PropertyCarboneF95 Midterm Answers

							                                SANTA CLARA UNIVERSITY
                                    SCHOOL OF LAW

PROPERTY 104                                                                1995-96
PROFESSOR CARBONE                                                           EXAM REVIEW

                            MID-TERM EXAM REVIEW OR
                      CARBONE'S GUIDE TO SUCCESS IN PROPERTY

GENERAL COMMENTS

        1. The mid-term is one-third of the final grade, so there should be a good chance to
increase your grades. The final exam will test only material from the second semester, although
I expect you to be able to identify property interests from the first semester. [E.g., you should
be able to recognize the difference between a joint tenancy and a joint life estate followed by a
contingent remainder, but you do not need to know whether the contingent remainder violates
the Rule against Perpetuities.]
        The final is likely to be most like the landlord-tenant question from the mid-term.

        2. In reading your exam, take each issue one at a time. First, reread the question and my
answer. Then, read your answer and my comments (if any). Try to focus on what you did
right, and ask yourself why -- did you study that section differently, did you approach the
question differently, etc. Then, compare it to a weaker part of the exam. If you can see the
differences, and can focus on how to make sure more of the exam looks like the best part of your
mid-term, the final grade will be higher.

        3. Everyone can improve by learning to spot additional issues and getting more credit for
the issues you do see. Always discuss issues in the alternative. For example, even though I
thought the transfer to Terry was more likely a sublease than an assignment, I gave full credit to
those who fully addressed the counterargument.

                                PART II     ESSAY QUESTIONS

                                        QUESTION II. A

       The most effective approach was to break the question
down into a series of issues, and address each issue separately. A good way to review your
exam is to note, first, how many subissues you spotted. For example, most students discussed
the IWH, but not everyone addressed all the subissues that were necessary for a complete
answer. Second, consider whether you fully developed the answer to the issues you discussed.
An "A" answer discussed approximately two-thirds of the material presented below, a "C" about
40%.

1. Is the building residential or commercial?

       At the time the original lease was created, the entire property was being used for




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residential purposes and there is no indication that Leary was aware of any plans to convert the
garage to office space. Therefore, as a contractual matter, the lease should be treated as
residential, and purely contractual determinations (e.g., interpretation of the provision re:
transfer) should probably be treated as residential. For regulatory purposes, (e.g., determination
of the applicable building codes) however, actual use would be more important, and actual use
might influence determinations of whether the IWH was violated. E.g., if the garage is not used
for habitation, problems limited to the garage space are unlikely to affect habitability.

2. Does the IWH apply?

        The IWH is implied in all residential leases and therefore applies to this lease. The two
questions that arise are: 1) Does the IWH cease to apply to the garage when it is converted to
commercial use or does it continue to apply to the building as a whole and 2) has it been waived?
        With respect to the garage, I gave credit depending on how well developed the answer
was. Answers that assumed it was commercial got less credit than answers that considered
alternative ways of looking at the issue. I thought the best answer was one that treated the
premises as a single residential unit, and then considered whether the damage to the garage
interfered with the habitability of the premises as a whole.

3. Waiver of the IWH

        This involved a series of issues:
a) Did the provision re: maintenance and repairs act as a waiver of the IWH? Maybe. The
clause might be interpreted to extend only to repair and maintenance, and not to major problems
that affected habitability in which case it would not be a waiver. I accepted any answer, but
students who saw it as an issue, rather than assuming waiver, received the most credit.
b) Are waivers permissible? This is an open question in the jurisdiction and therefore a
discussion of the policy issues pro and con was appropriate.
c) If waivers are generally prohibited, might this one be permitted? To the extent that the tenant
undertook responsibility for alterations, including conversion to commercial use, and to the
extent that there was equal bargaining power between the parties, maybe, although the waiver
might be limited to the garage and the area of commercial use.
d) Was the waiver applicable only to Serra and Clara and not Terry? Appears so, but the
consequences might be that C and S remained responsible to L and T for repairs and
maintenance even after they left. L would accordingly be unable to charge Terry with
responsibility for repairs (but could deduct the money from the security deposit) and T would
have to look to C and S, not L, to make repairs to the extent that L was not otherwise charged
with responsibility because of the IWH. This issue was subtle and complex, and I gave
substantial credit to anyone who raised it.

