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1
whole or in part.
Real Property and
Landlord-Tenant Law
responsibility to pay compensation when condemning private land for public use.
This chapter also examines the landlord-tenant relationship, briefly discussing the rights and responsibilities
of the landlord and tenant in negotiating a lease, in using and maintaining the leased property, in paying and
collecting rent, and in transferring interests in the property.
2 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
B. AIRSPACE AND SUBSURFACE RIGHTS
Significant limitations on air or subsurface rights normally have to be indicated on the deed.
1. Airspace Rights
Generally, plane flights do not violate owners’ rights, but strung wires, leaning buildings, and pro-
rights are absolutely liable if their excavation causes the surface to subside.
C. PLANT LIFE AND VEGETATION
When land with growing crops is sold, the sale includes the crops, unless otherwise specified. Crops
sold by themselves are goods (and the sale is covered by the UCC [UCC 2–107(2)]).
condition. The rights that accompany a fee simple absolute include the right to use the land for whatever
purpose the owner sees fit (but not to unreasonably interfere with others’ use of their land).
ADDITIONAL BACKGROUND—
or clothes or automobiles.
Many contracts involving the lease or sale of land use the terms “property,” “land,” and “premises”
interchangeably but these terms are distinguishable. “Property” refers to both the land and the premises.
“Land,” by contrast, is generally used to refer to the land itself as well as any mineral deposits or vegetation
CHAPTER 29: REAL PROPERTY AND LANDLORD-TENANT LAW 3
whole or in part.
C. CONCURRENT OWNERSHIP
Concurrent owners include tenants in common, joint tenants, tenants by the entirety, and community
property owners.
1. Tenancy in Common
a. Right of Survivorship
A deceased joint tenant’s interest passes to the surviving joint tenant or tenants. The
surviving joint tenant or tenants acquires a deceased tenant’s interest—instead of the interest
passing to the deceased tenant’s heirs.
separately his or her interest during his or her life.
4. Community Property
Only some states allow property to be owned as community property. If property is held as
community property, each spouse technically owns an undivided one-half interest in it.
Both the joint tenancy and tenancy by the entirety require that certain preconditions exist before a valid
tenancy can be said to exist. First, the owners of the estate must have both received their interests at the
same time (unity of time). Second, the owners of the estate must both draw their title from the same deed or
document (unity of title). Third, the owners of the estate must have equal interests in the land (unity of
interest). Fourth, the owners must have an unrestricted right to use the entire property (unity of possession). A
4 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
whole or in part.
2. Periodic Tenancy
A periodic tenancy is created by a lease that does not specify how long it is to last but does specify
that rent is to be paid at certain intervals. Some of the incidents of a periodic tenancy are
discussed—that, at the end of a period, the tenancy is automatically renewed, termination requires
4. Tenancy at Sufferance
A tenancy at sufferance is the possession of land without right, created when another tenancy ends
and the tenant remains in possession without the owner’s consent.
E. NONPOSSESSORY INTERESTS
2. Easement or Profit in Gross
An easement or profit in gross does not depend on the proximity of property—it requires the exis-
tence of only one parcel of land, which must be owned by someone other than the owner of the
easement or profit in gross.
4. Termination of an Easement or Profit
There are three methods of termination: (1) deed an easement or profit to the owner of the land
burdened by it; (2) abandon it and evidence an intent to relinquish the right to it; or (3) deed the
burdened land to the owner of the easement or profit. Nonuse is not enough unless it is
accompanied by an overt act showing intent to abandon.
whole or in part.
III. Transfer of Ownership
• A contract may be made contingent on the buyer obtaining financing at or below a certain rate of
interest, or selling other property, or obtaining a survey and title insurance. A contract may be
contingent on the property passing an inspection for defects and insect infestation.
1. Closing Date and Escrow
ADDITIONAL BACKGROUND—
Title Insurance
quality of title to the land itself. A property owner could file an action against the title insurance company if
some defect that was not disclosed in the title insurance policy rendered title unmarketable, but that very
same property owner would have no right to proceed against the title insurance company simply because its
investigation revealed that there are defects in the title.
company with the option of paying the claim (up to the full amount of the policy—which is generally the
purchase price of the property) or litigating the claim. The policy itself remains in force only for as long as the
insured continues to own the particular property. Subsequent purchasers of the land must purchase their own
policies.
whole or in part.
fit for human habitation (in reasonable working order and of reasonably sound construction). In a
few states, a later buyer can recover from the original builder under this warranty.
