This is a 2-hour exam; one essay and 20/25 questions

CHECKLIST

Do the questions first; then spend the rest of the time on the essay.

Things grader looks for: Need a nice IRAC; issue spotting;

I. Land Acquisition – TWO or more people fighting over property

A. Adverse possession: To constitute adverse possession, there must be actual possession which is uninterrupted, open and notorious, hostile and exclusive, and under a claim of right made in good faith for the statutory period. Possession for a statutory period of time can ripen into title.

1. Elements: COAH

a. Actual Possession: Actual means that the possession must be such that the community would reasonably regard the adverse possessor as the owner; the possessor must show an actual entry that gives exclusive possession of the land and does not have the owner’s permission to be there. The possessor’s subjective state of mind is irrelevant.

b. Uninterrupted: Continuity of possession may be established although the land is used regularly for only a certain period each year. It is not necessary that the occupant should be actually upon the premises continually. If the land is occupied during the period of time during the year it is capable of use, there is sufficient continuity. Thus, summer occupancy only of a summer beach home does not destroy the continuity of possession required.

c. Open and Notorious: The acts of the adverse possessor are 'open and notorious' if they constitute reasonable notice to the owner that the adverse possessor is claiming ownership.

d. Hostile and Exclusive: application of an objective test which simply asks whether the possessor 'acted toward the land as if he owned it,' without the permission of one with legal authority to give possession

e. Continuous (Uninterrupted) For The Statutory Period: the conditions of continuity and exclusivity require only that the land be used for the statutory period as an average owner of similar property would use it

i) Tacking: Tacking allows a party in adverse possession to tack onto his own period of adverse possession any period of adverse possession by his predecessors in interest where there is privity satisfied by any non-hostile nexus—blood, contract, deed, or will.

ii) Privity of estate: The possessor voluntarily transfers either an estate in land or physical possession to a subsequent possessor. Tacking is not permitted if there is an ouster by a third party not in privity of estate, or when abandonment occurs. Privity:

iii) Short form: Tacking of adverse possession is permitted if the successive occupants are in 'privity.'

a) Privity: An identity of interest between persons, so that the interest of the one is measured by the same legal right as that of the other. f. Defenses:

i) Disability: infancy, insanity, imprisonment. Generally, the statute of limitations on adverse possession will toll (will not run) for an owner's disability but the courts will only enforce the disabilities specified in the statute and only those disabilities in existence at the time the adverse possession begins. In some jurisdictions if owner is in the military or absent from the state the SOL will toll. There is no tacking of disabilities.

ii) Any problems with the scope of possession or rights of the parties

g. Claim of Title or Color of Title. Co-Adverse Possessor: The objective test looks to the actions of the adverse possessor. If his actions appear to the community to be claims of ownership, the claim will be adverse and under a claim of right. Under this test a person could be an adverse possessor without actually claiming title. A claim of right under the subjective test means that the adverse possessor has a bona fide or good faith belief that he has title.

h. Regaining Possession: A true owner can interrupt the adverse possession by entering the land openly and notoriously for the purpose of regaining possession. Interruption by the true owner does not require an actual intent to oust the adverse possessor. Most courts use the objective test. Note: There is a presumption that the use of land by the landowner is the exercise of his right to use it and is an assertion of his ownership.

2. Equitable Covenants: Applicable for –

a. Easements by Prescription; Holdover tenants: For the creation of an easement by prescription there must be open and notorious use that is adverse and under a claim of right, and it must be continuous and uninterrupted for the requisite period of time.

b. Land-sale disputes

c. Squatters A squatter has no ownership rights and cannot, under the definition of a squatter, acquire any since he claims no interest adverse to the owner

d. Co-tenant ouster: Any continuing act of exclusion from the enjoyment constitutes an ouster, even by one tenant in common of his co-tenant.

B. Land Sale Contracts

1. Pre-Closing Issues:

a. Valid Contract for Sale

b. Who bears risk of loss

c. Any issues with marketable title: Title established through adverse possession is free from encumbrance but it is not a “marketable” title of record until there has been a judicial determination of such title. To show a record title by adverse possession requires a suit and recording of a decree.

2. Post Closing Issues

a. Merger Doctrine; a servient tenement is said to merge into the dominant estate and when ownership of both parcels are joined; owner may not twice have the same rights of use in the same land.

b. Type Of Deed-Quit Claim Etc: Under modern law, there are two types of deeds used; (1) Warranty deeds: the grantor warrants title; and (2) Quitclaim deeds: the grantor does not warrant title.

c. Warranty Deed; A warranty deed will usually contain:

i) The covenant of Seisin, ii) The covenant of right to convey, iii) The covenant against encumbrances, iv) The covenant of quiet enjoyment, v) The covenant of warranty, and vi) The covenant of further assurances.

d. are there any violations of any of the covenants of title

3. Encumbrances: A burden or charge upon an estate or property, so that it cannot be disposed of without being subject to it. A claim, lien, charge, or liability attached to and binding real property. A hindrance, impediment, or obstruction. Any right to, or interest in, land which may exist in one other than the owner, but which will not prevent the transfer of fee title. An 'encumbrance,' as the term is used in a grantor's covenant that the premises are free and clear of all encumbrances, generally means 'any right to or interest in the land, subsisting in a third person, to the diminution of the value of the land, though consistent with the passing of the fee by conveyance.'

Encumbrances are defined by statute as 'taxes, assessments, and all liens upon real property.' (Civ. Code, § 1114.)

C. Conveyancing –every conveyance of real estate will consist of a two-step process. The land contract and the closing. The act or business of drawing deeds, leases, or other writings, for transferring the title to property from one person to another.

D. The land contract must be in writing (SOF) signed by the party against whom the enforcement is sought; description of the property and some consideration.

E. The one exception to the SOF is the doctrine of Part Performance: If on the facts, you have any two of the following three, the doctrine is satisfied and equity will decree specific performance of an oral contract for the sale of the land:

1. Buyer takes possession of the land

2. Buyer pays all or part of the sale price

3. Buyer makes substantial improvements

F. Marketable Title: Title free from reasonable doubt; free from lawsuits and the threat of litigation. Three things that will render title unmarketable:

1. Adverse possession – seller must be able to provide good record title meaning that if any portion of the title rests in adverse possession, title is unmarketable.

2. Encumbrances: means an unencumbered fee simple; servitudes and mortgages render title unmarketable unless you see that the buyer has waived them in writing.

3. Zoning violations: if the property violates a zoning ordinance it is unmarketable.

G. Seller promises not to make any false statements of a material fact. Failure to disclose latent material defects will hold seller liable. Whether lies or omissions.

H. Closing: Validity of the Deed – don’t assume it is valid deed unless question tells you so.

1. Delivery?

a. Intent to deliver: Delivery of a deed requires a showing that at the time of the purported conveyance, the grantor intended to make a present transfer of the property to the grantee. There is a presumption that the grantor intended a present transfer if the grantor gives the deed to the grantee at the time of the conveyance. If grantor retains the deed, that is a rebuttable presumption of no delivery. Must be lawfully executed in writing/signed and comply with all statutory requirements.

Quit Claim contains no covenants. Grantor isn’t even promising that he has title to convey. This is the worst deed a buyer could hope for.

General Warranty Deed – this is the best deed a buyer could want. Makes a series of promises; warrants against all defects in title, including those attributable to grantors predecessors. The general warranty deed typically contains all six of the following covenants. The first three are present covenants, meaning: a present covenant is breached, if ever, at the time of delivery.

Thus the SOL for breach of a present covenant begins to run from the instant of delivery.

i) The Covenant of Seisin: grantor promises he owns the estate he now claims to convey.

ii) The Covenant Of Right To Convey: grantor promises he has the power to make this transfer (i.e., grantor is under no disability or no temporary restriction or constraint on power to sell)

iii) The Covenant against Encumbrances: grantor promises that there are no servitudes or mortgages (liens) on the land.

