REAL PROPERTY 117. REAL PROPERTY Question 52 A husband purchased a cabin with his separate property. The husband provided in his will that the cabin be devised “to my sister-in-law for so long as my wife is alive, remainder to my son.” Shortly thereafter, the husband died. When the sister-in-law learned of her interest in the cabin, she decided to lease the property. She entered into a valid written lease for a term of three years with a tenant, who agreed to pay $3,000 per year rent, with $1,500 due in advance every six months. The tenant paid the first $1,500 and took possession of the property. Two years later, one week after the tenant had paid the $1,500 due for the ensuing six-month period, the wife died. The son demanded that the tenant surrender posses- sion of the cabin, but the tenant refused. In an appropriate action for possession of the disputed property, the son will probably: (A) Prevail, because his rights are superior to the tenant’s. (B) Prevail, if he reimburses the tenant for the portion of the six months’ rent already paid to the sister-in-law that is attributable to the period after the tenant surrenders posses- sion. (C) Lose, because he did not wait to bring the action until the period for which the tenant had already paid rent had elapsed. (D) Lose, because the tenant has the right to remain in possession for the last year of his lease as long as he pays the final $1,500. Question 32 A landowner properly executed a warranty deed conveying a parcel of land “to my brother for life, then to his widow for her life, then to my brother’s children.” At the time of the convey- ance, the brother was unmarried. A few years later, he married and had two children, the landowner’s niece and nephew. Three years ago, the landowner and the nephew were killed in an automobile accident. The landowner’s will left her entire estate to her friend. The nephew’s will left his entire estate to the humane society. Last year, the brother died. The common law Rule Against Perpetuities is unmodified by statute in the jurisdiction. There are no other applicable statutes. Who owns what interest in the land? (A) The niece and the humane society each own a one-half interest, subject to a life estate in the brother’s wife. (B) The niece owns the entire interest, subject to a life estate in the brother’s wife. (C) The brother’s wife owns the entire interest. (D) The friend owns the entire interest. Question 33 A landowner conveyed his parcel of land “to my sister and her heirs so long as it is used for residential purposes, but if it is ever used for other than residential purposes, then to the local community center.” Five years later, the landowner died, devising all of his real estate to his friend and leaving his daughter as his only heir. The following year, the landowner’s sister and the landowner’s daughter entered into a contract with a third party to sell the parcel to him in fee simple for $100,000. After examining title, the third party refused to perform under the contract because he believed the sister and the daughter could not deliver good title. The jurisdiction follows the common law Rule Against Perpetuities and has a statute providing that all future estates and interests are alienable, descendible, and devisable in the same manner as possessory estates and interests. If the sister and the daughter sue the third party for specific performance, their request will be: 118. EXAM REVIEW (A) Granted, because the sister owns the parcel in fee simple. (B) Granted, because the sister and the daughter together own the parcel in fee simple. (C) Denied, because the local community center has a valid interest in the parcel. (D) Denied, because the friend has a valid interest in the parcel. Question 80 Ten years ago, four brothers inherited their father’s 360-acre farm as joint tenants with right of survivorship. Three of the brothers immediately moved onto the property and began farming the land. The fourth brother had no interest in farming and stayed in the city. Two years ago, a creditor sued and obtained a judgment lien on the first brother’s interest in the farm. This interest was sold to a farmer at a judicial sale in order to satisfy the lien. Last year, the second brother died, leaving a son as his only heir. The third brother continued farming the property. Now, the farmer who purchased the first brother’s interest at the judicial sale wants to start farming the land and seeks a court determi- nation of the parties’ respective interests in the land. There is a seven-year statute for adverse possession in the state. The court should rule that: (A) The farmer owns 90 acres, and the second brother’s son, the third brother, and the fourth brother own an undivided interest in 270 acres. (B) The farmer owns 90 acres, and the third brother and the fourth brother each own 135 acres. (C) The farmer owns 90 acres, and the third brother owns 270 acres. (D) The farmer owns 90 acres, and the third brother and the fourth brother own an undivided interest in 270 acres. Question 14 Two partners bought a commercial building from an owner. They paid cash for the building and took title as joint tenants with right of survivorship. Several years later, the first partner executed a mortgage on the building to secure a personal loan to a bank. The second partner had no knowledge of the mortgage to the bank. The state in which the commercial building is located recognizes the lien theory of mortgages. The first partner died before paying off his loan. He left all of his property by will to his daughter, his only heir. Who has title to the commercial building? (A) The second partner has title free and clear of the mortgage. (B) An undivided one-half is held by the second partner free and clear of the mortgage, and the other one-half is held by the daughter, subject