Land Conveyancing: The Purchase and Sale of Real Estate

Question 1

Every conveyance of real estate consists of 2 step process

Answer 1

1-the land K, which endures until step 2

2-the closing, where the deed becomes the operative document

Question 2

The Land Contract

Statute of Frauds

Answer 2

1-the standard: the land K must be in writing; signed by the party to be bound; K must describe Blackacre; must state some consideration
2-when the amount of land recited in the land K is more than the actual size of the parcel–remedy is specific performance w/ pro rata reduction in price
3-one exception to Statute of Frauds: the Doctrine of Part Performance–if, in the facts, there are 2 of the following 3, the doctrine is satisfied and equity will decree specific performance of an oral K for the sale of land:
a. B takes possession
b. B pays all or part of the price
and/or
c. B makes substantial improvements

Question 3

The Land Contract

Problem of Risk of Loss

Answer 3

• apply doctrine of equitable conversion: equity regards as done that which ought to be done
• thus, in equity, once the K is signed: B owns the land, subject to the condition that he pay the purchase price at closing
• one important result flows from this: Destruction–if, in the interim between K and closing, Blackacre is destroyed through no fault of either party: B bears the risk of loss, unless the K says otherwise

Question 4

The Land Contract

2 Implied promises in every land K

Answer 4

1-seller promises to provide marketable title at the closing
a. the standard: title free from reasonable doubt–free from lawsuits and threat of litigation
b. three circumstances will render title unmarketable:
i. adverse possession
ii. encumbrances–unencumbered fee simple–servitudes & mortgages render title unmarketable unless buyer has waived them
iii. zoning violations
2-seller promises not to make any false statements of material fact:
-majority of states hold seller liable for failure to disclose latent material defects
-if the K contains a general disclaimer of liability, the disclaimer won’t relieve seller of liability for fraud or failure to disclose

Question 5

The Land Contract

Contains no implied warranties of fitness or habitability

Answer 5

• the common law norm is caveat entor (buyer beware)
• one exception–the implied warranty of fitness and workmanlike construction applies to the sale of a new home by a builder-vendor

Question 6

The Closing

Lawful execution of a deed

Answer 6

1-the standard: must be in writing, signed by grantor—deed need not recite consideration, nor must consideration pass to make a deed valid
2-description of the land: doesn’t have to be perfect; law requires only: unambiguous description and a good lawful execution

Question 7

The Closing

Delivery Requirement

Answer 7

1-could be satisfied when grantor physically transfers deed to grantee—permissible here to use the mail, an agent, or a messenger
2-however, delivery does not necessarily require physical transfer of the deed itself
-the standard for delivery is a legal standard, and is a test solely of present intent–Ask: did grantor have the present intent to be bound irrespective of whether or not the 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, the oral condition drops out
5-delivery by escrow is okay
-grantor may deliver an executed deed to a 3rd party, known as an escrow agent, w/ instructions that the deed be delivered to grantee once certain conditions are met

Question 8

The Closing

The quitclaim

Answer 8

-contains no covenants–grantor isn’t even promising he has title to convey–this is the worst deed a buyer could hope for

Question 9

The Closing

The general warranty deed

Answer 9

• the best deed a buyer could hope for–warrants against all defects in title–including those due to grantor’s predecessors
• general warranty deed typically contains 6 covenants:
  1. covenant of seisin–grantor owns this estate
  2. covenant of right to convey–grantor has power to transfer
  3. covenant against encumbrances–no servitudes or mortgages on Blackacre
  4. covenant for quiet enjoyment–grantee won’t be disturbed in possession by 3rd party’s lawful claim of title
  5. covenant of warranty–grantor will defend grantee against lawful title claims asserted by others
  6. covenant for further assurances–grantor will do whatever is needed in the future to perfect the title if it turns out to be imperfect

Question 10

The statutory special warranty deed

Answer 10

-provided for by statute in many states, this deed contains 2 promises that grantor makes only on behalf of himself:
1-grantor promises he hasn’t conveyed Blackacre to anyone other than T AND
2-Blackacre is free from encumbrances made by grantor