OUTLINE PROFILE:

Author:  	Damien Falgoust <dfalgoust@mail.utexas.edu>
School:		University of Texas
Course:		Property
Year:		Fall 1996-Spring 1997
Professor:	Prof. Ernest Smith
Book:		Cribbet, Johnson, Findley, Smith; 7th Ed.
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SOURCE OF THIS OUTLINE:

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A MESSAGE FROM THE AUTHOR:

This outline is e-mailware!  While there is no cost for using the outline, you must drop me a line at dfalgoust@mail.utexas.edu to tell me what you think, if it helped you, etc; it’d also be nice if you dropped by my web page at http://www.geocities.com/NapaValley/3578/ and signed my guest book.

Feel free to redistribute this outline unmodified to anyone who may find it useful.  This outline is provided “as is” and I make no promises as to its accuracy (it worked for me, your mileage may vary).  Good Luck on exams!

Damien Falgoust
University of Texas School of Law

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PROPERTY OUTLINE
Prof. Ernest Smith – Fall 1996/Spring 1997

I.	General Notes on Property
A.	What is Property?
1.	General Attributes
a)	Cash Value
b)	Separability from Person
c)	Value After Death of Owner
d)	Transferability (Alienability)
e)	Product of One’s Own Efforts
2.	Examples:
a)	Military Retirement – not property
b)	Earning Capacity – not property
c)	Accrued Goodwill of Medical Practice – not property
d)	Law Degree – not property
3.	General Incidents of Ownership
a)	Possession (right to have, hold, & keep)
b)	Exclusion (right to exclude others)
c)	Disposition (right to alienate)
d)	Use (right to employ the property as desired)
e)	Benefit (right to profits realized through property’s use)
f)	Destruction (right to destroy property)
B.	Posner and Property
1.	Property rights are “natural” (contrast with Bentham)
2.	Without property rights, there is no incentive to use property efficiently.
a)	There would be no consequences for theft
b)	People would disfavor activities that would require prepatory investment.
(1)	Ex.:  People would not farm, since this would require time to develop, during which the fruits of their labors could be taken by an interloper with no consequences.
(2)	Ex.: Thus people would turn to activities requiring less investment, such as hunting.
c)	Property rights should be transferable to promote efficiency.
(1)	Ex.: Farmer A owns land.  A’s crop = $1,000.
(2)	Farmer B can raise a crop worth $1,500.
(3)	If B pays A anything between $1,000 to $1,500 for the use of the land, both parties win.
(4)	e.g., if B pays A $1,250 then A makes $250 more than he would have, and B makes a $250 profit.
3.	Three Elements for an Efficient System of Property Rights:
a)	Universality – every limited resource must be owned by someone.
b)	Exclusivity – the owner must be able to exclude others (to provide an incentive to invest labor).
(1)	Note that this is never absolute (see infra).
c)	Transferability – property rights must be able to be shifted from one party to another (for maximum economic benefit)
4.	Note that Posner generally does not factor morality into his analysis.
C.	Other Philosophies:
1.	Blackstone
2.	Bentham – property is a ‘basis for expectation’
a)	Property is entirely a construct of law (there is no ‘natural’ property – only by discarding “might makes right” principle in favor of securing/labor theory does a right of possession exist)
(1)	Ex.: If a caveman must constantly defend what he owns, does he really ‘own’ it?
b)	Expectancy: securing something and/or investing labor in it gives rise to an expectation to use it.  The law should and does honor this expectation in property rights.
c)	Comparing Bentham to Posner
(1)	Anomalies under Bentham:  Under the Posner theory, property is something that has value, not just what is legally defined as property as under Bentham, but from what people hold as having value.  There are several cases of items treated as property without law, such as illegal drugs, territories for marketing such, boyfriends and girlfriends.  Here no property right exists but people treat it as such either by enforcement of societal values or by fear of retaliation.
(2)	Anomalies under Posner:  Transferability frequently measures more how much a person wants something, we being non-rational operators, than how efficiently we will do so.  Transferability of some items actually induces inefficiencies, such as those which are merit based.  If you could transfer law school admissions, you would be measuring who wanted it the most, or who could pay the most for it, and not who could best utilize it.
3.	Cohen:
a)	“Property merges by imperceptible degrees into government, contract, force & value.”
b)	In other words, when is property taken, and when is it merely regulated?
4.	Locke:
a)	Labor creates property
b)	Ex.: A deer is unowned until a hunter kills it.
D.	Defining Ownership of Property
1.	What does it mean to “own” something?
a)	Are tissue samples collected for a patient’s medical exam, but later used in a lucrative cell line, the patient’s property?  Moore v. Regents of University of California.
(1)	Court held the tissues were not property.
(a)	Policy reasons: don’t want to inhibit research.
(b)	Also, cites to laws which imply tissues are treated differently.
(2)	Dissent: it is unfair to enrich the researcher and not the patient.
b)	How would some of the above philosophers feel about this?
(1)	Posner would disagree; if property rights are ‘natural’, the patient owned the cells, and he should have the right to transfer them to his gain.
(2)	Locke would agree because the researcher’s efforts create a property interest.
2.	Limitations on Property (Property as a bundle of sticks)
a)	The three elements are never absolute.
(1)	Most notable is exclusivity.  
(a)	Government workers in the course of their employment can often enter property over the owner’s objections; they have a right to be there that supersedes the owner’s right of exclusivity.  State v. Shack
(b)	Property rights can also give way to a state’s policies
(i)	Thus, a state cannot enforce a racially discriminatory agreement, even over the objections of property owners attempting to exercise their right of exclusivity.  Shelley v. Kraemer
II.	Possession and Property Rights
A.	Occupancy
1.	To possess unowned property, there must be an actual taking with intent to possess.
2.	This boils down to:
a)	A physical relationship with the property, and
b)	The intent to exercise exclusive control over it.
3.	Thus, mere location of unowned property is insufficient; there must be some effort to actually possess the property.  Eads v. Brazelton 
4.	This serves several functions:
a)	Economic – by giving the property to those who can actually get to it, it becomes marketable sooner.
b)	Notice – an actual attempt to possess is more likely to give other interested parties fair notice that the property is spoken for.
c)	(In addition) Labor Theory – as Locke says, labor creates possession.
B.	Finders
1.	Generally speaking, a finder has the right to possession against all but the original owner (Armory v. Delamire)
2.	Exception: If something is found on private land, then the found object belongs to the landowner, not the finder.
a)	What makes land private?  How public must a place be before a finder can recover?
b)	Bridges v. Hawkesworth – public part of a store is sufficiently public.
c)	Smith’s Party – If someone holds a party in a private home, how ‘open’ does the invitation need to be before it becomes public?
C.	Stolen Property
1.	A thief cannot pass good title.  But what if there is a good faith purchase of the property?
2.	Two methods of handling:
a)	Adverse possession rule: to take title, the purchaser must make hostile, actual, visible, exclusive & continuous display of the property for the statutory period.
(1)	Problem is how to do this with personal property – if it is, say, a painting on display in one’s home it is not ‘visible.’
b)	Discovery rule: for the purchaser to take title, the statutory period begins running if the original owner does not make due diligence to find the property.
(1)	Problem is how does the good-faith purchaser know if he has good title – there is always the question of if the owner has exercised due diligence.
3.	Posner & Epstein would have favored the owner over the purchaser.
D.	Adverse Possession
1.	To establish adverse possession, possession must be:
a)	actual
(1)	real & substantial
b)	visible – “conspicuous”
(1)	must exert dominion over the land, but only to the extent that the land will permit.
c)	notorious – “widely known”
(1)	public perception that the land ‘belongs’ to the adverse possession is sufficient.
d)	exclusive 
(1)	there cannot be a sharing of ownership; however, allowing others to use the land periodically does not establish lack of exclusivity (i.e., letting local kids ice-skate on one’s pond)
(2)	basically, no sharing with the owner or the public at large.
e)	hostile
(1)	asserted against all other claims (not evil intent)
f)	continuous
E.	Conquest
1.	All title to land extends from the sovereign
2.	In competing chains of title, the one who can trace the land to the earlier grant that extends from the sovereign has the superior title.
a)	It does not matter which sovereign – If landowner A has a grant from Mexico (who had the land first) and landowner B has a grant from the U.S. (the current sovereign), landowner A gets title.
b)	Only grants from “civilized” nations count.  (the Indians are screwed)
3.	Locke favors this (disallowing title from “non-civilized” nations) because it fosters economic development (he believed that “work creates possession.”)
III.	The Anglo-American System of Estates in Land
A.	Possessory Estates
1.	Fee Simple Absolute (or just fee simple) (FSA)
a)	The closest thing to absolute ownership of land possible.
b)	Words of Creation: “…and his heirs”
(1)	It used to be that to give a Fee Simple Absolute, the grant had to say “to A and his heirs.”
(2)	Most modern states have relaxed the rule to merely requiring words showing an intention to create a fee simple, or assume a fee simple unless otherwise indicated.
