Property - University of Pennsylvania Law School

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Oct 31, 2013 (3 years and 9 months ago)

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A. Campbell Austin



acaustin@law.upenn.edu



11/1/2013


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Property

I.

Philosophical/Policy Pers pecti ves

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A.

Property is . . .
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B.

Locke: Mixing labor with nature

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C.

Hegel/Rabin


Personhood & Fungible Property

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D.

Rawls


veil of ignorance


Mini
mum Standards

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E.

Utilitarianism


Maximize Aggregate Welfare

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F.

Transactions: Coase theorem (see Nuisance)

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G.

Entitlements: Calabresi & Melamed (see Nuisance)

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H.

Discovery/Functionalism v. Formalism

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I.

Comments on Property Systems

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II.

Possession

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A.

Acquisition/Capture
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B.

Adverse Possession
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III.

Es tates, Land and Future Interests

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A.

Four Present Possessory Interests

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B.

Six Future Interests
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C.

Key to Interests

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IV.

Concurrent Interests

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A.

Tenancy in Common
-

“To X and Y”
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B.

Joint Tenancy
-

“to X and Y in joint tenancy”
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C.

Tenancy by the Entirety (Marriage)

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D.

Other systems: Corporations, Trusts & Partnerships

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V.

Li mitations on Use

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A.

Duties of Landowners to other parties
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B.

Nuisance
-

Externalities

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C.

Trespass

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D.

Social Norms & Property Intistutions
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E.

Eminent Domain & Governmental Takings

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VI.

Real Es tate Transacti ons
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A.

Process
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B.

Issues

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C.

Breach & Remedies

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D.

Recording Systems

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E.

Covenants
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F.

Security Interests

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VII.

Landl ord
-
Tenant Law

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A.

Leasehold Interests

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B.

Tenant’s Duties

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C.

Evictions

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D.

Landlord’s Duties

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E.

Meyer’s Argument against Habitability (1975): Warranty of habitability is bad.

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F.

Rights Against Discrimination/Section 8

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G.

Examples of Landlord
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tenant court…

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VIII.

Servitudes, Easements & Non
-
Possessory Interests

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A.

Generally


Ar
guments for and Against

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B.

Who should be able to change things?
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C.

Easements

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D.

Real Covenants
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A contract attached to land.

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E.

Equitable Servitudes

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IX.

Common Interest Communities

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A.

Generally: Subset of Equitable Servitudes (e.g., Neponsit)

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B.

Creation & Judicial Oversight

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C.

Models

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X.

Zoning

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A.

Euclidean Zoning
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Constitutionality

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B.

Commentary

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C.

Takings?
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D.

Exclusionary Zoning
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E.

Growth Controls
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XI.

Takings
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A.

Generally
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B
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Exactions
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C.

Regulations on Use
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A. Campbell Austin



acaustin@law.upenn.edu



11/1/2013


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I.

PHILOSOPHICAL/POLICY

PERSPECTIVES

A.

Property is . . .

1.

Property Law is rules to allocate to scarce resources

2.

Property rights
are rules that structure relationships between people over things.

3.

Bundle of Rights

a)

Rights to: Use, Possess, Exclude, Transfer, Alter, Fruits

b)

Exclusion of one right doesn’t mean you don’t own the property.

B.

Locke: Mixing labor with nature

1.

Anything you remo
ve from state of nature

2.

Objective: SUPPORT PRODUCTIVE USE OF LAND.

3.

Problems:

a)

Anything you can’t consume isn’t your property

b)

Contracts can violate this


migrant workers picking tomatoes don’t get to keep them.

c)

Now, there’s no un
-
owned property.

d)

What about

Shared rights?

4.

Your own body

a)

limits


no drug use

b)

no sale of organs

5.

Government’s responsibility is to protect those property rights.

6.

What happens when use or property interferes with another’s use of their property? Nuisance
,
etc.

C.

Hegel/
Rabin


Personhood & Fungible Property

1.

Things become part of us


familiarity leads to extension of self.

2.

Exercise of will is essential to individuality

3.

Community relationships with property, because individuals have relationships with groups
(see Zoning,

below)

4.

Some flaws:

a)

People don’t really have to have property to be people

b)

Can interact with stuff that’s not your own property

5.

What does this mean? Fungible v. Personal property

a)

Some property is essential to personhood


personal property (e.g., special
stuff that can’t
be exchanged or compensated)

b)

Some property can be exchanged easily


fungible property (e.g., cash)

6.

E.g., eminent domain


more respect for personal homes

D.

Rawls


veil of ignorance


Minimum Standards

1.

Hide your actual potential, everybody
would like the lowest common denominator to be good.

2.

Sort
-
of counter
-
argument: some people are risk
-
takers, and are ok with the possibility of
Getting a crappy situation if they can have the opportunity of great success.

3.

Some people are satisfied with LCD,

others are willing to take risk… in some cases, though,
we socialize risk (e.g., insurance)

E.

Utilitarianism


Maximize Aggregate Welfare

1.

Rough estimate


GNP

2.

Free market is best method for doing this


invisible hand

3.

USE LEGAL SYSTEM TO ADDRESS MARKET FAIL
URES.

a)

Externalities / Commons (well, open access)

(1)

Free goods will be exhausted

(2)

Nash equilibrium/prisoner’s dilemma

(3)

Dis
-
alignment of personal and aggregate interest.

(4)

Fix with private property

(a)

E.g., oysters along atlantic seaboard

(5)

Or, fix with taxes or laws
(or extrajudicial systems).

(a)

Have to handle pollution, when we can’t sell shares of air…

(b)

Allocate right to enter

A. Campbell Austin



acaustin@law.upenn.edu



11/1/2013


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(c)

E.g., lobsters

in maine

b)

Utility can’t be measured purely in dollars…

c)

Tendency toward monopoly

d)

Individual myopia…

e)

Some problems
with CLARITY OF INFORMATION!?

f)

Is this a descriptive or aspirational

4.

Other systems instead of Private Property as optimal system for maximizing efficiency?

a)

Basketball example of common (yet limited) resource

(1)

Who’s got next?

(a)

Witnesses

(b)

Size of “contestants”
.

(c)

Free throw contests

(2)

Winner stays

(3)

No authority for redress of grievances

(4)

But court isn’t very nice… go to sports club?

F.

Transactions: Coase theorem (see Nuisance)

1.

Transaction Costs and Least
-
Cost Avoider

2.

Who gets the entitlement?

a)

“Entitlements should be a
warded to the party that would have started bargaining for them
in the absence of transaction costs.” (Economic efficiency


give the entitlement to the
person who values it most (who can use it most efficiently for the market))

3.

Builds off Utility: use le
gal system to enforce property rights and expedite transactions


efficient allocation of resources!

a)

Universality


property can be owned by anyone

b)

Exclusivity



property can be owned by just one someone

(1)

Limits


farmer might be limited by other’s fair use

of their property

(2)

Eminent domain

c)

Transferability



property can be transferred from one someone to another someone

4.

Problems this seeks to avoid:

a)

Cost of negotiation and litigation.

b)

Free
-
rider problem


people will wait for someone else to sue.

c)

Hold
-
out pr
oblem


people will negotiate company contribution up, claiming it’s worth
20 or 25K, not 10 or 15.

d)

Opportunism


factory can extort more money than just cost of filter.

G.

Entitlements: Calabresi & Melamed (see Nuisance)

1.

Guiding principle: Least
-
Cost Avoide
r

a)

“Least
-
cost avoider”


award burden to the party who can most cheaply solve the
problem. (to force them to fix it)

b)

Or assign based on “moral right”

2.

Property Entitlement


market transaction, specific performance, equity.

3.

Liability Entitlement


Court
-
de
termined
Damages

a)

If lots of holdout/opportunism problems

b)

Or high TX costs.

c)

Reduction from property costs to keep essential factory open.

4.

Inalienability Entitlement


right can’t be sold, transferred, etc. (no kidneys)

H.

Discovery/Functionalism v. Formalism

1.

Right by discovery

similar to Capture.

2.

Right by Conquest

Johnson v. M

Intosh

3.

Instrumentalist v. Formalist

Pierson v. Post


I.

Comments on Property Systems

1.

Neighborliness
Principle


Shasta County
-

Ellickson

2.

Seniority
and Shared commons


Lo
bstermen in Maine


3.

Bill of Rights to protect CIC residents


French

(see
Common Interest Communities
)

4.

Land
-
use regs by Gov’t


Ellickson, Epstein
, etc. (see
Zoning
)

a)

Karkainnen


quasi
-
commons

A. Campbell Austin



acaustin@law.upenn.edu



11/1/2013


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b)

Mandelker


externalities.

5.

Decline of private property


Sax

(se
e
Takings
)

6.

Tragedy of the commons



Hardin

II.

POSSESSION

A.

Acquisition/Capture

1.

Conquest:
Johnson and Graham’s Lessee v. M’Intosh

Statement of Policy (Utility)

a)

UNITED STATES has title over unowned Indian land.

(1)

Right of Eminent Domain

(2)

Compensation of Indians nec
essary.

b)

PRODUCTIVE USE: you have to use the land, otherwise you lose it.

c)

CLEAR TITLE: US has title, period. New rule

doesn’t necessarily fit perfectly with
past history.

2.

Capture:
Pierson

v. Post

a)

Occupancy

b)

Property interests in wild animals is acquired by
occupancy only

c)

Rules v. Standards:

(1)

Rules


objective, efficient, but arbitrary, expensive to create.

(2)

Standards


more fair, cheap to create, but subjective, less efficient.

3.

Water interest
-

Riparian ownership:
Evans v. Merriweather


a)

Policy issue: want to p
rotect subsistence farming; parties should share common stream.

b)

Jury decides what reasonable use for individual farmers are.

c)

More important question: WHAT STANDARDS FOR ALLOCATION OF SCARCE
RESOURCES?

(1)

What is the property? In this case, water is common.

(2)

Wh
at rights? Well,

4.

Water interest


Prior User:
Coffin v. Left
-
Hand Ditch Co.

a)

Policy


efficiency.

b)

Want to avoid litigation, so court cleans up history


retroactively makes law of colo.
Match current constitution.

c)

Encourages efficient use of property


fir
st users get benefit.

d)

Also, don’t want to admit that Coffin’s rights have been changed; so Ct. says that he
never had right to water.

B.

Adverse

Possession

1.

Rules:

a)

Actual possession

(1)

Consistent with normal use, according to characteristics of la
nd.

