PROPERTY II OUTLINE

Professor Fran Ortiz

Summer 2002

E-mail: fortiz@stcl.edu (H) 832.252.6560

Office: Room 618 (C) 713.213.1421

(O) 713.646.2946

ACQUISITION BY Adverse Possession

Theory and Elements of Adverse Possession

i. Actual entry giving exclusive possession of the land

1. must actually physically possess the property with the same degree of occupancy and use as average owner would use that type of property

a. ie., if the owner has guests, you can have guests; if the owner goes on vacation, you can go on vacation

2. must exclude true owner

3. possession cannot be shared with the owner or the public

4. if a landowner does not bring action to eject an adverse possessor within the statutory period, the owner is thereafter barred from bringing an ejectment action.

a. 10 year SOL=>O owns & A enters in 1990. It’s the year 2002. A is considered to have taken title in 1990.

i. Relation-Back Doctrine

1. When you are considered to be the owner at the time you’ve entered the property as soon as you meet all the elements. So, in 2000 he is considered to have been the owner in 1990.before the SOL runs, the AP has all the rights of a possessor, but has no legal interest valid as against the true owner

ii. Open and notorious

1. visible possession so as to put owner reasonable notice

2. reasonably inform an attentive landowner that someone is on the property

iii. Possession must be adverse and under a claim of right

1. has to be against the true owner’s interests (a.k.a. “hostility”)

2. claim of title requirements

a. objective standard (punishes people from sleeping on their rights)

b. good faith belief you own the property

c. aggressive trespasser standard—you knew you didn’t own the land but you didn’t care

iv. Continuous for the statutory period

1. appropriate to the subject land—can be seasonal

2. unchanged type of use important

3. the possession of one person can be tacked to that of another if there is privity between them

Reasons for Adverse Possession

i. Quiets title (establishes ownership); will tell us who owns the land

ii. Promote beneficial use of land

1. Earning theory: rewards person making beneficial use of the land

iii. Penalizes person sleeping on their rights

1. Sleeping theory: encourages attentive ownership

iv. Settles disputes; encourages persons to make improvements

v. Furthers expectations of the adverse possessor

1. Economic theory: it is more economical to let the AP have the land than to try to determine who is the true owner

Van Valkenburg v. Lutz (1952)—Lutz purchased lots 14 and 15 in 1912; behind Lutz’s lots were lots 19-22 that D used only for access to his property at first then later built a shed, a chicken coop, and gardened selling the vegetables to his neighbors; in 1937 Van Valkenburg purchased lots 31 and 32; lots 19-22 were in between Ps and Ds properties; P purchased these lots in 1947 and erected a fence across P’s access-way to his property; D sued P, admitting P owned the lots but claimed a right of access across it; D lost because he did not occupy P’s land under a claim of title required in AP

i. To acquire by AP, one must clearly and convincingly show that for at least X years there has been actual occupation of the land (enclosing the land or cultivating or improving) under a claim of title

ii. Once an AP has an interest in land, it takes more than a mere statement or act to convey it back to former owner. Nothing you can say will change the fact that you adversely possess the land.

1. PROBLEM p. 142. A and B own adjacent lots. A erects a fence on B’s lot 3’ beyond what she thought was common boundary; fence stays for SOL; A owns the strip of land by AP; B surveys and notifies A of the mistake so A “to avoid a hassle” tears down her fence and erects a new one on the real boundary; three years later A talks to a lawyer, changes her mind and sues to eject B from the 3”; A wins because she owns the 3’ by AP and thus so, B has to meet his SOL too which he has not (3 years no SOL for AP)

Manillo v. Gorski (1969)—D entered land under K to purchase; in 1946 D’s son made some improvements to her home including building concrete steps to replace the wooden steps; D steps encroached on P’s property by 15”; the land was conveyed in 1952; P filed complaint seeking injunction against D’s alleged trespass; D counterclaimed seeking DJ to determine D had gained title by AP; entry and continuance of possession under mistaken belief that possessor has title to the land involved exhibits the hostile possession required to obtain title by AP

i. Mistaken Boundaries

1. Maine Doctrine—AP claimant must have intent to take the land regardless of whether or not it is his (aggressive trespasser) (rewards trespasser for trespassing v. rewarding somebody honestly making a mistake); minority view

