Essentials of Practical Real Estate Law

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This text was originally written as a reduced-essential version of a larger text entitled Practical Real Estate Law by Daniel F. Hinkel. Practical Real Estate Law covered every aspect of a modern real estate practice. That text, because of its detail and comprehensive coverage, totaled more than 600 pages, and some instructors teaching courses designed for six- to ten-week terms had found it difficult to complete Practical Real Estate Law. The students who were attending the shorter courses suggested that the text be shortened and that some detail be deleted. Consequently, the editors at West Publishing Company asked me to consider a way to revise and reformat...

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Essentials of Practical Real Estate Law Fourth Edition
DELMAR LEARNING Options. Over 300 products in every area of the law: textbooks, CD-ROMs, reference books, test banks, online companions, and more – helping you succeed in the classroom and on the job. Support. We offer unparalleled, practical support: robust instructor and student supplements to ensure the best learning experience, custom publishing to meet your unique needs, and other beneﬁts such as West’s Student Achievement Award. And our sales representatives are always ready to provide you with dependable service. Feedback. As always, we want to hear from you! Your feedback is our best resource for improving the quality of our products. Contact your sales representative or write us at the address below if you have any comments about our materials or if you have a product proposal. Accounting and Financials for the Law Ofﬁce • Administrative Law • Alternative Dispute Resolution • Bankruptcy • Business Organizations/Corporations • Careers and Employment Civil Litigation and Procedure • CLA Exam Preparation • Computer Applications in the Law Ofﬁce • Contract Law • Court Reporting • Criminal Law and Procedure • Document Preparation • Elder Law • Employment Law • Environmental Law • Ethics • Evidence Law • Family Law • Intellectual Property • Interviewing and Investigation • Introduction to Law Introduction to Paralegalism • Law Ofﬁce Management Law Ofﬁce Procedures Legal Nurse Consulting • Legal Research, Writing, and Analysis • Legal Terminology • Paralegal Internship • Product Liability • Real Estate Law • Reference Materials • Social Security Sports Law • Torts and Personal Injury Law • Wills, Trusts, and Estate Administration Delmar Learning 5 Maxwell Drive Clifton Park, New York 12065-2919 For additional information, ﬁnd us online at: www.delmarlearning.com
Essentials of Practical Real Estate Law Fourth Edition Daniel F. Hinkel Australia Brazil Canada Mexico Singapore Spain United Kingdom United States
WEST LEGAL STUDIES ESSENTIALS OF PRACTICAL REAL ESTATE LAW 4E Daniel F. Hinkel Career Education Strategic Business Unit: Director of Production: Marketing Coordinator: Vice President: Wendy A. Troeger Jonathan Sheehan Dawn Gerrain Content Project Manager: Art Director: Director of Learning Solutions: Steven S. Couse Joy Kocsis John Fedor Technology Project Manager: Cover Design: Acquisitions Editor: Sandy Charette Bernadette Skok Shelley Esposito Director of Marketing: Developmental Editor: Wendy Mapstone Melissa Riveglia Marketing Manager: Editorial Assistant: Gerard McAvey Melissa Zaza COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. No part of this Library of Congress Cataloging-in- West Legal Studies is an imprint of work covered by the copyright hereon Publication Data Delmar Learning, a division of Thomson may be reproduced or used in any form Hinkel, Daniel F. Learning, Inc. Thomson Learning™ is a or by any means—graphic, electronic, or Essentials of practical real estate law / trademark used herein under license. mechanical, including photocopying, Daniel F. Hinkel.—4th ed. recording, taping, Web distribution or p. cm. Printed in the United States information storage and retrieval Includes index. 1 2 3 4 5 XXX 07 06 05 04 systems—without written permission ISBN 978-1-4180-4806-8 (alk. paper) of the publisher. For more information contact 1. Vendors and purchasers—United Delmar Learning, States. 2. Real property—United For permission to use material from this 5 Maxwell Drive, P.O. Box 8007, States. 3. Conveyancing—United States. text or product, contact us by Clifton Park, New York 12065. I. Title. Tel (800) 730-2214 Fax (800) 730-2215 Or ﬁnd us on the World Wide Web at KF665.H52 2007 www.thomsonrights.com http://www.westlegalstudies.com 346.7304'3—dc22 2007042033 NOTICE TO THE READER Publisher does not warrant or guarantee any of the products described herein or perform any independent analysis in connection with any of the product information contained herein. Publisher does not assume, and expressly disclaims, any obligation to obtain and include information other than that provided to it by the manufacturer. The reader is notiﬁed that this text is an educational tool, not a practice book. Since the law is in constant change, no rule or state- ment of law in this book should be relied upon for any service to any client. The reader should always refer to standard legal sources for the current rule or law. If legal advice or other expert assistance is required, the services of the appropriate professional should be sought. The Publisher makes no representation or warranties of any kind, including but not limited to, the warranties of ﬁtness for particu- lar purpose or merchantability, nor are any such representations implied with respect to the material set forth herein, and the pub- lisher takes no responsibility with respect to such material. The publisher shall not be liable for any special, consequential, or exem- plary damages resulting, in whole or part, from the readers’ use of, or reliance upon, this material.