The next three covenants are future covenants, meaning: a future covenant is not breached, if ever, until grantee is disturbed in possession. Thus the SOL for breach of a future covenant will not begin to run until that future date.

iv) The Covenant for Quiet Enjoyment: grantor promises that grantee will not be disturbed in possession by a third party’s lawful claim of title.

v) The Covenant of Warranty: grantor promises to defend grantee should there be lawful claims of title asserted by others.

vi) The Covenant for Further Assurances: grantor promises to do whatever future acts are reasonably necessary to perfect the title if it later turns out to be imperfect.

b. The statutory special warranty deed: provided for by statute in many states, this deed contains two promises that grantor makes only on behalf of himself: (Note: Grantor makes no representations on behalf of his predecessors in interest.)

i) Grantor promises that he has not conveyed the property to anyone other than the grantee, and

ii) The property is free from encumbrances made by grantor.

c. Escrow situation: A delivery may be either absolute, as when it is delivered to the grantor himself; or it may be conditional, that is, to a third person to keep until some condition shall have been performed by the grantee, and then it is called an escrow. No presumptions apply. May be donative or commercial. Delivery situation under estoppel. If the transfer of the property would be beneficial to the grantee then acceptance is presumed. Grantee can refuse to accept the deed.

d. It is donative if the escrow third person receives no remuneration. Grantor retains the right to retrieve the deed before the condition is met. (see handout)

e. Commercial transfer: X collects payment from B and deed from A which are transferred upon completion. If A and B have a land-sale contract and the deed is held by X until escrow closes the date of the transfer relates back to the date the deed was handed to X and is the date B becomes the owner of the land. If A then sells the land to C before the closing, and C is a BFP w/o notice C would win out over B. However, if C knew about (had notice) the land-sale contract or had not paid value for the land then B, being first in time would win out. C can also win out under certain recording act statutes. See recording acts below.

f. Presumptions regarding delivery that should apply? -- In conveyancing, the placing of the property in the actual or constructive possession of the grantee. Usually accomplished by delivery of a deed to the buyer or agent of the buyer, or by recording said deed.

2. First in Time first in right (CL does it apply?) A maxim applicable where the equities otherwise are equal.

3. Are the parties sufficiently identified?

4. Are there sufficient words of transfer?

5. Is the property adequately described? Must furnish a reasonable clue as to the location of the property. Address; meets and bounds (Atherton) if the ambiguity is too severe and extrinsic evidence cannot clear it up it will fail. Monuments could be used to describe location—monuments such as streets or rivers—see accretion and erosion—which will change the boundary lines; evulsions is a sudden change in the course of a river caused by heavy rains/flooding—this does not change the boundary line

6. Grantor Signature must sign the transfer document as the party to be charged.. The grantee does not have to sign the deed. Consideration is not a requirement of a valid deed.

7. Notarization: A deed does not have to be notarized to be valid. Recordation is not required to transfer title but notorization is for recordation.

I. Recording acts: Always be careful to apply the recording act analysis to subsequent purchasers and not to the first claimant.

Our model: The case of the double dealer:

O conveys Blackacre to A. Later, O conveys Blackacre, the same parcel, to B. O, our double dealer, has skipped town. In the battle of A vs. B, who wins? It depends!

Remember two brightline rules:

1. If B is a BONAFIDE PURCHASER, and we are in a NOTICE jurisdiction, B wins, regardless of whether or not she records before A does.

2. If B is a BONA FIDE PURCHASE and we are in a RACE NOTICE jurisdiction, B wins if she records properly before A does.

3. Recording statutes exist to protect only bonafide purchasers and mortgagees (i.e., creditors)

A bona fide purchaser is one who:

i) B must purchase Blackacre for value, and

ii) Without notice that anyone else got there first

iii) Must not have had notice when he took

Only someone who has paid value (substantial pecuniary consideration) is entitled to the recording act protections.

4. The case of the doomed donee: Recording statutes do not protect donees, heirs, or devisees, unless the shelter rule applies

a. Notice Statute which will protect any bona fide purchaser who records against any subsequent purchaser who is also not a bona fide purchaser. Two requirements are imposed under a notice statute:

1) the party is a subsequent purchaser (B) of the property; and

2) B must be a BFP party and records first; if (C) takes their interest without notice of the prior claimant's rights and is a BFP, C wins.

Properly recorded: The deed must be recorded properly within the chain of title, which refers to that sequence of recorded documents, capable of giving record notice to later takers. In most states the chain of title is established through a title search of the grantor/grantee index.

Problem of the “wild deed” –O sells to A who does not record; then A sells to B; B records the A to B deed; although recorded, is not connected to the chain of title because it is missing a grantor-the O to A deed is missing from the records, making the A to B deed a “wild” deed. RULE: If a deed, entered on the records has a grantor unconnected to the chain of title, the deed is a wild deed. It is incapable of giving record notice of its existence.

Estoppel By Deed:

One who conveys land in which he has no interest is estopped from denying the validity of that transfer if he later acquires the land that he had previously transferred.

b. Race-Notice Statute will protect a bona fide purchaser (BFP), but only if he is the first to record. C must pay value and must take notice without notice and must be the first to record.

c. Race Statute (that will protect any good faith purchaser for value or beneficiary under a deed of trust as long as they recorded first.) which will protect the first person to record their deed or interest regardless of their status. E.g., if C is BFP for value and records first, C wins. If B records first B wins.

Notice and race-notice statutes give protection only for BFPs. See HB for language interpretation for the various statutes.

d. There are three types of notice: It is always critical to address all three types of notice when analyzing a party's rights under a notice or race-notice type recording act A I R

1) Actual Notice requires proof that the subsequent party actually knows about the subsequent claim.

2) Inquiry Notice: If the party has knowledge of facts and circumstances from a reliable source that would suggest the existence of a possible prior conveyance, then the party must make a reasonable investigation of it.

3) Record/Constructive Notice exists if the prior claim was properly recorded within the chain of title such that a subsequent purchaser will be charged with notice of the claim.

i) Tract Index: will always provide constructive notice

ii) Grantor/Grantee Index (majority) chronological listing under the G/G names (2 books); start with grantee index to find the conveyance record to the grantor; then go to grantor book to see if grantor had sold the property to anyone else.

J. Security Interests – mortgages

a. What type of security interest is involved?

b. what are the rights and priorities of parties in interest?

c. What is the effect of any transfer in interest?

II. Land Use

A. Creation: Easements are created by express grants (reservation), by implication, or by prescription.

1. An easement (or profit) is an interest in land and requires compliance with the SOF in its creation or transfer. As a general rule, the writing or express grant must be signed by the party to be bound (or the initial holder of the servient tenement).

B. Easements: An easement is a grant of a non-possessory property interest that entitles its holder to some form of use or enjoyment of another’s land—the right to use someone else’s land called the servient tenement. Easements can be affirmative or negative:

1. Affirmative: The right to go onto and do something on the serviant land. For example the right to lay utilities on the land or right of access across another’s land.

2. Negative: entitles its holder to prevent the servient landowner from doing something that would otherwise be permissible and are generally recognized in only four categories (CA recognizes scenic view negative easement: See L.A.S.S.:

a) Light

b) Air

c) Support

d) Stream water from an artificial flow (dam)

e) Scenic View:

NEGATIVE EASEMENTS CAN ONLY BE CREATED EXPRESSLY, BY A WRITING SIGNED BY THE GRANTOR. THERE IS NO NATURAL OR AUTOMATIC RIGHT TO A NEGATIVE EASEMENT.

C. Scope: Easements (or profits) are classified as

1. easements appurtenant (or profit) is appurtenant when it is attached to a piece of land and benefits the owner of such land in his use and enjoyment. Every easement appurtenant requires two pieces of land which are owned by two different persons. The two pieces of land involved are the dominant tenement which is the land whose owner (the dominant tenant), is benefited by the easement and the servient tenement, which is the land whose owner (the servient tenant) is burdened by (or subject to) the easement. Easements appurtenant run with the land. In other words, where the land is transferred, the easement appurtenant will transfer to the new owner of the land.

