Conveyance Flashcards
What is the purpose of Statute of Frauds (SOF)?
Make people more secure in their property and contracts by making deceitful claims unenforceable.
Instruments must be in (1) writing and (2) signed by party to be charged
- Contract for land: in writing and K usually signed by both parties (+ description of prop)
- Deed: in writing and typically only the grantor is promising something so only grantor will sign
Real Estate Contract (K)
RULES
1) Marketability:
Promises there aren’t any major defects in the title - implied even if not explicitly stated in K
*Good title that can be resold; doesn’t have to be perfect
2) Duty to disclose defects:
Common law: caveat emptor; “let the buyer beware” - no duty to disclose
The seller is not warranting the quality of premises (rather warranting marketability) – so buyer must inspect!
EXCEPTIONS (when seller has to disclose defects):
1) Confidential or fiduciary duty b/t buyer & seller
2) Active concealment (can’t hide defect when B inspects)
3) Affirmative misrepresentation (can’t lie to B’ ques)
4) Partial disclosure (need to disclose the whole issue)
5) Statutes (i.e. must give potential buyer form)
6) When seller creates defect that impairs value and cannot be found in inspection (i.e. haunted house)
7) Must disclose latent material defects
8) Implied warranty of quality (for builders, have a promise of workmanlike quality)
Real Estate K Breaches
Buyer typically breaches by:
- Not showing up at closing
- Finding a cheaper/better offer, change of circumstance not NEVER valid reason; BUT not being able to finance or trouble selling old house MAYBE a valid reason
Seller typically breaches by:
- Not showing up at closing w/ right deed
- Title defect
- Can get automatic extension to fix (?)
Real Estate K Breach Remedies
1) Damages - $ amount: general, special, punitive Measure of damages from seller's view (a) Basic damages - Loss of bargain - Difference b/t K price and fair market value of prop at time of breach (b) Special damages - $ used to put property back on market - $ used for upkeep b/c of breach - Any extra $ b/c of breach
2) Rescission
Place parties to pre-contract (give back deposit)
Common rule: breacher cannot recover deposit even if seller may have profit
Modern rule: Seller can retain amount of deposit that would compensate actual damages
3) Specific performance
According to the contract terms
What is equitable conversion?
When a buyer of real property signs a binding K and becomes the “equitable owner,” before the delivery of a deed.
Here, seller maintains minimum legal title to get the purchase price.
*Buyer burdens the risk of loss b/t the the signing of K and closing - majority view
What is merger?
When the contract merges into the deed.
At this point, no more lawsuits can be based off the real estate K, only the deed.
Exceptions of when you can still sue on K terms:
- fraud
- collateral promises (i.e. not only am I going to the sell you the house, but also the car)
What happens at closing?
1) Buyer pays $
2) Seller conveys title via deed
*Delivery of deed
Either grantor himself or via escrow agent
Issue: if grantor hands deed to someone other than grantee or escrow then ask who that person represents. If handed to own agent then NOT considered delivery
What is a deed?
An instrument that conveys real property from one person to another.
Modern Deed requirements (common law)
1) Name of grantor & grantee
2) Words of conveyance
3) Description of property
4) Signature of grantor
* Seal not necessary
Statutory Deed
There may be a statute in state w/ requirements (with specific form to fill out)
Things you should put in deed, but aren’t required:
- Consideration (nominal $)
- Date
- Notarization
What are the three types of deeds?
1) General warranty deed
2) Special warranty deed
3) Quitclaim deed
General Warranty Deed
Warrants title against all defects in title, whether they arose before or after the grantor took title.
Six classic warranties:
1) Covenant of seisin - grantor owns estate
2) Covenant of right to convey
3) Covenant against encumbrances - (mortgages, liens, easements, covenants)
4) Covenant of general warranty - grantor will defend against lawful claims
5) Covenant of quiet enjoyment
6) Covenant of further assurances - grantor will execute other doc to required to perfect title
Special Warranty Deed
Either:
(1) Promises the the six warranties, but only against the grantor’s own acts or
(2) A deed with special combination of some of the six warranties
Quitclaim Deed
Contains no warranties and merely conveys whatever title grantor has, if any.
*Cannot sue on deed b/c there’re no promises
Remedy for breach of general/special warranty
Can only get $ - MAX is the purchase price
