Chapter 23 BL 240

Requirements for Adverse Possession

-Possession must be actual and exclusive -Possession must be open, visible, and notorious -Possession must be continuous and peaceable for the required period of time -Possession must be hostile and adverse

Warranty Deeds Include

1. A covenant that the grantor has the title to, and the power to convey, the property. 2. A covenant of quiet enjoyment (a warranty that the buyer's possession of the land will not be disturbed). 3. A covenant that transfer of the property is made without knowledge of adverse claims of third parties. Generally, the warranty deed makes the grantor liable for all defects of title during the time that the property was held by the grantor and previous titleholders.

Permissible Uses of Land

1. Residential 2. Commercial 3. Industrial 4. Conservation districts A city's residential, commercial, and industrial districts may be divided, in turn, into subdistricts. For instance, a residential district may be divided into low-density (single-family homes with large lots), high-density (single- and multiple-family homes with small lots), and planned-unit (condominiums and apartments) subdistricts.

Fixed-Term Tenancy

A fixed-term tenancy, also called a tenancy for years, is created by an express contract stating that the property is leased for a specified period of time, such as a month, a year, or a period of years. Signing a one-year lease to occupy an apartment, for instance, creates a tenancy for years. Note that the term need not be specified by date. It can instead be conditioned on the occurrence of an event, such as leasing a cabin for the summer or an apartment during Mardi Gras. At the end of the period specified in the lease, the lease ends (without notice), and possession of the property returns to the lessor. If the tenant dies during the period of the lease, the lease interest passes to the tenant's heirs as personal property. Often, leases include renewal or extension provisions.

Leasehold Estates

A leasehold estate is created when a real property owner or lessor (landlord) agrees to convey the right to possess and use the property to a lessee (tenant) for a certain period of time. In every leasehold estate, the tenant has a qualified right to exclusive, though temporary, possession. (The tenant's rights are qualified by the landlord's right to enter onto the premises to ensure that the tenant is not causing damage to the property.) The tenant can use the land—for instance, by harvesting crops—but cannot injure it by such activities as cutting down timber to sell or by extracting oil.

Tenancy by the Entirety

A less common form of shared ownership of real property by husband and wife is a tenancy by the entirety. It differs from a joint tenancy in that neither spouse may separately transfer his or her interest during his or her lifetime unless the other spouse consents. Some states have effectively abolished this form of concurrent ownership. A divorce, either spouse's death, or mutual agreement terminates a tenancy by the entirety.

Community Property

A limited number of states allow property to be owned by a married couple as community property. If property is held as community property, each spouse technically owns an undivided one-half interest in the property. This type of ownership applies to most property acquired by the husband or the wife during the course of the marriage. It generally does not apply to property acquired prior to the marriage or to property acquired by gift or inheritance as separate property during the marriage. After a divorce, community property is divided equally in some states and according to the discretion of the court in other states.

Adverse Possession

A person who wrongfully possesses the real property of another by occupying or using the property may eventually acquire title to it through adverse possession. Adverse possession is a means of obtaining title to land without delivery of a deed. Essentially, when one person possesses the property of another for a certain statutory period of time, that person acquires title to the land.

Restrictive Covenants

A private restriction on the use of land is known as a restrictive covenant. If the restriction is binding on the party who purchases the property originally and on subsequent purchasers as well, it is said to "run with the land." A covenant running with the land must be in writing (usually it is in the deed), and subsequent purchasers must have reason to know about it.

Quitclaim Deeds

A quitclaim deed offers the least protection against defects of title. Basically, a quitclaim deed conveys to the grantee whatever interest the grantor had. Therefore, if the grantor had no interest, then the grantee receives no interest. A quitclaim deed is often used when the sellers, or grantors, are uncertain as to the extent of their rights in the property. It may also be used to release a party's interest in a particular parcel of property. This may be necessary, for instance, in divorce settlements or business dissolutions when the grantors are dividing up their interests in real property.

Warranty Deeds

A warranty deed makes the greatest number of covenants, or promises, from the grantor to the grantee and thus provides the greatest protection against defects of title. In most states, special language is required to create a general warranty deed.