A grants B a right of way across A’s land (1) so B can more easily reach his land (2). B’s land is the dominant tenement. B has an easement appurtenant to B’s dominant tenement. A’s land is the serviant tenement and serves B’s land—bears the burden.

2. Easements In Gross: An easement (or profit) is in gross when it is intended to benefit the owner or possessor personally or pecuniary advantage rather than in connection with any land the holder owns. Thus, every easement in gross requires only one piece of land (i.e., the servient tenement), which is owned by a person other than the owner of the easement in gross. There is no dominant tenement. The servient tenement is the land subject to and burdened by the easement.

3. The easement and transferability:

a. The appurtenant easement passes automatically with the dominant tenement, regardless of whether it is even mentioned in the conveyance.

b. An easement in gross is not transferrable unless it is for commercial purposes.

4. Creation (P.I.N.G)

a. Prescription

b. Implication

c. Necessity

d. Grant

i) By Grant: An easement to endure for more than one year to comply with the SOF, must be in a writing that complies with the formal elements of a deed. The writing to evidence the easement is called “a deed of easement.”

ii) By Implication: (also known as an “easement implied from existing use”). Creation by implication generally arises when the owner of two or more adjacent parcels sells one or more of them and it is clear (although not mentioned in the instrument of conveyance) that an easement was intended. At the time of the conveyance, one part of the land is being used for the benefit of another part and the existing use is apparent and the existing use is continuous; and is either reasonably or strictly necessary to the enjoyment of the quasi-dominant tract.

iii) By Necessity: A landlocked setting. An easement of right of way will be implied by necessity if grantor conveys a portion of his land with no way out except over some part of grantor’s remaining land.

iv) By Prescription: An easement may be acquired by satisfying the elements of adverse possession. C.O.A.H.; Continuous use for the statutory period; Open and notorious; Actual use; Hostile use (w/o owners consent). Note: Permission defeats acquisition by adverse possession because no hostility.

5. Riparian (Water) Rights:

a. The Riparian Doctrine: The water belongs to those who own the land bordering the water course. These people are known as riparians who share the right of reasonable use of the water. Thus, one riparian will be liable if his or her use unreasonably interferes with others’ use.

b. The prior appropriation doctrine: The water belongs initially to the state, but the right to divert it and use it can be acquired by an individual regardless of whether or not he happens to be a riparian owner.

c. Rights are determined by priority of beneficial use. The norm for allocation is first in time, first in right. Thus, a person can acquire the right to divert and use water from a watercourse merely be being the first to do so. Any productive or beneficial use of the water, including use for agriculture is sufficient to create the appropriation right.

d. Ground Water: Also known as percolating water—water beneath the surface of the earth that is not confined to a known channel: The surface owner is entitled to make reasonable use of ground water, however, the use must not be wasteful.

e. Surface Waters: water which come from rain, springs, or melting snow, and which have not yet reached a natural watercourse or basis.

The common enemy rule: A landowner may change drainage or make any other changes/improvements on his land to combat the flow of surface water. Many courts have modified the common enemy rule to prohibit unnecessary harm to others’ land.

c. In summary: Easements (or profits) may be created by: express provision in a deed or will; by implication; by prescription; by estoppel; by eminent domain.

d. The scope of an easement is determined by the terms of the grant or conditions that created it. Unilateral expansion of an easement is not allowed.

e. Termination: An easement will be perpetual in duration unless otherwise specified in the instrument creating it. However, an easement, even though perpetual, can be terminated by the parties. A dominant estate can release the servient estate from the easement by writing. The writing would have to meet deed formalities to satisfy a valid release. The easement can also be abandoned. However, it cannot simply be an oral abandonment. The oral abandonment must be coupled with some action by the dominant estate showing that they are abandoning the easement. The servient estate can also terminate the easement by prescription.

i) Termination by express terms of creation. The language of an express easement will be strictly construed to determine its scope and term. However, if the language is unclear, the rights created may be interpreted to accommodate reasonable changes.

The holder of the benefit (i.e., the dominant tenant) may execute a release, thereby terminating the burden of the servient tenement. The release must be in writing and comply with the SOF.

When the fee simple title to both the servient and dominant tenements comes into the hands of a single person, merger extinguishes the easement. The rationale is that one cannot have an easement in his own property. Termination by merger applies only to an easement appurtenant.

ii) Termination by abandonment. Easements may be terminated by abandonment. However, mere non-use standing alone, is not enough to constitute an abandonment of the easement. Non-use plus some proof the easement holder intended to abandon the easement right.

6. POSESSOR’S RIGHTS – The possessor of land has the right to be free from trespass and nuisance.

a. Trespass: is the invasion of land by tangible, physical object. To remove a trespassor you bring an action for ejectment.

b. Private Nuisance: is substantial, intentional, unreasonable interference of another’s use and enjoyment of land. Note: unlike trespass, nuisance does not require tangible, physical invasion. Thus, odors and noise could give rise to a nuisance claim but not trespass.

7. EMINENT DOMAIN:

a. Government’s Fifth Amendment power to take private property for public use in exchange for just compensation.

b. Explicit takings: acts of governmental condemnation

c. Implicit or regulatory taking is a a government regulation that, although not intended to be a taking, has the same effect. Example: You buy land in North Carolina for development. Three months later, the government imposes a ban on all development. You have not been the target of an overt condemnation but you argue that the regulation is an implicit taking. It has worked an implicit or regulatory taking resulting in an economic wipeout of your investment.

d. The remedy will either be compensation for the taking or terminate the regulation and pay the owner for damages that occurred while it was in effect

8. ZONING:

a. Pursuant to its police powers, government may enact statutes to reasonably control land use.

b. The Variance: The principal means to achieve flexibility in zoning: It is permission to depart from the requirements of zoning requirements To get a variance you must show undue hardship; won’t decrease neighboring property values. The variance is granted or denied by administrative action—typically by a zoning board.

c. The non-conforming Use: A once lawful, existing use now deemed nonconforming by a new zoning ordinance. It cannot be eliminated all at once unless just compensation is paid. Otherwise, it could be deemed an unconstitutional taking.

d. Unconstitutional exactions: those amenities government seeks in exchange for granting permission to build.

A. Profits: A profit is the right on one person to go onto the land in possession of another and therefrom either some part of the land itself or some product of the land, e.g., oil, gravel, marble, stone, grass, trees, shrubbery, or fish. A profit is a non-possessory interest in land and requires compliance with the Statute of Frauds.

a. Easement vs. Profit: The distinguishing element between an easement and a profit is that an easement gives its owner only the right to enter or use the land of another; a profit gives its owner the right take either the soil itself or some product of the land.

b. A right to come onto property and take water is an easement but to take ice is a profit because ice is considered a product of the soil.

B. License: A license permits one person to come onto the land in the possession of another without being a trespasser.

1. How it differs from easements/revocable or not: Unlike an affirmative easement, a license is not an interest in land. It is merely a privilege, revocable at the will of the licensor—unless it is coupled with an interest unless estoppel applies to bar revocation.

a. Tickets create fully revocable licenses The minority view holds that a ticket holder has a contract with the owner and the contract right is specifically enforceable and the holder has a right of self-help in remaining on the land.

b. An oral easement creates a freely revocable license “neighbors talking by the fence” it violates the SOF; easements must be in writing.

c. Estoppel will apply to bar revocation if substantial money or labor or both in reasonable reliance on the easement.

d. Classifications:

a) A license or mere license, which is always revocable.

b) A License Coupled with an Interest, which is irrevocable.

c) An Executed License (i.e., an oral license acted upon), which is irrevocable.

e. Compare with Lease: A license may be distinguished from a lease since a licensee never has possession of land. A lessee, on the other hand, always has possession of the land

f. Compare with Easement: An easement is a substantial incorporeal interest in the land of another and is created in most cases by a deed of conveyance. It is an interest in land and requires for its creation a compliance with the SOF. A mere license is no such interest in land and requires no formalities for its creation.

g. Compare with a Contract: A contract is always based on a consideration theory. There may or may not be a consideration for a license. For example, if A permits B to come onto A’s land to park his car for two hours with no consideration involved, then B has a mere license. A may revoke this license at any time. However if B pays A $2.00 for A’s agreement that B may do so without interruption, B has a license to park on A’s property, which is revocable, but he also has a contract under which A has promised for a consideration not to revoke the license. Although A has the right and power to revoke the license, he has only the power but no right to breach the contract, and so A would be liable for a breach.

