Real Estate Transactions

Question 1

Stambovsky v. Ackley - Caveat Emptor

DUTY TO DISCLOSE

Answer 1

Buyer Beware,
no duty on seller to disclose, except:
1. where there is a fiduciary relationship;
2. where there is a confidential relationship; or
3. where conduct suggests active concealment on the part of the seller.

Since seller created defect (by reputing house was haunted), seller had duty to disclose.

Question 2

Johnson v. Davis – Duty to Disclose

Answer 2

Seller has affirmative duty to disclose material facts not readily observable.

Question 3

General Warranty Deed

Answer 3

warrants title against all defects, irrespective of whether grantor of deed had title when error arose.

Question 4

Special Warranty Deed

Answer 4

warrants title only against grantor’s own acts.

Question 5

Quitclaim Deed

Answer 5

warrants nothing – only conveys title

Question 6

Covenant of Warranty – much like quiet enjoyment (Future covenant).

Answer 6

Covenant of Quiet Enjoyment – grantor promises that grantee will not be evicted by a paramount title holder (Future covenant).

Question 7

Lohmeyer v. Bower -

Municipal Restrictions or Ordinances and Merchantable Title

Answer 7

• Municipal Restrictions are not encumbrances or burdens on title
  (cannot rescind contract on basis of Municipal Restrictions)

Question 8

Brown v. Lober - Plaintiff’s allege constructive eviction (by not being able to convey full mineral rights).

Answer 8

While plaintiffs never possessed subsurface minerals, nobody else has possessed them either.
1. Since nobody has tried to possess them, they have not had their rights disturbed.

Question 9

Frimberger v. Anzellotti - Latent Violations of Restrictive Land Uses ARE NOT ENCUMBRANCES FOR THE PURPOSE OF A DEED WARRANTY, IF:

Answer 9

Do not appear on reacords,
Are not Known to the Seller
No enforcement action has been taken
DO NOT CONSTITUTE AN ENCUMBRANCE FOR THE PURPOSE OF A DEED WARRANTY

Question 10

Present Covenants

Answer 10

Covenant Of Seisin = Warranty of ownership
Covenant of right to convey = same as ownership
Covenant against encumbrances = No impediments to title which affect the value of the fee simple: mortgages and easements
- DO NOT RUN WITH THE LAND

Question 11

Future Covenants

Answer 11

Quiet Enjoyment, Warranty, and Further Assurance:

• Continuing Contract that grantee’s possession will be defendant.
• Promise that Grantor will make any conveyance necessary to give grantee full title.
• RUN WITH THE LAND.
• REQUIRES CONSTRUCTIVE EVICTION - THIRD PARTY ASSERTING A PARAMOUNT CLAIM

Question 12

Choses in Action

Answer 12

“present right to sue”

- Cannot sue prior Grantors for breach of present Covenants

Question 13

CONSTRUCTIVE EVICTION

Answer 13

• THIRD PARTY ASSERTING A PARAMOUNT CLAIM.

Question 14

S to B (warranty deed) in 1980.
- B discovers C is present holder of title by AP in 2009
- SOL for Breach of Seisin, right to convey, Encumberances = three years
Can B sue S for breach of Covenant?

Answer 14

No, Present Covenants = breached when they are conveyed (without eviction).
Future Covenants - Cannot sue without Eviction.

Question 15

S to B (warranty deed) in 1980, then B to C in 2000.
A brings Eviction against C.
SOL for Future Covenants = three years
Can C sue S in 2009?

Answer 15

Yes, for breach of Future Covenant.
SOL runs when A brought action against C.
Future Covenants run with the land.

Question 16

Statute of Frauds

Answer 16

Sale must include: Signature of party to be bound, Description of the Real Estate, Price of the Real Estate.

Question 17

Exceptions to the Statute of Frauds:

Part Performance:

Answer 17

Allows the specific performance of ORAL AGREEMENTS when particular ACTS have been Performed by one of the parties.

• ACTS performed pursuant to an ORAL CONTRACT
• ORAL CONTRACT = RELATED TO A CONTRACT FOR SALE.

Question 18

Estoppel

Answer 18

• Inducement by one party
• Substantial Change in Position
• Reliance on the Contract (reliance must be reasonable / Foreseeable)

Question 19

UnMarketable Title

Answer 19

Substantial Defect that may result in litigation and injury against the party holding title.
(Lohmeyer v Boher) - Violations of restrictions imposed by ordinance render title unmarketable.

Question 20

Equitable Conversion (Equitable Title)

Answer 20

Where there is an ENFORCEABLE CONTRACT FOR LAND:
Buyer is viewed in equity as the OWNER
SELLER = Has a Claim for Money Secured by Lien on the Land.
- or Holds legal title as trustee for buyer.