DiLorenzo_Property_Fall_2010

I.

Acquiring Property Rights over Wild Animals

**Overall purpose is to encourage capture of wild animals *Wild animal is based on generally shared expectations of whether animal has owner

A) General requirements:
1. Intention- intend to appropriate animal for individual use **PP theres limited supply of animals and we want to give only those desiring 2. Possession- To deprive animal of its natural liberty and bring animal into individual control (net or cage is fine) **PP behind possession requirement is to a) prevent confusion/preserve peace and order and b) certainty of: 1) Identification of animal- that it is the same one he was pursuing 2) Intention to keep animal 3) Likelihood to keep vs. abandon animal once killed - Pursuance is not possession o In Pierson v. Post we saw this when court ruled for Pierson even though Post was in obvious and diligent pursuance o Court held it didnt matter b/c even though there was intention, there was no possession

B) Ratione Soli (ownership soil)

1. P owns land 2. D has Intention and possession (both requirements) of wild animal 3. D was trespassing/did not have authority **PP is to deter trespassing - When wild animal is captured from the soil/property of another without consent, since we dont want to reward anybody who trespasses, even though both requirements are met- property rights have not been acquired o In Mckee v. Gratz we saw this when court ruled for Gratz even though Mckee captured the mussels (wild animal) satisfying both intention and possession requirements o Court held that since mussels are a relatively non-moving animal it is safe to hold that they were securely positioned on the soil of the owner and therefore nobody should be able to capture them b/c that would allow trespassing

C) Loss of Rights
1. Lost when wild animal regains its natural liberty. This occurs when it: a) Escapes all artificial restraint; and b) Returns to its natural habitat c) UNLESS animal has animum revertendi (inclination to return) **PP behind this is the taming and training of wild animals in order to serve the more general PP of a stable food and clothing supply - This is very hard to prove and can only be shown through established habit

o In Mullet v. Bradley we saw that D acquired property rights over seal: he met intention and possession requirement; and seal was not captured over somebody elses soil (ratione soli) o Lastly, court held that P lost his rights when seal escaped all artificial restraint and was captured by D- where seal had no animum revertendi (he was gone for 2 weeks so obviously had no intention to return) o *However, back then the courts did not hold that wild animal had to return to its natural habitat; today P would win. III. Property Rights Over Natural Resources (Oil and Natural Gas) Property rights over wild animals can be extended to other things, including various natural resources. Extension depends on if the same policy goals apply Same starting point: no one owns them until theyve been captured Some states follow capture doctrine (Minority)-Eastern States. Some states follow ownership in place rule (Majority)- If you own soil, you own oil and natural gas beneath them: best way to encourage capture (policy goal)

II.

Finders Rights

**Overall purpose is to maximize likelihood of return to original owner *Statute of limitations for personal property is 3 years

A) Classify **Classified as one of the 3 as soon as owner parts with possession 1) Lost- To involuntarily part with possession 2) Mislaid- To voluntarily part with possession but inadvertently fail to retrieve it 3) Abandonment- To intentionally part with/relinquish an interest - Exclusive Inference Rule- special rule regarding abandoned property, requiring proof of abandonment be reasonably direct and it must exclude any other possibility - Once property is abandoned finder is granted full bundle of rights A. Finders Rights/Obligations Policy Goal-To maximize possible return to rightful owner Gains property rights but never becomes true owner If owner appears, you have to give back property, fruits and profits made (keeping them in trust for true owner) Property rights not exclusive Property rights not perpetual Dont have right to damage or alienate Obligations (if lost or mislaid): o 1-return property to true owner o 2-safeguard property Obligations if abandoned: o No obligation of safeguard/return o Possession on part of finder leads to full ownership/property rights B. Who has rights- Finder or Owner of place where property is found? PP- to maximize possible return to rightful owner o Depends on location where property is found and whether it was lost or mislaid: o Public or private-based on generally shared expectations as to whether you are entitled to retain the property when you find it in this location B-1) General Requirements 1. Possession - Actual v. Constructive 2. Intention - To intend to take custody and control of article B-2) in Owners Place Requirements 1. Intention - Intention is assumed because of the overarching PP of maximizing likelihood of return to original owner 2. Possession - Constructive possession, and owner of place becomes quasi-bailee as long as property is mislaid (private or public) or lost in a private place o Whether a place is private or public is determined by generally shared expectations

When lost property is found in public its finders=keepers b/c it is unlikely that owner will return to public place to retrieve it C) NY Legislature on Finders Rights **2 conflicting policy concerns: 1. Maximize likelihood of return to original owner 2. To satisfy the expectations that finder is eventually the owner - Under NY Statute, valuable property (anything worth more than $20) must be deposited with police when found - A/t under $20 must be reasonably attempted to be returned b4 kept There is no longer any such thing as mislaid property; only lost Therefore, constructive possession of quasi-bailee no longer exists and police become quasi-bailee for original owner 3 step process when valuable property is found: 1. Deposit lost property with police within 10 days 2. Duty of police to notify and hold it for owner for statute of limitations- ranging from 10 days to 3 years 3. If not claimed after statute of limitations has run out then title is vested in finder * Abandoned property also still exists, and finder has 6 months to file abandonment claim- but since property is deemed lost 99/100 times most people dont even bother making claim

Bundle of finders rights:

Possession Use Not exclusive Not perpetual No right to damage or alienate No rights to fruits and profits

III.

Adverse Possession

**General policy concern behind adverse possession is that we want to promote certainty in the law and if owners are going to abandon their property then someone who will take care of it deserves it.

