Why Land Follows the State It Sits In
Of all the rules in this subject, the one about land is the oldest and the least negotiable. Immovable property is governed by the law of the place it sits in, and no contract, will or trust has ever succeeded in moving it.
The rule in short
The situs rule holds that questions about land are governed by the law of the state where the land is located. It reaches title and its transfer, the formalities of deeds, mortgages and their foreclosure, easements, adverse possession, landlord and tenant regulation of the premises, and the descent of land on death. It survives choice-of-law clauses, because a state's control of the land within its borders is not something private parties can vary.
Almost every rule described on this site involves weighing competing connections and reaching a defensible answer. The rule about land does not. Immovable property is governed by the law of the state where it lies, the rule is close to absolute, and it survives everything private parties can do to vary it.
What the situs governs
Title and its transfer. Who owns the land, what interests exist in it, and what is required to move ownership from one person to another.
The formalities of conveyance. How a deed must be executed, witnessed, acknowledged and recorded. A deed valid where it was signed is worthless if it does not satisfy the situs state's requirements.
Security interests and their enforcement. Mortgages and deeds of trust, their priority, and the procedure for foreclosure — judicial or non-judicial, with or without a redemption period, with or without a deficiency judgment.
Rights arising by operation of law. Adverse possession, prescriptive easements, implied easements, riparian and water rights, mineral interests and the rules on their severance.
The descent of land on death. Real property passes under the law of the state where it lies, not the law of the decedent's domicile, which is the reason for the separate proceeding described in real property outside the state of death.
Why the rule holds
Land cannot move. The connecting factor is fixed, permanent and impossible to manipulate, which removes the fortuity problem that undermined the old tort rule described in the place of injury and the modern test.
Recording systems are local. Every state maintains its own register, and title must be determinable from it by anyone searching. A private agreement selecting another state's rules would make the register unreliable for everybody else.
Enforcement is unavoidably local. Only the courts of the situs can order a sale, a possession or a correction of the record, and a judgment from elsewhere purporting to affect title has limited effect without local proceedings.
The state's regulatory interest is direct. Land use, environmental controls, homestead protections, tenant protections and property taxation are all exercised over specific parcels, and a state cannot administer them under another state's law.
And third parties rely on it. Buyers, lenders, insurers and neighbors all order their affairs on the basis that the land is governed where it is. The rule protects them rather than the parties to any particular transaction.
| Question about land | Governed by | Can a clause change it |
|---|---|---|
| Who holds title | The state where the land sits | No |
| Formalities of a deed | The state where the land sits | No |
| Foreclosure procedure | The state where the land sits | No |
| Adverse possession and easements | The state where the land sits | No |
| The contract to sell | The law the parties chose | Yes |
What the situs does not govern
The contract to sell. A purchase agreement is a contract and can be governed by another state's law. The obligations between buyer and seller, remedies for breach and the interpretation of the terms all follow the chosen law.
The loan obligation, sometimes. The promissory note may be governed by one state's law while the mortgage securing it is governed by the situs. This split is standard in commercial lending and surprises people who assume the package travels together.
The relationship behind the ownership. A partnership, trust or company holding land is governed as an entity by its own law, even though the land it holds is governed by the situs.
Personal property in or on the land. Movables follow different rules, which is why an estate can be administered under one law for the furniture and another for the house it sits in.
Whether a person had capacity or was defrauded. These questions about the transaction rather than about the land may be governed by another state's law, though the effect on title is ultimately for the situs to determine.
Equipment, solar installations, manufactured housing and agricultural improvements each start as personal property and may become part of the land. Whether a particular item has crossed that line is itself a question for the state where it sits, and the answer decides whether a security interest was perfected under one regime or the other. Establish the characterization before assuming which rules apply to anything else.
The practical consequences
Use local counsel for the conveyance. Formalities, recording requirements and title practice vary enough that a deed prepared to another state's standards is a real risk, and the risk is discovered when somebody tries to sell.
Expect a second proceeding for an estate. Out-of-state land generally requires ancillary administration, examined in when ancillary administration is required.
Plan around it rather than against it. Holding out-of-state land in a trust, a limited liability company or with a transfer-on-death instrument recognized at the situs can avoid the second proceeding entirely, and each option has to be checked against the situs state's law rather than the owner's.
Check foreclosure and tenant rules before lending or letting. Timelines, notice requirements and remedies differ substantially, and a lender or landlord operating on their home state's assumptions can lose months.
And do not rely on a governing law clause for anything touching title. It will govern the contract and it will not govern the land, which is the clearest illustration of the limits described in what a choice-of-law clause achieves.
