Cpcu 530 Ch.5

Real property includes land, buildings and other structures attached to the land. Includes trees, fixtures (doors), water and mineral rights and rights to pass over land.

Personal property is any property that is not real. Physical goods are tangible. Copyrights, securities, intellectual property and insurance policies are intangible, main idea is that what gives value isn't physical but an idea that is represented.

Ownership of property includes: right to exclude others from use, rights to pass valid title and requirement to pay taxes and no interfere with others' rights.

An individual need not own property in order to have possession of the property. Possession is the exercise of control. A person possessing property can exclude all others from using property, except the owner.

Gifting is a gratuitous transfer of property from one individual to antoher. Requirements of a bona fide gift 1) donative intent 2) delivery 3) acceptance. A donor can retian an interest in a gift e.x. the donor can transfer property to an irrevocable trust and retain life estate in the trust income. Although the donee must accept the gift there is no requirement for written document. A donee can disclaim a gift which represents the refusal to accept a gift.

Intellectual property includes books, songs, inventions or processes. Intellectual property rights are protected with copyrights and patents. Federal law generally governs these rights. Creator of a new machine or process can protect intellectual property with a patent.

A copyright protects printed works, songs, software and other forms of expression. Extends for 70 years after the author's death.

Fair use is permitted without consent based on: purpose of the use, nature of the work, substantiatiality of the portion of the work used, effect of the use on the value of the work and extent to which the use deprives owner.

Accession represents an addition or increase to existing property. Can be in the form of an animal producing offspring, improvements to property, etc.

Confusion is the intermingling of property owned by different individuals. When property is mixed and unidentifiable, courts must determine any misconduct. If no willful misconduct, parties own property in proportion to their respective interests. E.x. 2 neighbor farmers fences fall down and the animals mix together, who's is who's?

Bailment is temporary possession of property. Taking clothes to dry cleaner, loaning car.

Elements of bailment: transfer of possession (not title). Acceptance of property by bailee, express or implies agreement. Bailee's agreement to return the property is express or implied agreement. Owner is bailor, dry cleaner is bailee.

The bailee's rights depend upon the person benefitting from bailment. Bailee's benefit: bailee's right to use property limited to bailor's contemplated use. Bailor's benefit: bailee's right to use property only to the extent necessary to preserve protect it. Mutual benefit: bailee can use property based on rights specified in agreement.

When express or implied compensation has not been paid by bailor, bailee can assert a lien so bailee has rights to property until bailor pays whats due.

A bailee must take reasonable care of property. Bailee's benefit: must exercise an extraordinary degree of care. Bailor's benefit: slight care is required, liable if damage was foreseeable and it could have been prevented without trouble. Mutual benefit: must exercise reasonable care under the circumstances.

Bailee has legal duty to care for the goods and therefore has an insurable interest. Bailee can obtain insurance on the goods.

Bailee can limit liability for goods in the contract. Limit extends only to ordinary negligence, not willful misconduct.

Bailee has possession of property and therefore cannot transfer title to another. if goods are sold to a third party, bailor can generally recover the goods from the third party.

A bailor has the right to compensation if bailment benefits bailee only or both parties. Bailor can sue bailee for failure to return the proerty at the end of the ailment period. Bailor can sue bailee for damage done to the property.

Bailor's duties: mutual benefit- bailment implies a warranty that property is in good condition, bailor is responsible for damages caused by defects. Bailee's benefit- must notify beilee of known defects.

A bailor who negligently entrusts (entrusts person with something that is dangerous such as a gun) property to an incompetent bailee can be held liable for resulting injuries to third parties.

Fee simple estate is outright ownership. Most complete form of ownership. Owner can leave the property to heirs, can sell the property, lease it or use it.

A life estate is the right to use property for one's lifetime. The length of the life estate can be measured by the tenant's life or any other person. A life estate terminates at death. When a father dies he gives right to son to live in house until son's death at which point house goes to children. As long as there's a measuring life that makes it a life estate, not a complete interest like fee simple.

