ORIGINAL TO PERSONAL AND REAL

ASSIGNMENT #1 - LAND

- Primacy - First in time, first in right - Externalities - negative effects on third parties due to transactions between two other parties - Commodification - converting anything people are willing to sell/buy into a “property” - Main premise of : exclusivity and transferability - Maximizes incentive to buy and allows obtainability by the person who values it most - Limitations on land owner’s freedoms: taxation, nuisances, zoning, - Socio-political considerations - altering and refining social and political relationships - Using government/state power to protect interest minimizes personal spending on security

Johnson v. McIntosh - Supp #1 - FITFIR only applies when “root of title” is from a valid source - an accepted government - Culturally contingent nature of legal concept - Indians not deemed to be in - “Progress” was reason for expansion, takeover improves society, efficiency of land use

ASSIGNMENT #2 - TANGIBLE

- Actual Possession - physically possessing the object (ex. Holding dead fox) - Constructive Possession - legal fiction (ex. Mortally wounded fox still on ground)

I. Wild Animals (ferae naturae) - includes minerals A. Pierson v. Post - defined by two part “capture rule”: 1. Depriving of its natural liberty (kill, mortally wound, or trap) 2. Intent to appropriate B. Ownership ends when animal escapes, is released, OR chase is abandoned, EXCEPT: 1. Tamed animal that has habit of returning is still owned 2. Animal is not in its natural environment (ex. Tiger on Franklin St) C. Positive aspects: 1. Provides bright-line test - avoids confusion in courts 2. Promotes efficient hunting of “noxious” beasts - must kill to possess 3. Rewarding labor - mixing labor of killing the beast grants ownership D. Negative aspects 1. Overcapitalization - hunters buying better guns, better dogs - too costly 2. Overexploitation - killing everything in sight to gain possession 3. Discouraging activity - hunters won’t hunt if someone can sneak in and kill 4. Not rewarding labor - person doing all the hunting losing at end - atypical E. Landowner’s rights 1. Landowner has no rights to wild animal on his land, HOWEVER 2. Trespassing grants exclusive right to capture on own land - post notice

II. Fugitive Resources - Oil, Gas, Water A. Minerals (oil/gas) treated mainly as ferae naturae (wild) - not owned until extracted 1. Hammonds - no if gas in natural state under property b/c no possession B. Water 1. Western states - “prior appropriation” - FITFIR if reasonable/beneficial use 2. Eastern states - “riparian rights” - owning land by water gives right to water III. Common forms of action A. Trespass - money for D’s direct interference with P’s actual poss of land/chattels B. Trespass on the case - money for D’s indirect inter. due to D wrongful act C. Trover - recover the monetary value of an object wrongfully taken – effectively sold D. Replevin - recover the possession of chattels wrongfully taken E. Ejectment - recover the possession of wrongfully taken F. Conversion - action against someone treating your property as their own - Differences between conversion and trespass to chattels: - Conversion damages equal value of the chattel - Trespass to chattels damages equal harm caused to plaintiff - Trespass to chattels must interfere with P’s actual possession

IV. Other Notes - Must consider application of customs (ex. 300 tons of mussels is not “recreational”) - Granting trover is comparable to selling property - D gets ownership that P had before

ASSIGNMENT #3 - Finders, , and Accessions

I. Finders A. Four categories of “found” property: 1. Abandoned - owner intends to lose ownership - must act to show this 2. Lost - unintentionally parts with property and doesn’t know where 3. Mislaid - mistakenly places and fails/forgets to reclaim 4. Trove - Gold, silver, etc intentionally placed in secret location in past B. Rights of Finder - title is relative to the parties 1. Finder of lost property gains right to possession, UNLESS: - Property acquired illegally typically not retained by finder - If in soil or on private property goes to landowner (not if ) - Sometimes not true if landowner was unaware or not occupying 2. Finder of abandoned property becomes owner even over TO 3. Finder of mislaid typically awarded to location found - Helps TO locate the mislaid property easier 4. Finder of treasure trove typically given to finder if not trespassing 5. often dissolve differences between lost, mislaid, and abandoned - Public place finder has ownership if they report and TO doesn’t claim - Sometimes TO must give a reward to finder 6. to state if not claimed w/in certain time (dividend) 7. governed by federal and law of salvage – Finders handout 8. Native American artifacts are typically awarded to the tribe C. Additional Notes 1. Claim based on relativity of title - who of parties has greater possession 2. Jus tertii - rights of third party - no defense for a claim of possession - D saying P has no possession because TO does it meaningless II. Bailments - is delivery of possession of personal property to another w/out title transfer - Public accommodations typically strictly liable for loss/ (ex. Hotel, comm carrier) - Gratuitous bailees taking care for free held to very low standard (ex. Finder of goods) - Statutes limit liability of innkeepers requiring guest notice or maximum liability - General principle is reasonableness as bailment is typically contractual III. and Fixtures - Law of Accessions - Converting property and adding signif value or changing property - Physical ID Rule - physical fundamentally changed (ex. Wine from grapes) - Relative Value Rule - who contributed most to value and what is fair - Only valid if good faith conversion - bad faith conversion usually denies accession - If transferring title to good faith converter, original owner entitled to damage for loss - Fixtures - Personal property becoming fixed to real property treated as real property - Ex. Light fixtures when selling house, crops still connected to land

CREATION OF NEW PROPERTY RIGHTS

ASSIGNMENT #4 - Intangible Personal Property/Natural Resources

Alliance Against IFQs v. Brown - Supp #7 - Creating fishing permits for rights to fish off Alaskan waters - Creation of a property interest by administrative body - granted power by legis - Property interest basic characteristics: Right to (1) possess (2) use (3) exclude (4) transfer - If no regulation: - Incentive to capture as much as possible - will deplete population - Lower population leads to higher demand and price - more fisherman, more boats - Incentive to purchase best equipment possible - overcapitalization

Property = Bundle of Sticks - Metaphor that property is an aggregate of various rights in the thing - Owner may “unbundle” these parts and distribute to others - A thing may be owned by more than one person - each co-owner thus having limited rights - Property is not itself physical - derives from government’s ability/commitment to protect it - Property is a legal construct - relations among persons with regard to something of value

ASSIGNMENT #5 - Ideas and Persona

Joyce v. General Motors - pg. 95 - Based on traditional rule of ideas - Ideas are free and not protected until doing what society deems necessary to gain as property - Reasoning: to encourage competition, commerce, avoid monopoly, low cost options - If a patent, copyright, or trademark is given by authoritative figure (congress) idea protected

- - tension between encouraging innovation and promoting competition - Copyrights protect the particular manner an idea is expressed - not the idea itself - Trademarks are used to identify the source of a particular product - incentive for quality I. Right of Privacy A. Intrusion upon one’s seclusion or solitude B. Public disclosure of embarrassing private facts C. Publicity which places one in a false light D. Appropriation of one’s name or likeness - Right of Publicity II. Right of Publicity A. Statutory example (California) 1. Knowingly 2. Name or likeness - context not taken into account (photo, signature, voice) 3. In any manner or purpose 4. Purposes of advertising/selling 5. No prior consent 6. Injury ($$) B. Common law example (California) 1. Identity - context (Bette Midler sound alike voice) 2. To another’s advantage 3. No prior consent 4. Injury C. Policy Consideration for creating 1. Time invested in identity - unfair for others to on your work D. Defenses 1. Lanham Act - no likelihood of confusion 2. 1st Amendment/Parody - not if used as “commercial speech” 3. Right of privacy denied once you become a public figure - public interest

Smith v. Doss - Handout (Cross and Vail) - No privacy where: public character, dissemination of news/events, public interest/benefit

Carson v. Portable Toilets - Handout (Cross and Vail) - Phrase “Here’s Johnny” used to market another company’s product without consent - Likelihood of confusion only if public believes brand is approved by owner (Carson) - Based on - strength of brand, related goods, intent, marketing, possible expansion, etc. - Identity may be exploited even without name or picture - common law right of publicity - Motschenbacher v. RJR - picture of distinctive race car violation of driver’s ROPub - Ali v. Playgirl - Drawing labeled “mystery man” of nude, black boxer sufficiently ID’d Ali - Hirsch v. SC Johnson - use of name “Crazylegs” was violation of P’s ROPub

Cardtoons v. MLB Players Assn - Handout (Cross and Vail) - 1st amendment right to free speech outweighs ROPub of players parodied - Commenting on an important social institution - Commercial speech - speech that merely advertises a product/service for business purposes - Simply being an item sold for profit does not transform into “commercial speech” - Maximize creative expression and protect important form of entertainment/social commentary

White v. Samsung - pg. 99 - No statutory claim because robot resemblance is not considered a “likeness” - Celebrities are easy to evoke without use of name, likeness, or voice - need protection - Sufficient enough representation to constitute “identity” for common law claim - Dissent claims not enough, using the role for show more than identity of hostess

Glory Foods Collard Greens - Handout (Cross and Vail) - Marionette not considered a “likeness” for statutory claim - Is Zoeller recognizable enough outside of golfers to make a common law claim? Unsure

