Property Roadmaps

*****Remember, define all the law (ex: intention, etc)

o The plaintiff in Pierson decided to call it trespass. But the complaint was that of a property
interest, which is why we learn about it.
o Plaintiff must allege a right of possession. They must allege that the defendant intentionally
interfered with the plaintiffs right to possession. Must also allege that the interference was
without authorization.
Three elements to a trespass
1. Right of possession
2. Intentional Interference
3. Without authorization
- Replevin/Ejectment
o You are seeking the return of the goods
o In personal property cases you are seeking replevin. If the subject matter of the action is real
estate, we don't call it replevin. We call it ejectment.
o Elements
1. Right of possession
2. Intentional Interference
3. Without Authorization
o Remedy is wanting the property back. Damages could be included.
Could be lost profits
Is there a $ value to deprivation of possession?
I own a valuable painting and you took it from me. You hid it
from me for 6 months. It has not been damaged and I would not
have profited from it. I was only deprived from it. Are there
damages for deprivation?
- Trover
o Remedy is the fair market value of the property. This is the amount recoverable by the
plaintiff. The plaintiff has to prove:
1. Right of possession
2. Intentional Interference
3. Without authorization
4. Interference was significant
Some courts call it a serious interference
What is so serious that it allows the court to order trover?
Plaintiff is asking for a forced sale.
Destruction is not the only reason for order trover. Taking
possession of the item for a long period of time will allow for
trover.
Natural Resources
Pierson v. Post
- GR: you must have possession or occupancy. Pursuit alone is not occupancy
Animals
- Step 1: Intent
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Step 2: Possession or Occupancy

o Occupancy means to deprive it of its natural liberty and bring it within your
control
Killing, or
Deprivation of Liberty
Pursuit is not enough
Moral wounding is a kind of occupancy
Step 3: Ratione Soli: by reason of the ownership of the soil
o Policy: to discourage trespass (cannot gain property rights while trespassing)
o If you take possession of animal while trespassing, land owner becomes owner
o McKee v. Gratz mussels case
Navigable waterways are public property (no trespass)
GR: generally accepted public expectation
Depends on animal, depends on location (parrot in NYC)
Step 4: Has person lost property rights to the animal?
o Mullet v. Bradley
Man releases captured wild seal in the LIS. Caught on the Jersey Shore
o If animal has regained its natural liberty, the person loses their property interest
MINORITY RULE: when animal is free from artificial restraint
People have notice because the animal is generally wild
MAJORITY RULE:
1. Free from artificial restrain
2. Animal must return to its natural habitat
o Otherwise people should know its not wild (notice)
Step 5: Animin Revertendi (you have tamed your otherwise wild animal to return and
then someone captures it thinking it is wild)
o 1. Prove that you have released it in the past and that it has always returned; and
o 2. Prove that it hasnt been gone for so long that it has lost its habit or returning

Water
- Step 1: Intent
- Step 2: Possession and control (deprivation of liberty)
- Step 3: Has it escaped?
o If it returns to its natural habitat you lose ownership
- Step 4: Ratione Soli
Oil and Natural Gas
- Step 1: Intent
- Step 2: Ownership
o MINORITY RULE: capture rule (possession and control)
o MAJORITY RULE: ownership in place (no capture required)
The owner of the land owns all of the natural gas and oil that lies below
the surface
- Step 3: Has it escaped?
o If the oil returns to its natural habitat, you have lost your rights to it
- Step 4: Ratione Soli
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o If the oil has migrated under someone elses land, you have lost your rights to it
o What if defendant takes oil from under their neighbors land?
MINORITY RULE: person is trespassing
MAJORITY RULE: no ratione soli required. Person is stealing
Adverse Possession (Not required to pay taxes in NY, Granting Permission stops running)
Adverse Possession of Land
- General Requirements
o All five elements must be met before the statute of limitations begins to run
See McKinneys RPAPL 511 10 years
o No court order is needed for the adverse possessor. After the statute of limitations
has passed, the adverse possessor is the owner as a matter of law.
Will require an action to quiet title if you want to sell it in the future
- Step 1: Actual Possession
o NY RULE: must be using the land in a way that a reasonable owner should be
using it (Ewing)f
o NY RULE: Must be protected by a substantial enclosure RPAPL 512/522
o Cultivation and Improvement (OLD NY RULE RPAPL 511)
In Lutz the majority said that the shed was not an improvement and that
the small garden was not cultivation. Dissent disagreed
In Ewing, just digging sand could be enough
Depends on the circumstances what would a reasonable person
owning the land would have done with it?
- Step 2: Possession must be Adverse (i.e., cannot be permissive possession)
*Objective
o You must be a trespasser (Lutz knew because he already had the easement)
o Hostile Intention vs. Claim of Right
Hostile Intention NY RULE PRIOR TO 2010
Requires that you knew it was not your land.
Claim of Right (good faith, but mistaken belief that you are the owner)
Hostile intent is not necessary, though permissible before if
squatting started in 2010
NY IS CLAIM OF RIGHT AFTER 2010 RPAPL 511/521
o Color of Title (you have a written deed but there is something wrong with it)
Neighbor owns 10 acres, but your deed says that you own those 10 acres.
You enclose 2 of those acres. Under normal adverse possession you
would have those two acres.
With color of title, you might get the whole 10 acres, despite occupying 2.
Title is evidence of the area you are trying to claim.
- Step 3: Open and Notorious
o GR: if a reasonable owner would not have been able to tell that you were
possessing it upon investigation, the possession will not be open and notorious
Apparent upon reasonable inspection(NY) or Owner had actual
knowledge owner has a duty to inspect
o Manillo v. Gorski house encroached 15 inches onto neighbors property

MINORITY RULE: requires an encroachment that is visible to the naked

eye in order to be open and notorious
MAJORITY RULE AND NY RULE: owner should know their boundary
lines. Survey would reveal the encroachment.
- Step 4: Continuous (presumed)
o (A) Occupancy is continuous if it used regularly not constantly
If similar to the conduct of owners holding property of like nature and
condition. Howard v. Kunto
Seasonal use can be sufficient if the true owner would only use the
property during the summer months.
o (B) Possession must be without significant interruption
True owner might use self-help and kick the adverse possessor out
True owner exercises dominion and ownership (e.g., tears down fence)
Or go to courts to GET (some courts say this is sufficient) and ENFORCE
(some courts require enforcement) an ejectment
- Step 5: Possession must be exclusive (presumed)
o True owner cannot simultaneously be in possession. General public excluded too
Tacking
- Tacking is permissible as long as there was privity between the parties and deeds Kunto
o The deed running between the parties connects the possession of successive party
o Successive possessions can be tacked if the possessor intended to establish the
connection (Brand v. Prince (NY)
Proof of transfer of connection can be oral (walk the land with me)
Tolling
- Tolling requires legal disability (i.e., you cannot bring a lawsuit) **Need court order to
show it.
o Infancy: below 18
o Mental Incompetency (requires a court order to declare someone mentally
incompetent, then the court declares you competent)
o Specific Disability must exist at the time the cause of action accrued (day 1 of all
five elements of adverse possession)
o Subsequent disability does not qualify nor does a subsequent owners disability.
The particular owner and particular disability at the time the cause of action
accrued is what we care about.
- Common Law
o Once the disability ends, that is day 1 of the period of adverse possession
- Statutory doctrines (such as Ohio)
o Statute of limitations might be 21 years. Once the disability ends, the true owner
gets 10 years. normally
- NY RULE
o Infancy: Statute of limitations is 3 years after the disability ends
o Mental Incompetency: the adverse possessor gets title 10 years after the cause of
action accrues (i.e., no extra time because we don't know how long the disability
will last)
Adverse Possession of Personal Property (3 yr sol in ny)
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OKeefe
o Property missing in 1946. In 1965 Franks father had given him the painting and
Frank kept the painting hanging in his home. Frank sells painting to Snyder in
1976. Was Frank the owner under adverse possession when he sold it to Snyder?
Step 1: Actual
o Ewing: use property in the way the actual owner would (exercise dominion)
o Usually cultivated, usually improved, and substantially enclosed standards DO
NOT APPLY TO PERSONAL PROPERTY
o Frank gave permission to have it hung in a gallery and tried to sell it (evidence)
Step 2: Adverse
o Either hostile intention or claim of right
Step 3: Continuous (presumed)
o (A) Possession must be regularly
As often as an owner would possess this type of propertyHoward v Kunto
o (B) Cannot stop possession
Letting art gallery hang it with his permission (i.e., through him) did not
stop possession
Maybe commencement of a lawsuit is interruption PP. Def something
changing hands is.
Step 4: Exclusive (presumed)
o Must exclude true owner and the general public
Step 5: Open and Notorious
o True owner would have known about the adverse possession upon reasonable
inspection. Apparent upon reasonable inspection (difficult for personal property)
o You have to try and search for the property though. Report it to the police or
association that deals with that type of property (stolen art association)
Step 6: Demand and Refusal Rule in NY/ Discovery Rule elsewhere (NJ)
Demand and refusal might mean not responding.
o Other states just have open and notorious and then you have to struggle to explain
what that means when the property is moving around. We are not sure what
possession would be apparent upon reasonable inspection means.
o In NY, look to Guggenheim v Lubel. SOL does not run until demand and refusal.

I. Property Rights Based on Gift (dont need writing)

Gifts Inter Vivos
- The law wishes to validate gifts (when faced with ambiguous statements we interpret
them in a manner that validates gifts rather than invalidates them)
- Gruen v. Gruen I want to use the painting as long as I live
o He writes that once he dies he wants to give it to his son, but there was a
preceding letter which says I therefore wish to give you as a present, the oil
painting. Since it is your 21st birthday, I wish to give you my painting.
- Step 1: Intention (Gruen uses statements, actions and evaluations both in light of
circumstances)
o Donor must intend to make a present and irrevocable transfer (not future)
o Future transfers interfere with the statute of wills (in writing, signed by donor, and
two witnesses that also signed it)
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o It is possible to transfer title immediately, but retain the right to possession, which
is what happened in Gruen. It depends on whether the interests were transferred
immediately, or whether the interests were to be transferred upon death.
Gruen made an adequate present transfer. Son has title immediately, but
right to possession occurs upon the fathers death.
Step 2: Delivery
o (A) Actual Delivery
Physical delivery of the subject matter of the gift
Physical embodiment rule
Money in bank is intangible so you give donee the passbook
Works with stocks as well (stock certificate)
2 keys to box. 1 key given. Is A the owner? No.
o (B) Constructive Delivery only if actual delivery is impracticable
Hand your son the storage receipt to the warehouse where the painting is
Requires:
1. Donor has relinquished all means of obtaining possession and
control
2. Actual delivery is impracticable (when conditions dont
reasonably permit)
3. Donee is provided with means to obtain possession or control
o (C) Instrument of Transfer (Present Transfer)
Identifies the donor, the donee, the subject matter of the gift, contains
language wishing to part title (hereby), and the date in which the transfer
is to take place.
Must be physically given to the done (might be agent)
o Note: third party requirements are ignored for the sake of gifts
If the bank requires that you cannot access the safety deposit box without
your fathers signature, even though he gave you the key, the law says that
the donee is owner regardless.
Even being joint tenant of box may not pass title.
o Note: delivery can be to a third person. Delivery to an agent of the donee is
delivery to the donee. HAS NOTHING TO DO WITH RELATIONSHIPS.
Innes v. Potter was the businessman an agent of the daughter donee?
If the subject of the gift is delivered to third party and the donor
parts with all control of the instrument of transfer. Reserves no
right to recall the gift. Intends a final disposition of the property.
If there is an intention to make a present transfer, the third party is
the agent of the donees agent
Step 3: Acceptance

