I. K’s FOR SALE OF LAND
1. PROCESS OF REALTY TRANSFER
i. Execution of a K of sale
ii. Inspections—examination of title
iii. Financing
iv. Closing/settlement
v. Recording of the deed and security instrument
2. TYPES OF Ks:
i. Short term/earnest-money Ks (typical)
1. Written agreement of sale
2. Time b/w execution and closing
a. Allows due diligence, financing, etc.
ii. RE installment K/K for deed (midwest)
1. Buyer immediately takes possession; makes pmt to seller on regular basis over term-life; receives deed when last installment is paid
2. Seller finances purchase and K operates as mortgage
3. BROKERS
a. Listing Process
i. A K appointing broker as agent in obtaining a buyer
1. seller obligated to pay broker a commission
2. broker owes fiduciary duty to seller
3. privity of K b/w S and broker, NOT B and broker
b. Duties
i. Show, advertise, and market the property
1. MLS book: operated by board of realtors (members only)
ii. Minimum service provisions—services a consumer must purchase from a broker
iii. Transaction brokers—does not exclusively represent either buyer/seller
1. Duties:
a. facilitate the transaction for both sides
b. even-handedness towards both parties
c. cannot disclose confidential information obtained from either party
iv. Agency
1. CO stat—no buyers brokers, no seller’s brokers w/o K, no Kàtransaction broker
v. Duty to Disclose
1. Easton
a. F: house damaged in earthquake, no direct E broker knew
b. H: agent w/ duty “to conduct a reasonably competent and diligent inspection of the residential property and disclose all material defects to buyers”
i. àreasonable std of care (measured by edu, experience, and exams required by license)
ii. Exculpatory clauses in K’s generally don’t work
2. Remedies:
a. B can sue broker for fraud, reliance, concealment, negligent misrepresentation even w/o privity/agency/fiduciary duties
i. Eg. turnkey K for 8 mobile homes, 2 of which are not zoned
b. Intentional misrepresentation: affirmative statement of a false fact intending for B to rely on opinionàpunies, recision of K
c. Intentional concealment: in equity and good conscience broker would inform B
d. Negligent conduct: easier BOP than intentional fraud AND brokers w/ insurance (deep pockets)
4. SOF
a. memorandum (1) identifying the parties, (2) describing the subject, (3) stating material terms of K and (4) properly signed (both are loosely interpreted)
i. writing:
1. several related docs which can be construed together, destroyed but credible proof it existed, written long after K formed
ii. signature:
1. signed by one party is ok
2. email signatures are ok (see Rosnefeld v. Zerneck)
b. any material alternations must be in writing
i. eg. price, details of pmt, identification of land (legal description OR address)
c. Listing agreements must be written
i. Types of listing agreements:
1. Open listing—owner/seller pays commission if broker sells property BUT seller w/ ultimate authority to sell the property/find new agent
2. Exclusive agency listing—one broker for a set time BUT seller can make sale personally
3. Exclusive right to sell listing—owner pays commission solely to broker…most common
d. Drake v. Hosley
i. F: seller w/ exclusive listing agreement, seller balks at selling via broker and sells through another broker to different buyers
ii. I: is original broker owed commission when seller defaults and finds new buyers w/ new broker?
iii. H: Yes, according to both Dobbs and CL
iv. Notes:
1. Dobbs Rule: real estate broker earns commission when K of sale is performed
a. “performance:” time of closing of title, OR
b. if seller defaults on the sale and “improper or frustrating conduct” by owner prevents title from passing
2. CL Rule/Colo Stat.:
a. Broker entitled to commission after finding buy
I: buyer’s consequential damages
c. LR: Hadley rule
d. H: Where the buyer has obtained specific performance, but because of the delay has incurred higher mortgage rates, then his loss should include the higher financing cost.
i. BUT, typically, interest rate discrepancies are not discrete to calculate damages in terms of it alone
ii. àneed for expert witnesses
b. Specific Performance—equitable remedy
i. Spec perf AND damages for carrying costs, and interest on purchaser money mortgage purchaser would have paid but for breach (see Dato v. Mascarello).
ii. Schwindler—Buyer’s spec perf
1. S accepts offer from B; B moves in w/o closing and pays S $1500/mo until closing; S refuses to sell after delays; B sues for spec perf: $ for deed
a. Spec perf grants equitable relief where the damage remedy at law is inadequate
b. CONSIDER:
i. SOF
ii. Reliance on K (std: clear and convincing proof)
iii. Equitable: No hardship/unconscionable result
iv. Damages hard to prove
2. KEY: uniqueness of the property
a. I: condos (still have sentimental value)(but see Centex)(reasoning a condo development has definite price schedule for similar units)(holding spec perf as a remedy was inapplicable, damages were appropriate)
b. I: flipping homes (not unique…damages appropriate)
3. Notes:
a. Prove: B ready, willing and able and confounded by S
i. KEY: B must tender performance unilaterally
b. difficulty determining mkt value for damages?
i. Appraisersàtrial (fight over appraisals)
ii. Neighboring units
iii. àa lot of uncertainty
