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Generally
- Two steps:
- 1. The land contract, which endures until step 2
- 2. The closing, where the deed becomes our operative document
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The Land Contract
Statute of Frauds
- standard:
- writing
- signed by party to be bound
- describe Blackacre
- state some consideration
- When the amount of land recited in the land contract is more than the actual size of the parcel: remedy is specific performance w/ pro rata reduction in purchase price
- Exception to Statute of Frauds: THE DOCTRINE OF PART PERFORMANCE; if 2 of the followin g e obtain, then the doctrine is satisfied and equity will decree specific performance of an oral contract for the sale of land:
- 1. B takes possession;
- 2. B pays all or part of price; and/or
- 3. B makes substantial improvements
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The Land Contract
Problem of Risk of Loss
- Apply the doctrine of equitable conversion: equity regards done that which ought to be done
- Once the contract is signed, B owns the land, subject to closing.
- Important result: Destruction. If Blackacre is destroyed in interim of contract and closing, through no fault of either party, B bears the risk of loss unless the contract says otherwise
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The Land Contract
Implied Promises in Every Land Contract
- 1. Seller promises to provide marketable title at the closing, that is, title free from reasonable doubt. Free from lawsuits and threat of litigation.
- Three circumstances will render title unmarketable:
- a. Adverse possession - if even part of the title rests on adverse possession, it is unmarketable.
- b. Encumbrances - servitudes and mortgages will render title unmarketable, unless buyer has waived them
- *seller has the right to satisfy outstanding mortage or lien at the closing with the proceeds of the sale*
- c. Zoning violations
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The Land Contract
Seller Promises not to make any false statements of material fact
- seller liable for failing to disclose latent material defects
- seller liable for material lies and material omissions
- general disclaimer of liability won't relieve seller for fraud or failure to disclose ("as is" "with all faults")
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The Land Contract
Contains no implied warranties of fitness or habitability
- common law norm is caveat emptor
- Exception: implied warranty of fitness and workmanlike construction applies to the sale of a new home by a builder-vendor
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Closing
Generally
LEAD
- controlling document is the deed; th deed passes legal title fom Seller to Buyer
- LEAD: to be pass legal title it must be Lawfully Executed and Delivered
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Closing
Lawful Execution of a Deed
- in writing, signed by grantor
- deed need not recite consideration, nor must consideration pass to make a deed valid
- includes description of the land (does not have to be perfect); needs to be unambiguous with a good lead ("some" is not a good lead)
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Closing
Delivery Requirement
- satisfied when grantor physically/manually transfers deed to grantee
- can use mail, agent, or messenger
- *does not necessarily require transfer of the instrument itself*
- test is solely of present intent, that is, did grantor have a the present intent to be bound irrespective of whether or not the deed was handed over
- Recipient's express rejection of the deed defeats delivery
- If deed is absolute on face and transferred to grantee with an oral condition the oral condition drops out it is not provable and deliery is done
- Delivery by escrow is fine
- Escrow is good b/c can still pass to grantee if grantor becomes incapacitated
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Closing
Types of Deed
- 1. Quitclaim
- 2. General Warranty
- 3. Statutory Special Warranty
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Closing
Types of Deed
Quitclaim
- Contains no covenants
- doesn't even promise to have title to convey
- worst deed
- BUT, grantor did implicitly promise to provide marketable title at the closing in the aldn contract - any probelms post-closing = grantor off the hook
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Closing
Types of Deed
General Warranty
- Best deed
- warrants against all defects in title, including those due to grantor's predecessors
- typically contains following six covenants; first three are present - time of delivery; SOL for breach of a present covenant begins to run from the instate of delivery
- 1. covenant of seisin: grantor promises he owns this estate
- 2. covenant of right to convey: grantor has the power to transfer - under no temporary restratints on alienation - no inferiority suffered by grantor (sound mind, requisite age)
- 3. covenant against encumbrances: no servitudes or mortages on Blackacre
- Next three covenants are future covenants - not breached until grantee is disturbed in possession. The SOL for breach of future covenant will not begin to run until the future date.
- 4. covenant for quiet enjoymenet: grantee won't be disturbed in possession by a 3d party's lawful claim of title
- 5. covenant of warranty: promises to defend grantee against lawful claims of title brought by others
- 6. covenant for further assurances: grantor will do whatever is needed in the future to perfect the title
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Closing
Types of Deed
Statutory Special Warranty Deed
- Deed most frequently used in VA
- contains two promises that granto makes only on behalf of himself (grantor makes no representations on behalf of his predecessors in interest)
- 1. grantor promises he hasn't conveyed Blackacre to anyone other than grantee
- 2. Blackacre is free from encumbrances made by grantor
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