Property Outline

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Two Conceptions of Property 1. Property as a right to a thing good against the world—Right to Exclude 2. Property as a collection (“bundle”) or rights, with content that varies according to context and policy choices.

Trespass to Land Jacque v. Steenberg Homes, Inc. Wisc. S.Ct. 1997 pg. 1 Facts: • ∆ ran over π’s yard w/RV as intentional trespass. Sneaky & deceitful ∆ went across anyways after π repeatedly told him not to cross land w/RV. Rule: Society & private landowners have much more than nominal interest in excluding ppl from private land Intentional trespass to land causes actual harm to indv, regardless of whether harm can be measured in dollars. Reasoning: • A series of intentional trespasses can threaten indv’s very ownership of the land. • Def’s punishment of $31 is unlikely to deter defs from doing it again. Notes • Any intentional intrusion that deprives another of possession of land, even if only temporary, is considered a trespass. Restatement (2d) of Torts §158 • Trespass to Chattles will result in liability only if it causes harm to the owner of the thing. Restatement (2d) of Torts §218 cmt. e. Property rights Acquire Exclude Alienate (buy or sell) License Use/keep others from using or allow to use o Control • Right to destroy? • • • • •

 

Limitations on rights • Disrupt neighbors • Disrupt public • Contract derivatives

Peril  to  Life  

Ploof   Mouse’s  Case  (Cargo)   Jacques  

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Why enforce the right to exclude? 1. To avoid potential violence; and 2. Protect privacy rights

No  Opportunity  to   Bargain   X   X    

X   X    

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Reciprocal  Benefit  of  No   Property  But  Lives  Saved   X   X    

Nominal & Punitive Damages (helpful to get nominal damages) Why nominal good?

Why lrg punitive Why not have punitive Exclusion good? damages all the time? exceptions • Exclusion of party/∆ • Large punitive • Don’t want to frighten • Emergency damages may act indvs/Posner & • Foundation for punitive damages • Threat to life as a deterrent inefficient • Vindicating your claim that a wrong • Reciprocal • Dignitary matter • Difficult to quantify was done: Benefit of use of land— a) Principle of thing making home b) Showing wrong was done ^^ None in the owner’s land c) Procedural aspect—on appeal, Jacque case secure already have sub. determination (Frees π from having to prove L) • Prevent self-help Why so adamant about the right to exclude?    “That’s just how property is.” J.E. Penner: Car Park ex—took the car you wanted and left you the fair market value, plus a bonus. • But, as a non-owner, you must keep off someone else’s property. • Another positive approach to property: o Liken property to a game of chicken B Chicken Hawk A Chicken 0,0 -2,+10 Hawk +10,-2 0,0 • Why some get +10,-2? Reciprocity element o “I’ll keep my stuff, and you keep yours, and later on, either of us might be better off.” Normative Answers • Should the Jacques be required to offer exceptions? o I.E.: Allowing pedestrians vs. mobile home OR, just forcing them to let RV through • Purpose of the right to exclude: o Economics: must keep others out for future investment o Mary Radin’s Prop and Personhood Hinman v. Pacific Air Transport 9th Cir. 1936 pg. 10 Facts: Defs flew plane less than 100 ft. above π’s surface after plaints repeatedly told them not to. Rule: Plaints don’t have property rights to the airspace above their house Reasoning: 1) It’d be ridiculous to have indvs owning airspace. It’s so vast, like the ocean. And, like the ocean, nobody has property rights to it unless one can actually use the ocean. • Landowner owns as much of space above him as he uses, but only so long as he uses it. • Nobody can acquire title or exclusive right to any space above him. 2) Unless there was evidence showing that def’s actions caused damages, plaint entitled to no relief. Here, plaints offered no evidence showing any damage nor a case for injunctive relief.

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Ad Coelum Ad Coelum rule: followed in nearly all legal systems for purposes of defining right to exclude. • Owner of surface is also entitled to dig below (ex. For a basement) & above surface (ex. To build 2story house). W/o this understanding, bare right to surface would be pretty useless. o Air Rights: rights to the column of space above the surface. No court has ever concluded that operators of airplanes could be held liable in trespass for flying at cruise altitudes over land below. BUT—4 different doctrinal moves have been suggested to accomplish how to carve out an exception for over-flights from the ad coeolum rule w/o damaging rule’s general utility. 1) Action for trespass is available only to persons who are in possession of land (arguments for/against pg 14) 2) Plane over-flights are actionable as trespasses only if they cause actual harm to the surface owner (arguments for/against pg 14) 3) Plane over-flights are technically trespasses, but surface owner isn’t entitled to any damages or other relief cause she obtains “implicit in kind compensation” from being able to take advantage of the benefits that airplane travel has to offer—from being able to commit similar trespasses over other people’s property (arguments for/against pg 14) 4) Airspace in which planes travel could be classified as a type of public property—public navigable airspace—in which no surface owner has any claim of private property rights (arguments for/against pg 15) • US S.Ct. used 4th theory in US v. Causby (1946), concluding that Congress had effectively asserted fed gov control over navigable airspace. o Ct also included that the legislative declaration of fed ownership wasn’t a taking of property, unless the flights come in so low over property to destroy the use and enjoyment of surface area and improvements. • EX: Google books infringing on the rights of authors. However, Google argued that the injury to each author was so small or nonexistent, and the transaction costs of negotiating consents with each copyright owner would be so large as to make the project of creating such a database infeasible. Old rule of property: Ad Coleum • Even if not using it—still have value to you o Argument: could still sale air to plane company o High transaction cost o Planes have unspecific route so would need license from all houses  Cost of owning—paying Current rule of property: can use space above him as long as he’s actually able to use & uses it

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Philosophical Perspectives/Conceptions of Property 2 types of scholars who seek to identify the meaning of property: 1. Essentialists: attempt to uncover single true definition of property as legal concept. 2. Skeptics: who believe that it is fruitless to try to come up with a single official conception of what property means in a legal system. • “Property is just a word that means nothing until we spell it out using different words.” J.E. Penner, The Idea of Property in Law (1997) pg. 17 • Rights in rem: rights which bind “all the world.” Rights that must be respected by all subjects of the legal system; everybody must refrain from trespassing on my land. o Duty to large & indefinite class of others to respect the right of a thing [not person] o In rem rights = simple, easy-to-understand duties of noninterference [“no hitting”/”no trespassing”] • Rights in personam: right in the behavior of some person, such as the right to the performance of a K. Rights in personam bind only specific individuals. o Duty to only a small and definitely ascertained number of others. o Complicated rights imposing affirmative duties to take particular actions = in personam. Likely imposed by K or regulation. • The right to use reflects our practical interest in exclusively using things, which correlates to duties in rem on everyone else not to interfere with our uses of things. Exclusion Thesis: prop right=right to exclude ppl from things—comes from our interest in using them Jacques v. Hinman Courts Jacques Hinman • Justified punitive damages award as a way of • Viewed property more as a collection of rights, and vindicating their right to exclude others from the to question whether that includes the right to land, which is central to understanding that the land exclude airplane over flights depends on is their property considering competing social interests, not any a priori conception of what ownership entails.







• • •

Margaret Jane Radin, Property and Personhood (1982) pg. 282 Strength or sig of attachment to objects = greater as pain inc. from its loss [hierarchy of entitlements] o EX: object is closely related to one’s personhood if its loss causes pain that can’t be relieved by object’s replacement. Personal Property v. Fungible Property: theoretical opposites: o Personal Property: prop bound up w/person (allowing you to project yourself into world.) EX: not having a tongue. o Fungible Property: property that is held purely instrumental Expressing one’s character through property—things you own helps establish your identity o Dogs resemble their owners; Cars and clothes can proclaim character traits of their owners o If object you control is bound up in future plans of your future self, & these plans help you make you a person, then your personhood depends realizing those expectations.  EX: a smaller size pair of jeans with the goal of losing weight?...  Fetish: crazy? Shoe EX (3,000 pairs) or Cats EX—against social norms makes it weird. • Possibly draw the line [of what a fetish is] at harm to others. • Informal Property: mini project (EX: bus seat, class seat, library area) PDF: Posner, Economic Analysis of Law (1998), The Economic Theory or Property Rights Legal protection of property rights creates incentives to use resources efficiently. W/o prop rights, no incentive to incur costs cause no reasonably assured reward for incurring them. If every piece of land is owned by someone—if there’s always someone who can exclude all others from access to any given area—then indvs will try by to cultivate or make other improvements to max the value of land.

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Trespass/Nuisance Divide • •

Jacque and Hinman = intentional trespass to land by strangers. Trespass v. Nuisance: invasions of land by large objects (like house trailers or airplanes) v. interferences w/use & enjoyment of land caused by some activity on neighboring land, like pollution or excessive noise  Governed by law of nuisance (diff traits from law of trespass)

  Cause  of  Action   Damages?   Number  of  Parties   Solution   Defined   When  does  it  apply?  

Trespass   Entered/Stepped  over  a  line   N/A   2   Stop  it.  All  or  nothing.  A  or  B  wins   Protects  the  interest  in  possession  of   land   When  ∆  intrudes  on  land  w/object   large  and  solid  enough  to  physically   displace  π  from  portion  of  her  land.   EX  car/RV  

Nuisance   Unreasonable  Use   Matter   Large-­‐ish   Not  too  much   Protects  the  use  and  enjoyment  of  land   With  invasion.  Invasion  committed  by  small   objects  like  gas  particles     Noninvasive  interferences  w/use  &   enjoyment  of  land  [like  putting  up  a  spite   fence]  will  be  nuisance  not  trespass  

1. Nuisance (EX: noise, smell, vibrations) a. Legal nuisance covers some harms, but not all. i. EX: ugly house—cts don’t want to determine whose house is ugly—matter of taste. b. Noise: Can make noise—but reasonable amount—can’t interfere w/“my” normal use. i. EX: 3 Neighbors: [which is the “reasonable”] 1. (1) Concert Pianist 2. (2) Andy  Standard as a reasonable person 3. (3) Deaf persons 2. Reasonable Nuisance = like nuisance or like usage of neighbors 3. Residential Property a. 2 reasons why the Hendricks case came out like it did i. Normal Use—reasonable use of property to dig a well ii. No Malice—just a race to finish a well system first b. ((Maybe a trespass case in disguise))… Hendricks v. Stalnaker W. Va. S.Ct. of Appeals 1989 pg. 23 Facts: • Case of incompatible uses (both can’t use land in way both want) • π wants to install well & septic system. Waited for sanitation ppl to come out b4 started installation. • Sanitation department said no well/septic system w/in 100 ft of one another. • ∆ called right after πs for well & was told π proposed septic system. ∆ called well driller next day. • 2 days after π called sanitation dept, & 1 day after ∆ got permit to install well, depart told π no septic system could be issued cause absorption for system was w/in 100 feet of ∆’s well. Def Argues: Because ∆’s well wasn’t unreasonable use of his land, he’s NL for effects on π’s property. Plaints Filed Suit Requesting that: • (1) Water well be declared a private nuisance • (2) Nuisance be abated • (3) Damages Issue(s): Was ∆’s well a private nuisance to π in not allowing π to build septic system on their prop? Holding: No. Court agrees w/∆

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Reasoning: A Nuisance is: • Anything which annoys or distrurbs free use of one’s property, or which renders its ordinary use of physical occupation uncomfortable • Anything which interferes w/rights of a citizen, either in person, property, enjoyment of his property, or his comfort A condition is a nuisance when it clearly appears that enjoyment of property is materially lessened, and physical comfort of persons in their homes is materially interfered with. • Martin v. Williams (W.Va. 1956): defined nuisance including acts or conditions that affect either the general public or a limited umber or persons. • Hark v. Mountain Fork Lumber Co. (W. Va. 1945): defined public nuisance = “affects the general public,” and private nuisance = injures one person or a limited number of persons only. Private Nuisance Public Nuisance Substantial and unreasonable interference w/private use Examination of the “reasonableness or unreasonableness and enjoyment of another’s land of the use of prop in relation to the particular locality” • Includes conduct that’s intentional & unreasonable, • Any determination of liability for a private neg or reckless, or results in abnormally dangerous nuisance must include an examination of the conditions or activities in an inappropriate place private use and enjoyment of the land seeking protection and the nature of the interference. • Recovery for PN is limited to πs who suffered sig harm to their prop rights or privileges cause by the interference. No neg, reckless, or abnormally dangerous behavior. Can only look to intentional or unreasonable conduct. Intentional Unreasonable When actor knows or should know that the conduct is When gravity of the harm outweighs the social value of causing a substantial & unreasonable interference the activity alleged to cause the harm Notes: • Inability to operate septic system is clearly substantial interference with use & enjoyment of land. BUT—if π installed septic system, then ∆ wouldn’t have been able to operate a well. • Question = was it unreasonable for ∆ to have well on his property? • Cause of similar competing interests, balancing of their interests = or slightly in favor of well. • Thus, π haven’t shown that balancing of interests favors their septic system. • Not private nuisance cause π didn’t show it was an unreasonable use of land. • Maybe favor the one that’s more difficult to install? -

Bright Line o Trespass o Right to Exclude

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Rules: - Exclusion Strategies (one another gets it) - EX: fridge and different shelves

Governance Strategies: - Behavioral rules/geographical rules - EX: using all food in fridge / Stephanie’s roommate eating what she likes Advantages: - No doubles/Not taking space

Problems: - Losing advantage of different parts of fridge (w/beer in fridge) EX: playground - Each kid gets certain play area - Want kids paying with each other - Governance advantage strategy

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Reasonableness o Not too much

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Notes & Questions: Other possible approaches to nuisance cases 1. Instead of balancing parties’ interests, simply ask whether ∆ committed some kind of “invasion” of π’s land that causes “significant” harm above a certain threshold level. 2. Decide disputes by enforcing the general understanding in the relevant community of what constitutes “normal uses” of land a. Although it’s unclear from the facts, it’s unlikely that both water wells and septic tanks are common uses of rural W.Va. land. 3. First come, first serve basis 4. Ask whether ∆ (or π) has been acting in the general norms of “neighborliness” Exclusion Under this strategy, decisions about resource use are delegated to an owner who acts as manager or gatekeeper of resource • Law of trespass, applied in Jaque, uses this

Governance Strategy focuses on particular uses of resources, and prescribes particular rules about permitted and prohibited uses w/out regard to other attributes or resources. • Law of nuisance, applied in Hendricks uses this

The Coase Theorem • • •

Ronald H. Coase, The Problem of Social Cost 1960 pg. 31 If the increase in value of production through increasing the size is greater than the additional costs that have to be incurred, the size will increase. Otherwise, it won’t. Ultimate result is independent of the legal position if pricing system is assumed to work w/o cost. To discuss causation, both parties cause the damage. If one is to attain an optimum allocation of resources, it’s therefore desirable that both parties should take the harmful effect (the nuisance) into account in deciding on their course of action. Cows

Crops

Rancher

Farmer

1. F has entitlement (R has responsibility to keep cows off) 2. R has entitlement (F has responsibility to keep cows off) Situation #1A:

F Entitlement R Responsibility

Fence $200 Damages $100

 R pays (lets damage happen)

Situation #1B:

F Entitlement R Responsibility

Fence $200 Damages $300

 R builds fence

Situation #2A:

F Responsibility R Entitlement

Fence $200 Damages $100

 F takes damage

Situation #2B:

F Responsibility R Entitlement

Fence $200 Damages $300

 F builds fence

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Jacque case with Coase Theorem o Why no coase theorem deal with Jacques and company?  (A) Uncertainty about rights  (B) Personal values (emotions can drive a bargain)  (C) Right breakers (would do anyways) o Why no Hinman coase theorem?  (D) Impractical: Huge #s (Impediments to Bargaining)  (E) Strategic Bargaining (difficult also cause some people hold out)

Notes on Theorem • If K transaction costs = 0, then same # of cattle will be raised by R, whether or not R is L to farmFer for cattle trespass. Basic idea is that if K-ing=0, the parties will keep K-ing to modify initial assignment of prop rights til they’ve exhausted all possible deals to their mutual advantage. o If we ignore distributional impact, & focus only on question of how resources in society are used, result would be same regardless of initial allocation of rights, if transaction costs = 0. • Two assumptions that Coase doesn’t make explicit are: o 1. Indvs are rational maximizes & all values are capable of being expressed in $$$ terms. o 2. People are natural cooperators rather than ruthless exploiters.

Resolving Property Disputes by Contract • • •

Coasean bargains: should be explored as an alternative to litigation. A contractual rearrangement of rights may be cheaper and more satisfactory to all concerned. It’s important to be sensitive to the causes of high transaction costs in order to guide clients toward potential Coasean bargains before those options are foreclosed and litigation is the only recourse 2 factors that loom large throughout property law: Assembly problems & Bilateral monopolies

Assembly Problems • Arises when someone wants to assemble prop rights from large # of owners in order to undertake a project • High transaction costs from large #s of K-ing parties • EX: Hinman—if planes had to pay every landowners’ air it passed through

Bilateral Monopoly • Localized—situations where prop owner needs something that can be provided by only one other person or entity • Problem cause monopoly on each side: one seller and one buyer for contested resource • Also high trans. costs, cause each party has nowhere else for an equivalent transaction • Extremely prevalent in prop law Important to look to the future to identify potential assembly problems and bilateral monopoly problems before the client gets trapped in a situation that precludes any kind of Coasean bargaining.

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Building Encroachments Pile v. Pedrick S.Ct. Penn 1895 pg. 52 Facts: ∆s built wall that projected onto π’s land by 1 3/8 inches. ∆ offered to make wall a party wall, but π declined. π said ∆ had to remove parts of wall crossing prop line, but wouldn't let ∆ on his prop to do it. ∆ had to remove entire wall and rebuild from ∆’s side. • 2 possible remedies: o (1) Treated, with plaints’ consent as perm trespass and compensated for in damages o (2) Or, defs could remove offending ends of stone to other side of the line. • Plaints chose 2nd one and court below ordered it. • Richard Epstein: need to restore all property that you damaged Holding: • Court says “Tough luck, def. Take it down.” Costs of this appeal to be paid by appellants. Pile v. Pedrick S.Ct. Penn 1895 pg. 54 Facts: Appeal from previous case. Holding/Reasoning: • Defs had no right, at law or equity, to occupy land that doesn’t belong to them. • Ct doesn’t see how ct below could’ve done otherwise than recognize & act upon this principle. • 1 year to remove wall. Golden Press, Inc. v. Rylands S.Ct. Colorado, 1951 pg. 55 Facts: • ∆ caused π’s foundation (when constructing building) and footings to extend from 2-3.5 inches on π’s land. π seek an injunction requiring that ∆ remove all footings & foundations on their property. Issue(s): Was the encroachment of land intentional which would determine whether to find ∆ L? Holding: Reversed injunction. Reasoning: • When encroachment = deliberate and is willful & intentional taking of another’s land, equity may require its restoration regardless of expense of removal compared w/damage suffered; but where encroachment was in good faith, ct should weigh circumstances so it’s not oppressive. • If ∆’s encroachment = unintentional & slight, π’s use isn’t affect & danger is small & compensable, & removal is way much more expensive & causes grave hardship or making removal unconscionable, mandatory injunction may be denied and π will be compensated w/damages. • Ad coelom rule: owners own underground property. The expense and hardship of such removal would be so great in comparison with any advantages of πs to be gained making it unconscionable to require.

