B

Property
by Roger Bernhardt
Professor of Law
Golden Gate University

Ann M. Burkhart
Curtis Bradbury Kellar Professor of Law
University of Minnesota

FIFTH EDITION

Mat #40330682

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Capsule Summary of
Real Property

PART ONE: INTERESTS IN LAND

I.

THE IMPORTANCE OF POSSESSION

Possession, even absent ownership, is a protected property right. Possession plays

a central role in property law because of the near-impossibility and great
inconvenience of requiring people to prove ownership of all their goods at any
time. Moreover, possession and the transmission of possession serve important
practical and legal functions.

A.

Possession of Unowned and Owned Goods

1.

Unowned Goods
Unowned goods either never have been owned or have been abandoned
by their owner. Generally the first person who takes possession of an
unowned good usually becomes its owner. To satisfy the possession
requirement, the possessor must exercise physical control over the object

CAPSULE SUMMARY

and must intend to control it and exclude others from it. The person who
acquires ownership by taking possession of an object is entitled to all the
same legal rights as any other owner.
2.

Owned Goods
a) Relationship of the Owner and the Possessor
Unlike the situation with unowned goods, a person does not
become the owner of an object that already has an owner simply by
taking possession of it. In fact, the possessor is legally obligated to
return the object to its owner. The scope of the duty depends on the
type of relationship that exists between the possessor and the owner
with respect to the property.
b) Lost or Mislaid Property
If an owner has lost or mislaid property, she does not lose title to it
unless she abandons her ownership rights. The person who finds
the property must return it to the owner. Until the owner is
discovered, however, the finder or the owner of the premises where
the property was found has a protected possessory right in the
property. No one, except the true owner, has a right to take
possession from the rightful possessor. The courts have created a
number of tests to determine whether the actual finder or the owner
of the premises where the property was found has the right to
possess it until the true owner is discovered. The tests can be
ambiguous in application and may produce conflicting results.
However, most issues concerning found property are now covered
by legislation or by tort and contract law concepts.

B.

Gifts
Possession also plays a central role in the law of gifts. Usually, for a gift to be
valid, the donor must deliver possession of the gift to the donee. By requiring
the transfer of possession, the law requires that the donor demonstrate an
understanding of the legal effect of the gift. Moreover, possession provides
the donee with prima facie evidence that a gift was made.
1.

Inter Vivos Gifts

An inter vivos gift is given by a living donor to a donee. It must be
absolute and irrevocable to be valid.

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a) Elements
The three necessary elements for an inter vivos gift are (1) intent, (2)
delivery, and (3) acceptance.
1) Intent
The donor must intend to make a present, irrevocable gift,
whether of a presently possessory interest or of a future
interest. If the alleged donor only intends to make a gift in the
future, the gift is an unenforceable promise because it is not
supported by consideration. In determining whether the alleged donor had the requisite intent to make a present gift, a
court will examine the donors verbal and written statements
and the other circumstances surrounding the gift.
2) Delivery
Normally, only a manual delivery of the gift to the donee
satisfies the delivery requirement. If the donor cannot deliver
the gift manually because of its size, location, or character, a
court may accept some form of constructive delivery by which
the donor transfers control over the gift even though he has not
given the donee actual possession. Similarly, the donor may
satisfy the delivery requirement if she irrevocably delivers it to
a third person as the donees agent.
3) Acceptance
A donee is free to reject a gift for any reason. However, courts
presume acceptance of a beneficial gift, rather than require an
outward manifestation of the donees acceptance.

2.

Gifts Causa Mortis

A gift causa mortis is a gift made in anticipation of the donors imminent
death. It is an emergency measure that is designed to permit a dying
person a last opportunity to dispose of his or her property. By its nature,
it is a conditional giftcontingent on the donors death. In effect, the
donor is saying that the donee should have the property if the donor is
dead. The conditional aspect of the gift has troubled some courts because

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it appears to be, in essence, a testamentary gift, which is governed by

strict statutory requirements. This is particularly troublesome for courts
because of the enhanced potential for false claims of gift causa mortis
because the alleged donor is dead and obviously unable to testify.
II.

ADVERSE POSSESSION

If a property owner fails to sue a person in wrongful possession of it during the

statute of limitations period, the possessor may acquire title to the property.
A.

Background
Adverse possession operates to confirm the possessory claims of persons that
have been asserted long enough and visibly enough. In most cases, such a
claimant believes that he owns the property.

B.

Theory
A property possessor, even though not an owner, may protect his possession
against everyone except the true owner. Although the true owner may bring
an action against a wrongful possessor, her failure to do so in time means that
the possessor is then protected from action by anyone, stranger or former
owner. At this stage, the possessor becomes the owner.

C.

Elements
1.

Continuous and Uninterrupted

An adverse possession must last as long as the statute of limitations for
a cause of action to recover possession. The possession must be
continuous, so that the owner could have sued at any time during the
period. It must be uninterrupted, so that no other person possessed
adversely to the adverse possessor during that period. The adverse
possession of predecessors may be added (tacked) if privity exists
between the adverse possessors.
a) Extenuating Features
The statute of limitations does not begin to run against future
interests until they become possessory or against possessory inter-

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ests if, at the time of the wrongful entry, the owner is under a legal
disability. However, subsequent disabilities or transfers by the
owner do not extend the time period once the cause of action has
arisen.
2.

Open and Notorious

An owners lack of actual knowledge is not a defense, but adverse
possession must be sufficiently open and notorious to give notice to any
owner inspecting her land.
a) Extent of Possession
An adverse possessor acquires only the property he actually possessed, unless he has color of title to a larger area and actually
possesses some part of it, thereby establishing constructive possession of it all.

3.

Hostile; Ouster
An adverse possessor must act like an owner with regard to others and
must allow them to be on the property only with his permission. He
must be hostile to the true owners title.
a) Ouster; When the Initial Possession was Permissive
When possession begins permissively, an ouster must occur before
it becomes adverse to the owner. The possessor must notify the
owner that the possessor has repudiated the owners rights in the
property.
b) State of Mind
In some jurisdictions, the adverse possessor will acquire title only if
she possessed with a good faith belief that she owned the property.
Other jurisdictions require the opposite; the adverse possessor must
know that someone else owns the property.

D.

