1. © 2004 West Legal Studies in Business A Division of Thomson Learning 1 Chapter 25 Land-Use Control and Real Property

2. © 2004 West Legal Studies in Business A Division of Thomson Learning 2 IntroductionIntroduction Property ownership confers certain rights that give the owner the right to possess, control or transfer the property. Property ownership confers certain rights that give the owner the right to possess, control or transfer the property. Property is divided into real and personal property. Real property includes land and everything permanently attached to it. Personal property is both moveable and tangible or intangible (stocks, copyrights). Property is divided into real and personal property. Real property includes land and everything permanently attached to it. Personal property is both moveable and tangible or intangible (stocks, copyrights). Property ownership confers certain rights that give the owner the right to possess, control or transfer the property. Property ownership confers certain rights that give the owner the right to possess, control or transfer the property. Property is divided into real and personal property. Real property includes land and everything permanently attached to it. Personal property is both moveable and tangible or intangible (stocks, copyrights). Property is divided into real and personal property. Real property includes land and everything permanently attached to it. Personal property is both moveable and tangible or intangible (stocks, copyrights).

3. © 2004 West Legal Studies in Business A Division of Thomson Learning 3 § 1: Nature of Real Property Real property is immovable and includes: Real property is immovable and includes:  Land.  Buildings.  Trees and vegetation.  Airspace.  Subsurface (mineral) rights.  Fixtures. Real property is immovable and includes: Real property is immovable and includes:  Land.  Buildings.  Trees and vegetation.  Airspace.  Subsurface (mineral) rights.  Fixtures.

4. © 2004 West Legal Studies in Business A Division of Thomson Learning 4 LandLand Land includes: Land includes:  Soil.  Natural or man-made products attached to the surface.  Water and minerals under the surface.  Airspace above the surface. Land includes: Land includes:  Soil.  Natural or man-made products attached to the surface.  Water and minerals under the surface.  Airspace above the surface.

5. © 2004 West Legal Studies in Business A Division of Thomson Learning 5 Air Space and Subsurface Rights Owner of real property has relatively exclusive rights to: Owner of real property has relatively exclusive rights to:  Air Space above the land; and  Minerals and Soil beneath the land. Ownership of sub-surface rights can be transferred or retained by the owner. Ownership of sub-surface rights can be transferred or retained by the owner. Ownership of airspace very limited due to federal preemption. Ownership of airspace very limited due to federal preemption. Owner of real property has relatively exclusive rights to: Owner of real property has relatively exclusive rights to:  Air Space above the land; and  Minerals and Soil beneath the land. Ownership of sub-surface rights can be transferred or retained by the owner. Ownership of sub-surface rights can be transferred or retained by the owner. Ownership of airspace very limited due to federal preemption. Ownership of airspace very limited due to federal preemption.

6. © 2004 West Legal Studies in Business A Division of Thomson Learning 6 FixturesFixtures A fixture is personal property that becomes permanently affixed to real property: A fixture is personal property that becomes permanently affixed to real property:  Owner’s intent to become a fixture is necessary.  Intent is determined by: »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. Case 25.1: In Re Sand & Sage Farm & Ranch, Inc. (2001). Case 25.1: In Re Sand & Sage Farm & Ranch, Inc. (2001). A fixture is personal property that becomes permanently affixed to real property: A fixture is personal property that becomes permanently affixed to real property:  Owner’s intent to become a fixture is necessary.  Intent is determined by: »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. Case 25.1: In Re Sand & Sage Farm & Ranch, Inc. (2001). Case 25.1: In Re Sand & Sage Farm & Ranch, Inc. (2001).

7. © 2004 West Legal Studies in Business A Division of Thomson Learning 7 Fixtures [2] Trade fixtures: installed for commercial purposes by a tenant. 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. They remain the property of the tenant and can be removed when tenant leaves, repairing any damage caused by removal. Trade fixtures: installed for commercial purposes by a tenant. 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. They remain the property of the tenant and can be removed when tenant leaves, repairing any damage caused by removal.

