custody and control.
It seems to be that if you intend to possess, the court will find that you have possession even when custody and control are not that strong.
If you exercise a degree of custody and control, you will be in possession even when you say, “well, I had no intent to possess.”
Because the bailment relationship is usually created by contract, the respective rights and duties of the bailor and bailee have a strong contractual element and can be modified by agreement of the parties.
But because the essence of the bailment contract is the transfer of custody of property, some of the bailor’s rights associated with ownership (most notably the right to exclude others from the owned thing) are also transferred to the bailee.
As far as third parties are concerned, the bailee’s rights with respect to the thing are similar to those of an owner.
Allen v. Hyatt Regency What is the legal relationship between the car owner and the garage owner? Held : A bailment for hire had been created and upon proof of nondelivery, the appellee
was entitled to the statutory presumption of negligence.
So this was a bailment and Allen wins. Garage operator is expected to provide attendants and protection.
Common law duty of a bailee in a bailee for hire situation : Reasonable care Return the property
If the goods end up in someone else’s possession, it is assumed that the bailee gave them to the other person unless proven otherwise.
Types of Consensual Bailments1. Express Bailments: Like when there’s a little agreement on your coat claim check2. Implied Bailments: The law will infer from the facts that the bailor did not permanently
give possession to the bailee even though they didn’t say anything explicit. Ex: “Can I use your book?” The expectation is that I’m going to give it back.
Types of Non-Consensual Bailments1. Finders: Like Armory – the chimney sweep was both an implicit bailor (as far as the jeweler
was concerned) and also a bailee (as far as the true owner of the jewel was concerned). With the true owner, there was no agreement at all.
2. Thieves: If you find the person who took your stuff, you can force them to return it.
Bailee’s Duty of Care We classify bailments in terms of who gets the benefit of it, because that affects the standard
of care owed to the owner. Benefit of the Bailor : If the bailment is solely for the benefit of the bailor, then only
gross negligence on the part of the bailee will cause liability. Slight diligence on part of the bailee is required.
Benefit of the Bailee : If the bailee is the sole beneficiary, the bailee is liable to the bailor for even slight negligence that results in damage to the property.
Great diligence on the part of the bailee is required. Benefit of Both : When the benefit from the bailment is mutual, then the bailee will
only be liable if his conduct was characterized by ordinary negligence. Ordinary diligence on the part of the bailee is required.
SUMMARY OF BAILEE’S DUTY OF CARESTANDARD OF CARE WHEN APPLIED EXAMPLE
Slight care/liability only for gross negligence
Bailment is solely for the benefit of the bailor.
X leaves her car at a gas station operated by her friend Y for a free car wash.
Ordinary care/liability for ordinary negligence
Bailment is for the mutual benefit of bailor and bailee, as in bailments for hire.
X leaves her car with a mechanic for service.
Extraordinary care/liability for even slight negligence
Bailment is solely for the benefit of the bailee.
X gratuitously lends her sports car to her friend Y to drive to Y’s class reunion.
Absolute liabilityBailee departs from terms of bailment or fails to redeliver item (exceptions: involuntary bailee, and possibly delivery to imposter).
X gave the keys to her car to Y’s parking garage; employee drives X’s car to his class reunion. (But probably no absolute liability if X loses the claim check and Y’s employee, without notice, turns X’s car over to a dishonest finder of the claims check).
Cowen v. Pressprich With the bond – one brokerage house delivered the wrong bond via messenger boy.
Basis of the suit was D’s alleged wrongful delivery. P says Ds, once they had acquired the bond, had an absolute duty to deliver it back to them.
Bailment = custody and control. Custody and control = possession. Appeals court said that this did create a bailment because they exercised dominion
over the bond by accepting it and trying to give it away.
Voluntary/Involuntary Bailments If there is a voluntary bailment and the bailee gives the property to the wrong person (like in
the case above), the bailee has strict liability. To prove acceptance in a voluntary bailment case, you have to prove that they
exercised dominion and control They have to return the bailed goods or their value The only defense is that the person the bailee gave it to had superior title The duty is absolute because you agreed to take it into your possession
To be an involuntary bailee, you have to receive something you didn’t intend to receive Generally, finders are going to be involuntary bailees. Possessor has duty to exercise reasonable care to return property to the correct
party
The Winkfield Postmaster from is suing The Winkfield for value of mail that is at the bottom of the
sea. When you deliver mail to the post office, you are the bailor and they are the bailee
(they exercise care, custody, and control). There was a duty to not misdeliver and also a high standard of care – the Mexican
doesn’t want to be a bailee, but they are. When the bailee pays the money owed, they are no longer a bailee.
If the true owner sues and says, “I’m the bailor, you were a bailee and you misdelievered/breached your duty of care and should pay me” and you’ve already paid the money owed, you should respond, “We are not a bailee because we are the owner of the goods, and we have superior title to you.”
License vs. Bailment License = No presumption of negligence for loss or theft Bailment = Presumption of negligence for loss or theft Bailment = The cost of a loss will be passed onto other customers of the bailee License = The cost of a loss will be passed onto other licensees
Factors That Suggest the Creation of a Bailment Lack of choice on bailor’s part Bailee assumes some control over the item Bailee gives objective manifestation of control over the goods Ticket claiming a license is a contract of adhesion
Factors That Suggest the Granting of a License Impersonality/lack of connection between the parties Plaintiff retains maximal control over the goods (e.g., retains the car keys) Plaintiff is given notice via ticket of the absence of a bailment
GIFTS OF PERSONAL PROPERTY
Gifts are nothing other than a transfer of property rights. You have to intend to transfer all of the property rights. Transfer is for no consideration or less than adequate consideration. You must presently transfer an interest in property – if you only intend to make a transfer
in the future, then you have to look at contract law to see if it’s enforceable. If you presently transfer a future right, that is a gift.
Always Start With These Q’s To See If a Valid Gift Inter Vivos Was Made:1. Has there been intent? Intent to transfer presently some interest in the property.2. Has there been delivery? Delivery means physical delivery of the goods or some substitute
for physical delivery of the goods?3. Has there been acceptance? Acceptance is assumed.
Gifts Causa Mortis When the person reasonably believes they are about to die, they can make a gift causa
mortis. Revocable by donor prior to death or if the donor recovers from whatever was the
apprehension of death.
THE DELIVERY REQUIREMENT
In several contexts, the law requires that a transfer take place only if the thing being transferred or some evidence of title is delivered to the transferee.
Ex: Whenever land or an interest in land is transferred by deed, the transfer is deemed to have taken place only if the deed is delivered to the transferee. So if the transferor makes out a deed to the transferee, informs the transferee that the deed has been signed and sealed, and then puts the deed in his safe, courts will hold that no valid transfer occurred.
So, a gift is a type of transfer that requires delivery. The law requires either a deed of gift (which must be delivered) or actual delivery of the
object.
Irons v. Smallpiece Issue: Whether an orally promised gift should be fulfilled when promising party
dies. Court ruled that a gift must be either by deed or actual delivery. The rule of donatio
mortis causa (gift in contemplation of death) does not transfer property without an actual delivery. There was no change of possession, therefore no gift.
Foster v. Reiss Delivery of gift causa mortis must be actual, unequivocal, and complete and made
while donor is still alive for it to be a valid gift. Majority reasoned that woman didn’t actually deliver the money to D, but rather he
had to seek it out based on the instructions in the letter. Strict requirement for a ceremonial, formal delivery is the only thing that
separates a gift causa mortis from a testamentary will. To eliminate the delivery requirement would be to negate the power of the will statutes.
Two General Rules For Making Inter Vivos Gifts
1. There must exist:a. The intent on the part of the donor to make a present transfer;b. Delivery of the gift (either actual or constructive) to the donee; andc. Acceptance by the donee.
2. The proponent of a gift has the burden of proving each of these elements by clear and convincing elements.
Gruen v. Gruen The one with the painting gifted from father to son. Held: Father’s reservation of a lifetime interest on the painting did not defeat the
intention to make a gift (there was a remainder).
Scherer v. Hyland With the suicide and the check left on the table. Court found that in this case, there was concrete evidence of intent to make a
present transfer, the donor took all steps that she deemed sufficient to pass her interest in the check to the donee, and a constructive delivery is thereby created sufficient to support a gift causa mortis.
Usually, delivery of a check is not a completed gift – since there’s no consideration, there's no contract and I can call the bank and cancel at any time. It’s not completed till you cash the check or use it in a for-value transaction.
DELIVERY OF A GIFTCircumstances Example
Actual physical deliveryDonor physically vests donee with possession of the item such that donee has dominion and control over it.
X hands a pearl necklace to Y.
Constructive deliveryActual manual delivery is impracticable; donor surrenders the means of obtaining possession and control.
X, intending to give Y a safe and its contents, gives Y a slip of paper with the combination to the safe on it.
Symbolic deliveryActual manual delivery is impracticable; donor hands over some object symbolic of the thing given.
X executes a document stating that he is giving to Y a certain sculpture currently on loan to a museum.
Delivery through 3rd person
Donor instructs his agent to deliver a gift to donee.
Donor delivers gift to agent of donee.
X tells jewelry store (X’s agent) to deliver a pearl necklace to Y.
X personally delivers a pearl necklace for Y to Y’s butler.
ESTATES IN LAND
History Lesson By Baker William the conqueror-divided up England and had a complete survey put into a book called the
doomsday book. Divided up the real property among his followers(England, Scotland, wales). Called his followers the “tenants in chief”-the ppl held under the king. Under the tenants in chief there were other tenants which were known as middle tenants and so forth. Knights Service-highest form of tenure that create the greatest rights and duties on both sides.
There are only 4 kinds of estates:1. Fee simple absolute2. Fee simple defeasible3. Life estate4. Fee tail (no longer in use)
1. FEE SIMPLE ABSOLUTE
1. Possession without condition2. Title that is indefinitely inheritable (you can leave it to whoever you want)3. Property is freely alienable (you can sell to whoever you want)4. Possession is for a potentially infinite duration (nothing inherent in the estate that would
cause it to end)
Words of Purchase and Words of Limitation Words of purchase identify the person in whom the estate is created. Words of limitation are words describing the type of estate created. Ex: Where O conveys Blackacre “to A and her heirs,” the words “to A” are words of purchase
identifying A as the taker. The words “and her heirs” are words of limitation, indicating a fee simple.
Creating a Fee Simple Old law - at common law, it was necessary to use words of inheritance (“and his heirs”) to create a
fee simple by deed. If O, owner in fee simple, conveys “to A in fee simple,” at common law A would take only a life
estate. To create a fee simple, O should have conveyed “to A and his heirs.” Under modern law, a deed or will is presumed to pass the largest estate the grantor owned, so the
requirement of “and his heirs” has been abolished in all states to create a fee simple. A conveyance of Blackacre “to A” conveys a fee simple if the grantor had a fee simple.
Heirs Have No Present Interest A grant “to A and his heirs” gives A’s heirs no interest in the property. The words “and his heirs”
are only words of limitation indicating that A takes a fee simple. A can sell or give away the fee simple, or devise it by will, thus depriving A’s heirs of the land.
Heirs = those persons who succeed to the real property of an intestate decedent under a state’s statute of intestate succession.
2. DEFEASIBLE FEES (FEE SIMPLE DEFEASIBLE)
1. Possession without condition (no condition precedent to estate becoming possessory but there are conditions under which you can lose the estate)
2. Estate is inheritable, but probably not devisable3. Estate may be alienable, but it is subject to defeasance4. Duration is until the defeasing event occurs
There are three types of defeasible fees simple:1. Fee simple determinable2. Fee simple subject to condition subsequent3. Fee simple subject to an executory limitation
1. FEE SIMPLE DETERMINABLE
A fee simple determinable is a fee simple estate so limited that it will automatically end when some specified event happens.
Ex: O conveys Blackacre “to School Board so long as the premises are used for school purposes.” The words “so long as … [purpose]” are words of limitation, limiting the duration of the fee simple given. The School Board has a fee simple determinable that will automatically end when Blackacre ceases to be used for school purposes. When that event happens, the fee simple automatically reverts to O.
Automatic Termination A fee simple determinable is a fee simple because it may endure forever. But, if the contingency
occurs (Blackacre used for other than school purposes), the estate automatically ends. The estate terminates immediately on the occurrence of the event – nothing further is required – and the fee simple automatically reverts to the grantor. This is the distinguishing characteristic of the determinable fee.
Creating a Fee Simple Determinable A determinable fee is created by language that connotes that the grantor is giving a fee simple only
until a stated event happens. “White,” “during,” “so long as,” or language providing that on the happening of a stated event, the
land is to revert to the grantor. For a determinable fee, it is necessary to use words limiting the duration of the estate.
Transferability A fee simple determinable may be transferred or inherited in the same manner as any other fee
simple, as long as the stated event has not happened. The fee simple remains subject to the limitation no matter who holds it.
Correlative Future Interest Because there is a possibility that the grantee’s determinable fee may come to an end on the
happening of the stated event, the grantor has a future interest called a possibility of reverter. A possibility of reverter may be retained expressly or may arise by operation of law.
2. FEE SIMPLE SUBJECT TO CONDITION SUBSEQUENT
A fee simple subject to condition subsequent is a fee simple that does not automatically terminate but may be cut short (divested) at the grantor’s election when a stated condition happens.
Ex: O conveys Blackacre “to A, but if liquor is ever sold on the premises, the grantor has a right to reenter the premises.” The words “but if … premises” are words of condition setting for the condition upon which the grantor can exercise her right of entry. They are not words limiting the fee simple granted to A. A has a fee simple subject to condition subsequent. O has a right of
entry. If O does not choose to exercise her right of entry when liquor is sold, the fee simple continues in A.
Does Not Automatically End A fee simple subject to condition subsequent is a fee simple because it may endure forever. If the
contingency occurs, O merely has the power to reenter and to terminate the estate. The fee simple subject to condition subsequent does not automatically end on the happening of the
condition. Rather, the estate continues in the grantee until the grantor exercises her power of reentry and terminates the estate. The grantor has the option of exercising the power or not.
Creating a Fee Simple Subject to Condition Subsequent A fee simple subject to condition subsequent is created by first giving the grantee an unconditional
fee simple and then providing that the fee simple may be divested by the grantor or her heirs if a specified condition happens.
Traditional language includes, “to A, but if X event happens…” or “to A, upon condition that if X event happens…” or “to A, provided, however, that if X event happens…” the grantor retains a right of entry.
Transferability This estate may be transferred or inherited in the same manner as any other fee simple until the
transferor is entitled to and does exercise the right of entry.
Correlative Future Interest If the grantor creates a fee simple subject to condition subsequent, the grantor retains a right of
entry. The law does not require that a right of entry be expressly retained by the grantor. If the words of
the instrument are reasonably susceptible to the interpretation that this type of forfeitable estate was contemplated by the parties, the court will imply the right of entry.
Automatic vs. Optional Termination The distinction between automatic and optional termination governs the consequences in several
contexts. In cases of automatic termination, the fee simple goes back to the grantor by operation of law. Where termination is optional, the grantor must act affirmatively to terminate the fee simple estate.
3. FEE SIMPLE SUBJECT TO AN EXECUTORY LIMITATION
A fee simple subject to an executory limitation is a fee simple that, on the happening of a stated event, is automatically divested in favor of a third person (not the grantor).
Ex: O conveys Blackacre “to School Board, but if within the next 20 years Blackacre is not used for school purposes, then to A.”
The forfeiture interest is in another grantee (A), and not in the grantor (O). A’s future interest is called an executory interest. The School Board’s possessory estate is called a fee simple subject to an executory limitation, or a fee simple subject to an executory interest.
Ex: O conveys Blackacre “to School Board, so long as the property is used only for school purposes for the next 20 years, and if it is not, then to A.”
This example, in contrast with the preceding one, uses words of duration rather than condition. Words of duration are words that create a fee simple determinable . Accordingly, some lawyers say that here the School Board has a fee simple determinable followed by an executory interest. Others simply use the same label here as they do in the preceding example, where words of condition are used. In any event, A has an executory interest in each example.
(This is covered more in the Future Interests section).
3. THE LIFE ESTATE
A life estate is an estate that has the potential duration of one or more human lives. Life estates are very common today, particularly life estates in trust. When X holds property in trust for A for life, A is entitled to all the rents and profits or other income from the property.
Types of Life Estates For the life of the grantee
The usual life estate is measured by the grantee’s life. Thus, where O conveys Blackacre “to A for life,” the grantee (A) gets an estate in the land for so long as A lives. On A’s death, the land reverts back to O, the grantor.
Pur Autre Vie Where the estate is measured by the life of someone other than the owner of the life
estate, it is classified as a life estate pur autre view (“for the life of another”). It comes to an end when the measuring life ends.
In a Class A life estate can be created in several persons, such as “to the children of A for their
lives, remainder to B.” Where a life estate is given to two or more persons, the principal question that arises is:
What happens to the share of the first tenant to die? The usual construction is that it goes to the surviving life tenants and the
remainder does not become possessory until all life tenants die. Defeasible(capable of being voidable or terminated) Life Estates
Like a fee simple, a life estate can be created so as to be determinable, subject to condition subsequent, or subject to an executory limitation.
Ex: O conveys “to A for life so long as A remains unmarried.” A has a life estate terminable upon marriage.
Ex: O conveys “to A for life, but if A does not use the land for agricultural purposes, O retains the right to reenter.” A has a life estate subject to a condition subsequent.
Ex: O conveys “to A for life, but if B marries during A’s lifetime, to B.” A has a life estate subject to an executory limitation.
Construction Problems Sometimes it’s not clear what estate is created by the language used. Courts must then
construe the instrument to determine whether the estate conveyed is a fee simple, life estate, or leasehold estate. Each case depends on its own facts and the probable intent of the grantor. Some examples of ambiguous language raising construction problems:
Ex: “To my wife, W, so long as she remains unmarried.” Does this create a fee simple determinable or a life estate determinable (on the theory that the condition – marriage – could only happen during W’s life)?
Majority view: A fee simple determinable is created, even though the fee simple cannot be forfeited after W’s death.
