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Property Outline
I. What is Property?
a. Property The bundle of rights that defines the legal relationships between and among
persons (including legal entities, governments, etc.), to those things (resources) that
represent value (usually economic) or advantage to us together with the remedial devices
(remedies) our legal authorities (legislatures, courts, executive branch) provide to enforce
those rights.
i. All property rights are given by the “sovereign” – Sovereign has exclusive power to
give or take
1. 5
th
amendment of the U.S. Constitution restrains the power of the federal
government to take without exercising due process of law.
2. 14
th
amendment extends those protections to restrain the power of the State
government
ii. In addition to the traditional notions of property (realty and personalty), property can
also include anything that can not be taken away without due process of law
State-created benefits
1. Due process is not arbitrary or capricious
2. Where there is a remedy (conversion, trespass, injunction, etc.), property
rights exist and due process will apply.
iii. Attributes of Property:
1. Exclusivity
a. A property owner has exclusive right to possession, use, and transfer
of his property.
b. Property owner asserts his right to exclusivity through the remedy of
trespass
i. The remedy of trespass is evidence that exclusivity is a critical
part of the bundle of rights because the State provides
enforcement of this rule of law.
ii. Two Types of Trespass:
1. Criminal Trespass Only the State can enforce
(criminal law)
a. State’s interest in enforcing criminal trespass is
the maintenance of the peace
2. Civil Trespass Involves a remedy for damages caused
by the invasion of the owner’s property
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c. Not an absolute right law provides limits
i. Property owner may not be able to exclude everyone under all
circumstances
1. State v. Shack demonstrated that the right to exclude
may be limited when a property owner opens his property
to other people
a. If those persons are entitled to government
benefits, the property owner can not deny them
access to those benefits while they are on his
property.
b. A property owner who invites others to share in
the use of his property in turn shares some of the
rights in the bundle with those persons.
2. Possession
a. Can be protected through legal remedies even if owner is not
physically present.
b. Some jurisdictions hold that the owner of the surface owns everything
below it to the center of the earth and all of the sky above it.
c. Other jurisdictions carve this into ‘mini bundles’ for the sub-surface and
the air.
i. Edwards v. Sims Lee contends that part of Edwards’s cave
may lie beneath his property. Court decision changes nothing
with regard to Lee’s status. Edwards’s, however, may have lost
access to a part of his cave if that part of the cave lies beneath
Lee’s property. If Edwards goes to sell, the value of the
property may be impaired because Edwards may not have full
access to the cave. Edwards now has a duty to disclose this
knowledge to a potential buyer.
3. Use
4. Transferability
a. Types of Transfers
i. Volitional Occurs through a conscious decision on the part of
the property owner
1. Sale
2. Gift
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3. Will
a. State will get involved in volitional transfers when it
is in the public interest to do so.
b. Jones v. Alfred H. Mayer Co. Government had
the power to prohibit discrimination in the sale of
real and personal property.
i. State will not enforce illegal provisions.
ii. Non-volitional Occurs with the enactment of law coupled with
a judicial decision
1. Condemnation
2. Seizure
3. Intestate Succession
4. Adverse Possession
II. Transfers for Value:
a. Bon Fide Purchaser for Value Without Notice of Defect
i. Rule:
1. One who buys something; and
2. For value; and
3. Without notice (actual or constructive knowledge that grantor cannot transfer
the title that was bargained for) of another’s claim to the item or of any defects
in the seller’s title
ii. If a person is a BFP, he or she may take the property free and clear of any other
claim to the property.
1. Must provide evidence that he or she had no knowledge of any defect
a. Must have checked the records at the county courthouse
b. Must have inspected the property to ensure that no one else appeared
to have possession of the property.
2. Must record his or her deed to establish his or her claim to the property
a. Title is not evidenced by recording
b. Recording gives notice that ownership has been conveyed from
transferor to transferee.
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3. BFP should take possession of the property (evidence of his belief that he is
the owner)
iii. A true BFP can acquire better title than the transferor.
1. Grantor can only transfer the rights that he actually has. The grantee gets the
rights the grantor had to transfer plus the better right to possession (claim of
ownership) than anyone else except the rightful owner --- Grantee can end up
with more than the grantor had.
iv. Remedy available to BFP is equitable estoppel.
III. Adverse Possession
a. Adverse possession is a non-permissive use of a piece of property for a statutory period
with a claim of right to the property when that use is:
i. Continuous; and
ii. Exclusive; and
iii. Hostile; and
iv. Open; and
v. Notorious
b. Remedy available to the owner is the remedy of trespass
c. Statute of limitations applies:
i. An owner will be estopped from asserting trespass against the adverse possessor
after the statutory period.
ii. Once the statute has run, the adverse possessor can seek to quiet title to the
property in himself or herself.
d. Courts presume in favor of the one who holds actual title
i. Not being in actual possession does not weaken the stance of the one who holds
actual title.
ii. Title holder has a duty to protect his or her right to exclusivity.
iii. Neglecting to exercise that right for a statutory period of time will cause the owner to
be estopped from asserting the remedy of trespass (remedies have a shelf life)
iv. Burden is on the adverse possessor to prove that he or she met all of the elements
of adverse possession.
