Property Flashcards
What must be in a deed?
- signed by the grantor
- Indicating a real, identifiable grantee
- Description of the property
- Language of conveyance
Deed Forgery
deed is made, altered, completed, or signed by someone other than the grantor. A forged deed is void
Fraud in Inducement
- material misrepresentation
- of past or present fact
- by which the perpetrator intended to induce the grantor’s reliance
- and the grantor relied to her detriment
This results in a VOIDABLE deed
Fraud in execution
The grantor, through no fault of their own, signs a deed believing it to be something else.
Void
Delivery requirements
- words or acts of the grantor that demonstrate
- a present intent
- to transfer a property interest to the grantee
Can delivery be revoked?
NO
When will courts presume that delivery occurred?
- Grantee is in possession of the deed
- Grantor recorded the deed
- Grantor signs a deed before a notary or other witnesses
- Grantor is in possession of the property
Estoppel
A grantor might be estopped from denying delivery if 1) the grantor induced the grantee to take possession and 2) to spend money on the property 3) under the reasonable belief that the grantor transferred title
What happens if a Bona Fide purchaser buys from a seller who obtained a deed without legal delivery?
BFP has no interest, because seller had nothing to convey
Is acceptance presumed?
Yes, unless the property would be a burden on the grantee
Quitclaim deed
grantor gives to the grantee whatever interest the grantor has. No covenants of title
Special warranty deed
includes all covenants of title and warrants against title defects created by the grantor. Does not warrant against defects made by grantor’s predecessors
General Warranty Deed
Includes all covenants of title and warrants against title defects made by grantor and his predecessors
6 covenants of title
- seisin
- right to convey
- covenant against encumbrances
- quiet enjoyment
- warranty
- further assurances
seisin
warrants that the grantor actually holds a property interest in the land
right to convey
warrants that grantor has legal authority to transfer their interest
covenant against encumbrances
warrants that there are no encumbrances on the property
What if there are encumbrances on the property?
Then they must be in the deed or be open, notorious, and visible (eg. public highways, railways, overhead power lines)
Quiet enjoyment
warrants that no one with superior title will disturb grantee’s possession
Warranty
warrants that grantor will defend and indemnify grantee against any claims to the property by someone with superior title
Further assurances
warrants that the grantor will take whatever steps necessary to perfect grantee’s title
Broker
seller’s agent for the purpose of selling property
Broker’s fiduciary duties
act in the seller’s best interest, avoid or disclose conflicts of interest, act with diligence to fulfill responsibilities
Listing agreement
contract that lays out the agreement between seller and broker
Types of listing agreements
- Exclusive right to sell
- Exclusive agency
- Open
Exclusive right to sell
broker has the sole authority to sell the property. Broker always gets commission
Exclusive agency
Broker will be the seller’s only agent for the sale during the listing period. Broker gets commission unless the seller finds the buyer
Open: listing agreement
Broker has nonexclusive right to sell the property. Broker only gets a commission if broker finds a buyer
Federal Fair Housing Act
regulates the sale or rental of any living space. Prohibits discrimination based on race, sex, disability, national origin, famial status, color, or religion
Prohibited acts under the FFHA
- refusing to sell or rent to a bona fide offeror
- discriminating in the terms of a contract
- advertising any preference or limitation regarding renters or purchasers
- misrepresenting the availability of living spaces
- refusing to permit reasonable modifications, at occupants expense, to accommodate for a disability
can you waive FFHA protections?
NO
How to prove an FFHA violation
prove that the offender acted with discriminatory intent or that they engaged in a practice that has a discriminatory effect
What all is required for a real property sales contract?
- Writing
- Signed by the parties
- essential terms (parties names, words indicating intent to buy or sell, description of the property, price)
Part performance exception
SoF exceptions that will enforce a contract if buyer has done 2/3
1. buyer takes possession of the property
2. has paid some or all of the purchase price
3. OR made substantial improvements to the property
(MONEY DAMAGES UNAVAILABLE)
Estoppel exception to SoF
- Defendant’s actions induce the plaintiff’s reasonable belief that the parties have a sales contract
- the plaintiff detrimentally changed position in reliance on the existence of a contract
- enforcing the contract is the only way to avoid unfairness, injustice, or fraud
Other SoF exceptions
- defendant admits to there being a contract
- Fully performed oral agreement (Buyer takes possession and seller takes the money)
When must performance be done? RE a property sales contract
Unless the parties make time of the essence than anytime reasonable, even after closing
Available remedies for a buyer if a seller breaches
- Rescission and restitution
- Specific Performance, because land is unique
- Damages (loss of bargain, liquidated damages, incidental, or consequential damages)
Seller’s remedies
- rescission and restitution
- specific performance (unless the property is not unique ie single condo unit)
- Damages
Right of first refusal
A contract that allows the buyer to purchase property at a defined price if the owner decides to sell within a certain time period. Allows the buyer to prevent the seller from selling to a third party until buyer has refused to buy
Does a seller have to disclose anything about the property’s condition?
