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2 43. Pursuant to a valid lease agreement between Larry and Tony, Larry agrees to lease his property to Tony for 11 years. Two months later, Larry sells the property to Michael. One year into Tony s lease, Tony assigns, subleases and transfers all of his interests to Rebecca. The agreement between Tony and Rebecca provides that Rebecca assumes all obligations in the lease between Larry and Tony. Two years later, Rebecca assigns, subleases and transfers all of her interests to John. Thereafter, John fails to pay rent to Michael. Who is liable to Michael, and on what grounds, in a jurisdiction that recognizes the third-party beneficiary rule? A. Tony and Rebecca (because Larry is in privity of contract with Tony and Rebecca) and John (because Michael is in privity of estate with John). B. Tony, Rebecca, and John (because Michael is in privity of contract with Tony, Rebecca, and John, and privity of estate with John). C. Tony, Rebecca, and John (because Michael is in privity of contract with Tony, Rebecca, and John, and privity of estate with Rebecca). D. Tony and Rebecca (because Michael is in privity of contract with Tony and Rebecca) and John (because Michael is in privity of estate with John).

3 57. Assume the jurisdiction has a recording system and has adopted the following recording act: Every conveyance of real property or an estate for years therein, other than a lease for a term not exceeding one year, is void against any subsequent purchaser or mortgagee of the same property, or any part thereof, in good faith and for valuable consideration, whose conveyance is first duly recorded, and as against any judgment affecting the title, unless the conveyance shall have been duly recorded prior to the record of notice of action. The statute sets forth which approach to the recording acts? A. A race recording act. B. A notice recording act. C. A race-notice recording act. D. None of the above. 60. Four years ago the owner of a shopping center leased a store in the center for a 10-year term to a pharmacist for use as a drugstore. The pharmacist established and operated a drugstore at the leased premises. The lease included provisions that described the shopping center by metes and bounds; identified the entrances, parking areas, signs, and other common facilities of the shopping center; and set out a covenant that the owner would not lease any part of the shopping center to another drugstore. Last year the owner purchased a parcel of land immediately adjacent to the shopping center. That parcel was improved with a building that, at the time of the owner s purchase and for ten years earlier, was occupied in part by a food supermarket and in part by a discount drugstore, under leases which the prior owner assigned to the owner. The owner reconstructed the common facilities of both shopping centers to integrate them and combine them so that, to the public, the two centers appeared as a larger single development. The pharmacist learned that the lease of the discount drugstore was about to expire and that the owner planned to enter into a new lease of the same space with the discount drugstore. The pharmacist protested the proposed new lease, but the owner declared his intention to go forward with it. The pharmacist brought an appropriate action to enjoin the new lease to the discount drugstore as a violation of the covenant in the pharmacist s lease. If the court finds for the owner, what will be the likely reason? (A) The covenant in the pharmacist s lease can be fairly construed as to apply only to the original shopping center premises. (B) A covenant cannot restrict the use of land not owned by the covenantor when the covenant was created. (C) A covenant that attempts to restrict competition is invalid as against public policy even if it runs with the land. (D) The drugstore use on the adjacent parcel was in existence when the owner and the pharmacist first entered into the lease.

