REAL PROPERTY QUESTIONS BY TOPIC

CHAPTER 1: ADVERSE POSSESSION

I. “HOSTILE” POSSESSION
A. Boundary disputes
Question 1
Twenty-five years ago a seller conveyed Lot 1 to a buyer by a warranty
deed. The seller at that time also executed and delivered an instrument in
the proper form of a deed, purporting to convey Lot 2 to the buyer. The
seller thought she had title to Lot 2 but did not; therefore, no title passed
by virtue of the Lot 2 deed. Lot 2 consisted of three acres of brushland
adjoining the west boundary of Lot 1. The buyer has occasionally hunted
rabbits on Lot 2, but less often than annually. No one else came onto Lot
2 except occasional rabbit hunters.
Twenty years ago, the buyer planted a row of evergreens in the vicinity of
the opposite (east) boundary of Lot 1 and erected a fence just beyond the
evergreens to the east. In fact both the trees and the fence were placed on
Lot 3, owned by a neighbor, which bordered the east boundary of Lot 1.
The buyer was unsure of the exact boundary, and placed the trees and the
fence in order to establish his rights up to the fence. The fence is located
ten feet within Lot 3.
Now, the buyer has had his property surveyed and the title checked and
has learned the facts.
The period of time to acquire title by adverse possession in the
jurisdiction is 15 years.
The buyer consulted his lawyer, who properly advised that, in an
appropriate action, the buyer would probably obtain title to
(A) Lot 2 but not to the ten-foot strip of Lot 3.
(B) the ten-foot strip of Lot 3 but not to Lot 2.
(C) both Lot 2 and the ten-foot strip of Lot 3.
(D) neither Lot 2 nor the ten-foot strip of Lot 3.
Answer 1
Choice (B) is correct. Courts generally hold that one who possesses an adjoining landowner’s
land, under the mistaken belief that he has only possessed up to the boundary of his own land,
meets the requirement of “hostile” possession and can become an owner by adverse possession.
This is especially likely where the possessor has both planted and fenced in the land in
question, since such actions are very likely to bring home to the record owner that the
possessor is asserting an adverse claim. So the buyer is highly likely to be found to have gained
title to the 10-foot strip of Lot 3 by adverse possession. On the other hand, the buyer has not
met the requirement for “continuous” possession of Lot 2. The requirement of “continuous”
position does not mean that the possessor must be physically on the property 100% of the time.
However, a court would almost certainly require more than the very occasional rabbit-hunting
at issue here in order to conclude that the buyer had “continuously” occupied Lot 2.
(A), (C), and (D) are wrong because they are inconsistent with the above analysis.

II. CONTINUITY OF POSSESSION

A. Continuity of possession generally
 1. Temporary or seasonal gaps in possession
Question 2
Brown owned Blackacre, a tract of undeveloped land.
Blackacre abuts Whiteacre, a tract of land owned by Agency, the state’s
governmental energy agency. At Whiteacre, Agency has operated a
waste-to-electricity recycling facility for 12 years. Blackacre and
Whiteacre are in a remote area and Whiteacre is the only developed parcel
of real estate within a ten-mile radius. The boundary line between
Blackacre and Whiteacre had never been surveyed or marked on the face
of the earth.
During the past 12 years, some of the trucks bringing waste to the Agency
facility have dumped their loads so that the piles of waste extend from
Whiteacre onto a portion of Blackacre. However, prior to the four-week
period during each calendar year when the Agency facility is closed for
inspection and repairs, the waste piles are reduced to minimal levels so
that during each of the four-week closures no waste was, in fact, piled on
Blackacre. Neither Brown nor any representative of Agency knew the
facts about the relation of the boundary line to the waste piles.
The time for acquiring title by adverse possession in the jurisdiction is ten
years.
Last year, Brown died, and his son, Silas, succeeded him as the owner of
Blackacre. Silas became aware of the facts, demanded that Agency stop
using Blackacre for the piling of waste, and, when Agency refused his
demand, brought an appropriate action to enjoin any such use of
Blackacre in the future.
If Agency prevails in that action, it will be because
(A) the facts constitute adverse possession and title to the portion of
Blackacre concerned has vested in Agency.
(B) Brown’s failure to keep himself informed as to Agency’s use of
Blackacre and his failure to object constituted implied consent to the
continuation of that use.
(C) the interest of the public in the conversion of waste to energy
overrides any entitlement of Silas to equitable remedies.
(D) the power of eminent domain of the state makes the claim of Silas
moot.
Answer 2
Choice (A) is correct. Agency will win on an adverse possession claim if its possession was
open, notorious, visible, hostile and continuous. The requirement of hostility would likely be
deemed satisfied, because in a boundary dispute an owner who openly occupies the adjacent
parcel under the mistaken belief it is his own is typically found to meet the hostility
requirement. The only other requirement that is seriously in issue here is whether Agency’s
possession was “continuous,” in the light of the annual four-week period in which there was no
trespass. A court would likely hold that this brief respite each year did not prevent the
possession from being continuous, because Agency was treating Blackacre exactly the same
way it treated its own adjacent portion of Whiteacre — doing annual cleanup that happened to
have the unanticipated effect of removing the trespass. It is not certain that a court would
conclude that the continuity requirement was met, but adverse possession is the only one of the
choices that would plausibly yield a victory for Agency.
(B) is wrong because the only way in which Brown could be found to have given an
implied consent to Agency’s use would be if Brown’s silence was found to have created either
a license or an easement. A license is by its nature a revocable right of use, so even if Brown’s
silence had created a license by implication, Brown or his successor would be entitled to
revoke the license at will, and Silas’s suit would constitute such a revocation. As for an
easement, easements must generally satisfy the statute of frauds. It is true that an easement by
“estoppel” can be created, but this occurs only when the owner of the servient tenement allows
a use of his land while he knew or should have known that the user would change position in
reliance; here there has been no meaningful reliance by Agency, so this theory would not work.
(C) is wrong because Agency can win only if it obtained legal title to the part of Blackacre
in question, and no degree of “public interest” in wasteconversion could ever give Agency title
to the property by operation of law.
(D) is wrong because it concerns the wrong area of law. Agency is not trying to obtain title
to the relevant portion of Blackacre through eminent domain (i.e., it is not trying to obtain title
by paying just compensation). Instead, it is acting under “color of title” as if it already owned
the portion of Blackacre concerned. Hence, the problem calls for an adverse possession
analysis, not an eminent domain analysis.

CHAPTER 2: FREEHOLD ESTATES

I. THE FEE SIMPLE
A. Fee simple defeasible
1. Fee simple determinable
Question 3
A grantor executed an instrument in the proper form of a warranty deed
purporting to convey a tract of land to his church. The granting clause of
the instrument ran to the church “and its successors forever, so long as the
premises are used for church purposes.” The church took possession of
the land and used it as its site of worship for many years. Subsequently,
the church wanted to relocate and entered into a valid written contract to
sell the land to a buyer for a substantial price. The buyer wanted to use the
land as a site for business activities and objected to the church’s title. The
contract contained no provision relating to the quality of title the church
was bound to convey. There is no applicable statute. When the buyer
refused to close, the church sued the buyer for specific performance and
properly joined the grantor as a party.
Is the church likely to prevail?
(A) No, because the grantor’s interest prevents the church’s title from
being marketable.
(B) No, because the quoted provision is a valid restrictive covenant.
(C) Yes, because a charitable trust to support religion will attach to the
proceeds of the sale.
(D) Yes, because the grantor cannot derogate from his warranty to the
church.
Answer 3
Choice (A) is correct. The warranty deed conveyed a fee simple determinable title to the
church, and the grantor retained the future interest (a possibility of reverter). Such a reverter
becomes possessory immediately upon the occurrence of the limitation. A title is unmarketable
when a reasonable person would not purchase it. This buyer plans to use the land as a site for
business purposes, which would cause the limitation to occur and the title to be forfeited
automatically to the grantor. That possibility is easily enough to render the title unmarketable.
(B) is incorrect. Although this answer correctly states that the church is unlikely to prevail,
it misstates the legal basis for this conclusion. The quoted provision creates a fee simple
determinable title in the church (because the title in this case will be automatically forfeited to
the grantor if the land is not used for church purposes), not a restrictive covenant. A restrictive
covenant involves a promise regarding the use of the land and is not the title itself (though the
existence of a restrictive covenant barring non-church uses would, like the determinable fee
here, be enough to render title unmarketable).
(C) is wrong because it cites an irrelevant fact. The “so long as . . .” clause created a
possibility of reverter, making the church’s title unmarketable. The clause will not create a trust
for the benefit of religion, as this choice asserts (and even if it did, that wouldn’t prevent the
possibility of reverter from operating to divest the buyer of title if he were forced to close on
the sale).
(D) is wrong because it’s gibberish. The choice seems to be asserted that the grantor can’t
have a possibility of reverter because such an interest would be inconsistent with the warranty
deed that grantor gave. But that’s flatly untrue — the warranty deed just asserts that whatever
title grantor is conveying, he has (and in this case, he gave a lesser interest than he had, i.e.,
reserved a possibility of reverter to himself).

2. Fee simple subject to condition subsequent

Question 4
A landowner owned land in fee simple. A small house on the land was
occupied, with the landowner’s oral permission, rent-free, by the
landowner’s son and the son’s college classmate. The son was then 21
years old.
The landowner, by properly executed instrument, conveyed the land to
“my beloved son, his heirs and assigns, upon the condition precedent that
he earn a college degree by the time he reaches the age of 30. If, for any
reason, he does not meet this condition, then the land shall become the
sole property of my beloved daughter, her heirs and assigns.” At the time
of the conveyance, the son and the classmate attended a college located
several blocks from the land. Neither had earned a college degree.
One week after the delivery of the deed to the son, the son recorded the
deed and immediately told the classmate that he, the son, was going to
begin charging the classmate rent since “I am now your landlord.” There
is no applicable statute.
The son and the classmate did not reach agreement, and the son served
the appropriate notice to terminate whatever tenancy the classmate had.
The son then sought, in an appropriate action, to oust the classmate.
Who should prevail?
 (A) The son, because the conveyance created a fee simple subject to
divestment in the son.
(B) The son, because the landowner’s conveyance terminated the
classmate’s tenancy.
(C) The classmate, because the landowner’s permission to occupy
preceded the landowner’s conveyance to the
son.
(D) The classmate, because he is a tenant of the landowner, not of the
son.
Answer 4
Choice (D) is correct. The conveyance to the son was a gift of a fee simple subject to the
condition precedent that the son get a college degree prior to turning 30. Until the son got the
degree, the conveyance did not create any present possessory interest in him (and the
possessory interest remained in the landowner, with an executory interest in the daughter ready
to spring out of the landowner if the son turned 30 without getting the degree). Therefore, the
classmate continued to be a tenant of the landowner, not of the son, with the result that the son
did not have the right to terminate the classmate’s tenancy or oust him.
(A) is wrong because the phrase “upon the condition precedent . . .” in the landowner-to-son
conveyance made the gift a fee simple subject to a condition precedent, not a fee simple subject
to divestment. (If the gift had read, “to my son and his heirs, but if my son turns 30 without
having obtained a college degree, then to my daughter,” then the son would indeed have had a
fee simple subject to divestment, and the son would have won the case, making this choice
correct.)
(B) is wrong because a conveyance by the owner will not normally terminate a tenancy,
even where the conveyance is a transfer of a fee simple absolute or a fee simple subject to
divestment; furthermore, in this case the conveyance was of a fee simple subject to a condition
precedent, so it was even further from terminating the classmate’s tenancy.
(C) is wrong because the fact that the permission to occupy was both oral and rent-free
establishes that it was a tenancy at will (or else a license); therefore, it could be terminated at
any time by either party acting unilaterally. Consequently, although this choice correctly states
the result that the classmate wins, it does not correctly state the reason this is so.

II.THE LIFE ESTATE

A. Duties and powers of life tenant
1. Duties
a. No right to commit waste
Question 5
Alice owned a commercial property, Eastgate, consisting of a one-story
building rented to various retail stores and a very large parking lot. Two
years ago, Alice died and left Eastgate to her nephew, Paul, for life, with
remainder to her godson, Richard, his heirs and assigns. Paul was 30
years old and Richard was 20 years old when Alice died. The devise of
Eastgate was made subject to any mortgage on Eastgate in effect at the
time of Alice’s death.
When Alice executed her will, the balance of the mortgage debt on
Eastgate was less than $5,000. A year before her death, Alice suffered
 financial reverses; and in order to meet her debts, she had mortgaged
Eastgate to secure a loan of $150,000. The entire principal of the
mortgage remained outstanding when she died. As a result, the net annual
income from Eastgate was reduced not only by real estate taxes and
regular maintenance costs, but also by the substantial mortgage interest
payments that were due each month.
Paul was very dissatisfied with the limited benefit that he was receiving
from the life estate. When, earlier this year, Acme, Inc., proposed to
purchase Eastgate, demolish the building, pay off the mortgage, and
construct a 30-story office building, Paul was willing to accept Acme’s
offer.
However, Richard adamantly refused the offer, even though Richard, as
the remaind-erman, paid the principal portion of each monthly mortgage
amortization payment. Richard was independently wealthy and wanted to
convert Eastgate into a public park when he became entitled to
possession.
When Acme realized that Richard would not change his mind, Acme
modified its proposal to a purchase of the life estate of Paul. Acme was
ready to go ahead with its building plans, relying upon a large life
insurance policy on Paul’s life to protect it against the economic risk of
Paul’s death. Paul’s life expectancy was 45 years.
When Richard learned that Paul had agreed to Acme’s modified proposal,
Richard brought an appropriate action against them to enjoin their
carrying it out.
There is no applicable statute.
The best argument for Richard is that
(A) Acme cannot purchase Paul’s life estate, because life estates are not
assignable.
(B) the proposed demolition of the building constitutes waste.
(C) Richard’s payment of the mortgage principal has subrogated him to
Paul’s rights as a life tenant and bars Paul’s assignment of the life
estate without Richard’s consent.
(D) continued existence of the one-story building is more in harmony
with the ultimate use as a park than the proposed change in use.
Answer 5
Choice (B) is correct. Ordinarily, a life tenant may not demolish a structure on the premises,
even in order to build a bigger structure at his own expense that would render the future
interest more valuable; such a demolition is classified as waste. Courts have recognized a
narrow exception where changes in the character of the neighborhood have deprived the
property in its present form of “reasonable productivity or usefulness,” but this would probably
not be found to have occurred here, since the structure is being used for retail stores and
produces meaningful rent. (The problem is the substantial mortgage that eats up the rents, not
the lack of any reasonablyproductive use.) It is not certain that Richard would win with this
argument (since Paul might succeed in establishing the
no-reasonably-productive-usein-present-form exception), but this is the only one of the four
listed arguments that might plausibly produce a victory for Richard.
(A) is wrong because life estates are completely assignable, without the consent of the holder
of the future interest; the assignee simply receives a life estate per autre vie.
(C) is wrong because Richard’s payment of the mortgage principal does not change his
rights; even without such payments he would be entitled to veto a demolition and replacement
of the premises unless the narrow exception described in (B) applied.
(D) is wrong because the maintenance of “harmony” with the use envisioned by the future
interest holder is not a relevant factor in the decision about whether the proposed use violates
the latter’s rights; the issue is whether the proposed use would or would not constitute “waste,”
and harmony with the future holder’s desires is not part of the waste analysis.

b. Duty to pay current operating expenses

i. Duty to pay taxes
Question 6
Ody, owner of Profitacre, executed an instrument in the proper form of a
deed, purporting to convey Profitacre “to Leon for life, then to Ralph in
fee simple.” Leon, who is Ody’s brother and Ralph’s father, promptly
began to manage Profitacre, which is valuable income-producing real
estate. Leon collected all rents and paid all expenses, including real estate
taxes. Ralph did not object, and this state of affairs continued for five
years until 2007. In that year, Leon executed an instrument in the proper
form of a deed, purporting to convey Profitacre to Mona. Ralph, no
admirer of Mona, asserted his right to ownership of Profitacre. Mona
asserted her ownership and said that if Ralph had any rights he was
obligated to pay real estate taxes, even though Leon had been kind
enough to pay them in the past. Income from Profitacre is ample to cover
expenses, including real estate taxes.
In an appropriate action to determine the rights of the parties, the court
should decide
(A) Leon’s purported deed forfeited his life estate, so Ralph owns
Profitacre in fee simple.
(B) Mona owns an estate for her life, is entitled to all income, and must
pay real estate taxes; Ralph owns the remainder interest.
(C) Mona owns an estate for the life of Leon, is entitled to all income,
and must pay real estate taxes; Ralph owns the remainder interest.
(D) Mona owns an estate for the life of Leon and is entitled to all
income; Ralph owns the remainder interest, and must pay real estate
taxes.
Answer 6
Choice (C) is correct. When Leon, the life tenant, purported to convey the fee simple to Mona,
this conveyance had the effect of conveying all of Leon’s interest in the property, i.e., his life
tenancy. Therefore, Mona had a life estate per autre vie, i.e., an estate for the life of Leon. Once
Mona stepped into Leon’s shoes as life tenant, she had the right to collect all income from the
property, but also the obligation to pay all current operating expenses including real estate
taxes. Ralph always had a remainder interest following Leon’s life estate, and Ralph’s interest
was not changed in any way by Leon’s conveyance of his own interest to Mona.
(A) is wrong because a life tenant’s attempt to convey a fee simple does not cause the life
estate to be forfeited; such a conveyance merely transfers to the grantee the entirety of the
grantor’s interest (i.e., the life tenancy).
(B) is wrong because what Mona received is precisely what Leon had, namely an estate for
the life of Leon.
(D) is wrong because real estate taxes are the responsibility of the life tenant, not the
remainderman.

c. Duty to pay mortgage interest and principal

Question 7
(A) testator owned in fee simple a farm of 300 acres. He died and by will
duly admitted to probate devised the farm to his surviving widow,
for life with remainder in fee simple to his three children, two
daughters and a son. All three children survived the testator.
At the time of the testator’s death, there existed a mortgage on the farm
that the testator had given ten years before to secure a loan for the
purchase of the farm. At his death, there remained unpaid $40,000 in
principal, payable in installments of $4,000 per year for the next ten
years. In addition, there was due interest at the rate of 10% per annum,
payable annually with the installment of principal. The widow took
possession and out of a gross income of $50,000 per year realized
$25,000 net after paying all expenses and charges except the installment
of principal and interest due on the mortgage.
The daughters wanted the three children, including the son, to each
contribute one-third of the amounts needed to pay the mortgage
installments. The son objected, contending that the widow should pay all
of these amounts out of the profits she had made in operation of the farm.
When foreclosure of the mortgage seemed imminent, the son sought legal
advice.
If the son obtained sound advice relating to his rights, he was told that
(A) his only protection would lie in instituting an action for partition to
compel the sale of the life estate of the widow and to obtain the
value of the son’s one-third interest in remainder.
(B) he could obtain appropriate relief to compel the widow personally to
pay the sums due because the income is more than adequate to cover
these amounts.
(C) he could be compelled personally to pay his share of the amounts
due because discharge of the mortgage enhances the principal.
(D) he could not be held personally liable for any amount but that his
share in remainder could be lost if the mortgage installments are not
paid.
Answer 7
Choice (D) is correct. The general rule about personal liability for mortgage payments as
between present and future interests is that neither party has personal liability, except to the
extent that party is receiving net operating income from the property. Since the son as
remainderman gets no operating income from the property, he has no personal liability to make
any mortgage payments. However, if neither he nor anyone else makes all required mortgage
payments, the property will presumably be lost to foreclosure, in which case the son’s
remainder interest will be lost. Therefore, the son has the right (which he may well want to
exercise), but not the obligation, to contribute his one-third share of whatever mortgage
payments that the widow is unable or unwilling to make.
(A) is wrong because the holder of a future interest generally does not have the right to
bring a partition action to compel the sale of the possessory estate (here, the widow’s life
estate).
(B) is wrong because it overstates the widow’s obligation; the widow probably does have a
personal obligation to pay her fairly-allocated share of the mortgage payments (based on the
relative value of the widow’s life estate versus the remainder), up to the amount of net income
she’s receiving, but this choice incorrectly suggests that she would be personally liable to pay
the entire installments rather than just her share if the net income were large enough.
(C) is wrong because the son, as a remainderman, has no personal liability to make
mortgage payments at all (since he is not getting any operating income out of which to pay
them).

CHAPTER 3: FUTURE INTERESTS

I. POSSIBILITY OF REVERTER; RIGHT OF RE-ENTRY
A. Possibility of reverter and right of re-entry
1. Possibility of reverter
Question 8
Twenty years ago, a landowner who owned Blackacre, a one-acre tract of
land, duly delivered a deed of Blackacre “to School District so long as it
is used for school purposes.” The deed was promptly and properly
recorded. Five years ago, the landowner died, leaving Sonny as his only
heir at law. The landowner left a duly probated will, by which he left “all
my Estate” to his friend, who was a doctor.
Last month, School District closed its school on Blackacre and for valid
consideration duly executed and delivered a quitclaim deed of Blackacre
to a developer, who planned to use the land for commercial development.
The developer has now brought an appropriate action to quiet title against
the son, the doctor and School District.
The only applicable statute is a provision in the jurisdiction’s probate
code which provides that any property interest which is descendible is
devisable. In such action, the court should find that title is now in (A) the
developer.
(B) the son.
(C) the doctor.
(D) School District.
Answer 8
Choice (C) is correct. When the landowner conveyed to School District, School District got a
fee simple determinable (a fee simple that would automatically end if the property ever ceased
to be used for school purposes). The landowner retained a possibility of reverter, which is what
the grantor retains following a fee simple determinable, if the fee simple determinable doesn’t
specify what happens upon failure of the condition. In virtually all states, a possibility of
reverter can be inherited under the intestacy statute (i.e., it is “descendible”). The probate
provision here tells us that if the interest is descendible, it is also devisable (i.e., can be left by
will). Since we know that the possibility of reverter is descendible, we therefore know that it is
also devisable. Since the landowner left a will devising his entire estate to the doctor, the
reverter will pass by devise (i.e., by the will), not by inheritance. That’s because of the basic
rule that where a particular item of property is covered by a valid bequest in a will, the item
will pass by will rather than by intestacy. Therefore, the reverter goes to the doctor under the
will.
(A) is wrong because once School District closed its school, its interest in Blackacre was
automatically extinguished, and there was nothing left to pass to the developer via the
quitclaim deed.
(B) is wrong because the son’s status as heir (i.e., as taker under the intestacy statute) was
irrelevant given that the reverter here was bequeathed under the will, and was therefore not
available to be passed by inheritance.
(D) is wrong because once School District closed its school, its interest was automatically
extinguished.

