Chapter 24 – Real Property

Editor's Notes

• #5: In July 2007, Chevron sued to enforce a contract that it had made with Sheikhpour that entitled Chevron to buy and remodel Sheikhpour’s Manhattan Beach gas station. The parties entered into a Settlement Agreement that required Sheikhpour to complete certain reconstruction obligations by October 31, 2009. When he failed to complete the reconstruction by the deadline, Chevron obtained an order enforcing the Settlement Agreement and ordering Sheikhpour to convey the station to Chevron. Chevron’s efforts to possess the property were met with additional objections from Sheikhpour, however. In December 2010, Sheikhpour requested continuing access to the property for fourteen days to remove his “personal property,” including “equipment, supplies, materials, security fence, etc.” The parties then executed a “Release and Indemnification Agreement,” which authorized Sheikhpour to access the property during a two-week period for the sole purpose of removing his personal property. Several days after the agreement was formed, Sheikhpour informed Chevron that he intended to dig up and remove the fuel storage tanks. The tanks, which are valued at about $120,000, sit in a “tank pit area,” and are covered with gravel.
• #6: Attachment . Actual physical attachment to real property is not necessary, however. For example, heavy machinery or remote control devices for automatic garage doors may be considered fixtures even though they are not physically attached to real property. Adaptation . For example, keys and custom-sized window screens and storm windows have been held to be fixtures. Intent . If the owner does not want an attached item to be considered a fixture, he must specifically reserve the right to keep the item.
• #7: Though “trade fixtures” are an exception to the general rule of fixtures becoming part of the real property, a business would be very wise to specify their trade fixtures as personal property in the commercial lease agreement or risk a dispute over the property at lease termination.
• #11: Tenancy by the entirety is demonstrated in Tkachik v. Mandeville. Upon the death of the husband or wife, the property passes automatically to the surviving spouse.
• #12: By grant. When an owner of property expressly provides an easement to another while retaining ownership of the property, he is said to grant an easement. Utility easements, such as power lines, are common examples of this type of easement. By reservation. When one transfers ownership of her land but retains the right to use it for some specified purpose, she is said to reserve an easement in the land. By prescription. An easement by prescription is created when one person uses another’s land openly, continuously, and in a manner adverse to the owner’s rights for a period of time specified by state statute. By implication. Sometimes, easements are implied by the nature of the transaction rather than created by express agreement of the parties. Such easements, called easements by implication , take either of two forms: easements by prior use and easements by necessity.
• #13: The photo depicts power cables that require easements. Utility easement typically are express easements granted by a written deed.
• #15: Restrictive covenants are common in subdivisions (e.g., no trailers or inoperable cars in the front yard, no farm animals, pet limitations, pre-approval requirements for painting or home improvements).
• #16: The hyperlink is to the court’s opinion on the Findlaw.com website. In 1957, William & Ena Jefferys (parents of William Jefferys III) purchased 200 acres of farm land in Fayston, Vermont, known as the Strong Farm. Beginning in 1966, the elderly Jefferys began selling off parcels of the farm. In 1969, Sheldon and Carin Gardner purchased a ten-acre parcel of undeveloped land from the Jefferys. The deed contains a restrictive covenant providing that a specified part of the premises “shall forever be and remain open and free of all buildings and structures, except the right to construct on said open land a private swimming pool, and/or tennis court, and, the usual fences and structures appurtenant thereto and such other buildings and structures as meet the approval in writing of the Grantors herein, their heirs and assigns.” The provision further states that rights secured therein are “to be enjoyed by the Grantors, their heirs and assigns.” In 1975, the Jefferys conveyed a five-acre parcel of land to Karin Souminen, who, in turn, sold the parcel to George and Janice Soules in 1987. The Soules built a house on the land and lived there. Their property is located next to the Gardners’ land. In 1979, the elderly Jefferys conveyed the remainder of their Fayston property to their son, William Jefferys III, and his wife, Susan. In the late summer and early fall of 1999, the Gardners wrote to William and Susan Jefferys twice requesting approval to build a two-story structure within the area restricted by the covenant. The Jefferys gave the Soules a copy of the request. In June 2000, the Soules wrote the Gardners a letter stating that they were interested parties to the restrictive covenant. In September 2000, the Gardners filed a declaratory judgment action asking the court to determine the effect of the restrictive covenant in their deed. The Soules filed a counterclaim. In May 2001, the Gardners began building a shed in the restricted area. Shortly thereafter, the superior court granted the Soules’request for a preliminary injunction stopping the construction. In the fall of 2001, the Gardners began planting white pines in the restricted area directly in the Soules’ view. In July 2003, the superior court ruled that the benefit of the restrictive covenant ran with the land and was enforceable by both the Soules and the Jefferys, and that the Gardners had violated the covenant by beginning construction of the proposed shed and by planting trees in the restricted area. Accordingly, the court enjoined the continued existence of the shed and the trees. Further, the court prohibited the Gardners from allowing plants or crops in the restricted area to exceed six feet in height. The Gardners appealed.
