Hypos for 10 March 2008

Warren Linam-Church offers his house in Winthrop Harbor, Illinois, for sale at a price of $480,000. He retains Oscar Bestoffer, a licensed real estate broker as an exclusive agent for a period of 90 days. Erin Duncomb has been house shopping and hears about Bestoffer from a friend. She tells Bestoffer that she wants something in the Winthrop Harbor area because she is intrigued by its proximity to a nature preserve and a decomissioned nuclear power plant. She also tells Bestoffer that she is in a position to pay "about $500,000, but nothing more than $525,000." Bestoffer shows her Linam-Church's property, telling Linam-Church that he thinks the buyer will pay the $480,000 asking price. She loves the house, which overlooks the containment vessel of the nuclear plan, and, without much negotiation, they sign a standard-form residential real estate sales agreement.

1. After they close on the deal, and Duncomb moves in, she and Linam-Church have a cup of coffee and she tells him "I'm surprised you did not negotiate harder. You could have gotten me up to $525,000." What legal theories and remedies might be available to Linam-Church to get some more money? From whom?

2. Closing has not occurred yet. When Duncomb does her final walk through on the day of closing, she discovers that the house has no furnace or other heating system. What can she do?

3. When she does her final walk through, she discovers that the only heating system in the house is a 100-year old coal furnace firing a steam boiler. The furnace requires that the resident shovel coal into it twice a day to keep the house heated.

4. Duncomb needs a mortgage of $425,000 to go through with the sale. When she gets her mortgage commitment, it is conditional on her selling her existing condominium in the Florsheim Building for at least $250,000. She is unable to sell it for more than $100,000. Can she get out of the Winthrop Harbor deal or must she go through with it.?

5. Duncomb applies for a mortgage of $425,000 but before the commitment is issued, a friend of hers tells her that she is crazy to buy a house next to a nuclear power plant, inactive or not. She calls up the mortgage lender and says, "I've changed my mind. I don't want a mortgage." Is she off the hook?

6. She gets an unconditional mortgage commitment. When the professional inspector she retained goes through the property, he tells her that there is evidence that the basement regularly floods to a depth of four feet, and that the flood waters may be contaminated with asbestos fibres and radiation from the nuclear waste stored at the power plant site. Can she get out of the deal?

7. After she signs the agreement, her lawyer and Linam-Church's negotiate over the details. They reach impasse over her lawyer's insistence that a provision be added to the contract specififying a radiation check, with a threshold level of radiation above which the deal is null and void, at her option. Must she go forward with the deal without the provision?

8. Discouraged by the Winthrop Harbor experience, she extracts herself from that deal and shops for new construction in the Zion area.. She signs a contract to buy a house in Clean Energy Acres for $500,000, after she is impressed with the model--a brick-faced frame construction. The contract includes terms identical to those set forth at 462 n.2 of the casebook.

(a) when she goes to inspect her house after construction is nearly completed, she discovers that her "house" is a large mobile home, albeit one with the same square footage of the model. Can the developer force her to go through with the deal?

(b) the developer calls her six months after the signs the contract and tells her that the price has gone up to $600,000 because his prices of material and labor have increased.Can the developer force her to go through with the deal?

(c) the developer calls her six months after she signs the contract and tells her that completion has been delayed for 18 months because the developer has been going through a nasty divorce and a lien has been placed on all the developer's property. Can the developer force her to go through with the deal?

9. She extracts herself from the Zion deal and shops for condos in the West Loop. She signs a contract to buy a condo unit. When she gets the condo declaration, she discovers that it prohibits:

(a) any live performance of music of any kind in any unit

(b) any live performance of Azberzhani folk music in any unit

(c) any live performance in any unit making use of a jack hammer, however modified, for percussion.

Must she go through with the deal?