Conveying land

Question 1

Stops to convey real estate

Answer 1

1. The land contract (endures until step 2).

2. The closing (where the deed becomes the operative contract).

Question 2

Land contract: standard

Answer 2

The land contract must:

1. Be in writing
2. Be signed by the party to be bound (the ∆)
3. Describe the land, and
4. State some consideration.

• This is to satisfy the Statute of Frauds.
• Exception: Doctrine of part performance.

Question 3

Land contract: when the amount of land in the contract is more than the actual size of the parcel:

Answer 3

Buyer gets specific performance with a pro rata reduction in the price.

Question 4

Land contract: Doctrine of Part Performance

Answer 4

An exception to the Statute of Frauds: a court of equity will decree specific performance of an oral contract for the sale of land IF TWO of the following are satisfied by buyer:

1. Possession
2. Payment of all or part of the price
3. Substantial improvement to the land.

Question 5

Land contract: risk of loss

Answer 5

The doctrine of equitable conversion applies so that, in equity, once the contract is signed, the buyer owns the land (subject to the condition that he pay the purchase price at closing).

If, in the interim between the contract and closing, Blackacre is destroyed through no fault of either party, the buyer bears the risk of loss, unless the contract says otherwise.

• Doctrine of equitable conversion: equity regards as done that which ought to be done.

Question 6

Implied promises in every land contract

Answer 6

1. Seller promises to provide marketable title at the closing.
2. Seller promises not to make any false statements of material fact.

• (No implied warranties of fitness or habitability.)

Question 7

Implied promise of marketable title (general standard)

Answer 7

Seller promises to provide at closing: title free from reasonable doubt, lawsuits, and the threat of litigation.

• An unencumbered fee simple.

Question 8

What will render title unmarketable?

Answer 8

1. Adverse possession
2. Encumbrances
3. Zoning violations

Question 9

Implied promise of marketable title: adverse possession

Answer 9

Adverse possession renders title unmarketable.

Even if part of the title rests on adverse possession, it is unmarketable.

Seller must be able to provide good record title.

Question 10

Implied promise of marketable title: encumbrances

Answer 10

Encumbrances render title unmarketable (marketable title means an unencumbered fee simple).

Servitudes and mortgages render title unmarketable, unless buyer has waived them.

• But seller has the right to satisfy an outstanding mortgage or lien at the closing, with the proceeds of the sale.

Question 11

Implied promise of marketable title: zoning violations

Answer 11

Zoning violations render title unmarketable.

Question 12

Implied promise of no false statements of material fact (general standard)

Answer 12

Seller is liable for material lies.

• Majority of states also hold seller liable for failure to disclose latent material defects > seller is liable for material omissions and material lies.

Question 13

Implied promise of no false statements of material fact: disclaimers of liability

Answer 13

If the contract contains a general disclaimer of liability (e.g., “property sold as is” or “with all faults”) WILL NOT relieve seller of liability for fraud or failure to disclose.

Question 14

Implied warranty of fitness and workmanlike construction

Answer 14

Implied warranty that applies to contracts for the sale of a new home by a builder-vendor.

Question 15

The closing

Answer 15

Passes legal title from seller to buyer.

The controlling document is the deed (the deed passes legal title).

Question 16

The closing: how does a deed pass legal title?

Answer 16

To pass legal title, the deed must:

1. Be lawfully executed, and
2. Delivered.

Question 17

Requirements for lawful execution of a deed

Answer 17

The deed must be:

1. In writing
2. Signed by the grantor, and
3. Give and unambiguous description of the land and a good lead.

• Does NOT need to recite consideration—consideration is not required to pass to make a deed valid.

Question 18

Lawful execution of a deed: description of the land

Answer 18

The description of the land does not have to be perfect—the law requires only an unambiguous description and a good lead.

• With research, should know what land is at issue.

Question 19

The closing: delivery requirement

Answer 19

Delivery is a legal standard—it is the test solely of present intent.

• Ask: did the grantor have the present intent to be bound, irrespective of whether the deed was physically handed over.

Question 20

The closing: how is the delivery requirement satisfied?