Effect
Completion of a successful adverse possession gives the possessor an original
title to the property, although it may not be marketable until established in

CAPSULE SUMMARY

court. Such title is good only against those rights in the property that have
been extinguished by the statute of limitations. Therefore, adverse possession
will not extinguish future interests, nonpossessory interests, or interests
owned by the government.

III.

ESTATES

A.

Present Estates

1.

Types
a) Freehold
Freehold estates have no ascertainable termination date. At common
law, a person in possession of a freehold estate was said to have
seisin. A fee simple estate was created by a grant to a person and
his heirs. These words of limitation indicated that the estate was
inheritable and would not terminate on the grantees death. A fee
tail estate was created by a grant to a person and the heirs of his
body. This estate was inheritable only by the grantees lineal
descendants. A life estate was created when the grant did not
include any words of inheritance. It ended at the grantees death or
the death of anyone else who was the measuring life.
b) Nonfreehold
Nonfreehold estates have ascertainable termination dates. They
include the tenancy for a term, the periodic tenancy, the tenancy at
will, and the tenancy at sufferance.
c) Defeasible Estates
Any freehold or nonfreehold estate can be made conditional (defeasible).
An estate is determinable if some condition is incorporated into its
duration (so long as) and if the grantor retains the future interest
following it. It ends automatically if the event occurs. Alternatively,
an estate is subject to condition subsequent if the grant states that
upon the occurrence of a specified event, it may be reclaimed by the
grantor (but if . . . then). Termination of this estate is optional,

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rather than automatic. If the property passes to a third person when

the condition occurs, rather than to the grantor, the estate is subject
to an executory interest.
B.

Future Interests
1.

Possibility of Reverter and Power of Termination

If the owner conveys a determinable estate, he retains a possibility of
reverter. If he conveys an estate subject to condition subsequent, he
retains a power of termination (also known as a right re-entry).

2.

Reversion
A grantor retains a reversion whenever he gives away possessory estates
smaller than he held. A reversion becomes possessory at the natural
termination of the prior estate, rather than by cutting it short. A reversion
is always vested, though it may be subject to divestment, and requires no
special creating language. A grantor may retain both a reversion and a
possibility of reverter or a power of termination when he conveys an
estate that is both defeasible and smaller than the estate he held.

3.

Remainder
A remainder is a future interest created in a third person. It takes effect
at the natural termination of a preceding estate, rather than by cutting it
short. When a grantor conveys a series of estates of less than fee simple,
a series of remainders may exist. A remainder is contingent if the taker
is unascertained or if it is subject to a condition precedent. A remainder
is vested if it is given to an ascertained person and is not subject to a
condition precedent (other than natural termination of the prior interest).
A vested remainder is defeasible if it is subject to a condition subsequent
and is subject to partial divestment if it is given to a class of persons
whose individual ownership shares are reduced as new members enter
the class and claim their corresponding fractional shares.

4.

Executory Interest
An executory interest divests a prior interest or cannot become possessory immediately upon termination of the prior estate. If the grantor

CAPSULE SUMMARY

conveys both a defeasible estate and the future interest following it to a

third person, the future interest is a shifting executory interest. If the
executory interest will divest the grantors possessory estate, it is a
springing executory interest.
C.

Destructibility
At common law, a contingent remainder was destroyed if it had not vested
before the supporting estates terminated. It did not matter whether the
preceding estates ended naturally or prematurely. A merger of a preceding
estate into a vested future interest also destroyed any intervening contingent
remainders. All other future interests were indestructible.

D.

Rule Against Perpetuities

This Rule invalidates contingent interests (contingent remainders and executory interests) that could vest or fail to vest more than 21 years after the end
of some life in being at the creation of the interest. Thus, contingent
remainders and executory interests must be certain to vest or fail within that
time period, or they are invalid. Whether the interest actually vests in time is
irrelevant if any possibility existed at the time of its creation that it might not,
unless the jurisdiction has adopted a wait-and-see rule. A remainder subject
to open must be closed and vested as to every member within the time
period, or the entire class gift is void, unless the jurisdiction follows the rule
of convenience. An exception applies when both the present and future
interests are given to charities. When an interest is invalid, it is stricken from
the document, and either a new reversionary interest is created in the grantor
or the preceding estate is enlarged.

E.

Rule in Shelleys Case

At common law, if a grantor conveyed a freehold estate and a remainder to
the grantees heirs in the same instrument, the remainder was converted to a
remainder in the grantee. The remainder then might become vested and
might merge with the preceding freehold estate. The Rule does not apply
when one interest is legal and the other equitable, and it applies only to land.

F.

Doctrine of Worthier Title

At common law, an inter vivos gift of a future interest to the grantors heirs
was void. It remained a future interest in the grantor. A testamentary devise
of an estate to a person who would take the same interest by intestate
succession also was void.

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G.

Marital Estates
1.

Dower
Dower was the surviving wifes common law right to a life estate in
one-third of all property her husband owned during the marriage if it
was inheritable by her issue.

2.

Curtesy
At common law, immediately upon marriage, a husband acquired a legal
life estate in all property his wife owned (jure uxoris). As soon as issue
were born alive, his life estate was measured by his life alone and was
not dependent on his wifes continued survival (curtesy initiate). After
her death, the husbands life estate continued in its own right (curtesy
consummate).

3.

Statutory Forced Share

Many states statutorily provide a specified share of a decedents estate to
the surviving spouse regardless of any conflicting will provisions.

4.

Community Property
In community property states, property acquired during marriage
generally is owned in equal shares by the spouses even if title is taken in
only one spouses name.

H.

Restraints on Alienation
A deed provision that absolutely prohibits the grantee from conveying the
property is invalid. However, a restraint may be valid when it is limited by
time or by taker.

IV.

CONCURRENT OWNERSHIP

A.

Types
1.

Joint Tenancy
A joint tenancy includes a right of survivorship, whereby the last
surviving joint tenant takes the entire estate. A fee simple absolute estate

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CAPSULE SUMMARY

need not be involved. A joint tenancy requires unity of time (the

cotenants acquire title at the same time), unity of title (the cotenants
acquire title by the same instrument), unity of interest (the cotenants
own equal shares), and unity of possession (the cotenants have equal
rights to possess the whole property). Because the modern presumption
is for a tenancy in common, a conveyancing instrument specifically must
state that the grantees are acquiring title as joint tenants with right of
survivorship if that is the grantors intent.
a) Severance
Each joint tenant can sever its interest from the joint tenancy, thereby
converting that tenants share into a tenancy in common. A severance occurs when one joint tenant conveys her interest by deed and
may occur if she mortgages, leases, or contracts to convey her
interest.
2.

