Property Outline

Spring 2021 Holman

 Concurrent Ownership: Modern Concurrent Estates and

Severance (pg. 377)
o Concurrent Ownership
 Each co-owner or cotenant has the right to use and possess the entire
property
o Modern Concurrent Estates
 Tenancy in common
o Each has an undivided, fractional interest in the property
 Right to use and possess whole parcel
 Fractions don’t have to be equal
 Proceeds on sale would be divided proportionally
o Each tenant’s interest is alienable, devisable, descendible
o Preferred language: “to A and B as tenants in common”
 Each has 50% interest in the property
o Modern law favors tenancy in common absent express language in
the contrary
 The default
 Joint tenancy
o Each has an undivided, fractional interest in the property
o Each also has a right of survivorship
 When A dies, B becomes the sole owner
o At common law and some places today, a joint tenancy is created
only when the four unities of time, title, interest, and possession are
present
 If one is missing, it’s a tenancy in common
 Time: all joint tenants must acquire their interests at the same
time
 Title: they must acquire title by the same instrument (same
deed)
 Interest: must have the same shares in the estate, equal in
size and duration
 Possession: must have equal right to possess, use, and enjoy
the property
o If a joint tenant transfers interest, the joint tenancy is severed, and
they all become tenants in common
o Neither devisable nor descendible
 It is alienable, but doing so destroys the joint tenancy
o Preferred language: “to A and B as joint tenants with right of
survivorship”
 Tenancy by the entirety
o Only married couples can hold property in tenancy by the entirety
o Only ended by death, divorce, or agreement by both spouses
o Also has right of survivorship, along with undivided right to use and
possess the whole property.
o Preferred language: “to A and B as husband and wife as tenants by
the entirety”
 Title theory
o Mortgage destroys unity of time and title, severs joint tenancy
 Lien theory state
o Mortgage does not destroy unities, does not sever joint tenancy
o Split as to whether mortgage survives death of joint tenant
 Secret severance
o Breaking a joint tenancy behind the back of another
o Risk with joint tenancy
 Intent theory
o Courts are increasingly focusing on intent when determining whether
a joint tenancy has been created rather than relying on the four
unities
 Cases
o James v. Taylor
 Facts: Redmon conveyed a property to her three children, two
of the three died, the third (Taylor) sought a judgment that
the property had been conveyed to the grantees as joint
tenants with right of survivorship, making Taylor the sole
owner. The other children’s descendant’s opposed, arguing
the property was conveyed to them as tenancy in common.
The intention to convey as a joint tenancy with right of
survivorship was not expressed in the instrument of
conveyance itself. It was first ruled in favor of Taylor, appealed
 Issue: Whether the deed from Redmon was a conveyance to
them as tenants in common or as joint tenants with the right
of survivorship.
 Rule: if an instrument of conveyance does not show an intent
to create a right of survivorship, the instrument cannot
create a joint tenancy
 Holding: did not create a joint tenancy in the grantees,
language was insufficient to overcome the statutory
presumption of tenancy in common
 Reasoning:
1. Arkansas law presumptively construes conveyances as
creating tenancies in common, unless the instrument
shows a clear intent to create a right of survivorship
 2. Right of survivorship is the distinguishing feature of a joint
tenancy
3. Extrinsic evidence alone will not suffice to show an intent
to create a right of survivorship
4. Intent must be shown in the instrument of conveyance
itself
o Tenhet v. Boswell (severance)
o Rule: A lease does not sever a joint tenancy, but expires upon the
death of the lessor
o Facts: Johnson and Tenhet owned a parcel as joint tenants. Johnson
leased the land to Boswell but died before the lease ended. Tenhet
ordered Boswell to vacate the land, but he did not do so. Tenhet
brought this suit for a declaratory judgement that the lease was
invalidated by Johnson’s death
o Issue: does a lease entered into by a joint tenant expire upon his
death?
o Rule: A lease does not sever a joint tenancy, but expires upon the
death of the lessor
o Holding: a lease by one tenant in a joint tenancy does not sever the
joint tenancy, but does expire upon the lessor’s death
o Reasoning:
 A lease does not sever a joint tenancy because just as a joint
tenancy must be expressly declared, it follows that a desire to
sever the joint tenancy must be expressly declared by one of
the joint tenants.
 Therefore, when a joint tenant lessor dies, his interest
expires and ownership in that interest is automatically
vested in the other joint tenants due to the right of
survivorship.
 As a result, an existing lease of the deceased joint tenant’s
interest must also expire. In this case, the lease to Boswell did
not sever the joint tenancy, but when Johnson died, his
interest in the land vested in Tenhet, thus extinguishing the
lease. Accordingly, the lease to Boswell is invalid and the court
rules in favor of Tenhet.

 Concurrent Ownership: Partition and Cotenants Rights and Duties

(pg. 389)
 Partition
o Any tenant in common or joint tenancy has the right to sue for partition of
the property
o A partition judgement ends the co-tenancy and distributes its assets
o Partition in kind is preferred, though partition by sale is used more commonly
  Partition is the division of property owned by cotenants according to
each cotenant’s share. Partition in kind refers to the physical division
of the property.
o Partition by sale undesirable for some (Ark land) because cash is not always a
fair receipt for property
Right to occupancy
 Majority rule
o Cotenant in possession does now any rent to a cotenant out of possession,
absent an ouster
 Minority rule
o Cotenant in possession does owe rent to a cotenant out of possession
Sharing Rents and Profits
 Each cotenant is entitled to his proportionate share of all rents and profits derived from
the land
 White v. Smythe
o Cotenant holding a 1/9 interest sold less than 1/9 of the rock asphalt, and argued
that it was less than his share
o Court said a cotenant cannot select and take for himself part of the property
jointly owned and thus make a partition
 General rule that each cotenant must pay his proportionate share of such expenses
 General rule for improvements and repair is that cotenant doesn’t have to pay a share
o Think of one cotenant putting in a pool, doesn’t make sense that other would
pay
 Cases
o Ark Land Co v. Harper
 Economic value of property is not a decisive factor in determining
whether to partition in kind or by sale
 Partition is the division of property owned by cotenants according to
each cotenant’s share. Partition in kind refers to the physical division of
the property.
 But where land is not conducive to partition in kind, a court may order a
partition by sale, which is essentially a forced judicial sale with the
cotenants dividing the proceeds.
 A partition by sale is undesirable because, if one party opposes the sale,
the receipt of cash proceeds is not always fair compensation for the loss
of property. For this reason, the law of all jurisdictions reflects a
presumption towards partition in kind, only resorting to partition by sale
where partition in kind is inconvenient.
 Previously, this court has ordered partition by sale only where: (1)
partition in kind is not convenient; (2) the sale will result in the
promotion of at least one of the parties’ interests; and (3) the sale will
not prejudice the interests of the other parties.
  Economic cost is relevant in determining whether to partition in kind or
by sale. It is not, however, the determinative factor. Other relevant
factors include longstanding family ownership, as well as sentimental or
emotional interests.
 Here, the Caudill family owned the property at issue for over 100 years.
They were uninterested in the monetary value of the land and sought
only to maintain family ownership of the property. This non-economic
interest in the land would be prejudiced if the land is partitioned by sale.
 On the other hand, partition in kind would add an additional several
million dollars in costs to Ark Land’s mining plans.
 The circuit court relied only on this fact to rule in favor of a partition by
sale. But because economic hardship is not the sole factor to consider,
the circuit court erred in its ruling.
 While this court recognizes the resulting economic burden on Ark Land, it
does not justify the sale of the Caudills’ ancestral family home. Therefore,
the judgment of the circuit court is reversed, and the case is remanded
with instructions to order partition in kind.
o Esteves v. Esteves (Cotenants rights and duties)
 Where a cotenant has sole possession of the property and demands
contribution for operating and maintenance expenses from the non-
possessing cotenant, the tenant in possession must allow a
corresponding credit for the value of his sole occupancy
 Where property is held in a co-tenancy, there are two general rules
applicable to the distribution of proceeds upon sale of the property.
 First, each cotenant must pay his pro rata share of the operating
and maintenance expenses for the property. If one cotenant has
paid less than his pro rata share, he must reimburse the cotenant
who paid more than his pro rata share.
 Second, even though one tenant enjoys sole occupancy of the
property, the non-possessing tenant has no right to receive rent
from the tenant in possession. All tenants in common are entitled
to occupy their property free of charge. One cotenant’s decision
not to occupy the property does not affect another cotenant’s
right to occupy the property free of charge.
 Despite these general rules, there is a third rule that requires, for
the sake of fairness and equity, that where a cotenant in sole
possession demands contribution for operating and maintenance
expenses from the non-possessing tenant, the tenant in
possession must allow a corresponding credit for the value of his
sole occupancy.

