SOLUTION: property Condemnation Paper – Studypool

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42
Learning Objectives
The four Learning Objectives below are
designed to help improve your understanding. After reading this chapter, you
should be able to answer the following
questions:
1. What is a fixture, and how
does it relate to real property
rights?
2. What is the difference
between a joint tenancy and
a tenancy in common?
3. What are the requirements
for acquiring property by
adverse possession?
4. What are the duties of the
landlord and the tenant with
respect to the use and maintenance of leased property?
Real Property and
Landlord-Tenant Law
“The right of
property is
the most sacred
of all the rights of
citizenship.”
From earliest times, property has provided a means for survival. Primitive peoples lived off the fruits of the land, eating the vegetation and wildlife. Later, as the vegetation was
cultivated and the wildlife domesticated, property provided
farmland and pasture.
Throughout history, property has continued to be an
indicator of family wealth and social position. Indeed,
Jean-Jacques Rousseau
an individual’s right to his or her property has become,
1712–1778
in the words of Jean-Jacques Rousseau, one of the “most
(French writer and philosopher)
sacred of all the rights of citizenship.”
In this chapter, we examine the nature of real property and the ways in which it can
be owned and transferred. We even consider whether the buyer of a haunted house
can rescind the sale in this chapter’s Spotlight Case. We also discuss leased property and
landlord-tenant relationships.
42–1
The Nature of Real Property
Real property consists of land and the buildings, plants, and trees that are on it. Real
property also includes subsurface and airspace rights, as well as personal property that has
become permanently attached to the real property. Whereas personal property is movable,
real property—also called real estate or realty—is immovable.
994
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42–1a Land and Structures
Land includes the soil on the surface of the earth and the natural or artificial structures
that are attached to it. It further includes all the waters contained on or under the surface
and much, but not necessarily all, of the airspace above it. The exterior boundaries of land
extend down to the center of the earth and up to the farthest reaches of the atmosphere
(subject to certain qualifications).
42–1b Airspace and Subsurface Rights
Airspace Rights Disputes concerning airspace rights may involve the right of commercial and private planes to fly over property and the right of individuals and governments to
seed clouds and produce rain artificially. Flights over private land normally do not violate
property rights unless the flights are so low and so frequent that they directly interfere with
the owner’s enjoyment and use of the land. Leaning walls or buildings and projecting eave
spouts or roofs may also violate the airspace rights of an adjoining property owner.
Subsurface Rights In many states, land ownership may be separated, in that the surface of a
piece of land and the subsurface may have different owners. Subsurface rights can be extremely
valuable, as these rights include the ownership of minerals, oil, and natural gas. Subsurface
rights would be of little value, however, if the owner could not use the surface to exercise
those rights. Hence, a subsurface owner has a right (called a profit, to be discussed later in
this chapter) to go onto the surface of the land to, for instance, discover and mine minerals.
When ownership is separated into surface and subsurface rights, each owner can pass title
to what she or he owns without the consent of the other owner. Of course, conflicts can arise
between the surface owner’s use of the property and the subsurface owner’s need to extract
minerals, oil, or natural gas. In that situation, one party’s interest may become subservient
(secondary) to the other party’s interest either by statute or by case law.
If the owners of the subsurface rights excavate (dig), they are absolutely liable if
their excavation causes the surface to collapse. Many states have statutes that also make the
excavators liable for any damage to structures on the land. Typically, these statutes provide
precise requirements for excavations of various depths.
42–1c Plant Life and Vegetation
Plant life, both natural and cultivated, is also considered to be real property. In many instances,
natural vegetation, such as trees, adds greatly to the value of the realty. When a parcel of land
is sold and the land has growing crops on it, the sale includes the crops, unless otherwise
specified in the sales contract. When crops are sold by themselves, however, they are considered to be personal property, or goods. Consequently, the sale of crops is a sale of goods and
thus is governed by the Uniform Commercial Code (UCC) rather than by real property law.1
42–1d Fixtures
Certain personal property can become so closely associated with the real property to which
it is attached that the law views it as real property. Such property is known as a fixture—an
item affixed to realty, meaning that it is attached to the real property in a permanent way.
RSnapshotPhotos/Shutterstock.com
The owner of real property has rights to the airspace above the land, as well as to the soil and
minerals underneath it. Limitations on either airspace rights or subsurface rights normally
must be indicated on the document that transfers title at the time of purchase. When no
such limitations, or encumbrances, are noted, a purchaser generally can expect to have an
unlimited right to possession of the property.
Who owns airspace above
residential land?
“The meek shall inherit
the earth, but not its
mineral rights.”
J. Paul Getty
1892–1976
(American entrepreneur and
industrialist)
Fixture An item of personal
property that has become so closely
associated with real property that it
is legally regarded as part of that real
property.
1. See UCC 2–107(2).
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UNIT SEVEN: Property and Its Protection
Learning Objective 1
Songbird839/iStock/Getty Images
What is a fixture, and how
does it relate to real property
rights?
Under what circumstances is an
industrial-quality irrigation system
considered a fixture?
The item may be embedded in the land, or permanently attached to the property or to
another fixture on the property by means of cement, mortar, bolts, nails, roots, or screws.
An item, such as a statue, may even sit on the land without being attached, as long as the
owner intends the property to be a fixture.
Fixtures are included in the sale of land if the sales contract does not provide otherwise.2
The sale of a house includes the land and the house and any detached garage on the land,
as well as the cabinets, plumbing, and windows. Because these are permanently affixed to
the property, they are considered to be a part of it. Certain items, such as drapes and
window-unit air conditioners, are difficult to classify. Thus, a contract for the sale of a house
or commercial realty should indicate which items of this sort are included in the sale.
Example 42.1 Rosemary & Sage Farm has an eight-tower center-pivot irrigation system that
is bolted to a cement slab and connected to an underground well. The bank holds a mortgage note on the farm secured by “all buildings, improvements, and fixtures.” Later, when
Rosemary & Sage files for bankruptcy, a dispute arises between the bank and another creditor
over the irrigation system. In this situation, a court is likely to find that the irrigation system
is a fixture because it is firmly attached to the land and integral to the operation of the farm.
Therefore, the bank’s security interest will have priority over the other creditor’s interest. ■
42–2
Ownership Interests and Leases
Ownership of real property is abstract and differs from ownership of personal property. No
one can actually possess or hold a piece of land, the airspace above it, the earth below it, and
all the water contained on it. The legal system therefore recognizes certain rights and duties
that constitute ownership interests in real property.
Traditionally, ownership interests in real property were referred to as estates in land, which
include fee simple estates, life estates, and leasehold estates. We examine estates in land, forms of
concurrent ownership, and certain other interests in real property in the following subsections.
As you will see, ownership of real property (as well as personal property) can be viewed
as a bundle of rights, including the right to possess the property and to dispose of it by sale,
gift, lease, or other means. A person can own either the whole bundle of rights (a fee simple)
or only a part of the rights. When only some of the rights are transferred, the effect is to limit
the ownership rights of both the transferor of the rights and the recipient.
42–2a Ownership in Fee Simple
Fee Simple An ownership interest
in land in which the owner has the
greatest possible aggregation of
rights, privileges, and power.
“Few … men own their
property. The property
owns them.”
Robert G. Ingersoll
1833–1899
(American politician and lecturer)
One who possesses the entire bundle of rights is said to hold the property in fee simple (usually referring to fee simple absolute), which is the most complete form of ownership. An
owner in fee simple is entitled to use, possess, or dispose of the property as he or she chooses
during his or her lifetime. The owner has the rights of exclusive possession and use of the
property. The owner can give the property away, sell it, or lease it.
Duration On the fee simple owner’s death, the interests in the property descend (pass
down) to his or her heirs, even if the owner has not executed a will. Thus, a fee simple
is potentially infinite in duration and is assigned forever to a person and her or his heirs
without limitation or condition.
Limitations on Use The rights that accompany a fee simple include the right to use
the land for whatever purpose the owner sees fit. Of course, other laws, including applicable
zoning regulations, noise regulations, and environmental laws, may limit the owner’s ability
to use the property in certain ways. A fee simple owner cannot build a manufacturing plant
on the property if doing so would violate applicable city or county rules and regulations, for
2. Trade fixtures, which are items installed by a tenant for a commercial purpose (such as a walk-in cooler for a restaurant), are an exception and
do not become part of the landowner’s real property.
