property master outline - bai

8/2/2019 Property Master Outline - Bai

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Acquisition of PropertyI. Scope of coverage

We talked about different ways of acquiring property:A. DiscoveryB. CaptureC. Finding

D. Adverse possession

II. Acquisition of property by discovery

A. Doctrine of first possession property belongs to discoverer.

B. Departure from the doctrine of first possession to suit the needs of conqueror: Johnson v.MIntosh (page 3, Johnson obtained title from Indian Tribe chief, MIntosh obtained titlefrom US government. Indian Tribes did not have title to land in America despite firstpossession. The conqueror can set the rules)

III. Acquisition of property by captureApplies to wild animals and natural resources

A. General principle: the first capturer gets the property. Pierson v. Post (page 17, fox hunterv. fox killer).1. Note: if the first capturer is trespasser, the land owner prevails.

B. In absence of actual physical possession, consider the following factors:1. Trapped or fatally wounded or deprived of its natural liberty? If yes, there is

constructive possession. This is a better standard than the dissent because it is easierto make a conclusion on.

2. Reasonable prospect of capturing the wild animal? If yes, some courts will findconstructive possession exist (Dissent in Pierson v. Post, page 17)

3. Another standard is all that was possible (Ghen v. Rich)

4. Some courts will adhere to trade custom (example: Ghen v. Rich, page 23, whalekiller v. whale finder). In determining whether to follow the trade custom, courts lookat:

a. Whether the custom is universallyfollowed in the industry or if it is regional;b. Whether the custom affects only people in the trade;c. Whether there are competing customs involved in the case;d. Whether the underlying activity is a trade or sport.

5. Whether the possession process was interrupted by malicious intervention of thedefendant. If yes, there is an argument for unfair competition. However, no cause ofaction exists if defendant was using lawful means of competition (example: Keeble v.Hickeringill, page 27, decoy duck pond and defendants firing of shot guns). Must belawful trade + malicious intervention

6. Whether possession was interrupted by wrongful conduct of a 3rd party. If yes, arguefor pre-possessive interest (example: Popov v. Hayashi, page 110, baseball).

C. Escaped animals

1. Return to natural habitat a common property again. This is a legal standard2. Tenancy to come back - animals that exhibit tenancy to return has not returned to

natural habitat and thus owner does not lose right (example: Note 2, page 32, twofoxes imported from Canada, the male fox escaped and killed a short distance away).Or the example of deer from our book on 33

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D. Natural resourcesRule of first possession applies. Example: There is oil in the underground of Aand B. B drilled a well on his property and started extracting the oil. Can A sueto stop B from doing this? Answer: courts generally hold that the naturalresources are like wild animals and thus the rule of first possession prevails.

1. Re-injected natural resource not deemed to have returned to natural habitat.

IV. Acquisition of property by finding

A. General principle: Finders title is good against everyone except true owner, prior finders,and sometimes land owner. This is based on the doctrine offirst possession.

1. Example: Armory v. Delamirie (page 96, chimney sweeper boy v. goldsmith for ajewel. Chimney boy prevails).

2. Example: Anderson v. Gouldberg, (Note 4, page 97, the plaintiff trespassed on atimberland of a 3rd party, cut logs, and hauled them to a mill, where the defendanttook them. Plaintiff sued to repossess the logs. The court ruled for the plaintiff).

3. Example: A stole a watch from O, B stole the watch from A. In a dispute between Aand B, A prevails. In first possessor v. subsequent possessor who is not true owner,how first possessor obtained possession is irrelevant. Rationale: to discourage a chain

of wrongdoing.4. What constitutes possession by finder? Example: Oklahoma cash (Note 3, page 106).

B. Finder v. landownerDifferent courts have focused on different factors which may lead to different results:

1. Factor 1: The position of the propertyIf the found property is attached to the land or underneath the land, courts aremore likely to find that the title goes to the landowner who is deemed to haveconstructive possession of everything that is attached to or underneath hisland. Example: Staffordshire Water Co. v. Sharman (cited in Hannah v. Peel onpage 102, rings embedded in the mud at the bottom of the swimming pool the

defendant was hired to clean). Contrast Bridges v. Hawkesworth (cited inHannah v. Peel on page 100, British government notes lying loose on the shopfloor).

2. Factor 2: Owners possession of the landThe owner of the land is deemed to have constructive possession of thefound property by virtue of his possession of the land. However, if the ownernever took possession of the property, courts are more reluctant to find infavor of the landowner. Example: Hannah v. Peel (page 99, broach found inhouse which true owner never occupied).

3. Factor 3: the relation between finder and landowner

a. If finder is an employee or a hired worker, then court may find that the finder isan agent of owner and give title to owner. Some courts have looked a stepfurther at whether the finder is under any contractual obligation to report(example: Note 4, page 107, two laborers hired to build driveway but dug out a

jar of gold coins. Court found in for landowner because the two laborers were hisagents).

b. Trespassing finder loses to landowner as a result of strong policy againsttrespass (example, Note 3, page 104, Peel found the broach while trespassing onHannahs property).

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4. Factor 4: whether the property is abandoned, lost or mislaid

a. If property is abandoned, then first finder gets it unless he is deemed an agent ofthe landowner.

b. If the property is misplaced (i.e., the true owner intends to retrieve it), the courtwill likely give title to the landowner, because he has a better chance ofreturning the property to the true owner. Example: McAvoy v. Medina (page 105,wallet found lying on counter of barber shop).

c. If the property is lost, there have been cases in which the court held that thefinder gets title unless he is deemed agent of the landowner (example: Bridgesv. Hawkesworth, cited in Hannah v. Peel on page 100, British government noteslying on shop floor).

C. Finder of abandoned property1. General rule: Finder gets title.

2. Intent to abandon is key: finders reasonable belief under the circumstances.

3. Example: A was moving into an apartment in New York City. A unloaded his truck and

his personally belongings were scattered around the entrance of the apartmentbuilding and on the side walk. A few paintings were actually close to a public rubbishbin. While A was moving his stuff into his apartment, B was passing by and saw thepaintings. He took the paintings to a nearby gallery and said: These paintings wereabandoned but I think they may still be of some value. The owner of the galleryinquired about the circumstances in which he found the paintings and afterwards tookthe painting and paid B $200. Upon discovery, A sues the gallery for the return of thepaintings. Question: Can the gallery argue that it was a good faith purchaser of anabandoned property? Answer: Likely no, because a reasonably person would haveguesses that someone was in the process of moving into the apartment and thepaintings were placed there to be taken inside later.

4. Mere lapse of time is not enough to show abandonment (example: Columbus-AmericaDiscovery Group v. Atlantic Mutual Insurance Co., 974 F. 2d 450 (4th Circuit, 1992). In1857 the steamship Central America sank in a storm off Cape Hatteras, carrying largecargo of California gold to the bottom. The insurers paid off, and thus acquiredownership of the insured cargo. In 1988 the wreck of the Central America wasdiscovered and part of the cargo recovered. Can the insurance company that paid offyears ago claim title to the recovered cargo? Answer: Though 131 years had elapsedthe 4th Circuit ruled that the mere elapse of time was not enough to proveabandonment.

5. There is an objective standard

a. A reasonable person under similar circumstances would believe that theproperty is abandoned. Note that this can be muddled between finding andtaking possession of an item. If you see a wallet and tell your friend about it andhe picks it up

V. Acquisition of property by adverse possession

A. Rationale for awarding adverse possession1. Sleeping theory

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a. Encourage maintenance and upkeep of the propertyb. A person who doesnt claim their property can be assumed as abandonmentc. the law gives a statute of limitations for people to come forward during a

specified period of time or else they lose title. It is used to punish the lazy owner.2. Earning theory

a. The adverse possessor took the time and effort to live there, makeimprovements, and make it his own.

B. Elements of adverse possessionActual and exclusive, adverse and under claim of title, open and notorious,continuous.

1. Element 1 - Actual and exclusive possession

a. Actual possession - highly factual and likely an issue of disagreement (example:Van Valkenburgh v. Lutz, page 115, majority and dissent differed on whetherLutzs partial occupation of the disputed land satisfied the actual possessionrequirement). The key is whether the possession is akin to that of a true owner.

b. Exclusive possession : possession must be to the exclusion of others as areasonable true owner would.

i. Example : A purchased a hunting ground from O under a deed that wasdefective. He built a cabin and put a Private Property, No Trespassingsign at the entrance of a footpath leading to the cabin. Occasionally somenosy people got close to the cabin and looked inside. A ignored thosepeople most of the time and occasionally engaged in friendlyconversations with them. Upon realizing that the deed was defective, Oclaimed title in himself but A claimed adverse possession. Was Aspossession exclusive? Answer: Yes, it was used in a way that a true ownerwould have used the property.

