Parades 2004 Property Outline

Intro to property
Acquisition by discovery and capture
Alternative theories to property
Property in one’s person
Bundle of rights
Acquistion by find
Adverse Possession
Estates
Possessory Estates
Future Interests
Concurrent Estates
Leaseholds: Landlord/Tenant law
Leasehold estates
Subleases and Assignments
Tenant who defaults
Landlord’s duties
Tenants duties
Rent control
Nuisance
Intro
Remedies
Servitudes
Intro
Easements
Covenants
Zoning
Intro
Eminent Domain and Takings
Eminent Domain
Physical Occupations
Regulatory Takings

Intro
Acquistion by discovery and capture
Benefits of a first come basis
Generally very clear concept of who owns what
Less incentive to challenge
Only one person who could first possess
Creates incentive to be productive and first
Locke: acquire property by putting labor into it
More emphasis on laboring land than preservation
Putting labor into the land puts yourself into the land
Locke still believe in keeping some land in common with others
Cases
Johnson v. McIntosh
Being first not necessarily the most important. Must be first in the correct way
Indians have limited right to occupy, and can only transfer to nations
Pierson v. Post: case for incentives
Argument for initial hunter
Investment of labor into hunt.
If interloper were allowed to intercede at last moment, would provide disincentive towards future hunters
Violence of disputes
Arguments for interloper
Difficult to establish if he would have caught
Initial hunter may have been poor, excluding other hunters
Allows maximum societal benefits (ie fewer foxes)
Rule of capture: imminent capture will ensure simply spotting not enough, but will reward hunters who invest time
Ghen v. Rich
Externality: is it easier for whalers to find finders or finders to find whalers?
Pro whalers: no possible way to initially capture whale, and giving it to finder would disincentivize any whalers
Pro finders: whalers abandon property. Additionally, should develop technology to capture whale
Custom
Advantages of custom
May be more efficient
More narrowly tailored
More flexible
Disadvantages of custom
Unfairness
Which custom rules? Uncertainty
May only take own interest into account, not others
Create externalities
Trespass (theft)
Why make trespass illegal?
No incentive to buy property if others can steal
No incentive to work if fruits of labor simply taken away
Waste of resources defending property
Externalities
Definition: effect of action that falls one a 3rd party that the actor doesn’t take into account
Negative externalities: associated with too much of certain activity, because individual does not bear full cost that society does
Positive externalities are generally associated with not enough activity, since actor does not internalize benefits
Example
Factory produces pollution in neighborhood
Solutions: Neighbors pay factory to not pollute. Will pay up to what clean air is worth collectively.
Factory owner has to incur opportunity cost of not accepting money if it did not take money.
Neighbors have right to clean air
Factory will buy the neighbors right to clean air
Coase Theorem-no transaction costs, so optimum societal level always achieved
Transaction costs
Bilateral monopoly
Each has own interest to drive hard bargain
No competition
Hold outs
Free-riders
Information gathering
Commons
Externalities: individuals get full benefit, but only portion of cost (eg logging in commons-cutter gets all benefit of gaining tree)
Externality: Incentive to rush to acquire property
Advantage of private property: benefit/costs fully realized by owner, so all externalities internalized
Alternative theories of Property
Radin
Distinction between fungible and non-fungible
Non-fungible: people value personal property stronger depending on circumstances
Should we allow fungible and non-fungible to be valued at the market price?
Friedman/Sunstein
personal property rights allow autonomy and protection from gov’t
Property in one’s person: Moore
Scope of rights: should we be able to give, sell, prohibit use of own body?
Current law: own’s person is not alienable
Contract
could simply contract that cells may not be used, or go to different doctor
Bundle of rights
State v. Shack
Right to exclude not strong enough to infringe on other’s rights
Mobile home case
Do have right to exclude other’s for preference, economic reasons, etc.
Just because it would be inconvenience to others, does not allow trespass
Acquisition by find
Lost property: owner unintentionally parted with property (dropped wallet)
Owner has title over finder, but finder has title over others
Reason: if loser of property lost title of property, owners would spend more time watching over property and less time being productive
Finder of property usually wins, not owner or occupier of premises
Claims: Finder may claim owner would not have found it
Premises owner: owner of premises has control of premises, and therefore should have control over found property
When premises is public, generally goes to finder
Private: sometimes goes to owner
Mislaid property: Intentionally left, but mistakenly left (wallet on counter)
Owner of premises always wins over finder
Greater chance of finding true owner
Abandon property: intentionally abandon property
Intent: intent to abandon property shows abandonment
Finder
Must gain possession, and show intent of possession.
Adverse possession
Acquiring title to property by using it
Statute of limitations: amount of time in which owner can sue for trespass and ejectment
Elements of adverse possession
Actual entry onto property giving exclusive possession to adverse possessor
Provides notice to original owner
Informs extent of adverse possessor’s claim
Open and notorious
Cannot secretly take over property. Must be obvious to property owner
Any reasonably diligent owner could notice
Adverse and hostile to original owner
Cannot be there by permission of owner
Possession must be continuous
Must be used a manner consistent with nature of property
Use with nature will allow true owner to know of the trespass
Statute of limitations must have run
Constructive adverse possession
Wrong title. Thinks he owns, but doesn’t.
