Real and Personal Real and Personal PropertyProperty

Chapter 8Chapter 8

Law of Property

• Oldest part of common law

• Concepts from common law developed in England from 12th to 16th centuries

• Right guaranteed and protected by government

• Real Property: immovable (i.e. land, trees, houses)

• Personal Property (chattel): moveable (i.e. furniture and clothing)

• Contract law is used to make arrangements about the property use

Real PropertyReal Property

• Land– under - oil, minerals– attached - buildings, trees

• Property - “legally protected expectation of being able to use a thing for one’s advantage.’’

• Owner has a “bundle of legal rights”.• Governmental regulations may restrict

property owner’s common-law land use rights– (i.e. Endangered Species Act re: rare plants

and animal protection)

Ownership of Land• Deeds

Most common way to transfer ownership—warranty deeds most popular

ID original owner, describe land, ID new owner & state that ownership is transferred, possibly subject to certain conditions

• Titles

Comes from receipt of valid deed; is means by which owner has legal possession of the property

“Formal right of ownership”–sell, use, give–control it

Titles are recorded by state officials (usually county)

When property is transferred, usual to obtain title insurance (depends on state)

Forms of Ownership • Fee Simple - indefinite time and

right to dispose of it• up in the air “to the skies”• down to the core “to the center

of the earth”– these rights can be sold separately– subsurface mineral rights (profits)

often legally separated– in all other countries, mineral

rights belong to government

• Can be inherited, transferred, sold in part or in whole

Forms of Ownership• Joint tenancy

– Each tenant has same interest in undivided possession of property– Right of survivorship – if one tenant dies, ownership passes to

other owner– Joint tenants can force an end to joint tenancy by transferring an

interest into a tenancy in common• Tenancy in Common

– Each tenant (owner) has undivided interest in property– If one tenant dies, that interest passes to estate/heirs

• Tenancy by the Entirety– Available only to married couples; available in ½ of the states– One tenant cannot force an end to it except by divorcing the other

• Life Estates – Have use of land for life of “tenant for life”- but can’t ruin it.

Trusts

• Form of ownership through common law• Separates legal and beneficial ownership of property• Settlor (grantor) places property into a trust (often through what

is call a deed of trust).• Trustee owns legal title.• Beneficiary holds an equitable title to the property.• Trustee has a duty to manage the property for benefit of the

beneficiary• Business Trusts often used in place of partnerships or

corporations– Beneficiaries receive certificates of beneficial ownership– Can be traded like stocks & bonds

Evolving Property Law: Condominiums

• Not seen much before 1960s• Fee simple estate applies• Living space in building is

owned in fee simple (numerous conditions attached)

• BUT land building sits on, as well as elevators & lobbies, are held in common (for condo owners) by another person (business)

• Most states have statutes to simplify the legal process of modern living arrangements consistent with traditional property law.

Servitudes

• Servitudes

– property requirements imposed by an owner

– positive and negative requirements

– easements and covenants most important servitudes

• Easements

– right to enter land of another and make use of it or take something

– example: sidewalks, utilities

– becoming common in connection with solar and wind energy• Neighbors cannot block sunlight or solar collectors.• Can’t block wind from turbines.

Adverse Possession• Must be:

– Actual - does in fact possess property

– Open - visible so owner is on notice

– Hostile - without consent of owner

– Exclusive - not shared with others who have no right

– Continuous - goes on without major interruption

– State laws vary on time required – from 5-20 years

Moran v. Sims

• Sims owned property for decades surrounded by Moran property.• Sims built a home in 1991. Had access to property by driveway

across the property bought by Moran in 1996.• Sims asked the court to grant him an easement.• Trial court held that Sims has a prescriptive easement; allowed use of

driveway on Moran’s property. Moran appealed.• HELD: Affirmed. Elements of adverse possession proven. • Use of the property was

– Open and visible: Sims used the driveway since 1985– Hostile: No proof Moran consented for Sims to use drive – Claim of Ownership: Sims bought gravel for drive & hired it

spread– Exclusive: Driveway used by Sims family & those they permitted

to use it– Peaceful: No evidence of dispute of use of driveway– Continuous/Uninterrupted for 10 years+

Covenants

• Covenants or Covenant Running With the Land– Not actual legal interest in an estate –More like a contract with an estate–Most residential subdivisions have covenants–May burden or benefit the land– Tool for developing real estate– Goes with the estate from owner to owner

• “Covenant runs with the land”

Powell v. Washburn • 1988, Washburn, real estate developer, recorded Declarations of Covenants,

Conditions and Restrictions (CC&R) for Indian Hills Airpark, an aviation-related community.

