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Instructor Manual: Marianne M. Jennings, Real Estate Law, 12th Edition 2022, 9780357518649;

Instructor Manual Marianne M. Jennings, Real Estate Law, 12th Edition 2022, 9780357518649; Chapter 1-22

Chapter 1: Introduction and Sources of Real Estate Law

Table of Contents Chapter Objectives ......................................................................................................................................................... 2 Key Terms ........................................................................................................................................................................... 2 What's New in This Chapter ........................................................................................................................................ 3 Chapter Outline ............................................................................................................................................................... 4 Additional Activities and Assignments.................................................................................................................... 9 Answers to Case Questions ....................................................................................................................... 9 Addititional Case Information.................................................................................................................. 10 Answer to Consider (1.1) ......................................................................................................................... 11 Answer to Ethical Issue (1.1) ................................................................................................................... 11 Justification for Studying Real Estate Law: Some Cautions and Conclusions ........................................... 12 Answer to Consider (1.2) ......................................................................................................................... 12 Answers to Chapter Problems ................................................................................................................. 13 In-Class Exercises ..................................................................................................................................... 14 Resources ................................................................................................................................................ 15

Instructor Manual: Chapter 1: Introduction and Sources of Real Estate Law

Chapter Objectives The following learning outcomes are addressed in this chapter (see PowerPoint Slide 1-1): 01.01

List the sources of real estate law, the topics covered in each source, and where to find the sources.

01.02

Discuss the concepts of legal reasoning, interpretation of statutes, and stare decisis.

01.03

Describe the costly significance of knowing and understanding real estate law.

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Key Terms American Recovery and Reinvestment Act of 2009 (ARRA): federal law that provided funding for infrastructure and had the goal of economic recovery case precedent: doctrine of stare decisis; examining prior decisions to reach decisions in present cases citation: legal shorthand referring to cases, statutes, regulations, and ordinances cite: see citation Code of Federal Regulations (CFR): compilation of regulations of federal agencies common law: uncodified law found in cases or in the history of real property Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA): The Superfund; a program for private payment by polluting industries for cleanup of toxic waste Consumer Financial Protection Bureau (CFPB): created under the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFCPA); it will now assume that enforcement role eminent domain: process of governmental entity‘s taking title to private property for public purposes Equal Protection Clause: part of the Fifth and Fourteenth Amendments to the Constitution; requires that laws apply equally to all Fifth Amendment: provision in United States Constitution that provides guarantee of due process Fourteenth Amendment: application of due process rights to the states (including the Equal Protection Clause), which requires uniform application of laws and nondiscrimination; applied in cases in which land conveyances attempt to include racial restrictions

Instructor Manual: Chapter 1: Introduction and Sources of Real Estate Law

Mortgage Reform and Anti-Predatory Lending Act: federal law that regulates subprime, title, and other types of high-interest/high-default/high-repossession rate loans; provides requirements for disclosures and processes for consumers who obtain these types of loans Ordinance: laws passed on a local level of country, state, or city governments private law: laws between individual parties; e.g., landlord‘s rules and regulations or the terms of a contract Real Estate Settlement Procedures Act (RESPA): federal statute regulating disclosure of closing costs in advance and prohibiting kickbacks for referring customers to title companies United States Code (USC): compilation of all federal laws United States Constitution: framework for federal government [return to top]

What's New in This Chapter The following elements are improvements in this chapter from the previous edition:  

  

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New introduction that gives the full history on the saying, ―Possession is nine points of the law.‖ New case in Section 1-1i that illustrates the use of precedent on an issue of nuisance and hog-farming, In Re North Carolina Swine Farm Nuisance Litigation. This case is less complicated than the two previous cases on consent for mechanic‘s liens that were a little more difficult for students to understand. The hog-farming case is easily understood and interesting and remains an ongoing issue that deals with social responsibility and ethics issues. Extra references are provided in the IM for instructors to get updates on the 26 hog-farming cases. In Section 1-1i, new Ethical Issue 1.1 on the hog-farming dispute and the interests of the parties. New Consider 1.1 in Section 1-1i that draws on the findings in the hog-farming case on who can bring an action for nuisance. In Section 1-1, updated examples on constitutions, statutes, and new example on use of judicial decisions that involves a ban on fraternity houses by the City of Bowling Green trying to deal with Bowling Green students and rowdy behavior and dropping property values in single-family neighborhoods, Yoder v. City of Bowling Green. Updated chapter problem #6 on what defines ―living space.‖

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Instructor Manual: Chapter 1: Introduction and Sources of Real Estate Law

Chapter Outline In the outline below, each element includes references (in parentheses) to related content. "CH.##‖ refers to the chapter objective; ―PPT Slide #‖ refers to the slide number in the PowerPoint deck for this chapter (provided in the PowerPoints section of the Instructor Resource Center); and, as applicable for each discipline, accreditation or certification standards (―BL 1.3.3‖). Introduce the chapter and use the Ice Breaker in the PPT if desired, and if one is provided for this chapter. Review learning objectives for Chapter 4. (PPT Slides 1-3). 1-1 Sources of Real Estate Law—USE POWERPOINT SLIDES 1-2 TO 1-12 USE FIGURE 1.1 (THE PYRAMID) AND POWERPOINT SLIDE 1-3 TO HELP STUDENTS FOLLOW ALONG IN YOUR DISCUSSION OF THE SOURCES OF REAL ESTATE LAW. 1-1a

The United States Constitution 1. Found at the base of the pyramid because it is the basis of all other laws 2. Very general and provides the legal constraints within which the other laws must fall 3. Examples of U.S. Constitutional provisions affecting real estate: a. Fourth Amendment—covers unlawful searches and seizures and the issuance of search warrants for the search of property b. Fifth Amendment—due process protections See, e.g., Fuentes v. Shevin, 407 U.S. 67 (1972); debtors are entitled to notice before their property is taken. Mortgage foreclosures and due process with robo-signing and other ownership issues. c. Fifth Amendment—eminent domain procedures and protections See, e.g., U.S. v. Causby, 328 U.S. 256 (1946) (Chapter 3)—Farmer whose chickens were being killed and having nervous breakdowns because of noisy Air Force jets landing near the Causby farm was entitled to compensation for a taking. d. Fourteenth Amendment—same language as the Fifth Amendment but applicable to states; also includes the Equal Protection Clause. See, e.g., brokers and steering—Brokers‘ and agents‘ control of racial composition of neighborhoods by steering potential buyers to prevent desegregation is an example of an equal protection issue. More recently, prohibitions on group homes for retarded citizens and AIDS patients have been subject to equal protection challenges.

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Instructor Manual: Chapter 1: Introduction and Sources of Real Estate Law

SEE CHAPTER 19 FOR MORE DETAILS ON CONSTITUTIONAL ISSUES RELATING TO REAL ESTATE. 1-1b

Federal Legislative Enactments 1. Passed by Congress and found in the United States Code (U.S.C.) 2. Explain system of citation—title number precedes the U.S.C. and the section number appears behind 3. Use examples listed in the text and the following: Dodd-Frank Financial Reform Act is part of U.S.C. All federal financing agencies are established in U.S.C. and provide rules and regulations for loans, contracts, assumptions, secondary sales, etc. including: Consumer Financial Protection Bureau Department of Housing and Urban Development Federal Reserve Soldier's and Sailor's Relief Act (see Chapter 15)—requires special paperwork in the event a mortgage involves active enlisted people; provides for delays in foreclosure when mortgagors are active service people on duty outside the country. NOTE: War in Iraq caused an uptick in the use of this Act with many active duty soldiers afforded protection; national guard members called into active service with resulting pay cuts were protected. The National Environmental Policy Act (see Chapter 20)—provides for maintenance and protection of the environment and imposes restrictions on use—see 42 U.S.C. Sections 4321 et seq. The post-2008 market collapse resulted in the American Recovery and Reinvestment Act of 2009 (ARRA) with mortgage relief (Discussed in Chapter 15)

1-1c

Federal Administrative Regulations 1. Federal agencies are created by Congress to enforce the U.S.C. statutes and to promulgate their own regulations on the topics covered in the statutes; will provide the details needed for compliance with the laws For example—forms for securities registration and property reports under Interstate Land Sale Full Disclosure Act (ILSFDA); forms for mortgage disclosures (adjustable rate mortgages) 2. Examples of federal agencies involved in real estate transactions EPA—Environmental Protection Agency

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Instructor Manual: Chapter 1: Introduction and Sources of Real Estate Law

HUD—Department of Housing and Urban Development—involved in providing low-cost housing and enforcement of Interstate Land Sales Full Disclosure Act FHA—Federal Housing Administration—provides low interest loans and insurance for lenders Department of Energy—energy policies Interior Department—management of federal parks and lands 3. Regulations are found in the Code of Federal Regulations (CFR) Paperback series; reprinted each year; updated daily by the Federal Register 1-1d

State Constitutions 1. Will contain provisions similar to the U.S. Constitution—the organization of the state government 2. Will also contain specifics on real estate transactions a. Use examples from text b. Find examples in your own state‘s constitution c. Use the following: Texas—A section providing a homestead exemption (a protection from creditors discussed in Chapters 4 and 15) California—A section providing a right eminent domain for all frontages on navigable waters in the state (Article 10, Sect. 1)

1-1e

State Legislative Enactments 1. Describe name/cite of your state statutes: For example–Florida Statutes Annotated—F.S.A. 689.91; Colorado Revised Statutes C.R.S. 39-5-12; West's Annotated California Code West's Ann. Cal. Fin. Code 31401 2. Subject matter of state legislative enactments: Real estate licensing Insurance law Contract law Water rights Partnership and corporation law Lien laws Wills, trusts and probate Deeds and recording

1-1f

State Administrative Regulations

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Instructor Manual: Chapter 1: Introduction and Sources of Real Estate Law

1. Same purpose and set-up as federal regulations 2. Describe the agencies (name) in your state responsible for each of the following: Real estate licensing Corporations Securities registration Contractors' licensing Insurance licensing and regulation Utilities regulation 1-1g

County, City, and Borough Ordinances 1. Passed at the city, county, or borough level 2. Discuss some examples in your area relating to: Zoning Construction, inspection, and permits Curfews Parking limitations Parks Building and construction codes

1-1h

Private Law 1. Created by individuals to control their relationships 2. Areas of private law Landlord/tenant—pool use, cleaning deposits, noise regulations, and other lease terms Deed restrictions—square feet minimums, architectural controls, parking restrictions, limitations on pets Homeowner Associations—rights of use, association fees, liabilities Transfer restrictions—fee simple determinable Age zoning and restrictions 3. Private land ownership rights as found in public records

1-1i

Court Decisions 1. Interpretation of all laws is necessary For example—A city ordinance prohibits ―the use of any vehicle in any form in a city park.‖ Does the ordinance apply to the following?

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Instructor Manual: Chapter 1: Introduction and Sources of Real Estate Law

Bicycle—no Child's tricycle—no Car—yes City maintenance truck—no Emergency vehicle—no War memorial with a vehicle—no Reason for variations in the answers is that intent of the ordinance is probably safety and noise reduction in city parks. 2. Language of the law is examined 3. Legislative intent is examined 4. Law is applied in each case 5. Court cases are reported and published Cases appear throughout the text Explain your state court system and the appellate review of cases USE THE FOLLOWING CASE AND POWERPOINT SLIDE 1-12 TO DISCUSS WHEN A NUISANCE SUIT CAN BE FILED AND BY WHOM. CASE BRIEF: In Re North Carolina Swine Farm Nuisance Litigation 2017 WL 5178038 (E.D.N.C. 2017) FACTS:

Twenty-six individuals (plaintiffs) who lived near hog-farming operations in eastern North Carolina brought suit against Murphy-Brown, LLC, the owner and operator of the hog operations (Defendant). The nuisance claims related to the smells, flies, and general muddy messes resulting from the large operations that raised hogs for slaughter. The court consolidated the cases into one suit for purposes of addressing the same legal issues in all of the cases prior to each case proceeding to trial. The issue addressed in this decision related to the type of land interest a plaintiff must have in order to bring a nuisance suit. The plaintiffs in the cases were not actually property owners but were adults related to the property owners who lived on the properties near the hog-farming operations either in the actual owners‘ residences or on trailers parked on the properties. The plaintiffs do not have rental agreements for their use of the homes or the space for their trailers and have not paid rent. The defendant asked for a motion for summary judgment on the issue of lack of property interest as a requirement for a nuisance claim.

ISSUE:

Can those who occupy the land of another (without ownership rights, a lease, or payment of rent) have standing to bring a nuisance suit?

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Instructor Manual: Chapter 1: Introduction and Sources of Real Estate Law

DECISION:

The court held that those who are on the property in a non-trespassory manner do have standing to bring a suit. The court noted that without such a conclusion those who were married to someone but did not have their name on the deed for the land on which they lived could not bring a nuisance suit. The court used a prior case that involved a beauty shop owner having to leave her shop because the smells from the plastic factory were too great for her customers to endure. She had left the premises and was not paying rent. However, the court found that her lease interest at the time of her leaving was sufficient standing to pursue a nuisance claim. Defendant additionally contends that two plaintiffs, Gertie Jacobs and Eddie Nicholson, Jr., have not even occupied any affected property. In support of this contention, defendant relies on the fact that Jacobs‘ voter registration and driver's license and Nicholson's voter registration, driver's license, and medical records reflect addresses different from the affected properties at which they claim to live. Defendant urges the court to disregard these plaintiffs‘ deposition testimony regarding the discrepancies on the ground that the testimony is ―selfserving.‖ The court declines to do so.

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Additional Activities and Assignments Answers to Case Questions 1. What are the differences between the plaintiffs in this case and the owner of the beauty shop in the Kent v. Humphries case? Kent v. Humphries

In Re North Carolina Swine Farm Nuisance Litigation

Plaintiff paid rent

Plaintiffs did not pay rent

Plaintiff had some form of lease—her name was associated with the property

Plaintiffs were not on the property title; plaintiffs did not have leases Some plaintiffs did not list the property as their addresses for mailing and voting purposes

Plaintiff was not occupying the property

Plaintiffs were occupying the property

Plaintiff left the property because of the smells

Plaintiffs remained on the property

Plaintiff lost the investment in her

Plaintiffs had no economic losses because

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Instructor Manual: Chapter 1: Introduction and Sources of Real Estate Law

business

of the alleged nuisance

Commercial operations by both plaintiff and defendant

Commercial operations by defendant and none by plaintiffs

2. What effect will the court’s finding on the standing required for plaintiffs in nuisance cases have on nuisance claims? The scope of cases has broadened—more people will be able to bring nuisance cases as a result—they need not own property or even live in the area as long as they can show a right to be there. The case may make nuisance recoveries an industry with moving plaintiffs who take possession of land near nuisances and then move along to the next nuisance recovery. 3. Does the court’s use of the precedent change the nature of nuisance recovery? The recovery is now not economic-based—losing the right to use your land productively, losing the right to peaceful co-existence—recovery is the goal not abatement of the nuisance. The finding is a widening of the scope of plaintiffs in nuisance cases. Without any financial or ownership or economic requirements for occupying the land, nuisance claims can be brought by squatters or those who use others‘ property for purposes of litigation. In short, they have no skin in the game. In the 26 cases, the plaintiffs did not ask for injunctive relief (stopping the operations). They only asked for actual and punitive damages so that the farms would be put out of business.

Additional Case Information The hog-farm litigation in North Carolina is a study in civil procedure and a host of other issues as the doctrine of nuisance and litigation were used as a means to shutting down hog-farming operations. One of the interesting questions in the cases, beyond the nuisance issues, was the desire of the defendants to have the discovery sealed. They argued that the discovery in the case had significant information about their operations, their finances, and other business information that would affect their ability to compete. The decision of the court of appeals, after the lower court decisions on this issue, was that the defendants failed to overcome the common law presumption of access. Thus, a great deal of information about the hog-farming operations, particularly useful to animal rights activists, became public. In Re North Carolina Swine Farm Nuisance Litigation, 2020 WL 119736 (E.D.N.C. 2020). The suits continued after this and other determinations on general procedural issues: ―Through five trials, held from April 2018 to March 2019, juries awarded 36 plaintiffs a total of $550.5 million. (The awards were later reduced to approximately $98 million due to a state law that places a limit on punitive damages.) Those verdicts have put family farmers out of business and taken a toll on our rural communities.‖ https://www.ncfarmfamilies.com/ farmkeepersblog/all-eyes-on-richmond-an-update-on-murphy-browns-appeal-ofnuisance-lawsuits.

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Instructor Manual: Chapter 1: Introduction and Sources of Real Estate Law

The cases are now on appeal in the federal fourth circuit court of appeals. For an excellent summary of the issues in the case, see https://www.ncporkreportdigital.com/ncpq/0319_fall_2019/MobilePaged Article.action?articleId=1523953#articleId1523953. The issue of the amount of damages is central to the appeals, particularly punitive damages. Also central to the cases has been the North Carolina statute that limits nuisance recovery when property occupants have moved to the nuisance. There is more on these nuisance cases in Chapter 3.

