LAW 516-001 – Property II


Leasehold Estate
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."

A lease is a possessory right.

Types of leasehold estates:

  1. Tenancy for Years

    The tenancy for years is a tenancy for any fixed term. A tenancy for years expires on its own at the end of the fixed term, without the need for either party to give notice to terminate the lease.

  2. Periodic Tenancy

    The periodic tenancy is a tenancy that is measured by successive, identical periods of time. A periodic tenancy automatically renews for successive periods, unless one of the parties gives proper notice to terminate the tenancy. If not otherwise specified, the common law generally requires that the party seeking to terminate the tenancy must provide notice at least one period prior to the date of termination, up to a six-month max.

  3. Tenancy at Will

    The tenancy at will is a tenancy without a fixed duration and without any defined renewable periods. It lasts as long as both parties wish it to. The common law did not require advance notice to terminate a tenancy at will, but most states have now enacted statutes that require some minimal period of notice to terminate a tenancy at will.

  4. Tenancy at Sufferance

    The tenancy at sufferance really is not a tenancy. Rather, it is a label given to the situation that arises when a tenant "holds over" in possession after the lease has expired. A tenancy at sufferance only lasts until the landlord evicts the tenant or the parties agree to create a new tenancy.

Lease Transfer

Types of lease transfers:

  1. Assignment

    An assignment is when a tenant gives all of his possessory rights to an assignee.

    An assignment places the assignee in privity of estate with the landlord.

  2. Sublease

    A sublease is when a tenant gives anything less than all of his possessory rights. This then makes the tenant the landlord of the sublessee.

    A sublease does not put the sublessee in privity of estate with the landlord.

Recapture Clause

A recapture clause is where a tenant agrees to pay the landlord some or all of the profit he makes from an assignment or sublease.

Statute of Frauds

A statute of frauds is a defense that prevents the enforcement of a land transfer transaction or a lease longer than one year unless there is a signed written memorandum listing the price, parcel, and parties.

Neither a legal description of the property nor the parties' full names are required, only enough to identify them.

1L/2nd Semester/LAW 506-002 – Contracts II/R2C § 129

To enforce the covenants of a lease against a tenant, the landlord must either be in privity of contract or privity of estate with the tenant.

Waste

Waste is a tenant degrading the value or character of a property. (i.e., damaging it.)

Affirmative Waste

Affirmative waste is a change by a tenant that degrades the value of property.

Permissive Waste

Permissive waste is a tenant's failure to maintain the leased property properly.

Common Law Obligations of Landlord

Under common law, the landlord has the following duties: (page 440)

  1. Disclosure of latent defects
  2. Maintenance of the physical conditions of common areas under the landlord's control
  3. Contractually agreed repairs
  4. The physical condition of premises if agreed to be furnished
  5. The fitness of buildings under construction for the purposes for which the tenant entered into the lease
Covenant of Quiet Enjoyment

Covenant of quiet enjoyment is a landlord's promise that neither the landlord, his agents, nor people with superior title will interfere with the tenant's exclusive possession of the land.

If one of these people physically removes the tenant, it is an actual eviction.

It is breached if the landlord, his agent, or a paramount title holder actively interferes with the tenant's possession or if the landlord's inaction if the face of a legal duty to act results in interference.

If this interference is sufficiently serious so as to deprive the tenant of the benefit of his possession and he departs promptly as a consequence, the departure will escalate the breach into a constructive eviction.

An interference must be intentional (intent is usually inferred from the landlord's conduct), substantial, and permanent to support an allegation of constructive eviction.

A breach of the covenant of quiet enjoyment can be through omission or commission.

Implied Warrant of Habitability

A warranty of habitability is a covenant by the landlord, implied by law into residential leases, that the landlord will maintain the premises in condition fit for human habitation throughout the duration of the lease.

This warrants that:

  1. The premises are fit for human habitation.
  2. The condition of the premises is in accord with the uses reasonably intended by the parties.
  3. The tenants are not subject to any conditions endangering or detrimental to their life, health, or safety.

