PROPERTY Second Semester

PROPERTY – Second Semester

Conveyancing I. LAND SALE CONTRACTS a. General terms: i. Escrow – delivery of deed to a third person to hold until purchase price paid ii. Closing – exchange of purchase price and deed 1. The parties may or may not need to be present 2. Marks the moment of change in possession iii. Specific performance – as prop is all different, an aggrieved party must request this, not damages; Court uses equity powers to compel a party to go through with the deal iv. Time of Performance – Unless the K specifies that ‘time is of the essence,’ a K not performed on the date called for in agreement allows for a ‘reasonable time’ for parties to complete performance b. Statute of Frauds i. A land K MUST be in writing and signed by the party to be charged 1. Need not be a formal K; a memorandum or compilation of several docs that when taken together evidence an agreement affecting prop suffices 2. Writing must contain all “essential terms” of the K a. Description of the property b. Identification of the parties c. The price and manner payment (if agreed upon) i. K for sale at “fair market value” is enforceable d. Other terms and conditions pertinent to the trans (e.g., manner of payment) 3. Incidental matters (prop. taxes, title ins.) can be determined by custom – need not in the writing nor been agreed upon 4. Many states allow oral modification or revocation of K (Statute applies only to forming of K) ii. EXCEPTIONS to Statute of Frauds 1. Part Performance a. An oral agreement in which one party begins to carry out the terms of the agreement i. The performance must be something contemplated and expressly provided for in the oral K b. Some courts apply an Evidentiary Theory: i. If the acts done by a party can be explained only by reference to an agreement, these acts unequivocally establish the existence of an oral K c. Mere preparation to perform does not amount to part performance (NOTE: but could be reliance for estoppel) d. Jx split on what acts could constitute part performance i. Acts could include the following (many jx require at least two): 1. Possession of the land by the purchaser 2. Making of substantial improvements 3. Payment of all or part of the purchase price by the purchaser e. Does not matter who performs – a seller can claim part performance based on a buyer’s acts 2. Estoppel a. Acts done in reliance on the oral K which would result in hardship to such an extent that it would be fraud if the K not enforced i. i.e., the other party is estopped from using Statute of Frauds as a defense

1 b. May also apply where unjust enrichment would result through reliance on the Statute c. The plaintiff must be the one whose actions would result in the hardship d. Hickey v Green: Oral agreement for sale of home, with no expectation by either party for a writing, where π sold her home in reliance on K i. Δ admits to the existence of the K, and knew πs were selling their home ii. π must actually sell her current home to enact specific performance iii. The estoppel rule is set out in R.2d Contracts § 129 iv. NOTE: There was a deposit check – had it been deposited, it would have been a signed writing, although perhaps unenforceable unless included the “essential terms” of the K e. Walker v Ireton: NOT estoppel because the seller could not foresee the sale of the other property; Does not warrant specific performance c. Doctrine of Equitable Conversion i. Once the K is signed and both parties are entitled to specific performance, equity regards the purchaser as the owner of the prop 1. The legal title remaining in the seller is said to be held in trust for the buyer until payment is made ii. NOTE: Possession follows legal title  seller entitled to possession of land until the closing iii. Risk of Loss if prop destroyed 1. Majority rule: before closing, risk of loss is on the buyer (as legal owner of the prop) a. Must pay K price despite the loss, unless K provides otherwise 2. Minority Rule: Enactment of Uniform Vendor and Purchaser Risk Act, which places the risk on the seller unless the buyer has legal title or possession at the time of loss d. Marketable Title i. An implied warranty in every land sale K  at closing, the seller will provide buyer with a title that is “marketable” ii. NOTE: “Marketable” and “merchantable” title are synonymous iii. Marketable – title reasonably free from doubt 1. Need not be “perfect title,” but must be free from questions that might present unreasonable risk of litigation 2. Generally  unencumbered fee simple with good record title a. NOTE: “good record title” is different, and less frequently asked for in Ks – must furnish good title based on the docs in chain of title (precluding title by AP) 3. A request for quitclaim deed does not affect the warranty to provide marketable title (unless so provided in K) iv. Could be UNMARKETABLE if: 1. Defects in Chain of Title a. Ex: Significant variation in description of land, defectively executed deed (does not meet recordation requirement), prior grantor lacked capacity to convey prop b. Adverse Possession i. Historically, title acquired by AP is unmarketable ii. Most recent cases say AP title ARE marketable if: 1. possession has been for very lengthy period 2. the risk that record owner will sue appears remote 3. probability of record owner’s success in suit appears minimal iii. Conklin v Davi: Title based on AP is not per se unmarketable 1. A seller who holds AP title may: a. Perfect title (obtain record title from former owner, action to quiet title, etc.)

2 b. Enter into K and convince buyer that marketability is justified by proving: i. the true owners, were they to assert claim, would not succeed; AND ii. there is no real likelihood such a claim will ever be asserted

2. NOTE: Even if the court issues a doc saying the title is marketable, the true owners may still bring suit as the decision is not res judicata as to their claim (were not parties to proceeding) c. Future interest held by unborn or unascertainable parties i. Generally impossible for the present and future interests to transfer a marketable title together – as the other parties are yet unborn, etc. 2. Encumbrances a. Mortgages and liens i. Seller has right to satisfy these at closing using the purchase price b. Easements i. One reducing the value of the prop makes title unmarketable 1. Some courts say buyer accepts them if notorious or known to buyer when entered into K 2. Ex: Rights of way benefiting neighbors ii. Beneficial easements that were latent or known to buyer does not constitute an encumbrance 1. Ex: utility easement to service property c. Restrictive Covenants i. Lohmeyer v Bower: There were private restrictions on the land, and the home on the lot was in violation of these restrictions, as well as zoning restrictions 1. The mere existence of a private restriction is an encumbrance, and renders the title unmarketable (whether or not there is a violation) 2. The restriction must be substantial, otherwise it does not diminish the value of the land, and buyer has no grounds to rescind 3. In this case, the violations could have subjected buyer to litigation – therefore could not be marketable. d. Encroachments i. Will not be unmarketable if: 1. very slight, not inconvenience 2. owner encroached upon says will not sue 3. has existed for so long (many decades) has become legal by AP 3. Zoning restrictions a. An existing violation of ordinance for which the gov’t can demand correction renders title unmarketable b. Generally, the restrictions alone do not affect marketability of title 4. NOTE: Any of these may be waived in the K for sale v. REMEDY 1. Buyer must notify the seller and give a reasonable time to cure defects 2. If not cured, buyer may rescind K, sue for damages, get specific performance 3. If the buyer finds out unmarketable before closing, the buyer does not have to pay; after closing, the buyer still must pay K price (the K is said to merge w/ the deed)

