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Real Property > Conveyances (Real Estate Contracts) > Flashcards

Conveyances (Real Estate Contracts) Flashcards

1
Q

What two steps occurs in land sales?

A

(1) contract of land sale, which conveys equitable title

(2) closing, which conveys a deed passing legal title

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2
Q

What does the statute of frauds require of land sale contracts?

A

In writing, signed by party to be charged, and including the essential terms (parties, description of land, and price)`

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3
Q

When can a land sale contract be taken out of the statute of frauds?

A

Doctrine of part performance
If you have 2 of the 3 of the following:
(1) buyer has taken possession
(2) buyer has paid the full price or substantially the full price
(3) buyer has made substantial improvements

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4
Q

What is the doctrine of equitable conversion?

A

Once a contract is signed, equity regards the buyer as the owner of the property. The seller’s remaining interest is in the right to the proceeds of the sale (a personal property interest). Legal title is considered held in trust for the buyer but seller is entitled to possession until closing.

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5
Q

Under the doctrine of equitable conversion, what happens if the property is destroyed without fault to either party before closing?

A

Buyer has risk of loss

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6
Q

Under the doctrine of equitable conversion, what happens if either dies before closing?

A

If seller dies, bare legal title passes to heirs/devises but they must give it to the buyer at closing. (Seller’s right at death is considered personalty)

If buyer dies, heirs/devises have a right to the legal title

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7
Q

What is the implied covenant of marketable title?

A

All land sale Ks have an implied covenant that the seller will provide marketable title (title reasonably free from doubt) at closing. Need not be perfect but must not present unreasonable risk of litigation

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8
Q

When may title be unmarketable?

A

Defect in record chain of title:
–A title acquired by adverse possession is unmarketable
– A future interest whose holder is unborn or unascertainable renders title unmarketable
Encumbrances (mortgages, lines, easements, RCs, options to purchase and significant encroachments)
Zoning restriction violations (only existing violation).

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9
Q

At what time does marketable title become relevant?

A

The date of closing (for an installment land K – buyer’s last payment)

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10
Q

What is the remedy if title is unmarketable?

A

Buyer must notify the seller of unmarketable title and give them reasonable time to cure the defect. If seller fails to cure, buyer’s remedies include rescission, damages, specific performance with abatement, and a quiet title suit

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11
Q

What is the time of performance in land sale contracts?

A

Time is presumed not “of the essence” – closing date is not absolutely binding and late tender does not prevent the party tendering late from enforcing the contract if tender is within a reasonable time (but may be liable for incidental losses)

Time is of the essence if (1) stated in K, (2) circumstances indicate parties’ intent, or (3) notice by one party to the other – if this is the case than failure to tender on closing date is breach

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12
Q

What are the attributes of tender of performance in land sale contracts?

A

Buyer’s obligation to pay and seller’s obligation to convey are concurrent conditions. Neither party in breach until the other tenders. If neither party tenders by closing date, it is extended until one of them does

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13
Q

What are the remedies for breach of sales contracts?

A

Nonbreaching party entitled to damages (K price - market value + incidentals) or specific performance
If title is unmarketable, purchase price may be abated

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14
Q

What are the seller’s liabilities for defective property?

A

If the sale of a new house by a builder (but not generally) – warranty of quality/fitness for purpose
For existing land and buildings – defects like leaky roof/termites under the theories of misrepresentation, active concealment or failure to disclose

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15
Q

When is a seller liable for defects under a misrepresentation/fraud theory?

A

When they knowingly or negligently made a false statement of fact to the buyer, the buyer relied, and materially affected property value.

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16
Q

When is a seller liable for defects under an active concealment theory?

A

Even absent any statements, liable for any defects seller took steps to conceal

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17
Q

When is a seller liable for defects under a failure to disclose theory?

A

If (1) they know or should know of the defect; (2) it is not apparent and buyer will not discover on ordinary inspection, and (3) serious and would probably cause the buyer to reconsider if they knew

Factors: did seller create defect? is defect dangerous? is this residential?

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18
Q

When does an easement not render title unmarketable?