A tenant's obligation to pay rent is dependent upon the landlord's compliance with the implied warrant of habitability. A tenant may vacate the premises and terminate the lease or remain in possession and raise habitability as a defense or action respectively.

English Rule

The English rule provides that a landlord has an implied duty to place the tenant into actual possession on the first day of the lease term.

The English rule is the majority rule.

American Rule

The American rule provides that a landlord has no implied duty to place the tenant in actual possession as long as the tenant has the legal right to possession.

Self-Help

Although a few states still allow a landlord to repossess the premises following a tenant's default as lonog as he does not "breach the peace," most state forbid self-help without the tenant's consent.

Servitude

The servient estate generally remains burdened by the servitude even after it is transferred. Such a burden of a servitude "runs with the land."

If a servitude benefits a parcel of land, property law designates it as appurtenant, or real. If a servitude is purely purely personal to its holder is called a servitude in gross.

Land Transfer
Executory Interval

An executory period is a time gap between the time that the transferring parties bind themselves by signing a purchase and sale contract and the time of closing.

Broker

There are two rules as to when a broker earns his commission, differing when it is the buyer's fault the sale did not close:

  • The traditional/majority rule:
    A broker is entitled to a commission when he produces a buyer ready, willing, and able to purchase the property on the seller's terms, even if the sale is not completed.
  • Dobbs Rule

    The Dobbs rule says that a real estate broker does not earn a commission unless the contract of sale is performed, and he has not produced a ready, willing and able buyer if the buyer refuses or is unable to perform at closing. However, the broker has not produced a ready, willing, and able buyer if the seller is the reason the deal did not close.

Drake.

Statute of Frauds

A statute of frauds is a defense that prevents the enforcement of a land transfer transaction or a lease longer than one year unless there is a signed written memorandum listing the price, parcel, and parties.

Neither a legal description of the property nor the parties' full names are required, only enough to identify them.

1L/2nd Semester/LAW 506-002 – Contracts II/R2C § 129

Traditionally, land transfers have been governed by the doctrine of caveat emptor, saying that the seller of land was not liable for defective conditions unless he gave an express warranty that the premises were free of defects or the seller committed fraud by affirmatively misrepresenting the condition of the premises.

However, the overwhelming majority of states have adopted some variant of the seller's duty to disclose "material" facts that are known to the seller but are not "readily observable" by the buyer.

Equitable Conversion

Under the traditional equitable conversion rule, the risk of loss is placed on the purchaser as soon as the contract is made.

Under the Massachusetts rule, the risk of loss is placed on the seller until the closing or a taking of possession.

Under the Uniform Vendor and Purchaser Risk Act, if all or a material part is destroyed without the buyer's fault, the risk of loss is on the seller until the closing or a taking of possession.

A contract can provide another rule than a state's default.

Recording Act

A recording act regulates who has priority when there is a subsequent bona fide purchaser.

Recording acts override the common law first-in-time principle says that the first person to possess property is the true owner.

There are three types of recording acts:

  1. Pure Race

    Pure race statutes state that the grantee that records the title first will prevail over the other.

    Two states (NC & LA) have pure race recording acts.

  2. Pure Notice

    Approximately half of the states have pure notice recording acts, which state that a subsequent purchaser will prevail over a prior grantee as long as he does not have some form of notice of the prior claimant.

    The subsequent purchaser is not required to record his title.

  3. Race-Notice

    Roughly half of the states have race-notice recording acts, which are like pure notice statutes, as they state that a subsequent purchaser will prevail if they do not have notice of a prior claimant, but they also require the subsequent purchaser to record his title.

Shelter Rule

The shelter rule extends protections from a recording act to a subsequent grantee of the bona fide purchaser, even if that grantee would not qualify as a bona fide purchaser himself.

Notice

There are three types of notice.

For the recording system to provide notice effectively, deeds must be recorded accurately so searchers can find them. Defects in a deed can affect its validity or its recordability.

Idem Sonans

The doctrine of idem sonans states that where a name's sound is substantially preserve, bad spelling will not invalidate its effect.

Some jurisdictions do not apply the doctrine of idem sonans and simply hold that any misspelling will invalidate inquiry notice.

Belmont.

Gaps in the chain of title due to inheritance or devise do not invalidate inquiry notice, even if the heirs or devisees do not record their interests.

Forgery invalidates a deed.

Invalid delivery invalidates inquiry notice, but courts generally hold that the recording of a deed creates a rebuttable presumption of valid delivery.

States are split whether a deed with defective acknowledgment provides defective notice, but some states have "curative" statutes deeming the deed valid after a certain number of years.

Chain of Title Problems
  • Wild Deed

    A wild deed is one that is not properly connected to the chain of title because a predecessor a failed to record his deed.

    Courts have uniformly ruled that a wild deed does not provide constructive notice to subsequent purchasers.

    A subsequent purchaser should ensure that the seller has properly recorded his title before purchasing and thus that he does not record a wild deed.

  • Deeds recorded too early or late
  • Multiple chains of title from a common owner

The traditional rule is that a deed provides constructive notice to subsequent purchasers even if the recorder misindexes it, but some courts have held that a misindexed deed does not.

Marketable Title Act

Roughly one-third of states have adopted marketable title acts,which extinguish title interests that have not been recorded within a reasonable period. (Thirty years under the Uniform Marketable Title Act.)

Title Assurance

Title assurances assure a buyer that he will get marketable title.

Marketable Title

Marketable title is a title not subject to reasonable doubt of defects that would decrease its market value.

There are generally three defects that can make title unmarketable:

  1. Flaw in the seller's title
  2. The existence of an encumbrances on the property not reasonably knowable to the buyer
  3. Events that have deprived the seller of title

Physical defects normally cannot constitute title problems.

The existence of public restrictions do not affect marketability, but courts are split as to whether a violation of these can.

  • However, private restrictions can.

Courts are split on whether adversely possessed title is marketable.

Courts are roughly evenly split between two rules as to what the damages are for defective title.

  • English Rule

    Under the English Rule, the buyer is limited to a return of his money.

  • American Rule

    Under the American Rule, the buyer may recover benefit-of-the-bargain damages—typically the contract price minus the fair market value at the time of the breach.

Pre-Closing

A contract will typically contract that the seller will provide marketable title. If a title search reveals a defect in the seller's title, the buyer may choose to rescind the contract, seek enforcement of the contract with a price reduction, or sometimes seek to recover damages resulting from the breach.

Merger

Post-Closing

Warranty Deed
General Warranty Deed

General warranty deeds warrant against unknown defects of title with six covenants of title, but they can still be subject to excepted encumbrances.

Six Covenants

Most deeds contain six types of covenants.

Three are breached, if at all, at the time the deed is delivered.
Three are breached, if at all, at some later time.

Present Covenants

Present covenants are breached, if at all, at the time the deed is delivered.

Seisin

Seisin is the right to immediate possession.

The substance of the covenant of seisin is usually a promise that the grantor actually owns the property rights that the deed purports to convey.

Right to Convey

The covenant of right to convey warrants that the grantor has the legal right to transfer title.

Against Encumbrances

The covenant against encumbrances warrants that there are no encumbrances on the land which would decrease its value.

Encumbrances, as defined for marketable title, generally apply to deed covenants against encumbrances.

Marketable Title

Marketable title is a title not subject to reasonable doubt of defects that would decrease its market value.

There are generally three defects that can make title unmarketable:

  1. Flaw in the seller's title
  2. The existence of an encumbrances on the property not reasonably knowable to the buyer
  3. Events that have deprived the seller of title

Physical defects normally cannot constitute title problems.

The existence of public restrictions do not affect marketability, but courts are split as to whether a violation of these can.

  • However, private restrictions can.

Courts are split on whether adversely possessed title is marketable.

Courts are roughly evenly split between two rules as to what the damages are for defective title.

  • English Rule

    Under the English Rule, the buyer is limited to a return of his money.

  • American Rule

    Under the American Rule, the buyer may recover benefit-of-the-bargain damages—typically the contract price minus the fair market value at the time of the breach.

Future Covenants

Future covenants are breached, if at all, at some later time.

Warranty

The covenant of warranty is a grantor’s promise to defend and indemnify a grantee who suffers an interference with his possession of the land by a person who has superior or paramount title.

The covenant of warranty is practically the same as the covenant of quiet enjoyment.

Quiet Enjoyment

The covenant of quiet enjoyment warrants that the grantee’s possession and enjoyment of the property will not be disturbed by anyone holding superior title.

Practically the same as the covenant of warranty.

Further Assurances

A covenant of further assurances is a promise to take any future actions that may be needed to perfect the title which the original deed purported to convey.

Unlike the other covenants, the covenant of further assurances may also be enforced by specific performance.

Special Warranty Deed

Special warranty deeds warrant against unknown defects of title caused by the grantor with six covenants of title, but they can still be subject to to excepted encumbrances.

Six Covenants

Most deeds contain six types of covenants.

Three are breached, if at all, at the time the deed is delivered.
Three are breached, if at all, at some later time.

Present Covenants

Present covenants are breached, if at all, at the time the deed is delivered.

Seisin

Seisin is the right to immediate possession.

The substance of the covenant of seisin is usually a promise that the grantor actually owns the property rights that the deed purports to convey.

Right to Convey

The covenant of right to convey warrants that the grantor has the legal right to transfer title.

Against Encumbrances

The covenant against encumbrances warrants that there are no encumbrances on the land which would decrease its value.

Encumbrances, as defined for marketable title, generally apply to deed covenants against encumbrances.

Marketable Title

Marketable title is a title not subject to reasonable doubt of defects that would decrease its market value.

There are generally three defects that can make title unmarketable:

  1. Flaw in the seller's title
  2. The existence of an encumbrances on the property not reasonably knowable to the buyer
  3. Events that have deprived the seller of title

Physical defects normally cannot constitute title problems.

The existence of public restrictions do not affect marketability, but courts are split as to whether a violation of these can.

  • However, private restrictions can.

Courts are split on whether adversely possessed title is marketable.

Courts are roughly evenly split between two rules as to what the damages are for defective title.

  • English Rule

    Under the English Rule, the buyer is limited to a return of his money.

  • American Rule

    Under the American Rule, the buyer may recover benefit-of-the-bargain damages—typically the contract price minus the fair market value at the time of the breach.

Future Covenants

Future covenants are breached, if at all, at some later time.

Warranty

The covenant of warranty is a grantor’s promise to defend and indemnify a grantee who suffers an interference with his possession of the land by a person who has superior or paramount title.

The covenant of warranty is practically the same as the covenant of quiet enjoyment.

Quiet Enjoyment

The covenant of quiet enjoyment warrants that the grantee’s possession and enjoyment of the property will not be disturbed by anyone holding superior title.

Practically the same as the covenant of warranty.

Further Assurances

A covenant of further assurances is a promise to take any future actions that may be needed to perfect the title which the original deed purported to convey.

Unlike the other covenants, the covenant of further assurances may also be enforced by specific performance.

Title Insurance

Title insurance is a contract made with a third-party company which agrees to defend and indemnify against future losses the buyer due to latent defects in the title.

Mortgage

A mortgage is a type of secured loan in which real property is used as collateral.

The legal effect of a mortgage depends on the state.

Lien Theory

A majority of states follow lien theory, under which a mortgage is seen as merely a lien on the secured property.

This does not sever a joint tenancy.

Under this theory, a mortgagee is not entitled to possession before foreclosure.

Title Theory

Some states treat a mortgage as a conveyance of the property to a lender which is returned when the debt is discharged.

In a title theory state, the mortgage has the theoretical right to take possession of the secured property without foreclosure.

If there are multiple liens on property, generally liens are given priority based on who was first-in-time to file the lien on the deed.

  • However, the purchase money mortgage has priority has a priority over other liens.

Mortgage contracts usually have due on sale clauses.

Due on Sale Clause

A due on sale clause requires that any outstanding payment on a loan be repaid when a mortgaged property is transferred.

In the absence of a due-on-sale clause, one may still buy the property subject to the mortgage or may agree to assume the mortgage. (Bottom of 793)

Deed of Trust

A deed of trust is when a third-party trustee holds title to the property and sells it in the event of a default to repay the creditors.

About half the states recognize the deed of trust.

Installment Land Contract

An installment land is when a buyer agrees to pay the purchase price in installments over a period of years. The buyer typically receives possession of the property during the contract period, but the seller retains title to the land during this time and transfers it at the end thereof.

Installment land contracts usually contain a clause stating the seller has the right to terminate the contract in the event of a default, regaining possession without legal process and retaining all previous payments.

Installment land contracts are often used as an alternative to a mortgage, but some states treat land installment contracts as mortgages.

Some states have provided recourse for the naturally harsh consequences of installment land contracts, such as allowing the buyer to redeem the property or to challenge the forfeiture provision.

Foreclosure

A foreclosure occurs when there is a default on a mortgage.

In the event of a default, there are three options:

  1. Strict Foreclosure
    • Classical approach where the mortgagee takes possession of the property.
    • While still theoretically available in a few states, most foreclosures involve a foreclosure sale.
  2. Judicial Foreclosure
    • Judicial foreclosure is when one uses the judicial process to take possession of the property and sell it in a public sale.
    • Available in every state
  3. Non-Judicial Foreclosure
Redeem

In either type of foreclosure sale, the mortgagor has the right to redeem the mortgage by paying the entire balance of the debt. Some states provide a statutory right of redemption, allowing the mortgagor to redeem the property even after the foreclosure sale.

Right of Reinstatement

Contracts can and some state statutes do allow for a right of reinstatement, allowing a mortgagor to cure his default by paying all past-due amount.

This generally must be done early in the contract early in the foreclosure process. Illinois's statute requires it to be paid within 90 days of receiving notice.

If a sale's value exceeds the balance of the mortgage, the extra must be paid to the mortgagor.

  1. Judicial Foreclosure

    Judicial foreclosure is where a full judicial proceeding is used to take possession of and effect a public sale of the foreclosed property.

    Judicial foreclosure requires joining all person with interests junior to the mortgagee. If one is not joined, his interest will not be terminated.

    Process of judicial foreclosure:

  2. Non-Judicial Foreclosure

    Some states allow mortgage contracts to grant the mortgagee the power to sell the property in the event of a default.

    These non-judicial foreclosures, also known as foreclosures by power of sale, allow the mortgagee to conduct a public sale of the property on his own, but still require notice to be given to the interested parties.

    If it is deed of trust mortgage, the sale would be conducted by the trustee instead.

Nuisance

In general, one can use his property in any way he wishes. However, this is limited when it can harm others' rights and is therefore subject to the doctrine of nuisance.

A nuisance is a substantial and unreasonable interference with someone's use of his property.

Restatement Second of Torts § 821F

Significant Harm

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There is liability for a nuisance only to those to whom it causes significant harm, of a kind that would be suffered by a normal person in the community or by property in normal condition and used for a normal purpose.

Restatement Second of Torts § 822

General Rule

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One is subject to liability for a private nuisance if, but only if, his conduct is a legal cause of an invasion of another's interest in the private use and enjoyment of land, and the invasion is either

  1. intentional and unreasonable, or
  2. unintentional and otherwise actionable under the rules controlling liability for negligent or reckless conduct, or for abnormally dangerous conditions or activities.
Intentional Invasion
Restatement Second of Torts § 825

Intentional Invasion—What Constitutes

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An invasion of another's interest in the use and enjoyment of land or an interference with the public right, is intentional if the actor

  1. acts for the purpose of causing it, or
  2. knows that it is resulting or is substantially certain to result from his conduct.
Restatement Second of Torts § 826

Unreasonableness of Intentional Invasion

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An intentional invasion of another's interest in the use and enjoyment of land is unreasonable if

  1. the gravity of the harm outweighs the utility of the actor's conduct, or
  2. the harm caused by the conduct is serious and the financial burden of compensating for this and similar harm to others would not make the continuation of the conduct not feasible.
Gravity of Harm
Restatement Second of Torts § 827

Gravity of Harm—Factors Involved

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In determining the gravity of the harm from an intentional invasion of another's interest in the use and enjoyment of land, the following factors are important:

  1. The extent of the harm involved;
  2. the character of the harm involved;
  3. the social value that the law attaches to the type of use or enjoyment invaded;
  4. the suitability of the particular use or enjoyment invaded to the character of the locality; and
  5. the burden on the person harmed of avoiding the harm.
Utility of Harm
Restatement Second of Torts § 828

Utility of Conduct—Factors Involved

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In determining the utility of conduct that causes an intentional invasion of another's interest in the use and enjoyment of land, the following factors are important:

  1. the social value that the law attaches to the primary purpose of the conduct;
  2. the suitability of the conduct to the character of the locality; and
  3. the impracticability of preventing or avoiding the invasion.
Test Structure

A nuisance is present if the gravity of the harm outweighs the utility of the conduct.

Gravity of the harm has five factors. These are ...

Analyze each in separate paragraph.

Utility of the conduct has three factors. These are ...

Analyze each in separate paragraph.

Zoning

Zoning is pre-dispute planning where the government restricts the purposes that land can be used for in order to prevent nuisances.

A zoning ordinance can only be found unconstitutional if its "provisions are clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare." Village of Euclid.

There are four basic types of zones:

  • Residential
  • Commercial
  • Agricultural
  • Industrial
Cumulative Zoning vs Noncumulative Zoning Diagram
Cumulative Zoning

Cumulative zoning is when the zoning levels go from restrictive to permissive, allowing all previous uses while accumulating further uses.

It is also known as Euclidean zoning after the Euclid case.

Noncumulative Zoning

Noncumulative zoning is when the zoning districts are exclusive and each zone only allows one type of development.

Spot Zoning

Spot zoning is when a small tract owned by a single person is given different restrictions than a surrounding area that is uniformly zoned differently.

For spot zoning to be legal, it requires a clear showing of a reasonable basis therefor.

  • Factors used is determining reasonableness are:

    • the size of the tract in question;
    • the compatibility of the disputed zoning action with an existing comprehensive zoning plan;
    • the benefits and detriments resulting from the zoning action for the owner of the newly zoned property, his neighbors, and the surrounding community; and
    • the relationship between the uses envisioned under the new zoning and the uses currently present in adjacent tracts.

Illegal spot zoning is an unreasonable, arbitrary application of zoning laws to some people but not others.

Contract Zoning

Illegal contract zoning is when a landowner and his zoning authority undertake reciprocal obligations in a bilateral contract.

There are three ways a change can occur in the authorized or prohibited uses:

  1. A community's legislative body may amend the zoning ordinance.

    Upzone

    Upzoning means switching an area from one type of zone to a less restrictive zone.

    Downzone

    Downzoning means switching an area from one type of zone to a more restrictive zone.

  2. If the ordinance allows it, the community may issue a special use permit.

    Special Use Permit

    A special use permit, also called a conditional use permit, allows a parcel to be used in a manner it is not zoned for, but the ordinance must also authorize officials to grant permission for this specific use.

    Nonconforming Use

    A nonconforming use is a pre-existing use that does not conform to the zoning ordinance but is grandfathered in.

    This prevents the community from dictating what a private individual can do with his land.

    However, nonconforming uses cannot be expanded. This is to encourage the landowner to move to a properly zoned area and to promote the ultimate elimination of nonconforming uses.

    Chrismon.

  3. The community may grant a particular landowner an administrative variance from the strict application of the zoning classification to his parcel.

    Variance

    Most zoning acts allow boards to grant variance from the strict letter of the zoning ordinance. This allows an alternative when individual landowners would otherwise suffer special hardship from the application of the ordinance, but it should be exercised sparingly.

    There are two types of variances:

    Area Variance

    An area variance authorizes deviation from the dimensional limitations of the property, such as restrictions on the size or height of buildings or buildings' placements.

    Use Variance

    A use variance is one which permits a use other than what is prescribed by the zoning ordinance.

    Use variances are not permitted in all jurisdictions.

    For a variance to be granted, the applicant must show that relief is necessary to prevent unnecessary hardship to the property owner and that it is not contrary to the public interest.

    • Unnecessary hardship means that the property owner is unable to yield a reasonable return due to the unique character of the property.

    Matthew.

Eminent Domain

Eminent domain allows the government to take private property for public use in exchange for just compensation.

The Fifth Amendment puts this restriction on the federal government when it says, "nor shall private property be taken for public use, without just compensation."

It has also been incorporated against the states by the Fourteenth Amendment's requirement of due process.

Public Use

In determining whether something is a public use, the public purpose test is used.

Public Purpose

As long as a taking is rationally related to a legitimate public purpose within the scope of the government's police power, the public use requirement of the Fifth Amendment is satisfied. Kelo.

Examples
  • To eliminate a blight. Burban.
  • To eliminate extreme wealth. Hawaii Housing Authority.
  • To promote economic development. Kelo.

The federal restriction presented in Kelo is the minimum purpose required, but states can and do set stricter requirements,as seen in County of Wayne, which limited it to three situations:

  1. Where "public necessity of extreme sort" requires collective action
  2. Where the property remains subject to public oversight after transfer to a private entity
  3. Where the property is selected because of "facts of independent public significance," rather than in the interest of the private entity to which the property is eventually transferred

These situations are valid public purposes under the federal restriction as well.

Just Compensation

Just compensation means the fair market value of the property when the taking occurs.

Fair Market Value

Fair market value means the amount that a willing buyer would pay in cash to a willing seller. It's usually determined by recent sales of comparable properties.

Inverse Condemnation

When the government does not condemn a property and take title of land in eminent domain proceedings but otherwise deprives a property owner's rights in a way that otherwise constitutes a taking, that landowner can initiate an inverse condemnation action to show that his land was taken, get it condemned, and get just compensation therefor.

Taking

Takings can occur when:

  1. The government actually condemns the property and takes title.
  2. The government conducts a permanent physical invasion of the property.
    • When there is a physical invasion of the property, the Supreme Court has consistently held that a taking has occurred, regardless of how small a diminishment in value may result.
  3. Regulatory Taking

    A regulatory taking is where the state effects a taking of land by restricting its use so that the owner is unable to develop a significant portion of it.

    The standard for what constitutes a regulatory taking was established in Penn Central, which said that "economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with distinct investment-backed expectations" must be balanced against "the character of the governmental action."

    • The economic impact of the regulation on the claimant is determined by comparing the fair market value before and after the regulation.
    • A buyer who purchases land already devoted to a legally permitted use usually has a reasonable investment-backed expectation that the use will continue.
    • Again, when there is a physical invasion of the property, the Supreme Court has consistently held that a taking has occurred, regardless of how small a diminishment in value may result.
    • A regulation is not a taking if it is reasonably related to the public health, safety, or welfare—even if it substantially diminishes the value of the affected land.
    • The impairment must be truly significant to give rise to a taking.
  4. Extractions and Impact Fees
    Extraction
    Impact Fee
    1. Nature
      • Essential Nexus
    2. Extent
      • Rough Proportionality

    Dolan.