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70 Cards in this Set
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What is involved in a conveyance of real property? |
Conveyancing involves the transfer of title to real property with the owner's consent (as opposed to adverse possession or eminent domain, in which title is transferred involuntarily). All that a conveyance requires, in essence, is a valid deed and delivery. However, these are the typical elements of a conveyance and the potential problems with each: 1. Land sale contract (defects in formation); 2. Between land sale contract and closing (destruction of property/risk of loss, marketable title, breach of the land sale contract); 3. Closing- that is, the time set for performance of the land sale contract (failure to perform land sale contract); and 4. After closing (contents of deed, nature of property transferred [e.g. accretion, reliction, erosion], delivery of deed, breach of seller's warranties [covenants of seisin, right to convey, against encumbrances, quiet enjoyment, warranty, further assurances], recording of deed [discussed in next topic, by itself]). |
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To be valid, what elements must appear in a contract for the sale of land? |
As a threshold matter, remember that because a land sale contract is a contract, it must meet all the typical contract requirements (e.g. mutuality, consideration); also, because it's for an interest in land, it must comply with the Statute of Frauds (i.e. it must be in writing, unless it fits an exception like part performance). As to content, it must contain essential terms, including: 1. Names of parties (grantor and grantee); 2. Price; 3. Terms and conditions (e.g. price, financing, and manner of payment [if agreed upon]); 4. Description of land; and 5. Signatures (of the party against whom the contract is sought to be enforced). NMEMONIC: Peter Pavlov Trained Some Dogs (Parties, Price, Terms, Signatures, Description). Remember that a conveyance only requires a valid deed and delivery; however, a land sale contract is almost always used when the conveyance involves a sale (rather than a gift) of real property. |
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Must a written contract for the sale of land (or an interest therein) be signed by both parties to the sale? |
No. The Statute of Frauds is satisfied by a written memorandum signed by only the "party to be charged"- that is, the party against whom the contract is sought to be enforced. NOTE: A deed on the other hand, need only be signed by the grantor. The grantee is bound by the terms of the deed through acceptance of the deed. |
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Partial performance removes a contract from the Statute of Frauds (i.e. if a contract is partially performed, it need not be in writing to be enforceable). What kinds of thinks constitute partial performance when the contract involves the sale of land? |
Although the requirements vary from state to state, as a general rule partial performance requires that the grantee possess the property as well as either make payment for the property or make improvements to it. NOTE: Most courts also require proof of "unequivocal referability," viz, party seeking to enforce the contract must prove that the actions undertaken were clearly in response to an oral contract and not explainable otherwise. NOTE: Cases seeking specific performance of an oral land sale contract are normally brought by the buyer, not the seller. However, if the buyer partially performs the contract, most modern courts would allow a seller to enforce the land sale contract, on grounds that a seller ought to be entitled to the same recovery as a buyer (this is known as mutuality of remedies). (The sellers' performance, in the form of executing a deed in the grantee's favor, wouldn't by itself constitute part performance necessary to enforce an oral land sale contract). Older cases didn't allow the seller to enforce an oral land sale contract due to partial performance. |
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Why are land sale contracts necessary? |
In theory, they aren't; the buyer and the seller could simply exchange the purchase price and the deed. However, land sale contracts are generally necessary to cover the period before the conveyance itself takes place, during which time the buyer conducts a title search, arranges financing, and the like. NOTE: Where the conveyance involves a gift of land, there won't be a land sale contract at all. A land sale contract isn't necessary for a conveyance to take place; all that requires is a valid deed and delivery. |
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What remedies are appropriate for breach of a land sale contract? |
Whether buyer or seller breaches, the major possible remedies are: 1. Rescission (rescind the contract; if the seller breaches, the buyer is entitled to return of a down payment or deposit). 2. Damages for contract breach (buyer's damages= market price at closing less contract price; seller's damages= contract price less market price at closing; if difference is zero or negative, wronged party gets nominal [e.g. $1] damages, plus foreseeable reliance damages [e.g. brokers' fees]). 3. Specific performance (because land is unique, the wronged party can seek the equitable remedy of enforcement of the contract; however, equitable defenses apply [e.g. if enforcement would cause undue hardship on the wrongdoer, the contract won't be enforced]). If the contract can't be enforced (e.g. there's an easement across property that the seller can't remove0, the buyer can seek enforcement with an abatement (reduction in contract price) to reflect the defect. |
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McDonald orally agrees to sell his farm to Chicken. Chicken gives him $1,000 when they reach agreement and McDonald gives Chicken a memo that says, "I agree to sell my farm located at the intersections of Hearaquack and Thereaquack Roads in Cowpat City, USA, to Chicken for $25,000. Chicken agrees to buy the Farm. I acknowledge receipt of $1,000 as earnest money from Chicken, balance due on delivery. Date: March 21, 1964. Signed McDonald". McDonald decides to back out. Can Chicken sue to enforce the contract? |
