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Real Estate Transactions Outline Fall 2012

IV. INTRODUCTION 1. Ethics


a. Abuse of process by lawyers who are in the know b. Rules regulating the Florida Bar i. Korte v. US Bank Natls Assoc. frivolous defenses ii. JP Morgan v. Hernandez fraudulent documents iii. The Florida Bar v. Adormo class action $7 million settlement 2. History a. Treaty between Spain and US that made Florida part of US was concluded in 1819 and proclaimed in 1821. 3. MISC: a. I% rule: every buyer should be willing to pay 1% of the purchase price to hire a lawyer to deal with buying/selling real estate

IV. CONTRACTS FOR THE SALE OF LAND 1. Real Estate Brokers


a. Broker is the agent of the seller b. If broker is successful in securing buyer, then she gets % of sale as commission i. Because of the relationship of commission to selling price, agents may have an incentive to sell at the highest price, but that is not necessarily how it works in reality) c. Brokers Authority i. Traditionally brokers market home (MLS, etc), review contract, negotiate with buyer/seller, locate property for potential buyer, arrange showings, provide information like relative property values, most recent selling prices, property taxes, give information on financial options, assist in formatting offers/counters/acceptances Power to consummate a sale, sometimes (broker contract could give broker power of attorney) ii. Realtor represents the seller unless you do something differently in your REB contract Single-agent relationship with seller No brokerage relationship (almost disinterested) Transactional broker (good for the deal) iii. BROKER HAS A DUTY TO INVESTIGATE SELLERS PROPERTY iv. Unbundle Broker services Broker can unbundle his/her services, but 9 states have minimum service laws that dictate the services that a consumer must purchase when entering into a relationship with a real estate broker. 8 states have min, service laws, but allow consumers to waive (including Florida) These laws may harm consumers (1) reduce choice; (2) brokers who would offer less cant (3) dont ensure quality d. Drake v. Hosley (AL) 1986

i. Facts: REB, Hosely found willing, ready and able buyer, but seller sold to someone else and didnt want to give H commission. ii. Trial Court: real estate broker was granted commission on summary judgment; ct concluded broker fulfilled the terms of the sale iii. ALSC: affirms: the Agreement provided that broker would receive 10% commission if he (1) located a buyer willing and able to purchase at the terms set by seller or (2) the seller entered into a binding sale during term of agreement. iv. Traditional Rule: Broker entitled to commission when he produces a buyer ready, willing and able to purchase the property on the sellers terms, even if the sale is not completed. (protects marketplace) v. Dobbs Rule: In the absence of default by the seller, the brokers right to commission comes into existence only when his buyer performs in accordance with the contract of sale. (broker gets paid only at closing unless seller defaults vi. TAKEWAY: Hosely found a group of buyers willing and able to perform in accord with the terms set by the seller, but they were prevented from doing so by the sellers frustrating conduct. The buyers tried to perform by tendering checks for the down payment within 10 days of clear title as required by the earnest money agreement. The sale did not take place because the seller, Drake, sold the property to a third party during the 10 day closing period. Thus, even under Dobbs rule, Hosley is entitled to his commission. e. Listing Agreements i. All listing agreements must be in writing (Statute of Fraudsevery agreement that might take more than one year must be in writing) f. Material Defects and Compensation DUTY TO DISCLOSE i. seller must tell real estate professional of all material defects and will indemnify RE professional if seller does not disclose tree fell on roof (repaired)did that materially effect the value of the property? Peacocks in neighborhood Dairy in neighborhood Slash: house not big enough and not enough parking Toxic Chinese drywall Flooding, may need to disclose bc prone to flooding or mold That previous resident diagnosed with HIV/AIDS, death, murder, suicide n property, not material Gilchrist v. Rayonier (1997): FlaSC held (1) one who negligently supplies false information for guidance of others in a transaction in which he has pecuniary interest is subject to liability under a theory of negligent misrepresentation for pecuniary loss caused to others by their justifiable reliance on information, and (2) statutory comparative fault provisions apply to actions involving negligent misrepresentation M/I Schottenstein Homes v. Azam (2002): FLaSC held the purchasers stated a cause of action for fraudulent misrepresentation when developer told homeowners that a nearby parcel of land was a permanent natural preserve when he knew there were plans for a school to be built on it. ii. DISCLOSURE

RESIDENTIAL: have to disclose anything that materially affects the property value (from sellers POV). Buyer has no duty to inspect in Florida. How to tell if materially affects: Threat of litigation; so materially dangerous that you might get sued; access (access goes with status of title) Limitations of Actions: Actions for fraud: 4yr SOL from time you knew or should have knownafter 12yrs from date of lie lost right to sue) iii. In California, Brokers have an affirmative duty to inspect and can be held liable for not investigating. Most states hold broker liable for affirmative statements that turn out to be false and silence when the broker knew something was wrong. Outside of CA, if brokers have no actual knowledge, but could have been found with inspection, probably wont be held liable g. Confidential Information i. Broker cant disclose confidential information, unless disclosure is required by statute, or failure to disclose the information would constitute fraudulent misrepresentation ii. but broker is required to disclose adverse material facts to a prospective buyer h. Integration Clause: this listing contract constitutes the entire agreement i. Is everything in the contract for sale that you thought you were getting?

Std:

2. The Statute of Frauds and Part Performance


a. First, the seller/buyer make a contract for sale that gives a 30-90 day executory period. Then, the contract is performed at the closing. b. What happens during the executory period? i. Check that seller really owns property (good, clear, marketable title); maybe Buyer needs to get a loan, sell previous house, arrange for move, maybe seller needs time to find a new home, maybe buyer is concerned about physical condition of house and wants an inspection. c. Statute of Frauds: sale of land to be in IN WRITING. i. Doesnt have to be in a single instrument (email exchange) ii. Has to be signed (usually by person you want to hold accountable to contract) iii. Have to have a meeting of the minds: parties names, description of property, price (definitely an essential term). d. Types of Contracts: i. Short-term contract (45-60 days then sale is over: sales contract) ii. Long term contract = installment sale contract (combination of deed, mortgage, promissory note all in one) e. Part Performance Doctrinetakes contract out of the SOFstill have to prove the contract by clear and convincing evidence i. 3 most often mentioned acts that constitute part performance (most of the time need 2-3 of these factors) payment of part (or all) of the purchase pricepartial payment alone is almost always not sufficient going into possession of the property making substantial improvements

