Real Estate Contracts Flashcards
A seller need not transfer title until closing or a reasonable time thereafter unless:
Time is of the essence, ie, if the K or circumstances strongly suggest that the parties intended the closing date to be strictly enforced.
Unless otherwise provided, the doctrine of equitable conversion places the risk of loss on:
the party with equitable title to the prop.
What is eq. title: The buyer acquires eq. title once a real estate K is formed and can be specifically enforced.
Sellers duty to disclose in commercial and residential prop transactions, majority and minority view
The majority of JDX have stats. that require sellers of residential prop. to disclose any KNOW material defects that cannot be reasonably discovered by the buyer.
Remember the 1201 C exception, “as is” clause or specific disclaimers without seller’s fraud.
If no applicable stat is provided, the common law rule of caveat emptor controls- let the buyer beware- provides that the seller has no duty to disclose defects to the buyer unless otherwise agreed.
For commercial sale, there is never a duty to diclose property defects unless otherwise provided.
Is an oral agreement for the sale of land enforceable?
No, real estate K’s are subject to the SOF, the agreement must be in writing, signed by the party whom enforcement is sought and contain all essential terms.
Tenancy in common definition
a concurrent estate in which each co-tenant holds a separate share of the property and the right to possess the entire property with no right of survivorship.
How can a right of survivorship be created in a tenancy in common?
By an agreement that satisfies the SOF, in writing, signed by both parties, and contains all essential terms.
A misrepresentation is an untrue assertion of fact that makes a K voidable by the adversly affected party when:
- the misrep. is fraudulent OR material
- the misrep induced assent to the K
AND - the adversley affected party justifiably relied on the misrep.
Nondisclosure of a known fact is tantamount to an assertion that it does not exist if the party not disclosing the fact knows that:
- Disclosure would correct the other party’s mistake about a basic assumption of the K
AND - the failure to disclose would violate the duty of good faith and fair dealing.
Is time for performance an essential term in a real estate contract?
No, courts will presume that performance within a reas. time was intended if no time is listed.
When is title considered marketable?
If it is reasonably free from doubt and under no threat pf litigation such that a reas. person would accept and pay for it.
Red flags that title is not marketable:
- restrictive covenants
- easements
- Leases
- liens
- gaps in chain of title
- etc.
When does the doctrine of part performance apply and what is it?
Part performance is an exception to the SOF.
It entitled the buyer to equitable relief (eg. specific performance) if the buyer has:
1. take possession of the property
2. substantially improved the property,
AND/OR
3. paid some or all of the purchase price.
What is the executory period?
Look for this on questions about equitable conversion,
executory period is where equitable conversion comes into play.
What is the merger doctrine?
Once the deed has been delivered to an accepted by the buyer, the K for sale of land merges with the deed.
Important because, if any problems w the title arise thereafter, the buyer must rely on the covenants of title or other provisions contained within the deed.
Types of real estate broker contracts
What does earnest money typically function as, what is the exception?
Earnest money typically constitutes liquidated damages, which are generally recoverable upon the buyer’s breach. (Only if the LD’s are less then 15% of the purchase price).
But if LD’s are deemed a penalty (far exceed actual damages), then the seller may recover only actual damages.