3 e. Seller’s Liability i. Implied Warranty of Workmanlike Quality – New Construction 1. On the ground buyer has no reasonable opp. to inspect, the warranty applies new home construction 2. A few courts have extended and allowed subsequent owners to recover from original owner a. Lempke v Dagenais: Privity of K not necessary when a latent defect manifests itself after a reasonable time after purchase AND causes econ. loss i. Plaintiff has the burden to show the defect results from builder’s workmanship; Builder has defenses – wear and tear, not attributable to builder, previous owners made substantial changes ii. Sale of Existing Land and Buildings 1. Active concealment a. Seller could be liable even w/out saying anything if seller took steps to conceal a defect 2. Misrepresentation (Misfeasance) a. Requires: i. the seller make a false statement concerning a material fact ii. the seller know the rep. is false iii. the seller intend the buyer to rely on the rep., AND iv. the buyer be injured by its reliance on rep. 1. Johnson v Davis – where seller affirmatively represented a leaky roof was fine b. NOTE: If there is no misrepresentation, caveat emptor applies – the buyer has the responsibility of discovering defects through inspection (except those that are undiscoverable – latent) 3. Duty to Disclose (Nonfeasance) a. Seller held liable if defects not disclosed if: i. Seller knows or has reason to know of defect; ii. Defect is latent, and seller knows the buyer is unlikely to discover it; AND iii. Defect is serious, and would probably cause buyer to reconsider purchase (“material defect”) b. Stambovsky v Ackley: Haunted house sold w/ “as-is” clause in K i. If the seller knows what the defect is, but it is not easily ascertainable by the buyer, and buyer does not know of defect, not enforceable 1. Conversely, a patent defect (dilapidated roof) would be enforceable ii. The reputation of the house goes to the very essence of the bargain between the parties, greatly effecting value of prop and ability for resale iii. The as-is (or “merger”) clause is not sufficient to overcome the seller’s liability for fraud, concealment, or failure to disclose 1. NOTE: Conversely, a specific disclaimer is likely to be upheld c. AIDS statute (California) – Does not create duty to disclose; only says there is no C/A for failure to disclose II. DEEDS a. Formal Requirements: i. Statute of Frauds – a deed must be in writing, signed by grantor ii. Description of Land and Parties 1. Must be unambiguous a. Typically, extrinsic evidence is allowed to clear up any ambiguity b. Can be described by metes and bounds, recorded plat, name of prop, street address

4 2. People may be identified by name, or description (e.g., “to my eldest son”) 3. If delivered w/out grantee name, the person taking the delivery is presumed to have the authority to fill in a name – and if done, the deed is valid 4. If land description is left blank, the deed is void unless the grantee is expressly given authority to fill in the description, and did so. 5. Grantee must be living – i.e., delivery to someone already dead is not valid iii. Words of intent – intent to transfer realty, w/out having to use such words. 1. In most jx, the word “grant” is sufficient iv. Consideration not required – property may be given away v. Seal is unnecessary vi. Must be signed by grantor 1. In case of corp., usually valid w/ sigs. of two officers and affixation of corp. seal vii. Should be notarized to comply w/ recording acts b. Types of Deeds Warranting Title i. General Warranty Deed – expressly contains the “usual covenants,” described below ii. Special Warranty Deed (or Grant Deed) – contains “usual covenants,” only warrants defects in title arising during the time the grantor held the land (i.e., only Covenant of Seisin and Covenant Against Encumbrances) iii. Quitclaim Deed – Does not warrant anything; only transfers interest grantor  grantee c. The Usual Covenants i. Present Covenants a. Breached, if at all, at time of conveyance. Statute of limitations begins to run as of the date of the conveyance. 2. Covenant of Seisin – seller covenants he owns the property conveyed 3. Covenant of Right to Convey – e.g., would be breached if prop. held in an irrevocable trust that gave only a trustee, not the seller, the right to convey 4. Covenant Against Encumbrances – seller covenants there are no easements, covenants, mortgages, or liens on the prop – “except as enumerated herein” a. If apparent, permanent or irremediable, then excluded from covenant against encumbrances  BUT if diminishes value of prop, is a breach regardless of whether it is patent. i. Frimberger v Anzellotti: A latent violation of zoning ordinance that could not be found by title search (b/c there had been no official action to compel compliance) or physical examination, AND that are unknown to the seller, is not a breach of this present covenant. ii. Future Covenants a. May be breached at time of conveyance, or anytime thereafter; Statute of limitations does not run until there is an actual breach i. There must be interference of possession by a third party 1. Most courts hold any disturbance of possession suffices to constitute a breach (only a portion of possession interfered with, having to pay a third party to retain possession, etc) b. They run with the land to successive grantees c. There must be notice to the grantor before holing him liable 2. Covenant of Quiet Enjoyment – buyer will not be disturbed in possession of prop by a lawful claim by a third party a. Only guarantees that the peaceable possession of the land will not be taken from the seller, not that there is no one with paramount title. i. Brown v Lober: Land sold did not convey entire mineral interests – ¾ remained in a third party; statute of limitations ran on present covenants – so, π attempted to sue for breach of the future Covenant of Quiet Enjoyment;

5 no one undertook removal of the minerals, so the mineral estate remained vacant 1. Should not be interpreted to take place of another covenant – seisin 2. NOTE: If π won, would only get damages, not mineral interests 3. Covenant of Warranty – title to the prop is good and that, as grantor, seller will defend at his own cost ant suit from a party claiming paramount title 4. Covenant of Further Assurances – The ‘unusual covenant.’ Rare in America. Seller promises to perform whatever acts are necessary to perfect buyer’s title d. BREACH OF COVENANTS i. Look at: 1)whether a sophisticated buyer; 2) whether the defect is realized before or after closing; and 3)whether there was the ability for the buyer to find out the defect (latency) e. Damages and Remote Grantees i. Breach of the covenant of seisin does not run with the land if there was no good title to begin with (no title upon which to attach the covenant), but the DEED created a warranty under K law, and such chose in action was assigned to third parties as the deed was transferred. 1. Rule not true in all of US. NOTE: Majority (“American Rule”) – no transferability of chose in action; Minority (“English Rule”) – transfer allowed 2. Rockafeller v Gray: A  B  C; A never had good title. C is able to sue A or B for breach of the covenant of seisin. B has no C/A b/c not currently in possession of land. a. Damages are limited to the amount paid by the original grantee to the original grantor, not the mount paid by C to B. i. NOTE: If C sued B and recovered, B regains his chose in action, and may sue A for recovery of the amount paid to C. ii. NOTE: If C did not win in a suit against B, C retains the chose in action f. DELIVERY i. A deed MUST be delivered by the grantor (e.g., cannot sign and leave on desk) 1. Some jx relax the manual delivery requirement where it is clear the grantor meant for the grantee to receive the prop ii. The effective date of a deed is the date when it is delivered – which can be evidenced by the date it is signed, but one cannot depend on that necessarily iii. Two requirements: 1. Must manifest intent to make the deed effective, by words or conduct; AND 2. Grantor must immediately give the prop to grantee. iv. Extrinsic evidence is admissible to prove delivery or nondelivery 1. Parol Evidence a. Admissible to prove grantor’s intent (majority rule admits stmts made by grantor before or after alleged delivery) b. NOT admissible to show delivery to grantee was conditional, when the deed is unconditional on its face c. Admissible to show that no delivery was intended v. Delivery may not be cancelled – interest in prop already transferred to grantee vi. Where there is a subsequent good faith purchaser, the grantor may be estopped from denying delivery 1. But absent estoppel, a subsequent bona fide purchaser (BFP) is not protected if there was ineffective delivery and the BFP’s grantor did not have the power to convey

