Land Ownership Flashcards
Statute of Frauds
All land sale contracts are subject to the Statute of Frauds.
Requirements:
- Must be in writing
- Must be signed by the party to be charged (in a lawsuit)
- Must include essential terms
- Parties and Description of Property
Defenses to Statute of Frauds requirement are Partial Performance
and Detrimental Reliance (Estoppel)
Partial Performance as a Defense to Statute of Frauds Requirement of Land Contracts
Courts will look at factors, including:
- Payment: Partial or Full?
- Possession of Property
- Improvement to Property
Partial Performance is used to show evidence that a contract existed between the buyer and seller.
Detrimental Reliance as a Defense to the Statute of Frauds Requirement in Land Sales
The party reasonable relied on the contract and would suffer hardship if the contract was not enforced.
Marketable Title
EVERY land sale contract contains the implied covenant of marketable title.
This covenant protects from any unreasonable risk of litigation related to the property (adverse possession, easements, zoning violations).
Defect in title must be cured before the closing [because after that point the contract sale and land deed merge].
- Standard is that of a reasonable buyer. What would this reasonable buyer expect?
- Remedy: If seller cannot deliver marketable title then the buyer can rescind the contract. [Which is why it’s important to use remedy before closing]
Delays in Land Contract Sales
General rule is that unless it is specifically stated to the contrary, time is NOT of the essence.
Therefore, a failure to close the sale contract on the set closing date is not grounds for breach/rescission of contract.
Specific Performance is still an available remedy.
Seller’s Duty to Disclose Defects
Most jurisdictions impose a duty on the seller to disclose to the buyer all known physical and material defects.
A general disclaimer, such as “as is” clause, will not satisfy this duty.
Seller’s Remedies for Buyer Breach
- Damages (Difference between Contract Price and Market Price)
- Recision of Contract
- Specific Performance
Buyer’s Remedies for Seller Breach
- Damages: Difference between contract price and market value on date of breach
- Recission
- Specific Performance
Risk of Loss in Land Contracts
Majority Rule: The buyer holds risk of loss during the time of execution of contract and the delivery of the deed.
Minority Rule: Seller bears risk of loss between execution of contract and delivery of title
Elements of Adverse Possession
- Continuous for the statutory period
- Open and Notorious
- Hostile
- Exclusive
Adverse Possession: Continuous
- Does not need to be literal–can be used for seasonal use for instance.
- A current adverse possessor can tack on prior adverse possessor’s time if they are in privity to satisfy this requirement
- Time will not run against the true owner if they have a disability at the time the adverse possession BEGINS (infancy, insanity, imprisonment)
- True owner can stop continuous use by ejecting the adverse possessor
Adverse Possession: Open and Notorious
- The adverse possession must be open and notorious so that it would put the reasonably prudent true owner on notice of the adverse use.
- The use cannot be hidden
Adverse Possession: Hostile
- The possession must be adverse to the true owner’s interest. It is a claim of competing title.
- Majority Rule does not take into account good or bad faith state of mind.
- Minority Rule:
- Good Faith adverse possession (adverse possessor believes land is unowned) cannot be used to satisfy this prong because it was a mistaken belief and not actually hostile
- Bad Faith adverse possession satisfies requirement
Adverse Possession: Exclusive
- The adverse possessor cannot share possession of the property with the true owner.
- There can be multiple adverse possessors (treat as tenants in common when title is acquired)
Scope of Adverse Possession
Generally, applies to the legal boundaries of the property.
Constructive Adverse Possession: Adverse possessor holds color of title and occupies portion of property in the invalid instrument. Gets adverse possession of land occupied and constructive possession of remaining land described in the invalid deed.
Deeds
The legal instrument used to transfer real property. Requires (1) delivery and (2) acceptance.
A deed does not need to be recorded to be valid.
Deeds: Delivery
One of two requirements.
Delivery: Requires that the grantor had the present intent to transfer the property.
Deeds: Acceptance
One of the two requirements for deeds.
Acceptance of the deed is generally presumed if the transfer of the deed was for value.
Contents of a Deed
- Must identify the parties
- Must be signed
- Must include the words of transfer
- Typically has a granting clause to evidence present intent to transfer
- A sufficient description of the property
Signature Requirement of a Deed
- A deed must be signed by the Grantor (not the Grantee).
- Does not need to be witnessed or notarized.
- If a signature is forged, the deed is void.
Recording Act Types
Recording Acts cover deeds, mortgages, leases, options, judgments affecting title, and instruments that create an interest in land (easements, covenants, etc.).
Three Types:
- Notice Statutes
- Race Statutes
- Race-Notice Statutes
Does not apply to gifts.
Notice Statute
Rule: A subsequent purchaser wins if she, in good faith, acquired the interest without notice of a prior, unrecorded conveyance.
Race Statutes
Rule: First to record wins, even if the subsequent purchaser had notice of a prior, unrecorded conveyance.
Race-Notice Statutes
Rule: A subsequent purchaser wins if two requirements are met:
- Interest is acquire without notice of a prior unrecorded conveyance AND
- Is the first to record.
The Shelter Rule
A person who takes from a bona fide purchaser protected by the Recording Acts has the same rights as her grantor.
O to A. A does not record. O then sells to B. B does not know of A or her potential claim to property. This is a Notice state. B sells to C. C knows about A; however would still win because of this rule because B was protected by the Recording Acts.