2. Connecticut Doctrine—no intentional hostility required (objective standard—intent irrelevant); majority view

ii. The element of “open and notorious” possession may not be met where the encroachment is of a small area or where the intrusion requires an on-site survey; no presumption of knowledge arises from a minor encroachment along a common boundary, actual knowledge required; only where the true owner has actual knowledge thereof may it be said that the possession is open and notorious

iii. Remedy—owner can be forced to convey the land to D if:

1. AP’er must be innocent trespasser

2. small encroachment

3. encroachment is:

a. costly

b. impractical to remove

c. removal will cause great hardship

4. AP’er must pay for value

5. No serious damage results to the land

iv. Whether or not the AP is mistaken, the owner is ousted from possession; if he fails to attempt to recover possession within the requisite time, it is probably the result of lack of knowledge that he is being deprived of lands to which he has title

v. Any entry and possession for the required time that is exclusive, continuous, uninterrupted, visible and notorious, even under mistaken claim of title, is sufficient to support a claim of title by AP

Constructive Adverse Possession—if someone else owns the land, you can only adversely possess what you can physically enter
Color of Title—claiming title via written instrument; an instrument or act that has the appearance of granting title to the claimant but in reality falls short of establishing it (e.g., forged deed); must have an actual entry
Boundary Disputes—most courts apply the objective test to determine if one of the parties has acquired title to the disputed strip of land by adverse possession; ie., by putting up a fence and using the land for the necessary number of years, the party can acquire title to the land

i. Doctrine of Agreed Boundaries—if there is uncertainty between neighbors as to the true boundary line, an oral agreement to settle is enforceable if the neighbors accept the line for a long period of time

ii. Doctrine of Acquiescence—acquiescence for a long period of time is same as an agreement because you did something and the other person didn’t object; like a silent agreement

iii. Doctrine of Estoppel—if one neighbor makes representations about location or engages in conduct that tends to indicate the location of the common boundary and the other neighbor changes her position in reliance on the representations or conduct, the first neighbor is estopped from denying that’s where the boundary is

The Mechanics of Adverse Possession

Howard v. Kunto (1970)—Howards and Kuntos hold property in a summer resort area where houses are used primarily for summer occupancy; Ps owned land one lot away from Ds; when Ps tried to convey land to 3d party, they found the title they held was to the adjacent lot (most other land owners too); Ps brought action to quiet title; court held that since D owned land for > 1 year and the principle tacking was not established, the title was quieted in Ps; Ds appeal; J reversed

i. The fact that the land was only used in summer months makes no difference in establishing AP

ii. Continuous Possession

1. when possessor maintains possession for the statutorily required period of time and the property is used in a customary manner; ie., summer cabins, farming someone else’s field for enough years

iii. Tacking

1. allowing AP to tack the time he is in possession onto that of his predecessor in interest’s period of AP

2. there must be privity of estate between the two APs

3. once there is an entry against an owner, AP begins and isn't defeated when ownership changes through will or intestacy

a. American Rule—AP’ers cannot tack unless there is privity

b. English Rule—AP’ers can tack regardless of privity

i. Privity—voluntary transfer of property from one to another

4. PROBLEM

a. O owns

i. 1987—A enters

ii. 1994—B kicks A off, A leaves and B enters into possession

iii. 1997—who owns? O owns under American Rule; under English Rule B owns

5. PROBLEM (continued)

a. 1994—A leaves under threat of force

b. 6 months later—A recovers possession from B

c. If O does nothing, will A own Blackacre 10 years and 6 months from the date of entry in 1987

6. PROBLEM

a. O owns-10 year SOL

i. 1981—A enters

ii. 1982—O devises to B for life, Rm to C

iii. 1997—B dies without ever having entered upon Blackacre

iv. Who owns Blackacre? A

7. RULE—you adversely possess the estate you enter upon; once there is an entry upon an owner, AP begins and possession is not defeated or interrupted by subsequent transfers by the owner, whether by conveyance, will or intestacy

8. RULE—Adverse possession is against the possessory estate; so whatever estate is the possessory estate is what the AP’er will get unless the future interest holders are put on interest

iv. Improvements and Encroachments (buildings and fixtures erected without right)

1. Compensated equal to market value of improvements or permitted removal of the improvements

2. Landowner may have choice to pay for improvements or convey land at market value to improver

3. If building not entirely on neighboring land but partially on wrong lot is usually not considered fixture

4. If encroachment result of innocent mistake, courts tend to look at relative hardships of parties granting or denying injunctive relief

