Ownership-a system of laws governing the relationship among people with respect to resources. A social construct



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Accounting--an equitable proceeding to distribute benefits and costs of co-

ownership

In all states, a cotenant who collects rents from third parties must account to cotenants for the amounts received (364)--but absent outser, account is usually based on actual receipts, not fair market value

Mortgages are usually divided (364)--if one tenant has sole possession of property, contribution may not be allowed (364)--but this rule is not uniformly applied (364)

Necessary repairs are usually divided *** true? see 364

Improvements are not subject to contribution

BUT in partition actions, partitioning is done so as to give the improver the benefits of the improvements

Physical grant

Money!--for increase in the sale value of the property

This promotes efficient use of the land, because the improver get the value, not his costs; where benefits of improvement outweigh the costs, efficient course is to improve the property.



United States v. 1500 Lincoln Avenue (1991 at 376)--Drug dealer and tenancy in the entirety

Government is entitled to forfeiture of husband's interest in the tenancy in the entirety

Wife will get a fee simple absolute if she outlives her husband

Government gets the property if she does not

Doctrine of Waste still applies (see life tenant)--party in possession who wastes resources is liable in damages to the other owners

Rationales for government regulation

***

Condominuims and cooperatives at a glance







Condominiums

Cooperatives

Ownership

Unit: Fee simple absolute; Common Areas: Tenants in common

Building: Corporation; Individuals: Shares in the corporation and a proprietary lease

Financing

Mortgages by unit owner

Building blanket mortgage + Unit owner mortgages

Fees/Expenses/Taxes

Units make individual tax & mortgage payments + a common area charge

Corporation pays taxes and mortgage; Shareholders pay maintanence charges

Governance

Condo association

Board of directors

Condominiums



Lagua Royale Owners Assoc. v. Darger (1981 at 924)--ct. calls "unreasonable" condo association's refusal to allow a condo to be turned into a timeshare

Contract provided that purchaser "shall not assign or otherwise transfer this agreement [or sublet] without the consent of and approval of Lessee"

"Since they are living in such close proximity and using facilities in common, each unit owner must give up a certain degree of freedom of choice which he might otherwise enjoy in separate, privately owned property." (929)

Association must act reasonably in regulating condominium owners (930)

The reason for withholding approval must be rationally related to the protection, preservation and proper operation of the property; and

The power must be exercised in a fair and nondiscriminatory manner

If a person consents to supervision by a condo association when buying a condo, why should a court intrude into the associations relations with the buyer?

Most condos do not have approval rules, but have a first right of refusal

Ability to buy condo for same terms as a prospective buyer; or

First ability to purchase

Prospective buyers may not offer as much for condos because of risk of preemption on purchase offer

Nahrstedt v. Lakeside Village Condominium Association (1992 at 936)

"No pets" provision (937)

Covenants, conditions, and restrictions (CC & Rs) regarding pets are reasonable when they prohibit conduct which, while otherwise lawful, infact interferes with, or has a reasonable likelihood of interfering with, the rights of other condominium owners to the peaceful and quiet enjoyment of their property. (941)

WHEN WAS THE RULE AGAINST PETS ADOPTED

If before she moved in, argue that she "consented"

If after she moved in, argue that she had too little or no say in the vote to change the rules.

Note on Cooperatives--when a person defaults in a cooperative, other shareholders must pick up the slack of the maintenance charge--therefore cooperatives have broad latitude in screening applicants (934)

Efficiencies of scale

Group discounts; but

Group decision making may carry large transactions costs

Rental v. Homeownership

Currently 2/3 of dwelling units are owner occupied; this dipped in the 1980's due to high interest rates

Trend has been a steady increase in condominium ownership; proportion of condos and co-ops rises as prices of single family homes drop

Advantages of home ownership

Greater control over one's living environment

vs. CCR's of condos and co-ops

Appreciation of land values

Leads to increased rents

"Great" hedge against inflation

Combination of consumption/investment good

Better control over housing costs

Tenants must periodically recontract (i.e. "year lease")--

Extraction of a rent premium due to:

Transactions costs of moving

Moving cost

Brokers fee

Time

Personality theory--connection with dwelling has intrinsic value



BUT risk of loosing a good tenant

Incentive to maintain/improve land--leads to efficiency/capital maintenance

consumption interest

investment interest

confers benefit upon others; positive externality/public good

rental housing--landlord has less incentive to improve because no consumption interest exists + agency costs

Tax subsidy for homeownership

Homeowner can deduct property taxes and interest on the mortgage

In a competitive housing market, tenants may have discounted rents due to this subsidy

IRS does not tax imputed income

Rent received from tenant is taxable

Disadvantages of homeownership

Possibility that land values decrease

Beats the shit out of co-ops***explain this!

