land transfers

Question 1

what is a real estate broker, and what relationship do they have with their clients

Answer 1

aka a real estate agent, represents the interest of either a buyer or a seller in the land sale transaction

they have a fiduciary relationship with the clinet, meaning that they are acting in a posistion of trust with the client

Question 2

what does the fiducary relathionship entail?

Answer 2

a duty of good fatih (acting in good faith for the interest of the clinet) and a duty of loyalty(acting only in the interest of the client without self dealing)

Question 3

does the real estate broker have a fiduciary duty with the buyer?

Answer 3

no just the seller; the real estate broker does not have to adhere to the common law rule of good faith and loyalty with the buyer, unless otherwise stated in a contract

Question 4

what is the purpose of the contract for sale/does it pass title?

Answer 4

IT DOES NOT PASS TITLE; rather it obligates the seller to provide title to the buyer at closing and it obligates the buyer to provide consideration for the tittle to the seller at closing; its an agreement for to transger the land in the future

Question 5

can you transfer land without a contract or consideration?

Answer 5

yes, that would be considered a gift

Question 6

what is earnest money and what happens if the buyer backs out/or actually buys the land?

Answer 6

usually a provision in the land sale contract; it represents a deposit on the property that the buyer places with an escrow agent;

if the buyer changes his mind and does not honor his contractual oblication to buy the proeprty, the seller gets the earnest money

if the buyer completes the purchase of the property, the seller gets the earnest money as part of the agreed upon purchase price

Question 7

what does the closing part of the contract do?

Answer 7

its where both the transfer of the title and the transfer of the money occur; ie execution and delivery of the deed

Question 8

what is the ‘time for performance’ part of the k

Answer 8

usually says ‘time is of the essense’ ; if a party does not meet any of the specifed deadlines, the k may be terminated

Question 9

what is the inspection period?

Answer 9

its within the executory period and its when any disclosures should come out; the buyer usually hires an inspection company, and at this state renogtaiom is common/ if no agreement can be reached, the buyer can cancel the contrac without penalty (and get their earnest money back)

Question 10

what is the executory period

Answer 10

its the period after youve entered the k, but before the closing; lasts about 1-2 months, the buyer is probably getting their financing together, doing inspections/

Question 11

what is the risk of loss provision and what is the equitable conversion doctrine?

Answer 11

the equitable conversion doctrine is the common law; it says if the property were damaged during the executory period, the buyer would be responsble for that loss

the risk of loss provision places any risk of loss/damages during the exeutory period on the seller

Question 12

what would happen if a risk of loss provsion were not in a contract?

Answer 12

under common law equitable conversion, if the house were destroyed, in a fire for example, the buyer would still have to buy
This risk of loss provision switches it to prevent the common law doctrine equitable conversion from kicking in

Question 13

what is absolutely necessary for a contract to transfer real property?

Answer 13

stems from the SOF; must be in wrirting, must identify the parties
Describe the land
Reference the purchase price
State an intent for the seller to transfer title to the buyer at closing

Question 14

what kind of writing requirement is needed for a valid contract?

Answer 14

any writing will do; and officla k written up by a lawyer, written down without laywer ect

Question 15

what are the two exceptions to the SOF writing requirements for a contract that would allow a party to enforce an oral agreement wheich would otherwise fail because of the writig requirment?

Answer 15

part performance: an oral k for the sale of land may be enforced when there are acts of partial performance including payment of some of the purchase price, delivery of possion to the buyer, or improvements on the property by the buyer

equitable estopel – an oral k for the sale of land can be enforced when the buyer has reasonably relied on that oral k to his detriment; if failure to perform the k would relsult in unjust enrichment or unconscionable injury

Question 16

what would a part performance fact patten look like

Answer 16

payment of some of the purchase price

delivery of possession to the buyer or

improvements on the property by the buyer

Question 17

what is the caveat to the exceptioms to the SOF in terms of enforcing the sale

Answer 17

the oral k needs to be definite enough; a mere ageement to agree is not enough; it must contain all the necessary elements that a written k would have