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Property Rules, Liability Rules, and Remedies Guido Calabresi & Douglas Melamed Property Rules, Liability Rules, and Inalienability: One View of the Cathedral 1972, pg. 960 • 1st order legal decisions: decide which conflicting parties will be entitled to prevail. • 2nd order legal decisions: go to manner in which entitlements are protected & to whether indv is allowed to sell or trade entitlement. 3 Types of Entitlements (1) Entitlements protected by property rules: • Involves a collective decision as to who is to be given an initial entitlement but not as to the value of the entitlement (2) Entitlements protected by liability rules: • Whenever someone may destroy the initial entitlement if he is willing t pay an objectively determined value for it, an entitlement is protected by a liability rule (3) Inalienable Entitlements • Its transfer isn’t permitted between willing buyer and willing seller • Rules of inalienability not only “protect” the entitlement; they may also be viewed as limiting or regulating the grant of the entitlement itself. NOTES • Courts have a “choice” along two dimensions. o (1) Can assign “the entitlement” to either the π or ∆. o (2) Can choose to protect this entitlement with either a property rule or a liability rule. o YIELDS FOUR RULES: Calabresi & Melamed box

Assignment of Entitlement

Π Wins ∆ Wins

• •

Mode of Protection Property Rule Liability Rule Rule 1: Award entitlement to π and Rule 2: Award entitlement to plaint, but protect protect this by a prop rule.—ex entitlement with a liability rule. injunction (stop factory from polluting or force factory to move) Damages for health, prop. Boomer Case Rule 3: Award entitlement to def Rule 4: Entitlement is awarded to ∆, but π can protected by a property rule. force ∆ to transfer entitlement to π in return for payment for money compensation. Fact wins, Hinman, no injunction, no damages. subject to buy for FMV. Eminent Domain. Stalnaker. Like π pay ∆ moving costs.

Injunction: bigger right—can force someone to do something vs. Damages: Get $, but ∆ has option to continue doing what they want, just have to pay you.

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The Mistaken Improver Producers Lumber & Supply Co. v. Olney Building Co. TX Court of Appeals 1960 pg 65 Facts: • Lot 8 was purchased by π for $1428 for a home which was to be built. • π had the lot graded and planted tress and grass on it. • ∆ constructed 9 dwellings, one of which was on ∆’s lot. • ∆ called secretary/treasurer, asked if lot 8 was sold, was told "no" • Later ∆ learned that lot 8 was sold to π dwelling at that time was almost complete. • There was no settlement between the parties reached regarding ∆ buying lot from π. • ∆ eventually broke off negotiations, sent a crew to destroy the building without π's permission. Π Wanted: • Damages for house; return lot to condition before; exemplary damages • EX: K law and barbershop quartet on lawn (but wrong lawn), do you have to pay them? o No, no bargain: more of an “accidental” gift Holding: ∆ should pay $5,900. Reasoning: • Orts (∆) resorted to self-help and took law into his own hands. Before a court of equity could determine rights of parties, ∆ went on Lot 8 (knowing it belonged to π) and demolished dwelling worth $5,000 causing great destruction of prop. Rule: Under no circumstances is an improver allowed to go on someone else’s land, without his knowledge and consent, and demolish the improvements that he has through mistake placed thereon, and if he does so, he commits waste and can be required to pa the landowner for such waste. Dissent (Justice Barrow): • Record shows that π, having ∆ “at its mercy” attempted to drive an unconscionable bargain. 3 Remedial Options That a Court of Equity Might Adopt in a Case of a Good Faith Improver 1. Let true owner keep house & pay encroacher its value (an equitable award of restitution either immediately or on sale, w/obligation secured in the meantime by a lien on the land) 2. Transfer lot to encroacher in return for payment of its fair market value (effected by a commonlaw award of damages and motivated by considerations of unjust enrichment) 3. Sell property to 3d party and apportion proceeds between true owner and encroacher in accordance w/their respective entitlements (a judicial award of partition, again reflecting principles or restitution or unjust enrichment)

• • • • •

Pile Π wins, all or nothing or tear it down (Exclusion Strategy) Encourages care, will be more careful Rules-based approach Cheaper for courts (lowers admin. costs) Encourages un-neighborly behavior





Golden Press Distinguishes intentional—if this, then Pile outcome—vs. accidental encroachment (lesser remedy, π wins, but damages or injunction but has to allow access) (Governance Strategy) When do you draw the line? depends on what jury says

Strategic Bargaining ---------------- No, give value of property Π |-----------------------------------------------------------------------------------| ∆ ------------ I’ll close windows

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ORIGINAL ACQUISITION First Possession: Wild Animals Pierson v. Post NY 1805 pg. 82 Facts: Post pursing fox w/his hounds. Pierson killed & captured fox despite knowing Post was hunting it. Neither owned land they were hunting on. Post brought trespass suit contending he acquired title to fox when he began to hunt it. Pierson said Post didn’t have control over fox; so, he didn’t acquire any prop interest in it. Issue: Does fact that person is pursuing wild animal grant that person right to the animal? Holding: No. To obtain title to wild animal, person must take it. If Post mortally wounded animal, would’ve been sufficient to show possession since would’ve deprived animal of its natural liberty. But, π only showed pursuit & so didn’t acquire prop interest in animal. Rule: First to kill and capture. AKA First come, first serve. Negative externality: Banana Peel Positive externality: Plaint in garden Dissent (Livingston): Externalities—take consequences of something, don’t hurt you, but hurts someone else. o EX: Banana peel on ground. o Rule of capture Public Policy ARGUMENT [Dissent]: • Death of fox is matter of public interest. • As a public policy matter, decision should offer greatest possible encouragement to destruction of this animal. It was nearly certain that Post would’ve captured the fox. Has to POSSESSION—hard to draw line on who and when determines when prop right begins.

Custom Ghen v. Rich US District Ct: District of Mass 1881 pg. 90 Facts: π killed finback whale, but had to wait 3-5 days until it rose to surface—customary cause couldn’t take whale then. Usually, finder of whale sends word to town of finding, and “owner” / shooter, comes to pick it up and pays finder. Here,guy found it and sells it at auction. ∆ buys it. Neither knew π killed it, but knew or might have known if they wished, that it had been shot and killed by someone engaged in this type of business. - Right Whale = Rule of Capture - Leading us to Iron holds the whale?  Why Gentleman’s Agreement o Danger and effort; Size of boats; Character of the lance; Capital expense and labor; Value Holding: Belongs to shooter. Damages = market value of oil obtained from the whale, less the cost of trying it out and preparing it for the market, with interest on the amount so ascertained from the date of conversion. Notes: - 2 major rules of customary whaling rules o (1) Fast-Fish-Loose-Fish Rule: whale belonged to 1st harpooner as long as it was attached to his boat, Then got to keep whole whale. Applied to slow-moving whales. o (2) Iron-Holds-the-Whale (First-Iron Rule): 1st harpooner gets exclusive rights to whale as long as he was in fresh pursuit. Applied to most valuable & most dangerous whales. - ALSO—Capture rule (whoever finds, gets it)

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Keeble v. Hickeringill Queen’s Bench, 1707 pg. 93 Facts: π had decoy pond. Bought materials to catch wildfowl. ∆ knew & intended to drive them all away. ∆ shot at pond scaring away wildfowl. Holding: ∆ NOT allowed to go shoot up wildfowl and keep ducks away from ∆ Reasoning: - Nearness does establish claims - Rule of Capture = not your duck…But if animal on your land, then duck is yours. - Every man can use for his property what he wants; Everything π did was lawful RULE: Someone who hinders another in his trade or livelihood is L to an action for so hindering him. Since it was done in a violent and malicious way, def is L. Had def just created his own pond which brought waterfowl from plaint’s land, then that would be okay.

Tragedy of the Commons -

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The Problem of the Commons: Garret Hardin THE THOUGHT: Positive action based on rational analysis (the tendency to assume that decisions reached individually) will be the best decisions for an entire society. Rational beings each seek to maximize his gain. WE ASK: “What is the utility to me of adding one more animal to my heard?” This utility has one negative and one positive component: o The positive component is a function of the increment of one animal. (EX: herdsman). Since the herdsman receives all proceeds from sale of additional animal, positive utility = nearly +1.  Easy for you to find owner if interested—impossible for owner to find them. o The negative component is a function of the additional overgrazing created by one more animal. Since, however, the effects of overgrazing are shared by all the herdsmen, the negative utility for any particular decision-making herdsman = only a fraction of -1.  Rule of Capture as long as not maliciousCustomary Practice The rational herdsman concludes that the only sensible course for him to pursue is to add another animal to her herd. And another; and another. Therein is the tragedy. Each individual benefits as an individual from his ability to deny the trust even though society as a whole (of which he’s a part) suffers.

• “The tragedy of the commons” describes problems associated w/an open-access resource where there’s an unrestricted privilege to capture some valued feature of the resource. Examples of Tragedy of the Commons • Hunting (prob why tags) • Financial-Housing Market • Water usage (Loan/Houses) • Fishing • Gas usage • Traffic light out (everyone • Pollution • Rainforest usage trying to occupy) • Littering Each person would be better off it could get together & agree •

• •

Potential tragedy in the use of natural resources: • Depletion of resources—Hunters realized all of the deer are going away, tag limits—Also, you find out the depletion and voice concerns, then they’ll intervene. Grazing commons in trad ag societies such as those of early modern Europe weren’t open access. Solutions to the problem of the commons require some form of coercion or cooperation. o Another possible solution to overuse of an open access resource  create new type of property, individual transferable quotas (ITQs), which restrict overall level of access to resource (but are transferable) so indvs can exit & enter new industry.

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• • • • • • •

What would help? Homogeneity Imminence of threat and info Closed system (hunter’s license) Small group Enforceability/Defensibility Non necessity Long term interest

• • • • •

What would hurt/detract? Heterogeneity Ignorance of problem Open access (no licenses?...) Large #s Necessity

Hardin on Population • As people grow economically, birth rates decline o Hard in China—sister o Bringing women out of poverty o Allocation of resources not same o Rural people? Space Hague v. Wheeler, 1893 PDF • Both neighbors taking out gas—one is destroying and other is piping it out to use. Gas is being depleted for the one who’s taking it out. o Minerals moving around (oil& gas)—who owns this? • Not really extortion (create situation of duress by expending resources in order to expend someone else’s) cause they can only purchase and sell it to each other—more like strategic bargaining. • Does the right to taking gas out mean a right to destroy it too? o Π will get less gas because ∆ is flaring it off. Π ** Seeking injunction o Big difference in value of gas between π and ∆  Solutions: • (1) Leave as are what happened • (2) When can’t bargain, courts should be able to give to party who’d pay most (wants it most) Home Run Baseballs (pg. 109) Popov v. Hayashi 2002 (Cal. Super 2002) - Like other abandoned property, they can be claimed by 1st person to take possession of them. - Facts: π originally caught Barry Bond’s ball, but unclear whether he had full control of it. o ∆ ended up w/it. π sued ∆ claiming that he was 1st possessor and so was entitled to ball. - Held: ball should be sold. Half proceeds given to each cause although π couldn’t prove he established possession of ball, once it landed in his mitt, he had an exclusive “pre-possessory interest” in being allowed to complete the catch w/o interference. - First in time rules work best when potential appropriators have heterogeneous knowledge and abilities. o Homogeneity of appropriators conduces to well-functioning governance regimes.

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Misappropriation and the Quasi-Property Right in Hot News International News Service v. Associated Press US S.Ct. 1918 pg. 131 Facts: Rewriting what you wrote and no cite; News value is fresh; AP can’t copyright news [R]: There is a quasi property interest in news collected by an agency against other news collection agencies. It is unfair business competition for a news collection agency to distribute the news collected by another news collection agency. [Reasons] - The parties are competitors in this field; and on fundamental principles, applicable here as elsewhere, when the rights of privileges of the one are liable to conflict with those of the other, each party is under a duty so to conduct its own business as not unnecessarily or unfairly to injure that of the other. - Quasi Property Holmes DISSENT: - When an uncopyrighted combination of words is published there is no general right to forbid other people repeating them—there’s no property in the combination or in the thoughts or facts that the words express. - Property doesn’t arise from value. - Property depends on exclusion by law from interference. Brandesis DISSENT: - The fact that a product of the mind has cost its producer money and labor, and has a value for which others are willing to pay, isn’t sufficient to ensure to it this legal attribute of property. - That competition isn’t unfair in a legal sense, merely because the profits gained are unearned, even if made at the expense of a rival, is shown by many cases besides those referred to. Notes: • In order to sustain an injunction (according to the court), it need not affirm any general and absolute property in the news as such. • International News is leading judicial statement of the idea that property rights should be based on desert, that one shouldn’t be allowed to reap where another has sown. Production Frida Kahlo Writing News Value of news vs. writing Writing

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Midler v. Ford Motor Company 9th Cir. 1988 pg. 143 Facts: Company wanted to use Midler’s voice (herself) in their commercial. Called her manager and he said she won’t do commercials. Company got copyright to her song and had one of her old backup singers sing her song and imitate her. Many people thought it was actually Midler singing on the commercial. They’re trying to control her persona and stage performance [R]: Court holds that only that when a distinctive voice of a professional singer is widely known and is deliberately imitated in order to sell a product, the sellers have appropriated what is not theirs and have committed a tort in CA. [Reasons] • Copyright protects “original words of authorship fixed in any tangible medium of expression. A voice is not copyrightable (others can sound like each other). The sounds are not “fixed.” • No unfair competition found here. One-minute commercials like this wouldn’t have saturated Midler’s audience and curtailed her market—Mider didn’t do TV commercials so defs weren’t in competition with her. Notes: • Vanna White EX: Instead of having an exclusive right in her name, likeness, signature or voice, every famous person now has an exclusive right to anything that reminds the view of her. o The panel is giving White an exclusive right not in what she looks like or who she is, but in what she does for a living. • Intellectual property law assures authors the right to their original expression, but encourages others to build freely on the ideas that underlie it. INTELLECTUAL PROPERTY • Web address domain names o Goes to one who values the most—but how do you know who values the most? o EX: peta.org (People Eat Tasty Animals got it first)  People for Ethical Treatment Of Animals o ** Cybersquatting statute  Mockery included? o Rule of Capture vs. Calder Hicks (who wants it more gets it) • Why protect IP? o If protecting, may not grow technologically o Writings & copyright o Musicians—concerts to make money o Movies—make toys/figuresmovies, Netflix, Redbox  Appearances—maybe like Comicon Star Wars—Special Features on DVD • Makes DVDs more desirable than downloading  CNN news ex: cite/acknowledge and pay  IP-like claims: Titanic—corset on Kate Winslett • Colorizing movies--Casablanca

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THE PRINCIPLE OF ACCESSION Principle of Accession vs. Doctrine of Accession • Someone making good faith improvements on something thinking that doesn’t belong to anyone. o Stone (ex) then goes to one who made it better  Reward to laborer who does the work • (1) Transformation of something • (2) In good faith Principle of Accession • First Possession: kid first at front of line o “Firstness” and “Continually”  Prominent but also higher value for those in first arbitrary • Sugden’s argument: Nearness defines “prominence” o What about 3 seats with middle seat unoccupied? o Nearness allows for patrol/control of area • Closeness suggests: o (1) Highest value o (2) Control Principle of accession: • Alternative principle of acquisition, distinct from 1st possession. • Like 1st possession, accession assigns property rights in unowned things, but instead of picking out someone who has expended labor at bringing the thing under her control (as in 1st possession), the principle of accession assigns the unowned thing to the owner of some prominent other thing. Advantages: • One advantage of accession is that it typically identifies this winner without her having to do anything, and it doesn’t encourage the wasteful racing behavior often associated with first possession, discovery, or creation. • Accession also enhances the incentives to improve property, insofar as new increments in value are automatically assigned to the existing owner of the prominently connected asset. Weaknesses: • Accession gives rise to unearned windfalls, and makes the rich get richer, as it were. Hume’s theory of property: • Generally rests on convention, and the accession principle, like possession, rests on a preference for conforming to a widespread pattern of behavior—like respecting each other’s possession—that could have been otherwise. Solution: • Assign portions of the seabed for purposes of hydrocarbon development to the country. • Argument: Sugden argues that not only the simplicity but also the very arbitrariness of a closeness relationship recommended it as the basis for the division: o Unlike some of the other criteria and procedures (like “equal division”), the accession-style solution based on closeness of coastline was not open to special pleading and extended argument or, one might add, manipulation. “Tacit Cooperation”: • Focal solutions to situations that can be modeled as cooperative games draw on common knowledge, but some have argued that these solutions can arise from hard-wired aspects of mind as well. Accession can be seen as defining the scope of property claims.

