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Property
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Section 3604
• Section 3604 makes it unlawful –
– Because of race, color, religion, sex, familial
status, or national origin –
• To refuse to sell or rent after a bona fide offer or to refuse
to negotiate or to make unavailable a dwelling to a
person;
• To discriminate against a person in the terms, conditions,
or privileges of a sale or rental of a dwelling; and
– To make, print, or publish, or cause to be made,
printed, or published a notice or advertisement
about a sale or rental of a dwelling that indicates a
preference based on race, color, religion, sex,
handicap, familial status, or national origin.
2
§ 3603(b) exemptions
Nothing in section [3604] (other than subsection (c)) shall apply to-– Any single-family house sold or rented by an owner:
• Provided, That such private individual owner does not own
more than three such single-family houses at any one time.
...
• Provided further, That after December 31, 1969, the sale or
rental of any such single-family house shall be excepted
from the application of this title only if such house is sold or
rented
– (A) without the use in any manner of the sales or rental facilities or the
sales or rental services of any real estate broker, agent, or salesman,
or of such facilities or services of any person in the business of selling
or renting dwellings, or of any employee or agent of any such broker,
agent, salesman, or person and
– (B) without the publication, posting or mailing, after notice, of any
advertisement or written notice in violation of section [3604(c)];
• but nothing in this proviso shall prohibit the use of attorneys,
escrow agents, abstractors, title companies, and other such
professional assistance as necessary to perfect or transfer
the title, or
3
§ 3603(b) exemptions (cont’d)
Nothing in section [3604] (other than
subsection (c)) shall apply to-– Rooms or units in dwellings containing
living quarters occupied or intended to be
occupied by no more than four families
living independently of each other, if the
owner actually maintains and occupies one
of such living quarters as his residence. . . .
4
Section 3603(b) revision
• Section 3603(b) exempts the following properties from the
general discrimination rules (other than § 3604(c)):
– Rooms or units in a dwelling containing no more than four
independent living quarters for families, if the owner
maintains and occupies one of the living quarters as his or
her residence; and
– Any single-family house sold or rented by a private individual
owner but only if it is sold or rented -• Without using the facilities or services of any real estate
broker, agent, or salesman (including any agent or
employee); and
• Without violating § 3604(c) (prohibiting discriminatory
advertising).
• The second exemption does not apply if the owner owns –
– More than three such single-family houses at any one time
or
– The right to receive sales or rental proceeds from more than
three such houses at any one time.
5
Definitions and other matters
• A house is not owner-occupied if the
owner was not the most recent resident of
the house immediately before the sale.
• Note that the second exemption does not
prohibit the use of attorneys, escrow
agents, abstractors, title companies, and
other professionals necessary to perfect or
transfer title.
6
Problem 3, pages 433-34
• Mrs. Murphy has an apartment to rent in her
home. Assume that the apartment is the only
one in her home. She puts the following
advertisement in the newspaper:
– For rent: Furnished basement apartment in a
private white home.
• A black couple applies and is rejected by Mrs.
Murphy because of race. Are there any
violations of the Fair Housing Act or § 1982?.
7
Variations of Problem 3
• Suppose that Murphy’s advertisement
omitted the word "white?"
• Suppose that the advertisement had said that
it was rented "only to persons speaking
Polish, German, or Swedish?"
• Would Mrs. Murphy violate either act if she
discriminated against German people in
renting the apartment in her building?
8
Variations of Problem 3
(cont’d)
• Would advertising that featured only white (or
black) models be discriminatory?
• Should the following discrimination be
protected under the Fair Housing Act: An
owner of a large apartment building reserves
a certain number of units for white applicants
to protect against white flight and maintain
integrated housing?
9
Problems (page 442)
• T leases a large piece of open land from L to be used
for hunting and trapping and pays a year's rent in
advance. There is no public access to the land and
neighbors refuse to grant T ingress and egress.
What result?