It is possible to have gift inter vivos on apprehension o death but

presumption is cause mortis
Presumption of Acceptance Greun: Valuable to donne.
Express nonacceptance, not valid Hood v. Hood

Gifts Causa Mortis (In NY must be in writing when upon death. Other states SOF)
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Cant Retain Any Present Interest in Gift Causa Mortis (Receive Dividends)
Grymes v. Home (NY COA) Death must be likely to occur in the future. (no time limit)
Presumed when upon reasonable apprehension of death. However, clear and convincing
evidence might show intervivos.
- Newell v. National Bank of Norwich
o Reynolds turns over the ring to Frank on what he thought was his deathbed. After
Reynolds recovers, Frank gives him the ring back, but Reynolds says NO this
right was your regardless of whether I lived or died. Then Reynolds died of
something else. Estate wants to say that it was a gift causa mortis
- Step 1: Donor must be in apprehension of imminent death (objective)
o Reasonable person in the circumstances would fear death
o There is no specific time limit in which death must occur after the gift (could be 5
months after the gift causa mortis). Death must be likely to occur in the near
future you don't have to be on your death bed.
- Step 2: Was the gift revoked? A gift causa mortis is a present transfer subject to
condition subsequent (three conditions subsequent)
o (A) Donor survives the apprehended cause of death (revoked as a matter of law)
o (B) Donee predeceases the donor (revoked as a matter of law)
o (C) Donor revokes by any clear statement or action indicating an intention to
revoke (a will dispensing the property=revocation. Will leaving everything most
likely not, because gift is absolute moment on death)
- Step 3: Intention
o If he wanted it to be irrevocable it is a gift inter vivos
o Subject to condition subsequent? I.e the donor dies.
o Presumption is a gift causa mortis if you are in apprehension of immediate death
Donee must establish that it was a gift inter vivos despite apprehension of
death
- Step 4: Delivery
o Newman v. Bost Man dieing. Sole key to dresser w/ life insurance, not
constructive. Couldve been picked up. Furniture, yes. Too heavy.
- Step 5: Acceptance
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- III. Property Rights Based on Purchase

Three situations where the transferee has more rights than the transferor
1. Voidable title doctrine (owner stripped of title must have voluntarily transferred)
- If the transferor had voidable title, the transferee can acquire title if he is a good faith
purchaser. Transferee gets greater interest than transferor
- True owner voluntarily transferred title to transferor (not mere possession), however, the
transfer was procured through fraud (as opposed to theft). Transferor has voidable title,
which can be rescinded by the courts. A transferor with voidable title can then transfer
the property to a transferee, and as long as the transferee was a bona fide purchaser, the
transferee will have title (not voidable title).
- Not to stolen property. Owner to A by fraud (voidable) to B Good faith purchaser (Good
title)
- In OKeefe, Barry Snyder was a bona fide purchaser.

o But the voidable title doctrine does not apply because OKeefe never transferred
title. The property was just stolen. But suppose Frank had purchased the painting
from OKeefe, but the check bounced, Frank would have voidable title. Snyder
didnt know about the fraud, thus he is a good faith purchaser, and he would have
valid title.
2. Statutory estoppel doctrine (bars the owner from recovering the painting) UCC 2-403(2)+(3)
- (A) Entrustment of possession of goods, (B) to merchant who deals in goods of the kind
o Merchant has power to transfer all of the rights of the entruster to a buyer in the
ordinary course of business
Buyer in ordinary course is a person who in good faith buys from the
merchant. Purchaser will get title if they can invoke the statutory estoppel
doctrine.
o It is an open question as to whether the merchant is required to inquire as to the
ownership (i.e., have good faith)
o It must be the same merchant to whom the owner entrusted the painting to.
For statutory estoppel to work, the bona fide purchaser must be buying the
painting from the merchant that the owner entrusted the painting to in the
first place.
- Porter v. Wertz
o Porter owned the Utrillo. Von Maker (under the name Wertz, who was really just
a deli employee) had interest in it, so Porter permitted him to have it temporarily.
Von Maker was given possession, not title. When Porter asked for it back Von
Maker had already sold it to Feigen (owner of the art gallery), who sold it to
Brenner, who sold it to X in Venezuela.
o Feigen
No Voidable Title Doctrine
He did not have voidable title because there was no transfer of title
by the true owner (only transfer of possession)
No Statutory Estoppel
Wertz wasnt a merchant and did not make himself out to be.
Nor did Feigen act in good faith. There is a duty to investigate and
he did not. A simple phone call would have revealed the truth
when they reached the deli and not an art dealership. Also Feigen
did not investigate the private records of prior ownership that the
art community has. They would have found out that Porter was the
owner.
You are charged with whatever information you would have
uncovered through investigation.
3. Equitable estoppel doctrine (bars the owner from recovering title, but owner must have
made representation A-Gallery-C But B Was true owner. Cant be Estopped)
o Can only be invoked by a bona fide purchaser
o Owner may be estopped from claiming title against a bona fide purchaser where
the owner had clothed the seller with indicia of title
o An estoppel only arises if Porter had clothed Peter Wertz with ownership of or
authority to sell the Utrillo painting and the Feigen Gallery had relied upon
Wertz apparent ownership or right to transfer it.
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1. Action by the owner

o For example, if Porter had given a representation of ownership (i.e., indicia of
title), intentionally or through negligence, to Wertz.
Indicia of title usual evidence of title or apparent authority. General
description (usual evidence to title or authority to sell on a sellers behalf)
Ownership of share of stock. One side has thfe owners name, but
the other side is blank and they can endorse it. The owner signs
the endorsement, leaves the name of the transferee blank. The
original owner gave the transferee the indicia of title, so when the
transferee fills in their own name, which is not allowed,
nonetheless the third party can raise the equitable estoppel defense.
Possession alone is not indicia of title
o Wertz had not been clothed by plaintiffs with any indicia of title
- 2. Actual Reliance on the owner by the bona fide purchaser
o He was ignorant of true facts and acted upon indicia of title.
o Porter did nothing to influence Feigens decision to purchase the painting from
Wertz
- 3. Reliance must have been reasonably expected
o If the owner gives the third party a certificate of title, if the third party is misled
when the transferee fill in their own name as the owner, you should have foreseen
the misleadingness
What is a purchaser?
- A purchaser who parts with value (other than nominal value) that cannot be restored as a
matter of law. In order for a bona fide purchaser to raise one of these doctrines as a
defense, they must have parted with value (i.e., no gifts)
o A promissory note (I promise to pay you $4,000) does constitute value because
according to 2-403 there is consideration, and consideration implies value, but it
is not value for these purposes because it can be restored to you as a matter
of law (the court can say that the promissory note is not enforceable). A court
cannot restore you $4,000 cash as a matter of law. You have to collect that from
defendant.
When does a purchaser not act in good faith? (applies to merchants and non-merchants)
- 1. Actual Notice
o Purchaser has actual knowledge of the defect in title at the time of purchase
- 2. Constructive Notice
o Defective title is a matter of public record
o Purchaser would have seen that seller was not the true owner and they would be
charged with that knowledge
- 3. Inquiry Notice
o 1. Is there a duty to inquire?
Would a reasonable person (objective standard) who knows the same
information as the purchaser (subjective standard) become suspicious?
If yes, there is a duty to inquire
In Porter, Feigen, the art gallery, had a registry that listed ownership of all
major works of art. If he had opened that registry, he would have

subjectively known that Donald King was the owner. Someone with the
same knowledge would have become suspicious.
A disparity in selling price and fair market value should only make a
purchaser suspicious if it is so significant that it would shock the minds of
most people. Question of fact. Very unpredictable standard.
o 2. What sort of inquiry is required?
Reasonable inquiry is required. An inquiry that most people in the
circumstances would have undertaken.
o 3. If the person does not reasonably inquire, we presume that they would have
discovered the defect and they are charged with that information.
If you do not inquire at all, the law presumes you would have discovered
the defect in title regardless if you would have discovered it or not.
IV. Property Rights Based on Labor
Two parties with property interest
- 1. Creation (value by itself)
o A owns wood
- 2. Accession (value added by someones labor/gives property interest)
o B carves it into a mantel (adds $2,000 in value)
A was supposed to then buy the value added from B
o Wooden Ware you can be denied the value of your labor
US timber ($60) > wrongfully taken by Indians (now $850) > Defendant
1) In the case of willful trespass you can deprive someone of the interests
of their labor. They are liable for the full value of the whole property
at time of demand and are deprived of the enhanced value at time of
demand. US collects $850 because of bad faith.
2) If the trespass was unintentional, or mistake, or vendee of
unintentional trespasser, the value of the property when taken ($60
here) would govern. (Get to keep money from labor)
3) Purchaser, without notice from a willful trespasser, the value at time of
purchase.
Defendant transferee gets the same rights as the Indian transferors.
If the defendant had turned the wood into a dresser now worth $2000, they
would only be liable for $850 because they were a bona fide purchaser
o UCLA v. Moore
Moore wants accession (value added to his cells). UCLA says that even if
this is Moores property, we acted in good faith, so we can keep the
enhanced value. Moore says that he did not voluntarily transfer them.
Is the Mo-Cell something new, or an enhancement to an existent item?
Court does not apply doctrine of accession because Mo-Cells are distinct
from the cells taken from Moores body. Also, even if it was enhanced
property, there was no bad faith. Doctors frequently take cells for
research
V. Property Rights Based on Marriage
Protecting a Surviving Spouse
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Intestate Share and Elective Share (NY + US)

o They give the surviving spouse title, as opposed to possession in the common law
(husband all wife life estate for 1/3). Divorce no life estate!
o NYRPL 189, 190 Courtesy(death), and Inchoate(child) dower abolished
- If there is no will, the surviving spouse has a property right called the intestate share
o In NY, surviving spouse will receive 100% of the property if there are no kids
o In NY, if there are children, the spouse receives 50% and the other half is equally
distributed to the children (1/6 each if there are 3 kids)
- If there is a will, the surviving spouse has a property right called the elective share
o Surviving spouse can invoke the elective share and claim 50% of the net estate.
The other 50% gets passed under the will.
o If there are children, the spouse gets 33% and the rest passes through the will
Divorce (Factors, length, economics, security)
- Step 1: What is marital property?
o All property acquired by either spouse subsequent to the marriage (except
property acquired by gift or by a will given to one spouse only)
Property brought into the marriage is not marital property.
o In re Marriage of Graham MBA degree is not marital property
Wife contributed 70% of income to his education
Degree has no exchange value (cannot be sold or transferred)
o MAJORITY RULE: education of one spouse is not marital property
o MINORITY RULE AND NY RULE: contributions of the spouse in the career,
or to the career potential, of the other party. Obrian v. Obrian (medical license)
Elkus v. Elkus wife is opera singer before marriage, but career takes off
after marriage with the help of husband who is a voice coach.
Marriage as an economic partnership
An increase in value in the career of one partner, due to the efforts of the
other partner during the marriage, becomes marital property.
The enhanced value is separate property than the career that was acquired
before the marriage started (separate items of value like accession doctr.)
o Wife owns $200,000 home going into marriage. They divorce and its worth $400
An increase in the value of separate occurring during the marriage due to
the contributions or efforts of the other spouse is considered marital
property
Improvements can be direct or indirect
Husband can pay someone to do the improvements.
Or maybe husband was taking care of the kids while wife made
improvements (marital activities as a hometaker count)
If market conditions lead to increase in value, husband receives nothing
Like stocks. They will always remain separate
If third party efforts led to increase in value, husband receives nothing
- Step 2: What is an equitable distribution of the marital property?
o Depends on several facts (How long the marriage was? Does one need more
security than the other? Who is going to be taking care of the children?)

