Property II Outline
Land Transactions
I. Real Estate Transaction
A. Seller hires a broker and lists the property.
1. Seller pays the commission.
2. Often built into the price of the property (buyer actually paying).
B. Buyer and Seller agree to a price
1. Buyer can walk until a contract is signed or earnest money has been paid (down payment)
C. Execution of contract for the sale
1. Provisions:
a. Home inspection contingency
b. Mortgage contingency
1. Buyer is released if they cannot get financing
c. Title search
2. If one decides after the contract is signed that they want to back out generally the down payment will be lost.
D. Obtaining financing
1. Usually 10-20% down payment and the rest is a bank loan.
E. Title search
F. Title insurance
G. Closing
1. Money/Title change hands.
2. New deed and mortgage are recorded.
H. Brokers
1. Traditional agent is a fiduciary of the seller.
a. Act with the principal’s interest above agent interest.
b. Duty of care/Duty of loyalty
2. Broker must disclose: anything material to the matter in which he is employed or the discharge of the agency for which the broker has undertaken
3. Dual agents – owe no duty to anyone but they must notify that they are a dual agent.
4. Commission Due
a. Majority – commission is due when the agent has a buyer that is ready, able and willing to purchase the property (prior to the closing).
b. Minority – only when the closing has been completed.
1. Unless the sellers willful conduct causes the buyer to walk away.
C. Statute of Frauds
1. Any sale of land and evidence of the transfer (deed) have to be in writing.
2. You can satisfy the statute as a memorandum which sets out price, describes the real estate, and signed by the parties. (If no stated price it would be FMV or courts can imply a reasonable price or contract can refer
ning
a. The mere existence does not make the title unmarketable.
b. The violation makes the title unmarketable.
4. Easements
a. Majority – title is unmarketable even if the easement is known to the purchaser.
b. Minority – If the purchaser knows and they are visible then it does not make the title unmarketable.
c. PA – knowledge is irrelevant
5. Landlocked property: split of authority
6. Conklin – if title is gotten from AP is the title unmarketable? No one could find the owner of the undeveloped land. Split of authority.
7. Hazardous waste doesn’t not make title unmarketable, but still have to disclose.
C. Equitable conversion
1. Risk of loss
a. Majority – on the buyer because he holds equitable title.
