Transcript
CHAPTER 8 – REAL AND PERSONAL PROPERTY
A. Chapter Introduction
Chapter 8 discusses real and personal property. Topics in the chapter include ownership of real estate, bailments, landlord-tenant relationships, insurance, devising property through gift or inheritance, and protection of the environment.
After completion of this chapter, students should be able to:
Define personal property and describe the methods for acquiring ownership.
Explain bailments and the parties to a bailment.
List and describe the four types of real property.
Describe ownership interests in surface, subsurface, and air rights.
Identify the types of co-ownership.
Name and describe the types of freehold estates.
Explain the real estate transaction or transfer of deed.
Identify and describe the various types of leaseholds and explain the landlord-tenant relationship.
Explain some features of land-use control.
B. Instructional Ideas
1. Explain the meaning of “property.” This is such a huge concept that, perhaps, the “bundle of rights” description is the most helpful to put the subject of property in a proper context.
2. Explain the difference between tangible and intangible property, asking the class for examples of intangible property (such as stocks, copyrights, patents, etc.). Students can get confused by intangible property, since intangible property is evidenced by symbols—stock certificates, for instance—that can be tangible.
3. Distinguish between lost and abandoned property, and point out the finder of lost property is the bailee of the property.
4. Discuss bailments—what they are, how they work, and the liability associated with bailments.
5. Distinguish the types of freehold estates and future interests.
6. Distinguish the types of jointly owned property. Use examples of persons co-owning real estate together to show why it matters that property be owned as tenants in common, joint tenants with rights of survivorship, and tenants by the entirety. Explain community property. Find a famous celebrity divorce case from a community property state to show what it means to divorce in a community property case.
7. Explain the difference between condominiums and cooperatives, a difference that can be difficult to grasp.
8. Ask the class for their thoughts on whether adverse possession should be allowed. There might be some interesting thoughts to come from that discussion.
9. Explain what easements are and how they work.
10. Prior to this chapter’s lecture, ask any of the students who rent if they would be willing to bring in their leases so that they could be examined in light of the types of tenancies that are created and the obligations imposed on the tenants and the landlords.
C. Video Recommendation(s)
Insight Media offers a video entitled “Real Property,” that can be found on its website. The video introduces the legal concepts of property and property rights, including joint ownership, the obligations of landlords and tenants, as well as the methods real property can be obtained, lost, and protected from loss.
D. Chapter Outline
I. Personal Property
A. Definition: Everything that is not real property; sometimes referred to as goods or chattels.
B. Types of Personal Property:
1. Tangible property: physically defined property such as goods, animals, and minerals.
2. Intangible property: rights that cannot be reduced to physical form, such as stock certificates, bonds, and copyrights.
C. Types of Gifts:
1. Gifts inter vivos: gifts made during a donor’s lifetime that are irrevocable present transfers of ownership.
2. Gifts causa mortis: gifts that are made in anticipation of death.
D. Mislaid, Lost, and Abandoned Property:
1. Mislaid property. Personal property that an owner voluntarily places somewhere and then inadvertently forgets. The owner of the premises where the property is mislaid does not acquire title to the property but has the right of possession against all except the rightful owner. The rightful owner can reclaim the property.
2. Lost property. Personal property that an owner leaves somewhere because of negligence or carelessness. The finder obtains title to the property against the whole world except the true owner. The rightful owner can reclaim the property.
a. Estray statutes. State statutes that permit a finder of mislaid or lost property to obtain title to the property. To obtainclear title, the finder must:
i. Report the find to the appropriate government agency and turn over possession of the property to the agency.
ii. Post and publish required notice.
iii. Wait the statutorily required time (e.g., one year) without the rightful owner claiming the property.
3. Abandoned property. Personal property that an owner has discarded, or mislaid or lost property that the owner gives up any further attempt to locate. The finder acquires title to the property. The prior owner cannot reclaim the property.
II. Bailments
A. Description: Occurs when the owner of personal property delivers the property to another person to be held, stored, or delivered, or for some other purpose.
B. Parties:
1. Bailor. Owner of the property.
2. Bailee. Party to whom the property is delivered.
C. Mutual Benefit Bailment: Bailments for the mutual benefit of the bailor and the bailee.
1. Mutual benefit bailment: Arises when both parties benefit from the bailment. This includes commercial bailments.
2. Duty of care: The bailee owes a duty of reasonable or ordinary care and is liable for ordinary negligence.
III. Real Property
A. Nature of Real Property: Real property is immovable: includes land, buildings, subsurface rights, air rights, plant life, and fixtures.
