January 12, 1999

Final is NOT cumulative but is worth two thirds of our grade

On the final will be a picture of a development carved into lots which are bought, sold, put in roads, etc... This is what we are going to talking about.

Buying and selling houses – order of events

1. consult a real estate agent

must be in writing, specific as to which lot (including address), identification of the parties, show evidence of being able to pay (such as a loan), also should have lot description (protects buyer in that buyer will be clear on dimensions of the lot), title, condition of property report, zoning report

remedies:

1. specific performance – because land is unique you can go for this; this is assumed for the buyer when the seller reneges on the deal – this was common law; now there are types of cases where the seller can get specific performance as well – such as having a famous person buy the place which would increase the value of the whole area

• when can a seller get specific performance – when it would greatly inconvenience the seller if the buyer does not buy
• if the land was to be used for a specific purpose

1. restitution –
2. expectation damages –

law court – damages

court of equity – specific performance or injunction, must show there is no adequate remedy at law (damages are not enough to put the plaintiff in the position he would have been in had the contract been performed)

Regular Inspection – have an inspector look at property; buyer must act on information before going through with deal

Inspection Warranties – different than inspection clauses. A warranty made by the seller that there will be no defects. Seller should not agree to an open ended warranty as they will be forever responsible for defects in the property

Requirement for real estate contracts is Statute of Frauds

--------------------------------------

January 14, 1999

Lohymeyer is almost always on the final.

Title -

Record title – whose name is on the property deed as owing it – what is on record in the recorder’s office;

Marketable title – secure title – title free from doubt or risk of litigation

What kinds of violations interfere with marketable title and which kinds do not is a very complicated question and is almost ALWAYS on the final.

Is there marketable title within the jurisdiction before the sale. ON FINAL

What happens between time of contract of sale and time of closing?? This is this week’s topic. We are looking at what happens BEFORE the deed is transferred.

We are talking about circumstances in which a buyer and seller enter into a deed for sale….?

Courts are reluctant to interpret an agreement to eliminate a guarantee of marketable title.

Warranty Deed – a deed that guarantees some things will be included with the deed; such as warranties of title; a guarantee that seller has good title

Quitclaim deed – "I promise to transfer whatever I happen to own, but give no guarantees"

Title – who really owns the property

Deed – the document that purports to transfer ownership

An Abstract in Title – differs from title insurance in that an abstract is not a contract (which title insurance is) a search of the record that will guarantee good title. If the search is negligently done by the lawyer, then the lawyer is liable for malpractice.

Title report – a search of the record with a report documenting what is in the record; identifies any liens, mortgage, etc. Cannot be sued for a faulty title report.

Title Insurance – a company that produces a title report and then offers to insure the property on the basis of what is in the title report. A title report usually ends up with title insurance. Title insurance protects a policyholder against challenges to rightful ownership of real property, challenges that arise from circumstances of past ownerships. Each successive owner brings the possibility of title challenges to the property. Without a title

insurance policy, you may not be fully protected against errors in public records, hidden defects not disclosed by the public records, or mistakes in examination of the title of your new property.

Merchantable title – same as marketable title

Insurance titles should guarantee marketable title

Encumbrance – if something is an encumbrance does it necessarily violate marketable title – most resources say yes; but Carbone thinks it might be no

What does marketable title mean, what is an encumbrance?

• a public ordinance is NOT an encumbrance
• a private restriction (covenant) can make title unmarketable; it does constitute an encumbrance (see Lohmeyer) – the mere existence of a restriction without a violation does make title unmarketable and is an encumbrance

Public ordinance – violation of public ordinance

CCR – covenant, conditions, restrictions

-----------------------------------

January 19, 1999

Review of Lohmeyer:

Encumbrance – the mere existence of a private restriction is an encumbrance

Suppose there is a notice of violation of restriction that is filed in record – is it an encumbrance?? Come back to this later

Public ordinance – the mere existence of is not an encumbrance; a violation is an encumbrance

Review of Conklin v. Davi:

Father and mother lived on property for 40 years. Now it looks like they took property by adverse possession. The person whose name is on the record cannot be found.

