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Property II
South Texas College of Law Houston
Rensberger, Jeffrey L.

Rensberger, Spring 2011  Property 2
 
ADVERSE POSSESSION: A CLAIM WITHOUT TITLE
 
I.  Theory and Elements of Adverse Possession
a.       Intro:
                    i.      You have rights at date of entry
                  ii.      i.e. AP cuts trees before SOL ends, after SOL the trees are his even though he’s only had the trees for a little while
b.      Ballantine:
                    i.      Purpose is to quiet all titles that are openly/consistently asserted,
                  ii.      provide proof of titles, and
                iii.      correct errors in conveyancing
c.       Powell:
                 i.       Method of transferring interest in land without consent of prior owner, even in spite of dissent of such owners
               ii.       theory: adverse possessor may acquire title at such time as an action in ejectment (or other action for possession of real property) by the record owner would be barred by SOL
Policy:
1.      punish the true owner for sleeping on his rights and not putting land to use
2.      reward the AP because he was productive/efficient so he earns rights; he makes the land socially useful (may need good faith)
3.      quiet titles (may need good faith)
d.      Adverse Possession
                 i.      adverse possession is a synthesis of statute, case law, and judicial rules; AP requires:
1.      an entry that is
a.       actual occupation
b.      entry without permission makes a cause of action for trespass and triggers SOL
c.       entry also shows what the adverse possessor might end up claiming (marks the claim), puts owner on notice and shows AP is hostile
                                                                    i.      Substantial = must use the whole premises
                                                                  ii.      Need an inclosure, usual cultivation, or improvement
                                                                iii.      Lutz: used lot 19 substantially for 27 years; no proof he used the whole for the garden; throwing his trash on the land is not an improvement
                                                                iv.      Test: using it the way the true owner would it
2.      open and notorious
a.       puts property owner on notice that someone is on the property     
                                                                    i.      using the property as the ordinary owner is open and notorious. So if entry is enough to satisfy owner on notice, it probably satisfies this element too
                                                                  ii.      issue is where such usage is concealed; ad coelum – owning everything above and below the property you own
b.      sleep principal: penalize the negligent and dormant owner for sleeping on his rights
c.       notoriety meant for constructive notice:
                                                                 i.      objectively; would ordinary person notice the adverse possessor; not about the true owner knowing
3.      continuous of the statutory period and
a.       not constant, permitted to come and go in ordinary course; intermittent on a regular basis, depends on what kind of land it is
                                                                 i.      i.e. keeping land wild for hunting purposes
b.      Ewing: must use the property in manner that average true owner would use it under the circumstances
4.      Adverse, hostile and under a claim of right
Van Valkenburg (final winner, 3) v. Lutz (win 1/2/dissent): bought lots 14/15 at auction, lot 19 to the west. Cleared and made a traveled way and made Charlie’s house and a garden. VV bought lot 19. After bad blood, told Lutz to remove all his stuff. Lutz said he would but got prescriptive right to use walkway but not title to land.
·         Issue/Holding:  did Lutz have title via AP? No.
·         Rule: to get title by AP must show clear and convincing proof that for at least 15 years there was actual occupation under claim of title and there are no other adverse possessors. Proof = premises were cultivated/improved sufficiently to satisfy statute.
·         Analysis: use of garden and selling veggies is not substantial, and there was no improvement. Garage over the boundaries doesn't count either because he didn't know where the perimeters were. he conceded that π had legal title and possession of premises to show his right to easement by AP.
·         Dissent: held it for 15 years, everything he did improved the land; no one else asserted title; as long as he intended to use the property as his own, it doesn’t matter that he knew he didn't have title.
e.       3 views of state of mind requirement:
                    i.      State of mind is irrelevant (objective) (England) (Majority)
1.      Once there is trespass, there is a cause of action
2.      If all other elements of AP are there, hostility is implied
                  ii.      I thought I owned it (good faith) (American)
1.      If they dishonestly make a claim, they are trespassing and can never get title, they are squatters
2.      One can have hostile possession in good faith. Hostile possession = claim of right