Ex: “To my wife, W, to be used as she shall see fit, for her maintenance and support.” Does this give W a fee simple or a life estate with power to consume the principal?
Majority view: A fee simple is created; the words “for her maintenance and support” merely state the reason for the gift.
Alienability of Life Estate A life tenant ordinarily is free to transfer, lease, encumber, or otherwise alienate her estate inter
vivos. Of course, the transferee gets no more than the life tenant had – an estate that ends at the expiration of the measuring life.
Sale of Property by a Court
If the life tenant and the owners of the remainder are all adults, competent, and agree, a fee simple in the land can be sold. If for some reason they cannot agree, can the life tenant get a court to sell the land, and order the proceeds reinvested in trust with the income paid to the life tenant?
If the holders of the remainder are all ascertained, adult, and competent, they can consent to the sale and the general rule is that a court will not give the life tenant relief in this case. The parties can bargain amongst themselves about sale and division of the proceeds.
If the holders of the remainder cannot legally consent to the sale, because one or more is unascertained, underage, or incompetent, a court may order a sale if it finds that sale is in the best interests of the holders of the remainder.
SUMMARY OF POSSESSORY ESTATESPresent Estate Examples Duration Correlative Future
Interest in GrantorCorrelative Future Interest in 3rd Party
Fee Simple Absolute
“To A and his heirs.” Forever. None. None.
Fee Simple Determinable
“To A and his heirs so long as/until/ while…”
As long as condition is met, then automatically to grantor.
Possibility of Reverter.
(See Fee Simple Subject to an Executory Interest, below)
Fee Simple Subject to Condition Subsequent
“To A and his heirs, but if/upon condition that/provided that/ however…”
Until happening of named event and reentry by grantor.
Right of Entry.(See Fee Simple Subject to an Executory Interest, below)
Fee Simple Subject to an Executory Interest
“To A and his heirs for so long as … and if not … then to B.”
“To A and his heirs but if … to B.”
As long as condition is met, then to third party.
Until happening of event.
(See Fee Simple Determinable, above).
(See Fee Simple Subject to Condition Subsequent, above).
Executory Interest
Executory Interest
Life Estate (May be Defeasible)
“To A for life,” or “To A for the life of B.”
“To A for life, then to B.”
“To A for life, but if …, to B.”
Until the end of the measuring life.
Until the end of the measuring life.
Until the end of the measuring life or the happening of the named event.
Reversion.
None.
Reversion.
None (but see below).
Remainder.
Executory Interest.
FUTURE INTERESTS
Follow these important rules:1. Pay careful attention to the exact language used in the grant; and2. Read and analyze the interests in a grant in sequence.
Helpful Hints1. Classify the Present Estate
This may help you figure out the future interests, because some future interests can only follow a particular type of present interest (e.g., a possibility of reverter can follow only a determinable estate, and a right of entry can follow only an estate subject to a condition subsequent).
2. Look at Who Has the Future Interest If it is retained by the grantor, you’ve narrowed it down to a reversion, a possibility of
reverter, or a right of entry. If it is given to someone other than the grantor, it must be a remainder or an executory interest.
3. Think About How the Future Interest Will Become Possessory For interests in a grantee, remember that a remainder waits for the natural termination of
the preceding estate, whereas an executory interest either divests the prior estate or springs out of the grantor’s interest, in both cases cutting short the prior estate.
For future interests remaining in the grantor, the reversion usually follows the natural termination of the prior estate (e.g., after the life tenant dies).
Similarly, the possibility of reverter does not cut short the preceding determinable estate, but succeeds it.
On the other hand, the right of entry, like the executory interest, divests the preceding estate.
4. Also Identify the Possessory Estate in Which the Future Interest Will Be Held A future interest will always be held in some possessory estate. For example, if a
grantor who owns in fee simple absolute conveys a fee simple determinable, the grantor’s future interest (which is a possibility of reverter) is most completely identified as “a possibility of reverter in fee simple absolute.”
5. Determine Whether the Interest is Vested or Contingent A contingent interest either is given to an unascertained person or is subject to a
condition precedent. Classify each interest in sequence by looking at the “words between the commas” setting off the interests. And distinguish between a condition precedent, which comes “between the commas,” and a condition subsequent, which divests a vested interest.
Example of condition precedent: “To A for life, then to B if B survives A, and if B does not survive A, to C.”
Example of condition subsequent: “To A for life, then to B, but if B does not survive A, to C.”
INTRODUCTION
Future Interest DefinedA future interest is a nonpossessory interest capable of becoming possessory in the future. A future interest is a present interest in the sense that it is a presently existing interest. But it is not a presently possessory interest, and that’s why it’s called a future interest.
Ex: O conveys Blackacre “to A for life, and on A’s death to B.” A has a possessory life estate. B has a future interest called a remainder. It will become possessory on A’s death. Before A’s
death, the remainder exists as a property interest in Blackacre. As with other property interests, B can transfer the remainder to C, and B’s creditors can reach the remainder. It is an existing property interest, which will become possessory in the future.
There are 5 categories of future interests:1. Reversion2. Possibility of Reverter3. Right of Entry4. Remainder
a. Vested Remainderb. Contingent Remainder
5. Executory Interest
Future Interests in the GrantorFuture interests are divided into two basic groups: (1) future interests retained by the grantor; and (2) future interests created in a grantee.
If the future interest is retained by the grantor (or, if retained by a will, by the testator’s heirs), the future interest must be either a reversion, possibility of reverter, or right of entry.
Reversion A reversion is a future interest left in the grantor after the grantor conveys a
vested estate of a lesser quantum than he has. Ex: O, owning Blackacre in fee simple, conveys Blackacre “to A for life.”
Because I did not convey a fee simple to anyone – but only a life estate, which is a lesser estate than a fee simple – O has a reversion. When A dies, Blackacre will revert to O. If O had conveyed a fee simple to A, O would not have a reversion.
Possibility of Reverter A possibility of reverter arises when a grantor carves out of her estate a
determinable estate of the same quantum. In almost all cases it follows a determinable fee.
Ex: O conveys Blackacre “to the Board of Education so long as Blackacre is used for school purposes.” The Board had a determinable fee; O has a possibility of reverter. O’s interest is not a reversion because O, owning a fee simple, has conveyed a fee simple determinable to the Board. All fees simple (absolute, determinable, subject to condition subsequent or executory limitation) are of the same quantum.
Right of Entry A right of entry is retained when the grantor creates an estate subject to
condition subsequent and retains the power to cut short the estate. Ex: O conveys Blackacre “to the Board of Education, but if the Board ceases to
use Blackacre for school purposes, O retains a right to reenter.” The Board has a fee simple subject to condition subsequent; O has a right of entry.
Correlative Estates Possessory estates have correlative future in the grantor:
Life estate Reversion Fee simple determinable possibility of reverter Fee simple on condition subsequent right of entry
Future Interests in GranteesIf a future interest is created in a grantee, it must be either a remainder or an executory interest.
Remainder A remainder is a future interest in a grantee that (1) has the capacity of becoming
possessory at the expiration of the prior estates, and (2) cannot divest the prior estates. Ex: O conveys Blackacre “to A for life, and on A’s death, to B and her heirs.” A has a
possessory life estate; B has a remainder in fee simple. B’s interest is a remainder
because it can become possessory on A’s death, and it will not divest A’s life estate prior to A’s death.
Executory Interest Generally speaking, an executory interest is a future interest in a grantee that, in order to
become possessory, must divest or cut short the prior estate, or spring out of the grantor at a future date. The basic difference between a remainder and an executory interest is that a remainder never divests the prior estate, whereas an executory interest almost always does.
Ex (shifting executory interest): O conveys Blackacre “to A and his heirs, but if B graduates from law school, to B and her heirs.” A has a fee simple subject to executory limitation; B has a shifting executory interest. B’s interest can become possessory only by divesting A of the fee simple. A shifting interest is a useful device to shift title upon the happening of some uncertain event.
Ex (springing executory interest): O conveys Blackacre “to my daughter A when she marries B.” O retains the fee simple and creates an executory interest in A to spring out of O in the future when A marries B.
QUICK SUMMARY OF TYPES OF FUTURE INTERESTSIn Grantor In a Grantee
Reversion Possibility of Reverter Right of Entry
Remainder Executory Interest
REVERSION(Future Interest in Grantor)
A reversion is a future interest left in the grantor after she conveys a vested estate of a lesser quantum than she has. A reversion may be expressly retained.
Ex: O conveys Blackacre “to A for life, then to revert to O.” Where it is not expressly retained, a reversion will arise by operation of law where no other disposition is made of the property after the expiration of the lesser estate.
Ex: O conveys Whiteacre “to A for life.” O has a reversion in fee simply by operation of law.
Quantum of Estates A reversion arises when the grantor transfers a vested estate of a lesser quantum than she has.
The hierarchy of estates determines what is a lesser quantum: The fee simple is of longer duration than the fee tail; the fee tail is of longer duration than a life estate; the life estate is of longer duration than the leasehold estates.
Ex: O, owner of a fee simple, conveys a fee tail or a life estate to A. In either case, O has conveyed a lesser estate than O’s fee simple. Therefore, O has a reversion.
Reversions Are Vested Interests All reversions are vested interests even though not all reversions will necessarily become
possessory. Some reversions will certainly become possessory; e.g., O conveys “to A for life, reversion to O.” Other reversions may or may not become possessory (see example).
Ex: O conveys Blackacre “to A for life, remainder to B if B survives A.” O has a reversion because, if B dies before A, Blackacre will return to O at A’s death. If A dies before B, Blackacre will go to B at A’s death.
Note that O does not have a contingent reversion. By common law dogma, all reversions are vested. So O has a vested reversion, which can be divested by B’s interest becoming possessory at A’s death.
The significance of a reversion being vested is that it is alienable, accelerates into possession upon the termination of the preceding estate, and is not subject to the Rule Against Perpetuities.
Alienability A reversion has always been regarded as fully transferable both inter vivos and by way of testate
or intestate succession. The transferee, of course, gets only what the transferor had – an interest that cannot become possessory until the preceding estate terminates.
Distinguish Reversion from Possibility of Reverter A possibility of reverter arises where the grantor carves out of his estate a determinable estate of
the same quantum. Most often it arises where the grantor conveys a fee simple determinable. A reversion arises where the grantor conveys a lesser estate than he has and does not in the same
conveyance create a vested remainder in fee simple. There is no such interest as a “possibility of reversion.”
POSSIBILITY OF REVERTER(Future Interest in Grantor)
A possibility of reverter arises when a grantor carves out of her estate a determinable estate of the same quantum. In almost all cases, a possibility of reverter follows a determinable fee, not some lesser determinable estate. Thus, for all practical purposes, a possibility of reverter is a future interest remaining in the grantor when a fee simple determinable is created.
Ex: O conveys Blackacre “to A and his heirs so long as liquor is not sold on the premises.” A has a determinable fee; O has a possibility of reverter.
Created Only in the Grantor A possibility of reverter cannot be created in a grantee. The analogous future interest created in a
grantee is called an executory interest.
Alienability At common law, a possibility of reverter could not be transferred inter vivos under the rationale
that a it was not viewed as an existing interest, but rather as a mere possibility of becoming an interest – hence it was not a thing that could be transferred.
Modern law, in most jurisdictions, holds a possibility of reverter to be freely alienable, both during life and by will. The rationale is that the possibility of reverter is now viewed as a property interest, and alienability is an inherent characteristic of any property interest.
Termination Termination of a possibility of reverter is discussed below in connection with a right of entry.
RIGHT OF ENTRY(Future Interest in Grantor)
When a grantor creates an estate subject to condition subsequent and retains the power to cut short or terminate the estate, the grantor has a right of entry. Like a possibility of reverter, a right of entry cannot be created in a grantee.
Ex: O conveys Blackacre “to A and his heirs, but if intoxicating liquor is ever sold on the premises, O has a right to reenter and retake Blackacre.” A has a fee simple subject to condition subsequent; O has a right of entry for breach of the condition subsequent.
Alienability At common law, a right of entry was inalienable inter vivos because it was treated as a chose in
action, and choses were inalienable. It was not thought of as a property interest, but rather as a special right in the grantor to forfeit the grantee’s estate if he wished.
Modern law – in some states, the right of entry is now alienable; in other the common law is followed. Possibly in a few, a harsh rule is followed: The mere attempt to transfer a right of entry destroys it.
Ex: O conveys Blackacre “to Railroad Company, but if it fails to maintain an overpass, O has the right to reenter and retake Blackacre.” Subsequently, O conveys the right of entry to his son. In the last group of states mentioned above, this attempt to convey the right destroys it, and the railroad has a fee simple absolute.
Termination At common law, a right of entry or a possibility of reverter could endure indefinitely, and because
it was inheritable, the grantor’s heirs could exercise the right of entry or enforce the possibility of reverter hundreds of years after the grantor’s death.
These interests were not subject to the Rule Against Perpetuities, which generally prevented the creation of future interests to become possessory far in the future.
This remains the law in the large majority of states. In some states, however, statutes have been enacted expressly limiting the period during which a possibility of reverter or right of entry can exist.
The typical statute limits them to 30 years, after which the preceding fee simple becomes absolute. Some states have made the termination statute retroactive, applying it to existing possibilities of reverter and rights of entry.
Future Interest Correlative Present Interest
Example Rights of Grantor Alienability
Reversion Life Estate. “To A for life.”Estate automatically reverts to grantor on life tenant’s death.
Transferable, descendible, and devisable.
Possibility of Reverter
Fee Simple Determinable.
“To A so long as alcohol is not used on the premises.”
Estate automatically reverts to grantor upon the occurrence of the stated event.
Transferable, descendible, and devisable
Right of Entry Fee Simple Subject to Condition Subsequent.
“To A on condition that if alcohol is used on the premises, O shall have the right to reenter and retake the premises.”
Estate does not revert automatically; grantor must exercise his right of entry.
Descendible and devisable, but some courts hold not transferable inter vivos.
REMAINDER(Future Interest in Grantee)
A remainder is a future interest(becomes possessory after the natural determination/end of the prior estate) created in a grantee that is capable of becoming a present possessory estate on the expiration of a prior possessory estate created in the same conveyance in which the remainder is created. It is called a remainder because on the expiration of the preceding estate, the land “remains away” instead of reverting to the grantor. A remainder never divests or cuts short the preceding estate; instead it always waits for the preceding estate to expire.
Ex: O conveys Blackacre “to A for life, then to B if B is then living.” B has a remainder because B’s interest is capable of becoming possessory upon the termination of the life estate.
Essential Characteristics Must have preceding estate
A remainder can be created only by express grant in the same instrument in which the preceding possessory estate is created. Unlike a reversion, it cannot arise by operation of law.
Ex: O conveys “to A if A marries B.” No preceding estate has been created by O in anyone; thus A does not have a remainder. A has instead a springing executory interest.
Must follow a fee tail, life estate, or term of years The estate preceding a remainder can be a fee tail, a life estate, or a term of years. A
remainder can follow any of these estates, but a remainder cannot follow a fee simple. Ex (term of years): O conveys “to A for 10 years, then to B and his heirs.” A has a term
of years. B has a vested remainder in fee simple. B’s interest is a remainder. Must be capable of becoming possessory on natural termination of the preceding estate
A remainder cannot divest a preceding estate prior to its normal expiration. A divesting interest in a transferee is an executory interest, not a remainder.
Ex: O conveys “to A for life, then to B.” B has a remainder because B takes when the preceding estate (A’s life estate) expires.
Compare with: O conveys “to A for life, but if B returns from Rome during the life of A, to B in fee simple.” B does not have a remainder; rather, B’s taking divests A’s estate and thus B has a shifting executory interest.
Estates in Remainder An estate in remainder may be a fee simple, a life estate, or a term of years. Ex: O conveys “to A for life, then to B for 10 years, then to C for life, then to D.” B has a
remainder for a term of years, C has a remainder for life, and D has a remainder in fee simple. (All of these remainders are vested – see below).
CLASSIFICATION OF REMAINDERSRemainders are classified either as “vested” or “contingent.” A vested remainder is a remainder that is both created in an ascertained person and is not subject to any condition precedent. A contingent remainder is a remainder that is either created in an unascertained person or subject to a condition precedent.
How to classify : Take each interest in sequence as it appears in the instrument. Determine whether it is given to an ascertained person or is subject to a condition precedent. Classify it. Move on to the next interest and do the same thing.
1. VESTED REMAINDERSThe most common definition of a vested remainder is the one given above: a remainder created in an ascertained person and not subject to a condition precedent.
Ex: O conveys “to A for life, then to B in fee simple.” B (an ascertained person) has a remainder not subject to a condition precedent. The word “then” following a life estate is a word of art meaning “on the expiration of the life estate.” Whenever and however the life estate terminates, B (or her representative) will be entitled to possession. B’s remainder is vested.
Subclassification of Vested RemaindersThere are three different types of vested remainders:
1. Indefeasibly vested remainder;2. Vested remainder subject to open; and3. Vested remainder subject to divestment.
Generally, the crucial distinction is between vested remainders and contingent remainders, but these are important too.
Indefeasibly Vested Remainder When a remainder is indefeasibly vested, the holder of the remainder is certain to
acquire a possessory estate at some time in the future, and is also certain to be entitled to retain permanently thereafter the possessory estate so acquired.
Ex: O conveys “to A for life, then to B and her heirs.” B (or her representative) is certain to take possession on A’s death. If B dies before A, B’s heirs or devisees are entitled to possession. Thus, B’s remainder is indefeasibly vested. (If B dies intestate and without heirs during A’s lifetime, B’s remainder escheats to the state. At A’s death, the state takes the property.)
Vested Remainder Subject to Open When a remainder is vested subject to open, it is vested in a class of persons, at least one
of whom is qualified to take possession, but the shares of the class members are not yet fixed because more persons can subsequently become members of the class.