Question 18

Lemming v Mogan - alleged oral agreement to partner to purchase houses

Lemming and morgan entered into an oral agreement; lemming was to use his business connections and influence people to locate real estate, help morgan finance to purchase the property; lemming and morgan AGREED to temporarily put title to the property in Morgan’s name and morgan was to transfer one half of his interest in the property to lemming and spilt any proceeds earned. Long story short, morgan refused to transfer the one half interest in the properties and lemming sued for breach of k

Morgan moved for summary judgment because the claim is barred via the SOF
Lemming argues partial performance

Issue: is lemming’s partial performance of holding up his end of the deal enough to survive the strict SOF requirement for transfers of real property

Answer 18

Holding: no
Reasoning
For an oral contract to be enforced based on part performance, it must be CERTAIN AND DEFINITE in all ESSENTIAL particulars

even if a party performs actions towards a contractual end, if there is no actual oral contract in place, the court cannot enforce anything

Question 19

Hickey v green - woman reneges on oral agreement to sell land
Facts: hickey and green had a discussion about buying a lot and orally agreed to a sale of 15k
Hickey wrote a check of 500; but hickey had left the payee line of the deposit check blank because of uncertainty about which green family member to pay it to
Green held the check, didn’t fill in the name and did not cash or endorse it
Relying of the arrangements with green, hickey advertised their house for sale and sold it so they could move onto the lot
However, green told hickey she no longer intended to sell her property to him but had decided to sell to another person
Hickey told green that he had already sold his house and offered her money for the lot but she refused and they went to court seeking specific performance

Issue: could the court enforce the oral agreement that should have been in writing via equitable estoppel?

Answer 19

Holding: yes
Reasoning
The hickeys relied on greens oral promise, moved rapidly to make their sale without any obtaining any memo of the terms of what appears to have been intended to be a quick cash sale of the lot
The hickeys were bound in their contract to sell their house because the check written to them satisfied the SOF and they cashed it,unlike the one they wrote to green where the payee line was blank and green did not cash it

Question 20

in the hickey case, why did the check hickey write to green not pass SOF, but the one written to green by the buyer of his house did?

Answer 20

the one hickey wrote failed because he left the payee line blank, while the other check written to him for payment of his hold house was all the way filled out

Question 21

if there is a problem with the title, what kind of fact pattern is it?

Answer 21

marketable title fact pattern

Question 22

if there is a problem with the physical structure, what kind of fact pattern is it?

Answer 22

duty to disclose fact pattern

Question 23

what do all land sale ks have, eitehr expliclty or implidedly?

Answer 23

covenant of marketable title aka covenant of merchantable title

Question 24

what does the covenant of marketable title do

Answer 24

it obligates the seller to convey title that is reasonably free from doubt that there is better title to the property; Does Not have to be good/perfect but it must @ least be marketable – unless otherwise contracted for

Question 25

is good/perfect title the same as marketable title?

Answer 25

no! that is a higher standard that is not required unless contracted for

Question 26

what does the presence of substantial defect in title allow a buyer to do?

Answer 26

it allows them to terminate the contract for sale under the covenant of marketable title in the sales contract

Question 27

can the covenant of marketable title be waived?

Answer 27

yes! the parties can contract to make the promise of title more or less stringent than marketable title
Ex: a buyer may require the seller to convey perfect title, a seller may promise only insurable title, which means a state of title that a title company would insure, or a seller may even disclaim any promise regarding the state of the title

Question 28

what are three circumstances that defects would BREACH the covenant of marketable title

Answer 28

1. A problem in the chain of title - a missing link in the history of title transfers
   2.Undisclosed encumbrances - an undisclosed easement, covenant, or mortgage
2. Violation of zoning ordinances - noncompliance with local laws dictating building specifications or land use

Question 29

which substantial defect in title is this?