ASSIGNMENT #6 - Genetic Material and Other Body Parts

- Patent requirements: (1) patentable subject matter (2) novel (3) useful (4) non-obvious - Not possible to patent a product of nature or law of physics - Chakibarti - process for creating bacterium that was human made was patentable - Actual bacterium itself was not patentable because product of nature - Supreme Court has held that living, manmade organisms are patentable

Moore v. Regents of the Univ of Cali - pg. 49 - Excised cells used to patent a cell line by researchers not infringing on property rights of donor - Once cells are excised from the body, donor no longer expecting to retain possession - Human body is a public not property of person, except when by statute - Statutes typically more concerned with policy goals than protecting personal property -Relevant policy considerations include: - Promoting useful social activities - Morality/ethics - sacredness of human body - Judicial v. legislative competence - should the court be addressing this - Certainty v. uncertainty - providing a bright-line test - Not simply cells that are patented - researchers did work to create cell line - distinct - Patent law rewards inventiveness, not mere discovery of raw materials - Creation of property - not property until removed from body and “claimed” - contained - Effects of the decision: - Steers health care toward patentable cures - genetic/pharmaceutical - Steers away from research - incentive for privacy until patented - Dissent says only when discovery occurs after surgery and not a reason for surgery as here - Self paternalism - person knows what is best for him or her - True paternalism - someone else knows what is best for the person

ASSIGNMENT #7 - The

The - Based on the conflict for resources between individual interest and the - Example is a pasture shared by local herdsmen with no limitation on herd: - Positive: Herdsman receives all the proceeds of adding one animal to herd = +1 - Negative: Pasture is slightly degraded by each additional animal = fraction of -1 - Rational herdsman would conclude that it is more sensible to keep adding animals - Tragedy of commons arises when all rational herdsmen add to pasture and exceed its capacity - Private property owners protect resources, public uses unlimited exploitation rationale - Private property allows users to capture a greater benefit of their activities - Encourages personal work that won’t be used by community (ex. Cultivating oysters)

1. What attributes make a resource subject to the tragedy of the commons? - Free land that is shared - Exhaustible resource - limited - No effective limit on any individual’s usage - No incentive to conserve

2. Is the internet an example of the tragedy of the commons - Shared access, limits of bandwidth, no user limits, no incentive to conserve

3. If a TOC, what are possible solutions - Make it communal - lobster gangs - Set stringent government controls and keep as (quotas, etc) - Privatize the property - IFQs - How to assign: merit, primacy, lottery, auction

4. Why does communal system work in , but not in Alaska Halibut or Oyster industries - Lobstermen have a shared set of values - Lobstermen have ease of monitoring issues because buoys show when someone is intruding - Lobstermen can impose sanctions - harming traps easy to do without getting caught - Lobstermen can easily define a territory for each commune in communal system - Alaska - no shared values, too many people/too much mobility to monitor, no way to impose informal sanctions, no real way to define a territory - govt. controls work best - Oyster - needs regular investment to maintain “clutch”, no social norms - private works best

5. Could private method work for Internet? - Need control, ability to exclude - Need fixed individual right - must be able to define and delineate that right - Need effective legal sanctions - No - too vast to control, no fixed rights, how to sanction other countries

6. Is the atmosphere an example of a resource subject to the TOC? - No incentive - cheaper to pollute than to clean up after yourself

7. What type of system is Kyoto Protocol? - Global community - communal system - Somewhat like IFQ in that based on performance, obtain better rights/permits - private system - Many countries outside Kyoto protocol may dilute value of property rights of those in accord

THE RIGHT TO EXCLUDE AND ITS LIMITATIONS

Assignment #8 - The Common Law Rights of Property Owners

Pile v. Pedrick #1 - Supp #13 - Foundation of wall extends 1 3/8 inches into neighbors land - No need to accept an offer of a party wall where the rights of infringing wall are shared - No need to allow trespassing party to enter onto land to remove trespassing wall - Two ways to remedy trespass: (1) remove encroaching wall (2) treat as permanent trespass - Permanent trespass would be equivalent to selling a strip of land for cost

Pile v. Pedrick #2 - Supp #13 - Upholds first case for removal and requires timely removal within 1 year

Summary of Pile Cases - Neither case uses any policy as justification - simply facts and decisions - Right to exclude is one of the most important rights of land owner and will be protected - Effects of this ruling: 1. Avoid self-remedies 2. Ensure marketability - people know rights are protected 3. Make people cautious of surveys - incentive to verify 4. Creates when offended party is unreasonable as here (cost more than damage) - Property Rule - title will not transfer without volition of owner

Barnard v. Cohen - Supp #14 - An action for libel no punitive damages where compensatory damages are nominal

Jacque v. Steenberg Homes - pg. 9 - Delivering mobile home across land after refusal of permission still punishable w/out damage - Punitive damages for intentional trespass will be awarded even without actual damages - Policy considerations: 1. Courts must enforce right of exclusion - here by way of monetary punishment 2. Encourage use of legal system instead of taking matters into own hands - Other damages not enough - no actual damage, nothing to remove from land

State v. Shack - pg. 22 - Farmer prevented government workers from entering land to speak to migrant workers - Limits of exclusion - exclusion rights not to be used to deny others their own certain rights - Entering land to act on statutory right provided by government policy - No other valid means of reaching the workers to inform them of their rights - Human rights, protected or disadvantaged class, isolation of class

Williams v. South & South Rentals - Supp #15 - Apartment building extends one foot onto another’s property - Court will not allow “private eminent domain” by denying P’s right to have property removed - Mentions factors for consideration in these cases: 1. Substantial cost to D - potential economic waste 2. Good faith of D when building (surveying, etc) 3. Whether harm to the P is minor 4. Whether encroachment is slight (no indication of what is “slight”) - D may have to pay exorbitant price for land, or D may view as for eminent domain

OVERVIEW Elements. Possession must be: 1. Actual a. Actual physical occupancy of the property b. Must enter the property and begin using it i. Test: true owner (TO) might make the same use of the land 2. Exclusive a. Excludes all others, unless they have the permission of the adverse possessor (APer) to be there b. Exercising control over the land for the APer’s own benefit 3. Open and Notorious a. Possession cannot be concealed. : other people think you own the land. b. Reason: put the TO on notice 4. Adverse (a.k.a. hostile/under a claim of right) a. Non-permissive use b. Objective test: is the APer acting like they own the land? Neutral observer c. Subjective test: state of mind requirements (p. 178, 179) i. Bad faith standard: you knew it wasn’t your land but intended to claim it nonetheless ii. Good faith standard: you had to really think you owned the land (also must have intent to claim) iii. Combination good faith/bad faith: APer had to have subjective intent to claim the land. Doesn’t matter if it was because of good faith or bad faith. Whether you knew it was yours or not, did you intend to claim it? NC 5. Continuous and uninterrupted a. All elements must exist and continue uninterrupted for the full statutory period b. Reason: one goal of AP is to distinguish occasional trespass from AP c. Continuity interrupted by: i. APer acknowledging someone else’s superior claim to the land ii. Action by TO to eject APer iii. Presence of an intruder (nonexclusive) iv. Abandonment v. Absence with evidence of intent to abandon 1. Actual possession does not have to be constant to be continuous 2. Open lands doctrine: actual residency or occupancy not required on open, wild, unfenced lands, incapable of cultivation. Acts of AP need only reflect an appropriate use of the land (Mullis case)

Tacking 6. Original APer sold the land during the statutory period. The new possessor can count the original APer’s time toward the statutory requirement, as well as their own, if there is privity. Privity exists when the two APers are in cooperation and agreement: both are satisfied w/the transaction. Voluntary transaction

Color of Title 7. An instrument purporting to pass title to land that is defective in some way 8. 3 requirements a. must be a writing that purports to pass title b. but is invalid for some reason c. include a legally sufficient description of the property 9. Benefits of having color of title a. Actual possession of part of the property gives constructive possession to the entire property – No constructive possession for AP b. Most states have a shorter statute of limitations c. Question of adversity is never an issue. If you have a writing that says you own the land, clearly you intended to claim it. 10. A real sales is not color of title because it does not purport to convey; promises to convey in the future.

