1. Chapter 22 Land-Use Control and Real Property

2. 2 Chapter Objectives 1. Distinguish between different types of possessory ownership interests in real property. 2. Identify three types of nonpossessory interests in real property. 3. Discuss how ownership interests in real property can be transferred. 4. Indicate what a leasehold estate is and how a landlord-tenant relationship comes into existence. 5. Outline the rights of property owners concerning the use of their property.

3. 3 The Nature of Real Property Real property (also called real estate or realty) is immovable. Real property includes land, subsurface and air rights, plant life and vegetation, and fixtures.

4. 4 Case 22.1 New England Telephone and Telegraph Co. v. City of Franklin New England Telephone and Telegraph Co. (NETT) and other telephone companies filed a lawsuit against the City of Franklin and other municipalities, challenging the cities’ property assessments. The plaintiffs argued that their equipment was personal property and therefore should not be taxed. The courts ruled that the equipment was not a permanent fixture and should not be taxed. Intent is an important factor in determining whether an item is a fixture, yet how can a court objectively decide whether someone did or did not intend an item to be fixture?

5. 5 Ownership of Real Property Ownership of property is an abstract concept that cannot exist independently of the legal system. Property ownership is often viewed as a bundle of rights.

6. 6 Ownership in Fee Simple Fee simple absolute  The most complete form of ownership Fee simple defeasible  Ownership in fee simple that can end if a specified event or condition occurs

7. 7 Life Estates An estate that lasts for the life of a specified individual; ownership rights in a life estate are subject to the rights of the future-interest holder.

8. 8 Future Interests A residuary interest not granted by the grantor in conveying an estate to another for life, for a specified period of time, or on the condition that a specific event does or does not occur. The grantor may retain the residuary interest (which is then called a reversionary interest) or transfer ownership rights in the future interest to another (the interest is then referred to as a remainder).

9. 9 Nonpossessory Interests An interest that involves the right to use real property but not to possess it. Nonpossessory interests include:  Easements  Profits  Licenses

10. 10 Transfer of Ownership Ownership of real property can pass from one person to another in a number of ways:  Deed  Will or inheritance  Adverse possession

11. 11 Deeds When real property is sold or transferred as a gift, title to the property is conveyed by means of a deed. A warranty deed warrants the most extensive protection against defects of title. A quitclaim deed conveys to the grantee whatever interest the grantor had; it warrants less than any other deed. A deed may be recorded in the manner prescribed by recording statutes in the appropriate jurisdiction to give third parties notice of the owner’s interest.

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13. 13 Will or Inheritance If the owner dies after having made a valid will, the land passes as specified in the will. If the owner dies without having made a will, the heirs inherit according to state inheritance statutes.

14. 14 Adverse Possession When a person possesses the property of another for a statutory period of time (3–30 years, with 10 most common), that person acquires title to the property, provided the possession is actual and exclusive, open and visible, continuous and peaceable, and hostile and adverse (without the permission of the owner).

15. 15 Leasehold Estate A leasehold estate is an interest in real property that is held only for a limited period of time, as specified in the lease agreement. Types of tenancies relating to leased property include the following: Tenancy for Years Tenancy at WillTenancy at Sufferance Periodic Tenancy

16. 16 The Doctrine of Adverse Possession Public policies help resolve boundary disputes as fair as possible. The Doctrine of Adverse Possession helps determine ownership rights when title property is in question. It also furthers the policies of rewarding possessors for putting land to productive use, keeping land in the stream of commerce, and not rewarding owners who sit on their rights too long.

17. 17 Types of Tenancies Tenancy for Years  Tenancy for a period of time stated by express contract. Periodic Tenancy  Tenancy for a period determined by the frequency of rent payments; automatically renewed unless proper notice is given. Tenancy at Will  Tenancy for as long as both parties agree; no notice of termination is required. Tenancy at Sufferance  Possession of land without legal right.

18. 18 Landlord-Tenant Relationship Landlord-tenant relationships have become subject to specific state and local statutes and ordinances as well.

19. 19 Creating the Landlord-Tenant Relationship The landlord-tenant relationship is created by a lease agreement. State or local laws may dictate whether the lease must be in writing and what lease terms are permissible.

20. 20 Case 22.2 Osborn v. Kellogg Kristi Kellogg, her daughter, and her African-American boyfriend, James Greene, attempted to lease half a house. The house was owned by Keith Osburn and Pam Lyman. Kellogg was refused on the grounds that there were too many people, Greene’s income was too low, and Greene did not provide references. Half the house was later rented to the Li family with five family members, and the other half to the Suggett family with three family members. Both families had less income than Kellogg and Greene, and did not provide references as Kellogg and Greene did. Kellogg filed a complaint with the Nebraska Equal Opportunity Commission (NEOC) against Osburn and Lyman. What if the Osburn and Lyman discriminated against Kellogg not because her boyfriend was African-American but because they disapproved of cohabitation by unmarried couples? Should this form of discrimination be permissible?

21. 21 Rights and Duties The rights and duties that arise under a lease agreement generally pertain to the following areas: Rent Use and Maintenance of the Premises Possession

22. 22 PossessionPossession The tenant has an exclusive right to possess the leased premises, which must be available to the tenant at the agreed-on time. Under the covenant of quiet enjoyment, the landlord provides that during the lease term neither the landlord nor anyone having superior title to the property will disturb the tenant’s use and enjoyment of the property.

