1. Distinction between Contract for Sale and Deed
a.Contract for Sale – just a contract and contract law applies
i.Not recorded
ii.Enforced by equity, i.e. specific performance applies
iii.Seller retains possession until closing
iv.At closing, seller issues deed and transfers possession
1.Buyer gives money for the conveyance
2.If lender is involved, lender issues mortgage and handles technicalities
3.Lender usually controls the transaction
4.Lawyer that conducts the closing typically represents the lender
b.Deed is the actual conveyance (in the form of a document) given at closing
1.Any covenants or promises in the contract for sale merge into the deed, meaning they are replaced by the deed
2.Unless the deed references any warranties from the contract, the warranties do not live on in the deed
3.Warranties from the contract must be expressed in the deed to live on
4.Merger = disappear
a.Contract says “I want seller to make a general warranty”
b.If deed does not say, “I give a general warranty” but instead gives a bunch of special warranties, then the general warranty merges into the deed and disappears unless the deed says expressly, “this warranty is preserved”, under this scenario, only the special warranty exists
c.Installment Land Sale Contract
i.Definition – an arrangement whereby the seller contracts to convey title to the purchase when the purchaser has paid the purchase price in regular installments over a fixed period of time
1.Buyer does not get legal title until installments are complete
2.Buyer gets possession at execution
3.Contract would be recorded
4.Buyer/contract holder does get rights under doctrine of equitable title and the contract holder cannot void this interest without foreclosing the interest
a.The contract holder is holding the legal title in trust for the purchaser
2.Marketable Title
i.Title that is free from reasonable doubt
ii.Doubtful means that it exposes the party holding it to the hazard of litigation
b.Marketable Title is the default position in contracts for sale
i.You can contract for perfect title only by expression
c.Existence of City Ordinances cannot render unmarketable title because the ordinances are public information and there is a presumption of knowledge of their existence.
i.The violation of theses ordinance can render title unmarketable, exposing the buyer to threat of litigation
d.Existence of Restrictive covenants can render title unmarketable because they are private information and open purchaser to the treat of litigation
e.Title acquired by adverse possession can be marketable but requires a finding by the trier of fact