QUESTION I (90 minutes)

In 1978 Davis, a real estate developer, bought a large tract of land near the city of Lathrup, Mitchell. Davis intended to develop the tract as a residential development with its centerpiece being a golf course designed by the famous golfer, Jack Niblick. He obtained the golf course layout and then subdivided the remainder of the tract into 60 lots numbering them 1 through 60. These lots were situated around the course in a way intended to achieve maximum scenic views of the course.

As the course was being built Davis began to advertise and sell the lots. Because he intended that the subdivision be maintained as a residential area with expensive houses Davis planned to include several covenants relating to use of the property in all of the deeds in the subdivision. He did not have a lawyer assist him in doing this work, and therefore did not include any restrictions in the subdivision plan.

Interest in golf was just beginning at the time, and Davis had no trouble selling lots. The first 10 sales were made rather quickly. Each of the deeds transferring these lots contained 3 covenants. The first provided that the lot was to be used only for a single family residence. The second provided that no structure on the property could be more than 2 stories and in no case more than 30 feet high. The third provided that the owner would pay annual fees of $4,000 for the maintenance and upkeep of the golf course. This fee was to be adjusted annually for inflation. The deeds provided that the owner of the property would be entitled to use of the golf course. Each of the covenants was to be binding on the grantee and the successors and assigns of the grantee None of the deeds contained any provision expressly binding the lots retained by Davis. In each of the first 10 lot sales, however, Davis told the buyers that he intended to bind all of the remaining lots to the same covenants.

On March 3, 1983, Palmer purchased lot #32 from Davis. The deed by which Davis conveyed title to Palmer contained the first 2 covenants relating to residential use and the height restriction, but because of a clerical error omitted the covenant requiring payment of the golf course maintenance fees. This deed also contained no provision purporting to bind Davis with respect to any lots not yet conveyed by Davis.

On June 15, 1983, Davis contacted Palmer and told him that the covenant regarding the golf course fees had been inadvertently omitted from Palmer's deed and asked Palmer to execute a separate document incorporating the covenant. Palmer was an ardent golfer and agreed, but only if Davis would agree to guarantee that Palmer would always have sufficient sunlight to operate a solar heater which he had recently built in his backyard. Palmer was particularly concerned about lot #33 immediately adjacent to his backyard. Davis and Palmer then signed a document in which Palmer agreed to the golf course fee covenant and Davis agreed that no structure on lot #33 would be higher than 25 feet nor closer than 10 feet to the property line with lot #32. Each party agreed to bind his 'successors and assigns.' This document was duly recorded in the county recorder's office. The county did not maintain a tract index, and the document was recorded in the grantor-grantee index only under the name of Davis. The reference in the index said only that the document related to lot #32. There was no reference to lot #33 in the index.

In 1987 Palmer sold lot #32 to Lopez, also an avid golfer. He conveyed title by warranty deed 'subject to all encumbrances of record.' Lopez enjoyed the property and playing the golf course until 1993 when she sold the lot to Agassi. Neither Lopez nor Agassi did a title search on the property and neither had actual knowledge of the separate covenant agreement between Davis and Palmer. Agassi preferred tennis to golf but liked the view of wide open spaces. In the meantime, Davis had sold lot #33 to Alcott in 1984. His deed to her contained the 3 covenants relating to residential use, the 2 story-30 foot height requirement and the golf course fees but said nothing about the 25 foot height or the 10 foot set back restrictions. Alcott still owns lot #33.

After all 60 of the lots were sold in 1986 Davis transferred ownership of the golf course property to Bear Hollow, a nonprofit corporation owned by its members including the property owners in the subdivision. The corporation did have a few members from outside the subdivision who paid exorbitant fees for the membership. After this transfer Davis owned none of the property.

In 1995 the golf course was redesigned slightly by Bear Hollow. As a result, the practice range where golfers hit balls to practice or warm up before a round was moved closer to lot #32. As golfers hit ball after ball to practice, many began to fall in the backyard of lot #32. From dawn to dark balls flew into Agassi's yard. Agassi, his 3 year old daughter and several of his guests were nearly hit several times. It reached the point that his yard was unusable during daylight hours. He complained to the golf manager but was told that the course had expended too much money and could not afford to move the range.