IV. Donative Transfers (Gifts)
a. Elements:
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i. Intent to deliver and transfer the rights to the property from donor to donee; and
1. Have to look at objective evidence to determine intent (verbal, written, other)
ii. Delivery (actual or symbolic); and
1. Can be physical delivery of the thing or transfer of the deed
iii. Acceptance; and
1. Evidenced by recording the deed and taking possession of the property
iv. Donor must deprive himself of all current and future benefits from the object
1. Property given as a fee simple determinable or fee simple on condition
subsequent can still qualify as a gift even though the donor retains some
future interest in the property.
2. The donee controls whether the condition or event occurs that would allow
the donor to step back into ownership.
3. This element is met by the donor relinquishing all control over whether the
triggering event occurs.
b. Donative transfers are transfers that occur without any consideration being paid. The
quality of title transferred is the same as that which is transferred in a sale.
V. Freehold Estates
a. Key presumption is that the law always presumes that the grantor intended to transfer the
whole fee unless there are words in the conveying instrument that indicate that he intended
to transfer something less.
b. Fee Simple Absolute the whole bundle of rights
i. Marketable Title Fee simple title with no notice of defect that a reasonable and
prudent buyer would assume
1. Language in a deed must not have any ambiguity for there to be marketable
title to the property.
2. Common law required words of inheritance (“and his heirs”) in the creation of
a fee simple absolute. Modern jurisdictions view this as a holdover from the
past and do not require such language.
a. “Heirs” is a word of art.
b. Heirs does not refer to those who take under a will (“devisees” does)
c. Heirs are those persons who take property under the relevant statutes
of descent (intestacy statutes).
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d. The word “Heirs” in the deed creates the ability for the grantee to make
an alienable, devisable, or descendable transfer of title
e. “Heirs” is a word of limitation (to those who take under a statute) that
expands forever into the future.
3. Words must give us a clear picture of the grantor’s intent – words in property
must be precise because they may end up being the only evidence of the
intent years down the road.
4. Key Principles Relevant to Marketable Title:
a. A grantor intends to convey all that he has with regard to title unless
clearly stated otherwise in the conveyance.
b. A grantor cannot convey more than what he has.
ii. Words of Construction:
1. Common Law A to B and his heirs
2. Modern Interpretation A to B
3. Common Law & Modern Interpretation A to B and his heirs for use as a
school only
4. Common Law & Modern Interpretation A to B and his heirs for so long as
(until, during) no liquor is sold on the land Would likely create a fee simple
determinable under common law, but American courts would likely not view
this language as sufficient to express a clear intent by the grantor that the fee
interest in B should be subject to forfeiture. The condition would probably be
treated as a covenant running with the land.
c. The Life Estate
i. An estate for life is an estate which is not an estate of inheritance, and:
1. is an estate which is specifically described as to duration in terms of the life or
lives of one or more human beings, and is not terminable at any fixed or
computable period of time; or
2. though not so specifically described as is required under the rule stated in
clause (1), is an estate which can not last longer than the life or lives of one or
more human beings, and is not terminable at any fixed or computable period
of time or at the will of the transferor.
ii. Duties of the Life Tenant:
1. Fiduciary duty to remainderman.
2. Duty to prevent decay or waste.
a. Waste implies neglect or misconduct resulting in material damages or
loss of property (not depreciation)
b. Waste may be:
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i. Voluntary Commission of some destructive act; or
ii. Permissive Failure to exercise ordinary care
c. Defenses to waste:
i. Laches If a remainderman fails to charge to the life tenant with
waste in a reasonable time, he will be estopped from doing so.
1. Defense does not apply to permissive waste because
the life tenant has a continuing duty to keep up the
property for the remainderman.
2. Statute for collecting damages for permissive waste
begins to run at the end of the life tenancy.
3. Duty to account for depletion
a. When the remainderman discovers that the life tenant is depleting the
mineral resources of the property, his remedy is injunction.
b. He can then ask for an accounting and damages from the life tenant.
i. If the life tenant refuses, he must take legal action quickly
because the statute will begin to run.
ii. Failure to take action before the end of the life tenancy will
result in the remainderman being estopped from ever taking
action.
4. Words of Construction:
a. Common Law A to B
b. Common Law & Modern Interpretation - A to B (for the life of B)
i. Both of the above create a life estate with a reversionary
interest in the grantor.
c. A to B (for the life of B), remainder to C and his heirs creates a life
estate in B with a fee simple remainder in C and C’s heirs.
d. Defeasible Estates
i. Fee Simple Determinable:
1. Grantee holds the property in fee subject to a self-executing condition that will
cause the property to revert back to the grantor should the condition ever fail.
