PROPERTY CLASS ONE INTRODUCTION TO PROPERTY:

Fall 2013

Why Study Property? What is Property? (Real vs. Property) o Real property ! Fixtures (start out as personal property but when become affixed they become real) ! Land ! Farming ! Historical background Medieval times: distinguished and refined ones social relationship ! Special ! Unique ! o Personal property (tangible and intangible) ! Has become a function of the wall street capital markets ! Modernization of property: turning it into cash ! Books, cars, jewelry ! Intangible: Good will or an idea ! Needs to be replaced o What other courses involve property issues? ! Contracts ! Leases ! Landlord/tenant law ! Personal jurisdiction ! Lis pendens ! Judgment liens ! Tort law: Fraud, misrepresentation, premises liability ! Criminal law: trespassing ! Constitutional law: imminent domain, taking, right to take someones property, estate and local government ! Family law ! Trust and estates ! Intellectual property: copyrights, patents ! Corporations o Why special rules/courses for property? ! It is unique Selective views or attributes that make property different ! Limited/finite o What is different about real property from other types of property?

How do you acquire property? o True owner vs. possessor ! Acquire rights by finding something ! Inherit ! Purchase it ! Adverse possession If you possess property for a period of time, you acquire rights to it ! Imminent domain: Federal or state may acquire property involuntarily ! Theft ! Title action ! Equity ! Estoppel ! Discovery Major issues in property law o Ownership: what does it mean to say that X owns something? o Right to exclude vs. Right of Access o Right to use, Possess, and enjoy property o Right not to be injured by someone elses use of property o Right to transfer (disaggregation) ! Limits on Disaggregation Limits on ability to slice and dice Restrictions which void on public policy o Immunity from loss ! Loss of Property Forfeiture provisions Contracts Different theories of way to lose property o Due process of law o Freedom to contract ! Trianglestatute, common law, and K In NY cannot hire a surrogate to carry a child o Relationship between K & property law ! Why do rules change over time? No duty for a landlord to mitigate damages ! A lot of K principles: Whether a Landlord has to be reasonable o Justifications? ! Equity ! Justice ! Utilitarian ! Social Relationships ! Possession ! Expectation

o History ! Social context ! Statute of Frauds (dates back to 1600s) o Why certain property concepts have been discarded and some have remained o Formal sources of property rights (leases and contracts, deeds and wills) ! Informal (oral promises, possession over time, family relationships, social customs and norms) o Possession ! Relational aspect between true owner, possessor, and the rest of the world True owner trumps the possessor Want certainty of ownership o Bundle of rights (slice and dice) ! Concurrent owners (joint tenant) ! Present and future owners ! Vertical division ! Family/entity ownership ! Different estates (lease vs. FSA) SYLLABUS AND COURSE REQUIREMENTS: 1. Textbook, Supplement, Reference Materials a. Statutes are in the supplement 2. Syllabus & Reading a. Index to all topics b. Assigned reading i. Who is suing whom for what? c. Rule statement needs to come from either statute (mandatory, default rule), contract (parties provided answer to the question) or common law d. 3. Blackboard Website 4. Final Exam, Grades Practice Exams, PLA questions, etc. a. Closed book b. Practice exams 5. Lateness and Attendance Policy 6. Class Capture/Videotape 7. Powerpoints (ahead of class and final) 8. Participation 9. Office Hours 10. CRES Breakfast forums 11. Professional Development 12. Desk microphones 13. 5 minute break 14. Seating chart 15. Review 10-15 min before class starts END OF CLASS DISCUSSION

CLASS TWO August 29, 2013 Landlord/Tenant Law Leaseholds Duty to Deliver Possession Lease Transaction o Landlord/Owners: All rights to use, exclude, enjoy (Landlord Lessor) ! Landlord can still sell and mortgage the land Ownership is not absolute: The landlords rights are limited because the tenant has the right for 10 years of exclusive possession of the property Can be separated into different rights & interests Two different entities can have different legal rights in the same parcel of property Lease of land is both property of tenant and landlord (simultaneous rights) o Does NOT have right of possession ! 10 year lease (Leasehold) Leasehold Estate: (K that does the conveyance) Landlords Right to use in future after 1/1/2020 (LL record title future interest LL Reversion) (Tenant Lessee) Tenants Right to Use for 10 years till 1/1/2020 (Present Interest Lease) (Tenant Lessee) o Exclusivity (important use): granting exclusive use and space to tenant ! Tenant cannot mortgage or sell land o Right of possession: How would you figure out ones presence? ! Inquiry: Physical presence, keys, furniture, etc. Land records, but the property itself o What does it mean to have a property right in the future? ! Cant enjoy it until sometime in the future Present and Future Interests: o Tenant has a present possessory interest o There is also a future possessory interest (whenever leasehold terminates) ! If LL retains future interest: reversion ! If LL transfers the future interest to a 3rd party: remainder Landlords are sometimes referred to as Lessors Tenants: Lessees Lease: Estatehold Lease Landlord: (lord of the manor)

Lease vs. Contract: o Lease: ! Conveyance (a present transfer) and a contract (instruments of transfer) ! Covenants are independent (default of party x doesnt excuse performance of other party) ! Two principle promises contained within lease Tenants promise to pay rent Landlords promise that tenant peacefully enjoy property (Covenant of quiet enjoyment) ! Whether one party performs promise or not, has nothing to do with the other party defaulting on their promise ! Common law: (Landlord/tenant law) the tenant has to pay rent (monthly), irrespective of whether or not landlord is performing his promise Covenants are independent of each other Means that you dont have an excuse for not paying rent o Contract: ! Covenants are dependent (default of party x excuses performance of other party) Protects the other party Modern contract law: modified law: made it more rational Classification System of Leaseholds (fixed period of time- beginning & end) o Term of years (tenancy for a term) o Periodic Tenancy (fixed period of duration and continues automatically until either landlord/tenant gives notice of its termination) ! Express: in writing ! Implied: (harder because of Statute of Frauds) Exceptions: Equity Example: Month to month or year to year ! Automatically turn over and continue over to the next period unless its terminated (needs to have action to terminategive notice) Common law: Notice must be given equal to the length of the period o Advance, sufficient notice required, and has to be the end of the month o Ex.: One year needs 6 months to terminate o Tenancy at will: ! Have no fixed duration ! Lasts as long as either party desires it to last ! No advance notice is required ! Both parties have the right to terminate ! Under common law: Landlord can terminate lease at any time

Doesnt give a period of time Automatically terminates: If landlord/tenant dies If landlord decides to transfer ! May only be terminated in less than 30 days (New York) ! Common law: if one party had the right to terminate the lease, the other party also has the right to terminate But only if you first determine that the lease is a tenancy at will** (Final exam questions): provisions of a lease says Tenant has the option to terminate 50 days notice o What kind of lease is this? (Right to terminate does not make it a tenancy at will) ! Existence of termination option does not change the property classification of that lease ! Dont get confused: Tenancy at will: pay rent at the end of each month? Is it still a tenancy at will, or periodic tenancy? o Implied K to a periodic tenancy if paying at the end of each month o Tenants paying rent monthly, is a practical matter because landlord has accepted rent and impliedly created periodic leasehold o Holdover Tenancy (Tenancy at Sufferance) ! Three year lease expiring happens automatically, doesnt require any action Contract with a 2 months notice: (K will override rule) o Statute if applicable (at least) ! 232-a: Might not apply because it states no monthly tenant, or tenant from month to month OR o Common Law Notice equal to the period (one month) *the default rule Can always vary the rule by a Contract (to fashion a rule that meets the parties needs) Problems on Page 422: o Question 1: On October 1, L leases Whiteacre to T for one2 year beginning October 1. On the following September 30, T moves out without notice ! What are Ls rights? Tenant doesnt have to give notice because it is a term of years Year to year contract ! What if the lease had been to T from year to year beginning October 1? Periodic Tenancy: 6 months

! !

What if the lease had been for no fixed term at an annual rental of $24,000 payable $2,000 per month on the first of each month? First ask what kind of lease is it? o Then go through each type to determine type Implied period Statute will require a months notice A year to year (periodic will significantly change)

Question 2: o T, a month to month tenant notified L on November 16, 2010, that she would vacate as of November 30, 2010. T subsequently vacated on that date and paid no further rent to L. L, after reasonable efforts, finally relet the premises beginning April 1, 2011. The jurisdiction in question has no statute prescribing the method of terminating a month-to month tenancy ! Periodic lease o L sues T for unpaid rent for the months of December 2010 and January through March 2011. What result? ! Common law: One month before (at the end of the month) ! In New York: 30 days notice Can always give more notice, could not send notice after whats equal to the period o Whether a notice given late, will that notice automatically become effective until the end of that period until you have to give notice? ! Policy reasons to give notice: Give notice to provide landlord knowledge so he can take action o How is landlord harmed if we allow the notice effective for next period? o Cant end month-to-month 14 days before you plan to vacate. o Lawyer should most likely send another notice: ! Irrespective to whether Nov. 16th notice is effective, just in case prior notice is not effective, see new notice Lease vs. License vs. Contract (Problems on Page 428) o License: ! A type of contract ! Terminable o Lease: ! Is a contract (concludes with a conveyance) ! Mutually enforceable promises ! A conveyance of a present possessory interest ! Dictates remedies and other issues ! Breach: Landlord/Tenant court to enforce

o Is it a lease or a license? (page 428) ! Factors: The intention of the parties; Easier to get a licensee out vs. a tenant; The number of restrictions on use; The exclusivity of possession; The degree of control retained by the granting party (landlord or licensor); The presence or absence of incidental services, etc. o More incidental services, the less likely ! If lease what type of lease? Ability to use property pretty freely More restrictions the more likely the less consistence Examples: o (1) A rents from B the right to erect a billboard on land owned by B o (2) A contracts with B to install and operate a cosmetics concession in Bs department store; o (3) A rents a room for two months in Bs rustic country inn; CLASS THREE September 3, 2013 Duty to Deliver Possession (Hannan v. Dusch) Thursday September 26th Class Cancelled Hannan v. Dusch (Pg 438) (What default rule is going to apply in the absence of a contractual rule) Who is suing whom for what? o Hannan is the lessee (tenant) suing the landlord What remedy is he seeking? o Damages What type of Lease? o Term of years Lease (Whenever you see a lease, determine which type of lease it is**) o No notice is needed to be given because the term is set, and it expires once the term ends. Background facts: o Existing tenant remained in the premises when the old lease ended. o No express covenant at all (regular contract law: if theres no express covenant, whats left? Need to argue there is some sort of implied covenant)

o Landlord was able to give T2 legal, but unable to give actual possession because of a holdover tenant Did LL promise to deliver possession? What is the legal argument? o Landlords argument ! Landlord said he did not breach any express terms in the lease ! Relies on the actual words of the lease (claiming he never promised that he would put the tenant into actual possession only duty is to give the legal right of possession o Tenants argument ! Depends upon the case of there being an implied duty or covenant to deliver actual duty of possession of the premises (whether the landlord has to take actions against the holdover tenant) Analysis: o Court says: Whether the landlord has the duty to oust a trespasser o Legal Possession vs. actual possession: Lease between Landlord and tenant 1 (1/1/02-12/31/2012) vs. Lease Between Landlord and tenant 2 (1/1/13-12/31/2016) 1/1/13: Tenant 1 still in possession Difference between legal possession and actual possession o Legal: Whether or not Landlord gave someone else all the rights ! Has no obstacle in the form for better possession that would prevent tenant from obtaining premises o Actual: Either in or not ! Trespasser might be in actual possession but not in lawful possession (fact based determination) ! What constitutes actual possession: does not require standing vigilant in space 24/7. Legal determination that is based on something physical Two different rules (US and English) Landlord only has to guarantee legal possession, not actual o Implied covenant re: legal possession, but not actual o American Rule vs. English Rule: both have in common: the duty to deliver legal possession. o UK Rule: implied duty to deliver legal and actual possession o American (old NY common rule): implied duty only to deliver legal possession o Discuss commencement date vs. Contract execution date o Legal possession: simply the right of possession, not actually physically in possession, but whether or not you legally have the right of possession Re: American rule: landlord is not bound to put tenant in legal possession o All T2 has at its disposal is that nobody has a better right of possession o Tenant has the duty to sue the holdover tenant o Both landlord and tenant2 have an issue with holdover tenant1

o Under American rule new tenant has to sue the holdover tenant o Economic issue is who is going to bear the risk of a holdover tenant? ! Any reason why T1 fails to move out o Would the Courts conclusion been different if the landlord lawfully extended the tenant1s terms (t1s rights are better than t2?) ! T2 did not have the lawful right to the lease ! Since the landlord did not give legal possession, and therefore T2 did not have any rights to lease ! There is no absolute ! In order to sue breach of K: Existence of Promise (implied Both UK and American rule - covenant of Landlord to ensure the legal right of possession at the beginning of the term) Breach (Do not know if there is a breach until the beginning of the term) Damages (remedy = not paying rent for something not in possession of, and whether the market has changed)

Would the courts conclusion be different if Third party trespasser ejects T2 after lease commences? o Lease between LL and T1 (ending 12/31/2012) o Lease between LL and T2 (starting 1/1/13-12/31/16) ! 1/1/13 T2 takes possession Trespasser ejects T2 on 1/1/15? o *No obligation on the landlord to assure your enjoyment against wrongful intruders (another example of a risk of loss) o * (Implied covenant) Quiet possession (page 439): The landlord assures to the tenant quiet possession as against all who rightfully claim through or under the landlord DO NOT BE DISTRACTED BY THE PRIOR TO THE LEASE TERM AND AFTER THE LEASE TERM: IT MUST BE THE EXACT DATE OF THE TERM o Landlords are not responsible for: trespassers o Landlords are responsible for: T2 being Dispossessed by someone having better title What are the policy reasons behind US and UK rules? o UK Rule: ! Not what the parties intended ! Simply implying what the parties intended: Tenant wouldnt have gotten into the lease if he wasnt going to have possession ! It would be unfair to let the landlord into the lease without providing possession to the tenant

Landlord is in a better position to oust the prior tenant Clearly knows whether prior tenant is leaving ! Landlord can protect himself by putting in a term in the prior lease as a disincentive to T1 ! Bring a suit to evict T1 ! Easier for landlord to bring a suit because original lease was with T1 and LL. More resources, better relationship, etc. o US Rule: No duty to deliver actual possession ! Someone shouldnt be responsible for the tort another person ! Landlord not at fault ! Why should we imply for something that the parties are arguing for ! T2 has sufficient legal and equitable remedies to protect themselves ! tenant has greater incentive to use these remedies ! Very risky for landlord to not have a buffer from the beginning of the lease to the end Tenant should have an express provision that the landlord is held liable for a breach of covenant to deliver actual possession at a specified date and have some remedy if that covenant is breached Tenant should also have an express provision (condition precedent) rent should be conditioned upon delivery of possession o If theres a breach of that promise, rent does not have to be paid o Right to put an outside date terminating the lease if the T1 has not left o Right to have an express provision of landlord promising not to enter into an extension, etc. try to get as much from the landlord as possible What would T2 do if were in a NY jurisdiction if the tenant can evict the holdover? o T2 has the legal right of possession, and does not have to provide notice of eviction or suing Request leases of prior agreement (looking to see what the expiration date is)

NY Real Property Law 223-a: Remedies of lessee when possession is not delivered. In the absence of an express provision to the contrary, there shall be implied in every lease of real property a condition that the lessor will deliver (legal and actual) possession at the beginning of the term. In the event of breach of such implied condition the lessee shall have the right to rescind the lease and to recover the consideration paid. Such right shall not be deemed inconsistent with any right of action he may have to recover damages. *Statutory default rule*

NY Law Relating to duty to deliver possession: Contract: Statute: UK Rule, in the absence of an express provision to the contrary Common Law: American Rule: only legal possession What we will do next week: Look at sample leases Subleasing & Subletting assignment Ernst case Look at the Agenda, and go through 1-7 for first class on subleasing Property CLASS FOUR: September 10, 2013 NY Law Relating to duty to deliver possession: Contract:

Statute: UK Rule, in the absence of an express provision to the contrary

Common Law: American Rule: Only legal possession

When analyzing an exam problem weigh out both rules, but state that our jurisdiction governs the rule. Lease Excerpts: (Supp, page 21) Example 1: Sample Lease Section 2.3: What remedy does a tenant have to a holdover tenant from a prior lease? o Citing NY Law 223-a: Absence of an express provision to the contrary o In this example, there is an express provision to the contrary of 223-a, and therefore according to the K rule, the K overrides NY law. o Tenant Remedy: rent abatement o If landlord defaulted in their promise (of possession), the tenant is obligated to pay rent (pursuant to the contract rule) Sample Lease Section 1.02:

o Section (d) of the lease: provides an express provision to the contrary of Section 223-a of the Real Property Law Textbook (pg 442) Questions: 2. L and T2 execute a lease for a specified term. T2 takes possession and pays rent for several months. T2 then learns that L had earlier leased the premises to another tenant (T1) for the same term. T2 remains in possession but stops paying rent. L sues T2 for unpaid rent; T2 counterclaims for rent already paid. What result?

