Property Outline ?mostly as done as it’s gonna be


Table of Contents


Property basics. 3

Eminent domain. 3

Per se takings. 3

Public use or purpose. 3

Has a taking occurred?. 4

Regulatory takings. 5

The denominator problem.. 5

The Nollan nexus requirement 7

Just compensation. 12

Fair market value. 13

Other compensation. 13

Factors which are excluded. 13

Possession. 14

Externalities. 14

The law of capture. 16

Finders. 16

Bailments. 16

Constructive possession. 20

Adverse possession. 21

The elements of adverse possession. 22

Color of title. 23

Tacking. 25

Claim of right 25

Estates. 26

Terminology. 27

Fee simple absolute. 27

Creation of the fee simple absolute. 27

The defeasible fees simple. 28

Fee simple determinable. 28

Fee simple subject to a condition subsequent 28

Fee tail 30

The fee tail in Ohio. 31

Life estate. 31

Creation of the life estate. 32

Waste. 32

Adverse possession and estates. 32

The trust 33

Creation of the trust 34

Future interests. 35

Reversionary interests. 35

Reversions. 36

The future interests of the defeasible fees. 36

Remainders. 37

Contingent remainders. 37

Vested remainders. 37

Executory interests. 38

The Statute of Uses. 39

Rules furthering marketability. 40

The Destructibility of Contingent Remainders. 41

The Rule in Shelley’s Case. 42

Doctrine of Worthier Title. 42

The Rule Against Perpetuities. 43

The doctrine of severability. 45

Judicial reform.. 46

Statutory reform of the Rule Against Perpetuities. 47

The Uniform Statutory Rule Against Perpetuities. 47

State statutory reforms. 48

Concurrent ownership. 48

Tenancy in common. 48

Joint tenancy. 48

Secret severance. 50

Tenancy by the entirety. 52

The landlord-tenant relationship ?non-freehold estates. 53

Statutory tenancy. 55

The lease. 56

Assignment and subleases. 58

Servitudes. 61

License. 62

Irrevocable licenses. 62

Easement 62

Creation of easements. 63

Easement by necessity. 65

Easements by prescription. 66

Termination of Easements. 68

Real covenants and equitable servitudes. 68

The requirements for real covenants. 69

Creation of real covenants. 70

Implied covenants and the statute of frauds. 71

Implied reciprocal negative easements. 71

The doctrine of ancient lights. 72

Touch and concern. 74

Policy restrictions on servitudes. 75

Equitable servitudes versus real covenants. 76

Termination of servitudes. 77

Private nuisance. 78

Coming to the nuisance. 80

Water. 81

Property basics


Property is the right to exclude, control (or use and enjoy) and alienate (sell).


It’s only when there is another person or group of people involved that you need to develop a law of property because property law is about how we allocate resources between people.?The only context in which it makes sense is when I can use the force of the state to keep another person from messing with stuff that the state has allocated to me.?When you own something, the government will come to your aid to protect your ownership rights.?The scarcer the resource, the more law you’ll find.


Property is relative.?If I say that I own something, it implies that I have the right to exclude everybody.? However, that’s not how our system works.?I can own things relative to you.?In a lawsuit against you about who owns the computer, maybe I would win.?On the other hand, if I got into a dispute with some other person or the government, I might lose.?Title or ownership are relative.


Eminent domain


What does it mean to own property vis-?vis the government??We own property subject to the power of the sovereign to just take our property rights.?Some things can just be taken.?Some things can be taken but must be compensated.?The point is that whether the government pays just compensation or not, your title is subservient to the state.?Eminent domain runs up against a particular clause in the Fifth Amendment: ?i style='mso-bidi-font-style:normal'>nor shall private property be taken for public use, without just compensation?


Per se takings


There are two different kinds of analysis.?One analysis has to do with per se takings, which exist in three circumstances: (1) The garden-variety eminent domain case ?the government says that they want to acquire title to your land or an easement to your land.?The government brings suit for the purpose of establishing just compensation and its right to take the property.?(2) A permanent physical occupation, as in Loretto.? (3) Regulation depriving a property owner of all use of property ?for example, vacant land that must stay vacant.


Public use or purpose


The only way you can stop eminent domain is if what the government does is actually illegal, as in beyond their statutory authority.?Absent some statutory restriction on the eminent domain power, pretty much anything is going to satisfy the “public purpose?requirement.? It’s probably not worth the cost and expense of trying to litigate it.


Hawaii Housing Authority et al. v. Midkiff et al. ?When the use of eminent domain is “rationally related to a conceivable public purpose? it will not be found to be unconstitutional.?Public use means public purpose and public purpose means any plausible connection to a legitimate goal of public health and welfare that the government seeks to achieve.


Poletown Neighborhood Council v. City of Detroit ?In this case, we’re transferring property from a large group of people to a single individual.?The Supreme Court of Michigan says we don’t need a public use, but rather just a public purpose.?Was this a wise thing to do to acquire this property for $200 million and sell it to GM for $8 million??We don’t care.?We only care if this was rationally related to some public purpose.?Clearly we have that here.?The court is not going to look much behind at the wisdom of the rationale.?The court says that there is increased scrutiny when there’s a taking that results in a transfer from one private individual to another.?There may be some slight increased protection in Michigan that would not be available if we were deciding this case under the United States Constitution.


Has a taking occurred?


Braunstein suggests that asking whether there was a taking is a threshold question.?This is a much more complicated issue: whether something has been taken at all.? We’ll have a difficult time defining property, and thus we’ll have a hard time saying whether property has been taken.? If we say an action is a taking, it doesn’t mean the government can’t do it, it just means that the government must pay for it.?The measure of just compensation is not the value to the taker, but the change in value to the property in question.


Loretto v. Teleprompter Manhattan CATV Corp. et al. ?The permanent physical occupation of another’s property, authorized by the government, is a taking.?If it’s permanent, if it’s physical, and it occupies a portion of the complainant’s land, then it’s a taking.?The case was an example of a per se taking for which compensation was required.


Private individuals cannot trespass on your property.?However, what we’re talking about here is the government having the power to regulate.?Loretto brings the lawsuit claiming that this power has been abused.? Has the government just regulated what she can do with her land, or have they deprived her of her interest in the land?


If we accept what the Court says, then Mrs. Loretto certainly has lost a property right in this case.?Do we accept, however, that she has lost all these rights that the majority says she has?


The essence of property rules is that they can’t be taken from you from other individuals.?However, they can be taken from you by the sovereign.?The Fifth Amendment limits the sovereign’s power.?The sovereign can delegate that power to another entity like the cable company, phone company or power company.?If the cable company was not granted this power, there would be no question that a trespass had occurred.


It turns out this is more of a procedural thing than a substantive thing.?You can’t set a $1 standard for all cases.?You must take it on a case-by-case basis.?So Loretto actually loses, even though she appears to win: she’s going to end up with pretty much exactly what she would have had if she had never worked her way to the United States Supreme Court.


Why is it that we protect the owner and compensate them in trivial cases like this while we don’t compensate landowners for regulations that place a severe burden on them?


Regulatory takings


With regulatory takings, we will go through a complex process to determine whether compensation is due.?Lots of regulation is okay and no compensation is required.? But some regulation can go too far.? If the regulation has gone too far, has it gone far enough that compensation is required??Regulation can cross the line, but then if it crosses another line, you have to pay.


The State ex rel. Preschool Development, Ltd. v. City of Springboro ?Was the elimination of the curb cut a “taking??The Ohio Supreme Court seems to say that the government may take the right of access without compensation.?They also say that circuity of access created by government action is not compensable.?Some would say that this is an exercise of the state police power.?The owners still have access to their property; it’s just that it’s not as convenient as it was before.?Then we would argue that it’s not a take, but rather it’s regulation to promote public health, safety, and welfare.?That means it’s no longer a per se taking, but it might still be a taking and we would have to use a multi-factor analysis.?If a regulation goes too far, it can nevertheless be a taking.? Even if the Ohio Supreme Court is right, their analysis is clearly wrong.


Pennsylvania Coal Company v. Mahon ?Does the state police power stretch so far as to allow the destruction of “previously existing rights of property and contract??In general, “if regulation goes too far? it will be considered a taking.?Well, that’s swell, but when does it go too far?!


The denominator problem


We know what the law says.? The law says: “You can’t mine this coal.?span style='mso-spacerun:yes'>?But compared to what??Do we compare it to just that coal, or to all the coal??This denominator problem is a recurring problem.?How do we pick the denominator for measuring the extent of a loss?


It’s important to understand the difference between the Holmes and Brandeis opinions.?Brandeis thinks that the public purpose is more important than Holmes thought it was: this is a problem that exists throughout Pennsylvania.?Brandeis also thinks the coal company hasn’t lost much.


Both Holmes and Brandeis say you weigh the public benefit against the harm to the landowner.?But what’s the harm to the landowner??We know what’s regulated, and we know what the coal company can and can’t do.?But what fraction of their “total rights?is infringed??Do we make the “denominator?the entirety of the property that’s regulated??In that case, it’s a 100% deprivation.?Or, on the other hand, do we make the “denominator?the entirety of the property owned by the coal company??Is it relevant if they “chop up?their property rights?


Brandeis says: Look at all the coal they own.?They’ve lost 100% of the value of the coal under the house, but they own lots and lots of coal.?Therefore, Brandeis would argue, the burden on the coal company is not so great as Holmes wants to claim.


Penn Central Transportation Company v. City of New York ?Regulation authorized by statute that sufficiently frustrates the rational expectations of investors in land capital can amount to a “taking? even if it serves an important public purpose.?New York wants to protect historic buildings!?Penn Central owns Grand Central and they want to build an office building on top.?The Court goes through two stages of analysis.? First, the Court asks whether the landmarks statute is constitutional on its face.?Since it is, the Court asks whether the statute is constitutional in its particular application to Penn Central.


Is there a public purpose to the statute??Sure there is!?It’s a public purpose to have a beautiful city with beautiful architecture.?That confers some benefit on the people who live there.? The regulation of aesthetics is considered an appropriate state purpose.


Moreover, not all exercise of the state police power constitutes a taking.?When does the police power go too far??It can go too far if it frustrates “investment backed expectations??But just because Grand Central is worth less than before doesn’t make it a taking.?If it’s just zoning, that’s okay. If it’s just regulating a nuisance, even though it might have a severe effect on the value of the property, that doesn’t make it a taking either.?We all own land subject to certain laws and regulations with respect to how we use it; there’s no absolute ownership.?One of those laws is that you can’t create a nuisance on your land.?That’s actually sort of part of your title.


The Court distinguishes the actual situation with a situation where the train station had to be closed as a train station and reopened as a museum that would be far less profitable than the station.?That would certainly be a taking.


If you own property and the property has gone up in value, you make a decision on the margin whether or not to sell it based not on the original value but based on what it’s worth now.?The economist would say what’s relevant is the opportunity cost: every day they make the decision that “I’d rather have this building than, say, $20 million.?span style='mso-spacerun:yes'>?But that’s not how the court is looking at it.


The extent of the loss is important, but not dispositive: decrease in value by itself is insufficient to establish a taking.?The Court refers to the brick furnace case from L.A.?There was a big decline in the value of the regulated property, but because it was such a nuisance, it still wasn’t found to be a taking.


In turn, when we look at whether the problem has decreased in value, we have the denominator problem again.?The majority looks at the value of the airspace rights above Grand Central compared to their entire holdings in the area.?On the other hand, the minority looks at the airspace rights as an independent property right that has been taken away.


