Conveyancing

Question 1

When does the risk of loss pass to the buyer and why?

Answer 1

The risk of loss passes to the buyer after the land contract is signed, NOT at closing. Per the doctrine of equitable conversion, the buyer owns the land even though legal title rests with the seller.

Question 2

What promise does every land contract contain?

Answer 2

The implied covenant of marketability. This promises to the buyer that the seller will provide good record title and that the land is free from the risk of litigation.

Question 3

True or false: land acquired by adverse possession is unmarketable.

Answer 3

True. Unless the court has granted quiet title, land acquired by adverse possession is not marketable.

Question 4

What are some encumbrances that render title unmarketable?

Answer 4

Mortgages, liens, burdensome easements, restrictive covenants.

Question 5

True or false: a seller cannot satisfy outstanding liens on the conveyed property using the sale proceeds obtained at closing.

Answer 5

False. A seller has the right to satisfy a mortgage or lien at closing with the proceeds of the sale. If the buyer refuses to pay by claiming unmarketable title, the buyer is wrong and the seller is entitled to specific performance.

Question 6

What is the proper remedy for a buyer who wishes to proceed with the purchase despite unmarketable title?

Answer 6

Buyer can sue for breach of the covenant of marketability, and seek specific performance with abatement of the price.

Question 7

When is a seller liable for misrepresentation? (3 factors)

Answer 7

When the seller

1) knowingly or negligently makes a false statement AND
2) the buyer relied on the statement AND
3) the facts in question materially affected the value of the property.

Question 8

When is the seller liable for defects in the conveyed property? (4 factors)

Answer 8

1) Seller knew or should have known about the defects
2) Defects were not apparent
3) Defects were serious and would have caused buyer to reconsider purchase
4) Seller actively concealed the defects

Question 9

True or false: general and specific disclaimers by the seller are all invalid.

Answer 9

False. General disclaimers are invalid. Specific disclaimers that identify potential defects will likely be upheld.

Question 10

What are the elements of a valid deed? (4 factors)

Answer 10

1) Be in writing
2) Signed by the grantor
3) Reasonably identify the grantor and grantee
4) Reasonably describe the land

Question 11

True or false: if the grantor leaves the name of the grantee blank upon delivery, the deed is always invalid.

Answer 11

False. The person taking delivery may have authority to fill in the name of the grantee. If he does so, the deed is valid.

Question 12

True or false: the land description in the deed does not need to be a perfect and precise description to make the deed valid.

Answer 12

True. As long as the description provides a good lead to the identity of the property, meaning that with reasonable research, we can determine exactly the land to be conveyed, the deed is valid.

Question 13

At closing, what constitutes valid delivery of a deed?

Answer 13

Anything that shows the grantor’s intent to be bound by delivery.

Question 14

True or false: legal title passes to the buyer once the grantor signs the deed.

Answer 14

False. Legal title passes to the buyer ONLY upon delivery.

Question 15

What is the proper way to execute a conditional delivery of a deed?

Answer 15

By giving the deed to a third party and instructing the third party to deliver the deed upon fulfillment of a condition. Parol evidence is admissible to show that the delivery was conditional (if the condition is not contained in the actual deed).

Question 16

What is a general warranty deed and what 6 covenants does it contain? (simply list)

Answer 16

A general warranty deed is a deed that conveys the following covenants:

1) Covenant of seisin
2) Covenant of right to convey
3) Covenant against encumbrance
4) Covenant for quiet enjoyment
5) Covenant of warranty
6) Covenant for further assurances

Question 17

What is the covenant of seisin?

Answer 17

The grantor has title to the parcel to be conveyed

Question 18

What is the covenant of right to convey?

Answer 18

The grantor has the right to convey

Question 19

What is the covenant against encumbrances?

Answer 19

The grantor promises that there are no physical or title encumbrances on the estate

Question 20

What is the covenant for quiet enjoyment?

Answer 20

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

Question 21

What is the covenant of warranty?

Answer 21

The grantor’s promise to defend the grantee from third party claims of title

Question 22

What is the covenant for further assurances?

Answer 22

The grantor promises to perform acts reasonably necessary to perfect title conveyed.

Question 23

Which covenants in a general warranty deed run with the land?

Answer 23

The covenant for quiet enjoyment, covenant of warranty, and covenant for further assurances

Question 24

What is a special warranty deed and how is it different from a general warranty deed?

Answer 24

The special warranty deed contains all the covenants in the general warranty deed. However, the grantor only promises against defects in title arising under the grantor himself, and does not warrant against defects in title arising from before the grantor held the property.

Question 25

What is a quitclaim deed?

Answer 25

A deed that conveys whatever title the grantor has. It makes zero promises about title.

Question 26

What is estoppel by deed and who does it protect?

Answer 26

An estoppel that protects subsequent BFPs. When a grantor conveys an estate he does not actually have title to, but subsequently acquires title to, the initial conveyance to the grantee is valid.

Question 27

True or false: estoppel by deed is applicable to all types of deeds.

Answer 27

False. Estoppel by deed does not usually apply to quitclaim deeds, where the grantor makes no promises regarding title except that he relinquishes it.