Rights to Mailbox under Contract - Property Law - Exam, Exams of Property Law

Download Rights to Mailbox under Contract - Property Law - Exam and more Exams Property Law in PDF only on Docsity! CREIGHTON UNIVERSITY SCHOOL OF LAW PROPERTY, § B SPRING SEMESTER EXAMINATION Professor Pearson Monday, May 11, 1998 PART ONE INSTRUCTIONS: THIS IS PART ONE OF A THREE-HOUR CLOSED BOOK EXAMINATION. BOOKS, STUDY NOTES, PAPERS, OUTLINES, OR ANY OTHER MATERIALS ARE NOT PERMITTED IN THE EXAMINATION ROOM. PLACE YOUR EXAM NUMBER, SECTION, PROFESSOR'S NAME, AND COURSE TITLE ON EACH BLUE BOOK. IF YOU WRITE MORE THAN ONE BOOK, NUMBER THE BOOKS, e.g., 1 of 2, 2 of 2. QUESTION NO. 1: (Suggested time, 35 minutes) Buyer wishes to purchase Seller's property. Seller and Buyer agree to a purchase price of $100,000, and Buyer advances $3000 to Seller as earnest money. Seller and Buyer then enter into a written contract of sale, which provides in its salient parts: "The undersigned purchaser hereby agrees to purchase the subject property [property herein described by address and legal description] including all fixtures and equipment permanently attached to the property. The only personal property included are the dishwasher, clothes dryer, clothes washer, refrigerator, fireplace screen and tools, and all window coverings. PROVIDED, that Seller has good, valid and marketable record title, in fee simple, and Seller agrees to convey title to Property to Purchaser by warranty deed free and clear of all liens, encumbrances or special taxes levied or assessed, subject to all building and use restrictions, utility easements not exceeding ten (10) feet in width abutting the boundary of the Property, and covenants now of record." The contract was made contingent "upon Buyer securing within 15 days financing of $80,000" (80% of the purchase price). The contract also provided that “time is of the essence.” The contract further provided that, "[S]hould the buyer fail to make settlement as herein provided, sum or sums paid on account are to be retained by the seller either on account of the purchase money, or as compensation for the damages and expenses he has been put to in this behalf.” (a) assume that Seller takes with him the mailbox which stands on a post in the front yard of the house (Seller did not take the post itself but only the mailbox which was screwed into the post) Buyer wants the mailbox. Who has rights to the mailbox under the contract? (b) assume that in accordance with a portion of the contract not reproduced here, Seller treats the house for termites at Seller’s expense. In doing so, Seller hires a company to do the work and the company uses the chemicals heptachlor and chlordane (the contract was silent regarding the chemical to be used). The federal Environmental Protection Agency has now issued a study proving that these chemicals present a high risk of cancer even when properly applied in termite control activities. Buyer now wants out of the contract. May he succeed? Why or why not? PROPERTY, § B SPRING SEMESTER EXAMINATION Professor Pearson Monday, May 11, 1998 PART ONE QUESTION NO. 1: (CONTINUED) (c) assume that the Buyer wishes to secure from the lending institution funding in the amount of 90% of the purchase price, and does so. Because Buyer did this, he is now unable to secure financing as contemplated by the contract without delaying the date of closing by three days. May Seller treat the contract as breached under these facts and refuse to convey? Why or why not? (d) assume that Seller's interest in the property is burdened by a long-held recorded negative easement in a neighbor, which secures to the neighbor the right to a scenic view across the entirety of the conveyed property. Buyer knew of this prior to purchase but completed the sale in any event. Buyer closes the sale, crosses the street, and files his lawsuit against Seller, alleging breach of contract. How should the court rule and why? (e) assume that the Buyer fails to close as required under the contract. Seller sues Buyer for specific performance of the contract. How should the court rule and why? QUESTION NO. 2: (Suggested time, 25 minutes) Betty wanted to buy Blackacre from Sally, and approached her with that transaction in mind. “Would you be at all interested in entering into a deal with me?" she asked. “I would gladly give you $45,000 for a deed for Blackacre. That’s a good price!” Sally was momentarily taken aback by the offer, but after a moment’s thought, brightened up. “Sure, Betty, I think that will work. I never use the place anyway. But you’ll have to pay me cash. No loans or “subject to financing clauses” and stuff like that. And if we’re going to do this, I want to get it done promptly. I’ll tell you what -- I’ll prepare a written contract for us to sign, and I’ll draft up a deed real quick-like. When can you round up your payment?” Betty said she could get the money “in a few days.” “Let’s meet tomorrow to sign the contract,” Sally said. Betty was surprised by the speed of all of this, but was excited as well, and agreed to meet Sally the next day. The next morning they met and signed the contract. It was a simple contract, stating only that Sally would execute and deliver a deed to Blackacre to Betty and that Betty would pay the agreed-upon consideration. A couple of days later, Betty had the $45,000 in hand, so Sally and she met again. This time Betty handed over the cash and Sally handed the deed to Betty. Betty looked at the deed and was surprised to see it was a quitclaim deed. “Sally, I want a general warranty deed.” she exclaimed. “Sorry,” Sally responded. “I don’t do warranty deeds. Besides, the contract doesn’t call for one. Bon appetit.” Somewhat miffed, Betty nonetheless took the deed and went to record it. At that point, she determined the following: Sally does not hold title to Blackacre - - title is held instead by Trudy, a stranger to both Sally and Betty; it is a race- notice recording jurisdiction; and the deed by which Trudy received title has never been recorded. Betty immediately recorded the Sally to Betty deed. PROPERTY, § B SPRING SEMESTER EXAMINATION Professor Pearson Monday, May 11, 1998 PART TWO QUESTION NO. 2: (Suggested time, 15 minutes) S and B enter into a written contract of sale for Blackacre. S agrees to sell for $35,000 and B agrees to buy for that amount. There are no contingencies for financing