Other notes on AP 11. AP applies to real property only 12. If someone has achieved AP, she has legal title to the land (though not record title) 13. Disability statutes: TO may be under a disability to possess the property. Statute determines whether or not the SOL will run. Examples: under 18, mentally incompetent a. Two types i. Grace period: specified number of years the statute waits to run if TO is under a disability. Could be from the time of AP or the time the disability is overcome (NC)—depends on the statute ii. Toll statute: the SOL doesn’t even run until disability is over 14. Statute of repose: an action must be brought within a specified period of time from when the problem could have arisen. Compared to SOL: begins running when the problem actually arises a. Example: house construction. Have to bring action within 15 years of the construction itself, even though the statute of limitations gives 10 years after the cause of action arises (this could be 20 yrs after construction but stat. of repose wouldn’t allow an action at all, if it was more than 15 yrs after construction). 15. Policy justifications for AP a. the problem of lost evidence b. the desirability of quieting titles – figure out who owns land c. the interest in discouraging sleeping owners d. the reliance interests of AP’s and interested 3rd parties – passing to heirs 16. Payment of is not an element of AP but is usually required by statute 17. Permission: Permissive use will never achieve AP, but after the person who gave permission sells the land, permission goes away. 18. Buildings/improvements a. Common law rule: if someone builds something on your land that cannot be easily severed: TO can keep it for free when he gets the land back b. Example of statutory relaxation of CL rule i. NY: builder could be compensated for the building (court calculates diff btwn value of the structure and value of rents for the use of the property over the time period it was possessed) if the building was put there while land was possessed 1. in good faith and 2. under claim of title. 3. Must also show misconduct or failure to act on the part of the TO. c. NC betterments statute: NCGS sec. 1-340. i. will assess damages of P and the allowance to the D for the improvements…IF the land is possessed under color of title. 19. Remember: statutes have essential elements. If you fall outside the parameters of the statute, you are back under the common law of the jurisdiction. 20. AP is looked upon with hostility and therefore requires a higher burden of proof. Burden of proof for AP is an important jurisdictional question. a. Majority – clear and convincing b. Minority – preponderance of the evidence

CASES 1. Mullis v. Winchester: open lands doctrine a. Facts: APer had color of title and used the land for timber cutting. Only cut once. b. Deemed to have AP b/c he made the same use of the land that the TO would have made. i. However, the single cutting would not have been enough to satisfy continuous possession without 2 acts giving notice to the TO (since continuity requirement is for the purpose of giving notice): 1. He gave notice to the TO when he acquired the plat (it is her heirs now suing) 2. He told the neighbors that he owned the land c. There was issue as to whether his possession was adverse, but the SC court said that the law presumes adversity when there is exclusive possession by a stranger to the TO. i. . Most states follow SC rule. NC presumption is that unexplained occupancy is permissive, not adverse. d. The SC statute narrowed the common law by requiring color of title e. This case is at the outer limits of AP b/c of the continuity issue. 2. Norman v. Allison: boundary dispute a. Norman put a fence on his neighbor’s land, thinking it was his: he made a MISTAKE. Mistake is irrelevant in an objective jurisdiction but important in a subjective (good faith or bad faith). b. Issue is adversity/hostility. Good faith subjective jurisdiction i. In a good faith jurisdiction, you must think that what you are doing is ok BUT if it weren’t ok, you’d have done it anyway (in order to satisfy the intent to claim requirement) ii. Norman built the fence in good faith, but failed to say that if he had known it was his neighbor’s land, he would have built it anyway. (“I was just building a fence” was taken as positive proof contrary to intent to claim.) 3. Lilly v. Lynch: tacking, agreed-upon boundaries, equitable estoppel and acquiescence. a. AP issue to determine whether Lilly can tack: exclusivity. Lilly and her predecessors had to act like owners. “Neighborly accommodation” by letting others use the boat ramp (transitory and occasional use) was OK, and she was allowed to tack the time of her predecessor’s possession onto her own. b. Mutual recognition and acquiescence is an alternative to AP in boundary disputes—a method for establishing boundaries i. Must be a defined line ii. Acquiescence—no express agreement, but mutual recognition of the boundary by word or conduct iii. Period of time (varies by jurisdiction) c. Agreed-upon boundaries (different from acquiescence—express agreement) i. Uncertainty as to the true boundary ii. agreement (generally oral) that locates the boundary iii. acceptance by both parties (evidenced by occupation to line) iv. time varies considerably by jurisdiction 1. NC does not recognize this doctrine b/c it involves transfer of property outside of the law d. Lilly tried to use estoppel to keep TO from suing for the ramp after he had treated as if it were hers (before he looked at the and discovered it was his). This didn’t work b/c Lilly did not rely on info from Lynch. Estoppel: i. Is a defense ii. One party is estopped from asserting certain facts against another party because the first party’s conduct, information, admission or unjustified silence has encouraged the other person to change his or her position based upon reliance on the conduct, to his or her detriment. iii. Representing party must know the true facts and either lie or withhold them. Must have intent to have his representation acted upon. iv. Once you’ve said it is the true line, estopped from later saying that it isn’t 4. Sebrell v. Carter: Pure Mistake versus Conscious Doubt in NC a. Issue is intent i. Intent to claim is satisfied if APer takes possession knowing it belongs to another, or completely believing it belongs to him (pure mistake). ii. If possessor has a “conscious doubt,” concerning the title, no AP iii. This was a 1992 NC case 5. Adverse possession problem a. Possessor paid taxes on the wrong property and satisfied all elements of AP. b. The jurisdiction’s AP statute required the payment of taxes; therefore no AP.

NORTH CAROLINA ADVERSE POSSESSION LAW

NC Statutes 1-17. In an action relating to real property, a person under a disability must commence the action within 3 yrs of the removal of the disability (This is a grace statute)

1-19. more than one disability – limitation does not attach until all are removed

1-20. Disability must exist when the right of action accrues.

1-35. Title against state. If a person has been in possession for 30 years, under known and visible lines or boundaries, they can get “title in fee” 21 years under color of title with known boundaries.

1-38. Seven years possession under color of title

1-40 Twenty years adverse possession

CASES 1. Locklear v. Savage: action for trespass on state land a. 30 years AP required i. statutory requirement. Common Law: time doesn’t run against the government. b. “known and visible boundaries” also required if no color of title c. Locklear had to show that he met the requirements of AP over the entire land, not just the part where he lived. (If not, he had trespassed by cutting trees on other parts of the land.) 2. Price v. Tomrich: Lappage (land overlaps tracts owned by 2 ppl) a. Two people hold color of title. One is real title, other is a fraudulent deed obtained at an estate sale. b. For a junior title to defeat a senior title, there must be AP of the disputed land itself. Constructive possession based on actual possession of another part of the land doesn’t work in this case. c. Lappage rules: i. Neither one of the parties has actual possession of the land: superior title wins (Price case). ii. If one is on the lappage and one not, AP goes to the one on the land. iii. If both possess some of the lappage, TO gets all, b/c of superior title 3. Stone v. Condor: example of AP case with a disability statute in play. SOL doesn’t run until 3 yrs after the disability is over, provided it existed when the right of action accrued (when APer took possession) 4. Merrick v. Peterson: a. Tacking: can tie the possession of an ancestor to an heir when there is no hiatus or interruption of the possession i. In this case, P never actually possessed the property herself (only her ancestors did) ii. To prevail, would have had to have shown: evidence of AP by a direct ancestor or someone else she was in privity with, followed by AP by herself.

Issues to look for 1. First, common law elements of AP a. Good faith or bad faith jurisdiction? (NC is good faith/bad faith) 2. Is there color of title? What is the statutory effect? a. Does the color of title describe the land that the possessor is actually occupying? If not, it’s not color of title. b. Does the statute limit constructive possession? 3. Is the payment of taxes required? (May be required in the absence of color of title, for example) 4. In tacking cases, is there privity? a. The jurisdiction (like NC) may require more than the deed, like a contract. 5. Watch out for that are valid in part, invalid in part

Common Law Estates in Land

Fee Simple Absolute 1. Potentially infinite in duration 2. Freely inheritable 3. Not subject to any condition 4. Modern rules of construction establish a preference for FSA when language is ambiguous (old CL rule: had to use the words “and his heirs”)

Life Estate: separates present right to possession from future right to possession (a of the )

Law of Waste. 3 Types of Waste 1. Voluntary (or affirmative): voluntary action by the life tenant that damages the land in nature, character or improvements to the detriment of the holder 2. Permissive: failure to maintain or preserve the land a. Future interest holder can recover damages and/or get injunctive relief for 1 and 2. 3. Ameliorating: life tenant improves the estate, increasing its value.

