Property Law & Real Estate Construction Law

This article discusses various aspects of property law and real estate construction law. It covers topics such as power of attorney, valid and binding contracts, agency law, mortgage assumption, types of mortgages, and vicarious liability. The article also includes a field project that involves a lease agreement between Temple CB LLC California and Okra Energy Inc. based in California.

Running head: PROPERTY LAW & REAL ESTATE CONSTRUCTION LAW 1
Property law & Real Estate Construction Law
Name
Institution affiliation
Date

PROPERTY LAW & REAL ESTATE CONSTRUCTION LAW 2
1. a) You are a recent real estate sales licensee. You have been approached by Bob,
who wishes to purchase a condominium for his elderly mother. He says he has authority to
do so, as he has a "power of attorney." Explain the type of agency relationship created by a
power of attorney. For Bob's case, discuss the legal limitations of the power of attorney that
he should be careful of.
When a client comes or enters into an agency contract with a licensee, the agency
agreement will definitely constitute the powers that the principal is permitting the agent.
However, the agent cannot exercise any authorities away from those given under the agreement.
In Bob’s case, Specific Agency is created, and it gives the representative a limited power to only
one specific business highlighted in the agreement (Fields & Fields, 2018). This agency involves
the licensee about Bob's mother needs (Cameron, 2011). He should ensure that he fulfills his
mother's requirements to avoid her mother (principal) from removing him as her agent.
(b) The condominium unit needed new flooring, so after purchasing the unit, Bob
asked Cushioned Comfort to come over and provide a quote. The salesperson, Mark,
measured the unit and showed Bob some samples. Bob chose a carpet type, and Mark
wrote up a contract between Cushion Comfort and Bob. Mark and Bob signed the
contract, and Bob was given a copy of it, as well as one of Mark’s business cards showing
he is a salesperson for Cushion Comfort. Bob was in the process of throwing out the old
carpet when he got a call from the owner of Cushion Comfort. The owner told Bob that
Cushion Comfort was not able to meet the terms set out by Mark and that since Mark did
not have permission to enter into a contract for that amount, Cushion Comfort is not
bound to the contract. Is there a valid and binding contract? Discuss the relevant law as to
whether or not Mark can bind Cushion Comfort to a contract.

PROPERTY LAW & REAL ESTATE CONSTRUCTION LAW 3
For the contract to be valid, certain elements must be considered. In this case, Mark and
Bob had a legal purpose to get into the contract. Both parties were competent they were of the
right age and sound mind in time of the agreement (Donahue at el 2016). However, agreement by
offer and acceptance was not followed to the latter. The owner of the cushion comfort was not
involved in the process, and his sales person had no permission of getting into the contract.
Therefore, this contract will not be binding since the owner was not contented and involved. If
Bob needs the carpets, he can legally get into a new contract with the owner of the cushioned
comfort (Ricchetti & Murphy 2010).
(c) Before purchasing the property, advice was sought by Bob from Willie Wunder,
Real Estate agent, to ensure that his mother would not be saddled with any issues such as a
"leaky condo." Wunder stated to Bob that he reviewed the necessary documents of the
condominium complex and did not notice anything unusual. In actuality, Wunder only
partially read the documents and had trouble understanding a majority of what he read.
Six weeks into her possession of the condominium, Bob's mother receives a registered letter
requesting payment of the $10,000 special assessment to repair the water damaged
common area caused by a faulty building envelope. Upon further review, Bob discovered
that the condominium documents had discussed the $10,000 special assessment. Bob is very
upset and would like to know the following:
Under agency law, what duty or duties did Wunder owe Bob? What are the
potential consequences for Wunder’s actions?
Under the agency law, real estate agents must meet their end of the jobs. However,
Wondur did not meet the agreed results to Bob. He was supposed to be loyal and keep the