2. Element 2 Adverse use under claim of title

a. Possession must be without permission of true owner.

b. When property is co-owned, adverse use can be established only when one co-owner excludes the other co-owner from possession or acted in a way that isinconsistent with the co-ownership interest of the other co-owner.

c. What constitutes under claim of title? 3 different views.i. Objective view (most US jurisdictions): subjective mental state of adverse

user is irrelevant. Instead, focus on whether the adverse possessionobjectively appears to be under claims of ownership.

1. Whether your possession is under the impression of areasonable true owner

2. And whether you didnt have permission to be there in thefirst place.

ii. Maine Rule: I knew I did not own it, but I occupied it anyway.1. Van Valkenburgh case2. Encourage malicious wrongdoing in the first place.

iii. Good faith belief: I honestly thought I owned it.1. Your mental state should be such that you truly owned this

place.2. Ask her whats wrong with this position.

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d. Disclaimer by adverse possessor of title stops the adverse use and the runningof the statute of limitation. Example: Squatter occupies Blackacre and satisfiesall the elements of adverse possession for 9 years. The limitations period is 10years. Then Owner discovers Squatters presence and confronts him. Squattersays, Ill leave as soon as I can arrange a new place. Just dont sue me. IfSquatter stays for another 2 years, can he acquire title by adverse possession?No. He disclaimed ownership. Adverse claim of right element has been missingsince then.

e. Possession under color of title (defective deed) satisfies adverse claim of titlerequirement.

f. Permissioni. Silence does not equal permission because this goes to the underlying

rationale of adverse possession itself because adverse possession is meantto punish slothful owners who sit on their rights, therefore, if silence is notpermission, then it furthers the purposes of adverse possession doctrine

ii. Family members1. Courts are split on this issue and some presume permission

when family is involved and others do notiii. Co-owners1. A course of action must first be triggered in order to make

the statute of limitations begin to run2. A course of action must be a violation of the other co-

owners rights to the property3. One co-owner must be ousted by the other owner so as to

make his possession adverse against the interest of theother co-owners

4. Key Issue: Ouster Testg. Defective deed

i. Hypo: O conveyed deed to A. A began possession of the property

throughout the limitation period but O finds that the deed was defectiveand now comes forward and tells A to leave.ii. Technically As possession was under permission of O but to deprive A of

the title to the land in such circumstances would be harsh and thereforethe law says:

iii. If A enters the land under defect of deed, the law regards that A hassatisfied the requirement for under adverse claim of title (even thoughtechnically A had permission)

3. Element 3 Open and notoriousa. Readily visible upon reasonable inspection.

b. True owner standard: open and notorious satisfied if adverse possessor actedin a way that the true owner would have.

c. Actual knowledge by true owner starts the limitation period even though adversepossession is not open and notorious. Rationale: actual notice is better thanconstructive notice. If you do not know your rights as an owner are beinginfringed you shouldnt be punished.

d. Underground occupation actual notice by true owner is required (example:Marengo Cave Co. v. Ross, Note 3, Page 125, a cave lies underneath property of

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A and B with entrance on As land. A opened the cave to the public for a feeduring the statutory period).

e. Boundary disputes: Encroachment must be self-evidently apparent to nakedeyes upon reasonable inspection. A few inches of encroachment is not open andnotorious. Actual knowledge is required (example: Mannillo v. Gorski, page 130,15 inches of encroachment on neighbors property does not satisfy open andnotorious requirement).

i. What constitutes actual knowledge? See Note 2, page 134 (I hear there isa problem with your neighbors house the new part they built may be toofar. The answer depends on how narrowly the court interprets the noticerequirement. Some require actual knowledge, others require the trueowner to take reasonable steps to investigate if thats what a reasonableperson would have done).

ii. Knowledge of what? Note 2, page 134. Knowledge of smallerencroachment than the actual encroachment not sufficient for actualknowledge.

iii. Equitable solution in lieu of injunction if undue hardship on the part ofadverse possessor with good faith belief in his title: pay for the landclaimed. Alternatively, the true owner may be required to pay for the

improvement.

f. If the adverse possessor possesses the true owners property secretly, it isdifficult for the true owner to take notice of the violation that someone else hasdone to his property

g. The law says the adverse possessor must have open and notorious possessionsuch that the true owner of the property was given adequate notice

h. Open and Notorious:i. Reasonable person would be put on notice ORii. Possession as if true owner would

i. HYPO: a family is living on a tract of land owned by a company used for timberand oil. Is the familys occupation open and notorious?

i. This depends on the factorsj. HYPO: A goes to his neighbors yard at 2 am every morning so he doesnt satisfy

the open and notorious requirement, however, the true owner was aware of hissecret act and had actual notice of his possession. Would you grant title to Aunder adverse possession?

i. Even though the open and notorious notice is missing in this claim, A canstill prevail because the true owner has actual notice that his interests arebeing violated

ii. Open and notorious requirement is intended to provide the true ownerconstructive notice that his rights have been violated and actual notice iseven better than constructive notice so in absence of constructive notice

iii. If you can show the true owner had actual notice, it satisfies the rationale

for granting title under adverse possessionk. What constitutes actual notice?

i. HYPO: Your neighbor is building a shed, supposedly on his yard and youbelieved it to be in his yard. Another neighbor tells you that he heard thatthe other neighbors shed may have gone too far and that the true ownershould check it out. The true owner does nothing but the shed didencroach upon his property. Was the true owner given actual notice?

1. The law says that the true owner has a duty to investigateonly if a reasonable person under similar circumstanceswould have investigated

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l. If it is an 85 year old we still go by the average property owner standard

4. Element 4 continuous possessiona. Statutes of limitation stops running if possession is interrupted.

i. Rationale:

b. Constant possession is not required, focus on the true owner standard(example: Howard v. Kunto, page 136, summer house used during summer timeonly satisfied continuous possession).

i. It is reasonable to believe that a true owner would only use this land duringthe summer months as well.

c. Tacking:

i. Privity (voluntary conveyance) required and satisfied by showingvoluntary conveyance between adverse possessors of deed orpossession. Conveyance by a defective deed is indication of voluntaryconveyance of possession. Rationale for privity requirement: discourageacquisition of property by unlawful means.

1. Punish the true owner. He has been sitting on his property

rights for a long time.2. Even though there is not value paid by the currentpossession, the mere fact that it was voluntarily transferredmeans that he voluntarily gave up all of his rights to thispiece of property.

3. It can be a transfer of possession or a transfer of a deed.1. Even if the deed was defective, if there was a clear

intention of transfer of possession then it is ok.4. Policy reason:

1. We dont want to encourage criminal acts. Used todeter wrongdoing and trespassers.

ii. Example: A had been an adverse possessor for 19 years and 11 monthsand spent the following month in Ireland for a family reunion. B, uponlearning the nature of As possession and while A was away, tookpossession of the house. Can B tack on As 19 years of possession forpurpose of adverse possession against the true owner? Answer: No. Tohold otherwise would encourage trespassing and unlawful taking ofproperty.

iii. Example: Suppose A had been occupying the premises for 8 years when hewas ousted by B at gunpoint. B was not the true owner. A had all theintention of coming back to the property when circumstances wouldpermit. 3 years later, while B was still in possession of the property, the

true owner showed up and B fled. The statute of limitation is 10 years. CanA still claim adverse possession? Answer: prevailing view in the US saysthe statute of limitation is suspended. Is this view consistent with therationale for awarding adverse possession? No, if the rationale is sleepingtheory; but Yes if the rationale is earning theory (since A has not paidenough dues by occupying property for the required amount of time.

1. Can A tack on Bs possession to claim adverse possessionagainst owner?

1. B cant because it wasnt voluntarily given to him.

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2. Punishing theory: it doesnt matter who was possessingthe land; the owner was slow in claiming his rights

3. Rewarding theory: A, regardless of the reason, hasbeen on this property for only 8 years. Its too bad hewas ousted, but he didnt meet the statute oflimitations.

C. Effects of oral relinquishmentOnce title is established by adverse possession, it is not lost by divestment or oralrelinquishment (example: Note 3, page 134, A and B own adjacent lots. A erects afence on what she mistakenly believes to be the true boundary line. In fact the fenceis on Bs lot 3 feet beyond. A thereafter lived there throughout the entire statutoryperiod. After the statute has run, a survey by B revealed the mistake. A, to avoid ahassel, tears down her fence and erects a new fence on the original true boundary. 3years later, A talks to a lawyer, changes her mind, and sues to eject B from the 3 feet.What result? Answer: A wins, absent some sort of estoppel arguments (e.g., thatmight arise if B subsequently improved the land) because she had already obtainedtitle by adverse possession when she torn down the fence).

D. Title acquired by adverse possessor

1.Gets only what the true owner has.

