Real Property Contracts

Question 1

What is required to create a real property contract

Answer 1

Statute of Frauds requires a writing for a transfer of an interest in real property including:
1. signatures by the party to be charged
2. description of the property
3. description of the parties
4. price
5. any agreed upon conditions of price or payment

Question 2

What is Doctrine of Part Performance

Answer 2

Exception to statute of frauds allowing enforcement of an otherwise invalid oral contract for sale of land, provided the acts of the part performance unequivocally prove the existance of the contract

Question 3

What is required to satisfy doctrine of part performance?

Answer 3

At least two of the three facts must be shown:
1. payment of all or part of the purchase price
2. buyer takes possession of the land
3. buyer has made improvements upon the land

Question 4

What is equitable estoppel

Answer 4

Equitable estoppel is theory that may be used to prove an oral contract for the sale of land where there has been an act or representation regarding the sale

Question 5

What is promissory estoppel

Answer 5

Promissory estoppel may be used to prove an oral contract for the sale of land where there has been a promise regarding the land

Question 6

What is equitable conversion?

Answer 6

When a land-sale contract is formed, at the point of execution there is a bifurcation of title:
-equitable title passes to the buyer
-legal title remains with the seller until the deal closes

Question 7

What is the majority rule regarding risk of loss during real estate transaction

Answer 7

The risk of loss is deemed to follow equitable title, and transfers to the buyer upon execution of the purchase agreement

Question 8

What is the Uniform Vendor and Purchaser Act (Minority Rule)

Answer 8

The risk of loss remains with the seller until the legal title or possession of the property passes to the buyer

Question 9

What is covenant of Marketable Title

Answer 9

Covenant within a purchase contract that requires that a seller deliver a title at closing that is reasonably free from defects in both fact and law

Question 10

What are defects that will impair marketability of title

Answer 10

1. Unpaid mortgage or lien
2. Covenant or easement that restricts the use of land
3. Title acquired by adverse possession until adverse possessor quiets title
4. existing condition on the land that violates a zoning ordinance

Question 11

When does covenant of marketability of title manifest itself?

Answer 11

Covenant manifests itself at date of closing, at which point it merges with general deed

Question 12

What is the default rule regarding curing defects that render title unmarketable

Answer 12

A seller may use the proceeds of the sale to remove a cloud on title and make it marketable

Question 13

What is Merger Doctrine

Answer 13

Because the covenant of marketable title is implied in the contract, and the contract merges into the deed, the buyer cannot assert covenant of marketable title after-closing and instead is limited to suing only on covenants contained in the deed

Question 14

What are the types of deeds?

Answer 14

1. Quitclaim deed
2. General Warranty deed
3. Special Warranty deed

Question 15

What is a quitclaim deed?

Answer 15

Deed that contains no warrants or covenants where the seller conveys only what they have

Question 16

May a seller be liable under a quitclaim deed

Answer 16

No, buyer may not sue under a quitclaim deed because seller has made no representations

Question 17

What is a warranty deed?

Answer 17

Deed that does contain covenants

Question 18

Can a buyer sue under a warranty deed

Answer 18

Yes, insofar as one of the covenants contained in the warranty deed has been breached

Question 19

What is contained in a general warranty deed?

Answer 19

1. all six covenants of title which cover the period prior to the sale
2. warranty by seller that there are no defects in the chain of title

Question 20

What is contained in a special warranty deed

Answer 20

1. some of the covenants of title
2. warranty by seller that that no defects have occurred during the seller’s personal ownership

Question 21

How does a special warranty deed limit seller’s liability?

Answer 21

Seller warrants only that there are no defects in title that occured during the seller’s ownership, and thus limits liability only to the period of the seller’s ownership of the land

Question 22

What are the covenants of title?

Answer 22

Present Covenants:
1. seisin
2. right to convey
3. covenant against encumbrances

Future Covenants
1. quiet enjoyment
2. warranty
3. further assurances

Question 23

What are present covenants?

Answer 23

Covenants that do not run with the land and can be breached only at the time of closing

Question 24

What is covenant of sisin

Answer 24

Grantor promises that they own the property

Question 25

What is covenant of right to convey

Answer 25

Grantor promises that they have the power to convey the property

Question 26

What is the covenant against encumbrances

Answer 26

The grantor promises there are no encumbrances on the property that are either visible or invisible

Question 27

What are future covenants?

Answer 27

Future covenants run with the land and breach can be either at the time of closing or afterwards

Question 28

What is covenant of quiet enjoyment?

Answer 28

The grantor promises that the grantee will not be disturbed by a third party asserting a valid claim to the land

Question 29

What is the covenant of warranty

Answer 29

Grantor promises to defend the grantee against any third-party claims

Question 30

What is the covenant of further assurances

Answer 30

The grantor promises to do everything reasonably necessary to perfect the grantee’s title

Question 31

What is seller’s duty regarding fitness and suitability of a property

Answer 31

Seller has a duty to disclose material latent defects known to the seller but not readily observable and not known to the buyer

Question 32

When does seller’s duty regarding disclosure of fitness and suitability of property apply?

Answer 32

1. commercial builders and developers of new homes
2. in some states applied to all sellers of new or used homes

Question 33

When will sellers be liable for breaches regarding fitness and suitability?

Answer 33

If seller fails to follow through or has an ongoing duty to make sure the premises are habitable or fit, it may lead to tort liability

Question 34

When does implied warranty of quality apply?

Answer 34

Applies to sale of new or remodeled homes by builders and developers

Question 35

Does implied warranty of quality apply to commercial structures?

Answer 35

No

Question 36

When must defects be discovered for there to be liability under implied warranty of quality?

Answer 36

Defects must be discovered within a reasonable time after construction or remodeling

Question 37

What is the duty to disclose defects for a seller of a residential home?

Answer 37

A seller of a residential home has a duty to disclose to the buyer the material defects known to seller, but not readily observable or known to the buyer

Question 38

What are remedies for unmarketable title?

Answer 38

If the title is unmarketable, purchaser may seek rescission, monetary damages for breach of contract or specific performance with abatement of price

Question 39

What are material defects?

Answer 39

Material defects are limited to physical defects that affect the health and safety of the occupants of the property