Goals of the law of present and future interest: preserve wealth and control land. 1. Preservation of wealth a. Led to the development of the trust i. Settlor: sets up the trust for the purpose of directing the distribution of assets over a period of time ii. Trustee: manages the trust and holds legal title to the assets iii. Beneficiaries: hold equitable title to the assets (future interests) 2. Control use of land (defeasible estates – see below) a. fee simple determinable b. fee simple on condition subsequent c. fee simple subject to executory limitation

Restraints on Alienation: destroy incentive for the transfer of the land to the one who will use it most productively. Also reduces security value because not transferable as collateral if there is a default on the financing. 1. Types a. Direct Restraints on Alienation: i. O to A and his heirs. If A or his heirs try to transfer the land, O gets it back ii. Modern law: an enforceable promise to avoid or limit transfer b. Indirect Restraints on Alienation – Division of Ownership into Present and Future Estates i. O to A for life, then to B and his heirs ii. If P wants to buy the land, he has to bargain with all present and future owners, raising his transaction costs and decreasing his incentive to buy the land for productive use c. Indirect Restraint – Creation of Contingent Future Interests i. O to A for life, then to B and his heirs if and only if B joins the Church of . If B never joins the church, to C and his heirs. d. Indirect Restraint – use restrictions i. O to A, but only for raising sheep (restraint remains on potential buyer) 2. Direct Restraints classified as: a. Disabling restraint: This is yours, but any attempt to transfer it will be void. (invariably struck down by the courts) b. Forfeiture restraints: if you transfer it, the property reverts back to me. c. Promissory: this is yours, and you promise not to transfer it in the future

(general rules – some jurisdictions are different) Fee Simple Disabling Void Void Valid Forfeiture Void Valid Valid Promissory Void Valid Valid

3. Indirect restraints are valid so long as they are reasonable a. Example: “so long as this land is not being used for commercial purposes” i. does not say anything directly about A’s power to transfer the land ii. indirect restraint b/c limits class of potential transferees to those that do not want to use it for commercial purposes

DEFEASIBLE ESTATES

Types 1. Fee simple determinable a. Terminates automatically when the restriction is violated b. Language suggests a durational limit (“as long as…”) c. Will never be followed by a remainder (it isn’t a life estate), only by the possibility of reverter or executory interest. i. Reverter: interest is in the grantor ii. Executory interest: if restriction is violated, the estate goes to a third party 2. Fee simple subject to condition subsequent a. Right to terminate the estate and re-enter is optional, not automatic (grantor must bring suit) b. Grantor retains right of entry, a.k.a. power of termination 3. Fee simple subject to executory limitation a. Divests interests in third parties b. Breach of limitation shifts title to an identified third party c. Similar to FSD: if A violates the condition, the estate comes to an end and the land automatically goes to the one who holds the executory interest. i. Different because: If the executory interest is rendered void by the court (under Rule of Perpetuities), language of FSD implies the reverter even w/o the specific future interest language. Language of FSSEL, w/o specific language of future interest, leaves a FSA + (durational language implies reverter; conditional language does not). CASES 1. Roberts v. Rhodes: deed language—FSD or FSA? a. Law disfavors forfeiture. Very specific language is necessary to create a b. The language in this deed expresses a purpose, does not impose a condition: “for school purposes only” – no “or else” c. No evidence of anything less than FSA: no durational or conditional language d. Court went against intent of grantor: usually intent trumps construction but in this case, the land WAS used for school purposes for 60 yrs and court thought that satisfied intent. 2. Humphrey v. C.G. Jung: anything less than unequivocal language will be construed as a covenant (in Roberts case above, there wasn’t even enough for a covenant) a. Language was ambiguous, therefore mere covenant. i. language of injunction as a remedy mixed with language of reverter; also used the word “covenant.” No durational language. b. Also, Ps couldn’t get damages for the breach of covenant b/c the residential use covenant had been superceded by the changed character of the neighborhood— circumstances change covenants 3. Falls City v. Missouri Pacific RR: a. Deed enforceable as FSD with right of reverter unless otherwise invalid as ROA b. Restraint was indirect, but invalid b/c effectively a complete restraint i. Direct v. indirect not as important as how restrictive it actually is c. Once the restraint is voided, deed is read as if it were never there and becomes a FSA d. NOTE: If the land is a for a charitable or public purpose, FSDs less likely to be voided as ROAs: we want to encourage people to make those types of gift, so we respect the limitations that people put on them. i. Unreasonable restraint on alienation only voids a defeasible estate if the restraint is inconsistent with public policy 4. White v. Metro Dade a. Dade county held park land “to be used as a public park only” and built a tennis stadium on it, excluding the public b. Court held that they could have the stadium but could not exclude the public b/c that would be inconsistent w/the condition (FSCS) c. Notes i. The court distinguishes between public use and public benefit. The tournament is publicly beneficial because of all the money it brings to the town. But it still precludes public use of the parkland. ii. Once you’ve asked for one remedy, you can’t pursue another (b/c of this action for injunctive relief, Ps lost the right of reverter)

CONCURRENT OWNERSHIP

1. Tenancy in Common (TC) – default if not Joint Tenancy (JT) or Tenancy by the Entireties (TE) a. Each T has a separate interest. i. Size of interest need not be equal. ii. The interest in the land (right of possession) is undivided—each tenant has the right of possession to the whole property. iii. Every tenant is simultaneously holding the same estate. b. Neither can take unilateral action to defeat the other’s undivided legal right to possession c. Each one’s interest can be transferred by sale, gift or will. Interests can be subdivided. d. Conflicts i. actual use of the property ii. expenses associated w/the property iii. If conflicts can’t be resolved, they can divide the land and dissolve the co- tenancy (among themselves or by way of judicial action—division, or sale and division of proceeds, or owelty). 2. Joint Tenancy (originally favored over TIC, now TIC is favored) a. Each co-owner has a separate and undivided right to possession b. Right of survivorship: right to claim individual ownership of the property as the surviving joint tenant (to the exclusion of the decedent’s heirs—estate avoids probate) c. Deed language: “as joint tenants with the right of survivorship and not as tenants in common.” Anything less is TIC i. Key element is “right of survivorship” (express statement often required by statute, e.g. NCGS 41-2) ii. “To A and B as joint tenants” may not be enough iii. “to A and B jointly” definitely not enough iv. no language about heirs and survivors d. Requires 4 unities i. Time: all had to acquire interest at the same time, by the same instrument (deed, will, etc) ii. Title (same instrument) iii. Interest: each has to have the same size interest iv. Possession: each has right to possess the whole property e. How to terminate i. Death ii. Severance 1. Interests are freely transferable during lifetime of holder. Transfer severs joint tenancy. a. If there are 3 JTs (A, B and C) and C transfers his/her interest to D, D becomes a TIC with A and B but A and B are still JTs 2. Interest as a JT can’t be transferred by will (you can sever the interest and then transfer by will) 3. May be statutory possibility to sever by agreement 4. Straw conveyance may be used to transfer away and then back which breaks the unity of time iii. What is the effect of leasing the property to an outside person? Depends on jurisdiction. Options: 1. Lease = severance 2. Severance during the term of the lease 3. Lease doesn’t sever joint tenancy (puts lessee at risk: if the one he leased from dies, his lease is gone)

3. Tenancy by the Entireties (see below, after TIC, JT cases)

CASES 1. Palmer v. Flint: a. Clear intent of grantor trumps rules of construction (this does not seem to be a hard and fast rule, given the strictness of the rules of construction.) b. Any language clearly intending to convey a joint tenancy will be sufficient c. If there is a joint life estate + contingent remainder (a lot like JT), the remainder cannot be destroyed—it is sold with the life estate. (O to A and B [JLE+CR]. AC. B dies. C has FSA) 2. Harms v. Sprague a. The voluntary or involuntary destruction of any of the four unities required for joint tenancy (interest, title, time and possession) will sever the joint tenancy. b. A judgment does not in itself sever joint tenancy because it does not transfer title (unless you’re in a title theory state). It comes down to how a state views a mortgage: i. Lien theory: If a mortgage is just a judgment lien (interest for security purposes), joint tenancy is preserved. ii. Title theory: If a mortgage constitutes transfer of title (fewer than 10 states), it does sever the joint tenancy. (Ex: [property] to Lender, but if Borrower repays his debt in a timely fashion, Borrower may reenter and recover the premises.) 3. Mann v. Bradley a. Divorce property settlement agreement severed joint tenancy, even if severance was not directly expressed. (Converted to TIC) i. Reasoning: An agreement between joint tenants to hold the property as tenants in common can be inferred by how the owners deal with the property. b. Note: this is an atypical case. Usually, unless there is language in an instrument that shows intent to sever, court is not likely to come to this conclusion

Tenancy by the Entirety (TBE) 1. 4 unities of JT + the unity of marriage 2. Conveyance to married people is presumed to create TBE 3. One spouse cannot destroy the other’s right of survivorship (e.g. by selling their interest). Difference from JT 4. How to terminate: a. One spouse dies b. Decree of absolute divorce c. Self-conveyance or straw i. H&W convey to themselves as JTs or TIC ii. H&W convey the property to one or the other of them: no longer marital property OR to someone else 5. About ½ the states recognize TBE and they are grouped according to what creditors can access (Sawada v. Endo): a. No states left in Group I b. Group II: creditors can only get at the debtor spouse’s interest in the estate but the other spouse keeps the right of survivorship (group II TBE is really TIC with indestructible right of survivorship) i. If it can be transferred, creditors can get it. ii. Spouse can transfer the right of possession, therefore creditors can get at it. c. Group III: assets may only be reached by judgment creditors when the judgment is on a joint debt/obligation; may not be reached to satisfy debts of a particular spouse i. NC is a group III state (most states are) d. Group IV: can transfer right of survivorship, creditors can get at it. Can’t transfer right of possession; therefore possession is protected from creditors. 6. Sawada v. Endo a. Rule (Hawaii): Individual interest in TBE not subject to the claims of creditors during the joint lives of the spouses. b. Policy: i. Encourage/support the family unit. ii. Protect family ownership and assets: preserve something for the family to rely upon. 1. Operates as a “spendthrift trust” for married couples. 7. United States v. 35 Acres a. Federal forfeiture statute allows the government to seize the property of wrongdoers but not innocent parties b. No forfeitable interest in land held in TBE w/D’s wife (D grew marijuana) i. Since Mrs. McHan holds an undivided interest in the property, converting the estate to a TIC and forfeiting Mr. McHan’s interest would diminish the interest of an innocent party.

