CH 4: Transfer of Interests: Instruments and Agreements Flashcards
Deed
Written proof of title
Title
actual lawful ownership, NOT a document
Equitable title
actual title will be transferred at a future date
essential deed elements
- competent grantor
- identifiable grantee
- Act (word) of conveyance
- consideration
- legal description
- habendum clause
- Limitations
- exceptions and reservations
- signatures
- delivery and acceptance
Habendum Clause
“to have and to hold”
General warranty deed
- grantor warrants the title against defects before or during grantor’s period of ownership
- “convey and warrant forever”
Warranties included in a general warranty
covenant of seizen
covenant against encumbrances
covenant of quiet enjoyment
covenant of warranty forever
covenant of seizen
assures the grantor holds title noted in deed being conveyed
covenant against encumbrances
assures property is free of encumbrances (usually real property taxes that haven’t been assessed)
covenant of quiet enjoyment
ensures grantee can possess land w/o claims of title from others
covenant of warranty forever
provides grantor will defend the grantee’s interests against all unlawful claims of title
Full covenant and Warranty Deed
- strongest guarantee
- covenant of right to convey
- covenant of further assurances
covenant of right to convey
states grantor owns land and convey it
covenant of further assurances
requires grantor to remedy any defects in title
special warranty deed
- limited warranty
- bargain and sale deed w/ covenants
- grantor warrants title only against defects during the time the grantor owned property
bargain and sale deed (judicial deed)
-grantor has right to convey property, but there are no warranties with it.
Judicial deeds
executor's deed administrator's deed guardian's deed sheriff's deed referee's deed
executor’s deed
executor of estate conveys property of the deceased
administrator’s deed
court appoints person to convey property of deceased (usually no will)
guardian’s deed
court-appointed rep uses a guardian’s deed to convey property by a court
sheriff’s deed
a doc giving ownership rights in property to a buyer at a sheriff’s sale
referee’s dead
doc giving ownership during a bankruptcy or foreclosure
quitclaim deed (deed of release)
- no warranties
- conveys any interest
- used to remedy clouds on a title
clouds on a title
when someone may have a claim on title, but terminates his interest
Methods of transferring Ownership
- Voluntary Alienation
- Involuntary Alienation
- devise or descent
ways of voluntary alienation
Sale of property
Gift of a Deed
Grant
Involuntary Alienation
Eminent Domain
Foreclosure
Adverse Possession
Accession
Adverse Possession
requires open, notorious, hostile, adverse, continuous, and exclusive use of another’s land for a specified period of time - matures into title
accession
acquisition by it’s addition to real estate already owned through human/natural processes
Accretion/alluvion
gradual addition to dry land by nature (lake depositing silt)
avulsion
land lost due to sudden acts of nature
reliction
body of water gradually recedes, exposing land that was underwater
devise vs descent
devise- transfer with a will
descent - without a will
testate/intestate
dying testate = having a will
dying intestate = not having a will
Elements of a contract
- voluntary
- competent parties
- lawful and possible objective
- consideration
- description
- mutual agreement
- written format and signatures
competent parties (contract elements)
- 18+ years (only minor can void a contract)
- mental competence
- proper authorization
severable contract (contract elements)
one part or provision can be held unenforceable w/o making the entire contract unenforceable
consideration/valuable consideration (contract elements)
anything of value given to induce another to enter into a contract
forberance
promise not to do something
Contract characteristics
- sufficient, not necessarily adequate consideration
- given freely
- not under fraud, undue influence, duress, mistake
- written format
- power of attorney
attorney in fact has to be an attorney T/F?
False - can be anyone
Breach of contract
one party fails to perform - non-defaulting party can take legal action
substantial performance/ substantial breach (discharge of contracts)
promisor doesn’t perform all contractual obligations, but does enough so that the promisee is required to fulfill their obligation
material breach
breach on contract important enough to excuse the non-breaching party
“time is of the essence”
if deadline passes, contract is automatically voidable - material breech
- unless both parties agree to extend deadline
conditions/ contingency (discharge of contract)
party’s rights/obligations depend on occurrence/nonoccurence of certain events
Discharge of contracts
- agreements of the parties
- partial performance
- full performance
- impossibility of performance
- operation of law
remedies for breach of contract
cancelation compensatory damages injunction liquidated damages reformation recission specific performance
(remedy for breach) cancelation
termination of contract w/o undoing what was performed under it
(remedy for breach) compensatory damages
compensate plaintiff for harm caused by defendant’s act/failure to act
(remedy for breach) injunction
court order for party to do/not do certain acts as opposed to monetary reward
(remedy for breach) liquidated damages
amount of money specified in a contract to be awarded in the event the agreement is breached
(remedy for breach) reformation
a court/judge changes a contract to reflect true intent (usually when parties make clerical error)
(remedy for breach) recission
destruction, annulment, termination of contract and all parties must give back anything under it
(remedy for breach) specific performance
(forced sale) court orders breacher to perform as agreed rather than simply paying damages
(discharge of contract) partial performance
both parties agree to accept something different than original terms
(discharge of contract) full performance
all parties have fulfilled their obligations
(discharge of contract) impossibility of performance
obligation becomes illegal
(discharge of contract) operation of law
when rights/liabilities are changed by application of law
Assignment of contract
assignor transfers rights to another (assigned) person
Novation
substitution of a new contract for an earlier contract (new contracts cancel original)
Real estate sales contracts contain 3 things
- buyers initial offer (and counter offers)
- receipt of any earnest money deposit
- contract between buyer and seller
termination of an offer
- lapse of time
- death/incapacity
- revocation - must be made before offer is accepted
Requirements for acceptance of an offer
- “meeting of minds”
- must be communicated to offerer directly
escape clause/ bump clause/ 72 hour clause
buyer has to sell his home in order to purchase the property… this clause allows other buyers and sellers some options
Option to purchase
contracts that give one party the right to do something w/o obligating them to do it
- usually renting w/ the option of buying
- inforcible by optionee
Right of First Refusal
right to have first chance to a lease property if owner decides to sell/lease it
Gross lease
- common for residential rentals
- landlord pays for all expenses
modified-gross lease
lessor and lessee are sharing expenses
net-lease
leasee is paying some or all expenses
(Net-lease) single net
lessor pays for maint repairs and taxes/insurance
lessee pays EITHER taxes/insurance
(Net-lease) double net - net/net
lessor pays maint/repair
lessee pays BOTH taxes and insurance
(Net-lease) triple net
lessor pays for building repairs
lessee pays taxes, insurance/maint
(Net-lease) absolute net
lessee pays everything
Flat lease / level payment lease
rent payments are consistent throughout lease
variable lease
payments made at regular interval but may change
step lease
rent amount changes a PERCENT over time at set interval
revaluation lease
payments change over time to allow market changes
annual increase lease
rent changes an AMOUNT specified over time at set interval
percentage lease
- usually business
- paying base guaranteed minimum, plus a percent of the sales
T/F: leases are standardized and appraisers just need to know the type
False, appraisers have to look at each individual lease
Lease terms of interest to appraiser
- rent
- term of lease
- terms to change rent
- beginning and ending date of lease
- personal property included in lease
- expenses paid by landlord and tenant
- other services provided by landlord
Breakpoint rent / overage rent (percentage lease)
Breakpoint - minimum guaranteed rent
overage rent- percent of sales
