Selling Property Flashcards
What are the three basic real estate transaction steps?
(1) Purchase Contract
(2) Executory Period
(3) Closing/Deed
What must you check at the “purchase contract” phase?
(1) Statute of frauds
(2) Marketable title
(3) Duty to disclose
What is statute of frauds?
(1) Must be in writing
(2) with essential terms
(3) and signed by the ‘party to be bound’
What exceptions exist to the statute of frauds?
(1) Part performance
(2) Estoppel
What constitutes part performance?
(1) Buyer takes possession
(2) pays all or part of the purchase price
(3) makes improvements to the property
(4) Note that in some states, only some are required
What constitutes a claim for estoppel so as to be excepted from the statute of frauds?
(1) One party reasonably relies on oral contract to their detriment
(2) Serious injury would result if the contract is not enforced
What is marketable title?
(1) Title that is free from claims or defects
(2) such that a court will enforce a purchasers obligation to purchase title to the property
What are the three assumptions such that a property has Marketable title
What did I mean by this?
(1) Does not assume real property is defect free
(2) Assumes a title that a prudent purchaser would accept, acting ‘reasonably’ in ‘ordinary’ course of business
(3) Seller has time to cure defects prior to closing
What is insurable title?
A title that an insurance company would be willing to insure at normal rates
What is record title?
Title that appears in the public land records
“As is”
(1) Where a seller does not guarantee anything about the state of the title
What will make a title unmarketable?
(1) title is subject to an encumburance
(2) Seller’s property interest is less than the one they are obligated to convey
or;
(3) There is reasonable doubt about either one
Tell me the special rules for encumbrances
What am I refering to in this card? Special in relation to what?
N/A
What are two common “roles” that marketable title takes in a sale of property?
(1) Express title provisions, where sales contracts require sellers to deliver marketable title - or another standard such as insurable title
(2) Implied covenant of marketable title: Where there is a default rule that a seller must deliver marketable title
When will risk of loss rules be applied, and what are the three rules?
When
(1) a property is damages during executory period
and;
(2) there is no express allocation of risk
then;
(3) Majority: Equitable conversion
(4) Minority: Massachusetts Rule or
(5) Modern trend: Uniform Vendor and Purchaser Risk act
What is Equitable conversion
(1) Where a buyer bears the risk of loss because the buyer is the equitable owner
What is the Massachusetts Rule?
The seller bears the risk of loss
What is the damages rule by the Uniform Vendor and Purchaser risk act?
(1) The party with the right to possession at the time of the loss bears the risk of damages
What duties could a seller have to disclose defects in property
(1) Traditional view
(i) Caveat Emptor
or;
(2) Modern rule
What is Caveat Emptor?
(1) Generally, a seller has no duty to disclose defects
but;
A seller will be liable only if
(2) Affirmative misrepresentation
(3) Actively concealed defects
or;
(4) Owed a fiduciary duty to the buyer
What is the modern rule for disclosing defects?
Obligation to
(1) Disclose known defects that materially affect the value of the property
that are;
(2) not known or readily discoverable by the buyer
What are the two Deed delivery requirements?
(1) Deeds are only effective upon delivery to the grantee, even if already signed
(2) Grantor must manifest an intention to immediately transfer title to the grantee through delivery.
What is Death Escrow
(1) Where a thrid party has a deed and has been instructed only to deliver the deed on the grantors death
(2) Generally, only legally effective where the grantor cannot retrieve the deed
What is a Transfer on death deed
N/A
