Pg 47

Question 1

What happens under equitable conversion if one of the parties dies?

Answer 1

That person‘s heirs must consummate the deal

Question 2

What happens under equitable conversion if the seller dies before the contract is performed?

Answer 2

The money claim passes to the next of kin as personal property and bare legal title descends to the heirs who hold it in trust and have an obligation to convey it

Question 3

What happens under equitable conversion if the buyer dies before the contract is performed?

Answer 3

His claim to the land passes to his heirs as real property and the purchase price is paid from his estate

Question 4

What does title mean?

Answer 4

The legal system’s conclusions about how interests in realty are arranged and who owns them. This is an abstract concepts and is not a piece of paper

Question 5

What are the different ways you can divide interest in land?

Answer 5

According to time, space, or among numerous people

Question 6

What is the date that the covenant of marketable title manifests itself?

Answer 6

Only on the day of closing, so anytime before that it is not necessary that the seller have title. He can contract to sell land he doesn’t yet own as long as he will have the land by closing

Question 7

What is the covenant that is implied into all contracts for land unless otherwise specified?

Answer 7

That the seller will convey marketable title on the date of closing

Question 8

Is it necessary when a contractor is involved that there be privity for later purchasers so that they can sue the builder or contractor under an implied warranty of marketability for latent defects that manifest themselves within a reasonable time after purchase and cause economic harm?

Answer 8

No privity is required in order to do that

Question 9

What is the rationale behind the implied warranty of marketability?

Answer 9

It is imposed by law based on public policy

Question 10

What is marketable title?

Answer 10

That the title is reasonably free from defects and reasonable risks of attack. It must be title that a reasonable and prudent business person, with knowledge of facts and legal ramifications, in the current market would accept.

Question 11

Does every single contract for the sale of real property include an implied warranty of marketable title?

Answer 11

No, if the contract specifically states that it doesn’t. As long as there is no contrary intent, marketable title is implied

Question 12

If the seller cannot produce marketable title, what is he liable for?

Answer 12

Breach of contract

Question 13

If title to land is sufficiently doubtful so that a reasonable buyer would reject it, what happens?

Answer 13

That violates the covenant of marketable title and discharges the buyer’s obligation to perform. It also gives a remedy for breach

Question 14

Is it necessary that a seller provide perfect title?

Answer 14

No, because that is hard to find, the law infers that the covenant by the seller that the title will be free of all reasonable risk of attack

Question 15

What is the linchpin for marketability of title?

Answer 15

Hinges on reasonableness. If a reasonable buyer would accept title with the violation, it is still marketable. The same is true for minor hidden defects

Question 16

Does a violation of the housing code affect marketability of title?

Answer 16

Not usually, but it depends on the reasonableness

Question 17

If there is an encumbrance on the property what does that do?

Answer 17

It makes title less marketable by usually affecting the value and sometimes restricting transfer

Question 18

What does insurable title mean?

Answer 18

Title that a reputable title company would approve or insure. This is more lenient because companies are often willing to ignore minor defects that would make title unmarketable

Question 19

When can an action for marketable title be brought?

Answer 19

Only before the conveyance or deed is made or accepted by the buyer. Once the deal closes, the buyer can only bring suit based on covenants

Question 20

What is a title defect?

Answer 20

Something that affects the use and enjoyment or value of land enough to make a reasonable buyer not want to purchase it

Question 21

What are examples of things that are not considered to be title defects?

Answer 21

– Potential zoning violations
– fraud
– code violations
– hidden defects
– adverse possession
– if marketable on the date of closing

Question 22

If you want to build a pool on land you just bought, and then you learn that land is not zoned for that, does that make title unmarketable?

Answer 22

No, that would just be a potential zoning violation. The only thing that would make title unmarketable would be an existing zoning violation at the time of purchase

Question 23

If a seller lies and says that the land is zoned for something that it isn’t, does that affect the marketability of title?

Answer 23

No, but the buyer would have a suit for fraud or misrepresentation

Question 24

What are the duties of the buyer and the seller when a commercial transaction is involved?

Answer 24

The buyer has a duty to inspect the land before buying and the seller has no duty to disclose obvious conditions on the land such as a marsh

Question 25

Would it be considered to be a title defect if there is an existing housing or building code violation that a reasonable buyer would accept title with?

Answer 25

No because these are hard to discover so they do not make title unmarketable

Question 26

Is a hidden defect considered to be a title defect if a reasonable buyer would accept title with the hidden defect?

Answer 26

No

Question 27

Is it considered to be a title defect if an adverse possessor got an action to quiet title?

Answer 27

No

Question 28

What are defects that would make title unmarketable?

Answer 28

Mortgages, liens, restrictive covenants, easements, significant encroachments, etc.

These would be unacceptable to a reasonably prudent person that is expecting quiet and peaceful enjoyment of his property free from encumbrances

Question 29

How do you determine defects in the chain of title or ownership?

Answer 29

This means there was a problem with the route that the land took from the sovereign to the current owner. You must trace title back from the current owner, transaction by transaction until you get to the source, which is the transfer of title from the sovereign government

Question 30

What are some examples of defects in the chain of title or ownership that would make title unmarketable?

Answer 30

– Conveyances that the buyer knows were forged, undelivered, gotten by fraud or duress, or executed by a minor
– title that went through a judicial proceeding where the court did not have jurisdiction
– fiduciary’s deed if a fiduciary acted beyond his authority or in violation of duty

Question 31

If title is acquired by adverse possession but there was no action to quiet title, does that make title unmarketable?

Answer 31

Yes. It is necessary that the seller first perfect his title in court through a judicial degree of quiet title judgment, otherwise title is not marketable