A contract of sale for real property must statisfy the Statute of Frauds
To satisfy the Statute of Frauds, the contract of sale must:
- be in a writing
- signed by the party to be charged AND
- include the essential terms: identity of the parties, description of the land, price
Exception to The Statute of Frauds
Part Performance Exception
(1) Contract exists and all conditions precedent have been fulfilled AND
(2) two out of three of the following have been met:
* Takes Possession
* Makes Payment (full or substantial)
* Improves the Property
Requirements for the contract of sale of real property
- Satisfy the Statute of Frauds
- Satisfy the Implied Warranty of Marketable Title
Implied Warranty of Marketable Title
A contract of sale must satisfy the implied warranty of marketable title.
Title is Unmarketable if:
* there is a defect in the chain of title
* there is an encumbrance not mentioned in the contract
* there is a violation of a zoning ordinance
* title was acquired by adverse possession
Equitable Conversion
Under the doctrine of equitable conversion, once the contract is signed:
* the buyer’s interest is real property &
* the seller’s interest is personal property
Risk of loss falls on the buyer, even if the seller remains in possession and control of the land.
A seller finds a buyer to purchase her real estate. If the seller entered into an exclusive agency agreement, the broker:
Earns NO commission
A seller finds a buyer to purchase her real estate. If the seller entered into an exclusive right to sell agreement with the broker, the broker:
Earns a COMMISSION
Valid Execution of the Deed
A deed must:
A deed must:
* Identify the parties
* Have words of grant
* Describe the land (so that it is identifiable)
* Be signed by the grantor
Deed - Presumption of Delivery
The deed is presumed to have been delivered if EITHER:
* The deed is GIVEN TO THE GRANTEE
* The deed is RECORDED
Deed - Presumption of Nondelivery
The is presumed NOT to have been delivered if:
* The deed is in the grantor’s possession OR
* The deed is merely given to the grantor’s agent (because the grantor probably has the power to get it back)
Types of Deeds
- Quitclaim Deed - Grantor promises nothing
- General Warranty Deed: Grantor makes six implied covenants on behalf of himself and his predecessors
* Right to Convey
* Seisen
* No encumbrances
* Further assurances - will perfect
* Quiet enjoyment - grantee will not be disturbed by 3rd party’s valid claim
* Warranty - will defend
3.Special Warranty Deed: Same covenants as general warranty deed but only as to himself, not predecessors
Merger
On the closing date, the contract and deed merge. After the closing date, the buyer can only sue on the deed.
All contractual provisions are gone unless they are included in the deed or the contract states they will survive.
Estoppel by Deed
After-Acquired Title Doctrine
Under Estoppel by Deed / After-Acquired Title Doctrine: If a grantor transfers property by warranty deed to a grantee (when the grantor does not yet have title), the title will pass to the grantee once grantor acquires title.
- the Grantor passes title it does not yet have to grantee
- Grantor later acquires title
- Title will pass directly to grantee
- Does NOT apply to QUITCLAIM deeds
- Does NOT apply if the grantor gave the land to BFP after transferring to initial grantee
Seller’s Duty to Disclose Defects
The seller of a home has a duty to disclose defects that are:
* not obvious,
* serious, AND
* the seller knows or should know of
The seller cannot actively conceal defects
Warranty for New Homes Sold by a Builder
Implied Warranty of Fitness and Habitability - must be:
- defective construction or construction not done in a workmanlike manner AND
- must be discovered within a reasonable time
- CANNOT be attributable to later changes in the structure or normal deterioration
- Buyer can seek damages from the builder for breaching implied warranty of fitness for new homes
Closing
A deed must be validly executed by the grantor AND delivered.
Execution: the deed identifies the parties, has words of grant, describes the land, and is signed by the grantor.
Delivery shows intent to pass title presently. Delivery is presumed to have occurred if the deed is in the grantee’s possession or if it is recorded.
Types of Recording Acts
- Notice: Last BFP (purchaser w/o notice of prior conveyance)
- Race Notice: First BFP to Record
- Race: First to Record (Notice does not matter) - RARE
Types of Notice
- Actual - Knowledge
- Inquiry - referenced in document or land
- Record - recorded deeds (Not Wild Deeds)
Transfers by Morgagor (Debtor)
Transferee takes “subject to”: only morgagor liable
Tranferee “assumes” morgage: morgagor AND transferee liable
There is a novation (agreement between morgagor - transferee - morgagee (bank)): only transferee liable
A note is transfered by:
Endorsement & Delivery = Note is Transfered
Effect of Paying Original Mortgagee After Transfer of Nonnegotiable Note (One that May Not be Transferred to Another)
Mortgagor’s Payment to Original Morgagee (Bank) Effective