• #17: Court: “Gardner first contends that the restrictive covenant does not run with the land to the benefit of the Soules because the parties intended the covenant to bind only the grantors, their heirs and assigns, and neither the Soules nor the Jefferys are heirs or assigns of the grantors. We do not find this argument persuasive. … Gardner further states that neither the Soules’ deed nor the Jefferys’ deed includes an assignment from the elderly Jefferys, and that the Jefferys are not heirs because Ena Jefferys is still alive, and they did not obtain the land through inheritance. …We conclude that the record in this case overwhelmingly demonstrates that the parties intended the restrictive covenant to run with the land. …Well settled that where a restrictive covenant contains words of succession, i.e., heirs and assigns, a presumption is created that the parties intended the restrictive covenant to run with the land…. Ena Jefferys, one of the original grantors, testified that she always assumed that the phrase “open and free of all buildings and structures” meant that nothing would interfere with the view…overwhelming evidence that the intent underlying the restrictive covenant at issue here was to maintain the restricted area as an open meadow… Affirmed in favor of the Jefferys and Soules. ”
• #18: Example of adverse possession: Schlichting v. Cotter . Why good fences makes good neighbors! Court: Testimony unrefuted shows the Schlichtings maintained that they exclusively used up to the middle of the wooded area, and Mrs. Nitsos also testified that the Schlichtlings used that area exclusively as their own…. The attitude of the abutting neighbor who enjoyed a friendly neighborly relationship with the Schlichtings lends strength to the recognition of the fact that they recognized the plaintiffs as the owners of the property. The court finds by clear and convincing evidence that the plaintiff has proven her claim for adverse possession and is entitled to the property which she claims. The defendants are ordered to remove their fence, their piles of stone and to replace the ground cover and flowering bushes and shrubs and wall that they have destroyed within sixty (60) days of the date of this decision.” Adverse possession over significant acreage is very rare as of the printing of this text. Most disputes today are disputes over a few inches where a neighbor builds a fence that is actually on another’s property.
• #20: Log on to your state’s Secretary of State website or the state’s realtor’s association website to view examples of realty agreements.
• #21: General warranty deed. Under a general warranty deed, the grantor warrants against (and agrees to defend against) all title defects and encumbrances (such as liens and easements), including those that arose before the grantor received her title. Special warranty deed. Under a special warranty deed, the grantor warrants against (and agrees to defend against) title defects and encumbrances that arose after she acquired the property. If the property conveyed is subject to an encumbrance such as a mortgage, a long-term lease, or an easement, the grantor frequently provides a special warranty deed that contains a provision excepting those specific encumbrances from the warranty. In grant deeds , the grantor implicitly represents that he owns the land, but makes no covenants
• #22: A recorded deed operates to provide the public at large with notice of the grantee’s property interest.
• #25: The house has a bit of foundation trouble! (not exactly a hidden defect now)
• #27: These cases include the typical “slip and fall” cases, as well as the cases in which an invitee is attacked and injured.
• #29: Nuisance isn’t just the famous examples of the smelly feedlot operation, dairy farm, or hog farm. Nuisance includes noise, light, and other bothersome activities.
• #30: Note that the Fifth Amendment says “taken for public use.” The Kelo decision altered the traditional meaning of “public.” State congressional bodies reacted to the Kelo decision by proposing statutes preventing the taking of private property for private use, but most of those proposals were quietly dropped.
• #31: The hyperlink is to the case information and opinion on the Oyez.org website. New London, Connecticut, experienced decades of economic decline. In 1990, a state agency designated the city a “distressed municipality.” Conditions prompted state and local officials to target New London, and particularly its Fort Trumbull area, for economic revitalization. To this end, New London Development Corporation (NLDC), a private nonprofit entity established some years earlier to assist the city in planning economic development, was reactivated. In January 1998, the state authorized a $5.35 million bond issue to support the NLDC’s planning activities. In February, the pharmaceutical company Pfizer Inc. announced that it would build a $300 million research facility on a specific site and local planners hoped that Pfizer would draw new business, serving as a catalyst to the area’s rejuvenation. In May, the city council authorized the NLDC to formally submit its plans to the relevant state agencies for review. Upon obtaining state-level approval, the NLDC finalized an integrated development plan focused on 90 acres, which includes about 115 privately owned properties. The development plan called for the creation of restaurants, shops, marinas for both recreational and commercial uses, a pedestrian “riverwalk,” 80 new residences, a new U.S. Coast Guard Museum, research and development office space, and parking. The NLDC intended the development plan to capitalize on the arrival of the Pfizer facility and the new commerce it was expected to attract. In addition to creating jobs, generating tax revenue, and helping to build momentum for the revitalization of downtown New London, the plan was also designed to make the city more attractive and to create leisure and recreational opportunities on the waterfront and in the park. The city council approved the plan in January 2000, and designated the NLDC as its development agent in charge of implementation. The city council also authorized the NLDC to purchase property or to acquire property by exercising eminent domain in the city’s name. The NLDC successfully negotiated the purchase of most of the real estate in the 90-acre area, but its negotiations with nine property owners, including the petitioners Susette Kelo, Wilhelmina Dery, and Charles Dery failed. As a result, in November 2000, the NLDC initiated condemnation proceedings. Kelo had lived in the area since 1997 and made extensive improvements to her house, which she prizes for its water view. Wilhelmina Dery was born in her house in 1918 and had lived there her entire life. Her husband Charles had lived in the house since they married some 60 years ago. In all, the nine petitioners own 15 properties. There is no allegation that any of these properties is blighted or otherwise in poor condition; rather, they were condemned only because they happen to be located in the development area.
