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9 Pages Essays / Projects Year: Pre-2021

Complete answer to 2013 take home property exam. Received Distinction mark. Exam Question = Question 1 (20 marks) In 2012, Dawn was the registered proprietor of a parcel of Torrens Title land in NSW known as “Fabulous”. Dawn and Jeff entered into a written and signed agreement under which Dawn agreed to lease Fabulous to Jeff for a period of 10 years from 1 January 2013, with an option to renew for an additional 10 years. A lease was prepared and executed by both Jeff and Dawn and was registered. However, the option to renew was accidentally omitted from the registered lease. Jeff went into possession of the property on 1 January 2013. In March 2013, Jeff, with the consent of Dawn, granted a sublease to Roxie for a period of 4 years. Roxie went into possession at the start of the sublease on 1 April 2013. Although the sublease was executed in registrable form, it was never registered. In May 2013, Dawn and Stephanie entered into negotiations for Stephanie to purchase Fabulous. Stephanie knew of the lease to Jeff, but not the sublease to Roxie. She has seen Roxie on the premises at Fabulous, but Dawn had told her Roxie was an employee of Jeff’s, and Stephanie had made no further enquiries. Stephanie was only willing to purchase Fabulous with vacant possession (that is, free from any lease). Dawn contacted Jeff and asked him whether he would be willing to surrender the lease. Jeff told Dawn to send a written offer to Jeff’s solicitor, Mr Bouris. During negotiations between Dawn and Mr Bouris over the period of a week, Mr Bouris told Dawn that Jeff was willing to surrender the lease in return for the payment of $200,000 by Dawn to Jeff. Dawn agreed to this. However, Mr Bouris never communicated to Jeff the content of negotiations with Dawn. Instead, Mr Bouris told Jeff that Dawn was not prepared to pay any money for the surrender of Jeff’s lease. In response, Jeff instructed Mr Bouris to tell Dawn that Jeff would not agree to the surrender of the lease. Neither Dawn nor Jeff knew anything about Mr Bouris’ misrepresentations to Jeff. In June 2013, Dawn and Stephanie entered into a written and signed contract for the sale of Fabulous, with vacant possession, to Stephanie. Stephanie paid a 10% deposit. On 1 August 2013, the settlement for the sale from Dawn to Stephanie occurred. Mr Bouris was present at the settlement. He handed Dawn a surrender of Jeff’s lease, expressed to be between Jeff as lessee and Dawn as lessor. The surrender of the lease was in registrable form, but, unknown to Dawn, Mr Bouris had forged Jeff’s signature on it. On receiving the surrender of lease, Dawn gave Mr Bouris a bank cheque for $200,000 in favour of Mr Bouris’ trust account, and Mr Bouris left. The remainder of the settlement then took place. Stephanie handed to Dawn a bank cheque for the outstanding balance of the purchase price. Dawn handed to Stephanie:  the surrender of the lease  a transfer of the fee simple in Fabulous from Dawn to Stephanie. This transfer was in registrable form and expressed to be free of any prior encumbrance.  The certificate of title to Fabulous. Prior to the settlement, Stephanie had searched the folio of the register for Fabulous. The search had shown Jeff’s lease, but indicated no other dealing had been registered and no caveat had been lodged. However, 3 days after settlement, when Stephanie went to lodge the surrender of the lease and the transfer for registration, she discovered that Roxie had lodged a caveat “as a sublessee under a lease granted by Jeff.” Stephanie broke down in tears, and hurried away without lodging the dealings for registration. Mr Bouris has taken the $200,000 from his trust account and disappeared. Explain: 1. The nature of the interest in Fabulous, if any, held by Dawn, Jeff, Roxie and Stephanie (5 marks); 2. The priority of each person’s interest in relation to the other interests in Fabulous (10 marks); 3. Whether any person is entitled to claim compensation from the Torrens Assurance Fund (5 marks). Question 2 (20 marks) Angelina is a struggling actress and the sole registered proprietor of “Pitt View”, a Torrens Title property on Sydney’s north shore. She is married to Brad, an IT mastermind and part time underwear model. In October 2012, Angelina decides to go into business by setting up an upmarket adoption agency. In order to pay for the start-up costs of the venture, Angelina asks Billy Bob, the bank manager of her local branch of MaddoxBank Limited (“MaddoxBank”) to increase the limit on her Bankcard from $20,000 to $60,000. Billy Bob is comfortable with this limit, as Angelina is an old friend, but, as is MaddoxBank’s practice, asks for some security. Angelina says to him “You