C. Covenants:

1. Affirmative Covenant: will bind the covenantee or the holder of the servient estate to do some affirmative act related to land.

2. Negative Covenant: will prohibit the holder of the servient tenement from doing something with respect to the land.

a. The Covenant is a promise to do or not do something related to land.

b. Covenants can be negative (known as restrictive covenants)—a promise to refrain from doing something related to land. For example: I promise not to build for commercial purposes.

c. Covenants can be affirmative--promise to do something related to land.

If the plaintiff seeks money damages he is seeking to enforce a covenant. If he says he wants an injunction he wants an equitable servitude.

3. How do you determine if the given promise is a covenant or an equitable servitude? You determine based on the damages your plaintiff is seeking.

a. If the plaintiff seeks money damages it’s a covenant (a legal device)

b. If the plaintiff seeks an injunction it is an equitable servitude

c. In covenant parlance, one tract is burdened by the promise and one tract is benefited.

4. When will the covenant run with the land? When it is capable of binding successors.

5. Legal Effect: Contracts – As a general rule, a contract operates to bind person to person. Thus only the promisor is bound to perform the promise and only the promisee has a right to compel performance of the promisor. Note the following exceptions:

a. The case in which a third person (e.g., intended third-party beneficiary) for whose benefit a contract is made;

b. The case in which the promisee assigns the benefit of the contract to an assignee who may, without being party to the contract, enforce it against the promisor; and

c. Covenants running with the land which one may, without being a party to the contract, enforce simply by virtue of becoming owner of the estate in the land.

6. Legal Effects: Easements – An easement (or profit) appurtenant operates to bind land to land. The dominant tenant owns “an interest in the land of another” (the servient tenant). If the dominant tenement transfers, the benefit of the easement (or profit) appurtenant passes to the conveyee. By the same token, a transfer of the servient estate carries with it the burden of the easement (or profit) appurtenant. The successor in interest to either estate must recognize the easement or profit as an interest in the land.

7. Legal Effect: Covenants Running with the Land – A covenant running with the land is attached to or connected with the estate since it may be enforced against, or by, someone who is not an original party to the covenant, and they may do so solely by virtue of having succeeded to the ownership of the property to which the covenant referred.

8. Requirements for a Covenant to Run with the Land:

a. Does the burden of A’s promise to B, run? WITHN

It depends if the facts support the conclusion that the burden and benefit run.

1) Covenant – There must be a covenant or writing that is signed and complies with the SOF.

2) Intention – As long as the words assigns or successors are used in the instrument, the intention is usually clear that the covenant is intended to run.

3) Touch and concern: In order for a covenant to touch and concern the land (and thus run with the land), the land must be benefitted or burdened in some way. This means that the effect of the covenant is to make the land either more valuable (or increase its utility) in the hands of the covenantee or less valuable (or curtail the use or utility of the land) in the hands of the covenanter. – The benefit of the covenant usually touches and concerns the land of the covenantee, while the burden touches and concerns the land of the covenanter. Note: The reverse is also true. The covenant must affect the legal relations of the parties as landowners and not as members of the community at large.

4) Privity of Estate: Horizontal and vertical privity are required. There must be privity of estate between the original covenanting parties. For MBE purposes this usually means that one of the contracting parties succeeds to an interest in the land of the other party (e.g., landlord/tenant or grantor/grantee).

5) Horizontal Privity (estate)/Vertical Privity:

1) Vertical privity exists where the party is a recipient of the same possessory interest as the person who agreed to the restriction. Contract, devise, descent nexus. Adverse possession does not have vertical privity.

d. For horizontal privity to apply, the party agreeing to the restriction must have had a common property interest with the other party. Main reason many burdens won’t run.

e. Notice: The burdened purchaser had notice of the promise when she took.

f. Does the benefit of the original promise run to that purchaser? WITV

1) Must be in writing

2) Must have intended that the benefit would run

3) Touch and concern: the promise affects the parties as landowners.

4) Vertical privity some non hostile nexus between B and B1

5) Horizontal privity is not required for the benefit to run.

9. Dominant vs serviant estate:

a. Dominant: In the civil law, this term is used to signify the estate to which a servitude or easement is due from another estate; for example, where the owners of the estate, Blackacre, have a right of way or passage over the estate Whiteacre, the former is called the dominant,

b. Servient Estate. In property an interest that is burdened by another estate usually by an easement.

10. Has the current land owner taken with a Notice of restriction

11. Types of Covenants Running with the Land:

a. To pay rent

b. To insure the buildings on leased premises

c. To pay taxes on the leased premises

d. Option to purchase Leased Premises

e. Not to sell intoxicating liquor on leased premises

f. To Build a structure on leased premises

g. Not to assign or sublease premises

h. To supply water, light, or heat on leased premises

REQUIREMENTS FOR THE RUNNING OF COVENANTS

|AT LAW |IN EQUITY |
| |AFFIRM |
| Is more than a mere personal contract but is less than |Is a restriction on the use of the land enforceable in a |
|an easement because technically it is not an “interest in|court of equity. |
|land. |Is more than a covenant running with the land because it |
|Requirements: (a) there must be a covenant; (b) an |is an interest in the land. |
|intention that the covenant run with the land, (c) must |Is broader than an equitable easement because it applies |
|“touch and concern” the land, and (d) privity of estate. |not only to land but also to chattel property, such as a |
|A covenant “touches and concerns” the land if it makes |business. |
|the land in the in the hands of the owner either more |Requirements: (a) may be created by a writing complying |
|usable or more valuable or less useable and less |with the SOF, (b) intention of the parties that there be |
|valuable. |a restriction, and (c) transferee takes the land with |
|Legal effect: makes an assignee of the land either |either actual or constructive notice of the existence of |
|benefit by or be burdened by the covenant without being |the servitude. |
|party to the making of the contract. |Privity of Estate is not required. |
|Remedies for breach: standard contract remedies (i.e., |Remedies: equitable remedies |
|money damages or specific performance if appropriate). |Extinguished: (a) by doing an act which violates the |
| |servitude and continuing for the period of the SOL, (b) |
| |release by the dominant tenant, or (c) where the purpose |
| |and object of the servitude become impossible to achieve |
| |(e.g., change in character of neighborhood from |
| |residential to commercial). |

1) Does the restriction Touch and concern the dominant/servient estates? To satisfy this element, the burden of the land-use restriction must diminish the use and enjoyment of the servient estate. Additionally, the benefit of the land-use restriction must increase the use and enjoyment of the dominant estate. The burden of the restriction must "touch and concern" the burdened (servient) parcel and the benefit must "touch and concern" the benefited (dominant) parcel to enforce an equitable servitude. 2) Intend to run with the land? The parties must have intended that the restriction would apply to future purchasers of the land. There is a common law/modern split of authority as to the intent element. 3) In order to enforce a restriction against successors-in-interest to the servient estate, it must be demonstrated that the two parties who created the restriction intended that it should "run with the land" to benefit future owners of the dominant estate and burden future owners of the burdened estate. At common law, the original parties needed to expressly state such intent by using words like "heirs and assigns" to provide explicit proof that the restriction was truly intended to benefit and bind heirs and assigns of the original parties. Modernly the mere fact that the restriction touches and concerns both the dominant and servient estate is sufficient to infer the original parties intended to make the restriction run with the land.

4) Does the landowner have Notice? A restriction on the use of land cannot be enforced against the owner of that land unless he or she has been given proper notice of the restriction before acquiring their interest in the property. A restriction on use contained in a properly recorded instrument should provide constructive notice to any successor owner.

