Statute of Frauds As a general rule, on oral agreement for the sale of an interest in real property is NOT

enforceable Statute of Frauds requires that a K must meet the following requirements:

1. Essential terms: essential terms, (usually the identity of the parties, the price, and the property description,) must be set forth in writing

2. Writing: the writing can be a formal contract or an informal memorandum3. Signature: writing must be signed by the party sought to be bound

a. Failure to comply w/ Statute of Frauds does NOT make the K void; it simply prevents the K from being enforced UNLESS the exceptions apply

Why have statute of frauds? To make sure there is a contract, and to prevent inequity

Exceptions to the Statute of Frauds Part performance

o oral contract for the sale of real property may be enforced if the buyer: Takes possession; and Pays at least part of the purchase price, OR Makes improvements to the property

o Courts reason that a buyer would perform these actions only if a K existed; so this conduct serves as a substitute for the writing

Equitable Estoppel o Oral contract may be enforced if:

1 party acts to his detriment in reasonable reliance on another's oral promise; AND Serious injury would result if contract is not enforced

Hickey v. GreenFacts:∆ orally agreed to $15000 for purchase of lot and accepted deposit check—∆ didn’t fill in check. Then, repudiated and sold to another for higher price.Rule: K that does not comply w/ SoF can seek enforcement if they changed their position based on reasonable reliance on the K and continuing assent of other party Reas: ∆ did not deny the oral K, she could have enforced against π, but they wouldn’t have been able to enforce against her. Marketable Title Marketable Title: (merchantable title) a title reasonably free from doubt to its validity

Basic idea is that a buyer should be able to purchase property without fear of litigations about her titleo Title is unmarketable if:

1. The seller’s property interest is less than the one she purports to sell2. The seller’s title is subject to an encumbrance, or;3. There is reasonable doubt about either (1) or (2)

Example: seller promises to convey a fee simple when he only has a life estate

Question of marketability does not concern physical conditions on the title

Most courts  hold seller is not required to produce a marketable title until closing → allows seller reasonable time to cure defects

Generally, the existence of a private encumbrance (like an easement) clouds the title o exception: private encumbrances that are open & known to buyer at the

time of contract--> ex: power lines When seller is basing ownership on adverse possession, they don't have

record title. Most jx say this isn't marketable title

Lohmeyer v. Bower

Facts: π brought suit to rescind K to buy land after he discovered house on land violated a City OrdinanceRule: A title is doubtful and unmarketable if it exposes the party holding it to the hazard of litigation; RECORDED zoning restrictions, easements or covenants don’t make title unmarketable, but if they aren’t recorded, they aren’t valid.Reas: Public ordinances and zoning are not restrictions that make a title unmarketable, They only do so when the property in question is already in violation of them. Our seller still wants a chance to comply-->sellers will generally have a reasonable amount

time to fix errorsNotesInsurable Title: a title which a title insurance company would be willing to insure at normal ratesRecord Title: the title that appears in the public land recordsExecutory Period: the period between the contract signing and the closing

Equitable Conversion Equitable Conversion

1. Buyer bears the risk as the equitable owner;2. Seller bears the risk as the legal owner; and3. Party entitled to possession bears the risk ***

The Modern trend is the 3rd one: The person who has the right to possession bears the risk of loss

Difficulty is that people contract based on traditional lawIs it unfair to expect LL to purchase insurance when they look at existing law & see they aren't responsible?

Brush Grocery Kart Inc. v. Sure Fine MarketFacts: π leased a building from ∆, property was damaged in hail stormRule: Party entitled to possession of property bears the risk Reas: π was not in possession of property – ∆ held the right of use and occupancy and gave notice it would consider π a holdover tenant if it continued to occupy the premises other than by continuing to lease the property.Duty to Disclose

Caveat Emptor: "buyer beware"The seller of real property had no duty to disclose defects to the buyer.

o The buyer had the complete responsibility to assess the condition of the premises Unless the Seller:

1. Affirmatively misrepresented the condition of the property (lies!)2. Actively concealed its defects or;3. Owed a fiduciary duty to buyer (relationship b/t buyer & seller that's not at arms’ length

Lawyer selling to client Family members Banker/lender

Purposes of Caveat emptoro Gives us a brightline ruleo Encourages buyers to do their homeworko Provides more certainty to seller, they shouldn't have the onus to guess buyer's

preferences makes it up to buyer to ask/find out if something is important to them/necessary

to the transaction In most jx: seller of residential real property is obligated to disclose defects he knows about

that:o Materially affect the value of the property and;o Are not known to or readily discoverable by a buyer

Stambovsky v. Ackley

Facts: Buyer discovered house he purchased was known to have been possessed by ghostsRule: Where a condition which has been created by seller materially impairs value of K, and is peculiarly w/in knowledge of seller or unlikely to be discovered by a prudent purchaser exercising due care w/ respect to subject transaction, nondisclosure constitutes a basis for rescission as a matter of equityReas: Meticulous inspection/search by buyer would not have revealed presence of ghosts. There is no policy reason to deny π relief for failing to discover something most people wouldn’t contemplate. ∆ fostered public belief that her home was possessed – she told public of this, so she could have told buyer of the condition

Why isn't caveat emptor enough to protect the buyer here? We might assume that the presence of ghosts is a latent defect Dissent mentions that precedent is being upset in likely the wrong case

o Arguments against caveat emptor For reasons of fairness and equity, this could be irresponsible of the seller

o Majority approach--Objective standard Seller is obligated to disclose defects that:

1. Are known, and;2. Materially affect the value of the property, and;3. Are Latent (not known or readily discoverable by the buyer)

Rationales: Anti-predatory practices What buyers expect Cleaner to operate--brightline rule ("reasonable" buyer)

PATENT defects, that ARE readily discoverable by buyers don't necessitate disclosure from seller

Giving buyer information, puts decision in the hands of the buyer1. Broker wants you to disclose EVERYTHING, because liability for non-disclosure extends

to them2. We want to put some pressure on the buyer

Is it prudent for seller to talk about, a water heater, and assert "it looks good to me!" or should you enlist help of an expert?

The onus is on the buyer to hire and expert/inspectorImplied Warranty of Quality: developer of newly constructed residential property impliedly warrants that the property is fit for its intended use.

Strawn v. CanusoFacts: 150 families sought damages because developer knew of landfill nearby but didn’t discloseRule: professional sellers have a duty to disclose negative off-site conditionsReas: Pro sellers have superior access to info; info about dump is material to the transactionNormally, don't have to disclose off-site conditions

Limited to builder/developers (people in the business of selling), not to private seller After the case, the lx passes a statute that reins this in, "seller has to tell buyer that there

is a list of things you might want to know about" Delivery: Delivery requires:

1. an act manifesting an intent to make a present transfer of real estate; OR2. donor manifests that document is to be legally operative while the donor is alive.-->deeds

are present transactions!o Delivery is also presumed if the deed is recorded. o DEED is only effective if it is delivered &accepted. 