2. Example: Note 3, Page 142: O, owner of Blackacre, dies in 1991 leaving a will thatdevises Blackacre to B for life, remainder to C. In 1992 A enters adversely upon theland. In 2006 B dies. Who owns Blackacre? Answer: C, because A can only acquire theinterest of B, which is a life estate. B was in legal possession of the property whenadverse possession happened. The nature of Bs interest lasts only during his life.

Yes, adverse possessor prevails over B, but keep in mind he gets no more than whatB is entitled to. Bs interest ends when he dies in 2006.

E. Extent of title acquired by adverse possession

1. Entry without color of title: only the area actually possessed.

2. Entry with color of title (defective deed): all land described in the defective deed if itis a single parcel of land and a significant portion of the parcel occupied. Constructivepossession exists for the unoccupied portion.

3. Constructive possession yields to actual possession (example: A granted a deed to Bfor 100 acres of land. The deed turned out to be defective. A has been occupying 50acres of the land, but unbeknown to B, C has been occupying 10 acres of theremaining 50 acres of land throughout the limitation period. B can claim title to only90 acres of land. Bs constructive possession with regard to the 10 acres occupied byC is inferior to Cs actual possession).

4. If adverse possessor realizes he occupied land that was not his and abandonsproperty and tries to reclaim. Once he has acquired adverse possession then theproperty is his. There must be some sort of transaction that the original adversepossessor must convey title to give up his interest.

F. Suspension of statute of limitation due to disability of true owner1. Common types of disability: insanity, imprisonment, minor

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2. Be careful: statutes in many jurisdictions required disability exists at the time thecause of action accrues, i.e., the start of adverse possession.

3. Example: A started adverse possession in 2000. O was the true owner of sound mind.In 2001, O died and left the land to his 2-year old nephew. Assume statute oflimitation period is 10 years. When does the limitation period end? Answer: 2010. Thenephew will be 12 years old. His guardian should bring lawsuit on his behalf.

G. Adverse possession of personal property1. Typically shorter limitation period (e.g., 6 years)

2. Focus on the conduct of true owner upon discovery of loss: cause of action will notaccrue until the injured party discovers, or by exercise of reasonable diligence andintelligence should have discovered, facts (including the identity of the holder of theproperty) which form the basis of a cause of action. Burden of proof is on true owner(example: OKeeffe v. Snyder, page 144, case remanded for further findings alongthis guideline).

3. In NY, statute of limitation does not begin to run until true owner demands return andis refused.

Landlord and TenantI. Scope of coverage

A. Types of leaseB. Law on selection of tenantsC. Assignment v. subleaseD. Landlords obligations and tenants remediesE. Tenants obligations and landlords remedies

II. Types of lease

A. Four Types1. Term lease2. Periodic Lease3. Tenancy at will4. Tenancy at sufferance

B. Term of years1. A lease for a single fixed term of any length.

2. Beginning and ending dates must be either set out in the lease or determined byreference to a formula. Example: from August 1, 2007 to the end of the school year of

UC law school in 2010.

3. Lease of indeterminable duration: for as long as the war. Common law treats this typeof lease as tenancy at will. Some courts regard it as term of year lease since the partiesintend the lease to last at until the war ends.

4. No notice of termination is required at the end of the lease term.

C. Periodic Tenancy

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1. A periodic tenancy is a lease for a period of some fixed duration that continues forsucceeding periods until either the landlord or the tenant gives notice of termination(example: to T from year to year. If notice is not given, the period is automaticallyextended for another year).a. You cant terminate the lease within the period. You have to terminate the lease at

the end of the period.

2. The notice requirement

a. Annual lease : 6 month notice.i. A lease starts on July 1, 2009. You want to get out of your lease. You give

notice on Jan 4, 2010 that you will no longer be there.(1) Not acceptable. The last day of your lease is June 30 2010. You need to

give notice BEFORE midnight on December 31, 2009 in order to terminateyour lease. (6 months notice before the end of the lease)

b. Periodic lease of less than 12 mos : notice time = length of lease period, not morethan 6 mos. Under the common law, the termination day must be the final day ofthe lease, not in the middle of it. However, some states may alter that by statute(example: Month-to-month lease starting from January 1, 2008. On April 3, T givesnotice to terminate. What is the earliest date of termination? Answer: May 31, 2008,not April 30 or May 3).

i. Lease of 9 months Jan 1, 2008. Tenant gives notice on November 15, 2008.What is the earliest termination date of this lease? Answer: June 30th, 2009 isthe last day of the lease. Notification needs to be given 6 months before this sothe lease can end on this date. .(1) First figure out the last day of the current period. From there, we backtrack

to provide the notice. That would be the last day on which notice oftermination can be given.

3. Effect of death of landlord : The death of the landlord of tenant has NO effect on aperiodic lease. However, his estate may elect to terminate the lease at the END of thelease period by giving the required notice.

4. EXAMPLE:a. To A from year to year.

D. Tenancy at will

1. Definition : no fixed term and lasts as long as both landlord and tenant wish to continue.

a. L leases land for T for and during the pleasure of the landlord-L and T can terminateit at any time.

2. Right to terminate :a. Either party may terminate.

b. If the lease provides that it can be terminated by one party, common law will givethe same right to the other party.

3. What if the lease has given the right to terminate this lease to only one party?

a. Leases with unilateral right to terminate may be deemed as something other than atenancy at will (example: Garner v. Gerrish (page 305 ) The lease said it shallcontinue for and during the term of quiet enjoyment from the first day of May, 1977,but T has the privilege of termination of this agreement at a date of his ownchoice. It was a determinable life estate).

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b. If it is a tenancy at will, it means that either party can terminate it at will. If thelease has given right to only one party, the law will grant the same right to the otherparty=common lawi. This sort of treatment is inconsistent with the intention of the parties.

(1) For this reason, in leases that have granted unilateral rights to terminateto one party, courts are more inclined to treat this lease as somethingother than tenancy at will.

(2) Courts recognize that if we treated it as a tenancy at will, wed have togrant the same rights to the other party.

(3) They try their best to interpret the lease so the lease can be deemedsomething other than a tenancy at will.

c. L leases land to T so long as T should wishi. This creates a determinable life estate because only T can terminate it.ii. L has a reversion

4. Effect of death of one party : ends the lease.

5. Notice of termination ahead of time : No requirement of advanced notice under commonlaw, but state statues may require a period of notice.

6. What if it as many years as the landlord desires? Tenancy at will. But modern courtswould still regard it as a life estate in tenant. It is a determinable life estate because itdepends on the wish of the landlord.

a. Another way the modern courts avoid an undesirable outcome.

E. Tenancy at sufferanceTenant holds over after termination of the tenancy. At the end of the lease, thetenants refuse to leave.It is wrongful for T to holdover on this land after the termination of the lease. It isterminated when the landlord evicts the tenant or chooses to hold the tenant over toanother term.

III. The law on selection of tenant

A. Applicable law

1. Common law : free to discriminate.

2. Civil Rights Act of 1866 : All citizens of the United States shall have the same right, inevery state and territory, as is enjoyed by white citizens thereof to inherit, purchase,lease, sell, hold, and convey real and personal property

3. Federal Fair Housing Act : prohibits discrimination based on race, color, religion, sex,familiar status, national origin. Prohibited activities include refusal to rent or sell, to

discriminate in the terms, conditions of the lease or sale, to say property is not availablefor lease or sale when in fact it is available, to put inappropriate language inadvertisements, to induce or attempt to induce any person to sell or rent any dwellingby representation regarding the entry or prospective entry into the neighborhood ofpersons of a particular race, color, etc.

a. Exemption : single-family house sold or rented by an owner: provided, such privateindividual owner does not own more than 3 such single-family houses at any onetime, etc.

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4. Burden of proof : plaintiff must show discriminative effect, and defendant has burden ofshowing lack of discriminative motive (i.e., there is legitimate reason for thediscrimination).

5. Example : Note 3, page 380, Murphy has an apartment to rent in her home. She puts thefollowing advertisement in a local newspaper: For rent, Furnished basement apartmentin private white home. Call . A couple of African American origin applied and isrejected by Murphy because of race. Has this violated law? Answer: her advertisement

violated FHA, her refusal to rent violated Civil Rights Act of 1866 but not FHA (due tosingle-family exemption).

a. Example : Note 3, page 380, third full paragraph: Does the regular exclusion ofminority models from real estate advertisements containing human modelsviolate the FHA? Answer: Court said FHA prohibits all ads that indicate a racialpreference to an ordinary readerwhatever the advertisers intent. If an adthat includes a single model or a couple of one race that is run only two orthree times, it is unlikely to be found in violation of FHA. However, if there is along-standing pattern of publishing real estate ads in which black models areused for housing in predominantly black neighborhoods and white models areused for housing in predominantly white neighborhoods, a case may be

established under FHA.

b. Example : Note 4(a) Page 381, landlords, a retired couple, have 8 single-familyhouses for rent. They limit the number of occupants in each house. One of suchhouses is a 1,200 s.f house, consisting of 1 living room, two bedrooms, twobaths, a den opening directly into the living room (which could be used as abedroom). They limit the number of occupants to 4 people and refused to rentit to a couple with 3 children. Does this violate FHA because it discriminatesbased on family status? Answer: No, the landlords could establish legitimatebusiness reason to prevent over usage of the apartment beyond its normalwear and tear.

c. Example , Note 4(d) Page 381: L refuses to rent to a gay couple because heobjects to the partners sexual orientation. Answer: the FHA prohibitsdiscrimination based on sex, but does not prohibit discrimination based onsexual preference.

d. Example discrimination based on handicap1: L refuses to rent to T who isknown to L as a drug addict. Can T argue that his addiction to drug is ahandicap and thus L violated FHA? Answer: No, because FHA handicapdefinition does not include illegal drug addiction.

