Transcript  Real property is immovable and includes:       Land. Buildings. Airspace. Plant Life and Vegetation. Subsurface (mineral) rights. Fixtures. © 2005 West Legal Studies in Business A Division of Thomson.

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Real property is immovable and includes:
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Land.
Buildings.
Airspace.
Plant Life and Vegetation.
Subsurface (mineral) rights.
Fixtures.
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1
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A fixture is personal property that becomes
permanently affixed to real property.
 Intent that it become a fixture is necessary.
 Intent is determined by:
▪ The fact that the property cannot be removed without
causing damage to the realty.
▪ The fact that the property is so adapted to the realty
that it has become part of the realty.
▪ In re Sand & Sage Farm & Ranch, Inc. (2001).
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Trade fixtures: installed for commercial
purposes by a tenant.
They remain the property of the tenant and
can be removed when tenant leaves,
repairing any damage caused by removal.
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3
Ownership interests are classified as either
Possessory or Non-Possessory:
▪A Possessory interest such as a fee simple, life or
leasehold estate, gives the owner a right to
possess the land.
▪A Nonpossessory interest such as an easement,
profit or license, does not give the owner a right to
possess the land.
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4
Financial Advisors, Inc., signs a lease for the first floor
of an office building owned by Goodrich
Investments, Inc. Unlike a licensee, Financial
Advisors
 a. has only a temporary right to go upon the
property.
 b. is entitled to the exclusive use and possession of
the property.
 c. is not entitled to the exclusive use of the
property.
 d. must pay for the right to use the property.
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ANSWER: B
Lease is a possessory interest.
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Parts of a Deed
Parties: “Grantor” and “Grantee”
Words of Conveyance: “convey;” “bargain and
sell;” give; grant and transfer;” etc.
Description of Property: “Blackacre”
Habendum: “To have and to hold…”
Warranty: General, Special, other?
Due Execution: Signed and Acknowledged
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The Fee Simple (sometimes called fee simple
absolute) gives the owner the greatest
aggregation of rights, powers and privileges
possible under American law and can assigned to
heirs.
 A “conveyance” (transfer of real estate) “from A to B”
creates a fee simple. A is the Grantor and B is the
Grantee.
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Fee Simple Defeasible: grants conditional
ownership to Grantee as long as he complies
with condition. “A to B as long as ….”
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“To A, but only for so long as he runs his liquor
store on the land, then to B”
“To A and his heirs, the surface only of
Blackacre”
“To A and his heirs, but there is reserved to
Grantor ½ of all oil, gas & other minerals on,
in, under and that may be produced from
Redacre…”
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Estate that lasts for the life of some specified
individual. “A grants Blackacre to B for B’s life”
grants B a life estate in Blackacre.
When B dies, Blackacre returns to A or his heirs or
assigns, or a third party in the same condition, normal
wear and tear excepted.
Grantor A retains a “future interest” in the property.
During B’s life, she can possess, use, and take the
fruits of the estate, but not take from the property
itself.
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An easement is a right of a person to make
limited use of another person's real property
without taking anything from the property.
 A profit is the right to go onto land in possession
of another and take away some part of the land
itself or some product of the land.
 Property that is benefited by easement/profit
carries the the interest with the sale of land.
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11
Beth owns a corporate office park in Ohio. Her
ownership rights include the right to sell or give
away the property without restriction, as well as the
right to commit waste, if she chooses. Beth’s
ownership interest is
 a. a fee simple absolute.
 b. a leasehold estate.
 c. a life estate.
 d. the power of eminent domain.
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ANSWER: A
Fee simple owner can do anything they want to,
subject to laws or ordinances affecting all
other property owners. These would limit
ability to commit waste, for instance, if
dilapidated buildings were regulated.
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With respect to Adam’s land, Bob has an
easement, Carol has a profit, and Don has a
license. A right to possess the land is owned
by
 a. Adam, Bob, and Carol only.
 b. Adam and Don only.
 c. Adam only.
 d. Bob, Carol, and Don only.
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ANSWER: C
What would answer be if Ed had a lease on
Adam’s land?
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Regional Construction Company has a right to
drive its trucks across Standard Business
Corporation’s property, which is adjacent to
Regional’s office. This right is
 a. a leasehold estate.
 b. a license.
 c. an easement.
 d. a profit.
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ANSWER:
C
Roads, pipelines, power lines, utility
installations, etc. are normally on
easement estates.
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Wood Products Corporation, which owns no
land, has a right to cut trees from Natural
Resource Company’s land. Wood’s right is
 a. a leasehold estate.
 b. a license.
 c. an easement.
 d. a profit.
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ANSWER:
D
Profit is a right to enter and take something
away from land. What about a hunting
arrangement?
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Ownership in real property can be transferred
by:
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A written Deed.