Yes, because breach of a contract to sell land is grounds for specific performance (because land is unique), and the memo satisfies the Statute of Frauds- the parties are identified, the price is shown, the manner of payment is mentioned (due on delivery), the land is described, and the party to be charged, McDonald, signed the memo. RELATED ISSUE: If the situation was reversed and McDonald were suing, he would not succeed because Chicken would be the party to be charged and he didn't sign. RELATED ISSUE: Say instead of specific performance, Chicken sought damages. He would be entitled to the market value (at the time set for the closing) minus the contract price. Thus, if the contract price reflected market value or less, there wouldn't be any damages, except for foreseeable reliance damages (e.g. broker's fees). |
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Trump enters into a valid written contract to sell his property to Regis for $50,000. The contract calls for a closing date of July 4, and Regis gives Trump $1,000 earnest money. On July 4, Regis offers Trump a check for $49,000, but Trump refuses to tender the deed, saying he's changed his mind and doesn't want to sell. Can Regis force him to do so? |
Yes. The sale of land is the classic situation where an equity court will mandate specific performance, (i.e. fulfillment of the contract). Land is considered "unique" so that remedies available at law (e.g. damages) are considered inadequate. Thus, Trump will be ordered to surrender title. RELATED ISSUE: Note that Regis could have sued for damages for breach of contract instead of specific performance. If he had done so, his damages would have been measured by the market value (at the time of the closing) minus the contract price. This means that if the market price was the contract price or less, Regis would only get nominal damages (e.g. $1), plus foreseeable reliance damages (e.g., title search). |
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Jones orally agrees to sell his mountainous piece of land in the Black Hills of South Dakota to Borglum. The agreement would be valid if it were in writing. Borglum is thrilled, and carves the faces of four Presidents on one face on the property. He also orders thousands of snowy paperweights depicting the rock faces. Jones changes his mind and backs out of the deal, claiming that an oral contract for the sale of land is not enforceable. Is he correct? |
No, due to partial performance, which removes the "writing" requirement for the sale of an interest in land under the Statute of Frauds. Borglum's possession of the land coupled with his construction of "valuable improvements" on it would make it inequitable not to enforce the oral contract. NOTE: Many states also require proof of unequivocal referability to enforce an oral and sale contract. Unequivocal referability means that the actions undertaken must be clearly in response to an oral contract and not explainable otherwise. This requirement is satisfied here in the Borglum wouldn't so improve the land he didn't own. |
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Barney agrees to sell Suit up Place to Marshall. The agreement reads, in essence: "I, Barney, agree to sell my property, Suit Up Place, located at Rich and Frank Streets, City of Style, for $5,000. I acknowledge the receipt of $500 as earnest money." The document is dated and signed by Barney. Later, Barney tries to return the earnest money and back out. Can Marshall demand specific performance? |
No, because Marshall's name, as grantee, is not mentioned in the agreement. Thus, it does not meet the Statute of Frauds requirement for a writing, and it is unenforceable as a land sale contract. NOTE: The tendering of earnest money alone does not constitute partial performance, which would remove the deed from the Statute of Frauds. Partial performance of a land sale contract requires possession of the land along with either some payment or construction of improvements on the land. |
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Louis agrees to sell Versailles to Madame du Barry. The agreement reads, in essence: "I, Louis, agree to sell my property, Versailles, located at Bastille and Robespierre Streets, City of Ominous, to Madame du Barry for $10,000. I acknowledge the receipt of $1,000 as earnest money." The deed is dated and signed by Louis. Because the manner of payment is not described, is the agreement unenforceable? |
No, it's enforceable. If the manner of payment, closing date, and so on are not enumerated, they can be inferred. Typically, if financing isn't mentioned, the transfer is assumed to be a cash transaction. (Parol evidence- evidence other than that in the written agreement itself- would be admissible to resolve any ambiguities.) Note that this is exactly what you'd do with any contract; it would be enforceable as long as there were enough concrete terms to infer an agreement. |
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Peter owns Home Alone Gardens. He wants to give the property to his sons, Kevin and Buzz. However, the two boys fight constantly, and Peter doesn't want either of them to sell his interest to a stranger. Peter executes a deed to them as tenants in common; before he gives them the deed, he extracts an oral promise from each of them to grant the other a right of first refusal on sale such that, if either one wants to sell, he must first give the other a chance to match the sale price. the brothers have a falling out and Kevin shouts "You jerk! I wish I could make my family disappear!" He storms out of the room and the following day agrees to sell his interest to Mary, who's always shown an interest in the place. Mary pays Kevin $50,000 and takes possession. Buzz is furious and files a claim against Kevin for specific performance of the contract (proving that he has $50,000 to match Mary's price). What result? |
Buzz will lose, because the "right of first refusal" agreement was oral, not written, so it violates the Statute of Frauds. Under the Statute of Frauds, agreements concerning the conveyance of an interest in land must be in writing. The right of first refusal agreement is just such an agreement, and therefore, to be enforceable, it would have to be in writing (or there would have to be some defense to the Statute of Frauds, like part performance). Since there's no writing and nothing to lift the agreement from the Statute of Frauds requirement, the agreement isn't enforceable, and the sale to Mary will stand. |
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Barney leaves a house in Florida from Fred with an option to buy. The lease is oral and lasts for a term of 18 months. The rent is $500/month, with the rent to be applied to the purchase price if Barney decides to buy. After 9 months, a sinkhole develops near the house and the land suddenly and unexpectedly becomes waterfront property. Barney immediately tells Fred he wants to buy and Fred assures him, grudgingly, that he'll have a contract drawn up. When the lease term ends, Barney maintains possession, but Fred refuses to honor the option. Can Barney successfully demand specific performance of the contract? |