6 vii. Types of delivery: 1. Grantor-grantee delivery a. Presumptions: i. If grantor has deed  no delivery ii. If a deed is recorded  delivery iii. If grantee has deed  delivery 1. Physical possession alone is not sufficient proof – must also be intent to pass title b. Presumed to have taken place on the date of grantor’s signature 2. Delivery subject to a condition a. e.g., “This deed to take effect only upon my death” b. Valid i. generally, future interest expressed in the deed ii. condition that the grantee survive the grantor iii. conditions that reserve in grantor the power to revoke the deed prior to legal passage to grantee, so long as there is no actual revocation (modern trend) 1. Opposite view: Rosengrant v Rosengrant – Delivery to a third-party, while remaining in physical possession of the prop and without having the intent to relinquish right to retake is a symbolic delivery, and void. Does not carry “all the force and consequence of absolute, outright ownership at the time of delivery.” a. The grantor must intent to divest himself of the interest conveyed c. Not valid i. oral conditions attached to a deed valid on its face d. Conditional Delivery: Delivery to the grantee cannot be conditional – it vests absolute title in the grantee. (Sweeney, Administratrix v Sweeney) i. Conditional delivery must be made through the agency of a third party, who then delivers deed to grantee upon occurrence of the condition ii. There must be a present intent of delivery – delivering to grantee, without passing title, is not present intent of delivery III. THE RECORDING SYSTEM a. Purpose: To give notice to the public as to who has what interest in the prop (Constructive notice to everyone) i. As opposed to actual notice, which would be seeing or hearing of the relationship to land b. Filed with the County Recorder in one of two ways: i. Grantor-grantee Index 1. Chronologically and alphabetically, in two books – one for grantors and one for grantees a. The process is laborious, and traces grantors and grantees until the prop was initially conveyed ii. Tract Index 1. Docs filed chronologically by tract, block, and lot number c. Requirements: i. The document recorded must be an instrument affecting title to prop 1. ii. Grantor’s signature must be notarized d. Recording Acts i. Three major types: 1. Notice

7 a. A subsequent BFP would prevail over a prior grantee if the grantee failed to record and the BFP has no actual or constructive (including record and inquiry) notice i. i.e., if the BFP knows of a previous unrecorded deed, cannot prevail ii. The subsequent BFP is protected regardless of whether she herself records 1. NOTE: If BFP does not record, she runs the risk of a subsequent BFP prevailing over her 2. Race-Notice a. A subsequent BFP is protected only if she records before the prior grantee and did not have actual or constructive (record and inquiry) notice b. CALIFORNIA HAS A RACE-NOTICE STATUTE – it reads says “…whose conveyance is first duly recorded…unless the conveyance shall have been duly recorded prior to the record of notice of the action.” 3. Race a. Whoever records first wins; Actual notice is irrelevant b. Very few states have this ii. To be a BFP (and hence receive protection under Notice and Race-Notice statutes): 1. Is a purchaser a. donees, heirs, and devisees are NOT protected, although, depending on the provisions of the statute, mortgagees and judgment creditors MAY be protected b. Under the “shelter rule”, a person who takes from a BFP protected by the recording act has the same rights as the grantor 2. Takes the prop without notice a. Two types of notice: i. Actual: knowledge obtained from any source of the existence of a previous deed (e.g., newspaper, word of mouth) ii. Constructive: a previous deed is recorded and in the chain of title 1. Includes Inquiry notice: something is referenced in a deed or by looking at property that would require an inquiry by grantee a. A subsequent purchaser is charged with knowledge of whatever an inspection of the prop would have disclosed AND anything that would have been disclosed by inquiring of the possessor i. e.g., physical inspection of prop may give notice of an adverse interest ii. e.g., Tire tracks over land to an adjacent parcel may give notice of an easement iii. e.g., When a person is in actual possession of a condo (in open, visible and exclusive possession), should give notice of occupant’s interest in prop Waldorff Ins. v Eglin National Bank b. When a deed references an unrecorded transaction, the grantee is bound to make inquiry to discover the nature and charac of doc i. Harper v Paradise – deed referenced a previous deed, so grantees should have inquired about the provisions of the previous deed. c. When a grantee’s deed indicates the plan for which his lot is a part of, without mentioning land restrictions, jx are split on inquiry notice issue i. Some say he is required to inquire into restrictions in the other deeds in that plan from a common grantor and is held by those restrictions. Guilette v Daly Dry Wall

8 ii. Some think it is a better view not to require this inquiry b/c it would be labor intensive, and the other deeds are not in the chain of title iii. NOTE: Some jx find that restrictions on subsequent lots do not apply to previous unrestricted lots in the same plan b. A “Mother Hubbard clause” (where the conveyance describes prop as “all of the grantor’s prop in a certain county”) does not sufficiently describe the land in the doc, and is not sufficient to give constructive notice to purchaser – Luthi v Evans i. Doesn’t matter whether the parties knew about the clause or not ii. BUT, if regarding a claim involving original grantor, the grantor cannot claim vagueness of the clause (created it himself) c. Improperly indexed deeds: i. Majority rule: Will not prevent constructive notice ii. California: DOES prevent constructive notice (rejects majority view) 3. Pays valuable consideration a. If requirements are not, the common law standard of “first in time” applies iii. The deed must be in the Chain of Title 1. “chain of title” is the title est. by the grantor’s predecessors up to the time of the conveyance to grantee. 2. The term “duly recorded” means the deed is within the chain of title 3. Prior unrecorded deeds in chain a. The recording statutes do not give priority to a prior recorded deed that shows no conveyance from a record owner i. i.e., if a prior deed is unrecorded, and the subsequent recorded deed appear to be a record of a deed from an apparent stranger to the title (no record of transfer from original grantor to grantor of the recorded deed), then a BFP is not put on notice. 4. Grantor does not have title at time of conveyance a. JX split as to whether this conveyance, if recorded, is in the chain of title b. The doctrine of estoppel by deed could apply i. Requires that when O conveys land to A before obtaining title, and later receives and records, O may not retain the land himself or convey it to someone else  O is estopped from denying the validity of A’s deed b/c he created it (even though he had no deed to trf at the time) c. Issue of Constructive notice i. Majority view: Subsequent purchaser O  B would first see the most recent deed to O, and would not be required to search further back in time to find the grant O  A b/c it is deemed not in the chain of title. B would prevail. ii. Minority view: The deed would transfer automatically to A upon O’s receiving a valid deed, and A would prevail over B. iv. Marketable Title Acts have been passed to prevent assertion of stale claims (assertions that title MANY years back was defective) e. Title Insurance i. Does not run with the land and must be purchased by each subsequent purchaser ii. The policy usually covers: 1. Ineffective title (seller did not own) 2. Defect / lien / encumbrance on title 3. Lack of right of access 4. Unmarketability of title iii. The duty of the title searcher depends upon the agreement between the parties (contractual relationship), and liability is limited to the policy provisions.