Answer 20

The delivery requirement could be satisfied when:

1. The grantor physically transfers the deed to the grantee (permissible to use the mail, an agent, or a messenger).
2. But physical delivery is not required—the present intent that the grantor be bound is sufficient.

• But the recipient’s express rejection of the deed defeats delivery.

Question 21

What happens if a deed, absolute on its face, is transferred to a grantee with an oral condition?

Answer 21

The oral condition drops out—it is not provable and delivery is done.

• But could avoid this by giving the deed to an escrow agent with conditions for the agent delivering it to the grantee.

Question 22

Delivery of deed by escrow

Answer 22

Delivery by escrow is ok.

I.e., grantor may deliver an executed deed to a 3d party (an escrow agent), with instructions that the deed be delivered to grantee once certain conditions are met. Once the conditions are met, title passes to grantee.

Question 23

The advantage of delivery of deed by escrow

Answer 23

If grantor dies or becomes incompetent or is otherwise unavailable before the express conditions are met, title still passes from the escrow agent to grantee once the conditions are met.

Question 24

Types of deed

Answer 24

1. Quitclaim
2. General warranty
3. Statutory special warranty

Question 25

Quitclaim deed

Answer 25

Quitclaim deed contains NO COVENANTS.

Grantor does not even promise that he has title to convey.

• Even though grantor implicitly promised in the land contract that marketable title would be provided at closing, if any problems arise post-closing, the quitclaim grantor is off the hook.
• Shaggy: wasn’t me.

Question 26

General warranty deed (generally)

Answer 26

General warranty deed warrants against all defects in title, including those due to grantor’s predecessors.

• Mother Theresa.

Question 27

Covenants (typically) in a general warranty deed

Answer 27

Present covenants:

1. Seisin
2. Right to convey
3. Against encumbrances

Future covenants:

4. Quiet enjoyment
5. Warranty
6. Further assistance

Question 28

Present covenants: rule

Answer 28

Present covenants are breached, if ever, at the moment of delivery of the deed.

• Statute of limitations runs from the instant of delivery.

Question 29

Future covenants: rule

Answer 29

Future covenants are not breached, if ever, until the grantee is disturbed in possession.

• Statute of limitations for breach of a future covenant will not begin to run until that future date.

Question 30

General warranty deed: covenant of seisin

Answer 30

Grantor owns the estate.

Question 31

General warranty deed: covenant of the right to convey

Answer 31

Grantor has the power to transfer.

There are no disabilities or temporary restraints on alienation.

Question 32

General warranty deed: covenant against encumbrances

Answer 32

There are no servitudes or mortgages on the land.

Question 33

General warranty deed: covenant for quiet enjoyment

Answer 33

Grantee will not be disturbed in possession by a 3d party’s lawful claim of title.

Question 34

General warranty deed: covenant of warranty

Answer 34

Grantor will defend grantee against any lawful title claims asserted by others.

Question 35

General warranty deed: covenant for further assistance

Answer 35

Grantor will do whatever is needed in the future to perfect the title if it turns out to be imperfect.

Question 36

Present covenants

Answer 36

1. Seisin
2. Right to convey
3. Against encumbrances

Question 37

Future covenants

Answer 37

1. Quiet enjoyment
2. Warranty
3. Further assistance

Question 38

Statutory special warranty deed

Answer 38

Provided for in many states, the statutory special warranty deed contains two promises grantor makes ONLY ON BEHALF OF HIMSELF:

1. Grantor promises he has not conveyed Blackacre to anyone other than grantee.
2. Blackacre is free from encumbrances made by grantor.
   * (Grantor makes no representations on behalf of his predecessors in interest.)
   * Tina Fey.

Question 39

Reformation of a deed

Answer 39

Reformation is an equitable action in which the court rewrites the deed to make it conform to the intention of the parties.

It is granted when the deed does not express the agreement of the parties due to mutual mistake or a scrivener’s error, and may also be granted when there is a unilateral mistake if misrepresentation is involved.

• When there is a mistake or inconsistency in the description of property in the deed, one of the rules of construction is that the physical description takes precedence over the quantity description unless there are grounds for reformation of the deed.