I. Externalities (see 1/9/07 notes)
A. Def: A cost (or benefit) of any given action that is not taken into consideration (actor X is not forced to make the consideration) by the actor in determining the level of activity optimal from the actor’s point of view.
B. There are a function of transaction costs and encourage inefficient use
1. The actor essentially decides to use resources without accounting for the effects of the decision because they are external to the actor [they cause a cost to other people—to society].
2. Because of externalities, resources tend to be misallocated which is to say that when the resources were used in another manner, society would be better off.
3. We can anticipate that even if X changes a decision so that the cost to others would be eliminated and he sustains a cost that is on the whole less than that of society, X will still not make the change because he would be worse off.
a. If X were to change his situation, it would impose a benefit on the neighbors—removal of the cost—because benefit would be to someone other than X he would ignore those externalities.
b. Could the neighbors to offer X a sum of money to compensate him for the cost to him with the amount falling somewhere between actual cost and the full benefit the neighbors have actually garnered from the situation?
1b. This would force X to consider the cost on his neighbors…[internalize costs] if he decides to continue present use he forgoes payment and this in itself becomes a cost to X [note: if X does weigh this decision and continues his behavior, it is NOT an externality because X has made a decision to forgo payment] but there must be an offer for X to weigh from the neighbors which requires a collaborative effort and that collaborative effort is unlikely to take place if the transaction costs are sufficiently high because the neighbors (society) could actually become worse off.
2b. Reasons/Possibilities/Origins of high transaction costs
i. “X” is not known. Only the effects, not the cause is known and to find “X” would be too expensive
ii. There may be too many members of society and the effort to raise money will be too costly as they may live in a wide area and those affected could be hard to identify.
iii. What if X makes a change that actually benefits the society—[freerider problem beginning]. The freerider reasons that the other neighbors’ contributions will make up for his freeride and their contribution will induce X to change his decision. Of course, the freerider is not alone and everyone will feel the others are contributing so the freerider will give little—only enough to get others off his back—and will claim that he was not affected or less affected than others and thus contribution not necessary.
iv. Getting legal advice can be costly
v. X wishes to change land use but must first garner permission from all his neighbors and must pay them a certain amount but they hold out for a much higher number thus inducing great transaction costs
3b. Internalizing Costs can be done in more ways than just
4. Externalities do not necessarily lead to inefficient resource use—they can encourage inefficient use.
5. It would be unwise to ban activities with costly external effects
a. Externalities are reciprocal—arise from interactions
b. Banning X’s conduct would foreclose the efficient use of resources.
6. The tradgedy of the anitcommons
a. private property and state property are not the only ways to own land. Another suggestion is the anticommons. Just as a resource owned in common entails few if any rights to exclude others, an anticommons entails multiple rights to do so.
b. Just as common ownership leads to overconsumption (increasing as the # of common owners does), so in anticommons leads to underconsumption with the producblem of underconsuming. It is a good idea in a limited instance such as to protect a valuable wild life preserve.
7. On accounting for private property
a. Demsetz’s theory of the rise of property rights is criticized because of several reasons:
i. Makes an unjustified leap from assuming efficiency maximizing behavior of individuals to that same behavior of society—How does a society reorganize iteself from one of common property into one of private property>
a. It seems that the memebers must agree—but this requires reorganization and cooperation
b. So we really don’t know how private property comes about
c. Reorganization is cosly—a regimed has to be established to run the property system and the rights must be distributed and maintained
d. Since there is private property, and private property requires cooperation, cooperation is obviously possible. So can’t resources be managed just be cooperation? YES. But there are varying types of common property regimes. Some with restraints and controls and others with open access. As one gets closer to the open access, one has problems.
b. Demsetz says little about the benefits of common ownership. The benefits can include: That it is less costly, inceases the value of certain resources, enhance sociability, and can increase sociability
c. The good things of private ownership: Reduce externalities, nourishes diversity, maintains pluralism, essential for political freedom (frees them from the feudal chain.
