Real Estate Contracts

Question 1

Step 1: Contract of Sale signed —- general rule

Answer 1

K must be in:

1. writing
2. signed by the party to be charged; and
3. contain essential terms (party identities, price, description of land)

Question 2

Step 1: Contract of Sale signed —- part performance exception

Answer 2

If claimant does 2 out of 3 of the following:

1. takes possession
2. makes payment in full of a substantial part of the price; or
3. substantially improves the land

Question 3

Step 1: Contract of Sale signed —- payment

Answer 3

1. exclusive agency = broker gets commission only if his agent is procuring cause of the sale
2. exclusive right to sell = broke paid no matter who finds buyer — even if it is seller himself

Question 4

Step 1: Contract of Sale signed —- disclosure

Answer 4

Seller of home does not have to disclose defects unless they are not obvious, he knows/should know of them, and defect is serious

Seller CANNOT actively conceal defects

Question 5

Step 1: Contract of Sale signed —- warranty

Answer 5

For new homes sold by builder-seller (developer) = implied warranty of fitness

Question 6

Step 2: Marketable title — defined

Answer 6

• Reasonably free from defects

- MUST be given on day of closing (can pay off a mortgage with proceeds of sale ***)

Question 7

Step 2: Marketable title — what makes title unmarketable?

Answer 7

DEVA:

• Defect in chain of title
• Encumbrance (mortgage or easement not mentioned in the contract)
• Violation of zoning ordinance
• Adverse possession (title acquired through AP)

** violation of housing/building code does not render title unmarketable **

Question 8

Step 3: Title —- Equitable Title

Answer 8

Once K signed, equitable title passes to BUYER

• B’s interest is in real property so if something happens to the real property after the contract is signed, ROL is with B

Question 9

Step 3: Title —- Legal Title

Answer 9

Remains with the SELLER

• S’s interest is in the money (personal property) that seller will get from sale

Question 10

Step 4: Closing

Answer 10

• Deed must be executed & delivered
• executed = deed identifies the parties, words of grant, signed by seller, describes the land
• delivered = intent to pass title presently —- presumed to have occurred if deed is in grantee’s possession/recorded

** marketable title due on closing, not before!!! **

Question 11

Step 5: Buyer can only sue on deed once delivery occurs — types of deeds

Answer 11

1. quitclaim = no warranties
2. warranty = 6 convents
   ~ present = right to convey, seisin, no encumbrances
   ~ future = further assurances, quiet enjoyment, warranty
3. special warranty = same as general but grantor makes no representations on behalf of his predecessors in interest

Question 12

Step 5: How can buyer sue?

Answer 12

Because merger occurred, buyer can only sue on the DEED (contract has merged into the deed)