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98 Cards in this Set

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Statute of Frauds
a contract must be in writing, contain the signature of the party to be charged, the essential terms..part performance can take a contract out of the statute.
equitable conversion
once a contract is signed, equity regards the buyer as the owner of the real prop. the seller's interest is considered personal prop. the bare legal title that remains in the sellter is considered to be held in trust for the buyer. Right to possession follows the bare legal title, thus the seller is entitled to possession until closing.
Risk of loss
if property is destroyed (w/o fault of either party) before losing, the majority rule places the risk on the BUYER. some states, however, have enacted the uniform vendor and purchaser risk act, which places the risk on the seller unless the buyer has title or possession at the time of loss.
exam tip
even though the risk of loss is on the buyer, if the prop is damaged or destroyed, the seller must credit any fire or casualty insurance proceeds he receives against the purchase price the buyer is required to pay
passage of title on death- equitable conversion
under the doctrine of equitable conversion, if a party to a land sale k dies before the contract is completed, the seller's interest passes as personal prop and the buyer's interest passes as real prop. thus, if the seller dies, bare legal title passes to his heirs or devisees, but they must give up the title to the buyer at closing. if the buyer dies, his heirs or devisees can demand conveyance of the land at closing.
exam tip- passage of title
if the prop is specifically devised by will, check to see whether the ademption rules change the result of the equitable conversion doctrine
marketable title
every k contains an implied warranty that the seller will provide marketable title at closing. it need not be perfect title, but must be free of questions that present an unreasonable risk of litigation
defects in record chain of title
title may be unmarketable because of a defect in the chain of title (adverse possession, future interest held by unborn or unascertained persons, encumbrances, zoning restrictions, time of marketability)
adverse possession
title acquired by AP is unmarketable, despite the fact that most modern cases are contra
future interests held by unborn or unascertained parties
when a holder of a future interest is unborn or unascertained its impossible to convey marketable title. courts will not appoint a guardian ad litem to represent the uborn or unascertained parties for the purposes of conveying land.
encumbrances
mortgages, liens, restrictive covenants, easements and significant encroachments render title unmarketable. a beneficial easement, if visible or known to the buyer doesnt impair the marketability of title.
exam tip- proceeds of sale at closing
seller has a right to satisfy a mortgage or lien at closing with the proceeds of the sale. Thus, the buyer cant claim that title is unmarketabale because its subject to a mortgage prior to closing, if the closing will result in marketable title
zoning restrictions
dont affect marketability, but an existing violation of a zoning ordinance does render title unmarketable (set back?)
time of marketability
if the seller has agreed to furnish title at the date of closing, the buyer cant rescind prior to that date on grounds that the seller's title is not marketable. not that in an installment land contract, the seller need not provide marketable title until the buyer has made his last payment.
exam tip- marketability and implied warranty
avoid answer choices referring to the implied warranty of marketability of title if the closing ahs already occured. once the closing occurs and the deed changes hands, the seller is no longer liable on this contractual warranty. the seller is then liable only for promises made in the deed.
remedy if not marketable
the buyer must notify the seller that his title is unmarketable and give him reasonable time to cure the defects. if the seller fails to cure the defects, the buyer's remedies include recission, damages, specific performance w/ abatement, and a quiet title suit. but if closing occurs, the contract and deed merge, and the seller's liability on the implied contractual warranty ends.
time of performance
courts presume that time is not "of the essence" in real estate contracts. thus, the closing date is not absolutely binding, and a party late in tendering her own performance can still enforce the contract if she tenders w/in a reasonable time (two months) after the closing date.
time is of the essence, when
1. the contract so states 2. the circumstance indicate that was the parties' intent 3. one party gives the other notice that time is of the essence-- Liability: a party who fails to tender performance on the closing date is in breach and may not enforce the contract. even if time is not of the essence, a party who is late in tendering performance is liable for incidental losses.
tender of performance
the buyer's obligation to pay and the seller's obligation ato convey are concurrent conditions. Thus, neither party is in breach until the other tenders performance (even past closing date). If neither party tenders performance, the closing date is extended until one of them does so.
party's tender excused
a party need not tender performance if the other party has repudiated the contract or it is impossible (unmktble title) for the other party to perform
remedies for breach of sales contract
the nonbreaching party is entitled to damages (diff b/w k price and mkt value on date of breach + incidental costs) or because land is unique, specific performance. note that if a buyer wishes to proceed despite unmarketable title, she can usually get specific performance with an abatement of the purchase price
liquidated damges
sales k usually require the buyer to deposit "earnest money" w/ the seller and provide that if the buyer defaults in performance, the seller may retain this money as liquidated damages. courts routinely uphold the seller's retention of earnest money if the amount appears to be reasonable in light of the seller's anticipated and actual damages.
