Property 2 Outline Keyed To Dukeminier/Krier 6 Ed. UMKC, June Carbone Spring 2010

Gilmore Property 2 Outline
Keyed to Dukeminier/Krier 6th Ed.

UMKC, June Carbone Spring 2010
I Transfers of Real Property
Includes:
 Contract of Sale
 The deed by which title is transferred
 Financing device
A Contracts for Sale. To be enforceable, a contract to convey real property must satisfy
the Statute of Fraud. The purpose is to convince someone that the transfer has
occurred and in the process prevent fraud.
(1) Statute of Frauds—applies to all transfers of real property by gift or by sale. At a

minimum, the memorandum of sale/gift must be:
(a) Signed by the party to be bound (the party seeking enforcement)
(b) Describe the real estate
(c) State the Price/Method of arriving to the price.
(2) Exceptions to the Statute of Frauds. There are 2 principle exceptions to the SOF
requirement.
(a) Part Performance—allows the specific oral agreements when particular

acts have been performed by one of the parties to the agreement. Acts
held to constitute part performance vary from jurisdiction to jurisdiction.
1 Theory 1—(strict common law doctrine) Unequivocal evidence of

a contract. Acts of the parties substantially satisfy the evidentiary
requirements of the SOF if the acts make sense only as having
been performed pursuant to the oral agreement. Such as:
a Payment—all or part of the purchase price
b Possession—in physical possession
c Improvement—above general husbandry
2 Theory 2—(reasonable reliance) prevents injurious reliance on the

contract; if the pl. shows that he would suffer irreparable injury if
the contract were not enforced, then the buyer’s taking possession
alone is sufficient to set the court in motion. The modern trend is
to require proof of:
a an oral contract and

b reasonable reliance on the contract—enough reliance that

it would be inequitable to deny specific performance.
c Hickey v. Green- Green orally agreed to sell Hickey a

building lot for $15k and accepted but did not deposit
Hickey’s ck for part payment. Hickey sold his house
expecting to build a new house on the lot. Ms. Green
refused to complete the sale. Court held that Hickey’s
reliance was reasonable and that equity required specific
performance of the oral sale contract unless the Hickey’s
agreement to sell their house fell through (in which case
they’d receive restitution).
d No reliance—Walker v. Ireton—Ireton orally agreed to sell

his farm to Walker for $30k. Parties discussed a written K
but no K was every prepared. When Walker asked for a
written K, Ireton assured Walker he was honest and none
was needed. Walker gave Ireton a $50 ck as part payment
and Ireton accepted, but did not cash the ck. Walker then
sold his own farm without ever mentioning to Ireton of his
intent to do so. Ireton refused to convey. Court ruled for
Ireton. The delivery of the check was not sufficient part
performance to remove defense of SOF, and Walker’s sale
of his own farm was not reasonable reliance on the oral K
because the parties neither discussed that action nor was
it foreseeable by Ireton.
(b) Equitable Estoppel—May be used to enforce an oral sale K if the seller

has caused the buyer reasonably to rely significantly to his detriment
upon the seller’s oral agreement to sell. Similar to Theory 2 of Part
Performance
(c) Specific Performance—Injunction
1 Irreparable Injury
2 Balance of the Hardships—who is in the better position to avoid

the loss, and equitable compensation.
(3) Implied in any contract to sell real property is the obligations of:
(a) Good Faith—each party is required to act in good faith in discharging the
express duties of the K. Failure to do so will result in default.
(b) Timely Performance and Closing—most contracts state the date of

closing(the completion of the transaction) but if the closing does not occur
on the specific date, it still may be enforced in equity if full performance is
tendered within a reasonable time after the closing date. To get around
the lingering uncertainty add the term— time is of the essence—this
expressly makes time an essential term of the agreement, a party able
and willing to perform on the closing date is relieved of any future

obligations under the sale of the K if the other party fails to perform on the
required closing date, and
(c) Delivery of marketable title. See B
(4) Brokers and Agents—
(a) Brokers. Brokers (listing agent) are hired by sellers to sell the property on
the terms and for a commission as specified by the listing agreement.
Commission is earned when a broker has produced a buyer who is ready,
willing, and able to purchase on the terms of the listing agreement or
other terms acceptable to the seller.
1 Majority—in majority of jurisdictions, the broker is entitled to his

commission if the deal falls through regardless of the seller’s or
buyer’s default.
2 Minority—if the deal falls through because of the seller’s default or

the seller refuses to sell on the terms of the listing agreement the
broker is entitled to the commission anyway; but if the buyer
defaults, no commission is earned.
3 Duties—a listing agent is the seller’s agent and owes to the seller
all of the fiduciary duties that come with an agency relationship.
(b) Licari v. Blackwelder—The broker was charged with having withheld from
his client the fact that he was negotiating the sale of the property to a 3rd
party even before he purchased it; failed to exercise his best efforts to
obtain the best price for his client; and misrepresented other facts.
(5) Assurance of Good title—There are 3 ways a Buyer is assured of getting good
title to property.
(a) Certificate of Title—The attorney does a direct search of title
(b) Abstract of Title—the abstractor assembles all of the pertinent records

and abstracts or abbreviates their contents. The abstractor is usually the
Title Company
(c) Local Title Insurance—Issued by a corporate insurer on the basis of a

certificate furnished by the local attorney. You are being insured on the
original purchase price and if there is something wrong; you would have
to pay extra if you want to get the appreciated market value. Advantages
include—substitution of K liability for tort liability; and the replacement of a
mortal individual assurer by an immortal corporation and some additional
protections against defects of the title not appearing on the record.
(6) Lawyer’s Role—role in the sale of commercial property is greater.

B Marketable Title. Every real estate contract contains the implied duty of the seller to
supply title free and clear of encumbrances. If the seller cannot convey a merchantable
title to the buyer, the buyer is entitled to rescind the K. The law implied the duty to
deliver. The obligation can be expressly disclaimed by agreement between the buyer
and the seller. Any defect must be substantial and likely to result in injury to the buyer.
(1) Proof of Marketable Title. A seller can deliver marketable title by either:
(a) Production of good record title—a recorded chain of title , showing

unbroken transfer of title from some original root of title in the past to the
seller, with no recorded encumbrances (e.g., mortgages, liens,
easements, or servitudes) or
(b) Proving Title by Adverse Possession—either through a successful quiet

title action or evidence sufficient to establish that the rival claim to title
would not succeed if asserted and that there is no real likelihood that nay
claim will ever be asserted.
(2) Defective Title. The defect in title must be substantial and likely to injure the
buyer. Defective title does not always prevent the transaction from taking place.
Common defects of title include:
(a) Defective chain of title—the chain of title may have a faulty or nonexistent
link. (e.g., describes the wrong land.)
(b) Encumbrances—an encumbrance is a burden on title, such as a

mortgage, judgment liens, easements, or covenants.
(c) Zoning Restrictions—use limits imposed by public authority through

zoning laws are not regarded as encumbrances on title. The rationale is
that all property is subject to the lawful regulation of a public authority,
and that all land titles implicitly incorporate such use limits. However, if
the existing use of the property violates a zoning ordinance the title will be
held unmarketable on the theory that the buyer could not possibly have
intended to purchase a violation of law and consequent liability.
(3) Lohmeyer v. Bower. Bower and Lohmeyer entered into a written agreement by
which Bower agreed to sell and Lohmeyer agreed to buy a one-story wood-frame
house in KS. The lot was burdened by a covenant requiring all residences
constructed on the land to be 2-stories tall. The Court stated that the mere
existence of the covenant restricting use is an encumbrance making title
unmarketable. Only because Lohmeyer had agreed to take title “subject to all
encumbrances of record”, did the mere existence of the covenant not make title
unmarketable; however, Lohmeyer did not agree to accept existing violations of
the covenant. The present and continuing violation of the ordinance sufficiently
exposed Lohymeyer to the hazard of litigation to make the title unmarketable.
Those existing violations make title unmarketable.
2 exceptions exist:
(a) An easement that benefits the property (utility easement)
(b) If the sale K specifies a particular use that is permitted by the restrictive
covenant. (The buyer has bargained for a specific use, not all possible
lawful uses).
(4) Default and Remedies. Default occurs when one party has tendered
performance in time, and demanded timely performance from the other party,
and reciprocal performance is not forthcoming. Remedies include:
(a) Specific Performance—Because land is unique, damages may be

inadequate.
1 Sought by Buyer—are generally able to demand specific

performance. If the seller’s title is defective, and the buyer still
wants the property, the buyer is entitled to abatement of the price
to reflect the diminution in value attributable to the defect.
2 Sought by Seller—traditionally have been able to demand,

however the trend is to deny the sellers specific performance if
they are still able to sell the property at a commercially reasonable
price. A seller entitled to specific performance will be required to
reduce the price if there is an insubstantial defect in title. If the
defect is substantial then the title is not marketable, and the seller
is not entitle to specific performance.
3 Equitable Conversion—if a contract is specifically enforceable, this

doctrine operates to treat the buyer as the equitable owner from
the moment the K becomes effective, even if title passes later.
a Majority—The risk of loss is on the buyer from that moment