To: John Henry
Contents in Brief Chapter 1 Chapter 9 INTRODUCTION TO THE LAW OF REAL REAL ESTATE CLOSINGS 261 PROPERTY 1 Chapter 10 Chapter 2 REAL ESTATE CLOSING FORMS CONCURRENT OWNERSHIP 16 AND EXAMPLES 287 Chapter 3 Chapter 11 ENCUMBRANCES, EASEMENTS, CONDOMINIUMS AND COOPERATIVES 343 AND LICENSES 26 Chapter 12 Chapter 4 SURVEYS AND LAND DESCRIPTIONS 376 CONTRACTS 45 Chapter 13 Chapter 5 LEASES 408 DEEDS 113 APPENDIX: ANSWERS TO SELF-STUDY EXAMINATIONS 447 Chapter 6 LEGAL ASPECTS OF REAL ESTATE FINANCE 132 GLOSSARY 463 Chapter 7 INDEX 469 TITLE EXAMINATIONS 187 Chapter 8 TITLE INSURANCE 205
Contents Preface xiii Practical Assignments 25 Table of Exhibits xvi Endnote 25 Chapter 1 Chapter 3 INTRODUCTION TO THE LAW ENCUMBRANCES, EASEMENTS, OF REAL PROPERTY 1 AND LICENSES 26 Real Property Law 1 Public Encumbrances 26 Ownership of Real Property 4 Zoning 27 Methods of Acquiring Ownership to Real Property 5 Building Codes and Subdivision Regulations 27 Inheritance and Devise 5 Environmental Protection Laws 29 Gift 6 Power of Eminent Domain 32 Contract and Sale 6 Taxation 33 Adverse Possession 7 Private Encumbrances 33 History of American Real Property Law 8 Judgment Liens 33 Modern-Day Estates in Real Property 9 Mechanics’ and Materialmen’s Liens 34 Future Interests 11 Mortgages and Trust Deeds 35 Research Materials for Real Property Law 12 Restrictive Covenants 35 Ethics: Introduction 13 Easements 35 Role of Legal Assistant in Real Estate Legal Practice 14 Creation of Easements 36 Summary 14 Termination of Easements 39 Key Terms 14 Licenses 40 Self-Study Examination 14 Ethics: False Witness 40 Practical Assignments 15 Practice Tips for the Legal Assistant 41 Endnote 15 Checklist: Preparation of an Easement 41 Summary 42 Chapter 2 Key Terms 42 CONCURRENT OWNERSHIP 16 Self-Study Examination 43 Types of Concurrent Ownership 16 Practical Assignments 43 Joint Tenancy with Right of Survivorship 17 Addendum 43 Tenancy in Common 18 Rights, Duties, and Liabilities of the Chapter 4 Common Owners 18 Partition 19 CONTRACTS 45 Tenancy by the Entirety 20 Requirements of a Valid Contract 45 Community Property 20 Legal Capacity to Contract 46 Dower and Curtesy 21 Mutual Agreement 48 Elective Share 22 Consideration 48 Summary 23 Lawful Purpose 48 Key Terms 23 Written Agreements 48 Ethics: Unauthorized Practice of Law 24 Proﬁle: Christine A. Hansen 49 Self-Study Examination 24 Remedies for Breach of a Real Estate Contract 50 vii
viii CONTENTS Speciﬁc Performance 50 Chapter 5 Money Damages 50 DEEDS 113 Rescission 51 Types of Deeds 113 Liquidated Damages 51 General Warranty Deed 113 Real Estate Brokerage 52 Limited (Special) Warranty Deed 115 Agency Relationship 52 Grant Deed 116 Services Provided by a Real Estate Broker 53 Quitclaim Deed 116 Real Estate Brokers and the Internet 54 Basic Requirements of a Valid Deed 116 Introduction to the Preparation and Review of a Written Instrument 116 Real Estate Contract 55 Competent Grantor 117 Elements of a Real Estate Contract 55 Identity of the Grantee 117 The Parties 55 Words of Conveyance 117 Consideration 56 Description of the Property 117 The Agreement 56 Consideration 117 The Property 56 Signed by the Grantor 117 The Price 57 Witnessing of Deeds 117 The Method of Payment 57 Delivery to Grantee 118 Quality of Title 59 Preparation of a Valid Deed 118 Possession of the Property 60 Caption 118 The Closing 61 Premises or Preamble 118 Closing Documents 61 Granting Clause 118 Proration, Closing Costs, and Financial Description 118 Adjustments 62 Habendum Clause 118 Condition of the Property and Risk of Loss 64 Warranty Clause 119 Earnest Money 64 Testimonium 120 Brokers 65 Completing Sections