II. REMAINDERS
A. Contingent remainders
Question 9
A testator owned a tract of land in fee simple. By will duly admitted to
probate after his death, the testator devised the land to “any wife who
survives me with remainder to such of my children as are living at her
death.”
The testator was survived by his widow and by three children, who were
an accountant, a lawyer, and a doctor. Thereafter, the lawyer died and by
will duly admitted to probate devised his entire estate to his friend. The
accountant and the doctor were the lawyer’s heirs at law.
Later the widow died. In an appropriate lawsuit to which the accountant,
the doctor, and the friend are parties, title to the land is at issue.
In such lawsuit, judgment should be that title to the property is in
(A) the accountant, the doctor, and the friend, because the earliest
vesting of remainders is favored and reference to the surviving
wife’s death should be construed as relating to time of taking
possession.
(B) the accountant, the doctor, and the friend, because the provision
requiring survival of children violates the Rule Against Perpetuities
since the surviving wife might have been a person unborn at the time
of writing of the will.
(C) the accountant and the doctor, because the lawyer’s remainder must
descend by intestacy and is not devisable.
(D) the accountant and the doctor, because the remainders were
contingent upon surviving the life tenant.
Answer 9
Choice (D) is correct. The terms of the bequest made it clear that only a child who survived the
testator’s wife would take. Each child had a contingent remainder as of the testator’s death.
When the lawyer died before his mother (the widow) died, the lawyer’s contingent remainder
was nullified without ever becoming vested, leaving nothing to pass to the lawyer’s friend by
devise. At the widow’s death, the contingent remainders in the accountant and the doctor
vested (and, simultaneously, became possessory).
(A) is wrong for the same reason (D) is right: The remainders were intended by the testator
to be contingent unless and until the remaindermen survived the widow, at which time they
would vest. So when the lawyer died, his contingent remainder was destroyed by his failing to
have survived the widow, and he had no interest to pass to the friend.
(B) is wrong because under the common-law approach to the Rule against Perpetuities, the
time for evaluating a will is when the testator dies, not when the will was executed. At the time
the testator died, his widow (and, indeed, his children as well) were necessarily already in
existence, and could therefore serve as measuring lives. So there was no risk that the remainder
to the testator’s children would vest beyond “measuring lives plus 21 years,” making the gift to
those children valid contingent remainders.
(C) is wrong as a matter of law: Some remainders can indeed descend by intestacy.
Example: O bequeaths “to A for life, then to B.” Assume B is living at O’s death, but dies
intestate before A, and with C as his heir at law. At B’s death, the vested remainder in B passes
by intestacy to C, and C will have a fee simple once B dies.

Question 10
A testator owned a tract of land in fee simple. The testator wrote and
executed, with the required formalities, a will that devised the tract to
‘‘my daughter for life with remainder to my descendants per stirpes.’’ At
the time of writing the will, the testator had a husband and no descendants
living other than her two children, the daughter named in the will and a
son.
The testator died and the will was duly admitted to probate. The testator’s
husband predeceased her, but she was survived by her daughter, her son,
four grandchildren, and one great-grandchild. The testator’s two children
were the testator’s sole heirs at law. The testator’s children brought an
appropriate action for declaratory judgment as to title of the tract.
Guardians ad litem were appointed and all other steps were taken so that
the judgment would bind all persons interested whether born or unborn. In
that action, if the court rules that the daughter has a life estate in the
whole of the tract and that the remainder is contingent, it will be because
the court chose one of several possible constructions and that the chosen
construction
A. related all vesting to the time of writing of the will.
B. related all vesting to the death of the testator.
C. implied a condition that remaindermen survive the daughter.
D. implied a gift of a life estate to the son.
Answer 10
Choice (C) is correct, because if no condition that the remaindermen survive the daughter was
implied, the remainder would be vested rather than contingent. A remainder is contingent if it
is subject to a condition precedent (other than the mere expiration of the preceding estate) that
must be satisfied before the remainder can become a present interest. A common type of
condition precedent is the requirement that the holder of the remainder survive the holder of
the previous estate (often a life estate), and that is what we might have here. There are two
most plausible interpretations of what the testator meant by “my descendants”: (1) “all of my
descendants existing and identifiable at the moment of my own death” (when the remainder is
being created); or (2) “all of my descendants in existence when the remainder becomes
possessory” (i.e., all descendants who survive the daughter). If interpretation (1) is chosen by
the court, the remainder would be vested, because at the moment of the testator’s death we
would know everyone who was to take, and if any later pre-deceased the daughter, their heirs
could take. If interpretation (2) is chosen, we would not know who takes until the daughter
dies, at which point we would look to which descendants of the testator survived the daughter;
in that event, the remainder would be contingent as of the testator’s death (because at the
moment when the testator created the interest by dying, we don’t know who will take). So it is
only if the court selects interpretation (2) (imputing a condition that the remaindermen must
survive the daughter in order to take) that the remainder would be deemed contingent at the
present time.
(A) is wrong because if vesting occurred at the moment the will was written, the remainder
would be vested as of the testator’s death, not contingent. This choice is referring to the
possibility that the court would conclude that the bequest’s reference to “my descendants”
meant “anyone who is my descendant viewed as of the moment when I am writing this will.” If
this were the interpretation, then at the moment of the will-writing, we would know everyone
who could take (they’re all identifiable, and their remainder interests would vest immediately
even though the remainder would not become possessory until the daughter died). In that event,
the remainder would be vested, not contingent.
(B) is wrong because if all vesting were related to the testator’s death, the remainder would
be vested, not contingent, at that moment. The vesting/ contingent determination is to be made
at the moment the interest (the remainder) is created. That moment of creation is the testator’s
death. Saying that “all vesting is [related] to the death of the testator,” as this choice does, is
equivalent to saying that to be a “descendant,” a person just has to survive the testator, not the
daughter. In that scenario, at the moment of the testator’s death, the remaindermen would be
fully identifiable, and would be certain to take once the daughter died. So on this analysis, all
remainder holders would be vested (because fully identified as of the moment of creation of the
interest, and certain to take), not contingent.
(D) is wrong because an interpretation giving a remainder life estate to the son wouldn’t
automatically make that remainder contingent. Even in the unlikely event the court implied a
life estate remainder to the son, we still wouldn’t know whether that remainder was vested or
contingent, since we wouldn’t know whether there was a requirement that the son survive the
daughter (it would be contingent if there were a survival requirement, vested if there were not).
In other words, reading in a remainder for life to the son doesn’t fully answer the vested/
contingent question — of the four choices, only the choice that implies a
surviving-the-daughter condition (Choice (C)) does that.

1. Unborn or unascertained
a. Remainder “to A and her heirs or assigns” is vested
Question 11
 A grantor owned a tract of land in fee simple. By warranty deed he
conveyed the land to his nephew for life “and from and after the death of
my nephew to my niece, her heirs and assigns.”
Subsequently the niece died, devising all of her estate to the niece’s
boyfriend. The niece was survived by a cousin, her sole heir-at-law.
Shortly thereafter the nephew died, survived by the grantor, the niece’s
boyfriend, and the niece’s cousin.
Title to the land now is in
(A) the grantor, because the contingent remainder never vested and the
grantor’s reversion was entitled to possession immediately upon the
nephew’s death.
(B) the boyfriend, because the vested remainder in the niece was
transmitted by her will.
(C) the cousin, because she is the niece’s heir.
(D) either the grantor or the cousin, depending upon whether the
destructibility of contingent remainders is recognized in the
applicable jurisdiction.
Answer 11
Choice (B) is correct. The remainder to “my niece, her heirs and assigns” was a remainder to
the niece in fee simple. Since the niece was alive and identifiable at the time of the grantor’s
deed, the remainder to the niece was vested. A vested remainder can be left by will. Therefore,
the remainder passed by the will to the boyfriend.
(A) is wrong because the remainder was never contingent, not even for an instant.
(C) is wrong because a vested remainder can be passed by will, and the will here devised
the remainder to the boyfriend; therefore, the fact that the niece’s cousin was the niece’s heir at
law is irrelevant.
(D) is wrong because the remainder here was vested, not contingent; therefore, the doctrine
of destructibility of contingent remainders is irrelevant.

III. THE RULE AGAINST PERPETUITIES

(RAP)
A. Applicability of Rule to various estates
1. Options to purchase land
a. Right of first refusal
Question 12
A grantor owned two tracts of land, one of 15 acres and another of five
acres. The two tracts were a mile apart.
Fifteen years ago, the grantor conveyed the smaller tract to a grantee. The
grantor retained the larger tract. The deed to the grantee contained, in
addition to proper legal descriptions of both properties and identifications
of the parties, the following:
I, the grantor, bind myself and my heirs and assigns that in the
event that the larger tract that I now retain is ever offered for
sale, I will notify the grantee and his heirs and assigns in
writing, and the grantee and his heirs and assigns shall have the
right to purchase the larger tract for its fair market value as
 determined by a board consisting of three qualified expert
independent real estate appraisers.
With appropriate references to the other property and the parties, there
followed a reciprocal provision that conferred upon the grantor and her
heirs and assigns a similar right to purchase the smaller tract, purportedly
binding the grantee and his heirs and assigns.
Ten years ago, a corporation acquired the larger tract from the grantor. At
that time, the grantee had no interest in acquiring the larger tract and by
an appropriate written document released any interest he or his heirs or
assigns might have had in the larger tract.
Last year, the grantee died. The smaller tract passed by the grantee’s will
to his daughter. She has decided to sell the smaller tract. However,
because she believes the corporation has been a very poor steward of the
larger tract, she refuses to sell the smaller tract to the corporation even
though she has offered it for sale in the local real estate market.
The corporation brought an appropriate action for specific performance
after taking all of the necessary preliminary steps in its effort to exercise
its rights to purchase the smaller tract.
The daughter asserted all possible defenses.
The common-law Rule Against Perpetuities is unmodified in the
jurisdiction.
If the court rules for the daughter, what is the reason?
(A) The provision setting out the right to purchase violates the Rule
Against Perpetuities.
(B) The grantee’s release 10 years ago operates as a waiver regarding
any right to purchase that the corporation might have.
(C) The two tracts of land were not adjacent parcels of real estate, and
thus the right to purchase is in gross and is therefore unenforceable.
(D) Noncompliance with a right to purchase gives rise to a claim for
money damages, but not for specific performance.
Answer 12
Choice (A) is correct. Each of the original parties granted a reciprocal right of first refusal to
the other and the other’s heirs and assigns. A right of first refusal provides that if the owner
ever decides to sell the property, the one holding the right of first refusal has the right to
purchase it. A right of first refusal is therefore a conditional option to purchase, and it is
analyzed for Rule Against Perpetuities (RAP) issues like other purchase options that are “in
gross” (i.e., not associated with a lease). Courts are split as to whether to apply the RAP to
rights of first refusal or other options in gross. We don’t know here that the RAP will definitely
be applied to such interests, but we do know that if it’s applied, the daughter will win (and the
question is asking what the reason will be if the daughter wins). Why will the daughter win?
Because the RAP invalidates an interest unless it can be said with certainty at the time of
creation that that interest will vest or fail to vest within 21 years. Here, the right of first refusal
extended to the heirs and assigns of the original parties, so the decision to exercise the right
might occur more than 21 years after a life in being at the time the right was granted. (For
instance, the grantor’s great-grandchild might try to exercise the right as against the grantee’s
great-grandchild.) The RAP in this jurisdiction is unmodified by statute — therefore, the right
of first refusal is deemed void as of the time it was created, and the court will not wait to see
whether anyone tries to exercise that right more than 21 years after a life in being.
Consequently, the right is already invalid, even though only 15 years have passed since the
right was created.
(B) is wrong because the fact that the grantee chose not to exercise his right of first refusal
has no effect on whether the grantor can exercise the reciprocal right of first refusal regarding
the land originally owned by the grantee. That is, even if the grantee’s decision not to exercise
the right 10 years ago was a waiver of any subsequent right of first refusal on the part of the
grantee or his heirs (which it almost certainly was), there would be no reason why that decision
should act as a waiver by the grantor or her heirs as to the reciprocal right held by them.
(C) is wrong because it misstates the effect of the fact that the option is “in gross.” An
option “in gross” is an option that is not associated with a lease to the option-holder of the
property to which the option applies. So the right of first refusal here is indeed an option in
gross, as the choice suggests. But the choice is wrong for two reasons: (1) an option in gross is
enforceable as long as the time period during which it can be enforced is not longer than the
RAP period (i.e., not longer than lives in being plus 21 years); and (2) the fact that the parcels
are not adjacent is irrelevant to the analysis. (That is, even if the two parcels were adjacent, the
option would still be in gross because there is no lease.)
(D) is wrong because it misstates the remedies for breach of a right of first refusal. A holder
of a purchase option is entitled to a decree of specific performance, under which the other party
will be compelled to make the sale in return for the payment of the option’s strike price. A right
of first refusal is a conditional option to purchase. Once the condition is satisfied (by the other
party’s decision to sell), the holder of the option has the same right to a decree of specific
performance as would the holder of an unconditional purchase option.

CHAPTER 4: CONCURRENT OWNERSHIP

I. JOINT TENANCY
A. Severance
1. Conveyance by one joint tenant
Question 13
By warranty deed, Marta conveyed Blackacre to Beth and
Christine “as joint tenants with right of survivorship.” Beth and Christine
are not related. Beth conveyed all her interest to Eugenio by warranty
deed and subsequently died intestate. Thereafter, Christine conveyed to
Darin by warranty deed.
There is no applicable statute, and the jurisdiction recognizes the
common-law joint tenancy.
Title to Blackacre is in
(A) Darin.
(B) Marta.
(C) Darin and Eugenio.
(D) Darin and the heirs of Beth.
Answer 13
Choice (C) is correct. When Beth conveyed her interest to Eugenio, this act caused a
severance, destroying the joint tenancy immediately and leaving Eugenio and Christine as
 tenants in common. When Christine conveyed her interest to Darin, he stepped into
Christine’s shoes, becoming a tenant in common with Eugenia.
Choices (A), (B), and (D) are wrong because they are inconsistent with the above analysis.

a. Motive for severance irrelevant

Question 14
A brother and sister owned a large tract of land in fee simple as joint
tenants with rights of survivorship. While the sister was on an extended
safari in Kenya, the brother learned that there were very valuable coal
deposits within the land, but he made no attempt to inform his sister.
Thereupon, the brother conveyed his interest in the land to his wife, who
immediately reconveyed that interest to the brother. The common-law
joint tenancy is unmodified by statute.
Shortly thereafter, the brother was killed in an automobile accident. His
will, which was duly probated, specifically devised his one-half interest in
the property to his wife.
The sister then returned from Kenya and learned what had happened. The
sister brought an appropriate action against the brother’s wife, who
claimed a one-half interest in the property, seeking a declaratory judgment
that she, the sister, was the sole owner of the land.
In this action, who should prevail?
(A) The brother’s wife, because the brother and sister were tenants in
common at the time of the brother’s death.
(B) The brother’s wife, because the brother’s will severed the joint
tenancy.
(C) The sister, because the joint tenancy was reestablished by the
brother’s wife’s reconveyance to the brother.
(D) The sister, because the brother breached his fiduciary duty as her
joint tenant.
Answer 14
Choice (A) is correct. When the brother conveyed his interest in the property to his wife, this
conveyance acted as an immediate severance, transforming the joint tenancy into a tenancy in
common between the wife and the sister. When the wife immediately reconveyed to the
brother, the brother and sister were tenants in common. When the brother died, his interest as a
tenant in common passed back to his wife, making her a tenant in common with the sister.
(B) is wrong because the joint tenancy was severed before the brother’s will took effect (at
the moment the brother conveyed to his wife).
(C) is wrong because once the joint tenancy was broken by the conveyance from the brother
to his wife, it could only be reestablished by a new conveyance joined in by both tenants in
common, i.e., the wife and the sister (or, later, the brother and sister).
(D) is wrong because a conveyance by either joint tenant severs the joint tenancy regardless
of whether the conveying joint tenant had or breached any fiduciary obligation to the other.

2. Rights of creditors of deceased joint tenant

Question 15
 A brother and sister owned a parcel as joint tenants, upon which was
situated a two-family house. The brother lived in one of the two
apartments and rented the other apartment to a tenant. The brother got in a
fight with the tenant and injured him. The tenant obtained and properly
filed a judgment for $10,000 against the brother.
The statute in the jurisdiction reads: “Any judgment properly filed shall,
for ten years from filing, be a lien on the real property then owned or
subsequently acquired by any person against whom the judgment is
rendered.”
The sister, who lived in a distant city, knew nothing of the tenant’s
judgment. Before the tenant took any further action, the brother died. The
common-law joint tenancy is unmodified by statute.
The sister then learned the facts and brought an appropriate action against
the tenant to quiet title to the land.
The court should hold that the tenant has
(A) a lien against the whole of the property, because he was a tenant of
both the brother and the sister at the time of the judgment.
(B) a lien against the brother’s undivided one-half interest in the land,
because his judgment was filed prior to the brother’s death.
(C) no lien, because the sister had no actual notice of the tenant’s
judgment until after the brother’s death.
(D) no lien, because the brother’s death terminated the interest to which
the tenant’s lien attached.
Answer 15
Choice (D) is correct. Since the tenant’s judgment was only against the brother, the tenant’s
judgment lien was only against the brother’s real property, not the sister’s real property. That
real property consisted of the brother’s joint tenancy interest. At the moment of the brother’s
death, that joint tenancy interest ceased to exist, and there was nothing left for the judgment
lien to be a lien against.
(A) is wrong because the basis for the tenant’s judgment (and thus for his judgment lien)
was the brother’s having injured him in the fight; since this had nothing to do with the tenant’s
having been a tenant of both brother and sister, it did not create any lien against the sister’s
interest in the property.
(B) is wrong because it inaccurately characterizes the brother’s interest: It was a joint
tenancy, not an “undivided one-half interest” (a phrase that would be used to describe a tenancy
in common). Therefore, the fact that the judgment was filed while the brother was still alive is
irrelevant, because the brother’s joint tenancy ceased to exist at the moment he died.
(C) is wrong because it cites an irrelevant factor; even if the sister had had actual notice of
the judgment while the brother was still alive, there would be no lien after the brother died for
the reasons described in the discussion of (D).

II. TENANCY IN COMMON

A. Tenancy in common
1. Conveyance by one co-tenant
a. Grant of mortgage or judgment lien
Question 16
 A mother owned a two-family apartment house on a small city lot not
suitable for partition-in-kind. Upon the mother’s death, her will devised
the property to “my son and my daughter.”
A week ago, a creditor of the son obtained a money judgment against the
son, and properly filed the judgment in the county where the property is
located. A statute in the jurisdiction provides: Any judgment properly
filed shall, for ten years from filing, be a lien on the real property then
owned or subsequently acquired by any person against whom the
judgment is rendered.
The son needed cash, but the daughter did not wish to sell the property.
The son commenced a partition action against the daughter and the
creditor.
Assume that the court properly ordered a partition by judicial sale.
After the sale, the creditor’s judgment will be a lien on (A) all of the
property.
(B) only a one-half interest in the property.
(C) all of the proceeds of sale of the property.
(D) only the portion of the proceeds of sale due the son.
Answer 16
Choice (D) is correct. The mother’s will had the effect of giving the property to the son and the
daughter as tenants in common, with an undivided one-half interest going to each. (A
conveyance “to A and B,” without further specification, creates a tenancy in common with
equal shares.) At the time the creditor got his money judgment against the son, that judgment
became a lien only against real property owned by the son, and the son’s real property
consisted of his undivided one-half interest. When the partition by judicial sale occurred, the
son’s interest in the property became sole ownership of one-half of the proceeds, and the
creditor’s lien became a lien solely on that share of the proceeds.
Choices (A), (B), and (C) are wrong because they are inconsistent with the above analysis.

CHAPTER 5: LANDLORD AND TENANT

I. TORT LIABILITY OF LANDLORD AND TENANT
A. Landlord’s liability
1. Common law
a. Assignment of interest by L
Question 17
Les leased a barn to his neighbor, Tom, for a term of three years. Tom
took possession of the barn and used it for his farming purposes. The lease
made Les responsible for structural repairs to the barn, unless they were
made necessary by actions of Tom.
One year later, Les conveyed the barn and its associated land to Lottie
“subject to the lease to Tom.” Tom paid the next month’s rent to Lottie.
The next day a portion of an exterior wall of the barn collapsed because of
rot in the interior structure of the wall. The wall had appeared to be sound,
but a competent engineer, on inspection, would have discovered its
condition. Neither Lottie nor Tom had the barn inspected by an engineer.
Tom was injured as a result of the collapse of the wall.
 Les had known that the wall was dangerously weakened by rot and
needed immediate repairs, but had not told Tom or Lottie. There is no
applicable statute.
Tom brought an appropriate action against Les to recover damages for the
injuries he sustained. Lottie was not a party.
Which of the following is the most appropriate comment concerning the
outcome of this action?
(A) Tom should lose, because Lottie assumed all of Les’s obligations by
reason of Tom’s attornmentto her.
(B) Tom should recover, because there is privity between lessor and
lessee and it cannot be broken unilaterally.
(C) Tom should recover, because Les knew of the danger but did not
warn Tom.
(D) Tom should lose, because he failed to inspect the barn.
Answer 17
Choice (C) is correct. A landlord generally does not have tort liability for accidents that arise
out of a dangerous condition on the property. For example, a landlord has no duty to inspect the
property to discover dangerous conditions. But the landlord does have liability if he knows of
the danger, or is in possession of facts that would reasonably have led a person in his position
to know of the danger, and the tenant does not know of the danger. Les met this requirement
because the facts tell us that he had “known that the wall was dangerously weakened by rot and
needed immediate repairs.” When Les assigned to Lottie, Les remained liable until Lottie
actually discovered the condition and had a reasonable opportunity to fix it. Since Lottie had
only owned the property for one day before the accident, and had not learned of the condition,
liability had not yet passed to Lottie, and thus remained with Les, at the moment of the
accident.
(A) is wrong because, while Lottie took “subject to” the lease, she did not assume Les’s
obligations to Tom, and her receipt of a payment from Tom did not change this. By the rule
discussed in the prior paragraph, Lottie would not become liable for the condition until she
learned of it and had time to fix it (unless she expressly assumed liability for conditions not
known to her, which didn’t happen here).
(B) is wrong because a landlord is liable to the tenant for failing to disclose a known
dangerous condition. That liability persists regardless of whether landlord and tenant remain in
privity of estate (and ends only when the successor on the landlord side becomes liable, which
could only have been when the successor learned of the condition and had a chance to fix it).
(D) is wrong because, where a landlord is actually aware of a dangerous condition, and the
tenant is not aware, the landlord is liable regardless of whether the tenant could have (or even
reasonably should have) inspected the premises. In other words, the tenant has no duty to
inspect, at least in a scenario where the landlord has actual knowledge of the danger.