The dissent is saying that you look at the air rights and you find that those rights have been taken away 100%.?There is no plan that will satisfy the Commission and allow them to develop their air rights.?Therefore, the minority says that they’ve gone too far.


The majority doesn’t focus on what they can develop.?They focus on what they own and whether they can get a “reasonable return?on their investment.?The majority says that their investment expectations have not been frustrated.


What the dissent is saying is that it’s not necessary to invalidate all landmark statutes, it’s just that the people who benefit from the statutes should pay the people who incur the cost of preservation.


Braunstein doesn’t buy the argument that there’s “average reciprocity of advantage?here.?Penn Central gets to enjoy their building and see how pretty it is just like everybody else in New York.?They also get the benefit of the 400 landmarks located around New York.?This argument strikes Braunstein as somewhat facile: Penn Central is bearing a huge cost that nobody else has to bear.?The Court says, however, that everybody in the city benefits, and thus there is average reciprocity of advantage.


But is this statute constitutional as applied in this particular case?? The majority says that there is no interference with the property’s current use (as a train station).?The court again says that investment expectations are protected and there is average reciprocity of advantage.


The dissent also denies that there is average reciprocity of advantage.


The minority also says that the analogy to regulations that prohibit nuisances is not apt.?Everybody agrees that regulation of a nuisance is no taking, but nobody’s saying that Grand Central, if it was developed as proposed, would be a nuisance.?In fact, it would be in compliance with all other New York City regulations except the landmark law.


Finally, the dissent believes Penn Central has suffered a total loss: they choose the entirety of the air rights as the “denominator?here.


The Nollan nexus requirement


Nollan v. California Coastal Commission ?Regulation is a taking unless it advances a state interest and does not deny the owner of all economically viable use of the property.?A “permanent physical occupation?constitutes a compensable taking, and requiring such an occupation as a condition for a building permit also must be compensated in order to be constitutional.?Is this a compensable taking or just a regulation that adjusts the benefits and burdens of economic life in our society and doesn’t require compensation?


The Court starts with the proposition that if the California Coastal Commission had wanted to, they could have denied a building permit altogether.?If they had done that, then there would have been no taking.?If the state can do that, why can’t the state just put a condition on the building that says “If you want to build on this property, you must grant an easement that runs between the wall and the mean high tide line?


There are three main “sticks?in the bundle of property rights: the right to exclude, the right to use and enjoy, and the right to alienate.?Which of these rights would be most affected by the actions of the California Coastal Commission??Arguably, it’s the right to exclude.?You now have the public “intruding?on the landowners?property and being authorized to do so by the government.?So this is a physical invasion, but is it permanent??You might argue that people won’t use the easement 24 hours a day, year-round.?However, the Court is willing to assume, without discussion, that the invasion is permanent.?They find it doesn’t have to be continuous to be permanent.


So the landowners lose primarily their right to exclude, but secondarily the right to use and enjoy and a little bit of the right to alienate.


There seems to be a problem here.?The majority admits that they could ban the construction altogether, which is more severe than what the state actually did.?The state said: “You can build, and we’ll give you permission, but in return, you must allow the public to cross your land.?span style='mso-spacerun:yes'>?Why can’t they do that??Why can’t they condition their approval on this requirement?


Why are they talking about “‘fire?in a crowded theater??Why does Scalia go off on this tangent??Why would it be unlawful to let people pay $100 to yell “fire?in a crowded theater when the state could just ban it altogether?


The justification for prohibiting people from yelling “fire? is public safety, and that allows you to prohibit it altogether.?The justification for allowing the permitting process would be to raise money.?There is an important public purpose that would allow you to prohibit the speech, but the permitting process doesn’t serve that same purpose.?Therefore, it would be unconstitutional.


How does that apply to this case??Just because they can ban something doesn’t mean they can impose a condition that forces people to give up a constitutional right.


The government is restricted: if you have a constitutional right, like free speech, the government can’t impose conditions on the exercise of that right.?Here, you have the constitutional right not to have your property taken except to a public purpose with just compensation.? What the government is doing is imposing a condition on that right: the Nollans must give up their constitutional right in order to get a building permit.?Scalia says that this condition is unconstitutional.?Just because the government has the right to do something more severe doesn’t mean the government has the right to do something less severe, that is, putting a condition on the exercise of a constitutional right.


Land use regulation is not a taking if it advances a substantial state interest and does not deny the owner economically viable use of the land.


The condition must be closely tailored to the public purpose that justifies the restriction.? The rule of the case is that if the relationship between the condition and public purpose exists, then the condition is constitutional.?But if the relationship doesn’t exist then the regulation can’t be imposed.


Dolan v. City of Tigard ?In this case, the city imposed a condition and it was clear that the expansion of the plaintiff’s hardware store, which resulted in increased traffic, was causing some harm.?It was clear that what the state was doing satisfied the Nollan nexus requirement.?The Supreme Court looked at this and said it was fine.


But what was wrong in Dolan was that there was no reasonable relationship between how much land Dolan was being required to give up and how much harm she was causing.


Therefore, there are two requirements: (1) There must be a nexus between the condition and the public purpose.?(2) The burden on the landowner must be proportional to the amount of harm the landowner is causing by their current use of the land.


Lucas v. South Carolina Coastal Council ?Did the law’s effect on the economic value of Lucas’s land constitute a “taking?under the Fifth and Fourteenth Amendments requiring “just compensation??When the state deprives a property owner of 100% of the economic value of their land for some public purpose, it is a compensable taking unless the use that is being taken away was never part of the title to the land in the first place (e.g. creating a nuisance).


The Court says that there are two clear-cut cases of regulatory “takings? (1) physical occupation of private property, and (2) denial of all economically productive use of private property.


This case falls into the latter category.?The Court acknowledges that there are occasions when it will allow such regulation to fall short of a compensable taking.?The only time that happens is if, in effect, the state takes away something the landowner never had in the first place.


It is reasonable for property owners to expect that their property will be restricted in some ways.? One way to look at this is to say that certain implied limitations “inhere?in the title to the land.?The government doesn’t need to compensate for making explicit limitations that were previously implicit.


The Court says that in order for South Carolina to prevail on remand, it must show that common law principles of nuisance and property forbid the intended use of the land.


The trial court decides, and no one disputes, that the land has lost its value altogether.? (Braunstein thinks this probably isn’t strictly true: the land has some value, it’s just that it’s minimal versus what you would get if you could develop it.)


This will develop the third of the per se rules: when government regulation denies an owner all economically viable use of his land.


This is kind of an odd case because we’re not quite sure what the statute means.?The Supreme Court assumes that the statute means what the South Carolina Supreme Court said, which is that there are no exceptions to the no-build line.


What’s the holding of this case??The U.S. Supreme Court reversed the South Carolina Supreme Court and found for Lucas.? Let’s assume that the value of Lucas’s land has gone down to $0, that is, 100%.?The Court says that Lucas is entitled to fair market value.


Say you have a nuclear power plant, and suddenly it’s discovered that the plant is located on an earthquake fault and thus it’s very dangerous to people in the vicinity.? This is not a taking, because this use was always a nuisance.?It’s just that we didn’t know at the time that it was a nuisance.


The right to create a nuisance is not part of the “bundle of sticks?of property rights.?You always take the risk as you develop property that a nuisance will develop such that the cost of fixing it zeros out the net value of the property.


If there’s a taking, just compensation is required, though it may be quite small.


Wasn’t the South Carolina legislature trying to prevent a nuisance by passing the statute??What’s Scalia’s concern with the nuisance exception??He’s concerned that it’s just a loophole around paying compensation for what would otherwise be takings.?How does Scalia get around that??Can state governments create new and novel nuisances??If you distrust the state, and it’s clear that Scalia does, you have to be concerned with what prohibits the state from saying: “You want a nuisance?? I got yer nuisance right here!?/p>


Scalia tries to get around it thus: if something was a nuisance in the 19th century, it’s okay to regulate it without running into the Fifth Amendment.?If it’s always been considered a nuisance, then the state can regulate it.?On the other hand, Scalia says: “Don’t just go back and declare something a nuisance all of the sudden.?You’ll have to show something special about this property before you can say that it would be a nuisance to build on it.?/p>


But the problem with this, according to Braunstein, is that it limits the legislature in terms of discovering new nuisances.?What Scalia must be saying is that the Court will defer to the common law of nuisances, but if the legislature starts creating new and novel nuisances they will be scrutinized carefully to make sure they’re not just trying to weasel their way out of the Fifth Amendment.


The nuisance exception is tough to limit.?The legislature can say anything it wants is a nuisance.?All we’re left with is that the question of whether something is a nuisance must be judged against the background of state law.?That’s fine, but as new things are discovered that constitute nuisances, it’s going to be difficult or impossible to regulate those nuisances without paying just compensation.


Footnote 11: what’s it all about??It’s the denominator problem!?Scalia recognizes its existence, but doesn’t do much to help solve it.?He does two things: (1) He says the New York Penn Central decision is unsupportable.?The court in that case said that the denominator is all of Penn Central’s holdings in the whole world.?(2) If the state clearly recognizes that one “stick?in the “bundle?is an important property right, that may form the relevant denominator.


What about footnote 12?? Justice Stevens says the ?00%?rule is arbitrary.?Say Lucas had been deprived of 95% or 99% of the productive economic value of his property.? Why should he be deprived of the benefit of this rule?


Say you have two neighbors.? Say one neighbor has 100% of their property over the no-build line, while the other neighbor has a sliver of land on the “build?side of the “no-build?line.?Then the first neighbor gets 100% compensation, and the second neighbor gets nothing.


How does Scalia deal with this problem??First, he says basically “life is tough??This seems like an unsatisfactory answer to Braunstein.


It’s hard to know what it means to be deprived of 100% of value.?The state didn’t do much to say what Lucas could still do with his land, but there may have been something productive he could have done.?It’s hard to believe he couldn’t have done anything.


However, the rule is easy to state.?If you are deprived of 100% of the economically productive value of your land, it’s a taking and you’re entitled to just compensation unless the regulated use of the land constitutes a nuisance under established (not “new and novel? state law.


The State ex rel. R.T.G., Inc. et al. v. The State of Ohio ?Did the Ohio Reclamation Board of Review’s decision that RTG’s land was unsuitable for mining constitute a compensable taking?? The rule of Lucas applies if there has been a 100% taking, while the rule of Penn Central applies if the taking is less than 100%.?The “percentage?will largely depend on how the court defines the denominator of the fraction.


The lower court rules that the fee land hasn’t been taken even though they can’t mine under it.? All that means is that this isn’t a per se take.?So the lower court applied Penn Central and found it wasn’t a take.


What Braunstein likes about the case is that they go through and talk about both tests.?First, they look at the Penn Central test, which has three factors: (1) the nature of the governmental regulation, (2) the economic impact of the regulation, and (3) the extent of the interference with the “distinct investment backed expectations?of the landowner.


The third factor was pretty clear: they had recently spend a lot of money to get access to the land to mine coal, which was legal at the time they acquired the land.?This ad hoc analysis applies only when the deprivation is less that 100% of the economically beneficial use of the property.


Then the court goes on and talks about the per se test, which involves one of the following:?(1) Physical invasion ?Loretto; (2) Denial of all economically beneficial or productive use of land ?Lucas (but what does all mean?).


If Lucas applies, there’s a taking unless the regulated conduct constitutes a nuisance under established state law.


The court also tackles the denominator problem.?The numerator is the portion of the property that has been taken by the regulation (this is the easy part).?The denominator is the property interest that is subject to the regulation.?If the resulting fraction is equal to one, then there is a per se taking.?Otherwise, the regulation will be judged under the factor test of Penn Central.