8. © 2004 West Legal Studies in Business A Division of Thomson Learning 8 § 2: Ownership Interests in Real Property Property ownership is viewed as a “bundle of rights” that may include the: Property ownership is viewed as a “bundle of rights” that may include the:  Right to possess;  Right to sell;  Right to give;  Right to lease; and  Right to destroy. Property ownership is viewed as a “bundle of rights” that may include the: Property ownership is viewed as a “bundle of rights” that may include the:  Right to possess;  Right to sell;  Right to give;  Right to lease; and  Right to destroy.

9. © 2004 West Legal Studies in Business A Division of Thomson Learning 9 Fee Simple (Absolute) 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 the owner’s heirs. 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 the owner’s heirs. A “conveyance” (transfer of real estate) “from A to B” creates a fee simple. A is the Grantor and B is the Grantee. A “conveyance” (transfer of real estate) “from A to B” creates a fee simple. A is the Grantor and B is the Grantee. 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 the owner’s heirs. 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 the owner’s heirs. A “conveyance” (transfer of real estate) “from A to B” creates a fee simple. A is the Grantor and B is the Grantee. A “conveyance” (transfer of real estate) “from A to B” creates a fee simple. A is the Grantor and B is the Grantee.

10. © 2004 West Legal Studies in Business A Division of Thomson Learning 10 Fee Simple Defeasible Fee simple defeasible ownership contains a condition. Example: “To A and his heirs so long as the land is used for charitable purposes.” If the condition is violated, the land “reverts” or returns to the Grantor or her heirs. Fee simple defeasible ownership contains a condition. Example: “To A and his heirs so long as the land is used for charitable purposes.” If the condition is violated, the land “reverts” or returns to the Grantor or her heirs.

11. © 2004 West Legal Studies in Business A Division of Thomson Learning 11 Life Estates 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. 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 reverts to A or his heirs in the same condition, normal wear and tear excepted. During B’s life, she can possess, use, and take the fruits of the estate, but not take from the property itself. When B dies, Blackacre reverts to A or his heirs in the same condition, normal wear and tear excepted. During B’s life, she can possess, use, and take the fruits of the estate, but not take from the property itself. Case 25.2: Meadows v. Belknap (1997). Case 25.2: Meadows v. Belknap (1997).Meadows v. Belknap Meadows v. Belknap 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. 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 reverts to A or his heirs in the same condition, normal wear and tear excepted. During B’s life, she can possess, use, and take the fruits of the estate, but not take from the property itself. When B dies, Blackacre reverts to A or his heirs in the same condition, normal wear and tear excepted. During B’s life, she can possess, use, and take the fruits of the estate, but not take from the property itself. Case 25.2: Meadows v. Belknap (1997). Case 25.2: Meadows v. Belknap (1997).Meadows v. Belknap Meadows v. Belknap

12. © 2004 West Legal Studies in Business A Division of Thomson Learning 12 Reversionary Interest: Grantor retains right to re- possess land when Grantee violates a condition of a fee simple defeasible or the Grantee’s life estate expires. Reversionary Interest: Grantor retains right to re- possess land when Grantee violates a condition of a fee simple defeasible or the Grantee’s life estate expires. Future Interests FSD or Life Estate Grantor Grantee Reversionary Interest

13. © 2004 West Legal Studies in Business A Division of Thomson Learning 13 Future Interests [2] Remainder Interest: Grantor assigns, transfers or sells her future interest to a 3 rd Party who now has a remainder. When condition is violated or Grantee dies, interest passes to 3 rd Party. 3P FSD or Life Estate GrantorGrantee

14. © 2004 West Legal Studies in Business A Division of Thomson Learning 14 Leasehold Estates A real property owner or lessor agrees to convey the right to possess and use the property to a lessee for a certain period of time: A real property owner or lessor agrees to convey the right to possess and use the property to a lessee for a certain period of time:  Tenancy for Years.  Periodic Tenancy.  Tenancy at Will.  Tenancy at Sufferance. A real property owner or lessor agrees to convey the right to possess and use the property to a lessee for a certain period of time: A real property owner or lessor agrees to convey the right to possess and use the property to a lessee for a certain period of time:  Tenancy for Years.  Periodic Tenancy.  Tenancy at Will.  Tenancy at Sufferance.

