Flashcards in Land Sale Contracts Deck (14):
What is the doctrine of merger?
Covenants under the contract are merged into the deed and any remaining will flow from the deed.
• after closing, obligations contained in the contract are merged into the deed. If there was something important in the contract that was not in the deed, because the action is lost because of the controls after closing.
What are the three requirements to satisfy the statute of fraud's?
1. Must be in writing;
2. Must be signed by the party to be charged; and
3. Must include the essential terms
• description of the property
What are the two exceptions to the statute of frauds?
1. Part performance
2. Detrimental reliance
What are the elements of part performance?
Any two of the three:
1. Payment of all or part of the purchase price
2. Possession by the purchaser or
3. Improvements by the purchaser
What is detrimental reliance?
An estoppel doctrine that applies where party has detrimentally relied on the contract and will suffer hardship if the contract is not enforce.
• goes hand-in-hand with the part performance
What is marketable title?
Title that is free from an unreasonable risk of litigation
•Every land sale contract includes an implied covenant of marketable title
What are examples of defects in title that would render the title unmarketable?
• title acquired by adverse possession that hasn't been quieted
• private encumbrances, e.g. Mortgage, covenant, easement
•violations of zoning ordinances
What is the basic rule for time of performance in a land sale contract?
Unless the contract or parties notify, time is not of the essence.
• if time is not of the essence, failure to close on the date set for closing maybe a breach of the contract, but is not grounds for rescission of the contract.
• specific performance is still available
What does the implied warranty of fitness or suitability apply to?
Applies to defects in new construction.
• suits must be brought within a reasonable time after discovery of the defect.
What is the sellers duty to disclose defects?
Seller has a duty to disclose to the buyer all known, physical and material defects.
• General disclaimers (as is) will not satisfy the seller's duty to disclose.
What are the seller's 3 remedies on Breach by Buyer?
Measure is the difference between the contract price in the market price.
2. Recession: Seller can sell the property to someone else
3. Specific performance
What are the buyers remedies in breach by seller?
1. Damages: Measure is the difference between the contract price in the market value on the date breach.
• if the sellers breach the act in good faith buyer can only recover out-of-pocket expenses.
2. Rescission: returns payment to the buyer and cancel the contract.
3. Specific performance
• buyer and sellers must choose between damages is specific performance – can't have both remedies.
Who bears the risk of loss if there's a damage to or destruction of the property in a majority jurisdiction?
1. majority rule: the buyer holds equitable title during the period between the execution of the contract and the closing and delivery of the deed.
• buyer is responsible for any damages to the property that happens during that period.
• as holder of the legal title, seller has a right to possess the property.