5) Remedies available for breach of the equitable servitude: Since an equitable servitude is an equitable doctrine (as opposed to legal), it is subject to all applicable equitable defenses. Generally, this requires an examination of the surrounding area to determine whether the restriction no longer serves any useful purpose.

1) "Change of neighborhood" doctrine. If the neighborhood in which the burdened parcel is located has so changed that it would be unreasonable to enforce it, the equitable servitude will not be enforced. Anytime there is a large passage of time between the creation of a land use restriction until enforcement is sought, an argument for "change of neighborhood" should be made.

2) Merger. When both the dominant and servient parcels come into ownership by the same party, any private land use restrictions or rights (i.e., easements, covenants, servitudes, leases, etc.) are terminated by merger.

F. Implied Reciprocal servitudes

a. What was the restriction?

b. was it part of a common term or plan

c. Take with notice of restriction

III. Landlord/Tenant

A. Type of tenancy

1. Years: Estate for years or term of years. This is a lease for a fixed, determined period of time. Could be a day, week, month or years. Because the contract tells us when the lease will end, no notice is necessary to end. A term of years greater than one year must be in writing (SOF) to be enforceable.

2. Periodic: This is a lease which continues for successive or continuous intervals until Landlord or Tenant gives proper notice to terminate. It can be created expressly, i.e., Interval can be week to week, month to month, etc. Notice must be given to terminate a periodic tenancy. At CL equal to the length of the period itself. One week; one month but if a year to year or greater only 6 months notice is required.

3. At Will: This a tenancy for no fixed period of duration. Unless the parties expressly agree to a tenancy at will, the payment of regular rent will cause a court to treat the tenancy as an “implied periodic tenancy.” By statute in most states a reasonable demand to vacate is required.

4. Sufferance: T has wrongfully held over past the expiration of the lease. The law says we must name this T—a holdover—a tenant at sufferance. A tenancy at sufferance is short lived. It lasts until L evicts T or elects to hold T to a new term.

B. Tenant Duties

1. Duty To Repair – T is responsible for keeping the premises in reasonably good repair.

2. Waste: T must commit waste or destruction of premises. See voluntary waste, overt, harmful acts; permissive waste, neglect; ameliorative waste, alterations that increase premises value.

3. Fixtures: A fixture is a once-movable chattel (thing) that by virtue of its attachment to realty objectively shows the intent to permanently improve the realty. T must not remove a fixture no matter that she installed it. Fixtures pass with ownership of the land. The doctrine of waste is connected to waste; when a tenant removes a fixture he commits voluntary waste.

How to tell if a tenant’s installation is a fixture:

i) Express agreement

ii) In absence of agreement T may remove her installation so long as removal does not cause substantial harm to the premises.

iii) If removal will cause substantial harm, then in objective judgment T has shown the intention to install a fixture.

Problem with condition of premises

1. These are acts by a tenant which increase the value of the property. Damages are not available as there is an increase in the market value. Equity is the only relief in such cases. Whether or not injunctive relief will be granted depends on the circumstances (mainly how close the plaintiff is in getting the return of his property at the end of the lease).

4. Rent

Tenant breaches duty to pay rent but remains in possession. L’s only options are to evict through the courts and sue for rent; or continue the relationship with this tenant and sue for the rent owed. L cannot engage in self-help. L must not change the locks or forcibly move tenant or remove any of tenant’s possession. Self-help is punishably civilly and criminally.

5. T breaches duty to pay rent but is out of possession of the premises.

Leaves before the lease expiration date; SIR

a. Surrender –

b. Ignore the abandonment and hold tenant responsible for rent just as if T were still there.

c. Re-let – on the wrongdoer’s behalf and hold him liable for any deficiency. L must try to re-let to mitigate damages.

C. Landlord’s Duties:

1. Duty to deliver possession.

2. Implied covenant of quiet enjoyment

a. Breach by wrongful eviction

b. Breach by constructive eviction: SING

i) Substantial Interference

ii) Notice

iii) Goodbye!

3. Is L responsible for the bothersome conduct of other tenants? No. Exceptions:

a. L has a duty not to permit a nuisance on the premises

b. L has a duty to police common areas.

4. Implied Warranty of Habitability: only applies to residential leases not commercial. It is non waivable.

a. The Standard: The premises must be fit for basic human dwelling. (modest standard). The appropriate standard may be supplied by local housing code or independent court conclusion.

b. A breach may be triggered by no heat in winter, no plumbing or inoperable plumbing; no running water.

c. Tenant’s entitlements when the implied warranty of habitability is breached: MR3:

i) Move out and terminate the lease

ii) Repair and deduct. Allowable in many jurisdictions.

iii) Reduce rent or withhold rent (place in escrow) sue; let court decide

iv) Remain in possession, pay rent and affirmatively seek money damages (sue). Compare with constructive eviction.

5. Retaliatory Eviction – If T lawfully reports L for housing code violations, L is barred from penalizing T by raising rent or ending the lease, harassing T or other forms of reprisal.

D. Assignment vs. Sub-Lease:

1. Unless the lease states otherwise the law allows a tenant to transfer her interest. If transferred in its entirety it is an assignment. If only a portion of the leasehold interest is transferred that is a sub-lease.

2. Sub-Lease:

1. Who is entitled to rent – tenant or landlord?

2. Tenant – assignment or sub-lease

a) any prohibitions on transfers contained in the lease

IV. Estates and Future Interests(see chart on p. 176 CB)

A. Present Possessory Estate (p 176)

1. Fee Simple Absolute – this is absolute ownership of potentially infinite duration. It is freely devisable, descendible and alienable. There is no accompanying future interest. Example: O conveys “to A” or “to A and his heirs.” A is alive and well. What do his heirs have? Nothing. Only A has absolute ownership—a living person has no heirs—only prospective heirs also known as heirs apparent. They are powerless.

2. Fee Simple Defeasible—Fee Simple Determinable--grantor must use clear durational language. If the stated condition is violated, forfeiture is automatic. This estate, like all of the defeasible fees, is devisable, descendible and alienable, but always subject to the condition. There is an accompanying future interest—the possibility of reverter in the grantor. (F S D P O R) Fee Simple Defeasible Possibility Of Reverter.

3. Fee Simple Subject to Condition Subsequent—Grantor must use clear durational language and carve out the right to re-enter. This estate is not automatically terminated, but it can be cut short at the grantor’s option, if the stated condition occurs. There is an accompanying future interest—right of entry is synonymous with power of termination. AS CONCERN THE DEFEASIBLE FEES, NOTE TWO IMPORTANT RULES OF CONSTRUCTION:

a) Words of mere desire, hope, or intention are insufficient to create a defeasible fee. Courts disfavor restrictions on free use of land, thus will not find a defeasible fee unless clear durational language is used.

b) Absolute restraints on alienation are void. An absolute restraint on alienation is an absolute ban on the power to sell or transfer that is not linked to any reasonable time limited purpose.

Example: O conveys “to A so long as she never attempts to sell.” This is an absolute restrain on alienability and is VOID. A has a fee simple absolute; O has nothing.

Example: O conveys “to A so long as she does not attempt to sell until the year 2009, when clouds on the title will be resolved. Here the restraint is linked to a reasonable, time-limited purpose. Thus it is good. A has a fee simple determinable; O has a possibility of reverter. F S D P O R

4. Fee Simple Subject to Executory Limitation—This estate is similar to fee simple determinable only now, if the condition is broken, the estate is automatically forfeited in favor of someone other than the grantor. The accompanying future interest—shifting executory interest.

B. Life Estate—This is an estate that must be measured in explicit lifetime terms, never in terms of years. Example: O conveys “to A for life.” (not for 50 years) A has a life estate and is known as a life tenant. O has a reversion, meaning that at the end of A’s lifetime, the estate reverts back to O or O’s heirs. A future interest that arises in O the grantor who transfers less than he has other than a defeasible fee.

a) A life estate pur autre vie is a life estate measured by a life other than the grantee’s. “To A for the life of B.” If B dies, A is out—the estate reverts back to grantor. Note: The life tenant’s entitlements are rooted in the important doctrine of waste. The life tenant is entitled to all ordinary uses and profits from the land. The life tenant must not commit waste; anything to harm the future interest holders.

i) Waste: Voluntary or affirmative waste is actual overt conduct that causes a decrease in value. RULE: The life tenant must not consume or exploit natural resources on the property such as timber, oil, or minerals, unless one of four exceptions applies: PURGE.

