I. LAND TRANSACTIONS
a. Three Documents
i. K for sale
ii. Deed
iii. Mortgage
b. Timeline of a land transaction
i. Seller lists house/land with broker
ii. Buyer signs K
1. Standard form
a. Lists personal property to be conveyed
b. States earnest money agreement, which seller retains if buyer backs out
2. Modified form
a. People may attach riders to the standard form, cross out sections, or negotiate different terms
iii. Buyer obtains mortgage loan
1. Usually, buyer will want K to be contingent upon getting financed
2. Secure loan
a. Document buyer signs giving the home as collateral
b. Mortgage is the interest the bank/lender receives in the real estate
3. Mortgagor à buyer; owns in fee simple
4. Mortgagee à lender; has lien on house to secure repayment on the loan
iv. Lawyers will search records to ensure seller is conveying good title
v. Closing/settlement – usually 3rd party in charge
1. Signing of all documents
2. Delivery of deed
3. Delivery of mortgage
4. Check for the purchase price
5. Party in charge will record deed and any mortgages
a. Gives notice to the whole world of the interests in the real estate
b. Protects against third parties
c. Role of Lawyers
i. Commercial transactions
1. Buyer, seller, and lender represented by counsel
ii. Residential transactions
1. Involvement of lawyers may vary
2. In many states, brokers take care of land transactions
a. Draft K for sale
b. Must give full disclosure to buyers
c. Problem
i. Buyer often does not appreciate the broker’s conflict of interest; broker gets paid only if deal closes; broker gets paid by seller
ii. To protect buyer’s interest – get an attorney
II. CONTRACT OF SALE
a. Statute of Fraud
i. Purpose: evidentiary, proof of K
ii. No K for sale of land can be enforced UNLESS it is in writing and signed by the party to be charged. This includes:
1. Leases for 3 or more years
2. Deeds
3. Mortgages
iii. To satisfy the statute of frauds, courts typically require essential terms:
1. Signature / identification of parties
2. Description of the real estate / property
3. Terms and conditions (such as price and manner of payment)
a. If price is decided – must be put in
b. ‘Subject to financing’ clause – act in good faith and use reasonable diligence
Note: Parole evidence is only allowed in to clear up ambiguities
iv. Example:
1. O gives A written deed = valid
2. A gives O back the same deed = no
iii. Down payment is NOT sufficient for specific performance
iv. Unjust enrichment would result if a party who has received the benefit of the other’s performance were allowed to rely on the statute to avoid the K
b. Example – P sold home in reliance on the oral K (Hickey)
i. Reliance
1. Rapid sale of P’s home in reliance of D’s promise to sell her lot to P
2. Intentions – D knew P would sell his home
ii. Change of position – P actually advertised and sold home
iii. Injustice – only avoided by enforcement
1. Extensive litigation would occur to avoid transfer of P’s own house
b. Marketable Title – during executory period
i. A title reasonably free from doubt, one which a prudent purchaser would accept
Perfect title is not required, but the title must be such that there is no reasonable probability that the buyer will be subjected to a lawsuit (In re Estate of Oppelt)