Basic Property Concepts
I. Questions regarding property interests:
a. How are property interests created?
b. How can they be transferred (or lost)?
c. What bundle of rights do they create in their owners?
d. What can governments do to decrease the bundle of rights?
e. What are the pragmatic consequences?
II. Theories on Assumption of Property Rights
a. Natural Right
b. Part of Our Humanity
c. Necessary to Any Society
d. Completely defined by Government
e. Professor’s view: Property is not a stable concept; it is constantly evolving. There is no natural concept; property is comprised of set of cultural conventions at a particular point in time (discussed ex. of slavery)
Similar to intellectual property, ownership of real property can arise from creation, use or governmental grant. State or federal governments can grant ownership rights through a “land patent” as seen in the earliest land titles in America. Property interests can also be transferred among parties. Possession and use can create property interests through adverse possession or limitation title.
f. Acquiring Real Estate
i. By Gift, Devise, or Descent
1. Three elements required:
a. Intent on part of donor to make the gift
b. Delivery or transfer of the subject matter of the gift
c. Acceptance of the gift by the donee
2. Brewer v. Brewer (W.V. Sup Ct 1985)
During divorce proceedings, wife sues husband for half of house he bought before marriage. Wife’s name was put on deed the day before they wed. Court holds inter vivos gift requires 1)intent, 2) delivery, 3) acceptance. Intent of donor is questionable. Trial court had referred to W.V. Code stating that when a spouse purchase property in both husband and wife’s names, can presume it is a gift. Appellate court states this Code should not have been applied because the parties were not married when the deed was signed; code does not pertain to engaged couples or those contemplating marriage. Reverse trial court decision and remand for new trial.
3. Property interests can be created or transferred by a will.
a. The decedent has devised the property, which is called the devise, to the devisee.
ii. By Purchase: Equitable Title under Property Transfer Agreements
1. Effect of a Real Estate Transfer Agreement
a. Conveys and transfers “equitable title” to the purchaser; shows beneficial interest in the property and gives the right to acquire legal title to the property
b. “Legal title” remains in the seller until the deed is executed.
2. Calvin v. Custer County (Mont. Sup. Ct. 1940) Calvin contract to sell parcel of land to U.S. Before execution of the deed, taxes were assessed and Calvin paid under protest. After execution of the deed, Calvin sued for refund of the taxes. Refund was granted because when taxes were assessed in paid, the transfer agreement had been signed, and therefore U.S. held equitable title. Since U.S. is immune from state taxes, the property was not taxable for that year.
iii. Adverse Possession, or “Limitation Title”
1. Claimant occupies the land and if certain formal requirements are met:
a. Occupation is open, visible or obvious so that the record owner can recognize the possibility of losing the land
i. Constructive Notice: Even if owner did not notice that someone was using the property and it was reasonable for owner to notice, can consider it noticed by the owner.
b. Possession must be “hostile” (or non-permissive)
c. Must occupy for the period of time required by the pertinent state (governing suits to recover possession of land)
i. Successive occupancies of different possessor – none of whom individually adversely possessed for the required period of time- can be “tacked” together.
2. Totman v. Malloy (Mas. Sup. Ct 2000) Caroline Totman owned 2 parcels of land; conveyed one to her son, Totman, and later the other to grandson who conveyed it to Malloy. Malloys had the land surveyed and realized that part of the land that Totman thought was his and had regularly maintained was actually theirs. Totman claimed adverse possession, but trial court ruled in favor of Malloy based on the presumption of permissive use btw family members. Appellate court reversed, claiming that non-permissive use could occur btw family members. Presumption of permissive use among family members would requires subjective inquiry into family relationships and/or strifes and evaluation of claimant’s state of mind.
3. Davis v. Parke (Oregon Ct of App 1995) Davis could not claim adverse possession of parcel of land in question even though had put up fence and allowed cattle to graze on the land. Was not open and obvious b/c of the topography of the land and the distance from the owner’s house.
g. Lawyering Skills: Decotis and Steele Article
i. Rapport building
ii. Advice and consultation
iii. Document preparation
v. Courthouse functions
vi. Continuing legal education
vii. Practice management
h. Possessory Interests
i. Fee Simple Absolute
1. perpetual, and only, holder of all of the bundle of rights in the property
2. highest form of property ownership
3. “To [Grantee] and His/Her/Its Heirs” or “To [Grantee] in fee simple absolute”
a. Doesn’t necessarily mean that heirs have interest in the property; only implies that Grantee can give property away to anyone (s)he chooses.
ii. Multiple Interests in the Same Property
1. Life estate: grantee receives the property until his/her death
a. “To [Grantee] for Life and then to [Remainderman] and His/Her Heirs”
b. Remainder is fee simple absolute
2. Partition or partial sale: separate into different parcels
. Rents and profits: right retain profits gained by her use of the property and no duty to reimburse co-tenants for rental value of her use; co-tenant oust of possession has right to share in rents and profits received from third parties
ii. Taxes: can compel contribution if pay entire taxes or enforce lien against property
iii. Repairs: in most states, co-tenant has right to require contribution but must warn others in advance
iv. Improvements: not entitled for reimbursement
i. Marital Rights (also see Tenancy by Entirety)
States deal with the concept of community property and marital rights in different ways. In most states, community property is divisible upon divorce but separate property is not. There is often the presumption that property held by husband and wife is community; spouse claiming otherwise must prove this to the court.
i. Community Property System
1. Allows for “separate” property, owned by only one spouse; could include items obtained by gift, devise/descent, acquired before marriage
2. Inception of title doctrine: if the inception of title was before marriage, the property is not community
3. Commingled property: if separate property cannot be identified from community, then it is all community
4. Tracing: separate property can be traced showing it retained its separate character by showing where it came from and that it remained intact
5. Reimbursement: if community property or effort is used to enhance value of a separate asset, non-owing spouse may be reimbursed
ii. Common Law System
1. derived out of coverture (wife is a dependent incapable of contracting) which was replaced by equitable distribution
2. states differ on how to define marital property subject to distribution:
a. all property owned by either spouse, when/however acquired
b. includes only property acquired during marriage
c. only property acquired from income earned during marriage, not acquired through other means such as gift, devise, descent (closet to community property system)
i. Reasons for Valuation: taxes, sales contracts, division upon divorce
ii. Methods of Property Valuation
1. Capitalization of earnings: projecting future income and discounting
2. Multiple of earnings: fixed multiple