Land Sale Contracts Flashcards
What “essential terms” must be included in a land sale contract under the Statute of Frauds?
- Description of the property
- Identification of the parties
- Price and manner of payment (if agreed upon)
When will a court give specific performance of a K in the absence of a writing? (e.g. an oral K)
Doctrine of part performance – when the buyer does 2 out of the 3 things
- Possession of land by purchaser
- Making substantial improvements
- Payment of all or part of the purchase price
The seller may or may not be able to obtain specific performance
Under the doctrine of equitable conversion, what does each party to a land sale contract possess between signing and closing?
Buyer:
Real property
Seller:
Personal property (bare legal title and possession of the property)
What is the standard for the implied covenant of marketable title?
- It is reasonably free from doubt
- A reasonably prudent buyer would be willing to accept it
- It is free form questionst that might present an unreasonable risk of litigation
What things may render a title unmarketable? (Generally)
- Defects in record chain of title
- Encumbrances
- Zoning restrictions
What defects in record chain of title will render title unmarketable?
- Significant variation in the description of hte land from one deed ot hte next
- A deed in the chain was defectively executed
- Evidence that a prior grantor lacked capacity to convey the property
- Title was acquired by adverse possession
What is the effect of a mortgage or lien on marketable title?
As long as the purchase price is sufficient and the seller is able to satisfy the mortgage at the closing, the closing will result in marketable title
What is the effect of an easement on marketable title?
An easement that reduces the value of the property renders it unmarketable
But, some courts say that if it was a beneficial easement (e.g. utility easement to service property) or one that was visible or known to buyer, it is not an encumbrance
What is the effect of a restrictive covenant on marketable title?
It renders title unmarketable
What is the effect of an encroachment on marketable title?
A significant encroachment (either on seller’s land or his neighbor’s land) constitutes a title defect, but it is still marketable when:
- It is very slight and does not inconvenience the owner of the land it encroaches on
- The owner encroached upon indicated that he will not sue on it
- It has existed for so long that it has become legal by adverse possession (if the state allows adversely possessed title to be marketable)
What is the effect of a zoning restriction on the marketability of title?
Zoning restrictions themselves don’t affect the marketability of title, but existing violations of zoning restrictions will render it unmarketable
At what time must title be marketable?
At the date of closing
In installment land contract – when delivery is to occur / buyer has made last payment
What are the buyer’s and seller’s remedies if title is unmarketable?
Buyer must first notify the seller and give reasonable time to cure, even if that means extending the closing date. If seller doesn’t cure:
- Rescission
- Sue for damages for breach
- Specific performance with an abatement of the purchase price
- Require seller to quiet title (some JXs)
Seller cannot get damages for breach or specific performance.
What is the seller’s liability for unmarketable title after closing?
After closing, the contract merges with the deed, and unless there is fraud, seller is no longer liable for the implied covenant of marketable title.
However, buyer can sue for violation of promises made in the deed, if there are any.
When is the presumption that time is not “of the essence” overcome and what is the effect on the closing date?
Time is considered “of the essence” if:
- The contract so states
- The circumstances indicate that it was the parties’ intention
- One party gives the other notice that she desires to make time of the essence w/in a reasonable time prior to closing
If time is of the essence, then the closing date is binding and the party who fails to tender performance by the closing date is in total breach, and can’t enforce the K anymore