 Concurrent Ownership: Marital Property (pg. 401)

Marital Property
 Separate Property System
o Divided into three categories
 During the marriage
 Property owned separately unless agreed to hold property in
concurrent tenancy
 At divorce
 Most separate property states mandate equitable distribution of
the property owned by each spouse
 Property that can be distributed is the property acquired with the
earnings of either spouse during the marriage
 At death
 Most states offer a forced share (elective share)
o Survivor has a choice
 Take under the decedents will
 Receive a share of the decedent’s estate (usually
1/3 or ½
 Community Property System
o During the marriage
 All earnings during the marriage are owned by both equally
 Earnings before the marriage remains separate property
o Divorce
 All community property divided between the spouses
 Some states do it equal; others use factors to decide
o Death
 Decedent may devise her half of the property and all separate property
as she desires
Tenancy by the Entirety
 At common law, every conveyance to a married couple was presumed to create a
tenancy by the entirety
o Only half of states recognize this still
 Case
o Sawada v. Endo
 Rule of Law
 The interest of a husband or wife in a tenancy by the entirety is
not subject to the claims of his or her individual creditors during
the joint lives of the spouses.
 Facts
o The Sawadas (plaintiffs) were injured in a car accident with
Kokichi Endo (defendant). When the accident occurred,
Endo was the owner of land as a tenant by the entirety
with his wife. Before the trial on the accident was held, the
Endos deeded their land to their sons. Subsequently, the
 Sawadas were each awarded a monetary judgment against
Endo for his role in the accident. In trying to obtain
satisfaction from the judgment, the Sawadas brought suit
seeking to set aside the Endos’ transfer of land to their
sons. The trial court ruled against the Sawadas, and the
Sawadas appealed.
Issue
Is the interest of one spouse in a tenancy by the entirety subject to the claims of that spouse’s
individual creditors?

Holding and Reasoning (Menor, J.)

No. The interest of one spouse in a tenancy by the entirety is not subject to the claims of that
spouse’s individual creditors. A tenancy by the entirety is based on the unity of the married
couple and their ownership in property is likewise united as one. As a result, creditors of only
one of the two married individuals may not reach marital property that is a tenancy by the
entirety. Thus, in this case, the Endos’ transfer of land is not fraudulent and is valid. In fact,
even if the Endos had not transferred the land, the Sawadas would not have been able to stake
a claim to the land because their claims were to Kokichi Endo only, and not his wife. As a result,
the property as a tenancy by the entirety is not subject to the Sawadas claims. The land transfer
to the Endos’ sons is valid, and the judgment of the trial court is affirmed.

 Discrimination; Non-freehold Estates (pg. 441)

o Creating the Tenancy
 Selecting the tenant
 Common law traditionally allowed landlords to refuse anyone
o Modern statutes obviously prohibit this now
 FHA
o Does not apply to two types of property
 Rooms or units in dwellings containing living
quarters occupied by no more than four families
living independently of each other if the owner
occupies one of such living quarters as his own
residene
 Singly family house sold or rented by an owner if
he does not own more than three houses and does
not use real estate broker or agent in the sale or
rental
o Cases
 Netihamer v. Brenneman Property Services
 Once a plaintiff makes a prima facie case showing of
discrimination under the Fair Housing Act, the defendant may
 provide a non-discriminatory reason for rejecting the plaintiff’s
housing application, but the plaintiff may rebut this by
establishing the defendant’s nondiscriminatory reason is a pretext
 Fair Housing Council of San Fernando Valley v. Roommate.com
 Anti-discrimination provisions of the Fair Housing Act do not apply
to the selection of roommates
 Congress intended to address discrimination by landlords, not
arrangements between people who share a living space

Selecting the Estate

 Modern system of landlord-tenant estates is based on early non-freehold estates
o Common law developed four non-freehold estates
 Term of years tenancy
 Fixed duration agreed upon in advance
 Tenant’s possessory right automatically expires once term ends
and landlord may retake possession
 Commonly used in commercial leases and often in residential
leases
 Periodic tenancy
 Automatically renewed for successive periods unless the tenancy
is terminated with advance notice
 Think residential leases
 Tenancy at will
 No fixed ending point, continues only so long as both landlord and
tenant desire
 Often arises without an express agreement
 Most states require advance notice to end this tenancy now
 Automatically terminated at death of either party, upon
abandonment by tenant, or upon sale
 Tenancy at sufferance
 Created when a person who rightfully took possession of land
continues in possession after that right ends
 Arises from occupant’s improper conduct, not agreement
 One is a holdover tenant when they wrongfully continue in
possession
o Landlord has two options
 Treat as a trespasser and evict or
 Renew tenancy for another term

 Delivering Possession; Constructive Eviction (pg. 463)