2. Characteristics:
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a. Possession is dependent upon meeting some condition.
b. Property is indefinitely inheritable.
c. Property is freely alienable.
d. Property is devisable.
e. Condition will follow the property
f. Reversionary interest is self-executing
g. Reversionary interest is a contingent interest because it is dependent
upon the failure of a condition that may never fail.
h. Condition may be subject to a statute of limitations
3. Words of Construction:
a. A to B and his heirs as long as the land is farmed
b. A to B and his heirs until the land is no longer farmed
c. A to B and his heirs while the land is farmed
4. The mere expression that property is to be used for a certain purpose will not
in and of itself suffice to turn a fee simple into a determinable fee. There must
be some indication that grantor intends for the property to revert if the
condition fails.
5. Once the statute of limitations runs, the owner of a defeasible fee will have his
title converted to a fee simple absolute.
6. The possibility of reverter in a determinable fee is descendable, devisable,
alienable, and condemnable by government action the reverter has a value
that is dependent upon the likelihood of its exercise.
ii. Fee Simple on Condition Subsequent
1. Grantee holds the property in fee simple subject to some condition placed
upon the use of the land. Grantor holds a right to re-enter and take
possession of the land if the condition is ever broken. Grantor’s right to re-
enter is not self-executing he must take legal action within a statutory period
to exercise the right.
2. Characteristics:
a. Possession is dependent upon meeting some condition.
b. Property in indefinitely inheritable.
c. Property is freely alienable.
d. Property is devisable.
e. Condition will follow the property indefinitely unless stated otherwise in
the deed.
f. Reversionary interest is not self-executing.
g. Reversionary interest is a contingent interest because it is dependent
upon the failure of a condition that may never fail.
h. Condition may be subject to a statute of limitations.
3. Words of Construction:
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a. A to B and his heirs on condition that…but if…A and his heirs may re-
enter and claim the land.
b. A to B and his heirs but if…then A and his heirs may re-enter and claim
the land.
VI. Future Interests
a. Remainder Interests
i. Vested if:
1. Given to a born & ascertained person
2. Not subject to a condition subsequent
a. Vested remainders may be:
i. Indefeasible
ii. Vested subject to partial divestiture interest is vested in quality
by the quantitative value is undetermined.
iii. Vested subject to total divestiture
b. Rule: When a conveyance of a particular estate is made to support a
remainder over, the tenant for the particular estate takes it, and if the
remainderman is in being he takes the fee. In such a case, the
remainder is not contingent as to its becoming a vested remainder
because the title vests in the remainderman upon the delivery of the
deed.
c. Remainder can vest in a class of persons so long as one member of
the class is ascertainable at the time of the transfer.
i. The class is open with respect to the quantitative value and not
the quality of title so long as it is possible to add another
member to the class.
ii. An interest in a class is vested so long as there is no condition
precedent (the members are ascertainable at the time of the
deed)
ii. Contingent if:
1. Given to an un-born or un-ascertained person
2. Subject to a condition subsequent
iii. Rule in Shelley’s Case
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1. Rule Where an instrument creates a life estate in the grantee and purports
to create a fee simple remainder in the heirs of the grantee, the future
interest becomes a remainder in fee simple in the grantee.
a. A to B (for life of B), remainder to B’s heirs A to B in fee
b. Courts will apply this rule unless there is language in the deed to
qualify the word ‘heirs’ to mean something other than an indefinite
succession of takers from generation to generation.
c. Rule promotes the alienability of property.
d. The rule is a rule of law that has been abolished by statute in many
American jurisdictions.
iv. Doctrine of Worthier Title
1. Rule An inter vivos conveyance to the grantee for life with remainder to the
heirs of the grantor is ineffective to create a remainder but leaves in the
grantor a reversion which will pass by operation of law upon his death unless
he disposes of it.
a. A to B (for life of B), remainder to A’s heirs A to B (for life of B),
remainder to A in fee.
b. When ‘heirs’ is qualified to mean something other than indefinite
succession, the rule does not apply.
b. Executory Interests
i. Defeasible fee that moves the interest away from the grantor to avoid reverter.
ii. Uses:
1. Transfer of family wealth with long-term control of property
2. Private land use planning schemes
iii. Interest is self-executing upon the failure of some condition no legal action is
required
iv. Rule Against Perpetuities (Rule Against Remote Vesting):
1. No defeasible estate can be created to last longer than a life in being
(measuring life) plus 21 years and nine months.
2. The Rule eventually destroys the condition on the estate and puts the fee
back together again.
3. If there is no measuring life, the condition fails.
4. Goal of the Rule is to make property marketable again.
5. Interests subject to the Rule:
a. Contingent Remainders; and
b. Executory Interests
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i. Possibilities and fee simple subject to condition subsequent are
not subject to the Rule because the fee will come back together
in the grantor --- these interests are governed by statutes of
limitation to prevent conditions from running forever.