on.
b Minority—the risk of loss is on the seller until the legal title

is conveyed.
c. Massachusetts—Risk of loss on the seller if the loss is

substantial and the terms of the contract show that the
building constituted and important part of the subject
matter of the contract; if the loss is not substantial, either
party can enforce the contract, though an abatement in
purchase price may be given.
Parties should explicitly agree who bears the risk of loss until title
passes and express that agreement clearly in the sale K.
In inheritance, equitable conversion has been applied when one of

the parties to a contract for the sale of land dies and there is an
issue about the decedent’s interest is real property or personal
property. If equitable conversion has occurred, the seller’s interest
is personal property (right to purchase price), and the buyer is

treated as owner of the land. ?
(b) Rescission—If the seller breaches, the buyer may elect to rescind,
recover his partial payments already made, and “walk away” from the
deal. If the buyer breaches, the seller may elect to rescind the contract
and sell the property to another party. The rescission right does not ripen
until the closing date, however, because either party has until then to
tender performance. An attempted rescission prior to the closing date is
not only ineffective but is a breach of the sale K.
(c) Damages—if the pl. does not want (or cannot obtain) specific
performance she may obtain money damages. Damages include:
1 Benefit of the Bargain—the measure of damages gives the

aggrieved party the difference between the K price and the fair
market value of the property at the time of the breach. This is not
the future value but the value as of the date of the breach.
2 Jones v. Lee— the Lee’s entered into a K to purchase the Jones’s

home for 610K and then unjustifiably refused to perform. Jones
later sold the house for 540K and sought to collect 70K difference
from the Lees. The award of special and punitive damages was
upheld, but the award of compensatory damages was vacated
and the case remanded to determine whether the fair market
value of the house on the date of the breach had declined. The
Court instructed in making the determination, the latter sale for a
lesser price may be considered evidence of the market value at
the time of the breach, and should be considered with all other
relevant evidence.
3 Deposit Retention—Common law rule—is that a seller may elect

to retain the entire deposit made by the buyer in the event of the
buyer’s breach, even if the deposit exceeds the actual damages to
the seller. Economic Efficiency—criticizes this rule an unfair and
inefficient because it entitles the seller to a windfall and it deters
efficient breaches. Minority—limits retention of the buyer’s deposit
to the actual damages incurred by the seller, unless the parties
have agreed to retention as liquidated damages.
a Kutzin v. Pirnie—Pirnie’s agreed to purchase the Kutzins’

house and deposited $36K toward the purchase price.
The K contained no liquidated damages provision. After
the Pirnies unjustifiably failed to perform the Kutzins
sought to retain the entire deposit. The court placed the
burden of proof upon the party in breach and stressed that
the rule was limited to real estate K that did not dispose of
the deposit of liquidated damages. Court abandoned
common law rule in favor of economic efficiency and unjust
enrichment.
4 Out-of-Pocket—Limits the exposure of the seller who breaches

innocently (breach in good faith).
a ½ states limit damages awarded against a seller who has

breached in good faith to the actual money that the buyer
has expended in reliance and interest and fees incurred
with obtaining a loan.
b ½ states make the good faith seller in breach liable for the
entire benefit of the bargain.
5 Liquidated Damages—Sellers typically protect themselves against

a buyer’s breach by stipulating in the K that the buyer’s deposit
may be retained as liquidated damages in the event of the buyer’s
breach. This is enforceable as long as there is some reasonable
relationship between the deposit amount and the actual damages
suffered by the seller.
C Duty to Disclose. The common law rule is that absent a fiduciary relationship, a seller
has no duty to disclose know defects in property.
(1) Common Law View—Caveat Empetor (Buyer Beware, buy at your own risk) The
seller’s duty was to refrain from intentional misrepresentation—the outright lie
about the property’s condition. Active concealment of know defect. Caveat
Empetor was justified on the theory that buyers ought to use diligence and care
to examine the property for themselves—Caveat Empetor has been abandoned
today.
(2) Fiduciary Relationships—if the parties were in a fiduciary relationship—a

relationship where one party is dependent upon and has special trust in the other
—the fiduciary is obligated to reveal all defects know to him. This duty arises
from the fiduciary’s obligation to place the other party’s interests ahead of his
own.
(3) Imposition of the Affirmative Duty—the trend is that silence can operate as a
misrepresentation since other areas of the law have taken this step. The modern
rule equates nondisclosure with fraudulent misrepresentation, imbedded in the
elements of the modern rule. If there is a defect that the seller does not know
about then they do not have a duity to disclose because they don’t know anything
about it.
(a) Material Defect—Standards applied.
1 Objective—whether a reasonable person would attach importance

to it in deciding to buy
2 Subjective—whether the defect “affects the value or desirability of

the property to the buyer.” The mind of this particular buyer.
(b) Undisclosed Defects—Standard applied. What are the remedies for the
breach of the seller’s duty:
1 Ability to rescind
2 Have the seller correct the defects
3 Sue for damages
(4) Disclosure of seller-created conditions—the seller is obligated to disclose

conditions that:
(a) Are created by the seller

(b) Materially impair property value
(c) Are not likely to be discovered by a reasonably prudent buyer using due
care.
(d) Stambovsky v. Ackley. Ackley owned a home, and repeatedly publicized

various abnormal phenomena that had occurred in the house,
encouraging the reputation of the house as haunted by ghosts.
Stambovsky agreed to buy the house and then learned that the house
was reported to be possessed. He sought to rescind the K. NY Ct.
stated that caveat emptor did not apply because the seller promoted the
property’s reputation and that the reputation was likely not to be
discovered by a reasonably prudent buyer (inspection may not reveal the
presence of ghosts) therefore, the reputation materially impaired the
value of the K.
(5) Latent Material Defects—Majority rule—the seller must reveal all latent material
defects. Latent Material Defect is a defect that:
(a) Materially affects the value or desirability
(b) Is known to the seller (or only accessible to the seller)
(c) Is neither known to or within the reach of the diligent attention and
observations of the buyer.
(d) Johnson v. Davis. The Davises purchased Johnson’s house, moved in,
and learned within a few days the water leaked in around the windows
and from the ceiling in 2 rooms. The Davises sued to rescind. The court
found the Johnson misrepresented when they told the Davises that the
roof was sound and therefore, were liable for fraud. Also, Johnson was
obligated to disclose any facts know to him or accessible only by him that
materially affects the value or desirability of the property and which are
either unknown to the buyer or cannot be learned by diligent search.
(6) Misrepresentation—in all cases in all jurisdictions there is a duty not to

misrepresent.
(a) Misrepresentation—is a statement in which the seller can expect the

buyer to rely to his detriment. The critical element is reliance (looks like
estoppel).
(b) Seller always has a duty not to make a material misrepresentation.
(c) If you don’t disclose and you a blanket “as is” clause, the clause will not
cover latent material defects. However, an “as is” clause that is
accompanied by full disclosure is enforceable, as long as what is
disclosed is in reasonable contemplation of the buyer.
(7) Implied Warranty of Quality—
(a) Traditional View 1—a builder had no liability to anyone for his poor
workmanship unless he had given an express warranty of quality.
(b) Traditional View 2—a builder’s warranty of quality is implied into the K
between the owner and the builder but the builder’s liability for economic
loss resulting from the breach of this warranty was limited to those with
whom he was in privity of K –the immediate purchaser of the structure
from the builder or the owner with whom the builder contracted.
(c) Modern View—Implied warranty of quality by the builder of a new home

that may be enforced by subsequent purchasers of the structure.
(d) Lempke v. Dagenais. Dagenais build a garage for owners of property

who then sold the property to the Lempkes. Shortly after the Lempkes
took possession they noticed severe structural problems with the roof of
the garage. After some attempts to persuade Dagenais to repair the
garage the Lempkes sued Dagenais for negligence and breach of an
implied warranty of quality. The court concluded that when a builder sells
his structures a warranty of workmanlike quality is implied by law and
runs for the benefit of subsequent purchasers with respect to latent
defects that become apparent after the remote purchaser acquired title
and which could not have been discovered prior to the remote
purchaser’s acquisition.
1 No disclaimer—the Implied warranty of quality in favor of

subsequent purchasers may not be disclaimed.
2 Limitations period—Courts permit subsequent purchasers to bring

suit against the original builder for a “reasonable time”—usually a
period long enough for latent defects of the original construction to
become apparent.
3 Subsequent Owner’s Liability—the owner of a home who is not

the builder has no liability based on the implied warranty of quality.
Only the original builder is liable on that theory, but a seller may
be liable for breach of duty to disclose a known defect.
D The Deed. What you get after the sale is complete.
(1) Components—A deed is the usual method by which title is transferred.
(a) Writing Required—the SOF requires a writing signed by the grantor in

order to transfer an interest in land. Because the grantor is the only party
bound by the deed (distinguish from the K of sale) only the grantor needs
to sign the deed.
(b) Notarial Acknowledgement—Notary public attests to the grantors

signature and identity. A deed is valid without it though.
(c) The Grant—the first clause of the deed is the granting clause, which
recites the parties, the words effecting the grant, the consideration, and
the description of the property.
(2) Warranties of Title—A seller’s warranties concerning the state of the title
conveyed are expressly contained in the deed. No warranties are implied.
(a) Types of Deeds:
1 General Warranty Deed—deed guaranties the 6 present and

