I. Discrimination in Leasing a.

Traditional model of lease as conveyance allowed landlords to exercise complete discretion in choosing its tenants (this is part of the right to exclude that comes with ownership of property) b. Civil Rights Act of 1866 stated that all citizens have right to inherit, purchase, lease, sell, hold, and convey real and personal property c. Fair Housing Act-banned discrimination in housing based upon race, color, religion, and national origin (subsequent amendments have extended it to gender, familial status, and handicapped status) i. Familial Status: parents or a parent with dependent children under the age of 18 1. Why would a landlord want to discriminate against familial status? a. Noise, inability to pay, damage issues, heightened sense of liability with younger children i. this all affects the landlord and the potential for their income (a financial impact) 2. Reasons why Congress included familial status? a. family doesnt get housing b. discouraged from renting in a particular building c. might prevent families from educational opportunites to rent or buy in a place with better educational opportunities or accessibility d. main policy decision deals with the health, safety, and welfare of children e. if families are systematically deprived to access of rental places, this poses health and safety concerns that reflects on risks of the healthy development of children f. want to encourage the integration of children of different races and economic backgrounds (this reduces racial tension) ii. Handicap means (1)a physical or mental impairment which substantially limits one or more of such persons major life activities (2)a record of having such impairment (3)being regarded as having such impairment (the term does not include current, illegal use of or addiction to a controlled substance) iii. FHA: an example of federal law that has placed restrictions on the methods owners can use to find a tenant or buyer of real property iv. FHA applies to all state and local gov, but the Act itself specifically exempts any reasonable local, State, or Federal restrictions regarding the maximum number of occupants permitted to occupy a dwelling v. Exemptionsto FHA: group homes, religious organizations and private clubs, and any reasonable local, State, or Federal restrictions regarding the maximum number of occupants permitted to occupy a dwelling vi. 2 federal laws that are significant:

1. Section 2 of the Civil Rights Act Section 1982-there can be no racial discrimination for the rental or selling of real property 2. Fair Housing Action-bans discrimination in housing based upon race, color, religion, national origin, gender, familial status, and handicapped status a. *owner cannot put out an ad discriminating in such a manner i. when looking at an advertisement, the ordinary reader test is applied: where the ad suggests to an ordinary reader that a particular protected group is preferred or disrespected for the housing in question b. *owner cannot make favorable or unfavorable terms based on any of these protected categories c. *owner cant misrepresent the status of the property d. *if renter or buyer is qualified after an offer is made, landowner cannot refuse to sell or rent to the buyer e. Landlord cannot advertise his or her own preference d. Both Fair Housing Act and Civil Rights act discuss discrimination in housing based on race i. However, Civil Rights Act only deals with race with regard to discrimination in housing (does not address gender, handicapped, etc. that FHA covers) 1. for example, if I am a woman, I would file under the FHA ii. if any discrimination in housing claim falls under any of the protected classes other than race ,must file under the Fair Housing Act Easement What rights are given? Does the person have the right to use someone elses land or do they have the right to restrict the use of someone elses land? Here, since the facts tell us that.we know it is a o o Affirmative Easement right to make some limited affirmative use of land possessed by another (crossing over land to gain access to an adjacent tract Negative Easement limits the use of anothers land Appurtenant the owner of one parcel (dominant) has a right to use (or restrict the use of) another parcel (servient). o In Gross gives its holder the rights to land without regard to any other parcel of land. Easements can be created one of four ways, by The first issue is, was the easement properly created. prescription, implication, necessity, or by grant. o Grant since easements are interests in land, they are subject to SOF and thus must be in writing. 2 ways to create: We can also tell right away that this easement is an appurtenant or in gross. o

by grant where the grantor executes and delivers to the grantee an instrument conveying an easement over the servient land OR by reservation where the grantor executes and delivers a deed conveying a possessory estate in the servient land to the grantee, but reserves for themselves an easement over the servient land

Implied Easements law implies an easement in favor of one of the parties to a deed even tho the deed itself fails to create an express easement Easements implied from Subdivision Plats Developer subdivides parcel of land, a purchaser is left without access to a neighborhood street Courts imply appurtenant easement presume that A bought the lot in reliance upon she could legally use neighborhood streets to reach lot Implied Easement of Necessity when the owner of one parcel conveys part of the land, landlocks a parcel in the process, and fails to create an express easement Necessity must exist at the time the two parcels are first severed and must be from common ownership. Once necessity is gone, no more easement If you buy a property that has access at the time, but later is landlocked, no claim to an easement of necessity Policy: the subdivision of land should not render a portion of it less usable Law assumes that reasonable person must have assumed that landlocked parcel had access over other parcel, otherwise wouldnt buy it Courts disagree on what level of necessity is required, some say reasonable necessity, some say strict Some states have statutes that allow owner of landlocked parcel to pay servient owner for an easement; implied easement dont have to pay (implied in price) elements: o o o a common owner severed the property (unity of ownership) the necessity for egress and ingress existed at the time of the severance (the severance of the property caused one of the parcels to become landlocked) the easement is strictly necessary for egress from and ingress to the landlocked parcel most courts interpret the term to mean strictly necessary for the effective use of the property implied easement based on preexisting use deed that subdivides a parcel of land may sometimes fail to address the rights of parties w/ respect to uses of that land that occurred prior to subdivision From Bobs Ready to Wear emphasis on parties intent at time of severance