Tenancy in Common
The modern presumption is for a tenancy in common. The only required
unity is possession.

3.

Tenancy by the Entirety

This estate is a joint tenancy between husband and wife. It cannot be
severed or terminated except by death, divorce, or mutual agreement.

4.

Condominium
A condominium owner has sole ownership of his or her individual unit
and owns the common parts of the project as a tenant in common with
other unit owners in the project.

5.

Cooperative Apartments
In a cooperative apartment building, a corporation owns the building,
and the tenants own shares in the corporation, which usually entitles
them to a lease to particular apartment in the building.

B.

Possession and Income

Each cotenant is entitled to possess all the property, subject to the other
cotenants equal rights to do the same. No cotenants may exclude the others,

CAPSULE SUMMARY

and sole possession by one cotenant resulting from the others voluntary
absence is not actionable. However, a few states charge the tenant in sole
possession for a fractional share of the rental value. The Statute of Anne
compels a cotenant who collects rent from third parties to account for them
to the other cotenants.
C.

Expenditures

1.

Affecting Title
Unequal contributions to the purchase price may cause the cotenants to
acquire unequal interests if they take as tenants in common. Joint tenants
are required to hold equal interests. Therefore, unequal contributions to
a joint tenancy constitute either a loan or a gift.

2.

Reimbursements
A cotenant is liable for a portion of the property expenses in a
contribution action only if she was personally liable for them. Therefore,
a cotenant who makes payments necessary to prevent a mortgage
foreclosure or otherwise to protect the title may sue the other cotenants
for contribution only if they were personally liable for the debt.
Alternatively, the payments may constitute an offset in a partition or
accounting action. A party who pays for repairs may not sue for
contribution unless the other cotenant agreed to share the cost, but that
expenditure may be recognized in an accounting or partition action.
Similarly, a party who pays for improvements to the property without
his cotenants consent may recover the cost only in a partition or
accounting action and only to the extent they increased the lands value
or the rents from the property.

D.

Partition
Partition separates the undivided interests of cotenants into divided, separate
interests. It is accomplished either by a physical division of the property
(partition in kind) or by a sale of the property and division of the proceeds
(partition by sale). Covenants between co-owners not to partition the
property may be valid. A tenancy by the entirety may not be partitioned until
after a divorce has converted it into a joint tenancy or tenancy in common.

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E.

Transfers

1.

Inter Vivos
Tenants in common and joint tenants may convey their fractional
interests. A joint tenants conveyance severs her interest from the joint
tenancy. A tenancy by the entirety may be conveyed only by the owners
joint act.

2.

Death Transfers
The right of survivorship gives the last surviving joint tenant or tenant
by the entirety entire ownership of the property. Tenancy in common
interests are subject to testamentary disposition.

V.

LANDLORD AND TENANT

A.

Leasehold Estates
A leasehold is a nonfreehold estate that gives the tenant a possessory interest.
The landlord retains a future interest (a reversion). The tenants possession
distinguishes a leasehold from a license or an easement.

B.

Types of Tenancies

1.

Tenancy for a Term

A tenancy for a term arises when the parties have agreed on a
termination date for the leasehold estate. If the term is for longer than
one year, the Statute of Frauds usually requires a writing. Upon
expiration of the term, the tenancy ends automatically.

2.

Periodic Tenancy
A periodic tenancy arises when the landlord and tenant have agreed on
a regular payment of rent but have not established a termination date. It
may arise by express agreement or by a tenant being in possession and

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paying rent on a regular basis. The length of the period is established

according to the time for which rent is paid or calculated. A periodic
tenancy is automatically renewed at the end of each period unless either
party gives proper notice of termination. At common law, notice had to
be given at least one period in advance or six months in the case of a
tenancy from year to year.
3.

Tenancy at Will
A tenancy at will exists when someone possesses anothers land with her
consent but without any agreement as to termination or payment of rent.
It may be terminated at any time by either party, though most jurisdictions require some period of notice.

4.

Tenancy at Sufferance
A tenancy at sufferance arises when a tenant holds over after the
expiration of his term without the landlords consent. The landlord can
elect to treat him as a trespasser or as a tenant for another period or term.

C.

Possession
1.

Possession at Lease Commencement

Under the American Rule, a landlord is not responsible if the tenant
cannot take possession because of interference by others, such as the
prior tenant. The English Rule requires the landlord to deliver actual
possession to the tenant.

2.

Possession Throughout the Term

The covenant of quiet enjoyment, which is implied in every lease,
imposes a duty on the landlord not to interfere with the tenants
possession during the term. A landlord is not responsible for interferences caused by strangers but is responsible if the tenant is evicted by a
paramount title holder, by the landlord, or by the landlords agents. The
tenants rent obligation is dependent on the covenant of quiet enjoyment.
Therefore, a tenant is excused from further rent liability if the landlord or
a paramount title holder evicts him.

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3.

Abandonment
At common law, if a tenant abandoned the premises during the term, the
landlord was entitled to recover the rent from the tenant as it came due
and had no duty to mitigate. Alternatively, the landlord could elect to
treat the abandonment as an offer to surrender the leasehold estate and
could accept it by retaking possession for her own account. As a third
remedy, the landlord could treat the abandonment as empowering her to
act as the tenants agent to relet the premises for the tenants account.
The landlord could hold the tenant liable for the difference between the
amount received on reletting and the rent due under the lease. Some
jurisdictions now permit a landlord to sue the tenant, immediately
following his abandonment, for damages equal to the lost benefit of the
bargain (the difference between rent reserved and the rental value for the
balance of the term).

4.

Holding Over
When a tenant wrongfully holds over after the expiration of his term, the
landlord may elect to remove him or to compel him to remain for
another term or period. If a landlord elects to treat the tenant as a
trespasser, she generally cannot use self-help to recover possession but
must bring an action to evict the tenant. Statutory summary dispossess
or unlawful detainer procedures are available in every jurisdiction for
this purpose. Alternatively, the landlord may compel the holdover
tenant to remain, usually as a periodic tenant based on the original lease
term or on the period for which rent was paid or calculated. Until the
landlord makes an election, the holdover tenant is a tenant at sufferance.

