Land Transactions

Question 1

Contents of Standard Contract for Sale

Answer 1

1. Purchase price and how it will be paid
2. Legal description of the property
3. Promise that good title will be provided by the seller
4. Warranties of title: assurances by seller to buyer
5. Date for transfer of possession
6. Provision for liability for damage to the property during the intervening period
7. Itemization of furnishing: listing of who gets appliances, plants, etc.
8. Basic terms of an escrow agreement
9. Earnest money
10. Signature lines

Question 2

Unmarketable Title Rule

Answer 2

the existence of unmarketable title from the seller to the buyer will allow for the buyer to rescind during the intervening period

Question 3

Approaches to Nondisclosure

Answer 3

1. Quality Approach
2. Punitive Approach
3. Economic Efficiency Approach

Question 4

Quality Approach

Answer 4

Some jurisdictions impose liability where the quality was misrepresented (including market value, symbolic value, etc.).

Question 5

Punitive Approach

Answer 5

All nondisclosure is punished.

Question 6

Economic Efficiency Approach

Answer 6

Where the court finds that a preventable mistake was allowed to occur, it will impose liability under the theory of economic efficiency.

Question 7

Types of Warranties

Answer 7

Present (can only be sued at the time of closing or during the statutory period)

1. Covenant of Seisin
2. Covenant to Convey
3. Covenant against Encumbrances

Future (can be sued on after the deal is done)

4. Covenant of General Warranty
5. Covenant of Quiet Enjoyment
6. Covenant of Further Assurances

Question 8

Types of Deeds

Answer 8

1. General Warranty Deed
2. Special Warranty Deed
3. Quitclaim Deed

Question 9

General Warranty Deed

Answer 9

Usually full receipt covering all 6 warranties. Best kind for the buyer.

Question 10

Special Warranty Deed

Answer 10

Only a deed as it applies between the buyer and seller (intermediate deed that covers no past purchasers)

Question 11

Quitclaim Deed

Answer 11

No warranties of any kind. Worst kind for the buyer.

Question 12

Escrow

Answer 12

An instrument deposited by its maker (grantor) with some third-party custodian (like lawyer or bank) who is given instructions to deliver the instrument to another party on the occurrence of one or more future conditions. Irrevocable.

Question 13

Types of Escrow

Answer 13

1. Commercial: delivered as part of transaction

2. Death: delivered when grantor dies

Question 14

Estoppel by Deed

Answer 14

If grantor subsequently acquires title to the land, the grantor is estopped to deny that he had title at the time of the deed and that title passed to the grantee.

Question 15

Trusts

Answer 15

Revocable alternative to escrow.

Question 16

Title Certificate

Answer 16

Available in some jurisdictions to owners of title. Issued by the state and reissued to each new owner.

Question 17

Mother Hubbard Clause

Answer 17

A clause which intends to convey specific tracts of land but does so using very general language.

Question 18

Wild Deed

Answer 18

A deed that’s tied to an unrecorded link in the prior purchaser’s chain, not a subsequent purchaser’s.

Question 19

Wild Deed Doctrine

Answer 19

The wild holder of deed in every jurisdiction loses.

Question 20

Zimmer Deed (an adaptation of Wild Deed)

Answer 20

Where there is a deed that is tied to an unrecorded link in the subsequent purchaser’s chain, this holder will lose in relevant jurisdictions.
- In notice jurisdiction, apply the shelter rule.

Question 21

Title Theory of Mortgage

Answer 21

A mortgage transfers title to a property to the mortgagee, who holds it until the mortgage has been paid off, at which time title passes to the mortgagor (buyer).

Question 22

Lien Theory of Mortgage

Answer 22

The buyer holds the deed to the property during the mortgage term. The mortgage is a lien on the property until paid off.

Question 23

Shelter Rule

Answer 23

A grantee who has received an interest in property from a bona fide purchaser will also be protected as a bona fide purchaser, even if the grantee would not legally qualify for this status.

Question 24

Race Acts Recording Statute

Answer 24

provides that as between successive takers, the person who record first prevails

Question 25

Notice Recording Statute

Answer 25

provides that an unrecorded instrument is invalid as against any subsequent purchaser who does not have notice (of prior purchasers) and who pays value of the prior interest

Question 26

Race-Notice Recording Statute

Answer 26

provides that an unrecorded instrument is invalid as against any subsequent BFP who records first

Question 27

Marketable Title Acts

Answer 27

statutorily remove title defects of ancient origin, and act as statutes of limitation to clear the public record of remote property rights that cloud title