Property-4A

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IV. Duties, Rights and remedies PART IV - TRANSFERS OF LAND – Sale of land, Title assurance,

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What does caveat emptor (buyer beware) put a duty to do?

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1. Historically, caveat emptor (buyer beware) a) Even w/this harsh rule, l had (and HAS) a duty to disclose known dangerous conditions which are latent or concealed and are not discoverable by an ordinary inspection of the premises.

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3 exceptions to caveat emptor

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a) Latent defect rule – market can’t work because T can’t find the defect b) Fraudulent concealment by L – market can’t work because L is a cheater c) Furnished house offer for short term lease – had to be fit for use (summer house)

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3. Before the 1960’s, courts thought caveat emptor was _____ – these _____ set the stage for revolutionary cases

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3. Before the 1960’s, courts thought caveat emptor was working – these exceptions set the stage for revolutionary cases

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Implied covenant of quiet enjoyment - Reste Realty Corp v. Cooper – crucial case that changed the law and decided to give Ts a fair deal (from the modern view). Defendant Cooper leased from L lawyer an office building for 5 years. L was officer of corporation that owned building (he was owner w/corporation). L would clean up water that would flood basement on property. L and T made new lease 1 year later to expand the leased property to the entire basement. L dies and interest goes to L1 (Plaintiff). D had a large meeting, building flooded and Plaintiff did nothing. Defendant threatened to leave and she did, quit paying rent. Plaintiff sues\\\\ Who maintains what? How was the covenant of quiet enjoyment breached? What saves defendant?

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1. Defendant maintains covenant of rent and covenant of quiet enjoyment are interdependent (intertwined). Defendant maintains she was constructively evicted (not booted or locked out). 2. The covenant of quiet enjoyment is breached by eviction – the promise to pay rent was dependent on the promise of quiet enjoyment of the premises, therefore you have evicted me. 3. Plaintiff maintains caveat emptor. Defendant knew about the flooding when she signed the new lease and therefore waived her right to complain (be constructively evicted). The only thing that saves Defendant is that L promised to fix the leak 4. Constructive eviction (breach of the implied or express covenant of quiet enjoyment) happens when the T leaves. T must move out w/in a reasonable time from the breach of the quiet enjoyment for the constructive eviction to take place

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Define: Actual eviction – When can it be Total? When can it be Partial? What about JXs? What about Constructive eviction?

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5. Actual eviction – expulsion or exclusion (forced out or locked out) – can be total or partial a) Total – eviction from the entire part of the premises b) Partial – if T is evicted from any portion of the premises (1) Some Jx the T is relieved from all liability of rent even though it is partial eviction. (2) Constructive eviction can be total and it is an open question if it can be partial.

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Ts can get a declaratory judgment that they were constructively evicted before they sign a new lease – Burt v. Seven Grand Corp.a) Constructive eviction is good because?

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6. Ts can get a declaratory judgment that they were constructively evicted before they sign a new lease – Burt v. Seven Grand Corp. a) Constructive eviction is good because (1) Signal to the system that there is a problem (2) Efficient (3) Makes clear to people they have to put up w/the small indignities in life

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Implied warranty of habitability – Slum Housing - Hilder v. St. Peter- T is living in Ls apartment. Plaster falling off walls, window broken, electricity supposed to be provided and not. Here T wins across the board – gets damages. \\\ Does constructive eviction solve the proble? What is implicit in the warranty of habitability and what else is it called? Is the warranty of habitability waivable? How do we punish slumlords?

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C. Implied warranty of habitability – Slum Housing - Hilder v. St. Peter- T is living in Ls apartment. Plaster falling off walls, window broken, electricity supposed to be provided and not. Here T wins across the board – gets damages. 1. Constructive eviction does not solve the problem of slum housing, there is nowhere to go. 2. Implicit in the warranty of habitability is the promise to repair as well probably found in every residential lease (commercial leases, we don’t know). 3. Warranty of habitability is called implied fitness for use in commercial leases 4. Implied warranty of habitability is not waiveable. Even though unfair for richies who want to fix up a rental, must protect the entire population 5. Keep in mind that we should not punish slumlords too hard because we need somebody to do that job (provide low-income housing) a) If the slumlords fix up their places too much, rent will increase and the poor Ts won’t have anywhere to live. (1) Dobie says that legal aid, by getting these Ts punitive damages and zero rent, will contribute to the homeless problem because L will fix place up and drive up rent

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Define: General warranty deed

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1. General warranty deed – warrants against all defects in title

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Define: Special warranty deed –

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2. Special warranty deed – warrants against the grantor’s own acts

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Define: Quitclaim deed –

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3. Quitclaim deed – warrants against nothing. Says “I don’t know what I have, but whatever it is or isn’t, it’s yours”.

