Real Property

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eastmabl
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305312
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Real Property
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2015-07-17 15:45:28
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  1. Framework of Land Sale Contracts
    • The sale occurs in two phases.
    • Stage 1: contract stage. Any liability must be based upon a contract provision.
    • Stage 2: deed stage. Any liability must be related to a deed warranty.
  2. Doctrine of merger
    Covenants in contract are merged into the deed and are not enforceable unless the covenant is also in the deed.
  3. Statute of Frauds
    • land sale contracts trigger
    • SOF. To satisfy, there must be (1) a writing (2) including the essential terms of the agreement (3) signed by the party against whom enforcement is sought.
    • Essential terms: (1) parties, (2) description of the property, (3) with price and payment info.
    • Exceptions to SOF are:
    • Part performance doctrine ? evidence of partial performance by seller or buyer, such as (1) payment of part or all of the purchase price, (2) possession by purchaser, or (3) improvements made by purchaser.
    • Promissory estoppel: when (1) one party has made a statement which induces reasonable reliance by the other party, (2) the other party has actually relied upon the statement to her legal detriment, and (3) that party would suffer hardship if the contract is not enforced.
  4. Marketable title
    • Every sale of land has an implied covenant of marketable title, which is a promise that the title is free from unreasonable risk of litigation through defect in title.
    • Std: reasonable buyer.
    • Remedy for breach: rescission.
    • MD: Implied into every kind of title absent contrary language.
    • No duty to tell that someone died on property or that the previous occupant had HIV/AIDS.
  5. Implied warranty of fitness or suitability
    In the event of new construction, the initial or subsequent homeowner may bring suit to recover damages for repairs required to make the home suitable to live in.
  6. Duty to Disclose Defects
    • A seller has a duty to disclose to the buyer all known physical or material defects.
    • Hidden defects need not be disclosed.
    • Material defects must substantially affect the value of the home, health or safety of occupants or the desirability of the home.
  7. Seller?s remedies for Breach of Warranty
    Damages between contract price and market value on date of breach, rescission or specific performance.
  8. Buyers remedies for Breach of Warranty
    Damages between contract price and market value on date of breach. Rescission and specific performance.
  9. Risk of Loss
    • Majority - Buyer holds equitable title between execution and closing and delivery of deed; buyer responsible for damages.
    • Minority ? risk of loss with seller until closing and delivery of deed.
  10. Mortgages
    • A mortgage is a security device which is used to secure repayment of a debt.
    • Two parts: (1) note, which is promise, and (2) mortgage, which is the instrument.
    • MD: buyer can get title after paying 40% of purchase price.
    • Two types: (1) purchase money mortgage ? loan to purchase property, and (2) future advance mortgage ?line of credit not related to purchase of property.
  11. Special types of Mortgages
    • Deed of trust: A trustee holds title for the benefit of the lender.
    • Installment land contract: the seller finances the purchase and retains title until buyer makes final payments on installment plan.
    • If buyer defaults, the seller keeps the property
    • Absolute deed: the mortgagor transfers the deed to the property instead of conveying a security interest in the home.
    • Conditional sale and repurchase: owner sells property to the lender who leases the property back to the owner in exchange for a loan. Lender gives owner the option to repurchase once the loan is paid off.
  12. Liability of mortgagor
    • A mortgagor may transfer the property by deed, will or intestate succession.
    • Mortgagor continues to be reliable unless released by the lender or there is a modification of the transferee?s obligation.
    • Due on sale clause or due on encumbrance clause gives lender the option to speed up payment when property is transferred or a second mortgage is taken out.
  13. Liability of subsequent transferee
    • If transferee assumes mortgage, the mortgagor is secondarily liable. Both parties are liable upon default.
    • Taking ?subject to? mortgage: transferee is not personally liable upon default. Default in the case of silence.
  14. Foreclosure - When can you take?
    • Lien theory says that lender cannot take possession prior to foreclosure because this is just a lien. Title theory says that lender has right as the owner of title to possess property at any time.
    • Intermediate title theory says that the mortgagor retains title until default, and then the lender may possess.
  15. Waste
    • The owner cannot commit affirmative, voluntary or permissive waste to the property.
    • Ameliorative waste is typically permitted, since it improves upon the value of the security interest.
  16. Redemption
    When facing a default sale, a mortgagor can reclaim title by paying the full value of debt at any point before the foreclosure sale.
  17. Deed in lieu of foreclosure
    A mortgagor can convey property to lender in exchange for releasing her from any outstanding debt.
  18. Foreclosure methods
    • A foreclosure is a forced sale of an asset to pay off a debt.
    • Mortagee must give notice before foreclosing.
    • May be done by judicial sale (court) or power of sale (private sale).
