Business Law (Property)
Terms in this set (91)
Property Ownership is...
Property ownership is a bundle of rights that the law recognizes and enforces, including the rights to use, transfer, or destroy the property
Property refers to...
Property refers to
(a) something that may be owned, or
(b) a right or interest that allows a person to exercise dominion over a thing that may be owned or possessed
Property can be classified as...
(1) Real Property
Personal property can be classified as...
Tangible - has a physical existence
Examples: cars, clothing, animals, furniture
Intangible -- has no physical existence
Examples: intellectual property (patent, copyright, trademark), stocks, and bonds
Ownership of personal property may be acquired by:
(5) Will or inheritance
(8) Taking possession of unowned property
Possession of wild animals...
The first person to take possession of a wild animal normally becomes the owner. If a captured wild animal escapes and is caught by another person, that person becomes the owner unless s/he knew the animal had escaped from the first person
A person who finds abandoned, mislaid, or lost property...
May - or may not - be the owner
Property is considered abandoned if owner intentionally placed property out of his/her possession with intent to give up ownership
The person who finds lost property...
... does not acquire ownership of it, but acquires better rights to the lost property than anyone other than the true owner
Property is lost when...
.... the owner did not intend to part with possession of the property
Finder must return the property...
....when real owner asks for the property
A person who finds mislaid property...
...acquires no rights to the property, but has the right to hold property for the true owner and has better rights to the property than anyone other than the true owner
Property is mislaid when...
.... owner voluntarily leaves the property, but forgets to retake possession.
Finder of mislaid property...
... must return the property when real owner asks for the property
...allow finders of property to clear their title to the property through court action after giving public notice
refers to property found underwater or in the ground
A lease of personal property is not a transfer of ownership, but a transfer of the right to possess and use personal property belonging to another; common in business settings.
Ownership of personal property may transfer through inheritance upon the death of the former owner. Property passes by terms of a will or state law.
A gift is a voluntary transfer of property to the donee (the person who receives a gift), for which the donor (the person who gives the gift) gets no consideration in return.
If a person conditions a gift by requiring that the donee comply with certain rules or perform certain actions, the conditional gift is not a completed gift.
Ownership of personal property may be acquired by confusion, or the intermixing of different owners' goods in such a way that they cannot later be separated.
Accession means increasing property value by adding materials, labor, or both. In general, owner of original property is owner of improvements, but person(s) adding value may claim an ownership interest until paid
Bailment occurs when a bailor who owns personal property (or someone holding the right to possess it) delivers it to another (the bailee) who accepts it and is under an express or implied agreement to return it to the bailor or someone designated by the bailor
A Bailee has two basic duties
(1) To take care of the entrusted property
(2) To return property at the bailment's termination
Bailee may have right to compensation, but it depends on the bailment agreement
Involuntary bailee or Constructive bailee
A person who finds lost or misplaced property may be considered the involuntary bailee or constructive bailee of the property
Bailee's Duty of Care
Degree of care required of bailee to protect the property depends on the type of bailment:
(1) Bailment for the benefit of the bailor - Only minimal, or slight, degree of care
(2) Bailment for mutual benefit - Ordinary or reasonable care
(3) Bailment for the benefit of the bailee - High degree of care
If Bailee Fails to Satisfy Duty
A bailee is obligated to return property to the bailor in the same or similar condition as when bailed, subject to the degree of care
Thus, if a bailee with an ordinary or high duty of care damages or fails to return the property, bailee may be liable to the bailor for compensation or conversion
Some types of bailees are held to a higher level of responsibility than normally required by bailees, making these bailees almost an insurer of the bailed goods:
(1) Common carriers
(3) Safe-deposit boxes
Documents of Title
(1) Document of title refers to the document that identifies ownership of property
(2) A common carrier (bailee) contracts to store or transport containers of goods and deliver the containers to the owner or owner's designee
(3) Each container will have a related document of title
The warehouse receipt or the bill of lading may be either negotiable or non-negotiable
A person who acquires a negotiable document of title generally acquires both title to the document and title to the goods
To be negotiable, a warehouse receipt, bill of lading, or other document of title must provide that the goods are to be delivered to the bearer or to the order of a named person
The law of real property concerns the ownership, acquisition, and use of land.