4 69. An architect is the owner of a large two-story office building. The architect designed and supervised the building s construction. He and his associate occupy the first floor for their architectural business. In June 2005, the architect entered into a valid and binding written lease with a tenant to rent the second floor office space for four years at a monthly rental of $5,000. The lease contained a provision wherein the architect was required to repaint the second floor premises after two years of occupancy. On June 1, 2007, the tenant sent the architect a written letter requesting the repainting of the second-floor office space. The architect made no reply and failed to perform the repainting as the lease required. The cost of repainting the tenant s office was estimated at $1,750. On July 1, 2008, the architect had still not repainted the premises. The following day, the tenant moved out, mailed the keys to the architect, and refused to pay any more rent. The lease was silent as to the rights and remedies of the tenant due to the architect s failure to perform the repainting. There is no applicable statute in the jurisdiction. In an appropriate action by the architect against the tenant for the rent due, the architect will (A) win, because there was no constructive eviction. (B) win, because the tenant had the remedy of self-help. (C) lose, because he cannot maintain an action for rent while in breach of an express covenant. (D) lose, because the obligation to pay rent is dependent on the architect s performance of his express covenant In 1995, an investor purchased a 100-acre tract located in a rural county. Shortly thereafter, the investor prepared a subdivision plan, which created 90 one-acre residential building lots on this tract with the remaining 10-acre lot proposed for a public school building. In the investor s sales brochure promoting the subdivision, he stated that in addition to the close proximity of the proposed school for subdivision residents, the county school district would not need to expend tax money to acquire this property for school construction. In 1996, the subdivision plan was recorded with the county recorder s office. During the next few years, the investor sold 50 residential lots to individual purchasers. In 2002, the investor conveyed the remaining 40 lots and the 10-acre tract to a builder by deed that included language identical to that contained in the first 50 deeds. By 2007, the builder had sold all of the 40 lots. Each of these deeds identified each lot as being a part of the subdivision. On January 9, 2008, the builder sold the 10- acre tract to a buyer. This deed made no mention of the subdivision. On January 15, 2008, the county school board voted to build a new school on the 10-acre tract. Two weeks later, the buyer began construction of a pizzeria on the 10-acre tract. In an action by the school board against the buyer to enjoin construction of the pizzeria on the 10-acre tract, the court would grant judgment for (A) the buyer, because his own deed made no mention of the subdivision. (B) the buyer, because the dedication was not made to the public in general. (C) the school district, because the 10-acre tract was designated for public use. (D) the school district, because the 10-acre tract constituted an equitable servitude.

5 111. In 1995, a developer purchased a 100-acre tract located in a northern county of a state. Shortly thereafter, the developer prepared a subdivision plan that created 100 one-acre residential building lots on this tract. In 1996, the subdivision plan was recorded with the county recorder s office. During the next few years, the developer sold 60 residential lots to individual purchasers. Each deed specified that every lot designated on the subdivision plan was to be recorded in the county recorder s office. Each deed also provided the following: No house trailer or mobile home shall be built or maintained on any lot within the subdivision. In 2002, the developer conveyed the remaining 40 lots to a builder by deed that included language identical to that contained in the first 60 deeds. By 2007, the builder had sold all of the 40 lots. Each of these deeds identified each lot as being a part of the subdivision, but did not include the clause relating to mobile homes. On January 30, 2008, a man who had purchased one of the residential lots from the builder placed a mobile home on his property. A woman who owns a lot in the subdivision initiates suit against the man to force him to remove the mobile home. Which of the following would be the most accurate statement of law? (A) There is no enforceable restriction because the mobile-home provision did not run with the land. (B) There is no enforceable restriction because the man s deed did not include the mobile-home provision. (C) The mobile-home restriction would be enforceable because a common development scheme had been established for the entire subdivision. (D) The outcome turns on whether a common development scheme had been organized for the entire subdivision In 1996, an investor purchased a 100-acre tract located in a northern county of a state. Shortly thereafter, the investor prepared a subdivision plan that created 100 one-acre residential building lots on this tract. In 1997, the subdivision plan was recorded with the county recorder s office. During the next few years, the investor sold all 100 residential lots to individual purchasers. Each deed specified that every lot designated on the subdivision plan was to be recorded in the county recorder s office. Each deed also provided the following: No lot shall be used except for residential purposes. By 2009, the area surrounding the subdivision was rezoned for commercial and business uses. One of the lot owners now decides to operate a small beauty parlor in the basement of her home. In an action by the homeowners in the subdivision to prevent such commercial use, the court will most likely hold that (A) the residency restriction is no longer enforceable because of the change in the character of the neighborhood surrounding the development. (B) the residency restriction is no longer enforceable because the area surrounding the development was rezoned for commercial use. (C) the residency restriction is enforceable, thus preventing any commercial use. (D) the operation of a beauty parlor would not constitute a violation of the residency restriction.