Ex: O conveys “to A for life, then to A’s children.” If A has no children, the remainder is contingent because no person qualifies as a child. If A has a child, B, the remainder is vested in B subject to “open up” and let in other children. B’s remainder is sometimes called “vested subject to partial divestment.” (Once the remainder has vested in B, the interests of the unborn children are called executory interests because they may partially divest B.)
Class Gifts A class gift is a gift to a group of persons described as a class, e.g., “children of
A,” “brothers and sisters of A,” or “heirs of A.” A class is either open or closed. It is open if it is possible for others to enter the
class. In a gift to the “children of A,” the class is closed if A is dead. It is not possible for any other persons to come into the class. (A child of A in the womb is treated as in being from the time of conception if later born alive).
Vested Remainder Subject to Divestment When a remainder is vested subject to divestment, it is either vested subject to being
divested by the operation of a condition subsequent or vested subject to divestment by an inherent limitation of the estate in remainder.
Illustration – condition subsequent : O conveys “to A for life, then to B, but if B does not survive A, to C.” The vested remainder in B is subject to total divestment on the occurrence of a condition subsequent (B dying, leaving A surviving). C’s executory interest will divest B if the condition subsequent happens.
Illustration – inherent limitation : O conveys “to A for life, then to B for life, then to C and his heirs.” B has a vested remainder for life subject to total divestment if B fails to survive A. The divestment occurs because of the inherent limitation in a remainder for life: It fails if it does not become possessory within the life tenant’s life. C has an indefeasibly vested remainder in fee simple.
Vested subject to open and to complete divestment A remainder can be both vested subject to open and to complete divestment.
For example, O conveys “to A for life, then to the children of A, but if no child survives A, to B.” A, who is living, has a child, C. C has a vested remainder subject to open up and let in her brothers and sisters; it is also subject to complete divestment if A leaves no children surviving him (i.e., if C and all other children of A die before A).
2. CONTINGENT REMAINDERSA remainder is contingent if it either is limited to an unascertained person or is subject to a condition precedent.
Remainders in Unascertained PersonsA remainder in an “unascertained” person means the person is not yet born or cannot be determined until the happening of an event. Such a remainder is contingent.
Illustration – unborn children : O conveys “to A for life, then to A’s children.” A has no children. The remainder is contingent because the takers are not ascertained at the time of the conveyance. If a child is born, the remainder vests in that child subject to open and let in other children born later.
Illustration – heirs : O conveys “to A for life, then to B’s heirs.” B is alive. Because no one is an heir of the living (but only an heir apparent), the takers are not ascertained; therefore, the remainder is contingent. B’s heirs will be ascertained only at his death. If B dies during A’s life, the remainder will vest in B’s heirs at B’s death.
Reversion
In each of the above examples, there is a reversion in O. Note: Whenever O creates a contingent remainder in fee simple, there is a reversion in O.
Whenever O creates a vested remainder in fee simple, there is never a reversion in fee simple in O.
The reason is that in the case of a vested remainder in fee simple, the remainderman, by definition, stands ready to take whenever and however the previous estate ends. In the case of a contingent remainder, the remainderman will not be ready to take at the termination of the previous estate if the contingency has not yet been satisfied; hence, the interest must revert to O until the contingency occurs.
So, in the conveyance from O “to A for life, then to B’s heirs,” if B is alive when A dies, B’s “heirs” are not determined and thus not ready to take. In the conveyance from O “to A for life, then to A’s children,” it is true that at A’s death all of A’s children, if any, are determined and thus ready to take.
Remainders Subject to Condition PrecedentA remainder subject to a condition precedent is a contingent remainder. A condition precedent is an express condition set forth in the instrument (other than the termination of the preceding estate), which must occur before the remainder becomes possessory. This definition requires elaboration (see below).
What is a condition precedent : A condition expressly stated in the instrument. Suppose that O conveys “to A for life, then to B if B marries C.” B has a remainder subject to an express condition precedent. The condition precedent is marrying C. If B marries C during A’s life, the remainder vests indefeasibly in B.
What is not a condition precedent : The termination of the preceding estate is not a condition precedent. If it were, all remainders would be contingent, because no one is entitled to possession until the preceding estate has terminated.
Ex: O conveys “to A for life, and on A’s death, to B.” The words “on A’s death” merely refer to the natural termination of the life estate and do not state a condition precedent . They are therefore surplusage and may be struck out. B’s remainder is vested.
Vested Remainder Subject to Divestment vs. Remainder Subject to Condition Precedent Sometimes it’s difficult to distinguish between a vested remainder subject to divestment (i.e.,
subject to a condition subsequent) and a remainder subject to a condition precedent. The test : “Whether a remainder is vested or contingent depends upon the language employed. If
the conditional element is incorporated into the description of it, or into the gift to, the remainderman, then the remainder is contingent; but if, after words giving a vested interest, a clause is added divesting it, the remainder is vested.”
Ex: O conveys “to A for life, then to B, but if B does not survive A, to C.” B has a vested remainder subject to divestment by C’s executory interest. The words “then to B” give B a vested remainder; the clause following is a divesting clause, giving the property to C if B dies before A.
Ex: O conveys “to A for life, then to B if B survives A, but if B does not survive A, to C.” B and C have alternative contingent remainders. A condition precedent has been expressly attached to B’s remainder. O intended exactly the same thing as in the preceding example, but her intention was phrased differently. Here, O stated the condition of survivorship twice, once in connection with each remainder.
Preference for vested remainders If the instrument is ambiguous, the law favors a vested construction rather than a
contingent one. Ex: O conveys “to A for life, and at his death to A’s children, the child or children of any
deceased child to receive his or their deceased parent’s share.” Under the standard rule of construction, A’s children take a vested remainder subject to condition subsequent at birth. Each child’s interest is subject to being divested by his children if he dies before A.
Alienability Vested remainders have always been alienable inter vivos and devisable by will. Contingent
interests, including contingent remainders and executory interest, were not alienable inter vivos at
common law. Modern law = in a majority of jurisdictions today, contingent interests are alienable inter vivos or, when survivorship is not a condition precedent, devisable by will. Of course, if the remainder is contingent because the limitation is to an unborn person, there is no one to make the conveyance, so the interest is inalienable.
REMAINDERS – CONTINGENT vs. VESTEDContingent Remainders Vested Remainders
Created in an unascertainable person (not yet born or cannot be determined)
OR
Subject to a condition precedent expressed in the instrument
Created in an ascertained person
AND
Not subject to a condition precedent
EXECUTORY INTERESTS(Future Interest in Grantee)
An executory interest is any future interest in a grantee that does not have the characteristics of a remainder (i.e., it is not capable of taking on the natural termination of the preceding life estate. More specifically, an executory interest is an interest that divests the interest of another.
Remember that there are only two future interests that can be created in a grantee: remainders and executory interests. If it is not a remainder because the preceding estate is not a life estate, then it must be an executory interest.
Springing Executory Interest – “Follows a Gap” or Divests a TransferorA springing executory interest is a future interest in a grantee that springs out of the grantor at a date subsequent to the granting of the interest, divesting the grantor. It follows a gap in possession or divests the estate of the transferor.
Ex: O conveys “to A and her heirs if A quits smoking.” A has a springing executory interest. It will divest the fee simple of O, the transferor, if it becomes possessory.
Ex: O conveys “to A for 100 years if A so long live, then to A’s heirs.” The limitation to A’s heirs is a springing executory interest. Seisin stays with O until the death of A, when it springs out to A’s heirs.
Ex: O conveys “to A when and if A marries B.” State of title = fee simple subject to an executory interest in O; springing executory interest in fee simple in A. A’s interest is not a remainder because if A’s future interest becomes a present interest (if A marries B), it will divest O’s fee simple. Because it divests the estate of a transferor, it is a springing executory interest.
Ex: O conveys “to A for life, and one year after A’s death to B.” A has a life estate. O has a reversion. B has a springing executory interest in fee simple. B’s interest cannot be a remainder because of the one-year gap; it is not capable of taking on the natural termination of the preceding estate (A’s life estate). It is therefore an executory interest. It is a springing executory interest because it springs out of the transferor’s reversion.
Shifting Executory Interest – Divests a TransfereeA shifting executory interest is a future interest in a grantee that divests a preceding estate in another grantee prior to its natural termination. The shifting interest, like the springing interest, divests a prior interest. The difference between them is that a shifting interest divests a grantee, whereas a springing interest divests the grantor.
Ex: O conveys “to A and his heirs, but if B returns from Rome, to B and his heirs.” A has a fee simple subject to an executory interest. B has a shifting executory interest. (B’s interest cannot be a remainder, because it is a divesting interest, and remainders never divest).
Ex: O conveys “to A for life, and on A’s death, to B and his heirs, but if B does not survive A, to C and his heirs.” C has a shifting executory interest – it vests, if at all, by cutting off B’s vested remainder.
Why is B’s remainder vested? Remember to classify interests in sequence! B’s interest comes first, and therefore must be classified first. Once it is classified as a vested remainder in fee, any further future interest in a grantee is necessarily a divesting executory interest. A remainder cannot follow a vested fee simple, either in possession or in remainder, and therefore C’s interest cannot be a remainder if B’s prior estate is a vested remainder in fee.
Ex: “To A and her heirs; but if B returns from Canada, then and in that event to B and his heirs.” A has a fee simple subject to an executory interest. Because the future interest is created in a transferee, it has to be either a remainder or an executory interest. B’s future interest is not a remainder because it doesn’t follow the natural termination of the preceding estate (here, A’s fee simple estate). If B’s interest does take in present possession, it will divest A’s fee simple, and title will shift to B.
Ex: O conveys “to A for life, remainder to B and his heirs, but if B predeceases A, to C and his heirs.” C’s interest does not await the expiration of B’s vested remainder, but instead may cut it short.
FUTURE INTERESTS IN GRANTEESFuture Interest Example Reversion in Grantor
Following Future Interest?Transferable?
Indefeasibly Vested Remainder
“To A for life, then to B.” No; remainder certain to become possessory.
Yes; B’s remainder is transferable during life and at death.
Vested Remainder Subject to Open
“To A for life, then to A’s children.” A has a child, B. B has a vested remainder subject to open.
No; A’s children are certain of possession.
Yes; B’s remainder is transferable during life and at death.
Vested Remainder Subject to Divestment
“To A for life, then to B, but if B dies before A, to C.” B has a vested remainder subject to divestment by C.
No; no possibility of property reverting to grantor.
B’s remainder is transferable during life, but not transferable at B’s death if B predeceases A.
Contingent Remainder (1) “To A for life, then to A’s children.” A has no children.
(2) “To A for life, then to A’s children, who survive A.” A has a child, B.
(3) “To A for life, then to B if B reaches 21.” B is 17.
(4) “To A for life, then to B’s heirs.” B is alive.
(5) “To A for life, then to B if B survives A, and if B does not survive A, to C.”
Yes
Yes
Yes
Yes
Yes
No; no child is alive.
B’s contingent remainder is transferable during life, but not transferable at B’s death if B predeceases A.
B’s remainder is transferable during life, but remainder fails if B dies under 21.
No; no one is heir of B until B dies.
B’s remainder is transferable during life, but fails if B predeceases A; C’s remainder is transferable during life and at C’s death if A is then alive.
Executory Interest (1) “To A, but if B returns from Rom, to B.”
(2) “To A for life, then to B, but if B does not survive A, to C.”
(3) “To A upon her marriage.”
No
No
No reversion, but grantor has possessory fee until A’s
marriage.
Yes
C’s executory interest is transferable during life and at C’s death if A is then alive.
Yes
Differences Between Executory Interests and Remainders Executory interests are not destructible, while contingent remainders are still destructible in a few
jurisdictions. Executory interests are not considered vested, whereas contingent remainders can become vested.
EXAM TIP: It is not always necessary to know whether the executory interest is springing or shifting, as often it doesn’t make any difference in your analysis. But if you need to identify the type of executory interest, think of the difference between the two this way: A springing executory
interest springs out of the grantor (e.g., there is no preceding estate), and a shifting executory interest shifts the estate from one grantee to another.
CONCURRENT ESTATES
Two or more persons can own property concurrently. These persons all have the right to the enjoyment and possession of the land at the same time.
Three forms of concurrent ownership:1. Joint tenancy2. Tenancy in common3. Tenancy by the entirety
JOINT TENANCY
A joint tenancy can be created between two or more co-tenants where each co-tenancy owns an undivided share of the property, and the surviving co-tenant has the right to the whole estate.
The right of survivorship is the distinctive feature of the joint tenancy. When one joint tenant dies, the property is freed from this concurrent interest; the
survivor or survivors retain an undivided right in the property, which is no longer subject to the interest of the deceased co-tenant.
The tenant who lives the longest takes the whole property.
Creating a Joint TenancyCan be created by deed or will, or by a joint adverse possession.
Joint tenancy does NOT arise where persons inherit property by intestate succession. Heirs always take as tenants in common. There must be a clear expression of intent to create this estate, or else it won’t be recognized.
Language required is usually, “to A and B as joint tenants with the right of survivorship.” TODAY, TENANCY IN COMMON WILL BE PRESUMED. Joint tenancy only results
when an intention to create a right of survivorship is clearly expressed.
The fiction of one entity: By common law, joint tenants are regarded as composing one entity. Each owns the undivided whole of the property, so when one tenant dies, nothing passes to the surviving joint tenant(s). Rather, the estate simply continues in survivors freed from the participation of the decedent, whose interest is distinguished.
Thus, the surviving joint tenant is entitled to the whole by the right of survivorship, but no interest has passed to the surviving joint tenant.
The interest of the deceased joint tenant simply vanishes. Ex: State imposes an inheritance tax on all property passing from a decedent by devise,
bequest, or intestate succession. A and B are joint tenants. A dies. No inheritance tax is imposed on B by a stating taxing the passing of property at death.
The Four Unities RequirementBecause joint tenants are seised of the undivided property as one fictitious entity, the common law requires that their interest be equal in all respects. They must take their interests:
1. At the same time (unity of time)a. The interest of each joint tenant must vest at the same time.b. Ex: O conveys Blackacre “to A for life, then to the heirs of A and the heirs of B as joint
tenants.” The heirs of A are ascertained at A’s death, and the heirs of B are ascertained at
B’s death. Because the holders of the remainder are ascertained at different times, the heirs of A cannot take as joint tenants with the heirs of B. They will be tenants in common.
2. By the same instrument (unity of title)a. All tenants must acquire title by the same deed or will, or by a joint adverse possession.
3. With identical interests (unity of interest)a. Because joint tenants hold but one estate as a single entity, the interest of each joint
tenant must be equal in an estate of one duration. It is not possible, for example, for O to create a joint tenancy by conveying “one-half to A and his heirs, and one-half to B for life, A and B to hold as joint tenants.” A and B would be tenants in common, which doesn’t require unity of interest.
b. Property can be divided into fractional shares, one of which is owned by persons as joint tenants and the other owned by persons as tenants in common.
4. With an equal right to possess the whole property (unity of possession)a. Requires that each joint tenant have the right to possession of the whole.b. After a joint tenancy is created, the joint tenants can agree that one joint tenant has the
exclusive right to possession – this agreement doesn’t break the unity of possession, one tenant is merely waiving his right to possess.
If these four unities aren’t present, a joint tenancy will not be created at common law. Instead, if one or more of the unities is missing, a tenancy in common will be created.
Severance of a Joint TenancyAny joint tenant can at any time destroy the right of survivorship by severing the joint tenancy. Upon severance, the joint tenancy becomes a tenancy in common, and the right of survivorship is destroyed.
At common law, severance occurred automatically when one or more of the 4 unities are severed. Modern law generally follows the proposition that severance of any of the unities severs the
tenancy but because one of the unities can be unknowingly severed without intent to destroy the right of survivorship, in situations where a joint tenant conveys less than his entire share, some courts look to the intent of the parties in determining whether there is a severance.
Ways Joint Tenancy May Be Severed Conveyance by One Joint Tenant
Each tenant has the right to convey his interest. A conveyance of the tenant’s entire interest or share severs the joint tenancy with respect
to that share. Either a conveyance to a third person or to another joint tenant severs the share conveyed
from the joint tenant. A deed to a third person severs the joint tenancy even though the other joint tenant
doesn’t know about the deed. The transferee takes the interest as a tenant in common and not as a joint tenant.
When More than Two Joint Tenants When property is held in joint tenancy by three or more joint tenants, a conveyance by
one of them destroys the joint tenancy only as to the conveyor’s interest. The other joint tenants continue to hold in joint tenancy as between themselves,
while the grantee holds his interest as a tenant in common with them. Contract to Convey by One Joint Tenant
In most states, a severance results where one joint tenant executes a valid contract to convey his interest to another, even though no actual transfer of title has yet been made.
The contract is enforceable in equity, and hence is treated as an effective transfer of an equitable interest.
Some conveyances may not result in severance. When a joint tenant makes a conveyance but retains some interest in the property, the transfer may not effect a severance.
Mortgages
In the majority of states, a mortgage is regarded as a lien on title, and one joint tenant’s execution of a mortgage on his interest does not by itself cause a severance.
Rather, a severance occurs only if the mortgage is foreclosed and the property sold.
In the minority of states, which regard a mortgage as a transfer of title, the transfer destroys the unity of title and severs the joint tenancy.
Leases Theoretically, when one joint tenant leases his interest in jointly held property, the lease
destroys the unity of interest and thereby should effect a severance. This is the law in some states. Other states hold that the joint tenancy is not destroyed but is merely temporarily suspended (for the length of the lease).
TENANCY IN COMMON
A tenancy in common is a concurrent estate with no right of survivorship. Each owner has a distinct, proportionate, undivided interest in the property. This interest is freely alienable by inter vivos and testamentary transfer, is inheritable, and is subject to claims of the tenant’s creditors.
The only “unity” involved is possession: Each tenant is entitled to possession of the whole estate. Today, by statute, multiple grantees are presumed to take as tenants in common. The same is true
where multiple transferees take by descent.
Right to PossessionEach tenant has the right to possess and enjoy the entire property, subject to the same right in each co-tenant. Each owner has a distinct, proportionate, undivided interest in the property. No co-tenant has the right to exclusive possession of any part, but one co-tenant can go into possession of the whole unless the others object.