Ex: the seller enters a k with the buyer for the sale of land. The seller can trace her title only back five years to the previous owner but not before then. A search at the county record office reveals that some other third party holds tilted to the property –

Answer 29

A problem in the chain of title - a missing link in the history of title transfers

so the seller is in violation of the covenant of marketable tile because she cant trace her title to the land back to the root of the title

Question 30

which substantial defect in title is this?

Jon has granted his neighbor an easement to cross his property. Jon then enters into a k to sell his property to fran WITHOUT DISCLOSING THE EASEMENT. This

Answer 30

Undisclosed encumbrances - an undisclosed easement, covenant, or mortgage

This BREACHES the covenant of marketable title, and fran can rescind the contract.

Question 31

which substantial defect in title is this?

P entered a K to sell his gas station with D. soon after, p discover that the gas station violated the zoning ordinance because the area was zoned RESIDENTIAL rather than commercial.

Answer 31

Violation of zoning ordinances - noncompliance with local laws dictating building specifications or land use

P can terminate the K as a breach of the covenant of marketable title

Question 32

is title gained by AP marketable?

Answer 32

it can be; an adverse possessor must be able to show, by clear and convincing evidence , that he has gained title ‘that his title by adverse possession is not subject to any reasonable doubt’

Question 33

what does perfect title require (given that it was contracted for?)

Answer 33

it requires not just marketabilty, but also that every link in the chain of title a seller presents the buyer at closing be of record

Question 34

Lohmeyer v bower - contract made for sale of home that violates zoning ordinances;
Facts: p contracted to purchase property, but after execution of the agreement, it came to his attention that the house on the real estate had been placed there in VIOLATION of a zoning ordinance
The house on the lot was only one story high but the regulations required that all houses be two stories, it was situated too close to the border of a neighboring lot
He wanted to be released from the agreement,and said had he had known of the violation he would have never bought the property

Issue: is zoning violating a breach of marketable title

Answer 34

Holding: the VIOLATION of the zoning ordinance make such title doubtful and unmerchantable

Reasoning
A marketable title to real estate is one which is free from reasonable doubt, and a title is doubtful and unmarketable if it exposes the party holding it to the hazard of litigation

It is the presently existing violation of one of these restrictions that constitutes such encumbrance in and of itself , not the mere presence of the zoning ordinance

Question 35

what is the common law approach to duty to disclose

Answer 35

caveat emptor
Buyer beware; the seller has no duty to disclose
minority of jurisdictions still follow this

Question 36

what are the three exceptions to the common law approach of duty to disclose (buyer beware; seller has no duty to disclose)

Answer 36

1. Seller must disclose if he has made an AFFIRMATIVE MISREPRESENTATION
2. The seller must disclose if he has a FIDUCIARY RELATIONSHIP (or some sort of relationship of trust) with the buyer
3. The seller must disclose if he has taken AFFIRMATIVE STEPS TO CONCEAL THE CONDITION

Question 37

what happens if the seller disclosed the defects prior to the buyer entering the k

Answer 37

the buyer cant rescind because of the defects

Question 38

what does it mean that the duty to disclose continues after passing the deed?

Answer 38

it means that if the seller fails to disclsoe and they are obligated to do so, the buyer can sell on the sale contract, NOT THE DEED

Question 39

Jablonski v Rapalje, the bat case (common law approach) - P claims homeowners concealed bat infestation in attic
Facts: the p commenced the action to recover damages resulting from his purchase of a house with an attic that was infested with a bat colony
Issue: did the sellers actively conceal the bat colony, thus making it an exception to the buyer beware rule and giving them a duty to disclose

Answer 39

Holding: the P established the existence of triable issues of fact as to whether the Ds and real estate agents took actions to actively conceal the bat infestation, and thwart the ps ability to discover it

Dissent made the argument that there was inquiry notice and that the P should have asked more questions; and also argued that it was not a latent defect; also argued that p failed to practice due diligence

Question 40

if there is a duty to disclose, when should it be made?