Where the boundary gets blurred
Fixtures. Something that was personal property becomes part of the land when affixed, and whether it has crossed that line is a situs question decided by the situs state's test. Equipment, solar installations, agricultural improvements and manufactured housing all generate disputes here, and the answer determines whether a security interest was properly perfected under one regime or the other.
Manufactured homes. A structure that arrived on wheels and was later placed on a foundation may be personal property, real property or either depending on whether a title was surrendered and a conversion recorded. States handle this differently and the paperwork is frequently incomplete, which produces title problems years later at sale.
Mineral and water rights. Interests below the surface can be severed from it and dealt with separately, and the rules governing severance, ownership of extracted resources and rights to use water differ profoundly between eastern and western states. An owner familiar with one system frequently makes incorrect assumptions in the other.
Cooperative apartments. A cooperative interest is generally shares in a corporation together with a proprietary lease, which is personal property in most analyses despite being, to the occupant, an apartment. That characterization affects transfer formalities, financing, and how the interest passes on death.
Timeshares and fractional interests. Structured variously as deeded real property, as membership interests, or as contractual rights to use, and the structure decides which rules apply. Buyers routinely do not know which they hold, and the difference matters most at the point of sale or inheritance.
Each of these is the same question in a different costume: is this thing land, for the purposes of the state where it sits? Where the answer is yes, the situs rule applies with all its firmness. Where it is no, the ordinary contract and personal property analysis takes over, with its choice-of-law clauses and its weighing of contacts. Because the characterization is itself a matter for the situs state, the sensible approach for anyone dealing with an unusual interest across a state line is to establish that answer first, before any assumption is made about which state's law governs anything else.
Points to carry away
- Title, transfer and the formalities of conveyance follow the situs of the land.
- Mortgages, foreclosure procedure and priorities are governed by the situs.
- Adverse possession and easements are situs questions.
- Land descends on death under the law of the situs, not the decedent's domicile.
- The contract to sell may be governed by another law even though the deed is not.
Questions readers ask
Can parties choose another state's law for a property transaction?
They can choose it for their contract and not for the property. A purchase agreement, a joint venture arrangement or a loan agreement can be governed by another state's law, and courts will give effect to that. What cannot be varied is the law governing title itself, the formalities required to convey it, what interests can exist in the land and how they are recorded. Those are matters of the situs state's own control over property within its borders, and a clause purporting to change them has no effect on the outcome.
Why is the rule so much firmer than the others?
Three reasons. Land cannot move, so there is no risk of the connecting factor being fortuitous in the way a place of injury can be. Every state maintains a recording system for land within it, and title has to be determinable from that system rather than from an agreement between two parties. And enforcement is inevitably local: only the courts of the state where the land sits can effectively order a transfer, a sale or a possession. The rule is as much practical as doctrinal.
What does it mean for an estate with land in two states?
That the estate is administered under the law of the decedent's domicile for personal property and under the law of each situs state for the land there. This is why a second, ancillary proceeding is generally required where an estate includes out-of-state real property, and why an estate plan drafted entirely around one state's law can produce unintended results for a holiday home in another. The mechanics are set out in the articles on estates in two states.
Sources
- Legal Information Institute — Situslaw.cornell.edu
- Legal Information Institute — Real Propertylaw.cornell.edu
- Legal Information Institute — Conflict of Lawslaw.cornell.edu
- Legal Information Institute — Adverse Possessionlaw.cornell.edu
- Legal Information Institute — Recording Actslaw.cornell.edu
- U.S. Constitution, Article IV — Full Faith and Credit Clauselaw.cornell.edu
Right Way Review is a publication, not a law firm. This article states general rules and cites its sources; it is not advice about any particular case, and the law differs by state and changes over time.
More in Which State's Law Applies
Proving Another State's Law in Court
Under the federal rule and its state equivalents, a party intending to raise an issue about the law of another state must give notice, generally in a pleading or by separate written notice. The court then determines that law as a question of law rather than as a question of fact, and may consider any relevant material whether or not submitted by a party and whether or not admissible in evidence.
When a Court Sets the Chosen Law Aside
Courts decline to apply a chosen law on four broad grounds. The chosen state may have no substantial relationship to the parties or the transaction and no other reasonable basis may exist for the choice. Applying the chosen law may contravene a fundamental policy of a state with a materially greater interest in the issue. A statute may expressly void the clause, as several states have done for employment covenants and consumer contracts.
Two Laws, One Transaction: Splitting the Question
Issue-by-issue analysis, sometimes called depecage, follows from the way the modern choice-of-law test is framed: the question is which state has the most significant relationship to the issue in question. Because different issues implicate different contacts and different policies, a single dispute can be governed by one state's law on the standard of care, another's on damages, and a third's on a limitation defense.