• Referenced incorporation of the La Paz County zoning ordinances• Zoning permitted 3 residential uses: mobile or manufactured homes, constructed

homes, and hanger-houses (homes incorporating an airplane hanger).• In 1996, County amended ordinances to permit use of recreational vehicles (RVs) as

residences.• In 2002 Powell sued Washburn requesting injunction against use of RVs as

residences within the Airpark.• Trial Court held CC&R did not permit RVs as residents.• Appeals court reversed. Decision appealed to state supreme court.• HELD: Vacated and affirmed the trial court • No RV’s permitted as residences• Look at the intention of the parties that created a restrictive covenant• The plain intent of the CC&R’s was to limit residents to mobile or manufactured

homes, constructed homes or hanger-homes.

Landlords & Tenants

• Landlords and tenants– rented property is called a

leasehold– landlord has interest of some

length– tenant possesses estate for a

fixed period or at will as determined by landlord

– Leased property is assumed at law to have an implied warranty of habitability.

Lease • Can be commercial or residential• ID parties• describe premises being leased• state how long in effect• state how much rent is to be paid• does not have to state a specific end

– can go month to month

• usually also:– who pays utilities, taxes, insurance– where/when rent is paid– terms of damage deposit– who is responsible for repairs/maintenance– subleasing– termination provision

Rights/Duties of a Tenant

• Right of possession during lease

• Can exclude other parties

• Landlord must make essential repairs or may have constructive eviction

• Can’t:– abuse property– commit waste– remove valuable

property– be nuisance to

neighbors– engage in illegal

activities on property

Commercial Leases• Commercial leases often drafted by the

lessor’s legal department• Based on state law requirements and

experiences with previous tenants• Tend to be long• Cover many issues in detail• Description of leased space is often defined by

terms used by the Building Owners and Mangers Association (BOMA)– Recognized authority in setting standards

for commercial leases

Nielson v. Gold’s Gym

• Peterson signed lease with Nielsen to lease “premises” in a strip mall for a gym for 3 years at $0.85 annual per square foot.

• Nielsen still building at the time of the lease.• Contractor told Peterson it would cost $168,000 to

improve the building shell for the gym.• Peterson discussed with Nielsen who would pay for the

interior improvements.• Couldn’t reach agreement. Peterson walked away.

Nielsen leased to another party. • Nielsen sued for $112,000 for breach of contract & loss

for renting space for less than Peterson had agreed to.• Court held lease was unenforceable: no agreement of

the nature and extent of property to be leased. Appeal.

Nielson v. Gold’s Gym

• HELD: Affirmed. Lease unenforceable for lack of mutual assent to terms of who will pay for the improvement.

• Building was a shell when lease was signed.• Not clear from the lease who would pay for modifications.• No evidence of industry standards of who would be responsible

for payment in this situation.• Costs of improvements would have consumed more than half

the rent over the 3-year lease term.• Payment for improvements is not essential to every commercial

lease agreement.• HOWEVER, here it was an essential part of the bargain to be

reached.• Missing term creates an ambiguous lease and no mutual assent

by the parties.

Public Control of Real Property

• Eminent Domain– Government can force sale of property or granting of

easement without consent of owner– Must prove need for a public purpose– 5th Amendment requires “just compensation”

• Police powers– Control land use with regulations (i.e. zoning)– Is there compensation? Maybe, but when property

loses value, compensation may not appear to be “just” to an owner.

– Sometimes negotiated & sometimes statutes help court or jury decides amount to be paid

Saadala v. East Brunswick Zoning Board of Adjustment

• 7-Eleven has a store with 6 parking spaces on ½ acre lot in NJ• Part of lot is zoned residential, but store existed before zoning• Store was “grandfathered in” as a preexisting nonconforming use• Next to 7-Eleven is vacant Shell gas station also “grandfathered in”• 7-Eleven wanted to take over the gas station property and build retail

gas operation • Requested preexisting nonconforming use be extended• Saadala, area resident, opposed classification• Zoning Board approved it anyway• Decision affirmed by County Trial Court• Saadala appealed

Saadala v. East Brunswick Zoning Board of Adjustment

• HELD: Judgment reversed. 7-Eleven loses.• Court looked at N.J. statute re: repair and restoration of structure

existing at time of passage of new ordinance• Purpose of limited nonconforming uses is to prevent any increase

or change in nonconformity• Under 7-Eleven’s redevelopment plan, new business operation

would involve construction of 3 new islands to dispense gas and a kiosk, as well as 11 new parking spaces

• This is not simply an expansion of the convenience store or former Shell gas station; it is a substantial change in use of the properties

• 7-Eleven failed to show the property “peculiarly fitted” for a mini-mart

• Failed to show “special reasons” for approval of a use variance for its redevelopment plan; proposal rejected