A) Requirements: 1) Actual Possession **PP behind this requirement is that we want to make sure original owner can recognize that his property is being used adversely so he can reclaim it, and if its not being occupied properly then owner cant rightly replevy it - Majority rule: property used in the manner that original owner would - Was the possession actual? o Define actual: acts of ownership Define acts of ownership: act that owner would perform with this type of property 2) Adverse - Hostile intention- despite knowledge that it belongs to somebody else possessor continues to occupy it; OR - Claim of right- reasonable basis for belief that property is yours - Color of title is enough to satisfy this requirement - Payment of taxes satisfies this requirement o Was the possession adverse? Define adverse: hostile intention or claim of right Define hostile intention or claim of right: honest mistaken belief that its theirs - NY doesnt recognize hostile after 2008 statute 3) Open and Notorious - True owner has actual knowledge of your claim; OR - Possession is apparent upon reasonable inspection o Define open and notorious: owner capable of discovering it under reasonable inspection Reasonable Inspection- occupancy is apparent to naked eye (or surveyor) - Demand and refusal does not define open and notorious; it just provides tolling provision Exceptions - Discovery rule (minority rule)- COA will not accrue until the injured party discovered through due diligence (or should have) that adverse possessor is in control of personal property o Minority holds that SOL begins tolling upon discovery of possessor o NY Rule is that SOL begins tolling upon demand and refusal 4) Continuous Occupation **PP we want objective evidence that adverse possessor hasnt abandoned his claim Regularly- such possession that ordinarily marks the frequency that actual owner would occupy the land o Example: beach house- assuming its ordinarily a summer resort; adverse possessor would only have to occupy it regularly during each summer If possessor abandons property then SOL starts anew upon return

*Since it is impossible to prove all 5 elements from the get-go, law only requires adverse possessor to prove first 3 to court and day 1 of statute of limitations begins on that day

o However, intention is based on subjective intent of possessor Define: possession must have occurred regularly and without interruption o Define regularly: in the manner the owner would 3 reasons for regularly requirement: 1) To give owner notice when hed be expected to show up 2) Evidence that possessor actually claims title and not a lesser interest (easement, license) 3) To show that possessor didnt abandon his claim b) Without significant interruption- until original owner repossesses property significant interruption has not occurred o Without interruption- lack of original owner to repossess the propertyuntil taken back- no significant interruption Date of significant interruption, in the event of lawsuit filing is the day of interruption o PP is to protect true owners interest by enabling him to bring an action in ejectment (replevin for personal property) 5) Exclusive Occupancy - Adverse possessor excludes the owner and the rest of the public o Possessor does not share possession w/ owner or the public - PP is that if possession wasnt exclusive then true owner wouldnt be aware

Color of title Are you seeking easement, license, or full possession? When possessor enters without color of title- only gets what he uses When possessor enters with color of title- entitled to constructive possession o In this case, holder of color of title (good-faith belief of good title) gets all Tacking and tolling Tacking- possessor can transfer AP in privity- voluntary transfer of claim o This continues running of SOL Tolling- Infancy and minority (ends at 18); mental incapacity - Rule for mental incapacity: disability- if person is under legal disability under time of COA SOL is tolled- must be at the time - Once disability ends SOL begins (NY gives 3 years po - NY Rule - Only recognizes infancy and mental disability - Never have more than 10 years unless infancy, but have 3 yrs after disability

IV.

Acquisition by Gift

1. Inter Vivos **PP is to validate gift a. Intention

i. Present transfer 1. Donor can retain present possessory interest a. Title is transferred but possession isnt ii. Irrevocable transfer iii. Either oral or in writing iv. Look at donors words and actions in light of circumstances 1. There can be a present transfer w/donor retaining possession 2. There can be gift inter vivos when person is in apprehension of death a. However, law assumes gift causa mortis in this circumstance i. To override presumption, there must be clear evidence that gift causa mortis is not preferred b. Delivery **PP is concrete evidence of willingness to give and to protect donor that may be giving gift to hastily (by mere intention) 3 possibilities: i. Physical - actual transfer of gift to donor- best method ii. Constructive: If physical delivery is possible then Constructive delivery is NO GOOD 1. Delivery of means to obtain possession (keys, etc); AND 2. Donor relinquishes his right to possession (no spare keys!) iii. Symbolic/written instrument 1. Symbolic delivery alone is valueless- need written instrument a. Drawing picture of gift--------------------------NO GOOD b. Deed conveying interest-----------------------GOOD 2. (Letter) must: a. Identify and describe gift b. Identify intention to give it c. Be physically delivered 3. If gift is for intangible interest (account; stocks) then physical embodiment (bank book; stock certificate) is GOOD 4. If subsequent actions and statements are inconsistent then they are not considered 5. *In order to harmonize law of gifts with 3rd party requirements- we ignore 3rd party c. Acceptance i. Since we dont want to impose obligations on the donee, we require them to actually take the gift from the donor ii. However, when the gift is valuable, acceptance is presumed

1. Unless it is a conditional gift (as long as/if you), then acceptance has to be actual regardless of value iii. If there is evidence that acceptance did not occur then NO transfer 1. Ex: Son in denial of mothers death and hesitates to accept and ends up giving it back out of fear- NO GOOD 2. Causa Mortis - Intention o Present transfer Donor cannot retain present interest He has to give up full bundle of rights Revocable transfer Subject to conditions subsequent o Basically, gift is revocable if theres no death Either oral or in writing Look at donors words and actions in light of circumstances There can be a present transfer w/donor retaining possession There can be gift inter vivos when person is in apprehension of death o However, law assumes gift causa mortis in this circumstance To override presumption, there must be clear evidence that gift causa mortis is not preferred 1. Only recognized when donor is in 1) apprehension of 2) imminent death with 3) actual awareness a. Apprehension- would most people fear it in situation? b. Imminent death- belief by donor that death is in near future; no actual limit on time of death c. Actual awareness: i. Based on objective standard of reasonable circumstancescant be delusional, etc *Gift is automatically revoked if donor doesnt die, esp. from what he expected to die from *Death needs to be reasonably foreseen 3. Delivery to Agent of Donee a. Is it the agent of the donor or donee? i. Agent of the donee if the donor: a) Parts with all control over possession b) Reserves no right to recall (doesnt apply to Causa Mortis) c) Intends an unconditional final disposition of gift b. Intention determines agency

V.