Answer 40

before the parties enter into the contract, usually around the period that inspections are taking place

Question 41

what is the modern trend for duty to disclose?

Answer 41

The modern trend imposes on the seller a duty to disclose MATERIAL, LATENT, DEFECTS

Question 42

Hill v Jones (modern trend) the termite case : homebuyers discover past undisclosed termite damage

The buyers entered into an agreement after several visits to the house

The buyers noticed a small ripple in the wood floor on thesteps, p asked if the ripple could be termite damage but d said it was water damage
No further discussion took place between the parties on the subject
P was not satisfied with the answer but decided to wait for the termite inspection report
The termite report said there were no visible evidence of infestation
But after moving in, buyers found a pamphlet left in one of the drawers about termites and learned from a neighbor that the house had termites in the past and they called an exterminator who confirmed the existence of termite damage
In the initial termite inspection, they didn’t notice any termite damage because boxes were stacked in front of it

ISSUE: does a seller have a duty to disclose to the buyer the existence of termite damage in a residential dwelling known to the seller, but not to the buyer, which materially affects the value of the property?

Answer 42

Holding: yes ; termite damage in this case may or may not be material and the court concludes that buyers should be allowed to present their case to the jury

where a seller of real property knows of facts that materially affect the value of the property and are not readily observable and known to the buyer, the seller has a duty to disclose these facts to the buyer

A fact is material if it is one which a reasonable person would find important in determining his choice of action in a particular transaction

The existence of termite damage and past termite infestation has been considered by other courts to be sufficiently material to warrant disclosure

Question 43

what counts as a defect that would make a seller have to disclose under the modern trend

Answer 43

physcial problems that are material to the sale and located on the site of the property are always considered defects,

with nonphysial problems, abset a specfic statute adressing this concern, courts vary in their treatment of offiste or nonphyscial problems

Question 44

does an Onsite physical - ex a broken furnace count as a defect?

Answer 44

yes, always yes

Question 45

does an Onsite physiological? (like murders on the property) count as a defect?

Answer 45

sometimes, it depends

Question 46

does an Offsite physical – like a landfill a mile away count as a defect?

Answer 46

much harder to count as a defect but there are exceptions

Question 47

does an Offsite psychological – criminal history in the neighborhood –count as a defect?

Answer 47

extremely difficult to say its a defect

Question 48

what is a mandatory disclosure statement?

Answer 48

Many state legislators have enacted laws requiring sellers of residential real estate to provide buyers with a specific disclosure statement in connection with the sale of property

Question 49

what is another exception to the doctrine of caveat emptor(hint has to do with new construction)

Answer 49

happens when the seller is a new home builder; Courts have found that the sale gives rise to an implied warranty of fitness for the intended use of the realty
The implied warranty of fitness relieves the buyer of his or her obligations under caveat emptor
This implied warranty is sometimes referred to as the doctrine of caveat venditor, or in other words, SELLER BEWARE

Question 50

what is the logic behind caveat venditor (ie seller beware)

Answer 50

Courts tend to hold builders to a stricter standard - they are more experienced and repeat players

Question 51

Rutledge (new construction): septic tank overflows in newly built house
Facts
D (who held themselves out to the public as experienced and competent builders) sold to P a new house which had been constructed by them
After P and his family had lived in the house for about 8 months the septic tank overflowed on five separate occasions
Ps alleged that the overflow from the septic tank was due to either defective design or installation of the sewage disposal system

Issue: whether ds, as the builder-vendor of a NEW DWELLING, may be held liable to the purchaser on the basis of implied warranty for loss or damage caused by a defective condition of the building

Answer 51

Holding: in the sale of a new house by the builder-vendor there is an implied warranty that the house was built in a REASONABLY workmanlike manner and is reasonably suitable for habitation

Buyer and seller not on equal footing
The builder is in the perfect place to make all inspections as opposed to buyer
Better position to know the truth and take remedial measures