5. If removal is difficult or expensive for the intruder compared to inconvenience to landowner, injunctive relief usually denied and only damages awarded

6. Where inconvenience trivial, some courts deny all relief

7. If encroachment is willful or intentional, most courts issue injunction requiring removal of encroachment regardless of convenience or hardship

8. Party who intentionally encroaches does so at own peril

v. Disabilities

1. An action to recover the title to or possession of real property shall be brought within 21 years after the cause of action, but if a person entitled to bring such action at the time the cause of action accrues, is within the age of minority, of unsound mind, or imprisoned then that person may bring a COA within 10 years after such disability is removed

2. Disability is immaterial unless it existed at the time the COA accrued

a. PROBLEM

i. 1967—O owns Blueacre; O insane

ii. 5/1/67—A enters

iii. 1990—O dies insane and intestate; O’s heir H under no disability

iv. When would A acquire title? 2000

v. H gets to sue because he’s the successor in interest in the property

b. PROBLEM (continued)

i. O’s heir H is only 6 years old

ii. still has to sue by 2000 because disabilities can’t be tacked (legal guardian)

c. PROBLEM

i. 1967—O owns Blueacre; O has no disability

ii. 5/1/67—A enters

iii. 1985—O dies intestate

iv. O’s heir H is 2 years old

v. A will own Blueacre in 1988 because the disability doesn’t apply; it wasn’t present at the time of entry; 1967 + 21 years is 1988

d. PROBLEM

i. 1967—O owns Blueacre; O is 5 years old

ii. 5/1/67—A enters

iii. 1977—O becomes insane

iv. 1992—O dies insane and intestate

v. O’s heir H has no disability

vi. 1990 because only disability that counts is disability at time of entry; disabilities can’t be tacked

vi. RULE

1. death removes a disability

2. at the point the disability is removed, the 10 year provision starts ticking

3. disabilities can’t be tacked

4. disability must be present at entry

5. if there are two disabilities, take the longer of the two

Prescriptive Easements

Othen v. Rosier (1950)—use by express or implied permission, no matter how long continued, cannot ripen into a prescriptive easement; D consented to P’s use of the land so P does not have a prescriptive easement

i. Easement

1. limited use of someone else’s land (phone, cable, electric, water companies have an easement across your land to lay and maintain pipes, lines, etc.)

2. generally is for a right of way

3. same elements present for AP also there for easements

ii. Differences between AP and PE

1. AP is to own the land

a. possessory interest

b. exclusive possession

2. Prescriptive easement is to use the land

a. non-possessory interest

b. non-exclusive possession

iii. Elements of Prescriptive Easements

1. actual entry

2. “exclusive use” (can’t share the use with anyone else)

3. open and notorious

4. “adverse”

5. continuous use of another’s land for the statutory period

iv. Prescription by the Public—Jurisdictions vary:

1. some say – no prescription allowed

2. others say – yes, we will allow prescription by a large, definable group, but only if:

a. strong proof of adversity

b. different use than that made by general public

3. Public itself can prescribe but owner must be on notice, by the kind and extent of use, that an adverse right is being claimed by the general public and not by individual

4. To prevent a prescription, effectively prevent them from using it or give them permission so it will not be adverse

Easements by Necessity and Easements by Prescription

Matthews v. Bay Head Improvement Assn.(1984)—ownership, dominion and sovereignty over land flowed by tidal waters extending to the high water mark is vested in the state for the people; public uses include navigation, fishing, and recreational uses, including bathing; this doctrine applies to municipally owned dry sand areas since enjoyment of rights in the foreshore is inseparable from use of dry sand beaches; public interest in privately owned dry sand beaches may include 1) the right to cross in order to gain access to the foreshore; and 2) the right to sunbathe and enjoy recreational activities; without some means of access, the public right to use the foreshore would eliminate the public trust doctrine; the public interest is satisfied as long as there is reasonable access to the sea; bathers reasonable enjoyment of the foreshore and the sea cannot be realized unless some enjoyment of the dry sand area for rest and relaxation is also allowed

THE LAND TRANSACTION

Contracts of Sale—involves 2 steps:

i. K to sell/purchase is signed specifying the date for the closing

ii. at closing, the S gives the B a deed to the property and the B gives the S the agreed-upon consideration

