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Property > Chapter 8: Selling Real Property > Flashcards

Chapter 8: Selling Real Property Flashcards

1
Q

Statute of Frauds

What must be contained within the writing?

A
  1. The essential terms of the transaction (identity of parties, price, property description)
  2. Formal writing or informal memo
  3. Signature of the party sought to be bound
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2
Q

Statute of Frauds

Three ways of describing property

A
  1. Government survey
  2. Metes and bounds
  3. Subdivision map
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3
Q

Statute of Frauds

What is contained within a government survey?

A
  • Begins at initial point call Principal Meridian (37 in US) - Runs NS
  • Each line running perpendicular called “base line”
  • Townships are divided into 36 1-mile square sections
  • Range designations indicate property’s location east or west of the Principal Meridian
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4
Q

Statute of Frauds

What is contained within Metes and bounds

A

Based largely on visible topographic features - ridge lines, streams, and trees

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5
Q

Statute of Frauds

What is contained within a subdivision map?

A
  • A tract of land is subdivided into smaller parcels
  • A map shows where each lot is located
  • Each lot is designated by name (eg “lot 10”) with a reference to specific map and page
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6
Q

Statute of Frauds

Who is bound by the agreement?

A

Enforecement may only be sought against parties that have signed the document

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7
Q

Statute of Frauds

What must the buyer have done to be entitled to the part performance Exception to the Statute of Frauds?

A

Buyer
1. takes possession;
2. pays at least part of the purchase price; and
3. Makes improvements to the property
4. (some jx require that buyer take possession and either pay the purchase price or make improvements)

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8
Q

Statute of Frauds

Estoppel Exception to the Statute of Frauds

A
  1. One party acts in detriment in reasonable reliance on other’s oral promise and
  2. Serious injury would result if enforcement is refused
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9
Q

Statute of Frauds

Estoppel Exception to the Statute of Frauds

A
  1. One party acts in detriment in reasonable reliance on other’s oral promise and
  2. Serious injury would result if enforcement is refused
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10
Q

Marketable Title

A title is generally unmarketable if . . .

A
  1. Seller’s interest in property is less than he purports to sell
  2. Title is subject to encumbrance
  3. There is reasonable doubt about (1) or (2)
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11
Q

Marketable Title

Under what conditions does buyer accept unmarketable title?

A
  1. Property is burdened by visible encumbrance
  2. Buyer actually knows
  3. The buyer accepts the deed at closing
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12
Q

Marketable Title

How much time does a seller have to cure defects?

A

Seller is given time before closing to cure any market defects

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13
Q

Equitable Conversion

What is the time between contract signing and closing called?

A

Executory Period

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14
Q

Equitable Conversion

What are the 3 approaches to dealing with risk of loss during the executory period?

A
  1. Buyer bears the risk as the equitable owner
  2. Seller bears the risk as the legal owner
  3. Party entitled to possession bears the risk
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15
Q

Equitable Conversion

Can a party recover specific performance and keep proceeds from the insurance?

A

In some jurisdictions, yes.

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16
Q

Equitable Conversion

What if buyer or seller die before closing?

A

Contract is still valid
May be enforced by heirs and devisees of either party.

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17
Q

Duty to Disclose

What must seller disclose?

A

Defects seller knows about that
1. Materially effect the value of the property
2. Are not known or readily discoverable by a buyer

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18
Q

Duty to Disclose

Examples of typical required disclosures?

A
  1. Building code violations
  2. Zoning violations
  3. Structural defects
  4. Drainage issues
  5. Not psychological stigmas
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19
Q

Duty to Disclose

What is the implied warranty of quality?

A

Seller of newly developed property implies warranty that property is fit for its intended use.

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20
Q

The Deed

When is the deed effective?

A

ONLY when it is delivered - even if signed. MUST manifest intent to immediately transfer title

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21
Q

The Deed

What is the controlling element to determine delivery?

A

INTENT - manual transfer generally satisfies intent. So does recording of the deed. (acceptance is required but normally presume)

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22
Q

The Deed

What is a death escrow?

A

When the grantor deposits the deed with a third party and instructs them to deliver the deed only when the grantor dies - must not reserve right to recall

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23
Q

The Deed

What is a beneficiary deed?

A

Allows owner of real property to designate beneficiaries she wants to receive the property upon death; it is revocable and delivery is not required

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24
Q

Remedies for Breach

When is specific performance granted?

A

Only when monetary damages are inadequate - land is generally considered to be unique and therefore damages are usually an inadequate remedy

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25
Q

Remedies for Breach

Are sellers entitled to specific performance?

A

Illogically, courts say “yes”

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26
Q

Remedies for Breach

What role does hardship play in the remedy?

A

Performance has been denied when seller became disabled and moving would have been a hardship (eg may have been fatal for the affected buyer)

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27
Q

Title Covenants

What is the doctrine of merger?

A

Provides that once a grantee accepts the deed, all prior promises are extinguished

28
Q

Title Covenants

What is the general warranty deed?

A

Provides best protection: grantor warrants title against all defects, whether they arose before or after grantor obtained the title

29
Q

Title Covenants

What is the special warranty deed?

A

Grantor warrants against title defects that arose after the grantor obtained the title

30
Q

Title Covenants

What is the quitclaim deed?

A

Grantor makes no warranties about the title - grantee only receives what the grantor has, if anything

31
Q

Title Covenants

What are the 3 standard present covenants?