D.

Rent
If a tenant fails to pay the required rent, the landlord may sue for the rent and
may terminate the tenancy and bring an action to evict the tenant. The
landlords right to retain an advance payment by the tenant depends on
whether it was a security deposit to cover actual losses, payment of advance
rent to cover specified future periods, or a bonus given to the landlord as
consideration for executing the lease.

E.

Condition of the Premises

1.

Common Law
At common law, a landlord had no duty to repair either pre-existing or
subsequently arising defects in the property and had to disclose only

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hidden (latent) defects. The tenant had an obligation to avoid waste. If

the premises were destroyed or significantly damaged by some outside
cause, neither party had a duty to repair or to rebuild, and neither was
entitled to terminate the lease. The parties could alter their positions by
lease covenants.
2.

Constructive Eviction
If a landlord fails to perform its duty to repair the premises and if the
disrepair substantially interferes with the tenants enjoyment of the
premises, the tenant may claim that he has been constructively evicted
and may quit the premises and terminate the lease. However, the tenant
must show that the landlord was under an obligation to repair, that the
disrepair substantially impaired the tenants enjoyment of the premises,
and that the tenant moved out within a reasonable time. If a court
disagrees with the tenant, he wrongfully abandoned the premises and
continues to owe rent.

3.

Illegal Lease
Some courts hold that the rental of premises that violate the housing
code constitutes an illegal agreement, which is invalid. The tenant can
leave at any time.

4.

Statutory Duties
Most states now require owners of residential premises to keep them
habitable. Some states authorize the tenant to make the repairs and to
deduct the cost from the rent, to withhold rent until the repairs are made,
or to have a receiver appointed to make the repairs. Many states prohibit
a landlord from evicting a tenant in retaliation for exercising repair rights
or from requiring a tenant to waive these rights.

5.

Implied Warranty of Habitability

In most states, a landlord of residential premises impliedly warrants
their physical condition for the entire lease term. If the warranty is
breached, some states allow a tenant to remain in possession and to pay
a reduced rent (rent abatement). Other states limit the tenant to a cause
of action for damages.

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6.

Tort Liability
At common law, the tenants possession of the premises eliminated the
landlords liability for personal injuries caused by defective conditions
subject to a few exceptions. (1) A landlord is liable for personal injuries
caused by latent defects known to her and not disclosed to the tenant.
She also may be liable under this theory for injuries to third persons. (2)
A landlord is liable for injuries suffered by tenants and third persons in
the common areas, because she is deemed to possess them. In some
jurisdictions, courts have extended this exception to include harm
resulting from criminal activities occurring in the common areas. (3) A
landlord is liable for her negligent repairs and for failing to make repairs
when she has covenanted to do so. (4) Many courts now treat local
housing and building codes as safety ordinances and hold a landlord
liable for injuries arising from code violations. Some courts now hold
landlords to the usual tort standard of exercising due care under the
circumstances, rather than limiting the landlords duty to the common
law exceptions described above. Courts often hold that lease clauses
exculpating the landlord from liability for injuries are invalid and
ineffective against injured third parties.

F.

Transfers
1.

Right to Transfer
A tenancy is transferable unless the lease provides otherwise. A landlord
may prohibit transfers or may require the tenant to obtain the landlords
prior consent. The landlord generally has no duty to act in good faith
when granting or withholding consent, unless the lease provides otherwise. A no-assignment clause usually operates as a forfeiture restraint,
which entitles the landlord to terminate the lease if an improper transfer
has been made.

2.

Kinds of Transfers
A tenancy may be assigned or sublet. An assignment occurs when the
tenant transfers his entire remaining lease term. A sublease occurs when
the tenant transfers less than the entire remaining term. In some
jurisdictions, the distinction is made based on the parties intent. A
landlord may transfer the reversion.

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3.

Effect of Transfer
a) Assignment
If a tenant assigns, the assignee is in privity of estate with the
landlord, and the assignee and landlord can enforce the leases real
covenants against each other. The tenant and landlord remain in
privity of contract. An assignee who assigns his interest no longer
has privity of estate with the landlord and, therefore, no longer is
liable for the rent, unless he assumed the lease obligations. The most
recent assignee now has privity of estate with the landlord.
b) Sublease
A sublease creates neither privity of estate nor privity of contract
between the subtenant and the landlord. The subtenant is not bound
or benefited by the covenants in the lease. The sublessor and
sublessee are in privity of estate and privity of contract. The
sublease terminates if the lease terminates because the sublessee no
longer can possess the property.

G.

Discrimination in Leasing
A variety of federal, state, and local laws prohibit class-based discrimination
in the leasing of property. The equal protection clause of the Constitution and
1982 of the Civil Rights Act of 1866 both prohibit such discrimination, but
their effectiveness as a tool to combat discrimination is hampered by the
necessity of proving discriminatory intent. Moreover, 1982 applies only to
racial discrimination, and the equal protection clause is effectively limited to
protecting only members of suspect and quasi-suspect classes and applies
only if state action exists. In contrast, the federal Fair Housing Act and a
variety of state and local laws prohibit discrimination against a variety of
classes of people, applies to private persons, and may require proof of only
a discriminatory effect, rather than of discriminatory intent.

VI.

EASEMENTS AND PROFITS

A.

Definitions
An easement is a nonpossessory right to use anothers land for a limited
purpose. The easement holder is the dominant tenant, and his land is the

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dominant estate (also called the dominant tenement). The owner whose land
is subject to the easement is the servient tenant, and his land is the servient
estate (also called the servient tenement). An easement is appurtenant when
it benefits land. It is in gross when it benefits a specified person. An
affirmative easement entitles the dominant tenant to use the servient estate
for a particular purpose. A negative easement entitles the dominant tenant to
prohibit the servient tenant from engaging in otherwise privileged activity on
his land. If the use is revocable at will, it is a license, rather than an easement.
A profit authorizes its holder to enter anothers land to remove a natural
product, such as timber.

B.

Creation

1.