Acceptance is usually presumed even when the grantee is unaware of the gift. o In most states, manual transfer of the deed to grantee creates a presumption that

deed has been delivered

When grantor has the ability to revoke, the courts will likely say they meant they wanted to revoke

Rosengrant v. Rosengrantno deliveryFacts: old man and woman signed deed for farm to nephew, but when woman died, man retained the right of retrieval. Rule: When grantor delivers a deed under which he reserves a right of retrieval and attaches to that delivery the condition that deed is operative only upon death and further continues to use the property, these actions are really grantor attempting to make deed a will, which is unallowable. Reas: Writing on envelope showed that deed was retrievable at any time by Haroldcould have been retrieved by Harold OR nephew Vasquez v. VasquezdeliveryFacts: Woman granted property to one person in her will, and another in a deed. Deed was left with atty, woman had no power to recall deed. Rule: When grantor delivers a deed to a 3rd person w/out a reservation to recall it and instructs them to deliver it upon their death- the delivery is effective as a matter of law. Indications of immediate delivery

Statements Actions--does grantor retain a right to revoke? (Rosengrant) Escrow given to a 3rd party and there are no "take-backs" (Vasquez)/given to 3rd party w/

instructionsRevocable deeds

Not popular; modern trend of upholding revocable deeds, but not equivalent to majority rule

Differ from Rosengrant in that their revocability is express and known to all; no surprise o May want to use as a will substitute, or like an inter vivos transfer

MORTGAGE Promissory note: contract by which the borrower promises to repay the loan on certain terms

and conditions To minimize risk of nonpayment by buyer, lender will require security for the loan in the

form of MORTGAGE Mortgage: gives the lender the right to use a special remedy if the borrower defaults

Lender may sell the property and use the sales proceeds to pay off the loan (FORECLOSURE)o Borrower = mortgagor; Lender = mortgagee

Title theory: mortgager remains in possession of property but mortgagee holds title until loan is repaid

Lien theory(most jx): mortgage conveys only a security interest--which gives mortgagee right to foreclose on property--not as the transfer of titleo BOTH title AND possession remain with the mortgagor until and unless foreclosure

occurs

Wansley v. 1st National BankFacts: π was unable to repay loans to Bank, executed & delivered deed of trust conveying their interest in land to a trustee, trustee offered land at public auction, Bank was only bidder offered 1 millionRule: If the secured creditor is authorized to foreclose by power of sale, after debtor's default and upon compliance w/ the deed of trust or other's instrument, the secured creditor may: sell any or all of the real estate that is subject to the security interest in its then condition or after any reasonable rehabilitation of preparation for sale. Every aspect of sale, including the method, advertising, time, place and terms, must be commercially reasonableReas: Banks behavior was commercially reasonable Deficiency judgment: bank can go after you personally for the money still owed

Standard: commercially reasonable Court will set aside a foreclosure sale if sales price is "inadequate as to shock the conscience of the court”

Trustor gives a deed of trust to a 3rd party (trustee) for benefit of the lender (beneficiary)o If trustor defaults, trustee will sell the property through foreclosure and give the sales

proceeds to the beneficiary or repay the loanJudicial or Nonjudicial Foreclosure

Mortgagee who wanted to collect an unpaid loan would use judicial foreclosureo File a complaint, prove case, receive judgment authorizing him to foreclose on the

property Today, most states allow nonjudicial foreclosure if mortgage expressly provides for a

"power of sale"o Mortgagee forecloses on the property himself, conducting a sale w/o an judicial

involvement Mortgagee starts nonjudicial foreclosure by notifying the mortgagor that loan is in

default and allowing him an opportunity to pay debt If loan isn't repaid w/in a set time (usually 90-120 days), the mortgagee can hold

a foreclosure sale Terms of a deed of trust also permits nonjudicial foreclosure Usually saves time & $$ Presents greater risks for mortgagor

mortgagee typically bids amt of remaining loan balance (credit bid) and not required to bid w/ cash; Other bidders usually required to bid w/ cash

Once property is sold and purchase price is paid, auctioneer delivers the deed to the successful bidder

If sales price is MORE than loan balancessurplus goes first to any junior lienholders, then to mortgagor

If sales prices is LESSmortgagee may seek a deficiency judgment against the mortgagor

Antideficiency laws (Nevada) In some states. These restrict the mortgagee's ability to obtain a deficiency judgment, such

as where:o The mortgage encumbers an owner-occupied residence, or; o Mortgagee has used nonjudicial foreclosure

Other mortgagor remedies Reinstatement: mortgagor can quickly pay any missed payments to avoid foreclosure Statutory right of redemption: individual obtains funds to pay off loan AFTER foreclosure

sale; mortgagor may redeem property from successful bidder w/in a set period of time Mortgagor must pay the sale price, +interest and costs

Installment Land Contract Alternative to mortgage; Buyer promises to pay the purchase price in installments over a

period of time, and is allowed to take possession of the property, but the seller retains title until all payments are made

Mortgage and Foreclosure Required documents:

Original or certified copy of the deed of trust The mortgage note Each assignment of the deed of trust or mortgage An appraisal

Steps toward mediation Notice of default

o Election to mediate Who? --Borrower, person living in house (occupier), title holder, owners (owner

occupier & others) Supreme's Cts hands are tied, blame is on legislature for enacting this law

o Legislature is saying "you can only streamline this so much"; for private foreclosure, all that is required is deed of trust--this is simple and easy

o Lenders need to show up, be willing to negotiate, WF will act as owner, will mediate and negotiate if they can, if not, it goes to foreclosure (give borrower and lenders a chance to get together and talk)

When you go to mediation, it is more likely house won't be foreclosed ; Often come to an agreement

New Federal laws Helping families save their homes act of 2009

o 90 day notice to affected tenantso Assumption of property subject to lease

Making home affordable programModify or refinance loansHome affordable refinance programUnderwater borrowers who are current

Effects of foreclosure crisis? Reset would benefit cities/HOAs, bc it affects people who actually pay their mortgages We helped lenders get into this mess, is it fair to now turn to the market to get us out

o Govt intervention on behalf of those who were affected when market went southo Title theory element to NV Sup. Ct's resolution to these types of cases

Certainty in transactions--will lender be able to foreclose? o Fear that we will suppress economic activity b/c lenders don't know what property

rights are Facilitates transactions

o Don't upset certainty in transactions lightly--need a BIG mistake that "shocks the conscience" to undo transaction

We look at what the result is of adopting a particular rule--UTILITARIANo Negotiation of public policy concerns

Civic republican notion of home ownership in America--property is so important, everyone should have a little!

Breach of Sales K Remedies for breach:

Restitution Benefit of the bargain damages Specific performance

o Equitable remedy that requires breaching party to perform Kcan only be granted if $$ damages are inadequate

Giannini v. 1st National BankFacts: π had paid for condo unit, building was built but was declared a “rental unit” instead, court held that specific performance was required. Rule: specific performance can't be decreed of an agreement to convey property which has no existence or to which ∆ has no title, BUT Ks to devise or convey real estate are enforced by specific performance on the ground that the law cannot do perfect justiceReas: There is no hardship in compelling the seller to do what he agreed to do when he thought it was to his advantage

As an equitable remedy, specific performance is subject to the court's discretionCourt may deny if it would impose undue hardship on ∆.

