real estate transaction Flashcards
(99 cards)
1
Q
What does the term ‘caveat emptor’ mean in real estate?
A
Let the buyer beware.
2
Q
True or False: Under caveat emptor, sellers are required to disclose all known defects in a property.
A
False.
3
Q
Fill in the blank: Caveat emptor places the burden of due diligence on the __________.
A
buyer.
4
Q
Which of the following is an example of fraud in real estate transactions? A) Misrepresentation of property size B) Honest disclosure of known issues C) Providing property history
A
A) Misrepresentation of property size.
5
Q
What is the primary legal obligation of sellers under caveat emptor?
A
To refrain from actively deceiving the buyer.
6
Q
True or False: Caveat emptor applies to both residential and commercial real estate.
A
True.
7
Q
What must a buyer do to protect themselves under the principle of caveat emptor?
A
Conduct thorough inspections and research.
8
Q
Fill in the blank: In many jurisdictions, sellers are required to provide a __________ before a sale.
A
disclosure statement.
9
Q
Which legal principle can override caveat emptor in cases of fraud?
A
Misrepresentation.
10
Q
True or False: A seller can be held liable for failing to disclose latent defects.
A
True.
11
Q
What is the difference between a ‘latent defect’ and a ‘patent defect’?
A
A latent defect is not easily observable, while a patent defect is readily apparent.
12
Q
Multiple Choice: What is NOT a typical requirement of a seller’s disclosure? A) Property condition B) Neighborhood crime rates C) Known defects
A
B) Neighborhood crime rates.
13
Q
True or False: Caveat emptor protects sellers from legal claims if they have disclosed all known issues.
A
True.
14
Q
What role does a real estate agent play in the context of caveat emptor?
A
To facilitate the transaction while ensuring both parties are informed.
15
Q
Fill in the blank: The principle of caveat emptor encourages __________ responsibility.
A
buyer.
16
Q
True or False: A buyer can sue a seller for fraud if the seller knowingly lied about a property feature.
A
True.
17
Q
What is one common defense sellers use against claims of fraud?
A
Claiming the buyer was aware of the defects.
18
Q
Multiple Choice: Which of the following is a form of fraud? A) Seller failing to mention a leaking roof B) Seller providing accurate property history C) Buyer asking about property taxes
A
A) Seller failing to mention a leaking roof.
19
Q
What is the significance of ‘full disclosure’ in real estate?
A
It helps prevent legal disputes by informing buyers of all relevant property details.
20
Q
Fill in the blank: A seller’s failure to disclose a __________ defect can lead to legal action.
A
material.
21
Q
A
22
Q
A
23
Q
What is a wild title?
A
A wild title is a title to real property that is not connected to any known or identifiable owner.
24
Q
True or False: In notice jurisdictions, a subsequent purchaser can acquire title even if they have knowledge of a prior claim.
A
False
25
What is a race-notice jurisdiction?
A race-notice jurisdiction is a legal system where a subsequent purchaser can acquire title if they record their claim before any prior claims are recorded, and they do not have notice of those prior claims.
26
Fill in the blank: In a _____ jurisdiction, a purchaser must record their deed to gain priority over prior unrecorded claims.
race-notice
27
What does 'notice' refer to in the context of property law?
Notice refers to the awareness or knowledge of a prior claim or interest in property.
28
True or False: A wild title can be easily established in a notice jurisdiction.
False
29
In which jurisdiction is a purchaser who records first protected, regardless of notice?
In a race jurisdiction.
30
What is the primary difference between notice jurisdictions and race-notice jurisdictions?
The primary difference is that notice jurisdictions protect purchasers who lack knowledge of prior claims, while race-notice jurisdictions protect those who record first and lack notice.
31
What must a purchaser do in a notice jurisdiction to protect their title?
They must have no notice of prior claims at the time of their purchase.
32
Multiple Choice: Which of the following is NOT a characteristic of a wild title?
A) Unconnected to any owner
B) Easily transferable
C) Likely to be contested
D) Fully recognized in all jurisdictions
D) Fully recognized in all jurisdictions
33
True or False: Recording a title in a race-notice jurisdiction protects against all claims.
False
34
What is the effect of recording a deed in a notice jurisdiction?
Recording a deed provides public notice but does not necessarily protect against prior unrecorded claims if the purchaser had notice of those claims.