Termination of a Joint Tenancy

Although a joint tenant can transfer her or his rights by sale or gift to another without the consent of the other joint tenants, doing so terminates the joint tenancy. The person who purchases the property or receives it as a gift becomes a tenant in common, not a joint tenant. A joint tenant's interest can also be seized by court order to satisfy the tenant's judgment creditors. If this occurs, the joint tenancy terminates, and the remaining owners hold the property as tenants in common. (Judgment creditors can also seize the interests of tenants in a tenancy in common.)

Easement or Profit Appurtenant

An easement (or profit) appurtenant arises when the owner of one piece of land has a right to go onto (or remove something from) an adjacent piece of land owned by another. The land that is benefited by the interest is called the dominant estate, and the land that is burdened is called the servient estate. Because easements or profits appurtenant are intended to benefit the land, they run (are conveyed) with the land when it is transferred.

Termination of an Easement or Profit

An easement or profit can be terminated or extinguished in several ways. The simplest way is to deed it back to the owner of the land that is burdened by it. Another way is to abandon it and create evidence of intent to relinquish the right to use it. Mere nonuse will not extinguish an easement or profit unless the nonuse is accompanied by an overt act showing the intent to abandon. Finally, if the owner of an easement or profit becomes the owner of the property burdened by it, then it is merged into the property.

Fixtures

Certain personal property can become so closely associated with the real property to which it is attached that the law views it as real property. Such property is known as a fixture—an item affixed to realty, meaning that it is attached to the real property in a permanent way. The item may be embedded in the land or permanently attached to the property or to another fixture on the property by means of cement, mortar bolts, nails, roots, or screws. An item, such as a statue, may even sit on the land without being attached, as long as the owner intends the property to be a fixture. Fixtures are included in the sale of land unless the sales contract specifies otherwise. The sale of a house includes the land and the house and any detached garage, barn, or shop on the land, as well as the cabinets, plumbing, and windows. Because these are permanently affixed to the property, they are considered to be a part of it. Certain items, such as drapes and window-unit air conditioners, are difficult to classify. Thus, a contract for the sale of a house or commercial realty should indicate which items of this sort are included in the sale.

Airspace Rights

Disputes concerning airspace rights may involve the right of commercial and private planes to fly over property and the right of individuals and governments to seed clouds and produce rain artificially. Flights over private land normally do not violate property rights unless the flights are so low and so frequent that they directly interfere with the owner's enjoyment and use of the land. Leaning walls or buildings and projecting eave spouts or roofs may also violate the airspace rights of an adjoining property owner.

Eminent Domain

Even ownership in fee simple absolute is limited by a superior ownership. In the United States, the government has an ultimate ownership right in all land. This right, known as eminent domain, is sometimes referred to as the condemnation power of government to take land for public use. It gives the government the right to acquire possession of real property in the manner directed by the U.S. Constitution and the laws of the state whenever the public interest requires it. The power of eminent domain generally is invoked through condemnation proceedings. Condemnation proceedings usually involve two distinct phases. The first seeks to establish the government's right to take the property, and the second determines the fair value of the property.

Recording Statutes

Every jurisdiction has recording statutes, which allow deeds to be recorded for a fee. Deeds are recorded in the county where the property is located. Recording a deed gives notice to the public that a certain person is now the owner of a particular parcel of real estate. Thus, prospective buyers can check the public records to see whether there have been earlier transactions creating interests or rights in specific parcels of real property.

Ownership in Fee Simple

In a fee simple absolute, the owner has the greatest aggregation of rights, privileges, and power possible. The owner can give the property away or dispose of the property by deed (the instrument used to transfer real property) or by will. When there is no will, the fee simple ownership interest passes to the owner's legal heirs on her or his death. A fee simple is potentially infinite in duration and is assigned forever to individuals and their heirs without limitation or condition. The owner has the rights of exclusive possession and use of the property. The rights that accompany a fee simple include the right to use the land for whatever purpose the owner sees fit. Of course, other laws, including applicable zoning, noise, and environmental laws, may limit the owner's ability to use the property in certain ways. A person who uses his or her property in a manner that unreasonably interferes with others' right to use or enjoy their own property can be liable for the tort of nuisance.

