Land Sale Contracts

Question 1

Land sale contracts convey…

Answer 1

equitable title.

Question 2

The deed passes…

Answer 2

legal title and becomes the operative document.

Question 3

What does the Statute of Frauds require in land sale contracts?

Answer 3

1. Identity of the parties;
2. Description of the property;
3. The price & a means of determining the price;
4. A signature of the party against whom enforcement is sought.

Question 4

HYPO: B enters into a contract to purchase a farm. The contract ecites 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 4

Specific performance with a pro rata reduction in price.

Question 5

The preferred remedy for a breach of a land sales contract is…

Answer 5

specific performance, because land is inherently unique.

Question 6

The doctrine of part performance states that an oral real estate contract may be enforced by specific performance if:

Answer 6

(1) The oral contract is certain and clear, and

(2) The acts of partial performance clearly prove the existence of a contract.

Question 7

The acts of partial performance typically satisfy the requirements of the part performance doctrine if they meet two of following three:

Answer 7

1. Buyer has taken possession of the property;
2. Buyer has paid the purchase price or a signiciant potion of the purchase price; and/or
3. Buyer has made substantial improvements to the premises.

Question 8

Under the doctrine of equitable conversion, once the land contract is signed…

Answer 8

equity regards the buyer as the owner of real property.

Question 9

The two implied promises in every land contract are:

Answer 9

(1) Seller will provide marketable title at closing;
(2) Seller will not make false statements of material fact.

Question 10

Marketable title is title…

Answer 10

reasonably free from threat of litigation.

Question 11

The common defects that render title unmarketable are…

Answer 11

1. Defects in record chain of title;
2. Encumbrances;
3. Zoning violations.

Question 12

If even a portion of a title rests on adverse possession, the title is…

Answer 12

unmarketable.

Question 13

A seller will be liable for failure to disclose…

Answer 13

latent material defects.

Question 14

Can a seller avoid fraud or failure to disclose liability by including a general disclaimer of liability?

“as is,” “with all faults”

Answer 14

NO, but disclaimers of specific types of defects will be upheld.

Question 15

Do land contracts contain implied warranties of fitness or habitability?

Answer 15

No – caveat emtor is the common law norm.

Question 16

Is a closing date absolutely binding?

Answer 16

No, unless time is identified as “of the essence.”

Question 17

Time is of the essence if:

Answer 17

(1) the contract so states;
(2) the circumstances indicate that was the parties’ intent; or
(3) one party gives the other notice that time is of the essence.

Question 18

The buyer’s obligation to pay and the seller’s obligation to convey are concurrent conditions, so neither party is in breach until…

Answer 18

the other tenders performance (even if the closing date passes).

Question 19

A party is excused from performing if…

Answer 19

the other party has repudiated the contract or it is impossible for the other party to perform (such as when unmarketable title can’t be cured).

Question 20

A non breaching party is entitled to…

Answer 20

1. damages (difference between contract price and market value on date of breach + incidental costs); or
2. specific performance.

Question 21

If a buyer proceeds despite unmarketable title, they can usually claim the remedy of…

Answer 21

specific performance with an abatement of the purchase price.