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Property II

I. Transfers of Land
A. Overview of Land Sale & Land K
1. Four stages of a land sale
(1) Finding the buyer
(a) Seller (S) selects real estate broker – aka listing agent (LA)
to represent S in the sale
(b) S and LA enter into listing agrmt – Terms:
(i) LA agrees to find a buyer willing to pay a stated
price acceptable to S
(ii) S agrees to sell
(c) B makes offer to purchase
(i) Form of offer = written K that satisfies SF, with
condtns:
(a) Physical condtn of prpty
(b) Financing
(c) State of title– S must deliver marketable title
to B
(d) If any condtns fail, B walks away w/earnest
money
(ii) With k, B delivers earnest money
(iii) S signs K if he agrees to sale
(2) Negotiating the land K
(a) Agents typically represent B & S.
(3) Preparing for closing
(a) Between K formation & closing is called the “executory
period”
(b) B & S both have things to do during this period
(c) B will sign promissory note & execute mortgage to secure
repayment of loan
(d) During executory period, B will evaluate the state of the title
(i) Option 1- attorney search & certification of Title
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(ii) Option 2- attorney review of title abstract prepared
by a title abstract company (TAC)
(iii) Option 3- (supplemental to 1 or 2): Title Insurance
(4) Closing the transaction
(a) Closing supervised by attorney or escrow agent
(b) Generally, at closing
(i) Title conveyed from S to B by delivery of deed
(ii) Loan is made by lender & full purchase price is paid
by B to S
(iii) LA and CB are paid their commission
(iv) Deed and mortgage will both be recorded
2. The actors in a land K
a) Principals
b) Seller – aka grantor, vendor, or party of the first part
c) Buyer – aka grantee, vendee, party of the second part
3. 3 kinds of listing agrmts
(1) open listing agrmt- gives no exclusive right for agent to sell prpty
(2) exclusive agency K- forbids S fro selling the house through another
agency, but doesn’t prevent S from finding own B
(3) exclusive right to sell agrmt- forbids anyone other than la from
selling prpty

B. Role of Broker
1. Legal duties that broker owes to buyer & seller
a) Fiduciary duty of loyalty, good faith, competence owed to Seller
b) No fraud or conflict of interest
2. When is a commission due?
a) CL Rule- commission due when K is signed (Ohio)
b) Progressive Rule- commission due at closing
c) Or expressly agreed on time between parties
C. Forming the Land K (Statute of Frauds)
1. rqmts of SF
a) in writing, essential terms, signed by party agnst whom enfrcmt is sought
b) can be evidenced by single memorandum or series of related docs, but must
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indicate a final agrmt
c) don’t need full legal description in land K (but do in the Deed)
d) must be adequate to identify the land with REASONABLE CERTAINTY
(1) What if description is incomplete? May be cured by parol evidence.
(2) What if acreage is inaccurate? May fail if substantial inaccuracy.
(3) What if price not states? Not necessarily fatal, but probably is unless
parties agreed to reach price later.
(4) If no closing date stated, closing is in rsnbl time.
(5) Rule- SF won’t interfere if agrmt is already performed; SF won’t
undo a fully executed oral agrmt
D. Marketable Title
1. Rule: Physical condtn of prpty does NOT affect title.
2. 3 ideas to remember
(1) every owner’s title to land is different
(2) can’t pass a better title than seller has
(3) title to land is separate from physical condtn of land
3. Buyer can walk away if S doesn’t deliver the title agreed to in the K
4. If K is silent on kind of title to be transferred, then a marketable title must be
delivered. This is both a condition and a covenant.
a) Condtn begins when K is signed and ends at closing. If S delivers
unmarketable title at closing, then covenant to deliver marketable title is merged
into the Deed covenants.
b) LK covenant re: marketable title = Title free from REASONABLE DOUBT,
but not every doubt.
c) Two circumstances when title is definitely unmarketable
(1) Failure of title in terms of estate conveyed or acreage conveyed (but
small difference won’t render title unmarketable)
(2) Where prpty is subject to some lien or encumbrance that B did not
accept (court looks at what rsnbl B would accept)
d) Another definition of marketable title recognized by courts- rsnbly prudent
person w/full knowledge of the facts and legal consequences would be willing to
accept
e) Unmarketable if rsnbly probable that a purchaser would be subject to
litigation
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f) BAR Question- What if Seller produces a deed that is based on adverse
possession? Can such a Seller tender a marketable title to Buyer?
(1) Majority Rule is that a S with title through adverse possession CAN
pass marketable if the likelihood of the title being litigated is minimal.
(2) Minority Rule is that S can’t pass title until it has been Quieted.
g) Legal effect of failure to – if covenant breach, then damages; if condition
failure, then recission of the K.
h) When duty arises- Duty to convey MT begins when K is signed and ends
when Deed is delivered at closing. Buyer waives right to receive MT if he
accepts deed at closing, but may bring C/A for damages for failure of MT later.
5. Two Scenarios involving failure of MT
a) Title failure
(1) Lesser estate
(2) Under acreage (substantial
(3) Defect in chain of title
(4) Special Problem – Adverse Possession
(a) Majority Rule- AP Title = MT if TO has no serious claim
(b) Minority Rule- MT = successful through Quieted Title action
(5) Defect in Record Chain of title (deed forged, undelivered, etc.)
(6) Distinguish title from condition of prpty (can have a MT to
Unmarketable land)
b) Encumbrance
(1) Encumbrance defined- right of interest in land other than an estate
which reduces value of land or restricts use of land- eg, easements,
leases, liens, physical encrchmts
(2) Excepted encumbrances are OK
(3) Ancient (expired) encumbrances OK
(4) Zoning ordinance is NOT an encumbrance
(5) Visible encumbrance problem
(a) Newer cases – doesn’t render title unmarketable if visible
6. Time for S to render MT – generally, at closing; curable defects = mortgages;
postponing closing for rsnble time to cure
7. Buyers remedies if S can’t deliver MT
a) Recission
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b) Restitution
c) Specific performance w/price adjustment
d) damages
8. Misc. notes on MT
a) The fact that Buyer may not be able to reach prpty does not in itself make
title unmarketable
b) Hazardous waste on prpty does not render title unmarketable
c) Ordinance violation may make title unmarketable, but the ordinance itself
does not affect the status of a MT
E. Equitable Conversion
1. Doctrine of Equitable Conversion - As soon as the K is entered into, equity regards
the land as being owned by the buyer although the seller has legal title to the land until
closing. The money, under equitable conversion, is owned by the seller even though the
buyer holds the money until closing. (So, S has equitable title to the money, B has
equitable title to the land)
2. This is the rule, UNLESS one of 3 things happens:
(1) Equitable conversion does NOT happen if Seller can’t convey MT
(2) Parties can contract out of equitable conversion
(3) When one party is at fault, equitable conversion is not used. The at-
fault party bears the loss.