future covenants concerning title (see below). Each covenant is a
promise that title is absolutely free of the warranted defect,
regardless of whether the defect arose before or during the time
the grantor had title.
2 Grant Deed—in some jurisdiction when the deed states, “I grant”

the use of the word grant comes with 2 warranties:
a The covenant against encumbrances
b The covenant of seisin.
3 Special Warranty Deed—warrants that there are no defects in

title created by the grantor. This deed type contains the same 6 or
fewer covenants of the general warranty deed. the only difference
is that the grantor warrants against defects of title that arose
during the grantor’s time of holding title. Defects arising before
the grantor’s ownership are not covered.
4 Quitclaim Deed—contains no warranties, this deed operates to

convey to the grantee whatever interests in the property that the
grantor may own. The usual function is to remove apparent and
uncontested defects in title without resort to litigation.
5 Merger Doctrine—Traditional rule—any promises in the K of sale

with respect to title are “merged” into the deed once the buyer
accepts the deed. The buyer can only sue for breach of the deed
covenants of title and may not rely on the K of sale’s provisions
with respect to title. Exceptions: fraud, promises deemed

collateral to the deed. Merger doctrine now in disfavor—avoid it
by saying that the obligation in dispute is a independent or
collateral obligation.
(b) Deed Warranties:
1 Present Covenants—a present covenant is broke, if ever, at the

time the deed is delivered (the date of the closing). SOL begins o
toll o the date of the delivery of the deed. The following are
present covenants:
a Covenant of Seisin-- Grantor warrants that he owns the

estate that he purports to convey. Breached if the grantor
does not in fact own what he purports to convey regardless
of whether he is aware of the defect or not.
b Covenant Of Right To Convey—The Grantor warrants that

he has the right to convey the property. Breached if the
grantor lacks to power and authority to convey the interest
whether or not he is aware of the limits on his authority to
convey.
c Covenant Against Encumbrances—The grantor warrants

that there are no encumbrances on the property.
Breached if the title is encumbered at the time of delivery
of the deed, whether or not the owner is aware of the
encumbrance.
d Frimberger v. Anzellotti. DiLoreto owned property abutting

a tidal marsh. He constructed a bulkhead, filled a portion
of the marsh, build a house, and sold it to Anzellotti by
quitclaim deed. 2 years later, Anzellotti conveyed the
property to Frimberger under a general warranty deed.
when Frimberger sought to repair the bulkhead he learned
that a significant portion of the lot unlawfully encroached
on protected wetlands. Rather than seeking a variance fro
the use regulation, Frimberger sued Anzelloti on the
covenant against encumbrances. The court held that
“latent violations” of governmental land use regulations
that do not appear on the record, and are unknown to the
seller because no official action by the govt. has compelled
compliance, at the time the deed was executed, and that
have not become an interest do not constitute an
encumbrance.
i. prevailing rule is that violations of governmental

land use regulations that are not known to the seller
and which have not become the subject of

government enforcement are not encumbrances.
2 Future Covenants—promises the Grantor will do some act in the

future, such as defending against claims of 3rd parties or
compensating the grantee for loss by virtue of failure of title. A
future covenant is not breached until the grantee or his successor
is evicted from the property, buys up the paramount claim, or is
otherwise damaged. SOL begins to toll at the time of eviction or
when the covenant is broken in the future. The following are
future covenants.
a Covenant Of General Warranty—The grantor warrants that

he will defend against lawful; claims and will compensate
the grantee for any loss that the grantee may sustain by
assertion of superior title.
b Covenant Of Quiet Enjoyment—The grantor warrants that

the grantee will not be disturbed in possession and
enjoyments of the property by assertion of superior title.
This covenant is usually omitted from general warranty
deed because it mirrors the covenant of general warranty.
c Covenant Of Future Assurances—The grantor promises

that he will execute any other documents required to
perfect the title conveyed. Usually dropped from general
warranty deeds because of its open-ended obligation
imposed on the seller, or because it adds little to the first 4
covenants, or because the doctrine of after-acquired title
has made this covenant redundant.
d Brown v. Lober. Bost conveyed 80 acres to Brown under a

general warranty deed containing no exceptions, even
though Bost only owned 1/3 of the mineral rights. After the
SOL on the present covenants had expired, Brown agreed
to sell the mineral rights to Coal for $6K, but was forced to
accept only $2K once it learned that Brown only owned 1/3
of the mineral rights. The ct. found that Brown had not be
constructively evicted because the mere existence of a
paramount title does not constitute a breach of the
covenant of quiet enjoyment. If the owner of the other 2/3
of the mineral rights were to start mining coal under
Brown’s land, Brown would be actually evicted. If , in order
to prevent a real and manifest the threat of mining, Brown
purchased the other 2/3 of the mineral rights from the
owner, Brown would be constructively evicted, but if Brown
purchased the other 2/3 of mineral rights without such

threat it would probably not constitute a constructive
eviction.
e To have a adverse possession claim the injured party must

start to do the activity claimed in violation (i.e., mine the
minerals themselves thus tolling the SOL and carrying the
other elements of Adv. Possession).
3 Breach of Future Covenants—Breached only when the grantee’s

possession has been disturbed by someone holding superior title.
That can occur years after the original transfer and after the SOL
has barred suit on the present covenants.
a Benefits runs with the estate. If there is privity of estate b/t

the original grantor and the remote grantee the benefit of
the future covenant given to the original grantee runs with
the estate conveyed to the remote grantee.
i. Privity of estate—that the original grantor conveyed

either title or possession and the same interest was
conveyed to the remote grantee. If the original
grantor had neither title nor possession there is no
estate created which the covenant can run. After-
acquired title (estoppel by deed)—created because
the rule insulates wrongdoers from liability to
remote grantees. Courts will grant an “estate” held
by the original grantor and passed on to the remote
grantee , usually off the mere possibility that the
original grantor might later acquire an interest that
would be passed on to the remote grantee.
ii. Obligation to Defend—The covenant of general

warranty imposes no obligation of the grantor to
defend against spurious claims of paramount title.
The effect is to require the grantee to defend. Once
the 3rd parties paramount claim becomes lawful, the
grantee will be able to recover the costs of defense
plus damages. But if the 3rd party claim is
defeated, the costs of defending are entirely on the
grantee.
b Assignment of present covenants.
i. Majority rule (American rule)—is that a present

covenant is for the benefit of the immediate grantee
and that , if breached when made, the grantee has
a chose in action (right to sue) that is not impliedly
assigned if the grantee conveys to a remote
grantee.
ii. Minority rule (English courts)—that a transfer to a

remote grantee implicitly operates to assign the
grantee’s chose in action to the remote grantee.
c Rockafellor v. Gray—Connelly acquired title to 80 acres at

a foreclosure sale, then conveyed the property by general
warranty deed to Dixon, who in turn conveyed by special
warranty deed to H&G. The foreclosure sale was invalid
so Connelly never owned the 80 acres and thus breached
the covenant of seisin given to Dixon, but because Dixon
had conveyed by special warranty he had not breached
the covenant of seisin the had given to H&G. H&G sued
Connelly on the covenant of seisin he had given to Dixon.
the Ct. ruled that Dixon’s chose in action was impliedly
assigned to H&G by the conveyance to H&G.
4 Damages for Breach—Majority rule is that the grantee may not

recover more than what the grantor-in-breach received for the
property.
a Suit by the original grantee: Original grantee is limited to a

return of his purchase price. Courts are split as to whether
interest should accrue from the date of the promise or the
date of eviction.
b Suit by the remote grantee—Most all courts agree that if

the remote grantee has paid more for the property than the
original grantor received, the remote grantee is subject to
the general damage limit and will only recover what the
original grantor received. But if the remote grantee paid
less for the property, courts differ on whether the remote
grantee should recover what the remote grantee paid or
actual damages up to the amount received by the original
grantor.
E Delivery. A deed must be delivered by the grantor in order to be effective to transfer an

interest in land. Delivery means that the grantor has said or done things that can
demonstrate the grantor’s intent to transfer immediately an interest in land to the
grantee. The key is the grantor’s intent, the paper deed if destroyed does not invalidate
the deed, and if delivery is proper the deed is valid. A deed cannot convey a future
interest, a will can.
(1) Presumed Delivery. Courts hold the presumption that delivery has occurred
under any of the following:
(a) Physical Transfer to the grantee
(b) Notarial Acknowledgement of the deed, or
(c) Recording of the Deed.
Courts also hold the presumption that no delivery has occurred if the grantor
retains physical custody of the deed.
(d) Sweeney v. Sweeney. Maurice Sweeney, estranged from his wife Maria,
wished to ensure that upon his death his brother John would take
Maurice’s farm and tavern, rather than Maria. Maurice executed and
recorded a deed of the property to John, and John executed a deed of the
property to Maurice, which was not recorded. Both deeds were prepared
at the same time by the town clerk, who gave the originals to Maurice.
Maurice gave both deeds to John. When Maurice died, Maria contended
that the unrecorded but fully executed deed from John to Maurice had
been delivered to Maurice and operated to vest title in Maurice.
Accordingly, she claimed her elective share in Maurice’s estate, including
the farm and tavern. John asserted that there had been no delivery
because he had never intended to deliver the deed to Maurice or, in the
alternative, that there was an oral condition attached to the delivery. The
court ruled that because the John-Maurice deed had been manually
delivered to Maurice there arose the presumption of delivery, which was
not rebutted by the fact that the motivation of John and Maurice was to
defeat Maria’s elective share by ensuring that title to the farm was in John
at Maurice’s death, but to cause title to return to Maurice if and only if
John died before Maurice.
(2) Attempted Delivery. An attempt to deliver a deed:
(a) At the death of the grantor is almost always ineffective. If the grantor
intends that the deed become effective only upon his death, the deed is
void unless it can be admitted as a will. (Usually void by the Statute of
Wills).
(b) During his life, the grantor’s death does not destroy the delivery already
accomplished by that intent to be effective during his life.
(c) Rosengrant v. Rosengrant. The Rosengrants (childless) owned a farm