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Define: CA statutory (short form) deed – & its 2 limited warranties:

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4. CA statutory (short form) deed – not in the book. Type of special warranty deed. Physically contains no warranties, but understood as having 2 limited warranties a) Limited covenant of seisen b) Limited covenant against encumbrances (1) These are implied just as there is an implied warranty of habitability into every lease.

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Define: Executor’s deed-

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5. Executor’s deed- often the equivalent of a quitclaim deed a) Executor has had limited contact w/the decedent’s affairs 6. Basics a) Sometimes a buyer is powerful enough to demand a general warranty deed (an all-cash buyer, Microsoft, US govt)

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When are Present Covenants – breached?

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Present Covenants – breached at time of conveyance or not at all

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Define: Covenant of seisen –

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1. Covenant of seisen – I own what I purport to convey. I possess it. I am seised of it. a) If you were out of possession, you wouldn’t sign a deed w/this covenant

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Define: Covenant of good right to convey-

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2. Covenant of good right to convey- I have the right to convey what I’m conveying. a) You could still be out of possession and sign deed w/this

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Define: Covenant against encumbrances –

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3. Covenant against encumbrances – I promise there are no encumbrances on B/A

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When are Future Covenants – breached?

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Future Covenants – breached in the future (“when” depends on covenant)

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Define: Covenant of general warranty –

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4. Covenant of general warranty – I promise I will defend your title and that I will pay you for any loss which you sustain by assertion of superior title

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Define: Covenant of quiet enjoyment –

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5. Covenant of quiet enjoyment – I promise you won’t be evicted (actually or constructively)

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Define: Covenant of further assurances –

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6. Covenant of further assurances – I will sign any further documents that are required - rarely asked for, but obvious that it should be.

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Brown v. Lober – MEANING? . Bost bought land but grantor w/held 2/3 of mineral rights. Then Bost conveys to Brown w/a general warranty deed. Brown tries to sell mineral rights to coal company only to find they owned only 1/3 of rights \\\ did Brown have a good cause of action under the covenant of encumberances? Why couldent they sue under future covenants? When would there be eviction?

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Actual or constructive eviction will suffice for a breach of a future covenant. ---Brown v. Lober – Actual or constructive eviction will suffice for a breach of a future covenant. 7. Bost bought land but grantor w/held 2/3 of mineral rights. Then Bost conveys to Brown w/a general warranty deed. Brown tries to sell mineral rights to coal company only to find they owned only 1/3 of rights 8. Present covenants - Brown had a good cause of action under covenant of encumbrances – the encumbrance was the reservation of the mineral right – Bost used general warranty deed, but Brown didn’t sue on that covenant because SOL had run. The SOL had run on all present covenants. 9. Future covenants - couldn’t sue under breach of quiet enjoyment because they hadn’t been evicted yet (no breach) a) Eviction would be if the 2/3 owner began to mine the land. Or if they began mining and the 2/3 owner tried to stop them. – interference w/what they had been promised

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Frimberger v. Anzellotti- Covenant against encumbrances is breached if what?? 10. O subdivides land into 2 parcels which were partially on wetlands. He builds bulkheads to fill in some wetlands to enhance the property. O transfers to sister by quitclaim deed. Sister conveys to P by warranty deed (should have used a special warranty deed). 11. P tries to repair bulkhead and found it was in violation of law, so P sues sister – Cause of action is covenant against encumbrances \\\ what does the majority rule? What are the policy reasons?

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Frimberger v. Anzellotti- Covenant against encumbrances is breached if there is a private encumbrance (easement, mortgage), but is not breached by existence of public land controls (zoning, building codes) 10. O subdivides land into 2 parcels which were partially on wetlands. He builds bulkheads to fill in some wetlands to enhance the property. O transfers to sister by quitclaim deed. Sister conveys to P by warranty deed (should have used a special warranty deed). 11. P tries to repair bulkhead and found it was in violation of law, so P sues sister – Cause of action is covenant against encumbrances 12. Majority rule – violation of a government rule is not w/in the scope of covenant against encumbrances. 13. Policy reasons – Property lawyers are conservative, buyer beware…get a lawyer