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VI. Concurrent Interests (Tenants in Common, By the Entirety, Joint Tenants for Real
Property, No Tenants by the Entirety for any state for Personal Property)
Concurrent Interests
- Step 1: What are the words of grant?
o They indicate who the owner is.
- Step 2: What are the words of limitation?
o They indicate what the owners actually owns
o Absent words of limitation, tenancy in common is presumed
o The presumption as to the share is that each owner has an equal share.
- Step 3: What rights do the parties have to alienate, lease, mortgage, etc.?
- Step 4: What constitutes a severance?
- Step 5: What type of partition is there after co-owners cease co-ownership?
- Step 6: Waste
NY Law EPTL 6-2.1 NY recognizes All 3 (JT, TIC, TE
- Joint tenancy
o Right of survivorship (does not pass through estate)
o RPL 240-b says that a joint tenancy can be created directly without a strawman
o Can be severed unilaterally by either party
Can be by a transfer to a third party
If a party is indebted to another party and that party attaches the
property here, in the transfer of the partys half interest to the other
party, the joint tenancy gets severed (essentially a forced transfer)
o They become tenants in common with other half owner.
o Step 1: Express Declaration
Evidence of intent of co-owners to create a right of survivorship
MAJORITY RULE (NY): Saying co-parties as joint tenants is
sufficient
MINORITY RULE: express statement of right of survivorship is
required for a joint tenancy
Under either rule, just saying jointly is insufficient because it is
ambiguous. Tenants in common hold property jointly.
As husband and wife but not married. Maybe intention to have
survivorship? Why else put it in.
o Step 2: Are the Four Unities met at the time of the grant?
1. Time
They must acquire interest at the same exact time and by the same
instrument, which is why strawmen used to be used, but NY now
allows parties to become joint tenants by direct transfer
o NYRPL 240-b only applies to real property though
2. Title
All tenants must acquire title by the same instrument
3. Interest
Equal undivided shares and identical interest measured by duration
They must be subject to the same conditions
4. Possession (presumed)
Each must have a right to possession to the whole
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This can subsequently change without severing the joint tenancy

Tenancy in common (May have dif shares, but right to possess equally. Account proport
o EPTL 6-2.2 says that this is the presumption unless the parties are married and
then the presumption is a tenancy by the entirety
o EPTL 6-2.2, if property passes intestate to two or more persons, they take the
property as tenants in common
o Presumption if there are multiple parties stated in the will.
Tenancy by the entirety, BUT ONLY FOR REAL PROPERTY IN NY
o Right of survivorship that is INDESTRUCTIBLE unilaterally
Destroyed only where there is a divorce and then they become tenants in
common. Also destroyed if they agree???
o Step 1: Declaration
If parties are married, the presumption is that they are tenancy by entirety,
so no express declaration is required EPTL 6-2.2(b)
If you wanted to indicate otherwise and be joint tenants you would say
Trump to Ozzy and Sharon as joint tenants to right of survivorship.
o Step 2: Five Unities
1. Time
2. Title
3. Interest
4. Possession
5. Marriage
Subsequent marriage wont turn concurrent interest into a tenancy
by the entirety (ex buy prop as TIC, get married, still TIC)

Right to Alienate half-interest Swartzbaugh v. Sampson

- Husband leases the land without wifes consent. This is a valid transfer of interest
- Each owner has the right to convey, mortgage, subject to a lien, their share of the joint
property.
- TIC A and B. B gives mortgage to X. B defaults. Foreclosure sale ok for Bs interest.
Say X takes ownership. OK but cant exclude A.
- Co-owner cannot be excluded. Co-owners cannot do anything to prejudice the other
tenant. You can only alienate your interest.
- You cannot alienate your share in a tenancy in the entirety.
Right to Sever Joint Tenancy Riddle v. Harmon she transferred the property to herself
- A transfer will sever the joint tenancy (usually to avoid the right of survivorship aspect)
- MINORITY RULE AND NY RULE: You are allowed to create a joint tenancy by a
direct transfer, so you are allowed to sever a joint tenancy by direct transfer (unilaterally)
o RPL 240-c
- MAJORITY RULE: a conveyance to yourself is not a severance, and signing a
declaration of intent to sever (unilateral severance) is insufficient
o Basically requires that you convey to a strawman who will convey it back.
Divorce does not sever joint tenancy
Mortgage lien does not sever joint tenancy Harms v. Sprague
- Step 1: Mortgage does not destroy the four unities
13

o Deed of trust jurisdictions say that you transfer title to the lender, but courts say
that in reality this is just a lien and not a transfer of title
o Mortgage jurisdictions say that the mortgage is just a lien.
- A lien on a half-share does not destroy the unity of interest. Unity of interest is a liberal
standard. Interest remains the same.
- Step 2: Does surviving joint tenant take subject to the mortgage or free of the mortgage?
o MAJORITY RULE: free of the mortgage
Co-tenant conveys half-share subject to Williams right of survivorship
When right of survivorship comes to fruition, there is no collateral
o NY RULE: execution of a mortgage serves as a severance to the extent necessary
to protect the mortgagee. Co-tenant takes property subject to the mortgage.
In NY the right of survivorship would not be destroyed here, but the
owner takes the property subject to the mortgage of the half-interest.
However, upon death, joint tenant takes possession of whole, free of
mortgage. Smith v. Bank of America. (NY) Mortgagee should have gotten
consent of other, or protected its interest!
Is a lease a severance? Courts are divided. No NY rule
- More recent cases would suggest that it is not a severance
- Like mortgages, the unity of interest is probably not destroyed because it is a liberally
interpreted. But do you really have the same interest as another co-owner that does have
a right of possession, while you don't?
o Some courts say that the unity of interest does not exist and others say that as long
as you own in fee absolute, the leasing of the right to possession does not destroy
the unity of interest.
- So if right of survivorship is unaffected (i.e., no severance) and joint tenant becomes the
sole owner, are they subject to the lease of free from the lease?
o Some courts might say: free from the lease because joint tenants ownership
preceded the lease (lessor took subject to joint tenants right of survivorship)
o NY might say (as analogous to mortgages Harms) that surviving joint tenant
would take the property subject to the mortgage to the extent necessary to protect
the mortgagee.
The right of survivorship would not be destroyed here, but the owner takes
the property subject to the mortgage of the half-interest
Partition (when co-owners stop being co-owners). Can be in-kind or by-sale for Joint
Tenants and tenants in common but never tenants in the entirety
- Partition can be voluntary (mutually agreed), or involuntary (forced by one party)
- Delfino v. Vealencis Helen owns 1/3 of the land (rubbish removal plant). Delfinos
own 2/3 and they want to turn the lot into homes, but Helen wants to keep living there.
o Partition in-kind would let her keep the 1/3. Delfinos want the partition bysale so they can sell it, and then buy the whole thing and give her 1/3 of the price
- MAJORITY RULE: prefers partition in-kind
o Partition by-sale occurs under two circumstances
1. Physical attributes of the land make it so that the partition in-kind is
impracticable (they own 2/3 but it isn't a geographic 2/3 like a house)
Helens 1/3 was all the way at the western end of a rectangular plot
14

2. Where the interests of the owners would be better protected

Look to pre-existing uses and future potential uses (with more
weight given to existing uses).
If there is a 160 acre plot with 6 individuals, a partition in-kind
would substantially diminish the value of the property in terms of
the ability to sell the farm and actually use it as a farm. Johnson
- For Personal Property: Partition in kind is impossible. Presumed partition by sale.
Duty to Avoid Waste (interferes with the rights of the co-owner)
- Active Waste
o Permanent injury to the property that is done intentionally (removing coal)
o E.g., tearing down a house (even if you replace it with a more valuable home)
Brokaw v. Fairchild. Courts evolving; economically reasonable maybe allowed.
o One owner cant give tenant right to cut trees without others consent. Long time
to grow back Swartzbaugh v. Sampson(dicta)
- Passive Waste
o Failure to perform ordinary repairs that lead to permanent injury to the property
o Ordinary repairs that an ordinarily prudent person owner would perform
Duty To Account (Must share fruits proportional to interest)
- Whoever has the right of possession is entitled to fruits and profits (includes rent)
- Presumption is that tenant is receiving exclusive possession
- Excusive possession is shared equally by A and B. If A has signed an agreement with T,
the only way that T can have exclusive right of possession is if B agrees. If B does not
consent, T only has As right of possession. T will want to pay partial rental value. Rent
only represents As right of possession to be shared with B. A does not have to share the
rent with B because it only represents half interest.
- Does each co-tenant have an equal right to occupy?
o MAJORITY RULE: ` have an equal right to occupy the whole. Unless the one in
possession denies the other the right to enter or expressly agrees to pay rent,
nothing can be claimed for such occupation
Unless there is an ouster. Then occupant has to pay rent (account) Spiller
Simply asking the occupying tenant to leave and then he doesnt
does not qualify as an ouster because that tenant has a right to
occupy. For there to be an ouster, the tenant seeking occupancy
must be barred from entry. Maybe the tenant puts a lock on the
building (unless the lock was just to protect the inventory).
Circumstantial, he couldve asked for key.
Ouster the one in actual possession denies the other the right to
enter. No duty to account (pay rent) unless there is an ouster
o If ouster, then occupant must pay have rent, fair market
value to co-owner
- If one co-owner pays all of the expenses, they can recover a share of the expenses from
the other co-owners. A cotenant paying more than his share of taxes, mortgage
payments, and other necessary carrying charges, generally has a right to contribution
from the other cotenants, at least up to the amount of the value of their share in the
property.