Delivering Possession
 Keydata Corp v. U.S.
 o Rule: A lessor is obligated to provide the lessee with actual possession of the
leased premises at the beginning of the term
o Issue
 Is a lessor obligated to provide the lessee with actual possession of the
leased premises at the beginning of the term?
o Holding and Reasoning (Davis, J.)
 Yes. The lessor is obligated to provide the lessee with actual possession of
the premises and not merely the right to sue to recover the premises. Some
jurisdictions, including Massachusetts, follow the "American rule" that a
lessor only promises that possession of the premises will not be withheld by
the lessor or someone with superior title. However, the more appropriate
rule, the "English rule," is that the lessor covenants to deliver actual
possession of the premises to the lessee. The lessor is more likely than the
lessee to know the status of the premises and the rights of any persons
occupying the premises. Furthermore, prior to the beginning of the term,
the lessor has the power to evict any persons improperly occupying the
premises, and the lessee does not. Additionally, while Massachusetts law
restricts eviction of holdover tenants, the lessor may still protect itself by
expressly limiting or disclaiming its obligation to deliver possession,
requiring security from tenants to prevent holdovers, or seeking damages
from holdover tenants. The lessor is better positioned to anticipate, avoid,
or bear these risks than the lessee.
 Jurisdictions differ about whether the landlord must deliver physical possession, but all
states agree that he is required to deliver the legal right to possession when the term
begin
 Federal government rule
o American rule governs most leases
o English rule governs all gov. leases
 Condition of the Premises
o Challenge of substandard housing
 Urban landlords maximizing profits by ignoring housing codes.
 Case
 In re Clark
o Tenants can receive damages from landlords for egregious
living conditions
 Constructive Eviction
o Special protection for the tenant in defective leased premises
o Wrongful conduct interfering with the tenant’s beneficial use and enjoyment of
leased premises was deemed a constructive eviction
 Tenant could vacate the premises and end the lease, thus avoiding
liability for future rent
 o Remedies
 Terminate lease
o Case
 Fidelity Mutual life insurance co. v. Kaminsky
 Landlord’s failure to act in the face of repeated requests to
protect a tenant’s quiet enjoyment of the premises can constitute
a constructive eviction
 In order to prevail on a claim of constructive eviction, a tenant
must show:
o (1) the landlord intended that the tenant no longer enjoy
the premises (which a trier of fact can infer from
circumstances),
o (2) the landlord or its agents committed a material act or
omission that substantially interfered with the use and
enjoyment of the premises for its leased purpose,
o (3) the act or omission permanently deprived the tenant of
the use and enjoyment of the premises,
o (4) the tenant abandoned the premises within a
reasonable period of time after the act or omission. An
omission can include permitting third parties to interfere
with the tenant’s quiet enjoyment. 

 JMB Properties Urban Co. v. Paolucci

 If a tenant does not vacate the premises within a reasonable time
after a constructive eviction, he waives his claim to constructive
eviction
 Implied warranty of habitability
o No requirement to abandon/vacate
o Generally, cannot be waived
o Generally, requires that the landlord maintain “bare living requirements” and
that the premises are fit for human occupation
 Failure to supply heat or hot water
o Remedies
 Withhold rent
 Repair and deduct
 Sue for damages
 Terminate the lease

 Implied Warranty of Habitability (pg. 482)

o Doctrine that protects residential tenants from defective housing conditions
 o No requirement to abandon/vacate
o Majority rule: only applies to residential lease
o Case
 Wade v. Joe
 If a landlord breaches the implied warranty of habitability, the
tenant is entitled to a percentage reduction of the rent for the
period of the breach
 The implied warranty of habitability is consistent with housing
codes intended to ensure safe and decent housing
 Varies case by case
 Court must look at the importance of the defect and how long it
has existed
 Can also look at fair value of the premises as warranted minus the
fair rental value of the conditions as they exist
 Percentage diminution approach
o Tenant’s recovery reflects the percentage by which the
tenant’s use and enjoyment of the premises has been
reduced by the bad conditions
 As a general rule, the warranty of habitability requires that the landlord
maintain “bare living requirements”
 Teller v. McCoy
 Cannot impose an unrealistic level of accommodation into the
concept of habitability
 Not everyone can live in the Ritz
o Implied warranty of habitability now recognized in most states
 States vary on what “habitability” is
 Many define the scope of the warranty by the building and
housing codes
 Others use general tests such as “clean, safe, and fit for human
habitation”
o In order to use the implied warranty of habitability the tenant must notify the
landlord about the defects and allow a reasonable time for the landlord to make
repairs
o If implied warranty is breach there are 4 remedies
 Withhold rent
 Repaid and deduct
 Sue for damages
 Terminate the lease

 Assignment and Sublease (pg. 492)

Assignment and Sublease
 Transferring the Tenant’s Interest
o General rule is that tenants and landlords are both entitled to transfer their
interests to third parties
 Freedom of alienation principle
o Tenant can transfer by assignment or sublease
 Tenants and landlords have a privity of contract and privity of estate relationship
o Privity of estate think of from feudal days, possession gives rights
 Case
o Ernst v. Conditt
 One who takes assignment of a leasehold interest is responsible to the
lessor under the terms of the lease
 Is a third party directly responsible to a lessor for the obligations under
the lease when the lessee conveys to the third party all of his interest
under the lease?
 Yes. Sublet is created when a lessee conveys less than his full
interest by either term of years or retaining a right to re-enter or a
reversion
o In that situation, lessee remains in privity of contract and
estate with the lessor and is responsible for performance
 Alternatively, conveying all of lessee’s interest creates an
assignment and there is no longer privity
o Therefore, lessor may hold the assignee directly
responsible for terms
 Rodgers relinquished all rights to Conditt, creating an assignment
and Conditt was liable for rent and removing improvements upon
demand
 Majority test for distinguishing assignment and sublease (objective test)
o Did the tenant transfer his right of possession for all of the remaining lease
(assignment) or not (sublease)?
 Some jurisdictions look at intent (subjective test)
o Under this approach, it would be possible to have a sublease for the entire
remaining term of the original lease
 Assignment
o Tenant transfers (assigns) his entire interest in the premises to a third party
o Triangular relationship
 Privity of contract between lessor and lessee, between lessee and
assignee, and privity of estate between lessor and assignee
 Sublease
o Essentially two separate landlord-tenant relationships
 o Tenant (sublessor) transfers (subleases) part of her interest in the leased
premises to a third party (sublessee)
o Privity of contract/estate between lessor and lessee/sublessor
o Privity of contract/estate between sublessee/sublessor

 Landlord Consent; Abandonment (pg. 502)

Landlord Consent; Abandonment
 Three Basic landlord consents
o Sole discretion clause
 Landlord may refuse consent for any reason whatsoever in his sole
discretion
o Reasonableness clause
 L may refuse consent only on a commercially reasonable basis
 Bad credit
o No standard in lease
 Lease might require L’s consent but contains no standard to guide the
decision
 Known as a silent consent clause
 Case
o Kendall v. Ernest Pestana
 Question: Whether in the absence of a provision that such consent will
not be unreasonably withheld, a lessor may unreasonably and arbitrarily
withhold his or her consent to an assignment
 Rule: a commercial lessor may not unreasonably withhold his consent to
an assignment of a lease, with or without a clause requiring landlord’s
consent to transfer the lease
 In line with the policy against restraining free alienation of land as well as
increased recognition of the contractual nature of leases and the
resulting contractual duties of good faith and reasonableness
 Majority allows arbitrary refusal of assignment, but the minority only
allows if there is a commercially reasonable objection
 Commercially reasonable objections
o Iowa supreme court example
 Commercially reasonable because
 The sublessee would compete with another tenant, an existing
store
 Sublessee planned to install kitchen equipment which would
require alterations in the building structure
 Food odors could travel from the sublessee’s store through the
ventilation system to spaces occupied by other tenants
 Deliveries to the sublessee could interfere with deliveries to the
landlord’s own business in the same building
Abandonment
 Occurs when tenant vacates the leased property without justification and without any
present intention of returning and he defaults in the payment of the rent
o Landlord options
 Sue for all rent
 Terminate the lease
 “implied offer of surrender”
 Mitigate damages and then sue for rent
 Case
o Sommer v. Kridel
 A landlord has a duty to mitigate damages when he seeks to recover rent
due from a defaulting tenant
 Need to make a reasonable effort to re-let the premises when
seeking to recover rent from a defaulting tenant
 Consistent with the trend to treat leases as contracts
 Landlord has burden of proving that he used reasonable diligence
in attempting to re-let
 Majority of states follow this ruling today