Joint Tenancy

In a joint tenancy, each of two or more persons owns an undivided interest in the property, but a deceased joint tenant's interest passes to the surviving joint tenant or tenants.

Special Warranty Deeds

In contrast to a warranty deed, a special warranty deed, which is also referred to as a limited warranty deed, warrants only that grantors, or sellers, held good title during their ownership of the property. In other words, the grantor is not warranting that there were no defects of title when the property was held by previous owners. If the special warranty deed discloses all liens or other encumbrances, the seller will not be liable to the buyer if a third person subsequently interferes with the buyer's ownership. If the third person's claim arises out of, or is related to, some act of the seller, however, the seller will be liable to the buyer for damages.

Nonpossessory Interests

In contrast to the property interests just described, some interests in land do not include any rights to possess the property. Such an interest is called a nonpossessory interest and includes easements, profits, and licenses. An easement is the right of a person to make limited use of another person's real property without taking anything from the property. An easement, for instance, can be the right to walk or drive across another's property. In contrast, a profit is the right to go onto land owned by another and take away some part of the land itself or some product of the land. Easements and profits can be classified as either appurtenant or in gross. Because easements and profits are similar and the same rules apply to both, we discuss them together.

Seller's Duty to Disclose Hidden Defects

In most jurisdictions, courts impose on sellers a duty to disclose any known defect that materially affects the value of the property and that the buyer could not reasonably discover. Failure to disclose such a material defect gives the buyer the right to rescind the contract and to sue for damages based on fraud or misrepresentation. There is usually a limit to the time within which the buyer can bring a suit against the seller based on the defect.

Subsurface Rights

In other words, the owner of the surface can sell subsurface rights to another person. When ownership is separated into surface and subsurface rights, all owners can pass title to what they own without the consent of the other owners. Subsurface rights can be extremely valuable, as these rights include the ownership of minerals, oil, and natural gas. But subsurface owners' rights would be of little value, if they could not use the surface to exercise those rights. Hence, a subsurface owner has a right (called a profit) to go onto the surface of the land to, for instance, discover and mine minerals. Of course, conflicts can arise between the surface owners' use of the property and the subsurface owners' need to extract minerals, oil, or natural gas. In that situation, one party's interest may become subservient (secondary) to the other party's interest either by statute or by case law. If the owners of the subsurface rights excavate (dig), they are absolutely liable if their excavation causes the surface to collapse. Many states have statutes that also make the excavators liable for any damage to structures on the land. Typically, these statutes provide precise requirements for excavations of various depths.

Real Estate Sales Contracts

In some ways, a sale of real estate is similar to a sale of goods because it involves a transfer of ownership, often with specific warranties. A sale of real estate, however, is generally a more complicated transaction that involves certain formalities that are not required in a sale of goods. Usually, after substantial negotiations (involving offers, counteroffers, and responses), the parties enter into a detailed contract setting forth their agreement. A contract for a sale of land includes such terms as the purchase price, the type of deed the buyer will receive, the condition of the premises, and any items that will be included. A buyer who does not pay cash for the property must obtain financing through a mortgage loan. Real estate sales contracts can be made contingent on the buyer's ability to obtain financing at or below a specified rate of interest. The contract may also be contingent on the buyer's sale of other real property, the seller's acquisition of title insurance, or the completion of a survey of the property and its passing one or more inspections. Normally, the buyer is responsible for having the premises inspected for physical or mechanical defects and for insect infestation.

License

In the context of real property, a license is the revocable right to enter onto another person's land. It is a personal privilege that arises from the consent of the owner of the land and can be revoked by the owner. A ticket to attend a movie or a concert is an example of a license. In essence, a license grants a person the authority to enter the land of another and perform a specified act or series of acts without obtaining any permanent interest in the land. When a person with a license exceeds the authority granted and undertakes an action that is not permitted, the property owner can sue that person for the tort of trespass.

Land and Structures

Land includes the soil on the surface of the earth and the natural or artificial structures that are attached to it. It further includes all the waters contained on or under the surface and much, but not necessarily all, of the airspace above it. The exterior boundaries of land extend down to the center of the earth and up to the farthest reaches of the atmosphere (subject to certain qualifications).

