Understanding Doctrine of Waste in Property Law

1. MUSIC: Harry Connick Jr., 20 (1988) In Mahrenholz (Wed/Thu)IGNORE THE JACQMAINS Delete last paragraph on P581. Delete last complete paragraph on P582. Pretend you never heard of the Jacqmains.

2. Now on Course Page • Practice Midterm • Comments & Best Student Answers to Midterm Questions from Prior Years • Information Box re Chapter 7 Exam

3. DOCTRINE OF WASTE

4. Doctrine of Waste: Overview • Doctrine Applies to • Holder of Term of Years (Tenant) or Life Estate (Life Tenant) • Vis-à-vis interests of holder of future interest: remainder or reversion • We are covering as part of Chapter 6, so testable on final exam, but not part of Chapter 7 test.

5. Doctrine of Waste: Overview • Generally: Present holder has some duties to future interest holder to turn property over in roughly same condition it was received • Underlying Concern: Lack of incentives for present holder to take steps to preserve when benefits go to future interest holder • Remedies: Damages, injunction, or receivership (court takes over management of property).

6. Doctrine of Waste: Overview Precise duties vary w circumstances, including: • Explicit terms in lease or grant creating life estate • Type of waste at issue • Term of years v. Life estate • Likely amount of time before change in possession • Type of lease: residential v. commercial v. agricultural. (As with other areas in LT law, some changes as move away from agricultural lease as most common form.)

7. Three Types of Waste (1) Affirmative/Voluntary • Deliberate acts that harm value of property • Some complexity re when OK to remove valuable resources (timber/minerals) • Traditionally couldn’t touch capital assets • Casebook says maybe OK today where • Consistent with area custom • Likely was grantor’s intent • Where activity had started already when LT/TNT took possession

8. Three Types of Waste (2) Ameliorative • Traditionally, could enjoin changes even if increased property value (though future interest holder unlikely to sue) • Trend away from enforcement •  Some cases: can still be liable if substantially alter identity of premises (1-story  2 story) • Some cases allow changes w security deposits for restoration (cf. reasonable modification) • Some cases: multi-factor test (e.g., extent of harm, nature of property, time remaining)

9. Three Types of Waste (3) Permissive • Tenant must keep property in as good repair as when took possession, unimpaired by T negligence • Moore: Must use ordinary care to preserve & protect property, BUT not responsible for ordinary wear & tear • Casebook: Paying mortgage interest, taxes, insurance • Life Tenant Responsible • Ordinary Tenant Not, Unless in Terms of Lease • Casebook suggests duties in residential leases have changed w modern trends re responsibility for habitability

10. Moore, Laches & Estoppel • L dies leaving land w farmhouse to A (wife) for life, remainder to D&K (daughter/grandson of A & L) • A & D become estranged • Last 2-3 yrs before death A negligently lets farmhouse deteriorate • After A’s death, D/K sue for damages for permissive waste to farmhouse

11. Moore, Laches & Estoppel • Timing: Kansas allows suit while life tenant still in possession, but doesn’t require it (statute of limitations doesn’t start to run until future interest holder takes possession) • Equitable Defenses: Trial Court found suit barred b/c of ESTOPPEL & LACHES

12. Moore, Laches & Estoppel ESTOPPEL • Affirmative act by claimant, if relied on by other party, can bar contrary action by claimant • E.g., if future interest holder told life tenant, “OK to let slide”, later suit for waste may be estopped. • No evidence of here; if anything, evidence is daughter repeatedly complained to mother

13. Moore, Laches & Estoppel LACHES • Failure to act in timely manner, IF delay disadvantages other party (like stat. limit.) • OK if reasonable excuse for not acting more quickly (Perhaps future interest holder not enforcing more quickly b/c interest was just contingent or b/c young life estate holder died suddenly)

14. Moore, Laches & Estoppel No LACHES in Moore • Other party not disadvantaged: Unavailability of A’s testimony not disadvantage b/c permissive harm to farmhouse so clear • Reasonable excuses for not suing earlier: • D/K advised to avoid contact w A to avoid “making bad situation worse” • D wanted to avoid aggravating mother & taking $$ she might need for expenses

15. Moore, Intent & Drafting • Casebook Note 1: Would grantor have intended that his wife compensate daughter for deterioration in condition of farmhouse? • Difficult when drafting to anticipate estrangement on to include complex instructions for management Qs on Moore?

16. Doctrine of Waste & Chapter 6 (1) Florida Residential Landlord-Tenant Act • Limits on Tenant Responsibility Probably Affect What Counts as Permissive Waste, Especially if Residential Tenant Reports Problems & Landlord Doesn’t Fix • Consider re Florida Statutes, esp. §83.52

17. Doctrine of Waste & Chapter 6 (2) Reasonable Modifications : • Absent anti-discrimination provisions & without consent of landlord: • Some would be forbidden as affirmative waste b/c lowers market value • Some would be ameliorative waste; might be allowed, but hard-to-predict fact-specific inquiry • §3604(f)(3)(a) thus operates as exception to doctrine of waste

18. VESTED v. CONTINGENT REMAINDERS

19. FUTURE INTERESTS THAT FOLLOW FINITE ESTATES REMAINDER Future interest in a third party that follows naturally upon the termination of a finite estate. It is always expressly conveyed by the grantor.