(a)

Enclosures

(b)

Improvements

(2)

Constructive possession


POLICY

(3)

Color of title



claim based on defective document

b)

Hostile with a claim of right

(1)

Belief that property is YOURS.

(a)

Positive

(b)

Good faith

(2)

Can mean mistake (Mannillo)Jurisdiction
al Split:

(a)

Must be in bad faith


Maine Doctrine

(b)

Can mean honest mistake

Mannillo v. Gorsky

(steps)


follows
Connecticut
Doctrine

(c)

Becomes question of the action being “contrary to the interest of the real
owner”

(3)

Presumed or implied permiss
ion invalidates it.

c)

Open and notorious

(1)

Have to be give notice to public

(2)

Real owner has to have option for taking action against you)you.

A. Campbell Austin



acaustin@law.upenn.edu



11/1/2013


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d)

Exclusive possession

(1)

Nobody else can be using the property

e)

Continuous for Statutory Period

(1)

Statutory Period

(2)

Tolling


d
isability of owner.

(3)

Tacking

f)

Other considerations:

(1)

Taxes

(2)

SEE EASEMENTS, COVENANTS and EQUITABLE SERVITUDES

(a)

Adverse P. requirements used for Easement by Prescription.

2.

E.g.,
Mannillo v. Gorski
-

apply test:

a)

Guy builds steps 15” onto another’s property.

b)

Actu
al? Yes.

c)

Hostile? Well…

(1)

No intent

(2)

But it’s contrary to the interest of the real owner. (adopts Connecticut doctrine here)

d)

Open & not.? Well…

(1)

Not really

it’s only 15 inches.

(2)


e)

Exclusive? Yes.

f)

Continuous? Yes.

3.

Can also look at
Finley v. Botto
(apartment b
uildings, path in between, under EASEMENTS)

III.

ESTATES, LAND AND FU
TURE INTERESTS

A.

Four Present Possessory Interests

1.

Fee simple absolute (longest)

a)

“enfeffment” ceremony with clod of dirt.


origin of term “FEE”

b)

all the ownership rights + infinite duration

c)

no
qualifications

d)

use of “fee simple” or “fee simple absolute”

2.

Fee tail (long)

a)

duration is the life of the grantee

b)

“heirs of grantee’s body”

c)

three ways to deal with them (even one that’s been grandfathered in):

(1)

“A and the heirs of his body”

(2)

some states refuse

this

fee simple absolute is substituted.

(3)

Some states say “ok, whatever, but grantee can convert it to fee simple”

(4)

Some states allow only one generation.

3.

Defeasible fees (short)

a)

e.g., person gives you interest in property, but it’s conditional.

b)

reverts bac
k to grantor or his heirs.

c)

Two types:

(1)

FEE SIMLPLE DETERMINABLE: Explicit duration


“possibility of reverter” held
by grantor (repossession is automatic)

(2)

FEE SIMPLE SUBJECT TO A CONDITION SUBSEQUENT: Conditional duration


“right of re
-
entry” held by grant
or. (sometimes reentry is required for repossession
with this)

4.

Life estate (shortest)

a)

for the duration of the grantee’s life

b)

how is it created?

c)

What rights and obligations to grantee?

(1)

Statutorily defined

(2)

In some states, no changes allowed

(3)

LAW OF WASTE

(a)

so
metimes not even allowed to improve the property (ameliorative waste)

(b)

permissive waste


can’t just “let it go”

A. Campbell Austin



acaustin@law.upenn.edu



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(c)

harmful waste.

5.

Term use

a)

landlord
-
tenant situation… see below.

B.

Six Future Interests

1.

Possibility of Reverter

a)

After present possessory estate has e
xpired, property reverts to grantor.

2.

Right of re
-
entry or power of termination

a)

After conditional present possessory estate, grantor retains right of re
-
entry.

3.

Reversion

a)

After expiration of life estate, property reverts to grantor.

4.

Contingent remainder

a)

Pend
ing condition, when property doesn’t revert to grantor.

b)

Also if the grantee is unknown

5.

Vested interest

a)

Certain

b)

Can be vested, subject to open (remember “fertile octogenarian”), divestment, or
defeasement

c)

When there’s no condition on the remainder, it’s a v
ested interest.

6.

Executory interest

a)

Future interest given when grantee gets everything remaining (e.g., remainder of infinite
duration after a life estate)

b)

Pending condition

term use, life use, defeasablility, etc.

C.

Key to Interests

Fee Simple Absolute

no fu
ture interests


Fee Tail (archaic)


Reversion to Grantor


Fee Simple Defeasable:


FS Determinable (
automatic
)


Possibility of Reverter (
to grantor
)




(duration: “so long as”, “while”, “until”)


FSSubj. to Executory Limitation (
automatic
)


Executory Inte
rest (
to 3
rd

party
)




(same as cond. subs.)


Shifting






Springing (after one grantee,







then back to grantor, then to another grantee)


FSSubj. To Cond. Subseq. (
grantor act
)



Right of Entry/ Power of Termination



Express Reservation



Conditi
onal




(“but if”, “on condition that”, “provided, however”)


Life Estate


Reversion


(to grantor)





Shifting Executory Interest


(to 3
rd

party)






Remainder


(to 3
rd

party)







Contingent (condition precedent)






Vested








Indefeasably







Subject to Open







Subject to Defeasance (condition subseq.)








Partial








Complete

IV.

CONCURRENT INTERESTS

A.

Tenancy in Common
-

“To X and Y”

1.

Each party owns a percentage, but percentages add up to 100%

2.

No reimbursement necessary for use of allot
ted percentage (regardless of where it is)

3.

Still limits on what each party can do.

4.

Rights and Obligations:

a)

Partition



(1)

in kind


split the land (preferred) E.g.,
Delfino v. Vealencis
(dump
-
owner v.
developer tenant in common)

(2)

by sale


sell the land, spli
t the proceeds

A. Campbell Austin



acaustin@law.upenn.edu



11/1/2013


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(3)

by appraisal


permit one tenant to buy out others

b)

Possession

(1)

All tenants have right of possession of 100%

(2)

But tenants’ interests all add up to 100%.

(3)

“OUSTER” when one tenant is prohibited from using the property.

(a)

(in which case, ousted ten
ant gets rent from tenant in possession)

c)

Contribution

(1)

Tenant can demand taxes, mortgages, insurance, repairs, etc. from other tenants. (at
accounting or at partition)

(2)

Repairs


cost of repair.

d)

Fiduciary Obligations

(1)

Higher standard of care with regard to
co
-
tenants

(2)

Confidential relationships create fiduciary obligation: any co
-
tenant who gets a lien
is deemed to have acquired it on behalf of all the co
-
tenants.

(3)

Inherited Title: co
-
tenants who acquire their interests by will are regarded as
fiduciaries.

e)

Ac
counting

(1)

Bring suit anytime, but can also wait until partition.

(2)

Rents


assumes one party is doing management, provides for other parties to
monitor that management

(3)

Depletion


waste, allowed for fractional depletion of resources.

5.

AP Article
-

Developers a
nd Lawyers Use a Legal Maneuver to Strip Black Families of Land
(100s of joint tenants, developer buys a couple, forces partition by sale):

B.

Joint Tenancy
-

“to X and Y in joint tenancy”

1.

Each party owns 100%
-

as if they are each sole owners

2.

Concurrent inte
rest


parties are considered
one person
.

a)

E.g.,
Swartzbaugh v. Sampson
(husband sub
-
leases to boxing outfit)


one joint tenant
can’t sue other, and can’t prevent one tenant from using all of the property.

b)

Flaws


courts prefer tenancy in common.

3.

RIGHT OF

SUVIVORSHIP


last living tenant keeps everything (common among married
types or families)

4.

Some requirements: “four unities”

a)

Same time

b)

Same title

c)

Same interest

d)

Same possession

e)

Now, not so much in effect

courts are more and more willing to interpret what us
ed to
be set in stone.

5.

Pretty much able to be broken by one party, though, by conversion into tenancy in common
through straw man.

a)

E.g.,
People v. Nogarr
(husband mortgages his share to parents, dies)

(1)

POLICY: Encourage people to enforce their claims quick
ly.

(2)

POLICY: Encourage creditors to contract with both joint tenants of a given property.

(a)

Creditor only gets part interest. Right of survivorship means that creditor
only

C.

Tenancy by the Entirety (Marriage)

1.

Additional constraints

2.

Don’t have “four unities”

anymore, but…

a)

need marriage

b)

survivorship sticks

c)

can’t use property without consent of both parties

3.

Community law


anything coming in (e.g., paychecks) are community property, nothing is
individual

a)

also protects community property from suits against indiv
idual liability

4.

“to X and Y by the entirety”


has to be said explicitly!

A. Campbell Austin



acaustin@law.upenn.edu



11/1/2013


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5.

Statutory Rule of Community Property

a)

Based on Civil Law

b)

Division of property is still pretty specific

6.

Effect of Mortgage on Joint Tenancy


Title Theory State

Lien Theory State

Inte
rest held by
lender

Legal title

Security interest

Interest held by
joint tenant

Equity of Redemption

Legal Title

Effect

Unity of interest
destroyed; joint tenancy
severed; lender gets ½
(or whatever) interest in
property as tenant in
common.

Joint tenanc
y survives; lender gets nothing.

People v. Nogarr



non
-
mortgaged tenant
gets windfall if mortgaged tenant dies.

Of course, if lender forecloses, then joint
tenancy must be split, and lender gets
tenancy in common.

(there might be a right of redemption h
ere,
though.)

7.

Main questions at divorce are “what is property”?

a)

Professional Degrees are not property: E.g.,
In re the Marriage of Graham
455 N.W.2d
303 (Iowa App 1989) p.241

(MBA degree is not property)

(1)

Doesn’t conform with traditional property concept
s

(2)

No market value; can’t be transferred, etc.

b)

Medical License is property: E.g.,
O’Brien v. O’Brien

66 NY2d 576 (1985) p.246

(medical practice & loans are property)

(1)

Present value of medical license

(2)

Statute holds that all property acquired by either or both

spouses during the marriage
and before the execution of a separation agreement … regardless of the form in
which title is held.”

(3)

Economic partnership


marital property


each partner makes a contribution, and is
entitled to that contribution and apprec
iation thereof

(4)

Pre
-
nups are means of contracting around the rule.

(5)

The court is also locking in the decision to practice medicine by valuing the degree;

(6)

Can declare them loans that should be paid back with interest (Calif.)

