Real Property I (20%) Santa Barbara & Ventura Fall Term 201 5 OUESTION ONE

Ono decided to givc Blackacre to his daughter Alice and his new son-in-law Bob as a wedding present, but wanted to be sure that the property stayed in the family if the maniage didn't work out. Therefore, betbre the ceremony he gave them a deed that read "To Alice and Bob and their heirs as joint tenants with right of survivorship; but if Bob and Alice ever end their marriage before onc ofthem dies, then to my daughter Carol and her heirs."

Ten years after the wedding, Bob conf'essed that he was having an affair, and decided to move in with his lover, Alice and Bob realized that their marriage was over, but both decided not to seek a divorce. since that would result in Alice losing Blackacre to Carol. Alice decided to convert part of the premises into a rental unit, so she took out a loan to convert the premises, which she secured with a mortgage. She later rented out the unit under a two-)'ear lease at $2,500 per month. At the end of the term, the tenant moved out. She then re-let the premises under a five-year lease expiring in 2015 at $3,000 per month. Alice paid ofT the loan and the mortgage n'as released by the lender.

Alice consulted an attorney to plan her estate. The attomey advised her that under the deed from Otto, the propelty n'ould all go to Bob if she died first. Alice was not pleased to leam this. The attomey then drew up a deed transt'ening her interest in Blackacre from herself as a joint tenant to herself as a tenant in common. Alice signed the deed and had it recorded. She then made a valid will in which she left all of her property to her friend Deb.

Otto later had a heart attack. While bedridden, he was visited by his favorite nephew, Elrod. In the presence ofa nurse, Otto said. "Elrod, I'm probably not going to make it. I want you to have my Silver BMW 550 in the garage. The key and the pink slip are in the drawer over there. Please bring them to me." Elrod went over to the drawer, opened it, and found the key and the pink slip. As he picked them up to bring to his uncle, he heard a loud moan. When he retumed to the bed. Otto was dead. Elrod took the key and pink slip and drove away in the Mercedes.

In his will, Otto had left all of his personal property to Carol.

Alice died shortly after her father. Discuss the tbllowing issues: l. (A) What real prope(y interests, if any, do the tbllowing people have in Blackacre: (i) Bob; (ii); (iii) Carol.

2. Did Alice's lease ol the property sever thejoint tenancy? 3. Discuss whether Elrod or Carol owns the BMW. ISSUE SHEET: Fall 2015: OUESTION #l

what interest in Blackacre did Alice and Bob receive through the deed from otto?

1. EXECUTORY LIMITATIONON ON A FEE SIMPLE INTEREST

.,To The deed otto used to transfer the property to Alice and Bob stated, Alice and Bob and their heirs asjoint tenants with right of survivorship...". The interest here created is a present interest in fee simple held in joint tenancy by Alice (A) and Bob (B). Most jurisdictions favor a rebuttable presumption of a tenancy in common. In order to create a joint tenancy, the intent ofthe grantor in controlling and usually demands the use oflanguage ,,as specifically granting a joint tenancy. In this instance o used the wording joint tenants with right survivorship," showing that he definitely meant to create a joinitenancy and not a tenancy in common. The grant continues, stating "but if Bob and Alice evei end their marriage before one ofthem dies, then to my daughter Carol and her heirs.,'

This language places an executory limitation on their fee simple. making it a presenr interest in fee simple subject to an executory limitation.

If the limitation (the end of the marriage) ever occurs, carol's contingent execurory interest vests and interrupts A and B's fee simple, destroying that interest and creating a fei simple absolute in Carol.

As a side note, none of the interests here violate the Rule Against Perpetuities (RAp). which states. To be good, a future interest in a grantee must vest. ifat all, no later than 2l of' some life in being at the creation of the interest. Here, Carol has a contingent future interest. she is a life in being, and so are A and B. we will know by the death of either A or B whether the contingency has vested or failed by virtue ofthem not being able to get divorced after death. Therefore, the interest is valid for purposes ofRAp. 2. JOINT TENANCY IN BLACKACRE

A joint tenancy also needs the four unities: l. Time 2. Title 3. Interest 4. possession

Time is satisfied because the grant of the property occuned in the deed, and therefbre title is also satisfied because it was done by the same deed (at the same time). Interest is also satisfied because A and B are granted the same exact interest in Blackacre. Possession is satisfied, as well, because they both got possession of Blackacre to use as a full 100% undivided share. 3. EFFECT OF JOINT TENANCY

Since A and B's interest is in joint tenancy, they both own an equal undivided share of the whole of Blackacre with rights of survivorship. This means that if one of them dies before the other, the remaining living spouse will inherit all of Blackacre and the dead spouse's interest will disappear.