COTENANCY RELATIONSHIPS 1. Cotenant out of possession does NOT have a right to their share of the reasonable rental value of the property from the cotenant in possession UNLESS there is an ouster. a. Ouster: cotenant is acting adversely to the other tenants (as if the property were his or hers alone) b. If there is an ouster, cotenants right to rental value accrues from the point of the ouster forward 2. Action for contribution (CT in possession v. CT out of possession) a. Carrying charges: yes i. Taxes ii. Mortgage iii. When CT out of possession gets charged for taxes or mortgage, can he offset the charge with a charge for rent? Depends on jurisdiction. 1. Majority: yes, in an action for contribution, rent can be an offset (can’t recover the difference if rent is more than ½ contribution) to contribution charges 2. Minority: no 3. Difference between affirmative claim and using the offset defensively – no affirm claim available b. Repairs: maybe i. Must be proved necessary ii. Independent action for contribution for repairs? Jurisdictional split: 1. If no, you can get contribution as part of an accounting in the event of a c. Improvements: no, cannot sue for contribution for the costs of improvements 3. Partition and final accounting: can be voluntary or judicial, when disputes among CTs cannot be resolved a. Can be physical partition (preference) or sell and divide proceeds. b. Accounting i. If one CT made improvements, she gets credit for the amount the improvement added value to the property (not the cost of the improvement) ii. She gets ½ repair costs c. Cotenancy agreement not to partition is valid if it is limited in duration and for a reasonable purpose (otherwise: ROA)

Landlord-Tenant Relationships I. Lease: Contract or Conveyance?/Covenant of Quiet Enjoyment

• A lease creates an – a (nonfreehold estate) • A lease is both a conveyance of an estate in land and a contract containing promises • Traditionally, was dominant (but recently, contract principles have become more important) o Therefore, LL didn’t have any obligations to T (other than to provide T right of possession), and T didn’t have any obligations to LL (other than not to commit waste) o Even if LL did make promises to T, they were viewed as independent of T’s obligation to pay rent . If LL failed to perform promises, T could not withhold rent; remedy was to sue LL for breach of contract . If T withheld rent, LL could not evict; remedy was to sue T for rent as it became due • controls whether lease must be in writing o NC statute of frauds: 22-2: Any lease for more than 3 years from the date of the making of the lease has to be in writing

• Covenant of quiet enjoyment (CQE): LL won’t interfere with T’s right of possession • In NC, CQE is implied in every lease “absent a provision to the contrary” (this means that it is waivable) • CQE can be breached by actual wrongful or by (CE) • CE is typically raised as defense against LL trying to enforce a lease • Essential elements of a claim for CE: o Acts attributable to LL o Substantial interference w/ T’s use and enjoyment o T has to abandon (thereby giving notice) w/in a reasonable time • L is not normally responsible for 3rd-party interference (exception if L is best situated to remove 3rd party) o In NC, Ls have duty to remove unreasonable Ts

Fidelity Mutual Life Ins. Co. v. Kaminsky (TX 1989) – LL’s lack of response to T’s concerns (omission) is a violation of CQE that resulted in CE as it led to justifiable abandonment

McNamara v. Wilmington Mall Realty Co. (N.C. 1996) – Whether P vacated premises promptly to meet requirements for a breach of CQE must be decided on a case-by-case basis

II. Leasehold Estates: Creation and Characteristics/Holdover Tenants/Obligation to Deliver Legal and Actual Possession/Duty to Occupy

• 4 different types of tenancies: • fixed term/term for years/tenancy for years – for a fixed amount of time; no notice to terminate required • periodic tenancy - set for a fixed period, but automatically renews on the same terms for successive similar periods of time unless proper notice to terminate has been give by LL or T • tenancy at will - created by operation of law; no set term; most states require notice (CL is no notice to terminate required) o eg – LL and T are negotiating a lease, haven’t agreed on final terms, but LL allows T to go into possession • tenancy at sufferance – not a true tenancy; tenant remains in possession after lease has expired – “holding over” o can be brought to an end when LL makes an election of remedies: • treat holdover T as trespasser • evict • sue for reasonable rental damages • treat holdover T as T • bind him to a new/identical term • demand increased rent o holdover tenants are not trespassers initially, until something else happens…

David Properties v. Selk (FL 1963) - When a demands a different rent for continued possession of property it owns, and a tenant receives that demand and thereafter continues on in possession without protest, the tenant impliedly agrees to pay the rent demanded.

Bockelman v. Maynick (TX 1990) – T who vacated properly but whose cotenant remained as a holdover not liable for rent/dmgs as lease expressly designates holdover tenancy as new tenancy.

• Implied covenants in : o LL’s obligation to deliver legal possession . This is breached if prior lease had not been terminated properly o LL’s obligation to deliver actual possession the day the lease beings – premises must be open for entry at the beginning of the term) . American rule: the LL does not have this obligation (majority) . English rule: LL has this obligation (in NC we follow English rule) 3) covenant of quiet enjoyment

Hannan v. Dusch (VA 1930) – Where a new tenant fails to obtain possession of the premises because a former tenant wrongfully holds over, his remedy is against the wrongdoer and not against the landlord. No implied covenant for L to deliver possession to T. Under American rule, L not liable for actions of holdover Ts. Both landlord and tenant have a right to presume the former tenant will vacate at the end of his term

Seabrook v. Commuter Housing Co. (NY 1972) – When building not ready and lease vague, L failed to satisfy implied promise to deliver possession by affixed date or reasonable time thereafter. Also, lease unenforceable b/c contract is unconscionable due to unexplained clauses.

III. Duty to Occupy

• A tenant has no duty to occupy unless a lack of occupancy results in permissive waste or in cases of percentage lease (Gilberts) • Majority: T may use premises for any lawful purpose absent express/implied use restriction. Some jurisdictions imply duty to occupy through parties’ intent. • General rule: no requirement that T use/occupy the premises; but, consider K theory and public policy. Generally, duty to occupy must be created by express agreement in the lease, or if T “goes dark,” L may argue an implied covenant for continued use

Piggly Wiggly v. Heard (GA 1990) – K has no agreement for continuous operation, and as it was bargained for, court cannot impose such an implied covenant and D doesn’t have to use premises for business

IV. Abandonment, Duty to Mitigate, and Self-help

• What are T’s obligations if T abandons: o Under conveyance model: T still liable for all rent o Under K model: T liable to L for damages, but L must mitigate; requires L to be reasonable. T typically has burden of proving L made reasonable effort to reassign. • What is LL’s obligation if T abandons? o CL: no obligation . Do nothing – rent accumulates, sue for rent as it comes due . Terminate lease - T is liable for rent accrued and damages . Re-let – T still liable o Modern trend: LL has duty to mitigate (NC follows modern trend) • Waiver o Residential LL cannot waive duty to mitigate in lease

• Self-help: involves unauthorized entry onto the premises that the tenant has leased o English/traditional rule – LL can use reasonable and necessary force to regain possession when T breaches lease and L has right to possess (i.e. b/c of failure to pay rent) . Some states allow LL entry only by peaceable means o Other rule: must use judicial procedure . Public policy: want people to use judicial process because we want to live in a peaceful society

V. Warranty of Habitability and Fitness for Use

• Warranty of Habitability - At inception of lease and throughout lease, LL will maintain the premises in a certain condition • this is an implied warranty • Applies to residential (not commercial leases) • In NC, it is not CL, it is a statute o Must comply with housing codes, maintain premises in fit/habitable condition • Not waivable • LL’s obligations N.C. G.S. 42-42: o Keep common areas safe in safe condition o Premises have to be kept in fit and habitable condition . Premises = not just dwelling area, but everything, as defined by statute • Breach o Notice of defect o Reasonable time to repair o Failure to repair • T’s duties N.C. G.S. 42-43: • LL has reasonable amount of time to make repairs before being held liable • Remedies? o T can vacate the premises/terminate the lease (No further liability for rent) o T can stop paying rent and when they are sued, use WoH as defense o T can sue LL for specific performance o T can sue for damages due to the breach

• Warranty of Suitability – At inception of lease, there are no latent/hidden defects o Observable defects not covered by warranty • Applies to commercial leases • Only a minority of jurisdictions recognize this (not recognized in NC) • At inception of lease, there are no latent/hidden defects o Observable defects are no covered by warranty • Difference between WoH and WoS? o WoH – doesn’t matter if its apparent or latent o WoS – only latent defects, and then only those that are vital to the use of the premise for the intended purpose

• Retaliatory Eviction (N.C. G.S. 42-37.1) – Comes into play when 2 things happen: o LL has legit grounds for evicting T (T has violated some provision of lease) o LL’s actual motivation for evicting T is that T is involved in otherwise protected activities that LL dislikes o Must be residential and occurring within past 12 months • Waivable – T cannot waive rights to retaliatory eviction • Exceptions? (6 listed in statute) • What types of activities are protected? • Sole motive vs. substantial motive v. a part of the motive • Remedy: o Ejectment is denied as long as rent is being paid o Other CL and statutory remedies - Unfair Trade Practices – triple damages/atty fees

Pugh v. Holmes (PA 1979) – Breach of implied warranty of habitability serves as defense to eviction. As lease is contractual in nature, breach of either L or T’s obligations ends the other’s obligations.