which they wished to convey to their nephew, effective at their death.
They executed a deed of the farm (during their life, thus creating a life
estate?) which they handed to the nephew, the nephew then handed to
the banker for safekeeping. They instructed the banker to keep the deed
until they died, then give it to the nephew to be recorded. the banker put
the deed in an envelope marked with both parties name (the rosengrants
and the nephew) and kept it in a bank vault. After their death, the
nephew retrieved and recorded the deed. The court cancelled the deed
stating that it was never delivered during the Rosengrants lifetime
because there was never intent to give “outright ownership” at the time of
delivery. The bank’s policy to write both parties name on the envelope
provided justification.
F The Mortgage—NOT ON THE EXAM—THANK YA LAWD!
G Title Assurance. How current owners can obtain assurance that they actually have
good title to the land they purchased.
(1) Recording Acts—the recording system developed to keep record of deeds and
mortgage demonstrating title to real property. The purpose to provide certainty in
the real estate transaction—our market system would not work if the buyer didn’t
believe that when he bought a property, he actually owned it. Recording acts
apply if:
(a) The grantee is protected in that jurisdiction
(b) The document can be recorded.
(2) Types of Recording Acts—
(a) Race Statute—the concept of underlying the earliest type of recording

acts—a race statute—was literally a race to the county courthouse to be
the first one to record the conveyance. Notice of a prior transfer of an
interest in property is irrelevant. (2 states still have this North Carolina
and Louisiana).
1 Recordation cuts off the possibility that either a prior unrecorded

purchaser or a later purchaser could prevail.
(b) Notice Statute—Subsequent bona fide purchaser without notice of a prior

unrecorded transfer prevails over the prior purchaser who fails to record
(1/2 of American states recognize this statute):
1 BFP: one who gives valuable consideration to purchase the

property and is without notice of prior unrecorded conveyance
2 True: even if the subsequent BFP has not recorded.
(c) Race-Notice Statute—Protects subsequent BFPs who lack notice of prior

conveyance and record before the prior purchaser.
1 Encourages Recording
2 Eliminates Disputes over which of the 2 conveyances was first

delivered. .
3 Recordation cuts off the possibility that either a prior unrecorded

purchaser or a later purchaser could prevail.
(3) Consequences of NOT Recording: There are 2 important consequences to

failure to record:
(a) Common law rule applies—If nobody has recorded the common law
principle of “first-in-time, first-in-right” apply, except in a notice jurisdiction
when the subsequent BFP lacks notice.
(b) Grantor can convey good title to a later purchaser: Without recordation,
the grantor is left with the power to convey good title to a later purchaser.
The Grantor may be liable to losing first purchaser for the proceeds
received from the second purchaser.
(4) When is an instrument recorded? To be recorded, an instrument must be eligible

for recording and be entered into the records in a manner that complies with the
jurisdiction’s requirements. Common instances when instrument of the record
that is wholly or partially unrecorded:
(a) Instrument not indexed. The recorder’s failure to index and instrument or
to index it so improperly that I cannot be found by a diligent searcher
using the standard search methods.
(b) Omnibus or Mother Hubbard clauses: A variation on the improperly

indexed instrument is an instrument that accurately describes 1 parcel
and also includes “all other land owned by the grantor in the county”.
These clauses ‘sweep the cupboard bare”. The recorder can only record
this instrument by reference, because it is an unreasonable burden on the
recorder to search the records to identify all the other property owned by
the grantor. They are void against the later purchasers of the grantor’s
property because a diligent searcher of the index will never locate any
reference to the omnibus clause.
(c) Luthi v. Evans. Owens owned interests in 8 oil and gas leases. She
assigned to International Tours her interest in those leases under an
assignment that specifically described each of the seven different parcels
and included an omnibus clause that assigned to Tours Owen’s interest in
“all oil and gas leases” owned by Owens, where or not such leases are
specifically identified by the assignment. The 8th lease was not
specifically described. 4 years after Tours recorded the assignment
Owens assigned her interest in the 8th lease to Burris who obtained an
abstract of title which did not reveal the existence of the omnibus clause
in the Owens to Tours assignment. the court held that the omnibus
clause in the assignment did not give constructive notice to the later
purchaser, Burris.
(d) Misspelled Names—Jurisdictions are divided over whether a misspelled

name in a recorded instrument gives constructive notice. all jurisdictions
agree that if the misspelling is so significant that it does not even sound
like the correct name, there is no constructive notice. the problem that
divides jurisdictions is whether the misspelling that sounds like the correct
name supplies constructive notice
1 Doctrine of idem sonans. Holds that a misspelling that sounds

substantially identical to the correct name gives constructive
notices. This doctrine is NOT the prevailing rule with respect to
the issue of constructive notice from the real estate records.
2 Orr v. Byers. Orr obtained a judgment against Elliott, but Orr’s

lawyers prepared the judgment by spelling Elliott’s name as
“Elliot.” And abstract of judgment, listing the judgment debtor as
“Elliot” or “Eliot” was recorded in CA, and indexed under those 2
names only. Elliott later conveyed property subject to the
judgment lien to Byers and Orr sought to foreclose his lien against
the parcel acquired by Byers from Elliott. The Court held that
idem sonans did not apply in CA., and that the recorded
instrument did not give constructive notice of Orr’s lien. Byer
prevailed. If Byer had actual notice of Orr’s lien he would have
lost.
(5) Notice: to be protected under the notice or race-notice jurisdictions, a BFP must
be without actual or constructive notice at the time they pay the consideration.
(a) Actual Notice—real, actual knowledge of the prior unrecorded transaction.

(b) Constructive Notice—
1 Record Notice: the entire world is responsible for constructive

notice of the contents of the record.
2 Inquiry Notice: what a reasonable person should have known

based upon the facts present. In most states a subsequent
purchaser has the obligation to make reasonable inquiries, and is
charged with knowledge of what those reasonable inquiries would
reveal.
a Record reference to an unrecorded instrument—if a

recorded instrument refers expressly to an unrecorded
instrument, a purchaser is under an obligation in many
states to inquire about the substance of the unrecorded
instrument to which the record refers.
b Harper v. Paradise. Harper conveyed her farm to Maude

for Life, remainder to Maude’s children. The deed was
mislaid and thus not recorded. After Harper died her
children executed a quitclaim deed to Maud by conveying
any interest they may have in the farm (which is nothing).
Maude executed a deed of trust to Thornton for a $50 loan.
Thornton foreclosed after a default and rec’d a sheriffs
deed which she recorded. Then, Thornton conveyed to
the Paradises. Later the deed was found by Maude’s
children who recorded. Her children sued after her death
to recover possession of the property. The court found
that the Paradise’s could not rely on the GA statute
protecting the title of innocent purchasers from heirs who
lack actual notice of prior claims because the Maude-
Thornton deed made reference to the Harper-Maude deed.
Thornton owned only the LE possession of Maude and at
her death the future interest of her children was vested.
(6) Chain of Title Problems. Chain of title is the recorded sequence of transactions
by which title has passed from a sovereign to the present claimant. The period of
time for which records must be searched and the documents must be examined
within that time period. The meaning of chain of title varies from jurisdiction to
jurisdiction.
(a) IF an instrument is improperly indexed, some jurisdictions say that it is not

recorded.
(b) Shelter rule—Deals with the notice, race-notice issue. The only way to
protect a subsequent BFP is to protect further down the chain. Only
when the person would actually be the winner can the people down the
line be protected.
(c) Wild Deeds—A deed which is outside the chain of title. If a complete
stranger to the record chain of title records a conveyance (a wild deed),
the conveyance does not give constructive notice because it is not within
the chain of title.
(d) Estoppel by deed—I convey it before I own it am I subsequently stopped

from conveying my title? Most jurisdictions say that if the record is clean,
the person wins.
(e) Board of Education of Minneapolis v. Hughes. In MN, a race-notice

jurisdiction, Hoerger conveyed a lot to D&W, who did not record. D&W
then conveyed the lot to the BOE, who did record, after which Hoerger
conveyed the same lot to Hughes, who lacked notice of the conveyance
from Hoerger to D&W. Hughes recorded. The court stated that Hughes
prevailed over BOE because the conveyance form D&W to the BOE was
outside the chain of title and did not impart constructive notice. At the
time Hughes purchased from Hoerger, a diligent title search would reveal
Hoerger to be the record owner. Even thought the deed to the BOE was
recorded first, it would appear to be a deed made by a complete stranger
to the chain of title because the Hoerger to D&W link was not recorded a
diligent title searcher would never find the D&W to BOE conveyance.
(7) Expanded Chain of Title (ALWAYS ON EXAM)—deeds from a common grantor.