(a)	however, without the specific words title may be unmarketable – that is, the owner may in fact have a fee simple, but the uncertainty makes the title unmarketable.
(3)	Note that these are words of limitation.  Their meaning is artificial – the landowner’s heirs do not necessarily get anything; the landowner can dispose of the land as he pleases.
c)	Fee Tail – abolished in most states, used to create an estate that passes to one’s descendants.  Constructed with “to A and the heirs of his body.”  Only important for history and Jane Austen novels.  Creation of a fee tail in most states results in a fee simple by statute. 
2.	Life Estate
a)	Estate that runs for the life of someone, usually the grantee.
(1)	Ex. O grants to A for life.  A has the estate until his death, at which time the estate reverts back to O.
(2)	Historically, a life estate was presumed unless otherwise noted.  This presumption has changed.  Now a life estate only exists if expressly created as such.
b)	A life tenant cannot give away more than a life estate.  Thus if:
(1)	O grants to A for life
(2)	Then A grants to B and his heirs,
(3)	B does not get a fee simple.  B’s estate can only last as long as A is alive.  (This creates a life estate per autrie – for the life of another)
c)	A life tenant has an obligation to the remainderman to avoid waste
(1)	voluntary waste – actively harming the property
(2)	permissive waste – allowing the property to deteriorate 
3.	Defeasible Estates – an estate where the remainder is vested, but may lose the title on the happening of some event.  Contrast to a contingent remainder or executory interest.
a)	Fee Simple Determinable (and Possibility of Reverter) (FSD)
(1)	An estate where the property automatically reverts back to the grantor upon the happening of a given event.
(a)	created by durational, adverbial language, e.g.: for so long as, while, during, or until.
(b)	Ex.: “To church for so long as the land is used for church purposes” – creates a FSD in the church; if the land is ever not used for church purposes, the grantor automatically gets title to the property back.
(2)	The interest the grantor retains is the possibility of reverter, a future interest (see supra).  It can be transferred like any other property.
(3)	Note that under FSD adverse possession is possible since the grantor has title; if he permits the church to operate on his land for a long enough time, they can claim they have adversely possessed the land.
b)	Fee Simple Subject to a Condition Subsequent (and Right of Entry) (FSCS)
(1)	An estate where the grantor retains the power to terminate the grantee’s estate.  (The grantor must take action to get the estate back.)
(a)	created by phrases such as: but if, upon condition that, provided that.
(b)	Ex.: “To church, provided that the land is used for church purposes: -- creates a FSCS in the church; if the land is ever not used for church purposes, the grantor has the right to reclaim the land.
(2)	The interest the grantor retains is the right of entry, a future interest (see infra)
(3)	Note how under FSCS adverse possession is impossible since the church does not lose possession until the grantor exercises his right of entry.
c)	Fee Simple Subject to an Executory Interest (FSEI)
(1)	Similar to a FSD, except the land reverts to a 3rd party
(a)	Ex.: “To church for so long as the land is used for church purposes, and if they are ever not used for such, then to B” – creates a FSEI in the church, and an executory interest in B; if the land is ever not used for church purposes, B automatically gets title to the property.
(i)	(Except that this violates the rule against perpetuities and is thus void.  See infra.)
(2)	See ‘Executory Interests’ under ‘Future Interests,’ infra.
d)	Note that FSD and FSCS are not that different, since even a FSD will require some kind of court action to get the tenant to move.
e)	The cy pres doctrine allows a charitable donee to use the property in a similar fashion to the requirements of the grant if precise performance is impracticable.  (Similar to perpetuities reform, supra; I believe since they both involve “re-writes” of the conveyance they share the name)
f)	In deciding if there is a FSD or a FSCS, the court will look at the document as a whole, and the intent of the parties.
(1)	Oldfield v. Stoeco Homes, Inc. – despite the phrase “automatically cause title to revert,” the court held that other language implied the giving of a FSCS (i.e., clauses allowing later modification of the contract, references to ‘conditions’)
B.	Future Interests
1.	Types of Future Interests:
a)	Interests In Grantor:
(1)	Possibility of Reverter – created by FSD (see supra)
(2)	Right of Entry – created by FSCS (see supra)
(3)	Reversion – If a grantor conveys less than a fee simple, then he has a reversion.  “Any future interest in the grantor that becomes valid at the natural termination of the prior estate.”
(a)	If it is at all possible for the grantor to get the property back, he holds a reversion.
(b)	Ex.: to son for life, then to granddaughter and her heirs if she outlives her father creates a reversion in the grantor.
(i)	If the granddaughter does not outlive her father, the property reverts back to the grantor.
(c)	A reversion is created automatically.
(d)	Note that this (and any) interest in the grantor is automatically vested..
(e)	Distinguished from Possibility of Reverter and Right of Entry:
(i)	The prior two stem from a fee simple – the grantee holds the property in fee simple unless the stated interest happens.
(ii)	A reversion comes from less than a fee simple – at the natural termination of the preceding estate, there is no remainder (or executory interest) for the estate to go to.
b)	Interests In Transferees (3rd parties)
(1)	Remainder – a grantee that gets the property on the natural termination of the preceding estate (typically a life estate)
(a)	Vested Remainder – 3 types (Indefeasibly Vested, Subject to Open, and Subject to Divestment)
(i)	Indefeasibly Vested Remainder – the transferee’s estate is known in type and quantity.  Can only be given to an ascertained person.
(a)	There are no contingencies that can prevent the remainder from taking the property.  (It will become possessory on the termination of the preceding estate)
(b)	There is no possibility of the remainder taking a smaller estate.
(ii)	Vested Subject to Open – remainder that is subject to reduction in size.  The result of a class gift.
(a)	Note that once one member has vested, the unborn members of the class have an executory interest (which would partially divest the vested member)
(iii)	Subject to Divestment – a vested remainder which is subject to divestment on a condition subsequent.
(a)	Ex.: to A for life, then to B for life; A has a life estate, B has a vested remainder subject to divestment (he will get the estate, but if he dies before A then O gets the estate through reversion)
(b)	Ex.: to X for life, then to A and his heirs, but if when he dies A has no children then to B and his heirs; X has a life estate, A has a vested remainder subject to divestment (in the event he dies without issue)  (B has a shifting executory interest)
(b)	Contingent Remainder – 2 types (Condition Precedent and Unascertained Person)
(i)	Condition Precedent – the remainder does not vest unless a given condition occurs.
(a)	Ex.: to A for life, then to B if B marries C; A has a life estate, B a contingent remainder.  B will not vest unless he marries C. 
(ii)	Unascertained Person – in a class gift (see above) when no members of the class have been born, the interest is contingent on a member of the class being born.
(a)	Ex.: to A for life then to A’s kids (A has no kids); A has a life estate; A’s unborn kids have a contingent remainder.  (If A has a kid, the kid’s interest vests subject to open)
(b)	Ex.: to A for life, then to A’s kids that outlive him (A has two kids, B and C); A has a life estate, B & C have a contingent remainder.  B&C do not vest unless they outlive A.  (the persons who will outlive A are unascertained)
(c)	Note how the above example works for tax planning, avoiding double taxation of the estate (if it was to A for life, then to A’s kids in fee simple, any kids that die before A have estate taxes due on their portion of A’s estate, in addition to the tax paid on the estate as a whole for A’s death)
(2)	Executory Interest – a grantee that gets the property on the unnatural termination of the preceding estate (typically a fee, or a life estate cut short)
(a)	Shifting Executory Interest (Divesting a Transferee)
(i)	Interest that cuts short the prior estate, divesting the preceding transferee.
(a)	Ex.: To B for life, remainder to C and his heirs, but if C predeceases D, then to D and his heirs; B has a life estate, C a vested remainder subject to divestment, D a shifting executory interest.  C is vested, so if D takes the estate it cuts C’s estate short (& is thus an executory interest) (title shifts to D)
(b)	Ex.: To A and his heirs, but if B returns from Canada, then to B and his heirs; A has a FSEI, B has a shifting executory interest.  B does not have a remainder since A’s fee is of potentially infinite duration.  B’s returning from Canada cuts A’s estate short (e.g., ends the estate unnaturally) and title shifts to B.
(b)	Springing Executory Interest (“Following a Gap” – Divesting a Grantor)
(i)	Interest that follows a gap in possession or works to divest the transferor
(a)	Ex.: to A if A marries B; O has a FSEI, A has a springing executory interest.  A does not have a remainder because if his future interest becomes a present interest (i.e., he marries B) then he cuts short O’s fee simple.  A divests the grantor; his interest can be said to spring from the grantor.
(b)	Ex.: to A for life, and one year after A’s death to B.  O has a reversion (for the gap), A has a life estate, and B a springing executory interest.  B does not have a remainder because B cannot take the estate on the natural termination of the preceding estate (A’s life estate) due to the one-year gap.  B’s interest springs from the grantor’s reversion.  (in a sense, it divests the grantor of his reversion)
2.	Obsolete Doctrines
a)	Destructibility of Contingent Remainders
(1)	At Common Law, a contingent remainder had to vest prior to the termination of the preceding estate or it was destroyed.