 Eviction (pg. 520)

Eviction
 Elk creek management v. gilbert
o A landlord unlawfully retaliates against a tenant if the landlord terminates a
lease because of the tenant’s good-faith complaint
o Legislature intended to advance two interests:
 Protect tenants who exercise their statutory rights
 Require landlords to fulfill their statutory obligations to maintain a safe
property
 Berg v. Wiley
o When a lessor feels that the tenant in possession is violating the terms of the
lease, the lessor must exercise judicial remedies to retake the property
o At common law can only use self-help to retake possession of leased premises
only if the means used are peaceable
 Growing trend that says self-help never appropriate and judicial means
always to be used

 Statute of Frauds; Marketable Title (pg. 536)

o Three major steps in a real property sales transaction
 Purchase contract
  Parties negotiate and sign a written purchase contract, and
prepare to consummate the transaction
 Closing
 The contract is fully performed at the closing: buyer pays the
purchase price, the lender advances the loan funds, and the seller
transfers the title
 Title protection
 The buyer protects her title through title covenants, a title opinion
based on a search of public land records, and/or a title insurance
policy
Purchase Contract
 Once the contract is signed, parties prepare for closing
o During this stage
 The seller’s title is examined
 Condition of the property is evaluated
 The buyer obtains financing from a bank or other lender
 An escrow is opened to consummate the transaction
 Various documents are prepared, including the deed, mortgage,
promissory note, and escrow instructions
 Several problems can arise during a sale
o Statute of frauds
 Contract must meet these requirements
 Essential terms
o Terms of the contract (identity of parties, price, property
description) must be set forth in a writing
 Writing
o Can be a formal contract or an informal memo
 Signature
o Writing must be signed by the party sought to be bound
 Hickey v. green
 An oral land transfer agreement may be specifically enforced,
even though it violates the statute of frauds, if the party seeking
enforcement detrimentally relied on the validity of the contract
and injustice can be avoided only be specific performance
 Exceptions
 Part performance
o Oral contract may be enforced if the buyer
 Takes possession
 Pays at least part of the price
 Makes improvements to the property
 Equitable estoppel
o Oral contract may be enforced if
  One party acts to his detriment in reasonable
reliance on another’s promise
 Serious injury would result if enforcement is
refused
o marketable title
 marketable title means the title is reasonably free from doubt as to its
validity
 basic principle is that a buyer should be able to purchase property
without fear or litigation about her title
 title need not be perfect, if a reasonable and prudent purchaser
would pay fair market value for the property, then title is
considered marketable
 unmarketable if
 seller’s property interest is less than the one she purports to sell
 seller’s title is subject to an encumbrance
 if there’s reasonable doubt about 1 or 2^
 Lohmeyer v. Bower
 Purchaser of real property may choose to cancel the sale if the
title to the land is unmarketable
o equitable conversion
o seller’s duty to disclose

 Duty to Disclose; Deeds (pg. 556)

Duty to Disclose; Deeds
 Under common law doctrine of caveat emptor, no duty to disclose defects to buyer,
buyer had the responsibility to assess the condition
o Seller only liable if he affirmatively misrepresented the condition, actively
concealed, or owed a fiduciary duty to the buyer.
 In most jurisdictions today the seller is obligated to disclose defects he knows about that
a) materially affect the value of the property and b) are not known to or readily
discoverable by a buyer
 Actual knowledge of the defect is generally required, whether it should have been
known about is inconsequential
 Cases
o Stambovksy v Ackley
 If a seller creates a condition that materially impairs the value of a
contract and is within the knowledge of the seller or unlikely to be
discovered by a prudent purchaser exercising due care, nondisclosure of
the condition constitutes a basis for rescission of the contract
  Under caveat emptor a buyer must act prudently to assess the fitness and
value of the property, if not they are barred from seeking a remedy of
rescission
 However, if the seller creates a condition that is unlikely to be
discovered then not barred
 The deed
o Only effective when delivered
 Undelivered deed, even if signed, conveys nothing
o Grantor must manifest intention to immediately transfer title
o Cases
 Rosengrant v. Rosengrant
 Property transfers only valid if the transferor intends for the
transfer to take effect immediately upon delivery of the deed
 Cannot be intended to take affect at a later date

 Remedies for Breach; Title Covenants (pg. 580)

Remedies for Breach; Title Covenants
 Specific performance is one equitable remedy that requires the breaching party to
perform the contract
o Generally only where money damages inadequate
o Land is unique so easy to argue money is not adequate
 Case
o Giannini v. first natl bank
 Absent oppression or fraud, a buyer of real property is entitled to a
specific performance of a valid contract for the sale of real property as a
matter of right
 Real property is unique, thus legal remedies are inadequate requiring
equitable remedy
 Court may refuse to grant SP if doing so would create a lot of hardship or
an unfair result
 Damages are another option, usually the contract price and the fair market value
difference
 Recission and restitution is a possibility as well

Title Assurance
 Sale of real property is actually a sale of title
 Three methods of title assurance
o Title covenants: the grantor promises in the deed that he has good title to
convey
o Title opinion based on search of public records: attorney or other professional
renders an opinion about the state of the title after searching the public records
 o Title insurance: a title insurance company issues a policy that insures the
grantees title
 Best practice is to use multiple of the above methods
 Title covenants
o Express promises by the grantor about the state of the title
o At common law, the promises ended at closing unless they were restated in the
deed
 Doctrine of merger provided that once the grantee accepted the deed all
prior promises were extinguished, and the contract was merged into the
deed
o Three commonly used deeds
 General warranty: grantor warrants title against all defects, whether they
arose before or after he obtained title (best protection)
 Special warranty deed: the grantor warrants title against all defects that
arose after he obtained title
 Limits the grantor’s assurances only to any defects that arose
during his ownership. Doesn’t cover any problems created before
he obtained title
 Quitclaim deed: the grantor makes no warranties about title, so the
grantee receives only what the grantor has, if anything
o Six standard covenants
 Covenant of seisin
 Promise that grantor owns the estate he purports to convey
 Covenant of right to convey
 Promise that grantor has the right to convey title
 Covenant against encumbrances
 Promise that there are no encumbrances on the title other than
those listed
 Covenant of warranty
 Grantor will defend the grantee against any claim of superior title
 Covenant of quiet enjoyment
 Grantee’s possession of the property will not be disturbed by
anyone holding superior title, this covenant would be breached if
the grantee is evicted because of a title defect
 Covenant of further assurances
 Promise that grantor will take all future steps reasonably
necessary to cure title defects that existed at closing
 Brown v. lober
o The mere existence, without more, of a superior title does not constitute a
breach of quiet enjoyment

 Searching Title; Recording Acts (pg. 595)