D.

Other systems: Corporations,
Trusts & Partnerships

V.

LIMITATIONS ON USE

A.

Duties of Landowners to other parties

1.

Undiscovered trespassers: No Duty of Care

2.

Licensees (guests): Duty to inform of hidden hazards, don’t have to inspect

3.

Invitees (Business guests/Customers): Duty to keep place s
afe, inform of hazards, inspect.

4.

Many jurisdictions have thrown out these distinctions, now: reasonableness.

5.

Businesses (public accommodations) can’t discriminate on race, religion, etc.

B.

Nuisance
-

Externalities

1.

Coase Theorem

a)

New Idea: Bargaining over exte
rnalities


factory v. residents

(1)

Costless bargaining corrects externalities, always.

(a)

Residents/Factory could install home AC (150K)

(b)

Residents/Factory could pay to install filter (100K)

(c)

Residents/Factory could move. (500K)

(2)

Doesn’t matter who wins the cour
t case; most socially efficient result will happen.

(3)

Of course, the court decision will force the burden
/cost onto the losing party.

b)

But there are

transaction costs


(1)

Negotiation and litigation

(2)

Free
-
rider problem


people will wait for someon
e else to sue.

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(3)

Hold
-
out problem



people will negotiate company contribution up, claiming it’s
worth 20 or 25K, not 10 or 15.

(4)

Opportunism


factory can extort more money than just cost of filter.

c)

Conclusion: “entitlements should be awarded to the party tha
t would have started
bargaining for them in the absence of transaction costs.”

2.

Calabresi & Melamed

a)

Other conclusion:
“least
-
cost avoider”



award entitlement to force the party who can
most cheaply solve the problem.

b)

3 TYPES OF ENTITLEMENTS:


Property




rket
transaction EContractsF

Liability



Court
J
set
damages. EqortsF

Inalienability



right can’t be sold.

bncroacher
EfactoryF

ff factory winsI
residents have to buy
out owner. Ee.g.I
Waschak v. Moffat
)

Court
-
defined damages
to factory

Nuke plants


allow
ed to pollute
always.
E
Herculaneum
)

Property
Owner
(residents)

If property owner wins,
then factory has to pay
residents.

Damages to residents.
(e.g.,
Boomer v.
Atlantic Cement
)

(no kidney sales!)

c)

Property Rules
: Cost should be allocated to put cost on s
ide best able to deal with
problem: e.g.,
Waschak v. Moffat

379 Pa. 441 (1954) p.299 (coal banks)

(1)

Social norms hold coal banks are reasonable and natural use of land.

(2)

Well, sort of… dissent says it’s pretty unreasonable, and possibly downright
hazardous.

d)

L
iability Rules
: e.g.,
Boomer v. Atlantic Cement

26 NY2d 219 (1970) p.311 (temporary v
permanent damages from plant)

(1)

Law says: “if nuisance
, then injunction.”

(2)

Economic considerations of shutting down the plant win.

(3)

Court concludes that perm
anent damages (NPV) is the appropriate award.

(4)

But this is a crappy incentive, as noted in dissent


we’re allowing them to continue
committing the wrong. Successive actions, despite being a pain in the neck, are
better at this.

e)

Inalienability
Rules: e.g.,

Herculaneum, MO


Lead
-
tainted town

(1)

Example of liability (kind of),

(2)

Might also fit with property (because company is buying out some homeowners)

(3)

To certain extent, right of company to exist is inalienable

protected despite
pollution.

(4)

Ultimately, though,
we don’t know who has the right here

there’s no case in
Missouri saying “factories can’t spew lead” or the opposite…

(a)

Because nobody wants to sue the company.

(b)

And, company is crucial to survival of the town

(5)

Now, rule established


property right, has to buy

out residents.

(a)

Kids?

(6)

No set price… when purchased?

C.

Trespass

1.

Classic Case: e.g.,
Pile v. Pedrick
167 Pa. 296 (1895) p.288 (wall 1½” over property line,
forced to tear it down)

a)

Clear standard

b)

Property rule


buy out other party.

c)

Cost issue:

(1)

Chipping wall o
ff

(2)

New wall

(3)

Buy out plaintiff

2.

Reasonableness Standard: e.g.,
Geragosian v. Union Realty
289 Mass. 104 (1935) p.289
(theater fire escape & sewer line encroaching, court says just fix it)

a)

New drain would cost $4,300; property only worth $2,800

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b)

Despite the fa
ct that the owner suffers little or no damage to trespassee, injunction still
holds.

c)

Couple of exceptions to injunction:

(1)

Laches (delay)

(2)

Estoppel (prior promise to accept trespass)

(3)

Hardship

(4)

“Unclean hands



taking advantage of Vartig
ian’s knowledge of trespass.

d)

Rabin’s Personhood interest applies, sort of. But there hasn’t been a whole lot of
personal investment here…

3.

Good Faith Improver; e.g.,
Rabb v. Casper
51 Cal. App 3d 866 (1975)

p.292 (shack & house
on California property, warn
ing issued midway through construction)

a)

Casper relies on “good
-
faith improver” statute: requires people to buy out trespassee
when improvements are made in good faith
.

(1)

Protect against unjust enrichment


landowner could say “I want the n
ew house!”

(2)

Waste & inefficiency… poor utility to require people to tear down houses…

(3)

Adverse

possession arguments…

(4)

…except that we also need to protect rights of property owners, otherwise people
won’t buy property… slippery slope.

b)

T.Ct. f
inds for D, but doesn’t take negligence into account (negligence in not stopping
construction after warning, not surveying to begin with).

c)

App.Ct. remands


T Ct should consider warning as negligence


can’t surprise

with
objection midway
through.

D.

Social Norms & Property Intistutions

1.

Sublegal social systems serve to adjudicate more often than law: Ellickson
:
Shasta County
Case Study

a)

Cattle farming on plains, winter cattle on mountains in rural county

b)

Foothill population gr
owth

c)

Different trespass rules:

(1)

Open range

(a)

No liability except for “goats, swine & vicious dogs”

(b)

Liability in fenced areas

(2)

Closed range

(a)

Common Law: owners of animals are strictly liable

(3)

Patchwork of closed & open range areas, as dictated by ordinance.

d)

Soci
al Norms control

(1)

Laymen: One group “has the rights”

(a)

Cattlemen in open range

(b)

Property owners in closed range

(2)

Legal experts:

(a)

Lawyers/etc.
-

Focus on negligence

(b)

Insurance adjusters

(c)

2 county officials know:

(i)

Animal control officer

(ii)

Brand inspector

(3)

Neighborline
ss dominates

(a)

Lawsuit as last resort

(b)

Coase: people first find out legal entitlement

(c)

Reality… people are “outside the shadow of the law”


social norms
dominate…

(d)

So, is law really that important?

(e)

Well, all of this assumes the same interest


neighborliness.

e)

Informs ‘alternative dispute resolution’


neighborliness is better system in homogenous
society…

(1)

Protect property owners… well, which property?

f)

Law is one
-
shot deal; Neighborliness is long
-
term engagement. (Game Theory)

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2.

Neighborliness:
Schild v. Rubin
232 Cal.App.3d 755 (1991) p.474

(neighbor sues for
basketball playing)

a)

Schild’s kid plays basketball; neighbor Rubin complained. Schild installs “noise
abatement tech”

b)

Rubin sprayed them with water.

c)

Schild sues. Rubin counter
-
sues.

d)

Rubin brings in exper
ts:

(1)

Accoustical engineers monitor noise levels


finds Noise level exceeds LA noise
standards.

(2)

Appraiser says 15% reduction in value.

e)

T.Ct. says basketball only at certain times.

f)

App. Ct. throws it out, claiming that there’s no evidence of emotional distre
ss

g)

Courts are pissed that case is there

“you have by your conduct and by your position as
lawyers embarrassed the Bar and the judicial system as a whole”

3.

Limitations on rights of property owners

a)

Limits on Right to Exclude Gov’t workers:
State v. Shack
58 N
J 297 (1971) p.372

(migrant farm worker aid barred illegally)

(1)

Facts:

(a)

D attempted to provide gov’t
-
backed legal and health aid to migrant
workers on P’s land

(b)

P calls state trooper, charges trespass

(c)

P wins in T Ct and App Ct, D wins in Sup. Ct.

(2)

SCNJ says rig
ht to exclude doesn’t include right to exclude gov’t workers in
pursuance of their offices.

(a)

Migrant farmers are employees housed on P’s land

(b)

Title to real property cannot include dominion over the destiny of guests.

(c)

Law will deny the occupants the power to

contract away what is deemed
essential to their health, welfare or dignity.

(d)

But, there’s a way to protect their rights without infringing on the property
right of the owner.

(e)

And, to a certain extent, this is an unlawful search

no warrant.

(3)

You can now get
access to someone else’s property when you’re providing a gov’t
service, essential to health, welfare, or dignity, to disadvantaged third parties that
they cannot receive any other way.

b)

Quasi
-
public space
:
PruneYard Shopping Ctr. v. Robins

447 US 74 (1980)

p.377 (HS
students passing out fliers in privately
-
owned shopping area)

(1)

Facts:

(a)

HS students distributing pamphlets

(b)

Shopping ctr has rules against such activity.

(2)

SCOTUS says it’s ok


(a)

Shopping center offers public invitation (different from private houses,
etc.)

(b)

Speech in shopping centers allowed by state law

(c)

14
th

Amendment


due process…

(i)

Can scare off shoppers

(ii)

This is not really a taking…

(iii)

But there are restrictions:

(a)

Can’t force some people to bear burden

better borne by public as a
whole.

(b)

M
ust be done in orderly manner.

E.

Eminent Domain & Governmental Takings

1.

Right of the sovereign, comes from English law.

2.

5
th

Amendment protects.

a)

“Nor shall private property be taken
for public use

without just compensation.”

b)

Fair Market Value

c)

What is Public us
e?

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3.

Stretching Eminent Domain: Redistribution of land as public use
:
Hawaii Housing Authority
v. Midkiff
467 US 229 (1984) xerox

(18 landowners own 40% of land in Hawaii, HHA
condemns property, takes it, and resells it to lessees)

a)

Landowners claimed that t
his isn’t public use.

b)

SCOTUS says: “eminent domain power is rationally related to a conceivable public
purpose, the Court has never held a compensated taking to be proscribed by the Public
Use Clause.” So it’s ok according to the Ct.

4.