35
Fill in the blank: A _____ title may exist when a property owner cannot be identified or located.
wild
36
Which jurisdiction requires both recording and lack of notice for title protection?
Race-notice jurisdiction.
37
What is the significance of the recording system in real property law?
The recording system provides a public record of property ownership and interests, helping to establish priority among claims.
38
True or False: A wild title can be cured by establishing a chain of title.
True
39
In a notice jurisdiction, what happens if a purchaser has actual notice of a prior claim?
The purchaser cannot claim title against the prior claimant.
40
What is the primary purpose of recording a title?
To provide notice to potential buyers and protect the rights of the titleholder.
41
Multiple Choice: Which type of jurisdiction prioritizes the first to record?
A) Notice
B) Wild
C) Race
D) Equitable
C) Race
42
What is the outcome if two purchasers acquire the same property in a race-notice jurisdiction?
The purchaser who records their title first will prevail, provided they had no notice of the other's claim.
43
What is COUNT ONE in the hypothetical regarding real estate disclosures?
BREACH OF SELLER’S DUTY TO DISCLOSE DEFECTS
44
What is COUNT TWO in the hypothetical regarding real estate disclosures?
FRAUD
45
What is the HISTORICAL DEFAULT RULE regarding seller liability?
The seller is liable only if he (a) affirmatively misrepresented the condition of the property, (b) actively concealed its defects, or (c) owed a fiduciary duty to the buyer
46
What is the MODERN DEFAULT RULE regarding seller obligations?
The seller of residential real property is obligated to disclose defects he knows about that (a) materially affect the value of the property and (b) are not known to or readily discoverable by a buyer
47
What happens if the buyer or seller dies before closing under equitable conversion?
The contract is still valid; it can be enforced by the heirs and devisees of either party
48
Who receives the purchase price if the seller dies before closing?
The seller's son
49
What is the definition of UNMARKETABLE TITLE?
1. The seller’s property interest is less than the one she purports to sell; 2. the seller’s title is subject to an encumbrance; 3. there is reasonable doubt about either (1) or (2)
50
What must a seller provide regarding marketable title?
The seller is not required to produce a marketable title until the closing
51
What happens once the buyer accepts the deed at closing?
All rights under the purchase agreement are extinguished or 'merged' into the deed
52
What does the COVENANT OF SEISIN promise?
The grantor owns the estate he purports to convey
53
What is the difference between a GENERAL WARRANTY DEED and a SPECIAL WARRANTY DEED?
General warranty deed covers all title defects; Special warranty deed covers only defects after the grantor obtained title
54
What is the definition of TITLE according to BLACK’S LAW DICTIONARY?
The union of all elements (as ownership, possession, and custody) constituting the legal right to control and dispose of property
55
What is the purpose of estoppel by deed?
If A purports to convey title to B but does not hold title, if A later acquires title, it automatically passes to B
56
What is the significance of a recording system in real estate?
It gives notice of rights to the world and allows for the determination of claims on the land
57
What are the three approaches to a recording system?
1. Grantor-Grantee Index; 2. Tract Index; 3. Chain of title tracing
58
What is a BONA FIDE PURCHASER (BFP)?
A person who buys honestly and without notice of any conflicting claim on the property
59
What does the SHELTER RULE state?
A BFP can transfer protection to another even if the latter knows about prior claims
60
What happens if a deed is unacknowledged?
It is not deemed to be 'recorded' and does not provide record notice
61
What is the outcome of a deed that is induced by fraud?
It is voidable by the grantor; if conveyed to a BFP, the subsequent purchaser prevails
62
What is the implication of a Mother Hubbard clause?
Property interests are conveyed in general terms, effective as between parties but not against subsequent purchasers without actual knowledge
63
What defines a COVENANT OF QUIET ENJOYMENT?
A promise that the grantee’s possession of the property will not be disturbed by anyone holding superior title
64
What must be proven for a breach of the covenant of quiet enjoyment?
An actual or constructive eviction of the covenantee by the paramount titleholder
65
What is the significance of a quitclaim deed?
The grantor makes no warranties about title, thus the grantee receives only what the grantor has
66
What happens in a race jurisdiction regarding priority?
The purchaser who records first has priority
67
What is required for a title opinion based on a search of public records?
An attorney or professional must render an opinion about the state of title after searching public land records
68
What does the term 'chain of title' refer to?
