REAL ESTATE TRANSACTIONS & FINANCE
Assignment #3
The Real Estate Contract
Contracting for the Title to Be Conveyed
Reading Assignment: NWBF pages 83-96.
1.
In Haisfield v. Lape (page 84), suppose that the Lapes had presented uncontroverted evidence
that given the topography of the Laurel Ridge parcel, Haisfield could have been built a home on the Laurel
Ridge parcel in one of five different locations that would still have been invisible from the main residence
on the Oakmont parcel. Would this have changed the result? Why or why not?
2.
Gomer is negotiating to purchase a home on 2 acres of land from Carter. He has not yet ordered
a title report, which he expects to do once the contract is signed. Carter tenders a proposed contract that
says that “TITLE. Seller will convey marketable title subject to easements and restrictions of record.”
(a)
Why would Carter wish to express his obligation as Seller this way?
(b)
If Gomer signs the contract as drafted, has he waived the ability to object to the content
of any recorded easements or covenants that show up on the title report? Why or why
not?
(c)
How should Gomer modify the proposed contract?
(d)
Strategically, would Carter be well advised to obtain a title report himself before he puts
the house up for sale? Why or why not?
3.
If the contract in Haisfield v. Lape (page 84) had said only that the Lapes would deliver title “free
of all encumbrances, tenancies, and liens (for taxes and otherwise), but subject to restrictive covenants and
utility easements of record,” then should the court have required Haisfield to close, or should it have
allowed Haisfield to cancel and recover her deposit?
4.
Buyer contracts to buy land from Seller, pursuant to a contract that does not explicitly address the
quality of the Seller’s title. Buyer conducts a title search and fails to find any recorded instrument indicating
a conveyance of the land to Seller. As a result, Buyer refuses to perform. Seller sues Buyer for specific
performance of the contract. Seller presents uncontroverted affidavits from all four surrounding neighbors,
each stating that Seller has been in continuous possession of the land in question since 1980 (over 34
years). Should the court grant specific performance to Seller? Compare Tri-State Hotel Co. v. Sphinx
Inv. Co., 212 Kan. 234, 510 P.2d 1223 (1973) (title by adverse possession is not marketable title) with
Conklin v. Davi, 76 N.J. 468, 388 A.2d 598 (1978) (buyer not entitled to rescission if seller can prove
acquisition of title by adverse possession). Which approach do you think is preferable and why? How
could a buyer draft a contract that would avoid the result in Conklin? Would the form contract beginning
on page 27 be sufficient?
5.
Lambert has contracted to buy a condominium unit in Shady Acres Condominium from Mitchell,
which requires Mitchell to provide “marketable record title.” Which of the following recorded covenants
(if any) would permit Lambert to cancel the contract based upon unmarketability of Mitchell’s title?
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All units are subject to a recorded “residential use only” restriction.
All units are subject to a recorded restriction that they can only be occupied by Caucasians.
All units are subject to a recorded covenant prohibiting pets.
All units are subject to a recorded covenant prohibiting smoking.
6.
The weight of authority holds that neither the existence of adverse zoning nor the violation of a
zoning ordinance renders title unmarketable. [There is some authority for the position that a zoning violation
renders title unmarketable, see, e.g., Lohmeyer v. Bower, 170 Kan. 442, 227 P.2d 102 (1951), but the
weight of authority is to the contrary.] Should the law allow the buyer to cancel the contract and recover
her deposit if the zoning ordinance is violated or adverse to the buyer’s anticipated use? Why or why not?
Considering the following hypothetical: Litton enters into a written contract to purchase a home from
Trachtenberg. Trachtenberg has used the home as his law office for the past 4 years, and Litton intends
to use the home as his law office. Prior to closing, Litton learns that the land is zoned for residential use
only, and that Trachtenberg had not obtained a variance authorizing him to use the land as a law office. The
contract requires that Trachtenberg must provide “marketable title,” but is silent regarding zoning matters.
Can Litton cancel the contract? On what grounds what you argue on Litton’s behalf?