Mortgages Contracts

Question 1
Alex owned a fee simple absolute in Desertacre, a 500-acre tract of desert land. Desertacre was unimproved, except for a well on the land; a black electrical cable mounted on poles connected the well’s pump engine to the only power line in the region, which adjoined the west side of Desertacre. Twelve years ago, Alex conveyed the east half of Desertacre to Beth in return for $250,000; the deed did not create any express easements. Beth planned to build a home on East Desertacre when she retired.
One week after Beth purchased the land, she installed an underground electrical cable that ran from her planned home site, crossed West Desertacre (Alex’s retained land) for a distance of 1,000 feet, and then connected with the power line. She used a tan-colored cable, which was buried 12 inches below the ground in most places; but there was one area on West Desertacre where 25 feet of the cable were barely visible on the land surface if a person looked closely. Beth used the electricity to power four large lights which she kept on all night to deter trespassers. Alex never noticed the tan cable, but he sometimes wondered where Beth got the electricity for her lights.
Five years ago, Alex borrowed $100,000 from Carl in order to build a cabin on West Desertacre; the loan was evidenced by a promissory note and secured by a mortgage on the property, but Carl did not immediately record. Alex began construction, but ran out of money to complete the project. He accordingly borrowed $50,000 from Dana; the loan was evidenced by a promissory note and secured by a mortgage on the property. Dana recorded her mortgage immediately; two days later, Carl recorded his mortgage. Neither Carl nor Dana ever visited the land.
While working on the cabin one year ago, Alex was badly bitten by a wild turkey, became paralyzed, was unable to work, and accordingly failed to make the payments due on the loans from Carl and Dana. In September, Carl sent Alex and Dana a notice stating that: (1) Alex had defaulted; and (2) Carl had elected to accelerate the debt and begin foreclosure proceedings.
Carl scheduled a nonjudicial foreclosure sale for noon on Thanksgiving Day, on West Desertacre. At that time, the only bidders were Carl and Fiona; Carl bid $100,000, but Fiona then bid $100,001 and acquired the property. Alex then filed a lawsuit to set aside the sale.
What is the state of title to West Desertacre? As part of your answer, be sure to discuss whether the foreclosure sale will be set aside.

Question 2
Lois owned a shopping center. It consisted of a large store space leased to a famous supermarket and smaller store spaces for 10 other businesses. Tony dreamed of opening his own coffee house even though he had no business experience; he decided to rent one of these smaller spaces. Lois and Tony orally agreed that Tony would rent store space #7 for one year on these terms: (a) the term would begin on October 1; (b) rent was $5,000 per month; and (c) Tony could assign or sublease only if Lois consented.
On October 1, Tony opened “Tony’s Coffee” and paid rent for the first month. Throughout October the business attracted more customers each week; the weekly revenue totals were $500, $1,000, $2,000, and $3,000. Tony concluded that the business was doing so well that he could move it to a larger space in another shopping center across the street. Tony orally agreed to transfer “all of the rest of my lease” to his friend Amy, so that she could take occupancy on January 1. Amy planned to continue operating the coffee house and had five years of experience running an ice cream store in the past. But when Tony asked Lois for permission, she replied: “No way. You’re the one who is so successful. What does Amy know about coffee? And if you open a bigger store across the street, you’ll take customers away from my center!” Disappointed, Tony failed to pay the rent due on November 1 and never paid rent again.
Tony’s business continued to improve through November; the weekly revenue totals were $3,100, $3,250, $3,500, and $3,550. But on December 1, Lois’s staff erected the shopping center’s annual Christmas display, where visitors could get free hot chocolate. The display blocked the view of the coffee house from the road; it also occupied the 10 parking spaces closest to the coffee house. The display brought more customers to the center, but not to the coffee house. During the first 3 weeks in December, Tony’s business seemed to stagnate; the weekly revenue totals were $3,510, $3,470, and $3,530. Frustrated, Tony signed a five-year lease for a larger coffee house space in the shopping center across the street, with occupancy to begin on January 1. On December 24, Tony sent this email to Lois: “That Christmas display is killing my business! Get rid of it. Tony.”
Lois never responded, so on December 31 Tony started moving his chairs, tables, coffee machines, and other equipment and inventory to his new location. Enraged that Tony was moving, Lois waited until he left that evening and used her key to enter store space #7. She moved all of Tony’s remaining equipment and inventory to the public sidewalk, and changed the door locks. Lois then made diligent efforts for 9 months to mitigate her damages by trying to re-rent the space, but without success. Lois now plans to sue Tony for $55,000 in unpaid rent.
How much rent does Tony owe to Lois, if any? Why?

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