of a Deed 120 Survival 66 Exercises in Deed Preparation 123 Assignment of Contract 66 Correction of Deeds 127 Time Is of the Essence 67 Reformation and Cancellation of Deed 127 Warranties of the Parties 67 Ethics: Falsiﬁcation of Documents 129 Contingencies 69 Checklist: Preparation of a Deed 129 Deﬁnitions 69 Summary 130 Default 69 Key Terms 130 Notice 69 Self-Study Examination 130 Entire Agreement 70 Practical Assignments 131 Applicable Law 70 Additional Provisions 70 Chapter 6 Offer and Acceptance 70 LEGAL ASPECTS OF REAL Execution 71 ESTATE FINANCE 132 Caveat Emptor and the Seller Disclosure Form 72 Promissory Note 132 Options 72 Legal Assistant Practice Suggestions 133 Contracts and Computers 72 Checklist: Preparation of a Note 133 Legal Assistants and the Preparation or Review Guaranty 134 of Contracts 73 Mortgages, Deeds of Trust, and Security Deeds 135 Checklist: Preparation or Review of Mortgage 135 Commercial Real Estate Contract 74 Deed of Trust 135 Summary 77 Security Deed 135 Ethics: Illegal or Fraudulent Activity 77 Requirements of a Mortgage 136 Key Terms 78 Parties to a Mortgage 136 Self-Study Examination 78 Secured Debt 136 Practical Assignments 79 Secured Property 137 Addendum 79 Assignment of Mortgage 137 Endnote 79
ix CONTENTS Transfer of Property Encumbered by New Covered Risks under the 2006 Policy 209 a Mortgage 138 Exclusions from Coverage 211 Subject to versus Assumption 138 Schedule A 213 Cancellation or Satisfaction of Mortgage 139 Schedule B 215 Second-Mortgage Loans 139 Mortgage or Loan Policies 218 Uniform Commercial Code and Insurance Provisions 219 Financing Statement 141 Miscellaneous Provisions 220 Foreclosure and Other Mortgagee Remedies 143 Endorsements 220 Foreclosure 143 Construction Loan Title Insurance 221 Remedies Other Than Foreclosure 145 Claims Procedures under Title Insurance Policies 222 Proﬁle: Cheryl Sassard 146 Commitments for Title Insurance 222 Waiver of Default 146 Practice Tips for the Preparation and Review of a Debtor’s Remedies or Defenses to Foreclosure 146 Title Insurance Policy 223 Injunction 147 Ethics: Personal Conﬂict of Interest 224 Suit for Conversion 147 Checklist: Preparation of a Title Insurance Policy 225 Bankruptcy 147 Summary 226 Ethics: Conﬁdentiality of Client Information 148 Key Terms 226 Summary 148 Self-Study Examination 226 Key Terms 149 Practical Assignments 227 Self-Study Examination 149 Addendum 227 Practical Assignments 150 Chapter 9 Addendum 150 REAL ESTATE CLOSINGS 261 The Environment 262 Chapter 7 The Legal Assistant’s Role in a Real Estate Closing 263 TITLE EXAMINATIONS 187 File Creation 263 Bona Fide Purchaser for Value Rule 187 Information Gathering 264 Recording Statutes 189 Reviewing the Real Estate Contract 264 Practice Tips for Ordering a Title Examination 192 Checklist: Closing 265 Information Needed to Do an Examination 192 Contact with Seller, Purchaser, and Broker 269 Examining Title to Real Property 193 Ordering the Title Examination 269 Place to Search 193 Ordering the Survey 271 Period of Examination 193 Ordering Hazard and Fire Insurance 271 What to Search 193 Obtaining the Termite Clearance Letter or Bond 271 Reviewing the Various Instruments in the Reviewing the Title Examination 272 Chain of Title 194 Satisfaction of Loans and Liens 272 Other Things to Examine 195 Proﬁle: Jane Heuser 274 Role of a Legal Assistant and Practice Tips 200 Reviewing the Mortgage Loan Commitment 274 Proﬁle: Lizbeth F. Henderson 201 Parties 274 Ethics: Document Falsiﬁcation 202 Loan Amount 275 Record Rooms Embrace New Technology 202 Interest Rate 275 Summary 202 Term of Loan 275 Checklist: Ordering or Performing Repayment Terms 275 a Title Examination 203 Prepayment Terms 275 Key Terms 203 Security 275 Self-Study Examination 203 Appraisal 275 Practical Assignments 204 Insurance 275 Endnote 204 Escrow for Taxes and Insurance 276 Title Insurance 276 Chapter 8 Survey 276 TITLE INSURANCE 205 Compliance with Law 276 Owner’s Policy 206 Financial Documents 276 Insuring Provisions of an ALTA Owner’s Policy 207 Documents 277
