Property

• 3 Elements for any Real Estate Contract (REC)


  • Offer
  • Acceptance
  • Consideration
• What type of contracts need to be in writing


  • Marriage
  • Year or more in duration
  • Land
  • Executor (wills)
  • Goods (costing > $500)
  • Surety (promise to pay someone else's debt)
• Statute of Frauds (SOF)


  Requires any REC to be in writing
• Requirements for Statute of Frauds


  • Contract must be in writing
  • Description that positively identifies the property (address)
  • Identify the parties, including "buyers and seller" (names)
  • Payment terms & conditions of title transfer (settlement date)
  • Signatures of ALL people, especially the party to be charged (defendant)
• Affirmative Defense (for Defendant)


  If not plead specifically in answer to a complaint, it is considered waived and cannot be brought up again
• Transfers of any interest in real estate covered by Statute of Frauds

  • Fees simple
  • Easements
  • Real covenants
  • Mineral rights
  • Water rights
  • Long-term leases
  • Life estates
  • Remainders
  • Liens
• Doctrine of Part Performance (DOPP)


  Court will excuse a failure to procure a writing satisfying the SOF when the buyer does some combination of the following to demonstrate part performance of a sales contract (depending on jurisdiction)
• Actions that can demonstrate part performance


  • Possession alone is enough
  • Possession + at least partial payment (Shaughnessy)
  • Possession + valuable, lasting improvements to the property
  • Possession + a change in position (becomes homeless) for the buyer that will amount to irreparable harm if contract is denied
  • No acts are sufficient, part performance is NOT recognized
• Equitable Estoppel


  Might be able to enforce contract if you can show you reasonably relied on existence of a contract and not to enforce it would cause irreparable harm
• Elements of Equitable Estoppel


  • The seller makes a certain and definite oral promise that the seller should reasonably expect would induce the buyer to act
  • The buyer in fact acts in reliance on the promise and in pursuance of the agreement
  • A refusal to fully execute the oral contract would cause irreparable harm
  • Such that an injustice occurs that can only be rectified by specific performance
• Requirements for a Written Memorandum


  • Description of the land
  • Identities of the parties
  • Payment terms and title transfer
  • Signature of the party to be charged
• Informal written contract


  Writing ≠ Enforceable, Intent of both parties is required for an informal document to be binding
• Ambiguities


  Terms can be implied so long as they were mutually left out of the memo, Any ambiguities that cannot be resolved will always be resolved against the drafting party, Court will always have the last word when the terms cannot be settled
• Modifications


  Cancels old contract and creates a new one, cannot be oral
• Recission


  "let me out!"
• Positions on whether Recission must be in writing


  • Majority: SOF applies to the making of a contract and not to the recission, therefore they do not need to be in writing
  • Minority: Recission must be in writing
  • Extreme Minority: Must be in writing except in cases of part performance and equitable estoppel
• Responsibilities during the Executory Period


  • Seller: Maintain property, Prepare marketable title by fixing any flaws found in the title search, If contract is not executed, seller will be given back money in form of liquidated damages for anything fixed
  • Buyer: Obtain financing, Title search- must notify seller of any found problems and give them time to cure the title
• Time is of the Essence (TOE)

  Time being of the essence is never implied when not stated in the contract, Equitable remedy: never presumed à must be expressly stated in the contract, Legal remedy: can be presumed
• Specific date ≠ time is of the essence
• Courts will try to uphold contracts when the delay is reasonable, If performance was late and P has no harm à no recovery à "where is your booboo?"
• When time is specifically stated to be of the essence, seller may rescind if buyer does not comply, Even if it is reasonable, Courts cannot get around this
• Acceptance of late payments


  May be considered to be a waiver of TOE clause, Can only end waiver in writing
• Financing Agreements

  Burden of finding financing falls on the buyer, If no financing, seller is not bound to follow through and can keep deposit
• "Subject to Financing" Clauses


  Intentions must be clear and definite and communicated in a way so that buyers know if they can back out, Must show good faith effort à due diligence (buyer's burden), If the financing clause is too ambiguous then it will not be enforceable (fault à drafting lawyer, bad language)
• Options for dealing with defaults and foreclosure in Installments of Land


  • Restoration of the contract (always preferable if a default is non-willful)
  • Restoration & Recission
  • Forfeiture
• "The law abhors a forfeiture and equity even more so"
• Merchantable/Marketable Title


  "No marks or scratches"; no easements or other interests/claims, ORPP would accept it in ordinary course of business, ≠ Desirable
• Any buyer has a right to receive good title, he is never bound to receive bad title unless he knowingly and expressly agrees to do so in the contract
• General Rules of Marketable Title

  • Seller must convey a marketable title unless buyer agrees to accept less
  • Implied unless otherwise specified
  • Entering into a contract with less than marketable title is NOT a waiver of getting marketable title à defects can be expected to be cleared by settlement
• Positions on Title Search


  • Majority: buyer MUST do abstract of title and inform the seller of any defect and give them a reasonable amount of time to cure
  • Minority: Seller is responsible for getting abstract and giving it to the buyer, who then tells seller what he wants cleared
• Reasons a buyer would take unmarketable title

  • Get a good deal on the purchase price
  • Easy to fix
  • Might not realize that it is a big deal/as problematic
• Rules on Recission & Marketable Title

  • Buyer/vendee cannot rescind because of lack of title prior to the date performance is due
  • Buyer/vendee cannot place a vendor in default by tendering payment and demanding marketable title in advance of the time/circumstances stipulated in the contract
  • Buyer/vendee may rescind for fraudulent misrepresentation about marketable title that he was justified in relying
  • If it is curable and you STILL back out = anticipatory breach
  • May demand adequate assurance, but if the seller cannot assure him, buyer should start placing his payments in an escrow account
  • Cannot expect performance from other party UNTIL the settlement date
• Quitclaim Deed (QCD)


  Deed is not 100% but the buyer will take it anyway, A buyer's agreement to accept a QCD ≠ waiver of marketable title
• Warranty Deed


  Personal remedies to be fixed by buyer
• Tender


  To turn over, "tender your title", Settlement day = buyer tenders payment, seller tenders title, Where the seller does not tender at closing and his title is incurably defective, buyer can recover his deposit + interest (no less than marketable title), If defects are curable à buyer is not excused from responsibility to tender
• When seller is not bound for having a nonmarketable title: Fails to give notice or given notice but no reasonable time to cure defect
• Assignment


  Seller may assign the right to receive payment if he actually transfers the title to his assignee, Buyer can transfer right to receive the land, Original two parties stay liable to the other unless they have been formally released by a writing, When you assign your rights in something to another party, you are also delegating the duties that go along with it, but if that party does not fulfill the duties à you are still liable
• If buyer does not tender the money, if not assignment, just the original buyer is liable, If buyer has assigned their rights to the land, they both can be liable, Same can be true for owner
• Remedies for Breach of Contract


  Courts want to keep contracts alive, but if they cannot à restitution (put both parties in positions held before contract)
• Possible Remedies


  • Legal "I want money" (Punitive, Compensatory)
  • Equitable "I want action" (Specific performance, Injunction)