Land Sale Ks & Conveyances

Question 1

Land Sale Contracts - 3 Requirements

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. id 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 K 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

Equitable Conversion

Answer 3

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 S is converted into an interest in sale proceeds; judgment is not enforceable against real property (i.e. buyer is protected)

Question 4

Risk of Loss

Answer 4

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 take possession
• Parties can contract differently
• Seller must credit any insurance proceeds from loss against the purchase price

Question 5

Death of a Party

Answer 5

If buyer or seller dies before closing, rights to the K 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. B’s estate can sue delivery)

Question 6

2 Implied Promises in Land Sale Ks

Answer 6

1) Promise to Provide Marketable Title

2) Promise to Disclose & Make no Material False Statements

Question 7

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
c) Zoning ordinance violations existing at sale

Can be waived by buyer (NOT SELLER)

Question 8

Promise to Disclose & Make no Material False Statements

Answer 8

Seller must not materially misrepresent facts or make fale statements concerning the property

Seller has a duty to disclose known, latent material defects, which may be disclaimed if disclaimer is clear and specific

Question 9

Promise to Disclose & Make no Material False Statements - New Property Exception

Answer 9

Seller/builder is subject to an implied warranty of quality in construction.

Question 10

Remedy for Breach of Implied Promises

Answer 10

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 B fails to notify S before closing, K merges with the deed and S is not liable for contractual promises

Question 11

Deed Requirements (2)

Answer 11

1) Lawfully Executed: Deed must be signed by grantor, reasonably identify the parties, contain a legal description of the real estates; and

2) Delivered: Requires intent to be bound by the conveyance

• title passes upon effective delivery; cannot be rescinded
• Present intent controls; physical transfer not required
• 3rd Party or Conditional Transfers: If a deed is transferred with conditions or via a 3rd party, courts look at grantor’s intent and whether she retains control to rescind transfer
• Acceptance: Grantee must accept the deed; acceptance is usually presumed; non-existent/void entity cannot accept deed

Rejection by grantee = ineffective delivery

Question 12

3 Types of Deeds

Answer 12

1) General Warranty: Includes 6 covs for title

2) Special Warranty: Grantor assures that:
a) he has not conveyed the land to another; and
b) the land is free from encumbrances attaching while grantor owned the land

3) Quitclaim: Transfers whatever interest grantor purports to have property; no covenants included
-i.e. grantor is not even promising he has title to convey

Question 13

Six Covenants of Title

Answer 13

Present (only breached at the time of delivery):
1) Seisin
2) Right to Convey
3) Against Encumbrances

Future (only breached upon 3rd party interference with possession of grantee):
4) Quiet Enjoyment
5) Warranty
6) Further Assurances

Question 14

Present Covs (3)

Answer 14

Seisin: G’or covs that he is the rightful owner (i.e. has title, possession) and that deed covers described land

Right to Convey: G’or covs that he has the right to convey

Against Encumbrances: G’or covs that the land is free from encumbrances (e.g. servitudes, mortgages

Question 15

Future Covs

Answer 15

Quiet Enjoyment: G’or covs that g’ee will not be disturbed by a 3rd party’s claim of lawful title

Warranty: G’or agrees to defend against the lawful claim of title by another or pay defense costs if the claim is successful

Further Assurances: G’or promises to perform future acts reasonably necessary to perfect the title conveyed

Question 16

Bona Fide Purchaser - Definition

Answer 16

A BFP is one who purchases property for value (i.e. gives pecuniary consideration) without notice of a prior conveyance or encumbrance

Includes mortgagees for value, but not donees or devisees

Question 17

“No conveyance or mortgage of an interest in land shall be valid against any subsequent purchaser for value without notice thereof unless it is recorded”

Answer 17

Notice statute

Question 18

“No conveyance or mortgage of an interest in land shall be valid against any subsequent purchasers for value without notice thereof whose conveyance is first recorded”

Answer 18

Race - Notice Statute

Question 19

“No conveyance or mortgage of an interest in land shall be valid against a subsequent purchaser whose conveyance is first recorded”

Answer 19

Race statute

Question 20

Shelter Rule

Answer 20

One who takes from a BFP will prevail against any interest the transferor-BFP would have prevailed against, even if the transferee had actual notice of a prior conveyance

• Protects donees or devisess of BFPs who cannot qualify as BFPs and would not otherwise receive protection under notice or race-notice statutes

Question 21

Wild Deeds

Answer 21

A recorded deed unconnected to the chain of title in a grantor-grantee index system

• Record notice cannot be derived from a wild deed
• Wild deed cannot exist in a tract index system

Question 22

Estoppel by Deed

Answer 22

A grantor who conveys title to land he does not then own is estopped from subsequently acquiring the same land

• Title automatically passes to the benefit of grantee
• Prevents one from conveying land they do not presently own and later validly acquiring it

Question 23

Seller’s Agent

Answer 23

Broker who obtains listing from seller (“listing agent”)

Has fiduciary duty to seller

Earns commission from sale of property once the sale closes (may still earn commission if the sale fails to close due to seller’s fault)

Question 24

Buyer’s Agent

Answer 24

Primary relationship is with buyer e.g. show buyer potential properties buyer may purchase

• Typically compensated by receiving a portion of listing broker’s commission, i.e. gets paid out of seller’s agent’s commission

Common Law: owes a fiduciary duty to seller b/c/ buyer’s agent is technically a subagent of the seller’s agent

Modern Statutes: Requires separate agreement between buyer’s agent and buyer; buyer’s agent owes fiduciary duty to buyer but n fiduciary duty to seller

Question 25

Duty to Disclose

Answer 25

Agents have a duty to disclose material information about which they have actual knowledge