(2)	Ex.: To A for life, then to B’s kids; If B has no kids when A dies, then B’s kids’ contingent remainder is destroyed.  (under the rule – today B’s kids get a springing executory interest)
(3)	This rule has been abolished by statute in most states.
(4)	Today, the contingent remainder becomes a springing executory interest if it has not vested before the preceding estate; at the end of the preceding estate, the grantor gets a reversion, and the “remainder” gets the estate from the grantor upon the vesting condition.
b)	The Rule in Shelley’s Case
(1)	A life estate which makes the remainder the life tenant’s heirs operates to give the life tenant a FSA.
(2)	Ex.: to A for life, then to A’s heirs; A gets a FSA (under the rule – today A gets a life estate and his heirs get a FSA)
(3)	This rule has been abolished by statute in most states.
c)	The Doctrine of Worthier Title
(1)	If a grantor leaves a remainder to his own heirs, it becomes a reversion to the grantor.
(2)	Ex.: to A for life, then to O’s heirs (O is the grantor); A gets a life estate, O gets a reversion (under the rule – today, in most states, O’s heirs get a contingent remainder [that O will have heirs], and O gets a reversion [that goes away if he has heirs])
(3)	This rule has been abolished in most states for wills, and for inter vivos transfers the states will only use it if there is no evidence that the grantor intended to create a future interest in his heirs.
3.	The Rule Against Perpetuities
a)	“No interest in property is valid unless it must vest, if at all, not later than 21 years after one or more lives in being at the creation of the interest”
(1)	The point of the rule was to prevent “dead hand” control of the land for centuries.
(2)	When is the interest created?
(a)	Conveyance – at time of the conveyance
(b)	Devise – at time of testator’s death
(3)	If an interest could violate the rule, it (the interest) is void whether it actually violates it or not
(4)	The rule never applies to:
(a)	The grantor
(b)	Remainders subject to divestment
(c)	Indefeasibly vested remainders
(5)	The rule does apply to:
(a)	Contingent remainders
(b)	Executory interests
(c)	Class gifts (Vested remainders subject to open)
(6)	Where does this apply besides land conveyances? Stock buybacks, others…(its not just for land)
b)	“Must vest”
(1)	When an interest becomes possessory is not an issue; only when the interest vests.
(2)	Note therefore future interests in the grantor are always exempt from the rules since they are always vested.
(a)	Remember, a grantor’s reversion is transferable as property
c)	“Lives in Being plus 21”
(1)	The life in being does not have to be one person; however, (if a group) it must be a group of people that are clearly identifiable at the time the interest is created (i.e., the class must be closed) for them to be the measuring life.
(a)	Ex.: O wills “to my children for life, then to my grandchildren, and then to their children.” 
(i)	O’s children can be (and are) the measuring life since after death O cannot have any more children
(ii)	O’s grandchildren cannot be the measuring lives since O’s children could have more offspring after O dies.
(iii)	Further note this violates the rule – O’s great-grandchildren could vest more than 21 years after O’s children (the measuring lives).  Thus the great-grandchildren’s interest is void.
(2)	If the interest is given to a non-human entity (e.g., a church), there is no measuring life (just use 21 years)
d)	Note on Survivorship – if a grant requires survivorship, remember the class closes on the expiration of the preceding estate
(1)	Thus, to B for life, then to A’s children who outlive B is valid since the class closes when B dies – any children born afterwards are not eligible, and so do not vest, and so are not subject to the rule.
(2)	If this were not the case, this would violate the rule.  B is the measuring life; it is possible A could have kids more than 21 years after B’s death.  The class closing saves the conveyance from being void.
(3)	Note that if this was done through a trust the class would not close and would be subject to a rule violation.
e)	Suspect Rule Violations in the following:
(1)	Transfers to three or more generations,
(2)	Anything with a time period greater than 21 years,
(3)	Any executory interest, and
(4)	Anything involving corporations (or other non-human interests).
f)	Goofy Perpetuities Problems
(1)	The Fertile Octogenarian
(a)	To B for life, then to B’s children for life, remainder to B’s grandchildren.  B is 80 years old.
(i)	The grant to B’s grandchildren is void, since B could (from a legal perspective) still have children.  Therefore the class of B’s children is not closed, B is the measuring life, and the grant to B’s grandchildren could possibly fail to vest until 21 years after B dies.
(2)	The Unborn Widow
(a)	To B for life, then to B’s widow for life, remainder to the children of B that survive the survivor of B and B’s widow.
(i)	The grant to the children is void since “B’s widow” could be a person yet unborn (and thus not a life in being).  Therefore, B is the measuring life, and the grant to the kids could possibly fail to vest 21 years after B’s death.
g)	Perpetuities Reform
(1)	Some states are experimenting with reform to eliminate the Rule or stop some of the more bizarre results.
(2)	“Wait and See”
(a)	Aptly named, this reform waits to see if an interest actually violates the rule before invalidating it
(3)	“Cy Pres”
(a)	This reform re-writes the conveyance or devise to make it conform with the rule (e.g., 25 years becomes 21)
(4)	Some states combine the two.
(5)	Other proposals include a flat time period; others just like the status quo.
4.	Trusts
a)	A fiduciary relationship in which one person (the trustee) holds title subject to equitable rights in the beneficiaries. 
(1)	Smith: a split between legal and equitable rights
b)	Advantages of trusts
(1)	Tax Reasons
(2)	Grantor can exercise more control over how property will be handled.
(3)	It can prevent the Rule Against Perpetuities from invalidating a class gift
(a)	This is limited, though – eventually the trust must terminate, and the rule applies. 
(4)	It can prevent a class from closing
(5)	It can prevent destructible contingent remainders
C.	Concurrent Ownership
1.	Traditional Estates
a)	Tenancy In Common
(1)	Each owner owns a “segment” of the land, even if that segment cannot be specifically identified.  The segments need not be equal.
(2)	This estate is presumed in the absence of language which would create another type of concurrent estate
(3)	On a co-tenants’ death, his shares pass to his heirs (contrast with JT, supra)
(4)	Partitioning
(a)	A TIC can be partitioned in kind, meaning the land is physically divided based on value (not size)
(b)	A TIC can be partitioned by sale, meaning the property is sold and the proceeds divided among the owners
(c)	Any co-tenant can force a partition, regardless of his share.  A partition in kind is preferred.
(5)	Creditors can only reach the interest of the owner with bad credit.
b)	Joint Tenancy
(1)	The property is owned by one “entity” which each co-owner has rights in.  The key difference is the right of survivorship – if one owner dies, the other co-owners get his share (equally, if more than one co-owner), as opposed to a TIC, where the decedent’s heirs get the share
(2)	The “Four Unities” Required for a JT
(a)	Unity of Interest (all must have equal undivided shares of the same duration)
(b)	Unity of Title (each tenant’s interest must come from the same will or conveyance)
(i)	Remember, a person cannot convey to himself what he already owns – use of a straw person can avoid this.
(c)	Unity of Time (each tenant must vest at the same time)
(d)	Unity of Possession (each tenant owns the whole; none has greater rights of possession than any other)
(3)	During the lifetimes of the tenants, a JT is treated as a TIC; each tenant may transfer away his interest
(a)	If any tenant does so, his share becomes a TIC and his right of survivorship in the JT is destroyed
(b)	Tenants can set up a non-partition agreement; the agreement is only legally valid if it is for a “reasonable time.”  This time is influenced by the Rule Against Perpetuities.
(4)	Simultaneous death severs the right of survivorship, transforming the JT into a TIC.
c)	Tenancy by the Entirety
(1)	Estate where a married couple (TBE is only available to legally married couples) owns land as one “person.”
(a)	Stems from old rule where man controlled his wife’s land
(2)	Some states simply require a married couple to purchase property together; others require a specific intention to create a TBE.
(3)	TBE creates a nonseverable right of survivorship – neither spouse acting alone can terminate the TBE
(a)	Except by divorce (or murder!)
(4)	Right of management is like a TIC; however, creditors cannot get the husband’s “share” – just the right of survivorship.
2.	The Marital Estates
a)	Dower & Curtesy
(1)	Curtesy – Husband controls wife’s property.  Abolished today.
(2)	Dower – Wife automatically gets a 1/3 life estate in all real property the husband is seised in at his death.  It still exists in some states today and is a ‘clog’ on alienablility.
b)	Homestead Rights
(1)	Varies greatly from state to state; generally, an interest in land used as a home.
(2)	Protects property from creditors; liquidation requires consent of both owners.
(3)	Even on a devise of the land, the surviving spouse has the right to live there.
c)	Community Property (LA, TX, NM, AZ, CA, NV, WA, ID)
(1)	Generally, all property and income acquired during the marriage is owned in equal shares by each spouse.