Express Language
A grantor may convey an easement to another person or may reserve one
for herself on land that she is conveying to another. If the interest is
granted orally, it usually is a license and is revocable at will unless the
grantor is estopped from so doing by virtue of the grantees detrimental
reliance. At common law, an easement could not be reserved in favor of
a third party to a deed.

2.

By Implication
When one part of a parcel of land is used for the benefit of another part,
a physical division of the parcel may create an easement by implication.
The use must have been apparent, continuous, and beneficial (or
necessary, if an implied reservation is claimed). When severance landlocks
a parcel, an easement of necessity may be implied even if no prior use
existed.

3.

Prescription
Adverse use of anothers land may create a prescriptive easement.
Unlike adverse possession, the prescriptive use need not have excluded
all other activities on the affected land. The servient tenants objections
do not interrupt a prescriptive use except in jurisdictions that follow the
lost grant theory. The use need not be continuous, but, if it is limited or

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partial in time, the easement will be similarly restricted. A few jurisdictions permit the public to acquire recreational easements through long
continued use.
C.

Scope and Variation

1.

Express Easements
The document that transfers the easement controls the permitted use. If
it is silent concerning the scope of use, the dominant tenant may engage
in activities reasonably related to the easement, including those related
to the normal development of the dominant estate. The use must not
unreasonably burden the servient estate. The dominant estate may not
be enlarged.

2.

Implied Easements
The circumstances that created an easement by implication determine its
scope.

3.

Prescriptive Easements
The activities that created a prescriptive easement determine its scope.
New and different activities can become privileged if continued for the
time period for prescription.

4.

Use by the Servient Tenant

The servient tenant may engage in any activities on the land that do not
unreasonably interfere with the easement. He may permit third parties
to use the easement area. He is not entitled to relocate an easement when
the instrument that granted it specified its location.

D.

Transfer and Subdivision

1.

Burden
An easements burden transfers with the servient estate. If the servient
estate is subdivided, each parcel is subject to the burden, unless the
easement has been confined to one area.

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2.

Benefit
A transfer of the dominant estate includes the appurtenant easement.
When the dominant estate is subdivided, all the lots enjoy the easements
benefit. At common law, an easement or profit in gross could not be
transferred or subdivided. Courts now generally allow transfer of an in
gross easement or profit if it is for commercial use, is quantifiable, or
requires payments for its use.

E.

Termination
An easement ends when (1) its express time period expires, (2) it has been
properly revoked, (3) the servient estate has been destroyed, (4) the necessity
that created it ends, (5) the dominant and servient estates merge, (6) the
dominant tenant reconveys it to the servient tenant or abandons it, (7) the
servient tenant recovers it by prescription, or (8) it is forfeited by the
dominant tenants abuse of it.

VII.

A.

REAL COVENANTS AND EQUITABLE SERVITUDES

Nature of Covenants
A covenant running with the land (real covenant) is a promise that can be
enforced by the successors to the original covenantee and against the
successors to the original covenantor. Its benefits or burdens run automatically without the need for an assignment of rights or delegation of duties.

B.

Requirements
1.

General Prerequisites
A covenant will not run with the land unless it is enforceable between
the original parties, and they must have intended that it run. It must be
in writing, and it must touch and concern the land.

2.

Legal Requirements
For a covenant to touch and concern land, it must relate to the
property, rather than to its owner personally. A covenant to pay money

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may be treated as touching and concerning land if the payment is for an

act that touches and concerns land, such as maintenance. Some jurisdictions require that only the burden of the covenant touch and concern the
land when the burden is to run and that only the benefit of the covenant
touch and concern the land when the benefit is to run. Other jurisdictions require that both the burden and benefit touch and concern land for
the burden to run.
Some jurisdictions require the covenantor and covenantee to be in
privity of estate (horizontal privity). This type of privity requires the
covenant to have been created when the affected land was conveyed, but
a landlord-tenant relationship or persons sharing other interests in the
same property also can satisfy it. Neighbors may exchange covenants
that will run with the land only if the jurisdiction does not require
horizontal privity.
Some states require that the covenantors entire estate pass to her
successor for the burden to run and that the covenantees entire estate
pass to his successor for the benefit to run (vertical privity). Vertical
privity also requires an unbroken chain of conveyances from the original
covenantor to the current owner of the burdened land and from the
original covenantee to the current owner of the benefited land. Vertical
privity is destroyed if an adverse possessor acquires title to the land or
if a bona fide purchaser without notice of the covenant acquires the land.
Some jurisdictions require both horizontal and vertical privities of estate.
C.

Equitable Servitudes
For a covenant to run with the land as an equitable servitude, horizontal and
vertical privity are unnecessary. However, equity requires that the party to be
burdened by a covenant had notice of it when he bought the land. The
covenant also still much touch and concern the land, and the original parties
must have intended that it run.

D.

Subdivisions
1.

Standing
As the original promisee, the subdivider has standing to enforce
covenants made by grantees in their deeds to individual lots for as long

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as the subdivider owns any benefited property. The homeowners

association generally has standing to enforce those covenants as successor to the title of the common (benefited) land. Individual lot owners
may enforce covenants against other owners in the subdivision who
acquired title to burdened parcels before them. Lot owners may enforce
covenants against owners who purchased after them if they can show
that reciprocal burdens were implied from their own covenants, that
they are third party beneficiaries of later covenants, or that the subdivider promised them to restrict all retained land.
If the covenants properly were created originally, the fact that later deeds
to the burdened lots do not mention them is irrelevant. They will run
with the land if the new grantees have actual or constructive notice.

2.

Common Plan
If some parcels in the subdivision are unrestricted, a court may hold that
other grantees cannot be charged with notice of the restriction, that a
theory of implied reciprocal servitudes or of third beneficiary status will
not be allowed, or that the covenant is invalid because it burdens an
owner who cannot enforce it against others.

E.

Termination and Nonenforcement

1.

Defenses
A covenant endures only for as long as the creating document or a
statute provides. Merger of the benefited and burdened parcels, release,
abandonment, waiver, and prescription also can destroy a covenant. A
court will not enforce a covenant when changed conditions make the
benefit too insubstantial to justify the burden. Acquiescence, estoppel,
and laches also are defenses.

2.

Government Action
When the government acquires property burdened by a restrictive
covenant, it takes title free of the covenant. Covenants on property sold
by the government at a tax sale also may be extinguished.

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PART TWO: CONVEYANCING

VIII.

