Conveyancing Outline

Professor Farris
Ver. 2.5
Topics covered:
• Relationship between attorney, buyer and seller
o Attorney cannot represent both buyer and seller unless
o Malpractice: client must show:
o Attorney may represent buyer and insurance company, so long as
• Relationship between buyer/seller and brokers
o Listing agreements
o Fiduciary duty
• Contractual issues
o Mutual assent:
o Risk of loss
o Fixtures
o Statute of frauds
o Conditions
o Doctrine of Merger
o Locus of property
o Remedies
 Damages
 Liquidated damages:
 Specific performance
 Rescission
 Vendor/vendee liens
• Mortgage
o Jurisdiction statute
o Relationship between mortgagor and mortgagee
o Negative pledge: mortgagor promises mortgagee not to convey or encumber Blackacre in a
subsequent transaction
o Deed of trust:
 the borrower (trustor) will convey title to the lender’s nominee (trustee) who will hold
the property in trust as security to the lender (beneficiary)
 Must meet statutory requirements for jurisdiction
o Installment land contracts:
o Foreclosure
 Must follow the statutory requirements of the jurisdiction that you are foreclosing in
 Strict foreclosure
 Equity foreclosure with property sale
 General rule: in multiple mortgages, whoever forecloses first will have the right to the
property over the other mortgagees
• Exception in text: A junior mortgagee’s interest in property, if properly
recorded prior to the commencement of senior mortgage foreclosure
proceedings, is not cut off by the foreclosure unless he is made a party in the
proceedings
o Includes when jr. mortgagee is aware of sr. mortgagee’s foreclosure
 o Junior mortgagee will be made a party to foreclosure proceedings
through notice from registry (such as lis pendens)
 Other solutions to default:
• Refinancing the loan
• Salvage powers
• Title
o Search
 Grantor-Grantee index
 Tract index
 See index supplement
 NO constructive notice when:
 Other indices:
 Title standards:
 General rule: an unrecorded deed is only good against it’s original grantors, and
persons having actual notice of the unrecorded deed
• Majority rule: where a grantee searches under the grantor’s name under the
index of recorded deeds, and cannot discover a prior conveyance, he is a Bona
Fide Purchaser, and any prior deed conveyed is void, so long as the Nona Fide
Purchaser records his deed
o Includes any previously recorded deed, so long as that deed cannot be
found in the Bona Fide Purchaser’s grantor’s line of title
 Estoppel by Deed
 Abstract
o Recording
 Will not usually protect against:
 Race jurisdiction vs. Notice jurisdiction vs. Race-Notice jurisdiction
o Marketability
 Marketable title is:
 Sales K can determine if encumbrance is against marketable title by specifying a use
for the land
 Zoning requirements will not be against marketable title
• Exception: mutual mistake may be used as a claim (mutual, material, mistake)
o Can’t be because of
 Conscious ignorance on buyer’s part
 Deliberate risk taking on buyer’s part
 Warranty deeds (title warranty)
• Covenants
• Conditions of buyer self protection against any outstanding titles or
encumbrances (where there is no covenant against encumbrances):
 Marketable title acts
 Curative acts:
• Reaches back and corrects an error made in the past
• Prior failures to comply with the requirements for the execution or recording of
an instrument, or for transfer of an interest in land, shall be disregarded
• Often drafted to cure only formal matters; intent of the parties still controls
• Activated after shorter period of time than marketable title act
 • Three forms:
o Continuous and delayed operation, will continue to cure defects after a
certain period of time has elapsed
o Designed to cure defects in all instruments executed or recorded prior to
that date
o Legislation is changed, curative action may take immediate effect
 Statutes of limitation
 Lis pendens
 Record title is:
 Insurable title:
o Insurance
• Closing
o See Checklist supplement
o Doctrine of merger significant…
o Deed issues
o Notary officer issues
o Deed Delivery issues
o Liabilities that survive the deed (are not affected by merger, do not have to be in deed or will
make deed null)
 Fraud
 Intent of parties- if it doesn’t match deed, deed’s no good
• Unless the interest of a third party is implicated
 Collateral promises
• Those unrelated to title or possession of the property
 Liability of seller
 Buyer has no duty to disclose information to seller about property
 Lender
 Broker
 Architects
 Home inspectors
 Governmental agencies
 Title insurance companies
• Income tax issues
• 2 out of 5 rule: (general rule)
o Husband and wife (joint filers) can exempt out 500 K of the purchase price tax free
o Single: 250 K can be exempted out
o Primary residence must be there for two out of five years
• Exceptions
o Forced sale due to health reasons, there for less than 2 out of 5 years- exemption, partial
exclusion will result
o Job change involving long distance move, there less than 2 out of 5 years
o Unforeseen circumstances:
 Divorce Legal separation Death of spouse
 Multiple births of the same pregnancy
 Damage to the home from a natural disaster
 An act of war or terrorism
  A condemnation, foreclosure, or other type of involuntary conversion of the property
 Change in employment that made it impossible for seller to pay the mortgage or basic
living expenses
• You get a partial exclusion for all of these
• 250K back if you file jointly
• 125K back if you file singly
• 2 out of 5 rule can be used multiple times, just not twice out of 25 months
• Office and such