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Module 08
Real and Personal Property
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Learning Objectives
Upon successful completion, the student will be able to:
Explain law of property;
Analyze the concept of ownership of land;
Compare the different forms of ownership;
Describe trusts.
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Law of Property
Oldest part of common law
Concepts from common law developed in England from 12th to 16th
centuries.
Right guaranteed and protected by government
Real Property: immovable (i.e. land, houses)
Personal Property (chattel): moveable (i.e. furniture and clothing)
Contract law is used to make arrangements about the property use.
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Real Property
Land
Includes things under – oil, minerals
Includes things attached – buildings, trees
Property – “legally protected expectation of being able to use a thing
for one’s advantage.”
Owner has a “bundle of legal rights.”
Government regulations may restrict property owner’s land use.
(i.e. Endangered Species Act regarding rare plants and animal; local
zoning rules)
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Transfer Ownership of Land
Deeds
most common way to transfer ownership
quitclaim deed and warranty deed among possibilities
ID original owner, describe land, ID new owner & state that ownership is transferred, possibly
subject to certain conditions
Warranty deeds most often used in business property transactions – safer.
Warrant there are no liens or encumbrances on property
Titles
comes from receipt of valid deed; is means by which owner has legal possession of the
property
“formal right of ownership” – sell, enjoy, give it – control it
Titles are recorded by state officials (usually county)
When property is transferred, usual to obtain title insurance
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Forms of Ownership of Property
Fee Simple – Indefinite time and right to dispose of it; strongest form
of ownership
Up in the air “to the skies”
Down “to the center of the earth”
These rights can be sold separately
Subsurface mineral rights often legally separated
In most countries, mineral rights belong to government

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Forms of Ownership
Tenancy in Common
Each tenant (owner) has undivided interest in property
If one tenant dies, that interest passes to estate/heirs
Joint tenancy
Each tenant has same interest in undivided possession of property
Right of survivorship – if one tenant dies, ownership passes to other
owner
Joint tenants can force an end to joint tenancy by transferring an
interest into a tenancy in common
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Forms of Ownership (2)
Tenancy by the Entirety
Available only to married couples
Used in little more than half of the states
One tenant cannot force an end to it except by divorce
Life Estates
Beneficiary has use of land for life – (cannot ruin it).
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Form of ownership that separates the legal and beneficial ownership
of property
Settlor (grantor) places property into a trust (often through what is
called a deed of trust).
Trustee owns legal title; Beneficiary holds an equitable title to the
property.
Trustee has duty to manage the property for benefit of the
beneficiary.
Business Trusts commonly used for company property
Beneficiaries receive certificates of beneficial ownership.
Can be traded like stocks & bonds
Trusts
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Evolving Property Law: Condominiums
Not seen much before 1960s—but property owners are free to
devise new arrangements.
Fee simple estate applies
Living space in building is owned in fee simple (numerous conditions
attached)
BUT land building sits on, as well as elevators, parking garage &
lobbies, are held in common (for condo owners) by another person
(business)
Most states have statutes to simplify the legal process of modern
living arrangements consistent with traditional property law.
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Servitudes
Servitudes
Certain use limits or obligations on owner of the property
Easements and covenants most important servitudes
Easements
Right to enter land of another or make use of it or take something or restrict
owner from doing certain things
If permanent, it “runs with the land”
Is a “burden” on another’s estate
Use of land without payment for each use
Document that creates easement is much like a deed.
Most homes have easements for utilities.
Popular for solar energy development.
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Adverse Possession
Must be:
Actual – claimant does in fact possess property
Open – possession visible so owner is on notice
Hostile – without consent of owner
Exclusive – not shared with others
Continuous – goes on without major interruption
State laws vary on time required – from 5-20 years. Goal is to keep
property in play.
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Moran v. Sims
Sims owned property surrounded by Morans. Deed first recorded in
1985, but property in the family for decades.
Access to property by driveway across the property bought by
Morans in 1996.
Sims asked the court to grant him an easement.
Trial court held Sims has a prescriptive easement; allowed use of
driveway on Moran’s property. Moran appealed.
