Land Transaction

Question 1

Events and Phases in the Land Transaction

Answer 1

Two big events:
(1) Contract of Sale
(2) Closing
Phases:
(1)Pre-contract phase
(2)Post-closing phase
(3)Executory Period

Question 2

Contract of Sale requirements to satisfy the SOF

Answer 2

-In order to satisfy SOF, the contract of sale must include (1) a writing that identifies the buyer and the seller (2) a promise for the seller to sell and the buyer to buy (3) a physical description of the property (4) the price or formula for calculating price (5) time for closing *not a huge requirement because courts will infer a reasonable amount of time (6) signature of the parties against whom it will be enforced**ASK

Question 3

Electronic Signature

Answer 3

• Are ok as long as parties have agreed to conduct business electronically (look at conduct)
• Texas has adopted ESIGN which allows it

Question 4

Exceptions to the SOF

Answer 4

(1) Equitable Estoppel
(2) Part Performance

*Texas only recognizes part performance

Question 5

Equitable Estoppel Elements

Answer 5

(1) Oral agreement is admitted to exist or clearly proved
(2) The promisor reasonably expected to induce action
(3) The promisee acted on reliance to their detriment
(4) Serious or irreparable injury would result should specific performance not be allowed

Question 6

Part Performance Elements

Answer 6

(1) Took possession of property
(2) Paid all or part of the purchase money
(3) Made improvements
OR
Show facts that would make the transaction a fraud upon the purchaser if enforced

*Most jurisdictions require only 2. Texas requires all 3.

Question 7

Marketable Title

Answer 7

A record title that is free from reasonable doubt such that a prudent person, with knowledge of all salient facts and circumstances and their significance, would be willing to accept it. (REQUIRED TO BE DELIVERED)

• There is either an express title covenant addressing the quality of title that must be delivered by closing OR
• Implied covenant that the titel is going to be marketable

Question 8

What makes a title unmarketable?

Answer 8

(1) the seller does not own what he claims to own
-Concurrent Interest, Color of
Title. Life Estate etc.
(2) The title has an encumbrance
-Zoning laws are not an
encumbrance
(3) Presence of defects that would subject the buyer to a chance of litigation
-Wild deed
-Estoppel by Deed
-Adverse Possessor
-Easement
*if encumbrance is disclosed the
title is marketable

Question 9

What if the title is not marketable?

Answer 9

Buyer can rescind:

• If by closing seller has not removed encumbrance, but the buyer continues with the sale, the buyer takes subject to encumbrance
• If the covenant is already violated, buyer can rescind

Question 10

Doctrine of Equitable Conversion

Answer 10

• As of day of signing for sale, the buyer is viewed in equity as the owner of the property holding equitable title. Equitable title is real property. Seller has legal title as trustee for the buyer: this ensures the seller has a claim for the sale price secured by a vendor’s lien on the land
• Legal title is considered personal property

Question 11

Common-Law Majority Rule Equitable Conversion

Answer 11

-Buyer must buy the land no matter what happens to the land

Question 12

Minority Rule Equitable Conversion

Answer 12

VPRA: Vender and Purchaser Risk Act: Risk of loss remains with seller

Question 13

Texas Rule Equitable Conversion

Answer 13

VPRA: Risk of loss remains with the seller

Question 14

Seller’s Duty to Disclose Minority Approach

Answer 14

Caveat Emptor:

• Seller has no duty to disclose.
• Buyer has no remedy

Question 15

Seller’s Duty to Disclose Modern/Majority Approach

Answer 15

(1) A duty to disclose is generally imposed if the seller knew the defect and the defect is materially latent
- Material: important to a reasonable person and would be induced to act in regards to the transaction
- Latent: something that would not be discovered upon reasonable inspection
(2) If duty is violated, the buyer has basis for rescinding or obtaining damages

Question 16

Types of Defects

Answer 16

(1) Physical
(2) Psychological
(3) Reputational
(4) Off-Site

Question 17

Caveat Emptor Exceptions

Answer 17

(1) Confidential or fiduciary relationship between parties
(2) If the seller’s conduct constitutes active concealment
-Failure to mention is one thing
but to actively hide is another
(3) If Condition:
-a. Was created by the seller
-b. Materially impairs the value of
the contract
-c. Peculiarly within the
knowledge of the seller or is.
unlikely to be found by a prudent
purchaser.
-Even if an express discliamer exists, it wont protect the seller if the defect are peculiarly in the knowledge of the seller

Question 18

Texas Approach: Duty to Disclose

Answer 18

5.008 of Property Code: notice of defects needs to be delivered on or before the effective date of K. If notice is delivered after effective date, buyer can terminate for any reason within 7 days of receiving notice.

“As-is” clause in Texas is generally enforceable absent fraud, failure to disclose when required or concealment.

Question 19

New Builds

Answer 19

New builds have two warranties:

(1) Implied warranty of quality and habitability; and
(2) Implied warranty of workmanship

Question 20

Implied Warranty of Quality and Habitability; and

Implied Warranty of Workmanship

Answer 20

IWOQH: Purpose is to protect the buyer who lacks the ability and expertise to discover the defect in the new home (such as being on a toxic waste site

IWOW: Defines the level of performance when parties fail to make an express provision in their k (Minimum level of care) (ex: floor tiles arent properly set and begin to pop up)