© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1 Real Property and Environmental Law Chapter 24 BUSINESS LAW TODAY Essentials 9 th Ed. Roger LeRoy Miller - Institute for University Studies, Arlington, Texas Gaylord A. Jentz - University of Texas at Austin, Emeritus

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2 Learning Objectives  What can a person who holds property in fee simple do with the property?  What are the requirements for acquiring property by adverse possession?  What limitations may be imposed on rights of property owners?  What is a leasehold estate? What types of leasehold estates, or tenancies, can be created when real property is leased?  What are the respective duties of the landlord and tenant concerning the use and maintenance of leased property?

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 3 Nature of Real Property  Real property is immovable and includes: Land & Permanent Buildings. Land & Permanent Buildings. Airspace & Subsurface Rights. Airspace & Subsurface Rights. Plant Life and Vegetation. Plant Life and Vegetation. Subsurface (mineral) rights. Subsurface (mineral) rights. Fixtures.  Fixtures. 

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 4  A fixture is personal property that becomes permanently affixed to real property. Intent that it become a fixture is necessary. Intent that it become a fixture is necessary. Intent is determined by: Intent is determined by: The fact that the property cannot be removed without causing damage to the realty.The fact that the property cannot be removed without causing damage to the realty. The fact that the property is so adapted to the realty that it has become part of the realty.The fact that the property is so adapted to the realty that it has become part of the realty. Fixtures

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 5  Trade fixtures: installed for commercial purposes by a tenant.  They remain the property of the tenant and can be removed when tenant leaves, repairing any damage caused by removal. Trade Fixtures

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 6 Ownership in Fee Simple  The Fee Simple (sometimes called fee simple absolute) gives the owner the greatest aggregation of rights, powers and privileges possible under American law and can assigned to heirs.  A “conveyance” (transfer of real estate) “from A to B” creates a fee simple. A is the Grantor and B is the Grantee.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7  Estate that lasts for the life of some specified individual. “A grants Blackacre to B for B’s life” grants B a life estate in Blackacre.  When B dies, Blackacre returns to A or his heirs or assigns, or a third party in the same condition, normal wear and tear excepted.  Grantor A retains a “future interest” in the property.  During B’s life, she can possess, use, and take the fruits of the estate, but not take from the property itself. Life Estates

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 8  An easement is a right of a person to make limited use of another person's real property without taking anything from the property.  A profit is the right to go onto land in possession of another and take away some part of the land itself or some product of the land.  Property that is benefited by easement/profit carries the the interest with the sale of land. Nonpossessory Interests

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 9 Creation of an Easement or Profit  Easements or profits can be created by: Deed (physical delivery is sufficient). Deed (physical delivery is sufficient). Will (at Grantor’s death). Will (at Grantor’s death). Contract between Grantor and Grantee. Contract between Grantor and Grantee. Implication: circumstances surrounding creation of easement imply its creation. Implication: circumstances surrounding creation of easement imply its creation. Necessity. Necessity. Prescription: easement by adverse possession. Prescription: easement by adverse possession.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 10  By deed back to owner of the land burdened by it.  Owner of easement or profit becomes owner of the land burdened with it.  Abandonment by the owner of the right. Termination of an Easement or Profit

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 11 License  Revocable right of a person to come unto another’s land without removing anything from the land.  Personal privilege that arises from the consent of the owner of the land that can be revoked.  CASE 24.1 Roman Catholic Church of our Lady of Sorrows v. Prince Realty Management, LLC (2008). License to install temporary plywood fence around construction site, does not extend to more permanent structures such as steel piles and beams.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12  Ownership in real property can be transferred by: A written Deed. A written Deed. A Gift. A Gift. A Sale. A Sale. An Inheritance. An Inheritance. Adverse Possession. Adverse Possession. Eminent Domain. Eminent Domain. Transfer of Ownership 

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 13  A Deed is the instrument setting forth the interests in real property being transferred.  Necessary components of a Deed: Names of Grantor and Grantee. Names of Grantor and Grantee. Words evidencing intent to convey. Words evidencing intent to convey. Legally sufficient description of the land. Legally sufficient description of the land. Grantor’s signature. Grantor’s signature. Delivery of the Deed. Delivery of the Deed. Deeds

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 14  Warranty Deed. Special Warranty Deed. Special Warranty Deed. Implied Warranties in New Homes. Implied Warranties in New Homes.  Quitclaim Deed.  Grant Deed.  Sheriff’s Deed. Period of redemption. Period of redemption. Types of Deeds

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 15  Recording a deed (or any interest in real property) puts the public on notice of the new owner’s interest in the land and prevents the previous owner from fraudulently conveying the same interest to another buyer.  Race statute. Pure notice statute. Pure notice statute. Notice-race statute. Notice-race statute. Recording Statutes

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 16  Owner of real property dies, his property is transferred by: Will (testate). Will (testate). Without Will (intestate). Without Will (intestate).  Title is transferred at the time state law so provides in its testate and intestate laws. Will or Inheritance