9 1. e.g., where a deed does not recite the amount of acreage conveyed, the policy does not warrant the correct acreage was conveyed. a. By doing a search of relevant public records, the ins. comp. could not ascertain that which an accurate survey would disclose. Walker Rogge v Chelsea Title. iv. When evaluating marketability, the ins. comp. need not assess a land’s value 1. Someone can hold perfect title to valueless land; One can have marketable title to land that is not marketable. 2. e.g., where land has hazardous substances that effect its value, but there is no lien recorded (holding grantor responsible for cleanup costs), it does not affect title. Lick Mill Creek Apts. v Chicago Title Ins Co.

NUISANCE IV. General Information a. Interference with a person’s right to quiet enjoyment of land. i. Different from trespass b/c that requires interference with right to possess land b. Must be interference with land – e.g., particles, gas, noise, vibrations c. There is no recovery when the damage results from the abnormally sensitive nature of π’s land d. “Coming to the Nuisance” – generally the person moving in vicinity of nuisance held to know of it and accept it. i. Exception: Where the area surrounding a lawful business changes, becoming increasingly residential, can be enjoined for nuisance when conduct affects health, comfort, and convenience of a neighborhood. 1. If a person moves to or creates a neighborhood to the foreseeable detriment of a Δ, π may have to pay the reasonable expense of moving or shutting down the business. Spur Industries v Del E Webb Development (cattle feedlot that is breeding ground for flies) V. Public Nuisances a. Adversely affects public as a whole b. Must be against the law c. To recover, a π must show the harm she suffered is different from the harm to the public generally i. There need not be an interest in adversely affected land VI. Private Nuisances a. Two types of private nuisances: i. Nuisances at Law (per se) – not permitted in the neighborhood in question 1. A business lawfully conducted in a particular location can never be negligence per se ii. Nuisances in Fact – due to location or circumstances, is a nuisance b. Three requirements: i. substantial interference w/ π’s use and enjoyment of land by Δ ii. intentional and unreasonable, or unintentional and negligent, actions by Δ 1. Unintentional conduct must be negligent, reckless or ultrahazardous (e.g., blasting w/ dynamite) 2. Intentional conduct if Δ acts w/ the purpose of causing it, or acts knowing or having reason to know it results from his conduct a. Would be liable despite the degree of care exercised to avoid harm b. Requires the conduct be unreasonable (see below) iii. π must be entitled to use and enjoyment of land (in possession – need not be owner)

10 c. Establishing level of harm i. Look at: 1. extent and charac of harm 2. burden to Δ to correct harm 3. social value of land invaded 4. suitability of invaded land to locality VII. Remedies a. Injunction i. In the case of an intentional private nuisance, must first determine whether the conduct is unreasonable by using a utility v harm test 1. Considers injury to Δ and public by granting injunction a. If gravity of harm outweighs utility of conduct, is unreasonable b. Example i. Harm – health concerns, effect on market value of land, use and enjoyment breach (particle, vibrations, etc); VS. ii. Utility – jobs created, type of product, cost of alternative production methods 2. Consider balance of hardships (or balance of the equities) to determine if an injunction should be granted a. The general rule is that where substantial damage is, and nuisance is found, an injunction shall be granted – but courts sometimes do not follow this rule literally when the effect will be great on Δ or public. i. Compares the general loss to the public against the specific (often monetary) loss to the private plaintiff b. e.g., where a cement plant would have to be shut down by an injunction b/c there is no other way in which it may operate, damages more appropriate. Boomer v Atlantic Cement. c. Rule of Necessity i. Is narrowly construed ii. Financial benefit is not sufficient to apply rule. Estancias v Schultz (where Δ argued he could not rent apts w/out air conditioning) ii. In the case of an intentional public nuisance, the weight of the law is difference, but there is still a balancing of the hardships b. Damages

SERVITUDES VIII. General Information a. Non-possessory interests in land – Right to use the land of someone else b. Include: easements, profits, covenants and servitudes i. They are categorized by the way they operate 1. To determine what you are dealing with, look at: a. Function of right created b. Method of creation c. Method of termination IX. Profit a. Right to enter onto land and take something from it (wildlife, timber, etc) X. Easements a. General Information i. Typically created to grant right of way to access across a tract of land ii. In determining whether an easement is formed: 11 1. ambiguities are resolved in favor of grantee 2. subsequent conduct of parties is relevant 3. parties are assumed to intend a scope that would reasonably serve the purposes of the grant iii. Function: 1. Affirmative Easement a. Right to enter upon servient tenement and make an affirmative use of it b. e.g., right of way easement 2. Negative Easement a. Entitles the privilege holder to compel possessor of servient tenement to refrain from engaging activity that he would otherwise be able to do. b. Restricted to the categories recognized at common law: i. (L)ight, (A)ir, (W)ater (flowing through artifical stream), (S)upport 1. In Ca – also includes view c. If representing someone, want to fit into negative easement b/c easier to create and more difficult to destroy than a real covenant (discussed later) iv. Relation to Land: 1. Easement Appurtenant a. There must be two tracts of land involved (one dominant, one servient) b. Negative easements are always appurtenant to a dominant estate c. The dominant tenement must be benefited in use and enjoyment of property – merely making use of the land more profitable is not sufficient d. All who posses or subsequently possess the land are entitled to the benefit of the easement e. The right is connected to the land, and the easement may not be sold separately i. Exception: the easement holder may convey the easement to the owner of the servient tenement in order to terminate the tenement f. If the servient estate is sold, the easement remains unless the subsequent purchaser is a BFP with no notice of easement by: i. actual knowledge ii. notice from visible appearance, OR iii. notice b/c the doc creating the easement is recorded 1. The BFP is required to inspect the land and the record g. Can create easement appurtenant determinable, or subject to condition subsequent (if granting document contains such wording) 2. Easement in Gross a. One which does not benefit a tract of land, but an individual or business i. Passes entirely apart from the trf of land ii. Can be personal (right to swim) or commercial (RR track easements) b. Generally must be express (rare to be by prescription) c. In case of ambiguity – courts favor easements appurtenant i. e.g., where a grant says “for the benefit of the church” (which would be in gross) AND “so long as the property for whose benefit the easement is given…” (which is appurtenant)  court would likely find appurtenant. (Willard v First Church of Christ) d. Only transferable if for commercial purpose e. Is assignable, but the parties must have so intended i. “To heirs and assigns” are the magic words of intent f. Is divisible, but only if the separate holders act jointly (“one stock” rule) i. One party may not give a third party rights to land without the consent of all owners. (Miller v Lutheran Conference & Camp)