20. VESTED REMAINDER • Grantee is living ascertainable person (Presumed if granted to a named individual)

21. VESTED REMAINDER • Grantee is living ascertainable person AND • Clause creating the remainder contains no condition on grantee taking the property except expiration of prior estate

22. VESTED REMAINDER • Grantee is living ascertainable person AND • Clause creating the remainder contains no condition on grantee taking the property except expiration of prior estate • Example: To Aaron for life, then to Oona and her heirs.

23. CONTINGENT REMAINDER • Grantee is presently unborn or unascertainable *OR* • Clause creating the remainder contains a condition on grantee taking the property

24. CONTINGENT REMAINDER: EXAMPLES • “To Fred for life, then to Fred’s firstborn child.” Fred presently has no children. (Not born)

25. Suppose Fred has a child…

26. CONTINGENT REMAINDER: EXAMPLES • “To Fred for life, then to Fred’s oldest child living at Fred’s death.” (not ascertainable)

27. CONTINGENT REMAINDER:EXAMPLES • “To Fred for life, then to Wilma and her heirs if Dino survives Fred (condition precedent)

28. ANALOGY Vested Remainder Theater Ticket Contingent Remainder  Lottery Ticket

29. Life Estate + Vested Remainder To Fred for Life, then to Wilma and her heirs

30. Life Estate + Contingent Remainder Barney “to Fred for Life,then to Wilma and her heirs if Dino survives Fred.”

31. Life Estate + Contingent Remainder Barney “to Fred for Lifethen to Wilma and her heirs if Dino survives Fred.” Barney retains a reversion.

32. REMAINDERS “IN …” : • “To Fred for life, then to Wilma for life.”Wilma has a vested remainderin life estate • “To Fred for life, then to Wilma and her heirs if Dino survives Fred. Wilma has a contingent remainderin fee simple

33. PROBLEMS 7A-7F

34. (7A): O conveys Baconacre "to Mayer and her heirs." Mayer's only child, Armour, runs up large bills. Can Armour's creditors reach any interest of Armour in Baconacre?

35. (7A): O conveys Baconacre "to Mayer and her heirs." Mayer wishes to sell Baconacre and use the proceeds to take a trip around the world. Can Armour prevent Mayer from doing this?

36. (7B): Kermit “to Ernie for life, then to Burt forever.” (Common Law) Ernie: ?

37. (7B): Kermit “to Ernie for life, then to Burt forever.” (Common Law) Ernie: Life Estate Burt: ?

38. (7B): Kermit “to Ernie for life, then to Burt forever.” (Common Law) Ernie: Life Estate Burt: Vested Remainder in Life Estate

39. (7B): Kermit “to Ernie for life, then to Burt forever.” (Common Law)

40. (7B): Kermit “to Ernie for life, then to Burt forever.” (Common Law) Who owns the last piece?

41. (7B): Kermit “to Ernie for life, then to Burt forever.” (Common Law) Kermit has a reversion (in frog green!) Ernie dies?

42. (7B): Kermit “to Ernie for life, then to Burt forever.” (Common Law) Kermit has a reversion Ernie dies? Burt has life estate. Burt dies?

43. (7B): Kermit “to Ernie for life, then to Burt forever.” (Common Law) Kermit has a reversion Ernie dies? Burt has life estate. Burt dies? Kermit or Kermit’s heirs have fee simple

44. (7B): Kermit “to Ernie for life, then to Burt forever.” (Today) Ernie: Life Estate Burt: ?

45. (7B): Kermit “to Ernie for life, then to Burt forever.” (Today) Ernie: Life Estate Burt: Vested Remainder in Fee Simple Kermit?

46. (7B): Kermit “to Ernie for life, then to Burt forever.” (Today) Ernie: Life Estate Burt: Vested Remainder in Fee Simple Kermit: Nothing

47. (7B): Kermit “to Ernie for life, then to Burt forever.” (Today) Ernie dies?

48. (7B): Kermit “to Ernie for life, then to Burt forever.” (Today) Ernie dies? Burt takes a fee simple absolute. Burt dies?

49. (7B): Kermit “to Ernie for life, then to Burt forever.” (Today) Ernie dies? Burt takes a fee simple absolute. Burt dies? Property passes by Burt’s will or through intestacy to Burt’s heirs.

50. (7C): Elmer “to Sylvester for life, then to Bugs and his heirs.” Sylvester: ?