Selling Property Flashcards
What are the three basic real estate transaction steps?
(1) Purchase Contract
(2) Executory Period
(3) Closing/Deed
What must you check at the “purchase contract” phase?
(1) Statute of frauds
(2) Marketable title
(3) Duty to disclose
What is statute of frauds?
(1) Must be in writing
(2) with essential terms
(3) and signed by the ‘party to be bound’
What exceptions exist to the statute of frauds?
(1) Part performance
(2) Estoppel
What constitutes part performance?
(1) Buyer takes possession
(2) pays all or part of the purchase price
(3) makes improvements to the property
(4) Note that in some states, only some are required
What constitutes a claim for estoppel so as to be excepted from the statute of frauds?
(1) One party reasonably relies on oral contract to their detriment
(2) Serious injury would result if the contract is not enforced
What is marketable title?
(1) Title that is free from claims or defects
(2) such that a court will enforce a purchasers obligation to purchase title to the property
What are the three assumptions such that a property has Marketable title
What did I mean by this?
(1) Does not assume real property is defect free
(2) Assumes a title that a prudent purchaser would accept, acting ‘reasonably’ in ‘ordinary’ course of business
(3) Seller has time to cure defects prior to closing
What is insurable title?
A title that an insurance company would be willing to insure at normal rates
What is record title?
Title that appears in the public land records
“As is”
(1) Where a seller does not guarantee anything about the state of the title
What will make a title unmarketable?
(1) title is subject to an encumburance
(2) Seller’s property interest is less than the one they are obligated to convey
or;
(3) There is reasonable doubt about either one
Tell me the special rules for encumbrances
What am I refering to in this card? Special in relation to what?
N/A
What are two common “roles” that marketable title takes in a sale of property?
(1) Express title provisions, where sales contracts require sellers to deliver marketable title - or another standard such as insurable title
(2) Implied covenant of marketable title: Where there is a default rule that a seller must deliver marketable title
When will risk of loss rules be applied, and what are the three rules?
When
(1) a property is damages during executory period
and;
(2) there is no express allocation of risk
then;
(3) Majority: Equitable conversion
(4) Minority: Massachusetts Rule or
(5) Modern trend: Uniform Vendor and Purchaser Risk act
What is Equitable conversion
(1) Where a buyer bears the risk of loss because the buyer is the equitable owner
What is the Massachusetts Rule?
The seller bears the risk of loss
What is the damages rule by the Uniform Vendor and Purchaser risk act?
(1) The party with the right to possession at the time of the loss bears the risk of damages
What duties could a seller have to disclose defects in property
(1) Traditional view
(i) Caveat Emptor
or;
(2) Modern rule
What is Caveat Emptor?
(1) Generally, a seller has no duty to disclose defects
but;
A seller will be liable only if
(2) Affirmative misrepresentation
(3) Actively concealed defects
or;
(4) Owed a fiduciary duty to the buyer
What is the modern rule for disclosing defects?
Obligation to
(1) Disclose known defects that materially affect the value of the property
that are;
(2) not known or readily discoverable by the buyer
What are the two Deed delivery requirements?
(1) Deeds are only effective upon delivery to the grantee, even if already signed
(2) Grantor must manifest an intention to immediately transfer title to the grantee through delivery.
What is Death Escrow
(1) Where a thrid party has a deed and has been instructed only to deliver the deed on the grantors death
(2) Generally, only legally effective where the grantor cannot retrieve the deed
What is a Transfer on death deed
N/A
What are the three ways one might assure a buyer they have a particular title
(1) Covenants
(2) Title opinions
(3) Title insurance
What is a covenant?
Some kind of promise
What kinds of opinions typically assure title?
(1) Attorneys or other professionals
(2) rendering opinions on a properties state of title
(3) after searching public land records
What is title insurance?
(1) A company that issues a policy that insures the grantees title
What are the three types of deeds?
(1) General Warranty deeds
(2) Special Warranty Deeds
(3) Quitclaim Deeds
What is a General Warranty Deed?
(1) A grantor warrants title against all defects
(2) Whether they rose before or after she obtained title
What is a special warranty deed?
(1) A grantor warrants title against all defects that arose
(2) after she obtained title
What is a Quitclaim Deed?
(1) A grantor makes no warranty about title
(2) so, grantee is receives only whatever title grantor has
What are the six title covenants?
(1) Covenant of seisin
(2) Covenant of right to convey
(3) Covenant against encumberances
(4) Covenant of warranty
(5) Covenant of quiet enjoyment
(6) Covenant of further assurances
What is a covenant of seisin?
(1) The grantor promises he owns the estate he purports to convey
What is a covenant of right to convey
(1) The grantor promises that he has the right to convey title
What is a Covenant against encumberances
(1) the grantor promises there are no encumberances on title
(2) Other than those expressly listed in the deed
What is a covenant of warranty?
(1) The grantor promises he will defend the grantee against any claims of superior title
What is a covenant of quiet enjoyment
(1) A grantor promises the grantees possession of the property will not be disturbed by anyone holding superior title
What is a covenant of further assurances?
(1) Where a grantor promises he will take all future steps reasonably neccesary to cure title defects that existed at closing
How would an attorney create a title opinion?
(1) Looking through a
(i) not mandatory
(ii) not judically overseen
(2) Public land record system
What are the two methods of organization for public land records?
(1) Grantor/Grantee indices
(2) Tract Indexes
What is a chain of title?
(1) A history of ownership for a parcel
What are the steps to finding a chain of title?
(1) Locate relevant legal documents
(2) Evaluate their legal significance
What are the three recording-act rules?
(1) Race Jurisdiction
(2) Notice Jurisdiction
(3) Race-Notice jurisdiction
What is a race jurisdiction?
(1) 2 states rule
(2) the purchaser that records first has priority
What is a notice jursidiction?
(1) About half the states rule
(2) a subsequent purchaser without notice of prior interest
(3) is a Bonafide Purchaser
What is a race-notice jurisdiction?
(1) A subsequent purchaser
(2) Both has no notice and
(3) Records first is protected as a Bona-Fide Purchaser
What are the three kinds of interest-notice possible?
(1) Actual notice
(2) Record notice
(3) Inquiry notice
What is actual notice?
(1) Actual notice of a prior interest
What is Record notice?
(1) Where a standard search of public land records would notify the purchaser about a prior interest
What is inquiry notice
(1) Where suspicious circumstances
(2) even ones not actually known
(3) dictate an investigation would reveal a prior land interest
Salsich Article from class 22?
N/A
When is a seller required to produce Marketable Title?
At the time of closing
What happens to marketable title when someone accepts a deed?
Once a buyer accepts a deed at closing, they cannot sue to enforce the promise to deliver marketable title- merges into deed which becomes the operative legal instrument
What is the first in time principal?
(1) At common law
(2) The person whose interest was created first prevails
but;
(3) is virtually always excepted by the bona fide purchaser doctrine
What is the bona fide purchaser doctrine?
(1) Recording acts create speacial protections
(2) Which superceedes the first in time rule
What is the shelter rule?
(1) A bona fide purchaser is allowed to transfer their protection to a later grantee
What deed automatically conveys to listed beneficiaries on death?
A transfer on death deed
What are the rules for transfer on death deeds?
(1) designates the beneficiaries they want to receive property upon death
(2) revocable by the grantor during their lifetime
(3) not legally operative until the grantors death
(4) delivery isnt required
and;
(5) is not part of an estate - so doesn’t need to go through probate
