Understanding Real Property Ownership & Land Use Control: Rights, Transfers - Prof. John C, Study notes of Business and Labour Law

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Land Use Control

and

Real Property

BLS 211

Property Ownership

• (^) Property ownership involves a bundle of

rights.

• (^) For example, tenants have rights, owner

has rights, utility easements holders have

rights, heirs to a will may have rights – all

in the same property.

• (^) Classifications of property
  • (^) Real v. Personal
  • (^) Tangible v. Intangible
  • (^) Fixtures

Nature of Real Property

• Real property is immovable and includes:

– Land.

– Buildings.

– Trees and vegetation.

– Airspace.

• (^) Potentially unlimited, but actually highly controlled by

federal preemption

– Subsurface (mineral) rights.

• Ownership rights can be transferred or retained by the

owner

– Fixtures.

Fixtures

• (^) Fixtures
  • (^) Personal property attached to realty so that it becomes a part of the real estate. - (^) Heating and A/C? - (^) Chandeliers? - (^) Fire place insert? - (^) Floating dock and piers at marina? - (^) When you buy a house. Specify exactly what’s to stay and what can be taken.
  • (^) Property can start out as personal property, then become part of the realty, and then become personal property again. - (^) Growing trees are part of the real estate - (^) The lumber made from the trees is personal property. - (^) When the lumber is made into a house, it again becomes part of the real estate.
  • (^) Trade Fixtures

Ownership Interests in Real Property

• (^) Freehold Estates
  • (^) When the owner holds the right to the property for an undetermined period of time
  • (^) Estates in fee
  • (^) Life Estates

Estates Outline

• Freehold Estates

• Estates in Fee
  • (^) Fee simple absolute
  • (^) Fee simple defeasible
    • (^) Title to a third party
  • (^) Fee simple subject to a condition subsequent
    • Title back to original owner
• (^) Life Estates
  • Life Tenant
  • (^) Remainderman

• Non-Freehold Estates

• (^) Lease
• (^) License

Estates in Fee

• (^) Fee simple absolute
  • (^) This is the best interest to have. Practically all

ownership rights are contained in this estate.

• (^) Fee simple defeasible
  • (^) Title is removed upon happening of certain

conditions, and then goes to third party.

• (^) Example: “I hereby leave my farm to my wife, but if

she should remarry, then the farm goes to my

children, in fee simple absolute.”

• (^) Fee simple subject to a condition subsequent
  • (^) Title goes back to original owners if certain

conditions occur.

• (^) Example: “I hereby deed my farm to my son, so

long as re remains off drugs, but if he resumes

taking drugs, then the farm shall revert to me in fee

simple absolute.”

Life Estates

• (^) The life tenant owns the property for as long as he or she lives. When the life tenant dies, the property goes to the remainderman. - Example: “I leave the farm to my wife for as long as

she lives. Upon her death, the farm goes to my

children in fee simple absolute.”

• (^) Life tenant has full possessory rights to the property.
• (^) Life tenant can sell the property, but only for the life of the life tenant!
• (^) Life tenant cannot waste the property.
• (^) Remainderman can sell his remainder interest.

Non-Freehold Estates

• (^) Lease.
  • (^) Tenancy for years
    • (^) This lasts for the period of time stated in the written lease
  • (^) Tenancy from period to period
    • (^) This lasts for the period defined by the rent payments.
    • (^) This is usually month to month.
    • (^) This tenancy is often created when a tenancy for years expires, and the parties continue the relationship.
    • (^) Automatically renewed unless proper notice is given.
  • (^) Tenancy at Will.
    • (^) Tenancy for as long as both parties agree; no notice of

termination is required.

• (^) Tenancy at Sufferance
  • (^) Possession of land without legal right.
• (^) License
• (^) This is a right to be on property, such as a hunting privilege, or a dorm room.

Warranty and Rent

• The implied warranty of habitability requires

that a landlord furnish and maintain

residential premises in a habitable condition.

• The tenant must pay the rent as long as the

lease is in force, unless the tenant justifiably

refuses to occupy the property or withholds

the rent because of the landlord’s failure to

maintain the premises properly.

Transferring Rights to

Leased Property

• If the landlord transfers complete title to the

leased property, the tenant becomes the tenant of

the new owner. The new owner may then collect

the rent but must abide by the existing lease.

• Generally, tenants may assign their rights under a

lease contract to a third person. Tenants may also

sublease leased property to a third person, but the

original tenant is not relieved of any obligations to

the landlord under the lease. In either case, the

landlord’s consent may be required.

