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Property I
University of Pennsylvania School of Law
Pritchett, Wendell

Property Outline, Fall 2007
I. WHAT IS PROPERTY?. 3
Defined. 3
Theories of Property. 3
Different Property Regimes. 6
Theory for Limitations on Use. 7
Warranty of Habitability Theory. 10
Social Norms as Property Institutions. 10
Zoning Theorists. 10
Growth Control Theorists. 12
Exaction Theorists. 13
II. ACQUISITION OF PROPERTY. 14
Acquisition of Land and Chattels. 14
LAND.. 14
ANIMALS. 14
WATER RIGHTS. 14
ADVERSE POSSESSION.. 15
INTELLECTUAL PROPERTY. 17
III. FORMS OF OWNERSHIP. 19
PRESENT INTERESTS. 19
Fee Simple Absolute. 19
Fee Simple Defeasible Estates. 19
Life Estates. 20
Jointly Owned Property. 21
Tenancy in Common. 22
Joint Tenancy. 22
Rights of Co-Tenants in Tenancies in Common and Joint Tenancies. 24
Marital Property. 25
IV. LIMITATIONS ON USE. 26
Nuisance. 26
Trespass. 27
Limitations on Rights of Prop Owners. 28
V. REAL ESTATE TRANSACTIONS. 29
CONTRACT. 29
THE DEED/ESCROW PERIOD.. 29
FORECLOSURE. 31
VI. LANDLORD/TENANT LAW… 31
Evolution of System/Landlord Rights and Obligations. 31
Kinds of Leases:32
Termination of Leases:32
Bargaining Power. 32
Landlord’s Rights and Remedies. 33
Tenants Rights and Obligations/ Covenant of Habitability. 34
Rights Against Discrimination. 36
VII. SERVITUDE LAW… 37
Traditional Non-Possessory Interests(aka servitudes). 37
Easements. 38
Real Covenants. 40
Equitable Servitudes. 41
VIII. COMMON INTEREST COMMUNITIES. 42
Creation. 42
Judicial Oversight. 43
IX. ZONING.. 44
Euclidean Zoning. 44
Exclusionary Zoning. 45
First Amendment Concerns. 47
Growth Controls. 48
X. TAKINGS. 49
Eminent Domain. 49
Exactions. 51
Regulations of Use. 54
TABLE OF CASES. 56
INDEX. 57
 
I. WHAT IS PROPERTY?
Defined
A person has a property interest if he has any right which the law will protect against infringement of others
a.    Real property: land and any structures on it
b.    Personal property: all other kinds
c.     Possession: when someone has dominion and control over property
d.    Title: “ownership”
Bundle of Rights (don’t need all to own property); Sticks in the Bundle
a.       Use
b.      Alter
c.       Possess
d.      Enjoy fruits à e.g. farm land
e.      Transfer
f.        Exclude
Property law
                a. Source of rules to allocate scarce resources
                b. Set of rules controlling relationships btwn ppl and their surroundings
                c. Mean to decide when and if ppl have a right to do something
Property Laws are determined by 4 institutions to allocate resources
a.       Background legal principles: common / judge-made law
b.      Social norms: people often settle property disputes outside of the court
c.       Private contractual relations: private contracts can allow property relationships that are contrary to the law
d.      Political Institutions: specific bureaucracies set rules, such as EPA, zoning regulations
Theories of Property
a.       Natural Rights: John Locke
Property in his own person
                                                               i.      Your own body or your labor
                                                             ii.      Problems: you don’t have complete control of your body: ie. drug use, selling organs
Labor Theory
                                                               i.      Property is owned if he has mixed his labor with it, and joined to it something that is his own
                                                             ii.      First-come, first-serve
                                                            iii.      Limitation: only take what you can consume
                                                           iv.      Problems: now things are already owned by people, less common space; did not address issues of storing or selling, or what to do when 2 ppl claims same property
Role of government according to Locke: to protect interests once they’ve been established
Principles of Locke still hold:
                                                               i.      Labor is considered to be an important part of ownership
                                                             ii.      First possession is often given sizable weight in determining ownership
                                                            iii.      Government is a strong proponent in protecting the individual’s property rights
Personhood: Margaret Radin
ongoing relationships with property are important to personhood (similar to Hegel)
                                                               i.      property ownership is only important in context of group
                                                             ii.      certain kinds of property are important to personhood
2 basic kinds of property:
                                                               i.      Personal property: bound up with the person (i.e. wedding ring, family heirloom)
                                                             ii.      Fungible property: held purely instrumentally (i.e. money, or something that could be replaced with money)
Possible influence on policy:
                                                               i.      object loss is worse than monetary loss, so we should take money from a debtor first
                                                             ii.      personal property loss is worse than fungible property loss, so we should take fungible property first, possibly never take personal property
                                                            iii.      laws should give special protection to personal property
                                                           iv.      although personhood theory isn’t embedded in property laws, it may still be an important part of the decision-making process
Criticism:
                                                               i.      exact meaning unclear. Does this mean that an object tied to personhood is more valuable (and thus need to be compensated more if it’s taken away), or that this property cannot be taken away?