The Statute of Frauds—no interest in real property can be conveyed without a writing signed by the party to be charged (party against whom it is asserted there is a K)

i. K for sale of land must be:

1. signed by party to be bound

2. describe the property; and

3. state the price

Essential Terms—description of the property sufficient to make clear what property the parties have in mind, price (reasonable or market), the parties, and other terms and conditions pertinent to the transaction (manner of payment, etc.)
Specific Performance—rather than award damages, the aggrieved party must ask for specific performance
Oral Revocation—most states hold that the Statute of Frauds applies only to the making of the K and will thus allow oral revocation or modification
Time of Performance—each party has a reasonable time in which to complete its performance if the K does not specify time is of the essence or a date is called for in the K

i. State v. Buyers Service Co. (1987)—who prepares the K? D is title company assisting prospective property buyers by preparing closing packages and closings without attorney present; P brought suit alleging unauthorized practice of law; court holds that lawyer must prepare deeds, mortgages, notes and other legal real property transfers; activities such as preparing abstracts requires legal knowledge and skill and must be supervised by an attorney; closings should be conducted under attorney’s supervision; recording documents is act that constitutes practice of law

Exceptions to Statute of Frauds

i. part performance (varies by jurisdiction)

1. payment of all or substantially all of the purchase price (rarely stands alone); and

2. possession (can stand alone); and/or

3. improvements (can stand alone)

ii. estoppel

1. party seriously changes position to detriment;

2. in reliance on K;

3. resulting in unconscionable injury

Hickey v . Green (1982)—specific performance; Ps put deposit on D’s lot after oral agreement for sale of $15,000; D accepted $500 check marked by P on back with “Deposit….Subject to variance from Town of Plymouth;” P’s told D to fill in name of payee left blank because of uncertainty of who to make it out to; D held check but did not endorse it, and did not fill in payee’s name; Ps sold their house and accepted a deposit check; D told Ps she had decided to sell lot to another for $16,000; Ps offered D $16,000; D refused; P sought specific performance; court found for Ps; D claimed SOF barred relief and appeals; a K for transfer of interest in land can specifically be enforced if no compliance with SOF if party seeking enforcement reasonably relied on K and has so changed position that injustice can be avoided only by specific performance; D must be held to her end of the bargain
Walker v. Ireton (1977)—seller didn’t know buyer was going to sell his farm; court didn’t grant specific performance

i. Problems

1. O owns Blackacre and executes and delivers a deed to her daughter A as a gift; deed not recorded; then O tells A she would like Blackacre back so A hands deed back to O and says “the land is yours again;” O tears up the deed; O owns Blackacre

2. B gives S check for $5,000; B would not be able to rescind unless S has misrepresented the condition or has violated a duty to disclose or violated implied warranty of habitability; LET THE BUYER BEWARE

3. Suppose B can obtain loan secured by mortgage on $150,000 but B expected S would be able to obtain $175,000 loan; can B rescind? No, unless waiver in K stating “conditioned upon B obtaining financing”; B screwed; LET THE BUYER BEWARE

Marketable Title—title that a reasonable person would have no doubts that title was valid and a person would be willing to pay FMV; free of defects; implied in every sale of real property that title is free from doubts; one which a willing person would be willing to buy; B can rescind if title not marketable

i. Lohmeyer v. Bower (1951)—P K to buy house; D to provide good marketable title subject to all restrictions of record; abstract of title showed the original subdivider imposed restriction requiring that any home erected on the lot to be 2 stories (the existing home was 1 story); also, zoning ordinance required no frame building could be erected within 3’ of lot line (existing house 18” of lot line); P brought suit to rescind the K; D counter-sued for specific performance; the violation of the private and public restrictions renders title unmarketable; private covenants or restrictions (height requirement) may constitute encumbrances rendering title unmarketable unless waived; pre-closing: violations of zoning ordinance = encumbrances (K stage)

1. Encumbrance—burden on title that would make a reasonable person doubt that they have full title; encumbrances make real property unmarketable

