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Real Estate Transactions
University of Dayton School of Law
Reilly, Tracy

I.                   Requirement of Writing: not necessarily in the form of a traditional contract:
A.    Admission of Contracts Existence
B.    Multiple Pieces of Paper
C.    Writing Need Not be a Contract
II.                Consequences of Lack of Writing
A.    If there is no sufficient writing, netiher party can enforce the contract against the other, either at law for damages or in equity for specific performance.  Merely unenforceable, not void.
i) If both parties fully perform, neither party can rescind after performing by claiming that the contract is a nullity.
ii)     Rescission and restitution (for example, for fraud), and perhaps even damages for fraud can be obtained despite the lack of writing.
III.             Elements Writing Must Contain:
A.    Names of the Parities (or identification of them).
B.    Identification of the Land: (often most varied among courts)
i) Few cases require detailed legal description, but most courts will accept a more general description if it can be made unambiguous by resort to extrinsic evidence. (such as “he only ones one piece of land”)
C.    Words indicating an intent to sell the land.
D.   Price
E.    Terms of Financing if the seller is financing.
F.     The date of closing  need NOT be included if the parties agreed to a date.  If no date is included, then the court will assume that a reasonable time is allowed.
IV.              Signature:
A.    Most American statues require that the writing be signed by “the party to be charged or his agent.” Thus it must be signed by the person resisting the lawsuit.
Judicially-created exception to the Statute, and permits the courts to enforce a contract in equity even though there is no sufficient writing to satisfy the Statute of Frauds. Note: merely a substitute for WRITING; must still prove elements of a contract, but these matters may be proved by oral testimony.
I.                   Acts of Part Performance:
A.    Not requirements of the contract, but acts showing that there was a contract. 
B.    Acts by Purchaser courts generally recognize:
i)  Payment
ii)      Possession
iii)    Improvements.
C.    Some courts require a combination of at least, and a few courts require all three. None will accept payment alone.
II.                Rationale:
A.    Evidentiary Rationale:
i)  Substitute evidence that the writing would provide.
ii)      There are very few if any cases in which there is no other conceivable explanation for a party’s payment, possession, or improvements to real estate. 
iii)    “Unequivocable Referability” is not usually applied very literally.
a.       Te real question is whether the acts point to the presence of a contract with reasonable clarity.
B.    Estoppel
i)  Courts which use this approach to part performance focus on the unfairness to the party who claims that a contract exists but who cannot enforce it.
C.    Mixing Theories:
D.   Seller and Buyer Using Part Performance:
i)  ?
E.    Enforcement in Equity only:
i)  The part performance doctrine only makes available equitable relief to the plaintiff, usually in the form of an action for a specific performance.
F.     Standard of Proof
i)  Though elements are part performance are met, courts frequently insist that the proof of the contract’s terms be extraordinarily “clear and convincing” or the like.
I.                   Equitable Damages:
A.    Specific Performance
B.    Restitution,
C.    Possible lien on the land.
II.                Damages: the general measure of “loss of bargain” damages is the difference between the contract price and the market value of the land on the date of breach.
A.    Events occurring after breach:
B.    Good Faith Failure of Title:
i)  About half of the American courts refuse to grant a purchaser loss-of-bargain damages if the seller’s breach is a result of title failure which was not a product of the seller’s bad faith.
a.       In these cases, restitution is given of earnest money, attorney fees, brokerage, and other similar costs.
ii)      Other half give purchaser FULL loss-of-bargain damages. (American Rule)
C.    Special Damage Recovery:
i)  Expenditures in Reliance on the Contract:
a.       The non-breaching party may have expended funds because she expected the contract to be completed.
ii)      Lost Profits:
iii)    Increased Interest Expense:
a.       If the purchaser is required to buy other property at a later time, the delay may result in higher interest cost on a purchase-money mortgage.
b.      Te usual approach is to measure the difference between the payment stream which would have been due under the original financing and that under the new financing which the purchaser was forced to accept, and to discount this difference to a present value.
D.   Liquidated Damages and Retention of Deposit
i)  Liquidated Damage or Forfeiture?
a.       Were actual damages difficult or impossible to measure?
b.      Was the amount of the liquidated sum a reasonable estimate of the probably actual damages?
**The majority of cases focus on the reasonableness of the amount.
ii)      Preclusion of Other Remedies:
a.       Preclusion of Damages
b.      Preclusion of Specific Performance
iii)    Election of Remedies
E.    Specific Performance
i)  Rationale: Property is unique
a.       Enforcing by the vendor: (still a majority to award to seller)
i          The doctrine of mutual remedies has passed away in that it is no longer automatic for courts to award the same remedy to sellers and buyers.
ii        Not awarded to sellers when there is an adequate remedy at law.  Usually much easier to calculate for seller; especially if there is a hot market for the property.
·  SP should be confined to those special instances where a vendor will 1) otherwise suffer an economic injury for which his damage remedy at law will not be adequate or 2) whether other equitable considerations require that the relief be granted.
·  Always a matter resting in the courts discretion.