ii. PP is usually said to be recognized only in equity, typically in a suit for specific performance. It is an AFFIRMATIVE DEFENSE and doesnt prevent a suit from being filed. f. Johnston v. Curtis (ARK 2000): C is to sell house to J for 114k (there is no real estate agent). The contract stipulates that the sale is subject to J obtaining a home loan for 90% of purchase price ($102,600). J told C they had been preapproved, so C bought another home. House only appraised for 110k, so mortgage company denied loan. Then, they came to an oral agreementJ will buy house for 110k. J paid $500 and took possession of house. Closing date set. But, J refused to close bc interest rate unacceptable and could only get mortgage in his name and not in his and his wifes. i. Trial Court: C sues for breach of contract because J wont buy house bc cant have wife on loan. TC found: (1)parties had orally agreed to modify their original sales contract from 114 to 110, but subject to all other terms (2) oral modification not subject to SOF (3) J breached by failure to close. Damages to C in 10k. ii. COA: statute of frauds not applicable because of Js part performance ($500 and moving in) (must prove making of oral agreement and part performance by clear and convincing evidence); Js did not fill in blanks on contract about what interest rate they were willing to pay, so cant argue reasonable interest rate and Js didnt know wife wouldnt be on deed until day before trial and refused to perform a year earlier. Cs tried to argue for more damages but the measure for damages for a vendees breach of an executory contract is the difference between the contract price of the land and its market value at the time of the breach, less the portion of the purchase price already paid. g. Rosenfeld v. Zerneck (NY 2004) i. Can you make a contract for sale of real property via email? ii. Defendant wants SJ dismissing the complaint that seeks specific performance of the contract for sale of the Defendants home. D argues the email was preliminary and did not satisfy SOF. Email signature is valid for SOF, but the emails in the instant case did not create a binding agreement bc it lacked a vital term: did not set forth any understanding as to the amount of the contract deposit and did not indicate how the parties intended to treat the commercial lease then encumbering the premises. Ct finds no meeting of the minds. iii. RULE: essential contract terms: name of buyer/seller; price; good/accurate description; signature (need express authorization to sign for someone else) Lawyer cant get you into a contract (by signing for you) but may be able to get you out.

3. Remedies and Real Estate Contracts


a. Damages and Specific Performance i. Either buyer or seller can seek either remedy ii. Loss of bargain damages are traditionally measured as the difference between the contract price and the market value of the land on the date of the breach b. Donovan v. Bachstadt (NJ 1982): B agreed to sell real estate to Don by way of purchase money mortgage, but couldnt get good title to property. Don sued

for compensatory and punitive damages. Don wanted difference in interest between Bs mortgage and new mortgage he had to get. i. TC: Don was entitled to recover costs for title search and survey; wouldnt give difference in interest rates reasoning that contract was for sale of property and financing was only incident. ii. COA: REVERSED: ct concluded that statute intended that the general law of damages for breach of K applies. RULE: Buyer can recover benefit of the bargain damages when the seller breaches an executory contract to convey real property. Compensatory damages are designed to put injured party in as good of a position as he would have been if performance had been rendered as promised. What position that would have been depends on the parties reasonable expectations. B was not chargeable for loss that he did not have reason to foresee as a result of the breach. Loss must be a reasonably certain consequence of the breach although the exact amount need not be certain. c. BUYERS DAMAGES i. usually entitled to amount paid on purchase + interest; costs and expenses incurred in connection with proposed acquisition, improvements made (the difference between market and contract price may not be suitable in all situations). Buyers damages are limited to restitutionary recovery when the sellers title is defective but the seller has acted in good faith, is followed in about half the jurisdictions. But, does not apply if seller breaches contract ii. loss-of-bargain damages only available to buyer if the propertys value is higher than the contract price iii. What other damages might buyer be able to get? Expenses for title search, survey, atty fees Airfare to travel to negotiate and execute contract Rent at present location Loss of particularly favorable financing OFFSET by still have $/or saved interest buyer would have paid on mortgage iv. Date of valuation for remedies: market value as of date bf breach (maybe resale price) Good to use resale price bc appraisals can be imprecise v. When contract makes purchasers sole remedy termination of K and refund of deposity (recission and restitution), it is disfavored in Florida courts; sellers obligations are solely illusory d. SELLERS DAMAGES i. Carrying cost of property until resold ii. Interest on existing mortgage loans iii. Interest income seller expected to earn on purchase price iv. Cost of second brokers commission v. Increasing tax liability as a result in a change in tax laws vi. Even if you get specific performance, can still get damages e. Schwinder v. Austin Bank of Chicago (Ill COA 2004) i. 7/2000 Defendants accepted offer from Plaintiffs to buy condo; D didnt close bc of divorce, but entered into a contract for possession with Ps for 1500/month;

even after divorce D wouldnt close; Ps sued for specific performance and won and ct gave them back some of the rent they paid f. SPECIFIC PERFORMANCE i. SP is a matter of sound judicial discretion. Factors to consider: Parties entered contract freely/deliberately with no fraud or oppression by either party (binding contract) Property has to be unique. Plaintiff has to be ready, willing and able ii. Specific Performance may be denied when: It would produce unjust/unconscionable results If K is excessively vague If vendor has resold to another purchase who had no knowledge of the prior K. (if purchaser had notice, ct will uphold prior K) If purchaser was buying the land for immediate resale at a profit, its supposed uniqueness is of no real consequence, so damages are sometimes considered an adequate remedy Both SP and other remedies may be denied if there are precedent or concurrent conditions which have not been fulfilled or if the plaintiff is in substantial breach. If the K gives the vendor the right to forfeit the purchasers earnest money as liquidated damages, the clause may be treated as the vendors sole remedy iii. If the seller does not own all the property covered by the contract, the purchaser may desire, and can generally obtain, specific performance with an abatement of the price. g. Mahoney v. Tingley (Earnest Money) (WA SC 1975) i. Plaintiff sues for damages arising out of breach of earnest money agreement bc the damages are greater than the amount stipulated in the liquid damages clause. Terms earnest money shall be forfeited as liquidated damages, unless seller elects to enforce this agreement. Contract gives 2 remedies 1. Keep earnest money 2. Enforce agreement. Ct says cant sue for damages because of this clause. h. Other Cases: i. Contract says seller can either keep deposit, sue for actual damages, or get specific performance. Ct doesnt like bc when have both damages, then unjust enrichment one way or another, seller always gets better deal. ii. When contract gives buyer only remedy of getting deposit back then, it is an illusory promise i. Liquidated Damages Clause: i. 3 elements that must be validated to enforce damages clause parties intended to agree in advance to the settlement of damages that might arise from the breach the amount of liquidated damages was reasonable, bearing some relation to the damages which might be sustained as of what date is reasonableness measured? Usually the time the K was entered into, but sometimes date of breach or date of breach + date of K.

Vendor may not be allowed to keep deposit if he suffered no damages at all How much is reasonable? Most courts up to 10%, Fla up to 15%. Many cts allow vendor to retain a breaching buyers deposit whether or not
any clause in the K provides for it. damages would be uncertain in amt and difficult to prove ii. If liquidated damages clause does not address the issue of other damages, the usual rule is that the vendor may not seek actual damages, but may seek specific performance. If the clause does discuss other damages, some cts accept and some courts see it as a penalty and reject.
actual

4. Time of Performance and Tender


a. When is lateness a material breach of the contract? b. Did the original contract make time of the essence? c. If not, has one of the parties made time of the essence unilaterally? d. If time is not of the essence how far beyond the agreed-to closing date is the late party? e. Miller v. Almquist (NYSC 1998) i. Neighbor offers to buy coop unit next to theirs so that they can renovate for more space. Parties entered into a contract for 545k cash with 10% down. Closing date set, but day before, buyers asked for more time (no time of the essence clause in contract). Sellers said ok, but now time is of the essence. Moved date. On new closing, buyers werent ready and sellers sent a letter you breached, we keep 10%. Buyers brought suit seeking to enjoin sellers from terminating K; from implementing forfeiture of down payment and from contracting to sell apt to anyone else. ii. TC dismissed; COA cannot conclude that the time allotted in the time of the essence letter in response to a short adjourned closing date chosen by the buyers was reasonable so as to inflexibly bind the buyers to an April 16th closing date. f. Factors to consider when deciding what constitutes a reasonable time to close i. Nature and object of the contract; previous conduct of the parties; presence or absence of good faith; the experience of the parties and the possibility of hardship or prejudice to either one; specific number of days provided for performance g. CLASS REVIEW: i. Time is of the essence: is a material breach; breaching party may not be able to enforce in equity; non-breaching party has to be ready, willing and able to perform; how do we know if party has performed within time frame? ii. Financing and the contract: what if you dont have the number of years or the % rate in the contract? Is this a material part of the contract? Whose responsibility is it to make sure blanks in contract are filled in? Seller because she is going to be the one wanting to enforce them. What happens if the blank is left blank? Buyer should be responsible for getting this blank filled n (mutual mistake or unilateral mistake)