4. To the extent that the repair clause is invalid, is there a violation of the IWH?

A number of students assumed the answer was yes, but that conclusion was not automatic. The
best answer argued that interference with use of the garage in itself would not violate the IWH,
but to the extent that the continuing risk of mudslides posed a safety issue, the mudslide damage
compromised the building structural integrity or created sanitation problems, or to the extent the




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mudslide interfered with entrance to the building, the IWH was implicated. The key was to
explain and not assume.

5. To the extent that the repair clause is not treated as an impermissible waiver of the IWH, can it
be used to compel tenants to assume responsibility for the mudslide?

a) If tenants are responsible for repairs, L can probably evict for non-payment of rent and retain
security deposit and/or seek damages from C and S.
b) There was a substantial argument that repair and maintenance does not extend to
responsibility for damage due to a major external force, or, that to the extent it does, it is limited
to cleaning up the immediate mess, and does not include structural changes either to the building
or the hillside. If this is true, L may still be able to evict for non-payment of rent (assuming no
violation of IWH), but could not collect damages for failure to repair.

6. To the extent that the garage was considered commercial space, was there a violation of the
Covenant of Quiet Enjoyment?

a) Could the landlord be deemed responsible for the mudslide? You should have noted, first,
that the landslide itself was beyond the LL's control, and, second, that C and S had assumed
responsibility for repairs. You could nonetheless have noted the arguments above re: the
likelihood that the courts might interpret the repair clause narrowly.
b) Could T assert the CQE? The mudslide was substantial only if 1) you treated the garage as
separate from the residence (which I found highly questionable) or 2) you thought the mudslide
affected the building as a whole (which I found more likely). If so, then the question arises of
whether T has to leave. Yes, unless the jurisdiction recognizes partial constructive eviction (a
minority rule).

7. Was the lease frustrated by the mudslide?

The mudslide could be termed an unforeseeable act of God that rendered the premises unusable
for the purposes for which they were originally intended. Key problems with this argument: 1)
the leasehold interest (i.e., use of the entire premises) was not rendered impracticable by the
mudslide; only the garage was affected. To the extent you argued that the mudslide frustrated
the tenant's plans to use the garage as an office, this would be insufficient to frustrate the lease as
a whole. To prevail on impracticability, T needed to argue that the entire purpose of the lease
had been frustrated, not just part of it. 2) The repair clause arguably placed the burden of such
unforeseen events on the tenants. It certainly placed responsibility for the decision to use the
garage as an office squarely on the tenants.

8. Was the transfer to Terry an assignment or a sublease?

        C and S retained the ability to renew the lease for an additional five year term, setting up
a strong argument for a sublease. The counterargument was that an examination of their actions
would indicate an intent not to exercise the option. I thought that the argument in favor of the
sublease was stronger, given the tendency of the courts in this area to rely on form, but I gave
credit for both answers so long as the counterarguments were developed.




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        If a sublease, L could recover back rent only from C and S, which might be difficult
given their departure from the area.

9. Transfer to Twila

         The original lease permitted the transfer to T w/o L's consent. The sublease conditioned
subsequent transfers on L's consent, and permitted him to withhold consent for any reason
whatsoever. The clause in the sublease was almost certainly valid because 1) it was explicit; 2)
such a rule would ordinarily be implied in residential leases anyway (and as noted above this is
likely to be construed as residential for contract purposes); and, 3) even in a jurisdiction with a
different default rule, the contract is likely to be upheld. The subtle issue buried here is that the
restriction is contained in an agreement between C and S and T; L is not a party. He can
therefore enforce it only if the jurisdiction recognized third-party beneficiary theory.