This goes pretty far: it seems that the fraction will always be one when the state says “you can’t mine that coal??Now, what we have to do is figure out which of these two apply.?Braunstein likes this better than the Preschool case because the analytical framework is set up better.


The court decides to look at the coal as the relevant parcel because there is a tradition in Ohio of having rights in coal being a separate right from surface rights.?The court also says that the owners?intent was to purchase the property solely to mine the coal.?The court will go on to claim that the surface rights were worth nothing to the RTG because the surface was actually an impediment to getting at the coal.?But why would you determine the value of the surface subjectively (the value to RTG) as opposed to objectively (the value to anyone).


The court finds that the relevant parcel in the vertical plane is the coal—the sub-surface rights.? But what about the horizontal plane?


It turns out that 20% of the coal is outside the “unsuitable for mining area??The court says that economies of scale make mining outside of the UFM commercially impractical.?But there’s no factual support for that in the case.?The case also seems to be internally inconsistent to Braunstein (he bets that you can find economically productive coal mines of 100 acres or less).? Therefore, the court says that the relevant parcel is the coal locating in the UFM area.


What the court has done in order to determine the denominator in the horizontal plane is to ignore the coal that RTG can mine.?The court claims that the economics of coal mining are such that the 20% outside of the UFM becomes worthless due to this regulation.


Braunstein is especially suspicious of the use of the “all? from Lucas.?He doesn’t thing all really means all in this case.


The analysis wraps up by claiming that there hasn’t been a nuisance, and thus there has been a taking of both the leasehold coal and the fee simple coal.


What do we get out of this case??It’s a good analytical summary of the rules and the circumstances in which they apply.? Also, no matter how hard you try, the denominator problem is very difficult and one that is really left up to the discretion of judges.


Just compensation


The rule is pretty easy to state: just compensation is the fair market value of the property taken, or at least that’s a big part of it.?Why do we have just compensation??In a sense, this is an anti-democratic provision.?It’s designed to frustrate—at least in certain circumstances—the will of the majority.?The minority have certain rights no matter how unpopular they are.?Most people believe that this provision was put into the Constitution to prevent radical redistributions of wealth from the large landowners to the majority.


It becomes sort of a wash: if a majority of the people want to take farms in Virginia and make them into public lands, they could do it but they have to pay for.?While you may shift land to money, you’re not going to have a radical redistribution of wealth, at least through this procedure.


Another reason for just compensation is that taking people’s property is in some sense demoralizing.? It not only makes them unhappy and seems unfair but also is demoralizing in the sense that if your property is subject to being taken without just compensation, there is little incentive to improve the property.?It would be foolish to invent a lot of money in property if it could be taken by the government at any time without compensation.


Fair market value


Fair market value is the amount that a willing buyer would pay a willing seller, both reasonably well informed and neither under a compulsion to buy or sell.?In order words, it’s the selling price in a market that works well.?Some things are fungible and easy to find fair market value for: for example, a pound of copper or a share of GM.?One of the problems with land is that there is a “thin?market for land, that is, a particular parcel of land doesn’t sell frequently.? So the fair market value question becomes tougher; you need good proof including things like expert witnesses.


Other compensation


You’re also entitled to damages in addition to just compensation.?Frequently, the government doesn’t take all of a landowner’s property.?It depends on how much land they own and what the needs of the condemning authority are.? Consider widening a highway, for example.?The government is only going to take a portion of the land and leave the remainder.? But this may result in damage to the “residue? or the land remaining.?The remaining land may not be appropriate for all the valuable uses it could have been used for before.?You can get damages for the decreased value of the land you continue to own.


Factors which are excluded


You don’t get compensated for sentimental value, historic value, annoyance, and the value of any business you have going on that property.?The only way you get compensated for historic value is if there may be buyers on the market who are interested in “collecting?the property because of its historical significance, for instance a Frank Lloyd Wright house or a president’s birthplace.?If you operate a business on the taken property, you can’t get compensated for the value of the business.?So just compensation, in many cases, is arguably insufficient because it doesn’t fully compensate people for the losses they suffer as a result of the taking of their property.?It can be argued in turn that we should either change (increase) what we mean by just compensation or be more careful with what we mean as “public purpose??Alternatively, it can be argued that we accept as a burden of citizenship that all property is subject to possible eminent domain.


Almota Farmers Elevator & Warehouse Co. v. United States ?What is the proper measure of the fair market value of a leaseholder’s interest in the remaining term of its lease??Fair market value is determined by “what a willing buyer would pay in cash to a willing seller?


The “two-take?theory


When you value property for the purposes of eminent domain, you do so without reference to the project the land will be used for.?The government can’t use its eminent domain power to force down the value of the property.?When you value the property the government is taking, you do it as if the eminent domain proceedings weren’t proceeding.


United States v. 50 Acres of Land et al. ?Is just compensation in this case properly measured by the cost of a reasonable substitute landfill or by the fair market value of the condemned facility??Just compensation is generally measured by fair market value.?It was not difficult to establish a fair market value for the condemned facility, therefore it wasn’t necessary to substitute a different measure of just compensation.?In this case, private property gets a new definition.?The Court defines private property for the purposes of the Fifth Amendment to include public property owned by states and municipality.?State or municipally owned property is treated the same way as property owned by private individuals for the purposes of the Fifth Amendment.




Now we’re going to look at some ways to acquire property.?We’re going to look at a new concept that’s more complicated than we might think: what does it mean to say that someone is in “possession?of property?? Possession is a difficult concept.? But it’s a lot easier to do that than to try to establish ownership.?So we protect possession as a proxy for ownership.?But there is relativity of title.?Getting possession has important legal consequences.? Whatever possession means in terms of a wild animal, getting possession is important because your possession will be protected against the claims of others.


If we had a system that only protected ownership but not possession, people would fight each other all the time to gain possession and then make each other prove ownership.? What we do instead is protect possession.?We protect it by saying: ?i style='mso-bidi-font-style:normal'>First in time, first in right.?span style='mso-spacerun:yes'>?Prior possessors win out over subsequent possessors.?We do this for very practical, instrumental reasons.?We want to protect peace, order, and the certainty of knowledge of what you own.?It’s easy and practical to prove that you possessed some property before somebody else did.?So the prior possessor wins.




Externalities tend to lead to inefficient results.?Private property tends to reduce (or internalize) externalities.?This isn’t a difficult concept, but it’s more limited than you might think when you first think about it.?There are two kinds of externalities: an external cost and an external benefit.


An external cost is a cost that an actor imposes on others but which the law doesn’t force the actor to include in their personal cost-benefit analysis.?One of the cheapest ways to internalize externalities is through the institution of private property.?If it’s private property, you tend not to waste it because it’s yours.


An external benefit is a benefit than an actor provides to others but that the law doesn’t force the actor to take into account in deciding whether or not to continue providing the benefit.?The creator of the benefit cannot force the recipients to pay, which means they may not have incentive to continue to provide the benefit.


We want land to be used in its most productive way.? Therefore, we want people to take into account all the consequences of their decisions when they choose how to use their land.?If the landowner can’t be forced to pay the costs imposed on others by, for example, burning cheap coal, they may do that irrespective of the fact that the harm being caused to others is greater than the profit being made by burning cheap coal.?Thus, the wealth of society is decreased.


The Coase theorem


Assuming that bargaining is free, property rights will end up in the hands of the person who values them the most.?We like this because it means property rights will be put to their most productive use.?It doesn’t make any difference from a social perspective how property rights are allocated.?That’s not to say that there isn’t justice or injustice in how property rights are allocated.?But if we accept that wealth is a value (the more wealth the better), then it doesn’t make a difference how property rights are initially allocated, because if transaction costs are low, property rights will always end up in the hands of the person who can use them most productively.?Whoever gets it first will end up with some money.?But we have no reason to prefer one party over another.? Coase goes on to say: When markets don’t work, you ought to allocate property rights in the way that the market would if it did work.?In other words, we should give the property right to the person who values the property the most.


That’s not to say that everything can be traded.?You can’t give up your own right to bodily integrity and sell the right to kill you.? Also, there are transaction costs.?“All of you are studying very hard to become transaction costs.?span style='mso-spacerun:yes'>?There are all sorts of transaction costs.?You have to figure out who’s lying and telling the truth.? You need to ferret out free riders.? Sometimes the transaction costs are more than the benefit you could get if you entered into the transaction.


The tragedy of the commons


The idea of a commons is that everybody owns the land together.?Say we have a field and there are ten villagers.?None of them owns the exclusive right to use the field, but they can all use it in common with each other.? Say its only purpose is to graze cattle.? Say there are ten guys.?They’re going to overgraze the field!?When they’re finished, the field may be totally worthless!?How come?? Everybody looks at the field and they say: “What’s the benefit to me if I put another cow out here??It’s the profit from the cow.?What’s the cost to me if I put another cow out there??If I consider the problem of overgrazing, then the cost is very high and I shouldn’t put the cow out.?But all the other villagers might graze their cows anyway.? Therefore, the cost to me is really zero.?It’s true I’m causing some harm, but that harm will occur no matter what I do.?If I don’t graze more cows, the other guys will graze more cows.?span style='mso-spacerun:yes'>?The worse the field gets, the faster they’re going to put cows on the field until finally it can’t support any cattle at all.?The villagers “rush headlong to their own destruction!?span style='mso-spacerun:yes'>?Why??The commons created a series of misincentives.?It created an incentive to consume and a disincentive to conserve.?That’s because even if I conserve, I have no assurance that my neighbors will conserve.


But now let’s say that each of the ten villagers owns one of ten parcels, privately.?Each villager has the right to use the parcel and exclude others.?Now the calculation changes.?You have to weigh the profit from grazing another cow against the cost of failing to conserve.?This problem comes up in many circumstances.?Global warming is an example of this problem.?It causes problems with oil and gas as well.


The law of capture


Pierson v. Post ? Mere pursuit of a wild animal does not constitute possession of that animal.?(“Actual bodily seizure? killing, or “mortal wounding?seem to be sufficient to establish possession.)?What underlies all this is “first in time, first in right??The person who was first in possession of the fox is the person who is entitled to the pelt.


The holding of the case, which is the law as applied to these particular facts before the court is that one obtains possession of a wild animal by killing it.?But then there’s dicta, which are things the court says but that aren’t necessary to come to a conclusion in the case.?He says that people invest in resources for killing foxes, and you want to create public policy incentives to encourage more fox killing.?People aren’t going to invest in killing foxes if people can come along and take the fox at the last minute.


So what happens if you catch a fox, but then it escapes??Then it becomes unowned again.? One element of capture is that you must maintain control (possession) in order to maintain ownership.


Texas American Energy Corporation v. Citizens Fidelity Bank & Trust Company ?Once natural gas is extracted from the ground and thus converted to personal property, it will remain so even if it is stored in underground reservoirs (so long as they don’t leak).?You can continue the wild animal analogy and say that the gas hasn’t been released, but has been moved from one “cage?to another.




Armory v. Delamire ? The finder of property has a better title to the property he found than everyone except the rightful owner.?The plaintiff gets the maximum possible value of the jewel unless the defendant produces it.?The prior possessor wins!?Why should that be??(1) The rule tends to result in public order.?The opposite rule would encourage people to engage in force and trickery to get control of property.?(2) The rule rewards people’s reasonable expectations.?Why do we care about this??We want to engender a respect for the law.?(3) The rule encourages the use of bailments (like leaving your shoes at the shoe repair guy or leaving your car in a parking garage or taking your clothes into the cleaner).?It is an important goal of property law to encourage commercial transactions by making them easier and cheaper.