Real Property includes...
Real property includes not only land but also things firmly attached to or embedded in land:
(2) Trees, crops, and other vegetation
(3) Water and groundwater
(5) Airspace above
A fixture is personal property that has become attached to or connected to real property in such a way that it ceases being personal property and becomes part of the real property Fixtures belong to real property owner.
Three factors determine fixtures
If firmly attached to real property so it cannot be removed without damaging property, the item is likely to be a fixture
When an item would be of little value except for use with real property, item likely to be a fixture
Judged by what the circumstances indicate as intended not person's subjective intent
An exception to the usual fixture rules involve trade fixtures, which are personal property attached to leased premises by a tenant for the purpose of carrying on the trade or business
Trade fixtures remain tenant's personal property and may be removed at lease end
Security Interest in Fixtures
Personal property may be subject to a lien or security interest at the time it is attached to real property
Example: appliance store takes a security interest in dishwasher installed in home and perfects the interest by filing a financing statement in the appropriate real estate records office
Estate is used to describe a person's ownership interest in real property
Classified as freehold or non-freehold
Freehold estates are ownership interests of uncertain duration.
Most common forms of freehold estates (rights to exclusive possession) are fee simple absolute and life estate
Fee simple absolute
Fee simple absolute is the normal concept of "full ownership" of land
A life estate gives a person the right to possess and use property for a time measured by his or another person's lifetime
Nonfreehold (or leasehold) estates are those held by persons who lease real property
Co-ownership of real property exists when two or more persons share the same ownership interest in property
An easement is the right to make certain use of another person's property (affirmative easement) or to prevent another from making certain uses of his own property (negative easement)
Easements may be acquired by grant, reservation, prescription, or implication
An express grant of an easement normally is subject to the statute of frauds and must be in writing to be enforceable
Other types of easements are enforceable despite the lack of a writing
A profit is a right to enter another's land and remove some product or part of land
A license is a temporary right to enter another's land for a specific purpose
Real estate owners may create agreements that restrict use of real property called restrictive covenants
Covenants "run with the land" and bind subsequent owners of the property
Enforceability of covenants depends on purpose, nature, scope of restrictions
Acquisition of Real Property
Title to real property may be acquired by purchase, gift, will or inheritance, tax sale, and adverse possession
Adverse possession occurs when person wrongfully occupies land and acts in open and hostile manner as if he were the owner
True owner must take steps within a statutory time limit to eject possessor from the land or forever lose the right to eject the possessor
A valid conveyance of real property occurs through execution and delivery of a deed
A quitclaim deed conveys whatever title the grantor has at the time he executes the deed - Contains no warranty of title
A Warranty Deed
A warranty deed contains covenants of warranty about the title -- Two types: general and special
Deed of Bargain and Sale
A deed of bargain and sale (grant deeds) grantor makes no covenants about the title
First grantee who records a deed to a tract of land has superior title
A later grantee of property has superior title if his interest acquired without notice of earlier grantee's claim to the property under an unrecorded deed
Race Notice Statue
Race-notice statute: the grantee with priority is the one who both takes his interest without notice of any prior unrecorded claim and records first
In a title opinion, an attorney examines the abstract of title and gives an opinion whether grantor has marketable title
Marketable title: title free from defects or reasonable doubt about its validity
Abstract of Title
Abstract of title: history of what public records show about the passage of title to, and other interests in, a parcel of real property
• Not a guarantee of good title
Implied warranty of habitability
Over the last century, an implied warranty of habitability developed that guarantees the house is free of hidden defects rendering it unsafe or unsuitable for human habitation
Premises liability refers to negligence cases in which property owners or possessors (such as business operators leasing commercial real estate) are held liable to persons injured while on the property
Negligence: failure to exercise reasonable care to keep the property reasonably safe
Premises Liability generally includes...