• L leases property to T for a specified term, but after T
takes possession and pays rent for several months, T
learns that L had already leased the premises to
another person for the same term. T remains in
possession but stops paying rent. L sues for the rent
and T countersues for the rent already paid. What
result?
10
Privity of contract and estate
• If a landlord leases property to a tenant,
the landlord and tenant have both privity
of contract and privity of estate.
• Each privity obligates the parties to
perform the obligations under the lease.
• Thus, if a tenant has privity of contract
or estate with the landlord, the tenant is
obligated to pay rent under the lease.
11
Privity of contract
• The original tenant retains privity of
contract with the original landlord whether
that tenant assigns his or her lease
interest or subleases a portion of that
interest to another.
• An assignee or sublessee may have privity
of contract with the landlord to the extent
the landlord is a third party beneficiary of
the assignment or sublease.
12
Privity of estate
• The landlord (and his or her direct or
indirect assignee) and the tenant (and
his or her direct or indirect assignee)
are in privity of estate.
• For example, if L leases land to T, who
assigns the lease to T1, who in turn
assigns the lease to T2, L and T2 are in
privity of estate.
13
Examples
L
L
L leases property
to T.
L leases property
to T.
T
T assigns her lease
interest to T1.
T1
L is in privity of contract with T.
L is in privity of estate with T1
and may be in privity of contract
with T1 as a third party beneficiary.
T
T subleases an interest
in the property to T1.
T1
L is in privity of contract and privity
of estate with T.
L may be in privity of contract
with T1 as a third party beneficiary.
14
Question
• Joe rents land with two houses to Mary
for two years.
• Mary immediately leases one house to
Sally for the full two-year term.
• Is Mary’s lease to Sally a sublease or
assignment?
15
Problem 3(a) (page 448-49)
• L leases to T for a term of three years at a
monthly rent of $1,000.
• One year later T "subleases, transfers, and
assigns" to T1 for a period of "one year from
date.“
• Thereafter, neither T nor T1 pays rent to L.
• What rights does L have against T or T1?
16
Problem 3(b) (page 449)
• L leases property to T for a term of three years
at a monthly rent of $1,000.
• The lease provides that "T covenants to pay said
rent in advance on the first day of each month."
It also provides that "T shall not sublet or assign
with the permission of L.“
• Six months later, T, with the permission of L,
transfers its lease interest to T1 for the balance
of the term.
• Thereafter, T1 pays the rent to L directly for a
few months and defaults. L sues T for the rent
due.
• What result and why?
17
Problem 2(c) (page 449)
• L leases to T for a term of three years at a monthly
rent of $1,000. T covenants to pay the rent in
advance on the first day of each month and also
covenants to keep the leased premises in good
repair.
• Six months later, T assigns his entire interest in the
lease to T1, who agrees in the instrument of
assignment to "assume all the covenants in the
lease" between L and T.
• Three months later, T1 assigns his entire interest in
the lease to T2, and three months after that T2
assigns his entire interest in the lease to T3.
• T3 defaults on the rent payments and fails to keep
the premises in good repair.
• L sues T, T1, T2, and T3. What are the liabilities of
the tenants to L and among themselves?
18
Problem 1(a) (pages 457-58)
• L leases to T for a term of years. After two
years, T wishes to transfer the lease to T1.
• L refuses, because T1 is a tenant in another
of L's buildings under a lease that is about to
expire. L and T1 have been actively
negotiating a new lease, and L wants to avoid
losing T as a tenant in the other building.
• Is L's consent to the assignment
unreasonably withheld?
19
Problem 3 (pages 458-59)
• L leases property to T for a term of five years at a
$900 monthly rent. T covenants to pay rent and not
to sublet or assign the lease without L's permission.
• T, with L's permission, thereafter assigns the lease to
T1, but T1 does not expressly assume the obligations
of the lease.
• Later, T1 assigns the lease to T2 without first
obtaining L's permission.
• T2 defaults in the rental payments, and L sues T1 for
the past-due rent. What is the result?
20
Problem 4 (page 459)
• L leases a building to T for ten years.