PU – PRIOR USE, meaning that prior to the grant land was used to exploit. Here the life tenant may continue to exploit, unless otherwise agreed. NOTE: Prior use and the Open Mines Doctrine: if mining was done on the land before the life estate began a life tenant may continue to mine but is limited to mines already open. The life tenant may not open any new mines.

Reasonable repairs: the life tenant may consume natural resources for reasonable repairs and maintenance.

Grant: The life tenant may exploit if granted that right.

Exploitation, meaning this land suitable only to exploit—the land is a quarry

i) Permissive Waste: when land is allowed to fall into disrepair or the life tenant fails to reasonably protect the land. The life tenant should maintain the premises in reasonably good repair.

Permissive waste and the obligation to pay all ordinary taxes: The life tenant is obligated to pay all ordinary taxes on the land, to the extent of income or profits from the land. If there is no income or profit, the life tenant is required to pay all ordinary taxes to the extent of premises fair rental value.

ii) Ameliorative Waste: the life tenant must not engage in acts that enhance the property’s value unless all future interest holders are known and consent. The life estate’s accompanying future interest, if held by O, the grantor, is called a reversion. If held by a third party, it is a remainder.

V. Future Interests:

A. Future Interests Capable of Creation in the Grantor:

There are six categories of future interests, and we classify them based on whether they are retained by the grantor or instead by a transferee.

1. The possibility of Reverter: It accompanies only the fee simple determinable. When a grantor with a fee simple absolute transfers a fee simple determinable, the grantor retains a possibility of reverter. This possibility of reverter can be inherited, or devised by will. FSDPOR

2. The Right of Entry, also known as the power of termination: it accompanies only the fee simple subject to condition subsequent. The conveyance of an interest in land by attaching a condition subsequent give transferor a right of entry. Generally, a transferor who holds a right of entry also holds a reversion. A right of entry not incident to a reversion may be left by will and passes under the intestacy statute, but generally may not be conveyed inter vivos.

3. The Reversion: A reversion is created if a holder of a vested estate transfers to another a smaller estate. The reversion interests remains in the grantor. A grantor who gives away a fee simple determinable, retains a possibility of reverter. If something less than a fee simple is given, he retains a reversion. A reversions is alienable. A reversion is the future interest that arises in a grantor who transfers an estate of lesser quantum than she started with, other than a fee simple determinable or a fee simple subject to condition subsequent. (think of this as a “leftover.” A reversion is alienable.

B. Future Interests In Transferees

If a future interest is held by someone other than the grantor, it has to be either a:

Vested remainder of which there are three:

i) The indefeasibly vested remainder

ii) The vested remainder subject to complete defeasance (also known as the vested remainder subject to total divestment) and

iii) The vested remainder subject to open

There are three tasks in assessing future interests in transferees:

1. We must distinguish vested remainders from contingent remainders;

2. We must distinguish the three kinds of vested remainders from each other and;

3. We must distinguish all remainders from executory interests.

1. The difference between vested remainders and contingent remainders: First, what is a remainder? A remainder is a future interest created in a grantee that is capable of becoming possessory at the natural conclusion of a preceding life estate or term of years.

4. Contingent remainder; or

5. An Executory interest of which there are two:

i) The shifting executory interest and

ii) The springing executory interest

A. The difference between vested remainders and contingent remainders:

1. A remainder is a future interest created in a grantee that is capable of becoming possessory at the natural conclusion of the preceding life estate or term of years. (upon the expiration of a prior possessory estate created in the same conveyance in which the remainder is created.)

a. A remainder always accompanies a preceding estate of known fixed duration. That preceding estate is usually a life estate or a term of years. Example: “to A for life then to B.” B is the remainderman!

b. A remainder never follows a defeasible fee.

Remainderman cannot cut short or divest a prior transferee. In other words, if your present estate is a defeasible fee, your future interest in NOT a remainder. Instead it will be executory interest.

B. REMAINDERS ARE EITHER VESTED OR CONTINGENT:

A Remainder is vested if it is both created in an ascertained person and is not subject to any condition precedent.

By contrast, a remainder is contingent if it is created in an unascertained person or is subject to a condition precedent, or both.

1. The remainder that is contingent because it is created in an unborn or unascertained persons. Example: “to A for Life then to B’s first child.” A is alive and B has no children so we have a contingent remainder. Because it is dependent on its taker being born.

A remainder that is contingent because it is subject to a condition precedent. That is when it appears before the language creating the remainder or is woven into the grant to remainderman. Condition precedent = equals prerequisite: Example: “to A for life, and if B has reached the age of 21, to B.” A is alive. B is 19 years old. Notice, B must satisfy a condition precedent—a prerequisite—before B can take. B therefore has a contingent remainder. Why is this important? Because historically the law detested contingent remainders. Unknown, unborn, condition precedent. There are three rules to remember regarding contingent remainders:

i) Rule of destructibility of contingent remainders: At common law, a contingent remainder was destroyed if it still contingent at the time the preceding estate ended. For Example: “to A for life and if B has reached the age of 21 to B.” A died and B is only 19. Historically at CL B’s remainder would be destroyed because it was still contingent. O or O’s heirs would take in fee simple absolute.

Modernly the destructibility rule has been abolished. Today if B is still under 21 when A dies, O or O’s heirs take subject to B’s springing executory interest. Once he reaches 21 B takes.

ii) The Rule in Shelley’s Case: At CL the rule would apply in one setting only. O conveys to A for life then on A’s death to A’s heirs. A is alive. Historically the present and future interests would merge giving A a fee simple absolute. The Rule in Shelley’s Case is a rule of law, and not a rule of construction. I would apply even in the face of contrary grantor intention.

The rule in shelleys case has been virtually abolished. Thus when O conveys “to A for life, then to A’s heirs.” A has a life estate; A’s as yet unknown heirs have contingent remainder; O has reversion since A could die without heirs.

iii) The doctrine of worthier Title (also known as the rule against a remainder in grantor’s heirs):

When O, who is alive, tries to create a future interest in his heirs. O’ who is alive, conveys to “A for life, then to O’s heirs.” If this did not apply A has a life estate and O’s heirs have contingent remainder because O is still alive and a living person has no heirs. Instead, because of the Doctrine of Worthier Title, the contingent remainder in O’s heirs is void. Thus A has a life estate and O has reversion. The doctrine endeavors to promote free transfer of land. This doctrine is a rule of construction and not a rule of law. Grantor’s intent controls. If grantor clearly intends to create a contingent remainder in his heirs, intent is binding.

C. Distinguish the Three Kinds of Vested Remainders: (Note: Only remainders can be vested)

1. The indefeasibly vested remainder is certain to acquire an estate in the future, with no conditions attached. Example: “To A for life, remainder to B.” A is alive. B is alive. A has a life estate. B has an indefeasibly vested remainder. [indefeasible-cannot be voided/defeated/revoked].

What if B predeceases A? At common law B’s future interest passes by will or intestacy to his heirs.

2. The vested remainder subject to complete defeasance (also known as the vested remainder subject to total divestment.

His taking is not subject to any condition precedent. However, his right to possession could be cut short because of a condition subsequent.

Here, note the difference between a condition precedent, which creates a contingent remainder, and a condition subsequent, which creates a vested remainder subject to complete defeasance. To tell the difference, apply the “COMMA RULE” When conditional language in a transfer follows language that, taken alone and set off by commas, would create a vested remainder, the condition is a condition subsequent, and you have a vested remainder subject to complete defeasance.

Example: O conveys “to A for life, remainder to B, provided, however, that if B dies under the age of 25, to C.” A is alive. B is 20 years old.

a) A has a life estate.

b) B has a vested remainder subject to complete defeasance.

c) C has a shifting executory interest

d) O has a reversion

If B is under 25 at the time of A’s death, B still takes. However, B must live to 25 for his estate to retain his interest. Otherwise, B’s heirs lose it all, and C or C’s heirs take.

