PROPERTY Flashcards
Equitable Conversion
Before deed delivered, contract for sale signed. Under Equitable Conversion, as soon as contract signed (but before closing), buyer’s interest is real property and seller’s interest is personal property. Thus, risk of loss remains on buyer under equitable conversion even if seller remains in possession.
Validity of Deed
A deed is valid if it:
(1) in writing
(2) signed by grantor and grantee
(3) identifies grantor and grantee
(4) describes property
(5) indicates present intent to convey
General Warranty Deed
Present covenants:
(1) right to convey;
(2) seisin (rightful owner); &
(3) no encumbrances.
Future covenants:
(1) further assurances (grantor will do whatever reasonable to perfect title);
(2) quiet enjoyment (grantee will not be bothered by 3rd party lawful claim to title); &
(3) warranties (grantor will defend against 3rd party claims to title)
Quitclaim Deed
Quitclaim deed does not include any covenants or promises to buyer. It’s an “as is” deed, leaving buyer with NO right to sue for any encumbrances or defects in title.
Merger
At closing date, contract for sale merges into deed, so at that point, buyer can only sue on deed.
Breach of Implied Warranty of Fitness & Habitability
Builder of new homes warrants to buyer that home is habitable and fit for intended purposes. Warranty applies to defects that are discovered in a reasonable time and due to builder’s negligence or failure to do work in workmanlike manner.
Recording Statutes - Common Law
Under common law, grantor can only covey rights that grantor had at time of conveyance. If real property transferred multiple times by same grantor, first in time had valid title. Today, every state has recording statute that change the common law rule.
Notice Statute
Protect subsequent bona fide purchasers for value who take without notice of earlier transaction. Subsequent BFP will prevail over prior grantee that failed to record.
Race Statute
Protect subsequent bona fide purchasers for value who take without notice and are first to record. Whoever records first prevails (notice irrelevant)
Race-Notice Statute
Subsequent bona fide purchaser protected ONLY if records prior grantee.
Types of Notice
(1) Actual notice - grantee actually knows of conveyance
(2) Inquiry notice - examination of land or reference in an instrument would lead reasonable person to inquire
(3) Record notice - interest recorded in chain of title.
Shelter Rule
Person who purchases from bona fide purchaser receives same status and rights as BFP.
Wild Deed
Deeds that are recorded too late or too early are wild deeds. Wild deeds do not give record notice because outside chain of title.
Bona Fide Purchasers
Person/entity who takes real property without notice of prior conveyance and pays valuable consideration. Person who receives land by gift or bequest is NOT a BFP. However, if person sells property, subsequent owner may be a BFP.
Who Liable on Mortgage When Title to Property Transferred
Mortgagor can transfer title to property. However, mortgage will remain on property and mortgager still personally liable.New transferee who takes land “subject to mortgage” not personally liable. But if transferee “assumes” mortgage, personally liable along with original mortgagor. Novation occurs if initial mortgagor, new transferee, and mortgagee all agree that mortgagor is no longer liable and transferee assumes all of mortgagor’s duties.