Reciprocal implied covenants restricting land use may be implied by a
developer’s conveyance of property subject to express covenants burdening the
developer’s retained land, but such a covenant does not appear in the chain of
title of the retained land, if it is conveyed without the implied covenant being
made express.
(a) Jurisdictions are split, most concluded that the burden on title searchers
to locate and read all deeds out from a common grantor is unreasonable.
(b) Few states conclude that purchasers of property from a common grantor
have constructive notice of the contents of all deeds out from a common
grantor, thus imposing the practical burden of searching all deeds from a
common grantor.
(c) Guillette v. Daly Dry Wall, Inc. A developer conveyed a lot to Guillette
under a recorded deed that restricted the lot’s use to a single-family
residence, and recited that “same restrictions are hereby imposed on
each of the lots now owned by the seller” This was effective to impose
the single-family residence use restriction on all the developer’s
remaining lots. Later the developer conveyed a restricted lot to Daly
under a recorded deed that made no mention of any restrictions. Daly
obtained a permit to construct 36 apartments on the lot. The other
owners sought to restrict this use. The court held that Daly acquired the
lot with constructive notice of the restriction even thought the restriction
was not in the chain of title from the developer to Daly. The Guillette rule
requires a purchaser to expand his search of title to include all
conveyances made by the grantor of other adjacent property he owned, in
order to be certain that the grantor did not burden his remaining property
with a use restriction contained in a deed to a 3rd party. Jurisdictions
rejecting this rule reason that this search burden is unreasonable.
(8) Title Insurance. For a fee, a title insurer agrees to defend title and to
compensate for the loss of the insured title to the claim of a paramount owner.
Generally, title insurers will not insure unless the purchaser’s deed is recorded
and the insurer is satisfied that no rival would have a better title.
(a) Coverage. (Duty to disclose)The scope of coverage is determined by the

K for insurance. The usual policy insures only that the title stated in the
policy is a good record title. The policy does not insure against claims or
interest that are not part of the record. Courts impose on title insurers a
duty to disclose anything they know about the parcel in question that is
material or important, breach of which is an actionable tort. Jurisdictions
are split that the title insurance company has a duty to disclose
1 Maj.—no independent tort action outside the policy

(overwhelmingly)
2 Min.—duty to disclose the title search
(b) Walker Rogge v. Chelsea Title. Kosa acquired title from Aiello under a
deed that state the total acreage was 12.486 acres, based on a survey.
Walker agreed to purchase the tract from Kosa after being shown a
different survey stating the property’s total acreage as 1833 acres. The
Kosa-Rogge K state that the acreage was 19 acres. and stipulated that
the price was to be reduced by $16k per acre if the tract was in fact
smaller than 19 acres, the K referred to the 2nd survey. Walker hired
Chelsea title to examine and insured title. Chelsea did so and issued a
policy that excepted from coverage matters that could be disclosed by an
accurate survey. At the time the policy was issued Chelsea had in it files
the Aiello-Kosa deed, which stated the acreage to be 12.489. The court
held that the K exception immune them from K liability , but there was
evidence that Chelsea had undertaken a duty to only insure title, and that
any search of title was for its own benefit and ancillary to its duty to
insure.
(c) Marketable Title and Encumbrances-- Courts limit the scope of this
coverage to title rather than extending it to cover diminutions of value that
affect marketability but have no bearing on the clarity or certainty of
ownership. Insurance policy typically insure for:
1 Defects in title
2 Liens
3 Encumberances upon title
4 Unmarketable title.
5 Lack of right of access
(d) Lick Mill v. Chicago Title. Lick Mill Apts. Purchased and developed a
portion of a 30-acre tract that had been formerly the site of chemical
processing plants and warehouses. Chicago title insured the title against
defects, liens, encumbrances, and unmarketability. Prior to insuring the
title Chicago Title hired Caroll to inspect the site and Carroll reported the
presence of certain pipes, tanks, and pumps. When the title was insured
the records of various government agencies disclosed the presence of
hazardous substances on the property, but that it was not clear whether
those records were inspected by or know to either Lick Mill or Chicago
Title. After Lick Mill took the title it was required to expend considerable
sums to remove and clean up the toxins on the site. Lick Mill then sought
to recover those costs from Chicago Title. Alleging that the toxins made
the title unmarketable and constituted an encumbrance on title.
1 Distinguish-
a Loymeyer v. Bower—enabled the buyer to rescind his

purchase contract; a violation of a public ordinance =
encumbrance. This did affect marketability of title; if they
don’t fix it they are exposed to the hazards of litigation.
b Frimberger v. Anzellotti—a present violation of a zoning

law did not constitute unmarketable title for purposes of
breach of the covenant of general warranty. The
difference in the result is due to the ex post, ex ante
posture of the problem.
c Loymeyer—when the deal is still inchoate it makes sense

to allow it to unravel, for that permits avoidance of damage
before it hardens, but when it is done (Frimberger and Lick
Mill) a finding of unmarketable title shifts costs, perhaps
unfairly.
2 Diligent investigations on Lick Mills part would have enabled it to

avoid the loss, shifting the loss to Chicago Title would greatly
increase the scope of liability for title insurers, thus raising the cost
of title insurance generally and probably imperiling the continuing
existence of some insurers. (public policy issue)
II Land Use Controls
A The Law of Nuisance—A nuisance is any substantial non-trespassory invasion of

another’s interest in the use and enjoyment of their land.
(1) Private Nuisance—is an interference with the use and enjoyment of land, in order
to give rise to liability, must be substantial; it must also be intentional or
unreasonable, or the unintentional result (not on final) of negligent, reckless, or
abnormally ultrahazardous activity.
(a) Unreasonableness—in case of air and water pollution, noise, odors, etc.
There’s intent, but liability only arises when the resulting interference is
substantial and unreasonable. Instead of looking at social benefits v.
Costs (RST view), the relevant inquiry is whether the level of interference
rises to a level of liability. A lot of courts won’t even consider the social
benefit of the intentional nuisance (Jost-like view)
(b) Morgan v. High Penn Oil. High Penn operated an oil refinery that emitted
noxious fumes several times each week, polluting the air for about a 2-
mile radius from the refinery. Along with many other people who owned
land within that radius, Morgan sued to enjoin the refinery’s operations,
alleging that the noxious odors made me sick and deprived him of use
and enjoyment of his property. High Penn intended to operate the
refinery and knew or should have known that its operation would produce
the noxious odors and the court assumed its use was unreasonable but
did not explain quite why. The court applies the Jost-like view but you
don’t see the court in expressly stating how they are viewing it seems to
be a mixture of the RST and the Jost approach which is not uncommon.
(c) Lateral and Subjacent Support.
1 Lateral support of land—is that provided to one piece of land by

parcels of land surrounding.
2 Subjacent support—where one person owns surface rights and

another subsurface rights.
(2) Remedies. 4 outcomes of a Nuisance Suit.
(a) No nuisance, the use continues without constraint (Property Rule)
1 If challenged the activity if found not to be a nuisance the use right

is allocated to the challenged user and is implicitly protected by
the property rule.
2 The challenged user cannot be forced to stop without his consent
3 The use will continue unless the challenged use is the less
valuable one and the transaction costs do not inhibit its transfer.
(b) Enjoin the nuisance to stop it (Estancias Dallas Corp v. Schultz) (Property
Rule)
1 If a challenged activity is found to be a nuisance and the

challenger’s use is protected by a property rule, the challenged
activity will be enjoined and it will thus stop.
2 The challenger can continue his use at his pleasure.
3 If the enjoined activity is the more valuable the use right will likely
be shifted to the enjoined user unless the transaction costs
prevent the transfer.
(c) Award damages to landowners affected by the nuisance but permit it to

continue (Boomer v. Atlantic) (Liability rule)
1 The view of transaction costs In situations where there are a

large number of landowners affected by a more valuable use that
is, on balance a nuisance, the presence of holdout transaction
costs may prompt a court to protect the use right of the numerous
landowners by a liability rule instead of a property rule.
2 The damages awarded are permanent damages—an amount

sufficient to compensate now for all past and future injury that may
be inflicted by continuation of the nuisance.
(d) Enjoin the use (though maybe not a nuisance) and award damages to the
enjoined user. (Spur Industries v. Del E. Webb) (not on exam; Liability
Rule)
The court may enjoin an activity, but require the benefitted landowners
compensate the enjoined actor for the lost use. This may occur when:
The pl. asserts that his activity is more valuable It is not clear that either
 The challenged activity is a nuisance or