Generally includes duty to take reasonable security precautions to protect persons lawfully on premises from foreseeable wrongful (including criminal) acts by third parties
Americans with Disabilities Act
o Enacted to eliminate long-standing patterns of discrimination against disabled persons in employment, access to public services, and access to business establishments and similar facilities open to the public, ADA's Title III focuses on places of public accommodation
Nuisance refers to the lawsuit that may be filed if a property use unreasonably interferes with another person's ability to use or enjoy her own property
The Fifth Amendment to the Constitution guarantees that private property shall not be taken for public use without "just compensation". This implies the government's power of eminent domain to effect the taking. The key is "just compensation"
Typical lease today is for commercial or residential purposes
Primarily a contractual relationship
Bargaining position generally favors landlord
Duration of tenant's possessory right depends upon type of tenancy: tenancy for a term, periodic tenancy, tenancy at will, or tenancy at sufferance
Tenancy for a Term
Tenancy for a Term: Landlord and tenant agree on a specific duration of the lease and fix the date on which the tenancy will end.
Periodic Tenancy: Landlord and tenant agree that tenant will pay rent at regular, successive intervals (e.g. month to month).
Tenancy at Will
Tenancy at Will: Landlord and tenant agree that tenant may possess property for an indefinite amount of time, with no agreement to pay rent at regular, successive intervals.
Tenancy at Sufferance
Tenancy at Sufferance: Tenant remains in possession after the termination of one of the leaseholds described above, until landlord brings ejectment action against tenant or collects rent from him.
(1) Landlord entitled to receive agreed rent for the term of the lease and upon termination
(2) landlord has the right to the return of property in as good a condition as it was when leased, except for normal wear and tear
(3) Landlord may demand security or other deposits
Implied warranty of possession
Implied warranty of possession guarantees tenant's right to possess the property for the term of the lease
Implied warranty of quiet enjoyment
Implied warranty of quiet enjoyment guarantees that a landlord's act or omission will not interfere with tenant's possession. Landlord may not enter leased property during the lease term except for purposes of inspection or repair as stated in the lease agreement
Implied warrant of habitability
Implied warranty of habitability: like the one implied for sale of real property, landlord-grantor must deliver a habitable dwelling at the beginning of lease
Doctrine of constructive eviction aids a tenant when property becomes unsuitable for the rental purposes
Applies to residential and commercial property - Tenant may terminate the lease because s/he has effectively been evicted
No further rent obligation if tenant vacates promptly after giving the landlord reasonable notice and opportunity to correct problem
Landlord duties federal law
Fair Housing Act prohibits discriminatory practices in transactions affecting housing, including the rental of dwellings
Landlords Tort Liability
General rule: landlord has no tort liability
Current trend: landlords will be held liable for injuries for breach of the following duties:
- Duty to maintain common areas
- Duty to disclose hidden defects
- Duty to use reasonable care in performing repairs
- Duty to maintain property leased for public admission
- Duty to maintain furnished dwellings
Landlords may be liable for..
Landlords may be liable for injuries sustained by persons who were criminally attacked on landlord's property if the attack was aided by landlord's failure to comply with housing codes or maintain reasonable security
Tenant's Duties and Rights
(1) Primary duty of tenant is to pay rent
(2) Tenant also has duty not to commit waste on the property (i.e., duty not to destroy premises) and to return the property to the landlord at lease termination
(3) Tenant has rights to exclusive possession and quiet enjoyment of the property during the lease term
(1) Tenant normally liable to persons who suffer harm while on the portion of the property over which tenant has control, if injuries resulted from tenant's negligence
(2) If a tenant breaches the lease, landlord may take action to evict the tenant
(3) State law generally allows for speedy eviction procedure
Like other contracts, rights and duties may be assigned unless otherwise prohibited in the lease contract
Assignment: landlord or tenant transfers all rights under the lease to another person
Subleasing: tenant transfers some (not all) rights to possess the property to another -- Relationship of tenant to sublessee becomes one of landlord and tenant
Assignment V. Sublease
Significance of distinction is that an assignee acquires rights and duties under the lease between landlord and original tenant, but a sublessee does not - Assignee steps into shoes of original tenant and acquires any rights original tenant had by lease
Under assignment or sublease, original tenant remains liable to landlord for commitments made in the lease
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