Creation of an Easement or Profit

Most easements and profits are created by an express grant in a contract, deed, or will. This allows the parties to include terms defining the extent and length of time of use. In some situations, an easement or profit can also be created without an express agreement. An easement or profit may arise by implication when the circumstances surrounding the division of a parcel of property imply its existence. An easement or profit may also be created by necessity. An easement or profit by necessity does not require a division of property for its existence. A person who rents an apartment, for instance, has an easement by necessity in the private road leading up to the apartment building. An easement or profit may arise by prescription when one person uses another person's land without the landowner's consent. The use must be apparent and must continue for the length of time required by the applicable statute of limitations.

Implied Warranties in the Sale of New Homes

Most states recognize an implied warranty of habitability space in the sale of new homes. The seller of a new house warrants that it will be fit for human habitation even if the deed or contract of sale does not include such a warranty. Essentially, the seller is warranting that the house is in reasonable working order and is of reasonably sound construction. In some states, the warranty protects not only the first purchaser but any subsequent purchaser as well.

Limitations on Property Rights

No ownership rights in real property can ever really be absolute. An owner of real property cannot always do whatever she or he wishes to do on or with the property. Nuisance and environmental laws, for instance, restrict certain types of activities. Property ownership is also conditional on the payment of property taxes. Zoning laws and building permits frequently restrict owners' uses of realty. In addition, if a property owner fails to pay debts, the property may be seized to satisfy judgment creditors. In short, the rights of every property owner are subject to conditions and limitations.

Transfer of Real Property Ownership

Ownership interests in real property are frequently transferred (conveyed) by sale, and the terms of the transfer are specified in a real estate sales contract. Real property ownership can also be transferred by gift, by will or inheritance, by possession, or by eminent domain. When ownership rights in real property are transferred, the type of interest being transferred and the conditions of the transfer normally are set forth in a deed executed by the person who is conveying the property.

Ownership and Other Interests in Real Property

Ownership of property is an abstract concept that cannot exist independently of the legal system. No one can actually possess, or hold, a piece of land, the airspace above it, the earth below it, and all the water contained on it. The legal system therefore recognizes certain rights and duties that constitute ownership interests in real property. Property ownership is often viewed as a bundle of rights. One who possesses the entire bundle of rights is said to hold the property in fee simple, which is the most complete form of ownership. When only some of the rights in the bundle are transferred to another person, the effect is to limit the ownership rights of both the transferor of the rights and the recipient. Traditionally, ownership interests in real property were referred to as estates in land, which include fee simple estates and leasehold estates.

Concurrent Ownership

Persons who share ownership rights simultaneously in particular property (including real property and personal property) are said to have concurrent ownership. There are two principal types of concurrent ownership: tenancy in common and joint tenancy. Concurrent ownership rights can also be held in a tenancy by the entirety or as community property, but these types of concurrent ownership are less common.

Plant Life and Vegetation

Plant life, both natural and cultivated, is also considered to be real property. In many instances, the natural vegetation, such as trees, adds greatly to the value of the realty. When a parcel of land is sold and the land has growing crops on it, the sale includes the crops, unless otherwise specified in the sales contract. When crops are sold by themselves, however, they are considered to be personal property or goods. Consequently, the sale of crops is a sale of goods and thus is governed by the Uniform Commercial Code rather than by real property law.

Deeds

Possession and title to land are passed from person to person by means of a deed—the instrument of conveyance of real property. Unlike a contract, a deed does not have to be supported by legally sufficient consideration. To be valid, a deed must include the following components: 1. The names of the buyer (grantee) and the seller (grantor). 2. Words indicating an intent to convey the property (for example, "I hereby bargain, sell, grant, or give"). 3. A legally sufficient description of the land. 4. The grantor's (and often her or his spouse's) signature. 5. Delivery of the deed. Different types of deeds provide different degrees of protection against defects of title. A defect of title exists, for instance, if an undisclosed third person has an ownership interest in the property.

The Nature of Real Property

Property is divided into real and personal property. Real property (sometimes called realty or real estate) is land and everything permanently attached to it, such as buildings, plants, and trees. Everything else is personal property. In essence, real property is immovable, whereas personal property is capable of being moved.

