UNIT 11 REAL PROPERTY: ACQUISITION & DISPOSITION I. Contracts for the Sale of Land A. Options 1. Optionee not bound to purchase 2. Subsequent negotiations and counteroffers do not constitute a rejection of the option by the optionee 3. Becomes a contract to convey upon proper exercise 4. Must be recorded to give priority over lienholders and subsequent purchasers for value B. Preemptive Rights (Right of First Refusal) 1. Owner not bound to sell 2. Rule against perpetuities (Must vest within 21 years or less beyond a life in being; otherwise void even if attempt at exercise is earlier) 3. Must contain a reasonable price provision linked to fair market value or price that owner is willing to accept from third parties. C. Contracts for sale: interim 1. Statute of Frauds a. Sufficiency of writing i. No particular form required ii. Signed by party to be charged iii. Description: Legal best but not required. iv. All elements of a contract required 2. Remedies for breach a. Specific performance b. Rescission and restitutionc. Damages 3. Parol evidence a. Not admissible b. Admissible to show fraudulent inducement or mutual mistake D. Contracts for sale: Long-Term Financing device. II. Deeds A. Definition: An instrument of writing, signed, sealed and delivered, that transfers an interest in real property from a grantor to a grantee. B. General warranty deed Title free from defects and encumbrances C. Special warranty deed Title free from defects and encumbrances that may have arisen since the grantor acquired title. D. Quitclaim deed E. Essentials 1. Competent grantor 2. A grantee capable of holding title 3. Sufficient description of the property 4. Operative words of conveyance 5. Proper execution by the grantor (signature & seal) 6. Acceptance by the grantee. F. Revenue stamps required on deed ($1/$500) G. Covenants in a deed1. Seisin and right to convey 2. Encumbrances 3. Warranty and quiet enjoyment III. Security Interests A. Mortgages 1. Mortgagor - debtor 2. Mortgagee - creditor B. Deeds of trust 1. Grantor - debtor 2. Trustee 3. Beneficiary - creditor 4. Creditor may bid at foreclosure sale C. Title (N.C.) vs. Lien theory D. Equity of redemption E. Acceleration clause F. Assumptions/Due on sale clause G. Foreclosure by power of sale/Foreclosure by action H. Deficiency judgment/N.C.G.S. '45-21.38 Mortgage/deed of trust represents part of purchase price IV. Methods of sale A. Private agreement B. Broker/agent C. Auction D. Sealed
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