Property II

II. Part IV; Transfers of land

A. Chapter 7; the land transaction

i. Introduction into buying and selling real estate

a) Contract portion (before closing/possession)-

(1) where buyer and seller sign contract terms and set closing date, arrange for financing

b) Property portion (the closing and after possession)

(1) here is where legal title actually passes from seller to buyer.

c) 1^st step; real estate agent

(1) (now, not always) conventional searching, haggling, understanding of purchase price and time of occupancy.

d) 2^nd step get and sign form

(1) (sometimes consult attorney, sometimes form from real estate agent or service. Earnest money

e) 3^rd step, financing

(1) buyer expects to make down payment, but needs to get rest of money from mortgage. Apply (credit check, title search). Make deposit for closing costs.

f) 4^th step, process loan.

g) 5^th step. Title assurance

(1) Certificate of title (attorney)

(2) Title abstracts by title company

(3) Certificate of local title insurance – usually title company maintains title plant like abstractor

h) 6^th step. Closing,

(1) closing costs, seller then will execute deed and receive check from buyer/mortgage bank. Vendee executes note and mortgage to bank.

i) 7^th step. Lender’s attorney

(1) will send deed and mortgage to courthouse for attachment of revenue stamps and recording and will pay fees. Also send deed to buyer and abstract, mortgage, note and certificate of title to lender (he will sent to title insurance company). This certificate will show that tiel is vested in buyer and that the mortgage is a valid first lien against property.

j) 8^th step. Buyer has title,

(1) subject to mortgage and usually is in possession.

ii. Contract part;

a) Statute of Frauds

(1) Leases for over three years (usually one year now) and any contract or sale of lands or interest concerning them.

(2) To satisfy, must be signed by party to be bound, describe real estate and state price (but sometimes price can be reasonable one, if agreement talks about fair market value). If modification need new signature.

(3) Exceptions; part performance and estoppel

(a) Part performance; when particular acts have been performed by one of the parties. or if p shows that he would suffere irreparable injury if contract not enforced, if buyer took possession (substitute for evidence that transaction happened).

(i) hickey v. green oral agreement, seller accepted check, but never cashed or signed. Buyers stated to seller intention to sell home and build on lot. Buyers sold house, then seller backed out. Here part performance. there was reasonable reliance, seller knew of intentions. Not fair, because no written agreement was expected. Action in equity.

(ii) walker v. ireton. Buyer sold his other farm, but seller didn’t know of intention. Here no part performance, because no warning or assurance or communication to seller of intentions.

(b) Estoppel; when unconscionable injury would result from denying enforcement of oral contrat after one party has been induced by other seriously to change position in reliance. (fairness)

b) Marketable title

(1) Implied condition that seller must convey to buyer a marketable title. (means title held by seller which is free from encumbrance and doubt.). marketable title implied at law. buyer may waive. Ways a title can be unmarketable.

(a) Lacks all or part of title

(b) Title actually held by vender ????

(c) Title subject to encumbrance- right of interest in land held by 3^rd person which diminishes value of estate, but does not negate estate itself.( easement, restrictive covenant, mortgage, lien, existing lease)

(d) Reasonable possibility that 1-2 is the case (don’t have to prove doubt only)

(e) Implied condition of marketable title, unless contract says otherwise.

(f) Waiver of marketable title; buyer may waive for utility easement etc. then buyer doesn’t have right to back out on that basis.

(2) Encumbrances; right of interest in land held by 3^rd person which diminishes the value of estate, but does not negate existence of estate itself. (easement, restrictive covenant, existing lease, mortgage or lien). Encumbrances make it unmarketable.

(a) Lohmeyer v. bower zoning doesn’t violate “marketable title”, but the violation of those do (test would it expose possessor of title to hazards of litigation). P can be let out of contract. Also restrictive covenant will, but here agreed to purchase subject to all restrictions of record. marketable title is title that does not expose buyer to litigation.

(b) Title Insurance is only on the price you bought the house at, not at appreciation value.

(c) Conklin v. davi. Contract to sell. D refused to go through, sellers title was valid through adverse possession (on part of the land). Title by adverse possession does not affect marketability (if is really adverse possession-because title magically transfers when elements met, doesn’t need to be court date). In action regarding contract for sale of land, warranty of marketability is not broken if title is proven marketable at end of trial.

(d) Difference between marketability and perfect title. Title by adverse possession is marketable, but not perfect.

(3) Equitable conversion;

(a) Risk of loss; from time of contract of sale to sale, burden of loss Is on purchaser. (but many contracts shift risk to seller.

(b) Buyer is treated as owner of land (say for inheritance, real property v. personal property).

(c) Seller’s interest is personal property .

(4) Duty to disclose defects

(5) Stambovsky v. ackley haunted house where a condition which has been created by seller materially impairs value of contract and is peculiarly within knowledge of seller (or unlikely to be discovered by prudent purchaser excersizing due care with respsect to the subject transaction, nondisclosure constitutes a basis for recision.

(6) Johnson v. davis seller knew roof leaked, but said no problems with roof. Was. Where seller of home knows of facts materially affecting to value of property which are not readily observable and are not known to buyer, seller under duty to disclose them to buyer.

(7) In MN must get disclosure statement from seller, unless waive. Jurisdictions are very different in their application of caveat emptor (buyer beware).

(8) Material?; two tests.

(a) objective; whether reasonable person would attach importance to it

(b) subjective test; whether defect affects value of desireability of property to this buyer.

(9) Stigma statutes; Several state statutes protect sellers from having to disclose psychological or prejudicial factors (murder, former occupant died of aids).

(10) Most states broker/agent has same duty as seller.

(11) CERCLA/ superfund. Imposes duty on owner for liability of clean up of hazardous wastes. Defense if didn’t know or have reason to know (duty on buyer to make appropriate inquiry).

(12) Strawn v. canuso; we do not hold that duty to disclose transient social conditions. Rather we root in land the duty to disclose off’site conditions that are material to the transaction. (like nearby landfill to new homes).

(13) As is clauses ok if defects are reasonable discoverable and no fraud.

iii. Property/deed part of sale of real estate

a) Deed

(1) What is in deed;

(a) Grantor

(b) Grantee

(c) Words of grante

(d) Description of land involved

(e) Signature of grantor

(f) Consideration(usually say some was paid, but don’t specify what it was).

(2) Three kinds

(a) General warranty deed; warrants against all defects in title

(b) Adverse possession=liable

(c) Special warranty deed (or limited warranty deed); warrnates against things that happened during grantor’s ownership.

(d) Adverse possession= liable if during grantor’s ownership.

(e) Quitclaim deed; no warrnaty, conveys whatever interest grantor has.

(3) Forged deed is void

(4) Deed by fraud is voidable.

(a) Voidable against grantee, but not against subsequent bona fide purchaser, unaware prevails over grantor.

(5) present covenants; (broken if at all, when deed is delivered, can be assigned, SOL starts when deed delivered).

(a) covenant of seisin (warrantes that grantor owns interest conveying)

(b) covenant of right of entry

(c) covenant of right to convey

(d) covenant against encumbrances

(6) Future covenants (runs with land, not breached until successor or grantee is evicted or otherwise damages, SOL begins to run at time of eviction or harm)

(a) Covenant of general warranty- grantor promises to defend against lawful claims and will compensate grantee for losses grantee may sustain by assertion of superior title

(b) Covenant of quiet enjoyment- grantor warrants grantee will not be disturbed in possession of enjoyment by superior title

(c) Covenant of future assurances. Grantor will execute any documents required to perfect title.

(7) Remedies

(a) Breach of covenant of seisin;

(i) Return of part or all of purchase price (restitution)NOT entitled to current market value

(ii) Breach of covenant against encumbrances;

(a) If easily removable, then that cost,

(b) If not easily removable, then difference in value of land.

(b) General warranty deed

(i) Brown v. lober facts reasoning holding.

(c) Implied warranty of habitability-

(i) Lempke v. dagenais Owner 1 built garage, owner 2 noticed structure problem soon after, agreed to repair, never did Don’t need privity of contract for subsequent purchaser to sue builder/contractor under implied warranty of workmanship and good quality for defects that manifest a reasonable time after purchase and cause economic harm.

(ii) Uniform land transactions act §2-309; implied warranties against persons “in business’ of selling real estate

(a) warranty of suitability/ used and new

(b) warranty of quality/ only new. Covers defects not so serious to make property unsuitable for its purpose. Runs with land (waiver by 1^st buyer doesn’t affect 2^nd).

(c) Usually 6 years SOL for express warranties.

(d) Warranty of quality normally NOT implied where seller is not merchant of housing. (in that case must be based on fraud, misrepresentation, or failure to disclose).

(d) Warranties of title

(i) General warranty deed; warrants against all defects in title (from any time).

(ii) Special warranty deed/limited warranty deed; warrants against defects in title that happened during grantor’s ownership. “conveys and quitclaims, but grantor warrants that grantor hasn’t done anything to encumber property”

(iii) Quitclaim deed; no warranties of any kind. “hereby convey’s and quitclaims”

(e) Other;

(i) Consideration; usually “valid consideration paid, but doesn’t list”.

(ii) Adverse possession for general warranty deed. LIABLE.

(iii) Adverse possession by limited warranty deed. Not if before grantor’s ownership

(iv) Description of tract- must have description of parcel or land by boundaries or other helpful)

(v) Seal (anything really)

(vi) Forgery- void. Grantors whose sig is forged prevails overall

(vii) Fraud- voidable by grantor in action against grantee, but subsequent BFP from grantee prevails over grantor.

(f) Present covenants; Broken at time of delivery or not at all. No need to run with land, because broken at time of delivery or not at all. Then right of action, which different jurisdictions say this can be assigned or not. thus possession not important.(to encourage due diligence and encourage free transfer of land limiting prior owners liability.)

(i) Covenant of seisin- grantor warrants she owns the interest she is conveying

(ii) Convenant of right of entry-

(iii) Covenant of right to convey-grantor

(iv) Covenant against encumbrances-

(8) Future covenants (breached when grantee or successor is evicted or otherwise damaged). Runs with land, (SOL begins to run at time of eviction). They run with the land and autormatically gets transferred with land. But must have physical possession.

(a) Covenant of general warranty- grantor promises to defend against lawful claims and will compensate grantee for losses grantee may sustain in assertion of superior title.

(b) Covenant of quiet enjoyment- grantor warrants that grantee will not be disturbed in possession and enjoyment by superior title.

(c) Covenant of further assurances- grantor will execute any documents required to perfect title.

(9) Other- quitclaim deed gives deed (so if wrong, then no cause of action) except maybe unjust enrichment may apply depending on situation and jurisdiction.

(10) Estoppel by deed; if grantor conveys land doesn’t own, then estopped from denying that he had title at time of delivery. (automatically passes title to grantee in that case)

(11) Delivery- to be effective must be delivered with intent that be presently operative.

(12) Remedies;

(a) Breach of covenant of seisin; return of part or all purchase price/restitution (not entitled to current market value).

(b) Breach of covenant against encumbrances; if easily removeable, cost of removal. If not, difference between value of land with encumbrance and value of land w/o.

(c) All damages are limited to purchase price recived by warrantor.

(d) Brown v. lober A to B deed for 1/3 mineral rights , B to C general warranty deed, no exceptions. C thought he owned all. Here, present coventents past SOL, so sued on quiet enjoyment. Until the time when other title holder interfere’s with p’s right of possession, there is no constructive eviction and therefore no breach of covenant of quiet enjoyment. Existence of superior title doesn’t breach.

(e) GENERAL RULE; easement which is a burden and diminishes value constitutes breach, regardless of grantee’s knowledge. Some jurisdictions say that some visible easements do not breach.

(f) Frimberger v. anzellotti house in marshland, brother gave quitclaim deed. D conveyed to P warranty deed, subject to zoning,e asments and restrictions of record. but violation, reasoning latent violations of state or municipal land use regulations that do not appear on the land records, that are unknown to the seller of that property as to which the lagency charged with enforcement has taken no official action to compel compliance at the time deed was executed and that have not ripened into interest that can be recorded on land records, do not constitute an encumbrance for purposes of deed warranty.

(g) Bianchi v. Lorenz; septic system w/o complying with code. Sellers relied. Later major p0roblems. Sued for breach of covenant against encumbrances. Court held for buyers. Substantial violation of municpla ordinances is encumbrance in violation of deed covenants if the seller can determine from municpla records that the property violates local zoning or building regulations at the time of conveyance.

(h) Hazardous waste deposits do not violate covenant of encumbrances or any other

(i) Rockafellor v. gray outstanding mortgage grantee agreed to assume . forclosure proceedings… sherriff’s deed/quit claim deed. To C then to D with usual covenants of warranty. Then D to H by special warranty deed. reasoning in iowa, covenant of seizen runs with land and action may be maintined by remote grantee (by conveyancey or assignment). 2. covenantee has right regardless of possession, 3. if consideration listed in deed, then seller has right to rely on that amount (as top of recovery). But remote buyers can’t get more then original buyer paid as consideration in deed.

(j) Sweeny adminstrarix v. sweeny deed to brother, recorded, then back to brother 1 not recorded and burned. After execution of deed, brother 1 still continued in possession of estate, paid charges and exercised full dominion. Physical possession not conclusive proof of delivery. But here intent was good. However it was conditional delivery and that only works when using 3^rd person, regardless of intent. conditional delivery not good unless 3^rd party used. Prevailing view. 2 other ways (1. no delivery when to take effect at death of grantor, 2. delivery good, “no logical reason why deed should not be held in excrow by the grantee as well as by any other person”.

(k) Escrow; instrument deposited by maker with a 3^rd party with instructions that it be delivered to another party on occurrence of one or more conditions. (usually commercial or death-grantor must place deed beyond his/her control).

(l) Escrow agent in sale= 3^rd party (computes charges and credits for each party, handles mailing checks and other tasks, sometimes works with title insurance.

(m) Escrow transfer of title; delivery to custodian immediately passes a property interest to the grantee. Future interest, a springing executory interest.

(13) Delivery without handing it over.

(a) Delivery=act that evinces intent to be immediately bound by transfer. Can be grantor’s declaration, express or implied that he is bound by deed.

(b) Rosengrant v. rosengrant Harold and mildrend wanted to leave jay farm, they made deed but left it at bank. Told jay to record it if anything happened to them. Left in enveloped marked Harold or jay. No intent to be bound. Found in name on envelope not valid.

(c) To solve that problem of not wanting to share with wife; make will, joint tenancy with brother.

(d) Instead use revocable trusts. Valid. “sign declaration of trust, retaining right to possession and all rents and profits of the farm for their own joint lives and the life of the survivor. Also retain right to revoke trust and retain legal title. Need not deliver instrument to Jay, but keep it secure. (do not have to record, but would help).

III. The mortgage

A. Terms;

i. Strict forclosure; stop payment and property goes right to lender (rare)

ii. Power of sale foreclosure/ foreclosure by advertisement; statutory process. Don’t need court intervention. (MN-due on sale clause)

iii. Judicial foreclosure/foreclosure by action- court administered process that results in public sale of property in effort to obtain fair price for b’s property that will satisfy b’s debt to l.

iv. Equity of redemption- b’s right to redeem his property before sale

v. Statutory redemption- b’s right to redeem property before sale (mn 12 months and borrower gets possession for 12 months).

B. Acceleration clause-whole mortgage due at time of sale.

C. Deed of trust; recognized in majority of jurisdictions

i. Borrower convey’s title to the land to a person (usually 3^rd person) to hold intrust to secure payment of debt to lender. Here trustee is given power to sell land without going through court.

ii. Installment sale contracts; contract that obligates the purchaser to pay the purchase price in installments and obligates the seller to convey title to buyer after purchase price has been fully paid. Economically indistinguishable from a transfer of title followed by a note and purchase money mortgage. Most states treat the installment sale contract as a security device.

a) Bean v. walker installment sale contract. Forfeiture clause if buyers defaulted for 30 days, sellers could call remaining balance or declare contract terminated and repossess (which meant that buyers lost all money they had paid, which was called “liquidated damages”. reasoning in installment sale contracts, vendee acquires equitable title and vendor merely holds the legal title in trust for vendee. So vendor may not just bring act of ejectment, rather must foreclose vendee’s equitable title or bring action at law for purchase price. That is legal owner can’t recover premises summarily , but first had to extinguish the equitable owner’s equity of redemption”. ( unless, minimal payments, or abandoned)

D. Seller must give notice of possible forfeiture. Accepting late payments may waive seller’s right to forfeiture in future as it may mislead purchaser into believing that promptness is not required.

i. Order

ii. Borrower gives note and mortgage.

a) Note is personal liability and promise to pay

b) Mortgage is sort of a lien on property. borrowers have interest in property through mortgage.

E. Carefully distinguish between judicially created right to redeem from the mortgage (equity of redemption) v. statutory right to redeem from purchaser at foreclosure sale.

F. Foreclosure;

i. Not ordinarily challengable unless it shocks the conscience of the court and amount realized is applied to debt. Then morgagee is entitled to deficiency judgment for difference, collectible out of general assets of borrower.

ii. Private sale, courts scrutinize more closely to assure that mortgagee acted fairly and thus may deny deficiency judgment.

iii. Foreclosure only wipes out mortgages below them not above. So if second martgage forcloses then purchaser buys property with first mortgage and if first mortgage forecloses then money goes to them first and if any left then second lender. Junior mortgage holders, junior lien holders.

iv. Antideficiency statutes. Some states legislation to protect borrowers from deficiency judgments. That is the person who owes whatever lender doesn’t get from sale of house.

v. Murphy v. financial development corp. P behind in payments on mortgage, p made effort to avoid foreclosure (paid 7 months mortgage payments, but not 643 in costs) lenders scheduled sale and complied with statutory requirements.but no other buyers present at sale and lender’s rep made bid at 27,000, but the next day offered property for 40,000. duty of lenders is fiduciary, to protect interests of mortgager through exercise of good faith and due diligence. simply complying with statutory notice requirements is not necessarily due diligence and foreclosurors must use due diligence to get fair price (which is NOT fair market value). Here lenders’ knew value was far above their bid and didn’t make effort to get other buyers there.

vi. Solution, lender could establish upset price to assure minimum bid.

vii. If foreclosure sale is defective (not follow statutory) then borrowers can invalidate their sale, regardless of subsequent buyers.

G. Sale or transfer by mortgagor; buyer may assume the mortgage or take subject to mortgage.

i. Assume; then becomes personally liable.

ii. Take subject then no personal liability

iii. (due on sale clause/acceleration clause) makes loan immediately due and payable upon any transfer.

IV. Title assurance;

A. Recording system/public record of conveyances;

i. Recording act (diff. for each state) doesn’t generally affect validity of deed. Deed is valid w/o recording.

a) Doesn’t matter, unless there are more then two claimants.

b) BUT reasons for recording;

(1) Public system of recordation (so anyone can see who owns the land)

(2) Preserves in a secure place important documents that otherwise might be lost.

(3) Protects purchasers for value (BFP) against prior unrecorded interests. (equity will not enforce prior hidden equitable interests against BFP)

c) Judgment or decree can also be recorded.

d) Lis pendes (notice of pending action) can be recorded too.

e) COMMON LAW; prior in time, prior in effect continues to control unless, person can qualify for protection under applicable recording act.

ii. Two types of indexes;

a) Tract index, filed according to parcel number/ address etc.

b) Grantor-grantee index. Filed in two separate indexes. Indexed alphabetically under grantor’s surname.

(1) How to search title;

(a) backwards in time to acceptable source or “root of title”. In grantee index. (sometimes must go to sovereign, sometimes only 60 years) (CERCLA makes liable, unless all appropriate inquiry” so commercial property does more extensive searches).

(b) then search forward from that source. Grantor index.

(2) Luthi v. evans oil and gas leases, “intended to convey all interest of whatsoever nature in all working interests in coffey county Kansas whether or not enumerated above” one that wasn’t listed. MOTHER HUBBARD clause Here, everyone agrees that this contract was valid between two original parties but court wants to encourage selling of properties and buyer did all they could. And other party could have filed affidavit to describe other interest. but court holds that the general conveyance that did not describe the property covered sufficiently was not sufficient to impart constructive notice to subsequent purchaser.

(3) What you can do here; make specific recording as soon as you realize a property is included and not specifically described.

c) Where an instrument containing sufficient description of property conveyed is recorded, but not properly indexed is sufficient for constructive notice.

(1) Rule; grantee has burden to make sure lease is recorded right the first time (after that subsequent purchaser).

d) Remedy; courts divided. 1. buyer gets what other party made in profit off land 2. buyer gets what buyer paid and no more.

e) Orr v. byers judgment recorded, but attorney spelled name wrong. Doctrine of idem sonans; though a person’s name has been inaccurately written, indenty of person will be presumed from similarity of sounds between correct pronouncaction and pronouncation as written. so absolute accurancy in spelling names is not required in legal proceedings but NOT where written name is material. . Usually used in criminal action to establish sameness of identity. . burden is properly on judgment creditor to take appropriate action to ensure judgment lien will be satisfied. MINORITY VIEW.

f) Many jurisdictions will put burden on buyer to search for every variation and by all indexes.

g) Judgment and federal tax liens filed on debter’s land in country where lien is filed.

h) Some jurisdictions index is part of record. but if not, then mistake in index wouldn’t matter.

i) If title co. did search for you, you’d have recourse against them/

iii. Types of recording acts

a) Race statute; between successive purchases person who records first wins.

b) Notice statute; here all that is important is notice. Subsequent purchaser must not have notice to fall under statute.(recording is constructive notice)

c) Race notice statute; subsequent purchaser protected against unrecorded instruments only if without notice and records first.

d) To be recorded, must be entered into record AND fit other requirements (usually notary, tax etc.)

e) Shelter rule; even if purchaser A knew, if the seller bought as bona fide purchaser B then sold to A. A still gets to take advantage of act. (protecting market of B who is bona fide purchaser without notice)

iv. Messersmith v. smith deed to nephew, deed to smith (invalid because notary not present), deed from smith to seale, then nephew records. Prior deeds in chain and yours all have to be properly recorded, to take advantage of recording acts. (then common law, which is if no title to convey, then no conveyance) a prior unrecorded valid and effective conveyance that is challenged by a subsequent purchaser to whom no title was conveyed and who claims that the recording laws vest title in him by virtue of a deed that was not acknowledged in fact and therefore not entitled to be placed on record.

v. If defect in deed is hidden then BFP loses, if obvious then BFP wins.

vi. Wild deed; recorded deed that is outside chain to title.

vii. Board of education in MPLS v. Hughes reasoning deed became fully operative when buyer filled his name in under presumed authority from grantor (based on retained check). Wild deed, not notice to Hughes of prior unrecorded conveyance. subsequent purchaser protected from deeds recorded after his.

viii. Deed that has no name of grantee is null, but becomes operative when grantee (with either express or implied warranty) fills in name. can be proven with parole evidence.

ix. Majority of cases hold; cost of searching title under name of every owner for many years prior to date the owner received title, looking for possible prior deed given by owner is too much. So (deed from grantee to 3^rd party before grantee got deed) is outside of chain to title.

x. Courts differ on if estoppel by deed means you have to look for it.

xi. Mortgage/lien can be substituted for deed in all these problems.

xii. Do see who wins; first read recording act carefully. For race/notice, race, notice and who bonafide purchaser is defined as. (almost always have to have paid valuable consideration- but what is that?courts not agree).

xiii. Race jurisdiction ask

a) Who recorded first?

xiv. In notice jurisdiction ask

a) who is subsequent purchaser? Las purchaser by date of conveyance?

b) Did he have notice? If not then will always win.

xv. Race-notice ask;

a) subsequent purchaser?

b) Does he have notice?

c) Did he record first? Of subsequent purchasers without notice.

xvi. Daniels v. anderson contract of sale, gave right of first refusal for adjacent parcel. Contract not recorded. Deed did not mention this right, but recorded. Subsequent purchaser paid 40,000 of 60,000 then had actual notice of right of refusal. Then received deed, which he recorded. Subsequent purchaser claimed doctrine of equitable conversion, but didn’t claim theory at trial, so waived. this court recognizes pro tanto rule; protects buyer as to payments he made before notice, but not payments made after. Three ways to do this; 1. award land to holder of outstanding interest (most common). 2. award buyer a fractional interest in land proportional to amount paid prior to notice. 3. allow buyer to complete purchase, but pay remaining installments to holder of outstanding interest. TC gave property to neighbor, but made neighbor pay subsequent purchaser price and paid property taxes.

xvii.Lewis v. superior court A contract to buy, B recorded lis pendens, A made down payment, escrow closed, then lis pendens indexed. reasoning lis pendens was properly recorded when it was indexed. Seller doesn’t need to be paid in full before buyer can be considered bona fide purchaser (and protected against constructive notice).

B. Notice; Actual or constructive notice matters, when took w/o notice and paying in installments (courts don’t hold you to constructive-don’t want to have to check after each monthly payment-, but will for actual)

i. Actual; person was told or written etc.

ii. Constructive; should have known or recorded.

iii. Inquiry; someone else is in possession of property, funny documents, quitclaim deed etc.

a) Harper v. paradise susan harper conveyed to dauther in law for life and reminder for named children. then lost. Remaindermem made deed “…already made…deed that was not recorded and can’t be found. …” then forclosed on susan. Then real deed found and recorded. B bought.reasoning B took with inquiry notice, because mentioned susan’s original deed.

iv. Some jurisdictions say quitclaim deed provides inquiry notice (so not bona fide purchaser without notice). “refusal of grantor to warrant title, should create strong suspicion that title is defective”.

v. Case implies (and true generally in law) that if they had looked and questioned kids and no one knew about it, then the could have been protected.

vi. PAPER OUTLINE STOPS HERE

vii. Waldorff insurance and bonding, Inc. v. englin national bank condos. B bought on note to A. A mortgaged to C. B paid off A with “trade of debts”. C foreclosed on B. reasoning trade of debts was valuable consideration. Actual possession of real estate by 3^rd party is sufficient notice to mortgager, that seller ,might not have interest to sell (constructive notice).

viii. Duty to check all units if it is multi-unit, get “tenant estoppel certificate” from tenants (and have them write any special agreements on form.

C. Marketable title acts.

i. Certain time (usually 30-40 yrs) that record owner holds title and then wins, other inconsistent rights are extinguished.

ii. Right of fee simple determinable has to be re-recorded every --- years or is abandoned. but easement doesn’t have to.

iii. Torrens; title (much harder to get, file application, court inquire, you get all people who might have interest) but once done, extinguishes all interest.

D. Registration of title

i. Registration of title; state of title worked out in advance and given to you.

ii. Title insurance; bought by one premium paid at time of purchase. Contains for as long as interest in property goes. Covers against superior titles that can be found in public records (warranties cover off record defects in title).

iii. Two forms;

a) Mortgagee’s policy – insures mortgage lender

b) Owner’s policy- insures homeowner

iv. Lick mill creek apartments v. Chicago title insurance co apartment owners tried to have title company indemnify them for the costs of cleaning up and removing the hazardous substances under their property. reasoning title insurance policies are intended to protect against condition of owner’s title to land and not provide coverage for physical condition of the land itself.

V. Nuisance;

A. Basically; owner of land shouldn’t have to put up with another person’s interference with the use and enjoyment of his/her land. (that is substantial, unreasonable/negligent/reckless or abnormally dangerous)

B. Law of nuisance focused on owner of land affected, not conduct or actions of neighbor.

C. Two kinds of nuisance.

i. Unintentional- when d’s conduct is negligent, reckless, or ultra hazardous. NOT covered by LAW OF NUISANCE.

ii. Intentional- when D acts for purposes of causing nuisance, (or knew or should have known it would cause nuisance).

iii. Two elements;

a) D’s conduct was unreasonable- different from negligence. Restatement= balancing approach. Weighs harm to P against utitlity of P’s conduct and burden to stop.

b) caused P substantial harm.-

iv. Morgan v. high penn oil co. oil refinery smells and noises. Here two elements met; neighbors were close enough factory should have known it would bother them. AND substantial harm; noises all the time and smells 2/3 times weekly. yes, nuisance and injunction appropriate..

v. Boomer v. atlantic cement co cement plant and neighbor. Says dirt, smoke and vibrations from plant are nuisance reasoning nuisance will be enjoined even if big financial difference between effect of injunction and effect of nuisance as long as harm is substantial. But Here court allowed D to pay financial cost of permanent injunction instead.

vi. Spur industries v. del webb development P is developer, D is cattle feedlot. Feedlot was first. reasoning enjoined because public nuisance, but developer required to indemnify the D (that is pay damages from injunction) if nuisance was foreseeable when P arrived.

D. Other nuisances

i. Fear of future harm

a) Devaluation of property based on fear of future result by undesireable enterprise (courts split on if nuisance).

ii. Asthetic nuisance;

a) Mere unattractiveness is not nuisance, eyesore + d’s malicious intent can be.

E. Lateral and subjacent support

i. Right to lateral support (provided by neighboring parcels) liable only when actually occurs or is imminent.

F. Remedies;

i. Injunctive relief; granted only after balancing of equities.

a) 1 court held (webb that P gets injunction only if D is compensated for the injury it is caused)

ii. Money damages; when finding of nuisance, but denied injunctive relief; court may give damages (permanent, past, present and future)

iii. Can award both injunction and damages for past harm.

iv. Coming to the nuisance- if foreseeable P must indemnify D for damages of injunction, but can get injunction if public nuisance.

VI. Servitiudes

A. Easements;

i. Terms;

a) Dominant tenant- owner of easement

b) Servient estate- owner of land subject to easement

c) Dominant estate- land that benefits from easement

d) Servient estate- land burdened by easement

e) Appurtenant easement- where one land is burdened and a land is benefited (example access road across b’s land to get to a’s land)

f) In gross easement- land burdened, but a person is benfited (not a parcel- example right to fish)

g) Affirmative easement; is the right to do something on that land.

h) Negative easement; is the restriction of acts on that land.

i) Unobstructed veiew, preserve open areas, etc.

j) Profit- right to take something (minerals, timber, hunt, fish etc)

k) Appurtenant profit (connected to land-right for neighbor to take timber)

l) In gross profit- when right to take is limited/tied to a person.

m) License- NOT AN EASEMENT- because revocable. Unless license is expressly not revocable then is treated as easement.

n) Easement can be fee simple or life estate or definite duration

ii. How easements are created;

a) Expressly (grant or sell)/must comply with SOF

(1) Willard v. first church of Christ , scientist old lady wanted church to use as parking lot, Sundays, so put that clause in when selling, but next guy sold without clause. reasoning when a grantor deeds real property to one person they can reserve an interest to the property in a third.

(2) Majority of courts disagree, use common law rule that one can’t reserve an interest in property to a stranger to a title

(3) Instead 1. transfer easement first, then deed. 2. sign lease for church for 99 years 3. use church as strawman

b) Estoppel

(1) Holbrook v. taylor haul road for mine, mine closed, adjacent property used road, built new house. Then owner said no can’t use. reasoning easement was created by estoppel, when neighbors built new house in reliance on using that road and owners saw but made no move to stop it. .

c) Implied by prior usage

(1) Based on apparent and continuous use of portion of track when track was divided.

(2) Quasi easement- precursors to easement by prior use) use by single owner of one part of property for benefit of rest of property .NOT EASEMENT

(3) Also van sandt

d) Implied by necessity

(1) Necessity to enjoy claimants land and necessity arose when divided.

(2) Van sandt v. royster sewer lot D used C’s sewer to hook to city sewer. Nothing above ground visible. Reasoning easement will be implied based on circumstances under which the conveyance was made including; extent to which prior use was known by parties, and necessity.

(3) Can be implied by necessity alone. But then endures only so long as is necessary.

(4) Othen v. rosier A owned bunch of land, sold off at different times. One lot is now landlocked. reasoning to be easement by necessity; must have been necessary when land was separated. That is must prove (in this case) that when lot (burdened) was sold by A, lot benefited had no way out.

e) Prescription (similar to adverse possession)

(1) Apparent and continous. Different for different jursidctions

(2) Othen v. rosier (above)

(a) Elements of adverse possession-professor says can tack.

(i) Adverse use

(ii) Exclusive- not that owner didn’t use, but that right didn’t depend on like right in others.

(iii) Time?

(3) Public prescriptive easements; obtained by long continous use by public under a claim of right. If landowners put on notice.

f) Public trust doctrine

(1) By state statute; beach from water to high tide line. Dry sand part of beach, between high tide line and vegetation line can be private.

(2) Matthews v. bay head improvement association beach on atlantic ocean, part owned privately beach police stationed at entrances, open to just residents reasoning public must be afforded reasonable access to foreshore as well as suitable area for recreation on dry sand. (but doesn’t have to be every bit of shore as long as most)

(3) And where parties are unable to agree on application of this rule, claim of private owner shall be honored until contrary established.

(4) NOT TAKING, because private owner never owned it in first place, was merely holding in trust for public

(5) Argument that this same theory should be applied to other things, environmental resources etc.

iii. How easements are transferred.

a) In gross;

(1) Servient land still burdened in sold

(2) Benefit is only assignable if commercial (but new restatement says all)

(3) Benefits can be assigned if parties so intended

(4) Excetption; recreational easements (like hunting fishing) sometimes allowed assignable, sometimes not.

(5) Burden can be subdivided as long as total burden stays same.

(6) Benfit can be subdivided but can’t take more then what is granted. (here depends on exclusive use or limited).

(a) Miller v. Lutheran conference & Camp association miller leased lands then build dam and made lake. Co. had exclusive rights to use water. Divided interests ¾ to one brother ¼ to another. reasoning when deed said fishing and boating only, it didn’t include swimming. But these rights were aquired by prescription and transfer was parties intent. But these rights aren’t divisible, must be used as “one stock” that any actions made with common consent of all owners..

b) Appurtenant;

(1) Benefit and burden transferred.

(2) Burden transfers automatically

(3) Benefit transfers unless original language limits this.

(4) Can be subdivided as long as total easement doesn’t grow. Generally reasonable development is allowed.

iv. Scope of easement

a) Burden of repair usually on dominant owner (but contract can shift)

b) Addition of utilities- not under or above roadway

c) Prescriptive easement- more narrow

d) Express language

e) Extension of easements to nondominant land

(1) Brown v. voss Lot A needs road on Lot B to acess. Q buys lot A and Lot C, can he use road on B to get to lot C? NO, must pay damages, but not enough for injunction (as lot B doesn’t have more harm.)

f) Rules of non interference (by servient tenant)

g) Can’t unilateral relocate easement (w/o consent)

v. Termination of easements;

a) Merger (if comes under one ownership)

b) Release- dominant estate gives servient estate release in writing

c) Abandonment- need to show action showing intention never to make use of easement or action inconsistent with future existance

(1) Preseault v. United States P owned land, railroad had right of way. Then tracks and rails removed. Did D abandon right of way? reasoning when railroad took up rails it gave up right to use. “took action signaling intent to never use”..

(2) Railroads right of ways are easements.

d) Estoppel-

e) Prescription- need adverse use (without permission, wrongful, open and notorious)

f) By terms of grant

vi. Distinguishing between easements and covenants; easement; right to use someone else’s land

vii. Covenant is promise not to do something or do something and must begin with valid contract.

viii. Defeasible fees can be used to control land, but here remedy for breach is forfeiture. As opposed to servitude which would be damages, injunction, or enforcement of lien.

ix. Covenants running with the land;

a) definition; private contracts that contain enough real property to apply property law and be enforced against subsequent owners.

b) Promisor can’t be sued if transfers all of land/whole of property

c) Must meet requirements for contract between two original parties. (SOF offer, acceptance, consideration)

d) Common interest communities; servitudes imposing direct restraint on alienation and servitudes imposing indirect restraint. Restatement applies to everything. What does it say??????

e) Types;

(1) Real covenants (enforceable for money/at law) harder to prove

(a) Original contract valid

(b) Parties intended benefit/burden to run

(c) Some jurisdictions require burden to touch and concern land

(i) Neponsit property owners’ association v. emigrant industrial savings bank purchased land at judicial sale, deed included covenant. Covenant was to pay money to association for maintenance of public areas. This covenant ran with the land, because the burden touches and concerns land.

(d) Benefit must touch and concern land

(i) Caullet v. stanle stilwell and sons inc. grantors reserved right to build or construct oringal dwelling on premises…will run with land”. Here benefit was to architect/builder’s business. A restrictive covenant does not run with land at law or equity when benefit it creates would not touch and concern land.

(e) For burden need horizontal privity means original contracting parties must (co-owners of land, or grantor/grantee relationship or landowner/tenant)

(f) Homeowners associations have standing to sue for member.

(g) For burden need vertical privity, deed between parties owning parcel burdened. (means not if leaseing, not if adverse possessor)

(h) Subsequent BF purchaser must take with notice

(2) Equitable servitudes/restrictive covenants (enforceable in equity) easier to prove (differences from real covenants under line and regular font)

(a) Original contract valid

(i) Sanborn v. mclean mcleans tried to build gas station on residential lot. Can be implied by equity when there is scheme for development of residential subdivision and purchaser has notice (here court requires only that houses look like they have common plan, but now probably would need something in writing –brochure, model, etc.)

(ii) Guillete v. daly dry wall, inc. restriction on lot contained in deeds to its neighbors from a common grantor. Yes, subsequent purchaser is bound by restrictions contained in deeds to neighbors from common granter if recorded and possible to be found (under grantor-grantee index). NOT IMPLIED, EXPRESS, just not in this original deed.

(3) Rebuttable presumption that parties intended burden and benefit to run with land.

(4) Some jurisdictions burden must touch and concern land

(5) Benefit must touch and concern land

(6) No horizontal or vertical privity required. (but must have some interest in land or won’t have standing to sue.

(7) Courts don’t care about lack of consideration when equitable servitude

(8) Subsequent BFP must take with notice (constructive or actual or record or inquiry)

(a) Tulk v. moxhay Lancaster square garden no convenant in deed, but admitted purchased with notice. Covenant is enforceable in equity against a person who purchases land with notice of covenant.

f) When unenforceable

(1) FHA-Hill v. community of Damien of Molokai group home for people with aids, neighbors said violated covenant restricting use to single family residence. This use doesn’t not violate the covenant restricting use to single family residence (uses same as if family with all members sick), but if did then covenant would be unenforceable because it violated the FHA.

(2) Violates FHA if

(a) Discriminatory intent

(b) Disparate impact

(c) No reasonable accommodation.

(d) Included; people with aids. handicaped. Add others?

(3) CONSTITUTIONAL-Shelley v. kraemer 30 of 39 owners signed agreement no part of property occupied by persons not of caucasion race. This covenant restricting houses to a certain race is unenforceable because it violates the 14^th amendment of the constitution(equal protection).

g) When terminated

(1) CHANGES IN AREA-Western land co. v. truskolaski subdivision restrictive covenant allows only residential use. Developer wants to build, says neighborhood has changed so stupid to enforce. Restrictive covenants are enforceable despite changes, unless those changes are radical and within subdivision itself.

(2) LAST HOLD OUT-Rick v. west west bought land from rick under restrictive covenant and refused to release covenant when rick wanted to sell to hospital, west is only land benefiting.restrictive covenant is enforceable even if it is the only parcel benefiting, because D relied on them in purchasing his lot. Landowner had right to insist upon adherence to covenant even if other owners consent.

(3) ABANDONED-pocono springs civic association v. mackensie. Owners of vacant lot tried to abandon so they wouldn’t have to pay association fee. No authority exists in Pennsylvania that allows for abandonment of real property when owned in fee simple with perfect title. And if real property can’t be abandoned, then covenant can’t.

(4) Some states have statutes that you can abandon, but not many.

(5) UNREASONABLE AND OVERLY BROAD nahrstedt v. lakeside village condo association nahrstedt wants to continue living with her cats in her condo, even though condo association restricts pets. Enforceability of restrictions on ownership and possession of pets should be decided in a trial basis to determine if reasonable as applied to this case (but look at common interst development as whole not specific homeowner).

(6) Gated communities some problems; some cities have passed laws saying you can’t have gated community.

VII. Eminent domain

A. 5^th amendment of u.s. constitution; “nor shall private property be taken for public use without just compensation”.

B. Everyone agrees govt has power of eminent domain. Question is when is it a taking so they have to compensate.

C. States have additional statutes that address this (that can be more protective)

D. Ask;

i. Is there a private property interest?

ii. Has there been a taking?

iii. Is the taking for public use/public purpose?

iv. Has “just compensation” been paid or what is “just compensation”?

E. Here common carriers and other utilities usually have power of eminent domain.

F. 3 procedural ways;

i. Inverse condemnation action for physical burden (private owner brings action against govt)

ii. Inverse condemnation for regulatory taking (private owner brings action against govt)

iii. Action for condemnation. Govt says we are going to take. Owner says can’t take not for public use.

a) Is there private property interest

b) Is this taking for public use (kelo, hathcock etc.) (analyize with and without conceptual severance)

(1) Yes if physical taking

(2) Yes, if total wipe out

(3) No, if nuisance

(4) Otherwise use penn central balancing test

(5) Economic impact

(6) Extent interferes with investment backed expectations

(7) Character of govt. action

(8) …

iv. Has just compensation been paid

G. Reasons for eminent domain

i. Sovereign states had property before ind. And conveyed subject to condition state might resume ownership

ii. Remnant of feudalism

iii. Eminent domain is inherent attribute because necessary for existence of govt.

H. What is public use?

i. 1981-STATE CT Poletown neighborhood council v. city of Detroit gm says will build plant, but makes city condem land and convey to gm, not slums. Held; here financial prosperity is public benefit and thus public use. But court must use heightened scrutiny to determine if clear and significant public interest is predominant.

ii. 1982 STATE CT. city of Oakland raiders v. Oakland raiders. Taking of sports team for education, recreation and pleasure of public is public purpose.

iii. 1984 US CT Midkiff/; 70 families in Hawaii used to own it all. Govt took away land to give to renters. Public use fulfilled if rationally related to conceivable public purpose.

iv. 2004 STATE CT County of wayne v. hathcock construction of business and technology park. “intended to reinvigorate struggling economy” NOT public use. Ct here using Michigan statute? OVERRULED poletown.

v. (2005). US CT Kelo v. city of new London City wanted new development to benefit city financially. wanted to take some houses through eminent domain. No evidence that area was blighted. Held; public use is fulfilled by serving a public purpose. Dissent; distinguishs from midkiff. Economic development is not public use, except in the broadest definition which would include basically everything. Would define public use as open to public.

vi. After kelo MANY states passed laws that would define public use more narrowly (and require compensation more often).

I. What is just compensation?

i. Fair market value. Amount of case paid to willing seller by willing buyer.

ii. Doesn’t take into account costs of moving, emotional costs etc.

iii. Land is valued as if there weren’t any taking (so before proceedings started).

iv. Usually 40% higher award if you challenge

J. When is regulation a taking?

i. WHEN PHYSICAL INVASION

a) Loretto v. teleprompter manhattan CATV corp new building owner suing cable company over cable allowed to install on building by state statute. Area used was very small and unobtrusive. any permenant physical occupation authorized by govt. regulation is taking regardless of public interests or amount of property/harm.

ii. NOT WHEN NUISANCE

a) Hadacheck v. Sebastian brickyard outside city limits, then city grew. City said hadacheck violated an ordinancy against brickyards. Regulation that seeks to regulate nuisance is police power and can take but don’t need to compensate. AND doesn’t prohibit entire use of property (can still get clay out and make bricks elsewhere).

iii. Some courts say test for taking is whether use is natural or not. What does that mean?

iv. WHEN NOT TOTAL WIPE OUT

a) Pennsylvania coal co. v. mahon deed sold surface for residential use, but reserved right to remove coal under same. Can govt. stop company from removing coal. NO, here regulation would take all of co. property rights and that would require taking (and compensation). Important that surface owners agreed to buy only surface rights. DIMINUTION IN VALUE TEST.

b) Lucas v. south Carolina coastal co. state stuatute barred lucas from building on barrier island parcel. Land use regulation that deprives owner of all economically valuable uses of property is taking and requires compensation.upholds Pennsylvania coal.

v. DEPENDS

a) Penn central transportaion co. v. city of NY landmark preservation law, requires additional changes to building to be approved by committee. Committee said no to 20 story building on top of penn central. Law which does not completely wipe out property interest, and still allows owner to receive return on investment does not effect a taking. BALANCING TEST. Need to look at; who benefits, public necessity, reciprocity of advantage, burden on landowner, interference with investment backed expectations. CONCEPTUAL SEVERENCE; here must examine whole property cannot sever into pieces.

vi. ASK

a) is physical? If yes, then taking -loretto

b) is nuisance? If yes, then no taking -hadacheck

c) is total wipe out? If yes, then taking -lucas

d) use penn central balancing test.

e) Analyize all answers under conceptual severance theory applying and not. Current supreme court says don’t use, but might change.

vii. What about if P got property after restriction?

a) Then sometimes no, if no reasonable investment backed expectations.

b) Can fight if successive title holder ( because what aobut inheritance, protection of market value etc.)

viii. What about if govt decides not to take, but took so long to decide owner lost money.

a) MN-Johnson v. city of mpls city sent letter saying will take. Then decided not to, but never bothered to tell owners. Here taking, because city abused power. Don’t need to apply penn central because MN constitution is tougher.

K. Does a temporary taking require compensation?;

i. First English v. county of LA church bought 21 acre parcel for camp. Fooded. LA adopted ordinance; prohibiting reconstruction or construction in flood protection area. Govt is required to compensate for temporary taking by regulation, not just a declaration that regulation is invalid.

ii. Normal delays in taking, condemning, are not compensable.

iii. Tahoe-sierra preservation council v. tahoe group set up by several states to protect tahoe area. Decided to halt building for some years to make study on how building affected lake. A temporary regulation prohibiting building could be taking, but is not in this case, because doesn’t wipe out all rights. when regulation over property owners could build. court rejects conceptual severance. (court might have found taking using penn central p didn’t argue that)

L. Exaction cases

i. (stand on own not related to other takings laws)

ii. Means; when permits are granted with condition of regulation (scrutinized, worry is that govt will use as way to make money…)

iii. Nollan v. CA coastal commission commission granted nollan a building permit on condition that Nolan allow public to pass across his property to access a public beach. If regulatory condition is imposed on development permit, then condition must substantially advance same govt. purpose that refusing permit would serve. (or else taking and require compensation.)

iv. Dolan v. city of Tigard in exchange for approval of a building permit a city attempted to force a business owner to dedicate a portion of her proerty to the city for floodplain and recreational easements. Exactions are constitutional if benefits achieved are reasonably related to impact of proposed development.

M. Measure 37 stuff.

i. Ordinance in Portland to restrict lots of stuff. Statute passed by referendum that said any regulation is taking (basically of course exceptions for nuisance…). That meant if regulated to just residential for example, govt must pay difference between value of property at high commercial level and value as residential property or give parcel waiver from that regulation.

N. Zoning

i. Different then regulation, because is prevention of nuisances and things to regulation.

ii. Valid or violate 5^th amendment taking?

a) Valid; village of Euclid v. ambler realty co. several areas (u-1 most restrictive single family residential and up). Restricted height of buildings, use and % of plot/area developed. City’s reason; public health and welfare, security, safety etc. Zoning doesn’t violate 5^th amendment takings.

iii. Problems with restrictions; reduces money value of parcels, segregation based on economic status, can’t operate business out of home, separate work from home etc, transportation problems, hard when using small area to develop (where mulit use districts developed from)

a) PA northwestern distributors, inc. v zoning hearing board adult bookstore. He opened store and 4 days later city amended zoning to prohibit adult bookstores. Gave him 90 days to shut down. zoning ordinance which requires amortization (certain amount of time to comply/shut down) and discontinuance of lawful pre-existing use IS A TAKING. (unless nuisance).

b) Non conforming uses run with the land.

c) Some courts allow amortization depending on how long. MN DOESN”T

iv. Estoppel

a) If city people give you permit by accident or mistake and you rely on it.

b) Very hard to get , in MN must show done with malice/bad faith.

O. Exceptions

i. Variances

a) Allowing owner to do something against zoning but in (1)keeping with the spirit of zoning (2) cause undue hardship (3) circumstances are unique to property (4) if owner didn’t bring problem on themselves.

b) Variances can be unenforceable if has one of two problems

(1) Restricts completely one form of speech (i.e. newspapers, etc.)not just time and place.

(2) Discriminates regarding content. Here courts are especially protective of political speech and not so protective of sexual content. Everything else in middle.

c) City of ladue v. gilleo political sign in yard. Sign gets taken down stolen. City says illegal. She puts up window sign, they change ordinance. Court says ordinance not enforceable, because restricts complete form of speech (yard/home sign) and discriminates against content (churches, business can have signs).

d) Harder to get then conditional use permits.

e) Runs with land, but many variances have time period you must complete building

f) Two kinds

(1) Area-requirements of plot (so much land for each house etc.)easier to get then use

(2) Use-(different use not residential, but commercial etc.) harder to get then area.(in MN can’t do)

P. Conditional use permit/Special exceptions

i. In keeping with use and deemed desirable, but more problems then usual, so city wants them to jump through a couple more hoops. Usually must meet certain requirements and then presumption you will get it.

ii. Cope v. inhabitants of town of Brunswick p wants to build apartment building that is conditional use in this district. Held; this conditional use clause is unconstitutional because it didn’t give enough guidance (standards) for board of appeals to decide. When delegate authority of zoning to unelected boards city must use specificity or delegation no good.