12 b. Creation of Easements i. Express 1. Must be in writing that satisfies SOF, and must last in perpetuity 2. To interpret, look at: a. language of grant b. intention of parties c. presume a broad construction of the grant ii. Implied Easements 1. Terminology: a. Implied Reservation – retains easement in favor of grantor i. Some courts may not find an implied easement in this instance b/c is derogating from the fee grant being given to the purchaser ii. Reservation of easement in a third party -- not allowed at common law 1. Majority follows common law rule a. Can still be done indirectly – deed the land first to the holder of the easement, who can then grant a deed to the intended grantor with a reservation 2. Some courts, like in Willard, allow the reservation of an easement to benefit a stranger to the title in order to reflect the intent of the grantor (in that case, the sale of land was actually discounted) b. Implied Grant – easement implied in favor of grantee 2. Implied from Prior Existing Use a. If, prior to the time the tract of land is divided, a use exists that is reasonably necessary for the enjoyment of a part of land, and the parties intended the use to continue after division i. Before the tract is divided, this is called a “quasi easement” b. Must be a common grantor c. MUST exist prior to severance of parcel, and must be apparent and continuous d. Reasonable necessity required – something upon which enjoyment of the parcel depends i. Depends on many things, including the cost and difficulty of an alternative, and whether the price paid reflects expected continuation of use e. Minority: Implied Reservation: Must be strict necessity when retained in the grantor i. Modern trend: not to mechanistically require strict necessity just b/c it is for the benefit of the grantor 3. Implied by Necessity a. When division of a tract deprives one lot of access to a road or utility line, a right-of-way by absolute necessity is created by implied grant or reservation i. **NOTE: If a landlocked parcel is sold, may be an issue of marketability – there would not be marketable title if there is no right of access b. Must be a common grantor c. The necessity MUST arise at the time of severance i. e.g., if there is an accessible road at time of severance that is later unusable – no easement by necessity created d. Strict necessity is required i. Generally, would look to the reasonableness of any alternative access 1. HYPO: Access through park. If not a guaranteed right (could be revocable at any time) and only during the day – likely not reasonable. If only during day, but is a guaranteed right – could be reasonable.

13 ii. Some courts are VERY strict, and a navigable body of water on one side of a parcel terminates necessity 1. Reasoning: Should not rely on the court to satisfy the bargain you didn’t make in purchasing the land e. Public Policy argument: Should be strict necessity b/c otherwise would form a landlocked parcel whose access is dependant on the goodwill of the neighbors f. Placement of Easement i. Owner of the servient tenement has right to place the easement, provided location is reasonably convenient ii. If there is an option between two lots, would choose: 1. Any lot where there already exists an easement by prior existing use 2. If none, then easement would go on lot most convenient g. Easement terminates when necessity ends i. Cannot give rise to a prescriptive easement 1. BUT when necessity ends, any continued use is adverse and may eventually form a prescriptive easement h. Example: The public has the right to use the wet sand on the beach, and if the dry sand is publicly owned, there must be an easement by necessity for public to reach wet sand. Matthews v Bay Head Improvement Assoc. iii. Prescriptive 1. Analogous to acquiring property by adverse possession: a. open and notorious i. underground or non-visible uses (pipes, utility lines) are considered open and notorious if they could be discovered b. adverse and under claim of right i. Cannot have owner’s permission 1. There usually must be an act by owner to interrupt prescriptive use 2. If the owner also uses easement, is permissive ii. Note: If No Trespassing signs are up, but use despite this, better claim for adversity c. continuous and uninterrupted for statutory period i. Not constant use, but a continuous claim of right with periodic acts that put owner on notice d. exclusive i. If owner also using easement, not exclusive (minority approach – this defeats the requisite adversity) ii. Common Driveway Exception: Some jx say exclusivity not required when a common driveway is at issue, and the true owner also uses it. 2. Tacking is permitted, as with AP c. Use outside scope of easement i. When used in a way that exceeds the legal scope of easement, is said to be surcharged ii. Remedy is injunction of excessive use 1. Does not terminate the original easement iii. Brown v Voss: Where dominant estate purchases another plot of land and extends an easement to that property, Court allows it b/c it did not increase traffic on easement and acted reasonably in developing property (servient estate did not act until a large amount of money had been expended) 1. Dissent in this case said this was continuing trespass 2. NOT estoppel, but balance of the hardships – new dominant estate would be left landlocked, with no additional harm to the servient estate

14 d. Terminating Easements i. Can be accomplished in one of several ways: 1. If one owner acquires both the dominant and servient estates, easement is extinguished a. Cannot be revived with subsequent division of parcel 2. Released by written instrument (to satisfy SOF) or oral agreement (accompanied by act done in reliance on oral agreement) 3. Abandoned if easement owner indicates clear intent to abandon, and acts in a way that indicates such intent a. Not terminated by mere long period of nonuse by owner of easement 4. Easement in a structure will terminate when the structure is involuntarily destroyed 5. Easements by necessity terminate when necessity ends XI. Irrevocable License a. Given permission to enter land, and owner never objects. A license is revocable by nature. b. Not subject to SOF c. Becomes irrevocable when there is estoppel (creates easement by estoppel) i. Where one builds a house in reliance on a license to use a roadway, and improved the roadway, without a word from the owner  estopped (Holbrook v Taylor) ii. Must determine whether you are in a jx that accepts estoppel – most do iii. Must look at the intention of the parties 1. i.e., if the reliance was building a house on a lot, and the house burns down, the license terminates. If the reliance was purchasing the lot in the first place, the license remains. d. Personal to the license holder, and may not be assigned e. HYPO: If the home burns down, and start to use land to bring across supplies, but the owner stops you – no more license f. A dominant tenement owner would rather have an easement XII. REAL COVENANTS a. Promises to use or not use land in a specified way b. NOTE: Real covenants v Equitable servitudes – the same, only RC is for damages and ES is for injunction c. General Information: i. Run with the land, although are not interests in land ii. Involves “benefited land” and “burdened land” (not dominant/servient tenements) iii. Must be in writing 1. Can be in a deed, and grantee would be bound even if did not sign doc iv. Both pieces of property must have restrictions to be a real covenant (reciprocal) d. In interpreting a covenant, there are four rules of construction: i. if the language is unclear or ambiguous, the covenant is resolved in favor of free enjoyment ii. restrictions on use or enjoyment will not be read into the covenant by implication iii. the covenant must be interpreted reasonably, AND iv. words must be given their ordinary and intended meaning e. Whether a Burden runs with the land i. Must be the intent of the parties that it bind subsequent purchasers ii. Must be vertical privity 1. This would only NOT be met in the case of adverse possession iii. Must be horizontal privity a. NOTE: As separate neighbors, can NEVER satisfy horizontal privity i. Therefore, once one party sells his lot of land, that land is no longer burdened 1. Note: the other lot, as yet unsold, would still be burdened

