Numerus Clausus, Waste, and Alienation

Question 1

Numerus Clausus

Answer 1

• refers to standardization of property law - there’s a fixed and closed set of forms of ownership, and owners and transactors are not allowed to add to this list

Question 2

Rationale Behind Numerus Clausus

Answer 2

• mostly deals w/ preventing proliferation of new types of property rights - gives third parties (including both courts and buyers) less to be on the lookout for (reduces info costs)
• possibly also trying to limit ways of dividing property to discourage division and prevent excessive fragmentation
• idea that the system operates less efficiently if the forms of ownership become too convoluted

Question 3

Charles v. Barzey - Facts

Answer 3

• the numerus clausus case
• Iris Charles leaves No 9 Cork Street to nephew John Charles absolutely, + leaves the other (No 18) by devise - says niece Yvette Barzey gets the house, but John gets the addition to the house (garage and storeroom) for his use “as long as he wishes” (John had been using it for his pharmaceutical business)

Question 4

Charles v. Barzey - Procedural Posture

Answer 4

• trial court says Yvette gets house in fee simple + garage and storeroom in remainder (John gets life estate in them)
• appeals court says this life estate is repugnant to the fee, so Yvette gets the whole thing

Question 5

Charles v. Barzey - Decision and Reasoning

Answer 5

• House of Lords reinstates trial court’s decision (Yvette gets the house in fee simple, John gets life estate in garage)
• mentions numerus clausus (though not by name), but says this division is considered w/in the approved list so it’s fine

Question 6

Numerus Clausus - Changes

Answer 6

• supposed to only have a standardized set of property forms - if you want any changes, you can’t just contract around it -> changes are directed towards the legislatures, rather than the courts
• change is not wholly impossible (can theoretically remove or add items) but would need to do so through courts

Question 7

Numerus Clausus and Fragmentation

Answer 7

• technically doesn’t prevent fragmentation - just limits the ways in which you can fragment ownership

Question 8

How do we evaluate which items get added to the numerus clausus list?

Answer 8

• most useful + most beneficial generally get added first

Question 9

Numerus Clausus and Personal Property

Answer 9

• numerus clausus applies almost more stringently to personal property (comes up when people want to sell personal property w/ restrictions) -> usually not subject to registry -> would be too tough to figure out what the restrictions are

Question 10

Waste - General Concept

Answer 10

• present possessory interest holder may not unreasonably use the resource + must turn it over in substantially the same condition as he/she received it (more of a standard, rather than the rules normally found in property)
• default regime - the grantor can theoretically displace it w/ specific terms in the will

Question 11

How do we evaluate the actions of the present possessor for waste?

Answer 11

• theoretically, good benchmark is to ask what fee simple owner would do, but difficult in practice, so courts use rules of thumb + there’s a bias towards conservation
• flexible
• the greater one’s interest in the property, the more freedom one gets as an owner

Question 12

Problems of Shared or Divided Ownership

Answer 12

• co-ownership or divided ownership w/o more can lead to misaligned incentives - user gains all the benefit from use but only bears a fraction of the cost
• devices needed to prevent this -> some are “off-the-rack” defaults, some are contractual

Question 13

Problem of Temporally Divided Ownership

Answer 13

• misalignment of interests - present interest holder has incentive to use the resource to maximize own benefit, no incentive to conserve -> future interest holder needs way of holding this in check -> WASTE

Question 14

Waste and Contract

Answer 14

• waste acts as baseline against which parties can contract
• when property is leased, specific provisions about the tenant’s ability to modify the property effectively substitute for waste (default is normal wear and tear okay)

Question 15

Waste and Trusts

Answer 15

• for trusts, specification of the powers of the trustee to invade the trust property effectively substitutes for the common law duty doctrine of waste (also fiduciary duties - different baseline)
• trustee also less likely to have incentive to favor present interest holder or future interest holder

Question 16

Brokaw v. Fairchild - Background

Answer 16

• Brokaw gave son George life estate in a property (also gave interests in other dwellings to other sons + a daughter)
• in Brokaw’s will, each of his original children gets a life estate subject followed by a remainder in the life tenant, subject to a contingent remainder in Brokaw’s remaining heirs if the life tenant dies without issue (basically, if any of his kids die without living children of their own, the property would revert back to the family)

Question 17

Brokaw v. Fairchild - Facts

Answer 17

• after Brokaw dies, there’s a change of circumstances -> would be more valuable to George to raze the house + build a 13-story apartment building (claims prevents loss of roughly $70,000 + turns it into a $30,000 profit, w/ net benefit of around $100,000)
• George files a declaratory judgment action to okay this plan, but the heirs holding the contingent remainders object -> say would be waste

Question 18

Brokaw v. Fairchild - Decision and Reasoning

Answer 18

• court holds that plan for apartment building would be waste b/c would not give holder of the remainder the property in its current condition (life estate gives use, not full dominion or ownership of property)
• minority view (NY later changed by statute)

Question 19

Melms v. Pabst Brewing Co.