x CONTENTS Defaults and Late Charges 277 Borrower’s Afﬁdavit 304 Commitment Fee 277 Promissory Note 304 Loan Expenses 277 Deed to Secure Debt 304 Closing and Commitment Expiration Date 277 Hazard Insurance 305 Disbursement of Loan Proceeds 277 Settlement Statement 305 Acceptance of a Loan Commitment 277 Ethics: Case Problem 307 Assignability 277 Summary 308 Checklist: Loan Commitment for Key Term 308 a Residential Loan 279 Self-Study Examination 308 The Closing and Aftermath 279 Practical Assignment 309 Disbursing, Recording, and Transmittal Addendum 309 of Final Documents 280 Chapter 11 Final Closeout 280 CONDOMINIUMS AND COOPERATIVES 343 New Technology for Document Production 281 Checklist: Real Estate Closing 282 Condominium 343 Ethics: Conﬂicts of Interest 284 Birth of a Condominium 344 Summary 284 Articles and Bylaws of a Condominium Acknowledgment 285 Association 345 Key Terms 285 Practice Tips for the Legal Assistant 347 Self-Study Examination 285 Checklist: Questions for a Condominium Practical Assignments 286 Purchaser 348 Checklist: Questions for a Condominium Chapter 10 Lender 348 REAL ESTATE CLOSING FORMS Cooperative 348 AND EXAMPLES 287 Differences between Condominiums and Cooperatives 349 Afﬁdavits 287 Time-Shares 349 Title Afﬁdavit 288 Ethics: Legal Assistant Correspondence 350 Afﬁdavit of No Change 289 Summary 350 Same Name Afﬁdavit 289 Key Terms 350 Similar Name Afﬁdavit 289 Self-Study Examination 351 Foreign Person Afﬁdavit 289 Practical Assignments 351 Sale and Transfer Documents 290 Addendum 351 Deed 291 Bill of Sale 291 Chapter 12 Assignment of Leases 292 SURVEYS AND LAND DESCRIPTIONS 376 Loan Documents 292 Miscellaneous Real Estate Closing Documents 294 The Survey 376 1099-B Report Form 294 Preparation of Surveys and Survey Settlement or Closing Statement 294 Standards 378 Residential Closing Example 302 Land Descriptions 378 Title Examination 302 Government Rectangular Survey Checklist: Residential Closing Example 303 Description 378 Title Commitment 303 Platted Description 384 Survey 303 Metes and Bounds Description 384 Corporate Resolution 303 Legal Assistant Practice Tips for Foreign Person Afﬁdavit 303 Reviewing a Survey 389 Owner’s Afﬁdavit 304 Ethics: Competency 390 Transfer Tax Certiﬁcate 304 Summary 391 Warranty Deed 304 Key Terms 391 Bill of Sale 304 Self-Study Examination 391 Termite Letter 304 Practical Assignments 392 Truth-in-Lending Disclosure Statement 304 Addendum 392
xi CONTENTS Chapter 13 Assignments, Subletting, or Mortgaging of the Leased Premises 423 LEASES 408 Special Sublease Issues 426 Common Law and Leases 408 Provisions Normally Contained in a Sublease 426 Commercial Lease Provisions 409 Lease Guaranty 426 Parties to Lease 409 Rejection of Leases in Bankruptcy 427 Premises 409 Uniform Residential Landlord and Use 410 Tenant Act 427 Term 410 Legal Assistants and the Preparation Possession and Commencement of the Lease 411 and Review of Leases 428 Rent 411 Proﬁle: Teresa Raftis 429 Percentage Rent 411 Checklist: Preparation of a Residential Lease 430 Gross versus Net Lease 414 Preparation of Commercial Lease 431 Rent Escalation Clauses 415 Ethics: Legal Needs of the Poor 433 Maintenance and Alteration of Premises 416 Summary 433 Insurance 416 Key Terms 433 Damage or Destruction to