Other Remedies Damages : non-breaching party can obtain damages, usually calculated as difference b/t the

K price and the fair market value on the date of the breach Rescission : innocent party may rescind K and receive restitution. Rescission restores

parties to their original positions. Deed Covenants v. Contract Covenants

Merger doctrinehave a K remedy & you don't act on it before closing, then remedy evaporates; you're left w/ deed remedies

Remediesw/ deed covenants, we really only have damages The sale of real property is actually a sale of title

Title Assurance 3 methods for Title Assurance: (prudent buyer will normally use 2 methods)

Title Covenants: grantor promises in deed that he has good title to convey Title opinion based on search of public records: attorney or other professional renders

an opinion about the state of title after searching the public land records Title Insurance: title insurance company issues a policy that insures the grantee's title

Title Covenants Title covenants: express promises by the grantor about the state of title

At common law, promises parties made in K ended at closing unless they were restated in the deed

Doctrine of merger provided that once grantee accepted the deed all prior promises were extinguished; K was merged into the deed

1. Accordingly, grantees began to demand that grantors provide assurances of title in the deed

3 types of deeds commonly used: 1. General warranty deed : grantor warrants title against all defects, whether they

arose before or after he obtained title Offers best protection, b/c grantor promises that title is free from all defects at

closing, regardless of when they were created 2. Special warranty deed : grantor warrants title against all defects that arose after he

obtained title Limits grantor's assurances only to any title defects that arose during his

ownership; they don't cover any problems created before he obtained title3. Quitclaim deed : grantor makes no warranties about title, so grantee receives only

what grantor has, if anything Provides no assurances at all

General Warranty Deed and Special Warranty both contain specific title covenants...there are 6:

1. Covenant of seisin: promise that grantor owns estate he purports to convey Ex: covenant is breached if grantor purports to convey a fee simply but only owns

a life estate PRESENT COVENANT--breached at moment deed is delivered

2. Covenant of Right to convey : promise that grantor has right to convey title' Ex: breached if grantor is a trustee who lacks authority to transfer title to the

trust property PRESENT COVENANT--breached at moment deed is delivered

3. Covenant against encumbrances : promise that there are no encumbrances on title, other than those expressly listed in deed

Ex: breach if there is a prior mortgage on the property PRESENT COVENANT--breached at moment deed is delivered

4. Covenant of warranty : promise that grantor will defend grantee against any claim of superior title

Ex: if 3rd party holds better title than grantee, grantor must defend grantee's title FUTURE COVENANT

5. Covenant of Quiet Enjoyment : promise that grantee's possession of property will not be disturbed by anyone holding superior title

Ex: breached if grantee is evicted b/c of a defect in her title FUTURE COVENANT

6. Covenant of further assurances : promise that grantor will take all future steps reasonably necessary to cure title defects that existed at closing

FUTURE COVENANT Difference b/t 1st 3 covenants and the implied covenant of marketable title is that the

Marketable Title doctrine applies to defects discovered BEFORE closing, while title covenants protect against defects AFTER closing

Brown v. LoberFacts: grantor said he owned the surface and the sub-surface, He didn't really own all that, he only owned the surface and 1/3 of the sub-surface, Coal Cmpny owned the rest. Brown had no remedy Rule: Covenant of seisin is a present covenant breached at the moment the deed is deliveredReas: such breach was not actionable as barred by SoL If A grants land to B who grants land to C, all by general warranty deeds, if you're in C's shoes,

can you sue A on a present covenant? Ex: A gives a general warranty to B, B gives quitclaim deed to C; C is injured (LOBER)

o C doesn’t have any remedy against B under Quitclaim deed-->C's only remedies are available against A

o Obviously, Future covenants will run; however, Do present covenants run with the land?

Go from a-->B, then b-->c running w/ the land-->IT DEPENDS ON THE JX Majority rule is C can't sue A under a present covenant

For future covenants, the damage is the difference in the FMV the deed purports to convey and what the property is actually worth as conveyed.

Title Search Modern recording statutes give special protection to subsequent bona fide purchaser who

acquires title w/o notice of adverse claim and pays valuable consideration HOW TO SEARCH TITLE:

Establish a chain of title for the parcel1. Start from known grantee (current owner), trace back deed by deed until reach point

where land was owned by a sovereign like the federal govt2. move to grantor index, beginning w/ 1st grantor. Move forward to see if he conveyed

an interest to anyone who isn't in the known chain of title. examine all entries in grantor index under each grantor's name from

The date he received his interest until The date deed conveying his interest to a grantee was recorded

Tract index: organizes by the parcel involved Each parcel of land assigned to a unique identifier Every document affecting that parcel is typically filed in a folder under its

unique #Luthi v. Evanssubsequent bona fide purchaserFacts: Owens granted may have granted Kufahl lease to Tours under “Mother Hubbard” Clause, then Owens sold Kufahl lease to Burris. Burris recorded. Rule: innocent subsequent purchaser w/o constructive notice as to rights of an initial purchaser will have rights to the land superior to those of the initial purchaserReas: Tours didn't record the lease properly and w/ specificity to give Burris notice of ownership; Recorders shouldn't be required to read documents and "opine on their legal sufficiency"; as a practical matter we don't have recording agents perform the leasing function The aggrieved party can go after Owens under: deed of implied warranties; Future covenant;

fraud This case entirely turns on NOTICE

Actual Constructive (the notice here)Should we expect a subsequent purchaser to find this

document according to statute Inquiry

Role of recordation: An unrecorded deed is perfectly valid; however, recordation is important to protect grantee from title claims made by 3rd parties

scope of search that is required by subsequent buyers =Assemble a record of ownership, and look for inconsistencies in the record

Recording Acts First in time concept: as a general rule, the person whose interest was created 1st prevails

Bona fide purchaser: exception to general rule; recording acts create a special protectiono A vibrant property market demands that buyers have confidence they will receive good

titleo Protect buyers from adverse claims

Diligent buyer who conducts a careful search of public records and finds no title defects will be protected against existing unrecorded interests

3 types of Recording Acts establishing the method for determining priority b/t adverse claimants:

Race : the purchaser who records first has priorityo subsequent purchaser has priority over a previously-created interest if she records

1st--even if she actually knows about that interest. Priority is given to whoever wins the "race" to the recorder's officeInherent unfairness; only NC and LA still have race statutes

Notice : the subsequent bona fide purchaser has priorityo subsequent purchaser prevails if he takes w/o notice of a prior interest; doesn't have to

record in order to gain priority Purchaser is still motivated to record quickly--if he doesn't, he may lose his

interest to a subsequent purchaser. 1/2 of states use 3. Race-Notice : subsequent bona fide purchaser who records first has priority

o protects subsequent purchaser who BOTH takes w/o notice AND records first1/2 of states use

Messersmith v. SmithFacts: πs, members of the Messermith family , filed suit to quiet title to property. ∆s , Smith and Seale, purchased mineral rights to the property in question from women with no title in propertyRule: recording of an instrument affecting title to real estate that does not meet the statutory requirements of the recording laws does not give constructive noticeReas: Deed must be acknowledged. To constitute acknowledgment, grantor must appear before officer for purpose of acknowledging instrument and make an admission to officer of fact that he had executed such instrument Before May 7, 1946 C and F or contenants May 7, 1946 C to F (no record) Apr 23, 1951 C to Smith (lease) May 7, 1951 C to Smith (deed) and redo May 9, 1951 Smith to Seale May 14, 1951 lease recorded May 26, 1951 C to Smith deed and Smith to Seale deed recorded July 9, 1951 C to F deed recorded

If rule simply says, first-in-time rules, then Frederick winso 1st person wins unless some subsequent purchaser comes under the protection of

recording actso Seale records 1st, purchases w/o notice; no facts indicate Seale knew or should have

known (constructively or through inquiry notice) indicating F's presence-->WHY DOES SEALE LOSE?

The re-done deed was defective; wasn't notarized properly Under the recording acts, everything hasn't been done correctly, he isn't in 100%

strict compliance w/ the recording acts (C-->Smith :( ; Smith-->Seale :) )C-->Smith deed makes it so Seale can't seek protection under recording acts

Impossible for Seale to figure out C-->Smith deed was defective. Is this a good rule?