The co-tenants can come to any agreement about possession that they want.
No Right to SurvivorshipWhen a tenant in common dies, his interest passes to his devisees or heirs. It does not go to the surviving tenant in common.
Ex: A and B are tenants in common. A dies intestate, leaving H as her heir. H takes A’s share, and B and H now are tenants in common.
Equal Shares Not NecessaryEqual shares are not necessary for a tenancy in common. A and B can be tenants in common, with A holding ¾ interest and B holding a ¼ interest.
It is presumed that the shares of tenants in common are equal, but this presumption can be overcome by evidence that unequal share were intended.
If A and B, who are not related to each other, purchase property as tenants in common, and A puts up ¾ of the purchase price and B ¼, it will likely be held that A did not intend to make a gift to B, and that the parties have undivided interest proportionate to the consideration each paid.
Same Estates Not NecessaryTenants in common can have different types of estates. Suppose A and B are tenants in common, and that A dies, devising her half interest to C for life, remainder to D. C now owns a life estate and D a remainder in a one-half interest held in a tenancy in common with B.
Alienability
A tenant in common can sell, give, devise, or otherwise dispose of his undivided share in the same manner as if he were the sole owner of the property.
For example, A dies and devised her one-half interest to C for life, remainder to D. Thus, each share of a tenancy in common can be divided into a life estate and future interests, or among a new group of concurrent owners.
TENANCY BY THE ENTIRETY
A tenancy by the entirety is a form of concurrent ownership that can be created only between a husband and wife, holding as one person. The tenancy by the entirety is like the joint tenancy in that the four unities (plus a fifth – the unity of marriage) are required for its creation, and the surviving spouse has the right of survivorship.
Creating a Tenancy by the EntiretyAt English common law, a husband and wife were legally one, and therefore it was impossible for them to hold with each other as tenants in common or joint tenants. Therefore, a conveyance to H and W as “joint tenants” or as “tenants in common” created a tenancy by the entirety in H and W.
This rule has been abolished in all states. Modern law permits a husband and wife to take as tenants in common or joint tenants.
MODERN PRESUMPTION: Where the conveyance is unclear, most states that retain the tenancy by the entirety presume that a conveyance to a husband and wife creates a tenancy by the entirety.
This presumption can be rebutted by evidence that some other estate was intended.
Severing a Tenancy by the EntiretyAlthough the tenancy by the entirety resembles the joint tenancy in that the same four unities are required for its creation, it is unlike the joint tenancy in that severance of the tenancy by one tenant is not possible. Neither tenant acting alone can sever the four unities and destroy the right of survivorship.
Tenancy by the entirety cannot be terminated by involuntary partition. It can be terminated only by:
Death of either spouse (leaving the survivor sole owner of the fee); Divorce (leaving the parties as tenants in common with no right of survivorship); Mutual agreement; or Execution by joint creditor of both husband and wife (a creditor of one or the other
cannot execute).
LANDLORD & TENANT
A leasehold is an estate in land. The tenant has a present possessory interest in the leased premises, and the landlord has a future interest (reversion).
L-T law is a blend of property and contract law. This results from a lease being both a conveyance of an estate in land and a contract containing promises.
TENANCY FOR YEARS
A tenancy for years is an estate that lasts for a fixed period of time or a period computable by a formula that results in fixing calendar dates for beginning and ending, once the term is created or becomes possessory.
May be determinable (similar to a fee simple determinable) or on condition subsequent. The termination date of a tenancy for years is usually certain.
As a result, the tenancy expires at the end of the stated period without either party giving notice to the other.
There are a few cases where the lease is terminable on some event but of no fixed period (like “O leases to A for the duration of the war.”) Courts have held this to be a tenancy for years.
A term of years (and periodic tenancy as well) may be made terminable on some event, or subject to condition subsequent, in the same manner as a freehold may be made terminable on an event.
Ex: If L rents to T for 10 years “so long as used for a sawmill,” a 10-year term of years determinable is created.
Creating and Terminating a Tenancy for YearsTenancies for years are usually created by written leases. In most states, the Statute of Frauds requires that a lease creating a tenancy for more than one year be in writing.
Unless the parties specify otherwise, a lease begins on the earliest moment of the beginning day and ends immediately before midnight on the date set for termination.
Ex: A lease of one year “from July 1 next” is usually held to begin at 12:01 a.m. on July 1 and end at midnight the next June 30.
A tenancy for years ends automatically on its termination date. Because the parties know precisely when a term of years will end, a term of years expires at the
end of the stated period without either party giving notice. This is the chief difference between a term of years and a periodic tenancy, which
requires notice for termination. In most tenancy for years leases, the landlord reserves the right to terminate if the tenant breaches
any of the leasehold covenants. In many jurisdictions, if the tenant fails to pay rent, the landlord has the right to terminate
the lease even in the absence of a reserved right of entry. A tenancy for years also terminates upon surrender.
Surrender consists of the tenant giving up his leasehold interest to the landlord and the landlord accepting.
PERIODIC TENANCY
A periodic tenancy is a tenancy that continues from year to year or for successive fractions of a year (weekly, monthly, etc.) until terminated by proper notice by either party. The beginning date must be certain, but the termination date is always uncertain until notice is given.
If notice of termination is not given, the tenancy is automatically extended for another period. All conditions and terms of the tenancy are carried over from one period to the next unless there is
a lease provision to the contrary.
Creation of Periodic TenanciesPeriod tenancies can be created in three ways:
1. By Express Agreement of the Parties a. Landlord and tenant may expressly create an estate that is to extend from period to
period.b. Ex: “L to T for one year, and at the end of such term, the lease shall continue in effect
from month to month, unless one of the parties shall end this lease by notice in writing delivered at least one month prior to the end of the term in which such notice is given.”
2. By Implication a. A periodic tenancy will be implied if the lease has no set termination but does provide for
the payment of rent at specific periods.b. Ex: “L leases to T at a rent of $100 payable monthly in advance.” The reservation of
monthly rent will give rise to a periodic tenancy from month to month.c. NOTE: If the lease reserves an annual rent, payable monthly (e.g., “$6000 per annum,
payable $500 on the first day of every month commencing January 1”), the majority view is that the periodic tenancy is from year to year.
3. By Operation of Law a. A periodic tenancy may arise even without an express or implied agreement between the
parties.i. Where tenant holds over after the end of the term, the landlord may elect to
consent to the tenant’s staying over and hold the tenant liable for further rent as a periodic tenant for an additional term.
ii. Where tenant takes possession under an invalid lease. If the lease is invalid (e.g., because of failure to satisfy the Statute of Frauds) and the tenant nonetheless goes into possession, the tenant’s periodic payment of rent will convert what would otherwise be a tenancy at will into a periodic tenancy. The period of the tenancy coincides with the period for which the rent is paid.
Termination of Periodic TenanciesA periodic tenancy continues until proper notice of termination is given. Usually notice must be in writing and delivered to the party and specify the last day of the period. Generally:
The tenancy must end at the end of a “natural” lease period. For a tenancy from year to year, six months’ notice is required. For tenancies less than one year in duration, a full period in advance of the period in question is
required by way of notice (ex: for month to month, one month’s notice required).
TENANCY AT WILL
A tenancy at will is a tenancy of no stated duration that endures only so long as both landlord and tenant desire. To be a tenancy at will, both the landlord and the tenant must have the right to terminate the lease at will.
If the lease gives only the landlord the right to terminate at will, a similar right will generally be implied in favor of the defendant so that the lease creates a tenancy at will.
If the lease is only at the will of the tenant (e.g., “for so long as the tenant wishes”), courts usually do not imply a right to terminate in favor of the landlord. Rather, most courts interpret the conveyance as creating a life estate or fee simple, either of which is terminable by the tenant.
If the Statute of Frauds is not satisfied, the conveyance is a tenancy at will. Tenancies at will are not assignable.
A tenant at will is not merely a licensee – he has an estate in land; he has possession. The tenant can maintain an action of trespass against 3rd persons who intrude on the premises, or even against the landlord if he enters without having first terminated the tenancy.
Creation of a Tenancy at WillA tenancy at will generally arises from a specific understanding between the parties that either party may terminate the tenancy at any time. Unless the parties expressly agree to a tenancy at will, the payment of regular rent will cause a court to treat the tenancy as a periodic tenancy. Thus, tenancies at will are quite rare.
Although a tenancy at will can also arise when the lease is for an indefinite period or when a tenant goes into possession under a lease that doesn’t satisfy the requisite formalities (usually the Statute of Frauds), rent payments will usually convert it to a periodic tenancy.
Termination of a Tenancy at WillA tenancy at will may be terminated by either party without notice. However, a reasonable demand to quit the premises is required. A tenancy at will terminates by operation of law if:
1. Either party dies;2. The tenant commits waste;3. The tenant attempts to assign his tendency;4. The landlord transfers his interest in the property; or5. The landlord executes a term lease to a third person.
TENANCY AT SUFFERANCE / HOLD-OVER DOCTRINE
A tenancy at sufferance arises when a tenant wrongfully remains in possession after the expiration of a lawful tenancy. Such a tenant is a wrongdoer and is liable for rent. The tenancy at sufferance lasts only until the landlord takes steps to evict the tenant. No notice is required to end the tenancy, and authorities are divided as to whether this is even an estate in land.
The Holdover TenantWhen a tenant who was rightfully in possession wrongfully remains in possession (holds over) after termination of the tenancy, he is called a tenant at sufferance.
The tenant at sufferance is not really a tenant at all because he is not holding with the permission of the landlord.
On the other hand, he is not a trespasser either, because his original possession was not wrongful.The tenancy at sufferance lasts only until the landlord evicts the tenant or elects to hold the tenant to another term.
The prior tenancy of the holdover tenant may be a tenancy for years, a periodic tenancy, or even a tenancy at will.
Type of Leasehold Definition Creation Termination
Tenancy for YearsTenancy that last for some fixed period of time.
“To A for 10 years.” Ends at the end of the stated period without either party’s giving notice.
Tenancy for some fixed period that continues for
“To A from month to month,” or “To A, with rent payable on the first
Ends by notice from one party at least equal to the length of the time period
Period Tenancy succeeding periods until either party gives notice of termination.
day of every month,” or Landlord elects to bind holdover tenant for an additional term.
(e.g., one full month, for a month to month tenancy).Exception: Only 6 months required to terminate a year-to-year tenancy.
Tenancy at Will
Tenancy of no stated duration that lasts as long as both parties desire.
“To T for and during the pleasure of L.” (Even though the language gives only L the right to terminate, L or T may terminate at any time).
“To T for as many years as T desires.” (Even though the language gives only T the right to terminate, L or T may terminate at any time).
Usually ends after one party displays an intention that the tenancy should come to an end. May also end by operation of law (e.g., death of a party, attempt to transfer interest.)
Tenancy at Suff.Tenant wrongfully holds over after the termination of the tenancy.
B’s lease expires, but B continues to occupy the premises.
Terminated when landlord evicts the tenant or elects to hold the tenant to another term.
CONTRACT VS. PROPERTY
Property: (a conveyance of land) All lease clauses except covenant to pay rent and quiet enjoyment are independent – a breach of clause doesn’t allow a party to terminate the lease.
Remedy: Sue for damages or injunctive relief.Contract: Clauses are dependent – landlord’s obligations are mutually dependent with the covenant to pay rent. Can terminate lease if clauses are violated.Lease: A combination – covenants that run the entire length of the lease are dependent.
A breach must be substantial.
Medico-Dental v. Horton & Converse Issue: Were the clauses dependent or independent? Test: Covenants that run the entire consideration of the contract are mutual and dependent; look at
intent; D not liable for rent withholding because the covenant was substantially breached. The breach of covenant would defeat the entire intent of the lease.
PROPERTY CONTRACTT’s Right to Rescind a Lease Upon L’s Breach
All lease clauses, except covenant to pay rent and covenant of quiet enjoyment, are independent; L’s breach of a covenant does not entitle T to rescind lease.
L’s obligations are mutually dependent with the covenant to pay rent if the parties so intended.
Destruction of Premises Lease is intact and T must pay full rent.
Lease is terminated if destruction is not T’s fault.
Doctrine of Unconscionability No application. May be applied to find lease unenforceable.
Anticipatory Breach for Abandonment
L may not sue for future rents based on anticipatory breach.
L may sue for future benefit of the bargain damages.
Requirement for L to Mitigate Damages Following T’s Abandonment
L need not mitigate damages, but may sue for the rent as it becomes due.
L must take reasonable steps to mitigate his damages.
***Leases are moving more and more towards the contract theory (more rights)***
INDEPENDENT AND DEPENDENT COVENANTS Until the last 50 years, promises in leases were assumed to be independent of the other party’s
performance. Ex: L rents to T a house for 4 years; L promises in the lease to paint the house, and T
promises to pay rent. After T moves in, L fails to paint the house. T is stuck for the rent. The performance of T’s promise to pay rent is not dependent on the performance
of L’s promise to paint. The fundamental idea is that T purchased a 4-year term in the land, and T must pay the agreed consideration for the specific thing for which T bargained. L’s promise to paint is viewed as merely an incidental promise, enforceable in a lawsuit by T against L for damages.
The disadvantage of the independent covenant rule is that T cannot break the lease on L’s failure to perform, but has to sue for damages. However, modern law is coming more and more to apply contract law where a landlord breaches a covenant.
At common law, covenants in leases were always independent. But there was this exception: the tenant’s covenant to pay rent was always dependent on the landlord’s performance on the covenant of quiet enjoyment.
LANDLORD/TENANT DUTIES & REMEDIES
Tenant Duties and Landlord Remedies Duty to repair (doctrine of waste)
A tenant cannot damage (commit waste on) the leased premises. Duty not to use premises for illegal purposes
If the tenant uses the premises for an illegal purpose, and the landlord is not a party to the illegal use, the landlord may terminate the lease or obtain damages and injunctive relief.
Landlord remedies : – terminate lease, recover damages If the conduct is continuous, the landlord may terminate the lease and recover
the damages. Duty to vacate premises when lease expires Duty to pay rent
At common law, rent is due at the end of the leasehold term. However, leases usually contain a provision making the rent payable at some other time (e.g., “monthly in advance”).
Landlord remedies : Tenant on premises but fails to pay rent – evict or sue for rent. Tenant abandons – do nothing or repossess
Landlord does nothing – tenant remains liable. The majority view, however, requires the landlord to make reasonable efforts to mitigate his damages by reletting to a new tenant. Under this view, if he could have done so but does not attempt to relet, his recovery against the tenant will be reduced accordingly.
Landlord repossesses – tenant’s liability depends on surrender. If the landlord repossesses and/or relets the premises, the tenant’s liability will depend on whether the landlord has accepted a surrender of the premises. If surrender is not found, the tenant remains liable for the difference between the promised rent and the fair rental value of the property. However, if the landlord’s reletting or use of the premises for her own profit constitutes acceptance of surrender, the abandoning tenant is free from any rent liability accruing after abandonment.
Landlord Duties and Tenant Remedies1. Duty to deliver possession of the premises
a. Most states require the landlord to put the tenant in actual possession of the premises at the beginning of the leasehold term.
b. Tenant remedy – damages.i. In a majority of states, a tenant is entitled to damages against a landlord in
breach of the duty to deliver actual possession. Ex: If the tenant had to find more expensive housing during the interim or suffered business losses at a consequence of the landlord’s breach, he may recover for those items.
2. Duty not to interfere with tenant’s quiet enjoymenta. A tenant has the right of quiet enjoyment of the premises, without interference by the
landlord. This right arises from the landlord’s covenant of quiet enjoyment, which may be expressly provided in the lease. If not expressly provided, such a covenant is always implied in every lease.
b. DEPENDENT COVENANT: (As noted above) The tenant’s covenant to pay rent was always dependent on the landlord’s performance of the covenant of quiet enjoyment (common law). Thus, if the landlord breached this covenant by evicting the tenant, the tenant’s obligation to pay rent ceased.
c. TYPES OF EVICTION i. Actual Eviction
1. Actual eviction occurs when the landlord excludes the tenant from the entire leased premises. Actual eviction terminates the tenant’s obligation to pay rent.
ii. Partial Eviction 1. Partial eviction occurs when the tenant is physically excluded from
only part of the leased premises. The part from which the tenant is excluded need not be a substantial part of the premises for breach to occur. The tenant’s remedies for breach will differ depending on whether the partial eviction was caused by the landlord or by one with paramount title:
a. Partial Eviction by Landlord – Entire Rent Obligation Relieved: Partial eviction by the landlord relieves the tenant of the obligation to pay rent for the entire premises, even though the tenant continues in possession of the remainder of the premises.
b. Partial Eviction by Third Person – Rent Apportioned: Partial eviction by a third person with paramount title results in an apportionment of rent: i.e., the tenant is liable for the reasonable rental value of the portion that he continues to possess.
iii. Constructive Eviction 1. If the landlord does an act or fails to provide some service that he has a
legal duty to provide, and thereby makes the property uninhabitable, the tenant may terminate the lease and may also seek damages. The following conditions must be met:
a. The acts that cause the injury must be by the landlord or by persons acting for him.
b. The resulting conditions must be very bad, so that the court can conclude that the premises are uninhabitable.
c. The tenant must move out, thereby showing that the premises were uninhabitable. If he doesn’t vacate within a reasonable period of time, he has waived his right to do so.
3. Implied Warranty of Habitability
a. More than half the states have no adopted by court decision or statute the implied warranty of habitability for residential tenancies. The standards are more favorable to tenants than in constructive eviction, and the range of remedies is broader.
i. Standard = Reasonably Suitable for Human Residence1. The standard usually applied is the local housing code if one exits; if
there is none, the court asks whether the conditions are reasonably suitable for human residence.
ii. Remedies1. Tenant may move out and terminate lease (as in a constructive
eviction);2. Tenant may make repairs directly, and offset the costs against future
rent obligations.3. Tenant may reduce or abate rent to an amount equal to the fair rental
value in view of the defects of the property.4. Tenant may remain in possession, pay full rent, and seek damages
against the landlord.4. No Right to Retaliatory Eviction
a. If a tenant exercises the legal right to report housing or building code violations or other rights provided by statute, the landlord is not permitted to terminate the tenant’s lease in retaliation.