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THE AD COELUM RULE “To whomever the soil belongs, he owns also to the sky and to the depths” • Also applies to resources discovered beneath the surface, like minerals, oil, gas deposits, or caves. Edwards v. Sims KY Ct. Appeals 1929 pg. 171 [F]: Edwards found cave under his property. He advertised cave and built hotel by it. Lee stated that part of the cave was under his land and he wanted an injunction against people from going into his part. • Keep survey from being done o Vs. Hinman—no assembly problem here like Hinman (low transactions costs b/c only 2 parties) [H]: • Prohibition denied (E loses). Survey can be conducted to determine if E’s property is being used to the detriment of contiguous property—court doesn’t want a law that makes Lee do something wasteful like drill another entrance. o Edwards should have gotten his ducks in a row—do the survey himself and pay the fee would have resolved issue before E had expended effort. Reasoning: • Ad Coelum Rule—exceptions: o Limitations on the right of enjoyment of possession of all property, such as its use to the detriment or interference with a neighbor and burdens which it must bear in common with property of a like kind. Logan DISSENT: • Deprives Edwards of rights which are valuable, and destroys value of his property, on the motion of one who may have no interest in that which it’s taking away, and who couldn’t subject it to his dominion or make any use of it, if he should establish that which he seeks to establish in the new suit wherein the survey is sought. • Ad Coelum rule has never been true and shouldn’t be used now. • Rule should be: he who owns the surface is the owner of everything that may be taken from the earth and used for his profit or happiness. Anything which he may take is thereby subjected to his dominion, and it may be well said that it belongs to him. • Cave should belong absolutely to him who owns its entrance, and ownership should extend even to its utmost reaches if he has explored or connected these reaches with the entrance. • Cave is Edwards’ because he had made it what it was, and without what he had done it was nothing of value.—what he owns is intangible and indefinable. Notes: • S. Asia—property goes to oldest son o Males are valued more o Anticommons-creates assembly problems o Customary—Responsibilities

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DISCOVERY Johnson v. M’Intosh US S.Ct. 1823 pg. 113 Facts: From time immemorial, the Illinois and Piankeshaw tribes held and inhabited lands in controversy Issue: Did Natives do enough to claim the land? (for 1st possession). NO. Arguments: • Π: Deed-1773 o Native Am 1773  π’s • ∆: US-Deed o US  (1803?)  ∆ [R]: Native Americans do not have title to land on which they live; they only have possession (occupancy). Since they do not have title, they cannot convey title to others. Indians do not have a concept of individual property rights and thus cannot have title. The United States has exclusive title to land because of the discovery and conquest of America by Europeans. • Chief justice draws distinctions between sovereign title (“dominion”) based on discovery, and Indian title (“occupancy”) based on possession. • Court used a practice of, when faced with conflict, recreating the chains of title underlying competing claims in order to determine what party has the stronger claim. • The court bases its decision on property factors as understood by Euro society, and found that the US has sole title, which it inherited from England after the Revolutionary War. o But the tribes were nomadic people, so problematic to act in a way to disclose ownership per European settlers’ standards—all the Euro settlers recognized was agriculture.  Cultural preference of prominence (agriculture) Reasoning: • However extravagant the pretension of converting the discovery of an inhabited country into conquest may appear; if the principle has been asserted in the first instance, and afterwards sustained; if a country has been acquired and held under it; if the property of the great mass of the community originates in it, it becomes the law of the land, and cannot be questioned. • Other ways of utilizing land that the Europeans recognized: o Signals of land use (other ways of establishing property to claim property rights to land) o Continuation of a soverign state of the tribe • Can’t have territorial monopolies. Mashall’s Argument: o England  States (VA., etx.)  US o Π claim is void—nobody can extinguish claims except for US o Alternatives o NA have full property  New Zealand o Marshall: NA have undefined claims o NA have nothing  Australia Notes: • The policy of only allowing non-Indians purchase land from Indians with the permission of the US gov was disadvantageous to the Indians. o Indians could theoretically remain on the land but could not force potential buyers to compete with each other, thus depressing prices. o They recreate the “chains of title” underlying the competing claims, in order to determine which of the parties has the stronger claim. • CJ Marshall draws a distinction between sovereign title (“dominion”) based on discovery and Indian title (“occupancy”) based on possession. • Tee-Hit-Ton Indians v. US US S.Ct. 1955: Congress could take Indian land w/o compensation.

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ADVERSE POSSESSION Method where someone, w/o the owner’s permission, acquires a new root of title to property already owned. • •

If own things, can’t just buy, must take care & keep watch over it. How hard person to control property VS. How likely it’s to be confused as nobody’s there

Marengo Cave Co. v. Ross S.Ct. of Indiana 1937 pg. 190 Facts: • The then-owner of the real estate where entrance was took complete possession of entire cave and used for exhibition purposes, and began to charge an admission fee • Quiet Title: In rem action claim to world at largeClaim of property Is yours • DiscoveryPathways / DevelopmentSelling Tickets (controlling access) [signals ownership claim] *** Visibility—not fair to claim possession over secret acts.  would owner think something is going on? Problems w/AP law: • Probably the most touchy issue in AP law is what it means to say that the AP’s possession must be adverse under a claim of right. 1. Adverse under a claim of right means that the AP subjectively (but mistakenly) believes he is legally entitled to possession of the property, i.e. the AP is acting in good faith. 2. Adverse under a claim of right means that the AP subjectively believes he is not legally entitled to possession of the property, i.e., the AP is acting in bad faith 3. The AP’s subjective state of mind is irrelevant; all that matters is that the AP has not been given permission by the to use the property • In nearly all states one who actually possesses part of a parcel of land under an instrument giving color of title to the whole parcel is deemed to “constructively possess” the whole. So actual adverse possession of part of the parcel described in a defective deed may give rise to constructive adverse possession of the whole parcel. Elements of Adverse Possession—Possession must be: (1) Actual (2) Visible (3) Open & Notorious (4) Continuous & Uninterrupted [how owner would usually use property] (5) Exclusive PURPOSES OF ADVERSE POSSESSION • Reliance interests developed through long-standing possession of the property. • Losing something one already has is more painful than not getting something one doesn’t yet have. • If the AP is the person who “has” the property, then taking it from the AP may be more demoralizing to the AP than denying it to the TO would be demoralizing to the TO. • Adverse possession is a penalty designed to discourage TOs from “sleeping on their rights.” • 3rd rationale: AP reduces transaction costs of determining title to assets that last for long time (like land) • AP enhances the efficiency of property markets. ADVERSE POSSESSION AGAINST THE GOVERNMENT • At common law one could not obtain title by AP against the crown • US v. Thompson US S.Ct.1878; US v. Hoar (C.C. Mass 1821): o “In a representative gov, where people don’t and can’t act in a body, where their power is delegated to others, and must of necessity be exercised by them, if at all, the reason for applying these principles is equally cogent.

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Carpenter v. Ruperto

S.Ct. of Iowa 1982 pg. 203

[F]: Plaintiff used some of def’s property by planting garden, adding a propane tank to the property where defs only used to store junk and debris on it. Plaint knew she was on def’s property when planting. [R]: Good faith is an essential component of claim of right. When knowledge of lack of title is accompanied by knowledge of no basis for claiming an interest in the property, a good faith claim of right cannot be established. • Π can’t claim AP over strip of prop if she knew she was planting on ∆’s yard. Notes: In a survey of Am case law, courts generally grant AP only to possessors who act in good faith. Howard v. Kunto Ct. Appeals Washington, 1970 pg. 208 Facts: • Many different properties purchased with the belief that its owners owned the land, was wrong. The initial surveyer who surveyed the lands at purchase for each owner was off by 50 feet. • Thus, each owner ‘s land was his next door neighbor’s and each owner was on someone else’s property. Oft-quoted rule: • To constitute AP, here 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. Holding: • (1) Rejects conclusion that summary occupancy only of a summer home destroys continuity of possession required by statute. • (2) Occupancy of tract B during summer months for more than the 10-year period by def and his predecessors, together with the continued existence of the improvements on the land and beach area, constituted “uninterrupted” possession within this rule. • For Kunto—Court just gave deeds to correctly drawn lines. • Comes out in favor of the Adverse Possessor. Reasoning: • It’s been firmly established that the requisite possession requires such possession and dominion “as ordinarily marks the conduct of owners in general in holding, managing, and caring for property of like nature and condition.” • It is not necessary that the occupancy should be actually on premises continually. • If land is occupied during period of time during the year it’s capable of use, there is sufficient continuity. • Buchana v. Cassell Wash. 1959: purchaser may tack the adverse use of its predecessor in interest to that of his own where the and was intended to be included in the deed between them, but was mistakenly omitted from the description. • Faubion v. Elder Wash. 1956: the general statement which appears in many of the cases is that tacking of AP is permitted if the successive occupants are in “privity.” o The technical requirement of “privity” shouldn’t be used to upset long periods of occupancy of those who in good faith received an erroneous deed description. o Their “claim of right” is no less persuasive than the purchaser who believes he is purchasing more land than his deed described. o The requirement of “privity” is no more than judicial recognition of the need for some reasonable connection between successive occupants of real property so as to raise their claim of right above the status of the wrongdoer or the trespasser. There is sufficient privity of estate to permit tacking and thus establish AP as a matter of law. o o o

Willful improver gets noting Mistaken improver gets compensated Juries don’t like will

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AP & Tacking The AP can eject trespassers before the statute of limitations runs, as long as the AP entered the property first. The AP can also sell or give his interest to a third party. Tacking: adding of time the first AP used the property to the time the second AP used the property. • Tacking of adverse possessions is permitted if the successive occupants are in privity, which occurs by contract of sale, will, or other inheritance. • A series of successive trespassers not in privity cannot tack. ***Adverse possession protects the innocent 3rd party who acquires property from the adverse possessor. NOTES ON DISABILITIES • Typically, state statutes provide that the statute of limitations is tolled for owners suffering from certain narrow classes of disabilities, including being under age, insane, legally incompetent, or (sometimes) in prison, at the time the AP entered. • Disabilities arising later usually do not affect the running of the statute, and disabilities in the same or successive owners can’t be tacked. • Also, other hardships that might hinder TO from bringing suit, ex poverty, don’t affect running of statute • True Owner’s circumstances stops the clock for statute of limitations o (1) Statute of limitations doesn’t run against AP o (2) Those in prison/jail o (3) Poor person—can’t defend property, but can gain an asset o (4) Public ownership—No AP against public  EX: state park on Howard in Howard v. Kunto  Theory of Corruption (gov taking from people who’s electing them)  public official AP on Chattles: • AP on personal property o May discourage people from being friendly o EX: A asks B for a book to borrow  A takes book from B without knowing o EX: ArtworkMuseums  Family  low price  x  y  [. . . ]  Austrian St. Gallery • Does this sale establish a claim of right? o There’s a chain of titles and sale occurs, so belongs to gallery. o Maybe toll statute of limitations as similar to a disability VS.  Family  Seizure (lawful under Nazi reign  x  y  [. . .] Austrian gallery • Voluntary Transactions—will, purchases, gift (much more and more precise than involuntary transactions/Quick!) o At margins, lots of problems/similar to involuntary transfers LAND TRANSACTIONS pg. 871 • Once a written offer is accepted by the sellerit’s a Kgoverns dealings until closing. • Marketable title is title that’s free from defects and encumbrances but need not be perfect title; rather some notion of reasonableness animates this standard, such that marketable title is sometimes said to be title that is free from reasonable doubt or title that a reasonable person would accept. • A general warranty deed contains a covenant by the seller that he is able to, and does, convey good title to the buy. • A quitclaim deed contains no covenant of title; such a deed conveys to the buyer whatever the seller had but contains no assurance as to what that is. • A special warranty deed gives a covenant against title defects stemming from acts of the grantor and related parties, but not other defects.

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SECURITY INTERESTS pg. 807 • A security interest is a special type of property right in an asset called “collateral.” o Purpose: secure a loan; makes an asset, the collateral, available as a source of value if the debtor defaults on the loan. REAL ESTATE MORTGAGES pg. 823 • Land continues to be a convenient asset against which to borrow. • Very features that make land a good candidate for centralized records—its value, fixed location, and permanence—make good candidate for asset to use to secure loans, particularly long-term loans, and even loans whose proceeds will be used to finance projects other than the acquisition of the real estate. • The mortgage document represents the security interest and the note contains the terms of and evidences the loan itself. Equity of redemption: • One protection as borrower is the right to redeem property even after default Strict foreclosure: • Mortgagee would have the right to be declared the owner of the premises w/o any sale of theMpremises Foreclosure: • Can also refer as a shorthand to “foreclosure by sale.” Redemption: • Can refer to the equitable period of redemption (“equity of redemption”) developed by courts of equity, and “foreclosure” originally meant foreclosure of the equity of redemption. Before the current mortgage crisis, the most recent episode of wholesale legislative intervention on behalf of mortgagors took place during the Great Depression, which led a number of states to pass mortgage moratoria. •

The US S.Ct. upheld the Minnesota moratorium in the face of Ks Clause and Due Process challenges in Home Building and Loan Assn. v. Blaisdell 1934 (pg 825) o Minnesota law said that during the declared emergency period, mortgagors could obtain relief from foreclosure and execution sales through authorized judicial proceedings and that period of redemption could be extended. o Court said: “the economic interests of the State may justify the exercise of its continuing and dominant protective power notwithstanding interference with Ks” and likened mass foreclosures stemming from the Depression to natural disasters.

Real Estate: (1) Title Theory of (a loan) the mortgage a. Meet conditions of loan or lose everything b. K for deed i. Pay elevated rent and down payment 1. Then refinance and get payment down c. Just take it and that’s it—no further claim d. EX: buy car from dealer. i. Title and possession to car; bank has mortgage to car 1. Lien Theory (2) Lien Theory a. Lien: claim against property/security interest of at least amount of outstanding debt b. If can’t pay, bank will go through process to get title and repossess car, then sell car, and take what’s owed—rest back to owners c. Borrower gets excess money (3) Trust Deed a. Variation of lien theory—get interest out of hands from certain indvs.

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• •

Courts of Equity: o Buyer gets an equity of redemption Foreclosing equity of redemption o Strict Foreclosure in Title Theory  Lenders take it all and do w/e they want o Lien Theory Foreclosure  Sell property and pay lender/rest/excess goes to borrower • (1) Judicial Foreclosure • (2) Lender has power of sale • (3) Trust deed—who conducts sale?

Lien: Conditional claim on property till amount is paid back. Mortgage: Lien for unpaid debt—voluntary • Why agree? o Low interest rates o Living in a house/owning a house o Enforceable only by foreclosure o Lender has power of saleMurphy HYPO: (1) House: Fair Market Value = $60,000 Owner mortgaged and still owes = $15,000 Foreclosure sale—only highest bid = $20,000  Bidder A Homeowner gets = $5,000 and debt released Bank gets = $15,000 A gets house and $40,000 better (2) House: 60k Owes: 15K Sale = 15K  Bidder A Owner = gets $0 and debt released Bank = 15K Bidder gets house and 45K better (3) House: 60K Owes 15K Sale 5K  Bidder A Owner = -10K (deficiency judgment for 10K, still owes it) Bank = 5K Bidder gets house for 55K better (4) House: 60K Owes: 15K Sale 15K  Bidder A could be anyone, most likely bank itself (like in Murphy) Wipes out debt & keeps house.

Problems with foreclosure sales: • No bids/few • Low bids Why so low turn out? (1) Marketed limited/limited info (ct. house) (2) Question of finance—where does money come from? a. [What do you offer as a loan at an auction?]

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(1) Limited Info. (2) Finances (3) Limited Opportunities to Inspect

Consumer X X X

Commercial Transaction - they knew where to go to find ad - if buying in volume, not a problem

Reform ideas for consumers: • (1) Don’t let lender bid (lenders in favorable position) o Problem: shoving out person most fav to bid • (2) Letting lendee buy back property for sale price within certain time o Problem: who’d bid knowing in 2 years will sell back • (3) Make lender pay at least what’s owed o Problem: “under water”—owe more than what any sale would bring • (4) Lender bids at fair market value o 1. Risk on bank—no default judgmenthigher down payments interest rates o 2. Default Judgment Why don’t homeowners sell before foreclosure? • Thought he could sell it before somehow? o Over optimistic • Murphy can’t sell if owed mortgage, or if under water, won’t find buyers to purchase for outstanding debt. Short Sales • Bank accepts whatever get in sale to wipe out debt o For owner: no debt, but no house o Bank: no longer dealing with property and no foreclosure Types of Mortgages (1) Conventional mortgage (fixed rate mortgage) (2) Adjustable Rate Mortgage (ARM) (3) Second mortgage part of payment (4) *ARM with teaser (low interest rate at beginning and later payments higher) (5) Balloon mortgage (6) No down payment (7) No asking personal credit history o With the thinking of: the housing market is always going up, so you’ll be fine!!! •

#s 4-7 are loans to risky persons [worst kind of loans]

Things Slowing Down Foreclosures: • Judicial foreclosures (FL & NJ examples) • Litigation Buying a house ex: • How do you show it’s yours? o Title it o Actual possession (take care of it) o Fence it o Brand it

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Murphy v. Financial Development Corporation Supreme Ct NH 1985 pg. 825 FORECLOSURE…Lender can bid…but must act as FIDUCIARY [F]: Plaintiff bought a house with a mortgage. He fell behind on payments when he lost his job. The house was auctioned at a foreclosure sale for $27,000 and later resold for $38,000 by the lender. Holding: When selling the house, the lender needed to act in good faith and with due diligence to exert reasonable efforts to obtain a fair and reasonable price. Damages: Where a mortgagee fails to exercise due diligence, the proper assessment of damages is the difference between the fair price and the price obtained at foreclosure sale. Not the difference between market value and the sale price. Justice Brock DISSENT: • No support for master’s finding that the lenders failed to exercise due diligence • Mortgagee’s fiduciary duty extends only to its role as a seller. • Low price in itself isn’t sufficient to invalidate a foreclosure sale, unless the price was so long that it shocked the judicial conscious. Notes: • Duty of the mortgagee to obtain a fair price extends to the defaulting mortgagor. • Even if a court sides with the mortgagor in a case like Murphy, mortgagors with substantial equity would be well-advised to try to sell the property themselves, if possible. WHY? o Mortgagor is likely to get a much better price than lender. o Murphys should’ve sold house themselves—lender gets money back w/o incurring costs of foreclosure, and Murphys get to pocket full amount of their equity in house w/o having to spend time and money suing lender. • Why use land sale K instead? o Restrictions from mortgages add to costs and risks of using mortgages. o Provides credit to persons who have high risk of default. Mortgages and the Financial Crisis of 2008: pg. 846-849 • Broad agreement that management of financial institutions ignored reasonable estimations of risk and their compensation packages promoted decisions in favor of taking on these underestimated risks. • Lots of factors contributing to mortgage crisis: o (1) Gov—always been pro-house owning. Offering tax deductions—response to housing market failure, lots of agencies popped up to extend more loans. o Gov forced banks to give out loans to people who couldn’t afford it. • Collateralized debt obligation (CDO): A CDO combines property forms like the trust and mortgages. theory was that the underlying loans might be risky but the highest tranche would be very safe, and so eligible for the highest credit rating, and the credit rating agencies obliged with high ratings for higher tranches of very dubious collections of loans. o Problem: risk of underlying loans was more correlated than were being treated, and possibility of general downturn in housing (leading to correlated default) was also underestimated. • Credit Default Swap (CDS) is like an insurance policy and began insuring CDPs. o It’s a derivative b/c its value depends on value of a referent asset, here, the CDOs themselves. o CDOs remove the need for lenders or issuers of the securities to retain any interest in the loans, even indirectly, and CDs allow one to dispense with the underlying assets altogether. CDSs could be used to create synthetic CDOs, which are like CDOs without the ownership of the underlying components of a regular CDO. o Have to buy this: we’ll pay you off it default on your payments if your $ doesn’t come through. • Regulatory failure is a large part of the economic/housing market crash. • Also, faulty corporate governance regulation also contributed to lack of shareholder oversight over banks’ activities in bubble period.

