Legal Forms of Property Flashcards
Present Possessory Interest
Right to possess/use property now
- Tenants
Defeasible
Defeatable, capable of being terminated
Future Interest
Will (or might) get possessory interest to property in the future
Vested Interest (in future interest)
means that a specifically identifiable individual will have a definitive future interest
Vested Possession
when an interest becomes possessory
Language in a deed must be read to
create a legally recognized estate
Does someone always need to own land/have present interest in it
Yes, if the language doesn’t say who, the law implies it goes back to original grantor
What happens if a person is dead when their interest would become possessory
It goes to their heirs
Fee Simple
Full ownership
- present possessory interest unlimited in time
- To Marge
Life Estate
Present possessory interest for the life of a named person
- when they die it automatically goes to another
- Language: To Marge for life, then to [grantor or third party]
Reversion
interest retained by original grantor who will get property back after life estate
Remainder
interest held by third party during life estate
Contingent Remainder
third person gets it if they do or don’t do some condition
Fee Simple Determinable
Present possessory interest that ends automatically on occurrence of future event
- if the occurrence does not happen it goes back to original grantor who holds a possibility of reverter
- Language: To Marge as long as [durational language], then back to [grantor]
Fee Simple Subject to Condition Subsequent
Present possessory interest that does not end automatically on happening of future event
- original grantor gets a right of entry
- Language: To Marge, but if [conditional language], then back to [grantor]
Fee Simple Subject to Executory Limitation
Present possessory interest that ends automatically on the occurrence of future events
- goes to a third party who holds executory interest
- Language: to Marge, [durational or conditional language], then to [third party]
Conversion of Estates
Whenever property is transferred, all of what the grantor had must be accounted for
Numerous Clausus
There are a limited number of property interests which can exist as an interest in property
- Attempts to create interests that are unknown to the law are ineffectual
Waste
Cause of action against present possessory interest holders (not just life tenants), if present possessory interest holder unreasonably damages property
Affirmative Waste
Take some unreasonable act that causes excess damages to the remainder interest
Permissive Waste
Unreasonably fail to upkeep causes excess damage
Ameliorative Waste
Improve value of property
- Minority view - not permitted
- Majority view - balance interests
Alienation
restriction on transferring rights
Direct restraints on alienation
typically held void
Conditions that have the effect of restraining alienation
- Allow restraints taken to be reasonable
- Allow if it is framed as more about particular use rather than identity of user
Tenancy in Common
Each tenant as a separate, undivided interest
- can hold different shares but have the right to possess the whole property
Separate Interest
can alienate their interest and choose what happens to their interest at their death without consulting the other tenant
Undivided Interest
equal right to possess the whole property
- can use the whole thing
Right of Survivorship
Surviving tenant automatically acquires the interests of another joint tenant when the other tenant dies
Four Utilities that must be met to create Joint Tenancy
- Time: each interest acquired at the same time
- Title: each joint tenant acquires interest by same instrument
- Interest: each joint tenant must have the same legal interest
- Possession: each tenant must have equal right to possess the whole
Severance
ends joint tenancy
- If any of the four utilities no longer holds, converts to tenancy in common
Tenancy by Entirety/Marital Property/Community Property
- Only for Married Couples
- Joint Tenancy plus: has right of survivorship, four utilities plus marriage, can’t sell without consent of the other, no right to partition
Partition
action available to tenants in common and joint tenants to judicially divide ownership interest in land
- can be filed any time for no reason
Partition in Kind
physical division of land
Partition by Sale
Order land sold, and proceeds divided by ownership interest
Which kind of partition is preferred
partition in kind but partition by sale is used more
Three Co-Ownership Concepts
Accounting, Ouster, Contribution
Accounting
cause of action against co-tenant in possession after ousting the other co-tenant
- co-tenant in possession pays the other for their share
Ouster
Deprives other co-tenants from possessing the whole property
Contribution
Action by co-tenant in possession against co-tenants
out of possession for payment for maintenance or improvements on
property
- Generally not available
Contribution is Available when
- Counterclaim against accounting action
- Expenses necessary for the property being taken
Severance converts
joint tenancy to tenancy in common
Classic severance case
one tenant sells or gives away interest to a third party
Borderline Severance cases
mortgages and leases
Common law decision after divorce
- majority
- property divided equitably
Community property after divorce
- Minority
- dived equally
Term of Years
- lease for any fixed time
- automatically ends at specified time
Periodic Tenancy
- automatically rolls over in specified intervals
- Unless parties give notice
Common law - not notice required
Today - many jurisdictions require notice in frequency in which rent payments are made
Tenancy at Will
Can be terminated by tenant or landlord at any time
- Common law: no notice required
- Today: many jurisdictions require notice in frequency in which rent payments are made
Tenancy at Sufferance
- tenants that have overstayed the lease
- landlords can evict but if they don’t another kind of lease might arise
traditional lease law says what about landlord and tenant duties
- they are independent
- both parties are required to fulfill as promised regardless of the other’s breach
Covenant of Quiet Enjoyment
Implied term in every lease that tenant will have quiet and peaceful possession of premises as against landlord
- only breached by actions of the landlord
Constructive eviction
If landlord breaches covenant of quiet enjoyment, forcing tenants to leave, and they leave, they have been constructively evicted
- they are relived of the requirement to pay rent
Trend toward treating promises in leases as
- dependent by looking at the intent of the parties
- independent covenant models in the background
Implied Warranty of Habitability
Nearly all jurisdictions, landlord has ongoing duty to repair, breach of which justifies non-payment of rent