3. Equitable conversion is the CL majority view, BUT there are 2 minority positions
that are utilized in some states:
(1) Mass- risk of loss is on Seller where substantial loss
(2) Uniform Vendor & Purchase Act – says party in possession bears risk
of loss
4. What happens if there are insurance proceeds? Whoever bears the loss gets the
insurance money.
F. Duty to Disclose (non-title) defects
1. Normal rule = “caveat emptor” – no remedy for mere silence by Seller as to defects,
BUT Exceptions:
a) Fraud
b) Fiduciary relationship
c) Active concealment
d) Partial disclosure (half-truth)
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2. Latent defects- normally no duty to disclose, BUT if defect not subject to discovery
on reasonable inspection, then Buyer not held to strict doctrine of caveat emptor
3. Where a condition has been created by the seller materially impairs the value of the K
and is peculiarly within the knowledge of the seller or unlikely to be discovered by a
prudent purchaser exercising due care with respect to the transaction, nondisclosure
constitutes a basis for recission as a matter of equity.
4. Seller is under a duty to disclose defects that are not readily observable and not
known to Buyer.
5. If defect is NOT material, then there is not fraud
a) 2 different tests used for materiality of defect
(1) objective test- whether rsnbl person would attach importance to it in
deciding to buy
(2) subjective test- whether the defect “affects the value or desirability of
the property to the buyer.”
6. 3 situations when silence is NOT misrepresentation as to material defect:
(1) unknown by Seller
(2) when Buyer has same opportunity as Seller to discover the defect
(3) when Seller is NOT aware that Buyer is under misapprehension
7. Misc. Notes on Seller’s duty to disclose defects:
a) May be duty to disclose “noisy neighbors”
b) “As Is” clauses – are upheld so long as defect is rsnbly discoverable to Buyer
8. Merger Doctrine
a) General Rule - General rule is that contract merges into deed when buyer
accepts deed and buyer can’t sue on warranty (duty to deliver MT)
b) To sue on title defect, must sue before conveyance of deed
c) When Buyer accepts deed, the K merges into the deed & Buyer can’t sue the
Seller on warranties, if any, that are in the deed
d) 2 types of defects:
(1) Title Defects- Sellers must provide MT or Title that meets express
provisions of K between buyer and seller
(2) Condition defects- unknown defects needn’t be disclosed, but have a
duty to disclose defects that are not readily observable
e) Exceptions to Merger Doctrine
(1) Recission is still OK for fraud
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(2) Merger does NOT apply to non-title covenants
G. Implied Warranty of Quality
1. Standard of quality = “customary standard of skill and care”
2. privity not rqd; warranty does apply to subsequent purchasers
3. does not originate from K, but is implied
4. applies to latent defects
5. policy = to protect innocent Buyers
6. Limits on the Implied Warranty of Quality
(1) Latent defects only
(2) Not discoverable by rsnbl inspection
(3) Rsnbl period of time
(4) P must show causation btwn defect & workmanship
7. builder’s defenses
(1) defects not attributable to him
(2) defect is result of age or ordinary wear & tear
(3) previous owners made substantial changes
(4) some jurisdictions only allow warranty for initial purchasers
H. Remedies for Breach of the Sales K
1. Three Remedies are available to the nondefaulting party
(1) Damages
(2) Retention of deposit (by Sellers) or restitution of deposit (for Buyers)
(3) Specific performance of the K
2. Summary of Remedies to Know
a) General Rule for party seeking damages for breach of K to convey real estate
is the Difference btwn the K price and the Fair Market Value at time of breach
b) Buyers Damage for breach by Seller is the Value of the prpty at time of
breach – K price
c) Liquidated damages will be enforced if rsnbl in light of actual damages
d) Specific performance is usually available for land K deals b/c land is unique
e) Seller’s breach due to title defect
(1) English rule- if Seller breaches b/c of title failure, B gets restitution +
costs
(2) American rule- B gets the benefit of the bargain
3. Other notes
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(1) Special damages may be awarded if damages resulted from natural
and probable consequences of the breach & were rsnbly foreseeable by
breaching party
(2) Punitive damages may be awarded for willful & wanton breach or
reckless disregard of contractual obligation
I. The Deed- Warranties of Title
1. Three General types of Deeds
(1) General Warranty- warrants title against all defects in title, whether
they arose before or after the grantor took title
(2) Special Warranty- contains warranties agnst the grantor’s own acts,
but not the acts of others
(3) Quitclaim- contains no warranties; only conveys whatever the
grantor has, if any
2. habendum clause – may function to limit the estate granted in some way
3. Majority Rule on Acknowledgement
a) Witnessing or notary public = acknowledgement
b) Acknowledgement does NOT affect rights as btwn the parties, BUT if a deed
is not acknowledged, then it can’t be recorded or recognized as public record
4. Forgery & Fraud
a) Forged Deed - A grantor’s signature whose signature is forged to a deed
prevails over ALL persons, even Bona Fide purchasers
b) Fraud – Deed procured by fraud is voidable by grantor in action agnst
grantee, BUT a subsequent Bona Fide purchaser who is unaware of the fraud
prevails over grantor
c) Fraud in the Execution
(1) Ohio Rule - Where deception or trickery is used to get Grantor to
unknowingly transfer his deed, title is VOID
d) Fraud in the Inducement –
(1) party fully understands what he or she is signing, and is aware of the
nature and character of the instrument he or she executed, but is deceived
by fraudulent representations as to the facts outside the instrument itself
(2) DOES NOT void the title; BUT title is VOIDABLE
e) Summary of Ohio Rules
(1) Void Title – where a “forged deed” OR “fraud in the execution”
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(2) Voidable Title – where “fraud in the inducement”
5. Various covenants
a) Present covenants
(1) Covenant of seisin- breach occurs when estate granted was more
than grantor owned
(2) Covenant of right to convey- breach when grantor had no right to
convey
(3) Covenant agnst encumbrances- warrants that there are no
encumbrances on the prpty (e.g. mortgage, lien, etc)
b) Future covenants (run with the land)
(1) Covenant of general warranty
(a) grantor covenants to warrant and defend the title conveyed
by the deed against the lawful claims regarding the title
conveyed.1 The covenant of warranty is an agreement by the
grantor that upon the failure of the title which the deed purports
to convey, he or she will make compensation in money for the
loss sustained
(2) Covenant of quiet enjoyment
(3) Covenant of further assurances – the only covenant that allows for
injunction
(a) covenant that the grantor will, on demand, perform all acts
necessary to provide further assurances of title1 and requires the
grantor to take affirmative steps to cure any defects in the
grantor's title.2 It is prospective in character3 and runs with the
land conveyed.