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First have to establish the use sought to be imposed happened when both tracts had a common owner Then apply factors to find intent: Claimant grantee or grantor (courts favor grantee) Is it reasonable necessary (any other entrances/is there $ loss) Are their benefits to both parties? Manner of use before conveyance Prior use known to parties in present litigation

Prescriptive Easement - an easement may be acquired by meeting the elements of adverse possession (Lost grant theory has fallen out of favor protected use of land if allowed by true owner for a long time). Continuous use for the statutory period Open and Notorious - quite visible pattern of use Actual use quite literal pattern Hostile use presumption is that use was adverse (policy: supports party making use of property). o o Policy: this supports the party that is making use of the property, encourage Exception: if servient land is wild, unenclosed, or unimproved then presumption is permissive Policy for: conservation purposes, owner may have bought prop for investment purposes, plus owner cannot be expected to have been aware of invasion o Exception: (Simmons Rule) if owner of real property constructs a way over it for his own use and convenience, use by other which doesnt interfere with his use will be presumed to be by license or permission Policy for: encourages good neighborly relations (neighbors might build their own fortresses otherwise), discourages litigation, use is not control of land. Policy Against: No way of knowing when permission was granted and when not (also dont know if revoked), doesnt define what joint use entails (slippery slope) o Melendez found that adding on to a road infringed and constituted hostile to owner even though he created part of the road

Licenses and easements by estoppel once granted, easement not revoacable (unless terms say it can be) License contractual or permissive right to use/occupy land of another Revocable if revoked licensee cant get an injunction, but may sue for boc Irrevocable License based on detrimental reliance

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If licensee incurs substantial expenses (with knowledge of owner) in reliance upon continued use of license, can argue for estoppel Bobs Ready to wear granted irrevocable license, made improvements with knowledge of owner.

Next issue, was the use of the easement within its scope: o Generally, disputes over scope of an easement will be governed by the intention of the parties at the creation of the easement "Rules of Reason" are employed when intentions of the parties are unclear (from Lazy Dog) Owner of the servient estate may make any use of the burdened property that does not unreasonably interfere with the enjoyment of the easement by its owner for its intended purpose; The owner of the easement may make any use of the easement (including maintenance and improvement) that is reasonably necessary to the enjoyment of the easement, and which does not cause unreasonable damage to the servient estate or unreasonably interfere with the enjoyment of the servient estate. o determine the rights of the respective landowners according to a reasonableness standard; presumed that parties did not intend unreasonable use of the easement General Rule for express easements: o disputes over the scope of an easement will be governed by the intention of the parties at the creation of the easement Default Rules for express easements: Generally, the owner of the servient estate may make any use of the burdened property that does not unreasonably interfere with the enjoyment of the easement by its owner for its intended purpose conversely, the owner of the easement may make any use of the easement (including maintenance and improvement) that is reasonably necessary to the enjoyment of the easement, and which does not cause unreasonable damage to the servient estate or unreasonably interfere with the enjoyment of the servient estate o essentially, both the easement holder and the servient land owner can use the easement so long as their use does not unreasonably interfere with the others use Default rules for implied easements: o easement implied by necessity: would look at circumstances that gave rise to the easement; determine scope by the extent of the necessity easement by prior existing use: look at the nature of the prior existing use to determine scope easement by prescription: look at scope of easement within statutory period when given a question dealing with scope, know:

the nature of the use as it was originally intended the duration of the use whether the use of the easement was exclusive or nonexclusive the intensity of the use responsibility for the maintenance of the easement what type of easement it was: appurtenant, in gross, implied, express, prescriptive General rule: dominant easement owner has the right to maintain the easement in a condition that is suitable for passage (they can maintain it so they can use it, but are not obligated to maintain it)

Maintenance of Easements

when both parties use the easement, the cost of maintenance will be apportioned between dominant and servient owner first look at the intention of the parties for the maintenance of an easement, if cant discern then use default rules (if deed is ambiguous, parol evidence may be considered in ascertaining the parties intent)

2 default rules: if the servient owner does not use the easement, then the easement holder is responsible for maintaining the easement if the servient owner also uses the easement along with the easement holder, they both share the responsibility and expense associated with maintaining the easement