Answer to Consider (1.1) a. A farmer leasing property for purposes of growing crops who does not live on the property. The lease interest would give the farmer standing because the value of his lease and crops might be affected by the nuisance. b. A child who does not live on the property but will inherit the land from his parents. A future interest is what the child holds (see Chapter 2 for more information). There is some precedent for future land interest holders to stop the use of the land by the current owner in order to preserve its value—and there is some interest in the land. c. A mortgage lender on the property. The ability of the lender to foreclose and obtain a price for the land that will cover some or all of the mortgage amount is affected by the value of the land. And the value of the land can diminish when there is an unabated nuisance. The type of mortgage (see Chapter 15) would also influence this outcome— some states have the lender hold title and some merely have a lien, but the value of their interest is affected. d. A parent living with a child who owns the property. They would be lawfully on the property and under this decision need not pay rent or have a lease in order to bring a nuisance action. e. Employees who work daily on the property. It is possible that this one might qualify as a public nuisance (see Chapter 3 for more discussion). But they do not have a land-interest connection. It might be more difficult for them to recover under private nuisance doctrine. f. A co-owner who does not live on the property. They would have an ownership interest and could bring an action for nuisance because of the effect on the value of their interest.

Answer to Ethical Issue (1.1) The property owners have a claim related to the inability to use their property. For example, they can no longer hang their clothes outside because of the smell and there is a line at the coin laundries for drying clothes. They line up at 5:30 AM to be in there first to get their clothes dried. There are no longer outdoor gatherings in these communities because of the smells. On the other side, there is a need for food production. The farm operations are not the kind of thing that can be shut down completely. However, the owners of the farms and their operators could propose a compromise on the wet livestock waste—there are means for containing it and developing it into fertilizer as a by© 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Instructor Manual: Chapter 1: Introduction and Sources of Real Estate Law

product that would cut down on the lagoons and the smell and the waste retention. The processes would require additional expense, but it would be a means of balancing the interests of the parties—relief from the nuisance with production continuing but with more environmentally friendly processes. With ethical issues, there are nearly always compromises to be made on both sides, but the parties have to be willing to acknowledge the sentiments from the other side. How would I feel if I were on the property? How would I feel if it were my family business that I was running for a big company and I lose my means of support?

Justification for Studying Real Estate Law: Some Cautions and Conclusions  Explain to the students the complexities of real estate transactions such as recording, second mortgages, etc.  Explain the costs of not understanding the type of financing and security involved with your property.  Explain the need for a working knowledge of terms to be able to negotiate.  Explain how knowing the law can help a buyer, seller or broker ask the right questions in a real estate transaction.  Competence in legal issues can increase returns on investment by decreasing troublesome legal questions and costly litigation. The Most Frequently Asked Real Estate Questions Discuss the questions with the students. A possible class exercise is to survey the students to determine whether they have had or do have the questions as they are listed.

Answer to Consider (1.2) 1. State statutes; state regulations; local ordinances, private law (the rental agreement); case law 2. State statutes; state regulations; private law (the listing agreement/sales contract); case law 3. State statutes; state regulations; private law (the sales contract/escrow instructions); case law 4. State statutes; state regulations; case law 5. State statutes; state regulations; private law (the sales contract); local law (recording process); case law 6. State statutes; private law (insurance contracts); case law 7. State statutes; private law (antenuptial/prenuptial agreements); case law 8. State statutes; private law; case law 9. State statutes; private law (mortgage contract; note) 10. State statutes; case law 11. State statutes; local laws; case law; private law (deeds) 12. Federal statutes; federal regulation; case law 13. State statutes; private law (listing agreement); state regulations; case law 14. State statutes; local laws (recording); case law 15. State statutes; local laws (recording); case law

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Instructor Manual: Chapter 1: Introduction and Sources of Real Estate Law

16. Private law for HOA rules, Constitution for rights in the event the HOA seeks to lien the property and its rights to foreclose and collect on the lien, state laws that govern HOA structure and requirements 17. Local ordinances on short-term leases, private law such as HOA restrictions on short-term leases, local and state laws on landlord and health requirements; state and local licensing requirements for being an ongoing landlord, private law for the terms of such a short-term lease

Answers to Chapter Problems 1. The most recent legislation is Mortgage Reform and Anti-Predatory Lending Act, which was part of the Dodd-Frank Act. There are specific disclosure requirements as well as rights in foreclosure, with more protections on subprime mortgage loans. Chapter 15 includes more detailed information. 2. Interstate Land Sales Full Disclosure Act—federal statutes, United States Code (USC); possibly state laws on fraud and related state and federal regulations. 3. The issue raised here is one of eminent domain and economic development. There is more on this issue later in the text. However, the law covering the situation would be constitutional law and the Fifth Amendment takings clause as well as local ordinances and zoning laws and local procedural laws. 4. Local laws on zoning and perhaps a case of misrepresentation under state law. Also, covenants and deed restrictions could help. 5. California Code Annotated—State regulatory body and related regulations. 6. Should have been drafted more clearly, but garages and porches are generally not livable areas even though they are under the roof and would not be included. The key here will be the interpretation of ―living‖ in front of space. Can one live in an unfinished basement? That would be an interesting discussion for the court. Because of these debates on square footage, many real estate agents and homeowners are not describing their square footage very carefully, using terms such as ―approximate‖ and inserting ―finished‖ in front of ―living space‖ or even just stating the amount of square footage in the basement and describing it as ―unfinished.‖ In short, leave nothing ambiguous in descriptions. 7. Case law would be helpful in defining "living space." 8. The EPA has authority to mandate clean-up under federal environmental statutes and federal regulations. 9. These federal land exchanges are quite complex and require the individuals involved to go through their Congress members, state, and local officials (including zoning boards at city and county levels). Virtually every agency at the federal and state levels is also involved from HUD to BLM to city hall.

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Instructor Manual: Chapter 1: Introduction and Sources of Real Estate Law

10. State laws on broker relationships; state regulations on broker; private law which would include their listing contract and case law which has addressed this issue specifically (see Chapters 12 and 13). 11. Not even a close call—there was no agreement between the McClures and Simpson. The VPHOA had the contract and would have the right of lien enforcement, but such a lien was not possible because there was no contract between the McClures and the HOA related to tree removal. In fact, the court concluded that it was a wrongful lien filing. Not even remotely close to consent. The court even used the word ―vindictive‖ in describing the conduct of the McClures. For the defendants to succeed on their motion for summary judgment, the court must find that no express or implied contract existed requiring that the defendants provide labor or supplies to the plaintiffs. The plaintiffs in this case have not asserted that such a contract existed between them and the defendants. To the contrary, the plaintiffs have asserted that Simpson and the VPHOA performed this work without their knowledge and consent. Likewise, the defendants do not allege that such a contract existed. The undisputed facts reveal that Simpson, on behalf of the VPHOA, removed trees from some property that was within the view of the plaintiffs' home. The plaintiffs placed a lien on Simpson's home as a result of his actions. Because no contract was alleged and there was no meeting of the minds, the court finds that the first element required for a mechanic's lien has not been satisfied. Since the first element has not been satisfied, it is unnecessary to discuss the remaining elements. The court further finds that the plaintiffs are not the proper parties to file the mechanic's lien. It was Simpson and the VPHOA who performed the services. For this reason, it would have been Simpson and the VPHOA who could have placed a mechanic's lien as security for the work they performed. In order for the plaintiffs to claim a lien on Simpson's residence, the plaintiffs would have had to provide labor or supplies to Simpson. This did not occur in this case. Simpson provided services, but not pursuant to a contract; thus, neither party owed a debt to the other. McClure v. Fisher Attached Homes, 882 N.E.2d 61 (Ohio 2007).

In-Class Exercises Have the students play the role of a real estate agent and have them decide which sources of law should be consulted to provide them with the answers to the following questions: 1. How would I find out when and where I renew my license? 2. I am selling some 200-acre ranch lots in Prescott, Arizona. Where can I find out if the developer has complied with all the laws on disclosure? On land use? How would I find out who maintains the roads? Where would I find the zoning restrictions on the property? 3. I have a buyer who wants to finance the purchase of a home. How do I make sure that the lender has given him all of the necessary foreclosures? 4. I have two clients who would like to do a property exchange, but neither one of them understands what happens from a tax perspective? Where can they find help?

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Instructor Manual: Chapter 1: Introduction and Sources of Real Estate Law

5. I have clients who are buying a home in a gated community with a homeowners‘ association. What source of law tells me the requirements and rights of owners in the community? 6. My neighbor has constructed a chicken coop and is now raising chickens and eggs. How would I find out if the chicken coop is legal? 7. I have a group of three clients who want to go together and purchase an apartment building. How would I find out what types of business they could form to do this? [return to top]

Resources Alexander, ―History as Ideology in the Basic Property Course,‖ 36 J. of Legal Educ. 381-89 (September 1986). Anderson, ―Comparative Perspectives on Property Rights: The Right to Exclude,‖ 56 J. Legal Educ. 539 (2006). Anderson, ―The Divergent Evolution of English Property Law,‖ 29-OCT Prob. & Prop. 50 (2015). Blackstone, Commentaries on the Laws of England, Book II, Of the Rights of Things, Baton Rouge, LA: Claitor's Publishing Division. Blumenthal, ‖‗To Be Human‘: A Psychological Perspective on Property Law,‘‘ 83 Tul. L. Rev. 609 (2009). Cribbet, ‗‘Property in the First Year,‘‘ 18 J. of Legal Educ. 55 (1965). Diamond, ‗‘The Meaning and Nature of Property: Homeownership and Shared Equity in the Context of Poverty,‘‘ 29 St. Louis U. Pub. L. Rev. 85 (2009). Eagle, ―The Really New Property: A Skeptical Appraisal,‖ 43 Indiana L. Rev. 1229 (2010). Haar and Liebman, Property and the Law, Chapter 1. Hamilton, ―The Ancient Maxim Caveat Emptor,‖ Yale L. J. Vol. XL No. 8, 1931, 1133-87. Jennings, ―The Year in Review 2006: Best of the Courts 2006 (in the humorous sense),‖ 35 Real Est. L. J. 586 (2007). Madison, ―The Real Properties of Contract Law,‖ 82 B.U.L. Rev. 405 (April 2002). Nash, ―Packaging Property: The Effect of Paradigmatic Framing of Property Rights,‖ 83 Tul. L. Rev. 691 (February 2009). Smith, ―Mind the Gap: The Indirect Relation Between Ends and Means in American Property Law,‖ 94 Cornell L. Rev. 959 (May 2009). Yeoman, ―Here Are the Rural Residents Who Sued the World‘s Largest Hog Producer over Waste and Odors—and Won,‖ Food & Environment Reporting Network, (December 2019). © 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Instructor Manual: Chapter 1: Introduction and Sources of Real Estate Law

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

Instructor Manual Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

Table of Contents Chapter Objectives ...................................................................................................................................................... 18 Key Terms ........................................................................................................................................................................ 18 What's New in This Chapter ..................................................................................................................................... 20 Chapter Outline ............................................................................................................................................................ 20 Answers to Case Questions ..................................................................................................................... 24 Answer to Consider (2.1) ......................................................................................................................... 24 Answer to Consider (2.2) ......................................................................................................................... 25 Answer to Consider (2.3) ......................................................................................................................... 29 Answer to Consider (2.4) ......................................................................................................................... 31 Answers to Consider (2.5) ....................................................................................................................... 32 Answers to Case Questions ..................................................................................................................... 34 Answers to Case Questions ..................................................................................................................... 36 Answer to Consider (2.6) ......................................................................................................................... 36 Answers to Discussion Questions ............................................................................................................ 38 Additional Activities and Assignments................................................................................................................. 38 Answers to Chapter Problems ................................................................................................................. 38 In-Class Exercises ..................................................................................................................................... 43 Discussion Questions ............................................................................................................................... 44 Resources ................................................................................................................................................ 45

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

Chapter Objectives The following learning outcomes are addressed in this chapter (see PowerPoint Slide 2-1): 02.01

Describe and explain the various types of present and future land interests and list the length of those interests and discuss their transferability and characteristics.

02.02

Recognize the types of land interests that can be created.

02.03

Discuss the favorable and unfavorable aspects of various forms of land interests and the rules applicable to them.

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Key Terms contingent remainder: future interest that follows a life estate and that is not certain to follow or has unknown takers Doctrine of Worthier Title: principle of common law that gives a grantee the full fee simple title when the grant is made ―to grantee with remainder to the heirs of the grantee;‖ the two estates are merged into a fee simple estate for the grantee executory interest: future interest that is not a remainder and not an interest in the grantor fee: an inheritable interest in land fee simple: highest land interest; full title; right to convey or transfer by will or mortgage without restriction fee simple absolute: another term for a fee simple fee simple defeasible: a fee simple estate that can be lost by violation of a condition or use restriction placed in the transfer by the grantor fee simple determinable: full title to land so long as certain conduct is avoided; e.g., ―To A so long as the premises are never used for a bar‖ fee simple subject to a condition subsequent: full title provided that there is compliance with a condition; e.g., ―To A upon the condition that the property is used for school purposes‖ fee tail: full title restricted in its passage to direct descendants of the owner freehold: an interest in land that is uncertain or unlimited in duration inter vivos: during the life of; while alive; e.g., an inter vivos gift life estate: those who hold a life estate in property life tenant: those who hold a life estate in property

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

nonfreehold estates: type of land interest that is certain and definite in duration, such as a lease for a period of time possibility of reverter: future interest in the grantor that follows a fee simple determinable power of termination: future interest in the grantor that follows a fee simple subject to a condition subsequent remainder: future interest in someone other than the grantor; a remainder follows a life estate reversion: future interest in grantor that results after life estate terminates and no remainder interest was given right of entry: future interest in grantor that results when the grantee fails to honor the condition placed on the grant of a fee simple subject to a condition subsequent Rule Against Perpetuities (RAP): rule that prohibits the control of estates from the grave; provides a duration cap on contingent remainders and executory interests Rule in Shelley‟s Case: common law rule that merges future and present interests in A when grant is ―To A for life, remainder to A‘s heirs‖; has been abolished in many states; saving clause provision for alternative distribution of property being willed away; can be a defense to the Rule Against Perpetuities saving clause: clause in a will that prevents the destruction of interests or provides alternatives should any provision in the will violate the Rule Against Perpetuities testamentary: disposition by will vested remainder: a remainder that will automatically take effect when the life estate ends vested remainder subject to complete divestment: a remainder that can be completely lost if the terms of vesting are not met; not automatic on termination of the life estate vested remainder subject to partial divestment: a remainder that can be partially lost as other remainder men develop, i.e., more children are born during the life estate [return to top]

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

What's New in This Chapter The following elements are improvements in this chapter from the previous edition: 



Updated discussion of all future interests in Section 2-1c to reflect new state laws, limitations, and judicial alternatives solutions to the harsh results that some of these estates resulted in. In Section 2-1c, new case on fee simple determinables and the definition of what constitutes a ―camp‖ in a restriction on use and whether what was being operated really was a camp within the intent and meaning, Prelaz v. Town of Canton. New case in Section 2-2c, Rule Against Perpetuities, so that there is an example that students can understand and relate to. Whether an educational trust that ran for 25 years violated the Rule Against Perpetuities for a grant made in a grandmother‘s will for her grandchildren, Berry v. Union National Bank. New chapter problem #10 on the Trails Act‘s taking of landowner‘s property, Rogers v. U.S.

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Chapter Outline In the outline below, each element includes references (in parentheses) to related content. ―CH.##‖ refers to the chapter objective; ―PPT Slide #‖ refers to the slide number in the PowerPoint deck for this chapter (provided in the PowerPoints section of the Instructor Resource Center); and, as applicable for each discipline, accreditation or certification standards (―BL 1.3.3‖). Introduce the chapter and use the Ice Breaker in the PPT if desired, and if one is provided for this chapter. Review learning objectives for Chapter 4. (PPT Slides 1-3). 2-1 Land Interests: Freehold Estates and Accompanying Future Interests—USE POWERPOINT SLIDES 2-2 TO 2-18 FIGURE 2.1 AND POWERPOINT SLIDE 2-3 PROVIDE AN OVERVIEW OF ALL PRESENT AND FUTURE LAND INTERESTS. 2-1a

Freehold Estates 1. Freehold estate—unlimited in duration 2. Fee—is inheritable

2-1b

Fee Simple Absolute Ownership 1. Greatest degree of land ownership a. Can transfer title—inter vivos or by will b. Can pledge property c. No one holds any future interest in it 2. Created by language ―To A‖ or ―To A and his heirs.‖

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2-1c

Fee Simple Defeasible—unlimited or uncertain in duration with the potential of termination 1. Fee Simple Determinable and Possibility of Reverter a. Has an attached use restriction b. Compliance with the restriction is required or the estate is automatically terminated c. Examples ―To A so long as the property is used for grazing.‖ ―To State University so long as the property is used for a golf course.‖ ―To Mesa School District for the time that the property is used for a Lehi school.‖ 2. Possibility of Reverter—The Matching Fee Simple Determinable Future Interest a. b. c. d. e.