IV. Freehold Estates
A. Definition: Estates where the owner has a present possessory interest in the real property.
B. Estates in fee:
1. Fee simple absolute (or fee simple): highest form of ownership.
2. Fee simple defeasible (or qualified fee): estate that ends if a specified condition occurs.
C. Life estates: An interest in real property that lasts for the life of a specified person; called an estate pour autre vie if the time is measured by the life of a third person.
D. Future Interests: Right to possess real property in the future rather than currently.
E. Reversion: Right to possession that returns to the grantor after the expiration of a limited or contingent estate.
F. Remainder: Right to possession that goes to a third person after the expiration of a limited or contingent estate; the third person is called a remainderman.
V. Concurrent Ownership
A. Concurrent Ownership: where two or more persons jointly own real property.
B. Joint tenancy: Owners may transfer their interests without the consent of co-owners; transfer severs the joint tenancy. Under the right of survivorship, the interest of a deceased owner passes to his or her co-owners.
C. Tenancy in common: Owners may transfer their interests without the consent of co-owners; transfer does not sever the tenancy in common. Interest of a deceased owner passes to his or her estate.
D. Tenancy by the entirety: Form of co-ownership that can be used only by a married couple; neither spouse may transfer his or her interest without the other spouse’s consent. A surviving spouse has the right of survivorship.
E. Community property: Form of co-ownership that applies only to a married couple; neither spouse may transfer his or her interest without the other spouse’s consent. When a spouse dies, the surviving spouse automatically receives one-half of the community property.
F. Condominium: Owners have title to their individual units and own the common areas as tenants in common; owners may transfer their interests without the consent of other owners.
G. Cooperative: A corporation owns the building and the residents own shares of the corporation. Usually, owners may not transfer their shares without the approval of the other owners.
VI. Transfers of Ownership of Real Property
A. Sale of Real Estate: An owner sells his or her property to another for consideration.
B. Marketable Title: A title free of encumbrances, defects in the title, or other defects.
C. Deed: Instrument used to convey real property by sale or gift.
1. Warranty deed: Provides the most protection to the grantee because the grantor makes warranties against defect in title.
2. Quitclaim deed: Provides least amount of protection to the grantee because the grantor transfers only the interest he or she may have in the property.
D. Adverse Possession: A person who occupies another’s property acquires title to the property if the occupation has been:
1. For a statutory time period (in many states, 10 to 20 years)
2. Open, visible, and notorious
3. Actual and exclusive
4. Continuous and peaceful
5. Hostile and adverse
E. Easement: An interest in land that gives the holder the right to make limited use of another’s property without taking anything from it (e.g., driveways, party walls).
VII. Landlord-Tenant Relationship
A. Definition: Created when an owner of a freehold estate transfers a right to another to exclusively and temporarily possess the owner’s property.
B. Types of Tenancy:
1. Tenancy for years: Tenancy for a specified period of time.
2. Periodic tenancy: Tenancy for a period of time determined by the payment interval.
3. Tenancy at will: Tenancy that may be terminated at any time by either party.
4. Tenancy at sufferance: Tenancy created by the wrongful possession of property.
C. Lease: The rental agreement between the landlord and the tenant that contains the essential terms of the parties’ agreement.
VIII. Land-Use Control
A. Public Regulation of Land Use: Zoning ordinances: Laws adopted by local governments that restrict use of property, set building standards, and establish architectural requirements.
1. Variance: Permits an owner to make a nonzoned use of his or her property; requires permission from a zoning board.
2. Nonconforming use: A nonzoned use that is permitted when an area is rezoned.
E. Critical Legal Thinking Questions
1. Describe personal property. How does this differ from real property?
Personal property (sometimes referred to as “goods” or “chattels”) consists of everything that is not real property. Real property is the land and property that is permanently attached to it. For example, minerals, crops, timber, and buildings that are attached to land are generally considered real property.
2. What does an estray statute provide? What public policy underlies an estray statute?
An estray statute is one that permits a finder of lost or mislaid property to clear title to the property by turning the found property over to the appropriate government agency, and waiting the statutory time period following the published notification for the original owner to fail to claim the item.