O has a reversion, because it is possible that neither C nor C’s heirs will exist if and when the condition is breached.

By contrast, if the conditional language appears before the language creating the remainder, the condition is a condition precedent, and you have a contingent remainder.

Example: O conveys “to A for life, and if B has reached the age of 25 [condition precedent], to B [contingent remainder].” A is alive. B is 20 years old.

A has a life estate

B has a contingent remainder because his taking is subject to a condition precedent. B must be 25 before he can take possession.

O has a reversion. (If B dies under 25, the estate reverts back to O or O’s heirs.)

If B is still alive but under 25 at the time of A’s death, B cannot take. Instead, the estate reverts back to O or O’s heirs, who holds it subject to B’s springing executory interest if and when B reaches 25, B divests O.)

3. The Vested Remainder Subject to Open:

Here, a remainder is vested in a group of takers, at least one of whom is qualified to take. However, each class member’s share is subject to partial diminution because additional takers, not yet ascertained, can still qualify as class members.

Example: “to A for life, then to B’s children.” A is alive; B has two children, C and D.” C and D have vested remainders subject to open. Their share might be decreased if B has another child.

A CLASS IS EITHER OPEN OR CLOSED.

A class is open if it is possible for others to enter. A class is closed when maximum membership has been set. Person’s born after a class has closed are shut out. If conceived prior to closing, that person is a member of the class. [the womb rule]

How will you know when the given class has closed? [Apply the common law rule of convenience]. The class closes at B’s death and according to the rule of convenience but also at A’s death even if B is still alive or whenever any member can demand possession. C and C can demand possession at A’s death.

If C or D predeceases A under the common law their share goes to their devisees or heirs.

D. DISTINGUISH REMAINDERS FROM EXECUTORY INTERESTS:

An executory interest is a future interest created in a transferee (a third party), which is not a remainder and which takes effect by either cutting short some interest in another person (“shifting executory interest”) or in the grantor or his heirs (“springing executory interest”).

1. Shifting Executory Interest always follows a defeasible fee and cuts short someone other than O, the grantor.

Example: “To A and her heirs, but if B returns from Canada sometime next year, to B and his heirs.”

B has a shifting executory interest NOT a remainder because remainders NEVER follow defeasible fees.

A has a fee simple subject to B’s shifting executory interest.

This conveyance does not violate the rule against perpetuities because of the one year limit on B’s power.

Example: “To A, but if A uses the land for nonresidential purposes at any time during the next 20 years, then to B.”

B has a shifting executory interest.

A has a fee simple subject to B’s shifting executory interest.

This conveyance does not violate the rule against perpetuities.

2. Springing Executory Interest:

Example: O conveys “to A, if and when he marries.” A is unmarried.

A has a springing executory interest

O has a fee simple subject to A’s springing executory interest.

This conveyance does not violate the rule against perpetuities. We will know by the end of A’s life whether the condition is met or not.

Example: O conveys to A, if an when he becomes a lawyer.” A is still in high school.

A has a springing executory interest.

O has a fee simple subject to A’s springing executory interest.

This conveyance does not violate the rule against perpetuities. We will know by the end of A’s life whether the condition is met or not.

E. THE RULE AGAINST PERPETUITIES (“RAP”)

1. Rule against perpetuities*

RULE: Certain kinds of future interests are void if there is any possibility, however remote, that the given interest may vest more than 21 years after the death of a measuring life.

Four-Step technique for assessing potential RAP Problems.

a) Determine which future interests have been created by the conveyance. The RAP potentially applies only to contingent remainders, executory interests, and certain vested remainders subject to open.

The RAP does not apply to any future interest created in O, the grantor; indefeasibly vested remainder; vested remainder subject to complete defeasance.

Example: “To A for life, then to A’s children.” A is alive. She has no children.

The as yet unborn children have a contingent remainder.

2. Identify the conditions precedent to the vesting of the suspect future interest.

In the preceding example, what has to happen before your future interest holder can take? A must die, leaving a child.

3. Find a measuring life: Look for a person alive at the time of the conveyance and ask whether that person’s life or death is relevant to the conditions occurrence. That is not just any life. The measuring life must be relevant to the occurrence. A must have a child and must die as the measuring life.

In the preceding example A qualifies as the measuring life.

4. Then Ask: “Will we know, with certainty, within 21 years of the death of our measuring life, if our future interest holder(s) can or cannot take?” If so, the conveyance is good. If not (if there is any possibility, however remote, that the condition precedent could or could not occur more than 21 years after the death of the measuring life), the future interest is void.

The preceding conveyance, therefore is good. We will know at the instant of A’s death, if A has left behind a child or not.

Example: “To A for life, then to the first of her children to reach the age of 30.” A is 70 years old. Her only child is B who is 29 years old.

Apply the four steps:

i) Classify the future interest: we have a contingent remainder because there is a future interest created. [An unknown taker.]

ii) What are the conditions precedent to the vesting of the future interest? A must die and she must have a child to reach 30.

iii) Find a measuring life: A is the measuring life; her life and death are relevant—she must die & must have a child of age 30. (why not B? conveyance to A’s children is not B-specific, B may be one of several children. A might have other children and if B dies before 30, it may be C, or D – whichever one reaches 30 first.

5. Outcome determinative step: Will we know for sure within 21 years of the death of our measuring life, if a future interest holder can take? No. This may defy your basic instincts. In other words, is there any possibility, however remote, that A would not have a child to reach 30 until more than 21 years after A’s death. Yes. The common law RAP presumes that anything is possible.

What could invalidate this future interest?

B, who is 29, could die tomorrow; thereafter, A could have another child, no matter that A is 70. This is called the Fertile Octogenarian Rule. It presumes that a person is fertile no matter his or her age. A could die in labor, or, A could live. We just don’t know for sure, today, whether the condition precedent to any potential newborn’s taking will be satisfied within 21 years of A’s death—the child’s turning 30—will be satisfied within 21 years of A’s death. Therefore the contingent remainder is void.

Thus, we are left with:

A has a life estate

O has a reversion.

Many shifting executory interests will violate the rap. An executory interest with no limit on the time within which it must vest will violate the RAP.

Example: “To A and his heirs, so long as the land will be used for farm purposes,” and if the land ceases to be so used, to B and his heirs.”

i) B has a shifting executory interest.

ii) The condition that will trigger B’s entitlement is that the land must cease to be used for farm purposes.

iii) Find the measuring life: A is the measuring life.

iv) Will we know with certainty, within 21 years of the death of our measuring life if a future interest holder can take?

No. A might abide by the condition during her lifetime. The condition may not be breached, if ever, until hundreds of years have passed. Therefore, the future interest is void.

Once the offensive future interest in B is stricken, we are left with “To A and his heirs so long as the land is used for farm purposes.”

A now has a fee simple determinable.

O has a possibility of reverter.

There is no longer a RAP because RAP does not apply to future interests in O the grantor.

6. Reform of the RAP:

i) The “wait and see” or “second look” doctrine, is the majority reform effort.

The validity of any suspect future interest is determined on the basis of the facts as they now exist, at the conclusion of our measuring life. This eliminates the “what if” or “anything is possible” line of inquiry.

ii) Uniform Statutory Rule Against Perpetuities (USRAP)

Codifies the common law RAP and, in addition, provides for an alternative 90 year vesting period.

Both the wait and see and USRAP reforms embrace:

a) The “Cy pres doctrine” (as near as possible) If a given disposition violates the RAP, a court may reform it in a way that most closely matches grantor’s intent while still complying with RAP.

b) Both will reduce any offensive age contingency to 21 years.

F. CONCURRENT ESTATES:

There are three forms of concurrent ownership.

1. Joint Tenancy: Grantor transfers property to 2 or more people jointly; A&B jointly own the property. Two or more own with right of survivorship; always created by deed or by will—never by descent.

a) Right of Survivorship: passes automatically to the other joint tenants.