                                                             ii.      difficult to standardize
Gov Role:
                                                               i.      treat personal property diff. than fungible (homes most important)
                                                             ii.      create special class of prop, give greater protection
Distributive Justice: Rawls
“Ideal contractional” state
                                                               i.      Redistribute so that everyone has a minimum amount of goods
                                                             ii.      Would place a veil of ignorance so that even the well-off would pick the basic necessities for everyone
                                                            iii.      Reason: cannot be a person without the minimum resources (food, clothing, shelter, etc.)
Application
                                                               i.      Don’t necessarily need communism, can have democratic socialism, e.g. Sweden
                                                             ii.      E.g. welfare systems; subsidized low income housing, rent control
Criticisms
                                                               i.      impractical: ppl will act in own interest; poor have no political power
                                                             ii.      less incentive to work, hardest workers won’t get best reward
Gov Role:
                                                               i.      difference principle: arrange institutions so that lowest members of society get the mostbenefits
Wilson: Attacking Rawls
People are not risk averse, they are risk takers.
People understand that people have different talents, temperaments, interests and abilities. It is fair to match one’s rewards with one’s contributions.
In a settled society, inequalities become more evident, a natural division of labor occurs and the more gifted end up with more property.
Rawls’ view would only be possible in civilized society if people had equal abilities.
                                                               i.      Ex: San ppl of Africa: egalitarianàas shifted from nomads to settled, begin to hide cash from others
Utilitarianism
The goal of society should be to allocate resources so as to maximize aggregate welfare / satisfaction for its citizens
Government should be concerned with enforcing private property rights
Most concerned with average utility, not with individual utility
Free markets will ensure efficient (i.e. best) allocation of resources
Posner “Economic Analysis of Law”
                                                               i.      3 main criteria for an efficient system of property rights
1.       Universality: all limited resources should be ownable
2.       Exclusivity: people should be able to exclude others from their property.—This is limited to the point where my exclusive rights to my property aren’t infringing on someone else’s property rights.
3.       Transferability: in order to be most efficient, a piece of property must be transferable to an individual who will make more productive use of it.—Must always consider
Hardin (Tragedy of the Commons) 
if common (public) land, people will overuse until it’s valueless
every “rational” person will maximize resource for their own utility at the cost of the society overall; ex: oysters in public ocean over-taken, screws all
solutions: private prop., allocating rights
Sax – Some Thoughts on the Decline of Private Property (p344)
Society is shifting towards regulating private prop. rights more!
                                                               i.      Correct Allocation of Property Resources:private ownership should allocate the property resource to socially desirable uses. This isn’t happening .
                                                             ii.      why private ownership of Grand Central Station did not lead to the correct allocation:
1.       the law has moved recently from support of development to distrust of it—as a result “property rights are being fundamentally redefined to the disadvantage of property owners.”
