Selling Real Property Flashcards

1
Q

selling real property

3 major steps in real property sales transactions

A
  1. purchase contract
  2. closing
  3. title protection
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2
Q
  1. Purchase Contract- problems
A

(a) sof
(b) marketable titile
(c) equitable conversion
(d) duty to disclose

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3
Q

a. SOF- requirements

A
  1. essential terms - essential terms of the contract (normally the identity of the parties, the porce, and the property description) must be seit forth in writing..
    -> common property descriptions (1) gov survey- Public Land Survey System; (2) metes and bounds; (3) subdivision map.
  2. writing- the writing can be a formal contract or an informal memorandum.
  3. signature- the writing must be signed by the party sought to be bound.
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4
Q

SOF- exceptions

A
  • doctrine of past performance- oral contract may be enforced if buyer (1) takes possession (2) pays part of the purchase price; (3) makes improvements
  • Doctrine of estoppel- oral contract may be enforced if (1) one party acts to his detriment in reasonable reliance on another’s promise and (2) serious injury would result if enforcement is refused.
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5
Q

b. Marketable Title

A

Generally, title is unmarketable if:
1. The seller’s property interest is less than the one she purports to sell.
2. The seller’s title is subject to encumberance- an encumberance is a right ot interest in land (other than a freehold estate) that reduces the value of the land (easements, liens, mortgages)
3. There is a reasonable doubt about (1) or (2)
-> a believes he has obtatained title through adverse possession, while in the process of selling the home to B. the original owner brungs suit to claim land. A’s title is NOT marketable then.

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6
Q

c. Equitable Conversion

A
  • doctrine of equitable conversion- buyer is equitable owner of property once the contract is signed
  • massachusetts rule- seller cont. to bear the risk until actual transfer of the title absent an express agreement to the contrary.
  • Majority rule- buyer under a contract for teh sale of land assumes the risk of destructiion or injury to the property where he is in possession and destructions is not caused by sellers negligence. (party entitled to possession bears the risk).
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7
Q

d. Duty to Disclose- Caveat Emptor Rule

A

CL- caveat emptor (lingers in only a few states)- buyer is responsible to ask all of the questions.
* In most jurisdictions, the seller of residential property is oblgated to disclose defects he knows about that (a) materially affect the value of the proeprty and (b) are not known to or readily discoverable by a buyer.
* -> connoted that seller has actual knowledge
* exception- implied warranty of quality- property is fit for the inteded use -> developer may be liable even without knowledge of defects.

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8
Q

2 Closing- elements

A
  1. the buyer pays the purchase price to the seller, and executes a mortgage and promissory note for the lender;
  2. the lender advances the loan funds; and
  3. the seller transfers title to the buyer by delivering a deed
  4. deed and mortgage are recorded in public land records.
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9
Q

Closing- (a) the deed

A

A deed is only effective when it is delivered.
* threshold question- did the grantor demonstrate intent that teh grantee receive an immediate interest in the property
* in cases involving attempted transfers, it is the grantor’s intent at the time the deed is delivered which is of controlling importance.
* -> e.g. where the grantor symbotically delivers but then continues to use the property, live in it, and pay taxes -> he has not shown untent to deliver an immediate interest.

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10
Q

Closing- (b) Remedies for Breach

A
  • specific performance is granted when monetary damages are inadequate.
  • courts can deny speciifc performance where it woukd be out of the seller’s
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11
Q
A
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12
Q

3 Title assurance (3 methods)

A
  1. Title covenants- the grantor promises in the deed that he has good title to convey
  2. title opinion. based on search of public records- an attorneye or other professional renders an opinion about teh state of title after searching public land records
  3. title insurance- a title insurance company issues a policy that insures the grantee’s title.
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13
Q

first method of title assurance

TA- (a) Title Covenants

A

grantor promises in dee dthat he has good title to convey
- three types of deeds:
1. general warranty deed (best protection)- the grantor warrants title against all defects whether they arose before or after he obtained title
2. special warranty deed- teh grantor title against all defects that arose after obtained title
3. Quitclaim deed- the grantor makes no warranties about title