4. SEVERING A JOINT TENANCY

A cannot convey her interest in the property to a third party without first severing the joint tenancy. There are a few actions taken by A that may have severed the joint tenancy. depending on the jurisdiction. Bob's and Deb's interests both depend on whether and when A severed that joint tenancy. If the joint tenancy is severed, A and B become tenants in common, both retaining an equal half interest in Blackacre with no rights of survivorship (so ifA sells her interest after severing the JT, B will still be able to keep his half. 5. DID ALICE'S'|AKING OUT A LOAN THROUGH A MORTGAGE ON THE PROPERTY SEVER THE JOINT TENANCY?

Depending on the jurisdiction, Alice's taking out a moftgage on the property may have severed the joint tenancy, thus creating a tenancy in common. Some jurisdiction state that conveying an interest as a mortgage actually conveys title to the creditor, thus severing the JT. This means that in this iurisdiction, even if title eventually goes back to A, the JT is not revived.

In other jurisdictions, the court sees this as merely a lien, which destroys the JT during that time but as soon as the lien is lifted (A paid back the loan), the JT is revived. So her mortgage on the property may or may not have severed the joint tenancy. 6. DID ALICE'S LEASE OF THE PROPERTY SEVER THE JOINT TENANCY?

One way to sever a joint tenancy is to destroy one of the lbur unities' Here, Alice may have destroyed the unity of "interest".

However, leasing. (as opposed to selling), the property probably did not sever the JT because A and B both retained a reversionary interest in the JT. Only if they transfer title would it sever the JT and create a tenancy in common. Therefore, B has retained his survivorship rights in this scenario. 7. SO. IF A DIES BEFORE B. ASSUMING NO SEVERANCE OF JT. IS THE LEASE STILL VALID?

Some jurisdictions state that as soon as the co-tenant granting the lease dies, the interest they created through the lease vanishes and the tenant must vacate. If A had succeeded in severing the JT at any point during her lifetime (the only time she could, potentially, do it) the result would be different. In that case, A is teasing only her interest in the property, and not the property as it was in JT. This means that the lease was done under an interest as a tenant in common, which would preserve the lease through the agreed period of20l5.

8. DID ALICE'S ATTEMPT TO CONVEY HER INTEREST IN BLACKACRE FROM HERSELF AS JOINT TENANT TO HERSELF AS TENANT IN COMMON SEVER THE JOINT TENANCY?

Again. diflerent jurisdictions view this question differently. The old rule was that a straw man was necessary in order to accomplish a severance ofjoint tenancy that conveyed the interest back as a tenancy in common. In those instances, the property u,ould generally be conveyed to an attomey or his secretary, and then immediately transferred back to A. The transfer to the straw man would destroy the JT, but the straw man would convey back the same interest, except now it would be TIC.

Other jurisdictions have done away with the requirement of a straw man, saying that as long as there is a deed transferring the interest from A as JT to herself as TIC, and the deed is recorded, the transfer is valid and has destroyed the JT. Here, Alice signed the deed and had it recorded. In a modem jurisdiction, this would sulfice to sever the JT and A and B would each be letl with equal 50% interests in BA as TICs.

9. WHAT IS BOB'S INTEREST IN BLACKACRE?

As discussed above, if A was successful in severing the JT, Bob u'ould have lost his right of survivorship and only retained % interest as a TIC. This is most likely what happened when A recorded the deed, so B has a present % interest in Blackacre in FSA(assuming their separation did not trigger the executory limitation).