6 163. A housing corporation owned a tract of land. The housing corporation prepared a development plan to divide the land into 100 lots and create a residential community on the tract. The Declaration of Covenants created the homeowners association, an administrative entity that would administer and enforce the regulations and restrictions recited among the covenants. One of the restrictions set forth in the Declaration of Covenants reads: There shall never at any time be erected, permitted, or maintained upon any part of the property any structure designed for or used as a saloon or place for the sale or manufacture of malt, vinous, or spirituous liquors. The Declaration of Covenants was duly recorded and was included in the deed taken by a teacher when he purchased lot 62 in the development. The teacher immediately recorded his deed. The teacher leased his home to a librarian for a term of one year. The lease included the same restrictions as those in the Declaration of Covenants and in the teacher s deed. The librarian immediately began to sell liquor on the premises during weekly after hours parties. The homeowners association sues the librarian in an action for damages. Which of the following is the best argument for the librarian? (A) The librarian is not liable for burdens that do not run with the land. (B) The librarian is not in privity of contract with the homeowners association. (C) The librarian is not in privity of estate with the teacher. (D) Other lots in the immediate vicinity are used for commercial purposes A housing corporation owned a tract of land and prepared a development plan to divide the land into 100 lots and create a residential community on the tract of land. The Declaration of Covenants created the community association, an administrative entity that would administer and enforce the regulations and restrictions recited among the covenants. One of the regulations set forth in the Declaration of Covenants reads: Each purchaser, by the acceptance of a deed therefore, promises to pay the community association an annual assessment or charge to be determined on the basis of the valuation of each individual lot and the improvements thereon. Non-payment of any annual assessment or charge when due shall result in a lien upon the parcel of the property. A gardener, the owner of lot 29 in the development, sold his land to a landscaper with a deed containing no restrictions. The community association, pursuant the Declaration of Covenants, sues the landscaper to collect the annual assessment for lot 29. Which of the following is the best argument for the landscaper? (A) There is not privity of contract between the housing corporation and the community association. (B) Because the charge constitutes a lien, there is no personal obligation on the landscaper s part. (C) There is no privity of contract between the gardener and the landscaper. (D) There is no privity of estate between the gardener and the landscaper.

7 165. A housing corporation owned a tract of land and prepared a development plan to divide the land into 100 lots and create a residential community on the property. The Declaration of Covenants created the community association, an administrative entity that would administer and enforce the regulations and restrictions recited in the Declaration of Covenants. One of the restrictions reads: There shall never at any time be erected, permitted, or maintained upon any part of the property any structure designed for or used as a saloon or place for the sale or manufacture of malt, vinous, or spirituous liquors. The Declaration of Covenants was duly recorded and was included in the deed taken by a psychologist when he purchased lot 24 in the housing development. The psychologist recorded his deed. The psychologist gave his lot to his son. The deed conveying lot 24 to the son contained no reference to the Declaration of Covenants or any of its provisions. The deed provided that these premises are conveyed to (the son), his heirs, and assigns, as long as they are used for residential purposes only. The son did not record his deed. The son was unaware of the Declaration of Covenants. The son started a home business selling imported wine from his home. A geologist, the owner of lot 26, which was situated next to the son s lot, brought an action of ejectment against the son. Which of the following is the best argument for the son? (A) The deed to the son created a fee simple determinable with a possibility of reverter, giving the psychologist, but not the geologist, the right to sue the son. (B) Not having been recorded, the condition cannot be enforced against the son. (C) The geologist is entitled only to an injunction against the son. (D) The law recognizes when economic circumstances change for an owner burdened by a servitude.