Recording acts protect the subsequent bona fide purchaser. Any grantee can protect her title simply by recording her deed; but if she fails to perform, runs the risk that a later buyer will qualify for bona fide purchaser protection

In effect, law may allow a grantor to convey an interest that he no longer owns As a general rule, when an unacknowledged deed is entered in the public land records, it isn't

deemed to be "recorded", thus doesn't provide constructive notice. Where acknowledgement appears to be valid on the face of deed--but is defective due to a

hidden flaw--most states treat the deed as validly recorded Forgery and Fraud

forged deed is void, transferring no interest to the grantee. Any subsequent grantees in that chain of title, including bona fide purchasers, receive nothing

A deed induced by fraud is voidable by grantor; if grantee conveys title to a bona fide purchaser, the subsequent purchaser prevailso Loss can be put on the person that was defrauded, or the person who purchased 

Shelter Rule : a bona fide purchaser is allowed to transfer his protection to a later grantee S conveys to B who fails to record deed S conveys to C who immediately records, C then conveys to D who records D knew about S-B deed when his deed was delivered

o B/c D knew about B's interest, D cannot be bona fide purchaser; however, D is protected by SHELTER RULE!

TITLE REGISTRATION provides an alternative approach to recording systems Govt assumes role of title assurer by maintaining an authoritative registry of title Torrens system: title is passed by registration in a govt agency.

o Ownership of each parcel of real property must be determined by litigationo Once court determines the state of title, the property is registered w/ the govt agency,

which issues a certificate of title to the ownero Owner can transfer his interest only by registering title in the name of the buyer

Unregistered interests are invalid, except for a few exceptionsRecording Acts  Chain of Title Problems--->p. 621-628

If a recorded document can't be found in a standard title search, it is considered outside chain of title and provides no notice to subsequent buyers

4 situations where a recorded document is outside the chain of title1. Wild Deed

(1991)S conveys to B, who does not record (1992)B conveys to C --->wild deed, unable to be captured by reasonable

researcher (1993)C records (1994)S conveys to D (1995)D records … D owns property

2. Deed Recorded too Late S conveys to B, who does not record S conveys to C, who has actual knowledge of B C records B records C conveys to D D records … D owns property

D will not discover B's interests b/c S-B deed was recorded when D is no longer searching under S's name. Deed was recorded too late and doesn't provide notice

Deed Recorded too early S owns Greenacre B conveys to C C records

S conveys to B B conveys to D D records … D owns property

D will look under S's name from time S received title until date S-B deed was recorded, then under B's name from time B received title until present. D won't discover C's interest b/c B-C deed was recorded when D isn't looking under B's name

Deed from a Common Grantor S owns Greenacre and Forestacre S conveys Gacre to B, reserving an easement across Facre B records S conveys Facre to C, who isn't aware of the easement C records

C will look under S's name from time S received title until present. But b/c C is purchasing Facre, C only will look at conveyances relating to Facre 

Board of Education of Minneapolis v. HughesFacts: 5/06 Hoerger execute and acknowledge a deed  w/ grantee left blank for $25, and mail to ∆. ∆ fills in name just prior to recording. 4/09 Durea and Wilson pay Heorger $25 for a quitclaim deed to the same lot.11/09 D and W (real estate dealers) execute and deliver warranty deed to π. 1/10 π records. 12/16/10 ∆ records. 12/21/10 D &W record the quitclaim to themRule: A deed that does not name a grantee is a nullity, and wholly inoperative as a conveyance, until the name of the grantee is legally inserted.  Grantees should insert names and record immediately.Reas: ∆ was given implied authority to insert the name of the grantee to this deed, thus giving him a legally operative document. AND real estate brokers should have recorded their deed to the lot prior to conveying lot to πs. B/c they failed to do this, chain of title was flawed and although ∆ had purchased the land first, under the recording laws, ∆ became the subsequent purchaser for value and was protected by the recording laws.

Adequate Notice: Recording acts seek to protect the subsequent purchaser who has no notice of prior adverse interests.

1. Actual Notice: knowledge of a prior interest2. Record Notice: Notice of any prior interest that would be discovered by a standard

search of the public land records3. Inquiry Notice: notice of any prior interest that would have been obtained by

investigating suspicious circumstancesNotice; Title InsuranceRaub v. General Income Sponsors IowaFacts: π was swindled into giving men $$ a deed to her house. Deed was recorded, but π remained in possession as a tenant paying rent. ∆Bank took a mortgage on property and recorded. Then, 2nd Bank also took a mortgage. ∆’s mortgage was void b/c it was obtained by fraud; however they’re protected b/c they’re bona fide purchasers. Rule: occupancy, to impart notice, must be hostile to or inconsistent w/ that of the holder of legal titleReas: Nothing suggests ∆ had knowledge to put them on notice to make inquiry; Nothing to arouse ∆'s suspicions as to conditions under which mortgagor's title had been obtained Inquiry Notice based on record

Sometimes info in a recorded instrument may prompt title searcher to make further inquires

EX: if an instrument w/in chain of title refers to a document outside the chain, most courts require further investigationo If a recorded deed w/in the chain refers to a "lost" deed or an unrecorded lease, the

searcher must locate and review these documents You're on inquiry notice of the contents of the deed. If the deed references something that

seems "fishy" or suspicious, that's inquiry notice.

What is the appropriate balance b/t efficiency and fairness? Should inquiry notice be abolished?  

Title Insurance--CLASS Is there coverage under the insurance K for a lack of a right of access? Is there legal access to the land? What does the court say about whether a reasonable person would believe that a right of

access in a title insurance policy mean access by car? Title Insurance

Main method of title protection Typical buyer will purchase a title insurance policy to supplement the title covenants in his

deedo If buyer suffers a loss from a title defect that existed on the effective date of the policy,

he receives compensation from the title company Covers certain off-record defects such as a forged deed, unlike title opinion Usually provided by state-regulated insurance companies which have substantial

assets to cover losses Title insurance company is contractually obligated to pay claims under the policy

Use standard policy forms prepared by the American Land Title Association (ALTA)--2 basic types of policies: o Owner's policy--4 sections

Cover page: setting for the scope of coverage providedSchedule: stating the name of the insured party, the max amount insured by the policy, & estate that is insured

3. Exclusions and Exceptions: listing specific items that are excluded or excepted from coverage

4. Conditions and Stipulations: specifying procedural requirements, such as the time and manner for making claims

o Lender's policy Title insurance policy imposes the duty to defend and the duty to indemnify on the

insurance companyo Duty to defend: requires company to pay attorney's fees and costs necessary to

protect the owner's title as guaranteed by the policyo Duty to indemnify: may be required to defend the owner's title even if it isn't

completely clear that the potential defect is covered by the policyRiordan v. Lawyers Title Insurance GroupFacts: πs were owners of 160 acres of real property located in an "in-holding" in the middle of a Natl forest in NM. ∆ issued an insurance policy insuring πs title to the Property. πs allege they sustained a loss covered by policy as a result of lawsuit they filed against USA to declare a vehicular right of way to the Property. Property has been accessed by Trail maintained by the US Forest Service (USFS); unsuitable for vehicular access; located 2.5 miles from the nearest paved road, π testified that when he purchased the property in '95, there were several roads that had been used for access, including ones accessible by Jeep;Rule: ambiguity in a title policy is interpreted in favor of the insured partyReas:Common Interest Communities  Restatement Approach--combines the real covenant and the equitable servitude into one

doctrine: the covenant that runs at law. Under restatement approach, a covenant that runs at law is a type of servitude. A servitude

arises when: 1. The owner of the property to be burdened intends to create a servitude2. He enters into a K or conveyance to this effect that satisfies that Statue of Frauds; and3. Servitude is not arbitrary, unconstitutional, unconscionable, or violative of certain

public policies (e.g., it cannot unreasonably restrain alienation) This standard abandons the requirements of touch and concern and hz privity