 If it is, equity favors an unadorned injunction and
 It is unlikely that ht e pl. is able or willing to acquire the use right in

the market.
(e) Estancias Dallas Corp v. Schultz. Estancias Dallas constructed an apt

complex in Dallas adjacent to Schultz’s residence. To save $40K
Estancias located its central air conditioning unit about 5 feet from
Schultz’s lot line. 55 ft. from his house, and 70 feet from his bedroom.
The air conditioner was quite noisy, and prevented Schultz from
entertaining outdoors, and even interfered with an indoor conversation
and his sleep. To change the location of the unit would cost Estancias
140k-200k. The apts. could not be rented in sweltering Dallas without air
conditioning. The value of Schultz’s house was 25K.
(f) Boomer v. Atlantic Cement Co. Atlantic Cement’s factory produced dirt,
smoke, noise, and vibration that substantially interfered with the use and
enjoyment of land owned by a large number of neighbors. The factory
was a nuisance and an award of damage instead of a injunction was
warranted. Remanded for the determination of the amount of permanent
damages to be awarded for the ‘servitude’ thus created over the affected
land. The court reasoned technological impossibility of abatement,
coupled with recognition that the factory was the more valuable use (it
produced positive externalities in the form of jobs and other economic
benefits to the region), but that the holdout possibility might well frustrate
a marker transfer of the right if the factory was enjoined from further
operation.
(g) Property Rule—under either property rule outcomes, any later transfer of
the right must be voluntary and economically efficient transfers may be
inhibited by high transaction costs
(h) Liability Rule—under the liability rule outcomes the judicial system forces
a transfer of rights upon compensation to the other party. The justification
for using liability rules instead of property rules is that this will produce a
socially efficient outcome.
B The Law of Servitudes.
Estates in Land—give the holder the right to exclusive possession/occupation of the

property.
Servitudes—give the holder the right to use someone else’s property, or to restrict the
owner’s use of the owner’s property
(1) Various Types of Servitudes—Depending on what remedy is sought for

enforcement, these agreements create either a real covenant or a equitable
servitude.
(a) The Easement—the right to enter and perform an act on some servient
parcel of land.
1 Affirmative easement—the right to enter or perform on the parcel

of land. Ex. A is given the right to enter upon B’s land.
2 Negative Easement—prevents the owner of the parcel fro doing

something with their land. Ex. A is given the right to enforce a
restriction o the use of B’s land.
3 Can be characterized as appurtenant/in gross
4 Falls within the SOF—being an interest in land; creation requires

a:
a Written instrument signed by the party to be bound
b In addition to the exceptions for fraud, part performance,

and estoppels, and easement may be created by:
i. Implication, or
ii. Prescription
5 Can have duration comparable to any of the possessory estates.

An Easement can be in fee simple (perpetual duration) or for life,
or for a term of years.
(b) The Profit—to take off the land that is traditionally thought of as part of the
land (e.g., timber, mineral rights, wild game, and fish).
Example A is given the right to enter upon B’s land and remove
something attached to the land.
1 Can be characterized as appurtenant/in gross
2 Falls within the SOF—being an interest in land.
(c) Real Covenants/Equitable Servitudes—
1 Real Covenants—Covenants enforceable at law with the remedy

as damages.
2 Equitable Servitudes—Covenants enforceable in equity with the

remedy as an injunction.
Depending upon several factors, including the remedy that A seeks in the
even the restriction is breached. Examples—
3 A is given the right to enforce a restriction on the use of B’s land—

This is a negative covenant because B cannot use the land in
some way.
4 A is given the right to require B perform some act on B’s land—

This is an affirmative covenant which states that B must/has to
act.
5 A is given the right to require B to pay money for the upkeep of

specified facilities—Affirmative obligation, but it is different from 3
and 4 because in this example, it is a payment of money and is
going to be used for something in connection with the land.
(d) Appurtenant—an easement or profit that benefits a particular parcel of

land. This ‘benefit’ is transferred along with the titled to the parcel to each
subsequent owner. This type of easement/profit benefits the easement
owner in the use of the land. Requires:
1 Dominant tenement (or estate) and
2 Servient tenement.
3 The easement attached to and benefits the dominant tenement.
4 This type of easement usually is transferrable. Transfers along to

with the dominant tenement to successive owners. However,
appurtenant easements can be made personal to the easement
owner only and are not transferable to others.
(e) In Gross—The easement/profit is held by a particular person, not in

connection with the ownership of a specific parcel of land. The easement
owner benefits personally rather than in connection with the use of the
land which that person owns.
1 Involves only a Servient Estate
2 Does not benefit any land
3 May be alienable or inalienable
4 Said to be personal, but they are personal only in the sense that
they do not attach to any parcel of land owned by the easement
owner, not in the sense that they may not be transferred to
another person.
(2) Creation of Easements--
(a) Easement created by Grant—Easement created by grant in a deed need

to identify the property, describe the easement (nature of right), must be
in writing, should be notarized and recorded
1 Willard v. 1st Church of Christ, Scientist. The trial court went by

the common law rule that "one cannot 'reserve' an interest in
property to a stranger to the title." However, the court notes that
times are changing, and now they want to give effect to the intent
of the grantor. The court adds this rule frustrates the grantor's
intent, and b/c it produces an inequitable result b/c original
grantee presumably paid a smaller price for title to the property.
Here, McGuigan testified she discounted the land to Peterson.
There was also no evidence of any reliance by the insurance title
company. No evidence of a policy issued, thus no showing of
alliance to an insurance company. And Willard couldn't say he
had no knowledge of the easement, as the land was being used
as such while he was in the negotiating process, and after Willard
acquired title.
a At common law—the grantor cannot reserve an easement

in favor of a 3rd party (stranger of title
b Modern law—Rst. 3rd of Servitudes; an easement can be

created in favor of a 3rd party,
2 Reservation—is a provision in a deed creating some new

servitude which did not exist before as an independent interest.
Example: O conveys Blackacre to A reserving a 20-foot-wide

easement of way along the south boundary of
Blackacre.
The easement did not exist as an independent

interest prior to the conveyance by O.
3 Exception—is a provision in a deed that excludes from the grant

some preexisting servitude on the land.
Example: After the above conveyance, A conveys Blackacre

to B, except for the easement previously reserved
by O.
(b) Licenses—oral or written permission given by the occupant of land

allowing the licensee to do some act that otherwise would be a trespass
(like plumber coming to fix the drain) License is revocable where an
easement is not. Exceptions to the rule that a license is revocable
(irrevocable licenses treated like easements)
1 A license coupled with an interest cannot be revoked—when a

license is tied together with some other legally recognized interest
the license is irrevocable until that other interest is vindicated.
Example O grants A the right to take timber from property

owned by O—A has an interest (a profit) and an
irrevocable license to enter the land an take the
timber.
2 A license can also become irrevocable under the rules of

estoppels.
3 Holbrook v. Taylor. When a person has a license which includes

the right to erect structures and acquire interest in the land in the
nature of an easement by making improvements thereon, the
licensor may not revoke the license and restore his premises to
their former condition after the licensee has exercised the privilege
given by the license and erected the improvements at
considerable expense. When the land owner or previous
landowners granted permission to adjoining landowners in the use
of an easement on the land, and watched while the current party
spent substantial money in reliance on this representation, the
original landowner is estopped from. The court looked to the
intent of the party as part of the prescription claim. Here, the land
was granted permission by appellant since 1944 to be used as an
easement, which gave the appellees to feel as if they had license
to be on the land as well. They acquired an interest by improving
on the land by building the $500 worth on the ingress/egress
road. This building was done in reliance on the road being
property of both parties (mentioned above). Furthermore, there
was no dispute as to who could and could no use the roadway
until the fall of 1970. In sum, appellants agreed tacitly (w/o
consent) to allow the use of the easement, and thus should not be
denied now.
4 Differing Views:
a Shepard v Purvine: An oral license promptly acted upon in

the manner the plaintiffs acted is just as valid, binding, and
irrevocable as a deeded right of way.
b Henry v. Dalton: and oral license to do an act on the land

of the licensor, while it justified anything done by the
licensee before revocation is revocable at the option of the
licensor (at their own peril); required by public policy. This
prevents the burdening of lands with restrictions founded
upon oral agreements, easily misunderstood.
c Transactions costs: who is the lowest cost avoider, it is not

that burdensome to require if you are the licensee to put it
in writing
(c) Easement by Estoppel—if a licensor grants a license on which the

licensee reasonably relied on to make substantial improvements to the
property, equity requires that the licensor be stopped from revoking the
license. License made irrevocable though estoppel continues to exist
until the reasonable expectations of the parties have been satisfied. See
B above.
(d) Easement by Implication—an implied easement arises where the prior

use waws or might have been know of by the parties can be assumed to
have contemplated its continuance.
1 Quasi Easement—You can’t have an easement on your own

property, but you can make use on one part of your own land for
the benefit of another part, this is a quasi-easement.
2 Elements necessary to establish an implied easement from prior

use.:
a Common owner prior to division
b Prior use must be reasonably necessary for the use and

enjoyment of the quasi-dominant estate.
c Prior use must be continuous, not sporadic
d Parties must intend, at time of division, to continue prior

use.
e Prior use must be apparent, but does not necessarily

mean that it is visible. (Notice)
f Property law assumes that if the grantor had been using

the other parcels to benefit the parcel they chose to keep
then they would not have cut off that right, it is implied by
law.
3 Van Sandt v. Royster. Pl. discovered his basement filled with

sewage from the df. house. Df. had been draining sewage across
pl. land. Pl. sued to stop this practice. Prior owner of both lots had
created a quasi easement, so easement by reservation implied
from prior use had been validly created when she conveyed title to
each of the purchasers.
4 If the dominant and servient tenement come into the same