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Moran v. Sims (2)
HELD: Affirmed. Elements of adverse possession proven. Use was:
Open and visible: Sims used the driveway since 1950s.
Hostile: Moran did not consent for Sims to use drive.
Claim of Ownership: Sims bought gravel for driveway.
Exclusive: Driveway used by Sims family and those they permitted to
use it.
Peaceful: No evidence of dispute of use of driveway.
Continuous/Uninterrupted for 10 years: Deed recorded in 1985; property
in the family for 50 years.
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Covenants or Covenant Running With the Land
Not actual legal interest in an estate
More like a contract with an estate
Most residential subdivisions have covenants
May “burden” or benefit the land
Tool for developing real estate
Goes with the estate from owner to owner
“Covenant runs with the land”
Covenants
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Thayler v. Hollinger
Hollinger bought a lake and 800 acres around it in 1965. Subdivided
the land around lake – 75 lakeshore lots – sold.
Also built Perimeter Road around the lake. Homeowners association
now owns the road.
Hollinger kept land on the outside of the road. Land has trails that
Hollinger allowed lakeside lot owners to use for hiking and
horseback riding
When lot owners began to drive motorized vehicles (ATVs,
snowmobiles, motorcycles) on trails, Hollinger blocked access.
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Thayler v. Hollinger (2)
Lot owners sued, contending they had an easement to use trails
with motorized vehicles.
Said use was establish by covenants on the property.
District Court Held: Had no right of access.
Lot owners appealed.
Affirmed. Easement for right of way is a servitude (servient
tenement) in favor of another parcel of land (dominant tenement)
tenements. So they could travel over the trails.
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Thayler v. Hollinger (3)
Homeowners claim servitude arises from identified documents.
“Restrictive Covenants for Big Sky Lake,” recorded in 1968.
There, Hollinger granted them right of way for ingress and egress “over roads as
the same have been constructed by the Company.”
Was “applicable to the perimeter road, which shall be the outer boundary of each
tract and subdivision” and to the “middle access of roads.”
Thus connecting the perimeter road to roads leading to each lakeshore lot.
However, Hollinger’s land is outside Perimeter Road. The
1965.
Restrictive Covenants do not provide any clear description of any
roads on the Hollinger’s land, so not included in easements.
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Landlords & Tenants
Rented property is called a leasehold
Landlord has interest of some length
Tenant possesses estate for a fixed period or at will as determined
by landlord
Leased property is assumed at law to have an implied warranty of
habitability.
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Leases
Can be commercial or residential
Must: Identify parties; Describe premises being leased; Say how
long in effect, but need not have specific end date—can be month
by month; Say how much rent is to be paid.
Usually also:
Who pays utilities, taxes, insurance
Where/when rent is paid
Terms of damage deposit
Who is responsible for repairs/maintenance
Subleasing
Termination provision
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Rights/Duties of a Tenant
Right of possession during lease
Can exclude other parties
Landlord must make essential repairs or may have constructive
eviction
May not:
Abuse property
Commit waste
Be a nuisance to neighbors
Engage in illegal activities on property
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Requirements For Landlords
Uniform Landlord and Tenant Act – many states have adopted all or
part
Comply with building/housing codes about health and safety.
Make necessary repairs for habitable condition.
All common areas clean and safe.
Maintain in good working order – electrical, pluming, heating,
ventilating, etc.
Supply running water, reasonable amounts of hot water, heat in
winter, excepted in areas not required by law (such as garage).
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Commercial Leases
Commercial leases often drafted by the lessor’s legal department
Based on state law requirements and experiences with previous
tenants. Courts do not want to settle matters because not covered in
lease.
Tend to be long, detailed, and cover many issues—who changes
light bulbs, who cleans hallways, who cares for parking spaces, etc.,
etc.
Description of leased space is often defined by terms used by the
Building Owners and Mangers Association (BOMA). The recognized
authority in standards for commercial leases
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Nielsen v. Gold’s Gym
Peterson signed lease with Nielsen to lease “premises” in a strip
mall for a gym for 3 years.