This is a relationship between the bailor (prior possessor) and bailee, whereby the bailor voluntarily transfers possession of the property with the expectation that it will be returned.? When you check your coat at a restaurant or take your television in to be repaired, you give your stuff to the bailee with the expectation you’ll get it back upon payment.


There are two kinds of consensual bailments: (1) Express bailments ?There’s a little agreement on your claim check.?(I seem to recall that these aren’t enforceable as contracts.)?(2) Implied bailments ?The law will infer from the facts that the bailor did not permanently give possession to the bailee even though they didn’t say anything explicit.?For example: “Can I use your book??span style='mso-spacerun:yes'>?The expectation is that I’m going to give the book back to you when I’m done.


There are also non-consensual bailments: (1) Finders ?Take Armory for example.?The chimney sweep was both an implicit bailor (as far as the jeweler was concerned) and also a bailee (as far as the true owner of the jewel was concerned).?In the latter case, there was no agreement at all.?(2) Thieves ?These dudes are bailees too, in that if you find the person who took your stuff, you can force them to return it to you.


We classify bailments in terms of who gets the benefit of it.?The reason we do that is that it affects the standard of care.?(1) If the bailee is the sole beneficiary, the bailee is liable to the bailor for even slight negligence that results in damage to the property.?(2) If the bailment is solely for the benefit of the bailor, then only gross negligence on the part of the bailee will cause liability.?(3) When the benefit from the bailment is mutual, then the bailee will only be liable if his conduct was characterized by ordinary negligence.


Hannah v. Peel ? Who has superior title to the brooch??A landowner owns everything attached to or under the land, but not necessarily stuff lying on the surface of the land even though the stuff isn’t possessed by someone else.


Here are the four categories: Lost ?The true owner has been unintentionally dispossessed of the property.?The finder has better title to lost stuff than anyone except the true owner.?Mislaid ?The true owner intentionally left the stuff sitting around, intending to pick it up, but forgot.?In this case, the owner of the property where the stuff is found has better title to the stuff than anyone except the true owner.? Abandoned ?The previous owner intentionally gave up the property and left it lying around so that someone else could acquire it.?For example, if you leave furniture on the curb to be picked up by the garbage truck, it could be understood to be abandoned property.? The finder of such property has an unqualified right to it.?Treasure trove ?This one is like pirate booty!? If you find hidden treasure that has been hidden for so long that it would be impossible to find the true owner, then the treasure is awarded to the finder as long as they weren’t trespassing.


Bridges v. Hawkesworth ?Some money was found on the floor of a shop.? The finder turns it over to the shopkeeper.?They can’t find the true owner.?Who is entitled to possession of the notes??It turned out that the notes went to the finder.?The shopkeeper didn’t have possession as against the owner.? What the court is saying is that if the true owner sued the shopkeeper because the notes went missing, the true owner would lose.?The shopkeeper never accepted possession of the notes and never knew of their existence.? The court leaps to the conclusion that because the shopkeeper didn’t have possession against the true owner, the shopkeeper didn’t have possession against the finder either.?This is a big logical leap.?It might be right, but it fails to take into account the relativity of possession.? Just because you’re the owner of land doesn’t mean you’re the owner of everything that sits on the land.


So Peel is not necessarily going to win just because he’s the owner of the house.?So the owner of the locus in quo doesn’t always possess things found on the land.? The owner doesn’t win in Bridges; the finder wins!?Later we’ll find out that the holding of Bridges was limited to public places.?Then the question becomes whether or not a shop is a public place.


If you don’t know something is there, you can’t intend to appropriate it for your own use or intend to exclude others.


Braunstein has a problem with this case: Couldn’t Peel have claimed to have the intent to appropriate everything in the house??Peel was compensated for the use of the house, but that doesn’t mean he intended to give up any of the stuff not related to the government’s occupation.?We don’t know what Peel’s intent was.?So Bridges doesn’t take us very far, and judge doesn’t say why the case is relevant.


The court makes a big deal out of the fact that Peel never occupied the house.


What about South Staffordshire??The employee finds some rings while cleaning a pool.?Who gets the rings??The owner of the land wins.?How come?? There are several theories.?When you possess land, you get everything attached to or under the land.?In Hannah, the brooch was neither.?When the locus in quo is private property from which the public is excluded, then the trespasser doesn’t get to keep what he finds.?But that wasn’t the case in Hannah.? Also, the employee was doing something sort of “beyond the scope of his employment??The employee wasn’t invited on the property for the purpose of finding lost things.?How would that apply to Hannah??Hannah wasn’t in Peel’s house to find stuff.?He was there to do army stuff like hanging up blackout curtains.?If that’s the rationale for South Staffordshire, wouldn’t Peel win?


The owner of the locus in quo won in this case.?There are four different possible theories for explaining this case.


The court says that the possession of land carries with it everything attached to or under the land.? The brooch in Hannah was neither.


How does this case help us decide Hannah v. Peel??The brooch was just lying around.?It wasn’t buried.?It wasn’t attached to anything.?It was under the roof, but that doesn’t really mean the same thing.


How about the fact that the locus in quo was private property in this case, while it was public property in Bridges??Was Peel’s place private property at the time??Does it make a difference that it was taken by the government for the war?? It was being used as a hospital.? Isn’t that the same as a shop in a sense??An argument can be made that a hospital is a least as public as a shop, depending on where in the hospital you are.?We don’t know what part of the building the brooch was found in.


Really, there’s a spectrum between public and private.?Private homes are very private, while the public library is very public.?Then you have shops and other businesses that are open to people who have business there.?So if this is the holding of South Staffordshire, we’re not sure how it applies.


What about the “limited purpose?explanation??Sharman was invited to clean the pool and not to find things.?Hannah’s purpose was to be a lance-corporal.?The thing is that Sharman lost, while Hannah won.?If this had been a limited purpose case, Hannah arguably could have lost.


The problem with this opinion is that it throws out lots of cases and holdings, but the court doesn’t say why they’re relevant.


How important is the plaintiff’s “good behavior?in turning over the brooch to the authorities??The court doesn’t say explicitly.


So we have a good brief, but then it peters out.?It creates a lot of possibilities but doesn’t resolve them into a particular holding of the case.?So don’t be like this judge!


What does the court do??Look at the last paragraph of the opinion.?Was the brooch really lost?? What is “lost property??If someone is unintentionally dispossessed of something, it is lost.?If someone intentionally leaves something somewhere and then they forget about it, then it’s mislaid.


How did the brooch get where it ended up??Was it lost or mislaid??How could you lose something “up high??Mislaid property goes to the owner of the locus in quo, while lost property goes to the finder.


What assumptions does the court make that aren’t supported by the facts?


Even though Peel doesn’t own property, he may still have the power to sell it if he’s not a thief.? The shop to which Peel sold the brooch acquires good title to the brooch.?Peel’s title was voidable.?If he still had the brooch, Hannah could have gotten it back.?But a voidable title allows you to convey good title to a good-faith purchaser for value.? On the other hand, a void title is the kind a thief has.?If you buy from a thief, even in good faith, you don’t acquire good title.


If Hannah is entitled to the brooch, then he is entitled to its full value.?But what is the full value of the brooch??Is it the value that Peel sold it for, or is it the value that the shop resold it for??Should Hannah get the higher amount or the lower amount??If Peel made a bad deal, Hannah would be entitled to the full price rather than the “bad deal?price.


What if Peel had lived in the house??Would that have made a difference??Peel would be more likely to win in that case.?If Peel had lived in this private place, it looks like we would give the property to him and say he was the possessor of the property.


What reasonable expectations are protecting??If Peel has guests over to his house, he expects that people won’t take stuff from his house even if he doesn’t know it’s there.?The law encourages a great expectation of privacy at home.


What if Hannah had been a trespasser??Well, we don’t want to reward a thief.?But then what do we do with “first in time, first in right??How do we resolve the conflict??We could have a special rule for trespassers, but that’s not how it’s done.? Instead, we use the constructive possession doctrine.


Constructive possession


Constructive possession is an exception to the factual element of possession. Constructive possession is a way to say that we’ll pretend there is possession even though there really isn’t.?“Constructive?means it’s a legal fiction.?We’ll treat you like you’re in possession every though you’re not.?We want to do that because we want to apply the rule of “first in time, first in right?? So we give Peel constructive possession against trespassers because we want to protect public order.


When we say somebody is in constructive possession, we’ll pretend that they have possession because we want a certain outcome to follow.?Whether you’re in possession or not depends a lot on what objective the law is trying to achieve.?Take, for example, possession of narcotics.?That type of possession will be defined much more broadly than we define possession of lost property.?We use the law as an instrumentality, bending a set of rules to a particular purpose.


When you learn the law, you must accept that you can’t rely just on doctrine and definitions.?You can’t just look up “possession?in Black’s and know what it means.?Look at Constitutional Law.?You have a little tiny document that you can carry around in your pocket, but then you have a huge casebook you need to figure out what it means.?So you can’t interpret the Constitution just by looking up the words it contains.


The law as stated can never be a complete explanation.?You must ask the question: “What is the purpose of the law??Are we applying this law in a way that defeats its purpose??If so, we need to change the definitions to meet our goal.?span style='mso-spacerun:yes'>? Judges don’t like to change too much law at once because they are afraid of unintended consequences.


If a definition runs into problems with an important policy objective, we’ll dispense with it.


Lost property typically goes to the finder.?Mislaid property typically goes to the locus in quo (the true owner may retrace their steps).?But it’s tough to distinguish between lost and mislaid property!? Say you’re in a barber shop and you see an envelope with lots of money sticking out.?If the money was mislaid, it goes to the barber.?If it’s lost, it goes to you, the customer.?So what do we do??The money is sitting on a table.?So the thing you do if you want the money is kick it to the ground.?Then you’re within Bridges.


What’s the point of this?? When you frame these rules, you want to do it in a way such that you don’t give people the incentive to lie or be manipulative.?So Braunstein says the “lost/mislaid? distinction is problematic for two reasons: (1) It requires us to infer the intent of someone who is always absent: the true owner.?If the true owner showed up, they would win out over both the finder and the owner of the locus in quo.?(2) The distinction tends to encourage finders to manipulate the circumstances to make the property look lost and not mislaid.


Abandoned property also goes to the finder.?Treasure trove is an ancient concept that started with (maybe?) Henry VIII.?He made monasteries subject to tax.?The monks went and hid their assets by burying them.?They had the intention to return to claim the stuff.?This still happens every once in a while.?In England, when treasure is found it goes to the Crown, because the point was keeping it from the crown.?But in the U.S., treasure trove goes to the finder.?But we don’t want to encourage trespass.? Trespass is inconsistent with the notion of private property.?Whenever we see trespass, we’ll manipulate the rule so that the trespasser doesn’t win.


Adverse possession


This is based on the statute of limitations for the action of ejectment.?If someone occupies your land, you only have a certain amount of time to take action to take it back.?Once the adverse possessor has been in possession for a certain amount of time, nobody can do anything to dispossess you.?The statutory period varies.?It’s 21 years in Ohio, ten years in Missouri, and only two years in Nevada.?They’re generally longer in the East and shorter in the West.?The West developed with absentee owners and Eastern capital.? Western people tended to favor the local residents, and a shorter statute of limitations had that effect.


