Land Conveyance & Recording

Question 1

Land Contract of Statute of Frauds

Answer 1

1. Standard: Land K must be in (1) writing (2) signed by party to be bound. Land K (3) must describe blackacre and (4) must state some consideration.
2. When the amount of land recited in the land contract is more than the actual size of the parcel: Remedy is
   
   1. Specific Performance with pro-rata reduction in price.
3. Exception to SOF: Part Performance, If, on your facts, you have two of the following three, the doctrine is satisfied and equity will decree specific performance of an oral contract for the sale of land:
   
   1. Buyer Takes Possession
   2. Buyer pays all or part of the price and/or
   3. Buyer makes substantial improvements

Question 2

Problem of Risk of Loss

Answer 2

1. Apply the Doctrine of Equitable Conversion: equity regards as done that which ought to be done​
   
   • Thus, in equity, once the contract is signed Buyer owns the land, subject of course to the condition that he pay the purchase price at closing.
2. Destruction: If, in the interim between contract and closing, Blackacre is destroyed through no fault of either party Buyer bears the risk of loss unless the Land K says otherwise.

Question 3

Two Implied Promises in Land K: (1)Marketable Title

Answer 3

1. Seller promises to provide marketable title at the closing.
   
   1. ​Marketable Title: title free from reasonable doubt, lawsuits and threat of litigation
   2. Three Circumstance will Render title UNmarketable:
      
      1. Adverse possession: If even part of the title of the title rests on adverse possession, it is unmarketable. Seller must be able to prove good record title.
      2. Encumbrances: Marketable title means an unemcumbered fee simple. Thus, servitudes and mortgage render title unmarketable, UNLESS buyer has waived them.
         
         • Seller has the right to satisfy an outstanding mortgage or lien at the closing, with the proceeds of the sale.
      3. Zoning Violations: title Unmarketable when Land violates zonning ordinance

Question 4

Two Implied Promises in Land K: (2) False Statements of Material Fact

Answer 4

Seller promises not to make any false statements of material fact:

1. The majority of states now also hold seller liable for failure to disclose latent material defects liable for material lies and omissions.
2. If the contract contains a general disclaimer of liability (for example, “property sold as is” or “with all faults”) disclaimer WON’T relieve seller from liability of fraud or failure to disclose.

Question 5

Caveat Emptor

Answer 5

The land contract contains no implied warranties of fitness or habitability

• common law norm is caveat emptor.

Exception: The implied warranty of fitness and workmanlike construction applies to the sale of a new home by a builder-vendor.

Question 6

Land Contract & Deed: LEAD

Answer 6

• Once Land Contract is satisfactory Controlling Document becomes the DEED.
• DEED passes legal title from seller to buyer. Deed must LEAD.
  
  • Lawfully Executed and Delivered.

Question 7

Lawful Execution of Deed: LEAD

Answer 7

1. Lawful Execution Standard: deed must be in (1) writing (2)signed by grantor.
   
   • Deed need NOT recite consideration, nor must consideration pass to make a valid deed.
2. Description of Land: Need not be perfect. Law requires any unambiguous description and good LEAD.

Question 8

Lawful Execution of Deed: LEAD

Answer 8

1. The delivery requirement could be satisfied when grantor physically transfers deed to grantee.
   
   1. permissible to use mail, an agent or a messenger.
2. However, delivery does not necessarily require physical transfer of deed itself. Standard for delivery is a legal standard and is a test solely of present intent. ASK did Grantor have present intent to be bound, irrespective of whether or not deed was handed over.
3. Recipient’s express rejection of the deed defeats delivery.
4. If a deed, absolute on its face, is transferred to grantee with an oral condition drops out, not provable, delivery is done.
5. Delivery by escrow permitted.
   
   1. Grantor may deliver an executed deed to a third party, known as an escrow agent, with instructions that the deed be delivered once certain conditions are met. Once the conditions are met title passes to grantee.
   2. The advantage of escrow: If grantor dies or becomes incompetent or is otherwise unavailable before the express conditions are met title still passes from escrow agent to Grantee once conditions are met.

Question 9

Three Types of Deeds: Quitclaim

Answer 9

The quitclaim: It contains no covenants. Grantor isn’t even promising he has title to convey. This is the worst deed buyer could hope for. Contains no covenants whatsover.

Question 10

Three Types of Deeds: General Warranty (Present Covenants)

Answer 10

The general warranty deed typically contains all six covenants. The first three are present covenants, meaning: a present covenant is breached, if ever, at the moment of delivery.

• The statute of limitations for breach of a present covenant begins to run from instant of delivery.