to the mortgage. (C) An undivided one-half is held by the second partner and the other one-half by the daughter, with both halves subject to the mortgage. (D) The second partner has title to the entire property, with an undivided one-half being subject to the mortgage. Question 74 A landlord entered into a written four-year lease with a tenant for an apartment in the landlord’s apartment house. The tenant’s lease, and all leases in the apartment house, prohibited the playing of musical instruments between 10 p.m. and 8 a.m. The lease required the tenant to pay the rent on a monthly basis. Two years into the lease, the tenant assigned the lease to a nurse with the landlord’s permission. The nurse then assigned the lease to his brother with the landlord’s permission. The brother went into possession. A neighboring tenant in the same apartment house insisted upon playing a trumpet in a loud manner between 2 a.m. and 4 a.m. The brother complained to the landlord without REAL PROPERTY 119. success. Unable to sleep each night, the brother abandoned his apartment after occupying it for two months. If the landlord sues the nurse for the rent due during the period after the nurse’s brother left, the nurse’s best defense would be: (A) A breach of the landlord’s covenant of quiet enjoyment. (B) Estoppel, because the landlord consented to a further assignment. (C) Lack of privity of estate. (D) Constructive eviction. Question 92 Thirty years ago, a telephone company purchased an easement from an owner to install, inspect, repair, replace, and maintain under- ground transmission cables within a speci- fied portion of the owner’s property. The deed granting the easement was validly recorded, and the telephone company shortly thereafter laid underground long distance lines traversing the owner’s land beneath the area described in the easement deed. Fifteen years later, the owner sold a 50-acre portion of his land to a buyer. This portion included part of the easement granted to the telephone company. The buyer erected a residence on the purchased land and planted 49 acres of walnut trees. He granted an easement to the telephone company to string aerial telephone wires. The underground easement was never disclosed. Last year, the telephone company informed the buyer that it would have to excavate under- ground cables and replace them with new ones. This was the first the buyer knew of the cables lying under his land. The cables, lying within the easement, are directly beneath a row of black walnut trees running the length of the buyer’s property. Black walnuts have become extremely valuable, and the buyer estimates that their value is approximately $400,000. If the buyer seeks an injunction prohibiting the telephone company from undertaking the planned excavation, the trial court should rule for: (A) The telephone company, because the benefits of installing the new cables outweigh the harm done to the buyer. (B) The telephone company, because owner- ship of the easement permits it to make the excavation. (C) The buyer, because the telephone company concealed the existence of the underground easement from the buyer when it acquired the overhead easement from him. (D) The buyer, because the deed by which he purchased his property made no mention of the easement, and he had no actual knowl- edge of it. Question 47 An owner of 40 acres of mountain land sold the western 20 acres to a buyer. Because no access to any public road existed on the western side of the property, the deed conveying title to the buyer included an easement for ingress and egress that ran along the southern border of the owner’s land. This deed was duly recorded. About the same time that this sale took place, the county extended the public road so that it abutted on the buyer’s 20 acres. The buyer then built a cabin on the property. Later, the owner and the buyer both sold their 20 acres to the owner’s cousin. The cousin then sold the 20 acres acquired from the buyer to his lawyer and sold the other 20 acres to a doctor. All deeds involved in the various conveyances of the 20-acre parcels were validly recorded. Neither the cousin-lawyer deed nor the cousin- doctor deed made any mention of easements or rights-of-way. In fact, no use was ever made of the easement. A few years later, the lawyer sold his 20 acres to a development company that wished to build a 120. EXAM REVIEW hunting lodge on the property. The development company now wants to construct a road across the doctor’s property in the manner contem- plated in the deed from the original owner to the buyer. What is the strongest argument as to why the development company should not be permitted to construct the road? (A) Any easement that might have existed was extinguished by abandonment because of nonuse. (B) Any easement that once existed was termi- nated by merger. (C) The county’s subsequent expansion of the public road removed the necessity of using the easement across the eastern parcel. (D) Neither the cousin-doctor deed nor the cousin-lawyer deed made any mention of the easement. Question 48 Twenty-five years ago, a property owner placed a large sewer line (to service a single- family house he built on the property) across a neighbor’s property without the neighbor’s permission. Four years ago, the owner tore down the house in preparation for the construction of a larger house on the land, and made an agreement with municipal authorities to take an easement across the neighbor’s property and install a new sewer line to service the house. After a long delay, the municipal authorities failed to perform their agreement, and the owner finally constructed the house last year using the existing sewer line. The state has a 20-year statute for acquiring property interests by adverse use. If the neighbor attempts to enjoin the use of