• #32: In December 2000, the petitioners brought this action claiming, among other things, that the taking of their properties would violate the “public use” restriction in the Fifth Amendment. The trial court granted a permanent restraining order prohibiting the taking of properties in one area, but denied the order for properties in another area. Both sides appealed to the Supreme Court of Connecticut. That court held that all of the city’s proposed takings were valid. The petitioners then appealed to the U.S. Supreme Court.
• #33: Stevens, Justice. “ Two polar propositions are perfectly clear. On the one hand, it has long been accepted that the sovereign may not take the property of A for the sole purpose of transferring it to another private party B, even though A is paid just compensation. On the other hand, it is equally clear that a State may transfer property from one private party to another if future ‘use by the public’ is the purpose of the taking; the condemnation of land for a railroad with common-carrier duties is a familiar example. Neither of these propositions, however, determines the disposition of this case….The disposition of this case therefore turns on the question whether the City’s development plan serves a ‘public purpose.’ ” “ Without exception, our cases have defined that concept broadly, reflecting our long-standing policy of deference to legislative judgments in this field. Viewed as a whole, our jurisprudence has recognized that the needs of society have varied between different parts of the Nation, just as they have evolved over time in response to changed circumstances. For more than a century, our public use jurisprudence has wisely eschewed rigid formulas and intrusive scrutiny in favor of affording legislatures broad latitude in determining what public needs justify the use of the takings power.”
• #34: “ The City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community, including—but by no means limited to— new jobs and increased tax revenue. As with other exercises in urban planning and development, the City is endeavoring to coordinate a variety of commercial, residential, and recreational uses of land, with the hope that they will form a whole greater than the sum of its parts. To effectuate this plan, the City has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development. Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate for us to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan. Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the public use requirement of the Fifth Amendment.” “ Just as we decline to second-guess the City’s considered judgments about the efficacy of its development plan, we also decline to second-guess the City’s determinations as to what lands it needs to acquire in order to effectuate the project. …As the submissions of the parties make clear, the necessity and wisdom of using eminent domain to promote economic development are certainly matters of legitimate public debate. This Court’s authority, however, extends only to determining whether the City’s proposed condemnations are for a “public use” within the meaning of the Fifth Amendment to the Federal Constitution. Affirmed in favor of the City.”
• #37: The hyperlink is to the case information and opinion on the Oyez.org website. The photo is of the shoreline at Laguna Beach, Orange County, California. The owners of a beach-front lot (the Nollans) wished to tear down a small house on the lot and replace that structure with a larger house. The California Coastal Commission conditioned the grant of the necessary coastal development permit on the Nollans’ agreeing to allow the public an easement across their property. This easement would have allowed the public to reach certain nearby public beaches more easily. The Nollans challenged the validity of the Coastal Commission’s action. Ultimately, the Supreme Court concluded that the Coastal Commission’s placing the easement condition on the issuance of the permit amounted to an impermissible regulatory taking of the Nollans’ property. In reaching this conclusion, the Court held that the state could not avoid paying compensation to the Nollans by choosing to do by way of the regulatory route what it would have had to pay for if it had followed the formal eminent domain route.
• #38: True. A fixture is an item of personal property that has become attached to or used in conjunction with real property in such a way that it ceases being personal property and becomes part of the real property. False. The ovens and refrigerators would be trade fixtures that Carol took take with her at lease end. The shelving and glass cases, however, may have become fixtures (real property) depending on how they were installed.
• #39: True. The drainage ditch is an example of a utility or environmental easement. True. False. A warranty deed contains covenants of warranty about the title.
• #40: The correct answer is (d).
• #41: The correct answer is (c).
• #42: Opportunity to discuss real property disputes and eminent domain. See the full Kelo decision (and supporting documents) on the website of the U.S. Supreme Court: http://www.supremecourtus.gov/