Real Estate Law BLAW 434/534 Professor Whitney Johnson Today’s Class Introductions Syllabus Introduce Real Estate Law Sources of Law and Examples

Chapter 1: Introduction and Sources of Real Estate Law

What is property? Real estate v. ownership v. property v. real property What “rights” go with property ownership? What “rights” should property ownership allow? Real Personal Differences between the two? Problems caused in sale of “property” – deprecation, what goes with sale, security for mortgage, etc. Why is one “real” is the other not “real” Should we give different rights to “real” property owners? Do different laws apply? (tax, sales, remedies, estate, etc.) Do we give more rights to real property owners? The right to vote?

Ethics and Property Okay to sell organs? What about frozen embryos? Are they property? Strip mining? Racial restrictions on land? Example of laws to enforce ethics?

English Feudalism History Is it ethical to allow individual ownership of land? English Feudalism History Feudal System of Land Ownership (Alnwick Duke) King owns the land King granted rights to the land to others termed vassals. Vassals paid rent and sometimes provided men for armies as payment. US did not follow feudalism (our escheat laws are still based on a feudal concept). Peru situation Giving property title to 1.2 million squatters. What would this change? Native Americans What other systems exist to manage property? Are they better? Why?

Benefits to Society of Recognizing Property Rights Study found countries with greater property rights grow faster and are wealthier. Of 100 countries with data The 24 with the strongest property rights averaged $25,716 in annual per capita income The 21 with the weakest property rights averaged $3,094

Sources of Real Estate Law Start here thursday

Federal and State Laws Federal State Interstate Land Sales Full Disclosure Act Real Estate Settlement Procedures Act American Recovery and Reinvestment Act Comprehensive Environmental response, Compensation and Liability Act. UCC Acts Uniform Marital Property Act Uniform Probate Code Model Residential Landlord/Tenant Act

Examples of Private Laws Contract terms Landlord’s rules on use of laundry room and exercise facilities Employer rules on use of work computer for personal business Deed restrictions (condos/gated neighborhoods, etc.)

Example of Federal Law McLain v Example of Federal Law McLain v. Real Estate Board of New Orleans US Supreme Court, 444 US 232 (1980) Facts. Alleged price-fixing by brokers to set commissions on the sales of residential property. Used fixed rate commissions. Issue/Law. Are real estate sales (local by nature) “interstate commerce”? Analysis. Apply law to facts. Holding. Likely involves interstate commerce Funds raised from out-of-state Mortgage obligations traded out-of-state Title insurance secured out-of-state Chapter 12. Will return to this issue somewhat in Chapter 12 – The Broker’s Role How to brief a case

Warranty of Habitability example of state law Implied Warranty of Habitability. Premises are fit for human habitation. Premises are fit for the uses reasonably intended by the parties. That the occupants will not be subjected to conditions that are dangerous, hazardous, or detrimental to their life, health or safety. Real Property Law § 235-b Warranty of Habitability Lease. What’s the purpose of a lease? Contract law? a lease for? Uses as “Reasonably Intended.” What does this mean? What does this include? Does it matter how much the tenant pays? What was promised? Or does this just set the minimum standard? Uniform Standard for Habitability or Flexible. Is the standard for habitability uniform or does it adjust based on level of rent paid and services promised?

Constructive eviction? Tenant refused to pay rent because a neighboring tenant walked around nude in his apartment with no drapes and the landlord did not stop this. Constructive Eviction? Habitable?

Extra Slides

Warranty of Habitability –Hypotheticals Lease Clause: “Landlord…shall not be liable for any damages to …property resulting form falling…water which may leak from any part of said building or from pipes, appliances or plumbing works unless caused by or due to the negligence of Landlord… nor shall Landlord be liable for any such damage caused by other tenants. i.e. can a tenant waive the warranty? Broken doorbells and buzzers in apartment. Water leak onto restaurant grill .

Exercise MEAD, SAMUEL & CO. v. DYAR 622 P.2d 512 (Ariz. 1980) LAW – Can Argue Claims to Offset Rent Due: Model Residential Landlord Tenant Act on nonpayment of rent by a tenant as adopted by Arizona - A.R.S. Section 33‑1365. Under this section the tenant is entitled to present claims and reasons for not paying rent in the event the landlord brings suit for nonpayment of rent. Law – Cannot Argue Claims to Offset Rent Due: However, another procedural statute, an older one, provides that a tenant may not present such claims or defenses (counterclaims) when a landlord brings an action for rent (A.R.S. Section 12‑1177A). The court decided that the new law should be construed narrowly and only allow counterclaims directly related to the eviction. Older model law passed to avoid time consuming counter claims. Exercise MEAD, SAMUEL & CO. v. DYAR 622 P.2d 512 (Ariz. 1980) Apartment Rented. Mead, Samuel, and Company (landlord/appellee) leased an apartment to Randall Dyar (tenant/appellant). Side Deal to Clean Carpets. Dyar contracted with the landlord's agent to clean carpets in the apartment complex for $10 per apartment. Tenant Withheld Earnings from Carpet Cleaning. Dyar cleaned eight apartments and withheld $80 from his rent payment under the claim that the landlord owed him that amount. After an argument between Dyar and the landlord's agent, the landlord filed charges of breaching the peace with the city of Phoenix police. As a result of these charges, Dyar was arrested and imprisoned for one night and then released upon the police determination that Dyar had not breached the peace as the landlord had alleged. Landlord Sued to Evict. Landlord sued for: (1) Possession of apartment, (2) Payment of rent in the amount of $121.47, and (3) Costs and attorney's fees Tenant Countersued for $80 plus False Arrest. Dyar counterclaimed in the suit for an offset of the $80.00 in wages against the $121.47 and for false arrest and false imprisonment caused by the landlord's actions and sought $2500 in compensatory damages for the night he was forced to spend in jail.

Exercise Additional Questions Tom George rented an apartment from Big Sky for $575 per month. Tom agreed to act as night manager for a salary of $375 per month. For three months, Tom has paid only $200 rent. In a forcible detainer action brought by Big Sky, can Tom properly counterclaim for the $375 salary for three months? Alfreda Gulusko rented an apartment from Big Sky for $325 per month. The apartment was located in Boston, and during December, Alfreda's heater would not work. The temperatures in Boston averaged 25 degrees that month. In spite of Alfreda's repeated requests, Big Sky did not repair the heating problem. Alfreda had the heating repaired at a cost of $325 and then withheld payment of her January rent. In a forcible detainer action by Big Sky, can Alfreda counterclaim for cost of the repair? Jane Smith leased an apartment from Big Sky, Inc. in the Big Sky Villas for six months at a rental rate of $325.00 per month. Jane shared the apartment with Sue Jones, a tenant already located at Big Sky who was recommended to Jane by Big Sky's manager. After Jane moved in, she noticed that she seemed to be spending cash more quickly and that some of her jewelry had disappeared. Jane complained to management because she suspected Sue. In spite of on‑going complaints during the two‑month period, the manager did not switch Jane's roommate. Eventually, Jane returned home from work one day only to find all of her belongings and Sue gone. Jane stopped paying rent to Big Sky and it brought a forcible detainer action. Jane counterclaimed for the value of her property because Big Sky had recommended Sue as a roommate and because of the failure to take action on Jane's complaints. Big Sky knew of Sue's prior conviction for burglary at the time the recommendation was made to Jane. Does Jane have a proper counterclaim under the Mead standard?