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 17  One person possesses the property of another for a certain statutory period of time, that person automatically acquires title to the land, just as if there had been a conveyance by deed. Must be: Actual and exclusive. Actual and exclusive. Open, visible and notorious. Open, visible and notorious. Continuous and peaceable. Continuous and peaceable. Hostile and adverse. Hostile and adverse. Adverse Possession

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 18  Rights in property are not absolute. They are constrained by federal and state laws, e.g., nuisance, tax and environmental.  A “Taking” By Eminent Domain: The 5 th amendment gives the government the right to “take” private land for public use with just compensation.  CASE 24.2 Drake v. Walton County (2009). The Drakes reasonably relied on a stabilized drainage system when they purchased property. When the county permanently changed the drainage, a portion of Drake’s property was taken without just compensation. Eminent Domain

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 19 Leasehold Estates  Anyone who rents housing to the public for commercial purposes subjects herself to various state and federal Landlord- Tenant laws.  Owner of the property is the LESSOR and Tenant is LESSEE; the contract is called the LEASE. The property interest is called a leasehold estate.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 20 Tenancy Interests  Tenancy for Years. Created by an express contract. Created by an express contract. Property is leased for a specified period of time. Property is leased for a specified period of time.  Periodic Tenancy. Does not specify how long lease lasts. Does not specify how long lease lasts. But rent paid at certain intervals. But rent paid at certain intervals.  Tenancy at Will. For as long as both agree. For as long as both agree.  Tenancy at Sufferance. Wrongful possession without the right to possess. Wrongful possession without the right to possess.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 21  Lease Agreement can be oral or written (oral may not be enforceable). Lease gives Tenant the temporary right to exclusively possess the property.  Sources of Law: Common Law. Common Law. State and Local Statutes, and State and Local Statutes, and The Uniform Residential Landlord and Tenant Act (URLTA) which has been adopted by 1/4 of the states. The Uniform Residential Landlord and Tenant Act (URLTA) which has been adopted by 1/4 of the states. Landlord-Tenant Relationships

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 22  Trend in the law is to curtail, by contract and real estate law, the immense freedom that Landlords had in the past. Possession. Possession. Using the Premises. Using the Premises. Maintaining the Premises. Maintaining the Premises. Rent. Rent. Rights and Duties

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 23  Landlord has a duty to deliver actual physical possession under URLTA or legal right to possession (“American” rule). Tenant’s right to exclusive possession is only subject to Landlord’s limited right to come unto the property. Tenant’s right to exclusive possession is only subject to Landlord’s limited right to come unto the property. Tenant has a “covenant of quiet enjoyment” by which Landlord promises Tenant’s peace and enjoyment of the property. Tenant has a “covenant of quiet enjoyment” by which Landlord promises Tenant’s peace and enjoyment of the property. Rights and Duties

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 24  Eviction occurs when Landlord: Deprives Tenant of possession of the leased property; or Deprives Tenant of possession of the leased property; or Interferes with this use or enjoyment of the property to the extent that Tenant cannot use or enjoy. Interferes with this use or enjoyment of the property to the extent that Tenant cannot use or enjoy.  Constructive eviction occurs when: Landlord breaches lease or covenant or quiet enjoyment; and Landlord breaches lease or covenant or quiet enjoyment; and Landlord makes it impossible for the Tenant to use and enjoy the property. Landlord makes it impossible for the Tenant to use and enjoy the property. Rights and Duties

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 25  Implied Warranty of Habitability: Landlord must furnish premises in habitable condition.  Landlord is responsible for maintaining common areas such as stairs, parking lots, elevators and swimming pools. Landlord is responsible for maintaining common areas such as stairs, parking lots, elevators and swimming pools. Commercial property -- may still require Tenant to maintain depending on the lease. Commercial property -- may still require Tenant to maintain depending on the lease. Implied Warranty of Habitability

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 26 Implied Warranty of Habitability  To determine whether a breach has occurred, courts consider: Whether Tenant caused damage. Whether Tenant caused damage. How long defect existed and age of building. How long defect existed and age of building. Defects impact on Tenant’s safety and health. Defects impact on Tenant’s safety and health. Whether defect contravenes relevant statutes. Whether defect contravenes relevant statutes.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 27  Rent is Tenant’s payment to the Landlord for the Tenant’s occupancy or use of the Landlord’s real property. Payment based on agreement, custom, state statute, waiver. Payment based on agreement, custom, state statute, waiver.  Security Deposits. A deposit by Tenant which Landlord may retain for non-payment of rent or damage to premises. A deposit by Tenant which Landlord may retain for non-payment of rent or damage to premises. URLTA has specific provisions as to when it may be kept and when it must be returned. URLTA has specific provisions as to when it may be kept and when it must be returned. Rent

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 28  Transferring Landlord's Interest. Landlord may sell any and all of his rights in the real property. Landlord may sell any and all of his rights in the real property. New owner buys “subject to the lease,” if lease is recorded. New owner buys “subject to the lease,” if lease is recorded.  Transferring Tenant’s Interest. Landlord’s consent may or may not be required by statute or the lease itself. Landlord’s consent may or may not be required by statute or the lease itself. Transferring Rights to Leased Property