Warranty of fitness or quality - new construction only
contracts of sale and deeds of real prop carry no implied warranty of quality or fitness for purpose. A majority of cts now recognize a warranty of fitness or quality in the sale of a new house by the BUILDER. (negligence of builder: a person may sue a builder for negligence in performing a building contract. some courts permit the ultimate vendee to sue the builder despite lack of privity)
sale of existing land and buildings- liability for defects
seller of existing buildings (not new) may be liable to the purchaser for defects such as a leaky roof, flooding basement or termites, on several theories (misrepresentation, active concealment, failure to disclose)
misrepresentation
the seller is liable for defects about which he knowingly or negligently made a false statement of fact to the buyer if the buyer relied on the statement and it materially affected the value of the property.
active concealment
the seller will be liable for defects, even w/o making any statements if he took steps to conceal the defects
failure to disclose
seller liable if 1. knows or has reason to know of the defect 2. the defect is not apparent and the seller knows that the buyer is likely to discover it upon ordinary inspection and 3. the defect is serious and would probably cause the buyer to reconsider the purcahse if known.
disclaimers of liability
(sold as, with all defects)- arent sufficient to overcome a seller's liability for fraud, concealment, or failure to disclose. if the disclaimer identifies specific types of defects it will likely be upheld.
real estate brokers
sellers agents, should disclose material info if they have actual knowledge of it
title insurance
insures that a good record title of the prop exists as of the policy's date and promises to defend the record title if litigated. title insurance protects only the person who owns the policy and doesnt run with the land to subsequent purchasers.
deed
must be in writing, signed by the grantor and reasonably identify the parties and land.
inter vivos gift
must be donatative intent, delivery and acceptance.
exam tip- no name
court presumes that the person taking delivery has authority t ot fill in the name of the grantee. if the person fills in a name, the deed is valid. If land description is left blank the deed is void unless the grantee was explicitly given authority to fill in the description.
void deeds
forged, never delivered, or were obtained by fraud in the factum (grantor was deceived and didnt realize that she was executing a deed).
voidable ded
executed by minors/incapacitated persons, obtained thru fraud in the inducement, duress, undue influence, mistake and breach of fiduciary duty
joint owner forging tip
conveyance would be valid as to the interest of the owner whose signature is genuine but void as to the other owner.
Fraudulent conveyance
a deed my be set aside by the grantor's creditors if it was made with 1. actual intent to hinder, delay or defraud any creditor of the grantor 2. w/o recv'g a reasonably equivalent value in exchange for transfer, and the debtor was insolvent or became insolvent as result of the transfer. (Deed wont be set aside as against any grantee who took in good faith and paid reasonably equivalent value)
Description of land conveyed
provides a good lead to the identity of the property...if its too indefinite the grantor retains title...parol evidence is generally admissible to resolve patent or latent ambiguities if the description gives a good lead, but may not be admissible where the description is inadequate.
rules of construction- description
methods of description given priority: natural monuments, artificial monuments, courses, distances and quantity (# of acres)
Boundary cases (soil, water)
water: slow and imperceptible change in the course of a river operate to change the legal boundary. avulsion (sudden change of watercourse) doesnt change ownership rights...accretion (slow deposit of soil on land abutting water) belongs to the abutting owner.
reformation
deed will be reformed if it doesnt represent the parties' agreement because of: 1. mutual mistake 2. scrivener's error or 3. a unilateral mistake caused by misrepresentation or other inequitable conduct
delivery & acceptance
a deed isnt effective unless it has been delivered and accepted
Delivery
grantor's intention to make a deed presently effective even if possession is postponed. delivery may be: manual delivery, notarized, recording or anything that shows grantor's intent to deliver. parol evidence is admissible on the issue of intent to deliver, but not to show that delivery was conditional
tip on delivery
title passes on delivery, cant be cancelled or taken back- to return title grantee must draw up a new deed and deliver it to the grantor
retention of interest by grantor or cond'l delivery
retention of control or interest by grantor (right to revoke) = lack of intent to pass title. no deliver = no title pass...failure to record a delivered deed doesnt affect the passage of title even if the parties believe that the deed is ineffective until recording
express cond't of grantor's death
properly executed and delivered deed that provides that title will not pass until the grantor's death is valid and creates a future interest in the grantee.
cond'ts not contained in deed
if a deed is absolute on its face but delivered w/ an oral condition= cond't is disregarded, delivery is absolute
cond'ts & 3d party
grantor gives deed to 3d party- cond'l delivery is permissible...transfer to 3d party w/ no condts: if a grantor gives a deed to 3d party w/ instructions to give it to the grantee = valid delivery. if grantor fails to give instructions, the validity of the delivery depends on whether the 3d party could be considered the grantor's agent, if so, there's no delivery
transfer to 3d party w/ conditions (commercial transaction)
a valid cond'l delivery occurs when a grantor gives a deed to a 3d party w/ instructions to give to the grantee when certain conditions occur (if grantee pays purchase price before a certain date). Parol evidence is admissible to show that delivery is cond'l.