c) SL begins to run on breach of present covenant at date of delivery, BUT
begins to run on a future covenant at time of eviction or when covenant is broken
in the future.
d) Issue: Is covenant agnst encumbrances breached when there is a visible
(open & notorious), but unrecorded encumbrance (e.g. easement)?
(1) Split of authority on the issue:
(a) Some courts view as a condition, not a title problem, so no
breach of warranty.
(b) Other jurisdictions look at 2 different types:
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(i) Public easement = not a breach
(ii) Private easement = breach of covenant agnst
encumbrances b/c it is expected that Seller has power to
remedy the encumbrance (unless agreed to by Buyer)
e) Damages for breach of Deed Warranties - Rules
(1) No injury = no damages
(2) Damages for breach of covenant of seisin or right to convey = return
of purchase price (the consideration)
(3) Breach of covenant agnst encumbrances
(a) if easily removable, then damages is the cost of removal
(b) if not easily removable, then damages = difference in value
btwn land with encumbrance and value of land without the
encumbrance
(c) In ALL cases however, damages limited to total price
received by warrantor
(4) No damages due when warranty is breached, but P hasn’t been
dispossessed
f) Other rules
(1) Claim for breach of covenant agnst encumbrances cannot be predicated on
the necessity to repair or alter the property to conform with land use regulations.
There is not title defect and parties should handle such problems inside a K.
(2) Issue- Does the covenant of seisin run with the land? Majority rule = No;
minority = yes
J. Estoppel by Deed
1. aka “after acquired title doctrine”
2. Example: If O conveys property she doesn't own to A by warranty deed, but O later
acquires title to that land, then title immediately passes to A.
K. The Deed – Delivery
1. Deed is only effective on delivery from grantor to grantee
2. Undelivered deed is void, passes no title
3. Deed requires intent + delivery (usually physical delivery, but some other act may
qualify)
L. The Mortgage
1. Basic Concepts of Mortgage Law

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a) The Instruments – Note & Mortgage
(1) Promissor note evidences the debt and is secured by the mortgage
(2) Mortgage is an interest in land given to lender to secure the loan (SF
rqmts, is recordable)
b) Evolution of the Basis Mortgage Concepts
(1) Equity of Redemption- process in equity that allows a defaulting
mortgagor to redeem land. After a certain time, mortgagor is foreclosed
from redeeming land.
(2) Strict foreclosure – judicial process by which mortgagor’s right of
redemption is terminated after certain period of time.
(3) If foreclosure by sale results in proceeds in excess of debt, surplus
goes to mortgagor. If debt exceeds proceeds, then deficiency judgment
for remainder
(4) Two types of foreclosure by sale:
(i) Judicial foreclosure
(ii) Power of sale
(5) Statutory Right of Redemption- after a foreclosure sale,
owner/mortgagor has additional time period to redeem prpty (varies by
statute, 3 to 18 months)
(6) Until valid foreclosure sale, equity of redemption right exists
(7) After valid foreclosure sale, statutory redemption right exists
c) Theories of Mortgage Law
(1) Title theory – mortgagee holds title until note satisfied
(2) Lien theory (Majority in use) – mortgagor holds title, mortgage has
lien
(3) Intermediate theory
d) Mortgage Variant vs. Substitutes
(1) Variants – alternative arrangements to finance land sale that follow
mortgage law (eg deed of trust)
(2) Substitutes – financing arrangement used to avoid pro-mortgagor
principles of mortgage law
(3) Deed of Trust- mortgage with Power of Sale
e) Foreclosure Priorities
(1) All mortgages are NOT equal
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(a) Senior mortgages (first mortgage)
(i) Preferred status for lender
(ii) Les risk, lower interest rate
(b) Junior (second, third, etc. mortgage)
f) Transfer of Mortgagor’s Interest
(1) Rules for foreclosure sale:
(a) Mortgagee must use rsnbl effort to obtain fair price for
subject prpty @ foreclosure sale
(b) Mortgage has duty of good faith and due diligence to obtain
fair price
(i) Bad faith = intentional disregard of a duty or
purpose to injure
(a) Damages for bad faith = FMV @ time of
sale – actual sale price
(ii) Due diligence = is satisfied if a rsnbl person in
lender’s place would have acted the same as Def
(c) Absent fraud or irregularity, inadequate price alone does not
demonstrate bad faith unless price is so low as to “shock the
conscience.”