II. TRANSFER AND SALE BY LESSOR;

ASSIGNMENT AND SUBLETTING BY LESSEE
A. Generally allowed
1. Distinguish assignment from sublease
Question 18
 A landlord leased an apartment to a tenant by written lease for two years
ending on the last day of a recent month. The lease provided for $700
monthly rental. The tenant occupied the apartment and paid the rent for
the first 15 months of the lease term, until he moved to a new job in
another city. Without consulting the landlord, the tenant moved a friend
into the apartment and signed an informal writing transferring to the
friend his “lease rights” for the remaining nine months of the lease. The
friend made the next four monthly $700 rental payments to the landlord.
For the final five months of the lease term, no rent was paid by anyone,
and the friend moved out with three months left on the lease term. The
landlord was on an extended trip abroad, and did not learn of the default
and the vacancy until last week. The landlord sued the tenant and the
friend, jointly and severally, for $3,500 for the last five months’ rent.
What is the likely outcome of the lawsuit?
(A) Both the tenant and the friend are liable for the full $3,500, because
the tenant is liable on privity of contract and the friend is liable on
privity of estate as assignee.
(B) The friend is liable for $1,400 on privity of estate, which lasted only
until he vacated, and the tenant is liable for $2,100 on privity of
contract and estate for the period after the friend vacated.
(C) The friend is liable for $3,500 on privity of estate and the tenant is
not liable, because the landlord’s failure to object to the friend’s
payment of rent relieved the tenant of liability.
(D) The tenant is liable for $3,500 on privity of contract and the friend is
not liable, because a sublessee does not have personal liability to the
original landlord.
Answer 18
Choice (A) is correct. An assignment arises when a tenant transfers all or some of the leased
premises to another for the remainder of the lease term, retaining no interest in the assigned
premises. In this case, prior to the agreement with the friend, the tenant had privity of contract
with the landlord because of the lease. The tenant also had privity of estate because the tenant
was in possession of the apartment. Subsequently, an assignment arose when the tenant
transferred the premises to the friend for the remainder of the lease term of nine months. The
friend was then in privity of estate with the landlord as to all promises that run with the land,
including the covenant to pay rent. (When the friend moved out, this did not end the privity of
estate, because the friend did not assign to someone else, and simply abandoned the premises.
See Rest. 2d (Landlord & Tenant), § 16.1, Illustr. 24.) The tenant was not released by the
landlord, however, and thus remained liable on privity of contract.
(B) is incorrect, because the friend entered privity of estate with the landlord when he
received the assignment, and this privity of estate remained with the friend until the end of the
lease because the friend made no assignment. Therefore, the friend remained liable on privity
of estate for the period after he vacated. Furthermore, because the landlord never released the
tenant, the tenant remained liable for the full $3,500 on privity of contract.
(C) is incorrect, because the landlord never released the tenant, thereby keeping the tenant
liable on privity of contract based on the original lease. (There was no express release, and a
release would not be implied merely because the landlord accepted rent from the friend.)
(D) is incorrect, because this choice assumes that the friend was a sublessee, which he was
not. A sublease arises when a tenant transfers the right of possession to all or some of the
leased premises to another for a time less than the remaining time of the lease, or when the
tenant retains some other interest in the premises. Here, the tenant transferred all the remaining
time of the lease to the friend and retained no other interest. Accordingly, this was an
assignment and not a sublease. As an assignee, the friend was in privity of estate with the
landlord as to all promises that run with the land, including the covenant to pay rent.

B. Running of benefit and burden

1. Purchase options in leases
Question 19
Lanny, the owner of Whiteacre in fee simple, leased Whiteacre to Ten for
a term of ten years by a properly executed written instrument. The lease
was promptly and properly recorded. It contained an option for Ten to
purchase Whiteacre by tendering $250,000 as purchase price any time
“during the term of this lease.” One year later, Ten, by a properly executed
written instrument, purported to assign the option to Oscar, expressly
retaining all of the remaining term of the lease. The instrument of
assignment was promptly and properly recorded.
Two years later, Lanny contracted to sell Whiteacre to Jones and to
convey a marketable title “subject to the rights of Ten under her lease.”
Jones refused to close because of the outstanding option assigned to
Oscar.
Lanny brought an appropriate action against Jones for specific
performance.
If judgment is rendered in favor of Lanny, it will be because the relevant
jurisdiction has adopted a rule on a key issue as to which various state
courts have split.
Which of the following identifies the determinative rule or doctrine upon
which the split occurs, and states the position favorable to Lanny?
(A) In a contract to buy, any form of “subject to a lease” clause that fails
to mention expressly an existing option means that the seller is
agreeing to sell free and clear of any option originally included in
the lease.
(B) Marketable title can be conveyed so long as any outstanding option
not mentioned in the purchase contract has not yet been exercised.
(C) Options to purchase by lessees are subject to the Rule Against
Perpetuities.
(D) Options to purchase contained in a lease cannot be assigned
separately from the lease
Answer 19
Choice (D) is correct. Courts disagree about whether a purchase option embodied in a lease
may be assigned independently of the lease. Since Lanny is arguing that his title is marketable,
the position that purchase options cannot be assigned independently of the lease is favorable to
Lanny (because that position, if upheld, would certainly mean that Oscar could not exercise the
option, and might even mean that Ten had rendered the option invalid by purporting to assign it
independently of the lease).
(A) is wrong because, even if the contract’s “subject to a lease” language meant what this
choice says it means (that Lanny is committing to sell free and clear of any option), Lanny
would still lose: He would not in fact be able to sell free and clear of the purchase option now
purportedly held by Oscar.
(B) is wrong because the existence of a purchase option renders title unmarketable, even
though the option has not yet been exercised. (If the rule were otherwise, the buyer would be
paying full dollar for property that might be “called away” from him by exercise of the option
at any time, perhaps at a below-market price.)
(C) is wrong because: (1) purchase options embodied in leases are typically not subjected to
the Rule against Perpetuities; and (2) even if the option here were subject to the Rule, the
option would not thereby be rendered invalid (since the option must be exercised during the
lease term, and the lease terms falls within “lives in being plus 21 years”).

C. Agreement by the parties about transfer

1. Generally enforced
a. Condemnation awards
Question 20
Six years ago, a landlord and a tenant entered into a tenyear commercial
lease of land. The written lease provided that if a public entity using the
power of eminent domain condemned any part of the land, the lease
would terminate and the landlord would receive the entire condemnation
award. Thereafter, the city condemned approximately twothirds of the
land.
The tenant notified the city and the landlord that an independent appraisal
of the value of the tenant’s possessory interest established that it
substantially exceeded the tenant’s obligation under the lease and that the
tenant was entitled to share the award. The appraisal was accurate. In an
appropriate action among the landlord, the tenant, and the city as to the
right of the tenant to a portion of the condemnation award, for whom will
the court likely find?
(A) The landlord, because the condemnation superseded and canceled
the lease.
(B) The landlord, because the parties specifically agreed as to the
consequences of condemnation.
(C) The tenant, because the landlord breached the landlord’s implied
warranty of quiet enjoyment.
(D) The tenant, because otherwise the landlord would be unjustly
enriched.
Answer 20
Choice (B) is correct. The lease between the landlord and the tenant specifically addressed
what would happen if a public entity condemned any part of the land under its power of
eminent domain. That agreement between the parties controls. Thus, the court will find for the
landlord: The lease will terminate and the landlord will receive the entire condemnation award.
(A) is wrong because the specific terms of the lease supersede the condemnation, not vice
versa. If the lease had been silent on the issue of condemnation, then the result would have
depended on whether the condemnation was of all the property, or of just part. (With a total
condemnation and a lease silent on this point, the leasehold and all the tenant’s duties under the
lease would have been terminated, and the tenant would have been entitled to share in the
condemnation award only to the extent that the fair market value of his leasehold exceeded his
obligations under the lease. Had the city condemned just part of the property, in most courts the
tenant would have been required to continue paying the full rent, but would have been entitled
to a portion of the condemnation award to compensate him for the portion of the leasehold no
longer available to him.) However, this “default” rule for handling a condemnation award will,
in all courts, not be applied if the parties have specified a different treatment, as they did here.
(C) is wrong because it misstates the law. The taking of all or part of the leased land, or the
taking of some interest in it — say an easement — by eminent domain does not constitute a
breach of the landlord’s covenant of quiet enjoyment of the premises because it occurs through
no fault of the landlord.
(D) is wrong because there has been no unjust enrichment. Had the lease not provided for
the consequences of condemnation, the lease would have remained in force, and the tenant
would, to prevent unjust enrichment of the landlord, have gotten either a pro-rata reduction of
rent, some portion of the award (if the lease was below-market), or both. But the fact that the
parties expressly agreed that the landlord would keep the entire award means that there is no
unjust enrichment when the agreed-upon outcome is enforced.

CHAPTER 6: EASEMENTS AND SERVITUDES

I. CREATION OF EASEMENTS
A. Easement by prescription
1. Adverse use
Question 21
Oxnard owned Goldacre, a tract of land, in fee simple. At a time when
Goldacre was in the adverse possession of Amos, Eric obtained the oral
permission of Oxnard to use as a road or driveway a portion of Goldacre
to reach adjoining land, Twin Pines, which Eric owned in fee simple.
Thereafter, during all times relevant to this problem, Eric used this road
between Goldacre regularly for ingress and egress between Twin Pines
and a public highway.
Amos quit possession of Goldacre before acquiring title by adverse
possession. Without any further communication between Oxnard and
Eric, Eric continued to use the road for a total period, from the time he
first began to use it, sufficient to acquire an easement by prescription.
Oxnard then blocked the road and refused to permit its continued use.
Eric brought suit to determine his right to continue use of the road. Eric
should
(A) win, because his use was adverse to Amos and once adverse it
continued adverse until some affirmative showing of a change.
(B) win, because Eric made no attempt to renew permission after Amos
quit possession of Goldacre.
(C) lose, because his use was with permission.
 (D) lose, because there is no evidence that he continued adverse use for
the required period after Amos quit possession.
Answer 21
Choice (C) is correct, because it correctly identifies the reason Eric will lose: His use of
Goldacre was not “adverse,” i.e., non-permissive. The key facts here are that Eric had oral
permission from Oxnard originally to use the road across Goldacre, and Amos quit possession
of Goldacre before acquiring title by adverse possession. What does this mean? That Eric’s use
of Goldacre was never adverse to the interests of the landowner, and that Amos never had any
enforceable rights to Goldacre. In order to gain an easement by prescription, one’s use of
another’s property must be actual, open and notorious, continuous for the statutory period,
exclusive, and hostile and adverse (non-permissive). Here, the facts specifically state that Eric
had Oxnard’s oral permission to use the road across Goldacre. The red herring here is the
presence of Amos. However, Amos is merely in possession of Goldacre. The facts state that he
quit possession before he acquired title to it. Thus, the elements of an easement by prescription
would apply to Eric vis-àvis Oxnard, not Eric vis-à-vis Amos.
(A) is wrong because it focuses on the wrong fact. Here, it doesn’t matter if
Eric’s use is adverse to Amos, because Amos is not the landowner —
Oxnard is. Eric’s use is not adverse to Oxnard, because the facts state that Oxnard granted Eric
oral permission to use the road across Goldacre. An easement by prescription requires use of
another’s property that is actual, open and notorious, continuous for the statutory period,
exclusive, and hostile and adverse. “Hostile and adverse” means non-permissive in this
context. Here, since Eric’s use was with the permission of the landowner the entire time, his
use was never adverse. Since (A) does not recognize this, it’s not the best response.
(B) is wrong because it falsely suggests that Amos’s quitting possession of Goldacre is
relevant. It is not, because an easement by prescription is gained by adverse use against the
landowner, not the possessor. Eric could only gain an easement by prescription if his use of
Goldacre as against Oxnard was actual, open and notorious, continuous for the statutory period,
exclusive, and non-permissive.
(D) is wrong because it focuses on a basically irrelevant fact. What matters is whether Eric had
the requisite open and hostile use as against the true owner, Oxnard. If Eric hadn’t originally
gotten permission from Oxnard, his time of use of the driveway while Amos was in adverse
possession of the overall tract would count against Oxnard. So the problem is not that Eric
didn’t use the driveway long enough once Amos left, it’s that Eric’s entire use of the driveway
(even when Amos was there) wasn’t adverse as against Oxnard.

II. SCOPE OF EASEMENTS

A. Development of dominant estate
1. Remedy for misuse
Question 22
A large tract of land was owned by a religious order. On the land, the
order erected a large residential building where its members reside. The
land is surrounded by rural residential properties and its only access to a
public way is afforded by an easement over a strip of land 30 feet wide.
The easement was granted to the order by deed from a neighbor, who
owned one of the adjacent residential properties. The order built a
 driveway on the strip, and the easement was used for 20 years without
incident or objection.
Last year, as permitted by the applicable zoning ordinance, the order
constructed a 200-bed nursing home and a parking lot on their land, using
all of the land that was available for such development. The nursing home
was very successful, and on Sundays visitors to the nursing home
overflowed the parking facilities on the land and parked all along the
driveway from early in the morning through the evening hours. After two
Sundays of the resulting congestion and inconvenience, the neighbor
erected a barrier across the driveway on Sundays preventing any use of
the driveway by anyone seeking access to the order’s land. The order
objected.
The neighbor brought an appropriate action to terminate the easement.
The most likely result in this action is that the court will hold for
(A) the neighbor, because the order excessively expanded the use of the
dominant tenement.
(B) the neighbor, because the parking on the driveway exceeded the
scope of the easement.
(C) the order, because expanded use of the easement does not terminate
the easement.
(D) the order, because the neighbor’s use of self-help denies her the right
to equitable relief.
Answer 22
Choice (C) is correct. The expanded use of the easement here — especially the parking along
the driveway at all hours — probably does represent excessive use going beyond the intended
scope of the easement. However, a court would almost certainly limit the remedy to an
injunction against further violations, or to damages for the two past violations, and would not
order a forfeiture of the easement. That’s because forfeitures are drastic remedies, and will be
awarded in excessive-use situations only if no other remedy will be adequate, which would not
be the case for the violations here.
(A) is wrong because, while the order has indeed probably excessively expanded their use
of the easement, the court would not order the easement forfeited as a remedy, for the reasons
stated above.
(B) is wrong for the same reason (A) is wrong.
(D) is wrong because a court would not grant the neighbor the extreme remedy of forfeiture
whether or not she had used self-help.

III. REPAIR AND MAINTENANCE OF EASEMENTS

A. Dominant owner’s rights
Question 23
Two adjacent, two-story, commercial buildings were owned by a
landowner. The first floors of both buildings were occupied by various
retail establishments. The second floors were rented to various other
tenants. Access to the second floor of each building was reached by a
common stairway located entirely in Building l. While the buildings were
being used in this manner, the landowner sold Building 1 to an accountant
 by warranty deed which made no mention of any rights concerning the
stairway. About two years later the landowner sold Building 2 to a lawyer.
The stairway continued to be used by the occupants of both buildings.
The stairway became unsafe as a consequence of regular wear and tear.
The lawyer entered upon the accountant’s building and began the work of
repairing the stairway. The accountant demanded that the lawyer
discontinue the repair work and vacate the accountant’s building. When
the lawyer refused, the accountant brought an action to enjoin the lawyer
from continuing the work.
Judgment should be for
(A) the accountant, because the lawyer has no rights in the stairway.
(B) the accountant, because the lawyer’s rights in the stairway do not
extend beyond the normal life of the existing structure.
(C) the lawyer, because the lawyer has an easement in the stairway and
an implied right to keep the stairway in repair.
(D) the lawyer, because the lawyer has a right to take whatever action is
necessary to protect himself from possible tort liability to persons
using the stairway.
Answer 23
Choice (C) is correct. At the time of the conveyance by the landowner to the lawyer, the lawyer
received an implied easement to use the stairs for access to Building 2. (The three requirements
for an easement by implication were met here: (1) the land was “severed” from common
ownership when the landowner kept Building 2 while selling Building 1; (2) the use of the
stairway for access to Building 2 existed prior to this severance; and (3) the easement was and
is reasonably necessary to enjoyment of Building 2.) The holder of the easement (the lawyer)
therefore had an implied right to maintain the property used in the easement, given that the
maintenance was compatible with the intended use of the easement and did not unreasonably
interfere with the servient owner’s (the accountant’s) use of the servient estate.
(A) is wrong because the lawyer does have rights in the stairway, namely an implied
easement.
(B) is wrong because the lawyer as easement holder has the right to maintain or repair the
structure indefinitely, not just for the normal life of the original staircase.
(D) is wrong because it misstates the reason for the lawyer’s repair right, which is that the
lawyer has an implied easement; if the lawyer did not have an implied easement, he would
probably not face tort liability for failing to correct the stairway danger on property belonging
to another, at least if he asked the owner (the accountant) to do the work and the owner refused.

Question 24
Maria is the owner and possessor of Goodacre, on which there is a lumber
yard. Maria conveyed to Reliable Electric Company the right to construct
and use an overhead electric line across Goodacre to serve other
properties. The conveyance was in writing, but the writing made no
provision concerning the responsibility for repair or maintenance of the
line. Reliable installed the poles and erected the electric line in a proper
and workmanlike manner. Neither Maria nor Reliable took any steps
toward the maintenance or repair of the line after it was built. Neither
 party complained to the other about any failure to repair. Because of the
failure to repair or properly maintain the line, it fell to the ground during a
storm. In doing so, it caused a fire in the lumber yard and did considerable
damage. Maria sued Reliable Electric Company to recover for damages to
the lumber yard. The decision should be for
(A) Maria, because the owner of an easement has a duty to so maintain
the easement as to avoid unreasonable interference with the use of
the servient tenement by its lawful possessor.
(B) Maria, because the owner of an easement is absolutely liable for any
damage caused to the servient tenement by the exercise of the
easement.
(C) Reliable Electric Company, because the possessor of the servient
tenement has a duty to give the easement holder notice of defective
conditions.
(D) Reliable Electric Company, because an easement holder’s right to
repair is a right for his own benefit, and is therefore inconsistent
with any duty to repair for the benefit of another.
Answer 24
Choice (A) is correct. Reliable has an expressly-created easement for constructing and using
overhead electric lines. Since Reliable was given the right to use Maria’s land, it’s the
“dominant” tenement holder (and Maria is the “servient” tenement holder, since it’s her land
that’s burdened by the easement). The rule on maintaining easements is that the dominant
tenement holder has both the right and the duty to use reasonable care to maintain the
easement. Thus, Reliable would have the right to enter Maria’s land and repair the line and
poles, as necessary, and Maria could not object to this interference. However, Reliable also had
the duty to use reasonable care to maintain the equipment so it did not pose an unreasonable
danger to Maria’s land, and the utility, by failing to maintain the line at all, did not fulfill that
duty. As a result, Maria will be able to recover for damages to the lumber yard.
(B) is wrong because although it arrives at the correct result, it misstates the responsibility
of the dominant tenement holder. There is no doctrine that states that an easement owner is
strictly liable for damage caused to the servient tenement by the exercise of the easement.
Instead, the dominant holder merely has the obligation to use reasonable care to maintain the
easement in such a way that it does not damage the servient property. If the accident had
happened without the lack of due care by Reliable (which is not the way it happened), Reliable
would not be liable to Maria.
(C) is wrong because it misstates the duty of the servient tenement holder, and arrives at the
wrong result. In general, the dominant holder has the obligation to use reasonable care to
maintain the easement so that it does not pose unreasonable risk to the servient parcel. This
obligation includes an obligation to inspect. So the mere fact that Maria didn’t give notice of
the problem doesn’t save Reliable from liability. (Indeed, an electric utility ought to be able to
recognize maintenance issues more easily than a nonutility customer.)
(D) is wrong because it fails to recognize Reliable Electric’s duty to Maria. The holder of an
easement has both the right and the duty to take reasonable steps to maintain the easement.

1. Limited right to contribution

Question 25
 Beach owned a tract of land called Blackacre. An old road ran through
Blackacre from the abutting public highway. The road had been used to
haul wood from Blackacre. Without Beach’s permission and with no
initial right, Daniel, the owner of Whiteacre, which adjoined Blackacre,
traveled over the old road for a period of 15 years to obtain access to
Whiteacre, although Whiteacre abutted another public road. Occasionally,
Daniel made repairs to the old road.
The period of time to acquire rights by prescription in the jurisdiction is
ten years.
After the expiration of 15 years, Beach conveyed a portion of Blackacre
to Carrol. The deed included the following clause: “together with the right
to pass and repass at all times and for all purposes over the old road.”
Carrol built a house fronting on the old road. After the conveyance, Beach
has used the road once or twice per year. Daniel almost never uses the
road anymore.
The road was severely damaged by a spring flood, and
Carrol made substantial repairs to the road. Carrol asked
Daniel and Beach to contribute one-third each to the cost of repairing the
flood damage. They both refused, and Carrol brought an appropriate
action to compel contribution from Beach and Daniel.
In this action, Carrol will (A) lose as
to both defendants.
(B) win as to both defendants.
(C) win as to Beach, but lose as to Daniel.
(D) win as to Daniel, but lose as to Beach.
Answer 25
Choice (A) is correct. Carrol is the owner of the dominant tenement (i.e., the owner of the
easement), and Beach is the owner of the servient tenement. Beach, as the servient owner, has
no obligation to contribute one-third of Carrol’s repair expenditures. Beach may have some
obligation of reimbursement, based on the intensity and frequency of his bridge use versus
Carrol’s, but certainly not a one-third-of-total-cost obligation, since Beach clearly does not
represent one-third of the total usage of the bridge. As to Daniel, he may well have obtained an
easement by prescription. But even if he has done so, he, too, has no obligation to reimburse
Carrol for one-third of the latter’s expenditures, because Daniel, like Beach, rarely makes use
of the bridge, and has at most an obligation to reimburse for his small pro rata share of total
usage.
Choices (B), (C), and (D) are wrong because they are inconsistent with the above analysis.

