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