I. The Land Transactions
A.Stages
1. Locating a buyer
2. Negotiating the contract
3. Preparing for the closing
4. Closing the transaction
B.Broker:
1. exclusive right to sell
2. earns a commission;
3. the seller is liable for the commission if she defaults.
C.Attorney:
1. Negotiates the deal
2. Drafts the sales contract
3. Evaluating title documents
4. Issues a title opinion
5. Advises the client about zoning, tax and other issues
6. Helps the client fulfill contract considerations
7. Handles the closing
8. Negotiates or litigates any disputes that arise
D.Written Contract Required: The Statute of Frauds requires LOOK AT SOF DISCUSSION
E.Time of Performance: ESCROW WHEN EXCHANGED
F.Marketable Title: LOOK AT MARKETABLE TITLE IN NEXT SECTION
G.Defects in the Premises: LOOK AT DISCLOSURE
H.Remedies of Breach of Contract
1. Specific Performance: mandate that the breaching party perform the sales of the contract.
II. Contract of Sale
A.Statute of Frauds
1. Essential Terms
a) Identify the parties
b) Include words showing an intent to buy or sell
c) Specify the purchase price
d) Adequately describe the property.
2. Must be contained in writing:
a) The writing does not need to be intended as an agreement;
b) May be prepared after the agreement;
c) May consist of more than one document;
d) May be informal.
3. That is signed by the party against whom enforcement is sought.
B.EXCEPTIONS TO THE STATUTE OF FRAUDS: Part-Performance and Estoppel.
1. Part-Performance: 3 ELEMENTS
a) Taking possession;
b) Paying all or part of the purchase price; and
c) Making improvements to the property.
2. Equitable Estoppel:
a) One party has been induced by the other to substantially change position in justifiable reliance on an oral contract
b) Serious or irreparable injury would result from refusing specific performance of the contract.
C.Marketable Title:
1. GR: a title free from reasonable doubt, but not every doubt.
2. If the contract is silent about the quality of title, the law fills in the gap by requiring marketable title.
3. Factors of an Unmarketable Title:
a) If seller does not own the title, then it is unmarketable.
b) It is subject to lien, easement or other encumbrances.
4. Adverse Possession and Marketable title
D.EQUITABLE CONVERSION
1. The buyer is the equitable owner of the land until close of escrow, unless the contract specifies otherwise.
a) Includes post contract zoning amendments, eminent domain, and similar changes in a property’s legal status.
2. Risk of loss:
a) Expressly assigning the risk of loss in the event the property is damaged or destroyed before the close of escrow (ON THE SELLER)
b) If the seller is insured, then a constructive trust on the policy proceeds; seller must use money to benefit the buyer (prevents double dipping)
c) IMPLIED CONDITION: CA Statutes and other States
(1) An implied condition that the contract will not be binding if:
(a) The building is destroyed or significantly damaged; and
(b) The terms of the contract demonstrate that the building was an important part of the subject matter of the contract.
3. Inheritance: If equitable conversion has occurred, the seller’s interest is personal property (right to Sell) and the buyer is treated as the owner of the land.
E.THE DUTY TO DISCLOSE DEFECTS
1. Doctrine of Caveat Emptor: Let the Buyer beware.
2. Common Law Approach: This allows the seller to remain silent but cannot mislead by words or conduct. Nonfeasance
a) Fraudulent Misrepresentation:
(1) A false statement of material fact made by the seller to the buyer;
(2) Known to the seller to be false;
(3) Made with the intent to induce the buyer to purchase;
(4) Which the buyer justifiably relies on in deciding to purchase;
(5) To the buyer’s detriment or loss.
b) The buyer will be forced either to:
(1) Pay for an expert inspection; OR
(2) Negotiate for the seller to provide an express warranty on the homes condition.
3. What Must be Disclosed?
a) Material Defects: Something that effects the market value
b) Physical or Legal defects: Leaky roofs or zoning violations
c) Off-Site Conditions: Earth Quake zone or high crime area
d) Psychologically Impacted Property: think Stambosky
(1) Exceptions:
(a) People with AIDS living in the home
(b) Homicide or suicide in the home
4. Waiver of Duty
a) Express Waiver: Indicates that the buyer has:
(1) Considered the risk of known defects; and
(2) The seller reduced the price to compensate for these unknown risk
ion against the grantee for this covenant to come to play.
(b) COVENANT OF QUIET ENJOYMENT: The grantee’s possession and enjoyment of the property will not be disturbed by anyone holding a superior/paramount title.
(i) Rule: A covenant of quiet enjoyment can be breached by constructive eviction, but unless the convenantee’s right of possession is interfered with, there is not constructive eviction, and, therefore is no breach of covenant. Brown v. Lober
(c) COVENANT OF FUTURE ASSURANCES: Grantor will execute any additional documents and take any other actions that are reasonably necessary to perfect the grantee’s title.
b) Special Warranty: Contains the same six covenants in general warranty, but applies them only to title defects caused by acts of omissions of the grantor.
c) Quitclaim Deed: Contains no title covenants at all.
(1) Makes no warranties of any kind about the quality of the title.
3. Remedies for Breach
a) The grantor is liable for compensatory damages if any title covenant is breached
b) The amount of damages cannot exceed the purchase price paid by grantee.
B.Estoppel by Deed: The doctrine of estoppel by deed gives the grantee the thing bargained for, the land itself—not merely the damages.
1. Example: A (having no title) à B. Later A receives a good title from O. A estopped to assert that he had not title at the time of his conveyance, B didn’t take a title. After A acquires the title then B owns the property.
2. Application: applied to quitclaim deeds that purports to convey a fee simple.
C.Delivery: must be delivered with the intent that the title be presently operative. Grantor puts the deed in the hand of a third party who give the deed upon closing the transaction.
1. Other views:
a) No deliveryà this is where the evidence shows that the deed is to take effect at the death of the grantor, few courtS have held that there is no delivery and that the transfer is testamentary and void.
b) Delivery Good and condition enforced:
2. &
