Contracts of Sale and Closing

Question 1

Closing

Answer 1

when seller hands over the deed with intent to pass title

• implied warranty of marketable title must be satisfied on closing date
• if unable to, seller has reasonable time to cure defects as long as K or circumstances do not indicate that time is of the essence

Question 2

Implied warranty of marketable title

Answer 2

title is marketable if it is reasonably free of defects such that a reasonable person would accept it (on closing date)
- exclusion of warranty must be express

Question 3

Contract of sale must satisfy

Answer 3

(1) Statute of Frauds and

(2) implied warranty of marketable title

Question 4

Statute of Frauds

Answer 4

Contract must be:

(1) in writing;
(2) signed by the party to be charged; and
(3) contains the essential terms (identity of parties, description of land, and price)

Question 5

Part performance exception

Answer 5

Exception to SoF: (1) a contract exists and all conditions precedent have been fulfilled, AND (2) the actions of the parties clearly show there is a contract because the claimant has done TWO of the following: (i) takes possession, (ii) paid in full or a substantial portion of the purchase price, (iii) improves the property in a significant way

Question 6

Doctrine of equitable conversion

Answer 6

once K is signed, the buyer’s interest is real property (equitable title) and seller’s interest is personal property (legal title remains with seller until closing)
- risk of loss shifts to buyer

Question 7

Title is unmarketable if:

Answer 7

(1) defect in the chain of title;
(2) encumbrance not mentioned in K;
(3) violation of zoning ordinance; or
(4) acquired by adverse possession

Question 8

Uniform Vendor and Purchaser Risk Act

Answer 8

*MI rule

buyer is not liable if the property is destroyed while the seller is in possession and control

Question 9

Execution of deed

Answer 9

deed must: (1) identify the parties, (2) have words of grant, (3) describe the land, and (4) signed by the grantor

• deed does not need to be physically delivered as long as there is intent to pass title
• acceptance is presumed but can be rebutted

Question 10

Quitclaim deed

Answer 10

grantor promises nothing and the grantee gets whatever the grantor has
- grantee takes risk, cannot successfully sue on the deed

Question 11

Warranty deed

Answer 11

grantor gives six implied covenants that must be satisfied

• 3 present covenants, 3 future covenants
• can be SPECIFICALLY excluded

Question 12

Present covenants

Answer 12

given at the time deed is handed over and breached if not fulfilled at the time
- do not run with land (only the grantee that the grantor conveyed the property to can sue on these)

• Right to convey: grantor promises that grantor can convey title
• Seisin: grantor promises that grantor has title and possession
• No encumbrances: grantor promises that there are no easements, liens, or encumbrances on the property that are not stated in the deed

Question 13

Future covenants

Answer 13

covenants that are breached in the future. run with the land and all subsequent purchasers can sue on these

• Further assurances: grantor states that if he forgot to do something to pass title, he will do so
• Quiet enjoyment: grantor promises that grantee will not be disturbed by a third party asserting a valid claim
• Warranty: grantor will defend grantee if there is such a third party claim

Question 14

Merger

Answer 14

K merges into the deed on closing date, so buyer can only sue on the deed

Question 15

Estoppel by deed

Answer 15

after-acquired title doctrine

if grantor transfers property by WARRANTY deed to grantee (but grantor does not yet have title), when grantor acquires title, it will pass directly to grantee who should have initially received it

exceptions: if grantor gave the land to a bona fide purchaser after transferring it to the initial grantee

Question 16

Damages for breach of contract

Answer 16

Buyer’s remedies:

(1) Rescission
(2) Damages (money for whatever is alleged to be defective)
(3) Specific performance

Seller’s remedies:

(1) Damages (difference between the K price and value of the land)
(2) Liquidated damages (buyer’s deposit, but no more than 10% of sale price)
(3) Specific performance (enforcing land sale K)

Question 17

Implied warranty of fitness

Answer 17

for new homes sold by a buyer-seller

Question 18

Seller Disclosure Act

Answer 18

*MI rule

Party transferring property is required to provide to purchaser a good faith written disclosure statement disclosing any history of infestation