LAW 515-001 – Property I


Look at the OneNote stuff


Books Used

Property and Lawyering by Freyermuth, Organ, and Noble-Allgire, ISBN 9780314210135

Estates in Land and Future Interests by Linda H. Edwards, ISBN 9781454886389


Cave Laws

Majority: He who owns the surface owns everything below and everything below.

Minority: He who owns the surface is the owner of everything that may be taken from the earth and used for his profit, pleasure, or happiness—anything over which he can exert dominion and control—thus, he who owns entrance to cave owns the extent of the cave to its utmost reaches; first-in-time possession of entrance to cave and exploration/dominion and control of cave.
Bailment

A rightful possession of an object by someone who is not the true owner.

Carries the right to possess and exclude, but not use or transfer.

Elements:

  1. Delivery without the transfer of ownership
  2. Implied or express acceptance
  3. An implied or express agreement that the goods be returned
    • Element that differentiates from gift.

Carries the duty to:

  1. Care
    • Standard of care is that of a reasonably prudent person under the same or similar circumstances.
    • Paying raises the standard of care or a reasonably prudent person. Depends on the benefits and burdens
  2. Redelivery
    • Strict liability

Can be voluntary (taking care of a friend's dog) or involuntary (finding lost or mislaid property).

The law handles the ostensible title problem through the principle of derivative title.

Derivative Title

One can only transfer the title rights that he has himself.

Equitable Estoppel

Equitable estoppel prevents the true owner of property from asserting the derivative title principle and recovering possession.

Courts traditionally only impose equitable estoppel against a true owner when the owner has created a bailment relationship in which the bailee was clothed with "indicia of title."

The UCC also added the voidable title provision and the entrustment rule:

Voidable Title

A voidable title is a valid title that can be voided.

Voidable title is usually acquired by fraud or duress.

A person with a voidable title has the power to transfer a good title to a good faith purchaser for value.

Entrustment Rule
UCC § 2-403
  • Any entrusting of goods to a merchant that deals in goods of that kind gives the merchant power to transfer all of the entruster's rights to the good and to transfer the goods free of any interest of the entruster to a buyer in ordinary course of business.
  • "Entrusting" includes and delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor's disposition of the goods was punishable under the criminal law.
  • Merchant still cannot transfer rights that the entruster did not have the power to give.

    Adverse Possession

    The adverse possession doctrine shifts title of land from the true owner to an adverse possessor after the statutory period expires.

    For possession to ripen into title under adverse possession, most authorities hold that it must be:

    1. Actual possession
    2. Exclusive possession
    3. Continuous possession
    4. Hostile possession
    5. Open and notorious possession

    all for the full duration of the applicable statute of limitations.

    Gift

    A gift is transferring property for nothing in return.

    There are four types of gifts:

    1. Inter Vivos Gift

      The most common type of gift is an inter vivos gift.

      An inter vivos gift is the immediate, voluntary, gratuitous, and irrevocable transfer of title between living persons.

      It has three requirements:

      1. The donor must have donative intent.
        • i.e., the intent to make an immediately effective gift
        • The donative intent is what determines the type of gift given.
      2. The donor must deliver the object of the gift.
        • Delivery can be actual or constructive. Actual delivery is required unless it is not possible.
        • Usually concluded to require giving up dominion and control to the donee.
      3. The donee must accept the object of the gift.
        • Acceptance is assumed when the gift is valuable and unconditional.
    2. Conditional Gift

      Conditional gifts take effect immediately but are subject to a condition that will terminate the donees' ownership if it occurs.

    3. Gift Causa Mortis

      A gift causa mortis is one that gives the property immediately, subject to a condition subsequent of being terminated if:

      1. The donor changes his mind and revokes the gift.
      2. The donor does not actually die as a result of the particular peril that placed him in contemplation of imminent death.

      If the donor dies without expressing an intention to revoke the fit, the gift becomes absolute.

      Gifts causa mortis have the same requirements as an inter vivos gift.

    4. Gift of Future Interest

      Some states allow a person to give only the future interest to something.

      Gifts of future interest do not require delivery.

    Possessory Estate

    Possessory estate is the right to possess a piece of property now.

    Nature

    There are four natures that possessory estates have:

    1. Fee Simple

      A fee simple estate is the most common type. It allows the owner of the estate to keep the land forever or to devise it to someone else to keep forever. A fee simple will not end naturally.

      The words "and his heirs" in a conveyance are the words of limitation that create a fee simple.

      While a fee simple allows the grantee's heirs to inherit the estate, no legally recognizable interest is granted to them.

      Absolute

      Fee simple absolute means that no limitations at all. Fee simple is the only type of estate capable of being absolute, as all other types have inherent limitations.