the sewer line to service the new house, she will: (A) Prevail, because the agreement with the municipal authorities estopped the owner from using the existing line to service the new house. (B) Prevail, because the owner’s tearing down of the house and nonuse of the sewer line for several years constituted an abandon- ment of the easement. (C) Not prevail, because the original sewer line was a license which ripened into an implied easement. (D) Not prevail, because the use was within the scope of the prescriptive easement acquired. Question 9 A developer prepared and recorded a subdivi- sion plan, calling for 100 home sites on half-acre lots. There were five different approved plans from which a purchaser could choose the design of the home to be built on his lot. Each deed, which referred to the recorded plan, stated that “no residence shall be erected on any lot that has not been approved by the homeowners’ associa- tion.” A lawyer purchased a lot and built a home based on one of the approved designs. However, many of the lots were purchased by investors who wanted to hold the lots for investment purposes. Two years after the lots went on the market, one such investor sold her lot to an architect by a deed that did not contain any reference to the recorded plan nor the obligation regarding approval by the homeowners’ associa- tion. In fact, because very few residences had been built in the subdivision since the lots were first available for purchase, no homeowners’ association meetings had been held in two years. The architect began building a very modern- istic house on her one-half acre. When the lawyer noticed the house being built, he brought an action to enjoin the construction. The probable result of this action will be in favor of: (A) The architect, because her deed contained no restrictive covenants. REAL PROPERTY 121. (B) The architect, because any restrictive covenant in her deed can only be enforced by the opposite party to the covenant or that person’s successor in title. (C) The lawyer, because the recorded subdivi- sion plan, taken with the fact that all lots were similarly restricted and the architect had notice of this, gave him the right to enforce the covenant on her property. (D) The lawyer, because his deed contained the restrictive covenant. Question 85 A seller entered into a written land sale contract with a buyer on May 20, whereby the seller agreed to sell a home to the buyer for $60,000. The closing date was set at August 1. The buyer put up $6,000 as earnest money, as provided by the contract. The contract stated that if the buyer failed to perform by tendering the balance due on the house on August 1, the $6,000 could be treated as liquidated damages “at the option of the seller.” On July 21, the week before the closing, the house burned to the ground because of a freak lightning strike during a thunderstorm. When August 1 arrived, the buyer refused to tender $54,000 to the seller. The buyer asked the seller for the refund of his earnest money because the house had been destroyed. The seller refused and filed suit, asking for specific performance. The buyer countersued, demanding refund of the $6,000 earnest money. How should the court rule on the suits? (A) The court will order specific performance by the buyer. (B) The court will order the seller to return the $6,000 to the buyer because of frustration of purpose of the contract. (C) The court will award the seller $6,000 as liquidated damages. (D) The court will award neither party the relief sought because of mutual mistake. Question 61 A homeowner leased his home to a tenant for three years. The following year, the homeowner conveyed the house to a buyer, who never recorded her deed nor did anything with regard to the house. The tenant continued paying rent to the homeowner. Three months after the conveyance to the buyer, the homeowner conveyed the property to his proctologist, who knew nothing of the prior conveyance to the buyer. The homeowner took the proctologist’s money and skipped town. The proctologist told the tenant he now owned the house and that all rents should be paid to him. The tenant complied. Six months later, the proctologist went to his local bank for a loan. He offered to put up the property as security. The bank discovered that the proctologist had never recorded his deed and that, just two weeks prior to his loan application, the buyer had recorded a deed to the house that bore an earlier date than the deed the proctolo- gist had shown the bank. Because of this cloud on the title, the bank refused the loan request. When the tenant discovered this, she quit paying rent to the proctologist. The state has a recording statute that provides, “a conveyance of an interest in land, other than a lease for less than one year, shall not be valid against any subse- quent purchaser for value, without notice thereof, unless the conveyance is recorded.” If the proctologist sues the tenant to compel the payment of rent, the proctologist will likely: (A) Win, because the tenant is estopped from denying a landlord-tenant relationship with the proctologist, since she had paid rent for many months. (B) Win, because the proctologist was a bona fide purchaser when he bought the property from the homeowner. (C) Lose, because the proctologist failed to record his deed to the property. (D) Lose, because the proctologist did not have good title to the property and cannot demand rent from tenants in possession. 