REAL PROP - ESTATES Flashcards
what is a fee simple absolute?
- estate with uncertain or potentially infinite duratio
- can be sold, divided, devised, or inherited
- presumed in absence of express contrary language (words of inheritance not necessary).
what is a defeasible fee
fee simple estates that can be terminated upon happening of stated event
what is the statute of frauds requirements for a land sale K?
- land sale K must be memorialized in a writing that contains:
a. signature of party to be charged; and
b. essential terms (e.g., parties, description of land, price) - Part performance
(e. g., possession, substantial improvements, payment of purchase price)
can take a contract out of the statute.
What is the doctrine of Equitable Conversion?
- Once a land sale K is signed
- equity regards buyer as owner of the real property
- seller’s right to proceeds of sale is personal property
- legal title that remains with seller considered to be held in trust for buyer
- seller entitled to possession until closing
what is the risk of loss once a land sale K is signed?
- If property destroyed (without fault of either party) before closing
- risk is on the buyer (unless minority juris - in which risk only on buyer if buyer already in possession)
- seller must credit any fire or casualty insurance proceeds he receives against purchase price buyer required to pay
Under doctrine equitable conversion what happens if buyer or seller dies after land sale K signed but before K complete?
- seller’s interest passes as personal property
- and buyer’s interest passes as real property
- if seller dies, bare legal title passes to his heirs or devisees
- and they must give up title to buyer at closing
- If buyer dies, his heirs or devisees can demand conveyance of land at closing.
what does every land sale K contain?
implied covenant that seller will provide marketable title
-i.e. title must be free of questions that present unreasonable risk of litigation
How might a title be unmarketable?
- Defects in record chain of title.
- adverse possession
- future interests held by unborn or unascertained parties
- encumbrances
- violations of zoning restrictions
What defects in record chain of title can make title unmarketable?
- e.g., variation in land description in deeds
- defectively executed deed
- evidence that a prior grantor lacked capacity to convey
What happens in VA if vendor doesn’t own amt acreage specified in K?
i. buyers right to claim breach of covenant of marketable title depends on whether sale is in gross or per acre
a. if in gross
i. treated as sale of the whole unit of prop
ii. acreage mention in K ignored
b. if per acre
i. covenant is breached if seller cant deliver Ks specified # of acres
What does adverse possession do to title?
adverse possession makes title unmarketable
what are encumbrances that may make title unmarketable?
a. mortgage
b. liens
c. restrictive covenants
d. easements, and
e. significant encroachments
* but an easement that is beneficial, visible, or known to buyer does not impair marketability of title
can a buyer claim title is unmarketable prior to closing?
- No. seller has right to satisfy a mortgage or lien at closing with proceeds of sale
- buyer cannot claim title is unmarketable bc it is subject to a mortgage prior to closing if closing will result in marketable title
do zoning restrictions affect marketability of title?
No. but an existing violation of a zoning ordinance does render title unmarketable.
when must seller provide marketable title in an installment land K?
seller need not provide marketable title until buyer has made his last payment
what is time limit for making a cliam under the implied covenant of marketability?
- Once closing occurs and deed changes hands
- seller no longer liable under implied covernant of marketability
- seller then liable only for express promises made in deed.
what is buyer’s remedy if title not marketable?
i. rescission
ii. damages
iii. specific performance with abatement
iv. quiet title suit
- BUT if closing occurs
- seller’s liability on implied K covenant ends
how does a buyer claim a remedy under the implied title of marketability?
- buyer must notify seller that his title unmarketable
- and give him reasonable time to cure defects
- If seller fails to cure defects then buyer can pursue proper remedy
does quitclaim deed affect implied covenant to provide marketable title?
NO
what does it mean that time is not of the essence in a land sale K?
Courts presume time is not “of the essence” in real estate Ks
- so closing date not absolutely binding
- a party late in tendering her own performance can still enforce K if she tenders within reasonable time
- (e.g., two months) after closing date.
when is time of the essence in a land sale K?
when:
a. (i) contract states
b. (ii) circumstances indicate that was parties’ intent, or
c. (iii) one party gives other notice that time is of essence.
what is liability if time is of the essence and late in tendering performance?
When time is of the essence:
- party who fails to tender performance on closing date is in breach
- may not enforce K
Even if time not of essence
- party late in tendering performance liable for incidental losses
What does it mean that buyer’s obligation to pay and seller’s obligation to convey are concurrent conditions?
Neither party is in breach until other tenders performance
a. even if closing date passes
If neither party tenders performance
a. closing date is extended until one of them does
in a land sale K, when is a party’s performance excused?
- when other party has repudiated the K
- or it is impossible for other party to perform
- (e.g. unmarketable title that cannot be cured)
what are the remedies for a breach of sales K?
- damages (difference between K price and market value on date of breach) PLUS plus incidental costs, or
- specific performance; or
- specific performance with ABATEMENT (if buyer wishes to proceed despite unmarketable title); or
- liquidated damages (seller’s retention of buyer’s deposit of earnest money as long as amount reasonable in light of seller’s anticipated and actual damages)
what is warranty of fitness or quality
- a warranty made by builder in sale of a new house
- person can sue builder for negligence in performing a building K despite lack of privity
what does a builder of new construction warrant in VA?