Homeowner's don't usually have a diversified portfolio

Illiquidity

Immobility

Landlord and tenant

Introduction

Types of estates

Term of Years--estate that lasts for some fixed period of time (425)

Periodic Tenancy--lease for a period of some fixed duration that continues for succeeding periods until either the landlord or tenant gives notice of termination

Under CL

Half a year's notice is required to terminate a year to year tenancy

If period is less than a year, notice must be equal to the length of the period, but not longer than six months

Many states have permitted month-to-month tenancies to end any time after 30 days notice (426)

Tenancy at will--estate of no fixed period that endures so long as both landlord and tenant desire

Tenancy at sufferance--bastards who don't pay rent

General restrictions upon landlords

Discrimination

Ability to limit assign/sublet

Requirement of landlord to resort to law for eviction

Duty to cover

Quality of housing

Rent control

Publicly subsidized/owned housing

Modern trend in the law is to treat leases as contracts (as opposed to conveyances)--at least with respect to residential leases

Transfer of possessory interest in land--classic conveyance

Promises of performance--classic contract

Leases for more than one year must be in writing

Antidiscrimination law

Generally

Discrimination still goes on today; blacks and Hispanics face discrimination over 50% of the time (Turner article)

Assuming free markets, discriminating landlords (who have a "taste" for discrimination) will be driven out, due to competitive markets

But discriminatory landlords may actually prosper, because people are willing to pay more to live with all whites (Sunstein article)

Also discrimination is higher for homeowners than renters, because of fear of retribution for selling your house to minorities, so there's 3d party discrimination at work too.

Equal protection cluase (14th amendment)

Limited to state action

Subsidized private housing

Public housing

Proof of discriminatory purpose or intent needed

42 USC §1982 (1866)

Limited to racial discrimination

Proof of discriminatory purpose or intent needed

Fair Housing Act 42 USC §3604--bans discrimination on the basis of race, color, religion, sex, familial status, or national origin with respect to: (a) selling or renting; (b) terms or conditions of such a sale or rental; (c) making, printing, or publishing a discriminatory notice, statement, or advertisement; (d) conceiling the availability of units for sale or rent; (e) inducing a sale or rental on the basis of discriminatory representations regarding the neighborhood

Exceptions--42 USC §3603(b)

Single family house sold or rented by an owner

Rooms or units in dwellings containing living quarters occupied or intended to be occupied by no more than four families living independently of each other, if the owner actually maintains and occupies one of such living quarters as his residence

BUT such entities may not make, print, or publish any discriminatory notice, statement, or advertisement

Exceptions--42 USC §3607

Religious organizations and private clubs

Housing for older persons need not comply with prohibitions on familial status

1988 amendments to the Fair Housing Act

Extended protection to physically or mentally disabled persons

Exception for threats to health or safety and threats to land damage ***

Set minimum access requirements for housing to allow access for disabled persons

Banned discrimination against families with children (under age of 18). Exceptions:

State or federal housing designed for elderly people

Dwellings occupied only be people aged 62 or older

Dwellings with 80% of the units occupied by people aged 55 or older and have facilities catered to elderly people

Mandated HUD investigations of complaints. Where a complaint is valid, hearing is held automatically.

NOTE: In the passage of the FHA amendments, the House rejected an amendment designed to prohibit affirmative action (459)



Asbury v. Brougham (1989 at H157)--proving FHA or 42 USC §1982 claims w/respect to disparate treatment--inferrs the discriminatory intent of the landlord/owner based upon the circumstancial evidence

P must first come forward with prima facie case of discrimination; she must prove that:

She is a member of a racial minority

She applied for and was qualified to rent an apartment or townhouse in Brougham Estates

She was denied the opportunity to rent or to inspect or negotiate for the rental of a townhouse or apartment

The housing opportunity remained available

The burden then shifts to D to produce evidence that the refusal to rent or negotiate for a rental was motivated by legitimate, non-racial considerations

The burden then shifts back to P to show that the proffered reasons were pretextual.

Most federal courts also allow FHA suits based on disparate impact theories (H163)--Does a facially neutral rule have a disriminatory effect upon a protected class when applied

The prima facie case can be established with statistics

When faced with a prima facie showing of discrimnatory impact, defendants must prove a business necessity sufficiently compelling to justify the challenged practice (H163-164)

Differing tastes for integration; "white flight"/"tipping" phenomenon

Blacks prefer neighborhoods with 50% integration

Majority of whites would not move into a 50% black neighborhood

As the neighborhood became more integrated, blacks will be drawn more strongly, while whites will be repelled

United States v. Starrett City Associates (1988 at 446)

Starrett City has federally subsidized mortgages, and so they feared a minority community. They set up percentages of races (i.e. quotas) to promote integration. But due to these percentages, waiting lists for minorities were longer, and fewer units were available to them

Court used analogized to Title VII cases--but this analogy was a poor one; there is no such thing as "white flight" in employment

Starrett City argued that they were "clothed with governmental authority" and thus obligated under Otero v. New York to effectuate the purpose of the Fair Housing Act by preventing "the reghettoization of a model integrated community" (451)



Ortero was distinguished on the basis of its temporary nature

Quota considerations

Fixed term vs. temporary

Is the quota designed to address a history of discrimination?

Access quotas vs. ceiling quotas

Assignments and Subleases

Determinination of assignment vs. sublease

Common law (followed by a majority of jurisdictions; see 475)




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