Lease btw LL and T1 1-1-00 12-31-20

Lease Btw LL and T2 1-1-13 12-31-20 1/1/13 T2 takes possession T2 learns that there is a T1 with legal right, BUT T1 Hasnt ejected yet

What does delivery of legal possession mean? In some ways actual possession trumps legal possession Two possibilities: o Take possession and you have the lawful right to do so o Take possession and you dont have the lawful right to do so What happens when T2 shows up and kicks T1 out? o T2 in possession, but with someone with better title comes and takes possession (breach of quiet enjoyment - Hannan v. Dusch) SUBLEASES/ASSIGNMENTS: 1. Basics of Landlord & Tenant Relationship: A. Privity of Contract B. Privity of Estate Landlord----(Lease as Contract)------" Tenant Landlord----(Lease as Conveyance)--" Tenant

Landlord -------Lease--------Tenant Privity of K Privity of Estate LL has all Rights---" LL and T enter into Lease --" LL Reversion/Tenant

Lease, by virtue of being a legal document, a legal relationship develops between the two. Legal relationship arises by virtue of contract (Privity of contract)

o Privity of K exists when theres a contractual relationship between two parties o Anytime you have a contract with enforceable promises, that constitutes a privity of contract ! Dont sue for a breach of privity of contract, just sue for breach of contract o Privity of Estate: theoretical relationship (legal nexus) ! Legal relationship between holder of reversion (landlord) and the holder of the possessory estate (Tenant or, after an assignment: T2 whoever happens to be the then, current possessory holder) Landlord now has a legal relationship with assignee ! LL still has right of reversion ! Exists and describes legal relationship between holder and possessory of estate (Tenant) and the holder of the reversion (Landlord) ! Both have interests in the same property Dont have absolute rights Legal theories re: tenant and the landlord: o Breach of K arising re: privity of estate o Can sue for tort (arising out of duty of care) o Real covenant (property related) vs. Personal: ! Promise of quiet enjoyment is a real covenant ! Covenants pertaining to the land (quiet enjoyment, payment of rent, etc.) o Potential conflict arises from the ability of holding some property rights ! Landlord (reversion) ! Tenant (right of possession) Want to encourage free transfer of property Encourage ability to transfer property to someone else What is an assignment? o Term used to show something is being transferred (or conveyed): not a contract [original Tenant is assignor and T2 is assignee] ! Landlord-----Lease---"Tenant---"T2 Assignee: LL has all the rights----Lease----(LL Reversion/Tenant)-"(LL Reversion/Tenant2) o Neither landlord nor tenant can sever privity of relationship absent a legal justification (i.e. breach) o T2 has privity of estate o Tenant1 has rights (possession, exclusivity, enjoyment, etc.) and transferred it to T2 ! Legal consequences: Landlord is not suing Assignee T2 for breach of privity of estate but is suing for breach of contract (promises) o No Privity of K between landlord and assignee:

Landlords response: someone elses promise will be binding on T2, even though T2 did not personally make that promise o Unlike personal promises (i.e. student loan, etc.), if there is privity of estate, someone elses promise (T1) will be binding, and LL can sue for breach of K the person he is in privity of estate with. o An assignment does not automatically sever a contractual relationship unless the following occur(s): ! Release Tenant can be released if landlord chooses to do so o T2 now has a legal relationship with the LL solely by virtue of the relationship to the same piece of property ! T2 (party in actual possession) ought to pay the rent because he is primarily liable (equity question) ! Full performance (will not be sued for breach of promise) Legal Consequences of Assignment? o Property Law Magic ! By virtue of relationship between holder of reversion/possession o LL has all Rights -" Lease (Privity of K) Privity of Estate severed " LL Reversion/Tenant1 -----Assignment-----LL reversion/Tenant2 ! LL can sue Tenant1 for breach of K because of T1s promises in original lease If T2 claims innocence of obligation to pay rent: o LL can argue that since he has Privity of Estate with T2, the holder of the possessory estate assume liability for promises conveyed in K o LL can sue either parties for breach of K: ! T1 (assignor) because of Privity of Contract ! T2 (assignee) because of Privity of Estate When T2 assigns their lease to T3, what is the legal significance of subsequent assignments? o Privity of K goes away by: ! Release ! Full performance NOT by death

T2 ASSIGNS TO T3: When T1 transferred to T2 severing its privity of estate, they still had privity of K

With T2 there was no contractual relationship with LL just the estate, and when T2 transferred out of property, so was the relationship o LL cannot sue T2 for breach of K because there was no contractual relationship between them o LL can sue T1 for privity of contract o LL can sue T3 because theres privity of estate between LL and T3 How can Privities be Created Under Contract Law? A. Lease as Contract: a. Landlord -----Lease -------Tenant How can Privity of Estate be created: By virtue of relationship between holder of reversion/possession. o Whoever is in possession o Assignment is a conveyance (NOT A CONTRACT) ! No contractual relationships between T1 and T2 T2 doesnt really have to sign anything Assume assignment and assumption, what are the legal relationships between LL, T1 and assignee? o Legal consequences by T1 to T2? How to Sever Privities: o Privity of K? ! Fully perform promise ! Satisfaction ! Discharge ! Innovation ! Release (expressed) *If the facts are murky re: whether there is a release, there is no release o MUST BE EXPRESSED (not implied) o Privity of Estate? ! Transferring possessory interest LL transferring a reversion o Unilateral action of one party Assignment since it changes the relationship between holder of reversion and holder of possessory estate FOUR SCENARIOS: Either T1 is released or not - OR -Either T2 assumes the lease or not o Scenario 1: ! Who Can LL sue when theres neither assumption nor release? LL can sue T1 under theory of privity of K because contractual relationship remains (ASSIGNMENT DOES NOT CAUSE OR EQUAL RELASE) o Scenario 2: ! LL can sue T1 for privity of K

! ! !

LL cannot sue T1 for Privity of Estate LL can sue T2 for privity of estate LL can sue T2 for privity of K (because assumed all obligations in K)

o Scenario 3: ! LL cannot sue T1 for privity of K or privity of estate (been released from K) ! LL can sue T2 for privity of K and privity of estate because assumed obligations from K and is the possessory holder of the estate o Scenario 4: ! LL cannot sue T1 for privity of K or privity of estate because he was released and is not possessory holder of estate ! LL can sue T2 for privity of estate because hes the possessory holder of the estate, but not privity of K because he did not assume obligations of K *NOTE: T2 Can always be sued under Privity of Estate (because of property law always privity of estate). (Only time T2 couldnt be sued was when they hadnt assumed and then subsequently assigned to T3). **We will have at least 2 questions of one or two of the above scenarios** *** For Thursday: *Start with the law of Suretyship [what happens when the LL sues one party (T1)] *Then discuss subleasing *Discuss Earnst case *Read Rowe v. A&P also CLASS FIVE: September 12, 2013 Legal consequences of an Assignment by T1 to T2? o Privity of K o When not released, T1 still remains liable Privity of Estate o Always exists between landlord and the possessory holder of the estate When a tenant enters into an Assignment, he transfers all interest and rights to assignee. Tenant still obligated because of the contractual nature of the lease Special promises (real covenants) runs with the land because of the legal relationship between these two parties, each of which has interest in the property. Suretyship: The principle upon which party can get a remedy (T1 getting sued for T2s failure to pay rent, even though he was obligated by K)

o Creditor gets paid by third party who pays off debt for the other (T1) who failed to pay debt (T2) o Where Third party (T1) pays off debt from someone whos primarily liable of someone whos ought to pay LL (T2) o If T1 wins, o In every scenario, landlord can sue assignee (under different theories like privity of estate) o It is who ought to pay the debt, not whos liable o (Very tested area on the bar) ! i.e. insurance law o ***If someone other than the person who ought to be paying, this should trigger a suretyship question*** ! LL sues Assignee (T2) Question: Who can T2 sue? o Not T1 for suretyship because no equity to be done because they were the ones who were supposed to pay anyway o If LL can sue BOTH T1 and T2: ! If LL v. T2 and LL wins: Does T1 have any remedies? No. Because LL already won from who ought to pay o When LL sues T2 not a suretyship question o When LL sues T1 and wins it HAS to be Privity of K ! Then T1 can sue T2 for suretyship o **Regarding: Scenario 3 and 4 fact pattern, will ask a suretyship question BUT THIS IS NO SURETYSHIP SUBLEASING Assignment transferring all of right retaining nothing vs. Sublease (trying to get someone to take possession of lease and pay for it) must be for a period of time less than the entire lease Legal relationship between tenant and subtenant o Tenant wears 2 hats: ! Tenant with the Landlord; and ! Sublandlord by virtue of the sublease o Creates a privity of K AND o Creates privitiy of estate (Sublandlord with Subtenant) and (Sublandlord with original LL) ! Not with subtenant and LL ! Sublandlord has reversionary right at the expiration of the sublease (takes back into possession)

Relational aspect of property law When lease between Sublandlord as the Landlord, then Landlord has reversionary right

Ernst v. Conditt: o Sublease v. assignment How to identify whether its a sublease or assignment ! What is the difference between sublease & assignment (and what are the consequences of that difference?) o Legal question: is the instrument an assignment or sublease? ! Essential to figure out if Ernst wins If assignment: LL has a legal relationship and right (because there is privity of K or privity of estate) o Sublease (subtenants argument): ! LL (Ernst)---lease---T(Rogers)Rogers(SubLL)---sublease---subtenant (Conditt) o OR o Assignment (Landlords Argument): ! LL(Ernst)-----lease----------T1(Rogers) o Tenant has no right to assign or sublet without consent of the LL o Unless theyre released, theyre going to be liable o Conditt argues he cannot be sued because he is in a sublease o An assignment is an instrument of conveyance ! A sublease is an instrument of conveyance o In the lease, the parties use the term sublease and the parties are arguing it is dispositive ! Right of re-entry arises in any lease/sublease by virtue of default o D argues Rogers still remained liable throughout his sublease ! But the argument is not supportive since Rogers can still remain liable in a sublease and an assignment o Court says two different approaches: ! Formalistic Rule (Common law): An assignment contains the whole term leaving no interest or reversionary right Sometimes the facts used under formalistic, might also be used for modern rule approach A sublease arises when less than everything is transferred It is regardless of intent, form of document, and what you labeled it, look at what the document does formalistically. ! Modern Rule: looking at the intention of the parties Cardinal rule adopted for construing rigid instruments Plainly appears that they intended assignment o Can LL sue assignee? ! Yes, because under any scenario, T2 is liable under privity of estate

o Since Rogers retained liability does not constitute a reversion PROBLEMS: 3(a). What rights does LL have v. T1? 1. First determine whether relationship between T1 and T2 = assignment or sublease? 2. Second: a. Common/Formalistic rule: Look at what was stated in the lease i. Anything less than a transfer of the entirety of the remainder of the term = sublease (NOT ALL = SUBLEASE) ii. (ALL = ASSIGNMENT) If everything is transferred for the entire term = assignment 1. Applying facts here: T1 subleases to T2 for one year, out of his three year lease, so therefore according to common law/formalistic approach = sublease b. Modern rule: Look at intentions of the parties o Rule: Determine what the intentions are ! Applying Modern rule must look at the intent of the parties. If the parties intended assignment, it is treated as assignment, and vice versa. According to facts, we cannot establish the parties intent because we are only informed that the parties subleases, transfers, and assigns therefore not establishing anything. Answer: This is probably a sublease: Landlord can sue T1 because privity of K and privity of Estate Cannot sue T2 because neither privity of K nor privity of Estate NEXT CLASS: Questions 3(b) and (c) and the following cases: Rowe v. A&P: o Is there an implied prohibition against assignment if silent? ! If lease is silent re LLs consent, under what circumstances, if any, will a court imply a requirement to obtain LLs consent? Kendall v. Pestana: o Does LL have to be reasonable Can LL unreasonably withhold consent? ! If lease explicitly requires consent (but doesnt set standard for denial of consent), can LL unreasonably withhold consent?

PROPERTY Class Six September 17, 2013 Continued discussion of Subleases: LL/tenant relationship o Legally impossible to enter into a sublease greater than the original lease Comparison of sublease and assignment: Might accomplish the same, but only on the surface because of the interest transferred Sublease: o 20 year sublease a day o no legal relationship between landlord and subtenant because theres no privity of estate o K between LL and tenant remains Assignment: (different transfer vs. sublease) o A legal relationship between LL and assignee o K between LL and tenant remains o No automatic release o No automatic assumption ! Only an assumption creates a K relationship between T2 and the LL Problems page 449: 3(b) LL leases to T for a term of three years at a monthly rent of $1,000; the lease provides that T hereby covenants to pay said rent in advance on the first of month --T shall not sublet or assign without the permission of L Six months later T, with the permission of L, transfers to T1 for the balance of the term. Thereafter, T1 pays the rent directly to L for several months, then defaults. L sues T for the rent due. What result, and why? *What are LLs rights against T and T1 Is it a sublease or an assignment? If assignment, LL v. T: Yes, K If assignment, LL v. T1: Yes, Privity of Estate Consent does not release original tenant nor make T1 in privity of K *What is the first question (always)? *Who can landlord sue and under what theory? Ernst v. Conditt formalistic split o In a jurisdiction following formalistic approach LL can sue. 3. First determine whether relationship between T1 and T2 = assignment or sublease? a. Common/Formalistic rule: Look at what was stated in the lease i. Anything less than a transfer of the entirety of the remainder of the term = sublease (NOT ALL = SUBLEASE) ii. (ALL = ASSIGNMENT) If everything is transferred for the entire term = assignment 1. If were in a jurisdiction that applies the formalistic rule: If you transfer everything this equals an assignment

a. Applying facts here: According to the common/formalistic rule, since T1 transferred to T2 the balance of the term, the relationship here is equivalent to an assignment. It is not a sublease because transfer was not less than the original lease. b. Modern rule: Look at intentions of the parties (intent rule helps to decide sublease/assignment) o Rule: Determine what the intentions are ! In a jurisdiction that follows the intent rule: Applying Modern rule must look at the intent of the parties. If the parties intended assignment, it is treated as assignment, and vice versa. ! Applying the facts here: we cannot determine what the actual intentions of the parties are since the fact pattern does not state it. 3(c) LL leases to T for a term of three years at a monthly rent of $1,000; in the lease T covenants to pay the rent in advance on the first of each month and covenants to keep the leased premises in good repair. Six months later T assigns her entire interest to T1 who agrees in the instrument of assignment to assume all the covenants in the lease between L and T; Three months later T1 assigns his entire interest to T2; Three months after that T2 assigns his entire interest to T3. T3 defaults on rent payments and fails to keep the premises in good repair L sues T, T1, T2, and T3. What are the liabilities of the four tenants to L and as among themselves? LL-----lease----(3 years)-----original tenant Assignment to T1 with assumption o T1 assignment with T2; no assumption ! T2 assignment to T3; no assumption T3 has privity of estate Who can sue and under what legal theory? *Unless release is expressly stated, LL can sue all tenants under privity of K. ** LL can sue T1 for privity of K ***T3 is the holder of the possessory estate ***privity of K between LL and t1 by virtue of privity of K (assumption) ****no K between LL and T2, no privity of estate between LL and T2 ***** can sue T3 and win, but if he sues T1, T1 can open suit v. T3 for suretyship

Quick review of suretyship. Equitable remedy If LL can sue both T1 and T2: o If LL v. T1 and LL wins, T1 v. T2 Rowe v. A&P: Lease is silent. The legal question is under what circumstances will a court imply a requirement to obtain LLs consent for an assignment? o Must argue notwithstanding the absence of an express release, there is an implied provision o LL argues: ! reliance on special skill ! percentage rent o Court requires specific evidence: LL entered into lease in reliance upon a special skill or ability and theres no evidence of such o I.e. Nassau hotel case (Percentage rent and reliance on parties to run the hotel) o Here: theres base rent (LL will be paid regardless of who is the tenant) ! Percentage rent was extra and it also never kicked in (when revenues exceed a certain threshold) LL was also an attorney doesnt help his case since he should already know rules of property Parties neglected to include provision in their lease o Court applies the Default Rule: transferability: permit for transfer of assignees or subleases Kendall v. Pestana: (Pg. 450) 1st: Landlord ----------lease-------Tenant--------sublease-------------------subtenant (san jose) (Perlicht) (Bixler) Assignment of Ts interest to Pestana Assignment Pestana (T1/Assignee) Kendall(proposed subT) Lease o Sublease ! Assignment Proposed Assignment (what parties are fighting about) When consenting or rejecting a proposed assignment do the reasons have to be reasonable, or can they be unreasonable. Majority Rule vs. Minority Rule: o Majority: May refuse consent even if arbitrary o Minority Rule: LL must be commercially reasonable where no provision exists in lease

Restatement: LL cant unreasonably withhold consent, unless a freely negotiated provision gives LL such right o Look at the words following reasonable ! where no provision exists in the lease Traditional rule where LL can withhold consent when its arbitrary: o There must be a commercially reasonable objection Arguments for and against the majority/minority rule Majority Rule vs. Minority Rule: Majority Rule (traditional rule): Lease is a conveyance; LL should have control over property; freedom of ownership and control; LL should only have to look to original Tenant [lease is property law conveyance] Respects the Contract; Unambiguous reservation of right to LL; T could have bargained for clause; court shouldnt rewrite K (contract interpretation) Stare decisis; reliance LL deserves increase in FMV or property Minority Rule (modern approach): Lease is more like a contract; LL can have control, but must be reasonable; original Tenant is stilly liable; Duty to mitigate is now rule in many states; LL can still have say over who is assignee (examples); good faith and fair dealing; commercially reasonable Its not unambiguous; K was not explicit; intent; not rewriting K; just requiring good faith Law is changing; not universally held rule; changing view of K nature of the lease LL cant get more than bargain; increase in FMV doesnt belong to LL; consent not a way for LL to make more money Examples of LL reasonably withholding consent: o Proposed Assignees financial stability o Suitability of the particular property use o Legality of use o Whether proposed assignee will be making alterations o Personal taste or opinions o Making more money has nothing to do with protection of landlord and ownership of property Is LLs consent required? Various possibilities in K: 1. Lease is silent a. Rowe v. A&P: no implied prohibition 2. Lease states: tenant may not assign 3. Lease states: tenant may not assign, without LLs consent a. Majority rule: OK to refuse consent, even if arbitrary b. Minority rule/Kendall: must be commercially reasonable

4. Lease states: tenant many not assign, without LLs consent and LL shall not be unreasonable (or LL shall be reasonable) (Provides a standard*) a. Enforce K provision 5. Lease states: tenant may not assign, without LLs consent and LL may be unreasonable (Provides a standard*) a. Majority Rule/Restatement: enforce K provision b. Kendall: even Kendall court says OK to enforce do not pick this answer* CLASS SEVEN: SEPTEMBER 19, 2013 Legal significance of an assignment and a sublease Review Majority Rule vs. Majority Rule o Majority Rule: ! Lease is a conveyance, LL should have control over property; freedom of ownership and control; LL should only have to look to original tenant Lease is property law conveyance Minority Rule: o Lease is more like a K ! Examples of reasonable reasons to withhold consent: Financial responsibility Suitability of use Legality Need for alteration Nature of occupancy According to the agenda: Various possibilities in Contract: 1. Lease is silent 2. Lease states: Tenant may not assign (wont be tested on this) 3. Lease states: Tenant may not assign, without LLs consent (standard): Traditional Rule: OK to refuse consent even if arbitrary a. Modern rule/Kendall: must be commercially reasonable 4. Lease states: Tenant may not assign, without LLs consent and LL shall not be unreasonable (or LL shall be reasonable) a. Enforce K provision i. Doesnt matter whether youre in Kendall jurisdiction or not 5. Lease states: tenant may not assign without LLs consent and LL may be unreasonable a. Traditional rule/Restatement: Enforce K provision b. Modern/Kendall: Even Kendall court says OK to enforce i. Doesnt matter whether youre in Kendall jurisdiction or not Questions on page 457/458

1(a): Assume Kendall rule applies. LL refuses consent since proposed transferee is considering space in another building owned by LL? (no split in analysis) For his economic protection, LL can reasonably refuse consent because it would be unreasonable to refuse consent solely because the LL wanted to do a deal with that party. Kendall says reason to erfuse consent has to relate to the protection of the LL and the ownership of his property. Not for personal taste, convenience or sensibility LL cant get more than bargain Increase in FMV doesnt belong to LL Consent not a way for LL to make more money It must be related to a real property interest It must protect the LL in the ownership and operation of the property o Not for personal taste, convenience or sensibility of LL o But only for the protection of LL in its ownership and operation of property of the particular property not for its general economic protection (see p. 453) Question 2: Lease expressly prohibits assignments. T1 wants to assign to T2. LL refuses consent to the assignment since LL wants to enter into direct lease with T2 and capture rent increase. Sine lease only prohibits assignments, Tenant transfers lease minus one day after LL refuses consent to assignment. What is the issue? Rule 1: To determine whether consent required, need to determine if transfer minus 1 day is an assignment or sublease. Jurisdictions follow either formalistic rule or look at intent Describe the rules: Formalistic rule: if transfer all, assignment; if not all, sublease. Intent rule: rule is that characterization/nature of instrument is determined by intent of the parties. The words used may be evidence of the parties intent -- not dispositive. Application of facts: Applying formalistic rule, this instrument is a sublease because the facts state transfer minus a day and a sublease doesnt transfer all. It is not an assignment because not all is transferred. Applying the intent rule, it would most likely be an assignment because T states that she wants to assign but because LL refuses consent she instead transfers for all minus a day. Showing her intent to be of an assignment. If state follows formalistic rule, its a sublease [here the facts indicate the transfer was for one day less than remaining term]. If state follows intent rule, it [might be/probably is/is] an assignment [since that is what initial tenant wanted to do in the first place and this transfer was just a subterfuge]. But note that specific words actually used tends to undercut the intent argument. However the question states T wishes to assign to T1.