IfA was not successful in severing the JT, Bob would have a 100% full share interest in Blackacre in FSA (assuming their separation did not trigger the executory limitation) because he retained right of survivorship. Therefore, all of A's interest in Blackacre become his uoon her death. IO.DID A AND B'S SEPARATION TzuGGER THE LIMITATION AND THUS VEST CAROL'S INTEREST IN BLACKACRE?

The limitation on their estate was "ever end their marriage." This is slightly ambiguous considering the facts say they "realized that their marriage was over" but "decided not to seek a divorce." Since the marriage has not legally ended with a valid divorce, one could say that their separation did not trigger Carol's executory limitation. Therefore, by A's death, the contingency vanishes, creating a present interest in Blackacre in FSA for Bob.

Judging lrom the analysis above, one may conclude that Carol does not have an interest in Blackacre unless their separation triggered the executory limitation. lf for some reason it had, Carol would have a present interest in FSA and Bob would have nothing.

I I. WHO OWNS THE BMW?

An inter vivos gift requires:

l. The present intention to transfer ownership

2. Actual physical transt-er where possible

3. Acceptance by transferee

Otto definitely manif'ests his present intention to transfer ownership of the BMW. He tells E, ,,1 want you to have my silver BMW..in the garage." There is no ambiguity here as to what property he is trying to transfer. His words are very specific and directed presently at E. This element is probably satisfied.

The second element is where a problem arises. Usually an actual physical transi'er must occur to transf'er ownership. In cases of things that are dilficult to move or hand over. such as a car, a constructive transf'er will suflice. If O had handed E the keys, it would have satisfied the criteria for a constructive transf'er. However, O died immediately belbre he could hand them over to E.

E actually had the pink slop and keys in his hand in the process of bringing it to his uncle when O died. No constructive transfer took place without O handing the keys and pink slip to E, but we can tell f'rom the facts this was absolutely his intention. Since there was a nurse there watching everything, a court may decide they has enough evidence that the transfer was in progress and rule that the constructive transfer took place. But it was not fully completed, so there is no detlnite answer. If this transt-er did not suffice. then Carol owns the car. If it did sutfice, it belongs to E.

E definitely accepted because he took the key and pink slip and drove away in the BMW. REAL PROPERTY I(20%) Santa Barbara & Ventura Fall Term 201 5 QUESTION #2

Landlord (Lucy) and Tenant (Tom) enter into a one-year oral lease agreement of Landlord's condominium (condo) on January 1,2015. The agreement provides that Tom is to pay Lucy, "$36,000 per year, $3,000 per month."

When Tom prepares to move and opens the lront door of the condo he is met by the previous tenant, who had a one-year lease that expired on December 31,2014, but is still in possession. Tom informs Lucy about this matter. Lucy tells Tom that this is his problem since she has given him the keys to the condo.

Tom spends $6000 hiring an attorney to have the previous tenant evicted. Thereupon Tom moves into the condo in February I . 201 5.

Upon moving in, Tom paints the interior of the condo with a fluorescent blue painting over the prior white-colored walls. Lucy would have to spend a considerable amount to remove the fluorescent blue and repaint the walls to its original white hue.

On May 30, an intruder uses a key to gain access to the condo's underground remote- controlled parking garage condo. As top is about to enter his car, he is robbed at gunpoint and steals Tom's wallet. Three years earlier, another tenant was similarly robbed.

On March 31, because of the robbery, Tom informs Lucy that he is moving out and gives the keys to his condo to Lucy. Tom pays no further rent to Lucy.

L If Tom files suit against Lucy to recover the $6,000 spent in evicting the previous tenant. Will Tom prevail? Discuss.

2. If Lucy files suit against Tom to recover rent from April through December, will she prevail on a theory of constructive eviction because of Breach of the Covcnant of Quiet Enjoyment? Discuss.

3. If Lucy files suit against Tom for the extra cost involved in repainting the apartment, will she prevail on a theory of affirmative waste? Discuss. Interrogatory I

LEGAL V. ACTUAL POSSESSION

When we have a holdover tenant, does the landlord have a duty to evict the tenant? The answer depends on whether the jurisdiction follows the American rule or the English rule. The American rule simply requires that the landlord deliver legal possession only: that there is no legal barrier to the tenant taking actual possession. In such case, the landlord has no such duty to evict the holdover; it is the new tenant's duty to take legal action against the holdover.