    2. Fee Tail

      A fee tail estate allows the grantee to posses the land for the remainder of his life, but limits him from selling, giving, or devising the right of possession after his death. Instead the title is automatically inherited by the grantee's next lineal descendant. As it relies on having lineal descendants, at some point the law presumes that one will not be available and the estate will naturally end.

      A fee tail is communicated by the words of limitation "and the heirs of his body."

      Like fee simple, fee tail does not convey any legally recognizable interest to the grantee's heirs.

      Fee tails have been abolished in almost all states. In most states, any fee tail simply becomes a fee simple.

    3. Life Estate

      A life estate allows the right to possess the property for only the grantee's lifetime. It does not pass to the owner's issue on death.

      The words of purchase for a life estate are simply "for life."

      Pur Autre Vie

      Pur autre vie is a duration of a life estate based upon the lifetime of a person other than the possessor.

    4. Term of Years

      A term of years, commonly known as a lease, is an estate for a limited period of time.

      The words of limitation are usually some variation of "for 10 years."

    Words of Limitation

    Words of limitation tell what kind of limitation, if any, is inherent in the estate.

    If no words of limitation are included in the words of purchase, it is assumed because of the state's rules of construction that the grantor conveys all of the rights that he is able to.

    Possessory estates can have limitations beyond that of their natures however.

    Limitations
    Absolute

    Fee simple absolute means that no limitations at all. Fee simple is the only type of estate capable of being absolute, as all other types have inherent limitations.

    Defeasible

    A defeasible estate is one that is capable of being ended by the occurrence of a particular event.

    Three kinds of limitations can accomplish this:

    1. Determinable

      A determinable estate may end early automatically upon the happening of the limiting event.

      It relies on a duration without a condition happening. Words of duration are like: "until", "during", "as long as", or "while". The words of limitation will usually be in the original conveyance.

      It gives the grantee a possessory estate in fee simple determinable.

      If the future interest is retained by the grantor, it gives him a possibility of reverter.

      If the future interest is given to another grantee, it gives that person an executory interest.

    2. subject to an Executory Limitation
    3. Subject to a Condition Subsequent

      An estate subject to a condition subsequent requires the grantor to take some action to reclaim the property.

      It relies on a condition happening. Words of condition are like: "but if", "provided that", "on condition that", or "however". The words of limitation will usually be separated from the original conveyance by punctuation, instead attached to the following future interest.

      It gives a right of entry as a future interest.

    Future Interest

    A future interest is the right to possess a piece of property in the future.

    Remainder

    Remainder is a future interest created when a grantor conveys an inherently limited possessory estate and, in the same conveyance, conveys the future interest to a second grantee.

    Remainders can be vested or contingent.

    Vested Interest

    A vested remainder is certain to become possessory to an ascertained person according to the words creating the remainder by merely waiting until the prior life estate ends.

    Contingent Interest

    A contingent remainder is one

    1. with a condition precedent before the remainder-holder can take possession or
    2. one that is given to an unascertained person.
    Condition Precedent

    A condition precedent means that something has to happen before the remainder-holder can take possession.

    It's like being subject to a condition subsequent, but backwards. Something has to happen before the natural termination of the preceding estate.

    e.g. O to A for life, then to B if B has reached 25 years old.

    Executory Interest

    An executory interest is an interest in a grantee following a determinable estate or an estate subject to an executory limitation.

    An executory interest automatically takes effect upon the happening of the condition.

    Executory interests can be shifting or springing.

    Shifting

    A shifting executory interest divests an estate in another grantee.

    e.g. A to B, but if C graduates, to C. C has a shifting executory interest.

    Springing

    A springing executory interest divests an estate in a grantor.

    e.g. A to C, if C graduates. C has a springing executory interest.

    Reversion

    Reversion is a future interest in a grantor to an inherently limited possessory estate.

    Merger

    When the same person holds both a present possessory estate (or vested future interest) and the next vested future interest (i.e., no other person hold an intervening vested future interest), and the interests were not created by the same conveyance, then the present possessory estate (or vested future interest) merges with the vested future interest (lesser merges into greater) and destroys any intervening contingent remainders.

    Destruction of Contingent Remainders Doctrine

    A contingent remainder is destroyed if it is still contingent (not vested) when the prior estate ends.

    E.g.
    O to A for life, then to B if B reaches 30.
    If A dies before B is 30, B's contingent remainder is destroyed.

    Abolished in most states.

    Rule Against Perpetuities

    No interest is good unless it must vest and close, if at all, not later than twenty-one years after some life in being at the creation of the interest.

    Does not apply to future interests in the grantor.

    If the rule applies, strike out the offending future interest immediately at the time of conveyance.

    Book's definition

    A future interest is void the moment it is created if:

    1. It is given to a grantee (a remainder or an executory interest);
    2. It is either contingent (given to an unascertained taker or subject to a condition precedent or both) or subject to open [or executory]; and
    3. It might still be contingent or subject to open longer than 21 years after the death of the last person alive at the time of the conveyance.
    Charitable Exemption

    If both the possessory estate and vulnerable future interests are conveyed to charities, then the Rule Against Perpetuities does not apply.

