Property Law
Semester 2 Outline
I. Conveyancing Law Basics
a. Introduction to Buying and Selling Real Estate
i. John C. Payne, A Typical House Purchase Transaction in the United States (1966)
1. Consult a real estate agent.
2. Employ attorney to draft a proper contract/agreement
3. Obtain a mortgage
a. Buyer requires
i. Credit
ii. Assurance that the seller has a good title to convey
4. Commitment for the necessary loan
5. Title assurance
a. Methods of establishing title
i. Direct search culminating in a certificate of title – written statement to the effect that on the basis of the attorney’s search the fee simple is vested in the seller free and clear of any encumbrances other than as noted
ii. Abstract search
iii. Local title insurance
6. Closing
ii. Realtor Association of the Western Suburbs Standard Residential Sales Contract
1. Buyer, Seller, and property information
a. Contract does not indicate whether the buyers intend to take title as joint tenants or tenants in common or tenants by the entireties.
b. When contract executed, buyers have equitable tile and can enforce by specific performance.
c. Contract, while comprehensive, is poorly drafted.
i. Includes term of art “fixture”; A fixture is not something that is attached to the property, but something that should be.
2. The Earnest Money
3. The Closing Date
4. Possession
5. The Deed
a. “Good title” used – usual contract of sale requires the seller to furnish “marketable title”
6. Financing Condition
7. Prorations
8. Disclosures
a. Seller’s marital status not disclosed.
9. Other Terms and Conditions
10. Attorneys’ Modification
11. Inspection and Warranties
12. Seller Representations
13. Title
14. Affidavit of Title
15. Clear Condition
16. Escrow Closing
17. Survey
18. Risk of Loss
19. Transfer Tax Stamps
20. Well and Septic Test
21. Statement of Assessments
22. Statutory Compliance
23. Merger of Agreement
b. The Contract of Sale
i. Statute of Frauds (1677) – sought to make people more secure in their property by making deceitful claims unenforceable.
1. Two important provisions
a. Section 1 to 3 provided that, except for leases for less than three years, no interest in land could be created or transferred except by an instrument in writing signed by the party to be bound thereby.
b. Section 4 provided that no action shall be brought “upon any contract or sale of lands…or any interest in or concerning them…unless the agreement upon which such action shall be brought or some memorandum or note thereof shall be in writing, and signed by the party to be charged therewith.”
2. Exceptions
a. Part performance – allows the specific enforcement of oral agreements when particular acts have been performed by one of the parties to the agreement.
b. Estoppel – applies when unconscionable injury would result from denying enforcement of the oral contract after one party has been induced by the other seriously to change his position in reliance on the contract.
3. Hickey v. Green, 14 Mass. App. Ct. 671 (Appeals Court of MA, 1982)
a. MA adopts very restrictive Restatement (Second) of Contracts §129 (1981) view:
i. A contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to comply with the Statute of Frauds if it is established that the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only be specific performance (emphasis supplied). Page 576.
ii. Usually, specific performance is widely available and part performance can occur unreasonably and even without the knowledge of the seller.
1. CT: Plaintiff’s acts are sufficient to take an oral agreement out of the Statute of Frauds if they “clearly refer to some contract in relation to the matter in dispute, the terms of which may then be established by parol . . ..” Rienzo v. Cohen, 112 Conn. 427 (1930).
ii. Marketable Title
1. Marketable title – “a title not subject to such reasonable doubt as would create a just apprehension of its validity in the mind of a reasonable, prudent and intelligent person, one which such persons, guided by competent legal advice, would be willing to take and for which they would be willing to pay fair value.” Seligman v. First Natl. Invs. Inc., 184 Ill. App. 3d 1053 (1989).
a. Utz: No one is obliged to buy a lawsuit, i.e., no one is obliged to complete a purchase of land if title to the land would have to be defended in court.
2. A marketable title requirement on purchase protects the buyer on resale.
a. Marketable title is a more lenient standard than unimpeachable title to sovereign; designed to cleanse defects from title when they can no longer result in litigation.
b. Land-locked land held not to impair the marketability of its title.
i. Buyer need not defend a lawsuit
ii. Lack of ingress and egress is no blemish on title but only affects the value of the land
3. Marketable title statute – C.G.S. §47-33b to §47-33l
a. Record title traced back only 40 years to be assured that the title is marketable.
4. Lohmeyer v. Bower, 170 Kan. 442 (1951)
a. Violations of a zoning restriction and the negative (restrictive) covenant encumber the title to the land so as to expose the party holding it to the hazard of litigation and make title doubtful and unmarketable.
i. Majority of courts regard a zoning violation as an encumbrance, but not the existence of a zoning restriction.
b. Visible encumbrances – visible signs of potentially valid easements and other rights of third parties to use the land in question.
i. Differing views:
1. Buyer cannot refuse to take property subj
the deed
a. The usual way of avoiding the doctrine is to say that the particular obligation of the seller is independent or collateral obligation
iv. Implied Warranty of Quality – similar to implied warranty of habitability in landlord-tenant law; suit can occur only after the closing has taken place and the plaintiff has accepted the deed
1. Lempke v. Dagenais, 130 N.H. 782 (1988)
a. We hold that privity of contract is not necessary for subsequent purchaser to sue a builder or contractor under an implied warranty theory for latent defects which manifest themselves within a reasonable time after the purchase and which cause economic harm.
i. Tort standard is applied.
c. The Deed – something other than contracts; written counterpart of performances by the grantor of the property being transferred
i. Warranties of Title
1. “I hereby give, grant, bargain, sell, remise, demise, release, and convey unto X” is a formula that lumps together several distinct eras of real estate conveyancing theory
2. Real estate deed is an instrument that must be delivered to a grantee in order to pass title to an interest in land
3. Species:
a. A general warranty deed is one that warrants title against all defects, whether arising before or after the grantor took title
i. Present covenants (in praesenti)
1. Covenant of seisin – the grantor warrants that he owns the estate he purports to convey
a. Covenant extends not only to the land described in the deed but to all appurtenant easements, real covenants, etc., as well as to all appurtenant fixtures such as plumbing, including septic systems
2. Covenant of right to convey – grantor warrants that he has the right to convey the property
3. Covenant against encumbrances – grantor warrants that there are no encumbrances on the property
a. Encumbrances may include: mortgages, liens, easements, and covenants; different in different jurisdictions
ii. Future covenants (in futuro)
1. Covenant of general warranty – grantor warrants that he will defend against lawful claims and will compensate the grantee for any loss that the grantee may sustain by assertion of superior title
2. Covenant of quiet enjoyment – grantor warrants that the grantee will not be disturbed in possession and enjoyment of the property by assertion of superior title
