Monday, February 13, 2017

Land Investing 101 : Doctrine of Waste

Okay, the secret is out.  I am currently studying for my bar exam.  In the process, I must study real property law and other areas of law that pertain to real estate and may be helpful to a real estate or land investor.  I figured since I was studying anyways, I might as well put each topic one video at a time.  I also started a YouTube channel which can be seen here.

In this video we discuss the "Doctrine of Waste", a legal doctrine that basically states that life tenants (a tenant or someone whom leases the property) must leave the property in the same condition that it was given to him or her.  There are three kinds of waste that the doctrine covers:

  • Affirmative (Voluntary) Waste: This is when a tenant does something to the property that lowers the property value. For example, a farmer whom leases the land for farming and dig a 500 foot deep and 500 foot wide hole in the ground.  Or an apartment tenant that breaks the windows on his apartment. 
  • Ameliorative Waste: This is when a tenant does something that alters the property and gives the property what would be considered a an added value.  This could be in the form of an improvement to the property or something that would be considered an economic benefit to the property.  The doctrine is not concerned with the value of the waste but rather that the property be returned in the same condition as before the tenant occupied the property. 
  • Permissive Waste: This is when there is a lack of action by the tenant.  As a tenant there is a duty to make reasonable repairs or alert the landlord of reasonable repairs that need to be made.  When a tenant fails to make reasonable repairs, they are guilty of permissive waste.

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