Davidow v. Inwood (TX 1988) - T does not have to abandon for IWS, but must do so for CQE – added benefit over CQE

VI. Damage or Destruction of Premises

• CL: damage or destruction of premises does not have any effect on LL-T relationship - lease is not terminated; T must continue to pay rent; LL has no obligation to repair or rebuild • Modern rule: if a catastrophe occurs, T is released from obligations under lease but cannot recover prepaid rent • N.C. G.S. 42-12: modifies common law rule; 2 obstacles if T wants to terminate lease: o If there is something in lease that is contrary to the statute o Only provides relief when cost of repairs exceeds 1 year’s rent • N.C. G.S 42-9: only NC statute that directly addresses agreement to rebuild o only applies to accidental fire and houses - If house is damaged to more than ½ its value, agreement to rebuild invalid • Majority rule is that T has no obligation (except not to commit waste), but there could be something in the lease • General covenant to repair in NC includes covenant to rebuild destroyed premises o General repair clause = obligation of T to rebuild

Chambers v. North River Line (NC 1920) – T who covenanted to maintain the structure throughout the lease is liable to replace the structure and continue the lease after damages from natural disaster for which statute does not provide remedy. General covenant to maintain = general covenant to repair = obligation to rebuild (only applies where maintenance clause is a general one)

VII. Assignments and Subleases

• CL: no restriction on T’s right to sublet or assign the lease • LL-T relationship is a contractual relationship and a property relationship o Wrt , LL and T are in privity of contract o Wrt property, LL and T are in privity of estate • Assignment: conveys property for whole term with no remainder o Original T remains in privity of K (assignee/T2 is not in privity of K w/LL) . Original T remains responsible for performance of all promises in the contract (e.g. rent) o Original T no longer has privity of estate (assignee/T2 now in privity of estate w/LL) . Promises that run with the land (e.g. rent) are enforceable between LL and assignee o Therefore, LL can sue T2 directly to recover rent or T1 and T2 together • Sublease: conveys property for less than the whole term OR some remainder is maintained by the original lessee; T retains right of entry/ o Subtenant has no direct relationship w/LL and is not generally liable to L (unless he expressly assumes covenants of master lease) o No privity of estate between LL and T2 o Sublessee not liable to LL for rent • Forfeiture clauses: o majority – create assignment o minority – create sublease • Silent consent clauses: LL’s approval required for any transfer of the leasehold o majority – no reasonability required (NC) o minority – commercially reasonable required o Rule in Dumpor’s case (minority rule, NC follows): Once LL agrees to one assignment, LL implicitly waives requirement of LL consent to future assignments

Ernst v. Conditt (TN 1964) – Fixed test to determine whether it is a sublease or assignment: whether the person who is making the assignment has transferred all of their interest in the land. Majority rule is that if someone retains some interests (e.g. right of re-entry, power of termination) as a result of forfeiture clauses, it does not change what is otherwise and assignment into a lease.

Kendall v. Ernest Pestana, Inc. (CA 1985) – Even when a commercial lease has approval clause re: assignments, lessor can’t withhold consent for T to sublet property w/o reasonable commercially-based objection.

Servitudes

Servitudes

Easements Promissory Servitudes

Express Implied Prescriptive Real Equitable Covenants Servitudes

Prior use necessity plot private public

Easements I. Express Easements

• : a nonpossessory interest in land that gives its holder the right to use, or restrict the use of, the land subject to the easement o Types: . Affirmative Easement: gives someone the right to do something . Negative Easement: prohibits some sort of behavior • So disfavored at CL that they are enforceable only between original parties; to be enforceable against future landowners they must qualify as real covenants or equitable servitudes • Profit: gives holder the right to take something, such as resources, from another’s land; runs w/land; must comply w/statute of frauds • License: privilege to use another’s land (i.e. for express reason) that is terminable at will. Not an interest in land; not subject to statute of frauds (may be granted orally) • Not revocable (run w/ land) and must be recorded to be enforced against future landowners • May be appurtenant (runs w/land; transferable) or in gross (attaches to person) o An easement can be both appurtenant and personal o (1) "Appurtenant" means that the rights or obligations of a servitude are tied to ownership or occupancy of a particular unit or parcel of land. The right to enjoyment of an easement or profit, or to receive the performance of a covenant that can be held only by the owner or occupier of a particular unit or parcel, is an appurtenant benefit. A burden that obligates the owner or occupier of a particular unit or parcel in that person's capacity as owner or occupier is an appurtenant burden. (2) "In gross" means that the benefit or burden of a servitude is not tied to ownership or occupancy of a particular unit or parcel of land. (3) "Personal" means that a servitude benefit or burden is not transferable and does not run with land. Whether appurtenant or in gross, a servitude benefit or burden may be personal. • May be exclusive (only between the servient and dominant estate) or non-exlusive (the servient estate can grant similar easement rights to other parties than the dominant estate) • Duration??? • Creation of express easements: 2 ways (both must comply w/statute of frauds): o By grant: grantor delivers grantee an instrument conveying easement o By reservation: grantor delivers deed but “reserves” easement over servient land • 3rd- party easement: creation of easement benefit in another o Stranger to the Deed rule (majority): grantor must create the easement in the third person by grant before transfer of the property, and that deed must note the easement rd o Minority allow 3 party easements later

Alft v. Stewart (TN 1995) – Easement providing ingress and egress over a dam is an appurtenant easement b/c the language of the deed shows a clear intent to convey an easement over land.

II. Prescriptive and Implied Easements

• Elements of prescriptive easements: o Open and notorious use o Continuous and uninterrupted o Hostile/adverse/under a claim of right o For a certain period of time – “the prescriptive period” – use parallel adverse possession statute if there is no easement statute; 20 years in NC o (doesn’t have to be exclusive, as in adverse possession) • May be private or public (public not allowed in all jurisdictions) o Sufficiently diverse class of users - public • In NC, presumption is that use is permissive (burden is on the one claiming the easement to show it was adverse) o Permission terminates upon transfer by either true owner or user; continued use thereafter considered adverse o Presumption of permissive use on land that is wild/open/undeveloped • Majority rule is presumption of hostile use

Melendez v. Hintz (ID 1986) – If prescriptive easement elements are present save evidence of adversity, presumption is that use is adverse.

Concerned Citizens v. Holden Beach (NC 1991) – Multiple unsuccessful efforts to interrupt the public use of a road do not preclude a claim for a public prescriptive easement.

• Implied Easements: An implied easement from an existing use may arise when the owner of one parcel of land conveys part of the land, but fails to create an express easement to allow the continuation of some preexisting use (a “quasi-easement”) that the owner had made on the land • May be created from preexisting use, necessity, or derived from a plat • Easements by necessity: o Elements: . . Severance of title . After severance, it was necessary o Once necessity is gone, easement is gone o Common law device to make sure land did not end up land-locked o In NC, cannot get a way of necessity if you have a navigable river (b/c then your land isn’t landlocked) • Easements from prior/preexisting use: o Elements: . Common ownership . Used one part of the land to benefit another part . Apparent (underground utilities are “constructively apparent” . Continuous . Severance of title . Necessary • Strict (must show no other possible use) v. reasonable (cost of other possibilities v. cost of property) . Appurtenant, not in gross o Not subject to statute of frauds • Easements by plat: easements that are tied to the property, appurtenant to the property, e.g. community may access neighborhood roads

Metts v. Turner (NC 2002) – The use of an implied easement based upon prior use mst only be reasonably necessary to full enjoyment of the property.

