Property Law

Property Law

There are two types of property: real property and Personal Property. Most of the legal concepts and rules associated with both types of property are derived from English Common Law. Modern law has incorporated many of these concepts and rules into statutes, which define the types and rights of ownership in real and personal property.

Personal property, also referred to as movable property, is anything other than land that can be the subject of ownership, including stocks, money, notes, Patents, and copyrights, as well as intangible property.

Real property is land and ordinarily anything erected on, growing on, or affixed to it, including buildings and crops. The term is also used to declare any rights that issue from the ownership of land. The terms real estate and real property generally refer to land. The term land, in its general usage, includes not only the face of the earth but everything of a permanent nature over or under it, including minerals, oil, and gases. In modern usage, the word premises has come to mean the land itself or the land with all structures attached. Residential buildings and yards are commonly referred to as premises.

The difference between real property and personal property is ordinarily easily recognizable. The character of the property, however, can be altered. Property that is initially personal in nature becomes part of realty by being annexed to it, such as when rails are made into a fence on land.

In certain cases, however, the intention or agreement of the parties determines whether property that is annexed retains its character as personal property. A Landlord and Tenant might agree that the new lighting fixture the tenant attaches to the ceiling of her dwelling remains the tenant's property after the expiration of the lease.

Property may be further classified as either private or public. Private property is that which belongs to one or more persons. Public property is owned by a country, state, or political subdivision, such as a Municipal Corporation or a school district.

Personal Property

Personal property can be divided into two major categories: tangible and intangible. Tangible property includes such items as animals, merchandise, and jewelry. Intangible property includes such rights as stock, bonds, patents, and copyrights.

Possession Possession is a property interest under which an individual to the exclusion of all others is able to exercise power over something. It is a basic property right that entitles the possessor to continue peaceful possession against everyone else except someone with a superior right. It also gives the possessor the right to recover personal property (often called chattel) that has been wrongfully taken and the right to recover damages against wrongdoers.

To have possession, an individual must have a degree of actual control over the object, coupled with an intent to possess the object and exclude others from possessing it. The law recognizes two types of possession: actual and constructive.

Actual possession exists when an individual knowingly has direct physical control over an object at a given time. For example, an individual wearing a particular piece of jewelry has actual possession of it. Constructive possession is the power and intent of an individual to control a particular item, even though it is not physically in that person's control. For example, an individual who has the key to a bank safe-deposit box, which contains a piece of jewelry that she owns, is said to be in constructive possession of the jewelry.

Lost, Mislaid, and Abandoned Property Personal property is considered to be lost if the owner has involuntarily parted with it and does not know its location. Mislaid property is that which an owner intentionally places somewhere with the idea that he will eventually be able to find it again but subsequently forgets where it has been placed. Abandoned property is property to which the owner has intentionally relinquished all rights.

Lost or mislaid property continues to be owned by the person who lost or mislaid it. When a person finds lost goods, the finder is entitled to possession against everyone with the exception of the true owner.

The finder of lost articles on land belonging to someone else is entitled to possession against everyone but the true owner. However, if the finder of the misplaced goods is guilty of Trespass, she has no right to possess the goods. The owner of the place where an article is mislaid has a right to the article against everyone else but the true owner. Abandoned property can be possessed and owned by the first person who exercises control over it with an intent to claim it as his own. In any event, between the finder of a lost, mislaid, or abandoned article and the owner of the place where it is found, the law applies whatever rule will most likely result in the return of the article to its rightful owner.

Ordinarily when articles are found by an employee during and within the scope of her employment, they are awarded to the employer rather than to the employee who found them.

Treasure trove is any gold or silver in coin, plate, or bullion that is hidden by an unknown owner in the earth or other private place for an extended period. The property is not considered treasure trove unless the identity of the owner cannot be determined. Under early common law, the finder of a treasure trove took title to it against everyone but the true owner. The U.S. law governing treasure trove has been merged, for the most part, into the law governing lost property. In the absence of a contrary statutory provision, the title to treasure trove belongs to the finder against all others with the exception of the true owner. If there is a controversy as to ownership between the true owner and the state, the owner is entitled to the treasure trove.

