Property Law - Property

PROPERTY OUTLINE I. II. OWNERSHIP A. PROPERTY CAN BE TRANSFERRED/ALIENATED BY SALE, GIFT, WILL (effective upon decedent death), OR INTESTATE SUCCESSION PRESENT & FUTURE INTEREST A. PRESENT ESTATES a. WHAT ESTATE IS IT? i. FEE SIMPLE - absolute ownership of potentially infinite duration and is freely alienable. No future interest. ii. FEE TAIL - only be inherit by grantee's lineal blood descendants by specific words of limitation iii. LIFE ESTATE - limited in duration by the life of grantee or 3P.  FUTURE INTEREST: REVERSION - Upon end of measuring life, title reverts back to grantor or remainderman iv. LEASEHOLD b. IS IT DEFEASIBLE? - terminate upon the occurrence of an event i. INDEFEASIBLE ii. DEFESEABLE - WHO DOES IT GO BACK TO?  GRANTOR? a. CONDITIONAL LANGUAGE - FEE SIMPLE SUBJECT TO CONDITION SUBSEQUENT i. RIGHT OF ENTRY - Upon occurrence of condition, grantor (or successor in Interest) has right to terminate the estate. NOT AUTOMATIC ii. CONDITIONAL LANGUAGE: "provided that;" "on condition that," "but if" b. DURATIONAL LANGUAGE - FEE SIMPLE DETERMINABLE i. POSSIBILITY OF REVERTER - terminate upon happening of event & full ownership is returned to the grantor. AUTOMATIC ii. DURATIONAL LANGUAGE: until; for so long as; while; during.  3P? FEE SIMPLE SUBJECT TO EXCECUTORY LIMITATION (CONDITIONAL OR DURATIONAL LANGUAGE) a. EXECUTORY INTEREST - Upon occurrence of event, title will automatically pass to 3P. AUTOMATIC B. FUTURE INTEREST a. GOES BACK TO GRANTOR i. REVERSION [LIFE ESTATE] - creates automatically when grantor transfers less than what she owns & she retains part. ALWAYS FOLLOWS CONTINGENT REMAINDER ii. POSSIBILITY OF REVERTER [FSD] - automatically retained by grantor & follows determinable estate iii. RIGHT OF REENTRY [FSSCS] - must be exercised by grantor & follows estate subject to condition subsequent b. GOES BACK TO SOMEONE ELSE i. REMAINDER [POLITE] - does not cut short but waits for the natural termination of previous estate. 1 III.  VESTED- ascertainable grantee a. INDEFEASIBLE - not subject to condition precedent & cannot be taken away b. SUBJECT TO COMPLETE DIVESTMENT - occurrence of condition creates interest in 3P c. SUBJECT TO PARTIAL DIVESTMENNT [CLASS GIFT] unspecified group which ID is known once grantor dies and class is ID. any person after grantor dies is not part of class.  CONTINGENT - grantee is unascertainable or subject to an express condition precedent a. REVERSION ii. EXECUTORY INTEREST [IMPOLITE] - cuts short previous owner upon occurrence of event  SHIFTING - cut short grantee  SPRINGING - cut short grantor in future upon event C. SPECIAL RULES a. SHELLEY'S CASE - prevents remainder in grantee heirs and uses the doctrine of merger to create a fee simple CONCURRENT OWNERSHIP OF LAND - ownership or possession of real property by two or more persons simultaneously. Concurrent owners have right to possess the whole, but can K out of basic rule. A. TENANCY IN COMMON [DEFAULT] - Each party owns half with NO right of survivorship (look for heirs who get remainder interest of dead tenant). Freely transferable inter vivos or by will & does not affect ownership of others. B. JOINT TENANCY - Each party owns half with RIGHT OF SURVIVORSHIP a. RIGHT OF SURVIVORSHIP - JT dies remaining JT gets 100%.  Cannot be modified by will (last JT to survive gets all, will = basura) b. FOUR UNITIES - Possession (each has right to possess the whole); Interest (equal shares of same type of inters); Time (interest received at same time); Title (interest in same title)  Lose one unity = JT destroyed c. SEVERANCE OR CONVEYANCE - destroys JT & new ownership as TIC. Reconveyance to og JT does not revert back to JT d. GRANT MORTGAGE - JT may grant mortgage in her interest  Lien theory state - JT does not server, only upon foreclosure (majority)  Title theory state - JT severs into TIC between remaining JT and creditor C. TENANCY BY THE ENTIRETY - marriage (legal) + right of survivorship (5 UNITIES) a. RIGHT OF SURVIVORSHIP - spouse dies, the living spouse gets it all b. CONVEYANCE - requires consent of both spouses c. DIVORCE - terminates TBE and converts it as a TIC D. RIGHTS & OBLIGATIONS a. POSSESSION & USE  GENERAL RULE - cotenants have equal rights to use the land. Cotenant using land does not have to pay rent to other, but can K differently.  OUSTER - cotenant in possession denies another cotenant access to the property. Ousted cotenant can bring action to access land (injunction) and/or recover damages for value of use while cotenant was unable to access property b. 3P RENT & OPERATING EXPENSES  3P RENT - rent received from 3P, minus operating expenses, is divided based on ownership interest of each cotenant  OPERATING EXPENSES (taxes & mortgages) - divided based on ownership interest of each cotenant. 2 IV. V. 1. Contribution - cotenant that paid in excess of her interest can collect contribution from other cotenants  REPAIRS & IMPROVEMENTS - no right to reimbursement from cotenants for necessary repairs or improvements. Can bring partition action. c. PARTITION: EQUITABLE REMEDY - TIC & JT have unilateral (no need for permission) right to partition.  