Bona Fide Purchaser

1) Bona fide purchaser a. Individual that parts with value that cant be restored automatically, as a matter of law i. Purchased with valuable consideration ii. A donee is never a purchaser iii. Promissory note can be cancelled by court b. Good faith i. No actual knowledge of defect in title ii. No constructive knowledge of defect in title (search of government records would reveal the defect in title) iii. Inquiry notice 1. Information the purchaser actually knew a. Subjective standard 2. Would a reasonable person, knowing the same thing, suspect? a. Objective standard b. If yes, there is a duty to inquire c. A reasonable inquiry must be conducted 3. Law presumes everyone knows the FMV of purchase a. Shock the conscience standard 2) General Rule: a. If item is stolen, thief acquired no title, cant transfer rights b. UCC 2-403- purchaser acquires all title which his transferor had or had the power to transfer 3) Exceptions: a. Voidable title- Title procured by fraud i. True owner voluntarily transferred title, BUT ii. Owner has right to rescind because it was purchased fraudulently 1. Court can transfer back in equity iii. If subsequent transfer before rescind by bona fide purchasers, purchaser gets title PP- bona fide purchaser more innocent, some fault by owner PP- Uncertainty, in future, unknown fraud could cancel ownership b. Statutory Estoppel i. Must entrust goods ii. To a merchant (deals in goods of that kind) iii. Buyer in ordinary course (person who buys in good faith from a person in the business of selling goods of that kind) purchases it PP- to allow 3rd parties to safely rely on merchants

c. Equitable Estoppel

i. Harmonizing statute with common law-remains good law in every state that adopts UCC ii. Act on part of owner that will lead to an estoppel 1. Some representation that some other person is owner or has right to sell on behalf of the owner (indicia of title) iii. Reasonably expect 3rd parties would rely on their act iv. Third party actually did rely on it v. PP- owner is at fault and bona fide purchaser has good title

VI.

1. Doctrine of Creation

Property Rights Based on Labor

a. Laborer has property rights in what has been created, or adding something new to previously existing property PP- to encourage/reward labor

2. Doctrine of Accession

a. Occurs when there are 2 owners due to labor on existing creation b. Court usually rewards property to original owner c. However, property is awarded to laborer when: i. Laborer acts in good faith 1. Honest mistake as to true owner 2. Bad faith a. Wrongfully possesses property and then adds labor b. Given to owner regardless of added value c. PP- to deter wrongful behavior ii. Specification 1. If a new species has been created 2. Product cant be divided without damage to end product OR iii. Comparative Value 1. Even if it can be divided, sometimes unfair to return to

original owner, because the extra value added by labor is so extensive a. Render injustice of returning property at first blush

VII. Property Rights by Marriage

3 Changes from historical law: o 1-Applies to all property, real & personal o 2-Can transfer singly owned property on spouses consent o 3-No longer life estate, now, title to all property that belongs to decedent 2 Methods of Acquiring Property through marriage: o A. Intestate share

If no will upon death If no children, surviving spouse gets 100% If 1 or more children, spouse gets 50% o B. Elective (statutory share) Will exists upon death Can either follow will OR invoke elective share- prevents surviving spouse from being disinherited-spouse gets 1/3 o Can do anything with property before death (give away, sell, etc.) and spouse will have no property interest upon your death o NB-NY and other states have modified concept of estate to prevent undermining the purpose of statute Make testamentary substitutes applicable to elective share DIVORCE o Marital property- all property acquired by either spouse during marriage (in individual name) Based on labor, how much each spouse has added value to the marriage Marriage is agreement to let labor add value, must be shared Equitable distribution among spouses Based on length of marriage, number of children, economic circumstances of each spouse after marriage, etc. Very subjective o Marital property Most states agree academic degree is not marital property divisible in divorce, but do allow for reimbursement alimony NY exception- OBrien v. OBrien PP/statute-both parties laboring in good faith, if you contribute to a degree, youre entitled to equitable division Direct/indirect contributions- investments in the economic partnership Not giving part of license, but part of earnings produced NY court applies this to many degrees/licenses/practices Increase in value of separate property, during marriage, due to EFFORTS OF SPOUSE, is marital property Need direct or indirect proof of contribution Professional goodwill is divisible marital property in most states- if other spouse has contributed 3 types:

VIII. Concurrent Interests

1. Tenancy in Common
a. b. c. d. e. Arises from express grant No survivorship rights 2 or more owners for either real or personal property Tenancy is assumed to be this one unless otherwise stated Unless deed states otherwise, interests in property are equal among holders

f.

Each interest is descendible, divisible and freely alienable

2. Joint Tenancy
2 General requirements: a. Declaration of Right of survivorship i. Last one standing takes it all ii. Indicated by writing only 1. O to A and B as JT w/ r.o.s.---GOOD 2. O to A and B as JT---------------------GOOD 3. O to A and B jointly------------------NO GOOD a. This can be interpreted as T/C iii. Severance results with Tenancy in Common b/w 2 JT b. 4 Unities i. Time- interest of each JT must begin at same time; neither coowner can have a preexisting interest ii. Interest- 2 part requirement 1. Same estate 2. Same share (unless otherwise indicated) iii. Title- both JT must acquire their interest via same conveyance iv. Possession- both JT have equal right to possess entire property 1. Presumed unless original grant states otherwise 2. Created at moment of conveyance 3. Parties can later agree to dispossession w/o severing v. Either JT can sell and it destroys their right of survivorship 1. To F R and M as joint tenants w/ r.o.s. 2. Each owns 1/3 plus right to possess/enjoy the whole 3. F then sells to C a. Result is severance of JT as to Fs interest c. Either real or personal property