15

o If the tenant who pays for the expenses has been the sole possessor of the
property, there is no right to contribution. This is the flip-side of B not having to
account where there has not been an ouster.
o There is no right to contribution until the payments made exceed the fair market
value of his use and occupancy.
o However, if A is sole occupier for 12k fmv, yet it costs 15k annually, right to cont
Right to Alienation under a Tenancy of the Entirety
- Sawanda v. Endo couple convey house (with mortgage) to children in order to protect
their assets after a car crash (liability insurance might not cover it). Conveyance would
not be fraudulent if the creditors (insurance co.) could never have reached it in first place.
- Can one tenant in the entirety convey their interest without the other tenant in the
entiretys permission (meaning that the creditors cannot touch it)?
o MAJORITY RULE: An attempted conveyance by either spouse without the other
spouse joining is void. One spouse alone may not alienate their interest
The point of tenancy in the entirety is to protect the surviving spouse from
the other spouses debts. It also requires joint action for other purposes.
Creditors are entitled to no special consideration because if the debt arose
subsequent to the tenancy by the entirety, the creditor had full knowledge
of the state of the property. They could have protected themselves.
o MINORITY RULE AND NY RULE: A voluntary conveyance by only one
spouse is valid. The interest of a debtor spouse may be sold for his separate debts
subject to the other spouses right of ownership.
VRW v. Klein
Klein received a loan from VRW ($50,000). They were a secured
creditor. VRW investigated. The collateral was a one family
home in Westchester County. They realized that the house was
owned by the husband and wife. This means that they were
tenants by the entirety. So they needed Barbaras consent. So they
asked for her signature. Her signature was then forged
So really, the husband signed the mortgage without wifes consent.
1. Mortgage was valid without her consent in NY (not majority)
under a tenancy in the entirety
o You can encumber your rights subject to the continuing
rights to the other.
2. We want to protect one spouse from the debts of the other. This
doesnt mean that we have to make the conveyance by one spouse
void. We make the conveyance subject to the continuing rights of
the spouse.
o Wife cannot be named a defendant in the foreclosure sale
because we don't want to purchaser to get Barbaras rights.
o Husband will be the defendant and will lose his half-share.
If VRW buys it they get Richards rights. VRW own a
half-share subject to the continuing rights of the spouse, so
if Richard dies, Barbara becomes the sole-owner. But if.
Barbara dies first, VRW becomes the sole owner
16

VRW gets a tenancy in common subject to an

indestructible right of survivorship.
So then Richard conveys his half-interest to Barbara while the foreclosure
action is pending. She takes the interest subject the VRWs mortgage.
Richard can only convey the rights he has.
What if instead they get divorced and they turn into tenants in common,
which terminates the right of survivorship?
VRW will get a half-interest as a tenant in common and will seek a
partition, which they couldnt have done with right of survivorship.

VII. Estates in Land Freehold

Freehold estates
o Governed by statute of frauds. NY- any estate or any interest in real property
cannot be created, cannot be assigned, cannot be surrendered, unless by a
conveyance in writing. Needs writing, signed by parties, and essential terms
NY Law: exempts for a lease of a term not exceeding one year
If you do a 2 year lease, unless there is in writing, there is no estate for
years that is actually created. Estate at will.
-

1. Fee simple - most property rights (full bundle)

In NY this is presumed when the deed says from O to A.
o (a) Fee Simple Absolute
o (b) Fee Simple Determinable
o (c) Fee Simple Subject to Condition Subsequent
- 2. Fee tail
- 3. Life estate
o O to A for life, remainder to B
A has a life estate. Then B has in fee absolute subject to As life estate.
There are non-freehold estates (that we now call tenancies)
- 4. Estates for years
- 5. Estate from year-to-years
- 6. Estate at will
1. Fee Simple
- (A) Fee Simple Absolute (presumed) O to A and his heirs = O to A
- Full bundle of rights in perpetuity(possess, use, fruits, alienate, destroy)
-

(B) Fee Simple Determinable

o Allows for automatic forfeiture when a stated even occurs
o Original grantor has an estate with the possibility of reverter (revert = forfeiture)
o So long as the premises are used for school purposes
so long as and while until during unlessare terms of art imply
fee simple determinable
In NY, FSD was abolished after 1958. See below. File every 10 yrs.
Common law, now alienable for this and FSCS

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3rd party, creates an executor y interest. IN NY, called a limitation O to A or

remainder, so long as 1 fam, then to B

(C) Fee Simple Subject to Condition Subsequent (look to intention)NY=Fee on condition

o Allows for non-automatic forfeiture
o Original grantor has an estate with the right of reentry (right of possession)
NY=Right of reacquisition
o When the stated event happens the grantee does not automatically lose title
There has to be a court order
o O retains a right to reenter or provided that or but if provided however
on the condition that
Right to reverter and right of reentry are now alienable interests that can be transferred
o O to A so long as one family residence, then to B. B gets the possibility of
reverter (i.e., an executory interest). A owns in fee determinable.
B has AN EXECUTORY LIMITATION (limitation or remainder in NY).
We don't call what B has the possibility of reverter. That term of art is
reserved for the original grantor
Mahrenholz v. County Board of School Trustees look for grantors intention
o This land to be used for school purposes only, otherwise to revert to the grantor
o 1. Look for grantors intention using the language of the grant
Difference between a FSD and FSSCS usually depends on the words used
in the grant.
o 2. If the grant is ambiguous use a constructional preference (i.e., a presumption)
The general preference is courts wish to avoid forfeiture by grantee,
therefore in construing a grant, they will construe it in the way least likely
to lead to forfeiture
Fee Simple Subject to Condition Subsequent will avoid forfeiture
Courts will apply a third possibility: Fee Simple Subject to Covenant
Never a forfeiture here.
o This land to be used for school purposes only; otherwise to revert to the Grantors
herein.
The court says that this language takes the fee simple subject to a
covenant off the table because of the word revert
The word revert doesnt tell us whether it is a FSD or a FSSCS
We go back to the presumption. The court will say that revert
alone will then be FSSCS
But here they combined only and revert to say it was a FSD
Defense grantee can raise to avoid loss of title NYRPAPL 612
o For FSD, of FSSCS, there can be no action unless it is made within 10 years after
the occurrence of the event which triggers the reverter or right of reentry.
o Townson v. Town of Huntington transfer in 1774 with FSD
So long as the parcel is used as a public park not in 1950s
Even if forfeiture is automatic, if you don't take it back within 10 years of
the event, you have lost your right to bring suit.
o NY RPAPL 1953 no more automatic forfeitures in NY
We no longer recognize FSD if it was created after 1958

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o NY RPL 345 if FSD created before 1958 you have to re-file every 10 years
2. Fee Tail
- At the common law, O to A and the heirs of his body created a fee tail. A has a fee tail,
then his children have a fee tail, etc. The point was to keep the property in the bloodline.
- NY EPTL 6-1.2 effectively abolishes the fee tail and turns it into a fee simple, and if no
valid future estate is limited thereon (e.g., then to E), a fee simple absolute
o What if it is O to A and the heirs of his body, then to E.
E would receive a fee simple absolute if A dies with no heirs (he had no
children, or his children pre-deceased him).
But A dies with 2 children. E and Ds kids only possible owners. Probably
Ds kids
o What if it says O to A and the heirs of his body.?
If A had children, it wouldnt matter because NY had abolished the fee
tail. A is the owner. When A dies, the property becomes part of As
estate. Whoever is in his will gets it.
3. Life Estate
- White v. Brown I wish Evelyn White to have my home to live in and not to be sold.
o to live in implies life estate
o have my home implies fee simple
o not to be sold is unenforceable and void
Cannot have absolute restrictions on alienability
- NY does not prefer to have restrictions on alienability
- Because this grant is ambiguous, the presumption is that every grant shall pass all
interests to the grantee unless the desire to convey a lesser interest is made clear.
Non-Freehold Estates
1. Estates for years (if either dies, it continues) LOOK AT Intent
- Where there is a fixed period there is an estate for years. Commencement/Expiration
- It requires a fixed termination/expiration date, and then the lease ends automatically
o No prior notice is required.
o Can end by default in lease or violation of provision or mutual agreement
- If the lease is for one year or less, it does not have to be in writing. If you intend a 2 year
lease, unless there is a writing, you have not created an estate for years.
o 1. You get an estate at will
o 2. But if the tenant offers to pay rent and the landlord accepts the rent, the estate
at will in NY is transformed into a period tenancy.
And the periodic tenancy that it becomes is month to month
2. Estate from year to year (commonly called a periodic tenancy)
- No specific termination date. Rather the intention is to have successive renewals.
- O to T from month to month which continues until the periodic tenancy is terminated
- 24k payable 2k per month. Periodic tenancy from year to yr because annual rate fixed.
- If there is no writing, the tenancy becomes a estate at will TWO STEP PROCESS
o 1. The leasehold estate needed to be in writing and it was not, so it became an
estate at will
19

o 2. But if the tenant offers to pay rent and the landlord accepts the rent, the estate
at will in NY is transformed into a period tenancy.
And the periodic tenancy that it becomes is month to month
How to terminate:
o Through notice by either party that they wish to terminate
1. Notice must be given at least 1 period in advance
2. The expiration or termination date must be at the end of any period
3. If the notice was void, it is unenforceable and does not imply that you
wish to terminate at the end of the following period. We ignore that you
gave any notice at all.
NY statutes for termination of periodic tenancies
o RPL 232-b applies throughout NY, outside of NYC
Periodic tenancy is terminated by notice on the part of either the landlord
or tenant, at least one month before the expiration of the term.
But never more than 6 months in advance (applicable for a periodic
tenancy from year to year)
o RPL 232-a applies only in NYC
Landlord must serve tenant a 30 day notice of termination
Tenant does not have the corresponding duty to provide notice. They can
terminate whenever they want. Could be on the last day before renewal.

3. Estate at will
- No fixed term or guaranteed term of occupancy
- Can be terminated by either party, at any time, without the need for prior notice
- NYRPL 228: in order for an estate at will to be terminated, the tenant must be given 30
days prior notice. (tenant has no such corresponding duty)
- Unlike an estate for years or an estate from year to year, if the tenant dies holding an
estate at will, the estate is terminated. Estate has not duty to pay the rent.
Holdover Tenant (tenant at sufferance/TRESPASSER) NY RPL 232-c
- Landlord may:
o 1. Remove the tenant and get damages (fair market value)
o 2. Accept rent > creates (implied) a tenancy from month to money commencing
on the first day after the expiration of such term (never more than 1 yr) Landlord
has right to fix rent by notice. If none given, same.
o Express election by notice- Landlord gives notice (you have stayed, and we are
holding you another term). Notice if rent has changed. If not stays the same.
- Jaraslow v. Lehigh
o Holdover by a subtenant is equivalent to a holdover by the main tenant. The subtenant exists by virtue of the tenant. Here though, no rent was offered. Landlord
entitled to fair market value.
- NY: NY-232-c- Landlord must accept rent for tenant to become a periodic tenant. If
they do not, they cant say we are holding you over. Instead, treat them as trespasser
(eviction). If they do accept, always month-to-month so one month notice and tenant can
terminate.