- that to the best of his knowledge building is: free of structural defects
- constructed in workmanlike manner, and
- fit for habitation
- SPECIFICS:
- does not include condos
- warranty extends for 1 yr (5yrs as to the foundation) from transfer of title or vendee taking possession (whichever earlier)
- 2 yr SOL once defect occurs
- sending notice of breach of warranty to vendor tolls SOL period for 6 mo.
what must a builder of new construction disclose in VA?
builder must dislose in writing all known material defects that would be violation of any applicable building code
What are the theories on which a seller of existing land and buildings (not new construction) may be liable to purchaser for defects?
- misrepresentation (fraud)
- active concealment
- failure to disclose defects
What constitutes misrepresentation in a land sale K?
- seller knowlingly or negligently made false statement about defects to buyer
- buyer relied on seller’s statement
- and the defect materially affected the value of the property
*
what is active concealment in the context of a land sale K?
- seller took steps to conceal defects (e.g. wallpapering over water damage)
- seller liable for the defects he concealed
what is failure to disclose defects in the context of a land sale K?
- seller knows or has reason to know of the defect
- the defect is not apparent
- seller knows buyer unlikely to discover it upon ordinary inspection; and
- defect would probably cause buyer to reconsider purchase if known
- in determining whether seller liable for defects, weigh
- whether property residence
- whether defect dangerous
- whether seller created defect
- or seller made failed attempt to repair it
- in determining whether seller liable for defects, weigh
How can a seller disclaim liability in a land sale K?
- only if disclaimer identifies specific types of defects
- will the disclaimer likely be upheld
- e.g. “seller is not liable for defects in roof”
- general disclaimer is sales K
- not sufficent to overcome seller’s liability for
- fraud
- concealment
- failure to disclose
- not sufficent to overcome seller’s liability for
what is the VA rule about indicating physical condition of property in land sale K?
- in VA
- seller of 1-4 dwelling units
- must disclose physical condition of property under the K
- or must say property being conveyed “as is”
- seller must disclose any changes to property between signing of K and closing
- misrep by seller allows buyer to terminate K
what is a title insurance policy?
- insures good record title of property exists as of policy’s date
- promises to d defend record title if litigated
- owners policy
- protects only person who owns policy
- does not run with land to subsequent purchasers
- lenders policy
- follows assignment of mortgage loan
what is required for a proper deed?
- 1) must be in writing
- 2) signed by grantor
- 3) reasonably identify parties and land
- if name of grantee left blank
- presumed person taking delivery allowed to fill in name
- once name filled in = deed valid
- if land description left blank
- deed void unless grantee explicitly given authority to fill in description
- if name of grantee left blank
what is a void deed?
- a deed that is:
- forged
- never delivered
- issued to nonexistant grantee, or
- obtained by fraud in factum
- set aside by court even if property passed to BFP
what is voidable deed?
- one executed by:
- minors, incapacitated persons; or
- obtained through:
- fraud in inducement
- duress
- undue influence
- mistake
- breach of fiduciary duty
- deed set aside only if property not passed to BFP (e.g. a donee or someone with knowledge of defect)
what happens if joint tenant executes a deed for entire property with his own signature and forged signature of other joint tenants?
- valid as to interest of the joint tenant whose signature not forged
- void as to others
- so buyer holds as tenant in common with other joint tenants whose signature forged
what is a fraudlent conveyance?
one made:
(i) with actual intent to hinder, delay, or defraud a creditor of grantor; or
(ii) without receiving a reasonably equivalent value in exchange for transfer
- and debtor insolvent or became insolvent as result of transfer
- creditors can set the conveyance aside
- but deed not be set aside as against any grantee who took in good faith and paid reasonably equivalent value
is parol evidence admissable to resolve ambiguities in land desciption in a land sale K?
YES - as long as description gives a good lead
what is the priority given to methods of land description in land sale K?
i. natural monuments (e.g., oak tree));
ii. artificial monuments (e.g., stakes, buildings));
iii. courses (e.g., angles));
iv. distances (e.g., feet, yards));
v. name (e.g., Blackacre)); and
vi. quantity (e.g., 300 acres).
what are the water changes that can change a land boundary?
- WATER BOUNDARIES:
a. slow and imperceptible change in course of river or stream can change legal boundary;
b. accretion (slow deposit of soil on land abutting water)
i. belongs to abutting owner
c. Avulsion (sudden change of watercourse)
i. does not change ownership rights - FIXED BOUNDARIES:
- not changed by encroachment of water
when will a deed be reformed?
- when it doesnt represent parties’ agreement bc of
- mutual mistake
- scrivenors error; or
- unilateral mistake caused by misrep or other inequitable conduct
what are the typical closing documents?
- closing disclosure
- notification of defects
- environmental report
what is a closing disclosure
- doc provided to mortgagor by lender at least 3 days before closing
- must include details about mortgage including:
- pincipal, interest, payment amts;
- closing costs;
- potential surprises to mortgagors
- e.g. future changes in interest rates
what is a notification of defects?