(a)	Exceptions: Property acquired before marriage and gifts/devises to an individual spouse
(2)	All property acquired during marriage is presumptively common. 
(a)	If property owned before the marriage is sold at a profit, the profit is separate (in most states) if it is kept separate from the community property.
(b)	However, the income derived from property (i.e., rents, dividends) is community.
(c)	If separate property commingles with community, it becomes community if it is difficult to determine which is which.  Thus note that to keep property separate requires extraordinary bookkeeping.
(3)	The termination of the marriage
(a)	Divorce – CP is divided equally
(b)	Death – Decedent can transfer his/her ½ interest to anyone.
d)	Marital Property Act – WI 
(1)	Legislative act similar to community property
3.	Rights of Management
a)	A co-tenant must share consumptive profits, but not losses.
b)	If a co-tenant leases the property, the lessee takes the lessor’s (co-tenant’s) place.
(1)	Thus, unless she agrees otherwise, a co-tenant has the right to ½ of all profits from the land an oil company gets from a lease with her other co-tenant.
c)	A co-tenant cannot exclude the other, nor can he commit waste.
D.	Leaseholds (Non-Freehold Estates)
1.	Types of Leases
a)	Tenancy for Years
(1)	Lease has a definite maximum duration.  (Roughly like a life estate)
(2)	Typically used for commercial/retail leases or for upscale housing
b)	Periodic Tenancy
(1)	For any recurring period up to a year (i.e., week to week, year to year; typically is month to month).
(2)	Automatically renews unless tenant gives notice
(3)	Typically used for farms and low-income housing
c)	Tenancy at Will
(1)	Either party can terminate at any time (with reasonable notice)
(2)	Typically used during lease renegotiations
d)	Tenancy at Sufferance
(1)	Variation on Tenancy at Will – Lease expires but tenant still remains.
2.	Leases and Building Codes
a)	A lease in property that does not meet housing codes at the time of lease is invalid as an illegal contract.
b)	Posner: everyone operates with limited resources; what are they willing to pay?  If landlord cannot lease at its required rate of return, it can:
(1)	Repair the property and rent at a higher rate
(2)	Convert to some other use (or sell)
(3)	Abandon the property entirely
3.	Access to the Rental Market (The Fair Housing Act)
a)	Note this affects philosophical underpinnings of a property system
(1)	Bentham – no property rights without right to exclude
(2)	Posner – exclusion necessary for an efficient property system
b)	Federal Housing Act protects:
(1)	National Origin
(2)	Familial Status
(a)	Statutory definition – anyone under 18 living with a parent or guardian
(b)	Note this does not therefore protect unmarried couples, homosexuals, singles, etc.
(c)	However, some states have extended this to sexual orientation, etc.
(3)	Handicapped Persons
(4)	Color
(5)	Race
(6)	Religion
(7)	Gender
c)	More on the FHA
(1)	It does not apply to owner-occupied buildings with less than four rental units.
(2)	Violations can be either overt discrimination or a preference to discriminate. 
(a)	Asking about race implies a preference to discriminate
(b)	Ads showing all one race implies a preference to discriminate (for ads, use an “objective ordinary reader” test to determine if it is discriminatory.
(3)	Why not just say you cannot exclude based on class membership?
(a)	Property is different from other goods – the owner must clean up the mess when the tenants leave.
(b)	Administrative ease – it is easier to exclude a group as policy than to find an individual reason for each renter.
4.	Lessor’s Duties to Lessee (Lessee’s Rights)
a)	Duty to Deliver Premises (Tenant’s Right of Possession)
(1)	At the start of the lease, the lessor has a duty to deliver the right of possession to lessee.
(2)	There are two ways of determining what the lessor’s duty is regarding delivery of actual possession
(a)	The English Rule (majority of jurisdictions)
(i)	Landlord must deliver actual possession as well as the right to possession; the lessor is therefore responsible for evicting the prior tenant.
(ii)	Rationale: landlord is in the best position to deal with a previous tenant who refuses to leave on time; problem is likely more foreseeable to landlord.
(b)	The American Rule (minority of jurisdictions)
(i)	Landlord has no duty to deliver actual possession; lessee is therefore responsible for evicting a prior tenant.
(ii)	Rationale: The lease conveys a freehold, and thus it is up to the lessee to take the property; also, it is unfair to hold the landlord responsible for the tort of another (landlord is 3rd party to lessee-former lessee dispute)
b)	Quiet Enjoyment
(1)	Virtually every lease is held to have an implied covenant of quiet enjoyment (here, “quiet” means secure, not the absence of noise).
(2)	Breaches of quiet enjoyment end the lessor’s obligation to pay rent.
(3)	Elements of Quiet Enjoyment (interference with any of these is a breach of quiet enjoyment):
(a)	Title Covenant
(i)	Basically that the lessor will not lease the premises to anyone else during the lease term.
(b)	No Wrongful Eviction/Right of Actual Occupancy
(i)	The landlord cannot physically evict the tenant.
(c)	No Constructive Eviction
(i)	Through the fault of the landlord, the tenant’s use and enjoyment are so interfered with that no longer use the premises as contemplated.
(a)	It must be the fault of the landlord, meaning:
(i)	The lessor caused the problem, or
(ii)	The lessor was in a position to control the problem.
(b)	Thus, a landlord is not liable for other tenant’s conduct unless he is in a position to control them, or did something to cause the problem.
(i)	Blackett v. Olanoff – Landlord leased building to a nightclub next to a residential building he owned; ruled he interfered with quiet enjoyment.
(ii)	Most courts do not require move-out for a tenant to claim constructive eviction (reducing rent as an award instead); several others retain the move-out requirement. 
c)	Implied Warranty of Habitability
(1)	In addition to any express warranties made, most modern courts say there is an express warranty in every lease (especially residential ones) that they will meet some minimal level of habitability, usually based on the local housing code (see supra).
(a)	Rationale:
(i)	Residential tenants are usually in an inferior bargaining position
(ii)	Urban dwellers lack skills and time to do repairs, and often repairs need to be made in areas that a tenant does not have access to.
(iii)	Lessee is unlikely to make repairs since his interest is finite.
(iv)	Housing Codes require such a warranty.
(b)	Problem:  There are vastly different housing codes region to region; usually the most lax codes are in the areas where the worst housing conditions are.
(i)	Ex.: Compare Plano (wealthy Dallas suburb), Laredo (small city) , and the Colonias (poor border area).
(c)	The court is less likely to impose such a warranty on a commercial lease (when it does it is a warranty of fitness for a commercial purpose); Rationale:
(i)	More sophisticated parties.
(ii)	Less likely that one party is in a weaker bargaining position.
(iii)	Costs can be passed on to consumer.
(2)	Differing views on Leases
(a)	Lease as a Deed – the Doctrine of Independent Covenants
(i)	This is the traditional view that treats a lease as a deed and thus the promises made between the parties are independent of each other.
(ii)	Thus, the lessee must pay full rent even if lessor breaches one of his obligations (e.g., to repair).  Lessee’s only remedy is to sue for damages unless he has specifically reserved the right to terminate for such a failure.
(iii)	It operates the other way, too: a lessor cannot evict for failure to pay rent; rather, he must sue for the rent amount as damages.
(b)	Lease as Contract 
(i)	This is the prevailing view in modern courts.
(ii)	It basically means the promises made are dependent on each other: a failure to keep one promise gives the other party the right to cease his obligations to a degree.
(a)	Note that it does not waive the right – it just reduces rent to the value of the substandard apartment.
(iii)	Like most contract law, the court can also imply terms: in this case, the warranty of habitability.
(c)	The court is more likely to treat residential leases as contracts and commercial leases as deeds.
(3)	Posner on Implied Warranty of Habitability – he thinks it actually reduces the amount of low-income housing available, because rather than lose money by repairing premises many landowners will either convert to another use or abandon the property.
d)	Lessor’s Liability for Injuries on the Premises
(1)	The original rule shielded the lessor from all liability since the lessee was considered to be the landowner for the lease term.  Exceptions began to emerge, as in:
(a)	Latent defects (lessor knows of non-obvious defect and fails to inform tenant)
(b)	Common Area (unreasonable risk of injury in a common area that tenants have to use to get to their apartments)
(c)	Public area (responsible for areas open to the public)
(d)	Negligent Repairs (tort law – by volunteering, you become liable.
(e)	Covenant to Repair
(f)	Statutory Duty
(2)	The basic modern rule is that the landlord is liable for any unreasonably dangerous condition on the premises.
(a)	The test is standard B-PL analysis (see Torts)
(b)	Four situations where a landlord is held liable for failure to correct within a reasonable period of time:
(i)	Voluntarily taking the risk – if landlord expressly agrees to handle the problem, i.e., “I will provide security.”
(ii)	Special relationship – as in innkeeper/guest liability
(iii)	Opportunity to control crime – if lessor fails to remedy something that would encourage criminal activity, e.g., not re-keying locks or fixing obviously broken windows.