Searching Title; Recording Acts
  Method of title assurance is a title opinion based on a search of public land records
 How to search title
o Locate the recorded documents that affect title to the parcel
o Evaluate their legal significance
 Recorder’s office will use one of two systems
o The grantor-grantee index, organized by the names of the parties to the
transaction
 More common method
 First step, establish a chain of title
 Every recorded document indexed in two places
 Grantee index
 Grantor index
o tract index
 organized by parcel involved
 parcel identification number
 Case
o Luthi v. Evans
 A mother hubbard clause that does not provide a sufficiently detailed
description of the property conveyed fails to provide constructive notice
to a subsequent purchaser
 Mother hubbard clause is a deed that conveys all of a grantor’s property
in a specific county

Recording Acts
 Each state has a recording act which establishes the method for determining priority
between adverse claimants
o Race
 Purchaser who records first has priority over a previously created interest
even if actually knows about that interest
 Priority given to the race winner
o Notice
 The subsequent bona fide purchaser has priority
o Race-notice
 The subsequent bona fide purchaser who records first has priority
 Protects the subsequent purchaser for value who both takes without
notice and records first
 Exception to first in time recording
o Bona fide purchaser doctrine
 Vibrant property market demands that buyers have confidence they will
receive good title
 Protect buyers from adverse claims
 Case
o Messersmith v. Smith
  Recording of a title instrument that does not meet the recording act’s
statutory requirements does not provide constructive notice of the
transfer to subsequent buyers
 Zimmer rule (holman says we’ll just assume it applies for testing)
o Subsequent Purchaser is deemed to have recorded his conveyance only if all
prior conveyances in his chain of title are properly recorded
 Shelter rule
o A bona fide purchaser is allowed to transfer his protection

 Recording Acts; Notice (pg. 618)

Recording Acts; Notice
 Chain of title problems
o Outside the chain of title if a recorded document cannot be found in a standard
title search-provides no notice to subsequent buyers
o Situations outside chain of title
 Wild deed
 Deed recorded too late
 Deed recorded too early
 Deed from a common grantor
 Case
o Board of education of Minneapolis v. hughes
 One who record his valid title first is the record owner of real property,
regardless of whether another party has earlier received the same
property
 Adverse claim action, alleged that plaintiff owned the lot and this was
denied
 Hoerger sold the lot to Hughes for 25 bucks
 Deed was executed and acknowledged by Hoerger and her
husband on May 17 1906 but Hughes didn’t record until
December 11, 1910
 In 1909 the Wilsons bought the lot and recorded on dember 21
1910
 On November 19 1909 the wilsons gave a warranty deed to
plaintiff which was filed for record on January 1910
 Thus, deed to Hughes was recorded before the deed to the
Wilsons, but the deed from Wilsons to plaintiff was recorded
before the deed to defendant.
 Question: did the deed from Hoerger to Hughes ever become operative?
 If so, is he a subsequent purchaser whose deed was first duly
recorded, within the language of the recording act?
 A deed that does not name a grantee is a nullity and wholly inoperative
as a conveyance until the name is legally inserted
  Hughes deed not operative until his name was inserted sometime
December 11, 1910
 Hughes had implied authority to insert his name as grantee
 Thus, deed to Hughes became operative as a conveyance when he
inserted his name as grantee
 When hughes deed recorded, there was a a deed to the plaintiff, but no
title to convey from Wilsons to the plaintiff.
 Hughes was a subsequent purchaser in good faith
 Zimmer rule:
o A subsequent purchaser is deemed to have recorded only if all prior conveyances
are properly recorded
What constitutes notice?
 Three types of notice
o Actual notice
 Knowledge of a prior interest
o Record notice
 Notice of any prior interest that would be discovered by a standard
search of the public land records
o Inquiry notice
 Notice of any prior interest that would have been obtained by
investigating suspicious circumstances
Case
 Raub v. general income sponsors of iowa
o A bona fide purchaser is entitled to have its purchase upheld if it is not on
reasonable notice to make inquiry into whether the grantor obtained the
property fraudulently.
o Raub wanted to set aside a deed transferring property to general income,
arguing it was obtained by fraud
 Raub was a tenant on the property after she was fraudulently induced to
transfer it, and she didn’t know about the fraud until later
o Raub sought to invalidate two mortgages placed on the property by general
income before raub learned of the fraud
o Trial court declared the deed was void because of fraud and neither mortgage
valid
o Argued that the two mortgage purchasers were bona fide purchasers who were
not put on notice to inquire into the circumstances of general’s acquisition, thus
their mortgages were valid
 Raub argued that her continued occupancy put the mortgage holders on
notice to make inquiry about Raubs right to the property and general’s
circumstances of acquiring it.

 Obligation; Security (pg. 643)

Obligation; Security
 Obligation
o Financing real property
 Four key parts
 Obligation
o Borrowers’ duty to repay a loan evidenced by a written
promissory note or to perform other duties is called the
obligation
 Security
o Borrower will provide security to the lender through a
mortgage, a deed of trust, or a similar encumbrance on
the property
 Foreclosure
o If the borrower defaults on the obligation, the lender will
have the property sold at a judicial foreclosure sale or a
nonjudicial foreclosure sale and use the proceeds to satisfy
the loan
 Rights after foreclosure
o The borrower and lender may have additional rights after
the foreclosure sale occurs
o Creating the obligation
 Most common obligation is borrower’s duty to repay a loan as evidenced
by a written promissory note
o Acceleration clause
 Lender can demand payment in full if the borrowers miss even one
monthly payment
o Due on sale clause
 Lender can demand full payment if the borrower sell the property
o Nonmonetary obligations
 Keeping the property in good shape
 Avoiding waste
 Maintaining property insurance
 Defending title to the property
 Providing security
o Mortgage
 Traditional security instrument
 Mortgagor conveys an interest in real property to the lender as security
for the performance of an obligation, usually payment of a promissory
note
 Mortgage theories
  Title theory: view that the mortgage is a transfer of title from the
borrower to the lender
 Intermediate theory: lender holds the title but does not hold the
right to possession until the borrower defaults
 Lien theory: mortgage is seen as creating a lien or security
interest, not conveying title
 Unrecorded mortgage is still valid but standard practice is to record asap
like a deed
 Purchase money mortgage
 When the buyer of real property finances her purchase by giving
the seller a promissory note secured by a mortgage on the
property
o Deed of trust
 Common mortgage substitute
 Main security instrument today
 Borrower conveys real property in trust to a third party for the benefit of
the lender
 Text creates an express power of sale
 If borrower defaults on the obligation, the lender may instruct the
trustee to sell the property at foreclosure; trustee will then
distribute the sales proceeds to the lender as necessary to repay
the loan
o Installment land contract
 Another alternative to the mortgage
 Buyer promises to pay the purchase price to the seller in installments
over a fixed period
 Slone v. Calhoun
 Slone entered into a land contract with Calhoun for the purchase
of a lot and mobile home
o To pay $313 a month as well as taxes and insurance
 Claims Calhoun executed a land contract with sumner for the
same lot and home
o Then she tells him she cant pay anymore and moved.
o Sues for breach of contract alleging that she was forced
out
 Rule: an installment land contract provision stating the buyer
forfeits her property interest upon default of payment is
unenforceable
 Forfeiture clause
 Basically, liquidated damages
o Equitable mortgage
  Zaman v. felton
 In determining whether a purported land sale and subsequent
leaseback are in fact an equitable mortgage, a trial court applies
an eight-factor framework considering both the form of the
transaction and the circumstances surrounding the parties.
 Eight factors to indicate transaction was an equitable mortgage
o Any express statements indicating that the seller intended
to retain ownership
o Substantial difference between the purchase price and the
actual value
o Buy back option
o Sellers continued possession
o Sellers continuing homeowner obligations like paying
property tax
o Any disparity in the sophistication or bargaining position of
the parties
o Irregular purchase process
o Any financial distress the seller was in including the
imminence of foreclosure

