Land Conveyancing: The Purchase and Sale of Real Estate

Question 1

Every conveyance of real estate consists of a two-step process. What are the two steps?

Answer 1

Step I: The land contract, which endures until step II.

Step II: The closing, where the deed becomes our operative document.

Question 2

The Land Contract and the Statute of Frauds: What is the standard for the land contract?

Answer 2

The land K must be in writing signed by the party to be bound (the defendant), The K must describe blackacre and must state some consideration
In writing - party to be bound

Question 3

When the amount of land recited in the land contract is more than the actual size of the parcel: Question - B enters into a contract to purchase a farm. The contract recites that the farm is 100 acres. When B has a
survey done, B learns that the farm is actually 98 acres. What is B’s remedy?

Answer 3

Specific Performance - with a pro rata reduction in price (commensurate with the acreage deficiency)

Question 4

The one exception to the Statute of Frauds: THE DOCTRINE OF 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:

Answer 4

1. B takes possession
2. B pays all or part of the price; and/or
3. B makes substantial improvements

Question 5

The problem of risk of loss:

Apply the doctrine of equitable conversion:

Answer 5

Equity as regards as done that which ought to be done Thus, in equity, once the contract is signed B owns the land, subject of course to the condition that he pay the purchase price at closing

Question 6

One important result flows from this: Destruction. If, in the interim between contract and closing, Blackacre is destroyed through no fault of either party:

Answer 6

B bears the risk of loss, unless the K says otherwise

-Most times the land K will reallocate the risk (explicitly have it, however on the bar expect this)

Question 7

What are the two implied promises in every land contract:

Answer 7

1. Seller promises to provide marketable title at the closing (a title free from reasonable doubt, and free from lawsuits and the threat of litigation)
2. Seller promises not to make any false statements of material fact

Question 8

What are 3 circumstances that will render a title unmarketable?

Answer 8

1. Adverse Possession: If even part of the title is subject to AP than it is considered “unmarketable”
2. Encumbrances: Marketable Title signifies an unencumbered fee simple; thus servitudes and mortgages render the title unmarketable unless buyer has waived them (In most circumstances there are enumbrances and easements on land but the buyer is willing to waive those) (also note that if the the seller satisfies mortgages before closing title is marketable)
3. Zoning: Title is unmarketable when blackacre violates a zoning ordinance

Question 9

What is considered a “false statement of material fact” when conveying land?

Answer 9

MAJORITY: The majority of states now also hold seller liable for failure to disclose latent material defects
Seller is liable for material lies and material omissions (silence is not golden)
*If the contract contains a general disclaimer of liability (for example, “property sold as is” or “with all faults”) Disclaimer will not relieve seller for fraud or failure to disclose

Question 10

The land contract contains no implied warranties of fitness or habitability, what is the common law norm?

Answer 10

Caveat Emptor - Buyer beware

Question 11

What is the important exception to the Common Law Norm of Caveat emptor or buyer beware?

Answer 11

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

Question 12

At the closing, what is the controlling document?

Answer 12

The Deed - The deed passes from the seller to the buyer

Question 13

At the closing how does the deed pass from the seller to the buyer? LEAD

Answer 13

1. LE: Lawfully executed

2. AD: And Delivered

Question 14

What is the lawful execution of a deed?

Answer 14

1. The deed must be in writing by the grantor (The deed need not recite consideration, nor must consideration pass to make a deed valid)
2. The description of the land does not need to be perfect, The law requires only an unambiguous description and a good lead

Question 15

The deed recites that O conveys “all of O’s land,” or “all of O’s land in Essex County.” Would such descriptions suffice?

Answer 15

Yes - They provide a good lead we can research and know the meaning fo “all” - We could figure out what all means

Question 16

O conveys “some of my land in Sussex County.” Does such a description satisfy the standard?

Answer 16

No - even with research we would not know what “some” means

Question 17

When and how is the delivery requirement of the deed satisfied?

Answer 17

When grantor physically transfers the deed to the transferee (it is permissible to use a messenger, the mail or na agent)
This is a legal standard; Did the grantor have the present intent to be bound (grantor to hand over legal control) irrespective of whether or not the deed was handed over
*Note - Recipient’s express rejection of the deed defeats delivery

Question 18

As a surprise graduation gift, A’s Aunt Gertrude executes a deed conveying Blackacre to A. A responds, “I can’t accept such a lavish gift.” Blackacre belongs to who?

Answer 18

If a deed, absolute on its face, is transferred to grantee with an oral condition the oral condition drops out, it is not provable, and delivery is done

Question 19

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 what?

Answer 19

Void - Delivery is done (too succeptible to problems of proof)

Question 20

With a deed is delivery by Escrow acceptable?

Answer 20

Yes - Grantor may deliver an executed deed to a third party, known as 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 the grantee

Question 21

What are the advantages to passing a deed by escrow?

Answer 21

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 the conditions are met

Question 22

Covenants for title and the three types of deed, what are they?

Answer 22

1. The Quitclaim
2. The General Warranty Deed
3. The Statutory Special Warranty Deed

Question 23

What is the quitclaim deed?

Answer 23

A deed that contains no covenants. Grantor isn’t even promising that he has title to convey. This is the worst deed buyer can hope for - (Even here grantor did implictly promise in the land K to provide marketable title at closing Any problems post closing and grantor is off the hook)

Question 24

What is the General Warranty Deed?

Answer 24

The best deed a buyer could hope for. Warrants against all defects in title including those due to grantors predecessors. Generally contains all six regular covenants

Question 25

What are the six general covenants found in the General Warranty Deed?

Answer 25

1. The covenant against seisin: The grantor covenants that he has the estate and the title at the time of closing
2. The covenant of the right to convey: Grantor has the power to transfer, there are no disabilities or temporary restraints on alienation
3. The covenant against encumbrances: There are no servitudes on blackacre
   *4-6 are future covenants (grantee has to be disturbed in possession
4. The covenant for quiet enjoyment
5. The covenant of Warranty: grantor will defend grantee against any lawful title claims asserted by others, Yes grantor did make promise and now is covering all his bases
6. The 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 26

What is the statutory special warranty deed?

Answer 26

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 that he has not conveyed blackacre to anyone other than grantee; and
2. That blackacre is free from encumbrances made by grantor