20

VIII. Landlords Obligations to Tenants

- 1. Possession
- 2. Quiet Enjoyment
- 3. Fitness and Habitability
Three Types of Remedies
- 1. Damages
o (a) Duty
o (b) Landlord Breaches
o (c) Tenant has suffered a loss
- 2. Rent Abatement
o (a) Duty
o (b) Landlord Breaches
o (c) Tenant must prove that there is a dependant relationship between the
obligation that has been breached
Dependent Obligation is breached
The tenants duty to pay rent is dependent on the landlord fulfilling
his obligations.
Examples:
Actual possession unless the parties have agreed otherwise
Parties can agree to make express promises dependant promises
Quiet Enjoyment
- 3. Termination
o (a) Duty
o (b) Substantial Breach
o
Failure to deliver within reasonable time.
c) Material obligations must have been breached
Failure of an essential condition
Examples:
Duty to deliver legal possession is impliedly an essential promise
In NY failure to deliver actual possession after a reasonable time
after the new tenant is entitled to possession
Parties can agree to make express promises essential promises
1. Possession(Majority Breached or not breached on commencement of lease
- Hannan v. Dusch lease was silent with regard to landlords obligation to deliver
possession of the premises on the commencement date (prior tenant was holding over)
- There is an implied obligation for the landlord is to delivery legal possession.
- MAJORITY RULE: English Rule
o Implied covenant that the landlord will deliver actual possession (no holdover)
o More in tune with tenants expectations (like a contract) deliver reasonable time
o Landlord is in a better position to have known of a holdover tenant
- MINORITY RULE: American Rule
o No implied covenant that the landlord will deliver actual possession
o Landlord is not at fault. New tenant must sue the holdover tenant (the wrongdoer)
o Tenant should have protected himself and covenanted for actual possession
21

Second Restatement of Property 6.2 = English Rule

o Tenant may:
1. Terminate the lease and recover damages
Though landlord has a reasonable time to remove holdover tenant.
Reasonableness=Normal time for the action under the most
effective, speedy remedy available to the landlord under the state
law.
SO, if 6 months is reasonable in town, thats how long. Parties can
always modify and K otherwise.
2. Affirm the lease and recover damages, get rent abatement, withhold
rent. Rent abatement available immediately.
3. Also get damages from the holdover tenant
o As a landlord you can modify both your obligations and the remedy
NY RULE RPL 223-a hybrid of English and American rules
o Implied that the lessor will deliver possession at the beginning of the term
This means actual possession = seems like English Rule
There is also no reasonable time requirement on the part of the landlord
o You can only get termination and not damages/rent abatement (Atlantic Bank)
If the tenants wants to terminate, they rely on the statute.
If they want other damages/rent abatement, they must proceed under
present law where there is no implied promise for actual possession
American rule they must sue the holding over tenant. No implied
obligation for landlord to oust holdover tenant. Teidlebaum v.
Direct Realty. New tenant could terminate by notice to landlord.
Than landlord can oust old tenant.
Can sue trespasser for damages, but why not negotiate in K for
damages in rent abataement or otherwise.

2. Quiet Enjoyment (to get damages for breach, four requirements must be satisfied)
)(Residential and Commercial)
It is a dependent promise as matter of law. Unless agreed otherwise, one remedy is damages, rent
abatement, and last termination. For termination, 4 elements show substantial, quiet enjoyment
is material bylaw, and the landlord has a duty.
- 1. Act or omission by landlord
o Landlord must be directly responsible for the interference or fails to perform an
obligation owed to the tenant (either from the lease or a promise) Majority
o MAJORITY RULE: landlord is not required to protect tenant from interference
from other tenants (no wrongful act)
o MINORITY RULE AND NY RULE: if landlord permits another tenant to use the
premises for lewd purposes, thus making the premises unfit for living, and the
landlord fails to stop them when he has the legal power to do so, there is a breach.
He gets legal power from the lease that he has with those tenants.
If the issue is that Starbucks is producing foul odors, and Starbucks lease
had a provision that they would not produce odors, that is a promise to the
landlord that the landlord has the power to enforce and must.

22

2. Such act must render the premises substantially unsuitable for the purposes in which it
was leased. (Disturbance that is grave)
o Sometimes this is hard to determine. Look to code standards and see if they are
violated perhaps. If the disturbance is the noise that the tenant is producing check
what the code standards are for noise allowed.
3. Disturbance that is permanent (doesnt have to be constant)
o Permanent if it recurs regularly (e.g., every time it rains) an occasional event
4. Vacated within a reasonable time after the breach occurred (constructive eviction)
o If they wait too long it is waived. If you are waiting in order to give the landlord
an opportunity to cure or waiting to see if even will recur, that is not unreasonable

Reste Realty v. Cooper landlord said he would clean the water and remedy the water problem.
- The covenant of quiet enjoyment is implied in a lease, if it is not express. But it can be
waived or modified. Possibilities for modification (Tenant must agree and be aware)
o 1. Tenants accepts the premises as is even with water seepage. Unless the
defect is a latent defect.
o 2. Tenant agrees to keep the premises in good repair defective condition
becomes the tenants responsibility. But courts will use the strict construction
doctrine to narrowly construe the word premises against the drafter.
Here the premises that must be kept in good condition are the basement
offices. The defect was the surrounding property that allowed water in.
Barash v. Pennsylvania oral promise to keep the air condition on all the time (lease: 9am-6pm)
- Statute of frauds holds and the lease trumps the oral agreement
- 1. Wrongful act on the part of the landlord requires that they deprive the tenants
something that he was entitled to by virtue of the lease.
Actual Eviction vs. Constructive Eviction
- Total Actual Eviction (need 4 elements 1]wrongful act etc
o Landlord physically dispossess the tenant of all the space he is entitled to
o Tenant is deprived all of the space, or substantially all, and all of the time, or
substantially all.
o There is a right to terminate a total actual eviction
- Partial Actual Eviction
o Land lord physically restricts access to a portion of the premises (e.g., landlord
wants to put in a bigger elevator so they take space from the tenants from each
floor).
1. Wrongful act yes
2. Grave yes (when dealing with a partial eviction, we measure the area
in question that has been disturbed, and not the entire premises)
3. Permanent yes
4. Vacated yes (measured in terms of displaced area, so here vacation is
implied)
o There is no right to terminate when the eviction is partial (must be total)
- Total Constructive Eviction (need 4 elements 1)wrongful act etc
o Deprivation of all, or substantially, space and all, or substantially all the time
o Where the office becomes hot and stuff 24/7 and you leave
23

o Majority says action dismissed.

o However, maybe reputation effected. If this fails, KEEP GOING
- Partial Constructive Eviction Barash
o After 7:00pm the office became unusable. You have been deprived of all the
space, but for only part of the time.
o Recognized in NY, but not most states
MAJORITY RULE: partial rent abatement
MINORITY RULE AND NY RULE: total rent abatement (landlord not
permitted to apportion his wrong)
Remedy
- Unless the parties have agreed otherwise, one remedy is always damages or rent
abatement (because the covenant of quiet enjoyment is a dependent promise). They can
also terminate because quiet enjoyment is a material term as well.
3. Fitness and Habitability (expectations of the property, life health and safety 2nd rsd)
- Note: use clauses are not held against the landlord, they are for the benefit of the
landlord so that they know what their premises are going to be used for. Service Oil v.
White. Use clauses are not covenant of fitness
- There is no implied warranty that the premises be suitable for the use stated in
commercial Such a warranty must be expressly stated in the lease Edwards v. NY
Railroad Company (NY).
- Also, in case of fire, commercial tenant must still return in like condition. (Passive waste)
as long as cost isnt substantial see below
- Promise: what if clause says shall be usable as a retail store for sale of apparel.
- Breach: what if it is not usable because the prior tenant left all their fixtures intact
o 1. What was the intended meaning of this promise by the parties
o 2. If a landlord lets premises and decrees that they shall be fit for their intended
purpose and they are not, the landlord is responsible for his own negligence. If
his negligence is what leads to the wrong complained of, he is liable.
Negligence = failure to act as a reasonable landlord would in the
circumstances here. Franklin v. Brown. Example, (failure to investigate
smell of sewage)
What would a reasonable landlord do when a tenant leaves behind
fixtures? Could be that they contact the tenant and ask them to remove it,
and then maybe after a reasonable subsequent landlord removes them
- Remedy: unless otherwise stated, tenant is only entitled to damages
o Rent abatement is not available because express promises in a lease are never
impliedly dependent promises as a matter of law. Parties can make an express
promise a dependant promise though. Same for termination and essential promise
- There is now an implied warranty of habitability for every residential lease that is nondelegable and non-waivable.
o Hilder v. St. Peter - Toilet not working, windows not working, raw sewage (went
into her apartment) from a broken pipe in the basement, water leak near outlets
o The old caveat emptor (buyer beware) rule was for farms where the farmer
would do their own repairs. Today tenants arent just paying for occupancy, they
are paying for the condition of the premises as well.
24

o NY RULE 235-b all three rules are embraced. Promises also seen in Hilder
Dependent and essential promise.
1. Safe and Clean (only need 1 of the 3)
The premises must not pose a threat to tenants life, health, or
safety ex. Window broken (terribly cold)
2. Fit for Human Habitation
MINORITY RULE: tenant must prove that there was an actual
violation of the local building and housing codes. So, no violation,
no breach of habitability.
MAJORITY RULE: the local housing and building code provides
prima facie evidence of compliance or lack of compliance, but are
not determinative of a breach.
Window broken (freezing cant live)
Solow v. Wellner. Court rejects third California standard.
Doorman a few roaches doesnt make it unusable even if it says
reasonably intended
3. Defects in the essential facilities of a residential premises
o Toilet was unusable this would fall under the third rule
o Window was broken violates all three rules
Breach: landlord has a reasonable time to correct the deficiency after notification
o What if the rented premises are a luxury building and the landlord has fires the
doorman, turns off the air conditioning in the lobby, shuts down 2/4 elevators, and
there are some roaches in the laundry room.
This is not a breach. Warranty of habitability is to ensure that the
premises are not unusable. Has nothing to do with the level of services
and amenities that tenants reasonably expect to be provided under the
financial and other terms of their individual leases
o Landlord is responsible for breaches not directly responsible or with power to
remedy (sanitations wont cross picket line to pick up the garbage)
After 9/11 apartments in Battery Park became uninhabitable. Tenants are
entitled to rent abatement because landlord breached duty
No heat or hot water is a threat to health, life, and safety
Water leak near electric outlet is a danger to life
Apartment was breeding ground of rats and roaches for 2 years
Mailboxes are not an essential facility (apartment is not unlivable)
2 weeks for plumber to come. Is it unreasonable? Maybe.
A substantial deprivation of garbage disposal, janitorial and repair services for a

17-day period clearly harmful to life and health. Park West v. Mitchell.
Forces outside of control of landlord, still make him liable. Cant void them either.
Only residential.
Pedophile next door (nonphysical). Very unlikely, but not impossible.

Remedy
o Warranty of Habitability is a dependant and essential promise, which means that
the tenant can get rent abatement or terminate
And unlike with breach of covenant of quiet enjoyment, partial rent abate
is allowed in NY
o Alternatively, tenant get seek repair or repair himself and get a deduction on rent
25

o Tenant can also withhold rent and then pay it back when the landlord has repaired
o No damages if landlord cures in a reasonable time.
IX. Tenants Obligations to Landlords (always implied promises)
- 1. Pay Rent
o If not specifically expressed, tenant owes landlord fair market value
- 2. Duty to vacate at the end of the term. (if not express, implied)
- 3. Tenant must return the property in the same condition as it was at commencement
o Implied duty to avoid waste and make repairs
o Ex: TD bank knocking down walls for drive up. Must return to original position
Duty to Avoid Waste (also applies to heirs inheriting after a life estate)
- 1. Active Waste (intentional, permanent injury to premises)
o Means a change in the character of the building (has nothing to do with value)
o Six Speed Holdings tenant removed the old cabinets and put in better ones
(higher value). This is active waste because it permanently changes the nature
and character of the building (i.e., interior arrangement). While it was intentional,
was it permanent? Court says tenant saved cabinets, and can repair.
o Brokow v. Fairchild (common law)- even if its worth more, cant change (CL).
o Modify the lease to avoid damages- How?
o
Alterations landlord must consent to. However, tenant may have
to pay for restoration.
o
Tenant could include clause that for future alterations we will
notify and they are not to be reasonably withheld
o Remedy: damages to repair
Tenant should get landlords consent before making any alterations
As a tenant you might tell landlord that you will notify them and they have
a right to deny, but to not be unreasonably withheld
Landlord can waive claims for waste
Tenant can cure like in Six Speed
Injunctive relief (stop)
o NY RPAPL 803
(1) When the person has a life estate or estate for years
Then alterations are permitted when:
(1)(a) A prudent owner in fee absolute would likely make the chang

