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19 Cards in this Set
- Front
- Back
Two steps of conveying real property
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1. Land contract, which endures until step II.
2. The closing, where the deed becomes our operative document. |
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Land contract 3 requirements
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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. |
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Land contract description of property
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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.
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Land contract exception from statute of frauds (best 2 of 3)
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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. |
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Risk of loss in a land sale contract
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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.) |
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2 Implied promises in every land contract
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1. ***Seller promises to provide marketable title _at closing_***
2. Seller promises not to make any false statements of material fact. |
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Marketable title (and 3 ways to fail)
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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. |
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Seller's promise not to make any false statements of material fact
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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. |
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Land contract warranties
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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. |
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Closing
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Controlling legal document becomes the deed, not the land contract anymore. The deed passes legal title from seller to buyer.
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Two requirements for a deed (LEAD)
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LEAD: Lawfully Executed And Delivered.
1. Lawful execution 2. ***Delivery*** |
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Lawful execution of a deed
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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). |
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Delivery of a deed
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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. |
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Delivery of a deed, absolute on its face, with an accompanying oral condition
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Oral condition drops out, it is not provable, delivery is done.
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Delivery of a deed by escrow
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Is OK.
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Three types of deed
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1. Quitclaim Deed
2. General Warranty Deed 3. Statutory Special Warranty Deed |
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Quitclaim deed
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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! |
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General Warranty Deed (6 covenants)
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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. |
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Statutory Special Warranty Deed (2 promises)
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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. |