15. © 2004 West Legal Studies in Business A Division of Thomson Learning 15 Concurrent Ownership Tenancy in common (Fig.1). A and B own an undivided interest in the property. Upon B’s death interest passes to B’s heir, “C”. AB C Fig.1 AB Fig. 2 Joint Tenancy (Fig. 2). A and B own an undivided interest in property but, upon B’s death, B’s interest passes to A, the surviving joint tenant.

16. © 2004 West Legal Studies in Business A Division of Thomson Learning 16 Concurrent Ownership [2] Tenancy by the Entirety (not common today is usually between husband and wife. Tenancy by the Entirety (not common today is usually between husband and wife. Community Property (limited # of states). Community Property (limited # of states).  Property acquired by couple during their marriage is owned as an undivided ½ interest in property (real and personal). Tenancy by the Entirety (not common today is usually between husband and wife. Tenancy by the Entirety (not common today is usually between husband and wife. Community Property (limited # of states). Community Property (limited # of states).  Property acquired by couple during their marriage is owned as an undivided ½ interest in property (real and personal).

17. © 2004 West Legal Studies in Business A Division of Thomson Learning 17 §3: Private Control of Land Use An easement is a right of a person to make limited use of another person's real property without taking anything from the property. 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 of way to go onto another’s real property and take something away (timber, minerals). A profit is the right of way to go onto another’s real property and take something away (timber, minerals). An easement is a right of a person to make limited use of another person's real property without taking anything from the property. 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 of way to go onto another’s real property and take something away (timber, minerals). A profit is the right of way to go onto another’s real property and take something away (timber, minerals).

18. © 2004 West Legal Studies in Business A Division of Thomson Learning 18 Creation of an Easement or Profit Easements or profits can be created by: Easements or profits can be created by:  Deed or Will.  Implication: circumstances imply the creation of an easement.  Necessity.  Prescription: created when use occurs during a statutory period of time without landowner’s consent. Easements or profits can be created by: Easements or profits can be created by:  Deed or Will.  Implication: circumstances imply the creation of an easement.  Necessity.  Prescription: created when use occurs during a statutory period of time without landowner’s consent.

19. © 2004 West Legal Studies in Business A Division of Thomson Learning 19 Termination of an Easement or Profit By deed back to owner of the land burdened by it. By deed back to owner of the land burdened by it. Owner of easement or profit becomes owner of the land burdened with it. Owner of easement or profit becomes owner of the land burdened with it. Abandonment by the owner of the right. Abandonment by the owner of the right. By deed back to owner of the land burdened by it. By deed back to owner of the land burdened by it. Owner of easement or profit becomes owner of the land burdened with it. Owner of easement or profit becomes owner of the land burdened with it. Abandonment by the owner of the right. Abandonment by the owner of the right.

20. © 2004 West Legal Studies in Business A Division of Thomson Learning 20 LicensesLicenses Revocable right of a person to come unto another’s land without removing anything from the land. 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. Personal privilege that arises from the consent of the owner of the land that can be revoked. Revocable right of a person to come unto another’s land without removing anything from the land. 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. Personal privilege that arises from the consent of the owner of the land that can be revoked.