 Foreclosure (pg. 664)

Foreclosure
 Borrower’s Rights before the foreclosure sale
o Reinstatement
 As a general rule, a borrower can avoid foreclosure by paying the missed
payments before the lender accelerates the loan. Some states also allow
the borrower to reinstate for a limited period after acceleration occurs.
o Equitable redemption
 All states allow the borrower to avoid foreclosure by paying the loan in
full (plus any incurred costs) after default but before the sale occurs
 Judicial foreclosure
o Traditional remedy for collecting on a secured loan after borrower’s default
o Specialized form of litigation
o Lender files a complaint against the necessary parties
 Defendants may file answers that raise any objections to foreclosure
 Could lead to a hearing to determine whether foreclosure is appropriate
o If foreclosure is authorized the lender gives notice of the time and place of the
foreclosure sale
o Final step is judicial confirmation of the sale
  Once confirmed, deed delivered to successful bidder and the borrower’s
equity of redemption terminates
 Nonjudicial foreclosure
o Dominant method for collecting on a secured loan after the default
o Quicker and cheaper than judicial foreclosure
 Results of foreclosure sale
o Two basic principles
 Foreclosure eliminates or wipes out the mortgage being foreclosed and
all junior interests but does not affect senior interests.
 Foreclosure sales proceeds are distributed first to the foreclosing lender,
and then to junior interests in order of priority, any surplus proceeds go
to the borrower.
o Lender whose mortgage was created first has priority under the first in time rule
unless a subsequent purchaser or lender is protected under the states recording
act
 Special mortgage priority rules
o Purchase money mortgage
 Priority over any other lien or interest that attaches to the property
purchased through the buyer such as a judgment lien, dower, or
community property
o Future advance mortgage
 Clause which provides that the mortgage will serve as security for future
loans to the borrower
 If the mortgage obligates the lender to make such an additional loan, the
new loan takes priority from the date of the mortgage
 If optional, and the lender has notice that a third party has acquired an
interest in the prop. After its original loan was made, then the new loan
takes priority only as of the day it is made
o Deed in lieu of foreclosure
 Allows the borrower to avoid foreclosure by conveying title to the
property to the lender
 Does not wipe out junior interest
 exercising rights after foreclosure
o protecting the borrower
 statutory right of redemption
 may regain title by redeeming the property from the successful
bidder within a set period of time
 some states only applies to homes or farms
 setting aside the sale
  in most jurisdictions, a nonjudicial sale can be set aside if the sales
price is so inadequate as to shock the conscience of the court or is
grossly inadequate
o protecting the lender
 fair value legislation
 restrict the size of a deficiency judgment by limiting it to the
amount by which the loan balance exceeds the fair market value
of the property
 prohibition
 prohibits deficiency judgements in certain situations, most
commonly after nonjudicial foreclosure or foreclosure on a
purchase money mortgage
 judicial approaches
 inadequate sales price or unfairness
 Case
o Wansley v. first natl. bank of Vicksburg
 Sale of real estate by a trustee of a deed of trust will be upheld and
accepted for deficiency judgment purposes if the sale is commercially
reasonable in all respects
 A deed of trust is substantively identical to a common-law mortgage with
the power to convey the property in the event of default
 Trustee of a deed of trust is only subject to the requirement that sales
following foreclosures of mortgages must be commercially reasonable
 Discrepancy between foreclosure sale price and the amount of the
mortgagor’s indebtedness is not sufficient to make the sale commercially
unreasonable

 Creating Easements (pg. 683)

Private Land Use
 Easements
o Land cannot be used unless the owner has adequate access to it, which may
require an easement across land owned by another.
o Usually the product of an agreement but sometimes court will impose an
easement without the consent of the burdened owner
 Land use restrictions
o An owner might agree to restrict the use of his land by creating a real covenant
or an equitable servitude
 Nuisance law
o Resolves the rare situation where one owner’s use seriously interferes with
another’s use
Easements
 Nonpossessory right to use the land of another person
 Vital to productive use of land
 Basic easements
o Express easement
o Implied easement by prior existing use
 Elements
 Severance of title to land held in common ownership
 An existing apparent and continuous use of one parcel for the
benefit of another at the time of severance and
 Reasonable necessity for that use
o Easement by necessity
 Elements
 Severance of title to land held in common ownership
 Necessity for the easement at the time of severance
o Prescriptive easement
o Easement by estoppel
 Special terms
o Property
 Dominant land vs. servient land
o Parties
 Dominant owner v. servient owner
o Appurtenant or in gross
 Appurtenant easement benefits the holder in her use of a specific parcel
of land, the dominant tenement
 Easement in gross is not connected to the holder’s use of any particular
land but it is personal to the holder.
 Most are not this
o Affirmative or negative
 An affirmative easement allows the holder to perform an act on the
servient land
 Negative easement allows the holder to prevent the servient owner from
performing an act on the servient land
 Creating easements
o Most common is express
 Voluntarily created usually by deed
 May be created only by writing satisfying the statute of frauds
o Express easement by grant
 This arises when the servient owner grants an easement to the dominant
owner
o Express easement by reservation
 This arises when the dominant owner grants the servient land to the
servient owner, but retains or reserves an easement over that property
 Millbrook hunt, v. smith
o Grant of an interest in land typically constitutes an easement if it is for some
definite period of time
 Facts
 Smith owned 285 acres which is subject to a Lease and Easement
Agreement which permits the hunt club to use the land for the
purpose of fox hunting
 Agreement was for a term of 75 years unless terminated sooner
pursuant to the terms of the lease or pursuant to law
 Smith didn’t like hunting and ejected members of the club from
his property while they were working on trails for hunting
 The club did this action seeking declaration that it has an
easement over Smith’s property and to enjoin smith from
interfering with its use of that easement
 Smith said they only had a license which he can revoke
 To determine the true character of an interest, a court must examine the
nature of the right rather than the name given to it by the parties
 Mere labeling of an interest as an easement does not necessarily make it
an easement it may be a license
 An easement implies an interest in land ordinarily created by
grant, and is permanent in nature
 A license does not imply an interest in land but is a mere personal
privilege to commit some act or series of acts on the land of
another without possessing any estate therein
 The hunt club clearly reserved an absolute right to fox hunt on the parcel
of land
 The grantor has the right to redirect usage but does not make the
grant a license
 Because the interest in land is for a definite period it is different from a
license
 Clear the parties expressed the intent to reserve a right to hunt on the
parcel
 Thus, it’s an easement
 Smith had actual and constructive notice of this easement and
cannot stop it
 Emanuel v Hernandez
o If an easement implied by prior use did not arise at the moment the property
was severed, a change in circumstances after the severance cannot create such
an easement
 Parties in the case live next to each other, the property line bisected a
driveway between the properties but most of the driveway was on the
Hernandez property
  Hernandez’s began building a fence on the property line blocking the
Emmanuel’s continued use of the driveway
 Could not access their garage without use of the driveway
 The complaint sought an easement by implication over the driveway
o An easement may be implied when the owner of property conveys or otherwise
surrenders title to part of the property
o An easement from a prior existing use will be implied when the owner of a tract
or of two parcels conveys part of the property after having used the land so that
one part of the parcel derives from another a benefit that is apparent continuous
and permanent
o Crucial to recognize that an implied easement is the product of the intention of
the parties to the conveyance
 If an easement by implication does not arise at the moment of severance,
a change in circumstances since the severance, no matter how great,
cannot create any such easement
o Concluded that evidence does not support plaintiff’s claim of an easement by
preexisting use
 Elements of this easement are
 Common ownership of the dominant and servient parcels and a
conveyance or other transfer separating that ownership
 Before the conveyance or transfer severing the unity of title, the
common owner used part of the united parcel for the benefit of
another part and this use was apparent and obvious, continuous,
and permanent
 And the claimed easement is necessary and beneficial to the
enjoyment of the parcel conveyed or retained by the grantor or
transferor
 Preexisting use was not established in this case
 Berge v. state of Vermont
o Water access alone is not sufficient to defeat a claim for an easement by
necessity
 Only way to access Berge’s land via land was on gravel road that the state
blocked
 While property can be accessed by water, access by water is not a
sufficient sub for access by land
 Requirements for an easement by necessity
 Division of commonly owned land
 And the division resulted in creating a landlocked parcel