Future interest is fee simple determinable Future interest in the grantor Creation—‖To A so long as the property is used for a playground.‖ Can be transferred inter vivos or at death Statutory restrictions i. Some states limit effectiveness of restriction—40 years ii. Other states require that documents reflecting the restriction be recorded iii. Constitutionality of statutes has been questioned

3. Fee Simple Subject to a Condition Subsequent a. Has an attached use restriction b. Compliance with the restriction is required or the grantor can terminate the estate by retaking possession and title c. Examples ―To A on the condition that A is married, but if A should ever divorce, the grantor may enter and possess the property.‖ ―To A subject to the condition that no dancing ever occur on the property.‖ ―To A provided that the premises are always used for a Lutheran church.‖

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

NOTE:

Be certain the students understand that the distinction between a fee simple determinable and a fee simple subject to a condition subsequent is that the fee simple determinable automatically terminates upon violation of the use restriction. A fee simple subject to a condition subsequent terminates only if the grantor re-enters and takes the property back (generally through a quiet title action). The determination is based on the choice of language; a reflection of the parties' intent. 4. Right of Entry/Power of Termination: The Other Matching Future Interest a. Future interest that goes with a fee simple subject to a condition subsequent b. Grantor's future interest c. Creation—‖To the city of Minneapolis on the condition that the land be used for a city park, and should the land ever be used for another purpose, I reserve the right to re-enter and take possession of and title to the property.‖ d. Different from the possibility of reverter in that the grantor must take action to obtain possessory rights of the future interest whereas the possibility of reverter is automatically vested in the grantor at the time of the restriction violation e. Grantor can make inter vivos transfer or transfer by will f. Some states have restrictions similar to those noted under the possibility of reverter g. Distinctions between possibility of reverter and right of entry or power of termination i. Possibility of reverter uses timing language—‖so long as‖, ―until‖ ii. Right of entry/power of termination uses conditional language—‖if‖, ―provided that‖, ―only if‖, ―on the condition that‖ iii. Many states carry a presumption for the right of entry so that land interests are not automatically lost with the resulting confusion

CASE BRIEF: Prelaz v. Town of Canton 760 S.E.2d 389 (N.C. App. 2014) FACTS:

On May 4, 1992, Champion International Corporation conveyed title to the Camp Hope property (a 110-tract of land) to the Trustees of the Robertson Memorial Young Men's Christian Association (YMCA) by a deed that granted, ―a fee simple determinable estate in the lands‖ known as the Camp Hope property. The fee simple determinable estate would last so long as the YMCA did not violate any of the 17 conditions in the deed, which included:

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1. The property will be used for active recreational purposes. 2. The use of the property [only] for active recreational purposes such as camping for scout troops, organized camping programs for other organizations, picnicking, social and political gatherings, games such as shuffleboard, baseball, softball, tennis, football, hiking, etc. but will not permit the land to be used solely in a passive manner such as reverting to its nature state with the sole recreational use being hiking. There was another clause in the deed that provided that whatever camp was operated on the property would be ―primarily for the benefit of residents of other areas and states.‖ This clause in the deed was not part of the list of the 17 conditions. In 1996, following a YMCA violation, the deed provided that the town of Canton would then hold title to the property. If Canton failed to comply with the deed conditions, title then reverted automatically to Champion. In 2005, Canton negotiated a five-year lease with Wellspring Adventure Camp LLC to operate a weight loss and fitness summer camp at Camp Hope. Wellspring operates weight loss camps around the country and of the 978 campers who came to Camp Hope only 20 were from the Canton area. In 2006, John and Deborah Prelaz (plaintiffs) purchased a tract of land adjacent to Camp Hope. In April 2006, International Paper Company (which had merged with Champion) conveyed its reversionary interest in Camp Hope to the Prelazes. Following the Wellspring leases and activities, the Prelazes filed suit to have title to the Camp Hope property declared in their name. The jury found that title rested with Canton and the Prelazes appealed. ISSUE: Who owns the camp property? DECISION:

The decision of the trial court was reversed and remanded. The court held that Champion had created a fee simple determinable interest that provided for reversion of title for violation of any of 17 conditions listed in the deed. The deed had clear, express, and unambiguous language of reversion or termination upon condition broken. Champion intended to trigger reverter only if one of the enumerated conditions was broken. If Champion had intended to further restrain the Town's use of the property by prohibiting it from operating a summer camp that primarily benefited residents of other states, it should have done so in an enumerated paragraph. Thus, nowhere in the paragraph or in the Deed itself is it ―clearly manifested‖ that title to the property is to revert to Champion, or its successor, upon the Town's violation of the clause.

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

Answers to Case Questions 1. Draw a diagram of what was conveyed and to whom. Champion conveys title to YMCA YMCA violation Reverter interest goes to Canton Champion sells its reversionary interest in property to Prelazes Canton leases the camp to Wellspring Prelazes assert title as reversionary interest holders because of local-resident clause violation Court holds there is no reversion because the 17 clauses triggered the reversion, not the residency requirement—that was an expression of intent but not a triggering clause. 2. What is the difference between a clause and a condition in a fee simple determinable deed? A clause is an expression of desire—a condition is a triggering event for automatic termination of a present interest and the creation of a future interest into a present interest (reversion). 3. What should Champion have put in the deed if it wanted Camp Hope property to be used to benefit local residents? It should have made the residency requirement the 18th condition in the deed.

Answer to Consider (2.1) The court found for the Ator heir. Below is the court‘s explanation: It is undisputed that by operation of the 1954 Warranty Deed, Thelma Ator conveyed to School District a determinable fee simple in the Subject Land and retained a transferable possibility of reverter. A determinable fee simple, also known as a determinable fee upon conditional limitation, ―is a fee simple except that it is immediately terminated by the happening of some possible event, subsequently. The estate remaining in the grantor after the conveyance of such an estate is a possibility of reverter which he may convey, it being considered an interest in the land.‖ In contrast, a fee simple subject to condition subsequent ―may be terminated by the grantor by re-entry upon the happening of some possible event, subsequently. What remains to the grantor after the conveyance of such an estate is a power [of re-entry] ... which is not an interest in the land and is not sufficiently in esse to be subject of conveyance.‖ Breach of a conditional limitation triggers automatic reversion of land, whereas breach of a condition subsequent results in forfeiture. The question before us is one of contract interpretation—whether a condition has occurred within the meaning of the 1954 Agreement and Warranty Deed triggering automatic reversion of the Subject Property to Plaintiff Ator. School District argues the ―spirit‖ of the Agreement was to benefit children by promoting football and providing School District with land on which students could practice and play the game. School District insists these objectives currently are being met by its use of the Subject Property for eighth and ninth-grade football practices as well as for FOR practices and games. School District points out that none of these goals would be advanced if Plaintiff Ator assumed control of the Subject Property, demolished the

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stadium, and prevented children from playing football there. School District notes the 1954 Agreement contains five express references to ―the students‖ of School District, but no references to the high school, its varsity football team, or to the age or grade level of football players. School District maintains FOR football games are played ―in the manner and form generally employed by high schools‖ as required by the Agreement. Plaintiff Ator counters there is no evidence Thelma Ator intended to donate the land for the promotion of football in general. Rather, the express language of the conveyance indicates she hoped to correct School District's inability to ―institute and conduct in its school system a fully organized and regularly scheduled program of football training and football games‖ by giving it property on which to ―own or maintain a football field, stadium or other facility for the use of the students of said school district in the practice and playing of football.‖ He stresses it was School District's choice to build a new stadium on separate property rather than renovate and expand the facilities on the Subject Property in keeping with its contractual obligations under the 1954 Agreement and Warranty Deed. Plaintiff Ator argues School District cannot rely on FOR's use of the Subject Property to bootstrap itself into alleged compliance with the terms of the conditional grant. We agree with Plaintiff Ator. The plain language of the 1954 Agreement and Warranty Deed indicates that Thelma Ator intended for School District, not any other entity, to (1) maintain ―upon said property a fully organized football program;‖ (2) use the Subject Property ―for the playing of a complete program of regularly scheduled football games and contests during each school year,‖ and (3) ―maintain a regularly organized football program upon said property comparable in quality and standards to similar programs maintained in other communities of like size.‖ It is undisputed none of School District's football teams have played any football games at Ator Field since 2001. The plain fact is School District no longer maintains upon the Subject Property a fully organized football program of regularly scheduled football games as required by the 1954 Agreement and Warranty Deed. We agree with the trial court that School District cannot rely on FOR as its surrogate to avoid reversion of the Subject Property to Plaintiff Ator. Ator v. Unknown Heirs, Personal Representatives, Devisees, Trustees, Successors and Assigns of Ator, 146 P. 3d 821 (Ok. App. 2006).

Answer to Consider (2.2) a. Fee simple determinable and the future interest is a possibility of reverter. b. Fee simple subject to a condition subsequent and the future interest is a right of entry/power of termination. c. Fee simple determinable and the future interest is a possibility of reverter. d. Fee simple determinable and the future interest is a possibility of reverter. 2-1d

Fee Tail Ownership 1. Uncertain or unlimited in duration

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2. Inheritable but only by bloodline or lineal descendants such as children, grandchildren, and great grandchildren 3. Created by language such as, ―To A and the heirs of his body.‖ 4. Legislation a. Many states treat fee tails as fee simple absolutes b. Other states have statutes (disentailing devices) which permit the removal of the fee tail restrictions c. Other states treat it as a life estate d. Three states recognize and enforce fee tails e. All states still recognize fee tails created before these statutes were passed 2-1e

Life Estate Ownership 1. Creation a. Freehold—lasts only as long as the life of the holder or another measuring life b. Uncertain in length c. Examples: ―To A for life.‖ − conventional life estate ―To A for the life of B.‖—life estate pur autre vie—B is the cestui or measuring life and holds no interest d. Can be an effective estate planning device to provide for a surviving spouse and still leave funds for the children i. Fee simple determinable ii. Fee simple subject to a condition subsequent iii. Fee simple determinable

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USE POWERPOINT SLIDE 2-11 TO REVIEW ALL TYPES OF INTERESTS. 2. Rights of Life Tenants a. Exclusive possession during their lives b. Obligation not to destroy the property or commit waste c. Protect interests of those who will own the land in the future Examples: Life tenant on a farm depleting the soil by failure to use proper agricultural techniques Life tenant of a residence failing to maintain property with resulting water damage Timber example from the text d. Life tenants can transfer their interests i. only while they are alive ii. cannot transfer by will iii. creditors have security in property only so long as life tenant is alive e. Tax payments on life estate allocated in each state 2-1f

Reversions 1. Follows a lesser estate—life estate 2. Future interest in the grantor 3. Creation—‖To my husband for his life‖ When the husband dies, title to the property reverts back to the grantor 4. Also follows the termination of non-freehold estates such as a tenancy for years or periodic tenancy

2-1g

Remainders 1. Follow the termination of a lesser estate—life estate 2. Future interest in one other than the grantor 3. Creation ―To my husband for life, then to my daughter, Samantha.‖ 4. Vested Remainders a. Remainder given to persons in existence who have the immediate right to the land interest when the life estate terminates b. Example:

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―To my husband for his life, then to my daughter, Samantha.‖ Samantha holds a vested interest because: i. She is in existence at time of grant ii. Upon her father's death, she has the right to the property c. Vested remainder subject to partial divestment i. Remainder given to person or persons in existence, but there could be more persons added so that the interest of each remainderman can decline ii. Generally, covers a remainder given to a group iii. Example: ―To my brother for life, then to my brother's children. At the time of the grant, the brother is alive and has two children. At the time of the grant the two children are ascertained and will be entitled to their interest of 1/2 upon their father's death. However, there could be more children born after the grant and the two children would only get 1/3 or 1/4 as opposed to 1/2 if more children are born d. Vested remainders subject to complete divestment i. Remainder given to person in existence which will automatically vest when prior estate terminates ii. However, condition subsequent could cause a complete loss of the remainder iii. Example: ―To my husband for his life, then to my daughter provided she is married.‖ The daughter's interest is vested and automatic, but if she is not married, she can lose the interest completely. 5. Contingent Remainders a. Taker is unascertained—‖To my wife for life, then to the first child of mine to reach age 21.‖ Uncertain which child will be the first to reach age 21 b. Condition precedent—‖To my wife for life, then if my daughter has graduated from college, to my daughter.‖ The daughter's interest does not automatically follow the life estate, it is preceded by a condition. DISTINCTION: Complete divestment vs. contingent remainder. In contingent remainder, the condition precedes the remainder grant. In a vested subject to complete divestment, the condition follows the grant. c. All remainders are transferable—inter vivos or testamentary

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

Answer to Consider (2.3) The court held that the will did not provide for termination of life estate if property was used for business purposes or as a bed and breakfast or leased; and the will granted former resident a life estate in the property subject to termination in the event that she chose not to live there. In other words, the use for business purposes did not terminate her life estate, but she then had to live there. If she did not live there, the life estate terminated. Below is an excerpt from the opinion: ―An estate in fee simple determinable is created by a limitation in a fee simple conveyance which provides that the estate shall automatically expire upon the occurrence of a certain subsequent event.‖ Station Assoc., Inc. v. Dare County, 350 N.C. 367, 370, 513 S.E.2d 789, 792 (1999) (citing Elmore v. Austin, 232 N.C. 13, 20-21, 59 S.E.2d 205, 211 (1950)). ―Like a fee, a life estate may be defeasible if its continued existence is conditional.‖ Brinkley v. Day, 88 N.C.App. 101, 106, 362 S.E.2d 587, 590 (1987) (citing Blackwood v. Blackwood, 237 N.C. 726, 76 S.E.2d 122 (1953)). ―The law does not favor a construction of the language in a deed which will constitute a condition subsequent unless the intention of the parties to create such a restriction upon the title is clearly manifested.‖ Washington City Board of Education v. Edgerton, 244 N.C. 576, 578, 94 S.E.2d 661, 664, (1956). For that reason, the Supreme Court ―has declined to recognize reversionary interests in deeds that do not contain express and unambiguous language of reversion or termination upon condition broken‖ and has ―stated repeatedly that a mere expression of the purpose for which the property is to be used without provision for forfeiture or reentry is insufficient to create an estate on condition....‖ Station Assoc., 350 N.C. at 370, 371, 513 S.E.2d at 792, 793. However, ―in those cases in which the deed contained express and unambiguous language of reversion or termination, we have construed a deed to convey a determinable fee or fee on condition subsequent.‖ Id., 350 N.C. at 371-72, 513 S.E.2d at 793. ―The language of termination necessary to create a fee simple determinable need not conform to any ‗set formula‘‖ as long as ―‗any words expressive of the grantor's intent that the estate shall terminate on the occurrence of the event‘ or that ‗on the cessation of [a specified] use, the estate shall end,‘‖ are used. Id., 350 N.C. at 373-74, 513 S.E.2d at 794 (quoting Lackey v. Hamlet City Board of Education, 258 N.C. 460, 464, 128 S.E.2d 806, 809 (1963), and Charlotte Park and Recreation Commission v. Barringer, 242 N.C. 311, 317, 88 S.E.2d 114, 120 (1955), cert. denied sub nom., 350 U.S. 983, 76 S.Ct. 469, 100 L.Ed. 851 (1956)). As a result, the fundamental question that we must resolve in construing Item II.B.6 of Ms. Jones' will is determining whether it clearly expresses an intent that the life estate granted to Ms. Frejlach would automatically terminate upon the occurrence of one or more of the events described there. It is an elementary rule ... that the intention of the testat[rix] is the polar star which is to guide in the interpretation of all wills, and, when ascertained, effect will be given to it unless it violates some rule of law, or is contrary to public policy. In determining the testat[rix]'s intention, the primary source is the language used by the testat[rix]. Isolated

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clauses are not to be considered out of context, but rather the entire will is to be examined as a whole so as to ascertain the general plan of the testat[rix]. Edmunds v. Edmunds, 194 N.C.App. 425, 433, 669 S.E.2d 874, 879 (2008), aff'd per curiam, 363 N.C. 740, 686 S.E.2d 150 (2009) (quoting Pittman v. Thomas, 307 N.C. 485, 492, 299 S.E.2d 207, 211 (1983) (internal quotations omitted)). ―The intent of the testat[rix] must be gathered from the four corners of the will and the circumstances attending its execution.‖ Ward v. Ward, 88 N.C.App. 267, 269, 362 S.E.2d 847, 849 (1987), disc. review denied, 322 N.C. 115, 367 S.E.2d 921 (1988) (citation omitted). When interpreting a will, ―every word and clause must, if possible, be given effect and apparent conflicts reconciled.‖ Slater v. Lineberry, 89 N.C.App. 558, 559, 366 S.E.2d 608, 610 (1988). A careful analysis of the language of Item II.B.6 of Ms. Jones' will discloses that those portions of the will providing that ―[t]he house is not to be used for a business or Bed and Breakfast and is not to be leased out by [Ms.] Frejlach‖ are unaccompanied by any ―express and unambiguous language of reversion or termination upon condition broken,‖ Station Assoc., 350 N.C. at 370, 513 S.E.2d at 793, and amount to ―a mere expression of the purpose for which the property is to be used without provision for forfeiture or reentry.‖ Id. at 371, 513 S.E.2d at 793. We are particularly persuaded of the correctness of this conclusion given the Supreme Court's clear statement that the creation of defeasible interests is disfavored. As a result, we conclude that the trial court erred by construing Item II.B.6 to provide that Ms. Frejlach's life estate terminates if she ―uses the house or property for business purposes or as a bed and breakfast‖ or if she ―leases the house or property.‖ On the other hand, the language providing that Ms. Jones ―give[s] the right for life to [Ms.] Frejlach to live in the house‖ located on Gardner Road and that, ―if [Ms.] Frejlach declines to exercise this right, I give this 11 acres of property to‖ Ms. Hagaman is not merely precatory. We are unable to understand the ―right‖ to be ―exercised‖ as anything other than Ms. Frejlach's right to live on the Gardner Road property. Although this portion of Item II.B.6 lacks some of the language that is frequently found in instruments creating defeasible interests, such as ―so long as‖ or ―on the condition that,‖ the relevant provisions of Item II.B.6 do clearly state that, in the event that Ms. Frejlach does not ―exercise this right‖ to live on the property, it goes to Ms. Hagaman. As a result, we are unable to avoid the conclusion that Item II.B.6 of Ms. Jones' will does grant Ms. Frejlach a life estate in the Gardner Road property that is subject to termination in the event that she chooses not to live there. Our dissenting colleague rejects this reading of Item II.B.6 of Ms. Jones' will on the grounds that, ―[r]eading the devise in the sequence transcribed by the testatrix, it appears that Ms. Jones' intent was merely to devise appellant Frejlach a life estate in which the testatrix desired her to live in the house‖ and that, ―[a]t best, the devise to appellant in item II, paragraph (B)(6) would be defeasible only upon appellant Frejlach's death or her declining to exercise her right to the devised property, at which point the property would vest in appellee Hagaman.‖ As a result, the dissent concludes that ―this

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language would essentially create a ‗plain vanilla‘ life estate, because any life estate devised is only defeasible upon the death of the life tenant or upon a devisee's decision to renounce the estate.‖ We are not persuaded by this logic because it fails to give sufficient effect to Ms. Jones' very specific and repeated use of the word ―live.‖ As used in this context, ―live‖ means ―to make one's dwelling; reside.‖ Webster's New World Dictionary of the American Language, 857 (1957). We believe that, under the canons of construction discussed above, we must assume that Ms. Jones chose her words carefully and intended to use the language that she used. In the event that one accepts the logic of our dissenting colleague, Ms. Frejlach could retain a life estate in the Gardner Road property without ever setting foot on the premises, a result which we have difficulty squaring with Ms. Jones' explicit statement that she gave Ms. Frejlach the right ―to live in the house‖ located on Gardner Road ―for life‖ and that, if Ms. Frejlach ―declines to exercise this right, I give this 11 acres of property to‖ Ms. Hagaman. Thus, since the logic adopted by our dissenting colleague does not give effect to what we believe to be Ms. Jones' clear intention to divest Ms. Frejlach of her life estate in the event that she failed to live on the Gardner Road property, we do not find the approach taken in the dissent persuasive. Nelson v. Bennett, 694 S.E.2d 771 (N.C. App. 2010).