PROPERTY LAW & REAL ESTATE CONSTRUCTION LAW 4
interests of Bob ahead of any other; he also owed Bob a disclosure despite him not understanding
all the content in the agreement (Cameron 1993). Real estate’s agent should offer reasonable
care to the buyers and advise them accordingly Wunder owed this to Bob. Since Wunder actions
cost Bob 10000$, there were consequences for his actions. His reputation as an agent could have
been tarnished in the social media platforms to make sure that he does not repeat the same
mistake until he is thoroughly knowledgeable about his job description (Martindale at al 1931).
Bob should have opted to sue this agent and let him pay the extra cost that they owe since it was
his mistake.
(d) Bob's mother sold her home to Mr. Walker, a kindly gentleman, and avid
gardener, who said he noticed her fabulous fruit trees on his Sunday stroll and decided to
knock on her door to see if she would sell her property to him. Bob's mother thought the
price seemed reasonable and signed the contract, without concern for her hearing and
seeing difficulties given her extreme age. Bob has since found out that Mr. Walker was a
real estate sales licensee, who bought a row of houses that Sunday with the intent of
building a condominium complex on the property. No fruit trees will remain standing.
And, after commissioning an independent appraisal, Bob now discovers that the price paid
was less than two-thirds of the market value at the time of sale. Is the contract valid?
Explain why or why not, and what option(s) may be available to Bob’s mother.
Bob's mother signed the contract under pretense. The contract is not valid because bobs
mother was an old woman who could barely see and the other party pretended to be another
person during the time of signing the contract (Freidman & Scheiber 1981). The option that Bob
has is to prove fraud. Contract fraud involves the seller (bobs mother) being misled by the buyer
(licensee) because the licensee wants a different result from the contract (Galaty et al., 2001).

PROPERTY LAW & REAL ESTATE CONSTRUCTION LAW 5
The American Bar Association states that fraud exists when any statement from the contract is
substantially different from the truth and in our case this is what happened.
(e) When Bob's mother is no longer able to live on her own, Bob decides to rent the
unit, which is allowed by the bylaws of the complex. What are the requirements that Bob
would need to meet in a rental agreement? Explain how a residential tenancy differs from a
commercial tenancy. If Bob subsequently decided he wanted the tenant to vacate the unit,
explain briefly the various reasons Bob could use to terminate this tenancy agreement.
Bob should include the name of the tenant, terms of the tenancy, rent, deposit and fee
repair and maintenance and restrictions to any illegal activity in the rental agreement. A
residential tenancy is a contract between the landlord and the tenant to use the property for an
existing agreement. The property is to be used for residence and not for profit no commercial
services should be conducted in a residence house such as sales of goods or any other activity
that generates profit (Adams 2004). Rent for occupation is paid at the end of every month as
agreed. On the other hand, a commercial tenancy is an agreement between the landlord and a
business tenant for use in commercial activities such as sales of goods, services and
manufacturing to generate profit. The premise is a business house and cannot be used for living.
Rent is done per square footage the tenant occupies and in other cases; there is an added
percentage from the gross received by the tenant.
Bob can give the tenant a lot of reasons as to why he needs them to vacate the unit. One
of the reasons that bob can give is that he wants to sell the property to a different person thus
requiring them to vacate. He can also tell them that he wants to renovate the house and lease it to

PROPERTY LAW & REAL ESTATE CONSTRUCTION LAW 6
a commercial tenant if it was residential and vice versa. He will be required to give notice to the
tenant after he has explained his reason for the lease termination.
Q2 a). You are selling your home, which has a large mortgage with favorable rates.
You want to know whether a new purchaser can assume this mortgage. (i) Explain when
the assumption of a mortgage may occur, and also discuss whether you could bear any
liability if the mortgage is assumed.
Mortgage assumption is the transfer of the mortgage loan to the buyer name, and the
seller is no longer liable for the loan. A purchaser can assume loan if he can lock a lower interest
rate. This can save him money if the rate is lower than the current rate. As the seller, there will
be no liability if the price of the house is higher than the mortgage and also since the name on
loan is no longer his (Forts & Ramcy, 2015).
(ii)Would novation of the mortgage be a better idea? Explain when novation may
occur, and any liability you could face.
Novation agreement can also be a good idea whereby the purchaser, seller and the
institute that offered the loan come into an agreement and removes the seller from the equation
of the loan and transfer the loan obligation to the purchaser. This can happen if the purchaser is
willing to extend this loan. Their liabilities are limited since you are no longer involved in the
loan mortgage.
(b) You can sell your property, and now your financial advisor suggests that you
should invest your new windfall in mortgages. He lists the various types of mortgages
available. Discuss at least three different types of mortgages, relating their advantages and