Stretching Eminent Do
main: Job creation as public use
:
Poletown Neighborhood Council v.
City of Detroit

(City takes 1000 structures, 450 acres, and gives it to GM for plant) handout
(304 NW2d 455)

a)

Public purpose (saving jobs) makes this ok under the Public Use clause.

b)

Dissent
says that’s crap

gov’t is taking people’s property

5.

Current Standards:

a)

Public use is whatever gov’t says it is… (current standard)

b)

Don’t want to force private individuals to bear costs that should be borne by the entire
public.

6.

Possible Standards:

a)

“Actua
lly used by the public”

(1)

who is ‘the public’?

(2)

what is use? (profit?)

b)

“Benefits public”

(1)

what’s a ‘benefit’

c)

“Can’t be owned privately, must be owned publicly”

(1)

but everyone doesn’t agree on what they want

(2)

and private ownership may benefit the public (e.g.,
charter schools, etc.)

d)

“No commercial purposes”

(1)

consistency?

(2)

Discouraging profit isn’t really a good thing…

e)

“Hierarchy of needs”

(1)

housing, farming, etc…

f)

Free Markets?

(1)

But is the market really broken? (Personhood/Holdouts/etc.)

VI.

REAL ESTATE TRANSACT
IONS

A.

Pr
ocess

1.

Contract

2.

Escrow period


recording acts

3.

Closing


delivery of deed; Record deed immediately!

4.

(Foreclosure of Security Interests)

B.

Issues

1.

Caveat Emptor

a)

Generally, Buyer has burden

of finding problems/issues.

b)

Exceptions:

(1)

Covenants of Titl
e

(2)

Warranty of Fitness (new houses only)

(3)

Suit for misrepresentation

(4)

Suit for Fraud

2.

Statute of Frauds for Land Transactions (Rest Contr. §110)

a)

Specific requirements

b)

Must be in writing (Rest Contr. 2d §131)

(1)

Identify the parties

(2)

Describe the land

(3)

State the pri
ce

(4)

State other essential terms

c)

Rest. Contr. 2d §129


reliance on promise is exception to this

specific performance
may be required.

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3.

Equitable Estoppel


when one party detrimentally relies on the oral contract, the court may
enforce specific performance


based in Fraud.

a)

there was a false representation or concealment of material facts,

b)

the representation must have been known to be false by the party making it, or the party
must have been negligent in not knowing its falsity,

c)

it was believed to be true
by the person to whom it was made,

d)

the party making the representation must have intended that it be acted on, or the person
acting on it must have been justified in assuming this intent, and

e)

the party asserting estoppel acted on the representation in a w
ay that will result in
substantial prejudice unless the claim of estoppel succeeds.

C.

Breach

& Remedies

1.

Recission and restitution

2.

Damages

3.

Specific performance

4.

Measure of damages:

a)

Benefit of the bargain

b)

Incidental damages

c)

Consequential damages

5.

Damages in Reliance:
Younge v. Huysmans
127 NH 461 (1985) p.396

(estate sale, withdrawn,
= breach)

a)

Facts

(1)

H offers to purchase for $160K, provides deposit of 10K (8/10)

(2)

Bank and H conclude price of 172K (8/21)

(3)

Bank sends confirmation letter (8/31)

(4)

H records

letter at city hall (9/8)

(5)

H sells their house (9/8)

(6)

Bank sends letter (End of Oct.)

(7)

H notes problems with letter (10/29)

(8)

Bank finds record of letter,wants it released (11/1)

(9)

Bank says “deal’s off” (11/18)

(10)

H gives unwitnessed release to Bank (4/8)

(11)

Bank sel
ls land to C (9/1)

(12)

C makes improvements

(13)

Bank and C file to QUIET TITLE (10/1)

(14)

H files for specific performance (12/27)

b)

Court says:

(1)

It’s a contract

(2)

Damages

(a)

$1.2K in specific damages

(b)

$15K in aggravation and harassment

c)

When do we have a contract?

(1)

Do you need
a writing?

(2)

Lay understanding: lots of paperwork assumed!

(3)

Lots of consideration here, though:

(a)

10K check, H sells house

(b)

Bank took house off market

(4)

Bank seems dishonest (“short note to confirm that we have accepted your offer”)

(5)

Bank should take property off t
he market in exchange for deposit, at lest… but this is
custom, not law.

D.

Recording Systems

1.

Indexes:

a)

Tract System


indexed by property

b)

Grantor
-
Grantee System


indexed by last name

2.

Recording laws:

a)

Race Statutes: 1
st

person to record wins, even if he’s the

2
nd

purchaser.

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(1)

Rule


clear.

(2)

But… assumes perfect knowledge of the law.

(3)

Also, if there’s notice and a 2
nd

purchase, then 2
nd

purchase can still win…

b)

Notice: 1
st

person to give notice wins. if 2
nd

purchaser didn’t have notice, then he
wins

(1)

Standard

somew
hat unclear

(2)

Actual v. constructive notice?

c)

Race
-
Notice: 1
st

person to file or give notice

(1)

Balances needs of 2
nd

purchaser

(2)

So if there’s no notice, then 1
st

to file wins.

3.

Problem areas, e.g., Philadelphia’s recording system

a)

8
-
10 month delays.

b)

Stamped on s
ubmission date, but sits for awhile.

c)

Causes problems for

(1)

Race statutes

(a)

Law relies on recording and on dates.

(b)

Clouds title


don’t know if you win until much later!

(c)

Can slow real estate xactions, if we have to wait for clear recorded title.

(d)

Can discourag
e improvements.

(2)

Notice statutes


(a)

No problem if true owner occupies it

(b)

standard doesn’t rely completely on recording system.

(c)

Recording system can be notice, though, so if there’s nothing recorded, then
2
nd

purchaser can claim no notice & get title.

(3)

Race
-
not
ice:

(a)

PA law.

d)

Possible solution:

(1)

Private informal filing systems

e)

NY doesn’t have this problem

(1)

NY has bigger market

(2)

More interests in NY market

(3)

NY has more money to support recorder of deeds office

(4)

NY has tradition of better gov’t; deeds office isn’t polit
ical.

4.

Other problem areas:
Phila. Housing Scam

a)

Look for abandoned property

b)

Forge a deed

c)

Have deed transferred to him

d)

Sell it to another party

e)

Issues

(1)

Anyone can get a deed at the recorder’s office

(2)

Anyone can file a deed

(3)

Deeds aren’t scrutinized

f)

Couple of p
ossible solutions:

(1)

Improve professionalism of public sector

(2)

Improve notary system

(3)

Cut political influence

reduce corruption.

5.

Constructive Notice
: e.g.,
Miller v. Green
264 Wis 159 (1953) p.412 (farm sale to lessee, 2
nd

sale to other guy, lessee wins becau
se he took possession)

a)

Facts

(1)

Green owns farm

(2)

Miller leases it

(3)

Miller buys it & continues farming land

(4)

Hines buys it from Green

(5)

Miller sues

(6)

T Ct says no notice of Miller’s purchase, so Hines wins.

b)

Court says

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(1)

Race
-
Notice statute


1
st

filing or 1
st

notice.

(2)

Court says Possession = notice

(3)

Miller gets it

he possessed the land.

(4)

2
nd

buyer should check out the land; if he had, he would have found Miller
possessing it.

(5)

So tough nuts.

E.

Covenants

1.

Present Covenants

a)

Sesin


promise that grantor has title

b)

Right to conve
y


promise that grantor has right to transfer

c)

Freedom from encumbrances
-


2.

Future Covenants

a)

Warranty

b)

Quiet enjoyment

c)

Further assurances

3.

Types of deeds:

a)

General Warranty


contains all covenants of title

b)

Special warranty


protect grantee from certain acts

by grantor

c)

Quitclaim


no promises

F.

Security Interests

1.

Types of Interests

a)

Mortgage


lien on the property; majority consider this transfer of title.

b)

Deed of Trust


borrower conveys title to trustee, who holds the property in trust for the
benfit of the le
nder.

2.

Foreclosure

a)

Lender may foreclose if

(1)

Debtor is unwilling to pay

(2)

Debtor fails to insure, or pay taxes

(3)

Debtor fails to maintain the property

b)

Types

(1)

Judicial Foreclosure


lender files suit

(a)

Borrower usually has
Right of Redemption

(2)

Power of Sale Foreclosur
e


lender may hold public sale of property almost
immediately.

c)

Right of Redemption Statutes


(1)

Statute

(2)

Borrower (or his heirs/assigns) may redeem the property for a specified period after
the sale

(3)

Normally, borrower remains in possession during the redempti
on period (defined by
statute)

3.

Deficiency Judgment



when foreclosure sale proceeds don’t meet the debt.

a)

Lender may seek deficiency judgment against borrower

b)

Anti
-
Deficiency Statutes



some states prevent deficiency judgments. (Depression
-
era)

(1)

Mortgagors c
an’t waive these protections.

(2)

Critics


say that these statutes increase the cost of mortgages, because it makes
lenders insurers of charge
-
offs.

VII.

LANDLORD
-
TENANT LAW

A.

Leasehold Interests

1.

Term of years


set term, possibly fraction of a year

2.

Periodic tenanc
y


set period, continuing automatically

3.

Tenancy at will


as determined by contract

4.

Tenancy at sufferance


penalty, e.g., tenant stayed past contracted period, etc.

5.

Leases can be contract or an estate/property interest.

B.

Tenant’s Duties

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1.

Pay rent

2.

Not maint
ain a nuisance

3.

Duty to vacate at the end of the term

C.

Evictions

1.

Forcible entry and forcible detainer


landlords may not use self
-
help

2.

Unlawful detainer

a)

notice

b)

bring suit

c)

upon tenant’s loss of suit, sheriff will evict

3.

Detainer statutes can
exclude damage claims & counter
-
claims

4.

Specialized landlord
-
tenant court:

a)

efficiency (regular system = 2 years to adjudication)

b)

specialization

c)

more substantial justice


judges with experience.

d)

Court may be more sensitive to tenants

5.

Landlords are repeat
-
cu
stomers, so they get benefit too.

D.

Landlord’s Duties

1.

Duty to Mitigate

a)

Have to show apartment as “one of vacant stock”

(unclear meaning, though)
Sommer v.
Kridel
(guy opts out of lease, landlord holds property vacant for another year, Sup. Ct.
changes rule,
reverses

enough evidence to say there was no mitigation.

b)

Landlord has duty to prove mitigation
:
Riverview v. Perosio
(guy rents for a year of 2
-
year lease, breaches at end of 1
st

year, court requires evidence of mitigation.)

c)

Reletting on tenant’s account


if the new tenant’s rent doesn’t equal the old tenant’s rent,
the old tenant has to pay the difference.

