A. Two major events:
i. Signing of the K ii. Closing of the K B. Deed v. Title: i. DEED: written instrument which transfers title to legal right of ownership ii. TITLE: cluster of priviledges transferred; more abstract-establishes legal rights to property. C. The Statute of Frauds i. Requirements of a written memorandum 1. Signed by party to be bound 2. Adequate statement of the terms, if agreed upon 3. Adequate description of the property conveyed 4. Adequate identification of the parties to the K 5. MUST be in writing ii. To Defeat Statute: 1. Evidence of a K 2. Detrimental reliance iii. Exceptions to affirmative defense of S.O.F. 1. Part Performance: if evidence requirements are satisfied; clearly points to a K of sale; a ct. of equity is, under certain circumstances, allowed to specifically enforce an oral K for the sale of an interest in land a. In the interim b/t K & closing, buyer takes physical possession & pays for the prop up front when move in early (full consideration) b. In the interim, buyer takes physical possession & makes substantial improvements. 2. Estoppel: must show a party has reasonably relied on the alleged K and materially changed his position a. P relied to his detriment of oral agreement, so D should not use SOF to get out of it. 3. Equitable Fraud Theory – offending party is estopped to deny the existence of a K b/c of the acts of another party; proof of hardship by the other party is the most important aspect a. Remedy at Equity = specific performance b. Remedy at Law = damages D. Marketable Title: title is one which is free from reasonable doubt; seller promises in K i. A title is doubtful & unmarketable if it exposes the party holding it to the hazard of litigation. 1. An implied condition of a K of a sale of land is that the seller 2. The Standard: a. Title does not have to be perfect-some risk is inherent when a buyer purchases land b. Standard is reasonableness-what could a buyer determine before buying ii. Covenants & Marketability: mere existence w/o disclosure can make a title unmarketable iii. Zoning & Marketability: more difficult to ascertain & doesn't make title unmarketable if disclose iv. Merger = promises in K of sale are merged into deed a. BAD seller can leave parts out & screw buyer b. Disfavored today by most cts. v. Equitable Conversion = if there is a specifically enforceable K for the sale of land, equity regards as done that which ought to be done. a. The buyer is viewed in equity as the owner from the date of the K. The seller has a claim for $ secured by a vendor’s lien on the land. The seller also holds legal title as trustee for the buyer. b. Risk of Loss ~ buyer still has to go thru w/ the sale & seller must turn over insurance vi. Inheritance ~ when 1 of the parties to a K for the sale of land dies, & the issue arises whether the decedent’s interest is real prop or personal prop; if equitable conversion has occurred the seller’s interest is personal prop (right to purchase price) & the buyer is treated as owner of the land. vii. Types of imperfections a. Events which have deprived the vender of title, such as: the adverse possession or eminent domain. E. The Duty to Disclose Defects i. Traditional rule: Caveat Emptor: Buyer Beware (general starting point) ii. Disclosure rule: Where a condition has been created by the seller and materially impairs the value of the K and is peculiarly within the knowledge of the seller or unlikely to be discovered by a prudent purchaser exercising due care, nondisclosure constitutes a basis for recission as a matter of equity. a. Concealment: An act to hide a material defect b. Fradulence: An affirmative disclaimer that a material defect does not exist F. The Implied Warranty of Quality i. Against contractors, not normal house sellers a. A subsequent purchaser should be able to sue the builder or contractor on the theory of implied warranty of workmanlike quality for latent defects that cause economic loss. b. This may be done w/out privity of K, so long as it is w/in a reasonable time after the purchase, and the defects cause economic harm G. Reasons: i. Time for defects to occur or appear ii. Changing society iii. Ordinary buyer not in a position to discover all defects iv. Consumer protection is needed v. Duty there regardless of who owner is vi. Economics a. Latent Defect: occurs after a reasonable inspection b. Patent Defect: occurs on the face of the workmanship c. Limitations: 1. Latent defects which become manifest after the subsequent owner’s purchase & which were not discoverable had a reasonable inspection of the structure been made prior to the purchase 2. Limited to a reasonable period of time 3. Plaintiff has b.o.p. to show that the defect was caused by the defendants’ workmanship vii. Workmanship “breach of duty” customary standard of care & skill. H. The Deed i. General Warranty Deed a. Warrants title against all title defects whether they occur b/f or after the grantor took title b. If an oral condition accompanies the deed, it is dropped; everything must be in express / in writing ii. Special Warranty Deed a. Contains warranties only against the grantor’s own acts but not the acts of others; thus if the defect is a mortgage on the land executed by the grantor’s precedessors in ownership; the grantor is not liable b. Trustee’s Deed, Guardian Deeds, Personal Representatives Deeds iii. Quit Claim Deed a. Has no warranties “If I have an interest, I am conveying it to you.” b. merely conveys whatever title the grantor has, if any, and if the grantee of a quitclaim deed takes nothing by the deed, the grantee cannot sue the grantor c. If there is not interest when conveyed, the grantee receives nothings but there was nothing to give. iv. Forged Deed ~ Void Deeds a. No signature b. Void in ALL circumstances c. Grantor trumps bona fide purchaser v. Fraudulent Deed ~ Voidable Deeds a. Voidable b/t original grantor & grantee (party who has been defrauded) b. Law places risk of loss on person who is better able to know of I. The Mortgage i. Two components: promissory note and granting of a security of interest ii. Important factors: credit ranking, earnings, and job security iii. Mortgage establishes security agreement as to collateral a. Mortgagor – home owner b. Mortgagee – lending institution c. Note – evidence of promise to repay obligation (personal) iv. What happens if you default on your mortgage? a. Usually period of time to redeem “equity of redemption” b. Period of time depends on each state’s statute c. Possibility of foreclosure sale – opportunity to redeem has ended d. Statutory right of redemption – deal w/ right to buy back prop from 3rd party Some jurisdictions refuse to enforce the forfeiture provision of a land K if the proportion of the purchase price paid is so substantial that the amount forfeited would be an invalid penalty |
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