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RECORDS It’s important for environmentalists to have a recording system: • Passve usage/ownership • High value things o Land o Animals—livestock o Cars Why records? • Divided interest • Valuable • Not a lot of transactions TITLE RECORDS AND THE TRANSFER OF PROPERTY: pages 859-860  can standardize, easier to show than personal property. • Title Records: by investigating the state of title through the title records, a potential purchaser can gain assurance at reasonable cost that he or she is acquiring what the seller claims to have for transfer. NEMO DAT pg. 885 • Baseline principle of system of property regarding transfers of ownership: Nemo dat quod non habet—“one cannot give that which one does not have.” o Usual rule on property transactions nemo dat • Derivation Principle: the transferee’s rights derive from those of the transferor. o If someone owns something because someone transferred it to them, by sale, gift, bequest, etc.—he’ll normally have only that which the previous owner had and nothing more. • Also related to the principle of “prior in time is prior in right.” Nemo Dat EX: A has rights and sells to B, but by mistake, A sells to C too. • But, according to Nemo dat, B would have the rights when A mistakenly sells to C, so by nemo dat, C gets nothing. • Chain of transactions o Current owners must be able to trace their ownership back in time through series of legitimate transfers to an act of legitimate original acquisition THE GOOD FAITH PURCHASER pg. 891 • Good faith purchaser doctrine = important exception to nemo dat • EX: A sells goods to B but flawed transaction because B’s check bounced. B sells same goods to C. o As long as C bought in good faith and didn’t know of the flawed transaction from AB, then law generally gives C title to goods as good faith purchaser. o UCC recognizes nemo dat and good faith purchaser exception in § 2-403:  Ppl w/voidable title has power to transfer a good title to good faith purchaser for value. PROVING OWNERSHIP pgs. 901-904 • What constitutes notice and how does one provide notice in a way that is fairly cost-effective? • Consent is rarely a sufficient showing of an accurate chain of title. • Taking physical possession of real or tangible personal property was necessary before a person could be relatively certain that his claim was, and would remain, superior to that of others • Legal rule: to obtain priority in an asset over third-party claimants, an individual needed, in addition to the consent of the prior owner, to take physical possession of the asset. • **Rules of transfer that require public recordation can reduce risks that a subsequent purchaser won’t acquire good title w/o increasing risk that a present owner will lose his property by theft.

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Why are filing systems comparatively better than possessory systems? 1. Better when property is valuable, when property not transferred often, and when it’s important to share ownership of property among several individuals (like when creating future interest or security interest) 2. Better when prop’s physical use is imp or when underlying property right is abstract and unembodied. 3. Filing systems more easily accommodate title claims to an asset, not just security claims. o o o

The recording system has the effect of reducing uncertainty surrounding a transfer of real property w/o undermining consensual nature of those transfers. Money is best example of property that is not suitable for a filing system. Piece of personal property is often less valuable than a piece of real property and is likely to be more frequently transferred.

NOTE ON LAND DEMARCATION pgs. 881-885 2 categories of land demarcation: 1. (1) Metes and bounds system: land boundaries are marked using monuments like rocks, trees, and other structures as well as compass directions, distances, and angles. o Easy to make mistakes in this system  Difficult in rural areas of long-lost monuments; easier in urban life 2. (2) Rectangular survey: defines rectangular plots of any size, employing a systematic survey with references to latitude and longitude. o Many advs because of shape, in terms of how they come together, and their easy divisibility. o Nearly all land in fed public domain was eventually surveyed & disposed of using this system. 3. Both systems o Rectangular survey is more expensive to set up but leads to more certain descriptions and is easier to use on an ongoing basis. o Metes and bounds can be tailored to rugged terrain. o Rectangular survey is associated with fewer disputes, more roads, 50% more land transactions, and substantially greater land values persisting over more than a century. o Metes and bounds gave settlers more choices about which land to claim—could claim around rocky or marshy patches, often leaving lower valued lands isolated and unclaimed. o Rec system forced settlers to take quarter sections of land on all-or-nothing basis, so claimants took bad along with good. o Accuracy of rec system can be replicated in metes and bounds using GPS. TITLE SEARCH AND “CHAIN OF TITLE” pg. 919-924 • Every recording office as at least 2 indexes: o (1) Grantee Index: includes, by name, all grantees referenced in documents that have been submitted for recordation o (2) Grantor Index: includes, by name, all grantors referenced in the documents that have been submitted for recordation. • Some keep tract index: where all documents submitted for recordation are listed by legal description of the property under the surveying system established by the Land Ordinance of 1785. • Performing title searches involves tracing series of transactions from one’s would-be transferor back to a “root of title” and then tracing forward. Anything outside = outside the “chain of title” o If something is outside the chain of title (outside the legally defined reasonable search), the good faith purchaser exception to nemo dat applies. o The recorded deed are not always legitimate. TYPES OF RECORDING ACTS: 1. Race—the winner of the race to record prevails a. Race statutes create an exception to the nemo dat principle and a partial exception to the good faith purchaser doctrine, insofar as the first party to record wins even if she has actual notice of prior conveyance.

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2. Notice—subsequent bona fide purchaser wins unless he has notice (actual, constructive, or inquiry), and a recorded interest gives constructive, or “record,” notice. a. Incentive to record immediately in order to be protected from subsequent good faith purchasers. 3. Race-Notice—A subsequent good faith purchaser wins only if he has no notice and records before the prior instrument is recorded. a. Like race statute but solves problem of dishonest buyer under race approach. 4. Mixed Regimes—Some states apply a race regime to mortgages but another type of recording act to conveyances in general. RECORDING DOCTRINES BASED ON CHAIN OF TITLE • The recording acts in conjunction with the notion of chain of title define a legally required search for one who wishes to take advantage of the protection afforded good faith purchasers under the act. • The “Wild Deed.” o If a grantee records before her grantor, the grantee’s deed is a “wild deed” because it’s not connected up to the common grantor by a continuous chain of recording. o Called a “stranger to the title” if thinks has a deed but doesn’t because nobody recorded it… o Searches of traditional records won’t find the wild deed in a conventional chain of title search, because the name of the grantee would be unknown to searches. o Majority of courts believe that one can’t benefit from the recording act’s exception to nemo dat if one traces one’s ownership to a wild deed. Mugaas v. Smith S.Ct. Washington 1949 Mugaas brought action to quiet title to a strip of land she claims via AP against Smith who purchased the same land with record title. Court holds that a conveyance of record title to a bona fide purchaser does not extinguish a title established by AP. Court finds that the recording act does not apply to AP and that where title has been vested by AP, it cannot be divested by any other act short of a deed- Policy- if the act were applied to AP then the AP would have to keep his flag flying forever. Notes: • AP can be an exception to the nemo dat principle, since it allows shifts in title other than by a chain of voluntary transfers. o The forced transfer from present title owner doesn’t transfer rights greater than the owner had—AP and nemo dat similarity. • Marketable Title Acts: legislation reflecting something of a compromise between reliance on recording acts and allowing claims of title outside the record based on AP. o Idea = allow ppl to stop title searches at point & not have to go all way back to the sovereign. THE FAIR HOUSING ACT pg. 435 • Prohibit a range of discriminatory behaviors against members of enumerated protected classes in the housing field, with certain exceptions. • FHS, 42 U.S.C. §§ 3601-3619 o 3604. Discrimination in the sale or rental of housing and other prohibited practices  (a) No discrimination based on race, color, religion, sex, familial status, or national origin. (can’t refuse to sell or rent based on those)  (b) Unlawful to discriminate based on those things  (c) No printing or publishing anything indicating a preference for any of those groups  (d) Can’t say something isn’t available when it is to those groups  (e) For profit, to induce or attempt to induce a sale to anyone from those groups  (f) No discrimination for the handicap

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Frimberger v. Anzellotti •

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Conn. App. 1991 PDF

Tidal Marshland. D’s brother transferred land to him via quitclaim deed. D conveyed land to P by warranty deed—free & clear of all encumbrances, but subject to building & zoning restrictions of record. P discovers part of prop in violation of st statute. St agency advised P to come into compliance, but wasn’t threatening litigation. P instead sued for breach of warranty against encumbrances. Issue: Whether a latent violation of a land use statute, existing at the time of conveyance constitutes an encumbrance such that conveyance breaches grantor’s covenant against encumbrances? No: To render a title unmarketable, the defect must present a real and substantial probability of litigation or loss at the time of conveyance. Latent violation of land use regulations, that are unknown to the seller, as to which the agency charged with enforcement has taken no official action to compel compliance at the time the deed was executed, and that have not ripened into an interest that can be recorded on the land records do not constitute an encumbrance for the purpose of the deed warranty Prevention: parties can protect themselves from latent conditions violating statutes by requiring warranties of condition. Swinton v. Whitinsville Savings Bank S.Ct. Mass. PDF 1942

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D sold P a house. At time of sale, house was infested with termites, the seller knew about this and, the termites were not readily observable on inspection, and seller did not warn him. Held: Caveat emptor. Seller is not liable for cost of termite damages. Seller did not make any false statements and did not keep the plaintiff from inspecting property, so no fraud. Sellers not required to disclose all latent defects which materially affect the value of the property when the defect is obvious upon reasonable inspection Policy for caveat emptor: Judicial economy; shifts the burden on the buyer to make sure they are responsible in making contracts

Notes: • What makes something latent? [anything a home inspection could catch isn’t latent…?] o Obviousness vs. non-obviousness or patent Theis v. Heuer Ind. Appellate Court? 1972 PDF • • •

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Plaintiffs bought house from defendant builders. Defect at time of sale/construction that rain water and sewage would collect in the first floor. P’s had no reasonable means of inspecting this. Held- The builder of a new house is liable for major defects which render the house inhabitable Reasoning for new implied warranty of habitability: Caveat emptor does not satisfy demands of justiceespecially given unequal bargaining power and the fact that builder will have more information-analogy to products liability; caveat emptor here encourages shoddy work and a warranty will make construction better (think L. Hand: B<P*L)Over time shift from default rule of no warranty to implied warranty unless builder makes agreement to get out of it: reasons- shift in expectations over time; advent of track housing & dec in quality housing Implied warranty does not impose a duty to deliver a perfect house, but major defects that render it unfit for habitation (and are not readily remediable) entitle the buyer to rescission and restitution. Stambovsky v. Ackley NY App Div 1991 PDF Pre-closing case; disclosure





D sold P a home she knew to be possessed by poltergeists. She had advertised the ghosts in reader’s digest and in local press. P’s were not locals and did not know about property’s reputation; upon finding out, plaintiffs sought rescission of the contract. Court held that rescission was allowed because the Seller had duty to disclose possession by poltergeist

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Poltergeists are a latent defect which could not have been contemplated or discovered by the plaintiffs. House was not ‘vacant’ as promised. Where a condition which has been created by the seller materially impairs the value of the contract and is peculiarly within the knowledge of the seller, or unlikely to be discovered by a prudent purchaser exercising due car- nondisclosure constitutes a basis for rescission. Smith Dissent – absent fraud or fiduciary relationship, caveat emptor rules and no rescission.

Contract Buyers League (buyer) v. F & F Investment USDC ND Ill. 1969 PDF [F] BLOCKBUSTING: The practice of illegally frightening homeowners by telling them that people who are members of a particular race, religion, or national origin are moving into their neighborhood and that they should expect a decline in the value of their property. The purpose of this scheme is to get the homeowners to sell out at a deflated price. They bought with the old title system of mortgage. An real estate agent will then sell the vacated homes to minority group members at an inflated price, thereby obtaining a large profit. Fair access to housing is defeated by blockbusting. •

Claimed misrepresentation, civil rights, and unconscionablity...only civil rights claim survives o Some of the misrepresentations were physical and patent, buyers just have to expect puffery and it’s understandable for sellers to sell it for higher values then the property is really worth o Unconscionability – one element is you can get it somewhere else so it is a bad deal plus unequal bargaining power, fraud, coercion, duress  In this case high price alone doesn’t make something unconscionable  It is self correcting – sellers and buyers would not sell into an inflated market and the market would not adjust o Civil rights claims – sellers are selling at a higher market price to African Americans  The two separate markets could be segregation or to due to the higher demand for property by minorities  The case turns into an arbitrage case

Notes: • Elements of Unconscionable o Unequal bargaining power o Must be a bad deal •

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Disclosure—must disclose anything health-related o EX: oil tank underground—yes o Lead paint—yes o Asbestos in insulator but taped up—yes o **Must be reasonable to person to know. Latent Patent exception IL—anything physical must be discussed CA—anything material must be disclosed

Steps for white sellers:  Blockbusting (1) Scare buyers (2) Buy cheaply (3) Sell to min family for high price (4) Count prices and laugh (5) Prices go down eventually Ban on Blockbusting: • Cynical—protecting whites Inflaming racial actions

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Property and the Human Body: Moore v. Regents of the U of California

S.Ct. CA 1990 pg. 243

[F]: P was being treated for leukemia at D’s hospital. Physicians removes cells from spleen and used cells to develop a new cell line, without informing P. New cell line had valuable commercial applications. Moore sues for conversion (property interest). Use of body parts is repugnant based on slavery...BUT... [H]: P has no action for conversion because he did not have any property interests in his spleen. However he does have a claim for breaching fiduciary duty and failing to obtain consent. • ***Although P had no property rights, the court assumed that D did. • ***Court was worried about imposing unexpected liability on downstream medical researchers who had previously used body tissue for research without inquiring about their right to do so • ***Court thought it was best to await legislative action before treating body cells as property. • *** This case is an example of the cases which arise when new technologies force courts to re-examine historical principles. Informed Consent vs. Conversion: Informed consent was a big outcome of Moore, as opposed to conversion of property rights. Informed consent assumes the right to say no, which is functionally the right to exclude drs from getting their hands on the cells. • Reasons IC is preferred over Conversion: o IC would not impose a duty on downstream researchers, only to Moore’s treating physician o IC would apply to everyone, conversion only to those who’s parts were later utilized o Remedy is the big deal—but there is a limited remedy for IC breach; greater remedy if court had found conversion. Reasoning: • Moore is asking Court to impose a tort duty on scientists to investigate the consensual pedigree of each human cell sample used in research. o To impose such a duty, which would affect medical research of importance to all society, implicates policy concerns far removed from the tradition, two-party ownership disputes in which the law of conversion arose. o Moore claims ownership of the genetic code for chemicals that regulate the functions of every human being’s immune system. • To establish a conversion, plaint must establish an actual interference with his ownership or right of possession. Where plaint neither has title to the property alleged to have been converted, nor possession thereof, he cannot maintain an action for conversion. o He must show he retained an ownership interest in his cells (which he did not) cause:  (1) No reported judicial opinion supports his claim  (2) CA statutory law limits any continuing interest of a patient in excised cells  (3) Subject matters of the Regents’ patent can’t be his property. • His cells aren’t unique—everyone has the same ones. • 3 reasons why it’s inappropriate to impose liability for conversion based on allegations from Moore’s complaint: o (1) Fair balancing of relevant policy considerations counsels against extending the tort o (2) Problems in this area are better suited to legislative resolution o (3) Tort of conversion isn’t necessary to protect patients’ rights • 2 important policy considerations o (1) Protection of a competent patient’s right to make autonomous medical decisions. o (2) Is that we not threaten with disabling civil liability innocent parties who are engaged in socially useful activities, like researchers who have no reason to believe that their use of a particular cell sample is, or may be, against a donor’s wishes. o MIDDLE GROUND: Liability based on existing disclosure obligations, rather than an unprecedented extension of the conversion theory, protects patients’ rights of privacy and autonomy without unnecessarily hindering research.

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Justice Arabian CONCURRING: • Plaint is asking Court to recognize and enforce a right to sell one’s own body tissue for profit. Justice Broussard CONCURRING & DISSENTING: • No justification for barring plaint from bringing a conversion action against a party who doesn’t obtain organs or cells from a cell bank but who directly interferes with or misappropriates a patient’s right to control the use of his organs or cells. • Even if there were compelling policy reasons to limit the potential liability of innocent researchers who use cells obtained from an existing cell bank, those policy considerations wouldn’t justify the majority’s broad repeal of all conversion liability for the unauthorized use of body parts. Justice Mosk DISSENTING: • The concept of property is often said to refer to a “bundle of rights” that may be exercised with respect to that object—principally the rights to possess the property, to use the property, to exclude others from the property, and to dispose of the property by sale or by gift. o Above all, at the time of its excision he at least had the right to do with his own tissue whatever the defs did with it. Notes: • Diamond v. Chakrabarty US S.Ct. 1980: o Held that patentable subject matter “includes everything under the sun that’s made by man.” • Bilski v. Kappos US S.Ct. 2010 o Ideas and laws of nature are still not patentable subject matter • To be patentable, a living organism should be altered from any naturally existing form or at least distilled in a way not occurring in nature. Restraints on Alienability (1) Mistakes about self (not knowing importance of kidney) (2) 2nd Party Problems—Hais and wife, he says, you must sell your kidney (coercsion) (3) 3rd Paty—people not involved in transaction but affected Perspectives on Property (1) First Party: Might hurt person involved in transfer (2) Second Party: Someone else coercive/tricks you to buy something you didn’t want (3) Third Party: Harm to someone not involved in transaction US v. Corrow Ct. Appeals 10th Cir. 1997 pg. 267 Facts: • When he died, he left no provision for this disposition of his Yei B’Chei (ceremonial adornments), and no family or clan member requested them. • Mr. Corrow, contacted widow and offered to by the Yei B’Chei. He suggested to her that he planned to deliver them to a Navajo chanter in Utah to keep them safe. • IN 1994, FBI found out about his ownership (and national park ranger) by pics of eagle feathers. Faked a sale, Corrow traveled with all of the items to sell. • FBI got him and charged with two counts: 1 for trafficking in N.Am. cultural items and 1 for selling Eagle, Owl, and Hawk feathers. • Π said good faith purchaser HELD: Conviction upheld. ● Common pool problem: because no single person in the tribe owns the item, the seller does not have a right to sell the artifact ○ Protects other people’s interest in the tribe. Reasoning: • Congress enacted NAGPRA in 1990 to achieve 2 objections: o (1) Protect Native American human remains, funerary objects, sacred objects, and objects of cultural patrimony presently on Federal or tribal lands; and

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(2) To repatriate N.Am. human remains, associated funerary objects, sacred objects, and objects of cultural patrimony currently held or controlled by Fed agencies and museums. To be judged “cultural patrimony” (from the NAGPRA statute), the object must have: o (1) ongoing historical, cultural or traditional importance; and o (2) be considered inalienable by the tribe virtue of the object’s centrality in tribal culture Mr. Corrow is knowledgeable about Navajo traditions and culture and “would have been aware that various tribal members viewed ownership of property differently.” Due process doesn’t require that citizens be provided actual notice of all criminal rules and their meanings. o Constitution is satisfied if the necessary info is reasonably obtainable by the public. o



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Notes: • There is no separate prohibition, in the operative sections of the Act, of alienation, appropriation, or conveyance of cultural patrimony in NAGPRA. • Federal law appears to require, (1) a determination that items can’t be subject to private ownership or sale as a matter of tribal law or tradition, and then, (2) a determination that someone has attempted to acquire such an item in a manner prohibited by trial law or tradition. • “Kennewick Man” found—Inteior Dept. ordered remains be repatriated to area tribes under NAGPRA o Bonnichsen v. US D.Ct. Oregn and 9th Affirmed  Courts held NAGPA applies only to remains affiliated with presently existing tribes, peoples, or cultures, and held that there was no evidence that any presently existing tribe could trace its ancestry back 9,000 years. • S.Ct. been unsympathetic to claims seeking protection for culturally significant property as a matter of constitutional law. o Lyng v. Northwest Indian Cemetery Prtective Ass’n US S.Ct. 1988  Court rejected claim that building road through an Indian burial ground would violate the Free Exercise rights of N.Americans. o Navajo Nation v. US Forest Serv. 9th Cir. 2008  Rejected a challenge under NAGPRA to the practice of using recycled water containing minute quantitites of human remains for snowmaking in ski areas. • Although NAGPRA is unusual in prohibiting any attempt to treat cultural patrimony as private property, restrictions on the use and development of culturally significant properties are more common. • Museum Claims: o (1) Adverse Possession o (2) We took care what you didn’t o (3) More valuable to us than you  ^ But may not be the best for item—like Navajo-adopted kids—but hard to quantity value ANTI-COMMODIFICATION AND INALIENABILITY RULES • Define inability rules: rules that prohibit the transfer of an entitlement • An alternative characterization of the rulings in many of the cases isn’t that they deny the existence of property in particular resources, but rather they conclude that the entitlements in question should be protected by an inalienability rule. • Why does it make sense to recognize property in certain things but make them inalienable? o (1) Might reduce externalities in some contexts o (2) Might be justified by “moralisms” o (3) May be justified by paternalism, if we conclude that “a person may be better off if he is prohibited from bargaining.” • Restraints on alienation can be one tool for minimizing these dangers and can be used to influence decisions to acquire a resource in the first place.