- form seller of residential prop provides to buyer
- notifies buyer of any physical defects seller aware of
- if seller doesnt disclose known defect in this form
- = liable for defect after closing
what is environment report?
- usually negotiated by buyers and sellers of commercial real estate
- must be signed by both parties at closing
- identifies which environmental guarantees seller makes to buyer
- (bc owner of real prop usually has to pay to cure environ damage whether it occurred before or after owner obtains prop)
what is required for a deed to be effective?
- must be delivered and accepted
is a deed to a dead person valid?
- no - its void
- even if grantor unaware of grantee’s death
- but in VA - doctrine of equitable conversion allows deed to be made to dead person’s estate
- even if grantor unaware of grantee’s death
delivery of deed can be satisfied by:
a. manual delivery
b. notarized acknowledgment by grantor and recordation
c. anything else showing grantor’s intent to deliver
is parol evidence admissable to show grantor’s intent to deliver?
- YES - but NOT to show that delivery conditional
can delivery be canceled by giving the deed back to the grantor?
- NO
- title passes upon delivery
- grantee returning deed to grantor has to effect
- to return title to grantor
- grantee must draw up new deed and deliver it to grantor
what is the effect on delivery of a deed when grantor retains control over the delivery (e.g. right to revoke)
- shows lack of intent to deliver
- no delivery until delivery complete
what happens if grantor executes deed but doesnt deliver it during his lifetime?
- no title passes
must delivery of a deed be recorded?
- No - title passes upon delivery
- need not be recorded
what if there is express condition in properly executed and delivered deed that title not pass until grantor’s death?
- deed is valid
- creates future interest in grantee
- what is the effect when grantor gives deed to third party with instructions to give it to grantee
- this is a valid delivery
- what is the effect if grantor gives deed to third party WITHOUT instructions to give it to grantee
- if 3rd party grantor’s agent
- no delivery
- if grantee’s agent
- delivery
- what is effect if grantor gives deed to 3rd party with instructions to give it to grantee
- WHEN CERTAIN CONDITIONS OCCUR (e.g. when grantee pays purchase price)
- parol evidence admissable to show delivery conditional
- PAROL EVIDENCE NOT ADMISSABLE TO SHOW DELIVERY CONDITIONAL WHEN GRANTOR GIVES DEED DIRECTLY TO GRANTEE
when can grantor revoke conditional deed?
- when condition hasnt yet occurred; and
- theres no enforceable written K to convey
what happens if grantee wrongfully obtains deed from 3rd party prior to performance of condition?
- title doesnt pass
- grantee cant give good title to subsequent purchaser
what is the relation back doctrine with respect to conditional delivery deeds?
- usually title passes when condition occurs
- but if required for purposes of justice and
- when there is enfroceable K to convey
- title may relate back to time when grantor gave deed to 3rd party
- but rights of BFPs protected
when can grantor revoke a deed given to a 3rd party to be given to DONEE when condition occurs?
- if condition is grantor’s death and grantor’s intent was to create future interest in donee
- conveyance not revocable
- where condition is not grantor’s death
- conveyance revocable
- unless there is a written K to convey
do most states presume acceptance of real property?
yes
when does acceptance relate back to?
- date deed delivered into escrow
- unless this would defeat rights of intervening 3rd parties
how is land transferred to a public body (e.g. a city) by dedication?
- offer can be made by:
- written or oral statement
- submission of map or play showing dedication
- or opening the land for public use
- dedication can be accepted by:
- formal resolution
- approval of map or plat
- actual assumption of maintenance or improvements
what types of deeds are used to convey property?
- general warranty deeds
- special warranty deeds
- quitclaim deeds
what are the covenants in a general warranty deed?
1) covenant of seisin
2) covenant of right to convey
3) covenant against encumbrances
4) covenant for quiet enjoyment
5) covenant of warranty
6) covenant for further assurances
what is covenant of seisin
- grantor covenants she has estate she purports to convey
- she must have title and possesson at time of grant
what is covenant of right to convey?
- grantor covenants she has authority to transfer title
- i.e. theres no temp restraint on alienation
- and shes of proper age and mind
- theres authority to transfer if grantor has title
what is covenant against encumbrances
- grantor covenants against existence of:
- physical encumbrances (enchroachments)
- or title encumbrances (e.g. mortgages)
what is covenant for quiet enjoyment?
- grantor covenants that grantee with not be disturbed in possession by a 3rd party’s LAWFUL claim of title
what is covenant of warranty?
- grantor agrees to defend against reasomable claims of title by a 3rd party
- and to compensate grantee for any loss sustained by a claim of superior title
what is covenant for further assurances
- grantor promises to perform acts reasonably necessary to perfect title conveyed
- which are the present covenants and when are they breached
- seisin
- right to convey
- against encumbrances
- breach if at all, at time of conveyance
which are the future covenants in a general warranty deed and when are they breached?
- quiet enjoyment
- warrant
- further assurances
- breached only upon disturbance of grantee’s possession
- these run with grantee’s estate
what happens under a general warranty deed if a remote grantee is evicted by a lawful claim of title (and there have been successive conveyances of general warranty deed)?
- he may sue anyone up the line
