Real Property Speed

• Step one of sale of real property.
• Any liability must be based upon a contract provision.

• Step two of sale of real property.
• Any liability must be related to a deed warranty.

Covenants in contract are merged into the deed and are not enforceable unless the covenant is also in the deed.

• (1) a writing
• (2) including the essential terms of the agreement
• (3) signed by the party against whom enforcement is sought.

• (1) parties,
• (2) description of the property,
• (3) with price and payment info.

• Exception to SOF
• 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.

• (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.

• Implied in every sale of land.
• A promise that the title is free from unreasonable risk of litigation through defect in title.

Implied into every kind of title absent contrary language.

None

• Implied warranty of fitness or suitability
• New construction
• Initial or subsequent homeowner may bring suit to recover damages for repairs required to make the home suitable to live in.

• 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.

• Damages between contract price and market value on date of breach
• Rescission
• Specific performance.

• Damages between contract price and market value on date of breach.
• Rescission
• Specific performance.

• A security device which is used to secure repayment of a debt.
• (1) note, which is promise, and (2) mortgage, which is the instrument.

After paying 40% of purchase price.

• loan to purchase property
• will trump other mortgage holders

line of credit not related to purchase of property.

A trustee holds title for the benefit of the lender.

• The seller finances the purchase and retains title until buyer makes final payments on installment plan.
• If buyer defaults, the seller keeps the property

The mortgagor transfers the deed to the property instead of conveying a security interest in the home.

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.

• A mortgagor continues to be liable unless:
• (1) released by the lender
• (2) modification of the transferee's obligation.

lender option to speed up payment when property is transferred

• Due on encumbrance clause
• lender option to speed up payment when a second mortgage is taken out.

• The mortgagor is secondarily liable.
• Both parties are liable upon default.

• Transferee is not personally liable upon default.
• Presumption

Lender cannot take possession prior to foreclosure because this is just a lien.

• Lender has right as the owner of title to possess property at any time.
• MD?

Mortgagor retains title until default, and then the lender may possess.

• 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.

When facing a default sale, a mortgagor can reclaim title by paying the full value of debt at any point before the foreclosure sale.

A mortgagor can convey property to lender in exchange for releasing her from any outstanding debt.

A foreclosure is a forced sale of an asset to pay off a debt.

Mortagee must given notice before foreclosure.

May be done by judicial sale (court) or power of sale (private sale).

• Used to pay off other debtors
• Remainder is given to the mortgagee.

Survive the foreclosure

Extinguished by the foreclosure.

Over all other mortgages (even if first in time).

Subordinates its interest but only to the modification - future-advance mortgages.

Eliminates mortgagor's interest in the property

• statute which allows mortgagor to redeem property after foreclosure sale by paying what purchaser paid.
• Not MD

Delivered and accepted with present intent to transfer the property.

• Not required
• Delivery can be completed via an agent.

(1) identify parties, (2) signed by grantor, (3) include words of transfer, and (4) provide sufficient description of property.

• Deeds
• Mortgages
• Leases
• Option contracts
• Judgments affecting title
• Easements
• Covenants.

• Subsequent purchasers are protected by recording acts
• Not person who acquire title by gift, intestancy or devise.

• (1) actual notice
• (2) constructive notice - prior interest is recorded;
• (3) inquiry notice - reasonable investigation would disclose

First to record wins - language of "first recorded" or "first to record."

• Subsequent purchaser has good title if she has no notice of a prior, unrecorded conveyance.
• Language "in good faith," or "without notice."

• Race-Notice Statute
• (1) Purchase without notice
• (2) Record first.
• MD is a race notice state.

A person who takes from a bona fide purchaser protected by the recording act has the same rights as his grantor.

A grantor cannot repossess on grounds that he didn't have title when he made the original conveyance.

• Present covenant
• Seller warrants that there are no defects to the warranty of the deed, whether caused by him or another.

• Present covenant
• The deed describes the land in question.
• Remedy: lesser of purchase price or cost to perfect.

• Present covenant
• Grantor has the right to convey property.
• Remedy: lesser of purchase price or cost to perfect.

• Future covenant
• No undisclosed encumbrances on property.
• Remedy: difference in value or cost of removing encumbrance.

• Future covenant
• Promise to defend against all future challenges to grantee's title to property.
• Remedy: lesser of purchase price or cost to defend MD: cannot be waived.

• Future covenant
• Promise to defend against future encroachments.
• Remedy: lesser of purchase price or cost to defend

• Future covenant
• Promise to fix future title problems.
• Remedy: lesser of purchase price or cost to perfect.

Guards against defects caused by grantor.

Makes no warranties as to the health of the title.

Occurs at the time of the conveyance

Occurs after the conveyance when there is interference with possession.

• Tangible personal property that is affixed to real property in a manner that is treated as a part of the real property.
• Part of the real property.

• Buyer generally entitled to the chattel
• Seller may reserve, in contract, the right to keep the property.

• Seller retains legal title and holds property in trust for the buyer.
• Seller has right to possess the property

• Buyer acquires equitable title upon entering the contract.
• "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.

Does not apply if the contract is not specifically enforceable.