122. EXAM REVIEW Question 91 A mother had her lawyer prepare and execute two notarized deeds: one conveying a 640-acre farm to her daughter and the other conveying a 590-acre farm to her son. The mother produced the deed to the daughter, who told her mother to keep the deed just in case the daughter misplaced it. The mother held on to the deed. The next day, the mother went to her lawyer’s office to have the deeds recorded, but she forgot the daughter’s deed at home. The mother gave the lawyer the son’s deed and promised to bring the daughter’s deed in the next day. Later that afternoon, the lawyer recorded the son’s deed. That night, the mother suffered a stroke and died in her sleep. The daughter’s deed was never recorded but was found in the mother’s home after her death. In her will, the mother left all of her property to her daughter, her son, and the local animal shelter, in three equal shares. Aside from her modest home and some small bank accounts, the mother had no appreciable estate. If the animal shelter challenges the deeds to the farms on grounds of lack of proper delivery, it will: (A) Win on both farms. (B) Lose on both farms. (C) Win on the 640-acre farm but lose on the 590-acre farm. (D) Win on the 590-acre farm but lose on the 640-acre farm. Question 24 A homeowner agreed to sell his home to an accountant. He gave the accountant a general warranty deed and the accountant gave him $86,000, his asking price. The deed was recorded. A few years later, the accountant sold the property to a doctor, who paid her $125,000 for the property. To save on attorney’s fees, the accountant went to her local office supply store to purchase a general warranty deed form. The store was out of those forms, but the clerk suggested that she use the form labeled “Quitclaim Deed,” asserting that it would transfer the title just as well as the other form. The accountant purchased the form and filled in the blanks with the appropriate information she copied from her old deed. The doctor did not hire a lawyer to represent him in the purchase of the house. The doctor accepted the deed from the accountant and gave her $125,000. Soon after the doctor moved into the house, it was discov- ered that the homeowner’s title was not good. The true owner now demands that the doctor vacate. Title is judicially determined to be with the true owner, and the doctor is forced out. Does the doctor have any action against the homeowner or the accountant based on any covenant for title? (A) Yes, the doctor can sue both and can recover $125,000. (B) Yes, the doctor can sue the homeowner, but not the accountant, and can recover his full $125,000. (C) Yes, the doctor can sue the homeowner, but not the accountant, and can recover only $86,000. (D) No, the doctor can sue neither the homeowner nor the accountant. Question 67 A landowner in fee simple signed a promis- sory note for $10,000 to a bank, and secured the note by a mortgage of her land to the bank. The mortgage was duly recorded. The landowner then sold the property to an attorney, who assumed and agreed to pay the mortgage to the bank on the land. The attorney did not make payments on the mortgage note to the bank. The bank, following appropriate statutory proce- dures, foreclosed the mortgage and gave notice to both the landowner and the attorney that it intended to sue for any deficiency. At the foreclo- sure sale, the property sold for $6,000. The bank now sues both the landowner and the attorney for $5,000, which is the remaining amount of the unpaid principal and interest on the note plus costs of foreclosure. REAL PROPERTY 123. The bank will be successful in obtaining a judgment against: (A) Only the landowner. (B) Only the attorney. (C) Either the landowner or the attorney. (D) Both the landowner and the attorney. Question 68 A developer owned an office building subject to a first mortgage with a creditor in the amount of $1 million. Subsequently, the devel- oper borrowed $100,000 from a bank secured by a second mortgage on the building to help pay the first mortgage and other expenses of the building. The developer’s financial condi- tion worsened, and he was unable to make the required payments on the first mortgage to the creditor. The developer approached the creditor and offered to give her a deed to the building in satisfaction of all of his obligations to the creditor. The developer delivered to the creditor a quitclaim deed to the building, which recited as consideration the release of the developer from all liability on the mortgage to the creditor. The deed was duly recorded. Shortly thereafter, the office market greatly improved, and the building was worth $1.5 million. The developer then brought an action against the creditor, claiming that the deed was an equitable mortgage, and the bank served notice on the creditor that it was preparing to foreclose its mortgage on the building. In appropriate actions, the creditor will prevail against: (A) The developer only. (B) The bank only. (C) Both the developer and the bank. (D) Neither the developer nor the bank. Question 2 For several years, a landowner supplied water to the factory located on his land from a pump located on that same land. The pump drew water from a nearby creek, which provided plenty of water for all the factory’s needs. Subsequently, a developer purchased property abutting the northern boundary of the landowner’s land and constructed a large apartment building upstream from the creek, which also ran through her property. The building’s water supply was pumped from the creek. Once the developer’s building was fully occupied by tenants, there remained insufficient water to meet the needs of the factory. If the jurisdiction follows the prior appropria- tion theory of water rights, when the landowner sues to stop the developer’s use of the water, the result will be: (A) The developer wins, because prior appro- priation always protects upstream owners. (B) The developer wins, because of the excep- tion for domestic uses. (C) The landowner wins, because he was the first to use water from the stream as a riparian owner. (D) The landowner wins, because he first made beneficial use of the water.