Type Definitions Remedies if eviction by landlord
Remedies if eviction by others
Actual eviction (total)Physical expulsion or exclusion from possession of the entire premises
Tenant may terminate lease, pay no more rent, and collect damages
If by person with paramount title – same as if eviction by landlord
Actual eviction (partial) Physical expulsion or
exclusion from possession of part of the premises
Tenant may stay in possession and pay no rent until possession is restored
If by person with paramount title – tenant may terminate lease and seek damages, or stay in possession and pay proportionate amount of rent
Constructive Eviction Substantial interference with use and enjoyment of premises
Tenant must vacate in order to stop paying rent or receive damages
No remedy (i.e., no constructive eviction by 3rd party) unless landlord has duty not to permit nuisance or to control common areas
ASSIGNMENTS AND SUBLEASES
Absent an express restriction in the lease, a tenant may freely transfer his leasehold interest, in whole or in part. If he makes a complete transfer of all of the tenants interests for the entire remaining term, he has made an assignment. If he retains any part of the remaining term, the transfer is a sublease(any transfer that is not an assignment).
Ex: L leases property to T for a 10-year term. One month later, T transfers his interest to T1 for 9 years, retaining the right to retake the premises (reversion) after 9 years. The effect of his transfer is to create a sublease between T (sublessor) and T1 (sublessee).
If, on the other hand, T had transferred to T1 for the remaining period of the lease, reserving no rights, the transfer would constitute an assignment of the lease from T (assignor) to T1 (assignee). (Note: It is not controlling that the parties denominate the transfer an “assignment” or “sublease.” The court still examines what interest, if any, is retained by T to determine the nature of the transaction.)
Ex. L to T for 3 yrs 300/month. T to T2 for 1 yr
AssignmentsUnless the lease prohibits it, a tenant or landlord may freely transfer his interest in the premises. At common law, if the tenant transfers the entire remaining term of his leasehold, he has made an assignment, and the assignee comes into privity of estate with the landlord.
Privity of estate makes the landlord and the assignee liable to each other on the covenants in the original lease that run with the land.
Similarly, if the landlord assigns the reversion, the assignee and the tenant are in privity of estate.
Privity of Estate and Privity of Contract Privity of estate is a concept developed to give the landlord the right to sue the assignee of the
tenant on the covenants in the lease, and to give the assignee the right to sue the landlord on her covenants.
Ex: L leases to T. T promises to pay $200 a month for rent. T assigns the leasehold to T2. L can sue T2 on the promise to pay $200 a month for rent. They are in privity of estate with each other.
After assignment, L cannot sue T2 on a theory of privity of contract because T2 did not make the promise to L. To circumvent the lack of privity of contract, courts invented the concept of privity of estate.
An assignee of the tenant is said to be in privity of estate and is liable on the lease. Similarly, the landlord is liable to the assignee on the landlord’s covenants.
If there is privity of contract (i.e., the plaintiff and defendant have agreed with each other to do or not do certain things), their obligations bind them regardless of whether they are in privity of estate. So in the example above, after the assignment, L can sue T on his promise to pay rent, because T made the promise to L. L and T are in privity of contract.
L can also sue T2 on the promise because L and T2 are in privity of estate. Being able to sue two persons is an advantage to L, because one of them might be judgment proof.
Consequences of an AssignmentThe label given to a transfer (assignment or sublease) determines whether the landlord can proceed directly against the transferee or only against the transferor. To be an assignment, the transfer must be on the same terms as the original lease except that the tenant may reserve a right of termination (reentry) for breach of the terms of the original lease that has been assigned.
If a transfer is an assignment, the assignee stands in the shoes of the original tenant in a direct relationship with the landlord. The assignee and the landlord are in “privity of estate,” and each is liable to the other on all covenants in the lease that “run with the land.”
Covenants that Run with the Land A covenant “runs” if the original parties to the lease so intend, and if the covenant
“touches and concerns” the leased land; i.e., it benefits the landlord and burdens the tenant (or vice versa) with respect to their interests in the property. Covenants held to run with the land (unless the parties specify otherwise) include: covenants to do or not to do a physical act, covenants to pay money, and covenants regarding the duration of the lease.
Because the covenant to pay rent runs with the land, an assignee owes the rent directly to the landlord (only for the time he is in “privity of estate”).
Original tenant remains liable – After assignment, the original tenant is no longer in privity of estate with the landlord. However, if the tenant promised to pay rent in his lease with the landlord, he can still be held liable on his original contractual obligations to pay. This allows the landlord to sue the original tenant where the assignee has disappeared.
Distinguishing Subleases from AssignmentsThe common law rule is that if a tenant transfers less than the entire remaining term of his leasehold, he has made a sublease, and he becomes the landlord of the sublessee.
The sublessee is NOT in privity of estate with the landlord and cannot sue or be sued by the landlord. Because the sublessee has made no contract with the landlord, he cannot sue or be sued on a contract either.
So when is a transfer an assignment and when is it a sublease?a. Reversion Retained
At common law, a transfer by a tenant is a sublease if the tenant retains a reversion in the property after the transfer. A reversion is a period of time within the term of the leasehold when the tenant will again be entitled to possession; i.e., the tenant has not transferred the entire remaining term of the leasehold.
b. Right of Entry Retained Suppose that the tenant transfers the leasehold to another tenant and does not retain a
reversion, but retains a right of entry if a covenant is breached. The common law view is that such a transfer is an assignment because T retained no
reversion. The right of entry reserved by T is viewed as merely a means of enforcing T2’s contractual obligations. Because it is an assignment, there is no privity of estate between L and T2, so that L can hold T2 personally liable for the rent reserved in the L to T lease.
The modern view has been that this is a sublease. The reservation of the right to re-enter for nonpayment of rent is deemed a “contingent reversionary interest,” so that the transfer is a sublease even though no actual reversion is retained by T. Because it is a sublease, there is no privity of estate between L and T2. Thus, if T2 fails to pay rent, L cannot sue him directly.
Landlord’s Remedies L can sue T for rent based on privity of contract. L can evict T2 for breach of the promise to pay rent made in the L to T lease. Because this is only a sublease, there is no privity of estate, and so L cannot hold T2 personally liable for rent.
Assignment by L Assignment by T Sublease by TConsent Tenant’s consent is
required.Landlord’s consent may be required by lease.
Landlord’s consent may be required by lease.
Privity of Estate Assignee and tenant are in privity of estate.
Assignee and landlord are in privity of estate.
Sublessee and landlord are not in privity of estate. Original tenant remains in privity of estate with L.
Privity of ContractAssignee and tenant are not in privity of contract. Original L and T remain in privity of contract.
Assignee and landlord are not in privity of contract. Original tenant and landlord remain in privity of contract.
Sublessee and landlord are not in privity of contract. Original tenant remains in privity of contract with L.
Liability for Covenants in the Lease
Assignee liable to tenant on all covenants that run with the land because of privity of estate.
Original L remains liable to original T on all covenants in the lease because of privity of K.
Assignee liable to landlord on all covenants that run with the land because of privity of estate.
Original tenant remains liable for rent and all other covenants in the lease because of privity of contract.
Sublessee is not personally liable on any covenants in the original lease and cannot enforce the landlord’s covenants.
Original T remains liable for rent and all other covenants in the lease and can enforce the L’s covenants.
Consequences of a SubleaseIn a sublease, the sublessee is considered the tenant of the original lessee, and usually pays rent directly to the original lessee, who in turn pays rent to the landlord under the main lease.
Liability of Sublessee for Rent and Other Covenants The sublessee is liable to the original lessee for whatever rent the two of them agreed to
in the sublease. However, the sublessee is not personally liable to the landlord for rent or for the performance of any other covenants made by the original lessee in the main lease. The reason is that the sublessee has n contractual relationship with the landlord (no
privity of contract and does not hold the tenant’s full estate in the land (no privity of estate); therefore, the covenants in the main lease do not “run with the land” and bind the sublessee.
Termination for Breach of Covenants – Even though the sublessee is not personally liable to the landlord, the landlord can still terminate the main lease for nonpayment of rent or, if so stated in the lease, breach of other tenant covenants.
Assumption by Sublessee It is possible for the sublessee to assume the rent covenant and other covenants in the
main lease. An assumption is not implied, but must be expressed. If this occurs, the sublessee is bound by the assumption agreement and becomes personally liable to the landlord on the covenants assumed. The landlord is considered a 3 rd party beneficiary of the assumption agreement.
Rights of Sublessee The sublessee can enforce all covenants made by the original lessee in the sublease, but
has no direct right to enforce any covenants made by he landlord in the main lease. However, it is likely that a sublessee in a residential lease would be permitted to enforce the implied warranty of habitability against the landlord.
Assignment by Landlords A landlord may assign the rents and reversion interest that he owns – usually don't by
ordinary deed from the landlord to the new owner, and (unless required by the lease), consent of the tenants is not required.
Duty to Pay RentA promise to pay rent is a covenant running with the land, which means the promisee can sue any person on the covenant with whom she is in privity of estate(privity of estate means that a possessor voluntarily transferred to a subsequent possessor either an estate in land or physical possession ie. Tenants interest comes from the landlord.)The general rule is that a landlord can sue for rent any person who is either in privity of contract with the landlord as to the rent obligation, or who has come into privity of estate with the landlord so as to be bound by the rental covenants in the lease. Ex. Restriction with the right to use runs with the land
A. Assignment An assignment establishes privity of estate between the landlord and the assignee; thus
the assignee is personally liable for the rent even though no mention is made of it in the assignment.
Although the assignee is liable for the rent, the original tenant also remains liable for the rent, in the event the assignee fails to pay, because the original tenant contracted with the landlord.
The assignee, T2, is liable only for the rent accruing during the time he holds the leasehold. He is not liable for rent accruing prior to the assignment, nor for rent accruing after he re-assigns because the effect of any re-assignment is to terminate the privity of estate with L.
B. Sublease If the tenant subleases, the sublessee is not personally liable to the landlord for rent.
There is neither privity of contract nor privity of estate between the landlord and the sublessee. The tenant-sublessor, of course, remains obligated to pay rent. If he doesn’t pay, the landlord can terminate the lease and oust the sublessee.
Covenants Running to AssigneesFor the landlord to be able to enforce a covenant in the lease against the tenant’s assignee, or for the tenant to be able to enforce a covenant in the lease against the landlord’s assignee, the following requirements must be met.
1. Intention The parties to the lease must intend that the covenant run to assigns.
2. Privity of Estate
The assignee must be in either privity of estate or privity of contract with the person who is suing or being sued.
3. Touch and Concern The covenant must touch and concern the interest that is assigned, be it the leasehold or
the reversion. “Touch and concern” means that the covenant directly affects the party in the use or enjoyment of the property.
Two ends to the covenant – burden and benefit – There are two “ends” to a covenant, the burden end and the benefit end. Whoever makes the promise has the burden ends. Whoever has the benefit of the promise has the benefit end. For the burden or benefit end to run to assignees, the promise must touch and concern the interest of the assignee.
Generally, both burden and benefit touch and concern leased land. In the majority of covenants in leases, if either end touches and concerns, the other will too, because the covenant will have some direct relationship to the use or enjoyment of the leased property in which both parties have an interest. The covenant to pay rent touches and concerns the leasehold because it is the price paid for possession. It touches and concerns the reversion because it directly affects the value of (enjoyment of) the reversion.
Deed-no estate can be created except by an instrument in writing signed by the party to be charged.
Very vague and allows courts to supply the missing language. Makes clear that only the grantor must sign. If you accept the deed you are bound by it even if the only person who has
signed is the grantor. Does not have to include the price or date, but it is better if you do so. The grantor of the deed can be almost everyone To be a grantor you must meet the age of majority. Most is 18, and some 19 and
21. You must have mental capacity. Some states you do not have to have capacity because that person has a guardian.
Warranties of title-when one conveys real property the buyer receives what the seller has. The seller guarantees certain things
General warranty deed-provide all typical covenants of title(season, right to convey, encumbrances(personal covenants), private enjoyment
o Season-o Right to convey-had a right to convey the estate that I conveyed. Different
from season because might have a right to appointment, etc.o Encumbrances-promise by the grantor that there are no encumbrances
against the property. Ex. Mortgage, covenant, right of way to walk across property, etc. Has to be less than an estate.
These above three are breached if at all at the time of the conveyance.
o Quiet enjoyment(real covenant-attaches to the land)-this is a future covenant. Interfering quiet enjoyment can include selling the property
o General warranty-like season into the future.
o Further assurances-promise to do whatever is necessary to perfect your title.
Torrens Title registration-cost between 20 and 50 thousand dollars. A system for recording land titles under which a court may direct the issuance of a certificate of title upon application by the landowner.
The Torrens title system is a method of registering titles to real estate. Real estate that is recorded using this method is also called registered property or Torrens property.
Used primarily to solve title problems.
RECORDING ACTS
Common Law Rule – “First in Time” A grantee who was prior in time prevailed over one subsequent in time. Ex: If O conveyed Blackacre to A, and later O conveyed Blackacre to B (who knew nothing of
A’s deed), A prevailed over B on the theory that O had conveyed title to A and had nothing left to convey to B.
WHO IS PROTECTED BY RECORDING ACTS?
Only bona fide purchasers are entitled to prevail against a prior transferee under “notice” and “race-notice” states. To attain this status, a person must satisfy 3 requirements:
1. Be a purchaser (or mortgagee)2. Take without notice (actual, constructive, or inquiry) of the prior instrument; and3. Pay valuable consideration
Purchasers All recording acts protect purchasers. Donees, heirs, and devisees not protected because they do not give value for their interests.
▫ Ex: O, the owner of Blackacre, conveys it to A on Monday. A fails to record. O dies on Tuesday and his heirs/devisees succeed to his property interests. Even though O’s heirs/devisees may be unaware of the prior conveyance of Blackacre to A, A prevails.
A person who takes from a bona fide purchaser will prevail against any interest that the transferor-BFP would have prevailed against. This is true even where the transferee had actual knowledge of the prior unrecorded interest (Shelter Rule).
▫ Ex: O conveys to A, who fails to record. O then conveys to B, a BFP, who records. B then conveys to C, who has actual knowledge of the O to A deed. C prevails over A (and this is true whether C is a donee or purchaser).
Without Notice “Without notice” means that the purchaser has no actual, record, or inquiry notice of the prior
conveyance at the time she paid the consideration and received her interest in the land. While no one has a legal duty to perform a title search, a subsequent purchaser will be charged with the notice that such a search would provide, whether or not she actually searches. However, the fact that the purchaser obtains knowledge of the adverse claim after the conveyance but before she records is immaterial; she only has to be “without notice” at the time of the conveyance.
Three types of recording acts:
RACE STATUTES
The winner of the race to record prevails. If O sells to A and then sells to B, but B records before A, then B has title; A has only a claim
against O.
Race statutes create an exception to the nemo dat principle and a partial exception to the good faith purchaser doctrine, insofar as the first party to record wins even if he has actual notice of a prior conveyance.
NOTICE STATUTES-MOST COMMON
Deed is valid against all subsequent people who have notice.A subsequent bona fide purchaser wins unless he has notice (actual, constructive, or inquiry), and a recorded interest gives constructive or “record” notice.
Note the incentive to record immediately in order to be protected from subsequent good faith purchasers.
“A conveyance shall not be valid against any person except persons having actual notice of it.”▫ How do you have actual notice? The courts say if it’s recorded, you have notice.
RACE-NOTICE STATUTES
A subsequent good faith purchaser wins only if he has no notice and records before the prior instrument is recorded.
This is like the race statute but solves the problem of the dishonest subsequent buyer under the race approach.
“Every conveyance of real property is void against any subsequent purchaser whose conveyance is first duly recorded.”
The Shelter Rule Courts have interpreted recording acts to create an exception for certain transferees who otherwise
would be barred from obtaining title because they are not good faith purchasers for value.▫ Suppose O conveys to A, who does not record. Then O conveys to B who gives value
and has no notice of the prior conveyance. B then records. Under race, notice, or race-notice, B should prevail over A.
But what happens if B then gifts the land to C (so C is not a bona fide purchaser for value under the recording act), or B sells to C, even though C was aware of the prior deed to A?
▫ A literal reading of the statutes might lead one to think that C should lose to A under these circumstances, since C is not a good faith purchaser.
But under the Shelter Rule, courts have held that C prevails against A. Once B prevails against A, they reason, B should be given all the attributes of
ownership, including the right to make normal nemo dat style transfers of the property.
If the rule were otherwise, then B would have less than full ownership, because he could not give away the property or sell it to those w/ notice of transfer to A.
▫ The Shelter Rule has limits : If B seeks to transfer the property back to O, the original owner, the Shelter rule does not apply – under the “original owner exception” to the Shelter Rule, O cannot shelter under B’s rights.
Type of Statute Typical Language Effect
Race“No conveyance or mortgage of an interest in land is valid against any subsequent purchaser whose conveyance is 1st recorded.
Grantee who records first prevails.
Notice“No conveyance or mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof,
Subsequent bona fide purchaser (i.e., for value, without notice) prevails.
unless it is recorded.”
Race-Notice“No conveyance or mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof whose conveyance is first recorded.”
Subsequent bona fide purchaser (i.e., for value, without notice) who records first prevails.
1. O conveys to A. O then conveys to B, who is unaware of the conveyance to A. B records immediately. Then A records.
In a race jurisdiction: ▫ Time 1: O A. A wins because the statute doesn’t apply and common law does.▫ Time 2: O B. A wins first in time. B loses-nemo dat. No one has recorded so A still owns.
No one is a protected party because he did not record.▫ Time 3: B records. B wins is a protected party under the race statute. A loses because A did
not record first. Nemo dat does not apply to B because B is a protected party. ▫ Time 4: A records. B wins because B recorded first and B is a protected party.