• Cartway statute: (N.C. G.S. 136-69) statutory easement by necessity o When a person doesn’t have any other adequate access, under certain circumstances, they can go to court and institute a private eminent domain action • Difference between easement by necessity and cartway statute? o Must pay owner of servient land value of easement – you buy the easement o Once you buy the easement, it is no different than an express easement • Requirements for a cartway (it is not enough that person doesn’t have access): o Qualified activities (does not include residential use; commercial use only) o No public road or means o Affording access o Reasonable o Necessary o Just

Hodges v. Winchester (NC 1987)

III. Scope of Easements/Easements in Gross/Termination

• Scope of easements generally governed by intent of parties. o Location and character of the properties burdened and benefited by the servitude o The use made of the properties before and after creation of the servitude o The character of the surrounding area o The existence and contours of any general plan of development for the area o Consideration paid for the servitude • When difficult to determine the intentions, there are default rules, which determine right of landowners according to a reasonableness standard • Majority rule: Any extension of an easement to benefit a nondominant estate is a misuse of the easement = trespass

Brown v. Voss (WA 1986) Minority rule: An owner of an express easement may extend the use thereof to reach another subsequently aquired adjacent property, when there is no increased burden on the owner of the servient estate

• Termination of Easements o written conveyance or release – easement holder delivers instrument that releases owner of the servient estate o merger – if dominant and servient estates combine, easement ends (can’t have an easement in your own property) o prescription – if servient owner fulfills requirements (blocks use by dominant) o abandonment – more than non-use; must consider intent of holder • Transferability o Appurtenant are both transferable and divisible • Transferability of Easements in Gross: o Traditional common law: . easements in gross are personal to the holder  not transferable . Profits and commercial easements are assignable o New Restatement of Property: . Any servitude is transferable unless it is separately characterized as personal • Nothing to do w/ whether it is appurtenant or in gross • Divisibility? focuses on easement holder’s right to allow additional parties to share in the easement holder’s use of the servient land

Prommisory Servitudes • 2 types of promissory servitudes: Real Covenants (RC) and Equitable Servitudes (ES) o All RC are ES, but not all ES are RC • How are RCs and ESs different from easements? o Easements deal with right to use property; RC’s and ES’s restrict the use of land o Negative easements are really covenants • Real covenant: promise relating to the use of land; traditionally, not an interest in land (majority today says that it is b/c it touches and concerns the land); enforceable at law ($$ damages); runs w/the land o Common Law requirements: . Touch and concern . Privity of estate – majority: must satisfy both elements (vertical and horizontal); minority rule: don’t need horizontal . Intent - showing that parties intended that covenant run with the land . Form - must be in writing (everywhere) . Notice - generally a part of statutes • Equitable Servitudes: promise by the holder of a piece of land to conduct a stated activity on or make a stated use of his property; considered an interest in land o CL requirements: . Touch and concern . (no privity of estate) . Intent . Form - In NC, must be in writing . Notice • Main difference between RC and ES is the remedy o RC – money o ES - injunction • There are 2 sides of promissory servitudes – the benefit and the burden 1. Burden: lessens the land’s use or value to the covenantor (the one promising to do or not to do something); runs with the servient/burdened estate . Requirements for burden to run: • Vertical privity: entire estate must be conveyed • Horizontal privity • Notice • Will not run if benefit is in gross 2. Benefit: the covenant improves the use of the covenantee’s (the one who can enforce the promise) land; runs with the dominant/benefited estate . Requirements for benefit to run: • Vertical privity: possession; only some of the assignor’s interest must be conveyed (e.g. life estate or sublease) • (No horizontal privity) • (no notice) • Will run if burden is in gross 3. Both the benefit and the burden must run in order for subsequent assignees to enforce the covenant against other assignees • Touch and Concern: a covenant is enforceable against successors only when its subject matter was sufficiently bound up with the use of the land • Vertical privity: privity of estate between original covenanting parties and their successors • Horizontal privity: privity of estate between original covenanting parties • Questions to ask: 1. When is was created, did the covenant comply with the statute of frauds (i.e. was it in writing signed by the grantor)? a. If so, go on to #2. b. If not, it cannot be a RC. 2. Are you looking at a subsequent holder of the benefit or the burden? a. If you are looking at the land that is burdened by the covenant, you’re determining whether the burden runs. Go to #3. b. If you’re looking at land that is benefited by the covenant, you’re determining whether the benefit runs. Go to #4. 3. Did the successor have notice (actual or contructive) of the burden before buying the land? a. If not, burden does not bind the successor. b. If so, go on to #4. 4. Did the original covenanting parties intend to bind their successors? a. If there is intent (express language in the covenant, like “and their heirs, successors, and assigns”, or a statement mandating that the covenant runs with the land), go to #5. i. Most courts will imply intent if the agreement touches and concerns the land. 5. Does the covenant touch and concern the land? a. If you are looking at the burden, go to #6. b. If you are looking at the benefit, go to #9. 6. Is the covenant positive or negative? a. If positive, go to #7. b. If negative, go to #8. 7. Did the burdened property owner’s promise consist of performing a stated act or undertaking a named use of the burdened land that reduces the lands value or use to him? a. If so, it touches and concerns the land. Go to #12. b. If not, it doesn’t touch and concern the land (it’s in gross), and it cannot run with the land 8. Did the burdened property owner’s promise consist of not conducting a stated activity on, or making a stated use of, the burdened land? a. If so, it touches and concerns the land. Go to #12. b. If not, it doesn’t touch and concern the land (it’s in gross), and it cannot run with the land. 9. Is the covenant positive or negative? a. If positive, go to #10. b. If negative, go to #11. 10. Does performance of the covenant increase the use or value of the benefited land? a. If so, it touches and concerns the benefited land. Go to #12 b. If not, it doesn’t touch and concern the land (it’s in gross), and it cannot run with the land. 11. Does the promise increase the use or value of the benefited land (e.g. non-compete clause covering burdened land) a. If so, it touches and concerns the benefited land. Go to #12 b. If not, it doesn’t touch and concern the land (it’s in gross), and it cannot run with the land. 12. Is there privity of estate? a. If you’re looking at the burden, go to #13 b. If you’re looking at the benefit, go to #15 13. Is there horizontal privity? a. Look at the original covenanting parties. Did the covenant accompany the transfer of an interest in land between them? i. If so, go on to #14 ii. If not, the burden doesn’t run with the land 14. Is there vertical privity? a. Look at the relationship between the covenanting party and the successor in interest. Did the successor in interest take the entire estate? i. If so, there is vertical privity, and the burden runs with the land ii. If not, the burden does not run with the land 15. Is there vertical privity? a. Look at the relationship between the covenanting party and the successor in interest. Did the successor take possession plus some of the estate? i. If so, there is vertical privity, and the burden runs with the land If not, the burden does not run with the land

Outline:

I. COMMON INTEREST COMMUNITIES (CICs): concept new to property in last 50 years a. , , subdivisions with homeowners associations (HOAs) enforcing covenants- the common interest is that they are all run by private governments (boards) that enforce rules, make rules, assess charges and maintain and improve the common areas Note: All planned communities (PCs) are common interest communities but not vice-versa. A PC satisfies the definition of the statutory Planned Community Act (PCA). The PCA expressly excludes condos and coops i. (See PC section below) b. CICs are governed by three bodies: i. Developer- drafts and records the Declaration that includes the plat map (description where streets and common areas are planned for the development area) and Covenants, Conditions and Restrictions (CCRs) 1. Enforceablility of CC&Rs: a. Court might not always enforce it: will consider public policy and intention in the Declaration (must be clear and unambiguous: strict construction) b. Defenses for breach of covenant in common interest community: i. Selective enforcement ii. Waiver- waived for whole community iii. Statute of limitations needs to be in covenant- iv. Latch- waited too long to enforce it v. If conditions have changed so that the covenant no longer applies- changes must happen within the area in which the covenant is enacted (ex of commercial development outside the community doesn’t mean a change so that the covenant no longer applies because the regulation is designed to prevent the commercial development within the community) ii. Home Owners Association- 1. enforces the obligations and restrictions and manage and maintain the common areas/facilities 2. has power to amend the declaration (typically by supermajority of all owners in development) and has power to adopt rules, regulations, assessment (by simple majority) iii. Board: 1. has power to enforce rules and regulations- must be reasonable in its purpose and reasonable in its application 2. Board must make determination of violation in good faith and the enforcement must be fair and uniform 3. Board members have duties to stock holders (property owners association in this case)- if don’t honor the fiduciary duty, may be personally liable. iv. Business Judgment Rule 1. Usually based on Board’s maintenance and upkeep decisions 2. If made after reas investigation, in good faith, and in best interest of community, decision will be upheld v. Cases: 1. Nahrstedt v. Lakeside Village Condo Assn, Inc (CA, 1994, p 688) Whether a restriction in the CC&Rs against pets is reasonable and enforceable when it prevents an owner’s peaceful and quiet enjoyment of the property? Yes, the restrictions need only be reasonable and enforceable 2. Mulligan v. Panther Valley Property Owners Assn (NJ, 2001, Supp. in Assignment 28/29): Courts use reasonableness standard in determining validity of amendment to CC&Rs that prohibit sale of property to Tier 3 sex offender. The restriction doesn’t alienate her right to the property; she is prevented from selling to a small population, not unreasonable. 3. Smith v. Butler Mtn. Estates Property Owners Assn (NC 1988, Supp 81): NC law uses strict construction for restrictive covenants- limits on beneficial use of property/construction must be reasonable and not applied in such a way as to defeat the plain and obvious purposes of restriction, must be in good faith, must be in the covenant or established in the plan of development. In reviewing enforcement of the covenant requiring approval by Architectural Board, ct looks to 1. validity of provision- must be standard, detailed in the CC&Rs or otherwise clearly established in the scheme of development- in this case the general scheme comes from the style of the 12 houses already built; 2. validity of enforcement must be in good faith and reasonable 4. Allen v. Sea Gate Assn (NC, 1995, Supp #82): Ct ruled that covenants re dues assessments were invalid and unenforceable bc they didn’t specify the property and facilities to be maintained and improved: a. Valid covenant? Clear and unambiguous language concerning the intent of the covenant— i. have a sufficient standard by which to measure liability for assessments ii. identify specific property to be maintained iii. provide guidance to court which facilities and properties the association chooses to maintain b. Enforceable? 5. Miles v. Carolina Forest Assn (NC, 2004, Assign. 29): Ct ruled that the covenant to pay dues for maintenance of the roads was an implied contract, since not agreed to in the Declaration or Amendment. Since implied contract doesn’t have to be in writing, can’t be recorded- obligation is dependant upon nature and value of services provided. If benefits cease, not obligation to continue paying for that time. Not a covenant that runs with the land. c. PLANNED COMMUNITIES (PCS): must qualify as a PC under NC statutory form of subdivision § 47F, traditional rules supplemental to PCA i. 47F 1-102 – Application 1. Post 1/1/99 = All a. No communities under 21 lots b. No nonresidential communities 2. Pre 1/1/99 = Powers, Upkeep, Responsibility for assessments, Assessments, for assessments a. All if adopted by HOA ii. 47F 1-103 - Definitions 1. (4) – Common elements 2. (10) – Declaration 3. (23) – Planned Community 4. (25) – Real Estate 5. (26) – Attorney’s fees iii. 47F 1-108 – Use non-profit act as supplement iv. 47F-2-101 – Creation of Planned Community 1. Declaration- includes affirmative covenants (promissory servitudes), Covenants, conditions, and restrictions (CC&Rs) 2. Record- so that the declaration is accessible for title search 3. Index v. 47F-2-117 - Amendment of declaration 1. 67% of landowners 2. SOL = 1 year to challenge an amend., then it’s presumed valid vi. 47F-3-101 - Organization of owners' association must be incorporated by time of first conveyance of a lot 1. Non-profit – statute re non-profit corporations will also apply if the owners’ association is a non-profit corp vii. 47F-3-102 - Powers of owners' association: members of property owners association are the voters and elect the executive board viii. 47F-3-103 - Executive board members and officers: 1. Represent the owners association. 2. Board members don’t have to be lot owners 3. Board puts together the board, 30 days later the budget is voted upon with no need for quorum. It’s ratified unless majority of lot owners reject the budget (not majority of lot owners present) 4. Removal of Board members 5. Board cannot act unilaterally to amend the declaration ix. 47F-3-106 – Bylaws x. 47F-3-107 – Upkeep, maintenance, assessments 1. (a) - HOA responsible for maintenance and assessment 2. (b) - Lot owner who damages common area responsible for repair 3. (c) – Allows association and other members of the community to use the lots of others when necessary xi. 47F-3-107.1 – Fines 1. Hearing 2. Fines ($150/day max.) 3. Suspension of privileges 4. Fines can be secured by liens xii. 47F-3-108 Meetings 1. At least once a year 2. Proper notice required xiii. 47F-3-115 - Assessments for common expenses xiv. 47F-3-116 - Lien for assessments xv. 47F-3-120 – Attorney’s fees- no limit, just reasonable 1. May be awarded to the prevailing party on an enforcement issue d. Amendments (effective 12/1/04) – (Wise v. Harrington Grove) 1. Applies to pre-1999 communities 2. The 16 powers apply unless the declaration says otherwise a. Right to fine b. Right to assess dues e. Cases: i. McInerey v. Pinehurst Area Realty, Inc. (NC, 2004, Supp 85): Developer had right to file Amendments by vote of 75% of the owners per the Declaration. Developer filed Amendment to change owners’ right to vote to Amend. Ct takes K approach- the developer had the power per the K and the ct honors the K ii. Bryan v. Partners, L.P. (GA, 2001, Supp 86): Can CC&R prohibit signs in owners’ yards? Ct ruled that signs were barred in the covenant, that other signs were permitted that were for holidays or temporary and ╥s failure to enforce against those signs didn’t preclude its ability to enforce against ∆s sign Affirmed iii. Wise v. Harrington Grove Community Assn. (NC, 2003, Supp #78): ╥ constructed a pool (was approved by Architectural Committee) and a wall (wasn’t approved). Board revoked approval and imposed fines for violation of architectural standards. Can board impose fines? no, not retroactive

II. REAL ESTATE TRANSACTIONS: a. Purchase K negotiated and executed- lists requirements to be performed at time of closing, if these requirements aren’t met at time of closing, the K is breached. i. In writing- pursuant to Statute of Frauds (supplement) ii. Terms- what is sellers obligation re the quality of title that he seller is promising to give to buyer at closing (so if defects in title exist, can be fixed during due diligence period to not breach the Purchase K) 1. Quality of title: seller must deliver marketable title to the buyer (CL obligation- implied in the K, unless otherwise specified) which consists of: a. Fee Simple Absolute title to the land b. Can’t be subject to any outstanding interest to any third party (encumbrances)- liens, mortgages, easements c. Can’t be reasonable doubt that seller has marketable title b. Due diligence (typically lasts 30-90 days, called the executory interval or gap period): i. investigate seller’s title and seller’s legal right to possession and use of land (title search) 1. resolve outstanding legal claims to the land ii. arrange financing by buyer to purchase the land iii. investigate the land and improvements to assure buyer will receive what he has bargained for (inspections) Note: buyers or sellers remorse is not sufficient reason to not go thru with sales contract c. Closing: i. Passage of title in the form of a deed 1. if the deed conveys less than what was promised in the sales K, and buyer accepts the deed- buyer can’t sue for breach of the sales K. Merger of sales K into deed at time of closing- you can only rely upon the promises (if any) that are made in the deed. 2. Three types of deed: a. General - “Nothing in the past that changes my promise that this is good title” i. includes present warranties (promised immediately and the statute of limitations begins to run immediately at deed; do not run with the land; satisfied or breached at closing) 1. warranty of - that grantor is owner of the property 2. right to convey- that grantor can convey title 3. against encumbrances ii. includes future warranties (extend to the future, run with the land to subsequent purchasers of the property ) 1. covenant of warranty- defend any attacks title, so long as the attacks predate the deed 2. covenant of quiet enjoyment- no one out there with paramount title that will be able to interrupt buyer’s quiet enjoyment, no future breach of warranty against encumbrances (only breached at time that someone attempts to foreclose on the ownership) 3. future assurances- grantor will perfect grantee’s title if necessary iii. Damages for breach: majority rule- grantee cannot recover more than the covenantor received as consideration. if the conveyance was a gift, some courts allow no recovery, other courts allow recovery of market value at time the covenant is made b. Special Warranty deed- “during the period in which I was owner of this property, I have done nothing that would change that this is good title. I didn’t convey to anyone else or encumber the land different than what is disclosed and no one will do something thru me to interrupt your quiet enjoyment of the land” c. - you get what I’ve got; if I’ve got nothing, you get nothing. 3. Requirements for valid deed: a. In writing (Statute of Frauds) b. Identify parties – grantor/grantee c. Describe the land d. Indicate present intent to convey (give, transfer, deed over, will to, convenant, warrant of title- not just transferring it) e. Grantor’s signature or his agent’s signature f. Acknowledged to be recorded ii. Title Policy: Two types: 1. Lender’s insurance (required for mortgage: insures lender’s policy (cover the 80% (for example) of the value that is paid by the lender) 2. Should also get a buyer’s policy (for the value that you are paying for) 3. Title policy has exceptions (in Schedule B) that show other interests that prevent fee simple absolute, i.e. easement. a. Buyer must examine the exclusions- are they standard (utility easement) or significant interruptions in title (superior claim to title) b. Title insurance promises to pay the value of the property lost of an interruption in title that is not acknowledged by the exceptions. iii. Final title check to make sure that no other conveyance has been recorded between original title check and closing. iv. Deed recorded (to make the conveyance valid pursuant to the Recording Act): recording a deed provides constructive notice of the conveyance as it is indexed in the public records, raises a rebuttable presumption of superior title, only if the deed is valid. 1. Common Law: First in time, first in right, unless-- 2. (NC §47-18(a)) Race Statutes: Whoever records first wins; actual notice of prior claims is irrelevant 3. Notice Statutes: subsequent purchaser is protected against a prior unrecorded instrument if he has no actual or constructive notice of a prior claim 4. Race-Notice Statutes: subsequent purchaser without notice is protected against a prior unrecorded instrument only if he records before the prior instrument is recorded. 5. Note if statute protects subsequent purchasers or just purchasers. Also if protects gift recipients. 6. Shelter rule- purchaser is sheltered by grantor’s good title, even if purchaser has notice of prior unrecorded interest. 7. To record: instrument that conveys title to the property (mortgage, deed, etc) is indexed under Grantor and under Grantee names or under parcel index, depending on state. (NC records in grantor/grantee index).