2.

Implied
covenant to deliver possession

a)

US Rule:
Legal Possession
: Getting rid of trespassers is tenant’s duty

b)

English Rule:
Actual Possession
: Landlor
d has to get rid of tenants

3.

Implied
covenant of quiet enjoyment

a)

Landlord, someone with paramount title, etc., can’t disrupt tenant’s possession.

b)

Doesn’t include other people. . . should landlord be required to provide quiet atmosphere
for tenant? Other te
nants, neighbors, etc., can cause problems, and landlord isn’t
responsible. . .

c)

Nuisances?
EXAM QUESTION


USE CALABRESI & MELAMED TO DEFINE
WHO HAS DUTY OVER NUISANCE
.

d)

Actual Eviction

e)

Constructive Eviction

4.

Warranty of Habitability

a)

Development:

(1)

Tradit
ional idea

landlord just leases the land; buildings are incidental (medieval
farmers, etc.)

(2)

Late 19
th

century idea

landlord has duty to keep premises habitable.

b)

Now, landlord has to maintain property fit for tenant’s use


inalienable interest.

(1)

Tenant stil
l has to show property was unsuitable (
based on housing codes
)

(2)

Tenant has to report them/give notice

(3)

Allow time for repair

c)

While we’ve had codes for a century, they’re still failures . . .

(1)

Incentive structures . . .

(a)

Penalties are pretty small.

(b)

Prosecuti
ons are rare.

(c)

Judges don’t do fines

(2)

Housing depts. are underfunded & understaffed

(a)

Capture by landlords

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d)

Tenant doesn’t have duty to repair, but have to pay after witholding
:
Javins v. First
National Realty Corp
. (tenants withhold rent because of new violati
ons of housing code)
p.634 (428 F.2d 1071; 1970)

(1)

Tenant
-
side arguments:

(a)

Tenants can’t fix stuff (plus, no money to do it.)

(b)

Tenants aren’t allowed to fix heat, water, etc., plus, apt. buildings are
complicated

(c)

Leases for limited term


no incentive to impr
ove

(d)

Monthly rent is fixed, creates responsibility

(e)

Unfair bargaining power, particularly in tight market

(2)

Landlord
-
side arguments:

(a)

No
-
waste; landlords should maintain their property, regardless of whether
they have tenants.

(b)

Landlords are in best position to
fix stuff

(3)

Housing Codes


Society
-
side arguments:

(a)

Housing codes are the standard of “fitness”

(b)

Housing codes are implied in all leases.

e)

Remedies:

(1)

Rent application


tenant can “repair and deduct”

(a)

Problems: tenant might not have enough resources to fix.

(b)

Dis
incentive for landlord to fix . . . maybe. Tho, tenant might go out and
get really expensive solution.

(c)

Tenant doesn’t know what he’s allowed to repair.

(2)

Rent withholding


tenant can withhold rent until the landlord fixes the
problem.

(a)


Once repairs are co
mpleted, all the rent goes to the landlord.

(3)

Rent abatement


court figures out what proper rent should be, given
violations.

E.

Meyer’s Argument against Habitability (1975):

Warranty of habitability is bad.

1.

Profitable repairs

a)

Tenant might be able to pay high
er rent

2.

Less
-
profitable repairs

a)

Warranty helps initially

b)

Quantity of this category will decline

it will slip into category 1 or 3.

3.

Unprofitable repairs

a)

Landlord will close, or just not make repairs.

b)

This is bad

decrease in supply of housing.

c)

Gov’t might
be forced to take it over.

d)

Only for awhile

at some point the mangement costs will be too high, even for gov’t.

F.

Rights Against Discrimination/Section 8

1.

Fair Housing Act

a)

Prohibits discrimination on race, national origin, etc. in sale or lease of property

b)

Exc
eption for sales/leases by owner, in regards to his own residence.

2.

Race discrimination: e.g.,
US v. Starrett City
840 F.2d 1096 (1988) p.658

(mixed
-
race
housing complex; fixed quotas by race


illegal)


(1)

Rental facility (intended to be co
-
op), Fed (HUD), st
ate (NYHFA) funding

(2)

Racially integrated

(3)

Neighborhood worried about impact of the development

(a)

Fear of white flight

(b)

Tipping problem (10
-
20% minority, accelerating minority population)

b)

DoJ brings suit, Says quotas violate FHA by making apartments unavailable
to blacks
solely because of race.

c)

What’s the purpose of FHA?

(1)

FHA was enacted with belief that it would result in
residential integration
.

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(2)

But, at the same time, it was more important to
prevent discrimination
.

(3)

Belief that cutting discrimination would prom
ote integration.

d)

Inherent conflict.

(1)

In order to ensure integration, SC had to discriminate.

(2)

Looking at 20 years after FHA, discrimination went down, and segregation went up.

e)

Ct. Says that congressional record doesn’t help.

(1)

Have to look at language of stat
ute.

(2)

Looks at Wygant, Johnson, Ambach

(3)

Creates three
-
part test to allow for quotas:

(a)

Temporary

(b)

Group it’s helping has to have faced discrimination in the past.

(c)

Has to allow access to minority groups.

(4)

Ct. Says case is based on 14
th

amendment

(a)

Uh, isn’t it an F
HA case?

(b)

Also, Regan DoJ wants to keep 14
th

amend. limited.

(5)

J says SC fails test.

(6)

But, it says that race
-
conscious plans are ok.

(a)

Stringent, restrictive test, tho.

(7)

Otero

case was one
-
time thing, doesn’t use “quotas” per se.

f)

Dissent.

(1)

Says FHA was intended to

prevent segregation, and that SC has done exactly that.

(2)

If Jury applies test, will it find that this is discrimation?

(a)

It might or might not be temporary

(b)

Ok, they’ve been discriminated against in the past.

(c)

It might actually be better for minorities to live

in integrated society . . .

(3)

Says gov’t involvement does indeed absolve SC of liability


SC was following
NYC housing guidelines. HUD approved federal money.

(4)

Nuanced response


promoting integration

(5)

Congress couldn’t have foreseen a situation where FHA
winds up destroying an
integrated community.

(6)

Conclusion


congress hadn’t foreseen it, so SC should have a chance to make it
work; since the statute isn’t clear, let’s experiment.

(7)

Of course, this can mean that only certain developments are integrated . . .


3.

Tipping point? Is this reliable/justifiable?

a)

Historical context


real estate agents that perpetuated tipping; agents would encourage
whites to move out (to suburban developments)

4.

When should society intervene to regulate private contractual relationshi
ps?

a)

Integration v. non
-
discrimination

b)

Does integration of SC result in less housing available to minorities?

c)

Racism is inherently paternalistic, even when the intention is “integration”

d)

People should have freedom to organize themselves as they like

e)

Economi
c disparities are likely more important than racial ones.

5.

Section 8


vouchers for federal rent funding (1974).

a)

low income requirement

b)

can be used anywhere in the city, etc.


no legal requirement that landlord take the
voucher.

c)

if we restrict the use of s
ection 8, is that discriminatory?

d)

no. it’s a privilege.

e)

could be racial “steering”

G.

Examples of Landlord
-
tenant court…

1.

Philadelphia

a)

Complaints that Philadelphia housing court is stacked in favor of landlords

b)

E.g., 25% of tenants don’t even get to show evi
dence of housing code violations.

c)

But… possible structural errors with study.

2.

New York

a)

Landlords have difficulty


lots of tenant protections.

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b)

Changes:

(1)

Escrow rule: rent deposits required (so tenants’ don’t want to delay anymore)

(2)

Judges appointed

3.

Why the
difference?

a)

In NY, buyers are more savvy, have more power

b)

In NY, appointed judges; in Phila., elected


landlords can buy support.

(1)

Particularly in Phila., because to get Dem. Party endorsement, you pay them $50K.

c)

Phila. Is a “city of homeowners”


65%. In

NY, you can make a lot of money and still
rent.

d)

Also, in NY, it’s hard to find an apartment

tenants will be more activist and will also
get more sympathy.

VIII.

SERVITUDES, EASEMENT
S & NON
-
POSSESSORY INTERESTS

A.

Generally


Arguments for and Against

1.

Pro:

a)

Provid
e for breaking up of property interests

b)

Ability to Contract right to use, without transferring the rest of your rights.

c)

Efficient division of property

d)

Flexible means of controlling land

e)

Now, includes everything from gas line easements to common
-
interest co
mmunities

f)

Increase aggregate utility/value by limiting negative uses

2.

Con:

a)

Problematic, tho, because of CHANGED CIRCUMSTANCES

b)

Exception, discussed but not used in
Bolotin
:
Preserve Efficient Breach
.

(1)

The court wil
l declare deed restrictions to be unenforceable when,

(2)

By reason of changed circumstances

(3)

Enforcement of the restrictions

(a)

Would be inequitable and oppressive,

(b)

And would harass plaintiff without benefiting the adjoining owners
.

(4)

If the original purpose can be realized, then covenant should be enforced.

B.

Who should be able to change things?

C.

Easements

1.

Terms/Classification

a)

Dominant Tenement
= benefits

b)

Servient tenement

= burden
.

c)

Affirmative Easement

(1)

Permits use of
another’s land

(2)

Ingress/egress

(3)

Appurtenant


anyone who occupies the land attached to the land

(4)

In gross


just one guy

d)

Negative Easement

(1)

Permit holder of easement to restrict other’s use.

(2)

E.g., obstruction of water

2.

Creation

a)

Express grant


Statute of Fraud
s (all land stuff)

b)



3.

Express Easements are favored
: e.g.,
Green v. Lupo
32 Wn. App. 318 (1982) xerox

(trailer
park, easement for road to house, motorcycles on road)

a)

facts

(1)

G sells L land via land contract (so G keeps title until full payment)

(2)

G releases cl
aim to title in exchange for easement

(3)

G builds trailer park

(4)

Trailer park residents race motorcycles

(5)

L blocks road

b)

Court says

(1)

T. Ct. says it’s personal.

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(a)

What was part of original easement? Easement “to Greens” (not to “X
property”)

(b)

Parol evidence


extrinsi
c evidence is admissible to clarify ambiguous
terms (but parol evidence is ambiguous)

(2)

But it was also granted for utilities, ingress & egress.

