land sale + mortgage

Question 1

land sale contract requirements

Answer 1

common law governs

statute of frauds
writing + signed by party to be charged + essential terms

if not in writing then 2/3
- possession
- payment
- improvements

Question 2

merger

Answer 2

covenants are merged into the deed and cannot be enforced unless the covenant is also in the deed

Question 3

implied covenant of marketable title

Answer 3

for every land sale contract, the seller has a duty to convey marketable title to the buyer at closing

marketable title = free from an unreasonable risk of litigaton

Question 4

implied warranty of fitness or suitability

Answer 4

defects on new construction, must be safe and fit for human habitation

can be for the initial purchaser and subsequent purchaser

Question 5

duty to disclose defects

Answer 5

seller must disclose material defects that effect
- value
- desirability
- health and safety of occupants

Question 6

equitable conversion and risk of loss

Answer 6

majority rule = purchaser holds equitable title during the time bw the execution of the contract and the closing

purchaser responsible for damages

seller still holds title so they have the right to possess

Question 7

purchase money mortgage

Answer 7

borrows a loan to purchase a property

Question 8

future advanced mortgage

Answer 8

line of credit used for home equity, construction, business, and commercial loans

“second mortgage”

Question 9

foreclosure priority

Answer 9

purchase money mortgage

junior interest gone = anything after the loan that is being defaulted on

senior interest survive = anything before the loan that was being defaulted

Question 10

adverse possession

Answer 10

allows a trespasser to acquire title

• continuous for a statutory period (tacking)
• open and notorious
• exclusive
• hostile

Question 11

deed requirements

Answer 11

statute of fraud
identify the parties
describe the property sufficiently
delivered + accepted (present intent to deliver)

Question 12

general warrenty deed

Answer 12

strongest

seller protects title against all defects, even if the grantor did not cause the defect

Question 13

special warranty deed

Answer 13

middle ground

seller protects title against defects caused by the grantor

Question 14

quitclaim deed

Answer 14

least protection

seller makes no promises to the health of the title

Question 15

race statute

Answer 15

first one to record acquires title

“No conveyance is valid against a subsequent bona-fide purchaser who has recorded the deed to his conveyance FIRST”

Question 16

notice statute

Answer 16

subsequent purchaser acquires title if the purchase was made without notice of prior unrecorded conveyance

“No conveyance is valid against a subsequent bona-fide purchaser who has NO NOTICE of the original conveyance, unless the conveyance is first recorded”

Question 17

race-notice statute

Answer 17

without notice + first recorded

“No conveyance is valid against a subsequent bona-fide purchaser who has NO NOTICE of the original conveyance and who has recorded the deed to his conveyance FIRST.”

Question 18

bona fide purchaser

Answer 18

someone who buys an asset in good faith and for a stated value

Question 19

nonrecourse loan

Answer 19

type of debt that is secured by collateral, usually property.

If the borrower defaults, the lender can only collect from the property itself, not from the borrower’s other assets.

Question 20

encumbrance

Answer 20

a claim against a property by a party who is not the owner

Question 21

promissory note

Answer 21

formal IOU that sets forth the terms of the loan

primary evidence of the debt and is not recorded in the deed records

can be assigned to another independent of the mortgage

Question 22

buyer assumes mortgage

Answer 22

buyer agrees to pay loan & is primarily liable for debt

seller becomes secondarily liable

Question 23

buyer takes subject to mortgage

Answer 23

buyer does not agree to pay loan & is not liable for debt

seller remains solely liable for debt