Land Sale Contracts

Question 1

Under the doctrine of equitable conversion, if the seller of land dies before the contract closes

Answer 1

The successor’s to the seller’s real property must give up title at closing.

Question 2

The seller’s disclaimer that the property is sold “as is” is most likely to result in

Answer 2

the seller being liable to the buyer for defects in improvements to real property.

Question 3

Liability may be based on a seller’s

Answer 3

(i) misrepresentation, (ii) active concealment, or (iii) failure to disclose serious defects known to her and which the buyer is not likely to discover (i.e., latent defects).

Question 4

A general exculpatory clause in the contract of sale will NOT

Answer 4

allow a seller to avoid liability for misrepresentation, active concealment, or failure to disclose. However, the seller’s disclaimer identifying specific property defects is likely to be upheld.

Question 5

A seller who has not conveyed title will be considered in breach of her land sale contract,

Answer 5

f the buyer tenders the purchase price on the closing date.

Question 6

The closing is when

Answer 6

the parties are to exchange the purchase price and the deed.

Question 7

The buyer’s obligation to pay the purchase price and the seller’s obligation to convey the title are deemed to be

Answer 7

concurrent conditions. Thus, neither party is in breach of the contract until the other party tenders performance.

Question 8

Under the doctrine of equitable conversion, if improvements on realty are destroyed without fault before the closing date, the risk of loss is on the

Answer 8

buyer.

Question 9

The Statute of Frauds requires that a land sale contract

Answer 9

be memorialized in a writing that contains a description of the property, identification of the parties to the contract, and the price and manner of payment, if agreed upon. The Statute also requires that the memorandum be signed by the party to be charged.

Question 10

A title insurance policy

Answer 10

ensures that good record title exists as of the policy’s date and defends record title in the event of litigation. However, it protects only the person who owns the policy and does not run with the land to subsequent purchasers.

Question 11

When a seller of land breaches the implied covenant of marketable title, the closing date

Answer 11

may be extended to allow the seller time to cure.

Question 12

Every land sale contract contains

Answer 12

an implied covenant that the seller will provide marketable title at closing. Marketable title is title reasonably free from doubt, which a reasonably prudent buyer would accept. While it need not be perfect title, it must not present the buyer with an unreasonable risk of litigation.

Question 13

If the buyer determines that the seller’s title is unmarketable,

Answer 13

he must notify the seller and give her a reasonable time to cure, even if this requires extending the closing date, and even if time is of the essence.

Question 14

Who generally will be entitled to specific performance of a real estate contract?

Answer 14

Both the buyer and the seller.

Question 15

The usual measure of damages for breach of a real estate contract is

Answer 15

the difference between the contract price and the market value of the land on the date of breach.

Question 16

When will a real estate broker be considered an agent of the buyer

Answer 16

Only when explicitly agreed to.

Question 17

Under the doctrine of equitable conversion, equity regards the buyer of land as

Answer 17

Owning the real property as soon as the contract is signed.

Question 18

A title insurance policy that names the mortgagee as the insured party protects

Answer 18

the mortgagee only

Question 19

Every land sale contract contains an implied covenant that

Answer 19

the seller will provide marketable title at closing. While it need not be perfect title, it must be free from questions that might present an unreasonable risk of litigation.

Question 20

Title may be unmarketable because of

Answer 20

a defect in the chain of title. Examples include a significant variation in the description of the land from one deed to the next, the defective execution of a prior deed in the chain of title that thus fails to meet the requirements for recordation, and evidence that a prior grantor lacked capacity to convey the property.

Question 21

If a real estate contract states that time is of the essence, a party who fails to tender performance on the closing date:

Answer 21

is in total breach and loses their right to enforce the contract.

Question 22

When a seller of land dies before the contract closes,

Answer 22

the successors to the seller’s real property must give up legal title at closing. Under the doctrine of equitable conversion, the buyer of land is considered to own (i.e., hold equitable title to) the real property once the contract is signed.

Question 23

Although restrictive covenants generally render title unmarketable, title defects MAY be waived in the land sale contract.

Answer 23

The fact that a land sale contract calls for a quitclaim deed, which does not contain any covenants for title, does not affect the contract’s implied covenant to provide marketable title.

Question 24

When a buyer of land dies before the contract closes,

Answer 24

the successors to the buyer’s real property rights may demand a conveyance of the land at closing.

Question 25

A zoning ordinance that restricts the use of the land would not make title to land unmarketable.

Answer 25

However, title to land that currently violates a zoning ordinance would probably be considered unmarketable