Tuesday, August 21, 2018

Lovett on the Concept of Good Faith in a Mixed Jurisidction

LovettFor a little comparative scholarship from a mixed jurisdiction, John Lovett (Loyola) has posted Good Faith in Louisiana Property Law (Louisiana Law Review) on SSRN. Here's the abstract:

Good faith plays a pivotal role in four core areas of Louisiana property law that were the subject of an intense burst of law reform activity between 1977 and 1982. This article addresses the function of good faith in those areas: (1) as a prerequisite to the establishment of a predial servitude benefiting the owner of a building that encroaches on the property of a neighbor (Article 670 of the Louisiana Civil Code); (2) as a mediating device allocating the rights of an original owner of a corporeal movable and a subsequent transferee or acquirer under the bona fide purchaser doctrine (Articles 518 to 525 of the Louisiana Civil Code); (3) as a defining characteristic establishing rights and obligations under the law of accession when a person possesses immovable property without title (Article 487 of the Louisiana Civil Code); and (4) as a prerequisite for the acquisition of ownership or other real rights in immovable property by ten year acquisitive prescription (Articles 3480 to 3482 of the Louisiana Civil Code).

The article first observes that in all of the instances in which good faith is employed in Louisiana property law an initial owner of a corporeal thing either risks losing all or a portion of her property rights to another person who has invaded the owner's sphere of exclusive control or may be required to compensate another person who has acquired possession of the thing. In other words, the law shifts a property entitlement to someone who would ordinarily not be entitled to any legal protection. The article argues that in these entitlement shifting situations the Louisiana Civil Code uses the concept of good faith as a crucial mediating device, reallocating the rights and obligations of the original owner and the new player who has arrived on the scene either uninvited or through some intermediary transaction.

The article demonstrates that the concept of good faith has two essential components in those contexts: honesty and carefulness. Honesty is a fundamental and constant requirement for good faith status. Carefulness, however, plays a more variable role. In the context of building encroachments, the Civil Code only requires a minimal level of carefulness-no knowledge of obvious red flags. Under the bona fide purchaser doctrine, different market situations can lower or raise the level of carefulness required to achieve good faith status. In the law of accession, a good faith possessor must rely on a written title translative of ownership but otherwise must only be innocently unaware of defects. Finally, under the law of acquisitive prescription of immovables, a good faith possessor must rely on a just title and meet a rigorous standard of objective reasonableness.

This article shows that that as the consequences of the entitlement shifting rule increase, good faith is transformed from a relatively simplistic and mechanistic tool focused primarily on honesty to one that becomes increasingly precise, exacting and ethically responsive, focusing more and more on the transactional and contextual carefulness of the good faith claimant's actions-and sometimes on the relative carelessness of other parties in a property relationship. The article concludes by speculating on what Louisiana property law might gain and lose if the notion of good faith were banished from consideration.


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