3. Tenancy by the Entirety

a. Declaration of Right of survivorship with Marital interest b. **PP is to protect surviving spouse i. NOT unilaterally destructible- only upon consent of both parties ii. Only recognized in real property (not personal) iii. Majority rule does not recognize T/E 1. Therefore, r.o.s. declaration automatically becomes JT iv. NY assumes it upon contraction by married couple 1. Therefore, Declaration is not necessary; only 5 unities are v. Creditor cant get involved if only 1 spouse agreed to contract c. 5 Unities i. Time ii. Interest iii. Title iv. Possession v. Marriage- Both parties must be married at time of conveyance 1. Anything less becomes Joint Tenancy

d. Upon divorce or annulment Tenancy in Common results 4. Severance a. Majority Rule- JT is not severed until it is formally destroyed i. 1 of 4 unities must be formally destroyed ii. Mortgage 1. Unilateral mortgage does not sever b/c title is still there 2. Mortgage and lien vanish upon death of JT who made it iii. Lease 1. Unilaterally available 2. Some courts say it destroys r.o.s. And some say it doesnt 3. Recent trend is towards it not severing- argue both b. NY Rule i. 3 ways to sever: 1. 3rd person conveyance 2. Selfconveyance a. Inefficient to run around just to make it formal 3. Executing any written instrument indicating intention to make TC ii. Mortgage 1. Since PP is to encourage r.o.s. mortgage doesnt destroy it 2. Serves as severance to extent necessary to protect creditor 3. However, upon death of owner lien carries over! iii. Lease 1. Unilaterally available 2. Some courts say it destroys r.o.s. And some say it doesnt 3. Recent trend is towards it not severing 4. Argue both ways: The existing law is not sufficient for me to draw a conclusion, but here are the 2 possibilities: c. Partition i. Any co-owner can seek partition exclusive of the other ii. Co-ownership is divided individually 2 kinds of partition

iii. In kind iv. In sale

1. Physically divides property among co-owners 2. **PP favors this b/c we want people to keep their land

1. Proceeds get divided among co-owners 2. Majority Rule: Court grants this only if divisibility of land is impractical a. Physical obstacles exist to practicality of division 3. NY Rule: 2 parts a. Divisibility of land is impractical b. Represent best interest of co-owners d. Joint Tenancy i. Either JT may sever it unilaterally by conveying share 1. This results b/c 4 unities are no longer present

a.

Time and title have been destroyed when conveyed

5. Bundle of rights for concurrent interests a. Possess i. Each coowner is entitled to enjoy whole ii. Can be modified by agreement of all owners 1. If all JT agree to limit possession for so and so-------------GOOD b. Alienate i. Either JT can alienate his share at his discretion 1. If one JT wants to lease share and other disagrees--------GOOD 2. Partial alienation is okay too; example: mortgage lien 3. Leasee has equal rights as a cotenant ii. However, neither JT can oust the other! 1. Consequence is share of FRV c. Waste i. Any action that causes injury to the property ii. Implied duty to avoid waste 2 kinds of waste 1. Active- permanent injury intentionally done a. Permanent is irreversible injury 2. Passive- results from the failure to make necessary repairs iii. Based on a change in the nature/character of the property 1. Does not depend on FMV of property 2. Lower doesnt necessarily mean waste occurred 3. Cant enhance value (ameliorative waste) a. It might be valueless to cotenant d. Accounting i. In terms of both proceeds (rent profits) and burdens (repairs) ii. Absent an agreement or an ouster (cotenant physically excludes other from use of property), one cotenant is never liable to pay half of value for personal use and occupancy 1. Example: if one cotenant uses warehouse to store supplies 2. Also, cotenant cant seek repayment for improvements e. Contribution i. Coowner enjoys right to contribution during life of cotenancy for any repairs she reasonably makes 1. Example: football is thrown through window and brakes it, she is entitled to fair share of improvements (depending on percentage of property owned) ii. Notification is necessary prior to repair

IX.

SOF: All real estate transactions MUST be in writing

Estates and Land

1. Freehold Estates a. Fee Simple

Results from holding of title

To A and his heirs i. FS absolute

1. Indefeasible interest 2. Full bundle of rights a. Divisible b. Descendible to heirs (w/o will) c. Alienable (transferable inter vivos) d. No future interest in anybody else (absolute owner)

ii. FS determinable (NY- fee on limitation)

1. Defeasible interest 2. Consequence is possibility of reverter (FSD POR) 3. Grantor must use clear limitational language a. To A so long as b. To A during

c. To A until 4. Title is automatically lost upon breach of condition **PP when words are ambiguous we interpret outcome less likely to lead to forfeiture (subject to) a. Blackacre to A to be used as housing only b. O to A and B, but only while married, if divorced reverts to O c. O to A and B so long as A and B are married. a. O to A and B so long as they are married, if they get divorced then to A 5. Alienable but conditions remain

iii. FS subject to conditions subsequent (NY- fee on condition)

1. Defeasible interest 2. Grantor reserves the right to retake 3. Upon breach of condition, title is not lost until grantor acts a. Court action seeking declaration of forfeiture b. This is assumed rather than automatic loss c. O to A on condition that its used for housing d. O to A provided that its used for school purposes 4. Accompanied by right of entry 5. Alienable but conditions remain

iv. FS subject to covenant 1. Only consequence is damages, not reversionary

b. Fee Tail
i. Every state has abolished the fee tail ii. NY still differentiates iii. To A and the heirs of his body 1. Linea4l blood descendents iv. YES future interest 1. By reversion to O 2. Remainder in 3rd party v. Fee tail followed by a future interest: O to C and the heirs of his body, then to X 1. In half the states wait and see attitude is taken. Wait for death of first taker (C) and if C has issues (children) at the time of death, then he gets FSA 2. Other half: Upon death of C there are no issues- holder of future estate (X) receives title vi. Expires when there are no issues (descendants) remaining vii. Fee tail is essentially successive life estate that reverts back to original grantor (or to his devisees/heirs) once lineage has expired

c. Life Estate

i. Reversionary interest in O once A dies ii. Like all other estate types, we look at grantors intent

iii. Estate measured in explicit lifetime terms 1. O to A for life iv. Life estate per autre vie 1. Measured by some elses life v. Alienable to the extent that transferees interest is for As life

Rights of Grantee Majority Rule has Remainder and Executory interests NY Rule refers to all interests as Remainder interests Remainder interest o Known as patient future interest- waits for present estate to end o Remainder never follows FSD To A for life then to B B is remainder and waits for end of life estate o Occurs when 3rd party will receive interest upon expiration Executory interest o Occurs when termination of grantee is not sure to occur, but interest will be vested in 3rd party upon certain condition (if B does this or that; either determinable or subject to conditions subsequent) Take effect by cutting another short By taking over forfeiture o Follows defeasible fee and cuts short anybody (but O) o O to A so long as he gives charity then to B Rights of Grantor Possibility of reverter o Not sure to occur, but if it does it returns to O o Resulting ONLY from FSD (POR) Right of entry o Fee simple subject to conditions subsequent

o Grantor reserves right to renter (or he can look away) Reversion o Interest that is sure to return to O o Resulting from inevitable termination Life estate Example: conveyance from O to A for life

