New York University School of Law Property, Section IV Professor Hulsebosch 2 May 2005

Final Examination Four Hours

1) This exam has three (III) parts and nine (9) pages, including this instruction page. 2) The exam is closed book. It is a three hour exam, but you have four hours to take it. Use the extra time to read the exam and outline your answers on scrap paper. You cannot type during the first hour. The proctors are instructed to enforce this instruction. But isnt personal honor is the best enforcement mechanism? (This question is not part of the exam.) [NB: In 2006 you will have four hours without the reading/writing restriction.] 3) Write all your answers on your answer sheet, not on the exam itself. 4) Part I is worth 60%, Part II is worth 20%, and Part III is worth 20%. 5) Label each answer, and sections or sub-parts of each answer, clearly. 6) If you require additional information for your answers to parts I and II, explain what information you believe is missing and why it is necessary. Avoid digressions. 7) Other students in this course might take the exam at another time. Therefore, you should not discuss the exam in the presence of those who have not yet taken it. 8) Enjoy the summer.

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I. Winterset, N.J. (60%) It has been said that all happy neighborhoods are happy in the same way, but no American property lawyer has ever been able to verify the statement. It has also been said that each unhappy neighborhood is unhappy in its own way; for this there is some empirical support. Take the town of Winterset in Cold Spring County, New Jersey. Roger Rancher moved to Winterset in 1970 after receiving a patent for 400 acres, granted by New Jersey to Roger Rancher and his heirs. He has operated a dairy farm on 200 acres of the land for over three decades. The farm holds dozens of cows that produce many gallons of milk each week. The milk is sold to a company that distributes it to Gotham, a large city located 75 miles away. In 1975, Rancher sold an undeveloped 200 acre parcel of his 400 acre plot to Fran Farmer. Rancher and Farmer also mutually agreed not to use their land for retail sales or academic purposes, and they recorded their agreement with the deed. Farmer proceeded to develop half the land as an vegetable farm. The produce is sold to a company that distributes it to buyers in Gotham. In 1980, Fran Farmer sold the undeveloped half of her land to Doug Developer and his heirs. Since that time, Developer has been gradually developing the land as a residential subdivision called Shangri La. Recently, Farmer noticed that Ranchers milk cows were coming onto her farm and eating her corn. She calculated the damage as about 10% of her total vegetable harvest. She asked Rancher to do something about this problem. Rancher shrugged and said, Cows are cows. They get hungry, and theyre pretty stubborn, too. At about the same time, Rancher noticed that his cows were producing much less milk than they had in the past. A veterinarian informed him that his cows are reacting to a fertilizer that Farmer was dusting on her tomato fields, which accounted for about 90% of her harvest. The wind is blowing some of the fertilizer onto Ranchers property, and his cows are ingesting it. The fertilizer reduces milk production in milk cows; it has no other side-effect. Tensions are running high between Rancher and Farmer. Also recently, Developer noticed that Farmer was driving across a road on Developers land to get to the interstate highway. There is no other direct route to the highway from Farmers land. Developer blocked access to the road across his land to the highway. Farmer claims the right to pass over that road. She adds that the road has deteriorated the past few years, making it increasingly difficult for her to use it. This situation has made both Developer and Farmer unhappy. Next to Winterset is a Delaware Indian tribal reservation. For several decades the tribe has been fishing in a pond located on land included in Ranchers patent and still possessed by Rancher. Rancher built a large storage shed for his ranching tools in the early 1980s. The shed is actually not on his land but instead is on the Delaware tribes land next to his. Recently the Delaware tribe discovered that the shed is on its land and asked Rancher to remove the shed. -2-

