Land Sale Contracts

Question 1

What is the doctrine of merger?

Answer 1

Covenants under the contract are merged into the deed and any remaining will flow from the deed.

• after closing, obligations contained in the contract are merged into the deed. If there was something important in the contract that was not in the deed, because the action is lost because of the controls after closing.

Question 2

What are the three requirements to satisfy the statute of fraud’s?

Answer 2

1. Must be in writing;
2. Must be signed by the party to be charged; and
3. Must include the essential terms

• parties
• description of the property
• price

Question 3

What are the two exceptions to the statute of frauds?

Answer 3

1. Part performance

2. Detrimental reliance

Question 4

What are the elements of part performance?

Answer 4

Any two of the three:

1. Payment of all or part of the purchase price
2. Possession by the purchaser or
3. Improvements by the purchaser

Question 5

What is detrimental reliance?

Answer 5

An estoppel doctrine that applies where party has detrimentally relied on the contract and will suffer hardship if the contract is not enforce.

• goes hand-in-hand with the part performance

Question 6

What is marketable title?

Answer 6

Title that is free from an unreasonable risk of litigation

•Every land sale contract includes an implied covenant of marketable title

Question 7

What are examples of defects in title that would render the title unmarketable?

Answer 7

• title acquired by adverse possession that hasn’t been quieted
• private encumbrances, e.g. Mortgage, covenant, easement
• violations of zoning ordinances

Question 8

What is the basic rule for time of performance in a land sale contract?

Answer 8

Unless the contract or parties notify, time is not of the essence.

• if time is not of the essence, failure to close on the date set for closing maybe a breach of the contract, but is not grounds for rescission of the contract.
• specific performance is still available

Question 9

What does the implied warranty of fitness or suitability apply to?

Answer 9

Applies to defects in new construction.

• suits must be brought within a reasonable time after discovery of the defect.

Question 10

What is the sellers duty to disclose defects?

Answer 10

Seller has a duty to disclose to the buyer all known, physical and material defects.

• General disclaimers (as is) will not satisfy the seller’s duty to disclose.

Question 11

What are the seller’s 3 remedies on Breach by Buyer?

Answer 11

1. Damages:
   Measure is the difference between the contract price in the market price.
2. Recession: Seller can sell the property to someone else
3. Specific performance

Question 12

What are the buyers remedies in breach by seller?

Answer 12

1. Damages: Measure is the difference between the contract price in the market value on the date breach.

• if the sellers breach the act in good faith buyer can only recover out-of-pocket expenses.

2. Rescission: returns payment to the buyer and cancel the contract.
3. Specific performance

• buyer and sellers must choose between damages is specific performance – can’t have both remedies.

Question 13

Who bears the risk of loss if there’s a damage to or destruction of the property in a majority jurisdiction?

Answer 13

1. majority rule: the buyer holds equitable title during the period between the execution of the contract and the closing and delivery of the deed.

• buyer is responsible for any damages to the property that happens during that period.
• as holder of the legal title, seller has a right to possess the property.

Question 14

Who bears the risk of loss if there’s a damage to or destruction of the property in a minority jurisdiction?

Answer 14

Minority rule: place the risk of loss on the seller until closing and delivery of the deed.