A

When it is beneficial, visible, or known to the buyer

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19
Q

When can a buyer claim title is unmarketable due to mortgage or lien?

A

Not before closing because the seller has a right to satisfy a mortgage or line at closing with the sale proceeds

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20
Q

When is a party’s tender excused?

A

If the other repudiates or if it is impossible for the other party to perform

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21
Q

What liquidated damages provisions may occur in land sale contracts?

A

Usually buyer is required to deposit “earnest money” and seller may retain this on buyer’s default

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22
Q

What are the effect of disclaimers in land sale contracts?

A

General disclaimers (“as is” or “with all defects”) is not sufficient to negate liability, but specific disclaimers for specific types of defects likely effective

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23
Q

What are real estate brokers and what rights and obligations do they have?

A

Seller’s agents
Must disclose material info to buyer if they have actual knowledge of it
Traditionally, they earned their commission when they produce a buyer ready, willing, and able to buy even if the deal does not close
Increasingly, they earn on close or failure to close through the fault of the seller

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24
Q

What are exclusive listing agreements?

A

Under an exclusive listing agreement with a broker, their best efforts to sell acts as consideration for commission

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25
Q

What is title insurance?

A

Insures that good record title of the property exists as of the policy date

Owner’s policies: protect the person owning the policy (usually owner or mortgage lender)
Lender’s policy: follows any assignment of the mortgage

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26
Q

What is a deed?

A

Transfers title to a legal interest in real property

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27
Q

What formalities are required of deeds?

A

In writing
Signed by the grantor
Reasonably identify both parties and land

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28
Q

When may a deed validly convey an inter vivos gift?

A

(1) donative intent
(2) delivery
(3) acceptance

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29
Q

What happens if a deed is delivered with the name of the grantee left blank?

A

Court presumes the person taking delivery has authority to fill in the grantee’s name. Deed valid if grantee’s name filled in

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30
Q

What happens if the land description is left blank in a delivered deed?

A

Void unless grantee explicitly given authority to fill it in

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31
Q

What deeds are void and what happens to void deeds?

A

Include deeds which are forged, undelivered, issued to an nonexistent grantee, obtained by fraud in fact (grantor did not realize they were signing a deed)

Court will set aside a void deed even though it passed to a bona fide purchaser

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32
Q

What deeds are voidable and what happens to voidable deeds?

A

Voidable deeds include those executed by minors/persons otherwise incapacitated, obtained through fraud in the inducement, duress, undue influence, mistake, and breach of fiduciary duty

Voidable deeds will be set aside only if property has not passed to a bona fide purchaser

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33
Q

What happens if a joint tenant executes a deed for the entire property with their own signature and the forged signature of the other joint tenant?

A

Works a severance – buyer and other joint tenant become tenants in common

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34
Q

When may a deed be set aside as a fraudulent conveyance?

A

Even in compliance with the formal requirements, a deed may be set aside by the grantor’s creditors if made

(1) with actual intent to hinder, delay, defraud a creditor, or
(2) without receiving a reasonably equivalent value in exchange and debtor is insolvent or became insolvent as result of transfer

will not be set aside against a grantee who took in good faith and for reasonably equivalent value

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35
Q

When is a description of land in a deed sufficient?

A

Provides a good lead as to the identity of the property (e.g., “All my land in Stockton”). If indefinite, grantor retains title but there may be reformation of the deed.

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36
Q

When is parol evidence admissible to supply a description?

A

To resolve patent or latent ambiguities in the deed but not where the description is wholly inadequate

37
Q

What happens when descriptions are inconsistent or conflicting?

A

The following order of priority for methods of description is imposed:

(1) natural monuments (e.g., an oak tree)
(2) artificial monuments (stakes or buildings, e.g.)
(3) courses (e.g, angles)
(4) distances
(5) name
(6) quantity

38
Q

What presumption is in force to land abutted by a water boundary or right of way?

A

Title presumptively passes to the center of the right of way or water boundary. Can be rebutted by language in the deed

39
Q

What are the consequences of a variable water boundary line?

