Selling real property

Question 1

What must a K for the sale of land include to satisfy the Statute of Frauds?

Answer 1

To comply with the SOF a contract for the sale of land must be in a writing that contains the essential terms and is signed by the party to be bound

Question 2

What are the essential terms for the SOF?

Answer 2

□ Identity of the parties
□ Words showing an intent to buy or sell
□ The purchase price, if agreed by the parties or a procedure for establishing the price
□ Adequate description of the property which is specific enough to identify the land with/ reasonable certainty

Question 3

What is a writing under the SOF?

Answer 3

Any document that contains the essential terms & is properly signed

Question 4

What is necessary for the part performance exception within the SOF

Answer 4

Purchaser must take possession, have paid part or all of the purchase price, and have made substantial improvements

Question 5

What is necessary for the equitable estoppel exception to the SOF?

Answer 5

A K that fails to satisfy the SOF will be specifically enforced if
◊ One party has been induced by the other to substantially change position in justifiable reliance on the Orla contract
◊ Serious or irreparable harm would result from refusing specific performance of the K.

Question 6

What is marketable title?

Answer 6

A marketable title is a title reasonably free of doubt as to its validity. A contract without mention of the title imply marketable title.

Question 7

When is title not reasonably free from doubt?

Answer 7

The seller’s property interest is less than the one they purport to sell

The seller’s title is subject to an encumbrance

There is reasonable doubt about either of the other 2

Exposes the party holding it to the hazard of litigation

Question 8

What is an encumbrance?

Answer 8

A right or interest in land, other than present freehold estate or future interest in a freehold estate, that reduces the value or restricts the use of land.

Question 9

What is a private encumbrance?

Answer 9

When a landowner’s use or enjoyment of the land is substantially interfered with.

Easements, covenants, mortgages, leans, contract rights and options. Private encumbrances cause title to become unmarketable. In some states, if it is visible then title is still marketable.

Question 10

What is equitable conversion?

Answer 10

The doctrine that determines who owns what between when the K is signed and when it closes (executory period)

Question 10

What is a public encumbrance?

Answer 10

– The violation of a zoning ordinances or something similar only make title unmarketable if there is a violation. Building codes do not make title unmarketable even with a violation.

Question 11

Traditional/ Majority approach for equitable conversion.

Answer 11

□ If a K is specifically enforceable, the buyer is seen as the equitable owner of title (the real estate), and the seller is viewed as the equitable owner of the purchase price (the money).

Question 12

Modern trend (bush) for equitable conversion

Answer 12

□ The vendee/buyer assumes the risk of destruction of or injury to the property where he is in possession or has the right to possess, and the destruction or loss is not proximately caused by negligence of the vendor.

Question 13

Minority/ Massachusetts rule for equitable conversion

Answer 13

The seller bears the risk as the legal owner

Question 14

What is the majority rule for the duty to disclose?

Answer 14

The seller of residential real property is obligated to disclose defects she knows about that:
® Condition is known by seller
® Materially affects the values of the property
® Are not known to or readily observable by a buyer

Question 15

Common law/minority for the duty to disclose

Answer 15

Caveat emptor, The Seller of real property has no duty to disclose defects to the buyer, unless the seller, Affirmatively misrepresents the condition of the property, Actively conceals its defect, and Owes a fiduciary duty to the buyer.

Question 16

What is the stambovsky exception to caveat emptor?

Answer 16

Where a condition created by the seller materially impairs the value of the K & is peculiarly within the knowledge of the seller or unlikely to be discovered by a reasonably prudent purchaser exercising due care with respect to the subject transaction, nondisclosure constitutes a basis for recission as a matter of equity.

Question 17

What is the rule for delivery?

Answer 17

In general the grantor must manifest an intention to immediately transfer title to the grantee. A deed is delivered only if the grantor intends to make an immediate transfer of title to the grantee and makes an objective manifestation of that intent. Delivery does not require physical transfer.

Question 18

What is the vasquez rule for delivery?

Answer 18

When the deed is placed in the control of a 3rd person, the question is whether the grantor parted with all dominion and control over the instrument, with the intention that it take the effect of conveyance at the time of delivery.

Question 19

Death escrow

Answer 19

◊ Majority: a death escrow constitutes effective delivery if grantor parts w/ all dominion & control over the deed

◊ Minority: it is not effective

Question 20

What are the buyer’s remedies for a breach?

