Golden Gate University School of Law GGU Law Digital Commons Publications Faculty Scholarship 1996 Teaching Real Property Law as Real Estate Lawyering Roger Bernhardt Golden Gate University School of Law, [email protected] Follow this and additional works at: http://digitalcommons.law.ggu.edu/pubs Part of the Property Law and Real Estate Commons Recommended Citation 23 Pepp. L. Rev. 1099 (1996) This Article is brought to you for free and open access by the Faculty Scholarship at GGU Law Digital Commons. It has been accepted for inclusion in Publications by an authorized administrator of GGU Law Digital Commons. For more information, please contact [email protected]. Teaching Real Property Law as Real ]~state Lawyering Roger Bemhardt* INTRODUCTION 1102 I. POSSESSION 1106 A. Possessors'Rights 1106 B. Bailments 1111 C. Possessing Land 1114 D. Adverse Possession 1117 E. Innocent Improvers and Fixtures ............. 1121 F. Agreed Boundaries ........................ 1122 II. CONCURRENT OWNERSHIP ........................ 1123 A. The Choices 1124 B. Considerations 1126 1. Death Consequences 1126 2. Marital Dissolution 1127 3. Liability for Debts 1127 4. Inter Vivos Transfers ................... 1128 C. Drafting................................ 1129 D. Money Issues 1130 1. Title.... ........................... 1130 2. Rent and Possession 1132 3. Expenses....... ..................... 1132 4. Income.. ........................... 1132 E. Settlement Agreements 1133 III. LANDLORDffENANT ............................. 1133 A. The Tenancies and Their Termination ......... 1134 1. Other (Non)terminating Events 1137 B. Abandonment............................ 1138 1. The Duty to Mitigate 1139 C. Transfer of the Leasehold 1140 * Professor of Law, Golden Gate University. 1099 D. Holdovers 1143 1. As Trespasser 1143 2. As New Tenant 1145 3. The Effect on an Incoming Tenant ......... 1146 E. Condition ofthe Premises 1147 1. Repair Costs 1147 2. Termination 1149 3. Rent Withholding (Receivership, Implied Warranty, and Rent Control) 1150 4. Tort Liability ......................... 1153 a. Latent Defects 1154 b. Common Areas 1155 c. Dangerous conditions to outsiders, including public places ofpublic admission and furnished rooms ............... 1155 d. Contracts to repair 1156 e. Code Violations 1156 f Negligence and strict liability ........ 1157 g. Assaults on tenants and guests 1157 m. CONVEYANCING ............................•.•. 1157 A. Real Estate Brokers ........................ 1160 1. Function and Qualifications .............. 1160 2. Commission Agreements 1162 a. Earning a commission 1164 3. Ready, Willing and Able Purchaser. ........ 1164 a. Procuring cause ................... 1166 4. Agency 1167 5. Liability 1167 B. Vendor and Purchaser 1169 1. Marketable Title 1172 2. Risk of Loss 1174 3. Defective Premises 1175 4. Breach of Contract 1176 C. Mortgages............................... 1177 1. The Lender's Perspective ; 1178 2. Judicial Relief on Default ................ 1181 3. Clogging. ........................... 1184 4. Transfers of the Property ................ 1185 5. Second Mortgages 1185 D. Income Tax 1187 1. Current Income and Expenses ............ 1188 2. Timing and Deferral .................... 1190 3. Gains and Losses from Sales 1191 4. Mortgages and Tax Shelters .............. 1192 1100 [Vol. 23: 1099, 1996] Teaching Real Property PEPPERDINE LAW REVIEW E. Deeds 1193 1. Drafting and Descriptions 1193 2. Title Covenants 1195 3. Delivery.... ......................... 1196 F. Recording 1199 1. The Utility of Recording Acts ............. 1199 2. Recording Acts and the Title Searcher 1201 3. Mechanics of Recording and Searching 1202 4. Notice 1204 5. Value............................... 1205 6. Limits of the Recording System .. ,........ 1206 G. Title Insurance ........................... 1207 1. Coverage... ......................... 1208 2. Timing... ........................... 1210 3. Remedies 1211 H. Physical Defects Discovered After Closing 1211 I. Toxic Contamination 1213 1. Cleanup Liability 1214 2. Vendor-Purchaser Issues 1216 3. Related Questions 1218 IV. LAND USE 1219 A. Writing a Master Plan 1220 B. Converting the Plan into Regulations 1222 1. Eminent Domain 1222 2. Zoning. ............................. 1222 3. Other Tools .......................... 1224 C. Attacks on Land Use Devices 1227 1. Takings.... ......................... 1227 2. Speech and Association ................. 1229 3. Exclusion.. ......................... 