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Property II
South Texas College of Law Houston
Blackman, Joshua Michael

POLICY: Efficiency V Fairness — Unfair that the squatters get legal title without paying — Squatters are maintaining the property (they are actually using the property) — If the owner of the land does not assert his rights during the SOL, neither will the law — Certainty and efficiency of the land — Evidence eventually goes stale so must assert rights within SOL
* * * Elements * * *           General Rule — no adverse possession against the government
Entry — must physically enter the entire property…if not entire property then will only acquire part you use
Acts as a signal; serves as notice to the world
Creates the cause of action — triggers the statutory period for owner to bring a claim to eject
Property owners have an obligation to know of people on their land; the law will not protect property owners that do not take care of their land and watch over it
Open and Notorious
Further puts the property owner on notice
MUST make your use of the land public
Minor encroachments do NOT satisfy this element (MANILLO)
Closest link to SOL (each State has different requirement for number of years)
Continuous does not mean continuous in a strict sense — can leave property and go to work
If continuity is broken, SOL starts over
MUST use the property in the manner that the original owner would use it
Example — summer home: if you only squat during the summer, you would meet the continuous element
Not just a matter of timing, but also how much of the property is being used
Squatter does not have to use every inch of the property to constitute continuous use; just using a portion of the land is likely enough; however must use the property as the reasonable owner would
Adverse under a claim of right (hostile to true – so without permission)
“Claim of Title” — squatter has some sort of legitimate claim to the land
Adverse possessor must have a reasonable basis for believing that the property belongs to him
“State of Mind” — 3 states of mind
(1) Objective — modern approach; MAJORITY approach, Conn. MANILLO
State of mind is irrelevant
Once there is an entry, all the elements are met and the true owner has a cause of action
(2) Good Faith — inadvertent or mistake…honest state of mind (NJ Doctrine – Van Valekburgh v Lutz)
“I thought I owned it”
Courts prefer to award title to the good faith trespasser (as opposed to the aggressive trespasser who knows he does not own the property when he enters)
(3) Aggressive/Hostile Trespasser — knowledge and intent (COMMON LAW; TX, Maine Doctrine)
“I thought I didn’t own it, but I intended to make it mine”
NOTES on Adverse Possession
Property owner MUST enforce his rights within SOL — the law will not protect your rights if you do not enforce them
Not improvements to land: personal belongings, junk/debrisare, not viewed as occupation by improvement
If separate lots then it doesn’t matter if owned by same or different people – even if color of title, you still need to fulfil AP requirements for both
Doctrine of agreed boundaries/acquiescence: if uncertainty between neighbors as to true boundary line, an oral agreement/acquiescence to settle is enforceable if the neighbors subsequently accept the line for a long period of time.
Estoppel: When 1 neighbor makes a representation about the location of a common boundary line & the other neighbor then changes his position in reliance on that conduct – 1st neighbor estopped to deny the validity of his statements or acts. (silence can also be interpreted as a rep by neighbor).
Van Valkenburgh v. Lutz – (claim of right at issue here)
Lutz’s admitted the land wasn’t theirs bc in their 1st suit their lawyer argued for a Precriptive Easement (meaning VVs owned the land and Lutz had only acquired and easement, therefore they failed to prove the “claim of title” element. Followed NJ/ Good Faith doctrine
Brought AP claim in 2nd suit — since already conceded VV’s owned land now estopped from bringing this claim
Mannillo v. Gorski
Only on 15 inches of neighbor’s property (entry — first element met; continuous — third element met)
“State of Mind” irrelevant, honest mistake does NOT negate claim of right — adopts Objective standard (4th element met)
Not open and notorious because nobody knew they were crossing the boundary line (failed second element) – possible equity
Innocent Improver: (MODERN – MANILLO) – person mistakenly builds on land they don’t own but is ejected before AP SOL run:
1. modern view (manillo) – forces a conveyance (fmv) of land from the owner to improver.
– if minor encroachment then relief may be denied
2. 2-part test (amkco) – relative hardship test
A. P must show irreparable harm if removal denied and
B. Balancing test comparing hardship to P if removal denied v. hardship to D if removal granted.
(CL) harsh – anything built on wrong land, good faith or not, became property of landowner (subject to delay, acquiescence, estoppel).
Color of Title – Adverse Possessor has some sort of documentation that he owns the land, but the documentation is defective and invalid (i.e. claim founded on written instrument, judgement, decree that is for some reason defective/invalid – fraudulent deed)
actual possession under Color of Title for only part of land covered in defective writing is constructive possession of all that the writing describes
Example: A sells B Blackacre. A does not even own Blackacre. B cannot actually own Blackacre even though he reasonably believes he does.