A Gift.
A Sale.
An Inheritance.
Adverse Possession.
Eminent Domain.
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A Deed is the instrument setting forth the interests
in real property being transferred.
 Necessary components of a Deed:
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 Names of Grantor and Grantee.
 Words evidencing intent to convey.
 Legally sufficient description of the land.
 Grantor’s signature.
 Delivery of the Deed.
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Warranty Deed.
 Special Warranty Deed.
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Quitclaim Deed.
Grant Deed.
Sheriff’s Deed.
 Period of redemption.
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22
Investment Properties Corporation conveys an office
building to Jay with a deed that makes the greatest
number of warranties and provides the most
extensive protection against defects of title. This
deed is
 a. a grant deed.
 b. a quitclaim deed.
 c. a special warranty deed.
 d. a warranty deed.
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ANSWER:
D
Deed warrants property to grantee as against all claims,
whether arising from things that the grantor did or
things that others in the chain of title before him did.
…and Grantor does hereby bind itself to warrant and
forever defend all and singular the Property unto Grantee
against every person whomsoever, lawfully claiming or
to claim the same or any part thereof.
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Opal conveys three acres of wetlands to
Pristine Places, Inc., with a deed that
warrants only that Opal held good title during
her ownership of the property. This deed is
a. a grant deed.
b. a quitclaim deed.
c. a special warranty deed.
d. a warranty deed.
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ANSWER: C
The special warranty deed adds a qualifier at the end of
the warranty clause to limit the grantor’s liability:
and Grantor does hereby bind itself to warrant and
forever defend all and singular the Property unto
Grantee against every person whomsoever, lawfully
claiming or to claim the same or any part thereof, by
through or under Grantor but not otherwise.
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Manhattan Developers, Inc., pays Northeast Trust
Company to release its claim to a strip of waterfront
property. Northeast gives Manhattan a deed that
conveys only whatever interest Northeast has in the
strip. This deed is
 a. a grant deed.
 b. a quitclaim deed.
 c. a special warranty deed.
 d. a warranty deed.
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ANSWER: B
Actually not a conveyance of property, but a
relase of any claim to property. Effect is to
give the grantee whatever interest, if any, that
the grantee may have.
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Recording a deed (or any interest in real
property) puts the public on notice of the
new owner’s interest in the land and
prevents the previous owner from
fraudulently conveying the same interest
to another buyer.
Race statute.
 Pure notice statute.
 Notice-race statute.
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Owner of real property dies, his property is
transferred by:
 Will (testate).
 Without Will (intestate).
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Title is transferred at the time state law so
provides in its testate and intestate laws.
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One person possesses the property of another for a
certain statutory period of time, that person
automatically acquires title to the land, just as if
there had been a conveyance by deed. Must be:
▪
▪
▪
▪
Actual and exclusive.
Open, visible and notorious.
Continuous and peaceable.
Hostile and adverse.
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True or False:
Adverse possession has the same legal
result as a tenancy at sufferance.
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ANSWER: F
No, it’s much stronger than that! First, what’s a
tenant at sufferance?
Adverse possession results in what’s called a
“limitations” title which can be a fee simple.
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Eminent domain refers to the ultimate right
of an owner in fee simple absolute to
transfer the property by will to whomever
he or she wishes.
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ANSWER: F
Eminent domain is the right of the government
to take property for public use
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Rights in property are not absolute. They are
constrained by federal and state laws, e.g.,
nuisance, tax and environmental.
A “Taking” By Eminent Domain: The 5th
amendment gives the government the right
to “take” private land for public use with just
compensation.
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36
Bay City wants to acquire undeveloped land
within the city limits to convert into a public
park. Bay City brings a judicial proceeding to
obtain title to the land. This is
 a. adverse possession.
 b. an easement.
 c. constructive eviction.
 d. the power of eminent domain.
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ANSWER: D
Where in the constitution does it say the City can
do this?
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Anyone who rents housing to the public for
commercial purposes subjects herself to
various state and federal Landlord-Tenant
laws.
Owner of the property is the LESSOR and
Tenant is LESSEE; the contract is called the
LEASE. The property interest is called a
leasehold estate.
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39
True or False:
Contract doctrines do not apply to
landlord-tenant relationships.
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ANSWER: F
Leases are heavily governed by contracts…
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Tenancy for Years.
 Created by an express contract.
 Property is leased for a specified period of time.
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Periodic Tenancy.
 Does not specify how long lease lasts.
 But rent paid at certain intervals.
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Tenancy at Will.
 For as long as both agree.