Can file suit against the individual on the title. Can publish notice by publication.

Buyer should insist on good record title (this would preclude something such as adverse possession which is off the record)

If title is not marketable on Jan 22 because title will not be marketable….

Putting a closing date in the contract helps to get things moving

Time is of the essence – means that if one of the parties is not ready, then the other party can get out of the contract

Equitable Conversion

Equitable title – the buyer has a right to demand that the seller deliver title once the contract is signed; buyer is considered the equitable owner once the contract is signed

Legal title – person whose name is on the title for property (the seller)

- this stuff does not make much sense anymore (than in England in the middle ages) – because 1) there is title insurance now usually for sellers

--------------------------

January 21, 1999

Leaky roofs and ghosts

Duty to disclose – a set of obligations that determine if the contract is valid or not

Inspection – typical means for rejection

Caveat emptor – buyer beware; no duty to disclose

Except for:

• fiduciary relationship (family, someone you hired to help you,
• confidential relationship
• active concealment
• partial disclosure
• active / affirmative misrepresentation

In NY no generic duty to disclose

1. Seller creates condition
2. materially impair value of contract
3. peculiarly within knowledge of seller OR condition unlikely to be discovered by prudent buyer

DUTY TO DISCLOSE:

seller knows

materially affects value of property

buyer does not know

not readily observable

in Florida there is a duty to disclose

in NY there is no duty to disclose

in CA there is a duty to disclose; but do not need to disclose deaths that have occurred on property more than 3 years prior

page 11 of packet of forms – has a seller disclosure form; very detailed; but does not deal specifically with ghosts

Ask to see if there is a duty to disclose:

1. look to see if there is material impairment
2. is it insulated by statute?

Seems to be an objective test as to whether market value or decline or not and what is the cause in the change of market value

-------------------------------------

January 26, 1999

Implied warranty of quality

Implied warranty of workmanship

Difference between tort and contract is that in tort you don’t need privity

Economic harm rule: if loss is economic only, there is no recovery

• must manifest itself within a reasonable time
• latent defect
• subsequent purchaser

latent defects = which become manifest after the subsequent owner’s purchase and which were not discoverable had a reasonable inspection of the structure been made prior to the purchase

RULE: A warranty of quality is not normally implied where the seller is not a merchant of housing, that is, a builder, subdivider, or commercial vendor.

Failure to disclose

• buyer can sue seller for failure to disclose after the closing

other remedies that B might have:

• fraud and misrepresentation

Three types of warranties:

1. a general warranty deed – warrants title against all defects in title
2. quitclaim warranty – no warranties of any type; just conveys whatever title the grantor has to the grantee
3. special warranty deed – contains warranties only against the grantor’s own act be not the acts of others

a deed is only about the transfer of title to land

express representation – different types of warranties; often can run with land but often it is only a personal promise from seller to original buyer

deed warranties almost never have anything to do with the quality of the roof.

Buy a house and it has a leaky roof. Who can you sue?

• tort if it collapses
• manufacturer
• implied warranty of workmanship if defect can be traced to a professional builder
• express warranty
• with warranties that run with the land

Is the violation of implied warranty waivable?

---------------------------------------

January 28, 1999

Brown v. Lober review:

General warrantee – can put in exception in here (like: except two thirds of mineral rights)

Special warrantee – guarantees defects that the current owner creates

Quitclaim

If there is something that is in contract of sale intended to be in contract of sale then deed is final. If in contract but not deed, then the warranty is independent from title; modern trend is to treat ……?

Present covenant

• at sale closing is relevant time period to determine if that covenant is restricting
• must exist at the time of closing
• statute of limitations begin running immediately at closing
• irrelevant that no one knows about covenant

Future covenant – promise that grantor will do some certain act

Covenant of implied enjoyment – idea of use and enjoyment is very important

Breach of future covenant occurs at the point at which quiet enjoyment is interfered with

Problems in notes are important to look at.