Probably not, because the contract does not fall under the partial performance exception to the Statute of Frauds. Barney's possession of the land coupled with his payment of $500 a month is not unequivocally referable to the contract, as it would have to be for part performance to apply. (That is, the part performance here was not clearly in response to the oral contract and was explainable by some other facet of the parties' relationship.) The partial performance can easily be viewed as a straightforward landlord-tenant contract in light of the fact that there is no other proof of partial performance, such as improvement to the property or change of position by Barney in reliance on the contract. |
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Charles Foster Kane contracts to sell Xanadu, his estate, to Welles for $500,000. Before the closing date, Kane discovers oil under Xanadu and backs out of the deal. Xanadu's market value is $650,000 when the closing is to take place. If Welles sues for damages for breach of the land sale contract, to what amount will he be entitled? |
$150,000- the market price less the contract price (plus any foreseeable reliance damages, e.g. title search fees). This is known as the benefit of the bargain rule. NOTE: Say that Xanadu's market value was $500,000 or less, such that there wasn't an excess of market price over contract price. Welles would be entitled to "nominal damages" only (e.g. $1), as well as, of course, any out of pocket expenses (like a down payment and foreseeable reliance damages) NOTE: Because the transaction is for real property and each piece of real property is considered "unique", Welles could also have sought the equitable remedy of specific performance of the contract. RELATED ISSUE: Say that it was Welles who reneged on the deal. Kane could seek specific performance of the contract or damages. The damages for the seller are the mirror image of buyer's damages- the contract price less the market price (and if there is no difference or it's negative, the seller gets nominal damages and any foreseeable reliance damages, like brokerage fees). |
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What is the doctrine of equitable conversion? |
It's a common law theory that allocates the risk of loss during the time between the land sale contract and the closing, assuming that the land sale contract itself doesn't allocate the risk. Basically, it holds that the buyer bears the risk of loss during that time period, whether loss is due to destruction or eminent domain. If you want to get more technical about it, the doctrine of equitable conversion holds that after the land sale contract, but before the closing, the seller has a personal property interest in the property in the form of the balance of the purchase price owed to him. The buyer is considered the equitable owner of the property during the same period, which is why the buyer bears any loss. NOTE: Only look at the doctrine of equitable conversion when the land sale contract is silent as to risk of loss; if there's an express provision on the subject in the contract, it controls. MINORITY RULE: A growing minority of states follow the Uniform Vendor and Purchaser Act, which provides that the seller bears the burden of material losses until the buyer takes possession or title. REMEDY: The seller can either sue at equity for specific performance or at law for damages, to be measured by the reduction in value of the property. |
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Roderick contracts to sell the House of Usher to Madeline. Before Madeline takes possession or receives title to the House, it splits in two and vanishes. If the sales contract does not allocate the risk of loss, who will bear the burden at common law? |
Madeline. Common law follows the doctrine of equitable conversion, wherein the vendor, Roderick, is said to have a personal property interest in the House between signing the land sale contract and the closing, in the form of the balance of the purchase price Madeline owes him. Madeline, as vendee, is considered the beneficial owner of the property after the sales contract takes effect, so she bears the loss. REMEDY: Roderick can either sue in equity for specific performance of the contract at the contract price or sue at law for damages, which would be measured by the amount of value lost. MINORITY RULE: A growing minority of states follow the Uniform Vendor and Purchaser Act, which provides that the seller bears the burden of material losses until the buyer takes possession or title. Had there been an express provision in the land sale contract allocating the risk of loss, it would have controlled. |
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Arnold owns a home on the San Andreas Fault. He contracts to sell it to Stallone. After the sales contract is signed, but before Stallone takes possession or title, Arnold dies. In his will, Arnold leaves his real property to his wife Maria and personal property to his friend, The Rock. When the closing takes place, who gets Stallone's money for the house at common law- Maria or The Rock? |
The Rock. Common law, and a majority of states, use the doctrine of equitable conversion, such that, between the land sale contract and the closing, the buyer is said to own equitable title in the property and the seller has a personal property interest in it in the form of a right to the purchase price. This means that, under these facts, the one with the right to the seller's personal property-The Rock- gets the money. |
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Luigi contracts to sell Venice to Maria. Before Maria takes possession, Venice sinks somewhat. This doesn't make Venice uninhabitable, but it does lessen its value. Under the Uniform Vendor and Purchaser Risk Act, who bears the loss? |
Luigi. However, unlike the case of complete destruction, which renders the contract unenforceable, partial or immaterial damage means that contract remains intact, although the purchase price is reduced to reflect the extent of the destruction. The Act is only valid in a minority of states, although that minority is growing. MAJORITY RULE: Most states follow the doctrine of equitable conversion, which puts the risk of loss on the buyer once the sales contract is signed. Under the doctrine of equitable conversion, Luigi could either sue in equity for specific performance of the contract or at law for damages, measured by the reduction in value of the property. |
