2. Real and Personal Property Chapter 8

3. Law of Property Oldest part of common law Concepts from common law developed in England from 12 th to 16 th centuries Right guaranteed and protected by government Real Property: immovable (i.e. land) Personal Property (chattel): moveable (i.e. furniture and clothing) Contract law is used to make arrangements about the property use.

4. Real Property Land –under - oil, minerals –attached - buildings, trees Property - “legally protected expectation of being able to use a thing for one’s advantage.’’ Governmental regs. may restrict property owner’s land use (i.e. Endangered Species Act re: rare plants and animal protection)

5. Ownership of Land Deeds –most common way to transfer ownership –quitclaim deed vs. warranty deed –ID original owner, describe land, ID new owner, & state that the ownership is being transferred, possibly subject to certain conditions Titles –comes from receipt of valid deed; is means by which owner has legal possession of the property –“formal right of ownership” Titles are recorded by state officials (usually county)

6. Forms of Ownership Fee Simple - indefinite time and right to dispose of it up in the air “to the skies” (but airplanes can use it) down to the core “to the center of the earth” –these rights can be sold separately –subsurface mineral rights often legally separated Can be inherited, transferred, sold in part, or sold in whole (entirety)

7. Forms of Ownership Joint tenancy –Each tenant has same interest in undivided possession of property –Right of survivorship – if one tenant dies, ownership passes to other owner Tenancy in Common –Each tenant (owner) has undivided interest in property –If one tenant dies, that interest passes to estate/heirs Life Estates –have use of land for life of “tenant for life”- but can’t ruin it!

8. Evolving Property Law: Condominiums Not seen much before 1960s Fee simple estate applies Living space in building is owned in fee simple (numerous conditions attached) BUT land building sits on, as well as elevators & lobbies, are held in common (for condo owners) by another person (business) Most states have statutes to simplify the legal process of modern living arrangements consistent with traditional property law. Property law adjusts to modern conditions.

9. Servitudes –property requirements imposed by an owner –positive and negative requirements –easements and covenants most important servitudes Easements –right to enter land of another and make use of it or take something –example: sidewalks, utilities Adverse possession is a form of easement

10. International Perspective: “Insecure Property Rights” In U.S., property ownership provides strong rights. Not so in other parts of the world. In many countries, farmers do not own land they farm; city dwellers do not own land under the houses they have built. Philippines: 1/3 of ag land and 43% of dwellings have title Peru: 81% of farmed land isn’t owned; only half of urban dwellings have clear title Haiti: 97% farm land used but not owned Egypt: 92% of urban dwellings and 83% of farms are “unowned” Theory is that the persistence of poverty in such countries reduces the chance to capitalize on the value people place in farms and houses. Without secure property rights, economic progress is enjoyed mostly by those who live in the formal economy and can sell property or obtain a mortgage on it.

11. Adverse Possession Must be: –Actual - does in fact possess property –Open - visible so owner is on notice –Hostile - without consent of owner –Exclusive - not shared with others who have no right –Continuous - goes on without major interruption –And - State law may require payment of taxes.

12. Moran v. Sims Sims owned property surrounded by Morans. Deed to Sims’ property first recorded in 1985, but property had been in the family for over 50 years. Sims built a home in 1991. Access to Sims property was by driveway across the property bought by Morans in 1996. Sims asked the court to grant him an easement. Trial court held that Sims has a prescriptive easement; allowed use of driveway on Moran’s property. Morans appealed.

13. Moran v. Sims HELD: Affirmed. Adverse possession proven. Use of the property was –Open and visible: Sims used the driveway since 1985 –Hostile: No proof Morans consented (as owners) for Sims to use drive –Claim of Ownership: Sims bought gravel for drive & hired it spread –Exclusive: Driveway used by Sims family & those they permitted to use it –Peaceful: No evidence of dispute of use of driveway –Continues/Uninterrupted for over 10 years: Deed recorded in 1985; property in the family for 50 years.

14. Covenants Covenants or Covenant Running With the Land –Not actual legal interest in an estate –More like a contract with an estate –Most residential subdivisions have covenants –Tool for developing real estate –Goes with the estate from owner to owner “Covenant runs with the land”

15. Powell v. Washburn 1988, Washburn, real estate developer, recorded Declarations of Covenants, Conditions and Restrictions (CC&R) for Indian Hills Airpark, an aviation-related community. Referenced incorporation of the La Paz County, Arizona, zoning ordinances Zoning permitted 3 residential uses: mobile or manufactured homes, constructed homes, and hanger-houses (homes incorporating an airplane hangar). In 1996, County amended ordinances to permit use of recreational vehicles (RVs) as residences. In 2002 Powell sued Washburn requesting injunction against use of RVs as residences within the Airpark.