A

River or stream – the slow and imperceptible change to the course alters the legal boundary
Avulsion (sudden change of water course) does not alter boundaries
Abutting water depositing soil – accretion belongs to the abutting owner

40
Q

When will a deed be reformed?

A

If it does not represent the parties agreement because of (1) mutual mistake, (2) scrivener’s error, or (3) unilateral mistake caused by misrepresentation or other inequitable conduct

41
Q

What must a residential mortgage lender provided to a mortgagor prior to closing?

A

Closing disclosure at least 3 business days prior providing details about mortgage (principal, interest, payment amounts, closing costs, possible future surprises like future changes in interest rates or balloon payments)

42
Q

What form must a seller of residential property provide to the buyer at closing?

A

disclosure of physical defects of which the seller is aware (any nondisclosed defects of which seller is aware, seller will be liable for)

43
Q

When is a deed effective?

A

When delivered and accepted

44
Q

Can a deed be conveyed to a dead person?

A

no, void and contains no title, regardless of whether grantor was aware that grantee was deceased. title remains with grantor

45
Q

What is deed delivery?

A

Grantor’s intention to make a deed presently effective = delivery even if possession is postponed. May be done by manual delivery, notarized acknowledgement by grantor and recordation, or anything else.

46
Q

When is parol evidence admissible on the matter of deed delivery?

A

on the issue of intent to delivery but not to show delivery was conditional

47
Q

If a grantee returns a delivered deed, what is the effect?

A

no effect, title passes on delivery and cannot be cancelled/returned. to return, grantee must write a new deed and deliver to gratnor

48
Q

What indicates a lack of intent to pass title?

A

Retention of control or interest

49
Q

Is a properly executed and delivered deed providing that title will not pass until grantor’s death valid?

A

Yes, creates future interest in grantee

50
Q

What happens to a deed absolute on its face delivered with oral conditions?

A

Condition disregarded

51
Q

What happens if grantor gives a deed to a 3rd party with instructions to give it to the grantee?

A

Delivery is valid

52
Q

What happens if grantor gives a deed to a 3rd party but fails to give instructions?

A

Validity depends on whether 3P is grantor’s agent. If yes, no delivery

53
Q

When is a conditional delivery valid?

A

when grantor gives a deed to a third party with instructions to give it to grantee when certain conditions occur. parol evidence admissible to show delivery conditional

54
Q

When can a grantor revoke a deed given to a third part with conditions?

A

if condition has not yet occurred and no enforceable written contract to convey exists

55
Q

What happens when grantee breaches escrow conditions by acquiring the deed prior to performance of the condition?

A

Title does not pass, cannot give good title to subsequent purchaser

56
Q

When does acceptance occur?

A

Required to complete conveyance. Most states presume. Acceptance relates back to the date the deed is delivered in escrow unless this would defeat the rights of intervening third parties

57
Q

What are the three types of deed?

A

General warranty
Special warranty
Quitclaim

All provide different scope of title insurance/covenants for title

58
Q

What covenants are in a general warranty deed?

A 
Covenant of seisin 
Covenant of right to convey
Covenant against encumbrances
Covenant for quiet enjoument
Covenant of warranty
Covenant for further assurances
59
Q

What is the covenant of seisin?

A

Grantor covenants that she has the title and possession of the estate she purports to convey

60
Q

What is the covenant of right to convey?

A

Grantor covenants that she has the authority to make the grant. Title alone will satisfy

61
Q

What is the covenant against encumbrances?

A

Grantor covenants against the existence of physical or title encumbrances

62
Q

What is the covenant for quiet enjoyment?

A

Covenants that grantee will not be disturbed in possession by a third party’s lawful claim of title

63
Q

What is the covenant of warranty?

A

Grantor agrees to defend against reasonable claims of title by a third party and compensate grantee for any loss sustained by claim of superior title

64
Q

What is the covenant for further assurances?

A

promise to perform acts reasonably necessary to perfect title conveyed

65
Q

When/how are the covenants of a general warranty breached?