Remedies of an easement holder if the servient owner does not live up to responsibility to maintain easement: Easement holder can bring suit to recover what easement holder spent Easement holder can exercise their right to maintain easement, and then recover their expenses from the person who is responsible for maintaining the easement (entitled to setoff of expenses

Change and Expansion of Use of Easement where the servient owner retains the privilege of sharing the benefit conferred by the easement, it is said to be common or non-exclusive and therefore not subject to apportionment by the easement owner the term exclusive refers to the exclusion of the owner and possessor of the servient tenement from participation in the rights granted an exclusive easement is transferable and divisible a non-exclusive easement is only transferable

transferability focuses on the easement holders right to substitute a new easement holder in its place; by contrast, divisibility focuses on the easement holders right to allow additional parties to share in the easement holders use of the servient land

common law rule for easements in gross: belongs to a person (personal to the holder), therefore not transferable exception: commercial easements in gross are alienable and transferable

the owner of an easement may license or authorize third persons to use its right of way for purposes not inconsistent with the principal use granted *also, if it does not increase the burden on the servient estate beyond the scope of the intended and authorized use

General Rule: an easement appurtenant to one parcel of land may not be extended by the owner of the dominant estate to other parcels owned by him Policy: this could increase the burden on the servient estate you can only use the easement for the benefit of the dominant parcel and cannot extend the easement to other subsequently acquired parcels if an easement is appurtenant to a particular parcel of land, any extension thereof to other parcels is a misuse of the easement o o if you misuse the privilege, you lose the privilege misuse of the easement is a trespass

Balancing of harms: although there is misuse of the easement, if there is no added burden placed on the servient estate, and the Plaintiff spends lots of money developing the third parcel that did not have the actual right to use the easement, the court could order an equitable estoppel, or detrimental reliance

Termination of Easements o Termination by Merger The merger of the dominant and servient estates (i.e. when both estates are owned by the same person) terminates an easement An easement is a right to use another persons property. Once a person gains concurrent ownership of both the dominant estate and the servient estate, the estate merges and the easement disappears. If the common owner later severs the property, the old easement does not reappear automatically. A new express or implied easement may be created on a later severance, of course. o because an easement is the right to use the property of another, you no longer need an easement because you are the owner of the property Termination by Prescription If the owner of the servient parcel occupies it in a fashion that wrongfully interferes with the easement, and maintains this interference adversely to the holder of the easement for the statutory period for prescription, the easement is extinguished

If the servient landowner engages in sufficiently open and notorious acts adverse to the easement that continue for longer than the statute of limitations for acquiring prescriptive rights, the easement is terminated by prescription. In this circumstance, whether the easement holder intended to abandon the easement is irrelevant.

The servient estate owner must use the easement in a manner adverse to the easement holders rights. The servient estate owner must prove her use of the property was inconsistent with continuation of the easement.

Termination by Written Conveyance or Release the holder of the easement may deliver a writing to the owner of the burdened land indicating that he burdened land is released from the burden of the easement the easement holder by deed can transfer part or all of the easement to the servient estate owner. The release must be in writing to satisfy the Statute of Frauds. the original grant can define the life of the easement, and it can terminate upon expiration Courts will terminate an easement when the holder of the easement has abandoned it Must be an affirmative act of abandonment on the part of the owner of the easement to extinguish the easement Mere nonuse of an easement, created by grant, is insufficient to satisfy this requirement A substituted access may serve as evidence of abandonment, but that by itself is not dispositive Use of a substitute road may be evidence of an abandonment of the old road, however, the mere use of a new right-of-way will not extinguish the old. There must also be an abandonment by non-use of the old right-of-way Those claiming abandonment carry the burden of showing by clear and convincing evidence an intent to abandon the easement A finding of abandonment is usually based on circumstantial evidence rather than on direct expressions of intent Elements necessary for abandonment: exclusive use of the new right of way and nonuse of the old right of way In deciding whether an easement has been abandoned, courts generally focus on the intent of the easement holder, rather than the expectations of the owner of the servient tenement Courts have traditionally required clear and convincing evidence of the easement holders intent to abandon the easementtypically in the form of an affirmative act by the easement holder that demonstrates her intent to abandon the easement Courts have universally held that mere non-use (regardless of its duration) is insufficient to extinguish an easement 2 elements: intent to abandon

Termination by Abandonment

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must be evidenced by some identifiable and unambiguous act inconsistent with the continued ownership of the easement the best evidence of intent to abandon is a deed or other written document (which moves abandonment very close to release)

subsequent nonuse o o mere nonuse, no matter how long the duration of the nonuse, does not constitute abandonment nonuse for a long enough time, however, does give credence that some oral pronouncement or act taken long ago constituted the requisite unambiguous act denoting the intent to abandon

Profit The right to enter anothers land and remove something (minerals, timber, fish, soil, etc.) or other things constituting a natural part of the land usually the person has an easement to venture onto the property as necessary to enjoy the profits interest

