PROPERTY II
Final Examination
Spring 1985

Question II,(Suggested Time: 1 hr.)

In 1900, Adam and Benjamin were owners of. adjoining property along El Camino Real in what is now Laguna Hills. Adam owned the north 20 acres and Benjamin owned the south 20 acres - both properties were unimproved. In 1940, Adam sold his acreage to Benjamin for $20,000 by a warranty deed and in 1941, Benjamin drew up a set of plans for the entire property: envisioning a man-made lake and individual houses bordering the lake - all for the exclusive use of persons in their golden years (60 years and older). Benjamin pictured a utopia on that 40 acres for those who think young - neat houses bordered by white picket fences, silver-haired ladies and gentlemen riding their golf carts to visit their neighbors, etc.. He, therefore, divided the property into 20 homesites and went about selling the first 10 as Phase One, Leisure Estates.

Lots 1 thru 10 were sold by warranty deeds for $30,000 apiece in 1950 to ten couples all over 60 years of age. Each deed contained the following language: "The grantee of this property, for himself and his heirs and assigns, hereby warrants that he will keep his yard and curtilage maintained in a proper condition; that he will keep his house painted in an appropriate manner; that he will use his property for residential use only".

Lots 11 thru 20 were planned as Phase Two and were put on the market in 1957 for $60,000. All lots except numbers 19 and 20 were sold by deeds containing the same language quoted above. Those last two lots were located on the outside northwest edges of the tract and abutted vacant larid across a public road to the north. Finally, in 1963, after some difficulty, those last two lots.were also sold - also for $60,000 apiece, but without the above quoted restrictions. In fact, from this date forward, none of the deeds to these or other lots by anyone at any time contained any restrictions whatsoever.

In 1969, the owner of Lot 3 started repairing lawnmowers in his garage for money. In 1971, the owner of Lot 1 sold his property to a thirtyyear old couple. In 1974, the owner of Lot 11 started a telephone: soliciting business operating out of her-kitchen and using her home phone. Also in 1974, pursuant to a relaxation of the zoning codes in this area, the vacant land across the northern boundary of Leisure Estates was developed into a major multi-million dollar hospital and medical complex which stretched for thirty acres around the north and west sides of Leisure Estates. In 1984, the present owners of Lot 19 (who had bought the property from the original 1963 owners) sought to replace their residence with a florist-and gift shop - strategically located directly across from the main hospital entrance.

There were no objections to any of these developments until 1985, when the original owners of Lot 4 sold their property to Laura, a 67-year old lawyer from Western State University and her husband. They have come to you as a recently admitted member of the California Bar and WSU colleague and would like your impartial legal opinion on this question:

Will they be successful in their lawsuit to enforce the restrictions in their predecessors' 1950 deed against the new owners of Lot 19 - why or why not?