5. Title to be Conveyed
a. Fla. Stat. 689.01, .02, .03 and 695 (read) b. Marketable Title: ability to freely sell your title to property whether buyer is free of doubt of what she is buying 7

i. Definition (77): a marketable title is one which is free from liens or encumbrances; one which discloses no serious defects and is dependent for its validity upon no doubtful questions of law or fact; one which will not expose the purchaser to hazard of litigation or embarrass him in the peaceful enjoyment of the land; one which a reasonably well-informed person, acting upon business principles and with full knowledge of the facts and their legal significance, would be willing to accept with the assurance that he, in turn, could sell or mortgage the property at its fair value. ii. Assurance of marketable title: Lawyers opinion letter Title insurance (most common) title search, then binder that goes through chain of title with encumbrances Warranty within deed (Fla. Stat. 589.02(1)) Buyer looks at record herself iii. Title insurance: Hires layer to protect your property so you can keep property in event of dispute Compensate for loss in value When title insurance issued, they call it insurable title/not martketable title bc could have title defect that title insurer still insures c. Issue: Whether a buyer of real estate may be justified in refusing to complete the purchase bc she is dissatisfied with the quality of the title the seller proposes to convey. d. Haisfield v. Lape i. Lapes (seller); Haisfeld (buyer): sellers divide parcel in 2; sell first plot with sight easement. Second buyers, Haisfelds cant build what they want bc of easment; they claim no marketable title and want their $ backgave 60 days notice to cure. Lapes say defect not materially adverse, so they want to keep $. TC found for sellers, buyers breached by not closing; sellers got deposite, buyers appeal. ii. Issue: whether a line of sight or view easement renders title to the property at issue unmarketable, thereby justifying the buyers refusal to close the transaction. iii. Contract: title must be free from all encumbrances, but subject to restrictive covenants of record which do not materially and adversely affect the use of the property for residential purposes or render the title unmarketable iv. COA: title is unmarketable bc: Restrictive covenant is material; title is unmarketable Amount of encumbrance is not definite Acts as a building restriction Not an open, visible, physical encumbrance But subject to such restrictive covenants which do not materially and adversely affect the use of the property for residential purposes or render the title unmarketable (pg. 75) buyers use, so it is buyers perspective of materially and adversely affecting The line of sight easement in this case it clearly an encumbrance upon the property restricting its use in such a manner as to render the title

unmarketable. The existence of the easement is not an open, visible, physical encumbrance of the property that might have been considered in the establishment of the purchase price. The existence of a restrictive covenant that renders title to the property unmarketable is not excepted under the provisions of P 14 of the purchase agreement. e. Implied Covenant of Marketable Title i. Even when it doesnt expressly provide for marketable title in the contract, every K has a implied covenant of marketable title ii. Some Ks ask for insurable title iii. Some Ks for marketable and insurable f. Defects that Make Title Unmarketable i. Encumbrances: something that impacts use, possession of propertynot the same as a general covenant (leases, covenants, mineral reservations, mortgages, easements and liens) are usually considered to be title matters. If K doesn't expressly provide that the buyer will take the property subject to them, they violate marketable title. If buyer is aware of the encumbrance and K doesnt expressly provide that the buyer will take the property with the encumbrance, then some court may still allow buyer to get out of K bc of unmarketable title. ii. Visible or Beneficial Encumbrances: some cts hold that an easement does not make the title unmarketable if it is obviously visible and is beneficial to the land; a power line easement along the back of a property line is a typical example. iii. Access: A complete lack of access to a public road has usually been held to make the title unmarketable iv. Encroachments: something built by neighbor on property is usually held to affect mkt of title (or if building is on neighbors property) bc of threat of litigation v. Adverse Possession: if sellers title is based exclusively on adverse possession, then usually thought nor to be marketable bc may need lawsuit to determine ownership vi. Ordinance violations: regulatory prohibition on construction of bldg was a title encumbrance. Sometimes existing structures which violate zooming or other ordinances would be sufficient to make title unmarketable vii. Hazardous waste: physical conditions by themselves have no title implications, but some states require disclosure and some states have lien/superlien that can be imposed on the property to reimburse govt for cleanup viii. Existing adverse possessors ix. Risk of litigation: HOA, CDDsdoes lawsuit threaten to impact marketability of title? x. General Factors of Defects making title unmarketable: Violation of covenants Title links not of record Unreasonable risk of litigation xi. Notice to Vendor or title defects: buyer must examine title before closing. If defect, she must notify the seller and give fair opportunity to cure, unless incurable.

xii. Title has to be marketable at closing xiii. Merger of title covenants: if the purchaser has some objection to the title on the basis of the implied covenant of marketable title, she must raise it prior to accepting delivery of the deed (only remedy for breach of most of the deed covenants is damages). g. In FLORIDA, we dont have to guess what marketable title is, we have Uniform Title Standards: Standard 00: the attorney should construe questions in favor of marketability.(also 30 year rule) h. Adams-Onis Treaty of 1819 (1821): When Florida was given to the US, except Spanish Land grants and English land grants: to determine marketable title, we do back to this treaty and find all the deeds since then (if you want to cross all of your ts, otherwise, use the 30 year presumption in UTS) i. Type of Deed to be Delivered: no good deed goes unrecorded i. General warranty deed: Fla Stat 689 granted, bargained and sold this propery to buyer ii. Special warranty deed: warrants everything except a few special things or may limit warranty to thing that happened during ownership iii. Quitclaim deed I remise, release, and quitclaim my deed to this property

6. Equitable Conversion
a. Doctrine holds that equitable title passes to the purchaser as soon as an enforceable contract to sell land is formed, even though it is clear that the legal title will remain with the seller until the closing and delivery of a deed. b. Questions which EC is used to resolve: i. Characterization issues: during the executory period should we characterize a given party as owning a REAL property or a PERSONAL property interest. Ex: a party to the K dies, leaving a will that gives her real estate to A, but personal property to B. ii. Risk issues: during the executory period, something occurs that jeopardizes the propertys value or usefulness. c. Fulton v. Duro i. Seller has legal title, buyer has equitable title. Fulton and Duro had prior squabble; Fulton has judgment against Duro; Duro living on property, had equitable title; Fulton said I have lien on property and sheriff sold property; Samuelson bought it from Duro before sheriff sale and said Duro sold me equitable title before sheriff sale. COA says sheriff sole under judgment lien important that judgment lien recorded before, when Sam goe equitable title had Fulton lien on it. ii. Whether recording a judgment imposes a lien on a judgment debtors interest in land which he is purchasing under an executory contract. iii. Facts: Fulton had a judgment against Duro. iv. Hold: a judgment debtor cannot divest his land of a judgment lien or lien made by sheriffs sale by transferring the title to another person. BC Hulton has a valid judgment lien against Duros interest in the real property before Duro assigned that interest to Samuelson, Sam took Duros interest subject to Fultons judgment lien. d. Equitable conversion usually applied to:

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i. K for sale in Fulton was a long-term installment sale contract and Earnest money contract (short K) ii. Conversion on allies if there is a contract that equity would specifically enforce iii. Sometimes no conversion if the title is unmarketable as of the date at issue. A few courts have held there is no conversion until all conditions precedent in to the transfer of legal title have been fulfilled. e. It is widely accepted that the purchasers equitable interest is in real property and therefore subject to judgment liens. f. Death of contracting party: If a court concludes that conversion has occurred at the time of the vendors death, the vendors interest descends as personal property. If it is the purchaser who dies, her interest descends as realty. g. Rick of losses: losses equitable conversion imposes on purchaser: i. Physical: Fire, flood, wind, or other physical damage ii. Legal Changes: zoning change (contract will not be enforced if zoning change has made property unusable for purchasers intended purpose). Building code change: Eminent domain action h. EXAM REVIEW: i. Marketable title: objective in definition but when it comes to buyer subjective (by application) ii. Note 2 pg 79 important! iii. Uniform Title Standards iv. Contract requires seller to convey marketable title v. 689.02 warranty deed form vi. title insurance vii. Example Contract E: Ingress and Regress have to be able to get to property viii. Example Contract A: Title Insurace ix. Deed has to be in English x. Equitable Conversion: Fulton v. Duro: seller had personal property interest; buyer had real property interest

7. Introduction to Mortgage Financing


a. fixed rate; ARM; reverse mortgage; balloon mortgage; wrap-around mortgage b. borrowers sign note; buyer who owns property sign mortgage (can be different people, but most likely same c. Shrader v. Benton (Due-on-Sale Clause) i. Benton gives Shrader mortgage as wraparound contingent on banks approval. Bank didnt approve wrap around, but did offer alternative. TC gives alternative: 1. Buyer pay price in case; 2. Buyer assume sellers mortgage, So, buyer gets deposit back. COA held TC abused its discretion when is gave the buyers the second alternative bc sellers are entitles to full benefit of their bargain. d. Foreclosure i. Borrower has to own property ii. Buyer needs to sign mortgage/note iii. Borrower doesnt pay (default, whatever it may be)

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iv. Mortgagee sends demand letter (advises of default) v. Mortgagee sends acceleration letter (request all $) vi. Mortgagee files foreclosure lawsuit Last day to pay before we sell your property on courthouse steps; no right of redemption after that date (rt of redemption = pay whats owed and save property from foreclosure) vii. Final judgment of foreclosure viii. Notice of foreclosure sale ix. Foreclosure sale x. Purchasing at sale xi. Certificate of title xii. Distribution of cash sale proceeds xiii. Termination of right of redemption

8. Conditions in Contracts
a. Covenant = promise one who enters into it is obligated to perform nad one who doe not do so may be subject to a suit for breach, with such remedies as damages, specific performance, and rescission potentially available to the non-breaching party b. Condition is not a promise, it is merely a statement that a partys obligation to perform some covenant is dependent upon the happening of some event or occurrence. Conditions may involve events which no one promises will occur, and which are entirely outside the control of the parties. (most common arrangement of financing to permit the purchase)(also purchasers sale of other real estate, the successful procurement of a zoning change, satisfactory completing of certain physical tests, obtaining of an easement to benefit the land c. Barber v. Jacobs i. B wanted to move in before school starts; made offer, requested inspection bc wanted to put in tennis cts; K had financing contingency clauseB had r make prompt application and pursue with diligence; Bank approved the loan, but didnt give interest rate and hadnt sent approval letter; B had wetland imspection-discrepancy between maps/wetland; Bs attorney also represented the bank; buyers atty tells bank and bank withdraws from loan; buyer doesnt go to another bank bc of wetlands issue. COA holds buyers efforts reasonable and should get deposit back. ii. If conditions not met, then K void, buyer gets deposit back.

III. DEEDS AND TITLES 1. Deeds


a. Deed transfers legal title. While deeds are most common way to transfer title, can also transfer by wills, intestate succession, and by court decrees and legislative acts. Adverse possession and death of joint tenant have same effect as transferring deed, although not transferred by deed specifically. b. Deed uses some or all of the verbs: grant, bargain, sell, convey. Deed must be in writing, signed by the party bound thereby, and acknowledged by the party before two people and notarized. c. Elements of a deed:

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i. Grantors name and signature ii. Grantees name and an indication of the manner in which they are taking title iii. Recitation of consideration (not necessary, but still found in almost every US deed iv. Description of the real estate v. Statement of exclusions vi. Language envincing an intent ot make a conveyance words of grant vii. The date viii. Notary publics certificate of acknowledgment ix. Stamp of recorder, indicating that deed has been recorded (doesnt have to be recorded, but can lead to problems if not) x. SOMETIMES you have exceptions and reservations in deed: 1. Exception: is a holding back of some previously existing interest (except the south 50 feet) 2. Reservation creates and leaves the grantor with a newly formed interest in the land (life estate) xi. Warranties can be either present or future: 1. present warranties are the vendors representations about the title at the time of the closingthere are 3 of them: a. warranty of seisin: a warranty that the vendor owns the estate conveyed b. warranty of the right to convey: a warranty that the vendor has the right to sell or convey the estate c. warranty against encumbrances: a warranty that no interest held by a third party limits or qualifies the estate being conveyed. Examples of encumbrances are easements, running covenants, profits, divesting conditions, concurrent tenancy rights, marital interests, leases, mortgages, or other liens. Violation of zoning or land use ordinance is not an encumbrance. d. Warranty deed or general warranty deed: vendor warrants that neither she nor any of her predecessors have encumbered the estate. e. Special warranty deed: contains a statement by the vendor that the estate transferred is not otherwise than as stated in the granting clause and the premises because she herself has not encumbered the estate. f. Quitclaim deed: transfers as is in which the transferor in effect says Im not sure what I have, but whatever it is, I give it to the transferee. g. Chase Federal Savings and Loan Association v. Schreiber (131) i. Deed is not a contract, so dont need consideration for transfer of a deed. BUT, if there is consideration, it should be GOOD and VALUABLE. There can be contractual terms in a deed. ii. Ross (old lady) conveys land to Peter C uses standard form, pays $10 in consideration, main consideration is love. PC not related to Ross; PC then sells to Perez for 50k. Ross sues PC on theory of no consideration. TC says no consideration is necessary, do deed is good, cant give title back, but does give Ross 50k as ill-gotten gain. iii. 689.09: statute of uses: right to receive money is not interest in real property (legal title)

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2. Land Descriptions
a. How do we know which property is being conveyed by a deed? Suveyors and legal descriptions b. Test in Florida: can surveyor locate piece of property with certainty c. Free survey system (old): no predetermined monumentation is used (post, tree, creek) d. Modern system: use base line and meridian lines; mark each of the corners (with trees or rocks) didnt have iron stake in ground like they do today. Some lines jag because of curvature of the earth, mountains, etc) i. Township should be 36 sq miles, contains 36 1 sq mile sections of 640 acres each. Area of township = 23040 acres. ii. Spanish land grants are removed from this type of survey iii. Land Act of 1805 gave rules of survey, how boundaries and contents of public lands ascertained; doesnt matter if survey is off, what survey says is what is right. It is what it is iv. Adams-Onis treatyUS buys Florida from Spain 1819-1821 (Spanish land grants existed before 1818) v. All surveys start in Tallahassee on meridianthat is 00. vi. For legal description start at corner of a section and measure from there