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Margaret Jane Radin, Market-Inalienability 1987 pg. 288 Can transfer by gift, not by sale • 3 possible methods of justifying market-inalienability based on personhood: o (1) A prophylactic argument; o (2) Assimilation to prohibition; and o (3) Domino theory • Prophylactic Argument o Aims to ensure free choice—negative liberty—by the best possible coercion-avoidance mechanism under conditions of uncertainty. • Assimilation to Prohibition o If we accept that the commodified object is different from the “same” thing noncommodified and embedded in personal relationships, then market-inalienability is a prohibition of the commodified version, resting on some moral requirement that it not exist. • Domino Theory o Envisions a slippery slope leading to market domination. o Assumes that for some things, the noncommodified version is morally preferable; also assumes that the commodified and noncommoedified versions of some interactions can’t coexist. o EX: under this theory, the existence of some commodified sexual interactions will contaminate or infiltrate everyone’s sexuality so that all sexual relationships will become commodified. o Opposite of prohibition: There is assumed to exist some moral requirement that a certain “good” be socially available. • Prohibition and Domino Theories can be Connected— o The PT focuses on the importance of excluding from social life commodified versions of certain “goods” (like love, friendship, sexuality)—whereas the domino theory focuses on the importance for social life of maintaining the noncommodified versions. o The PT stresses the wrongness of commodification (its alienation and degradation of the person)—and the domino theory stresses the rightness of noncommodification in creating the social context for the proper expression and fostering of personhood. o ***If one adopts both prongs of the commitment to personhood, the prohibition and domino theories merge. • Conflicting arguments show problems with prophylactic argument for market-inalienability. o If allow commodification, exacerbate oppression of women (the suppliers). o If disallow, force women to remain in circumstances that they believe worse than becoming sexual commodity-suppliers o The alternatives seem subsumed by a need for social progress, yet must choose some regime now in order to make that progressthis transition is the double bnd. • Double bind has 2 main consequences o (1) If can’t respect personhood either by permitting sales or by banning sales, justice requires that we consider changing the circumstances that create the dilemma.  Must consider wealth and power redistribution. o (2) Must choose a regime for the meantime, the transition, in non-ideal circumstances.  To resolve the double bind, have to investigate particular problems separately; decisions must be made (and remade) for each thing that some people desire to sell. NOTES: • Minimum welfare rights are necessary to prevent people from being treated like commodities. • Harmful effects of selling sex—children for money—intimacy$$$--Body Parts • If buy and sell, do it cause there’s a market for them • Buy/Sell kidneys—monitor? Directly from hospitals? o [EX: Grey’s Anatomy and killing of person for organ] o Record keeping—expensive; willing to pay • Argument: why give kidneys if can sell it?

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FORMS OF OWNERSHIP Divisions by Time • An estate is a type of property right and measures a person’s interest in the land in terms of duration. • An interest may be either a present possessory estate or one that doesn’t take possession until the happening of some future event—a future interest. ESTATES IN LAND • Estate for definite term: LEASE/estate for years o Definite o Landlord, tenant law • Estate for indefinite time: FREEHOLD estate o No definite time o If ends at all, must be by something like death  EX: wills • Freehold interests tend to be recorded in land registries, but short-term leases are not. Present Possessory Estates Freehold 1. Fee simple absolute 2. Life estate 3. Defeasible fees Nonfreehold 4. Lease Note that the holders of a freehold interest as well as leaseholders are still sometimes called “tenants.” SEE PG. 505 FOR DIAGRAM OF ESTATES PRESENT POSSESSORY INTERESTS (1) Fee Simple Absolute = Property—largest estate in time • Largest package of ownership rights—no natural end. • No owner will live forever, but the owner can designate a successor owner, by gift, sale, or will. o Posses indefinitely from ownerowner’s heirs • If the owner dies intestate—without a will—a state intestacy statute will designate certain others who will then take the property in fee simple. • Example 1: o O grants Blackacre “to Marge and her heirs” or “to Marge in fee simple,” or “to Marge.”  In a transfer, a grantor is presumed to give all that she has, unless she indicates otherwise.  A person doesn’t have heirs until after her death (while alive, someone has at most heirs apparent).  If Owner grants “to Marge and her heirs,” Homer and her children receive nothing.  “And her heirs” are words of limitation as opposed to “to Marge,” which are words of purchase.  Only words of purchase designate someone who is to receive an interest. (2) Life Estate • Life estates come to a natural end with the death of the named person, usually the holder of the estate. • Example 2: o Current Uses  France PDF  Elderly relative

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Park service • AB for life then to C + his heirs o Remainder  AB for life of X o O grants Blackacre “to Marge for life, and then to Lisa.”  The life estate is alienable by gift or sale.  If Marge sells, the purchaser will receive a life estate pur autre vie—a life estate according to Marge’s, not the new owner’s, lifespan.  So the new owner will lose the property to Lisa when Marge dies. • Problems with life estates: o (1) Waste o (2) Tax evasion o (3) State claims (3) Defeasible Fees • These are like fee simple absolute except they may end on the happening of a named contingency o (a) Fee Simple Determinable  Ends automatically upon the occurrence of a named event, whereupon the grantor or the grantor’s successor takes the property. • Example 3: o O grants Blackacre “to Springfield Law School as long as it is used for instruction in the law, then to O.”  The fee simple determinable is created using language of duration, such as “as long as,” “so long as,” “while,” “during,” and “until.” o (b) Fee Simple Subject to Condition Subsequent  Continues indefinitely except that, upon happening of the named event—the condition—the interest does not automatically end but can be ended by action (selfhelp or lawsuit) by the grantor or the grantor’s successor. • Example 4: O grants Blackacre “to Springfield Law School, but if it is not used for instruction in the law, then O has the right to reenter and take the premises.” o School has fee simple subject to condition subsequent and O has a right of entry (also called a “power of terminiation”) o The fee simple subject to condition subsequent usually employs language like ‘but if,” “on condition that,” “provided that,” “provided however,” and “if,” (as opposed to lang of duration in the determinable fee, e.g., “as long as” in Example 3), and condition subsequent is often separated from description of the interest by a comma.  (c) Fee Simple Subject to Executory Limitation • If the defeasible fee is followed by an interest not reserved to the grantor—i.e., granted to some third party at the time of conveyance of the present possessory estate—the defeasible fee is called a fee simple subject to executor limitation. o Example 5A: O grants Black “to Law School as long as it’s used for instruction in the law, then to Springfield Animal Hospital.” o Example 5B: O grants Black to “Law School, but if it is not used for instruction in the law, then to Springfield Animal Hospital.”  The fee simple subject to executor limitation fonclates the nature of the two defeasible fees followed by an interest reserved in the grantor (the fee simple determinable and the fee simple subject to condition subsequent).  One can use “as long as” or “but if” style language interchangeably.

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Although seldom used, the system of estates allows interest other than the fee simple to be determinable and subject to condition subsequent. The fee tail: acquired the feature of long-term alienability by the 15th century. o It has been abolished in most states and has at most a theoretical existence in others. o To create a fee tail, one would use the language “to A and the heirs of his/her body” or “to A and his/her issue.” o Only when A’s bloodline ends—when A “dies without issue,” which can happen hundreds of years after A’s death—does the fee tail end. o The fee tail is a lesser estate than the fee simple absolute; the difference is a reversion in the grantor, even if it’s not terribly likely that this reversion will ever become possessory.  Changes hand on a natural event.

• •

FUTURE INTERESTS • Compared with the fee simple absolute, there’s “something left,” and that is a future interest. • A basic division is between interests retained by the grantor and interests created in a third party. • Interests retained by the grantor are now generally alienable. o If they are alienated, they don’t change their name or character. Future Interests Retained by Grantors 1. Reversion 2. Possibility of reverter 3. Right of entry (power of termination) INTERESTS RETAINED BY THE GRANTOR • If a person has a future interest, one also has to ask what present possessory interest one would have if the interest becomes possessory, or in other words what estate is in waiting. • EX: If O grants “to A for life, and then to B,” A has a present possessory interest in life estate and B has a remainder in fee simple. • Future interests retained by the grantor are sometimes called “reversionary” interests. • (a) Reversion o Follows natural end of life estate & in contexts when an owner hasn’t disposed of entire fee  Example 6: • O grants Black “to Marge for life, then to O.” o O here retains a reversion. o O had a fee simple and carved out a life estate, retaining the rest of the original fee simple. o The “rest’ retained is a reversion. • (b) Possibility of Reverter o Interest reserved to the grantor that follows a fee simple determinable. o O will automatically get property back if limitation built into fee simple determinable occurs.  Example 3: • O grants Black “to Law School as long as it is used for the instruction in the law, then to O.” o If O has died, then O’s successor will take. The possibility of reverter can also be implicit:  Example 7: O grants Black “to Law School as long as it is used for instruction of law.”  Here O isn’t mentioned, but because O owned the entire fee simple absolute and granted a fee simple determinable, O must retain a possibility of reverter, here implicitly.

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 



In either case, O need not do anything to regain ownership. If holder of the fee simple determinable (law school) doesn’t quit possession, it can start a period of adverse possession. (c) Right of Entry/Power of Termination o This is an interest retained by the grantor that follows a defeasible fee, but here the preceding defeasible fee must be a fee simple subject to condition subsequent.  Example 4: O grants Black “to Law School, but if it’s not used for instruction in the law, then O has the right to reenter and take the premises.” • O has a right of entry. The condition is a condition subsequent for the preceding interest and a condition precedent for future interest—right of entry. o If enough time passes, right of entry may no longer be exercisable, through doctrine of lashes.  Under this, right to entry must be exercised w/in a reasonable time, which some cts take to be the period in statute of limitations for bringing an action in ejectment.

SEE PG 515 FOR SUMMARY OF ESTATES AND FUTURE INTERESTS TABLE MEDIATING CONFLICTS OVER TIME pg. 551 • Holder of life estate will tend to favor current consumption and investments that produce a quick return. • In contrast, holders of remainders are likely to prefer conservation of asset and longer-term investments. THE RULE AGAINST PERPETUITIES pg. 572 • RULE: o No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest. SEPARATING MANAGEMENT AND POSSESSORY RIGHTS • A key difference among these mechanisms concerns the participants’ ability of willingness to commit their own assets to the enterprise. • Leases are attractive to those who can’t or do not want to invest their own resources in the larger enterprise; condominiums and cooperatives are more attractive to those who do want to make such an investment (either for tax or other reasons) Landlord/Tenant: • In it for LL? o Gets money (more than his own use) o Some as a career • In it for Tenant? o Risk in buying—go bad o May not have money o Won’t be there long term o Location choosing/testing area o Invest in other markets even if have capital • LL Risks: o Damage fof building o Theft o People not able to pay/tenant o If bad location, stuck with it • Dividing land between the two is specialization o Both specialized in certain parts  Land  Actual business

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Common Law Leases: • When “lease” under common law, it was like you owned it o Sale of property for time period Lease Types: • Term of Years o Opt in syste, • Periodic o Month to month o Opt out system • Tenancy at Will o Either LL or T can opt out at any time • Tenancy at Suffrance o Not really a lease o Giving T category from adding up adverse possession LEASES • “Sale” of property for a time o During time, tenant in control  At end, tenant must give back  Rent is due at very end Generalizing broadly, the 3 forms of legal ownership of greatest continuing importance are the fee simple, the lease, and the trust. • 1) Leases are a type of de facto financing device. o Leases allow persons to “leverage” their limited resources in roughly the same way that borrowing allows persons to leverage limited resources. • 2), Leases operate as a risk-spreading device. o Renting is a way of minimizing the risks of investing most of your savings in an asset that you may want to unload in fairly short order. • 3) Leases operate as a mechanism for integrating and managing complexes of assets, and in that sense function as a kind of entity property. o Leases allow these complexes of assets to be managed using a governance strategy, characterized by a specialization of functions. o Leasing is also very commonly used to acquire personal property like airplanes and automobiles. o One problem in the real property context is that it doesn’t differentiate between leases in terms of the underlying functional reasons the parties have for entering into a lease. o The same law generally applies to long-term (or routinely renewed) leases of agricultural land and to short-term rentals of furnished apartments. (a) LEASE TYPES • Terms of years o Lease that has a fixed time at which it terminates or ends o The unique legal aspect of the term of years is that neither the landlord nor the tenant is required to give notice to the other before terminating the relationship. o On the stated day of termination, the lease simply ends. • Periodic tenancy o Lease that automatically rolls over for a stated period of time, usually a year or a month. o Requires that each of the parties give notice to the other if they desire to terminate the lease. • Tenancy at will o Tenancy that lasts only so long as both parties wish it to continue. o Either party can terminate at any time for any reason. o At common law, no notice was required for termination of a tenancy at will.

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This has been changed in many jurisdictions to require notice equal to the period of time at which rent payments are made. • Tenancy at sufferance o Indv, who are once in rightful possession of property, holds over after this right has ended. o Differs from a trespasser cause tenant’s original entry wasn’t wrongful. o LL free to evict tenant at sufferance using forcible entry & detainer statutes, or by bringing an action in ejectment. (b) THE INDEPENDENT COVENANTS MODEL • Early leases functioned almost entirely as financing and risk-spreading devices. • Courts developed certain assumptions about the nature of the reciprocal obligations between landlord and tenant. • A central assumption was that the lease was a conveyance of a possessory interest in property. • The possessory right—including the right to exclude others from the asset—was transferred from the landlord to the tenant for the prescribed term of the lease. o

ASSIGNMENT AND SUBLEASE pg. 713 • Law recognizes two types of transfers of tenant interests: o Sublease and o Assignment • A sublease: LL starts w/a fee simple; then the subtenant carves out a sub-sublease for the sub-subtenant from the sublease, and so on. o Each of the “carving outs” creates an interest of somewhat lesser extent than the interest from which it’s taken. • As assignment, in contrast, operates very much like alienation: The landlord starts with a fee simple then the prime tenant alienates the prime lease to a first assignee; then the first assignee alienates the prime lease to a second assignee, and so forth. o There’s no “carving out”; rather prime leas as a whole is transferred to successive assignees. Default Rules: • Posner: what would parties have wanted? (guess) • Ayers: makes someone uncomfortable/forces info o Wants a rule forcing LL what he’s looking for • Common law approach of LL/T responsibility: Tenant’s duty to keep upkeep.

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• • •



SUBLEASE: The original landlord would deal with the prime tenant, and the prime tenant with the subtenant. But the original landlord wouldn’t deal with the subtentant. ASSIGNMENT: Assignee steps into the shoes of the prime tenant, and as such enters into direct relations with the original landlord. 2 sources of landlord-tenant obligation: privity of estate and privity of contract. o Privity of K:  Obligations deriving from here are simply the obligations that come from being a party to a binding bilateral K.  If original LL and the prime tenant enter into lease, they’re both bound by privity of K. o Privity of Estate:  Two conditions must be met for privity of estate to apply • (1) Parties to be bound must have interests such that one is directly carved out of the interest of the other • (2) One of the parties must be in actual possession of prop or have a reversion.  If these conditions are satisfied, then the parties are bound by privity of estate in addition to privity of K. EX: if you’re a landlord, and your prime tenant wants to exit from the relationship before the end of the lease, which is better, a sublease or an assignment? o Depends on how active you’re in the management of the property.  If you’re inactive, sublease b/c now the prime tenant will serve as the landlord to the subtenant, collecting rents, answering complaints about broken plumbing, and so forth.  With assignment, tenant in possession owes a duty to pay rent and perform other obligations that run with the land directly to you under privity of estate. • Two other concepts that are also relevant in the assignment context: assumption and novation o Assumption: occurs if the first assignee expressly agrees as part of an assignment agreement to be bound by the terms of the original lease. o Novation: occurs when the parties agree to erase any privity of K liability on the part of the prime tenant.  Can have assumption w/o novation, or novation w/o assumption, or both or neither.

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Paradine v. Jane

King’s Bench 1647 pg. 653

P leased property to D and sued because D did not pay rent for 3 years. D claimed he shouldn’t have to pay rent b/c he was unable to use it b/c there was an army camped out on it. Court held: even though covenant of quiet enjoyment was breached, the tenant’s obligation to pay rent continues. If the lessee is to make profits off the property, also must be allocated the risk of losses and not require lessor to bear the risks of losses • Principle that tenant is the “residual claimant” with respect to economic gains and losses associated with the property during term of lease continues to be sound. Rule: No duty on LL for up-keep—UP TO TENANT Notes: • The lease in Paradine specified the amount of rent, but didn’t expressly include a promise by the tenant to pay rent. But court holds that such a covenant is implied as a matter of law in all leases. LL can’t evict tenant • This case is the leading example of what’s been called the independent covenants model of the landlord-tenant relationship. • When the property that’s the subject of the lease is destroyed or damaged, the tenant’s obligation to pay rent continues uninterrupted. • Whatever rule is followed, the allocation of risk of casualty loss is generally understood to be a default rule subject to modification by the parties in the lease. Hanna v. Dusch

Va. 1930 PDF

P alleges that D leased him property but never evicted prior tenants. D argues that absent an express covenant as to delivery of possession, he has no duty to oust trespassers or wrongdoers. • Two rules at this time: 1) American Rule (landlord’s duty is to give legal right of possession to tenant, but NOT to put tenant in actual possession); and 2) English Rule (there’s an implied covenant requiring the landlord to put tenant in possession on day lease begins) • Holding: Court goes with American rule b/c 1) landlord didn’t covenant against other’s wrongdoing; 2) tenant is basically owner of property during term of lease, so up to him to protect against trespassers; 3) VA statute allowing summary remedy for unlawful entry or detainer is P’s proper venue for getting rid of trespasser/old tenant • Concurrence: points out that under common law, English rule is the law. However, b/c of VA statute that leaves LL w/o power to evict tenant under expiring lease, necessary to apply American rule. Arguments: • Landlord hasn’t covenanted against the wrongful acts of another and shouldn’t be held responsible for such a tort unless he’s expressly so Ked. • Conceded by those favoring English Rule that should the possession of the tenant be wrongfully disturbed the second day of term, or after he has once taken possession, there’s no implied covenant on landlord’s party to protect tenant from tort of another, though he has entered into no such covenant. • Virginia statute giving summary remedy for unlawful entry or detainer: The adequate, simply and summary remedy for the correction of such a wrong provided by statute was clearly available to this π. o It specifically provides that it shall lie for one entitled to possession ‘in any case in which a tenant shall detain the possession of land after his right has expired without the consent of him who is entitled to possession. DUTY TO DELIVER POSSESSION pg. 659 • “English Rule”: LL respons. for clearing out squatters or holdover tenants at beg of lease. Coe v. Clay • “Am Rule”: tenant is responsible for getting rid of any squatters or holdover tenants. Hannan v. Dusch • Best default rule? o Assuming both parties are fully informed about the relevant variables, the rule they’d adopt would plausibly be the one that assigns duty to party who is best able to detect the presence of squatters or holdover tenants and to bring actions to have them evicted before the lease starts.  In context of urban apartments, that party is almost surely the landlord.