Common Interest Community (CIC): a planned residential development Where all properties are subject to comprehensive private land use restrictions and Which is regulated by a homeowners association

o Declaration: Creates a CIC; usually has 4 parts: 1. Homeowner's association : establishes the association that will administer the

CIC, specifies the association's powers, and provides for an elected board of directors or similar group

2. CC&Rs : imposes CC&Rs or similar restrictions on all land w/in the CIC. These restrictions may be enforced as real covenants or equitable servitudes

3. Assessments : Requires all unit owners to pay monetary assessments which finance the operation of the association

4. Ownership Rights : Generally provides that each unit holds fee simple absolute in his particular unit, an undivided interest in common area of the CIC (for ex: a swimming pool, tennis cts and meeting rooms), and a membership interest in the association. Alternatively, title to the common area may be held by the association on behalf of the unit owners

Defenses to enforcement of legally binding CC&Rso Unreasonablenesso Abandonmento Changed conditions

Like an easement, a restriction may also be terminated by condemnation, estoppel, merger, prescription, or release--laches and unclean hands are available when equitable relief is sought

Nahrstedt v. Lakeside Villa Condominium AssociationFacts: π sued to prevent enforcement of restriction against keeping cats. Cat was noiseless and created no nuisanceRule: Restrictions should be enforced unless they are wholly arbitrary, violate fundamental public policy, or impose a burden on the use of affected land that substantially outweighs any benefitReas: the pet restriction was rationally related to health, safety, sanitation and noise concerns of the development as a whole it was reasonable and must be enforced.The presumption of validity is guided by social fabric governing consistent enforcement of Ks and agreements. Allowing 1 person to escape obligations of a written instrument interferes w/ expectations of other parties governed by CC &R  Restatement § 3.1: a servitude is valid unless it is "illegal or unconstitutional or violates public

policy" Doesn't include burden/benefit comparison of Nahrstedt Rule--doesn't consider utility of restriction

Servitude violates public policy if it: 1. Is arbitrary, spiteful or capricious2. Unreasonably burdens a fundamental constitutional right3. Imposes an unreasonable restraint on alienation4. Imposes an unreasonable restraint on trade or competition; or5. Is unconscionable

POLICY Benefits: stability, expectations [others may have chosen to live there b/c they're allergic to cats, etc.], assessments, property values (even inside), "notice"--people might not/can't read the declarations [not meant to be read; however, if you feel strongly about something, you would look and find it], availability--if you can choose, then choose among the covenants.

-->Castle metaphor: it's not just property; we can make the distinction b/t the inside and the outside

Think: this burden seems pretty severe, and is a fringe belief, likely will not enforce AbandonmentTEST: to determine abandonment:

Requires party opposing enforcement to prove that existing violations are so great as to lead the mind of the avg. person to reasonably conclude that the restriction in question has been abandoned

Analyze violations as to their number, nature and severity If abandonment still in doubt, consider

o Prior enforcement efforts and Possible realization of benefits Prior acts of enforcement

Is the community no longer enforcing the covenant so it's unfair? Does the community not really care about the covenant?

o A single severe violation won't trump, numbers more important Whether it is still possible to realize to a substantial degree the benefits intended through the

covenantFink v. MillerFacts: there was a covenant specifying roof shingles must be wood, but covenant wasn’t enforced, most many houses were tile. One resident sought to enforce against neighbor who wanted to have tile roof, court said tile roof was OK. Rule: Property owners who have purchased land in a subdivision, subject to CC&Rs, have the right to enforce such restrictions through equitable relief against property owners who don't comply w/ stated restrictions; HOWEVER, Property owners may lose this right if specific covenant they seek to enforce has been abandoned, thereby rendering the covenant unenforceableReas: Given the significant # of houses w/ nonconforming roofs, uniformity of development can't be accomplished by belated enforcement of the covenant (benefits of the covenant can't be realized)Arbitrariness: should we enforce a covenant under Nahrstedt?

Measured by the connection b/t the covenant/condition and the use of landGarden variety covenant easily passes arbitrariness (ex: keeping yard maintained), but question arises when we have weird other kinds of restrictions (ex: you must wear a brown shirt on fridays). Even if all community owners thought these were great ideas, what is the connection b/t that restriction and ownership?  

Vernon Township Volunteer Fire Dept. v. ConnorFacts: Fire Dept. purchased land w/ constructive notice of covenant not to sell alcohol on premises. Wasn’t brought up until they’d started building social hall. Had property owners sign a Release of Restriction—68 of 77 signed. Rule: Where changed or altered conditions in a neighborhood render the strict adherence to the terms of a restrictive covenant useless to the dominant lots, courts will refrain to enforce such restrictionsReas:  Other liquor serving places were OUTSIDE the restrictive tract; The benefit of the restrictive covenant is still therePROS TO GET RID OF COVENANT

o Alcohol establishments close byo No specific reliance on the covenant when purchasing the property3. Lots of releases4. Alcohol is more acceptable than when the restriction was adopted 

CONS TO GET RID OF COVENANT1. No alcohol=health, peace safety and welfare2. Minority values matter! 6 people relied on the covenant3. No abandonment

a. How could we appease these people without a complete injunction? i. Voluntary negotiation for compensationii. The court could have involuntarily paid the homeowners (damages) 

SCOPE: should we look just w/in, or just outside, or far outside of the neighborhood to assess these changed conditions?  

Changed Conditions Doctrine: the original purpose of the restriction has been materially altered or destroyed by changed conditions, and that a substantial benefit no longer extends to complainants by enforcement of the restriction

Where changed or altered conditions in a neighborhood render the strict adherence to the terms of a restrictive covenant useless to the dominant lots, courts will refrain to enforce such restrictions

In Modern Common Interest Communities, the CC&Rs almost always provide that they can be amended by a vote of the owners

Restatement § 7.10: where transaction costs are likely to be high b/c large #s of people are involved… a court should be more ready to intervene than where transaction costs are likely to be low"

Restatement § 8.3(1): a servitude may be enforced by "any appropriate remedy...which may include… compensatory damages"; monetary relief may be more appropriate than an injunction where a "servitude has little continuing utility b/c the purpose it was designed to serve is less important...than when the servitude was created". --Compensatory Damages 

GOVERNING THE DEVELOPMENT The typical CIC declaration provides that the association will:

Maintain the common areas of the CIC Enforce CC&Rs Adopt and enforce rules to supplement the CC&Rs Collect assessments from the units owners; and Take other actions as are necessary to administer the CIC

o These powers are usually exercised by the Board of Directors elected by the owners Business judgment rule: association isn't liable if the board made the decision in

good faith and rationally believed that it was appropriate Reasonableness Standard/Restatement § 6.13(1)(c): requires association to act

reasonably in the exercise of its discretionary powers Schaefer v. Eastman Community Ass’nFacts: Planned, Private 4 season Community wanted to close ski area. Most people didn’t use it. Court held that the Board had acted w/in its scope of authorityRule: A Board may use powers so long as it is “reasonable”Reas: The decision to close ski area doesn't contravene an express provision of the declaration, nor is it a decision reserved to the membersDecision to close may be necessary to ensure financial stability. BoD duty is to make financial decisions for the community. On the other hand, we have to identify something as a key element of the development, and BoD doesn't have the authority to get rid of key elements of the development, also; if there is authority, the reasonableness test should be heightened for key elements.  