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Frankenstein contemplates selling his castle to Igor. They haggle over price until Frankenstein offers to sell for $100,000. Igor responds, "Ok, you got a deal." They reduce the agreement to writing with a closing date in 2 months. Immediately after the contract goes into effect, Frankenstein discontinues his insurance on the place. 2 weeks later, there's an electrical fire and the castle burns down. Igor is furious when he finds out; however, he figures he's all right, because he won't have to follow through with the deal. Does Frankenstein's lack of insurance mean that he can't enforce the land sale contract against Igor under the majority rule? |
No, the contract is enforceable against Igor under the doctrine of equitable conversion. Facts like these are one of the reasons a growing number of states are moving away from the doctrine of equitable conversion. Under the doctrine, the buyer bears the risk of loss on the property between the land sale contract and the closing, barring an express provision otherwise. The nonexistence of insurance on the property doesn't change this. (Note that the buyer does have an insurable interest in the property between the land sale contract and the closing; he doesn't have to wait until the closing to insure the property). RELATED ISSUE: Say that Frankenstein had had insurance on the property and took the insurance proceeds without rebuilding the castle. He could not have enforced the contract against Igor under the doctrine of equitable conversion, according to most courts, because the doctrine doesn't permit a windfall- here, Frankenstein not only would have the insurance proceeds, but he'd have the purchase price, as well. |
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Doc owns the Holiday Ranch. He gives Virgil a 30 day option to buy the Ranch for $100,000. Before Virgil exercises the option, a fire destroys the property. If the option doesn't discuss the risk of loss, who bears the loss at common law- Doc or Virgil? |
Doc. The doctrine of equitable conversion puts the risk of loss on the buyer for the period between the land sale contract and the closing. Here, there isn't a land sale contract yet; Virgil has only the option to buy- that is, Doc must leave the offer to sell for $100,000 open for 30 days. If and when Virgil exercises it (by accepting the offer), the doctrine of equitable conversion would kick in and he would bear the loss. Because Virgil hasn't done so yet, Doc bears the loss. |
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What is marketable title? |
It is title that, viewed objectively, is free from reasonable doubt and that the reasonable buyer would accept without fear of litigation. SIGNIFICANCE: The conveyance of marketable title is an implied covenant in land sale contracts; it is implied unless the contract expressly provides for something other than marketable title (e.g. title insurable by a title insurance company). NOTE: Even when marketable title is implied in a land sale contract, the terms of the deed will control once the deed is conveyed under the doctrine of merger. This is a very easy item to test! Thus, for instance, if a quitclaim deed is conveyed, there will be no obligation to provide marketable title (because a quitclaim deed is free of express or implied covenants). WHEN TITLE MUST BE MARKETABLE: It must be marketable at the closing, not before; thus, as long as the seller removes any defects by the closing, the title will be marketable. The only exception is if the seller will not be able to deliver marketable title at closing then buyer can rescind the contract before closing. |
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What is the difference between marketable title and insurable title? |
Often a seller will contract to convey a title that is lesser than "marketable title" and is only "insurable title". Insurable title is that title a title insurance company will insure; sometimes a title insurance company will issue a policy even though the seller cannot convey marketable title. |
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What does a Marketable Title Act do? |
It makes title searches quicker and more efficient by eliminating property interests that do not appear in the "chain of title" beyond a given period of time (generally, 30 years back). Some interests are exempted from such acts, typically rights of possessors, assessed taxpayers, enumerated easement holders, or federal and state governments (in other words, these rights are preserved even if they do not appear in the "chain of title" in the last X years). The actual elements of Marketable Title Acts vary from state to state. |
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A title search on The House of the Blue Turtles shows that the property was conveyed to a Gordon Sumner. The next chronological conveyance is from Sting to Eric Clapton. There is a "gap" between Sumner and Sting, resulting from the fact that both names are those of the same individual. If the record is left "as is", can the title to The House of the Blue Turtles be considered marketable? |
No. Marketable title is a title that, viewed objectively, is free from reasonable doubt and that the reasonable buyer would accept without fear of litigation. Without clearing up the name discrepancy in the records, there appears to be a problem with a clear chain of title even when no such problem exists. Marketable title is an implied covenant in land sale contracts, unless the contract expressly provides otherwise. Inconsistencies in the record, like this, are common defects rendering title "unmarketable." Conveyance of "marketable title" is generally considered an implied covenant in land sale contracts. NOTE: Title need not be marketable until the date planned for closing. |
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Al Capone enters into a contract to sell his house. Examination of the record does not show payment of current taxes on the property. Is title to the house marketable? |
No. Marketable title is title that, viewed objectively, is free from reasonable doubt and that the reasonable buyer would accept without fear of litigation. Marketable title is an implied covenant in land sale contracts, unless the contract expressly provides otherwise. Under these facts, there's a tax lien on the property. Liens, mortgages, taxes, and other encumbrances render the title "unmarketable." (Note, however, that Capone could pay off the lien at the closing, thereby curing the defect, since title needn't be marketable until the closing). |