2. Non Freehold Estates

a. Estate for Years i. Fixed period of time ii. Automatically terminates upon expiration 1. Hence, notice of termination is not required iii. Terms longer than 1 year must be in writing (SOF)
iv. For 3 years, beginning 10/1/08 v. Holdover becomes periodic tenancy

b. Periodic Tenancy (Estate from Year to Year)

i. No set ending date 1. Continues for successive intervals a. To T from month to month b. Annual rental ii. NY Rule: look at if T offered to pay rent, and if L accepted that offer it becomes periodic tenancy 1. This is how estate at will becomes periodic tenancy iii. Notice must be given to terminate periodic tenancy 1. At least equal to length of period itself a. Unless otherwise agreed in lease terms i. In month to month- give 1 month notice 2. The expiration date must be the end date of any one period 3. Exception: 6 month maximum notice of termination iv. NY rules regarding termination 1. Common law doctrine in NY was very different than Majority opinion 2. No prior notice was necessary to terminate periodic tenancy

a. Virtually the same rules as estate at will 3. NY legislature didnt like this and so elected to change it up: 4. First they established rules for NYC tenants- 232(b) a. Can be terminated with notice given (by L or T) at least 1 month before expiration of the term b. Notice need not be in writing, but preferable 5. Then, they establish rules for the rest of NY state- 232(a) a. L is required to give at least 30-day prior notice of termination to T in writing (only L?)

c. Estate at Will
i. Open-ended 1. O to A at will ii. Either party may terminate an any time iii. State statutes can modify iv. NY Real Property Law- 228: in order to terminate estate at will, L must give T 30 day prior notice in writing 1. Obligation is only imposed on the L v. Estate at will ends with death of either party or sale of property 1. However, most landlords are corporations d. NY General Obligations Law i. Exception: one year or less lease does not have to be in writing Although statute holds absence of writing unenforceable, courts recognize estate at will

3. Holdover Tenant
a. Tenant at sufferance is a trespasser i. Retaining possession of premises beyond agreed on term b. Short-lived i. Lasts until L evicts T; or ii. Holds T to new tenancy iii. However, law holds L to first election c. Recovery is FRV deemed by court d. Mutuality i. T offers $ and L accepts- mutual agreement to month-month tenancy e. Common law recognized option on Ls part i. L can only hold T to periodic tenancy, not to estate for years ii. Maximum period is 1 year when L is exercising this holdover right; However, you can never be held over for longer than original lease iii. L can stipulate rent for new term iv. **PP was to deter holdovers v. **PP was also that T was a wrongdoer by holding over and law wanted to punish these people; therefore, L was able to take advantage and stipulate terms and rent vi. By holding over, T is offering to renew lease, and therefore L is able to opt for renewing leasehold (not as persuasive)

f.

vii. *However, it is not FRV when L initially opts to evict T as opposed to holdover NY state legislature thought this gave too much power to L Provision of Real Property Law- 232(c) changes the common law rule in several respects: i. The power to elect is no longer in the hands of L, but is instead in the hands of T ii. The power to set the rent for the term of the new holdover tenancy is not in the hands of the landlord, effectively it is in the hands of the tenant, but is technically shared iii. T is not held to a max term of 1 year; max term is now 1 month iv. Unless T acts, parties are just holdover T and unwilling L v. As soon as L accepts rent it sets month to month basis vi. Upon actual eviction, T is subject to pay FRV for period of holdover vii. Its always month-month holdover unless parties agree otherwise; if T agrees to nothing then T can only be held as a holdover T and nothing else

X.

Landlord obligations to Tenant

Remedies for Tenant: 1. Damages a) Duty on L b) L Breached that duty c) Compensable Loss by T o What constitutes compensable? Within the contemplation of parties at time of signing Provable to a reasonable certainty T operates same business in same location for reasonable period of time 2. Rent abatement a) Duty on L b) L Breached that duty c) Dependant obligation on L *Available for breach of quiet enjoyment b/c it is dependent 3. Termination a) Duty on L b) L Breached that duty c) Substantial breach of a material promise

1. Possession
a. Every L has implied obligation to deliver possession
Legal vs. Actual possession:

b. American rule: legal possession i. Reason is that L is not at fault for holdover T ii. New T is able to protect itself; negotiate new contract with L;
bring action in ejectment for holdover T

iii. Burden is on T to eject holdover T iv. Nonetheless, T has to pay rent to L v. For trespass, action is damages and amount recoverable is FMV
during period in which they were in unauthorized possession you, which leads to American rule

vi. Property rule- caveat emptor holds that law is not here to protect vii. Remedy is against holdover T- collection of rent c. English rule: actual possession i. T expected actual and not legal possession upon signing lease ii. L is more able to know/respond to holdover and should deal w/it iii. Contract rule- protects expectation of parties, leads to English rule iv. T does not have to pay rent during holdover; T can terminate
after a few months if a) L was informed, and b) reasonable time elapsed to no avail. Reasonable time? If T realizes before commencement date that somebody has paramount title to property he may terminate However, if T realizes after commencement he has no remedy until eviction (NY rule) Statute was passed in 1962 Actual possession In the case of breach, T can terminate agreement o After reasonable time or after day 1? Immediate, unless parties have stated otherwise - Is termination only remedy statute provides? (Rent abatement or damages) o We look at legislative history because statute doesnt provide for this In absence of express promise to deliver possession theres no damages Other remedies can be considered under present law L has no implied obligation to deliver actual possession *NY is hybrid because only for termination can you look at statute and actual applies; but if you want rent abatement or damages you must look at present case law that follows American law- legal possession *Look at statute and case law for NY; if you want termination then it follows English law; but if you want damages or rent abatement then it follows American law **To resolve this, as NY attorney for T, add express statement in lease that upon failure to deliver actual possession T has right to rent abatement **To resolve this, as NY attorney for L, add express statement in lease agreement that upon failure to deliver actual possession, T has no right of termination -

