1. Slides developed by Les Wiletzky Wiletzky and Associates Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. PowerPoint Slides to Accompany CONTEMPORARY BUSINESS AND ONLINE COMMERCE LAW 5 th Edition by Henry R. Cheeseman Chapter 37 Real Property and Landlord- Tenant Relationship

2. 37 - 2Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Real Property The land itself as well as buildings, trees, soil, minerals, timber, plants, and other things permanently affixed to the land: Land Buildings Subsurface Rights Plant Life and Vegetation Fixtures Air Rights

3. 37 - 3Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Estates in Land Ownership rights in real property The bundle of legal rights that the owner has to possess, use, and enjoy the property The type of estate that an owner possesses is determined from the deed, will, lease, or other document that transferred the ownership rights to him or her

4. 37 - 4Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Freehold Estate An estate where the owner has a present possessory interest in the real property Estates in Fee Estates in Fee Fee simple absolute Fee simple defeasible Life Estates Life Estates Estate pour autre vie

5. 37 - 5Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Estates in Fee Fee Simple Absolute Highest form of owner-ship of real property Ownership: Is infinite in duration Has no limitation on inheritability Does not end upon the occurrence or non- occurrence of an event Fee Simple Absolute Highest form of owner-ship of real property Ownership: Is infinite in duration Has no limitation on inheritability Does not end upon the occurrence or non- occurrence of an event Fee Simple Defeasible Grants owner all of the incidents of a fee simple absolute except that it may be taken away if a specified condition occurs or does not occur Fee Simple Defeasible Grants owner all of the incidents of a fee simple absolute except that it may be taken away if a specified condition occurs or does not occur

6. 37 - 6Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Life Estate Interest in property that lasts for the life of a specified person A life estate terminates upon the death of a named person and reverts back to the grantor or his or her estate or other designated person

7. 37 - 7Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Concurrent or Co-ownership When two or more persons own a piece of real property Forms of concurrent ownership: Joint tenancy Tenancy in common Tenancy by the entirety Community property

8. 37 - 8Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Summary: Concurrent Ownership (1 of 2) Form of Ownership Right of SurvivorshipTenant May Unilaterally Transfer His or Her Interest Joint TenancyYes. Deceased tenant’s interest automatically passes to co-tenants. Yes. Tenant may transfer his or her interest without the consent of co-tenants. Transfer severs joint tenancy. Tenancy in Common No. Deceased tenant’s interest passes to his or her estate. Yes. Tenant may transfer his or her interest without the consent of co-tenants. Transfer does not sever tenancy in common.

9. 37 - 9Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Form of Ownership Right of SurvivorshipTenant May Unilaterally Transfer His or Her Interest Tenancy by the Entirety Yes. Deceased tenant’s interest automatically passes to his or her spouse. No. Neither spouse may transfer his or her interest without the other spouse’s consent. Community Property Yes. When a spouse dies the surviving spouse automatically receives one-half of the community property. The other half passes to the heirs of the deceased spouse as directed by a valid will. No. Neither spouse may transfer his or her interest without the other spouse’s consent. Summary: Concurrent Ownership (2 of 2)

10. 37 - 10Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Condominium Common form of ownership in a multiple- dwelling building Purchasers of a condominium: Have title to their individual units Own the common areas as a tenant in common with the other condominium owners Owners may sell or mortgage their units without the permission of the other owners

11. 37 - 11Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Cooperative Form of co-ownership of a multiple- dwelling building A corporation owns the building The residents own shares in the corporation Each cooperative owner then leases a unit in the building from the corporation under a renewable, long-term, proprietary lease

12. 37 - 12Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Future Interest The right to possess property in the future The interest that the grantor retains for him- or herself or a third party Reversion Reversion – a right of possession that returns to the grantor after the expiration of a limited or contingent estate Remainder Remainder – a right of possession that goes to a third party upon the expiration of a limited or contingent estate

13. 37 - 13Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Transfer of Ownership of Real Property: Sale of Real Estate The passing of title from a seller to a buyer for a price conveyance Also called a conveyance Closing Closing – the finalization of a real estate sales transaction that passes title to the property from the seller to the buyer

14. 37 - 14Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Transfer of Ownership of Real Property: Deed A writing that describes a person’s ownership interest in a piece of real property Warranty Deed Quitclaim Deed Grantor Grantor – the party who transfers an ownership interest in real property Grantee Grantee – the party to whom an interest in real property is transferred