21. © 2004 West Legal Studies in Business A Division of Thomson Learning 21 Restrictive Covenants Private restriction on the use of land is called a restrictive covenant. Private restriction on the use of land is called a restrictive covenant. If the restriction is binding on future purchasers and their heirs, it is said to “run with the land.” If the restriction is binding on future purchasers and their heirs, it is said to “run with the land.” Private restriction on the use of land is called a restrictive covenant. Private restriction on the use of land is called a restrictive covenant. If the restriction is binding on future purchasers and their heirs, it is said to “run with the land.” If the restriction is binding on future purchasers and their heirs, it is said to “run with the land.”

22. © 2004 West Legal Studies in Business A Division of Thomson Learning 22 Covenants Running with The Land A restrictive covenant running with the land (CRWTL) cannot be separated from the land. A restrictive covenant running with the land (CRWTL) cannot be separated from the land. Four requirements must be met: Four requirements must be met:  CRWTL must be written.  Parties must intend covenant to run with the land.  Covenant must touch and concern the land’s use.  Successors must have notice. Restrictive Covenants promoting segregation are illegal. Restrictive Covenants promoting segregation are illegal. A restrictive covenant running with the land (CRWTL) cannot be separated from the land. A restrictive covenant running with the land (CRWTL) cannot be separated from the land. Four requirements must be met: Four requirements must be met:  CRWTL must be written.  Parties must intend covenant to run with the land.  Covenant must touch and concern the land’s use.  Successors must have notice. Restrictive Covenants promoting segregation are illegal. Restrictive Covenants promoting segregation are illegal.

23. © 2004 West Legal Studies in Business A Division of Thomson Learning 23 § 4: Public Control of Land Use Rights in property are not absolute. They are constrained by federal and state laws, e.g., nuisance, tax and environmental laws. Rights in property are not absolute. They are constrained by federal and state laws, e.g., nuisance, tax and environmental laws. The federal government does not engage in direct control of land, unless it is “federally owned land. The federal government does not engage in direct control of land, unless it is “federally owned land. States can regulate land use and development using their police and eminent domain powers. States can regulate land use and development using their police and eminent domain powers. Rights in property are not absolute. They are constrained by federal and state laws, e.g., nuisance, tax and environmental laws. Rights in property are not absolute. They are constrained by federal and state laws, e.g., nuisance, tax and environmental laws. The federal government does not engage in direct control of land, unless it is “federally owned land. The federal government does not engage in direct control of land, unless it is “federally owned land. States can regulate land use and development using their police and eminent domain powers. States can regulate land use and development using their police and eminent domain powers.

24. © 2004 West Legal Studies in Business A Division of Thomson Learning 24 Police Powers A State can regulate the use of land within its borders using its police powers with enabling legislation which authorizes a city or county to regulate the use of land within its geographical borders. A State can regulate the use of land within its borders using its police powers with enabling legislation which authorizes a city or county to regulate the use of land within its geographical borders. Cities and counties regulate land-use in the land-permitting process, but they must have a “general plan” to implement zoning restrictions for the management of private and commercial development. Cities and counties regulate land-use in the land-permitting process, but they must have a “general plan” to implement zoning restrictions for the management of private and commercial development. A State can regulate the use of land within its borders using its police powers with enabling legislation which authorizes a city or county to regulate the use of land within its geographical borders. A State can regulate the use of land within its borders using its police powers with enabling legislation which authorizes a city or county to regulate the use of land within its geographical borders. Cities and counties regulate land-use in the land-permitting process, but they must have a “general plan” to implement zoning restrictions for the management of private and commercial development. Cities and counties regulate land-use in the land-permitting process, but they must have a “general plan” to implement zoning restrictions for the management of private and commercial development.