Disgusted, Agassi refused to pay any more maintenance fees for the golf course saying he did not like golf anyway and had no obligation to support it. Alcott and several other owners in the subdivision sued for an injunction requiring Agassi to make payments as required in the covenant. By now the yearly maintenance fee had grown to $7,000.

Agassi then sued Bear Hollow to enjoin its use of the driving range in such a way as to make his yard unusable.

At about the same time Alcott began construction of an addition to her house. This addition was 28 feet high and would come within 6 feet of the property line with lot #32. When completed it would significantly limit sunlight to the solar collectors on lot #32. Agassi then sued for an injunction against Alcott's construction of the addition. In the alternative, he sued for damages to his property if the construction were allowed to continue.

1) Can Agassi be required to pay the maintenance fees for the golf course? Explain your answer.

2) Can Agassi enjoin Bear Hollow from using the driving range? What remedy might be available to him, if any? Explain.

3) Can Agassi prevent Alcott's construction of the addition above 25 feet and within 10 feet of his property? If not, is he entitled to damages for the breach of the covenant? Explain.

QUESTION II (60 minutes)

Larry Landlord owned a house on Mitchell Avenue in Summit, Anywhere. This house had a small office with a separate entrance and 6 rooms for residential use. Both the office and residential areas were furnished. On June 1, 1992, Landlord signed a lease for the house with Quinn for a 3 year term beginning on July 1, 1992, and ending on June 30, 1995. Quinn told Landlord that he planned to live in the house and use the office for his solo law practice as soon as he passed the bar in July. Landlord said that this was fine with him, but included in the lease a clause providing that "the tenant shall not assign this lease or sublet the premises without the written consent of the lessor which consent may be withheld for any reason." The lease also contained a clause saying "Landlord makes no warranties, express or implied, regarding the condition of the premises and Tenant on behalf of himself and his heirs and assigns takes the property free of any such warranties."

When Quinn tried to move in on July 1, 1992, he found that the old tenant, Hackney, whose lease expired on June 30 had not moved out. Quinn asked Landlord to do something about it, but Landlord said there was little he could do. Hackney had always been a troublesome tenant, and Quinn would just have to wait for Hackney to leave or do something himself. Quinn was forced to stay in a motel for almost 2 weeks until Hackney finally left. This was particularly bad timing because it disrupted Quinn's studying for the bar exam at the end of the month. When he finally was able to move in, Landlord apologized and offered Quinn $500 for his trouble. Quinn refused but said he was holding Landlord responsible for the delay.

When Quinn did move in, he found that the ceiling height in one of the upstairs bedrooms was only 6 feet 8 inches. He checked the building codes of the city of Summit and found that the minimum ceiling height for a bedroom was 7 feet. Quinn told Landlord of this problem and asked for a 10% rent reduction in return for not reporting the violation. The rent was $1,000 per month for the whole house so the requested reduction was $100 per month. Landlord refused Quinn's offer stating that he would not be blackmailed and would hold Quinn to the agreed rental. Quinn did not report the violation and paid the rent in full while he used the house.

Quinn lived in the house and took the bar exam in July, 1992. He began to prepare the office for his practice but had to wait until the bar exam results came out to actually begin practicing. Unfortunately, in September, 1992, Quinn received notice that he had failed the exam. He realized that he could not afford to stay in the house and pay rent now that he would not be able to practice law. Quinn notified Landlord of his intention to move out of the house and office, and also told Landlord that he held him responsible for Quinn's failing the bar exam because of the failure to get the old tenant out.

Quinn found one of his law school classmates, Raye, who was willing to take an assignment of the lease. Landlord agreed to the assignment on November 28, 1992, and Raye moved in on December 1. Raye lived in the house and used the office for her practice for the next several months.

Raye was quite happy with the arrangement, but was having trouble with her boyfriend, Martin, whom she had dated for about a year. Over time he became physically abusive, and she tried to end the relationship. In June of 1993 Martin, enraged over Raye's refusal to see him, entered the house while she was not there and went on a rampage. He threw clothes and furniture around and broke some of the furniture. He hit the walls in several places with a baseball bat, leaving large holes. He cracked the toilet using the bat and broke the shower head off the wall. He went into the office and broke the window pushing the whole frame of the window away from the wall. He then left.