6. Examples:
a. A to B (life of B), remainder to B’s children who each age 21
i. Measuring life is B’s life
ii. If B has children at the time of the deed, the Rule does not apply
because the future interest is vested (subject to divestment) with
a possibility of reverter in A.
iii. If B has no children at the time of the deed, this transaction will
still work because a vesting will occur (either as a reverter in A
or in children that may be born to B).
iv. The only way the transaction doesn’t work is if the executory
interest does not kick over to B’s children until some age older
than 21.
b. A to B on condition that…but if…then to C
i. Executory interest is destroyed because this transaction does
not pass the Rule no measuring life.
c. Covenants vs. Defeasible Estates
i. The failure of a condition in a defeasible estate may not be the end of the story.
Contractual remedies may still exist.
ii. Person seeking enforcement may be able to obtain an injunction and sue for breach
iii. Covenants = contractual agreements among grantors and grantees to
restrict/restrain land uses.
1. If you are the object of a covenant (as a landowner), then someone else has
an interest in your land (a contractual interest).
2. Relevant to the discussion of defeasible estates because the unavailability of
a property remedy does not necessarily rule out the use of a contractual
remedy.
3. Covenants that are no longer relevant may be ignored even though they
continue to run with the land.
iv. Defenses to Covenants (both work together):
1. Waiver If there is no attempt to enforce the covenant by the grantor (and
the grantor knew of the breach), the covenant is waived.
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2. Estoppel When the covenant ceased to be enforced (and the statute of
limitations ran), the covenant became unenforceable.
VII. Concurrent Estates
a. Tenants in Common
i. Two or more persons who share ownership of a piece of property
ii. Undivided interests none of the co-tenants can be said to own an identifiable
segment of the realty or personalty
iii. Rights & Duties Each co-tenant has a right of possession, coupled with a duty not
to interfere with another co-tenant’s co-extensive right.
iv. Remedies in the event of disagreement over the property
1. Partition in kind or by sale; or
2. Lease the property & apportion the rent by ownership percentage; or
3. One co-tenant purchases the other’s interest
v. Individual interests are descendable devisable, and alienable without destroying the
co-tenancy
vi. Presumption of the law is that a tenancy in common is created unless there is
language in the conveying instrument that indicates otherwise.
vii. Pur my et no pur tout
b. Joint Tenancy
i. Will substitute the grantor imposes the succession plan upon the grantees except
for the last survivor.
ii. Co-tenants comprise a single legal entity which owns the property.
iii. Right of Survivorship ownership passes to the other co-tenant upon death of the
first co-tenant the survivors continue to comprise the entity that owns the property
iv. Any of the joint tenants can end his participation by compelling a partition as to his
interest the other joint tenants will continue to hold their interests as joint tenants to
each other.
v. A joint tenant can also end his participation by a deed conveying his undivided
interest to any other person Severance grantee will now hold as a tenant in
common to the other joint tenants.
vi. A creditor, by writ of execution, can force a sale of the debtor’s undivided interest
and the forced sale will be a severance.
vii. Language creating joint tenancy must do so overtly.
viii. Pur my et pur tout
c. Tenancy by Entirety
i. Conveyance to two people (husband and wife) as if they were one person.
ii. Indestructible neither spouse can break up the interest except by death or divorce.
iii. Interest can be conveyed but both spouses have to agree to the transfer.
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iv. Creditors cannot get at one spouse’s interest.
v. Must be consciously created.
vi. Not recognized in every jurisdiction
d. Fiduciary relationship what one co-tenant does for his own benefit, he does for all.
e. Duty to Account attaches to the interest in the land
i. Where the co-tenant in possession of the property begins to develop the property,
he has a duty to account and avoid waste. If the property produces revenue, he has
a duty to provide the other co-tenant with his share of the income (after re-couping
all of his costs)
f. Treatment of Mortgages and Joint Tenancy
i. Lien Theory States Mortgage has no effect as a conveyance of debtor’s interest.
A mortgage merely serves to give the lender the security of a lien.
1. Lender only acquires title to the joint tenant’s interest when he forecloses.
2. Creditor runs the risk of being unable to collect anything in a lien theory state
if he fails to foreclose before the joint tenant dies Unwise to loan money
against the interest of only one co-tenant in a joint tenancy.
ii. Title Theory States Debtor does convey his interest to the mortgagee until the
debt is repaid.
1. Mortgage serves to sever the joint tenancy.
2. Lender holds the bare legal title to the joint tenant’s interest.
3. Joint tenant effectively buys back his interest from the lender.
4. The borrower keeps all of the equitable interests in the property even while
the mortgage exists (possession, alienability, descendability, and devisability).