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SELF-HELP pg. 387 • EXs: fences, locks on doors, security guards, dogs, burglar alarms, and video cameras are examples in real property context. • EX: ignition locks, safes, indelible serial numbers, and Lojack tracking system are examples in personal property realm. • Right v. Privilege o Right: claim that one person has against one or more others, which corresponds to a duty that these others have toward the one with the right.  If A owns Black, A has right to exclude B, C, D, etc. from it, and B, C, D, etc., have a corresponding duty to keep off Black without A’s permission. o Privilege: freedom to act in certain ways w/o interference from others, which corresponds to a “no-right” in others to interfere w/one exercising privilege. Privilege associated w/ ownership.  If A owns Black, then A has a privilege to engage in a variety of defensive measures to protect Black from invasions or other harms by others, like B, C, D, etc. • The others, B, C, D, etc. have “no-right” to interfere or try to stop A from deploying these defensive measures.  Permits but doesn’t compel people to do certain things.

Berg v. Wiley S.Ct. Minnesota 1978 pg. 388 Wiley leased building to Berg for 5 years. Lease allowed Wiley to retake possession if lessee failed to notify landlord of any changes to the property or if the restaurant was not operated in a lawful or prudent manner. Landlord sent demand letter warning they would retake the premises if changes weren’t made within two weeks. Wiley eventually locked out premises and re-let. • Held: 1) Berg did not abandon or surrender the premises; 2) Landlord (Wiley) cannot resort to selfhelp. The only lawful means to dispossess a tenant who has not abandoned nor voluntarily surrendered but who claims possession adversely to a landlord’s claim of breach of a written lease is by resort to judicial process. • Reasoning: Minnesota rule re self-help to retake leased premises requires 1) landlord is legally entitled to posses (like when tenant is hold-over or tenant breaches lease clause containing reentry clause), and 2) the landlord’s means of entry are peaceable. Second requirement is founded on the recognition that the potential for violent breach of peace inheres in any situation where a landlord attempts to remove a tenant. There is no cause to sanction such potentially disruptive self-help where adequate and speedy means are provided for removing a tenant peacefully through judicial process. o Court finds that here, only reason actual violence didn’t erupt when Wiley changed locks was b/c Berg was absent (*ehhh, not sure if true) Wiley’s Argument: • Berg’s duty of quiet enjoyment breached Berg’s remedies if actual abandonment; • (1) Stand/Accept • (2) Pursue lease Notes: • Forcible entry and detainer (FED) statutes used most often in landlord-tenant disputes. o Most common type of action, like in Berg, is one brought by landlord seeking to regain possession of leased premises from a tenant. o In order to bring such an action, the landlord must show that he or she has the right to possession of the premises, which in turn typically requires that the lease contain a clause providing that the tenant forfeits the right of possession or that the landlord has the right to reenter and retake possession on the happening of certain conditions (such as nonpayment of rent or holding over after a lease has expired.) • Forcible Entry Detainer Statutes (FED): o (1) Rightful o (2) No Violence

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Reste Realty v. Cooper New Jersey S.Ct. 1969 PDF Here the flaw was serious, she couldn’t run the business, but there was nothing in the lease about the landlord’s duty, which would have made it a better case. It wasn’t really permanent either. However it was likely the landlords fault because they could fix it, it is in the LL’s control and it is in the LL’s interest to fix driveway • The last component was that she must actually leave, which she did, showing that it was bad enough to cause her to be constructively evicted BUT between March and December it flooded and she didn’t leave – plus there was a new purchaser to the building after she had already left Held: LL breached covenant. Reasoning: • Whenever a tenant’s right to vacate leased premises comes into existence because he is deprived of their beneficial enjoyment and use on account of acts chargeable to the landlord, its immaterial whether the right is expressed in terms of breach of covenant of quiet enjoyment, or material failure of consideration, or material breach of an implied warranty against latent defects. • 9 months of waiting for landlord to fix water problem/damage was sufficiently a reasonable amount of time to wait, thus landlord liable. • Also, landlord in better position of knowing what is wrong with structure and is in better position to fix Constructive Eviction Requirement 1. Serious 2. Permanent 3. LL’s fault 4. Tenant has to leave Blackett v. Olanoff

S.Judicial Court of Mass 1977 pg. 666

Holding: • For tenants: The landlords had a right to control the objectionable noise coming from the lounge. Reasoning: • LLs had it w/in their control to correct the condition which caused tenants to vacate their apartments. • The lease for the lounge expressly provided that entertainment in the lounge had to be conducted so that it couldn’t be heard outside the building and wouldn’t disturb the residents of the leased apartments. • The decibel level for the entertainment at the lounge was intolerable for the residential tenants. • Landlords shouldn’t be able to collect rent for residential premises which weren’t reasonable habitable. Notes: • Courts concluded that landlord misfeasance sufficiently serious to cause a reasonable tenant to vacate was a constructive eviction, and excused the tenant from further payment of rent. • One theory for holding a landlord responsible for constructive eviction based on nonfeasance turns on whether the landlord’s inaction violates some specific clause in the tenant’s lease. • Like in Reste Realty Corp., LL’s failure to act was the breach of a specific duty outlined in the lease. • Theory is designed to single out landlord breaches that “deprives the tenant of the enjoyment and occupation of the whole or part of the leased premises.” • The general standard is that a tenant must move out in a reasonable time. • Failure to act was the breach of a specific duty outlined in the lease. • Third Party Beneficiaries o A K says pay C B [now A owes C]

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THE MODEL OF DEPENDENT COVENANTS pg. 677 Contractual aspect of LL tenant law moved away from model of indp covenants to model of dept covenants. Javins v. First National Realty Corp.

Ct Appeals DC Cir. 1970 pg. 685

[F]: Busted sewer line, broken lock, trash, broken window, toilet backed up, falling plaster and bad wiring. The court holds that the landlord is responsible for fixing the problems regardless of if they happen before or after – they are warranting to make it habitable for the entire period of the lease o Latent/patent defects you may not know about when you look at an apartment o Older buildings need to be kept up as well – depends on tenant expectations, plus the cost of the maintenance/change Holding: • LL had duty. A warrant of habitability [during entire time of lease], measured by the standards set out in the Housing Regulations for DC, is implied by operating of law into leases of urban dwelling units covered by those regs and that breach of this warrant gives rise to the usual remedies for breach of K. Reasoning: • It’d be unreasonable to hold, under such circumstances, that the landlord doesn’t impliedly agree that what he’s letting is a house suitable for occupation in its condition at the time. • It’s up to the LL to make the necessary fixings because it is in a better position to do so. • Also, since the appellants continued to pay the same rent, they were entitled to expect that the LL would continue to keep the premises in their beginning condition during the lease term. Notes: • The illegal lease doctrine: if LL leases property that is subject to one or more code violations, such that the premises are rendered unsafe and unsanitary, then the lease is void and of no legal effect. • The doctrine of retaliatory eviction has been widely adopted to protect tenants who engage in protected activity, such as reporting housing code violations or attempting to organize a tenants’ union. • The illegal lease doctrine suffers from the fact that if the lease is illegal, then it’d seem that the tenant isn’t only released from the burdens of the lease but can’t claim the benefit of the lease either (such as the covenant of quiet enjoyment) • Constructive eviction may also be relevant under residential leases since the jurisdiction relies on its housing code to define IWH content. • Remedies for violating IWH: 1. Recession of lease by tenant, allowing tenant to vacate without further obligation to pay rent 2. An order directing specific performance of IWH 3. An action for damages for breach of the IWH 4. If the LL had sued the tenant for unpaid rent, a set-off against rent liability reflecting the LL’s violation of the IWH 5. In some jurisdiction, withholding of all or a portion of the rent until the LL corrects the violation of the IWH or permits the tenant to arrange for repair of the violation • Common-law baseline: we see that risk of casualty losses under a lease is originally placed on tenant. o So, any tort liability for injuries incurred on the premises would lie with the tenant. o LL has general legal obligation to maintain the premises in a manner consistent w/the housing code, and otherwise to insure that it meets minimal standards of public safety and health. o This legally-imposed duty can provide the foundation for a broad LL duty in tort to the tenant and the tenant’s guests, including a duty to protect these persons against assaults by intruders that could’ve been kept at bay with proper security cameras and locks. Theories of LL/Ten Waiver of Warranty: 1. Unconscionability >Determines Illegal Lease 2. Social Issues > Determines Illegal Lease • Could also be preventing crime in addition to public health concerns  Neg. Externalities Damages • Standard measure: FMV of apartment as warranted – FMV as it = damages

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Chicago Bd. Of Realtors v. City of Chicago •

• •

Cit. Ct. 1987 PDF

Chicago ordinance requires security deposits to be held in Illinois banks and requires payment of interest on security deposits; it also allows a tenant to withhold rent in an amount reflecting the cost to him of the landlord’s violating a term in the lease; and allows a tenant to make repairs and subtract the cost of repair from the rent; and forbids landlords from charging a tenant more than $10/month in late fees Posner finds that this ordinance will hurt poor people and will only benefit the affluent; landlords will screen potential tenants more thoroughly and supply less housing. The market for rental housing behaves as economic theory predicts: if price is artificially depressed, or costs of landlords artificially increased, supply falls and many tenants, usually the poorer and the new tenants, are hurt. So Tougher codes = higher rent = lower supply Kramarsky v. Stalh Management NY S.Ct. 1977 PDF



There’s nothing illegal in a LL discriminating against lawyers as a group, or trying to keep out of his building intelligent persons, aware of their rights, who may give him trouble in the future. Sommer v. Kridel NJ S.Ct. 1977 pg. 702

Facts: • March 10, 1972—def entered into lease with plaint. Def couldn’t pay because marriage fell through, discharged from army, and became student. Def wrote LL letter asking to notify at earliest convenience, LL never replied. Someone interested in renting, but LL said already rented out to def. But plaint never stepped foot inside apartment nor showed it to anyone until over a year later. Holding: • LL does have obligation to make reasonable effort to mitigate damages in a situation. • LL should’ve treated apartment as vacant—antiquated real property concepts which servd as the basis for the pre-existing rule shall no longer be controlling where there’s a claim for damages under a residential lease. Reasoning: • Sommer waited 15 months & allowed $4,658.50 in damages accrue b4 attempting to re-let apartment. • LL needlessly increased damages by turning prospective tenant away. Notes: • Riverview Realty Co. v. Perosio NY Super. Ct. 1976 o Ct held LL still have duty to mitigate to all residential leases, whether tenant abandoned apartment in middle of lease term w/no effort to communicate with LL w/”frivolous” defenses. Sommer  v.  Kridel   Lease  #1   Kridel   1) No  possession   2) LL  sued  for  2  full  years   3) T.Ct.  for  tenant  

Lease #2 Sommor 1. Took possession 2. LL sued for a couple months 3. T.Ct. for LL

Remedies  

Old  Property  Rules  

• •

• LL no duty to sell it or do anything Standing  on  the  lease  (paying  K  part)     Tenant  owes   Accepts  breach  and  allows  for  new  tenants    would  owe  no  rent  to  LL   Tenant  Responsible  (AM  Rules)  vs.  LL  Responsible  (British)  

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When is a LL picky? • Short time period • Quality—delicacy • Interactive property (apartment vs. ranch) Filtering Theory: • No matter where build housing, will always start at low end o Apartment2 fam housesingle fam housemansionmansion TRANSFER OF INTERESTS • Under a lease, possession of the property (land, apartment, car) shifts from lessor to lessee. • So, during term of lease, the lessee acts as the general gatekeeper of property and can exercise the in rem rights of exclusion that we associate with possession of property. • General rule is that when LL transfers the reversion, the transferee takes subject to the tenant’s leasehold interest, just as someone acquiring property in which another has a life estate would acquire subject to the life estate. DOCTRINE OF SURRENDER • Doctrine of surrender, like the doctrine of constructive eviction, is pro-tenant. • When court finds that the LL has accepted a surrender, tenant is L for full amount of rent owed up to moment of acceptance, but is off the hook thereafter. • LL and tenant could create a mutual release by implied K: o Would happen if tenant vacated the premises with intention never to return, in effect making an “offer” to surrender leasehold estate, and LL responded by taking action inconsistent with the tenant’s continuing right to the leasehold interest, in effect, “accepting” the surrender of the leasehold estate. • Doc. Surrender o Requires cts characterize both actions of tenant and LL as evidencing a particular state of mind.  Tenant’s state of mind must be to abandon leasehold.  LL’s state of mind must be to “accept’ abandonment and reclaim leasehold interest as an entitlement belonging to the LL. o Under NY law, LL has 3 options when tenant abandons  (1) Do nothing and sue for accrued rent;  (2) Relet as the “agent” of the tenant; or  (3) Accept tenant’s surrender and relet for LL’s benefit. Another lease clause LLs sometimes use to protect them in event tenant defaults: rent acceleration clause: • Purports to make all of the rent owing under the lease immediately due. Fair Housing Act pg. 435-439 • Communications Decency Act: includes a provision granting immunity from liability to online publishers for content of user-generated material appearing on their sites. • Roommates.com could be sued under FHA cause site helped “develop” the content by asking users to create profile based on sex and sexual orientation that was used to match user with others having similar characteristics. • US v. Starrett City Associattes 2d Cir. 1988 o Court held that racial ceiling quotas (even to balance whites, Latinos, and blacks) violated FHS despite owners’ claim that they were being used to maintain integration and prevent “white flight.”

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SERVITUDES Doctrines allowing parties enter into Ks that “run w/the land,” meaning terms & conditions of the agreement are binding not only on original owners but on all future owners of both benefited & burdened parcels.

Servitudes  

Easement  

Covenant  

Hiking  Trail  

Cutting  timber   methods  

Ks that bind successors in ownership are general called “servitudes” 2 principal types: • Easements o Functionally like a K in which an owner agrees to waive his or her right to exclude certain kinds of intrusions by another and give the other a right to use o Appears that easements have an in rem effect, since third parties may not interfere with the performance of rights under an easement • Covenants o K where owner agrees to abide by certain restrictions on use of his land for benefit of one or more others o Even when run with the land, less often described as type of property; rather, usually spoken of as “promises respecting the use of land.” o Generally don’t give rise to any rights against third parties, so more accurately thought to be in personam.

EASEMENTS Kind of a permanent right. (1) Easements in Implication [“Quasi Easements”] • Even if not in deed • Easement goes to back owner even if doesn’t ask for it (2) Easements by Necessity • Arguing that gets an easement by necessity • Possible argument EX: Schwab v. Timmons [Wisconsin, bluffs, cliffs, public and private roads]

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Easments in Gross PDF • Easements appurtenant: easements attached to the land that they serve. o EX: Ann’s driveway across Bart’s property—the driveway goes right up to edge of Ann’s lot (the “dormant tenant” [Kristy]). Bart’s property, across which the easement runs, is called the “servient tenement” [neighbor].  EX: Kristy’s well/neighbor • Easements in gross: not attached to any other particular piece of land o Recreational easements are frequently easements in gross o EX: Hunters might have a hunting easement on someone else’s farm; they don’t own any property to which the easement is attached. They may not own any property at all.  No dominant tenant • Issues of transferability. o Easements appurtenant are normally transferred along with the dominant tenement; the easement will be “implied” even if it’s not explicitly granted in the deed. Creation of Easements pg. 989 • Although easements are regarded as property rights, at common law they couldn’t be created by the quaint ceremony of livery of seisin, only by grant. • To create property by grant, including an easement, the grantor must deliver to grantee a deed to prop. • Easement could be created by grant, of the direct A-to-B variety. o Easement by Reservation:  If A granted Black to B, A could in the deed granting Black reserve himself an easement over Black, perhaps to access other land retained by grantor. o No granting a third party an easement.  EX: If A granted Black to B, A couldn’t in the deed to B reserve an easement in Black running to C. Holbrook v. Taylor

KY S.Ct. 1976 pg. 997

Facts: 1942 appellants purchased the subject property. In 1944, they gave permission for a haul road to be cut for the purpose of moving coal from a newly opened mine. No evidence of any probative value which would indicate that the use of the haul road during that period or time was either adverse, continuous, or uninterrupted. Holding: • (1) Use of this easement wasn’t established by prescription.  like Adverse Possession • (2) License to use the subject roadway may not be recovered—right to the use of roadway had been established bye estoppel. Reasoning: • A right to the use of a roadway over the lands of another may be established by estoppel. Notes: • AP involves the transfer of full possessory rights of ownership from the original true owner (TO) to the adverse possessor (AP), after the statute of limitations runs. • An easement by proscription involves the transfer of an easement over the land of the TO to the adverse user (AU), after the statute of limitations runs. • Under these statutes, the landlocked owner can force the servient owner(s) to convey an easement, but must pay just compensation (fair market value) for the rights so obtained. TERMINATION OF EASEMENTS pg. 1020 1. Most approved method is by deed, releasing or extinguishing easement. 2. As a matter of law when the dominant and servient tract come under common [could buy entire property back and takes possession of easement] ownership 3. Adverse Possession or Reverse Prescription i. If owner of servient tract blocks easement, and the owner of the dominant tract fails to object before statute of limitations runs, then easement will be extinguished 4. If prolonged nonuse makes appear that it’s been abandoned.