8 Source Material: 8, 11, 20, 24, 26, 27, 29 Prof. Ostrow (Hofstra Law) Spring 2009 Property Final Exam 43, 57 Prof. Folami (Hofstra Law) Spring 2013 Property Model Exam 60 National Conference of Bar Examiners 2014 Sample Questions Booklet 69, 109, 111, 113, 163, 164, 165 Kaplan Bar Review Redbook 2012 Edition 8. (B) 11. (C) 20. (D) 24. (C) 26. (C) 27. (A) 29. (C) 43. D. Michael steps into the shoes of Larry because Michael purchased the property from Larry. Therefore, Michael becomes the landlord who is in privity of contract with Tony and Rebecca and has privity of estate with John, who unlike Rebecca, did not explicitly assume tenant obligations under the original lease agreement. 57. C. Race-notice statute. 60. A 69. (A) At common law, because a tenant was deemed to receive an estate in land, his rights and duties were treated as independent of the landlord s rights and duties. Thus, if the landlord promised to keep the property in repair, a breach of this promise did not relieve the tenant from the duty of paying rent. According to the common law rationale, the rent was owed as payment for the estate, and the promise to do repairs was merely a collateral promise, which could be enforced only by a separate contractual suit brought by the tenant. This doctrine is generally referred to as the independence of covenants. Choice (B) is incorrect. (B) is wrong; the reason the landlord will prevail is because the premises were not so uninhabitable (the basis for constructive eviction) as to force the tenant out and relieve the tenant of the duty to pay rent. This choice falsely suggests that the tenant had the remedy of self help and failed to avail himself of that remedy by failing to perform the re painting himself. In other words, self help is not an appropriate remedy inasmuch as the tenant had no duty to make such repairs. Choice (C) is incorrect. Because the duty to pay rent was independent of the landlord s rights and duties, a breach of the promise to keep the premises in repair still did not relieve the tenant from the duty of paying rent. This choice states that the landlord will lose in his action to collect rent because the architect cannot collect it while in breach of an express covenant. However, because the duty to pay rent is independent of the covenant to paint, the architect can sue for the rent and treat that as separate from his own failure to paint the premises. Because this choice states that a landlord cannot do both at the same time, it is incorrect. Choice (D) is incorrect. Because the duty to pay rent was independent of the landlord s rights and duties, a breach of the promise to keep the premises in repair still did not relieve the tenant from the duty of paying rent. Because this choice states that the obligation to pay rent is dependent on the covenant to repair, it is incorrect (C) The proposal in the subdivision plan and also in the development brochure to set aside a 10-acre tract for the location of a school building would constitute a public dedication offering. Dedication at common law required no particular form and could be made by any method by which the dedicator expressed his intention: by words, conduct, or writing. When acceptance by public adoption is manifested, there arises a conveyance of an easement for such public use, with the fee remaining in the grantor. In the present case, the school district would be entitled to erect a school on the tract, thereby enjoining the buyer s pizzeria. Choice (A) is incorrect. Even though the buyer s deed made no mention of the subdivision, he will nonetheless be charged with constructive notice of the subdivision and the dedication because the deed that the builder received from the investor mentioned the subdivision and the dedication. Because those restrictions were in the buyer s chain of title, he will be put on constructive notice of them. Choice (B) is incorrect. A dedication can be made from a private land holder to the public

9 generally or to a public body. Here, the school board would be a valid public body. Choice (D) is incorrect. The school district first would need to argue that the land was dedicated to them because this would explain why they can enjoin the construction of the pizzeria. To argue that there is an equitable servitude only explains there is a restriction on the land and still does not explain why the school board has an enforceable interest in the land. Because choice (C) explains how the school acquired its interest (through a dedication), it is the strongest choice (C) When a developer subdivides her land into many parcels and some of the deeds contain a certain restriction and others do not, those restrictions may still be binding upon other purchasers, even though their deeds never contained the restriction. The following two requirements, however, must be met: (1) a common development scheme, and (2) notice. In order for there to be a common scheme, there must be a showing that when the project began, there was a common plan in place that all parcels would adhere to the same restrictive covenant. Here, there would be such a showing because the developer restricted the first 60 parcels and then sold the remaining 40 parcels to the builder by a singular deed that included the same mobile-home restriction. Notice may be