(a)	Minority rule – landlord not liable for criminal acts as it is out of his control how 3rd party acts.
(iv)	Foreseeability – Lessor should foresee the dangerous situation, e.g., a dramatic increase in crime creates duty to provide security.
(a)	See minority rule above.
5.	Lessee’s Duties to Lessor (Lessor’s Rights)
a)	Duty to Pay Rent
(1)	Most residential leases have a set amount per month
(2)	Commercial leases can be more complicated:
(a)	Annual percentage increases
(b)	Tying rent to an index (e.g., CPI)
(c)	Percent of sales + minimum amount
(3)	Piggly Wiggly Southern v. Heard – Court finds no breach for a store to stop operating, thus reducing its rent (in a percent sales lease)
b)	Remedies for Non-Payment of Rent
(1)	Sue periodically for back rent.
(2)	Terminate the lease if the defaulting tenant moves out & permit new lessee to move in.
(a)	Original lessee could claim trespass, but landlord can respond that move-out implies lessee has abandoned the lease.
(3)	Re-let on account of defaulting tenant and apply new rent to old tenant’s obligation as a credit.
(a)	Note that if you treat leases as a contract, a landlord has an obligation to do this (i.e., mitigate his damages).
(b)	Note historically land was considered unique and that mitigation would be impossible; not the case today, since most leases are cookie-cutter apartments.
c)	Note a landlord cannot evict for retaliatory reasons, e.g., reporting housing code violations, but can evict for good reason or even no reason at all.
(1)	Note why – if landlord could evict for reporting, no one would report violations.
(2)	What if eviction is for reporting lessor to IRS?  Problem with this doctrine is it involves a good deal of line-drawing.  (Answer is that that eviction is OK, probably)
IV.	Interests in the Land of Another
A.	Easements, Covenants, and Equitable Servitudes
1.	Easements
a)	Easements Defined
(1)	An easement is a grant in the land itself (as opposed to a promise) entitling its holder to use the land in some particular way.  Note both grantors and grantees in a conveyance can have an easement.
(a)	The most common example is an easement across another’s land for a road or driveway.
(2)	Affirmative v. Negative
(a)	Affirmative – Gives holder the right to go onto or do something to the burdened land.
(b)	Negative – Give holder right to prevent a particular use of the burdened land.
(3)	Appurtenant v. Gross
(a)	Easement in Appurtenant – an easement which is attached to the tract of land itself (by far the most common type)
(b)	Easement in Gross – an easement which is attached to a person for a particular use.  These are typically utility easements, e.g., AT&T has an easement to come on your land to repair the telephones (an easement for the use of AT&T).
(4)	Easements distinguished from licenses.
(a)	If A gives B permission to use his land in a particular way, B only has a license.
(i)	There is no writing (thus, the statute of frauds is not satisfied, though part performance may do so)
(ii)	There is no right conveyed.
(iii)	The license is revocable at will.  (Subject to contract breach action)
(a)	There are exceptions here; if grantee has done substantial improvements, many courts will prevent the grantor from revoking the license without at least compensating for the improvements.
(b)	Criticism: doesn’t that discourage neighborly behavior?
(b)	If B has the right to be on the land, it is an easement.
(5)	Easements distinguished from possessory estates.
(a)	Possessory estate cannot be lost by abandonment
(b)	Easement can be so lost.  Typically need to show:
(i)	Intent to no longer use easement, and
(ii)	Actual lack of use for a reasonably long period of time.
b)	Types of Easements
(1)	Express Easements (Intentionally Created Easements)
(a)	This is an easement created on purpose
(b)	Note that courts sometimes presume creation of the largest estate possible, and thus will often find an possessory estate rather than an easement, and an easement rather than a license.
(c)	The “stranger to the deed” rule
(i)	Traditionally, a deed transfer could not reserve an easement to a 3rd party to the transaction
(ii)	Most modern courts, however, will permit such a transfer to occur.  Willard v. 1st Church of Christ  
(iii)	To avoid any confusion, it is best to first convey the easement to the 3rd party, then convey the deed.
(2)	Implied Easements
(a)	Why Imply Easements?
(i)	Public policy favors keeping land both usable and alienable.
(a)	Criticism: aren’t these people adults?  Why give a party a windfall?
(ii)	Easement is implicit in the purchase price (why would you buy land you cannot use?)
(b)	Types of Implied Easements 
(i)	Easement by Strict Necessity – Typically arises when a ‘landlocked’ parcel of land is conveyed; must show that an easement is the only way to get to the land.  
(a)	Elements:
(i)	No means of ingress/egress, and
(ii)	Landowner shows a strict necessity, and
(iii)	Constructive intent that landowner would be able to get off of his land.
(b)	Note this suggests the public policy rationale for implied easements.
(ii)	Easement Implied by Prior Use (Quasi-Easement) – More common type of easement.
(a)	Elements
(i)	Common ownership of both burdened and benefited land, with a subsequent dividing conveyance.
(ii)	Prior to severance, owner used burdened land for the benefit of the benefited land.
(iii)	Such prior use was obvious, continuous, and permanent.
(iv)	The easement claimed is reasonably necessary for the enjoyment of the benefited land.
(iii)	Prescriptive Easements  
(a)	Operates in much the same way as adverse possession (same elements).
(i)	Key differences: adverse possession is statutory, while prescriptive easements are a common law creation; adverse possession give title rather than a mere easement.
(b)	Public can acquire this type of easement since an accompanying conveyance is not required.
(c)	Courts do not like prescriptive easements.  Why?
(i)	It can surprise the landowner – he lets people use his land and suddenly he can’t stop them!  (It discourages neighborliness)
(ii)	The court will usually say the use was not hostile (i.e., implying a license), or was not exclusive (if the landowner still used the land).
(d)	Similar doctrines
(i)	Custom – English rule that permits creation of easement by long and continuous use (from “time immemorial”) by the public.  Thornton 
(ii)	Implied dedication – Long term public use of a type that shows an intent to dedicate.  (Express dedication also permitted, as when a subdivider dedicates the streets for public use)
(c)	Rejection of Implied Scenic Easements
(i)	Modern courts mostly reject an implied scenic easement
(ii)	It doesn’t come under the blanket of ‘necessity,’ nor does it meet the requirements of prior use.
(iii)	Prescriptive doctrine is difficult to meet:
(a)	How to be “open” or “obvious?” 
(b)	What cause of action does landowner have (no trespass for mere observation)?
(iv)	Some courts will permit it if the landowner sells a portion of his land and the view is clearly implicit in the purchase price (the remaining land is prevented from having built on it a view-obstructing structure).
2.	Real Covenants
a)	A real covenant is one which runs with the land (as opposed to a mere contract between two parties).  It is a promise to do (or not do) a certain thing.
b)	Real covenants distinguished from…
(1)	A contract – contract only affects the parties, while covenant stays with the land and affects all subsequent landowners.
(a)	Note that covenant only comes into play if land is transferred to a 3rd party – otherwise, contract remedies rule.
(2)	An easement – an easement is an actual grant of an interest in the land, while a covenant is a promise respecting the use of the land.
(3)	An equitable servitude – The difference is remedy; a servitude is enforced by injunction (e.g., in equity), while a covenant gets money damages.  Also, criteria for servitude are less stringent.
c)	Requirements for a covenant to run with the land:
(1)	Touch and Concern – the covenant affects the quality or value of the land, e.g., the covenantor’s interest is less valuable, or covenantee’s interest is more valuable.  Determined objectively.  
(a)	Smith says the best way to think about it is to ask if the covenant affects the use of the land, because everything will ultimately impact the monetary value of the land.
(b)	Note that rent is generally assumed to touch and concern.
(c)	Examples:
(i)	Promise restricting use of the land
(ii)	Promise to pay rent, taxes, or insurance
(iii)	Promise to repair, maintain, or improve land.
(2)	Intent – The parties must have intended for the covenant to run with the land.  Determined subjectively.
(3)	Privity – Privity of estate between the parties.  
(a)	Traditionally, the courts required both mutual/horizontal and vertical privity; most modern courts only require vertical.
(b)	Types of privity
(i)	Mutual – Parties have a mutual, continuing interest in the land (typically lessor-lessee) (Old English rule)
(ii)	Horizontal – Parties have made a conveyance in fee from one party to the other (i.e., grantor-grantee) (American addition)
(iii)	Vertical – Person claiming the benefit (or subject to the burden) is a successor to the estate of the original person benefited/burdened.
(a)	Note also that the benefit/burden must be for the same estate – a life estate holder may not be subject to a covenant by a prior owner who held in fee.
(4)	Writing – vast majority of states require that the covenant must be evidenced by a writing.  
(a)	Reasons: usual statute of fraud reasons, plus it demonstrates intent and is a way of establishing notice to later purchasers.