2. Restrictive covenant—promise that restricts; ie., single family housing, easement; more easily found

3. Real Covenants

a. Encumbrances (unless waived) = unmarketable title

b. Real covenants = encumbrances (unless waived)

c. Real covenants = unmarketable title

d. Violations of real covenants = unmarketable title

4. Zoning Ordinances

a. Encumbrances (unless waived) = unmarketable title

b. Zoning ordinances ≠ encumbrances/marketable title

c. Violations of zoning ordinances = encumbrances / unmarketable title

5. Encumbrance

a. Restrictive covenant – yes

b. Violation of restrictive covenant – yes

c. Zoning ordinance – no

d. Violation of zoning ordinance – yes

e. If “yes” and B has not waived this particular encumbrance in the K, B can rescind

ii. Conklin v. Davi (1978)—S K to sell house to B; K called for S to furnish marketable title and insurable title; B discovered that S obtained title to part of the property through AP; S never went to court to quiet title; B refused to go through with the deal; S sued B for specific performance; S counterclaimed to rescind K; title obtained by adverse possession is not unmarketable; when a seller’s title is grounded on AP he may either: perfect record title (obtain record from former owner, action to quiet title, action to concede outstanding encumbrance, etc.); or choose to enter into a K of sale hoping to convince the purchaser or the court that his estimate of the marketability of the title is justified; the K did not require perfect title of record, just marketable title; the title doesn’t need to be free from every doubt; the law implies that a title must be marketable even if a K fails to specify; if title by AP is clearly established, the title is marketable

1. Time is of the Essence

a. Title must stand or fall as it exists on the day of closing and seller cannot later cure the defects; if the K does not say time is of the essence the court will give the parties a reasonable time for performance; if the K does not same that time is of the essence, either party can fix the time for performance by giving notice to the other, provided the notice leaves a reasonable time for rendering performance

2. Damages for Breach of K

a. Specific performance

b. Loss of bargain damages

i. The difference between the K price and the MV of the property on the date of breach (can fluxuate and either go for you or against you)

3. Equitable Conversion

a. Determines who bears the risk of loss after the K has been signed but before the deed has passed; if K has been signed B thinks he owns property and S thinks he’s sold the property BUT LEGALLY title doesn’t pass until deed passes at closing (578); at closing, deed and title pass, and the Buyer becomes the Owner; Generally Buyer has equitable title after K has been signed, but before the deed has been passed. Not legal title. Buyer carries risk of loss after signing K. Buyer would get insurance proceeds from fire etc. If a Seller remains in residence, some jurisdictions say Seller bears risk of loss until they move out. Buyer holds equitable title. Seller holds legal title in trust for the Buyer.

The Duty to Disclose Defects

i. Stambovsky v. Ackley (1991)—Owner was advertising house as haunted prior to sale; Buyer buys house, ignorant that it was haunted; Owner did not disclose it to Buyer; Buyer finds out it is haunted and wants to rescind saying Seller has failed to make the condition of the house known to him; NY law was caveat emptor – “Buyer Beware”

1. Elements of Caveat Emptor

a. No duty to disclose latent (hidden) defects, unless:

i. Confidential or fiduciary relationship exists between parties; or

ii. Active concealment by Seller.

1. Active concealment can be:

a. Affirmative misrepresentation or partial disclosure; or

b. Mere non-disclosure, but only if meet the requirements of Stambovsky or Davis. Does not apply to supernatural events.

As-is clause was insufficient; only the Seller knew about it, the Buyer didn’t know; allso, Seller was supposed to leave house vacant, Court says it is not – there are poltergeists in the house; Court is making the assumption that poltergeists decrease market value; if Seller wants out, needs to argue that poltergeists do not decrease the market value; Issue: Should Buyer should have found out about the poltergeists? No. Might not want to talk to neighbors; just b/c house was featured in Reader’s Digest does not mean that everyone knows about it; RULE: If Seller creates defect/peculiarly (solely) within the knowledge of the Seller unlikely to be discovered by prudent purchaser exercising due care, the condition materially impairs the value of the K.

ii. Johnson v. Davis (1985)—Seller said the roof was fine but the roof leaked; Buyer tries to rescind alleging breach of K, fraudulent concealment; when a Duty to Disclose is violated, the Buyer is entitled to rescind; RULE: If the Seller knows of a defect materially affecting the value of the property and the defect is not readily observable to Buyer, the defect is not known to Buyer.

1. How to interpret Materiality (Jurisdictions differ):

a. Objective test – whether a reasonable person would consider it material

b. Subjective test – whether the Buyer herself would consider it material. Some jurisdictions require Seller fill out Disclosure Form.