met by either actual notice, constructive notice, or inquiry notice, whereby the appearance of the properties would put a prospective buyer (such as the man) on notice that the neighborhood was planned to have certain characteristics. Because there was a common development plan in place for the entire subdivision, the woman will prevail even though the man s deed made no mention of the mobile-home restriction. Choice (A) is incorrect. The original deed provision between the developer and the builder prohibiting house trailers and mobile homes to be built or maintained on any lot within the subdivision is an example of a restrictive or negative covenant running with the land. Therefore, the restriction would be enforceable against the man, even though the prohibition was not contained in his deed. In order for a covenant to run with the land, the following four requirements must be met: (1) the covenant must be in writing; (2) the covenant must touch and concern the land; (3) privity of estate must exist between covenantor and covenantee; and (4) there must be intent that the covenant run with the land. Because this covenant did run with the land, this choice is incorrect. Choice (B) is incorrect. When a developer subdivides her land into many parcels and some of the deeds contain a certain restriction and others do not, those restrictions may still be binding upon other purchasers, even though their deeds never contained the restriction. The following two requirements, however, must be met: (1) a common development scheme, and (2) notice. In order for there to be a common scheme, there must be a showing that when the project began, there was a common plan in place that all parcels would adhere to the same restrictive covenant. Here, there would be such a showing because the developer restricted the first 60 parcels and then sold the remaining 40 parcels to the builder by a singular deed that included the same mobile-home restriction. Notice may be met by either actual notice, constructive notice, or inquiry notice, whereby the appearance of the properties would put a prospective buyer (such as the man) on notice that the neighborhood was planned to have certain characteristics. Because there was a common development plan in place for the entire subdivision, the woman will prevail even though the man s deed made no mention of the mobile-home restriction. Because this answer choice states that the woman cannot enforce any restriction because the man s deed was silent, it is incorrect. Choice (D) is incorrect. A common development scheme will be found to exist in the subdivision. In order for there to be a common scheme, there must be a showing that when the project began, there was a common plan in place that all parcels would adhere to the same restrictive covenant. Here, there would be such a showing because the developer restricted the first 60 parcels and then sold the remaining 40 parcels to the builder by a singular deed that included the same mobile-home restriction. Choice (C) is a more complete choice because in presuming that there is a common development scheme, choice (C) states that the restriction would be binding and that the woman would thus prevail (C) The restriction except for residential purposes should be interpreted to prohibit the operation of a beauty parlor in defendant s home. Such commercial activity clearly violates the plan and obvious purpose of the covenant and is prohibited by its terms. Choice (A) is incorrect because the change in character of the surrounding neighborhood would not justify failure to enforce the restriction where the original purpose of the restriction could still be realized. Choice (B) is incorrect because the rezoning to commercial use (in the surrounding neighborhood) would not justify failure to enforce the restriction where the original purpose of the restriction could still be realized. Choice (D) is wrong because the operation of a beauty parlor in defendant s home would constitute a violation of the restrictive covenant so as to justify injunctive relief (B) In order for the burden to run, we need both horizontal and vertical privity. Vertical privity is lacking, so the burden does NOT run. Absent being bound by a covenant that runs with the land, contract liability would be the only thing to hold the librarian liable to the homeowners association for damages. Choice (A) is wrong because the Rule in Spencer s Case provides that an assignee of either the reversion or of the leasehold estate cannot be held liable for breach of covenant if the covenant is of a type that does not touch and concern the land. Because the librarian is a tenant, not an assignee, the Rule in Spencer s Case is inapplicable. A tenant is in privity of estate with her landlord. The librarian is the teacher s tenant, and is thus in privity of estate with him. Therefore, lacking privity of estate is simply not the best argument for the librarian. Thus, answer choice (C) is wrong. Answer choice (D) is incorrect because a plaintiff seeking to enforce an equitable servitude may be denied relief on equitable grounds if the purpose of the servitude in a development scheme is impossible to attain because of changed conditions. In this question, the ability to distinguish between legal and equitable remedies makes it easy to eliminate choice