 Real Covenants; Equitable Servitudes (pg. 736)

Real Covenants; Equitable Servitudes
 Land use restrictions
o Covenants, conditions and restrictions (CC&Rs)
o Real covenants
 A promise concerning the use of land that benefits and burdens both the
original parties to the promise and their successors
 Also called a covenant running at law
 Traditional remedy is money damages
 Real covenants have two sides: burden and benefit
 Burden: the duty to perform
o Six elements traditionally must be proven for the burden
of the promise to bind the promisor’s successors but only
4 generally for the benefit to run to the promisee’s
successors
 Compliance with the statute of frauds
 Intent to bind successors
 Touch and concern
 The covenant must “touch and concern
land”
o Must relate to the enjoyment,
occupation, or use of the property
 Generally, restricting the use of land will
satisfy the touch and concern requirement
 Notice
 Promisor’s successor must have notice of
the covenant
 Horizontal privity
 Concerns the original parties
 Mutual interests: in most states the
requirement is met where the original
parties have mutual simultaneous interests
in the affected land
 Successive interests: in almost all the states
requiring horizontal privity, this element is
satisfied by a grantor-grantee relationship
between the original parties, so that they
have successive interests in the affected
land
 No requirement: modern trend
 Vertical privity
 Concerns relationship between an original
party and his successor
 Most states don’t require anymore
 Benefit: the right to enforce the promise
 Deepwater brewing v. fairway resources
  A covenant runs with the land if 1) it is enforceable between the
original parties 2) it touches and concerns the land 3) it binds
successors in interest 4) there is privity between the original
parties and present disputants and 5) there is privity between the
original parties
o Equitable servitudes
 Principle tool for enforcing private land use restrictions
 Gambrell v. Nivens
 A restrictive covenant binds remote grantees as an equitable
servitude if the covenant touches and concerns the land, the
original parties intended that the covenant run with the land, and
the remote grantee had notice of the covenant.
 Difference between real covenant v. equitable servitude
o Very similar, both are promises concerning the use of land that benefits and
burdens both the original parties to the promise and their successors
o Difference lies in the remedy
 Equitable servitude enforced by an injunction
 Covenants by damages
 A servitude is a covenant that “runs at law” i.e. benefits and binds successors
o Arises when
 The owner of the property to be burdened intends to create a servitude
 He enters into a contract or conveyance to this effect that satisfies the
statute of frauds
 And the servitude is not arbitrary, unconstitutional, unconscionable, or
violative of certain public policies
 Notice to burdened party (to be enforceable)
 Vertical privity (only under certain circumstances)
 Common interest community
o Planned residential development a) where all properties are subject to
comprehensive private land use restrictions and b) which is regulated by a
homeowner’s association
o CIC usually created by a declaration containing
 Homeowners’ association
 Establishes the association, specifies powers, provides for board
of directors
 CC&Rs
 Restrictions may be enforced as real covenants or equitable
servitudes
 Assessments
 All unit owners must pay monetary assessments which finance
the operation of the association
 Ownership Rights
  Each unit owner usually holds a FSA in his particular unit, an
undivided common interest in the common area, and a
membership interest in the association
Enforcing restrictions
 Three defenses
o Unreasonableness
o Abandonment
o Changed conditions
 Like an easement a restriction may also be terminated by condemnation,
estoppel, merger, prescription or release
 Nahrstedt v. Lakeside
o California law provides that common interest development use
restrictions are enforceable unless unreasonable
Fountain valley v. veteran affairs
 A covenant requiring the interior of a house to be well-maintained cannot reasonably be
construed to allow a homeowner’s association to dictate the amount or location of non-
hazardous objects in the house

 Zoning Basics; Nonconforming Uses (pg. 805)

Land use regs
 Constitutionality of zoning
o Village of Euclid v. ambler realty (EUCLID TEST)
 Municipal zoning regulations are constitutional, unless they are clearly
arbitrary and unreasonable, having no substantial relation to the public
health, safety, morals, or general welfare
 Power to pass zoning regs derives from states’ police powers
 Constitutional guarantees must have some elasticity to deal with recent
developments
 Zoning laws make fire and accident prevention easier, reduce noise, and
preserve residential areas
o Euclid is the foundation of modern land use regulation in the US
 Typical zoning ordinance
o Two basic components
 The text or the ordinance
 Creates different types of zones where particular uses are allowed
o Like a zone where only certain houses are allowed
 Maps that implement the ordinance
 Nonconforming uses
o A new zoning ordinance will provide that it does not apply to lawful uses that
already exist
 Prior uses allowed to continue
 o Thus, zoning regulates future development, not existing uses
o Trip associates v. mayor and city council of Baltimore
 Increasing the frequency of a valid, nonconforming use of property is a
permissible intensification of the use rather than an unlawful expansion
of the use
 A nonconforming use is any lawfully existing use of a structure or land
that does not conform to the ordinances applicable to the district where
the structure or land is located
 To establish a valid, nonconforming use, a property owner must
demonstrate, that before, and at the time of, the adoption of a new
ordinance, the property was being lawfully used in a manner that the
new ordinance prohibited
 Termination
o In addition to abandonment/discontinuance and amortization, a nonconforming
use can be terminated by:
 Destruction of the structure housing the use
 If the use is a nuisance and
 By eminent domain
 Amortization
o Most jurisdictions allow the use of amortization to terminate a nonconforming
use as long as a reasonable period is allowed
o Courts may look at several factors including the benefit to the public and the
burden to the owner in determining an appropriate period
 Abandonment v. discontinuation
o Abandonment occurs if landowner both
 Intends to relinquish his right to the use and
 Voluntarily ceases the use for a set period of time, varying by jurisdiction
from 30 days to 2 years
 Vested rights
o When zoning changes before a new project is completed
 Most jurisdictions the landowner acquires vested rights in the current
zoning and is protected under the nonconforming use doctrine if
 1) already acquired the necessary permits and
 2) spent a substantial amount of money in good faith reliance