15. 37 - 15Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Transfer of Ownership of Real Property: Recording Statute A state statute that requires the mortgage or deed of trust to be recorded in the county recorder’s office of the county in which the real property is located Quiet title action Quiet title action – a party concerned about ownership rights in a parcel of real property can have a court determine the extent of those rights

16. 37 - 16Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Transfer of Ownership of Real Property: Marketable Title (Good Title) Title that is free from any encumbrances or other defects that are not disclosed but would affect the value of the property The three most common ways of assuring marketable title: Attorney’s Opinion Torrens System Title Insurance

17. 37 - 17Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Transfer of Ownership of Real Property: Tax Sale A method of transferring property ownership that involves a lien on property for unpaid property taxes If the lien remains unpaid after a certain amount of time, a tax sale is held to satisfy the lien Any excess proceeds are paid to the taxpayer The buyer receives title to the property

18. 37 - 18Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Transfer of Ownership of Real Property: Gift, Will, or Inheritance Gift Gift A transfer of property from one person to another without exchange of money Will or Inheritance Will or Inheritance If a person dies with a will, his or her property is distributed to the beneficiaries as designated in the will If a person dies without a will, his or her property is distributed to the heirs as stipulated in the state’s intestate statute

19. 37 - 19Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Transfer of Ownership of Real Property: Adverse Possession (1 of 2) Occurs when a person who wrongfully possesses someone else’s real property obtains title to that property if certain statutory requirements are met Property owned by federal and state governments are not subject to adverse possession

20. 37 - 20Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Transfer of Ownership of Real Property: Adverse Possession (2 of 2) To obtain title under adverse possession, the wrongful possession must be: 1. 1. For a statutorily prescribed period of time 2. 2. Open, visible, and notorious 3. 3. Actual and exclusive 4. 4. Continuous and peaceful 5. 5. Hostile and adverse

21. 37 - 21Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Nonpossessory Interests: Easements A given or required right to make limited use of someone else’s land without owning or leasing it Easement Appurtenant Easement Appurtenant – created when the owner of one piece of land is given an easement over an adjacent piece of land Easement in Gross Easement in Gross – authorizes a person who does not own adjacent land the right to use another’s land

22. 37 - 22Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Nonpossessory Interests: License Grants a person the right to enter upon another’s property for a specified and usually short period of time A license does not transfer any interest in the property A license is a personal privilege that may be revoked by the licensor at any time

23. 37 - 23Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Nonpossessory Interests: Profit Grants a person the right to remove something from another’s real property e.g., gravel, minerals, grain, or timber Profit Appurtenant Profit Appurtenant – grants the owner of one piece of land the right to go onto another’s adjacent land and remove things from it Profit in Gross Profit in Gross – authorizes someone who does not own adjacent land the right to go onto another’s property and remove things from it

24. 37 - 24Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Landlord-Tenant Relationship (1 of 2) landlord tenant A relationship created when the owner of a freehold estate (landlord) transfers a right to exclusively and temporarily possess the owner’s property to another (tenant) Nonfreehold Estate Nonfreehold Estate – an estate in which the tenant has a right of possession of the property but not title to the property

25. 37 - 25Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Landlord-Tenant Relationship (2 of 2) Leasehold Leasehold – a tenant’s interest in the property Landlord Landlord – the owner who transfers the leasehold Tenant Tenant – the party to who the leasehold is transferred

26. 37 - 26Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. The Lease A transfer of the right to the possession and use of the real property for a set term in return for certain consideration i.e., the rental agreement between a landlord and a tenant Leases can be either oral or written Statutes of Frauds Most Statutes of Frauds require written leases for periods of time longer than one year

27. 37 - 27Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Types of Tenancy (1 of 2) Type of TenancyDescription Tenancy for YearsContinues for the duration of the lease and then terminates automatically without notice. It does not terminate by the death of either party. Periodic TenancyContinues from payment interval to payment interval. It may be terminated by either party with adequate notice. It does not terminate upon the death of either party.

28. 37 - 28Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Types of Tenancy (2 of 2) Type of TenancyDescription Tenancy at WillContinues at the will of the parties. It may be terminated by either party at any time with adequate notice. It terminates upon the death of either party. Tenancy at Sufferance Arises when a tenant wrongfully occupies real property after the expiration of another tenancy or life estate. It continues until the owner either evicts the tenant or holds the tenant over for another term. It terminates upon the death of the tenant.

