Conveyances Flashcards
K of Sale
Statute of Frauds requires:
- writing
- signed by D
- essential terms (1) description of the property (2) names of the parties and (3) price or means of determining price
Exception to SOF = Part Performance
- Most states required 2 but TX requires all 3!
(1) possession of land by buyer
(2) paying all or part of purchase price
(3) erecting improvements on the land
Executory Period and Risk of Loss (ROL)
ROL is on BUYER before closing if property is damaged or destroyed (UNLESS it’s the seller’s fault)
Equitable Conversion = title is in the buyer for all practice purposes after K but before closing, even if seller remains in possession and control
TX = ROL is on the party in possession at the time of the loss (adopted the Uniform Vendor & Purchaser Risk Act)
Death of either party = parties’ rights are still preserved (seller’s interest is $ = personal property; buyer’s interest = real property)
Marketable Title (Implied Warranty in Land Sale Ks)
Every land sale K has implied warrant that AT CLOSING (or reasonable time thereafter if time is not expressly “of the essence”), seller will give buyer marketable title (that a reasonable person would accept)
Defects making title UNMARKETABLE: includes something that presents a significant threat of litigation
(1) defects in record chain of title (variations in property descriptions, un improperly executed deed or evidence prior grantor lacked capacity to convey)
(2) presence of encumbrances (easements, covenants, mortgages, options, etc. that aren’t mentioned in K)
(3) violation of zoning ordinance (but presence of ordinance itself is OK)
(4) title acquired by adverse possession (BUT may be cured with a judgment of title in the seller OR with a quitclaim deed from former owner)
Implied Warranty of Marketable Title: Buyer’s Remedies
MUST notify seller and give reasonable time to CURE (even if it postpones closing)
- 3 options if not cured:
(1) rescission
(2) sue for damages
(3) specific performance (price lowered for defect) - if buyer accepts imperfect title, due to doctrine of merger buyer loses all recourse
Breach of Sales K: Remedies
(1) Damages (K price - value of the land on day of breach)
- Liquidated damages: buyer’s deposit can be forefeited so long as it’s not more than 10% of sales price
(2) Specific performance
- ALWAYS available to both buyer and seller
Physical Condition of the Property an Seller’s Liability
General CL rule = sale of land does NOT come with any warranties of quality or fitness as to physical condition of the property
Exceptions:
Liability of seller of new construction (re: MATERIAL LATENT DEFECTS):
- includes implied warranty of good workmanship and a warranty of habitability in the sale of a new home (basically promising qualify of new construction is suitable for human residence)
- TX = Tex. Sup. Ct. says there are 2 promises: (1) warranty of good workmanship (disclaimer only valid if builder replaces with express warranty for quality of construction) and
(2) warranty of habitability (waiver/disclaimer generally invalid)
Liability of Seller of Existing Land/Buildings
- Seller MUST disclose serious defects he knows of and are not obvious/discoverable to the buyer (e.g. leaky roof, termite infestation etc.)
- TX = Property Code says seller’s disclosure form must be honest, provided to buyer before entering into sales K
- Seller can be liable for knowing or negligent misrepresentation if buyer relied and it materially affects house’s value
- Seller CANNOT actively conceal defects
- Seller CANNOT make a false statement re: condition of the property
Deeds: Basics
- Deed transfers legal title
- Must comply with SOF
- NO consideration required (can be inter vivos gift)
- Deed to a dead person is invalid
- Formalities
(1) in writing
(2) signed by grantor
(3) conveyancing language “grant”
(4) reasonably identifies the parties AND the land (so parties can identify the property–metes and bounds will control over other description–or else void for vagueness) - Land description priority for rules of construction: natural monuments; artificial monuments; courses; distances; name; quantity
- Must have proper
(1) execution
(2) delivery and
(3) acceptance
Delivery of a Deed
- Key = intent to pass title
- if facts show G intended to pass title, mere safeguarding of the paper by G does not show lack of delivery
- BUT if G dies and still has deed in his possession = PRESUMPTION of no delivery (can be rebutted by grantee)
- Recording a deed raises PRESUMPTION of delivery, even if grantee never sees the deed and knows nothing about it
- Once delivery occurs, title passes–later returning the deed or tearing it up has NO effect
- Parol evidence is permitted to show G’s intent to deliver
Conditional delivery:
(1) expressly written into deed (if deed says it won’t become effective until G’s death, this is valid delivery of a future interest)
(2) oral condition with delivery to grantee (if made orally at time of delivery, majority view says DISREGARD oral condition)
(3) delivery conditional on paying the purchase price (VALID provided G makes delivery to TP in escrow with instructions to deliver to grantee when condition is satisfied (*G CANNOT get deed back once in escrow as long as grantee satisfies condition)
Acceptance of a Deed
- PRESUMED unless facts show that grantee rejected the deed
- Acceptance relates back to the date the deed was delivered into escrow
Void v. Voidable Deeds
Void = set aside by court even if property has passed to BFP
- forged
- never delivered
- issued to nonexistent grantee
- obtained by fraud in the factum
Voidable = will be set aside only if property has NOT passed to a BFP
- executed by minors or incapacitated persons
- obtained through… fraud in the inducement, duress, undue influence, mistake, and breach of fiduciary duty
Reformation of Deeds
Deed will be reformed if it does not represent parties’ agreement because of
(1) mutual mistake
(2) scrivener’s error
(3) unilateral mistake caused by misrepresentation or other inequitable conduct
Covenants for Title: 3 kinds of deeds
3 types of deeds:
(1) General Warranty Deed
(2) Special Warranty Deed
(3) Quitclaim Deed
General Warranty Deed
3 Present Covenants
- Seisen: seller in fact owns the estate she purports to convey (has title and possession)
- Right to convey: seller has the right to convey title and possession
- Against Encumbrances: seller promises no physical or title encumbrances
3 Future Covenants
- Quiet Enjoyment: promises grantee will not be disturbed in possession by a TP’s lawful claim of title
- Warranty: seller agrees to defend against reasonable claims of title by a TP and compensate grantee for any losses
- Further Assurances: promises to perform acts reasonably necessary to perfect the title
Damages for breach = limited to purchase price received by original seller/D + incidental damages
Statutory Special Warranty Deed
Use of word “grant” in deed creates by implication 2 limited assurances against acts of GRANTOR (not predecessors):
(1) G has not conveyed the same estate or any interest therein to anyone other than grantee
(2) the estate is free from encumbrances made by the G
Quitclaim Deed
- Releases whatever interest the G has
- NO covenants of title are included or implied
