Land Sale Contracts: Reading Between the Lines - Real Property Foundations Episode

1. What are the two stages of a land sale transaction?

The contract stage and the closing stage.

2. At what stage does the seller convey legal title to the buyer?

At closing, through delivery of the deed.

3. What three elements should a land sale contract identify, according to the lecture?

The parties, a description of the land, and the price or a way to determine it.

4. What are the seller’s two implied promises in a land sale contract?

To provide marketable title at closing and not to make false statements of material fact.

5. Must the seller’s implied promises be expressly written into the contract?

No. The law implies them even if they are not expressly written.

6. What is marketable title?

Title reasonably free from doubt and the threat of litigation.

7. Does marketable title require perfect title?

No. It requires title that a reasonable buyer would accept without substantial doubt or risk of litigation.

8. Why does the law require marketable title?

To protect the buyer from having to accept title that could expose the buyer to litigation or competing claims.

9. What kinds of third-party interests may create title problems?

Liens, existing mortgages, easements, and potential adverse possession claims.

10. What is an encumbrance?

A burden on property, such as a lien, mortgage, or easement.

11. How might a neighbor’s right of way create a title issue?

It gives the neighbor a right to use part of the property and therefore burdens the land.

12. How might a longtime squatter create a title issue?

The squatter may have an adverse possession claim that creates uncertainty about ownership.

13. May a buyer waive a title defect?

Yes. The buyer may agree to accept the title despite the defect.

14. When must the seller provide marketable title?

At closing.

15. Must title be marketable when the land sale contract is signed?

No. The seller generally has until closing to cure title defects.

16. What period does the seller have to cure existing title defects?

The period between signing the contract and closing.

17. A mortgage exists when the land sale contract is signed. Has the seller necessarily breached the promise of marketable title?

No. The seller may resolve the mortgage by closing.

18. A seller cures a title defect before closing. Has the seller satisfied the timing requirement for marketable title?

Yes, provided the title is marketable at closing.

19. What is a material fact concerning property?

A fact important enough to affect the buyer’s purchase decision.

20. What three forms of misleading conduct does the lecture discuss?

Affirmative misrepresentation, active concealment, and failure to disclose a defect that must be disclosed.

21. What is an affirmative misrepresentation?

A false statement of fact.

22. What is active concealment?

Taking steps to hide a defect or mislead the buyer about the property.

23. What is failure to disclose?

Omitting information about a defect that the seller has a duty to reveal.

24. A seller knows of a longstanding ant infestation but says there are no pest problems. What misconduct is involved?

An affirmative misrepresentation about a material fact.

25. A seller disguises a straw-and-stick house to make it appear to be brick. What misconduct is involved?

Active concealment and, if the seller says it is brick, an affirmative misrepresentation.

26. Under the lecture’s rule, what three elements establish liability for failure to disclose a defect?

The seller knows or has reason to know of the defect, realizes the buyer is unlikely to discover it, and the defect is serious enough that the buyer would probably reconsider the purchase.

27. For nondisclosure liability, must the seller have actual knowledge of the defect?

Not necessarily. Under the lecture’s rule, knowing or having reason to know is sufficient.

28. What must the seller realize about the buyer’s ability to discover the defect?

That the buyer is unlikely to discover it.

29. How serious must a defect be to trigger the disclosure duty described in the lecture?

Serious enough that the buyer would probably reconsider the purchase.

30. Must the seller disclose every minor imperfection?

No. The lecture’s disclosure rule concerns serious defects satisfying the required elements.

31. What is a memory aid for the three nondisclosure elements?

Seller knows; buyer unlikely to discover; serious defect.

32. A seller knows of a serious hidden foundation problem that the buyer is unlikely to discover. Must the seller disclose it under the lecture’s rule?

Yes. The defect satisfies all three nondisclosure elements.

33. A seller falsely states that the foundation has never had problems. What issue should you identify?

An affirmative misrepresentation about a material fact.

34. Why should you distinguish a false statement from mere silence?

A false statement raises misrepresentation issues; mere silence requires analysis of whether a disclosure duty exists.

35. A house floods during an unprecedented hurricane, and the seller had no reason to anticipate flooding. Is the seller liable for failure to disclose under the lecture’s example?

No. The seller did not know or have reason to know of the problem.

36. Why does the lecture treat one or two occasional basement spiders as insufficient for nondisclosure liability?

They are not a serious enough defect to cause a reasonable buyer to reconsider the purchase.

37. What does an “as is” clause generally mean?

The buyer agrees to accept the property in its existing condition, with its faults.

38. Are “as is” clauses generally enforceable?

Yes.

39. Does an “as is” clause excuse a seller’s fraud?

No.

40. Does an “as is” clause excuse failure to disclose a defect that the seller must disclose?

No.

41. A seller knowingly withholds serious hidden toxic contamination and relies on an “as is” clause. Does the clause shield the seller from liability?

No. The clause does not excuse fraud or failure to make a required disclosure.

42. What is the key timing distinction for marketable title?

The seller may have defective title at signing but must provide marketable title at closing.

43. What is the key distinction between a title defect and a physical defect?

A title defect concerns ownership or legal burdens on the land; a physical defect concerns the property’s condition.

44. What are the central rules from this lecture?

Marketable title is due at closing; sellers must not materially mislead buyers; serious hidden defects may require disclosure; and “as is” clauses do not excuse fraud or required nondisclosure.