PROPERTY LAW & REAL ESTATE CONSTRUCTION LAW 7
disadvantages to a mortgagee from a legal standpoint, in particular concerning the security
involved.
There are different types of mortgage a person can consider when buying a home. Fixed
rate mortgage is one of them. This is the type where the interest rates do not change throughout.
The advantage of this mortgage is that you will have peace of mind since you already aware of
what you are to pay. The disadvantage is the interest rate can be much higher than what is in the
market at times. The other type is the adjustment mortgage where the interest rate will change at
times (Muchlinskiat at al., 2008). You only know when they change but not with how much. The
advantage is that you enjoy the benefit of lower interests at times while the disadvantage is that
you can have a high interest and be unable to pay it n time. The third type of the mortgage is the
government insured home loans; this means that if the borrower fails to pay the mortgage, the
government will ensure the lender pay for the lose (Pyhrr, Seiler & Wofford, 2011). The
advantage is that the loan type gives you an option to put forth down payment with a small rate
of the house price. The disadvantage is that you have to incur the extra cost of paying for the
insurance.
PART B: Field Project
Q1. a) a) Prepare a brief write up on each of the three cases
First Case
Trevor William Maxwell Inglis
According to the Council’s discipline committee, Trevor was found to have committed
professional misconduct through participating in the deceptive transaction by fabricating an offer

PROPERTY LAW & REAL ESTATE CONSTRUCTION LAW 8
and claiming that the offer was on client’s property. He also made a false statement to the
committee in his response to the issues he is facing. In my opinion, Trevor committed conduct
unbecoming a license himself as well intending to retaliate against his fellow listing agent.
2nd Case
This second case is about the Consent Order Proposal submitted Hao Yan. In this case,
Yan committed professional misconduct that also led to the suspension of his license for two
weeks.
Finally, the last case involves Anthony Roland Boos who is the Managing Broker of
Cascade Realty Ltd. He was found to have committed an offense and was reprimanded. He was
to pay a penalty fee due to the misconduct.
b) Similarities and Differences
In all these three cases, there were breaches of the Real Estate Agents Act and Sale of
Land Act through altering with some important information that misleads the buyer thus
attracted penalties for non-compliance.
c) Explain vicarious liability and discuss who could be held liable for any losses that
might occur relating to this principle.
Vicarious liability is a circumstance where an individual is held accountable for conducts
or omissions of another individual in an employment location context, an employer can be liable
for conducts or may be omissions of the employees, given that it can be verified that they indeed
happened during their employment contract (Adam, 2013). In reference to the above-reviewed

PROPERTY LAW & REAL ESTATE CONSTRUCTION LAW 9
cases, this can be related to Anthony Roland issue where both of them in all the three cases were
held responsible for the damages caused in each case.
Answers to the questions
1. The name of the landlord in the lease is Temple CB LLC California.
2. The name of the tenant is Okra Energy Inc. which is based in California.
3. The premises to be rented are business halls in the City.
4. The lease started on 1st December 2013
5. The lease covers the period from the start until 31st May 2020
6. A renewal of this lease can be done for five more years provided the tenant offers a
minimum of a 120-day notice before the expiration of the agreement.
7. Rent is paid monthly at a rate of $100000
8. The tenant has been obligated to pay a refundable $20000 as security sum to the
landlord at the beginning of the agreement. Secondly, the tenant is liable for leasehold interest as
stipulated in Leased Premises. Thirdly, the tenant as advised by the landlord shall be paying the
real estate taxes as outlined in the Leased Premises.
9. The landlord is responsible for paying for all the repairs and improvements in the
premises for as long as the agreement holds.
10. One condition that exists in this agreement between the tenant and landlord is that a
5% additional penalty is given to a tenant for late remuneration of the monthly rent.