Court divides property into equal parts 1. IN KIND - physical division, preferred by the ct 2. BY SALE - sell land and divide proceeds in accordance with percentage of ownership. Usually when in kind is not practical or fair to all parties  K - cotenants can agree not to partition. Enforceable if K is clear and time limitation is reasonable SPECIAL ISSUES A. DISCRIMINATION UNDER FHA i. FHA - prohibits discrimination in the sale, lease, rental and financing of dwellings & advertisement w/ discriminatory preference or falsely denying a unit is not available  Exemptions - (1) single-family housing sold/rented w/o broker, (2) owner-occupied building w/ 4 or fewer units, (3) religious org. and private clubs B. CONFLICTS OF LAW - cases disputing property, the controlling law is where the property is located LEASEHOLDS: LANDLORD & TENANT A. LEASE - creates a K interest + a property interest (mix of K and property law) B. TENANCIES - know how each is created & terminated i. FOR YEARS - estate that lasts for a fixed and ascertainable period of time & ends automatically upon expiration.  Is created by K between tenant and landlord (more than 1 yr - writing & signed SOF)  No need to provide notice, it ends automatically. Can terminate before its term by abandonment of tenant or either party's breach ii. PERIODIC - estate that is repetitive and ongoing for a set period of time (month-to-month or year-to-year).  Renews automatically at end of each period until one party gives notice of termination (notice must be given before the start of the last term)  Created by party's intent (1) express by K or (2) implication by conduct (payment of rent) iii. AT WILL - may be terminated by either landlord or tenant at any time & for any reason  Created either by express agreement or by implication (both parties intent to create it)  Can be terminated by either party w/o notice (death of either terminates it) a. If K grants only landlord right to terminate = tenant has right by implication to terminate b. If K grants only tenant right to terminate = landlord has no right to terminate iv. AT SUFFERANCE OR "HOLDOVER" - tenant remains in possession after lease has ended (temporary tenancy: before landlord evicts or re-rents property to tenant)  Created by actions of the tenant alone (TAW: created by K of L and T)  Terminated by (1) tenant voluntarily leaves, (2) landlord evicts, (3) landlord re-rents (periodic tenancy) a. Tenant is obligated to pay reasonable value of use & is liable for damages that result from holdover C. DUTIES i. TENANT  PAY RENT - lease requires it unless 3 a. (1) premise is destroyed & tenant is not responsible b. (2) landlord completely or partially evicts c. (3) landlord materially breaches K (below) i. IMPLIED COVENANT OF QUIET ENJOYMENT (residential and commercial) 1. Landlord actions make the premises wholly or substantially unsuitable for its intended purpose; and 2. Tenant is constructively evicted a. Premises cannot be used for intended purpose b. Tenant notifies landlord of problem c. Landlord does not correct problem d. Tenant vacates premises after reasonable amount passed 3. Landlord controls: common areas (lobby, hallway) & nuisance like behavior of other tenants (stinky wall of pee) ii. IMPLIED WARRANTY OF HABILABILITY (residential only) 1. Landlord has obligation to maintain the property such that it is suitable for residual use (cannot threaten tenants health and safety) a. Cannot be waived by tenant b. Landlord failure to comply w/ housing codes = breach 2. If premises is not habitable, tenant may refuse to pay rent (must notify landlord and give opportunity to fix problem), remedy the defect & offset cost, or defend against eviction  AVOID WASTE - tenant duty not to commit affirmative (voluntary) waste or permissive (neglectful) waste. Ameliorative waste is allowed (increases property value) but requires landlord permission ii. LANDLORD  GIVE POSSESSION - majority: deliver physical possession v. minority: deliver legal possession  DUTY TO REPAIR - residential lease, landlord is presumed to be responsible for repairs. Tenant must notify landlord of any needed repairs. Not on commercial lease.  RETALIATORY EVICTION DOCTRINE - landlord cannot evict residential tenant for reporting housing violation or refusing to pay rent for IWH breach  DUTY TO MITIGATE DAMAGES - tenant abandons property early or is evicted. a. MAJORITY RULE - landlord must make reasonable efforts to re-rent the property. i. If landlord does not make diligent efforts to re-rent, the tenant is relieved from payment of rent. ii. If landlord does mitigate, is entitled to difference between og tenant and rent received by new tenant iii. Does not have to accept unacceptable replacement tenant b. MINORITY RULE - landlord does not have to mitigate damages. D. TORT LIABILITIES i. TENANT - owes duty of care to invitees, licensees, and foreseeable trespasser. ii. LANDLORD  COMMON LAW - responsible for (1) negligence for latent (hidden) defects about which tenant has not been warned; (2) faulty repair completed by landlord; (3) negligence that causes injuries in common areas of property 4 VI.  