Issue 2: So the transfer is a sublease OR assignment depending on jurisdiction. Therefore, we need to determine if LLs consent was required in connection with an assignment and/or sublease. Rule 2: The general rule is that the common law favors free transferability. Subleases and assignments are permitted unless expressly prohibited by lease because of general common law rules favoring free transfer. [Source: common law]. (If there is a provision in the lease that requires it, well enforce it.). We generally dont read in implied prohibitions except in unusual circumstances. [See Rowe v. A&P] If however there is an express provision in the Lease requiring consent, then law will enforce the provision and LLs consent is required. [Source: K and common law] restrictions on alienation are permitted and enforceable just disfavored and read narrowly. *If the lease says so, it is. If it is, then consent is not required. Here the lease restricts assignments, but not subleases. Therefore, A: since the lease does not expressly prohibit subleases, tenant may freely sublease. Landlords consent is NOT required because of general common law rules of free transfer. (Source: Contract and common law) Formalistic jurisdictions*** Initial conclusion 1: therefore, in jurisdiction that determines that the transfer is a sublease (Formalistic), LLs consent not required and t1 may transfer to t2. B: Here, this lease expressly prohibits assignments and the common law will enforce that provision. So, LLs consent is required. Application A: dealing with if transfer is a sublease: END Application B: If in a jurisdiction that determines that the transfer is an assignment, this particular lease expressly prohibits assignments. Therefore, LLs consent is required: END (SCENARIO 3) Is Landlords refusal to consent reasonable? Rule 3: if LLs consent is required and there is no standard, there is modern rule and traditional rule regarding LLs ability to withhold consent. Traditional LL can unreasonably withhold consent for any reason Modern: LL must be reasonable (Kendall) Application: Here there is no standard of consent in Lease. (Source: lease) If in traditional jurisdiction and jurisdiction determined that the transfer is an assignment, LL can therefore withhold consent for the transfer in sole and absolute discretion

If in modern jurisdiction (and jurisdiction determined that the transfer is an assignment) LL can only withhold consent for the transfer if reasonable, what are the rules on reasonability? Subrule: factors for reasonability are: (Describe Kendall) Application: Here (describe facts), therefore LLs refusal to consent is unreasonable since LL is NOT basing refusal Conclusion 1: if in jurisdiction that follows formalistic rule, instrument is a sublease (formalistic). Under modern or traditional, LLs consent not required since the lease is silent on subleases. It only restricts assignments. Therefore, T1 may transfer/sublease to T2. (ROWE) Conclusion 2: Intent Jurisdiction: and determines assignment, and follows modern rule: re: consent (LL must be reasonable), LL may not refuse consent since LL is unreasonable (economic gain is not a valid reason). If lease says assignments and subleases are prohibited, no need to figure out sublease/assignment re: intent required. Need to figure out whom LL needs to sue. If prohibited both: Erndst v. Conditt analysis. Dumpors Rule (Q3): In jurisdictions following Dumpors rule (consent to assignment 1 deemed consent to future unless expressly reserved), if LL sues T1, what result? *Consent is going to keep applying unless you do something. Representing a LL consenting to assignment, what are you going to advise? Drafting express clause stating T1 agrees that one consent does not result in further subsequent assignments. T1 needs to seek consent. **Reason why this clause is in there is to undue Dumpors Rule. Reason you put in the language is so that it does not apply. LL--------lease------T [Prime Lease: no assign/sublet without consent.] Consent of LL to assignment to T1 (no assumption) Tenant 1: is there still privity of estate? T1 assigns to T2 without consent? LL can sue if in Dumpors Rule jurisdiction T1 for privity of K and T2 for privity of estate. NY Section 226-b: Most of which varies by contract If you have a commercial lease that contains no provision at all, no implied restrictions Rowe v. A&P

Form of the statute (one para deals with assignments, one para with subleasesdiff rules) *Very first clause: unless a greater right is conferred by the lease, the tenant renting residence may not assign without consent from LL, which consent could be reasonably withheld. *Protection of T: provided owner releases tenant with consent. Remedy: release (would prefer release than entering assignment), LL can sue us by privity of K, the whole purpose of getting out of lease is assignment. If reasonable, T not released as T cant assign If unreasonable, T released but no assignment Not quite the same as Assignment = OK Provision(6) Any provision of a lease or rental agreement purporting to waive a provision of this section is null and void. The Tenant Who Defaults (Self-Help) In this section we examine: Diff rights and remedies of the landlord on two different versions of the world: Tenant is in Possession: Whether LL can take self help to retake possession (Forcible entry/change locks), if T is in possession & defaults; and Tenant is NOT in Possession: Whether after T abandons possession, does LL have a duty to mitigate damages? Sommer v. Kridel: YES, duty to mitigate Kenneth Cole cases (NY): NO DUTY TO MITIGATE (True in residential context also) TENANT IN POSSESSION: Berg v. Wiley (page 460) Tenant failed to finish remodeling and comply with health code violations and LL wanted them out Description of Lease: Who is suing whom for what? o T1 is suing LL What are 2 legal questions? o Did T abandon/surrender the premises? (p.462) ! Review standard for court? Sufficiency of evidence to support the jurys finding that Berg had not abandoned or surrendered? o Not really asking this question. Really asking if theres sufficient evidence to support jurys finding that tenant did not abandon? No error T was still in legal possession (no abandonment; no offer to terminate lease) Lease is still in effect

o Was LLs retaking possession lawfully? Is Self-help wrong as a matter of law? (p.462) ! Common law rule: LL can use self help to retake premises from a tenant-in-possession (without incurring liability for wrongful eviction) so long as 2 conditions met: LL must be legally entitled to possession o Holdover tenant OR o Breach of lease AND lease contains a reentry clause AND o Re-entry must be peaceable Therefore: T may recover damages for wrongful eviction if either o LL not entitled to possession OR o Not peaceable ! LLs argument: no violence, (actual or threatened violence could give rise to damages) How can you have that if tenant was not there? ! Holding: Court couldnt resolve this case ! What is non-peaceable entry when the tenant is absent? ! Whats wrong with LLs self-help? ! New standard (growing minority) Analysis of first legal question: Did tenant impliedly offer to terminate the lease? o If they did, by abandoning, then LL accepts that offer, and cannot sue for wrongful conviction. o Surrender & Abandonment by a tenant ! Tenants offer to terminate the lease: Express offer (an agreement to surrender) Implied offer (by abandonment or surrender) ! Landlords acceptance of offer to terminate Lease Express (an agreement whereby LL agrees to accept) Implied (are LLs actions inconsistent with or repugnant to the continuation of the original lease?) o Express agreements satisfy the statute of frauds (in writing) o Implied agreements (examine intent of LL and T; contract standards) Next Tuesday: Finish this case, and duty to mitigate, and next assigned material (quiet enjoyment)

PROPERTY; CLASS EIGHT: September 24, 2013 In this section we examine: Surrender & Abandonment by the tenant: o Tenants offer to terminate the lease: ! Express offer (an agreement to surrender) ! Implied offer (by abandonment or surrender) o Landlords acceptance of offer to terminate lease: ! Express (an agreement whereby LL agrees to accept) ! Implied (are LLs actions inconsistent with or repugnant to the continuation of the original lease? Common Law Rule Re: Self Help: o LL may use self-help to retake premises from a tenant-in-possession (without incurring liability for wrongful eviction) so long as 2 conditions met: ! LL must be legally entitled to possession Holdover tenant OR Breach of lease AND lease contains a re-entry clause ! AND Re entry must be peaceable ! Therefore T may recover damages for wrongful eviction if either (i) LL not entitled to possession OR (ii) not peaceable Courts Holding and Reasoning: o Holding? o What is non-peaceable entry when the tenant is absent? o Whats wrong with LLs self help? o New Standard (growing minority) Policy reasons having a good alternative that doesnt even allow the possibility of threatened force, pushing towards that ALL self-help is wrong. o Common law rule/Modern Law: this would be a breach of the peace ! Self help is never available to dispossess tenant o Want a higher standard, not a speedier one Written notice and opportunity cure: o Self help: ! Enforceable: If self-help is not available

LANDLORDS DUTY TO MITIGATE Sommer v. Kridel/ NJ & Kenneth Cole/NY Facts: Kridel entered into a lease May 19th notifies LL he was expressly surrendering possession (offer to terminate) Sommer doesnt allow anyone else to rent it, even though there was inquiry

Rule: Traditional/Common Law (majority rule): Landlord has no duty to mitigate o Why should LL have to concern themselves after tenant is given absolute right Modern Rule (applied by the Sommer Court): Analysis: Distinction is not viable Duty to mitigate with contracts Implied duties Basic notions of fairness and equity would dictate LL has this duty Crazy for him to stay by an empty apartment and not collect rent o Matter of fairness Cheapest cost avoider Plaintiff could have avoided damages Modern motions of fairness (away from Property Law) LL needlessly increased damages by turning away possible new tenant who wanted to rent out surrendered apartment LL has a reasonable effort to mitigate o Try to rent the apt as soon as possible o Advertisements in local newspaper ! Providing proof o Hire a real estate agent to show the apt. o Keep a log of who saw the apartment ! Burden of proof: does LL have to prove that they mitigated or does the Tenant have to prove that LL didnt reasonably mitigate. o Each case judged on its own facts Tenant will be liable for LLs cost to mitigate Does LL have to rent to anyone? Dont have to accept an unsolved or unsuitable tenant Returns the property to productive use Opposition to duty to mitigate: Holy Properties v. Kenneth Cole: Landlord has 3 options (page 44, sup.): Do nothing and collect full rent from T (no duty to mitigate) o LL is ok with empty space o LL is able to collect rent from tenant Accept Ts surrender (terminating the lease), re-enter premises and relet premises for LLs own account (tenant has no liability) (lease is terminated) o Rent market is rising o LL wants to capture increase value o Tenant unable to assign or sublease Notify that LL is entering and reletting for Ts benefit ($$ goes to LLs expenses, then to Tenants rent liability)(tenant still liable) (duty to mitigate) o Dceclining market or

o LL is unable to collect rent from original T o LL doesnt want space empty o This is the Classic mitigation scenario where LL tries to minimize Ts damages Why pick one over the other? o The middle bubble (option 2) if rent has gone up, LL can benefit with increased rent and new tenant o Tenant will be liable for rent difference if rent goes up and LL mitigated by reletting premises. Economic reasons why you would not want to do nothing Presumably able to collect rent Doing nothing and suing is not a great option Can the parties agree that the LL has to mitigate? o Enforce K provisions giving LL right o Enforce a clause that says Tenant agrees that LL doesnt have to mitigate at all?

Next Class: Quiet enjoyment & Marketability Sept 26th class cancelled by Professor CLASS NINE: OCTOBER 1, 2013 Introduction to Breach of Covenant of Quiet Enjoyment Breach of the Covenant of Quiet Enjoyment Covenant of quiet enjoyment (must prove existence of it) o Express (in writing) o Implied (common law, judge, court) Breach o Actual Eviction: when a tenant is physically ousted ! By LL (protect against ouster): under what circumstances are living conditions so miserable that a tenant chooses to leave? ! By 3rd party o Constructive Eviction by LL (protect against actions similar to ouster) o What is Constructive Eviction by LL? Reste Realty v. Cooper (p. 438) What were LLs arguments? o Waiver o Condition was not a permanent interference with the use of quiet enjoyment o Def stayed too long to prove unlivable conditions Background facts: o Reste successor to Donigan

o Joy Cooper is Tenant ! 1958 signs lease no.1 for 5 years, using ground floor space for commercial purposes ! 1 year later enters into a new 5 year lease How did the court respond to Landlords arguments? o Waiver: ! Def relied on original LLs promise, cant be a waiver if she relied on the promise o Court said def did not stay too long o Flooding not permanent interference ! Court defines permanence: regular reoccurrence and sufficiently serious ! It was permanent although not constant ! It was regular and persistent ! Doesnt have to be everlasting and unending ! If regular and serious enough to substantially interfere with use and enjoyment for purpose of lease (in effect, defining constructive eviction) o Test for constructive eviction was clearly met by above factors o Definition of premises in this lease did NOT include the driveway Did the LL breach a covenant justifying tenants removal from the premises? o One mode of analysis is. ! Breach of the Covenant of Quiet Enjoyment Express (this lease contained an express covenant-existence of a promise pg. 486) Implied o Majority rule: implied covenant of QE in all leases o Old NJ Rule: no implied covenant simply because of the LL/T relationship. There must be an express agreement or use of some words that imply the covenant. (Note: NJ now has implied covenant of QE) So if there is a covenant of quiet enjoyment, was there a breach??? Constructive eviction (pg 486) o Any act or omission of LL (or anyone acting by, through, or under LL OR having superior legal title) which renders premises o Substantially unsuitable for the purpose for which they are leased o Seriously interferes with beneficial enjoyment of premises ! Other examples of breach of covenant of QE- pg 486-7 ! Noisy garbage truck is not a breach of QE bc not in direct control of LL LLs act or omission (not fixing driveway and/or not properly paving property) Other theories: o Breach of dependent covenants: ! Stewart v. Childs (older case) covenants independent ! Higgins v. Whiting (newer case)- covenants are dependent

A breach of a dependent covenant is a material failure of consideration K: Promise + consideration (Covenants are dependent) Tenants point of view is almost always paying rent Most important promise is to pay rent Absence of an express provision, most courts will read in an implied promise in the lease o Also similar to implied duty to deliver legal and actual possession o Implied warranty against latent defects ! (K type argument) Actual eviction: o 3rd party having paramount title (legal right) dispossesses Tenant ! LL leases to T1 (doesnt take possession) ! LL leases to T2 (takes possession) ! T1 arrives and asserts legal right over T2 ! Review Hannan Case (pg 439) Actual Eviction by LL: o LL wrongfully evicts and/or forces T off premises ! Ex. Self help in Berg v. Wiley

Looking at Hannan: o Court made 3 diff points: (when there is no express covenant is there an implied covenant to possession?) ! (1) evicted by LL or someone claiming possession (covenant of quiet enjoyment) ! (2) duty to deliver possession at the commencement date ! (3) evicted by trespasser No question of covenant because it is expressly in lease o Question of breach: ! Actual eviction by tenant ! Actual eviction by LL Constructive Eviction: o A way of proving the breach o Any wrongful act or omission of LL ! Or anyone acting by, through, or under LL or having superior legal title which renders premises: o Substantially unsuitable for the purpose for which they are leased or seriously interferes with beneficial enjoyment of premises AND (This is the part that makes it constructive) o Tenant therefore abandons tenant is required to abandon premises (have to prove tenant did or did not do something) ! Element of abandoning premises is standard of actual eviction

LL so disregarded obligations by either doing or failing to do something, it is as if they actually evicted tenant Abandonment = dispossession (no longer in possession) o Serious abandonment o Have to make sure the party actually left o Promise to pay rent is the hallmark of a LL/Tenant relationship (commercial or residential) ! Promises that were once dependent became independent Questions on Bottom of Page 491: o Can you have a breach of the Cov QE for a Tenancy at Will? o Is there a breach of Cov QE if: ! LL fails to control excessive noise of neighbors ! Cigarette smoke ! Criminal activity o Page 491; Question 2(a): ! LL fails to control excessive noise made by neighboring tenants of T who commonly party long and loudassume disturbance in question is not noise but cigarette smoke seeping in. Did LL breach cov of QE due to 2nd hand smoke? First state whether cov of QE is express or implied o If nothing expressed, law implies cov QE in every lease Whether there is a breach: o Actual or Constructive eviction? ! No actual eviction ! Only way T can prevail is if they can prove constructive eviction: Constructive eviction is: o Any wrongful act or omission of LL (or anyone acting by, through, or under LL) OR having superior legal title which renders premises: ! Can refer to statutes to support the act or omission as wrongful ! Noise statute applies to occupants themselves ! Also refer to the lease in question to see if they refer to noise issue o Substantially unsuitable for the purpose for which they

are leased OR seriously interferes with beneficial enjoyment of premises; AND o Tenant thereafter abandons tenant is required to abandon premises ! Applying rule to facts: (this is not a strict liability offense) (1) Here we do not know whether T abandoned premises; (2) question of whether this smoking is so severe/constant it truly interferes with daily QE: again facts are not indicative of this factor; (3) we know that the LL failed to control the noisy Tenants, however factor mentions any wrongful act or omission. 2nd hand smoking might not equate to wrongful. NY Section 227 (Supp. Page 60): o 227: When tenant may surrender premises: ! Where any building is destroyed or injured by the elements, or any other cause as to be untenantable, and unfit for occupancy, and no express agreement to the contrary has been made in writing, the lessee or occupant may, if the destruction or injury occurred without his or her fault or neglect, quit and surrender possession of the leasehold premises, and of the land so leased or occupied; and he or she is not liable to pay to the lessor or owner, rent for the time subsequent to the surrender. Any rent aid in advance or which may have accrued by the terms of a lease or any other hiring shall be adjusted to the date of such surrender. (Default statute making it fragile and easy to undo) Now look at Implied Warranty of Habitability Hilder v. St. Peter: Suit for breach of implied warranty of habitability Court rejects argument that abandonment is a requirement Background facts: o Lease was a conveyance

o o o o o

Provision to deliver (Hannan) Courts analysis: Policy Reasons: New Rule (safe, clean and fit for human habitation housing) Implied warranty exists for cov. of QE ! Recognized dependency of covenants: Tenant does not have to pay rent when there has been a breach of an implied covenant For Thursdays class: Tenant calls you up and tells you theyre living in horrible conditions, how do you translate the law to advice???

For Thursday: read through Lohmeyer v. Bower CLASS TEN: OCTOBER 3, 2013 Intro to Coneveyancing Purchas and Sales Contracts Statute of Frauds Intro to Unit 2: Purchase and Sale of RE Seller (deed) " Buyer # $$$$ In a lease: The conveyance (transfer) happens in the lease o LL hereby conveys to T1 Why do we care if theres an enforceable K? o No legal relationship between seller and buyer Pre-K Trying to pin point at what point LL and buyer in privity of K together First: o Is there an enforceable promise? ! When was the K formed? Tells us where on the timeline the line can be drawn. o Whats the legal relationship between the buyer and seller after the promise has been performed? Concept of an allocation of risks: o Stuff happens Equity allocates some of the benefits of the buyer at the concept stage o If you get the benefits, you dont get the loss Why even bother with a contract of sale? o You need to have a closing. o The only way to convey property is through a deed Contracts of Sale: o Why have a K of sale?