(5)	Other requirements
(a)	“In Esse” rule – a minority of states (including Texas) require the formal language (“and his heirs…”) be present if the covenant is for something not in being yet (e.g., a covenant to build roads).
d)	Terminating a Real Covenant
(1)	All parties agree to terminate.
(2)	Legislation restricts length of time covenant can run.
(3)	Could also argue the covenant is actually a servitude and that enforcement of it would be inequitable.
e)	Problems with Real Covenants – a subdivider creates a homeowner’s association to collect fees (part of the covenant) for maintenance.  The association owns no property, and thus no privity.  Possible ways to deal with:
(1)	Agency theory – association is acting on subdivider’s behalf.
(2)	Convey whole tract to association and let it sell the subdivided tracts.
(3)	(Best option) Convey a portion of the land to the association (e.g., the streets or a small park-ish area)
f)	Why all the complexities with covenants? – They reduce alienability and thus courts feel it should be difficult to make them.
3.	Equitable Servitudes (a.k.a. implied reciprocal easement)
a)	An equitable servitude is a agreement that may or may not run with the land which has equitable enforcement, e.g., injunctions.
(1)	Thus note that the choice between a covenant and servitude is largely a choice between remedies (see covenants for distinctions).
(2)	Note also that a servitude is easier than a covenant to argue for as the elements are easier to prove.
(3)	Specialized type of servitude: a “Reciprocal Negative Easement.”
(a)	If the owner of two (or more) adjacent lots sells one with restrictions which benefit the lot retained, the servitude is mutual and the owner of the lot retained can do nothing forbidden to the owner of the lot sold.  (and it runs with the land)
(b)	Basically, if you own a big parcel, and sell a part of it, any restrictions on the land sold benefiting your parcel also restrict your use of the remaining parcel, and carries over to any part of that parcel you sell later.
b)	Requirements for an Equitable Servitude
(1)	Intent – The parties intend to create a covenant
(2)	Notice – A party must have notice of the servitude (though it need not be in writing).  This is the most essential element.  Types:
(a)	Actual – typically, the deed has it in writing.
(b)	Inquiry – notice is obvious to a reasonable person from the character of the land or available information.
(i)	Problem: it assumes the servitude is obvious – what if it involves  a great deal of searching?
(c)	Constructive – as a matter of law, the buyer is assumed to have notice (most common type of notice)
(3)	Equity – the servitude would be fair to enforce against a later party.
(a)	Note that touch and concern is implicit in this (some list it as a fourth element).
c)	Terminating an Equitable Servitude
(1)	Changing Conditions – if surrounding conditions have altered the character of the neighborhood, the court may not enforce the servitude.
(a)	Note the change must be sufficient to have altered the whole of the land burdened, not just the border properties (Cowling v. Colligan)
(2)	No previous enforcement – if servitude has not been enforced against others
(a)	Note that many courts will let insubstantial violations pass (e.g., a church in a with an agreement that it be residential-only) without invalidating the servitude.
(3)	One could argue for a balancing test – that there is a greater net benefit without the servitude than with it – but this is unlikely.
4.	Ways to look at Easements/Covenants
a)	Posner – A property interest (one stick of the bundle).  One only needs to meet the requirements of deed construction and not violate public policy.  Posner likes easements as they are wealth-maximizing devices.
b)	Carol Rosen – Regulatory devices regulating private conduct.  Court should look at more than proper creation; it should at how much the easement or covenant restricts individual freedoms and balance it against other parties’ interest.
B.	Natural Interests 
1.	Nuisance
a)	Essentially, the ‘right thing in the wrong place’ – the pig in the parlor rather than the barn.
b)	Traditional Elements of Nuisance
(1)	Actual Harm – the plaintiff experiences some type of harm, such as serious discomfort or inconvenience (lack of sleep, high stress, etc.)
(a)	Note that most courts do not consider an aesthetic harm to be a valid to establish a nuisance
(2)	Inappropriate Use – the nuisance is unreasonable and inappropriate for the area.
(a)	Note violation of a regulation is strong evidence of inappropriate use (Some would make it a optional fourth element)
(3)	Plaintiff is present first – the plaintiff was on the land before the nuisance (because nuisance law is designed to protect expectations)
(a)	There are rare exceptions, as when plaintiffs and defendant expand into each other (Spur Industries, where city and feedlot grew into each other).  The court there forced the nuisance to move, but required plaintiff to pay moving costs because the defendant did nothing wrong and the only reason for the move was concern for public health.
(b)	These cases are exceptions; normally, moving into a nuisance is a defense for the defendant.
c)	Approaches to nuisance law
(1)	Bentham – Bentham promoted the idea of property law protecting expectation.  This is the most common approach to nuisance doctrine (it is largely the basis for traditional rules).
(a)	A Bentham analysis:
(i)	The elements of nuisance establish a right that the plaintiff has against the defendant.
(ii)	The defendant’s case determines if the remedy will be injunction or money damages (and the amount thereof).
(b)	The decision as to injunction or damages is based on the “economic proportionality” test (Boomer)
(i)	If there is a wide disparity between the economic benefits of the nuisance and its costs, the remedy should be an injunction.
(ii)	If the disparity is not so wide, damages should be awarded.
(iii)	The difficulty with this test is that it can be difficult to assign a value to some harms (e.g., lost sleep, etc.)
(2)	State v. Shack – Court just lumps all the factors together and decides if the social utility of the nuisance is outweighed by its harm; it can make the defendant pay for any harm done if the utility of the nuisance is higher.  (The basic idea is that rights are limited to those which further social goals).
(3)	Posner/Law and Economics – Nuisance doctrine allows same results as private transaction if there were no transaction costs.
(a)	Nuisance often affects a community; the widely-spread nature of the parties makes negotiating a solution nearly impossible.  Thus, nuisance doctrine exists to achieve results that private negotiations could not.
(i)	Note this fails to explain the existence of nuisance doctrine that applies to discrete parties (e.g., spite fences)
(b)	For instance, if the dispute only involved two parties, they could negotiate the sale of an easement; this is practically impossible among a community of victims.
d)	Ellickson’s Chicago Law Review Article:
(1)	Ellickson criticizes the use of injunctions as a means of controlling land use; he thinks damages should be used as a means of forcing a party to pay the costs of his nuisance.
(2)	In this way, the lesser cost prevails – if damages are cheaper than ending the nuisance, the party will pay.  If not, the party will stop the nuisance.
(3)	This concept is known as Coase Theorem (that the lesser cost / greater gain will prevail, if all administrative costs are held at zero).
(4)	Criticism of Coase Theorem:
(a)	Administrative costs are never zero
(b)	It ignores inequality of resources (e.g., rich company vs. relatively poor homeowners)
2.	Airspace and Sunlight
a)	Airspace
(1)	The key issue: how much airspace do you own?  (How high can you build?)
(a)	Traditional rule: to the furthest extent of the atmosphere.
(b)	Modern rule: as much as you can reasonably use or occupy.
(i)	Thus, a airport whose takeoffs and landings over a farm caused chickens to die and the family to suffer was found to have trespassed on the property via a nuisance.  Court distinguishes between takeoff/landing area and flight paths (U.S. v. Causby)
(c)	Smith’s Hypo: What if you own a hot air balloon that you use regularly?
(i)	Under ‘reasonable use or occupy’ standard, you can exclude anyone at any height.
(ii)	More likely solution: the FAA minimum lowest flight path.
b)	Sunlight
(1)	The right to sunlight is not recognized under the doctrine of covenants, so frequently the law of nuisance is invoked.
(2)	Theories on rights in sunlight
(a)	“Ancient Lights” – old English doctrine created a property right based on a ‘lost grant’ of the right to sunlight (the grant was given at time immemorial, but has merely been lost in the current writings, and therefore still controls)  (American courts nearly all reject).
(i)	Problem with this theory – if it operates as adverse possession, how can such possession be ‘hostile’ or ‘open’?
(b)	Thus, modern view is to treat sunlight under the standard nuisance doctrine, if at all
(i)	minority view – blocking sunlight can be a nuisance
(ii)	majority view – no rights in sunlight (note this is a pro-development view)
(3)	Question: if one of the goals of nuisance law is the protection of reasonable expectations, and a hotel builds in an area that permits high-rises, can the hotel reasonably expect that a high-rise might be built near it that blocks the sun from its pool area?
3.	Water
a)	Surface Flowing Water (“Riparian Lands”)
(1)	When is something riparian? – if it is contiguous to the waterway, and it is within the watershed.
(2)	There are two way to treat rights in a waterway:
(a)	The English System, or Riparian Theory (Eastern States)
(i)	This says that if you own land next to a flowing waterway, you have the right to use that water.
(ii)	The basic concept is “natural advantage” – the upstream owner can use water even to the disadvantage of the downstream owner.
(a)	Note, though, that such use must be reasonable.
(iii)	Notice how this fits with the Bentham view of law creating property and protecting expectations (a riparian landowner likely expects that he can use the water)
(b)	The American System, or Right by Appropriation (Western States)
(i)	This says whoever gets to and uses the water for a useful purpose first has the right to continue taking whatever quantity he has been, regardless of if his land is riparian or not.