License where a landowner permits another person to use property, but the permission is revocable at the landowners will (tickets to see a movie, concert) main attribute is that it is revocable or terminable at will allows the licensee to do something that would otherwise be a trespass o ex. a houseguest, the cable guy

easement has to be in writing, license does not General Rule: a license may be revoked by the licensor at any time for any reason Exception: when there is a detrimental reliance on the person who is allowed to use the license; in that case, landowner cannot revoke license only in extent necessary for the license not to be unfairly deprived of the fruits of their labor

Promissory Servitudes Agreements that relate to the use of land major issue is whether agreements or promises between two landowners can be enforced against successors to parties that originally made agreement enforceable promises between a land owner and someone else negative or affirmative covenants Negative covenants: promises that restrict the owner of land from making certain uses of the servient estate Ex. a restriction permitting land to be used for residential purposes only Affirmative covenants: obligate the promisor to undertake affirmative acts

Ex. a covenant requiring a landowner to pay a neighborhood subdivision association assessment

Real Covenants and Equitable Servitudes agreements, promises, or deed provisions that relate to real property (land and improvements to land) and that bound or benefit subsequent owners of the respective properties solely because they own the property.

Real Covenant A promise that concerns a use of land (ex. Subdivision covenant: trees, lights, fixtures, etc.) restrictive or negative covenants o o o o o prohibit or limit what an owner can do on his/her property ex. no flamingos in yard restrict or prohibit the uses that can be made of the burdened property requires a landowner to do something on his or her property (require property owner to pay community interest fees that maintain subdivision roads) require the owner of the burdened estate to perform some act or to pay money The difference between a real covenant and an equitable servitude is remedy sought o o o real covenant gives damages equitable servitude gives specific performance or injunction Real covenant v. equitable servitude

affirmative covenants

most actions involving land would want an equitable servitude intent to bind successors touch an concern the land Policy: making sure that the promise has something to do with the land itself General Rule: affirmative covenants do not run with the land traditionally courts found that only negative or restrictive covenants would touch and concern the land easier for the court to identify what restrictions place on the owner courts less likely to enforce affirmative covenants because it is more likely to be personal, benefiting a person rather than the land (and touch and concern makes sure that the promise has something to do with the land itself) Exceptions: exceptions to the general rule:

Elements necessary for a real covenant to bind and benefit subsequent owners:

*a promise touches and concerns the land when it affects the legal relations-the advantages and the burdens-of the parties to the covenant, as owners of particular parcels of land and not merely as members of the community in general, such as taxpayers or owners of other land

modern courts will recognize affirmative and negative covenants * even when the benefit is in gross New Restatement with respect to touch and concern: get rid of touch and concern, and focus whether servitude is unreasonable restraint on alienation or otherwise violates public policy in some way

how do you determine if the covenant touches and concerns the land: what effect the covenant has on the land o a promise touches and concerns the land when it affects the legal relations--the advantages and the burdens--of the parties to the covenant, as owners of particular parcels of land and not merely as members of the community in general, such as taxpayers or owners of other land o the landowner who has to pay the fee must be more interested in that than any non-landowner member in the community o it has a direct effect on the value of the property

the burden wont touch and concern the land if the benefit is in gross; it must be appurtenant if the covenant is only in gross: a burden interferes with the land by affecting the use of the land and the marketability of the land; there is only a negative effect on the land and no positive effect on another piece of land to strike a balance; all you have is property that is burdened without the offsetting increase in value of another land o this is why courts were hesitant to enforce benefits in gross if the covenant is appurtenant: there is an offset (the dominant land becomes more valuable and marketable)

Problem: O, who owns 2 adjacent lots, conveys one to A. The deed to A contains a covenant restricting As lot to residential use.

Does the covenant touch and concern As land? Yes, it restricts what A can do on the land and how A can use the property. If affects the physical use of As land.

Does the covenant touch and conern Os land:? Yes, O is directly concerned with what O can do on his property. The physical environment that surrounds Os land that touches and concerns.

Lets assume that Os retained land was not immediately adjacent but was 1 mile away from the lot conveyed to A. Does the covenants burden touch and concern Os land? It depends on what is going to be put on As lot. Being 1 mile away might make the effect on Os property so small that it no longer touches and concerns Os land (to be negatively affected by As land)

vertical privity of estate the subsequent property owner must succeed to an original partys entire estate in the property, either directly from an original party or through person who can trace their interests back to an original party to the covenant for a burden to run to a successor, the party must have succeeded to the original promisors entire estate or ownership interest the entire estate requirement means lessees are not in vertical privity with their lessors conversely, all that is required for a benefit to run is that a remote or subsequent purchaser have a posessory interest in the property adverse possession defeats the running of both benefits and burdens completely since the adverse possessor does not succeed to any partys interest

horizontal privity of estate the relationship that must exist between the original parties to the agreement exists if the original parties have either mutual interests or successive interests o mutual interest: exists when each party has some interest in a given parcel of land ex. an easement (right to use property owned by someone else)

successive interests: exists when the parties make the covenant as a part of a grant of an estate from one to the other, thereby standing in a grantor-grantee relationship

a few states require horizontal privity for the burden to run but not for the benefit to run o the original promisor would be burdened no matter if the original promissee or a subsequent owner enforced the covenant, but horizontal privity would be necessary to enforce the covenant against subsequent purchasers of the burdened property

