4. Tort liability – Are the owners of incorporated and unincorporated condominium associations liable?
C. Cooperatives distinguished
1. A cooperative is a corporation that rents units to persons who own shares in the corporation
2. Advantages of condominium ownership
V. What are the Methods for Transferring Title to Real Property?
A. Transfer by deed
1. Definitions
2. Classification of deeds
a. Quitclaim: transfers whatever interest is owed
3. Execution of deeds – depends on state law (See Figure 48-1 in text)
4. Delivery and acceptance of deeds
5. Recording of Deeds
a. Not necessary to pass title
6. Additional protection of buyers – abstract of title or title insurance
CASE BRIEF: Chornuk v. Nelson
857 N.W. 2d 587 (N.D. 2014)
FACTS: In January 1986, Norman and Mildred Dahl conveyed the disputed property (a 1.667 acre tract
located in McKenzie County) to Harry and Linda Chornuk by warranty deed, but the deed was not
recorded until June 24, 2010. On June 17, 2005, after Norman Dahl’s death, Mildred Dahl
conveyed the same property by warranty deed to the Nelsons as part of the conveyance of
approximately 44.5 acres. The deed was recorded on July 5, 2005.
In 2010, the Chornuks sued the Nelsons to quiet title to the property. The district court quieted title
in favor of the Chornuks. The court found that the Chornuks’ actions were sufficient to put a prudent
person on notice someone else had an interest in the property and that the Nelsons were required
to conduct further inquiry before purchasing the property from Mildred Dahl. The court found the
Nelsons had constructive notice of the Chornuks’ interest and were not good-faith purchasers.
The Nelsons appealed.
ISSUE: Who held title to the property?
HOLDING AND
REASONING: The Chornuks held title to the property because they were the first good-faith purchasers to record.
The Nelsons recorded first, but they were not good-faith purchasers because they had seen the
We affirm the judgment.
7. Cancellation of deeds
8. Grantor’s warranties
a. Warranties of title
i. Covenant of seisin
ii. Covenant of right to convey
b. Fitness for use
9. Grantee’s covenants
a. Covenants running with the land – review the text example with your class
b. Restrictive and affirmative covenants
VI. What are the Other Methods of Transferring Real Property?
A. Other methods of transferring real property
1. Eminent domain – by government; public use or benefit
CASE BRIEF: Kelo v. City of New London
545 U.S. 469 (2005)
FACTS: In 1978, the city of New London, Connecticut undertook a redevelopment plan for purposes of
creating a redeveloped area in and around the existing park at Fort Trumball. The plan had the
goals of achieving all the related ambience a state park should have, including the absence of pink
cottages and other architecturally eclectic homes. Part of the redevelopment plain was the city’s
deal with Pfizer Corporation for the location of its research facility in the area. The preface to the
city’s development plan included the following statement of goals and purpose:
to create a development that would complement the facility that Pfizer was planning to
build, create jobs, increase tax and other revenues, encourage public access to and use
of the city’s waterfront, and eventually “build momentum” for the revitalization of the rest of
the city, including its downtown area.
The redevelopment plan included detailed and extensive documentation on its socioeconomic
impact. The affected property owners, including Susette Kelo, live in homes and cottages (15 total)
located in and around other existing structures that will be permitted to stay in the area for the
proposed new structures that will consist of primarily private land developers and corporations. In
fact, the city was assisted by a private, nonprofit corporation, the New London Development
Corporation (NLDC), in the development of the economics plan and the ferrying of it through the
various governmental processes, including that of city council approval. Such approval seems a
mere formality given the fact that the city council created the NLDC. The central focus of the plan
was attracting Pfizer to the Fort Trumbull area (where the homeowners and their properties were
located) with the hope of the economic boost and benefits a major corporate employer can bring to
an area.
Kelo and the other landowners whose homes would be razed to make room for Pfizer and the
accompanying and resulting economic development plan filed suit challenging New London’s legal
authority to take their homes. The trial court issued an injunction preventing New London from
taking certain of the properties, but allowing others to be taken. Following an injunction, the
property owners who were denied relief appealed and the city cross-appealed. The appellate court
found for New London on all the claims, and the landowners (petitioners) appealed.
ISSUES: 1. Can a city delegate its economic development role and its eminent domain duties and powers
to a redevelopment corporation?
2. Can a city pick and choose which properties will be retained by owners and which will be
condemned and taken?
3. Is economic development a constitutionally permissible use of the eminent domain power?
HOLDING: In a 5-4 decision delivered by Justice Stevens, joined by Justices Kennedy, Souter, Ginsberg and
REASONING: New London’s taking of the homes of Kelo and others qualifies as a “public use” within the meaning
of the Takings Clause. Local governments cannot take private land simply to confer a private
benefit on a particular private party, but when the takings will be executed pursuant to a carefully
considered development plan and the plan was not adopted “to benefit a particular class of
identifiable individuals,” the takings are constitutional. Government projects often benefit
individuals, with some individuals benefiting more than others. Such imbalance does not violate
the constitution. The court concludes that public purpose is a broad category for purposes of
determining when takings are constitutional. Local governments’ determinations that areas at issue
are sufficiently distressed to justify a program of economic rejuvenation are entitled to deference of
the courts and the courts should not second-guess local authorities.
DISCUSSION POINTS: Have the students discuss eminent domain using the Kelo v. City of New London case.