PROPERTY LAW & REAL ESTATE CONSTRUCTION LAW 10
11. This type of tenancy is company let given that tenant is an incorporated body, that
is, LLC.
12. In a gross lease, the landlord agrees to pay all the expenses such as utilities and
even taxes in some cases while in a net lease, the tenant is responsible for all the taxes, utilities
and also maintenance. (Eissen, 2011). Therefore, in this case, the agreement is a net lease.
13. The full amount of $20000 which is the security deposit is returned to the tenant
14. The tenant may sublet the premises provided they write of such intentions to the
landlord. The difference between lease assignment and lease renting is that in the former, all
rights are transferred from the tenant to the new owner while in the former; a tenant may allow
another tenant to use the premises temporarily (Friedman & Scheiber, 2012).
15. The landlord is responsible for paying for any negligence or omission that can be
directly associated with the subject. Additionally, there is an implied obligation such as that of
being accountable to the tenant once the property is partially or fully destroyed by fire.
16. In the agreement, it is precisely stated that the tenant has an obligation of ensuring
that the property they have rented is maintained in good condition. Moreover, there is an implied
obligation given that they have the right to erect interior designs however it will be at their own
risk. This means that the tenant will be entirely held accountable by the authorities (Sion, 2018).
17. The lease may be terminated by writing a notice to the tenant and asking them to
clear all taxes and outstanding rent arrears for the period in question. On the other side, the
tenant may also terminate the contract by clearing the taxes and asking for their security deposit.

PROPERTY LAW & REAL ESTATE CONSTRUCTION LAW 11
18. Interesse termini are the right of the lessee to enter the leased property. The
agreement, in this case, gives the lessee who is the tenant the right to access, repair and develop
the premises to a certain extent. However, in this case, no interest is paid to the landlord.
(b) You can sell your property, and now your financial advisor suggests that you
should invest your new windfall in mortgages. He lists the various types of mortgages
available. Discuss at least three different types of mortgages, relating their advantages and
disadvantages to a mortgagee from a legal standpoint, in particular concerning the security
involved.
Net lease advantages to the tenant are they have control over cost, and the rent charges
are lower and more property control. However, the tenant might is not able to plan early, and the
operating costs might be higher at times. I would advise a tenant to use net lease since there is a
lot of controls and the rent is lower.

PROPERTY LAW & REAL ESTATE CONSTRUCTION LAW 12
References
Adams, K. A. (2013). A manual of style for contract drafting. Chicago: ABA, Section of Business
Law, 94(5), 62-64.
Cameron, J. G. (2011). Michigan real property law: Principles and commentary. Ann Arbor,
Mich: Institute of Continuing Legal Education , 36(29), 8.
Donahue, D. J., Quinn, P. D., Grandilli, D. C., & Donahue, D. J. (2016). Real estate practice in
Ontario. Journal of Canadian Studies, 52(2), 538–569.
Eissen, V. (2011). The Oxford Handbook of International Investment Law. International Journal
of Legal Information, 39(1), 93–96.
Fields, C. K., & Fields, K. C. (2018). Contemporary real estate law. Survey Review, 50(359),
107–121
Friedman, L. M., & Scheiber, H. N. (2012). American law and the constitutional order:
Historical perspectives. Cambridge, Mass: Media History Monographs, 20(2), 1–31.
Sion, A. (2018). A real estate contract: At what point and to what extent does it become binding?
PM World Journal, 7(8), 1–11.
Pyhrr, Stephen A., Michael J. Seiler, and Larry E. Wofford. 2011. “Review Articles: A
Supplemental Account of the History of the American Real Estate Society.” Journal of
Real Estate Literature 19 (2): 235–81.

PROPERTY LAW & REAL ESTATE CONSTRUCTION LAW 13
Pyhrr, S. A., Seiler, M. J., & Wofford, L. E. (2011). Influencing Real Estate Thought and
Decision Making Through Research and Education: The Past, Present, and Future of
ARES. Journal of Real Estate Research, 33(2), 127–178.