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instance. Also, a person who uses his or her property in a manner that unreasonably interferes with others’ right to use or enjoy their own property can be liable for the tort of nuisance.
Spotlight Case Example 42.2 Nancy and James Biglane owned and lived in a building in
Natchez, Mississippi. Next door to the couple’s property was the Under the Hill Saloon, a
popular bar that featured live music. During the summer, the Saloon, which had no airconditioning, opened its windows and doors, and live music echoed up and down the street.
Although the Biglanes installed extra insulation, thicker windows, and air-conditioning
units in their building, the noise from the Saloon kept them awake at night. Eventually, the
Biglanes sued the owners of the Saloon for nuisance. The court held that the noise from
the bar unreasonably interfered with the Biglanes’ right to enjoy their property and
prohibited the Saloon from opening its windows and doors while playing music.3 ■
42–2b Life Estates
A life estate is an estate that lasts for the life of some specified individual. A conveyance, or
transfer of real property, “to Alex Munson for his life” creates a life estate. In a life estate, the
life tenant’s ownership rights cease to exist on the life tenant’s death.
The life tenant has the right to use the land provided that he or she commits no waste
(injury to the land). In other words, the life tenant cannot use the land in a manner that
would adversely affect its value. Example 42.3 Julian, a life tenant on Blazin Acres, can use the
land to harvest crops. If mines and oil wells are already on the land, Julian can extract minerals and oil from it, but he cannot drill new oil wells or excavate mines on the property. ■
The life tenant also has the right to create liens, easements (discussed shortly), and leases,
but none can extend beyond the life of the tenant. In addition, with a few exceptions, the
owner of a life estate has an exclusive right to possession during her or his lifetime.
Along with these rights, the life tenant also has some duties. He or she must keep the property in repair and pay property taxes. In short, the owner of a life estate has the same rights as a
fee simple owner, with a few exceptions. The life tenant must maintain the value of the property
during her or his tenancy and he or she cannot sell the property or leave it to his or her heirs.
The distinction between a life estate and a fee simple determined the result in the following case.
Life Estate An interest in land that
exists only for the duration of the life
of a specified individual, usually the
holder of the estate.
Conveyance The transfer of title
to real property from one person to
another by deed or other document.
Waste The use of real property in
a manner that damages or destroys
its value.
3. Biglane v. Under the Hill Corp., 949 So.2d 9 (Miss.Sup.Ct. 2007).
Case 42.1
In the Matter of the Estate of Nelson
North Dakota Supreme Court, 2018 ND 118, 910 N.W.2d 856 (2018).
Background and Facts When Sidney Solberg died, 100
mineral acres—that is, the right to all of the minerals under a
certain 100 acres—and other real property in his estate were distributed to his widow, Lillian, for her life. The remainder interest
(the right of ownership after Lillian’s interest ended) was conveyed
to their four children, including Glenn Solberg.
Later, Lillian married Lyle Nelson. When Lillian passed away, a
codicil (addition) to her will allegedly gave the 100 mineral acres
to Glenn. The codicil also purported to create for Glenn an option
to buy the other real property she had inherited from Sidney. When
Lyle Nelson died, Glenn filed a claim in a North Dakota state court
against Nelson’s estate. Glenn claimed that under the terms of the
codicil to Lillian’s will, he was entitled to the ownership of the 100
mineral acres and the right to buy the other property. The court
dismissed Glenn’s claim. He appealed to the state supreme court.
In the Words of the Court
JENSEN, Justice.
****
(Continues )
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Our law regarding the rights of someone who holds a life
interest in property is * * * well established. It is well-settled
[that] a life estate holder is entitled to both the possession and
the use of the property, * * * including the right to rents, issues,
and profits generated by the parcel * * *. A life tenant is entitled
to possession and enjoyment of the property as long as the estate
endures; he or she may convey or lease his or her interest, but may
not disregard the rights of those who take when the life estate
ends. * * * No future interest can be defeated or barred by any
alienation [voluntary transfer of real property] or other act of the
owner of the [life] interest. [Emphasis added.]
In this case, Lillian Nelson obtained a life estate interest in the
100 mineral acres and in the option property * * * from Sidney
Solberg’s estate. The codicil relied upon by Glenn Solberg itself
identifies Lillian Nelson’s interest as being limited to a life estate.
As a life tenant she was limited to conveying an interest in her
property only to the extent of her life and she could not make any
transfers that would disregard the rights of those who would take
the property when her life ended. As such, Lillian Nelson’s attempt
to provide an interest in the 100 mineral acres to Glenn Solberg
in her * * * will is invalid because it disregards the rights of those
who would take the property when her life ended. Similarly, her
attempt to convey a right of first refusal to the option property
* * * is also invalid because it disregards the rights of those who
would take the property when her life ended.
Upon Lillian Nelson’s death * * * her life interest ended
and the 100 mineral acres and the option property became the
property of her four children as the holders of the remainder
interest. * * * The Lyle Nelson Estate did not hold, and Lyle
Nelson never held, an interest in the 100 mineral acres or the
option property. * * * Glenn Solberg could not recover property
from the Lyle Nelson Estate if Lyle Nelson never held an interest
in the property.
Decision and Remedy The North Dakota Supreme Court
affirmed the dismissal of Glenn’s claim. “The [lower] court properly concluded that, with certainty, it would be impossible for
Glenn Solberg to obtain the relief he requested from the Lyle
Nelson Estate.”
Critical Thinking
• What If the Facts Were Different? Suppose that Sidney
Solberg had disposed of his entire estate in fee simple before his
death. Would the result have been different? Discuss.
42–2c Concurrent Ownership
Concurrent Ownership Joint
ownership.
Tenancy in Common Joint
ownership of property in which each
party owns an undivided interest that
passes to his or her heirs at death.
Joint Tenancy Joint ownership
of property in which each co-owner
owns an undivided portion of the
property. On the death of one of
the joint tenants, his or her interest
automatically passes to the surviving
joint tenant(s).
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Persons who share ownership rights simultaneously in particular property (including real
property and personal property) are said to have concurrent ownership. There are two principal
types of concurrent ownership: tenancy in common and joint tenancy. Concurrent ownership
rights can also be held in a tenancy by the entirety or as community property, but these types
of concurrent ownership are less common.
Tenancy in Common The term tenancy in common refers to a form of co-ownership in
which each of two or more persons owns an undivided interest in the property. The interest
is undivided because each tenant shares rights in the whole property. On the death of a
tenant in common, that tenant’s interest in the property passes to her or his heirs.
Example 42.4 Four friends purchase a condominium unit in Hawaii together as tenants in
common. This means that each of them has a one-fourth ownership interest in the whole.
If one of the four owners dies a year after the purchase, his ownership interest passes to his
heirs (his wife and children, for instance) rather than to the other tenants in common. ■
Unless the co-tenants have agreed otherwise, a tenant in common can transfer her or
his interest in the property to anyone without the consent of the remaining co-owners. In
most states, it is presumed that a co-tenancy is a tenancy in common unless there is specific
language indicating the intent to establish a joint tenancy (discussed next).
Joint Tenancy In a joint tenancy, each of two or more persons owns an undivided interest in
the property, but a deceased joint tenant’s interest passes to the surviving joint tenant or tenants.
Right of Survivorship. The right of a surviving joint tenant to inherit a deceased joint
tenant’s ownership interest—referred to as a right of survivorship—distinguishes a joint tenancy from a tenancy in common. Example 42.5 Jerrold and Eva are married and purchase a
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house as joint tenants. The title to the house clearly expresses the intent to create a joint
tenancy because it says “to Jerrold and Eva as joint tenants with right of survivorship.”