In a notice jurisdiction: ▫ Time 1: O A. A wins because A has no notice of any problems.▫ Time 2: O B. B wins because B is a protected party – a subsequent bona fide purchaser for
value without notice.▫ Time 3: B records. B wins because B is still a protected party.▫ Time 4: A records. B still wins because B is a protected party under the noticed statute and A
is not a protected party because A is not subsequent and A has record notice (if A did a title search, A would discover that B recorded). Nemo dat does not apply because B is a protected party.
In a race-notice jurisdiction:▫ Time 1: O A. A owns. Statute doesn’t apply because A hasn’t recorded and common law
applies (first in time, first in right).▫ Time 2: O B. A wins, because B didn’t record and isn’t a protected party. The common
law applies and A wins under common law (first in time, first in right).▫ Time 3: B records. B wins, because B is a protected party under the statute because B
recorded first and had no notice. B was a subsequent bonafide purchaser. A does not win because he did not record.
▫ Time 4: A records. B wins, because A was not the first to record and A had notice.
2. O conveys to A. O then conveys to B, who is aware of the conveyance to A. B records immediately. Then A records.
Race:▫ Time 1: O A. A wins because First in time. Recording act does not apply because A has not
recorded and we revert to common law.▫ Time 2: O B, B is aware of conveyance to A. A still wins, because no one has recorded and
common law applies. B is not a protected party and A is first in time.▫ Time 3: B records. B wins, because of the exception to nemo dat that the first party to record
wins even if he has actual notice of a prior conveyance.▫ Time 4: A records. B still wins because B recorded first, and B is a protected party.
Notice:
▫ Time 1: O A. A wins, common law applies.▫ Time 2: O B, B is aware of conveyance to A. A owns under common law – first in time.
Statute doesn’t apply because doesn’t fit within he definition of the statute.▫ Time 3: B records. A wins. Statute doesn’t apply, we go back to common law because B has
notice so he’s not in good faith and is not a protected party. B is not a bonafide subsequent purchaser.
▫ Time 4: A records. A still wins because B had notice and is not in good faith so not protected under the notice statute. Common law applies.
Race-Notice:▫ Time 1: O A. A owns, statute doesn’t apply because A hasn’t recorded and common law
applies.▫ Time 2: O B, B is aware of conveyance to A. A still owns, because B hasn’t recorded yet
and isn’t a protected party because B had notice and was no in good faith. Common law applies, first in time.
▫ Time 3: B records. A still wins because B had notice even though he recorded, same analysis as above.
▫ Time 4: A records. A wins because statute doesn’t apply to B because B had notice and wasn’t in good faith so we go back to common law and A was first in time.
3. O conveys to A, who does not record. Then O conveys to B, who also does not record. Then O conveys to C, who does not record. First assume that B and C are each unaware of the previous grants from O. Then consider: What if each of them is aware?FIRST, WITH B and C UNAWARE:
Race:▫ Time 1: O A. A owns. Common law applies.▫ Time 2: O B. A still owns, first in time (common law). B is not a protected party because B
did not record.▫ Time 3: O C. A still owns, common law first in right. C is not a protected party because C
did not record.
Notice:▫ Time 1: O A. A owns, common law applies.▫ Time 2: O B. B owns, he has no notice and is a subsequent bona fide purchaser for value
(protected party).▫ Time 3: O C. C owns, C is protected party under notice statute, C is subsequent bona fide
purchaser for value.
Race-Notice:▫ Time 1: O A. A owns, common law applies.▫ Time 2: O B. A still wins, the subsequent purchaser, even though they had notice, didn’t
record so statute doesn’t apply and we go back to common law.▫ Time 3: O C. A still wins (same as O B). C is not a protected party because C did not
record.WITH B and C AWARE:
Race:▫ Time 1: O A. A owns, common law applies, statute does not apply…▫ Time 2: O B with notice. A first in time. B did not record.▫ Time 3: O C with notice of A and B. A first in time.
Notice:
▫ Time 1: O A. A owns, common law applies.▫ Time 2: O B with notice. A owns, because B had notice so we go to common law as statute
doesn’t apply.▫ Time 3: O C with notice of A and B. Same as above, A wins, statute doesn’t apply…
Race-Notice:▫ Time 1: O A. A wins, common law applies.▫ Time 2: O B with notice. A, statute does not apply because B had notice and didn’t record.▫ Time 3: O C with notice of A and B. Same as above.
4. O conveys to A. O then conveys to B, who has no knowledge of A’s deed. Then A records. B then records and sells to C.
Race:▫ Time 1: O A. A owns, common law applies.▫ Time 2: O B (no knowledge of A’s deed). A still owns, B is not a protected party (neither
is A for that matter) as he has not recorded. First in time first in right.▫ Time 3: A records. A owns, CL still applies(First in time), statute doesn’t apply yet (statute is
for subsequent purchasers, which A is not).▫ Time 4: B records. A still wins, because A recorded first and is a protected party.▫ Time 5: B sells to C. B has nothing to transfer to C, so A still wins because A recorded first.
B had nothing to convey. C should have notice because deed was recorded.
Notice:▫ Time 1: O A. A wins, common law applies.▫ Time 2: O B (no knowledge of A’s deed). B wins. He is a protected party – subsequent
bona fide purchaser for value without notice.▫ Time 3: A records. B wins B is a subsequent bona fide value for purchase without notice.▫ Time 4: B records. B is a SBP.▫ Time 5: B sells to C. C wins because of the SHELTER DOCTRINE. C wins because B wins.
C is not a protected party.
Race-Notice:▫ Time 1: O A. A wins, common law applies.▫ Time 2: O B (no knowledge of A’s deed). A wins, because B didn’t record and isn’t a
protected party. Common law applies for A.▫ Time 3: A records. A wins –Common law still.▫ Time 4: B records. A still wins, B is not a protected party B didn’t record first so under CL A
still wins.▫ Time 5: B sells to C. A wins, B and C are not protected parties because even though B
recorded, B didn’t record first and even if C records, C didn’t record first because A recorded first … common law applies.
5. O conveys to A. O then conveys to B, who has no knowledge of A’s deed. Then A records. B then records and sells to O (this is the same situation as in Problem 4, except C is replaced by O).
Race:
▫ Time 1: O A. A wins, common law applies, A was first in time.▫ Time 2: O B (no knowledge of A’s deed). A still owns, common law. B is not a protected
party under the race statute.▫ Time 3: A records. A still owns, because A recorded first. Statute doesn’t apply to B because
B did not record first and is not a protected party.▫ Time 4: B records. A still wins. Statute doesn’t apply to B because B didn’t record first,
therefore since A was the first in time purchaser, statute doesn’t protect B and A wins under common law.
▫ Time 5: B sells to O. A wins because A reported first, A was first in time bona fide good faith purchaser, statute doesn’t apply to B or O since neither of them recorded to first A.
Notice:▫ Time 1: O A. A wins, common law applies.▫ Time 2: O B (no knowledge of A’s deed). B wins – B is a protected party under notice
statute because B is subsequent bona fide purchaser for value without notice.▫ Time 3: A records. B still wins, because he is a protected party as a subsequent bona fide
good faith purchaser for value and the notice statute applies because B did not have notice at the time of B’s purchase. YOU MEASURE NOTICE AT THE TIME OF PURCHASE, NOT AT ANY TIME AFTER.
▫ Time 4: B records. B wins, B was a subsequent bona fide good faith purchaser without notice. A’s subsequent recording doesn’t effect B.
▫ Time 5: B sells to O. A wins. O doesn’t win under shelter doctrine because of limitation on shelter rule regarding transferring property back to the original owner. A wins based on estoppel (by deed). O is also a wrongdoer.
Race-Notice:▫ Time 1: O A. A wins, common law applies.▫ Time 2: O B (no knowledge of A’s deed). A wins, because B didn’t record and isn’t a
protected party. Common law still applies.▫ Time 3: A records. A wins, A had no notice of O B and recorded first.▫ Time 4: B records. A still wins because B had notice (A’s recording) and A recorded first.▫ Time 5: B sells to O. O had notice of everything and A recorded first so A wins.
6. O conveys to A. O then conveys to B who has actual notice of the deed from O to A. B records, and then A records. Then B sells to C.
Race:▫ Time 1: O A. A wins, common law applies.▫ Time 2: O B (B has actual notice of O A). A still wins, still dealing with common law,
statute does not apply because no one has recorded yet and A was first in time.▫ Time 3: B records. B wins, B recorded first and is a protected party.▫ Time 4: A records. B still wins, B recorded first.▫ Time 5: B C. C wins, B recorded first and rightfully sold to C. Shelter rule.
Notice:▫ Time 1: O A. A wins, common law prevails because A was first in time.▫ Time 2: O B (B has actual notice of O A). A wins, B is not a protected party because he
had actual notice and was not a bona fide good faith purchaser.▫ Time 3: B records. A still wins because B is not a protected party as B had actual notice.▫ Time 4: A records. A wins because B had notice of O A.▫ Time 5: B C. C wins, C is a protected party under the statute, C is a subsequent bona fide
purchaser for value without notice. When C does a title search, he won't find the O A deed because it was recorded out of order.
Race-Notice:
▫ Time 1: O A. A wins, common law applies, A was first in time.▫ Time 2: O B (B has actual notice of O A). A still wins, even though B had actual notice
B hasn’t recorded so A is the owner. Under the statute, B was not a good faith purchaser because he had notice and is not a protected party so A still wins under the common law.
▫ Time 3: B records. A would still win since under the statute B is not a good faith purchaser because he had notice and therefore is not a protected party so the common law still applies and A wins.
▫ Time 4: A records. A wins. Same reason as above.▫ Time 5: B C. C wins.
Hood v. Webster(924)
PROCEDURAL POSTURE: Defendant nephews appealed from a judgment of the Appellate Division of the Supreme Court in the Fourth Judicial Department (New York) affirming a judgment in favor of plaintiff brother in an action to annul the subsequent deed to the nephews.
OVERVIEW: The decedent left his property to his wife on the condition that in the event of her death, the property was to go to the brother. The wife executed a deed of the property to the brother and placed it in escrow with the brother's attorney. Thereafter, the wife deeded the property to the nephews, and the deed was recorded. Upon the death of the wife, the deed in the possession of the attorney was recorded, and the brother instituted this action to annul the deed of the nephews. The trial court returned a judgment in favor of the brother, and the nephews challenged the decision. The appellate division affirmed the judgment, and the nephews sought additional review. The court noted that the applicable statute, N.Y. Real Property Law § 291, the nephews were required to provide evidence that they were purchasers in good faith and for valuable consideration. The recital contained in their deed regarding consideration was not enough to have put them into the position of purchasers for valuable consideration in the sense of § 291. Therefore, the nephews failed to discharge their burden, and their deed was properly annulled.
OUTCOME: The judgments of the trial court and the appellate division were affirmed.
Facts: - Florence Hood owned parcel of land in Ontario county. - Property devised to Florence Wieder husband and it said in the will that if she
should die beffor him the estae would go to the plaintiff, the husband's brother
- 1913- Florence executed a deed of farm to P, delivered it to his attorney as escrow(A written instrument, such as a deed, temporarily deposited with a neutral third party (the Escrow agent), by the agreement of two parties to a valid contract) to take effect upon her death.
- Florence keeps occupying the property, and in 1928, she granted another deed to her brother and nephew, recorded it.
- Florence dies in 1933. - The deed was delivered to plaintiff
Issue: Does a subsequently recorded deed(technically first on record) negate a prior deed?
Holding: Those who received the second deed must produce evidence of actual considerations given- must meet the burden of proof as cast by the recording act.
Reasoning: - Court holds that question of burden of proof- not an easy one. - General rule is that the burden of proof should fall on those holding the
unrecorded deed when a subsequently recorded, with valid consideration, is presented.
- HOWEVER, Defendants were bound to make out by preponderance of the evidence the affirmative assertion of status as purchasers in good faith and for valuable consideration which they were not able to do in this case, only offering the standard payment of “one dollar and valuable consideration.”
- Burden of proof fell upon Ds because of recording acts, which they failed to do. Court does not even get to question of oral v. written because Ds did not carry their burden of proof with regards to consideration.
o Keep in mind: completion of deed to P not until 1933o HELD IN ESCROW!o Wasn’t signed, sealed, delivered until 1933
General take away point: If there’s a conveyance that’s not recorded, then any subsequent conveyance that is recorded, made in good faith, with consideration- previous one is VOID!
Mugaas v. Smith
Synopsis of Rule of Law. A conveyance of record title to a bona fide purchaser will not extinguish a title acquired by adverse possession.
Facts. Plaintiff brought an action to quiet title to a strip of land, 135 feet in length and having a maximum width of 3 and 1/2 feet, he claimed by adverse possession and to compel Defendant to remove from any buildings constructed thereupon. The Plaintiff relied on a fence built in1910 and maintained until 1928 which clearly enclosed the disputed land in favor of Plaintiff’s parcel. The fence disintegrated over time and the Defendant took title in 1941 under a deed, which recited that his parcel included the disputed strip of land. The lower court found that the Plaintiff had established ownership of the land through adverse possession and directed that the Defendant remove any buildings on the strip of land. The Defendant appealed.Issue. Was the Defendant, as a bona fide purchaser of real property, entitled to rely on the record title description, which included the disputed strip?Held. No. Judgment affirmed.• The court cited the recording statute, which stated that any unrecorded conveyance, “is void as against any subsequent purchaser or mortgagee in good faith and for valuable consideration from the same vendor, his heirs or devisees, of the same real property or any portion thereof whose conveyance is first duly recorded.” Rem.Rev.Stat. §§ 10596-1, 10596-2.• However, the court distinguished the possession by adverse possession from that by an unrecorded conveyance. The court found no authority which would dispossess the Plaintiff of the land she had acquired title to be adverse possession, notwithstanding her lack of a recorded instrument showing her title to the strip.
• A conveyance of record title to a bona fide purchaser will not extinguish a title acquired by adverse possession.• The court found that if the ruling favored the Defendant, then the doctrine of adverse possession would be impaired. The doctrine of adverse possession is based on a statute of limitations, and once a right is established thereunder, the right is vested in favor of the adverse possessor, and the adverse possessor does not have to adversely possess the land thereafter for the right to be upheld.• The legislature intended the protection under the recording statute to be accorded to bona fide purchasers of community real property, and did not intend that the mechanics of the recording statute could circumvent the doctrine of adverse possession.
Discussion. The court based its ruling on the prior acquisition of the strip of land by the Plaintiff through adverse possession. Consider that the Defendant had no actual nor constructive notice of any prior rights of the Plaintiff to the strip of land.
Zimmer v. Sundell
ADVERSE POSSESSION EXCEPTION- when adverse possession occurs, a new chain of title is
started in the adverse possessor; exception to nemo dat- allows shift in title other than byclaim of voluntary transfers
a. Mugaas v. Smith- woman gains title by adverse possession (fence- open andnotorious); once SOL has run, AP has title against appellants, who purchased the
land; holds despite there being no record in registry and that possession is no longeropen/notorious
2. WILD DEEDS- recorded but cannot be located in the transferor’s chain of titlea. Zimmer v. Sundell- issue: Π’s entire chain of title back to the common grantor notrecorded until after Δ’s entire chain of title was recorded; Held: Πs lose b/c their deed
wasn’t recorded back to orig. grantor 1stb. Rule: if 2 claims originate from same grantor who had a wild deed, winner is the
one who had the chain of title recorded first
MORTGAGES
The mortgage transaction consists of 2 documents: 1) the note; and 2) the mortgage. The note is the document that evidences the debt and is a personal obligation of the borrower. The lender can sue the borrower on the note if the borrower doesn’t pay. The mortgage is the agreement that the land will be sold if the debt is not paid and the lender reimbursed from the proceeds of the sale.
Mortgagor = The borrower or debtor. Where a person buys land and gives a mortgage on the land to a lender, the buyer is the mortgagor.
Mortgagee = The lender is the mortgagee. Equity = The borrower’s interest in the land is called the equity.
Transfer of the Mortgagor’s Interest Sale subject to the mortgage
▫ The mortgagor can transfer his interest (“the equity”) subject to the mortgage. If the sale is “subject to the mortgage,” the new buyer takes the land subject to the lien on it, but the new buyer is not personally liable on the debt. If the debt is not paid, the mortgagee can foreclose on the land, but the mortgagee cannot sue the new buyer on the debt. Thus, the mortgagee cannot get a deficiency judgment against the buyer who takes “subject to the mortgage.” The original mortgagor remains liable on the debt.
Sale with assumption of the mortgage ▫ The mortgagor can transfer his interest to a new buyer who assumes the mortgage. If the
new buyer “assumes the mortgage,” she becomes personally liable on the debt. The mortgagee can sue either the new buyer or the original mortgagor on the debt (as between them, the new buyer is primarily liable). Both are subject to a deficiency judgment if, upon foreclosure sale, the land does not bring a sum sufficient to discharge the debt. If the mortgagee elects to sue the original mortgagor on the debt, the mortgagor in turn can sue the new buyer, who assumed the mortgage, for the debt or foreclose upon the land.
Possession Before ForeclosureWhen a mortgagor defaults on his debt, the mortgagee can sue on the debt or foreclose on the mortgage. A mortgagee may wish to take possession of the property, or begin receiving the rents from the property, before foreclosure.
THEORIES OF TITLE The mortgagee may have a right to take possession before foreclosure, depending on the theory the state follows.
▫ LIEN THEORY According to the lien theory, the mortgagee is considered the holder of a
security interest only and the mortgagor is deemed the owner of the land until foreclosure. About half the states follow this theory, which provides that the mortgagee may not have possession before foreclosure.
▫ TITLE THEORY Under the title theory, legal title is in the mortgagee until the mortgage has been
satisfied or foreclosed. About 20 states follow this theory, which provides that the mortgagee is entitled to possession upon demand at any time. In practice, this means that as soon as a default occurs, the mortgagee can take possession.
