Contracts

Question 1

WHat are the 5 elements of a land sale contract under Stat of Frauds?

Answer 1

1. be in writing
2. identify the parties
3. be signed by the party to be bound
4. describe the property
5. list the purchase price

*the doctrine of part performance is an EXCEPTION to the general rule that land sale contracts must be evidenced by a signed writing that satisfies the stat of frauds

Question 2

What is equitable conversion?

Answer 2

Once a contract for the sale of land is executed, the doctrine of equitable conversion gives equitable title to the BUYER - who will then be considered the owner of the land in equity, while legal title and right to possession remain w/ SELLER until closing

*majority rule IS that if the property is destroyed BEFORE closing - w/out fault from either - the risk of loss remains with the BUYER

Question 3

What is required to establish “part performance” under a land sale contract?

Answer 3

Occurs if the buyer has taken possession of the land AND EITHER:

1. made substantial improvements to land OR
2. paid all of part of purchase price

*this is the majority approach to part performance, and it based on the idea that the fats show the buyer is entitled to specific performance, even if they are not contained in a writing

Question 4

Which party carries “risk of loss” under equitable conversion?

Answer 4

Maj Rule: if the real property is destroyed prior to closeing - BUYER because they are considered the owner

*in this scenario, the buyer must pay the seller the full K price, unless K specifies otherwise

Question 5

What is the preferred remedy when seller breaches a land sale contract?

Answer 5

specific performance

Question 6

What is marketable title?

Answer 6

title that is free from unreasonable doubt about whether the seller can convey the rights they want to convey

**marketable does NOT mean perfect title, but title that is reasonably likely not to be litigated

Question 7

What are the 2 types of defects that will make title unmarketable?

Answer 7

1. defects in chain of title
2. encumbrances (montages, liens, easements)

Question 8

In a real estate K, will “time be of the essence” by default?

Answer 8

General No

Default rule is that time is NOT of the essence, even if the K picks a particular date for the closing

Question 9

May a real estate K require the title to be marketable prior to closing?

Answer 9

YES

May provide for a different point in time when the seller must furnish buyer with good an marketable title

*if no such provision exits, title must be marketable at the date of closing

Question 10

What happens at a “closing” in real estate transactions?

Answer 10

Is the time when the seller gives the deed to buyer, and any other documents required by local laws, and the buyer tenders payment

Question 11

What is the measure of monetary damages for a breach of a land sale K?

Answer 11

the difference between the market price and K price

*benefit of the bargain rule