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Hinkel Australia Brazil Canada Mexico Singapore Spain United Kingdom United States WEST LEGAL STUDIES PRACTICAL REAL ESTATE LAW 5E Daniel F. 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To John Henry This page intentionally left blank Contents Preface xv Corporation 33 General Partnership 33 Limited Partnership 33 Chapter 1 Limited Liability Company 34 INTRODUCTION TO THE LAW OF REAL PROPERTY 1 Summary 34 Key Terms 34 Real Property Law 2 Review Questions 34 Laws That Govern Real Property Transactions 2 Case Problems 35 Real Property versus Personal Property 2 Practical Assignment 35 Physical Elements of Real Property 3 Addendum 35 Case: Ex Parte Brown 6 Community Property Agreement 36 Ownership of Real Property 7 Co-ownership Chart 38 Methods of Acquiring Ownership to Real Property 7 Endnote 35 Inheritance and Devise 7 Gift 8 Contract and Sale 9 Chapter 3 Adverse Possession 9 SURVEYS AND LAND DESCRIPTIONS 39 History of American Real Property Law 10 The Survey 40 Modern-Day Estates in Real Property 11 Preparation of Surveys and Survey Standards 41 Role of Legal Assistant in Real Estate Land Descriptions 42 Legal Practice 14 Government Rectangular Survey Description 42 Research Materials for Real Property Law 15 Platted Description 46 Ethics: Introduction 16 Metes and Bounds Description 47 Summary 16 Practice Tips for Reviewing a Survey 52 Key Terms 17 Ethics 54 Review Questions 17 Summary 54 Case Problems 17 Key Terms 55 Practical Assignments 17 Review Questions 55 Endnotes 18 Practical Assignments 55 Addendum 55 Chapter 2 Platted Description Survey 56 CONCURRENT OWNERSHIP 19 Metes and Bounds Description Types of Concurrent Ownership 20 (Including Curves with Descriptions) 57 Joint Tenancy with Right of Survivorship 20 Metes and Bounds with Use of Interior Angles 58 Tenancy in Common 21 Metes and Bounds Survey—E. Ponce de Tenancy by the Entirety 23 Leon Property 59 Community Property 24 Metes and Bounds Survey—Mohawk Agreements of Contenancy 26 Trail Property 60 Concurrent Ownership and the Role of Metes and Bounds Survey—West Pine the Legal Assistant 32 Valley Road Property 61 Ethics 32 Metes and Bounds Survey with Legal OtherLegal Entities 33 Description—Willow Creek Property 62 vii viii CONTENTS ALTA/ACSM 2005 Survey Standards 63 Chapter 6 Survey Review Checklist 69 CONTRACTS 118 Requirements of a Valid Contract 119 Chapter 4 Legal Capacity to Contract 119 PUBLIC REGULATION AND Mutual Agreement 122 ENCUMBRANCES 71 Consideration 124 Public Regulation 72 Lawful Purpose 124 Zoning 72 Written Agreements 124 Building Codes and Subdivision Regulations 73 Remedies for Breach of a Real Estate Contract 125 Environmental Protection Laws 73 Specific Performance 125 Case: Shackford & Gooch, Inc. et al. v. The Town Money Damages 125 of Kennebunk et al. 74 Rescission 126 Environmental Law on the Internet 78 Liquidated Damages 127 Power of Eminent Domain 78 Real Estate Broker 127 Taxation 78 Agency Relationship 127 Federal and State Income Tax Liens 79 Case: Southeastern Land Fund, Inc. v. Real Private Encumbrances 80 Estate World, Inc. 128 Judgment Liens 80 Services Provided by a Real Estate Broker 130 Mechanics’ and Materialmen’s Liens 80 Listing Agreements 131 Mortgages and Trust Deeds 81 Open Listing 136 Easements 81 Exclusive Listing 136 Restrictive Covenants 81 Exclusive Right-to-Sell Listing 136 Ethics 82 Real Estate Brokers and the Internet 136 Summary 82 Taxation and the Sale of Real Property 137 Key Terms 83 Federal Income Tax 137 Review Questions 83 Federal Income Tax on the Sale of a Home 137 Practical Assignments 83 Federal Income Tax on the Sale of