POLICY The law puts you in a more favorable position because you have some documentation (although invalid) showing that you believed you owned the property — In TX — 3 year SOL for color of title; 10 year SOL for AP
***Color of title can get you around State of FRAUDS (writing req)…if deed isn’t signed by Seller (fraud or accident) and the buyer meets all reqs for AP and is on the land for time req for Color of Title AP, then the title is now valid with the buyer
Effect of Disabilities in AP
The AP SOL does NOT begin running if someone has a disability
If there is a disability at the time of the entry, the adverse possession clock is stopped (does not begin to run)
A disability that arises after entry does not suspend the running of the SOL clock — POLICY is that if the disability occurred after the entry, the owner was already on notice and should have enforced rights
If there are more than 1 disability before AP starts — then use longer 1
In TX, disability for adverse possession means: (1) younger than 18 or (2) of unsound mind
Cannot TACK disabilities!!!!!!!!!!!!!!!! If O is insane, and H is a minor, then the clock starts running when O dies. (O is the owner and H has a future interest when O dies. Even though H is a minor, the SOL begins when O dies).
Tacking (REAL PROPERTY) — If adversely possessed land is sold, conveyed or devised, the period of time of the previous adverse possessor can be “tacked on” to the period of time of the current adverse possessor.
Requires some sort of privity between the current adverse possessor and the previous adverse possessor
need for reasonable connection between successive occupants of real prop. as to raise their claim of right above the status of wrongdoer or trespasser Howard v. Kunto
Howard v. Kunto – Beach houses, surveys were wrong, owners next to each other actually lived in the house that their neighbors owned
Uninterrupted possession does not require constant year-round occupancy, but rather such control over the property as ordinarily marks the conduct of owners in general in holding, managing, and caring for property of a similar nature and condition. – Accordingly, occupancy of the summerhouse during summer months over the ten-year statutory period sufficiently establishes adverse possession.
Tacking: (CHATTELS) – (not including NJ Discovery Rule-minority)
CL: no tacking – subsequent transfer of converted chattel was considered a separate act of conversion
Modern – permits tacking – the accumulation of consecutive periods of possession by parties in privity w/each other
Discovery rule (AP of chattels): (O’keefe v. Snyder – New Jersey)
Elements: hostile, actual, visible (diff between open and notorious), exclusive and continuous (for SOL).
Disc Rule is Minority = SOL want start or will be paused if true owner acting diligently to find property (O’keeffe)
Majority = AP rules for Chattels except SOL starts when owner should have reasonably known item missing
You can still TACK if there's privity for Chattels using discovery rule.
Ignores continuity rule, allowed tacking, shifted burden to plaintiff to prove she was diligently searching for property.
***Open and notorious element OR whether true owner was searching diligently will be the serious issue in AP Chattels cases.
O’Keeffe v. Snyder — (paintings stolen then sold to 3rd party, court wants discovery rule over AP)
Rule for AP does not govern personal property effectively because open and notorious prong is difficult to determine
For chattels, the clock starts ticking when the owner of the property knew or should have known the identity of the possessor (discovery rule)
BUT, upon discovery of theft the SOL is paused if the true owner of the chattels makes diligent efforts, under the circumstances, to locate and recover the chattels. This may include reporting the theft to the police or registering the lost chattels with a registry so as to notify potential buyers that it may be stolen.
AP BOP – REAL=squatter has to prove each AP element—CHATTELS = Disc Rule on original owner to prove looking diligently
THE SALES CONTRACT — Key Components of the Sales Contract
Purchase Price – duh
Earnest money — deposit to hold onto property; protects the seller because he must take the property off the market during closing
Description of the property — must describe where the house is; describe the property and its measurements
Good Title (abstract of title) — people try to sell property they do not own
Warranty of Title — certain restriction on the land
Date of Transfer (closing date) — if the deal is not done by this day, the entire contract could be voidable
Title — the legal relationship between person and property; title must be “good and merchantable”
Deed — piece of paper; evidence of having title; THE instrument documenting transfer of title
***When you acquire property, you are acquiring the title (the deed is just evidence of the title)
Deed of Trust: like mortgage where buyer (borrower) conveys land to 3rd party and title held in trust to secure payments.
Executory K: title isn’t transferred immediately upon signing agreement, because both buyer and seller must do certain things during the time between K formation and closing (ex. obtain title search. Inspection of home. Loan.)
Brokers Fiduciary Duty— owe their principals certain fiduciary duties (must act entirely on behalf of their principals)
FACTS – Two real estate brokers, who were associated with the listing Agent on the Licaris’ (P) property, purchased the property and sold it for a profit six days later knowing there was a buyer would who pay more that they hid from the Licaris’.
RULE – As fiduciaries, real estate brokers must place their clients’ interests above their own, act in good faith, and disclose all information that is or may be material to their clients’ rights and interests
Real estate agent’s fiduciary relationship to client:
Required to exercise fidelity and good faith, & can’t put himself in a position antagonistic to client.
Legal obligation to make full, fair and prompt disclosure to his client of all facts within his knowledge which are/or may have been material to the matter in connection with which he is employed.
Ways to violate code of realtors:
making a material misrep OR a false promise of a character likely to influence, persuade, or induce.
Acting for more than 1 party in a transaction without disclosing knowledge of all parties for whom he acts.