Joint Ownership of Real Property

• (^) Joint Tenancy With Right of Survivorship
  • (^) This is the most common form of residential ownership in Alabama.
  • (^) Each joint tenant owns an undivided fractional interest
  • (^) Each joint tenant is entitled to possession of the whole.
  • (^) At the death of one joint tenant, title passes to the survivor.
  • (^) A sale by only one joint tenant converts the Joint Tenancy to Tenancy in Common.
• (^) Tenancy in Common
  • (^) Each tenant in common owns an undivided fractional interest
  • (^) At death, title passes to the heirs of the decedent.
  • (^) Each tenant in common is entitled to possession of the entire property, jointly with the other tenant.
  • (^) Each joint tenant has the right to sell their interest.
• (^) Tenancy by the Entirety
  • (^) Rare in Alabama.
  • (^) Husband and wife own property jointly.
  • (^) There can be no sale unless each signs the deed.
  • (^) Divorce converts the property to a Tenancy in Common.
• (^) Community Property
  • (^) California, Texas, Louisiana, other states
  • (^) Not the law in Alabama.
  • (^) Each spouse owns an undivided one half interest in all community property.

Other Property Interests

• (^) Easement
  • (^) Right to make use of someone else’s property without

actually possessing the property

• (^) Utility easements
• (^) Right of way easements
• (^) Egress and ingress easements
• (^) Easements by prescription are similar to adverse

possession.

• (^) Profit
  • (^) Right of way to go onto another’s real property and take something away (timber, minerals).
• (^) Quiet Title Action
  • (^) This is the form of the lawsuit to determine real

property ownership issues, such as adverse

possession.

Transfer of Real Property Ownership

• (^) Will
  • A formal document that “speaks” at the time of the author’s death.
  • (^) If a person dies without a will (intestate), their property passes in accordance with state statute.
• (^) Deed
  • (^) A general warranty deed conveys title with no liens or encumbrances, except those expressly listed.
  • (^) A quitclaim deed says, “I don’t know what I own, if anything, but whatever I own, you can have.”
  • (^) Recording statutes give constructive notice of the ownership status of real property to everyone.

Elements of a Real Estate Transaction

• (^) Listing Agreements.
  • (^) Between Seller (or Buyer) and a Real Estate Agent.
• (^) Real Estate Sales Contracts must be in writing

and signed to be enforceable under the Statute

of Frauds.

• (^) Contingencies.
• (^) Closing Date and Escrow.
• (^) Implied Warranty of Habitability.

Sale Process

Seller’s Response Purchase & Sale Agreement Financing Title Exam & Insurance Escrow Closing Buyer’s Purchase Offer Home Inspection

Recording Statutes

• 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.

• Marketable Title and Title Search.

• Title Insurance.

Transfer of Real Property Ownership

• (^) Adverse Possession
  • (^) Open, notorious, hostile possession of

another’s property for the statutory period

• (^) In Alabama, the period is 10 years, if you entered the property with a claim of right.
• (^) The period is 20 years, without a claim of right.

Transfer of Real Property Ownership

• (^) Eminent Domain
  • (^) This is the power of a governmental entity to take private property with just compensation for a public purpose.
  • (^) Kelo v. New London , United States Supreme Court
    • (^) City of New London, Conn., is taking working class houses and giving them to private developer (Pfizer Corp.) for a higher tax generating private use. The United States Supreme Court said this is a public purpose?
  • (^) Dolan v. City of Tigard. City required landowner to dedicate 15% of his property for a bike path in order to obtain a building permit to improve the property. City required 85% open space. Dolan planned to expand his plumbing and electric supply store and build a parking lot. City wouldn’t give him a building permit unless he dedicated 15% of his property for the bike path. Issue: Is this a taking requiring just compensation? Supreme Court, Justice Rehnquist, said that it was a taking, and the city must pay just compensation.

Acquiring Ownership of Personal Property

• (^) Taking possession of wild animals, such as fish, acquires ownership of the animals.
• (^) With lost or mislaid property, the possessor takes title against everyone except the true owner.
• (^) With abandoned property, the possessor takes against everyone, including the true owner.
• (^) Purchase
• (^) Gifts, completed gifts are irrevocable
• (^) Will or inheritance
• (^) Production

Bailment

• (^) A Bailment is a transfer of personal property from one person (Bailor) to another (Bailee) for a particular purpose. - (^) Example: Cleaners, repairs
• (^) Usually bailments are by agreement.
• (^) The Bailee has a duty of reasonable care to return the property to the Bailor.
• (^) The degree of care owed by the Bailee depends upon the nature of the bailment.

Land-Use Control

• The Law of Torts.

– Owners are obligated to protect the interests

of those who come on the land and those who

own nearby land.

• Private Agreements.

– Owners may agree with others to limit the use

of their property.

Police Power

• A state can regulate the use of land within

its jurisdiction.

• A state authorizes its city or county

governments to regulate the use of land

within their local jurisdiction.

• Government Plans: Most states require

that local land-use laws follow a general

plan.

Zoning Laws

• Laws that divide an area into districts to

which specific land-use regulations apply.

• Districts may be zoned for residential,

commercial, industrial, or agricultural use.

• Within all districts there may be minimum

lot-size requirements, structural

restrictions, and other bulk zoning

regulations.

Zoning and Growth

Management

• Variances : allows for the use of property

in ways that vary from the restrictions.

• Growth Management: Limits on, for

example, the number of residential

building permits.