Land Purchase:Sale

Question 1

What are the 2 steps in the conveyance of real estate?

Answer 1

1) The land K, which endures UNTIL step 2) The closing, where the DEED becomes the operative document

Question 2

How is risk of loss apportioned in land sales? NOTE: NY Distinction

Answer 2

Apply the doctrine of Equitable Conversion = once the K is signed, the buyer is the owner of he land (s/t the condition to pay purchase price at closing). At signing, the risk of loss (i.e. destruction without FAULT) is on the BUYER (i.e. has to pay FULL K price), UNLESS the K states otherwise

NY DISTINCTION: in NY so long as the buyer is w/out fault, the ROL remains with the SELLER until the buyer takes possession

Question 3

What are the requirements of the land K? What is the one exception to SOF?

Answer 3

i) The land K must be in WRITING, signed by the party to be bound, ii) it must describe Blackacre and iii) it must state some consideration.

SOF EXCEPTION: the “doctrine of part performance”; if you have TWO of the following THREE elements, DON’T need a writing… Buyer takes possession; Buyer pays ALL or PART of the price; Buyer makes subtl improvements

Question 4

What are 2 implied promises in everyland K?

Answer 4

1) Seller promises to provide MARKETABLE title at the closing. That is title free from reasonable doubt (i.e. free from litigation or the threat of litigation)

3 circumstances that renders title UNMARKETABLE: i) Title acq’d by adverse possession (even if just PART of title) ii) servitudes and mtgs render title unmarketable unless buyer has waived them. Note, seller has the right to satisfy outstanding mtg or lien at the closing. iii) zoning violations - when Blackacre violates a zoning ordinance title is unmarketable

2) Seller promises not to make any false stmt of material fact: Seller is liable for failure to disclose LATENT material defects, seller is liable for material lies and omissions. Even if K states a general disclaimer of liability (e.g. “property sold as is”), it wont relieve seller from liability for FRAUD or FAILURE to disclose

Question 5

Do land Ks contain implied warranties of fitness OR habitability?

Answer 5

At common law, NO! (caveat emptor) EXCEPTION: the implied warranty of fitness and workmanlike construction APPLIES to sale of a NEW home by a BUILDER vendor

Question 6

What is the purpose of a deed?

Answer 6

At closing, the deed PASSES legal title from the seller to the buyer

Question 7

How does the deed pass legal title from seller to buyer?

Answer 7

It must be Lawfully Executed And Delivered

Question 8

What is the std for the lawful execution of a deed?

Answer 8

The deed must be (1) in WRITING (signed by the grantor); AND (2) have a DESCRIPTION of the land

*The land description doesn’t have to be perfect, just UNAMBIGUOUS * the deed need not recite consideration, NOR must consideration pass to make a deed valid

Question 9

What are the delivery requirements for a deed?

Answer 9

“Delivery” is accomplished… 1) When grantor PHYSICALLY transfers deed to the grantee (via the mail, agent OR messenger); 2) When the deed has been LEGALLY transfered (governed by grantor’s present INTENT); OR 3) When delivered by ESCROW (via an escrow agent once conditions are met); BUT 4) NOT when the grantee expressly REJECTS the deed NOTE: if deed (absolute on its face) is transferred to grantee with an oral condition, the oral condition DROPS OUT (it’s not provable), BUT delivery is accomplished

Question 10

Name 3 types of deeds

Answer 10

1) The quitclaim deed (containing NO cov’ts) 2) The general warranty deed (containg 6 cov’ts) 3) The statutory special warranty deed (containing 2 cov’ts)

Question 11

What is a quitclaim deed?

Answer 11

A deed that conatins NO COV’TS Grantor isn’t even promising that the deed won’t have any post-closing issues (BUT the land K has an implied promise to deliver marketable title at CLOSING). The WORST possible deed for a buyer

Question 12

What is a general warranty deed AND it’s 6 cov’ts?