Jerrold has three children from a prior marriage. If Jerrold dies, his interest in the house
automatically passes to Eva rather than to his children from the prior marriage. ■
Termination of a Joint Tenancy. A joint tenant can transfer her or his rights by sale or
gift to another without the consent of the other joint tenants. Doing so terminates the joint
tenancy. The person who purchases the property or receives it as a gift becomes a tenant in
common, not a joint tenant. Example 42.6 Three brothers, Brody, Saul, and Jacob, own land
as joint tenants. Brody is experiencing financial difficulties and sells his interest in the property to Beth. The sale terminates the joint tenancy, and now Beth, Saul, and Jacob hold the
property as tenants in common. ■
A joint tenant’s interest can also be levied against (seized by court order) to satisfy the
tenant’s judgment creditors. If this occurs, the joint tenancy terminates, and the remaining
owners hold the property as tenants in common. (Judgment creditors can also seize the
interests of tenants in a tenancy in common.)
Learning Objective 2
What is the difference
between a joint tenancy and
a tenancy in common?
Tenancy by the Entirety A less common form of shared ownership of real property by
married persons is a tenancy by the entirety. It differs from a joint tenancy in that neither
spouse may separately transfer his or her interest during his or her lifetime unless the
other spouse consents. In some states in which statutes give the wife the right to convey
her property, this form of concurrent ownership has effectively been abolished. A divorce,
either spouse’s death, or mutual agreement will terminate a tenancy by the entirety.
Tenancy by the Entirety Joint
ownership of property by a married
couple in which neither spouse can
transfer his or her interest in the
property without the consent of the
other.
Community Property A limited number of states4 allow married couples to own property
as community property. If property is held as community property, each spouse technically
owns an undivided one-half interest in the property. This type of ownership applies to most
property acquired by either spouse during the course of the marriage. It generally does not
apply to property acquired prior to the marriage or to property acquired by gift or inheritance as separate property during the marriage. After a divorce, community property is
divided equally in some states and according to the discretion of the court in other states.
Community Property A form of
concurrent property ownership
in which each spouse owns an
undivided one-half interest in
property acquired during the
marriage.
42–2d Leasehold Estates
A leasehold estate is created when a real property owner or lessor (landlord) agrees to convey the
right to possess and use the property to a lessee (tenant) for a certain period of time. The tenant
has a qualified right to exclusive possession. It is qualified because the landlord has a right to
enter onto the premises to ensure that no waste (damage or destruction) is being committed.
The temporary nature of possession under a lease is what distinguishes a tenant from a
purchaser, who acquires title to the property. The tenant can use the land—for instance, by
harvesting crops—but cannot injure it by such activities as cutting down timber for sale or
extracting oil.
Leasehold Estate An interest in
real property that gives a tenant a
qualified right to possess and/or use
the property for a limited time under
a lease.
Fixed-Term Tenancy A fixed-term tenancy, also called a tenancy for years, is created by an
Fixed-Term Tenancy A type of
tenancy under which property is
leased for a specified period of time,
such as a month, a year, or a period
of years. It is also called a tenancy
for years.
express contract by which property is leased for a specified period of time. Signing a oneyear lease to occupy an apartment, for instance, creates a fixed-term tenancy. The term need
not be specified by date and can be conditioned on the occurrence of an event, such as
leasing a cabin for the summer or an apartment in New Orleans during Mardi Gras.
At the end of the period specified in the lease, the lease ends (without notice), and possession of the property returns to the lessor. If the tenant dies during the period of the lease, the
lease interest passes to the tenant’s heirs as personal property. Often, leases include renewal
or extension provisions.
4. These states include Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Puerto Rico
allows property to be owned as community property as well.
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Periodic Tenancy A lease interest
Periodic Tenancy A periodic tenancy is created by a lease that does not specify how long it
is to last but does specify that rent is to be paid at certain intervals. This type of tenancy is
automatically renewed for another rental period unless properly terminated. Example 42.7 Kayla
enters into a lease with Capital Properties. The lease states, “Rent is due on the tenth day of
every month.” This provision creates a periodic tenancy from month to month. ■ This type
of tenancy can also extend from week to week or from year to year.
Under the common law, to terminate a periodic tenancy, the landlord or tenant must give
at least one period’s notice to the other party. If the tenancy extends from month to month, for
instance, one month’s notice must be given prior to the last month’s rent payment. Today, however, many states’ statutes require a different period for notice of termination in a periodic tenancy.
Jitalia17/iStock/Getty Images
for an indefinite period involving
payment of rent at fixed intervals,
such as week to week, month to
month, or year to year.
The lease agreement for the
apartment in this building states
that rent is due on the first of each
month. What type of tenancy is
created?
Tenancy at Will A type of tenancy
that either the landlord or the tenant
can terminate without notice.
Tenancy at Sufferance A tenancy
that arises when a tenant wrongfully
continues to occupy leased property
after the lease has terminated.
Nonpossessory Interest In the
context of real property, an interest
that involves the right to use land but
not the right to possess it.
Easement A nonpossessory right,
established by express or implied
agreement, to make limited use of
another’s property without removing
anything from the property.
Profit In real property law, the right
to enter onto another’s property and
remove something of value from that
property.
Tenancy at Will With a tenancy at will, either party can terminate the tenancy without
notice. This type of tenancy can arise if a landlord allows a person to live on the premises
without paying rent or rents property to a tenant “for as long as both agree.” Tenancies at
will are rare today because most state statutes require a landlord to provide some period of
notice to terminate a tenancy. States may also require a landowner to have sufficient cause
to end a residential tenancy.
Tenancy at Sufferance The mere possession of land without right is called a tenancy at
sufferance. A tenancy at sufferance is not a true tenancy because it is created when a tenant
wrongfully retains possession of property. Whenever a tenancy for years or a periodic tenancy ends and the tenant continues to retain possession of the premises without the owner’s
permission, a tenancy at sufferance is created.
42–2e Nonpossessory Interests—Easements, Profits, and Licenses
In contrast to the types of property interests just described, some interests in land do not
include any rights to possess the property. These interests are known as nonpossessory interests
and include easements, profits, and licenses.
An easement is the right of a person to make limited use of another person’s real property
without taking anything from the property. An easement, for instance, can be the right to
walk or drive across another’s property. In contrast, a profit5 is the right to go onto land owned
by another and take away some part of the land itself or some product of the land.
Example 42.8 Shawn owns The Dunes. Shawn gives Carmen the right to go there to remove
all the sand and gravel that she needs for her cement business. Carmen has a profit. ■
Easements and profits can be classified as either appurtenant or in gross. Because easements and profits are similar and the same rules apply to both, we discuss them together.
Easement or Profit Appurtenant An easement or profit appurtenant arises when the
owner of one piece of land has a right to go onto (or remove something from) an adjacent
piece of land owned by another. The land that is benefited by the easement is called the
dominant estate, and the land that is burdened is called the servient estate.
Because easements appurtenant are intended to benefit the land, they run (are conveyed)
with the land when it is transferred. Example 42.9 Taylor has a right to drive his car across
Green’s land, which is adjacent to Taylor’s land. This right-of-way over Green’s property is
an easement appurtenant to Taylor’s property and can be used only by Taylor. If Taylor sells
his land, the easement runs with the land to benefit the new owner. ■
Easement or Profit in Gross In an easement or profit in gross, the right to use or take
things from another’s land is given to one who does not own an adjacent tract of land. These
easements are intended to benefit a particular person or business, not a particular piece of
land, and cannot be transferred.
5. As used here, the term profit does not refer to the profits made by a business firm. Rather, it means a gain or an advantage.
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Creation of an Easement or Profit Most easements and profits are created by an express
grant in a contract, a deed, or a will. This allows the parties to include terms defining the
extent and length of time of use. In some situations, an easement or profit can also be created without an express agreement.
An easement or profit may arise by implication when the circumstances surrounding the
division of a parcel of property imply its existence. Example 42.11 Mathews divides a parcel of
land that has only one well for drinking water. If Mathews conveys the half without a well
to Dean, a profit by implication arises because Dean needs drinking water. ■
An easement or profit may also be created by necessity. An easement by necessity does not
require a division of property for its existence. A person who rents an apartment, for instance,
has an easement by necessity in the private road leading up to the apartment building.
An easement or profit may arise by prescription when one person uses another person’s
land without the landowner’s consent. The use must be apparent and continue for the length
of time required by the applicable statute of limitations. (In much the same way, title to
property may be obtained by adverse possession, discussed later in this chapter.)