23. 23 Use and Maintenance of the Premises Unless the parties agree otherwise, the tenant may make any legal use of the property. The tenant is responsible for any damage that he or she causes. The landlord must comply with laws that set specific standards for the maintenance of real property. The implied warranty of habitability requires that a landlord furnish and maintain residential premises in a habitable condition.

24. 24 Case 22.3 Schiernbeck v. Davis Linda Schiernbeck rented a house from Clark and Rosa Davis. Schiernbeck noticed a smoke detector missing and claimed she told Clark Davis about it. Davis did not recall the conversation but admitted he gave her a detector. Schiernbeck was later severely injured in a fire and filed a suit against the Davises alleging negligence and breach of contract. The court ruled in favor of the Davises. What is a landlord’s ethical duty with respect to keeping rental premises “fit for human habitation”?

25. 25 Rent The tenant must pay the rent as long as the lease is in force, unless the tenant justifiably refuses to occupy the property or withholds the rent because of the landlord’s failure to maintain the premises properly.

26. 26 Transferring Rights to Leased Property If the landlord transfers complete title to the leased property, the tenant becomes the tenant of the new owner. The new owner may then collect the rent but must abide by the existing lease. Generally, tenants may assign their rights under a lease contract to a third person. Tenants may also sublease leased property to a third person, but the original tenant is not relieved of any obligations to the landlord under the lease. In either case, the landlord’s consent may be required.

27. 27 Land-Use Control The Law of Torts  Owners are obligated to protect the interests of those who come on the land and those who own nearby land. Private Agreements  Owners may agree with others to limit the use of their property.

28. 28 Police Power A state can regulate the use of land within its jurisdiction. A state authorizes its city or county governments to regulate the use of land within their local jurisdiction.

29. 29 Government Plans Most states require that local land-use laws follow a general plan.

30. 30 Zoning Laws Laws that divide an area into districts to which specific land-use regulations apply. Districts may be zoned for residential, commercial, industrial, or agricultural use. Within all districts there may be minimum lot-size requirements, structural restrictions, and other bulk zoning regulations. A variance allows for the use of property in ways that vary from the restrictions.

31. 31 Case 22.4 Allegheny West Civic Council, Inc. v. Zoning Board of Adjustment of the City of Pittsburgh Irwin Associates applied for a variance to use a contaminated lot of land that was zoned for residential use as a parking lot. The Zoning Board granted the variance that was opposed by the West Civic Counci,l and the Council appealed to the state court which upheld the Board decision. The case was appealed to the state supreme court. What might have happened to neighboring property values if the variance had not been granted?

32. 32 Subdivision Regulations Laws directing the dedication of specific plots of land to specific uses within a subdivision.

33. 33 Growth-Management Ordinances Limits on, for example, the number of residential building permits.

34. 34 Limitations on the Exercise of Police Power Due process and Equal Protection  Land-use controls cannot be arbitrary, unreasonable, or discriminatory. Just Compensation  Private property taken for a public purpose requires payment of just compensation.  “Taking” for a public purpose includes enacting overly burdensome regulations.

35. 35 Case 22.5 Shemo v. Mayfield Heights Michael Shemo and Larry Goldberg owned an undeveloped 22.6 acre parcel of land in Mayfield Heights, Ohio. The property was “U-1” for single- family homes when the Mayfield Heights City Council enacted an ordinance to rezone the property “U-2-A” for cluster single-family homes. Shemo and Goldberg filed a suit to invalidate the ordinance and have the property rezoned “U-4” to permit retail and warehouse use. They also made proposals to help improve traffic flow and limit access from their property. The court declared the ordinance unconstitutional. To what extent do you think that Shemo and Goldberg’s proposals—to replace and widen the commercial driveway, install a traffic light, and limit access to the residential streets to emergency vehicles—affected the outcome of this case?

36. 36 Eminent Domain Condemnation power  Governments have the inherent power to take property for public use without the consent of the owner. Limits on the power of eminent domain  Private property taken for a public purpose requires payment of just compensation.

37. 37 Land-Use Regulations and the Takings Clause Several cases have been brought by private- property owners who allege that environmental regulations limiting their control over their own land essentially constitute a taking of private-property rights in the public interest. “When a government body, such as a city or state government, imposes limitations on private land owners’ rights in order to preserve environmental resources and habitats for endangered species, the private landowners should be compensated for such a ‘taking’ of their property.” Do you agree with this contention? Why or why not?

38. 38 Eminent Domain in Germany The German constitution first affirmatively establishes the right of the government to take private property for public use with some payment to the landowner. Private-property owners have a duty to use their property for the public good. Why might a government choose not to pay its citizens for property that is taken?

39. 39 For Review 1. What can a person who holds property in fee simple absolute do with the property? Can a person who holds property as a life estate do the same? 2. What are the requirements for acquiring property by adverse possession? 3. What is a leasehold estate? What types of leasehold estates, or tenancies, can be created when real property is leased? 4. What are the respective duties of the landlord and tenant concerning the use and maintenance of lease property? Is the tenant responsible for all damages that he or she causes, intentionally or negligently? 5. What limitations may be imposed on the rights of property owners?