When the statute of limitations bars a tort claim, we’re not saying that the bad person didn’t do it.? We just say that you can’t sue them anymore.?Notice that adverse possession bars anyone from coming forward with a claim.?This statute of limitations is liberative; it ends the rights of all people to be able to make a claim.?Tort statutes of limitations are prescriptive, in that they end the right of a particular person to sue.


The law of adverse possession is a composite of common law and statutes.?But notice that the elements of adverse possession that we’ll discuss below are usually not contained in the actual statutes.? Adverse possession is more or less uniform from state to state, but there are some important differences.


Why do we have this doctrine??It appears to be like acquiring title by theft.?There are several theories.?Holmes said that basically when you’ve been associated with a certain property long enough, you just start thinking of it as yours.?There is some kind of psychological attachment, but also after some period of time, people develop the expectation that they’ll be able to stay where they are.?Here are three more popular theories: We want to punish lax landowners (the “sleeping theory?.?We want to reward the diligent occupier (“earning theory?.?The court may lean towards different conclusions depending whether it focuses on the laziness of the true owner or the laziness of the adverse possessor.?Finally, we want to provide security of title (certainty).?After a while, you’ll want to clear up uncertainty in the records.? Eventually, you just need to let bygones be bygones and let sleeping does lie.?You don’t want disputes to proceed indefinitely.


The elements of adverse possession


Actual possession ?You must actually enter onto the property.? It has to be exclusive insofar as your occupation isn’t shared with the true owner.?Entry is required because the cause of action that can later be barred by the statute of limitations out is ejectment or trespass.?Until you have entry, your statute of limitations doesn’t begin to run.?We’ll talk about claim of right (good faith versus bad faith of adverse possessor) and color of title, but entry must always be wrongful in order for the statute of limitations to start running.?You can’t just look at someone’s land in order to take adverse possession.?Looking at someone’s property isn’t unlawful and it’s not an entry, so it doesn’t matter how long you do it.?In some states, you may be required to think you have the right to be there, but it’s always essential that you be wrong.


Open and notorious possession ?These two words mean pretty much the same thing.?These mean that you act the same way the true owner would act with respect to the land.? Just what conduct this requires depends on the typical uses of the land.?If the land is good for farming, then a true owner would farm on that land.? If the land is good for building a house, then a true owner would build a house there.?Some states, like New York, have statutes that say certain acts are deemed to constitute actual, “open and notorious?occupancy.?Fences are one example.?Fences give notice of the intent to stay there and use the land as a true owner.? When I fence some land, it’s probably because I feel like I have some claim to it.?“Open and notorious?means not covert.?You can’t acquire title by adverse possession in secret.?You must produce “markers?that a reasonably diligent true owner would discover.?You must provide notice to the true owner if they want to protect their title.


Hostile possession ?Possession must be adverse or hostile everywhere (not permissive).?In some states, you also need a claim of right.?An example of this would be that a tenant can never acquire title to a property they’re renting.?If you’re not living in your apartment wrongfully, then your possession isn’t hostile and you won’t get adverse possession.?What’s a “claim of right??It could be, more or less, “hostility??But in some states, there can be a subjective component.?You may need a good faith belief that you’re entitled to your possession.?Often this means you have a deed that purports to give you title to the land.


Continuous possession ?“Continuous?and “uninterrupted?don’t mean the same thing.?“Continuous?relates to what the adverse possession does.?It doesn’t mean 24/7.?It gets back to how a true owner would use the land.?If it’s land in the mountains of Montana that you can only get to in the summer months, then continuous possession would only be using it in the summer.?If you could use the land year round, then continuous possession would be year-round possession.?“Uninterrupted?relates to the acts of the owner.?The best way for an owner to stop the statute of limitations from running is to file a suit within the statutory period!?Even if the judgment comes much later, you will have successfully interrupted the adverse possession and the judgment will be effective back to the date when the suit was filed (if you win).?How else can you interrupt possession??You could simply stop the adverse possession.?There are a couple problems, though.?If you use force, you might fail because they’re stronger.?Also, you may just give the adverse possessor the opportunity to show how hostile he is.


Possession must last for the prescriptive period ?It’s more complicated than it seems!?There are two problems: (1) Tacking ?one adverse possessor can transfer their rights to someone, and the transferee is then herself an adverse possessor, but the two of them can add their time together.?(2) Disabilities ?If the owner is under some disability like insanity, that may last for quite a long time, and the regular statutory period may not be enough to get you adverse possession.


There are three generally recognized kinds of deeds: (1) Quitclaim deed ?a deed by which one person transfers to another whatever interest they happen to own in the property.?But they don’t warranty or guarantee that they own anything.?These deeds are often used to clean up title defects.?But it’s also a perfectly good way to convey title from one person to another.? (2) General warranty deed ? This is sort of the opposite of a quitclaim deed.?This deed warrants that nobody has a better title and that quiet title is assured.? (3) Limited warranty deed ? This warrants that there are no defects in the title, but it’s limited to the acts of the person who is selling the land.? It’s the new owner’s problem if there are any acts predating the warrantor.?All of these deeds are effective to convey title.?The only difference is whether you can sue for breach of warranty if the title is screwed up.


Teson v. Vasquez ? The person claiming adverse possession must prove the following elements by the preponderance of the evidence: (1) actual possession, (2) hostile possession, (3) open and notorious possession, (4) exclusive possession, and (5) continuous possession over the course of the statutory period.


Color of title


Color of title means that you have a written instrument that, in good faith, you think is valid and purports to convey the land at issue in the adverse possession suit.?This instrument is, by definition, invalid.?If it were valid, then you wouldn’t be an adverse possession.?Also, the true owner must have notice of the instrument.?Notice can be acquired by: actual notice (like telling the dude the stuff) or constructive (fictional) notice.?Color, in this sense, is like “colorable? meaning “appearing to be valid?


In the United States, there are “Recording Acts?which do a weird thing.?You ought to be able to go down to the courthouse and look at the records and see who owns what.?The Acts change a common law rule.?If you have a conveyance (a deed) from O to A, even if that deed is not recorded, A is the owner.?Then say you have a conveyance from O to B.?Under the common law, A is still the owner of the property.?At the time at O conveyed the property to B, O had nothing to convey!?Under the common law, B loses, and this is considered an intolerable situation.?If you look at the records, it looks like O is the owner of the property because the first conveyance was never recorded.


Property used to be transferred by livery of season, where one guy hands another guy a clump of dirt.? It’s a symbolic act of transferring a piece of property itself.?This is great in feudal England because most people can’t read or write.? Also, it gives other people notice that a transfer has occurred.?That might be fine in feudal England, but that’s not how we do it here.


What the Recording Acts say is that if A records the transfer, then B has constructive notice.? We’ll act as though B has notice.?We allow that fiction so that we can have a reliable recording system.?On the other hand, if A fails to record the transaction, then B wins.?This provides A an incentive to record promptly and rewards A by making A the definite owner.?There’s a stick as well as a carrot: if A fails to record promptly, B could win!? This fits in with “open and notorious?? Transfers of property can’t be secret.


Color of title has an impact on the mechanics of the adverse possession rule.?If you have color of title, you’re deemed to possess all the property described in the deed.?If you lack color of title, you’re deemed to possess only the property you actually occupy.?Note that you can’t take adverse possession against the government.? You can look at this as a case of sovereign immunity.


Say O is ten years old when P took possession.?Would the action be barred??No, it appears that O has a total of 14 years to bring the suit because he has until he turns 21 plus three more years.?Why does the statute contain the language “the person or his heirs??Say, for example, a person dies a day before their 21st birthday.?Also, sometimes the thing that renders someone incompetent can never be cured.?If you really have a 10 year old landowner, why can’t that person’s guardian take responsibility??Braunstein suggests that this might be a good reason to abolish these disabilities because they go again society’s interest in certain and marketable title.?He can see how this statute could result in injustice in particular cases.


What if O was 15 years old when P took possession??In that case, the action would be barred if O was 25 because O only had until age 24 to bring suit.?O either gets seven years or three years past the age of 21.?Make sure to calculate the time both ways.?Say O was 20 at the time the adverse possession enters.?If O gets the full seven years, O gets seven years.?If O gets the age of majority plus three years, he only gets four.?You take the calculation that is most favorable to the owner, thus O gets 7 years in this case.


What if O was mentally ill when P took possession??It would depend on several factors: Is O still mentally ill??If O is better, when did he get better??How old was O when the affair began?


The law often weighs justice in the individual case against the public policy interest behind the statute.? Braunstein doesn’t buy into the idea that this statute is going to do much justice.


Braunstein proposes another problem with these disabilities.?Say O would have three years to sue after the age disability is removed.?Let’s say that on O’s 21st birthday, O goes crazy.?Now what happens??On the face of the statute, it looks like O gets screwed!?We deem O incompetent until he turns 21.?Then let’s say he goes crazy just before he turns 21.?Then it makes sense to say that the disability continues until it is resolved.?The answer turns out to be that you can’t tack disabilities.?Braunstein thinks that this is nuts!?If disabilities are so important, then they ought to get more protection.?On the other hand, if they are as unimportant as Braunstein believes, they don’t need any protection.


Say O is crazy, gets someone pregnant, and then dies.?Now we have someone who hasn’t even been born yet at the time of possession, and they get crap!?The point is that you can’t tack disabilities.


Braunstein can’t really figure why you get the extra time from this statute.?It’s can’t just be because you need it.?There are many situations where you just get screwed.?Braunstein thinks that these disabilities don’t help much, and hurt the value of the statute of limitations overall.




What is the standard for tacking??Tacking won’t be used to protect successive trespassers.?There must be some relationship between the successive possessors (privity of estate) that makes it reasonable to tack.?This is a vague, fluid concept.


Intestate means you die without a will.?Think of the phrase “last will and testament??Since you don’t have a will, somebody gets your property, and the people who get the property are called the heirs and are specified by statute.?


Charlton v. Crocker ?Did the Crockers acquire title to the lots in dispute by adverse possession??The defendants must show actual, hostile, open and notorious, exclusive, and continuous possession of the property in dispute for the statutory period.


What’s a mechanic’s lien?? There’s a basic problem with construction contracts involving real property.?It applies to anyone who works on a construction project.?The only person that the owner promises to pay is the general contractor.?A mechanic’s lien is a way for someone who does work on property without a direct contract with the owner to use the property as collateral for the payment of services.?In this case, a mechanic’s lien was used by the adverse possessor to try to recover the cost of the improvements made to the land in the true owner’s absence.


It doesn’t matter whether you believe that you’re taking the true owner’s property in order to get adverse possession.?It only matters that you believe that you possess the property in your own rights.?You possess the way an owner would possess.?If you know that what’s you’re doing is adverse possession, you know “more than you need to??It’s not fatal to act willfully, but it might cast suspicion on some of the elements of adverse possession, as it does in this case.? Note that “adverse?means substantially the same thing as “hostile?or “wrongful??All the requirements of adverse possession boil down to acting like the true owner of the property.


Claim of right


Don’t let “claim of right?confuse you, because there’s basically no correct answer!?In some cases, all “claim of right?means is that you’re claiming unequivocally that you have the right to possession in your own right.?In other words, there is no requirement of good faith.?But sometimes the courts go further than that and require that subjectively you must believe that you have a right to be where you are.?The adverse possessor, in other words, must show that they really believed it was their land.?Some courts go even further and make it nearly impossible to acquire title by adverse possession.?They say that you must be adverse, have a claim of right, but that you must be non-hostile in the sense that you’re not thinking of the true owner.?In other words, you must believe you have a right to be where you are yet actually not have the right to be where you are.?This gets very close to a Catch-22 and makes it almost impossible to acquire land by adverse possession (AKA “title by larceny?among some of those who follow this rule).?You would probably need color of title.?The issue of what “claim of right?means cannot be resolved because it means different things in different jurisdictions.


