Pg 50 Flashcards
When do you impose a lien on property?
To get recovery of the price that is owed
What happens if there’s a lien on property?
It results in foreclosure of the property if the buyer does not pay the rest of the balance. This is a judicially supervised sale to the highest bidder where the proceeds pay the seller and the surplus goes to the buyer. If there is a deficiency, then a personal judgement is entered for it
What is the only time that a lien on property is of value to the buyer?
Only if he has priority that is higher than competing interests. If there were competing interests that were created before the contract of sale was entered, and the buyer had notice, his lien is inferior.
When does a lien have priority over other interests?
If it was created after those interests, unless the holder took in good faith, for value, without notice of the contract [BFP]. If the contract has language that subordinates the buyer’s rights to those acquiring later interests, this priority can be lost
What are the two different types of rescission?
– mutual agreement to cancel the contract (this means they excuse one another and restitution is made for performance that was already done)
– one party unilaterally treats his duty as excused (and looks for judicial confirmation usually from something like mistake, misrepresentation, duress, undue influence, impracticability, frustration)
What are the two different types of real estate contracts?
– Marketing contract
– installment sale contract
What is a marketing contract?
A contract that specifies the price and other conditions of sale for a short period of time. The parties immediately transfer title with financing either through the seller or third-party lender. It is expected to be performed in a short time/couple of months, and doesn’t allow the buyer to take possession until legal title has passed by delivery of the deed. Once the full contract price is paid, the buyer gets possession and title at the same time.
What is an installment sale contract?
When the seller does the financing himself, and this means that the buyer does not get the deed until he has made all payments. It is like a mortgage that stays operative for 10 to 20 years while the buyer makes installment payments on the purchase price. When all or substantially all of the price is paid, the seller delivers the deed, but possession is taken many years before.
If the buyer breaches, the seller can keep the installments as rent or liquidated damages. This is not favoured by the courts so these are often treated as mortgages to avoid inequity
What is a deed?
An instrument in writing, executed and delivered, that conveys real estate
What is title?
Legal ownership of property
What are different ways that you can transfer real property?
Through a will, intestate succession, adverse possession, prescription, dedication, legislative acts of transfer, court decrees, eminent domain, removal of clouds on title, sale, etc
If you own property, what do you have?
Both the title and deed
What is a mortgage?
An instrument in writing that operates as security for a debt
What are the elements of a deed?
– In writing – identity of the parties – sufficient description of the property – words that indicate a present intent to convey – grantor’s signature
Is it necessary that the parties involved in a deed be specifically named?
No, an informal designation is OK if no innocent third parties are hurt by it. It must be reasonably understood who the parties are based on the evidence
If a deed says that land is being conveyed to the seller’s son, is that sufficient to identify the parties?
It depends on the situation. If he only had one son, it is OK
If a deed is delivered with the grantee’s name left blank, but the grantor knows or authorizes a person to fill it in, is that OK?
The deed is void until the name is inserted at a later date, and at that point the deed is OK. It’s still OK if the grantor dies before the name is written as long as the name does get inserted
If a deed is made out to a nonexistent grantee, what happens?
It is void. This could include: a dead grantee, heirs of a living grantee, corporations that haven’t been formed yet or have dissolved, etc.
What are different ways that you can sufficiently describe property in a deed?
– Complex legal descriptions of metes and bounds
– street address
– descriptive phrases such as “the Harris Ranch“
What is required for there to be a sufficient description of the property in a deed?
It must be possible for a person of ordinary intelligence and understanding to successfully use the description to locate and identify the property
If there is a discrepancy between the deed description of the land and the actual property, what happens?
It is not fatal if the property can be identified with sufficient certainty
If you own a parcel of land on State Street, but the deed says that it is .5 acres when it is actually only .25 acres, is that still a sufficient description of the property for the deed to be valid?
Yes, as long as the address was correct. It is OK if the land is smaller than indicated
If a description of land is so vague that you cannot identify the property, is that enough for the deed to be valid?
No
What is a mother Hubbard clause?
“Grant all my land in California“
What is the controlling law for deeds and property?
The state that the land is located in is controlling.
If an estate has several properties in several different states, what is the law that applies?
There needs to be separate administrations of the estate in the separate jurisdictions
What are words that would be considered to indicate a present intent to convey in order for a deed to be valid?
“Give, transfer, deed over.“
If a deed says “I will transfer this land“ is that enough to be considered an indication of present intent to convey in order for the deed to be valid?
No, because it just shows future intent, not present. Same for words like “shall belong to you.“
Is it required that there be consideration in order for a deed to be valid?
No, this is not a contract
What is required for the grantor’s signature on a deed?
Any mark or writing that is intended to show approval of the grantor is OK. This could include signing the word “mom“, initials, imprints, nicknames, etc.
Why is it not necessary to have the grantee’s signature on a deed?
Because he does not on the property until the grantor conveys it
What are the different types of deeds?
– Full/general warranty deed
– special warranty deed/grant deed
– quit claim deed
– statutory warranty deed
What is affected by the type of deed?
The seller’s liability if there is a defect
What is a full or general warranty deed?
A deed that has extensive covenants of title and gives the greatest protection by warranting title issues for things that come from the seller or any of his predecessors. The grantor promises to be liable for any breach of the six major covenants whether the breach comes from him or his predecessors in title.
How do you know if a deed is a full or general warranty deed?
It is implied by words like “full, general, or usual“ or if it says “warranty deed”
What is a special warranty deed or a grant deed or a limited deed?
This does contain covenants of title, but they are limited in scope so they usually only include some of the six covenants. Generally the grantor’s covenants only cover title problems that arise during his period of ownership so he is only responsible for problems that happened after he got title, not before.
If A conveys property to B and B finds out later that the title is defective because A’s grantor only had a life estate, so A had a life estate measured by the life of another, can B recover from A?
No because this was a special warranty deed or a limited deed which means that B can only recover from A for anything that happened during the period after A got title. Here the defect arose before A got title, so the title covenants were not breached