·  EX. In a cold real estate market, the seller’s backing out reexposes the sellers to the risk that they wont be able to sell the house or that they will have to sell it at a lower rate.  The thing is, these damages cannot be determined at the time of the awarding of damages… awarding an estimate of damages can be quite unfair… this unfairness results directly from the “uniqueness” of real estate and the lack of a liquid market.
iii      Usually not allowed specific performance when there are lots of identical units in a hot market.
ii)      Circumstances under which SP is Unavailable:
a.       Lack of ability to perform:
i          Naturally, can’t enforce sale of a contract when the people either don’t have money or are otherwise unable to comply.
b.      Contrary Contract Language:
iii)    Property Being Purchased for Resale
a.       ??
F.     Damages in Addition to SP
I.                   Time is of the Essence: (Miller v. Almquist) p.62
A.    The parties may make time “of the essence” by so stating in the contract or y oter language which indicates that the time of performance is important to theem.
i)  If not indicated, court will assume a reasonable time.
ii)      In granting an adjournment of the closing date, the other party may unilaterally impose a condition that time is of the essence as to the rescheduled date.
a.       The effectiveness of this condition, though, is contingent on the specificity of the notice and on the reasonableness of the time period.
i          Reasonable time: depends on the facts and circumstances of the particular case.
ii        Factors Considered:
·  Nature and object of the contract
·  Previous conduct of the parties
·  The presence or absence of good faith
·  The experience of the parties
·  Possibility of hardship or prejudice to either one
·  Specific # of days provided for performance
B.    Duties and Remedies if Time is NOT of the Essence:
i)  If time is not of the essence, and a party tenders later, he still may enforce the contract, so long as he or she is not UNREASONABLY late.
a.       Time considered reasonable can vary. Generally delays of 30 to 90 days.
i          Ex. 10 year delay was not unreasonable where neither party attempted to enforce in the interim.
ii        NOTE: Buyer who is late is responsible for damages caused by the delay.
ii)      If UNREASONABLY late, cannot enforce the contract.
C.    Duties and Remedies if Time IS of the Essence:
i)  If time is of the essence, and a party tenders late, the other party is fully excused from performance.
a.       Lateness becomes TOTAL breach.
D.   Waivers of Strictly Timely Performance:
i)  Even if time is of the essence, courts often find waivers of strict performance from oral or written statements or from the parties actions.
a.       SOF does not bar oral waivers.
I.                   Marketable Title:
A.    A marketable title is one which is free of all … which will not decrease its market value.
i)  Part of this is things which n

e closing occurs.
II.                Judgment Liens
A.    Idaho’s position, taken in Fulton v. Duro, that the purchaser’s equitable interest is “real property” and hence subject to judgment liens, is very widely accepted.
B.    Judgment against the Vendor
C.    Judgment against the Purchaser
III.             Type of Losses: While losses which equitable conversion imposes on the purchaser are usually the result of fire, flood, wind, or other physical hazards, the risk of changes in the property’s legal status is sometimes allocated to the purchaser in the same way.
A.    Zoning Changes:
i)  Contract will not be enforced if zoning change has made property unusable for purchaser’s intended purpose.
B.    Building Code Change:
C.    Eminent Domain Action:
IV.              Loss from title defects:
A.    An event which occurs during the executory period of the contract and which cause a loss is also a title defect, such as the imposition by the city of a lien for a sewer improvement assessment. 
V.                 Risk of Loss
A.    Uniform Vendor and Purchaser Risk Act
i)  § 1. Risk of Loss: p. 91
B.    English view: MAJORITY: (Doctrine of Equitable Conversion) Vendee acquires equitable ownership of the land as soon as the contract is signed and the risk of loss immediately shifts to him.
i)  Exception: The vender will bear any loss which results from HIS neglect, default, or unreasonable delay in carrying out the contract.
ii)      Vender must bear the loss if at the time of the damage in was not in a position to convey the contract that he had contracted to convey.. because, therefore, the buyer is not in equitable possession…  title wasn’t merchantable.
a.       Purchaser is not recorded as the equitable owner—so he cannot be forced to pay full price for defective title.
C.     Mass. Rule: MINORITY: Burden of loss remains on the vendor until legal title is conveyed.  And even though the purchaser is in possession.  These courts ignore the Equitable Conversion Doctrine.
i)  Under this doctrine the buyer can only rescind in the case of SUBSTANTIAL damage.
ii)      If insubstantial damage the abatement of the price.
D.    The Possession Rule: The risk is on the party in possession.
i)  Vender- so long as he remains in possession and has title.
ii)      But that then shifts to the purchaser if the purchaser takes possession OR title.
I.                   Early Antecedents of the Deed
A.    The grant
B.    The lease and release
C.    The bargain and sale deed
D.   The covenant to stand seized
II.                The Modern Deed
A.    Some of the early types of deed described above were required to be in writing, while others were not. 
B.    English Statute of Frauds, enacted in 1677, required all deeds to be written, and every American state has adopted this rule.
C.    Even though American deeds often use the terminology of the old English deed forms, the technical terms used in England no longer have much significance in this country, and the courts will give effects to the parties’ intent if the basic elements of a deed are present.
III.             Elements of a Deed:
A.    Deeds must contain much same information as a contract for sale:
i)  identification of the parties
ii)      description of he land,
iii)    some words indicating present intent to convey,
iv)    and the grantor’s signature.
B.    Grantee’s Name in Blank:
i)  A deed with no grantee’s name is obviously void.
ii)      When grantor’s name is left blank, courts have upheld people’s filling in their own names, even after the grantor has died. (implied evidence that the