Real Property Flashcards
Before a deed is delivered,
The contract of sale is signed
Under equitable conversion,
As soon as the contract is signed (but before closing), the buyer’s interest is real property (the land) and the seller’s interest is personal property (the money from the sale). Thus, the risk of loss is on the buyer under equitable conversion, even if the seller remains in control and possession of the land.
To be valid, a deed must:
Identify the buyer and seller, describe the land, contain words denoting a present intent to convey, and be signed by the grantor.
It must also be delivered.
How to determine if a deed has been delivered?
Question of intent to pass title presently.
Quitclaim deed
Grantor gives no covenants (promises nothing) and the grantee gets whatever the grantor has. Grantee takes the land subject to a defect in the title, an undisclosed easement, or other problem, and has no recourse.
Warranty deed
Grantor gives six covenants—three present covenants and three future covenants.
Present covenants: the right to convey, the covenant of seisin (both meaning that the seller guarantees he owns the land he is selling), and the covenant against encumbrances (no existing easements, liens, or encumbrances that are not stated in the deed).
Future covenants: further assurances, quite enjoyment, and warranty.
Under common law, remote grantees can sue only under future (not present) covenants.
Merger
On the closing date, the contract for sale merges into the deed, so at that point, the buyer can only sue on the deed.
Breach of the implied warranty of fitness and habitability
A builder of new homes impliedly warrants to the buyer that the home is habitable and fit for its intended purposes. This warranty applies to defects that are discovered within a reasonable time and are due to the builder’s negligence or failure to do work in a workmanlike manner.
Common law rule for priority:
A grantor can only convey those right that the grantor had at the time of the conveyance. Thus, common law follows the first-in-time, first-in right principle.
All states have recording statutes that change the results of the common law principle.
Notice statutes
Protect subsequent BFPs for value who take without notice of the earlier transaction
Ex: A conveyance of interest in land is not valid against any subsequent purchaser for value without notice unless it is recorded.
Race-notice statutes
Protect subsequent BFPs for value who take without notice and are the first to record
Ex: No conveyance of an interest in land is valid against any subsequent purchaser for value without notice unless it is first recorded.
Pure race statutes
Protect subsequent purchasers who are the first to record
These are rare!
Three types of notice
Actual: grantee actually knows about the conveyance
Inquiry: examination fo the land/reference in an instrument would lead a reasonable person to inquire
Record: interest is recorded in the chain of title. Deeds that are recorded too late or too early are wild deeds. Wild deeds do not give notice.
Can a mortgagor transfer title to the mortgaged property?
Yes—however, the mortgage will remain on the property and the mortgagor is still personally liable on the note.
Transferee who takes the land “subject to” the mortgage
Is not personally liable on the mortgage.
Transferee who “assumes” the mortgage
Is personally liable on the mortgage along with the original mortgagor.
Novation
Occurs if the initial mortgagor, the new transferee, and the mortgagee all agree that the mortgagor is no longer liable and the transferee assumes all of the mortgagor’s duties.
Term of years lease
Specifies both a beginning and end date