Property I Outline

1. Introduction to Buying and Selling Real Estate

a. Typical House Purchase Transaction in the United States, John C. Payne

b. Realtor Association of the Western Suburbs Standards Residential Sales Contract

c. Questions and Problems

2. Contact of Sale

a. General Information

i. Land sale contract (LSK) are bilateral executory contracts (every purchase is a sale and every sale is a purchase—involving two future promises)

ii. Four requirements of LSK (a.k.a. Purchase and Sales Agreement)

1. Statute of Frauds – all LSK must be in writing (note: LSK is not a deed, an actual conveyance; a deed must be in writing as well)

a. Parole evidence rule – terms of written contract can’t be varied or added later

2. Presumed remedy for breach – specific performance (because every land is considered unique)

3. Promise of marketable title (implied or expressed)

a. Title not subject to such reasonable doubt that it would create apprehension in the mind of a reasonable person

b. If no marketable title, buyer can rescind

c. Ways to avoid, by promising…

i. Insurable title

ii. Quit claim deed

4. Immediate legal consequence – equitable conversion: after contract is signed and down payment made, the buyer is treated like the owner of the property (buyer has equitable interest in land, seller has equitable interest in money)

iii. Minimum terms of LSK

1. Description of the property

2. Signature of the bound party

3. Price and time not required, but should be in the contract

b. Statute of Frauds

i. Hickey (Ps) v. Green (D) (P put deposit on D’s lot after orally agreeing to purchase the land; Ps left payee line blank; D didn’t fill in the line or indorse it; Ps sold their property and received payment for it; D refused to sell because it had sold it to another)

1. The contract for transfer for land interest can be enforced even though it did not comply with SOF because P reasonably relied on the contract and changed her position that injustice can only be avoided by specific performance

a. D knew that P was relying—P was planning to sell the house

b. Under equitable estoppel, D may not sell the house to another for a higher price since P relied on D

c. If P had no obligation to sell its own house, court may have granted restitution instead of specific performance

ii. Notes and Problems

c. Marketable Title

i. Lohmeyer (P-buyer) v. Bower (D-seller) (provision that D would provide marketable title; house violated two restrictions—that the house be two stories (private) and at least three feet away from the lot line (public zoning ordinance); D offered to buy two feet in order to be at least three feet away from the lot line; P refused)

1. The title was not marketable because it violated the private and public restrictions

a. Existence of zoning ordinance is not grounds for rescission; private covenants or restrictions can be an encumbrance that makes title unmarketable (G: presence alone doesn’t make unmarketable)

b. Violation of both led to the possibility of litigation à unmarketable title

i. The contract provision that said that the conveyance was subject to the restrictions referred to the existence of them, not violations of them

ii. Notes and Questions

iii. Conklin v. Davi (P-seller, D-buyer; contract required P to furnish marketable and insurable title; D found that P obtained part of the property through adverse possession and wanted to rescind contract)

1. Title obtained through adverse possession is not per se marketable

a. Title by adverse possession can be insurable and marketable (G: If record title not promised, can be…)

i. Title insurance company agreed to insure so insurable title requirement met

ii. P had to perfect record title (get record title or action to quiet title) OR convince buyer or court that title was marketable despite possession through adverse possession (latter option taken)

1. P’s burden of proof was not met; had to show that if there was a suit between the P and outstanding claimant to land, P would prevail AND that likelihood of litigation was low

2. Marketable title requirement can be implied by law even if the contract does not specify it; marketability is determined at ti