Case Example 42.12 Junior and Wilma Thompson sold twenty-one of their fifty acres of
land in Missouri to Walnut Bowls, Inc. The deed expressly reserved an easement to the
Thompsons’ remaining twenty-nine acres, but it did not fix a precise location for the easement. James and Linda Baker subsequently bought the remaining acreage of the Thompsons’
land. Many years later—on learning of the easement to the Bakers’ property—a potential
buyer of Walnut Bowls’ property refused to go through with the sale.
Walnut Bowls then put steel cables across its driveway entrances, installed a lock and
chain on an access gate, and bolted a “No Trespassing” sign facing the Bakers’ property. The
Bakers sued. Ultimately, a state intermediate appellate court found that an easement existed
and instructed the trial court to determine its location. An easement can be created by deed
even though its specific location is not identified. If the easement is not identified by agreement between the parties or inferred from use, then a court must determine its location.6 ■
Termination of an Easement or Profit An easement or profit can be terminated in
several ways. The simplest way is to deed it back to the owner of the land that is burdened
by it. Similarly, if the owner of an easement or profit becomes the owner of the property
burdened by it, then it is merged into the property.
Another way to terminate an easement or profit is to abandon it and create evidence of
intent to relinquish the right to use it. Mere nonuse will not extinguish an easement or profit
unless the nonuse is accompanied by an overt act showing the intent to abandon.
License In the context of real property, a license is the revocable right to enter onto
another person’s land. It is a personal privilege that arises from the consent of the owner of
the land and can be revoked by the owner. A ticket to attend a movie at a theater or a concert
is an example of a license.
In essence, a license grants a person the authority to enter the land of another and perform
a specified act or series of acts without obtaining any permanent interest in the land. When a
person with a license exceeds the authority granted and undertakes an action that is not
permitted, the property owner can sue that person in tort law for trespass.
Know This
An easement appurtenant
requires two adjacent
pieces of land owned by
two different persons,
but an easement in gross
needs only one piece of
land owned by someone
other than the owner of
the easement.
woodygraphs/Shutterstock.com
Example 42.10 Avery owns a parcel of land with a marble quarry. Avery conveys (transfers)
to Classic Stone Corporation the right to come onto her land and remove up to five hundred
pounds of marble per day. Classic Stone owns a profit in gross and cannot transfer this right
to another. ■ Similarly, when a utility company is granted an easement to run its power
lines across another’s property, it obtains an easement in gross.
If an easement’s location is not
precisely fixed, is the easement
still valid?
License In the context of real
property, a revocable right or
privilege to enter onto another
person’s land.
6. Baker v. Walnut Bowls, Inc., 423 S.W.3d 293 (Mo.App. 2014).
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Case Example 42.13 Richard and Mary Orman purchased real property owned at one time
by Sandra Curtis. Part of the garage extended nine feet onto Curtis’s neighboring property.
In an agreement on file with the deed, Curtis had given the Ormans permission to use the
garage as long as it continued to be used as a garage. After the Ormans moved in, they converted the garage’s workshop into guest quarters but continued to use the garage as a garage.
A dispute arose over the driveway shared by Curtis and the Ormans, which straddled the
property line. The Ormans filed a suit claiming that Curtis left “junk objects” near the driveway
that impeded their access. Curtis countered that the permission she had given the buyers to
use the garage was a license. She claimed that the Ormans, by converting the workshop
into living quarters, had exceeded their authority under the license, which she could therefore
revoke. The court looked at the agreement’s wording, which clearly gave the Ormans the right to
use the garage but did not mention the workshop. The court concluded that because the Ormans
were continuing to use the garage as a garage, Curtis could not revoke their right to do so.7 ■
Exhibit 42–1 illustrates the various interests in property discussed in this chapter.
42–3
Transfer of Ownership
Ownership interests in real property are frequently transferred (conveyed) by sale, and the
terms of the transfer are specified in a real estate sales contract.
Real property ownership can also be transferred by gift, by will or inheritance, by adverse
possession, or by eminent domain. When ownership rights in real property are transferred,
the type of interest being transferred and the conditions of the transfer normally are set forth
in a deed executed by the person who is conveying the property.
42–3a Real Estate Sales Contracts
In some ways, a sale of real estate is similar to a sale of goods, because it involves a transfer
of ownership, often with specific warranties. A sale of real estate, however, is a more complicated transaction that involves certain formalities that are not required in a sale of goods.
In part because of these complications, real estate brokers or agents who are licensed by the
state generally assist the buyers and sellers during a real estate sales transaction.
Usually, the parties to a sale of real estate enter into a detailed contract setting forth their
agreement. The contract includes such terms as the purchase price, the type of deed the
buyer will receive, the condition of the premises, and any items that will be included.
7. Orman v. Curtis, 54 Misc.3d 1206(A), 50 N.Y.S.3d 27 (2017).
Exhibit 42–1 Interests in Real Property
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Ownership Interests
1. Fee simple—The most complete form of ownership.
2. Life estate—An estate that lasts for the life of a specified individual.
3. Concurrent ownership—Ownership by two or more persons who hold
title to property together. Types of concurrent ownership are as follows:
a. Tenancy in common
b. Joint tenancy
c. Tenancy by the entirety
d. Community property
Leasehold Estates
1. Fixed-term tenancy (tenancy for years)
2. Periodic tenancy
3. Tenancy at will
4. Tenancy at sufferance
Nonpossessory
Interests
1. Easements
2. Profits
3. Licenses
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Unless the buyer pays cash for the property, he or she must obtain financing through a
mortgage loan. Real estate sales contracts can be made contingent on the buyer’s ability to
obtain financing at or below a specified rate of interest. The contract may also be contingent
on certain events, such as the completion of a land survey or the property’s passing one or
more inspections. Normally, the buyer is responsible for having the premises inspected for
physical or mechanical defects and for insect infestation.
Implied Warranties in the Sale of New Homes Most states recognize a warranty—the
implied warranty of habitability—in the sale of new homes. Because the warranty is implied, it
need not be included in the contract of sale or the deed to be effective.
Under this warranty, the seller of a new home essentially warrants that it is in reasonable
working order and is of reasonably sound construction. Thus, the seller is in effect a guarantor of the home’s fitness. In some states, the warranty protects not only the first purchaser
but any subsequent purchaser as well.
Implied Warranty of Habitability
An implied promise by a seller of a
new house that the house is fit for
human habitation. Also, the implied
promise by a landlord that rented
residential premises are habitable.
impose on sellers a duty to disclose any known defect that materially affects
the value of the property and that the buyer could not reasonably discover.
Failure to disclose such a material defect gives the buyer the right to rescind
the contract and to sue for damages based on fraud or misrepresentation. The
buyer generally must bring such a suit within a specified time.
Example 42.14 Matthew Newson partially renovates a house in Louisiana
and sells it to Terry and Tabitha Moreland for $68,000. Two months after the
Morelands move in, they discover rotten wood behind the tile in the bathroom and experience problems with the plumbing. The state statute specifies
that the Morelands have one year from the date of the sale or the discovery
of the defect to file a lawsuit. Therefore, the Morelands must file suit within
twelve months of discovering the defects (which would be fourteen months
from the date of the sale). ■
In the following Spotlight Case, the court had to decide whether the buyer
of a “haunted” house had the right to rescind the sales contract.
RuslanDashinsky/E+/Getty Images
Seller’s Duty to Disclose Hidden Defects In most jurisdictions, courts
If this homeowner discovers numerous defects
in her recently purchased house, can she wait
years to attempt to rescind the contract?
Spotlight on Sales of Haunted Houses: Case 42.2
Stambovsky v. Ackley
Supreme Court, Appellate Division, New York, 572 N.Y.S.2d 672, 169 A.D.2d 254 (1991).
signed a contract to buy Helen Ackley’s house in
Nyack, New York. After the contract was signed,
Stambovsky discovered that the house was widely
reputed to be haunted. The Ackley family claimed
to have seen poltergeists on numerous occasions over the previous nine years. The Ackleys
had been interviewed about the house in both
a national publication (Reader’s Digest ) and the
local newspaper. The house was included on a
walking tour of Nyack, New York, as “a riverfront
Victorian (with ghost).”
pixeldigits/iStock/Getty Images
Background and Facts Jeffrey Stambovsky
When will a buyer of a
house that is allegedly
haunted have the right
to rescind the deal?