3. Delivery and Escrows


a. Delivery makes the deed operative and it is often litigated. A deed which has not been delivered is said to be entirely void. b. A Valid delivery requires the coincident presence of two facts: an INTENT by the grantor to pass title immediately, and some act or behavior on the grantors part to evidence that intent. Occasionally a count may say that no act at all is necessary if the intent is sufficiently clear. Can be recording. Acceptance is good proof of delivery. c. Martinez v. Martinez: Issue: intent of parties to make delivery: Mom and Dad own, want to give to son and DIL, give deed to kids to take to bank to hold, but instead the kids record the deed. But, court says no valid delivery bc no intent on parents part to pass title immediately. i. Recording is rebuttable presumption of delivery, but protect BFP. But, even if deed is never recorded, delivery can still be complete. ii. Void=didnt happen. Voidable=could be undone. Things are void when fraud in inducement (forgery)=didnt happen. Things are voidable when fraud in the factum (like Martinez)=undo. iii. Rule: If deed signed, then you find out there were shenanigans, voidable; if grantor never signed deed (fraudulent signing), then void. d. Wiggill v. Cheney: Mom signed deed over to daughter; put in safe deposit box that was in Moms and Wiggles name, but only she had key. Mom instructed Wiggles to hand envelope with deed in it over to daughter when she died. He did it, but court says no delivery. Ct says she had intent, but didnt have the actdidnt dispose herself of the title before she died.

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e. Can put deed in death escrow. Give deed to someone else before die with instructions that when I die, give to x. This works because grantor relinquished control. Grantor cant reserve right to revoke deed. f. If make changes to deed after signed, the alteration is void, not the deed itself.

4. Warranties of Quality
a. Now, we are back to disclosure: b. There are latent (Less obvious) and patent (pretty obvious) defects in the property c. Latent: dairy water contamination d. Patent: peacocks (and may be particular to one person, so may not be a defect) e. Slash: f. Madonna: defect to building; Madonna dancing wouldnt be defect in building if you cant hear her (affects habitability)old construction whenever someone makes a noise I hear it. Is problem a neighbor (so temporary) or inherent in design g. Are you misrepresenting? Hiding defects? Not disclosing? h. House on landfilllatent defect in property (sometimes personal knowledge may cure defect) i. Hurricane tree on housemay not be a latent defect if fixed properly. Look at amount of time passed since fixedany problems like mold j. But, if your property floods every time there is a big storm, then defect you may need to disclose, especially bc of mold. k. Superfund siteclose to contaminationneed to disclose, but at what point does it become public knowledge (when its on national news?)what if buyer is local/not local? l. Chinese drywalldefect is latent, depending on the phaseif it smells is may be patent m. LACK OF ACCESS is NOT defect on land, it may be defect of marketable title n. Stambovsky v. Ackley: NY slicker buys haunted house. The seller facilitated that reputation, but buyer had no idea. When buyer finds out, he wants to rescind contract. Haunted is latent defect, patent if buyer hears ghosts. As a matter of law the house is haunted. In this case, bc of prior representations, the house is haunted and you need to disclose. i. Seller must disclose: 1. Not readily observable 2. Seller knows about o. Questions to ask i. Is there a defect? (something that materially affects the value) ii. Is it latent (can be sued for)/patent (cant be sued for bc subject to inspection)? iii. Did the seller know or not? iv. What did the buyer know? 1. Should the buyer be estopped (seller defense)?

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p.

q.

r. s. t.

u.

v.

v. Seller/Builder? Speight v. Walters Development Co, Ltd. Speight (3rd owner) sued buildersimplied warranty of workmanlike construction. No contractual privity. Issue: whether the Speights, as remote purchasers, could pursue a claim for implied warranty of workmanlike construction. Hold: IWOWC can be brought by subsequent purchaser Implied Warranty of Worklmanlike Construction is a judicially created doctrine implemented to protect an innocent homebuyer by holding the experienced builder accountable for the quality of construction. Statute of Limitations on IWOWC: 4 years; statue of repose 12 years Implied warranty of habitability in tort sue the seller BUT economic loss rule: If there is contract breach, can't sue in tort. If you have a contract, you have the ability to negotiate a remedy, so cant sue in tort unless there is a statute. For instance, bc of Florida stat 95.11(4) can sue in negligence and breach of contract against contractor *****Bessett v. Basnett***** (What is the sellers duty to disclose?): sellers misrepresented size, amt of revenue lodge brings in, rook, availability of additional land. A person guilty of intentional fraudulent misrepresentation should not be permitted to hide behind the doctrine of caveat emptor (buyer beware). i. The recipient of a fraudulent misrepresentation of fact is justified in relying on its truth, although he might have ascertained the falsity of the representation had he made an investigation. However, if a mere cursory glance would have disclosed the falsity of the representation, its falsity is regarded as obvious, then buyer cant win ii. A person guilty of fraud should not be permitted to use the law as his shield. Nor should the law encourage negligence. However, when the choice is between the twofraud and negligence, negligence is less objectionable than fraud. iii. We hold a recipient may rely on the truth of a representation, even though its falsity could have been ascertained had he made an investigation, unless he knows the representation to be false or its falsity is obvious to him. *****Johnson v. Davis***** Seller knew of problems with roof and did not disclose to buyer. When buyer asked, seller fraudulently misrepresented. Sellers knew of and failed to disclose that there had been problems with the roof. The sellers fraudulent concealment entitles the buyer to return of its deposit. Seller now has obligation to disclose material facts. Hold: where the seller knows of facts materially affecting the value of the property, which are not readily observable and are not known to the buyer, the seller is under a duty to disclose. Duty is equally applicable to new/used property. Relief from fraudulent misrepresentation may be granted only when the following elements are present: i. false statement of material fact ii. represents knowledge that the representation is false

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iii. intention that the representation induce another to act iv. consequent injury w. *****Gilchrist Timber Co. v. Rayonier****** NEGLIGENT MISREPRESENTATION and NOT RESIDENTIAL. Purchaser of tract of timberland brought action against vendor, alleging that vendor had made negligent misrepresentation regarding zoning restrictions on tract. FlaSCt held: (1) one who negligently supplies false information for guidance of others in transaction in which he has pecuniary interest is subject to liability under theory of negligent misrepresentation for loss caused by the other partys justifiable reliance on the information and (2) statutory comparative fault apply to actions involving negligent misrepresentation. (not residential, so Johnson doesn't apply). The party who negligently transmitted the false information may be held liable when the recipient is able to establish a negligent misrepresentation cause of action as set forth in the Rstmt. We also conclude the doctrine of comparative negligence applies to an action for negligent misrepresentation. x. Schottenstein v. Azam Homeowners sued for fraud in the inducement, rescission and negligence alleging that developer falsely represented that a newarby parcel of land was permanent natural preserve when developer knew that county had plans to build a school. Question of whether a cause of action for fraudulent misrepresentation exists where the putatively misrepresented info is contained in public record is one of fact and should not be resolved through a motion to dismiss. FlSCt held that purchasers stated a cause of action for fraudulent misrepresentation. (Johnson v. Davis applies)

5. Title Covenants in Deeds


a. Title assurance: the set of mechanisms which buyers of land use to (1) learn whether their sellers have and can convey the quality of title they claim and (2) obtain recovery f the title, after the transfer, turns out not to be as represented. i. The first of the mechanisms is the deed covenant/warranty in deed: a statement in (or a legal inference from) the deed itself which gives the grantee rights against the grantor if the title is not as promised. ii. There are tother mechanisms discussed in the next sections: the recording system, the Torrens or title registration system, checking public records yourself, lawyers opinion, and title insurance. b. Warranty in Deed: Covenants start running on date of closing or when you should have known. If use warranty deed, has full common law covenants: i. Present: 1. Seisin: owner of property is only one that can transfer ownership 2. right to convey: grantor has right to convey (cant when owner is crazy and cant formulate intent to deliver) 3. covenant against encumbrances: nothing encumbering except what buyer has agreed to assume (mortgages, tax liens, HOA liens, etc...)

