Sale of Real Property (Brokers, Sale Process) Flashcards
In the sale of real property who has taken control?
The role of lawyers has mostly been taken over in part by realtors
What is the broker’s role in the sale of property?
a. Typically represent seller if there’s an agreement
b. If represent buyer for transaction, acting in own interest, no duty to disclose (ex. no general duty to disclose small facts, but large ones should be disclosed-however, each state my have different rules about this)
What are the 3 types of agreements that generally apply to broker/individuals?
a. Open listing: only owe commission if the broker brings in seller
b. Exclusive Agency: Owe the broker a commission unless owner finds buyer on own
c. Exclusive Right to Sell: (when you give a company the right to sell)Owe a commission regardless of who brings in the seller; typically one year renewable contract
How does paying a commission work?
a. If seller defaults, always owe a commission
b. Might allow for knowing waiver: law is what parties agree to
c. Common Law Rule: (Majority) Commission owed when broker presents a buyer who is ready, willing, and able to purchase on agreeable terms
d. Emerging Modern View: Commission due if buyer can obtain financing (buyer is ready and willing to buy but not able (needs bank to approve loan)
e. Minority Rule: Commission due at closing when purchase price is paid
What does the seller promise to deliver in a purchase contract?
Seller promises to deliver marketable title in the purchase contract
**This is implied unless the purchase contract provides otherwise
How does a seller-broker contract work?
Seller hires broker who will find buyer; typically has to be in writing (but not always)
How does a Seller-Buyer purchase contract work?
There is no reasonable doubt that seller owns fee simple absolute free from encumbrances
- Firm offer to buy land
- Must comply with SOF (identify land, parties, intent, price, signatures)
- This begins process for inspection, financing and other shit
What does marketable title mean? What are the exceptions???
Seller owns fee simple absolute free from encumbrances, the following do not make title unmarketable:
(i) Ordinary utility easements servicing the property
(ii) Mortgages and liens pre-payable by seller at closing
(iii) Mutually reciprocal residential servitudes
(iv) Zoning and gov. regulations are not title defects
Do most states allow adverse possession to cure problems in title?
NO
What if the exact interest to be conveyed isn’t specified in the purchase contract?
Common Law will apply fee simple absolute
What should a buyer check when purchasing a property and why?
Make sure to check all records, public records, physical inspection etc. prior to closing bc some things don’t need to be recorded
1. Buyer had good faith obligation to notify seller of title defects prior to closing
If a buyer finds defects in the title, does the seller have time to fix them?
YES-Reasonable extension of time for closing to cure title defects unless contract says time is of the essence
What are the buyer’s remedies if the seller cannot deliver the title they promised at closing?
The contract is voidable by the buyer.
(i) May sue for breach and recover deposit, actual damages (including loss of bargain profits), interest and expenses
(ii) May negotiate for a lower closing price
(iii) May sue for specific performance and get an abatement in the purchase price (reduction in price based on defects)
What happens after a buyer accepts deed at closing?
She waives any title defects under purchase contract that could have been raised prior to closing (waiver and merger doctrine) (after sale title covenants supersede promises in contract)
What happens to collateral (non-title) agreements after closing?
Collateral (non-title) agreements in purchase contract are not waived and merged at closing they are still enforceable (this is like agreements that don’t concern title such as representations that house is habitable)