IV. TRANSFER AND SUBDIVISION OF EASEMENTS

A. Transfer of benefit
1. Transfer of easements appurtenant
Question 26
Olwen owned 80 acres of land, fronting on a town road. Two years ago,
Olwen sold to Buck the back 40 acres. The 40 acres sold to Buck did not
adjoin any public road. Olwen’s deed to Buck expressly granted a
 right-of-way over a specified strip of Olwen’s retained 40 acres, so Buck
could reach the town road. The deed was promptly and properly recorded.
Last year, Buck conveyed the back 40 acres to Sam. They had discussed
the right-of-way over Olwen’s land to the road, but Buck’s deed to Sam
made no mention of it. Sam began to use the right-of-way as Buck had,
but Olwen sued to enjoin such use by Sam.
The court should decide for
(A) Sam, because he has an easement by implication.
(B) Sam, because the easement appurtenant passed to him as a result of
Buck’s deed to him.
(C) Olwen, because Buck’s easement in gross was not transferable.
(D) Olwen, because Buck’s deed failed expressly to transfer the
right-of-way to Sam.
Answer 26
Choice (B) is correct. What we have here is an easement appurtenant, because the easement is
for the benefit of a particular parcel (the back 40 acres). An easement appurtenant passes to the
new holder of the dominant tenement automatically, even if the deed to the dominant tenement
does not mention the easement.
(A) is wrong, because the easement here is an express easement, not one by implication.
Furthermore, even if the easement here were an easement by implication, it would
automatically pass together with the dominant tenement.
(C) is wrong because the easement here is appurtenant, not in gross. That is, it is clear from
the surrounding circumstances that the easement is being used to benefit a particular parcel (the
back 40 acres), not to benefit Buck irrespective of Buck’s ownership of those 40 acres. So
while many courts indeed hold that an easement in gross is not transferable if the document
creating it is silent on the issue, this principle won’t apply to the facts here.
(D) is wrong because, as described in the answer to (B) above, an easement appurtenant
will pass together with the dominant tenement, even if the deed conveying the dominant
tenement does not mention the easement.

V. LICENSES
A. Definition
1. Where agreement is oral
Question 27
A landowner orally gave his neighbor permission to share the use of the
private road on the landowner’s land so that the neighbor could have more
convenient access to the neighbor’s land. Only the landowner maintained
the road. After the neighbor had used the road on a daily basis for three
years, the landowner conveyed his land to a grantee, who immediately
notified the neighbor that the neighbor was not to use the road. The
neighbor sued the grantee seeking a declaration that the neighbor had a
right to continue to use the road.
Who is likely to prevail?
(A) The grantee, because an oral license is invalid.
(B) The grantee, because the neighbor had a license that the grantee
could terminate at any time.
 (C) The neighbor, because the grantee is estopped to terminate the
neighbor’s use of the road.
(D) The neighbor, because the neighbor’s use of the road was open and
notorious when the grantee purchased the land.
Answer 27
Choice (B) is correct. A license is permission to use the land of another. It is ordinarily
revocable, and is not subject to the Statute of Frauds. In this case, because the neighbor had the
landowner’s permission to use the road and did not expend any money, property, or labor
pursuant to the agreement (i.e., the neighbor did substantially rely on the continued availability
of the license), the neighbor had a license that was revocable — and effectively revoked — by
the grantee.
(A) is incorrect because, while this option correctly states that the grantee will prevail, it
misstates the reason why this is so. A license (unlike an easement) is not subject to the Statute
of Frauds; it may be oral, written, or implied.
(C) is incorrect because for estoppel to apply to make a license (which is ordinarily
revocable) irrevocable, the neighbor must have expended money, property, or labor pursuant to
the agreement. In this case, the landowner alone maintained the road. The neighbor’s use of the
land by permission, without expense, was therefore a revocable license that was effectively
revoked by the grantee.
(D) is incorrect. An open and notorious use of the road suggests a claim for an easement by
prescription. However, the use was with permission, which prevents a prescriptive claim.
(Also, the use was for just three years, making it extremely unlikely that the statutory period
for adverse possession-type claims could have run.) Instead, the neighbor’s use of the land was
a license that was effectively revoked by the grantee.

VI. EQUITABLE SERVITUDES/ RESTRICTIVE COVENANTS

A. Intent to benefit plaintiff’s parcel
Question 28
A landowner owned a large tract of land. During the landowner’s lifetime,
he conveyed the eastern half of the tract to his son, and the western half to
his daughter. The two halves of the tract were located in different
municipalities. Each of the conveyances, which were promptly and
properly recorded, contained the following language:
The parties agree for themselves and their heirs and assigns that
the premises herein cnveyed shall be used only for residential
purposes; that each lot created within the premises herein
conveyed shall contain not less than five acres; and that each lot
shall have not more than one single-family dwelling. This
agreement shall bind all successor owners of all or any portion
of the tract, and any owner of any part of the tract may enforce
this covenant.
After the landowner’s death, the landowner’s son desired to build houses
on one-half acre lots in his half of the tract, as authorized by current
applicable zoning and building codes in its municipality. The area
surrounding the son’s half of the tract was developed as a residential
community with homes built on one-half acre lots. The western half of the
 tract was in a residential area covered by a zoning code that allowed
residential development only on five-acre tracts of land. In an appropriate
action brought by the daughter to enjoin the son’s proposed construction
on one-half acre lots, the court will find the quoted restriction to be
(A) invalid, because of the change of circumstance in the neighborhood.
(B) invalid, because it conflicts with the applicable zoning code.
(C) valid, but only so long as the original grantees from the landowner
own their respective tracts.
(D) valid, because the provision imposed an equitable servitude.
Answer 28
Choice (D) is correct. Where a promise regarding land use is a negative one — i.e., one
forbidding certain uses — the promise is called an “equitable servitude.” An equitable
servitude is not enforceable by the owner of a particular parcel unless the original parties
intended to benefit that particular parcel. The language in the deeds from the landowner to his
son and from the landowner to his daughter specifically provided that “any owner of any part
of the tract may enforce the covenant”; the fact that the daughter’s parcel was part of the tract
shows that that parcel was intended to be benefitted by the restriction. Since the daughter’s
parcel was intended to be benefitted, and since equitable servitudes are generally enforceable,
the daughter wins.
(A) is wrong because the change in local land use does not mean that the court will not
enforce the servitude. There can be extreme circumstances in which a change of land use
throughout an entire neighborhood might lead a court to conclude that it should no longer
enforce an equitable servitude; but the mere fact that uses inconsistent with the servitude are
now prevalent in adjacent parcels would not be enough. That’s especially true where, as here,
some of the parcels near plaintiff (i.e., any parcel on the western side of the municipal line) are
used in a way that is consistent with the restriction.
(B) is wrong, because the fact that a use forbidden by a servitude is allowed by local zoning
codes won’t cause a court to refuse enforcement of an otherwise valid restriction unless the
entire area in question has changed in such a way that enforcement would be of little value. So
where, as here, use patterns on the western side are still five-acre minimums, the fact that the
zoning code applicable to the eastern side is inconsistent with five-acreminimums would not
induce the court to relax the enforcement of the servitude.
(C) is wrong, because courts will enforce an equitable servitude against a subsequent owner
of burdened land who took with actual or constructive notice. So if, for instance, the son sold to
a buyer, that buyer would be deemed to have constructive notice of the restriction (it’s in her
chain of title). Consequently, the landowner’s daughter could get an injunction against the
buyer even though the buyer was not an “original grantee.”

B. Running of benefit and burden

Question 29
A landowner owned five adjoining, rectangular lots, numbered 1 through
5 inclusive, all fronting on Main Street. All of the lots are in a zone
limited to one-and two-family residences under the zoning ordinance.
Two years ago, the landowner conveyed Lots 1, 3, and 5. None of the
three deeds contained any restrictions. Each of the new owners built a
one-family residence.
 One year ago, the landowner conveyed Lot 2 to a developer. The deed
provided that each of the developer and the landowner, as well as their
respective heirs and assigns, would use Lots 2 and 4 respectively only for
one-family, residential purposes. The deed was promptly and properly
recorded. The developer built a one-family residence on Lot 2. Last
month, the landowner conveyed Lot 4 to an investor. The deed contained
no restrictions. The deed from the landowner to the developer was in the
title report examined by the investor’s lawyer. The investor obtained a
building permit and commenced construction of a twofamily residence on
Lot 4. The developer, joined by the owners of Lots 1, 3, and 5, brought an
appropriate action against the investor to enjoin the proposed use of Lot 4,
or, alternatively, damages caused by the investor’s breach of covenant.
Which is the most appropriate comment concerning the outcome of this
action?
(A) All plaintiffs should be awarded their requested judgment for
injunction because there was a common development scheme, but
award of damages should be denied to all.
(B) The developer should be awarded an appropriate remedy, but
recovery by the other plaintiffs is doubtful.
(C) Injunction should be denied, but damages should be awarded to all
plaintiffs, measured by diminution of market value, if any, suffered
as a result of the proximity of the investor’s two-family residence.
(D) All plaintiffs should be denied any recovery or relief because the
zoning preempts any private scheme of covenants.
Answer 29
Choice (B) is correct. The plaintiff owner of a parcel can’t gain enforcement of either a
covenant at law or an inequitable servitude against a defendant who is the “downstream” owner
of a burdened parcel (i.e., one who took after the burden was imposed), unless: (1) there was an
intent by the original parties to benefit the parcel now owned by the plaintiff; and (2) the
defendant was on actual or constructive notice of the nature of the restriction at the time she
took. In the case of the suit by the developer on behalf of Lot 2, both of these requirements are
satisfied: (1) the landowner-to-developer deed made it clear that both Lots 2 and 4 were being
both burdened and benefited by mutual single-family-only restrictions (so the requisite intent to
benefit Lot 2 is present); and (2) the investor was on constructive (and probably actual) notice
of the restriction on the lot she was buying at the time she bought because it was mentioned in
the landowner-to-developer deed that was part of the investor’s title report (and, indeed, from
this the investor knew that that restriction was intended to benefit Lot 2). Therefore, the
developer will likely be entitled to his choice of an injunction and damages (i.e., to recover on
the equitable servitude or, alternatively, for breach of covenant at law).
The owners of Lots 1, 3, and 5, by contrast, cannot satisfy either of these requirements: (1)
nothing indicates that at the time the landowner conveyed these three lots, he was intending
(then or ever) to create any equitable restrictions on any of his five lots, so the present owners
of the three lots cannot show that their parcels were ever intended to be benefited; and (2) the
investor, at the time she took, was not on notice that Lots 1, 3, and 5 were to be benefited by
any restriction on the parcel she was buying. So these owners are unlikely to get any relief
against the investor.
(A) is wrong because there was no common development scheme at the time Lots 1, 3, and 5
were conveyed. It’s true that had there been in place, at the time Lots 1, 3, and 5 were
conveyed, a “plan of development” (say, a filed subdivision plat) showing an intent to keep the
whole development singlefamily residential, the owners of Lots 1, 3, and 5 might succeed with
an “implied reciprocal servitude” argument, that the landowner implicitly promised them that
he’d burden his remaining lots consistently with this plan and that the investor should have
known of this promise and be required to honor it. But the facts do not indicate that any such
plan existed at the time the landowner sold Lots 1, 3, and 5.
(C) is wrong because, as noted in the analysis of Choice (B), owners cannot recover
damages (i.e., recover on a covenant at law) unless they can show that there was an intent to
give their parcels the benefit of the restrictive promise, an intent which is absent as to Lots 1, 3,
and 5. The fact that the landowner later developed such a purpose to burden his remaining lots
doesn’t help — there must have been an intent-to-burden at the time when the landowner still
owned the lots in question.
(D) is wrong because the existence of a zoning scheme that allows the activity in question
doesn’t trump a stricter scheme of covenants. If the zoning scheme was stricter, it would
prevail (landowners can’t by mutual agreement cause strict zoning rules to be relaxed). But the
converse is not true — indeed, the whole idea of restrictive covenants is that they can be used
to forbid uses that are allowed by the zoning rules.

Question 30
A realty company developed a residential development, which included
single-family dwellings, town houses, and high-rise apartments for a total
of 25,000 dwelling units.
Included in the deed to each unit was a covenant under which the grantee
and the grantee’s ‘‘heirs and assigns’’ agreed to purchase electrical power
only from a plant the realty company promised to build and maintain
within the development. The realty company constructed the plant and the
necessary power lines. The plant did not supply power outside the
development. An appropriate and fair formula was used to determine
price. After constructing and selling 12,500 of the units, the realty
company sold its interest in the development to an investor. The investor
operated the power plant and constructed and sold the remaining 12,500
units. Each conveyance from the investor contained the same covenant
relating to electrical power that the realty company had included in the
12,500 conveyances it had made. A woman bought a dwelling unit from
its former resident, who had purchased it from the realty company.
Subsequently, the woman, whose lot was along the boundary of the
development, ceased buying electrical power from the investor and began
purchasing power from an outside electric company, which provided such
service in the area surrounding the development. Both the electric
company and the investor have governmental authorization to provide
electrical services to the area. The investor instituted an appropriate action
against the woman to enjoin her from obtaining electrical power from the
outside electric company. Assume that the jurisdiction follows the
 traditional rule for the running of covenants. If judgment is for the
woman, it most likely will be because
(A) the covenant does not touch and concern the land.
(B) the mixture of types of residential units is viewed as preventing one
common development scheme.
(C) the covenant is a restraint on alienation.
(D) there is no privity of estate between the woman and the investor.
Answer 30
Choice (A) is correct. The covenant here is ostensibly a ‘‘real’’ covenant, which is a promise
related to land that is enforceable by (and against) subsequent holders of the land. Traditionally,
for a covenant to be “real” (i.e., to be enforceable by and against subsequent landholders) (1)
the original parties must have intended that the covenant run with the land, (2) the covenant
must “touch and concern” the land, (3) the Statute of Frauds must be satisfied, and (4) privity
of estate must exist. Choice (A) correctly focuses on the touch-and-concern requirement. A
covenant does not touch and concern the land if it doesn’t change the value, use, or utility of
the land. Most typically, covenants that touch and concern the land are building restrictions,
although even payments to homeowner’s associations can qualify. However, a mere agreement
to purchase electricity from the realty company’s facility would traditionally not be considered
to touch and concern the residential owner’s land; therefore, it couldn’t ‘‘run with’’ the land,
and, as a result, the woman would not be bound by it without her personally covenanting to do
so. Since, of the four answer choices presented, Choice (A) correctly identifies the most likely
basis on which the woman will prevail, it’s the best response. (Note that, under the modern
trend, as represented by § 3.2 of the Third Restatement (Servitudes), the covenant need not
fulfill the touch-and-concern requirement in order to run. But you’re told that the jurisdiction
follows the “traditional rule” for the running of covenants, and touch-and-concern is part of the
traditional set of rules.)

1. Requirement that subsequent grantee be on notice of burden

Question 31
In 2000, Oscar, owner of a 100-acre tract, prepared and duly recorded a
subdivision plan called Happy Acres. The plan showed 100 one-acre lots,
and said that these lots would be “single-family, no mobile homes
allowed.”
In 2001, Oscar sold 60 of the lots to individual purchasers. Each deed
referred to the recorded plan and also contained the following clause: “No
mobile homes shall be erected on any lot within Happy Acres.” Sarah was
one of the original purchasers from Oscar.
In 2006, Oscar sold the remaining 40 lots to Max by a deed which
referred to the plan and contained the restriction relating to mobile homes.
Max sold the 40 lots to individual purchasers, whose deeds from Max did
not include the mobile-home restriction. One of those purchasers was Joe,
who did not know of the no-mobile-homes restriction in any prior deeds
within Happy Acres. Joe then placed a mobile home on his lot. Sarah now
brings an action against Joe to force him to remove the mobile home. The
result of this action will be in favor of
 (A) Sarah, because the restrictive covenant in her deed runs with the
land.
(B) Sarah, because the presence of the mobile home may adversely
affect the market value of her land.
(C) Joe, because his deed did not contain the restrictive covenant.
(D) Joe, because he is not a direct but a remote grantee of Oscar.
Answer 31
Choice (A) is correct. A restrictive covenant will normally run with the land, i.e., be
enforceable by subsequent grantees of the benefitted parcels, and against subsequent grantees
of the burdened parcels, if the original parties intended that it run. The existence of the filed
subdivision plat with the restriction, and the fact that Oscar took the trouble to insert the
restriction in all his deeds, establish that he and his grantees intended the burden and benefit of
the restriction to run. Meanwhile, Joe, as a subsequent grantee, will only be bound by the
restrictive covenant if he was on actual or constructive notice when he took. “Constructive”
notice includes “record” notice. Here, Joe was on record notice of the restriction. That’s true
because although Joe’s deed did not itself refer to the no-mobile-homes restriction, that
restriction was present in a prior recording in his chain of title (the Oscar-Max deed). And a
purchaser is deemed to be on record notice of any restrictions in his chain of title. Intuitively,
this makes sense — Joe’s lawyer could have and should have found the Oscar-to-Max deed,
and noticed the restriction. (Or, the lawyer could have and should have noticed that the lot was
part of a filed subdivision plat that contained the restriction.)
(B) is wrong because the fact it cites is irrelevant to the issues here. The mere fact that the
presence of mobile homes would adversely affect the value of Sarah’s land does not mean that
Sarah has a legally cognizable right to forbid their presence. As a general principle, the owner
of land may put the land to any lawful use he chooses, without regard to the impact on the
market value of other, neighboring properties. Thus, even if (B) were true, it would not provide
a sound basis for Sarah to prevail.
(C) is wrong because it does not correctly cite the rule on restrictive covenants (or
“equitable servitudes,” as they are also called). Restrictive covenants will bind subsequent
purchasers of the land as long as the original parties intended that the agreement will run with
the land, and the subsequent purchaser had actual or constructive notice of the restriction. Here,
Joe had constructive notice (namely, record notice) of the restriction, as further explained in
(A). Therefore, the fact that Joe’s own deed did not contain the covenant is irrelevant.
(D) is wrong because as long as the restriction was intended to run with the land, the fact
that the person sought to be bound is a remote grantee of the original, covenanting party —
here, Oscar — is irrelevant. That’s what the fact that the covenant or restriction “runs with the
land” means — the restriction binds remote grantees who take with actual or constructive
(including record) notice.

Question 32
Able, owner of Blackacre and Whiteacre, two adjoining parcels,
conveyed Whiteacre to Baker and covenanted in the deed to Baker that
when he, Able, sold Blackacre he would impose restrictive covenants to
prohibit uses that would compete with the filling station that Baker
intended to construct and operate on Whiteacre. The deed was not
recorded.
 Baker constructed and operated a filling station on Whiteacre and then
conveyed Whiteacre to Dodd, who continued the filling station use. The
deed did not refer to the restrictive covenant and was promptly and
properly recorded.
Able then conveyed Blackacre to Egan, who knew about Able’s covenant
with Baker to impose a covenant prohibiting the filling station use but
nonetheless completed the transaction when he noted that no such
covenant was contained in Able’s deed to him. Egan began to construct a
filling station on Blackacre.
Dodd brought an appropriate action to enjoin Egan from using Blackacre
for filling station purposes.
If Dodd prevails, it will be because
(A) Egan had actual knowledge of the covenant to impose restrictions.
(B) Egan is bound by the covenant because of the doctrine of negative
reciprocal covenants.
(C) business-related restrictive covenants are favored in the law.
(D) Egan has constructive notice of the possibility of the covenant
resulting from the circumstances.
Answer 32
Choice (A) is correct. Dodd can win only if Egan is found to have been bound by Able’s
promise to Baker that Able would impose a restriction on Blackacre when he sold it. A
subsequent purchaser of a use-restricted parcel can be bound by the restriction only if he had
some sort of notice of the restriction at the time he took. Egan did not have record notice of the
restriction because (1) the restriction was not contained in the Able-to-Egan deed by which
Egan took Blackacre; and (2) even if the Able-to-Baker deed to Whiteacre was held to be
within Egan’s chain of title (which it wouldn’t be), that wouldn’t give Egan notice, because the
Able-to-Baker deed was not recorded, so Egan couldn’t have discovered the restriction by
tracing back title to Whiteacre in the public records. Therefore, the only way Egan could have
received the required notice (and thus lose) is if he had actual notice or some form of
constructive notice not involving record notice. (A), by referring specifically to Egan’s “actual
knowledge” of the restriction, is the only choice that satisfies the notice-to-Egan requirement.
And as we know from the statement of facts, Egan indeed had such actual knowledge.
(B) is wrong because, while the doctrine of negative reciprocal covenants might apply to
restrict Whiteacre, Egan wouldn’t be bound by that restriction if he didn’t have some form of
notice, and this choice does not refer to the notice problem.
(C) is wrong because, like (B), it fails to refer to the key point, notice to Egan.
(D) is wrong because, while Egan might indeed lose if he had constructive notice of the
possibility of the restriction, such constructive notice was not present in the facts here: The
mere fact that Able sold Whiteacre to Baker and that Baker put a filling station on the property
would not suggest to a reasonable purchaser of the adjacent Blackacre parcel that Able would
likely have restricted Blackacre by giving Baker a non-compete. (Otherwise any purchaser of a
commercially-zoned parcel would have to check into the facts surrounding his seller’s sale of
any other nearby parcel, to make sure that the seller didn’t give a non-compete, too large a
burden on buyers to make sense.)

