purchase/sale of real estate

Question 1

purchase/sale of real estate

Answer 1

Every conveyance of real estate consists of a 2-step process.

1. The land K
2. The closing

Question 2

purchase/sale of real estate

land K

Answer 2

The land K endures until the closing

1. Land K and SoF
2. Problem of risk of loss
3. 2 implied promises in every land K
4. Caveat emptor

Question 3

purchase/sale of real estate
land K
land K and SoF

Answer 3

The standard: The land K must be 1) in writing 2) signed by the parties to be bound (buyer & seller), 3) must describe the land, and 4) state some consideration.

Question 4

purchase/sale of real estate
land K
land K and SoF
If amount of land in land K is more than the actual size of the parcel

Answer 4

When the amount of land recited in the land K > the actual size of the parcel, B’s remedy is specific performance WITH a pro rata reduction in price.

Question 5

purchase/sale of real estate
land K
land K and SoF
doctrine of part performance

Answer 5

Equity will decree specific performance of an oral K for land sale if the doctrine of part performance is satisfied.
The doctrine of part performance is satisfied if two of the three elements is met:
1. B takes possession.
2. B pays all or part of the price
3. B makes substantial improvements

Question 6

purchase/sale of real estate
land K
problem of risk of loss

Answer 6

equitable conversion

destruction

Question 7

purchase/sale of real estate
land K
problem of risk of loss
equitable conversion

Answer 7

Under the doctrine of equitable conversion, equity regards as done that which ought to be done.
In equity, once the K is signed, B owns the land subject to the condition that he pay the purchase price at closing.
The K provides equitable title

Question 8

purchase/sale of real estate
land K
problem of risk of loss
destruction

Answer 8

If, in the interim between K and closing, Blackacre is destroyed through no fault of either party, B bears the risk of loss (unless the K says otherwise).

Question 9

purchase/sale of real estate
land K
2 implied promises in every land K

Answer 9

Promise to provide marketable title

Promise to not make any false statements of material fact

Question 10

purchase/sale of real estate
land K
2 implied promises in every land K
Promise to provide marketable title

Answer 10

Seller promises to provide marketable title at closing.
The standard
3 circumstances that render title unmarketable

Question 11

purchase/sale of real estate
land K
2 implied promises in every land K
Promise to provide marketable title
The standard

Answer 11

Title is free from reasonable doubt.

Title is free from lawsuits and the threat of litigation.

Question 12

purchase/sale of real estate
land K
2 implied promises in every land K
Promise to provide marketable title
3 circumstances that render title unmarketable

Answer 12

Adverse possession
Encumbrances
Zoning violations

Question 13

purchase/sale of real estate
land K
2 implied promises in every land K
Promise to provide marketable title
3 circumstances that render title unmarketable
adverse possession

Answer 13

If even part of the title rests on adverse possession, it is unmarketable.
Seller must be able to provide good record title.

Question 14

purchase/sale of real estate
land K
2 implied promises in every land K
Promise to provide marketable title
3 circumstances that render title unmarketable
encumbrances

Answer 14

Marketable title means an unencumbered free simple.
The presence of any servitude will render title unmarketable unless buyer has waived them.
Seller has the right to satisfy an outstanding mortgage or lien at closing w/proceeds of the sale.
Buyer cannot claim title is unmarketable b/c it is subject to a mortgage prior to closing as long as the parties understand that the closing will result in the mortgage being satisfied or discharged.

Question 15

purchase/sale of real estate
land K
2 implied promises in every land K
Promise to provide marketable title
3 circumstances that render title unmarketable
zoning violations

Answer 15

Title is unmarketable when Blackacre violates a zoning ordinance. (This can make it subject to a lawsuit.)

Question 16

purchase/sale of real estate
land K
2 implied promises in every land K
Promise to not make any false statements of material fact

Answer 16

The majority of states now hold seller liable for failing to disclose latent material defects.
Seller is liable for material lies and omissions of latent defects.
If the K contains a general disclaimer of liability, disclaimer won’t excuse seller from liability for fraud or failure to disclose.

Question 17

purchase/sale of real estate
land K
caveat emptor

Answer 17

The land K contains NO implied warranties of fitness or habitability
Common law norm is caveat emptor (let the buyer beware).
Exception: The implied warranty of fitness and workmanlike construction APPLIES to the sale of a NEW HOME by a builder-vendor.

Question 18

purchase/sale of real estate

closing

Answer 18

At the closing, the land K dies and the controlling document is now the deed.
Deed passes legal title from seller to buyer.
To pass legal title, the dead must be LEAD
Lawful Execution and
Delivery with
Covenants for title and 3 types of deeds.

Question 19

purchase/sale of real estate
closing
Lawful Execution of a deed

Answer 19

The deed must be in writing signed by the grantor.
The deed need not recite consideration nor must consideration pass to make a deed valid.
The land description does not have to be perfect.
Deed needs only to have an unambiguous description of the land and a good LEAD.

