An Overview of Real Estate Law
Real estate law is a set of legal principles that governs land and any permanent structures attached to it, such as homes and commercial buildings. It encompasses a wide range of matters involving the rights to use and possess land, as well as any issues that arise from the purchase or sale of land. As real estate disputes carry high stakes, it’s critical that individuals entering into such transactions are aware of the law and their rights.
In general, real estate law consists of constitutional law, statutory law, and common law. Constitutional law includes state constitutions that govern, amongst other things, property rights and how land can be used. Statutory law consists of state and federal statutes such as rules governing contracts and payments. Finally, common law consists of decisions by judges and appellate courts that provide binding precedent for future cases .
Some basic principles of real estate conveyance include the "time is of the essence" clause, which establishes the deadline for delivering or receiving payment or possession. To comply with the statute of frauds, all contracts must be in writing and signed, as real property is considered an asset of great value. Contracts must also contain a clear legal description and show a meeting of the minds, meaning that both parties understand the terms of the contract and agree to its provisions.
Real estate law does not apply to physical property like goods or services, which fall under the purview of contract law. Furthermore, real estate law does not apply to transactions that involve alternative forms of public and private land ownership, such as eminent domain.
Prominent Real Estate Law Cases
When examining influential real estate law cases, several cases are particularly noteworthy because of their lasting impact on attorneys and other real property owners. They are as follows:
Carter v. Greene, 195 P.2d 785 (Okla. 1948). This case, commonly known as the "Twirling Trees" case, was the first of its kind in protecting the views of a property owner against the encroachment of vegetation on an adjacent property owned by a neighbor. To this day, this case serves as a persuasive reference for many trial courts when dealing with the clear obfuscation of views created by trees and shrubs on adjoining property.
Katz v. P. Gordon & Co., 182 N.E.2d 689 (N.Y. 1962). In this case, the appellate court affirmed a lower court judgment against a corporation that had conveyed its "Prior Use" and "Reversionary Rights" to a hospital. The court found the hospital to be liable for the negligence of an independent contractor, and thus, equal to a mere landowner. The hospitals’ arguments were rejected even though it managed the entire day-to-day operation of the development.
Walter v. Walmart Stores, Inc., 2007 BL 84981, 2007 WL 1199456 (Cal. App. 2 Dist. Apr. 23, 2007). In this case, a property owner successfully sued a large retail chain for damages including legal fees, with regards to his eminent domain claim. The property owner also recovered costs as a plaintiff under the Public Cost Recovery Statutes Cal. Civ. Proc. Code §§ 1240.410-1240.440 and Cal. Civ. Proc. Code §§ 1255(a)(b), for the costs incurred in preparing the appraisal of the subject property in the eminent domain action. The Court of Appeals upheld the property owner’s claim.
Green v. Bittner, 825 A.2d 39 (Pa. 2003). In an influential case involving a twist on the doctrine of adverse possession, the Pennsylvania Supreme Court held that a claim exists for interference with a property right where a person has been using land under a mistake of fact and uses such land in a manner inconsistent with the true owner. This case has huge implications for property owners and title insurance companies with respect to their property right claims and rights.
Riley Street Retail Center, LLC v. Goin’ Postal, LLC, 145 Cal. App. 4th 151 (Cal. App. 2006). In this case, the court found that a lessee’s breach of a non-interference provision in a commercial lease agreement prevented the lessee from claiming damages for interference with quiet enjoyment.
Real Estate Contract Disputes
Contractual issues are also common sources of disputes. In W&S Par., LLC v. Hennings, the Court of Appeals of Indiana proffers the unique situation where the disagreement centers around the scope of a contract. Here, the buyer’s claim against the seller for failure to convey the property standard under the contract was agreed to be decided by the Indiana Uniform Standards of Professional Appraisal Practice (the USPAP.) The evaluation of the property by the buyer’s appraiser was done on an "as-is" basis for an informal appraisal, without the benefit of a sale, at a time when no other sales had been made for the property. Following his report, he performed the required appraisal as a formal appraisal, at which time he found that the property had dropped in value since the initial report. The trial court denied the buyer’s claim for the difference in the two appraisals as not matching the requirements of the agreement. On appeal, the court reversed and found that the second appraisal met the requirements of the USPAP, and ordered the seller to pay the difference in value between the initial appraisal and the later findings. The result is that the seller takes the loss reflected in the second appraisal, as the terms of the contract required.
In another alleged breach of contract action, the court finds that there is a genuine issue as to fact regarding the owner’s damages in investing in the property and vacated the entry of summary judgment for the plaintiff. The plaintiff had purchased an 11-acre parcel and began developing it prior to its sale. The property was later sold to the defendant who found that the developer had only developed 6 of the 11 acres and brought suit for an alleged breach of contract and specific performance.
In a different context, the question of contractual obligation after an individual’s death was tried in Marquiss V. Marshall. Here, the court determined that the marital liability of a deceased post-divorce former spouse to pay for the purchase of real property was enforceable against his estate. Following the divorce, one party continued to pay off the loan on a home purchased during the marriage and after death sought specific performance in a probate action against the decedent’s estate. The estate defended against the claim asserting that the divorce agreement did not specifically state the payments were an obligation of the estate, pursuant to In re Estate of Krokoff. In striking the estate’s affirmative defense as irrelevant and finding the agreement sufficiently specific to support the claim for specific performance, the court observed that contracts for the sale of land are specifically enforceable. As the underlying contract was clear and unequivocal, the granting of the plaintiff’s motion for partial summary judgment was proper.
Through such situations and cases, among others, claims involving contracts in real estate transactions continue to develop and expand legal doctrine and theory to bring justice and equity to the parties.