Joint tenancy represents concurrent ownership. Has rights of survivorship. Property cannot be passed by will. Tenants must own equal share. E.x. if 4 people own a house and one of them dies, that person's 1/4 ownership automatically transfers to the remaining 3 people by operation of law.

Tenancy in common is concurrent ownership that can be used with real or personal property. Does not have rights of survivorship. Tenants can have unequal interests, could be equal to the amount they paid for the property instead of splitting evenly. Tenants need not derive their interests in the same deed from the same grantor. Can leave property to someone else in will.

Cooperative ownership typically involves real property and involves the ownership of the property by a corporation. Cooperative owners purchase stock in the corporation. Owners receive proprietary long-term lease for one apartment. Tenants (stockholders) vote on matters relating to coop. Unlike concurrent ownership, does not permit equal right to occupy entire premises.

Condominium ownership is similar to coop ownership, except owner has a direct property interest in their unit and common areas such as the land and buildings. Owner has a tenants in common interest in the common areas. Owner may mortgage the condo. Owner cannot retain title to a unit and sell their undivided interest in the common area.

Coop owners have secondary interest, while condo owner have primary interest in their real estate.

A contract of sale for real property typically includes the following elements: Written agreement - statute of frauds indicates that real estate sales must be in writing, must be signed by the parties. Essential terms (must be included) - sufficient description of property and price. Nonessential terms (doesn't have to be included) - time of closing, etc, not contained in all contracts.

A deed is used to transfer real property. Must be in writing and must contain language stating that a transfer of property is occurring.

Types of deeds: General warranty deed (if purchasing real estate best type to get)- contains grantor's warranty that title is free of all encumbrances (grantor has unlimited title to property, after person buys land no one else can come after them a with claim to land). Special warranty - contains warranties against encumbrances from the time the grantor took title, title insurance particularly important for the buyer.

Types of deeds: Bargain and sale - lacks any guarantee regarding validity of title, includes no warranties, buyer may seek remedy for losses if there is any encumbrance. Quit claim - transfers only the interest the grantor has and contains no warranties, buyer cannot seek remedy for losses if there's an encumbrance.

Recording a deed gives notice that property is being transferred. Buyer takes deed to local government office. Deed is filed with office, good way of perfecting the interest.

An unrecorded deed is effective against donees and heirs. Not effective against subsequent purchasers of the property without notice of knowledge. E.x. If seller sells property and buyer doesn't record the deed if seller tries to leave property to their son in a will the buyer still has rights to property over the son however if seller sells to someone else the buyer may not have same rights.

A mortgage involves a transfer of land to lender (bank). Mortgage becomes void when debt is paid off therefore bank has no rights to property once debt paid. Under a land contract the seller retains title until a specified portion of the purchase price is paid by the buyer.

A real estate mortgage must be in writing. Must be signed, similar to a deed. An unrecorded mortgage is not valid against subsequent mortgagees, good faith purchasers and creditors with liens.

A mortgagee's (bank) remedy when the motgagor (buyer) defaults on a mortgage payment is foreclosure. If proceeds of sale are insufficient to satisfy remaining loan, mortgagee can obtain a deficiency judgement against the mortgagor. If sale results in excess money, excess is paid to mortgagor.

A mortgagee's interest in the property may be assigned at any time, bank can sell mortgage at any time.

A mortgagor can sell the property or take out a second mortgage. Transactions after recording of mortgage do not affect the mortgagee's rights. E.x. if buyer sells to purchaser and doesn't pay off the loan the bank can come after the buyer still as their rights haven't changed.

A purchaser's rights depend on wording in deed: If purchaser takes property "subject to the mortgage," purchaser not liable for deficiency. If purchaser "assumes mortgage debt," purchaser is liable for any deficiency in mortgage payments.

Subject to mortgage e.x. Bob mortgaged his house with the XYZ bank. The mortgage was appropriately recorded. Bob later sold his house to Sue indicating on the deed that Sue takes the property subject to the mortgage. Therefore XYZ bank will have the same rights against Bob as they had before the sale to Sue.