25. © 2004 West Legal Studies in Business A Division of Thomson Learning 25 Zoning Laws Zoning is the State’s power to control the use of land through legislation without having to compensate the owner, unless the restriction is so severe that it is a “taking” under the 5 th amendment. Zoning is the State’s power to control the use of land through legislation without having to compensate the owner, unless the restriction is so severe that it is a “taking” under the 5 th amendment. The zoning ordinance must be rational in advancing a state interest and must be non- discriminatory. The zoning ordinance must be rational in advancing a state interest and must be non- discriminatory. Zoning is the State’s power to control the use of land through legislation without having to compensate the owner, unless the restriction is so severe that it is a “taking” under the 5 th amendment. Zoning is the State’s power to control the use of land through legislation without having to compensate the owner, unless the restriction is so severe that it is a “taking” under the 5 th amendment. The zoning ordinance must be rational in advancing a state interest and must be non- discriminatory. The zoning ordinance must be rational in advancing a state interest and must be non- discriminatory.

26. © 2004 West Legal Studies in Business A Division of Thomson Learning 26 Use Restrictions Land with “use restrictions” can be zoned for residential, commercial, industrial or agricultural use. Land with “use restrictions” can be zoned for residential, commercial, industrial or agricultural use. Commercial districts are further zoned for light or heavy use. Commercial districts are further zoned for light or heavy use. Land with “use restrictions” can be zoned for residential, commercial, industrial or agricultural use. Land with “use restrictions” can be zoned for residential, commercial, industrial or agricultural use. Commercial districts are further zoned for light or heavy use. Commercial districts are further zoned for light or heavy use.

27. © 2004 West Legal Studies in Business A Division of Thomson Learning 27 Structural Restrictions Land zoned with “structural restrictions” controls details such as minimum floor space, lot-size, building height and parking. Land zoned with “structural restrictions” controls details such as minimum floor space, lot-size, building height and parking. In addition, “set back” restrictions dictate the distance between a building and a street or sidewalk. In addition, “set back” restrictions dictate the distance between a building and a street or sidewalk. Land zoned with “structural restrictions” controls details such as minimum floor space, lot-size, building height and parking. Land zoned with “structural restrictions” controls details such as minimum floor space, lot-size, building height and parking. In addition, “set back” restrictions dictate the distance between a building and a street or sidewalk. In addition, “set back” restrictions dictate the distance between a building and a street or sidewalk.

28. © 2004 West Legal Studies in Business A Division of Thomson Learning 28 VariancesVariances A zoning variance allows property to be used in a way that varies from the zoning restriction. To secure a variance: A zoning variance allows property to be used in a way that varies from the zoning restriction. To secure a variance:  An owner must not be able to realize a reasonable return on the investment;  An owner must have been individually hurt by zoning ordinance;  The variance must not substantially alter the surrounding area. Case 25.3: Richard Roeser Professional Builder, Inc. v. Anne Arundel County (2002). Case 25.3: Richard Roeser Professional Builder, Inc. v. Anne Arundel County (2002). A zoning variance allows property to be used in a way that varies from the zoning restriction. To secure a variance: A zoning variance allows property to be used in a way that varies from the zoning restriction. To secure a variance:  An owner must not be able to realize a reasonable return on the investment;  An owner must have been individually hurt by zoning ordinance;  The variance must not substantially alter the surrounding area. Case 25.3: Richard Roeser Professional Builder, Inc. v. Anne Arundel County (2002). Case 25.3: Richard Roeser Professional Builder, Inc. v. Anne Arundel County (2002).

29. © 2004 West Legal Studies in Business A Division of Thomson Learning 29 Limitations on Police Powers The government’s police powers are limited by the 14 th and 5 th amendments to the United States Constitution. The government’s police powers are limited by the 14 th and 5 th amendments to the United States Constitution. The 14 th amendment requires that any regulation of land must not violate either the due process of equal protection provisions. The 14 th amendment requires that any regulation of land must not violate either the due process of equal protection provisions.  Due Process requires any regulation to have a rational basis reasonably related to health or general welfare. The government’s police powers are limited by the 14 th and 5 th amendments to the United States Constitution. The government’s police powers are limited by the 14 th and 5 th amendments to the United States Constitution. The 14 th amendment requires that any regulation of land must not violate either the due process of equal protection provisions. The 14 th amendment requires that any regulation of land must not violate either the due process of equal protection provisions.  Due Process requires any regulation to have a rational basis reasonably related to health or general welfare.