(i) Equitable factors: substantial equity held by
mortgagors
(ii) Bank knew of recent appraisal
(iii) Bank knew of P’s attempts to cure
g) Discharge by Prepayment
M. Title Assurance
1. The Recording System – Intro
a) Records are public, but system is largely private
b) Recording deed does NOT validate a weak title nor invalidate a good title
c) Deed must be acknowledged by notary or else not acceptable for recordation
d) Statutes dictate method and rules and practice for recording
e) Main purpose of recording acts is to protect purchasers and lien holders from
unrecorded interests
f) Subsequent Bona fide purchaser is protected agnst prior unrecorded interests
g) 4 steps to a Title Search
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(1) search Grantee Index – to build a “chain of title”
(2) Search down the Grantor Index – to find encumbrance
(3) Read all relevant documents
(4) Perform collateral search in other record bases for other docs that
affect land titles(probate, bankruptcy)
h) Some basic rules
(1) Default Rule (if no recording act) = “first in time, first in right” as
long as constructive notice
(2) But BFP prevails if no constructive notice by prior interested party
(3) Actual notice will always defeat a BFP
(4) Misindexing does NOT prevent the deed from imparting constructive
notice=Majority rule
2. Types of Recording Acts
a) Race statues
(1) First to record prevails
(2) Notice is irrelevant
b) Notice statutes (about ½ of states)
(1) Whoever records first wins, unless first recorder had notice of prior
grantee
(2) BUT, one problem – subsequent purchaser, even if he does NOT
record, prevails over prior unrecorded interest
(3) The notice provision helps avoid fraud on the prior grantee
c) Race-notice statutes (about ½ of states)
(1) Subsequent purchaser prevails ONLY if
(a) No notice of prior instrument
(b) He records before the prior instrument is recorded
3. Chain of Title Problems
a) Chain of title = Series of records linked by to a piece of property and passed
btwn subsequent parties
b) The effect of misindexing
(1) Majority – indexing the deed is NOT essential to recordation, so
misindexing is not fatal and still imparts constructive notice
(2) Minority – index is essential part & there’s no constructive notice
until properly recorded
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c) Land Descriptions – 3 different ways to describe land
(1) Metes and bounds – series of directions and distances that trace
boundary of prpty
(2) Description by Gov’t Survey (most common) – essentially formed all
land into rectangular tracts
(3) Subdivision plat method – developer subdivides prpty into lots
d) Chain of Title – two standards
(1) Standard title search – minimum search rqd by the jurisdiction
(2) Extended title search – when the state requires a searcher to look at
enlarged time periods, to find more documents
e) Wild deed – a deed that is recorded, but detached from chain of title (happens
when one fails to record a deed, then sells to a buyer who then records, thus this
recording is a wild deed b/c is springs up and falls outside the chain of title.
f) Extended title search problems
(1) Wild deed and late recorded deed problems
(a) (Hughes) Deed becomes operative without new execution by
grantee, with either express or implied authority of grantor, inserts
his name in the blank space left for the name of the grantee
(2) Duty to search collateral title chains
(3) Early recorded deed problems
g) 4 problems that fall outside of normal rule
(1) wild deeds – not expected to find it
(2) early recorded deed – old cases = yes, new cases = no
(3) late recorded deed – not expected to find it
(4) collateral deed search – often yes, there is obligation to search these
deeds
4. Persons Protected
a) Who’s protected under recording act- subsequent purchasers
b) Who’s not protected – donees are not protected
c) BFP example (Anderson)
(1) The new buyer purchased property, but was not aware of plaintiff’s
K with seller as to the right of first refusal
(2) Majority rule – BFP is protected to extend of payments made prior to
notice, but no further
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(a) 3 possible remedies- award land to holder of interest &
award buyer the payments made, award buyer fractional interest
in the land proportional to the amount paid prior to notice, allow
buyer to complete the purchase, but pay remaining installments
to holder of outstanding interest
d) Indexing – majority rule is that indexing is NOT essential for deed to be
considered as recorded
5. Notice
a) 3 kinds of notice
(1) actual – when one is personally aware of a conflicting interest in real
prpty
(2) record –notice based on properly recorded instruments
(3) inquiry – based on facts that would cause a rsnbl person to make
inquiry into the possible existence of an interest in real prpty
(a) Important Rule – can get inquiry notice of an unrecorded
instrument if that unrecorded instrument is expressly mentioned
by a reference in a recorded one
(b) Inquiry notice from possession – if another party is in
possession, then you are on inquiry notice
b) Rule- Actual possession is constructive notice to all the world that the
occupant has rights in the land
c) Rule- Possession of land by a stranger is inquiry notice to a subsequent
claimant
6. Marketable Title Acts
a) Why MRTA? To remedy ancient title flaws, MRTA fixes a root title. It’s goal
is to simplify and maybe shorten A TITLE SEARCH
(1) Forged Deed- land equivalent of theft of land, is void and no BFP can
receive good title because a thief can’t pass good title.
(2) Fraud in the inducement- representation that something is genuine but
is not, so grantee then has a voidable title, BFP pays value and gets good
title
(a) Shelter Principle- BFP can pass a good marketable title to
someone with Notice of the fraud
(3) Fraud in the Execution- signeing of deed not in free will transfers a
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void title and is the same as theft.
b) MRTAs fix root title to some period of time (e.g., 30 years or 40 years) go
back 30 years and then back a little farther to the first available deed and that is
the root whether or not it is a nullity.
(1) Future interests that existed before root title are extinguished
(a) UNLESS these interests are recorded in chain of title after
the fixed date of the root title
(2) Person who has easement and in order to prevent from slipping past
the root must rerecord.
(3) Anything listed in root deed is good with the land
(4) MARTA shapes RECORD NOTICE
(5) MARTA does NOT affect adverse possession
c) Curative acts set a statutory period that a title or deed defect (1-2 years) if it
goes beyond then there is no problem with the deed or title
d) Statutes that Terminate Ancient Interests in Land
(1) Bar certain types of very old- but apparently valid- claims to land for
example (POR, ROE)
7. Title Insurance
a) 2 types- homeowner’s policy protects owners up to value of property and
lender’s policy protects bank up to amount of mortgage
b) only covers record defects (whereas warranty deed covers record and off-
record defects)
c) Risks NOT covered by title insurance (don’t make title unmarketable)
(1) Losses caused by gov’t ordinances
(2) Eminent domain losses
(3) Title defects or encumbrances that were agreed to by the insured
(4) Title defects known by insured but not disclosed in insurance
company
(5) Known risks that insurance companies exclude from coverage in
policy
(6) usually does NOT insure the quantity of the land
(7) economic value of land, marketability
(8) physical damage or condition of prpty, or other encumbrance
II. Land Use Controls (nuisance, servitudes, zoning, eminent domain)
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A. Judicial Land Use Controls – Nuisance
1. Nuisance = substantial, nontrespassory invasion of another’s interest in private use
and enjoyment of land
2. 2 Types of nuisance recognized: 1) intentional, 2) unintentional (also, public vs.
private)
(1) intentional
(a) with purpose of causing or with knowledge that the result is
near certain
(b) subject to liability of intentional invasion when conduct is
unreasonable under the circumstances
(c) how do we know what is unreasonable? 1) balance harm
agnst benefits; 2) threshold test- Does the level of interference
cross some threshold that marks the point of liability
(2) unintentional
(a) when conduct is negligent, reckless, or ultrahazardous
3. Difference btwn nuisance & trespass
a) Nuisance = interference must be substantial, not so for trespass
b) Trespass is a physical invasion; nuisance is a nonphysical interference
(1) Trespass as an intentional invasion of land
(2) Trespass as an Unintentional invasion of land
(a) Recklessly or negligently, or as result of abnormally
dangerous activity, enters land in possession of another or causes
3rd person to enter land and causes harm to land.