CASE SYNOPSIS—
Case 29.1: Stambovsky v. Ackley
Helen Ackley believed that her house in Nyack, New York, was haunted, and promoted and profited from
so had an obligation to disclose it. Her failure to do so amounted to an unfair advantage, and thus she could
not enforce the contract.
..................................................................................................................................................
ANSWER TO “THE ETHICAL DIMENSION”
QUESTION IN CASE 29.1
have known—would potentially impact Stambovsky’s decision to purchase the house. Ethically, a party
should disclose all material facts to the other party in negotiating contracts. [This answer could go either way
depending on the ethical models and theories discussed in class.].
whole or in part.
ANSWER TO “THE LEGAL ENVIRONMENT DIMENSION”
QUESTION IN CASE 29.1
Why is applying the strict rule of caveat emptor inappropriate in this case? How would applying
this doctrine increase costs for the purchaser? The court ruled that applying the rule of caveat emptor
ENHANCING YOUR LECTURE—
POTENTIAL PROBLEMS
WHEN REAL ESTATE IS ADVERTISED ONLINE
misrepresentations? Such questions are likely to arise in the future as more and more people use the Internet
to search for properties.
STATE LICENSING STATUTES AND ADVERTISING
Often, a state agency, such as a real estate commission, is in charge of granting licenses and enforcing the
laws and regulations governing real estate professionals.
Although some states have rules regarding the advertising of real property, these regulations usually do
not specifically address Internet advertising, which necessarily reaches consumers beyond the state’s
8 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
whole or in part.
damages or cancel the contract, however, he or she will have to sue the agent for fraud. At this point,
jurisdiction problems may arise.
If the real estate agent and the buyer are located in different states and the Internet ad was the agents
only contact with the buyer’s state, the buyer may have to travel to the agent’s state to file the suit. Courts
depending on the state where they live.
FOR CRITICAL ANALYSIS
Do your students think that the federal government should regulate the advertising of real
c. Telco Communications v. An Apple A Day, 977 F.Supp. 404 (E.D.Va. 1997); Inset Systems, Inc. v. Instruction Set, Inc., 937 F.Supp.
161 (D.Conn. 1996).
d. State by Humphrey v. Granite Gate Resorts, Inc., 1996 WL 767431 (Minn.Dist. 1996), aff’d, 568 N.W.2d 715 (Minn.App. 1997), aff’d
again, 576 N.W.2d 747 (Minn. 1998); Hasbro, Inc. v. Clue Computing, Inc., 994 F.Supp. 34 (D.Mass. 1997).
• A legally sufficient description of the land.
• The grantor’s (and spouse’s) signature.
• Delivery.
specific point of beginning around the boundaries of the property. In earlier times, metes and bounds
CHAPTER 29: REAL PROPERTY AND LANDLORD-TENANT LAW 9
whole or in part.
Modern metes and bounds descriptions typically avoid references to monuments but instead use a
succession of courses and distances that eventually return (if properly done) to the starting point. Other types
of legal descriptions of property may be used instead of metes and bounds descriptions. If a subdivision plat,
for example, has been filed in the public records, then it is not necessary for the deed to include a metes and
bound description because it can make a reference to a specified lot and block in that plat which will suffice
land; and that transfer is made without unknown adverse claims of third parties.
ENHANCING YOUR LECTURE—
that prevented property owners in the subdivision from erecting any buildings other than one house and one
garage on their land. After the garage had been built, Pietrowski asked a court to issue an order that the
garage be razed (destroyed).
The Dufranes argued that Pietrowski herself had violated the covenant because she had built a shed on
garage was a “major violation” that materially breached the covenant. According to the court, “enforcement
against a major violation of the restrictive covenant by a party who committed a minor violation does not result
in an injustice.” The court ordered that the garage be razed.a
THE BOTTOM LINE
whole or in part.
a. Pietrowski v. Dufrane, 634 N.W.2d 109 (Wis.App. 2001).
3. Quitclaim Deed
This warrants less than other deeds, conveying only whatever interest the grantor has.
4. Grant Deed
ADDITIONAL BACKGROUND—
Basic Types of Recording Statutes
• Race statutes, which provide that the first purchaser to record a deed has superior rights to the
property, regardless of whether he or she knew that someone else had already bought it but had failed to
record the deed.
Irrespective of the particular type of recording statute adopted by a state, recording a deed involves a fee.
The grantee typically pays this fee, because he or she is the one who will be protected by recording the deed.
D. ADVERSE POSSESSION
Adverse possession is a means of obtaining title to land without delivery of a deed.
1. Elements of Adverse Possession
The elements are—
