CONVEYANCING
SPRING 2011
Final Examination
Professors Malaguti & Morris
Your Student ID Number:____________________________________
You are not to have a cell phone, or any other device that can transmit
and/or retain information, on your person during this exam. Possession
of a cell phone or such other device shall be treated, and dealt with, as
cheating.
Instructions
This exam consists of five (5) parts:
Part One consists of a short fact pattern followed by 24 questions. The
suggested time is 45 minutes.
Part Two consists of 6 clauses taken from a hypothetical purchase and sale
agreement, and 12 questions concerning drafting choices to make in regard to
the clauses. The suggested time is 30 minutes.
Part Three consists of a set of Closing Instructions and a HUD-1 Settlement
Statement. You are to use the closing instructions to complete the Settlement
Statement. The suggested time is 30 minutes.
Part Four consists of a fact pattern, followed by a brief question and a brief
essay question. The suggested time is 30 minutes.
Part Five consists of a short essay question. The suggested time is 45 minutes.
You have three (3) hours to complete the examination. These are not “brain
dump” questions. You will have sufficient time if you identify and address the
relevant issues while staying away from irrelevant issues.
You are to place all of you answers in this exam booklet, not in a blue book.
The bluebook you receive will be only for use as a scrap book.
This is a closed-book examination; other than writing implements, you are not
to have any materials on your table or at your feet. Please place all books,
knapsacks, briefcases, etc. at the side or front of the room.
GOOD LUCK!
PART ONE
Part One consists of a common fact pattern followed by a number of questions.
You are to answer each of the questions in the space provided below the
question.
Common Fact Pattern
On August 13, 2010, a seller and buyer executed a Purchase & Sale
Agreement (the agreement) for the purchase of a single-family residence located
in a Massachusetts suburb (the residence) for a price of $294,000. The
residence had an attached garage, a shed in the back yard, an asphalt
driveway, a well-maintained lawn and landscaping, and the other
accoutrements customarily accompanying single-family dwellings in
Massachusetts. The agreement, which required that the seller deliver a
“quitclaim deed,” was otherwise silent as to the quality of title that the seller
was required to convey. No provision of the agreement expressly addressed the
issue of zoning. The agreement also was silent in regard to the condition of the
premises at the time the seller was required to deliver the deed. At the time, the
buyer’s only asset was $300,000 held in a savings account. The buyer intended
to use that money to purchase the residence; there was no so-called mortgage
contingency clause in the agreement.
Questions
Q.1.
Assume for the purposes of this question that the agreement
complied with the Statute of Frauds and was binding on the parties.
Considering such facts, as well as the common facts, please check only one (1)
of the following statements which is the most accurate. In order to receive
credit, you must be sure to make it absolutely clear which answer you are
checking.
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□
□
□
The seller has no obligation to deliver a marketable title and has no
obligation to deliver a good record title.
The seller is obligated to deliver both a marketable title and a good record
title.
The seller is obligated to deliver a marketable title, but is not obligated to
deliver a good record title.
The seller is not obligated to deliver a marketable title, but is obligated to
deliver a good record title.
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Q. 2.
In the space provided below, please explain the reasoning (apply
the applicable law to the facts) you employed in checking the particular answer
above.
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Q.3.
Assume again for the purposes of this question that the agreement
complied with the Statute of Frauds and was binding on the parties. But for
this question, the agreement was not silent as to the quality of title that the
seller was required to convey; it said specifically that “said deed shall convey a
good and clear record and marketable title thereto, free from any
encumbrances.” Considering such facts, as well as the common facts, please
check only one (1) of the following statements which is the most accurate. In
order to receive credit, you must be sure to make it absolutely clear which
answer you are checking.
□
□
□
□
The seller has no obligation to deliver a marketable title and has no
obligation to deliver a good record title.
The seller is obligated to deliver both a marketable title and a good record
title.
The seller is obligated to deliver a marketable title, but is not obligated to
deliver a good record title.
The seller is not obligated to deliver a marketable title, but is obligated to
deliver a good record title.
Q. 4.
In the space provided below, please explain the reasoning (apply
the applicable law to the facts) you employed in checking the particular answer
above.
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Q.5.