1. What about AIDS? Yes it is considered a handicap and the landlord cantrefuse to rent just because the tenant has AIDS.

e. Example : Note 4(g), page 382: L wants to evict T because T has a mentaldisability that results in seemingly threatening behavior. Question: Is mentalillness a handicap under FHA? Answer: Yes. However, court has held that L isnot obligated to rent to T if his condition would create a direct threat to thehealth and safety of others or result in substantial damage to the property, butL must make reasonable accommodations. Interpretation: L must at least give

T reasonably amount of time to locate another place and move out.

1 Definition of handicap under FHAL it means a physical or mental impairment which substantially limits one or more of the persons

major life activities.

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1. If keeping the tenant there would potentially harm others or theproperty, the landlord if not required to keep this tenant. This issomething beyond reasonableness.

f. Example: landlord has a no pet policy but a tenant needs the dog because sheis schizophrenic and relies on the dog as a friend. Can the landlord discriminateand not let her have the dog?

1. The landlord needs to accommodate to allow the person to keep the dog

as long as she can prove that the dog is a necessary part of treatmentand that there is no other reasonable way to accommodate thisdisability.

g. A landlord can discriminate based on profession. Some state statutes have alaw prohibiting the landlord from discriminating on profession, but not all.

IV. Assignment and sublease

A. AssignmentB. Privity of Estate- mutual or successive relationship to the same rights of property. orC. Privity of Contract

D. Subrogation Theory- assuming you do not have the standing to sue someone do you havethe standing to sue a third party or can they sue you1. Definition: L or T has transferred his entire interest in the lease.2. After assignment, who has standing to sue if either party fails to perform lease

obligations? Privity of contract or privity of lease must exist between plaintiff anddefendant.

3. Example , problem 2(c), page 394: L -- T T1 (assumption of all obligations) T2 T3.T3 defaults on rent payments and fails to keep premises in good shape. L sues T, T1, T2

and T3. What are their liabilities to L and among themselves? Answer:a. T to L : T is liable to L for T3s default under privity of contract. There is no novation

(i.e., release by L of Ts obligation) of the original lease and its covenants.

b. T1 to L : T1 is liable to L for T3s default on privity of contract, by virtue of T1sassumption of the covenants in the lease.

c. T2 to L : Not liable to L. T2s privity of estate with L ended when he assigned thelease to T3, and T2 was never in privity of contract with L because he did notassume the covenants of the ORIGINAL lease. (the lease between L and T; it isntsufficient to explicitly assume the obligations in the contract between T1 and T2)

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L

T1

Privity of contract unless release

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What constitutes assumption?

-Not implicit in assignment;

-subject to lease or subject

to obligations and covenants

in lease not sufficient

What constitutes release?

Must be explicit.

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d. T3 to L : T3 is liable to L on privity of estate arising from the assignment. One inprivity of estate with L is liable for his breaches of all covenants in the lease that runwith the land.

e. T against T1 : If L proceeds against T, T can proceed against T1 on privity of contract(because T1 assumed the covenant in the lease). In addition, T can proceed against

T1 and/or T3 on subrogation theory T stands in the position of L.

f. T against T2 : No privity of estate, no privity of contract, and no subrogation (since Lhas no cause of action against T2). Thus, there is no cause of action.

g. T against T3 : No privity of contract, no privity of estate, but if L recovers from T, Tcan go after T3 by standing in the shoes of L (subrogation theory).

h. T1 against T3 : Similarly, if T proceeds against T1, T1 may proceed against T3 on thesame subrogation basis (although there is no privity of contract nor privity of estatebetween them).

E. Sublease

1. Definition : lessee transfers anything less than his entire interest in the leasehold,thereby retaining a reversion.

2. The standing to sue :

3. Note: although L cannot sue T1 for damages in absence of T1s explicit assumption oflease, L can terminate the lease and evict T1.

F. Distinguishing assignment from sublease1. Traditional common law (also majority of US jurisdictions): sublease has shorter term

than original lease.a. Full remaining period?

i. Whether or not T has retained any right to re-enter the property.ii. If the transfer is for the entire remaining term of the lease, it looks like an

assignment, but we still need to look if the transferor has retained a right to re-

enter the property(1) T, in the transfer agreement, says on the last day of this transfer/lease, I

have the right to come to the property and inspect the property.(2) If T1 defaults on any of his obligations, I have the right to re-claim the

property.(3) If transfer agreement says at the end of this lease term, T has the

obligation to restore this leased premise to its original state.

2. Significant minority: look at whether the parties intend to create a reversion in theoriginal tenant. Mere use of words of sublease or assignment in the document is not

14

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L T

Privity of contract

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ptionbyT1 T1

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conclusive evidence of intent (example, Ernst v. Conditt, page 388, court held thetransfer was an assignment despite use of term sublease repeatedly in documentbecause T did not reserve any right to enter premises at the end of the lease term, didnot reserve the right to re-enter upon breach of lease term by T1, and T1 was to restorethe property to original state at the end of the lease term).a. Whether or not the transferor can re-possess the property if T1 defaults, whether T

has the opportunity to restore the property to original estate, whether T has theright to re-enter the property to make sure it is in good shape on the last day of thelease.

b. Not that much different from the majority view.

G. Restrictions on assignment and sublease

1. General rule: unless the original lease explicitly prohibits assignment or sublease, leaseis freely transferable by either method. Any restrictions are narrowly construed.a. If the lease says T cant assign this property to any other person. T turns around and

subleases it to another person. L objects, but the law says that the originalrestriction only prevents T from ASSIGNING the lease, not subletting.

b. The law wants to promote more productive use of the property.c. Very often we will see a provision that says tenant cant transfer the interest in the

lease without the landlords consent.i. Does L have absolute power to withhold consent????

d. Can transfer an explicitly denied lease even with death if it is to family member,because it does not say transfer by inheritance. See policy reason in b

2. Limits on landlords power to withhold consent of transfer:a. Common law: landlord may withhold consent even without good reason if the lease

so provides.

b. Modern view (increasing minority): landlord cannot withhold consent withoutreasonable commercial objections, unless the lease explicitly provides that thelandlord may withhold consent with or without cause. There is a growing view thata lease is a contract in nature and as such, there is implicit requirement of good

faith and fair dealing (example, Kendall v. Ernest Pestana, Inc., page 395)

i. When the parties dont have equal bargaining power, the court should imposea reasonableness requirement even when the lease explicitly says Tcant transfer without Ls consent. L has the absolute discretion on thisconsent.

ii. Landlord can insert into contract landlord reserves right to withhold consentto sublease/assignment with or without reason or original tenant remainsliable

c. What is a commercially reasonable objection?

i. Economic rather than personal concerns.

ii. New tenants ability to pay rent.

iii. Alteration to the existing premises

(1) The premise is for office space, but the new tenant wants to come in andopen a restaurant.

iv. General economic interest of the landlord?

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(1) Landlord argues that he doesnt want to give consent because he can pushhim into paying a higher rent. This is not a commercially legitimate reason

v. Unreasonable

(1) Denial without stating reasons

(2) Failure to respond within a reasonable period of time

(3) Personal taste or demeanor (e.g. morally object to an abortion clinic)

V. Landlords obligations and tenants remedies

A. Landlords obligation to deliver legal possession

1. Common law: landlord is required to deliver only legal possession, i.e., no one claimingthrough landlord has a better right to possession than the tenant.a. Legal possession: no one holds any superior right to possess the leased property

during the leased term than the tenant.b. True owners have superior legal right to possess the property. This is a classic

example of a landlord failing to deliver legal possession. He is REQUIRED tomaintain tenants superior legal right throughout the entire lease period.

2. It is a continuous obligation on the part of the landlord throughout the lease term.

3. Tenant may waive his right to receive legal possession. For example, L was in adversepossession of house, leased it to T, but mentioned to T that if the true owner showed up,

T would have to move. For this reason, L charged T rent that was 30% below marketrate. T is deemed to have implicitly waived his right to legal possession.