If you believe that the purpose of adverse possession is to punish the lax owner, you will not care much about the mental state of the adverse possessor.?If, on the other hand, you’re out to reward a diligent adverse possessor, then you might start asking more or less whether the adverse possessor is a “good person?


Braunstein dislikes subjective intent because it’s easily manipulated.?You can always just lie and no one would be the wiser.?Braunstein would set an objective standard of whether the possessor acted like the true owner.?But jurisdictions all over the place are split wildly over this issue.




First, we’ll learn to classify interests.?Only after we’re classified them can we apply rules which determine their validity.? The rules depend on the classifications.? We will spend a lot of time classifying the different interests people have created or tried to create.?Then we’ll look at rules about marketability of land.?


You can’t just do anything you want with land in Anglo-American land.?There are only a certain number of estates that are recognized, and you must fit your estate into one of the categories, or it’s no good.


What are some ways to divide ownership??We can divide land the way it gets divided on a map.?We could divide it into flat pieces and parts.?We could also divide the air, surface, and subsurface (vertically).? We can give the air rights to one person, the surface rights to another person, and the subsurface rights to a third person.


But what we’re going to talk about now is dividing up land over time.?The easiest example is the “non-freehold estate? the landlord-tenant relationship.?The tenant has the property for a time, and then it will revert to the landlord at the end of that time.?A will have the property for a period of time, and then B will have the property after that.


Anglo-American law separates possession and ownership.?A possessor doesn’t necessarily own the whole “bundle of sticks??This can create some confusion!?The possessor of the property isn’t necessarily the owner of the property.


We divide interests in land based on whether they are possessory or non-possessory.?If it’s non-possessory, it’s a future interest.? “Future interest?means it’s non-possessory but could become possessory at a later time.?But a “future interest? is a current ownership.?For example, a landlord owns a building, but doesn’t have a possessory interest in the building.?That’s a future interest, but it’s not the ownership that’s delayed, it’s just the possession that’s delayed.




This is like learning a foreign language.?One problem is that some of the terminology is stuff you think you already know because it has a “lay?meaning and a different, more precise legal meaning.?So we’ll have new words to learn and also words we already know that we’ll have to relearn for this purpose.


Heir ?Heirs are defined by statute.?Living people have no heirs.? Heirs are not identified until the decedent dies (that’s what a decedent is).?You can’t be an heir unless you survive the decedent.


Issue ?Who are these people??It doesn’t mean children.?If you mean children, say “children??If you say issue, it means all direct lineal descendents.?It only goes down: children, grandchildren, great-grandchildren, continuing down theoretically forever.?If you believe in Adam and Eve, then we are all issue of Adam and Eve because we are direct lineal descendants.?Adopted children are treated the same as natural children for all purposes of the law.? But foster children or stepchildren are not descendants and thus not “issue??Stepchildren don’t inherit from their stepparents.


There are only four kinds of estates: (1) The fee simple absolute ?This is the most complete form of ownership recognized by American law.? It’s the complete bundle of sticks.? (2) The fee tail, (3) the fee simple defeasible ?These are fees that are capable of being defeated, and (4) the life estate.?These are all the freehold estates.?The non-freehold estate is the landlord-tenant relationship.?Those make up all the possessory estates.?All of these, except for the fee simple absolute, are associated with a future interest.?Everything always has to add up to 100%, and 100% equals a fee simple absolute.?If you can’t add up back to a fee simple absolute, you’ve missed something.


Fee simple absolute


This is what we mean when we talk about owning something.?It’s the whole bundle of sticks!?When you get fee simple absolute, you get all of these fabulous prizes!? (1) Possession without condition.? (2) Title that is indefinitely inheritable (after the 1540 Statute of Wills): you can leave the property to whoever you want when you die.?(3) Your property is freely alienable after 1290 and the Quia Emptores: while you’re alive you can also sell your property to anyone you want.?(4) Your possession is for potentially infinite duration: there is nothing inherent in the estate that will cause it to end.?The only thing that would cause the estate to end would be forfeiture for treason, where the property would revert to the sovereign.?Because a fee simple absolute is everything, it’s not followed by anything.?There is no future interest because there is nothing left to own.


Creation of the fee simple absolute


“O hereby grants Blackacre to A and her heirs”…this phrase includes words of purchase and words of limitation.?“To A?are words of purchase and define just who gets the property.?“And her heirs? are words of limitation that says not who gets the property, but what they get.?Don’t worry about the word “purchase?in situations where it’s really a gift.? It’s just terminology.?This is what the Statute of Quia Emptores did.? That’s how the fee simple absolute became alienable.?The heirs are considered to own nothing in reality.


So in the conveyance above, A takes Blackacre in fee simple absolute, and the heirs get nothing.? When you convey property to “A and her heirs? the heirs get absolutely nothing.?It is true that A’s heirs will likely be her children and will likely inherit either by virtue of being heirs of statute or by A’s will.?But if the heirs take anything, they’ll take it by virtue of the statute or will.?They get nothing by virtue of this gift.?Recall that A doesn’t have any heirs because living people don’t have heirs.


The defeasible fees simple


“Defeasible?means conditional.?These are also known as fee simple conditional.?When you think of “defeasible? think “defeat??Here are the wonderful cash and prizes you get when you get a fee simple defeasible: (1) You get possession without condition!?There is no condition precedent to your estate becoming possessory.?But there are conditions under which you could lose the estate.?(2) The estate is inheritable, but probably not devisable.?They could go to your heirs, but you might not be able to will the estate to anybody.?(3) The estate may be alienable, but it’s subject to defeasance.?(4) The duration is until the defeasing event occurs.


What’s the difference between a condition precedent and a condition subsequent??A condition precedent is a condition that has to occur before you get something (“I’ll give you ten dollars if you work for me for an hour.? You get the ten dollars after you work an hour.?.?A condition subsequent is a condition where you get something and you get to keep it until and unless the condition occurs.?This is a very important distinction that we need to master.?With a condition precedent, the condition has to occur before you get something.?With a condition subsequent, you get the thing, but if the condition occurs, then you lose it.


Fee simple determinable


The duration of this one is until some event occurs.?The estate ends automatically.?It is accompanied by a future interest in the grantor called “possibility of reverter?(not a reversion) in the transferor or his heirs.?So fee simple determinable plus possibility of reverter equals fee simple absolute.


If we’re trying to create a fee simple determinable, we’ll use language that will create a condition precedent, also known as ?i style='mso-bidi-font-style:normal'>durational language??The words you might see include “while? “during?and “so long as??When the duration has run out, the estate runs out and there’s nothing left.?When the duration runs out, the possibility of reverter turns into a possessory estate.


Fee simple subject to a condition subsequent


The duration is a little bit different.?It lasts until an election is made after the occurrence of the specified event.?It doesn’t end automatically, but rather ends at the option of the grantor or his heirs.?If the city of Columbus starts using a park as a school instead of a park and I think that’s okay, then I can decline to exercise my election.? The fee simple subject to a condition subsequent is always accompanied by a retained future interest in the grantor called “right of entry?or “retained right of entry for condition broken?? So a fee simple subject to a condition subsequent plus a right of entry equals a fee simple absolute.


The fee simple subject to a condition subsequent does not end automatically.?The grantor or the grantor’s heirs must take some action to enter onto the property and regain possession.?Therefore, two things must happen in order for the estate to end: some condition must occur, plus the grantor or the grantor’s heirs must take some action.?The most common language to establish this estate includes “provided that? “but if?and “upon condition that?


Some courts prefer to construe conveyances as fees simple determinable under there is clear language retaining the right of entry.?Note that the court in Higbee v. Kennedy does just the opposite.?This is not a hard and fast rule, but it is something you can fall back on when you’re hopelessly confused.


These defeasible fees are accompanied by a retained interest in the grantor, either the possibility of reverter or the right of entry.?If the future interest following the defeasible fee is created in a transferee then we call it an executory interest for reasons we’ll get to shortly.?When the interest is an executory interest, it doesn’t matter if the accompanying estate is a fee simple determinable or a fee simple subject to a condition subsequent.?Executory interests are not retained interests.


Mayor and City Council of Ocean City v. Taber ?The habendum clause contains limitations on the estate granted.?It usually follows the actual grant.?What did the habendum clause say in this case that was relevant to our discussion??It says that it should be used “for the purpose of a Life Saving Station??Is this a fee simple determinable, or is this a fee simple subject to a condition subsequent??Is the reversion to the trustees automatic??According to the deed, it seems to be.?It says that the land will go back to the trustees “without any legal proceedings, suit or otherwise??That sounds pretty automatic.?On the other hand, there is language that follows that says: “they shall be entitled to re-enter upon and take possession??Is that latter language consistent with the fee simple determinable??It doesn’t sound like it.?It sounds more like a fee simple subject to a condition subsequent because that is followed by right of entry, which is the future interest that this sounds like.


What does the court conclude??The court doesn’t seem to tell us why, but they say that it’s a fee simple determinable.? Has the use ended??Has the divesting condition been triggered??The United States stopped using the land for life saving stuff.?The way the court looks at it is that it’s not enough for Ocean City to take over the life saving station.? The condition seems to be that as soon as the United States fails to use the land as a life saving station, and thus as soon as the United States conveys the land to anybody else, the condition has occurred and the estate terminates.?What if the United States had leased back the land to continue using it as a life saving station??What if the United States subcontracted to somebody to do life saving?


There was an adverse possession claim in this case.?Why did it fail??Adverse possession started to run in 1967, so there couldn’t possibly be adverse possession.? There was a claim that the original deed to the United States was invalid.?If that had been true, the United States would have entered under color of title and might have obtained adverse possession over the parcel.?In this case, the owner granted the property to the intended grantee.?The grantor could argue that the possession was not hostile.


But the key is that if we have a fee simple determinable, which is what the court finds that we have here, adverse possession starts to run as soon as the determining condition occurs.?In this case, that’s when the United States stopped using the land as a lifesaving station.?Compare that to the next case.


Higbee Corporation v. Kennedy, Executor ?Was the estate created by the deed a fee simple determinable or a fee simple subject to a condition subsequent??Words that express conditions, like “provided? “if? and “upon the condition that?suggest the existence of a fee simple subject to a condition subsequent.? However, the express retention of a reverter to the grantor suggests a fee simple determinable.?Finally, the burden of clearly establishing a restriction on a grant falls on the drafter, and grants will be construed to make title as marketable as possible without being inconsistent with the grant.


The fee simple determinable is less marketable and alienable than the fee simple subject to a condition subsequent.?The court places a high burden on the drafter of the grant to use clear language establishing the fee simple determinable.?If it’s unclear, the court will rule that the grant is a fee simple subject to a condition subsequent based on public policy grounds.?The court thus finds that this grant was a fee simple subject to a condition subsequent.


Furthermore, the court finds that the condition subsequent has not been shown to have been broken.? The word “wishes?suggests a subjective state of mind of the grantee.?In order to show that the condition had been broken, the court says that Higbee would have to prove that Kennedy had “no inclination?to use the land for a road.?It wasn’t enough merely to show that the land wasn’t being used as a road.