Assume again for the purposes of this question that the agreement
complied with the Statute of Frauds and was binding on the parties. Also
assume that the clause pertaining to title quoted in Question 3 pertains to this
question. Finally, assume that the shed mentioned in the common fact pattern
straddled a boundary line shared by the seller and a neighbor. The buyer’s
bank caused a “mortgage survey” to be completed prior to the delivery of the
deed, which revealed the fact that the seller’s shed encroached upon the
neighbor’s property. Prior to the closing, the buyer and her bank objected to
the title that the seller proposed to deliver. Considering such facts, as well as
the common facts, please check only one (1) of the following statements which
is the most accurate. In order to receive credit, you must be sure to make it
absolutely clear which answer you are checking.
□
□
□
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The seller’s proffered title does not violate his requirement to deliver a
marketable title and does not violate his requirement to deliver a good
record title.
The seller’s proffered title violates his requirement to deliver a marketable
title and violates his requirement to deliver a good record title.
The seller’s proffered title does not violate his requirement to deliver a
marketable title but does violate his requirement to deliver a good record
title.
The seller’s proffered title violates his requirement to deliver a marketable
title but does not violate his requirement to deliver a good record title.
Q. 6.
In the space provided below, please explain the reasoning (apply
the applicable law to the facts) you employed in checking the particular answer
above.
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Q.7.
Assume again for the purposes of this question that the agreement
complied with the Statute of Frauds and was binding on the parties. Also
assume that the clause pertaining to title quoted in Question 3 pertains to this
question. Finally, assume this time that the shed mentioned in the common
fact pattern did not straddle a boundary line shared by the seller and a
neighbor; instead, it was three (3) feet away from the boundary line and totally
within the seller’s owned premises. The municipality in which the seller lived,
however, had a zoning ordinance pertaining to the district in which the
residence was situated requiring that “all pools, garages, sheds, and other
accessory structures to be at least ten feet (10’) from the nearest boundary.”
The buyer’s bank caused a “mortgage survey” to be completed prior to the
delivery of the deed, which revealed the fact that the seller’s shed, while within
the seller’s boundaries, violated the applicable zoning laws by being within ten
feet of a boundary line. Prior to closing, the buyer and her bank objected to the
title that the seller proposed to deliver. Considering such facts, as well as the
common facts, please check only one (1) of the following statements which is
the most accurate as to real estate located in Massachusetts. In order to
receive credit, you must be sure to make it absolutely clear which answer you
are checking.
□
□
□
The seller’s proffered title does not violate his requirement to deliver a
marketable title and does not violate his requirement to deliver a good
record title.
The seller’s proffered title violates his requirement to deliver a marketable
title and violates his requirement to deliver a good record title.
The seller’s proffered title does not violate his requirement to deliver a
marketable title but does violate his requirement to deliver a good record
title.
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□
The seller’s proffered title violates his requirement to deliver a marketable
title but does not violate his requirement to deliver a good record title.
Q. 8.
In the space provided below, please explain the reasoning (apply
the applicable law to the facts) you employed in checking the particular answer
above.
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Q.9.
Assume all the same facts as stated in Question 7, except that the
real estate was located in a “multistate” jurisdiction rather than in
Massachusetts. Considering such facts, as well as the common facts, please
check only one (1) of the following statements which is the most accurate as to
real estate located in Massachusetts. In order to receive credit, you must be
sure to make it absolutely clear which answer you are checking.
□
□
□
□
The seller’s proffered title does not violate his requirement to deliver a
marketable title and does not violate his requirement to deliver a good
record title.
The seller’s proffered title violates his requirement to deliver a marketable
title and violates his requirement to deliver a good record title.
The seller’s proffered title does not violate his requirement to deliver a
marketable title but does violate his requirement to deliver a good record
title.
The seller’s proffered title violates his requirement to deliver a marketable
title but does not violate his requirement to deliver a good record title.
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Q. 10.
In the space provided below, please explain the reasoning (apply
the applicable law to the facts) you employed in checking the particular answer
above.
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Q. 11.
Assume the same facts you considered in answering Questions 9
and 10, except that the buyer did not raise the zoning issue until after the
closing occurred and the deed was delivered. Would this change your answer to
Question 9?
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□
YES
NO
Q. 12.
In the space provided below, please explain the reasoning (apply
the applicable law to the facts) you employed in checking the particular answer
above.