C. Developer’s building plan

 1. Plan filed without restriction
Question 33
A fee-simple landowner lawfully subdivided his land into 10 large lots.
The recorded subdivision plan imposed no restrictions on any of the 10
lots. Within two months after recording the plan, the landowner conveyed
Lot 1 to a buyer, by a deed that contained no restriction on the lot’s use.
There was then a lull in sales. Two years later, the real estate market in the
state had generally improved and, during the next six months, the
landowner sold and conveyed eight of the remaining nine lots. In each of
the eight deeds of conveyance, the landowner included the following
language: “It is a term and condition of this conveyance, which shall be a
covenant running with the land for the benefit of each of the 10 lots [with
an appropriate reference to the recorded subdivision plan], that for 15
years from the date of recording of the plan, no use shall be made of the
premises herein conveyed except for single-family residential purposes.”
The buyer of Lot 1 had actual knowledge of what the landowner had
done. The landowner included the quoted language in part because the
zoning ordinance of the municipality had been amended a year earlier to
permit professional offices in any residential zone. Shortly after the
landowner’s most recent sale, when he owned only one unsold lot, the
buyer of Lot 1 constructed a one-story house on Lot 1 and then conveyed
Lot 1 to a doctor. The deed to the doctor contained no reference to any
restriction on the use of Lot 1. The doctor applied for an appropriate
certificate of occupancy to enable her to use a part of the house on Lot 1
as a medical office. The landowner, on behalf of himself as the owner of
the unsold lot, and on behalf of the other lot owners, sued to enjoin the
doctor from carrying out her plans and to impose the quoted restriction on
Lot 1.
Who is likely to prevail?
(A) The doctor, because Lot 1 was conveyed without the inclusion of the
restrictive covenant in the deed to the first buyer and the subsequent
deed to the doctor.
(B) The doctor, because zoning ordinances override private restrictive
covenants as a matter of public policy.
(C) The landowner, because the doctor, as a successor in interest to the
first buyer, is estopped to deny that Lot 1 remains subject to the
zoning ordinance as it existed when Lot 1 was first conveyed by the
landowner to the first buyer.
(D) The landowner, because with the first buyer’s knowledge of the
facts, Lot 1 became incorporated into a common scheme.
Answer 33
Choice (A) is correct. To be binding, a restrictive covenant must be placed on property at the
time it is conveyed. Here, neither the deed to the first buyer nor the deed to the doctor contains
the restrictive covenant. The burden cannot be attached to Lot 1 at a later time by someone who
has no interest in Lot 1, even if that person (here, the landowner) purports to be acting on
behalf of the entire subdivision. Therefore, the doctor may proceed with her plan to use part of
the property as a medical office.
(B) is incorrect, because although this option correctly concludes that the doctor will
prevail, it misstates the reason why this is so. Zoning ordinances do not automatically override
a private restrictive covenant. The stricter of either the zoning ordinance or the covenant will
prevail. In this case, the doctor will prevail because the restrictive covenant was not in the deed
to the first buyer of Lot 1, nor was it in the deed to the doctor.
(C) is incorrect. Public land use controls and private land use controls are separate issues.
Zoning may be changed. In this case, the zoning was changed a year after the first buyer
purchased Lot 1. The doctor’s use of Lot 1 is governed by the zoning in existence during the
time of the doctor’s ownership, and the previous zoning of the property is irrelevant. The
doctor may proceed with her plan to use part of the property as a medical office, because the
restrictive covenant was not in the deed to the first buyer of Lot 1, nor was it in the deed to the
doctor.
(D) is incorrect. To be binding, a restrictive covenant must be placed on property at the time
when it is conveyed. The first buyer’s learning of the covenant two years after he acquired it is
irrelevant, and does not incorporate Lot 1 into the common scheme of the subdivision; nor does
the actual knowledge of any subsequent buyer of Lot 1 (even knowledge acquired before he
took) have any effect. A common-scheme argument might prevail as to subsequent purchasers
of other lots in the subdivision who took from the landowner after the landowner had already
burdened other parcels with the restriction. As to Lot 1, however, the doctor may proceed with
her plan to use part of the property as a medical office, because the restrictive covenant was not
in the deed to the first buyer, nor was it in the deed to the doctor.

VII. MODIFICATION AND TERMINATION OF COVENANTS AND SERVITUDES

A. Modification and termination generally
1. Effect of passage of time
Question 34
A grantor owned in fee simple two adjoining lots, Lots 1 and 2. He
conveyed in fee simple Lot 1 to an investor. The deed was in usual form
of a warranty deed with the following provision inserted in the
appropriate place:
Grantor, for himself, his heirs and assigns, does covenant and
agree that any reasonable expense incurred by grantee, his heirs
and assigns, as the result of having to repair the retaining wall
presently situated on Lot 1 at the common boundary with Lot 2,
shall be reimbursed one-half the costs of repairs; and by this
provision the parties intend a covenant running with the land.
The investor conveyed Lot 1 in fee simple to a housewife by warranty
deed in usual and regular form. The deed omitted any reference to the
retaining wall or any covenant. Fifty years after the grantor’s conveyance
to the investor, the housewife conveyed Lot 1 in fee simple to a student by
warranty deed in usual form; this deed omitted any reference to the
retaining wall or the covenant.
 There is no statute that applies to any aspect of the problems presented
except a recording act and a statute providing for acquisition of title after
ten years of adverse possession.
All conveyances by deeds were for a consideration equal to fair market
value.
The deed from the grantor to the investor was never recorded. All other
deeds were promptly and properly recorded.
Lot 2 is now owned by the grantor’s son, who took by intestate
succession from the grantor, now dead.
The student expended $3,500 on the retaining wall. Then he obtained all
of the original deeds in the chain from the grantor to him. Shortly
thereafter, the student discovered the covenant in the grantor’s deed to the
investor. He demanded that the grantor’s son pay $1,750, and when the
son refused, the student instituted an appropriate action to recover that
sum from the son. In such action, the son asserted all defenses available to
him.
If judgment is for the grantor’s son, it will be because (A) the student
is barred by adverse possession.
(B) the investor’s deed from the grantor was never recorded.
(C) the student did not know about the covenant until after he had
incurred the expenses and, hence, could not have relied on it.
(D) the student’s expenditures were not proved to be reasonable and
customary.
Answer 34
Choice (D) is correct. When the grantor conveyed Lot 1 to the investor, the grantor burdened
Lot 2 with the covenant to reimburse the owner of Lot 1 for wall-repair expenses. This
covenant was enforceable, and ran with the land on both the burden and benefit side. Even
though more than 50 years have passed, no event has occurred (e.g., change of circumstances
rendering fulfillment of the covenant’s purposes impossible) that would cause the covenant to
be extinguished, and the mere passage of time does not suffice to end the covenant. The fact
that the covenant ran with the land on the benefit side means that the student as present owner
of the benefited lot gets to enforce the covenant; this running of the benefit side occurs even
though the deed to convey the benefited parcel to the student did not mention the covenant or
the wall (since mention of the covenant in the deed to the benefited lot is simply not a
requirement). The running of the covenant on the burden side means that the obligation of
payment attached to the grantor’s son’s interest in Lot 2. Therefore, the only way the student
can lose is if his expenditures were not reasonable and customary (in which case they would
not be covered by the terms of the covenant, even though the covenant is still enforceable).
(A) is wrong because nothing occurred to cause the doctrine of adverse possession to affect
title to the benefited lot (Lot 1) while that lot was held by either the investor, the housewife, or
the student. For instance, no action by any owner of Lot 2 could even arguably have constituted
the requisite hostile, notorious, open, and continuous possession of the wall so as to wipe out
the covenant governing repairs.
(B) is wrong because the fact that the investor’s deed from the grantor for Lot 1 was not
recorded had no effect on anyone who ever had an interest in Lot 2. It’s true that the grantor, by
conveying Lot 1 to the investor, simultaneously created a covenant burdening Lot 2, which was
an interest in Lot 2. But a grantee’s failure to record under a recording act has no effect on the
rights as between the original grantor and grantee; therefore, in a contest between the grantor
and the investor, the investor’s failure to record his covenant against Lot 2 would not prevent
the investor from recovering reimbursement from the grantor while the grantor still owned Lot
2. The interesting question is whether the investor’s failure to record can be taken advantage of
by the grantor’s son as the grantor’s successor. In other words, is the grantor’s son a
“subsequent purchaser without notice” who can take advantage of the fact that the deed
creating the covenant never appeared in his chain of title? The answer is that because recording
acts invariably protect only “purchasers for value,” and because the son took by intestate
succession (and thus did not give value for his interest), the son is not a purchaser for value and
thus cannot take advantage of the recording act. (If the son had purchased for value and
without notice of the covenant, he would have been free of the covenant on account of the
investor’s failure to record.)
(C) is wrong because the owner of a parcel benefited by an affirmative covenant does not
lose the benefit merely because he did not act in reliance on the covenant’s existence.
 CHAPTER 7: LAND SALE CONTRACTS, MORTGAGES, AND DEEDS
I. LAND SALE CONTRACTS
A. Statute of Frauds Question 35
Ozzie owned and occupied Blackacre, which was a tract of land improved
with a one-family house. His friend, Victor, orally offered Ozzie $50,000
for Blackacre, the fair market value, and Ozzie accepted. Because they
were friends, they saw no need for attorneys or written contracts and
shook hands on the deal. Victor paid Ozzie $5,000 down in cash and
agreed to pay the balance of $45,000 at an agreed closing time and place.
Before the closing, Victor inherited another home and asked Ozzie to
return his $5,000. Ozzie refused, and, at the time set for the closing, Ozzie
tendered a good deed to Victor and declared his intention to vacate
Blackacre the next day. Ozzie demanded that Victor complete the
purchase. Victor refused. The fair market value of Blackacre has remained
$50,000.
In an appropriate action brought by Ozzie against Victor for specific
performance, if Ozzie loses, the most likely reason will be that
(A) the agreement was oral.
(B) keeping the $5,000 is Ozzie’s exclusive remedy.
(C) Victor had a valid reason for not closing.
(D) Ozzie remained in possession on the day set for the closing.
Answer 35
Choice (A) is correct. The Statute of Frauds applies to all contracts for the sale of land, or for
the sale of an interest in land. Therefore, such a contract will not be enforced unless it is in
writing. There are a few exceptions to this rule (e.g., where there has been part performance in
reliance on an oral agreement), but none of those exceptions applies here.
(B) is wrong because it is not the case that the seller’s exclusive remedy for breach is to
keep the deposit; often, a court will order the buyer to specifically perform even where the
seller has a deposit. (Furthermore, unless the parties have agreed that the deposit will be the
exclusive measure, the seller will be entitled to recover his actual damages from the buyer’s
breach if these are greater than the deposit.)
(C) is wrong because the fact that Victor inherited a different home is not a valid reason for
not closing; the doctrine of frustration of purpose occasionally applies to land-sale contracts,
but would virtually never apply where the only event alleged to have frustrated the buyer’s
purpose is that he found or acquired other property he liked better.
(D) is wrong because Ozzie’s anticipated one-day delay in vacating would not have been a
material breach, unless the agreement or the circumstances indicated that time was of the
essence. There’s no indication that that happened here. Therefore, the one-day delay would not
have deprived Ozzie of his otherwise-existing right to obtain specific performance.

B. Marketable title
1. Time for measuring marketability
a. Effect of outstanding mortgage
Question 36
A landowner mortgaged the land to a bank to secure his preexisting
obligation to the bank. The mortgage was promptly and properly
 recorded. The landowner and a buyer then entered into a valid written
contract for the purchase and sale of the land, which provided for the
transfer of “a marketable title, free of encumbrances.” The contract did
not expressly refer to the mortgage.
Shortly after entering into the contract, the buyer found another property
that much better suited her needs and decided to try to avoid her contract
with the landowner. When the buyer discovered the existence of the
mortgage, she asserted that the title was encumbered and that she would
not close. The landowner responded by offering to provide for payment
and discharge of the mortgage at the closing from the proceeds of the
closing. The buyer refused to go forward, and the landowner brought an
appropriate action against her for specific performance.
If the court holds for the landowner in this action, it will most likely be
because
(A) the mortgage is not entitled to priority because it was granted for
preexisting obligations.
(B) the doctrine of equitable conversion supports the result.
(C) the landowner’s arrangements for the payment of the mortgage fully
satisfied the landowner’s obligation to deliver marketable title.
(D) the existence of the mortgage was not the buyer’s real reason for
refusing to close.
Answer 36
Choice (C) is correct. Unless the sale contract specifies otherwise, the seller’s title is not
required to be marketable until the date set for the closing. The fact that there is an outstanding
mortgage on the property, therefore, does not entitle the buyer to cancel the contract, as long as
the seller has the right and probable ability to pay off the mortgage at the closing.
(A) is wrong because the fact that the mortgage was granted for pre-existing obligations (as
opposed, say, to being a purchase money mortgage) is irrelevant to the issue of whether the
seller’s title is marketable. For instance, if the seller were not paying off the mortgage at the
closing, the mortgage would indeed be an encumbrance rendering title unmarketable, even
though it was granted to secure the seller’s pre-existing obligation to the mortgagee.
(B) is wrong because the doctrine of equitable conversion is used to pass the risk of loss to
the buyer under a purchase contract, and has nothing to do with whether the seller’s title is
marketable.
(D) is wrong because a purchaser’s “real reason” (i.e., motive) for refusing to close is irrelevant
to whether the purchaser has the right to so refuse. For example, if the seller’s title had been
unmarketable, the buyer would have been entitled to refuse to close even though her real
reason for refusing was something entirely unrelated to the quality of the seller’s title.

Question 37
Venner, the owner of Greenacre, a tract of land, entered into an
enforceable written agreement with Brier providing that Venner would
sell Greenacre to Brier for an agreed price. At the place and time
designated for the closing. Venner tendered an appropriate deed, but Brier
responded that he had discovered a mortgage on Greenacre and would not
complete the transaction, because Venner’s title was not free of
 encumbrances, as the contract required. Venner said that it was his intent
to pay the mortgage from the proceeds of the sale, and he offered to put
the proceeds in escrow for that purpose with any agreeable, responsible
escrowee. The balance due on the mortgage was substantially less than
the contract purchase price. Brier refused Venner’s proposal. Venner
began an appropriate legal action against Brier for specific performance.
There is no applicable statute in the jurisdiction where Greenacre is
located.
Venner’s best legal argument in support of his claim for relief is that
(A) as the seller of real estate, he had an implied right to use the contract
proceeds to clear the title being conveyed.
(B) the lien of the mortgage shifts from Greenacre to the contract
proceeds.
(C) under the doctrine of equitable conversion, title has already passed
to Brier and the only issue is how the purchase price is to be
allocated.
(D) no provision of the contract has been breached by Venner.
Answer 37
Choice (A) is correct. This choice correctly identifies that Venner can use the sale proceeds to
pay off the mortgage, and thus force Brier to honor the contract. Where, as is usually the case,
the seller in a land-sale contract covenants to deliver the property free and clear of
encumbrances, the presence of a mortgage would be an encumbrance rendering the title
unmarketable. But you’re told here that the proceeds will cover the mortgage. When that’s the
case, the seller has an implied right to use the proceeds of the sale to pay off the mortgage.
When you think about it, this rule comports with what you’d expect to happen, since many
homeowners, in real life, couldn’t sell their home if this weren’t the case.
(B) is wrong because it misstates the law. Although it’s possible that the law of the
jurisdiction may make the mortgage payable from the proceeds, and the mortgage agreement
itself may insist on payoff if the property is conveyed, the “rule” stated in this choice wouldn’t
cause the mortgage to be removed from Greenacre — and that’s the central problem here.
Instead, the key is that the seller gets to use the sale proceeds to pay off the mortgage
simultaneously with the closing of title.
(C) is wrong because the doctrine of equitable conversion would not apply to these facts.
The doctrine of equitable conversion addresses the period between the signing of the land sale
contract and the closing. Under the doctrine, the vendor has a personal property interest in the
property, between the signing of the contract and the closing, in the form of the balance of the
purchase price owed to him; the vendee is considered the beneficial owner of the property. The
doctrine wouldn’t help with the problem here, which is that Venner can’t deliver marketable
title unless he can remove the mortgage. (D) is wrong because it states an insufficient ground
on which Venner could prevail. Of course, his underlying argument must be that he hasn’t
breached the contract, because if he had, he wouldn’t be entitled to specific performance.
However, Choice (D), in and of itself, doesn’t provide a rule allowing Venner to use the
proceeds to pay off the mortgage, and enforce the contract. Only Choice (A) does this.

C. Remedies for failure to perform

1. Damages
 a. Where no earnest money deposit
Question 38
Able was the owner of Blackacre, an undeveloped city lot. Able and
Baker executed a written document in which Able agreed to sell
Blackacre to Baker and Baker agreed to buy Blackacre from Able for
$200,000; the document did not provide for an earnest money down
payment. Able recorded the document, as authorized by statute.
Able orally gave Baker permission to park his car on Blackacre without
charge prior to the closing. Thereafter, Baker frequently parked his car on
Blackacre.
Another property came on the market that Baker wanted more than
Blackacre. Baker decided to try to escape any obligation to Able.
Baker had been told that contracts for the purchase and sale of real
property require consideration and concluded that because he had made
no earnest money down payment, he could refuse to close and not be
liable. Baker notified Able of his intention not to close and, in fact, did
refuse to close on the date set for the closing. Able brought an appropriate
action to compel specific performance by Baker.
If Able wins, it will be because
(A) Baker’s use of Blackacre for parking constitutes part performance.
(B) general contract rules regarding consideration apply to real estate
contracts.
(C) the doctrine of equitable conversion applies.
(D) the document was recorded.
Answer 38
Choice (B) is correct. It is likely, though not absolutely certain, that Abel will be able to obtain
specific performance (the court will have to be satisfied that money damages would not give
him an adequate remedy). But one thing that is certain is that Baker will fail with his
lack-of-consideration argument, because the general contract principle that an exchange of
promises meets the consideration requirement applies to real estate contracts. Able has made a
promise (to convey in return for the purchase price), and Baker has made a return promise (to
pay the purchase price in return for title), so standard consideration requirements are easily
satisfied. The fact that there was no earnest money deposit is completely irrelevant to the
consideration issue — an earnest money deposit is not required, and where present is merely a
form of liquidated-damages clause.
(A) is wrong because the contract, since it is in writing and meets the consideration
requirement, would be binding even if Baker had not parked on the property and therefore
arguably partly performed. (If the contract had been oral, Baker’s parking might supply him
with an argument for application of the part-performance exception to the Statute of Frauds,
but even here, he would probably lose because the parking was not really part “performance.”)
(C) is wrong because equitable conversion, where applicable, vests “equitable title” in the
vendee under a land sale contract (thus passing the risk of loss to the vendee), and neither
equitable title nor risk of loss is at issue on these facts.
(D) is wrong because a vendor under a land sale contract can recover for breach (including
specific performance if money damages would not be an adequate remedy) whether the
contract was recorded or not — recording is merely relevant to the vendee’s rights vis-à-vis
later grantees from the vendor (by giving the world constructive notice of the pending transfer),
not to the vendee’s rights vis-à-vis the vendor.

2. Specific performance
a. Breaching buyer
Question 39
Adam entered into a valid written contract to sell
Blackacre, a large tract of land, to Betsy. At that time, Blackacre was
owned by Adam’s father, Fred; Adam had no title to Blackacre and was
not the agent of Fred.
After the contract was executed and before the scheduled closing date.
Fred died intestate, leaving Adam as his sole heir. Shortly thereafter,
Adam received an offer for Blackacre that was substantially higher than
the purchase price in the contract with Betsy. Adam refused to close with
Betsy although she was ready, willing, and able to close pursuant to the
contract.
Betsy brought an appropriate action for specific performance against
Adam.
In that action, Betsy should be awarded
(A) nothing, because Adam had no authority to enter into the contract
with Betsy.
(B) nothing, because the doctrine of after-acquired title does not apply to
executory contracts.
(C) judgment for specific performance, because Adam acquired title
prior to the scheduled closing.
(D) judgment for specific performance, to prevent unjust enrichment of
Adam.
Answer 39
Choice (C) is correct. The purchaser under a land-sale contract will normally be entitled to a
decree of specific performance if the seller is able but unwilling to perform. Here, the fact that
Adam did not have title at the time he signed the contract is irrelevant; the contract called for
him to make a conveyance at the scheduled closing date, and he is able to do that. The case
therefore falls within the familiar principle that the time for measuring whether a seller has
marketable title is the time for closing, not some earlier date.
(A) is wrong because the fact that Adam did not have authority to sell the land at the
moment of signing is irrelevant; he has title by now (prior to the scheduled closing date), and
that’s all that matters for purposes of specific performance.
(B) is wrong because the doctrine of after-acquired title is not necessary for a decree of
specific performance here; all that matters is that Adam has title by the time scheduled for
performance.
(D) is wrong because specific performance is used for breach of contract where (as here)
damages would be an inadequate remedy, and the concept of unjust enrichment is not needed
or relevant to whether specific performance should be decreed.

3. Deposit
a. Where deposit is a reasonable estimate of damages
 Question 40
Three months ago, Bert agreed in writing to buy Sam’s single-family
residence, Liveacre, for $110,000. Bert paid Sam a $5,000 deposit to be
applied to the purchase price. The contract stated that Sam had the right at
his option to retain the deposit as liquidated damages in the event of Ben’s
default. The closing was to have taken place last week. Six weeks ago,
Bert was notified by his employer that he was to be transferred to another
job 1,000 miles away. Bert immediately notified Sam that he could not
close, and therefore he demanded the return of his $5,000. Sam refused,
waited until after the contract closing date, listed with a broker, and then
conveyed Liveacre for $108,000 to Conner, a purchaser found by the real
estate broker. Conner paid the full purchase price and immediately
recorded his deed. Conner knew of the prior contract with Bert. In an
appropriate action, Bert seeks to recover the $5,000 deposit from Sam.
The most probable result will be that Sam
(A) must return the $5,000 to Bert, because Sam can no longer carry out
his contract with Bert.
(B) must return the $5,000 to Bert, because Bert was legally justified in
not completing the contract.
(C) must return $3,000 to Bert, because Sam’s damages were only
$2,000.
(D) may keep the $5,000 deposit, because Bert breached the contract.
Answer 40
Choice (D) is correct. The contract provision concerning the deposit was a liquidated damages
clause. In most courts, a liquidated damages clause is enforceable if it was a reasonable
estimate (viewed either as of the time the contract was made or at the time of suit) of the
damages that the seller would likely incur if the buyer breached. Here, an estimate, as of the
time the contract was signed, that the seller would sustain $5,000 in damages if there was a
breach on a $110,000 contract, seems reasonable. The fact that the seller ended up with a
slightly smaller-than-predicted loss of $2,000 (not counting any incidental expenses to the
seller from having to re-list the property or wait for a later sale) does not change the
reasonableness of the time-of-contract estimate; in fact, the $5,000 estimate is probably also
reasonable viewed as of the time of suit.
(A) is wrong because Sam’s present inability to carry out his contract with Bert was caused
by Bert’s breach, and therefore does not nullify Sam’s ability to rely on the liquidated damages
clause.
(B) is wrong because Bert’s need to transfer is not the sort of extraordinary event that
would excuse Bert’s nonperformance.
(C) is wrong because, as explained in (D), the liquidated damages clause will be enforced
here, even though it differs from the seller’s actual damages.