the Premises 417 Self-Study Examination 433 Obligation of Repair 418 Practical Assignments 434 Condemnation and Eminent Domain 418 Addendum 434 Default 418 Endnotes 434 Landlord’s Remedies for Tenant’s Default 418 Landlord’s Right to Perform Tenant’s Obligations 419 Landlord’s Lien 421 APPENDIX: ANSWERS TO SELF-STUDY Grace Periods 421 EXAMINATIONS 447 Tenant’s Remedies for Landlord’s Default 421 Quiet Enjoyment 421 GLOSSARY 463 Surrender of the Premises 422 Estoppel Certiﬁcate 422 Memorandum of Lease 423 INDEX 469 Limitation on the Landlord’s Liability 423
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Preface This text was originally written as a reduced-essential version of a larger text entitled Practical Real Estate Law by Daniel F. Hinkel. Practical Real Estate Law covered every aspect of a mod- ern real estate practice. That text, because of its detail and comprehensive coverage, totaled more than 600 pages, and some instructors teaching courses designed for six- to ten-week terms had found it difﬁcult to complete Practical Real Estate Law. The students who were attending the shorter courses suggested that the text be shortened and that some detail be deleted. Consequently, the editors at West Publishing Company asked me to consider a way to revise and reformat the material in Practical Real Estate Law to reach the varied audience of the day. The result was Essentials of Practical Real Estate Law, ﬁrst published in 1993. It is time for a new edition of this book. Many things have happened since the last revision in 2004. Lawyers and their clients keep revising and updating legal forms. The duties and responsibilities of legal assistants have increased and become more diversiﬁed. Technology and the increased use of the Internet provide real estate attorneys and legal assistants with new tools and procedures for conducting a real estate transaction. Essentials of Practical Real Estate Law, Fourth Edition, retains the liveliness and readability of the parent book. Each chapter gives deﬁnitions of key and important terms where they ﬁrst appear in the text, and there is a comprehensive glossary at the back of the book. There is a self-study examination at the end of each chapter to reinforce the student’s understanding of that chapter’s material. Based on comments and suggestions from various teachers, students, and reviewers of the second edition of this book, the text has been revised. Chapter 1 introduces the student to the concept of property ownership and the various types of ownership that can exist are discussed. Chapter 2 introduces the student to the situation in which real property is owned by more than one person and discusses all the forms of concurrent ownership. Various encumbrances to the ownership of real property, with special emphasis on easements are discussed in Chapter 3. In Chapter 4, basic contract law is discussed and standard provisions found in real estate con- tracts are explained. Chapter 5 contains a discussion of deeds, complete with many examples and sample forms. Real estate ﬁnance with emphasis on notes and mortgages, complete with many examples and sample forms, is discussed in Chapter 6. Chapters 7 and 8 are devoted to title examinations and title insurance. Chapters 9 and 10 are devoted to real estate closings, with Chapter 9 containing a full discussion of the substantive issues of real estate closings and Chapter 10 being devoted to forms and examples of closing documents, including a sample of a residential real estate closing transaction. Chapter 11 acquaints the student with condominiums and cooperatives. Chapter 12 is a full discussion on the methods of describing real property and contains sample surveys and legal descriptions. Chapter 13 includes a discussion of leases, complete with residential and commercial lease forms. CHANGES TO THE FOURTH EDITION Forms All forms where needed have been updated and new forms have been added to the text. xiii