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Q. 13.
Assume for the purposes of this question that the agreement
complied with the Statute of Frauds and was binding on the parties. Assume
again that the residence was located in Massachusetts. The agreement
contained the following Paragraph:
13. The acceptance of a deed by the BUYER or his nominee as the
case may be, shall be deemed to be a full performance and
discharge of every agreement and obligation herein contained
or expressed, except such as are, by the terms hereof, to be
performed after the delivery of said deed.
For this question, assume that a creditor of the seller obtained and recorded a
real estate attachment on the residence one week prior to the closing. Although
it was recorded properly, the buyer’s attorney did not pick up the attachment
prior to the closing. The parties attended the closing, the deed was recorded,
and the buyer took possession of the residence. A month after the closing the
buyer discovered that the creditor had placed a real estate attachment on the
residence and has brought an action against the seller for breach of the seller’s
obligation to deliver a marketable title. In that law suit,
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□
The buyer will prevail
The seller will prevail
Q. 14.
In the space provided below, please explain the reasoning (apply
the applicable law to the facts) you employed in checking the particular answer
above.
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Q. 15.
Assume again for the purposes of this question that the agreement
complied with the Statute of Frauds and was binding on the parties. Three
weeks prior to the closing the buyer died, and her husband was appointed as
the executor of the estate. The buyer’s husband, on behalf of the estate,
announced that the buyer’s death terminated the agreement and that the
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estate would not complete the transaction. Is the buyer’s husband correct that
the buyer’s estate can rightfully fail to complete the transaction?
□
□
YES
NO
Q. 16.
In the space provided below, please explain the reasoning (apply
the applicable law to the facts) you employed in checking the particular answer
above.
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Q. 17.
Assume the same facts as in Question 15, except that the buyer’s
husband did not attempt to back out of the transaction. At her death, the
buyer had a valid will that left all her personal property to her daughter, an
adult and an only child, and all her real estate to hr husband. The daughter
wants all of the $300,000 to be delivered to her, but the husband wants most
of the $300,000 to be used to complete the transaction for the purchase of the
residence. Upon full administration of the buyer’s estate, will the daughter
obtain all of the $300,000 the buyer had in a savings account at her death?
□
□
YES
Go on to the next page.
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NO
Q. 18.
In the space provided below, please explain the reasoning (apply
the applicable law to the facts) you employed in checking the particular answer
above.
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Q. 19.
Assume the same facts as in Question 15, except that the buyer
did not die three weeks prior to the closing. Instead, a pipe burst as a result of
excessively cold weather. Upon bursting, the formed ice inside the pipe freed,
allowing cold water to gush from the pipe. Because the seller was not at home
at the time, water gushed from the pipe for more than three hours and caused
extensive structural damage in the kitchen and dining room areas of the house.
An insurance adjuster informed the seller that it would pay the seller $18,000
to cover the cost of repairs. The buyer has demanded that the seller either pay
over the $18,000 to allow her to make the repairs or permit her to rescind the
transaction. The seller has refused both options; he intends to collect and
pocket the $18,000, and force the buyer to accept delivery of the deed to the
residence with no reduction in purchase price for the damage. The residence is
located in a jurisdiction that follows multistate law on the matter. Considering
these facts, as well as those contained in the common facts, in an action in
which the seller and buyer have asserted their respective positions as stated in
this Question,
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The buyer will prevail
Go on to the next page.
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The seller will prevail
Q. 20.
In the space provided below, please explain the reasoning (apply
the applicable law to the facts) you employed in checking the particular answer
above.
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Q. 21.
Assume the same facts as in Question 19, except that the
agreement contained the following clause:
Full possession of said premises free of all tenants and occupants,
is to be delivered at the time of the delivery of the deed, said
premises to be then (a) in the same condition as they now are,
reasonable use and wear thereof excepted, and (b) not in violation
of said building and zoning laws. The BUYER shall be entitled
personally to inspect said premises prior to the delivery of the deed
in order to determine whether the condition thereof complies with
the terms of this clause.
Would this change your answer to Question 19?
□
□
YES
Go on to the next page.
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NO
Q. 22.
In the space provided below, please explain the reasoning (apply
the applicable law to the facts) you employed in checking the particular answer
above.