NOTESThe court implies it's appropriate to take a broad view of the association's powers in order to maintain property valuesUsed the "reasonableness" standard 

Ex: neighborhood is going to have great amenities including a golf course. Person is lured to purchase b/c of golf course. Golf course closes, person wants to sue

Can person sue at all? To the extent that we view HOAs as a "city govt", prob not. Argument that you can vote the

board members off. To the extent HOA viewed as a corporation, then decisions are viewed through the

reasonableness standard What is the scope of the board's discretion? Is it ultra vires?

Reviewed under the reasonableness standard Argument: this is why we have a BoD, to make these financial decisions for the community.

On the other hand, we have to identify something as a key element of the development, and BoD doesn't have the authority to get rid of key elements of the development, also; if there is authority, the reasonableness test should be heightened for key elements.  

Fountain Valley Chateau Blanc HOA v. Dept. of Veterans AffairsFacts: Sr. Citizen w/ Hodgkins disease was sued by his HOA because his house was really cluttered, but posed no actual hazard

Rule: Reas: HOA attempted to micromanage man’s personal housekeepinga man’s home is his castle! NUISANCE Private nuisance: a nontrespassory invasion of another's interest in the use and enjoyment of

land A π must establish that the ∆'s conduct resulted in intentional, unreasonable, and

substantial interference w/ the use and enjoyment of the π's lando Intentional : the ∆'s conduct is intentional if he acts for the purpose of causing the

harm or he knows that the harm is resulting or is substantially certain to result from his conduct

o Nontrespassory : the interference must not involve any physical entry only the land of another. For ex: noise, vibration, light and orders are all viewed as nontrespassory invasions

o Unreasonable : Jxs differ about the meaning of this element. Gravity of the harm test: the ∆'s conduct is unreasonable if it causes substantial

harm, regardless of the social utility of the conduct Restatement 2d of Torts § 826(a): conduct is unreasonable if the gravity of the

harm outweighs the utility of the conduct. Some states use a multi-factor test that falls in b/t both

o Substantial interference : there must be a "real and appreciable invasion of the π's interests --R2 of Torts § 821 F cmt. C

o Use and enjoyment of land : the ∆'s conduct must interfere w/ the use and enjoyment of land, e.g., causing physical damage to the property or personal injury to occupants 

Boomer v. Atlantic CementFacts: ∆, operated a cement plant. πs, neighboring property owners, sought injunction/damages for injury to property from smoke, dirt and vibrations from the plant. NY law had been that a nuisance would be enjoined although marked disparity is shown in economic consequences to the parties concerned. The court ruled that application of this rule would impose a drastic, inappropriate remedy. Rule: When a nuisance is of such a permanent and unabatable nature that a single recovery can be had, there can be only 1 recoveryReas: best solution was to grant an injunction on the condition of permanent damages so that πs would be afforded relief as well as preventing repetitive lawsuits and avoid the appearance of regulating environmental policy.

Gravity of Harm approach What policy factors apply to the choice of remedies in Boomer?

Remedy options: (1) issued a permanent injunction [close the plant down] o Precedent: NY states that where there is a continuing nuisance, it shall be enjoined

(2) first in time? In Boomer, find whether conduct is unreasonable or not based on gravity of harm; competing

social utility of the harm, we will hash out in the remedies stage Rule Four Matrix:

Rule 1: Entitlement in Receptor protected by injunctiono Community wins, you get to be pollution free

Rule 2: Entitlement in Receptor protected by damageso Community wins, as long as polluter agrees to pay court determined damages

Community and polluter could negotiate for damages Rule 3 Entitlement in Polluter protected by an injunction

o Ex: pig farm; we could say 1st that there is NO NUISANCE, so the "polluter" wins, and is protected by an injunction-->the surrounding community is out of luck . If you want to stop them, buy them out

Rule 4: Entitlement in Polluter protected by damageso If the community is willing to pay you the right amt of damages, you have to stop

pollutingThomsen v. GreveFacts: Nuisance action brought by πs to enjoin ∆ neighbors from using a wood-burning stove to heat their home and for damages resulting from the smoke originating from the stove πs complained to ∆s that stove made their house smell made them physically ill-->can't have family get-togethers/visitorsRule: Reas: To have the use and enjoyment of one's home interfered w/ by smoke, odor and similar attacks upon one's senses is serious harmlook at factors of gravity of the harm

1. Extent of harm involved2. Character of harm involved3. Social value that the law attaches to the type of use or enjoyment invaded4. Suitability of the particular use or enjoyment invaded to the character of the locality5. Burden on the person harmed of avoiding the harm

vs. the social utility of the conduct 1. The social value that the law attaches to the primary purpose of the conduct2. The suitability of the conduct to the character of the locality; and3. The impracticability of preventing or avoiding the invasion

Zoning, Rigid or Flexible Euclidean Zoning: Separating your city into zoning categories and then designating specific

uses in these areas Euclid Test : unconstitutional only if it is clearly arbitrary and unreasonable, having no

substantial relation to public health, safety, morals, or general welfare Standard State Zoning Enabling Act provided only 3 ways for an owner to escape a zoning

ordinance: Amendment Variance Special exception

o In recent decades, new tools for zoning flexibility have emergedZONING AMENDMENTS

Rezoning presents special dangersThreatens the goal of comprehensive land use planning

If many individual parcels are rezoned for different uses, zoning plan may become meaningless.

Creates a heightened risk of governmental corruption If the value of A's land is $5000 for farm use, but $50,000for single-family use, A

has economic incentive to influence the outcome through bribery or other improper influence

Most jxs follow that a rezoning decision is valid UNLESS:o It is "clearly arbitrary and unreasonable, having no substantial relation to the public

health, safety, morals, or general welfare"Smith v. City of Little RockFacts: Little Rock BoD voted to change zoning classification of property from a single family/quiet office classification to commercial classification to build a Wendy's. Rule: Presumption that the City Board acted in a fair, just and reasonable manner when it rezones or refuses to rezone and the burden is on the persons attacking the rezoning or refusal to show otherwiseReas: property located on busy street nearby are many business and restaurantsDissent: purpose of city planning is to keep the city honest—have upheld plans in the past, now they want to violate their own plan; fast food restaurants are noisy, unsanitary, unsightly, bright at

night, smelly, attract large amts of traffic and incompatible w/ family residences; this area is a boundary of a beautiful residential areaSPOT ZONING exists when a zoning amendment:

Singles out a small parcel of land for different treatment; Primarily for the benefit of the private owner, rather than the public;

3. In a manner inconsistent w/ the general plan for the communityo Spot zoning may be found even if 1 or more of these criteria are absent, depending on

the jx  Alternative approaches to Rezoning

Treating rezoning as a quasi-judicial action: o A zoning amendment affecting 1 parcel is more akin to a judicial decision than to

legislation, b/c it essentially applies a general rule to a factual situation affecting only one owner. Thus, a rezoning decision should be subject to a more rigorous standard of review, like other judicial action

City charter provision that all zoning amendments and other land use decisions be approved by the electorate 

VARIANCES Safety valve protecting against situations where zoning ordinances might cause particular

hardship Majority test for a variance:

o "The board may grant a variance [to avoid unnecessary hardship to the owner], provided that ALL of the following findings are made where relevant in a given case:

1. That there are unique physical circumstances or conditions, including irregularity, narrowness, or shallowness of lot size or shape, or exceptional topographical or other physical conditions peculiar to the particular property and that the unnecessary hardship is due to such conditions…

2. That b/c of such physical circumstances or conditions, there is no possibility that the property can be developed in strict conformity w/ the provisions of the zoning ordinance and that the authorization of a variance is therefore necessary to enable the reasonable use of the property.