So in Brokow, making land apartments would be permitted

(1)(b) Proposed alteration will not reduce market value
(1)(c) Not in violation of any agreement
Look to the lease itself for restrictions
(1)(d) Life expectancy of the owner is at least 5 years
(1)(e) 30 days notice is required to owners of future interest but no consent
necessary
- 2. Passive Waste
o Failure by the tenant to make ordinary repairs that will lead to permanent injury
o There is an implied duty on the part of the tenant to make ordinary repairs
ONLY APPLIES TO COMMERCIAL TENANTS (warranty of
habitability has lifted this duty from the residential tenant)
26

o Ordinary repairs (as opposed to extraordinary repairs) are those repairs that do not
cost a substantial sum, in light of the value of the unexpired term of the lease
If the value of the 3 year term is $36,000 ($1,000 a month), and the cost to
make repairs after a fire is $20,000, this would be substantial, which
means it is an extraordinary repair that a commercial tenant is not
obligated to repair.
o Landlord is not obligated to make extraordinary repairs either
Tenant still has to pay rent. As is the case with fire. No fitness for
commercial leasee,
o NYRPL 227
Tenant has the right to terminate the lease when the premises are
destroyed or injured by the elements. But most tenants end up waiving
this right.
o Example: Tenant promises to keep the premises in good repair. In many states
this means extraordinary repairs because it is implied that the tenant has the duty
to make ordinary repairs. By adding language, you are promising more.
o Example: Landlord promises to keep premises in good repair. Because there is
no duty for them to do ordinary repairs, if we are adding language it means we are
adding a duty, so the next duty is ordinary repairs.
X. Remedies Security Deposit, Forfeiture, Self-Help, Summary Proceedings and Duty to
Mitigate Damages
Landlords remedies when the tenant is in default (failure to pay rent, or make ordinary repairs)
- 1. Security Deposits
- 2. Forfeiture
o Automatic
o Non-Automatic
- 3. Self-Help
1. Security Deposits
- Security deposits are held in trust and must not be comingled. NY General Oblig. Law
7013. At common law, could spend than return.
- Implied right that landlord can use the security deposit for back rent. However, duty to
replenish if it is used.
2. Forfeiture of the lease
- None of the tenants obligations are essential promises. At Common law landlord cold
never terminate, even w/ default
- Depends on what the lease says. Lease can allow for termination in the case of default if
the lease says that the tenants obligation to pay is an essential/material promise or
breaching any covenant
- Tenant has 4 defenses(nonwaivable) where the landlord is exercising their right to
terminate at Common Law
o 1. Forfeiture is strictly construed against the party that drafted it (the landlord)
If the clause is about rent and tenant fails to pay a tax, no termination
o 2. Landlord must promptly enforce the forfeiture provision, otherwise it is waived
o 3. The breach must involve a substantial violation of the material promise
27

Termination upon default of any covenant contained in the lease is not

enforceable. Must be substantial violation of important promise
o 4. There must be a demand for rent and an opportunity to cure before forfeiture
First National Stores v. Yellowstone Shopping Center
o The lease said that where there is a default of any covenant and the default
continues for 10 days after notice, lessor may terminate and enter premises.
Tenant did not install a sprinkler that the government mandated. It was his
duty, landlord gave him notification and 10 days passed without cure.
Note: this was a material promise because it was a government
order that would lead to closure if not adhered to.
o Before the 10 days were up, the tenant sued and then they found out they were
wrong so they want time to install the sprinklers.
Court says, NO. After 10 days the termination was automatic. No court
order necessary. Landlord can declare the lease terminated.
HOWEVER, if it said may declare such lease ended, it wil be construed
against drafter and they need a court order. Without processs of law
indicates automatic forfeiture
Tenant should have brought a Yellowstone injunction which is a
temporary restraining order in order to figure out whether they are really
in default tolls the 10 day waiting period.
(A) Non-Automatic
o May declare such lease ended is considered non-automatic. You have to go to
court and prove the default and have the court declare the termination and enforce
(B) Automatic
o Lessor, at the option of the lessor, may declare said term ended, and may reenter
upon the leased premises either with or without process of law.

3. Self-Help (Common law remedy when lease is already at an end)

- Where there is an automatic forfeiture and the lease is at an end, the landlord can use selfheld and retake possession. They can use whatever reasonable force necessary without
causing serious injury or death.
- States have enacted summary dispossess statutes, but this does not mean that the self-help
remedy is unavailable. Some states say otherwise though (that self-help is unavailable)
- NY RPAPL 853 limits self-help. Cannot keep a person out in a forcible and
unlawful manner. This doesnt mean that self-help is not available.
o Forcible- when landlord uses actual violence against the tenant or threatens
unusual force or violence. - they can smash a lock and replace it with a new one
o Unlawful- taking possession before termination
- Berg v. Wiley (Without forfeiture clause, lease is not at end, self-help not available)
o Court rejects the use of self-help. The only means to disposes a tenant who has
not voluntarily surrendered, is resort to the judicial process
o MINORITY RULE: self-help is not available when dealing with residential
tenants. Though some of these states allow it for commercial tenants.
o MAJORITY RULE AND NY RULE: self-help is available, but half make it
unavailable to residential tenants.

28

NY Rule
- Article 6 proceeding declare a lease at an end and evict a tenant through the courts.
For example, failure to keep insured. Because lease does not end, only a promise was
violated, use art 6.
- 711 much quicker under Article 7 (often 1 month)
- 711(1) holdover proceeding (after the expiration of his term)
- 711(2) nonpayment proceeding (when the tenant has defaulted in the payment of rent)
Duty to Mitigate
- At common law the landlord had three options where tenant leaves early:
o 1. Treat the vacate as a surrender (accept offer to surrender the premises)
Surrender by mutual agreement. Lease is at an end
o 2. Ignore the abandonment as if it never occurred
The lease remains in full force and effect
The landlord can sue for rent due for the 2 years
o 3. Landlord can attempt to re-let on the tenants behalf (OPTION to mitigate)
Lease is not at an end. The landlord is voluntarily choosing to mitigate
damages by trying to find a substitute tenant
If he cannot the original tenant had an obligation to pay
If Landlord chooses the option to mitigate, the landlord must use
reasonable diligence/reasonable efforts to re-let on tenants behalf
- MAJORITY RULE: duty to mitigate damages for residential tenants, but not for
commercial tenants
- NY RULE: no duty to mitigate damages for residential leases, but there is a duty to
mitigate for commercial leases. Holy Properties Three common law options for
residential leases.
- Reasonable Diligence/Reasonable Efforts (Show apartment, advertise, proffered
suitable tenants Sommer v. Kridel
o Landlord need not accept less than fair market value, or substantially alter his
obligations under the preexisting lease. If they signed a 1 year lease and the new
tenant wants a 3 year lease, this is not a reasonable substitute.
o Landlord is free to object is new tenant insists on leasing under different terms.
o Landlord is allowed to re-let for the more than the original rent.
Some states say that landlord is allowed to keep the excess money
Other states say that he cannot; that tenant is entitled to the excess rent.
But then landlord can revoke his agreement to re-let, agree instead to a
surrender, then lease the property, and keep the excess money.
Restatement allows him to do this.
XI. Transfer of Leasehold Estates Assignments and Subleases (normally not essential
(wont terminate)
- Common law allows leaseholds to be freely alienable unless the lease provides otherwise.
Kendal v. Ernest Pestana. Strictly construed against drafter.
o Unless the landlord has relied on the special skill of the tenant

29

Nassau Hotel v. Barnett the landlord owned the hotel and they leased it
to the tenant. The tenant is a hotel management company. Instead of a
specified rent, it would be a percentage of the income
They were relying on the special skill of the tenant.
Anchor tenant of a luxury shopping center cannot alienate if they are
leasing to a non-luxury store.
o When the lease is silent, freehold estates are freely transferable (freely alienable)
- Tenant may not assign the lease without the landlords consent. If tenant finds a
workaround and sells the business in the form of corporate stock, the court will construe
it against the landlord and allow the alienability. Courts done like restrictions on transfer.
- Ernst v. Condit Ernst (landlord) > Rogers > Condit
o Assignment v. Sublease
Sublease > landlord has no cause of action against the subtenant
(for unpaid rent, etc.)
Assignment > landlord has a cause of action against assignee
Intent of the parties doesnt mater
An assignment conveys the whole premises, for the whole term, leaving
no interest in the assignor. Sublease has continuing interest
- Kendal v. Ernest San Jose > Perlitch > Ernest Pestana
o Landlords restrictions on the tenant to further assignments also apply to
subtenant. Landlords consent was required.
o MAJORITY RULE: where the lease contains an approval clause, the lessor may
arbitrarily refuse to approve a proposed assignee no matter how suitable.
(commercial and residential) However, maybe fair housing act.
o Ex: Cant refuse even if new tenant would be coming from L other building.
o EX: T1 wants to use to compete with LS business. Cant refuse.
o EX: T1 competes w/ other tenants businesses. Can refuse
o EX: L (religious) T1(Abortion Counseling). L cant deny because of beliefs.
Maybe because of losing other tenants. Def if it is incompatible to the building.
o EX:L(Religious)T1(abortion but acceptable use). L asks for more rent. NO
o MINORITY RULE: landlord must act reasonably, though this can be waived
(commercial, not extended to residential except in NY)
o NY RULE IS IN THE MIDDLE
Reasonable reasons to withhold approval of a proposed assignee
- 1. Financial Responsibility of the proposed assignee
- 2. Legality of the proposed use (zoning and building codes retail/manufacturing zones)
- 3. The nature of the occupancy (office, factory, clinic, etc.)
o Landlord can choose what types of businesses they want to allow to operate
Landlord restrict premises to only offices for example
- 4. Suitability of the use for the particular building
o High end stores vs. low end stores. Luxury office buildings vs. non-luxury
Unreasonable reasons to withhold consent
- 1. Personal Taste or Sensibility
- 2. Convenience
- 3. Cannot be for lessors desire for more money (tenant will charge a higher rent)
NY Law
30

American Book Co. v. Yeshiva University Development

o American wants to assign their interest. Yeshiva is the landlord
o NY says that the landlord can arbitrarily deny consent(commercial), but here the
lease said, not to be unreasonably withhold
o Yeshiva objects to Planned Parenthood executive office (based on personal taste).
o Look to see if a reasonable landlord in this situation would have denied consent
There cannot be a subjective taste as a basis for denying consent
RPL 226-b right to sublease or assign (applies only to residential leases)
o 1. Parties can agree otherwise if it increases the tenants rights. Landlord
technically can arbitrarily withhold consent. If he does tenant is free from lease
though after 30 days.
o 2(a). If the dwelling has 4 rooms or more, the landlord cannot deny consent to
sublease unreasonably.
o Landlord can never decrease tenants rights. Must act reasonably
o EX: Tenants wants to assign to poor student. No (financial irresponsibility)
o EX: Tenant wants to lease to doctor to run practice. Building allows commercial,
but maybe no because of foot traffic, disturbances etc