2. Don’t have to disclose sexual offenders as they are listed in the public records. Don’t have to disclose if a swarm of killer bees are swarming around, as they are readily observable to the Buyer.

Merger.

i. At closing, K of sale merges with the deed. Now have 1 document. Seller can only sue now on warranties in the deed, not on warranties contained in the K of sale. Exceptions: fraud or misrepresentation. Also could argue that the obligation to be enforced is outside the scope of the deed, therefore can sue for it.

The Implied Warranty of Quality

i. Logically must occur post-closing. If discover fault prior to closing, then Buyer should rescind.

ii. Lempke v. Dagenais (1988)—Builder builds garage for the Sellers. Subsequent Buyer of a house sues Builder of garage for structural defects. Buyer sues Builder for economic loss under Breach of K. Implied Warranty of Quality is a Tort COA.

1. Elements of IWQ

a. Defects must be latent

b. Manifest after purchase

c. Not discoverable by reasonable inspection prior to purchase

d. Limited to reasonable period of time

e. Warranty limited to workmanlike quality.

2. Buyer should do an inspection prior to purchase. If they don’t, could be barred from bringing IWQ as IWQ can only succeed if a reasonable inspection DID NOT turn up the defect.

3. Major Points with IWQ

a. Against Builders

b. Arises after Closing.

THE DEED

Warranties of Title

i. General Warranty Deed—warrants title against all defects in title, whether arising before or after grantor takes title

ii. Special Warranty Deed—contains warranties only against the grantor’s own acts but not the acts of others

iii. Quitclaim Deed—contains no warranties of any kind; merely conveys whatever title Grantor has, if any. Concerned about title after deed has passed to ensure that if something happens, the Seller will pay the Buyer back.

1. O owns Blackacre. A sells Blackacre to B. O outs B. Can B sue A under a:

a. GWD? Yes

b. SWD? Yes, A created the problem by selling to B in the first place; also A didn’t have superior title and sold it to B so B can sue A

c. QD? No, no warranties whatsoever

2. O owns the property. A sells it to B. B sells it to C. O outs C and O shows he has superior title? Can C sue B if B passed a:

a. GWD? Yes, problem arose when A sold to B but B warranted against all defects whether problem arose before or after

b. SWD? No, because B did not cause the problem, A did

c. QD? No, no warranties of any kind whatsoever

3. O owns property. A forges O’s name and sells it to B. In a suit between O and B, who wins? O, because it was a forged instrument, O was not conveying it; the grantor whose signature is forged prevails over all others

4. O owns. A forges O’s signature and sells to B. B sells to C. In a suit between O and C, who wins? The grantor whose signature was forged prevails over all others, including subsequent bona fide purchasers who didn’t know the deed was forged

5. O owns property. A cons O into selling 50 acres by changing the deed. (A fraudulently induces O to sell.) In a suit between O and A, who wins? O. The transaction is void if A committed fraud.

6. O owns property. A fraudulently induces O to sell to A. A conveys to B. In a suit between O and B, who wins? B, grantor who has been defrauded can void the original transaction, but cannot void conveyances to subsequent bona fide purchasers (BFPs); the people who can prevent the harm are different in forgery and fraud

Forgery

i. the grantor whose signature is forged to a deed prevails over all persons, including subsequent bona fide purchasers from the grantee who do not know the deed is forged; a true owner cannot prevent the harm; a subsequent BFP can stop the harm by requiring some kind of identification to make sure it’s not forgery

Fraud

i. A grantor who has been defrauded can void the original transaction, but cannot void conveyances to subsequent bona fide purchasers (BFPs); a true owner can prevent the harm by getting someone to read the deed for her; there is nothing that subsequent BFP can do

1. Different rules for forgery and fraud because the people who can prevent the harm are different. In forgery, the true owner cannot stop the forgery. Therefore, true owner always wins. In fraud, the true owner can prevent the harm by getting someone to read/interpret the sale note. Therefore BFP will win. There was nothing the BFP could have done to prevent the harm from occurring.

