2002 Property II Exam

Curt Stine

QUESTION 1 (75 minutes)

In 1997 Sarah Speculator bought 40 acres of real property in a scenic area of the state of Western. The acreage was almost totally wooded and consisted of the top and slope of a steep bluff overlooking the Vista River Valley. The portion of the property on top of the bluff was flat and suitable for building 3 or 4 expensive houses on large lots, and the portion at the bottom of the bluff next to the road flattened enough to make it suitable for several lots for building. The remainder of the property was too steep to be suitable for building. The portion of the property at the bottom of the bluff ran along state highway 36. The land surrounding the property on the other three sides was owned by two neighboring farmers. (See attached diagram)

Sarah originally planned to wait several years to develop the property because she believed that its value would increase. When she suffered some financial difficulties in 1999, however, she decided to sell the property at the bottom of the bluff along the highway to raise cash. She divided the strip of land along the road into 3 parcels each of which runs halfway up the steep part of the bluff. Lot 1 was on the west side of the strip and Lot 2 on the east. In between she retained Lot 1A, a fifty foot wide strip that would give her access to build a road from the highway when she developed the bluff lots.

First, Sarah sold lot 1 to Adam Smith who planned to build a weekend home for his use. In the deed to Smith, Sarah inserted provisions restricting his and his successors’ use of the property to single family residential use and also prohibiting any permanent structure exceeding 50 feet in height. The second provision was included to make sure that no structure rose above the trees and hindered the view from the bluff lots.

Next, Sarah sold lot 2 to David Ricardo who said he planned to build a home similar to Smith’s. When her lawyer drafted the deed to Ricardo, he failed to include the two provisions that were in the Sarah to Smith deed. Ricardo did not build right away citing some recent stock losses as the reason. The land remained undeveloped through the beginning of 2002.

In 2001 Sarah decided to take advantage of the boom in the popularity of the area. A casino had opened 5 miles down the river, and tourism had increased. She thought the time was ripe for selling off the bluff lots. She started to build an access road so that she would be able to show the view from the top of the bluff to prospective buyers. When she consulted a local contractor, she had a rude surprise. The strip of land that she had retained was not wide enough to accommodate a road to the bluff lots. The bluff was so steep at that point that it was necessary for the road to follow the contour of the bluff in a wider arc than could fit within her strip. Even a four wheel drive vehicle would have difficulty making it up the grade that would fit in the 50 width. In winter the grade would be impassable.

She approached both of the farmers whose land surrounds hers to see if either would grant her access through their properties. Both refused. She was not surprised because they opposed development of the area.

Adding to her problems, in November Ricardo obtained approval from the County Board to construct a waterslide and two miniature golf courses on his Lot 2. An enabling statute of Western authorized the County Board to adopt a land use map controlling the use of land outside incorporated towns and cities in the county. The area had been designated for agricultural and residential use until the meeting, but the Board changed the designation at its meeting and designated Ricardo’s lot commercial, a classification that permits his proposed uses. Sarah and others in the area objected strenuously to no avail. The Board in its resolution approving the change noted that the proposed use fit “the changing demographic climate and traffic patterns of the county.”

Ricardo has begun construction of his waterslide. The plans call for a mammoth facility towering 70 feet above the surface, well above the tree-line and clearly visible from the upper bluff. In addition, Ricardo plans to use spotlights and a large neon sign at the roadside to attract customers.

With good reason, Sarah fears that the facility will substantially impair the value of her bluff top lots. Adam Smith too is outraged that the facility is going in.

Sarah has consulted your firm, and the partner in charge of her case has asked you to prepare a memorandum addressing 2 questions.

1. Is there any theory under which Sarah can obtain a right to build a road that will allow her to gain access to the upper bluff lots?

2. Is there any theory that would permit Sarah to stop the Ricardo water slide and golf course from going forward?

Prepare the memorandum.

QUESTION 2 (45 minutes)

A. Ollie Owner owned Blackacre, a tract of undeveloped land in the state of Mitchell in fee simple. On January 15, 1999, he gave a quitclaim deed conveying Blackacre to his daughter, Amy, as a gift. He told Amy that he wanted her to have the property but that he expected her to let him use it for hunting while he was alive. Amy lived out of town and did not record the deed at that time.

In 2000 Ollie had a reconciliation with his son, Bart, from whom he had been estranged. On January 15, 2000 as a demonstration of their new relationship, Ollie gave a warranty deed to Bart purporting to convey to Bart a one-half (1/2) undivided interest in Blackacre. Ollie said that he now wanted to treat his two children equally. Ollie told Bart about the prior deed to Amy and said that he trusted that the two children could settle the matter themselves. Bart did not record the deed at that time.

On June 15, 2000 Bart satisfied a gambling debt by transferring a one-half undivided interest in Blackacre to Clyde, his bookie, by warranty deed. Clyde recorded the deed the next day.

In July of 2000 Amy was in town to visit Ollie and stopped by the courthouse to record her deed from Ollie on the 15^th of the month.

Clyde, who did not want the property, told his friends that he wanted to sell it, and on August 15, 2000 Dougie, who was an avid hunter, gave him $1,000 in return for a warranty deed to Blackacre. Dougie recorded the deed the next day.