Answer to Consider (2.4) a. A—life estate B—vested remainder b. A—life estate B—vested remainders (language ―and his heirs‖ is simply fee simple absolute language c. B—life estate A—contingent remainder Grantor—possible reversion if A is not married at B's death d. A—life estate B's heirs—contingent remainder since heirs are unascertainable until death e. A—life estate B—vested remainder subject to complete divestment (C's interest is discussed later) 2-1h

Executory Interests 1. Future interest in one other than the grantor which is not a remainder 2. Creation a. Two fee simples; possibility of reverter is given by the grantor to another ―To A so long as the premises are used for a school, but if they are ever not so used, to my son, B.‖ b. Gap between present interests and future interests ―To A for life, then in five years after A's death to A's child.‖

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A holds a life estate but A's child's interest will not be possessory for five years; thus, the gap prevents A's child from holding a remainder c. Future freehold interest ―To my wife in fee simple in 10 years.‖ There is no present interest and the wife's future interest is not a remainder.

Answers to Consider (2.5) USE POWERPOINT SLIDES 2-15 TO 2-18. a. Life estate b. Fee simple absolute c. Fee simple absolute (in most states) d. Fee simple absolute to two people e. Fee tail female f. Fee simple subject to a condition subsequent g. Fee simple subject to a condition subsequent h. Fee simple determinable i. Life estate j. Fee simple determinable k. Fee tail (female) l. Life estate pur autre vie m. Fee simple determinable n. Fee tail o. Fee tail p. Fee simple determinable USE FIGURE 2.2 FOR REVIEW. 2-2 Special Rules Governing Interests in Land—USE POWERPOINT SLIDES 2-19 TO 2-24 2-2a

Rule in Shelley's Case 1. ―To my wife for life, remainder to the heirs of my wife.‖ 2. Ordinary construction—wife has life estate; heirs have a contingent remainder 3. Shelley's case merges life estate with contingent remainder and wife thus has a fee simple 4. Some states have abolished the rule in Shelley's case so that the two estates are not merged, and the ordinary construction applies

2-2b

Doctrine of Worthier Title (DOWT) 1. ―To A for life, remainder to my heirs.‖

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

2. Ordinary construction—A has life estate Heirs have either vested or contingent remainder depending upon whether the grantor is still alive 3. Grantor holds reversion; heirs hold nothing 4. Some states have abolished the rule or courts are permitted to interpret the grantor's true intent 2-2c

Rule Against Perpetuities (RAP) 1. Rule limiting the time the grantor can control the property being transferred 2. Applicable only to a. Executory interests b. Contingent remainders 3. Interest must vest within lives and being plus 21 years 4. Use text example ―To my children for life, remainder to any and all of my grandchildren who reach 21.‖ (Grant is made in a will) Step 1—Children have life estate; grandchildren are unascertained and also must wait to take interest. There is a gap in seisin—executory interest Step 2—Since executory interest exists, RAP applies Step 3—Vesting would occur when last grandchild reached age 21 Step 4—Lives in being are those given the life estate or those who are in existence at the time of the grant (cannot be grantor; grantor is dead) Step 5—When last child dies—no more grandchildren; thus, interest would vest within 21 years after death of last child Step 6—No violation—21-year maximum met

CASE BRIEF:

Berry v. Union National Bank 262 S.E.2d 766 (W. Va. App. 1980)

FACTS:

Clara Clayton Post died on June 20, 1975. Her will created a private educational trust for the descendants of her late husband's brothers and sisters, giving her trustee absolute discretion to provide educational expenses for those descendants who met certain criteria. The trust was to last for 25 years after Clara‘s death or until the principal was reduced to less than $5,000.00, whichever came first. At the termination of the trust, the principal and interest were to be distributed per stirpes (See Chapter 17 for an explanation of how this

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

method of distribution works) to the then living descendants of her husband's brothers and sisters. The trial court found that the trust violated the RAP and was void. ISSUE:

Does the education trust that lasts for 25 years violate the RAP?

DECISION:

The appellate court reversed the trial court decision by modifying the will to change the trust duration from 25 years to 21 years, thereby bringing it within the RAP and not void. The court held that equity required a modification in order to provide a solution that was consistent with the testator‘s intent.

Answers to Case Questions 1. Explain what Clara wanted done with her estate, why, and for how long. Clara wanted to fulfill her husband‘s wishes to provide educational funds for her nieces and nephews. Once they had mostly finished their years of education, she wanted the trust funds (whatever was left) distributed to them. She put an ending time of the trust being reduced to $5,000 or 25 years. 2. What is the result if the RAP is applied? If the RAP is applied then the trust fails and the funds that would have gone into the trust would go to the other relatives Clara had designated in her will, or if she made only specific bequests to them then the general provision funds for the trust would be distributed according to intestate distribution—whatever state law provides if there is no will or the will makes no provision for any distribution. 3. What result does the court achieve by reducing the 25 years to 21 years? The result is that the trust is not void and Clara‘s will can accomplish her and her husband‘s intent, which was to provide for the education of their nieces and nephews. 4. What do you now know about precedent in West Virginia on the application and interpretation of the RAP? The court has set up a way that courts can modify provisions in wills so that the intent of the testator/testatrix can be accomplished and the RAP does not wipe out their focus and intent in making their will. CASE BRIEF:

Kennewick Public Hosp. Dist. v. Hawe 214 P.3d 163 (Wash. App. 2009)

FACTS:

Albert M. Luth executed a last will and testament in 1957. He devised his Benton County real property to the Kennewick Public Hospital District: I now give, devise and bequeath all of my right, title and interest in and to any real property owned by me at the time of my death within the County of Benton, State of Washington, to the Kennewick Public Hospital District, a municipal corporation, to keep and maintain the same, to collect the rents, issues and profits therefrom and to expend the income therefrom in the upkeep, maintenance and improvement of the hospital building and grounds as in the judgment of the duly elected commissioners of said hospital district seems best. I now direct that the real property shall not be sold but shall be retained as an investment. This devise is in perpetuity, and the property shall at no time be transferred, incumbered [sic] or otherwise alienated from the

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

purposes herein expressed and intended, and if the same or any part thereof, shall at any time be conveyed, transferred or incumbered [sic], by deed, mortgage or otherwise, then in such case I do devise all of the above mentioned real estate to the County of Benton, and in default thereof, to the State of Washington. Mr. Luth devised one-quarter of the remainder of his estate to his niece, Laura Hurd; one-quarter to his nephew, Norval Havercroft; and one-half to his sister, Alice Hawe. Mr. Luth died in 1961. In 1978, Ms. Hurd executed a will that left her estate to the Diocese. Ms. Hurd died in the 1980s. The Hospital sued to quiet title to the property in 2006. Benton County and the State both waived any interest. The court entered default judgments to quiet title against all heirs and others, except the Diocese. The Diocese and the Hospital filed cross-motions for summary judgment in 2008. The court concluded that the Hospital held the property in fee simple absolute and granted summary judgment for the Hospital quieting title. The Diocese appealed. ISSUE:

What happens to a gift when the grantor has violated the RAP? Who gets title to the land and what type of interest is it?

DECISION:

The executory interest violates Washington's version of the rule against perpetuities and is therefore void. The Diocese argues that Mr. Luth's will conveyed a fee simple determinable estate to the Hospital. And the effect of that was to transfer the property to Ms. Hurd's estate under the residuary clause in Mr. Luth's will, if and when the Hospital violates the prohibitions in the will against transfer. The rule against perpetuities requires that future estates vest or fail within ―a life or lives in being at the time of the testator's death and twenty-one years thereafter.‖ Otherwise, the limitation is void. So, Mr. Luth's devise of a future estate to the County and State fails under the rule against perpetuities because their interest may vest or fail into perpetuity. A conveyance of a fee simple estate may employ language of either ―executory limitation‖ or ―special limitation‖ to cause the created interest to automatically expire upon the occurrence of a stated event. Language creating a fee simple subject to executory limitation must ―express[ ] an intent of the conveyor that, on the occurrence of a stated event, an estate in fee simple contemporaneously conveyed or retained by the conveyor is to terminate in favor of an estate created in a person other than the conveyor.‖ By contrast, ―[a] fee simple determinable, also called a determinable fee simple, is an estate that automatically terminates on the happening of a stated event and reverts to the grantor by operation of law.‖

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

The effect of striking the County's and State's interest in the subject property is removal of the condition of defeasibility. We then agree with the trial judge that the resulting interest is fee simple absolute. We affirm the summary judgment in favor of the Hospital.

Answers to Case Questions 1. Explain which of the types of interests in land the court discusses in making its decision. The Diocese argues that once the rule against perpetuities invalidated the County's and State's interest, Mr. Luth's devise became a fee simple determinable estate that reserves the right of reverter for Mr. Luth and his heirs. The Hospital characterizes the language in Mr. Luth's will as an attempt to devise an estate subject to executory limitation. So, when the court struck the limitation, a fee simple absolute remained. 2. Why does the clause granting the rights violate the RAP? Because the interest, which was executor, could not vest within lives and being plus 21 years—it went on forever. 3. Is there anything that could have been part of the will that would have prevented the litigation? A saving clause—if anything in the will violates the RAP, then provide for a contingent disposition and make it clear.

Answer to Consider (2.6) Step 1—Children have life estate, grandchildren have executory interest Step 2—RAP applies to executory interests Step 3—Same—interest would vest when last grandchild reaches age 21 Step 4—Childrens' lives will again be the measuring lives along with grantor, since grantor is alive Step 5—Since the grantor is still alive, it is possible that additional children could be born (this is a possibility even if the grantor is 80 under RAP (the fertile octogenarian)). These children would not be included in the measuring lives and a date scenario would be as follows: Grant is made—1952 Grantor has 4 children at the time—A, B, C, D Child E is born—1965 A and B die—1972 (have 2 children—G and H respectively) C and D die—1980 (have 2 children—X and Y respectively) E's child Z is born—1987 Although G, H, X and Y will be 21 years old within the proper period, Z will not be 21 until 2008, which is 36 years after A and B's death and 28 years after C and D's death Step 6—The rule is violated because of a potential child. Emphasize that the rule is violated even if the theoretical Child E is never born. Rule turns on possibilities, not realities. USE FIGURE 2.3 TO REVIEW FUTURE INTERESTS.

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

2-3

Reforms of Future Interests and Their Rules—USE POWERPOINT SLIDES 2-25 AND 226

2-4

Land Interests—Nonfreehold Estates—USE POWERPOINT SLIDES 2-27 AND 2-28 Limited in duration and non-inheritable

2-5

Economics of Land Interests (Review Posner article with students)—USE POWERPOINT SLIDE 2-29 AND 2-30 A. New Ownership Rights Needed to Provide Incentives B. Discuss Example of Farmer's Sale to Maximize Profitability and Return on Investment C. Efficient Economic Land Systems 1. Must be universal 2. Must provide for exclusive rights—protection of land interests—use and possession 3. Transferability

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

USE POWERPOINT SLIDE 2-31 TO DISCUSS RICHARD POSNER'S ARTICLE.

Answers to Discussion Questions 1. How do property rights serve to protect and ―incent‖ landowners? By giving them exclusive rights in the land and its products—crops. 2. Why is it sometimes more economically efficient for a property owner to transfer property? Second party may make the land more productive because he may be a better farmer than the first party. 3. What are the three criteria of an efficient system of property rights? Universality; exclusivity; transferability. [return to top]

Additional Activities and Assignments Answers to Chapter Problems 1. Fee simple determinable; must use it for an incinerator or lose the land. Proctor v. Inland Shores, Inc., 373 S.E.2d 268 (Ga. 1988). 2. The court reasoned that the termination of a fee simple determinable determined title to the mineral estate. The only factual issue is whether Grizzle had ceased operations—if he had, then title reverted back to Ramsey and he had the right to extract minerals. Ramsey v. Grizzle, 313 S.W.3d 498 (Tex. App. 2010). 3. The basic issue raised on the appeal is this: Does the fact that the Kinney County State Lake located on the land no longer contains a body of water of 150 acres serve as a basis for the activation of the reversion clause so as to terminate the State's title to the real estate and cause title to revert to the plaintiffs? In order to determine this basic issue, it would be helpful to consider certain general principles of law which are applicable in cases involving reversion clauses. In this case, the State, as grantee, owns a determinable or qualified fee in real estate which has all the attributes of a fee simple except it is subject to being defeated by the happening of a condition which is to terminate the estate. An estate in fee simple determinable is created by any limitation which: (1) creates an estate in fee simple and (2) provides that the estate shall automatically expire upon the occurrence of the stated event. In the past, this court has determined issues involving estates in fee simple determinable. In Curtis v. Board of Education, 43 Kan. 138, 144, 23 P. 98 (1890), it was stated that the authorities are uniform that an estate upon condition subsequent, which estate after having been fully vested may be defeated by a breach of the condition, is never favored in law, and that no deed will be construed to create such an estate unless the language to that effect is so clear that no room is left for any other construction. In Ritchie v. K.N. & D. Rly. Co., 55 Kan. 36, 57, 39 P. 718 (1895), it was held that an instrument containing a condition subsequent, working a forfeiture of an estate, is to be strictly construed and its terms will never be extended by construction. This general rule is based upon the theory that, since a deed is the

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

act of the grantor, it will be construed most strongly against him. See Rose v. School District No. 94, 162 Kan. 720, 726, 179 P.2d 181 (1947). Where, however, a deed clearly creates a fee simple determinable and reserves a reversionary interest in the grantor, such provisions will be enforced. See, for example, Thompson v. Godfrey, 191 Kan. 102, 379 P.2d 269 (1963). The clause of reversion contained in paragraph six of the warranty deed requires that the premises be used by the State, as grantee, as a ―public forestry, fish and game preserve and recreational state park.‖ At the time the deed was executed, the statutes of Kansas provided for the establishment of public forestry, fish and game preserves, and recreational grounds. G.S. 1935, 32-215 authorized the forestry, fish and game commission, among other things, to establish, maintain, and provide for sanctuaries, in which game, game birds, fur-bearing animals or fish may breed or rest; to replenish hunting and trapping grounds and water or fishing waters; and to establish, maintain, and improve recreational grounds for the purpose of affording recreational facilities for the citizens of Kansas. That statute was enacted in 1927 and was in full force and effect at the time the warranty deed was executed in the present case. These same basic powers are given to the fish and game commission today by virtue of our present statutes in K.S.A. 32-201 et seq. G.S. 1935, 32-214 gave the forestry, fish and game commission broad power and authority to acquire lands by donation or by purchase for the purpose of establishing and maintaining the same as a public forestry, recreational grounds, and fish and game preserves; to acquire or provide for the building of reservoirs, dam or lakes for impounding water and for providing for the planting of forestry trees; to supervise building and construction work of all kinds; to plant forestry trees and to make improvements on the property including the upkeep of roads and to do all and anything possible to carry out the intent of the act. Thus, by statute, the fish and game commission, acting on behalf of the State, is obviously vested with great power and discretion in using donated lands for a public forestry, fish and game preserve or a recreational state park. In the City of Wichita v. Clapp, 125 Kan. 100, 263 P. 12 (1928), it was held that the use of a portion of a public park as an airport came within the proper and legitimate uses for which public parks are created. In the opinion, at page 101, the court discussed the meaning of the term ―park purposes.‖ The court stated: ―The specific question for consideration is whether park purposes may include an airport or landing field for airplanes. Under various authorities, the expression ‗park purposes' has been held to include a race track, a tourist camp, bridle trails, boating, bathing, refreshment and lunch stands, providing bathing suits, towels and rooms for bathers, dressing pavilion, waiting room for street cars, refreshment and shelter room for the public, grandstand, ball games, baseball diamond, race meets, tennis courts, croquet grounds, children's playgrounds, hotels, restaurants, museums, art galleries, zoological and botanical gardens, conservatories, and many other recreational and educational facilities. In Bailey v. City of Topeka, 97 Kan. 327, 330, 154 P. 1014, this court quoted approvingly from Dillon on Municipal Corporations, to the effect that:

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

―‗A park may be devoted to any use which tends to promote popular enjoyment and recreation.‘ (Dillon, Municipal Corporations, 5th ed. § 1096, p. 1749.)‖ In 1955, the legislature provided for a state park and resources authority (K.S.A. 74-4501 et seq). The legislature gave broad and comprehensive definitions to the terms ―state park‖ and ―park facilities.‖ See K.S.A. 74-4502(d) and (e). These various statutes and authorities are cited to show the broad interpretation which has been given to the terms ―forestry, fish and game preserve and recreational state park.‖ The trial court in this case granted partial summary judgment in favor of the defendants, holding that the terms of the deed do not support a forfeiture of the State's interest in the property simply because the lake constructed on the premises contained a body of water of less than 150 acres prior to and subsequent to the filing of this action. We agree with the trial court. The deed should be construed to require only that the State in good faith maintain the property as a public forestry, fish and game facility and as a recreational state park. The grantor obviously had in mind an area dedicated to the protection and conservation of natural surroundings, game and fish, and a place where the people could enjoy such natural beauties. The lake is an important factor to be considered in determining whether the State in good faith has maintained the entire property for the intended uses. The maintenance of the lake, however, is not the controlling consideration but is only a part of the big picture. Under the circumstances, we hold that the trial court correctly held that the State of Kansas had not forfeited its title to the land simply because the quantity of water contained in the lake has not been sufficient to completely fill an area of 150 acres. The quantity of water contained in the lake is bound to vary from year to year depending upon the amount of rainfall and any other available sources of water in the area. As noted above, however, the trial court, instead of restricting its decision to a partial summary judgment on the single issue presented, found that all other issues in the case were moot and that judgment should be rendered in favor of the defendants and against the plaintiffs ―on their cause of action.‖ We hold that, in entering that judgment, the trial court committed reversible error. The final summary judgment rendered was erroneous because it was prematurely granted and denied to the parties the opportunity to complete their discovery and present evidence on the ultimate factual issue presented in the case: Whether the state has in good faith used and maintained the premises for the intended purposes. In Lawrence v. Deemy, 204 Kan. 299, 461 P.2d 770 (1969), this court reviewed our law relating to summary judgment and stated as follows: ―Generally before a summary [judgment] may be granted, the record before the court must show conclusively that there remains no genuine issue as to a material fact, and that the moving party is entitled to judgment as a matter of law. A mere surmise or belief on the part of the trial court, no matter how reasonable, that a party cannot prevail upon a trial will not warrant a summary judgment if there remains a dispute as to a material fact which is not clearly shown to be sham, frivolous, or so

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

unsubstantial that it would be futile to try the case (Knowles v. Klase, 204 Kan. 156, 460 P.2d 444; Green v. Kaesler-Allen Lumber Co., 197 Kan. 788, 420 P.2d 1019.) The manifest purpose of a summary judgment is to obviate delay where there is no real issue of fact. A court should never attempt to determine the factual issues on a motion for summary judgment but should search the record for the purpose of determining whether factual issues do exist. If there is a reasonable doubt as to their existence, a motion for summary judgment will not lie. (Secrist v. Turley, 196 Kan. 572, 412 P.2d 976.) A court, in making its determination, must give to the party against whom summary judgment is sought the benefit of all inferences that may be drawn from the facts under consideration. (Shehi v. Southwest Rentals, Inc., 199 Kan. 265, 428 P.2d 838; Jarnagin v. Ditus, 198 Kan. 413, 424 P.2d 265; Brick v. City of Wichita, 195 Kan. 206, 403 P.2d 964.) ―Regardless of how refined or sophisticated we attempt to state the summary judgment rule, we always return to the language of the statute itself (K.S.A. 60-256[c] )—there must remain ‗no genuine issue as to any material fact.‘ ― 204 Kan. at 301-02, 461 P.2d 770. Although there was apparently some evidence presented to the trial court at the informal discovery conference that improvements had been made on the land and that the lake had contained water intermittently down through the years and that various sums of money have been spent on the property, such evidence has not been included in the record on appeal and the parties have not been furnished a full opportunity to complete their discovery and develop evidence to be presented on the primary issue in the case, set forth above, or on other issues raised by the parties. We have no hesitancy in holding that final summary judgment in the case was prematurely granted and that the case must be remanded to the trial court for further proceedings. The judgment of the district court is affirmed in part and reversed in part and remanded for further proceedings in accordance with the views expressed in this opinion. Kinney v. State of Kansas and Kansas Fish and Game Commission, 710 P.2d 1290 (Kan. 1985). 4. a. A—life estate A‘s widow—life estate A‘s children—contingent remainder (do not know which children will be living) Grantor—reversion DOWT does not apply to heirs—not ―to heirs‖ but ―to children‖; RAP not violated because it vests immediately upon death of the measuring life (the widow) b. A—life estate Grantor—reversion c. A—fee simple subject to a condition subsequent G—right of entry/power of termination d. A—life estate B—vested remainder subject to complete divestment G—reversion D—estate for years (subject to termination if A dies during the 10-year period) © 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

e. A—fee simple determinable G—possibility of reverter If G left all of his estate to A, A would then have a fee simple f. A—has an executory interest which will eventually be a fee simple interest G—has nothing No violation of RAP since A and G are measuring lives g. A—life estate Children—life estate Grandchildren—vested remainder subject to partial divestment (there could be more grandchildren) h. A—life estate B—vested remainder subject to complete divestment C—executory interest i. A—life estate Heirs of A—contingent remainder (if Rule in Shelley's case applies, A holds fee simple) j. A—life estate B—vested remainder subject to complete divestment 5. Fee simple determinable = present interest (Church of God); possibility of reverter = future interest (Collins and heirs); no, RAP does not apply. Collins v. Church of God of Prophecy, 800 S.W.2d 418 (Ark. 1990). 6. The court held that (a) daughters received vested remainder subject to divestment, not contingent remainder; (b) as a matter of first impression, when a life tenant is explicitly given the right to consume or invade the corpus, absent a showing of waste, she may do so at her discretion without need to petition the court for permission or provide notice of the invasion or an accounting; and (c) wife was not required to provide notice to daughters when wife invaded corpus or to provide accounting. Hammons v. Hammons, 327 S.W.3d 444 (Ky. 2010). 7. There was a violation of the use restriction because the P-1 building is used only to test the siren. Fire Department no longer owns the land. It reverted back. Long v. Pompey Hill Volunteer Fire Dept., 539 N.Y.S.2d 1014 (1989). 8. Edna has a life estate. Edna also has an alternative executory interest if she becomes a widow. Dover v. Grand Lodge of Nebraska Ind. Order of Oddfellows, 206 N.W.2d 845 (Neb. 1973). 9. Alice has a life estate with a remainder to the heirs of the grantor thus creating a Doctrine of Worthier Title situation. It is a void grant and the grantor thus keeps the reversion. Harris Trust & Savings Bank v. Beach, 495 N.E.2d 1170 (Ill. 1986). 10. The court held that there was a reversionary property interest. The Trails Act prevents a common law abandonment of the railroad right-of-way from being affected, thus precluding state law reversionary interests from vesting. Stated in traditional property law parlance, upon abandonment or termination of a railroad easement, ―the burden of the easement would be extinguished, and the landowner‘s property would be held free and clear of any such burden.‖ By preventing the abandonment and concomitant restoration of a fee simple © 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

unburdened by the easement, the Trails Act effects a taking. Rogers v. U.S., 101 Fed. Cl. 287 (Fla. 2011).

In-Class Exercises 1. Have the students develop the following: a. A property grant from their parents to them that would restrict their use of the property. b. A property grant to their children (or potential children) that would restrict their use of the property. c. A donation of land from them to a College or University that would restrict the college's or university's use of the land. 2. Have the students create a life estate in which they hold both the life estate and the future interest accompanying it. 3. Have the students read the following case and answer Chapter Problem #7: LONG v. POMPEY HILL VOLUNTEER FIRE DEPT. 539 N.Y.S.2d 1014 (1989) Richard J. Long, and Mary Long, his wife, conveyed by warranty deed dated September 30, 1949, to the Pompey Fire Department a parcel of land (called P-1). The deed, which was properly recorded in the Onondaga County Clerk's Office on November 15, 1949, stated that the grant of the parcel was given for the purpose of ―erecting thereon a fire house.‖ The deed also included the following language: In the event that the said premises are no longer used to house a fire department, then and in that event the land and building erected thereon is to revert to Richard J. Long and Mary Long, or their heirs and assigns. Shortly after the conveyance, a fire house was erected on P-1. The building is a two-story structure with a cinder block first floor and a wood frame second floor. The first floor contains three large bays to house fire trucks and equipment. The building was used continuously from 1950 to 1985 to house the Fire Department. In 1984, the Fire Department (defendant) acquired another parcel of land (P-2) located about 300 yards from P-1. P-2 had an elementary school which was remodeled to include vehicle bays and other features of a well-equipped fire house. In November 1985, the Fire Department moved its essential equipment and the majority of its functions to the P-2 facility. Paul Long and others who are the heirs of Richard and Mary Long (plaintiffs) brought suit to have title to P-1 vested in them for violation of the restriction placed on the property in the original grant. MORDUE, Justice The issue now before this Court is whether P-1 is still being used to ―house a fire department‖. Based upon the credible evidence adduced at trial, I find that P-1 has been used as follows.

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

Originally, the building on P-1 housed all activities including meetings, the maintenance and storage of equipment, the maintenance and storage of vehicles, training programs, and fund raising activities. In addition, P-1 had running water, toilet facilities, and heat, and was well maintained. P-1 had a telephone system installed and was the official address for the defendant. The building on P-1 was the response place where the fire fighters would go to get equipment at emergency times. The use of P-1 to house the fire department in the above stated manner continued for several decades and until 1984. When the defendant bought its new building at P-2 in 1984, most activities at P-1 stopped. The last monthly meeting held at P-1 was in the winter of 1984. The telephone as well as the water pump were disconnected, thereby precluding lavoratory [sic] use as well as outside communication. P-1 was no longer used for storage of emergency vehicles or equipment, nor was it used for training programs. For all intents and purposes, P-1 was virtually abandoned by the defendant from the fall of 1985, through the summer of 1986. The classrooms were gone, no longer were any chairs in the building, snow was no longer removed, telephone services were removed, lavoratories [sic] were inoperable due to removal of water, heat was turned off, and the outside of the building was no longer being maintained although it was in need of paint and repair. In addition, the 1986-87 telephone book listed P-2 as defendant's address. The evidence reflects that this state of disuse and unkemptness continued until 1988. After the Demand for Delivery of Real Property was served on the defendant on June 3, 1986, and as the instant lawsuit came closer to fruition and resolution, activities increased at P-1. A few training sessions covering extrications and first aid of car accident victims were held. In addition, a bus that had always been parked across the street in a vacant parking lot, was suddenly being stored in P-1. To demonstrate ―activity‖ at P-1, in 1988, defendant conducted a series of air-mask training programs at P-1. At the present time, P-2 houses the fire department's activities. All matters dealing with fund raising and medical training are conducted at P-2. In addition, the mandatory monthly meetings are held at P-2. Furthermore, at the present time, there are approximately 1,200 square feet of space in P-2 that are not being used by the defendant. Hence, there appears to be no reason for P-1 to be used by the defendant despite the fact that there is still a siren located at P-1 that is automatically tested every day at 12:00 o'clock noon. The testing of the siren appears to be the only use to which P-1 is devoted by the defendant. Based on the foregoing, this Court finds that the defendant no longer uses the conveyed premises (P-1) to ―house a fire department‖. As such, the land and building thereon should revert to Richard J. Long and Mary Long or their heirs or assigns, the plaintiffs herein. Title was vested in the Plaintiffs (the heirs of the Longs).

Discussion Questions 1. 2. 3. 4. 5.

When was the property originally conveyed to the Fire Department? What restriction was placed on its use? What happened in 1985 to change the character of its use? How was P-1 used after 1985? What type of interest did the heirs of the Longs have?

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 2: Land Interests: Present and Future

6. What type of interest did the Fire Department have? [return to top]

Resources Andersen, ―Present and Future Interests: A Graphic Explanation,‖ 19 Seattle U.L. Rev. 101 (1995). Barros, ―Toward a Model Law of Estates and Future Interests,‖ 66 Wash. & Lee L. Rev. 3 (2009). Becker, ―Uniform Probate Code Section 2-707 and the Experienced Estate Planner: Unexpected Disasters and How to Avoid Them,‖ 47 UCLA L. Rev. 339 (December 1999). Black, ―The Historical Background of Some Modern Real Estate Principles,‖ 34 Real Est. L. J. 327 (2005). Burby, Real Property, Chapters 11, 16 and 17. Cohan and Melton, ―Using Powers of Appointment to Increase the Period Assets Are Held in Trust,‖ 54 Real Prop. Tr. Est. Law J. 1 (2019).. D‘Emilio, ―Frontier Feudalism: Agrarian Populism Meets Future Interest Arcana in the Land of Manifest Destiny,‖ 70 Okla. L. Rev. 943 (2018). Dukeminier and Krier, “The Rise of the Perpetual Trust,‖ 50 UCLA L. Rev. 1303 (2003).

―Dynasty Trusts and the Rule Against Perpetuities,‖ 116 Harv. L. Rev. 2588, 2609 (2003). Entin, Jonathan L., ―Defeasible Fees, State Action,‖ 34 William and Mary L. Rev. 769 (1993). Festa, ―Property and Republicanism in the Northwest Ordinance,‖ 45 Ariz. State L.J. 409 (2013). Foster, ―Fifty-One Flowers: Post-Perpetuities War Law and Arkansas's Adoption of USRAP,‖ 29 U. Ark. Little Rock L. Rev. 411, 487 (2007). ―From the Courts: Technology, Real Estate, and Livery of Seisin,‖ 41(3) Real Estate L. J. 331-7 (2012). Guzman, ―Worthier for Whom?‖ 88 Okla. L. Rev. 779 (2016). Harding, ―Perpetual Property,‖ 61 Fla. L. Rev. 285 (April 2009). Helfman, ―Land Ownership and the Origins of Fiduciary Duty,‖ 41 Real Prop. Prob. & Tr. J. 651 (2006). Hopperton, ―Teaching Present and Future Interests: A Methodology for Students that Unifies Estates in Land Concepts, Structures, and Principles,‖ 26 U. Tol. L. Rev. 621 (Spring, 1995). Huber, ―The Durability of Private Claims to Public Property,‖ 102 Geo. L.J. 991 (2014).

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Jennings, ―Real Property Could Use Some Updating,‖ 24 Real Est. L.J. 103 (Fall 1995). Mahoney, “Perpetual Restrictions on Land Use and the Problem of the Future,‖ 88 Va. L. Rev.

739, 743 (June 2002). “Modern Status of the Rule in Shelley’s Case,” 99 American Law Reports 1161 (2019).

Orth, ―Requiem for the Rule in Shelley‘s Case,‖ 67 N.C. L. Rev. 681 (1989). Pollman and Edwards, ―Scholarship By Legal Writing Professors: New Voices in the Legal Academy,‖ 11 Legal Writing: J. Legal Writing Inst. 3, 212 (2005). Powell, Real Property, Volume 3, 169-260. Schneider, ―A Rule Against Perpetuities For The Twenty-First Century,” 41 Real Prop. Prob. & Tr. J. 743 (Winter 2007). Shepherd, ―A Uniform Perpetuities Reform Act,‖ 16 New York University Journal of Legislation and Public Policy 89 (2013). Singer, ―Democratic Estates: Property Law in a Free and Democratic Society,‖ 94 Cornell L. Rev. 1009 (May 2009). Waggoner, “The Uniform Statutory Rule Against Perpetuities: The Rationale of the 90-Year Waiting Period,‖ 73 Cornell L. Rev. 157, 162 (1988). [return to top]

Instructor Manual Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 3: Extent of Real Estate Interests

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Answer to Ethical Issue (3.2) ................................................................................................................... 62 Answers to Case Questions ..................................................................................................................... 63 Answer to Consider (3.3) ......................................................................................................................... 67 Answer to Ethical Issue (3.3) ................................................................................................................... 68 Answers to Case Questions ..................................................................................................................... 69 Answer to Consider (3.4) ......................................................................................................................... 70 Answers to Case Questions ..................................................................................................................... 71 Answer to Consider (3.5) ......................................................................................................................... 71 Answer to Consider (3.6) ......................................................................................................................... 73 Answer to Consider (3.7) ......................................................................................................................... 73 Answers to Case Questions ..................................................................................................................... 74 Additional Activities and Assignments................................................................................................................. 75 Answers to Chapter Problems ................................................................................................................. 75 In-Class Exercises ..................................................................................................................................... 82 Resources ................................................................................................................................................ 82

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 3: Extent of Real Estate Interests

Chapter Objectives The following learning outcomes are addressed in this chapter (see PowerPoint Slide 3-1): 03.01

Discuss ownership of surface, subsurface, and above surface portions of property.

03.02

Discuss solar and light rights.

03.03

Discuss mineral and water rights.

03.04

Discuss oil and gas rights.