contained in the contract. After execution of the contract, B tells S he cannot come up with the full $35,000; he can only pull together $25,000. B asks S to rescind. S orally agrees to do so, S and B shake hands, and the two depart. Assume that the mutual forbearance of obligations qualifies as adequate consideration for the agreement to rescind. Assume as well that B was untruthful when he said he couldn’t come up with the money. The truth is that B had found another property (Whiteacre) which had a sale price of $25,000 that B decided he wanted rather than Blackacre. After the aforementioned events, B purchased Whiteacre for $25,000. A couple of weeks later, S regretted his “kind” action and sought out an attorney to represent him. The attorney indicated that S’s written contract with B is still in force because of Statute of Frauds considerations. Discuss. QUESTION NO. 3: (Suggested time, 15 minutes) O conveyed Blackacre to A in fee simple absolute on January 1, 1998. On February 1, 1998, O purportedly conveyed a one year leasehold in Blackacre to T by written lease, at a monthly rental amount of $1000, an amount equal to the reasonable rental value of the premises. T commenced payment to O each month in accordance with the terms of the lease document. T learned of A’s fee simple title interest in Blackacre on April 30, 1998. It is now June 15, 1998. A is demanding that T give A a payment in the amount of $6000 for the rental value of Blackacre for the six months from January to June. Assume these additional facts: the jurisdiction has a recording statute, which provides the following: “No conveyance, transfer or mortgage of real property, or any interest therein, nor any lease for a term of one year or longer, shall be good and effectual in law or equity against creditors or subsequent purchasers for a valuable consideration and without notice, unless the same be recorded according to the law;” A never recorded the O to A deed and T had no actual or inquiry notice regarding the O to A deed (until learning of it on April 30, 1998); and T has never recorded his lease document. (a) What kind of a recording statute is this? (b) Can T use this recording statute to avoid making the $6000 in rent payments to A? Why or why not? PROPERTY, § B SPRING SEMESTER EXAMINATION Professor Pearson Monday, May 11, 1998 PART TWO QUESTION NO. 3: (CONTINUED) (c) Assuming T is able to use the recording statute to avoid making payments to A, can T secure repayment of the $6000 from O and thereby be relieved of all obligation to pay rent for that period? Why or why not? QUESTION NO. 4: (Suggested time, 15 minutes) Oscar is the owner in fee simple absolute of a forty-acre parcel of land. Oscar intends to “subdivide” the property into one-acre parcels and sell those parcels to individual purchasers. Oscar first sells off Parcel A to Alice. The deed from Oscar to Alice reads as follows in pertinent part: “Oscar hereby conveys [Parcel A (herein adequately described)] to Alice in fee simple absolute for good and sufficient consideration received. Alice hereby covenants to construct on Parcel A a single family residence of a style and size approved by Oscar in the exercise of his exclusive discretion. Alice covenants as well to use Parcel A only for residential purposes. Oscar retains the right to modify restrictions placed on subsequently conveyed lots.” Oscar executed the deed and delivered it to Alice. Thereafter, Oscar conveyed successively Lots B through G by use of deeds containing the same substantive language. But, eight months later, Oscar conveyed Lot H to Harry by a deed containing no restrictions. Harry is now in the process of building a restaurant, but Alice files a cause of action seeking to enjoin the construction. Identify and discuss the likely theory behind Alice’s cause of action and the defenses Harry might offer in opposition to the cause of action. Be sure to include in your answer your views as to the best resolution of the matter. QUESTION NO. 5: (Suggested time, 15 minutes) George took up occupancy of vacant land known as Blackacre, which is located in a state with a ten year statute of limitations for adverse possession and which follows the objective standard for the element of hostility. Hilda holds record title to Blackacre in fee simple absolute, but since she rarely visits the property, she had no idea of George’s presence on the land. George was not intending to secure property rights by his occupancy, but was simply wanting a place to stay when he was down and out. Over time, though, George took a liking to the place and, since nobody was ejecting him, decided to stay. PROPERTY, § B SPRING SEMESTER EXAMINATION Professor Pearson Monday, May 11, 1998 PART TWO QUESTION NO. 5: (CONTINUED) And stay he did, exclusively and continuously and openly, for nine years and five months. During that time, he lived in a cabin already in place on the premises. Having learned of the law of adverse possession after being in residence for five years, George had promptly decided to stay on precisely to get title . Given his belief that he would be titleholder to Blackacre in a mere seven additional months, he drew up plans to construct a more permanent abode on the land. But, as fate would have it, with only two months to go, Hilda found out about George. George was flabbergasted at the possibilities of discovery! But, much to George’s surprise, Hilda apparently knew nothing of the law of adverse possession. And being a kind spirit, she said it was okay for George to stay on the land. “I don’t have any real use for this place anyway, George, don’t ya’ know. Why, you’re welcome to be here, George! I’m actually glad you’re here, George. I mean, who would take care of this place, George? Certainly not li’l ol’ me!” Hearing this, George breathed a sigh of relief and went ahead and constructed the house in accordance with his plans. It took him two years to finish construction. Hilda was out of his life again and had no idea that George was building the house. It is now fifteen years since George took up occupancy. Hilda has since learned about the law of adverse possession. She has brought an action to eject George from Blackacre. George is arguing that he owns Blackacre “either at law or in equity” and has refused to leave. What property rights, if any, and of what duration, does George hold in Blackacre? Please discuss.