ownership, easement is extinguished, and will not be revived by
the land being divided again. but a new easement by implication
may be created, if intended.
(f) Easement by Necessity—where property has been divided by a common

owner in such a manner that an easement for access is absolutely
necessary (e.g., landlocked).
1 Elements needed:
a Unity of ownership alleged of the dominant and servient

estates
b that a roadway is a necessity, not a mere convenience.
c that the necessity existed at the time of severance of the 2

estates (no other roadway existed at the time of
conveyance) (critical element)
2 Necessity must exist at the moment the parcel is divided. NO

prior use is needed.
3 Othen v. Rosier. Hill owned a large parcel of land, which eh

divided up and sold. One of the parcels was landlocked and
acquired by Othen (pl.), who would cross Rosier’s (df.) land to
reach the public road. When Hill had conveyed the parcel to
Rosier, he had owned other land that was continuous to Othen’s
parcel and a public roadway. Othen had an easement implied by
necessity across some other property, but not Rosier’s.
4 Easement by necessity lasts as long as the necessity exists; if

necessity is removed (by creating a new public road), the
easement is terminated.
5 The servient estate owner is permitted to select a reasonably

convenient location for the easement, because he can best
minimize the damage to the servient estate.
6 Important to look at the sequence of events in which the parcels

are conveyed.
(g) Easement by Prescription—Adverse use for a sufficient period of time can

ripen into an easement by prescription. Similar to Adverse Possession.
1 Elements needed--
a open and notorious
b continuous
c Throughout the prescriptive period
d Exclusive use of the property
2 Public Prescriptive Use. Where the public uses, can be acquired

by the public at large. Owners must be put on notice the adverse
right is being claimed by the general public, not by individuals.
(h) Bona Fide Purchaser w/o Notice—any of these if you are a bona fide
purchaser w/o notice you will take free of the easement regardless of how
it came into being, by expression, by implication, by prescription.
(3) Assignability of an Easement. See appurtenant and Easement in gross.
(a) Miller v. Lutheran Conference and Camp. Pocono grants to Frank and
heirs and assigns the exclusive right to fish and boat in the lake. Then,
Frank granted to Rufus ¼ interest in the right to fish, boat, and bathe in
the lake. Rufus dies, and his estate granted licenses to Lutheran to boat,
fish, and bathe in the lake. Frank sued to stop Lutheran from sue of the
lake. The court said that bathing right acquired by prescriptive use, so
there was an easement in gross acquired. Since this was a commercial
easement, it was intended to be transferable, but even though they were
transferable, they were not divisible.
1 Recreational easements in gross are not assignable—intended to

be personal, and we don’t want to burden the servient land
beyond the original contemplation of the parties.
2 Easement in gross is divisible when the creating instrument so

indicates or when the easement is exclusive (or if it would create a
burden on the servient estate).
(b) Benefits automatically pass to the assignees of the land to which they are
appurtenant, if the parties so intend and the burdened party has notice of
the easement.
(4) Scope of Easements—the scope of an easement involves two separate

questions:
 How extensively and intensively may the easement hold use the
easement?
 To what degree may the owner of the servient estate use or interfere with
the easement?
(a) Parties intention to Control—The overriding principle in determining the

scope of an easement is to identify and uphold the parties’ intentions, but
this is not always easy. The courts examine the following factors.
1 Easement by Grant
2 Easement by Implication (Prior Use/Necessity)
3 Easement by Prescription.
(b) How conditions have changed to affect the originally intended use
1 Change in location of easement—if an easement specifies a

specific location, or one has been agreed to by the parties
conduct, the location is permanently fixed unless the parties agree
to a change.
2 Enlargement of the dominant estate—an easement, however

created, cannot be used for the benefit of land that is not the
dominant estate.
3 Brown v. Voss. Easement existed b/t Parcel A (servient) and

parcel B (dominant). B subsequently acquired another parcel of
land and used the easement for both parcels of land. There was
no increase in burden to the servient estate by this use.
a when an easement is created by an express grant, the

extent of the right acquired is to be determined from the
terms of the grant properly construed to give effect of the
intention of the parties. Grant gave easement to Parcel B,
not parcel C. doesn’t matter that C is now combined into
the same ownership w/ the dominant estate; have to look
at what parties intended to agree on when easement was
created.
b An easement appurtenant to one parcel of land may not be

extended by the owner of the dominant estate to other
parcels owned by him, whether adjoining or distinct tracts,
to which the easement is not appurtenant.
c Just because there is no added burden on the servient

estate, doesn’t mean that there’s no misuse of the
easement. If an easement is appurtenant to a particular
parcel of land, and extension to the other parcels is a
misuse.
(c) What changes in use were reasonably foreseeable by the parties? didn’t
talk about.
(5) Termination of Easements—Once the easement has been extinguished it cannot

be revived—it must be created anew in one of the ways easements are formed.
(a) Expiration—expire by its terms if by grant; or when purpose of easement

has ceased.
1 Necessity—expires when the necessity is eliminated
2 Estoppel-expires when the licensee gets full value of expenditures

made in reliance on the license.
(b) Merger—If dominant and servient estates merge (get same owner),
easement is extinguished.
(c) Release—a waiver; generally, it must be written, oral release is valid

through equitable estoppels (when servient owner relied on it to his
substantial detriment)
(d) Abandonment—if the easement holder manifests a clear and unequivocal

intention to abandon the easement. Mere nonuse will not suffice to prove
this. Abandonment is established by either a present intent to relinquish
the easement or purpose inconsistent with its future existence.
1 Can be abandonment if not sued within the statutory period
2 Act of obtaining alternative means of access to the dominant

parcel could constitute an intent.
3 Presault v. United States. RR had right of way easement on Pl.’s

property, for its rail line. then RR ceased operations over that
portion , and removed tracks. RR then entered into an agreement
with the US. for the lines to be used as a public trail. Pl sued b/c
government taking their property. The court looked at the intent of
the parties when the conveyance was made. Since the estate
was acquired solely for RR’s needs it was an easement, not a fee
tail. Intent was to grant an easement for RR lines, and it was not
reasonably foreseeable that it would be used as a public trail. RR
intended to abandon the easement when they removed the tracks,
and there was no intent to revive the use of the easement for that
purpose.
(e) Estoppel. If the servient owner relies upon a statement or representation

by the easement owner.
(f) Condemnation—if the government exercises their power of eminent

domain (taking)
(g) Prescription—if the servient owner wrongfully and physically prevents the
easement from being sued for the prescriptive period, the easement is
terminant.
C Covenants running with the Land.
Estates in Land—give the holder the right to exclusive possession/occupation of the

property.
Servitudes—give the holder the right to use someone else’s property, or to restrict the
owner’s use of the owner’s property
(1) Real Covenants—A promise about land usage that runes with an estate in land,
meaning that it binds or benefits subsequent owners of the estate. A real
covenant may be affirmative or negative. The promise to use the land in some
fashion is affirmative; A promise not to use the land in a specified fashion is a
negative covenant. Both types are enforceable.
(a) Benefit and Burden—A promise about land usage burdens some land
and normally benefits other land.
(b) Runs with the land—if one party breaches a covenant made with another
person –even if it concerns land usage—the issues presented are purely
a matter of contract law.
(c) Remedy—Money damages.
(d) Development of the Real Covenant—
1 English—only the immediate parties to the covenant are able to

sue to enforce the covenant or were liable for the breach
2 American—real covenants may be created when a fee simple is

transferred or even between neighbors with no transfer of title;
Horizontal privity of estate.
(e) Covenant, not condition—A real covenant is a promise concerning land, it

is not a condition of continued land use. Conditions concerning land use
are Defeasible estates.
(f) Creation—may not be created by implication or prescription; only created

by written instrument. (hence contract law)
(g) Enforceability by or against successors—Because the burden of a real

covenant exposes the successor to liability that is potentially unlimited,
this burden out to be imposed only to those people who acquire the
identical estate that was initially burdened. Elements are as follows.
1 Intent—the original parties must have intended the burden (or

benefit, or both) to run. Explicit statement “successors, heirs, and
assigns.”
2 Horizontal Privity—The older discarded view—horizontal privity of

the estate between the original parties—is required for the burden
to run, but not for the benefit to run. Three relationships:
a Landlord-Tenant View—Horizontal privity is met only if the

original parties were landlord and tenant—no longer
recognized in America.
b Grantor-Grantee—Promise has to be related to the grant

(it has to be in the actual grant and needs to exist at the
time of conveyance).
c Simultaneous Interest—Fee and easement—that exists AT