03.05

Discuss land protection including nuisance and trespass.

03.06

Describe the duties of landowners to those persons on their property.

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Key Terms air lot: that portion of the airspace from 23 feet above the Earth‘s surface to the heavens air rights: property ownership rights in the air above the surface centerline rule: rule that, for landowners with adjoining streams and rivers, provides for ownership of the land beneath these waters to the centerline of the river or stream column lot: portion of air rights from the surface of the Earth to 23 feet above the surface Doctrine of Ancient Lights: theory that originated in England that provides right to light if so used for 20 years or more; this prescriptive form of rights is no longer followed in the United States Doctrine of Correlative Rights: term in oil and gas law that limits recovery of oil and gas in situations where others‘ rights or deposits would be destroyed equitable relief: court remedies that require parties to perform certain acts or specifically perform a contract fee interest: in oil and gas ownership, owner owns both the surface and subsurface rights geothermal energy: form of energy that is the result of naturally formed pockets of hot steam; can be a mineral right invitee: party who is specifically invited to enter another‘s property or is a member of the public in a public place licensee: party who enters another‘s land with express or implied permission; e.g., a social guest mineral interest: ownership right to minerals on property; could also be a lease

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mineral rights: subsurface rights in property; the rights to mine minerals; also known as mineral interest mineral servitude: easement across the surface of the land for access to the land monetary relief: form of remedy for contract or trespass that awards money damages for breach nonownership states: method for oil and gas ownership that disallows ownership of oil and gas until they have been captured through drilling nuisance: use of property so as to interfere with another‘s use and enjoyment of property; e.g., bad smells and loud noises oil and gas lease: transfer of rights to remove oil and gas in exchange for payment to landowner; generally payment is in the form of royalties ownership state: method for oil and gas ownership right determination that states mineral rights can be lost only if someone first captures the oil and gas by drilling Prior Appropriation Doctrine: water allocation policy of first to use the water gets the rights to that water profit a prendre: right to enter another‘s land for the purpose of removing soil, water, minerals, or another resource Riparian Doctrine: in water rights, governs the landowner who adjoins water; a theory that entitles all riparians to use of their water; does not allow one riparian to use all of the water royalty interest: interest landowner retains upon leasing of oil well Rule of Capture: in mineral rights, a first-in-time-is-first-in-right philosophy in which the first to take subsurface minerals has title regardless of property boundary lines solar easement laws: negative easements that prevent the servient estate from doing anything that would block the sunlight access of the dominant estate spite fences: prohibit the erection of fences (trees or fencing materials) that are erected maliciously or exceed a certain height trespass: invasion of the property of another by a person or object trespasser: one who is on the property of another without permission water rights: system of priority for water use [return to top]

What's New in This Chapter The following elements are improvements in this chapter from the previous edition:

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 3: Extent of Real Estate Interests

     

New Consider 3.1 in Section 3-1a on noise from Super Hornet jets affecting property owner‘s use and enjoyment of her property. In Section 31b, new and expanded discussion of the issues with drones—explosion of legislative, regulatory, and judicial activity in this area; all since 2012. New drone case in Section 3-1b on harassment and drone activity, F.W.T. v. F.T., regarding a father using a drone to dive-bomb contractors on his son‘s property. Expanded coverage of building height restrictions (San Francisco changed its mind) in Section 3-1b. In Section 3-1d, expanded solar coverage, including statutes and cases on new developments. In Section 3-1e, expanded wind power surface, subsurface, air rights, and environmental issues as well as an ethical issue and updates on current status including the impact of the climate change movement on willingness to allow the wind farms; new Ethical Issue 3.1 on the failure of the Cape Wind project and a discussion of the parties involved. That is in contrast to the text discussion of the recently approved Martha‘s Vineyard project (smaller wind farm, but still approved).



New case in Section 3-1f on the right to a view involving the Cubs and Wrigley field, Right Field Rooftops, LLC v. Chicago Baseball Holdings, LLC.



New case in Section 3-2a on whether fossils are minerals and subsurface rights or whether these very valuable dinosaur bones and fossils belong to the surface owner or the minerals rights owner, Murray v. BEJ Minerals, LLC.

 

In Section 3-2c, expanded discussion of fracking and the issues there. Updated discussion of geothermal new expansion as a lean resource and new protection in Section 3-2d. In Section 3-2e, revised water rights section to simplify the issues and shift coverage to environmental coverage.

 

  

New case in Section 3-3a on trespass when the mortgagor is in default and the lender sends inspectors regularly to check on the condition of the property, Prather v. Bank of America, N.A. New landowner liability case in Section 3-4d in which skateboarder is killed after hitting a poorly adjusted manhole cover; Bertsch v. Mammoth Community Water District. Deleted Consider 3.1 from previous edition and repurposed it into chapter problem #9, Goodman v. U.S. New chapter problem #10 on intentional trespassing, Crystal Lotus Enterprises Ltd. v. City of Shoreline.

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this chapter (provided in the PowerPoints section of the Instructor Resource Center); and, as applicable for each discipline, accreditation or certification standards (―BL 1.3.3‖). Introduce the chapter and use the Ice Breaker in the PPT if desired, and if one is provided for this chapter. Review learning objectives for Chapter 4. (PPT Slides 1-3). 3-1 Land Interests Above the Surface—USE POWERPOINT SLIDES 3-2 TO 3-15 USE FIGURE 3.1 AND POWERPOINT SLIDE 3-3 TO INTRODUCE THE CONCEPT THAT LAND INTERESTS EXTEND BEYOND SURFACE RIGHTS 3-1a

Air Rights 1. Who Can Use the Air?

CASE BRIEF: U.S. v. Causby 328 U.S. 256 (1946) FACTS:

Causbys owned land near airport outside Greensboro, N.C. U.S. Government used the airport for landing all types of crafts. Causbys lost 6-10 chickens each day from chickens flying into walls caused by fright induced by aircraft noise. Causbys sued in eminent domain, saying U.S. was taking their air. The lower court found for the Causbys and the U.S. appealed.

ISSUE:

Did the flying of airplanes through the Causbys' airspace constitute a taking?

DECISION:

Yes—this type of flight was a taking because although every property owner must be subject to some flying where such flying causes property to diminish in value or become uninhabitable, there is a taking.

Answers to Case Questions 1. What type of business did the Causbys operate and how did the low-flying planes affect that business? The Causbys operated a chicken farm. The runway was located 2,220 feet from the Causby's barn and 2,275 feet from their house. The planes flew over 67 feet above the house, 63 feet above the barn, and 18 feet above the highest tree. In fright, the chickens flew against the walls and killed themselves. 2. Can the use of airspace diminish the value of the surface of the land? Yes, according to court as in this case where property becomes uninhabitable. 3. What does the court establish as the standard for determining whether a place is flying too low? The court says that the determination of whether a plane is flying too low is found in the amount of damage done to the surface property. How you know if a flight is too low is determined by what happens to the owners of the surface property over which they are flying.

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 3: Extent of Real Estate Interests

Answer to Consider (3.1) The court held that: [1] Andrews failed to state inverse condemnation claim; [2] If the students read the facts carefully, they will notice that the Navy was there first. The Super Hornet program was in place and there had been a public announcement prior to Andrews‘ purchase in 2006 of the property. Andrews lacked requisite protectable property interest when any takings claim accrued due to announcement that fighter jets would be deployed to naval station or as a result of that deployment; and [3] Takings claim based upon gradual increase in noise from overflights accrued when deployment was announced and began. The court noted that noise from aircraft as well as altitude can be a factor in determining a taking, but noted that Andrews was not able to show that the noise level increased during the time she held title to the property. She arrived as an owner when the noise was in full swing. The case was dismissed. Andrews v. U.S., 108 Fed Cl. 150 (2012). 3-1b

Some Complex Issues in Air Rights 1. Trees and Overhang (of tree branches, eaves, etc.) a. Can bring suit for removal b. Some states allow self-help—removal of branches 2. Drones, Airspace, and Privacy a. Federal Regulation of Drones i. Federal Aviation Administration (FAA) regulated drones weighing less than 55 pounds ii. Drones above 55 pounds are prohibited iii. Permitted uses of drones: a) Line-of-sight requirements for operators − must be able to see them b) Maximum speed of 100 mph c) Aerial photography, mapping, ranching observations, and agricultural monitoring d) Limits on ―twilight‖ operating e) No operating above 400 feet

iv. Commercial drones v. Drone Advisory Committee (DAC) b. State and Local Regulations of Drones CASE BRIEF: F.W.T. v. F.T.

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101 N.E.3d 336 (Mass. App. 2018) FACTS:

F.W.T. (FWT/son/plaintiff) and F.T. (FT/father/defendant), as the court phrased it, ―have been engaged (since 2014) in numerous legal disputes.‖ The disputes resulted after FWT purchased adjacent commercial property from his father. Following that sale, FWT developed the land and appeared to be using it in a way that competed with his father‘s business. The son brought this suit seeking a harassment prevention order to stop his father from flying a drone over his property. FWT presented evidence showing that there were three to five incidents of drones flying over FWT‘s property, including an alleged buzzing of a contractor as he operated heavy equipment. The lower court issued a harassment prevention order for a period of one year. FT moved to vacate the order on the grounds that FWT had not presented sufficient evidence of harassment required under the harassment statute. The lower court upheld the order and FT appealed.

ISSUE:

Was there sufficient information offered to establish harassment through the use of a drone?

DECISION:

The court held that FWT had not presented sufficient evidence to establish harassment for purposes of the statutory harassment prevention order. The court also noted that there were no findings it was making with regard to whether what FT did constituted a trespass or other forms of interference with use and enjoyment of property. Also, there was no proof of intent to harm a particular person or that the drone flights were done with malice. Reversed.

Answers to Case Questions Explain the basis of this particular suit between father and son. This was a statutory action based on a state harassment prevention statute that required proof of malice or intent to harm a particular person as well as three separate incidents of harassment. Based on the court’s decision, what type of drone activity would be necessary to result in a harassment order? There would need to be multiple uses of the drone and the drone being directed at a particular person or with the intent to do harm or frighten those on the property. What about the issue of privacy and business operations? Corporate espionage? The case is a narrow decision that was based on a state statute that was intended for another purpose to be used for preventing drone flights. The court was unwilling to extend the statute that far, but it did leave the door open for the use of other theories such as trespass as a means for halting drone flights. If the drones were being used to obtain trade secrets or other protected information, the case would be decided on different grounds. Because the regulation is spotty, the theories used in cases vary significantly and courts are carving out protections depending on the theory of the complaints filed in the cases.

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3. What Air Rights Can Be Transferred?—SEE DIAGRAM BELOW a. Column lots—up to 23' b. Air lots—everything above 23' c. Examples of transferred air space i. Chicago—Prudential Mid-America building is built in the air and column lots above Illinois Central Terminal ii. Boston—52-story Prudential Tower is built in the air and column lots above the Massachusetts Turnpike iii. New York—59-story MetLife Building is built in the air and column lots above Grand Central Station iv. New York—Trump Tower built above Tiffany's d. Condominium construction and purchase is the purchase of a portion of the air space Discuss PRACTICAL TIPS with students on land sales and air rights issues and the sale of air rights. air

air lots 23' column lots

surface subsurface

cylindrical or caisson lots

3-1c

The Right to Light 1. Issue of solar energy and collectors—what if access is blocked? 2. Some statutory protections a. b. c. d. e.

Solar easement laws Laws for unobstructed use Zoning laws Shade control acts California prohibits deed restrictions that prevent installation of solar systems

3. No common law protection a. Doctrine of ancient lights not adopted here © 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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b. Adverse possession of light if you used it over a 20-year period CASE BRIEF: Fontainebleau Hotel Corp. v. Forty-Five Twenty-Five, Inc. 114 So.2d 357 (Fla. 1959) FACTS:

Luxury hotel Fontainebleau constructed in Miami in 1954, faces the ocean. 1955—Eden Roc constructed—also facing ocean. 1955—Fontainebleau began construction of addition that would block sunlight on Eden Roc pool after 2:00 p.m. Eden Roc brought suit challenging construction because of shadow. The trial court found for Eden Roc and Fountainebleau appealed.

ISSUE:

Does a landowner (Eden Roc) have the right to the free flow of light and air from adjoining land?

DECISION:

No, because: (1) common law doctrine of ancient lights is not adopted in the United States; (2) decision better left to legislative bodies; and (3) no existing statutory bases for protection.

Answers to Case Questions 1. Will the court recognize the Doctrine of Ancient Lights? Does the presence of spite make any difference in recognition of a right to light? See Carlson v. Calusa Golf, Inc., 498 So.2d 461 (Fla. 1986). No—the doctrine is not recognized in the United States. 2. Will the court recognize an easement for the sunlight? No—no authority to do so. 3. What remedy does the court suggest? Be sure to recall this case during the discussion of nuisance. Some legislative remedy—zoning, statute, etc. Today, a solar easement might help. 3-1d

The Right to Solar Light 1. Solar Laws: Regulating Shade 2. Solar Easement Laws a. Solar Easements: Drafting Issues 3. Solar Laws: Government Mandates 4. Solar Laws: Doctrine of Prior Appropriation 5. State and Local Solar Development Laws 6. Solar Incentive Programs 7. Buildings and Light

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Answer to Consider (3.2) The court concluded that the Association's restrictions did not prohibit the installation or use of the Carsons' solar device and were merely process requirements that the Carson had to follow. Below is an excerpt from the opinion: 1. Content and language of restrictions or guidelines, and conduct of homeowners association in interpreting and applying them. The CCRs and the related guidelines specifically acknowledge that the Association may not bar installation of solar devices. Nevertheless, the CCRs establish that homeowners must receive approval of the Architectural Committee before installing solar panels, and both the CCRs and guidelines explicitly mention the requirement that such devices must be shielded from view. Moreover, the evidence shows that the CCRs and guidelines apply to every property owner in the Fox Creek Community, and the Association actively enforces the provisions pertaining to solar devices. The Committee's interpretation of the restrictions allows solar devices, but requires them to be screened, by fencing, landscaping, or other materials. 2. Whether the architectural requirements are too restrictive to allow solar devices as a practical matter. Other community homeowners have installed solar energy devices with the approval of the Association and in compliance with the architectural guidelines. The Carsons themselves have installed solar panels on the roof of their home to heat their swimming pool. The Committee also approved another homeowner's installation of a solar device like the one at issue here, provided it was installed in the owner's fenced rear yard. 3. Whether alternatives utilizing solar energy are available that will be comparable in cost and performance, and the feasibility of making required modifications. In reviewing the Carsons' post-installation application, the Committee required the Carsons either to move the device to their fenced backyard or build a block wall to screen it. The Association's expert evaluated conditions in the Carsons' backyard and testified that moving the device to the backyard would reduce its efficiency and performance only minimally. He testified it would be less costly and more efficient to install the device in the backyard than to fence the device in its existing location. The Carsons argue, however, that the cost of building a block wall or moving the solar device to their backyard is so great that the Association effectively has barred them from installing the device. The Carsons presented evidence it would cost $12,800 to $15,200 to install a block wall around the device, but they offered no evidence of what it would cost to install the solar device in their backyard or the amount by which that cost would exceed what they paid to install it beyond the fence. In the absence of that evidence, the Carsons did not demonstrate that the cost © 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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of satisfying the Association's requirements effectively bars installation. To the contrary, the evidence supported the superior court's conclusion that it would be feasible to install the device in the backyard or − though more expensive − to fence it in its current location. 4. Extent to which the property at issue is amenable to the required changes. No evidence was offered of any property limitations or city ordinances that would prevent the Carsons from installing the solar device in their backyard or fencing it at its current location. 5. Whether the restrictions impose too great a cost in relation to what typical homeowners in the community are willing to spend. As discussed above, the Carsons presented no evidence of what it would cost to install the solar device in their backyard. However, another property owner in the same subdivision installed the same type of solar device in his backyard, a fact that supports the conclusion that the restrictions the Committee imposed do not render the installation of such devices cost-prohibitive. After examining the evidence relating to the relevant Garden Lakes factors, we conclude substantial evidence supports the superior court's findings that ―the CCRs are a reasonable restriction on the installation of solar energy devices in the Fox Creek community and neither the CCRs nor the Association effectively prohibit the installation of such,‖ and ―the CCRs as applied to the Carsons' [solar] installation at issue in this case are not too restrictive and did not unreasonably affect the costs to the Carsons of installing the SED.‖ Accordingly, we affirm the court's conclusion that the restrictions the Association imposed did not violate A.R.S. §§ 33-1816 or -439. The Architectural Committee likewise did not act unreasonably in conditioning its approval of the Carsons' application on relocation or screening of the solar device. See Tierra Ranchos Homeowners Ass'n v. Kitchukov, 216 Ariz. 195, 201, ¶ 25, 165 P.3d 173, 179 (App. 2007) (homeowners association must ―act reasonably in the exercise of its discretionary powers including rulemaking, enforcement, and design-control powers.‖) (quoting Restatement (Third) of Property: Servitudes § 6.13(1)(c) (2000)). B. The Superior Court Did Not Err By Granting Injunctive Relief. The Carsons argue that even assuming they breached the CCRs by installing the solar device beyond their backyard fence, the superior court abused its discretion by granting the Association's request for injunctive relief. A declaration of covenants, conditions and restrictions is a contract between a community's owners collectively and the individual lot owners. Ahwatukee Custom Estates Mgmt. Ass'n v. Turner, 196 Ariz. 631, 634, ¶ 5, 2 P.3d 1276, 1279 (App. 2000). Such restrictions properly may be enforced by injunctive relief. Heritage Heights Home Owners Ass'n v. Esser, 115 Ariz. 330, 333, 565 P.2d 207, 210 (App. 1977). ―An

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injunction is an equitable remedy, which allows the court to structure the remedy so as to promote equity between the parties.‖ Scholten v. Blackhawk Partners, 184 Ariz. 326, 331, 909 P.2d 393, 398 (App.1995) (supplemental opinion). We reject the Carsons' contention that the Association was not entitled to injunctive relief because it failed to show irreparable injury or that it lacked an adequate remedy at law. ―[A] party seeking to enforce a valid deed restriction may demonstrate adequate harm merely by proving that to tolerate a violation would diminish the protection provided to all homeowners by the deed restrictions.‖ Ahwatukee Custom Estates, 196 Ariz. at 636-37, ¶ 19, 2 P.3d at 1281-82 (citing Cont'l Oil Co. v. Fennemore, 38 Ariz. 277, 285-86, 299 P. 132, 135 (1931)). The Carsons' unauthorized solar device affected other residents in the subdivision in that it was visible from some locations in the community. Additionally, as in Ahwatukee Custom Estates, requiring the offending homeowners to comply with the community documents ―would serve to vindicate and preserve the [Committee's] future authority to enforce the subdivision's CC & Rs and Guidelines.‖ 196 Ariz. at 636-37, ¶ 19, 2 P.3d at 1281-82. CONCLUSION For the reasons set forth above, we affirm the superior court's judgment. We award the Association its costs and reasonable attorney's fees on appeal. Fox Creek Community Ass'n v. Carson, 2012 WL 2793206 (Ariz. App. 2012).