No more than conditions and covenants Contains mutual promises (if it doesnt contain mutual promises, not enforceable) ! Protects the parties ! Lock in the price ! Only way of locking in price of mutual promise is a K o Conditions and Covenants ! Closing conditioned upon certain items true and untrue ! Subject to Contingent upon ! most of the K is a bunch of conditions o Purpose of Condition? ! We let parties set the terms of their promises as long as youre not attaching the term thats void because its against public policy o Policy goals behind Statute of Frauds: ! Prevent fraud or perjury ! Most state has some version of it (varying) ! Property lasts a long time ! If the K for sale is for purchase and sale of house for $5000 and property w Hickey v. Green: Payee left blank, issue identifying the parties (Want specific performance) Payee has to endorse the check o Seller pleads SOF as defense o Reasonable Reliance, change of position ! Purpose of change of position: Who is suing whom for what? Does the Statute of Frauds apply? Is Statute of Frauds satisfied? Is there an exception to the SOF? Page 506: (Court takes SOF seriously) o This is equity: a lot of leeway (variety) in how quick a court will take seriously equity Example of a court that has a higher standard (variance) Walker case in its enforcement of SOF: Higher bar to find an equitable exception Likely issues in SOF cases: o Disputes as to what constitutes a writing Hypothetical: In New York, Buyer sees a for sale sign. B says to S that she wants to buy it. B gives S a $500 check to S as down payment. Later that evening B changes her mind. Can S sue B? o Opposite facts of Hickey o Answer under NY GOL 5-703 (page 87) ! Conveyances and contracts concerning real property required to be in writing.

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1. An estate or interest in real property, [other than a lease for a term not exceeding one year],. . . cannot be created, granted, assigned, surrendered or declared, unless --by act or operation of law, or --by a deed or conveyance in writing, subscribed by the person creating, granting, assigning, surrendering or declaring the same . . .. (Doesnt apply in this hypo): o Deals with property law, can you sign the lease orally 2. A contract for the leasing for a longer period than one year, or for the sale, of any real property, or an interest therein, is void unless the contract or some note or memorandum thereof, expressing the consideration, is in writing, subscribed by the party to be charged . . .. 4. Nothing contained in this section abridges the powers of courts of equity to compel the specific performance of agreements in cases of part performance. o (Codification of form of possession) o Legislature does not diminish equity power o Standard for equity in NY statute. Need a way of computing the price Exceptions? Bc timeframe is so short, no time for buyer to have reasonable reliance or incur any irreparable injury Answer: If claim is going to fail for enforceability it will be because lacking an essential term (price) o Some courts will disagree on that matter.

Next Class: Marketable title CLASS ELEVEN: October 8, 2013 Marketability Equitable Conversion MARKETABLE TITLE: Different types of title o Record title ! If you went to the land records shows who owns title but not dispositive of ownership o Insurable title ! What the title insurance is willing to insure

o Marketable title ! Quality of the title ! Common law implies promise of seller to convey title in sale ! Buyer can terminate K and dont have to close if title not marketable Seller has time to cure prior to closing ! Law assures to buyer a title free from reasonable doubt but not every doubt ! When presented with title problem applying vague standards to something specific ! Reasons why you might need a standard of something less than perfect Difficult for any transaction to close because the buyer would always be able to claim imperfection Recognition that every property has some problem o Standard of imperfection would make it an impossible standard Marketable Title Defects: o Chain of title: ! Rare but if they happen, almost always mean total title failures ! Low probability, high cost if the event occurs (insurance companies take this onpaying small premium and shifts risk onto 3rd party) Fraudulent transfers Forged deed (if you discover deed was forged prior to closing, you dont have to close) Incapacity Duress Improper acknowledgement Deed wasnt delivered o The world of encumbrances (much more likely): Reduces value of the property ! Third party rights that someone might have relating to (1) monetary, possessory rights, or use ! Monetary: right to money that creates a title problem Lien: (almost always liens) describes certain rights of the lienholder that give them the right to sell property in satisfaction related to debt (property matter) o Not recorded in land records o Mortgage lien (voluntary transaction) o Unpaid taxes (federal and state level) o Mechanics liens: particular kind re: someone doing work on the house Mortgage o If theres no debt, mortgage is meaningless

Possessory: (tenant) Lease o Important in commercial real estate because value of property is relative to lease ! Uses: Easement o If your neighbor has an easement across your property to get to the lake, it interferes with the use o (Cannot be a nuisance because thats a tort) o Zoning law not an encumbrance (not a third party private right ---law of general applicability) ! One of the reasons why every buyer will be able to walk away ! (not leaking roofs, ugly paint, people moving in next door) has to be something about the title that causes the reduction of the value of the property o Encroachment: ! An illegal intrusion upon property ! Something physical built on some property that you dont own Fences Air conditioners hanging over property line Garage ! Example: Owner of Lot Bs garage encroaches on lot A o Is lot A unmarketable? ! Yes, because B is encroaching onto Lot A o Is Lot B unmarketable? ! No. There may be a problem though. Lot A could go to court and force Lot B to move his garage. But B owns all of lot B A cannot interfere with Bs use of any portion of whats inside his lot square Lot A Lot B o o o o

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o As ability to sue b with the overhang is not a right title of interest that A has in Bs property o A only has a right of exclusive possession ! *There will be a question on this* o As property unmarketable because the piece of garage interferes with use o An unrecorded deed suggests possibility of litigation because you dont have title o Visibility is impt. component because it gives the justification ! Invisibility is a tough standard Common law definition of marketable title is implied in all contracts o Default rule is implied in the K ! Free transferability (whats not prohibited is permitted) o If every title has an encumbrance, every buyer has an option Contractual variations on the standard of marketability: o Under what circumstances can the buyer rescind (lawfully terminate, refuse to close, etc.) o S covenants to deliver marketable title: very buyer friendly o S covenants to deliver marketable title, subject to the recorded citibank mortgage (smaller than 1) Buyer doesnt have to close if anything other than citibank o subject to all encumbrances of record creates a smaller exception (Cannot use an encumbrance of record to get out of closing) o subject to all encumbrances very limited on buyer having the right not to close Lohmeyer v. Bower: o S covenants to deliver marketable title, subject to all encumbrances of record o Court reformulated what was expressly written to make it read: S covenants to deliver marketable title, subject to all encumbrances of record (so long as not violated) ! But it is not that version because it was silent. o This court read into K to mean so long as not violated o What did K say? ! Free and clear of all encumbrances except taxes, subject however, to all restrictions and easements o Restrictive covenant renders title unmarketable because it interferes with use

o Encumbrance of record if not violated was read into it o Problems of the property: ! Zoning violation o Mere existence of restrictive covenant makes title unmarketable: ! In the absence of an agreement to contraryall restrictive covenants make title unmarketable ! Could write K diff. saying buyer only has to close if .. o Mere existence of zoning does not render title unmarketable o Violation of zoning and violation of restrictive covenant make title unmarketable ! Violation NOT mere existence o This case is not the end all dealing with marketability o A K case where they read in so long as not violated o Need to determine whether to read in so long as not violated or not o Mere existence of a restrictive covenant renders title unmarketable o This case changed the standard by reading in so long as not violated o K at issue read in so long as same have not been violated ! If you put in the standard court cannot undue that so easily ! In absence of something, court can sometimes read in additional terms Thursday: 10 minutes on Equitable Conversion Brown case, etc. (2 classes of material) CLASS TWELVE: OCTOBER 10, 2013 Marketability Equitable Conversion Doctrine of Merger Deeds Marketability: The standard of title the seller needs to deliver at closing which is implied in all contracts of sale. May be modified (common law default rule) Standard less than perfection What renders title unmarketable: Chain of title defect o Forge deed o Encumberances (more likely) ! Dont result in a total title failure decreases value of property ! Right title of interest in someones property ! Title typically relates to $ possession or use Mechanic liens Judgment liens

Mortgages ! Possessory rights: Releases o Easements o Restrictive covenants ! Encroachment ! Standard modified by K (infinite number of possibilities) 5 standard examples o (which is more seller friendly vs. buyer friendly) o which direction youd want to move negotiation ! Buyer: Seller offered v.2. that is good from buyers point of view Lohermeyers case: o K Sets up all encumbrances of record o Read in so long as not violated ! Treated K as if it was written same was as K v.3. Applied rule: (not general rule of marketability) o Marketability (general rule): all things rendered title unmarketable o But for this particular K, buyer doesnt have to close if seller does not deliver marketable title but can deliver title of record ! Court added so long as not violated ! If there was any encumbrance of record that was violated, buyer didnt have to close Similarly if encumbrance not of record, that would not be picked up either o Exception (sellers promise to deliver marketable title) is modified by encumbrances of record o Anything else not of record, would give buyer opp. Not to close bc seller promised to deliver marketable title ! Encroachment is not an encumbrance of record o Once Court said so long as not violated rest. Cov. Was violated and loh. Could get out of K

o Violation of zoning code in this jur. Also is an encumbrance title not marketable ! NOT TRUE EVERYWHERE *PRINCIPALLY NEW YORK o Absence of a K provision, the mere existence of a restrictive cov. Renders title unmarketable o K clause that they signed said subject to all easements and encumbrances of record mere existence is not enough to give buyer an out ! VIOLATION of it, rose to the level and not included in K language that the buyer wouldnt have to take subject to these matters because they were violated once read in conditions so long as not violated Only have to take subject so long as not violated This K is v.3. although written v.4. o Only in absence of anything related to violations is Court able to read in so long as not violated ! Had parties written in expressly even if violated no doubt buyer wouldnt have to close because he agreed to take even if violated ! Where nothing in K re: whether covenant or encumbrances could not be violated, court read in so long as not violated Read in reasonability in the absence of saying you can be unreasonable Re: marketability question: o K provision thats absolutely silent as to marketability (probably wont have that not difficult, seller has high standard and buyer would always find something) o Asked to answer marketability question: ! Go hunting for K provision that applies ! K interpretation: Does your K clause give buyer right to refuse close because of marketability OR do they still have to close notwithstanding (depends on how its written) o Leaking roofs o Noisy neighbors ! Not render title unmarketable If value of property declines because it is not a marketable title problem Its a PROBLEM but NOT marketable title.

Not mere existence of encumbrance that renders title unmarketable its the VIOLATION o All encumbrances render title unmarketable but K provision changes our standard (cant close notwithstanding the fact that property unmarketable bc you agreed to take property subject restrictions of record) ! Try not to confuse Loh. Holding dealing with this K provision clause with general principles of marketability (all these things render title unmarketable) Equitable Conversion: Some property law magic happens moment of time K of sale is signed (everything else happens at closing: what to do to have effective transfer or property). Property law concept: at the moment in time that you have an enforceable K of Sale: whether you have closed yet, (probably havent because typically of K of sale at closing) o Equitable title of sale passes to the buyer o Mere legal title remains with the seller ! Why: Equity considers what was promised to have been done, as having been done Considers what you promise to do in the future as if you already did it Equity is la la land considers what you promise to do as having been done o Why we allow specific performance o Consequences: deals with issues of loss (why do you want a K of Sale in the first place: because stuff happens) ! Dont know if property worth more or less at closing (hopefully worth same) ! Things happen during executory period: Ex. Fire damage General market conditions (interest rates lower) ! Under common law: if EC occurs at moment of time that you have enforceable K of sale, equity is treating as if the closing happened at the K signing (didnt actually happen) Questions re: who bears the loss/risk: treat it as IF IT DID happen o Only fair that buyer gets both downside and upside ! Ex. 100,000 K, property goes up to 120,000 buyer still pays $100,000 Court says fair to get both down/upside How do you protect yourself against fire damage? (property originally

worth $80k) inefficient to require both parties to get insurance o Issue during executory period: things happen affecting value of property ! Common law doctrine of EC: closing in effect equitably occurred, buyer will get treated for benefit as well as downside Characterization issues: are u going to characterize sellers interest as a real property interest or buyers interest as real property interest o At moment ec occurs: buyer deemed to have real (equitable) property interest. Seller has K right to receive proceeds at closing. o Ex.: Grandpa signs K, and dies during executor period and will says leave real property to randy and personal property to peter: ! Under EC: must determine if Grandpa was seller: did not have real property interest, he was title holder, just had a right to property proceeds. Peter would be entitled to $$ at closing, not Randy. Simple characterization issue (multiple choice questions on final). ! K says one person gets real property and the other gets personal Only relevant if will treats real/personal property differently Wills treat real/personal property differently Certain legal issues that are unique to real that arent true for personal property interest ! If Grandpa was the buyer and dies during exec. Period: (Wrong answer): does grandpas death terminate K? No more than an assignment terminates the lease. No more than any property transfer has any effect on K o Only thing that affects is full performance, etc. NOT DEATH o Can write in K this K is terminated if party dies: not fun though. Randy would get property at closing (estate has to pay for it) Important thing: Remember what equitable conversion is: Splitting of equitable interest (real property with legal title interest) o Another way we see that various parties have bifurcated rights in the same leased land o Ex.: each buyer/seller has diff interest rights Doctrine of Merger: What happens when buyer accepts Deed at closing. Act of accepting deed is considered to be evidence that the buyer is deemed to have been satisfied with sellers obligations. At that moment in time, K merges into deed. At the point of closing, only legal relationship left between seller/buyer is in deed because property law doctrine of merger. Deed may/may not contain promises. After closing youre back to where you started from with no legal relationship?

o Not exactly because seller has continuing liability with any promises made in deed, or K of sale, fraud, or tort, nondisclosure, misrepresentation, lying stealing, cheating, etc. Deed may or may not contain covenants and only those covenants that buyer will be able to use in order to sue seller after the closing. If buyer wants to sue seller during exec. Period, based on K of sale. Only document both signed. o Buyers dont sign deed ! Deed: instrument of transfer may/may not contain promises. ! If buyer discovers property unmarketable after closing, can they sue seller for marketability problem after closing? No. bc everything seller promised during exec. Period is deemed satisfied at closing. ! Marketability wont come to the rescue, other legal theory, promise in deed, fraud, title insurance claim but NOT marketability. ! MC answer inviting you to choose it for title issue after closing RUN AWAY: because impossible. Marketability only has a meaning during executor period. All promises after closing are deemed merge. Why have a deed in the first place? o We like having a merger: if there is a dispute after closing, simplifies where you have to look to see if any agreement exists between seller/buyer ! What do we need in order to have a transfer of property: Deed became substitute of livery (delivery) of seisin (possession) ! Before SOF (statute of uses) the way people transferred property, they would have a ceremony: Seller would pick up dirt with a twig and hand it over to buyer, bring neighbors to witness it. ! Statute of Uses (1536): you may use a deed to transfer property ! Prior to 1536, had to do dirt thing livery of seisin ! SOF: Deed must be used, it is required ! NY Statute: Have to have an instrument of writing signed by grantor (buyer doesnt have to sign it) Identify parties Identify land ! If Grandpa signs a deed: has property been transferred? Deed has to be delivered to grantee or someone acting on behalf, and has to be accepted (because propertys have to have value) o Dont have to accept deed. o Typical circumstances: presume acceptance o But MAKE SURE PARTY DELIVERS IT ! Transfer does not happen moment signed name

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o Dont have to record deed, acknowledge it, or notarize to have effective transfer o Malpractice not to record a deed, but as a matter of property law, deed is not required to be recorded. (makes good sense) but doesnt have to be ! Once signed deed and delivered to party, have an effective transfer of property ! Personal property: no need to have writing because it is movable ! Ks of sale: governed by regular K law (consideration, offer, acceptance, etc.) ! To have a transfer of property: no need to have above, can happen as a result of a gift (often) ! Property system has gone from ceremonial (dirt) to paper oriented (SOF requiring deed and its delivery) ! Changing doctrine because its based on livery of seisin (which is outdated) EC: K of sale stage Merger: act of delivering deed (full performance of K) Deed being required in order to effectively transfer property (Statute of Fraudsthe only way) ! Deed says hereby transfer lot 12 Hand over to whomever transferring property to Deed may/may not contain other promises Deed contains no promises (quit claim) instrument of conveyance Two more common: o Full warranty deed o General Warranty deed (GWD): Contains the MOST promises o Bargain and sale Deed (NY calls it special warranty deed or covenant against grantors acts) Real estate forms (supplement) ! Practitioner in NY Form: In presence of (not legally required, no witness, notary, etc., no colored ink) Distinguish full covenant deed vs. others are the promises contained: o Present covenants and future covenants o Name of Buyer/Seller o Grant and Lease o Consideration of $1 ! Recording statute only protects bona fide purchasers, put it in to get benefit o Has to be signed by seller and delivered o Promises contained in paragraphs: (treated as 3 present and 3 future)

Present covenants: Covenant of Seisin: often goes hand in hand with right to convey title (so similar) I owe the land and have the right to transfer land Covenant of Right to Convey Title (see above) Covenant against encumbrances (property is free of encumbrances) not the same as marketability (preclosing concept) o Difference of marketability: ! promise of no encumbrances ! Dealt with first present covenant of owning property o Dealt with in full warranty deed separately instead of one topic ! Two separate paragraphs o If buyer discovers problem with property after closing sue on breach of these covenants not marketability because only thing left is these promises Present covenants because promise is in the present tense (I promise that there are no encumbrances) seller owns the property Personal to the grantor for the benefit of the grantee I own property are no encumbrances (true or not true) o If true: seller could never be sued for breach of covenant o Buyer has to prove promise is untrue o If buyer finds these to be untrue at closing (hasnt been delivered yet) working with marketability matters how K is drafted to answer question Mantra: true or untrue

Importance because of Statute of Limitations (effects present covenants) o Breach occurs: at the moment of closing o Easy to figure out when statutory period begins: at closing when deed is delivered o Breach of K (in NY 6 years) o If Buyer discovers breach 7 years later: wont help much ! Future Covenants: Covenant of Quiet enjoyment (grouped with general warranty) Covenant of further assurances: the seller saying promise to help if the deed is rejected at recording office for whatever reason. Marketability: K concept implied in K of sale Covenant of Seisin: Promises contained in deed (Not implied either there or NOT) general warranty deed Covenant of quiet enjoyment: same exact concept as LL/Tenant covenant o Seller promising you will not be dispossessed of someone having better title by through or under me ! If seller sold property year earlier and then to you, dispossessed by original owner, you can make a claim against seller Cannot be reached at closing (rare event) Full/General warranty deed: making absolute statement: there are no encumbrances (Usually seen in NJ) o Nothing in K specifying what deed you want Special warranty deed: deals only with period of time seller had property (usually seen in NY) Quit Claim deed: Instrument of conveyance only o Not used when someone not paying a lot of money ! Family members ! Inter company transfers, etc. Title company wont insure them Used to fix mistakes Gifts, to family members Brown v. Lober: (Cov. Of Quiet Enjoyment) Frimberger (Cov. Against encumbrances)

Rockafellor (benefit of present covenant?) (do present covenants run with the land?) Brown v. Lober: (executor of Bosts) Brown- Buyer Lober Seller Transfer in 1947 from unnamed party to Bosts o Bosts transfer by GWD to Brown o Brown enters into K of sale with Consolidated coal o Transfer of minerals: property of being sliced and diced ! Present rights in future ! Divided by mineral, surface and heir rights Unbeknownst to Brown, 1947 transfer of property/deed, predecessor reserved 2/3s of mineral rights o Held it back (in shopping bag of rights, transferred everything, but kept what they didnt want to transfer, and kept it) ! Bosts didnt know that o In 1957 Bosts delivered GWD to Brown and then 20 years later, Brown wants to sell ! K of sale with Consolidated Coal, enters into K for property ! Consolidated Coal check title and discover Brown dont own all of mineral rights, only 1/3 Did not want to pay 6K for all, pay 2K for 1/3 o CC (Consolidated Coal) got leverage to renegotiate transaction with doctrine of marketability) ! CC says marketability is implied in all Ks of sale, you cannot deliver to me marketable title Ownership problem (Brown doesnt actually own what they say they do): Title failure only own 1/3 of the rights when they got title from Bosts o Pre-Closing: not merger nor deed covenant ! During executory period ! CC doesnt have to close because no marketable title which includes ownership Brown sues Loeber (executor) o Sues predecessor in interest (Bosts-dead, executor Loeber for $4,000 in damages, breach of cov. Of quiet enjoyment) o Which covenant of the GWD three promises if youre claiming someone doesnt know what they dont own: ! Covenant of Seisin: right to convey ! But not choosing to sue for seisin because SOL has ran (limitation of deed covenants) present covenants have limited value because if you dont discover breach in 6 year window (assuming 6 year K of Lim. State) ! This is about a 3rd party having some sort of right title and interest o Only thing left for Brown (plaintiff) is the breach of covenant of quiet enjoyment:

