Property: Adverse possession & Conveyances Flashcards
adverse possession general rule
If a person possesses property for the period of the statute of limitations for ejectment actions, such possession may ripen into record ownership.
Constructive Possession: In most jurisdictions, a claimant who possesses under color of title is entitled to the entire parcel that is described in the defective instrument if the claimant physically possesses a significant proportion thereof.
conveyances- 2 steps
The conveyance of land is usually a two-step process:
1) the land sale contract and
2) the closing.
The Land Sale Contract must be
in writing and signed by the party to be charged (SOF)
a. Exception: Doctrine of Part Performance (for specific performance only), which requires proof of at least two of the following:
1. Full or substantial payment (more than rent) by the purchaser
2. Physical possession by the purchaser
3. Substantial improvements by the purchaser
The Land Sale Contract must describe the land in such a manner that the property may be located with certainty, such as a street address
The Land Sale Contract must also identify the parties and state a sale price (i.e., a land sale contract requires consideration)
Real Estate Agent/Broker
The agent typically works for the seller and earns her commission when she finds a “ready, willing, and able” buyer. Traditionally, the commission was due even if the buyer repudiates the contract. Most modern cases award the commission only if the sale actually closes or the seller repudiates the contract.
Types of Listing Agreements. If a broker has an “exclusive right-to-sell” listing agreement, the broker is entitled to a commission if the seller accepts an offer to purchase during the exclusive period, regardless of who procures the buyer or when the closing occurs. If a broker has an “open” or “non-exclusive” listing agreement, the broker is entitled to a commission only if the broker provides the buyer.
Unauthorized Practice of Law. In most states, agents may fill in the blanks on standard land sale contracts, but they may not draft deeds, mortgages, or other documents that transfer interests in land. In addition, agents may not conduct closings or express opinions on the status of title or zoning laws.
title insurance
A title insurance policy insures that “good record title” to the property exists as of the policy’s date, and the insurer agrees to defend the record title if litigated. It insures against forgery or lack of delivery of an instrument in the chain of title, as well as the disability of a grantor in the chain of title.
Title insurance does not insure against claims “outside” the record, such as adverse possessors, boundary disputes, implied or prescriptive easements, zoning ordinances, or hazardous waste.
Title insurance may be taken out by either the owner of the property or the mortgage lender.
An “owner’s policy” protects only the person who owns the policy (i.e., the named insured) and does not run with the land to subsequent purchasers.
A “lender’s policy” follows any assignment of the mortgage loan
Equitable Conversion (majority view):
prior to closing, the risk of loss rests with the buyer (assuming no fault on the part of the seller) and, if the buyer dies before closing, the property will pass to the persons entitled to the buyer’s real estate at the buyer’s death.
By contrast, if the seller dies prior to closing, the proceeds of the sale belong to the persons entitled to the seller’s personal property at the seller’s death.
Reminder: The death of either party (or both parties) does not discharge the parties’ duties under the contract.
If a buyer is held liable for a loss before closing, the seller’s insurance proceeds, if any, must be credited to the buyer.
Implied Covenants Given by Sellers in Land Contracts:
- seller will convey marketable title (i.e., a title free from reasonable doubt and free from non-frivolous lawsuits) at the closing (or, in the case of a land sale contract, at the end of payments)
a. title is “unmarketable” if there are defects in the chain of title, including:
The property was obtained by the seller by adverse possession (with no judgment)
There are encumbrances on the title that will not be resolved at closing
a beneficial easement (e.g., a utility easement) will not render the title unmarketable
The seller’s current use of the property violates existing zoning laws
b. but the title is MARKETABLE despite the fact:
The buyer’s intended use violates existing zoning laws
The implied covenant of marketable title applies even if the contract calls for conveyance by quitclaim deed
- seller has not made any false statements of material fact or failed to disclose any latent material defects
most states require sellers to give buyers a written statement disclosing facts about the property
in most states, an “as is” clause is a defense to claims based on negligent misrepresentation or failure to disclose; an “as is” clause is not a defense for claims based on intentional fraud or concealment
sellers do not make implied warranties of fitness or habitability, except when a NEW HOME is sold by a builder (i.e., implied warranty of skillful construction)
- time is NOT of the essence in real estate contracts, unless the contract provides otherwise (or the circumstances dictate such a term); thus, specific performance may be sought even if one of the parties tenders late (but that party would be responsible for any damages caused by the delay).