15 b. R.3d does not require horizontal privity iv. Must touch and concern the land 1. Effect of the covenant itself is to make the land more useful or valuable to benefited party 2. Must affect legal relationship as landowners v. Must be notice (actual or constructive by BFP of covenant) f. Whether a Benefit can be enforced i. Must be intent to bind subsequent purchasers ii. Must be vertical privity 1. Loose requirement – a renter could likely enforce iii. Must touch and concern iv. Must be notice (not really an issue, b/c satisfied if seeking enforcement) g. Available remedy – Damages h. May be negative or affirmative covenants i. The test for whether a covenant runs with the land is whether it imposes a burden on the land that also increases the value of a different interest in the same land 1. Example: Where there is an affirmative covenant to pay a maintenance fee, this runs with the land b/c it is essential to enjoyment of the property. Neponsit Property Owner’s Assoc. v. Emigrant Industrial Savings Bank. i. TERMINATION of Covenants i. May be terminated by: 1. release in writing 2. merger (one person owning both properties) 3. condemnation of burdened property 4. The covenant no longer fulfills its original purpose a. The fact that land can be of greater value if used for other purposes is not sufficient. Western Land v Trukolaski (where want to build commercial unit, but the residential restriction substantially benefits the residents of the subdivision) i. Requires a community change “so general as to frustrate the original purpose.” 5. Abandonment of property (for one landowner only, not whole restriction) a. Can only occur if the landowner no longer holds perfect title to the land, otherwise must still abide by covenant. Pocono Springs v MacKenzie. 6. Abandonment of covenant a. Must be intent to abandon i. Without intent, could consider waiver 1. If want to show waiver (that land being used for purposes other than the covenants restrictions), must prove the land is currently being used for that deviated purpose. ii. There must be unanimity (one person can serve as a “hold out”) 1. Where a developer created the restrictive covenant, and now wants to build a hospital, but a landowner resists (the change would change the nature of the comm. in which she purchased)  cannot terminate covenant. Rick v West. j. Limiting Covenants i. Could be found in violation of statute 1. Example: Restrictive covenant for single-family residential purposes, with no more than 5 unrelated persons.” Defendants want to use as AIDS home. To enjoin them under the covenant would be in violation of the Fair Housing Act (FHA). FHA creates three distinct claims: a. Discriminatory Intent – must show handicap was somehow basis for covenant

16 b. Disparate Impact – enforcing covenant would actually result in disc., or have a discriminating effect i. Does – this group would be unable to live in a residential community if held under the covenant c. Reasonable Accommodation – involves changing some rule that is generally applicable so as to make its burden less onerous on the handicapped individual, if it does not require: 1) fundamental alteration of the nature of the restriction or 2) imposes undue financial hardship or administrative burdens i. Here, would not have negative effects on community, and should accommodate (by not seeking enforcement of the covenant) Hill v Comm. of Damien of Molokai. d. SO – Δs can stay b/c amounts to discrimination. i. Could also have stayed if complied with covenant, or if the covenant was found as against public policy – policy of encouraging accommodation ii. Could be found in violation of Constitution 1. Example: Restrictive covenants based on race or color are in violation of the Fourteenth Amendment, and denies a defendant equal protection. Shelley v Kraemer. a. NOTE: Is a private restriction, and would not normally be an issue for federal courts – but when a state court enforces the restriction, it constitutes state disc. and can be reviewed by fed. cts. XIII. Equitable Servitudes a. The only difference between this and a real covenant is the remedy sought i. Remedy: Injunction – Equitable Remedy 1. A plaintiff would generally want a servitude over a covenant – often seeking injunction b. Created by a covenant in a writing that satisfies the SOF i. Exception: Negative equitable servitudes can be implied from a common scheme in development of a residential subdivision (implied reciprocal negative servitudes are discussed below) c. Must have: i. Writing (except in implied reciprocal servitudes – discussed below) ii. Touch and Concern iii. Notice 1. In equity, if you know about a restriction, you are held to it iv. Intent to bind subsequent purchasers d. Touch and Concern requirement i. On issues of touch and concern, courts are not predictable ii. Servitudes in Gross – Where benefit is personal and burden attached to land 1. English Rule: Not binding on assigns of burdened land (no longer controlling) 2. American Rule: Permits burden to run with the land iii. The R.3d Property (Servitudes) thought touch and concern is arbitrary – replaced it with different tests for enforceability: 1. Arbitrary, spiteful, and capricious 2. Unreasonably burdens fundamental Const. right 3. Unreasonable restraint on alienation 4. Unreasonable restraint on competition or trade 5. Unconscionable under another section of R.3d a. NOTE: Not good law until a jx adopts it e. Privity i. Horizontal privity not required ii. Vertical privity not required for burden to run (b/c attaches to the land itself)

17 1. The benefit runs to all assignees 2. Could apply also to adverse possessors, although this has not been litigated XIV. Implied Reciprocal Servitudes a. Must determine whether jx applies IRS i. NOTE: Those jx that accept IRS are called Sanborn jurisdictions – Majority approach ii. California does not (must be in deeds to all lots) b. When a developer subdivides land and some deeds contain negative covenants but some do not, negative covenants binding on all parcels may be implied as IRS c. Requirements: i. A common grantor ii. A common scheme for development 1. The common scheme must be made known to the buyer (see notice below) a. In CA – the scheme must be recorded to be binding 2. Any lot sold before the creation of the common scheme is not held to the restrictions therein a. Also cannot sue for violations of restrictions by those landowners within the scheme – unless was an intended third party beneficiary of the restrictions i. Can be an express or implied beneficiary – an implied would have a weaker argument for enforcement of restrictions on other lots ii. Any beneficiary argument would have this counterargument – as a matter of policy, IRS is intended to be reciprocal. If the beneficiary is not equally bound by restrictions, should not allowed to sue for enforcement of restrictions (likely would not prevail) 3. Any land retained by grantor – must determine whether it was part of common scheme a. If it is intended to be a part of the common scheme, is subject to IRS restrictions iii. Must be reciprocal between all lots iv. NOTICE 1. Two types: a. Record Notice: In some jx, through recording act, purchaser must check deeds of all lots from common grantor and receive constructive notice i. In a jx that accepts record notice, a developer can put in one deed “all remaining lots restricted to the same use,” and bind all other lots by putting them on constructive notice b. Inquiry Notice – walk through neighborhood and notice restrictions i. Example: Where a landowner wants to build a gas station, but all other lots are used for residential purposes, he is put on notice of uniform use, even though there are no restrictions in his title. Sanborn v McLean c. NOTE: Actual Notice if know of covenants 2. Check at two times: a. At time land sold (and remainder retained in grantor) b. At time grantor’s retained land is sold d. If a jx is not a Sanborn jx, then look at the express restrictions i. Must be in every deed. ii. The restrictions would benefit the parties in privity only – land sold before the restricted land would not be benefited land, and could not sue to enforce restrictions. 1. Only those lots retained in the grantor following sale of restricted land could sue, even after subsequently sold by grantor

18 XV. Homeowner’s Associations a. General Information i. Members subject themselves to certain restrictions in return for protection that other homeowners also assume the same obligations ii. Condominiums and Cooperatives iii. CCRs – Covenants, Conditions, Restrictions b. To challenge restrictions, one must prove they are unreasonable i. Restrictions that are arbitrary, against public policy, or that impose a burden on use that greatly outweighs any benefit will not be enforced ii. Courts do not look at individual pets, but the restriction as applied across the board iii. Requires a balancing of the equities: benefit to comm. v. burden to landowner iv. Example: A restriction for cats and dogs, but allowing other types of pets, is reasonable b/c rationally related to health, sanitation, and noise concerns. Nahrstedt v Lakeside Village.