Answer 12

The general warranty deed warrants against ALL defects in title, INCLUDING those due to grantors predecessors 3 present cov’ts whereSOL starts running from the instance of delivery at closing 1) Cov’t of seisin = promise that the grantor owns this estate 2) Cov’t of right to convey = promise that grantor has the pwr to trnfr (i.e. he’s under no RESTRAINT or DISABILITY like age/sound mind) 3) Cov’t against encumbrances = promise that there are NO servitudes or mtgs on blackacre 3 future cov’ts where SOL for breach does not begin to run UNTIL the breach occurs (e.g. the date of the disturbance) 1) Cov’t for quiet enjoyment = promise that grantee won’t be DISTURBED in possession by a 3d party’s lawful claim of title 2) Cov’t of warranty = promise that grantor will defend grantee against lawful claims of title asserted by others (indemnification) 3) Cov’t for further assurances = promise that grantor will do what’s needed to perfect to the title in the future (post-closing)

Question 13

What is a statutory special warranty deed AND its 2 cov’ts? NOTE: NY Distinction

Answer 13

Deed that’s provided for by statute in many states, containing TWO promises that the grantor makes ONLY on behalf of himself (and NOT on behalf of his predecessors) 1) Grantor promises that he hasn’t conveyed this estate to anyone other than grantee 2) The estate is free from encumberances made by the grantor NY DISTINCTION: in NY this type of deed is called a bargain and sale deed

Question 14

What is the shelter rule?

Answer 14

Scenario: O→A (does NOT record); O→B, BFP (records); B→C (C is B’s heir, and has knowledge of O→A transaction, so NOT a BFP) Shelter rule says… C takes shelter in B’s BFP status (steps into B’s shoes). Protects B by making it easier for B to transfer successfully

Question 15

What are recording statutes and what are the 2 types jxs? NOTE: NY Distinction

Answer 15

Recording acts exist only to protect BFPs and mortgagees (creditors)
2 types of jx: race notice jx (rnjx) vs. notice jx (njx)

1) Rnjx: If B is a BFP, and we are in a rnjx, B wins IF she records properly before A. NY is a race notice jx
2) Njx: the LAST BFP wins regardless of who records first

*recording statutes do not protect donees, heirs or devisees unless the shelter rule applies

Question 16

Who is a bona fide purchaser (BFP)?

Answer 16

One who 1) purchases land for value; AND 2) Does not have notice of someone else’s claim to that land

3 forms of notice that a buyer may potentially be charged with: Actual;
Inquiry (whatever examination of land would reveal. if recorded instrument makes reference to an unrecorded trxn, B is on notice of whatever a reasonable follow up would show); OR
Record (properly recorded w/in chain of title)

*Inquiry and record are constructive forms of notice that will be imputed to B regardless of B’s actual notice

Question 17

How do you identify a notice statute vs. a race-notice statute?

Answer 17

1) Notice statute = “A conveyance of an interest in land shall NOT be valid against any subsequent purchaser for value, without notice thereof, unless the conveyance is recorded.” 2) Race-notice statute(NY!!) = “Any conveyance of an interest in land shall NOT be valid against any subsequent purchaser for value, without notice thereof, whose conveyance is 1st recorded.”

Question 18

What is estoppel by deed?

Answer 18

One who conveys property in which she has NO interest, is estopped from denying the validity of the conveyance if he later acquires the interest that he previously transferred.

Question 19

What is a wild deed?

Answer 19

If a deed, entered on the records (A to B), has a grantor unconnected to the chain of title (O to A), the deed is a wild deed INCAPABLE of giving record notice to subsequent BFPs

Question 20

What happens when the amount of land recited in the land K is more than the actual size of the performance?

Answer 20

Specific performance with a pro rata reduction in price.

Question 21

name three chain of title problems

Answer 21

the shelter rule, the problem of the wild deed, estoppel by deed