The history of ownership of a particular property
69
In a notice jurisdiction, who prevails if a subsequent BFP takes without notice of a prior interest?
The subsequent BFP prevails
## Footnote
BFP stands for bona fide purchaser.
70
What is the priority rule in race jurisdiction?
The purchaser who records first has priority.
71
In race-notice jurisdiction, who has priority?
The subsequent BFP who takes without notice and records first.
72
In the scenario where S conveys to B, C, and D, who wins in first in time?
B wins.
73
In race jurisdiction, if C records after not recording an initial conveyance, who wins?
C wins.
74
In notice jurisdiction, who wins if D takes without notice of prior interests?
D wins.
75
What are the three types of notice?
* Actual notice
* Record notice
* Inquiry notice
76
What is actual notice?
Direct knowledge of a prior interest.
77
What is record notice?
Notice of any prior interest that would be discovered by a standard search of the public land records.
78
What is inquiry notice?
Notice of any prior interest that would have been obtained by investigating suspicious circumstances.
79
What is the general rule regarding oral agreements for the sale of real property?
An oral agreement is not enforceable.
80
What are the three conditions under which an oral contract for the sale of real property may be enforced?
* Takes possession
* Pays at least part of the purchase price
* Makes improvements to the property
81
What is promissory estoppel?
An oral contract may be enforced if one party acts to their detriment in reasonable reliance on another’s oral promise.
82
What is dower at common law?
A wife’s right, upon her husband’s death, to a life estate in one-third of the land he owned in fee.
83
If the farmer's daughter contests her ownership against her ex-wife and son, which legal concepts will be significant?
* The Statute of Frauds
* Promissory estoppel
* The intestacy statute
* Bargained-for consideration
* Adverse possession
84
What is required for part performance to apply in enforcing an oral contract for real property?
* Possession
* Partial payment
* Improvements
85
What does the term 'BFP' stand for?
Bona fide purchaser.
86
In a race-notice jurisdiction, who records first has priority?
The subsequent BFP who takes without notice.
87
What does it mean to take title 'subject to' the loan?
The buyer acknowledges the seller's mortgage exists but does not assume liability for the debt.
## Footnote
The deed is transferred to the buyer, but the loan remains in the seller's name.
88
Who is responsible for making mortgage payments when a buyer takes title 'subject to' the loan?
The buyer makes payments on the seller's existing loan.
## Footnote
However, there is no direct contractual agreement between the buyer and the lender.
89
Is the buyer personally liable for the debt when taking title 'subject to' the loan?
No, the buyer is not personally liable for the debt.
## Footnote
If the property goes into foreclosure, the lender can only foreclose on the property.
90
What happens to the seller's liability when the buyer takes title 'subject to' the loan?
The seller remains liable for the loan.
## Footnote
The seller's credit can be negatively affected if the buyer fails to make payments.
91
Is lender approval typically required when a buyer takes title 'subject to' the loan?
No, lender approval is not typically required.
## Footnote
However, a 'due-on-sale' clause may allow the lender to call the entire loan balance due.
92
What does it mean when a buyer agrees to 'assume' the loan?
The buyer takes over the seller's existing mortgage obligation and enters a direct agreement with the lender.
## Footnote
This makes the buyer responsible for all the terms and conditions of the original loan.
93
Is the buyer personally liable for the debt when they assume the loan?
Yes, the buyer becomes personally liable for the debt.
## Footnote
The lender can pursue foreclosure and seek a deficiency judgment if the buyer defaults.
94
What may happen to the seller's liability when the loan is assumed by the buyer?
The seller may be released from liability.
## Footnote
This protects the seller if the new buyer defaults.
95
Is lender approval required when a buyer agrees to assume the loan?
Yes, lender approval is required.
## Footnote
The buyer must qualify based on creditworthiness and financial situation.
96
What type of agreement is created when a buyer assumes a loan?
A formal agreement between the buyer and the lender is created.
## Footnote
This agreement outlines the buyer's responsibilities and the lender's rights.
97
Fill in the blank: When a buyer takes title 'subject to' the loan, they control the property but the legal obligation to repay the loan rests with the _______.
seller
98
True or False: A buyer who takes title 'subject to' the loan can be pursued for any deficiency after foreclosure.
False
99
True or False: The buyer who assumes the loan is protected from any deficiency judgment by the lender.
False