ALL TIMES that the covenant is created.
d RST does not require Horizontal Privity.
3 Vertical Privity—All courts require vertical privity---of the estate

between the original promisor and the successor to the burdened
estate—for either the benefit or burden to run, but is more easily

met for benefits to run than for burdens to run. STEPPING INTO
THE SHOE= taking EXACTLY what the person that had it before
you had.
a Harder to establish vertical privity to enforce the burden of

the covenant than it is for the benefit of the covenn it is for
the benefit of the covenant.
b Benefit—RST says that the benefit will run to the assigns

of any interest in land, not just to the assigns of an estate
of the same duration as held by the original promisee.
c Neposit exception: a homeowner’s association may sue to

enforce the benefitof a covenant even thought the
association succeeds to no land owned by the original
promisee. The association is regarded as the agent of the
real parties in interest who own the land.
d There is no vertical privity btwn adverse possessor and the

person that he is taking it away from (particularly w/
respect to an affirmative obligation).
4 Touch and Concern—the substance of the promise must touch

and concern the burdened land and in most states, the benefitted
states as well. Common if the real covenant is in gross
(personal), the burden will not run.
(2) Equitable Servitudes—A covenant about land use that will be enforced in equity
(by an injunction) against a successor to the burdened estate who acquired it
with notice of the covenant. Covenant does NOT need to meet all the criteria of
a real covenant to be enforceable. Covenants are more likely to be enforces as
an equitable servitude rather than a real covenant because they are easier to
enforce by or against successors and most people prefer enforcement of a
covenant by injunction than damages for its breach.
(a) Differences b/t equitable servitudes and Real covenants—
1 Remedy—injunction.
2 No privity needed--
3 Creation—may be created by implication in many jurisdictions—

real covenants can only be created expressly and in writing.
(b) Property theory of E.S.—at first it started out as a promise enforced in

equity, now its and interest in land. unlike a covenant, which only
attaches to estate in land., E.S. burdens the land itself, not the estate
(similar to an easement)
(c) romo
(f) Neponsit v. Emigrant-- covenant on the land requires members of

residential community to pay maintenance charges; does this covenant
run with the land? Held, yes. A covenant touches and concerns the
land when it substantially affects the legal rights of the parties to the
covenant. By paying the fees, a land owner acquires an easement to the
public spaces so it clearly touches and concerns the land. Vertical privity
—association is a convenient instrument for parties who do have vertical
privity
(g) Hill v. Community of Damien of Molokai (1996): Community is a group

AIDS home; neighbors sued to enforce restrictive covenant limiting
property use to “single family home”. Held, ambiguous restrictive
covenants should be construed in favor of the free use and
enjoyment of property and against restrictions; term “family” is
ambiguous and so it is construed against restrictions; restrictive
covenants violate the FHA when they have a discriminatory intent,
effect or constitute a failure to make reasonable accommodations.
(h) RST 3rd of Property—Servitude is valid unless illegal or unconstitutional or

violates public policy. Violation of public policy may be because:
1 its arbitrary, spiteful, or capricious
2 Unreasonably burdens a fundamental constitutional right
3 imposes an unreasonable restraint on alienation
4 Imposes and unreasonable restraint on trade or competition
5 Is unconscionable.
(i) Caullet v. Stanley Stillwell. D sold P property with the condition that his
construction company would build the house. P and D couldn’t negotiate
so P sued to quiet title. Clause too vague and it didn’t touch and concern
the land. To constitute a real rather than a personal covenant, the
promise must exercise direct influence on the occupation, use, or
enjoyment of the premises. It cannot be a use incidental to the
performance of a promise. There must be a reasonable limitation or
proscription to the land (like limiting for residential purposes), but this
provision is not similar.
(j) Termination of E.S.—See Real Covenant Termination. also
(k) Termination by Changed Condition—because E.S. are enforceable in

equity, the following equitable defense, if proven, will effectively
extinguish an E.S. by blocking its enforcement.
1 Change conditions within the affected area—a covenant will no

longer be enforced in equity if condition have so radically and
thoroughly changed within the area affected by a covenant usually
a subdivision that the covenant can no longer achieve its purpose.
2 Changed conditions in surrounding area—The nature and

character of the surrounding area has so changed that it would
now be inequitable to enforce the servitude. To succeed it is
necessary to establish that the extrinsic changes in the
neighborhood have been so pervasive that all the benefitted lots
have lost the benefit of the covenant.
i. Western v. Truskolaski-- lots in a subdivision were

restricted to single-family dwellings; residents sued to
enjoin the construction of a shopping center on one of the
plots of land. Held, the residential character of the
neighborhood remained of value to the landowners;
changed conditions do not invalidate a residential
covenant where the character of the subdivision
remains residential (isolated deviations do not effect a
waiver); a change in zoning will not override a private
restrictive covenant, even where economic efficiency
would be served by invalidating covenant
ii. Rick v. West-- lots restricted to residential use and all but
one resident agree to release covenant in order to build a
hospital; suit to void covenant for changed conditions.
Held, a landowner in a subdivision under a restrictive
covenant has the right to insist upon adherence to the
covenant even when other owners consent to its
release; holdout landowner relied on covenant in
purchasing property and expectations should be upheld;
enforced unless unconscionable or oppressive
(Restatement § 7.10 applies here as well to give discretion
to terminate)
iii. Holdout problem—Balance the hardships—Even when

injunctive relief is otherwise appropriate, a court may deny
an injunction if the hardship imposed by the injunction is
very large in relation to the benefits produced, but this
principle is rarely invoked by the courts in servitude cases,
and may be more theoretical than actual.
(l) Affirmative Covenants to pay money—perpetual burden—Affirmative

covenants to pay money (usually dues to a HOA) may be enforced either
by foreclosure of the equitable lien created by nonpayment or by suit to
recover as money damages the unpaid dues. The burden of these
covenants is personal and may not be easily avoided.
1 Pocono Springs v. MacKenzie-- Δ attempt to sell land under

covenant to pay association fees and when they can’t sell it they
attempt to abandon it. Held, a covenant running with the land
cannot be terminated by abandonment when the owner still
holds title in fee simple absolute. [Restatement § 7.12 now
permits court to terminate covenants to pay maintenance fees
after a reasonable period of time.]
III Legislative Land Use Controls
A The Law of Zoning. The proactive response to nuisance laws with early principles of
(1) separation of uses (2) production of single-family home (3) low-rise development (4)
medium-density of population.
B Eminent Domain and Regulatory Takings.

Property 2 Outline Keyed To Dukeminier/Krier 6 Ed. UMKC, June Carbone Spring 2010

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Gilmore Property 2 Outline

Keyed to Dukeminier/Krier 6th Ed.

I Transfers of Real Property

(1) Statute of Frauds—applies to all transfers of real property by gift or by sale. At a

(a) Signed by the party to be bound (the party seeking enforcement)

(b) Describe the real estate

(c) State the Price/Method of arriving to the price.

(a) Part Performance—allows the specific oral agreements when particular

1 Theory 1—(strict common law doctrine) Unequivocal evidence of

a Payment—all or part of the purchase price

b Possession—in physical possession

c Improvement—above general husbandry

2 Theory 2—(reasonable reliance) prevents injurious reliance on the

a an oral contract and

b reasonable reliance on the contract—enough reliance that

c Hickey v. Green- Green orally agreed to sell Hickey a

d No reliance—Walker v. Ireton—Ireton orally agreed to sell

(b) Equitable Estoppel—May be used to enforce an oral sale K if the seller

(c) Specific Performance—Injunction

2 Balance of the Hardships—who is in the better position to avoid

(b) Timely Performance and Closing—most contracts state the date of

and willing to perform on the closing date is relieved of any future

(4) Brokers and Agents—

1 Majority—in majority of jurisdictions, the broker is entitled to his

2 Minority—if the deal falls through because of the seller’s default or

(a) Certificate of Title—The attorney does a direct search of title

(b) Abstract of Title—the abstractor assembles all of the pertinent records

(c) Local Title Insurance—Issued by a corporate insurer on the basis of a

(6) Lawyer’s Role—role in the sale of commercial property is greater.

(a) Production of good record title—a recorded chain of title , showing

(b) Proving Title by Adverse Possession—either through a successful quiet

(b) Encumbrances—an encumbrance is a burden on title, such as a

(c) Zoning Restrictions—use limits imposed by public authority through

(a) An easement that benefits the property (utility easement)

(a) Specific Performance—Because land is unique, damages may be

1 Sought by Buyer—are generally able to demand specific

2 Sought by Seller—traditionally have been able to demand,

3 Equitable Conversion—if a contract is specifically enforceable, this

a Majority—The risk of loss is on the buyer from that moment

b Minority—the risk of loss is on the seller until the legal title

c. Massachusetts—Risk of loss on the seller if the loss is

In inheritance, equitable conversion has been applied when one of

is personal property (right to purchase price), and the buyer is

1 Benefit of the Bargain—the measure of damages gives the

2 Jones v. Lee— the Lee’s entered into a K to purchase the Jones’s

3 Deposit Retention—Common law rule—is that a seller may elect

a Kutzin v. Pirnie—Pirnie’s agreed to purchase the Kutzins’

4 Out-of-Pocket—Limits the exposure of the seller who breaches

a ½ states limit damages awarded against a seller who has

5 Liquidated Damages—Sellers typically protect themselves against

(2) Fiduciary Relationships—if the parties were in a fiduciary relationship—a

(a) Material Defect—Standards applied.

1 Objective—whether a reasonable person would attach importance

2 Subjective—whether the defect “affects the value or desirability of

2 Have the seller correct the defects

3 Sue for damages

(4) Disclosure of seller-created conditions—the seller is obligated to disclose

(a) Are created by the seller

(d) Stambovsky v. Ackley. Ackley owned a home, and repeatedly publicized

(a) Materially affects the value or desirability

(b) Is known to the seller (or only accessible to the seller)

(6) Misrepresentation—in all cases in all jurisdictions there is a duty not to

(a) Misrepresentation—is a statement in which the seller can expect the