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Leif Ericson gains title to America through adverse possession. Subsequently, Columbus agrees to buy the property from Ericson, as long as Ericson supplies marketable title. Is Ericson's title marketable? |
Not until there is a judicial determination that it is. Although title by adverse possession is free of encumbrances, it cannot be assured to be reasonably certain not to evoke litigation (in other words, "marketable") until a court has determined its validity. NOTE: For Ericson to obtain a judicial determination he would file an action to quiet title to get a determination by the court of all valid interests in the property. |
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Horton contracts to sell his house to Seuss. At the time he signs the contract, Hat holds a mortgage on the property. Horton plans to pay off the mortgage with the money from the sale of the property. IF the contract is silent as to when title must be marketable, is Horton's title "unmarketable" due to the mortgage? |
No; title must be marketable on the date set for the closing unless the contract provides otherwise. As such, the mortgage, as an encumbrance that would otherwise make Horton's title unmarketable, does not do so, as long as it's corrected at the closing. this is because the seller has the implied right to use the proceeds to clear the title to the property. NOTE: This rule only applies if the selling price is high enough to clear the mortgage. Otherwise, the seller would be in breach. RELATED ISSUE: Say that the land sale contract provided expressly that Seuss would take the property subject to the mortgage. In that case, since the mortgage was expressly provided for in the contract, its presence wouldn't render title to the property unmarketable. |
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J.R. contracts to buy a ranch, Southfork, from Ellie, intending to turn it into an oil field. A month before the proposed closing date, J.R. discovers an old easement over the property that has never been used. The easement is owned by Cliff Barnes, and the easement was to be used for a path to lead to Cliff's nature preserve next door. Cliff has since closed the nature preserve. Ellie tells J.R. she will try to buy out the easement. When Ellie asks Cliff about a buyout so that she can sell the land to J.R, Cliff responds, "No way! You know I wish J.R. would have died when he got shot!" Ellie calls J.R., and when he asks if she'll be able to buy out the easement, she says, "It's very unlikely based in the response I received." J.R. tells her he's canceling the land sale contract due to lack of marketable title. Keeping in mind that the closing date is a month away, how would a modern court decide a claim by Ellie against J.R. for breach of contract? |
It would likely decide in J.R.'s favor, even though the general rule is that title need not be marketable until the closing. Thus, in most situations, the buyer doesn't have any right to rescind the contract for lack of marketable title before the closing itself. However, modern courts are tending to allow the buyer to cancel the contract immediately if it appears unlikely that the seller will be able to cure the title defect. Here, the existence of an easement renders the title unmarketable, and because Cliff doesn't have to agree to extinguish the easement, it may well remain there. As a result, a modern court would likely allow J.R. to cancel the contract immediately without waiting to see if Ellie in fact remedies the defect by the closing date. |
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Ruth contracts to sell his house to Joe, who intends to open a shoe store in the house. While there are some stores nearby, the land on which Ruth's house stands is zoned residential. Joe and Ruth never discuss Joe's intended use of the house. Before the closing, Joe finds out about the zoning regulation and seeks to rescind the contract, claiming that the zoning regulation renders the title unmarketable. Is he correct? |
No. As a general rule, zoning regulations (and other land use restrictions enforceable by the government) do not make title unmarketable, because they aren't considered encumbrances. Thus, if Joe refuses to follow through with the sale, Ruth can either seek specific performance of the contract or seek damages (measured by the contract price less the market price). RELATED ISSUE: Say that the zoning laws would have permitted Joe's use when the contract was signed, but were changed before the closing such that they would materially interfere with, or frustrate entirely, Joe's intended use of the property. Under such circumstances, many courts wouldn't enforce the contract against him on grounds of either frustration of purpose or unfairness. |
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Babe begins negotiating to sell his house to Joe, who intends to open a shoe store in the house. The land is zoned as residential. Joe tells Babe what he is planning to do with the property and wants to make sure that he can use the land for a business. Although Babe knows that the land is zoned as residential and Joe will not be able to operate his store on the land, Babe tells Joe, "That's a great idea. I'm sure it will be a big hit. There won't be any zoning problems with having a store here." A couple of days after signing the contract, Joe finds out about the residential only zoning. Will Joe breach the contract if he refuses to go through with the transaction? |
In this instance Babe knew Joe's proposed use of the property and misrepresented the zoning laws to induce him to buy it. This fraudulent misrepresentation would entitle Joe to rescind the contract. |
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Henry owns an estate called Glen. It's a peaceful place where flora and fauna abound, After a while, Henry's royalties from books dwindle and he decides to sell the place. Phil, industrialist, decides that Glen would make an excellent spot for his nuclear weapons factory, and because the area is zoned for residential, commercial, and industrial use, the factory could be built on the land. Henry and Phil contract for sale of the land for $500,000. After the contract is signed, but before the closing takes place, the city declares Glen a historical landmark, subjecting it to landmark preservation status, such that no commercial activity would be allowed and any alterations to the premises as a residence would have to be approved by thee city. The value of the property with this zoning is $50,000. Phil refuses to follow through with the sale. Henry sues to enforce the contract. What result?
