Chapter 8: Deeds Flashcards
Abargain and sale deedis
A deed that conveys real estate from a seller to a buyer but does not guarantee clear title; used by court officials and fiduciaries to convey property they hold by force of law, but to which they do not hold title.”
*It does not guarantee that there is a clear title, but at least the seller (grantor)implies that they do hold title to the property.
*An example of this might be a sheriff’s deed, which is given to the purchaser of a property at a court-ordered sale.
*Most bargain and sale deeds do not have covenants or warranties; however in some states a seller is allowed to add covenants to this type of deed.
tax deed
A deed that conveys title to a property purchased at a tax sale; may or may not convey absolute title, free of all prior claims and liens, depending on state law.”
This is essentially a bargain and sale deed, but is used specifically for tax sales where properties have been taken over for non-payment of real estate taxes.
A warranty deed is defined as
A deed that conveys to the grantee title to the property free and clear of all encumbrances, except those specifically set forth in the document.”
This is the best and most powerful type of deed. The grantor warrants or guarantees that the title being conveyed is free and clear of all encumbrances. If, at a later date, a cloud on the title appears or someone else makes a claim against the title, the grantor must make it right.
Adeed of trust, ortrust deed is…
A legal instrument similar to a mortgage document, except that three parties are involved in securing the debt: the borrower, a lender, and a trustee who holds property title when the deed of trust is executed and delivered. The trustee transfers title to the lender if the borrower defaults and to the borrower if the note is repaid. Also called atrust deed.”
This is similar to a mortgage and is the method used in some states to encumber properties in lieu of recording a mortgage. Title is vested in a third party, the trustee, until the mortgage lien is satisfied.
It is an alternative document that is a security instrument for a lender. In some states, lenders prefer deeds of trust because, in the event of mortgage default, the trustee is able to sell the property without going through a lengthy and expensive foreclosure process.
parol evidence rule
states that written contracts take precedence over oral agreements. The law.com Legal Dictionary defines theparol evidence rulethis way: “if there is evidence in writing (such as a signed contract) the terms of the contract cannot be altered by evidence of oral (parol) agreements purporting to change, explain or contradict the written document.”
Contracts can be terminated or discharged by:
Agreement of the parties
Performance of the contract
Impossibility of performance
Operation of law
Assignment is defined as
“n. the act of transferring an interest in property or some right (such as contract benefits) to another. It is used commonly by lawyers, accountants, business people, title companies and others dealing with property.”
Novationis defined as
n. agreement of parties to a contract to substitute a new contract for the old one. It extinguishes (cancels) the old agreement. A novation is often used when the parties find that payments or performance cannot be made under the terms of the original agreement, or the debtor will be forced to default or go into bankruptcy unless the debt is restructured. While voluntary, a novation is often the only way any funds can be paid.”
An Execute (ed contract) is defined as
v. 1) to finish, complete or perform as required, as in fulfilling one’s obligations under a contract or a court order. 2) to sign and otherwise complete a document, such as acknowledging the signature if required to make the document valid.”
Impossibility of Performance
Generally speaking, even if a party is unable to perform the obligations of a contract, they are still liable. The only way to prevent this is to insert in the contract provisions for relief in the event of impossibility.
An example ofimpossibilitywould be if a law changed after the contract was arranged but before the full performance of the contract. Suppose a contract was signed to drain lowland areas and since then it became declared as a protected wetland area. It would now be an illegal act, and the contract would be void.
Or if the pertain dies or the property is destroyed.
Contracts can be terminated byoperation of lawunder:
Bankruptcy
Statute of limitations
Alteration of contract
A filing of a petition forbankruptcyunder federal law terminates any contracts in existence as of that date.
If a party to a contract fails to bring action against a defaulting party within a specific time frame under theStatute of Limitations, the right of remedy is lost. Check your own particular state for the time periods under the Statute.
The intentionalalterationof a contract without written consent of all parties effectively terminates the agreement. Of course, this may lead to liability.
flat rental leaseis defined as
a lease with a specified level of rent that continues throughout the lease term.”
gross leaseis defined as
A lease, usually for a long term, that provides for periodic rent adjustments based on the change in an economic index.”
The consumer price index (CPI) is most often the index to which the lease is tied, but it could be any recognized index. The CPI reflects the basic rate of inflation. Adjustments in the rent usually are made annually, but could be in any frequency that is negotiated. This usually seems to be fair and reasonable for both sides, as they are offered some protection against the inevitable fluctuations in the economy and purchasing power.
A net lease is:
A lease in which the landlord passes on all expenses to the tenant.”
Often the terms net lease, net/net lease, net/net/net lease, ortriple-net leaseare used. These terms indicate the extent to which the tenant and landlord are dividing the expenses of utilities, taxes and insurance. The meaningsof these net terms may vary regionally, so it is important for you to know exactly who is responsible for what expenses in the subject lease, as well as in comparable leases to which the subject is being compared.
graduated rental leaseis defined as
A lease that provides for specified changes in rent at one or more points during the lease term, e.g., step-up and step-down leases, or leases with a set percentage adjustment.”