Question 52

what is a mortgage

Answer 52

represents a debt instrument through which the borrower secures the funds by putting up his real property as collateral for the loan, and he agrees to pay back the loan by a set schedule of payments over time

Question 53

what are the two types of mortgages

Answer 53

Purchase money mortgage

Future advance mortgage

Question 54

what is a Purchase money mortgage

Answer 54

the seller is the one financing the purchase for the house; a mortgage given to the seller of real property to secure repayment of the unpaid portion of the purchase price

the buyer provides the real estate collateral at the time that he purchase the real estate and the seller conveys it to him

This is the most common

In order to get a loan for the remaining balance, he must use the very property that he is buying as collateral for that loan

Question 55

what is a future advance mortgage?

Answer 55

where some of the loan is not disbursed until sometime after the mortgage has been secured

Question 56

what is the accelleration clause when talking about mortgages

Answer 56

The acceleration clause provides the mortgagee (bank) the right to require the mortgagor (borrower) to IMMEDIATELY repay the entire principal balance if a term of the mortgage is not met

Question 57

who is the mortgagee

Answer 57

the lender of funds, often a bank

Question 58

who is the mortgagor

Answer 58

the borrwer of funds for purchasing the property

Question 59

what does it mean that a buyer assumes a mortgage of the seller?

Answer 59

the buyer takes on personal liability to pay off the existing mortgage debt; the seller remains personally libale on the loan

the buyer assumes the seller’s mortgage; seller personally liable, so is the buyer

Question 60

what does it mean that buyer takes the property subject to an existing mortgage

Answer 60

the buyer IS NOT personally liable on the mortgage loan, and the seller remains personally liable

the buyer takes title of the property
If the seller stops making payments the seller is liable, not the buyer

Question 61

how can mortgagees (the lender) prevent an assumption of the mortgage?

Answer 61

by adding a due on sale clause, whcich enaables the lender to require payment o the entire loan balance at the time the mortgagor transgers tittle to the property

Question 62

does the due on sale clause unreasonably restrain alienation (ie the transfer of land)?

Answer 62

No! See Martin!

Question 63

Martin v peoples mutual (mortgage assumption): is a due on sale clause a restriction on alienation?

Facts
The home involved in the litigation was bought by the previous owners, and it was financed from the D(a loan association) and in the mortgage lang there was a due on sale clause
The previous owners listed their home for sale, and the martins contracted to buy the house

Martins, despite the due on sale clause, assume the sellers mortgage

D sent the previous owners an acceleration letter, requesting payment of the mortgage balance

The martins brought the suit seeking to prevent D from using the due on sale provision to accelerate payment of the loan

Issue: does the state common law prohibit D(the lender of funds) from invoking the due on sale clause of its mortgage?

Answer 63

Holding: due on sale clauses are valid and enforceable ; and it didnt come under the restatments def of restraint on alienation

The questioned clause in no manner precludes the owner-mortgager from conveying his property

market rationale: If the due on sale clauses are unenforceable, these mortgages carrying an under market interest rate would not be prepaid and, of course, there would be no device for the D to recover its money when the house was sold

This could be balanced only by charting new borrowers a higher rate of interest than they would otherwise be required to pay

Question 64

via the martin case, and the restatment, what is a restraint on alienation?

Answer 64

an attempt by an otherwise effective conveyence or k to cause a later conveyce

a. to be void OR
B. to impose contractural lianlty on the one who makes the later conveyance when such liabilty results from an agreement no to convey OR
c. to terminate or subject to termination all or part of the property interest conveyed

Question 65

what is mortgage forclosure

Answer 65

if the borrower defaults on the loan, the lender can seek to force the sale of the mortgaged property in order to pay off the loan.

