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56 Cards in this Set
- Front
- Back
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What's the two-step process for conveyancing?
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1. Contract of sale, THEN
2. Conveyancing |
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CONTRACT OF SALE
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Contract is governed by all regular contract rules, plus some others.
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Statute of Frauds
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Any contract of sale of an interest in property must be:
In writing and signed by the one who is sued (one who is charged) |
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Only need some kind of signed writing, as long as the writing contains:
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1. Description of property
2. Name of the parties 3. Price |
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What's the one exception to the statute of frauds?
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Part performance.
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What are the 2 requirements for part performance?
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1. Oral K must be certain and clear, AND
2. The acts of part performance must clearly prove up a contract. |
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How to prove up a contract for part performance?
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Look for claimant in possession, and
1. Paying full purchase price, or 2. Erecting improvements |
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The legal effect of the K of sale between time of signing of contract and closing? 4 issues.
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1. Risk of loss
2. Death of a party before closing 3. Marketable title 4. Time of performance |
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Risk of loss?
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If property is damages or destroyed before closing, buyer loses: Once K is signed, it is buyer's land and buyer's risk b/c equitable conversion (title in buyer for all practial purposes) has taken place even if the seller remains in possession and control.
applies only if seller is not at fault! |
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Death of a party before closing?
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Equitable conversion preserves rights as set in the K, and death of a party before closing does not affect them.
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What if seller dies before closing?
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Buyer closes with seller's estate: seller's interest is personal property.
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If buyer dies before closing?
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Seller closes w/ buyer's estate; buyer's interest is real property.
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Marketable title?
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Every land sale K has implied warranty that at closing, seller will give buyer a marketable title-- not necessarily perfect, just one that a reasonable person would accept.
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Seller must give buyer what three things?
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1. Proof of title
2. Title free of encumbrances 3. Valid legal title on the day of closing. |
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What will show proof of title?
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Abstract or copy of all deeds recorded in the chain of title
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Title free of encumbrances?
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No easements, restrictive covenants, mortgages, options, etc. that are not mentioned in the contract.
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What does the existence of a valid option to purchase do?
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It's an encumbrance on the title and makes it unmarketable.
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Is zoning or a violation of housing or building codes an encumbrance?
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Zoning: no, unless property is in violation of ordinance
Violation of housing/building codes: No. |
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is a mortgage an encumbrance?
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No, if the mortgage is to be satisfied out of the proceeds of the sale.
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Valid legal title on day of closing?
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Watch out. If seller doesn't have legal title the day before, that's ok. Must only have it ON THE DAY OF!
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Buyer's remedies if seller's title is unmarketable?
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Buyer must notify seller and give seller reasonable time to cure the defect, even if that postpones closing.
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What if the problem is not corrected?
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Buyer has 3 remedies:
1. Rescission - B walks away 2. Damages 3. Specific performance- B takes what seller can give and price gets lowered to cover defect. |
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What if buyer goes to closing and accepts deed without problems being cured?
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No recourse against seller based on the K.
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General rule for time of performance?
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Even if there is a closing day specified in the contract, time IS NOT of the essence in land sales contracts, unless K says so or the facts make clear that is what the parties expect.
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If time is not of the essence, when must performance be tendered?
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Within a reasonable time after the date for closing set in the K.
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What are the two remedies for breach of a sales contract?
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1. Damages
2. Specific performance |
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Measure of damages?
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Difference between the K price and value of the land on the day of the breach.
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What about liquidated damages?
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Buyer's deposit can be forfeited as liquidated damages so long as it is not more than 10% of sales price
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Specific performance?
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Always available to both buyer and seller for a land sale contract.
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Defects on the property?
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Land not fit for ordinary purposes and buyer wants to rescind. General rule: buyer cannot recover (caveat emptor)
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Two exceptions to caveat emptor?
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1. Seller must disclose serious defects that the seller knows of and are not obvious to the buyer (can't actively conceal defects)
2. There is an implied warranty of fitness or merchantibility for new homes sold by a builder-seller. |
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DEED
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Intro card
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How does the deed play into this whole scheme?
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Once deed is accepted, the K merges into deed and is destroyed, and all K provisions are lost unless included in the deed.
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What are the 2 requirements for passage of legal title from seller to buyer?
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1. Execution
2. Delivery |
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What is execution?
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--Deed is subject to SOF- seller must sign the deed
--Description of land must be able to identify/locate the property |
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A land description by metes and bounds...
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Always controls over a description by acreage, or any other description.
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Delivery of a deed?
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Does not always mean physical transfer. It's a question of intent to pass title.
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What raises a presumption of delivery?
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Recording a deed
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Can parol evidence be used in showing grantor's intent regarding delivery?
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Yes.
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Conditional delivery?
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Grantor hands over deed, but tries to condition delivery on some event.
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What are the 3 situations of conditional delivery?
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1. Where condition is in deed
2. Oral condition 3. Making delivery conditional on grantee paying the purchase price |
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Oral condition?
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If made at time of delivery, can disregard the oral condition.
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Making delivery conditional on grantee paying purchase price?
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1. Grantor can deliver to escrow
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Is consideration needed for a deed?
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No!
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COVENANTS FOR TITLE?
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1. Present covenants
2. Future covenants |
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If grantor makes no promises regarding title, what does grantee get?
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A quitclaim deed: grantee gets whatever grantor owns and grantor promises nothing.
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And if grantor makes promises regarding title?
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They are covenants for title, and deeds with the 6 traditional covenants for title are called general warranty deeds.
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What's important to remember about present covenants?
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Can sue immediately on these.
These are personal to grantee. Do not run with the land. |
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What are the 3 present covenants?
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1-2: Covenant of seisen and covenant of the right to convey (promise by seller that he has title and possession and can validly convey both).
3: Covenant against encumbrances (grantor promises no easements, restrictive covenants, or liens). |
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What's to remember about future covenants?
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Not breached immediately, but only later when grantee is disturbed in possession.
These RUN WITH THE LAND, so can be enforced by all subsequent purchasers! |
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What are the 3 future covenants?
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1-2: Covenant of quiet enjoyment and covenant of warranty (represent the promise of seller that seller will protect buyer against anyone who later shows up and claims title)
3: Covenant of futher assurance- if seller forgot to do something to pass valid title, he promises to do whatever is necessary. |
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What are the damages for breach of covenant?
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If there is a breach of warranty, damages are limited to purchase price received by warrantor plus incidental damages.
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What is estoppel by deed?
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If seller deeds property to buyer that seller doesn't own and seller later acquires title, buyer will get title because of implied covenant that title transfers.
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But what if seller THEN sells propert to a second buyer after getting that title, to a BFP?
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The original buyer loses and cannot rely on estoppel by deed.
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Estoppel by deed is sometimes called what?
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Doctrine of after-acquired title.
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Deed to dead person?
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Generally invalid, although enforcement can be had by the seller or buyer's estate and a new deed is made.
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