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ii. Future Covenants 1. Covenant of Warranty: seller will defend title 2. Covenant of Quiet Enjoyment: right to possess and use as your own promise by the grantor to compensate the grantee for the loss if the title turns out to be defective or subject to an encumbrance and the grantee thereby suffers eviction 3. Covenant of Further Assurances: promise by grantor to execute such further documents as may be necessary to perfect the grantees title. c. Brown v. Lober: Plaintiff buys house in 57, 15 years later tried to sell mineral right, but found out then that only owned 1/3 mineral rights bc original seller kept 2/3 mineral rights. Misrepresentation about status of title. Buyer thought they had 100%. Seller didnt tell about 2/3 interest. 2/3 interest was a matter of public record. Plaintiff tried to sue seller on i. covenant of seisin, but loss bc of SOL. SOL: buyer buys without seller lawyer-didn't find the public record reservationdid seller breach seisin when had already recorded the reservation? Probably not. ii. breach of covenant of quiet enjoyment, but lost bc not yet an eviction. iii. Things to think about? Do we really have a loss? Yes; Can we apply the affirmative defense of comparative negligence? Maybe if follow Gilchrist Timber and find that it was negligent misrepresentation instead of intentional. If intentional, then Basnett holds, when intentional and negligent, then intentional wind. What about damages? Dimunition in value measured the date of contract or the date of deed?; pay costs to cure; pay to litigate issue or buy the right back from cola company.

6. Title Assurance Methods


a. Proof of title b. Recording i. 3 systems of public recorder index 1. tract: for each tract of land, all conveyances on one page, problemwhat happens to large tract that gets smaller and smaller 2. grantor-grantee index: to/from alpha by yeardoesnt matter property or value 3. Torrens (doesnt really exist for us) ii. 695.01(1): Conveyances to be recorded: no conveyance shall be good against creditors or subsequent purchasers for a valuable consideration without notice, unless it is recorded. 1. Notice: actual notice; implied actual notice (doesnt allow willful blindness; constructive notice, its recorded, so you are deemed to know) iii. 695.01 buyer takes priority when: 1. didn't know of competing interest

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2. pd valuable consideration 3. didnt have notice (BFP) iv. Florida is a Notice statute state: if you have notice, you wont win. In order to have superior title, you cant have notice. v. Don't forget matters that aren't of record that might affect title: 1. Ecretion, wholesale land grant under Swamp and Overfill Act, water boundaries) 2. Adverse possession: have lawful right to be in possession and have been in possession for last 7 years (cant have in a subdivision) 3. Boundary by agreement: agree where fence goes up; realize its not right, fence stays for 7 years, now one lot reduced/one lot bigger 4. Boundary by acquiescence: uncertain of common boundary, dont reach an agreement; one neighbor puts up fence on others property. Other says get fence off, but other says no. Goes on for 7 years 5. Recorded even if clerk makes a mistakewhen clerk screws it up, as long as it's recorded, it is recorded, even if it is not properly indexed. Sue clerk for negligence. c. Marketable Record Title Act: statute that tells you have far back you need to search the records cuts off certain old rights in land after the passage of a certain period of time (in Florida 30 years) d. Wild deed: deed is not in grantor chain ex: if you make a deal with neighbor about pence and you get quitclaim deed from neighbor to show no interest, but its wild bc neighbor never owned that part.

7. Different Forms of Property Ownership


a. Tenants in Common i. Two or more people, each person has undivided interest in part of property (owns % of property); presumed 50/50, but can be prescribed. Has tight to use 100% of property, but only has a percentage ownership. When one jt dies, goes to her estate. b. Joint Tenants with Right of Survivorship i. 2 people acquire property together; creates a single interest; when first person dies, other person gets it. If one joint tenant sells, severs right of survivorship and owners become TIC. c. Tenants by the Entirety i. Husband and wifemarried people acquire title at same time. Like JTROS as fas as survivorship. Pre-divorce, wife can convey to hub and vice versa, then no longer TBE. If get divorce, becomes TIC 50/50. These are non-record transfers!

8. Title Insurance
a. Title Insurance company takes risk that there will not be a claim on property insuring buyer has insurable title. b. Three types of forms i. Title insurance commitment

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ii. Owners title insurance policy (issued in amt of purchase price or by appraisal) iii. Lenders title insurance policy: paid for by buyer, tend to be more comprehensive, assignable c. Title insurer can pay or litigate when there is a claim. If title defect becomes known, they must diligently pursue the claim i. Title insurance company pays lawyerlawyer really represents the insured, lawyer cant tell title ins co whats going on. ii. If title insurance co doesnt win, then ins co pays insured the diminution in value, iii. Owner/lender must cooperate with insurance co and insured needs to fess up with actual knowledge at the time of purchase.

9. Settlement
a. RESPA: supposed to standardize closings across the country) consumer protection statute, first passed in 1974. Regulates mortgages i. Purpose: 1. To help consumers become better shoppers for settlement services 2. To eliminate kickbacks and referrals that unnecessarily increase the costs of certain settlement services. ii. Applies to: 1. 1-4 residential property 2. certain disclosures a. prohibit anyone from referring services to closing b. prohibits people from requiring buyers to have to buy title insurance and says can buy title insurance from whomever buyer pleases. 3. Certain info about time of loan app a. Info booklet b. Lender has to tell you the charges for closing before the closing c. Mortgage services disclosure statementhave to disclose if they are going to sell it or keep it 4. Affiliated business arrangement AFBA 5. HUD1 Settlement Statement: closing statement has to be standardized. b. What happens at closing? i. Ownership changes ii. Mortgage obligation is finalized iii. Sellers and 3rd parties get paid (realtor, lender, surveyor, lawyer) iv. Title insurance requirements are met c. Post-closing i. Overnight loan package to lender ii. Record docs (deed, mortgage, affidavits, trust docs, poa, satisfaction of judgment) iii. Pay 3rd party expenses (pay off sellers mortgage)

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iv. Update title search to include recorded deed and mortgage (and check its recorded) and then issue title insurance policies v. Verify satisfaction of mortgages paid at closing vi. Send sellers 1099-S form to IRS