• A lease clause states that T cannot
transfer the lease without L’s
permission.
• T merges into ABC.
– Is the merger a transfer of the lease that
triggers the permission clause?
– Would it matter if T and ABC are related?
21
Review Problems – Chapter 3
• In each of the problems below, describe
the estates that are created under modern
and, if different, common law.
• Assume in each case, that O owns a fee
simple interest in Blackacre before the
conveyance.
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Review Problems (cont’d)
• O conveys Blackacre to A.
• O conveys Blackacre to A for life.
• O conveys Blackacre to A and her heirs, but if A fails to use
Blackacre as a residence, O has a right of entry.
– What happens if A conveys her interest to C?
– Can O convey his remaining interest to D?
– Can O's remaining interest be transferred by will or intestacy?
• O conveys Blackacre to A as long as A uses Blackacre as a
residence.
– What happens if A conveys her interest to C?
– Can O convey his remaining interest to D?
– Can O's remaining interest be transferred by will or intestacy?
• O conveys Blackacre to A and the heirs of his body, then to B and
her heirs. A devises his interest in Blackacre to C but dies without
issue.
– How does your answer change if shortly before A dies, he legally adopts
his lawyer?
23
Review Problems (cont’d)
• O conveys Blackacre to A for ten years, then to B.
• O conveys Blackacre to A and his heirs until B graduates from
law school.
• O conveys Blackacre to A to have and hold during B's life.
• O conveys Blackacre to A and the heirs on her mother's side.
• O conveys Blackacre to A for life. In a separate transaction, A
transfers her interest in Blackacre to B.
– What if, instead, O transferred his interest in Blackacre to B?
• O conveys Blackacre to A for the life of B. A dies intestate,
leaving B as her only heir.
• O conveys Blackacre to A, but if A divorces, then the property
reverts back to O.
• O conveys Blackacre to A for life, and A then conveys his
interest in Blackacre to B for ten years.
24
Review Problems (cont’d)
Describe disadvantages that may arise if a
legal life estate or fee tail is conveyed.
25
Reading from left to right
• Example 7
– O conveys “to A for life, then to B and her
heirs if B survives A, and if B does not
survive A to C and his heirs.”
• Example 8
– O conveys “to A for life, then to B and her
heirs, but if B does not survive A, to C and
his heirs.”
26
Reading from left to right
• Example 7
– O conveys “to A for life, then to B and her
heirs if B survives A, and if B does not
survive A to C and his heirs.”
• Example 8
– O conveys “to A for life, then to B and her
heirs, but if B does not survive A, to C and
his heirs.”
27
Reading from left to right
• Example 7
– O conveys “to A for life, then to B and her
heirs if B survives A, and if B does not
survive A to C and his heirs.”
• Example 8
– O conveys “to A for life, then to B and her
heirs, but if B does not survive A, to C and
his heirs.”
28
Reading from left to right
• Example 7
– O conveys “to A for life, then to B and her
heirs if B survives A, and if B does not
survive A to C and his heirs.”
• Example 8
– O conveys “to A for life, then to B and her
heirs, but if B does not survive A to C and
his heirs.”
29
Rules of thumb
• If the first future interest is a contingent
remainder in fee simple, the second
future interest will be as well.
• If the first future interest is a vested
remainder in fee simple, the second will
be an executory interest.
30
Problem 1(a) (page 270)
• O conveys “to A for life, then to A’s
children and their heirs, but if at A’s death
he is not survived by children, then to B
and her heirs.”
– At the time of the conveyance A has no
children.
– Two years thereafter, A has twins, C and D.
– C dies during A’s lifetime, and A is survived by
B and D.
• At each juncture, what is the state of title?
31
Problem 1(b) (page 270)
• O conveys “to A for life, then to such of A’s
children as survive him, but if none of A’s
children survive him, to B and her heirs.”
– At the time of conveyance, A has two children,
C and D.
– C dies during A’s lifetime, and A is survived by
B and D.
• At each juncture, what is the state of title?
