Chapter 7 – Land Transaction
A. Introduction to Buying and Selling real Estate –
Typical House purchase:
1) consult real estate agent to know which properties are for sale
2) Reasonable and prudent buyer – employ attorney to draft proper contract and steer him through legal and financial obstacles. Or an unreasonable buyer will just sign whatever the real estate agent supplies.
3) After price agreement is met the buyer will need a credit and the assurance that the seller has good title – which a mortgage can give. And buyer will have to solicit credit from some lender.
4) Credit is the lifeblood of real estate, and every agent must assist buyers with obtaining financing. The agent will forward loan application to lending institution and a credit report will be obtained. Lender will notify attorney that an investigation of title will be required.
5) Land titles must be recorded in county courthouses. There are open to public inspections. Three types of title insurance 1) registration 2) Attorney gives client certificate of title, 3) local title insurance
6) Closing – to bring the parties together and permit them to execute and delivery necessary documents simultaneously with payment of purchase price and settlement of transaction costs.
7) Lender’s attorney will send deed and mortgage to courthouse for revenue stamps and recording will pay the necessary fees. And then send deed to the buyer.
The buyer now has title, subject to mortgage, and is in possession. Transfer complete except for repayment of loan.
Process of buying residential and commercial property:
In buying a house:
1) get a real estate agent
2) agree on purchase price and sign a basic contract, which generally rely on contingencies. Buyers have been willing to waive some contingencies to make themselves more attractive. Contingency for inspection – they check out the roof, fire place, etc. and based on what they find they renegotiate the purchase price. Contingency – if you can’t qualify for the mortgage you can get out of the deal and not owe any money.
3) Lawyer drafts closing document and does a title search.
Title assurance: to make sure there is good appropriate record title
1. Certificate of title – lawyer provides or searches to make sure there is good record of the title. Abstract – company gathers the records all together and provides the lawyer with certain documents.
2. Title insurance – one time premium and the policy is not transferable, so if owner sells the house the purchasers have to get new title insurance.
B. The contract of Sale
1. Statute of Frauds: sale of land must be in writing. Memorandum of the parties’ agreement, summarizing some terms but not the entire oral agreement, will satisfy the Statute if it specifies :
(1) the names of the parties;
(2) the land to be conveyed;
(3) normally,
e title and insurable title, they go to different things
2 problems with the title:
1. privately imposed restrictive covenant that they house has to be 2 stories.
2. publically imposed zoning ordinance which indicated how far back the house has to sit with other property lines.
Municipal violation: what is the court concerned with here:
public restriction – does the existence of the zoning restriction make the title unmarketable per se? à NO
violation of the zoning ordinance, does the fact that there is a violation make the contract unmarketable? à yes, the problem is that he could be sued later, and should not have the hazard of litigation.
if you can cure the zoning ordinance if they can, can they bargain for a new contract, yes, but they buyer is not legally bound to accept the term of the contract. They are entitled to do something they didn’t contract to do.
Property can still be sold, it is not the privately imposed encumbrance, it is that the house is in violation of the encumbrance, and thus the buyer is subject to the hazard of litigation. If you are looking at the threat of litigation then you have a marketable title problem.