 Zoning Amendments; Variances (pg. 825)

o Zoning amendments
 Like any law, a zoning ordinance may be amended
  Land zoned for ag use only can be rezoned for single family
residences by an amendment to the ordinance
 Rezoning comes with dangers
 Threatens the goal of comprehensive land use planning
o May make zoning plans meaningless
 Heightened risk of government corruption
 Constitutionality of rezoning reviewed under the same standard applied
to a new zoning ordinance
 Rezoning valid unless it is clearly arbitrary and unreasonable,
having no substantial relation to the public health, safety, morals,
or general welfare
 Some states use the change or mistake approach
o Rezoning valid if
 Conditions in the zone have significantly changed
 Or a mistake was made in the original zoning
ordinance
 Cases
 Smith v. City of little rock
o Rezoning a previously residential property in a residential
neighborhood is not inherently arbitrary and capricious
o Presumption that a zoning boards act reasonably and fairly
when rezoning or refusing to rezone
 Challenging a boards zoning decision comes
w/burden of establishing the board’s decision was
arbitrary and capricious
o Spot zoning
 Exists when a zoning amendment
 Singles out a small parcel of land for different treatment
 Primarily for the benefit of the private owner, rather than the
public
 In a manner inconsistent with the general plan for the community
 Some jurisdictions find spot zoning even if one of those conditions are
absent
o Zoning Variances
 Case
 Detwiler v. Zoning Hearing Board of Lower Salford Township
o Applicant for a zoning variance must show the variance
will not harm the public interest and is necessary to relieve
an unnecessary hardship, not self-inflicted, that uniquely
affects the property in question
 o Hardship may take many forms and is not limited to
restrictions that deprive the property of any value
 Exists only if applicant shows the property in
question cannot be put to use without the variance
o Hardship is self-inflicted only where the applicant paid a
high price for the property, anticipating a variance would
be granted justifying the price
o The variance must be the minimum necessary to relieve
the hardship, may not have a negative impact on the
public’s health, safety, or welfare
 Types of variances
 Area variance
o Permits modification of lot size, setback, height, frontage,
density, or similar requirements
 Use variance
o Permits a type of use otherwise prohibited
o Conditional uses
 Use permitted in the zone if certain conditions specified in the zoning
ordinance are met
 Typically utilized to regulate uses that might cause aesthetic, noise,
traffic, or other problems
 Unlike a variance, the conditional use is a use authorized by the
ordinance- but one that must be regulate on a case-by-case basis to avoid
injury to existing nearby uses
o New approaches to land use regulation
 Conditional zoning
 Rezoning a particular parcel when the owner satisfies conditions
imposed by the city or county, in order to mitigate the impact of
the zoning change
 Floating zone
 A zoning district with detailed provisions which does not have a
specific location until an owner applies to have the zone applied
to her property
 Cluster zone
 A residential zone that restricts the number of homes, but allows
the developer choice about where the homes will be located; this
permits the clustering of residences and encourages preservation
of open space
 Planned unit development
  Zoning that allows a developer to plan an entire community
subject to guidelines for density and other concerns; this is
essentially cluster zoning extended to all uses

 Eminent Domain: Defining Public Use (pg. 919)

o Eminent domain
 Government power to take your land
 Process of using eminent domain is called condemnation
 Allows federal, state, and local governments to take property from those
who refuse to sell voluntarily
 Military installation
 Highways
 Parks, schools
 Framers viewed the eminent domain power as an inherent attribute of
sovereignty
 Constitution limits eminent domain still
o Taking’s clause of the 5th amendment
 Two restrictions
 Only for public use
 Just compensation
o Fair market value
o Defining Public Use
 Hawaii Housing Authority v. Midkiff
 State may use the eminent domain process to take property that
is heavily concentrated in the hands of a few private landowners
and redistribute it among the general population of private
individuals
o “public use” does not prohibit this
 Virtually any use within the police powers of a sovereign state
constitutes a public use
 Overarching purpose of promoting public welfare
o Scope of Public Use
 Kelo v. City of new London
 A state’s use of eminent domain to condemn property from
private individuals and redistribute it to other private individuals
constitutes a “public use” under the Fifth amendment if it is
rationally related to a conceivable public purpose
  Criticized opinion because some say “public use” is no longer a
limit on eminent domain
o State legislatures also responded negatively, passing
legislation to curb the effect of the case
o Summary
 Public use requirement is clearly satisfied when government takes land so
that it may be physically used by the public or by gov. employees. More
broadly, supreme court has held that the requirement is satisfied if a
taking serves a public purpose.
 Economic development
 SC has held that taking private property for the primary purpose
of economic redevelopment pursuant to a comprehensive plan
satisfies the public use requirement
 State laws
 May interpret its conny as requiring a more narrow definition of
public use than is used to interpret the federal takigns clause
 Just compensation
 Generally defined to mean fair market value-the amount that a
willing buyer would pay a willing seller on the open market.

 Takings: Penn Coal, Penn Central (pg. 941)

 Takings clause of the 5th amendment
o Seizing possession for public purpose = physical taking
o Regulation restricting owner’s rights so much that it becomes the equivalent of a
seizure = regulatory taking

o Penn. Coal v Mahon

 While the use of property may be regulated, overregulation will be
considered a taking
 State may pass laws in the valid exercise of its police powers that has
incidental impact on property values, but when the law causes sufficient
diminution in property value, the state must take the land by eminent
domain and provide compensation
 Question of degree
 Deference shown to legislature’s judgment, but impacted parties
may challenge the constitutionality of the law at issue
o Penn Central Standard
 New three factor balancing test for determining if a taking occurred
 Applied today
  In determining whether a state regulation constitutes a taking under the
5th and 14th amendments, courts should consider
 the economic impact of the regulation on the owner,
 the extent to which the regulation has interfered with the
owner’s reasonable investment-backed expectations,
 and the character of the government action involved in the
regulation
o Three categorical tests
 A taking will be found under these tests if a governmental entity
 Authorizes a permanent physical occupation of land
 Adopts a regulation that causes the loss of all economically
beneficial or productive use of land, unless justified by
background principles of property or nuisance law; or
 Demands an exaction that has no essential nexus to a legit state
interest or lacks rough proportionality to the impacts of the
particular object
 Loretto v. teleprompter (permanent physical occupation case)
 A permanent physical occupation authorized by gov. is a taking
requiring the payment of just compensation without regard to the
public interests that it may serve or the fact that it only has a
minimal economic impact on the property owner
 Requires payment because a permanent physical occupation
Destroys the property owner’s opportunity to exercise three
rights
o Owner may no longer fully possess the property or exclude
others from possessing it
o The owner can no longer exclude others from using his or
her property, and cannot make any personal non-
possessory uses of it
o The owner cannot properly dispose of the property
because of a permanent physical occupation typically
strips the property or most or all of its economic value
o Loss of all economically beneficial or productive use
 Lucas v. South Carolina
 A state regulation that completely derives private property of all
its economic value constitutes a taking that requires the payment
of just compensation, unless the economic activity presented by
the regulation is not party of the owner’s initial title or property
rights when acquiring the property
o Exactions
 An exaction is a taking if either
 There is not an essential nexus between the exaction and a legit
state interest or
 The exaction is not roughly proportional to the impact of the
project