1. You have two (2) hours and fifteen (15) minutes to complete all questions. You may allocate your time as you see appropriate.
2. This exam is closed book. No materials of any kind are allowed.
3. There are two essay questions and two bonus multiple choice questions. Each essay question is worth 50 points. The multiple choice questions are worth 2 points each.
4. Please write your answers in the blue book(s) provided to you. If you are handwriting, make sure to write on every other line and on one side of each page. Please write legibly. Answer the multiple choice questions in the bluebook.
5. Your answer should demonstrate your understanding of the law as applied to the facts presented.
6. Write your exam number on your exam envelope and on all used blue books. Do not use your name, student ID number or Social Security number on any exam materials.
7. At the conclusion of the exam, return all exam materials to the exam envelope and submit it to the proctor. Failure to return all exam materials to the exam envelope may result in your exam not being graded.
GOOD LUCK!!! HAPPY HOLIDAYS!!!
Question One – 50 Points
After Aurelia inherits a house on Sunrise Street from her grandmother, she decides
to attend law school. Aurelia borrows $25,000 from her friend Bruno to help
with her first year expenses. Aurelia executes a promissory note and mortgage
in favor of Bruno. Bruno does not record the mortgage. At the end of her first
year, Aurelia borrows another $25,000 from Cramer to pay for her second year
of law school. Aurelia tells Cramer that she still owes a balance of $20,000
on the first promissory note to Bruno. Aurelia provides Cramer with an appraisal
of the Sunrise Street property, estimating its fair market value at $300,000.
Cramer records his mortgage.
In her final year of law school, Aurelia borrowed an additional $25,000 from Druza for her final tuition fees and graduation costs. Aurelia executes a promissory note and mortgage in favor of Druza who fails to record.
After graduating from law school, Aurelia decides to sell all of her property and live in Alaska in a yurt (a kind of tent). Aurelia sells the Sunrise Street property to Frances for $200,000, and delivers a general warranty deed to her. Frances retains the purchase and sales contract but misplaces the deed and fails to record it. Frances purchases title insurance from Guaranty Title Insurance Company (“GTI”).
One year later, Aurelia defaults on all of the promissory notes. When Cramer attempts to foreclose on the property, he discovers that Aurelia’s grandmother never owned the property.
What are the rights and remedies of the parties?
Question Two – 50 Points
Gunther purchased two homes in a newly constructed residential development.
He intended to live in the Luna Court property as his primary residence and
use the Jupiter Street property as rental property. Soon after moving in, Gunther
began to suffer from headaches and nausea. Other residents, including Gunther’s
tenant Tina, also suffered similar symptoms. The local media suggested that
the symptoms were caused by a chemical known as hexyl trichloride which had
been used to weatherproof the exterior of the homes in the development. Gunther
believed that this chemical was the cause of his suffering.
Gunther decides to sell both properties and enters into an exclusive right to sell listing with Brody, a real estate broker. Brody is too busy to look at either property and simply asks Gunther, “Is there anything about the property that I need to know about? What about that hexyl problem? Do you have any problems?” Gunther replies, “Nothing like that.”
The following week, Brody shows the rental property to Stasha. Tina the tenant, tells them both about her headaches and nausea. Stasha says she does not care about the hexyl problem because she plans to rent the property out to tenants.
Brody tells Stasha that Gunther is also selling his primary residence and that Gunther has not had any problems from hexyl trichloride because it was not used on that property. Although Brody was aware of water stains on the kitchen ceiling he says nothing about them to Stasha. Stasha agrees to purchase both properties and signs a purchase and sales contract. Gunther still owes a mortgage of $100,000 on the property to First Bank.
Before the close of escrow on the rental property, Tina’s party guests accidentally tip over her barbeque and the resulting fire destroys the house. Neither Tina nor Gunther have any applicable insurance coverage. Stasha refuses to close escrow on the Jupiter Street property.
Gunther’s attorney, Appelman is handling the escrow for the sale of the Luna Court property. After Stasha deposits $200,000 for the transaction, Appelman steals the money without paying Gunther’s mortgage debt of $100,000. After a heavy rain storm, the roof at Luna Court completely collapses and causes extensive water damage. Stasha also develops serious brain damage as a result of her exposure to hexyl trichloride.