Property: Basics, Possession and Personal Property

Common law finders rule

"The title of the finder is good as against the whole world but the true owner." The common law holds that a finder of lost property has greater rights to the found property than the entire world except the true owner.

A finder of lost property is a person who...

(1) takes control of the lost property and (2) has the intent to maintain possession of the property.

Bank accounts:

(a) Power of attorney: A depositor may give another person power of attny to withdraw funds from the account. (b) "Pay on death" (POD) accounts: POD accounts are payable on the depositor's death to a named person. These accounts were usually void at common law for want of delivery until death, when a valid will would be required to transfer title, but this rule has been altered by statute in many states. (c) Totten trusts: A Totten trust is a POD account in the form of a trust, with the depositor as trustee for the death beneficiary but with the sole right to deal with the account during life. It was popular when POD accounts were generally void bc the gift to the depositor as trustee was completely during life and thus valid. (d) Joint tenancy: Two or more people may own a bank account as joint tenants, which creates a right of survivorship, but the joint tenants have equal right to the funds during life, which may not be the depositor's desire.

Bailment

A bailment is a legitimate possession of personal property by someone who is not the owner of the property. The bailor is the owner and the bailee is the legitimate possessor.

Elements of bailment

A bailment is created when the bailee has actual control of the property and intends to possess the property. Parties to a bailment may contractually specify their rights and obligations.

Gifts

A gift is a voluntary transfer for no consideration. A gift is made when the donor intends to make a gift, the property is delivered to the donee (by deed, by symbolic delivery, or by constructive delivery), and the donee accepts the property.

Adverse possession by co-owners or tenants?

A tenant or co-owner has a right to possession, so their occupation is not wrongful until and unless there has been a very clear repudiation of the lease (by a tenant) or assertion of exclusive ownership (by a co-owner), at which time possession becomes wrongful and adverse possession starts.

Trust

A trust is created when a person (the settlor) declares his intent to create a trust, transfers property to a trustee to hold in trust for the purposes specified by the settlor, and identifies the beneficiaries of the trust. Gifts to trusts are subject to special rules. While inter vivos gifts are irrevocable, a trust may be either revocable or irrevocable; thus, gifts by a settlor to a revocable trust are revocable at the will of the settlor.

Accession

Accession occurs when a person, in good faith, adds his labor to the property of another, or when a person, in good faith, mixes his labor and his property with the property of another. Generally, the resulting product is owned by the owner of the original property, unless the value is substantial, in which the case the laborer may keep the mixture if he compensates the owner for his loss. A person who in good faith constructs an improvement on the land of another (usually a neighbor) creates in the neighbor an option to either (1) sell the land to the improver at its fair market value (net of the improvement) or (2) pay the improver the fair value of the improvement itself.

Color of title:

An adverse possessor who enters under a defective deed or some other defective writing that purports to deliver title to the adverse possessor has entered under color of title. Color of title is usually not necessary to establish adverse possession (although some states require it), but an adverse possessor who enters under color of title is deemed to possess all the property described in the deed so long as it is physically contiguous and owned by the person against whom the actual entry was made.

Conversion

Conversion is a common law action for the tort of using another's property as one's own. the true owner or rightful possessor can recover the property.

Elements of Adverse Possession

For the true owner's claim of possession to be time-barred the adverse possessor's occupation must meet the following elements: (1) Actual entry: The adverse possessor must actually enter and take exclusive possession of the property. Exclusive possession means to exclude the world, except by permission of the possessor. (2) Open and Notorious: The adverse possession must be readily detectable to a true owner by being the type of occupation a true owner would make. (3) Hostile or under claim of right: There are three different views of hostility - (a) Good faith: The adverse possessor must actually believe, in good faith, that he is entitled to possess the property; (b) Objective: The adverse possessor's acts and statements germane to his occupation objectively appear to be claims of ownership; (c) "Aggressive trespass": The adverse possessor must know that his occupation is wrongful but still intend to claim the property. (4) Continuous: The adverse possessor must continuously occupy for the limitations period. This means that the occupation must be as continuous as a true owner's occupation would be, without voluntary abandonment by the adverse possessor. An adverse possessor may tack his possession onto that of a prior possessor so long as the two adverse possessors are in privity - they have voluntarily transferred possession from one to the other. (5) Taxes: A few jurisdictions, mostly in the west, require also that the adverse possessor have paid the property taxes for the requisite limitations period.