Addendum 83 Commercial Property 138 R-4 Single-Family Residential Ethics 139 District Regulations 84 Summary 139 C-1 Community Business District Regulations 87 Key Terms 140 Townhouse Restrictions 91 Review Questions 140 Case Problems 140 Practical Assignments 141 Chapter 5 EASEMENTS AND LICENSES 101 Easements 102 Chapter 7 Creation of Easements 103 PREPARATION AND REVIEW OF A REAL ESTATE CONTRACT 142 Case: Russakoff v. Scruggs 108 Termination of Easements 110 Sydney’s Real Estate Contract 143 Licenses 111 Elements in a Real Estate Contract 144 Practice Tips for the Legal Assistant 111 The Parties 144 Ethics 112 Consideration 145 Summary 112 The Agreement 145 Key Terms 112 The Property 145 Review Questions 112 The Price 146 Case Problems 113 The Method of Payment 147 Practical Assignments 113 Quality of Title 148 Addendum 113 Possession of the Property 149 Sanitary Sewer Easement and Ingress Closing or Settlement 149 and Egress Easement 114 Closing or Settlement Documents 150 Electric Power Company Proration, Closing Costs, and Right-of-Way Easement 116 Financial Adjustments 151 CONTENTS ix Condition of the Property and Risk of Loss 152 Case: Lunsford v. King 216 Earnest Money 153 Limited (Special) Warranty Deed 216 Brokers 154 Quitclaim Deed 217 Survival 155 Executor’s and Administrator’s Deeds 217 Assignment of Contract 155 Trustee Deeds 217 Time Is of the Essence 156 Basic Requirements of a Valid Deed 218 Warranties of the Parties 156 Written Instrument 218 Contingencies 158 Competent Grantor 218 Definitions 158 Identity of the Grantee 218 Default 158 Words of Conveyance 218 Notice 158 Description of the Property 218 Entire Agreement 159 Consideration 219 Applicable Law 159 Signature of Grantor 219 Additional Provisions 159 Witnesses of Deeds 219 Offer and Acceptance 159 Delivery to Grantee 219 Execution 160 Preparation of a Valid Deed 219 Caveat Emptor and the Seller Disclosure Form 161 Caption 220 Special Commercial Contract Issues 161 Premises or Preamble 221 Description of the Property 161 Granting Clause 221 Representations, Warranties, and Covenants 162 Description 221 Purchaser’s Inspection or “Free Look” 162 Habendum 221 Closing Documents 163 Warranty Clause 221 Rent Prorations 165 Testimonium 221 Lease Commissions 166 Completing Sections of a Deed 221 Security Deposits 166 Preamble 221 Seller’s Covenants Regarding Operation Granting Clause 223 of Property 167 Description 223 Hazardous Materials 167 Testimonium 224 Indemnification 168 Practical Exercises in Deed Preparation 225 Seller’s Disclaimer of Warranty 169 Correction of Deeds 229 Options 169 Reformation and Cancellation of Deed 229 Contracts and Computers 169 Practical Tips for the Legal Assistant 229 Ethics 173 Grantor 229 Summary 174 Grantee 231 Key Terms 174 Legal Description 231 Review Questions 174 Witnessing a Deed 231 Case Problems 175 Ethics 232 Practical Assignments 175 Summary 232 Addendum 176 Key Terms 233 Contract for Purchase and Sale of a Home 177 Review Questions 233 Contract for Purchase and Sale of a Large Case Problems 233 Tract of Vacant Land 184 Practical Assignments 234 Seller’s Property Disclosure Statement 190 Addendum 234 Contract for Purchase and Sale of a General Warranty Deed—North Carolina 235 Retail Shopping Center 195 General Warranty Deed—Texas 237 Option to Purchase 211 Warranty Deed (Joint Tenancy)—Illinois 239 Limited Warranty Deed—Georgia 240 Grant Deed—California 241 Chapter 8 Quitclaim Deed—Georgia 243 DEEDS 212 Quitclaim Deed—California 244 Historical Development of Deeds 213 Executor’s Deed—New York 245 Types of Deeds 214 Administrator’s Deed—Georgia 247 General Warranty Deed 214 Trustee Deed—Georgia 248