Land Sale Contracts

Question 1

Land sales contract must (SOF)

Answer 1

1. be in writing
2. be signed by the party to be charged
3. contain all off the essential terms (parties, property discription, terms of price and payment)

Question 2

Exception to land sales SOF

Answer 2

1. Part performance (2 required all or part of the purchase price, possession, substantial improvement)
2. Full performance
3. Detrimental reliance
4. admission

Question 3

implied covenant of marketable title

Answer 3

Implied on ALL land sales contracts, any kind of deed

Marketable title = free from an unreasonable risk of litigation

Question 4

Title defects that make it unmarketable

Answer 4

1. Title acquired by AP that hasn’t been quieted
2. Future interests when the holders haven’t agreed to the transfer
3. private encumbrances (mortgages, covenant, option, easement)
4. violation of zoning ordinance
5. significant physical defect (can be waived by the buyer)

Question 5

When is seller required to deliver marketable title?

Answer 5

AT CLOSING (or delivery for a land installment K)

Question 6

Remedies for unmarketable title

Answer 6

Buyer can rescind

recover out-of-pocket costs and earnest money payments

Sue for breach

Specific performance with an adjustment of price

Question 7

Is time of the essence in a real estate contract?

Answer 7

Not usually, UNLESS:

1. Specifically stated
2. circumstances indicate it was the intention of the parties
3. 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

Question 8

Implied warranty of fitness/suitability

Answer 8

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

Question 9

Duty to disclose all defects

Answer 9

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

Question 10

Remedy for failure to disclose all defects

Answer 10

buyer can rescind sale or seek damages

Question 11

Performance on a land sale K

Answer 11

concurrent conditions - one is not obligated to perform if the other doesnt

Question 12

Merger and land contracts

Answer 12

obligations in the contract MERGED into the deed - CANT be enforced

Question 13

How are damages calculated for breach of land sale K?

Answer 13

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

Question 14

Doctrine of equitable conversion

Answer 14

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

Question 15

Action against a seller during k period

Answer 15

CANNOT use the property - seller’s interest is no longer in the property itself, only in the proceeds from the sale

Question 16

Risk of loss during K period

Answer 16

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

Question 17

If one party dies during K period

Answer 17

Seller’s interest = personal property ONLY (real property interest is adeemed)

buyer’s interest = real property

Question 18

Right of First refusal

Answer 18

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.

Question 19

Does RAP apply to an option or right of first refusal?

Answer 19

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