32
Problem 1(c) (page 270)
• O conveys “to A for life, then to B and her
heirs, but if A is survived at his death by
any children, then to such surviving
children and their heirs.”
– At the time of conveyance, A has two children,
C and D.
– C dies during A’s lifetime, and A is survived by
B and D.
• At each juncture, what is the state of title?
33
Problem 2 (page 270)
• T devises $10,000 “to my cousin, Don
Little, if and when he survives his wife.”
• What interest does Don Little have at
the time of the devise?
• Why would the testator make that
devise?
34
Common-law Rule Against
Perpetuities
• Under the rule, a “contingent” interest must
vest or fail within the perpetuities period (i.e.,
lives in being plus 21 years).
• The rule may apply to a contingent
remainder, executory interest, or class gift.
35
Common-law Rule Against
Perpetuities (cont'd)
• The rule invalidates interests that might vest
too remotely, regardless of what actually
happens (the "what-might-happen" rule).
• If a transfer creates more than one interest
subject to the rule, the rule applies separately
to each interest.
– There may be a different validating life for each
interest.
36
Examples
• O conveys Blackacre to A for life, then to A's
first child to reach age 21.
• O conveys Blackacre to A for life, then to A's
first child to reach age 25.
• T devises property to my grandchildren who
reach age 21.
• T conveys property to my grandchildren who
reach age 21.
37
Corollaries of the "what-mighthappen" rule
• The "fertile octogenarian" rule is a conclusive
presumption of lifetime fertility, regardless of
age or medical history.
• The "unborn widow" rule
presumes that a person may
marry someone not born at the
time of the conveyance or devise,
regardless of the person's age at
that time.
38
Class gifts
• Under the "all-or-nothing" rule, if a gift to one
class member might vest too remotely, the
whole class gift is void.
• For a class gift to be vested under that rule,
the following two conditions must be met
during the perpetuities period -– The class must be closed; and
– All conditions precedent for each member must be
satisfied.
• A class may close “naturally” or under
the rule of convenience.
39
Rule Against Perpetuities -flowchart
No
Does the conveyance involve
a contingent remainder, executory
interest or class gift?
RAP does not
apply.
Yes
Determine lives in being causally
connected with the conveyance.
No
RAP does not
Can a person other than a life in being
acquire a possessory interest in the property? apply.
Yes
40
Rule Against Perpetuities –
flowchart (cont’d)
To what interest might an
after-born person succeed?
Might that interest vest more than No
21 years after any lives in being?
RAP does not
apply.
Yes
RAP invalidates
that interest.
41
Problems 1-2 (pages 289-90)
• O conveys Blueacre "to A for life, then to B if
B attains the age of 30." B is now 2 years
old.
• O conveys Greenacre "to A for life, then to
A's children for their lives, then to B if B is
then alive, and if B is not alive, to B's heirs."
– Assume also that at the time of the conveyance, A
and B are alive but A has no children.
42
Problems 3-5 (page 290)
• O, a teacher of property law, declares that she holds
in trust $1,000 "for all members of my present
property class who are admitted to the bar."
– Suppose, instead, that O held the $1,000 in trust "for the first
child of A who is admitted to the bar."
• O conveys Brownacre "to A for life, then to A's
children who reach age 25." A has a child, B, age 26,
living at the time of the conveyance.
• O conveys Redacre "to A for life, then to A's widow, if
any, for life, then to A's issue then living."
43
Problem 6 (page 290)
T dies survived by A and B. T devises
property "to A for life, and on A's death to A's
children for their lives, and upon the death of
A and A's children, to -–
–
–
–
–
–
B if A dies childless;
B if A has no grandchildren then living;
B's children;
B's children then living;
A's grandchildren; or
T's grandchildren.
44
Question
• How does the Rule Against Perpetuities apply
in each of the following cases? O conveys
Blackacre -– to the School Board, as long as it is used as a
school.
– to the School Board, as long as it is used as a
school, then to A and his heirs.
– to the School Board, but if it ceases to use
Blackacre for school purposes, then to A and his
heirs.