    • Excess proceeds are used to pay off other debtors, and any excess amount is given to the mortgagee.
  19. Priority of Mortgages
    • Generally, senior interests survive the foreclosure, while junior interests are extinguished by the foreclosure.
    • Surviving debts are satisfied chronologically.
    • Exceptions: purchase money mortgages have priority over all other mortgages (even if first in time).
    • State recording act may require a junior interest which is recorded first to take before a senior interest.
    • Senior mortgage can agree to subordinate its interest to a junior interest.
    • Modifications which make a senior mortgage more burdensome subordinates its interest but only to the modification - future-advance mortgages.
  20. Effect of foreclosure
    Eliminates mortgagor?s interest in the property, except for statutory redemption (statute which allows mortgagor to redeem property after foreclosure sale by paying what purchaser paid).
  21. Deed
    • To be valid, a deed must be delivered and accepted.
    • Ask whether the grantor had the present intent to transfer the property.
    • Physical transfer is not required, and delivery can be completed via an agent.
    • Acceptance is generally presumed provided that the gift is for value.
  22. Contents of the Deed
    Contents must (1) identify parties, (2) signed by grantor, (3) include words of transfer, and (4) provide sufficient description of property.
  23. Recording of Deeds
    • Recording is the public registration of the deed that puts the world on notice that you own the property and protects against subsequent purchasers of the same property.
    • At common law, the first in time to record the deed was the first in right to the property ? this has been modified by statute.
  24. Scope of Recording Acts
    • Types of interests covered are deeds, mortgages, leases, option contracts and judgments affecting title, as well as easements or covenants.
    • Subsequent purchasers are protected by recording acts, not person who acquire title by gift, intestancy or devise.
  25. Notice in the Recording Acts
    • Notice: three types ?
    • (1) actual notice, with real, personal knowledge of the prior interest;
    • (2) constructive notice, where the prior interest is recorded;
    • (3) inquiry notice, where reasonable investigation would disclose the existence of prior claims.
  26. Types of Recording Statutes
    • Three possible
    • Race:? first to record wins - language of ?first recorded? or ?first to record.?
    • Notice: subsequent purchaser has good title if she has no notice of a prior, unrecorded conveyance. Language ? ?in good faith,? or ?without notice.?
    • Race-Notice: combination of the two above statutes. (1) Purchase without notice and (2) record first. MD is a race notice state.
  27. Shelter rule
    A person who takes from a bona fide purchaser protected by the recording act has the same rights as his grantor.
  28. Estoppel by deed
    A grantor cannot repossess on grounds that he didn?'t have title when he made the original conveyance.
  29. Warranties with Deeds
    • After closing, the land sale contract is merged into the deed.
    • Any liability must arise out of deed, not the contract.
  30. General warranty deed
    Greatest amount of title protection by providing six implied warranties for the deed.
  31. Present covenants of a deed - Seisin ?
    • Describes the land in question.
    • Remedy: lesser of purchase price or cost to perfect.
  32. Present covenants of a deed - Right to convey
    • That grantor has the right to convey property.
    • Remedy: lesser of purchase price or cost to perfect.
  33. Present covenants of a deed - Against encumbrances ?
    • No undisclosed encumbrances on property.
    • Remedy: difference in value or cost of removing encumbrance.
  34. Future covenants of a deed - Quiet enjoyment ?
    • Defend against all future challenges to grantee?s title to property.
    • Remedy: lesser of purchase price or cost to defend MD: cannot be waived.
  35. Future covenants of a deed - Warranty ?
    • To defend against future encroachments.
    • Remedy: lesser of purchase price or cost to defend
  36. Future covenants of a deed - Further assurances ?
    • Promise to fix future title problems.
    • Remedy: lesser of purchase price or cost to perfect.
  37. Specialty warranty deed
    Like a general warranty deed, except that it only guards against defects caused by grantor.
  38. Quitclaim deed
    Makes no warranties as to the health of the title.
  39. Breach of Covenants of Deed
    Breach of present covenants occurs at the time of the conveyance, while the breach of future covenants occurs after the conveyance when there is interference with possession.
  40. Fixtures
    • Tangible personal property that is affixed to real property in a manner that is treated as a part of the real property is treated as part of the real property.
    • The buyer of real property is generally entitled to the chattel unless the seller reserves in contract to keep the property.
  41. Equitable Conversion
    • Although the seller retains legal title to real property during the pendency of the land sale contract, equitable title passes to the buyer upon entering the contract.
    • The seller effectively holds the property in trust for the buyer, and has a duty to keep up the property.
    • "The buyer becomes the owner of the land and the seller becomes the owner of the purchase money"
    • However, as the holder of legal title, the seller has the right to possess the property.
    • Equitable conversion does not apply if the contract is not specifically enforceable.

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