[P3] Property // Conveyancing

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FL PROPERTY ESSAY

CONVEYANCE OF LAND

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FL PROPERTY ESSAY

CONVEYANCE OF LAND

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Lawfully Executed Deed

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1. Must be in writing signed by grantor
2. Standard. Deed need not recite consideration, nor must consideration pass to make deed valid.
3. Description of land does not have to be perfect. Need unambiguous description and a good lead.

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Delivery requirement, Deeds

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Delivery requirement could be satisfied when grantor physically or manually transfers deed to grantee. Permissible to use mail, or messenger, or agent. Does not require actual physical transfer of instrument. Legal standard.

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Legal Standard for deed delivery

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Test solely of present intent. >>> Ask: Did grantor have the present intent to be bound irrespective of whether or not the deed was handed over. (intent to deliver + acceptance.)

Presumption is that the deed is accepted by grantee upon delivery. Only Express rejection of delivery and acceptance of the deed will Defeat delivery.

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Deed transferred to grantee with oral condition

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If deed, absolute on its face, transferred to grantee with an oral condition the oral condition drops out. It is not provable and delivery is done!

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Covenants for title and three types of deeds

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1. The quitclaim deed
2. General warranty deed
3. Statutory special warranty deed

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Quitclaim Deed

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Wholesale abdication of responsibility. Contains no covenants. Grantor isn't even promising he has title to convey. Worst deed a buyer could hope for. Note: grantor still promised in land contract to provide marketable title at closing but any problems post closing and grantor off the hook.

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General Warranty Deed

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Best deed a buyer could hope for. Warrants against all defects in title including those due to grantor's predecessors. Contains six covenants. Three are present covenants and three are future covenants.

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Present covenants, statues of limitations

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Present covenants are breached, if ever, at the time of delivery. Statute of limitations for breach of a present covenant begins to run from the instant of delivery.

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Covenant of seisin

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Grantor promises he owns this estate. Present covenant.

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Covenant of right to convey

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Grantor has power to transfer. No temporary restraints on alienation. Grantor is of requisite age, and of sound mind. No restraints on capacity to sell. Present covenant.

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Covenant against encumbrances

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No servitudes or liens on Blackacre. Present covenant.

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Future covenants, Statutes of limitations

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Future covenants are not breached, if ever, until grantee is disturbed in possession. Thus the statute of limitations for breach of a future covenant will not begin to run until that future date.

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Covenant for quiet enjoyment

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Grantee wont be disturbed in possession by 3rd party's lawful claim of title.

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Covenant of warranty

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Grantor promises to defend grantee against any lawful claims of title brought by others.

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Covenant for further assurances

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Grantor will do what is needed in future to perfect the title if it somehow later turns out to be imperfect. A housekeeping assurance. Will take all reasonably needed measures.

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The statutory special warranty deed

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Provided for by statute in some states. Contains two promises that grantor makes only on behalf of himself. 1. Has not conveyed property to anyone other than grantee. 2. Blackacre free from encumbrances made by grantor.

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Deed Requirements:

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1) Writing
2) Signed by grantor
3) Identify parties
4) Description of land

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Conveyancing:

Florida statutes provide that real estate may only be conveyed by....

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Florida statutes provide that real estate may only be conveyed by a written instrument, that is signed in the presence of 2 subscribing witnesses.

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Conveyancing:

Conveyance of real estate in FL - What is required?

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1) May only be conveyed by a *written instrument*, that is

2) *Signed* in the presence of

3) *2 subscribing witnesses*

-- Applies to all conveyances by any type of instrument of any interest >1yr.

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Doctrine of Equitable Conversion

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Under the Doctrine of Equitable Conversion, once a K is signed for the sale of real property, equity regards the buyer as the owner of the real property.

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Under FL law, what is the result if the property is destroyed (without fault of either party) before closing?

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Florida adheres to the majority rule in putting the risk of loss on the buyer. (Rationale: The doctrine of Equitable Conversion: Once a K is signed for the sale of real property, equity regards the buyer as the owner of the real property.)

Caveat: Even though the risk of loss is on the buyer, if the property 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.

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Marketable Title:

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Every contract in Florida contains an implied warranty that the seller will provide marketable title (i.e, title reasonably free from doubt) at closing. It need not be perfect title, but it must be free of questions that present unreasonable risk of litigation.

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Marketable Title: What would constitute unmarketable title?

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Title may be unmarketable because of a defect in the chain of title (e.g., variation in land description in deeds, defectively executed deed, evidence that a prior grantor lacked capacity to convey). Mortgages, liens, and generally, easements are considered to render the title unmarketable. (Note: But Seller has right to pay off any mortgages on the property with the proceeds from the sale.)