A

Seisin, right to convey, and against encumbrances are breached, if at all, at the type of conveyance (present covenants).

Quiet enjoyment, warranty and further assurances are breached only on disturbance of grantee’s possession and run with the estate.

66
Q

Who may a grantee sue if he is evicted by lawful claim of title?

A

Anyone up the line of successive conveyances

67
Q

What is a special warranty deed?

A

Same covenants as general warranty but promises to warrant and defend title only against claims arising by through or under the grantor and not against defects in title that existed before grantor was deeded the property

68
Q

What is a quitclaim deed?

A

No covenants of title included or implied, releases whatever interest grantor has

69
Q

What is estoppel by deed?

A

If a grantor purports to convey an estate she does not own, her subsequent acquisition of the estate will automatically inure to the benefit of the grantee. Not usually applicable to quitclaim deeds. Most states limit this: title will unsure to the benefit of the grantee only as against the grantor but if the grantor transfers after-acquired title to a bona fide purchaser for value, the BFP prevails over the original grantee

70
Q

What are recording acts?

A

Recording acts apply where a grantor conveys the same property more than once, establishing how to determine who prevails

71
Q

What are the three major types of recording act?

A

Notice
Race
Race-notice

72
Q

What is the rule in a notice jurisdiction?

A

subsequent BFP (who pays value and has no notice of the prior deed) prevails if the prior grantee failed to record regardless of whether the BFP records

73
Q

What is the rule in a race jurisdiction?

A

Whoever records first wins

74
Q

What is the rule in a race-notice jurisdiction?

A

A subsequent BFP who pays value and has no notice of the prior deed prevails if they record before the prior grantee

75
Q

Which kind of statute is this: “No conveyance or mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof, unless it is recorded.”?

A

Notice

76
Q

Which kind of statute is this: “No conveyance or mortgage of an interest in land is valid against any subsequent purchaser whose conveyance is first recorded.”?

A

Race

77
Q

Which kind of statute is this: “No conveyance or mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof, whose conveyance is first recorded.”?

A

Race-notice

78
Q

What is the consequence of proper recordation?

A

Gives constructive notice of the first conveyance to everyone, so there can be no subsequent BFP

79
Q

Who is protected by recording acts?

A

Only bona fide purchasers – purchasers without notice (actual, constructive, or inquiry) who pay valuable consideration

Mortgagees for value are BFPS. Donees, heirs, devisees of record owners are not. Those who purchase from donees, et al are BFPs

80
Q

What is the shelter rule?

A

A person who takes from a bona fide purchaser will prevail against any interest that the transferor-BFP would have prevailed against, even if the transferee had actual notice of a prior unrecorded conveyance

Exception: a transferee who previously held title

81
Q

When is notice relevant for determining BFP status?

A

Time of conveyance

82
Q

What is record notice in the chain of title?

A

Though there is no legal duty to perform a title search, subsequent purchasers are charged with whatever notice that search would provide even if they did not search

83
Q

What is a wild deed?

A

A recorded deed not connected to chain of title, does not impart record notice

84
Q

What can put a potential purchaser on inquiry notice?

A

References in recorded instruments to unrecorded instruments, unrecorded instruments in the chain of title, possession unexplained by the record

85
Q

Does use of a quitclaim deed put a purchaser on inquiry notice?

A

no

86
Q

What happens if a testator devises or bequeaths land in a will and no longer owns it at the time of death?

A

Gift fails (is adeemed) to the extent that the property has been given away. Applies only to bequests that can only be satisfied by specific property (land but not money)

87
Q

What happens if property is damaged or destroyed before the testator’s death but casualty proceeds are not paid until after?

A

Usually no ademption, but beneficiary of specific bequest gets insurance proceeds/same for condemnation scenarios

88
Q

What is a lapse?

A

Beneficiary of a gift dies before the testator

At common law – gift was void
Now – statutes usually prevent lapse by permitting gift to pass to beneficiary’s living descendants

89
Q

When are gifts abated?

A

When estate assets are not sufficient to pay claims against the estate

Real Property (7 decks)

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