Land Sales Contracts Flashcards
What must a contract for the sale of land contain?
It must be written, contain the signature of the party to be charged, and the essential terms of the contract.
When does a contract for the sale of land not necessarily need to be written?
Partial performance, which satisfies the statute of frauds.
Doctrine of Equitable Conversion
once a contract is signed, equity regards the buyer as the owner of the real property. The seller’s interest in the property (proceeds of the sale) are personal property. The buyer holds that interest in trust for the seller.
Even after a contract is signed, the seller has the right of _____________ until closing.
possession
If the property to a land sale contract is destroyed without fault of either party before closing, the risk of loss is on the _________.
buyer
If a seller dies before closing, what effect?
Title passes to his heirs, who must give up title at closing.
If a buyer dies before closing, what effect?
His heirs can demand a conveyance of the land at closing.
Implied Covenant of Marketable Title
every contract for the sale of land contains an implied covenant that title will be marketable, i.e. that there are no encumbrances on the land when it is sold.
Must title be perfect to be marketable?
No, just reasonably free from doubt; i.e. free from questions that present an unreasonable risk of litigation.
Title acquired by adverse possession is __________.
unmarketable
Where a holder of a future interest is unborn or unascertained, is it possible to convey marketable title?
No
What kind of encumbrances make title unmarketable?
mortgages, liens, restrictive covenants, easements, and significant encroachments.
What kind of encroachment does not render title unmarketable?
An easement which is beneficial, visible or known to the buyer.
Do zoning restrictions affect marketability?
No, but violations of them do.
If a seller has agreed to furnish title at the date of closing, may a buyer rescind prior to the date of closing on the grounds that the title is unmarketable?
No, it must be done at the time of closing.
In an installment land contract, when must title be transferred to the buyer?
When the buyer has made his last payment.
If title is unmarketable, what must a buyer do?
The buyer must notify the seller that title is not marketable and give them a reasonable time to cure the defect.
If title remains unmarketable after a reasonable period of time to cure, what are the buyer’s remedies?
The buyer can seek damages, rescission, specific performance with abatement, and a quiet title suit.
Is the closing date absolutely binding on the parties?
Only if the contract so states, the circumstances evidence that it is binding, or one party gives notice of time being of the essence.
If the closing date is not absolutely binding on the parties, when must the seller give title to the buyer?
Within a reasonable time.
If one party to a land sale contract does not tender performance, what result?
The other side is relieved of their duty to tender performance.
What happens if neither party tenders their performance?
The closing date is extended until one of them tenders performance.
What kind of damages can a non-breaching party seek if the other side does not tender their performance?
Damages
What kind of damages can a non-breaching party seek if the other side does not tender their performance and the land is unique?
specific performance