xiv PREFACE Practical Assignments Included in each chapter are practical assignments that ask the student to perform tasks which will enhance the student’s knowledge of the chapter’s contents. Expanded Coverage New examples and exhibits have been added to explain some of the more difﬁcult legal concepts. New material has been added to Chapter 4 expanding the discussion of speciﬁc per- formance and rescission and introducing the student to seller disclosure forms. New material has been added to Chapter 6 discussing the history of mortgages and foreclosures, as well as expanding the discussion of the debtor’s right of redemption. New material has been added to Chapter 8 discussing the new ALTA 2006 owner’s and loan title insurance policy forms. New material has been added to Chapter 8 discussing the use of endorsements to title insurance policies. New exhibits include sample copies of the most common endorsements. New material has been added to Chapter 10 explaining the escrow closing. Case Material A number of cases have been introduced in many of the chapters to illustrate important points of law and to give students experience in reading actual cases and applying actual disputes to chapter material. Personal Proﬁles The number of personal proﬁles of legal assistants working in the real estate ﬁeld has been expanded. These proﬁles add a human interest component to the material. STUDENT LEARNING FEATURES • Chapter objectives open each chapter to focus the student’s attention on the key concepts. • Terminology is emphasized in each chapter. The terms appear in boldface and are deﬁned in the text where they ﬁrst appear. They are also listed at the end of each chapter as a reference. Finally, a comprehensive glossary is located at the end of the text. • There is a self-study examination at the end of each chapter to help the students reinforce their understanding of the material contained in the chapter. The answers to the self-study examinations are located in the Appendix. SUPPLEMENTAL TEACHING MATERIALS • The Instructor’s Manual with Test Bank is available online at www.westlegalstudies .com in the Instructor’s Lounge under Resource. Written by the author of the text the Instructor’s Manual contains suggested syllabi, lecture notes, answers to the text ques- tions, useful Web sites, and a test bank. • Online Companion™ —The Online Companion™ Web site can be found at www .westlegalstudies.com in the Resource section of the Web site. The Online Companion™ contains the following: • Chapter Summaries • Exhibits • Web page—Come visit our Web site at www.westlegalstudies.com, where you will ﬁnd valuable information speciﬁc to this book such as hot links and sample materials to download, as well as other West Legal Studies products.
xv PREFACE • Westlaw®—West’s online computerized legal research system offers students hands- on experience with a system commonly used in law ofﬁces. Qualiﬁed adopters can re- ceive ten free house of Westlaw®. Westlaw® can be accessed with Macintosh and IBM PC and compatibles. ACKNOWLEDGMENTS Acknowledgments are due Linda Selfridge and Deborah Reinhardt who prepared the manuscript and to the following individuals for their ﬁne efforts in reviewing the fourth edition of the text. Hank Arnold Luci Hoover Jane Kaplan Aiken Technical College Rockford Business College NYC Technical College Aiken, SC Rockford, IL Brooklyn, NY Please note the Internet resources are of a time-sensitive nature and URL addresses may often change or be deleted. Contact us at westlegalstudies@delmar.com
