6) Contracts Flashcards
SOF essential terms for a property transfer
1) description of the property
2) the parties
3) price
4) any conditions of price or payment
oral ks for sale of land: 2 ways to enforce
1) part-performance (see the spl land k rule)
2) estoppel, inc equitable and promissory
equitable estoppel: def
based on an act or representation
promissory estoppel: def
based on a promise
equitable conversion: rule
when a land-sale k is formed (BEFORE closing), there is a bifurcation of title.
Equitable title passes to buyer
Legal title remains with seller until closing date
majority approach: risk of loss before closing
risk of loss follows equitable title, so risk is on BUYER if lost before closing
minority approach: risk of loss before closing
Uniform Vendor and Purchaser Risk Act
risk of loss remains with seller until legal title or possession of property has passed to the buyer (ie until closing)
marketable title: rule
included in every land sale k unless expressly stated otherwise
BUT only manifests itself at the time of closing. Seller dnn to have marketable title any time prior to closing.
(majority: ok for seller to use proceeds of sale to remove cloud on title, ex. pay a mortgage)
marketable title: def
title reasoanbly free from defects in both fact and law
exs. of defects that would make title unmarketable
1) unpaid mortgage/lien
2) covenant or easement restricting use of land
3) title acquired by AP (and hasn’t been quieted)
4) existing condition on the land that violates a zoning ordinance
merger: rule
covenants in a sale k, including marketable title, merge into deed at closing.
Result: buyer can’t assert covenant of marketable title/etc after closing – must sue on the deed (and success of that will depend on what kind of deed he had)
merger: exception
collateral matters do not merge into the deed (ex. agreement to remove junk car)
deeds: Kinds
1) quitclaim
2) general warranty
3) special warranty
quitclaim deed: def + result
as-is deed, no warranties or covenants, seller just conveys whatever interest he has
buyer can’t sue!
general warranty; deed: Def + result
contains all 6 covenants of title that cover all of the period prior to seller sellign to buyer (inc. that no defects in chain of title)
buyer can sue on one of the covenants in the deed
special warranty deed: def + result
many contain some or all of the covenants, may limit liability to period of GRANTOR’S ownership of land
can sue under whatever covenants the deed has, only
covenants in the general warranty deed (list)
present:
1) seisin
2) right to convey
3) encumbrances
future:
4) quiet enjoyment
5) warranty
6) further assurances
covenant of seisin: def
promise by grantor that grantor actually owns the property
covenant of right to convey: def
promise by grantor that he has the power to convey the property
covenant of encumbrances; def
promise by the grantor that there are no encumbrances, visible or invisible, on the property
present covenants; result
does not run w land – can only be breached at the time of closing (but closing must happen)
future covenants: result
run w the land, breach can be at time of closing, or after
covenant of quiet enjoyment: def
promise by grantor that grantee will not be disturbed by a 3rd party asserting a valid claim to the land
covenant of warranty: def
promise by the grantor that they will defend the grantee against any 3rd party claim
covenant of further assurances; def
promise by grantor that he will do everything reasonably necessary to perfect the grantee’s title
fitness + suitability of residential homes (tort)
there is duty to disclose material latent defects if seller knows about them but not readily observable and not known to buyer
applies to commercial builders/new homes
some states: old homes too
implied warranty of quality (torts)
applies to new or remodeled homes by builders + developers, covers significant latent defects (must be discovered w/in reasonable time after construction or remodeling)
–not commercial structures
