Property Chapter 48

Property Capable of being acquired, owned, used A legally protected right or interest over which the owner has the ability to exercise dominion. A bundle of rights - that are recognized and enforced by law, and protected under the Constitution. –Property has a unique status, second in importance only to liberty. –No person shall be deprived of life, liberty or property, without due process of law...and just compensation.

Real Property The earth’s crust and all things firmly attached. Immovable Includes subsurface rights, i.e., minerals Includes rights above land, i.e., radio towers Trees, shrubs, perennial vegetation Fixtures - Can it be removed w/o material damage? What is the party’s intent; the purpose of the item?

Personal Property (chattels) Acquired and transferred easily. Intangible - Intellectual property (patents, copyrights);stock; commercial paper (notes) Tangible - Anything that has a physical existence, generally moveable, cars, computers, books, animals, severed trees, crops that must be planted each year, i.e., corn, oats, potatoes

Ten ways to acquire personal property Buy it (Sale of Goods) Create it (knit a sweater) Take it (capture a deer) Trade it Inherit it Receive it as a gift Find it (abandoned or lost property) By accession By divorce By Confusion

By Gift Voluntary transfer without consideration 3 elements needed: –Donor’s present intent to give a gift –Donor must make delivery of the gift constructive delivery –Acceptance Inter vivos –Irrevocable Causa mortis –Contingent upon death –Must die as anticipated –Revocable

Lost, Mislaid or Abandoned Property Lost - unintentionally left. Finder is entitled to the property against everyone except the true owner. –Exception for lost property found in the ground. –Estray statutes Mislaid - Intentionally placed somewhere and accidentally left with no intent to relinquish ownership. Finder acquires no rights. Owner of premises, not finder, has first claim. Abandoned - Intentionally left. Intent to relinquish ownership. First finder entitled to the property. –Unclaimed Property escheats to the state

By Accession The right of the owner to any increase/improvement of the property, whether natural or human made –Owner of cow acquires title by accession to any calves born to the cow Improvements –by thief –by someone in good faith who believed he was an owner

By Confusion The mixing or putting together of property so that it becomes difficult to distinguish who is the owner of their own individual property –Co-mingling of fungible goods (oil, grain) –Accident, Mistake, Agreement, each owner will bear the loss in proportion to his share –By willful or wrongful act, he may lose his interest.

Property Insurance: Insurable Interest Insurable interest - A person has an insurable interest if the insured will derive an economic benefit or advantage from its preservation, or will suffer economic loss or damage from destruction. –Must exist when the loss occurs but not necessarily at the time the policy is issued –Acquired when goods are identified. Persons other than owners can have an insurable interest, i.e, lessees, secured creditors, grantors liable for a mortgage

Subrogation Entitles the insurer, to the extent it has paid for a loss, to any rights of its policy holder to recover from any third party. If a loss is covered by the insured’s own negligence, subrogation does not apply. Not applicable to life insurance and rarely to health insurance Subrogation precludes double recovery for the same loss

Cancellation Exercising the right to rescind, abandon, abrogate or otherwise terminate a contract of insurance. The form and the notice of proper cancellation are determined by provisions in the policy. Both the insurer and insured can cancel. Restrictions on cancellation may apply (statutes, administrative regulations) may require that insurers give proper reasons for cancellation or nonrenewal.

Fire and Casualty Insurance Covers direct fire damage, and damage from smoke chemicals, water Also, policies usually cover wind, hail, and other forces of nature (not hurricanes) Pays insured a specified amount for property loss. Does not indemnify for lost profits, business interruption or other special matters unless there is a rider attached. Friendly Fire/Hostile Fire

Co-Insurance Insured can be fully protected up to a percentage (usually 80%) of the value of the property. Encourages policy holders to insure property for an amount that is near to its full replacement cost. The coinsurance requirement applies only to partial losses. Total losses result in recovery of the face amount of the policy. Recovery = Face Value of Policy X Loss FMV of Property X Co-insurance %

Book Example, p $60,000 (Policy) X $50,000 = 37,500 $100,000 X 80% Insurer pays $37,500

Book, Problem #13 Graham is entitled to collect $36,600. Graham should have carried $96,000 fire insurance if the building was valued at $120,000 and the policy contained an 80% co-insurance clause. Since the property is under insured, the amount recoverable is computed by multiplying the amount of loss ($48,000) by a fraction, the numerator of which is the amount of the policy and the denominator of which is the amount the policy should have been ($72,000/$96,000)

Insurance Defenses Misrepresentation –Must be material Breach of Warranty - a statement, undertaking that appears in policy –Affirmative warranty –Promissory Warranty Nondisclosure

Types of Policies Valued - Policy where the parties specifically agree upon the full value of the property at the time it is issued Open - No agreement as to specific value. Insurer pays FMV.

Binder Agents have authority to make the insurance effective immediately Answer to Problem # 12 - Offer and Acceptance. Yes. Adler is protected by public liability insurance in these circumstances because agents of casualty insurance companies are normally authorized to issue a temporary binder and to cover an insured immediately upon request, without notice to or acceptance by the insurance company of the risk.