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Q. 23.
Assume the same facts as in Question 19. Ignore the clause added
in Question 21; as stated in the original common facts, the agreement is silent
in regard to the condition of the premises at the time the seller was required to
deliver the deed. However, the residence is located in a jurisdiction that follows
multistate law on the matter. Would this change your answer to Question 19?
□
□
YES
NO
Q. 24.
In the space provided below, please explain the reasoning (apply
the applicable law to the facts) you employed in checking the particular answer
above.
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PART TWO
Part Two provides a number of clauses and/or paragraphs contained in a
standard-form Massachusetts purchase and sale agreement. Following each
clause or paragraph is one or more questions pertaining to the clause or
paragraph. You are to answer each of the questions in the space provided
below the question.
Clause
1.
PARTIES AND
MAILING
ADDRESSES
Owners of Record, of 17 Longarm Road, Stoneham,
MA, hereinafter called the SELLER, agrees to SELL
and Philip Trellis Kelly O’Coughlin, of 426 Elm Street
#213, Stoneham, MA, hereinafter called the BUYER,
agrees to BUY, upon the terms hereinafter set forth,
the following described premises:
Questions
Q. 1.
You represent the BUYER and have received this clause in a draft
purchase and sale agreement delivered by the seller’s attorney. In the space
below, please list all proposed changes you would make, if any. Do not address
the issue of the description of the premises in your answer to this question.
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Q. 2.
In the space provided below, please explain your reasoning in
proposing the changes you listed above.
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Clause
2.
DESCRIPTION
A one (1) acre lot taken from the five (5) acre parcel
known and numbered as 17 Longarm Road,
Stoneham, MA 02180, said one (1) acre lot being
located within the western half of SELLER’s parcel,
which one (1) acre lot will be specifically designated
prior to the closing on a plan of land currently being
prepared by SELLER’s registered professional
engineer. The five (5) acre parcel is specifically
described in Middlesex South Registry of Deeds in
Book: 29641 Page 439.
Questions
Q. 3.
You represent the BUYER and have received this clause in a draft
purchase and sale agreement delivered by the seller’s attorney. In the space
below, please list all proposed changes you would make, if any.
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Q. 4.
In the space provided below, please explain your reasoning in
proposing the changes you listed above.
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Clause
4
TITLE DEED
Said premises are to be conveyed by a good and
sufficient quitclaim deed running to the BUYER, or to
the nominee designated by the BUYER by written
notice to the SELLER at least seven (7) days before the
deed is to be delivered as herein provided, and said
deed shall convey a good and clear record and
marketable title thereto, free from any encumbrances,
except
(a) Provisions of existing building and zoning laws;
(b) Existing rights and obligations in party walls
which are not the subject of written agreement;
(c) Such taxes for the then current year as are not
due and payable on the date of the delivery of
such deed;
(d) Any liens for municipal betterments assessed
after the date of this agreement;
(e) Easements, restrictions and reservations of
record;
* (f) None.
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Questions
Q. 5.
You represent the BUYER and have received this clause in a draft
purchase and sale agreement delivered by the seller’s attorney. In the space
below, please list all proposed changes you would make, if any.
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Q. 6.
In the space provided below, please explain your reasoning in
proposing the changes you listed above.
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Clause
14. USE OF MONEY
TO CLEAR TITLE
To enable the SELLER to make conveyance as herein
provided, the SELLER may, at the time of delivery of
the deed, use the purchase money or any portion
thereof to clear the title of any or all encumbrances or
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interests, provided that all instruments so procured
are recorded simultaneously with said deed.
Questions
Q. 7.
You represent the SELLER and have received this clause in a draft
purchase and sale agreement delivered by the real estate broker. In the space
below, please list all proposed changes you would make, if any.
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Q. 8.
In the space provided below, please explain your reasoning in
proposing the changes you listed above.
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Clause
8.
TIME FOR
PERFORMANCE;
DELIVERY OF
DEED
Such deed is to be delivered on the 11th day of May,
2011, at the Middlesex South Registry of Deeds.
Questions
Q. 9.
You represent the SELLER and have received this clause in a draft
purchase and sale agreement delivered by the real estate broker. In the space
below, please list all proposed changes you would make, if any.