When Raye returned, she was frightened. She reported the incident to the police, but decided she had to move away from Summit. She cleaned the place as best she could and had the glass in the window in the office replaced. She called Landlord and told him of her intention to move, and he reminded her of her continuing obligation under the lease. She said she did not care what he did; she was going to leave, and she did.

By August 1, 1993, Landlord was able to find a new tenant, Stevens, who also was a lawyer. Landlord wrote to Raye and informed her that he was assigning her lessee's interest to Stevens on her behalf. Raye did not write back.

Stevens moved in on August 1, 1993, and put the boxes in which he kept his legal files in the corner of the office near the window. He began seeing clients in the office and lived in the house. On August 12, 1993, a thunderstorm hit the area. The next morning Stevens discovered that the area around the window was soaking wet and that the boxes of files were also wet. A few more soakings like that and the files would be ruined. Apparently the damage to the window done by Martin caused the leakage since there had never been problems before.

Stevens had to move all of the file boxes to the other side of the office, which made the usable space so small that he would be unable to see clients comfortably in the office. He told Landlord of the problem, but Landlord said, "It's not my problem. It was the prior tenant who caused the problem." During the rest of the summer and fall it rained heavily at least once a week, so Stevens never put anything back in the space near the window.

Stevens also discovered the problems with the residential area soon after he moved in. He had seen the holes in the wall before he moved in but was not aware of the cracked toilet or broken shower. The toilet was particularly a problem because it was unsanitary. Stevens made several requests to Landlord to repair all of the defects, but Landlord steadfastly refused. Stevens did not want to move out. He could shower at his club and use the other toilet in the house. Finally, in October of 1993 Stevens sent a letter to Landlord demanding that Landlord make the necessary repairs. Until Landlord had completed the repairs, Stevens would withhold all rental payments.

On December 15, after Stevens had failed to pay 2 month's rent when due, Landlord brought suit to evict Stevens and also sued Quinn, Raye and Stevens for past due rent. He also requested damages for the loss of the benefit of the lease since the fair rental value had declined to less than $1,000 per month due to (i) the condition of the premises and (ii) a downturn in the rental market in Summit.

Discuss and resolve the issues of property law that might arise in this lawsuit.

QUESTION III (30 minutes)

In 1990 Owner executed a quit claim deed to Blackacre in favor of her daughter, Abigail, as a birthday gift. Abigail did not record the deed at that time. The land was unimproved, but was located not too far from Tipp City and therefore likely to increase in value for development in the next few years. Abigail did not occupy the land or build any structures on it. In 1992 Abigail obtained a loan of $5,000 from City Bank and executed a mortgage on Blackacre in its favor. City Bank immediately recorded this mortgage.

In 1992 Owner executed a warranty deed purporting to convey Blackacre to Boris in exchange for Boris's payment of $20,000 in cash. Boris inspected the property and found it vacant but did not do a title search. Boris recorded the deed the next day.

In 1994 City Bank discovered that Owner's deed to Abigail had not been recorded, and obtained it from her and recorded it. It then discovered that Boris had put the property up for sale claiming that he owned it based on the deed from Owner to him. It also discovered that Boris and Carter had executed a purchase agreement for Carter to buy Blackacre from Boris. City Bank informed Carter of its claim to Blackacre, but Carter nevertheless accepted Boris's quitclaim deed for Blackacre on January 15, 1995, paying $15,000 for it. Carter then recorded this deed.

On May 1, 1995, your client, Delia, told you that she wants to buy Blackacre from Carter. City Bank somehow found out about her interest and sent her a letter informing her of its claimed mortgage and of Owner's deed to Abigail back in 1990. Delia asks your opinion as to whether Carter can transfer title to Blackacre to her free of any claims of City Bank or Abigail. State your opinion and explain how you reached it. Assume that the jurisdiction has a race notice recording statute and that the county does not maintain a tract index.