3. Describe how a bailment occurs. Who are the parties to a bailment? How is liability for lost or damaged goods assessed?
A bailment occurs when the owner of personal property delivers his or her property to another person to be held, stored, or delivered, or for some other purpose. The owner of the property is the bailor, and the party to whom the property is delivered is the bailee. When a bailment benefits both parties, that is known as a mutual benefit bailment, and the duty of reasonable care applies to the bailee. That means that the bailee will be liable for loss or damage to the bailed property that results from the bailee’s negligence.
4. What is a fee simple absolute (or fee simple) estate? How does this differ from a life estate?
A fee simple absolute is the highest form of ownership of real property because it grants the owner the fullest bundle of legal rights that a person can hold in real property. It is the type of ownership that most people connect with “owning” real property.
5. Describe the difference between a joint tenancy, tenancy in common, and tenancy by the entirety.
All three types of tenancy involve more than one person owning property together. A joint tenancy is one in which the death of a joint tenant results in the dead tenant’s interest automatically passing to the surviving joint tenants. A tenancy in common is one in which the property interest of a dead tenant passes to the dead tenant’s estate, not to the co-tenants. A tenancy by the entirety is a form of co-ownership of real property that can be used only by married couples and must be created by express words. As opposed to a joint tenancy, this form of ownership prevents one spouse from transferring his or her interest without the other spouse’s consent.
6. What is the purpose of a recording statute?
Recording statutes are intended to prevent fraud and to establish certainty in the ownership and transfer of property. Instruments are usually filed in the county recorder’s office of the county in which the property is located.
7. Describe the doctrine of adverse possession. Why does the law recognize this doctrine?
Adverse possession is a legal doctrine that allows one to obtain title to someone else’s real estate through wrongful possession, if certain statutory requirements are met. Federal- and state-owned property are not subject to adverse possession. The law recognizes this doctrine. Presumably, this doctrine originated as a way to promote the highest use of real estate, since part of the statutory requirement is open and actual exclusive possession of the rightful owner’s possession.
8. What is an easement? Describe the difference between an express easement and an implied easement.
An easement is an interest in land that gives the holder the right to make limited use of another’s property without taking anything from it. Easements may be expressly created by grant or reservation, which requires the use of language. Implied easements are those in which the subdivision of a property leaves no indication other than that roads or wells, etc., are there for the use of those in the subdivision.
9. Describe the differences between tenancy for years, periodic tenancy, tenancy at will, and tenancy at sufferance.
A tenancy for years is created when the landlord and tenant agree on a specific duration for the lease. A tenancy for years terminates automatically upon the expiration of the stated term. A periodic tenancy is created when a lease specifies intervals at which payments are due but does not specify the duration of the lease. A periodic tenancy may be terminated by either party at the end of any payment interval, provided adequate notice is given. A tenancy at will is one which may be terminated at any time by either party. A tenancy at will may be created expressly or by implication. A tenancy at sufferance is created when a tenant retains possession of the property after the expiration of another tenancy or a life estate without the owner’s consent. Technically, a tenant at sufferance is a trespasser. Eviction proceedings are usually required to evict a holdover tenant.
10. Are land-use control laws necessary? What purposes do they serve?
Land-use control laws, created at the federal, state, and local level are necessary. The regulation of private property, although anti-capitalistic in design, serves the purpose of seeking safety and efficient use of the land.
F. Cases for Discussion
Magliocco v. American Locker Co., Inc., 239 Cal.Rptr. 497 (1987), concerned an illicit purchase of smuggled gold with a purchase price of $409,000. The money was placed in a suitcase in a coin-operated locker owned and operated by American Locker Co. located in a Greyhound bus station, with the buyer and seller each having a key. The seller’s accomplice used fraud to get a Greyhound employee to open the locker and then took the suitcase. When the seller discovered this, he sued Greyhound and American Locker. The jury, ruling for the plaintiff, found that a bailment had been created. The Court of Appeals, however, reversed, concluding that a bailment could not have been created with a coin-operated locker because there was no common law notion of delivery for bailment purposes. The owner of the goods never gives up possession of the property because there is no “bailee” with a coin-operated locker.
QUESTIONS
1. Do you think the assessment of the loss fell on the proper party? Why or why not?
This is an opinion question, designed to stimulate class discussion. But, it’s hard to feel sorry for people who use bus station lockers to hold the proceeds for their black market sales and then lose the money to a more deceitful character.