A.

REAL ESTATE AGENTS

Qualifications
Brokers are licensed to negotiate sales, leases, financing, and related real
property transactions. Without a license, no person may claim compensation
for performing the above services, except for a finders fee for merely
introducing the parties to one another. Persons working under a brokers
supervision usually are called salespersons and also must be licensed.

B.

Listing Agreements
A listing agreement is the employment contract between the broker and the
seller. It authorizes the broker to solicit offers to purchase the sellers
property in return for a fee if she is successful. In most states, the listing
agreement must be written. The most common types of listing agreements
are:
1. Open (also called Nonexclusive)The broker earns a commission only
if she finds the buyer;
2. Exclusive AgencyThe broker earns a commission even if some other
broker finds the buyer; and
3. Exclusive Right to SellThe broker earns a commission even if some
other broker or the seller finds the buyer.

C.

Ready, Willing, and Able Purchaser

A broker generally earns a commission when she produces a ready, willing,
and able purchaser. The purchaser must make an offer that matches the terms
of the listing agreement or that is otherwise acceptable to the seller. In most
states, the agents right to a commission vests when the seller and buyer enter
into a purchase agreement. If the agreement is subject to any conditions, the
agents commission right vests when the conditions are eliminated. In a
minority of states, the agents commission right does not vest unless and until
the sale is consummated.

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D.

Duties
A broker has obligations pursuant to:
1. ContractShe must perform the obligations that she has undertaken in
the listing agreement;
2. AgencyShe is subject to the fiduciary duties of loyalty, integrity, and
good faith as an agent to her principal;
3. Tort LawShe must meet the standards of due care expected of a
professional in this field; and
4. LicensingShe must comply with the duties imposed by the licensing
authority.

E.

Agency
A listing agreement makes the broker the sellers agent. It also may make
other brokers cooperating under a multiple listing service subagents of the
seller, especially when they receive their commissions from the seller. A
broker often works under a dual agency arrangement and represents both the
seller and buyer in the same transaction.

IX.

CONTRACT FOR THE SALE OF LAND

A.

Enforceable Contract
A binding contract for the sale of land must be written and must describe the
property, the price, and the parties, although the purchaser may indicate that
title is to be taken by a nominee. Part performance, consisting of the
purchaser taking possession and sometimes paying part of the price or
making improvements, may excuse the lack of the writing. A court will imply
a reasonable time for performance if the contract does not specify one.

B.

Marketable Title
Absent a contrary provision, a contract for the sale of land includes an
implied covenant that the purchaser will receive marketable titletitle that is

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free from reasonable doubt as to its validity and as to the existence of any
encumbrances or defects. If the vendor owns less than he has contracted to
convey, if irregularities in the chain of title exist, or if the property is subject
to an encumbrance, it is unmarketable. Land use ordinances and physical
defects in the property do not affect title, and monetary encumbrances may
be removed by using part of the purchase price to satisfy them. If title is
unmarketable at the time for closing, the purchaser may refuse to perform or
may be granted specific performance with an abatement of the purchase
price.
C.

Equitable Conversion
Once the vendor and purchaser have executed a specifically enforceable
contract, the purchaser becomes the equitable owner of the property, and the
vendor holds legal title only as security for the purchase price. Courts that
follow this doctrine hold that the purchaser bears the risk of innocent
destruction of the premises. However, other courts imply a provision into the
contract that the purchaser will receive the property in the same condition as
when the contract was executed, unless the purchaser has taken possession.
The parties may insure themselves against risk of loss or may contract as to
the allocation of risk.

D.

Performance
The vendor performs by tendering a valid deed. The purchaser performs by
paying the contract price. Once the parties perform the contract, its provisions end (merge) and are replaced by any covenants in the deed. However,
the purchaser may have subsequent rights against the vendor for fraud or
based on the warranty of habitability.

E.

Breach
Unless time is of the essence, both parties have a reasonable time after the
specified closing date to perform. If either party fails to perform, the other
may terminate the contract or sue for specific performance or damages.

X.

DEEDS

A.

Formal Requirements
1.

Writing
A deed must identify the grantor and grantee and adequately must
describe the property. It also must include words indicating the grantors

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intent to transfer title to the property. The grantee need not sign the deed,
and the signatures usually need not be notarized. Recording and
consideration also are unnecessary for the deed to be valid between its
parties.
Parol evidence may resolve ambiguities in the legal description of the
land. When internal inconsistencies exist, monuments prevail over
courses and distances, which prevail over names and quantities. Generally, reference to a boundary with width, such as a road, extends to its
center. Boundary lines may change where a waterway is involved as the
course of the waterway changes. Condominium boundaries include
altitude as well as surface location and exclude the exterior walls, which
are part of the common areas.
When neighbors orally relocate a common boundary, their agreement is
upheld if it resulted from uncertainty or disagreement but not if it
resulted from mistake or conscious intent to change the line.
2.

Deed Types
A deed that contains no title covenants is a quitclaim deed. A general
warranty deed contains all six common law title covenants. A grant or
limited warranty deed contains some, but not all, of the title covenants,
or the covenants apply only to the grantors period of ownership.

B.

Delivery
A deed transfers title only when the grantor delivers it. To deliver a deed in
the legal sense, the grantor must manifest an intent that a completed legal act
has occurred. If the grantor intends instead that title pass only in the future,
delivery has not occurred. In transactions involving only the grantor and
grantee, the grantors conditional delivery means either that delivery has not
occurred or that title passes absolutely without the condition. A grantor may
make a future or conditional transfer of title by employing an escrow agent
and unconditionally delivering the deed to her with instructions to deliver it
to the grantee at the later time. In that case, the escrow agents delivery
relates back to the grantors delivery to the escrow agent.

XI.

RECORDING ACTS

A.

Priority Disputes
The recording act principle of protecting bona fide purchasers has replaced
the common law principle of first in time, first in right. The prior grantee

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of a deed or other conveyancing instrument may lose priority to a subsequent

grantee by failing to record. This rule permits potential purchasers of land to
rely on the chain of title as shown in the public property records.
B.

Recording Acts
1.

Recordable Documents
Any instrument affecting title to land may be copied into the official
records and indexed according to the names of the grantor and grantee
or according to the propertys description. These indexes permit a title
searcher to trace the title from its current owner back to the original
source and then determine what interests, such as easements and
mortgages, encumber the title.