Question 66

what is a judicial foreclsoure

Answer 66

When the court issues a ruling in the lender’s favor, the property is subject to auction by the sheriff

Once the property is sold, the mortgagor is foreclosed from paying off the loan balance

Question 67

what is the right of redemption

Answer 67

The borrower has a right to repay the balance that he owes prior to the point of the foreclosure sale

Question 68

what is the only way a lender can terminate the borowers right of redemption

Answer 68

the foreclosure sale

Question 69

what is the doctrine against clogging the equity of redemption

Answer 69

prevents a borower from binding himself in a k with that he will not assert his right of redemption

Question 70

where do the proceeds of the foreclosure sale go to

Answer 70

it goes to satisfy the outstanding balance on the loan

Question 71

where does the rest of the proceeds in a forclosure sale go after the remaining balance on the loan has been paid

Answer 71

The surplus go to any other lien holders on the property

If, after satisfying the other lien holders, there is still a surplus, the mortgagor (borrower) is entitled to that surplus – called the mortgagor’s equity

Question 72

what happens if the proceeds of the foreclosure sale dont satisfy the debt?

Answer 72

the lender may seek a deficiency judgment

Question 73

what is a deficiency judgment

Answer 73

A money judgment that allows the lender to procure the outstanding balance from the other assets of the borrower

Question 74

what is a statoury right of redmeption

Answer 74

aka redemptiom after foreclosure; allows a mortgagor (borrower) to redeem the mortgage after the foreclosure sale

Question 75

if a property owner takes out more than one morgage on the property, and they defalut on all the morgages, how are the proceeds distributed between the two mortgagees?

Answer 75

the law gives priorty to the mortgagee who was first in time; the size of the loan does not matter; onlu after the firest mortage debt has been satisfied in full from the proceeds of the foreclosure sale is the second mortgageee paid anything at all

Question 76

how is a property owner able to take out more than one mortgage?

Answer 76

if an owner owes less o a loan than the property is worth, then the owner has equity in the home, and that equity can be mortgaged to secure another loan

Question 77

what are the three theories that mortags fall under

Answer 77

title theory , lein theory, and intermediate theory

Question 78

what is lien theory?

Answer 78

MAJ OF JURISDCTIONS FOLLOW THIS
the mortgage represents a lien on the property; ie recognizes the mortgage as a security interest

So if the mortgagor defaults on the mortgage, the mortgagee can foreclose on the property, ultimately forcing the sale of the property to pay off the loan

Question 79

what is title theory

Answer 79

MINORTY OF JURSIDICTIONS FOLLOW THIS

the mortgage represents a transfer of legal title to the mortgagee
The mortgagee retains the legal title until the mortgagor repays the loan

Question 80

what is intermediate theory?

Answer 80

combines title and lien; The mortgage represents a lien on the property, but, if the mortgagor defaults, title theory applies, and the mortgagee can possess the property prior to the foreclosure

Question 81

Premier Bank v JD homes (judicial foreclosure): man falls behind on installment land contract payments

facts: JD holmes takes out a mortgage from premier bank, and JD commits the tort of nusiance

raintree, an adjacet landowner sues JD, and raintree prevails (which means that they now had a lein on JD)

JD has a judgment agasint them of like 11k

at same time, premier bank files a foreclosure action against JD
tc found that premier had a first and prior lien over the sales proceeds of the foreclsoure sale

issue: who had priorty to the foreclsoure sale proceeds

Answer 81

premier bank because the morgate taken out from them was before the money jdugment from the raintree incident

Question 82

is the mortgagee who forcloses liable for judgments or leins against the mortgagor and his property? (ie the argument rain tree makes that the bank is liable for the nusicance because the nucisamce occured on the property that the bank holds a mortgage on)

Answer 82

no! see premier bank! if this were to happen it would counter to the fact that the mortgage was just a lien mortgage, ie just givmimg them an interest in the property if foreclsoure occurs; and a lean does not give you CONTROL over the property

Question 83

if a mortage loan was taken out on an earlier date (via a bank) than that of a money judmgent agaisnt the same actor who took the loan out, who gets priory?

Answer 83

the bank because that was the first lien on the property

Question 84

what does a lien need in order to be considered to have priorty?