2. Did Magliocco act ethically in suing Greyhound and American Locker? Whose fault was it that the money was stolen?
This is another opinion question.
3. What would be the impact on coin-operated locker businesses if the jury’s verdict were allowed to stand?
Who’s to know? If the use of such lockers were considered to be bailments, the cost of using them would probably increase.
Cunningham v. Hastings, 556 N.E.2d 12 (1990), concerned an unmarried couple who purchased a house together. Mr. Hastings paid a $45,000 down payment on the house. The deed referred to Hastings and Ms. Cunningham as “joint tenants with the right of survivorship.” After their relationship ended, Hastings took sole possession, and Cunningham sued for partition of the house. The trial court ordered the house to be sold and the proceeds split, provided that Hastings also got his $45,000 down payment back. The appellate court reversed, finding that since the couple took the property as joint tenants, then their ownership interest was equal, regardless of how much extra money Hastings paid for the property. Therefore, Cunningham was entitled to one-half of the sales proceeds.
QUESTIONS
1. Should the law recognize so many different forms of ownership of real property? Do you think most people understand the legal consequences of taking title in the various forms?
This is clearly an opinion question. And as to whether most people understand the legal consequence of taking title in various forms—if they did, there would be fewer real estate lawyers driving German luxury sedans.
2. Did Cunningham act ethically in demanding one-half the value of the down payment even though she did not contribute to it?
If all is fair in love and war, then ethics is moot. It is clear that it wasn’t her money when it was used as a down payment.
3. Could Hastings have protected the $45,000 he paid for the down payment? If so, how could he have done it?
Hastings and Cunningham could have made a written agreement that called for the return of the money to him in the event that their relationship ends. They also could have taken the property as tenants in common, with his share being larger than hers, to represent the down payment.
Solow v. Wellner, 569 N.Y. Supp.2d 882 (1991), concerned a suit by the landlord against the 80 tenants of a luxury, upper East Side, Manhattan apartment building for unpaid rent over a six-year period when the tenants were on a rent strike, protesting what they viewed as deteriorating conditions and services. The defendant-tenants sought abatement of rent for breach of the implied warranty of habitability. During the rent strike, the elevator system barely worked, a stench came from garbage stored near the garage and mice appeared in that area, fixtures were missing in public areas, water seeped into mailboxes, the air conditioning in the lobby was inoperative, and air conditioners in the apartments leaked. The court found that New York recognizes the implied warranty of habitability in residential housing, which includes the requirement that the landlord meet the “reasonable expectations” of tenants. Although the amenities found lacking here weren’t life threatening, the court concluded that the obvious expectations of the tenants in this luxury apartment building had not been met.
QUESTIONS
1. Should the law recognize the implied warranty of habitability? Why or why not?
This is another opinion question. The law does recognize this implied warranty.
2. Did the landlord act ethically in not correcting the defects in the building? Did the tenants act ethically in engaging in a rent strike?
There are not enough facts in this case to know what actually happened in that untidy, fashionable, upper East Side apartment building.
3. Was the remedy the court ordered appropriate in this case?
The court’s remedy was to abate the rent of each of the tenants individually, in total allowing the landlord to recover 22% of the amount for which he sued. The court ordered the landlord to pay the tenants’ attorneys’ fees. This question is another opinion question.
8.1
Naab v. Nolan, 327 S.E.2d 151 (WV 1985), concerned a dispute over the location of a concrete garage. The Naabs purchased property in a subdivision that had a small garage on it, erected about 20 years earlier. Three years following the Naabs’ purchase, the Nolans bought a lot next to the Naabs. A survey showed that one corner of the Naabs’ garage encroached 1.22 feet onto the Nolans’ property, and the other corner encroached .91 feet. Upon refusing to remove the garage, the Naabs were sued by the Nolans.
ISSUE: Who wins?
The Naabs. The court found that the Naabs had acquired title to that portion on which the garage sat because of adverse possession. As to the statutory time limit of ten years for adverse possession, the court followed the common principle that owner of a burdened premise is bound by the actions or inactions of his or her predecessors in title.
8.2
Hill v. Pinelawn Memorial Park, Inc., 282 S.E.2d 779 (N.C. 1981), concerned two families fighting over the right to be buried in crypt D at the Memorial Park Mausoleum. The Hills contracted first for crypt D, making a down payment and installment payments. Later, the Shacklefords contracted for crypt D, making a down payment and installment payments. When the Hills discovered this, they sued Pinelawn and the Shacklefords. When the Shacklefords realized they were being sued, they discovered that they had no deed to crypt D and demanded one from Pinelawn. They got the deed and recorded it in the County Register.
