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15 Cards in this Set
- Front
- Back
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What is a contract to sell land?
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A contract to sell land is really an agreement to sell good title to that land. If the contract makes no mention as to the quality of the title to be conveyed, it is implied in the contract (not in the deed), that the seller will tender a marketable title at the closing.
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"What is "marketable title?"
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Marketable title is one free from encumbrances, and free from reasonable doubt as to the interest of any third person.s It is a title that the buyer will not need to defend by litigation.
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What does the seller guarantee?
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A buyer should not be forced to accept an unmarketable deed. E.G. for example, where for a search of the sellers chain of title reveals ownership gaps, recorded judgments, mortgages, or where an inspection of the property revelas encroachments or an adverse possessor. Even a contract to take a quitclaim deed impliedly requires the seller to tender a marketable title.
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What about complications such as easements?
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Covenants, easements, or . ., such as reverter or right of reentry, any such limitation on the use or free and clear ownership, renders title unmarketable unless the contract expressly makes the sale "subject to existing covenants, conditions, or easements of record. Likewise, property owned by an adverse possessor is not marketable until a court determines title.
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What about building code violations?
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A sellers use of the property that violates a building code does not render title unmarketable. Such defects relate to the state of the structure rather than the quality of the title
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What is building department intitiated litigation?
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If the building department had started litigation because of the code violation, however the litigation would render title unmarketable.
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zoning laws
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A buyer impliedly takes title subject to existing zoning laws.
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what if zoning laws change after signing the conract
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Even a change in the zoning laws after contract but before closing will not relieve the buyer form the contract. Accordingly, B's attorney should condition the contract on appropriate zoning at the time of closing.
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Zoning laws example
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Buy property next to NYU to set up a restaurant, the you find out it got changed to residential for NYU to buy a dorm, your still bound to the contract, but if your attorney had conditioned the C on zoning being appropriate.
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What if the seller is currently using the property in a way that violates zoning laws?
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If the MBE seller's current use of the property violates existing zoning laws, then the existing violation renders the MBE title unmarketable. In NY, however, zoning violations do not render title unmarketable unless the contract expressly so provides.
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anticipatory breach of implied warranty of marketable title
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Trick question - You can't! Implied covenant of marketable title imposes no obligations on the seller until the day of closing. IE the seller is not in breach until law day.
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Can the seller invoke implied covenant of marketable title (covenant of marketability)?
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The requirement for the seller to tender marketable title is for the buyers benefit and may be raised or waived only by the buyer
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Merger Doctrine
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Under the merger doctrine, the covenant of marketablity merges into the deed when the seller delivers the deed to the buyer at the closing. So think of it as, there's only only one paper concerning the transaction.
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Standard for Unmarketable Title
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Courts have held that title is unmarketable where the hazard of litigation is of such importance as to lead to a reasonable belief that the buyer may be called upon to defend his possession or title.
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Standard Example
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A neigbor threatens to sue for adverse possession, bogus claim. This bogus claim on the property is not of such importance to lead to a reasonable belief that the buyer may be called upon to litigate title.
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