A trust deed (trust indenture) is a real property secured interest in property held by a trustee. In many states, court proceedings are not necessary to foreclose a trust deed. Protects lender until loan is repaid. Allows for borrowing of large sums. Holder of bond secured by trust deed can sell the bond. Trustee almost acts as a middle man in this transaction. Technically not a negotiable interest even though it is similar. Has three parties: the borrower, the trustee and the beneficiary.

Adverse possession is a chain of ownership by a possessor who does not have title. E.x. homeowner has a shed that a man has been living in and the homeowner knew about it and has never sued him, the man may have ownership through adverse possession.

Under adverse possession, possession must be: Possession must be exclusive by the adverse party, open and obvious, hostile without the owner's consent, and continuous for a long period of time based statue (ex. 20+ years)

Water rights, adverse possession, rights on, above and under the surface of the land, rights to subjacent and lateral support and ownership of fixtures.

Ownership of land includes rights to: items over, under and on surface - crops. Lateral support systems - right to have land supported by adjacent land, e.x. a neighbor digs up their land without notice to others and as a result the land next to them collapses in, the neighbor could be liable for damages to land and building but if notice is provided the neighbor is liab for land but not to any buildings as those aren't land in its natural state and it is duty of building owner to reinforce the building upon notice. Subjacent support systems - earth below. Water rights - surface and underground water. Fixtures - transferred with land when sold, trade fixtures are not transferred.

Fixtures are property installed on land or buildings that become real property (attached door). Fixtures include fire places and doors. Trade fixtures include bakery ovens, cabinets, boilers and dishwashers. If the party attaching the item intended the item to become part of the land, it is a fixture.

A painting hung on a wall is considered personal property, not a fixture. Wallpaper would be considered an improvement to the property.

Incorporeal interests are nonmaterial interests in real property. Easements - use of land for certain purpose, can be created by express words, implication or prescription e.x. implied easement is when someone lives next to someone else and has to use the other person's land to access a road. Profits a prendre - right to enter land and remove something of value (minerals). Seller's restrictions on land use - owner can restrict the use of land to preserve its value.

A license provides permission to use land for a particular purpose, e.x. a person purchases a ticket to amusement park has a license to enter. Does not grant an interest in the land. Without license, trespass would occur. License can be oral, written or implied.

The rental of a hotel room represents the granting of a license by the hotel to the patron.

Zoning is the regulation of construction based on a comprehensive plan. Exclusionary zoning - prohibits additional building or requires high standards. Spot zoning - plan assigns a different use for a small area of land than surrounding area. Special exclusion - building church or school in single family home area.

If a city passes new zoning laws, property that complied with old laws, but not new laws, could receive relief under conforming use.

Eminent domain represents seizure of property by the government. Typically requires a condemnation proceeding. Land must be seized for public use. Government must pay fair compensation for property.

Types of landlord-tenant relationships: Tenancy at will - tenant can occupy property as landlord desires. Estate for years - exists for fixed period, holdover tenant remains on property after lease term expires. Periodic tenancy - has no fixed ending date and an automatic renewal, if a landlord accepts rent from a holdover tenant, a periodic tenancy is implied.

Landlord's primary right is to receive rent when due, and recover the property at the end of the lease term.

Landlord's primary duty is to provide possession of the premises to the tenant. If tenant defaults, landlord has no duty to find a replacement tenant. Tenant abandonment can be treated as anticipatory breach so landlord can sue tenant.

Landlords can evict the tenant for breach of lease. Actual eviction - ends rent obligation. Constructive eviction - tenant is prevented from using substantial part of premises, no heat, no water, pests, ect. If landlord seeks court order for rent not paid, tenant can assert a defense of constructive eviction.

Distraint - landlord's right to peacefully seize tenant's property and sell if at public sale.

If the rented property ha a significant defect, the tenant need not pay rent if: Tenant instructed landlord to fix problem, Landlord did not fix problem within reasonable time, tenant vacated the premises at the end of the reasonable period.

Although tenant does not have to pay rent, they cannot sue for damages.