4. Ts remedy if L fails to deliver legal possession: can terminate the lease, or waive hisright to receive legal possession and continue occupying property and paying rent.

5. Ls failure to deliver legal possession is not excuse for T to withhold rent if T is in actualpossession (example, Problem 2, page 388, T, who had actual possession of leasedproperty, could not withhold rent for reason that L had entered lease of the sameproperty with another tenant).

B. Landlords obligation to deliver actual possession

1. Traditional common law (and minority US jurisdictions: American Rule) : landlord has noobligation to deliver actual possession (example, Hannan v. Dusch, page 384, L had noobligation to evict holdover tenant from prior lease).a. Ts remedies

T has the same right against the wrongful possessor as L. He can treatthe holdover as a trespasser and evict and recover damages, or he can

renew the holdover for a new term, receiving the rent from the holdover.These may not be satisfactory remedies to T.

2. Majority US jurisdictions : landlord has obligation to deliver actual possession. Rationale:L is in a better position to know the possibility of holdover. And tenant cannot evict untilHIS lease is supposed to start.

3. Hypo : L leases from T hunting lands but cannot get to the land because neighbors willnot allow it. Has L satisfied the duty. Answer: L has failed to deliver actual possessionunder the English rule but this is satisfied under the American rule

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4. Hypo : if trespasser enters on the 2nd day of the lease then the lessee has theresponsibility to remove trespasser.

C. Tenants Duty to occupy?1. Is he required to actually occupy?

a. Generally no. if he pays rent and the lease is silent on occupying, then he doesnthave to.

b. EXCEPTION:

i. Explicit provision in the leaseii. The landowner gets a percentage of the rent. The courts are willing to find thatthe parties have implicitly agreed that the tenant has a duty to occupy.(1) If the landlord charges you rent close to market value, but be also takes

3% of your business, then courts arent willing to find an implicitagreement.

iii. Waste(1) Ts failure to occupy the leased property would result in a waste of the

property value, or would decline the property value.

D. Landlords duty to keep the rental property habitable1. The doctrine of constructive eviction

a. In every lease, there is an implied duty on the part of the landlord to provide quietenjoyment of the leased property.b. If this is violated then constructive eviction has happenedc. What constitutes constructive eviction?

i. The interference must be such as to render the premises substantiallyunsuitable for the purpose for which they are leased(1) Substantially unsuitable is a factual issue determined on case-by-case

basis(2) A reasonable person standard applies here.

(a) Failure to provide heat in the month of November for a propertylocated in Boston is more likely to be a constructive eviction thanfailure to provide heat in November in Florida.

ii. (E.G., Reste Realty Corp. v. Cooper, page 422, basement office flooded when itrained).iii. Other examples

(1) Failure to supply heat(2) Strong and offensive odor(3) Leasing other parts of same bldg to other Ts engaged in illegal/immoral

activities rendering Ts premises unsuitable for a decent familyd. What if the lease has a provision that says, T has inspected the premises and

accepted the premises in their present condition?i. T is barred from claiming constructive eviction [caused] by L, IF:

(1) The defects were not latent AND(2) The defects that caused the problem were part of the leased premises

(3) Landlord has made a promise that he would remedy the defects by thetime that the lease begins.

ii. (E.G., in Reste Realty Corp. v. Cooper, page 422, the driveway caused theflooding. Since the driveway was not part of the lease, the above provision hadno effect).

iii. Reasoning(1) Driveway, its surfacing, the exterior wall, or foundation cannot be

considered included as part of the premises under the lease(2) Even if included w/i premises, nothing in evidence suggests that condition

in driveway/wall would be noticeable upon inspection

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(3) The condition was probably a latent problem, which the prior-L (if aware)had a duty to disclose, regardless of lease provisions

(4) Even though was aware of the problem prior to signing 2nd lease, hadrecd assurances that problem would be remedied. In fact, prior-Ls on-sitemgr. had tried to remedy by resurfacing the driveway but the attemptproved unsuccessful

(5) Interference not reqd. to be permanent; it is only reqd. to be substantialiv. RESULT/HOLDING

(1) L did breach covenant, thereby justifying Ts vacating the premises(2) T did not waive right to vacate b/c T vacated w/i a reasonable time of the

constructive eviction coming into existence(3) T did not assume responsibility for defect b/c at first T was unaware of

latent defect and, when aware, prior-L promised to remedy

(4) Premises rendered Substantially unsuitable for the intended use.Permanent rain damage is not necessary. As long as it happens regularly.

e. Tenants remedies when constructive eviction established:i. FIRST, Tenant MUST vacate premises; and

(1) Minority of jurisdictions do not req. such vacating as pre-condition(a) T may have a hard time finding a suitable, affordable, alt. place to live(b) T may be unsure whether Ls conduct constitutes constructive

conviction(c) Vacating pre-condition is inconsistent w. implied warranty ofhabitability doctrine, which does not req. T to move out

ii. T, by terminating lease, is relieved from further obligation to pay rent; andiii. Tenant may recover damages to his belongings and business

(1) Damages equal difference b/w rents paid and the FMV of premises in itsdefective state

(2) Consequential damages are available for things such as hotel expenseswhile looking for another place to stay

iv. T may seek injunction to compel L to fix the defect

v. Note : If T does not respond to Ls constructive eviction byabandoning the property within a reasonable time, he is deemed to have

waived his right of abandonment.

2. The doctrine of implied warranty of habitability

a. Applies to residential leases.-a lot more powerful in providing protection to thetenant.i. In each lease, the landlord has made an implicit warranty that the property is

safe, clean, and fit for habitation.

b. What constitutes breach of warranty ? The claimed defect has an adverse impacton the safety or health of the tenant, making the leases premisesuninhabitable in the eyes of a reasonable person (example, Hilder v. St. Peter, page

431, bathroom toilet was clogged, window was broker, the door had no lock, leak ofwater pipes, etc). Breach may exist even though housing code is not violated (this isbecause there are a lot of problems that are not addressed in the housing code).i. The tenant is entitled to remedy at this point.

(1) Tenant is not required to move out of the property in order to claim underthis implied warranty.

(a) This doctrine is the applied in most jurisdictions to residential leasesonly.

(2) Need to give a reasonable amount of notice in order for the landlord to fixthe defect.

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(a) Failure to give adequate notice to fix the defect waives the tenantsright to get remedy under this doctrine.

ii. Note : In order to bring a cause of action for beach of the implied warranty, thetenant must first show that he or she notified the landlord of the deficiency ordefect not known to the landlord and allowed a reasonable time for itscorrection.

iii. This is a reasonable person standard(1) If a reasonable person in the community where the property is located

would reasonably believe that the property could adversely affect thesafety or health of the new tenant, then this fails. The subjective belief ofthe new tenant is irrelevant.

iv. Ex.(1) On-site laundry- no not a breach(2) Air-Conditioning- yes a breach if in summer high heat(3) Sex offender- not a breach of implied warrant of habitability. They will look

at the likelihood of a recurring offense.(4) Violation of housing code- this should be one factor and it is a strong factor

but it is not conclusive evidence in itselfv. *big difference between implied warranty and constructive eviction is that

plaintiffs do not have to vacate premises.

c. This is strict liability on the part of the landlord landlord is liable even thoughcauses of defects are beyond his control.i. Note 4a page 439

d. The implied warranty of habitability cannot be waived by the tenant. A landlordcannot nullify the implied warranty of habitability on a dwelling by giving his tenanta discount in rent. This is because courts recognize the limited bargaining power oftenants.

e. Tenants remedies upon landlords breach of warrantyi. Refund of the difference between true market value of the property and the

value of the dwelling as warranted (which usually is determined by referenceto the rent).(1) Percentage rental deduction. If 20% of the property is not usable because

of the defect, then theyll deduct 20% of the market value after taking intoconsideration the market value with defects.

(a) X is worth $100. The market value of X with defects is $50. Thelandlord will then take 20% off $50.

ii. Future rent is excused until defects have been corrected.(1) What if only one bathroom is defected, but everything else in the house is

fine?(a) To avoid the dilemma, a tenant is allowed to withhold the entire

amount of rent.

(b) If later on the court finds that you are at most required to withhold$200, then you must pay the rest of the rent to the landlord.

iii. Deduction from any future rental obligations reasonable expenses incurred bytenant in correcting defects.

iv. Punitive damages may be awarded for willful or wanton or fraudulent breachby the landlord

v. Special consequential damages (example, tenant had to incur the cost ofstaying in a hotel while looking for another apartment).

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f. Does the constructive eviction model becomes moot if you use the impliedwarranty?i. No. not every state has recognized the implied warranty.ii. The doctrine of implied warranty only applies to residential leases while

constructive eviction applies to both residential and commercial leases.

