RULES
LAND TRANSACTION
Purchase of Home:
1. Contract of Sale
2. Deed
3. Mortgage
Time Line of Real Estate Trans:
1. Seller- List prop. w/ broker
2. Buyer- C house, want to buy, sign K, Pay a down payment (earnest money)
3. Mort-bank interest in land –Note (promise 2 pay)
4. Closing- Time between K and closing is EXECUTORY PERIOD
5. Deed is recorded: Doesn’t effect relationship between buyer/seller – Rather – Rest of the World
CONTRACT OF SALE:
Statute of Frauds:
1. Transfer of Interest in Land in Writing:
· Leases, deeds, mortgages easements…
· Sig. of parties, legal des, price (email ok)
2. EXCEPTIONS:
· Part Performance- if evidence exists (ie move in2 house, fix house)
· Estoppel- Unconscionable injury by denying enforcement After u seriously changed position based on reliance
Marketable Title:
Express in K of sale – if not it is implied
RULE: Title is market. when buyer is w/o doubt (when sub. poss. for litigation = title unmark.)
Private: Mere existence makes title unmarketable unless – K of sale says u take subject to
Public: mere existence still marketable
Violation: Of either renders title unmarketable
Types of Defects = Renders Title Unmarketable:
1. Claim in Chain of Title
2. Encum
nder title unmark.
Equitable Conversion:
If enforceable K, equity regards what ought to be done. S/B sign K (S=personal/B=real prop interest) If prop/ destroyed & in EC state Buyer bears loss
Duty to Disclose Defects:
Traditional Rule: Strict Caveat Emptor (buyer beware) – seller not required to tell of defects
· Exceptions = Affirmative Misrep., fiduciary/confidential rel.
Now most states req. seller to tell of known defects
· Remedies: In PA seller/broker actual dmgs for failure to disclose
STAMBOVSKY RULE:
Condition created by seller impairs value of K (& w/in knowledge of seller & prudent buyer not able to see or find defect = Buyer can rescind K
· DEFECT HAS TO BE LATENT
JOHNSON RULE: (4 Elements/Majority)
1. Defect must materially effect the value of prop
2. Seller must be aware of defect
3. Defect must be latent
4. Latent defect must be unknown to buyer
How to determine if defect is material/latent:
1. Objective Test: Whether a reasonable person would attach importance to it when deciding to buy