The closing
- Upon closing, the deed supersedes the land sale contract; thus, after closing, the buyer must look exclusively to the deed for any rights, warranties, and claims of title (in other words, the implied warranty to provide marketable title is discharged at closing).
The deed does not supersede fraud or “implied warranty of skillful construction” claims
- To transfer title from seller to buyer, there must be:
a. A lawfully executed deed, which requires
i. A writing
ii. Signed by the grantor/vendor
The grantee usually does not sign the deed, but is bound by any covenants therein by accepting the deed
iii. A description of the land sufficient so that an objective party may locate it with certainty
The deed must be “delivered” to be effective: test for delivery
Did the grantor have the present intent (shown by words and/or conduct) to be immediately bound by the conveyance (in other words, did the grantor intend to part with legal control of the property)? A deed not properly delivered is void.
When delivery is in doubt, the courts rely on various rebuttable presumptions:
physical possession of the deed by the grantor raises a presumption of non-delivery
physical possession of a properly executed deed by the grantee raises a presumption of delivery
the recording of the deed raises a presumption that it was delivered
Delivery to a Third Party:
If the grantor gives the deed to an agent of the grantee (e.g., the grantee’s attorney or friend) to deliver to the grantee, the delivery requirement will generally be satisfied at that moment.
If the grantor gives the deed to an agent of the grantor (e.g., the grantor’s attorney) to deliver to the grantee, the delivery requirement will be not satisfied until the grantor’s agent delivers the deed to the grantee, which must occur before the grantor’s death.
Once proper delivery has been made, the deed may not be cancelled by destroying it or returning it to the grantor; instead, the grantee must re-deed the property to the grantor (even if the grantee never recorded her deed)
Acceptance of the deed by the grantee is also required, but acceptance is generally presumed.
A deed obtained by fraud in the execution
(i.e., the grantor did not know that the document she was executing was a deed) is “void.”
A deed (or other recordable document, such as a mortgage or release of mortgage) that is materially altered is “void” at least to the extent of the alteration. If the grantor’s signature is forged, the deed is “void.”
A deed executed under physical duress (i.e., serious violence or threats of serious violence) is void.
A “void” deed may be voided by the grantor despite the fact that the grantee subsequently conveyed the property to a bona fide purchaser.
By contrast, a deed obtained by fraud in the inducement is “voidable” by the grantor until the property is conveyed to a bona fide purchaser. A deed obtained by undue influence is also “voidable.”
A deed to a dead person or a non-existing entity (e.g., an unchartered corporation) is void.
Subject to the Doctrine of Estoppel by Deed (infra), a deed executed by a person who has no ownership interest in the property at the time of conveyance is void.
However, if the grantee takes possession of the property, the grantee would have “color of title” for purposes of adverse possession.
Covenants of Title
- Quitclaim Deeds: No covenants of title (grantor conveys only what she has, which may be nothing)
- General Warranty Deeds—Six Covenants of Title by Grantor:
a. Three Present Covenants, which may be breached only at closing (which is when the SOL starts to run):
Covenant of seisin (grantor owns the property)
Covenant of right to convey (grantor has the legal right to convey the property)
Covenant against encumbrances (there are no mortgages, liens, etc. of which the grantee is unaware)
b. Three Future Covenants, which may be breached only if the grantee is disturbed in possession after closing (the SOL starts to run upon such breach):
Covenant of quiet enjoyment (grantor will indemnify grantee against future claimants)
Covenant of warranty (grantor will defend grantee’s title against lawful claims)
The grantee must give the grantor notice of such claims
If the grantee defends a claim and prevails, the grantee is not entitled to reimbursement because the claim was not “lawful”
Covenant of further assurances (grantor will perform any administrative or ministerial steps necessary to perfect title)
c. The future covenants run with the land (and are enforceable by successors), but the present covenants do not (and thus may be enforced only by the party to whom they are made).
d. Damages for breach of covenant are limited to the consideration received by the covenantor (and not current FMV), plus interest
3. Special Warranty Deeds (authorized by statute). Two covenants by grantor (made on behalf of the grantor only, not his or her predecessors):
i. grantor has not conveyed the estate to others (i.e., no double-dealing)
ii. the estate is free from encumbrances created by the grantor