5. A creditor is still unwise to loan money against only one joint tenant’s interest
in a title theory state because he must still expend money to partition the
property in the event of a foreclosure.
g. Slayer Statutes
i. Prevent a co-tenant who kills another co-tenant from acquiring the other co-tenant’s
property to his benefit.

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Page 1 of 13 Property Outline I. What is Property? a. Property – The bundle of rights that defines the legal relationships between and among persons (including legal entities, governments, etc.), to those things (resources) that represent value (usually economic) or advantage to us together with the remedial devices (remedies) our legal authorities (legislatures, courts, executive branch) provide to enforce those rights. i. All property rights are given by the “sovereign” – Sovereign has exclusive power to give or take 1. 5th amendment of the U.S. Constitution restrains the power of the federal government to take without exercising due process of law. 2. 14th amendment extends those protections to restrain the power of the State government ii. In addition to the traditional notions of property (realty and personalty), property can also include anything that can not be taken away without due process of law – State-created benefits 1. Due process is not arbitrary or capricious 2. Where there is a remedy (conversion, trespass, injunction, etc.), property rights exist and due process will apply. iii. Attributes of Property: 1. Exclusivity a. A property owner has exclusive right to possession, use, and transfer of his property. b. Property owner asserts his right to exclusivity through the remedy of trespass i. The remedy of trespass is evidence that exclusivity is a critical part of the bundle of rights because the State provides enforcement of this rule of law. ii. Two Types of Trespass: 1. Criminal Trespass – Only the State can enforce (criminal law) a. State’s interest in enforcing criminal trespass is the maintenance of the peace 2. Civil Trespass – Involves a remedy for damages caused by the invasion of the owner’s property Page 2 of 13 c. Not an absolute right – law provides limits i. Property owner may not be able to exclude everyone under all circumstances 1. State v. Shack – demonstrated that the right to exclude may be limited when a property owner opens his property to other people a. If those persons are entitled to government benefits, the property owner can not deny them access to those benefits while they are on his property. b. A property owner who invites others to share in the use of his property in turn shares some of the rights in the bundle with those persons. 2. Possession a. Can be protected through legal remedies even if owner is not physically present. b. Some jurisdictions hold that the owner of the surface owns everything below it to the center of the earth and all of the sky above it. c. Other jurisdictions carve this into ‘mini bundles’ for the sub-surface and the air. i. Edwards v. Sims – Lee contends that part of Edwards’s cave may lie beneath his property. Court decision changes nothing with regard to Lee’s status. Edwards’s, however, may have lost access to a part of his cave if that part of the cave lies beneath Lee’s property. If Edwards goes to sell, the value of the property may be impaired because Edwards may not have full access to the cave. Edwards now has a duty to disclose this knowledge to a potential buyer. 3. Use 4. Transferability a. Types of Transfers – i. Volitional – Occurs through a conscious decision on the part of the property owner 1. Sale 2. Gift Page 3 of 13 3. Will a. State will get involved in volitional transfers when it is in the public interest to do so. b. Jones v. Alfred H. Mayer Co. – Government had the power to prohibit discrimination in the sale of real and personal property. i. State will not enforce illegal provisions. ii. Non-volitional – Occurs with the enactment of law coupled with a judicial decision 1. 2. 3. 4. Condemnation Seizure Intestate Succession Adverse Possession II. Transfers for Value: a. Bon Fide Purchaser for Value Without Notice of Defect – i. Rule: 1. One who buys something; and 2. For value; and 3. Without notice (actual or constructive knowledge that grantor cannot transfer the title that was bargained for) of another’s claim to the item or of any defects in the seller’s title ii. If a person is a BFP, he or she may take the property free and clear of any other claim to the property. 1. Must provide evidence that he or she had no knowledge of any defect a. Must have checked the records at the county courthouse b. Must have inspected the property to ensure that no one else appeared to have possession of the property. 2. Must record his or her deed to establish his or her claim to the property a. Title is not evidenced by recording b. Recording gives notice that ownership has been conveyed from transferor to transferee. Page 4 of 13 3. BFP should take possession of the property (evidence of his belief that he is the owner) iii. A true BFP can acquire better title than the transferor. 