ZONING XVI. General Information a. Public restrictions to regulate land b. Enacted where private restrictions are inefficient – b/c they go on for a long time w/out changing c. Only the State has the power to zone i. The right has been extended to cities and counties by “enabling statutes” 1. Requires the local zoning authority to adopt a comprehensive plan, which can be revised occasionally. Zoning must conform to the plan. d. Goal: Orderly development of comm. by promoting economic growth, health, welfare, and safety i. Can regulate density of human population by limiting building heights, yard setbacks, etc. ii. TODAY – zoning ordinances are presumptively valid. e. Segregates land use into geographic regions f. It is a proper exercise of police power to phase out uses that are inconsistent w/ zoning changes i. A use no longer permitted after zoning change is a “nonconforming use” g. Euclidian Zoning i. Districts are graded from highest to lowest, in categories of use, height and area ii. Example: U-6 can include the commercial uses therein, and any of the uses in the tiers below it 1. NOTE: Unless the uses cause a nuisance, then neighbors can bring such an action XVII. Constitutional Considerations a. Restrictions must be for a legitimate governmental objective b. Two lines of Constitutional analysis: i. Source of state power 1. Often police power -- right to regulate society on issues of public health, safety and welfare ii. Constitutional Limitations c. Complete restrictions of all commercial and apartment buildings from a purely residential district is proper for many reasons: i. fire and health protection ii. traffic congestion and street accidents reduced iii. safer, cleaner, and more enjoyable place to live (Village of Euclid v Amber Realty – the case challenged zoning ordinances generally, but found proper) 1. If the provisions of an ordinance are applied to a specific property, it may be arbitrary and unreasonable (Village of Euclid) d. A nonconforming use (was once acceptable before changes in zoning) creates a vested property right that cannot be abrogated or destroyed (unless nuisance, abandonment, or extinguished by eminent domain) 19 i. RULE: If the effect of a zoning law is to deprive an owner of lawful use of property, it amounts to a taking for which must be justly compensated. (PA Northwestern v Zoning Hearing Board) e. Amortization provisions – given period of time in which to bring prop into compliance i. Jx split – some say unconst. on its face, others do not f. Household Composition Ordinances i. Have long been made to prevent boarding houses, frat houses, or overcrowded conditions (preserve the nature of the neighborhood), but can also create Const. issues ii. If restrict unrelated individuals – Constitutional 1. The majority opinion in Village of Belle Terre v Boraas extended the police power, and found a legitimate state interest in maintaining the character of a neighborhood (quiet seclusion, clean air, etc) a. “Police power is not confined to the elimination of filth, stench, and unhealthy places” – can protect an area of sanctuary for people b. In that case, the definition of “family” excluded a group of unrelated students c. The DISSENT says it is imposition on 1st Amend freedom of association and right of privacy (only regulated unrelated people, not comm. as a whole iii. If restrict related individuals – Unconstitutional intrusion into the family 1. California has found a similar ordinance to be unconstitutional (Moore v City of E. Cleveland – where a grandparent could not live with more than one set of grandchildren) a. Distinguished from Belle Terre b/c involves family, not unrelated individuals iv. Courts find the idea of family should be protected – but there is no concrete idea about what “family” is g. **STRICT SCRUTINY – applied if determined there is an invasion of right to privacy i. RULE: If strict scrutiny, then must be: 1. Compelling state interest 2. Well-tailored or narrowly-tailored relationship to state interest a. Would include a discussion of whether there are less restrictive options avail. ii. RULE: If not strict scrutiny: 1. Legitimate state interest 2. Rational relationship to state interest h. The Fair Housing Act (FHA) prohibits discrimination against certain groups (handicap, race, religion, etc) i. Distinguishes between maximum occupancy restrictions (which would restrict to maintain health & safety by preventing overcrowding) and family composition restrictions (which help to create a single-family use) 1. Max. occ. is exempted by the FHA, family comp. is not 2. Where an unlimited number of related individuals and a restricted number of unrelated individuals may live together under the ordinance, it is family composition and not exempted by FHA (City of Edmonds v Oxford House) a. It is both underinclusive and overinclusive b. NOTE: Is a state interest (controlling density), but NOT relational to interest (not actually controlling density, but attempting to define the character of the family)

EMINENT DOMAIN (TAKINGS) XVIII. General Information a. Power of government to take privately owned land for public use. b. Just compensation must be made for the taking under the Fifth Amendment i. “Just compensation” is fair market value of property

20 XIX. PUBLIC USE a. Only extends to public use or public purpose i. Found in Public Use Clause of the Fifth Amendment b. Two competing definitions of public use: i. Broad (for public purpose) ii. Narrow (for public use) c. “Public use” depends on what the legislature declares to be the public interest i. The fact that it is taken to be transferred to private parties can be allowable if done for a public purpose. 1. Example: Large amounts of land taken from a small number of landowners and sold to individual lessees b/c there was interference w/ the normal functioning of residential land market. Hawaii Housing Authority v Midkiff(1984, USSC) 2. Conversely: An unused naval base is taken and divided among private parties to create jobs and encourage investment is for a private purpose and NOT allowable. Kelo v City of New London. – currently before USSC ii. Taking private land to develop commercial business is NOT allowable. County of Wayne v Hathcock. 1. NOTE: This rule is a state analysis. Whether it would be allowable under the US Const. is an issue for the USSC, and now being considered in Kelo d. There must be one of three characteristics to be public use (set forth in County of Wayne): i. Public necessity of the extreme sort otherwise impracticable 1. i.e., the very existence depends on the use of the land that can be attained only by coordination of the central government ii. Remains in public control iii. Land selected for condemnation chosen based on public concern (e.g., slums) 1. This is the rule only if accepted by the courts of the jx XX. CATEGORICAL RULES a. If there is a physical occupation, is always a taking (no balancing of governmental interest) b. If the ordinance is designed to control nuisance-like activity, it is never a taking i. Does not need to be nuisance per se – if it affects health, safety and welfare, it is within the police power (Hadacheck v Sebastian – where stopping brick kiln on land caused a significant diminution of land value b/c it was fit only for that purpose, but the use negatively affected the other landholders) 1. Private interests must yield to progress 2. Limitation: must not be arbitrary or w/ unjust discrimination c. Total regulatory taking must always be compensated. Lucas v Carolina Coastal Council i. Where 100% of the value of the land is taken, is always a taking ii. Unsure what portion of land would prompt this rule -- whether 100% taking of a small portion of land would be a compensable act of eminent domain, or if it is merely a diminution in value that would require a balancing test iii. This only applies to new statutes in certain circumstances – new regulations that do not effect the old law do not constitute a taking XXI. TYPES OF TAKINGS a. Physical Invasion i. If substantial enough, it must pay just compensation 1. e.g., vibrations, odors, noise, etc b. Permanent Physical Occupation i. Degree of interference and impact considerations are significant considerations 1. BUT constitutional protection in this instance does not depend on the size of the area permanently occupied