D. Equitable conversion
1. Effect of pending contract
Question 41
On September 1, a seller and a buyer executed an agreement for the sale
of real property, closing scheduled for November 1. The jurisdiction in
 which the property is located recognizes the principle of equitable
conversion and has no statute pertinent to this problem.
The seller died before closing, and his will left his personal property to
his son and his real property to his daughter. Assuming that there has been
no breach of the agreement by either party (or that party’s successor in
interest), which of the following is correct?
(A) Death, an eventuality for which the parties could have provided,
terminates the agreement if they did not so provide.
(B) The daughter is entitled to the proceeds of the sale when it closes,
because the doctrine of equitable conversion does not apply to these
circumstances.
(C) The son is entitled to the proceeds of the sale when it closes.
(D) Title was rendered unmarketable by the seller’s death.
Answer 41
Choice (C) is correct. Under the doctrine of equitable conversion, during the period between
the land sale contract and the conveyance, the purchaser is considered the equitable owner of
the property, and the seller is deemed to have a personal property interest in the purchase price.
Therefore, if the seller dies before the conveyance takes place, the one entitled to his personal
property is entitled to the purchase price. (The one entitled to his real property only gets a bare
legal title, which she must convey to the purchaser when the purchaser performs his duty under
the contract, i.e., turns over the cash.) Under these facts, the son is entitled to the seller’s
personalty, so he gets all the cash from the sale, and the daughter is out of luck.
(A) is wrong, because death does not terminate a land sale contract. As long as the land sale
contract is specifically enforceable, if the vendor dies before the conveyance takes place, the
one to whom he willed his personal property is entitled to the purchase price when the
conveyance takes place. This is part of the doctrine of equitable conversion. If you chose this
response, it could be because you thought the situation was covered by the rule that terminates
an offer on the death or insanity of either the offeror or the offeree. That rule is not involved
here, since there’s an enforceable contract already in place.
(B) is wrong because it arrives at the wrong conclusion and states, wrongly, that the
doctrine of equitable conversion does not apply to these circumstances. In fact, the doctrine of
equitable conversion does apply to these circumstances, and its operation means that the person
entitled to the seller’s personal property — his son — is entitled to the purchase price. Under
the doctrine of equitable conversion, during the period between the land sale contract and the
conveyance, the purchaser is considered the beneficial owner of the property, and the seller has
a personal property interest in the purchase price. If the seller dies before the conveyance takes
place, the one entitled to his personal property is entitled to the purchase price. (The one
entitled to his real property only gets a bare legal title, which he must convey to the purchaser
when the purchaser performs his duty under the contract, i.e., turns over the cash.)
(D) is wrong, because it misstates the rule of law, and, in any case, the concept of marketable
title is irrelevant to these facts.
Title is not rendered unmarketable by the seller’s death. A marketable title is one that, viewed
objectively, is free from reasonable doubt in both law and fact, and that the reasonable buyer
would accept without fear of litigation. The conveyance of marketable title is an implied
covenant in land sale contracts. (However, the terms of the deed will control once the deed is
conveyed and accepted; thus, if a quitclaim deed is conveyed, there will be no remaining
obligation to provide marketable title.) Here, the mere fact that the seller died would not render
the title unmarketable. Since the doctrine of equitable conversion is followed in the
jurisdiction, there’s no question that the one entitled to the seller’s personal property — his son
— will be entitled to the purchase price. Thus, there is no reasonable doubt as to law and fact,
and there should be no reasonable fear of litigation. Therefore, the title is not unmarketable.

2. Risk of loss Question 42

Landover, the owner in fee simple of Highacre, an apartment house
property, entered into an enforceable written agreement with VanMeer to
sell Highacre to VanMeer. The agreement provided that a good and
marketable title was to be conveyed free and clear of all encumbrances.
However, the agreement was silent as to the risk of fire prior to the
closing, and there is no applicable statute in the state where the land is
located. The premises were not insured. The day before the scheduled
closing date, Highacre was wholly destroyed by fire. When VanMeer
refused to close, Landover brought an action in specific performance. If
Landover prevails, the most likely reason will be that
(A) the failure of VanMeer to insure his interest as the purchaser of
Highacre precludes any relief for him.
(B) the remedy at law is inadequate in actions concerning real estate
contracts and either party is entitled to specific performance.
(C) equity does not permit consideration of surrounding circumstances
in actions concerning real estate contracts.
(D) the doctrine of equitable conversion applies.
Answer 42
Choice (D) is correct. Under the doctrine of equitable conversion, the vendee is considered the
beneficial owner of the property after the sales contract takes effect, leaving the vendor with a
personal property interest in the property, in the form of the balance of the purchase price the
vendee owes him. This common-law doctrine is followed by most states. In a state following
equitable conversion, the vendee is required to close, even though the structures on the
property have been destroyed. (But the vendee gets the benefit of any insurance policy the
vendor may have had on the structure.)
(A) is wrong because it relies on a fact which is irrelevant: VanMeer’s failure to insure the
property is not dispositive of Landover’s ability to recover the purchase price. Whether
VanMeer did or did not buy insurance (which he could have — he had an insurable interest as
soon as he signed the contract), Landover would still be able to force a closing, if and only if
the jurisdiction applies equitable conversion (see Choice (D) above).
(B) is wrong because although it is a correct statement of the law, it would be insufficient,
under these facts, to result in a decision for Landover. (B) is correct in that, in general,
remedies at law (e.g., damages) are inadequate in actions where real estate is involved, since
real estate is “unique.” In such situations, specific performance is an appropriate remedy.
However, specific performance is an equitable remedy, meaning that equitable considerations
will be taken into account to determine if it’s appropriate. Choice (D) is just such a
consideration — the doctrine of equitable conversion. Conversely, if the jurisdiction does not
apply equitable conversion, Landover won’t be able to force a closing even though his remedy
at law is inadequate.
(C) is wrong because it misstates the law. Specific performance is an equitable remedy.
Equitable remedies are granted by determining whether the remedy will be just in the
circumstances. As a result, the circumstances surrounding the contract are considered.

Question 43
A seller owned a single-family house. A buyer gave the seller a signed
handwritten offer to purchase the house. The offer was unconditional and
sufficient to satisfy the Statute of Frauds, and when the seller signed an
acceptance an enforceable contract resulted.
The house on the land had been the seller’s home, but he had moved to an
apartment, so the house was vacant at all times relevant to the proposed
transaction. Two weeks after the parties had entered into their contract,
one week after the buyer had obtained a written mortgage lending
commitment from a lender, and one week before the agreedupon closing
date, the house was struck by lightning and burned to the ground. The loss
was not insured because, three years earlier, the seller had let his
homeowner’s insurance policy lapse after he had paid his mortgage debt
in full. The handwritten contract was wholly silent as to matters of
financing, risk of loss, and insurance. The buyer declared the contract
voided by the fire, but the seller asserted a right to enforce the contract
despite the loss. There is no applicable statute. If a court finds for the
seller, what is the likely reason?
(A) The contract was construed against the buyer, who drafted it.
(B) The lender’s written commitment to make a mortgage loan to the
buyer made the contract of sale fully binding on the buyer.
(C) The risk of loss falls on the party in possession, and constructive
possession passed to the buyer on the contract date.
(D) The risk of loss passed to the buyer on the contract date under the
doctrine of equitable conversion.
Answer 43
Choice (D) is correct. Under the equitable conversion doctrine, courts treat the signing of the
contract as vesting equitable ownership of the land in the purchaser. (Conversely, the seller is
treated as becoming the equitable owner of the purchase price.) Not all courts apply the
doctrine of equitable conversion (though most do). When a court does apply the doctrine, the
main result is that the risk of loss is deemed to belong to the equitable owner of the land, i.e.,
the buyer. So where, as here, the contract is unconditional and silent as to the risk of loss, if
equitable conversion applies, the buyer will be deemed to bear the risk of loss and cannot
cancel the contract.
(A) is wrong because it relies on an irrelevant fact. It does not matter who drafted the
contract if it is silent as to risk of loss and there is no applicable statute. By contrast (and as
further described in the analysis of Choice (D) above), it does matter whether the court applies
the doctrine of equitable conversion. If the doctrine applies (as it does in the majority of
courts), the risk of loss is deemed to pass to the buyer as soon as the contract is signed,
assuming that the contract is silent on the risk-of-loss issue. If equitable conversion does not
apply, the court will apply the minority common-law rule, under which the risk of loss remains
with the seller until the closing.
(B) is wrong because it relies on an irrelevant fact. The contract became binding when the
seller accepted the buyer’s offer. The facts state that the offer to purchase was unconditional, so
the buyer was obligated to purchase the house whether or not he got a loan commitment. In a
jurisdiction applying equitable conversion, the buyer was thus the equitable owner as of the
time seller signed an acceptance and, as of that moment, the buyer bore the risk of loss.
(C) is wrong because possession does not pass to the buyer until closing, absent a contrary
provision in the contract of sale. On the other hand, equitable ownership passes on the signing
of the contract, and that is enough to transfer the risk of loss to the buyer if the jurisdiction
applies the doctrine of equitable conversion (as described above in the analysis of Choice (D)).

II. MORTGAGES AND INSTALLMENT CONTRACTS

A. Nature of mortgage
1. Sale of mortgaged property
a. Assumption by buyer
Question 44
Several years ago, a man purchased a building, financing a large part of
the purchase price by a loan from a bank that was secured by a mortgage.
The man made the installment payments on the mortgage regularly until
last year. Then the man persuaded an investor to buy the building, subject
to the mortgage to the bank. They expressly agreed that the investor
would not assume and agree to pay the man’s debt to the bank. The man’s
mortgage to the bank contained a due-on-sale clause stating, ‘‘If the
mortgagor transfers his/ her interest without the written consent of the
mortgagee first obtained, then at the mortgagee’s option the entire
principal balance of the debt secured by this mortgage shall become
immediately due and payable.’’ However, without seeking the bank’s
consent, the man conveyed the building to the investor, the deed stating in
pertinent part, ‘‘subject to a mortgage to’’ the bank and giving details and
recording data.
The investor took possession of the building and made several mortgage
payments, which the bank accepted. Now, however, neither the investor
nor the man has made the last three mortgage payments. The bank has
brought an
appropriate action against the investor for the amount of the delinquent
payments. In this action, judgment should be for
(A) the investor, because she did not assume and agree to pay the man’s
mortgage debt.
(B) the investor, because she is not in privity of estate with the bank.
(C) the bank, because the man’s deed to the investor violated the
due-on-sale clause.
(D) the bank, because the investor is in privity of estate with the bank.
Answer 44
Choice (A) is correct, because the investor would have to assume the man’s mortgage to be
liable under it. When a person buys a mortgaged property without assuming the mortgage, the
buyer has no liability on the mortgage. That’s true even if the mortgage contains a due-on-sale
clause. The clause will be enforced (and will entitle the mortgagee to accelerate the mortgage),
but the clause won’t cause the buyer to be deemed to have assumed the mortgage, and therefore
won’t require the buyer to pay for any missed payments.
(B) is wrong, because privity of estate is not an issue in mortgage cases. Privity of estate
makes a difference in cases involving covenants at law. Absence of privity of estate may mean
that a successor to the covenantor won’t be bound. But a mortgage is not a covenant running
with the land, so privity of estate doesn’t matter.
(C) is wrong, because the violation of the due-on-sale clause didn’t make the investor
personally liable on the mortgage. A due-on-sale clause allows a lender to demand full
payment of the remainder of an existing loan if the mortgagor transfers any interest in the
property securing the loan without the lender’s consent. The violation of the due-on-sale clause
would give the bank grounds for a case against the man, and grounds to accelerate the
mortgage, but not grounds to obtain a personal judgment against the investor. The investor did
not assume the man’s debt to the bank, and the violation of the due-on-sale clause does not
change this fact.
(D) is wrong, because a mortgage is not a covenant running with the land, making privity of
estate irrelevant. Privity of estate makes a difference in cases involving covenants running with
land. A covenant running with the land is simply a contract between two parties, which,
because it meets certain technical requirements, has the additional quality that it is binding
against one who later buys the promisor’s land. In determining whether a covenant runs with
the land, one of the requirements is that there be privity of estate between the parties.
However, a mortgage is not a covenant running with the land. Therefore, the existence or
non-existence of privity of estate as between the bank and the investor is irrelevant — the bank
would only prevail against the investor if the investor expressly assumed the mortgage that
existed between the man and the bank, which she didn’t.

Question 45
A man borrowed money from a bank and executed a promissory note for
the amount secured by a mortgage on his residence. Several years later,
the man sold his residence. As provided by the contract of sale, the deed
to the buyer provided that the buyer agreed “to assume the existing
mortgage debt” on the residence.
Subsequently, the buyer defaulted on the mortgage loan to the bank, and
appropriate foreclosure proceedings were initiated. The foreclosure sale
resulted in a deficiency.
There is no applicable statute.
Is the buyer liable for the deficiency?
(A) No, because even if the buyer assumed the mortgage, the seller is
solely responsible for any deficiency.
(B) No, because the buyer did not sign a promissory note to the bank
and therefore has no personal liability.
(C) Yes, because the buyer assumed the mortgage and therefore became
personally liable for the mortgage loan and any deficiency.
(D) Yes, because the transfer of the mortgage debt to the buyer resulted
in a novation of the original mortgage and loan and rendered the
buyer solely responsible for any deficiency.
Answer 45
Choice (C) is correct. When a buyer assumes the seller’s mortgage, the buyer becomes
primarily liable for the mortgage debt. (The seller is secondarily liable, assuming there is no
release.) The lender may therefore sue the buyer for the deficiency when a foreclosure sale is
not sufficient to discharge the debt. (Contrast this to the situation where the buyer takes
“subject to the mortgage.” In that situation, the buyer would not be personally liable for the
mortgage debt or for a deficiency judgment after foreclosure.)
When a buyer knowingly receives a deed that recites that the buyer is assuming the mortgage
and intends to be bound, assumption occurs even though the buyer has not signed the deed.
(Here, where the buyer previously signed the contract, which called for assumption, it’s even
more clear that the buyer will be deemed to have assumed even though he never signed the
deed.)
(A) is wrong because it misstates the law. When a buyer agrees to “assume” a mortgage,
this language is always interpreted to mean that if the lender forecloses and is left with a
deficiency judgment, the lender can recover that deficiency from the assuming buyer without
first trying to recover it from the original borrower. In other words, the assuming buyer
becomes “primarily liable” for the mortgage debt and for any deficiency after foreclosure sale.
(B) is wrong because it was not necessary for the buyer to sign a promissory note to be
liable. Once the buyer assumed the mortgage, he became primarily liable on the mortgage and
thus is liable for the deficiency. (And the fact that the buyer didn’t sign the deed doesn’t
prevent him from being deemed to have assumed, as long as the buyer knew the deed
contained an assumption provision; see Choice (C) for more about this.)
(D) gives the right result but the wrong rationale. The buyer’s assumption of the mortgage is
not the same as a novation. With a novation, the bank agrees to substitute the personal liability
of the buyer for that of the original debtor and releases the original debtor. Nothing in the facts
suggests the bank’s involvement in the transaction at all, let alone its willingness to release the
original borrower.

Question 46
Ashton owned Woodsedge, a tract used for commercial purposes, in fee
simple and thereafter mortgaged it to First Bank. She signed a promissory
note secured by a duly executed and recorded mortgage. There was no
“due on sale” clause, that is, no provision that, upon sale, the whole
balance then owing would become due and owing. Ashton conveyed
Woodsedge to Beam “subject to a mortgage to First Bank, which the
grantee assumes and agrees to pay.” Beam conveyed Woodsedge to Carter
“subject to an existing mortgage to First Bank.” A copy of the note and
the mortgage that secured it had been exhibited to each grantee.
After Carter made three timely payments, no further payments were made
by any party. In fact, the real estate had depreciated to a point where it
was worth less than the debt.
There is no applicable statute or regulation.
In an appropriate foreclosure action, First Bank joined Ashton, Beam, and
Carter as defendants. At the foreclosure sale, although the fair market
value for Woodsedge in its depreciated state was obtained, a deficiency
resulted.
First Bank is entitled to collect a deficiency judgment against
 (A) Ashton only.
(B) Ashton and Beam only.
(C) Beam and Carter only.
(D) Ashton, Beam, and Carter.

Answer 46
Choice (B) is correct. Ashton is personally liable because she signed the original promissory
note. Beam is personally liable because he assumed the mortgage by means of the document
that conveyed to him (and the fact that Beam may not have signed the deed won’t matter, as
long as he was aware of the assumption language in the deed and intended to be bound by it.)
First Bank can recover even though it was not a party to the Beam-to-Ashton promise, because
First Bank would be found to be an intended beneficiary (and thus a third party beneficiary
who may recover) of that promise. Carter is not personally liable, because a person who
receives a conveyance stating that the transfer is “subject to” an outstanding mortgage does
not, without more, assume (i.e., become personally liable for) the mortgage. Carter’s lack of
liability did not change by virtue of the fact that he made several timely payments; only an
express promise of assumption by Carter (made either to Ashton, Beam or First Bank) could
have rendered him personally liable.
(A), (C), and (D) are wrong to the extent that they are inconsistent with the above analysis.

2. Redemption of mortgage
a. Who has right to redeem
Question 47
A brother and sister owned a property in fee simple as tenants in common,
each owning an undivided one-half interest. The two joined in mortgaging
the property to an investor by a properly recorded mortgage that
contained a general warranty clause. The brother became disenchanted
with land-owning and notified his sister that he would no longer
contribute to the payment of installments due to the investor. After the
mortgage was in default and the investor made demand for payment of the
entire amount of principal and interest due, the sister tendered to the
investor, and the investor deposited, a check for one-half of the amount
due the investor. The sister then demanded a release of her undivided
one-half interest. The investor refused to release any interest in the
property. The sister promptly brought an action against the investor to
quiet title to an undivided onehalf interest in the property.
In such action, the sister should
(A) lose, because the investor’s title had been warranted by an express
provision of the mortgage.
(B) lose, because there was no redemption from the mortgage.
(C) win, because the sister is entitled to marshalling.
(D) win, because the cotenancy of the mortgagors was in common and
not joint.
Answer 47
Choice (B) is correct. The mortgage attached to the entire property, and payment of 1/ 2 the
total amount therefore did not “free up” a 1/ 2 undivided interest. The investor as mortgagee
has a lien on the entire property. That is, the investor received a security interest on the full
property — and the concomitant right upon default to conduct a judicial sale of the full
property to get her debt repaid — regardless of whether one party paid that party’s full share.
A.L.P. § 16.172. In other words, the investor is entitled to say, “Who paid what is between the
two of you — I’ve got the right to have the whole property sold at foreclosure if any part of
my loan is in default and the default is not wholly cured.” That’s what happened here. (The
sister’s remedy is a suit in contribution against the brother for 1/ 2 the amount she paid to the
investor.)
(A) is wrong, because the investor did not have title to the property. A mortgage is a security
interest in a property securing a loan. The fact that the mortgage instrument contained a clause
in which the brother and sister warranted that they owned the property free of encumbrances
(which is what the general warranty clause did) is irrelevant to the issue of whether the sister is
entitled to quiet title.
(C) is wrong, because the equitable doctrine of marshaling does not apply to these facts.
Marshaling is the ranking of assets in a certain order toward the payment of debts. The concept
arises in equity, and means that where there are two creditors, with the senior one having two
funds to satisfy his debt, that senior creditor must resort first to the fund which is not subject to
demand of the junior creditor. The concept is misapplied to this fact pattern, because the
doctrine would be one a second mortgagee invoked to protect his interest from the first
mortgagee’s foreclosure. Under these facts there is only one mortgage on the property, and as a
party who joined with the brother in making the mortgage on the property, the sister would not
be able to have her interest released.
(D) is wrong, because the sister would lose even if the cotenancy was joint.
Joint tenancy differs from tenancy in common only with respect to the right of survivorship,
which exists as to the former but not the latter. There is no difference in the legal analysis here
between the joint-tenancy and tenancyin-common scenarios.

3. Priorities (allocation of foreclosure proceeds)

a. Judgment lien creditor’s status
i. Two-property scenario
Question 48
A businessman owned a hotel, subject to a mortgage securing a debt he
owed to a bank. The businessman later acquired a nearby parking garage,
financing a part of the purchase price by a loan from a financing
company, secured by a mortgage on the parking garage. Two years
thereafter, the businessman defaulted on the loan owed to the bank, which
caused the full amount of that loan to become immediately due and
payable. The bank decided not to foreclose the mortgage on the hotel at
that time, but instead properly sued for the full amount of the defaulted
loan. The bank obtained and properly filed a judgment for that amount. A
statute of the jurisdiction provides: “Any judgment properly filed shall,
for ten years from filing, be a lien on the real property then owned or
subsequently acquired by any person against whom the judgment is
rendered.” There is no other applicable statute, except the statute
providing for judicial foreclosure of mortgages, which places no
restriction on deficiency judgments. Shortly thereafter, the bank brought
 an appropriate action for judicial foreclosure of its first mortgage on the
hotel and of its judgment lien on the parking garage. The financing
company was joined as a party defendant, and appropriately
counterclaimed for foreclosure of its mortgage on the parking garage,
which was also in default. All procedures were properly followed and the
confirmed foreclosure sales resulted in the following: The net proceeds of
the sale of the hotel to a third party were $200,000 less than the bank’s
mortgage balance. The net proceeds of the sale of the parking garage to a
fourth party were $200,000 more than the financing company’s mortgage
balance.
How should the $200,000 surplus arising from the bid on the parking
garage be distributed?
(A) It should be paid to the bank.
(B) It should be paid to the businessman.
(C) It should be paid to the financing company.
(D) It should be split equally between the bank and the financing
company.
Answer 48
Choice (A) is correct. The foreclosure sale of the bank’s mortgage on the hotel was insufficient
to pay the businessman’s debt to the bank. The bank had received a judgment against the
businessman for the entire amount of the defaulted loan. This lien was properly recorded and
applied to all property owned by the businessman during the following ten-year time period,
including the parking garage. After the financing company was paid in full from the funds
generated by the foreclosure sale of its mortgage on the parking garage, the additional funds
generated by that sale would be paid to the bank not as a deficiency judgment, but because of
the unsatisfied amount of the prior money judgment.
(B) is incorrect. The judgment lien was properly filed against the businessman. Therefore,
the garage was subject not only to the loan of the financing company, but also to the judgment
lien as a second priority. The businessman would be entitled to surplus proceeds only if both
liens had been fully paid.
(C) is incorrect. The foreclosure sale of the financing company’s mortgage on the parking
garage was sufficient to pay the businessman’s debt to the financing company in full. The fact
that the garage was sold for more money than was owed under the garage mortgage is
irrelevant to the amount owed to the financing company — a mortgagee doesn’t receive any
part of the “surplus” after its mortgage has been paid in full.
(D) is incorrect for the same reason that (C) is incorrect.