16. Powell v. Washburn Trial Court held CC&R did not permit RVs as residents. Appeals court reversed. Decision appealed to Arizona supreme court. HELD: Vacated the decision of appeals court, and affirmed the trial court No RV’s permitted as residences Look at the intention of the parties that created a restrictive covenant The plain intent of the CC&R’s was to limit residents to mobile or manufactured homes, constructed homes or hanger-homes.

17. Landlords & Tenants Landlords and tenants –rented property is called a leasehold –landlord has interest of some length –tenant possesses estate for a fixed period or at will as determined by landlord

18. Lease Can be commercial or residential ID parties Describe premises being leased State how long in effect –But can be month to month State how much rent is to be paid Usually also: –who pays utilities, taxes, insurance –where/when rent is paid –terms of damage deposit –who is responsible for repairs/maintenance –subleasing –termination provision

19. Rights/Duties of a Tenant Right of possession during lease Can exclude other parties Landlord must make essential repairs or may have constructive eviction Can’t: –abuse property –remove valuable property –be nuisance to neighbors –engage in illegal activities on property See Issue Spotter: “Would Tighter Leases Help?”

20. Nielson v. Gold’s Gym Peterson signed with Nielsen to lease “premises” in a strip mall for a gym for 3 years at $0.85 annually per square foot. Nielsen was still building at the time of lease. Contractor told Peterson it would cost $168,000 to improve the building shell for the gym. Peterson discussed with Nielsen who would pay for the interior improvements. Couldn’t reach agreement. Peterson walked away. Nielsen leased to another party. Nielsen sued for $112,000 for breach of contract & loss for renting space for less than Peterson had agreed to. Trial court held lease was unenforceable for lack of agreement of the nature and extent of the property to be leased.

21. Nielson v. Gold’s Gym HELD: Affirmed. Lease is unenforceable for lack of mutual assent of terms of who will pay for the improvement. Building was a shell when lease was signed. Not clear from lease who would pay for modifications. No evidence of industry standards of who would be responsible for payment in this situation. Costs of improvements would have consumed more than half of rents over the lease term. Payment for improvements is not essential to every commercial lease agreement. HOWEVER, here it was an essential part of the bargain to be reached. Missing term creates an ambiguous lease and no mutual assent by the parties.

22. Public Control of Real Property Eminent Domain –Government can force sale of property or granting of easement without consent of owner –5th Amendment requires “just compensation” Police powers –Control land use with regulations (i.e. zoning) –Is there compensation? Yes, but when property loses value, compensation may not appear to be “just” to an owner. –See Macon-Bibb County Planning & Zoning Comm. v. Vineville Neighborhood Assn.

23. Macon-Bibb County Planning & Zoning Comm. v. Vineville Neighborhood Assn. Zoning Commission rezoned property so developer could build a shopping center. Residential area, Vineville, bordered 10-acre piece of land. Residents, opposed to development, sued the Commission. Trial court held that neighborhood association had standing to challenge zoning action. Trial court held that Commission had abused its discretion in re-zoning decision. Developer and Commission appealed.

24. Macon-Bibb County Planning & Zoning Comm. v. Vineville Neighborhood Assn. HELD: Reversed. No substantial damages to a substantial interest in the zoning decision by the Commission. Two steps to standing: 1) aggrieved must have substantial interest in zoning decision and 2) interest that could suffer substantial injuries. Mere increase in traffic congestion is not a substantial interest to appeal from. This development is an inconvenience of urban living. Mere result of normal urban growth and development. To stop this kind of rezoning would slow, if not stop, the necessary growth of modern cities. The rezoning decision by the Commission stands. Developer can build a shopping center.

25. Torts Against Property Trespass to Land: Unauthorized intrusion that interferes with another’s peaceful enjoyment of their propertyTrespass to Land: Unauthorized intrusion that interferes with another’s peaceful enjoyment of their property Private Nuisance: interference with use & enjoyment of landPrivate Nuisance: interference with use & enjoyment of land –Destruction of crops, causing health risks from pollution, throwing objects on the land, using the neighboring house for drug deals Public Nuisance: Interference with a right held in common by general publicPublic Nuisance: Interference with a right held in common by general public –Illegal gambling, bad odors, obstruction of a highway Trespass to Personal Property: Interference with the right of an owner to the exclusive use and enjoyment of propertyTrespass to Personal Property: Interference with the right of an owner to the exclusive use and enjoyment of property Conversion: Unlawful control of another’s personal propertyConversion: Unlawful control of another’s personal property Misappropriation: Invasion of property rights such as trademarks or trade secretsMisappropriation: Invasion of property rights such as trademarks or trade secrets

26. Smith v. Kulig Kulig owns building with apartments on second floor. Street door to apartments locked; only tenants and their guests can access. Back of building is a fire escape. Tenants are not to use fire escape unless an emergency. “No Trespassing” signs posted on fire escape. Smith visited Wolf at his apartment in the building. Smith went out on the fire escape; some bolts on fire escape detached from wall; Smith fell to his death. Estate sued Kulig. Trial court dismissed, holding Smith was a trespasser. Appealed.