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14
Q

TA- (b) Title Opinion based on search of public records

A
  • an attorney or professional renders an opinion about the state of a title
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15
Q

-

A sells to B and 1 week later A sells the same property to C

A
  • If B records the deed -> where a buyer does not retain anyone to search the land records, they are charged with notice of properly recorded deed because thet would have been found in a title search -> B owns the property
  • BUT where the deed is never recorded -> there is special protection from a subsequent bonda fide purchaser who azquires title w/out notice of an adverse claim and pays valuable consideration -> C owns the house
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16
Q

The Real Bullshit

A
  1. first in time
  2. race notice
  3. notice
  4. race-notice
17
Q

exception to first in time

A

the recording acts create special protection for the subsequent bona fide purchaser, which supersedes the first- in-time rule.

18
Q

3 forms of notice

A
  1. actual notice
  2. record notice
  3. inquiry notice
19
Q

(1) actual notice

A

knowledge of a prior interest

20
Q

(2) Record notice

A

notice of any prior interest that would be doscovered by a standard search of teh public land records

21
Q

(3) inquiry notice

A

notice of any prior interest that would have been ontained by investigating suspicious circumstances

22
Q

First in time

A

the person whose interest was created first prevails

  • the bona fide purchaser is the exception to the first in time rule.
23
Q

Who is the protected bona fide purchaser?

A

refers to someone who buys property in good faith, without notice of any other party’s prior legal rights to the property, and who pays a fair price for it.
- this is crucial as it protects buyers from subsequent claism made against the property bo other parties who may allege prior interests.

24
Q

Legal protections for the bona fide purchaser

A

In many jurisdictions, recoding statutes protect bona fide purchasers.
These statutes may vary, but generally, they prioritize the rights of the first to record the deed assuming they are a bona fide purchaser.
there ae three main types of recording statutes: (next set)

25
Q

3main types of recording statutes

A
  1. race statute
  2. notice statute
  3. race-notice statute
26
Q

race staute

A

the first person to record the deed,regardless of knowledge of previous unrecorded interests, has the superior claim

27
Q

Notice statutes

A

a subsequent purchaser who does not have notice of a prior unrecorded interest and who records first wil have the superior claim.

28
Q

race- notice statutes

A

a subsequent purchaser must both lack notice of any prior unrecorded interesta and be the first to record to have the superior claim.

subsequent purchaser- refers to an individual or entity who purchases property after a prior transaction has already taken plave involving that same property. essentially, this person is NOT the first purchaser from the original owner, but instead buys the property from someone who previously purchased or aquired it.

29
Q

title insurance - definition

A

insurance company issues a policy that insures the grantee’s title and covers off-record defects that can protect the buyer

30
Q

title insurance- how to assess on exam

A
  1. did the insured suffer “loss or damage”
  2. did the policy provide coverage “for the risk”
    exceptions and exclusions of the insurance policy

exclusion- a potential risk that the company is unwilling to cover in any policy, such as encumbrances created or agreed to by the insured party.
exception- a problem that concurs the particular pacel, which the title company discovers by searching its computerized version of the public land records

31
Q

Title insurance example- Riordan v. Lawyers title insurance corp

A

facts- plaintiffs property was insured by the defendant w a policy that stated protection from “lack of a right of access to and from the land.” P then found that land could not be accessed by car.
RULE- doctrine of reasonable expectations only applied when policy terms are ambiguous
application- here, the language is clear and unambiguous, the policy guarantee access the policy guarantees access ≠ the type of access ○ defects in physical condition of property ≠ constitute unmarketability of title
here, plaintiff was able to sell the property showing that the title was marketable and plaintiff suffered no loss
holding for the insurance company.

32
Q
A