2.       Private property system should protect gems like Grand Cent. But it doesn’t cause:
a.       Where there are exclusive consumer benefits people value the prop. accurately and bid for it. (will protect it cause you get benefit)
b.      w/ non-exclusive consumption benefits the public doesn’t protect. Hard to group people together, etc. (Coase/free rider, diffuseness, smallness of individual interest, imperfect knowledge, differential values to a large # of people and difficulty of pricing)
c.       This leads to asking government to protect these benefits — Restrict prop. rights to protect the commons (i.e. growth ctrls, LL/T law (habitability).
                                                            iii.      “We have endowed individuals and enterprises with property because we assume that the private ownership system will allocate and reallocate the property resource to socially desirable uses. Any such allocation system will, of course, fa

gether to protect territory, it is understood that gang members support each other in protecting their territory. Generally an unwelcome individual will leave.
c.       Philosophy: This system broadens the range of property regimes to three: private property, shared or common property and “open access.” The lobstering territory is an example of shared/common property. The tragedy of the commons, or of open access, does not occur in these areas because the gangs have incentive to protect the resources and avoid overcrowding.
d.      This is an interesting example of a non-private property regime that has not required strict governmental regulations to protect the natural resources. Local communities have developed ways to limit access and provide incentive to conserve resources. The result is similar to private property regimes, and “stocks of lobsters are larger, catches of fishermen are larger and the breeding stocks are larger.”
e.      Probs: Is it a sustainable system? There is not much incentive for innovation.
Theory for Limitations on Use
BLACKSTONE’S COMMENTARIES, (page 273)
Absolute view of property rights: 3rd absolute right is to property
The law’s regard for private property is so great that the owner’s right must be exclusive, and must not be abridged even for the general good of the community, except according to the law
not really applicable to the law today, many regulations on property right (probably not even applicable when Blackstone was writing back in 17th century)
MORRIS COHEN, PROPERTY AND SOVEREIGNTY, 1933 (page 273)
The essence of property is the right to exclude others
COASE THEOREM AND THE ECONOMICS OF PROPERTY RIGHTS (page 274)
Externality: external cost that spills over onto people who are not benefiting from the bargain. When X’s use of its rights has a negative effect on someone else (i.e. my factory pollutes your air)
                                                               i.      Externality is an example of market failure. Coase theorem says that if there were no transaction costs, the law would not have to account for efficiency problems due to externalities because people would solve them by contract, regardless of who had the entitlement.
Coase Theorem Main Ideas:
                                                               i.      When one activity interferes with another, law must decide whether one party has the right to interfere (no legislation) or whether the other party has the right to be free form interference (legislate)
                                                             ii.      When parties follow law uncooperatively, the allocation of property rights matters to arriving at an efficient outcome
                                                            iii.      When parties bargain successfully, the allocation of property rights doesn’t matter to efficiency
ZERO Transaction Costs Model:
                                                               i.      the allocation of rights affects only the final distribution of resources, not the efficiency of resource allocation
HYPOs
                                                               i.      If CBW has entitlement (rt to pollute)
1.       Burden on residents à 4 options: do nothing, install A/C = $150,000, offer CBW $ to install fume control system = $100,000, offer CBW $ to relocate = $250,000. Most efficient (if no transaction costs) = #3
                                                             ii.      If residents have entitlement (rt to odor-free air)
1.       CBW has burden à options: install fume control system = $100,000, install A/C for neighbors = $150,000, relocate = $250,000; Would install fume abatement system
Positive Transaction Costs:
                                                               i.      when transaction costs are high enough to prevent bargaining, the efficient use of resources will depend upon how property rights are assigned
                                                             ii.      Negotiation and Litigation Costs: significant time and money have to be invested in communication, working out and enforcing the agreement
Free-rider problem
                                                               i.      Everyone wants someone else to sue / negotiate because they will then be able to reap benefits without paying costs
                                                             ii.      f everyone waits, the problem will not be solved in efficient manner