grantor's right to recover deed
grantor can revoke if : 1. the cond't hasnt yet occrued 2. there is no enforceable written k to convey
breach of escrow cond'ts
if a grantee wrongfully acquires the deed from the escrow holder prior to performance of the cond't, title doesnt pass and the grantee cant give good title to a subsequent purchaser.
relation back doctrine
title usually passes when cond't occurs, but if justice requires it (grantor dies/incompetent) and there's an enforceable k to convey, title may "relate back" to the time when grantor gave the deed to the 3d party. rights of intervening bona fide purchasers are protected.
transfer to 3d party w/ cond'ts (donative transaction)
when a grantor gives a deed to a 3d party to give to a donee when a cond't occurs, the main issue is whether the grantor can revoke the deed before the cond't occurs. where the condition is not the grantor's death, delivery is irrevocable and creates a springing exec. interest in the donee. where the cond't is the grantor's death, most courts follow the same reasoning but some hold deedds revocable unless theres an unenforceable contract to convey (ie, same as true escrow cases)
acceptance and conveyance
acceptance by the grantee is req'd in order to complete a conveyance. most states presume acceptance..relates back to the date the deed was delivered into escrow (unless it would defeat the rights of intervening 3d parties)
dedication and conveyance
may be transferred to a public body by dedication. an offer may be made by written/oral statement, submission of a map or plat showing the dedication, or opening the land for public use. to be effective, a dedication must be resolution, approval of map or plat or actual assumption of maintenance or improvements
covenants for title and estoppel by deed
3 types of deeds used to convey prop interests other than leaseholds: general warranty deed, special warranty deed, quitclaim deed (scope of title assurance diffs)
Covenants in General Warranty Deed- Covenant of Seisin
grantor convenants that she has the estate she purports to convey..must have both title and possession at time of the grant
Covenants in General Warranty Deed- covenant of right to convey
grantor convenants that she has authority to make the grant...title alone will satisfy
Covenants in General Warranty Deed- covenant against encumbrances
covenants against the existene of physical (encroachments) or title encumbrances (mortgages)
Covenants in General Warranty Deed- quiet enjoyment
covenants the grantee will not be disturbed in possession by a 3d party's lawful claim of title
Covenants in General Warranty Deed- covenant of warranty
grantor agrees to defend against reasonable claims of title by a 3d party, and to compensate the grantee for any loss sustained by the claim of superior title
covenant for quiet enjoyment and warranty
practically the same damn thing
Covenants in General Warranty Deed- covenant for further assurances
grantor promises to perform acts reasonably necessary to perfect title conveyed (not one of the usuals)
Brach of covenant
breached at time of conveyance: seisin, right to convey, against encumbrances

breached only upon disturbance of the grantee's possession: quiet enjoyment, warranty, further assurance/future covenants
damages and remote grantees
if there are successive conveyances by general warranty deed and the last grantee is evicted by lawful claim of title, he may sue anyone up the line. some states allow him to recover to the extent of consideration rec'd by a def-covenantor. other states limit recover to the lesser of what he paid or what the def-covenantor rec'd
Statutory special warranty deed
use of the word "grant" in a deed creates by implication two limited assurances against acts of the grantor (not her predecessors): 1. that the grantor hasnt conveyed the same estate or any interest therein to anyone other than the grantee; and 2. that the estate is free from encumbrances made by the grantor
quitclaim deed
deed releases whatever interest the grantor has. no covenants of title are included or implied
estoppel by deed
if the grantor purports to convey an estate in property that she doesnt own, her subsequent acquisition of the estate will automatically inure to the benefit of the grantee. this doctrine applies where the conveyance was by warranty deed, or where the deed purported to convey a particular estate. its not usually applicable to quitclaim deeds.
