Real Property - Land Conveyancing

Front 1

Two steps of conveying real property

Back 1

1. Land contract, which endures until step II.

2. The closing, where the deed becomes our operative document.

Front 2

Land contract 3 requirements

Back 2

1. Land contract must be in writing, signed by the party to be bound (don't know who that will be at the outset--whoever is the D in the later litigation);

2. Must describe the property;

3. Must state some consideration.

Front 3

Land contract description of property

Back 3

When the amount of land recited in the contract is more than the actual size of the parcel, the buyer can get specific performance with a pro rata reduction in price.

Front 4

Land contract exception from statute of frauds (best 2 of 3)

Back 4

Normally land contracts have to be in writing, but if you have any 2 of the following 3 requirements met then equity will decree specific performance of an oral contract for the sale of land:

1. Buyer takes possession;
2. Buyer pays all or part of the price; and/or
3. Buyer makes substantial improvements.

Front 5

Risk of loss in a land sale contract

Back 5

Equitable conversion applies: once buyer signs the land contract, she owns the land (subject of course to paying the price at closing) as far as equity is concerned.

Ergo, B bears the risk of loss if the property is destroyed by no fault of either party between contract and closing! (Contract can state otherwise, this is just the default.)

Front 6

2 Implied promises in every land contract

Back 6

1. ***Seller promises to provide marketable title _at closing_***

2. Seller promises not to make any false statements of material fact.

Front 7

Marketable title (and 3 ways to fail)

Back 7

Marketable title = title free from reasonable doubt, free from lawsuits and the specter of litigation.

3 things make title unmarketable:

1. Adverse possession: if even part of the title rests on AP, it is unmarketable. Seller must be able to provide good record.

2. Encumbrances: must be an unencumbered fee simple. Thus servitudes and mortgages render title unmarketable, though buyer can waive them.
NB: seller has right to satisfy an outstanding mortgage or lien at the closing with the proceeds of the sale--B can't claim title is unmarketable because of a mortgage prior to closing so long as the parties understand that the closing will result in the discharge or satisfaction of the mortgage.

3. Zoning violations: when the property violates a zoning ordinance, that makes title unmarketable because it subjects the property to litigation.

Front 8

Seller's promise not to make any false statements of material fact

Back 8

In a land contract, the seller promises not to make any false statements of material fact.

In addition, most states now also hold seller liable for failing to disclose latent material defects--aka seller is liable for material lies AND omissions.

Even if a contract contains a general disclaimer of liability (e.g., "as is" or "with all faults"), it won't reliever seller of liability for fraud or failure to disclose.

Front 9

Land contract warranties

Back 9

No implied warranties of fitness or habitability. Caveat emptor!

Exception: implied warranty of fitness and workmanlike construction applies to the sale of a new home by a builder-vendor.

Front 10

Closing

Back 10

Controlling legal document becomes the deed, not the land contract anymore. The deed passes legal title from seller to buyer.

Front 11

Two requirements for a deed (LEAD)

Back 11

LEAD: Lawfully Executed And Delivered.

1. Lawful execution

2. ***Delivery***

Front 12

Lawful execution of a deed

Back 12

First requirement for a deed. It must:
(i) Be in writing, signed by the grantor. Deed need not recite consideration (but, quick review, what did have to?), nor must consideration pass to make a deed valid.
(ii) Describe the land: doesn't have to be perfect, but must be unambiguous and a good lead (O conveys "all of O's land" is enough, but "some of my land in Essex County" is not).

Front 13

Delivery of a deed

Back 13

Second requirement for a deed.

Can be satisfied when grantor physically or manually transfers the deed to grantee; using the mail or an agent or messenger is permissible here.

***However, delivery does NOT require actual physical transfer of the instrument itself--delivery is a _legal_ standard and is a test solely of PRESENT INTENT. If grantor had the present intent to be bound by the deed it doesn't matter whether it was handed over.***

Recipient's express rejection of the deed defeats delivery. Otherwise there is a presumption of acceptance.

Front 14

Delivery of a deed, absolute on its face, with an accompanying oral condition

Back 14

Oral condition drops out, it is not provable, delivery is done.

Front 15

Delivery of a deed by escrow

Back 15

Is OK.

Front 16

Three types of deed

Back 16

1. Quitclaim Deed
2. General Warranty Deed
3. Statutory Special Warranty Deed

Front 17

Quitclaim deed

Back 17

Contains NO covenants/promises/warranties. Grantor isn't even promising that she has title to convey!

Remember, grantor had to promise (implicitly) that she would provide marketable title _at closing_, but this deed says that any problems that come up post-closing are none of her business--peace!

Front 18

General Warranty Deed (6 covenants)

Back 18

Mother Teresa of deeds, best a buyer could ask for. Warrants against ALL defects in title, including those due to grantor's _predecessors_!

Contains 6 covenants; first three are present covenants, meaning it can be breached, if ever, only at closing--thus, the statute of limitations for their breach begins to run from the instant of delivery:

1. Covenant of seisin: grantor promises that she owns Blackacre.

2. Covenant of right to convey: grantor promises that she has power to transfer, meaning no temporary restraints on the power to sell, not under any disabilities.

3. Covenant against encumbrances: no servitudes or liens on Blackacre.

Next 3 are future covenants, meaning they are not breached, if ever, until grantee is disturbed in possession; thus, statute of limitations for breach of them begins to run from that future date of disturbance.

4. Covenant for quiet enjoyment: grantee won't be disturbed in possession by a third party's lawful claim of title (AKA promising that there isn't anyone with better claim out there).

5. Covenant of warranty: grantor promises to defend grantee against lawful actions of title brought by others.

6. Covenant for further assurances: grantor will do whatever is needed in the future to protect the title.

Front 19

Statutory Special Warranty Deed (2 promises)

Back 19

Creature of statute provided for in many states. Only contains two promises and only on behalf of grantor, not on behalf of her predecessors in interest:

1. Grantor hasn't conveyed Blackacre to anyone other than the grantee; and

2. Blackacre is free from encumbrances made by grantor.