The Land Transaction

Question 1

6 Steps for a land transaction:

Answer 1

1) Find a Broker
2) Negotiate a Sales Contract
3) Inspect the Premises
4) Get an inspection report
5) Financing
6) Closing

Question 2

What is a Contract of Sale?

Answer 2

Instrument, distinct from deed, that conveys a valid title

• Must comply with SoF and implied condition of marketable title
• Consideration is required

Question 3

What is a deed?

Answer 3

Deed or instrument that certifies or signifies the immediate transfer of title

NO CONSIDERATION NEEDED

Question 4

Why is there a Statute of Frauds?

Answer 4

In land transactions, we want to discourage lying and make people secure in buying and selling

Land becomes more alienable / transferrable and more efficient use of land

Question 5

Statute of Frauds Requirements (4)

Answer 5

1) A writing
2) Signed
3) Some mention of price
4) Description of Property

Question 6

What happens if the SoF is not completely complied with but there has still reliance? (2)

Answer 6

1) Specific Performance
- Compel the party to complete the transaction

2) Estoppel
- Prevents one party from denying the existence of a valid contract of sale

Question 7

Hickey v. Green

Answer 7

REASONABLE RELIANCE

An oral land-transfer agreement may be specifically enforced, even though it violates the Statute of Frauds, if the party seeking enforcement detrimentally relied on the validity of the contract and injustice can be avoided only by specific performance.

Question 8

Why did Court find Hickey’s reasonably relied?

Hickey v. Green

Answer 8

They sold their house

Question 9

What is the two part test for reasonable reliance?

Hickey v. Green

Answer 9

(1) Plaintiff’s had reasonable reliance

(2) Changed their position so much that it would be unjust not to enforce the contract

Question 10

Does electronic signatures satisfy the SoF?

Answer 10

YES

Question 11

What is marketable title? (2)

Answer 11

A title free from REASONABLE doubt, but NOT ALL doubt

(1) Seller must own the Property
(2) Title cannot be subject to liens, easements, or other encumbrances

Question 12

What happens if a seller conveys title that isn’t marketable?

Answer 12

Buyer is entitled to rescind the contract

Question 13

Why isn’t a marketable title subject to certainty?

Answer 13

It puts an unreasonable burden on the seller, making it an absolute test would be unfair to the seller:

• what if there is something buried in title from 100 years ago
• Makes land transactions nearly impossible

We want land marketable enough so people will buy and sell, but not so stringent that it would make land unsellable

Question 14

Lohmeyer v. Bower

Answer 14

The purchaser may rescind and void the sale if the land is found to have an unmarketable title.

Question 15

Why did the Ct. find that implied marketability of title was violated?
(Lohmeyer v. Bower)

Answer 15

The property the seller was conveying violated two encumbrances

1) Restrictive Covenant – building must be over two stories (home was one story)
2) Zoning Ordinance – home must be set back 3 ft from other property (only set back 18 inches)

Question 16

Was the title unmarketable because of the existence of the encumbrances?
(Lohmeyer v. Bower)

Answer 16

NO

Unmarketable because VIOLATION of encumbrances

Question 17

Why does existence of encumbrance not matter for marketability of title? (2)
(Lohmeyer v. Bower)

Answer 17

1) If Ct. found that zoning ordinance rendered title unmarketable, then passing a zoning ordinance could render 10,000 titles unmarketable
2) Court found the covenant in the deed had been waived in the contract itself