Mutual or Successive horizontal privity? o O owns 2 adjacent lots and sells one to X. The deed contains a covenant restricting the land conveyed to residential purposes. No, not a mutual interest because neither O nor X have an interest in a single parcel of property Yes, successive interest because the transaction where O transferred the property to X, the transaction involved the transfer of interests in the property thereby creating a grantor-grantee relationship o What if O sells his portion of the land to Y. What is the relationship between Y and X? o No horizontal privity because there is no longer a grantor-grantee relationship. This is a vertical privity O owns 2 adjacent lots and sells one to X, reserving for himself an appurtenant easement of way. The deed contains a covenant that X will keep the easement in repair. Mutual interest? Yes, because the transaction resulted in O and X having an interest in the same land Successive interest exists for same reason as the prior example

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notice actual, constructive, or inquiry notice (original contract must meet general requirements of contract enforceability)

Equitable Servitude Elements necessary for an equitable servitude to bind and benefit subsequent owners:

Intent to bind successors intent usually reflected by express language indicating that the covenant binds the covenanting parties and their heirs, successors, and assigns heirs and assigns serve as rebuttable presumptions of the parties intent to burden and benefit successors This covenant runs with land

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Touch and concern the land Notice (original contract must meet general requirements of contract enforceability)

See examples on 2-8 and 2-10 class notes

Common Interest Communities o generally the declaration establishes the initial and maximum amounts of assessments, procedures for increasing assessments or levying special assessments, allocation of reserves for future capital needs, and collection and enforcement mechanisms o o o o courts have generally found residents assessment obligations as covenants that run with the land unpaid lot assessments constitute a lien against that lot, enabling the association to sell a lot in the event that the lot owner cannot (or refuses) to pay the assessments homeowner associations have the implied power to levy dues or assessments even in the absence of express authority a landowner who willfully purchases property subject to control of the association and derives benefits from membership in the association implies his consent to be charged assessments and dues common to all other members o o a common interest community has the power raise the funds reasonably necessary to carry out its functions by levying assessments against the individually owned property in the community the power to levy assessments will be implied if not expressly granted by the declaraion or by statute o o o o o Policy: to promote effective and efficient property management through defined operational requirements that preserve flexibility for such homeowner associations CICs are typically structured around a promissory servitude regime, established by means of a written instrument typically called a declaration either the declaration or a separate document will set forth so-called Covenants, Conditions, and Restrictions by their terms, the CCRs are stated as reciprocal restrictions and obligations, burdening each lot covered by the declaration for the reciprocal benefit of every other lot the typical CIC is administered by an owners association owners association is responsible for regulating potentially conflicting or undesired uses within the community by enforcing the communitys restrictive covenants

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in many cases, association also responsible for managing and maintaining the communitys common assets association is empowered to establish and collect assessmentsthereby spreading among all owners the costs of constructing and maintaining the communitys common facilities the CCR should be recorded in the clerks office to provide notice to potential buyers shows that all the lots in the subdivision are subject to the same restrictions all lots are burdened and benefited from the CCRS

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See 2-12 class notes p. 638 with Dave Developer an implied obligation may be found where the declaration expressly creates an association for the purpose of managing common property or enforcing use restrictions and design controls, but fails to include a mechanism for providing the funds necessary to carry out its functions. When such an implied obligation is established, the lots are a common-interest community

when association assessments go unpaid, the uncollected share of community expenses falls upon the remaining neighbors in one of two ways: the association may choose to maintain its existing level of services and simply pass the costs on the remaining reliable owners the association may choose to reduce its expenses by deferring or decreasing maintenance or eliminating services

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implied reciprocal servitude: everyone is subject to the same restrictions, benefits, and burdens some courts recognize an implied reciprocal servitude, while others do not: courts that do imply reciprocal servitudes do so under a reciprocal servitude theory or a thirdparty beneficiary theory some courts require buyers to take steps to get notice of whether there are any restrictions or burdens that they can enforce or can be enforced against them a title search of previous land sold by the landowner would have put on notice that there were restrictions on those properties that would most likely extend to the current buyer inquiry notice (1) the two properties are proximate to one another (2)need a common development scheme: 2 elements common owner, showing an intent to execute a general plan for the subdivsion deeds to various purchasers need to contain substantially uniform covenants and restrictions

what do we need to imply a development scheme?:

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if a development scheme exists, courts will imply a reciprocal servitude Implied Reciprocal Servitudes Problem Developer has presented potential purchasers with subdivisions maps and other promotional materials that reference uniform development restrictions. Developer includes the restrictions in the first 20 deeds but inadvertently omits the restrictions form the next 10 deeds. Can we imply reciprocal servitudes?

must demonstrate 2 elements of a common element scheme: o (1) establish that developer pursued a course of conduct that indicated an intention to have a general scheme present evidence of the brochures and maps that show maps and plans for the subdivision, and the restrictions were contained in the first 20 deeds; this shows intention to have a general scheme o (2) the deeds must contain restrictions that are substantially similar

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these 2 elements demonstrate a common element scheme and the court will imply reciprocal servitudes

restrictions must be placed at the time the first lots were sold for there to be a common element scheme

See 2-15 class notes Note 2 on p. 641 restrictions contained in the declaration of common interest communities are enforceable unless unreasonable Issue: what is reasonable? 2 approaches: equitable reasonableness: uphold restrictions that provide a reasonable means to further collective health, happiness, and enjoyment of life of owners of a common interest development One of two different standards depending on whether restriction was adopted by a majority vote of homeowners or whether it was included in the declaration or master deed of the covenant o o By majority vote: subject to a reasonableness standard In declaration: restriction is presumptively valid (a court will refuse to enforce restriction only if it is arbitrary, violates public policy, or violates a constitutional right By enforcing these rules, this gives validity to the covenant and protects the general expectations of condominium owners that restrictions in place at the time they purchase their units will be enforceable Rule: when a restriction is contained in the declaration of the common interest development and is recorded with the county recorder, the restriction is presumed to be reasonable and will be enforced uniformly against all residents of the common interest development unless the restriction is arbitrary, imposes burdens on the use of lands it affects that substantially outweigh the restrictions benefits to the developments residents, or violates a fundamental public policy

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Restraints on leasing and restraints on transfer of property within a CIC are okay as long as it is reasonable if the language is unambiguous, the covenant shall be enforced according to its plain language, and the covenant shall not be subject to rules of interpretation or construction

an ambiguity exists when the instrument at issue is susceptible of two or more reasonable but conflicting interpretations or meanings. The fact that the parties have suggested opposing meanings of the disputed instrument does not necessarily compel the conclusion that the instrument is ambiguous

How the court resolves ambiguities in the covenant: determine the intent of the parties at the time the instrument was drafted if an ambiguity is found in the restrictive covenant, the court is to determine the intent of the parties at the time the instrument was drafted. The interpretation of the restrictive covenants intended by the drafters can be ascertained from the language of the covenants, the existing circumstances at the time of the formulation of the covenants, and the conduct of the parties. Additionally, the mutual interpretation of the restrictive covenants afford cogent evidence of their meaning. In other words: to resolve ambiguity: o o intent of the parties at the time the covenant was drafted, language of the covenant, conduct of the parties extrinsic circumstances General rule: restrictions on the use of land are not to be extended by implication, and doubts are to be resolved in favor of the free use of land Restatement: land use restrictions are as likely to increase alienability and utility, as it is to decrease it by protecting landowners expectations, you protect utility land restrictions might make the property more valuable, therefore increasing its value and therefore its alienability See 2-15 & 2-17 class notes Note 2 &3 p. 664, 665

CICs: Termination and Amendments o Covenant can be changed in 3 ways: unanimous agreement by everyone in entire community according to the terms provided for in the declaration litigation abandonment o those entitled to the benefit demonstrate intent to abandon their rights this test is met when the average person, upon inspection of a subdivision and knowing of a certain restriction, will readily observe sufficient violations so that he or she will logically infer that the property owners neither adhere to nor enforce the restriction change of circumstances o change in the character of the subdivision such that owners can no longer enjoy the benefits for which restrictions were created

changed circumstances applies where there is a change in the character of the subdivisions where the owners can no longer enforce the restriction or enjoy the benefits of the restriction even if they wanted to if restriction cannot be enforced because of changed circumstances, it cannot be enforced against anyone this differs from abandonment because the decision to abandon is up to the homeowners

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Note: the changing circumstances doctrine will help you get rid of or amend an old covenant, but will not allow you to make additions to a covenant

Methods of termination: written release merger of the benefited and burdened parcels prescription (wrongful interference with the servitude for the prescriptive period) applies to only one lot the restriction cannot be enforced against the entire community, only the one person the restriction is abandoned by the entire subdivision widespread violations that suggest the covenant no longer exists and the residents are no longer interested in enforcing covenant the restriction cannot be enforced against anyone in the community

abandonment

issue: whether a majority of the lotowners may adopt covenants which are new and different from the existing covenants and which are binding on all of the lotowners West Court allowed new covenants by landowners because they thought the definition of the word change included the addition of new covenants Boyle Court does not allow the addition of new covenants; the provision does not authorize a majority of lotowners to bind all lotowners to new and different covenants that restrict the use of land

