Homework answers / question archive / Real 105 Chapter 9 In Deed Study the case of Evans v

Real 105 Chapter 9 In Deed Study the case of Evans v

Real Estate

Share With

Real 105 Chapter 9 In Deed Study the case of Evans v. Faught and answer the following questions: 1. What are the two implied warranties of a grant deed? The two implied warranties of a grant deed are that :a. The grantor has not already conveyed title to any other person. b. The estate being conveyed is free from encumbrances made by the grantor or any other person claiming under the grantor, other than those disclosed to the grantee. 2. Is the unrecorded lease executed by the seller with the county an encumbrance that affects title? Why? Yes. An unrecorded lease 3. What if the defendant in this case gave a copy of the lease, which expressly indicated the lease was for two years, to the plaintiff prior to the sale? Wouldn’t the plaintiff have actual notice of the lease? Study the case Honey v. Henry’s Franchise Leasing Corp. and answer the following questions: 4. Should the court measure damages by the rental value or benefit of the bargain? 5. The market value of the property was $135,000, minus $90,000 equals $45,000. Buyer paid seller $33,450. Is the seller entitled to the difference? Answer will not be graded based on length, but on how it is written. Worth 1 point. "Evans v. fought 231 C.A.2d 698 (1965) [Defendants leased part of their property and a right-of-way to the county to construct a building. Plaintiff later purchased the property, after personally inspecting the land. Two years later, he paid the county $5,500 to terminate its lease, then sued the seller (defendant) for breach of the implied warranty in the grant deed against encumbrances. Defendant claimed that he was not liable for breach because plaintiff had actual knowledge of the unrecorded lease to the county before buying the property, and had personally inspected the property and had seen the county building and the road leading to it" "Under C.C. §1173, a grant deed, absent specific provisions to the contrary, contains two implied warranties: (1) that the grantor has not previously conveyed the estate, and (2) that the property is free from all encumbrances. The courts have construed encumbrances to include only those encumbrances that affect title and have held that encumbrances that affect physical condition are not covered by grant deed warranty.]MOLINARI, JUSTICE. There are two kinds of encumbrances, that is, those that affect title and those that affect only the physical condition of the property. A mortgage or other lien is an illustration of the former, and a public road or right-of-way is an example of the latter. The distinction between the two is that an encumbrance affecting title is one that is usually of a temporary character and capable of removal. An encumbrance affecting the physical condition of the property consists of a servitude [burden] imposed upon the land that is visible to the eye and that affects not title, but only the physical condition of the property. If the encumbrance is one affecting title, the covenant against encumbrances is broken at the time of the transfer and the vendor’s prior knowledge or notice of the encumbrance is immaterial. However, if the alleged encumbrance consists of a physical burden upon the land, permanent in character and of an open and notorious nature, which affects only the physical condition of the property, it is not an encumbrance under Section 1113, and the covenant is not therefore broken at the time of transfer. The rationale of the rule, insofar as it concerns visible physical burdens upon the land, is that in the absence of an express agreement, the buyer is presumed to have contracted to accept the land subject to physical encumbrances of an open and notorious nature. The building and the road leading to it were not encumbrances within the meaning of Section 1113 because they unquestionably constituted physical burdens upon the land of an open and notorious nature. Accordingly, plaintiff was presumed to have contracted to accept the land subject to such physical encumbrances. The important question is the effect of the unrecorded lease. An unrecorded lease that is binding upon a purchaser of real property is a limitation affecting title because it obviously is a right or interest in land that subsists in a third person to the diminution of the value of the land. The plaintiff ’s knowledge of the existence of the lease prior to the execution of the conveyance is not a bar to an action for breach of covenant because he was entitled to rely upon the covenant in the deed made subsequent to the acquisition of such knowledge. Suffice it to say, the fact that plaintiff was presumed to accept whatever physical encumbrances were on the land does not com-pel the conclusion that he was willing to accept title subject to the limitations and conditions imposed by the lease. The damages The usual measure of damages for breach of a covenant against encumbrances is the amount the covenantee actually expends in removing the encumbrance, not exceeding the value of the property at the time of the breach. This rule refers to such encumbrances as may be satisfied by the payment of money (e.g., mortgages and other liens), but is not applicable to encumbrances that cannot be extinguished at the will of the owner by the payment of any sum (e.g., easements or restrictions on the use of land). In the latter instance, the applicable rule is that the damages are based upon the natural and proximate con-sequences to the plaintiff of the existence and continuance of the encumbrance. