Editing Property Dukeminier/Outline

{{Infobox Text-Specific Outline
|subject=Property
|text=Property Connected Casebook (Aspen Casebook) Dukeminier
|authors=Jesse Dukeminier*James E. Krier*Gregory S. Alexander*Michael S. Schill*Lior Jacob Strahilevitz
}}

=SECTION 1: WHAT IS PROPERTY? THEORIES OF PROPERTY; ACQUISITION OFPROPERTY=

Class 1: Theories of Property; Acquisition By Discovery/Conquest/Capture Readings: 34-37; 3-22; 27-34
==The Tragedy of the Commons and the Economic Theory of Property (34-37)==

#  The Tragedy of the Commons

Two Types of Commons: limited-access and open-access
# Limited Access Commons – Limits access to use of resources to members of relatively small group; group has right to exclude outsiders.
# Open-Access Commons – Resources in the commons are open for anyone to use; no individual or group has right to exclude anyone.

Open-access commons are thought to create a "tragedy of the commons."
# Tragedy of the Commons – The open-access commons system compels members to increase their use of resources as much as possible because they gain all the benefits but share only a small portion of the cost of overuse; encourages unlimited use of resources in a world where resources are limited. Because of this, resources will be depleted and nobody will be able to use.

It has been argued that limited-access commons dont create tragedy of commons:
# People often able to cooperate for good of group
# Limited numbers/shared outlooks facilitate constructive collective action
#  Economic Theory of Property

Basic Theory: The purpose of property rights is to enhance social welfare by maximizing the value of scarce resources. Happens in two ways:
# Prop. rights concentrate costs and benefits of use on owners
# Therefore incentivizes them to use their resources more efficiently
# Prop. rights reduce the cost of negotiating with others over remaining externalities

Externalities – Positive or negative effects on others caused by Person As use of resources Utilitarian Account of Property
# Primary function of property rights is to promote efficient use of resources
# Where economic theory of property derives from
# Views concept of property as a human invention/social institution
# Dominant view of property today

Criticisms of Utilitarian Account of Property
# Does not give adequate weight to interests of individuals (focuses on aggregate wealth of society)
# Treats goods as always substitutable – not the case in the real world.
# Specific to Economic Theory – Rational actor model of individual motivation does not apply to real-world actors (people are not homo-economicus)

==Acquisition by Discovery/Conquest (3-13)==

Johnson v. MIntosh (1823) – Plaintiffs claimed title to land under two grants made by Piankeshaw Indians. McIntosh claimed title under grant by US Government. "An absolute title cannot exist, at the same time, in different persons, or in different governments." Pact between European nations (and later the US) allowed the (government) discoverer of a tract of land to claim title in that land, but granted to Indian tribes occupancy and use rights. Tribes did not, however, have sovereignty—no right to transfer title/control of the soil. Because the land in question had been "discovered" by the colonists and later became property of US government, US government had exclusive right to transfer title of the land; tribes occupying land had no such right. McIntosh wins because Piankeshaw tribe had no right to transfer title to Johnson.For acquisition by conquest to be valid, the conquest must be legal. Generally, conquest is not legal unless theres a declaration of warConquest is not ideal because it is super inefficient will just result in an arms race and/or constant fighting What we learn from this case: Under no circumstances can two entities claim right to the same soilIf you are going to claim ownership, then whoever gave you that right better have had the right to convey it to youBeing "first in time" is significantly important in determining property rights Case is about chain of title Why First in Time? Promotes peace Encourages investmentAdministrative easehistoryarbitrary
==Acquisition by Capture (13-34)==

''[[Pierson v. Post]]'' (1805) – Post was pursuing a wild fox with his hounds, and at the last moment Pierson, who knew Post was in pursuit, killed the fox and carried it away. Issue is "what acts amount to occupancy, applied to acquiring right to wild animals?" Actual bodily seizure of the animal is not 100% necessary to acquire right to/possession of animal; HOWEVER, the person claiming title must have mortally wounded the animal, or captured the animal by nets, etc. in such a way that the animal has been deprived of its natural liberty and escape rendered impossible. Such steps taken by the pursuer of the animal "manifests an unequivocal intention of appropriating the animal to his individual use." Because Post was only in pursuit of the animal and had not yet wounded, killed or captured it, Pierson obtained rightful title to the animal when he killed it.PIERSON WINS.LIVINGSTON DISSENT: Berbeyracs theory should be adopted. Post should have won because he was in pursuit with hunting dogs and was within reach or had a reasonable prospect of capturing the animal, were it not for Piersons intervention.

===Popov v. Hayashi===
Popov v. Hayashi (2002) – The case about Barry Bonds 73rd home run ball. Popov almost caught ball, but was then swarmed by other fans and fell to the ground. Hayashi was also knocked to the ground. While on the ground Hayashi saw the ball, picked it up, stood up, and put the ball in his pocket.Class 2: Right to Exclude; What Can Be Property?Readings: 37-44; 62-81; 97-102

==Right to Exclude (p. 37)==

[[Jacque v. Steenberg Homes, Inc.]] (WI, 1997) – When nominal damages are awarded for an intentional trespass to land, punitive damages may, in the discretion of the jury, be awarded. Jacques = a couple. Jacques’ neighbor ordered a mobile home, easiest path to deliver was across Jacques’ land. Jacques protested to this method, Steenberg plowed a path through the snow and drove mobile home across Jacques’ land to deliver the trailer anyway. Jacques sued and won $1 in nominal damages, and jury awarded $100K in punitive damages. Circuit court set aside $100K punitive damages. Court of appeals affirmed, saying “award of nominal damages will not sustain a punitive damage award.” WI Supreme court reverses here. Reasoning: Individuals have a legal right to exclude others from private property. Such a right is hollow if legal system does not provide sufficient means to protect it. Nominal damages award of $1 is not sufficient to protect the right to exclude—Steenberg could easily decide that it is more profitable to flaunt the right and pay the $1 than to respect the right of the Jacques. Society’s interest extends past protecting individual rights of landowners—society has interest in preserving integrity of legal system. Landowners should have confidence that when their rights are violated, violators will be appropriately punished. If they feel as such, they will be less likely to resort to self-help/vigilante justice. Therefore, both private landowner and society have much more than a nominal interest in excluding others from private land (and punitive damages are therefore appropriate even when nominal damages are awarded).

[[State v. Shack]] (NJ, 1971) – Tedesco = landowner/farmer. 2 defendants, Tejeras and Shack. Tejeras is field worker for federal organization created to aid migrant farmworkers by, among other things, providing health services. Shack was member of federal organization created to provide legal services to migrant farmworkers. Defendants entered Tedesco’s property and asked to speak to a worker regarding health and legal services. Tedesco said okay, but I have to be present for all of that. Defendants said no, we can speak to the worker in private, my G. Tedesco called state troopers who in turn refused to remove defendants unless Tedesco wrote a formal complaint that they were trespassing. Tedesco filled out the complaint, thus bringing this case to the court. Ownership of real property does not include the right to bar access to governmental services available to migrant workers and hence there was no trespass within the meaning given to the term by the State trespass statute. A person’s right in real property is not absolute. Common law maxim is that one should use his property so as not to injure the rights of others. Rights are relative, and there must be an accommodation when they meet. THEREFORE necessity, whether private or public, may justify entry upon the lands of another. There is no legitimate need for the farmer to deny the opportunity for aid available from federal, State, or local services, or from recognized charitable groups seeking to assist him. Hence, representatives of these agencies may enter the premises to seek the worker out in his living quarters. Worker must be allowed to receive visitors of his own choice so long as there is no behavior that is hurtful to others. Members of the press may not be denied reasonable access to workers who do not object to seeing them. On the other hand, farmer has right to make visitors identify themselves in order to keep himself and his workers secure. Farmer may not, however, deny workers’ privacy. PRIVACY RIGHTS AND THE RIGHT TO LIVE WITH DIGNITY ARE TOO IMPORTANT TO SOCIETY TO BE OVERRIDDEN BY INTEREST IN REAL PROPERTY.
===Civil vs. Criminal Trespass (p. 42)===

Civil Trespass – An unprivileged intentional encroachment upon property owned by another.
# Intentional = engaging in voluntary act such as walking. Does not require specific intent to trespass.
# Trespass is unprivileged when encroachment is:
## without owner’s consent;
## lacks necessity as a justification; and
## is not otherwise justified by public policy

Criminal Trespass – Trespass is criminal when the defendant enters another’s land knowing that he lacks the privilege to do so or if the defendant refuses to leave another’s land after being asked to do so.

==Property in One’s Person (p. 62)==

Moore v. Regents of University of California (CA, 1990) – Moore had hairy cell leukemia and went to defendant’s med center for treatment. Consented to splenectomy and to having tests done/blood and tissue samples taken over next 7 years. Moore told that his samples would be used for research, but was not told that his cells were unique and that their use in the research could be immensely lucrative for defendants. Defendants developed a cell line from Moore’s cells and patented the cell line and other products derived from it. Moore sued for conversion once he found out how much money was potentially involved. Court found that Moore had no cause of action for conversion under the traditional meaning because he did not have possession of the cells once they were removed and because under California case and statutory law he did not appear to retain any ownership rights in the cells once they were removed from his body. The court further found that Moore could not have any rights in the subject of the defendant’s patent because it was the product not of Moore’s raw cells but rather of the human ingenuity of the researchers involved in the testing of his cells. The court declined to extend the tort of conversion to include the type of harm that Moore alleged he suffered because the court feared it would chill the conduction of research that would be beneficial to all mankind and because the court found that existing law regarding doctor-patient disclosures were sufficient to protect against the type of harm Moore claimed he had suffered.
==IP Interests – Patents (p. 75)==

Specific protection granted to patent holders by federal patent statute is the right to prevent others from making, using, selling, etc. the invention during the term of the patent. Currently, the term of a patent is 20 years from the date the application is filed with the USPTO.Patent applications must meet five (5) criteria for the PTO to grant the patent:
# Patentable – Invention must fit into one of the following four (4) categories of patentable subject matter:
## Process
## Machine
## Manufacture
## Any composition of matter
# Novel – To be novel, the idea must not be preceded in identical form in public prior
art.
# Utility – The invention must offer some actual benefit to humans
# Non-Obvious – Most important requirement. Invention must constitute a sufficiently large technical advancement over prior art.
# Enablement – Requires the patent application to describe the invention in sufficient detail such that “one of ordinary skill in the art” would be able to use the invention.

Diamond v. Chakrabarty (US, 1980) – Chakra. Filed a patent for a new bacteria that he created that had properties capable of breaking down many components of crude oil. As such, the bacteria were thought to have a potential useful application in containing oil spills. Chakra’s filed three types of patent claim: 1) a claim on the method for producing the bacteria; 2) claims for an inoculum comprised of a carrier material floating on water and the new bacteria; and 3) claims to the bacteria themselves. Patent office rejected the third claim asserting that 1) microorganisms are products of nature; and 2) that as living things the bacteria were not patentable subject matter under current US patent law. Issue was whether the bacteria constituted a “manufacture” or a “composition of matter” under current patent law. The court held that because the bacteria were not a discovery of a naturally occurring organism; rather, they were a non-naturally occurring manufacture or composition of matter having different characteristics from any such composition of matter found in nature, and that they were the product of human ingenuity. Therefore, the court found that the bacteria/microorganisms were patentable. What counts as a “product of nature” after Chakrabarty?

[[Association for Molecular Pathology v. Myriad Genetics, Inc.]] (2013) – Court held that Myriad could not patent a naturally occurring DNA sequence that it had isolated, despite the finding that the isolated sequence indicated a heightened risk of developing cancer. “Separating [a] gene from its surrounding genetic material is not an act of invention.” Myriad also removed introns from naturally occurring DNA sequences, resulting in cDNA sequences that do not occur naturally in the human body. The court found that such cDNA sequences could be patented because the lab techs “unquestionably create something new when cDNA is made”; however, the court notes that Myriad would still need to show the other elements of patentability (i.e. novelty, non-obviousness, and specification) in order to actually obtain a patent on cDNA.

==Trademarks (p. 97)==

Three requirements must be met for trademark protection:
# Distinctiveness – Mark must distinguish the goods or services of one person from those of another.
# Non-Functionality – If an aspect of a good is exclusively functional, it cannot be protected by trademark law (because patent law protects functional goods). SCOTUS has explained that a product feature is functional of “it is essential to the use or purpose of the article, that is, if exclusive use of the feature would put competitors at a significant, non-reputation-related disadvantage.”
# First Use in Trade – Exclusive right to use a mark requires first use, not just first adoption, of the mark in a particular geographic market. Under the Lanham Act, the use must be in commerce, which has a more narrow scope than “trade.”

Qualitex Co. v. Jacobson Products Co., Inc. (US, 1995) – Qualitex makes pads for dry-cleaning equipment. Qualitex has used same green-gold color for pads since 1950’s. In 1989, Jacobson started selling pads that were a similar green-gold color. In 1991, Qualitex files for a trademark on the green-gold color, and also files a suit for trademark infringement against Jacobson. Issue is whether a color alone can be trademarked. Court found that a color alone could be used as a trademark as long as it met the requirements of the Lanham Act. Court held that Qualitex could trademark its gold-green color because it acted as a symbol of the brand and was used or intended to be used to distinguish Qualitex’s goods from those manufactured/sold by others in the marketplace, to with Jacobson.Class 3: Acquisition by Find; Acquisition by Adverse PossessionReadings: 103-113; 114-123 (Through Problem 1)
==Acquisition by Find (p. 103)==

[[Armory v de Lamirie]] (King’s Bench, 1722) – Chimney sweep found a jewel and carried it to defendant’s shop. Defendant’s assistant removed the jewel and offered the boy only the value of the setting that the jewel came in. Court ordered defendant to either return the jewel or pay the boy an amount equal to the value of a jewel of the finest quality that would fit in the setting. When a piece of property is found by an individual, the finder may maintain property rights in the object against all but the true owner or a previous possessor with better title, such as a previous finder.Jus Tertii Defense – Latin for “rights of a third party.” Defense where a party tries to claim the rights of a third party as a defense. In the case above, the defendant tried to assert the rights of the absent true owner of the jewel. As is still common, the court rejected the defense. Generally, courts will demand that a party stand on his/her own rights, and not the rights of a third party.Trover – Common law cause of action for money damages resulting from the defendant’s conversion to his own use of a chattel owned or possessed by plaintiff. Trover is basically obsolete, having been replaced by the tort of conversion.Prior Possessor as Thief – Even if the “finder” is actually a thief (i.e. if plaintiff in Armory had stolen the jewel rather than found it), he still enjoys the same rights over the person who takes the property from him. “Any other rule would lead to an endless series of unlawful seizures and reprisals in every case where property had once passed out of the possession of the rightful owner.”

[[Hannah v. Peel]] (King’s Bench, 1945) – Quartered soldier (Hannah) finds brooch lodged in windowsill of house that he was quartered in. House was owned by Peel, but had never been occupied by him. Hannah turned brooch in to police. Owner was not found, and police subsequently returned it to Peel (rather than Hannah), assumedly because Peel owned the house. Peel offered Hannah a reward for the brooch, but Hannah refused, always maintaining that he had good title in brooch over all but the true owner (who was unknown). Peel sold the brooch. Hannah sued Peel for return of or payment for the brooch, and also for damages for detaining the brooch when Hannah had rightful title. Court found in Hannah’s favor, more or less reasoning that the true owner of the brooch was unknown and therefore the law of finds gave Hannah good title in the brooch against all except the true owner. In finding such, the court also implicitly finds that ownership of real property where an article is located, without more, does not give the real property owner better title over the article than its finder. PER DOLIN: THIS IS A DUMB CASE. THERE WAS NO GOOD OUTCOME SO COURT HAD TO MAKE A CALL. CASE IS DUMB BECAUSE THE COURT DOES NOT SUPPORT ITS DECISION. COURT SHOULD HAVE OUTLINED ITS GOALS IN DECIDING THE CASE AND THEN EXPLAINED WHY THE DECISION IT RENDERED WAS THE BEST MEANS FOR ACHIEVING THE GOALS OUTLINED.NOTE: Despite the poorly reasoned opinion, this case appears to have come out correctly when squared with the general principles regarding mislaid, lost, and abandoned property below. Given the circumstances under which the brooch was found (jammed in the windowsill of an unoccupied house and covered in cobwebs), it is most likely that the brooch would be characterized as lost, if not abandoned. It is highly unlikely that it would have been characterized as mislaid, the only situation of the three that generally awards good title to the owner of the locus in quo.

==Mislaid, Lost, and Abandoned Property (p. 112)==

Mislaid Property – Property is mislaid when the owner intentionally placed it in a location and then forgot to retrieve it. Owner of the locus in quo (a.k.a. area where item was left) usually wins against a finder in such cases. Logic is that with mislaid property, true owner is likely to retrace steps and find property, so the owner of the locus in quo should hang on until true owner comes to retrieve the item.Lost Property – Property is lost when the owner inadvertently loses possession of it. Lost property usually goes to the finder (often after a mandatory waiting period) because if the true owner doesn’t know where he lost the property then he is unlikely to retrace his steps and find it. This setup is also considered desirable because it rewards the honesty of the finder.Abandoned Property – Property is abandoned when the true owner intentionally relinquishes all rights to the property with no intentions of conferring his rights on some other person. Most common example of abandonment is throwing a piece of property in the trash. In cases of abandoned property, rights generally go to the finder.
==Treasure Trove (p. 112)==

Treasure Trove—Gold, silver, bullion, or money that has been concealed in a public place. At British Common law, treasure trove belonged to the King. Modern British practice is to auction the treasure trove to museums and divide proceeds equally between the finder and the owner of the land where it was discovered. American law generally rejects the treasure trove doctrine and instead treat treasure troves as either lost or mislaid property. In cases where the found items were buried, American courts generally give them to the owner of the land on which they were found.
==Shipwrecks (p 112)==

Treasure from ships sunk at sea is governed either by maritime law or the law of finds. Law of finds has generally been applied to ships lost in territorial waters, and the finder has been held entitled to an abandoned shipwreck unless the wreck was embedded in land owned or possessed by another. Given this, the US and several states have successfully asserted claims to shipwrecks embedded in their territorial waters and thus constructively possessed.Abandoned Shipwreck Act of 1987 (43 USCA §§ 2101-2106)—United States asserts title to any abandoned shipwreck embedded in submerged lands of a state and simultaneously transfers its title to the state in which the wreck is located.Proof of Abandonment—Evidentiary standard required for proof of abandonment is high, so in most cases the maritime law of salvage applies to shipwrecks.Law of Salvage—A ship lost at sea and settled on the seabed remains the property of the owner— unless title to the vessel was abandoned—but anyone subsequently reducing the ship or its cargo to possession is entitled to a salvage award. Law of salvage is in sharp contrast to property law, which awards a finder all or nothing subject to the rights of the true owner.
==Acquisition by [[Adverse Possession]] (p. 114)==

General Concept of Adverse Possession—That, in certain circumstances, a property owner may lose title to another person who possesses the property without the owner’s permission.
===Three Policies/Theories for Doctrine of Adverse Possession (p. 114)===

#  Avoiding Stale Claims—Theory of adverse possession is founded in statutory law, namely the statute of limitations for recovering possession of land in cases of trespass. This SOL is meant to bar assertion of claims based on old, unreliable evidence by limiting timeframe in which such claims may be asserted. If owner’s claim is not filed within the statutory timeframe, owner loses title and adverse possessor gains new and valid legal title. 
#  Quieting Titles/Correcting Title Errors—Deeds and other legal instruments of title may contain errors that affect the transferee’s title (improper execution, error in land description, etc.). Adverse possession resolves these problems by quieting title after a period of time.
#  Protecting Personal Attachments—Prospect theory holds in part that people generally regard the loss of an asset in hand as more significant than forgoing the opportunity to realize an apparently equivalent gain—in other words, adverse possessors would feel the loss of the adversely possessed property more strongly than would the true titleholder feel the loss of the opportunity to add the same property to his portfolio. As such, adverse possession gives good title to the adverse possessor after a period of time.

===Functionality of Adverse Possession (pp. 114-15)===

Adverse possession does not function as a direct means of transferring ownership.The running of the statute of limitations in adverse possession cases does two (2) things: 1. Bars an action against the adverse possessor by the erstwhile owner; and
# Vests a new title, created by operation of law, in the adverse possessor.

Once acquired, the new title relates back to the date of the event that started the statute of limitations running. The law then acts as though the adverse possessor were the owner from that date.



===Elements of Adverse Possession (pp. 115-16)===

There are five (5) elements to adverse possession: 
#  Actual Entry—Adverse possessor must actually enter property. Entry is what creates the trespass cause of action, and therefore triggers the statute of limitations on which adverse possession is based.
#  Exclusive Possession—Adverse possessor’s possession of property cannot be shared with the true owner or with the general public; however, absolute exclusivity is not required (i.e. guests and others may potentially use the property without invalidating adverse possessor’s claim).
#  Open and Notorious Possession—Possessor’s entry and subsequent acts of use must be such that they would put a reasonably attentive property owner on notice that someone is on the property. Objective standard is used—if adverse possessor’s acts would be noticed by an ordinary person, owner is regarded as knowing what should have been known, i.e. that someone is on the property.
#  Hostile and Adverse Possession—Claimant’s possession of property cannot be with the true owner’s permission.
#  Continuous and Uninterrupted—Possession must be continuous; however, claimant may come and go in the ordinary course, given the nature of the property (i.e. if it is a beach house, it’s possible that possession only during the summer months would suffice). True owner may successfully interrupt possession during the statutory period by bringing an ejectment action against the adverse possessor or by re-entering the property.

===Adversity Requirement and Adverse Possessor’s State of Mind (p. 116)===

Existing doctrine reflects three (3) different views on state of mind:
#  State of Mind is Irrelevant—All that matters is conduct of adverse possessor. Once there is entry, true owner has a cause of action; therefore, it does not matter what was on the mind of the adverse possessor. (The “Objective Standard”) 
#  Required state of mind is “I thought I owned it”—Requires a good faith claim on the part of the adverse possessor. Comes up sometimes in American decisions and is codified in statutes in a few states. (The “Good-Faith Standard”) 
#  Required state of mind is “I thought I did not own it, but I intended to make it mine”—Adverse possessor’s must intend to take the property even if they know it does not belong to them. (The “Aggressive Trespass Standard”) 
Fulkerson v. Van Buren (Ark. App. 1998)—Fulkerson owned land with a church building on it since 1949. Congregation of Progressive Church started using church building as their place of worship in 1985 and made several improvements to building and surrounding land over next few years. Church did not find out that Fulkerson owned the land until 1994 or 1995. In 1994, Fulkerson sent letter to church telling them to vacate. In 1995 Fulkerson filed in Circuit Court to have congregation removed. Church filed response and counterclaim claiming title to land by adverse possession. Arkansas law uses aggressive trespass standard (I thought I did not own it, but I intended to make it mine) as requisite intent for AP, and adverse possessors must show that they had requisite intent, along with the other elements of AP (open, notorious, hostile, distinct, exclusive) for seven years to be successful on a claim of AP. Because this case was brought—at a maximum—two years after the Church acquired the requisite intent (that is, they found out that someone else had title and continued to use the land as their own), the court found that the church had not shown by a preponderance of the evidence that they had the requisite intent for the statutorily mandated time period. Reversed and remanded. DISSENT: Because church possessed land since 1985, lower court’s ruling not clearly erroneous. Court must not read word “hostile” too literally. Claim of ownership, even under a mistaken belief, is nevertheless adverse. 10/10 would have affirmed.
===The Open and Notorious Requirement (Caves, duh) (p. 122)===

NOTE CASE – [[Marengo Cave Co. v. Ross]] (Ind. 1937)—Cave was under the land of both Ross and Marengo, entrance to cave on Marengo’s land. Ross did not know that the cave ran under his land. Marengo started a business and started charging entry fee for cave and giving tours for many years. Business was well known to Ross. Court found that Marengo did not have good AP claim because his possession of the cave under Ross’ property was not notorious. Finding out that the cave ran under Ross’ land would have required a survey, and such survey would have required Ross to get permission from Marengo because only entrance to cave was on Marengo’s land. Cost of survey was therefore high relative to the value of the land in question. Moreover, the discovery rule says that statute of limitations does not begin to run until plaintiff knew or should have known of defendant’s wrong. Opinion implies that it is not reasonable to say Ross knew or should have known of Marengo’s trespass until the results of the survey are revealed. Finally, court says underground trespass is a form of fraud. Case shows that although notorious requirement is usually obvious, it can be tricky in some circumstances.

===The ad coleum Doctrine (p. 122)===

Ad Coelum Doctrine—“Cujus est solum, ejus est usque ad coelum et ad infernos” (“to whomsoever the soil belongs, he owns also to the sky and to the depths.”) Marengo case is, at least in part, decided based on this principle, which is now restricted especially with regard to the “to the sky” part.
===Color of Title and Constructive Adverse Possession (p. 123)===

Color of title refers to a claim founded on a written instrument or a judgment or decree that is for some reason defective or invalid. All states provide some advantages to adverse possessors whose possession is under color of title. In a few states, color of title is essential to acquiring title by adverse possession.In all states, entry with color of title may have an advantage where the adverse possessor enters into possession of only a part of the property. Actual possession under color of title of only a part of the land covered by the defective writing is constructive possession of all that the writing describes. The advantage that a person may gain from constructive possession is that the activities relied upon to establish adverse possession reach not only to the part of the premises actually occupied, but to the entire premises described in the writing.Class 4: More On Adverse PossessionReadings: 123-143
===Boundary Disputes (p. 123)===

Boundary disputes are now the most frequently litigated of adverse possession claims. State of mind comes up in the special context of mistaken boundaries.

Hollander v. World Mission Church of Washington D.C. (Va. 1998)—WMC owned land, including the tract of land in question in this case. Hollander and her predecessors in title believed that her land ran to a line of trees in the ground, and that the line of trees was the natural barrier between her land and the WMC’s. Hollander and her predecessors in title mowed, gardened, and otherwise maintained the land up to the tree line for a period of over fifteen years. WMC sued to have the land it owned by good title returned by Hollander. Hollander responded with a claim of adverse possession for the tract of land up to the tree line. In claim of AP based on mistaken belief, adversity cannot be shown solely by a mistake in the description contained in the deed; however, adversity can be shown if the adverse possessor mistakenly believed that their property ran to a particular and definite line on the ground. The practical test to determine whether adversity/hostility has been shown in such cases is whether the adverse possessor intended to claim AS HIS OWN the land up to a particular and definite line on the ground. Because all other elements of AP had been met and because Hollander intended to claim as her own the land up to a particular and definite line on the ground (the tree line), the court found in Hollander’s favor.
===Mistaken Improvers (p. 126)===

A Mistaken Improver is someone who innocently and mistakenly builds on land that belongs to another. Old rule was that anything built on the land of another had to be torn down (even if only a small part of a house). The modern rule is to ease the plight of the innocent improver by forcing the true owner to convey the land to the improver at market value, or to give the landowner the option to buy the improvement at market value.EXCEPTIONS: If the encroachment is so minor as to be trivial, courts may deny relief to the true owner altogether; conversely, if the improvement takes up a significant portion of the true owner’s land, courts may order removal, notwithstanding the good faith of the improver.

Amkco Ltd., Co. v. Wellborn (N.M. 2001)—Unintentional encroachment took up almost 10% of the true owner’s land. Court applied a TWO PART TEST: 1) plaintiff must show that it would suffer irreparable harm if removal is denied; and 2) even if irreparable harm is shown, relief may still be denied under a balancing test that compares the hardship to the plaintiff if removal is denied to the hardship to the defendant if removal is granted. If the relative hardship test precludes removal, the encroaching party acquires either title or an easement to the land and pays damages accordingly.
===Agreed Boundaries, Acquiescence, and Estoppel (p. 126)===

Doctrine of Agreed Boundaries—If there is uncertainty between neighbors as to the true boundary line, an oral agreement to settle the matter is enforceable if the neighbors subsequently accept the line for a long period of time.Doctrine of Acquiescence—A period of long acquiescence—though not necessarily as long or longer than the statute of limitations—is evidence of an agreement between the parties to fix the boundary line.

Doctrine of Estoppel—When one neighbor makes representations about—or engages in conduct that tends to indicate—the location of a common boundary and the other neighbor then changes his position in reliance on that representation or conduct, the first neighbor is estopped from denying the validity of his statements/acts. Similar to promissory estoppel in contracts. Holler at Tief.
===Mechanics of AP – Tacking (p. 127)===

Howard v. Kunto (Wash. App. 1970)—The case where everyone’s beach house was on the wrong land. Kunto’s house was on a tract of land directly east of the land which was described in his deed. Everyone to the west of Kunto was in the same situation (deed described land directly west of the land where their house was sitting). All of the previous owner of Kunto’s house were under the same mistake of title. Kunto only occupied the house during the summer, and had only had title for a couple years. Howard had paper title to Kunto’s land, and wanted to convey half his land to someone else. Howard had a survey done, and figured out that everyone’s house was on the wrong land. Howard got the person with the deed to the land where Howard’s house was sitting to convey title to him, in exchange for Howard conveying title to land where Kunto’s house was to them. Kunto claimed rightful title to land where his house stood under adverse possession argument. Court found that Kunto’s occupancy during the summer months only was sufficient to show continuous possession because it was a summer beach house and therefore a true owner would likely have only occupied during those months. Court further held that, under privity of estate, it was okay for Kunto to tack on the occupancy of his immediate predecessor to show that he had occupied the land for the requisite time period because they were all operating under the same mistake. Judgment entered in favor of Kunto.Privity of Estate—Privity of estate clearly exists where A, who possesses for a period of time less than the statutory period, voluntarily transfers the property to B, who then possesses for a period that, together with that of A, exceeds the statutory period.

===Disabilities (p. 132)===

Every state allows for the statute of limitations to be extended if certain disabilities are present at the time when the cause of action accrued. Disability statutes differ, but generally allow for extending the SOL if the person was a minor, was of unsound mind, or was imprisoned at the time the cause of action accrued. If, however, the cause of action began accruing before the disability existed, or the disability ceased to exist before the cause of action began to accrue, there is no extension.Adverse Possession Against the Government—Under the common law rule, adverse possession does not run against the government. American courts have relied on this rule, as well as state constitutional provisions restricting the alienation of state lands. However, a number of states have changed the rules. Some permit adverse possession against the government under the same terms as against a private individual. Other states permit it only if possession continues for a period much longer than that that would be required in other cases.Adverse Possession of Chattels (p. 134)
===O’Keefe v. Snyder (N.J. 1980)—===

====Three (3) Rules Regarding the SOL for Adverse Possession (p. 142)====

The Conversion Rule—The statute begins to run against the true owner as soon as the property is converted. (Rule used by trial court in O’Keefe case).

The Discovery Rule—Cause of action for conversion does not accrue, triggering the running of the SOL, until the owner discovers, or by exercise of reasonable diligence and intelligence should have discovered, facts which form the basis for a cause of action. (Rule applied in O’Keefe case).The Demand Rule—The statute of limitations does not begin to run until the true owner makes a demand for the return of the property and the demand is refused.

==Void vs. Voidable Title Under UCC § 2-403 (p. 142)==

Void Title Rule—If a person acquires possession of a good where the true owner did not intend to transfer title to the good, then the possessor acquires no title to that good and cannot transfer good title to it to anyone else. Title that was void in the transferor’s hand is void in the transferee’s hand as well.Voidable Title—Exists where the true owner intends to transfer the good, even though the transfer of the good was procured through fraud or misrepresentation. Unlike void title, with voidable title delivery is voluntary. Voidable title is a defective title, but it is a title that, although the true owner can rescind, becomes good title if transferred to a good-faith purchaser for value.“Entrusting” Under the UCC (p. 143)Entrusting—Any delivery regardless of any condition expressed between the parties to the delivery and regardless of the fact that the procurement of the entrusting or the possessor’s disposition of the goods may have been larcenous.Class 5: Acquisition by GiftReadings: 143-159
===Three (3) Requirements for a Gift (p. 143)===

Intent—Donor must intend to make a present transfer of an existing interest in the property. Must intend to be legally bound now, not in the future. Intention to make a gift may be shown by oral evidence.Delivery—The donor must transfer possession (i.e. “hand over the property) to the donee with the manifested intention to make a gift to the donee. Objective acts are required to show delivery.Acceptance—Acceptance by the donee is required, but usually not an issue. Courts presume acceptance upon delivery, unless the donee expressly refuses the gift.
===More on the Delivery Requirement (pp. 143-44)===

If manual delivery is not practicable because of the size or weight of the gift, or because of its inaccessibility, constructive delivery or symbolic delivery may be permitted.Constructive Delivery—Handing over a key or some object that will open up access to the subject matter of the gift.Symbolic Delivery—Handing over something symbolic of the property given. Usual example is handing over a written instrument declaring that the subject matter is a gift—i.e. John hands Mary a written instrument that says “I give my grand piano to Mary as a gift.”
=SECTION II: THE ESTATE SYSTEM= 

#BASIC ESTATES
Class 6: History; Fee Simple; Life EstateReadings: 161-180Escheat—When a person dies intestate and without heirs, the person’s property escheats to the state.

Modern law recognizes only four estates:  
#Fee Simple
#Fee Tail
#The Life Estate
#Leasehold

==The Fee Simple Estate (p. 166)==

Most common estate. Vast majority of land in US today held in fee simple. Largest possible estate because its duration is infinite.Key characteristics of Fee Simple Estate are heritability and alienability. Heritability—Means fee simple estate can be inherited. If O does not leave a valid will, O’s fee simple (not a newly created one) passes to O’s legal heirs.Alienability—Owner’s interest in a fee simple estate can be freely transferred to others in life and to his heirs at the time of his death.Creating a Fee Simple Estate—Originally, a FSE was created by a conveyance transferring from O “to A and his heirs.” “And his heirs” are the words of limitation; however, in modern practice these words are no longer needed—a conveyance from O “to A” is sufficient, but the words of limitation are still commonly used to avoid doubt.Fee simple exists only in land. It does not apply to personal property.
===Inheritance of a Fee Simple (p. 168)===

Heirs—People who survive the decedent. THE LIVING HAVE NO HEIRS. If conveyance transfers “to A and his heirs” and A is alive at the time of the conveyance, we do not know who the transferees are and will not know until A dies.Spouse—In all states, the surviving spouse is designated as an intestate successor of some share of the decedent’s land; however, the size of the share often depends on who else survives.Issue—Issue are descendants of the decedent. Issue includes not only the decedent’s children, but also grandchildren and so on down the line. Issue take by right of representation.
#Right of Representation—If a child of the decedent dies but leaves children, those children take in their parent’s place.

Ancestors—Parents usually take as heirs if the decedent leaves no issue.Collaterals—All persons related by blood to the decedent who are neither descendants nor ancestors. If a decedent leaves no spouse, no issue, and no parents, the decedents brothers and sisters (and their descendants by representation) take in all jurisdictions.Escheat—If a person dies intestate without any legal heirs, the person’s property escheats to the state where the property is located.
==The Fee Tail (p. 169)==

Fee tail originated to keep land within a family, back in the day when land was power. The fee tail prevented the current owner from cutting off the inheritance rights of his issue.Creation of a Fee Tail—A fee tail estate in land is created by a conveyance “to A and the heirs of his body.” Designed to keep dynasties intact. Expires when the original tenant in fee tail (A) and all of his lineal descendants are dead.When A’s bloodline runs out and the fee tail ends, the land will revert to the grantor or the grantor’s heirs by way of reversion, or, if specified by the instrument, will go to some other branch of the family. EXAMPLE: O conveys land “to my son A and the heirs of his body, and if A dies without issue, to my daughter B and her heirs.” In this example:
# A is given fee tail
# B is given a remainder in fee simple to become possessory when and if the fee tail expires.

Every fee tail has a reversion or a remainder after it.Fee Tail has nearly disappeared in the United States. Can only presently be created in Delaware, Maine, Mass. And Rhode Island.Only problem related to fee tail that still pops up is: when an instrument uses language that would have created a fee tail at common law, what estate is created today?
#All states that have abolished fee tail have answered this question by statute. Most states fall into one of two categories:
# A limitation “to A and heirs of his body” creates a fee simple in A and any gift over on A’s death without issue is void. With regard to the example above, under this construction neither A’s issue nor B takes anything under this conveyance.
# A limitation “to A and heirs of his body” creates a fee simple in A, but a gift over to B if A dies without issue will be given effect in one circumstance. B will take the fee simple if, and only if, at A’s death, A leaves no surviving issue.
#i) B’s future interest is known as a divesting executory interest, which will shift the fee simple to B if A leaves no issue at death. ii) If A leaves surviving issue at his death, B’s interest fails, and A’s fee simple cannot be divested thereafter. In this case, A can devise his fee simple to whomever he chooses.

==The Life Estate (p. 171)==

Creation of a Life Estate—A conveyance “to A for life” gives A a life estate that last for the duration of A’s life. A can transfer to B, but the life estate is still A’s life estate, meaning B’s interest is determined by A’s life, i.e. when A dies, so does B’s interest in the property. If B dies while A is still alive, the estate passes to B’s heirs or devisees until A dies.Every life estate is followed by a future interest—either a reversion in the transferor or a remainder in the transferee, or both.
#Therefore, if O conveys Blackacre to A for life, then:
# A has a life estate
# O has a reversion

White v. Brown (Tenn. 1977)—[SUMMARIZE NOTES FROM 176-180]Class 7: Defeasible EstatesReadings: 180-192Any estate may be made to be defeasible.Defeasible Estate—An estate that is made to terminate, prior to its natural end point, upon the occurrence of some specified future event.Most common defeasible estates are fee simple defeasible.Primary reason that landowners create defeasible estates today is to control the use of the land after it has been transferred.
===Types of Fee Simple Defeasible Estates (p. 181)===

There are three (3) types of defeasible fee simple estates:  
#Fee Simple Determinable
#Fee Simple Subject to Condition Subsequent
#Fee Simple Subject to Executory Limitation/Interest

Fee Simple Determinable—Fee simple limited such that it will end automatically when a stated event happens. Example: O conveys Blackacre to School Board so long as BA used for school purposes. Fee simple could last forever, but as soon as land is used for non-school purposes the Board’s fee simple will end and revert back to O.
#Created by durational language such as “so long as,” “during,” or “while.” 
##Must be careful to use words of determination. “To Board for school purposes” would give Board fee simple absolute.
#Every fee simple determinable is accompanied by a future interest. 
##Usually a possibility of reverter, as in the above example.
Fee Simple Subject to Condition Subsequent—A fee simple that does not automatically terminate, but may divest (be cut short) at the transferor’s election when a stated event happens. Example: “O conveys Blackacre to School Board, but if premises are not used for school purposes,O has a right to re-enter and retake the premises.”
#Words of limitation are such that Board’s fee simple does not automatically terminate if BA not used for school purposes, but once BA not used for school purposes O can divest the Board of its fee simple interest.
#Unless and until entry is made, the fee simple continues.
#Created by a conveyance of a fee simple, followed by language providing that the fee simple may be divested by the transferor if a specific event happens.
#Common words of limitation: “but if,” “provided, however, that when the premises . . .,” “on condition that if the premises . . .,” etc.
#Future interest retained by the transferor is called a right of entry, also known as a power of termination 
##May be retained initially only by the transferor or his heirs
##May not be created in a transferee

Fee Simple Subject to Executory Limitation—Created when a grantor transfers a fee simple subject to condition subsequent and in the same instrument creates a future interest in a third party rather than himself. The future interest in the third party is called an executory interest.
#Example: O conveys land “to the County School Board, but if it ceases to use the land as a school, to the City Library.”
#Same language used to create a Fee Simple Subject to Condition Subsequent, only difference is who retains the future interest
#IMPORTANT NOTE: While Fee Simple Subject to Condition Subsequent is only forfeited upon entry, Fee Simple Subject to Executory Limitation is forfeited immediately when the specified event occurs.
#Fee simple subject to executory interest can be created either in possession or in remainder.

Mahrenholz v. County Board of School Trustees (Ill. App. 1981)—In cases of ambiguous language in a deed, courts are supposed to look for evidence of the grantor’s intent. 
#FUTURE INTERESTS
Class 8: Reversion; Possibility of Reverter; Remainders; Executory InterestReadings: 193-207Modern Future interests are divided into two (2) basic groups: 1. Interests initially retained by transferor
#Reversion
#Possibility of Reverter
#Right of Entry/Power of Termination
#Interests created in a transferee
#Vested Remainder
#Contingent Remainder
#Executory Interest

BE CAREFUL TO LIST ANY FUTURE INTEREST FULLY—IDENTIFY BOTH THE INTEREST AND THE ESTATE. A future interest is a presently existing property interest. It is called a future interest only because the right of possession is delayed to some future time.
===Reversion (p. 194)===

If O, a fee simple owner, grants land “to A for life,” the land reverts back to O at A’s death. O’s future interest is called a reversion. If O dies during A’s life, O’s reversion passes to his heirs, and at A’s death whoever owns the reversion is entitled to possession of the land.In a general sense, a reversion is the interest left in an owner when he carves out of his estate a lesser estate and does not provide who is to take the property when the lesser estate expires.The hierarchy of estates determines what is a lesser estate.All reversions are retained interests, which remain vested in the transferor.
===Possibility of Reverter (p. 196)===

A possibility of reverter is a future interest remaining in the transferor or his heirs when a fee simple determinable is created.Example: O conveys Blackacre “to the School Board so long as it is used for school purposes.” O has a possibility of reverter.
===Right of Entry (p. 197)===

Exists when an owner transfers an estate subject to condition subsequent and retains the power to cut short or terminate the estate.Example: O conveys Blackacre “to the School Board, but if it ceases to use the land for school purposes, O has the right to re-enter and retake the premises.” O has a right of entry.
==DECISION TREE FOR CLASSIFYING FUTURE INTERESTS==

Step 1: Is it a remainder or an executory interest?Step 2: If a remainder, is it a vested remainder or a contingent remainder?Step 3: If it is a vested remainder, how is it vested?
#Indefeasibly?
#Subject to open?
#Subject to complete divestment?
#More than one of the above?

==Remainders (p. 198)==

There are two general types of [[remainder]]s:  
#Vested
#Contingent

Vested Remainder—A remainder that is (1) given to an ascertained person; and (2) not subject to a condition precedent (other than the natural termination of the preceding estates).
#Indefeasibly Vested Remainder—The remainder is certain of becoming possessory in the future and cannot be divested.
# A remainder in a class of persons (such as in A’s children) is vested if one member of the class is ascertained, and there is no condition precedent.
#The remainder is vested subject to open (subject to partial divestment) if later-born children are entitled to share in the gift.

Contingent Remainder—A remainder that (1) is given to an unascertained person; or (2) is made contingent upon some event occurring other than the natural termination of the preceding estates. In the latter situation, the remainder is said to be subject to a condition precedent.

==Shortcut Rules for Classifying Series of Future Interests (p. 201)==

Shortcut Rule 1: If LE + FI(1) + FI(2) and FI(1) = CR (in a FS), then FI(2) = CR.Shortcut Rule 2: If LE + FI(1) + FI(2) and FI(1) = VR (in a FS), then FI(2) = EI.
==Two Important Examples (p. 201-202)==

Dolin went over these in class and emphasized looking at the commas to determine the outcome of each:Example 7: O conveys “to A for life, then to B and her heirs if B survives A, and if B does not survive A to C and his heirs.” The language “if B survives A” subjects B’s remainder to the condition precedent of B surviving A, and the language “if B does not survive A” subjects C’s remainder to the opposite condition precedent. Here we have alternative contingent remainders in B and C. If the remainder in B vests, the remainder in C cannot, and vice versa.Example 8: O conveys “to A for life, then to B and her heirs, but if B does not survive A to C and his heirs.” Note carefully: B does not have a contingent remainder. B has a vested remainder in fee simple subject to divestment; C has a shifting executory interest which can become possessory only by divesting B’s remainder.Book Notes on these examples: Realistically, in both scenarios the property will never revert back to O; however O still technically has a reversion under the rules studied. O’s reversion in these examples is called a technical reversion, “technical” in the sense that it has no practical significance. Technical reversion is recognized as a vestige of feudal law that no longer exists. Even though the rule no longer exists, modern law continues to assume that a life estate can end prior to the death of the life tenant for the purposes of classifying remainders. So, there is a third shortcut rule of classification:Shortcut Rule 3: If LE + CR (FS) + CR (in FS), then REV (in FS).
==Executory Interests (p. 202)==

Executory Interest—A future interest in a transferee that must, in order to become possessory: 1. divest or cut short some interest in another transferee (this is known as a shifting executory interest); or
#Divest the transferor in the future (this is known as a springing executory interest).

The distinction between the two types of EI has no legal consequence.





















==The System of Estates and Future Interests==

Suppose that a transferor who owns land in fee simple absolute conveys one of the possessory estates listed in the left column of the table below. The middle column shows all of the possible future interests in the transferor, and the right column shows the possible future interests in transferees.
{|
|-
|POSSESSORY ESTATES
|POSSIBLE COMBINATIONS OF FUTURE INTERESTS
|-
|-
|In Transferor
|In Transferee
|-
|Fee Simple Absolute
|None
|None
|-
|Defeasible Fee Simple:
|

|

|-
|Fee Simple Determinable
|Possibility of Reverter
|None
|-
|Fee Simple Subject to ConditionSubsequent
|Right of Entry (Power ofTermination)
|None
|-
|Fee Simple Subject to an ExecutoryLimitation
|None
|Executory Interest
|-
|Fee Tail
|Same as with life estate
|Same as with life estate
|-
|Life Estate
|Reversion [indefeasibly vested](when no remainder created)
|Contingent remainder(s)
|-
|Reversion [vested subject to defeasance] (when contingent remainder(s) created)
|Contingent Remainder(s)
|-
|Possibility of Reverter (if any)
|Remainder vested subject to open
|-
|Right of entry incident to reversion
|remainder vested subject to divestment
|-
|Reversion [vested subject to defeasance or indefeasibly vested]
|Executory interest (if any)Remainder subject to limitational defeasance
|-
|None
|Executory interest in unborn class members
|-
|None
|Indefeasibly vested remainder
|-
|Leaseholds
|Same as with life estates
|Same as with life estates
|}

==The Trust (p. 207)==

Separates legal and equitable title.Trustee:
#Holds legal title to trust property
#Manages the property for the benefit of the beneficiaries
#Usually has power to sell trust assets and reinvest proceeds in other assets
#Is a fiduciary 
##Duty of loyalty to beneficiaries
##Must act for the exclusive benefit of the beneficiaries
##Not permitted to benefit personally from the trust
##Subject to personal liability for breach of fiduciary duty
##i) May be removed by a court

Beneficiaries:
#Hold equitable interests (interests enforceable by courts of equity)
#Typically hold equitable interests that correspond to the legal possessory estates and future interests
#Have right of beneficial enjoyment of the property
#Net income of the trust is paid to beneficiaries
#Upon termination of the trust, trust assets are handed over to the designated beneficiaries, free of the trust

Class 9: Rule Against PerpetuitiesReadings: 208-210 (skim); 210-222Generally, the purpose of the rule is to curb dead-hand control of property by the wealthy. 
==Introduction to Rule Against Perpetuities (p. 210)==

Rationale: Testators can realistically (and perhaps wisely) assess the capabilities of living members of their family, so with respect to them the testator’s informed judgment is given effect; however, testators can know nothing about unborn persons, so their assessment of these persons can only be given effect in limited circumstances.Rule Against Perpetuities—No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest.
#In other words, an interest is void unless it is absolutely certain that it will vest within 21 years after the death of a life in being at the time the interest was created.
#Only applies to interests that are not vested at the time of the conveyance that creates them.

===The Mechanics of the Rule (p. 213)===

STEP 1: Which Interests?Only 3 interests are subject to the Rule Against Perpetuities:
#Contingent Remainders
#Executory Interests
#Class Gifts

STEP 2: What is the perpetuity period? In other words, when does the perpetuity clock begin to run?Rule against perpetuities is a rule of logical proof. Must prove that a contingent interest is certain to vest or terminate no later than 21 years after the death of some person alive at the creation of the interest.
#If this can’t be proven, the contingent interest is void from the outset.

What does “some person alive at creation of the interest mean?
#If interest is created by will, then it is a person that is alive at the time of the testator’s death.
#If contingent interest is created by an irrevocable inter vivos transfer, the life in being must be a person alive at the time of the transfer
#In the case of a revocable transfer, RAP does not apply until the transfer becomes irrevocable (e.g. at the death of the person who has the power to revoke). Hence, the life in being must be a person alive at the time that the power of revocation ceases.

STEP 3: What is/are the relevant future events?There may be more than one future event that must occur in order to resolve the contingency of the interest.
#Be sure to clearly understand what these events are
#Sometimes obvious from the language creating the interest
#Example: “To A for life, then to B if B is then alive”—B surviving A is the only event that is made a condition precedent to the vesting of B’s remainder.
#Example: “To A for life, then to such of A’s children as survive A,” and at the time of conveyance A has no children. Here, two events are needed to resolve the uncertainty of vesting:
#All of A’s children must either be born or remain unborn (i.e. A must die either with or without children); and
#Any children born to A must survive A or predecease him (terminating the child’s interest).

STEP 4: The Search for a Validating LifeMust look for a person (only need one) that will enable you to prove that the contingent interest will vest or fail within the life—or at the death—of that person, or within 21 years after that person’s death. This person, if found, is called the validating life. Look only at causally connected lives:
#Preceding life tenant(s)
#Taker(s) of the contingent interest
#Anyone who can affect the identity of the taker(s) (Such as A in A’s gift to A’s children)
#Anyone else who can affect events relevant to the condition precedent

Test each life with the “what might happen” question:
#What might happen question: For this person, is there some possible (not necessarily probable) chain of post-creation events such that the contingency might still remain unresolved, one way or another, after that person’s death plus 21 years?
#If you can find one person to whose life you can answer “no” to this question, you have found your validating life.
#If there is no person for whom you can answer “no,” then the interest is void.

It is important to remember that you are only looking at what might happen, without regard to what, in the end, actually did/does happen.ALL POSSIBLE POST-CREATION EVENTS, NO MATTER HOW UNLIKELY, MUST BE TAKEN INTO ACCOUNT IN A RAP ANALYSIS.
===Class Gifts and RAP (p. 216)===

All or Nothing Rule—Under the Rule Against Perpetuities, a class gift is not vested in any member of the class until the interests of all members have vested.
#For a class gift to be vested under the rule:
#the class must be closed
#i) Each and every member of the class must be in existence and
identified
#All conditions precedent for each and every member of the class must be satisfied within the perpetuities period

Class Closing Rule (aka Rule of Convenience)—A class will close as soon as one member of the class is entitled to immediate possession or enjoyment, even if this means closing the class before it closes naturally, or physiologically, that is, when the possibility of births (or adoptions) ends (i.e. the death of a class’s ancestor).
#When the class closes prematurely under the rule of convenience, no person born or conceived thereafter can share in the gift.
#Rule does not terminate the interests of existing class members whose interests are not yet vested at the time of creation. 
##They remain present members of the class
##However, they are not guaranteed to share in the gift. They may only share in the gift if they satisfy the relevant condition precedent.

===Perpetuities Reforms (p. 221)===

Statutory Reforms
#Some states have enacted statutes to correct technical perpetuities violations
#Example: Common law assumed lifetime fertility. IL statute declares for purposes of RAP nobody under 13 or over 65 is fertile.

Wait-and-See Test
#Instead of pre-emptively invalidating based on possible outcomes (as the Common Law rule does), this test waits to see whether the interest does in fact remain contingent until the end of the perpetuity period. 2. Looks at what actually happens

Uniform Statutory Rule Against Perpetuities
#Adopts a fixed waiting period of 90 years
#If at end of 90 year period interest(s) still not vested, rule allows courts to reform the offending language of the instrument to allow the interest to vest by that time
#Enacted in more than 20 states
#Many have modified the rule in various ways, though

Restatement 3d’s Two Generations Approach
#Allows for judicial modification if the instrument does not terminate on or before the expiration of the perpetuity period
#Under this rule, “perpetuity period” expires at the death of the last living measuring life
#Measuring lives: 
##Transferor
##Beneficiaries who are unrelated to the transferor and no more than two generations younger than the transferor
##Beneficiaries who are unrelated to the transferor and no more than the equivalent of two generations younger than the transferor

Qualified Abolition of the Rule, and the Rise of the Perpetual Trust
#Nearly 25% of states have abolished RAP in the case of trusts containing a power of sale in the trustee
#Where these statutes exist, perpetual trusts are now permitted

=SECTION III: CONCURRENT INTERESTS=

Class 10: Co-OwnershipReadings: 223-230; 230-231 (skim); 232-251
==Common Law Concurrent Interests==
==Types, Characteristics, Creation (p. 223)==

Three (3) Modern Concurrent Estates:
#Tenancy in Common
#Joint Tenancy
#Tenancy by the Entirety

Tenancy in Common  
#Tenants in common have separate but undividable interests in the property
#Interest of each TIC 
##Is descendible
##May be conveyed by deed or will
#No survivorship rights between TIC’s
#Each TIC owns an undivided share of the whole

Joint Tenancy
#Joint tenants have right of survivorship (key characteristic of joint tenancy)
#Theory behind right of survivorship: Joint tenants are regarded together as a single owner 
##Each tenant is seised per my et per tout (by the share and by the whole)
##In theory, each owns the undivided whole of the property, therefore:
##i) When one dies, nothing passes to surviving tenant; rather ii) The estate continues in the survivors freed from the participation of the decedent, whose interest is extinguished
#The “four unities” of joint tenancy:  
##Time—the interest of each joint tenant must be acquired or vest at the same time
##Title—All joint tenants must acquire title by the same instrument or by a joint adverse possession. A joint tenancy can never arise by intestate succession or other act of law.
##Interest—All must have equal undivided shares and identical interests measured by duration.
##Possession—Each must have a right to possession of the whole. After a joint tenancy is created, however, one joint tenant can voluntarily give exclusive possession to the other joint tenant.
#Generally, if 4 unities do not exist then it is a tenancy in common rather than a joint tenancy 
##Some jurisdictions allow for creation of a JT simply by explicitly stating the intent to do so.
#If 4 unities exist at creation but are later severed, JT becomes TIC 
##JT’s can convert to TIC’s by mutual agreement destroying any one of the 4 unities.
##Any JT can unilaterally convert all interests to TIC by conveying his interest to a 3<sup>rd</sup> party
#If JT’s cannot settle by mutual agreement, they can bring action for judicial partition 
##Court will either physically partition the tract of land into separately owned parts or order the land to be sold and divide the proceeds among the tenants
#Joint tenants have no interest that can be passed by will at their death

Tenancy by the Entirety
#Can only be created in husband and wife (moving toward “married persons”)
#Requires the four unities, plus a fifth (marriage)
#Surviving tenant has a right of survivorship
#Husband and wife are considered one person under Common Law 
##Neither can defeat the right of survivorship of the other by conveyance of a moiety to a 3<sup>rd</sup> party
##Neither, acting alone, has the right to judicial partition
#Divorce terminates the tenancy by the entirety because it destroys the 5<sup>th</sup> unity (marriage)
#Exists today in fewer than half the states

==Avoidance of Probate (p. 225)==

#Joint tenancies are popular, especially among married coupes 
##Practical equivalence of a will, but at tenant’s death probate of the property is avoided
#JT’s avoid probate because no interest passes at the joint tenant’s death 
##Rather, decedent’s interest ends at death
#The fact that JT interest ceases at death has important effect for creditors: 
##If creditor act’s during JT’s life, creditor can seize and sell JT’s interest in the property, severing joint tenancy; however
##If creditor waits until after JT dies, the JT’s interest has disappeared, and there is nothing the creditor can seize

==Unequal Shares (p. 225)==

#Under Common Law one of the four unities (interest) requires joint tenants to have equal shares
#Thus, if A has a 1/3 interest and B has 2/3 interest, A and B would hold as TIC’s rather than JT’s
#Modern approach increasingly ignores this rule and allows for this type of setup provided it was the mutual intention of the parties to set up the tenancy that way

==Severance of Joint Tenancies (p 226)==

(William) Harms v. Sprague (Ill. 1984)—John Harms was a joint tenant with his brother William in a piece of property. Sprague bought some property from Simmons, but was $7,000 short. Sprague signed a promissory note for the $7K, but had no collateral. JH decided to help his boy Sprague out by cosigning the note and giving a mortgage on his interest in the JT property he had with his bro. William harms knew nothing of the deal or his brother’s mortgage on the JT property. JH dies, leaves entire estate to Sprague in will. WH claims 100% ownership of the JT property, says mortgage can’t be enforced against him because JH’s interest died with him. Sprague counterclaimed that he should be recognized as a tenant in common by way of the will/mortgage. Issue is whether a mortgage on a JT property, executed by less than all of the joint tenants, severs the joint tenancy and creates a tenancy in common. HELD: No. Joint tenancy is not severed by the mortgage because the unity of title has been preserved. WH’s right of survivorship under the joint tenancy became operative on the death of JH, and thus WH is the sole owner of the JT property in its entirety. The property right of the mortgaging joint tenant is extinguished at the moment of his death. Upon death, his interest ceases to exist and along with it the lien of the mortgage.
==Secret Severance (p. 230)==

#One joint tenant can unilaterally sever joint tenancy without notice to the other JT’s a. Example: Husband and wife own property in JT. Wife wants to dispose of her interest by will. She secretly deeds her interest to herself, then executes a will devising her interest to her daughter. On her death, the will stands.
#Some states now require recordation to sever a joint tenancy

==Relations Among Concurrent Owners (p. 232)==
==Partition (p. 232)==

#When concurrent owners cannot come to an agreement for terminating co-tenancy, they must resort to partition
#Available to any joint tenant or tenant in common
#Not available to tenants by the entirety

==Delfino v. Vealencis (Conn. 1980)—==

#Modern Partition Practice—Though it is still often recited that partition in kind is preferred to partition by sale, sale is decreed in the great majority of recent cases because either
#the parties all wish it; or
#The courts are convinced that sale is the fairest method of resolving the conflict Sharing the Benefits and Burdens of Co-Ownership (p. 240)
#Sometimes independent property rules are needed to determine how the benefits and burdens of ownership are to be shared by the co-owners
#When a problem arises that is not touched on in the ownership agreement
#When the rights of third parties are in question
#When there was never an agreement in the first place

Spiller v. Mackareth (Al. 1976)—Spiller and Mackareth owned a building together in AL. When a tenant of the building vacated, Spiller entered and began to use as a warehouse. Previous tenant had removed the locks, so Spiller put new ones in. Mackareth sent Spiller a letter demanding that he either vacate half of the building or start paying rent. Because there was no agreement to pay rent, the court reasons, there must be evidence that establishes an ouster before Spiller is required to pay rent. Issues: (1) what constitutes an ouster in a case adjudicating an occupying cotenant’s liability to pay rent to the non-occupying cotenant; and (2) was there ouster in this case? REASONING: For a finding of ouster, the occupying cotenant must deny entry to the nonoccupying cotenant, regardless of a claim of absolute ownership. In Alabama, the occupying cotenant is not liable for rent notwithstanding a demand to vacate or pay rent. HELD: Before an occupying cotenant can be liable for rent, he must have denied his cotenants the right to enter. Simply requesting the occupying cotenant to vacate is not sufficient because the occupying cotenant holds title to the whole and may rightfully occupy the whole unless other cotenants assert their possessory rights. The fact that Spiller put new locks on the doors is irrelevant—as long as he did not actually deny access to his cotenants, any activity of possession and occupancy (such as using the building and putting locks on the doors) is consistent with his rights of ownership. Therefore, because there is no evidence that Spiller intended to exclude his cotenants, he cannot be held liable for paying rent.Sharing, Rents, Profits, and Costs.One cotenant may seek to recover from another cotenant:
#Rents realized from leases to 3<sup>rd</sup> parties
#Profits realized from using the property for business purposes
#Value realized by one or more of the cotenants in occupying the property as a residence
#Some or all of the amount of various expenditures such as improvements, taxes, mortgage payments, repairs, etc.

Rents and Profits—In all states, a cotenant who collects rent and other payments arising from the co-owned land from 3<sup>rd</sup> parties must account to cotenants for the amounts received, net of expenses.Taxes, Mortgage Payments, and Other Costs—A cotenant paying more than his share of these expenses is entitled to recover contributions from other cotenants, at least up to the amount of the value of their share of the property. Also, such a cotenant receives a credit for the excess payments in an accounting or partition action.Necessary Improvements—There are two formulations:
#Most jurisdictions recognize no affirmative right to contributions from other cotenants absent an agreement
#Some jurisdictions provide for contributions of the repairing cotenant gives notice to the other cotenants

Improvements—A cotenant has no right to contribution from other cotenants for expenditures for improvements.
#No credit is given for the cost of improvements in an accounting or partition action
#General rule is that the interests of the improver are to be protected if it can be accomplished without detriment to the interests of the other cotenants; thus: 
##If property divided pursuant to partition action, improver is awarded the improved portion; and
##If partition by sale is necessary, proceeds will be distributed in such a way as to award the improver the added value (if any) resulting from the improvements

==Marital Interests (p. 244)==

Two theories:
#Separate Property System—Husband and wife own property separately; ownership is given to the spouse who acquires the property. Developed in England, common law view.
#Community Property—Husband and wife are a community/marital partnership and should thus share their acquisitions equally. Continental formulation originated by the Germanic tribes.
#Usually how property is divided upon divorce in the US, but has less of an effect when property is divided on death

==The Common Law System (p. 245)==

#Spousal property rights are classified into 3 categories:
#Rights during the marriage
#Rights upon divorce
#Rights at death

During Marriage
#Under historical common law, married woman not entitled to exercise powers of ownership 
##Husband and wife regarded as one person—the husband
##All property of wife at time of marriage or acquired thereafter (including earnings) was property of husband
##Wife’s property becomes subject to husband’s debts and thus, his creditors
#1800’s—Most common law property states adopt Married Woman’s Property Acts 
##Give married woman control over her property
##Her property is separate property and immune from her husband’s debts
##Give woman control of her earnings outside the home

==[[Sawada v. Endo]] ([https://www.courts.state.hi.us/courts/supreme/hawaii_supreme_court Haw.] 1977)—==

#Modern Approach—In a majority of states, a creditor of one spouse cannot reach a tenancy by the entirety because one spouse cannot assign his or her interest
#Exemption from creditors a main reason for survival of tenancy by the entirety
#Tenancy by entirety serves to protect family home and other property from transfer by one spouse and from creditors of one spouse
#Tenancy by the entirety (where recognized) can be created: 
##i) in any amount of real property; and
##ii) in many states, in any amount of personal property

Termination of Marriage by Divorce
#Common Law Approach—Property of spouses remains the property of the spouse holding title, co-owned property remained in co-ownership. Husband paid alimony arising out of his duty of support to his wife.
#Equitable Distribution—Property is divided by the court, in its discretion, on equitable principles. 
##Every state has replaced common law approach with ED
##Many statutes allow court to divide all property owned by spouses, regardless of time and manner of acquisition
##Other statutes divide only marital property
#Marital Property—Defined in two different ways depending on state: 
##All property acquired during marriage by whatever means (earnings, gifts, or inheritance); or
##Includes only property acquired from earnings of either spouse during marriage

Termination of Marriage by Death
#Personal property under common law 
##Widow gets 1/3 if there are surviving issue and 1/2 otherwise
##Widower takes all wife’s personal property absolutely
#Real property under common law 
##Widow got right of dower
###i) Life estate in 1/3 of each parcel of land of which husband was seised during marriage
###ii) Attaches to land at moment of marriage if land then owned; or when acquired
*iii) Right of dower inchoate until husband dies
 >If wife dies first, dower extinguishes >If husband dies first, wife becomes entitled to dower possession
#Husband got interest in curtesy 
##i) Life estate in each piece of wife’s real property if certain conditions met
##ii) Curtesy did not attach to land unless issue of the marriage capable of inheriting the land were born alive
#Dower and curtesy abolished in almost all US jurisdictions

===The Community Property System (p. 251)===

#Currently used in 9 states: 
##AZ, CA, ID, LA, NV, NM, TX, WA, WI
#Fundamental idea—Earnings of each spouse during marriage should be owned equally in undivided shares by both spouses
#Community property includes: 
##Earnings during marriage
##Rents, profits, and fruits of earnings
##Whatever is bought with earnings
#Separate Property—Property acquired before marriage and property acquired during marriage by gift, devise or descent.

=SECTION IV: LEASEHOLDS=

Class 11: Lease; Delivery; Subleases and AssignmentsReadings: 264-285Four main Types of Leasehold Estates 
#The Term of Years—An estate that lasts for some fixed period of time or for a period computable by a formula that results in fixing calendar dates for beginning and ending once the term is created or becomes possessory 
##Can be any time period (1 day, 2 months, 5,000 years, etc.)
##No limit to time period at common law, but some US jurisdictions impose a limit
##Term must be for fixed period
##Can be earlier terminable upon the happening of some event or condition
##No notice of termination is necessary since it states from the outset when it will terminate
##Death of LL has no effect on the leasehold
#The Periodic Tenancy—A lease for some fixed duration that continues for succeeding periods until either the landlord or tenant gives notice of termination (i.e. MTM or YTY leases) 
##Usually renews automatically until a party gives notice of termination
##MTM and YTY are examples of express periodic tenancies, but they can also be implied
##Under common law
###i) Half year’s notice required to terminate a YTY tenancy ii) Periodic tenancy must be terminated by notice equal to the length of the tenancy period, NTE 6 months
##Death of LL has no effect on leasehold
#Tenancy at Will—A tenancy of no fixed period that endures as long as both LL and tenant desire 
##If lease provides that it can be terminated by one party, it is necessarily the will of the other party as well if a tenancy at will has been created
##Terminates:
###i) At death of either party
###ii) When a party terminates
##Modern statutes usually require a notice period in order for a party to terminate unilaterally
#Tenancy at Sufferance: Holdovers—Arises when a tenant remains in possession after termination of the tenancy 
##At common law, LL’s have two options when faced with a holdover:
###i) Eviction (plus damages)
###ii) Consent (express or implied) to the creation of a new tenancy
##Tenancy in holdover is usually governed by the same terms as the original lease unless:
###i) parties agree otherwise; or
###ii) some term or condition is regarded as inconsistent with the new situation
##THERE IS NO SUCH THING AS A LIFE TENANCY/LEASEHOLD FOR LIFE
Kajo Church Square, Inc. v. Walker (Tex. App. 2003)— 
==Subleases and Assignments (p. 278)==

#Tenant’s interest in a leasehold is an estate, and is thus transferable to 3<sup>rd</sup> parties 2. Two types of tenant transfers
#Sublease
#Assignment
#Distinctions between sublease and assignment have important legal consequences

Ernst v. Condit (Tenn. App. 1964)—The general rule as to the distinction between a sublease and an assignment is that an assignment conveys the whole term, leaving no interest nor reversionary interest in the grantor, whereas a sublease may be generally defined as a transaction whereby a tenant grants an interest in the leased premises less than his own, or reserves to himself a reversionary interest in the term.
==Two (2) Tests for Sublease and Assignment (p. 283)==

Test #1: Formalistic; Most Commonly Used Test
#If lessee transfers his entire interest under the lease, it is an assignment 2. If lessee transfers anything less than his entire interest, a sublease
#Lessee retains a reversion
#Note: if lessee transfers his entire interest in a part of the property, most courts would consider it a partial assignment rather than a sublease

Test #2: Based on Intention; Lesser Used Test
#Actual words used (“sublease” or “assignment”) in the instrument are not conclusive, but may be persuasive
#Court will attempt to determine the intention of the parties and then make its ruling

==Third Party Beneficiary Contract (p. 283-4)==

Restatement § 16.1, Comment (c)—At the time a transfer of an interest in the leased property is made, the transferor may exact a promise from the transferee that he will perform the promises in the lease which were made by the transferor. The exaction of such a promise does not relieve the transferor of liability on his promises. It does give him a direct remedy against his transferee if the transferee fails to perform the promises, which remedy will continue to be available even after the transferee has transferred the interest to someone else. If the holder of the benefits of the promises made by the transferor acquires enforcement rights as a third party beneficiary against the transferee by virtue of the transferee’s promise to the transferor, then the transferee is in privity of contract with such third party beneficiary and a subsequent transfer by the transferee of an interest in the leased property will not affect that privity of contract liability.
#Example: In exchange for $20, A promises B (who paid the money) that A will wash C’s car. Although B is the promisee of A’s promise, C is the intended beneficiary, and if the local jurisdiction recognizes the third party beneficiary contract doctrine, then C has enforceable contract rights against A. Restraints on Alienabilty in Leaseholds (p.284)
#Though the common law generally disfavors restraints on alienation of property, this policy has less application to leasehold interests because LL’s have a legitimate interest in protection their reversionary interests and assuring that the leasehold covenants are performed.
#This is why it is okay to have a consent clause, as there was in Ernst, requiring the tenant to get permission from the LL before subleasing or assigning



Class 12: Subleases and Assignments Contd; DefaultReadings: 285-306Kendall v. Ernest Pestana, Inc. (Cal. 1985)—A commercial lessor may not unreasonably withhold his consent to assignment of a lease, whether or not there is a consent clause.NOTE WELL: The reasonableness requirement set out in Kendall DOES NOT APPLY to residential leases.
==The Tenant Who Defaults (p. 292)==
==The Tenant in Possession==

Berg v. Wiley (Minn. 1978)—When a lessor feels that a tenant in possession is violating the terms of the lease, the lessor must exercise judicial remedies to retake the property.
#Self-Help at Common Law—A LL entitled to possession could resort to self-help without fear of civil liability so long as he used no more force than reasonably necessary 2. Modern View on Self-Help—The Berg view—LL must resort to judicial remedy to retake
#However, some courts continue to allow self-help
#Whether or not self-help rule applies only to commercial leases, only to residential leases, or to both depends on the jurisdiction
#Some courts allow the parties to bargain around self-help rules, others don’t. All depends on jurisdiction

==The Abandoning Tenant (p. 299)==

Sommer v. Kridel (N.J. 1977)—A LL has a duty to mitigate damages by making a reasonable effort to re-let the premises when seeking to recover rents due from a defaulting tenant. This is the most commonly-used rule today.Surrender—An agreement between LL and tenant to prematurely terminate the tenancy. If effected, the surrender relieves the tenant from liability for future rent.
#Tenant is, however, still liable for any past unpaid rent
#Normally, express surrender is subject to the Statute of Frauds

Abandonment—Per the Restatement, “an abandonment of the leased property by the tenant occurs when he vacates the leased property without justification and without any present intention of returning and he defaults in the payment of rent.”
#Considered to be an implied offer of surrender by tenant
#LL is free to accept or reject
# 3 options traditionally available to LL when tenant surrenders: 
##Terminate the lease—Accept the implied offer and terminate
##Leave premises vacant and recover accrued rent—Reject offer, leave premises vacant and bring action against abandoning tenant
##Mitigate damages, recover any difference in rent—self explanatory.

The “Vacant Stock” Theory—Laid out in Sommer, this theory requires a mitigating LL to make at least the same effort to re-let the abandoned property as he would/does with other vacant units.Class 13: Duties, Rights & RemediesReadings: 306-328
==The Landlord’s Duties (p. 306)==
===The Duty to Deliver Possession===

#American Rule—The LL is obligated only to deliver legal possession, i.e. the legal right to possession of the premises, when tenancy begins. 
##It is tenant’s responsibility to oust a trespasser or holdover
##Tenant’s remedies are against person in physical possession
##i) May sue to recover possession and damages
#English Rule—Landlord must deliver actual possession. Upon LL’s default, tenant may terminate the lease and sue the LL for damages. 
##Alternatively, tenant can continue the lease and sue for damages
# A majority of jurisdictions in the US now follow the English Rule.

===Duties Regarding the Condition of the Premises (p. 307)===

The Original Common Law Approach: Independent Covenants 
#Leasehold covenants, whether express or implied, were considered independent of each other. 
##Covenants must be performed regardless of whether other party is upholding its covenants. Tenant must still pay rent even if LL not upholding its covenants.
#Quiet Enjoyment—Tenant has a right to possession undisturbed by the LL or someone claiming through the LL 
##Breach of the covenant of quiet enjoyment discharged tenant of duty to pay rent
##Initially limited to cases where tenant was actually ousted physically; expanded to extend to cases of constructive eviction
#Constructive Eviction—Actions by the LL and those acting under him that so substantially interfere with a tenant’s beneficial enjoyment of the premises that the tenant has no reasonable alternative other than vacating the premises.

Contract Approach (a.k.a. Modern Approach) 
#Leases should be viewed as a contract where all covenants are interdependent. Default by either side will/may result in the other side gaining a right to terminate.

===Quiet Enjoyment and Constructive Eviction (p. 309)===

Village Commons, LLC v. Marion County Prosecutor’s Office (Ind. App. 2008)—MCPO rented office space from VC. Lease said LL would maintain premises but limited remedies available to tenant in case of breach to right to sue for an injunction or damages. MCPO had no right to terminate or withhold rent under the lease. Premises began having water leaks, destroyed boxes of evidence. MCPO notified LL, LL told them to move evidence out of problem areas. VC made repairs but did not fix the issue. VC also declined to pay for mold remediation despite health risks. By failing to remedy the problems with the premises, VC had constructively evicted MCPO. Under Indiana law, a tenant who has been wrongfully evicted may abandon the premises and stop paying rent, even if the exclusive remedy provision provides that the tenant may not terminate the lease or withhold rent if the LL breached. MCPO wins.
===Elements to Prove Breach of Covenant of Quiet Enjoyment and Constructive Eviction (p. 316)===

#Wrongful Conduct by LL (or someone for whom the LL is legally responsible)—Acts by LL that seriously interfere with the tenant’s use or enjoyment. Can be:
#Affirmative acts
#Inaction—Generally only considered wrongful where LL has a duty to act
#i) Duty by express clause in lease ii) Duty by Statute iii) Four common law duties:
> Furnished Dwelling Rule—For short-term leases of furnished dwellings, LL has an implied duty to make and keep premises habitable> Common Areas—LL is responsible for care and condition of the common areas> Latent Defects—LL has duty to disclose any latent defects existing at the outset of the lease of which the LL knew or reasonably should have known> Nuisances—In some jurisdictions, LL is responsible for abatement of nuisances occurring in the premises if they affect the leased premises
#Acts of 3<sup>rd</sup> Parties—Traditional rule is that LL’s are not responsible for acts of third parties. Modern courts are divided:
#i) Some apply traditional rule
#ii) Others hold that LL is responsible for controlling the 3<sup>rd</sup> party’s conduct if the LL has the legal authority to do so.
#Substantial interference with the tenant’s use and enjoyment—The conduct must constitute such a major interference with the tenant’s ability to use or enjoy the premises that a reasonable person would conclude that the property is uninhabitable or unfit for its intended use. 
##Minor interferences, such as broken window, do not amount to constructive
eviction
#Vacation of the premises in a timely fashion—Only really an element of constructive eviction; not always necessary to show in an action for breach of quiet enjoyment. Tenant must give LL notice of defect and time to resolve the problem; then, if LL does not resolve, tenant must leave before constructive eviction remedy is waived (if it is waivable). 
##IMPORTANT NOTE: CONSTRUCTIVE EVICTION IS ONLY ONE OF A MENU OF REMEDIES FOR A BREACH OF QUIET ENJOYMENT. Tenant should be, and USUALLY IS, able to stay in possession and sue for damages equal to the difference between the value of the property with and without the breach of quiet enjoyment.

Partial Eviction
#Actual Partial Eviction—Tenant is actually physically evicted from a part of the premises. Tenant is relieved of all liability for rent, notwithstanding continued occupation of the balance.
#Constructive Partial Eviction—LL makes part—but not all—of the premises uninhabitable, but tenant remains in undisturbed possession of the balance. In most jurisdictions, tenant is not relieved of obligation to pay rent.

===The Implied Warranty of Habitability (p. 318)===

#Caveat Lessee (Lessee Beware)—The early common law approach. There is no implied warranty of habitability. Tenant takes the premises as-is.

''[[Hilder v. St. Peter]]'' (Vt. 1984)— Hilder rented apartment owned by St. Peter and lived there with 4 kids. There were many problems: broken kitchen window, no front door lock, non-functioning toilet, bad light fixtures, water leakage, failing plaster, and leaking sewage. Hilder complained about each problem as they were discovered. St. Peter usually promised to remedy but never actually did. Hilder fixed at her own expense in most cases. Hilder paid rent on time. Hilder sued for breach of implied warranty of habitability when she moved out. Issues: Whether (1) the court should adopt implied warranty of habitability; (2) if yes, whether a tenant is entitled to recover rents paid upon prevailing; and (3) if yes, whether tenant is entitled to an award of compensatory and punitive damages for prevailing on the same claim? Held: (1) All residential rentals include an implied warranty of habitability that cannot be waived or disclaimed. (2) Yes. On winning a suit for breach of implied warranty of habitability, tenant is entitled to recover all rents paid to LL. It is not necessary for the tenant to vacate the premises and claim constructive eviction in order to succeed on this remedy. (3) Yes. A tenant may be entitled to recover compensatory damages for her discomfort and annoyance arising from the defects. Further, the tenant may recover punitive damages where the breach is so wanton, willful, or fraudulent that it justifies an award of exemplary damages. Status of Implied Warranty of Habitability (p. 325)
#Adopted for residential leases in all but 3 jurisdictions (AL, WY, and AR) 
##Most states have adopted by statute rather than judicial reform
##Usually does not apply to all residential leases; some may be excluded
#Majority of jurisdictions have not adopted implied warranty of fitness or suitability for purpose for commercial leases.
#Implied warranty of habitability does not render useless the doctrines of quiet enjoyment, constructive eviction, and illegal leases

Standard and Breach of the Warranty (p. 325)
#Generally speaking, “adequate standard of habitability” must be met
#Breach occurs when the leased premises are “uninhabitable” in the eyes of a reasonable person 
##Housing code violations are considered compelling but not conclusive
##Objective is safe and healthy housing
##means something more than avoiding slum conditions—i.e. loud noise in apartment building may be considered a breach

Remedies for Breach of Implied Warranty of Habitability (p. 325)
#Generally, tenant may avail himself of all basic contract remedies:
#Damages
#Rescission
#Reformation
#Tenants remedies have unique aspects. The following remedies are available:
#Remain in possession and bring action for breach of warranty (Hilder)
#Rescind the lease, thereby permitting tenant to vacate premises with no further obligation to pay rent
#Remain in possession and withhold all or part of the rent
#Repair the defects and deduct the cost of repairs from rent payments 3. Three formulas for calculating rent deductions and damages:
#Agreed Rent (AR) - Fair Market Rental Value (FMRV) of premises in defective condition. Most straightforward method because it uses the agreed rent as the starting point.
#FMRV of premises in compliant conditions – FMRV of premises in defective condition.
#i) Aims to avoid the possibility present in formula (a) that tenant gets zero because defects existed at outset and tenant was aware of them c. Agreed Rent - % of rent corresponding to lease value lost as a consequence of LL breach
Consequences of the Implied Warranty of Habitability (p. 326)
#New doctrine did not result in fewer eviction cases being filed, indicating there may not have been an increase in tenant rent withholding
#Large portion of LL-tenant cases never reach court—once LL gets the $ or possession they drop the case. Tenants apparently prefer to move rather than litigate.
#When cases do reach court, most are resolved without reference to condition of premises. Most tenants are not represented by counsel and lack sufficient knowledge of the law to assert their rights on their own.

==TRANSFERS OF LAND==

Class 14: Contract for Sale, WarrantyReadings: 331-32; 332-45 (skim); 345-64
===Introduction to Buying and Selling Real Estate===

#First step is to negotiate a purchase and sale agreement, setting forth: 
##legal description of the property
##Price
##Provision for an earnest money deposit
##Date for closing or settlement (the transfer of title)
#Real estate contracts are almost always executory—title not transferred immediately on signing because both parties must fulfill certain obligations between signing and closing 
##Typical buyer obligations:
##i) Title search to satisfy herself that seller can convey good title ii) Obtain a mortgage loan. Usually K will provide that if she cannot obtain within a certain time she can rescind K and recover deposit (the mortgage contingency)
iii) Inspection Contingency—clause allowing buyer to obtain an inspection of the property and rescind K if cost of remedying any problem found exceeds a certain threshold.
#Lender provides proceeds of loan to seller, who uses the money along with additional proceeds received from buyer to: 
##pay off any existing loans on the property
##pay the broker commission
##pay legal and other fees he has agreed to take care of
##pockets the rest
#At same time lender advances funds to seller, seller transfers title to buyers by giving them a deed 5. Buyers will then 
##Sign a promissory note for the loan
##Execute a mortgage or deed of trust in favor of the lender
##Pay fees for services provided by lawyer, title company, and any other parties involved in transaction
#Title company will then usually record the deed and mortgage with County Clerk
#Title company will issue a policy of title insurance promising to defend against any adverse claims and pay a fixed amount if the title is later found to be flawed or unmarketable
#Buyers now own a home!

===The Contract of Sale (p. 346)===
==The Statute of Frauds==

#Statute of Frauds is English law enacted in 1677 providing that: 
##except for leases less than 3 years, no interest in land can be created or transferred except by an instrument in writing signed by the party to be bound thereby; and
##no action shall be brought upon any contract or sale of lands, or any interest in or concerning them, unless the agreement upon which such action shall be brought or some memorandum or note thereof shall be in writing, and signed by the party to be charged therewith.
#When not confined by express language, courts have treated the Statute of Frauds as principle rather than a statute. 
##Most law relating to SoF is judge-made rather than statutory
##Some judges are strict about it, others are more relaxed 3. 3 minimal requirements for satisfying the Statute of Frauds
##Memorandum of sale must be signed for the party to be bound
##Memo of sale must describe the real estate
##Memo of sale must state the price
###i) When price agreed upon, most courts regard it as an essential term that must be set forth
###ii) If price was not agreed upon, courts may imply an agreement to pay a reasonable price
###Exceptions to Statute of Frauds (When Oral Agreements are Allowed)
##Part Performance—Allows the specific enforcement of oral agreements when particular acts have been performed by one of the parties to the agreement
###i) Theory 1: When the acts of the parties substantially satisfy the evidentiary requirements of the SoF, there is part performance
###ii) Theory 2: Part performance is a doctrine used to prevent injurious reliance on the contract, and therefore if the plaintiff shows that he would suffer irreparable injury if the contract were not enforced, then the buyer’s taking of possession alone is enough to set the court in motion
##Estoppel—Applies when unconscionable injury would result from denying enforcement of the oral agreement after one party has been induced by the other to seriously change his position in reliance on the contract

Hickey v. Green (Mass. App. 1982)—Green negotiated to sell parcel of land to Hickey. PArties came to oral agreement, Hickey gave Green $500 deposit. Hickeys told Green they were going to sell their house and build on the lot they were buying. Green sold house less than 10 days after making deposit. Green then told Hickey that she no longer intended to sell property to them and found another buyer. Hickeys offered to meet other buyer’s price but Green refused. Hickey sued for specific performance, Green said SP not available because agreement did not comply with SoF. ISSUE: Whether an oral contract for sale of land can be specifically enforced if the party seeking enforcement detrimentally relied on the agreement? HELD: Yes. An oral land transfer agreement may be specifically enforced, despite violating the Statute of Frauds, if the party seeking specific performance has detrimentally relied on the oral agreement and injustice can only be avoided by specific performance.
==Marketable Title (p. 351)==

#Seller must convey marketable title to buyer for there to be an enforceable contract for sale of land
#If seller cannot produce, buyer may rescind
#Marketable Title—a title not subject to such reasonable doubt as would create a just apprehension of its validity in the mind of a reasonable, prudent and intelligent person, one which such persons, guided by competent legal advice, would be willing to take and for which they would be willing to pay fair value

''[[Lohmeyer v. Bower]]'' (Kan. 1951)— Lohmeyer contracted to buy property from Bower. Deed that transferred sale warranted that the property was transferred “free and clear of all encumbrances,” but “subject to all restrictions and easements of record applying to this property.” Lohmeyer’s lawyer found two zoning violations. Lohmeyer told Bower who offered to fix one (but not both) of the violations. 

Loh. refused and brought suit seeking to rescind the K and for return of the earnest money deposit. Bower countersued for specific performance. ISSUE: Do zoning ordinance violations render a property’s title unmarketable? HELD: Yes. Because the zoning violations would have put Lohmeyer at risk of litigation were the sale to go through, they rendered the title unmarketable. The purchaser of real property may choose to cancel the sale if the title to the land is found to be unmarketable.

==Equitable Conversion (p. 355)==

#Doctrine of Equitable Conversion—If there is a specifically enforceable contract for the sale of land, equity regards as done that which ought to be done.
#Buyer is viewed in equity as the owner from the date of the contract (thus having the equitable title)
#Seller is viewed in equity as having a claim for money secured by a vendor’s lien on the land. Seller is also said to hold the legal title as trustee for the buyer
#Risk of Loss—Courts have taken three different approaches to who takes the loss when premises are destroyed between signing contract of sale and closing when the contract has no provision allocating the risk of loss: 
##Equitable Conversion Approach (Majority Approach)—From the time of the contract of sale of real estate, the burden of the loss is on the buyer, even though seller retains possession. (treats purchaser as owner through EC)
##Approach #2: Loss is on the seller until legal title is conveyed
##Approach #3: Risk of loss is placed on the party in possession
#Inheritance—If one of the parties to a sale of land dies and equitable conversion has occurred: 
##Seller’s interest is in personal property (right to the purchase price)
##Buyer is treated as owner of the land

==The Duty to Disclose Defects (p. 356)==

Stambovsky v. Ackley (N.Y. 1991)—Stambovsky entered into a contract for the purchase of a home with Ackley. Unknown to Stambovsky, Ackley had held house out to public as a haunted house. Article in magazine, included on haunted homes tour of town. Ackely did not disclose these facts during negotiations. Upon learning that home was haunted, Stambovsky brought action to rescind sale contract. ISSUE: Does seller have duty to disclose a condition created by the seller that decreases the value of the home and is unlikely to be discovered by the buyer? HELD: Yes. Ackley had a duty to disclose the fact that he held the home out as being haunted. Because holding the house out as haunted has the potential to decrease the value of the home, and because it is not something a buyer should ordinarily be expected to consider prior to purchase, there was a duty to disclose. A condition created by a seller that decreases (or is likely to decrease) the value of a home, and is unlikely to be discovered by the buyer, must be disclosed by the seller.Johnson v. Davis (Fla. 1985)—Johnson agreed to sell house to Davis, did not disclose what he knew about poor structure of roof. Davis specifically asked about water marks on ceiling, Johnson said they were not water marks and that roof was in good working order. After Davis paid deposit, there was a rainstorm and Davis entered house to find water pouring in from windows and ceiling. ISSUE: IS a homebuyer entitled to a refund of deposit when the seller knew of, but failed to disclose, significant leakage problems in the roof of the home? RULE: Where the seller of a property knows of facts materially affecting the value or desirability of the property that are not observable or known to the buyer, the seller has the duty to disclose them to the buyer. HELD: Yes. A seller is liable for failing to disclose material problems with the structure of a house if he knows about them. Because Johnson knew about the problems, failed to disclose them, and actively lied about them, and because a leaky roof is a material defect, Johnson is liable and must return deposit.
#Modern Approach: Majority of states now require seller to disclose all known defects and equate nondisclosure with fraud or misrepresentation. When seller breaches this duty, buyer can rescind the contract or sue for damages after the closing.
#Most states now have statutes requiring sellers to deliver a written statement disclosing facts about the property to the buyer.
#In every jurisdiction with a statute, defect must be material to be actionable 3. Two tests for determining materiality of a defect: 
##Objective test: Whether a reasonable person would attach importance to the defect in deciding to buy
##Subjective Test: Whether the defect affects the value or desirability of the property to the buyer
#Merger Doctrine—When a buyer accepts a deed, the buyer is deemed to be satisfied that all the contractual obligations have been met. Contract nerges into the deed, and buyer can no longer sue seller on promises in the contract of sale that are not also contained in the deed. 
##Doctrine now in disfavor and riddled with exceptions
##Normal way to avoid the doctrine is to say that the particular obligation of the seller is an independent or collateral obligation
#The Implied Warranty of Quality—Implied warranty of quality or skillful construction exists in contracts for the sale of homes by builders, developers or other merchants of housing. Suits on the warranty can only arise after the closing has taken place and the plaintiff has accepted the deed. 
##Most states do not impose strict liability—defendant is only liable if he failed to exercise the standard of skill and care exercised by similar merchants.
##Most states hold that the warranty only applies to significant defects
##Most courts also hold that warranty only applies to latent or hidden defects

Class 15: Contract Remedies; Deed & DeliveryReadings: 364-74; 374-84
==Remedies for Breach of the Sales Contract (p. 364)==

#There are three (3) remedies available to the non-defaulting party when a contract for sale is breached: 
##Damages
##Retention of the deposit (sellers) or restitution of the deposit (buyers)
##Specific performance of the contract
#Generally, the winner chooses which remedy they want

Jones v. Lee (N.M. App. 1998)—Lee contracted to buy a ;piece of property from Jones for $610K and paid a $6K deposit. Few weeks later, Lee tells Jones deal can’t be completed for financial reasons. Lee drafted termination agreement where they would forefeit the deposit in exchange for cancellation of the deal. Jones rejected. When Lee could not buy, Jones resold property for $540K. Jones sued Lee for breaching the sale contract. Trial court awarded $70K in damages, the difference between the contract price and the eventual sale price. ISSUE: Whether damages should be measured as the difference between the actual sale price and the contract price when a purchaser of real estate defaults on the sale agreement? HELD: No. The correct way to measure damages is the difference between the contract price and the FAIR MARKET VALUE. The trial court in this case made no findings regarding FMV, therefore, case remanded for further proceedings to calculate damages.Kutzin v. Pirnie (N.J. 1991)—ISSUE: May a seller of real estate keep the deposit when the buyer breaches the contract and the contract of sale does not include a liquidated damages or forfeiture clause? HELD: No. The buyer is entitled to restitution of sums paid which are over and above the loss actually suffered by the seller. THE KUTZIN HOLDING IS A MINORITY VIEW. The general rule is that when a buyer breaches a contract to purchase land, the seller may retain the deposit because of the difficulty in estimating the actual damages and the acceptance of the 10% down payment as a reasonable amount.Class 16: Title & The Recording SystemReadings: 415-441
==The Recording System==
===Introduction (p. 415)===

#Every state has a statute providing for land title records to be maintained by the county recorder in each county
#Recording acts generally do not affect the validity of a deed or other instrument
#Deed is valid and good against grantor upon delivery, regardless of recordation 3. Three main functions of recording system: 
##Establish a system of public recordation of land titles
##Preserve in a secure place documents that, in private hands, may be easily lost or misplaced
##Protect purchasers for value and lien creditors against prior unrecorded interests 4. Types of instruments that can be recorded:
##Deed
##Mortgage
##Lease
##Option
##Other instruments affecting an interest in land
##Lis pendens (notice of pending action) may be recorded prior to judgment in a
lawsuit affecting title to real property
#i) Effectively puts subsequent claimants on notice of the claims being litigated
#Wills and affidavits of heirship of an intestate
# A subsequent bona fide purchaser is protected against prior unrecorded interests
#NOTE WELL: the common law rule of “prior in time, prior in effect” continues to control unless a person can qualify for protection under the applicable recording act

===The Indexes (p. 417)===

#Two types of indexes are used in the US: 
##Tract Index
##Grantor-Grantee Index
#Tract Index—Do not exist in most states. Indexes docs by parcel ID number assigned to the particular tract of land.
#Grantor-Grantee Index—Separate indexes are kept for grantors and grantees. Grantor and grantee indexes are each indexed under the surname of the grantor or grantee.
#The reference in the index to a document sets forth its essentials: 
##Grantor
##Grantee
##Description of the land
##Kind of instrument
##Date of recording
##Volume and page numbers where the instrument can be found and set forth in full


===Luthi v. Evans===
''[[Luthi v. Evans]]'' (Kan. 1978)—Owens owned interest in several oil and gas leases in Coffey County. She assigned some of her interests in 1971 to International Tours. Assignment document specifically described 7 oil and gas leases to be assigned. Second paragraph purported to convey to Tours “all interest” in oil and gas leases “whether or not specifically enumerated above.” Owens owned a gas lease in Kufahl, which was in Coffey County. The ownership of the Kufahl lease was not described in the first paragraph of the assignment. Tours recorded the assignment in 1971. In 1975, Owens assigned the Kufahl lease to Burris. Burris personally checked register of deeds, and also secured an abstract of title. Neither effort reflected the prior assignment to Tours. A dispute arose as to the ownership of the interest in the Kufahl lease. ISSUE: Does recording with the recorder of deeds a conveyance which does not include full legal descriptions of the interest conveyed impart constructive notice to subsequent purchasers? RULE: Conveyances of real property interests must provide a specific legal definition of the interests being conveyed. HELD: No. The recorder’s office had a statutory obligation to index the names of the grantors and grantees as respects particular properties. Because the Kufaehl lease was not described in the recorded document, the recorder could not have appropriately recorded that interest. Assignment was effective between Owens and Tours, but it was not effective as applied to anyone else. Because the recordation did not give constructive notice to Burris, the assignment of the Kufahl lease to Owens is overridden by the subsequent assignment to Burris.

===Orr v. Byers===
''[[Orr v. Byers]]'' (Cal. App. 1988)—In 1978 Orr secured a legal judgment against Elliott for $50K.The recorded document misspelled Elliott’s name, sometimes using one L and sometimes using 2. Elliott subsequently sold a piece of property to Byers in 1979. This sale should have triggered Orr’s judgment lien, but because of the spelling error, the lien was not identified and the sale was perfected without Elliott satisfying his debt to Orr. Orr sues Byers, Elliott and the title company to enforce judgment lien, arguing that the spellings were so similar that subsequent purchasers of the land had constructive knowledge of the judgment lien. ISSUE: Does the doctrine of idem sonans operate to provide constructive notice of the existence of a judgment lien when the judgment debtor’s name is incorrectly spelled in the recorded document? HELD: No. The doctrine of idem sonans assists in establishing the sameness of identity when a paper spells a person’s name incorrectly, but the pronunciation of the name as written closely mirrors the correct pronunciation. Idem Sonans does not apply when the written name is material, and error would prejudicially mislead a third party. REASONING: In the case of recordation of judgments, applying the doctrine would inappropriately burden title researchers by making forcing them to search for possibly misspelled names. RULE: When recording a judgment lien, the proper identification of the judgment debtor is critical to future efforts to enforce the judgment.

===Types of Recording Acts (p. 432)===

#Race Statute—Between successive purchasers of a piece of property, the person who wins the race to record prevails 
##Earliest type of recording act
##Whether a subsequent purchaser has actual knowledge of the prior purchaser’s claim is irrelevant.
#Notice Statute—Subsequent purchaser prevails as long as he did not have actual knowledge of the prior purchaser’s claim a. Who records first is irrelevant
#Race-Notice Statute—Subsequent purchaser prevails if he (1) did not have knowledge of
prior purchaser’s claim and (2) records first.Mesersmith v. Smith (N.D. 1953)—Messersmith and nephew each owned one half interest in land. In 1946, Messersmith executed a quitclaim deed to nephew, granting him her interest in the land. Deed was not recorded until July 1951. On May 7, 1951, Messersmith granted Smith a one half interest in the oil and minerals located on the same land. The deed for this transaction was executed on the same date. When Smith noticed there was a small error in the deed, he returned to Messersmith’s home, tore up the deed, and prepared a new one. Second deed was then brought to a notary who acknowledged Messersmith’s signature by phone. On May 9, 1951, Smith conveyed the one half interest in the mineral rights to Seale. Both the second deed and the conveyance to Seale were recorded on May 26, 1951. Nephew sued to quiet title, claiming deed to Smith was void. Smith defaulted. Seale argued that he was a good-faith purchaser without notice and therefore protected under the recording statute. ISSUE: Does a title instrument that was not recorded according to the statutory requirements provide constructive notice of the transfer to a subsequent purchaser? HELD: No. Smith’s recordation of his deed did not provide constructive notice to the nephew because his deed was not properly acknowledged. ND is a race-notice jurisdiction. Thus, an unrecorded transfer of title to real property is void against a subsequent, good-faith purchaser. The recording of an instrument that does not meet all of the statutory requirements of recordation does not provide constructive notice. Because the acknowledgement was made by phone, the deed was not properly acknowledged before a notary. RULE: The recording of a title instrument that does not meet the recording act’s statutory requirements does not provide constructive notice of the transfer to subsequent buyers.Class 17: Title & Recording System Part II Readings: 441-460
===Chain of Title Problems (p. 441)===

#Chain of Title (Technical Definition)—The period of time for which records must be searched and the documents that must be examined within that time period. In this sense, chain of title includes, and is coextensive with, those instruments that will be picked up by the title search required in the particular jurisdiction
#Meaning of “chain of title” varies in different jurisdictions
#Chain of title includes the series of recorded documents that, in the particular jurisdiction, give constructive notice to a subsequent purchaser.

Board of Education of Minneapolis v. Hughes (Minn. 1912)—May 1906 Hughes bought plot of land from Hoerger. Hughes sent his money and a deed to Hoerger with a copy of a deed to be executed and returned to hi. The name of the grantee was left blank, but Hoerger signed and returned the deed. Hughes filled in his name as the grantee and recorded the deed in December 1910. In April 1909, Duryea and Wilson also received a quitclaim deed for the lot from Hoerger. Quitclaim deed was recorded in January 1910. Board of Education brought suit to determine who owned the title to the land. Trial court determined Board of Ed was proper owner. Hughes appeals. ISSUES: (1) Does delivery of a blank deed, with the understanding that the name of the grantee is to be written in, constitute valid delivery? (2) May a subsequent purchaser of property who records his deed first take valid title where the previous recipient failed to record their title? RULE: One who records his valid title first is the record owner of real property, regardless of whether another party has earlier received the same property. HELD: (1) Yes. Delivering a deed that does not include the name of the grantee is null until the point where the grantee’s name is filled in. Hughes had implicit authority from Hoerger to fill his name in as the grantee, thereby curing the nullity of the original conveyance and making the deed effective. (2) Yes. If a piece of real property is conveyed to multiple parties, the first to duly record his title has superior rights to the property. Because the transfer from Hoerger to Duryea and Wilson was not recorded, D&W did not have proper title to convey to the Board of Ed.Guilette v. Daly Dry Wall, Inc. (Mass. 1975)—A grantor may restrict the use of his land. A purchaser of property has the burden of diligently researching the title to the property to ensure that he is acquiring clean title.
===Persons Protected by the Recording System (p. 449)===

#Courts have held, almost universally, that recording statutes do not protect donees and devisees, even in a race jurisdiction. 
##As a result, courts sometimes need to determine whether a person is a purchaser
(protected) or a donee (not protected)
#Therefore, court may need to determine what is a valuable consideration for purposes of obtaining protection under the recording act
#i) Some disagreement, but usually must be more than a “nominal” amount. Could be:
 > “Substantial” amount > Amount “not grossly inadequate”
#If deed recites that it is for “$1 and other good and valuable consideration,” this raises the presumption that the grantee is a purchaser for valuable consideration 
##Places the burden of going forward to establish the falsity of the recital of consideration on the party attacking the deed

Lewis v. Superior Court (Cal. App. 1994)—ISSUE: Whether a bona fide purchaser of property may be charged with constructive knowledge of an encumbrance on the land where the encumbrance was recorded, but not indexed, prior to the sale? RULE: A purchaser of property is presumed to have knowledge of any encumbrances to the property which can be found at the recorder’s office at the time of the conveyance. HOLDING: No. A property interest is not fully recorded until it has been indexed.
#Creditors—Many recording statutes protect creditors against unrecorded deeds and mortgages. 
##Protect only creditors who have established a lien, such as attachment by judgment; NOT ALL CREDITORS ARE PROTECTED. (Merely lending money does not gain protection)

===Inquiry Notice (p. 453)===

3 Kinds of Notice a Person May Have With Respect to a Prior Claim:
#Actual Notice—Arises where one person is personally aware of a conflicting
interest in real property
#Record Notice—Form of constructive notice. Consists of notice one has based on properly recorded instruments
#Inquiry Notice—Form of constructive notice. Based on facts that would cause a reasonable person to make inquiries into the possible existence of an interest in real property.

Waldorf Insurance and Bonding, Inc. v. Eglin National Bank (Fla. App. 1984)—ISSUE: Does a purchaser’s interest in a condo unit vest title in him at the time the sale is agreed to and the buyer moves in? RULE: An owner may not further burden a property (for example, by permitting a lien to be placed on it) after he has quitclaimed his interest in that property. HOLDING: Yes. A purchaser of real property receives an equitable interest in the proeprty at the time the agreement to purchase is made, even if the purchase price has not yet changed hands.