have the Certificate of Title to Pitt View in your safe. That should be enough”, and on 2 November 2012 Maddox Bank increases the limit on Angelina’s credit card. In December 2012, Angelina decides she needs more money for the business. She approaches an old friend, Gwyneth, and asks if she could lend her $500,000 until the business gets off the ground. At Gwyneth’s request she agrees to grant Gwyneth a mortgage to secure the advance, and they enter into a mortgage in registrable form. The mortgage states that the $500,000 is repayable in one year. The mortgage agreement also stipulates that Angelina will provide Gwyneth with free adoption agency services for a period of 10 years. The mortgage remains unregistered, as Angelina has told Gwyneth that the Certificate of Title is at MaddoxBank for safekeeping, and Gwyneth accepts this explanation. By February 2013, the business is starting to take off and Angelina is working night and day. Unfortunately, Brad has become very frustrated by the amount of time and attention Angelina is devoting to the business, and has decided to go on an extended holiday with his ex wife, Jen. He approaches his friend George, a wealthy but out of work actor, for a loan of $1 million to fund the holiday. George asks for some security for the loan, and Brad tells him that Angelina will grant George a first mortgage over Pitt View. After conducting a search of the register, George agrees to loan Brad the money, repayable in full on 30 June 2013. The mortgage did not include a provision granting George the power of sale in respect of Pitt View. It did, however, provide that the mortgagee was to keep the property insured, and was also to keep the property in good repair. The mortgage also contained a clause which provided: “the parties agree that, to the maximum extent permitted by law, the notice procedures required by s 57 of the Real Property Act do not apply to defaults by the mortgagor under this mortgage.” Using his IT skills, Brad creates a counterfeit certificate of title, and forges Angelina’s signature on the mortgage. When he meets George to hand over the Certificate of Title and mortgage, he tells George that Angelina cannot come to the meeting as she is too busy with her business. George accepts this explanation and gives Brad a bank cheque for $1million. On his way to Land and Property Information to register his mortgage, George runs into his friend old friend, Billy Bob, from Maddox Bank and tells Billy Bob he is on his way to register the mortgage over Pitt View. Billy Bob informs him that MaddoxBank also has a mortgage over Pitt View. George flashes him a winning smile and says “that’s interesting.” George then registers the mortgage. 30 June 2013 passes, and the $1 million is not repaid. Brad is still holidaying on a deserted island with Jen and cannot be contacted. To make matters worse, the house on Pitt View catches fire and is severely damaged. The house is uninsured, and Angelina cannot afford to have it repaired. On 15 July 2013, George hand delivers to Angelina a letter stating that she is in default of her obligations under the mortgage, and that he was exercising his power of sale under the mortgage immediately. Angelina is shocked, as she knows nothing of the mortgage, the loan to Brad or his holiday with Jen until now. She pleads with George not to go ahead with the sale, as it will leave Angelina and her 15 children homeless. However, George is unmoved by their plight. George appoints Leonardo, an experienced real estate agent, to arrange the sale of Pitt View. Once a week for 4 weeks, Leonardo advertises in the local newspaper that Pitt View will be sold by auction. The advertisement is headed “Demolition Delight” and refers to the house as being a “wreck”. Leonardo also retains an experienced valuer, who values the property at $450,000. The auction is to be held on Friday 13 September 2013. In early August 2013, Leonardo receives a call from Beyonce, a wealthy property developer, who says she is willing to pay $500,000 for the property. However, she is overseas and cannot attend the auction. Beyonce asks Leonardo to postpone the auction. However, he is unwilling do so. Angelina is very distressed, and wishes to stop the auction going ahead. Advise Angelina of the legal position concerning Pitt View, including: 1. The nature of the interests (if any) that each party has in Pitt View. (5 marks) 2. Whether Angelina has any grounds to restrain the sale of Pitt View. (5 marks) 3. If the sale were to proceed, how would a priority dispute between MaddoxBank, Gwyneth and George be resolved? (8 marks) 4. Will Gwyenth be able to enforce the clause in the mortgage concerning the provision of adoption services? (2 marks)


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