Table of Exhibits 1–1 SCHEDULE OF KINSHIP RELATIONSHIP TO A DECEDENT 7 1–2 DIFFERENCE BETWEEN A REVERSION AND A REMAINDER 11 2–1 RIGHT OF SURVIVORSHIP 18 2–2 CO-OWNERSHIP 22 3–1 APPURTENANT EASEMENT 36 3–2 IMPLIED EASEMENT 37 3–3 PRESCRIPTIVE EASEMENT 39 3–4 UTILITY RIGHT-OF-WAY EASEMENT 44 4–1 CONTRACT FOR PURCHASE AND SALE OF A HOME (REPRINTED WITH PERMISSION OF GEORGIA ASSOCIATION OF REALTORS, INC.) 80 4–2 CONTRACT FOR PURCHASE AND SALE OF RETAIL SHOPPING CENTER 87 4–3 SELLER’S PROPERTY DISCLOSURE STATEMENT (REPRINTED WITH PERMISSION OF GEORGIA ASSOCIATION OF REALTORS, INC.) 103 4–4 EXCLUSIVE SELLER LISTING AGREEMENT (REPRINTED WITH PERMISSION OF GEORGIA ASSOCIATION OF REALTORS, INC.) 108 4–5 OPTION TO PURCHASE 112 5–1 PRESENT VERSUS FUTURE COVENANTS 115 5–2 FORMAL PARTS OF A DEED 119 5–3 MILLER-DICKSON DEED 124 5–4 KNOX-JACKSON DEED 125 5–5 WARRANTY DEED 126 5–6 DEED CONTAINING MISTAKES 128 6–1 UCC FINANCING STATEMENT 142 6–2 FNMA RESIDENTIAL FIXED-RATE NOTE 151 6–3 FNMA RESIDENTIAL ADJUSTABLE-RATE NOTE 154 6–4 COMMERCIAL LOAN NOTE 158 6–5 PAYMENT GUARANTY 161 6–6 FLORIDA MORTGAGE 163 6–7 NORTH CAROLINA DEED OF TRUST 166 6–8 FNMA RESIDENTIAL MORTGAGE 168 6–9 GEORGIA COMMERCIAL DEED TO SECURE DEBT 184 7–1 ABSTRACT ORDER 192 8–1 OWNER’S POLICY—ALTA 228 8–2 OWNER’S AFFIDAVIT 234 8–3 LOAN POLICY 235 8–4 ZONING ENDORSEMENT 241 8–5 COMPREHENSIVE ENDORSEMENT 242 8–6 SURVEY ENDORSEMENT 243 8–7 ACCESS ENDORSEMENT 244 8–8 CONTIGUITY ENDORSEMENT 244 8–9 USURY ENDORSEMENT 245 xvi
xvii TABLE OF EXHIBITS 8–10 UTILITY FACILITY ENDORSEMENT 246 8–11 SUBDIVISION ENDORSEMENT 246 8–12 TAX PARCEL ENDORSEMENT 247 8–13 FUTURE ADVANCE ENDORSEMENT 247 8–14 TITLE COMMITMENT 249 8–15 TITLE OPINION 253 8–16 SAMPLE TITLE COMMITMENT 255 8–17 TITLE EXAMINATION FORM FOR PRACTICAL ASSIGNMENT 256 8–18 TITLE COMMITMENT FORMS FOR PRACTICAL ASSIGNMENT 258 9–1 REAL ESTATE SALES CONTRACT 266 9–2 TITLE EXAMINATION FORM 270 9–3 LOAN PAYMENT REQUEST 273 10–1 AFFIDAVIT OF TITLE 288 10–2 AFFIDAVIT OF NO MATERIAL CHANGE 289 10–3 SAME NAME AFFIDAVIT 290 10–4 SIMILAR NAME AFFIDAVIT 290 10–5 FOREIGN PERSON AFFIDAVIT 291 10–6 GENERAL WARRANTY BILL OF SALE 292 10–7 ASSIGNMENT OF LEASES AND SECURITY DEPOSITS 293 10–8 INFORMATION FOR REAL ESTATE 1099-B REPORT FILING AS REQUIRED BY THE INTERNAL REVENUE SERVICE 295 10–9 HUD-1 CLOSING STATEMENT 296 10–10 SALES CONTRACT 310 10–11 AMERICAN EAGLE MORTGAGE COMPANY LOAN COMMITMENT 312 10–12 TITLE EXAMINATION 313 10–13 CORPORATE RESOLUTION 313 10–14 CERTIFICATE AND AFFIDAVIT OF NON-FOREIGN STATUS 314 10–15 OWNER’S AFFIDAVIT 315 10–16 TRANSFER TAX CERTIFICATE 316 10–17 WARRANTY DEED 317 10–18 GENERAL WARRANTY BILL OF SALE 318 10–19 TRUTH-IN-LENDING DISCLOSURE STATEMENT 319 10–20 BORROWER’S AFFIDAVIT 320 10–21 NOTE 322 10–22 SECURITY DEED 325 10–23 HUD-1 SETTLEMENT STATEMENT 341 11–1 STATE CONDOMINIUM ACT REQUIREMENTS FOR DECLARATION 352 11–2 CONDOMINIUM DECLARATION 355 11–3 STATE CONDOMINIUM ACT REQUIREMENTS FOR CONDOMINIUM PLAT 364 11–4 ARTICLES OF INCORPORATION FOR CONDOMINIUM ASSOCIATION 366 11–5 CONDOMINIUM ASSOCIATION BYLAWS 369 12–1 AS-BUILT SURVEY 377 12–2 METHODS OF LAND DESCRIPTION IN THE UNITED STATES 380 12–3 PRINCIPAL MERIDIAN AND BASE LINE 381 12–4 SECTIONS IN A TOWNSHIP 382 12–5 ONE SECTION OF LAND 382 12–6 A SECTION 383 12–7 METES AND BOUNDS SURVEY 385 12–8 QUADRANTS OF THE COMPASS 386 12–9 ELEMENTS OF CURVED PROPERTY DESCRIPTION 387 12–10 MEASUREMENT OF COURSES BY ANGLES 388 12–11 PLATTED DESCRIPTION SURVEY 393