• In the last two situations, what could you do
to achieve O’s intent?
45
Questions -- Future Interests
• O conveys Blackacre to A and his heirs, but if the
property ceases to be used for agricultural purposes,
then to B and her heirs.
• O conveys Redacre to A and his heirs as long as the
property is used for agricultural purposes, then to B
and her heirs.
• O conveys Whiteacre to A's children who reach age
30. At time of the conveyance assume that A has
two children, Fred, age 29, and Sally, age 2, and that
-– A is dead; or
– A is alive.
46
Questions – Future Interests
(cont’d)
• O transfers Blueacre to all of his grandchildren who
will be born in the next 30 years. Assume
alternatively that the transfer is -– An inter vivos conveyance, or
– A devise.
• O devises Greenacre to his great-grandchildren, with
the devise to take effect when any of his
grandchildren first reaches age 21.
– At O's death, his wife is pregnant with O's first and only child,
A, who is born four months later.
– A dies at age 30, leaving a wife pregnant with their only
child, B, who is born five months later, and subsequently at
age 18, bears a son, C.
– B subsequently reaches age 21.
47
Questions – Future Interests
(cont’d)
• O devises Purpleacre to A for life, then
to A's first son for life, then to C and his
heirs if O's first grandchild is a girl. At
the time of the devise, O has one child,
X, but A has no children.
• O conveys Yellowacre to A for life, then
to B for life, then 22 years after the
death of B, to C.
48
Questions – Future Interests
(cont’d)
• O conveys Orangeacre to A for the life of X,
then to B for as long as B is alive, then to C if
C gets married, but if C divorces, then to D.
• O conveys Brownacre to A, but if the property
is not used primarily for recreational
purposes, to B.
• O devises Grayacre to my first grandchild
who shall reach age 70. O has one child, A,
age 18, and no grandchildren at O's death.
49
Problem (page 477)
• O owns Blackacre. He executes and
delivers a deed transferring the property
to his daughter as a gift. A does not
record the deed.
• Later, O tells A that he wants Blackacre
back. A hands the deed back to O and
says “The land is yours again.” O tears
up the deed.
• Who owns Blackacre?
50
Problem (page 477)
• O owns Blackacre. He executes and delivers
a deed conveying the property to himself and
A, his daughter, as joint tenants. The deed is
not recorded.
• Later, A tells O that she wants her son, B, to
have her interest in Blackacre. O agrees, and
to save recording fees, A “whites out” her
name and replaces it with B’s name. The
deed is recorded and O dies.
• Who owns Blackacre?
51
What sort of symbol is E-sign
referring to?
52
What sort of sound is E-sign
referring to?
Michael Jackson
53
Problem 2(a) (page 685)
•
•
•
•
A conveys to B, who does not record.
O conveys to A, who does not record.
B conveys to C, who records.
A conveys to D, who records. D is
shown the deed from O to A.
• O conveys to E, who records.
– Who prevails in a notice jurisdiction?
– Who prevails in a race-notice jurisdiction?
54
Problem 2(b) (page 685)
• O conveys to A, who does not then record.
• O conveys to B, who knows of the deed from O to A
and does not then record.
• O conveys to C, who does not record.
• B conveys to D, who does not then record but is
shown the deed from O to B.
• A records, then B records, and finally, D records.
– Who prevails in a notice jurisdiction?
– Who prevails in a race-notice jurisdiction?
– If after D records, A conveys to E, who promptly records,
who prevails -• In a notice jurisdiction?
• In a race-notice jurisdiction?
55
Problem 3 (page 685)
• O sells its property to A on June 1, the date that the
deed is dated.
• A borrows money from B and executes a mortgage in
B's favor. A also borrows money from O and
executes a mortgage stating that it is subordinate to
the mortgage from A to B.
• The mortgage from A to O is recorded on August 1;
the deed from O to A is recorded on August 15; and
the mortgage from A to B is recorded on August 30.
• C buys the property on January 1 of the next year.
• Is C bound by either mortgage?
56