Property

1. Property Chapter 48

2. Property • Capable of being acquired, owned, used • A legally protected right or interest over which the owner has the ability to exercise dominion. • A bundle of rights - that are recognized and enforced by law, and protected under the Constitution. • Property has a unique status, second in importance only to liberty. • No person shall be deprived of life, liberty or property, without due process of law ...and just compensation.

3. Real Property • The earth’s crust and all things firmly attached. • Immovable • Includes subsurface rights, i.e., minerals • Includes rights above land, i.e., radio towers • Trees, shrubs, perennial vegetation • Fixtures - Can it be removed w/o material damage? What is the party’s intent; the purpose of the item?

4. Personal Property (chattels) • Acquired and transferred easily. • Intangible - Intellectual property (patents, copyrights);stock; commercial paper (notes) • Tangible - Anything that has a physical existence, generally moveable, cars, computers, books, animals, severed trees, crops that must be planted each year, i.e., corn, oats, potatoes

5. Ten ways to acquire personal property • Buy it (Sale of Goods) • Create it (knit a sweater) • Take it (capture a deer) • Trade it • Inherit it • Receive it as a gift • Find it (abandoned or lost property) • By accession • By divorce • By Confusion

6. By Gift • Voluntary transfer without consideration • 3 elements needed: • Donor’s present intent to give a gift • Donor must make delivery of the gift • constructive delivery • Acceptance • Inter vivos • Irrevocable • Causa mortis • Contingent upon death • Must die as anticipated • Revocable

7. Lost, Mislaid or Abandoned Property • Lost - unintentionally left. Finder is entitled to the property against everyone except the true owner. • Exception for lost property found in the ground. • Estray statutes • Mislaid - Intentionally placed somewhere and accidentally left with no intent to relinquish ownership. Finder acquires no rights. Owner of premises, not finder, has first claim. • Abandoned - Intentionally left. Intent to relinquish ownership. First finder entitled to the property. • Unclaimed Property escheats to the state

8. By Accession • The right of the owner to any increase/improvement of the property, whether natural or human made • Owner of cow acquires title by accession to any calves born to the cow • Improvements • by thief • by someone in good faith who believed he was an owner

9. By Confusion • The mixing or putting together of property so that it becomes difficult to distinguish who is the owner of their own individual property • Co-mingling of fungible goods (oil, grain) • Accident, Mistake, Agreement, each owner will bear the loss in proportion to his share • By willful or wrongful act, he may lose his interest.

10. Property Insurance: Insurable Interest • Insurable interest - A person has an insurable interest if the insured will derive an economic benefit or advantage from its preservation, or will suffer economic loss or damage from destruction. • Must exist when the loss occurs but not necessarily at the time the policy is issued • Acquired when goods are identified. • Persons other than owners can have an insurable interest, i.e, lessees, secured creditors, grantors liable for a mortgage

11. Subrogation • Entitles the insurer, to the extent it has paid for a loss, to any rights of its policy holder to recover from any third party. • If a loss is covered by the insured’s own negligence, subrogation does not apply. • Not applicable to life insurance and rarely to health insurance • Subrogation precludes double recovery for the same loss

12. Cancellation • Exercising the right to rescind, abandon, abrogate or otherwise terminate a contract of insurance. • The form and the notice of proper cancellation are determined by provisions in the policy. • Both the insurer and insured can cancel. • Restrictions on cancellation may apply (statutes, administrative regulations) may require that insurers give proper reasons for cancellation or nonrenewal.

13. Fire and Casualty Insurance • Covers direct fire damage, and damage from smoke chemicals, water • Also, policies usually cover wind, hail, and other forces of nature (not hurricanes) • Pays insured a specified amount for property loss. Does not indemnify for lost profits, business interruption or other special matters unless there is a rider attached. • Friendly Fire/Hostile Fire

14. Co-Insurance • Insured can be fully protected up to a percentage (usually 80%) of the value of the property. • Encourages policy holders to insure property for an amount that is near to its full replacement cost. • The coinsurance requirement applies only to partial losses. Total losses result in recovery of the face amount of the policy. • Recovery = Face Value of PolicyX Loss • FMV of Property X Co-insurance %

15. Book Example, p. 1045 • $60,000 (Policy) X $50,000 = 37,500 • $100,000 X 80% • Insurer pays $37,500

16. Book, Problem #13 • Graham is entitled to collect $36,600. Graham should have carried $96,000 fire insurance if the building was valued at $120,000 and the policy contained an 80% co-insurance clause. Since the property is under insured, the amount recoverable is computed by multiplying the amount of loss ($48,000) by a fraction, the numerator of which is the amount of the policy and the denominator of which is the amount the policy should have been ($72,000/$96,000)

17. Insurance Defenses • Misrepresentation • Must be material • Breach of Warranty - a statement, undertaking that appears in policy • Affirmative warranty • Promissory Warranty • Nondisclosure

18. Types of Policies • Valued - Policy where the parties specifically agree upon the full value of the property at the time it is issued • Open - No agreement as to specific value. Insurer pays FMV.

19. Binder • Agents have authority to make the insurance effective immediately • Answer to Problem # 12 - Offer and Acceptance. Yes. Adler is protected by public liability insurance in these circumstances because agents of casualty insurance companies are normally authorized to issue a temporary binder and to cover an insured immediately upon request, without notice to or acceptance by the insurance company of the risk.