Requires promise of dispossession of someone having better title (unlike present cov. This does not occur until breach occurs) Sue pretty quickly, no SOL problem Requires dispossession (one of elements) ! Do not sue for breach of seisin because of SOL ! Breach of encumbrance: cant because of SOL o Only possible claim is Breach of Quiet Enjoyment: if and when owner with paramount title dispossess/interferes with Browns right of possession or constructive eviction o Paramount title: (person owning 2/3rds of mineral rights) (O has better title) o Bottom of pg 591: mere existence of paramount title does not constitute as a breach of Quiet Enjoyment o Court saying this claim is premature: requires someone with better title but mere existence is not enough have to actually be dispossessed by the person ! Trespasser (not a breach) Advice to Browns: o Brown cant sue Bosts for K of sale ! SOL ! Common law doctrine of merger o Why is it not a SOL question? ! After a question after the closing re: K of sale (this is wrong because of common law doctrine of merger (are no promises to sue on) Promises that you expressly state do not merge into deed o Can always infer an implied promise in deed ! Common law doctrine of merger: made something expressed that would otherwise be implied Frimberger: Deloreto transfers to Anzellotti Deloreto coneveyed by quit claim deed Anzellotti sells to Frimberger general warranty deed Person claiming loss: o (Plaintiff?) Frimberger ! Pays a bag a money but receives something with troubles ! Plaintiff the last party in string of deeds ! Frimberger sues Anzellotti under GWD ! Can Anzellotti sue Deloreto? No Deloreto cannot be sued for breach of deed covenant: o Cant sue someone for breach of a promise that someone didnt make o No promises to sue on

! For next class: Frimberger Rockafellor Begin recording statute

In order to have a breach of K claim must prove existence of promise, and then a breach

CLASS THIRTEEN: OCTOBER 15, 2013 Statute of Limitations starts at the closing Frimberger & Rockerfellor case Covenants contained in deed o General Warranty Deed ! 2 present covenants (encumbrances) ! Marketability: Relates to chain of title If not breached at closing it will never be breached o If seller delivers deed, no encumbrances ! Statement is either T/F at moment they made the statement ! Seller doesnt think there are no encumbrances But if an encumbrance is discovered o That statement is untrue Statute of limitations starts at the closing o When seller delivers deed, deed contains statement either T/F o Future cov. Of quiet enjoyment never breached at closing because it runs with land for benefit of anyone with privity of estate with promise maker Brown v. loeber: Quiet of enjoyment o SOL had run so they tried to squeeze in a cov did not apply o QE does not apply because its premature o Holder of superior right did not come and dispossess you Frimberger: Hardest question of term is distinguishing from Lohmeyer Deloretto sells quit claim deed to anzellotti Deloretto can never be sued because of quit claim deed (no promises) o Can be sued from other deed covenant o Cannot be sued for breach of promise if you never made a promise Frimberger suffers the loss Paid money, have property and contact DEP in charge of regulating wetlands and discover bulkhead previously built violates a ct. statute by encroaching title wetlands

Ask for variance Plaintiff does not ask for variance o Suffers loss and wants to sue Anzellotti quickly Want marketability to survive closing need to have covenant As deed (pg 594- 4th paragraph) o Free and clear of all encumbrances subject to building lines zoning restrictions and easements Had F discovered problem during executory period, remedy would have been: breach of duty to deliver marketable title K was silent: real question is does a violation of a land use related statute (environmental law building code or health code) o Violation of law does not always render title unmarketable o Depends on what kind of statute and what kind of violation o Land statutes: no effect of marketability (background noise) o Only maybe violation of zoning would give rise to claim of marketability ! Depending on jurisdiction o Not exactly Loh. o One could easily discover violation o Jur. Not taken for enforcement action ! DEP asked to file for variance o Had F discovered problem pre-closing depends on how K is written Loh court did not need a violation of zoning because of restrictive covenant No encumbrances covenant o Statement true/untrue at moment of deed delivered page 595 Encumbrance: every right or interest in land of third party effects land, all encumbrances classified in pecuniary, leases possessory, and rights and restrictions related to use. o Same big categories of items rendered or cause something to be an encumbrance o No chain of title (independent covenant) No case law in ct. about latent violation code Not all laws are equal Where does wetland statute violation fall on spectrum? Page 596: property owner requested installation of pipe on NJ property for stream, etc. o Discovered violation; lead to P required to replace it and sued for cost for correcting violation Suing for violation of statute needed to be remedied after closing vs. marketability o Remedy or policy reason, same standard? Not chain of title, now in context of fraud If someone refuses to close due to marketability o Get their down payment back o Sellers left with problem ! Seller fixes o If buyer sues under context of covenants

You sue seller for damages of how much money it costs you to fix the problem Economic incentive to do it as efficiently as possible Loss was not imminent Other ways of protecting themselves: o Seller doesnt want to be worried that buyers going to come back after closing o Protect yourself by contract o Hire people to determine if there was a violation Title company does a search which are publicly available o Then assess the risk of the violation Loh.: violation of zoning renders title unmarketable Frimberger: latent violation of land use does not cause breach of covenant of encumbrances Policy question: why fair to allow zoning violation but in some jurisdictions differ? o Varies at what point asked to determine whether or not there is an encumbrance Background to Rockerfellor case: Covenants running with the land Deed covenant is a covenant GWD contains 3 promises: o 2 present o 1 future (Quiet enjoyment) ! Whether or not a remote grantee (3rd party) gets the benefit of that promise ! If seller makes promise to buyer can buyer sue? Yes. Buyer entitled to benefit of that promise ! Instrument of conveyance Does assignee get benefit of promise? o Breach of K claim, you need to be able to prove existence of a promise, damages, entitled to benefit of promise, and promise has been made Real covenant runs with land o LL sells to buyer can buyer sue original owner o Buyer bc of property law (priv of estate) gets to sue tenant Over course of time buyer becomes seller Rockerfellor case: Two diff transactions: o Loan: owned a property, took mortgage out o Sells property: taken on obligation to pay back debt ! Mortgage: right to foreclose o Buys at foreclosure sale ! Flips property for almost double price o Foreclosure sets aside: whether or not legal? o Once court decides foreclosure is improper can undo it?

! Very rare to set aside transfer Who has sad face? o H&G: sale was improper Parties need to sort out mess Once foreclosure sale set aside new litigation from deed covenants to recoup loss H&G does not sue under special warranty deed: Property awarded back to rockerfellor: new petition: on conolly for deed covenants to recoup loss of $7,000 that they paid Special warranty deed: smaller promise than GWD H&G cannot sue Dixon: o No breach of K o No title Harder question: P should have sued under cov. Of seisin but excluded because of passage of time o No breach of Covenant of Quiet Enjoyment because requires dispossession, cannot be dispossessed if youre never in possession Future cov. Of quiet enjoyment always runs with the land Privity of estate occurs when transfer of title and possession o No transfer of title or possession because they thought they had title but didnt Covenant of Seisin: o Only possible cause of action o Traditional common law rule: present covenants dont run with the land because must be breached at closing o Promise breached = cause of action o Common law causes of action are not property rights Allows H&G to sue: rock. Court held present covenants run with the land o Chosen action is impliedly designed o No privity of estate no transfer of title or possession o Dixon needs cause of action for once he sells because he must have meant to impliedly assigned cause of action when Dixon transferred property to H&G ! Adopt UK approach: instant deed is delivered, coventee held cause of action and deed conveyed title and implied assigned a cause of action o Court held present covenants are impliedly assigned o Expressed assignment: Assignment Cant sue someone for breach of nonexistent promise A made 3 promises: 2 present one future o Present: impliedly assigned o Quiet enjoyment didnt run with the land C can sue a for future or present covenants depending on facts Easement: not exclusive Possession: exclusive Leases: encumbrances, causing dispossession

C to sue A on present covenants, whatever present covenants have turned into a cause of action or not True/Untrue: true always true, untrue = breach Privity of estate: rockerfellor expands, running with land LL transfers to buyer transferring title and reversion No violation for special warranty deed For next class: Problem left off with Recording statute CLASS FOURTEEN: OCTOBER 17, 2013 Review of Present and Future Covenants Who can D sue if ousted by the True Owner? D vs A: D vs B: D vs C: Any suits by C or B? By virtue of the dead Possible claims deed has with parties flow out of the kind of deed that was made Can D sue B? B gets special warranty deed is a very particular kind of covenant. B owned property for a period of time Special warranty deed relates to encumbrances (voluntary or involuntary) Still need to deal with question whether D is entitled to benefit? Does remote grantee get benefit of promise or not? Whether D can sue A on the general warranty deed? (exam question) What promises are contained on the GWD and whether or not D gets benefit of them Future covenant of Quiet Enjoyment: Can D sue A: D is entitled to benefit of promise Existence of a promise (covenant of QE is implied in all leases) and whether or not a breach occurred Still need to do next element that T3 is entitled to benefit of a promise If D can sue A it needs to be for breach of covenant of seisin and/or for covenant of no encumbrances No evidence of any breach Covenant of no encumbrances: when they deliver the deed there are no encumbrances Not true here:

Covenant of no encumbrances (encumbrance is a 3rd party right title interest realitng to property, money, use or possession) If there is an encumbrance, there is a breach of promise that there are no encumbrances If the jurisidiction is nonrockafeller then D cannot sue notwithstanding the fact that there was a breach of the promise because promise doesnt run through Ds benefit Common law causes of action are not assignable Can D sue A? D vs A: Future coenants: Yes because facts state that D ousted by True Owner Yes, if bank forecloses and ousts D after the foreclosure sale Present Covenants: IN majority jurisdiction: NO In minority jurisdiction: Yes, for breach of cov of no encumbrances No, for breach of cov of seisin Can D Sue B? D vs B: no, promise not breached Can D sue C? D vs. C: No, no promises made in QCD Can C or B sue? C and B dont sue since they didnt suffer any damages. They cant be liable under deed covenants Common law jurisdiction: NO causes of action dont run for grantee WHY HAVE A RECORDING SYSTEM? Special issues with real estate Proof of ownership o How do you confirm that seller owns property? Title Indexing/Recording Systems (two principle methods) o Indexing by tract or parcel o Grantor/Grantee Want to have a common place to find the records of ownership Recording system relies on title indexing Every jurisdiction has its own recording statute Race: o *Easy o whoever records first wins Notice o Notice Statute:

No conveyance shall be good and effectual in law or equity against creditors or subsequent purchasers for a valuable consideration and without notice, unless the same be recorded ! A is always winning under common law rule ! Recording statutes always read from Bs perspective ! A would say first in time, Im going to win ! O to A conveyance is not good because no notice re: it. Race/Notice Statutes: o What the common law courts did re: justice between A and B New York Recording Statute: (pages 129-131 of supplement) o A conveyance of real property

Recording statute (heavily tested on the bar) o Every such conveyance not so recorded is void as against any person who subsequently purchases . . . the same real property . . ., in good faith and for a valuable consideration, from the same vendor . . ., and whose conveyance . . . is first duly recorded What is a conveyance: o The term "conveyance" includes every written instrument, by which any estate or interest in real property is created, transferred, mortgaged, or assigned, or by which the title to any real property may be affected. . .; except a will, a lease for a term not exceeding three years, an executory contract for the sale or purchase of lands . . . Every such conveyance [A] not so recorded is void as against any person who subsequently purchases [B]. . . the same real property . . ., in good faith and for a valuable consideration, from the same vendor . . ., and whose conveyance . . . is first duly recorded . . .. o Good faith: ! Someone who paid money ! Didnt know about it ! And recorded in good faith A always wins under common law Through combination of recording and searching can avoid the loss if they search

Common Law

Race

Notice

Race-Notice

3(a): O to A, then O to B (neither records) O ---"A O ---------->B 3(b): O to A, then O to B (B records) O ---"A O ---------->B [R] 3(c): O to A, then O to B (A records) O---"A[R] O ---------------->B

A wins

A wins B Loses: Could have recorded

B wins A could have recorded

(B has to both know and record first) A Wins B loses: could have recorded B wins A loses: Had A recorded, they would have won (because B wouldve been a bona fide purchaser) A wins B loses: could have searched

A wins

B wins A Loses: A could have recorded to avoid loss

B wins A could have recorded

A wins

A wins B loses: B could have searched and No loss

A B could have known (record notice) Had they searched they would have discovered their loss

No matter what jurisdiction: A wins if they record first, and B wins when A fails to record System by A recording, and B searching, each party is able to avoid loss and/or prevent other party from acquiring property CLASS FIFTEEN: OCTOBER 22, 2013 Courts changed common law result Why court of equity would award B vs. A: o B being a good guy, didnt know about O to A, ad equity dictates awarding property to B o Recording statutes are codifications (judge making exceptions) Codified exception to recording statute Every jurisdiction has a recording statute (look at every recording statute as the exception to common law rule) Can B use recording statute to change result: o If No: Left with common law result: As winner Recording statute only says under certain circumstances other conveyance is void *Helpful to think about whats going on in the fight between A vs. B and whether B and whatever jurisdiction in, can they use recording statute to change the result? o A always wins with common law o Always read recording statutes from Bs perspective

Race jurisdiction is few: note that its easy and simple (same simplicity as common law result) o Equitable problems: O to A, and A to B, B still wins o Race jurisdictions dont care, changed common law result based on who recorded first o Other states are equally divided between notice and race notice ! New York is a race notice Notice: shorthand way of referring to a complicated statute o Why do we call notice a notice statute: B is claiming didnt have Notice o Dont feel sorry for A because A couldve protected herself by Recording Whoever wins, losing party can protect themselves Actual Notice (Whats actually in your brain) Constructive: Law will treat you if you know, although you actually didnt know. Implied knowledge o Record Notice (Recording) ! You would have known had you looked ! Doesnt matter whether they looked or not o Inquiry Notice After closing figure out who owns the property Board of Ed and Luthie Case: what does it mean if you have actual knowledge or not o Whats effect of record notice? Race Notice: o Same exact element of notice but in addition, they have to: ! Prove didnt know (deserving of justice) ! Prove they recorded first (kind of like race notice) ! Have to be a bona fide purchaser May record: Permissive What are minimum deed requirements in order to have effective conveyance of property: o Written instrument (statute of frauds says so) o Signed o Delivered Only asking who owns the property On exam: recording statute and figure out what it is: o Every such conveyance is void unless signed in writing by party transferring: ! Conveyance: written instrument where youre creating transferring mortgaging estates and interests in land Must be in writing May be recorded No conveyance other than those created by operation of law New Yorks Recording statute: nowhere does it say race or notice. Signal words first

o Bona fide: good faith and valuable consideration ! Deserving of protection o Recorded first: Race statute o Every conveyance is void against good guy Care about relativity of recording If B has actual knowledge, A always wins to C o Person who cares about ownership is the one either after or before closing (C) C is always going to lose If B has knowledge facts are thrown off Scenario where B doesnt have knowledge of prior transfer: o In notice jurisdiction: what happens after B to C doesnt matter ! In a race jurisdiction: different! Moment at O to B Conveyance: figure out whether B knew or didnt know Although reading recording statute years later, moment of time where looking whether B has knowledge is at the moment of conveyance Notice jurisdiction: B wins because doesnt have any notice, and gets benefit of recording statute Common law jurisdiction: A, assuming B has no knowledge o Everything after is irrelevant B wins between A and B. o B sells: ! Without shelter rule: always lose against A because A recorded ! A could undo application of recording statute in Bs benefit ! Ownership: ability to transfer Need an exception: Shelter Rule: o B won: C will get benefit of Bs win against A o C is not disadvantaged by As recording because otherwise if B wins, As will always go run and record, but B could never sell it. o For recording statute to work: B has to be winner all the time until they sell Agenda 3(e): O to A; A to B; B records: o 3 different types of recording statutes: ! Common Law: A wins Does B get to change result in a race jurisdiction? o A wins. o No. A race statute says you must be the first to record, whenever. B was not the first. ! Notice Jurisdiction: A wins. Can B change result: doesnt matter after O to B conveyance B doesnt have record notice: bona fide purchaser, can undo. Recordation after the fact is irrelevant.