A joint tenant’s interest is alienable (capable of being sold or transferred). It is not divisible or descendible. At Common Law it was deemed Joint Tenant; modernly presumption is Tenants In Common unless expressly stated otherwise. Right of Survivorship states that if one tenant dies the other tenants share the property totally. A, B, C, own it; A dies and that share is divided equally between B and C. Express language is required. Under modern law, joint tenancies are disfavored, (JT can avoid the necessity for a will and probate) consequently there must be a clear expression of intent to create this estate; otherwise it will not be recognized. Joint tenants interest is alienable but not devisable or descendible.

Example: A “to B and C and their heirs” are typical words for creating a joint tenancy at common law. Modernly in the absence of a clearly expressed intent to create a joint tenancy with the right of survivorship, such a grant creates a tenancy in common. The clearest language would be A “to B and C and their heirs as joint tenants with right of survivorship, and not as tenants in common.” Each has an undivided interest in the property—the entire property. Each one has an undivided interest in the entire property. The interests for a TIC do not have to be equal. Each cotenants’ interest is fully transferrable; they can sell it, give it away, or will it to someone.

2. Tenancy by the Entirety: a protected marital interest that only exists between husband and wife with right of survivorship. Tenancy by the Entirety operates as a joint tenancy so that the survivor spouse takes the whole estate and the heirs receive nothing. Arises presumptively in any conveyance between husband and wife unless clearly stated otherwise. This is a highly protected form of co-ownership. Can’t touch this! Creditors of only one spouse cannot touch the tenancy. Neither tenant acting alone can defeat the right of survivorship by a unilateral conveyance to a third party.

3. Tenancy in Common – consists of ownership of a piece of land by two or more people with no rights of survivorship. The main attribute of a joint tenancy that differs from a tenancy in common is the right of survivorship. Any conveyance to two or more people that does not specifically say it is a joint tenancy will be a tenancy in common. At CL the opposite was true presumption was joint tenancy.

a) Each co-tenant owns an individual part and each has the right to posses the whole.

b) Divisible, descendible and alienable but there are no survivorship rights between tenants in common.

c) The presumption favors the TIC.

4. Creation of a Joint Tenancy: Requires “The Four Unities” under common law all four were required. Modernly you only need interest and possession; tenants in common only need possession. Remember: ‘T-TIP”

a) Unity of Time (interests acquired and vested at the same time). To have a valid joint tenancy, the joint tenants must acquire title at the same time. One of the essential properties of a joint estate; the estates of the tenants being vested at one and the same period. If A and B wanted to add C they had to add a “straw man” by transferring the land to “X” then X would transfer the land back to A, B, & C as Joint tenants. Is this a legal fiction? Outcome determinative: Straw man conveys back to the JTs with right of survivorship.

b) Unity of Title (interests acquired by the same instrument).

In joint tenancy, the holding by the joint tenants must be under the same document. The estates of the joint tenants must he created by one and the same act. One of the essentials of a joint estate; the estate of all the tenants being created by one and the same act. Similar to Unity of Time; use the “straw man” by transferring to X who transfers back to A and B making their holding under the same instrument. Modernly many jurisdictions do not require a straw person so that the unites of time and title are satisfied.

c) Unity of Interest (interests of the same type and duration)

In joint tenancy, the joint tenants must acquire their interest by the same conveyance and the interest must be equal. Their interests must be identical in nature, extent, and duration. One of the properties of a joint estate; all the joint tenants being entitled to one period of duration or quantity of interest in the lands; each joint tenant must have the same type of estate; e.g., life estate

d) Unity of Possession (interests give identical rights of enjoyment)

Each joint tenant must be entitled to possession of the whole property. An essential element of joint tenancy. This term is used to designate the possession by one person of several estates or rights. In joint tenancy, the joint tenants must have equal rights to possession. For example, a right to an estate to which an easement is attached, or the dominant estate, and to an estate which an easement encumbers, or the servient estate, in such case the easement is extinguished. But a distinction has been made between a thing that has being by prescription, and one that has its being ex jure naturae; in the former case unity of possession will extinguish the easement; in the latter, for example, the case of a water course, the unity will not extinguish it.

5. By the civil code of Louisiana, art. 801, every servitude is extinguished when the estate to which it is due, and the estate owing it, is united in the same hands. But it is necessary that the whole of the two estates should belong to the same proprietor; for if the owner of one estate only acquires the other in part or in common with another person, confusion does not take effect.

6. Suppose a joint tenant tries to dispose of her share of the joint tenancy; this may sever the JT and convert it to a tenancy in common. A creditor attaching her interest against one of the JT and initiates a judgment against the JT and forces a sale.

7. A JT takes precedence over a will. Right of survivorship takes precedence over a valid will. Each tenant owns an undivided interest in the whole with right of survivorship. Upon the death of one JT, the surviving tenant or tenants own the whole of the property and nothing passes to the heirs of the decedent.

8. Other things a JT owner might do that could sever a JT. Sale, partition, and mortgage [SPAM]. a) Transfers away or sell her interest during her lifetime; can even do so secretly without the others knowledge or consent- that will sever the JT as to the seller’s interest because it disrupts the four unities. The buyer becomes a “TIC” not a JT. The Joint Tenancy remains in place as to the other non-transferring joint tenants.

b) Partition: a) Voluntary agreement a peaceful way to end the relationship. b) Partition in Kind: judicial action for physical division of the property if in the best interest of all. c) Forced sale: a judicial action if in the best interest of all; proceeds are divided amongst the joint tenants proportionately.

c) An inter vivos (from one living person to another) conveyance will sever a JT.

d) A Mortgage will sever a joint tenancy.

e) A contract of sale: if the JT sells her share of the JT, it severs the Joint Tenancy.

G. Rights And Duties Of The Co-Tenants

1. Possession: each tenant has the right to possess and enjoy the whole estate; if one co-tenant wrongfully excludes another he has committed wrongful ouster.

Ouster is impermissible.

2. Rents and Profits: In a majority of states, a tenant in possession has the right to retain profits gained by her use of the property and need not share such profits with a co-tenant out of possession, nor reimburse her for the rental value of her use of the land, unless there has been an ouster. However, a co-tenant out of possession has a right to share in rents and profits received from third parties. Rule: Absent ouster, a co-tenant in exclusive possession is not liable to the others for rent.

3. Rent from Third Parties: Rule: A co-tenant who leases all or part of the premises to a third party must account to his co-tenants providing them their fair share of the rental income.

4. Adverse Possession? Not allowed. Unless he has ousted the other co-tenants one co-tenant in exclusive possession for the statutory period cannot acquire title to the exclusion of the others. No hostility because there was no ouster.

5. Carrying Costs: Each co-tenant is responsible for his or her fair share of carrying costs such as taxes and mortgage interest payments, based upon the undivided share t hat he owns.

A tenant who has paid the entire taxes may compel contribution by her co-tenants or enforce a lien against the property for such. She may also compel contribution for mortgage interest payments as long as the one making payments is not in sole possession of the property; if so, the court will only reimburse her if the payments are in excess of the amount the property would net if rented.

6. Repairs: Co-tenants are required to share the cost of repairs. The general rule is that the co-tenant making the repairs and laying out the money must notify the other co-tenants in advance of the necessity and their expected contribution. Rule: The repairing co-tenant enjoys a right to contribution for necessary repairs provided she has told the other co-tenant(s) of the need for the repairs.

7. Improvements: Rule: One co-tenants improvement could be another’s nightmare. During the life of the co-tenancy there is no right to contribution for improvements. However, at partition the improver gets a credit equal to any increase in value caused by her efforts and bears any decrease in value caused by her efforts. The upside/downside doctrine.

8. Waste: A co-tenant must not commit waste (see life tenant) voluntary, permissive, and ameliorative waste. Rule: a co-tenant can bring an action for waste during the life of the co-tenancy; not necessary to wait for partition.

9. Partition: A joint tenant or tenant in common has a right to bring an action for partition. Under