Land Transactions

Question 1

4 minimum requirements for a Land Sale Contract to satisfy SoF

Answer 1

1. Signed → must be signed by the party to be bound (broad, any method of impression)
2. Describe → RE must be described in detail sufficient to allow extrinsic evidence to solve any ambiguity
3. Price → price must be stated or sufficiently detailed to allow extrinsic evidence to solve any ambiguity
   (if no price agreed upon, ct may imply an agreement to pay a reasonable price)
4. Names of all parties

Question 2

Exceptions to SoF for Land Sale Contract

Answer 2

Part performance (not in NC)

Promissory Estoppel (not in NC unless PE is used to show contractual obligation was waived (maybe))

Equitable Estoppel (not in NC unless clear fraud present)

Question 3

Marketable Title

Answer 3

Fee simple absolute

Free from unreasonable risk of litigation

Not subject to any encumbrances
(Any encroachment, no matter how small –> .g., liens, leases, mortgages, easements)

Question 4

Defects that do not make title unmarketable

Answer 4

Items waived in K

Items to be paid at closing (e.g., ad valorem taxes)

Any encumbrances buyer knows about

Anything beneficial to property (e.g., utility easements bc utilities are good for prop)

Zoning restrictions (unless zoning violation is material bc then an unreasonable risk of litigation exists)

Question 5

Equitable Conversion Doctrine

Answer 5

equitable title to real property passes to the BUYER upon entering land sale K, even though the seller retains legal title.

This places the risk of loss on the buyer

If EC has occurred, the seller’s interest is personal prop (right to purchase price), and the buyer is treated as owner of the land

EC has been used by some cts to determine whether the seller or purchaser takes the loss when the premises are destroyed between signing K and closing, and K has no provision for allocating the risk of loss

Question 6

Uniform Vendor and Purchaser Risk Act

Answer 6

Adopted by NC

Seller bears risk of innocent losses before legal title or possession is transferred to buyer

Put simply → When an innocent loss occurs, the buyer is excused to perform

Question 7

General Warranty Deed

Answer 7

Provides greatest degree of protection, warranting title against all defects in title, whether they arose before or after grantor took title

Question 8

Special Warranty Deed

Answer 8

2nd best in degree of protection–contains warranties only against grantor’s own acts, no one else’s

E.g., if defect is a mortgage on the land executed by grantor’s predecessors in ownership, grantor isn’t liable

Question 9

Quitclaim Deed

Answer 9

Contains no warranties of any kind

Merely conveys whatever title the grantor has, if any, and if the grantee of a quitclaim deed takes nothing by the deed, the grantee can’t sue grantor

Note: title must still be marketable

Question 10

Mortgage

Answer 10

a security interest in real property that guarantees repayment of the debt

Question 11

Title Theory (NC)

Answer 11

legal title to property is transferred to the mortgagee (used to make mortgagees’ life easier; no real difference anymore)

Possession, however, stays with mortgagor.

The mortgagee delivers title back to mortgagor once the entire loan is paid off.

Question 12

Lien Theory (majority)

Answer 12

legal title remains with the mortgagor.

Mortgage is a lien on the property, removed once the entire loan is paid off.

Question 13

Buying property “subject to” mortgage vs. “assume” mortgage

Answer 13

Subject to –> property may be sold at foreclosure sale to satisfy and outstanding loan obligation

Assume mortgage –> buyer may be personally liable to deficiency action

Question 14

Equitable Redemption

Answer 14

All states recognize an equitable right of borrower to retain the property if he pays the entire debt before foreclosure sale.

Foreclosure cuts off borrower’s equity of redemption