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the question of whether a new addition to the covenant is permissible comes down to *notice* and what the property owners could have reasonably anticipated when they purchased their lot what if there is no declaration that allows for the amendment of covenants? How does the community go about changing then? courts traditionally have held that if a servitude regime does not contain a provision authorizing change by majority or super-majority vote, any change to the regime requires unanimous consent. However, recent legislation in some states establishes a presumption that a CIC servitude regime can be amended unless the declaration expressly provides to the contrary

Note: the changing circumstances doctrine will help you get rid of an old covenant, but will not allow you to make additions to a covenant

Land Transfer Transaction

4 basic stages: find a buyer/find a property closing where the actual transfer takes place (buyer and seller sit down with broker or agent and sign papers that states you are accepting property, willing to pay loan back, that bank has a lien on property because of loan, exchange title, give bank down payment, bank gives real estate agents their commission checks, then seller walk away with keys to the house) hire real estate broker terms contingencies (taking property as is, etc.) price title search buyer obtains loan to finance the purchase negotiate a contract

executory period

Real Estate Broker (under stage 1) many real estate transactions begin with securing a real estate agent or broker to assist one or both of the parties in marketing or finding a property and negotiating an agreement for the sale of the propertywhich is memorialized in a written contract real estate brokers typically perform two separate functions: the listing functioni.e. entering into a brokerage contract with the seller to list the property (typically in exchange for a commission ranging from 5-10% of the purchase price) and thereafter advertising the property for sale by placing the property into the brokers own promotional materials and onto an areas multiple listing service the selling functioni.e. displaying the home to potential buyers and facilitating negotiation and contract formation between the seller and prospective buyers 3 different types of listing agreements (agreement that the seller and broker enter into): Open Agency: gives broker a commission only if the broker actually procures a buyer (the broker does not get a commission if the seller or another agent makes the sale) Exclusive Agency-the owner may not use another agents efforts to sell the home during the effective period of the listing agreement o o o o The owner may sell the property through her own efforts without incurring liability for a brokerage commission If another broker sells the property, the broker still gets a commission If seller makes the sale himself, the broker does not get a commission broker gets a commission if the property is sold by any broker, but there is no commission if the seller makes the sale himself

Exclusive Right to sell-the broker has the exclusive right to facilitate sales of the property, even as against the property owner o If the property owner sold the property during the period of the listing agreement, the broker would earn a commission even if the brokers efforts did not facilitate the sale in any way o Gets a commission no matter who sells the property (another broker or property owner)

Multiple Listing Service: a website for a broker to look at residential properties broker gets access to information about properties, but broker usually must split commission 50/50 with the service (there is a listing broker and a selling broker, and split commission will come from the sales price)

Traditional rule: a broker is entitled to a commission when he produces a buyer ready, willing and able to purchase the property on the sellers terms, even if the sale is not completed Ready, willing, and able: a buyer who has the willingness as well as the ability and capacity to act on the transaction o o o court deems a purchaser ready, willing, and able as soon as the contract of sale is signed even if the seller tries to back out, this protects the broker so that he is guaranteed commission the signature of the seller means that: o seller is presumed to be in acceptance of buyers financial capability of purchasing the property seller accepts the risk that the agreement will not result in an actual sale risk is on the seller and not the broker

when a seller enters a valid unconditional contract of sale with a purchaser procured by a broker, the purchasers acceptability is conclusively presumed because the seller is estopped to deny the qualifications of a purchaser with whom he is willing to contract

Modern Rule (Dobbs) Rule: in the absence of default by the seller, the brokers right to commission comes into existence only when his buyer performs in accordance with the contract of sale (in other words, a real estate broker does not earn a commission unless the contract of sale is performed by the buyer) a broker can still collect his commission, even under the Dobbs Rule, if the sellers improper or frustrating conduct breaches the contract Policy: in a practical world, the true test of a ready, willing, and able buyer is at the time of closing, not at the time the contract of sale is signed. The buyer is not willing and able if the buyer is not able or refuses to perform at closing. The traditional rule is unfair to the seller because the seller usually relies on paying commission out of the sales profit.

