Property II Outline
The Real Estate Transaction
Brokers
Traditionally standard commission at 6%
Listing agent – traditionally represents seller
Selling agent – traditionally represents seller
Issue arises that the seller’s agent is spending time with the buyer and the buyer is likely to divulge information because of that relationship
Dual Agency Agreement => one real estate agency represents both buyer and seller (have to disclose that to both parties)
Also may have buyers agents (could have dual capacity)
Fiduciary duty => required to exercise fidelity and good faith (even sub-agents have this duty)
Agent’s self-interest must be set aside
Multiple Listing Service (MLS) – central database
Policy arguments:
– Real estate agencies have a monopoly on the MLS service
The Contract Provisions
Mortgage Contingency
o An offer to buy is contingent upon successful mortgage application
o Success may mean acquire loan at a specific/reasonable rate
Inspection Contingency
prior to closing, explore the promises made prior to closing
o if some promises have been broken, you may be able to get out of the contract
Transferability
Assignability => you can assign your interest to a contract to another party prior to closing; OR
Enter into another contract to sell the same property
Note: selling property that you do not yet have title to is not a problem until closing, all you are doing is promising to deliver title.
Possession – as stated in K; reasonable time; or some statutes require at closing; others i.e. Ohio 30 days after closing
Statute of Frauds
The Statute of Frauds (SOF) requires a contract for the sale of real property to be in writing. The writing m
defense
Related to inducement – i.e. “We should put this in writing”….. “Ah don’t worry about that”
Policy arguments:
The purpose of the SOF is to prevent fraud/perjury
Need clear evidence that the parties knew what they were doing (it is important to put the transaction in writing)
Breech of Implied duty to deliver Marketable Title (prior to closing)
Traditional Rule: Existence of a burden on the title such as covenant restrictions, liens, easements that burden the land, mortgages, constitute encumbrances and render title unmarketable.
Modern Approach: To render a title unmarketable, there must be an encumbrance that creates a high probability of substantial injury to the buyer at the time of conveyance.
