Property - LAND CONVEYANCES Flashcards
LAND CONVEYANCES
This section covers
(1) Statute of Frauds for land conveyances
(2) Marketable Title
(3) Deeds
(4) Covenants in Deeds
(5) Recording statutes
Every conveyance of real estate consists of a two-step process
(1) the land contract, which endures until step 2
(2) the closing, where the deed becomes our operative document
The LAND CONTRACT
Land contract and statute of frauds
-The land contract must be in writing, signed by the party to be bound (aka the D). It must DESCRIBE THE LAND and state some CONSIDERATION
EXCEPTION TO SOF:
Part Performance - if two out of three are satisfied, no writing required
(1) buyer has POSSESSION
(2) buyer has made at least PARTIAL PAYMENT
(3) buyer has made SUBSTANTIAL IMPROVEMENTS
The Problem of Risk of Loss (ie who bears ROL after land contract but before closing?)
(The LAND CONTRACT)
Apply the doctrine of Equitable Conversion - for the multistate - EQUITY regards as done that which ought to be done
–Thus, in equity, once the contract is signed buyer owns the land, subject of course to the condition that he pay the purchase price at closing
THIS MEANS - if the land is DESTROYED in the interim between contract and closing, through no fault of either party, buyer bears the risk of loss, unless the contract states otherwise
NY DISTINCTION*** IN NY, so long as buyer is without fault, the ROL remains with seller until buyer has title or takes possession
Two implied promises in every land contract
The LAND CONTRACT
(1) Seller promises to give MARKETABLE TITLE at the CLOSING
standard: title free of reasonable doubt (ie title free from litigation or threat of litigation)
(2) Seller promises not to make any FALSE STATEMENTS OF MATERIAL FACT
- – Majority of states now hold sellers liable for failure to disclose a latent material defect - seller is liable for material lies and omissions SILENCE IS NOT GOLDEN
- –if contract contains a general disclaimer of liability (e.g. property “as is” or “with all faults”) will NOT RELIEVE seller from liability for fraud or failure to disclose
MARKETABLE TITLE: Three circumstances that render title unmarketable
(1) ADVERSE POSSESSION - if even part of the title rests on adverse possession, it is unmarketable. Seller must provide good RECORD TITLE
(2) ENCUMBRANCES - Marketable title means an unencumbered free simple. Thus, servitudes and mortgages render title unmarketable, unless buyer has waived them (these include easements [though many cts say if easement was known to buyer he has implicitly agreed], covenants etc)
NOTE: Seller has the right to satisfy an outstanding mortgage or lien at the closing, with the proceeds of the sale. Thus, buyer cannot claim title is unmarketable because it is subject to a mortgage prior to closing, so long as the parties understand that the closing will result in the mortgage being satisfied or discharged.
(3) ZONING VIOLATIONS - title is unmarketable when Blackacre VIOLATES a zoning ordinance
The land contract contains no implied warranties of fitness or habitability
Common law norm is CAVEAT EMPTOR
The CLOSING
our controlling document is now THE DEED
How does the deed pass legal title from seller to buyer?
remember that it must LEAD - “Lawfully Executed And Delivered”
(1) LAWFUL EXECUTION OF THE DEED
(i) standard is that deed must be IN WRITING and SIGNED BY the GRANTOR
- - Note: deed need not recite consideration, nor must consideration pass to make a deed valid
(ii) the DESCRIPTION OF THE LAND does not have to be perfect, just needs to provide GOOD LEAD as to the identity of the property sought to be conveyed, meaning we can research it and know what is meant
(2) DELIVERY REQUIREMENT
(I) could be satisfied when Grantor PHYSICALLY TRANSFERS the deed to grantee - it is permissible to use the MAIL, an AGENT, or a MESSENGER
(ii) delivery does not REQUIRE physical transfer of the deed itself – legal standard of delivery is a test solely of PRESENT INTENT
- — we Ask: Did Grantor have the present intent to be bound irrespective of whether or not the deed itself was handed over
(iii) — recipient’s EXPRESS REJECTION of the deed DEFEATS DELIVERY
(iv) if a deed, absolute on its face, is transferred to grantee with an oral condition the oral condition drops out, if it is not provable and delivery is done
v) Delivery by escrow is OK
– grantor may deliver an executed deed to a third party, known as an escrow agent, with instructions that the deed be delivered to grantee once certain conditions are met. Once the conditions are met, title passes to grantee
ADVANTAGE OF ESCROW - if grantor dies or becomes incompetent or is otherwise unavailable before the express conditions are met title still passes from escrow agent to grantee once the conditions are met
Covenants for title and the THREE TYPES OF DEEDS
(1) Quit Claim Deed
(2) General Warranty Deed
(3) Statutory Special Warranty Deed
Quit Claim Deed
QUIT CLAIM DEED contains no covenants. Grantor is not even promising that he has title to convey. This is the WORST DEED buyer could hope for (but gets you through the closing, and after that, grantor is off the hook)
The GENERAL WARRANTY DEED
General Warranty Deed - best deed a buyer could hope for (pretty rare) - warrants against ALL DEFECTS in title including those due to Grantor’s predecessors
SREQWF
typically contains the following 6 covenants
First 3 are present covenants, meaning a present covenant is breached, if ever, at time of delivery (ORE - own it, right to convey, no encumbrances)
(1) the covenant of SEISIN: grantor owns this estate
(2) covenant of RIGHT TO CONVEY- grantor has the power to transfer, she is under no restraint or disability
(3) covenant against ENCUMBRANCES- there are no servitudes or mortgages on blackacre
future covenants - covenant is not breached, if ever, until grantee is disturbed in possession. Thus S/L will not begin to run until that future date
(4) covenant of QUIET ENJOYMENT - grantee will not be disturbed in possession by a third party’s lawful claim of title
(5) covenant of WARRANTY - grantor will defend grantee against lawful claims of title asserted by others
(6) covenant of FURTHER ASSURANCES - grantor will do what is needed to perfect the title (housekeeping/administerial)
Statutory SPECIAL WARRANTY DEED
provided by statute in many states, this deed contains two promises that GRANTOR MAKES ONLY ON BEHALF OF HIMSELF (grantor makes no reps on behalf of his predecessors in interest)
(1) grantor promises she hasn’t conveyed this estate to anyone other than grantee
(2) the estate is free from ENCUMBRANCES made by the grantor
**NY - in NY the special warranty deed is called a “bargain and sale deed”
Next go to RECORDING SYSTEM
RECORDING SYSTEM SLIDES NEXT