a.       Charlie’s house was not an improvement because he knew it wasn't on his land. Court says need good faith
b.      Garage: knew it wasn’t on his land
                iii.      I thought I didn't own it, but I intended to make it mine (aggressive trespass) (bad faith)
1.      To be AP’s, occupants must intend to take property even if they know it’s not theirs
2.      Award title only if AP agrees to pay FMV to dispossessed former owner
f.       Walling v. Przybylo: there can be a claim of right even if AP knows that land belongs to someone else
g.       Color of Title: claim on written instrument, or judgment that is defective/invalid
                    i.      Where AP has a defective document purporting to give them document
                  ii.      Only in a few states is it required for AP; only AP’s who win have the elements plus a deed that conveys interest that is later found to be defective
                iii.      Sometimes has shorter SOL for AP’s, helps because it gives you good faith
1.      Only helps grantees; only clears up issues about title because of conveyances that go far back
                iv.      Actual possession under color of title of only part of land covered by defective writing is constructive possession of all that the writing describes
1.      Actual entry is needed for AP so remainder of property that you didn't take actual possession of, you have by constructive possession
2.      Constructive possession loses to: one with actual possession, or one with prior constructive possession
Mannillo π v. Gorski ∆ (win 1): Gorski had possession of a lot in 1946. Mannillo acquired an adjacent lot in 1953. Gorski made improvements in 1953 and a concrete walkway extended on Mannillo’s lot by 15 inches. Gorski built the walkway “I though it was mine.” Mannillo sued Gorski in trespass and ∆ counterclaimed for adverse possession. ∆:  acquired the land through adverse possession beginning in 1946 and continuing for more than twenty years. π: ∆ needed bad faith.
1)      Must possession be hostile in order to acquire land through adverse possession in New Jersey (Prebble v. Maine doctrine)?
a.       MAINE: STATE OF MIND RELEVANT; need hostility. So if you make mistake, you lose. Need bad faith.
b.      No. party may acquire land through adverse possession if that party had a mistaken belief that she had title to the property (Connecticut doctrine).
                                                              i.      CONNECTICUT: STATE OF MIND IRRELEVANT. Innocent improver doctrine. Entering as you would is enough
c.       Policy: Maine awards intentional wrongdoer; good faith person is treated worse than person with hostile mentality. Mere mistake doesn’t defeat AP, it can still be hostile
2)      What is required in order for a minor encroachment along a common border to constitute “open and notorious” possession?
a.       In order to constitute “open and notorious” possession, the true owner must have actual knowledge of a minor encroachment along a common border
·         Test for Adverse Possession: Any entry and possession for the required time which is exclusive, continuous, uninterrupted, visible, and notorious, even though under mistaken claim of title is sufficient to support a claim of title by adverse possession.
·         Open and Notorious Possession: Possession is open and notorious only when the true owner has actual knowledge. When the possession of land is clear and large enough to be immediately visible, there is a presumption that the true owner has actual knowledge of the adverse occupancy
o   but, there is no presumption of actual knowledge by the true owner when the encroachment is of a small area along a common boundary and is not clearly and self-evidently apparent to the naked eye.
o   This rule may impose undue hardship upon an adverse possessor. Equity may therefore require that the true owner convey the disputed land to the adverse possessor upon payment of its fair value.
o   Or, burden of a survey on the improver (∆ here); π isn’t obligated to inquire when he sees his neighbor making improvements because inequitable. Cost of avoiding risk of problem is on the person who is engaging in the activity. Putting all the costs on him might make him not do the activity.
h.      Small Intrusion Solutions
                    i.      Agreed boundaries (2 elements): neighbors orally agree on what the boundaries are between them. Used when they are (1) both uncertain. If they are uncertain and don't write it down, and go by it (2) for a long time, SOF wont apply.
                  ii.      Acquiescence: no one testifies that they have an oral agreement. But for a long time acquiescing shows the court there probably was an orally agreement. Agreed for a long time, though shorter than the SOL, evidence of an agreement that they were ok with the boundary line
                iii.      Estoppel: when one neighbor makes representations that show the location of the common boundary, then changes their mind, they are estopped from denying the validity.
i.        To test the efficiency of removing a significant encroachment (two part)
                    i.      Π has to show that it would suffer irreparable harm if removal were denied. But if it makes hardship: balance hardship to each party. If to ∆ is too great, no injunction probably. Instead, remedy at all.
 