Any act or conduct which constitutes dishonest, fraudulent, or improper dealings.
Selling broker v. Listing broker:
selling broker owes fiduciary relationship to the seller (even though buyer working with them to get home.)
Listing broker and selling broker (person who brings buyer there) work together. 
Selling broker wants highest price possible to get highest commission.
Buyer's broker is someone who represents the buyer.  Unpopular because trying to drive down cost and might not get paid. 
Buyer's broker not guaranteed to split fee with listing broker.
Buyer's broker doesn’t have k with homebuyer and might need to collect fee directly from the buyer.
REQS = (1) be in writing (2) signed (3) by the parties to be bound (BOTH)(check doesn

importance to when deciding to buy the property
(2) Subjective Test — whether the defect affects the value or desirability of the property to this specific buyer
Major component of home in operating condition if: performs function for which it was intended, regardless of age and doesn’t constitute a threat to life and safety.
Warranty of Suitability: used/new buildings = 6 yr sol from original purchase
Implied Warranty of Quality    [[[[[SOL begins when defect is found]]]]] Implied as a matter of law — imposed by the courts; cannot waive implied warranty of quality as a matter of public policy
The implied warranty of quality sets a bare minimum level of quality that the builder/contractor cannot fall below; if the builder/contractor falls below the minimum threshold of quality, the owner/buyer is entitled to sue
If no K for hiring a contractor for work, the owner can use the implied warranty of quality as a means to sue for poor work
COMMON LAW requires Privity of K to sue…so must sue up the chain…When equitable, Courts might waive req of privity
MODERN— Privity of contract is not necessary for a subsequent purchaser to sue a builder or contractor under an implied warranty theory for latent defects which manifest themselves within a reasonable time after the purchase and which cause economic harm.
Economic harm is that loss resulting from the failure of the product to perform to the level expected by the buyer AND is measured by the cost of repairing or replacing the product
LIMITATION: implied warranty of quality is limited to latent defects which manifest after the subsequent owner’s purchase and which were not discoverable had a reasonable inspection of the structure been made prior to the purchase
LIMITATION: the subsequent purchaser still has the burden to show that the defect was caused by the builder’s workmanship (defenses are also available to the builder). The builder can demonstrate that the defects were not attributable to him, that they are the result of age or ordinary wear and tear, or that previous owners have made substantial changes.
POLICY for turning from CL to Modern…“The essence of implied warranty is to protect innocent buyers. As such, this principle, which protects first purchasers is equally applicable to subsequent purchasers.” — Latent defects don’t appear until sometime down the road, leaving innocent buyers left to deal with a problem and maybe even the seller didn’t know he sold something that was defective—Society is rapidly changing — houses are rapidly bought and sold (flipped)—so sellers aren’t too worried about finding the defects bc they just want to sell the house quickly—Subsequent buyer has little opportunity to inspect construction—Court says builder owes duty to even the subsequent purchaser, extends duty—Privity requirement might encourage sham sales—bc sellers know they aren’t going to be liable down the road—Builder is in better position to guard against financial risk bc of superior skill—Not logical
EXAMPLE — RooferàSelleràBuyer…B finds latent defect…who to sue?
Addition of subsequent buyers changes analysis…AS YOU MOVE FURTHER AND FURTHER AWAY from the roofer, roofer becomes less responsible——-CL – sue Seller then Seller sues Roofer…Modern – could sue Roofer directly with adequate proof
***If Seller knew of defects, and lied (MALFEASANCE) or was silent (NONFEASANCE), then Buyer can directly sue Seller (MODERN)
IMPLIED WARRANTY OF QUALITY Lempke v. Dagenais (Buyer) v. (Builder)
FACTS – Lempke’s (P) predecessors in title contracted with Dagenais (D) to build a garage on their property. Lempke (P) bought the property six months later. After they purchased the home, the Lempkes (P) noticed structural defects in the garage’s construction. They sued Dagenais (D)
RULE    Privity of K not necessary to maintain a cause of action for implied warranty of workmanship and good quality against a builder for latent defects.
——————————————————————————————————————————————————————Remedies for Breach of Sales Contract                  OPTIONS FOR EITHER SELLER OR BUYER
(1) Damages (2) Retention of the deposit (remedy for the seller) (3) Restitution of the deposit (remedy for the buyer)
(4) Specific performance —every piece of property is unique, so $ DAS are not adequate (not getting benefit of the bargain)
Winner can usually elect option
When BUYER Breaches K:
CL: you lose full deposit on home if you breach the K as buyer.
Modern: breaching buyer entitled to receive the difference between deposit amount and the loss from breach. 
Unjust enrichment used – can’t profit off of another person’s misconduct.  “growing recognition of injustice concerning the forfeiture of deposits.”
Liq DAS Clause – CTs will most likely not award these…most likely will put you in the position of Modern Rule
When SELLER breaches due to title defect:
AMERICAN RULE (MAJORITY) – allows purchaser to recover expectation DAS plus other reasonably foreseeable special DAS.