ForeclosureForeclosure is a process by which the mortgagor’s interest in the property is terminated. The property is generally sold to satisfy the debt in whole or in part (foreclosure by sale). Almost all states require foreclosure by sale. All states allow judicial sale, while about half also allow nonjudicial sale under a power of sale. The nonjudicial sale is often permitted with deeds to trust but not with mortgages.
Foreclosure sales are conducted by auction, with the highest bidder taking the property. The lender may bid at the sale, and in many cases the lender is the sole bidder.
Redemption Redemption in Equity
▫ At any time prior to the foreclosure sale, the mortgagor has the right to redeem the land or free it of the mortgage by paying off the amount due, together with any accrued interest. If the mortgagor has defaulted on a mortgage or note that contains an “acceleration clause” permitting the mortgagee to declare the full balance due in the event of default, the full balance must be paid in order to redeem. THIS IS UNIVERSALLY RECOGNIZED.
Statutory Redemption
▫ About half the states give the mortgagor a statutory right to redeem for some fixed period after the foreclosure sale has occurred; this period is usually 6 months or a year. The amount to be paid is usually the foreclosure sale price, rather than the amount of the original debt.
EASEMENTS-RIGHT OF USENOT POSSESSION
An easement is a grant of an interest in land that entitles a person to use land possessed by another. Easements (and covenants) are nonpossessory estates in land.
The holder an easement has the right to use a tract of land (called the servient estate) for a special purpose, but has no right to possess and enjoy that land. The owner of the servient estate continues to have the right of full possession and enjoyment subject only to the limitation that he cannot interfere with the right of special use created in the easement holder.
The most important questions about easements relate to their creation and termination. Easements can be created by:
An express agreement; Estoppel; Implication from an existing use when land is divided; Necessity when land is divided; and Prescription
Easements are either affirmative or negative, appurtenant or in gross.
Types of Easements1. Affirmative Easements
a. The owner of an affirmative easement has the right to go onto the land of another (the “servient land”) and do some act on the land. Most easements are affirmative.
i. For example, when O, the owner of Blackacre, grants to A a right of way across Blackacre, an affirmative easement has been created.
2. Negative Easements a. The owner of a negative easement can prevent the owner of the servient land from doing
some act on the servient land.i. Ex: A owns Lot 6. By written instrument, he stipulates to B that he will not
build any structure upon Lot 6 within 35 feet of the lot line. B has acquired a negative easement in Lot 6.
b. Some recognized negative easements: light, air, and subjacent or lateral support.
Easement Appurtenant-properties must be touching or contiguousAn easement is deemed appurtenant when the right of special use benefits the holder of the easement in his physical use or enjoyment of another tract of land.
For an easement appurtenant to exist, there must be two tracts of land.▫ One is called the dominant estate, which has the benefit of the easement. The second
tract is the servient estate, which is subject to the easement right (it is the burdened land).▫ Ex: Whiteacre is located between Blackacre and a public road. O, owner of Whiteacre,
conveys to A, owner of Blackacre, a right to cross Whiteacre to reach the public road. The easement over Whiteacre is appurtenant to Blackacre (the dominant estate).
An easement appurtenant is attached to the dominant estate and usually passes with the estate to any subsequent owner of the estate. In the above example, the benefit of the easement across Whiteacre will pass to any subsequent owner of Blackacre.
▫ Exception – personal easement : If the grant of an easement creates appropriate limiting terms, it will not pass to subsequent owners of the dominant estate.
▫ Ex: O, owner of Whiteacre, grants a right of way over his land to his neighbor, A, owner of Blackacre. The conveyance provides that the right of way shall exist “only so long as A lives on Blackacre.” This easement is appurtenant but also personal. If A sells
Blackacre, the easement terminates and B has no right of way. Nor does A, because A no longer lives on Blackacre.
Use and Enjoyment ▫ In an easement appurtenant, the benefits of the easement must be directly beneficial to
the possessor of the dominant estate in his physical use and enjoyment of that tract of land. It is not sufficient that the easement makes use of the land more profitable.
Ex: A owns Lot 6 and B owns adjacent Lot 7. A grants to B the right to use part of Lot 6 to mine coal. The right is not an easement appurtenant because the benefit granted is not related to B’s physical use and enjoyment of Lot 7.
Benefit Attached to Possession ▫ The benefit of an easement appurtenant becomes an incident of the possession of the
dominant estate. All who possess or subsequently succeed to title to the dominant estate become, by virtue of the fact of possession, entitled to the benefit of the easement.
▫ There can be no conveyance of the easement right apart from possession of the dominant estate, except that the easement holder may convey the easement to the owner of the servient estate in order to extinguish the easement.
Transfer of Dominant and Servient Estates ▫ Both the dominant and servient parcels can be transferred.
If the dominant parcel is transferred, the benefit of the easement goes with it automatically, even if it is not mentioned in the deed, and becomes the property of the new owner.
If the servient parcel is transferred, its new owner takes it subject to the burden of the easement, unless she is a bona fide purchaser with no notice of the easement.
▫ There are 3 ways the person who acquires the servient land might have notice of the easement:
Actual knowledge; Notice from the visible appearance of the easement on the
land; and Notice from the fact that the document creating the easement
is recorded in the public records.▫ Ex: A owns Lot 6 and grants B (the owner of Lot 7) an easement for a
driveway across Lot 6 to benefit adjacent Lot 7. The easement is not recorded. Then A sells Lot 6 to X. The tire tracks of the driveway are plainly visible at the time of the sale. X is therefore not a bona fide purchaser, and takes Lot 6 subject to the easement.
Easements in GrossIf an easement does not benefit its owner in the use and enjoyment of his land, but merely gives him the right to use the servient land, the easement is in gross. “In gross” is the term used to signify that the benefit of the easement is not appurtenant to the other land. An easement in gross is created where the holder of the easement interest acquires a right of special use in the servient estate independent of his ownership or possession of another tract of land.
An appurtenant easement cannot be separated from its dominant estate and turned into an easement in gross, unless the owners of the dominant and servient estates make a new agreement permitting that. An easement in gross usually can be assigned if the parties so intend.
In an easement in gross, the easement holder is not benefitted in his use and enjoyment of a possessory estate by virtue of the acquisition of that privilege.
There is no dominant estate. An easement in gross passes entirely apart from any transfer of land.
o Ex: A owns Lot 6. By written instrument, she grants to B the right to build a pipeline across Lot 6. B receives the privilege independent of his ownership or possession of a separate tract of land. B has acquired an easement in gross.
o Ex: O, owner of Greenacre, grants to Billboard Co. the right to erect a sign on Greenacre. Billboard owns no land. The easement is in gross and can be assigned by
Billboard if the parties so intend. If O sells Greenacre to A, the burden of the easement passes with the ownership to A.
Easements in gross can be either personal (e.g., O gives friend right to swim and boat on lake) or commercial (e.g., utility or railroad track easements). Generally, an easement in gross is transferrable only if the easement is for a commercial or economic purpose.
Easement in gross can be revocable if
Challenges in Distinguishing Easements Appurtenant from Easements in GrossIn cases where the easement holder does not own land adjacent to, or at least in the vicinity of, the servient parcel, the characterization of the easement as an easement in gross is relatively straightforward.
But it’s not always the case where the grantee of the easement holder is an adjacent landowner, however. Such an easement is an easement appurtenant if the intended benefit was intended to flow to an adjacent owner because she is the owner. If it is intended to flow to her personally, it is an easement in gross even though she owns adjacent land.
Creation of EasementsEasements may be created by express grant or reservation, by implication, or by prescription.
Express Grant An easement over the grantor’s land may be granted to another. This is known as an
easement created by grant. Because an easement is an interest in land, the Statute of Frauds applies. Therefore, any
easement must be in writing and signed by the grantor (the holder of the servient estate) unless its duration is brief enough (commonly one year or less) to be outside a particular state’s Statute of Frauds coverage.
Duration of Easement : An easement can be created by conveyance. A grant of an easement must comply with all the formal requisites of a deed. An easement is presumed to be of perpetual duration unless the grant specifically limits the interest.
In some deeds, it’s hard to tell whether the grantor intended to grant an easement or to grant a fee simple. Generally, a grant of a limited use, or for a limited purpose, or of an identified space without clearly marked boundaries creates an easement.
Ex: O grants A a 40-foot strip “for a road.” The limited purpose indicates that an easement is created.
Express Reservation An easement by reservation arises when the owner (of a present possessory interest) of a
tract of land conveys title but reserves the right to continue to use the tract for a special purpose after the conveyance.
In effect, the grantor passes title to the land but reserves unto himself an easement interest.
Note that, under the majority view, the easement can be reserved only for the grantor; an attempt by the grantor to reserve an easement for anyone else is void.
Ex: G owns Lot 6 and Lot 7, which are adjacent. G sells Lot 7 to B. Later, when G is about to sell Lot 6 to A, B asks G to reserve an easement over Lot 6 in favor of B. G agrees to do so, and executes a deed of Lot 6 to A that contains the following language: “Reserving an easement for a driveway in favor of Lot 7, which is owned by B.” The reservation clause is void and no easement created.
Implication – (See flow chart for approach to easement by implication) An easement by implication is created by operation of law rather than by written
instrument. It is an exception to the Statute of Frauds. There are only 2 types of implied easements: 1) an intended easement based on a use that existed when the dominant and servient estates were severed; and 2) an easement by necessity.
Easement Implied from Existing Use (“Quasi-Easement”)
If, prior to the time a tract of land is divided into two lots, a use exists on the “servient part” that is reasonably necessary for the enjoyment of the “dominant part” and which the court finds the parties intended to continue after the tract is divided, an easement may be implied.
Implied only over land granted or reserved when the tract is divided – An easement can be implied only over land granted or reserved when a tract is divided into two or more parcels. If an easement is implied in favor of the grantee, the easement is created by implied grant to the grantee. If an easement is implied in favor of the grantor, the easement is created by implied reservation to the grantor.
Ex: O owns Blackacre, a large tract of land. A house is built on the back of the tract, serviced by a driveway leading to the street. O divides Blackacre into two lots, and sells the back lot with the house on it (lot 1) to A. O retains the front lot with the driveway on it (lot 2). Provided the other requirements of implied easements are met, a court will imply a grant to A of an easement of way over lot 2. If O had retained lot 1 and sold lot 2 to A, a court would imply a reservation of an easement over lot 2.
Existing use at time of tract division – At the time a tract is divided into two or more lots, a use of one part of the tract must exist from which it can be inferred that an easement permitting its continuation was intended. This existing use is often called a “quasi-easement.” It is not a legal easement, because O cannot have an easement in his own land. It can arise as an easement only when O divides the land into two lots. However, a quasi-easement is a use of the land that would resemble an easement if the tract were divided into two lots. In the example above, the driveway on Blackacre, before division by O, is a quasi-easement.
Apparent – To have a quasi-easement, the previous use must be apparent. It is apparent if the grantee could, by a reasonable inspection of the premises, discover the existence of the use. “Apparent” doesn’t mean the same thing as “visible;” a non-visible use may be apparent. Thus, e.g., underground drains may be apparent even though not visible, if the surface connections would put a reasonable person on notice of their presence.
Ex: O builds two houses on his property, Blackacre. O installs a sewer line to service these houses; the sewer line runs from the street to house 1 and then to house 2. O sells house 1 to A. Although the sewer running under house 1 is not visible, A could discover that it serviced house 2 as well as house 1 by calling a plumber to do an inspection. It has been held that an implied sewer easement has been reserved to house 2 because the sewer is apparent (Van Sandt v. Royster).
Continuous – The previous use must be continuous, not sporadic. The requirement of continuity is based on the idea that the activities should be such that there is a great probability that the use was known to the parties at the time of the grant, from which an intent can be inferred that the parties wanted the use to continue.
Reasonable necessity – The easement must be necessary for the enjoyment of the claimed dominant tenement. Necessity is an important circumstance in implying an easement on the basis of an existing use, because it probably affects the intention of the parties as to whether the existing use is to continue.
Easement by Necessity An easement by necessity is implied if the owner of a tract of land divides the
tract into two lots and by this division deprives one lot of access to a public road or utility line. An easement of way over the lot with access to the public road or utility line is implied.
Usually an implied easement of way by necessity must be strictly necessary and not just a more convenient access. The doctrine of easements by necessity rests on either the ground that public policy requires a way of access to each separate parcel of land, or on the ground that, because access is essential to use, the parties intended to create an easement but overlooked putting it in the deed.
Implied only over landlocking parcel – An easement by necessity is implied only when land is divided. The necessity must exist when the tract is severed. The easement is implied only over that portion of the divided tract that blocks access to a public road from the landlocked parcel. An easement by necessity cannot be implied over land that was never owned by the common grantor of the dominant and servient estates.
By Prescription Acquiring an easement by prescription is analogous to acquiring property by adverse
possession. For prescription, the usual elements required for adverse possession must be shown:
Open and notorious use The use must not attempt to conceal his use. Underground or other
nonvisible uses, such as pipes and electric lines, are considered open and notorious if the use could be discovered upon inspection.
Adverse under a claim of right The use must not be with the owner’s permission. Unlike adverse
possession, the use need not be exclusive. The user of a common driveway, e.g., may acquire a prescriptive easement even though the owner uses it too.
Continuous and uninterrupted Continuous adverse use does not mean constant use. A continuous
claim of right with periodic acts that put the owner on notice of the claimed easement fulfills the requirement. Not that tacking is permitted for prescriptive easements, just as for adverse possession.
When Prescriptive Easements Cannot be Acquired Negative easements cannot arise by prescription, nor generally may easements
in public lands. An easement by necessity cannot give rise to an easement by prescription. However, if the necessity ends, so does the easement, and the use is adverse from that point forward.
Scope of EasementsAfter an easement is created, questions may arise about what use the easement owner can make of the easement or about what interference by the servient owner is permissible. General Rule: The scope of an easement depends on the intention of the parties. In ascertaining this intent, a court may examine whether the easement was created expressly or by prescription, what changes in use might reasonable be foreseeable by the parties, and what changes in use are required to achieve the purpose of the easement under modern conditions and preserve the usefulness of the easement to the dominant estate. The court will also look at whether the increase in the burden is unreasonable.
General Rules of Construction Ambiguities are resolved in favor of the grantee (unless the conveyance is gratuitous) Subsequent conduct of the parties respecting the arrangement is relevant The parties are presumed to have intended a scope that would reasonably serve the
purposes of the grant and to have foreseen reasonable changes in the use of the dominant estate.
How Easement Was Created1. Express Easement
If the easement was expressly created, the court will look at the language of the instrument, together with the surrounding circumstances, in order to determine the parties’ intent.
2. Implied Easements Existing use If an easement is implied on the basis of use existing at the time of
severance of a tract into two parcels that the parties intended to continue, the scope is generally the same as an express easement. Changes that reasonably might have been expected or that are necessary to preserve the utility of the easement are permitted.
Easement by necessity In case of an easement by necessity, the extent of necessity determines the scope.
3. Easements by Prescription It is more difficult to increase the burden of an easement by prescription than any other
kind of easement. The uses that give rise to the easement can continue, but there is no basis for assuming the parties intended the easement to accommodate future needs.
If a prescriptive easement is acquired by use to reach a house, and the use of the dominant estate is changed from residential to commercial, the added burden of traffic will not be permitted on the prescriptive easement.
Transfer of Easements Easement Appurtenant
When the dominant estate is transferred, any easements appurtenant are transferred with it, unless the appurtenant easement is also personal in its terms. Similarly, the burden of an easement appurtenant passes with the servient land when transferred.
An easement appurtenant is thought of as “attached” to the dominant land, and it benefits the possessor of that land, including an adverse possessor.
The owners of the servient and dominant estates may, by mutual consent, “detach” the easement and either “attach” it to other dominant land or convert it into an easement in gross, but neither party can do this acting alone.
IMPORTANT: Remember that the easement appurtenant passes with the benefitted land. Don’t be fooled by questions that make you think it must be specifically mentioned in the deed.
Easements in Gross Easements in gross may present special problems regarding transferability. If the benefit
of an easement in gross is inherited by or assigned to a large number of persons, it may be difficult to locate these persons, making it difficult to secure a release of the easement or to clear up title.
Termination of EasementsAn easement, like any other property interest, may be created to last in perpetuity or for a limited period of time. To the extent the parties to its original creation provide for the natural termination of the interest, such limitations will control. An easement may be terminated in accord with its express terms, or in any of the following ways:
By Unity of Title An easement is a right in the land of another. If the title to the easement and title to the
servient estate come into the hands of one person, the easement is extinguished. This usually happens when one person buys the dominant estate and the servient estate. Once the easement is extinguished, it is not revived by subsequent separation of the estates into two ownerships.
By Act of Dominant Owner Release The owner of an easement may release the easement to the servient owner by a
written instrument. An oral release is ineffective because of the Statute of Frauds. Nonuse Mere nonuse of an easement, like nonuse of a fee simple, does not extinguish
the easement. A power company, e.g., which has an easement for electric lines across Blackacre, does not lose the easement merely because the lines are not built.
Abandonment Although neither oral release nor nonuse alone is sufficient to terminate an easement, if the owner of an easement acts in such a way as to indicate an unequivocal intent to abandon the easement, the easement is abandoned. Such acts can include an oral
release or nonuse coupled with failure to maintain the easement, or permitting the easement to be blocked by others, or establishing a substitute easement elsewhere.
Alteration of Dominant Estate If an easement is granted for a particular purpose, and an alteration of the dominant estate makes it impossible to achieve the purpose any longer, the easement is extinguished.
Ex: O, owner of Blackacre, grants to A, owner of the adjacent lot, an easement of view from the windows of A’s present house across Blackacre to Main Street (on the other side of Blackacre). A subsequently moves her house to the rear of her lot, where it has no view of Main Street from any of its windows. The easement is extinguished.
Easement by Necessity An easement by necessity terminates when the necessity ends. If the dominant owner acquires other access by conveyance or prescription, the easement by necessity is extinguished.
