Real Property Contracts Flashcards
What is required to create a real property contract
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
What is Doctrine of Part Performance
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
What is required to satisfy doctrine of part performance?
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
What is equitable estoppel
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
What is promissory estoppel
Promissory estoppel may be used to prove an oral contract for the sale of land where there has been a promise regarding the land
What is equitable conversion?
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
What is the majority rule regarding risk of loss during real estate transaction
The risk of loss is deemed to follow equitable title, and transfers to the buyer upon execution of the purchase agreement
What is the Uniform Vendor and Purchaser Act (Minority Rule)
The risk of loss remains with the seller until the legal title or possession of the property passes to the buyer
What is covenant of Marketable Title
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
What are defects that will impair marketability of title
- Unpaid mortgage or lien
- Covenant or easement that restricts the use of land
- Title acquired by adverse possession until adverse possessor quiets title
- existing condition on the land that violates a zoning ordinance
When does covenant of marketability of title manifest itself?
Covenant manifests itself at date of closing, at which point it merges with general deed
What is the default rule regarding curing defects that render title unmarketable
A seller may use the proceeds of the sale to remove a cloud on title and make it marketable
What is Merger Doctrine
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
What are the types of deeds?
- Quitclaim deed
- General Warranty deed
- Special Warranty deed
What is a quitclaim deed?
Deed that contains no warrants or covenants where the seller conveys only what they have
May a seller be liable under a quitclaim deed
No, buyer may not sue under a quitclaim deed because seller has made no representations
What is a warranty deed?
Deed that does contain covenants
Can a buyer sue under a warranty deed
Yes, insofar as one of the covenants contained in the warranty deed has been breached
What is contained in a general warranty deed?
- all six covenants of title which cover the period prior to the sale
- warranty by seller that there are no defects in the chain of title
What is contained in a special warranty deed
- some of the covenants of title
- warranty by seller that that no defects have occurred during the seller’s personal ownership
How does a special warranty deed limit seller’s liability?
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
What are the covenants of title?
Present Covenants:
1. seisin
2. right to convey
3. covenant against encumbrances
Future Covenants
1. quiet enjoyment
2. warranty
3. further assurances
What are present covenants?
Covenants that do not run with the land and can be breached only at the time of closing
What is covenant of sisin
Grantor promises that they own the property
What is covenant of right to convey
Grantor promises that they have the power to convey the property
What is the covenant against encumbrances
The grantor promises there are no encumbrances on the property that are either visible or invisible
What are future covenants?
Future covenants run with the land and breach can be either at the time of closing or afterwards
What is covenant of quiet enjoyment?
The grantor promises that the grantee will not be disturbed by a third party asserting a valid claim to the land
What is the covenant of warranty
Grantor promises to defend the grantee against any third-party claims
What is the covenant of further assurances
The grantor promises to do everything reasonably necessary to perfect the grantee’s title
What is seller’s duty regarding fitness and suitability of a property
Seller has a duty to disclose material latent defects known to the seller but not readily observable and not known to the buyer
When does seller’s duty regarding disclosure of fitness and suitability of property apply?
- commercial builders and developers of new homes
- in some states applied to all sellers of new or used homes
When will sellers be liable for breaches regarding fitness and suitability?
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
When does implied warranty of quality apply?
Applies to sale of new or remodeled homes by builders and developers
Does implied warranty of quality apply to commercial structures?
No
When must defects be discovered for there to be liability under implied warranty of quality?
Defects must be discovered within a reasonable time after construction or remodeling
What is the duty to disclose defects for a seller of a residential home?
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
What are remedies for unmarketable title?
If the title is unmarketable, purchaser may seek rescission, monetary damages for breach of contract or specific performance with abatement of price
What are material defects?
Material defects are limited to physical defects that affect the health and safety of the occupants of the property