Landlords Rights against Tenants or a transferee

- Two possible legal bases for a landlords cause of action. Cant find, YOURE OUT
o 1. Privity of Contract
No privity of contract with a transferee that is a subtenant, EVEN W/
CONSENT
Privity of contract exists where transferee is an assignee and there is a
release of the transferor
Contractual obligations between the landlord and assignee have not
been terminated. So as long as the lawsuits basis is an express
promise in the contract there is a cause of action. One promise in
the contract might be to pay rent
Three types of Assignment
1. Pure
o Original tenant is the only one making the covenants
o I hereby transfer my right, title, and interest to you, Dewy
& Howe. Dewy & Howe is offering nothing in return.
2. Pure Assignment + Assumption
o Agreement between assignor and assignee: I hereby
transfer my title, right, and interest. + I hereby promise
to perform all your obligations under the lease
Landlord is not a party to this contract. Landlord
does not have privity of contract to the assignee
even with the assumption.
3. Pure Assignment + Assumption + Release
o I hereby transfer my right, title, and interest. + I hereby
promise to perform all your obligations under the lease +
I hereby release, tenant from his obligations under the
lease.
31

Now there is privity of contract with the assignee

Samuels v. Ottinger assignee defaults on rent. Landlord can sue the
original tenant after he assigns, under privity of contract.
o 2. Privity of Estate
1. One of the parties to the lawsuit has created the estate held by the other
Usually plaintiff has created the estate that is held by the defendant
The created estate must be the unexpired term for all the premises
o The assignee must hold the estate created by the landlord
2. The other party (defendant) holds a present interest in that estate
3. The obligation that is the basis of the lawsuit, inheres in the estate (not a
personal obligation promise attaches to estate)
As a matter of law, the obligation to pay rent always inheres in the
estate
The obligation to keep the premises in good repair (implied in a
commercial lease) inheres in the estate.
Masery v. Southworth assignee doesnt keep the premises insured
thus violating a covenant in the lease. Does the obligation to keep
the premises insured inhere in the estate (runs with the land)?
For a covenant to run with the land, it must have in its subject
matter something that the obligation sustains the estate and the
enjoyment of it, for the benefit of both the lessor and the lessee.
o If the covenant to insure is only for the benefit of the lessor
(not to be used to repair the building), it does not inhere in
the estate, but if the insurance money works for the benefit
of both parties, then it inheres in the estate.
Where there is a default in paying rent, in the assignment situation, the landlord can
choose to sue the tenant (based on privity of contract, unless there is a release in which he
can sue the assignee), or the transferee (based on privity of estate)
What about when the transfer is a sublease?
o Contract is usually between the tenant and the subtenant
o The typical sublease has two clauses:
1. I hereby transfer a sublet to you the following space.
2. From the subtenant: I promise to perform all you obligations under
the lease.
But the landlord is not a party. The person creating the lease is the
original tenant.
o 1. Privity of Contract No
o 2. Privity of Estate No
Tenant created the estate (landlord created a different estate that had a
longer term and involved a larger premises),
o Landlord can never sue the subtenant. They can only sue the original tenant that
they have privity of contract with.Davis. v. Vidal
o L-T-T1-T2-T3. Assignment. L can sue T (POK) or T3(POE). If L sues T, he
will get judgment for T2s default. However, through subrogration, T can step into
Ls shoes and assert a cause of action that L could have assered. (Same rights as
L).
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XII. Land Transactions Covenants of Title

Real Estate Transactions: Steps
- 1. Real Estate broker is hired
o MAJORITY RULE: owner of residential property has a duty to disclose material
defects that they have actual knowledge.
No duty to disclose in commercial transactions.
Minority Rule: Caveat Emptor Buyer Beware
o All real estate transactions must be in writing (statute of frauds) DEED
o Broker ascertains commission upon finding suitable buyer that can fufill
conditions. Parties can K otherwise, and make it so commission is upon transfer
- 2. Inspection
- Majority: No warranties. (Minor Exception for builders of new homes. Should inspect!)
- 3. Decision of Purchase - (Parties sign binder (residential property) or letter of
intent(commercial).
- 4. Satisfy Contingencies
o Get a mortgage, get an engineers report, make sure seller owns the property
(Title search), down payment etc.
o Mortgage contingency ex: Purchasers oblgation contingent upon getting mortgage
o Title Search
Tells you about outstanding mortgages, easements, restrictive covenants
o Loymeyer v. Bower seller has a right to cure before closing upon until the
closing date a reasonable time thereafter.
- 5. Closing
o Seller gives you a deed and there is the implied promise of Good Marketable Title
One promise on the deed is the covenant of seisin says, I have title
One promise is the covenant against encumbrances nobody else has
interest in the property (i.e., no mortgages, easements, or restrictive
covenants)
Implied Obligations from seller
- Good Marketable Title (implied)
o 1. Seller promises that they have title (in fee absolute)
If seller only have a life estate, this is a breach
o 2. Promise that there are no encumbrances on the title (or disclose them to the
buyer and the buyer takes title subject to such encumbrances)
Encumbrance- right that exists in the third party that interferes with the
full use and enjoyment of the property by the owner
If the land is subject to an easement (e.g., a right of way), by a
third party, this is a breach
A mortgage lien is an encumbrance. It makes the property much
more difficult to resell or attain another mortgage.
Municipal ordinances and private restricts (restrictive covenants)
Restrictive covenant might say that the houses in the community
must be two stories high (the house you are buying has one story)
Municipal ordinance is being within 18 inches from property line

33

MAJORITY RULE: the existence of a municipal restriction alone is not

an encumbrance. If the municipal restriction is violated at the time of sale,
this is a breach (opens buyer to the hazard of litigation)
MAJORITY RULE: the existence of a private restriction alone is an
encumbrance. Sellers must disclose that there are private restrictions.
Breach of covenant of Good Marketable Title (two part standard)
o 1. Reasonable doubt of non-defect breach doesnt actually have to exist.
Purchaser can consider a breach of marketable title, and can thus
terminate, when there is a reasonable doubt about the marketable title
Purchaser need not prove that there is a defect in title reasonable doubt
Example: A to B to C. C investigates and finds out that A may
have been incompetent during the transfer, thus making it
unenforceable = possible breach of marketable title
o 2. Magnitude of the Defect reasonable person would refuse to purchase.
Must be a serious defect
For example: for the municipal restriction, buyer would have to chop 18
inches off the entire house. A reasonable person would not purchase
For example: private restriction, buyer would have to build a second story
Remedy: seller has the right to cure (time is not of the essence) by the time of
contracting and a reasonable time thereafter.
Closing: Merger
o Once the parties close and title is delivered from the seller to the purchaser,
covenants of title contained in the contract are merged into the deed.
o Once the closing occurs, you cannot sue for the breach of covenant of marketable
title. You have to sue for this breach before closing. After closing, if there is a
defect or encumbrance, it has to be based on something in the deed, not the
contract.

Deeds (three types) Solerg (Dont run w/ land) Scofield (Runs)

- 1. General Warranty Deed (Full warranty in NY)
- 2. Special Warranty Deed
- 3. Quit Claim Deed
- ALL COVENNTS OF TITLE = ACTUAL EXIISTENCE OF THE DEFEC
1. General Warranty Deed (FULL Warranty in NY)
- Promises: Present Covenants
o 1. Covenant of seisin
o 2. Covenant of right to convey
o 3. Covenant against encumbrances
- Promises: Future Covenants.
o 4. Covenant of Warranty
o 5. Covenant of Quiet Enjoyment
o 6. Covenant of Further Assurance
Present Covenants
o The moment of the breach, the covenant becomes immediately a cause of action.
The cause of action occurs at the moment of closing.
- 1. Covenant of seisin
34

o You must be the sole owner, in fee absolute, and of the entire property. Ex: Find
out its 2 owners, or life estate, or its less land.
o Covenant of seisin does not run with the land. MAJORITY
o MINORITY NY- DOES RUN
o *** When it does not run: O-A-B-C. O gave A bad title. B can only sue A, C
cant. When it does run, B cant sue (right was assigned) A, but C can b. Why?
In the first, when it doesnt runs C will sue B, and than B will sue A and use cs
rights under subrogation.
2. Covenant of right to convey
o Often comes hand-in-hand with a breach of the covenant of seisin
o But sometime a person has title, but no right to convey (like a trustee)
3. Covenant against encumbrances
o Any right that exists in a third party that interferes with the full use and enjoyment
of the property. Such as an easement, mortgage lien, and restrictive covenant)
o Ex: if there is an easement on the land, at the moment of closing, the
encumbrance existed.
Frimberger v. Anzellotti defect was the violation of the wetlands code
o Encumbrance (right that exists in a third party the state that interferes with the
use and enjoyment being able to build a bulkhead)
o The existence of a regulation is not a breach of the marketable title, and similarly,
the existence of a government regulation per se is not an encumbrance, and the
violation is not an encumbrance until the government issues the formal violation
Latent violations of state or municipal land use violations
1. They do not appear on the land records in this case
2. They are not known by the seller
o When seller is promising that there are no encumbrances, he is making the
promise that there are no encumbrances at the time of conveyance. There is
no promise that there wont be any encumbrances that will arise later.
Here, since the encumbrance (the formal governmental action) occurred
after the conveyance, there is no breach of the covenant against
encumbrances.
When dealing with breach of marketable title, the standard for breach was reasonable
doubt. When you are dealing with covenants of seisin, the standard for breach is actual
existence of the defect you have to prove that there is a defect in title

Future Covenants (NORMALLY RUN W/ LAND AS LONG AS THEY STAY COVENANTS)

- 4. Covenant of Warranty
- 5. Covenant of Quiet Enjoyment (Any dispossess is a breach) Must be an
ouster(Constructive eviction for example)
- 6. Covenant of Further Assurance
o Any dispossess will be a breach of quiet enjoyment. There is no breach, or cause
of action, until there is a dispossess.
Ex: the breach of quiet enjoyment did not occur until the moment of actual
dispossess (i.e., he drives his car across the property)
o For both of these, there is only a breach with at the moment of ouster (dispossess)

35

Actual Ouster- when the grantee (purchaser) is dispossessed by a holder

of a paramount/superior interest (could be the true owner)
Constructive Ouster- grantee is forced to make a payment to avoid being
dispossessed by the holder of a superior interest.
There is a mortgage against the property and a year after the
conveyance, the holder demands payment, or else threatens to
bring a foreclosure action to dispossess the holder. The current
owner has to pay off the mortgage to avoid dispossess
There is now a cause of action against the grantor in ((3) Covenant
against Encumbrances, and (5) Covenant of Quiet Enjoyment
Brown v. Lober
o Bost > (general warranty deed) > Brown > unable to sell property when he
discovered that he only owns 2/3 of the mineral rights. Bost created the defect
o The cause of action in breach of covenant of seisin was timebarred (10 years after
closing), so they base the action on the future of covenant of quiet enjoyment.
They look for an ouster (dispossess by the holder of a paramount right)
There was no ouster because the owner before Bost must be the
one seeking payment