Rancher declined. Then he blocked the tribes access to the pond. Tensions run high here, too. Last year, Doug Developer decided to build a gated community on an undeveloped portion of Shangri La. The homes in the gated community will be orange; so will the steel gates surrounding them. He is lining up the financing, reviewing architectural plans, and planning how to market the gated community, which he will call The Saffron Gates at Shangri La. He plans to build mostly single-family homes on sizeable lots. He also would like to build an apartment building in The Saffron Gates. Developer has conducted market research that indicates a demand for gated communities because buyers are eager to protect themselves from crime, terrorism, and other social ills. In fact, the research indicates that gated communities raise the value of new homes and rental properties by about 20%. The Winterset town government recently learned of Developers plan and quickly passed a new zoning ordinance forbidding gates around residential communities. The ordinance is motivated by the government's concerns that gates on residential developments harm the sense of community and civic involvement. The residential regulation ordinances of the Winterset Zoning Code have long allowed only singlefamily homes. Developer really wants to build The Saffron Gates as planned and will be unhappy if he cannot. Orville Oldtimer purchased a single-family home in Shangri La in the 1980s. Sadly, Orville died this spring. Orville was a federal district judge and a graduate of NYU School of Law. His will provided that his property should go to NYU School of Law provided that at least 10% of each graduating class serves as federal judicial clerks immediately after graduation from law school, and if less than 10% of a graduating class serves as federal judicial clerks after graduation, then the property should go to the American Red Cross. NYU is pleased to be named in Orvilles will. It has two plans for the land. One is to lease it, at a low rent, to a senior faculty member who writes most of her scholarship at home. The second plan is to lease it to whoever offers to pay the highest rent, and the Starbucks Company is interested in the site. Assume that the federal government passed a statute a year ago that creates a new civil service position, the Professional Court Clerk, so that every federal judge must hire Professional Court Clerks rather than what Congress calls amateurs (i.e., recent law school graduates). Last summer, Congress established a special training institute for judicial clerks in an underused building in Langley, Virginia. The training program lasts one year. From this year forward, all federal judicial clerks will have to complete a training program at the institute in order to serve as clerks for federal judges. NYU School of Law is quite unhappy about this new requirement. Alex Rodriguez has agreed to purchase a house at 13 Slippery Street in Shangri La from Sam Seller, who had lived there for about a decade. The closing, at which title is supposed to be transferred from Sam to Alex, is next month. In preparation for the closing, Alex conducted the title search himself and discovered that the home was restricted by a covenant providing that only native born U.S. citizens who are the children of native born U.S. citizens can own or occupy the land located at number 13 Slippery Street . Alexs parents were born in the Dominican Republic and immigrated to the U.S. before Alex was born. Shocked, Alex confronts Sam Seller. Sam says he knows nothing about the covenant and does not want to enforce it. Alex remains disturbed.

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Meanwhile, Sam lost his new Ipod somewhere in Winterset. Sam wonders whether he should ever hope of possessing it again. As a result of all these property controversies, people in Winterset are unhappy, tense, or both. They want happiness and peace along with their rights. They get together and hire you, a respected property lawyer in the state, to give them objective advice about the property law issues they confront and an assessment of how those issues would probably be resolved if brought to a court. Give them your best advice.

End of Part I

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II. Common Law Estates (20%) Write your answers on your exam answer sheet, not here on the exam itself

1. Ollie transfers Greenacre to Albert for life, then to Ollie's children if they survive Ollie, but if Ollie dies without surviving children, then to Barb's children, and then to the children of Barb's children. A) Identify the interests that the grantor intended to create. Assume that Ollie is childless but Barb has one child, Chris. B) Identify the interests if Ollie has died without children, and then Albert and Barb die too. C) Does this conveyance violate the rule in Shelley's Case, the doctrine of worthier title, and/or the rule against perpetuities? If so, indicate how the rules affect the interests at the time of conveyance.

2. 3. 4.

End of Part II

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Part III. Ten Multiple Choice Questions (20%) Answer on your exam answer sheet, not here on the exam itself

4.

An externality is best defined as: (A) The cost of activity that occurs outside ones own property. (B) The cost of determining who owns a piece of property. (C) The cost of activity that should bring profit but does not. (D) The cost of producing one more unit of any given form of property. (E) The cost of an activity not paid by the actor.

9. Today, when a married couple gets divorced in the average American state, a court will most probably: (A) Divide property between the two spouses according to who earned which property during the marriage. (B) Divide property between the two spouses and presume that each share should be equal. (C) Divide property between the two spouses to ensure that the larger share goes to the higher earning spouse. (D) Divide property between the two spouses to ensure that the larger share goes to the lower earning spouse.

End of Part III and End of the Exam

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