Land Sale Contracts: Let’s Make a Deal

What is conveyancing?

The process of buying and selling real estate and transferring ownership.

What are the two stages of conveyancing?

The land sale contract and the closing.

When does the buyer obtain equitable title?

Upon entering into an enforceable land sale contract.

What happens at closing?

The buyer pays the purchase price, and the seller delivers a deed conveying legal title.

What document conveys legal title to the buyer?

The deed.

When does the buyer ordinarily become entitled to possession?

At closing, when legal title passes to the buyer.

Why should you identify whether a dispute arises before or after closing?

The applicable rules and remedies may differ depending on the stage of the transaction.

What kinds of problems commonly arise before closing?

Property defects, attempts to withdraw from the transaction, and damage or destruction of the property.

What kinds of problems may arise after closing?

Previously unknown title problems, such as competing ownership claims or easements.

Why does a land sale contract generally need a writing?

It involves an interest in land and falls within the Statute of Frauds.

What must a land sale contract writing generally contain?

Identification of the parties, a sufficient property description, the price or a means of determining it, and the signature of the party to be charged.

How specific must the property description be?

It must provide enough information to identify the property.

Must the writing state a fixed purchase price?

No. It may state a price or an ascertainable method of determining it.

What is an example of an acceptable method of determining the purchase price?

Fair market value based on an appraisal.

Who is the party to be charged under the Statute of Frauds?

The party against whom enforcement of the agreement is sought.

If the buyer sues the seller to enforce a land sale contract, whose signature is required?

The seller’s signature.

Does the Statute of Frauds necessarily require a formally drafted contract signed by both parties?

No. A sufficient writing signed by the party to be charged generally satisfies the writing requirement.

What is the doctrine of equitable conversion?

The doctrine under which equity treats the buyer as the owner of real property upon entering into an enforceable land sale contract.

Who holds equitable title between contract and closing?

The buyer.

Who retains legal title between contract and closing?

The seller.

Who ordinarily remains entitled to possession before closing?

The seller.

Under the traditional majority rule discussed in the lecture, who bears the risk of accidental loss between contract and closing?

The buyer, unless the contract or an applicable statute provides otherwise.

Why does the buyer bear the risk of loss under the traditional rule?

Equitable conversion treats the buyer as the owner of the real property.

What circumstances trigger the traditional pre-closing risk-of-loss rule?

An enforceable land sale contract exists, and the property is damaged or destroyed before closing through no fault of either party.

A house is destroyed by lightning after an enforceable sale contract but before closing. Must the buyer still pay under the traditional rule?

Yes. The buyer must complete the purchase and pay the contract price unless the contract or an applicable statute provides otherwise.

Can the parties change the traditional allocation of risk of loss?

Yes. The contract may allocate the risk differently.

According to the lecture, how are insurance proceeds received by the seller for the destruction treated?

They are credited against the buyer’s purchase price.

What is the key distinction between equitable title and legal title in conveyancing?

Equitable title passes under the enforceable sale contract; legal title passes through the deed at closing.