2.

Types of Acts
The two most common recording acts are notice acts, which protect a
subsequent purchaser who takes without notice of an unrecorded
instrument, and race-notice acts, which protect a subsequent purchaser
who takes without notice and records first. Race statutes, which protect
the purchaser who records first, and period of grace statutes exist in a
few states.

3.

Value
Most recording acts protect only subsequent grantees who have given
value. Grantees are protected if they gave more than a nominal consideration. Donees, unsecured creditors, judgment creditors, and persons
who have merely promised to pay are not protected. Execution of a
negotiable note that has been transferred to a holder in due course and
cancellation of a prior debt qualify as paying value. When the grantee
has paid only part of the price, she has pro tanto protection. The
purchaser at an execution sale is protected as a purchaser for value,
although the jurisdictions are divided when that person also is the
judgment creditor.

4.

Notice
Subsequent purchasers who have notice of a prior conveyance are not
protected against it. Notice includes actual knowledge and construc-

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tive notice from the property records. Misindexed documents and

wild documents (those not linked to any instrument in the chain of
title) generally do not give notice. The jurisdictions are divided concerning whether instruments recorded after the owner transferred title,
before he acquired title, or that relate to other property owned by him,
give notice. Courts impose a duty on prospective purchasers to make
inquiries about any suspicious information concerning the title and to
inspect the property and impute to him any knowledge that a reasonable
inquiry would have produced. Thus, a purchaser must investigate
defectively recorded instruments, unrecorded instruments that are mentioned in recorded instruments, and rights of persons in possession of
property, unless their possession is consistent with the record title.

C.

Torrens Registration
Torrens registration is based on the premise that the government should
certify the title to a parcel of land, as it does for cars, rather than simply
serving as a repository for documents concerning it. To register a parcel of
land in the Torrens system, the owner brings a quiet title-like action in which
the title is determined. Thereafter, with limited exception, no one owns an
interest in that parcel unless it is shown on the certificate of title that the
government issues. The government is liable for any title mistakes it makes
with respect to the registered land.

XII.

A.

TITLE ASSURANCE

Title Covenants

1.

Deed Types
A quitclaim deed contains no covenants of title. A grant deed or limited
warranty deed has limited title covenants. A general warranty deed
includes all the common law title covenants.

2.

Deed Covenants
The present title covenants are the covenants of seisin, right to convey,
and against encumbrances. These warrant that the grantor has the title

CAPSULE SUMMARY

he is purporting to convey and that he has the power to transfer it is free

of all encumbrances, except those expressly or impliedly excluded. The
future covenants are the covenants of quiet enjoyment, warranty, and
further assurances. These warrant that the grantee will not be evicted by
a paramount interest holder and that the grantor will execute any
additional document necessary to perfect the transfer of title.
3.

Breach of Covenant
The present covenants are breached, if ever, when the conveyance is
made. The future covenants are breached only when the grantee is
injured by a conflicting title interest. Future covenants run with the land
and may be enforced against the covenantor by a remote grantee. The
measure of damages may be the purchase price, the cost of removing the
encumbrance, or the depreciation in market value caused by the
encumbrance.

B.

Title Insurance
Title insurance guarantees that the insured owns the title described in the
policy, subject only to the defects described in the insurance policy. The
policy generally excludes claims that exist because the insured was not a
bona fide purchaser or that could have been ascertained from a physical
inspection of the property, including boundaries (matters of survey). The
policy does insure againstoff-record risks, such as a grantors legal
incompetence, forgery, and nondelivery of any document in the chain of title.
When a title insurance company is liable, it may compensate the insured for
the loss, acquire the outstanding claim against the title, or challenge it in
court.

XIII.

MORTGAGES

A mortgage is a security instrument that authorizes a lender (the mortgagee) to

sell the mortgaged land (foreclose) to satisfy a debt if the borrower (the
mortgagor) defaults.
A.

Documentation
The mortgage secures the debt, which is evidenced by a promissory note. In
some states, lenders more commonly use a deed of trust, rather than a

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mortgage. The only significant difference between them is that a deed of trust
appoints someone other than the lender (a trustee) to conduct the foreclosure.
B.

Foreclosure
The mortgagor and junior lienors have an equity of redemption that enables
them to pay a defaulted loan in full to prevent foreclosure. If they do not
exercise this right, the mortgagee can have the mortgaged property sold to
satisfy the obligation. Any surplus from a foreclosure sale goes to any junior
lienors, because their liens are eliminated by the foreclosure, and then to the
owner. If the sale does not produce enough proceeds to pay the foreclosed
debt in full, the foreclosing mortgagee can sue for the difference between the
debt and the foreclosure sale price (the deficiency), unless the jurisdiction has
antideficiency legislation. If any rents from the property have been given as
additional security, the lender also may collect them and apply them to the
debt.

C.

Junior Mortgages
When a junior mortgage is foreclosed, the land is sold subject to the senior
liens. A junior mortgage is eliminated by a senior foreclosure sale. The junior
mortgagee receives any surplus from the senior sale in preference to the
mortgagor.

D.

Transfers
Property subject to a mortgage is transferred subject to it. If the grantee
assumes the secured debt, she becomes personally liable for it. If she does not
assume liability, she merely takes subject to the mortgage. A transfer of the
note always includes the mortgage, even if it was not expressly assigned.

PART THREE: RIGHTS RELATING TO LAND

XIV.
A.

MISCELLANEOUS PROPERTY DOCTRINES

Water
1.

Stream Water
A riparian owner has an absolute right to use water when it does not
affect the waters flow or is used solely for domestic purposes. If the flow

CAPSULE SUMMARY

is affected and the use is nondomestic, the natural flow doctrine permits
downstream users to enjoin the use, whereas the reasonable use doctrine
balances the intended uses of the conflicting riparian owners. Western
states follow the prior appropriation doctrine and grant permits to take
water depending on the time of application and the intended use.

2.

Underground Water
The absolute ownership rule allows surface owners to make any use of
underground water as long as it is not malicious. The reasonable use rule
limits surface owners to reasonable uses of the water.

3.

Surface Water
The natural servitude rule prohibits landowners from diverting water
that flows over their land. The common enemy rule allows owners to
alter their land to drain water from it. The reasonable use rule allows
owners to divert water as long as it does not unreasonably interfere with
their neighbors use of their land.