ISSUE: Who wins crypt D?
The Hills win crypt D. The court concluded that the Shacklefords weren’t protected by operation of the recording statute when they recorded their deed after being served a summons by the Hills, who were asserting their right to the crypt. Although the race to the Register of Deeds’ office generally determines who takes title, that is not the case when one of the parties is aware of pending litigation. The doctrine of lis pendens applied in this case. Furthermore, the Shacklefords were not “innocent purchasers for value.”
8.3
Love v. Monarch Apartments, 771 P.2d 79 (Kan.App. 1989), concerned a tenant, Ms. Love, and her children, who vacated an apartment owned by Monarch, terminating it early because the severe roach problem in her apartment had not been abated by Monarch’s efforts. This was Ms. Love’s second Monarch apartment. The first one had a severe termite problem that Monarch couldn’t solve, necessitating the move to the second apartment.
ISSUE: Did Love lawfully terminate the lease?
Yes, Love did lawfully terminate the lease. The court concluded that Monarch breached its statutory duties under Kansas’s Residential Landlord and Tenant Act. Love was awarded damages, including consequential damages, for Monarch’s breach.
8.4
Souders v. Johnson, 501 So.2d 745 (Fla.App. 1987), concerned a dispute over the will of Dr. A.M. Edwards, whose will left his condominium and its “contents” to his stepson, and the residual of his estate to other named legatees. Stock certificates, passbook savings accounts, and other bank statements—totaling over $500,000—were found in the condominium. The stepson said the property constituted part of the condo’s contents and were his. The other legatees said that property was intangible and not part of the condo’s contents.
ISSUE: Who is entitled to the stocks and bank accounts? Do you think Souders acted ethically in this case?
The other legatees are entitled to the stocks and bank accounts. The court concluded that “contents” of a home means tangible personal property, not intangible property. If the stepson was entitled to the stocks and bank accounts as part of the contents of the condominium, it would have depleted the residuary estate and nullify the bequests to the residuary beneficiaries. Did Souders act ethically? You be the judge.
G. Case for Briefing
1. Case Name
The Wackenhut Corporation and Delta Airlines, Inc. v. Lippert, 609 So.2d 1304 (FL 1992)
2. Key Facts
A. Ms. Lippert made the wildly unusual decision to put $431,000 worth of jewelry in her purse when she attempted to fly from West Palm Beach to New York on a Delta Airlines flight.
B. At the security checkpoint, operated by Wackenhut, her bag was placed on the magnetometer, and while she was going through the security archway, her purse, with the jewelry inside, was stolen.
C. Ms. Lippert sued Delta and Wackenhut for negligence, arguing that a mutual benefit bailment had been created when Wackenhut took possession of her purse.
D. The defendants argued that the limitation of liability clause, appearing on the back of Delta’s ticket, made them only liable for $1,250 for loss or damage to a passenger’s baggage.
E. They also argued that they were a gratuitous bailee, since the security checkpoint was required by federal law, and therefore were only liable for gross negligence.
F. Ms. Lippert argued that the limitation of liability didn’t apply to her purse because it hadn’t reached the cargo compartment or cabin of the airplane, as described on the back of the ticket. Therefore, it wasn’t baggage, according to the ticket’s definition.
3. Issue
Does the limitation of liability for airport baggage apply to one’s purse when it is passed through a security checkpoint and is intended to be carried on board by the passenger?
4. Holding
The Florida Supreme Court held that the $1,250 limitation of liability did apply to the missing purse while it was in the possession of Delta’s agent at the security checkpoint.
5. Court’s Reasoning
A. The court considered the ticket’s definition of baggage—“whether checked in the cargo compartment or carried in the cabin”—emphasized that there was no difference under the liability limitation between carry-on and checked baggage.
B. A ticketed passenger’s property, destined for an airplane and in transit between the security checkpoint and the airplane, constitutes “baggage” as defined by the ticket.
C. Therefore, the limitation of liability clause did apply to the purse, even though a mutual benefit bailment occurred when the Delta’s security agent took possession of the purse, which in the absence of the limitation of liability clause, would make Delta liable for ordinary negligence.