1. Grantor can only transfer the rights that he actually has. The grantee gets the rights the grantor had to transfer plus the better right to possession (claim of ownership) than anyone else except the rightful owner --- Grantee can end up with more than the grantor had. iv. Remedy available to BFP is equitable estoppel. III. Adverse Possession a. Adverse possession is a non-permissive use of a piece of property for a statutory period with a claim of right to the property when that use is: i. ii. iii. iv. v. Continuous; and Exclusive; and Hostile; and Open; and Notorious b. Remedy available to the owner is the remedy of trespass c. Statute of limitations applies: i. An owner will be estopped from asserting trespass against the adverse possessor after the statutory period. ii. Once the statute has run, the adverse possessor can seek to quiet title to the property in himself or herself. d. Courts presume in favor of the one who holds actual title i. Not being in actual possession does not weaken the stance of the one who holds actual title. ii. Title holder has a duty to protect his or her right to exclusivity. iii. Neglecting to exercise that right for a statutory period of time will cause the owner to be estopped from asserting the remedy of trespass (remedies have a shelf life) iv. Burden is on the adverse possessor to prove that he or she met all of the elements of adverse possession. IV. Donative Transfers (Gifts) a. Elements: Page 5 of 13 i. Intent to deliver and transfer the rights to the property from donor to donee; and 1. Have to look at objective evidence to determine intent (verbal, written, other) ii. Delivery (actual or symbolic); and 1. Can be physical delivery of the thing or transfer of the deed iii. Acceptance; and 1. Evidenced by recording the deed and taking possession of the property iv. Donor must deprive himself of all current and future benefits from the object 1. Property given as a fee simple determinable or fee simple on condition subsequent can still qualify as a gift even though the donor retains some future interest in the property. 2. The donee controls whether the condition or event occurs that would allow the donor to step back into ownership. 3. This element is met by the donor relinquishing all control over whether the triggering event occurs. b. Donative transfers are transfers that occur without any consideration being paid. The quality of title transferred is the same as that which is transferred in a sale. V. Freehold Estates a. Key presumption is that the law always presumes that the grantor intended to transfer the whole fee unless there are words in the conveying instrument that indicate that he intended to transfer something less. b. Fee Simple Absolute – the whole bundle of rights i. Marketable Title – Fee simple title with no notice of defect that a reasonable and prudent buyer would assume 1. Language in a deed must not have any ambiguity for there to be marketable title to the property. 2. Common law required words of inheritance (“and his heirs”) in the creation of a fee simple absolute. Modern jurisdictions view this as a holdover from the past and do not require such language. a. “Heirs” is a word of art. b. Heirs does not refer to those who take under a will (“devisees” does) c. Heirs are those persons who take property under the relevant statutes of descent (intestacy statutes). Page 6 of 13 d. The word “Heirs” in the deed creates the ability for the grantee to make an alienable, devisable, or descendable transfer of title e. “Heirs” is a word of limitation (to those who take under a statute) that expands forever into the future. 3. Words must give us a clear picture of the grantor’s intent – words in property must be precise because they may end up being the only evidence of the intent years down the road. 4. Key Principles Relevant to Marketable Title: a. A grantor intends to convey all that he has with regard to title unless clearly stated otherwise in the conveyance. b. A grantor cannot convey more than what he has. ii. Words of Construction: 1. Common Law – A to B and his heirs 2. Modern Interpretation – A to B 3. Common Law & Modern Interpretation – A to B and his heirs for use as a school only 4. Common Law & Modern Interpretation – A to B and his heirs for so long as (until, during) no liquor is sold on the land – Would likely create a fee simple determinable under common law, but American courts would likely not view this language as sufficient to express a clear intent by the grantor that the fee interest in B should be subject to forfeiture. The condition would probably be treated as a covenant running with the land. c. The Life Estate i. An estate for life is an estate which is not an estate of inheritance, and: 1. is an estate which is specifically described as to duration in terms of the life or lives of one or more human beings, and is not terminable at any fixed or computable period of time; or 2. though not so specifically described as is required under the rule stated in clause (1), is an estate which can not last longer than the life or lives of one or more human beings, and is not terminable at any fixed or computable period of time or at the will of the transferor. ii. Duties of the Life Tenant: 1. Fiduciary duty to remainderman. 2. Duty to prevent decay or waste. a. Waste implies neglect or misconduct resulting in material damages or loss of property (not depreciation) b. Waste may be: Page 7 of 13 i. Voluntary – Commission of some destructive act; or ii. Permissive – Failure to exercise ordinary care c. Defenses to waste: i. Laches – If a remainderman fails to charge to the life tenant with waste in a reasonable time, he will be estopped from doing so. 1. Defense does not apply to permissive waste – because the life tenant has a continuing duty to keep up the property for the remainderman. 2. Statute for collecting damages for permissive waste begins to run at the end of the life tenancy. 3. Duty to account for depletion a. When the remainderman discovers that the life tenant is depleting the mineral resources of the property, his remedy is injunction. b. He can then ask for an accounting and damages from the life tenant. i. If the life tenant refuses, he must take legal action quickly because the statute will begin to run. ii. Failure to take action before the end of the life tenancy will result in the remainderman being estopped from ever taking action. 