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Phil will likely prevail. Zoning changes do not render title to the land unmarketable, but in cases like this- in which a zoning change between the land sale contract and the closing materially interferes with or frustrates entirely the grantee's intended use of the property- many courts won't enforce the contract on grounds of frustration of purpose or unfairness. |
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Giant agrees to sell Jack his mountaintop home, along with its 2 acres of land. They sign a land sale contract. Thereafter, Jack checks the zoning laws and finds that the area is zoned for parcels no smaller than 6 acres; Giant had subdivided his land into 3 two acre parcels. Jack refuses to carry out the sale, claiming the title is unmarketable. Giant seeks specific performance, claiming that zoning laws can't make title unmarketable. Who wins? |
RELATED ISSUE: Say that the area was zoned for 2 acre parcels, that it was zoned residential, and that Jack intended to open a souvenir shop on the property. As long as Giant didn't misrepresent the zoning laws, the zoning laws would not be considered an encumbrance making title unmarketable, and Giant could enforce the land sale contract. |
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Pumpkins are found to be a cheap and efficient source of fuel. Peter, owner of a pumpkin farm, is thrilled by this news. He decides to get while the getting's good and contracts to sell his pumpkin farm to a conglomerate, Worldwide Pumpkins. The land sale contract includes a "time is of the essence" clause and a closing date of June 15 at noon. What does this mean? |
NOTE: Courts dislike enforcing "time is of the essence" clauses strictly and allow for minor delays (such that the late party can demand specific performance of the contract). Typically, courts will look for any oral or written statements or circumstances suggesting that the punctual party waived the "time is of the essence" clause. RELATED ISSUE: Say that title to the farm was unmarketable due to an easement over it and that Worldwide was 3 days late in tendering performance (i.e., the purchase price). Peter could not recover for material breach of contract from Worldwide, because he didn't tender his own performance in the form of marketable title. |
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Marshall owns vacant land on which Barney wants to build the Bro Code Bar. On Jan. 1, Barney agrees to buy thee land for $100,000 with closing set for Feb. 14. The agreement provides that it will be null and void if the closing doesn't take place by Feb. 14. On Jan. 15, Marshall discovers that the Aldren Phone Co. has an old easement running diagonally across thee property, which was never used because the area around the land didn't develop as expected. Marshall immediately calls Barney and says he will negotiate a settlement with the phone company to extinguish the easement as quickly as possible, but it may take a little longer than the Feb. 14 deadline requires. Barney responds, "I want the easement gone, but I want the land even more. If it takes a little longer, we'll work it out." Marshall finally settles with the phone company on Feb. 15. He notifies Barney the same day that he has marketable title and they can close. Barney refuses due to the delay. Is Marshall entitled to specific performance of the contract? |
NOTE: Even without Barney's comments, courts dislike strictly enforcing such clauses and actively look for any oral or written statements or circumstances indicating waiver of the deadline. |
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To be valid, what elements must appear in a written deed? |
2. Parties (if grantee isn't identified, majority rule is that deed is void until the name of a grantee is inserted, at which time it becomes fully effective as a transfer to thee grantee named); 3. Description of the property; 4. Interest conveyed (e.g. fee simple, life estate, lease); 5. Intent to transfer (words like convey, sell, give, assign); 6. *Acknowledgments (*for recording purposes only; not necessary to bind the parties). MNEMONIC: PIG ID (Parties, Interest, Grantor's signature, intent, description) Remember that a deed doesn't require consideration, the grantee's signature, or witnesses to be valid. |
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On a deed, is acknowledgment (e.g. a witness) required for the passage of title? |
No. Under modern rules, a deed need not be witnessed (e.g. by a notary) to validly pass title. However, acknowledgment is necessary for recording purposes, so deeds should be acknowledged. |
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Artificial monuments, Courses (angles), Distances, Maps, Name, Natural monuments, Original survey monuments, Quantity |
Original survey monuments (e.g. stake or natural object used to mark out a survey) Natural monuments (e.g. trees) Artificial monuments (e.g. fences) Maps Courses (angles) Distances Name (e.g. Gilligan's Island) Quantity (e.g. 2 acres of Old McDonald's Farm) MNEMONIC: ON A Monday, Chickens Do Not Quack |
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Dr. Emmett Brown deeds his laboratory to the Marty Skateboard Co. and sends it to the company's address. Unbeknownst to Brown, the company was dissolved three months ago. What happens to the laboratory?
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The deed is void, so the lab still belongs to Brown. That's because a deed to a nonexistent grantee (here, a dissolved corporation) is void. Other such nonexistent grantees include dead people, the heirs of a living person, or a corporation not yet formed. RELATED ISSUE: Where a deed is made out to a nonexisting grantee, courts are generally likely to reform the will to honor the grantor's intent (e.g., giving the property to a dead grantee's hears, giving property to a not yet formed company when it is formed). |
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Don agrees to sell Windmill Estate to Panza. The deed reads, in essence :"I, Don, convey my fee-simple estate in Windmill Estate, located at the corner of Miguel and Cervantes Streets, City of La Mancha, to Panza. The purchase price is $5,000, and I acknowledge its receipt." The deed is dated and signed by Don. Later, Don decides he wants Windmill Estate back and claims the deed is invalid because Panza didn't sign it. Is he correct? |
RELATED ISSUE: Say that Panza agreed to return Windmill Estate to Don, and he just handed back the deed (or burned it). This wouldn't be a valid conveyance, because it would have to comply with all the formalities of the original conveyance, just as if Don was a stranger (e.g., valid deed with Don as grantee, delivery, etc). RELATED ISSUE: Say that the document in question was a land sale contract, not a deed, and Panza was trying to weasel out of buying the property. In that case, Panza couldn't be bound to the contract because the Statute of Frauds would require a writing with the signature of the party to be charged (i.e., the one trying to avoid thee contract) for the agreement to be enforceable against the party. |
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A deed from J.R. to Sue Ellen reads, in pertinent part: "I, J.R. Ewing, convey my property, Southfork Ranch, City of Spelling, to Sue Ellen." It is dated and signed by J.R. He subsequently tries to back out, claiming the deed does not satisfy the Statute of Frauds because it doesn't mention consideration. Is he correct? |
RELATED ISSUE: However, if the document in question was a land sale contract and not a deed, consideration would be required. Whereas a deed is a conveyance and not a contract, a land sale contract is a contract, so it must comply with contract requirements (e.g., mutuality, consideration, and the like). NOTE: In the case of a gift, like the one in these facts, there wouldn't be a land sale contract because there's no sale. |
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Phidias conveys by deed "my property, the Parthenon, located on Roman Road next to the Acropolis." Phidias' property is actually located next to the Acropolis on Feta Road. Is the conveyance valid? |
Yes, the deed is definite enough to satisfy the Statute of Frauds, because the description of the land is definite enough to identify it. As a result, parol evidence- that is, any evidence outside of the deed itself- will be allowed to clarify Phidias' intent. The key is that the parol evidence can only resolve discrepancies in the deed itself, not provide a description in total. |
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Hagrid makes out a deed conveying "most of my property, Forbidden Forest" to Malfoy. Will parol evidence be allowed to determine exactly what part of Forbidden Forest Hagrid meant? |
RELATED ISSUE: Say the deed covered "all my property in the Forbidden Forest." Between Hagrid and Malfoy the description would be valid but, due to the havoc such a description would wreak on title searchers (as it isn't clear from the face of the deed what property is involved), such deeds are sometimes considered unrecorded. |
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When the land described in a deed is bounded by a waterway, changes in the waterway may change the land the grantee actually receives. What are the three principal changes that can occur?
