Property Exam - Winter 2003 - Whitman

Question 1 (50 minutes estimated time). Justin owned a small retail store building in the State of Anxiety. In the latter part of 2000 he negotiated a lease of the building to Heather, who planned to operate a “scrapbook” store there. Justin and Heather executed a written lease which provided in relevant part as follows:

“Heather has the right to possession for two years, from January 1, 2001 to December 31, 2002 at a rent of $12,000 per year payable at $1000 per month on the first of each month. Heather shall not assign the lease without Justin’s prior written consent.”

Heather took possession and opened her store. She did not close the store or vacate the premises on December 31, 2002, but instead remained open and sent Justin another check for $1,000 rent, which Justin’s secretary deposited in Justin’s account.

In mid-January 2003 Justin was contacted by Carrie, who had heard that the building might be coming vacant. Carrie offered to rent it for $1,500 per month, provided that she could get possession by March 1, 2003. Justin was naturally eager to enter into a lease with Carrie for the higher rental, but they entered into no specific agreement at that time. On January 25, 2003 Justin sent Heather a letter stating in relevant part:

Your lease has already terminated, effective December 31, 2002 according to its terms. However, I wish to be understanding, so I am willing to allow you to remain in possession under February 28, 2003, provided that you pay the rent promptly for February. You are hereby on notice that you absolutely must vacate the premises by February 28.

Heather’s business was not doing very well, but she considered the $1,000 rent highly advantageous. When she received Justin’s letter, she telephoned him and said, “I’m not moving out until the end of the year, and you don’t have any right to make me move before that time.” Heather then contacted Carrie (who had come into the building to look around) and entered into the following agreement with her:

SUBLEASE. Heather hereby subleases the premises [described] to Carrie, commencing on March 1, 2003 and running to the end of the calendar year 2003. Rent shall be $1,300 per month.”

Heather was rather pleased with herself. She believed that she had just “unloaded” a store that was making very little profit, and had also assured herself of earning $3,000 during the remainder of the year on account of the difference between the rent she would receive from Carrie and the rent she would have to pay Justin. Heather moved out and Carrie took possession of the building on March 1, opening a fabric store on the premises and paying $1,300 rent for March to Heather. Heather and Carrie have both made their respective rental payments for April and May as well.

When Justin learned what Heather and Carrie had done, he was incensed! He has consulted you today, asking what his rights are against Heather and Carrie. He would like to remove Carrie from possession unless she is willing to immediately begin paying him $1,500 per month. He would also like to hold both Heather and Carrie responsible for any loss he suffers as a result of not receiving $1,500 per month in rent, commencing March 1, 2003. Please write a memo to Justin explaining his legal position, discussing all relevant legal issues.

Question 2 (60 minutes estimated time). Fred owned a vacant lot about 1 acre in size on Strain Street in an industrial area of the State of Anxiety. He was approached in January 1998 by Andrea, who was purchasing a parcel that abutted Fred’s on the rear (that is, away from the street). The property Andrea was purchasing was not land-locked, but she planned to construct a furniture factory there and felt that it would be good for her to have panel truck access to the rear of the factory, where its loading dock would be built. Andrea therefore negotiated and signed the following agreement with Fred:

February 1, 1998. Fred hereby grants to Andrea an easement of access, 20 feet in width, over the portion of Fred’s [described] vacant lot, the easement to be located as shown on the plan drawn below. Fred and Andrea agree that each of them will pay one-half of the cost of paving the easement five years from now. [Signatures added here]

The agreement was immediately and properly recorded in the public records. Fred agreed to pay half of the paving cost because he himself expected to use part of the easement for his own vehicles when he developed his lot. However, he has not yet done so.

After the agreement was signed, Andrea did not build the factory, much to Fred’s surprise. Instead, she resold her land to Igor. Her deed to Igor did not mention the 1998 agreement. Igor proceeded to build a factory that made heavy boilers. In 2000 Igor began using the easement, not for the sort of moderate-sized panel trucks that would be needed to transport furniture, but for 18-wheel tractor-trailers, which were much heavier. Soon the easement was a heavily-rutted ocean of mud.

Fred put up with this mess until January 2003. Then he demanded that Igor pay for half of the cost of paving the easement, as provided in the 1988 agreement. Igor refused to pay anything, remarking, “I never promised to give any money for your stupid roadway. In fact, I never even heard of any such promise.”

Fred has now consulted you, asking whether he can sue Igor and (1) recover the damages that have resulted from the harm to Fred’s land caused by Igor’s heavy trucks; (2) get the court to declare that Igor has no right to use the easement; or (3) recover the money that he believes Igor owes for one-half of the cost of paving the easement. Please write a memo to Fred, advising him of his rights in these respects, and discussing all relevant issues. (Please deal only with the questions Fred has asked, not with other questions that you think he might have wanted to ask.)