rights of subsequent purchasers
title insures to the benefit of the grantee only as against the grantor. if the grantor transfers her after acquired title to a BFP the BFP will prevail over the org grantee
remedies of grantee
orig grantee can accept title or sue for damages for breach of covenant
Recording
CL: if a grantor conveyed the same prop twice, the grantee FIRST IN TIME generally prevailed
Recording- constructive notice
proper recordation
Recording- notice statute
a subsequent BFP (paid value, and has no notice of the prior instrument) prevails over a prior grantee who failed to record. Key: subsequent purchaser had no actual or constructive notice at the time of the conveyance [subsequent BFP is protected regardless of whether she records at all]
Recording- race notice statute
a subsequent BFP is protected only if she takes w.o notice AND records before the prior grantee
Recording- race statutes
whoever records first wins. notice is irrelevant. (not common)
Who is protected
protected: purchasers, mortgagees for value
not protected: donees, heirs, devisees
Purchasers from donee, heir, or devisee
purchasers from a donee, heir or devisee of the record owner is protected against prior unrecorded conveyance of the record owner
judgment creditors
most states permit a plaintiff who obtains a money judgment to place a judgment lien on the def's real prop by filing the judgment in the appropriate county office. the majority: hold that such a judgment creditor is NOT protected by the recording statute against a prior unrecorded conveyance by the def.
shelter rule
a person who take from a BFP will prevail against any interest the transferor (BFP) wouldve prevailed against. true even if the transferee had actual notice of prior unrecorded conveyance. rule doesnt help a transferee who previously held title; she cant ship thru a BFP to get good title
Purchaser under installment land contract
a purchaser under an installment land contract is protected only to the extent of payment made. in a dispute w/ a prior claimant, the court may award the purchaser: 1. a share of the prop as a tenant in common equal to the proportion of payments made 2. a lien on the property to the extent of the amt paid or 3. the entire prop, subject to a lien on the prop to the extent of the balance still owed.
without notice
purchaser had no actual, constructive (record), or inquiry notice of a prior conveyance at the time she paid consideration and rec'd the interest.
actual notice
knowledge obtained from any source (newspaper, word of mouth)
record notice- chain of title
a subsequent purchaser will be held to have record notice only if the deed in question is recorded "in the chain of title" which means that its recorded in such a manner that a searcher could reasonably find it.
wild deeds
recorded deed that isnt connected to the chain of title. it doesnt impart constructive notice because a subsequent purchaser couldnt feasibly find it.
Deeds recorded late
a deed recorded after the grantor is shown by record to have parted with title thru another (subsequent) instrument isnt constructive notice in most states (but is in some race-notice jurisdictions)
Deeds recorded before grantor obtained title
a recorded deed rec'd from a grantor who had no title when conveyed but who afterwards obtains title doesnt impart constructive notice to subsequent purchasers...BFP will win on the grounds that the deed isnt in his chain of title.
Restrictive covenants- deeds from common grantor
deed with easements and restrictions on adjacent lots by same grantor not within the same chain of title.
inquiry notice
purchaser may be required to make reasonable inquiries. purchaser charged w/ knowledge of whatever the inquiry wouldve revealed..using a quitclaim deed isnt notice.
valuable consideration
the subsequent grantee must prove that he is a purchaser (not donee)..must be of some pecuniary value.
title search- tract index jurisdiction
the searcher looks at the page indexed by block and/or lot describing the prop and any instruments affecting it.
title search- grantor and grantee index
the searcher establishes a chain of title by searching back in time in the grantee-grantor index. from that point, he then searches forward in time in the grantor-grantee inde to see if any grantor conveyed an interest to someone outside of the backward claim
effect of recordation
gives prospective subsequent grantees constructive notice of the existence and content of recorded instruments. it also raises a presumption of valid delivery and authenticity. however, it doesnt validate an invalid deed or protect against interests arising by operation of law to this extent, BFPs are still in jeopardy
Recorders mistaks
if the instrument is considered recorded but there's a mistake, c.o.a against recorder's office
conveyance by will- ademption
if prop is specifically devised or bequeathed in the testator's will, but the testator no longer owns it at the time of death, the gift fails. ademption applies only to specific bequests, which can be satisfied only by the delivery of a particular item; they cant be satisfied by money. a gift of land is always a specific devise. if the testator specifically devises property and then sells or gives away a part of that prop, only that portion is adeemed; the remainder passes to the devisee
lapse and anti lapse statutes
lapse occurs when the beneficiary of a gift in a will dies before the testator. CL: if lapse occurs, the gift was void...now gift can pass to predeceasing beneficiary's living descendants. (inapplicable if beneficiary dead when will executed)
lapse and anti lapse statutes- class gifts
if a class member w/in coverage of an anti lapse statute predeceases the testator leaving surviving issue, the statute will apply and the issue will take the deceased class member's share of the gift (doesnt apply if its contrary to a will provision)
abatement- estate assets arent enough to pay all claims against estate and satisfy all devises
gifts are abated, abated in the following order: 1. property passing by intestacy 2. the residuary estate 3. general legacies 4. specific devises and bequests
crops (emblements)
conveyance includes all crops except: 1. crops that have already been harvested or severed from the land 2. crops planted by a tenant during the term of tenancy..for title to crops to remain in a tenant, the tenancy must have been uncertain duration and have terminated w/o fault on the part of the tenant.