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2. Reliction- the land rises and the water recedes. This increases the amount of land the grantee gets. 3. Avulsion- the sudden, violent alteration in course of a waterway (this doesn't change the land the grantee gets; the boundary line stays the same). Accretion and reliction change only a boundary that is a waterway; if the land in the deed is described as extending to a fixed point without regard to the water, the accretion or reliction would not change the boundary. |
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Cleopatra owns property on the banks of the Nile. Over time, the water recedes to the point that Cleopatra's barge, moored near her house, is beached. Does the boundary line of Cleopatra's land change as a result? |
RELATED ISSUE: Accretion occurs where property is increased by soil and sand deposits on the shores. Like reliction, accretion provides the property owner with more land. RELATED ISSUE: If Cleopatra's land were described in the deed as extending to a fixed point without regard to the lake, the reliction wouldn't change her boundary. |
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In the context of conveyancing, what does delivery mean? |
It is the element of a conveyance that refers to the grantor's present intent, as evidence by words or conduct, that the deed constitutes a conveyance. The result is that, even if the deed itself is valid, without delivery it won't constitute a valid conveyance. Note that this means the deed needn't physically change hands to be "delivered." However, a physical deed, duly executed by the grantor, must exist before delivery is possible. |
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To be effective, does transfer of an interest in land require the physical delivery of a deed? |
NOTE: Except for the 2 situations discussed below (conditions and bona fide purchasers), any extrinsic evidence is admissible to prove grantor's lack of intent to transfer title in spite of the physical delivery of the deed to the grantee. First, conditions: If grantor hands grantee a deed that is unconditional on its face with an oral condition ("This is yours when you finish college."), the condition is ignored and the deed is deemed delivered. Second, bona fide purchasers: Even if grantor didn't intend that grantee get the deed, but he intentionally or negligently allowed the grantee to do so, he can't claim lack of delivery against any innocent third party bona fide purchaser who subsequently bought the property from the grantee. |
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What is the impact of a grantor retaining possession of a deed?
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Grantor's retention of the deed raises rebuttable presumption that title hasn't passed. Presumption is rebuttable by virtually any extrinsic evidence showing grantor's intent to presently transfer title. Conversely, delivering the deed to grantee, recording the deed, or grantor's acknowledging the deed before a notary raises rebuttable presumption that title has passed. |
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What does conditional delivery to a grantee mean? |
NOTE: Be very careful to distinguish conditional delivery from lack of intent to transfer title entirely. Say, for instance, on handing over the deed, the grantor says, "With this instrument, I grant you a lease for the summer on this property." Because the statement disavows any intent to transfer an interest in land, it would be admissible to rebut the presumption that because grantor gave grantee the deed, title had passed. |
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Can the grantor deliver a deed to a 3rd party and still vest title in the grantee? |
Yes. Because delivery refers tot the state of mind of the grantor- whether or not he intends a present conveyance of the property- the fact that the deed is in the hands of a 3rd party doesn't make delivery impossible. The problem with 3rd party deed holders is that there's no flat presumption as to whether title has passed, because it's in the hands of neither the grantee (creating a presumption that title's passed) nor the grantor (creating a presumption that it hasn't). In the typical property sale situation, a 3rd party, such as an escrow agent, holds the deed with instructions from the grantor to release the deed to the grantee when the grantee forks over the purchase price. When the grantee pays, he receives the deed, which "relates back" (for purposes of title passage) to when the grantor gave the 3rd party the deed. |
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What is the Relation Back Doctrine? |
It determines the time when title passes in certain cases where an escrow is used- that is, a 3rd party who holds title from grantor for delivery to grantee. It is an exception to the general rule that title remains in the grantor until the escrow condition is satisfied. In this context, the first delivery occurs when the grantor makes a valid delivery to the escrow, and the second delivery occurs when the escrow makes a valid delivery to the grantee. The relation back doctrine kicks in on the second delivery- it is said to "relate back" to the first delivery, and that's the date the grantee is said to take title. |
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What is the significance or impact of the Relation Back Doctrine? |
The relation back doctrine operates to make the grantee's claim to the property superior to any claim that came into being as a result of one of the following having occurred while the deed was in escrow- the death or incapacity of the grantor, the marriage of the grantor, the death of the grantee, or conveyance by the grantor to a 3rd party who had notice. |
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How can you determine whether the deed has been delivered when it is in the hands of a 3rd party (escrow holder)? |
A conditional delivery using a 3rd party is effective as long as the grantor intends to presently convey either a present or future interest in the property. If the verbal or written condition is given to the escrow agent and the transfer of the deed to the agent is irrevocable, then it will be found that the grantor had a present intent to convey some interest in the property. However, if the grantor retained some control over the deed and could indeed ask for it back/revoke the deed, then there is no present intent to convey anything and the delivery will not be effective. |
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Under what circumstances will oral agreements between neighbors regarding boundary lines be upheld? |
1. The neighbors must be either uncertain or unaware or disputing the true boundary line; 2. They must agree to where they believe the boundary line is; 3. There must be an actual taking (and relinquishment) of possession after the agreement to show that there was an agreement (in fact, some courts require that the agreed boundary line be evidenced by a fence or other monuments). NOTE: If these requirements are met, land changes hands without any written evidence of the conveyance. |