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Q. 10.
In the space provided below, please explain your reasoning in
proposing the changes you listed above.
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Clause
Please consider the following two clauses together:
6.
PURCHASE
PRICE
21. BUYER’s
DEFAULT;
DAMAGES
The agreed purchase price for said premises is
$294,00.00 (Two Hundred Ninety Four Thousand and
00/100 Dollars, of which
$ 146,000.00
has been paid as a deposit this day
$
1,000.00
have been paid as deposit with the
Offer to Purchase
$ 147,000.00
is to be paid at the time of delivery
of the deed by certified, cashier’s,
check(s) or attorney’s IOLTA check
drawn on a Massachusetts bank
$ 294,000.00
TOTAL
If the BUYER shall fail to fulfill the BUYER’s
agreements herein, all deposits made hereunder by the
BUYER shall be retained by the SELLER as liquidated
damages and this shall be the Sellers’ sole and
exclusive legal or equitable remedy.
Questions
Q. 11.
You represent the BUYER and have received these clauses in a
draft purchase and sale agreement delivered by the seller’s attorney. In the
space below, please list all proposed changes you would make, if any.
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Q. 12.
In the space provided below, please explain your reasoning in
proposing the changes you listed above.
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PART THREE
Passed out as a separate document (Addendum A) is a set of Lender’s Closing
Instructions sent to you, the Settlement Agent closing a loan. Please note that
the loan fees, charges, reserves and payoffs are set forth at the end of the
closing instructions. Using the information provided in the Lender’s Closing
Instructions, please complete the first two pages of the following HUD-1
Settlement statement to the best of your ability:
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PART FOUR – SHORT ESSAY
Part Four consists of a fact pattern followed by a short question and short
essay. You are to answer each of the questions in the space provided below the
question.
Fact Pattern
An owner of a vacant lot, in fee simple absolute conveyed it in 1995 by
quitclaim deed to his girlfriend in consideration of “love and affection.”
In 2006, the owner sold the vacant lot to a buyer for $525,000, by a special
warranty deed that included the covenant of seisin, the covenant of quiet
enjoyment, and the covenant of further assurances.
In 2007, the buyer sold the vacant lot to an investor by a special warranty deed
that included the covenant of seisin, the covenant of quiet enjoyment, and the
covenant of further assurances.
In 2009, the owner and the girlfriend ended their relationship and the girlfriend
took possession of the vacant lot and commenced building a residence. The
investor has sued the buyer and the owner for breaches of deed covenants.
Questions
Q. 1.
In his law suit, the investor will:
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prevail against the buyer only
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prevail against the owner only
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prevail against both the buyer and owner
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prevail against neither the buyer nor the owner
Go on to the next page.
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Q. 2.
In the space provided below, please apply the facts to the law to
justify your answer to the previous question.
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PART FIVE – SHORT ESSAY
Part Five consists of a short essay.
Essay Question
A owner of a dairy farm borrowed $100,000 from a cooperative bank and gave
the cooperative bank a promissory note secured by a mortgage on the farm that
she owned. The cooperative bank promptly and properly recorded the
mortgage, which contained a “due-on-sale” clause. A few years later, the farmer
borrowed $25,000 from a national bank and gave it a promissory note secured
by a mortgage on her farm. The national bank promptly and properly recorded
the mortgage.
Subsequently, the farmer defaulted on her obligation to the cooperative bank,
which then accelerated the debt and conducted foreclosure proceedings. The
national bank received notice of the foreclosure sale but did not send a
representative to the sale. At the foreclosure sale, a buyer who was not acting
in collusion with the farmer, outbid all other bidders and received a foreclosure
deed to the farm.
Several months later, the farmer repurchased her farm from the buyer, who
executed a warranty deed transferring the farm to her. After the farmer
promptly and properly recorded that deed, the national bank commenced
foreclosure proceedings on the farm and simultaneously brought a breach of
contract action on the promissory note. The farmer has brought a legal action
seeking to enjoin the national bank’s foreclosure and seeking a declaratory
judgment that the mortgage is no longer in existence. In addition, the farmer
seeks a dismissal on the national bank’s count for breach of contract on the
note.
Please discuss the rights, duties and liabilities of the parties.
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END OF EXAM
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