Land Sale Contracts

Question 1

True or false: in most cases, listing and seller agent share commission

Answer 1

True. The agent who shows you the property is working for the seller.

Question 2

True or false: many states forbid dual agency as a COI

Answer 2

True. Representing both buyer and seller can be a COI.

Question 3

Liability for breach of sale of land is determined by….

Answer 3

Stage where breach occurs

1. Contract: liability based on contract provision
2. Deed: based on deed warranty

Question 4

What does the doctrine of merger effectively say/do?

Answer 4

Covenants under the contract are merged into the deed – any remedy will flow from the deed

Note: if there was something important in the K that was not merged into the deed, cause of action is lost (deed controls)

Question 5

Beyond a signed writing, what are the essential terms required for a sale of land to satisfy SOF?

Answer 5

Parties
Description of property
Price and payment

Note that the signed writing must be signed by the party to be charged

Question 6

What are the two exceptions for SOF and sale of land?

Answer 6

1. Part performance by either buyer or seller
   2/3: payment, possession, improvements
2. Detrimental reliance (estoppel) by either buyer or seller
   reasonable reliance on K, suffer hardship if not enforced

Question 7

True or false: Not every land sale contract includes an implied covenant of marketable title

Answer 7

False. This is included with EVERY land sale.

Marketable title: Title that is free from unreasonable risk of litigation

Ex: of unmarketable title– AP that hasn’t been quieted, private encumbrances, violation of zoning code

Question 8

If seller cannot deliver marketable title, the buyer’s remedy is….?

Answer 8

Rescission of the contract.

Question 9

True or false: Unless the parties or contract specifies, time is NOT of the essence

Answer 9

True.

This matters b/c if time is NOT of the essence, failure to close on the date set may be a breach of the contract, not not grounds for rescission of the contract

Specific performance is still available

Question 10

What warranty applies to defects in new construction?

Answer 10

Implied warranty of fitness or suitability

Question 11

What is the general rule for breach of the implied warranty of fitness or suitability?

Answer 11

Must be brought within a reasonable time after discovering the defect (some jurisdictions have a statutory time period)

Question 12

Most jurisdictions impose a duty on the seller to disclose to the buyer all known, physical, and ___ defects?

Answer 12

Material defects = substantially affect value of the home, health and safety, or desirability

Concerned with hidden defects.

Question 13

True or false: a seller’s use of the term “as is” when selling property is sufficient to satisfy seller’s duty to disclose

Answer 13

False. General disclaimers are not enough.

Question 14

In land sale contracts, what are the seller’s remedies for a buyer’s breach?

Answer 14

Damages: Contract price - market price
Rescission: sell the property to someone else
Specific performance: we are making this happen

Question 15

In land sale contracts, what are the buyer’s remedies for a seller’s breach?

Answer 15

Damages: contract price - market value (date of breach)
Rescission: cancel contract, reimburse buyer for any payments
Specific performance

Question 16

What happens if a seller breaches in a land sale but acted in good faith?

Answer 16

Buyer can only recover out-of-pocket expenses

Question 17

True or false: Buyers and sellers must choose between damages and specific performance

Answer 17

True. Cannot have both remedies.

Question 18

Between the period of contract and closing of the sale of land, who bears the risk of loss/damages or destruction of the property?

Answer 18

Majority: Buyer w/equitable title (“we will recognize you”)
Minority: seller until closing and delivery of legal title/deed