1. The covenant of seisin: Grantor owns the land
2. The covenant of right to convey: Grantor has power to transfer, no disabilities or restraints on alienation
3. The covenant against encumbrances: no servitudes or mortgages on Land

Question 11

Three Types of Deeds: General Warranty (Future Covenants)

Answer 11

The next three covenants are future covenants, meaning: a future covenant is not breached, if ever, until a grantee is disturbed in possession. Thus, the statute of limitations for breach of a future covenant will not begin to run until that future date.

1. The covenant for quiet enjoyment: Grantee won’t be disturbed in possession by a third party’s lawfull claim of title.
2. The covenant of warranty: grantor will defend grantee against any lawful title claims asserted by others
3. The covenant for further assurances: grantor will do whatever needed ni the future to perfect title if it turns out to be imperfect.

Question 12

Three Types of Deeds: Statutory Special Warranty Deed

Answer 12

Provided for by statute in many states, this deed contains two promises that grantor makes only on behalf of himself. (Note: Grantor makes no representations on behalf of his predecessors in interest.)

1. Grantor promises he has not conveyed Land to anyone other than Grantee. AND
2. Land is free from encumbrances made by Grantor.

Question 13

Two Brightline Rules

Answer 13

1. If B is a BONA FIDE PURCHASER, and we are in a NOTICE jurisdiction, B wins, regardless of whether or not she records before A does.
2. If B is a BONA FIDE PURCHASER and we are in a race-notice jurisdiction, B wins if she records properly before A does.

Recording acts exist to protect only Bonafide Purchasers and Mortgagees (creditors).

Question 14

Bona Fide Purchasers

Answer 14

• A Bona Fide Purchaser is one who:

1. Purchases Land for Value AND
2. without notice that someone else got there first.

• Two routine value questions:
  
  1. _​​_The bargain basement sale: Okay as long as Buyer remits substantial pecuniary consideration
  2. Case of the Doomed Donee: Recording Statutes do not protect donees, heirs, or devisees UNLESS Shelter Rule Applies.
• Three forms of notice that a buyer may potentially be charged with are. AIR

Question 15

Bona Fide Purchasers: Notice (AIR)

Answer 15

1. Actual Notice: Prior to B’s closing, B Learns of Buyer A.
2. Inquiry Notice: Whether he looks or not, B is on inquiry notice of whatever an exam of blackacre would show.
   
   1. The buyer of real estate has a duty to inspect before transfer of title, to see, for example, whether anyone else is in possession. If another is in possession, B has inquiry notice, regardless of whether buyer actually bothers to inspect or not.
   2. If a recorded instrument makes reference to an unrecorded transaction, grantee is on inquiry notice of whatever a reasonable follow-up would show.
3. Record Notice: B is on record notice of A’s deed if at the time B takes, A’s deed was recorded properly.
   
   1. In a Notice state, B wins. In a race notice state, to win B must be a BFP and must also win race to record.

Question 16

Recording Statutes.

PA DISTINCTION

Answer 16

1. The Notice Statute**: “A conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, **unless the conveyance is recorded.”
2. The Race Notice Statute: “Any conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, whose conveyance is first recorded.”
   
   1. to prevail Buyer must be a (1) BFP and (2) win race to record.

PA Distinction: PA Race-Notice State

Question 17

Proper Recording

Answer 17

To give record notice to subsequent takers, the deed must be recorded properly, within chain of title, which refers to that sequence of recorded documents capable of giving notice to later takers. In most states, the chain of title is established through a title search of the grantor-grantee index.

Question 18

Three Discrete Chain of Title Problems: Shelter Rule

Answer 18

Shelter Rule

One who takes from a BFP will prevail against any entity that the transferor-BFP would have prevailed against. In other words, the transferee “takes shelter” in the status of her transferor, and thereby “steps into the shoes” of the BFP even though she otherwise fails to meet the requirements of BFP status.

Question 19

Three Discrete Chain of Title Problems: Wild Deed

Answer 19

The Problem of the Wild Deed

• O sells Blackacre to A, who does not record. Then, A sells to B. B records the A-to-B deed.
  
  • The A to B deed, although recorded, is NOT connected to the chain of title, because O to A deed is missing from the records.
  • The A to B deed, therefore, is a Wild-Deed.
• The rule of the wild deed: If a deed, entered on the records (A to B), has a grantor unconnected to the chain of title (O to A), the deed is a wild deed. It is incapable of giving record notice of its existence.

Question 20

Three Discrete Chain of Title Problems: Estoppel By Deed

Answer 20

Rule of Estoppel by Deed: : One who conveys realty in which he has no interest (here, X), is estopped from denying the validity of that conveyance if he later acquires that previously transferred interest.