10. Waste/Security Deposit/Future Rent

        I asked about the security deposit (which I assumed to be the original payment from C
and S; they may have collected a second deposit from T to offset their original payment, but if
so, it was irrelevant to the answer) to trigger a discussion of waste. There were 4 issues: 1) can
L keep security deposit to pay for C and S's failure to repair? Yes, if the failure to repair was
enforceable in accordance with the discussion above. 2) Can L keep deposit to pay for
restoration of the office to a garage? Maybe. This gets into the question of whether restoration
is separate from the damage from the mudslide (probably not), and whether the office raised or
lowered the value of the property. 3) Failure to take steps to prevent further damage from the
mudslide. This is a classic waste issue and should have been discussed separately from the
question of repair. 4) Future rent -- the landlord could also have claimed rent due for the
remainder of the lease, triggering issues about eviction, mitigation, etc.

11. Can the LL retake possession of the premises?

       Yes, unless one of the defenses mentioned above applies. Given the way the question
was worded and the fact that this is new jurisdiction with no law, it was worth raising the
question of whether the LL had to resort to judicial process or could self-help. The best answer
was to advice the LL that the law was unknowable in the absence of a judicial ruling, but that the
most prudent course was to proceed with an eviction.

                                       QUESTION II. B

                                 Case 1 - Van Valkenburgh v. Lutz

OVERVIEW

       Historically, adverse possession served to encourage people to use land productively.
Accordingly, the mental intent requirement in the original Lutz decision arguably served to
reward those who took over unused land and made it their own, while still seeking to discourage
inadvertent changes in title. Adverse possession would have thus rewarded those who sought to




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claim unused land, without encouraging the careless who mistaken encroached on another's land.
Pro (i.e., for overruling Van Valkenburgh v. Lutz)

         Whatever purpose this requirement originally served, it serves no useful purpose today.
First, in most jurisdictions, and particularly in New York and California, there is no public
interest in encouraging either land grabs or development of un
used land. 1) Land is too valuable; 2) unused land serves a public purpose in its undeveloped
state; and, 3) security in land titles outweighs any potential gains in productivity.
         Second, the requirement encourages litigation because it is so hard to prove or disprove,
and perjury, especially since it runs so contrary to popular expectations about appropriate
behavior.
         Third, the rule encourages behavior that public opinion would deem dishonest --
intentionally taking land one knows one doesn't own, while precluding success on the basis of
good faith acts that public opinion would deem blameless -- e.g., innocent mistakes re:
boundaries.

Con (i.e., against overruling Van Valkenburgh)

        1) The historical reasons continue to hold. There is no more interest today than there
ever was in encouraging carelessness about boundary lines. Negligent possessions (e.g.,
possession resulting from failures to check existing boundaries carefully) should not be
rewarded. See, e.g., Bryant v. Blevins. Particularly at a time when land is valuable, and
transfers in title are to be discouraged, the mental intent requirement usefully serves to deny
adverse possession to all but a few possessors -- viz., those who intentionally claim idle land
seeking to make it their own.
        2) Relaxing the mental intent requirement might well encourage more litigation as
adverse possession would become easier to establish and rigorous cross examination should
expose perjury.

GRADES

        The secret to doing well on this question involved thoroughly developing the different
parts of the answer. First, you were at a distinct disadvantage if you did not present a
counterargument. Second, there were two types of arguments to develop: a policy argument
about how mental intent fits in with the purposes of adverse possession, and a practical
arguments about the difficulties of judging mental intent and the potential for encouraging
perjury. You could develop these arguments in a number of different ways, but you lost credit if
you did not mention both types of arguments. Third, the question asked for a discussion of the
pros and cons, and then a recommendation.
        The best answers developed a argument for, then presented an argument against, then
responded to the counterargument, and gave a conclusion. Weaker papers presented a argument
for, a weak or non-existent argument against, and then repeated the argument for in the
conclusion. Example:
Argument for overturning Lutz:

       There is no public interest in encouraging aggressive trespassers to claim land that they




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       know is not theirs, while penalizing good faith possession based on a mistake re:
       boundary lines.