MODERN - landlord have a general duty of reasonable care E. SUBLEASE v. ASSIGNMENT i. CAN BE LIMITED BY K, IF NOT THEN FREELY ASSINGED/SUBLET ii. ASSIGNMENT - complete transfer of remaining lease term  RENT - landlord can collect rent from tenant (privity of K) & assignee (privity of estate) iii. SUBLETTING - transfer of property for less than the entire duration of lease term (tenant retains reversionary interest)  RENT - landlord can collect from tenant (privity of K and estate), sublessee owes rent to tenant only. iv. LANDLORD TRANSFER OF INTERST - does not need tenant permission before transfer but new landlord is bound by terms of existing lease F. CONDEMNATION - taking of land for public use or bc land is unfit for use. i. PARTIAL: tenant is liable for rent but is entitled to compensation for condemned portion. ii. COMPLETE: tenant is discharged and entitled to compensation LAND SALE K → 2 DOCS (1) REAL ESTATE K & (2) DEED A. REAL ESTATE CONTRACT - intent to convey/transfer title i. SOF  WIRITING + INTENT OF TRANSFER  SIGNED BY PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT  BASIC TERMS - Parties, Price & payment conditions, description of property a. Description needs to be sufficient to let buyer and seller know what property is being sold/bought. i. Not as detailed as a description on a deed which is recorded and gives notice to the world  TIME IS OF THE ESSENCE - K must expressly state it, if not time is not of the essence and failure to close at set date is not a breach (watch out for curable defects which allow seller reasonable time to cure)  EXCEPTIONS TO SOF (oral k) a. PART PERFORMANCE - partial performance by either party is evidence that K existed. i. Acts of performance: (look for at least 2) 1. full or partial payment 2. possession by buyer 3. substantial improvements made by buyer to property a. improvements an owner would make, not a lessee b. DETRIMENTAL RELIANCE/ESTOPPEL - party reasonably relied on K/promise; promise actually induced reliance; and would suffer hardship if K was not enforced c. FULL PERFORMANCE - seller has conveyed title to the buyer d. ADMISSION - party admits to existence of oral K e. ANOTHER WRITING THAT SATISFIES SOF (check) ii. MARKETABLE TITLE → "title free from unreasonable risk of litigation"  MARKETABLE TITLE IS IMPLIED, IF NOT EXPRESSED IN K - seller must deliver at closing, clear and free of liens, encumbrances, and mortgages (seller can enter into K w/o title, he has until closing to provide marketable title) a. WAIVER - buyer may waive the right to have a marketable title  DEFECTS THAT RENDER TITLE UNMARKETABLE a. AP - Title acquired by AP that hasn't been quieted (judicially supported) b. Defective execution of a deed 5 c. Significant variation of description of land from one deed to next (people cannot tell which property is subject to condition) d. Future interest where holders have not agreed to transfer e. Private encumbrance (mortgage, covenant, option K, easement, right of 1st refusal, liens) i. Seller can satisfy a mortgage or lien at closing w/ proceeds of sale f. Violation of zoning ordinance i. Mere existence of zoning restriction does not render title unmarketable (public record all on notice) g. Significant physical defect (incurable encroachment) i. Visible encroachment that purchaser knows does not render title unmarketable h. PHYSICAL DEFECTS DO NOT RENDER TITLE UNMARKETABLE  TIMING - title must be marketable at closing a. RESCISSION - buyer can rescind immediately upon discovery if it is highly unlikely that the seller can cure the title defect at closing i. NOT HIGHLY UNCURABLE? buyer must notify seller of defect and give reasonable time to cure it (can extend closing date, even if time is of the essence) b. INSTALLMENT K - title does not need to be marketable until buyer pays final payment and seller is required to deliver title  REMEDIES TO BUYER IF TITLE NOT MARKETABLE a. Rescission + damages and restitution of down payment b. Enforce k w/ price reduction iii. BREACH OF K  REMEDIES a. AT LAW: Money Damages i. Buyer breaches (Seller recovers) 1. Damages: a. seller is entitled to expectation damages (K price - market price at time of breach). b. Incidental damages (cost of inspection). c. Consequential damages (mortgage interest). d. Punitive damages, if willful breach 2. May retain down payment, even if not liquidated damage provision on K (limited to cover damage cost of buyer breach). a. Reasonable liquidated damage clause? Seller may retain entire down payment if reasonable 3. IF SELLER SUFFERS NO DAMAGES - CANNOT RECOVER ii. Seller breaches (Buyer recovers) 1. Expectation damages: market price at time of breach - breach of K price. 2. Incidental and consequential damages 3. Restitution of down payment b. EQUITABLE REMEDY i. Buyer breaches (Seller recovers) 1. Recission of K 6