Torts Against Property• Trespass to Land: Unauthorized intrusion that interferes with another’s

peaceful enjoyment of their property– Belief by trespasser that property belongs to him/her is not relevant -- still a trespass– Property owner may not intentionally harm trespasser or set a trap – but usually no duty to

warn of dangerous conditions on the property

• Private Nuisance: interference with use & enjoyment of land– Destruction of crops, causing health risks from pollution, throwing

objects on the land, using the neighboring house for drug deals • Public Nuisance: Interference with a right held in common by general public

– Illegal gambling, bad odors, obstruction of a highway• Trespass to Personal Property: Interference with the right of an owner to the

exclusive use and enjoyment of property• Conversion: Unlawful control of another’s personal property• Misappropriation: Invasion of property rights such as trademarks or trade

secrets

Smith v. Kulig

• Kulig owns building with apartments on second floor.• Back of building is a fire escape.• Tenants are not to use fire escape unless an emergency.• Smith visited Wolf at his apartment in the building.• Smith went on fire escape; collapsed; Smith fell to his death. • Estate sued Kulig.• Trial court dismissed, holding Smith was a trespasser. Appealed.

• Held: Affirmed. Wrongful death action dismissed with prejudice.• Trespasser is person who enters premises without privilege/consent.• Building contained no trespass signs, as did door leading to and from

fire escape.• Ladder to the fire escape had no trespassing sign.• Smith did not have the right to use fire escape–no emergency.• Landowner owes no duty to trespasser other than not harming him in

wanton or willful manner.

Atkinson v. City of Pierre

• Tour Ice produced ice at its plant in business district of Pierre for years. Trucks come and go..

• Atkinson moved into apartment across street from ice plant. Complained to Tour Ice and City about noise– got nowhere.

• Sued for nuisance. • Trial Court held for defendants. Atkinson appealed.• HELD: Affirmed. Business is not a nuisance.• There were no other complaints from any other

residents near the plant.• City has authority to declare what constitutes a

nuisance.• City’s decision was reasonable.

Torts Against Property Owners

• Is a person harmed on the property a trespasser or an invitee?

• Customers are invitees, not trespassers.• What duty of care must property owners

take to insure safety on their property?• In business, a major tort is “premises

liability.”

Premises Liability• Accidents that result from negligence of the

business• Common are “slip-and-fall” cases • Duty to keep premises reasonably safe under

the circumstances • Duty to inspect premises for dangers and

correct problem or warn invitees• If a danger is obvious, people have duty to

protect themselves by acting reasonably.

See Campisi v. Acme Markets, Inc.

Campisi v. Acme Markets, Inc.

• Blind employee worked at Acme grocery store. Was walking, using his white aluminum cane.

• Campisi walking down another aisle; rounded the corner; tripped over cane; suffered injuries.

• She sued Acme for premises liability based on negligence: store should post a sign that it had a blind employee using cane, then customers would be more cautious.

• Jury awarded a verdict for Campisi. Trial Court granted Acme judgment notwithstanding the verdict. Campisi appealed.

• HELD: Affirmed. Verdict in favor of Acme.• Businesses owe invitees high duty of care for known or reasonably

foreseeable risks or dangers.• Customers must be aware of sudden occurrences in shopping

markets – shopping carts, other customer’s foot, someone’s cane, or obstacles when exiting an aisle.

• Duty of ordinary care includes looking what is in the aisles. No award to Campisi.

Premises Liability

• Accidents that result from negligence of the business• Common are “slip-and-fall” cases • Not providing sufficient security to prevent crimes from

occurring on the property– Problems are especially in high crime areas– Issue: Owner “knew or should of known” of problem

in the area– Issue: Did owner act “reasonably” to protect

patrons?– Ways owners may protect themselves: lighting,

safety patrols, posters, warnings

Erichsen v. No-Frills Supermarkets of Omaha

• Erichsen went grocery shopping at No-Frills.• Returned to her car, assaulted, beaten, robbed, dragged a mile

hanging from the car of assailant. Suffered serious injuries.• Sued No-Frills and owner of shopping center for negligently failing to

warn of criminal activity.• Said defendants failed to protect her from foreseeable criminal

activities (10 criminal events within 16-month period).• Trial court held defendants did not violate duty of care to Erichsen. • She appealed.• HELD: Remanded back to trial court for further proceedings.• Property owner is not an insurer of safety until he knows that acts of

3rd persons are occurring or could occur.• If owner has “reason to know, from past experience” that there is

danger, he has a duty to take precautions: warnings or guards.• One incident not enough to create danger.• However, here there were many prior criminal events in the area.• Erichsen can go to trial with facts of the case against defendants.