DISCUSSION POINTS: Thinking Things Through
Putting the Brakes on Eminent Domain
Differing from the U.S. Supreme Court, the Arizona Supreme court employed a balancing test when the ultimate use
will be private and commercial, following the condemnation of another’s private and commercial use:
…[w]e hold that when a proposed taking for a redevelopment project will result in private commercial
ownership and operation, the Arizona Constitution requires that the anticipated public benefits must
substantially outweigh the private character of the end use so that it may truly be said that the taking is for a
use that is “really public.” The constitutional requirement of “public use” is only satisfied when the public
benefits and characteristics of the intended use substantially predominate over the private nature of that
use.
The court concluded that because Bailey’s property was not to be used for a public park, transportation or other
purposes that the proposed use did not pass the strict test imposed by Arizona’s constitution. The result was that
Bailey’s Brake Service stayed put, and is still there today.
2. Adverse possession
a. Discuss adverse possession by a private party
b. Discuss actual adverse possession
c. Discuss visible and notorious adverse possession
VII. What are Mortgages and What are the Parties and Rights Involved in Them?
A. Characteristics of a mortgage
1. Mortgagor (debtor)
2. Mortgagee (creditor)
B. Property subject to mortgage
C. Form of mortgage
D. Creative forms of financing
E. Recording or filing of mortgage
DISCUSSION POINTS: E-Commerce & Cyberlaw
MERS and Problems
The separation of a mortgage from a note created title and foreclosure rights problems that are not yet resolved.
F. Responsibilities of the parties
1. Repairs and improvements – mortgagee must make when in possession
2. Taxes, assessments, and insurance
3. Impairment of security – mortgagor liable to mortgagee for damages to property
G. Transfer of interest
1. Transfer by mortgagor – the mortgage stays on the property
H. Rights of mortgagee after default
1. Discuss foreclosure
I. Rights of mortgagor after default
ANSWERS TO QUESTIONS AND CASE PROBLEMS
1. Adverse possession. The deference of the Carnahans to the neighbors on the use of their boat shows that they
understood their rights to be permissive and not adverse and that they were not acquiring a property right
2. Licenses. Judgment against the Bunns. The only right to use the swimming pool was the one given by contract
to the original purchaser and family. No expressed statement was made in either this contract with or the deed to
3. Recording; priorities. The court held that Wells Fargo is second because Stewart Title failed to do an effective
search for prior interests. The record shows that Stewart Title did look for recorded loans and liens on the
property and failed to find the Washington Mutual loan only because the deed was defectively recorded. The
4. Deeds; delivery. It is to be noted from the trial testimony that all involved agree that J.M. Fernandez, Jr., never
varied from his intention to deliver the deeds to all of the grantees, including the Sheppard/Kerr deed. Ultimately
It is true that delivery of a deed is essential to its effectiveness. This does not mean, however, that a delivery, in
order to be effective, must always be a physical handing over of the deed by the grantor to the grantee. For
“Actual manual delivery and change of possession are not always required in order to constitute an effectual
The uncontradicted testimony is that J.M. Fernandez, Jr., evinced an intention to deliver the deed personally to
5. Duty of landowner; liability of landowner for injuries. One view is that the children were invitees and the
Kosinski’s owed a duty to the children to control access. Also, that the children’s activity was ongoing for the
6. Fixtures.
a. Personal property
b. Generally fixtures
7. Adverse possession; trespass. Adverse possession begins as trespass and ripens into rights of ownership.
8. Premises liability; invitees. Landowners have a duty to take reasonable precautions to protect their invitees from
The line of sight between the employees of Taco Bell and the drive-thru was obstructed, with the video
Taco Bell owed Winchell a duty as a matter of law and there were questions of fact regarding the elements of
9. What constitutes delivery of deed. The deed was void. It was never delivered by Miller to Zieg with the intent that
The court pointed out that the conclusion that there was no intent by Miller to transfer title prior to his death was
10. Building as a fixture. No. When the house was attached to Sarah’s land, it became part of the real estate owned
11. Adverse possession. The strip of land in question is owned by Bradt by adverse possession. This is true even
though such possession was based on a mistake and there was no intention to deprive anyone of title to the
12. Fixtures. The billboard at issue is a structure permanently affixed to the land. Whether such a structure remains
personalty, owned by the person who erected the structure, or becomes part of the realty, and thus owned by the
The billboard was erected more than 65 years ago by Consolvo & Cheshire, an advertising agency. At that time,
Consolvo & Cheshire negotiated a lease which provided that “[a]ll boards and materials placed on the premises”
Adams claims to be the owner under the terms of the 1977 lease or, alternatively, because all the leases show
an intent that the lessee retain ownership of the billboard. We agree that each lease does address the ownership
of the billboard, but places ownership in the lessee who erected the billboard. Consolvo & Cheshire erected the
The trial court also correctly held that Long was the owner of the billboard. When tenants retain ownership of
structures they erect on property and are allowed to remove the structures, the removal generally must occur
within a reasonable period after the end of the tenancy. If the structure is not removed, it becomes the property of
In this case, the tenant that constructed the billboard, Consolvo & Cheshire, did not remove it at the conclusion of
its tenancy or within a reasonable time thereafter. Consequently, the billboard, which was permanently affixed to
13. Creation of easement; termination of an easement. The court held that the memo granted an easement that did
14. Transfer of interest. A purchaser who assumes the mortgage debt becomes personally liable on the mortgage
15. Right of way; easement. Yes, the Mallocks had a right of access to the burial plot. Without such access, the plot
16. O A December 1, 2015
O B (bfp)
B records
O C
B has title under race (first to record)
B has title under notice (last bfp to take)
B has title under notice (first bfp to record)
LAWFLIX
Country (1984) (PG)
Jessica Lange has the starring role in a movie about farm lands, foreclosure, ownership, mortgages, and rights.
To access additional videos that illustrate business law concepts, visit www.cegage.com/blaw/dvl.
management system for classroom use.