3. Landlords tort liability for failure to keep the rental property safea. Common law (and most US jurisdictions): landlord is not liable in tort. Exceptions:

i. Public use exception , which imposes tort liability on landlord if the followingconditions are met:(1) L leases to T for a use open to the public;(2) The defect in question exists at the outset of the lease; and(3) L knew or should have known of the defects; and(4) L knew or should have known that T could not reasonably be expected to

remedy the defect or guard against injury, and

(5)The injured person is a member of the public rather than T. If T were theinjured person, he would have to fall into some other exceptions.

ii. Latent defect exception , which says that landlord is liable for latent defects if

at the outset of the lease, L knew or should have known the existence of thedefect, and T neither knew nor had reason to know the existence of thedefects.

iii. Common area exception , which says that landlord has a duty to use reasonablecare in keeping common areas safe.

(1) Is landlord responsible in torts for criminal conduct of 3rd parties? Courtssplit. Some courts say landlords duty extends only to defects on theproperty, while others impose a duty of reasonable care on landlord toprovide security where landlord has been put on notice of repeatedcriminal activities in the area.

b. Effects of tenants waiver : Lessor shall not be liable to tenant or to any otherperson or to any property for damage or injury occurring on or owing to thecondition of the leased premises, or any part thereof, or in the common areasthereof, and tenant agrees to hold lessor harmless from any claims for damages nomatter how caused.i. Validity upheld in commercial leases.ii. Court split in residential leases.

VI. Tenants obligations and landlords remedies

A. Tenants duty to repair1. Common law: tenants have duty to repair except for extraordinary and substantial

repairs.

2. Common law duty may be altered in lease agreement. A general repair clause obligatestenant to repair in order to preserve the property in the same condition as it was at theoutset of the lease. An unqualified general repair provision imposes duty on tenant torebuild the leased premises after complete destruction.

3. The doctrine of implied warranty shifts repair burden to landlord.

B. Tenants duty to avoid affirmative activities that substantially damage the property

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1. Substantial damage must be extraordinary in scope and effect. A factual issue that maygive rise to disagreements.

C. Landlords options if tenant holds over at the end of the lease

1. Common law gives landlord two options eviction (plus damages) or consent (expressor implied) to the to the extension of the lease for another term.

2. Nature of new lease : if L elects to have the lease extended for another term, moststates treat the new tenancy as a periodic tenancy.

a. When the landlord talks with the tenant he has to be careful. He may be deemed tohave made a choice when he really didnt.

3. Holdover must be out of control by Tenant : Example: L leased the property to T for 3years for $1,000 per month. T gave good notice to L of his moving out at the end of thelease. On the last day of the lease, T suffered a heart attack and was hospitalized for aweek. Question: can L elect to have the lease extended for another term of 3 years?Answer: No, the situation was beyond control of T, and thus T was not a holdover. Note:

T will be a holdover if after the condition has terminated, he still does not move out.

4. What has landlord elected? Example: Crechale & Polles, Inc. v. Smith (page 369, Ldenied existence of oral agreement to extend the lease and demanded T to vacate theproperty. However, about 2.5 months after T held over, Ls lawyer wrote to T to notifyhim that L was treating the holdover as a renewal of the lease for another term). L haselected to treat T as holdover tenant and thus, if L accepts check instead of evicting T intime, he is deemed to have agreed to an extension of the lease on a month-by-monthbasis.

5. Example: L leased an apt to T for a term of years. After the K has expired, T held overfor another 2 years. During that time, T tendered rent on a monthly basis, but each timeL refused to accept the rent and demanded T to move out. However, L did nothing else

to evict T. Question: has L elected to have this lease renewed for another term?

a. Answer: the courts split. Some have held that consistently refusing rent equates tonot extending the lease. Others have held that by failing to take adequate actionto evict the T, the L has elected to extend the lease.

6. When must L make the choice of eviction or extending lease ? Reasonable amount oftime.a. Reasonable amount of time factual issue that varies b/w situations and Ks

i. Reasonableness varies from case to case.

D. Landlords self-help measures when T holds over or fails to pay rent or perform other lease

obligations1. Remedies Available when T defaults (on rent or other lease obligations)

a. terminate and repossess the premisesi. equitable relief from forfeiture of lease if rents are paid w/i a reasonable period

b. Also, L can sue for back rent and other damages

2. Common law approach : Landlord may use self-help measures if two conditions are met:a. Landlord is entitled to repossession, AND

i. E.G. T holds over after the lease term or T breaches a major term of the leaseb. Method of reentry is peaceable

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i. (E.G., Berg v. Wiley, page 403, L changed lock while T was away, court foundmethod not peaceable).

ii. Peaceable(1) Voluntary transfer of possession

(a) Landlord appears on the property and tells the tenant that he isretaking possession of property because he has breached and tenantleaves on his own.

(2) L cannot use force or threats, AND L cannot use a ruse or stratagem totrick T out of possession

iii. Examples of non-peaceable(1) Picking a lock(2) Entry through an open window(3) By removing the doors(4) By changing locks

3. Modern view : L cannot use self-help measures, must resort to judicial proceedings(example, Berg v. Wiley, page 403, the court found Ls entry not peaceable but restedopinion on prohibiting self-help measures entirely). Courts are more willing to apply thisapproach in cases of residential leases. Many jurisdictions have established summaryproceedings that provide judicial remedy for L in a few days

a. Such proceeding in Ohio is called Forcible Entry and Detainder

b. What if the lease provides landlord may repossess the property upon Ts default?

i. Courts split.ii. Some regard this an indication T has waived his rightiii. Majority and modern courts hold the view that the policy against self-help

measures cannot be contracted awayiv. **However, courts are likely to limit Ts ability to waive to only commercial

leasesv. There is a disparity in the bargaining power.

4. Residential v. Commercial Leasea. Some STs allow self-help in context of commercial leases, but not residential leases.Why?i. The psychological impact due to loss of residence is bigger than that due to

loss of commercial spaceii. The bargaining powers of the parties in a commercial lease tend to be equal

5. Example: Berg v. Wiley(MN 1978) [p. 403]a. Facts

i. The lease(1) L and Ts predecessor entered into lease in 1970, for 5 years(2) T should not alter the premises w/o first seeking consent from L.

(3) L may repossess the property upon Ts default/non-compliance w. leasesterms"

ii. T remodeled, w/o consent, and L did not like the remodelingiii. L gave notice that T must undo the remodeling, or else L would evict T in 2

weeksiv. At deadline, T dismissed employees, closed the restaurant, and placed sign

closed for remodelingv. L attempted to change locks, but T returned in time to intervene and preventvi. L, hanging around property, become concerned about destruction of property

and called police

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vii. Police mediated an agreement b/w parties to maintain status quo, until eachparty consulted counsel

b. Issuesi. Whether T abandoned/surrendered the premisesii. Whether Ls reentry was forcible and wrongful as a matter of law (despite lease

provision permitting Ls self-help)c. Held

i. Sufficient evidence to support jury finding that T did NOT abandon/surrenderthe premises

ii. T.Ct. determination that, as a matter of law, Ls reentry was unlawful wascorrect

6. Ls liability for conversion/destruction of Ts personal items

a. E.G. L sued to evict 2 tenants for failure to pay rent. Before the eviction proceedingand when the Ts were out-of-town, L removed the Ts personal property from thepremised and placed the property on the street w. a sign saying Free Take. Tswere, by judicial proceeding, evicted. But, the Ts sued to recover damages for thevalue of the personal items. [See Chryar v. Wolf, 21 P.3d 428 (CO Ct. App. 2000)]i. Ts could recover for the value of the personal property b/c the L had wrongfully

taken the property.(1) If the L had simply placed the personal property into a storage room, then

no damages b/c Ts could simply collect property

E. Landlords choices when tenant abandons lease

1. Accept abandonment and terminate the lease , releasing T from future leaseobligations/rent (T must pay past due rent and for any damages to prop).

a. What constitutes abandonment by tenant? May be subject to dispute (example,Berg v. Wiley, page 403, closed for remodeling sign and discharge of employees not indication for abandonment)

b. After tenants abandonment, L may rent out the property again, and tenant is notentitled to any higher rent that the landlord is able to charge.

c. Why would you want to just accept the property?

i. If you reject the abandonment, then the tenant is kept on the hook. Thelandlord can go find someone else, and if the new tenant defaults, then thelandlord can go after both of them. To accept the abandonment doesnt seemso appealing now.

2. Landlord may refuse to accept tenants surrender of the premises and sue tenant fordamages.a. Lease is not terminated. L may sue for damages based on the Ts anticipatory

breach.b. If the landlord rejects the abandonment, can the tenant come back later?

i. If the landlord has already leased the property, then no, even though he canstill be liable for rent if the new tenant defaults.

ii. If there isnt a new tenant then the courts are split.(1) Some courts say that the tenant should still be able to come back because

technically the property still belongs to him.c. Is landlord required to mitigate damage?

i. Traditional common law: no duty to mitigate. Why?