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What's the common law rule regarding dedications? |
Dedications are a means by which a grantor is bound by a promise to "dedicate" his land to public use. At common law, dedications have 2 requirements: First, that the grantor manifests his intent to dedicate the property to public use; and second, the public (through the government) must manifest its intent to accept the property. Once this occurs, the title to the land is in the public, and the public would prevail over any subsequent purchasers of the dedicated land, as long as they have notice of the dedication (e.g. it appears within the chain of title). |
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What are the 3 most common types of deeds? |
2. Special Warranty Deed; and 3. Quitclaim Deed |
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What is a general warranty deed? |
NOTE: Some courts don't require the covenant for further assurances, but only the other five. COMPARE: A deed providing for "the usual covenants" includes all covenants except for the covenant for further assurances; a deed providing for "full covenants" covers all six covenants. |
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What is a special warranty deed? |
Like a general warranty deed, it is a deed that usually contains all six basic covenants of title: seisin; right to convey; against encumbrances; quiet enjoyment; general warranty; and for further assurances. However, unlike a general warranty deed, it holds the grantor responsible only for title defects arising during the time he owns the property, not before (a general warranty deed binds the grantor to defects arising both before and during his tenure as owner). |
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What is a deed called that contains no express warranties? |
NOTE: This supersedes the land sale contract, because the provisions of the land sale contract are "merged" into the deed. Thus, a quitclaim deed does not convey marketable title (as marketable title is an implied covenant only in land sale contracts, not deeds). |
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Of the 6 covenants for title, 3 are capable of breach only when the deed is delivered; the other 3 can only be breached later on. Which are which? |
Covenant for seisin (possession); Covenant of right to convey; Covenant against encumbrances AFTER DELIVERY (these are real covenants, meaning that they run with the land, and they are enforceable by and against subsequent grantees): Covenant for quiet enjoyment; Covenant of general warranty; Covenant for further assurances |
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At common law, do all deeds contain an implied warranty of good title? |
No. In the absence of a statute providing otherwise, no warranties are implied when a fee is conveyed. The warranties must be expressed in the deed, otherwise it'll be a quitclaim deed (free of all warranties). |
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Are the covenants for seisin and right to convey synonymous? |
NOTE: The covenants of both seisin and right to convey can only be breached at the time of the conveyance- not later; they can be discovered later than the conveyance, but they can't come into being later than the conveyance. NOTE: Both of these covenants are personal covenants, meaning they can't be enforced against the grantor by anyone except the original grantee. |
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What is a covenant against encumbrances? |
It is a covenant guaranteeing that there are no interests outstanding that would diminish the property's value or use. Such interests include: mortgages and liens; leases; restrictive covenants; easements (affirmative or negative); profits; and inchoate dower rights. |
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What is the covenant of quiet enjoyment? |
NOTE: The covenant of quiet enjoyment can be breached only after the conveyance. |
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What is the practical difference between the covenant of quiet enjoyment and the covenant of general warranty?
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NOTE: Bothe of these covenants can be breached only after the conveyance. |
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What is the covenant for further assurances? |
NOTE: The covenant for further assurances can be breached only after the conveyance. |
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How do you measure damages for breaches of covenants of title? |
1. COMPLETELY DEFECTIVE: Grantee gets purchase price + interest. 2. PARTIALLY DEFECTIVE (e.g., easement on property, violating the covenant against encumbrances): Grantee gets partial refund of purchase price + interest. 3. NOT DEFECTIVE (e.g. mortgage on property that grantor agrees to pay off): Grantee gets nominal damages (e.g. $1). |
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What is the doctrine of merger in relation to conveyances? |
NOTE: This does not apply to collateral promises (i.e., promises not related to passage of title, like the undertaking of improvements or repairs). |
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What is estoppel by deed? |
1. The grantor purports to convey an estate larger than the one he has; 2. The grantor subsequently acquires the title he's already purportedly conveyed; 3. Title automatically passes to the grantee, by estoppel. NOTE: The grantee gets the land itself, not damages, under this doctrine. |
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For the doctrine of estoppel by deed to be applicable, must here be a misrepresentation in the conveyance? |
No. The grantor need not misrepresent his estate; he needn't even know what estate he possesses. For "estoppel by deed," the grantor need only express an intent to convey an estate larger than the one he ahs, and he must subsequently acquire that estate( at which time, title passes automatically to his ostensible grantee). Thus, misrepresentation need not exist. |
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Under what circumstances does a seller remain liable for injuries caused by dangerous conditions on the land existing when the land is conveyed?
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1. If the seller knows about condition and fails to disclose it: He's liable until the buyer has a reasonable time to discover the defect and repair it. 2. If the seller knows about the condition and actively conceals it: He's liable until the buyer actually discovers the defect and has a reasonable amount of time to repair it (thus, if the buyer negligently fails to discover the defect, the seller remains liable). NOTE: The seller's liability extends to anyone injured by the defect, not just the buyer. |
