Pg 47 Flashcards
What happens under equitable conversion if one of the parties dies?
That person‘s heirs must consummate the deal
What happens under equitable conversion if the seller dies before the contract is performed?
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
What happens under equitable conversion if the buyer dies before the contract is performed?
His claim to the land passes to his heirs as real property and the purchase price is paid from his estate
What does title mean?
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
What are the different ways you can divide interest in land?
According to time, space, or among numerous people
What is the date that the covenant of marketable title manifests itself?
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
What is the covenant that is implied into all contracts for land unless otherwise specified?
That the seller will convey marketable title on the date of closing
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?
No privity is required in order to do that
What is the rationale behind the implied warranty of marketability?
It is imposed by law based on public policy
What is marketable title?
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.
Does every single contract for the sale of real property include an implied warranty of marketable title?
No, if the contract specifically states that it doesn’t. As long as there is no contrary intent, marketable title is implied
If the seller cannot produce marketable title, what is he liable for?
Breach of contract
If title to land is sufficiently doubtful so that a reasonable buyer would reject it, what happens?
That violates the covenant of marketable title and discharges the buyer’s obligation to perform. It also gives a remedy for breach
Is it necessary that a seller provide perfect title?
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
What is the linchpin for marketability of title?
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
Does a violation of the housing code affect marketability of title?
Not usually, but it depends on the reasonableness
If there is an encumbrance on the property what does that do?
It makes title less marketable by usually affecting the value and sometimes restricting transfer
What does insurable title mean?
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
When can an action for marketable title be brought?
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
What is a title defect?
Something that affects the use and enjoyment or value of land enough to make a reasonable buyer not want to purchase it
What are examples of things that are not considered to be title defects?
– Potential zoning violations – fraud – code violations – hidden defects – adverse possession – if marketable on the date of closing
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?
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
If a seller lies and says that the land is zoned for something that it isn’t, does that affect the marketability of title?
No, but the buyer would have a suit for fraud or misrepresentation
What are the duties of the buyer and the seller when a commercial transaction is involved?
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