Fee tail


This is a “tailored?estate. ?/span>This estate was designed to accommodate the dynastic urge by keeping property in the family.?While the fee simple absolute could be transferred to anyone and left or devised to anyone, the fee tail was different.?It was designed to keep family lands in the family.?Not only do you keep family lands in the family, but you keep them undivided.?Part of the purpose of this estate is to preserve concentrations of wealth.?In the French Revolution, this was thought to be so pernicious in its effect that in the Napoleonic code it was provided that you must divide the property among your children.?The idea was to get rid of the concentration of wealth that the fee tail was designed to preserve.?We will see that the fee tail has been largely abolished.


The fee tail includes: (1) Possession here is without condition.?(2) Modification of inheritability is limited to the grantee’s direct line.?(3) Only the grantee’s limited interest is alienable.?The grantee can sell a life estate, but it reverts to the grantee’s line when the grantee dies.?(4) This estate is not of infinite duration: it ends when the tenant in the tail’s line dies without issue.?At some point, in other words, the line could simply die out.


This estate is created by the words: “To A and the heirs of his body??Those words don’t create a present interest in the “heirs of A’s body? at least at common law.?Those are just words of limitation.?Because the fee tail falls short of the fee simple absolute, it must be followed by a future interest.?If the future interest is retained by the grantor or the grantor’s heirs, then it’s a reversion.?If I say: “to A and the heirs of her body? that gives A a fee tail but leaves a reversion to me in fee simple absolute.?If I say: “to A and the heirs of her body and then to B and her heirs?then I create a fee tail for A with a remainder for B (a future interest in fee simple absolute).?B doesn’t get any possessory interest until A’s line dies out.?But that doesn’t mean B doesn’t own anything.?B owns a future interest!


The fee tail was preceded by the fee simple conditional.?This is another example of government and rich people and their attorneys fighting with each other.?The owner of the fee simple conditional had the power to convey a fee simple absolute as soon as issue were born.?So having a baby made the father rich!?The fee simple conditional was abolished by De Donis Conditionalibus in 1285.?The younger generation wins for the time being by finding a way to convert the fee simple conditional into a fee simple absolute.? Later, the older generation wins again by establishing the fee tail.


The fee tail has been pretty much abolished everywhere.?Different states have dealt with the fee tail in different ways.?The two most common are: (1) “To A and the heirs of his body?creates a fee simple absolute in A.?(2) In most states, all you have to do to disentail the estate is to sell the property.?In fact, you can sell the property and then buy it right back.?The person you sell the property to and buy it back from is called a “straw man?


The fee tail in Ohio


Let’s talk about Ohio.?The Ohio statute says: “All estates given in tail, by deed or will, in lands or tenements lying within this state shall be and remain an absolute estate in fee simple to the issue of the first donee in tail.?span style='mso-spacerun:yes'>?So a gift that purports to create a fee tail will create a life estate in the tenant-in-tail, and then a fee simple absolute in the issue of the tenant-in-tail, assuming that the tenant-in-tail has any issue.

Another alternative used in other states is to abolish the fee tail altogether and say that “to A and the heirs of her body?equals “to A and her heirs??Or you could get a life estate that converts into a fee simple absolute upon the birth of issue.?There are a couple of reasons for these statutes.?One is that fee tails last too long!?They prevent the property from being used in commerce during that period.


Life estate


Here’s the stuff you get: (1) You get possession without condition.?(2) This estate is not inheritable by its very nature.?(3) The life estate is alienable, but A’s life is still the measuring life.?(This is called a life estate pur autre vie.)?(4) The estate ends with the death of the life tenant.?This is a lot less than a fee simple absolute!?That means that this estate is also always followed by a future interest: either reversion in the grantor, or remainder in a transferee.? Remainder off of a life estate is probably the most frequently used future interest.


Creation of the life estate


Originally, at common law, there was a presumption in favor of the life estate because that kept the property in the grantor’s family.?So if you say: “To A for life? the property goes back to the grantor and his heirs upon A’s death.?“To A forever? would also create a life estate.?“To A in fee simple absolute?would create a life estate at old, old common law because you failed to use the magic words.? But now, statutes presume that the grantor conveys everything the grantor has.?In other words, if O has a fee simple absolute, then “To A?will create a fee simple absolute in A unless there is evidence otherwise.?If you want to create a life estate in A, one way to do it, at least in Missouri, is to say: “To A and then to B and his heirs.?/p>




Woodrick v. Wood ? Is the holder of a remainder interest in some land entitled to stop the life tenant from destroying buildings there?? While at common law anything that altered leased premises in any way constituted waste, under Ohio case law there must be substantial damage to the reversion in order for waste to be actionable.


The issue is whether the owner of the remainder can sue in order to prevent waste.?She can!?Notice how this is another common pool problem!?When more than one person owns a piece of property jointly, it creates the incentive to commit waste.?If a life tenant thinks about fixing up the property, the incentive is not so great.? If they take care of the property, they have to pay the whole cost, but they may not get the whole benefit.?Most of the benefit might go to the owner of the remainder.?We have externalities!?By taking care of the place, the life tenant confers an external benefit to the owner of the remainder.?So the law steps in!?When we have this kind of situation, we’ll have a rule that says that the life tenant more or less has to take care of the property.?This rule is designed to cure these misincentives inherent in the situation.


There are two competing definitions of “waste??At old time common law, any change at all is waste, even if it improves the property!? But Ohio doesn’t recognize this rule.?In Ohio, it’s only waste if it actually lowers the value of the property overall.?There’s permissive waste and voluntary (intentional) waste.?If you destroy the place on purpose, that’s voluntary.?If you break your duty to keep up the place, that’s permissive waste.?The idea of beneficial or ameliorative waste is that if you’re going to make a change to your place and you’re a tenant, you better go bargain with your landlord first before you end up in court.?You must have the law of waste once we separate possession from ownership.?A life tenant will have an incentive to commit waste, and that’s why the government needs to step in and regulate.


Adverse possession and estates


An adverse possessor acquires by adverse possession the estate of the person who was in possession when A wrongfully entered.?So if the current possessor has a life estate, the interloper gets a life estate.? If the current possessor has a fee simple absolute, A gets a fee simple absolute, and so on.?You can’t adversely possess a future interest (except in the case of waste…see below).


This is a common pool problem.?Two people own an interest in the same land at the same time.?Whenever you have a common pool problem, regulations are sure to follow to deal with the “tragedy of the commons??If A’s possession would constitute waste, it would be a violation of C’s rights as well.?If A wasted stuff for long enough, he could get adverse possession against C.?But we’ll get back to this and clarify it later.


The point of this is not primarily to learn more about adverse possession, but rather to demonstrate the difference between possessory and non-possessory interests in land.? The estate is a thing.?You can only have adverse possession against a particular estate.?If that estate ends, like a life estate deforms into a fee simple absolute, then the thing you possessed doesn’t exist anymore.


The trust


The purpose of a trust is to separate management of wealth from enjoyment of wealth.?You create a manager, called the trustee, whose function is to make the property productive through investment and then dispose of the property according to the terms of the trust.?So you have a trusted person who is responsible for management and enforcing the trust.?But the trustee is not supposed to enjoy the money.?The trustee has a high standard of care and a fiduciary duty to the beneficiary.


The person that starts out with the money is called the trustor, settlor, or grantor.?The trustor transfers the property to the trustee, but not for the trustee’s benefit.? Then the trustee manages the property for the benefit of the beneficiary.?Sometimes, these three roles can be held by three different people.?You might set up a trust in anticipation that you might become incompetent in the future, and set yourself up as trustor, trustee, and beneficiary.?But then you provide that if you become incompetent, another trustee will be appointed.


The courts of law did not originally recognize and enforce this transaction.?Instead, they would say that the trustee had a fee simple absolute.? But the courts of equity would enforce trusts.?So not only do we divide title between estates and future interest, but also between legal title and equitable title.?That simply depends on which court you would go to in order to enforce the title.


So there are two kinds of title: legal and equitable.?Both the beneficiary and the trustee could have a fee simple absolute.?The trustee would have a legal fee simple absolute, while the beneficiary would have an equitable fee simple absolute.?For our purposes, all the classifications remain the same, except when we talk about trusts.?We say that the beneficiary has an equitable fee simple absolute and the trustee has a legal fee simple absolute.?Both of them can have fee simple absolutes.?In a sense, this doesn’t make sense.?We already defined fee simple absolute as the whole bundle of sticks, but now we’re saying that a legal fee simple absolute is not the whole bundle of sticks.


Trusts are private and secret, which is a plus for many people.?You won’t have to go to court to show that you’re not crazy, for example.? But trusts are expensive!?It costs money to set one up, plus you probably have to pay the trustee.?Trusts are good for their purpose, but they’re expensive.


Creation of the trust


You would say “to T in trust for B for life and then to C and his heirs??Then T has a legal fee simple absolute, B has an equitable life estate, and C has an equitable remainder in fee simple absolute.?T’s legal fee simple absolute gives the trustee the power to sell the property and invest the proceeds.?Even though T’s legal estate is going to end, we call it a legal fee simple absolute because T has to be able to sell the property.?T can’t enjoy the trust property.?B is entitled to the income from the trust, and B may be able to invade the “corpus?of the trust, too.?C gets whatever’s left when B dies.


Pigg v. Haley ?By statute, a conveyance is in fee simple absolute unless there is a contrary intention.?By precedent, life estate plus absolute power of disposition equals fee simple absolute and any remainder is automatically void.?But then, by statute again, life estate plus absolute power of disposition leaves a remainder in whatever the life tenant doesn’t sell or consume in his or her lifetime.


Edward Haley left a holographic (handwritten) will.?A holographic will has to be handwritten and signed.?It’s an exception to the general rule that a testator must sign a will, have it notarized and have it signed by witnesses.? If the whole thing is in the testator’s handwriting, you have some assurance that it’s not a forgery.


Mrs. Pigg found the will while rooting around her husband’s things.?The will was found among his genealogical notes.?Was this really intended as a will??Braunstein thinks it’s an open question.?When you really want something to be your will, you let people know.?Maybe this will was just tentative.?Maybe at one time he intended it to be final, but instead of tearing it up, he just put it aside.?This document was not kept in a place that you would usually expect to store important papers.?Mrs. Haley’s lawyer could have made the argument that this document was not intended to be a will at all.


The two big issues are: (1) What are the interests created??(2) Were there any interests that Garland gave up that would constitute consideration for the later agreement?


Courts tend to enforce these agreements because if they can come to an agreement it’s usually better than if they have to litigate.?Litigation sucks!


It’s a confusing case because of the consideration, but it’s not that confusing in the future interests sense.?It’s clear that there’s a life estate with the remainder to Pigg, but then there’s an absolute power to dispose.?There are several different views on the effect of that power, and the court has to sort out which is right and how it applies.


Future interests


Reversionary interests


These are interests retained by the grantor when the grantor conveys a vested estate that’s less than the estate the grantor had.?There are three types: (1) reversion, (2) possibility of reverter, and (3) right of entry (for condition broken).?Is there any difference between a remainder and a reversion??What we’re dealing with is a matter of form, and it’s a formal distinction that could have significant consequences.


In property, the extrinsic evidence rule is much more restrictive than it is in the law of contracts.? When property law developed, real property was the most important way that capital was held.?That’s no longer true.?In the absence of the statute, the words “to Mary?would have just created a life estate in Mary and would have left Oswald a reversion in fee simple absolute.? So after Mary dies, Oswald would have a possessory estate in fee simple absolute.


