real estate transaction Flashcards
requirements for a deed (5) WIIGS
- Must be in writing
- Have to identify the grantor and the grantee
- Have to describe the property to be conveyed- must be located by its boundaries (house numbers, street) if the property cannot be easily identified it would be difficult for a buyer to know what they are buying
- Have to state the intent to convey the property
- Contain the grantors signature
W- writing
I- intent
I- Identify
G- geographical description
S - signature
do deeds need to be recorded?
no
deeds do not need to include
- It does not have to include the total price but it must say that there is valuable consideration
- Deeds have to be signed, sealed, and delivered but most states do not require a seal, but if it is required it has low requirements of what a seal can be
deed delivery
- Deeds must be delivered and accepted in order to be valid
- There is a strong presumption in favor of acceptance, rejection should be clear
- If a grantor gives a deed to a third party with instructions, (give this to my kids when i die) is a valid delivery
- But not valid if the condition is uncertain or grantor reserves control
*(i.e “if i die first” or “reserves right to revoke”)
- But not valid if the condition is uncertain or grantor reserves control
when is the deed voided
- Deed void if forges
- If one co-owner forges others signature but validly signs his own.. The property is co-owned by buyer and victim of forgery
General Warranty deed
warrants all six of the covenant of title. Warrants against all defects, no matter when the defects arose
Special Warranty deed
Ditto but only if violations are seller’s fault. Only protects defects that arose during the grantors ownership
Quitclaim deed
- Warrants nothing. This means that if you get propert through the quitclaim deed and there’s a title/encumbrance problem you usually have no claim vs. seller. * There is no claim, provides no warranties, just conveys the interest
- Does not affect the buyer from being a BFP
Do covenants in general/special warranty deed run with land (i.e. apply to grantees who purchased from original grantee)
No, if present covenant, yes if future
Present Covenants -
Seisin and right to convey
That grantor owns what they are conveying.
*Violated if grantor didnt really own the property.
*The warranties begin as soon as the property is sold
* Against encumbrances-
Warrants that there are no encumbrances. Meaning the rights in a third party such as mortgages, restrictive covenants, etc. by contrast,
* natural problems like flooding is not a violation.
the warranties begin as soon as the property is sold
Present Covenants -
Seisin and right to convey
Against encumbrances
Present Covenants
* Meaning the rights in a third party such as mortgages, restrictive covenants, etc. by contrast,
Covenant of Further Assurances
- Grantor provides reassurance that there is a legal and effective title
- A grantor must act to make a title clear and legal
Future Covenants are covenants of..
covenants of general warranty and quiet enjoyment
Future Covenants
- if grantee evicted, grantor has to pay their legal bills and otherwise pay their damages
- Only takes affect when the grantee is taken off of their property
- Warranties dont start running until something happens to the person who is in possession of the property
- No violation until actual eviction or similar interference with grantee’s use
- remember , these run with land unlike present covenants
Warranties dont start running until something happens to the person who is in possession of the property
Future Covenants
Equity of Redemption
- Even if suit for foreclosure has been filed by the creditor, borrower has “equity of redemption” - right to retake land by paying debt
- This right ends at time of foreclosure sale
Purchase money mortgage
If mortgage is part of sale transaction it is a “purchase money mortgage”- for example, if someone buys house ands at the same time takes out mortgage to creditor
purchase money mortgage (PMM) often have..but creditors can…
priority over other mortgages, especially if PMM is hed by seller (as opposed to a third party creditor)
*Creditors can contract out if thus rule through “subordination agreement” - creditor pats PMM holder to forfeit priority
* In which case, the third party lender will then have priority for the payment of the borrowed money
someone buys a property that still has a mortgage on it (and the seller hasn’t paid off that mortgage) they are.. unless…
subject to the mortgage -
* If the new buyer stops making mortgage payments, the lender can foreclose on the property (take it back).
- However, the lender cannot sue the new buyer personally for any remaining debt if the foreclosure sale doesn’t fully cover what’s owed (deficiency judgment). Instead, the lender would go after the original debtor (the seller) for the remaining balance.
- Unless If the buyer explicitly agrees to assume the mortgage, they are personally responsible for both the mortgage payments and any remaining debt after foreclosure.
If there is no recording statute relevant, than it is just
first come first served
Race Statute
Second grantee wins only if they record before the first grantee
Notice statute
Second grantee wins only if they are a bona fide purchaser (paid, did not get land for free) and without actual or constructive notice
* Inquiry notice falls under constructive notice, a second buyer has the obligation to inquire into the language of a deed that could potentially lead to any issue
Race - Notice Statute : In NY
Combines race and notice:
To win, second grantee must have BOTH:
1. Be a BFP (paid + no notice)
2. Record before the first grantee
Constructive notice
- second grantee should have known about the grant EX:
- Record notice (cannot be too vague)
Inquiry notice (physical obviousness) - If there is a chain of title referencing prior deed, grantee has a duty to inquire about it
Shelter Rule
If you take property from BFP, you are treated as BFP even if you personally had notice of prior grant