(1) Lease is mere a conveyance of real property than a K. Thus, L should notbe concerned (or obligated) by the consequences of T abandoning hisproperty interest. T cannot by his own wrongdoing impose a duty on L.

(2) Law does not want to encourage abandonment of lease by T b/c it leads towaste and vandalism.

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(3) Ls mitigating effort may be deemed as acceptance of Ts abandonmentand thus L would be forfeiting recovery from T for future rents should L failto rent out the premises

(4) Requiring L to mitigate damages causes complexities in litigating rewhether L has acted reasonably to mitigate damages

(5) Unfair b/c L loses chance to rent out another vacant apt in a multi-unit bldgii. Modern view (majority US jurisdictions): L has duty to mitigate by renting out

the premises in residential leases.(1) This is due to the increasing view that a lease is a contract and as such

imposes duty to mitigate on the non-breaching party

(2) (E.G., Summer v. Kridel, page 410)(a) T signed 2-yr lease, but notified L prior to start of lease term that she

would be unable to fulfill lease(b) L failed to re-let until more than a year after Ts surrender(c) L sued T to collect back rent(d) HELD: L failed to take reasonable action to mitigate damages

(e) As soon as landlord accepts surrender of tenant then the contractends

[A] Therefore landlord should not accept tenants surrender(3) Burden of proof:

(a) Most jurisdictions require L to show he has used reasonable effort tore-let the prop(b) Minority req. T b/c in K law breaching party has burden to show lack of

reasonable effort to mitigate by non-breaching party(4) Why require mitigation?

(a) Lease is a K rather than a mere transfer of possessory interest in realproperty. Thus, K law req. mitigation should apply to leases

(b) T has a significant liberty interest in being able to move out beforeend of lease term, so long as Ls financial interests are fully protected

(c) Each apt is unique and suits different tastes of different customers.Even if L is not reqd. to re-let the premises, he still may not be able torent out another unit

(d) **Uniform Residential L & T Act (URLTA), adopted in about the STsdoes impose such duty on L in residential tenancies(e) Policy against waste

[A] Promote a more productive use of the property.(5) Does mitigation duty apply to commercial leases?

(a) Courts split(b) Jurisdictions that extend the duty to commercial leases are governed

by the ordinary K principles

(6) If new T defaults during term of 1st Ts lease, then 1st T is liable for thedefault

(a) But L cannot double-collectiii. IF L has duty to mitigate:

(1) If L has failed to meet the duty:(a) his damages (recoverable in suit) are reduced by the FMV of rental of

the property(b) Note: this includes the situation where L has failed to put up

reasonable effort to re-rent the space at its FMV[A] E.G. L hastily re-rented the property for $100, while the

FMV was $200 and the original rent was $150. In this situation,L would not be entitled to recover any damages b/c byreasonable effort L could have rented the premises for atleast $150

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[B] EX 2: there were 8 months left in the lease. Rent was $100a month. L didnt attempt to mitigate, but there was evidenceto show that he could have gotten $90 a month. (ANSWER:$80)

(2) If L has satisfied the duty:(a) L damages are the difference b/w the agreed rent and the rent that L

could charge form the new-T(b) If he tried reasonably to find new-T but failed, then Ls damage is

the agreed rent(c) Note: Law does not compel L to re-let the leased premises. Indeed, L

may sue before he starts any effort to find a new-T. However, in suchsituation, FMV of rental must be deducted from the damagescompensation

d. Waiver by T of Ls duty to mitigatei. Enforceableii. Rent acceleration clause intended as a waiver of the duty to mitigate

(1) Enforceable, unless the payment upon acceleration is unreasonably highrelative to the estimated damages

(2) Note: scholars have pointed out that in assessing reasonableness a courtcould essentially impose the duty to mitigate on the L again, therebyrendering the acceleration clause meaningless

e. How can L avoid having his mitigation effort be construed as acceptance of Tssurrender?i. L can simply communicate to T, promptly and effectively, the message that L is

not accepting Ts abandonment and is merely re-letting the premises on Tsbehalf

f. Landlords remedy if he refuses surrender by tenant: may recover the differencebetween the rent specified in the lease and the amount he collects from new tenantbased on market value.

g. Landlord re-letting of premises may lead to belief that he has accepted tenantsabandonment. To avoid this, landlord should make it clear to tenant that I am re-letting the premises on your account. You are still liable for the difference.

F. Tenants duty to repair1. Common law: tenants have duty to repair except for extraordinary and substantial

repairs.

2. Common law duty may be altered in lease agreement. A general repair clause obligatestenant to repair in order to preserve the property in the same condition as it was at theoutset of the lease. An unqualified general repair provision imposes duty on tenant torebuild the leased premises after complete destruction.

3. The doctrine of implied warranty shifts repair burden to landlord.

Estates and the Rule againstPerpetuities

I. Scope of CoverageA. Present possessory estates;

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1. Person who holds the interest can possess it right now.a. Fee simple absouteb. Fee Tailc. Life estated. Defeasible fees

B. Future interests;1. No possessory interest right now, but you may have one in the future.

C. The Rule against Perpetuities

D. Note : Practice is key to mastering the concepts summarized in this outlineII. Present possessory estates

A. Estates v. Interests1. 4 Types of Estates (& their durations)

a. Fee Simple (forever)b. Fee Tail (until original grantees lineage dies out)c. Life Estate (for the life of grantee)d. Term of Years (fixed period measure in years, months, or days; or a date certain)e. ** 1-3 are Freehold Estates; 4 is a Non-freehold Estate (although the distinction is

not very relevant today)2. Interests

a. All estates are interests, but not all interests are estatesB. Fee simple absolute (to A and his heirs, to A, etc.)

1. Definition

a. Absolute ownership (title) in real property for perpetual duration withoutlimitationsi. Absolute ownership no conditions attached

(1) Most unrestricted and longest estate.b. (A.K.A. complete ownership until the end of time)

2. Creation of fee simple absolute interest

a. Common Law: to A and his heirsb. Modern View: to A and his heirsis not reqd.

i. Other acceptable phrases include to A, to A forever,etc.ii. But still most lawyers stick to the tradition of using and his heirs in order to

grant fee simple absolute.3. Transferability of fee simple absolute interest

a. Inheritable under intestacy statutes. Thus if the owner of a fee simple dies, theproperty passes to the people deemed to be his heirs under the intestacy statuteof the state where the land is located.

b. Ownership is freely transferable by alienation, will and inheritancei. A salient feature of fee simple estateii. ANY restriction on transferability is void

c. Devisable by Willi. E.G. O conveys land to A and his heirs. A dies, but in his will, A leaves the

land to a friend B.(1) Does As son C have any claim in the property on the ground that he is

the only heir to A?(2) NO. A is free to transfer the land, by will, to any individual, and the

phrase and his heirs does not create any ownership right in C.C. Fee tail (to A and the heirs of his body)

1. Example:a. O grants to A and the heirs of her body, and if A dies without heir, then to B and

his heirs.i. Creates a series of life estates in A, and upon As death, to As children, and

so on. (Traditionally it was to As eldest son. The law has relaxed in allowingdaughters to share this interest)

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(1) Direct blood line.ii. A has fee tail not fee simple.iii. If at the time A dies, A has a son A1, A1 gets the fee tail. B gets nothing.iv. B gets the property only after As line of blood has run out.

v. Note : Bs interest is called remainder.

2. Elimination of fee tail in US jurisdictions :a. In the US today, fee tail has been largely abolished except for in a few states (ME,

MA. RI, and DE)

b. Even in states that still keep fee tail, the fee tail can be destroyed by an ordinaryconveyance of fee simple absolute by the fee tail holder during his life time (notby will or intestacy).

i. Example : O grants house to A and the heirs of her body, and if A dieswithout heir, then to B and his heirs. A conveyed the property by deed to Cand his heirs. C has fee simple absolute interest.

(1) When A dies without heirs, B does not have any interest in the property.(2) C has fee simple.

c. What interest results in States that have abolished fee tail?i. Two main approaches:

(1) By statute, fee tail is converted into fee simple or the largest estate thegrantor owns

(a) (E.G.: O has life estate in land, and conveys to To A and the heirsof her body. A holds a life estate b/c that is biggest estate that Oowned)

(2) By statute, fee tail is converted to fee simple but subject to executorylimitation if the fee tail has a remainder in someone else

(a) (E.G.: To A and heirs of his body, then to B and his heirs convertsto: To A and heirs, but if A dies w/o issue, then to B and his heirs).So if A has an issue, then the As will have fee simple absoluteforever.

D. Life estate (to A for life)1. Reversionary v. Remainder Interest

a. If O grants to A for life, then O maintains a reversionary interest, which takes

effect upon As deathb. If O grants to A for life, remainder to B and his heirs, then B holds a remainder

interest, which in this case would be a fee simple estatei. Unless it says remainder to B for life. That would be another life estate in B.