Tenancy at Sufferance.
 Wrongful possession without the right to possess.
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42
True or False:
A periodic tenancy is created by an
express contract under which
property is leased for a specified
period of time.
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ANSWER: F
No, what’s described here is a tenancy for years
(even if it’s only months). You may think of a
periodic tenancy as measured by the rent
period, in a sense, since you are entitled to
one rent period’s notice to leave.
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True or False:
A tenancy for years is created by a lease
that does not specify how long it is to
last but does specify that rent is to be
paid at certain intervals.
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ANSWER:F
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Lease Agreement can be oral or written (oral may
not be enforceable). Lease gives Tenant the
temporary right to exclusively possess the property.
 Sources of Law:

 Common Law.
 State and Local Statutes, and
 The Uniform Residential Landlord and Tenant Act (URLTA)
which has been adopted by 1/4 of the states.
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Form of the Lease:
 Must express intent to establish the lease.
 Provide for transfer of possession to the Tenant.
 Provide for the Landlord’s “reversionary” interest.
 Describe the property.
 Indicate length of the term, amount of rent, when and
where rent paid.
 Illegality.
▪ Osborn v. Kellogg (1996).
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48
Dora leases a house from Evan for a two-year term. To
ensure the validity of their lease, it should include
 a. a description of the premises.
 b. a due date for the payment of the property
taxes.
 c. a requirement that Dora perform structural
repairs to the house.
 d. a requirement that Evan carry liability insurance.
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ANSWER: A
Read the question – only A is necessary to the
validity of the lease; the other things are all
very good ideas and examples of the many
things that need to be addressed in a lease.
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Trend in the law is to curtail, by contract and
real estate law, the immense freedom that
Landlords had in the past.
 Possession.
 Using the Premises.
 Maintaining the Premises.
 Rent.
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Landlord has a duty to deliver actual physical
possession under URLTA or legal right to possession
(“American” rule).
 Tenant’s right to exclusive possession is only subject
to Landlord’s limited right to come unto the
property.
 Tenant has a “covenant of quiet enjoyment” by
which Landlord promises Tenant’s peace and
enjoyment of the property.

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True or False:
Under the covenant of quiet enjoyment, a
landlord promises that a tenant will not
be disturbed in the use of the premises.
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ANSWER: T
How might a landlord breach this covenant?
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Eviction occurs when Landlord:
 Deprives Tenant of possession of the leased
property; or
 Interferes with this use or enjoyment of the property
to the extent that Tenant cannot use or enjoy.

Constructive eviction occurs when Landlord:
 Breaches lease or covenant or quiet enjoyment; and
 Makes it impossible for the Tenant to use and enjoy
the property.
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Residential property -- Landlord must
furnish premises in habitable condition.
Landlord is responsible for maintaining
common areas such as stairs, parking lots,
elevators and swimming pools.
Commercial property -- may still require
Tenant to maintain depending on the
lease.
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Implied Warranty of Habitability applies to
major (substantial) defects if Landlord knew or
should have known about & he had a reasonable
time to repair.
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To determine breach, Courts consider:
 Whether Tenant caused damage.
 How long defect existed and age of building.
 Defects impact on Tenant’s safety and health.
 Whether defect contravenes relevant statutes.
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Rent is Tenant’s payment to the Landlord
for the Tenant’s occupancy or use of the
Landlord’s real property.
 Payment based on agreement, custom, state
statute, waiver.

Security Deposits.
 A deposit by Tenant which Landlord may
retain for non-payment of rent or damage to
premises.
 URLTA has specific provisions as to when it
may be kept and when it must be returned.
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If Landlord breaches the warranty of habitability,
depending on state law, Tenant may:
 Withhold rent -- put in escrow.
 Repair and Deduct -- notify, repair, and deduct repair
from rent.
 Cancel the Lease -- must be constructive eviction or
breach of habitability.
 Sue for Damages -- difference between what paid for
and what received.
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59
True or False:
When a landlord sells leased premises to a
third party, any existing leases terminate
automatically.
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ANSWER: F
Leases usually* are encumbrances that remain in place
when property is sold. It is said that the property is sold
“subject to” the lease. The buyer simply becomes the
landlord.
*Depends on the contract, however!
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Transferring Landlord's Interest.
 Landlord may sell any and all of his rights in the
real property.
 New owner buys “subject to the lease,” if lease is
recorded.

Transferring Tenant’s Interest.
 Landlord’s consent may or may not be required by
statute or the lease itself.
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Transferring the Tenant’s Interest (cont’d)
 Assignments: Tenant transfers his entire interest
in the lease to a third person. Original Tenant is
not released from liability under the lease.
 Subleases: Tenant transfers all or part of his
interest in the lease for a shorter period of time
than the lease. Original Tenant is not relieved of
liability under the lease.
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63
Allen owns a duplex that he leases to Brad and
Cora. Allen may sell
 a. the duplex at any time.
 b. the duplex, but only after the lease term
expires and Brad and Cora have moved out.
 c. the duplex, but only with Brad and Cora’s
permission.
 d. the lease, but not the duplex.
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ANSWER: A
He can sell the duplex “subject to” the lease. What
rights do Brad and Cora have to dispose of the
leasehold interests that they have?
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Bill leases an apartment from Cathy. Two
months later, Bill moves out, and arranges
with Dian to move in and pay the rent to
Cathy for the rest of the term. This is
 a. an assignment.
 b. an easement.
 c. an eviction.
 d. a sublease.
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ANSWER: A
How is a sublease different than this?
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