Land Sale Contract Flashcards
EQUITABLE CONVERSION - Every Property is Unique
Once the parties have entered into a valid land sale contract, the rights of the parties are fixed according to the doctrine of equitable conversion. The purchaser is regarded as the owner of the real property, and the seller is regarded as having a personal property right to the proceeds of the sale.
Doctrine of Exoneration - A deceased buyer’s interest passes as real property to the taker of the buyer’s real property interests. He can compel specific performance and demand a conveyance of land. He is entitled to exoneration out of the personal property estate.
EQUITABLE CONVERSION
Under the equitable conversion, the buyer is regarded as the equitable owner of the property, and will bear the risk if property is damaged (lives during escrow period of a land sale transaction).
Must pay full contract price despite any decrease in the property’s value due to damages. [Should have gotten insurance].
MARKETABLE TITLE
A seller is not entitled to specific performance if she is unable to furnish buyer with such title to the land as to eliminate a reasonable probability that the buyer will be subject to a lawsuit.
Absent a provision to the contrary, a contract for sale of land contains an implied promise by the seller that she will deliver to the buyer a marketable title at the time of closing. This promise imposes on the seller an obligation to deliver a title that is free from reasonable doubt (i.e. free from questions that might present an unreasonable risk of litigation. Title is marketable if a reasonably prudent buyer would accept it in the exercise of ordinary prudence. An inability to establish a record chain of title will generally render the title unmarketable. If the buyer determines, prior to closing, that the seller’s title is unmarketable, he must notify the seller and allow a reasonable time to cure the defect. If the seller is unable to acquire title before closing, so that title remains unmarketable, the buyer can rescind, sue for damages caused by breach, or obtain specific performance with an abatement of the purchase price.
MARKETABLE TITLE / ADVERSE POSSESSION
Title does not imply marketable title. When a person acquires land by adverse possession, he may not convey marketable title until he has brought an action to quiet title in front of a judge, or has other tangible proof of title. Oral evidence will not suffice.
ADVERSE POSSESSION
One may obtain title to land by taking and maintaining possession of it for the statutory period provided by the jurisdiction. The possession must be actual and exclusive, open and notorious (sufficient to put the true owner or the community on notice of the fact of possession), hostile (without true owner’s consent), and continuous (used without interruption in a way that the actual owner would use it.
N.B.: The incapacity of the adverse possessor will only toll the limitation period at the beginning of the adverse possession.
PRESCRIPTIVE EASMENT
As with adverse possession, an easement by prescription requires that the use be open and notorious, adverse, and continuous and uninterrupted for the statutory period. Only difference with adverse possession is the exclusivity of the use.
DEFECT TO QUANTITY OF LAND CONVEYED
Can be cured by a pro rata abatement of the price reflecting the defect. If the defect is substantial a recision of the contract will be allowed. (2 acres vs. 100 acres).