    Reforms:

    Wait & See

    The Wait & See reform does not test for possibilities at the time of conveyance.

    It will test after one of two times:

    1. Wait & see for the common law period (lives in being plus 21 years)
    2. Wait & see for 90 years
    Uniform Statutory Rule Against Perpetuities

    Interest is valid if at least one of the following is true:

    • It complies with the original Rule against Perpetuities
    • It is certain to either vest and close or fail within 90 years
    • It actually vests and closes or fails within 90 years (a "wait and see" approach)
    Saving Clause

    Saving Clause in conveyance creates a time limit on when future interests must vest; not surprisingly, that time limit is 21 years after the death of some life in being at the time of the conveyance.

    i.e., add "within 21 years of the death of B" to conditions.

    Destruction of Contingent Remainders Doctrine

    A contingent remainder is destroyed if it is still contingent (not vested) when the prior estate ends.

    E.g.
    O to A for life, then to B if B reaches 30.
    If A dies before B is 30, B's contingent remainder is destroyed.

    Abolished in most states.

    Concurrent Ownership

    The common law recognized three types of concurrent ownership that have continuing relevance:

    1. Tenancy in Common

      Tenants in common share an undivided interest as co-owners. Each tenant in common has a distinct share that belongs to him. Each can use it to the same extent as if he owned it individually, although neither can take unilateral action to defeat other tenants in common's rights.

      Upon death of one of the co-owners, the interest in the property does not pass to the other co-owners but to the person named in the will of the deceased, who will then become a tenant-in-common with the surviving co-owners.

    2. Joint Tenancy

      Joint tenancy is similar to a tenancy in common in that each co-owner holds a separate and undivided right to possession, but joint tenant also have a right of survivorship. The death of one tenant will result in ownership of the land by the surviving joint tenants, passing outside probate.

      A joint tenancy must have the four unities.

      Four Unities
      1. Unity of Time

        Interest must be acquired by both tenants at the same time.

      2. Unity of Title

        The interests held by the co-owners must arise out of the same instrument.

      3. Unity of Interest

        Both tenants must have the same interest in the property.

        Both must have the same type of interest, and the interest must run for the same duration.

      4. Unity of Possession

        Both tenants must have the right to possess the whole property.

      If a unity is broken, the joint tenancy converts to a tenancy in common.

      States are split as to how a lien is handled. They are split between two theories:

      1. Lien Theory

        Under the lien theory, a mortgage only gives the mortgagee a lien on the property.

        This does not sever a joint tenancy.

      2. Title Theory

        Under the title theory, a mortgage gives title to the land to the mortgagee the moment the mortgage is made.

        For a joint tenancy, this immediately severs the right of survivorship and converts the joint tenancy to a tenancy in common.

    3. Tenancy by the Entirety

      Tenancy by the entirety is similar to joint tenancy, but it is only between married couples, and the law sees the two owners as one person.

      Tenancy by the entirety does not exist in all states and is usually only the default form of ownership for married couples in regards to real estate.

      Tenancy by the entirety has the four unities of joint tenancy, in addition to the fifth unity of marriage.

    If land is devised to multiple people without specifying what type of concurrent ownership, tenancy in common is assumed in almost all states.

    Each co-tenant has four rights concerning the property:

    1. Possession
    2. Partition

      Partition is when a cotenant asks the court to terminate the cotenancy and to divide the cotenancy property, either in kind (physical division of the property) or by sale (with division of the proceeds).

      There is a presumption that partition in kind should be made unless great prejudice is shown. Schmidt v. Wittinger.

    3. Accounting

      Accounting is an action in which one cotenant seeks to compel another cotenant to share benefits obtained from the leasing, exploitation, or use of the property.

    4. Contribution

      Contribution is an action in which one cotenant seeks reimbursement from the other cotenant for his share of necessary expenses that the complaining cotenant has paid.

    Some types of estates are held exclusively by spouses:

    Community Property

    Community property is a type of estate some states have created that gives spouses concurrent ownership. Neither spouse can unilaterally convey his share to someone other than his spouse. Neither spouse has a right of survivorship in community property.

    Equitable Distribution

    Most states have statues, under which property acquired during marriage is divided fairly at divorce.

    Obsolete Estates
    Jure Uxoris

    Jure uxoris no longer exists. It gave a husband an estate jure uxoris in all of the land by his wife at the time of marriage.

    Curtesy

    Curtesy was a common law estate that gave a husband all of the land owned by his wife at any time during their marriage upon her death.

    Dower

    Dower gave a widow an estate of dower for life in all land her husband owned an estate of inheritance at any time during the marriage.