(3) Liable for trespass, with or without harm if:
(a) Enters land, remains on land, or fails to remove from the
land a thing which he is under duty to remove
4. public vs. private nuisance
a) public nuisance
(1) an unrsnbl interference with a right common to the general public
(2) conduct that significantly interferes with public health, safety, peace,
comfort, or convenience
(3) conduct proscribed by statute or ordinance
(4) must be of a continuing nature
b) private nuisance
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(1) private nuisance is a non-trespassory invasion of another’s interest in the
private use and enjoyment of land.
5. Remedies
a) Injunction
b) Damages
(1) Note – to recover damages for public nuisance, must show special
injury; to get injunction for public nuisance, must have authority as a
public official or have standing to sue as a rep of the general public
(2) Temporary vs. Permanent damages
(a) Permanent damages
(b) Temporary damages
B. Private Land Use Controls – Servitudes – Easements
1. General
a) Dominant estate and Servient estate
(1) Dominant- the estate that benefits (not always one)
(2) Servient- the lot that is burdened (there’s always one)
b) Affirmative or Negative
(1) Affirmative- involves right to use servient prpty in some manner
(2) Negative- stipulate some restriction on use of servient prpty for
benefit of dominant prpty. Allows easement holder to forbid landowner
from doing something they normally would be able to do. These
easements have a very serious impact upon use of burdened land
therefore these were limited in England for a handful of circumstances
(light, view, airflow, support).
c) Appurtenant or In Gross
(1) Appurtenant – benefit it to the land (runs with the land). Lot that
benefits from the easement is the Dominant Estate and the lot that is
burdened by the easement is the Servient Estate
(2) In Gross – benefit to a single person (not his land) & does not
involve a dominant estate (so, does not run with land)
(a) CL says in gross easement is transferable for commercial
prpty (such as railroads)
(b) example involves right of passage where sale is to person and
extinguishes upon their death or where the rights are exclusively
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not transferable
2. Creation
a) Express 90% of easements
(1) SF must be met- written memo, signed by grantor
(2) Areas of ambiguity
(a) FSA or easement conveyed?
(b) Is easement appurtenant or in gross? Must look to:
(i) Language
(ii) Purpose/circumstance of grant
(iii) Constructional preference is for appurtenant as
default
b) By estoppel (license that crystallizes into property right of easement)
(1) Elements
(a) Representation & entry on land
(b) Reliance (substantial) and reasonable
(c) Substantial investment/improvement
(d) Attempted revocation
c) Implied from prior use (power lines)
(1) Elements
(a) Quasi-easement under CL owner
(b) Severance
(i) Conveyance of Q-D tenement- implied grant
(ii) Conveyance of Q-S tenement-implied reservation
(c) Existing Apparent
(d) Continuous Use
(e) Necessary that Use Continues after severance
(2) Majority rule for ‘implied reserved easements’- permitted upon strict
necessity
(a) Other rules on reserved easements by Grantor
(i) Restatement – permitted reservation is a factor to
consider in ascertaining party intent
(ii) English – no implied reserved easements
(iii) US minority – same as for implied grants of
easement
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(3) Can be opted out of if strictly written into deed.
d) Implied from necessity (sole purpose of accessing landlocked land)
(1) Elements
(a) Unity of ownership of D & S estates
(b) Severance rendering one parcel landlocked
(c) Necessity, not merely convenience, at the time of severance
(i) How much necessity? (must be at time severance
occurred)
(a) Majority-strict necessity (if access, even
costly, must use)
(b) Progressive- “rsnbl necessity” – met if esmt
is beneficial of normal use of land (e.g. alt way
is costly or difficult)
(c) Termination – when no longer a necessity
(d) Continued necessity
(2) Justification for finding implied easement
(a) Public policy – access to land
(b) Intent of parties
e) By prescription (only easements obtained unilaterally by longstanding use
without the consent of the owner of the servient property)
(1) Elements
(a) Open and notorious
(b) Hostile and adverse to owner’s right
(c) Acquiescence by owner (NOT permissive though)
(d) Continuous & uninterrupted for statutory period
(e) Under claim of right
(2) Permission – if permission, then NO prescription-- burden of proving
permission is on the true owner
(3) Presumptions
(a) Use of presumptions
(i) Reject any use of presumptions
(ii) Majority – unexplained use presumed adverse
(iii) Minority – unexplained use presumed permissive
(b) Two special presumptions
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(i) Unenclosed lands – light use presumed permissive
(ii) Initial use pursuant to license – presumed permissive
(4) Limits to prescription
(a) No negative easement by prescription
(5) Divisibility of Easement in Gross
(a) Doctrine of Mountjoy’s case – divisible, but must be used as
“one stock”
f) Implied restrictive reciprocal negative easement
(1) Need common grantor & notice
(2) A majority of courts imply negative restrictions from a general
plan(Sanborn)
3. Assignability & Scope
a) Appurtenant – auto-assignability
b) Easements in Gross
(1) Majority – assignable if parties intend
(2) Restatement – all assignable
c) Issue- Can one reserve an interest in prpty in a stranger?
(1) Rule- Old rule said NO, but courts now give effect to intent of
grantor
d) Easements – Scope
(1) Basic Rule – prpty esmt in appurtenant can’t be enlarged to serve
non-dominant land (Voss)
(2) Relocation of easement
(a) Old Rule = No
(b) New rule = nuanced rule, subject to limitations
(3) Enlargement of prescriptive easements
(a) PE not frozen into original use, some enlargement permitted
but to a lesser degree
(b) New use must be consistent with:
(i) General conduct that created the easement
(ii) PE for pedestrian right of way not upgradeable to
motor right of way
4. Termination – 15 ways to terminate
(1) At end of stated term (eg 5 years)
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(2) When a condition is breached (easement extinguishes upon breach)
(3) When purpose of esmt is accomplished
(4) When purpose of esmt becomes impossible (access invoving the use
of a bridge and the bridge burns down)
(5) release executed by holder (owner conveys back to serviant owner)
Note must be a written document because it is an interest in land.