29. 37 - 29Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Landlord’s Duties: Possession A lease grants the tenant exclusive possession of the leased premises: (1) for the term of the lease or (2) until the tenant defaults on the obligations under the lease A landlord may not enter leased premises unless the right is specifically reserved in the lease

30. 37 - 30Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Landlord’s Duties: Covenant of Quiet Enjoyment covenant of quiet enjoyment The law implies a covenant of quiet enjoyment in all leases The landlord may not interfere with the tenant’s quiet and peaceful possession, use, and enjoyment of the leased premises Wrongful Eviction Wrongful Eviction – a violation of the covenant of quiet enjoyment

31. 37 - 31Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Landlord’s Duties: Duty to Maintain Leased Premises Building Codes State and local statutes that impose specific standards on property owners to maintain and repair leased premises Building Codes State and local statutes that impose specific standards on property owners to maintain and repair leased premises Implied Warranty of Habitability A warranty that provides that the leased premises must be fit, safe, and suitable for ordinary residential use Implied Warranty of Habitability A warranty that provides that the leased premises must be fit, safe, and suitable for ordinary residential use

32. 37 - 32Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Tenant’s Duties 1.Duty to pay rent 2.Duty not to use leased premises for illegal or nonstipulated purposes 3.Duty not to commit waste 4.Duty not to disturb other tenants

33. 37 - 33Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Transferring Rights to Leased Property Landlords Landlords may sell, gift, devise, or otherwise transfer their interests in the leased property If complete title is transferred, the property is subject to the existing lease tenant’s The tenant’s right to transfer possession of the leased premises to another depends on the terms of the lease Assignment of the lease Sublease

34. 37 - 34Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Assignment of the Lease A transfer by a tenant of his or her rights under a lease to another Assignor Assignor – the party who transfers the rights (original tenant) Assignee Assignee – the party to whom rights have been transferred (new tenant) The assignor remains responsible for his or her obligations under the lease.

35. 37 - 35Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Sublease Occurs when a tenant transfers only some of his or her rights under the lease Sublessor Sublessor – the original tenant in a sublease situation Sublessee Sublessee – the new tenant in a sublease situation No legal relationship is formed between the landlord and the sublessee

36. 37 - 36Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Land Use Regulation Generally, the ownership of property entitles the owner to use that property as the owner wishes Such use is subject to limitations imposed by government regulation Land Use Regulation Land Use Regulation – the collective term for the laws that regulate the possession, ownership, and use of real property

37. 37 - 37Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Zoning Ordinances (1 of 3) Local laws that are adopted by municipalities and local governments to regulate land use within their boundaries Adopted and enforced to protect the health, safety, morals, and general welfare of the community Zoning is the primary form of land use regulation in the United States

38. 37 - 38Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Zoning Ordinances (2 of 3) Zoning ordinances generally: 1.Establish use districts within the municipality (e.g., residential, commercial, or industrial) 2.Restrict the height, size, and location of buildings on a building site 3.Establish aesthetic requirements or limitations for the exterior of buildings

39. 37 - 39Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Zoning Ordinances (3 of 3) Variance An exception that permits a type of building or use in an area that would not otherwise be allowed by a zoning ordinanceVariance Nonconforming Uses Uses and buildings that already exist in the zoned area that are permitted to continue even though they do not fit within new zoning ordinances Nonconforming Uses Uses and buildings that already exist in the zoned area that are permitted to continue even though they do not fit within new zoning ordinances

40. 37 - 40Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Civil Rights Act A federal statute that prohibits racial discrimination in the transfer of real property The Act prohibits private and public discrimination It permits lawsuits to recover damages and obtain injunctions against offending conduct

41. 37 - 41Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Fair Housing Act Federal statute that makes it unlawful for a party to refuse to rent or sell a dwelling to any person on the basis of race, color, national origin, sex, or religion Prohibits discrimination by real estate brokers, mortgage lenders, and advertisers concerning the sale or rental of real property

42. 37 - 42Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Title III of the Americans with Disabilities Act (ADA) ADA A federal statute that prohibits discrimination against disables individuals in employment, public services, public accommodations and services, and telecommunicationsADA Title III of the ADA A title of the ADA that prohibits discrimination on the basis of disability in places of public accommodation operated by private entities Title III of the ADA A title of the ADA that prohibits discrimination on the basis of disability in places of public accommodation operated by private entities

43. 37 - 43Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Compensable Taking of Real Property Eminent Domain The power and process by which the government acquires private property for public use Eminent Domain The power and process by which the government acquires private property for public use Just Compensation Clause A clause of the U.S. Constitution that mandates that the government compensate the property owner (and possibly others) just compensation when the government exercises its power of eminent domain Just Compensation Clause A clause of the U.S. Constitution that mandates that the government compensate the property owner (and possibly others) just compensation when the government exercises its power of eminent domain