Real Estate Transactions

Question 0

Statute of Frauds

Answer 0

WETS: writing, essential terms, signature of party intended to be bound

Question 1

Pre-Closing Issues

Answer 1

Statute of Frauds, Marketability of Title, Equitable Conversion, Duty to Disclose

Question 2

Marketability of Title

Answer 2

Seller has full title to convey, no encumbrances on the property, no reasonable doubt.

Question 3

Encumbrances

Answer 3

Municipal restrictions do not render unmarketable, private and public restrictions do render unmarketable

Question 4

Risk of Loss/Equitable Conversion

Answer 4

To identify owner for liability - buyer is equitable owner of property at contract, seller is equitable owner of purchase price

Question 5

Duty to Disclose

Answer 5

Traditionally, buyer bore risk of loss, caveat emptor, seller had no real duty to disclose unless affirmatively misrepresented condition of property, actively concealed defects, owed a fiduciary duty to buyer

Modernly, person in possession nears risk. Seller has a duty to disclose defects that materially effect the value of property and are unlikely to be discovered
Professional sellers have duty to disclose physical off-site conditions that touch and concern land

Question 6

Closing

Answer 6

Deed, mortgage, deed of trust, installment contract

Question 7

General Warranty Deed

Answer 7

Warrants all 6 title covenants before and after seller took possession

Question 8

Special Warranty Deed

Answer 8

Warrants all 6 title covenants AFTER seller took possession

Question 9

Quitclaim Deed

Answer 9

Warrants nothing

Question 10

Title Covenants

Answer 10

Present: SRTCAE: covenant of seisin, covenant of right to convey, covenant against encumbrances

Future: WQEFA: covenant of warranty, covenant of quiet enjoyment, covenant of future assurance

Question 11

Title Assurance

Answer 11

Types of deeds, title covenants, title opinion based on search of public records, title insurance

Question 12

Deed Delivery

Answer 12

Does not require physical delivery, must have intent to divest oneself immediately

Actual or constructive - possession not determinative

Can deliver to third party if no reservation to recall

Question 13

Mortgage

Answer 13

Security interest in the property

Title theory- lender holds title until paid off

Lien theory- buyer holds title, lender holds security interest

Question 14

Judicial and Private Foreclosure

Answer 14

Property auctioned off

Excess goes to borrower

If not satisfied, lender can sue for delinquency judgment

Question 15

Deed of Trust

Answer 15

Three parties- borrower, trusted, lender

Private foreclosure

Question 16

Installment Contract

Answer 16

Two parties: borrower, lender

Automatic forfeiture, no transfer of title

Question 17

Covenant of Seisin

Answer 17

Covenants seller actually owns estate

Question 18

Covenant of the Right to Convey

Answer 18

Seller is rightful owner and has full title to convey - synonymous with seisin

Question 19

Covenant Against Encumbrances

Answer 19

Warrants no covenants or restrictions restrict use

Question 20

Covenant of Warranty

Answer 20

Seller will defend against claims of superior title

Question 21

Covenant of Quiet Enjoyment

Answer 21

Warranting no superior title in existence - synonymous with warranty

Question 22

Covenant of Future Assurances

Answer 22

Assures seller will take all reasonable steps to cure defects

Question 23

Recording System

Answer 23

Notice, bona fide purchasers, least cost avoiders

Question 24

Notice

Answer 24

Actual notice: direct knowledge of superior claim OR Constructive notice - inquiry notice, record notice

Question 25

Bona Fide Purchaser

Answer 25

Purchaser who purchases for value with no notice of superior title

Question 26

Least Cost Avoider

Answer 26

Person who fails to comply with the recording system

Question 27

Searching Title

Answer 27

Grantor/Grantee Index Tract Index: organized by parcel Nebraska, North Dakota, South Dakota, Utah, Oklahoma, Wyoming

Question 28

Recording Acts

Answer 28

Statutes to encourage compliance with recording system Race, Notice, and Race-Notice

Question 29

Race

Answer 29

Favors first to record

Question 30

Notice

Answer 30

Favors last bona fide purchaser

Question 31

Race-Notice

Answer 31

Favors subsequent bona fide purchaser who records first

Question 32

Title Insurance

Answer 32

Gives damages in monetary compensation for title defects

Question 33

Chain of Title Problems

Answer 33

Wild Deed, Deed recorded too early, deed recorded too late, deed from a common grantor

Question 34

The Shelter Rule

Answer 34

Bona fide purchaser can transfer protection to grantee S to B who doesn't record S to C who records C to D who knows of S to B D protected by shelter rule

Question 35

Wild Deed

Answer 35

S to B who doesn't record B to C who records S to D who records

Question 36

Deed Recorded Too Late

Answer 36

``` S to B who doesn't record S to C who knows of S to B C records B records C to D who records ```

Question 37

Deed Recorded Too Early

Answer 37

S owns Greenacre. B conveys Greenacre to C who records S to B who records B to D who records

Question 38

Deed from a Common Grantor

Answer 38

S owns X and Y. S conveys X to B and gains easement to cross X to Y. B records. S coveys Y to C who is unaware of easement. C records

Question 39

Caveat Emptor

Answer 39

Traditionally, buyer bore risk of loss for duty to disclose. Caveat emptor encourages buyer to exercise diligence in investigating condition of property Seller only owed duty where: affirmatively misrepresented property, actively concealed defects, owes fiduciary duty to buyer