III. DEEDS
A. Formalities
1. Identification of parties
Question 49
A landowner owned a valuable parcel of land located in York County.
The landowner executed a document in the form of a warranty deed of the
parcel, which was regular in all respects except that the only language
designating the grantees in each of the granting and habendum clauses
was: “The leaders of all the Protestant Churches in York County.” The
 instrument was acknowledged as required by statute and promptly and
properly recorded. The landowner told his lawyer, but no one else, that he
had made the conveyance as he did because he abhorred sectarianism in
the Protestant movement and because he thought that the leaders would
devote the asset to lessening sectarianism.
The landowner died suddenly and unexpectedly a week later, leaving a
will that bequeathed and devised his entire estate to his cousin. After
probate of the will became final and the administration on the
landowner’s estate was closed, the cousin instituted an appropriate action
to quiet title to the parcel and properly served as defendant each
Protestant church situated in the county.
The only evidence introduced consisted of the chain of title under which
the landowner held, the probated will, the recorded deed, the fact that no
person knew about the deed except the landowner and his lawyer, and the
conversation the landowner had with his lawyer described above.
In such action, judgment should be for
(A) the cousin, because there is inadequate identification of grantees in
the deed.
(B) the cousin, because the state of the evidence would not support a
finding of delivery of the deed.
(C) the defendants, because a deed is prima facie valid until rebutted.
(D) the defendants, because recording established delivery prima facie
until rebutted.
Answer 49
Choice (A) is correct. In order to be valid, a deed must identify the grantee(s) with reasonable
precision. Here, the grantees are “the leaders of all the Protestant churches in York County.” It
may be possible to identify with acceptable confidence all Protestant churches in the county,
but it is unlikely that the “leader” of each church can be identified, given the imprecision of the
term “leader” in the context of a church (is it the minister, or is it the president of the
congregation, or is it the entire board of directors of the organization?). Where a deed does not
identify the grantee with acceptable precision, the deed will be treated as if it had never been
made. That would mean that the landowner died still holding title, which passed to the cousin.
(B) is wrong because the fact that the deed was recorded furnishes a strong presumption
that delivery occurred (i.e., that the grantor intended the deed to take effect immediately, which
is all that “delivery” means).
(C) is wrong because, while it may be true that a deed is presumed valid, the lack of an
acceptably-precise designation of grantees here would be sufficient to rebut the presumption of
validity.
(D) is wrong because, while recording will indeed create a prima facie (but rebuttable) case
that delivery occurred, the problem here is not delivery but imprecision in the designation of
the grantees.

Question 50
A vendee entered into a valid written contract to purchase a large tract of
land from a vendor for its fair market value of $50,000. The contract was
assignable by the vendee. The vendee duly notified the vendor to convey
 title jointly to the vendee and “Charles,” Charles being the vendee’s friend
whom the vendee had not seen for many years.
When the vendee learned that Charles would have to sign certain
documents in connection with the closing, she prevailed upon her brother
to attend the closing and pretend to be Charles. The vendee and her
brother attended the closing, and the vendor executed an instrument in the
proper form of a deed, purporting to convey the property to “[the vendee]
and Charles, as tenants in common.” The brother pretended that he was
Charles, and he signed Charles’s name to all the required documents. The
vendee provided the entire $50,000 consideration for the transaction. The
deed was promptly and properly recorded.
Unknown to the vendee or her brother, Charles had died several months
before the closing. Charles’s will, which was duly probated, devised “all
my real estate to my nephew” and the residue of his estate to the vendee.
The vendee and the nephew have been unable to agree as to the status or
disposition of the property. The nephew brought an appropriate action
against the vendor and the vendee to quiet legal title to an undivided
one-half interest in the property.
The court should hold that legal title to the property is vested
(A) all in the vendor.
(B) all in the vendee.
(C) one-half in the vendee and one-half in the vendor.
(D) one-half in the vendee and one-half in the nephew.
Answer 50
Choice (C) is correct. Because Charles was dead at the time of the purported conveyance to the
vendee and Charles as tenants in common, the deed’s attempt to pass an interest to him was not
effective (i.e., the deed was “void” as to him). Therefore, no interest passed through to his
estate or via his estate to his nephew. The “Charles” portion of the tenancy in common
therefore remained in the vendor. The deed was effective as to the vendee’s interest, however,
since she was correctly named and the deed was delivered to and accepted by her; therefore,
she has the tenancy in common interest that the vendor intended to convey to her.
Choices (A), (B), and (D) are wrong because they are inconsistent with the above analysis.

B. Delivery of deed
1. Delivery to agent of grantee
Question 51
When a homeowner became ill, he properly executed a deed sufficient to
convey his home to his nephew, who was then serving overseas in the
military. Two persons signed as witnesses to qualify the deed for
recordation under an applicable statute. The homeowner handed the deed
to his nephew’s friend and said, “I want [the nephew] to have my home.
Please take this deed for him.” Shortly thereafter, the nephew’s friend
learned that the homeowner’s death was imminent. One day before the
homeowner’s death, the nephew’s friend recorded the deed. The nephew
returned home shortly after the homeowner’s death. The nephew’s friend
brought him up to date, and he took possession of the home. The
 homeowner died intestate, leaving a daughter as his sole heir. She asserted
ownership of his home. The nephew brought an appropriate action against
her to determine title to the home. The law of the jurisdiction requires
only two witnesses for a will to be properly executed.
If the court rules for the nephew and against the daughter, what is the
most likely explanation?
(A) The deed was delivered when the homeowner handed it to the
nephew’s friend.
(B) The delivery of the deed was accomplished by the recording of the
deed.
(C) The homeowner’s death consummated a valid gift causa mortis to
the nephew.
(D) The homeowner’s properly executed deed was effective as a
testamentary document.
Answer 51
Choice (A) is correct. An inter vivos gift (i.e., one made during the giver’s lifetime) may be
made of real estate. The gift is deemed made when “delivery” occurs, accompanied by the
requisite donative intent. Here, the homeowner had the requisite donative intent as shown by
his words. Delivery occurred when the homeowner physically handed the deed to the nephew’s
friend as the agent of the nephew; this was delivery because it is clear from the homeowner’s
words that he intended the gift to take place immediately rather than at some future time.
Acceptance is presumed if the gift is beneficial. Once delivery occurred, the homeowner could
not recall the gift.
(B) is wrong, because although the recording of a deed may create a presumption of
delivery, here the delivery occurred prior to the recordation of the deed (at the moment the
homeowner physically handed the deed to the nephew’s friend as the agent of the nephew, with
the intent to pass the title).
(C) is wrong, because a gift causa mortis may only be made of personal property. In
addition, the gift was not made in view of pending death from a stated peril (the facts only note
that the homeowner was ill).
(D) is wrong, because a testamentary document takes effect at the death of the testator and
must have been executed with the requisite testamentary intent. Here, the homeowner wanted
the nephew to have title immediately and thus delivered the deed to the nephew’s friend; the
homeowner did not want to postpone delivery until his death.

2. Revocability of delivery
Question 52
Ogle owned Greenacre, a tract of land, in fee simple. Five years ago, he
executed and delivered to Lilly an instrument in the proper form of a
warranty deed that conveyed Greenacre to Lilly “for and during the term
of her natural life.” No other estate or interest or person taking an interest
was mentioned. Lilly took possession of Greenacre and has remained in
possession.
Fifteen months ago, Ogle died, leaving a will that has been duly admitted
to probate. The will, inter alia, had the following provision:
 “I devise Greenacre to Mina for her natural life and from and after Mina’s
death to Rex, his heirs and assigns, forever.”
Administration of Ogle’s estate has been completed. Mina claims the
immediate right to possession of Greenacre. Rex also asserts a right to
immediate possession.
In an appropriate lawsuit to which Lilly, Mina, and Rex are parties, who
should be adjudged to have the right to immediate possession?
(A) Lilly, because no subsequent act of Ogle would affect her life estate.
(B) Mina, because Ogle’s will was the final and definitive expression of
his intent.
(C) Mina, because Lilly’s estate terminated with the death of Ogle.
(D) Rex, because Lilly’s estate terminated with Ogle’s death and all that
Ogle had was the right to transfer his reversion in fee simple.
Answer 52
Choice (A) is correct. When Ogle delivered the deed to Lilly, she received a life estate, and
nothing Ogle did thereafter could undo or modify that life estate. Therefore, the clause in
Ogle’s will leaving a life estate to Mina did not affect Lilly’s life estate. (Instead, Mina got an
executory life estate that would not start until Lilly’s death.)
(B) is wrong because of the principle stated in Choice (A) above. (C) and
(D) are wrong because of this same principle; notice that a grantor (here, Ogle) can create a life
estate in the grantee, and the grantor’s death does not act to terminate that life estate, as
Choices (C) and (D) suggest that it would.

C. Covenants for title in warranty deed

1. Present vs. future covenants
Question 53
Seller owned Blackacre, improved with an aging four-story warehouse.
The warehouse was built to the lot lines on all four sides. On the street
side, recessed loading docks permitted semi-trailers to be backed in. After
the tractors were unhooked, the trailers extended into the street and
occupied most of one lane of the street. Over the years, as trailers became
larger, the blocking of the street became more severe. The municipality
advised Seller that the loading docks could not continue to be used
because the trailers blocked the street; it gave Seller 90 days to cease and
desist.
During the 90 days, Seller sold and conveyed Blackacre by warranty deed
for a substantial consideration to Buyer. The problem of the loading docks
was not discussed in the negotiations.
Upon expiration of the 90 days, the municipality required Buyer to stop
using the loading docks. This action substantially reduced the value of
Blackacre.
Buyer brought an appropriate action against Seller seeking cancellation of
the deed and return of all monies paid.
Such action should be based upon a claim of (A)
misrepresentation.
(B) breach of the covenant of warranty.
 (C) failure of consideration.
(D) mutual mistake.
Answer 53
Choice (A) is correct. By concealing the fact that the present use was the subject of current
enforcement proceedings, Seller would likely be found liable on a fraudulent misrepresentation
theory. It is not certain that such a claim will succeed — the case may be found to fall within
the general rule that nondisclosure is actionable only if the party who failed to disclose had an
affirmative duty to do so, and that there was no such duty here. But the more likely result is
that Seller will be found liable for his intentional nondisclosure. One ground for such a result is
that a party to a business transaction is under a duty to disclose “facts basic to the transaction,
if the [defendant] knows that the other is about to enter into it under a mistake as to [those
facts], and that the other, because of the relationship between them, customs of the trade or
other objective circumstances, would reasonably expect a disclosure of those facts.” Rest. 2d
(Torts) § 551(2)(e). Here, Buyer has a good chance of establishing that under the customs of
the real estate trade, where a seller offers a properly for a particular use (warehousing with
large trucks), which he knows the buyer intends to continue, the buyer would reasonably
expect a disclosure that the legality of that present use is being contested by a governmental
authority.
(B) is wrong, because the covenant of warranty protects the grantee only against an eviction
or disturbance, due to absence of title or to an encumbrance. So the facts here fail to support a
claim for breach of the warranty covenant in two respects: (1) the problem with using the
loading docks was not a problem with title or an encumbrance (merely a problem that the
existing use violated city rules), and (2) more fundamentally, Buyer has not been evicted or
even threatened with eviction (he can stay on the property forever as long as he doesn’t unload
trailers in a way that blocks the street).
(C) is wrong, because each party gave a promise in consideration for the other’s promise in
the original contract of sale. In any event, any problem with consideration would have been
eliminated, because any contract rights would have been deemed merged into the deed.
(D) is wrong, because any “mistake” was certainly not “mutual” — Seller knew all along
that the present use was the subject of current enforcement proceedings.

D. Undisclosed condition in house

Question 54
Able, who owned Blackacre, a residential lot improved with a dwelling,
conveyed it for a valuable consideration to Baker. The dwelling had been
constructed by a prior owner. Baker had inspected Blackacre prior to the
purchase and discovered no defects. After moving in, Baker became
aware that sewage seeped into the basement when the toilets were
flushed. Able said that this defect had been present for years and that he
had taken no steps to hide the facts from Baker. Baker paid for the
necessary repairs and brought an appropriate action against Able to
recover his cost of repair.
If Baker wins, it will be because
(A) Able failed to disclose a latent defect.
(B) Baker made a proper inspection.
(C) the situation constitutes a health hazard.
 (D) Able breached the implied warranty of habitability and fitness
for purpose.
Answer 54
Choice (A) is correct. An increasing number of courts now impose liability on a home seller
who is aware of a material defect and who fails to disclose it to a buyer, where the defect is a
latent one that cannot easily be found by an inspection. It is by no means certain that a court
would find for Baker on this ground, but of the four possibilities this is the only one that offers
Baker even a plausible chance of success.
(B) is wrong because Baker’s having made a proper inspection, by itself, would not be
enough to ensure him a victory. For instance, if the defect had been a “patent” one (one that
ought to have been discovered by a reasonable inspection), virtually no courts would impose
liability.
(C) is wrong because, while the fact that the condition constitutes a health hazard is a factor
making liability slightly more likely, the key factor leading to liability is that the defect was
latent (not readily discoverable), a factor that this choice does not refer to at all.
(D) is wrong because courts virtually never hold that the seller of a “used” house built by
someone else makes an implied warranty of habitability or fitness for particular purpose; since
the facts tell us that a prior owner built the house, this rule precludes liability on
warranty-of-habitability grounds.
 CHAPTER 8: RECORDING ACTS
I. WHAT INSTRUMENTS MUST BE RECORDED
A. What instruments must be recorded
1. Contract of sale
Question 55
Able was the owner of Greenacre, a large tract of land. Able entered into
a binding written contract with Baker for the sale and purchase of
Greenacre for $125,000. The contract required Able to convey marketable
record title.
Baker decided to protect his interest and promptly and properly recorded
the contract.
Thereafter, but before the date scheduled for the closing,
Charlie obtained and properly filed a final judgment against Able in the
amount of $1 million in a personal injury suit. A statute in the jurisdiction
provides: “Any judgment properly filed shall, for ten years from filing, be
a lien on the real property then owned or subsequently acquired by any
person against whom the judgment is rendered.”
The recording act of the jurisdiction authorizes recording of contracts and
also provides: “No conveyance or mortgage of real property shall be good
against subsequent purchasers for value and without notice unless the
same be recorded according to law.”
There are no other relevant statutory provisions.
At the closing, Baker declined to accept the title of Able on the ground
that Charlie’s judgment lien encumbered the title he would receive and
rendered it unmarketable. Able brought an appropriate action against
Baker for specific performance of the contract and joined Charlie as a
party.
In this action, the judgment should be for
(A) Able, because in equity a purchaser takes free of judgment liens.
(B) Able, because the contract had been recorded.
(C) Baker, because Able cannot benefit from Baker’s action in
recording the contract.
(D) Baker, because the statute creating judgment liens takes precedence
over the recording act.
Answer 55
Choice (B) is correct. In most states, a land-sale contract is recordable, and the facts here tell us
that this is so for the state in question (by telling us that Baker “properly recorded the
contract”). Once the contract was recorded, it created an interest in land on the part of the
vendee (namely, the right to buy on the stated terms) that was superior to any later-created
interest in the property. Therefore, Baker’s right to purchase was superior to the later-filed
judgment lien obtained by Charlie. Consequently, Able would be deemed to have marketable
title, because notwithstanding the judgment lien he was capable of conveying the property free
and clear to Baker.
(A) is wrong because it states the right result, but for the wrong reason. A purchaser would not
always take free of a judgment lien; for instance, a purchaser would not take free of a judgment
lien that was filed before the purchase contract. It is only the fact that the sale contract was
recorded before the judgment lien was filed that lets the purchaser here take free of the lien.
(C) is wrong because Able can indeed benefit from Baker’s action in recording. The issue is
whether Able can convey marketable title to Baker, and the fact that Baker recorded means that
Able can do this; there is no rule that one party cannot benefit from the other’s action in
recording.
(D) is wrong because it is a misstatement of law. The statute creating judgment liens merely
describes that a judgment lien is an interest in property; the statute does not say anything about
priorities, a subject that is left to the recording act. Under the recording act, an early-filed
interest in land (here, the vendee’s rights under the sale contract) takes priority over a
later-filed interest (here, the judgment lien).

II. WHO IS PROTECTED BY THE RECORDING ACT

A. Who is a bona fide purchaser (BFP)?
Question 56
Devlin was the owner of a large subdivision. Parnell became interested in
purchasing a lot but could not decide between Lot 40 and Lot 41. The
price and fair market value of each of those two lots was $50,000. Parnell
paid Devlin $50,000, which Devlin accepted, and Devlin delivered to
Parnell a deed which was properly executed, complete, and ready for
recording in every detail except that the space in the deed for the lot
number was left blank. Devlin told Parnell to fill in either Lot 40 or Lot
41 according to his decision and then record the deed. Parnell visited the
development the next day and completely changed his mind, selecting Lot
25. He filled in Lot 25 and duly recorded the deed. The price of Lot 25
and its fair market value was $75,000 . Before Devlin had time to learn of
Parnell’s actions, Parnell sold Lot 25 to Caruso for $60,000 by a duly and
properly executed, delivered, and recorded warranty deed. Caruso knew
that Devlin had put a price of $75,000 on Lot 25, but he knew no other
facts regarding the DevlinParnell transaction. Caruso’s attorney accurately
reported Parnell’s record title to be good, marketable, and free of
encumbrances. Neither Caruso nor his attorney made any further
investigation outside the record. Devlin brought an appropriate action
against Caruso to recover title to Lot 25. If Devlin loses, the most likely
basis for the judgment is that
(A) the Statute of Frauds prevents the introduction of any evidence of
Devlin’s and Parnell’s agreement.
(B) recording of the deed from Devlin to Parnell precludes any question
of its genuineness.
(C) as between Devlin and a bona fide purchaser, Devlin is estopped.
(D) the clean hands doctrine bars Devlin from relief.
Answer 56
Choice (C) is correct. The goal of recording statutes is to protect subsequent bona fide
purchasers and incumbrancers — those who pay value and take without notice of prior
conveyances, in good faith. Here, Caruso is a bona fide purchaser, because he has no notice of
any defects in the chain of title. The price he paid, $60,000, was a bargain compared to what
Devlin asked previously, but this would not in and of itself negate his bona fide purchaser
status, since it would still constitute “value” and would not, barring other facts, indicate
something untoward was involved. Since the chain of title indicates that Parnell was conveying
marketable title, Caruso was not obligated to look further. Choice (C) goes on to suggest that
Devlin is “estopped” from denying the validity of the deed. An estoppel occurs, in facts like
these, when one has done or omitted to do something, and is as a result forbidden from
pleading or proving an otherwise-important fact. Here, Devlin’s carelessness in allowing
Parnell to fill in the deed will lead to his being bound by the resultant deed — he’ll be
“estopped” from denying its validity.
(A) is wrong because the Statute of Frauds would not prevent proof of Devlin’s and
Parnell’s oral agreement. Devlin is trying to show that the deed he signed has the wrong lot
number on it, due to Parnell’s wrongdoing. That’s not a contracts problem, and the Statute of
Frauds applies only to contracts. Except for the estoppel problem (discussed in (C)), Devlin
would be able to show that the deed as filed was not genuine (i.e., was a forgery as to the lot
number). And that would be true even though Devlin’s proof would consist of proof of an oral
agreement. So the Statute of Frauds wouldn’t be relevant.
(B) is wrong because it states an incorrect rule of law: Recording a deed does not preclude
any question as to its genuineness. The mere act of recording would not, for instance, make a
fraudulent deed genuine. The upshot, nonetheless, might be that, despite the fact that a deed is
incorrect, the bona fide purchaser may still prevail, on grounds of estoppel. But (B) states as a
concrete rule that recording a deed means its genuineness cannot be questioned, and this is
incorrect.
(D) is wrong because it misstates the facts: Devlin’s hands are not “unclean.” Under the
equitable doctrine of “unclean hands,” one who has acted “unconscionably,” or in a morally
reprehensible manner, cannot recover. Here, at most Devlin has behaved negligently; there is
no basis on which to attach any bad faith to his behavior. If anything, he was gullible in trusting
Parnell to fill in the blank in the deed as instructed; but the creation of the agency did not
involve wrongdoing. If anyone, it’s Parnell who’s the wrongdoer.

B. The “gave value” requirement

1. Judgment creditors
Question 57
A seller owned a piece of land in fee simple, as the land records showed,
when he contracted to sell the land to a buyer. Two weeks later, the buyer
paid the agreed price and received a warranty deed. A week thereafter,
when neither the contract nor the deed had been recorded and while the
seller remained in possession of the property, a creditor of the seller
properly filed a money judgment against the seller. The creditor knew
nothing of the buyer’s interest.
A statute in the jurisdiction provides: “Any judgment properly filed shall,
for ten years from filing, be a lien on the real property then owned or
subsequently acquired by any person against whom the judgment is
rendered.”
The recording act of the jurisdiction provides: “No conveyance or
mortgage of real property shall be good against subsequent purchasers for
value and without notice unless the same be recorded according to law.”
 The creditor brought an appropriate action to enforce her lien against the
property in the buyer’s hands.
If the court decides for the buyer, it will most probably be because
(A) the doctrine of equitable conversion applies.
(B) the jurisdiction’s recording act does not protect creditors.
(C) the seller’s possession gave the creditor constructive notice of the
buyer’s interest.
(D) the buyer was a purchaser without notice.
Answer 57
Choice (B) is correct. Where the language of the recording act is ambiguous about whether
judgment creditors are covered (e.g., where, as here, “purchasers for value” are what are
covered), most courts have interpreted the statute so as not to cover the judgment creditor.
There is no guarantee that a court would interpret the statute in this anti-creditor way, but that’s
at least a possibility, and of the four choices this is the most likely explanation for an
anti-creditor result. (Remember, you’re not asked to say how the case will come out — you’re
merely asked to say what the most likely rationale will be if the case is decided for the buyer.)
(A) is wrong because the doctrine of equitable conversion has nothing to do with any issue
presented by this question. Equitable conversion, where the court chooses to apply it, makes a
vendor under a land-sale agreement the “equitable seller,” and the vendee the “equitable
buyer.” The main consequence of the doctrine’s application is that risk of loss passes to the
buyer upon the signing of the contract, even though the seller still holds the legal title.
(C) is wrong, because the seller’s possession would not suggest the seller had sold the
property to the buyer. Under a recording statute like the one here, a subsequent bona fide
purchaser (i.e., a person who gives valuable consideration and has no actual or constructive
notice of the prior instrument) prevails over a prior grantee who failed to record. If the creditor
was trying to become covered by the recording act, and the buyer had been in possession at the
time the creditor filed her lien, the fact that the buyer (not the seller, who was the record
owner) was in possession at the date of lien filing might have been enough to cause the buyer
to lose, since this possession might have put her on inquiry notice that the seller was perhaps
no longer the owner. But the fact that the seller was still in possession didn’t put the buyer on
notice of anything, so it’s irrelevant on these facts.
(D) is wrong, because recording acts protect the second, not the first, purchaser in certain
circumstances. Here, it would be the creditor (who can argue that she “purchased” by filing her
lien), not the buyer, who is trying to get the protection of the recording act. It is the person
seeking the protection of the recording act (the second purchaser), not the person resisting
application of the act (the first purchaser) who needs to be “without notice.” So here, the notice
status of the creditor might well matter (if the recording act otherwise applied to judgment lien
creditors). But the notice status of the buyer, the first “purchaser,” does not matter at all.