27. Smith v. Kulig Held: Affirmed. Wrongful death action dismissed with prejudice. Trespasser is a person who enters or remains on premises without privilege or consent. Building contained no trespass signs, as did door leading to and from fire escape. Ladder to the fire escape had No Trespassing sign. Smith did not have the right to use fire escape as entry or exit to building – there was no emergency situation here. Landowner does not owe duty to trespasser other than not harming him in wanton or willful manner.

28. Atkinson v. City of Pierre Tour Ice produced ice at its plant in business district of Pierre for years. Trucks pick up/distribute from plant. Atkinson moved into apartment across street from ice plant. Complained to Tour Ice and city – got nowhere. Sued for nuisance. Couldn’t tolerate noise level from operations. Trial Court held for defendants. Atkinson appealed.

29. Atkinson v. City of Pierre HELD: Affirmed. Business is not a private nuisance. There were no other complaints from any other residents near the plant. City has authority to declare what constitutes a nuisance. City’s decision that Tour Ice’s operation was not a nuisance was reasonable.

30. Issue Spotter: “Protecting Company Property” Problems with theft of company property –Pens –Staplers –Reams of paper –More expensive items –It all adds up Can a policy that informs employees that taking supplies is theft of company property and subject to dismissal? Do we have to notify employees of this policy at all?

31. Torts Against Property Owners Is a person harmed on the property a trespasser or an invitee? Customers are invitees, not trespassers What duty of care must property owners take to insure safety on their property? In business, a common, major tort is premises liability.

32. Premises Liability Accidents that result from negligence of the business Common are “slip-and-fall” cases Duty to keep premises reasonably safe under the circumstances However, if a danger is obvious, people have a duty to protect themselves See Campisi v. Acme Markets, Inc. See Issue Spotter: “Duties to Elderly Customers”

33. Campisi v. Acme Markets, Inc. Blind employee worked at Acme grocery store. He was walking in the store, using his white aluminum cane. Campisi, walking down another aisle, rounded the corner; tripped over cane; suffered injuries. She sued Acme for premises liability based on Acme’s negligence. She argued that Acme should post a sign that it had a blind employee, then customers would be more cautious. Jury awarded a verdict for Campisi. Trial Court granted Acme judgment notwithstanding the verdict. Campisi appealed.

34. Campisi v. Acme Markets, Inc. HELD: Affirmed. Verdict in favor of Acme. Businesses owe invitees high duty of care for known or reasonably foreseeable risks or dangers. HOWEVER, customers must be aware of sudden occurrences in shopping markets – shopping carts, other customer’s foot, someone’s cane or obstacles when exiting an aisle. Customers have duty of ordinary care that include looking what is in the aisles. No award to Campisi.

35. Premises Liability Accidents that result from negligence of the business Common are “slip-and-fall” cases Not providing sufficient security to prevent crimes from occurring on the property –Problems are especially in high crime areas –Issue: Owner “knew or should of known” of problem in the area –Issue: Did owner act “reasonably” to protect patrons? –Owners may protect themselves: lighting, safety patrols, posters, warnings In Stewart v. Federated Department Stores, court upheld $1.5 million verdict in favor of heirs of woman who was robbed and murdered in parking garage of Bloomingdale’s department store

36. Erichsen v. No-Frills Supermarkets of Omaha Erichsen went grocery shopping at No-Frills one morning. Returned to her car, she was assaulted, beaten, robbed, and drug over one mile hanging from the car of the assailant. She suffered serious injuries. Sued No-Frills and owner of center for negligently failing to warn of criminal activity. Said defendants failed to protect her from foreseeable criminal activities (10 criminal events within 16-month period). Trial court held defendants did not violate duty of care to Erichsen. She appealed.

37. Erichsen v. No-Frills Supermarkets of Omaha HELD: Remanded back to trial court for further proceedings. Property owner is not an insurer of safety UNTIL he knows that acts of 3 rd persons are occurring or could occur. If owner has “reason to know, from past experience” that there is danger, he has a duty to take precautions, e.g. warnings, servants to offer protection. One incident does not constitute notice of criminal activities that were foreseeable. However, here there were prior criminal events in the area. Erichsen can go to trial with facts of the case against defendants.