(6) excessive use or misuse by holder (court of equity could cancel)
(7) abandoned by holder
(8) prescription – adverse use (interference) by servient owner
(9) conveyance of servient land to BFP (no notice to BFP- no recording
of easement, actual, constructive, or inquiry notice) easement
extinguished
(10) merger of dominant and servient parcels under common ownership
(not revived upon severance)
(11) estoppel (if creation by estoppel is possible then losing land by
estoppel is possible as well)
(12) mortgage foreclosure on servient land (foreclosure wipes out junior
esmt) (new purchaser gets land as it was at the time of the mortgage)
(13) market record title acts (MRTA, wipes out esmt if the esmt is older
than the root title (unless the deed is mentioned in a later recorded deed
or esmt is visible much be very specific as to where easement can be
found in the land record)
(14) destruction of the servient land
(15) eminent domain (typically with compensation) ( Preseault v. US
case) (5th amendment- nor shall private property be taken for public use
without just compensation)
5. A Coda on Negative & Other Easements
a) Evolving use of servient and/or dominant estate
(1) Change in manner, frequency intensity of use of servient estate is ok
for rsnbl enjoyment of servitude or to accommodate normal development
b) Subdivision of dominant land
(1) Esmt is appurtenant to each lot, but S estate can’t be burdened to
greater degree than contemplated at time esmt was created
(a) 4 lots = rsnbl growth
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(b) 40 lots = unrsnbl burden
(2) relocation of esmt
(a) old rule = Not allowed
(b) new rule = nuanced rule, subject to limitations
(3) enlargement of prescriptive easements
(a) PE not frozen into original use, some enlargement permitted
(b) New use is consistent with:
(i) General conduct that created the esmt
(ii) PE for pedestrian right of way can’t be used for
motor use later
C. Private Land Use Controls – Servitudes – Covenants Running With the Land
1. “Real Covenants” – Covenants Enforceable at Law
a) real covenant – a promise with respect to use of land that automatically binds
successor landowners, that if breached, gives rise to an action for damages at law
GENERALLY make land more profitable because has power over other land in
some fashion.
b) General Elements for creation & to bind original parties & successors:
(1) Formalities
(a) Statute of frauds – in writing, description, signed by Grantor
(2) Intent to bind successors
(a) Language – “heirs and assigns” bound
(b) If language unclear, look to purpose & circumstances of
covenant
(3) Privity of estate
(a) Horizontal privity (K btwn original parties)
(b) Vertical privity (K btwn successive parties)
(c) Focus – must determine whether burden, benefit, or both
must run
(d) 2 Qs to ask
(i) Do you need horizontal privity?
(a) For the burden to run, know these rules:
(i) Majority – burden will run with the
land if the covenant is wrapped up in the
deed btwn grantor and grantee
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(ii) Minority – no horizontal privity rqd
for privity to run
(iii) English standard – must b LL-T (if
not met, then there’s no horizontal
privity)
(iv) 2 states-Massachusetts and NV –
promisor and promisee must have a
mutual simultaneous interest in the prpty
(b) for benefit to run:
(i) don’t need horizontal privity
(ii) Do you need vertical privity?
(a) For burden to run
(i) “same estate” standard – same estate
burdened must be conveyed; successor
no bound if different estate passed to
him; if successor didn’t buy from
promisor, then adverse possessor takes
prpty is free from the covenant
(b) For benefit to run
(i) Relaxed state standard
(4) Touch & Concern
(a) Clark test – a covenant that runs with the land must affect the
legal relations – the advantages and the burdens – of the parties
to the covenant.
(b) Bigelow test – focus is on FMV of PR’s & PE’s land -> if
covenant lessens value of PR’s interest in the land, then the
burden is deemed to T&C the land; if the covenant increases
value of PR’s interest int the land, then the benefit is deemed to
T&C the land
(i) Q to ask is - Does the covenant impose on the one
hand a burden upon an interest in land, which on the
other hand increases the value of a different interest in
the same or a related land?
(c) Special rule for benefits in gross
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(i) CL didn’t like idea of burdening land for benefit in
gross
c) Two types of real covenants
(1) Affirmative covenant – obligate landowner to perform some
affirmative act concerning his land (requires to do something)
(2) Negative covenant – prohibit landowner from performing some act
concerning his land (requires not to do something)
d) Two ends to every covenant (the law separately analyzes the legal sufficiency
of the burden and the benefit)
(1) Promisor – promises something that burdens his land
(2) Promisee – receives a promise of something that benefits his land
e) Four litigation scenarios
(1) Suit btwn original parties; can sue under K law; don’t need burden or
benefit to run
(2) Suit btwn original promisee & successor promisor- burden must run
(3) Suit btwn original promisor & successor promisee – benefit must run
(4) Suit btwn successor promisor & successor promisee – burden &
benefit must run
2. “Equitable Servitudes” – Covenants Enforceable in Equity
a) Elements:
(1) formalities (implied)
(2) original intent to bind successors
(3) Privity of estate
A. Horizontal privity (proper legal relationship)- to other promise
holder
B. Vertical Privity- to the successor
(4) touch and concern the land

3. Covenants – Creation
a) Created by original parties – formalities, intent to bind successors, T & C,
privity Must be in writing, signed by grantor and accepted by the grantee to
comply with the SoF
b) Intent that benefit and/or burden of the covenant run to successors of the
original parties
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A. language “heirs and assigns bound”
B. “covenant shall run with the land”
C. If language is unclear, look to the purpose and circumstances of
the covenant.
c) Privity- Every covenant has a burden and a benefit
A. Is horizontal privity required?
1. Majority- must be grantor-grantee relationship.
B. Is vertical privity required?
4. Covenants – Validity & Enforcement
a) Equity provides 3 rqmts in order for covenant to be enforceable
(1) Intent that benefit and/or burden of the covenant run to successors of
the original parties
A. language “heirs and assigns bound”
B. “covenant shall run with the land”
C. If language is unclear, look to the purpose and circumstances of
the covenant.
(2) Notice on the part of purchasers of original promisor
(3) Covenant must touch and concern the land
b) Servitudes are invalid if illegal, unconst, or violate pub policy – examples
(1) Servitude that’s arbitrary, spiteful, or capricious
(2) unrsnbly burdens a fundamental Const right
(3) imposes unrsnbl restraint on alienation
(4) imposes unrsnbl restraint on trade or competition
(5) unconscionable
5. Covenants – Scope
a) Rules of construction
(1) If language is ambiguous, court will construe in favor of free
enjoyment of prpty & agnst restrictions
(2) Court won’t imply restrictions on the use and enjoyment of the land
(3) Court must interpret a covenant rsnbly, but strictly, so as not to create
unrsnbl construction
b) Policy notes
(1) Public policy favors recognizing small group homes as families
(2) Home-based businesses? Usually found to be residential usage if no
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burden/impact on neighbors
(3) Racially restrictive covenants are never enforceable
6. Covenants – Termination
(1) Defective formation (no horizontal or vertical privity, no T & C, no
intent to bind successors, etc.)