Implied Warranty of Habitability Variation on
- Whether tied to housing code
- Waivable for consideration v. non-waivable
- Residential lease or all leases
- How to calculate amount of rent withheld
Implied Warranty of habitability central feature of
revolution towards tenant protections in lease law
Landlord’s transfer
sell property to new landlord
General rule of landlord transfer
new landlord takes subject to lease
Exception to general rule of landlord transfer
foreclosure on landlord’s interest
New landlord’s duties
provisions of the lease that run with the land
- only bound by lease provisions that touch and concern the land regardless of what lease says
Tenant’s abandonment requires landlords to
- mitigate damages
- must make commercially reasonable efforts to re-rent apartments after tenant’s abandonment
Tenant’s are liable for what after abandonment
amount landlord can’t make up by re-renting
Reasonable efforts by landlord to re-rent involve
- treating apartment as vacant
- not turning down commercially reasonable replacements
Sublease
Original tenant carves out a mini-lease from their interest to new tenant
After sublease what are the relationships
Original tenant and new tenant in a landlord-tenant relationship
Assignment
Original tenant transfers entire lease to new tenant
After assignment what are the relationships
Original landlord and new tenant in a landlord-tenant relationship
- original tenant secondarily liable for rent
Traditional rules to determine if assignment or sublease
If transfer is for full remaining interest in property it’s an assignment
If any less than full remaining interest is is a sublease
Privity
A legal relationship between two people that imposes legal duties
Privity of Contract
- Occurs when: two parties actually agreed to a contract
- Duties: provided for in the contract
Privity of Estate
- Occurs when: two parties have interest in the same real estate such that 1) the interest of one is directly carved out of the interest of another and 2) one of the parties is in actual possession or has a reversion
- Duties: those that run with the land
Sublet Privity
- Original tenant is in privity of contract and estate with original landlord
- New tenant is in privity of contract and estate with original tenant
- New tenant in neither privity of contract nor estate with original landlord
Assignment Privity
- Original tenant is in privity of contract but not estate with original landlord
- New tenant is in privity of estate but not contract with original landlord
Bottom line of Assignment duties
the duties of original landlord and new tenant to one another are only those duties in the lease that run with the land
Assumption
- Assignee agrees to be bound by original lease terms
- binds new tenant to the landlord in privity of contracts
- no necessary effect on original tenant’s relationships
Novation
- Parties agree to erase privity of contract between original landlord and original tenant
- If landlord agrees to novation after assignment, original tenant is entirely off the hook, no relationship with the property or other parties
- no necessary effect on the new tenant’s relationship with landlord
Traditional rule of landlord consent
if the lease requires landlord consent to proposed sublease or assignments, consent is required and can be withheld unreasonably
Many jurisdictions of landlord consent
Regardless of what lease says, consent cannot be withheld unreasonably
- variation from state to state
Condominiums
Owners own their unit inside the walls in fee simple; everything else all owners own as tenants in common
What creates condos
Declarations or Master deeds lay out rule
What governs condos
Homeowner’s association
Renting in Condos
Controversial; split authority on how it can be prohibited after creation of community
Cooperatives
Corporations own building; tenants/owners collectively own all stock in corporation
- Corporation leases tenants/owners their units
How are co-ops created
By corporate registration documents
What governs a co-op
co-op board
Roommates
co-lessees jointly iving together and jointly signing a lease
What is Covered by the FHA
- Sales of residences by brokers
- rentals by broker or landlord with four or more units
- Condos
- Co-ops
What is not Covered by the FHA
- Single family homes sold or rented by owners with less than three properties and no broker
- rentals of dwellings with less than four units in which owner lives
- roommate selection
- additional exceptions: housing for older persons
Trusts
One person (trustee) holds and manages property for the benefit of another (beneficiary)
What authority does trustee have over the property
They hold legal title to trust property and can transact with it as an owner
- owe fiduciary duties to beneficiary
What claim does beneficiary have in the property
Equitable title; holds claim against trustee for breach of fiduciary duties if necessary
Settlor
- grantor, trustor
- Person who creates the trust
- can also be trustee or beneficiary as long as they are not the sole one in either
Trustee
- Person/Entity with legal title to property
- manages on behalf of beneficiary and owes them fiduciary duties
Beneficiary
Person/persons with equitable title to property
Are spendthrift clauses enforceable
Generally yes
Difference between ownership in trust and outright ownership
Spendthrift clauses are generally enforceable
Courts strictly enforce
- Liability even where conflicts of interest are not very dramatic and without actual evidence of loss
- liability for failing to prevent breach by co-trustees
- Quasi-punitive and punitive damages available
Charitable Trusts
- Require valid charitable intent
- can last forever
- Subject to cy pres
Cy pres
where the specific purpose of charitable trust is impossible, illegal, or impractical, the court will substitute another within the settlor’s general charitable intent
Creating a Trust
- Settlor intent to create what the law recognizes as a trust
- Ascertainable beneficiaries
- Specific property (res or corpus)
- If testament or res is real property writing may be required by Wills Act or Statute of Frauds
- Trusts usually specify trustee, but a trust will not fail for want of a trustee
Corporations are
artificial legal entities or legal persons
- authorized by statute
- created by registration
Corporations have what rights
The private law rights or natural persons
- own property
- enter contracts
- sue and be sued
Corporations Property
- Corporation is itself property owned by shareholders
- but corporate property is distinct from shareholders property
Shares in corporation are
personal property of the shareholders
Liability of corporations and shareholders
They are not liable on each others debt’s
What governs relations between shareholders, managers, and everyone else
a complex mix of contract and state corporate law