2. Quiet enjoyment
a. Can be expressly waived (partially or totally) i. Wording doesnt need to be literal ii. Waiver requires an awareness of defect iii. Unawareness express waiver is unenforceable

b. Strict construction doctrine i. Limits possible waivers that might be enforceable against T, whenever possible (to protect T)1. Example: driveway not part of property

c. Types of evictions

i. Actual total eviction 1. Every state recognizes this 2. T must vacate fully because of totality ii. Actual partial eviction 1. Recognized by Majority and NY 2. T is deprived of some of the leased space a. L leases 40 acreage farm to T but then occupies barn

d. Breach

iii. Constructive total eviction 1. State X and NY 2. Use and enjoyment is being interfered with 3. Deprived of substantially all of the space for substantially all of the time due to failure of essential condition 4. T has access to premises, but conditions prohibit effective use 5. T must vacate premises for effective termination a. First must give notice and reasonable time to cure iv. Constructive partial eviction 1. Majority does not recognize this 2. NY does 3. Not all of the space/not all of the time 4. Vacate during time in question and only area in question 5. So T only has to leave during the days in which the conditions were grave 6. When there is a flood T has to vacate and hes in the clear i. Wrongful act on the part of L 1. L directly causes the disturbance a. Example: L locks T out of property 2. L fails to perform its obligation under lease term (gvmt oblig) 3. NY Rule: L is responsible when he has legal power to abate disturbance BUT fails to do so 4. Power to abate noise by others need be stated in ii. Grave disturbance (always a Q of fact to prove) 1. Renders the premises unsuitable for purposes of use 2. Actions of the L are equivalent to an eviction 3. Only in respect to space and time in question b/c more lenient on T iii. Permanent disturbance

agreement

3. Fitness

1. Does not have to be constant condition; merely recurring 2. Some courts hold that a/t more than one time/sporadic interference is permanent and amounts to recovery iv. T vacates within reasonable time 1. Evidence that grave conditions are tantamount to eviction 2. Courts are lenient on T with this requirement a. Example: T doesnt vacate for a while because he is looking for space = Reasonable e. Available Remedy i. Damages- for breach of covenant ii. Rent abatement 1. Can be total (total eviction) or partial (partial eviction) iii. Termination 1. Only available for total eviction

a. Promise i. Fitness is not implied promise, its expressed in agreement ii. Unfit conditions- space not usable for sale of clothing (T is a

restaurant owner) iii. Even though the premises is not usable for a month T still has to pay rent until it is! iv. Attorney should add L warrants that premises is fit for use as retail space for the sale of mens and womens apparel. 1. Fit isnt necessary; a/t conveying intended meaning in K b. Breach i. Courts look at parties likely intended meaning ii. Negligence on part of L 1. L fails to acts as reasonable L would in similar circumstances a. This follows for any express covenant between T and L c. Available Remedy i. Damages only 1. Whenever parties have included express promise that is breached, ONLY remedy is damages 2. Unless agreement says otherwise

4. Habitability a. Only applies to residential leases i. Quiet enjoyment applies to both residential and commercial leases 1. However, T must vacate entire space for entire period so this
COA is not always reasonably tenable ii. Court finally recognized implied warrant of habitability b. Promise i. Safe 1. Referred to as Restatement rule

2. Conditions of premises must not pose a threat to the life,

health or safety of the residents

states, this makes no substantial difference at all- same result regardless of states phrasing ii. Fit for human habitation (Javin standard) 1. 2 viewpoints for proving breach: 1. Only substantial violation of local municipal code (building/health/fire) 2. Prima-facie evidence (based on first evidence) but not the prime means to prove (allows greater protection) iii. Essential facilities c. Breach i. L is liable for habitability regardless of his degree of control ii. T must show that L was: 1. Notified 2. Reasonable time was given before COA was claimed iii. Which element each state includes differs iv. NY, among other states, drops Restatement v. Code violation is not exclusive determinant of habitability, just indicative d. Available Remedy i. Termination ii. Rent abatement 1. Most useful for T because law states that in such a condition for breach of warranty of habitability T can stop rent totally 2. This gives T the opportunity to cure, where L will feel forced to make conditions habitable asap or no rent iii. Damages

3. Residential premises is expected to have a sustained (?) 4. Even though there is difference in formulation between

XI.

1. Implied obligations a. Pay rent b. Vacate at the end of term c. Return property in same condition as it was at commencement date i. This is implied obligation ii. Establishes 2 part duty on T: 1. Duty to avoid active waste a. Permanent injury to the premises by intention b. Injury not measured by FML; even if the value of the property is enhanced c. Example: removing a fixture (furnace/custom window) i. Once movable chattel that has been affixed 2. Duty to avoid passive waste a. T fails to make repairs that lead to permanent injury of the real estate iii. In order to avoid waste problem, T can add provision enabling alterations and modifications to premises to suit needs of business/residence iv. Common law rule is that you cant change condition of the building 1. If proposed change reduces market value then it is prohibited 2. Repairs a. Ordinary repairs are T obligation b. Extraordinary repairs are L obligation c. Decided based on cost of repair against the remaining FMV of lease i. Example: if its minor in relation to the value of the leasehold estate then it is ordinary (T obligation) ii. If it is relatively expensive then it is extraordinary iii. 2 Exceptions: 1. Lease of only a portion of the building and entire building burns down