(ii)	Thus, latecomers don’t have a right to the water even if their land is riparian
(iii)	Note how this fits with the Locke theory that work creates property rights.
(iv)	Posner analysis of the American System:
(a)	Posner would like that you can transfer water rights even beyond their use for riparian land.
(b)	He would dislike that it does not permit speculation – the water must be put to use for the right to vest.
(3)	How much water can you take (if you have the right)?
(a)	Vast majority of states say “reasonable use.” (“natural flow” hinders development)
(b)	“Natural Flow” says that an upstream owner cannot interfere with the “natural flow” of the stream (he must return enough of the water to maintain that flow).
(c)	Sometimes the distinction will be drawn between natural use (drinking water, etc.) and artificial use (irrigation, industry, etc.), with natural use being preferred.
b)	Underground Water
(1)	Ways to handle rights to underground water:
(a)	The English Rule, or the common-law rule, or the “rule of capture”
(i)	The landowner can take as much water out as he wishes
(ii)	Rationale: 
(a)	Encourages self-help (if you don’t like someone else pumping it dry, dig your well deeper).
(b)	Assumes that supply is inexhaustible.
(c)	Assumes we don’t know enough about hydrology to determine what is reasonable (not valid in modern times).
(iii)	Likely to be favored by large interests who will pump water away from the land (e.g., a city)
(b)	The American Rule, or “reasonable use” rule
(i)	A landowner can take out enough to satisfy any reasonable and beneficial use (usually for the land itself).  There is no preference as to type of use
(ii)	Definitions of reasonable use:
(a)	Any use with a benefit anywhere
(b)	Any use which only benefits the land over the aquifer (this is the most common rule)
(c)	Reasonable in context of other’s use (Neb. Rule – Prather)
(i)	This sets up preference as (in order): domestic use, agricultural use, and industrial use.
(iii)	Likely to be favored by someone with an interest in large use of water on-site (e.g., a big farmer)
(c)	The California Rule, or “correlative rights” rule
(i)	Landowners have equal rights in a common aquifer and cannot take more than their equal share for any reason if it harms other landowners.
(ii)	Criticism: it does not prioritize between uses, and requires heavy regulation to determine fair share (or flood of litigation ensues)
(a)	To this end, many states use a regulatory scheme to set priority as to type of use.
(iii)	Likely to be favored by small landowner using water for domestic uses.
c)	Public Trust Doctrine
(1)	Basically says that government owns navigable waterways in trust for the people
(a)	This doctrine has been around a long time
(b)	Recently, it has been expanded from navigation and fishing to other uses.
(c)	To that end, it has been a big stick for environmental groups.
(2)	Many courts require government to weigh environmental costs in deciding what to do with water, and minimize the impact if possible.  National Audubon v. Superior Court  (Los Angeles pumps water from lake, damaging its ecological value).
d)	Note that in addition to watercourses and underground water, there are separate doctrines for lakes and drainage.  Smith says treating these things differently is stupid – hydrologically they are the same.
(1)	Posner – if you don’t understand what you’re making rules for, you are going to get a big mess.
V.	Public Land Use, Planning, And Control
A.	Traditional Methods of Controlling Land Uses
1.	Zoning
a)	Generally
(1)	Zoning only permits certain types of uses in certain areas; the idea is to structure the growth of a community.
(2)	Generally, zoning is done using the Euclidian model, from most desirable (single-family housing) to least desirable (industry).  All more desirable uses are permitted in any given zone (e.g., you can build a house in an industrial zone, but not vice-versa)
(3)	How to value land if there is taking?  Value of current use (a problem if land is held for speculation)?  Value of best use?  Most courts use fair market value.
b)	Constitutional Challenges (first determine basis, then type)
(1)	Basis of Challenges
(a)	Taking without compensation (5th amendment)
(b)	Due Process
(i)	Substantive – zoning is not fair, e.g., zoning has nothing to do with general welfare.
(ii)	Procedural – procedures weren’t followed.
(c)	Equal Protection – zoning creates categories and those categories are treated unequally (e.g., a law that permits hospitals but not AIDS hospitals)
(d)	1st amendment rights (e.g., prohibiting churches)
(2)	Types of challenges 
(a)	Facial Invalidity
(i)	Courts give a lot of deference to local regulation (they are presumed valid), especially if the zoning is done to an unincorporated area.
(ii)	Euclid – established zoning as constitutional; said in determining validity, all circumstances must be taken into account (what’s good for the city may not be good for rural areas)
(iii)	Modern courts are more likely to permit ordinances for aesthetic reasons than older courts
(b)	Invalid as Applied to the Individual
(i)	As opposed with the regulation itself being invalid, here you’re saying circumstances make it invalid as applied to you
(ii)	The strongest argument for this is that the zoning regulation has reduced the value of your land to zero (as in Nectow)
c)	Criticisms of Zoning
(1)	Tends to segregate people by wealth
(2)	Leads to urban sprawl
(3)	Can artificially inflate the value of land (Posner)
d)	Alternatives to Zoning
(1)	No Zoning (Houston) – no government zoning, but “de facto” zoning via private means (e.g., real covenants, etc.)
(2)	“New Cities” – each zone permits a certain percentage of a type of use.
e)	Initial Zoning vs. Rezoning (Facial Validity)
(1)	Zoning
(a)	Presumption – lies with government (the landowner has the burden of proof.
(b)	Standard of Review – “Arbitrary & Capricious” – landowner must show zoning is arbitrary & capricious.
(2)	Rezoning 
(a)	Majority Rule – same as for initial zoning
(b)	Minority Rule
(i)	Presumption – often rests with city (because the city is the one making the change – the landowners have relied on the zoning and to change it may undercut them)
(ii)	Standard of Review – “Reasonable Person” – rezoning must be reasonable to a reasonable person.
2.	Subdivision Regulation
a)	While regular zoning applies to specific plots, subdivision regulation regulates the dividing process.
b)	Typically, a local government body must approve subdividing plans to insure roads are wide enough, the infrastructure (e.g., plumbing, etc.) will match up with the existing system, etc.
c)	Three questions
(1)	When does an exaction become a taking?
(a)	An exaction is when the city requires something for subdivision approval, e.g., that a certain amount of the land be set aside for parks or an easement for sewage personnel.  See infra.
(2)	How much discretion should a planning commission have to reject plans that meet all written standards?
(a)	Durant, where a subdivision was denied permission because of various problems – watercourse disruptions, sight lines from highway, etc. – that were either vague or not listed as technical requirements; Court upholds the denial.
(b)	Contrast to a plan to build low-income housing that met all technical specifications and was still denied – the court reversed the denial.
(3)	What is the standard of review?
3.	Acquisition by the Public (Eminent Domain)
a)	The government can take land for public use so long as it compensates the owner
b)	What if it takes the land and transfers title to another private individual?
(1)	Berman – D.C. uses eminent domain to take land and transfer it to developers for the purpose of urban renewal. Court says that’s fine.
(2)	Hawaii Housing – Hawaii takes land to break up land ownership by old families and sell to new owners (e.g., break up land oligarchies).  Court says that’s fine, too.
(3)	Basically, you would have to show that there is no rational relationship to a public purpose to invalidate such a move.  This is very difficult to do.
(a)	For instance, if the Berman landowner was a developer who planned to build new buildings that would aid in urban renewal, the use of eminent domain would be invalid.
(b)	Also, the government must generally be a mediator – a transfer from A to G to B is permitted, but G cannot force A to sell to B.
(c)	Also note that state constitutions usually have similar provisions; often the state courts construe the standard has being harder for the government to meet.
4.	Administration of Land Control Uses
a)	Nonconforming Uses
(1)	When zoning first started, it was believed that nonconforming uses would just go away; the opposite happened – they thrived because there was no competition
(2)	In response, amortization periods developed to give existing landowners a certain amount of time to cease the nonconforming use.
(a)	Ex.: Valatie, in which an ordinance that said no trailer homes were allowed except in trailer parks had an amortization period which ended when the nonconforming owner’s title passed (e.g., by sale, gift, or death); Amortization period is challenged by owner’s daughter after he died; court says the period is fine (it doesn’t have to be a set time period)
(i)	Smith: She should have challenged that it was invalid as applied to her – the amortization period is supposed to facilitate planning, and she couldn’t have planned when her father died.
(ii)	Valatie is unusual in that the use is residential (e.g., no one is making a profit) and the amortization period is not a discrete, finite amount of time.
(3)	How Much Reliance is Enough?
(a)	Two approaches:
(i)	When a substantial amount of work on a project is done
(a)	Thus, in Stone, when a developer had met all the application requirements to build low-income housing and the city suddenly re-zoned, his interest was not considered vested.
(b)	Problems with this approach: it results in uncertainty (developer has official go-ahead, but can’t be sure if that won’t change; city can’t be sure if it is worth the time to challenge him)
(ii)	When the paperwork has been filed
(a)	This is the minority rule – it prevents the confusion mentioned above.  But is it rational?