Confusion and Accession Confusion and Accession govern the acquisition of, or loss of title to, personal property by virtue of its being blended with, altered by, improved by, or commingled with the property of others. In confusion, the personal property of several different owners is commingled so that it cannot be separated and returned to its rightful owner, but the property retains its original characteristics. Any fungible (interchangeable) goods, such as grain or produce, can be the subject of confusion.

In accession, the personal property of one owner is physically integrated with the property of another so that it becomes a constituent part of it, losing any separate identity. Accession can make the personal property of one owner become substantially more valuable chattel as a result of the work of another person. This occurs when the personal property becomes an entirely new chattel, such as when grapes are made into wine or timber is made into furniture.

Subject to the doctrine of accession, personal property can become real property through its transformation into a fixture. A fixture is a movable item that was originally personal property but has become attached to, and associated with, the land and therefore is considered a part of the real property. For example, a chandelier mounted on the ceiling of a house becomes a fixture.

Bailments A Bailment is the rightful temporary possession of goods by an individual other than the true owner. The individual who entrusts his property into the hands of another is called the bailor. The person who holds the property is called the bailee. Ordinarily, a bailment is made for a designated purpose upon which the parties have agreed. For example, when a person pawns a diamond ring, she is the bailor and the pawnshop operator is the bailee. The pawnshop owner holds the ring for an agreed period as security on the loan to the bailor. The bailor is entitled to recover possession of the ring by paying back the loan within the time period. If the bailor fails to pay back the loan in time, the bailee gains ownership of the ring and may sell it.

A bailment differs from a sale, which is an intentional transfer of ownership of personal property in exchange for something of value, because a bailment involves only a transfer of possession or custody, not ownership.

Bona Fide Purchasers The basic common-law principle is that an individual cannot pass better title than she has and a buyer can acquire no better title than that of the seller. Because a thief does not have a title in stolen goods, a person who purchases from the thief does not acquire title.

A bona fide purchaser is an individual who has bought property for value with no notice of any defects in the seller's title. If a seller indicates to a buyer that she has ownership or the authority to sell a particular item, the seller is estopped (prevented) from denying such representations if the buyer resells the property to a bona fide purchaser for value without notice of the true owner's rights. At common law, such an Estoppel did not apply when an owner brought an item for services or repairs to a dealer and the dealer wrongfully sold the chattel. The bona fide purchaser, however, was subsequently protected under such circumstances by the Uniform Commercial Code, which was adopted in all states.

A buyer who induces a sale through fraudulent representations acquires a Voidable title from the seller. A voidable title may be vacated at the seller's option, upon discovery of the buyer's Fraud. The seller has the authority to transfer good title to a bona fide purchaser for value without notice of the outstanding Equity.The voidable title rule is only applicable in situations where the owner is induced to part with title, not merely with possession, as a result of fraud or deception.

Real Property

In the United States, every state has exclusive jurisdiction over the land within its borders. Each state has the power to determine the form and effect of a transfer of real property within its borders. Modern statutes have eliminated much traditional concern over the proper conveyancing of real property. In modern real estate law, real property can be conveyed by a deed, with the intention of the person conveying the property, the grantor, that the deed take effect as a conveyance. The deed must be recorded to give notice as to who legally holds title to the property.

Estates in Real Property

In real property, an estate is the degree, nature, and extent of an individual's ownership in real estate. Several types of estates govern interests in real property. These interests include freehold estates, nonfreehold estates, concurrent estates, specialty estates, future interests, and incorporeal interests.

Freehold Estate A freehold estate is an estate in real property that is of uncertain duration. An individual who is in possession of a freehold estate has seisin, which means the right to immediate possession of the land. The two basic types of freehold estates in the United States are the fee simple absolute and the life estate. The fee simple absolute is inheritable; the life estate is not.

A fee simple absolute is the most extensive interest in real property that an individual can possess because it is limited completely to the individual and his heirs, assigns forever, and is not subject to any limitations or conditions. The person who holds real property in fee simple absolute can do whatever he wants with it, such as grow crops, remove trees, build on it, sell it, or dispose of it by will. The law views this type of estate as perpetual. Upon the death of the owner, if no provision has been made for its distribution, the owner's heirs will automatically inherit the land.

