Land Sale Contracts Flashcards
Land sales contract must (SOF)
- be in writing
- be signed by the party to be charged
- contain all off the essential terms (parties, property discription, terms of price and payment)
Exception to land sales SOF
- Part performance (2 required all or part of the purchase price, possession, substantial improvement)
- Full performance
- Detrimental reliance
- admission
implied covenant of marketable title
Implied on ALL land sales contracts, any kind of deed
Marketable title = free from an unreasonable risk of litigation
Title defects that make it unmarketable
- Title acquired by AP that hasn’t been quieted
- Future interests when the holders haven’t agreed to the transfer
- private encumbrances (mortgages, covenant, option, easement)
- violation of zoning ordinance
- significant physical defect (can be waived by the buyer)
When is seller required to deliver marketable title?
AT CLOSING (or delivery for a land installment K)
Remedies for unmarketable title
Buyer can rescind
recover out-of-pocket costs and earnest money payments
Sue for breach
Specific performance with an adjustment of price
Is time of the essence in a real estate contract?
Not usually, UNLESS:
- Specifically stated
- circumstances indicate it was the intention of the parties
- one party gives the other notice
Therefore failure to perform does not get you out of the K, but still a breach (–> damages)
Can sue for specific performance as long as the party was ready to perform within a reasonable time
Implied warranty of fitness/suitability
ONLY FOR NEW HOMES - commercial builders/developers
Most jx allow first purchaser and subsequent purchasers
suit must be brought within a reasonable time
Damages = cost of repairs
Duty to disclose all defects
SELLER’s duty to disclose all known material physical defects
EXCEPT those readily observable or known to buyer
Must substantially affect value, health/safety, or desirability
Remedy for failure to disclose all defects
buyer can rescind sale or seek damages
Performance on a land sale K
concurrent conditions - one is not obligated to perform if the other doesnt
Merger and land contracts
obligations in the contract MERGED into the deed - CANT be enforced
How are damages calculated for breach of land sale K?
Both buyer/seller can recover expectation damages - difference between price and market value on date of performance
AND incidental damages - cost from title search or survey of property
Buyer can sue for specific performance
Doctrine of equitable conversion
Seller retains legal title during pendency of sales contract - effectively holds property in trust for the buyer, duty to keep up the property
Buyer gets equitable title
Action against a seller during k period
CANNOT use the property - seller’s interest is no longer in the property itself, only in the proceeds from the sale
Risk of loss during K period
on the BUYER!
Unless damage is due to seller’s intentional or negligent actions
If seller has insurance, usually has to give buyer a credit in the amount of the proceeds
If one party dies during K period
Seller’s interest = personal property ONLY (real property interest is adeemed)
buyer’s interest = real property
Right of First refusal
Whoever has it has the right to get property prior to its transfer to someone else
Valid unless UNREASONABLE
Can be limited in various ways - time period, etc.
Does RAP apply to an option or right of first refusal?
Not for a current leasehold tenant (ex: if the lease gives the tenant the right of first refusal, RAP does not apply)
Most jx say RAP doesnt apply either when its a commercial transaction