IV. THE USE OF MORTGAGE SUBSTITUTES 1. The Use of Mortgage Substitutes


a. Right of Redemption: The debtor or mortgagor cannot, in the inceptin of the instrument, as a part of or collateral to its execution, in any way deprive himself of his equitable right to come in after a default in paying the money at the stipulated time, and to pay the debt and interest and thereby to redeem the land from the encumbrance of the mortgage; the equitable right of redemption, after a default is preserved, remains in full force, and will be protected and enforced by a court of equity, no matter what stipulations the parties may have made in the original transaction purporting to cut off this right. b. By a parity of reasoning, an agreement allowing the mortgagee to keep any part of the mortgaged property, redemption being limited to the balance, fails. Nor is the mortgagee allowed at the time of the loan to enter into an option or contract for the purchase of the mortgaged property. c. In Florida, we have judicial foreclosure (strict foreclosure) and the right of redemption stops at foreclosure sale unless judgment gives a different date (usually before sale). It is a statutory right of redemptionthe equitable right is limited by statute. d. Perry v. Queen: the plaintiff was the owner of a property with a 2nd mortgage. Te 2nd mortgage was delinquent and a foreclosure was imminent. P got letter in the mail, saying, call us, well save you. P got 11k, D got deed/title. P was then renting house with option to repurchase after a year for $. P still living in the house. Value of the house is 94k/68k equity. P doesnt repurchase, D tries to kick out. P argues mortgage loan agreement and acting as security for loan. Court recharacterizes deed as mortgage. Uses factors to get to that charcterization. (parol evidence it admissible in these cases): Factors: i. P was not well-educated; ii. there was a relatively low amt of consideration pd for the warranty deed; iii. P retained physical possession; iv. P did not have access to legal advice at the time the deal was executed. e. The absolute deed intended as security: i. Parol evidence is admissible to estb that a deed purporting to be an absolute conveyance of real estate was intended to serve as security for an obligation, and should therefore be deemed a mortgage. ii. Intent must be proven by clear and convincing evidence. Such intent may be inferred from the totality of the circumstances, including the following factors: Statements of the parties Presence of a substantial disparity between the value received by the grantor and the fair market value of the property The fact that grantor continued to pay real estate taxes The fact that grantor made post-conveyance improvements to the real estate The nature of the parties and their relationship prior to and after the conveyance.

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f. Downs v. Ziegler P wants to foreclose. D is a construction guy with 30k debt and cant pay. Banker calles his brother (a Dr) and gets 3 doctors to help guy out. He gives drs title, they give him 30k. P can repay 30k with a fee (conditional repurchase agreement). D didnt repaybank foreclosed, but not enough to pay mortgage. Bank wants deficiency payment against owner. Drs are owners of property as per deed, but drs say no, we arent real owners the deed was really a mortgage. Drs show that even though there is a deed, its really a mortgage. Drs won, banker/bro lost. D lost property to foreclosure, but bank couldnt pursue deficiency against drs bc deed really a mortgage.

2. The Installment Land Contract


a. When a vendee under an installment land contract defaults, the vendor, under traditional remedies, amy sue (1) for the installments which are due with interest thereon (2) for specific performance of the contract (3) for damages (4) to foreclose his vendees rights (5) to quiet title (6) or he may rescind the contract. b. Most vendors rely on the forfeiture clause which is contained in virtually every installment land contract. The clause typically will provide that time is of the essence adnd that when a vendee defaults under the contract, the vendor has the option to declare the contract terminated, to retake possession of the premises, and to retain all payments nder the contract as liquidated damages. Vendors view as pro-vendor c. Russell v. Richards: long term land contract. Buyer didn't make required payments; right of lender in New Mexico to repossess, terminate instantly, no process. Buyer raises defenses: exceptions to statute, look at all the good things Ive done; CT held buyer responsible for term of K and forfeit rights at point of default. Russells loss of her interest under the contract did not result from a wrong committed by the Richardses, but from her default under the real estate contract for failure to make a timely payment. The usual consequence of default, as clearly stated in the contract assumed by Russell, is forfeiture of all interests; only unusual equitable circumstances create an exception to that rule. d. Peterson v. Hartell: Grandma has 160 acres, sells granddaughter 6 acres at $50/month, when finished paying, get deed. GD made 58of first 65 payments. GD stopped paying, GM collected payments after past default and never went back, but for 21/2 years totally stopped paying; GD sent GM $250 to restart payments. GM sent back and said no thank you, K terminated. No remedies in K. GM does nothing to terminate K. Ct says GD can give full performance or GD can get restitution for value seller got for payments and property. i. Issue: If buyer intentionally defaults, does buyer still get remedy? GM has security interest (like mortgage); GD should be given opp to pay (reas amt of time) or if cant pay, should get restitution of excess. e. Sebastien v. Floyd: (most like Florida): issue: whether a clause in an installment land sale contract providing for forfeiture of the buyers payments upon the buyers default may be enforced by the seller. Buyer had installment K of 11k at 8.5%; paid $5,400 (40% of purchase price). Ct holds forfeiture cannot be enforced. When a typical installment contract is used as the means of financing the purchase of property, legal title to the property remains in the

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seller until the buyer has paid the entire contract price or some agreed-upon portion thereof, at which time, the seller tenders a deed to the buyer. However, equitable title passes to the buyer when the contract is entered. The seller holds nothing but bare legal title as security for the payment of the purchase prce. Land sales contracts are treated just like conventional mortgages.

IV. Other stuff 1. Riparian Rights and Water Front Property


a. Who owns what? What rights do I have to use the water? What are the regulatory restrictions? What are the non-record transactions that affect the water on my property? b. Not all Waterbodies are Public. We generally think in terms of all waterbodies being publicly owned. While that is generally the case, it is not always so. You get privately owned waterbodies in three ways: i. Because the state has already sold them or somehow relinquished its interest. ii. Because the waterbody is too small to be navigable which unfortunately is a standard that changes depending on the political moods in Tallahassee, or iii. Because the waterbody was created after Statehood. These are generally artificial, but could also include waterbodies created by sinkholes. If a waterbody is privately owned, we must be able to explain to our clients, what rights (if any) they may have to use that waterbody. c. The Boundary is Legally Defined. The Boundary between public and private ownership on a waterbody is legally defined as either the Ordinary High Water Line (if non-tidal) or the Mean High Water Line (if Tidal). Those are defined as i. The Ordinary High Water Line (OHWL) as a line between a riparian owner and the public is to be determined by examining the bed and the banks and ascertaining where the presence and action of the water are so common and usual and so long continued in all ordinary years as to mark upon the soil of the bed a character distinct from that of the banks in respect to vegetation, as well as to the nature of the soil itself. High water mark means what its language imports, -- a water mark. It is coordinate with the limit of the bed of the water, and that only is to be considered the bed which the water occupies sufficiently long and continuously to wrest it from vegetation and to destroy its value for agricultural purposes. Tilden v. Smith, 94 Fla. 502, 113 So. 708, 712 (1927). ii. Mean High Water is generally the boundary between public and private ownership on tidally influenced waters. It is computed very differently as the average a height of the high waters over a 19 year period. Fla. Stat. 177.27 (14). d. Waterfront Boundaries Move. The boundary along water frontage is ambulatory. It Moves from time to time and therefore can never be pinned down to a specific point in a survey. This becomes a key point later in our discussions because it affects the way in which a waterfront