Nielsen was still constructing the building at the time of the lease.
Delivered concrete shell to Peterson.
Contractor told Peterson it would cost $168,000 to improve the
building shell for the gym.
Peterson discussed with Nielsen who would pay for the interior
improvements.
Could not reach agreement. Peterson walked away. Nielsen leased
to another party.
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Nielsen v. Gold’s Gym (2)
Nielsen sued for $112,000 for breach of contract & loss for renting
space for less than Peterson had agreed to.
Trial court held lease was unenforceable for lack of agreement of
the nature and extent of the property to be leased.
HELD: Affirmed. Lease is unenforceable for lack of mutual assent of
terms of who will pay for improvement.
Building was a shell when lease was signed.
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Nielson v. Gold’s Gym (3)
No evidence of industry standards of who would be responsible for
payment in this situation.
Costs of improvements would have consumed more than half of the
rent over the 3-year lease.
Payment for improvements is not essential to every commercial
lease agreement. However, here it was an essential part of the
bargain.
Missing term creates an ambiguous lease and no mutual assent by
the parties.
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Public Control of Real Property
Eminent Domain
Government can force sale of property or granting of easement without
consent of owner
Must prove need for a public purpose
5th Amendment requires “just compensation”
May be negotiated or value determined by statutory process
Police Powers
Zoning: Control land use by regulation
Permitted use may change
Change may reduce value; generally no right to compensation for such
loss of value
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RDNT, LLC v. City of Bloomington
RDNT owns assisted care living facility in Bloomington, MN for
elderly and disabled persons. Applied for permit to expand.
Would mean 8% increase in number of staff members. Testimony
conflicted about how much traffic would increase.
When proposal was made to Bloomington Planning Commission
some citizens opposed because of increase in traffic.
Commission recommended denying building permit.
RDNT appealed to district court. It held for RDNT.
Court of Appeals reversed.
RDNT appealed to Supreme Court of Minnesota.
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RDNT, LLC vs. City of Bloomington (2)
ISSUE: Whether City’s permit ordinance is legally sufficient.
City may deny a permit if there are dangers to “the public health or
safety or the general welfare of the area affected or the community
as a whole.”
This permit is not about “capacity issue” but a “livability issue.”
Increase in traffic would injure neighborhood or otherwise harm
public health, safety and welfare. . . .
denial.
Affirmed.
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Torts Against Property
Trespass to Land: Unauthorized intrusion that interferes with
another’s peaceful enjoyment of their property
Knowledge of ownership not relevant
Property owner may not intentionally harm trespasser – but usually no
duty to warn of dangerous conditions on the property
Private Nuisance: interference with use & enjoyment of land
Destruction of crops, causing health risks from pollution, throwing
objects on the land, using the neighboring house for drug deals
Mental peace is important.
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Torts Against Property (2)
Public Nuisance: Interference with right held in common by public
Illegal gambling, pollution, obstruction of a highway
Trespass to Personal Property: Interference with the right of an
owner to the exclusive use and enjoyment of property
Conversion: Unlawful control of another’s personal property
Misappropriation: Invasion of property rights such as trademarks or
trade secrets
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Smith v. Kulig
Kulig owned a building with apartments on second floor.
Street door to apartments locked; only tenants and their guests can
access. On back of building is a fire escape.
Tenants are not to use fire escape unless an emergency.
“No trespassing” signs posted on fire escape.
Smith visited Wolf at his apartment in the building.
Smith went to fire escape; some bolts detached from wall; Smith fell
Trial Court: Dismissed, holding Smith was a trespasser. Appealed.
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Smith v. Kulig (2)
Held: Affirmed. Wrongful death action dismissed with prejudice.
Trespasser is a person who enters or remains on premises without
privilege or consent.
Building contained no trespass signs, as did door leading to and
from fire escape. Ladder to the fire escape had no trespassing sign.
Smith did not have the right to go on the fire escape – there was no
emergency.
him in wanton or willful manner.