Once statute of limitations runs, then does get it
Leasing does not qualify for adverse possession
Co-tenant cannot gain adverse possession, unless excluded by other owner (Ouster)
Tacking.
Can tack periods of adverse possession from prior adverse possessor, as long as title passes directly.
Reasoning for adverse possession
create incentives to use land productively. Either the adverse possessor will use land productively or original owner will find trespasser by using it productively
Can clarify title of land. This can encourage future exchanges
Expectation. Adverse possessor expects to keep land
Allocates risk. There need not be complete and exhaustive title examinations of every exchange of property
Adverse Possessor may be using the property and has personhood attached to it, whereas actual owner obviously doesn’t use
To avoid: all owner must do is check from time to time.
Also, whoever values the land more will simply buy it from the other, regardless of who the court gives it to. But then problem runs with efficiency of transactions.
Estates
Intro
Can divide up ownership rights over time
Alienability is a good right
However, from an initial transfer right, there is an advantage to allowing transferor to use own terms to encourage the transfer of land
There are no new estates in land. However, through contracts and such, one can acquire land to make part of an estate
Fee Simple
Fee Simple absolute (O to A)
Runs forever
Fully alienable
Any attempt to put a restraint on alienation is void
Defeasible Fees
***Fee Simple Determinable
Possibility of reverter. Future interest is held by grantor
Transfers automatically back to grantor upon condition
Fee Simple Subject to condition subsequent
Future interest in form of right of entry by grantor
Grantor must exercise right of reentry upon condition
Fee Simple Subject to executory limitation
Future interest held by a 3rd party
Automatically give to 3rd upon condition
No estate that gives right of entry to 3rd party
Can combine interests by acquiring both future interest and present interest, creating a fee simple.
Life Estates
Estate in land someone has as long as they are alive
Followed by a reversion (to the grantor) or Remainder (to 3rd party)
Can impose restrictions on alienability of life estate.
Remainders
Vested remainder: belongs to an ascertainable person with no conditions (O to A for life, then to B)
Vested remainder subject to open: Exists when the remainder is a class that can increase (O to A for life, then to B’s children)
Vested remainder subject to divestment: remainderman could be divested upon the happening of an event (O to A for life, then to B, but if B drops out of law school, to C)
Contigent Remaninder-unascertained person takes person takes possession (O to A for life, then to B if she graduated from law school)
Waste-life tenant cannot waste
Voluntary waste: affirmative action that causes harm
Permissive waste-inaction
Tenant has duty to repair
Tenant has duty to pay taxes on property
If tenant does not pay taxes, then remainderman may lose property
Ameliorative waste: makes the property more valuable
Courts have found a relatively worthless property can be changed by life tenant
Co-tenancy
Intro
Time: all interests must be vested at same time
Title: must be on same deed
Interest: must all take the same kind
Possession: all must have identical rights of possession
Tenancy in common
Each tenant has a separate but undivided interest in the property
Each has a right to possess entire property
Ownership can have different fractions of ownership
Co-tenants may contract a different use of land (A for summer, B for winter)
Can sell, and is transferable by will
Joint tenancy
Right of survivorship-not transferable by will
Each has right to possess property in its entirety
Not inheritable between joint tenants
Can contract around interests
Transfer to another extinguishes his right of survivorship (creates a tenant in common)
O to A,B,C. A to D. B dies. A=1/3, C=2/3
Pros of joint tenancy
Avoids probate
Ouster
If A takes steps to keep B off of premises, then A is liable to pay B for rent
Destruction of joint tenancy
Partition
Partition in kind: physical partition of land
Partition in sale: selling of land and giving fractional interest of the sale to each party
Severance
One of four unities disturbed
Duties of cotenants
Possession: each must have right to possess all of property
Accounting: Profits need not be shared, but leases must be paid for
Contribution: Each must pay for necessary repairs, and taxes
Leaseholds
Intro
4 leasehold interests
Term of years
Any lease for a specific period of time
No notice required, lease simply ends at lapse of lease
If tenant stays past date, landlord can sue for trespass
Periodic Tenancy
Period lasts for fixed duration, and will continue until landlord or tenant gives notice of termination
Common law: Must give 6 months notice for anything longer than a year
Common law: Anything short of a year requires the notice to be as long as the period, but not longer than a year
Many statutes: can cancel with 1 month of notice
Tenancy at will
No fixed period
Tenancy lasts as long as both parties desire
Terminable by both parties
Waste by tenant can cancel tenancy
When tenant or landlord dies, or one transfers interest, lease ends
Tenancy at sufferance
Holdovers
Tenant wrongfully maintain possession of premises after lease is up
Remedies: issue a trespass order, and eject tenant
Alternative: find new tenancy. Generally, terms of old lease apply, with maximum extension of one year.