A life estate is an interest in property that does not amount to ownership because it is limited by a term of life, either of the individual in whom the right is vested or some other person, or it lasts until the occurrence or nonoccurrence of an uncertain event. A life estate pur autre vie is an estate that the grantee holds for the life span of another person. For example, the grantor conveys the property "to grantee for the life of A."

A life estate is usually created by deed but can be created by a lease. No special language is required provided the grantor's intent to create such an estate is clear. The grantee of a life estate is called the life tenant.

A life tenant can use the land, take any crops from it, and dispose of his interest to another person. The life tenant cannot do anything that would injure the property or cause waste. Waste is the harmful or destructive use of real property by an individual who is in rightful possession of the property.

The life tenant has the right to exclusive possession subject to the rights of the grantor to enter the property to determine whether waste has been committed, collect any rent that is due, or make any necessary repairs.

A life estate is alienable; therefore, the life tenant can convey her estate. The grantee of a life tenant would thereby be given an estate pur autre vie because the death of the life tenant would extinguish the grantee's interest in the land. The life tenant is unable, however, to convey an estate that is greater than her own.

Nonfreehold Estates Nonfreehold estates are property interests of limited duration. They include tenancy for years, a tenancy at will, and a tenancy at sufferance. This type of estate arises in a landlord and tenant relationship. In such a relationship, a landlord leases land or premises to a tenant for a specific period, subject to various conditions, ordinarily in exchange for the payment of rent. Nonfreehold estates are not inheritable under the common law but are frequently assignable.

A tenancy for years must be of a definite duration; that is, it must have a definite beginning and a definite ending. The most common example of a tenancy for years is the arrangement existing between a landlord and a tenant, where property is leased or rented for a specific amount of time.

A tenancy from year to year, also called tenancy from period to period, is of indefinite duration. The lease period is for a definite term that is renewed automatically if neither party signifies an intention to terminate the tenancy. This is a common arrangement for leasing business office space or for renting a house or apartment.

A tenancy at will is a rental relationship between two parties that is of indefinite duration because either party may end the relationship at any time. It can be created either by agreement or by failure to effectively create a tenancy for years. A tenancy at will is not assignable and is categorized as the lowest type of chattel interest in land.

A tenancy at sufferance is an estate that ordinarily arises when a tenant for years or a tenant from period to period retains possession of the premises without the landlord's consent. This type of interest is regarded as wrongful possession. In this type of estate, the tenant is essentially a trespasser except that her original entry onto the property was not wrongful. If the landlord consents, a tenant at sufferance may be transformed into a tenant from period to period, once the landlord accepts rent.

Concurrent Estates A concurrent estate exists when property is owned or possessed by two or more individuals simultaneously. The three basic types are Joint Tenancy, Tenancy by the Entirety, and Tenancy in Common.

Joint tenancy is a type of concurrent relationship whereby property is acquired by two or more persons at the same time and by the same instrument. A common example is the purchase of property, such as a house, by two individuals. The deed conveys title to "A and B in fee absolute as joint tenants." The main feature of a joint tenancy is the Right of Survivorship.Ifany one of the joint tenants dies, the remainder goes to the survivors, and the entire estate goes to the last survivor.

A tenancy by the entirety is a form of joint tenancy arising between a Husband and Wife, whereby each spouse owns the undivided whole of the property, with the right of survivorship. It is distinguishable from a joint tenancy in that neither party can voluntarily dispose of his interest in the property.

A tenancy in common is a form of concurrent ownership in which two or more individuals possess property simultaneously. The individuals do not own an undivided interest in the property, but rather each individual has a definable share of the property. One of the tenants may have a larger share of property than the others. There is no right of survivorship, and each tenant has the right to dispose of his share by deed or will.

Specialty Estates Specialty estates are property interests in Condominiums and Cooperatives. Condominium ownership, which was introduced in the United States in 1961 and grew in popularity, allows separate ownership of individual apartments or units in a multiunit building. The purchaser becomes the owner of a particular unit and of a proportionate share in the common elements and facilities.