xviii TABLE OF EXHIBITS 12–12 METES AND BOUNDS DESCRIPTION (INCLUDING CURVES WITH DESCRIPTIONS) 394 12–13 METES AND BOUNDS SURVEY WITH USE OF INTERIOR ANGLES 395 12–14 METES AND BOUNDS SURVEY—E. PONCE DE LEON PROPERTY 396 12–15 METES AND BOUNDS SURVEY—MOHAWK TRAIL PROPERTY 397 12–16 METES AND BOUNDS SURVEY—WEST PINE VALLEY ROAD PROPERTY 398 12–17 METES AND BOUNDS SURVEY WITH LEGAL DESCRIPTION—WILLOW CREEK PROPERTY 399 12–18 ALTA/ACSM 2005 SURVEY STANDARDS 400 12–19 SURVEY REVIEW CHECKLIST 406 13–1 LANDLORD AND TENANT’S DUTIES UNDER A RESIDENTIAL APARTMENT LEASE (GROSS LEASE) 414 13–2 LANDLORD AND TENANT’S DUTIES AND OBLIGATIONS UNDER A COMMERCIAL LEASE (NET LEASE) 414 13–3 ASSIGNMENT OF TENANT’S INTEREST IN LEASE 424 13–4 SUBLEASE OF TENANT’S INTEREST IN LEASE 424 13–5 ESTOPPEL CERTIFICATE 434 13–6 SHORT-FORM MEMORANDUM 435 13–7 SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT 436 13–8 GUARANTY OF LEASE 440 13–9 HOUSE OR APARTMENT LEASE 442 13–10 SMALL COMMERCIAL RETAIL SPACE LEASE 444
1 CHAPTER Introduction to the Law of Real Property “For ‘tis the only thing in the world that lasts. ‘Tis the only thing worth working for, ﬁghting for, dying for.” —Margaret Mitchell, Gone with the Wind OBJECTIVES After reading this chapter you should be able to: • Distinguish between real and personal property • Understand the legal concept of property ownership • Identify the modern estates of ownership for real property • Understand and be able to explain the legal concept of adverse possession • Identify various ways of becoming an owner of real property S carlett O’Hara’s father’s sentiments about Tara are shared by millions of homeowners throughout the world. Home ownership ranks high on most people’s wish list, and a home is considered the most valuable asset in many households. The real estate industry, with all its many facets, such as development, construction, sales, leasing, and ﬁnance, generates vast concentrations of wealth and creates millions of jobs. Real estate is a valuable commodity, and almost every aspect of its use, sale, and development is regulated by law. These laws are steeped in history and tempered with logic and practicality. Representation of real estate clients is a major area of practice for many law ﬁrms, and the opportunities for the trained real estate legal assistant are numerous. Preparation for this work begins with an introduction to the basic principles of real property law. REAL PROPERTY LAW What law governs real property transactions? The law of the United States comprises two separate systems of law: federal law and state law. Federal law applies uniformly throughout the country, whereas state law, because of differences in local history and conditions, varies from state to state. The law of real property in general is governed by state law and, therefore, is somewhat different in each of the various states. The law of the state in which the real prop- erty is located usually governs. For example, if a New York couple owns a beach house on Cape Cod, the laws of the Commonwealth of Massachusetts control the couple’s ownership rights to the property and the form and content of the various legal documents and procedures involved in the sale, leasing, ﬁnancing, inheritance, and so on of the property. There are, however, basic legal principles that govern real estate transactions, and the approach of this text is to describe these principles and to mention the more important instances in which the states do not agree. What is real property? The law recognizes two classiﬁcations of property: real and personal. Real property relates to land and those things that are more or less permanently attached to the