Instruction to students: This is an individual assignment.
Task: 7050 Property Law Assignment
Complete the following three questions and their sub-questions.
Phillip decided to make some extra money by investing, developing and reselling properties at a profiting order to help fund his university studies. To cut costs he did his own conveyancing. Phillip has encountered the following problems:
i)Phillip found 56 Gum Tree Place on the internet. A search of the Land Title Register showed that the vendor held an unencumbered fee simple estate. Phillip was too busy that week to inspect the property but went through the computer walk-through and agreed to buy the house in any case. Six days after the transaction was settled and the Transfer of Land registered in his name, he got around to visiting the property. To his surprise, while looking around the front yard a woman drove a car into the driveway of the house, took a small child from the back seat, unpacked shopping from the boot and carried it all inside. She came back out and exclaimed to him “Oh, you must be the new landlord. Can I speak with you about the dodgy wiring?” The woman is a tenant in possession of the property under a written lease for less than 3 years. The lease is unregistered.
Must the Phillip take the land subject to the lease? Briefly explain your answer. (3 Marks)
ii) Phillip found a heritage warehouse still used to store bales of wool for a nearby wool broker. With vague ideas of renovating it into heritage apartments he entered a contract to purchase the warehouse and paid the deposit, overjoyed at the bargain. He left no stone un turned in his title and related investigations but four weeks before settlement of the transaction the warehouse was destroyed in a gas explosion.
Briefly explain Phillip’s interest in the land. Must he pay the full purchase price for the warehouse although only rubble remains?Briefly explain your answer.(4 marks)
iii) Phillip pressed a hard deal on the owners of the vineyard and winery Château Briand to acquire it for just $3 million. Everyone in the industry said it was worth at least $4 million. Now there are rumors that the owners of the estate have secretly made a second contract to sell it to another buyer for $4.5 million.
What can Phillip do to protect his acquisition of legal title to the property?(3 marks)(3 + 4+ 3 = 10 marks)
Rebecca owned an aroma therapy centre. She decided to renovate and extend it in order to stay ahead of the competition, moving the south wall to make room for two more studios and a relaxation pool. Rebecca would have to borrow money to achieve her objective but because she had always paid for things in cash she did not have a credit record, successful or otherwise, and in the view of institutional lenders the present value of the centre was too low to serve as a security for the loan she had in mind.
Coincidentally, friends of Rebecca’s mother who lived in the next town, Mr and Mrs Armstrong, were looking for an investment but were very wary of institutional investment after losing a lot of money during the Global Financial Crisis. However, they trusted Rebecca implicitly and admired her plans.
“Let’s do it this way!” proposed Mr Armstrong, “You transfer to us your registered title to the center in exchange for the amount of the loan. Then we will rent your center back to you. The monthly rent you pay will service the loan and also repay the loan by installments over 20 years. When you have repaid the loan, which you can do at any time, you can exercise an option in the lease to repurchase the center and we will re-transfer the title to you.” Rebecca saw the proposal as an ideal solution and they implemented it. The arrangement worked perfectly and everyone was very happy.
However, after 10 years the elderly mother of Mrs Armstrong needed assistance and she and Mr Armstrong made plans to retire and move to Perth to live with her. Everyone started thinking hard what to do about the arrangement with Rebecca. A business acquaintance of Mr Armstrong, Mr Hooper, expressed interest in buying out the Armstrong’ interest. The discussion progressed. Mr Armstrong fully explained the right of Rebecca to pay out the loan and get a re transfer of the title. The new arrangement went ahead and they embodied their agreement in a contract of sale. Mr Hooper would pay Mr Armstrong the current outstanding balance of the loan and Mr Armstrong would transfer the shop title to Mr Hooper. Rebecca’s tenancy would continue as before.
Explain Rebecca’s rights.(10 Marks)
Leonie was the registered proprietor of a fee simple estate in land near the town of Cockatoo. A year or so ago she suffered a rare disease and fell into a coma. Her next of kin was her older brother Mark and he took over Leonie’s affairs. Unfortunately Mark had a gambling problem which impacted all of his financial affairs and led him to think of using Leonie’s Cockatoo land to raise funds. Markoffered Leonie’s land for sale over the internet at a bargain price. Karl was attracted by the striking landscape and sweeping river bend – it would be a perfectly relaxing get-away. Mark advertised the land at a mere $1.4 million on condition that the sale could be completed in 14 days. Karl and his girlfriend Sally decided to buy the land after looking at it just once. At first they thought it was simply a lucky bargain but when Mark-sent them the Vendor’s Statement Karl noted that the title was in Leonie’s name and began to raise queries with Mark. Mark explained that he was selling the land on behalf of Leonie, who was working in a remote location overseas and needed the money very quickly. Also, in view of this and the difficulty of selling land in country areas she had decided to let it go for just $1.4 million – about 70% of its market value. Mark explained that Leonie had already signed the contract and transfer of land and couriered them to him. Karl and Sally visited the land again and decided that it was a win-win situation in which Karl would love to own the land and at the same time he would help Leonie out.Karl signed up, the transaction was settled and Karl was registered as fee simple proprietor.
Describe the interests held in the land by Leonie, Karl, Sally,BAB, KC and Alex.
Determine the relative priority between their interests, explaining the legal and equitable grounds of your determination.(40 marks)