(2) Servitude that is illegal, unconst, or violates public policy
(3) Covenant is set to expire after a # of years or upon an event
(4) When release granted by person benefited by the covenant (need S/F
of course)
(5) Loss by Eminent Domain (compensation by the government)
(6) Merger – like with esmts, if benefited and burdened prpties merge,
then cvnt destroyed
(7) Abandonment (occurs when conduct of the party entitled to the
benefit demonstrates an intent to relinquish the rights)
(8) Condemn (Eminent Domain)
(9) Estoppel
(10) Prescription
(11)Change n neighborhood cndtns; the change must completely thwart
the purpose & eliminate all the benefits of the covenant in order to
terminate it
(a) Example – In Western Land v. Truskolaski, developer denied
a nullification of restrictive covenant with neighboring prpties so
he could build a shopping center; grounds for denial was that the
purpose of the covenant was not thwarted and the changed
conditions of the neighborhood were not such that any benefit
from the covenant was dispelled
(b) Example 2 – In Rick v. West, court enforced covenant where
P sued to have the covenant extinguished so an industrialist
could build on the prpty; court enforced the covenant b/c there
was still benefit to the person seeking its enforcement; court said
it would enforce the covenant unless covenant holder’s actions in
standing on his covenant were “unconscionable or oppressive.”
7. Common Interest Communities & CCRs (covenants, conditions, & restrictions)
a) Generally CCRs are valid if reasonable. Burden is on challenger to show
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unreasonable.
b) Nahrstedt court said CCRs are void if unreasonable, giving 3 times when
unreasonable
(1) Arbitrary
(2) Burden outweighs benefit to community
(3) Violates public policy
D. Legislative Land Use Controls – Zoning
1. Intro
o Village of Euclid
• Zoning ordinance is valid as Const. exercise of state’s police power b/c
not arbitrary and is substantially relate to public health & welfare
• Loss of 75% of prpty value alone will not strike down a zoning
ordinance
o Nectow v. Cambridge
• Court set aside zoning ordinance as it applied to P’s piece of prpty b/c it
was arbitrary & irrational as to P’s prpty, having no substantial relation to
public health & welfare
o The Nonconforming Use
• Nonconforming use = Preexisting use that now violates the zoning
ordinance
• Amortization period = window of time given the occupant to fulfill and
terminate his investment (or to eliminate the nonconforming use)
• About ½ states allow amortization regulations
• Require rsnbl period of amortization (varies from 1 to 30 years)
• Factors to determine rsnblnss of amortization period:
o Amount invested
o Number of improvements
o Public detriment caused by the use
o Character of the surrounding neighborhood
o Amount of time needed to “amortize” the investment
• Nonconforming use DOES run with the land, so can be sold and new
owner can continue nonconforming use.
• Termination of nonconforming use occurs by:
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• Destruction, or
• Abandonment
o The Vested Rights Doctrine
• A proposed use might be protected if sufficient commitments have been
made
• e.g. plans drawn, permits obtained, site preparation, construction begun
-> in reliance on existing zoning rqmts that are subsequently changed in
a way that invalidates the proposed use
• Vested rights doctrine varies in practice from jurisdiction to jurisdiction,
but the critical factors relate to how much money has been invested in
good faith, and on what the money has been spent.
o Estoppel:
• Normally not assertable against the government, but possible in rare
situations.
• Requires detrimental reliance that was reasonable
• Must be substantial investment, perhaps mistaken approval, other good
reason for the reliance
2. Flexibility – Variance & Special Exceptions
a) Variances vs. Special Exceptions
(1) Variance = authority extended to a landowner to use his property in a
manner prohibited by the ordinance
(2) Special Exception = allows landowner to put his property to a use
which the ordinance expressly permits, but requiring certain conditions
be met before grant of the exception.
b) Variance
(1) Variance is a violation of a Master Plan
(2) To grant a variance, usually requires:
(a) Undue hardship would result to landowner/developer
without variance
(i) Self inflicted hardship does not count
(ii) Efforts to try to ameliorate the hardship are evidence
of hardship considered by the court (i.e., procure
neighboring land, efforts to sell the land for rsnbl price)

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(b) Variance, if granted, must not: (these are “negative criteria”)
(i) Cause substantial injury to public health, &
(ii) Would not impair the intent and purpose of the zone
plan
(3) Note – if public health/negative impact is so great as to preclude
grant of the variance, then eminent domain may be called for and
compensation must be paid
(4) Other notes on variances
(a) Hardship must relate to the use of the parcel of the land, not
personal hardship such as personal infirmity, etc.
(b) Area variances (e.g. setback rqmts) as opposed to a use
variance are more likely to be permissible, having relaxed
restrictions.
3. Flexibility – Zoning Amendments
a) Post Euclidean Means for Achieving Flexibility in Zoning
(1) conditional zoning – is an agrmt that you won’t use the prpty for
certain uses
(2) contract zoning – is an actual bilateral agrmt (whereas conditional is
unilateral) btwn owner & zoning authority
(3) Floating Zone- involves a reservation for a certain type of zoning to
spring up later, but that is indeterminate at the time of the master plan; a
few states have adopted these laws; some states say these are too vague
and don’t allow them
(4) Cluster zones – technical area restrictions relaxed (setback, sq ft,
etc.) so that developer can give the parcel/neighborhood some character
by arranging properties in some irregular way so as perhaps to arrange
for interesting landscaping features, etc.