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3-1e

Other Renewable Energy Sources and Ownership Rights: Wind Power 1. Severability of Wind Rights: Eminent Domain and Safety 2. State and Local Regulation of Wind Farms 3. Wind Power and Environmental Litigation a. Preconstruction Litigation b. Litigation During Operation 4. Wind Power and Nuisance Effects a. Wind turbines face challenges from property owners i. Noise ii. Harms to birds iii. Wakes and use of wind b. Some laws have been passed that are similar to the early solar energy laws to allow use of land for generation and turbines

Answer to Ethical Issue (3.1) The wind power development is a classic right-to-a-view case (and there is none) when there is a public interest in alternative energy sources. However, protections for wind power, unlike for solar power, do not exist. Parties are in a dispute that has no current laws. Discuss the stakeholders listed in the facts and any other stakeholders the students can think of. Walk them through the various interests affected, both long- and short-term effects. Perhaps most important, from a critical thinking perspective, is to help students understand that there are competing interests in the development of wind power. Their beliefs about whether it is good or bad need to be revisited as they realize the complexity of the issue and the impact of permitting the wind farms and denying their approval. Also, good discussion is noting that many who supported clean energy—Cronkite and Kennedy—changed their views when their views from their homes on Cape Cod were affected. And the Koch brothers had their interests in oil and gas as a key source of energy. Motives, hypocrisy, etc. are ethical issues on both sides. 3-1f

Right to a View 1. Relatively new area of law 2. Has developed because of considerable number of recreational properties in areas in which views are important 3. In the absence of zoning laws, deed restrictions or private agreements, landowners have not had much luck in establishing a right

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CASE BRIEF: Right Field Rooftops, LLC v. Chicago Baseball Holdings, LLC 87 F. Supp.3d 874 (2015); aff‘d, 870 F.3d 682 (7th Cir. 2017), cert. denied, 138 S.Ct. 2621 (2018) FACTS:

The Right Field Rooftops (Rooftops) control two buildings and businesses that sell tickets to view Cubs baseball games and other events at Wrigley Field. Since Wrigley Field's construction in 1914, spectators on the roofs of the buildings across the street on Sheffield have enjoyed a view into Wrigley Field. Starting in the 1980s, owners of the buildings began to turn their roofs into grandstands for spectators and in 1998, the City of Chicago enacted an ordinance formally allowing the rooftop businesses to operate for profit. By 2002, there were eleven rooftop businesses operating for profit by selling tickets to patrons who wanted to watch Cubs games and other events from the roofs. Before the beginning of the 2002 Major League Baseball season, the Cubs installed a large green windscreen above the outfield bleachers. The windscreen impacted views from the rooftop businesses. The Cubs filed suit against a number of the rooftop businesses, claiming that the rooftop businesses were misappropriating the Cubs' property by charging admission fees to watch Cubs games from the roofs. That suit was settled through a License Agreement in which the rooftop businesses agreed to pay the Cubs a royalty of 17% of their gross revenues in exchange for views into Wrigley Field until December 31, 2023. The agreement also provided that if the Cubs erected anything (from bleachers to screens) that blocked the view from the Rooftop, the Cubs would repay either all or 50% of the gross revenues received from the Rooftop to that point or there could be a reduction in the revenues paid. However, the agreement provided that the license would end if the Cubs constructed anything that was approved by the City of Chicago. The Chicago City Council had designated Wrigley Field as a Landmark Property, something that meant it was unlikely that alterations would be permitted that altered the historic structure of the facility. In late 2011 and early 2012, the Cubs released an illustration of the intended construction to all the rooftop business owners and the illustration showed that the rooftop businesses would be largely blocked by the construction. After many meetings and public hearings over the course of two years, the City of Chicago approved the Cubs final plan to construct a total of eight outfield signs above the bleachers, including a video board in both left and right field. The Cubs are placing the right field video board directly in front of the Rooftops, while the Cubs-owned rooftop businesses are left unobstructed. The Rooftops filed for a preliminary injunction to halt the planned construction at Wrigley Field.

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 3: Extent of Real Estate Interests

ISSUE:

Were the Rooftops businesses entitled to protection for their view of Cubs games?

DECISION:

The court denied the preliminary injunction and allowed the Cubs to begin construction of the expansions (signs). The court found that there was no breach of the right-to-a-view license that the parties had negotiated through their agreement to settle their suit over the rooftop customers viewing the Cubs‘ games. The court held that Subsection 6.6 of the License Agreement provides that ―any expansion of Wrigley field approved by governmental authorities shall not be a violation of this Agreement.‖ The proposed video board had been approved by a governmental authority. The court noted that ―expansion‖ does not mean ―seat expansion,‖ and any addition to the structure of Wrigley Field would be an expansion—triggering the contract termination clause. The court also noted that the Rooftops owners were counting on the City of Chicago to not permit any alterations to Wrigley Field because of its Landmark designation. However, that approval came, and the contract provisions then applied. The court noted that they were savvy businesspeople who should have anticipated some change. ―Bottom line, they were wrong.‖ The Landmarks Commission approved the Cubs' proposed construction. The court also noted that the argument that the businesses would become insolvent immediately was not established by the evidence. The request for a preliminary injunction was denied. [The Cubs began making the changes to Wrigley Field.]

Answers to Case Questions 1. What commentary does the court make about the business savvy of the Rooftops owners? The court notes that they were wrong to assume that the City would never approve changes to Wrigley Field. Its designation as a Landmark was certainly an indication of its historic nature, but time and change might necessitate structural changes. The court pointed out that they were wrong in their assessment. 2. Based on this decision, is there any presumptive right to a view that can evolve over time? In this case, the views from the rooftops had a long history, supported by the view license and a great deal of reliance. Still, there was no protected right to a view because the parties did not effectively negotiate terms to preserve their view. 3. If you were working on the license agreement for the view, how would you change the language? The language should have been focused on ―expansions that result in an

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 3: Extent of Real Estate Interests

obstruction of the view from the Rooftops.‖ The License Agreement provided the Ricketts with a way out if they could persuade the city to approve their plans—they were able to do so. 4. Evaluate the ethics of the Ricketts family in this case. One of the troubling aspects of the case is that the businesses that they purchased from the Rooftops group would not be blocked by the proposed expansions. In other words, they protected their business interests on the rooftop. The plan to seek city approval was already in the works when they negotiated the revenue-sharing and license agreement with the Rooftops. Perhaps they lulled the Rooftops into a sense of comfort and neighborly sharing whilst they had a different plan all along. NOTE ON PRACTICAL TIP: Discuss with the students how property owners could protect a view through private agreements and introduce the notion of easements that will be discussed in the next chapter. Also, deed restrictions, discussed in Chapter 22, could also be introduced as a method of private agreement for protection of a view.

Answer to Ethical Issue (3.2) The problem presents for student discussion the classic conflict between developers and residents who want to preserve the status quo in terms of population, buildings, homes, traffic, etc. In this case, the residents want to preserve their long-standing view. However, Trump has no legal obligation to preserve that view. Ethics requires an examination of the Trump project in light of the following: 1. 2. 3. 4. 5.

How will Trump‘s actions affect his business in the future? How does the new development affect the community? Would Trump object if someone did the same to him? Didn‘t the owners understand city limitations and new buildings? Is it right for the owners to demand more now when their legal rights were clear long before Trump proposed his development? Are they changing the rules?

3-2 Surface and Subsurface Rights—USE POWERPOINT SLIDES 3-16 TO 3-29  Landowners own to center of earth (see air lot illustration)—REFER TO FIGURE 3.2 AND USE POWERPOINT SLIDE 3-18  Can convey these interests 3-2a

Mineral Rights

CASE BRIEF: Murray v. BEJ Minerals, LLC 908 F.3d 437 (9th Cir. 2018) En banc rehearing granted, Murray v. BEJ Minerals, LLC, 920 F.3d 583 (9th Cir. 2019)

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FACTS:

Once upon a time, in a place now known as Montana, dinosaurs roamed the land. On a fateful day, some 66 million years ago, two such creatures, a 22-foot-long theropod and a 28-foot-long ceratopsian, engaged in mortal combat. While history has not recorded the circumstances surrounding this encounter, the remnants of these Cretaceous species, interlocked in combat, became entombed under a pile of sandstone. In 2006, an amateur paleontologist uncovered the well-preserved fossils of the ―Dueling Dinosaurs‖ on a Montana ranch. Lige and Mary Ann Murray (plaintiffs) in this action, own the surface estate of the ranch where the fossils were found. In 2005, prior to the discovery of the fossils, Jerry and Robert Severson (―the Seversons‖) (defendants) and previous owners of the ranch, sold their surface estate and one-third of the mineral estate to the Murrays. In the conveyance, the Seversons expressly reserved the remaining 2/3 of the mineral estate, giving them ownership, as tenants in common with the Murrays, of all right, title, and interest in any ―minerals‖ found in, on, and under the conveyed land. These fossils are now quite valuable. The Murrays filed suit seeking to be declared owners of the fossils because of their surface rights. The Seversons asserted a counterclaim seeking a judgment that the Montana Fossils belong to them as holders of the mineral estate. The district court found that the Montana Fossils are not ―minerals‖ under Montana law and therefore are not part of the mineral estate and granted summary judgment for the Murrays. The Seversons appealed.

ISSUE:

Were the dinosaur bones and fossils surface materials or mineral rights?

DECISION:

The appellate court reversed the decision of the lower court and found that the fossils were minerals using a combination of precedents from Montana and Texas. The composition of the fossils and bones may have been quite ordinary, but the rarity of the finds made them quite valuable and should therefore be classified as minerals, thereby belonging to the Seversons. Under the appellate decision, the Seversons own 2/3 of the mineral rights and therefore 2/3 of the cash in escrow.

Answers to Case Questions What is the Heinatz/Farley test for determining what is a mineral for purposes of title to subsurface discoveries? The test is one that goes on a case-by-case basis. It depends. Sand can be a mineral if it is a type that has the rare quality for making glass. Sand used in road construction is not a mineral and is surface material. The dinosaur bones were rare and extraordinary and therefore minerals. Is sand always a mineral? Why or why not? It depends on how the sand can be used. The test is one of the value of the substance, not necessarily its mineral composition. What happens to the dinosaur bones now? The Seversons have the right to negotiate their sale.

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What will happen to the money that is being held in escrow from the Murrays’ sales of some of the dinosaur bones? The Seversons, as majority owners of the mineral estate, will own two-thirds of the Montana Fossils and will receive 2/3 of the cash in escrow. The Murrays get the remaining 1/3. Had the decision gone the other way, the Murrays would get the full value of the dinosaur bones. 3-2b

Mineral Rights: Oil and Gas Ownership 1. Nature of Oil and Gas a. b. c. d. e.

Oil is liquid form of petroleum Formed by pressure in various sedimentary layers beneath the surface Still moving; pockets are not stable Drilling is the only way to confirm its presence Ownership of oil and gas i. Initially courts followed the Blackstone theory that you owned what was beneath the surface ii. Shifting nature of interests makes that difficult iii. Oil and gas are fungible goods, and it is difficult to tell from whence they came iv. Also following Blackstone's rule would create trespass issues v. Rule of capture followed a) Ownership of all oil and gas produced by wells on your land b) True even if oil came from deposit on adjoining land vi. Ownership v. non-ownership states: difference in rules is simply who owns rights prior to capture; no one owns mineral rights until capture in non-ownership and in ownership deed holder owns rights which could be lost through capture vii. Exceptions to rule of capture a) b) c) d) e)

Does not apply to stored oil or gas that escapes Enhanced recovery operations Sweeping Doctrine of correlative rights Government regulation in the form of conservation and prorationing

2. Classification of Oil and Gas Interests a. b. c. d.

Profit a prendre—right to enter land of another and take oil and/or gas Fee simple determinables Separate sets of state laws to govern Taxation issues

3. Types of Oil and Gas Interests

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a. Fee interest—surface and sub-surface rights b. Mineral rights—subsurface rights and easement to use the surface for removal (mineral servitude in Louisiana) c. Oil and gas lease d. Working interest or operating interest e. Royalty interest 3-2c

Water Hydraulic Fracturing: Fracking Horizontal and direct hydraulic fracturing to recover hydrocarbons 1. Federal Regulatory Oversight 2. State and Local Regulatory Oversight

3-2d

Geothermal Energy 1. Regulation of Geothermal Energy: What Is Geothermal Energy? a. Is it mineral or water? i. Federal court—not minerals ii. States—water or neither (statutes)

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2. Federal Regulation of Geothermal Energy a. Geothermal Steam Act of 1970 and Geothermal Energy Research, Development, and Demonstration Act—encourage development of geothermal resources b. Energy Improvement and Extension Act of 2008 c. The Energy Policy Act of 2005 3. Prior Appropriation Issues in Geothermal Resource Development 3-2e

Water Rights 1. Water Rights: Type of Water a. Two major theories applicable to natural and artificial lakes, rivers, and streams; apply to navigable waters or water that could be used for navigation even though not used so presently b. Riparian Theory—east of Mississippi i. No priorities—equality ii. Must own land abutting or touching water iii. Natural flow vs. reasonable use theories a) Natural flow—cannot benefit non-riparian land b) Reasonable use—can benefit non-riparian land so long as no interference with other riparian rights iv. Use for natural (artificial—irrigation, power, mining, industry) purposes given priority a) b) c) d)

Household uses Drinking water Stock watering Garden irrigation

v. Riparian has right of water free from problems vi. English doctrine c. Prior Appropriation Theory i. First in time/first in right ii. No equality/no limitations on reasonable use iii. Must do following a) b) c) d)

Appropriate water with intent to appropriate Divert water Put to beneficial use File necessary administrative forms

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 3: Extent of Real Estate Interests

iv. Need not own land (Arizona is an exception where water used for irrigation) v. Can use water on riparian and non-riparian land vi. No distinction between artificial and natural purposes—only required to put property to beneficial use vii. First appropriator has exclusive right to water—no waste viii. Statutory on state by state basis 2. Water Rights: Ownership of Riverbeds These theories do not apply to ownership of land beneath river; subject to centerline rule which means you own land beneath to center of stream 3. Water Rights: Private Ponds Private ponds belong to real estate owner 4. Water Rights: Ground Water Percolating or underground water—subject to Riparian and Prior Appropriation rules and include aquifers, artesian waters, underground lakes, and unknown sources

Answer to Consider (3.3) Under the Riparian doctrine, Shanty Hollow would have violated the rights of other riparians by excessive use. Under Prior Appropriation, it is quite possible for one landowner to have this extensive use so long as it was in a position of having done so first, or, in some states, in a position of priority for use. Yes, there could be a permit issued here under government police power authority in order to facilitate the beneficial use of property. Catskill Center v. N.Y. Dept. of Environ., 642 N.Y.S.2d 986 (1996). 5. Water Rights: Rainwater Harvesting a. New source of water amidst scarcity b. States have different approaches—if you capture it, it is yours, but if water goes into other sources (groundwater, ponds, rivers, and streams), then the other water rights rules apply 6. Water Rights at the Crossroads a. Water rights have become a hot-button issue in development b. Environmental concerns for animals and plants around water being used c. Government agencies have become more involved i. Reviewing proposed projects ii. Using a ―reasonable or wasteful‖ summary d. Changes in law taking place—water is only real property until captured and then it is personal

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e. Supply and demand issues drive intervention in water issues

Answer to Ethical Issue (3.3) Point out to the students that Great Spring‘s use of the water could be done. Whether it should be done requires an examination of good faith, intent, and the impact of future generations. Perhaps at the heart of the Great Springs litigation was the sense of its competitors that something was terribly wrong with the business model that was able to slip so ably in between federal and state regulation and have an unregulated source of water. The prior appropriation doctrine played a role in its success in the case. In considering, for example, utilitarianism, the plaintiffs in the case were unable to point to anyone who was deprived of water because Great Springs was bottling water from federal lands. The reality was that no one was using the land and hence the lack of challenge from landowners. The competitors brought suit because Great Springs had tapped into (literally and figuratively) a source of water that was cheap and not subject to restrictions. 3-3 Protection of Property Rights—USE POWERPOINT SLIDES 3-30 TO 3-34 3-3a

Trespass 1. Intentional interference with landowners' use and enjoyment of their property 2. Any physical presence or instigated presence is trespass a. Persons b. Bullets c. Water 3. Precautions to prevent trespassing a. Signs b. Barricades c. Injunctions

CASE BRIEF: Prather v. Bank of America, N.A. 2017 WL 1929474 (D. Mont. 2017) FACTS:

Ryan and Carey Prather bought a home in Frenchtown, Montana that they financed through a mortgage loan for $243,079.00 with Countrywide Bank. The loan was secured with a Deed of Trust on the property. Countrywide Bank, a collapsed bank following the 2008 market crash, assigned the note to Bank of America (BANA). The Prathers defaulted on their loan when they failed to make a mortgage payment between August 23, 2013 and October 21, 2013.