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MISUSE OF EASEMENTS Penn Bowling Recreation Center, Inc. v. Hot Shoppes, Inc. Ct. Appeals DC Cir. 1949 pg. 1021 [F]: Penn Bowling acquired dominant tenement with easement through Hot Shoppes property for ingress and egress. Hot Shoppes erected barrier claiming that Penn Bowling doesn’t have right to use easement because it was used improperly for parking and loading and unloading supplies for both dominant tenement and another property for which easement was not created. Court find that the easement isn’t forfeited for misuse and that Penn Bowling can continue to use the easement so long as it separates its use so that the easement is only used by the dominant tenement and not by their second property. • Appellant’s parking of vehicles on right of way at a time when appellee needs its use would constitute an unlawful interference with the latter’s right. • Appellant may not use easement to serve both the dominant and non-dominant property, even though the area thereof is less than the original area of the dominant tenement. Reasoning: • The right to an easement isn’t lost by using it in an unauthorized manner or to an unauthorized extent, unless it’s impossible to sever the increased burden so as to preserve to the owner of the dominant tenement that to which he’s entitled, and impose on the servient tenement only that burden which was originally imposed upon it. • Appellant is entitled to a reasonable use and enjoyment of the easement for purposes of ingress and egress—must determine what is reasonable. Bright-Lined Rule: • Can only use easement for dominant property for which use was designed for Regular Easements • Positive: one party uses property of another • Attached to another property (Appurtment)

Weird • Negative: not using your property, but telling you how to use someone else’s property • “In gross”—not attached to another property o Problem with easement in gross: comes in transfer

Problems w/weird easements • What is it? • Who owns it? o FIX: record or no transfers

Fontainebleau Hotel Corp. v. Forty-Five Twenty-Five, Inc. FL. Ct. Appeals 3d District 1959 pg. 1013 [R]: P, Eden Roc Hotel, sought injunction against D to prevent D from building 8-story tower which would block sunlight over the Eden Roc’s pool and sunbathing area. P claims that he has an implied easement (by prescription) of light and air for more than 20 years. [H]: While there is a rule that one must use his prop so as not to injure lawful rights of another, there is no legal right to access of light and air. If P wants to change this rule, must amend the zoning ordinance. Reasoning: • One must use his property so as to not injure the lawful rights of another. • Can’t deprive adjoining landowner of any right of enjoyment of his property which is recognized and protected by law, and so long as his use isn’t such a one as the law will pronounce a nuisance. • Court doesn’t want to change the universal rule—if the public wants to, they can by amendment. • No statutory basis for the right sought to be enforced by plaintiff exists. Notes: • The court said that it doesn’t matter whether the addition to the Fontainebleau may have been constructed partly out of spite. [But, pure spite can sometimes lead to greater intervention.] o Particularly where one landowner erects a fence solely to block light and air from a neighbor, many courts have been willing to find a nuisance and issue an injunction. o Mixed motives will usually lead to no liability.

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COVENANTS • Closely related to easements • Covenants or promises respecting use of land • Less “property like” than easements • Lie closer to K end of property-K spectrum • Impose no duties of forbearance on third parties • Can’t acquire a covenant by prescription, implication, necessity, or estoppel. Covenants   • Right  to  insist  on  the  use  or  nonuse  of  land   • Prescribe  elaborate  system  of  governance  rules   • Either  affirmative  or  negative  

• Statute of Fraud applies • All covenants must be in writing • Function like “add ons” to basic package of rights and liabilities that landowners normally have, specific modifications that originate in written contractual undertakings that relate to particular parcels of land Easements   • Right to go onto land • Repealing servient owner’s right to exclude • Nearly always affirmative

2 Theories Allowing Promises Respecting Use of Land to Run With Land: 1. Asks whether promise is enforceable against successors as an “equitable servitude” 2. Asks whether promise is enforceable against successors as a “real covenant” Determining which theory to use: nature of relief plaintiff seeks • If injunction sought, matter lies in equity, and courts generally apply equitable servitude theory • If damages matter falls on common-law side of old division; ct generally apply real covenant theory. Equitable servitudes and real covenants are same thing—promises respecting use of land • In deciding whether these promises run with the land is determined by theory for enforcing the promise against successors, not by any thing intrinsic in nature of promise itself. Servitudes  of  the  Civil  Law   Limits Common  Law   • Intent:   language  “heirs   &  assigns”  

1. Notice 2. Negotiability 3. Notice

Pos. Easement A does X on B’s property.

Neg. Easement/ Covenants A doesn’t do Y on B’s property for A’s benefit

Limits on easement in gross—doesn’t go to everyone after first.

EX: #2e on PDF—use of premises: commercial vehicles can’t park…no clothesline, etc.

EX: driveway • No limits/ problems • Who do I go to fix it?

EX: no antenna • Notice problems: o What are the limits? o Value to some, maybe not to all

Positive Covenants B does Z on B’s property for A”s benefit EX: will cut hedge • Must do more to make stick with the land

  Question  for  all  three:  Do  they  survive  change  of  ownership  or  do  they  not?     Limitations Reasons  for  successive  running  with  land  covenants       Same  problem  will  be  there  later  expectations   • Notice to burdened party buying property • Negotiability • Value (to land) o Not personal deals Bargaining away property—buying into with these limits. Can buy an easement but can’t get one by prescription

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REQUIREMENTS FOR COVENANTS TO RUN • Major issue with covenants is whether the benefits and burdens of the deal between original parties will extend to successors of those parties—whether the benefits and burdens “run with the land.” REAL COVENANT THEORY For the burden of a promise to run, one would have to establish: 1. Intent for the burden to run. a. EX: If A covenants with B, who is allergic to peanuts, that A will not eat peanuts in the backyard, the benefit probably won’t run to B’s successor unless the context indicates otherwise (for ex, B is running an allergy clinic and sells to another allergy clinic) 2. Horizontal privity lease or sale *** Notice to burden party a. EX: Two neighbors sign agreement where they both agree to restrict their use of their parcels to residential use and they record. b. Because they’re not in a grantor-grantee relationship, there’s no horizontal privity and so traditionally the burden doesn’t run. i. Under the new Restatement, which doesn’t require horizontal privity, burden would run. 3. Vertical privity. Relationship between one owner of property & successive owner of property. Arent/subleaseZ [A has obligations on property] a. For burden to run at law, successor in interest to the person who covenanted for the burden must hold the entire durational interest held by the covenantor at the time she made covenant. 4. Touch and concern. a. The covenant must touch and concern the land. b. No court has yet followed this proposed approach clearly. For the benefit of a promise to run, few requirements: 1. Intent for benefit to run 2. Vertical privity. a. For the benefit to run, the successor need only succeed to some estate, not necessarily an estate of the same duration as the covenantor’s (so less stringent requirement than in the case of the vertical privity required for burden to run) 3. Touch and concern. Concern  for  Limits  

• • • •

Notice   Negotiability   Value   Negotiability  &  Value   RELATED  

Remedy-­‐-­‐$  common  law   deals  with  limits   • Horizontal privity • Vertical privity (Sucessory privity) • Touch & Concern

Remedy  in  Equity   Injunction?   Spec.  Perform?   • Notice (real & recorded) • Sufficient interest to be or be sued? • Value package?

ALI  

• Notice (real & recorded) • Standing? • Is it reasonable?

Don’t  need  horizontal  privity  unless  successor  knows.   EQUITABLE SERVITUDE THEORY For the burden of a promise to run at equity, there must be: 1. Intent. 2. Notice. a. This characteristic of equity. b. If covenant is in deed given to the grantee, there’s no problem enforcing it against the grantee. c. If not in the deed, then actual or inquiry notice must be present. d. Inquiry notice is given by facts that’d make a reasonable person inquire further & find covenant. 3. Touch and concern. For the benefit of a promise to run at equity, there must be: 1. Intent. 2. Touch and concern.

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Eagle Enterprises, Inc. v. Gross NY Ct. Appeals 1976 pg. 1042 •



[F]: Realty Co. conveyed property to P1 with a covenant in the deed that they would provide water for several months of the year for a fee. Realty Co was succeeded by EE and P1 was succeeded by P2. P2 got a well and no longer needed water from EE and did not pay fee. EE sued. [H]: The provision does not run with the land because it does not “touch and concern” the land. P2 does not need the water and thus the covenant provided no benefit to the land for P2, unlike P1. ● Since the covenant was not in a lien (a security interest granted to secure payment), money damages cases had to be resolved in common law court, not equity court. ● Changed Circumstances Doctrine: Covenant became obsolete when the circumstances changed. Therefore, covenant was terminated. ● It is advisable to structure a covenant as a lien so there can be an equitable claim against an asset to collect a just debt, instead of against an individual.

Notes: Personal Property Servitudes: • Running of servitudes is more an issue in land cases b/c it lasts much longer than typical personal prop • Unlike land, where servitudes address spillovers that affect identifiable neighbors, personal property servitudes often restrict use or the terms of resale of an item of personal property. • Mostly the law has regulated these in terms of antitrust. o Should holders of IP rights be able to contract for servitudes that will run with some property, tangible or intangible? o An alternative to such servitudes would be to license the IP rights themselves and include the restrictions in the terms of the license. EQUITABLE SERVITUDES pg. 1026Only get equity damages if remedy isn’t good enough • English common law recognized only one circumstance when covenants regarding land use would run to successors in interest: When either LL or tenant transferred his interest in property subject to a lease. • The common law courts refused to enforce covenants between neighboring landowners as interests running with the land. • Proved to be a major inconvenience. Hence, Court of Equity. • Judge is the trier of fact Tulk v. Moxhay

England Court of Chancery 1848 pg. 1026

[F]: Invented the equitable servitude test. T owned Leicester Square and surrounding houses. T sold the square to E by a deed that promised that E and his successors would maintain the square and let residents use it. The square was eventually conveyed to M, whose deed said nothing about the promise, although he knew about it. M wanted to build on the square. T sued for an injunction and won. • Tulk UpkeepElmsXYdef Moxhay • Although covenants usually only run when the promise is in the lease, M had notice of the promise. • Thus there is no requirement for privity, which then encourages negotiability about who the benefits and burdens apply to, based on people’s interest in the property.

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REAL COVENANTS American invention. Covenant attached to fee simple property that, under certain circumstances analogous to the LL-Tenant doctrine of running covenants, will bind successors in an action at law. Neponsit Property Owners’ Association, Inc. v. Emigrant Industrial Savings Bank NY Ct. Ap. 1938 pg. 1031 [F]: P had a homeowner’s fee covenant in a lien on the prop conveyed to D. The fee was to be used for general upkeep of the development. D refused to pay the fee arguing that it did not touch or concern his land. P sued. [H]: judgment for P. This created the Real Covenant test. All requirements of the test were met. • Promise to pay certain fees can no be considered to “touch and concern” the land • This case is the reason why homeowner’s fees are structured as liens today, so they issues can be resolved in equity courts. • It merges the common law courts and equity courts. [Reasons]: • Real Covenant Test: 1. Must appear that grantor and grantee intended that the covenant should run with the land; 2. Must appear that the covenant is one “touching” or “concerning” the land with which it runs; 3. Must appear that there’s “privity of estate” between the promise or party claiming the benefit of the covenant and the right to enforce it, and the promisor or party who rests under the burden of the covenant.” • Trick to get around: put alien on the prop—claim against property to enforce debt (equitable remedy) Rule: • A covenant must touch or concern the land. Privity exists in substance if not in form for an association that is comprised of property owners to advance their common interests. Notes: • Covenants in leases run to successors of the original LL or tenant if: o (1) The LL and Tenant intend that they will run; and o (2) The covenant is one that “touches and concerns” the land o This court adds (3) That there be “privity of estate” between the party claiming the benefit of the covenant and the paty subject to the burden of the covenant. THE THIRD RESTATEMENT pg. 1040 ● Advocates abolishing the traditional property law requirements for the running of servitudes, such as the touch and concern doctrine and the privity requirements. ● The restatement makes enforceability the default, subject to limitations based on requirements of writing or violation of public policy. ● Provides for a baseline for the creation of servitudes that is grounded in contract and party intent: ● A servitude is created (1) If the owner of the property to be burdened (a) enters into a contract or makes a conveyance intended to create a servitude that complies with Statute of Frauds. ● A servitude is valid unless it is illegal or unconstitutional or violates public policy: ○ Servitude that is arbitrary, capricious, or spiteful ○ Servitude that burdens a constitutional right ○ Servitude that imposes an unreasonable restraint on alienation ○ Servitude that imposes an unreasonable restraint on trade or competition ○ Servitude that is unconscionable ● No court had adopted this approach

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CONSERVATION EASEMENTS pg. 1050 [more covenant, not easement] • Servitudes that restrict the future development of land. • Most common type of restriction prohibits subdivision and commercial development but permits existing agricultural and residential uses. • Ranges from prohibitions on cutting timber to requiring the preservation of historic facades. • Negative Covenants In Gross o Negative: prohibit the servient landowner from engaging in certain kinds of activities o Covenants: don’t fit any of the 4 categories of negative easements o In Gross: power to enforce the restriction is typically given not to another landowner but to a unit of local government or a charitable land trust like the Nature Conservancy. o Probably wouldn’t run with the land at common law. o Couldn’t be enforced as a real covenant, since the privity requirements wouldn’t be met • Perpetual conservation easement designed to give “peace-of-mind to current landowners worried about the future of a beloved property, whether forest or ranch, stretch of river or family farm.” • Huge tax benefits to donating a conversation easement to local unit of gov or a charitable land trust. o Donation must provide that land is being restricted for one of several general purposes: outdoor recreation, wildlife habitation, scenic enjoyment, agricultural use, or historical importance. • Conservation easements as potentially powerful tool in combating new commercial development. o Conservation easements are the product of a voluntary agreement between a landowner and a unit of local government or a land trust, and encounter little or no opposition. • Public Policy: Some traditional environmentalists have objected to conservation easements on the ground that they deprive the public of any input into the development of conservation policy. o Since public is paying for the conservation, both directly through tax subsidies and indirectly through foregone development opportunities, public should have some say into the process. o Instead, conservation easements are created through private negotiations between landowners and land trusts, typically with no notice to the public even after they’ve been created. Evanglical Lutheran Church of the Ascension, of Snyder, NY v. Sahlem Court Appeals NY 1930 PDF [F]: Church in a neighborhood w/ single-family home restriction; church wants to do build more but a covenant restricted them; They received consent from all neighbors except one. They went against the covenant and started building anyways, then eventually used the courts to try to get holdout neighbors to comply. [I]: Termination of a covenant [H]: The court said there was no good reason for the church to go against covenant. Restrictive covenants will be enforced by preventive remedies while the violation is still in prospect, unless the attitude of the complaining owner in standing on his covenant is unconscionable or oppressive.



Eminent Domain: public government wanting to put in a street is okay Liability Rule vs. Property Rule Bolotin v. Rindge

District Court Appeal, 2d District, CA 1964 pg. 1054

[F]: Covenant for single-family homes; P wants to build an office; restrictions end in 1970. [I]: Doctrine of Changed Circumstances [H]: Restriction is still enforceable b/c a benefit still accrues to other neighbors; circumstances haven’t changed so much as to burden party w/o benefit to adjoining owners; Property rule for neighbors Rule: Covenants are unenforceable under “changed conditions” doctrine when: 1) Purpose of restrictions are obsolete. 2) Enforcement of the covenant no longer benefits adjoining owners.

• Homeowner value trumps other like Jacque case. Reasoning: • Court will declare restrictions unenforceable if enforcing restrictions would be inequitable and oppressive and would harass plaint without benefiting adjoining owners. Wolff v. Fallon 1955. o ^^^^ FALLON TEST

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• •



• •

Marra v. Aetna Construction Co. RULE 1940: o A building restriction in the nature of a servitude won’t be enforced where changed conditions in the neighborhood have rendered the purpose of the restrictions obsolete. BUT, if the original purpose of the covenant can still be realized, it’ll be enforced even though the unrestricted use of the property would be more profitable to its owner. Present case, no finding that the purposes of the restrictions on have become obsolete, or that the enforcement of the restrictions on the plaints’ property will no longer benefit defs. Purpose of the deed restrictions was to preserve tract as a fine residential area by excluding offensive activities to residents creating noise, traffic, congestions, etc. which would lesson comfort and enjoyment of residents. o Office building may increase market values even though it offended senses of residents and destroyed te physical conditions which made their neighborhood desirable for them. Miles v. Clark 1919: o Even if land becomes more valuable doesn’t entitle defs to be relieved of restrictions they’ve created. o Just because the property becomes more valuable for businesses is immaterial—Courts aren’t controlled by money value, but may protect the home. (a) Unclean Hands: o Can’t tell me I can’t do something if you’re doing it (b) Expectation

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COMMON-INTEREST COMMUNITIES pg. 743 • Alternative forms of entity property where multiple persons enjoy individual possessory interests while common areas subject to specialized management, namely condos, cooperatives, and other commoninterest communities like gated private residential subdivisions. • Differ from leases: o Persons who obtain individual possessory rights in these complexes have ownership interests that can be described as equivalence to a fee simple. o These property forms aren’t’ used as financing or risk spreading devices like leases. o Make sense only as a mechanism for separating management functions of common areas from individual possessory units—only encounter where this specialization of functions is desired. • Shared feature of all common interest communities: o Multiple persons have an undivided interest in certain common assets. 3 Types: • Cooperative Apartment Building: Oldest of these alternative property forms o No indv mortgages o Cooperatives are corporations.—Corporation holds fee simple title to entire complex. o Individual units and common facilities owned by corp. o Indvs must purchase stock in corporation to be able to live there—must have great credit score because essentially, shareholders are paying the mortgage that the corp took out to pay.  If miss a payment, the burden is on the rest of the shareholders.  Some banks lend money to individuals secured by their shares in corporation • Condominiums: much newer form of property o Differ from cooperatives:  Individual units owned within walls by individuals in fee simple (instead of being leased like with cooperative)  Common areas owned by unit owners as tenants in common.  Regulated by master deed or declaration binding on all unit owners.  Master deed calls for HOA managing common facilities and charges assessments to unit owners to pay for upkeep, operating expenses, taxes associated with common facilities. Association Subdivision: o Stand alone units (usually single family homes) that enjoy certain facilities in common w/others o Can be created using servitudes running with land. o Early forms were private streets, squares, or gardens accessible only by surrounding homeowners paying for upkeep (like Tulk & Neponsit) o Commonly built around golf courses, lakes, marinas, but one increasingly encounters gated residential communities where streets and sidewalks owned in common and access is limited by private security guards. Problems in terms of management and control of facilities shared by indv unit holders: • Leases seen as dictatorship. o Landlord rules as master. • Cooperatives, Condominiums, and common-interest communities represent like a democracy o Owners must determine some way to organize themselves collectively to manage common areas and shared facilities. o Basic organizing document and an ongoing elected governing body. o Kind of “private government.” Why own vs. rent? • Control • Investment • Conditioned response/brainwashing •

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Notes: pg. 748 • Collective governance housing is a hassle—HOA • Common interest communities impose costs above and beyond rental communities • Preference for common interest communities is attributable to tax breaks? o After the Tax Reform Act, the benefits of owning become relatively greater. • LLs can deduct taxes and interest payments too (as business expenses) and can deduct depreciation, something owners can’t do. o Tax policies always changing. o Presumably, persons who purchase freestanding homes in a gated community obtain no more tax benefits than do persons who purchase freestanding homes in an ordinary subdivision. • Many people have unrealistic expectations that housing prices would always rise faster than inflation. o This belief encouraged many people who otherwise would’ve preferred to rent, to buy. • Demand driven? Or, supply driven? o Local govs faced with budget restraints prefer association subdivision to ordinary subdivisions because more local expenditures—new school buildings, streets, parks—can be off-loaded to developers who agree to pay for these things as part of the price of being allowed to develop. • Tax benefits, housing bubbles, local gov budget constraints as explanations for why persons may prefer to own rather than rent personal living space? o Discretionary control over how to remodel CONDOS VS. COOPS pg. 750 • Individual ownership of living units combined with collective governance of common facilities. • Condos command a higher price than cooperative apartments for otherwise similar units. 2 factors accounting for greater condo appeal: 1. Financing o Financing for coops were limited to each shareholder’s portion of unpaid balance on blanket mortgage. o Today, purchasers can obtain separate financing for their unit, secured by their shares in the association. 2. All residents bear a portion of the risk of default by any single shareholder means that cooperative boards typically impose severe financial restrictions on who can buy into a coop. o Potential purchasers had to show they had lots of money, limiting number of potential purchasers, driving down price. JUDICIAL REVIEW OF GOVERNANCE DISPUTES • LL ‘s dictatorship for facilities like high-rise apartments or shopping centers is constrained by market forces and by the specific promises she makes in leases with tenants. o Subject to these constraints, LL can make decisions about management of the common areas and shared facilities unilaterally. • When multi-unit facilities are organized as coops or condos, governance questions are more difficult o Unit owners are collectively the body responsible for management of common areas & shared facilities. o 2 principal mechanisms used in coops and condos to solve ongoing governance problems 1. Contractual • Articles of incorporation or the master deed establishing coop or condo will contain a # of rules and regs that run with the ownership of the indv interests, and can be said to bind any person who acquires an ownership interest in one of the indv units 2. Establish Board of Directors • Or other HOA or governing body charged with the authority to establish rules and regs and bring enforcement actions against indv unit owners.