Transfers for value: Bona fide purchasers:

Generally, a person may only transfer the title he has, but a bona fide purchaser (BFP) may sometimes acquire better title than the seller had. A BFP is somebody who pays value, does not know that the seller lacks good title, and has a good faith belief that the seller is a true owner. To acquire a clear title from a vendor without title it is generally necessary to be a BFP who acquires a negotiable instrument, or purchases an item from a merchant who deals in that type of goods if the property has been entrusted by its owner to the merchant for sale, or purchases from a vendor with voidable title, which results when an owner intends to transfer title but doesn't because the other party (the vendor to the BFP) is guilty of fraud or duress that permits the owner to void the transaction.

Adverse Possession

If a person wrongfully possesses land long enough in a certain manner, the true owner may be barred from recovering possession by statutes of limitation which prescribe the period within which a suit to recover possession of real property must be brought. Once such an action is barred, the adverse possessor has effectively acquired title.

Lost and mislaid property:

If your wallet slides out of a hole in your pocket w/o your knowledge, it is lost; but if you place the wallet down on a counter, intending to put it back in your purse, but forget to do so, it is mislaid. Generally, the finder of lost or mislaid property has a better title to it than anyone else except the true owner, but the owner of the property where the object is found may have a better title than the finder in some circumstances.

Trover

The action for monetary compensation for conversion of personal property is called trover.In effect, trover is a forced sale. A person who is compensated pursuant to a trover action loses his rights to have the asset returned.

Replevin

The action or remedy to recover the asset itself (plus money damages for injury to the asset) is called replevin.

Rationales for adverse possession:

There are three policy rationales for adverse possession: (1) Sleeping theory: If the true owner doesn't care enough to protect his interest in possession, he deserves to lose title. (2) Earning theory: An adverse possessor who takes possession and stays there for the limitations period has probably expended time, energy, and money to make the land productive and so should be rewarded for his efforts, at least when the true owner has not bothered to recover possession. (3) Stability theory: Adverse possession operates to resolve dispute claims of title and possession after there has been a long wrongful occupation with no action to recover possession. Adverse possession promotes efficient resolution of such disputes.

Abandoned property:

When the true owner voluntarily intends to give up ownership of property it is abandoned. Abandoned property is unowned and the first possessor becomes its owner unless the circumstances of that possession are wrongful (e.g., the finder is a trespasser).

Personal property:

adverse possession was developed to deal with wrongful occupation of real property which, of course, has a fixed location. Adverse possession is not well suited to deal with wrongful occupation of personal property bc most personal property is highly portable and easily concealed. A shorter s/o/l usually applies and some states have discarded adverse possession altogether, in favor of a rule that triggers the limitations period when the owner first discovers, or reasonably should have discovered, the facts that constitute the cause of action.

Boundary disputes:

boundary disputes are sometimes resolved by adverse possession, but the doctrines of agreed boundaries, acquiescence, and equitable estoppel are also employed to resolve these problems.

Finder v. Landowner

if the object is lost and the finder is not a trespasser, the finder prevails. If the object is mislaid, the landowner prevails, on the theory that the owner of mislaid property is more apt to retrace her steps to locate where it was misplaced. But even with respect to lost property, the finder loses out to the landowner if the finder is an employee or invitee of the landowner, or the object is embedded in the soil.

Equitable division:

some say a fairer solution is to divide the value between claimants with equally legitimate claims.

When does the adverse possession S/o/L period begin?

the statute of limitations starts to run when the adverse possession first begins. If at that moment the owner is legally disabled (typically imprisoned, insane, or under the age of majority) the owner is given an extended period of time (after the disability runs) in which to bring suit.

Statutory modification of finders law:

these rules are often modified by statute, typically by awarding all found property to the finder if, after a reasonable search for the true owner, the true owner cannot be found.