Answer 20

Specific performance, rescission, restitution, expectation damages

Question 21

What are the seller’s remedies for a breach?

Answer 21

Liquidated damages, expectation damages, specific performance (depending on the court)

Question 22

What are the title assurances?

Answer 22

Title covenants, Title opinions based on a search of public records, Title insurance.

Question 23

What are title covenants and what determines the protections afforded?

Answer 23

A title assurance is an express promise by the grantor about the quality of title. The protections are determined by the type of deed and the covenants (promises).

Question 24

What are the three types of deeds for title covenants?

Answer 24

◊ General warranty: There are no title defects anywhere in the chain of title at the time of closing

◊ Special warranty: The grantor promises that there are no title defects at the time of closing that arose during the time they held title.

Quitclaim: Grantor makes no warranties about title, so the grantee only receives what the grantor has, if anything.

Question 25

What are the present covenants?

Answer 25

Covenant of seisin: Grantor owns the estate the deed purports to convey in quality and quantity

Covenant of right to convey: Promise that the grantor has the right to convey title.

Covenant against Encumbrances: There are no encumbrances on the title other than those expressly listed

Question 25

What are the future covenants?

Answer 25

Covenant of warranty: grantor will defend the grantee against any claim of superior title

Covenant of quiet enjoyment: The grantee’s possession won’t be disturbed by anyone holding superior title.

Covenant of further assurances: The grantor will take all future steps reasonably necessary to cure title defects that existed at closing

Question 26

Which covenants run under the traditional rule?

Answer 26

Only future covenants

Question 27

Which covenants run under the modern rule?

Answer 27

Both future and present covenants

Question 28

What are the effects of recording?

Answer 28

puts the world on notice. The future purchaser is charged w/ knowledge of all documents in the chain of title that would have been found during a search

Question 29

What is the scope of a standard title search

Answer 29

From the date the grantor received title until the date of recording of the deed conveying title from the grantor to their grantee

Question 30

What is the scope of an expanded title search?

Answer 30

Some jurisdictions: Must search from the time the grantor received title until the date of the search

Other jurisdictions: Must search during every year the grantor is alive

Question 31

Constructive notice

Answer 31

A deed recorded within the chain of title provides constructive notice to subsequent purchasers. Under the common law, the first in time prevails.

Question 32

Bona Fide Purchaser

Answer 32

Someone who buys something for value and without notice of another’s claim to the land.

Question 33

What did Luthi teach about notice?

Answer 33

To supply constructive notice recorded entrustments of conveyance must describe the land conveyed with sufficient specificity so that the specific land conveyed can be identified

Question 34

The recording acts that are the exception to the first in time rule.

Answer 34

Race: first to record

Notice: The BFP takes title without notice of any prior interest

Race/notice: The BFP takes title without notice of the prior interest and records first

Question 35

Zimmer rule

Answer 35

A subsequent purchaser is deemed to have recorded his conveyance only if all prior conveyances in his chain of title are properly recorded

Question 36

What are latent defects?

Answer 36

When a deed appears valid on its face but is defective due to a hidden flaw. The majority rule states that if a deed is valid on its face, then it is valid.

Question 37

Patent defects

Answer 37

A deed that appears invalid on its face

Question 38

What is the shelter rule?

Answer 38

Anyone who takes from a subsequent BFP is afforded the same protection as the BFP. One who acquires an interest from a BFP also prevails over a first-in-time claimant.

Question 39

Wild deed

Answer 39

Recorded deed that title searcher won’t find because there is a break in the link. (don’t put a subsequent buyer on record notice and are considered not recorded)

Question 40

record notice.

Answer 40

Notice of any prior interest that would be discovered by a standard search of public title.

Question 41

Inquiry notice

Answer 41

Notice of any prior interest that would have been obtained by investigating suspicious circumstances. If there is a situation that would make you suspect something is up, then you are charged with every fact you would have found out had you checked

Question 42

inquiry notice based on the record

Answer 42

If an instrument within the chain of title refers to a document outside of the chain, most courts require further investigation

Question 43

inquiry notice based on possession

Answer 43

Possession by a person other than the grantor is sufficient to put a subsequent buyer on inquiry about the rights of the person in possession. There is an exception for possession by the grantor of a recorded deed does not impart such notice.