4. Words of Construction: a. Common Law – A to B b. Common Law & Modern Interpretation - A to B (for the life of B) i. Both of the above create a life estate with a reversionary interest in the grantor. c. A to B (for the life of B), remainder to C and his heirs – creates a life estate in B with a fee simple remainder in C and C’s heirs. d. Defeasible Estates i. Fee Simple Determinable: 1. Grantee holds the property in fee subject to a self-executing condition that will cause the property to revert back to the grantor should the condition ever fail. 2. Characteristics: Page 8 of 13 a. b. c. d. e. f. g. Possession is dependent upon meeting some condition. Property is indefinitely inheritable. Property is freely alienable. Property is devisable. Condition will follow the property Reversionary interest is self-executing Reversionary interest is a contingent interest because it is dependent upon the failure of a condition that may never fail. h. Condition may be subject to a statute of limitations 3. Words of Construction: a. A to B and his heirs as long as the land is farmed b. A to B and his heirs until the land is no longer farmed c. A to B and his heirs while the land is farmed 4. The mere expression that property is to be used for a certain purpose will not in and of itself suffice to turn a fee simple into a determinable fee. There must be some indication that grantor intends for the property to revert if the condition fails. 5. Once the statute of limitations runs, the owner of a defeasible fee will have his title converted to a fee simple absolute. 6. The possibility of reverter in a determinable fee is descendable, devisable, alienable, and condemnable by government action – the reverter has a value that is dependent upon the likelihood of its exercise. ii. Fee Simple on Condition Subsequent 1. Grantee holds the property in fee simple subject to some condition placed upon the use of the land. Grantor holds a right to re-enter and take possession of the land if the condition is ever broken. Grantor’s right to reenter is not self-executing – he must take legal action within a statutory period to exercise the right. 2. Characteristics: a. b. c. d. e. Possession is dependent upon meeting some condition. Property in indefinitely inheritable. Property is freely alienable. Property is devisable. Condition will follow the property indefinitely unless stated otherwise in the deed. f. Reversionary interest is not self-executing. g. Reversionary interest is a contingent interest because it is dependent upon the failure of a condition that may never fail. h. Condition may be subject to a statute of limitations. 3. Words of Construction: Page 9 of 13 a. A to B and his heirs on condition that…but if…A and his heirs may reenter and claim the land. b. A to B and his heirs but if…then A and his heirs may re-enter and claim the land. VI. Future Interests a. Remainder Interests i. Vested if: 1. Given to a born & ascertained person 2. Not subject to a condition subsequent a. Vested remainders may be: i. Indefeasible ii. Vested subject to partial divestiture – interest is vested in quality by the quantitative value is undetermined. iii. Vested subject to total divestiture b. Rule: When a conveyance of a particular estate is made to support a remainder over, the tenant for the particular estate takes it, and if the remainderman is in being he takes the fee. In such a case, the remainder is not contingent as to its becoming a vested remainder because the title vests in the remainderman upon the delivery of the deed. c. Remainder can vest in a class of persons so long as one member of the class is ascertainable at the time of the transfer. i. The class is open with respect to the quantitative value and not the quality of title so long as it is possible to add another member to the class. ii. An interest in a class is vested so long as there is no condition precedent (the members are ascertainable at the time of the deed) ii. Contingent if: 1. Given to an un-born or un-ascertained person 2. Subject to a condition subsequent iii. Rule in Shelley’s Case Page 10 of 13 1. Rule – Where an instrument creates a life estate in the grantee and purports to create a fee simple remainder in the heirs of the grantee, the future interest becomes a remainder in fee simple in the grantee. a. A to B (for life of B), remainder to B’s heirs → A to B in fee b. Courts will apply this rule unless there is language in the deed to qualify the word ‘heirs’ to mean something other than an indefinite succession of takers from generation to generation. c. Rule promotes the alienability of property. d. The rule is a rule of law that has been abolished by statute in many American jurisdictions. iv. Doctrine of Worthier Title 1. Rule – An inter vivos conveyance to the grantee for life with remainder to the heirs of the grantor is ineffective to create a remainder but leaves in the grantor a reversion which will pass by operation of law upon his death unless he disposes of it. a. A to B (for life of B), remainder to A’s heirs → A to B (for life of B), remainder to A in fee. b. When ‘heirs’ is qualified to mean something other than indefinite succession, the rule does not apply. b. Executory Interests i. Defeasible fee that moves the interest away from the grantor to avoid reverter. ii. Uses: 1. Transfer of family wealth with long-term control of property 2. Private land use planning schemes iii. Interest is self-executing upon the failure of some condition – no legal action is required iv. Rule Against Perpetuities (Rule Against Remote Vesting): 1. No defeasible estate can be created to last longer than a life in being (measuring life) plus 21 years and nine months. 2. The Rule eventually destroys the condition on the estate and puts the fee back together again. 3. If there is no measuring life, the condition fails. 4. Goal of the Rule is to make property marketable again. 5. Interests subject to the Rule: a. Contingent Remainders; and b. Executory Interests Page 11 of 13 i. Possibilities and fee simple subject to condition subsequent are not subject to the Rule because the fee will come back together in the grantor --- these interests are governed by statutes of limitation to prevent conditions from running forever. 