Conveyancing Flashcards
(51 cards)
What is a sales contract?
A sales contract transfers equitable title, but not legal title. It is like a promise to make the transfer at a future time.
When is a sales contract valid?
When it conforms to the statute of frauds, meaning: (i) it is in writing, (ii) includes a description of the property, (iii) identifies the parties to the contract, (iv) the price of the land, and (v) is signed by the party to be charged.
OR,
if part performance applies, i.e. two of the following apply: (i) possession of the land by the purchaser, (ii) purchaser made substantial improvements to the land, and (iii) payment of part or all of the purchase price by the purchaser.
What is the remedy for the breach of a sale of contract?
Specific performance. This can be enforced by either the buyer or the seller.
What is the doctrine of equitable conversion?
Once the sales contract is signed by both parties, the buyer has equitable title of the property and the seller retains possession and a right to the proceeds from the sale, i.e. an interest in personal property.
Who bares the risk of loss (the destruction of the property) once the sales contract is signed?
The buyer. So, he must pay the price of the property even if it was destroyed before the deed was delivered.
In a minority of states, the burden is not he seller.
What if the sales contract is signed, the property is destroyed, and seller has casualty insurance?
Seller is required to credit the buyer in the amount of the insurance proceeds against the purchase price.
What happens when one of the parties dies after the sales contract is signed but before the deed is delivered?
The seller takes real property (the cash from the sale) and the buyer takes legal title to the property.
What is marketable title?
Title that leaves the buyer free from doubt.
What are common examples of defects in the chain of title that leave title unmarketable?
(i) significant variation in the description of the land from one deed to the next
(ii) a defectively executed deed in the chain of conveyance
(iii) evidence that a prior grantor lacked capacity to convey a deed.
BUT, ancient mortgages that have exceeded the statute of limitations don’t undermine marketable title.
Is title acquired by adverse possession marketable?
No.
Is title marketable when there are unascertained remaindermen?
No. But, it will become marketable gift he remainder men become definite and all of them agree to a conveyance.
Do mortgages, liens, easements, and covenants render title unmarketable?
Yes, unless they are waived by the buyer. But, the seller can satisfy mortgages and liens with the proceeds from the sale at the time of sale.
Negative easements make title unmarketable unless they were known.
Restrictive covenants make title unmarketable.
Encroachments render title unmarketable unless they are (i) very slight and don’t inconvenience the owner of the land, (ii) the owner has indicated that he will not sue on the encroachment, (iii) the encroachment has existed for so long that it has become legal by adverse possession, provided adverse possession creates legal title in the jurisdiction.
Do existing ordinance violations make title unmarketable?
Yes.
What must the buyer do if he finds out before closing that the title is not marketable?
(i) notify the seller so he has an opportunity to correct the title;
(ii) if the seller does not correct title, the buyer can sue and recover damages or specific performance and a price reduction or allow the sale contract to merge with the deed. Once merger happens, the seller cannot be held liable.
Is time presumptively of the essence in real estate contracts?
No. Each party can be late in tendering their performance as long as they tender within a reasonable time after the official closing date.
When is time of the essence?
When:
(i) the contract status so;
(ii) the circumstances indicate that it was the parties’ intentions that performance be timely
(iii) one party gives the other notice that she thinks time is of the essence within reasonable time before the closing
What happens if time is of the essence an a party fails to perform?
That party is in breach and loses their ability to enforce the contract.
What is a non-performing party’s liability when time is not of the essence?
Damages for the incidental loses she has caused, such as additional mortgage interest.
What are concurrent conditions in a conveyance of property?
The buyer’s obligation to pay the purchase price and the seller’s obligation to convey title. They are called concurrent because one party can’t enforce its side of the contract unless it has tendered performance.
What happens if neither party tenders performance?
The closing date is automatically extended indefinitely.
Do warranties of fitness apply to land?
No.
Except from the builder of a new house. The requirement is that the new house is designed and constructed in a reasonably workmanlike manner and suitable for human habitation.
When can a seller be liable for defects in land and property the seller did not build?
- when the seller engaged in misrepresentation
- - The seller made a (i) false statement of fact to the buyer that (ii) the buyer relied on and that (iii) materially affected the value of the property. - the seller will be liable if he took steps to conceal a defect in the property
- sellers are also liable for failure to disclose when (i) the seller knows or has reason to know of the defect, (ii) the defect is not obvious or apparent and the buyer is unlikely to discover it, and (iii) the defect is serious and would probably cause the buyer to reconsider the purchase if it were known.
Are sellers attempts to contract around liability for defects likely to be upheld?
No.
What is included in a valid deed?
- It is in writing
- It contains a description of the land that is unambiguous. A description is sufficient if it provides a good lead to the property.
- Identifies the parties
- Words of intent. But, this can just be the word “grant.”
- Grantor’s signature or trustee’s if held in trust.