(5) PUDs (planned unit development) – similar to cluster zones, but
constitutes a deliberate plan of mixed use (e.g. residential, cmmrcl,
possibly industrial)
(6) So, cluster zones involve area variations, while PUDs involve area
and use variations
4. Expanding Zoning – Aesthetic Regulation
a) Majority of jurisdictions – prohibit zoning ordinances based strictly on
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aesthetic considerations
(1) These regs DO usually pass Const. muster b/c they are not drafted
strictly on aesthetic considerations (often have economic, other purposes
cited)
b) For historic zoning and historic preservation legislation, court feel less
inhibited in admitting the legitimacy of the aesthetic objectives
E. Eminent Domain & Takings
1. Eminent Domain
a) 5th Amendment limits this – “…nor shall private prpty be taken for public
use, without just compensation.”
b) Two justification for the taking clause:
(1) to protect citizens from state’s ability to single out citizens by
depriving them of their prpty
(2) fairness – where the public benefits, it ought to be clearly shouldered
by the taxpayers at large, rather than on the private party
c) Key Concepts of Eminent Domain
(1) What is private property? Personal prpty, poss & non-poss interest
in land, intangible prpty, covenants, etc.
(2) What do we mean by taking?
(a) They occur in 2 contexts
(i) formal condemnation - formal proceeding whereby
the state takes title
(ii) inverse condemnation – involves a lawsuit by the
private owner alleging the gov’t has taken his prpty and
seeking compensation
(b) 2 means
(i) physical takings – permanent physical occupation
(ii) regulatory takings – gov’t has subjected the prpty
owner to a reg that substantially deprives the owner of
the value of his prpty; the line that is crossed is from a
valid exercise of police power to -> deprivation of all
value; is only const if the gov’t pays just compensation;
C/A involves P bringing an inverse condemnation suit
and if P wins, then the state has 2 choices, to pay or to
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abandon the reg
(3) What is public use?
(a) Old test was ‘physical use test’ – looked at who the end use
was; if it was the public, then that was public use and the taking
could go forward
(i) this changed when railroads came into being and
necessitated taking of prpty to go to a common carrier
(b) Berman Test – central element is that “if the gov’t has the
right to control land for police powers, it has right to take power
for eminent domain”
d) Important Cases
(1) Midkiff ( Hawaii case)
(a) State never handled the property, but immediately transferred
from Trust holders to lessees for reasonable payment
(b) Case established level of judicial review – rational basis test
(c) Thus, after Midkiff, no more “physical test” or physical
handling by state rqd for a taking
(2) Kelo v. City of New London
(a) Issue: Whether the city’s proposed disposition of non-
blighted prpties that just happen to be in the middle of a
“comprehensive plan” involving future development qualifies as
a “public use” within the meaning of the Takings Clause of the
5th Amendment.
(b) things to take from the case:
(i) Prpty does not have to be blighted to be taken
(ii) This decision also means that states legislatures can
determine what needs justify taking, despite the federal
standard; thus, the state can set stricter rules for eminent
domain
(iii) Midkiff is the floor – every state must have some sort
of restraint that prevents private-to-private transfers that
serve no public purpose
(iv) So, Supreme Court provides the floor under the
Constitution, but the states provide the ceiling
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2. Physical Occupations & Regulatory Takings
a) 2 Categorical Rules regarding phys & reg takings:
(1) Categorical Rule 1 - Any permanent physical occupation by the gov’t
or authorized by the gov’t is a taking (Loretto)
(2) Categorical Rule 2 - When gov’t exercises its police power to
suppress a nuisance it is NOT a taking
b) NOTE – Most judges/attorneys divide takings according to a 2-Part
Architecture:
(1) Physical takings
(2) Regulatory takings
c) Side-Note on regulation of nuisances:
(1) Gov’t has always been able to regulate nuisance w/out it being a
taking b/c the right to create a nuisance has never been considered one of
the rights in the bundle of rights. Prpty restrictions agnst creating
nuisances predates the Const.
d) Important Case:
(1) Loretto v. Teleprompter Manhattan CATV Corp
(a) Issue: whether a minor but permanent physical occupation
of an owner’s prpty authorized by the gov’t = a “taking” for
which just compensation is due under the 5th & 14th Amendments
of the Constitution
(b) Rule: Presence of a permanent physical occupation by gov’t
action is always a taking
(i) But if there is merely a temporary physical
occupation, then the Court does a Balancing Test under
Penn Central
3. Balancing Rules
a) Balancing factors to determine whether the gov’t action = a taking: 2 Factors:
(1) Legitimacy of the gov’t action
(a) Taking is more likely if gov’t physically invades the prpty
(b) Less likely a taking if gov’t merely interferes
(c) Q to ask is – “Does the reg advance a legit state interest?”
-- Balanced Against --
(2) Economic impact
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(a) Measured by looking at extent of interference with
investment-backed expectations
b) Other considerations:
(1) Diminution in value alone does not = a “taking”
(2) Does the reg interfere with the primary expectation concerning use
of the parcel?
4. Regulatory Takings
a) 2 Types
(1) where reg authorizes a permanent physical occupation (Loretto)
(2) where reg denies all economically beneficial use of land
(a) b/c this essentially = to a physical taking
(b) b/c such deprivation does not = balancing of benefits to
public and burden on landowners
5. A Categorical Rule (re: denial of all ecnmcly bnfcl use of land)
a) Categorical Rule 3 – Where the state deprives a landowner of ALL
economically beneficial use of his land, he must be compensated unless the state
can show that the use proscribed by the state reg/state action was merely
suppression of nuisance
(1) Sub-rules
(a) No presumption of validity
(b) Burden of proof falls on state to show the reg applies to
prpty only to suppress nuisance
6. Exactions
a) Exaction = quid pro quo where gov’t grants developer permits in exchange
for developer giving up some prpty right or provide some certain good in
exchange
b) First Rule – Essential Nexus
(1) In Nollan, the Court required some (any) nexus btwn the condition
placed on the grant and the development
c) Second Rule – Rough Proportionality
(1) In Dolan, the Court went further by requiring in addition to a nexus,
that “rough proportionality” (rsnbl rltnshp) be required btwn the exaction
imposed and the impact caused by the development.
d) Categorical Rule 4 - Exactions need a nexus btwn the public interest & the
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condition imposed, & in addition there must be rough proportionality btwn the
impact caused by the development and the exaction sought in exchange
e)
Summary of the 4 Categorical Rules:
1. Phys takings always rqr compensation
2. Nuisance control never rqrs compensation
3. denial of all econ benefit = comp rqd.
4. Exaction- need nexus btwn pub interest and the condition & must show rough proportionality

Covenants vs. Easements


Covenants Equitable servitudes
Formalities Formalities
Intent to bind successors Intent to bind successors
Privity – horizontal and vertical Privity – don’t need horizontal or vertical privity
Touch and concern Need T & C
Notice = a defense Notice = defense

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