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Sowers v. Forest Hills Subdivision
Sowers decided to build a wind turbine to generate electricity on his
residential property
Neighbors not pleased
Turbine would generate noise
Would cause shadow flicker
Ruin their view
Reduce property values
Members of subdivision sued for permanent injunction from
construction of turbine
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Sowers v. Forest Hills Subdivision (2)
Said it was a nuisance
District Court granted injunction.
Sowers appealed.
Several kinds of nuisances:
Nuisance per se: nuisance at all times under any circumstances
Nuisance in fact: nuisance by reasons of circumstances/surroundings
Test: Whether use is a nuisance depends on the reasonableness of
Whether property use is a nuisance to neighbors? Balance
competing interests.
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Sowers v. Forest Hills Subdivision (3)
Turbine was unreasonable and substantial to amount to nuisance
compared to its utility
Activity is substantial if normal persons would regard it as “offensive,
seriously annoying or intolerable”
Means “gravity of harm outweighs the social value of the activity”
HELD: The turbine is a nuisance in fact. Permanent Injunction
issued.
outweigh the utility of the wind turbine.
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Torts Against Property Owners
Is a person harmed on the property a trespasser or an invitee?
Customers are invitees, not trespassers.
What duty of care must property owners take to insure safety on
their property?
In business, “premises liability” is a major issue.
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Premises Liability
May be accidents that result from negligence of the business.
Common are “slip-and-fall” cases & other injuries on business
property.
Duty to keep premises reasonably safe under the circumstances.
Duty to inspect premises for dangers and correct problem or warn
invitees.
However, if a danger is obvious, people have duty to protect

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Premises Liability (2)
Not providing sufficient security to prevent crimes from occurring on
the property may produce liability
Problems are especially in high crime areas
Issue: Owner “knew or should of known” of problem in the area
Issue: Did owner act reasonably to protect patrons?
Ways owners may protect themselves: lighting, safety patrols, warnings
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Troupe v. Burlington Coat Factory Warehouse
Troupe went to baby section of Burlington store.
Slipped and fell on a berry in the aisle.
Knee and back injuries.
Store aisles cleaned every morning.
Employees picked up anything they noticed.
Troupe sued, contending Burlington was negligent.
Not inspecting floor in baby areas
More often needed because kids spill food and drinks
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Troupe v. Burlington Coat Factory Warehouse (2)
Trial Court: Held for Burlington.
No evidence of notice by Burlington of the berry. Court rejected
claim that the “mode-of-operation” rule be applied.
Troupe appealed.
Affirmed. Duty of care to invitees by business owners is reasonable
due care to provide a safe environment and “to discover and
eliminate dangerous conditions.”
had no actual or constructive notice or reasonable chance to
discover.
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Troupe v. Burlington Coat Factory Warehouse (3)
No proof Burlington employees knew about the berry. Employees
regularly looked for problems.
No eyewitness or characteristics of berry; no indication of how long it
had been there; no other berries lurking in the vicinity.
Mode-of-operation rule: Special application of foreseeability
Not a general rule of premises liability never applied to customers
independently handling shopping.
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Erichsen v. No-Frills Supermarkets of Omaha
Erichsen went grocery shopping at No-Frills.
When she returned to her car, assaulted, beaten, robbed, dragged
over a mile hanging from the car of assailant. Suffered serious
injuries.
Sued No-Frills and owner of shopping center for negligently failing to
warn of criminal activity.
Said defendants failed to protect her from foreseeable criminal
activities (10 criminal events within 16-months).
Trial court held defendants did not violate duty of care to Erichsen.
She appealed.
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Erichsen v. No-Frills Supermarkets of Omaha (2)
HELD: Remanded to trial court for further proceedings.
Property owner is not an insurer of safety until he knows that
criminal acts are occurring or could occur.
If owner has “reason to know, from past experience” that there is
danger, he has a duty to take precautions, e.g. warnings, security
patrols.
One incident does not constitute notice of criminal activities that
were foreseeable. However, here there were prior criminal events in
the area.
Erichsen’s evidence is sufficient to go to trial against defendant.
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THE END
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