Race Jurisdiction: A wins. o Two different elements: ! Notice ! Must prove first to record o Not a distraction if immediately relevant o Never a tie, always a first. ! B cant use recording statute. Agenda 3(f): Facts are telling us B knows, and they record o Litigation between A and C o Have to figure out Cs rights to property o A to B transaction: ! Notice Jurisdiction: A wins because B has actual knowledge Why B is not a bona fide purchaser: facts tell us they have actual knowledge ! Race Notice: Harder to win than notice. A wins We do not care about Bs knowledge: same problems of common law rule. ! Common Law: A wins o B Sells to C: ! Race Notice: C wins ! We dont impute actual knowledge to a third party ! Bs notice does not taint C Analysis between A and C is done on its own terms. ! Race jurisdiction: C ! Notice Jurisdiction: A C can use conveyance because no actual notice ! Have to figure out whether B knew or not. A didnt record and could have protected herself from B. ! All fights are binary Someone at the end of the line paid money and thinks they own it. Know the shelter rule: o Who owns property and why? ! Answer choices: O, A, C, B Between A and C Start with premise A wins under common law (default) B has burden of proving they can undo result Recording statute helps us figure out state of title: whether or not prior interests affect you or not: o Do they run with the land? o Can you kick tenant out or not? Conveyances (recording statute applies all): o Any written instrument by which an estate and interest is created with the land

o O mortgage: O leases: O sells ! Trying to figure out who owns property and what about those interests? No one fighting C for ownership Need to show O is not owner by a deed. ! Use privity of estate to show transfer of title and possession Conveyances satisfy privity of estate Lease doesnt disappear because LL sold property: o Dispute, buyer says I didnt know about lease ! Fight between buyer vs. tenant: Common law: tenant wins ! Are we going to respect interest? (enforce) ! Protected by taking possession Lease doesnt need to be recorded Buyer cannot use recording statute to set aside lease (because tenant is in possession) CLASS SIXTEEN: OCTOBER 24, 2013 What is the state of the title? (really asks): Who owns the property? o B Owns under common law and C cant use the recording statute ! B wins ! C loses ! What remedies does C have against O? ! Whenever A records defending them being the first to record If a hadnt recorded b would be using the statute offensively What is the state of title (encumbrances that affect title)? o B owns If youre looking at the assignment, theres three separate transactions: o Original lease o Sale o Subsequent assignment to T2 Rockefeller definition of privity of estate: o LL transfers title to buyer pursuant to deed o Transferring possession pursuant to assignment to T2 Transfer of title & transfer of possession is privity of estate Buyer takes subject to the lease o Lease was a conveyance o Sale came after Totally different kinds of transacts o Both affected by common law rule first in time

o Recording statute can apply bc applies to all conveyances and a lease is a conveyance (even though it cannot be recorded---cannot record a lease less than 3 years, still protected) o Inquiry notice of possession ! Searched building: should have had some inquiry notice of your possession Luthi v. Evans: o Labor and time: ! Race transfers ! Performed a search (not totally irresponsible) No way of them finding it because kufahl lease was never filed ! B wins: Conveyance is effective between two parties: as a matter of property law who was owner of property between two parties: o Has to comply with conveyance law, SOF, has to be delivered, accepted, identify parties and property o Need to know that, or else it wont be effective because it doesnt convey the property, but theyre effective enough ! Court says deed is effective between O and A ! Policy justification: court says intent is for the recorded instrument to convey or give constructive notice to the subsequent purchaser Deed has to generally describe property so someone can find it o Mother Hubbard clause effective between O and A, not for purchaser who did not have notice ! B did not have actual notice even though they did the search ! Pick a party as a cheap cost avoider: A (because first recipient) Page 167: Once you present deed for recording, cant assume party is going to do right thing (pure loss question) o Simply a policy question of which party: A or B will bear risk of the recording office mistake. ! Whenever youve done a recording statute analysis: winner or loser Does loser have remedy, can the loser sue someone under deed covenant o Less sympathetic to A because theyre responsible for their own loss o **You will not have question citing Kansas Purpose of this case: A recorded deed gives constructive notice o Except when it doesnt:

Mother Hubbard clause describing an unnamed property thats no longer described Effective and neat ! Effective to convey property but come with certain inherent risks Board of Ed case: o Court asks: when what the Hoerger/Hughes deed effective (option 1 or 2) o Significance of wild deed (does it impart record notice) ! (Luthi case: It is recorded, but thats not enough because had B looked wouldve found K lease ) o signed deed that is blank, why pick an option that doesnt punish or incentivizes someone to wait around and record it ! how do we know when he put his name in? perjury risk court picks Option 2 o what is the purpose of being recorded? ! Policy: recording recognizes someones loss if they dont ! Did board of ed really record? Best position between board of ed vs. hughes to make sure that earlier deed had been recorded: BOE o Wild deed problem: answer choices that make wild deed problem applicable in a track index jurisdiction: would have opened up box for this lot and found the D&W and BOE deed ! BOE could have fixed it even after discovering they hadnt recorded ! Race notice jurisdiction (without notice & first to record to get benefit of statute) Pure notice? Race: didnt have notice because couldnt find it, and werent first to record ! BOE winning because of shelter rule (option 1) Race notice: option 1: b loses o Although D&W doesnt have notice, theyre not the first to record ! DW last to record A & C: hughes and BOE: a little unclear and comes back to question: what does it mean to be the first to record Both Luthi and BOE are 2 examples with deed recorded prior to subsequent deed and notwithstanding: race recording statute o Identify what was covered by that deed so people can find it ! Index: make sure everything in chain of title was recorded ! Who wins out of BOE and Hughes: Hughes wins if youre in a grantor grantee jur. Bc it is a wild deed vs. (attractive choice): Hughes wins no matter where because it is a wild deedwrong answer but close to being true Harper v. Paradise:

o Stands for proposition: harper gave a deed to Maude (lost, later found) subsequent chain of title to Paradise ! Who wins between parties? Paradise argues: Deed recorded made reference to 1922 deed: never recorded, made notice of it Impact of this case: anything referred to in recorded document you are in notice of O to A deed: remember purchase option in agreement. o Now on notice even though purchase option NOT recorded ! Making reference to an unrecorded deed Inquire what that document is Recording statute cares about notice Introduction to Adverse Possession: (2.5 classes) o 2 cases: ! (controlling law in NY) & manilo case CLASS SEVENTEEN: OCTOBER 29, 2013: ADVERSE POSSESSION Examples: Squatter: o Goes into possession, and then try to stay in possession True owner may bring judgment action against wrongful possessor (TO v. AP) No other person in world, other than true owner can bring judgment action against that possessor (only TO and no one else) Fight between AP vs. someone in future; who wins? o First in time, first in right = ! AP (even if wrongfully there, have better rights than other people in the world) Adverse Possession: o Hierarch [TO; AP; ROW] o Cause of Action of Ejectment: ! Two elements: Defendant is wrongfully in possession Plaintiff has either the true ownership and lawful right of possession or better rights than the other party (have to trump the other party) o Policy Reasons for Statute of Limitations: ! Moment in time that one can bring the cause of action Cause of action for ejectment: have to prove you have the lawful right of possession o What moment in time does D become unlawful possessor? (answers the question) o Begins the moment in time the unlawful possession begins

o Adverse possession doesnt apply to tenant (lawfully there) Why do we have SOL in litigation: why 6 years o Way of limiting number of claims (do not want to clog the system) o Relying on peoples testimony: time is against us o What is adverse possession: ! The moment in time when the true owner loses the right to bring the COA for ejectment against the AP because the statute of limitations has expired (evidentiary) Some moment in time when true owner can no longer bring COA If true owner can bring an action for adverse possessor, is there anyone else who can? NO. AP 1 vs. AP2: AP1 always wins, first in time, first in right o No better rights than AP1 ! Prove Unlawfully in possession AP2 cannot prove better rights of possession vs. AP1 ! AP becomes true owner when clock strikes midnight of the last day of last year of applicable SOL ! If TO cannot bring a COA then no one can Ownership is the right of possession o Tenant has very limited right of possession ! Diligence: we dont like an owner whos lazy who doesnt verify that no ones one his/her property Create a rule that incentivizes owner to be diligent: reasonable o Punishing sleeping owner ! Rule punishes sleeping owner and rewards the person possessing it and putting it to use ! Having mechanism to have uncertain boundaries certain (correcting mistakes) ! Same primitive impulse of the person having possession to have it as theirs since theres some sort of attachment (some doctrine to prevent the psychological damage that would arise if allowed TO at any point to come reclaim the property o Policy Reasons: Duration: Continuous Uninterrupted Length of time o (tacking and disabilities) Possession: Actual (note: constructive possession)

Open & notorious (notice element) o Material/major (imputed notice) o Minor (actual notice) Exclusive Hostile & Adverse o Claim of right o Objective/no intent (ct. rule) o Intent Van Valkenburgh (True Owner) v. Lutz (AP) page 122 NY Statute (pages 125/126) Section 34 (applicable time period) Section 38 o Definition of possession under color of title: ! A deed/written instrument o Color of title vs. claim of title (claim of right) ! Sec. 39 gives definition of adverse title: where there has been an actual and continuation of possession of premises ! Definition of AP when there is no color of title ! Requires claim of right or claim of title Sec. 40: Definition of possession for section 39 ! Didnt have a deed, not owed freebie ! Didnt own and started adversely possessing it. o Constructive adverse possession No adverse possession (AP loses) Valkeburgh sues for ejectment: Page 126: deemed to have been occupied for the same length. o Land is deemed to have been possessed Majority court: Two elements: o Actual possession o Under claim of right What constitutes actual possession o Enclosures (fences), cultivation (something you do with the land/build), and/or improvements (just means something was built, nothing related to redecorating) What did Lutzes do on land that constitute possession: o Built house o Garage o Farm, garden, chicken coups, automobiles, etc. o No evidence of enclosures (no protection by substantial enclosures) o Cultivation: gardening o Improvements: show cultivation utilized premises claim (Speculation and surmise to say actually cultivated property) o Only thing left to prove 1st element of possession o But was it under a claim of right? ! Argument: Had bad faith (fails: cannot argue that)

Charlies shed: Dissent calls it a 1 room dwelling Majority calls it a shack ! Garage encroachment (fails) Cannot satisfy claim of right if you have good faith believe that it was your own land because youre not making a claim against 3rd party o Do you intend to claim the property as your own? (This is what claim of right is) Page 134: discussed current state of AP in New York: o Later case clarified Valkenburgh: arguing must have bad faith ! Passed statute defined claim of right: a reasonable basis for the belief that the property belongs to the AP In NY: legislature got rid of Valkenburgh and made it clearer o Have to thought that you owned it Dissent Manillo (True Owner) v. Gorski (AP) page 136 Valkenburgh: going to actual element of in Actual Possession Notice part o Whether equitable to apply adverse possession to someone when adverse possession was so small that it might not be easily noticeable o Court discusses that issue and state of mind that adverse possessor has to have. CLASS EIGHTEEN: OCTOBER 31, 2013: Has to be hostile & adverse Hostile: you dont have permission o Like claim of right: looked into state of mind of adverse possessor o Some jurisdictions look at intent & some dont ! No state of mind is easy: were they unlawful possession? ! Whats the intent of parties in a contract? ! Jurisdictions with intent: require AP mistakenly thought it was their land Vs. counterintuitive (knowing trespasser; squatter) Whether or not unlawful possession; think true owner, satisfies hostility o All adverse possession arises by unlawful possession (trespassing) o Only when possession becomes unlawful (SOL) o When possession became unlawful, what was adverse possessor thinking? ! Mistakenly? ! Or actually know that they didnt own the property

Main doctrine: jurisdictions require in order to meet hostile adverse possessor: someone who knew they didnt own property; only way to succeed AP is if theyre bad guy o Trouble with AP because it seems like stealing ! Punishes person who is in good faith but mistaken to believe it was their property Ct. Rule: Pierce case talks about any unlawful entry is hostile since without right, and good faith mistaken AP, can claim AP bc unlawful possession itself giving rise to cause of action ! Good fact: most jurisdictions dont look at State of mind anymore ! Just look at whether possession was unlawful ! If AP flows out of COA for ejectment: (for unlawful possession, not KNOWING unlawful possession) Unlawful: it is hostile o State of mind jurisdictions: require AP know they didnt own property, other require AP had good faith ! Mistakenly believed that they are the good guy o New York: Legislative Enactment: referenced on page 134 note 3, requires a reasonable basis for belief (do have to look into state of mind, to prove reasonable basis for belief, not enough to be there without permission) Variety for jurisdictions looking at intent some require good faith & some require bad faith o Actual possession: cannot acquire anything other than AP ! Exclusivity: hand in hand with possession distinguish between easement Notice element: are we going to reward AP to acquire by AP if their hostile AP was obvious o Equity aspect: doesnt seem fair to penalize TO if act of possession is so minimal doesnt seem fair to punish ! If AP is punishing sleeping owner, require possession to be open & notorious (easily observable) Material or major encroachments or possessions; (if AP has occupied such a large piece of land no need to survey to see that) doesnt matter TO doesnt know or not, impute notice; no equitable concern vs. Minor: something really small, no impute TO knew, just actual notice If possession is clear & unequivocal clear and material: TO should know about AP

o If small: no inference that TO actually knew ! No presumption or inference/implication of a legal status to TO o Material: observable to naked eye; OR o Minor: Not observable to naked eye This would require TO being on constant alert (not fair) o Manilo: not exceeding several feet ! Must prove TO knew or not ! This particular encroachment (bc 15 not exceeding several feet); no proof of actual notice: whether or not TO knew or not; cannot assume it in absence of actual knowledge ! 10 feet = material State of mind vs. Significance of encroachments o 15 equity aspect of notice o state of mind: hostility many jurisdictions do not care about intent because COA for ejectment doesnt relate still there unlawfully o equally ejectable AP: evidentiary; delineate the extent of APs claim o Constructive possession exception o Policy reasons: productivity theory: why should we benefit you through AP if youre not making land more productive ! Only for a portion of land part of a larger parcel described in instrument Duration elements: o Actual o Open &Notorious o Exclusive o Hostile & Adverse Howard v. Kunto: o Howard got wind of problem a year later from Kunto moving in ! Easy loss/win for Howard bc of duration of Kunto on property o Facts: ! Overall big picture: McCalls TO of lot D, but moved into lot C Howard TO of lot B but moved into lot A Moyers moved into Lot B Mccalls sold lot C to millers, but should have been lot D Deed transferring lot d, Kunto went into possession of lot C ! AP tracks who is TO and who is in possession What moment in time someone became AP is time when COA for ejectment starts o Unlawful possession for mismatch is a mistake

o Are you giving credit for Kunto for other partys prior possession ! Taking same approach for possession? Each transfer effect of unlawful possession ! Moyers transfers deed to Howard: who is in good shape because of that transaction? Only lot so far where we have a match between TO and possessor (what we want) person in possession to be in possession o Moyers solved problem without going to court o Howard further away from owning property but no better position ! Howards needed to have whoever TO of Howards property to transfer ownership to them but not to Moyer o Focusing on lot C: Howard v. Kunto: record owner vs. possessor ! Record owner of Lot C suing the one who is in unlawful possession Kunto owns lot D not C AP problem is arising TO of lot C: Howard ! Millers having closing with Kunto: transferring title to next store lot (lot B) o Answers: Continuity question: was it continuous? ! Not literally uninterrupted but whether possessor is acting like a true owner Possession of property in a way that TO would: o Summer house: no ones expecting you to be in possession in winter ! Summer occupancy OK for continuity o Requisite possession only requires the way TO would for similar nature o Reject conclusion of summer occupancy of summer house does not constitute continuity requirement ! Based on property Continuity: like, nature & condition ! Length of time: must get credit of prior APs possession Add on prior parties possession Important: referred to as tacking* o Page 145: none of property occupied by D-Kunto coincided with property in deed: purchaser may tack Adverse use of predecessor in interest ! When transferred deed intended to cover lot of land owned

o Page 146: tacking: (Credit for prior possession) of AP is permitted if successive occupants are in privity ! Deed running between properties traditionally furnishes privity which connects occupancy (some lawful relationship) Succession of trespasses: even with no interval, will allow defeat of title Claim of right: squatter shouldnt profit from trespassers o Good faith belief of ownership but had deeds of transferring property o Privity of estate: transfer or title or possession No ousting, just voluntary transfer of title and possession All took possession when transferred possession Policy with POE: distinguishing (no benefit to squatter or AP2): no punishment for AP1 to AP2, not start of SOL every time, but when first AP came into possession o Page 147: claim of right: no less persuasive than purchaser who purchases more than deed described ! Final analysis: claim of right relational Relative rights: whether or not some way to raise their claim above claims of others Several successive purchasers received record title of tract of mistaken belief of another tract o Sufficient POE to permit tacking ! POE coming into play for AP re: tacking (voluntary transfer of title or possession) No voluntary transfer = tacking Tacking voluntary transfer of title or possession Question 2 & 3: (will have one like this on exam & disability question) o Difference between 2 & 3: 2: o is TO; and stuff happens to property: divvying up property: what does A acquire? ! O dies leaving will giving Blackacre life estate to A & C O dying happens after A gets possession 2 vs. 3: O dies and divvying up happens first and then AP enters: what kind of title does AP get? o Easy rule: AP gets state of title exists at moment they step foot on property ! When AP entered in 1996, B had a life estate ! Vs. 2: A entered property in 92, o owned title.

Pick up questions 1, 2, and 3 and Disability Question for next class

CLASS NINETEEN: NOVEMVER 5, 2013: Exclusivity: looking for someone acting like an owner State of mind: (hardest part of the elements on the possession side) o Easiest to start with is state of mind: either look or you dont ! Jurisdictions: dont look at state of mind because cause of action for ejectment requires unlawful possession Why should we care Hostile adverse and claim of right o Hostile and adverse: without consent ! Adverse: aspect of unlawfulness *there without permission of the other Claim of right: courts left to figure out what that meant State of mind of the active trespasser or something else Have to use in a like manner in a use that a similar owner would use Fishing property: during fishing season o Uninterrupted o SOL hasnt passed: ! TO finds out about it ! Can go into court and bring COA for ejectment ! Right of possession ! Stopped clock and has not acquired property by adverse possession even though hit all elements Question 2: AP entering property in 1994 and TO something happens: o Question 3: AP entering in 1996 o When Statutory period expires what kind of possession does AP have ! Who owns the property? Once the entry against owner: AP begins: o COA for ejectment begins o Will not be defeated or interrupted by subsequent transfers of the owner o We will not reset the clock to 2010 or 1995 ! Either relates back to what TO has at the moment of time AP enters property ! At moment of time AP sets foot unlawfully onto property

What kind of title relies on the above fact TO divied up property (common with wills and family transfers giving B a life estate remainder to C) When life estate terminates, remainder of property will revert COA for ejectment: o Unlawfully in possession o P has to prove lawful right of possession (between 1994 and 2004: B) o Only right of possession o Cs ability to bring a COA

Disabilities: o Equitable one o Tolling statute: stops clock: told that TO finally can bring COA after disability is removed ! No infinite amount of time, wouldnt be fair either ! Disability: not legal term ! o TO under disability: AP enters that year 1984, TO dies, inheritance of property without disability at that time o Disability portion of statute: whether that extends period of time helping TO ! Under disability: example of where TO gets benefit of disability statute Removed in 2007: qualifying disability o Ignore later disability because statute tells us to o If person entitled to bring COA : TO at the time COA accrues ! Because of that, thats why were ignoring later disabilities because statute instructs us to. ! How Is Os interest protected: someone should be responsible for their well being ! Disability statute: one way of going a little further than relying on guardians and executors Have a disability statute (will be provided the text) o Time period will be different (not 21) o Focus on: ! Time period ! Whats a disability Need your magic glasses to get question Be distracted by subsequent disability What did adverse possessor acquire (question 1 or 3) o What did they acquire: state of title

o Will have 3 paths to go out Acquisition of Property: o Purchase of sale o Adverse possession o Gift: Will pick up Acquisition of Property on 11/7/13

CLASS TWENTY: NOVEMBER 7, 2013: Acquisition of a gift as property: Transfer of real property Transfer of personal property Inter vivos transfer vs. testamentary disposition How to make an effective gift o Intention ! Oral evidence can be used ! Not easy to figure out intent ! o Delivery: if object can be delivered it must be manually delivered Actual/manual; constructive; symbolic Actual/manual: physical act Proof of delivery: objective acts o Difficult: to what extent do we give possession and do we give more weight o Purpose of manual delivery: ! Relinquishing statement: hereby give you something Impractical objects: piano o No consideration (voluntary) ! Hypothetical essay question: mention it, but do NOT go into major detail, not the issue o Acceptance (presumed) o Irrevocable Page 166 (1st para) o Question 1: ! O owns a pearl ring. While visiting her daughter, A, O leaves the ring on the bathroom sink. After O leaves, A discovers the ring. When A telephones O to tell her of the discovery, O tells A to keep the ring as a gift. Has there been an effective gift made o Intent (YES) ! In order to have a gift you need intent Apply facts: !

o O tells A to keep ring as a gift (oral statement) o Symbolic is a key: symbolic act o No evidence of consideration (voluntary) o In order to have an effective gift: apply rule statement ! Except until gift is presumed In order for not to be acceptance, have to be something affirmative to show donee rejecting it (liability) o Gifts are effective only in the present ! hereby is present tense Must be intent + delivery of the item o Delivery: ! Actual; constructive; symbolic nd 2 Para of first question: o Suppose that A does not telephone O to tell her the ring has been found. A week later, at a dinner with friends, A surprises O by producing the ring. O takes the ring, looks at it, then gives it back to A saying, I want you to have it. Its yours. A tries the ring on but it is too large for As finger. O then says Let me wear it until you can get it cut down to fit you. O leaves the dinner wearing the ring, is struck by a car and is killed. A sues Os executor for the ring. ! What result? When daughter hands back to Mom no intention to make a gift o Suppose that at the dinner above, O had not said the words quoted, but instead said I promise to leave you this ring when I die ! Issue: Delivery: intention to give gift. Promise (without consideration) are not enforceable: o Only way to transfer property at death is by a will Mom wearing a watch hands daughter A a signed writing saying: I hereby give A the wristwatch I am wearing. o Q is this a valid gift? ! There is intent Is there delivery? o In order to have effective gift has to be intended delivery. Here clearly intent that she gave the watch to her daughter. Issue is whether there is delivery. ! Three different types: Manual constructive: actual delivery of the item: if it CAN be delivered, it MUST be delivered Constructive

Symbolic: implies thing capable of being delivered Although writing trying to conform, here since watch is capable of being delivered, writing is ineffective.