B.

Oil and Gas

Traditionally, underground oil and gas were viewed as being analogous to
wild animals. Because neither oil nor gas was within anyones control and
because both generally move about freely, the first person to extract them
becomes the owner. In more recent times, legislation generally has preempted
the common law rule of capture, and some courts have adopted the fair
share rule, which limits an extractor to a fair share of the oil or gas.

C.

Support

1.

Lateral Support
A landowner whose excavations cause neighboring land to subside is
liable regardless of negligence unless he can show that the land subsided
only because of the additional weight of improvements erected on it. If
the excavator is liable, states are divided over whether compensation
must be paid for the improvements.

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2.

Subjacent Support
An excavator is absolutely liable for injuries to land and buildings
caused by the removal of subjacent support.

3.

Modifications
Landowners may agree that one will furnish additional support to
anothers improvements or, conversely, that no duty of support is owed.
Some jurisdictions require excavators to shore up neighboring buildings.

D.

Freedom from Interference

1.

Trespass
Trespass is an unprivileged intrusion upon anothers land. It is actionable because it interferes with an owners right to exclusive possession.
Even without harm, a trespasser is liable for at least nominal damages.

2.

Nuisance
A nuisance is an unreasonable use that substantially interferes with the
use and enjoyment of anothers land. Determination of whether a
nuisance exists usually requires a balancing of the utility of the parties
actions, a comparison of the harm against the cost of correction, and a
consideration of the nature of the locale.

E.

Airspace
1.

Use Rights
Title and the right to develop airspace may be severed from the surface.
Absent severance of the airspace, the owner of the surface has the right
to use it.

2.

Invasions
Surface owners generally do not have a cause of action against flights in
the public airspace above their lands. However, an overflight may

CAPSULE SUMMARY

constitute a trespass if it is too low, a nuisance if it creates too much

disturbance, or a taking if the government operates the aircraft or the
airport.
F.

Fixtures
Personal property becomes real property when it is affixed to land with an
intention that it become a permanent part of land and when it is specifically
adapted to the land. When the same person owns both the land and the
personalty, the personaltys conversion to a fixture may be significant
because of inheritance laws, a mortgage on the property, property taxation, or
an exercise of eminent domain. When the fixture is owned by someone other
than the owner, such as by a tenant, the most significant issue usually is
whether the fixtures owner can remove it.

G.

Waste
The owner of a presently possessory interest in land that is less than a fee
simple absolute owes a duty to the future interest owners and to concurrent
owners not to harm the property by affirmatively damaging it or by failing
to make normal repairs to protect it from deterioration.

XV.

A.

LAND USE

Authority to Regulate
Land use regulation is a state power that the state delegates to cities and
counties. Some states also permit direct voter regulation by initiative or
referendum.

B.

Forms of Regulation

1.

Planning
A comprehensive plan prepared by the local planning board often is a
legal prerequisite to the enactment of land use laws. The plan consists of
the communitys goals and purposes concerning its physical development.

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2.

Zoning
A typical zoning ordinance divides the land it governs into use, height,
and area districts. It regulates the size of land lots and buildings by
minimum floor space, minimum lot size, floor to area ratio, open space,
and setback requirements. Cluster zoning permits the owner of a large
parcel to violate the usual area requirements if the standards are satisfied
by the aggregate project. The planned unit development zoning
classification may allow a mix of uses, as well as a clustering of density.
For a floating zone, the zoning ordinance describes the permitted uses
but does not place any land in that category until an owner successfully
seeks a rezoning for it. A holding zone temporarily prohibits intensive
use of land while the community plans for the future.
Most zoning ordinances are cumulative; less intense uses, such as single
family homes, are permitted in more intense zones, such as commercial.
Zoning ordinances generally also include provisions for conditional uses
(also known as special exceptions)uses that are allowed in a zoning
district only after discretionary review and the possible imposition of
conditions. Zoning codes generally permit pre-existing uses to continue
as nonconforming uses but may prohibit enlargement of those uses or
their resumption after discontinuance for a period of time or may
amortize such uses by permitting them to continue for only a limited
number of years. Variances are available to property owners who
otherwise would suffer unnecessary hardship because of special circumstances affecting their land. The local legislative body may amend its
zoning ordinance as to any particular parcel. Contract or conditional
rezoning involves a zoning amendment based on the landowners
agreement to specified conditions.

3.

Subdivision Regulation
A local government may require a subdivider to dedicate streets in the
subdivision to the public, to construct off-site improvements, or to
dedicate land or to pay a fee for public uses, such as parks and schools.

4.

Other Forms of Regulation

A local government may control the growth of its community by a
building moratorium or by limiting the number of building permits it

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issues. It may protect historic buildings or districts by prohibiting

construction, reconstruction, or demolition of structures. It may regulate
the size and placement of billboards, although its right to ban them
totally unclear. It can delegate architectural approval to a design review
board. Federal and state environmental protection acts may require a
local government to consider and to mitigate adverse environmental
impacts created by projects that it has the right to approve.
C.

Judicial Review
1.

Legislative v. Administrative (Quasi-judicial)

If a court determines that a particular action by a local government is
legislative, the court will uphold it if it bears a rational relationship to a
permissible state objective. If the action is administrative (quasi-judicial),
substantial evidence must support it. Many courts reject the distinction
between legislative and administrative actions. Additionally, a court will
subject a land use action to more searching review if it is directed at a
suspect or quasi-suspect class or if it impinges on a fundamental right.

2.

Judicial Standard
A court will invalidate a land use regulation if it is not authorized by the
state enabling act (ultra vires), involves an improper or standardless
delegation of legislative power, is arbitrary, or was enacted or administered by improper procedures.
A court also will invalidate a regulation if it violates the federal or state
constitution. For example, a court will invalidate an ordinance if it
violates the first amendment, such as by overregulating signs, movie
theaters, or churches or by intruding too far into family living arrangements. The just compensation clause of the fifth amendment requires
compensation when a regulation is so oppressive that it takes the
owners property. Equal protection principles may invalidate land use
systems that exclude lower and middle income persons from residing in
the community.

3.

Remedies
When a landowner successfully challenges a land use regulation, the
court will invalidate the law but usually will not award damages. In

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