Argument against:

       To the extent that there is any public purpose to be served by adverse possession, it is to
       encourage the more productive use of unused land. There is no point in encouraging
       landowners to be careless about boundary lines; they should carefully check the boundary
       or seek their neighbor's consent before building new structures. Adverse possession is
       intended to deal with cases where initial title is clear, not to excuse negligence that arises
       from a failure to check the record. Therefore it is appropriate to limit it to cases where
       the possessor intends to claim land she knows she doesn't own (or where the mistake
       arises from the record itself as in color of title problems).

Conclusion:

       The true distinction is between boundary disputes and claims to larger parcels of land.
       With respect to the latter, the distinction between those who know they don't own the
       land and intend to claim it anyway, and those who either mistakenly believe they have a
       claim to the land, or who admit that they would relinquish title to someone with a serious
       claim is meaningless. Mental intent is hard to determine, testimony may well depend
       more on knowledge of the law and effective lawyering than actual intent, and the
       incentive to lie will always cloud determination of the issue. I therefore recommend
       changing the mental intent requirement to an objective one, but reserving judgment on
       the question of whether a boundary encroachment (e.g., the garage in VV v. L) is open
       and notorious where the true boundary cannot be determined without reference to the
       record.

In this example, the argument for, the counterargument, and the conclusion all add to the level of
discussion; they do not merely present mirror images of each other. In grading this, I would
therefore give separate credit for each part of the discussion. The more typical student response,
however, went like this:

Argument for overturning Lutz:

       There is no public interest in encouraging aggressive trespassers to claim land that they
       know is not theirs, while penalizing good faith possession based on a mistake re:
       boundary lines.

Argument against:

       The requirement of a claim of right requires an intent to make the land one's own, and
       encourages more productive use of the land.

Conclusion:




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       In the modern era, there is no public interest in encouraging aggressive trespassers to
       claim land that they know is not theirs, and an objective test would better encourage
       productive use of the land.

In this example, the counterargument is weak, and the conclusion responds by largely repeating
the initial argument, and therefore is worth little additional credit. (In addition, the reasons each
rule might encourage more productive use of land are not explained). The point of using
counterargument is to add to the depth and subtly of the argument.

                                     Case 2 - Bryant v. Blevins

OVERVIEW

        The case sets out the arguments fairly well. I therefore graded the answers on how well
you set out the arguments and evaluated them in making a recommendation. To summarize the
main points:

Argument Against Overturning Decision

       There were two key arguments:

                1) The importance of land title records. In the modern era, subsequent purchases
and mortgagees (i.e., banks) rely heavily on the title record system. Landowners should be
encouraged to check the records before building fences, and the records themselves should be
kept as free as possible from extrinsic factors.

                2) Land records constitute a "bright line" system that is readily ascertainable in
litigation, and with modern surveying techniques, relatively easy to administer.

Argument for Overturning Decision

               1) The case overlooks the importance of encouraging neighbors to resolve
disputes on their own, and of honoring the expectations of landowners who are more likely to
rely on the physical appearance of land than on a title search.

                2) Surveying is expensive, and uncertain. It is unrealistic and unfair to require
owners to conduct a survey every time they wish to build a fence. Moreover, litigation will
involve a battle between surveyors who may reach different results.

Conclusion

       The conclusion should have addressed: 1) your assumptions about the accuracy of
surveys and 2) the relative importance in the modern era of encouraging agreement between
neighbors versus the importance of reliance on land title records, particularly by third parties,
such as subsequent purchasers.




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