30. © 2004 West Legal Studies in Business A Division of Thomson Learning 30 Due Process and Equal Protection The 14 th amendment’s equal protection clause prohibits discriminatory land use regulations. The 14 th amendment’s equal protection clause prohibits discriminatory land use regulations.  A zoning ordinance cannot treat different land owners differently unless there is a rational basis for a legitimate health, safety or general welfare concerns. Case 25.4: Shemo v. Mayfield Heights (2000). Case 25.4: Shemo v. Mayfield Heights (2000). The 14 th amendment’s equal protection clause prohibits discriminatory land use regulations. The 14 th amendment’s equal protection clause prohibits discriminatory land use regulations.  A zoning ordinance cannot treat different land owners differently unless there is a rational basis for a legitimate health, safety or general welfare concerns. Case 25.4: Shemo v. Mayfield Heights (2000). Case 25.4: Shemo v. Mayfield Heights (2000).

31. © 2004 West Legal Studies in Business A Division of Thomson Learning 31 Just Compensation Under the 5 th amendment, private property may not be “taken” for “public use” without “just compensation.” Under the 5 th amendment, private property may not be “taken” for “public use” without “just compensation.” Government regulations of private property that deny an owner the ability to use or develop the land for any reasonable income-producing venture results in a “taking” of the land that requires payment. Government regulations of private property that deny an owner the ability to use or develop the land for any reasonable income-producing venture results in a “taking” of the land that requires payment. Case 25.5: Purdie v. Attorney General (1999). Case 25.5: Purdie v. Attorney General (1999). Under the 5 th amendment, private property may not be “taken” for “public use” without “just compensation.” Under the 5 th amendment, private property may not be “taken” for “public use” without “just compensation.” Government regulations of private property that deny an owner the ability to use or develop the land for any reasonable income-producing venture results in a “taking” of the land that requires payment. Government regulations of private property that deny an owner the ability to use or develop the land for any reasonable income-producing venture results in a “taking” of the land that requires payment. Case 25.5: Purdie v. Attorney General (1999). Case 25.5: Purdie v. Attorney General (1999).

32. © 2004 West Legal Studies in Business A Division of Thomson Learning 32 Eminent Domain Government has an inherent power to take property for public use without the consent of the owner. Government has an inherent power to take property for public use without the consent of the owner. Every landowner owns her land subject to a superior right of the state to “condemn” the land and pay fair value, which is usually equally to fair market value. Every landowner owns her land subject to a superior right of the state to “condemn” the land and pay fair value, which is usually equally to fair market value. Government has an inherent power to take property for public use without the consent of the owner. Government has an inherent power to take property for public use without the consent of the owner. Every landowner owns her land subject to a superior right of the state to “condemn” the land and pay fair value, which is usually equally to fair market value. Every landowner owns her land subject to a superior right of the state to “condemn” the land and pay fair value, which is usually equally to fair market value.

33. © 2004 West Legal Studies in Business A Division of Thomson Learning 33 Law on the Web Housing and Urban Development. Housing and Urban Development. Housing and Urban Development Housing and Urban Development Information on the Buying and Selling of Homes. Information on the Buying and Selling of Homes. Information on the Buying and Selling of Homes Information on the Buying and Selling of Homes Legal Research Exercises on the Web. Legal Research Exercises on the Web. Legal Research Exercises on the Web. Legal Research Exercises on the Web. Housing and Urban Development. Housing and Urban Development. Housing and Urban Development Housing and Urban Development Information on the Buying and Selling of Homes. Information on the Buying and Selling of Homes. Information on the Buying and Selling of Homes Information on the Buying and Selling of Homes Legal Research Exercises on the Web. Legal Research Exercises on the Web. Legal Research Exercises on the Web. Legal Research Exercises on the Web.