Chapter V= Land Use Controls p. 637 (637-666 Seek Wk 1 Notes)
I. Land Use Controls–An Introduction
A. Externalities and Other Elements affecting Land Use
1. The presence of External costs and benefits becomes especially important to understanding the role of property institutions in controlling conflicting uses of land
2. Besides externalities, history, politics and issues of justice and fairness should also be considered when examining land use
B. The Law of nuisance = the earliest formal legal method of controlling conflicting land uses
1.. The content of nuisance law is set down by common law courts
C. The Law of servitudes
1. Set up primarily by private arrangements in light of market forces
D. Law of Zoning = development of the 20th C.
1. Gives rise to regulatory takings of property like eminent domain
2. Largely legislative and thus a political matter
II. Chapter 9- Judicial Land Use Controls: The Law of Nuisance
A. The law of nuisance is part torts and part property
B. WHY the two?
1. Tort= liability arises from negligent or otherwise wrongful activity
2. Property = the liability is for interference with the use and enjoyment of land
C. Nuisance Law is the means by which common law judge resolve conflicting land uses
D. One should use one’s own property without injuring the property of another
An Introduction to the Substantive Law
a. Nuisance: An unprivileged interference w/ a person’s use and enjoyment of her land.
i. Substantial interference that is either:
1. Intentional and unreasonable; or
2. Unintentional but negligent, reckless or abnormally dangerous.
ii. P must have a property interest that is affected by the nuisance.
c. Public – (same test as private) affects the general public (i.e. gambling)
Morgan v. High Penn Oil Co (see case outline and class notes)
To be a nuisance, there must be an ordinary use involved.
If something is ugly, most courts hold that this alone is NOT enough to constitute a nuisance
Note: Lateral and Subjacent Support
A. Law of private nuisance is regarded as defining one of a number of soc called rights incident to land ownership
B. Other rights include:
1. freedom from trespass
2. water rights
3. and the right to support: lateral and subjacent
C. Lateral support = refers to the support provided to one piece of land by the parcels of land surrounding it.
1. The common law right of lateral support imposes a duty on neighboring land to provide the support that the subject parcel would need under natural conditions
2. Normally there is no right to support of structures present on the land
3. A cause of action for interference cannot take place until subsidence takes place or is threatened (the movement or displacement of soil) and then it runs against the excavator
4. Liability is absolute and negligence need not be shown
5. IF however the subsidence would not
grant some preexisting servitude on the land. [does not create an easement]
3. Regrant Theory—
A. Easement must be distinguished from a license. A license is an oral or written permission given by the occupant of land allowing the licensee to do some act that otherwise would be a trespass.
B. A license is revocable, an easement is not [with two exceptions].
1. License couples with an interest cannot be revoked.
2. A license that becomes irrevocable under the rules of estoppel.
C. A license that cannot be revoked is treated as an Easement in the RST of Property
1. Holbrook v. Taylor
A. Easments are implied in two situations:
1. The easement is implied on the basis of an apparent and continuous (or permanent use) of a portion of tract existing when the tract is divided. This is sometimes called a quasi easement.
a. The easement is implied to protect the probable expectations of the grantor and grantee that the existing use will continue
b. An easement implied from a prior existing use was implied in Van Sandt v. Royster.
2. The easement is implied when the court friends the claimed easement is necessary to the enjoyment of the claimants land and the necessity arose when the claimed dominant parcel was severed from the claimed servient parcel. the easement is a necessity and not a convenience and that the necessity existed at the time the two estates were severed. This kind of implied easement is known as an easement by necessity (Othen v. Rosier) [i don’t understand why this doesn’t describe the Van Sandt case] Easements by Prescription
A. Easements may be acquired through prescription which in many ways is similar to adverse possession but in some ways different. Adverse possession involves an SOL running on the right for someone to recover possession. The adverse possessor has acquired new title based on adverse possession.
B. Doctrine of Prescription—rights can be acquired simply by the passage of time. [Remember, easments involve use and not possession of land] C. Lost Grant Theory- An owner of land is presumed to consent or acquiesque in the use.
The Public Trust Doctrine: Think Beaches
A. The public trust doctrine is only one way tat the public’s interest in beaches is recognized.
B. The public trust doctrine is the principle that certain resources are preserved for public use, and that the government is required to maintain it for the public’s reasonable use
C. Case: Mattews v. Bay Head Improvement Association
Assignability of Easments
A. The benefits and burden of appurtenant easments pass automatically to assignees of the land to which they are appurtenant, if the parties so intend and the burdened party had notice of the easment. Where the benefits is in gross, however, the benefit may not be assignable.
B. Case: Miller v. Lutheran Conferance & Camp Association
C. Recent cases allow for the assignability of easments in gross if the pariteis so intend.
1. Generally the only easements in gross that are not assignable are recreational easments
Termination of Easements
A. There are various ways to terminate easments. [SEE NOTES AND FILL IN] 1. Abandonment—Must have intent AND an actual act of abandonment
a. Preseault v. United States
 The Freeriding problem arises when efforts are made to extract contributions from members of a group in order to carry out transactions or benefits on the group.