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property must be described. Each move the boundary between public and private ownership EXCEPT AVULSIVE! i. Accretion -- the gradual building up of the land; ii. Erosion -- the gradual washing away of the land; iii. Reliction the gradual lowering of the water to expose the land and other gradual and imperceptible changes iv. Avulsive sudden, perceptible changes or artificial changes -- do not change the boundary between public and private ownership. Examples of this would be a hurricane cutting a new pass, or changing the route of a river, or any change in the waterfront involving heavy equipment. e. Owner Has Certain Rights in the Waterbody. There are two types of rights to waterfront property, and although technically different, they are so similar that they are referred to almost interchangeably -- Riparian And Littoral Rights. They only apply when the state owns the waterbody, although similar rights have been found in shared private waterbodies. f. Riparian vs. Littoral. Riparian rights attach to lands fronting on a river or stream; littoral rights are those appurtenant to lands fronting on an ocean, sea, or lake. g. Vested Common Law Rights. Riparian and littoral rights are common law rights and, for constitutional purposes, they constitute property. h. Include Use Rights. Riparian and littoral property rights consist not only of the right to use the water shared by the public, but include the following vested rights: (1) the right of access to the water, including the right to have the property's contact with the water remain intact; (2) the right to use the water for navigational purposes; (3) the right to an unobstructed view of the water; and (4) the right to receive accretions and relictions to the property. (but see Stop the Beach Renourishment) i. Cant be Statutorily Modified. Because riparian and littoral rights are common law creations that vested in the upland owner long before the adoption of the statutory definition in 1953, the statutory definition cannot constitutionally modify, limit, or restrict those rights granted at common law. State v. Florida National Properties, Inc., 338 So.2d 13 (Fla. 1976). Nonetheless, the statutory definition is likely to be casually followed and is not a bad restatement of the common law. j. Governing Legal Doctrines after Coastal: After Coastal there are basically five legal doctrines relevant to a Sovereignty Lands determination: They are: i. If a given waterbody was navigable on March 3, 1845 (the date of statehood), the lands under that waterbody are Sovereignty Lands and ownership passed to the State by virtue of it becoming a state (the Equal Footing Doctrine). Note that the test is navigability when Florida became a state, not current navigability. ii. The dividing line between public and private ownership of lands adjacent to state-owned waterbodies is the OHWL. The main body of Florida case law addressing the issue, states "[t]he ordinary high water line (OHWL) is described as 'the point up to which the presence and action of the water is so

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continuous as to destroy the value of the land for agricultural purposes by preventing the growth of vegetation.'" iii. Changes in the OHWL resulting from slow, natural processes (accretion, reliction and erosion) change the dividing line between public and private ownership. Avulsive changes resulting from sudden or artificial changes affecting the OHWL do not affect the boundary between state and private ownership. Thus, as the natural movement of waters build up or erode lands along one side of a waterbody, the line of demarcation between public and private ownership adjusts to correspond to the then existing OHWL. On the other hand, avulsive changes do not change this line of demarcation and, over time, a significant gap may develop between the water-line and the public-private boundary. iv. There is a rebuttable presumption that waterbodies which were meandered in the original U.S. government surveys were "navigable" and, conversely, that unmeandered waterbodies were not. This, however, is not an absolute rule, but may be challenged in court. The courts have not, to my knowledge, clearly established the strength of these presumptions. v. The state does not lose title to any Sovereignty Lands through the application of the Marketable Record Title Act, the doctrine of contemporaneous determination or the doctrine of legal estoppel. This was the express holding of Coastal. k. Tidal and navigable waters i. 1845 when Florida became a state, it automatically received title to navigable water and all tidally influenced water sovereign lands = lands that are under water passed under equal footing doctrinethe test is where was the water in 1845. (non record transfer) ii. Swamp and Overflow land Act: over 20 million acres of swamp and overflow land conveyed to Florida by US Patent iii. When surveying meander bodies of water that are navigable, i.e. draw lines that approximate shoreline. iv. Gradual, imperceptible, natural change moves the boundary line (erosion, accretion, reliction) v. Manmade or sudden changes dont change boundary lines (avulsion) l. Fresh water have different boundary tests i. Freshwater: ordinary high water line (OHWL); Tilden v. Smith ii. Mean high water boundary is mathematically certain and 177.27(14) defined as the average height of the high waters over 19 year period m. Waterfront owner has riparian (river or stream) rights or littoral (lakes) i. Access ii. Use iii. Unobstructed view iv. Receive accretions and relictions n. Beach restoration: classic avulsion change (doesn't change boundary line if avulsive); establish erosion control line before restoration; fixes boundary between upland and sovereign owner

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o. Marketable Record Title Act is inapplicable to sovereign lands (have to go back to 1845). p. Review of case: farmer owns SE of a section with a lakedeed says farmer owns out into lake. Farmer farming muck from lake and selling it. State says they own lake and ask farmer to stop. Farmer says his land is from the Spanish land grant, so no sovereign land. TC so the land was never deeded to the state, its the farmers. COA by magic of law, says Spanish govt owns navigable waters and didnt convey them away, so COA read in gratn and said his property always didnt include lake. IV. Potential exam questions: 1. If you are on Destins beach, are you on government or private property? a. A: is it restored beach or non-restored beach? i. If non-restored, then on private property up to high tide line; if on restored beach, then on public property up to the line deemed private.

Remedies Loss of Bargain Damages

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Difference between the K price and the mkt value on the date of the breach Compensatory Damages Put injured party in as good of a position as he would have been if performance had been rendered. Loss must be reasonably certain consequence of the breach, although the exact amount need not be certain. Liquidated Damages Seller may retain deposit as liquidated damages Specific Performance Even if party gets specific performance, can still get compensatory damages SP is a matter of sound judicial discretion. Cts consider if parties entered into K freely; property has to be unique; buyer had to be ready, willing and able SP may be denied when: It would produce unjust results; K is excessively vague; If vendor has resold to another purchaser who had no knowledge of the prior K; If purchaser was buying land for immediate resale at a profit, then uniqueness doesnt fly; Both SP and other remedies may be denied if there are K conditions which have not been fulfilled or if the P is in substantial breach; If the seller does not own all the property covered by the K, the buyer may obtain SP with an abatement of the price. BUYER Is usually entitled to refund of dep + interest on dep + costs and expenses incurred in connection with proposed sale + any improvements made on prop Expenses for title search, survey, attorneys fees, airfare to negotiate, rent at present location, loss of particularly favorable financing (offset by any money saved on interest/taxes, etc buyer would have paid and any interest buyer made on money still had that would have used to buy house) Buyers damages are limited to restitutionary recovery when the sellers title is defective but the seller has acted in good faith Loss of bargain damages only available to the buyer when the propertys value is higher than the contract price When contract makes buyers sole remedy termination and refund of deposit, then sellers obligations are illusory and Florida courts wont have it. SELLER Compensatory: carrying cost of property until resold, interest on existing mortgage, interest income seller expected to earn on purchase price, cost of second brokers commission, increasing tax liability as a result in law change Liquidated damages: seller may retain the dep, Fla cts enforce up to 15% 3 elements that must be validated to enforce damages clause: parties intended to agree in advance to the settlement of damages that might arise from breach amount of liquidated damages was reasonable, bearing some relationship to the damage which might have been sustained actual damages may be uncertain and difficult to prove

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If liquidated damages clause does not address the issue of other damages, the usual rule is that seller may seek specific performance, but not actual damages. If the clause does discuss other damages, some cts see this as a penalty and reject.

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