Question 58
Able conveyed Blackacre to Baker by a warranty deed. Baker recorded
the deed four days later. After the conveyance but prior to Baker’s
recording of the deed, Smollett properly filed a judgment against Able.
The two pertinent statutes in the jurisdiction provide the following: 1) any
judgment properly filed shall, for ten years from filing, be a lien on the
real property then owned or subsequently acquired by any person against
 whom the judgment is rendered, and 2) no conveyance or mortgage of
real property shall be good against subsequent purchasers for value and
without notice unless the same be recorded according to law.
The recording act has no provision for a grace period.
Smollett joined both Able and Baker in an appropriate action to foreclose
the judgment lien against Blackacre.
If Smollett is unsuccessful, it will be because
(A) Able’s warranty of title to Baker defeats Smollett’s claim.
(B) Smollett is not a purchaser for value.
(C) any deed is superior to a judgment lien.
(D) four days is not an unreasonable delay in recording a deed.
Answer 58
Choice (B) is correct. Smollett could win only if he were protected by the recording act. This is
so because without the recording act’s protection, Smollet would have to lose since Baker
received his conveyance before Smollett filed his lien (meaning that Able no longer had any
interest in the property at the moment Smollett’s judgment became a lien on Able’s “property”
by means of Smollett’s filing). In most jurisdictions, if the recording act protects only
“purchasers for value,” a judgment creditor will not be deemed to be a “purchaser.” So if
Smollett were found not to be a purchaser, and therefore not to receive any protection from the
recording act, he would lose. It is not certain that the recording act here would be interpreted so
as to not protect lien creditors, but of the four choices, this is the only one that could plausibly
yield a defeat for Smollett.
(A) is wrong because Able’s warranty of title to Baker might help Baker in a suit against Able,
but would not help Baker in a suit against Smollett. Where a party (here, Baker) doesn’t record
immediately (or within the applicable grace period if any), nothing in that party’s deed can save
her from losing to a subsequent purchaser for value who is protected by the recording act.
(That’s the purpose of recording acts — to protect subsequent purchasers for value, and to
allow them to rely on the record as of the time of the subsequent purchase.)
(C) is wrong because it is a gross misstatement of law, especially the law of the jurisdiction
in question here. The first statute cited in the question gives a filed judgment a lien against all
real property then owned by the judgment debtor; so if the judgment had been filed before the
conveyance to Baker, the judgment lien would indeed be superior to Baker’s deed (which this
choice says could never happen).
(D) is wrong because, when a recording act does not have a grace period, the purchaser
takes the risk of a subsequent purchaser’s gaining rights in the gap between the first
conveyance and a recording of that conveyance, no matter how small this gap is. (If there had
been a grace period of more than four days, this choice would have been a good explanation of
why Smollett would lose.)

C. Recording first in a race or race-notice state

Question 59
A landowner owned a piece of land in fee simple of record on January 10.
On that day, a bank loaned the landowner $50,000 and the landowner
mortgaged the property to the bank as security for the loan. The mortgage
was recorded on January 18.
 The landowner conveyed the property to an investor for a valuable
consideration on January 11. The bank did not know of this, nor did the
investor know of the mortgage to the bank, until both discovered the facts
on January 23, the day on which the investor recorded his deed from the
landowner.
The recording act of the jurisdiction provides: “No unrecorded
conveyance or mortgage of real property shall be good against subsequent
purchasers for value without notice, who shall first record.” There is no
provision for a period of grace and there is no other relevant statutory
provision.
The bank sued the investor to establish that its mortgage was good against
the property.
The court should decide for
(A) the investor, because he paid valuable consideration without notice
before the bank recorded its mortgage.
(B) the investor, because the bank’s delay in recording means that it is
estopped from asserting its priority in time.
(C) the bank, because the investor did not record his deed before the
mortgage was recorded.
(D) the bank, because after the mortgage to it, the landowner’s deed to
the investor was necessarily subject to the mortgage.
Answer 59
Choice (C) is correct. This is a race notice statute, since it says that it protects only “subsequent
purchasers for value without notice, who shall first record.” Therefore, the investor could only
obtain the protection of the recording statute if he recorded before the prior interest (the bank’s
mortgage) was recorded. Since the bank recorded on Jan. 18 and the investor on Jan. 23, the
investor did not satisfy the record-first requirement. Therefore, the recording act does not
apply, and the bank wins under the common-law principle that the first-in-time conveyance
takes priority over the second conveyance.
(A) is wrong because, while the investor’s paying valuable consideration and taking without
notice prior to the bank’s recording were necessary elements for him to be covered by the
recording act, they were not sufficient elements — he was also required to record first.
(B) is wrong because there is no principle of estoppel by which a party who delays in
recording loses the right to rely on the recording act; the only risk taken by the delaying party
is that during the delay, a subsequent purchaser may meet the requirements for protection under
the recording act.
(D) is wrong because it gives an incorrect explanation for the correct result: After the bank
received its mortgage, it would still lose to a subsequent purchaser for value without notice
who beat it to the recording office.

III. PURCHASER MUST TAKE “WITHOUT NOTICE”

A. Notice to subsequent claimants
1. Record notice
a. Imputed knowledge
i. Mortgage and note
Question 60
 A landowner executed and delivered a promissory note and a mortgage
securing the note to a mortgage company, which was named as payee in the
note and as mortgagee in the mortgage. The note included a statement that
the indebtedness evidenced by the note was “subject to the terms of a
contract between the maker and the payee of the note executed on the same
day” and that the note was “secured by a mortgage of even date.” The
mortgage was promptly and properly recorded.
Subsequently, the mortgage company sold the landowner’s note and
mortgage to a bank and delivered to the bank a written assignment of the
note and mortgage. The assignment was promptly and properly recorded.
The mortgage company retained possession of both the note and the
mortgage in order to act as collecting agent. Later, being short of funds, the
mortgage company sold the note and mortgage to an investor at a
substantial discount. The mortgage company executed a written assignment
of the note and mortgage to the investor and delivered to him the note, the
mortgage, and the assignment. The investor paid value for the assignment
without actual knowledge of the prior assignment to the bank and promptly
and properly recorded his assignment. The principal of the note was not
then due, and there had been no default in payment of either interest or
principal.
If the issue of ownership of the landowner’s note and mortgage is
subsequently raised in an appropriate action by the bank to foreclose, the
court should hold that (A) the investor owns both the note and the
mortgage.
(B) the bank owns both the note and the mortgage.
(C) the investor owns the note and the bank owns the mortgage.
(D) the bank owns the note and the investor owns the mortgage.
Answer 60
Choice (B) is correct. The bank was the first grantee of both the note and the mortgage, so the
bank is the owner unless the recording act somehow gave the investor superior title. When the
bank promptly recorded the assignment to it of the note and mortgage, the bank complied with
all requirements of the recording act. Therefore, no later assignment by the mortgage company
to the investor (or anyone else) could take priority, under the recording act, over the assignment
to the bank. The fact that the investor paid value for his assignment, and without actual notice
of the prior assignment to the bank, doesn’t change any of this — the investor is deemed to be
on notice of what a proper record search would have indicated, and here a search of the
mortgage company in the records would have disclosed the prior assignment to the bank.
Similarly, the fact that the mortgage company kept possession of the note and mortgage after
assigning these to the bank makes no difference; the investor as second grantee cannot take
priority over a prior conveyance that was properly recorded.
(A), (C), and (D) are wrong because they are inconsistent with the above analysis.

B. Purchaser from one without notice

1. Donee who takes from person protected by act
Question 61
 A grantor who owned a parcel conveyed it by quitclaim deed as a gift to a
woman, who did not then record her deed. Later, the grantor conveyed the
parcel by warranty deed to a man, who paid valuable consideration, knew
nothing of the woman’s claim, and promptly and properly recorded. Next,
the woman recorded her deed. Then the man conveyed the parcel by
quitclaim deed to his nephew as a gift. When the possible conflict with
the woman was discovered, the nephew recorded his deed.
The parcel at all relevant times has been vacant unoccupied land.
The recording act of the jurisdiction provides:
“No unrecorded conveyance or mortgage of real property shall be good
against subsequent purchasers for value without notice, who shall first
record.” No other statute is applicable.
The nephew has sued the woman to establish who owns the parcel.
The court will hold for
(A) the nephew, because the woman was a donee.
(B) the nephew, because the man’s purchase cut off the woman’s rights.
(C) the woman, because she recorded before the nephew.
(D) the woman, because the nephew was a subsequent donee.
Answer 61
Choice (B) is correct. The man met all the requirements of the recording statute: He took for
value, he took without notice of the prior conveyance, and he recorded before the prior
conveyance was recorded. Once the man met those requirements, his interest cut off all rights
of the prior grantee (the woman) who didn’t record first. The man therefore had the ability to
pass a valid title to his nephew, even though the nephew did not take for value, and even
though the nephew was on record notice of the woman’s claim at the time he took (since by
then the woman had recorded).
(A) is wrong because it is not the woman’s status as a donee that causes her to lose, it is the fact
that she did not record before a subsequent BFP (the man) recorded. Remember that under
recording acts, it is never significant whether the first grantee took for value; it only matters
whether the subsequent grantee, who is trying to take advantage of the recording act, took for
value.
(C) is wrong because the fact that the woman recorded before the nephew cannot save her;
once a subsequent grantee (the man) took for value and without notice and then recorded first,
a person downstream from that subsequent grantee (the nephew) wins against the original
late-filing grantee regardless of whether the downstreamer took for value, took without notice,
or recorded first.
(D) is wrong because the fact that the nephew did not give value doesn’t matter; as with
Choice (C), once the subsequent grantee (the man) got the protection of the recording act, it
doesn’t matter whether a person downstream from him gave value, recorded first, or took
without notice.

2. Status of one who lends to a person protected by act

Question 62
Five years ago, an investor who owned a vacant lot in a residential area
borrowed $25,000 from a friend and gave the friend a note for $25,000
 due in five years, secured by a mortgage on the lot. The friend neglected
to record the mortgage. The fair market value of the lot was then $25,000.
Three years ago, the investor discovered that the friend had not recorded
his mortgage and in consideration of $50,000 conveyed the lot to a buyer.
The fair market value of the lot was then $50,000. The buyer knew
nothing of the friend’s mortgage. One month thereafter, the friend
discovered the sale to the buyer, recorded his $25,000 mortgage, and
notified the buyer that he held a $25,000 mortgage on the lot.
Two years ago, the buyer needed funds. Although she told her bank of the
mortgage claimed by the investor’s friend, the bank loaned her $15,000,
and she gave the bank a note for $15,000 due in two years secured by a
mortgage on the lot. The bank promptly and properly recorded the
mortgage. At that time, the fair market value of the lot was $75,000.
The recording act of the jurisdiction provides: “No conveyance or
mortgage of real property shall be good against subsequent purchasers for
value and without notice unless the same be recorded according to law.”
Both notes are now due and both the investor and the buyer have refused
to pay. The lot is now worth only $50,000.
What are the rights of the investor’s friend and the bank in the lot?
(A) Both mortgages are enforceable liens and the friend’s has priority
because it was first recorded.
(B) Both mortgages are enforceable liens, but the bank’s has priority
because the buyer was an innocent purchaser for value.
(C) Only the friend’s mortgage is an enforceable lien, because the bank
had actual and constructive notice of the investor’s fraud.
(D) Only the bank’s mortgage is an enforceable lien, because the buyer
was an innocent purchaser for value.
Answer 62
Choice (D) is correct. This is a complicated fact pattern, but the essential information is that the
buyer purchased the lot from the investor before the friend recorded his mortgage. Thus, (1) the
buyer was a bona fide purchaser (BFP) for value and is protected by the recording statute; and
(2) the bank who lent to the buyer is also protected despite the fact that the buyer knew of the
prior mortgage when it lent.
The jurisdiction’s recording act is a “notice” statute because it provides, “No conveyance or
mortgage of real property shall be good against subsequent purchasers for value and without
notice unless same be recorded according to law.” A notice statute protects only a subsequent
taker who takes for value and without notice of the prior conveyance or mortgage. (Because
this is a pure notice rather than race-notice statute, the subsequent taker doesn’t have to have
recorded before the prior grantee or mortgagee records.) Notice can be actual, record, or
inquiry. The facts do not indicate that the buyer had actual notice of the friend’s mortgage.
Since the friend had not recorded the mortgage at the time the buyer purchased the lot, the
buyer did not have record notice. Finally, the property is a vacant lot; so even if the buyer had
inspected the property, she would not have been put on inquiry notice of the friend’s mortgage.
Thus, the buyer is a BFP (i.e., she took without any kind of notice) and receives the protection
of the recording act. Therefore, the friend’s lien is unenforceable against the buyer (or against
anyone who deals with her, as we’ll see in a minute).
The bank’s mortgage, on the other hand, is an enforceable lien against the property, because the
buyer is a party to the mortgage and the bank promptly and properly recorded the mortgage.
(Even if you did not know this, you would be able to pick the correct answer by eliminating the
other three choices, which all rely on the friend’s having an enforceable lien.)
And the fact that the bank made its loan while having notice (both actual and record) of the
prior mortgage to the friend does not prevent the bank’s mortgage from being a valid first lien
— that’s because the buyer took free of the friend’s mortgage for the reasons described above,
and once the buyer had this free-and-clear title she was entitled to place a first mortgage on it
(or re-sell it) regardless of the state of knowledge possessed by the new mortgagee (or new
buyer). If the rule were otherwise, an innocent buyer would never be able to take out a first
mortgage or re-sell, if the holder of a prior interest who didn’t record promptly eventually
recorded, as happened here.
(A) is wrong because, for the reasons explained in the analysis of Choice (D), the friend did
not have an enforceable lien against the property. Thus, the fact that the friend recorded before
the bank is irrelevant.
(B) is wrong because, for the reasons explained in the analysis of Choice (D), the friend did
not have an enforceable lien against the property. This answer choice misstates the significance
of the buyer’s being an innocent purchaser for value. The buyer’s BFP status protects her from
the enforcement of the friend’s lien; it does not affect the “priority” of the liens (since there is
only one valid lien, the bank’s).
(C) is wrong because, for the reasons explained in the analysis of Choice (D), the friend did
not have an enforceable lien against the property. The friend recorded too late to prevent the
buyer from being a BFP; so, the fact that the buyer later learned of the friend’s mortgage is of
no consequence — the buyer took free of the friend’s mortgage. Once the buyer had this
freeand-clear title, she was entitled to place a first mortgage on it (or sell it) regardless of the
state of knowledge possessed by the new mortgagee (or new buyer). Such a rule is necessary to
protect the innocent buyer’s financing and resale market. See the analysis of Choice (D) for
more about this.

CHAPTER 9: RIGHTS INCIDENT TO LAND

I. NUISANCE
A. Private nuisance
1. Failure to abate the nuisance
Question 63
A homeowner and his neighbor own adjacent lots in fee simple. The
homeowner has kept the lawns and trees on his property trimmed
and neat. His neighbor ‘‘lets nature take its course’’ on her property.
As a result, the neighbor’s lawn is a tangle of underbrush, fallen
trees, and standing trees that are in danger of losing limbs. Many of
the trees on the neighbor’s land are near the homeowner’s property.
In the past, debris and large limbs have been blown from the
neighbor’s property onto the homeowner’s. By local standards the
neighbor’s lot is an eyesore that depresses market values of real
property in the vicinity, but its condition violates no applicable laws
or ordinances.
 The homeowner demanded that his neighbor keep the trees near his
property trimmed. The neighbor refused. The homeowner brought an
appropriate action against his neighbor to require her to abate what he
alleges to be a nuisance. In the lawsuit, the only issue is whether the
condition of the neighbor’s property constitutes a nuisance. The strongest
argument that the homeowner can present, if factually correct, is that the
condition of his neighbor’s lot (A) has an adverse impact on real estate
values.
B poses a danger to the occupants of the homeowner’s lot.
C violates community aesthetic standards.
D cannot otherwise be challenged under any law or ordinance.
Answer 63
Choice (B) is correct. Normally, an owner’s refusal to abate a naturallyoccurring condition on
his land will not be deemed to be a nuisance. But nearly all courts have long recognized an
exception for trees that pose the risk of falling on the public highway, and some courts have
extended this exception to trees that pose a risk of physical danger to those on adjacent
non-highway property. A court would not necessarily find that the risk of danger from the
fallen trees makes the condition a nuisance, but of the four choices this is the only one that
could plausibly lead to a finding of nuisance.
(A) is wrong because, while impact on real estate values might a reason for holding that a
man-made feature poses a nuisance, it would not be grounds for overruling the usual rule that
failure to abate a naturally-occurring condition is a nuisance.
(C) is wrong for the same reason as (A): While a violation of community aesthetic
standards might be a reason for holding that a man-made feature poses a nuisance, it would not
be grounds for overruling the usual rule that failure to abate a naturally-occurring condition is
not a nuisance.
(D) is wrong because the fact that a condition cannot be challenged by any other law or
ordinance does not mean that the court will find it to constitute a nuisance — the homeowner
will have to show that the conditions here cause him a substantial interference with his use and
enjoyment of his property, and the fact that the condition doesn’t violate a law or ordinance
doesn’t say anything about whether the homeowner can meet this standard.

II. WATER RIGHTS

A. Drainage of surface waters
1. When one party wants to get rid of the water
Question 64
A rancher and a farmer own adjacent tracts of rural land. For the past nine
years, the rancher has impounded on her land the water that resulted from
rain and melting snow, much of which flowed from the farmer’s land. The
rancher uses the water in her livestock operation. Recently, the farmer
increased the size of his farming operation and built a dam on his land
near the boundary between the two tracts. Because of the dam, these
waters no longer drain from the farmer’s land onto the rancher’s land.
There is no applicable statute. The rancher sued the farmer to restrain him
from interfering with the natural flow of the water onto her land.
Who is likely to prevail?
 (A) The farmer, because he has the right to use all of the water
impounded on his land.
(B) The farmer, because the rancher’s past impoundment of water estops
her from asserting the illegality of the farmer’s dam.
(C) The rancher, because she has acquired riparian rights to use the
water.
(D) The rancher, because the farmer is estopped to claim all of the
surface water on his land.
Answer 64
Choice (A) is correct. This water is diffuse surface water. Although there are three different
views regarding the way an owner may expel such water if he doesn’t want it, there is only one
view about whether the owner may impound it if he does want it: The rule is that an owner
such as the farmer may impound all such water, at least in the absence of any malice (and there
is none here).
(B) is wrong because although this option correctly concludes that the farmer will prevail, it
misstates the reason why this is so. At least in the absence of malice, either landowner may
impound diffuse surface waters, and that would be true even if the other party hadn’t also
previously impounded (so that the doctrine of estoppel doesn’t apply).
(C) is wrong because water from melting snows and rain is diffuse surface water. Riparian
waters are waters with defined beds and banks, such as streams, rivers, and lakes, and a
riparian owner is one whose land borders such waters. Here, the only water at issue is diffuse
surface water, and the rule for such waters is as stated in the discussion of Choice (A).
(D) is wrong because as described above, either party may impound surface waters that are
on his own land, and the doctrine of estoppel would not apply to change this general rule.

III. AIR RIGHTS

A. Other air-rights issues
1. Right to sunlight
Question 65
Pauline and Doris own adjacent parcels of land. On each of their parcels
was a low-rise office building. The two office buildings were of the same
height.
Last year Doris decided to demolish the low-rise office building on her
parcel and to erect a new high-rise office building of substantially greater
height on the parcel as permitted by the zoning and building ordinances.
She secured all the governmental approvals necessary to pursue her
project.
As Doris’s new building was in the course of construction, Pauline
realized that the shadows it would create would place her (Pauline’s)
building in such deep shade that the rent she could charge for space in her
building would be substantially reduced.
Pauline brought an appropriate action against Doris to enjoin the
construction in order to eliminate the shadow problem and for damages.
Pauline presented uncontroverted evidence that her evaluation as to the
impact of the shadow on the fair rental value of her building was correct.
 There is no statute or ordinance (other than the building and zoning
ordinances) that is applicable to the issues before the court.
The court should
(A) grant to Pauline the requested injunction.
(B) award Pauline damages measured by the loss of rental value, but
not an injunction.
(C) grant judgment for Doris, because she had secured all the necessary
governmental approvals for the new building.
(D) grant judgment for Doris, because Pauline has no legal right to have
sunshine continue to reach the windows of her building.
Answer 65
Choice (D) is correct. A landowner has no legal right to have sunlight continue to reach her
building. For example, it is not a nuisance for one owner to block another owner’s access to
sunlight, even if the consequence of the blockage is to reduce the latter building’s rental or
market value.
Since Doris has done nothing wrong, both (A) and (B) are incorrect.
Although (C) states the right result, the fact that Doris secured all necessary government
approvals is not dispositive; for instance, if the governmentapproved building built by Doris
had released noxious odors that substantially impaired the value of Pauline’s building, the fact
that Doris had obtained all necessary permits would not be a defense to Pauline’s nuisance suit.

Question 66
The plaintiff and the defendant own adjoining lots in the central portion
of a city. Each of their lots had an office building. The defendant decided
to raze the existing building on her lot and to erect a building of greater
height. The defendant received all governmental approvals required to
pursue her project. There is no applicable statute or ordinance (other than
those dealing with various approvals for zoning, building, etc.).
The defendant constructed her new building without incident. However,
when it was completed, the plaintiff discovered that the shadow created
by the new higher building placed the plaintiff’s building in such deep
shade that her ability to lease space was diminished and that the rent she
could charge and the occupancy rate were substantially lower. Assume
that these facts are proved in an appropriate action the plaintiff instituted
against the defendant for all and any relief available.
Which of the following is the most appropriate comment concerning this
lawsuit?
(A) The plaintiff is entitled to a mandatory injunction requiring the
defendant to restore conditions to those existing with the prior
building insofar as the shadow is concerned.
(B) The court should award permanent damages, in lieu of an injunction,
equal to the present value of all rents lost and loss on rents for the
reasonable life of the building.
(C) The court should award damages for losses suffered to the date of
trial and leave open recovery of future damages.
 (D) Judgment should be for the defendant, because the plaintiff has no
cause of action.
Answer 66
Choice (D) is correct. A landowner has no legal right to have sunlight continue to reach her
building. Therefore, it is not a nuisance or other violation for one owner to block another
owner’s access to sunlight, even if the consequence of the blockage is to reduce the latter
building’s rental or market value.
Since the defendant has done nothing wrong, (A), (B), and (C) are all incorrect.