Traditionally the law has recognized that the broker works for the best interest for the seller many states have adopted statutes that change brokerage relationships o a real estate agent can be a buyers agent, and a buyer is represented by a realtor unless the parties have agreed otherwise or the broker is only performing ministerial duties (showing property, answering questions buyer may have) o law also provides for dual agency (broker is agent for both buyer and seller) provided that both parties give their informed consent however, this provides for mixed loyalties and a conflict of interest

See 2-24 class notes for Ready, Willing, and Able Problem

Issues in Contract Formation o o General Rule: all states have enacted a statute of frauds, which requires that the transfers of land and contracts for such transfersmust be in writing to be enforceable To satisfy the statute of frauds: courts typically require that the writing identify the parties, describe the land, state the purchase price, and be signed by the party to be charged. Courts also have recognized that the writing need not be in a particular form; a letter, note, or other informal memo may suffice. o To satisfy SOF, need a signature by the party to be charged Some courts have found that a signed check may satisfy the SOF

Exceptions to the SOF: (1)Equitable estoppel: a contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to comply with the Statute of Frauds if it is established that the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific enforcement if a party seeking to enforce an oral agreement can demonstrate (a) reasonable and detrimental reliance on the oral agreement, and (b) the necessity for specific enforcement of the agreement to avoid injustice or irreparable injury, the court can estop the other party from asserting the statute of frauds as a defense **2 requirements: detrimentally relied on the promise, and the promise was reasonable (2)Part Performance: courts have considered acts taken in performance of an oral agreement such as the payment of money, together with either the transfer of possession of the land or the construction of improvements (or both)as a sufficient evidentiary substitute for a written document; based upon these acts of part performance, courts have justified enforcement of an oral agreement in equity despite the lack of compliance with the statute of frauds problematic, however, because courts often have held that sufficient acts of part performance must be unequivocally referable to the existence of an oral agreement in other words, there must be no other plausible explanation

equity: the difference between the amount of the home and the money you still owe on it) SOF requires the real estate contract to contain an adequate description of the land being sold for the sales contract, something as simple as an address will do however, at the closing, a full legal description is usually required

Land Description o

most courts are fairly lenient with the requirement that the real estate contract contain an adequate description of the land being sold, and do not require a formal legal description at this stage of the proceedings instead, it is generally enough to give the street address, tax identification number, or some other description specific enough to identify the land with reasonable certainty

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some courts will allow extrinsic evidence to clarify an ambiguous description, however, they will not permit such evidence to supply a description when one is completely missing from the contract most courts require the deed of conveyance to contain a full legal description 3 primary methods of land description: metes and bounds, government survey, and plat Metes and bounds: describes the land in relation to natural monuments (e.g. rivers, rocks, trees) or artificial monuments (bridges, roads, fences, stakes, pins, or posts) The description begins at some easily identifiable corner of the property and then traces the boundary lines of the property by using distances, compass point headings, and monuments until the description closes by returning to the point of beginning Government Survey Plat

See Plat handout Title: how are system decides how interests in land are owed the parties contract usually provideseither expressly or impliedlythat the seller will provide title of a certain quality the contract usually uses the term marketable title marketable title means a title free from reasonable doubt as to the promised titles validity o o a reasonable person having knowledge of all the relevant facts , and the legal consequences flowing from those facts, would be willing to accept title Generally, the title is unmarketable if there is a reasonable probability the seller does not own the full title alleged, the property is subject to an undisclosed encumbrance, or the purchaser bears an unreasonable risk he or she would be subject to litigation related to the property. It is not the existence of an encumbrance or possible defect that causes title to be unmarketable, rather it is the existence of an undisclosed encumbrance and thus not made part of the bargain that makes the title unmarketable

Title Investigation and Assurance: Quality of Title o o

 Policy:

**A good rule of thumb is that a title is unmarketable if acquiring the property would subject the purchaser to a real risk of litigation. the law developed this requirement to protect the expectations of the typical buyer of land, who expects to receive a fee simple absolute estate subject to neither (a)outstanding third-party property rights in the land that might interferer with buyers (or any successor owners) use of the land nor (b)reasonable doubt that such outstanding rights may exist

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such doubts or colorable claims are termed clouds on title

what makes title unmarketable? some flaw in the sellers title, suggesting the seller does not actually own the estate to be conveyed the existence of undisclosed encumbrancesliens, easements, and other rights of third parties in the land events that have deprived the seller of title, such as the governments exercise of eminent domain in defining marketable title, courts often focus on whether there are outstanding rights in the land that might interfere with its use. Accordingly, physical defects in the land or improvementssuch as termite infestationnormally do not constitute title problems

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the seller generally has until the closing date to clear up any title defects and tender marketable title The marketable title standard is implied in every sale for the purchase of property, unless the contract says otherwise See 3-1 class notes Problems p. 729 Issue: Does the existence of an ordinance or covenant render the title unmarketable? General rule: covenants are an encumbrance that will render title unmarketable, zoning restrictions are not why treat public restrictions different than private ones? A buyer may not anticipate private restrictions Title exception clause: if there is a clause in the contract that states buyer will take title subject to all restrictions and easements of record, this can waive the buyers ability to object to the content of any recorded restrictions *as a buyer, ask the seller to list the easements and restrictions of record

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