3. That such unnecessary hardship has NOT been created by the applicant4. That the variance… will not alter the essential character of the neighborhood or

district in which the property is located, nor substantially or permanently impair the appropriate use or development of adjacent property, nor be detrimental to the public welfare

5. That the variance...will represent the minimum variance that will afford relief… Detwiler  

Hardship : exists only if no reasonable use of the land is permitted under existing zoning Physical Condition of the Land: "unique physical circumstances" requirement was satisfied in

Detwiler by the shallowness of the lot Impact on Public:In some jxs, variance will be denied if it would lower the value of surrounding

properties or adversely affect "visual environment" of the area TWO TYPES OF VARIANCES

Area variance : permits modification of lot size, setback, height, frontage, density or similar requirements

Use variance : authorizes a type of use that is otherwise prohibited by the zoning ordinanceo b/c there is a risk that a use variance will circumvent the uniformity of the zoning

plan--w/o the procedural safeguards built into the amendment process--some states impose higher standards on use variances

usually requires a showing of strict hardship Area variance may be granted under the less-demanding practical difficulties

test: Requires that the land cannot practically be used given the existing zoning,

even if a permitted use is theoretically possible. SPECIAL EXCEPTIONS

AKA conditional use: use that is permitted in the zone if certain conditions specified in the zoning ordinance are meto Typically utilized to regulate uses that might cause aesthetic, noise, traffic or other

problems in a neighborhoodo Unlike a variance, authorized by ordinance

Landowner seeking special exception will apply to the local zoning authorities for a permit to implement the useo B/c the special exception is viewed as quasi-judicial action, it is subject to more

intensive judicial review than a zoning amendment Wal-Mart v. Planning Board of N. ElbaFacts: Wal-Mart wanted special exception to build and operate in beautiful N.Elba, was denied.Rule: Reas:

Facts Walmart applied to respondent for a conditional use permit and site plan approval for a large retail store it proposed to build/operate in N. Elba

N. Elba is a super beautiful place tourist place with great views of Whiteface Mountain

Respondent voted 3-1 to deny petitioner's applicationsProcedure Petitioner commenced this proceeding to annul the respondent's finding,

arguing that it's not supported by substantial evidence and is arbitrary, capricious, and infected by legal error

Issue Is the denial of special exception arbitrary?Holding NO. Affirmed-->"it was in no way irrational to find that petitioners failed to carry

their burden of showing that their contemplated use of the subject property 'conforms w/ the standards imposed by the zoning ordinance.'"

Reasoning Not only did proposal not meet requirements of SEQRA, but also didn't satisfy criteria set forth in Town Land Use Code

Several general development considerations aimed to avoid any undue adverse impact on the natural, physical, social and economic resources of the Town weren't met

Respondent's overriding mandate is to review the entire project, including any possible modifications that might decrease its harmful effects, and determine whetehr the mitigating measures adopted will in fact ameliorate those adverse effects

Respondents were justified in deciding that adverse visual impact of a large earthen berm sucked; wouldn't mitigate other adverse environmental impacts

Despite all efforts to screen the store and parking area from the road their presence would nevertheless bring about a noticeable change in the visual character of this critical area

The development, including a traffic light, would be visible w/in part of the overall scenic view

Evidence to demonstrate that other communities have suffered no decline in commercial propety values after Wal-Mart store opened is worthless b/c most areas studed aren't comparable to this area

NEW APPROACHES TO LAND USE REGULATION CONDITIONAL ZONING: rezoning a particular parcel when the owner satisfies conditions

imposed by the city or county, in order to mitigate the impact of the zoning change FLOATING ZONE: A zoning district w/ detailed provisions (usually to accommodate large-

scale developments such as shopping centers) which does not have a specific location until an owner applies to have the zone applied to her property

CLUSTER ZONE: a residential zone that restricts the number of homes, but allows the developer choice about where the homes will be located; this permits the "clustering" of residences and encourages preservation of open space

PLANNED UNIT DEVELOPMENT: zoning that allows a developer to plan an entire community (w/ homes, businesses, and public services), subject to guidelines for density and other concerns; this is essentially cluster zoning extended to all uses 

Family ZoningWHO is allowed to live in certain areas? RIGHTS TO INCLUDE/EXCLUDE Euclid rational basis test : ordinance was reasonable and not arbitrary, bearing a

reasonable relationship to the legitimate state objective of regulating noise, parking, traffic, and other density-related problems

Many municipalities have adopted ordinances providing that only members of a "family" may occupy a single family residence

Belle Terre Ordinance: defined "family as "one or more persons related by blood, adoption, or marriage" or up to 2 unrelated persons

6 unrelated students rented a house and challenged the ordinance. Echoing Euclid's rationale basis test, the Court held the ordinance was reasonable &not arbitrary; cited noise, parking, traffic, and other density related problems

Marshall's dissent argued that the strict scrutiny test should be used instead, b/c the ordinance abridged the rights of association and privacy.

More than 30 years since this decision--much has changed. Is Belle Terre rationale now obsolete?

Moore v. City of E. ClevelandFacts: grandma lived with her son and 2 grandsons which violated criminal statute that limited occupants of a dwelling to members of a single family--family did not meet the definition required for a single family. Statute was unconstitutional and violated the Due Process Clause of the 14 th AmendmentRule: Reas:

Holding/Reasoning

YES; right infringed upon is a liberty interest protected by the Due Process Clause, and the statute does not sufficiently advance legitimate state interests. Therefore, the statute is unconstitutional.

Unlike previous precedent upholding limitations on housing units that affected only unrelated individuals, present statute declares certain categories of relatives may live together while others may not. This is intrusive regulation of family protected by Due Process Clause.

The City justifies the statute as a means of preventing overcrowding, minimizing traffic and parking congestion, and avoiding undue financial burden on the school system. These are legitimate goals, but the statute serves them only marginally b/c large groups of people can still live together so long as they meet the statutory definition of a single family.

City also tries to distinguish this case from other precedent that provided for constitutional protection of family rights by suggesting such rights extend only to the nuclear family; however, the force and rationale of these precedents are applicable in the present case.

Caution, rather than abandonment, is proper way to move forward when judicial branch gives enhanced protection to substantive liberties w/o guidance of more specific provisions of the Bill of Rights. Clear lines can't place limits on substantive due process, rather an examination of teachings of hx and recognition of the basic values that underlie society should serve as guidance.

Under the Rational Basis Test: The concerns discussed like overcrowding, minimizing traffic, etc. were served minimally at best by the ordinance

Was overinclusive in certain ways, and underinclusive in othersRational Basis Test

Isn't concerned w/ the gap b/t over and under inclusiveness, as long as the average does what it intends to do--as long as the ordinance isn't operating at the poles. Most of the time, does bx fall in the zone? "reasonable relationship"

Even if there was a rational basis, it still is likely unconstitutional Ames Rental Property Association v. City of AmesFacts: Zoning ordinance passed to stop the flow of IA St. U students into residential areas: only allowed single-dwelling families in certain areas of the city"Families" defined as--any # of related persons or no more than 3 unrelated personsRule: Reas:

How big of a family are we concerned about? How are they different? We believe that communities should be able to self-define. Can we use nuisance law to police noise problems/parties/etc.? --Rational Basis: Accept if they burden a suspect class, then there is a heightened scrutiny, or if it cuts too deeply into familyEX: Musicians

NOT a protected classIs it reasonably related to a legitimate public goal? Is it arbitrary?