(3)

App. Ct. says it’s not

clearly Not personal

clearly for ingress & egress, which is
for the land.

(a)

(not to be conf
used with necessity

this is contracted
-
for.)

(b)

Washington has presumption of appurtenant easement


solves all the
ambiguity.

(c)

Ct. does point out that motorcycles are a dangerous nuisance

use has to be
reasonable. L can set use restrictions.

4.

Easements by La
w

a)

Easement by Implication

(1)

Two parcels were under single ownership

(2)

Permanent and continuous use before subdivision

(3)

Use was apparent

(4)

Easement is reasonably necessary

b)

Easement by Necessity:

(1)

When land is subdivided, and one of the parcels is landlocked from th
e public road,
an easement may be created. (doesn’t need prior use)

(2)

Necessity must be created by the subdivision.

c)

Easement by law: E.g.,
Reese v. Borghi
216 Cal. App. 2d 324 (1963) p.734

(P owns
land, sells off pieces, landlocks himself.)

(1)

Facts;

(a)

P sel
ls bunch of land to borghi, landlocks himself

(b)

D blocks existing path, P sues

(2)

Court says

(a)

P gets easement by necessity

(b)

Not eminent domain


right of way was acquired as a common law right
and not by exercise of eminent domain.

(c)

Not implied reservation (partie
s didn’t intend to not have easement)


well
recognized distinction between right of way and easement by implication.
(no implication here)himself


court creates easement by necessity, ignores
implication argument)

5.

Easement by prescription



Like advers
e possession.

a)

Court will declare easement under common law.

b)

Follows requirement of adverse possession:

(1)

Actual

(2)

Adverse

(3)

Open & Notorious,

(4)

Continuous and Uninterrupted

(5)

(but doesn’t have to be exclusive)

c)

Easement must be Adverse



no permission:
Finley v. Botto
161 Cal. App. 2d 614 (1958)
p.741 (path between apartment complexes)

(1)

Facts:

(a)

Path between houses, used for 10 years.

(b)

D builds fence across path

(c)

P sues.

(2)

T. Ct. says no easement.

(a)

Use wasn’t open & notorious, because there w
as implied permission.

(3)

Ct. says

(a)

If neighborly permission, then no adverse, open & notorious use.

(b)

Of course, this means that you can defeat easement by prescription anytime
with the neighborliness argument . . .

6.

EXPECT HYPO EASEMENT BY LAW STATUTE ON EXAM.


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D.

Real Covenants
-

A contract attached to land.

1.

Most commonly used in organized communities

a)

(Distinguished from contracts by being tied to land, rather than parties)

b)

Breach



Damages.

2.

Common Law

a)

Benefit & Burden

b)

Affirmative

(e.g., maintain
your property)

c)

Negative

(e.g., not growing farm products in residential area)

3.

Legal requirements
for passing benefit & burden
.

a)

Writing

b)

Intent

c)

Vertical Privity:

(1)

Identical relationship between covenantor and subsequent owners

(2)

So leaseholders
aren’t necessarily bound by covenants.

d)

Special requirements for passing the burden
:

(1)

Horizontal Privity

(a)

Relationship between the original two parties

(b)

E.g., neighbors don’t have relationship, but if one party sold the parcel to
another, then

it works (lessor
-
lessee works too)

(2)

Touch & Concern

(3)

Notice

4.

Statute is key here


common law disappearing.

5.

Touch & Concern:
Eagle Enterprises v. Gross

39 NY2d 505 (1976) p.761 (6
-
month water
utility service doesn’t adequately touch & concern the land to be
a valid covenant)

a)

Facts

(1)

EE is successor to original seller, Gross is successor to original purchaser.

(2)

Original conveyance contains provision for water service

(3)

Gross builds well, doesn’t want service any more.

(4)

EE sues.

b)

Court says:

(1)

Should agreement be enfor
ced?

(2)

T.Ct. finds privity of estate.

(3)

T.Ct says water service counts.

(4)

App Ct. reverses, says that agreement doesn’t sufficiently “touch and concern” the
land, since it’s only seasonal.

(5)

Of course, if everyone else in the development now has to pay more to get

the same
water, then relieving Gross of the agreement,

(6)

Rule: agreement has to “substantially affect the ownership interest of the
landowners”

6.

Impact of Constitutional Law on Covenants


can’t violate equal protection clause:
Shelley v.
Kramer
334 US 1 (1
948) xerox

(race
-
based covenant cannot be enforced, because
enforcement would violate equal protection clause)

a)

Facts

(1)

Agreement saying that no black/asian/etc. families allowed in community

(2)

Black family buys in.

(3)

Other owners file suit for state enforcement
of agreement

(4)

T.Ct. says no, App. Ct. Says ok, SCOTUS says no way.

b)

SCOTUS says:

(1)

Can this covenant be enforced?

(2)

No. violated equal protection clause.


relevance of 14
th

amendment & civil rights.

(3)

Private parties can enter this covenant, but it’s unenforceab
le by law. (changed by
civil rights act of 1964.)

(4)

State action to enforce agreement
is

a violation.

(5)

Court could be saying that any contract enforcement is state action . . . does that
make easements eminent domain?

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(6)

Court could also be saying that private
actions that violate 14
th

amend. won’t be
enforced. (which is different . . .)

(7)

Of course, it’s not really a covenant.

(a)

Agreement doesn’t have horizontal privity.

(b)

50 years questions intent to tie to the land v. just being a contract.

(c)

Racial exclusion may or

may not touch & concern.

E.

Equitable Servitudes

1.

Generally

a)

Provides for residents to place obligations on each other

b)

No privity requirement

c)

Touch & Concern required

d)

Notice required

e)

Intent


there must be intent that the servitude run with the land.

2.

Homeowner
s Associations

servitude is ok without privity


Neponsit Property Owners’ Ass’n
Inc. v. Emigrant Industrial Savings Bank

278 NY 248 (1938) p.777 ($4 annual fee from
property owners to NPOA for streets, sewers, etc)

a)

Facts

(1)

Agreement to pay monthly maintenan
ce fee to organization.

(2)

NPOA


group of property owners, created by original developer.

(3)

EISB


purchased land at judicial sale

(4)

Lien gets placed against the land (possibly incl. back fees, too)

(5)

NPOA sues.

b)

Court says:

(1)

Lehman


legal realist . . . substance o
ver form. Who
should
win?

(2)

Covenant may or may not run with the land.

(3)

Document says it does, but there’s a Test:

(a)

Touch & Concern

(b)

Privity of estate

(c)

Intent

(4)

T&C:

(a)

Generally, maintenance charge doesn’t cut it.

(b)

However, it’s much the same thing as maintaining
the land directly.

(c)

But, if it’s for a public purpose, shouldn’t that invalidate the covenant?

(d)

Stretches T&C a bit here.

(5)

Privity of estate:

(a)

Original grantor to original grantee, sure. (horizontal)

(b)

Distinction between current plaintiff (NPOA) and original de
veloper. No
horiz. Privity with NPOA.

(c)

But, Lehman concludes that NPOA is effectively the same as property
owners themselves, therefore privity.

(i)

(of course, property owners don’t have privity either

only NPDC
does)

(6)

Bottom line

creates an equitable servitud
e:

(a)

T&C

(b)

Intent

(c)

No privity.

c)

Historical note


(1)

lots of foreclosures; EISB wants to set a precedent saying it doesn’t have to pay.

(2)

Also, NPOA wants to preserve services

if banks don’t pay, then no services.

d)

Thoughts on Lehman’s methods . . .

(1)

Common law traditi
on


change the law, that’s ok.

(2)

However, he’s not being very honest about it

does lots of flips to get there.

(3)

Better to just get rid of privity requirement.

3.

Changed Conditions

don’t necessarily get you out


Bolotin v. Rindge
(Wi
lshire blvd,
servitude says houses only, now a commercial district, servitude stays)

a)

In this case

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(1)

No finding that the restrictions had become obsolete

(2)

Destroy physical conditions that make neighborhood valuable (personhood)

(3)

In order to get out,

(a)

Residenti
al development was impossible

(b)

Covenant no longer benefited the landowners.

(4)

And . . . they’ve only got 6 years to go.

b)

Generally:

(1)

The court will declare deed restrictions to be unenforceable when,

(2)

By reason of changed circumstances

(3)

Enforcement of the restrictions

(a)

Would be inequitable and oppressive,

(b)

And would harass plaintiff without benefiting the adjoining owners.

(4)

If the original purpose can be realized, then covenant should be enforced.

c)

Thoughts: is this a utilitarian dec
ision?

(1)

No


personhood (of other owners.): “effect upon market value . . . is not the test”

(2)

Yes


enforcing contracts generally
is

utilitarian.

IX.

COMMON INTEREST COMM
UNITIES

A.

Generally: Subset of Equitable Servitudes (e.g., Neponsit)

1.

Benefits:

a)

Sense of commu
nity

b)

Security

c)

Shared expenses


amenities

d)

High standards


no nuisances

e)

Good for younger families and old people

2.

Problems

a)

Restrictive

b)

Cultural wasteland!

c)

Changed conditions . . . tough luck

d)

Arbitrary and capricious enforcement

B.

Creation & Judicial Oversig
ht

1.

3 Documents

a)

Declaration/Master Deed

b)

Bylaws


organizing structure

c)

Deeds to individual units

2.

Model Declaration:

a)

Restrictions on use?

“Single
-
family community”


may violate fair housing act.

still, though, the preamble might not be part of the contract.

b)

Aesthetic standards?

Architectural improvements

Maintenance

Board
-
set standards


maybe too high.

Changes not agreed to by everyone.

c)

Enforcement

Board can just go to the painting.

Arbitration

d)

Recommendation:

Board has lots of power . . . better be on the
board.

e)

Voting?

one lot, one vote.

only owner (not family members, or renters) gets to vote

developer might have majority of lots, and might be in financial trouble. Might
drastically reduce dues.

f)

Negotiation?

Majority rule


board can amend declaration

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g)

A
ssessments

annual assessments


sure, ok.

specific to lot assessments


if the board doesn’t like you, the board can charge just you.

special assessments


board could declare special assessment to build golf course.

3.

Concerns With CIC contracts
:

a)

Bill of ri
ghts?

b)

Property itself . . . what does it look like?

c)

Character of the board?

d)

Special assessments?

e)

How much is benefit? ($ amount!)

f)

Amendments


how easy (too easy?)

C.

Models

1.

