Land Sale Contracts and Conveyances

Question 1

Land sale contracts

Answer 1

Subject to the SOF and must be:
1) In writing;
2) Signed by the parties to be bound; and
3) Articulate essential terms (e.g. identify grantor and grantee, intent to convey, consideration to be paid, description of the land)

Question 2

Land sale contracts-exception

Answer 2

Partial performance
-A land sale contract outside the SOF is enforceable against the seller if the buyer does any two of the following:
a) Pays all or part of the purchase price;
b) Takes possession; and/or
c) Makes substantial improvements

Question 3

Land sale process

Answer 3

1) Contract: agreement to buy/sell land
2) Escrow period: transfer of dunds through escrow
3) Closing: escrow completion to deed delivery
4) Conveyance: successful deed transfer, upon which property is conveyed to the new owner

Question 4

Equitable conversion

Answer 4

During escrow (after land sale K but before deed delivery), buyer owns the real property, but seller owns personal property (i.e. the right to proceeds of the sale)
-Seller holds legal title in trust for buyer
-Action against seller for claims arising before the K: any judgment against seller is converted into an interest in sale proceeds; judgment is not enforceable against real property (i.e. buyer is protected)

Question 5

Land sale contracts-Risk of loss

Answer 5

If property is destroyed before closing through no fault of the parties, buyer bears the risk of loss in most jurisdictions
-Applies even if buyer has not taken possession
-Parties can contract differently
-Seller must credit any insurance proceeds from loss against the purchase price

Question 6

Land sale contracts-Death of a party

Answer 6

If buyer or seller dies before closing, rights to the contract pass according to interests held
* Seller’s interest: passes as personal property
-I.e. seller’s estate can sue for sale proceeds
* Buyer’s interest: passes as real property
-I.e. buyer’s estate can sue for delivery

Question 7

Implied promise: 1) promise to provide marketable title

Answer 7

• Promise that title will be free from risk of litigation upon closing
• Defects rendering title unmarketable:
  a) Acquired by adverse possession,
  b) Encumbered by interests (e.g. servitude, mortgage, future interest); but seller has the right to satisfy outstanding mortgages or liens with sale proceeds, or
  c) Zoning ordinance violations existing at sale
  -Can be waived by buyer (but not the seller)

Question 8

Implied promise: 2) Promise to disclose and make no material false statements

Answer 8

• Seller must not materially misrepresent facts or make false statements concerning the property
• Seller has a duty to disclose known, latent material defects, which may be disclaimed if disclaimer is clear and specific
• New property: seller/builder is subject to an implied warranty of quality in construction

Question 9

Land sale contracts-Remedy for breach

Answer 9

Buyer must notify seller before closing and give reasonable time for seller to cure defects
-If seller fails to cure, buyer can rescind, file for damages, demand specific performance, or file suit to quiet title
-Merger: if buyer fails to notify seller before closing, contract merges with the deed and seller is not liable for contractual promises

Question 10

Deeds