On the other hand, if the jurisdiction follows the English rule, the landlord has a duty to deliver legal and actual possession: to open the premises up to the new tenant' ln such case, the landlord would have a duty to evict the holdover. (No analysis on this issue: the outcome is solely dependent on the rule the jurisdiction in question fbllows.)

Interrogatory 2

YEAR-TO-YEAR OR MONTH-TO.MONTH PERIODIC TENANCY?

This is a one-year lease, the rent for which is payable at the rate of $36,000 per year, $3,000 per month."

Does payment "per year" indicate that this will be for each year;? At the same time "per month" indicates that this will be tbr each month. Thus, do we have a year-to-year periodic tenancy (fbr which tenant must or a month-to-month periodic tenancy (for which tenant must give only 30 days noticef

If Landlord places the focus on the "per year," this is a year-to-year periodic tenancy and she (Lucy) rvould argue that the "$3.000 per month is simply a convenient description of what amount is due each month to facilitate rental payments and this is not inconsistent with a year-to-year periodic tenancy.

Tenant (Tom) will ask a court to rule that the monthly payment amounts suggest a month-to-month periodic tenancy (with the $36,000 "per year" simply a mathematical computation that in no way affects the intent of the parties to create a month-to-month tenancv). Interrogatory 3

LANDLORDS DUTY OF CARE TO TENANT

With respect to the robbery in the underground garage, the common law rule is that a landlord is liable for maintaining the common areas and is liable for negligently failing to do so. Modemly, we are not concemed about the place; rather, the landlord has a general duty of due care. The question is, irrespective of whether we follow the common law or the modem approach, should Lenore be held liable in negligence for the robbery?

On the one hand, a landlord should not be a guarantor for tenant saf'ety. especially when the conduct in question is the criminal act ofa third person.

On the other hand, we have to ask whether the landlord is on notice of this type of conduct (recall that there was a similar robbery years earlier), even when that prior conduct was a single act (versus a series of acts) that happened three years earlier. of course, policy arguments can be made for each side.

Breach of the Covenant of Quiet Enjoyment. The question is whether the landlord can be found to have breached the covenant of quiet enjoyment. Under the common law, the landlord can be in breach for not acting when he is under a duty to act, which lailure substantially interfered with the tenant's peaceful enjoyment of the premises. For this exam, I would have focused on the common law duty to maintain common areas (the garage). of course, assuming one found the duty to maintain the common area as the underlying duty, one would have to argue both ways: why the landlord breached the duty and why. in the altemative. he did not.

Breach of the Covenant of Quiet Enjoyment: Modern View. tJnder Reste Realty, a landlord breaches the covenant of quiet enjoyment whenever he fails to act, irrespective ol' any underlying duty, if he has the power to eliminate the problem that interl'eres with the tenant's peaceful enjoyment of the premises. on a very simple level, the landlord has the power, through private security, for example, to make the garage safe.

On the other hand, there must be some limit to the landlord,s duty, even under the most modem approach. To hold otherwise makes the landlord a guarantor of the tenant's safety. Further, Reste Realty dealt with a structural problem; the problem here is an intentional criminal act, a clear extension of Reste Realty, if the doctrine even applies. Still, one could easily find a breach of duty with policy considerations. yet once more, we see that rve do not and cannot have a definitive answer.

Constructive Eviction. Assuming that we find a breach of the covenant of quiet measured by the totality of the circumstances. The tenant moved out the next day. That seems to be timely. Alfirmative Waste. Did Tom commit waste when he painted the walls a deep fluorescent blue? that required Lenore to use five coast of paint to cover up the purple? Waste is a destruction of the property. Of course, it is not clear if what Tina did constituted waste.

On the one hand, if we look at the extra cost to Lenore, we may say that Tina committed waste: the added expenditure of five coats, in the manner of a substantial repair, is indicative of destruction of the property. On the other hand, Tina did not in fact damage the walls in a pennanent and physical sense. Nor did she affect their structural integrity. Further, paint itself is not expensive although the labor can be.

This a gray area. Tina herself may be able to assert constructive eviction by claiming she did not have quiet enjoyment.