(4)	Four Ways Government Handles Discontinuance Requirements
(a)	Require discontinuance of both the use and the structure within a reasonable time. (New York rule)
(b)	Require discontinuance of the use, but not the structure, within a reasonable time (but this eventually becomes the above – who wants to live in a gas station?)
(c)	Require discontinuance of use and structure, but amortization period is tailored on a case-by-case basis.
(d)	No discontinuance requirement allowed
b)	Adaptation to Development Proposals (Flexibility & Zoning)
(1)	The big question: when should a city permit variation in land use?
(2)	Six Approaches to Flexibility (most common to least common)
(a)	Hardship
(i)	Typically, this involves a Nectow-ish situation, where the zones have been carved as such that the landowner cannot make any use of his land (Nectow, for instance, requires this exception)
(ii)	Problems with hardship:
(a)	What standard do you have to meet?  No possible use?  No practical use?  Use would be inconvenient?
(b)	How much detail should a zoning ordinance have on what type of hardships are permissible?
(iii)	Note that between hardship and special exceptions lie the option of re-zoning
(a)	Rezoning usually happens in two contexts: the current zoning is inappropriate due to change in land character, or it is better for landowners (e.g., Industry won’t come unless you rezone)
(b)	Special Exception
(i)	These are exceptions that are spelled out in the zoning ordinance; generally, requires a special hearing to show your use is appropriate and won’t disrupt the area.
(ii)	Example: ordinance permits day-cares; owner must show it won’t increase traffic, etc.
(c)	Floating Zone
(i)	The ordinance sets requirements for a given use (e.g., 25 acres for light industry)
(ii)	Then, landowners meeting those requirements can apply to have their land zoned for that use  
(iii)	This approach tends to attract industry
(d)	Contract Zone
(i)	Re-zone, but with restrictive covenants that tightly restrict usage
(a)	Ex.: To have a professional building built in a neighborhood, re-zone to retail and sale of land has covenant that only a professional building can built there (i.e., to prevent a strip mall later)
(ii)	Pro: Provides a way out of the impasse between landowner and neighbors
(iii)	Con: Invites political abuse – no clear standard of review
(e)	Planned Unit Development (PUD)
(i)	Permits a mix of uses (e.g., 50% single-family residential, 20% multi-family residential, 20% retail, 10% parks)
(ii)	It therefore operates as a mix of public and private planning.
(iii)	This is popular in California; you need a big piece of land to do it.
(f)	Comprehensive Master Plan
(i)	Basically, guides the growth of a city based on location of highways, etc.
5.	Permissible and Impermissible Goals of Land Use Regulation
a)	Two Steps in Showing Impermissible Use
(1)	Determine the Motive of the Regulation 
(a)	Mere proof of impact isn’t enough  
(i)	Arlington Heights, where proof of a racial impact was not enough to establish a racial motive.
(ii)	Similarly, in Bean, a racial impact wasn’t enough to stop placement of a solid waste facility – waste facilities are often placed in low-income areas not for discriminatory purposes, but because that is where industry is.
(b)	Typically, you must show
(i)	A pattern of zoning over time
(ii)	Evidence showing decisionmakers considered discriminatory reasons
(iii)	Sudden rezoning (e.g., it’s zoned for multi-family, a low-income housing project is proposed, and suddenly it’s rezoned to single-family)
(2)	Apply the standard of review
(a)	Strict Scrutiny – for a suspect class (e.g., race) or fundamental right (e.g., religion) (Arlington Heights)
(i)	State must show a compelling state interest in the discrimination.
(ii)	Burden rests on the government.
(b)	Heightened or Direct Relationship – used for “quasi-suspect” classes (Cleburne, sort of)
(i)	State must show a direct relationship between the ordinance and the goal.
(ii)	Burden rests on the government.
(c)	Rational Basis – used for discrimination on economic/social grounds (e.g., hard liquor vs. soft liquor)  (Belle Terre)
(i)	State must only show a rational basis that the ordinance will help achieve its goal.
(ii)	Burden rests on the plaintiff.
b)	Note it is usually better to use the Fair Housing Act instead of the 14th amendment if possible because:
(1)	It is easier to establish a violation (the action must only have a “grossly disproportionate” effect (e.g., a disproportionate impact)
(2)	The burden is shifted to the state (impact considered a prima facie violation of the FHA; burden is the same as “direct relationship”)
c)	Exclusionary Zoning
(1)	When does a municipality have to consider the effects on surrounding communities?
(2)	This is not a constitutional issue – look to the zoning enabling act; if it provides that the zoning board must act for the “general welfare,” a valid argument can be raised that the impact on surrounding communities must be considered.
(a)	Exclusionary zoning is usually not a constitutional issue because it is easily defeated via the rational basis test.
(b)	Smith: should the muni have to consider the area?  If so, you’re asking a small muni to zone for a whole region (Many states have regional planning boards for just this reason).
(c)	Thus, in Britton, a “bedroom community” had to rezone to make adequate multi-family dwellings available since the next-door town was booming.
(3)	When a municipality has to consider the region, it must do its “fair share;” how is this determined?
(a)	Look at the character and history of the land
(i)	Character – land that uses septic tanks can’t handle dense population
(ii)	History – Difference between Westlake Hills (Austin suburb) and Round Rock (small town that Austin is growing into)
B.	The Conflict Between Private Property and Public Control
1.	The Concept of Regulatory Taking
a)	Three ways the government can take land:
(1)	Condemnation/Eminent Domain – in which case they must pay.
(2)	Inverse condemnation – e.g., Causby – the government takes land without paying (but you can force them to pay if you can prove a taking)
(3)	Regulatory Taking – Government regulates to the point that it’s the same as a taking (e.g., the regulation is the equivalent of a taking; government should pay or not regulate)
b)	What Is Property (reprise)?  
(1)	Two theories (both ends of the extreme)
(a)	All property rights come from government, so there is no such thing as a regulatory taking (State v. Shack) 
(i)	e.g., society defines property and thus can restrict it however it wants.
(b)	Any act which decreases land value is a taking and should result in compensation
(2)	Why compensation for takings? (or why invalidate the ordinance?)
(a)	Bentham – to protect expectations 
(b)	Posner – most efficient use – regulation should maximize economic use of the property
(i)	Have to look to tradition (e.g., common law) to find what property is – the only regulation permitted at common law is nuisance.
(3)	Questions created by the 5th amendment
(a)	Does a specific regulation deprive me of property without procedural due process?
(b)	Does the regulation “take” my property for public use?
c)	Criteria for determining if a regulation is a taking:  (Penn Central)
(1)	Economic impact on the claimant
(a)	This is the dollars-and-cents impact on the claimant
(2)	Character of the government action
(a)	A physical intrusion – as in Causby – is automatically considered a taking.
(b)	A regulation may not be.
(3)	Interference with investment-backed expectations
(a)	This is the interference with the use to which the claimant expected to put the property
(b)	Ex.: In Penn Central, the court said no expectations were disrupted – Grand Central Station could still be used as a train station even if the proposed office building wasn’t built.
2.	Tension Between Preventing Nuisance and Protecting Economic Use
a)	Keystone Bituminous – Court says regulation preventing mining where it could harm housing support is not a compensable taking.
(1)	Ostensibly, the court says this case deals with public interest vs. private interests instead of pure private v. private as in Mahon (this one sounds more like a nuisance case)
(a)	Dissent says that’s silly – both cases dealt with the economic concerns of the parties rather than safety reasons
(2)	Court also says that since the coal companies’ land is harmed very little taken as a whole, they haven’t significantly impaired its value
(a)	Dissent says that’s silly, too – you should just look at the land that was “taken” by the regulation and determine what the impact is on it
b)	Justice Scalia on Regulatory Takings (Lucas)
(1)	What is automatically a taking?
(a)	Any physical intrusion
(b)	Any time the economic use of land has been reduced to zero (e.g., there is no productive use left due to the regulation).  There are two exceptions to this:
(i)	Personal Property – because, Scalia says, everyone ought to know regulation of personalty is a possibility (e.g., eagle feathers and salamanders)
(a)	Smith: Utter Nonsense!  Historically, land has always been more regulated than personalty – there is no good reason to treat it differently
(ii)	Preexisting Limit – if there is a preexisting limit on the property, a regulation effectuating that limit is not a taking (e.g., if this would be a common law nuisance, a law stopping it is not a taking)
(a)	Smith: Read this narrowly!
c)	Smith’s Criticism 
(1)	Who defines property?  The judiciary – why shouldn’t the legislature, as a co-equal branch of government, have a say as well?
(2)	In other words, why is there no compensation required when the judiciary removes a property right (e.g., through nuisance law) but there is such required when the legislature does it through regulation?  Why can the judiciary wipe out all property value but the legislature can’t?
3.	Exactions
4.	Legislation & The Private Property Rights Movement