Real Property Outline

WATSON REAL PROPERTY II – FALL 2011

I. Introduction

1) Steps

a. K to close (not required)

i. earnest money K

-buyer gives seller deposit to show intent to buy

-if buyer breaches, usually seller keeps deposit as liquidation damages

b. executory period

i. time to: validate ownership, clear title, get loan

c. close

i. installment land K

-seller finances buyer

-buyer possess house, but seller doesn’t give buyer title until all loan satisfied

2) Security

a. promissory note

i. recourse

-bank (mortgagee) hold buyer (mortgagor) personally liable to repay debt

-mortgagee gets money by going after mortgagor personally

ii. non-recourse

-mortgagor is not personally liable for note

-mortgagee can only go after the home (mortgage)

b. mortgage

i. mortgagee holds house as security for repayment

ii. if mortgagor doesn’t repay the loan, default, and foreclosure

iii. mortgagee gets money by sale proceeds

3) Foreclosure

a. mortgagor in default

b. mortgagee terminates mortgagor’s equitable right of redemption

c. remainder of debt is satisfied by deficiency judgment (recourse personal liability)

II. Statute of Frauds

1) Law

a. rule

i. land sales require written K (no oral K)

ii. can be multiple pages

iii. if writing destroyed, parties can testify to it

b. requirement

i. written K

-K/memo/note/letter/check/pleading

-doesn’t have to be a traditional K

-but if no writing, unenforceable

ii. essential terms (PP-DICS)

-parties (names)

-price (not essential-reasonable if not included)

-description (don’t need to be specific)

-intent

-consideration

-signature (of person resisting enforcement) (any form)

-(don’t need closing date)

c. rescind land K (eliminate K)

i. written: valid

ii. oral: valid

d. modify land K (creating a K)

i. written: valid

ii. oral: invalid (exception: oral modification of time of performance upheld)

2) Exception (no SOF)

a. part performance

i. definition

-substitute for writing

ii. evidence (O-PPI)

-oral K (PP-DICS)

-buyer substantial/total payment (alone not enough)

-buyer possession (biggest factor)

-buyer substantial improvements

iii. rationale

-evidentiary: actions give evidence of the K

-estoppel: reliance/fairness/prevent injustice

iv. law

-full performance: cannot rescind

-partial performance: K enforceable in equity

v. remedy

-specific performance (no damages)

III. Time of Performance

1) Introduction

a. parties don’t have to fix a time for performance

b. default: reasonable time

2) Time is of the Essence Clause

a. definition

i. oral or written clause stating specific date of performance

ii. can be declared unilaterally

b. law

i. TOE clause:

-breach

•reasonably late (30 days): total breach (exception: waiver)

•unreasonably late: total breach (exception: waiver)

ii. no TOE clause:

-breach

•reasonably late (30 days): parties can still perform

•unreasonably late (10 years): total breach

iii. TOE modification

-rule

•party can write/orally create TOE clause later

-types

•mutual agreement

•unilateral (SR)

-specific

-reasonable (previous conduct, hardship /prejudice, # of days provided)

c. remedies

-buyer

•actual

•S.P.

•restitution

•special

-seller

•actual

•S.P.

•liquidation

•special

3) Conditions

a. definition

i. condition on party’s duty to perform

b. types

i. precedent

-must occur before party has duty to perform

-exception: waiver

ii. concurrent

-neither party has duty to perform until other party has tendered performance

-tender: willing and able to perform

-exception: repudiation, unwillingness to perform, difficult/impossible performance

c. exceptions

i. waiver

ii. repudiation

iii. unwilling to perform

iv. impossible to perform

v. interference

IV. Financing

1) Introduction

a. promissory note

i. personal liability to pay off loan (mortgagee’s ability to sue mortgagor personally)

ii. secured by mortgage

b. mortgage

i. security interest to repay the note (mortgagee’s ability to foreclose on property)

2) Types

a. cash sale (from seller POV)

i. definition

-seller walks away with 100% of asking price in cash

-buyer gets legal title

-bank gets promissory note and mortgage

ii. types

-cash buyer

-bank loan

b. installment land K

i. definition

•seller finances buyer

•buyer doesn’t get title until all payments made

c. assumption