6. Examples: a. A to B (life of B), remainder to B’s children who each age 21 i. Measuring life is B’s life ii. If B has children at the time of the deed, the Rule does not apply because the future interest is vested (subject to divestment) with a possibility of reverter in A. iii. If B has no children at the time of the deed, this transaction will still work because a vesting will occur (either as a reverter in A or in children that may be born to B). iv. The only way the transaction doesn’t work is if the executory interest does not kick over to B’s children until some age older than 21. b. A to B on condition that…but if…then to C i. Executory interest is destroyed because this transaction does not pass the Rule – no measuring life. c. Covenants vs. Defeasible Estates i. The failure of a condition in a defeasible estate may not be the end of the story. Contractual remedies may still exist. ii. Person seeking enforcement may be able to obtain an injunction and sue for breach iii. Covenants = contractual agreements among grantors and grantees to restrict/restrain land uses. 1. If you are the object of a covenant (as a landowner), then someone else has an interest in your land (a contractual interest). 2. Relevant to the discussion of defeasible estates because the unavailability of a property remedy does not necessarily rule out the use of a contractual remedy. 3. Covenants that are no longer relevant may be ignored even though they continue to run with the land. iv. Defenses to Covenants (both work together): 1. Waiver – If there is no attempt to enforce the covenant by the grantor (and the grantor knew of the breach), the covenant is waived. Page 12 of 13 2. Estoppel – When the covenant ceased to be enforced (and the statute of limitations ran), the covenant became unenforceable. VII. Concurrent Estates a. Tenants in Common – i. Two or more persons who share ownership of a piece of property ii. Undivided interests – none of the co-tenants can be said to own an identifiable segment of the realty or personalty iii. Rights & Duties – Each co-tenant has a right of possession, coupled with a duty not to interfere with another co-tenant’s co-extensive right. iv. Remedies in the event of disagreement over the property – 1. Partition in kind or by sale; or 2. Lease the property & apportion the rent by ownership percentage; or 3. One co-tenant purchases the other’s interest v. Individual interests are descendable devisable, and alienable without destroying the co-tenancy vi. Presumption of the law is that a tenancy in common is created unless there is language in the conveying instrument that indicates otherwise. vii. Pur my et no pur tout b. Joint Tenancy i. Will substitute – the grantor imposes the succession plan upon the grantees except for the last survivor. ii. Co-tenants comprise a single legal entity which owns the property. iii. Right of Survivorship – ownership passes to the other co-tenant upon death of the first co-tenant – the survivors continue to comprise the entity that owns the property iv. Any of the joint tenants can end his participation by compelling a partition as to his interest – the other joint tenants will continue to hold their interests as joint tenants to each other. v. A joint tenant can also end his participation by a deed conveying his undivided interest to any other person – Severance – grantee will now hold as a tenant in common to the other joint tenants. vi. A creditor, by writ of execution, can force a sale of the debtor’s undivided interest and the forced sale will be a severance. vii. Language creating joint tenancy must do so overtly. viii. Pur my et pur tout c. Tenancy by Entirety i. Conveyance to two people (husband and wife) as if they were one person. ii. Indestructible – neither spouse can break up the interest except by death or divorce. iii. Interest can be conveyed but both spouses have to agree to the transfer. Page 13 of 13 iv. Creditors cannot get at one spouse’s interest. v. Must be consciously created. vi. Not recognized in every jurisdiction d. Fiduciary relationship – what one co-tenant does for his own benefit, he does for all. e. Duty to Account – attaches to the interest in the land i. Where the co-tenant in possession of the property begins to develop the property, he has a duty to account and avoid waste. If the property produces revenue, he has a duty to provide the other co-tenant with his share of the income (after re-couping all of his costs) f. Treatment of Mortgages and Joint Tenancy i. Lien Theory States – Mortgage has no effect as a conveyance of debtor’s interest. A mortgage merely serves to give the lender the security of a lien. 1. Lender only acquires title to the joint tenant’s interest when he forecloses. 2. Creditor runs the risk of being unable to collect anything in a lien theory state if he fails to foreclose before the joint tenant dies – Unwise to loan money against the interest of only one co-tenant in a joint tenancy. ii. Title Theory States – Debtor does convey his interest to the mortgagee until the debt is repaid. 1. 2. 3. 4. Mortgage serves to sever the joint tenancy. Lender holds the bare legal title to the joint tenant’s interest. Joint tenant effectively buys back his interest from the lender. The borrower keeps all of the equitable interests in the property even while the mortgage exists (possession, alienability, descendability, and devisability). 5. A creditor is still unwise to loan money against only one joint tenant’s interest in a title theory state because he must still expend money to partition the property in the event of a foreclosure. g. Slayer Statutes i. Prevent a co-tenant who kills another co-tenant from acquiring the other co-tenant’s property to his benefit. Name: Description: ...
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