conveyancing Flashcards
land sale Ks
must be in writing, signed by the party against whom enforcement is sought
must also identify the parties, describe the property, state consideration, price term
land sale exception to SoF
part performance– allows buyer to enforce oral K by specific performance if:
* Buyer took possession
* Buyer paid purchase price or significant portion
* Buyer made substantial improvements
equitable conversion & risk of loss
land K conveys equitable title but not until closing that buyer gets legal title
Buyer bears risk unless K says otherwise: despite a loss due to fire or other casualty (assuming it was not due to the fault of either party), the buyer must still pay the contract price at the closing date unless the contract provides otherwise
–> court can order specific performance (payment of balance due on the K)
marketable title
Title free from reasonable doubt/lawsuits and the threat of litigation; generally means free from encumbrances and with good record title
* doesn’t need to be perfect title, but must be free from qs that might present an unreasonable risk of litigation: “A buyer does not have to buy a lawsuit”
There is an implied covenant in every land sale contract that, at closing, the seller will provide the buyer with marketable title.
defects in title
defects in record chain of title:
* Title acquired by AP is unmarketable and thus is not good record title (unless AP gets quiet title first)
encumbraces:
* Mortgages, liens, easements, restrictive covenants unless the buyer has waived them
* but a seller has the right to satisfy a mortgage or lien at the closing with sale proceeds and thus provide clear title to the buyer
zoning violations:
* not just zoning scheme in existence, but violation of zoning ordinance makes title unmarketable
remedies for unmarketable title
If the buyer of land determines that the seller’s title is unmarketable, the buyer must notify the seller and give a reasonable time to cure the defects
If the seller fails to cure the defects, then the buyer may rescind the contract, sue for damages for breach, get specific performance with abatement of the purchase price in amount reflecting title defect, or (in some jurisdictions) require the seller to quiet title
the buyer may NOT sue on the implied covenant of marketable title after closing:
* Once the closing occurs and the deed changes hands, the seller is no longer liable on this implied contractual covenant; only the express promises made int the deed
closing
extinguishes the contract, which is said to merge with the deed
deed
conveys legal title from grantor to grantee
LEAD:
Lawfully Executed
* writing signed by grantor
* Unambiguous description of the land
* identification of parties
* words of intent to transfer e.g. “grant”
* no consideration needed
And Delivered
* Does not require physical transfer of deed instrument itself
* present intent by grantor to be bound/part with legal control
* rejection of the conveyance defeats delivery
recording statutes
race, notice, race-notice
race statute
first party to record wins
notice of a prior conveyance by the grantor doesn’t matter nor does BFP status
notice statute
Under a notice statute, a subsequent purchaser who had no notice of a prior conveyance by the grantor will prevail over a prior grantee who failed to record
* last BFP to take wins
race-notice
to be protected under a race-notice statute, the subsequent purchaser must not have any notice of the prior grant and must record first
BFP who records first prevails
BFP
purchaser for value: didn’t take by gift, will, inheritance
* have to give value: pay valuable consideartion
who is without notice at the time of the conveyance
shelter rule
recording statutes do not protect donees, heirs, or devisees unless the **shelter rule applies **
* a person who takes from a BFP will prevail against any interest that the transferor-BFP would have prevailed against
* true even if the grantee had actual notice of a prior unrecorded conveyance
* e.g. BFP conveys to C (who lacks BFP status) C steps into BFP’s shoes and is therefore the fictious last BFP to enter
notice
AIR
Actual: literal knowledge; prior to closing, B learns of A
Inquiry: constructive; buyer charged with what inspection would’ve revealed
Record: B on notice of deeds properly recorded in chain of title
* wild deed (recorded deed but that isn’t connected to chain of title) is incapable of giving notice
mortgage
To secure the debt, the borrower gives the lender a mortgage (along with a promissory note representing the loan) on the property.
* If the loan isn’t paid, the lender may foreclose the mortgage
The mortgage is the agreement that says that if the mortgagor quits paying, the land can be sold to pay the mortgagee
the note is the mortgagor’s personal obligation
* This means that the mortgagee is not limited to the land when seeking a remedy for default; can also sue the mortgagor personally for payment of the note
transfer by mortgagor
Generally, when a mortgagor transfers title to the property, the grantee automatically takes the property subject to the mortgage.
* The grantee will not be personally liable on the mortgage unless they specifically assume the mortgage.
* But, the mortgage remains on the land as long as the mortgage instrument was properly recorded
* the mortgagee’s only recourse is foreclosure (they cannot maintain a suit against the grantee)
When a grantee assumes the mortgage, the grantee expressly promises the grantor-mortgagor that he will pay the mortgage obligation as it becomes due
* After the assumption, the grantor-mortgagor becomes a surety who is secondarily liable to the mortgagee on the note if the grantee fails to pay but bank could come after both
foreclosure
If debtor-mortgagor has defaulted on the loan, mortgagee can foreclose by proper judicial proceeding
* land is sold –> sale proceeds go t satisfying debt
termiantes all junior interests
* can still go after mortgagor via deficiency action but no longer look to proeprty for satisfaction
does not effect senior interests
* foreclosure sale buyer is not personally liable to senior debt but takes subject to them (meaning SI are entitled to forcelose against the land)
priority for allocating mortgage foreclosure sale proceeds
first in time, first in right: Generally, the priority of a mortgage is determined by the time it was placed on the property, and the proceeds of a foreclosure sale will be used to pay off the mortgages in the order of their priority
and purchase-money mortgage superior
If surplus, junior liens are paid off in order of their priority, and any remaining surplus goes to debtor
Senior lienors receive none of the proceeds.
* Because a senior lien remains on the property (i.e., may itself be foreclosed in the future), a senior lienor is not entitled to any of the money from the sale, even if there is a surplus.
equitable redemption
Debtor can redeem land by freeing it of the mortgage prior to foreclosure sale by paying
* If no acceleration clause –> paying off missed payments/amount overdue on the mortgage + accrued interests and costs
* if acceleration clause –> debtor must pay off the full balance + accrued interests and costs
cut off by forclosure sale
general warranty deed
warrants against all defects in title, including those attributable to grantor’s predecessors
Typically contains six covenants for title; three present covenants – of seisin, of right to convey, and against encumbrances; and three future covenants – for quiet enjoyment of warranty and for further assurances
right to convey
grgrantor has power to transfer
seisin
grantor owns the estate
covenants against encumbrances
no servitudes or liens
* assures that there are neither visible nor invisible encumbrances against the title or interest converted
* Most jurisdictions hold the grantor liable for breach of covenant even if the grantee knew of the encumbrance
cov for QE
assures that the grantee will not be disturbed in her possession or enjoyment of the property by third parties lawful claim of title
cov of warranty
assures that the grantor will defend the guarantee against any lawful claims of title by third-party and compensate the grantee for any loss sustained thereby
* need notice to convenantor
cov of further assurances
cov to perform whatever acts are reasonably necessary to perfect the title conveyed if it turns out to be imperfect
* need notice to covenantor
special warranty deed
warrants against all defects in title (only for grantor themselves, not predecessors)
quit claim deed
no covenants for title
* not even promising title to convey
