Land Sale Contracts Flashcards
Under the doctrine of equitable conversion, if the seller of land dies before the contract closes
The successor’s to the seller’s real property must give up title at closing.
The seller’s disclaimer that the property is sold “as is” is most likely to result in
the seller being liable to the buyer for defects in improvements to real property.
Liability may be based on a seller’s
(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).
A general exculpatory clause in the contract of sale will NOT
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.
A seller who has not conveyed title will be considered in breach of her land sale contract,
f the buyer tenders the purchase price on the closing date.
The closing is when
the parties are to exchange the purchase price and the deed.
The buyer’s obligation to pay the purchase price and the seller’s obligation to convey the title are deemed to be
concurrent conditions. Thus, neither party is in breach of the contract until the other party tenders performance.
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
buyer.
The Statute of Frauds requires that a land sale contract
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.
A title insurance policy
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.
When a seller of land breaches the implied covenant of marketable title, the closing date
may be extended to allow the seller time to cure.
Every land sale contract contains
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.
If the buyer determines that the seller’s title is unmarketable,
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.
Who generally will be entitled to specific performance of a real estate contract?
Both the buyer and the seller.
The usual measure of damages for breach of a real estate contract is
the difference between the contract price and the market value of the land on the date of breach.
When will a real estate broker be considered an agent of the buyer
Only when explicitly agreed to.
Under the doctrine of equitable conversion, equity regards the buyer of land as
Owning the real property as soon as the contract is signed.
A title insurance policy that names the mortgagee as the insured party protects
the mortgagee only
Every land sale contract contains an implied covenant that
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.
Title may be unmarketable because of
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.
If a real estate contract states that time is of the essence, a party who fails to tender performance on the closing date:
is in total breach and loses their right to enforce the contract.
When a seller of land dies before the contract closes,
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.
Although restrictive covenants generally render title unmarketable, title defects MAY be waived in the land sale contract.
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.
When a buyer of land dies before the contract closes,
the successors to the buyer’s real property rights may demand a conveyance of the land at closing.
A zoning ordinance that restricts the use of the land would not make title to land unmarketable.
However, title to land that currently violates a zoning ordinance would probably be considered unmarketable