Nazi PartyPolitical class that should heighten up the level of scrutiny Truck driversMore likely to bring their trucks home

Livermore challenge: Cities are adjacent to one another. If we allow Boone to only zone for single family homes, that will have an effect on Ames. If we allow cities to not allow any more growth, it will affect other cities.

Livermore cuts against the rational basis test--says you may decide, but you have to take into account adjacent city and their needs.  

Associated Home Builders of Greaters Eastbay v. City of LivermoreFacts: ordinance enacted by voters of Livermore which prohibits issuance of further residential building permits until local educational, sewage disposal, and water supply facilities comply w/ specified standardsRule: Reas: Eminent Domain: "Nor shall private property be taken for a public purpose w/o just compensation"Restricts, rather than grants, rights to the governmentCONDITIONS:  1. Nor shall private property…

Federal definition is Broad: Real, Personal & Patents…BUT States can limit what they deem as “property”

2. ...be taken… Local govt or state govt has passed a law that restricts my use of the property (ex: wetlands

area includes my property, so I can't develop)o Lowered homeowner's property value--they were injuredo It was TAKEN, didn't formally file a ED proceeding, but the affect did such--(inverse

condemnation/regulatory takings) Cant pay for consequences of all regulations. Govt by it's very nature make

ordinances that affect the value of ordinances, then we could never pass any property regs.

Taken--gov't says we are taking your land, we will give you compensation Homeowner is protesting, ED case is invalid

3. ...for public purpose…

4. ...w/o just compensation…The valuation of just compensation is the FAIR MARKET VALUE; Doesn't capture sentimental value that people have in their homesState vs. federal schemeo states can narrow or further detail the general takings clause

In NV, Good will: tries to compensate for the business (land & stuff), also ongoing concern of the business, some value not represented by it's physical characteristics

o federal scheme is the same as in Kelo Condemnation: process of using eminent domain to take property Eminent Domain: allows fed, state and local govts to take property from a private owner who refuses to sell voluntarily

Framers viewed eminent domain power as an inherent attribute of sovereigntyo Tension b/t citizen's right to own property and govt's interest in acquiring it for the

public goodo Constitution limits govt's eminent domain power through the TAKINGS CLAUSE

Takings Clause of the 5th amendment: "[N]or shall private property be taken for publice use, w/o just compensation"

2 restrictions on eminent domainGovt may take property only for "public use"; andThe private owner must receive "just compensation"

What is public use? Easily satisfied when got takes land that will physically be used by:

the public-->Ex: hwy Or by govt employees-->Ex: military installation

Problems arise where the govt takes private land and gives it to another private ownerHawaii Housing Authority v. MidkiffFacts: Remnants of the feudal system in Hawaii created land oligopoly. Hawaii legislature adopted a plan to condemn various residential lands to break up large estates. Then, Hawaii Housing Authority sold the land back to tenants or lessees who requested the condemnation and wanted to buy the land.Rule: Exercise of eminent domain for “public use” will be constitutional so long as it is rationally related to a conceivable public purpose. Govt itself does not have to use the property. Only the purpose, not the mechanics will be relevant to the takings’ constitutionality.Reas: statute must have a valid public purpose and rational means for accomplishing its goals; driving prices down/breaking up oligopoly is a valid public interestPublic purpose

Alleviate the socioeconomic evil caused by an oligopoly o Redistribute this land--give ownership to more peopleo Lower real estate priceso Increase availability of land

Feeds into our fears of monopoly, and virtues of valuing broad land ownership The legislature decision is it that the public purpose is a good one?

o Tension--owners whose land is being taken, being given, ultimately, to other private owners

How do we resolve this tension? Focus on the purpose, then, we can be less focused on the MECHANISM of taking

We have a legit public purpose, so the fact that the property ends up on private hands is irrelevant

Weighing private to private transfersPublic use in this case is a benefit rather than actual literal use. It focuses on the ends rather than the means. Court was deferential to state’s legislative determination. Mere fact that land was transferred in 1st instance to private citizen (lessees) did not render it a private use. Court did not think that entire community had to benefit from a particular legislative act.

Public Use Limitation At a minimum, public use limitation prevents govt from using its eminent domain power to

take proprty for a purely private use even If it is willing to pay fair market value to the owner.o Narrow definition: "public use" could be taken quite literally to mean physical use by

members of the public Govt could exercise it's ED power to take land for purposes such as public hwys,

parks, a universities (which could be used by the public), but not for private hotels, office buildings or shopping centers (from which the public could be excluded)

o Broad construction: "public use" would require that the project proved some public benefit, regardless of who physically uses the land

Govt could use ED to clear slums or redevelop struggling inner-city economies by forcing individual owners to sell to private developers

Legislative Deference Courts give great deference to these decisions

o Never held a compensated taking to be barred by the Takings clause if the condemnation was rationally related to a conceivable public purpose 

Kelo v. City of New LondonFacts: ∆ approved development plan that was “projected to create in excess of 1,000 jobs, increase tax/other revenues, and to revitalize an economically distressed city, including its downtown and waterfront areas.”  ∆ purchased property, seeks to enforce eminent domain to acquire remaining parcels from unwilling owners.Rule: A city can condemn private land w/ intent of giving to private developers to encourage economic development b/c economic development is a public purpose.Reas: Used rational review, private benefit that is conferred doesn’t negate public use of the taking. “Public Use” is defined broadly, gives deference to City’s decision; heightened scrutiny would impede consummation of City plans. Concurrence: Kelo is different--mere ED w/o being able to identify a bad situation should be permittedDissent: Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner; effectively deletes the words "for public use" from the Takings Clause; external, judicial check on how the public use requirement is interpreted is necessary if constraint on govt power is to retain any meaning.

Three categories of takings comply with public use requirement:1. Private property transferred to public ownership.2. Private property transferred to private parties who make the property available for the

public's use (stadium, railroad, etc.).3. Under certain circumstances, private property can be taken when destined for subsequent

private useHowever, economic development is not a constitutional reason for a taking.Midkiff can be distinguished because the state was attempting to rectify an imbalance in ownership and an oligopoly; Recognized that a purely private taking could not w/stand scrutiny of public use requirement b/c it would serve no legitimate purpose of govt. Also, the extraordinary pre-condemnation use of the targeted property inflicted affirmative harm on society.  This harm had to be eliminated Here, the city does not claim that Ps' homes are harmful.

Basically, Court is saying sovereign can take private property currently put to ordinary private use and give it over for new, ordinary private use so long as there might be some secondary benefit for publicBut, nearly any lawful use of real private property can be said to generate some incidental benefit to public. General sense that the area is economically "distressed"

Public purpose--economic development If public purpose is acceptable, and the legislature makes that determination, then the

specific mechanism we use to achieve that purpose, is irrelevant

Concurrence: Kelo is different--mere ED w/o being able to identify a bad situation should be permitted

On the likelihood of success of the project, it's not a legal condition but a political condition There are ED projects that haven't been successful that have created the destruction of

communities, which creates backlasho Antipathy

Don't touch my stuff govt! The govt just bulldozed a neighborhood--didn't bulldoze the rich, and

redevelopment didn't work! It was just slum clearance and now poor people are displaced

In NV, we have ED statute that is very anti-ED in response to Kelo Makes it very hard to get anything done! (creating hwys, etc.)