By Act of Servient Owner Destruction of Servient Estate An easement in a structure (e.g., a right to use a
stairway) is terminated if the building is destroyed without fault of the owner of the servient estate. If the building is destroyed by the intentional act of the servient owner, the easement is not extinguished. The servient owner is liable in damages to the owner of the easement, and a court may require the servient owner to create in a new building a stairway for the use of the dominant owner.
Prescription If the servient owner interferes with an easement in an adverse manner (e.g., by erecting a fence across a road), the servient owner can extinguish the easement by prescription. The requisite elements of adversity are the same as for the creation of an easement by prescription. However, where an easement has been created by no occasion has arisen for its use and the servient owner fences his land, the servient owner is not deemed to act adversely until the dominant owner demands that the easement be opened and the servient owner refuses to do so.
Negative EasementsA negative easement gives the easement holder the right to prevent the servient owner from using her land in some way.
Types Limited Negative easements are rare and are generally not permitted unless one of four types
recognized by early English law: easements for light, for hair, for subadjacent or lateral support, or for the flow of an artificial stream.
These four negative easements permit two neighbors to agree that neighbor A will not block neighbor B’s windows, will not dig so as to undermine B’s house, or will not interfere with an aqueduct bringing water to B’s farm. However, the list of negative easements is not necessarily closed.
Cannot Arise by Prescription Negative easements (for light and air, support, drainage) cannot arise by prescription.
The reason is that prescription bars a cause of action, and where the owner has no cause of action, prescription does not apply.
COVENANTS & EQUITABLE SERVITUDES
REAL COVENANTS
A real covenant is a promise concerning the use of land that (1) benefits and burdens the original parties to the promise and also their successors, and (2) is enforceable in an action for damages. A real covenant may be either affirmative (a promise to perform an act) or negative (a promise not to perform an act).
THE QUESTION IS NEVER, “IS IT ENFORCEABLE BY THE ORIGINAL GRANTOR AGAINST THE ORIGINAL GRANTEE?” THE ISSUE IS, “IS IT ENFORCEABLE BY A REMOTE PARTY AGAINST A REMOTE PARTY?”
Distinguish From an Equitable Servitude An equitable servitude is a covenant enforceable in equity by or against successors to the land of
the original parties to the contract. Hence, if the plaintiff wants equitable relief (injunction or specific performance), the plaintiff must show that the covenant qualifies as an equitable servitude.
Creating a Real CovenantTwo points are vital to understanding:
1. The law distinguishes between the original parties to the covenant and their successors.2. Each real covenant has two sides – the burden (the promisor’s duty to perform the promise) and
the benefit (the promisee’s right to enforce the promise)
Requirements for the Burden to RunIn order for the successor to the original promissor to be obligated to perform the promise (that is, for the “burden to run”), the law traditionally requires that six elements be met:
1. The promise must be in writing that satisfies the Statute of Frauds;2. The original parties must intend to bind their successors;3. The burden of the covenant must “touch and concern” the land;4. Horizontal privity must exist;5. Vertical privity must exist; and6. The successor must have notice of the covenant.
“Touch and Concern” In order to touch and concern the land, the covenant must relate to the direct use or
enjoyment of the land. For example, a covenant that restricts the height of future buildings on a parcel meets this requirement. In contrast, a covenant that requires an act having no connection whatsoever with the particular parcel of land (e.g., dancing a jig in the village square) does not “touch and concern.”
Horizontal Privity The law traditionally requires that the original parties have a special relationship in order
for the burden to run, called horizontal privity. In some states, horizontal privity exists between the promissor and the promisee who have mutual, simultaneous interests in the same land (e.g., landlord and tenant). Other states extend horizontal privity to the grantor-grantee relationship as well.
Vertical Privity
Vertical privity concerns the relationship between an original party and his successors. Vertical privity exists only if the successor succeeds to the entire estate in land held by the original party.
Requirements for the Benefit to RunThe law requires only four elements for the benefit of a real covenant to run to successors:
1. The covenant must be in a writing that satisfies the Statute of Frauds;2. The original parties must intend to benefit their successors;3. The benefit of the covenant must touch and concern the land; and4. Vertical privity must exist.
Termination of Real CovenantsAs with all other nonpossessory interests in land, a real covenant may be terminated by:
1. The holder of the benefit executing a release in writing;2. Merger (fee simple title to both the benefitted and burdened land comes into the hands of a single
owner); and3. Condemnation of the burdened property.
EQUITABLE SERVITUDES
If a plaintiff wants an injunction or specific performance, he must show that the covenant qualifies as an equitable servitude. An equitable servitude is a promise concerning the use of land that: (1) benefits and burdens the original parties to the promise and their successors, and (2) is enforceable by injunction.
An equitable servitude is a covenant that, regardless of whether it runs with the land at law, equity will enforce against the assignees of the burdened land who have notice of the covenant. The usual remedy is an injunction against violation of the covenant.
The equitable servitude was born in the famous decision of Tulk v.Moxhay (1848) where England’s chancery court held that a promise to maintain a privately-owned park in an open state, uncovered by buildings, was enforceable in equity against a successor – even though the promise could not have been enforced as a real covenant.
Equitable Servitude Compared With Real CovenantThe main difference between en equitable servitude (enforceable in equity) and a real covenant (enforceable at law) are as follows:
Remedy Different remedies are available for breach of an equitable servitude than are available for breach of a real covenant.
If a promisee seeks damages from an assignee, the promise must go into law and attempt to enforce the promise as a real covenant.
If the promisee seeks an injunction, or enforcement of a consensual lien securing a promise to pay money, the promisee must go into equity and ask for enforcement of an equitable servitude.
Touch and Concern Both real covenants and equitable servitudes require that the covenant touch and concern the land. Neither is enforceable against a subsequent bona fide purchaser without notice of the covenant.
Creation of an Equitable ServitudeGenerally, equitable servitudes are created by covenants contained in a writing that satisfies the Statute of Frauds. As with real covenants, acceptance of a deed signed only by the grantor is sufficient to bind the promisor. There is one exception to the writing requirement: Negative equitable servitudes may be implied from a common scheme for development of a residential subdivision (see below).
DISTINGUISHING CHARACTERISTICS OF REAL COVENANTS & EQUITABLE SERVITUDES
Real Covenants Equitable Servitudes
Creation Writing always required.Writing is usually required but may arise by implication from common scheme of development of a residential subdivision.
Running of Burden
Requires: Horizontal privity (shared interest in land,
apart from the covenant, by original covenanting parties; or covenant put in a deed from grantor to grantee), and
Vertical privity (successor holds entire interest held by covenanting party)
No privity required.
Running of Benefit Vertical privity required. No privity required in most states.Remedy Damages Injunction
Requirements for the Burden to Run (Equitable Servitude)In order for the burden of an equitable servitude to bind the original promissor’s successors, four elements must be met:
1. The promise must be in a writing that satisfies the Statute of Frauds or implied from a common plan;
2. The original parties must intend to burden successors;3. The promise must “touch and concern” the land; and4. The successors must have notice of the promise
Privity of Estate Horizontal privity of estate is not required in equity, nor is vertical privity required for the burden
to run. The court, in enforcing an equitable servitude, is enforcing an interest in land analogous to an
easement, which is enforceable against any person who interferes with it. On the other hand, when a person other than the original promisee is enforcing the
benefit, in some states such person must show that he acquired title to his land from the promisee, either before or after the original covenant was made.
Requirements for the Benefit to Run (Equitable Servitude)Only three elements are required for the benefit to run to successors:
1. The promise must be in writing or implied from a common plan;2. The original parties must intend to benefit successors; and3. The promise must “touch and concern” the land.
Servitudes Implied From Common Scheme – Reciprocal Negative Servitudes When a developer subdivides land into several parcels and some of the deeds contain negative
covenants but some do not, negative covenants or equitable servitudes binding all the parcels in the subdivision may be implied under the doctrine of “reciprocal negative servitudes.”
The doctrine applies only to negative covenants and equitable servitudes and NOT to affirmative covenants.
Two requirements must be met before reciprocal negative covenants and servitudes will be implied:
A common scheme for development; and Notice of the covenants.
Ex: A subdivides her parcel into lots 1 through 50. She conveys lots 1 through 45 by deeds containing express covenants by the respective grantees that they will use their lots only for residential purposes. A orally assures the 45 grantees that all 50 lots will be used for residential purposes. Some time later, after the 45 lots have been developed as
residences, A conveys lot 46 to an oil company, which plans to operate a gas station on it. The deed to lot 46 contains no express residential restriction.
A court will nonetheless imply a negative covenant, prohibiting use for other than residential purposes on lot 46 because both requirements have been met for an implied reciprocal negative servitude.
1. First, there was a common scheme, here evidenced by A’s statements to the first 45 buyers.
2. Second, the oil company was on inquiry notice of the negative covenant because of the uniform residential character of the other lots in the subdivision development.
Common Scheme Reciprocal negative covenants will be implied only if at the time that sales of the parcels in the subdivision began, the developer had a plan that all parcels in the subdivision be developed within the terms of the negative covenant. If the scheme arises AFTER some lots are sold, it cannot impose burdens on the lots previously sold without the express covenants.
It is inferred that buyers bought their lots relying on the fact that they would be able to enforce subsequently created equitable servitudes similar to the restrictions imposed in their deeds.
Notice To be bound by the terms of a covenant that does not appear in his deed, a grantee must, at the time he acquired the parcel, have had notice of the covenants contained in the deeds of other buyers in the subdivision.
The requisite notice may be acquired through actual notice (direct knowledge of the covenants in the prior deeds); inquiry notice (the neighborhood appears to conform to common restrictions); or record notice (if the prior deeds are in the grantee’s chain of title he will, under the recording acts, have constructive notice of their contents).
Creating Implied Reciprocal Negative Restrictions Reciprocal negative easements occur where:
The owner of two or more parcels of property Transfers by deed some, but not all, of the owner’s property By way of a deed containing restrictions on the use of that transferred property Where those restrictions benefit the land the transferor retained, and The transferred property and the retained property have such a relationship that
it is equitable for the transferee to infer that the transferor will limit the use of the retained property to the same extent that the transferee is limiting that of the transferred parcels.
In these circumstances, the courts having inferred the grantor promised to restrict the use of the retained parcels, will find the grantor created an implied covenant with respect to that property.
Suppose, as pictured below, an owner of four beach front parcels and four abutting, non-beach front parcels, delivers a deed to a grantee for beach front lot 1 and the deed contained a height restriction for the beach front being transferred. The purpose is to enhance the value of the non-beach front lots. Many courts, finding it equitable for the grantee to presume that the transferor will also have the height restrictions on the retained beach front lots, will impose the same on those lots as seen in the illustration.
----------------------------------------------Beach and Ocean------------------------------------------------
Front 1Conveyed withRestrictions
Front 2
Implied Restrictions
Front 3
Implied Restrictions
Front 4
Implied Restrictions
Non 1 Non 2 Non 3 Non 3
----------------------------------------------------Access Road-----------------------------------------------------
ANALYSIS OF COVENANTS & EQUITABLE SERVITUDES
Determining the Validity & Scope of Covenants & Equitable ServitudesOnce one has created a real covenant or equitable servitude, problems may arise with attempting to apply the restriction. What might render an otherwise validly created restriction unenforceable or invalid as a matter of law? What determines whether the real covenant or equitable servitude applies to the conduct the complaining party finds offensive?
General Considerations Historically, courts have disfavored unreasonable restraints on the alienation of real
property. Even appropriately created real covenants and equitable servitudes are at least indirect restraints on alienation.
For instance, where one has restricted the property’s use to residential use only, courts do not construe this to mean only single-family residential use.
Courts tend to favor a broader use.
Who Can Enforce Covenants and Equitable ServitudesWho is the proper party to enforce the restrictions?
1. Original Promisee
Historically, the original promisee has the right to enforce the promise, as long as he retains a possessory interest in the benefited property.
Question arises as to whether the original promisee may enforce a covenant or equitable servitude after the promisee no longer has any interest in the property benefitted by the promise.
The usual answer in the US has been that the promisee has lost his right to enforce the restriction, once the promisee no longer has any interest in the property benefitted by the promise. The promisee is no longer a party with any real interest in how the restriction operates, once the promisee loses his interest in the benefitted land.
Ex: Suppose O, owner of 200 acres of farmland called Blackacre, leased the east 100 acres to A. As part of the lease terms, Adam promised to fertilize, seed, maintain, and harvest both his land and O’s during the full term of the lease. O’s land is benefited by this promise. As long as O retains an interest in the benefitted land, she has the right to enforce the promise. But, once she transfers her interest in the benefited land, her transferee substitutes for her and Olivia has no right to enforce the promise.
Typically, the original parties must evidence their intent that the promisee is to retain the right to enforce the restriction even after conveying all interest in all benefitted land.
2. One Other Than the Original PromiseeGenerally
Often the party attempting to enforce a restriction is not the original promisee. Sometimes it is a party who has succeeded to all or some of the original promisee’s interest in the benefitted land. Other times that party is someone whom the original parties intended to benefit even though that third party has no interest in the original promisee’s land (i.e., a third party beneficiary, who, if intended to be a third party beneficiary, can enforce a valid contract obligation).
To determine whether one who is not the original promisee has obtained the right to enforce a restriction, one must consider three matters:
Whether the party attempting to enforce the restriction is a successor in interest to the benefited land or whether he is a third party without any interest in the original parties’ land;
Whether one attempting to enforce the promise is seeking damages as a remedy at law (damages, judgment, ejectment) or an equitable remedy (injunction, specific performance); and
Which, if any, of the following five primary considerations are present:1. Horizontal privity existed between the original parties.2. The benefit of the promise touched and concerned the original promisee’s land.3. The original parties intended one other than the original promisee would be
entitled to the promise’s benefit.4. Vertical privity exists between the original promisee and the one attempting to
enforce the promise’s benefit.5. The one attempting to enforce the promise’s benefit took an interest in the
original promisee’s land with notice of the benefit.Promisee’s SuccessorsSince one may not ordinarily succeed to the benefit of a real covenant or an equitable servitude that originally is a benefit in gross, but one who acquires land may be able to enforce the promise at law or in equity based solely on that land acquisition, one must identify what the law requires for one to succeed to the benefit of a promise affecting land. The answer is different depending on whether a party is seeking a remedy at law or on in equity.
SEEKING A REMEDY AT LAW Litigation throughout the years called upon the courts to address five primary considerations (listed above) to determine whether a successor in interest to the original promisee can enforce a restriction.
1. Horizontal Privity This is necessary to create the covenant at law under the traditional view. This
can exist between landlord and tenant, and sometimes grantor and grantee. For horizontal privity, there must be a simultaneous convergence of:
i. Exchanging a real property interest (i.e., creating a landlord-tenant relationship, conveying a fee interest, or conveying an easement interest) and
ii. The making of the promise. Under the modern view, horizontal privity is not required for the benefit to run
at law or in equity. But this is not true in every jurisdiction.2. Touch and Concern
The promise should touch and concern land which the promisee owned or had a right to use at the time of the promise (i.e., the benefitted land).
The benefit of a promise touches and concerns land the promisee owned or had a right to use if complying with the promise enhances the use or value of land which the promisee owns or has a right to use at the time of the promise.
i. In other words, the promise touches and concerns the benefitted land when the benefit is valuable only to someone who holds an interest in that land.
ii. Ex: Consider a landlord entering into a validly executed written lease with a tenant. In that lease the tenant promises to paint the landlord’s portrait. Because of the lease, the landlord holds a property interest called a reversionary interest that allows the landlord to take possession at the end of the lease. Does the benefit of the promise touch or concern the landlord’s property?
No! It has nothing to do with the landlord’s reversionary interest in the property. It does not increase its use or value. If the landlord assigned his rights to another party, that party has no interest in a portrait simply because of his obtaining the reversionary interest following the end of the lease.
Today, whether the benefit touches or concerns the promisee’s land usually depends upon whether performing the promise enhances the use or value of the promisee’s property.
3. Intent There must be evidence of the original parties’ intent at the creation of the
restriction that the benefit should pass to the original promisee’s successors. The original parties may either expressly or impliedly evidence their intent that
the benefit would pass to a successor in interest to the benefited land.i. For instance, the parties might have expressed this intent clearly in the
creating instrument.ii. Alternatively, their using words similar to “and/or successor or assigns”
following the identification of the promisee is highly persuasive.iii. Courts may infer the intent to benefit successor to the promisee from
the surrounding circumstances, such as common schemes of development.
4. Vertical Privity Traditionally, vertical privity is necessary for the benefit to run. The concept of
vertical privity addresses the relationship between the original promisee and the one who is currently attempting to enforce the promise, although they are not the original promisee and not one initially benefited by the promise.
Vertical privity exists for the running of the benefit by one’s receiving, either from the original promisee or from someone who is in a chain of vertical privity beginning with the original promisee, some part of the original promisee’s possessory estate in the benefitted property.
5. Notice Some courts have mentioned a requirement for the promisee’s successor to have
notice of the covenant and its benefits in order for the benefit to run to them. But, there is significant doubt that notice should even be required for the
benefit to run to successor. This generally is a requirement for the burden to run to successors.
SEEKING AN EQUITABLE REMEDY For a successor in interest to the original promisee to be a proper party to enforce the benefit as an equitable servitude by seeking an equitable remedy such as an injunction for a breach, courts traditionally require the following first two of the aforementioned criteria to be met.
Intent The first is that the original parties intended that the benefit would pass to a
successor in interest to the benefited land. The statements above regarding intent apply equally well here.
Touch and Concern The second is that the promise must touch and concern land the promisee owned
or had a right to use at the time of the promise. The statements above regarding touch and concern apply equally well here.
Against Whom May One Enforce Covenants, Equitable Servitudes, and Restrictions?The more precise question is whether the original promisor and/or someone other than the original promisor is a proper party to be obligated to pay damages for violating the restriction or to be enjoined from violating the restriction.
When a party wishes to enforce a real covenant or equitable servitude against a person who is NOT the original promisor, it raises the question of whether one who is not the original promisor is subject to the burden, i.e., whether the burden has run to that person.
A person who is not subject to the burden cannot be prevented from violating the restriction of held liable for violating it.
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