Braunstein says that this rule is related to the Recording Acts.?If A, the first purchaser, fails to make a record of sale, then B, the second purchaser without notice, will win.?We want to be able to tell by going down to the courthouse and looking at public records who owns what property.?If we want to accomplish that purpose, we can’t use extrinsic evidence.? If such evidence is allowed to be used too liberally, then it defeats the idea of a recording system.?Also, deeds last longer than contracts.? Contracts are basically done once they’ve been fully performed, and are most often performed within the parties?lifetimes.?But the significance of deeds can last a very long time, even after the parties are dead or no longer own an interest in the property.?So we want the deed to be certain on its face and within its four corners.?The Recording Acts create a strong incentive to record!


Black v. Black ?The court finds that the joint will implicitly gives Jessie a life estate and gives the nieces and nephews a remainder in fee simple.? What rights do the nieces and nephews have??Jessie seems to have the right to dispose of or consume some of the property that is subject to the will.?What does the language “then remaining?mean?


What’s the West Virginia statute and what’s the common law rule of how you deal with a case of a life estate with a power in the life tenant to dispose of some or all of the property that is the subject of the life estate?? Under the common law rule, the nieces and nephews would get nothing because if you give a life estate the absolute power of disposal then they actually get a fee simple and the purported gift to the nieces and nephews simply fails.?But under the statute, the life tenant has the power to dispose, but if there’s anything left it goes to the folks who hold the remainder.?The common law rule has been changed by the statute!?The purpose is to give increased flexibility to the life estate.


Frequently, the support of the life tenant is the principal goal of the testator.?For example: “To my spouse for life, and then to my children.?span style='mso-spacerun:yes'>? The goal is to provide for the spouse, but there is a secondary goal of providing for the children.?So you can provide the life estate plus the added power to dispose.?At common law, that just mutates into a fee simple absolute, but by statute, you can have this new category that’s kind of halfway in-between the two.


The court uses the statute and the result is that Jessie gets a life estate, and then the nieces and nephews get a remainder in fee simple absolute.?Braunstein suggests that because there was no power of disposal, it works out the same way under either rule.


Say you convey “to A for life with power to dispose, then to B and her heirs??Under the common law, we say that the gift to B fails and A gets a fee simple absolute.?At common law, the idea of the power to dispose is repugnant to the idea of a life estate.?On the other hand, under the statute, the second gift does not fail.?The statute says that we’ll enforce the clear intent of the testator.?What’s dangerous about putting in (or leaving out) the power to dispose??There’s a risk either way.?Land values go up. ?/span>The cost of living goes up.?The rents from owning a farm may be sufficient to live on at one point, but later not be enough.?If the life tenant can’t sell any of the property, they may be left destitute.? But on the other hand, the life tenant could turn out to be a spendthrift who gambles away the estate.? So there is a danger either way that can only be resolved through careful drafting.


The legal life estate is a pretty inflexible way to accomplish the purpose it’s usually used for.? The best way to accomplish the purpose of providing for the successive generations after the property owner’s death is a trust.




When a grantor conveys a vested estate of a lesser quantum than that which he had, the grantor retains a reversion.?A reversion is a future interest retained by the grantor when he transfers a vested estate(s) and/or a vested future interest of a lesser quantum than that which he owed.?For example, the fee tail is of a lesser quantum than the fee simple absolute, and a life estate is of a lesser quantum than the fee tail.?As part of the definition of reversion, notice that it says that when the grantor transfers vested estates, he retains a reversion.


The future interests of the defeasible fees


The possibility of reverter, right of entry, and reversion are all vested interests.?That means that they are all essential parts of the fee simple absolute.?They are not contingent.?They are retained parts of the fee simple absolute, which was vested. ?/span>Even if the owner transfers away a big chunk of his fee simple absolute, the part that he keeps is still vested.?Therefore, the rules we’ll look at next week (like the Rule Against Perpetuities) don’t work to invalidate these interests.?The point of those rules is to make land marketable.? We want to be able to put the interests back together again so we can get the land into commerce.


Originally, the possibility of reverter and right of entry were unlikely to be alienable or devisable.? In modern times, they are generally alienable, devisable and inheritable.


Two classes of future interests can be created in transferees: (1) remainders and (2) executory interests.?Any time you see a vested fee, the interest created in a transferee that follows it must be an executory interest.?A remainder cannot divest the preceding interest.


The vested remainder is a property right even though it’s not a possessory right.?It can be sold, transferred, or devised in a will.


A deed is effective when it’s delivered.?A will has no legal effect so long as the testator is alive.


No matter what language is used, the property interest that the grantor retains will always be a reversionary interest.


There are three ways to transfer property.?You can alienate it, you can devise it, or you can inherit it.


To alienate property means to sell it inter vivos, while you’re alive.? To devise property means to dispose of property by will.?If you inherit property, it means you die without a will and it goes to your statutory heirs.




This is not a retained interest.?It is created in a transferee.?It doesn’t have to become possessory, but it can become possessory.?There can’t be any gaps between the termination of the previous possessory estate and the remainder.?The common law couldn’t tolerate the idea that ownership was in abeyance.?“Who owns it in the meantime??It can’t be nobody!?There can’t be any gaps!?/p>


The remainder can become possessory upon the natural termination of the preceding estate.?For example, “To A for life, and then to B and her heirs.?span style='mso-spacerun:yes'>?A gets a life estate and B gets a remainder which becomes possessory on A’s death.


What about: “To A for life and then to B if B gives A a proper funeral.?span style='mso-spacerun:yes'>?What’s a proper funeral??You have to wait until after the person’s dead to have a funeral.?There is a necessary gap between A’s life estate and when B’s estate becomes possessory.?Therefore, B’s interest is not a remainder.


Contingent remainders


A remainder is contingent if either or both of two things exist: (1) It is subject to a condition precedent, and/or (2) it is given to an unascertained person.?Notice with the “and/or? that remainders can be “doubly?contingent.


Vested remainders


There are three types of vested remainders: (1) Vested remainders, (2) vested remainders subject to open (or vested subject to partial divestment) ?for example: “To A for life and then to the children of A and their heirs (if A already has at least one child)??If there are more kids, the existing kids get partially divested.?(3) Vested remainders subject to (complete) divestment ?“To A for life, then to B and his heirs, but if B marries Z, then to C and his heirs.?span style='mso-spacerun:yes'>?A vested remainder subject to divestment is also known as a vested remainder in fee simple absolute subject to a condition subsequent.?Remainders change their name based on changes in the relevant facts.


The law is antiquated in two respects: (1) It is based on a time when there was no technology for determining if people can have children.?(2) It is based on the presumption that children have to be conceived during the lifetime of the husband.?If you have frozen embryos or conception that occurs after the death of the donors, the law won’t know what to do.


Remainders stay remainders, and reversions stay reversions.?We classify them at the time they are created.?However, remainders can switch between being vested and being contingent.?O has a reversion if he has given away a vested remainder of lesser duration than that which he had.?The focus is on vested and not contingent interests. ?/span>Future interests are future because they’re not yet possessory.?They are interests that the law recognizes.?They can be inherited and devised by will.?A vested life estate plus a vested remainder in fee simple absolute equals a possessory interest in fee simple absolute.?A will has no effect to future interests while you’re living.


In order for a remainder to be vested, it can’t be subject to any condition precedent.?But conditions precedent exclude a certain group of things that might happen.?Vested means not subject to a condition precedent other than the natural termination of the precedent estate.


If “A’s children?get a remainder, and A doesn’t have any children yet, what kind of remainder do A’s children own??It’s a contingent remainder!?The children, if they don’t exist, are unascertained.?The most common groups of people who are unascertained are (1) heirs of living people, and (2) unborn children.


Executory interests


An executory interest is contingent, not vested.?An executory interest is always given away, never retained.?An executory interest is a future interest in someone other than the grantor that’s not a reversion.?One way you can have an executory interest is when you have a fee simple subject to an executory limitation.?Another way is when you have a vested remainder subject to divestment.


There are two kinds of executory interests: shifting and springing.?Shifting executory interests go from one grantee to another upon the occurrence of some condition.?Springing executory interests go from the grantor to a grantee upon the occurrence of some condition.? Another way to put it is that there is a springing executory interest whenever there is an unavoidable gap in ownership of a present possessory estate in the land.?If the gap is avoidable, then you don’t call it a springing executory interest.?But these types have no practical significance.?We distinguish them for analytical purposes.


What happens if there is a gap in ownership??What happens to possession??Land is always owned by someone.?During the gap, the owner gets a fee simple subject to executory limitation.?The distinction between shifting and springing is a distinction between from whom the interest is coming.


The Statute of Uses


Before the Statute of Uses in 1536, shifting executory interests were not enforceable at law but only in equity.?In order to make shifting executory interests enforceable, you had to use certain “magic words?to “raise a use??You also had to appoint a “feoffee to uses? who was almost like a trustee.?After the Statute, the legal fee simple of the “feoffee to uses?disappeared as soon as he got it.


“To T and his heirs for the use of A and his heirs for so long as A is unmarried at the time of her death and then to B and his heirs? Before the Statute of Uses, you wouldn’t allow the future interest in B.?At law, this wouldn’t have been enforced, but in equity, it would have been recognized.


The Statute of Uses is passed to increase taxes, among other reasons.?“Raising a use?was a tax avoidance scheme because seisin didn’t pass at death at law.


What the Statute did was execute the trust.?“Execute?means the same thing here as it does when you talk about “executed?contracts.? What the Statute says is that what were previously equitable interests are now legal interests.


In the above example, before the Statute of Uses, A had an equitable fee simple determinable and B had nothing at law, but had an equitable interest.?T had the fee simple absolute at law, but his duties would be enforced at equity.?O had a possibility of reverter at law, but nothing in equity.


So law and equity were in conflict!?The Statute of Uses brings them into harmony!?We make all the interests legally enforceable.?The mechanism was complicated because it “indulged in a fiction? the “feoffee to uses? or trustee, acquired a fee simple absolute, but it disappeared as soon as he got it.?Thus, the trust was said to be executed.


So how do we still have trusts in light of the Statute of Uses??The Statute of Uses executed trusts!?This Statute is part of our common law here!?How can we still have trusts?


Trusts are valuable!? The courts and people with money didn’t want to see them go.?There are two possibilities that will result in the creation of a valid trust:?(1) To T for the use of T1 for the use of…somebody else.?The first trust would execute, but the second trust would be valid.?This is totally artificial, but it worked.?One you execute once, you don’t execute again, so the second trust gets enforced in equity.?(2) You can establish an “active trust?but not a “dry?or “passive?trust.


How do we interpret “To A five days hence??How can you have a fee simple absolute if it’s going to end in five days or when somebody graduates from law school or gets married or whatever??It seems inconsistent, and it is.?We just grin and bear it.?A fee simple absolute is an estate of potentially infinite duration except as modified by the Statute of Uses.


Interests can be vested in two ways: (1) They can be vested because they are no longer contingent.? (2) They can be vested because they are possessory interests, which are always vested.


Executory interests are never vested until they become possessory.?In other words, for the purposes of the Rule Against Perpetuities, they are always treated as contingent, not vested.?(This is not in the right place in your notes!)


The reason we will call something an executory interest is because it can’t be a remainder.


How come there’s a reversion when there are contingent remainders that seem to be complete alternatives??It’s kind of fictional, but on the other hand, there are ways that a life estate can end before the death of the life tenant.?For example, the life tenant can decline the estate.?In that case, the estate may go back to the grantor in fee simple absolute.


A vested remainder subject to divestment could be clarified to be more specific.?It could be a vested remainder in fee simple determinable, a vested remainder in fee simple subject to a condition subsequent, or a vested remainder subject to an executory limitation.?The latter three tell you that this remainder is followed by an executory limitation.