When Stambovsky learned of the house’s reputation, he sued to rescind the contract, alleging that
Ackley and her real estate agent had made material
misrepresentations when they failed to disclose
Ackley’s belief that the house was haunted. Ackley
argued that she was under no duty to disclose to the
buyer the home’s haunted reputation. The trial court dismissed Stambovsky’s case, and Stambovsky appealed.
In the Words of the Court
Justice RUBIN delivered the opinion of the Court.
****
(Continues )
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While I agree with [the trial court] that the real estate broker,
as agent for the seller, is under no duty to disclose to a potential
buyer the phantasmal reputation of the premises and that, in his
pursuit of a legal remedy for fraudulent misrepresentation against
the seller, plaintiff hasn’t a ghost of a chance, I am nevertheless
moved by the spirit of equity to allow the buyer to seek rescission
of the contract of sale and recovery of his down payment. New
York law fails to recognize any remedy for damages incurred as a
result of the seller’s mere silence, applying instead the strict rule
of caveat emptor [Latin for “let the buyer beware”]. Therefore, the
theoretical basis for granting relief, even under the extraordinary
facts of this case, is elusive if not ephemeral [short-lived].
****
The doctrine of caveat emptor requires that a buyer act prudently
to assess the fitness and value of his purchase and operates to bar the
purchaser who fails to exercise due care from seeking the equitable
remedy of rescission. * * * Applying the strict rule of caveat emptor
to a contract involving a house possessed by poltergeists conjures up
visions of a psychic or medium routinely accompanying the structural
engineer and Terminix man on an inspection of every home subject
to a contract of sale. It portends that the prudent attorney will establish an escrow account lest the subject of the transaction come back
to haunt him and his client—or pray that his malpractice insurance
coverage extends to supernatural disasters. In the interest of avoiding
such untenable consequences, the notion that a haunting is a condition which can and should be ascertained upon reasonable inspection
of the premises is a hobgoblin which should be exorcised from the
body of legal precedent and laid quietly to rest. [Emphasis added.]
****
In the case at bar [under consideration], defendant seller deliberately fostered the public belief that her home was possessed.
Having undertaken to inform the public at large, to whom she has
no legal relationship, about the supernatural occurrences on her
property, she may be said to owe no less a duty to her contract
vendee. It has been remarked that the occasional modern cases
which permit a seller to take unfair advantage of a buyer’s ignorance
so long as he is not actively misled are “singularly unappetizing.”
Where, as here, the seller not only takes unfair advantage of the
buyer’s ignorance but has created and perpetuated a condition
about which he is unlikely to even inquire, enforcement of the
contract (in whole or in part) is offensive to the court’s sense of
equity. Application of the remedy of rescission, within the bounds
of the narrow exception to the doctrine of caveat emptor set forth
herein, is entirely appropriate to relieve the unwitting purchaser
from the consequences of a most unnatural bargain.
Decision and Remedy The New York appellate court found
that the doctrine of caveat emptor did not apply in this case. The
court reinstated Stambovsky’s claim for rescission of the purchase
contract and the down payment.
Critical Thinking
• Ethical Assuming that Ackley’s behavior was unethical, was it
unethical because she failed to tell Stambovsky something about
the house that he did not know, or was it unethical because of the
nature of the information she omitted? What if Ackley had failed to
mention that the roof leaked or that the well was dry—conditions
that a buyer would normally investigate? Explain your answer.
42–3b Deeds
Deed A document by which title to
real property is passed.
Possession and title to land are passed from person to person by means of a deed—the instrument of conveyance of real property. Unlike a contract, a deed does not have to be supported
by legally sufficient consideration. To be valid, a deed must include the following elements:
1. The names of the grantor (the giver or seller) and the grantee (the donee or buyer).
Know This
Gifts of real property
are common, and they
require deeds even
though there is no consideration for the gift.
30301_ch42_hr_994-1016.indd 1004
2. Words evidencing the intent to convey the property (such as, “I hereby bargain, sell, grant, or give”).
No specific words are necessary. If the deed does not specify the type of estate being transferred, it
is presumed to transfer the property in fee simple absolute.
3. A legally sufficient description of the land. The description must include enough detail to distinguish
the property being conveyed from every other parcel of land. The property can be identified by reference to an official survey or recorded plat map, or each boundary can be described by metes and
bounds. Metes and bounds is a system of measuring boundary lines by the distance between two
points, often using physical features of the local geography—for instance, “beginning at the southwesterly intersection of Court and Main Streets, then West 40 feet to the fence, then South 100 feet,
then Northeast approximately 120 feet back to the beginning.”
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4. The grantor’s (and often her or his spouse’s) signature.
5. Delivery of the deed.
Different types of deeds provide different degrees of protection against defects of title. A
defect of title exists, for instance, if an undisclosed third person has an ownership interest
in the property.
Warranty Deeds A warranty deed contains the greatest number of covenants, or promises,
of title and thus provides the greatest protection against defects of title. In most states,
special language is required to create a general warranty deed. Warranty deeds commonly
include the following covenants:
1. A covenant that the grantor has the title to, and the power to convey, the property.
2. A covenant of quiet enjoyment (a warranty that the buyer will not be disturbed in her or his possession of the land).
3. A covenant that transfer of the property is made without knowledge of adverse claims of third parties.
Warranty Deed A deed that
provides the greatest amount of
protection for the grantee. The
grantor promises that she or he has
title to the property conveyed in the
deed, that there are no undisclosed
encumbrances on the property, and
that the grantee will enjoy quiet
possession of the property.
Generally, the warranty deed makes the grantor liable for all defects of title during the time
that the property was held by the grantor and previous titleholders. Example 42.15 Mandal
sells a two-acre lot and office building by warranty deed to Flash Technologies, LLC. Subsequently, Perkins shows that he has better title to the property than Mandal had and evicts
Flash Technologies. Here, Flash Technologies can sue Mandal for breaching the covenant
of quiet enjoyment. Flash Technologies can recover the purchase price of the land, plus any
other damages incurred as a result. ■
Special Warranty Deeds A special warranty deed, or limited warranty deed, in contrast,
warrants only that the grantor or seller held good title during his or her ownership of the
property. In other words, the grantor does not warrant that there were no defects of title
when the property was held by previous owners.
If the special warranty deed discloses all liens and other encumbrances, the seller will not
be liable to the buyer if a third person subsequently interferes with the buyer’s ownership.
If the third person’s claim arises out of, or is related to, some act of the seller, though, the
seller will be liable to the buyer for damages.
Quitclaim Deeds A quitclaim deed offers the least amount of protection against defects of
title. Basically, a quitclaim deed conveys to the grantee whatever interest the grantor had.
Therefore, if the grantor had no interest, then the grantee receives no interest.
Quitclaim deeds are often used when the seller, or grantor, is uncertain as to the extent
of his or her rights in the property. They may also be used to release a party’s interest in a
particular parcel of property, such as in divorce settlements or business dissolutions when
the grantors are dividing up their interests in real property.
Recording Statutes Every state has a recording statute, which allows a deed to be recorded
for a fee. Deeds are recorded in the county where the property is located. Recording a deed
gives notice to the public that a certain person is now the owner of a particular parcel of
real estate. By putting everyone on notice as to the true owner, recording a deed prevents
the previous owners from fraudulently conveying the land to other purchasers. Thus,
prospective buyers can check the public records to see whether there have been earlier
transactions creating interests or rights in specific parcels of real property.
Special Warranty Deed A deed
that warrants only that the grantor
held good title during his or her
ownership of the property and does
not warrant that there were no
defects of title when the property was
held by previous owners.
Quitclaim Deed A deed that
conveys only whatever interest
the grantor had in the property and
therefore offers the least amount of
protection against defects of title.
Recording Statute A statute that
allow deeds, mortgages, and other
real property transactions to be
recorded so as to provide notice to
future purchasers or creditors of an
existing claim on the property.