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 29  Transferring the Tenant’s Interest (cont’d) Assignments: Tenant transfers his entire interest in the lease to a third person. Original Tenant is not released from liability under the lease. Assignments: Tenant transfers his entire interest in the lease to a third person. Original Tenant is not released from liability under the lease. Subleases: Tenant transfers all or part of his interest in the lease for a shorter period of time than the lease. Original Tenant is not relieved of liability under the lease. Subleases: Tenant transfers all or part of his interest in the lease for a shorter period of time than the lease. Original Tenant is not relieved of liability under the lease. Transferring Rights

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 30  The principal sources of environmental law are: Common Law Actions.  Common Law Actions.  State and Local Regulation.  State and Local Regulation.  Federal Regulation.  Federal Regulation.  Environmental Law

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 31  Nuisance. Person liable if they use their property in a manner that unreasonably interferes with others’ rights to use or enjoy their own property. Person liable if they use their property in a manner that unreasonably interferes with others’ rights to use or enjoy their own property.  Negligence and Strict Liability. Business or person alleged failure to use reasonable care toward a party whose injury was foreseeable and, or course, caused by the lack of reasonable care. Business or person alleged failure to use reasonable care toward a party whose injury was foreseeable and, or course, caused by the lack of reasonable care. Common Law Actions

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 32  Federal environmental policy is achieved through federal agencies: Example: Environmental Protection Agency [ (EPA). Example: Environmental Protection Agency [ (EPA). Regulatory agencies must take environmental factors into consideration when making significant decisions. Regulatory agencies must take environmental factors into consideration when making significant decisions. Federal, State, and Local Regulation

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 33 Federal Regulation  National Environmental Policy Act (NEPA). Does not directly deal with pollution control. Does not directly deal with pollution control. Require preparation of an environmental impact statement (EIS) when major federal action in the environment is to be undertaken. Require preparation of an environmental impact statement (EIS) when major federal action in the environment is to be undertaken.  Media Specific Pollution Control Legislation.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 34  An EIS must analyze: The impact of the proposed action on the environment. The impact of the proposed action on the environment. Any adverse effects of the action and alternatives to the action. Any adverse effects of the action and alternatives to the action. Any irreversible effects the action might generate. Any irreversible effects the action might generate. Environmental Impact Statement

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 35  Clean Air Act. This act provides the basis for issuing regulations to control pollution coming primarily from stationary (factories) and mobile (cars) sources of air pollution. This act provides the basis for issuing regulations to control pollution coming primarily from stationary (factories) and mobile (cars) sources of air pollution. It prescribes the use of pollution control equipment that represents the maximum achievable control technology. It prescribes the use of pollution control equipment that represents the maximum achievable control technology. Air Pollution

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 36  Clean Water Act goals: Safe swimming and drinking water. Safe swimming and drinking water. Protection of fish and wildlife (wetlands). Protection of fish and wildlife (wetlands). Elimination of the discharge of pollutants into waterways (navigable waterways). Elimination of the discharge of pollutants into waterways (navigable waterways).  Established national permitting system for regulating discharges from “point sources.”  What about comparable economic costs of power plants?  CASE 24.3 Entergy Corp. v. Riverkeeper, Inc. (2009). EPA has the power to do a cost-benefit analysis to determine whether a plant has the “best technology available for minimizing adverse environmental impact.” Water Pollution

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 37 Water Pollution  Drinking Water. Safe Drinking Water Act of 1974, amended in Safe Drinking Water Act of 1974, amended in  Ocean Dumping. Marine Protection, Research, and Sanctuaries Act of 1972, amended in Establishes a permit program of toxic waste. Marine Protection, Research, and Sanctuaries Act of 1972, amended in Establishes a permit program of toxic waste.  Oil Pollution. Oil Pollution Act of Oil Pollution Act of 1990.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 38  Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). Regulates the use of pest control chemicals in the process of food growth to food packaging, to minimize their presence in foods consumed. Regulates the use of pest control chemicals in the process of food growth to food packaging, to minimize their presence in foods consumed.  Toxic Substances Control Act. Requires anyone planning to use chemicals first determine their effect on human health and the environment. Requires anyone planning to use chemicals first determine their effect on human health and the environment. Require special labeling, limit the use of substance, set production quotas, or prohibit the use of a substance altogether. Require special labeling, limit the use of substance, set production quotas, or prohibit the use of a substance altogether. Toxic Chemicals

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 39  Resource Conservation and Recovery Act. Authorizes the EPA to issue regulations for the monitoring, transporting, storage, treatment, and disposal of hazardous substances. Authorizes the EPA to issue regulations for the monitoring, transporting, storage, treatment, and disposal of hazardous substances. Hazardous Waste Disposal

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 40 CERCLA - Superfund  Designed to ensure the clean-up of hazardous waste sites and to assign liability for the costs of the cleanup operations.  Joint and Several Liability for cleanup costs can be assigned to any potentially responsible party (PRP).