Yes, any material defects known to the seller, if those defects could not be reasonably discovered by the buyer
What is a material defect?
if the defect has a significant effect on the value or desirability of the property
Implied Warranty of quality and workmanship
seller warrants that the house was built in a careful workmanlike manner (Only applies to people who build and sell houses for a living)
What is marketable title?
- a title that a reasonably prudent buyer would accept under the circumstances
- OR a title that is reasonably free from doubt
Do zoning laws affecting property affect the marketability of title?
No, unless there is an existing violation
Equitable conversion
Once the parties enter into a contract, the buyer becomes the the equitable owner of the property.
Who holds the risk of loss between contract and closing?
The buyer
What is a mortgage?
a lien on real property that secures a debt
Two types of mortgages
- Purchase money mortgage
- Future-Advance mortgage
Lien theory
Mortgage company gets a lien but not title
Title theory
mortgage company keeps title until the debt is paid
Priority of mortgages
- Purchase money mortgages
- Any other mortgage in order of time
Special rule RE Future advance mortgages
If the mortgage company is required to make disbursements, then they are all treated as one mortgage with a date of the original payment. If they are optional and the company has notice of junior mortgages, then the junior mortgage has priority over all subsequent disbursements
Can a man with a mortgaged property sell that property?
Yes, however a due on sale clause might apply
Due on sale clause
Allows the mortgage company to demand the remainder of the debt upon the sale of the property
Who remains liable for the mortgage after sale?
The original mortgagor, Unless the buyer agrees to assume the mortgage
If the buyer assumes the debt, is the seller still liable?
Yes secondarily, unless the mortgage company releases them
Acceleration clause
clause that allows a mortgage company to demand the remainder of the debt upon a default
Equity of redemption
allows a person to avoid foreclosure by paying the remaining debt plus interest, fees, and costs. must be done before a foreclosure sale
Statutory redemeption
allows a person to regain their property after the foreclosure sale by paying the foreclosure sale price plus interest and costs
Who must statutory redemption payment be made to
foreclosure buyer
3 types of foreclosure
- Strict (mortgage company just takes the property)
- foreclosure under power of sale (mortgage company sells the property)
- judicial foreclosure (court sells the property via auction)
Distribution of sale proceeds
- cost of foreclosure and sale (attorney’s fees and court costs)
- the mortgage being foreclosed
- all junior mortgages
- the man, if any surplus remains
Marshaling
If a senior creditor can foreclose of two properties owned by one debtor and a junior creditor can only foreclose on one, then courts require the senior creditor to first foreclose on the property that the junior creditor does not have access to.
Deeds of trust
Property owner obtains a loan from creditor. property owner executes a deed conveying property to a third party. Third party has the right to sell the property upon default and give proceeds to the creditor.
Absolute conveyance
Property owner (debtor) gives a deed to the creditor. Creditor agrees to either 1) not record the deed until default or 2) to sell the property back to the owner for a nominal amount upon repayment.
Sale-Leasebacks
Property owner sells property to creditor and leases it from the creditor
Installment land contract
allows a person to take immediate possession of property while making installment payments over time. Seller retains title until payments are made
Equitable mortgage factors
- debtor retains possession of property
- debtor had an acute need for money at the time of transaction
- sells the property for less than FMV
- pays the buyer an amount greater than the sales price
What is the significance of a court finding a transaction is an equitable mortgage?
Debtor has protections as if the transaction was a normal mortgage (redemeption)
Adverse possession elements
- continuous
- hostile
- open and notorious
- for the statutory period
- exclusive ownership
Types of recording acts
- race (First to record wins)
- notice (BFP wins if he lacks notice of other interest holders, recording time is irrelevant)
- race-notice (BFP without notice wins if he records first)
Estoppel by deed
arises if a person without proper title conveys land to a BFP and then the person later gets title. The title automatically transfers to the BFP.
MUST BE CONVEYANCE VIA A WARRANTY DEED. DOES NOT APPLY TO QUITCLAIM
Wild deed
a deed from a grantor who is outside a later purchaser’s chain of title. (Ex. A to B B does not record, B to C C records. A to D. D would have no notice of C’s interest)