Newman v. Bost (pg 167) o Miss Newman suing for conversion ! Unlawful possession of personal property Have to get it back to reclaim possession o Suing for life insurance policy o Household property including bureau o Insurance proceeds from piano o Furniture o What property is she claiming? o Facts: ! Asked nurse to give keys to mantle ! Gives keys to Julia and says I want you to have everything in the house ! Unlocked bedroom bureau (which contains life insurance policy) o Analysis: ! Intention not required to announce expressly ! Can infer intention ! Delivery requires some objective act No three kinds of delivery Just one kind ! Difference here: Wasnt actual delivery o Donor didnt take anything out of bureau or separately mention it ! Something about intent ! Life insurance policy is deliverable ! Constructive delivery is different than a safe deposit box ! Intent: gave keys that opened up everything Difference between Thomas vs. Louis where donor takes out from bureau o Proves intent ! Delivery intent gets intertwined ! Wasnt a gift because of constructive delivery because (page 172) impractical Constructive delivery will apply because those things did not have to be delivered o Piano: arguing a lifetime gift

Court says it might be a gift But question as to delivery (insufficient evidence to delivery) o Remand to lower court to answer question Reasoning in Newman v. Bost: was there a valid gift? Was there intent? o Give insurance policy o Whether delivery: intent clear ! Capable of being delivered it has to be delivered (strict about requiring manual delivery) If you can do manual delivery, you must Possession is presumption of delivery ! Traditional common law rule: if it can be delivered, it must Insurance policy is easy Gruen Case: o Dad wanted to retain life estate to give to his son for his birthday For Tuesday: Gruen Case Estate system (3 classes + agenda) CLASS TWENTY-ONE: NOVEMBER 12, 2013 Constructive delivery: Adam v. Hayes is precedent (if it can be given it must be given) o According to court constructive delivery is permitted only if ! There is plain intent to make gift (back door way if bringing intent back in) ! If thing intended to be given is not present or ! If present, is incapable of manual delivery (Size/weight) No constructive delivery allowed if item: o present o And capable of being there Adam v. Hayes: o In their jurisdiction: pretty good summary of traditional rule of constructive and manual delivery ! A lot of ifs If there is a plain intent to make a gift o Stronger/clearer intent of donor now proves constructive delivery permitted o If the thing intended to be given is or is not physically present o Life insurance policy is capable of delivery ! No constructive delivery allowed if item is present ! And capable of being given

Must actually be given this must be had Constructive delivery only arises once concluded manual delivery is incapable ! This court flat out rejects symbolic delivery Whenever transfer of something less than entire shopping bag of rights o You have bifurcated future rights (your estate system) Gruen v. Gruen: o Tell from the facts that the stuff in the bureau donor physically delivered stuff to done o Dad made a lifetime gift of this future interest ! Just like a LL made a lifetime gift of reversion (giving property when lease is up) ! Argues that gift was testamentary in nature Have to be careful with whether or not thats true o Easily confuse a life estate ending and a future interest in being what is a life estate in nature o Cannot make a gift of chattel and retain a life estate More technical argument: cannot make a gift of chattel and claim a it as a life estate o Hereby granting property but retaining all for mineral rights o Concept of reserving reservation is very common in property law and conveyancing. ! Not a constructive delivery case Different in Julias case, didnt take anything out fro the bureau Key involved: donee received contents of the strong box/safe o Donor gave key (classic delivery) ! Unlike a bureau with intrinsic value: rare for anyone to buy a safebox for its beauty o Intent and delivery: not an axiem to plot out on a graph: more clearer intent. Less require for delivery o But often will see the slippage, intent of the donor intended to make it a gift ! Makes it easier Never made specific reference o Bureau doesnt necessarily hold life ins. Policies ! Safe did o Who is suing whom for what? ! Son is suing step-mom for order that he is the owner of the painting o Sons argument: dad made an effective intervivos gift o Facts:

! !

Dad bought painting for $8,000 in 1959 Letter 1: giving painting to son but retained possession of painting for lifetime ! Letter 2: instructing son to destroy old letter states outright I hereby give you the painting ! Son never takes possession ! Dad has possession of painting till he dies ! Son asks step mom for painting and she refuses o Can any donor make an inter vivos gift: present vs future: (gift giving) looking for whether or not grantor can revoke gift (whether they can change their mind) o We are concerned if donor wants to make a gift until death ! Not whether death triggers, because always true with life estate Common tool for families with estate planning o Legal question 1: can a donor (dad) make an iner vivos gift retaining a life estate where done (son) never had actual possession before donors death? (I hereby transfer you future interest) Legal question 2: if the answer to question 1 is yes, do the facts support finding such a gift (intent, delivery and acceptance) o If no, gift is ineffective ! But yes, still have to figure out whether or not a gift was made (legal requisites of making a gift) o Very easily could have accomplished what dad wanted had he done this two step transaction Okay to make a gift o Bottom of page 177 Whether or not you can make the split: o How do you prove intent? o Sometimes it might say intent is. ! Or contract has some sort of intent like statement ! Court is left to figure out what the intent of the parties are Sometimes they restrict themselves to four corners of document or look at other evidence Letter 1 was destroyed due to dad writing in letter 2 to destroy it o Court says read all letters together: letter 2 does not invalidate letter 1 o Manual delivery? ! No painting stayed on the wall o Constructive delivery? Letter 3 is a piece of paper indicating intent of the gift o Court discusses details of delivery requirements ! Why have a delivery requirement? About preventing fraudulent claims Manual delivery is the best form: if you can, you have to do it

! !

These questions will come up in context of: who owns it: but really figuring out whether the gift was effective or not o Once you figure that out, you can find out who the TO is ESTATE CLASSIFICATION SYSTEM: Agenda: o Discussion of historical background of estate system: ! Old: based on medieval times Estates in general: conveyancing (Transferring, selling, alienating) o An owner of an estate may convey part or all of what the owner has (but not more) o Whatever isnt conveyed by a grantor is necessarily retained (Whether or not you say so) ! Grandpa says: to grandma for life, and nothing more Retained reversion o Automatically is retained (what isnt transferred is kept) o Whatever you have left: whether four marbles or reversion: whatever property interest you have retained you can transfer (free transferability of property) ! During lifetime ! Or when were dead ! If it is when were dead: Under will: pick who gets your property o Grantor can transfer that retained piece to a 3rd party (inter vivos, will, intestacy) For Thursdays class: o White v. Brown o Baker v. Weedon CLASS TWENTY-TWO: NOVEMBER 14, 2013 Life Estates: Law is somewhat tolerant of some restrictions o No need to know all three Fee simple absolute cannot have restraints on alienation or transfer o Makes property unmarketable ! Discourages person taking care of property ! Creditors from getting property can never use it as collateral White v. Brown: o Facts: ! Ms. Jesse Lide (widow who died) leaving holographic will (will written in decedents hand)

Wish evelyn white to live in home that she lived in and not to sell that house ! Lide made will leaving property to evelyn (sister in law) o Trying to figure out what Lide created o Same idea about meaning to find out which cubby hole o Is it a FSA with an unenforceable restraint on alienation? ! Is it a life estate with a condition/restraint (requires consent of remainderman? intent? o Does not deal with future interest (where trouble arises) ! Create a life estate If she was 70 years old when sold it, 48% o Modern rule: meant to create larger estate ! Presumption: resolve estates in future absolute o Modern rules: bigger estate ! Difference because presumption will come in handy Baker v. Weedon: o Facts: ! Weedon has a will: To my wife, Anna Weedon all of my property during her natural life Upon her death, to Annas issue, if any, and if no issue, then to Johns grandchildren No dispute as to type of estate (life estate) Competing interests between present interest holder (life estate) and future interest holder (remaindermain) ! Why sell a good thing when property is going to double two years from now Their interest is not the same as her interest o Present interest vs. future interest ! Natural conflicts between parties are created ! Present: get to cut down trees so nothing left for remainderman o What are the standards? ! Maintain, repair, sell it, does property support any sort of meager existence? o Property might go up in value at a higher rate Life estates: usually left for family members o Hard to sell o Cannot lease it, but if you do and someone dies, lease doesnt trump life estate, life estate disappears on its own terms o Cant mortgage it: common law obligations towards property (pay insurance, make repairs, etc.) Not many instances for property lawyers do estate planning DEFEASIBLE FEES: Vocabulary:

o Defeasible (defeased) brought to an end o Fee simple Determinable (FSD) o Fee simple subject to a condition subsequent (FSSCS) Fights over triggering event (Whether or not it occurred) Common: limitation (triggering event) o Fee simple determinable: ! Same because they have a triggering event ! If condition/event occurs, estate automatically ends Do not have to do anything for it to end ! I hereby transfer property so long as you dont divorce _____ if you do divorce, someone has that future interest: creator of the estate either was silent (retained it) or might specify who gets that future interest future interest because theres ALWAYS a future interest with everything o feasible fees might come to an end but law treats it as if something might happen as if it will happen: treated differently ! if event occurs: whoever has future interest doesnt have to go into court (trigger) no need for further action (unless need to remove someone from land) language used to indicate: o Until o So long as o During o While Need to distinguish two based on language because (just like recording statutes) need to read one and know what it is, need to read a deed and determine if its FSD or FSSC o Fee Simple Determinable: create present interest, transferring it to _____ (for so long as: trigger) future interest transferring everything but still change that school uses land for different purposes, and then the land will revert Possibility of Reverter (POR): Future interest: (retained and held by grantor/creator) either grantor expressly reserves it or it is silent (operation of law) o What you havent transferred, still own (axiom of conveyancing) o When create defeasible fee: creator can either indicate who gets future interest if trigger happens, or reserve it for themselves, or be silent about it Fee Simple subject to a condition subsequent (FSSC): o Also feasible with triggering event ! If triggering event occurs, estate doesnt automatically go back to creator Holder of right of entry or future interest has to do something

SEMICOLON RULE: FSD vs. FSSCS: (can only use this for property exam: NOT BAR) o FSD: To a for so long as.; then ! A little more cramped (smaller) ! Reversion happens automatically ! Only way if condition is exactly the same, only way to distinguish two are timelines ! Distinction between the words: so long as it is more limited, closer to the grant o FSSCS: To A; but if , then (bigger) ! Rather have FSSCS because its weightier Fee simple absolute String added on if you.(trigger) Until exercising power of termination Answers the question of: whos the owner? FSD: o Future interest with special name o Fact pattern: possibility of reverter: has to be since it is FSD (good evidence) FSSCS: o Right of entry or termination FSD & FSSC: not stated who gets the property if the condition occurs o When 3rd party designated by the original grantor to hold that string ! Creator holds everything they own Review: o Future interest: ! Estate Future interest? FSA None Life, Fee tail, term of years Reversion of remainder FSD Possibility of reverter* FSSCS Right of entry (termination)**

Transferability of possibility of reverter and right of entry????? o Under common law couldnt make inter vivos transfers of POR or ROE ! Only exception: holder of future interest could transfer POR/ROE to the holder of the present possessory interest Questions on Page 256: O to A for 20 years: future interest? Yes. This is a lease. *even though havent stated it there is a future reversion O conveys to A for life then to B for life. O dies with a will that devises all of Os property to C. Then A dies, then B dies. Who owns property? C. Facts of Mahrenholz: (REALLY IMPORTANT CASE*) First transfer by Hutton to school dist for school purposes only; otherwise to revert to Grantors

o Transfer to Jacqumains to Mahrenholz ! Same time transfer reversionary interest (Jacqmains to Mahrenholz) ! NOT enforceable/permitted: Defeasible fee Either right of entry or power of termination (FSD or FSSCS) o Rule: cannot make a lifetime transfer of the future interest inter vivos transfers of POR or ROE ! Only exception: holder of future interest could transfer POR/ROE to the holder of the present possessory interest o Hutton dies, Mrs. Hutton dies, Harry is only heir o If triggere didnt occur, different consequences if whether or not FSD or FSSC o Going to have to go into Court o Mess: ! HH release and disclaimer-----school district (recorded Oct. 4 1977) Transfers everything to Mahrenholz and recorded it Later transaction HHs transferred to school district and thats recorded Think about: o *Chart on Powerpoint o try to figure out if the condition occurred, (breach, no school not used for school purposes) and FSD who wins? ! Mahrenholz or school?

CLASS TWENTY-THREE: NOVEMBER 19, 2013 Defeasible Fees: o Both have a relationship with an event in the future ! Certain rights happen o Fee Simple Determinable: ! Holder automatically gets the fee o FSSCS: ! Trigger is triggered and holder of the reversionary interest (right of entry, etc.) if condition occurs depending on how its written Either claim that trigger occurred but knowledgeable about event happening, thats why theyre in court asserting rights Different ways of helping figure out which is which: o FCCS: ! To A; but if, then o FSD: ! To A for so long as..; then Semicolon to extent of its use is just another way of remembering special language that follows after it

If facts talk about right of entry or power of determination there is some sort of clue about what they are talking about ! Certain kinds of interest (defeasible fees) Not transferrable whether by sale or gift and were only inheritable by heirs o Reversionary interest: havent caught all the rights o Classification of the estate o Encumbrance: any third party right to use in possession in right or lien, and tenant has the right of possession ! Preceding easement: owner transfers, subject to restrictive covenant ! Because a lease is an estate: legally what is happening ! In actual transaction do deal with both of those (deed + assignment of leases where LL assigns all interest in leases just in case) Exception relevant for Marenholz is that only transfer of the future interest associated with defeasible fee (respected at law) is the one to the holder of the possessory estate o Not talking about leases o Holder of the possessory state of the defeasible fee is the holder of the defeasible fee Facts of Marenholz: o First transfer of 1941 to school district ! Didnt transfer property outright to the school If for some reason school is not used for school purposes they will buy property o Not enforceable, Huttons passed away and Harry is the heir ! Issue: did trigger occur, was condition violated? Was school used for school purposes only or no? Releases and disclaims to the school district which is a kind of transfer (rights are against the school because theyre the holder of the defeasible fee) o Trying to make sense of these last two transfers (3 and 4 in 1977) ! Only two choices for type of fee Other question that would affect analysis is whether or not trigger occurred School district has FSD and stipulating in 1973 that these facts equal a breach (trigger) o Defeasible fee automatically ends and reverts and the holder of the string doesnt have to do anything ! *Harry

in may 1977 what harry owns is the fee simple absolute (legally)

Co-Tenancies: o Background: ! (Concurrent ownership interests) ! Tenancy in common: TIC Separate but undivided interests in the whole More likely to see in a family context If grandpa gives property to two or more people (coownership relationship) 2 or more parties buying property at the same time ! Joint tenancy (with rights of survivorship) [JTWROS] fragile only have meaning at death If you own joint tenancy interest upon death, automatically go to joint tenants by operation of law o Cannot change who will get that property by your will ! If A&B take property, either party can unilaterally convert it to a tenancy in common 4 unities (time, tile, interest, possession) Unity of possession: each have right of possession to the whole o Exclusive rights can be given after, but moment of creation at Joint tenancy you have unity by possession ! Tenancy by the entirety (TBE) 4 unities plus unity of marriage doesnt tell you anything about what portion of the property they own acquire interest pursuant to time you acquire instrument Must also have unity of marriage o Cannot be unilaterally destroyed ! Only if you sever marital relationship ! Separate property rights ! No survivorship rights o Co-tenancies apply to all types in state ! Defeasible fee: holders of interest can be co-tenants ! Most commonly fee simple absolute Four unities were once in existence but thereafter severed, converted joint tenancy into tenancy in common o Joint tenant transfers to 3rd party, or they transfer to themselves

o If A & B held as joint tenants, and A transferred to lawyer, but transferred back to A, now A & B acquired interest at different times ! Joint tenancy: Must be same document at the same time Any individual can sever it by a transfer because separate transfer will destroy in transfer and unity of time

CLASS TWENTY-FOUR: NOVEMBER 21, 2013 Concurrent Ownership Interests Co-Tenancies Undivided interest in the whole: o Property was sold, each get 50% of proceeds ! Simplest tenant in possession: default Four unities: need unity of time title and interest in possession o Time and title goes together ! Time: when you get the interest ! Not enough to be engaged must be legally married in the state the property is located o Joint tenancy with rights of survivorship is simple in estate ! Doesnt effect tax because its quick ! Who was described in the instrument as husband and wife ! Tenancy by the entirety is unusual: Some jurisdictions o Problems on 322 ! Q1: O conveys Blackare to A, B, and C, as joint tenants Dont have unity of time or title o B and C received their title pursuant ! No different than b dying in testate with B as an heir Owner has a joint tenancy and now dead, and havent transferred it before death and transferred by operation of law by one joint tenant o Not uncommon if tenants in common start out unequal but eventually percentages start to be unequal ! No rule that TIC have non-equal percentages A lot of similar issues with tenancy in common Would it matter if B had a will leaving the property to H? o No. Because it is a joint tenant

Once concluded it is joint tenancy it is irrelevant whether B dies or had a will Same question except assume that O doesnt create a joint tenancy but instead a TLC o O conveys Blackacre to A, B, and C (assume TIC) ! What happens if you start out w A, B, C as having TIC, A can unilaterally transfer their tenants in common interest Definitely transfer tenancy in common o Ds still owning their 1/3 tenancy in common interest Automatically transfers to the joint tenant o Joint Tenancys are fragile ! Unity of time, title, possession and right? Dont have to constantly be testing it o Once its there its there until someone has done something Would survivorship be enough? o Thats why lawyers overwrite If it is a tenancy in common A cant also Riddle v. Harmon: If Frances dies still owning joint tenancy it doesnt matter what will says, it will automatically go to survivors o Unilaterally transfers property to herself ! Deed says Frances as JT hereby transfers to Frances TIC Adds someone onto lease Two step process: Formalistic o A would transfer deed to lawyer, not making a gift ! 2 minutes later lawyer would sign deed out as A and B four unities (for a moment in time lawyer owner property) o Whether or not people should be required to go through process of this? ! This case is about destroying a joint tenancy Doesnt take much, two step process with what you can do in one step Shouldnt require someone do something indirectly that they could do directly o Dont blindly follow precedent ! Livery of seisin is outmoded and no longer needed (common law notion because we use deeds) If a JT can unilaterally sever joint tenancy, how do you create an indestructible right of survivorship o *someone cannot unilaterally sever joint tenancy with right of survivorship ! Irrevocable trust Trusts are expensive

Estate planning and deeds are simple: already drafting a deed bc youre giving something to someone or selling them something Adding extra language ! Defeasible fees: how could you create if youre creator of estate, and want to make sure no once can destroy right of survivor ship use language so long as O would transfer to A and B (fee simple absolute), for so long as both are alive (condition is no longer true when one dies) and the survivor o Put into conveyancing language o Drafted in such a way to get around the ability of the holder of the tenant Create a joint life estate: to A and B as JTIC o Need a future interest ! Every life estate has a future interest and then to the survivor. Now neither one can leave that property in their will If they transfer during their lifetime it springs back automatically o Creator of estate drafted that in such a way to prevent that (many ppl wanted control over property) Goal of indestructible right of survivorship: through life estate through defeasible fee o Wrong for Frances to unilaterally sever JTIC? ! Why not make Frances separate in her will? No reason not to, but no jurisdictions have survivor because simplicity is better Simplicity of joint tenancy also gives certainty: o Seen on bank accounts, common estate planning tools