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FL Pure Notice Recording Act

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Under a PURE NOTICE recording act, a subsequent BFP *prevails* over a prior Grantee who failed to record.

The order of recording after the subsequent BFP is irrelevant.

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Under Florida's PURE NOTICE recording act, to be a BFP the subsequent party must:

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(a) give VALUE; and

(b) have NO ACTUAL or CONSTRUCTIVE NOTICE of the prior conveyance at the time of her transaction.

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(Constructive) Notice: In FL, if a person fails to record their interest, will there be a presumption of lack of notice on the part of any subsequent purchaser?

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Yes. In FL, there is a presumption of lack of notice of an unrecorded instrument by a person subsequently acquiring an interest in the property.

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(Actual) Notice: In FL, the burden of proving ACTUAL notice is on who?

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In FL, the burden of proving actual notice is on the CLAIMANT under the UNRECORDED instrument.

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What are the 3 main theories on which seller of existing land and buildings may be liable to the purchaser for defects in the improvements:

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A seller of existing land and buildings may be liable to the purchaser for defects in the improvements on any of several different theories. 3 main theories tested on in a FL essay:
(1) Failure to Disclose;
(2) Active Concealment;
(3) Misrepresentation or Fraud

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Failure to Disclose:

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Under this theory, a seller may be held liable for failure to disclose defects if: (i) The seller knows or has reason to know of the defect; (ii) The defect isn't obvious or apparent and the seller realizes that the buyer is unlikely to discover it by ordinary inspection; and (iii) The defect is serious, and would probably cause the buyer to reconsider the purchase if it were known.

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Active Concealment:

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This theory states that the seller is liable if the seller took steps to conceal a defect in the property.

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Misrepresentation or Fraud:

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This theory requires proof that the seller made a false statement of fact to the buyer, that the buyer relied on the statement, and that it materially affected the value of the property. The seller must have either known the statement was false, or have made it negligently.

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Option to Purchase Real Property

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An OPTION to purchase real property is an IRREVOCABLE offer in effect for a specified period of time.

The option must:
(1) Be supported by CONSIDERATION;
(2) Specify a TIME within which the Option may be exercised;
(3) ID with particularity the PRICE to be paid
(4) ID with particularity the PROPERTY.

+In addition, general K principles require that there by MUTUAL ASSENT (offer + acceptance) and NO DEFENSES to the creation of the Option K.

The SOF requires that an agreement for the sale of land must:
(1) Be in WRITING;
(2) ID the PARTIES to be charged;
(3) ID the SUBJECT matter of the agreement and
(4) Contain the SIGNATURES of all parties to be charged.

+Plus, FLORIDA requires that the writing be signed by the parties in the presence of 2 SUBSCRIBING WITNESSES.

Generally, the rules concerning acceptance of an offer govern the determination of whether an option has been exercised.

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FL courts follow the minority rule to determine if there is consideration:

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In FL, consideration is present if there is EITHER a BENEFIT to ONE party or a DETRIMENT to the OTHER.

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What if a party is trying to claim that an Option K / or any K for the sale of land is unenforceable because of a SOF/Formation problem: They're argument is that property was not identified with particularity b/c there is no indication in the facts that the lease/option included a legal description of the property...

What would the other party (trying to enforce the lease/option agreement) counter-agrument be?

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They would counter that the circumstances surrounding formation of the agreement provided sufficient notice of the subject of the option/lease.

And further contend that the purpose of the ID requirement is to ensure that all parties are properly notified of the subject of the agreement (and because of the circumstances, all parties have proper notice as to the subject).

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What can a P (wants to enforce the K) argue if one party is trying to avoid the existence of a land sale K / option K based on a SOF defense?

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He would want to argue that the Doctrine of PART PERFORMANCE takes the agreement/K outside of the SOF. Must have 2 of the 3:
(1) Possession;
(2) Payment;
(3) Improvements.

Part performance generally cures any defects in meeting the requirements of the SOF.

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FL is a "Pure Notice" Jurisdiction, which means:

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FL is a pure notice state, which means we will protect a subsequent BFP who pays VALUE with NO actual or constructive NOTICE of a prior conveyance.

One party will argue that he is BPF that paid value and took w/o notice - i.e., that since the other party did not record, he had no notice.

Other party will say that circumstances required/imposed a duty upon him to inquire as to ownership (i.e., he's arguing that he had Inquiry Notice).

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Inquiry Notice / Constructive Notice (FL)

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INQUIRY NOTICE means that if the grantee is bound to make a reasonable inquiry, he will be held to have knowledge of any facts that such an inquiry would have revealed (even if he made no inquiry).