2. Life estate in a group of people :a. O grants land to my children for their lives and the remainder goes to Church. O

has 3 children. Child 1 dies.i. Does the church get 1/3 of interest now?

ii. Answer : most jurisdictions hold that child 1s interest goes to the remainingchildren. Church will get land when all children die.

3. Ambiguous grant :a. Courts prefer to find fee simple over life estate w/o contrary evidence

i. In cases of ambiguity, courts will choose fee simple because it is lessrestrictive in transferability and practice than the transferability in a lifeestate.

ii. Courts are also willing to infer that the grantor has given 100% of their will.b. Courts presume that grantor has granted his entire interest rather than partial

interest w/o contrary evidencec. Restrictions inconsistent with fee simple are voided

i. E.G.: White v. Brown, p. 190

(1) I wish White to have my home to live in and not to be sold. I also leavemy personal prop to Sandra White Perry. My house is not to be sold.

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(2) Decedents other legal heirs claimed that this will created a life estate,not a fee simple absolute. Lower courts agreed.

(3)TN Supreme Ct. held that the will created a fee simple by finding:(a) That applicable TN statute provided that a fee simple

absolute was passed unless the testator clearly intended todevise a life estate.

(b) Fee simple absolute was presumed (even w/o words of inheritance)if there was no language that could be construed to create aremainder.

(c) Thus, the restraint on the sale of the house was insufficient toovercome the presumption that a fee simple had been devised, andtestamentary restraint on alienation was void

(d) The court focused that White was the only person that thedeceased was associated with up to her death

[A] She was the only one who actually took care of her prior to herdeath. There was no evidence that the nieces and nephewswere in the picture. She didnt even mention the nieces andnephews in her will at all.

(e) Dissent focused on the restrictions

4. Transferability of life estate :

a. Freely transferable, but transferred interest is limited by the life span oftransferor/life estate holderb. E.G. A holds life estate in the house. A writes to B, I want you to know that I

want you to have my house for as long as you live. Then, A dies.i. Question: Does B have a life estate in the house?ii. Answer: No, Bs interest in the house terminates when A dies

c. NOTE: Life Estate holder can transfer fee simple, only if he obtains the consent ofall the remainder/reversionary holders

5. How an a life estate holder convey a fee simple?a. By obtaining consent from all holders of the remainder interest.

6. Undesirable problems associated with life estate :a. Hard to sell or lease property for an extended period of time b/c buyers/lessees

can only purchase/lease property for length of grantees lifeb. Judicial response to the inflexibility of a life estate :

i. Courts sometimes (though not often) order the sale (or a partial sale of prop)and divide the proceeds b/w the life estate holder and the remainder

ii. Key factors courts consider :(1) Whether the sale is in the best interest of all parties (including whether

sale is necessary to avoid waste), AND(2) Whether sale is the only practical way to provide material comfort for

the life tenant and to preserve asset value for the remainder interest

iii. E.G. Baker v. Weedon, page 197. (life estate v. remainder)(1) Widow, w. life estate in farmland, tried to sell land, which was expected

to appreciate in value soon, to help subsidize her living expense

(2) HISTORY: T.Ct. allowed her to sell land and thus divested remaindermenof their contingent interest.

(3) ISSUE: should the property be sold to sustain a comfortable living of thelife estate holder?

(4) RESULT: MS S.Ct. revd and remanded(a) You still have to take into account the interest of the grandchildren,

despite the presumed intent of the deceased or the equitable reliefof Anna.

(5) HELD:

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(a) Deterioration & waste of property is not exclusive & ultimate test indetermining whether a sale of land affected by future interest isproper,

(b) Ct. should also consider whether a sale is necessary for the bestinterest of all the parties, i.e., the life tenant & the contingentremaindermen

(c) Intent of the husband:[A] He seemed to speak very highly of her because he wanted her

to be taken care of, and the house could then go to herchildren, even if they werent his.

(6) RATIO:(a) Parties should convene to try and resolve the issue independent of

court system(b) Perhaps, a partial sale of the property would be a better resolution(c) S.Ct. remanded the case to allow for a resolution that protected the

interests of all affected parties

c. Modern life estate equitable life estate (as opposed to legal life estate) : Themechanism works like this: (how to resolve the tension between a life estate andthe remainder interests)

i. O, who intends to grant a life estate in A, puts property in trust, with

beneficial interest held by A for life, and remainder to O/3

rd

Pii. The trustee holds legal title to the property in the form of fee simpleabsolute, while A (beneficiary) holds the beneficial interest.

iii. Trustee can sell land and transfer fee simple absolute interest to buyer iftrustee believes that such sale would be for the benefit of all equitableowners

(1) Note : Trustee owes equitable owners fiduciary duty and thus is requiredto act for their best interest.

iv. For added flexibility, A can be both the trustee and the beneficiary.(1) To A as trustee to hold land for the benefit of A for life, and then to B

outright and free of trustv. Language used

(1) To T, as trustee, to hold land for the benefit of A for life, and then to Boutright and free of trustvi. Presently, every life estate is granted in the form of a trust.

7. Duty of legal life estate holder to avoid wastea. Generally, life estate holder is reqd. to use the property in such a way as to avoid

waste

b. Definition of waste :i. Action of the life estate holder thatpermanently impairs the propertys

value or the interest of the remainder holders.c. Different types of wastes

i. Affirmative (or voluntary) waste(1) Life estate holder acts affirmatively to damage the property

ii. Permissive (involuntary) waste:(1) Life estate holder fails to act reasonably to prevent the deterioration of

the property(a) E.G. failure to treat termites

iii. Ameliorative waste:

(1) Life estate holder changes the principal use of the property, and therebyincreases the value of the land or at least does not decrease the value.

(2) Cause of action arises only if the change is inconsistent with theintention of the grantor, and the property may still reasonably beused in the fashion that the grantor had intended

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(3) E.G.: To A for life, to be used as a farmland, remainder to B and hisheirs.(a) If A builds an office building on the land and as a result the value of

the land increases, then B, who loves farming and has beendreaming of owning his own farm, may still sue for ameliorativewaste b/c the office building is inconsistent with the intention of thegrantor and the land may still be reasonably used as a farmlandeven though using it as a farm land gives only a fraction of thevalue of using it as an office space.

(b) The law wants to promote more productive use of the land.[A] In absence of any language to the contrary, the law does not

presume that the grantor only wants the land to be used theway it was used when it was granted.

(4) If things/conditions beyond the grantees control cause the property tobe unusable for the purpose selected by the grantor, then some courtsmay allow the grantee to convert the property to another use (but thecourts are reluctant to do so)

d. Duty to take insurance on the property : Jurisdictions split.i. In states that do not require insurance, the insurance proceeds belong to the

life estate holder who paid the premium.

ii. In STs that req. insurance, the proceeds are divided b/w life estate holder andthe remainder man in proportion to their respective value of the property.

E. Defeasible fees (fee simple interest that is interrupted by the occurrence of some events)

NEED TO MEMORIZE THE EXACT TERMINOLOGY OF THESE DEFEASIBLE FEES.1. Fee simple determinable

a. Conveyance of a fee simple interest for a limited duration.

b. Grantees property interest automaticallyterminates upon occurrence of specifiedevent/noneventi. (e.g., to A so long as A refrains from smoking)

c. Words commonly used to create fee simple determinable:

i. So long as,ii. While,iii. During,iv. Until,

v. Unless, (but can also be interpreted as a condition attached)vi. And any other word that limits the duration of the grant

d. Freely transferable, but the nature of the estate stays the same

i. But the transferor will be bound by the same limits.ii. If A transfers to B, but if the next day, A picks up smoking, B loses every

penny that he has paid. He loses the interest completely. The property goesback to O

e. Possibility of reverter chance that the property might return to the grantor if

condition subsequent happensf. Relationship

i. A fee simple determinable is a present possessory estate followed by apossible reverter in the grantor

(1) Sometimes the possibility of reverter is expressed in the deed/willcreating the fee simple determinable

(2) If not expressed in will/deed, then it will be implied as part of the natureof a fee simple determinable

ii. Grantee: holds property in a fee simple determinable

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iii. Grantor: if remainder is in the grantor, then his remainder interest is calledpossibility of reverter

g. NOTE:i. Grant does not have to specifically mention grantors residual interest.

(1) Reversion back to grantor occurs automatically by operation of law uponthe occurrence of the specified event/nonevent.

ii. Possibility of reverter is a future interest2. Fee simple subject to condition subsequent

a. Definition:i. Grantor intends to convey a fee simple absolute but has attached a condition

to the grant(1) If a specified future event/nonevent happens, the grantor MAY revoke

the grant and regain his fee simple absolute estate(2)

property master outline - bai

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