10 (D); the homeowners association is suing the librarian in an action for money damages (for breach of a covenant), so legal, rather than equitable, remedies are in issue. Because choice (D) presents an argument that is appropriate to refute the enforcement of an equitable servitude, it is misplaced and therefore incorrect. Given that privity of contract is required in order for the burden to run, the librarian s best argument is that he is not in privity of contract with the homeowners association, and never had a contract with the teacher, or any of the other individuals who purchased lots from the housing corporation. For these reasons, choice (B) is correct (B) The provision, which provides for the annual assessment payable to the community association, is enforceable as a covenant running with the land. The effect of such a covenant is that the benefit, burden, or both pass to succeeding holders of the estate of the original covenanting parties. Here, the landscaper is the gardener s successor in interest and would ordinarily be obligated to perform under the contract. However, choice (B) is the best answer because the Declaration of Covenants stipulates that nonpayment of any annual assessment or charge when due shall result in a lien upon the parcel of the property. Thus, the landscaper s best argument is that the landscaper is not personally liable for the payment, because failure to pay simply results in a lien on the parcel. Choice (A) is incorrect. Here, privity of contract between the housing corporation and the community association is not necessary. It is sufficient that the community association is the intended recipient of the annual payments. Choices (C) and (D) are incorrect because the conveyance of the property from the gardener to the landscaper created both privity of estate and privity of contract between the parties (C) Under the collateral document rule, where the developer intends a common scheme for the entire parcel of land, including all of the plots, a land owner whose deed does not contain the restriction may be bound by the restriction if the other deeds of the adjacent properties contain the restriction. The purchaser of a plot whose deed does not contain the restriction is deemed to be on constructive notice of the contents of the deeds of adjacent properties. This notice is, of course, constructive notice. However, the purchaser of a plot does not have to be on actual notice of the restriction to be bound by it. Here, the son has constructive notice (record notice) of the common scheme for the housing development. Therefore, choice (C) is the best answer because the geologist may seek to enforce the restriction against the sale of alcohol on the premises as an equitable servitude. The geologist may obtain an injunction to enforce the restriction, but he is limited to injunctive relief and may not eject the son. Choice (A) is incorrect. Although the conveyance did create a fee simple determinable, which would give the grantor (the psychologist) a possibility of reverter, the geologist need not rely on the provision in the psychologist son deed; he may enforce the restrictions set forth in the Declaration of Covenants. Answer choice (B) is wrong because, despite the fact that the deed was not recorded, the restriction would nevertheless be enforceable because the son would have constructive notice of the restriction. Choice (D) is incorrect. Among the rights attendant to property ownership is the right to freely alienate it. Practically all American states recognize the fee simple determinable.

11 109. (C) The proposal in the subdivision plan and also in the development brochure to set aside a 10-acre tract for the location of a school building would constitute a public dedication offering. Dedication at common law required no particular form and could be made by any method by which the dedicator expressed his intention: by words, conduct, or writing. When acceptance by public adoption is manifested, there arises a conveyance of an easement for such public use, with the fee remaining in the grantor. In the present case, the school district would be entitled to erect a school on the tract, thereby enjoining the buyer s pizzeria. Choice (A) is incorrect. Even though the buyer s deed made no mention of the subdivision, he will nonetheless be charged with constructive notice of the subdivision and the dedication because the deed that the builder received from the investor mentioned the subdivision and the dedication. Because those restrictions were in the buyer s chain of title, he will be put on constructive notice of them. Choice (B) is incorrect. A dedication can be made from a private land holder to the public generally or to a public body. Here, the school board would be a valid public body. Choice (D) is incorrect. The school district first would need to argue that the land was dedicated to them because this would explain why they can enjoin the construction of the pizzeria. To argue that there is an equitable servitude only explains there is a restriction on the land and still does not explain why the school board has an enforceable interest in the land. Because choice (C) explains how the school acquired its interest (through a dedication), it is the strongest choice.