Real Estate Contracts - Creation and Merger

Question 2

A valid contract for the sale of land must satisfy…

Answer 2

A valid contract for the sale of land must satisfy the statute of frauds. Generally, the contract must:

1. Be in writing and signed by the party to be charged;

AND

2. Contain all of the essential terms (i.e., parties, property description, terms of price and payment).

Question 3

What are the two main exceptions to the writing requirement

Answer 3

Partial performance

and

promissory estoppel/detrimental reliance

Question 4

Wha tis partial performance?

Answer 4

One of the exceptions to the writing requirement.

Partial performance by either the seller or buyer is treated as evidence that the land sale contract existed. This is a valid exception to the writing requirement in many jurisdictions if
any two of the following three are met:

1. Possession by the purchaser;
2. Payment of all or part of the purchase price;

AND/OR

3. Improvements to the land made by the purchaser.

Question 5

What is Promissory Estoppel/Detrimental Reliance

Answer 5

One of the exceptions to the writing requirement.

Promissory Estoppel/Detrimental Reliance operates as a valid exception where a party reasonably and foreseeably relied on the land sale contract to his detriment and would suffer hardship if the contract is not enforced.

Question 6

What does merger mean?

Answer 6

Covenants under the land sale contract are merged into the deed and CANNOT be enforced unless the covenant is also in the deed.

Question 7

Merger breaks the land sale contract down into two stages, what are they?

Answer 7

1. Contract Stage. Prior to closing (i.e., the date that the ownership of the property is transferred to the buyer), any liability must be based on a provision in the land sale contract.
2. Deed Stage. After closing (i.e., the date that the ownership of the property is transferred to the buyer), any liability must be based on a deed warranty.

Question 8

A seller is entitled to keep a buyer’s deposit as

Answer 8

liquidated damages following the buyer’s breach of contract, as long as that deposit was 10% of the sale price or less.
Not sure about the brightline 10% rule, but contrast this with the 25% deposit trying to be enforced on the executor when the buyer passed away and seller sold to subsequent buyer for more than their K was worth. Because could not show liquidated damages justified 25%, no way court would uphold that amount of deposit.