Tenant obligations to Landlord

a. This results in a failure of consideration because T never had an interest in the soil 2. Implied Warrant of habitability a. Where most T are incapable of repairs, only as it applies to residential T i. T bypasses the obligation of passive waste; active waste still holds T liable 3. NY Rule: 3rd exception: T has right to terminate if: a. Whenever there is a sudden event leading to injury or destruction b. The premises is rendered unusable c. The parties have not agreed otherwise d. In agreement, there are usually certain reparation terms i. T must keep the premises in good repair 1. When provision is in agreement, its interpreted to hold T liable for even extraordinary repairs ii. L must keep premises in good repair 1. Interpreted to hold L liable for even ordinary repairs e. Warranty of habitability 1. T doesnt have to make ordinary repairs in residential tenancy 3. Remedies a. Security deposit (most frequently invoked remedy) i. Created in agreement b/w parties and only holds that it must exist ii. If T defaults, after notice and opportunity to cure, L has right to cure default by taking security deposit in order to effectuate cure iii. T is required to replenish security deposit upon seizure of it 1. However, usually this does not occur which is why L like to get more than 1 month SD b. Forfeiture i. Under common law, L never had right to terminate lease, regardless of nature of default (even failure to pay rent) 1. As a result, L added a right to forfeiture in agreement a. If T should default, in payment of rent or performance of any other covenant, L may at its option terminate lease ii. 4 forfeiture clauses (common law protection): 1. Strictly construed 2. L must promptly enforce forfeiture provision, or else it is deemed to have been waived 3. Regardless of terms of lease, courts will only allow forfeiture if there is 1) substantial violation of 2) material promise 4. Only applies when breach is failure to pay rent a. L is not allowed to declare forfeiture until 1) demand for rent and 2) reasonable time to cure default 5. Applies to both residential and commercial leases

iii. Automatic forfeiture clause occurs automatically and without a court order iv. Automatic termination is not the default; only upon clear and expressed evidence of intention to do so 1. With or without process of law 2. At the end of 10 day period, lease is at an end as if that date were the expiration date stated in the lease. v. Upon forfeiture declaration, there are 2 ways to repossess: 1. 711(1) (Holdover proceedings) a. If T continues in possession after expiration of term b. Estate for years and holdover T c. T is month-month; L gives appropriate L gives one month notice but T holds over = 711(1) d. If its non-automatic forfeiture clause, 711(1) no good 2. 711(2): Non-payment proceedings a. T has defaulted in payment of rent b. Demand for rent has been made but to no avail c. Says that if there is default in payment of rent that has not been cured, you can evict T, even when there is NO forfeiture clause in the lease d. This is because prerequisite is simply default in rent c. Self-help i. Common law held L could do so as long as no death/serious harm ii. Trend towards changing this with easier judicial proceeding iii. Interpreting NY statute on self help (853) 1. NY didnt abolish self-help doctrine 2. Put the person out of real property in an unlawful manner a. Person has right to property. Lease is not at an end 3. Forcible manner a. Serious personal injury, or threat of serious personal injury iv. Minnesota departs fully from self-help holding that only legal resort is judicial proceedings v. Half the states hold no self-help and half hold yes self help (including NY), but theres a trend toward eliminating it fully 4. Leaving with unexpired term a. T vacates and defaults rent b. Common law: i. Offer of surrender by T and acceptance by L and lease terminates ii. L ignores offer and T still has to pay full rent 1. Duty to mitigate eliminates this option (Majority) 2. Forces option of reletting on T behalf or allowing termination iii. Relet- but lease is still on T behalf- L must sublet (assignment) 1. L must use reasonable diligence in attempting to sublet

2. If L relets for less than FRV and used due diligence then T owes L difference 3. However, if L gets more he does not owe T money a. PP is to deter breach of K- so if L gets more money from sublet then L keeps it 4. L is not required to change terms of lease under due diligence a. Whether it be monthly terms/type of lease (office) 5. NY Rule: NO duty to mitigate, even with residential Tenancies 6. No obligation to mitigate in lower courts (in Holy Property) c. **PP reason to distinguish commercial from residential tenancies- 5. Sublet a. Silent agreement i. T can transfer entire interest (assignment) or part of it (sublease) ii. CA holds that its freely alienable and L has no right to stop transfer iii. Exception to free alienability: when L has relied on special skill/identity of T- where reliance is implied from terms of lease 1. L owns mall and needs anchor T- they only want luxury T iv. PP is against restrictions on alienability so its construed strictly against L 1. In light of this PP, courts allow subleasing instead of assignment where its not allowed v. To protect himself, L now incorporates no subletting in agreement 1. This is example of strict construction doctrine b. Waivers i. Expected waiver 1. L is aware of transfer; and accepts rent from transferee 2. L cant then deny subleasing ii. Unexpected waiver 1. Once you waive (permit) first transfer L automatically waives all future transfers (assignment/sublets) 2. To solve this L attorney drafts in K that L reserves right to monitor all transfers c. Assignments v. Sublease i. Assignment 1. For entire remaining term, with no reversionary interest in T 2. T transfers entire interest- premise and space- for entire balance of term of lease (whole entire thing basically) 3. 3 assignment types: a. Peer assignment- only T speaks in assignment agreement- Ihereby assign all my right, title and interest to you

b. Assignment + Assumption- both parties speakassignor: Ihereby assign all of my rightsto you; and assignee: Ipromise to perform all obligations under your lease c. 3 party agreement- b/w all 3 parties- assignor: Itransfer all my rights assignee: Ipromise to perform all obligations under your lease L: I hereby release Chase from his obligations under the K (Rare) ii. Sublease 1. T reserves reversionary interest in same term a. Reversionary interest i. When it is set to go back to original T for at least some time ii. Not based on whether assignor will get it back upon default, because he always will d. Consent i. To solve issue of not being able to assign lease- T that wants to sublease needs to retain 1 square foot/assign the whole thing less 1 day. This solves assignment issue 1. However, L will add provision that restricts T from assigning or subletting w/o consent ii. Reasonableness standard 1. T should be able to sublet if subleasee is reasonable 2. Based on factors such as: financial capability, suitability for particular property (subjective), legality of use, need for changeup 3. NY Statute on reasonability (Residential only) a. Allows T to move forward when L acts unreasonably b. T has option to terminate lease in this event 4. (Majority rule/NY rule) on reasonability (Commercial) a. Silence in agreement = free to transfer b. L can arbitrarily deny consent in agreement c. PP behind reasonability rule: denying consent solely based on sensibilities of L is not reasonable i. This is because L desire for a better bargain has nothing to do with permissible purpose, which is not for economic purposes, rather for performance of leasehold obligations of particular property d. Assignment does not extinguish K b/w L and T (release does) i. The only time privity of K is when there is novation of leasehold iii. Unreasonableness standard 1. NY and majority rule: if lease provides, only need consent