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Hidden Harbour Estates, Inc. v. Norman Ct. App. Florida, 4th Dist. 1975 PDF Issue over whether the board of directors could adopt a rule prohibiting use of alcoholic beverages in certain common areas of the condo. [H]: Court finds that this rule is ok. Notes that the association could not adopt arbitrary and capricious rules bearing no relationship to health, happiness, and enjoyment of the life of various owners. The test for this is reasonableness. The court finds that this rule is reasonable, and that a lot of other condos (and government) have similar rules- so they should be on notice that this may be expected • Court rejects trial courts reasoning that reasonableness is something that would halt a nuisance, and notes that it is not necessary that conduct be so offensive as to constitute a nuisance to justify regulation • Reasonable is something within the range of things an owner was expecting when they moved in. • Reasonable = halting a nuisance Justice Court Mutual Housing Cooperative, Inc. v. Sandow S.Ct. Queens County NY 1966 [F]: Sandow moves into coop with agreement that her kids could practice their instruments, and for first 6 years everyones happy. Coop then adopts regulations limiting the amount of hours they could practice to 1 and ½ hour a day b/w hours of 10 am and 8 pm. [H]: Test is whether the rule is reasonable - Court finds that it’s arbitrary and capricious; attempts to regulate the occupants mode of living rather than their use of the land. 1 and ½ hour rule arbitrary and unreasonable (so each member of family played 1.5 hours at different parts of day (total of 6 hours) but the kids cant play 6 hours?); 8 pm cut-off also arbitrary and unreasonable (occupants not allowed to have parties and play music?) • Again: what do owners expect to have rules about about when they move in? • Twin Elm Management Corp. v. Banks: Playing piano for 12 hours a day wasn’t unreasonable as to constitute a nuisance and that mere annoyance to other tenants in and of itself didn’t create a nuisance or make the tenancy of the occupant undesirable. o But flute and piano are VERY VERY different • This regulation is different from those prohibiting animals or machines (electronic equipment, etc) since it attempts to regulate the mode of living of the occupants of the building. • But whether the music is the most subline noise that has ever penetrated into the ear isn’t for the judiciary to determine.

Nahrstedt v. Lakeside Villege Condominim Association, Inc. CA S.Ct. 1994 pg. 752 [F]: Homeowner sued to prevent enforcement of a restriction against keeping cats, dogs, and other animals in the condo development. Owner asserted that the restriction was unreasonable as applied to her because her cats were noiseless and created no nuisance. [H]: Reasonableness or unreasonableness of a condo use restriction is to be determined not by reference to facts of the objecting homeowner, but by reference to common interest development as a whole • As a matter of law, the recorded pet restriction isn’t arbitrary but is rationally related to health, sanitation and noise concerns. • Two categories of use restrictions: those set forth in declaration or master deed of the condo; and rules promulgated by governing board. o Rules promulgated by governing board are subject to ‘reasonableness test’ o Rules in the deed are presumed reasonable and will be enforced uniformly unless they are arbitrary, or impose burdens on the use of land it affects that substantially outweigh the restriction’s benefits to the development’s residents, or violate some constitutional right, or violates public policy.

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Why presumption of reasonableness? o Protects expectations of condo owners o Encourages development of shared ownership housing by encouraging stability. o Reduces litigation costs on owners Arabian DISSENT – major benefits of pet ownership; burden of pet restriction greatly outweighs any negligible benefit (especially if animal kept in condo & bother no-one); tied to importance of owning home & freedom to do what wants; statute doesn’t specify a presumption of validity for restrictions in master deed • Hidden Harbour Estates v. Basso Fla. Dist. Ct. App. 1981 o Florida court distinguished 2 categories of use restrictions:  (1) Use restrictions set forth in declaration or master deed of condo project itself, and • [should be subject to a “reasonableness” test]  (2) Rules promulgated by the governing board of the condo owners association or the board’s interpretation of a rule • [should NOT be evaluated under a “reasonableness” standard. Instead, these restrictions are clothed with a very strong presumption of validity and should be upheld even if they exhibit some degree of unreasonableness] • When courts accord a presumption of validity to all such recorded use restrictions and measure them against deferential standards of equitable servitude law, it discourages lawsuits by owners of individual units seeking personal exceptions from the restrictions. • Social fabric is best preserved if courts uphold and enforce solemn written instruments that embody the expectations of the parties rather than treat them as “worthless paper” as the dissent would. Notes: If in CC&R, give up presumption of reasonableness. If it’s a rule change, then it’s okay. Bernardo Villas Management Corp. v. Black Cal. Ct. App. 1987 • Held a restriction prohibiting residents from keeping any truck, camper, trailer, boat or other form of recreational vehicle in a carport couldn’t be applied to prevent a unit owner from keeping in the carport a clean new pickup truck with a camper shell that he used for personal transportation. Portola Hills Community Assn. v. James Cal. Ct. App. 1992 • Refused to enforce planned community’s restriction banning satellite dishes against a homeowner who had installed a satellite dish in his backyard that wasn’t visible to other project residents or the public. •

Standards of Review 1. CC&Rs/Initial Deeds [highest standard of review] 2. Amended & Recorded CC&Rs [next highest standard of review] 3. Association (HOA/POA) Rule Changes [lowest standard of review]

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ANTIDISCRIMINATION LAWS pg.423 Plessy v. Ferguson US S.Ct. 1896 • Held that the Equal Protection Clause wasn’t violated if a state required common carriers to fulfill the antidiscrimination requirement by providing “separate but equal” facilities for persons of different races. Brown v. Board of Education US S.Ct. 1954 • Overruled Plessy—separate but equal was dismantled in the realm of public accommodations, most decisively under Title II of the Civil Rights Act of 1964 There’s no legal principle that prohibits a homeowner or tenant from announcing that persons of a particular race or other protected category will be systematically excluded from her home or apartment. Shelley v. Kraemer US S.Ct. 1948 pg. 424 [F]: Blacks were sold property, but neighboring landowners sued to enforce a covenant attached to the property from being occupied by “any person not of the Caucasian race.” Also, there were interlocking covenants, which attempted to monopolize a whole area. State court had initially upheld the covenants because they were private and thus the 14th did not apply. [I]: How drop racial covenants without fringing on ability of private actors to do what they want? [H]: Overruled. Judicial enforcement of the covenant was state action and would violate the 14th Amendment. Unenforceable. Provisions violated Constitution. • Further, the blacks were not in horizontal privity with the neighboring landowners, and thus did not have proper notice of the covenant, and thus not enforceable. [Reasons]: The difference between judicial enforcement and nonenforcement of the restrictive covenants is the difference to petitioners between being denied rights of property available to other members of the community and being accorded full enjoyment of those rights on an equal footing. • “In granting judicial enforcement of the restrictive agreements, the States have denied petitioners the equal protection of the laws and that, therefore, the action of the state courts can’t stand.” Notes: • State action doctrine o A mere “voluntary agreement” among neighbors not to sell to blacks wouldn’t be state action, and is a permissible incidence of owner sovereignty.  But, if someone calls on the court powers to enforce the agreement, any resulting judicial judgment is state action, and is subject to the limitations of the Constitution, including the EPC. • One related but distinct approach to the specter of racially restrictive covenants is to invalidate them on grounds of public policy. • The S.Ct. held, immediately after the decision in Shelley, that judicial enforcement of racial covenants in Washing, D.C. would violate public policy. Hurd v. Hodge US S.Ct. 1948

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USE OF TRESPASS ACTIONS TO EXCLUDE PERSONS BASED ON RACE Does Shelley require that any state enforcement of private property rights is “state action” subject to constitutional limitations? • Ex. civil rights sit-ins at lunch counters, white owners would call police to have demonstrators arrested. o If state where segregation required by law, SCOTUS held prosecutions for trespass were “state action” regardless of whether owners reason for calling police was motivated by prejudice or simply to comply with the law. o Where no state statute requiring segregation? Bell v. MD (1964). US S.Ct. ducked issue b.c before deciding, Maryland enacted statute making segregation in public accommodations illegal. Some justices argued that trespass law necessary to maintain social order (so doesn’t matter if prosecution based on racism); other justices argued that trespass convictions based on race violate 14th amendment NOT b/c “state action” but b/c Framers intended to constitutionalize equal access to public accommodations.  Civil Rights Act of 1864 resolved this issue: prohibited racial discrimination in any public accommodation affected by interstate commerce. o But what about racially-based trespass claims in private property? Does judicial enforcement of these claims constitute “state action”…seems like no, discriminatory exclusion on private property allowed. Charlotte Park and Recreation Commission v. Barringer NC S.Ct. 1955 PDF [F]: B conveyed properties to P with the clause that the park was not to be used by back people, and if so, it was to be reverted back to B. White only golf course that was created by people (including the city) to give away plots of land with the reverter that it had to be a white only golf course. The Barringer deed is the only one left with a reverter so when it became an integrated golf course it reverted to Barringer. [H]: Private covenant is valid and not subject to public enforcement. (No plus factor). [Reasons]: ○ Barringers get the land back and now have a bargaining chip against the golf course. ○ Developers didn’t use reversionary clauses to continue discrimination due to enforcement costs. ○ Ruling didn’t have a large impact on segregation. ○ Reverter clauses give an out to people who have very strong, maybe objectionable, preferences—the remedy is hard b/c you have to take it ALL back.

• • • •

Nuisance No body is a nuisance Must do something Goes through air (dust, vibrations, noise, smell) Unreasonable use of own property

Trespass [exclusion strategy] Nuisnace [governance strategy]

Cause of Action Invasion of another Subnormal use of our property

Trespass • Stepping/interfering on someone else’s property

Transactional Costs Low #s, clear rights LOW COST High #s, not all same nuisance level EX: frat noise HIGHER COSTS

Judge Involvement Yes/No Did cross line or not? More discussion & discretion

Deafening  -----[unreasonable]-------- Ordinance Usage  ------[reasonable]------- Silence POLICY: 1. Less litigation 2. Expectations 3. Higher value in ordinary usage 4. Flexibility (if usage changes, standard changes too) Trespass Administrative Costs More facts to present case but fewer case law Parties’ Expectations: plaint and def both expected usage (for Middlesex)

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Nuisance Higher cause more cases to make decision

Middlesex Company v. Dennis McCue Mass S.Ct. 1889 PDF Facts: • P (a mill corporation) requests an injunction to stop D from filling their millpond. D owns land up the hill, uses it for cultivation purposes (and manures it), but it washes into P’s pond. P claims interfering with P’s right of flowage. Def didn’t put up fence or wall to prevent filling of plaint’s pond or to prevent raising of his own land, which plaint had right to flow, or to bank against further flowage. Plaint argues: • Def changed character of soil by cultivating it and caused filling up of mill pond Issue: • Could def use the land as he did despite the harmful effects on plaint’s land? Holding: • Def’s use of land was legally made and def could thus cultivate as he needed. • If def was found liable, then his right to surface drainage would be limited—a man has a right to cultivate his land in the usual and reasonable way. • Plaintiff can build his own wall if def’s actions interfere with his property. Reasoning: • Fact that damage is foreseeable or even intended isn’t decisive apart from statute. • Liability depends on nature of act, kind and degree of harm done, considered in light of expediency and usage. • As a nuisance, plaint should build wall—low transaction costs o But looks more like a trespass cause of the water spillover o Court looks at it as a nuisance instead:  Def’s lack of intentional actions may make it a nuisance  Def’s use of land wasn’t out of the ordinary. Sher v. Leiderman Cal. App. 1986 PDF Facts: • Plaints’ home designed and built to take advantage of winter sun for heat and light. Plaints paid for tree work. Plaints’ house cast in shadow between 10am-2pm during winter making it dark and dismal • Plaint sue on private nuisance, public nuisance, and NIED Issue: • Does an owner of a residence designed to make use of solar energy state a cause of action for private nuisance when trees on his neighbor’s property interfere with his solar access? Holding: • CA nuisance law doesn’t provide remedy for blockage of sun and court declines to extend existing law. • Private Nuisance: o Landowner has no easement for light and air over adjoining land, in absence of express grant or covenant. o Blockage of light to neighbor’s property, except in cases of malice as overriding motive, doesn’t constitute actionable nuisance, regardless of impact on injured party’s property or person. Only Wash S.Ct. has departed from this. o General Rule: In determining whether any interference with the use and enjoyment of land is unreasonable, a court must balance the gravity of the harm against the utility of the conduct. • Solar Shade Control Act wasn’t intended to apply to provide protection from shading to exclusively passive solar homes. • NIED: o In the absence of any unlawful act or any special relationship creating a duty, no cause of action for NIED exists here.

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Policy: • Older law would say: no, not a nuisance o Should shade be a nuisance in modern law though? • Plaint couldn’t gotten an easement for the view in the first place. • Should nuisance law change? • Remedy?? EX: lose nuisance suit, but still have the right to cut down the trees [like Calabraisa Rule 4] o California has no prescriptive easement. View Wars & Problems [trees growing on hill—can’t see San Fran bay bridge] • #s issue/Assembly • Opportunity for hold out • Benefits of trees to hill • Free rider issues • SELF-HELP implications/issues o Legal community doesn’t think self-help is a good idea o If SH being used and being abused, is there something wrong with the SH rules? What can be done? • Turn into a public view by regulations Suggestions/EX: • Drachonian—no trees • No trees over X height [maybe this one plus prescription?] • No tress blocking someone else’s view • Remove trees on request • Remove trees if neighbor pays for it • Tree arbitration board Challenges to Regulations: • “Takings Clause” o Which events are compensable and which are not? [what is a taking of property?]  EX: Raising speed limit from 25 30 • Compensation? By gov? • Gov took some value of property? Attacks on Regulations: • (1) This legislation is stupid and no reason for it (loser!) • (2) It’s not stupid, the government can’t do it because it’s not for a public purpose o Keelo (not for public purpose)  Economic development is a public purpose to use eminent domain • ^^ Neither is the usual takings argument • (3) Public at large is getting the benefit, not me, so the public should be the ones paying for it. Takings Causes of Actions/Potential Claims: • (1) If gov takes title, then that’s a taking & must be compensated • (2) Trespass/Physical Invasion (damages?) • (3) Lost value (maybe ALL/maybe SOME?) (reciprocal benefits) major regulatory takings issue Defenses to COA Claims: • (1) Just preventing a nuisance—not taking anything • (2) Reciprocal benefits (Quid Pro Quo) • (3) Quit whining! Didn’t lose anything—not all, doubtful took “much”

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Pumpelly v. Green Bay Company US S.Ct. 1871 PDF Facts: • Plaint brought trespass case against def for overflowing 640 acres of his land by a dam erects across Fox River—waters rose forcibly and with violence overflow all his land—tore up his trees and gross, and washed them away with his hay. • “Takings” Jurisprudence Issue: Is injury to plaint’s property within the State’s right to exercise eminent domain? Holding: • Defs weren’t protected by the March 10th act because they exceeded the authority conferred by it—as to plaint’s rights, the subsequent statutes were void because they contained no provision for compensation. • When the US sells land by treaty or otherwise, it retains no right to take that land for public use without just compensation, nor does it confer such a right on the State within which it lies; and that the absolute ownership and right of private property in such land isn’t varied by the fact that it borders on a navigable stream Reasoning: • Def asserts the right, under legislative authority, to build and continue the dam without legal responsibility for those injuries. • It remains true that where real estate is actually invaded by super-induced additions of water, earth, sand, or other material, or by having any artificial structure placed on it, so as to effectually destroy or impair its usefulness, it is a taking • If the plea was intended as a plea of prescription for an easement, the time isn’t long enough— that requires 20 years. Penn Central Transportation Company v. City of NY Takings Case

US S.Ct. 1978 pg. 1285

Facts: Penn Central wants to erect a 50 story building atop Penn Central, after being refused by the Commission to construct anything on it. COA = Loss of Value Issue: Can a city, as part of a comprehensive program to preserve historic landmarks and historic districts, place restrictions on the development of individual historic landmarks—in addition to those imposed by applicable zoning ordinances—without effecting a “taking” requiring the payment of “just compensation”? Holding: • Application of NY City’s landmarks Law HAS NOT effected a “taking” of appellants’ property. • The restrictions imposed are substantially related to the promotion of the general welfare and not only permit reasonable beneficial use of the landmark site but also afford appellants opportunities further to enhance not only the Terminal site proper but also other properties. Rehnquist, CJ, & Stevens DISSENT: • Landmark designation imposes on him a substantial cost, with little or no offsetting benefit except for honor of the designation. Actions violated the 5th A “nor shall private property by taken for public use, w/o just compensation.” Public Policy Argument: • “Freezing” the exterior design of notable buildings, without providing any compensation for lost development rights, may have 2 unintended consequences: 1) Persons who own buildings that are potential targets for historic preservation designation may rush to demolish them before they’re protected; and 2) Persons who are contemplating commissioning the construction of new buildings may turn down dramatic or innovative designs out of fear they’ll be “rewarded” with a historic preservation designation, and hence will be locked into the building for all of time. • Providing compensation for lost development rights would presumable eliminate these incentive effects. • But it’d also mean there’d probably be fewer historic designations, because of the expense to the community of paying for lost development rights.

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Why save historical buildings? 1. Beauty/architecture 2. Homogeneity culture 3. Remembrance/Memoralization 4. Historical significance 5. Tourism 6. Education/Cultural conservation 7. Orientation/Identity Public Benefit LL owner? OR paid for by everybody? • • •

In Penn, plaint argues: Lost 100% of air rights and Transferable Development Rights (TDR). o “You’re making us pay much more for a public benefit” S.Ct. said: NO, can’t compare air rights with zoning parcels NY Argued: Compare air rights & property

Policy: • Can’t compensate every piece of regulation—just not feasible

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