Answer 84

collateral! so even if you were the first to loan money to the defaluter, if there was no collateral attached you wouldnt be first

Question 85

what is the alterternative to a tradtional mortgage/judicial foreclosure?

Answer 85

a deed of trust, in which it enables a buyer to secure funds for purchase of real property and it secures those funds by putting up the property as collateral

the borrower delivers the deed of trust to a third party trustee, instead of direclty to the lender

Question 86

what is the foreclosure under a deed of trust and what does it look like

Answer 86

non judicial disclosure; Rather than forclosing through the judicial process, a lender foreclsoes through a private party who serves as TRUSTEE of the deed of trust

Question 87

what is a power of sale clause (think non judicial foreclosure world)

Answer 87

its within the non judicial foreclosure world, and may authorize the mortgagee to sell the property in the event of a default

Question 88

what is a deed in lieu of foreclosure (nonjudicial foreclosure world) and why might this be preferable for both parties

Answer 88

a mortgagor who has defaulted to avoid a foreclosure by deeding the property to the mortgagee in return for the mortgagee forging the outstanding debt

For the mortgagor, he is forgiven of his debt on the defaulted loan and it hurts his credit less
For the mortgagee he avoids the cost and time associated with foreclosure

Question 89

what is a short sale (nonjudicial foreclosure world

Answer 89

The mortgagee accepts teh proceeds of the mortgagor’s sale of the property, even though those proceeds fall short of the outstanding balance on the mortgagor’s loan

The mortgagee often forgives the remainder due - known as the deficiency - rather than obtaining a deficiency judgment

Question 90

in deed of trust (non judical forceclosure) what duty does the trustee have

Answer 90

the trustee must ensure that every aspect of the sale is commercially reasonable

commerically reasonable=looking at market shifts to see if it reflects the sale price

Question 91

Wansely v first national bank (nonjudicial foreclosure): brothers have land sold by trustee who was connected to the bank

Issue: Will the sale of real estate by a trustee of a deed of trust be upheld and accepted for deficiency judgment purposes if the sale is commercially reasonable in all respects even if trustee has a connection with the bank?

Answer 91

Holding: if the secured creditor is authorized to foreclose by power of sale, after the debtor’s default and upon compliance with the deed of trust or other instrument, the secured creditor may sell any or all of the real estate that is subject to the security interest in its then condition or after any REASONABLE rehabilitation or prep for sale

Every aspect of the sale must be COMMERCIALLY REASONABLE

Question 92

what option does a buyer with bad credit or no fincial means for a down payment have as opposed to a mortgage

Answer 92

an installment land contract aka a land sale contract

Question 93

what is an installment land contract aka a land sale contract

Answer 93

Provides for a buyer to purchase real property over time under a contract, while taking possession of the real property

At the end of the specified time period, if the buyer has made all the required payments, the K requires the seller to deed the property over to the buyer

The seller therefore retains title to the property until the buyer has paid the entire purchase price

Question 94

what is the forfeiture provision in the installment land contracts

Answer 94

Calls for the buyer’s IMMEDIATE forfeiture of the property in the event the buyer misses a required payment to the seller

Question 95

what is the absolute deed as mortgage aka equitable mort

Answer 95

alternative to a regular mortgage; Where parties intended for a deed to serve as collateral on a loan instead of property

Question 96

Lewis v premium investment(installment land contract): man falls behind on installment land contract payments

Issue: Did the court of appeals err by declining to apply the forfeiture provision of the installment land contract, instead determining Lewis has an equitable interest in the property which includes a right of redemption upon default?

Answer 96

Holding: It would be inequitable to enforce the forfeiture provision without first allowing the purchaser an opportunity to redeem the installment contract by paying the entire purchase price

Courts of equity can relieve a defaulting purchaser from the strict forfeiture provision in an installment land k and provide the opportunity for redemption when equity so demands

Reasoning
Lewis made 141 of the 182 required payments. A forfeiture of his equitable interest could constitute an unenforceable penalty, as the forfeiture could be far greater than Premium’s damages.