42–3c Will or Inheritance
Property that is transferred on an owner’s death is passed either by will or by state inheritance
laws. If the owner of land dies with a will, the land passes in accordance with the terms of
the will. If the owner dies without a will, state inheritance statutes prescribe how and to
whom the property will pass.
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42–3d Adverse Possession
acquisition of title to real property
through open occupation, without the
consent of the owner, for a period of
time specified by a state statute. The
occupation must be actual, exclusive,
open, continuous, and in opposition to
all others, including the owner.
A person who wrongfully possesses the real property of another (by occupying or using it)
may eventually acquire title to it through adverse possession. Adverse possession is a means
of obtaining title to land without delivery of a deed and without the consent of—or payment
to—the true owner. Thus, adverse possession is a method of involuntarily transferring
title to the property from the true owner to the adverse possessor.
Essentially, when one person possesses the property of another for a certain statutory
period, that person acquires title to the land. The statutory period varies from three to thirty
years, depending on the state, with ten years being the most common.
Learning Objective 3
must be satisfied:
What are the requirements
for acquiring property by
adverse possession?
1. Possession must be actual and exclusive. The possessor must physically occupy the property. This
requirement is clearly met if the possessor lives on the property, but it may also be met if the possessor builds fences, erects structures, plants crops, or even grazes animals on the land.
Adverse Possession The
Requirements for Adverse Possession For property to be held adversely, four elements
2. Possession must be open, visible, and notorious, not secret or clandestine. The possessor must
occupy the land for all the world to see. The obviousness requirement ensures that the true owner is
on notice that someone is possessing the owner’s property wrongfully.
3. Possession must be continuous and peaceable for the required period of time. This requirement means
that the possessor must not be interrupted in the occupancy by the true owner or by the courts. Continuous does not mean constant. It simply means that the possessor has continuously occupied the property
in some fashion for the statutory time. Peaceable means that no force was used to possess the land.
4. Possession must be hostile and adverse. In other words, the possessor cannot be living on the property with the owner’s permission and must claim the property as against the whole world. (See this
chapter’s Business Law Analysis feature for an illustration.)
When Possession of
Property Is Not “Adverse”
T
he McKeag family operated a marina
on their lakefront property in Bolton,
New York. For more than forty years, the
McKeags used a section of property belonging to their neighbors, the Finleys, as a beach
for the marina’s customers. The McKeags
also stored a large float on the beach during
the winter months, built their own retaining
wall, and planted bushes and flowers there.
The McKeags prevented others from
using the property, including the Finleys.
Nevertheless, the families always had a
friendly relationship, and one of the Finleys
gave the McKeags permission to continue
using the beach. He also reminded them of
his ownership several times, to which they
said nothing. The McKeags also asked for
30301_ch42_hr_994-1016.indd 1006
Business Law
Analysis
permission to mow grass on the property and
once apologized for leaving a jet ski there.
Can the McKeags establish adverse possession over the statutory period of ten years?
Analysis: There are four requirements
to acquire title to property through adverse
possession. The possession must be
(1) actual and exclusive, (2) open and obvious, (3) continuous for the required period
of time, and (4) hostile and adverse.
Result and Reasoning: The McKeags
satisfied the first three requirements for
adverse possession:
1. Their possession was actual and exclusive because they used the beach and
prevented others from doing so, including the Finleys.
2. Their possession was open and visible because they made improvements
to the beach and regularly kept their
belongings there.
3. Their possession was continuous and
peaceable for the required ten years.
They possessed the property for more
than four decades, and they even kept a
large float there during the winter months.
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Nevertheless, the McKeags’ possession
was not hostile and adverse, which is the
fourth requirement. The Finleys provided
substantial evidence that they had given
the McKeags permission to use the beach.
Rather than reject the Finleys’ permission
as unnecessary, the McKeags sometimes
said nothing and other times seemingly
affirmed that the property belonged to the
Finleys (by asking permission to mow grass,
1007
for instance). Thus, because the McKeags
did not satisfy all four requirements, they
cannot establish adverse possession.
Case Example 42.16 Leslie and Ethel Cline owned a 141-acre property to the south of
State Route 316 in Ohio. Rogers Farm Enterprises, LLC, owned 399 acres to the north
of State Route 316. When the Clines bought their farm in 1987, they believed that State
Route 316 was the dividing line between their property and Rogers Farm. Later, a survey
showed that a 3.95-acre strip of land on the Clines’ side of the road, which the Clines had
been farming, actually belonged to Rogers Farm.
In 2013, the Clines filed a suit claiming that they had acquired title to the property
through adverse possession. The court granted title to the Clines. Rogers Farm appealed. An
Ohio state appellate court affirmed. The Clines had been openly and continuously farming
on the disputed strip of land for the requisite period of time under Ohio’s statute (twenty-one
years) and legally owned it.8 ■
The following case raised the question of whether the owner of land next to a railroad
line could acquire a portion of the right-of-way by adverse possession.
8. Cline v. Rogers Farm Enterprises, LLC, 2017 -Ohio- 1379, 87 N.E.3d 637 (Ohio App. 2017).
Case 42.3
Montgomery County v. Bhatt
Court of Appeals of Maryland, 446 Md. 79, 130 A.3d 424 (2016).
Background and Facts The Capital Crescent Trail is a wellknown hiking and biking route that runs between the District of
Columbia and Silver Spring, Maryland. The path was formerly
used as a railroad line and was later sold to Montgomery County,
Maryland, for $10 million. The county planned to use the Maryland
portion of the property for the proposed Purple Line, a commuter
light rail project.
Ajay Bhatt owns a residence backing on the county-owned
property. He purchased the residence in 2006 from his aunt, who
had owned it since the 1970s. Montgomery County issued a civil
citation to Bhatt for having a shed and a fence on his property that
was within the former railroad line’s right-of-way. The county had
obtained the right-of-way from the railroad company pursuant to
the federal Rails-to-Trails Act. A state district court found Bhatt
guilty and ordered him to remove the fence and shed.
Bhatt appealed, claiming that he owned the encroached-upon land
by adverse possession. Because a fence had been standing in its current location (beyond the property line) since 1963, Bhatt argued that
30301_ch42_hr_994-1016.indd 1007
he had met the state’s twenty-year period for adverse possession.
A circuit court vacated the district court’s decision and held that Bhatt
had a credible claim for adverse possession. The county appealed.
In the Words of the Court
Glenn T. HARRELL, Jr., J. [Judge]
Driving that train, high on cocaine,
Casey Jones, you better watch your speed.
Trouble ahead, trouble behind,
And you know that notion just crossed my mind.
— The Grateful Dead, Casey Jones, on Workingman’s Dead
(Warner Bros. Records 1970).
Although the record of the present case does not reflect a
comparable level of drama as captured by the refrain of “Casey
Jones,” it hints at plenty of potential trouble, both ahead and
behind, for a pair of public works projects (one in place and the
other incipient [in development]) cherished by the government and
some citizens of Montgomery County.
(Continues )
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****
* * * The County contends * * * that, because this Court has
considered previously a railroad line to be analogous to a public
highway for most purposes, the land in question is not subject to
an adverse possession claim.
* * * Bhatt rejects the public highway–railroad line analogy
because the land was in private, not public, use during its operation as a rail line.
****
A railroad is in many essential respects a public highway, and
the rules of law applicable to one are generally applicable to the
other. Railroads are owned frequently by private corporations,
but this has never been considered a matter of any importance
* * * because the function performed is that of the State. Railroad
companies operate as a public use and are not viewed strictly
as private corporations since they are publicly regulated common
carriers. Essentially, a railroad is a highway dedicated to the public
use. [Emphasis added.]
* * * Nothing is more solidly established than the rule that title
to property held by a municipal corporation in its governmental
capacity, for a public use, cannot be acquired by adverse possession. [Emphasis added.]
****
* * * Because time does not run against the state, or the public, * * * public highways are not subject to a claim for adverse
possession, except in the limited circumstances of a clear abandonment by the State. By parity [equivalence] of reasoning applied
to the present case, railway lines [are] also not * * * subject to a
claim for adverse possession, without evidence of clear abandonment or a clear shift away from public use.