Covenants

i. Present Covenants—they have to be breached when deed is delivered, if breached at all; SOL begins running at delivery of the deed; (e.g., chicken lays eggs that will crack immediately or not at all®breached when deed delivered or not at all; must sue before SOL runs)

1. Covenant of Seisen—grantor warrants that he owns the estate that he purports to convey

2. Covenant of Right to Convey—grantor warrants that he has the right to convey the property; in most instances this covenant serves the same purpose as the covenant of seisen, but it is possible for a person who has seisen not to have the right to convey (e.g., a trustee may have legal title but be forbidden by the trust instrument to convey it

3. Covenant Against Encumbrances—grantor warrants that there are no encumbrances on the property; encumbrances include mortgages, liens, easements and covenants

ii. Future Covenants—breached in the future when grantor fails to live up to promise (e.g., a broken egg = a cause of action; SOL doesn’t begin running until egg breaks; when a covenant is breached, the covenant no longer runs with the land…it’s a COA and you must sue within the SOL otherwise you’ve got a broken egg that’s going to start smelling)

1. Covenant of General Warranty—grantor warrants that he will defend against lawful claims and will compensate the grantee for any loss that the grantee may sustain by assertion of superior title

2. Covenant of Quiet Enjoyment—grantor warrants that the grantee will not be disturbed in possession and enjoyment of the property by assertion of superior title; this covenant is identical to the covenant of general warranty and is often omitted from GWDs

3. Covenant of Further Assurances—grantor promises that he will execute any other documents required to perfect the title conveyed [never tests on this]

iii. Problems

1. Assume 5-year SOL; Jan 1, 1995 – O owns. A sells to B. What covenants have been breached? The only ones are Seisen and Right to Convey ®both rights are in O. When must B sue A? Jan. 1, 2000.

2. Assume 5-year SOL; Jan 1, 1995 – O owns. A conveys to B. What covenants have been breached? Seisen and Right to Convey breached on Jan. 1, 1995. These were breached immediately. SOL Jan 1, 2000. Jan 1, 1996 – O ousts B. Covenant of General Warranty and Quiet Enjoyment have been breached. Jan 1, 2001 SOL.

3. Assume 5-year SOL. Jan 1, 1995 – O owns. A conveys to B. Jan 1, 2005 – O ousts B. What covenatns have been breached, if any?

4. Grantor conveys: “to A in trust for O without the power of sale.” Jan 1, 1995 – A ® B. Jan 1, 2005 – O ousts B. What covenants have been breached, if any? A breached right to convey in 1995, he lacks the power to sell. Covenant of general warranty breached because O has superior title. Covenant of quiet enjoyment because B has been booted off the property and right to quiet enjoyment has been breached.

iv. Brown v. Lober (1979)—present v. future covenants; O sells to Bosts reserving 2/3 mineral rights; they’ve sold the surface estate and 1/3 mineral rights; Bosts ® GWD Browns, no reservation mentioned; Browns ® leased mineral rights for $6K to Consolidated Coal; CC does title search and finds that Bosts still own 2/3 mineral rights and said they would give $2000 to Browns and $4000 to estate of Bosts for mineral rights; breach of seisen when Bosts sold to Browns because they didn’t mention reservation and breach of right to convey because they only really conveyed 1/3 mineral rights; SOL had already run because present covenants broken when conveyed; would have won of sued earlier; looked to future covenants and chose to sue under covenant of quiet enjoyment; warranty saying grantor saying you will not be disturbed in your quiet enjoyment by someone coming onto property saying get off; Browns pissed; court said no breach of quiet enjoyment because Browns trying to extend and would be same as covenant of seisen / covenant of right to convey

1. Quiet Enjoyment

a. Breached only if there is an interference with possession or constructive eviction

b. Mere existence of superior title is not enough

v. Frimberger v. Anzellotti (1991)—latent land use violations; post-closing: Violations of Land Use Statutes ¹ Encumbrances (deed stage); D’s brother built house on title wetlands in violation of Clean Water Act; conveys to D by quitclaim deed; D conveyed property to P by WD, free and clear of all encumbrances but subject to all building, building line and zoning restrictions; P discovered violation of land use statute when he tried to make repairs; DEP informed D that he would have to submit application demonstrating necessity of maintaining bulkhead; instead P filed suit claiming breach of warranty against encumbrances and innocent misrepresentation; trial court found for P; D appeals; J reversed because latent violation of restrictive land use statute that exists at time fee is conveyed does not constitute breach of the warranty deed covenant against encumbrances; latent violations of state or municipal land use