2. Special Warranty Deed (NY: bargain and sale deed with covenants)
- Contains warranties against the grantors own acts, but not the acts of others.
o Thus, if there is a mortgage (acts of another), the grantor is not liable
- There are no encumbrances that I created (made or suffered by me)
o A (general warranty) to B (special warranty) to C
C cannot sue B if A had a mortgage on the property (created by A)
o A (general warranty) to B (general warranty) to C
C can sue B even though B did not create the encumbrance because B
promised C that there are no encumbrances (such as As mortgage)
3. Quit Claim Deed (NY: bargain and sale deed without covenants)
- Grantor makes no representations or promises about the property at all.
Rockafellor v. Gray
- Doffing > Rockafellor (who was indebted to Gray and there was a foreclosure sale) >
Connelly (think he has general warranty deed) > Dixon > (special warranty) H&G
- Rockafellor says there was no jurisdiction for the foreclosure action and the court issues a
decree saying that the foreclosure say was invalid. H&G are therefore not the owners.
o H&G cannot sue Dixon because he gave them a special warranty deed.
o H&G can sue the remote grantee Connelly, who provided a general warranty deed
o Connelly argues that he only made promises to Dixon
- MAJORITY RULE: breach of present covenant may not be had against the remote
grantor. Covenant of seisin does not run with the land. A cause of action may not be
maintained by a remote grantee
o When moment Connelly conveyed to Dixon, the breach existed and there was a
cause of action. But that cause of action does not run with the land, so H&G have
no cause of action against Connelly after Dixon conveyed to them. Nor do they
36

have a cause of action against Dixon because obviously he gave only a special
warranty deed.
MINORITY RULE AND NY RULE: the cause of action for breach of covenant of
seisin (and all present covenants) does run with the land.
o In the conveyance from Dixon to H&G the cause of action was
transferred/assigned and H&G can therefore sue Connelly

Recording Acts
Earl v. Fisk Nancy Fisk > Benjamin for life, then Mary Fisk (deed was never recorded)
- Nancy dies. Benjamin (grantor) sells to Earl (subsequent purchaser)
1. Race Recording Statute (2 states) protects subsequent purchaser who is the first to record
- If Earl records his deed first, he will become the owner and Mary is stripped of title.
2. Notice Recording Statute (Half states- no majority rule)
- Protects subsequent purchaser, who paid value, who at the time of purchase, is without
notice of the earlier claim then the other potential owner is stripped of title
- 1. Actual Knowledge
- 2. Constructive Knowledege
o If there was no recording, you probably wouldnt have constructive knowledge
o If you don't check the public records you are charged with whatever information
the records would have revealed. You have a legal obligation to check.
o Must be properly recorded Messersmith v. Smith
- 3. Inquiry Notice
o Duty to investigate if a reasonable person would be suspicious under the
circumstances. Duty to then conduct a reasonable investigation, one that a
reasonably prudent person would have conducted under the circumstances
3. Race- Notice Statute (NY RULE)
- Protects subsequent purchaser, (any value more than nominal and must extend value
simultaneously to receiving interest), who at the time of purchase did not have notice,
and was also the first to record then the other potential owner is stripped of title.
4. If neither party is protected by a statute (intestacy, will, gift, etc, or if both dont record), we
go back to the common law rule = first in time, first in writing.
**Keep in mind- A later purchaser can independently claim rights, or claim superior rights
from predecessor.
Hypo
- Florida fraud scheme. O > A. O > B (neither of which are recorded)
- In a notice jurisdiction B is the owner because they are subsequent to A and had no notice
- In a race-notice jurisdiction, B is not protected because they have not recorded. A is not
protected either because they are not a subsequent purchaser
o Where neither party is protected, go back to the common law doctrine = first in
time, first in writing owner would be A
- In a race statute, same would occur common law doctrine A is the owner
o So B realizes then records. They are now protected. They are subsequent and
they paid value.
Waldorff Insurance v. Eglin National Bank

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Eglin held a mortgage and wanted to start a foreclosure action against X. Waldorff had a
contract that preceded the mortgage. Eglin wants to cut off any interests anyone has in
the property.
Eglin says they are a subsequent purchaser without notice (they should be free from
Waldorffs rights).
o No recording = no constructive notice
o There was inquiry notice though Waldorff was in possession of the property
MAJORITY RULE: actual possession is inquiry notice to the world
o You are put on inquiry to ascertain the rights of the occupants of the premises
o If you then investigate and find out that the person has a lease, you have to do a
further investigation and ask them if they have any other rights in the property.
o Doesnt matter how inconvenient. If you buy an apartment building, you have to
ask all the tenants what rights they have in the property.
o If one tenant in the building have an option/right to buy the building, and you
have not been told of their option to buy, and that option precedes your purchase,
you don't take free of it, because you have a duty to ask each tenant what rights
they have in the property. You take subject to their rights.

Real Estate Financing

Residential Loans- Normally self-amortizing(pay off principal and interest w/in term) and
recourse(personally liable in case of default)
Commercial Loans-Non amortizing (results in balloon at end) and non-recourse(they just sell,
not personally liable)
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Two documents in a real estate financing transaction

o 1. Promissory Note
Contractual obligation to pay off the debt
If there is a default and the foreclosure sale doesnt yield enough money to
repay the debt, there is still a cause of action against the promissory note
o 2.Mortgage (fixed rate -same rate forever)(adjustable rate- 5 years same, than up
Lien on the real estate
Imposes several obligations on the homeowner
Duty to pay real estate practices, keep insured, keep good repair
Allows for acceleration where there is a default
MAJORITY RULE AND NY RULE: Security interest created is the
Mortgage. Mortgagor(homeowner) retains title to the real estate, and the
mortgagee receives a lien on the real estate.
MINORITY RULE: there is a borrower, the lender, and the trustee
Trustee receives title to the real estate (but only in form and not in
substance). The transfer of title, in substance is really just a lien on
the real estate.
At default, the trustee has the right to bring foreclosure.
Called Deed of Trust
Remedies for default (lender never wants default- costly)
- 1. Workout (i.e., loan modification)
o (a) Extend the term (monthly payments thereby become less)
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o (b) Lower the interest rate

o (c) Delay foreclosure proceeding if borrower can pay later (i.e., lost job)
o (d) Principle forgiveness (if lender knows they wont get much at foreclosure,
they might just agree to remove a certain amount off the loan).
- 2. Deed in lieu of foreclosure (immediate transfer of title to the lender)
o Allows for a quicker transfer than foreclosure (plus, borrower might be destroying
the home). Loan is written off in exchange for title
Benefits to the lender = limits delay of foreclosure action
Borrowers benefit = your debt is written off
- 3. Foreclosure- last resort (two types)
o 1. Judicial foreclosure action (only type of foreclosure in NY)
Lender has the right to the deficiency (difference between the outstanding
debt and the amount attained at foreclosure)
o 2. Non-judicial foreclosure (power of sale) quicker
Deed of trust might give the lender the right to sell at a public auction
without judicial action.
All they have to do is notify the borrower of the public sale
The catch: lenders don't have the right to deficiency in the power of sale.
The borrower is not liable for the difference between the debt owed and
the sale at the foreclosure sale.
NY DOES NOT HAVE POWER OF SALE
Paths of a Foreclosure Sale in NY
- After default notice, there is a 90-day pre-foreclosure notice. If the borrower does not
remedy the default somehow, then there is an acceleration letter. If not paid, the
foreclosure initiates. There is there a court proceeding.
o Answer is due. You can answer and assert a defense
Settlement conference is necessary at this point, even if useless. 60 days
If you don't answer > order of reference
Court appoints referee
o 1. Referee computes the amount owed by borrower
o 2. Referee conducts the public sale of the property
Lender files and schedules the sale
Public auction ensues. Often borrowerer
bids (commercial, get it cheap)
o Then an action for Deficiency
(difference between outstanding
principle and FMV)
o Than referees deed (QC) or trustees
deed(QC)
DODD Frank- See if lender made loan and collected in bad faith. Lender
did not make good faith attempt to see if I could repay.
-

If there is a second mortgage of the property, the lender would want to name any holder
of a junior lien as a defendant along with the borrower. Lenders want the property free of
liens. Lender wants to terminate their interests

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o If it is a commercial shopping center, or an apartment building, with tenants, you

name the tenants as defendants if they have a subordinate interest to terminate
their leases.
o The issue is that the commercial tenant might have long-term leases
Such leases would not be later in time. This is why 99% of mortgages
have subordination agreements:
o My lease is subject and subordinate to any existing loan
on the property and any future loan that may be placed on
the property.
Tenants are always subordinate and second mortgagees are subordinate
and their leases are terminated.
Hypo
- We have Bob and Betty who bought the house for $200,000. The mortgage loan is
$150,000, but they didnt have $50,000 to put down. So the received a first mortgage
line of $150,000 and they got a $30,000 loan (this is subordinate to the mortgage)
- They have a first mortgage of $150,000 and a second mortgage of $30,000
- There is a foreclosure and the house goes for $100,000
o The claimants are the holders of the first mortgage. The defendants are the
holders of the second mortgage, and the buyers (B&B)
o How is the money divided? Lien priorty- first in time, first in right
Holder of the first mortgage is paid first. The costs of the foreclosure
proceeding (court costs) are paid first. Then the rest goes to the holder of
the first mortgagee (which is the remaining principle and any interest).
The first mortgage was due $130,000
o The entire $100,000 foreclosure would go to them. Then
they would seek a deficiency action for the rest
The second mortgage was still owed $25,000
o They would get nothing if the house goes for $100,000.
They have to sue for a deficiency judgment
What if the sale price was $160,000
Holder of first mortgage gets paid first. They are paid their
$130,000. Then the second mortgagee gets their $25,000. The
remaining $5,000 would go to the buyers.
o What constitutes a default under the first mortgage? You need a default to
have acceleration in order to get the full $130,000
It could be failure to pay second mortgage or taxes, or something else.
These are all events of default
Not paying the second mortgage is a default on the first mortgage and they
can accelerate and then they are still first priority.
Due on sale provisions- For residential, whenever property is sold, outstanding payments
are due. Commercial, they can assume.
Takes subject to- Purchaser not liable for other owners past debt.
Assumption- Promiser promises to pay off debt.
Right to Redeem (protects the borrower)
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1. Equitable right to redeem (exists in all 50 states)

o The equitable right to redeem ends when the property is sold in the foreclosure
sale (the right to redeem is what is being foreclosed)
o It is the right to take the property out of foreclosure. Can be done at any step in
the proceeding after the order of reference is sought.
o It isn't the greatest protection for the borrower though because in order to redeem,
the buyer must pay the lender all of the unpaid principle, interests, and costs of
the foreclosure action..
o But for commercial, because its non-recourse, hes not personally liable and may
want to buy back.
2. Statutory right to redeem (about half the states allow this) - very protective of
borrower
o It is the right to stop the transfer of title of the property
o It allows the borrower to take back the property months after the foreclosure sale
(the amount of time after depends on the jurisdiction could be 3 months, or 18)
Step 1: Foreclosure sale (not an immediate transfer to the bidder)
Step 2: Owner in default remains the owner
Then 3, or 18, months later, is the title actual transferred to the
highest bidder right to redeem ends.
Step 3: Amount you pay in order to redeem
In some states it is the entire unpaid sum
In other states it is the highest price bid at the foreclosure sale
Bean v. Walker
o Emphasizes how important the courts believe the right to redeem is
o Here, it was not a mortgage, nor a loan. It was an installment sale
$15,000 15 year contract where the purchaser would make all the
payments for 15 years and then, and only then, would they get title.
The contract said that where there is a default, the purchaser does
not get title, and the amount they paid thus far, here $7,000, would
be considered liquidated damages. Owner keeps the property
o The court recharacterizes the entire agreement as a mortgage lien (held by the
owner) and the court affords the buyer all the protections that a mortgage would
offer.
One such right is the right to redeem.
Now, the total sum due is $8,000. As long as the purchaser pays
the $8,000 they will receive title.
The seller cannot exercise the contractual right to terminate. The
buyer has their right to redeem.

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