Question 20

purchase/sale of real estate
closing
Delivery of a deed

Answer 20

delivery requirement
legal standard
recipient's express rejection of the deed
oral condition
delivery by escrow

Question 21

purchase/sale of real estate
closing
Delivery of a deed
delivery requirement

Answer 21

Delivery requirement could be satisfied when grantor physically transfers to grantee.
It is permissible to use mail, an agent, or messenger.

Question 22

purchase/sale of real estate
closing
Delivery of a deed
legal standard

Answer 22

Delivery does not require physical transfer of the deed itself.
The standard for delivery is a legal standard and is a test solely of PRESENT INTENT.
If grantor had the PRESENT INTENT to be bound irrespective of whether or not the deed itself was handed over, the legal standard is met.

Question 23

purchase/sale of real estate
closing
Delivery of a deed
recipient’s express rejection of the deed

Answer 23

Recipient’s express rejection of the deed DEFECTS DELIVERY.

Question 24

purchase/sale of real estate
closing
Delivery of a deed
oral condition

Answer 24

If a deed, absolute on its face, is transferred to grantee w/ an oral condition, the oral condition drops out and delivery is achieved.
An oral condition is void and not provable.
(Too susceptible to fraud.)

Question 25

purchase/sale of real estate closing Delivery of a deed delivery by escrow

Answer 25

Delivery by escrow is allowed. Grantor may deliver an executed deed to a 3rd party, known as an escrow agent, with instructions that the deed be delivered to grantee once certain conditions are met. Once the conditions are met, title passes to grantee.

Question 26

purchase/sale of real estate closing Delivery of a deed delivery by escrow - advantage of escrow

Answer 26

If grantor dies, becomes incompetent, or is otherwise unavailable before the express conditions are met, title still passes from escrow agent to grantee once the conditions are met.

Question 27

purchase/sale of real estate closing covenants for title and 3 types of deeds

Answer 27

quitclaim, general warranty, special warranty

Question 28

purchase/sale of real estate closing covenants for title and 3 types of deeds quitclaim deed

Answer 28

Quitclaim contains no covenants. Grantors isn't even promising he has title to convey. Worse deed buyer could hope for. But even here, seller did implicitly promise in the land K to provide marketable title at closing. With any problems post-closing, seller is off the hook.

Question 29

purchase/sale of real estate closing covenants for title and 3 types of deeds general warranty deed

Answer 29

General warranty deed warrants against all defects in title including those due to grantor's predecessors Best deed a buyer could hope for. General warranty deed typically contains all 6 covenants: (present covenants - covers delivery) covenant of seisin, covenant of right to convey, covenant against encumbrances (future covenants - covers post-delivery) covenant for quiet enjoyment, covenant of warranty, covenant for further assurances

Question 30

``` purchase/sale of real estate closing covenants for title and 3 types of deeds general warranty deed present covenants ```

Answer 30

A present covenant is breached, if ever, at the moment of delivery. The SoL for breach of a present covenant begins to run from the instant of delivery. covenant of seisin, covenant of right to convey, covenant against encumbrances

Question 31

``` purchase/sale of real estate closing covenants for title and 3 types of deeds general warranty deed present covenants covenant of seisin ```

Answer 31

covenant of seisin: Grantor owns this estate

Question 32

``` purchase/sale of real estate closing covenants for title and 3 types of deeds general warranty deed present covenants covenant of right to convey ```

Answer 32

covenant of right to convey: Grantor has the power to transfer. No disability, no temporary restraints on alienation.

Question 33

``` purchase/sale of real estate closing covenants for title and 3 types of deeds general warranty deed present covenants covenant against encumbrances ```

Answer 33

covenant against encumbrances: There are no servitudes or mortgages on Blackacre

Question 34

``` purchase/sale of real estate closing covenants for title and 3 types of deeds general warranty deed future covenants ```

Answer 34

A future covenant is not breached, if ever, until grantee is disturbed in possession. The SoL for breach of a future covenant will not begin to run until that future date. covenant for quiet enjoyment, covenant of warranty, covenant for further assurances

Question 35

``` purchase/sale of real estate closing covenants for title and 3 types of deeds general warranty deed future covenants covenant for quiet enjoyment ```

Answer 35

Covenant for quiet enjoyment: Grantee won't be disturbed in possession by a 3rd party's lawful claim of title.

Question 36

``` purchase/sale of real estate closing covenants for title and 3 types of deeds general warranty deed future covenants covenant of warranty ```

Answer 36

Covenant of warranty: Grantor will defend grantee against lawful title claims brought by others.

Question 37

``` purchase/sale of real estate closing covenants for title and 3 types of deeds general warranty deed future covenants covenant for further assurances ```

Answer 37

Covenant for further assurances: Grantor will do what is needed in the future to perfect the title.

Question 38

purchase/sale of real estate closing covenants for title and 3 types of deeds special warranty deed

Answer 38

Special warranty deed contains 2 promises that grantor makes ONLY on his own behalf and not of his predecessors in interest. 1. Grantor promises she hasn't conveyed Blackacre to anyone other than grantee. 2. Blackacre is free from encumbrances made by grantor.