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From 2013 through 2015, a BANA property inspector visited the property to conduct inspections. The inspector took pictures of the exterior of the Prathers‘ home but did not enter or attempt to enter the home or garage. The inspector would walk to the front door and leave a door hangar. The Prathers did not post any signage or otherwise restrict the ability of delivery drivers, postal workers, or other service providers from entering their property. The Prathers‘ claim that when the inspectors would take photos or place door hangars on their home it caused them distress, anxiety, and loss of sleep. On December 14, 2015, the Prathers filed suit alleging BANA‘s misconduct during the servicing of their home loan. BANA moved to dismiss, and the Court granted the motion but the Prathers had remaining claims against BANA for trespass and invasion of privacy. BANA moved for summary judgment on those claims. ISSUE:

Can mortgagors recover for trespass from a lender who sends a property inspector following a default on the mortgage?

DECISION:

The court held that there was no trespass because: 1. Under the terms of the deed of trust, once the Prathers were in default, the holder of the mortgage had the right of inspection of entry onto the property. 2. Federal laws limiting causes of action against consumer mortgage lenders prevented a private suit for privacy. 3. No boundaries were crossed, no entry into the home was made and the open nature of the Prather property meant that there was no seclusion subject to trespass. 4. No one else was prohibited from entering the property by any signage 5. The deed of trust permitted access upon default.

Answers to Case Questions Explain why BANA was permitted to enter the property. There was a contractual provision in the deed that gave the holder of the mortgage joint access with the borrowers to the home and the right to conduct inspections. Federal law did not permit private rights of action against lenders for enforcing their rights. What damages did the Prathers claim as a result of the inspectors’ presence on their property? They said that the door hangars caused them to have anxiety and sleeplessness. What facts did the parties admit that allowed the court to grant a summary judgment on the trespass issue? That there had been a default. That the inspectors did not try to enter the home or the garage. That the deed of trust provision permitted access by BANA.

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 3: Extent of Real Estate Interests

Answer to Consider (3.4) The court found that there was indeed a trespass. A ―trespass‖ is an intrusion on a party's right to exclusive possession of his property. Anything BNSF leaked over was a trespass. To establish intentional trespass, a plaintiff must show (1) invasion of property affecting an interest in exclusive possession; (2) an intentional act; (3) reasonable foreseeability the act would disturb the plaintiff's possessory interest; and (4) actual and substantial damages. A cause of action for continuing intentional trespass (as opposed to permanent trespass) arises when an intrusive substance remains on a person's land, causes actual and substantial harm to that person's property, and is abatable. The remedies for a continuing trespass are limited to injunctive relief and damages for injury incurred during the three years prior to filing the action. The concept of trespass includes trespass by water. Burley v. Burlington Northern & Santa Fe Railway Company, 273 P.3d 825 (Mont. 2012). 3-3b

Nuisance 1. Unreasonable interference with another's use and enjoyment of property 2. Private nuisance—one affecting a small group of landowners 3. Public nuisance—one affecting a great or indeterminate number of landowners 4. Remedies a. Equitable—injunction to halt nuisance activity b. Monetary—money for damages caused by the nuisance

CASE BRIEF: Spur Industries, Inc. v. Del E. Webb Development Co. 494 P.2d 700 (Az. 1972) FACTS:

Spur Industries operated a cattle feedlot near Youngtown and Sun City (communities 14 to 15 miles west of Phoenix). Spur had been operating the feedlot since 1956, and the area had been agricultural since 1911. In 1959, Del E. Webb began development of the Sun City area, a retirement community. Webb purchased the 20,000 acres of land for about $750 per acre. In 1960, Spur began an expansion program in which it grew from an operation of 5 acres to 115 acres. Webb began to experience sales resistance on the lots nearest Spur‘s business because of strong odors. Nearly 1,300 lots could not be sold. Webb then filed suit alleging Spur‘s operation was a nuisance because of flies and odors constantly drifting over Sun City. At the time of the suit, Spur was feeding between 20,000 and 30,000 head of cattle, which produced 35 to 40 pounds of wet manure per head per day, or over one million pounds per day.

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 3: Extent of Real Estate Interests

The trial court enjoined Spur‘s operations and Spur appealed. ISSUE:

Could Spur be enjoined from operating on the grounds of being a nuisance? Did Webb owe compensation?

DECISION:

The court held that the cattle operations created a public nuisance that needed to be enjoined. However, the court also noted that Del Webb had moved to the nuisance and Spur had begun operations in a remote area before the city had grown and that it could not anticipate that it would have caused a nuisance in that remote area at the time of its creation. Therefore, Del Webb was required to compensate Spur—an amount of $11 million was later agreed upon by the parties.

Answers to Case Questions 1. Did Spur create a nuisance? The court found that the flies and smell were a public nuisance that required an injunction. Too many people were affected by the smell and flies and the result was rendering the surrounding land unusable. 2. Should it make any difference that Spur was there first? The court finds that equity requires taking note of the fact that Spur was there first and could not have anticipated that, in that remote area, it would ever create a nuisance. However, the city moved out its way. The court must balance first-come rights with the resulting condemnation of surrounding property that occurs when growth occurs. 3. How does the court balance retirement communities and beef production, which are two of Arizona's biggest industries? Spur must be compensated—it must recoup the

costs of moving to a more remote location. Webb gets to use the land free of the nuisance, but it must compensate those who were there first. Webb paid the $11 million it cost for Spur to move. UPDATE:

There are now farm nuisance protection laws that cut back on litigation by people who move to the farm nuisance.

Answer to Consider (3.5) Point out that this was a case where the property owner wanted to use its own airspace but could not because its airspace for flight purposes was blocked by the use of airspace in the adjacent property for a transmission line. The court held that APS carried its burden of establishing that there was no genuine dispute that Brenteson's use of the airstrip created an unreasonable risk of a trespass and potentially serious accident. The court found for APS not on a trespass theory, but on a nuisance theory. The court found that:

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―Overflights which do not enter the plaintiff's airspace may still unreasonably interfere with the landowner's use of the land. In such a case the liability will rest upon the basis of nuisance rather than trespass.‖ Restatement, supra at § 159, comment m. A nuisance does not necessarily involve a physical intrusion on the land or an interference with the plaintiff's possession in the land. Id. at § 821D, comment d. Although Brenteson had asked for compensation because its property was unusable for its purposes, the court did not permit recovery because APS‘s rights in the property existed prior to Brenteson‘s purchase and use. Although the transmission line was built much later than Brenteson‘s purchase, APS had the title first and had gone through all necessary governmental approval processes. The court also discussed the Spur case: Because the facts of the present case do not fit the narrow holding of Spur, we do not believe that the superior court was obligated to award damages to Brenteson. However, the facts here fall within the broader equitable principle stated in Spur. Spur instructs that the superior court may invoke its equity powers to award some compensation, at least when the landowner whose use constituted the nuisance was present in the area prior to the plaintiff landowners. In this case, Brenteson's operation predated the APS power lines. The erection of the power lines rendered Brenteson's property unsuitable for use as an airstrip, and some compensation might be appropriate. However, the superior court considered Brenteson's claim based upon Spur and expressly rejected that claim. On this record, we cannot say that the court abused its discretion in determining that equity did not require that APS compensate Brenteson. Moreover, Brenteson fails to urge any error in this regard on appeal, resting on the sole contention that compensation is constitutionally required because the injunction was equivalent to a taking. The court also noted that any landowner would have been entitled to the air protection rights that Brenteson was violating with its takeoffs from the airstrip. You might also discuss the issues of precedent with the students since both cases came from Arizona and the issue of moving to the nuisance and the distinction between the cases is a good means for discussing differing facts and effects on precedent. Brenteson Wholesale, Inc. v. Arizona Public Service Co., 803 P.2d 930 (Ariz. 1990). 3-4 Duties of Landowners—SEE FIGURE 3.3 AND USE POWERPOINT SLIDES 3-35 TO 3-40 Various Duties Depending upon Nature of Party Involved 3-4a

Trespassers—Duty to not intentionally injure

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Answer to Consider (3.6) The town lawyers are correct in their assessment of liability. The boys have the right to be on town property, but only as a citizen passing by. They cannot take possession of the property and cannot build on it. They are invitees, but for a limited purpose. You cannot change the structure of a business or store simply because you have a right of access. In that sense, they are trespassers. However, they are elevated from trespassers to licensees or invitees to the extent the city allows them to remain there with their games. The city is thus liable for injuries that occur on its property of which they are aware, and they are aware of the Wiffle ball activities. The adjoining landowners probably have a nuisance issue because the boys do play at night. There could be time constraints placed on the game. There is the noise, traffic, and gathering problem. The engineers have a valid point, too, because even if the boys owned the property they could not use it in a way that affected the public health and welfare, i.e., caused flooding—causing flooding onto others property is, of course, a trespass. Peter Applebome, "Build a Wiffle Ball Field and Lawyers Will Come," New York Times, July 10, 2008, L1. 3-4b

Licensees 1. Those on property with some form of permission 2. Duty to not intentionally injure and to warn of any defects

3-4c

Invitees 1. Those in public places, stores, etc. 2. Those on premises by express invitation 3. Highest duty—inspect, warn, and correct

Answer to Consider (3.7) a. b. c. d.

Paramedic—licensee in most states Customer—invitee Researcher—licensee Burglar—trespasser 3-4d

Breach of Duty—liability is imposed

CASE BRIEF: Bertsch v. Mammoth Community Water District 247 Call. App. 4th 1201, 202 Cal. Rptr. 3d 757 (3d Dist. 2016, review denied August 17, 2016) FACTS:

Brett Bertsch was skateboarding with his brother in Mammoth Lakes, California. The two were traveling downhill at a ―pretty fast‖ speed (estimated at 8–10 mph),

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sans helmets, when the front wheels of Brett‘s skateboard hit a small gap between the paved road and a cement collar around a manhole cover. The wheels on the skateboard stopped, but the laws of physics being what they are, Brett kept going and his fall caused him to hit his head on the pavement. The resulting brain injury eventually resulted in his death. Brett‘s father and brother, Richard and Mitchell Bertsch (plaintiffs), brought a wrongful death action against Mammoth Community Water District, which inspects and maintains the manhole cover, and Sierra Star Community Association, the owner of the road where the accident occurred (defendants). The trial court granted summary judgment, and the Bertsches appealed. ISSUE:

What is the level of duty and liability of the city and the subdivision for the use of public streets for recreational activity?

DECISION:

The court held that the doctrine of assumption of risk meant that the landowners were not responsible for the injuries when the plaintiff is engaged in an activity that carries an assumption of risk. Skateboarding is a dangerous activity. That a skateboarder experiences greater injury because of property conditions when skateboarding on another‘s property is not the issue. The issue is the dangerous activity—going downhill on a skateboard on the wrong side of the road is dangerous activity. The parties did not dispute that Brett was on the wrong side of the road because that side was where the manhole was located. That an injury resulting from such activity is made worse because of the placement of a manhole cover does not change the risk or the assumption. In addition, requiring all landowners to anticipate risky uses and adjust the conditions in their property accordingly would impose far too great of a cost and burden on landowners. The court noted, ―Finally, the policy reasons stated in Calhoon, for declining to impose such a duty on homeowners apply equally to the defendants in this case. To require road owners and water districts, whether private or public, to make their roads and utility access points safe for skateboarding would amount to an unnecessary burden.‖ Affirmed.

Answers to Case Questions 1. Was the skateboarding a means of transportation or part of a recreational ride? What facts does the court point to in order to establish its conclusion on this issue? The court found that the young men transformed their ride for meeting their father into something more than just a means of transportation on the street. They found that the young man had to sort of circle back around to get to the top of the hill and that there was no reason to use the street except for the thrill of a downhill ride on a skateboard. The father‘s testimony about where

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he was meeting the boys established the change in their route from the most direct to one that involved the hill. They did not dispute Brett was on the wrong side of the street. Indeed, because the manhole cover was in the oncoming lane, Brett would have had to have been in this lane in order for the gap between the road and the cement collar around the manhole cover to have caused the accident. 2. Why does the assumption of risk doctrine apply here? It applies because skateboarding is an inherently risky activity, particularly when the young men were not wearing helmets. It is true that in both this case and the Calhoun case that their injuries were made worse by conditions on the property but when there are risky activities and there is no special relationship between the parties (i.e., it is not an area designed for skateboard use or a skate park or an area used for skating) the court choose not to impose extra duties in terms of making land safe for all types of activities because it is too much of a burden. 3. Why does the court not impose a duty on either the town or the association to make the street safe for skateboarders? The burden for landowners to anticipate every possible use of their land and take precautions, even for inherently dangerous types of assumption of risk activities would impose too great of a burden on landowners. They need only make their properties safe for usual uses. CAUTIONS AND CONCLUSIONS for Landowners—go through checklists with students. [return to top]

Additional Activities and Assignments Answers to Chapter Problems 1. This is an action in inverse condemnation brought by Petitioners against Northeast Lake Washington Sewer and Water District, a municipal corporation. Inverse condemnation is an action to ―recover the value of property which has been appropriated in fact, but with no exercise of the [condemnation] power.‖ ―Our constitution requires that just compensation be paid a landowner in the event of either a governmental ‗taking‘ or ‗damaging‘ of property.‖ Under a general takings analysis, the elements of an inverse condemnation action are not in dispute. However, the only Washington case which considered a property owner‘s right to a view is State v. Calkins. In that case the court stated: ―Clearly, there has been no specific declaration by our legislature of an intention to pay compensation for nonexistent property rights; i.e., access, air, view, and light; furthermore, absent such rights, the condemnation proceedings herein do not violate Art. I, Section 16, of our state constitution, which requires the payment of just compensation for the taking or damaging of property rights.‖ Although Calkins was not an action for inverse condemnation based upon interference with a property owner‘s right to a view, it is nevertheless somewhat indicative of this

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Instructor Manual: Marianne M. Jennings, Real Estate Law, 2022, 9780357518649; Chapter 3: Extent of Real Estate Interests

court‘s position on the matter. Because our own decisions have not squarely addressed this issue, we may look to decisions from other jurisdictions. In Pacifica Homeowners’ Ass’n v. Wesley Palms Retirement Comm’ty, 224 Cal. Rptr. 380 (1986), the California Court of Appeal concluded that ―[a]s a general rule, a landowner has no natural right to air, light or an unobstructed view and the law is reluctant to imply such a right.‖ However, ―[s]uch a right may be created by private parties through the granting of an easement or through the adoption of conditions, covenants and restrictions by the Legislature.‖ In Pacifica, the Homeowners‘ Association (Association) attempted to enjoin the Wesley Palma Retirement Community from allowing trees on its property to grow higher than the Association‘s five-story building. The Association claimed a conditional use permit placed a limitation on tree height, which was ―imposed particularly for the benefit of the uphill landowners including the Association.‖ However, the court rejected the Association‘s arguments and stated that ―[i]n the absence of any agreement, statute or governmentally imposed conditions on development creating a right to an unobstructed view, it cannot be said Wesley Palms...interfered with any right.‖ In Gervasi v. Board of Comm’rs of Hicksville Water Dist., 256 N.Y.S.2d 910 (1965), the facts closely parallel those in this case. The plaintiffs in that case sought to enjoin the water district from completing construction of a water tank or to recover damages measured by the reduced value of their homes caused by construction of the water tank. In that case, the water district constructed a storage tank on its own property. The plaintiffs claimed construction and maintenance of the tank reduced the market value of their properties. The Court concluded that the plaintiffs had failed to state a cause of action because they had not been deprived of ―property within the meaning of that provision as it ha[d] been construed by the courts.‖ The court determined that the plaintiffs had no cause of action because the water district constructed the water tank on its own property. The court found no deprivation of property under the takings clause of the New York Constitution. Similarly, in the case now before us, the District constructed a water tank on its own property. We conclude that Petitioners have not been deprived of any property rights because the District is acting only upon its property. The court in Gervasi further concluded that ―[d]amages cannot be recovered because of the unsightly character of a structure and aesthetic considerations are not compensable in the absence of a legislative provision.‖ ...we conclude that Petitioners are not entitled to compensation for damages solely because of the unsightly character and the unaesthetic appearance of the water tank. Following the reasoning of...Pacifica...and Gervasi, we conclude that Petitioners do not have a cause of action for inverse condemnation based on their claimed ―right to a view.‖ The water tank was a permissible use constructed and maintained solely upon the property of the District.

SOURCE: Scholarfriends.com