1230 CONCLUSION 1231 APPENDIX: ESTATES IN LAND ." " 1232 Waste and Partition 1236 1101 INTRODUCTION This Article describes an alternative way of teaching the Property course so as to have students appreciate that the rules covered there are relevant to the everyday practice of law. It concentrates on the use lawyers make of those rules, rather than treating the rules as ends in themselves. What I do here is approach the rules covered in Property from the position of attorneys who have to deal with them in the ordinary course of their practice-not at a jurisprudential or appellate level, but at the earlier, simpler stages of questioning clients, drafting documents, nego­ tiating with others, preparing for litigation, and when necessary, litigat­ ing. The traditional case method does little to make a student appreciate what most class discussion has to do with actually being a lawyer. Rule learning appears to many students to be something to do in order to graduate law school but not very relevant to the activities of lawyering which they hope to engage in after graduating. Most teaching innovations that go beyond the pure case method do so in a litigation context. But everyday real estate practice does not consist primarily of litigation. Clients with real estate matters more often consult their attorneys in order to make transactions terminate favorably rather than because transactions have already terminated unfavorably; they are clients who have not yet acted, or prepared their offers, or commenced their negotiating, and who have generally not yet started feeling antagonistic to the other side. Litigators and judges are stuck with facts that have already occurred, but transactional practice contains the extra dimension of creating the facts: telling clients what they can and cannot do or that their desires can be achieved if they go at it one way rather than another, inserting or deleting clauses in docu­ ments to avoid adverse consequences, or striking or not demanding clauses that merely duplicate what the legal system already provides. These creative possibilities are denied to those who merely litigate.! Realistic coverage of the rules of Property need not be limited to hypotheticals involving disputes over facts that already exist and docu­ ments that have already been executed. Co-ownership issues can be 1. A litigation approach also presents a narrow and unflattering picture of real es­ tate practice. Real estate lawyers are dealmakers as much as they are fighters; clients retain them on the assumption that the transaction will more likely go through and on better terms because of their involvement. Teaching the rules of Property as if they were intended only for trial and appellate use conceals this positive aspect of lawyering. See Gerald Korngold, Legal Education for Non-Litigators: The Role of the Law Schools and the Practicing Bar, 30 N.Y.L. SCH. I.. REV. 621 (1985). 1102 [Vol. 23: 1099, 1996) Teaching Real Property PEPPERDINE LAW REVIEW raised in tenus of advising two clients how to take title to land they are acquiring rather than in tenus of resolving a disagreement as to the consequences of a deed they already have. Landlord-tenant coverage can revolve around consideration of what provisions to include (or omit) in a lease rather than as argument over the effect of the provi­ sions in an already executed lease. Conveyancing is clearly better suited for asking what provisions to put in a listing, offer, deed, or escrow instruction than in analyzing the provisions of an executed agreement in order to determine whether to sue or not. Land use can be made significantly more realistic and believable to inexperienced students by having them consider what regulations they might wish to enact rather than considering the effect of those already in force. Adverse posses­ sion is less subject to such a planning approach, but even it has many aspects in which legal creativity about making use of the rules can play an important pedagogic role. 2 The teaching proposals presented in this Article are procedural and not substantive. I do not seek to revise the corpus of the Property course3 or to offer new insights into the cases, rules, or policies cov- 2. There is no reason why we professors cannot teach law in a planning climate, even if that was not how we used our legal talents while we were engaged in prac­ tice prior to teaching. It has never been assumed that we must have practiced what we preach. For the query, "What sort of dispute would involve the legal issues I want to cover in class today?" merely substitute "transaction" or "negotiation" or "deal" for "dispute." Because we are cloistered in our academies, our knowledge of what occurs in nonlitigation practice may be significantly behind the times. But such deficiencies are not likely to have any significance in dealing with the subject matter of first-year Property. 3. In preparing this Article, I examined all of the casebooks to make sure that the classes I describe here do fit the mainstream course. Occasionally, there will be footnote