****
Because no evidence was presented by Bhatt to show that
* * * the Railroad or the County abandoned the right-of-way, no
claim for adverse possession will lie.
Decision and Remedy A state intermediate appellate court
reversed the lower court. Railroad companies operate as a public
use. Land that is held by government for public use cannot be
acquired by adverse possession unless the government has clearly
abandoned its right to the land.
Critical Thinking
• Legal Environment Bhatt claimed to have met all of the
requirements to acquire land through adverse possession. Based
on the facts provided, which element would a court likely find
was lacking?
Purpose of the Doctrine There are a number of public-policy reasons for the adverse possession doctrine. These include society’s interest in resolving boundary disputes, determining
title when title to property is in question, and ensuring that real property remains in the stream
of commerce. More fundamentally, the doctrine punishes owners who do not take action
when they see adverse possession and rewards possessors for putting land to productive use.
42–3e Eminent Domain
Eminent Domain The power of a
government to take land from private
citizens for public use on the payment
of just compensation.
Condemnation Proceedings The
judicial procedure by which the
government exercises its power
of eminent domain. It generally
involves two phases: a taking and a
determination of fair value.
30301_ch42_hr_994-1016.indd 1008
No ownership rights in real property can ever really be absolute. Even ownership in fee
simple absolute is limited by a superior ownership. In the United States, the government
has an ultimate ownership right in all land. This right, known as eminent domain, is sometimes
referred to as the condemnation power of government to take land for public use. It gives the
government the right to acquire possession of real property in the manner directed by
the U.S. Constitution and the laws of the state whenever the public interest requires it. Property normally may be taken only for public use, not for private benefit.
The power of eminent domain generally is invoked through condemnation proceedings that
occur before a judge. For instance, when a new public highway is to be built, the government
must decide where to build it and how much land it needs. After the government determines
that a particular parcel of land is necessary for public use, it will first offer to buy the property.
If the owner refuses the offer, the government brings a judicial (condemnation) proceeding to
obtain title to the land. Condemnation proceedings usually involve two distinct phases—the
first to establish the government’s right to take the property, and the second to determine
the fair value of the property.
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Ethical Issue
Should eminent domain be used to promote private
development? Issues of fairness often arise when the government
takes private property for public use. One issue is whether it is fair for a government to take property
by eminent domain and then convey it to private developers. For instance, suppose a city government
decides that it is in the public interest to have a larger parking lot for a local, privately owned sports
stadium or to have a manufacturing plant locate in the city to create more jobs. The government
may condemn certain tracts of existing housing or business property and then convey the land to the
privately owned stadium or manufacturing plant. Such actions may bring in private developers and
businesses that provide jobs and increase tax revenues, thus revitalizing communities. But is the
land really being taken for “public use,” as required by the Fifth Amendment to the U.S. Constitution?
In 2005, the United States Supreme Court ruled that the power of eminent domain may be used
to further economic development.9 At the same time, the Court recognized that individual states
have the right to pass laws that prohibit takings for economic development. Since then, the vast
majority of the states have passed laws to curb the government’s ability to take private property and
subsequently give it to private developers. Nevertheless, loopholes in some state legislation would
still allow takings for redevelopment of slum areas. Thus, the debate over whether (and when) it is
fair for the government to take citizens’ property for economic development continues.
The Taking When the government takes land owned by a private party for public use, it
The Compensation The U.S. Constitution and state constitutions require that the government pay just compensation to the landowner when invoking its condemnation power. Just
compensation means fair value. In the second phase of the condemnation proceeding, the court
determines the fair value of the land, which usually is approximately equal to its market value.
42–4
Landlord-Tenant Relationships
A landlord-tenant relationship is established by a lease contract. In most states, statutes require
leases for terms exceeding one year to be in writing. The lease should describe the property
and indicate the length of the term, the amount of the rent, and how and when it is to be paid.
State or local law often dictates permissible lease terms, particularly in residential leases.
For instance, a statute or ordinance might prohibit the leasing of a structure that is not in
compliance with local building codes. As in other areas of law, the National Conference of
Commissioners on Uniform State Laws has issued a model act to create more uniformity
in the laws governing landlord-tenant relationships. The Uniform Residential Landlord
Taking The taking of private
property by the government for public
use through the power of eminent
domain.
drnadig/E+/Getty Images
is referred to as a taking. Under the takings clause of the Fifth Amendment to the U.S.
Constitution, the government may take private property for public use with just compensation to the property owner. State constitutions contain similar provisions. In the first
phase of condemnation proceedings, the government must prove that it needs to acquire
privately owned property for a public use.
Example 42.17 Franklin County, Iowa, engages Bosque Systems to build a liquefied natural gas pipeline across the property of more than two hundred landowners. Some property
owners consent to this use and accept Bosque’s offer of compensation. Others refuse the
firm’s offer. A court will likely deem Bosque’s pipeline to be a public use. Therefore, the government can exert its eminent domain power to “take” the land, provided that it pays just
compensation to the property owners. ■
Why does the U.S. Constitution
require that a government taking, such as the acquisition of
private land for a gas pipeline,
be for “public use”?
Know This
Sound business practice
dictates that a lease for
commercial property
should be written carefully and should clearly
define the parties’ rights
and obligations.
9. See Kelo v. City of New London, Connecticut, 545 U.S. 469, 125 S.Ct. 2655, 162 L.Ed.2d 439 (2005).
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1010
UNIT SEVEN: Property and Its Protection
and Tenant Act (URLTA), which was issued in 1972, has been adopted in some form by
twenty-one states. A revised version of the act was issued in 2015, but no states had adopted
it prior to the publication of this text.
Learning Objective 4
What are the duties of the
landlord and the tenant with
respect to the use and maintenance of leased property?
Eviction A landlord’s act of
depriving a tenant of possession of
the leased premises.
Constructive Eviction A form of
eviction that occurs when a landlord
fails to perform adequately any of
the duties required by the lease,
thereby making the tenant’s further
use and enjoyment of the property
exceedingly difficult or impossible.
Know This
Options that may be
available to a tenant on a
landlord’s breach of the
implied warranty of habitability include repairing
the defect and deducting
the cost from the rent,
canceling the lease, and
suing for damages.
42–4a Rights and Duties
The rights and duties of landlords and tenants generally pertain to four broad areas of
concern—the possession, use, and maintenance of the leased property and, of course, rent.
Possession A landlord is obligated to give a tenant possession of the property that the
tenant has agreed to lease. After obtaining possession, the tenant retains the property exclusively until the lease expires, unless the lease states otherwise.
Quiet Enjoyment. The covenant of quiet enjoyment mentioned previously also applies to
leased premises. Under this covenant, the landlord promises that during the lease term, neither the landlord nor anyone having a superior title to the property will disturb the tenant’s
use and enjoyment of the property. This covenant forms the essence of the landlord-tenant
relationship, and if it is breached, the tenant can terminate the lease and sue for damages.
Eviction. If the landlord deprives the tenant of possession of the leased property or interferes with the tenant’s use or enjoyment of it, an eviction occurs. A constructive eviction occurs
when the landlord wrongfully performs or fails to perform any of the duties the lease requires,
thereby making the tenant’s further use and enjoyment of the property exceedingly difficult
or impossible. Examples of constructive eviction include a landlord’s failure to provide heat
in the winter, electricity, or other essential utilities.
Use of the Premises The tenant normally may make any use of the leased property,
provided the use is legal and does not injure the landlord’s interest. The parties are free to
limit by agreement the uses to which the property may be put.
Maintenance of the Premises The tenant is responsible for any damage to the premises
that he or she causes, intentionally or negligently, and may be held liable for the cost of
returning the property to the physical condition it was in when the lease began. Unless the
parties have agreed otherwise, the tenant is not responsible for ordinary wear and tear and
the property’s consequent depreciation in value.
Landlords must, of course, comply with any applicable state statutes and city ordinances
regarding maintenance and repair of buildings. In some jurisdictions, landlords of residential
property are also required by statute to maintain the premises in good repair.