Will or Inheritance

Property that is transferred on an owner's death is passed either by will or by state inheritance laws. If the owner of land dies with a will, the land passes in accordance with the terms of the will. If the owner dies without a will, state inheritance statutes prescribe how and to whom the property will pass.

The Compensation

The Fifth Amendment to the U.S. Constitution requires that the government pay just compensation when invoking its condemnation power. State constitutions contain similar provisions. Just compensation means fair value. In the second phase of the condemnation proceeding, the court determines the fair value of the land, which usually is approximately equal to its market value. The government may take property only for public use, not for private benefit.

Airspace and Subsurface Rights

The owner of real property has rights to the airspace above the land, as well as to the soil and minerals underneath it. Limitations on either airspace rights or subsurface rights normally must be indicated on the document that transfers title at the time of purchase. When no such limitations, or encumbrances, are noted, a purchaser generally can expect to have an unlimited right to possession of the property.

Right of Survivorship

The right of a surviving joint tenant to inherit a deceased joint tenant's ownership interest—referred to as a right of survivorship—distinguishes a joint tenancy from a tenancy in common

Zoning

The rules and regulations that collectively manage the development and use of land are known as zoning laws. Today, zoning laws enable the government of a municipality—a town, city, or county—to control the speed and type of development within its borders by creating different zones and regulating the use of property allowed in each zone. As long as its zoning ordinances are rationally related to the health, safety, or welfare of the community, a municipal government has broad discretion to carry out zoning as it sees fit. The purpose of zoning laws is to manage the land within a community in a way that encourages sustainable and organized development while controlling growth in a manner that serves the interests of the community. One of the basic elements of zoning is the classification of land by permissible use, but zoning extends to other aspects of land use as well.

Tenancy in Common

The term tenancy in common refers to a form of co-ownership in which each of two or more persons owns an undivided interest in the property. The interest is undivided because each tenant shares rights in the whole property. On the death of a tenant in common, that tenant's interest in the property passes to the tenant's heirs. Unless the co-tenants have agreed otherwise, a tenant in common can transfer ownership interest in the property to another without the consent of the remaining co-owners. In most states, it is presumed that a co-tenancy is a tenancy in common unless there is specific language indicating the intent to establish a joint tenancy.

Purpose of Adverse Possession

There are a number of public policy reasons for the adverse possession doctrine. These include society's interest in resolving boundary disputes, determining title when title to property is in question, and ensuring that real property remains in the stream of commerce. More fundamentally, policies behind the doctrine include rewarding possessors for putting land to productive use and punishing owners who sit on their rights too long and do not take action when they see adverse possession.

Inverse Condemnation

Typically, a government agency exercises the power of eminent domain through litigation or negotiation and pays compensation to the landowner whose property is seized. Inverse condemnation, in contrast, occurs when a government simply takes private property from a landowner without paying any compensation. The taking can be physical, as when a government agency uses or occupies the land, or constructive, as when an agency regulation results in loss of property value. The United States Supreme Court has held that even temporary flooding of land by the government may result in liability under the takings clause.

The Taking

When the government uses its power of eminent domain to acquire land owned by a private party, a taking occurs. In this phase of condemnation proceedings, the government must prove that it needs to acquire privately owned property for a public use.

Periodic Tenancy

With a periodic tenancy, the lease does not specify how long it is to last but does specify that rent is to be paid at certain intervals, such as monthly or yearly. The tenancy is automatically renewed for another rental period unless properly terminated. A periodic tenancy sometimes arises after a fixed-term tenancy ends when the landlord allows the tenant to retain possession and continue paying monthly or weekly rent. Under the common law, the landlord or tenant must give at least one period's notice to the other party before terminating a periodic tenancy. If the tenancy is month to month, for instance, one month's notice must be given. Today, however, state statutes often require a different period of notice before the termination of a tenancy.

Easement or Profit in Gross

n an easement or profit in gross, the right to use or take things from another's land is given to one who does not own an adjacent tract of land. These easements are intended to benefit a particular person or business, not a particular piece of land, and cannot be transferred. Similarly, when a utility company is granted an easement to run its power lines across someone's property, it obtains an easement in gross.