On September 1, 2000 Ollie Owner died. Amy had no desire to keep the property, and since her father would no longer be around to hunt the land, she sold it to Edward for $40,000. She gave Edward a warranty deed conveying the property on October 1, 2000. Edward did not record the deed until November 15.

Mitchell Statutes, section 563.75 reads as follows:

“Every grant of an estate in real property is conclusive against the grantor, also against everyone subsequently claiming under him, except a purchaser or incumbrancer who in good faith and for a valuable consideration acquires a title or lien by an instrument that is first duly recorded.”

Blackacre is located in Windsor County which maintains only grantor-grantee indexes. It has no tract index. No other events have occurred affecting title to Blackacre since November 15, 2000.

Edward claims that he is the sole owner of Blackacre in fee simple. Dougie claims that he owns a one-half undivided interest in Blackacre. Who is correct? Does the party whose claim is incorrect, have any alternative means of relief?

QUESTION 3 (30 minutes)

Lynn Landlord owns several commercial rental properties in the city including two strip mall shopping centers located across the street from each other. She leased retail space in one of the malls to Tanya Tenant for 2 years beginning on February, 1, 2000. One term of the lease prohibited assignment of the lease by the tenant without Landlord’s express written approval. Tanya opened her store selling athletic shoes and specialty athletic clothing.

Tanya soon found that she had been mistaken in thinking that her specialty store could compete with the large chain stores. Her sales never reached a level close to that necessary to make a profit. She finally gave up in September of 2000. Knowing that she was responsible for the remaining lease term, she found Alma Anderson who was willing to take the space. Anderson planned to open a specialty gift and greeting card shop in the space.

When Tanya offered Anderson as her assignee, Landlord refused to accept the assignment. Landlord was concerned that one of her tenants in the mall across the street, Bobble Drugs, had a specialty gift and card section that produced a substantial amount of its revenues. Bobble was having a hard time competing against the larger drug chains, and Landlord did not want a competing business in the area.

Tanya was angry and told Landlord that she was leaving anyway. Landlord replied that Tanya could leave but that Landlord would continue to hold her responsible for the rent. Tanya moved away, leaving the space empty from October until late January of 2001 at which time Landlord rented the space to Cooper for one year beginning on February 1, 2001. Cooper moved in, but he too failed to do enough business. He abandoned the property and defaulted on the rent beginning in October of 2001. The space remained vacant thereafter.

On March 1, 2002, Landlord sued Tanya for all rents due under the lease from October 1, 2000 until February of 2002 except for the amounts paid by Cooper during his occupancy.

The judge for whom you clerk has asked you to prepare a memorandum addressing Tanya’s liability for the rent including any defenses she might have. Prepare the memorandum.

QUESTION 4 (30 minutes)

Last year Bobby Zimmerman bought the Orpheum, an old theater building in downtown Sioux Rapids. The building had been closed for several years, but when it was built in 1910, it was the finest opera house in the region featuring at one time or other some of the greatest stars of stage and music. It was converted to a movie theater in about 1940, and finally closed in 1985 when multi-screen suburban theaters became popular.

Zimmerman had been looking for such a gem for some time. Although the prior owners had done little to maintain the property, its interior design was intact. Zimmerman knew that this meant that its acoustical qualities would be superior as they were with many of these old houses. Expert testing confirmed that they were.

Zimmerman planned to restore the theater to its original splendor and open it for plays and musical events. He believed he could attract national touring companies of stage plays and musical performances of all kinds, from classical and opera to country and rock and roll. Sioux Rapids was the largest town for over 300 miles and had a population of 200,000. He was sure that a restored Orpheum could be successful.

When he sought approval for his restoration scheme, however, he discovered that the city had an ordinance that required any entertainment facility containing more than 200 seats to provide one off street parking space for every 4 seats in the facility. The theater had 600 seats, meaning that he would have to supply 150 spaces, an impossibility since there was virtually no open space in the downtown area. He was sure that this requirement was intended for the types of theater developments that were springing up on the outskirts of town. There were several parking ramps in the downtown area that would accommodate his customers.

At a hearing before the Board of Zoning Appeals addressing his request for approval of his project, Zimmerman asked for a waiver of the parking space requirement. The Board agreed to a waiver but conditioned it upon Zimmerman’s agreeing to two requirements. First, Zimmerman must agree to pay for extra police presence required by performances at the theater. During questioning he was asked about the types of popular musical acts that he would be booking. He testified that he might have everyone from Bob Dylan to Willie Nelson to various hard rock acts. Several of the Board members expressed concern about the type of audience some of the acts might attract and suggested that some might not be the kind of people the city wanted to bring downtown. Zimmerman’s guarantee to pay for police protection was required following that discussion.

Second, Zimmerman must give the city at least 100 free tickets during the run of any stage play and 30 free tickets for any musical performance “with artistic merit.” These tickets would be given to school children and teachers in the city for educational purposes. Zimmerman assumes that the latter requirement will apply to classical and operatic performances and not to popular music shows, but he is not sure.

Zimmerman does not want to comply with either of these conditions. He has asked you what legal recourse he might have to continue his project without complying with the conditions. Prepare a brief memorandum answering his inquiry. Be sure to discuss the legal issues raised by his situation and the likelihood that they will be resolved in his favor.