A
  1. Covenant of seisin
  2. Covenant of right to convey
  3. Covenant against encumbrances
32
Q

Title Covenants

Define covenant of seisin

A

A promise that the grantor owns the estate that he purports to convey

33
Q

Title Covenants

Define convenant of right to convey

A

A promise that the grantor has the right to convey title

34
Q

Title Covenants

Define covenant against encumbrances

A

A promise that there are no encumbrances on the title other than the ones expressly listed in the deed

35
Q

Title Covenants

What are the 3 standard future covenants?

A
  1. Covenant of warranty
  2. Covenant of quiet enjoyment
  3. Covenant of further assurances
36
Q

Title Covenants

Define convenant of warranty

A

A promise that the grantor will defend the grantee against any claim of superior title

37
Q

Title Covenants

Define covenant of quiet enjoyment

A

A promise that the grantee’s posssession of the property will not be disturbed by anyone holding superior title

38
Q

Title Covenants

Define convenant of further assurances

A

A promise that the grantor will take all future steps reasonably necessary to cure title defects that existed at closing

39
Q

Title Covenants

What is the standard measure of damages for breach of a title covenant

A

The price paid by the grantee plus interest

40
Q

Title Covenants

What is the standard for breach of the covenant against encumbrances?

A

The lesser of
1. The amount necessary to remove the encumbrance or
2. The amound by which it reduces the property value

41
Q

Title Covenants

What are the rights of remote grantees?

A

A cause of action is usually transferable - future covenants run with the land to remote grantees and most states allow for present covenants to be transferred as well

42
Q

Title Covenants

Define estoppel by deed

A

If the A grants to B with warranty deed but does not actually have title but later acquires it, it automatically passes to the B

43
Q

How to Search Title

What are the two things a searcher must do to determine the state of the title?

A
  1. Locate the recorded documents that affect title
  2. Evaluate their legal significance
44
Q

How to Search Title

What are the two systems for recording title?

A
  1. The grantor-grantee index
  2. The tract index
45
Q

The Recording Acts

What is the universal exception to the first-in-time rule?

A

The bona fide purchaser doctrine

46
Q

The Recording Acts

What is the rule in notice jursidictions?

A

A subsequent purchaser for value prevails if he takes without notice or a prior interest - subsequent purchaser does not have to record

47
Q

The Recording Acts

What is the rule in race-notice jurisdictions?

A

A subsequent purchaser for value who both takes without notice and records first prevails

48
Q

The Recording Acts

What is the Zimmer rule

A

A subsequent purchaser is deemed to have recorded his conveyance only if all prior conveyances in his chain of title are properly recorded

49
Q

The Recording Acts

When is a deed void?

A

If the deed is
1. Undelivered or
2. Forged

50
Q

The Recording Acts

When is a deed voidable?

A

If the deed is induced by fraud

51
Q

The Recording Acts

Define the shelter rule

A

A bon fide purchaser is allowed to transfer his protection to a later grantee

52
Q

The Recording Acts

Describe the alternative approach to Title Registration: the Torrens system

A

Title is passed by registration in a government agency (few states use it because it was not mandatory, initial determination was expensive, exceptions undermined it)

53
Q

The Recording Acts

A conveys to B, who does not record
B conveys to C
C records
S conveys to D who does record
Who owns the property? Why?

A

D owns the property
B-C deed is wild because a reasonable searcher would not be able to discover it

54
Q

The Recording Acts

A conveys to B, who does not record
A conveys to C, who records and has actual knowledge of B
B records
C conveys to D, D records
Who owns the property? Why?

A

D owns the property
The S-B deed was recorded too late when D is no longer searching under A’s name and does not provide notice

55
Q

The Recording Acts

A owns Greenacre
B conveys to C, C records
A conveys to B, B records
B conveys to D, D records
Who owns the property? Why?

A

D owns the property
The deed was recorded too early because the B-C deed was recorded at a point when D is not looking under B’s name

56
Q

The Recording Acts

A owns Greenacre and Forestacre
A conveys Greenacre to B granting an easement to cross Forestacre, B records
A conveys Forestacre to C who is unaware of the easement, C records
What becomes of the easement? Why?

A

C would not discover the easement because it is part of B’s deed relating to Greenacre - this is a deed from a common grantor

57
Q

What constitutes notice?

What are the 3 primary forms of notice?

A
  1. Actual notice
  2. Record notice
  3. Inquiry notice
58
Q

What constitutes notice?

Define actual notice

A

Knowledge of the prior interest

59
Q

What constitutes notice?

Define record notice

A

Notice of any prior interest that would be discovered by a standard search of the public land records

60
Q

What constitutes notice?

Define inquiry notice

A

Notice of any prior interest that would have been obtained by investigating suspicious circumstances

61
Q

Title Insurance

What are the 5 sections of the ALTA (Am. Land Title Assoc.) owner’s policy?

A
  1. Cover page
  2. Exclusions
  3. Schedule A
  4. Schedule B
  5. Conditions
62
Q

What constitutes notice?

What is in the Cover page of the ALTA owner’s policy?

A

Sets forth the scope of the coverage provided

63
Q

What constitutes notice?

What is in the Exclusions of the ALTA owner’s policy?

A

Lists specific items that are excluded from coverage for all properties

64
Q

What constitutes notice?

What is in the Schedule A of the ALTA owner’s policy?

A

States name of the insured party, the max amount insured by the policy, and the estate that is insured

65
Q

What constitutes notice?

What is in the Schedule B of the ALTA owner’s policy?

A

Lists specific items that are excepted from coverage for the property

66
Q

What constitutes notice?

What is in the Conditions of the ALTA owner’s policy?

A

Specifies procedural requirements, such as time and manner for making claims

Property (11 decks)

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