Harms v. Sprague: (pg 330) John moves in with Sprague: John Dies: Jons will leaves all property to Sprague If JT: Brother William wins bc of right of survivorship (will doesnt matter) If TIC Sprague wins bc all goes to Sprague under Johns will William wins: mortgage doesnt sever JT since its a lien (not title theory state) o Trend treats deeds of trust ! John granted his half of joint tenancy as collateral ! Mortgaged his property ! Under what circumstances do other transfers invest? Private Land Use Arrangements: Not talking about public land use (zoning) o Private land use

Most of material looking at leads up to how do we accomplish private land use arrangements that bind future parties because we want to encourage neighbors to work things out o Privity: what happens when one of them sells? ! New person subject to the prior restriction that someone else made? Some private land use arrangements are just the law of covenants o Running with the land; and o Easements Private Land use arrangements o A is given the right to enter upon Bs land ! Easement o A is given the right to enter upon Bs land and remove something attached to the land (profit) o A is given the right to enforce a restriction on the use of Bs land (negative covenant) o A is given the right to require B to perform some act on Bs land (affirmative covenant) o A is given the right to require B to pay money for the upkeep of specified facilities (covenant) Really studying easements and covenants (servitudes in casebook) o Arguing an implied easement something is wrong Types of Easements: o Writing: ! Express: Grant (the beneficiary is the grantee) Reservation (the benfeciary is the grantor) o Willard exception to common law rule o No writing: ! Easement by estoppel (hollbrook v. taylor) ! Easement by implication Easment implied from prior existing use o Van sandt v. Royster Easement by necessity (othen v. rosier) ! Easment by Prescription (similar to adverse possession) Balance of slides should be weighted by exceptions o Proper way is in writing, expressly ! If not in writing it is against SOF If we assume B owns lots 1 and 2, and B sells lot 1 to A, A would like to have an easement over lot 2: o How does that get done? ! Grant an easement: Transfer Lot 1 to A (since B owns both lots) o Grants are simpler

Grant of an Easement: B----easement over Lot 2-----A Grantee is beneficiary B----FSA in Lot 1-------A o B grant an easement to A to permit them ! Beneficiary of an easement is the one who gets to do the walking (burdened by the easement) one who allows other party onto property If B grants easement to A, which lot is unmarketable o Lot 2 Grantee is beneficiary by easement of grant ! Creating encumbrances along with easements and/or restrictive covenants A owns Lot 2 and flips it o Wants to keep something, not transferring entire shopping bag of rights ! Withhold/reserve an easement for your benefit Easement by renovation: the grantor is the beneficiary o Retaining easement by creating easement by reservation o Easement by renovation: ! Could accomplish same thing in two steps A would transfer lot 2 to B and at closing B would turn around and grant an easement to A o Why is B granting A an easement (put in K a condition to closing) NEED TO KNOW THIS COLD to understand case o Some of standards are harder than easements by reservations vs. grant ! Grant: goes to title records see both Grant of an easement ! Easement by reservation: holding something back Implied easement by reservation requires something more (greater rights) Willard v. First Church of Chirst: o McQuigan: transferred lot 20 to Petersen: in deed contained an Easement within benefit of church o Once we decide whether or not theres an easement need to determine if theres a violation of the deed covenant ! Deed contains an easement for benefit of church

Has a deed restriction: benefit of church on S.W corner, easement runs w land so long as dominant of state runs with.. Anything can be defeasible (life estate, and fee) Start with the rest on Tuesday Read: Hollbrook Sandt (question on exam) Othen v. Rosier CLASS TWENTY-FIVE: NOVEMBER 27, 2013 Easements: about use o Study of marketability o Third party right to a portion of another partys land ! Another partys land cannot exploit use, not about use ! Person whos subject to the easement is the person burdened by easement Exceptions: (all have in common no writing) o Recognizing some special reason to do so o Complying with SOF and easement in writing: ! Grant: Granting entire lot to A, doesnt give right to new owner to property o (grantee) ! Reservation: holder or beneficiary of easement is grantor, person selling property need to switch it If didnt reserve easement, wouldnt be able to have property anymore Can always be expressed in two step process where you grant them o No easements o No encumbrances ! New owner of property gets neighbors easement Grantor is the beneficiary o 2 step process grantee is beneficiary Lot 2 is subject to an easement o Right to cross lot 2 doesnt make property unwantable o Additional property right ! Easement in gross is personal

No one else owns property other than person o Differentiating the one for the other ! Whos beneficiary of the easement? Willord: o Restriction on deed (769) ! Subject to an easement which runs with the land So long as used for church purposes Defeasible Benefit of third party: common law: cannot do that o Beneficiary has to be one or the other o Third party alleged beneficiary of easement ! Defeasible easement o At least 3 different ways, one can create easement benefit for church ! One step: cannot reserve easement for benefit of 3rd party under common law ! Second Step: Church turns around, transfers property to Peterson, reserving easement for themselves Church is grantor: reservation 2 step transaction with an easement by grant o Church is beneficiary Church is grantee: Couldve granted easement to Church (do it ahead of closing) create an easement and after transfer property Writing (express) Willord case Appurtenant v. gross: o Argument for App.: Presumption ! Easement to run with the land (appurtenant) ! Is it personal (gross) For the benefit of the church: use it for church purposes (intent to make it limited to her church only or any church that owns that lot?) Personal: if they move down the block, still use the parking lot o Appurtenant: runs with the land ! For church purposes its defeasible Mcdonalds vs. Methodist church o Easement Appurtenant: subject to church hours for benefit of church Easement by estoppel: use of land by permission: o At what point does oral license become irrevocable? ! If license is irrevocable it is not an easement ! Allowed to cross property with consent Easement: acquiring right to use by adverse possession (we dont use that termadverse possession for possession)

o Exception to estoppel o Easements are non-exclusive theyre uses o Preventing an implied easement from stopping? (how to prevent an implied K from being created?) ! Make it express ! Easement by Estoppel: owner of servient parcel permits another to use land, the other changes position (e.g., making substantial improvements) in reliance upon the permissive use, and it was reasonable to foresee that the other might change his position. This is not recognized in some jurisdictions where they take a strict view of the Statute of Frauds. ! Inequitable to revoke it ! By not asserting right: showing wasnt substantial interference to rights (estoppel) waited too long, lost right Equitable Servient: looks to enforce a covenant Van Sandt v. Royster: o Is there an easement burdening Lot 19 for benefit of Lots 20 & 4? o Written easement? NO o [If Mrs. Bailey had done written agreement, what kind of easement? o Implied easement? o Implied Easement by PEU o Easement by Prescription Van sandt says get sewage off property: o Royster can say sewage is entitled to pass through property Van Sandt suing Royster there is a clear distinction between implied grants and implied reservations To say that a grantor reserves to himself something out of the property granted, wholly by implication, not only offends the rule that one shall not derogate from his own grant, but conflicts with the grantors language in the conveyance, which, by the rule, is to be taken against him, and is wholly inconsistent with the theory on which our registry laws are based. The correct rule is, we think, that where, as here, one grants a parcel of land by metes and bounds, by a deed containing full covenants of warranty and without any express reservation, there can be no reservation by implication, unless the easement claimed is one of strict necessity, within the meaning of that term After all transactions 3 diff ppl own 3 diff lots Bailey to jones Bailey to Murphy o Deeds didnt make exceptions to easement but knew about sewer connecting o Had actual notice that sewer line was running through property o Van Sandt is suing to find out whether there is an easement (burdening lot 19 for benefit of other lots) o Is there an enforceable easement ! Lot 20 have the right to cross lot 19?

Easement parlor say they are the servient estate (burdened) Van sandt will lose Is there an easement burdening lot 19 for burden of lot 20? o No written agreement o Implied easement by prior existing use? ! By prescription? o Never want to rely on implied anything o Bailey at the time owns lot 19 and lot 20 ! Creates and easement by reservation ! Deed from Bailey to jones Quasi Easement: one part of a persons land benefits another part of anothers land o Dominant/servient ! Cannot be an easement bc you own the land but you have a quasi easement Tuesday: start with Van Sandt and finish up easements in next two classes o Easements and Will covenants

CLASS TWENTY-SIX: DECEMBER 3, 2013 Review session: December 12th at 6:00 PM W400 Final Exam is Four hours Private Land Use *will not be any questions on easement by necessity or easement by prescription on final* The Willard case will be found in 3 diff ways o Could have gotten easement to church in compliance with common law ! Two step process Common law: beneficiary is either grantor or grantee Easement by estoppel: (homer case) o Statute of frauds o When are you going to enforce ! The owner of servient parcel permits another to use land, the other chances position (making substantial improvements) No instrument of land can be obtained by party signed by writing o Interests in land because of equitable considerations, court will enforce it but does not apply to SOF Quasi Easement o Impertinent easement that benefits the predominant estate and burdens servient estate ! Cant have an easement in your own land Quasi easement (sort of like an easement)

o Where one part of your land is benefitting another portion of land ! Not a legal relationship : just describes factual situation Really need to know easement by reservation and grant o Common law: standard of what kind of necessity claimaint needed to prove varied ! If trying to claim an implied easement by prior reservation by Prior existing use, need strict necessity No other way to hook up plumbing to sewer line (according to facts of case) o Why have different standards? ! Higher standard for easement by reservation? Hardest language in the case: court says in effect: reservation of easement is derogation of the expressed words of the grant Grant of easement doesnt contradict grant All about looking at four corners of the deed o Easement by grant: o Modern (now majority): only show reasonably necessary/intent for both implied easements by reservations and grant Had she done it expressly: would have had to put in the deed other than easement by reserving o Implying easement by reservation: contradicting four corners of the document which purports to transfer all of the lot to the other party o Recognizing and implied easement: holding back something: in effect, did not transfer him full lot ! Transferred to him subject to an easement (not reflected to party in deed) Easements by reservation are created bc its in the deed o Easement by grant: happens independent of the property o Not inconsistent with transfer of property ! Reservation of an easement is in derogation Lower standard if easement by grant o Distrinction of higher necessity standard (easement by reservation) common law distinction ! Enforce any oral agreement modern approach is what was the intent of the parties o Easement by prior existing use element ! Has to be common ownership where the land was then severed ! Quasi-easement element: prior existing use: use by common owner of one parcel to benefit the other

If owner didnt own both parcels, it would be an easement o Which was apparent (or reasonably discoverable) not the same as visible (Equitable component) o Continuous o Necessary ! Courts saying discoverable, apparent because should have had modern plumbing (must have had a sewer because it must have been connected to something) o Inconsistent with the deed (old common law approach) Strict necessity is a very high standard: no other sewer line connected through property Strict necessity is still required in jurisdictions with common law o Unlike the easement by necessity, the easement based on prior existing use does not necessarily require strict necessity but may instead require only reasonable necessity or sometimes referred to as highly convenient. Jurisdictions following the modern approach require only reasonable necessity for any implied easement. Whereas, jurisdictions following the historic approach require only reasonable necessity in the case of implied grants but strict necessity in the case of an implied reservation of an easement. o Easement: nonexclusive right to use someones property o Prior existing use: continuity of use: if you only use something once, was it really parties intention you were to continuous this post sale? Not likely ! Someone using this easement a few times a day: very continuous (unusual not to think) Implied easement: enforceable: when theres an encumbrance o Title, use, forelose use in land ! Implied easement: lot 19 is burdened by implied easement Definition of marketability: delivers marketable title subject to all encumbrances of record o Not covered subject to all easements this is covered *you need to know: recording statute only applies to conveyances o all easements are not conveyances: enforceable property rights but NOT conveyances ! property rights acquired, other than writing adverse possession corporate merger intestate ! need to make sure these things are there: look at surevy Restatement factors: (elements)

o Factors in Van Sandt ! Is claimant grantor or grantee Implied easement by grant or reservation ! Consideration paid? Apparent and continuous ! Necessity Necessity analysis ! Manner in which land was used prior to conveyance Quasi easement ! Was prior use known to parties? Which was apparent (or reasonably discoverable) When does necessity (prior existing use: after, before, day of sale?) o When prior existing use exists has to be determined as of the date of the sale ! At the time of the severance Implication: implied easement because of prior use and stop using it Once concluded there is an easement (whether express or implied) laws concluding there is one ! At that moment of time of date of first transfer: was she using it Facts say: 3 years later new sewer line put in: tough question because now thinking is it strictly necessary or not? o Strict necessity is determine as of one moment of time: time of severance Not true with easements by necessity: only as long as necessity lasts o Doesnt matter if adverse possessor does everything inconsistent with adverse possessor requirement: hes already acquired it when statutory period expired If Mrs. Bailey was still alive, could Van Sandt sue Bailey on the GWD? o Present Covenants: ! GWD: Is she entitled to the BENEFIT or not (Real point here) Non-rockafellor: NO o If not a rockafellor: common law jurisdiction: doesnt get benefit of promise, so no breach Rockafellor: Yes, if no S/L issues o Unless implised exception or carve out to deed promise Covenant of title Covenant of Encumbrances o Furure Covenants: ! Covenant of Quiet enjoyment: runs with the land, gets the benefit of it: yes, they run. But has Van Sandt been dispossed Breach of promise?

o Not dispossessed: so no breach ! Easement is about use Always explain what everything is o An encumbrance is. o A breach is. As discussed abovethere is (likely) an implied easement, thats acknowledged by common law, then theres a breach o Promised no encumbrance, there is an encumbrance: there is a breach Easements are only required when they are strictly necessary (will be tested on this)*** ***Not responsible for: o Easements by prescriptions: (not tested) o Negative easements: ! Right of the dominant tenant to stop the servient tenant from doing something on the servient estate ! Sought to limit them because conceptually hard to figure out what that meant ! Under common law: very few instances Blocking windows Interfering with air flowing to your land in a defined channel Removing support for a building Interfering with the flow of water in an artificial stream Responsible for easements by estoppel o Express is easy because its signed o Implied Discussion YES (generally - but note methods of creation that do not expressly reflect intent - e.g., estoppel and prescription) YES (exception - sometimes easements by prescription enforced without notice) YES for express easements; also may be created by estoppel, prescription (not negative easements), or implication (prior existing use or necessity) N/A N/A (appurtenance fulfills this function for burdened parcel)

Requirement/Characteristic - Easement Intent to Create Notice (for burden to run) Writing Horizontal and Vertical Privity Touch and Concern

Remedy

Specific performance or money damages

On Thursday: Covenants running with the land o Promise to pay rent o Covenant of quiet enjoyment ! Answered the question CLASS TWENTY-SEVEN: DECEMBER 5, 2013 30 MC questions 3 Essay Questions Issue Rule Statements (many times more than 1 rule statement) Private Land Use Arrangements: Real Covenants: Mutual promise: o Real covenant covenant that relates to the real estate property ! Estates and land : life, fee simple, defeasible, leasehold, etc. ! Every promise has a promisor and a promisee ! If B (promisor) promises to maintain stone wall (as opposed to a negative covenant) Promise to pay right About being able to use the burdened estate: o Servient estate in a particular matter Nonexclusive Not about entering the other partys land, forcing neighbor to do or not do something o Promises have benefits and burdens ! Person making promise: promisor ! Person entitled to benefit of promise: promisee (beneficiary) o Name suggests personal covenant is enforceable o Usually only K parties are able to sue one another How are K (personal) covenants and real covenants different? o Relaxing of this very strict privity of K between two parties for one party to see the other Breach of K: Plaintiff has to be entitled to benefit, person suing has to have made promise, has to be a promise, breach, damages, statute of limitations somewhat relevant A v. B: o No question that LL can sue tenant if tenant does not pay rent ! If LL sells to buyer: can buyer sue T for failure to pay rent?

Question: we dont feel so bad about suing tenant o Can the assignee (who fails to pay rent) be sued by LL? ! Prima facie case: Promise to pay rent? o Assignee says didnt sign anything to pay rent o But liable for obligation because promise to pay rent is a real covenant and it runs with the land o Privity of estate = runs with the land o Holder of possessory estate o Sublease does not have this same benefit because no reversion of interest Assignee C gets benefit of property needs to pay rent: equity of the principle o Not performing predecessor of promise Could have a situation that LL sold property o Two total strangers signing the lease o If facts that say assignee assumed need to have a signature somewhere, creates privity of K ! Theory because of their relationship to the land Running covenanats: Benefits and burdens run if o Intent to run (express or implied) o Notice (in part because of recording statutes) o Writing (subject to statute of frauds) o Privity of estate: ! Horizontal privity: relationship between coventor and coventee Landlord/tenant Mutual privity (related interests in same land such as easement) Instantaneous privity (similar to vertical privity) Insantaneous privity (similar to vertical privity) ! Vertical privity Referred to the subsequent transfers by B to C (privity of estate) o Refers to the legal relationship between two parties ! Doesnt deal with a lot of property relationships o Horizontal & Vertical: is there privity of estate ! Answer: Yes, because privity of estate is legal relationship of the holder of reversion

Under rockafellor, privity is defined as whether theres a voluntary transfer of title o Creating a leasehold estate, transferring to leasehold tenant ! Equitable servitude: not quite law everywhere yet Learn covenants running with land under all standards Any promise enforceable as a covenant of law, is enforceable in equity Tacking in adverse possession: tacking in privity of estate Classic negative covenant is not building something o Dont build taller (blocking view) o Affirmative covenants: walls, painting, etc. Cannot take self help with a breach of Contract o Intent notice in writing is dealing with equity of making someone else liable for someone elses promise o Elements are almost always true in leases and deeds ! Restrictive covenant: recording it o Notice: either because in possession or document it Tulk v. Moxhay: Some new legal development o Prior to this case worse than equitable servitude o Covenants: ! Grantee maintain garden in good repair (affirm cov) ! Grantee will NOT cover garden with building (negative cov) ! Tulks tenants will have the right to use square (easement FBO 3rd party) MUST translate store for something presenting legal idea and explain ! Anything after "in order to is explanatory promise Will disregard Does it matter if benefit runs? o No. This is a question of whom the burden is running from ! Cov did not run at law Real covenant of quiet enjoyment o Has to touch and concern the land o Fancy way of saying property promise: does it touch and concern the land? ! Real covenant? Basic principles o But most questions have two different views of the world Dont have to cite cases Dont need to know: o Ernst o Pestana o Lohmeye

o Frimberger o Rockafellor o B of Ed v. Hughes o Kunto o Gruen o Mahreholz o Willard v. First church o Holbrook o Van sandt o Othen o Tulk v. moxhay o Neponsit Wrap up: o General principles ! Cov not enforceable by 3rd party is not an encumbrances: right that a third party has ! Adverse possessor, true owner rest of world Talked a lot about: Pizza shopping bag, property law is all about monetizing property rights o Think about social contexts ! LL / tenant Formal and informal sources of rights o Formal: right clearly, in writing, never rely on implied right, when you can have expressed Triangle: K, Statute, Common Law o Rule statement: Rule has to come from somewhere: wheres your authority coming from? ! Statute doesnt always trump K, and vice versa, it all varies o Every time thinking about one of the rules: think about where rule comes from, modifying it, etc. ! Property comes up in almost every class youre going to take ! Basic material talking about will come up again