Answer 19

• leading example of the majority view regarding waste

- permits ameliorative waste, at least when it can be justified by changed circumstances

Question 20

Affirmative Waste

Answer 20

• an affirmative act that is not reasonable, causes “excess” damage to the property (could include mineral extraction or tree-cutting, depending on what the normal use of the property is)

Question 21

Permissive Waste

Answer 21

• means you fail to perform an act (nonfeasance), and this failure causes excess damage to the property (ex: failure to pay taxes or allowing an adverse possessor to remain)

Question 22

Ameliorative Waste

Answer 22

• an act that increases the market value but changes the property in some substantial way (may destroy subjective value)
• contractual element - idea that if you specifically contract for something (through your will), you should get what you wanted, even though it would be higher market value w/o it

Question 23

Posner’s Analysis of Waste

Answer 23

• law of waste should permit holder of present possessory interest to do anything a fee owner would do and prevent that which goes beyond
• problem - still lingering question of how courts should mimic a fee simple owner

Question 24

Restatement Fourth of Property - Waste

Answer 24

Three Main Points:

• holder of present poss. interest liable to future interest holder if, by affirmative act or failure to maintain, repair, or preserve, causes excessive damage to prop.
• damage = any material change that impairs the property’s market value or alters the property’s nature + character, unless authorized by grantor, by contract, or justified by changed circumstances
• also defines when damage is excessive

Question 25

Restatement Fourth of Property - Waste - When is damage excessive?

Answer 25

- if it exceeds the damages permitted by a) the instrument creating the interest, b) an agreement between the parties or c) the background norms of prop. use (including ordinary wear + tear + depreciation)

Question 26

Alienation

Answer 26

- ability to alienate or transfer property to another = one of the normal incidents of owner sovereignty - b/c this is a core element of owner sovereignty, courts generally don't like attempts to restrain power of owner to alienate -> any attempt directly to restrain alienation will be held void as contrary to public policy

Question 27

Restraints on Alienation

Answer 27

- direct restraints generally impermissible - efforts to use defeasible fees or executory limitations to effectuate complete restraints on alienation are similarly void (ie. if you give someone a fee simple under the condition that they not alienate-> void) - tougher q - what about conditions which have effect of reducing possibilities of alienation?

Question 28

Permissible Restraints on Alienation

Answer 28

- courts will generally uphold restraints on alienation for a limited period of time if they appear reasonably related to some family planning estate objective (ex: restraint on alienation by a minor until reaches age of maturity, or restraint on alienation of a surviving spouse if you want the property to ultimately go to your kids)

Question 29

Mountain Brow Lodge No. 82, Independent Order of Odd Fellows v. Toscano - Facts

Answer 29

- nonprofit sues to quiet title to parcel of real property it acquired by gift deed from the Toscanos - habendum clause at issue - says the property is "restricted for the use and benefit of the second party, only" -> if they stop using it or sell/transfer any part of it, it reverts to the heirs of the Toscanos

Question 30

Habendum Clause

Answer 30

- the part of the deed that describes the estate transferred + the extent of the interest

Question 31

Mountain Brow v. Toscanos - Core Issue

Answer 31

Defeasible fee w/ two things going on: - Mountain Brow isn't allowed to sell the property - this is a MAJOR no-no - restraint on alienation - BUT Mountain Brow is directed to use the property for its nonprofit purpose -> might be okay Core Q is whether or not the use condition is valid even if it has the effect of restricting alienation

Question 32

Mountain Brow v. Toscano - Decision and Reasoning

Answer 32

- court says use restriction is valid - conditions restricting use have long been distinguished from restraints on alienation (even though they can impair alienation) + have been upheld in a wide variety of cases - courts are especially understanding of charitable purpose conditions - note that this condition also does not violate public policy (vs. something like a racially restrictive covenant in Shelley)

Question 33

Mountain Brow v. Toscano - Dissent

Answer 33

- takes a realist approach - says if only the lodge can use it, it's effectively a restraint on alienation + should therefore be treated as such