Contract Model

a)

Traditional market view


51% majority rule.

b)

Personal autonomy as so
urce of obligation

c)

Internal standard
-

We want to force people to read & abide by contracts.

d)

Benefits



(1)

Flexible

(2)

People enter into these agreements

(3)

Consent granted consciously in exchange for benefit

(4)

Structure organization however you like.

e)

Problems



(1)

A
ssumes that CIC members enter will full knowledge

(2)

Might be restrictive/unconscionable clauses

(3)

Might not have read it (crappy excuse)

(4)

Not everyone knows what they want, or wants the same thing.

(5)

Little power to fight contract modifications.

f)

K model must be r
easonable, but it’s loose:

Hidden Harbor v. Norman

309 So2d 180
(1975) p.842 (no liquor in common space)

(1)

No liquor adopted by 2
-
1 vote

(2)

T.Ct. says this is unreasonable


restriction must have “reasonable relation to
protection of life, property, or the gen
eral welfare”

(3)

Court says:

(a)

Association is not at liberty to adopt arbitrary/capricious rules

(b)

Conduct doesn’t have to be a nuisance

to be banned.

(c)

Banning alcohol is reasonable.

(d)

Administrative framework


within authority & reasonable


2.

Admin
istrative Model

a)

View CICs as admin bodies with delegated administrative authority

(1)

Some people are too stupid/lazy/powerless to contract effectively.

(2)

We want to protect them.

(3)

Increasing litigation


want to have society play a bigger role (current trend)

b)

Middle Ground between contract and local gov’t.

c)

Courts assess whether association is acting within its authority

d)

Benefits

(1)

Assess reasonableness of regulations

(2)

Some deference to CIC

(3)

Better protection against abuse.

e)

Problems

(1)

Reduces contracting power

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(2)

Judges

don’t really know what they’re doing


courts impose their own views, rather
than just determining reasonableness within CIC framework.

(3)

Judicial activism, rather than interpretation.

f)

More litigation & uncertainty


“reasonableness” is pretty vague.

g)

Admin


reasonableness of reg. is key:

Hidden Harbor v. Basso
393 So2d 637 (1981)
p.844

(private well in trailer park, reg must be
“reasonably related to the fulfillment of
desired objectives”
)

(1)

P claims:

(a)

Increase salinity

(b)

Stain sidewalk

(c)

Proliferate wells

(2)

Cour
t says:

(a)

Legitimate objectives


go to aesthetics, best interests of all owners.

(b)

Unreasonable


none of these happened, and it was in use for a year.

(c)

Standards:

(i)

Reasonableness applies principally to regulations adopted after
formation


to amendments. (admi
nistrative framework)

(ii)

Restriction wasn’t in place at formation of CIC (if so, then it’s
contract.)

3.

Governmental Model

a)

External standard


really, these are just local gov’ts.

b)

Residents should get constitutional protections.

c)

Benefits

(1)

Applies civil protect
ions to CICs

d)

Problems

(1)

Larger scope of inalienable rights

(2)

No monopoly on violence, power to distribute wealth, etc.

e)

Of course, the main reason to have a CIC is because local gov’t sucks.

f)

Portola Hills v. James

4 Cal App 4
th

289 (1992) p.851 (satellite dish

in backyard)

(1)

T.Ct says


presumption that bylaws are valid, but it’s unreasonable

(a)

Sort of administrative.

(2)

App.Ct.


administrative standard

(a)

Dish is not visible


exterior structures defined as “visible to others and/or
the public”

(b)

Association can only reg
ulate exterior structures.

(c)

Therefore, tough luck.

(d)

Legit goal of association?

(i)

Satellite dishes are good


worldwide communication


somewhat local
gov’t . . . can’t restrict constitutional benefits to communication.

(ii)

Cable does it too, but court disregards
this.

(3)

Might be communal cable; satellite might break this. Court ignores this. (Bylaws?)


g)

CIC can’t make ex post facto laws:

Winston Towers 200 v. Saverio
360 So2d 470 (Fl.
App 1978) p.854

(dog has puppies,
retroactive rule invalid
.)

(1)

Facts

(a)

1/72: Guy mov
es in with dog

(b)

2/74: Board amends bylaws


no new dogs as of 2/73

(c)

5/75: Dog has puppies

(2)

Court says:

(a)

Retroactive regulation (affects back to 1973, when voted on in 1974)

(b)

Contract


new terms. But not a problem because it’s new.

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(c)

Not good, because local gov
’t/administrative: ex post facto is unreasonable
on its face.

(3)

Thoughts . . .

(a)

This sounds somewhat biased . . . CICs can pass new regulations, why not
this one?

(b)

Probably just because this judge likes dogs.

4.

Corporate Model

(not very useful)


a)

Corporate board


property owners own shares.

b)

Decisioning must happen within governing rules.

c)

Yeah, but CICs are non
-
profit, etc . . .

5.

Trust Model
(not very useful either)

a)

Trustees charged with fiduciary duties to maintain the CIC

b)

In charge of making sure that CIC operat
es the way it was supposed to.

6.

Restraints on Alienation


Laguna Royale v. Darger
(timeshare in geezer condo)

a)

Associations refusal to consent to transfers was unreasonable and thus not valid.

b)

Test for reasonableness:

(1)

Reg has to be
rationally related to pro
perty protection/preservati on
/proper
operation, as set forth in governing docs.

(2)

Whether the power was exercised in a
fair and nondiscriminatory manner

(3)

The nature and
severity of the consequences of application
of the resctriction.

X.

ZONING

A.

Euclidean Zoning
-

Constitutionality

1.

Zoning is not a taking: e.g.,
Village of Euclid v. Ambler Realty

272 US 365 (1926) p.901
(zoning ruled legal by SCOTUS)

a)

Cleveland Suburb, 5
-
10K pop.,

(1)

Enacts zoning ordinance: six (seven) use
-
districts:

(a)

U1: single
-
family housing

(b)

U2: tw
o
-
family housing

(c)

U3: apartments, hotels, schools, etc.

(d)

U4: banks, offices, restaurants, fire/police

(e)

U5: billboards, warehouses, light industry

(f)

U6: heavy industry

(g)

U7: excluded uses

(2)

Inclusive scheme


U3 can have single
-

and two
-
family houses

b)

Land between R
R and highway,

(1)

Zoned for partial residential (U2), Partial mixed
-
use (U3), Partial heavy industry
(U6)

c)

P sues for violation of due process for takings. “nor shall private property be taken for
public use, without just compensation”

(1)

Wanted to sell for comm
ercial use and heavy industry.

(2)

Of course, just because the Gov’t screwed you, doesn’t mean you can recover.

d)

SCOTUS says:

(1)

Changing times . . . new regulation might be necessary. (generally, tho, it’s a bad
thing.)

(2)

Scope of Constitutional Guarantees must ex
pand or contract with the times.

(3)

Relevant past doctrines:

(a)

Nuisance

Law


zoning is just a comprehensive (pre
-
emptive) scheme.

(i)

Also, nuisance

can only be used by private owners


only in equity.

(ii)

Maybe a higher bar for nuisa
nce
.

(iii)

Of course, nuisance

builds in the specific facts

maybe more fair.

(b)

Police power


gov’t can regulate to protect public welfare.

(c)

Similar to traffic regulations.

(d)

Gov’t has to deal with this anyway, might as well do it b
roadly with zoning.

(4)

Should be constitutional:

(a)

Segregation of R/C/I is a good thing.

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(i)

Suitable fire apparatus

(ii)

More favorable environment to rear children

(iii)

Apartments are parasites

(b)

Hands
-
off judicial restraint


legislative judgment must control.

(c)

Can’t say zo
ning is a bad thing.

(5)

Here’s the Zoning test:
Unless the regulations are “clearly arbitrary and
unreasonable”, they’re ok as exercise of police power.

2.

Since Euclid


no challenges to zoning idea, just specific application. (still good law)

a)

E.g., can’t hav
e unrelated people living together


prevent students

3.

Variances allowed occasionally


you can get an exception to the ordinance (Philadelphia

all the time)

4.

Houston


no zoning, works ok.

a)

97% of towns over 5K have zoning.

b)

Gas stations next to single
-
famil
y houses.

c)

Strong sense of private property . . .

d)

Generally thought of as not very aesthetically pleasing.

e)


. . . but, Houston also happens to have lots of CICs.

(1)

Don’t want gov’t telling them what to do

f)

But they’re ok with contracting for stuff.

B.

Commentary

1.

Mandelker



free market should take care of everything
.

a)

But, there may be externalities.

b)

We used to deal with this through nuisance

law (more objective)

c)

Problem: Zoning is subjective


relies on taste and preference.

(1)

So

it’s not really dealing with externalities.

(2)

Application is problematic

2.

Karkkainen



zoning protects neighborhood personhood interest

a)

Defending zoning

b)

Only partially about externalities.

c)

Point is that zoning protects homeowner’s consumer

surplus.

d)

Neighborhoods as quasi
-
commons that is protected by zoning


Zoning protects
PERSONHOOD

3.

Epstein



zoning stops growth, negative regional consequences

a)

Zoning allows veto power over future growth

(1)

Lack of zoning would only small nega
tive consequences for people who live there

(2)

But zoning has huge negative consequences for people who don’t.

b)

NEGATIVE REGIONAL CONSEQUENCES (externalities, of a sort)

c)

Zoning boards do it wrong

people like having bakeries, etc., mixed in with houses

d)

Nuisance

and servitudes (e.g., Houston) would take care of this

we don’t need zoning.

4.

Ellickson



zoning may or may not be more efficient

a)

Efficiency


zoning is cheaper than servitudes

b)

Nuisance

is pretty cheap,
so it’d probably work.

c)

High cost on minorities and poor


zoning favors the wealthy

d)

Zoning boards are stupid


let people sue when they don’t like stuff.

(1)

Suits against factories

(2)

None against bakeries

e)

Consensual systems of organization would be better
-

CI
Cs

5.

Fischel



zoning is good, but implementation is bad
.

a)

Attempt to respond to market failures

b)

Redistributes value from undeveloped landowners to developed landowners

c)

Not efficient allocation of resources

d)

Decreases municipal costs


no fac
tories, then no factory problems.

(1)

Lower tax rates

(2)

Higher tax revenue per acre

(3)

Lower requirements for services

(a)

Fewer people period

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(b)

Fewer poor people

e)

Benefits residents over non
-
residents

f)

Higher property values (this is a good thing)

g)

But, zoning can produce

problems:

h)

Want to make benefits equitable

C.

