Land Conveyacing: The purchase and sale of real estate Flashcards
2 step processs of land conveyancing
2 step process.
Step 1: land contract which transfers equitable title. Endures until Step 2.
Step 2: The closing where the deed becomes operative. Transfers legal title.
Land contract and SOF and exception: doctrine of part performance
i. must be in writing signed by the party to be bound, by the π and ∆. Must describe blackacre. State some consideration
iii. exception to SOF: doctrine of part performance. If you have 2 of the following three factors, doctrine is satisfied and equity will decree specific performance of an oral k for the sale of land
1. B takes possession
2. B pays all or part of the price
3. and/or
4. B makes substantial improvements
ii. When the amount of land recited in the LC is more than actual size of the parcel.
1. Remedy: specific performance with pro rata reduction of price commensurate with deficiency
Land contract and the problem of the risk of loss
b. The problem of risk of loss: Land k gives equitable title. closing and deed give legal title.
i. apply equitable conversion: equity regards as done that which ought to be done
ii. buyer must remit the remainder of purchase price due at closing.
iii. One important resut: destruction. if in the interim bw contract and closing, Blackacre is destroyed through no fault of either party
1. Buyer bears risk of loss unless k says otherwise.
Two impllied promises in every land k
- Seller promises to provide marketable title.
- Seller promises not to make any false statements of material fact
- Seller promises to provide marketable title. - free from lawsuits/ threat of litigation, i.e. doesn’t rest on adverse possesion, unencumbered, no zoning violations
a. Standard: title free from reasonable doubt. free from lawsuits and the threat of litigation.
b. Three circumstances will render title unmarketable
i. If even part of title rests on adverse possession, it’s unmarketable. sell er must be able to provide good record title. must go to court and get judgment of quiet title.
ii. Encumberances
1. marketable title is an unencumbered fee simple. Thus, servitudes (easement or covenant) and mortgages render title unmarketable unless buyer has waived them.
a. Note: seller has the right to satisfy an outstanding mortgage or lien at the closing, with the proceeds of the sale. Thus, buyer cannot claim title is unmarketable because it is subject to a mortgage prior to closing, so long as the parties understand that the closing will result in the mortgage being satisfied or discharged
2. Future interests held by unborn or unascertained parties—when a holder of a future interest is unborn or unascertained it is impossible to convey marketable title. Courts wont appoint a guardian ad litem to represent the unborn or unascertained parties for the purposes of conveying land.
iii. Zoning violations:
1. unmarketable when blackacre violates a oning ordininace.
- Seller promises not to make any false statements of material fact
a. Maj of states hold liable for failing to disclose latent material defects and material omisions
b. If a contract contains a general disclaimer of liability ex. “property sold as is” or “with all faults”
i. wont excuse liability for fraud or failure to disclose.
Does a land k contain an implied warranty of fitness or habitability
- common law norm is caveat emptor buyer beware
- exception: implied warranty of fitness applies only to sale of NEW home by a builder-vendor.
a. if vendor is same as builder.
The controlling document at closing
a. controlling document is now: the deed
b. deed passes legal title from S to B
How does deed pass
IT must LEAD. Lawfully executed and delivered
lawful execution = signed and describes the parcel
delivery = intent to deliver
i. Lawful execution of a deed
1. must be in writing and signed by the grantor. doesnt have to have consideration
3. description of the land need not be perfect but must be unambiguous and provide a good lead.
ii. Delivery requirement—when grantor physically transfers the deed to the grantee
1. permissible to use the mail or an agent or a messenger
2. However, delivery does not necessarily require physical transfer of the transfer of the deed itself.
a. standard is a legal standard, test solely of present intent. Did grantor have the present intent to be bound irrespective of whether or not deed was handed over?
3. Even without knowledge of the grantee, delivery to recorder’s office satisfies the delivery requirement.
4. If a grantor executes a deed and gives it to a 3p with instructions to give it to the grantee upon the grantor’s death, most courts hold the grantor cannot get it back.
a. Because his intent was to presently convey a future interest.
b. Deed was delivered.
- Recipient’s express rejection of the deed: defeats delivery.
- If a deed, absolute on its face is transferred to a grantee with an oral condition, the oral condition drops out.
a. oral condition is not provable. delivery is achieved.
b. O conveys a deed to Blackacre that is absolute on its face, but says to grantee, “Blackacre is yours only if you survive me.” This oral condition is void.
a. OR may deliver an executed deed to a third party, known as escrow agent w instructions that the deed be delivered to EE once certain conditions are met. Once met, title passes
b. Advantage of escrow: if OR dies or becomes incompetent or is otherwise unavailable before the express conditions are met title still passess from the agent to EE.
i. , if justice requires, title of the grantee is deemed to relate back to the time of the deposit of the deed in escrow. - for ex when grantor becomes incompetent, can relate back to the time money paid and deed delivered.
- Title deemed to have passed to buyer at the time seller deposited deed in escrow.
Covenants for title and three types of deed
Quitclaim, general warranty deed, statutory special warranty deed
Quitclaim
contains no covenants. OR isn’t even promising that he has title to convey. worst deed buyer can hope for. Buyer might be left w nothing. But even here OR did implicitly promise in the land k to provide marketable title at the closing BUT that is a shortlived promise. any problems post-closing and seller is off the hook.
General warranty deed
best deed buyer could hope for. warrants against all defects in title, including those attributable to OR’s predecessors.
a. typically contains all six of the following covenants.
first 3 are present covenants, which are those breached at moment of delivery. SOL begins to run from the instant of delivery.
But the present covenants cannot be enforced by remote grantee!! (ie. If you purchase from someone who purchased from someone ELSE that caused the defect in title, cannot recover for these breaches of covenant)
RES- right to convey, no encumbrances, seisin
i. Covenant of seisin—OR promises she owns this estate (has title)
ii. Covenant of right to convey—OR has the power to transfer. no temporary disability, sound mind, requisite age, no restraints on capacity to alienate.
iii. Covenant against encumbrances: no servitudes or mortgages
next three are future. Not breached until EE is disturbed in possession. SOL doesn’t run until future date
QWF- quiet enoyment, warranty, further assurances
iv. covenant for quiet enjoyment: EE wont be disturbed in possession by 3P lawful claim of title. OR promises that she isnt a double dealer.
v. Covenant of warranty—OR will defend EE against lawful title claims brought by others. OR will indemnify
vi. Covenant of further assurances—OR will do whats needed in the future to perfect the title for ex accidentally signed deed in blue ink when law says black.
Statutory special warranty deed
provided for by statute in many states. Has 2 promises that OR akes only on behalf of himself. OR makes no representations on behalf of his predecessors in interest. OR promises
a. He hasn’t conveyed blackacre to anyone other than EE.
AND
b. That blackacre is free from encuberances made by OR
Equitable conversion and passage of title on death
b. Equitable conversion:
i. once a k is signed, equity regards the buyer as the owner of the real property.
ii. Seller’s interest of right to proceeds of sale is personal property.
iii. Bare legal title that remains with the seller is considered to be held in trust for the buyer.
iv. Right to possession follows the bare legal title, however, thus, seller is entitled to possession until closing.
v. Passage at death—if a party to a land sale k dies before the k is completed, the seller’s interest passes as personal property and the buyer’s interest passes as real property.
1. if seller dies→ heirs have bare legal title which they must give up at closing
2. if buyer dies→ heirs can demand conveyance at closing.
Timing at closing
c. Court presume that time is not of the essence in real estate k. Thus closing date is not absolutely binding, and a party late in tendering can still enforce if she tenders within a reasonable time after the closing date.
