Real Property Law. Professor Parkinson
Spring 2005 Final Examination Question 1
One Hour
The real estate market was soft and Sam couldn’t sell his old farm house for enough to pay the loan against the property. Sam found Robert the renter to lease his house. As an incentive to Robert, he gave him a written two year lease which also gave Robert the right to buy the house for $350,000 at any time during the term of the lease.
The property was a country property with access via a gravel road over the adjacent property to the City Street.
About a year later Dave, a big time developer, bought the farm acreage which surrounded Sam’s property. Before he bought the farm property, Dave entered into an agreement with Sam to the legal effect that Sam would sell his house to Dave for $350,000, if Dave was successful in acquiring the acreage and getting it rezoned for a shopping center.
The City agreed to rezone the acreage, but didn’t rezone Sam’s property because Robert opposed rezoning the house and it’s lot. Dave wasn’t very happy about the failure to change the zoning on Sam’s property but bought Sam’s house anyway. The city is encouraging Dave to develop the shopping center because it wants the sales tax revenue, and they are possibly willing to provide financial incentives to get a shopping center developed.
Robert, along with his rent check, just sent a written demand to Dave for $500,000 to release Robert’s interest in the property and to the driveway to the property.
Another developer is looking at developing another shopping center on the other side of town. The City says they will approve whichever one is ready to go first, but not both.
Dave contacts you. He got title insurance. He isn’t sure what kind of deed he received from Sam. The title company rechecked the records at his request and advises there is no easement or any other problem with the title and it appears the Title Insurance Policy correctly lists any exceptions to title of record. He feels like he is being blackmailed by Robert. Sam has apparently moved and cannot be located.
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On his way to the lawyer’s office to discuss these items and what to do, Dave passed the property and saw a “For Sale by Owner” sign in the driveway. He tore it down. Sam is nowhere to be found and apparently does not know of any problems. Robert thinks he has rights but has not yet consulted a lawyer.
Discuss the legal rights and obligations of each of the parties.
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