Disputes Over Property Rights and Ownership
In the realm of property rights and ownership, one landmark case is Pierson v. Post. In this 1805 ruling, the Court of Appeals of New York decided that hunting remains with the pursuer until actual physical possession.
This case had its genesis in what first appeared to be a typical property dispute, where the plaintiff, Roger Post, claimed to have legally caught an animal on property owned by him. The defendant, John Pierson, claimed he was the first in pursuit of the animal.
The New York court sided with Pierson, showing additional concern over who had the most right to the animal being hunted. In this instance, the case was made that Pierson was closer to the quarry than Post and it was Pierson who had most likely been the hardest worker thus far in terms of finding the animal.
The concept of possession being nine-tenths of the law was also considered relevant in the decision, because Pierson had gone through the necessary paces – a necessary preliminary step prior to any potential capture.
Another significant outcome of this matter was that the notion of "pursuit" changed, and the goal to possess the item became the key point. As this case redefines the way the law saw pursuit, it also redefined the way the law looked at the definition of and approaches to property rights.
A little later on in 1850, in California, a similar case occurred, though in a somewhat different light.
The earlier case was not a hunt but a collection of beached seals, which resulted in the case of Ghen v. Rich. When the boat captain John Rich discovered a seal embedded with his marker on the Cape Cod coast, he attempted to seize it.
When he did so, another ship captain by the name of Edward Ghen came forward to claim the animal, and Rich eventually brought suit against Ghen for the return of the vessel.
Because of the nature of the vessel industry in the Cape, it was customary in the area, in any kind of seal hunting, for agency retrieval of the seal after its death. The primary rule was that the claimants had to go swiftly to the site of the kill, with the presumption that it would have been left there momentarily to undergo gutting and other collection activities.
The following courts ruled that Ghen had passed the point of possession and applied "the natural and probable course of events" in order to do so: "Any owner of a vessel engaged in sealing on the Cape would have known immediately of the accident. His first action would have been to send out for the dead seal immediately, if possible."
In both of these cases, the principle of possession was important. Today, the search for possession and the process of transferring ownership from that point continues with real estate transactions – otherwise known as conveyancing – and a specialized field of law called real estate law.
These matters can help to define the scope of ownership and possession in real estate transactions.
Zoning and Land Use Cases `
Another area of foundational significance to the practice of real estate law are legal disputes arising from zoning and land use regulations. These cases have contributed substantially to shaping how urban areas look and develop, as well as the rights and limitations placed on property owners and developers.
One seminal case is Euclid v. Ambler Realty Co., an early 20th century Supreme Court ruling that came about as the result of a dispute between a landowner and the city of Euclid, Ohio . Ambler, the landowner, argued that the zoning ordinances passed by the city violated the Fifth Amendment, as they severely limited the development potential of his land. The Court upheld the city’s right to regulate building in accordance with a comprehensive plan, finding Euclid’s zoning ordinances appropriate. The case set a crucial precedent, and still is often cited in cases involving land use and zoning laws.
How Real Estate Law Shapes Market Dynamics
In addition to providing important legal precedents, real estate law cases can also have a significant impact on the real estate market itself. Traditionally, cases that have been interesting enough to generate litigation between large parties with matching legal budgets are the ones that have the most substantial market influence, but recent years have seen more hits on a subject like fair housing impacting entire states and with substantial ripple down influences on local real estate markets.
An example of this can be seen in the state of New Jersey, which has been the focus of multiple high-profile cases, many of which have led to state-wide changes. The racial bias case Mount Laurel I, roughly 40 years ago, was the start of one of the longest and most expensive public discussions the state has ever held, while more recently, the long-term case, What’s Mine is Mine, has resulted in major changes for how inclusionary zoning is handled across the state.
More minor cases, like those involving easements, can also cause ripples within their immediate locality. For instance, the case of JMH Realty v. Kamins, involved the idea that a court could create and modify an easement to better serve the purpose it was supposed to serve, if the original language did not clearly create that use. Such a case, while definitely important to the landowners set to benefit from the easement, might not impact property owners throughout even the same county. However, over a long period of time, these smaller cases can add up to create a more clear and involved body of law.
Part of the impact of such a case was visible during the drafting of K.S.A. 60-1004 in Kansas. Through this law, Kansas tries to prevent any judge from altering the language of a deed, be it an easement or otherwise, even with the apparent consent of the involved landowners, and in doing so, reemphasizes the importance of solid drafting and clear language when creating easements and other real estate documents.
Trends in Real Estate Law
As we look ahead to the near future, a few trends stand out that are set to impact the field of real estate law. Cases involving lease agreements and the evolving requirements on landlords and tenants continue to be in play, particularly in light of ongoing shifts in occupancy and usage patterns brought about by the pandemic.
We anticipate that the question of what constitutes "essential" amenities will be litigated frequently and consistently, and will likely warrant further clarification from courts in different jurisdictions as this issue moves through the process. Landlords may start to stipulate amenities explicitly in the lease agreement so they are clearly defined and the expectations of tenants are clear.
Lease agreements will also see an increased focus on exclusive use clauses and what amenities can be limited for the benefit of one particular store over others . These clauses will be heavily relied upon in any new agreement where space is being leased in larger buildings or shopping centers and tenants will continue to advocate for reduced use and the right to limit the amenities provided to their competitors.
In addition to the issues of usage and amenities, we expect that topics such as valuation of lease or rental space and issues related to the legality of covenants and restrictions on occupied space will also be brought before the courts more frequently going forward. We anticipate that judgements will take a stricter view on non-compliance with usage clauses and restrictive covenants. Tenants, landlords and even developers can expect to see an increase in litigation over property rights and clauses in leases that stipulate how the real estate can be used, allocated and ultimately transferred.