Land Transfer And Finance

Front 1

Statute of Frauds

Back 1

you have to be careful when dealing land that you apply the statute of frauds when it is required. The statute of frauds must establish the essential terms of the contract without resort to parol evidence (including size, location, etc)

Front 2

Part performance

Back 2

if statute of frauds was not rightfully used (no written agreement, just oral) but the situtation indicates that part performance can be only explained by the existence of an oral contract, then the contract should be enforced. A party that wants to get out of a contract cannot deny a contract when the other party has acted to their detriment in reliance on it

Front 3

Integration Clauses

Back 3

These have the function of waiving the entirity of any language used by the seller that the buyer relied upon. (Wpes out statements in Ads, conversations, etc.

Front 4

Time period at the beginning formation of Contract

Back 4

(title search, lender, inspection, survey by the buyer and deed preparation by the seller) This is the executory period

Front 5

Dates of the essence clause

Back 5

just what it sounds like…. makes dates in the agreement may be neceesary to make for the deal to go through (Usually just the closing date, but may be EVERY date)

Front 6

Title assurance

Back 6

Warranties in the deed (make the seller liable if the sale is not what it was made out to be in respect to title, title insurance)

Front 7

Marketable title

Back 7

Title is free from significant liens and encumbrances, discloses no serious defects, does not expose the purchaser to litigation or threaten the quiet enjoyment of the property, and instruct the reasonably well-informed prudent person that he could sell or mortgage the property at fair market value.

Front 8

Statute of Frauds

Back 8

"required in a real state transaction because it is an interest in land
The party to be charged must sign"

Front 9

Non-binding lease

Back 9

If a lease is not binding on the purchaser, it would not render a title unmarketable

Front 10

MT and ALL DEFECTS

Back 10

A TITLE NEED NOT BE FREE OF ALL DEFECTS TO BE MARKETABLE…. Only to be in a condition that would satisfy a buyer of ORDINARY PRUDENCE

Front 11

Sale of real estate and MT

Back 11

Seller HAS to give the purchaser a marketable title in the absence of language to the contrary

Front 12

Recovery of deposit

Back 12

if a marketable title cannot be recovered, an escrow posit can be recovered

Front 13

Sale of co-owned property

Back 13

if all parties cannot agree to sell, and one party has made an agreement to sell, the vendor is liable for damages (Especially in a tenancy by the entirity)

Front 14

Part Performance

Back 14

"Difficult to prove in property
If it is an oral contract that has not satisfied the Statute of Fraudswill be specifically enforced

cannot deny the contract when another party has acted to their detriment in reliance upon it"

Front 15

Retention of Deposit

Back 15

if the purchaser defaults, the seller can retain the deposit as liquidated damages

Front 16

Specific Performance and abatement

Back 16

breaching party to a land transfer,

Front 17

Equitable conversion

Back 17

a theoretical change of property from realty to personality, or vice versa, in order that the intention of the parties in the class of contract of sale, or at the directions fo a testator, or in the case of the directions of a will, may be given effect

Front 18

When does equitable conversion occur

Back 18

only when the contract is specifically enforceable

Front 19

Risk of loss and Equitable Conversion

Back 19

"While the title is transferring, if the property is destroyed by a fault free accident (lightning fire) then most states require the seller to insure until closing (in the absense of language to the contrary)
Some with Risk on the buyer
some with risk on the property holder"

Front 20

Subject to financing clause

Back 20

a requirement to have preapproval of credit before buying property

Front 21

Marketable title and hazards?

Back 21

Does not affect title… you have to have draft protections in the transfer

Front 22

Mortgage defined

Back 22

secures repayment of a NOTE. If the buyer does not repay, the bank can foreclose

Front 23

Prepayment of Mortgage

Back 23

"a. A borrower has no right to prepay a loan at common law
Can't get out of periodic payment and go elsewhere to get a better deal
b. Still the law, without a provision in the contract or a statute
Buyers try to get right to prepayment penalty for right to get out of the contract subject to penalties
"

Front 24

Taking over existing mortgages

Back 24

" Banks wrote into contracts ""due on sale"" clauses
i. Says that if borrower sells property, mortgage becomes immediately due and payable
ii. Purchaser has to get a new mortgage

b. Some jurisdictions (statute or case) declared these clauses against public policy
Banks fought back, got Congress to pass law regulating the FDIC, preempting state regulation of federally chartered institutions
"

Front 25

Types of mortgage theories followed by states

Back 25

Title, lien, intermediate

Front 26

Title theory

Back 26

"i. Legal ""title"" is in the mortgagee until the mortgage has been satisfied or foreclosed
ii. For the most part, have treated the mortgagee as simply holding security interest, the mortgagee's title does appear to give him the right to possession"

Front 27

Lien Theory

Back 27

"i. More predominant
ii. The mortgagee holds no ""title"" but has security only
iii. Mortgagor has the right to possession until there has been a valid foreclosure"

Front 28

Intermediate theory

Back 28

Right to possession to mortgagor until default, and generally to mortgagee after default

Front 29

If multiple mortgages and then sale

Back 29

"Whoever gave the first gets priority in repayment. They will be made whole first by the sale, then whatever is left over would go to repaying other debtors, and then to the owner if there is anything left after that. (100,000$ sale, $80,000 mortgage is payed off entirely, then a 30,000$ loan is payed off 20,000 and has to sue for the rest)

Some jurisdictions have anti-deficiency legislations that prohibit lenders from going after borrower's personal assets... they have to be content with what they can get out of the property"

Front 30

Purchase money mortgage

Back 30

Mortgage given by the seller by the buyer. Seller becomes the lendor, and all laws applying to foreclosure, etc apply to them

Front 31

Due on sale clause

Back 31

"A buyer may take on a mortgage
If take subject to a mortgage, the property is bound but your personal assets are not bound (Unavoidable… you are lower in priority as far as your debts)
Assume and agree to pay; you are completely bound to the mortgage and all its terms

As a practical matter, most buyers will not assume the seller's mortgage. The buyer's lendor will in most cases just buy out the seller's loan"

Front 32

Due on further encumberance clause

Back 32

When a buyer attempts to transfer an easement to the property, the lendor has a right to prohibit further encumberance and the easements need to be approved. This usually encompanied by a rewriting of the mortgage terms

Front 33

Prepayment penalties

Back 33

these are kind of common… when you prepay, you will be allowed to only on the condition of paying a penalty

Front 34

Foreclosure and statutory redemption

Back 34

If a property is foreclosed, the amount it sells for is the amount of money it takes to redeem it. The lendor has to pay this amount off in this time. (there may be a period of statutory redemption time when the original borrower can repay, and any improvements to the property made by buyer 2 are too bad so sad)

Front 35

Subject to financing clause

Back 35

Intent of financing clause it to protect the buyer from involuntary breach

Front 36

Variable Interest rate Mortgage

Back 36

"Can be 6 months, 1 year, 2 years, etc
When adjusted, look at how much it can be adjusted over a period (up or down, 1% or more)
What is the cap to the mortgage? Look at if people can afford new rates even at the maximum
What index is used?"

Front 37

Mortgagee executing a power or sale

Back 37

"bound VERY STRICTLY by the statutory procedural requirments AND by a duty to protect the interests of the mortgagor through the exercise of good faith and due diligence… otherwise the lendor has to schedule another forclosure

Must make every effort to try to get a reasonable price under the circumstances"