In cooperative ownership, the title to a multiunit building usually is vested in a corporation. The purchaser of an apartment in the building buys stock in the corporation, receiving a stock certificate and a lease to the apartment. As a stockholder, each cooperative member has an ownership interest in the corporation, which owns all the units and common areas. Each tenant pays to the corporation a fixed rent, which is applied to a single building mortgage and a real estate tax bill for the entire building, as well as to insurance premiums and maintenance costs.

Future Interests Future interests in real property are property rights that are not yet in existence. The privilege of possession will come into being at a designated future time. There are five basic kinds of future interests: the reversion, possibility of reverter, right of reentry for condition broken (also known as power of termination), executory interest, and remainder.

A remainder is a good example of a future interest. Remainders are subdivided into two principal categories: contingent remainders and vested remainders. A contingent remainder is based on something happening in the future. For example, Tom owns Blackacre in fee simple. While Bob and Jane are alive, Tom conveys Blackacre to Bob for life, with a remainder to the heirs of Jane. The heirs of Jane are not yet known, so they have a contingent remainder.

A vested remainder is a future interest to an ascertained person, with the certainty or possibility of becoming a present interest subject only to the expiration of the preceding property interests. If Tom owns Blackacre in fee simple and conveys Blackacre to Bob for life and then to Jane in fee simple, Jane has a vested remainder in fee that becomes a present interest upon the death of Bob. She simply has to wait for Bob's death before assuming a present interest in Blackacre.

Incorporeal Interests Incorporeal interests in real property are those that cannot be possessed physically because they consist of rights of a particular user or authority to enforce various agreements as to use. They include easements, covenants, equitable servitudes, and licenses.

Easements are rights to use the property of another for particular purposes. A common type of easement in current use is the affirmative grant to a telephone company to run its line across the property of a private landowner. Easements also are used for public objectives, such as to preserve open space and conserve land. For example, an easement might preclude someone from building on a parcel of land, which would leave such property open, thereby preserving a park for the public.

Possession

Possession is a property right or interest through which one can exercise dominion or control over something to the exclusion of all others. The owner of real property has the right to exclusive possession of her land, which includes the airspace above and the space below the surface within the exterior boundaries of the property.

An owner of real property is not entitled to possess all space above her land outward to infinity but has the right to be free from those intrusions into the space that would interfere with the reasonable occupation and Quiet Enjoyment of the surface. A landowner, therefore, owns as much of the space above the ground as he can possess or use in connection with the land.

Possession of property adverse to the rights of the true owner results in acquisition of title by the possessor under the doctrine of Adverse Possession. The doctrine is based upon statutes that limit the time for recovery of property, thereby operating as a bar to one's right to recover property that has been held adversely by another for a specified length of time. For example, if A builds a fence two feet inside B's property and B fails to take legal action to have the fence removed during the specified time period, A will acquire title to the property that the fence encroached.

Eminent Domain and Zoning

Governments have the right to acquire privately owned land through the exercise of the power of Eminent Domain. Eminent domain is the right or power of a unit of government or a designated private individual to take private property for public use following the payment of a fair amount of money to the owner of the property. The Fifth Amendment to the U.S. Constitution states, "nor shall private property be taken for public use, without just compensation." The theory behind eminent domain is that the local government can exercise such power to promote the General Welfare in areas of public concern, such as health, safety, or morals.

Government may control how real property is used. Zoning is the regulation and restriction of real property by a local government. The most common form of land use regulation, zoning involves the division of territory based on the character of land and structures and their fitness for particular uses. Municipalities use zoning to control and direct the development of property within their borders, according to present and potential uses of the property. Consideration is given to the conservation of property value and the most appropriate use of the land.

Further readings

Hylton, J. Gordon, et al. 2003. Property Law and the Public Interest: Cases and Materials. 2d ed. Newark, N.J.: Lexis-Nexis.

Singer, Joseph William. 2002. Property Law: Rules, Policies and Practices. 3d ed. New York: Aspen Law & Business.

Sprankling, John G. 2000. Understanding Property Law. New York: Lexis.

Cross-references

Abandonment; Commingling; Land-Use Control; Recording of Land Titles; Registration of Land Titles; Sales Law; Scope of Employment; Title Insurance; Title Search.