21 a. Example: Regulation that requires a LL to allow the cable company to install a cable box and wires on its building, where the cable company determines placement, is a permanent physical occupation. Loretto v Teleprompter Manhattan. i. The LL cannot legally deny, so arguably violates the right to exclude ii. NOTE: If the ordinance said LL must provide cable if requested by a tenant, and LL could arrange for installation himself, would be a regulatory taking(discussed below) and would not be violative per se. b. Conversely: Owner of mobile home park, who is forced by ordinance to allow renters to sell their mobile homes while also fixing the land rent payment, does not have an involuntary taking  can change the nature of the land, stop running a mobile home park, and not be subjected to the provisions of the ordinance. Yee v City of Escondido. c. Regulatory Takings i. Questions arise when some, but not all, of the value of land is lost as a result of regulations ii. Some courts look at the purpose of the regulation 1. If the goal and effect of the regulation is protection of the public from harm, it is a valid exercise of police power iii. Other courts look at whether the land’s value is negatively affected 1. The land must have practically no economic value left to it; Sometimes even severe loss is not enough to constitute a taking d. Historical Landmarks i. The case of Penn Central v City of New York 1. Balancing Test – Extent of Interference v. Importance of Government Action: a. The nature and extent of impact on prop owner i. Court found that all interest in the land was not taken because they still retained the right to rebuild (Transfer Development Rights (TDRs) – can trf to other land owned) – mitigates impact 1. Look at Penn Central as a whole (not just Penn Station property) – can still build on other of its properties ii. Still can get an adequate return on their investment (no change to existing structure iii. “Reciprocity of Advantage” – benefited as well as burdened by the ordinance (increased tourism dollars) b. The character of the governmental action i. Legitimate government interest (preserving landmarks, promoting tourism, etc) e. Total Restriction of Use of Land i. The police power is limited by due process 1. Gov’t should not have to pay for every diminution of property value caused by its laws, b/c then it could not act 2. Look at the extent of the diminution to determine the limits a. At a certain magnitude, there must be exercise of eminent domain & compensation i. i.e., whether compensation is required is a question of degree b. When damage is not common or public, and there is no public nuisance, a law does not disclose a public interest sufficient to warrant an extensive destruction of a landowner’s property rights (which are constitutionally protected) i. A strong public desire to improve the pubic condition is not enough to warrant achieving the goal through a shorter route – bypassing the Const. requirement of compensation.

22 ii. Example: Where a statute gives someone a right to mine coal, but only so much as doesn’t cause subsidence of human dwellings – Δ mines coal, causes such subsidence to π’s home, but the deed transfers right of subsidence to Δ. Court finds the gov’t cannot regulate use of private property to prevent an owner from using the property. There was not enough of a public interest – and Δ has a constitutionally-protected right to mine coal. Penn Coal Co v Mahon. 1. πs bargained for only surface rights, and the fact the risk they assumed has become a danger does not warrant giving them greater rights than they bought 2. Balancing Test: a. State v Coal Company (constitutionality of statute) b. Importance of public interest v Extent of burden on mining coal i. NOTE: The right of subsidence is an estate in land (property right), which is severable and transferable 3. Dissent disagrees – says was controlling a nuisance, and that is never a taking f. Total Extinguishing of Property Value i. Regulations that deny the property owner all economically viable use of the land requires compensation without inquiry into the public interest advanced in support of the restraint 1. Is one of the discrete categories of regulatory deprivations that requires this a. There has been no justification set forth for this by the courts 2. ALWAYS a taking – no balancing test ( becomes a categorical rule – see below) ii. Example: Where π purchases land on coast, and afterward a regulation is passed that he must obtain licenses before building. The limitation is so great that the value of the land, according to the court, becomes $0. Therefore, is a taking, and should be compensated. Lucas v Carolina Coastal Council g. Imposing Conditions on Land Permits i. A use restriction may constitute a taking if not reasonably necessary to the effectuation of a substantial government purpose. ii. TWO-PART TEST that must be employed: 1. Essential Nexus Test – an “essential nexus” must exist between the public purpose and the condition imposed on land use. a. The gov’t may not require a person to give up a constitutional right (namely, right to compensation) in exchange for a discretionary benefit that has little or no relationship to the property. i. Example: A coastal regulation limits the height of houses built at the coast so as not to block the view of the ocean. Coastal Commission will let landowner build higher than regulation if they allow an easement. There is not sufficient connection between the purpose of the regulation (sight of ocean) and the taking of an easement. Any such easement would require compensation under eminent domain. Nolan v California Coastal Commission. 2. Rough Proportionality Test – required by the Fifth Amendment, some sort of individualized determination that the required land use regulation is related both in nature and extent to the impact of the proposed land use reg. a. No precise mathematical calculation is necessary b. Example: The city did not present enough evidence that the regulation placed on a business expansion would actually serve the purported purpose – regulation of flooding. For instance, a public easement for a bike trail serves to diminish the

23 landowners right to exclude others, but was not shown to help in controlling flooding. Dolan v City of Tigard. i. There is an essential nexus (they are connected), but not rough proportionality iii. Landlords – use the two-part test when the government tells landlords they cannot do something unless gives the gov’t something it cannot otherwise get. 1. Example: In NY, a statute passed that says LLs cannot go out of business, unless on condition they contribute to a public housing fund. a. As to the statute – unconstitutional b/c is a permanent occupation of land – always a taking b. As to the condition – would be allowable if was uniform as to all such LLs, and was calculated to reach a goal of a legitimate state purpose. i. Apply the two part test iv. Exactions – money taken from landowner and given to a public fund 1. Is unconstitutional if taken from one landowner as a condition for a building permit. a. It may be allowable if imposed as a general tax to all such businesses. 2. Example: The city did an analysis and determined there were too few public recreational facilities. When π attempted to tear down a private facility and build an office building, the city made it a condition of the permit that π either contribute money to a public fund for recreational facilities, or include such facilities in its new building. There is a nexus – office building would bring more people to the area and worsen the existing problem – but it is not proportional b/c the condition suggests replacing a private club with a public one. Erlich v Culver City.