FL's recording statute does not mandate inquiry notice, but case law imposes a duty on a purchaser to physically examine the premises. Physical possession by one who is not the grantor has been held as constructive notice.

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Standard measure of damages for breach of a land sale K:

"Canned" Paragraph

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[If the K between O and A is valid, O breached the K when he conveyed the property to B.]

The standard measure of damages for breach of a land sale K is the difference between the K price and the FMV of the land.

Consequential damages may also be recovered - the court may hold the breaching party liable for any further losses resulting from the breach that any reasonable person would have foreseen would occur from a breach at the time of entry into the K. Punative damages are generally not awarded in such cases. And A(P) would also be entitled to return of the deposit, plus accrued interest.

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If land is involved, you will want to argue SPECIFIC PERFORMANCE as a remedy to a breach of a land sale K:

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[Assuming that the K is enforceable, A(P) would assert that he is entitled to SPECIFIC PERFORMANCE.]

P would assert that he is entitled to SPECIFIC PERFORMANCE because land is involved, so the remedy at law (damages) would be inadequate. Enforcement is feasible - so a court would order B to tender a deed to A in exchange for the purchase price. B may argue that the original K price is not the reasonable market value of the property, but it is unlikely that the court will find the K price inequitable and deny enforcement of the K as originally written. B would then seek to recover his damages from O.

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[O executed a WARRANTY DEED conveying Blackacre to B.]

A grantor may give any or all of several covenants, which are classified as the "usual covenants for title."

B will argue that O violated the covenants included in the deed.

-Note that if O had executed a Quitclaim deed, B would have no such COA because O would only have conveyed such an interest as he had.)

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A warranty deed may contain a COVENANT OF THE RIGHT TO CONVEY (i.e., that the grantor has the power and authority to make the grant). B would argue that O breached the covenant of the right to convey.
-B will probably not prevail in an argument based on this covenant because title alone will usually satisfy this covenant.

B would assert that O breached the COVENANT AGAINST ENCUMBRANCES, which is a covenant assuring that there are not visible encumbrances (such as easements) nor invisible encumbrances (such as mortgages) against the title or the interest conveyed.
-If the property is encumbered, the covenant is breached and a COA arises at the time of conveyance.
-The covenant is breached even if the grantee knew of the encumbrance. So even if the B is deemed to have record or inquiry notice, he can still seek damages for breach of this covenant.

B would argue that O breached the COVENANT OF WARRANTY, which is a covenant where the grantor agrees to defend on behalf of the grantee any lawful or reasonable claims of title by a third party, and to compensate the grantee for any loss sustained by the claim of superior title.

Finally, B would argue that O breached the COVENANT FOR FURTHER ASSURANCES, a covenant to perform whatever acts are reasonably necessary to perfect the title conveyed if it turns out to be imperfect.

Damages: A's suit would be for a claim of superior title and O may be liable to B for any loss. B may be able to recover from O any actual or consequential damages resulting from A's action to enforce the K. B may also recover from O the cost of litigating the issue of the validity of the K agreement. If A is granted specific performance, B would seek to recover the difference between the K price paid by A and the price B paid to O, and would also be entitled be paid for any improvements made on the property.

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Every conveyance of real estate consists of two step process

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Step 1: The land contract, which endures until step 2
Step 2: The closing, where the deed becomes our operative document

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Land Contract, Statute of Frauds

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Land K must be in writing; signed by party to be bound, defendant. Must describe property & state some consideration.

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What happens when amount of land recited in contract is more than the actual size of the parcel?

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Specific performance with pro rata reduction in purchase price.

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Statute of Frauds Exception: Doctrine of Part Performance

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If on the facts have two of the following three:
1. Buyer takes possession
2. Buyer pays all or part of purchase price, and/or
3. Buyer makes substantial improvement

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Two implied promises in land contracts

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1. Seller promises to provide marketable title at the closing.
2. Seller promises not to make any false statements of material fact.

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Standard for marketable title

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Title free from reasonable doubt, free from lawsuits, and threat of litigation.

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Title rendered unmarketable when?

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Three circumstances:
1. Adverse possession: if part of title rests on adverse possession it is unmarketable. Need good record title
2. Encumbrances: servitudes and mortgages render title unmarketable unless buyer waives them.
3. Zoning violations

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Seller promises not to make any false statement of material fact

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Includes:
1. Failure of seller to disclose latent material defects and material omissions.
2. If contract includes disclaimer "as is" or "with all faults" it wont excuse seller from liability for fraud or failure to disclose.

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Land K contains NO implied warranties of fitness or habitability. What is the exception?

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C/L Rule: Caveat emptor, Buyer beware.

EXCEPTION: Implied warranty of fitness and workmanlike construction applies to the sale of a new home by a builder-vendor. Sale by builder.