II.Mechanics of Adverse Possession
 
Howard win 1 v. Kunto win 2: Adverse possession by Tacking. Owners of property in a summer house discover the land they occupied did not match their deeds. Howard owned the deed to the property occupied by Moyer; Moyer held the deed to the property owned by Kunto. Howard and Moyer traded, giving Moyer the correct deed and Howard the deed to the l

march 1946, so her action is barred by SOL, ∆ summary judgment
                  ii.      Appellate court: reversed and entered summary judgment for the π, action not barred concluding (i) the paintings were stolen; (ii) the defenses of expiration of the statute of limitations and title by adverse possession were identical and (iii) the ∆ had not proven the elements of adverse possession
1.      SOL is same as AP so to win on SOL, must win on AP, which he didn't satisfy all the elements. So the SOL doesn't start running
2.      They say no AP because wasn't’ open and notorious
                iii.      Supreme Court: reverse/remand for lack for facts (whether the property is stolen)
d.      Policy for SOL: stimulate activity and punish negligence, promote repose by giving security and stability to human affairs; achieves this purpose by barring cause of action after statutory period
e.       Discovery Rule (minority): SOL rule is too harsh
                    i.      cause of action will not accrue until injured party discovers, or by exercise of due diligence and intelligence should have discovered facts that form basis for a cause of action
1.      one can sue 6 years after the time of discovery
                  ii.      principal of equity to mitigate unjust results that result from strict SOL
                iii.      Factors for discovery rule:
1.      Whether π used due diligence to recover the paintings at the time of alleged theft and thereafter
2.      Whether time of theft there was effective method for her to alert art world
3.      Whether registering paintings with art dealers would put a reasonably prudent purchaser on notice that someone other than possessor was true owner
                iv.      Discovery rule rejected by NY; cause of action wont start running until you know the persons identity and you assert a claim against them and they deny it, as opposed to plain old discovery that says as long you realize its gone and who took it, the clock starts anew
f.       Open and visible possession of personal propriety may not be sufficient to put original owner on actual or constructive notice of identity of possessor
                    i.      π: nothing short of public display is sufficient to notify true owner, so there is no reasonable method
                  ii.      Policy: Discovery rule is more responsive to needs of the art world; shifts emphasis from the conduct of possessor to conduct of owner
1.      Issue will thus be, whether owner acted with due diligence in pursuing his personal property
2.      Artist that uses reasonable efforts to report, investigate, recover a painting can preserve rights of title and possession
                iii.      SOL modified by discovery rule and UCC encourages good faith purchases from legit dealers and discourages trafficking in stolen art without frustrating artists ability to recover stolen art works
1.      Discovery rule satisfies SOL and gives greater protection to innocent owner of property goods are lost/stolen
g.       MAJORITY approach is still normal element of AP if the same way it applies to real property
                    i.      Aim is to quiet title; if one is in possession of something for a long time, they will likely be able to keep it
 
BUYING AND SELLING PROPERTY
I. Transfers of Real Estate
 
a.       contract v. conveyance
                    i.      conveyance: closing, deed, title passes hands
                  ii.      k: promise by buyer to by as long as some requirements are met
1.      usually make a down payment of 10-20%
2.      will need credit approval; usually don’t pay in cash; money will be paid at closing
a.       money comes from lender who gets mortgage on it
b.      mortgage needs approval
c.       buyer makes loan applications to various lenders
3.      buyer gets money from lender to finance, whereas lender gets money from mortgage so if mortgage is not paid, lender takes it back; lender does independent title search
4.      title insurance companies insure title; and insurance company can protect the buyer against a defect against the title
a.       title insurers check the title before giving rate and such
b.      they give you a series of commitments, saying they will write a title insurance policy preview on date of closing for buyer to show seller
c.       lender provides mortgage on certain terms