2. However, there is some movement towards recognizing reasonableness standard 3. Unreasonableness factors: a. Objective vs. subjective (reasonable L standard- would reasonable L in circumstances deny consent?) b. Financial responsibility/Legality of proposed use/Overall nature of occupancy /suitability (office/factory/clinic) Suitability of T for particular space

XII. Rights and Obligations between Parties

1. L can sue based on: a. Privity of K i. There is K b/w parties 1. If L and T2 dont have K then he cant sue him ii. K contains express promise that is breached 1. Promise to pay rent 2. To make ordinary repairs iii. K has not been extinguished 1. Only when L expressly releases T 2. Assignment and sublease is not extinguish unless specified b. Privity of Estate i. Estate in land created by one of parties in lawsuit 1. Can be T2 (assignee) or L2 (future interest) ii. Other party to lawsuit holds present interest in same estate 1. Always applies to ASSIGNEE 2. Never applies to SUBLEASE a. For sublease, L can only sue T iii. Promise in question inheres (attaches) to the estate 1. Sustains the estate and enjoyment of it 2. Obligation to pay rent always inheres in the estate

XIII. Marketable Title

1. Contract Phase a. When Buyer is ready willing and able to buy on terms of Seller K is ready b. First there is listing of parcel (through broker); then K is signed by B according to S terms; lastly there is closing c. In K of sale there is implied promise that seller has marketable title i. However, beforehand B must make sure S has marketable title 1. Inspect property to ensure it is in good condition 2. Search back 60 years (more than that is too burdensome) d. Marketability of title has to be free from reasonable doubt i. As long as it may exist there can be reasonable doubt 1. If there is reasonable doubt, is it serious enough to terminate? 2. Standard is if a reasonable person in the circumstances would refuse to purchase based on possibility of lawsuit ii. However, breach occurs at closing 1. So before closing date, buyer cannot claim damages/etc 2. This leads to notice and opportunity to cure and quiet title a. Until closing date and reasonable time thereafter e. If title isnt marketable B can terminate K of sale before closing i. So serious that most people in circumstances would terminate 1. Seller would respond, it is not the case ii. You never get official answer until court order determining iii. This leads to Insurable vs. marketable title 1. Since it would take too long for court, parties rely on insurance company, who may be willing to insure title 2. Seller promises such title as any title insurance company authorized to operate in the state of (NY) is willing to insure subject to no encumbrances except those enumerated in K f. Merge occurs once K is closed i. No more right to terminate based on K agreement 1. So if B doesnt spot title defect and deed is quitclaimscrewed g. Assumed to be fee simple absolute

i. This is waivable 1. I have title Breach a. Not the owner at all i. You are owner but dont have type of estate promised 1. FS determinable instead of fee simple absolute 2. Stated the wrong amount of acreage a. Loss from adverse possession ii. Right that exists in 3rd party that will interfere with full use and enjoyment of parcel 1. Restricted covenant a. Owner perhaps cant paint parcel w/o permission from architecture 2. Mortgage lien is also encumbrance iii. Seller needs to modify K according to encumbrance iv. Private restriction is always encumbrance and renders title unmarketable v. In this event there is Notice and opportunity to cure before breach vi. As long its possible to cure, B has no right to terminate for reasonable time Not an encumbrance o Right that exists in 3rd party that serves benefit to property owner Public road with sewage easement Is easement visible? Does sewer line serve property in question? (Beneficial) Some sense of interference However, benefit of service always outweighs interference o This is net effect o Municipal restrictions are not encumbrances unless violated 2. Doctrine of Merger a. After closing no more K title promise, and COA can only arise from deed i. All promises in K are merged into the deed 1. Merge into deed, as soon as K is made b. Deed (necessary to validly transfer title b/c there is SOF requiring writing for any transfer of real property) i. General warranty (6 promises) 1-3 is present covenant 1. Seisen a. Seller is ceased of title to all of premises b. Fee simple absolute (implied) i. A/t less is breach

2. There are no encumbrances

2. Right to convey a. I have title, and right to convey it b. Usually hand in hand c. Occasionally, sale of real estate is restricted for a certain amount of time 3. Encumbrances a. Any rights that exist in 3rd party that interfere with use and enjoyment of premises i. Mortgage would be interference ii. Public land use controls would not be an encumbrance b/c it isnt at conveyance time Breach: this occurs immediately upon closing b/c that is when it exists (thats why first 3 are called present covenants) 4. Warranty a. Against any person ever claiming the premises i. You will not suffer a loss Breach: Only when holder of paramount title dispossesses you and collects payment from you. THEN breach occurs 5. Quiet enjoyment a. You will not be dispossessed due to a failure in title i. I suffered a loss because of the failure of title Breach: Warranty and quiet enjoyment are the same to courts; breach upon ouster; can be actual or constructive- payment to person holding paramount rights in order to avoid ouster Example: mortgage lien unknown at closing, when mortgagee asks for $- constructive ouster 6. Further assurance a. As reasonably required to clear defects in title Breach: occurs upon refusal to clear title ii. Special warranty (more common in NY) 1. Seller is making the same 6 promises w/one limitation: a. All encumbrances made by me or suffered by me i. Loss of footage by adverse possession ii. Could be from mortgage lien too

iii. Quitclaim 1. You get what I give you, and I dont promise anything more

than what you see 2. If there is a quitclaim deed then upon any problem later recognized you have nothing against original seller! 3. In foreclosure sales the deed is always a quitclaim 3. Covenants running with the land a. Seisen does not run with the land b. COA are not transferred or impliedly assigned c. Covenants are transferred d. Majority rule holds that until theres an ouster you cant sue e. NY Rule: COA is impliedly assigned

i. Since the reason for the rule has vanished, the rule should vanish ii. 6 year SOL upon ouster f. Future covenants run with the land with privity of estate i. Grantor conveyed title/possession to grantee who reconveyed it 1. Fraud conveyance where grantor had no title- no privityestate **PP is to protect current owner