Takings?

1.

Is it right for gov’t to take property rights?

a)

Eminent domain instead of zoning (avoid grandfathering)

2.

Paradox: Zoning raises value by taking rights away.

a)

Nuisance

& private regulation i
s hugely expensive (like gov’t monopoly on currency)

b)

Not just about poor people.

3.

Impact of zoning on free speech (e.g., advertising)

4.

Pornography


adult theaters excluded period. SCOTUS says it’s free speech.

a)

But courts have upheld zoning.

b)

E.g., Times Squ
are

5.

Right to association


prevent unrelated people living together.

a)

Courts uphold such prohibitions.

b)

Tough luck for free association.

6.

Equal protection claims


regulation of group homes for mentally disabled, halfway houses,
etc.

a)

Apts ok, “group homes” n
ot.

b)

But Zoning protected by SCOTUS.

D.

Exclusionary Zoning

1.

Use of zoning ordinances to keep out certain groups

2.

Methods:

a)

Large lot requirements

b)

Large minimum sq foot requirements

c)

Prohibitions on apartments or mobile homes

d)

Expensive materials requirements

3.

Benef
its:

a)

Low taxes

(1)

Few services

(2)

Private schools, hospitals, etc.

b)

High property values

4.

Problems:

a)

Externalities elsewhere (poor urban centers)

b)

Segregation

5.

Courts:

a)

Suits by poor people

b)

SCOTUS


no fed. constitutional claim against exclusionary zoning (generally
, zoning is
ok)

c)

But states can do what they want


zoning is unconstitutional; equal protection under
STATE constitutions.

d)

NJ cases


Mt. Laurel Cases

6.

PA Cases:

a)

“Fair Share” of regional burden

test
: E.g.,
Surrick v. Zoning Hearing Board
476
PA 182
(1977) p.984 (limits on total apartment
-
zoned land ruled unconstitutional)

(1)

Surrick wants to build apartments at end of commercial strip (which happens to be
zoned single
-
family residential)

(2)

Problem with zoning


only 1.14% of acreage is zoned comme
rcial/apartments

(3)

SCOPA says:

(a)

Willistown
says: can’t just stand in the way of development

(4)

“Fair share” test:

(a)

Have to accommodate demands of all the people who want to live there

(b)

“Logical area for development”

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(c)

Population density fact question

(d)

Evaluate “prima
ry purpose” of exclusionary intent

(5)

Court concludes that 1.14% is way too small.

b)

What should township do?

(1)

Well, they have to grant a variance (minimum)

(2)

They can also act pre
-
emptively, and add another 1
-
2% area.

(3)

But township could easily stall


(a)

To get stan
ding to sue, you have to buy property in the area.

(b)

Suits are difficult

high barrier to entry.

(c)

P has burden

of P&P.

c)

Delay by Zoning Boards
: e.g.,
Fernley v. Schuylkill Twp
. 509 PS 413 (1985) p.989
(complete bar to multi
-
family homes)

(1)

Philadel
phia area

(2)

Owners of 245 acre farm


Fernley wants to build apartments &c.

(3)

Schuylkill argues it’s not in the path of development, so fair share doesn’t apply.

(4)

Court says

no.

(a)

Where a zoning regulation completely excludes a certain type of building,
it’s unco
nstitutional.

(b)

Not only that, but you have to grant
this specific variance.

(c)

Want to prevent retaliation.

7.

Mt. Laurel NJ



a)

Mt. Laurel I: “Fair share”


pretty vague.

b)

Mt. Laurel II: Supreme Ct. of NJ forces towns to accept “public housing.”

(1)

Developers could
just go in and build.

(2)

People VERY UPSET.

(3)

Governor loses by a landslide, after coming out kind of in favor.

(4)

Legislature responds to courts decision, passes law creating Council on Affordable
Housing. Twps required to zone for affordable housing, but they w
ere also allowed
to trade permits.

(5)

E.g., Mt. Laurel sells units to Camden.

c)

Mt. Laurel III: Affordable housing types sue to invalidate legislation.

(1)

Chief justice is up for recall in state senate, so he knuckles under, upholds it.

8.

Wait, just because somethi
ng is a bad idea (exclusionary zoning), doesn’t make it illegal.

a)

But because local governments are subsidiaries of the states, the state constitution
controls.

b)

So the state interest matters, not the locality. (in other words, the country model is a bad
an
alogy, because of sovereignty differences)

c)

So the state can override zoning regulations if they violate state interests.

E.

Growth Controls

XI.

TAKINGS

A.

Generally


1.

If the gov’t takes private property for public use, it has to pay.

2.

Physical invasion by 3
rd

party


de facto taking

3.

Harm test:

a)

If regulation is to prevent harm/nuisance/etc, it’s usually ok.

b)

If regulation is to create a public benefit, then it’s a taking.

4.

Economic loss test:

a)

Onwer must be left with some reasonable economic value (e.g.,
Lucas v. Carolina

Coastal.
)

5.

Just Compensation:

a)

Market value (includes future expectations)

b)

Partial taking . . . severance damages

(1)

Change in value

(2)

Nothing.

B.

Exactions

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1.

Generally:

a)

Requirement that Developer build sewers, parks, schools, etc. in addition to housing.

b)

Impact Fee
s


developer has to pay $1K per person to build schools, etc.

2.

3 Reasons:

a)

Shift
all development
costs
(externalities included) to the developer

b)

Encourage efficiency
by forcing developer to consider all costs

c)

Enable growth


development may outstrip gov’t a
bility to expand services

d)

Discourage growth
by making development more expensive

e)

Redistribute wealth

from developer to current residents

3.

Linkages


developer has to build low
-
income housing in addition to whatever they want to
build.

4.

Restrictions on Exacti
ons:

a)

There must be a
connection between justification and the regulation
:
Nolan v. California
Coastal Comm’n
(public easement as criteria for building permit . . . unconstitutional, but
not a taking)

(1)

Exchange?

(2)

Yeah . . . but it’s still a loss of a “stick
in the bundle”

(3)

Test: There must be an “
essential nexus
” between regulation and the interest.

(4)

Bad test

if it’s a taking, it’s a taking.

(a)

“Essential nexus” doesn’t mean anything relating to takings.

(b)

It
does

relate to gov’t regulation of land & exercise of t
he police power.

b)

Dolan v. City of Tigard
(
required donation is unconstitutional
. . . but not a taking)

(1)

Dolan owns hardware store on creek, wants to double size, add parking.

(2)

New test on regulation in addition to “essential nexus”: “
rough proportionality


(3)

Govt’ has burden

of persuasion (burden on city in exactions, burden on property
owner in zoning cases, when everyone has same problem)

5.

Implementation:

a)

Same Reg

(1)

Small Harm: it’s ok.

(2)

Big Harm: it’s not.

b)

So “essential nexus”/ “rough proportiona
lity” don’t actually mean anything . . .

(1)

Maybe it’s more like “I know a taking when I see it”

C.

Regulations on Use

1.

Penn Central v. City of NY

(historical comm’n denies building over grand central; court
upholds it


no taking.)

a)

SCOTUS says: Factors Balanci
ng test:

(1)

Economic impact

(2)

Impact on investment
-
backed expectations

(3)

Character of Gov’t action

(4)

Physical invasion

b)

State police power is ok to:

(1)

Promote health, safety, morals, etc.

(2)

But if it is not “reasonably necessary to the effectuation of a substantial publ
ic
purpose”, then the regulation may be a taking.

c)

Takings doesn’t break single parcels into sub
-
parts.

d)

So, this isn’t a taking . . .

(1)

Doesn’t interfere with current uses.

(2)

Doesn’t prohibit ANY construction, just hast to be within set standards

(3)

Transferrable
rights mitigate the harm.

(4)

Doesn’t impact the return expected initially (although, PC went bankrupt shortly)

(5)

Zoning (and landmark designations) can increase the value of land . . .

2.

Sax


Property Under Assault. Exclusive v. Non
-
Exclusi ve value

a)

Understandi
ngs of Property have changed



b)

Letting people develop property however they want isn’t bringing social benefit anymore.

(1)

Lower non
-
exclusive profit margin
of progress

(2)

Scarcity
of undeveloped land drives value

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c)

But . . . non
-
exclusive beneficiaries aren’t go
ing to organize to protect Grand Central.

(1)

Diffuseness.

(2)

Smallness of individual interest

(3)

Imperfect knowledge

(4)

Differential values

(5)

Difficulty of Pricing

d)

So non
-
exclusive benefits are difficult to protect . . . so Gov’t does it.

(1)

But now we’re forcing individua
ls to continue conferring a benefit.

(2)

(plus, Bad incentive


encourage mediocrity).

e)

But this is EXPENSIVE!
-

Public solution (as in
Lucas
)


so we force public to pay
for
the restriction.

(1)

Tax abatements

(2)

Density bonuses

(3)

Transferrable development rights

3.

Luca
s v. South Carolina Coastal Council

505 US 1003 (1992) p.354 (complete destruction of
economic value is a taking)

a)

Guy has waterfront property


two lots

b)

Coastal Council says he can’t build

have to protect the dunes.

c)

Two types of takings:

(1)

Physical Invasion

(2)

Complete destruction of economic value.

d)

“where the state deprives all economic use, the state must pay compensation, unless the
state can show that the proscribed use interests were not part of the title to begin with.”

e)

Implied limitation in takings clause
.

(1)

Presumption against the gov’t.

(2)

In order for regulation to be ok, you have to find that there was a nuisance.

(3)

Nuisance should cut it: (if another landowner could say “you can’t do this”, then the
gov’t can say it too.)


Index


Adverse

................................
.........................

4, 10, 20

Breach

................................
.........................

13, 19, 21

burden

................................
................................
19, 21

Burden
................................
.
8, 11, 12, 21, 28, 29, 30

Changed Circumstances
................................
..
19, 23

Changed Conditions

................................
..............

22

Color of t itle
................................
..............................

4

Ellickson

................................
.......................

3, 10, 27

Epstein

................................
................................
.....

27

Fischel
................................
................................
......

27

Good Faith
................................
...............................

10

Karkkainen

................................
..............................

27

Lobsters

................................
................................
.....

3

Mandelker

................................
...............................

27

mist
ake

................................
................................
.......

4

Nuisance

...............................
2, 9, 16, 24, 26, 27, 28

Surprise

................................
................................
....

10

Unclean hands

................................
........................

10