In addition, the implied warranty of habitability discussed earlier may apply to residential leases. The warranty requires the landlord to ensure that the premises are habitable—
that is, a safe and suitable place for people to live. Also, the landlord must make repairs to
maintain the premises in that condition for the lease’s duration.
Generally, this warranty applies to major, or substantial, physical defects that the landlord
knows or should know about and has had a reasonable time to repair—such as a large hole
in the roof or a broken heating system. Example 42.18 Carol and Ken Galprin own a house
within the city limits of Redmond. A city regulation states that a residence must be connected to the city sewer system before anyone, including tenants, can live in the residence.
The Galprins’ house is not connected to the city system. Thus, it is not legally habitable, and
they cannot lease it to tenants. ■
Rent Rent is the tenant’s payment to the landlord for the tenant’s occupancy or use of the landlord’s real property. Usually, the tenant must pay the rent even if she or he refuses to occupy the
property or moves out, as long as the refusal or the move is unjustified and the lease is in force.
Example 42.19 Lifetime Insurance Agency enters into a lease with Mallory for a suite of
offices in Mallory’s building. Lifetime’s revenue is less than managers had projected, however,
and the rent is now more than the company wants to pay. Lifetime vacates the offices before
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CHAPTER 42: Real Property and Landlord-Tenant Law
1011
the end of the lease. In terms of the landlord-tenant relationship, the move is unjustified,
and the lease remains in force. Lifetime must continue to pay the rent. ■
Under the common law, if leased premises were destroyed by fire or flood, the tenant still
had to pay rent. Today, however, if an apartment building is destroyed, most states’ laws do
not require tenants to continue to pay rent.
In some situations, such as when a landlord breaches the implied warranty of habitability,
a tenant may be allowed to withhold rent as a remedy. When rent withholding is authorized
under a statute, the tenant must usually put the amount withheld into an escrow account.
The funds are held in the name of the tenant and are returned to the tenant if the landlord
fails to make the premises habitable.
BanksPhotos/iStock/Getty Images
Commercial Lease Terms State statutes often allow tenants and landlords more flexibility
in negotiating the terms of a commercial lease. Case Example 42.20 Lynwood Place, LLC, owned
an office building in Newtown, Connecticut. Sandy Hook Hydro, LLC, agreed to lease a part of
the building containing a hydroelectric turbine. The lease required Sandy Hook to pay a base
annual rent, plus an additional amount of rent equal to 6 percent of any increase in operating
expenses incurred by the landlord. “Operating expenses” included all costs of maintenance
and repair related to the premises.
When Sandy Hook did not pay the additional rent due under this provision,
Lynwood Place filed a suit in a Connecticut state court to take immediate
possession of the property. The court issued a judgment in the landlord’s favor.
The tenant appealed, but the reviewing court affirmed. The court concluded
that Sandy Hook had signed the lease, which clearly indicated that the rent
was subject to a 6 percent increase for operating expenses. Therefore, even
though Sandy Hook occupied only part of the building, the lease gave the
landlord the right to increase its rent by that amount.10 ■
42–4b Transferring Rights to Leased Property
If a lessee agrees to rent a part of a building that
houses a turbine, what happens when the lessee
doesn’t pay the agreed-upon annual increase in
lease payments?
Either the landlord or the tenant may wish to transfer her or his rights to the
leased property during the term of the lease. If a landlord transfers complete
title to the leased property to another, the tenant becomes the tenant of the new
owner. The new owner may collect subsequent rent but must abide by the terms of the existing
lease. A tenant’s transfer of rights in the leased property may result in an assignment or a sublease.
Assignment The tenant’s transfer of his or her entire interest in the leased property to a
third person is an assignment of the lease. Many leases require the landlord’s written consent
for an assignment to be valid. The landlord can nullify (avoid) an assignment made without
the required consent and evict the assignee. State statutes may specify that the landlord may
not unreasonably withhold consent, however. Also, a landlord who knowingly accepts rent
from the assignee may be held to have waived the consent requirement.
When an assignment is valid, the assignee acquires all of the tenant’s rights under the
lease. Nevertheless, an assignment does not release the original tenant (the assignor) from
the obligation to pay rent should the assignee default. In addition, if the assignee exercises
an option under the original lease to extend the term, the assignor remains liable for the rent
during the extension, unless the landlord agrees otherwise.
Subleases The tenant’s transfer of all or part of the premises for a period shorter than the
lease term is a sublease. Many leases also require the landlord’s written consent for a sublease.
If the landlord’s consent is required, a sublease without such permission is ineffective. Also, like
an assignment, a sublease does not release the tenant from her or his obligations under the lease.
Example 42.21 Derek, a student, leases an apartment for a two-year period. Although
Derek had planned on attending summer school, he decides to accept a job offer in Europe
Sublease A tenant’s transfer of all
or part of the leased premises to a
third person for a period shorter than
the lease term.
10. Lynwood Place, LLC v. Sandy Hook Hydro, LLC, 150 Conn.App. 682, 92 A.3d 996 (2014).
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1012
UNIT SEVEN: Property and Its Protection
for the summer months instead. Derek therefore obtains his landlord’s consent to sublease
the apartment to Ava. Ava is bound by the same terms of the lease as Derek, and the landlord
can hold Derek liable if Ava violates the lease terms. ■
42–4c Termination of the Lease
“Even in Hell the
peasant will have to
serve the landlord, for,
while the landlord is
boiling in a cauldron,
the peasant will have
to put wood under it.”
Russian Proverb
Usually, a lease terminates when its term ends. The tenant surrenders the property to the
landlord, who retakes possession. If the lease states the time it will end, the landlord is not
required to give the tenant notice. The lease terminates automatically.
A lease can also be terminated in several other ways. If the tenant purchases the leased
property from the landlord during the term of the lease, for instance, the lease will be terminated. The parties may also agree to end a tenancy before it would otherwise terminate. In
addition, the tenant may abandon the premises—move out completely with no intention of
returning before the lease term expires.
At common law, a tenant who abandoned leased property was still obligated to pay the rent for
the full term of the lease. The landlord could let the property stand vacant and charge the tenant
for the remainder of the term. This is still the rule in some states. In most states today, however,
the landlord has a duty to mitigate his or her damages—that is, to make a reasonable attempt to
lease the property to another party. Consequently, the tenant’s liability for unpaid rent is restricted
to the period of time that the landlord would reasonably need to lease the property to another
tenant. Damages may also be allowed for the landlord’s costs in leasing the property again.
Practice and Review
Vern Shoepke bought a two-story home in Roche, Maine. The warranty deed did not specify what
covenants would be included in the conveyance. The property was adjacent to a public park that
included a popular Frisbee golf course. (Frisbee golf is a sport similar to golf but using Frisbees.)
Wayakichi Creek ran along the north end of the park and along Shoepke’s property. The deed allowed
Roche citizens the right to walk across a five-foot-wide section of the lot beside Wayakichi Creek as
part of a two-mile public trail system. Teenagers regularly threw Frisbee golf discs from the walking
path behind Shoepke’s property over his yard to the adjacent park. Shoepke habitually shouted and
cursed at the teenagers, demanding that they not throw the discs over his yard.
Two months after moving into his Roche home, Shoepke leased the second floor to Lauren Slater
for nine months. The lease agreement did not specify that Shoepke’s consent would be required to
sublease the second floor. After three months of tenancy, Slater sublet the second floor to a local artist,
Javier Indalecio. Over the remaining six months, Indalecio’s use of oil paints damaged the carpeting
in Shoepke’s home. Using the information presented in the chapter, answer the following questions.
1. What is the term for the right of Roche citizens to walk across Shoepke’s land on the trail?
2. What covenants would most courts infer were included in the warranty deed that Shoepke
received when he bought his house?
3. Can Shoepke hold Slater financially responsible for the damage to the carpeting caused by
Indalecio? Explain.
4. Could the fact that teenagers continually throw Frisbees over Shoepke’s yard outside the
second-floor windows arguably be a breach of the covenant of quiet enjoyment? Why or why not?
Debate This
Under no circumstances should a local government be able to condemn property in order to sell it
later to real estate developers for private use.
30301_ch42_hr_994-1016.indd 1012
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