Subleases and assignment
Privity of estate: between landlord and present tenant
Privity of contract: agreement between landlord and initial tenant (or assignee that expressly takes the obligations)
Assignment-tenant transfers entire interest for entire term to 3rd party
Assignee and landlord in privity of estate
Tenant and landlord in privity of contract
To get out of privity of contract, tenant must expressly be released
Sublease-transfer of lesser interest to 3rd party
T1 has some right of re-entry
No privity of estate or contract between sublessee and landlord
L can sue T1, but T1 can sue T2
Landlord can reasonably withhold right to sublease or assign
Landlord that accepts rent of assignee accepts assignment
Tenant who defaults
Common law rule: landlord can use self-help to retake premises
Even with quick court action, could still be a while to let judicial system workthis could lead to more misuse of premises
transaction costs of going through courts
Can also lead to violence
Residential v. Commercial
More restrictions on self-help for residential (More emotional attachment to home, Radin view)
Vacation of premises
Landlord must attempt to mitigate damages-find another tenant
Can, however, lease for less, and then sue for damages
Argument: mitigation good for society using property well. Also, landlord is no worse off.
If mitigation required, landlord will simply raise rents, have more background checks, etc.
Anticipatory breach: sue for termination and future rent
Could have contractual remedy (fixed breach costs)
Duties of landlord
Implied covenant of quiet enjoyment
Total eviction of tenant (Tenant physically removed, but L still wants rent)
Partial eviction (landlord keeps part of leased property). T can stay on the rest of the land w/o paying rent
Constructive eviction: landlord who fails to provide a service that makes leased property uninhabitable. You can leave, and be excused from rent
Landlord must be responsible for condition
Substantial interference with quiet enjoyment
Must abandon premises within a reasonable time
This evidences that eviction occurred
Idiosyncratic tenant
Generally must be a reasonable person’s needs
Implied warranty of habitability
Cannot contract around it
Found if premises are uninhabitable by a reasonable person
Remedies
Terminate lease, abandon premises
Can take to court for abatement of rent, and recoup back rent
May stay and withhold rent until conditions fixed
Why do we have this?
Tenants have lower bargaining power than landlords
Negative externalities hurt surrounding property
Duties of tenant
Tenant cannot commit waste
If tenant covenants to repair, tenant is liable for every repair
Exception: ordinary wear and tear
Rent control
Price ceiling of rent
Fewer services
Fewer landlords in general (move towards ownership)
Higher safety deposits
Rich people, the ones that we are not trying to help, benefit
Radin: people attach personhood to their community, and home
Nuisance
Intro
Nuisance: you use of the land interferes with another’s use of land
Generally come up from negative externalites
Must be substantial to be classified as nuisance
Extent and character of nuisance (Loud music at 3pm v. 3am)
Extent and character of the harm (eg oil refinery keeping from growing flowers vs. oil refinery making people sick).
The social value of the plaintiff’s use of the land
Suitability of the parties use of their land in a particular setting (eg pig farm in rural area v pig farm in downtown)
What is the burden on the plaintiff to stop the harm (eg shutting window v no possible remedy)
what is the burden on the defendant to solve the problem?
Who was there first?
is the social value of the defendants conduct?
Nuisance determines rights (eg right to pollute vs. right to clean air)
Coming to the nuisance
Moving into the nuisance should assume risk
First in time principles
If you came to the nuisance, probably paid a lower price
Considerations
Is it coming to the nuisance by moving next to a factory?
What if the factory expands?
What if diligence would have found this information?
Remedy
Injunction
Mandatory end of nuisance
Post injunction bargaining: Δ could buy out Π.
Still have traditional bilateral monopoly problems
Spite
Holdout
Personal Value
Damages
Could steal lead to end of nuisance, by costing too much to continue
Rights, liability rule, and property rule
Right to clean air with property ruleactivity must be abated by injunction
Right to clean air with liability ruleΔ must pay damages to continue pollution
Right to pollute w/ property ruleLet factory owner continue with no relief
Right to pollute w/ liability ruleAbate the activity if factory given damages
Servitudes
Intro
Real covenants: covenants enforceable by law
Equitable servitudes: covenants enforceable at equity
Dominant tenement-land that is being benefited by the easement
Servient tenement-land that is being burdened by the easement
License: revocable (by permission)
Easements
Right to possess land simultaneously
Relationships in land, not just contract
Common use: transportation to another portion of land
Term of years
Defeasible happening a certain event
Easement appurtanent: easement directly benefits a specific piece of land
Easement in gross: no specific benefited land (benefit person, not land)
Creation of easement
Express grant to another
Estoppel: reasonable expectations (building of house, should have had notice)
By implication (prior existing use)
1st situation: previous use by a common owner. (Sells part of land to another, but he can still use the land for himself to get to his land.)
Previous use continuous.
Previous use must have been open and obvious.
Reasonably necessary.
By prescription
Use must be adverse (a trespass).
Must be continuous and uninterrupted for statutory period. (Can be seasonal if for the same purposes)
Use must be visible and notorious or with owner’s knowledge.
Use must be without the owner’s permission
To prevent easement by prescription: give permission, block the pathway.
By necessity
Unity of ownership between servient and dominant tracts
Necessity-use is strictly necessary (not just useful or convenient)
Necessity had to exist at the time of the severance of the parcels
Termination
Unity of ownership
By abandonment (mere non-use not enough).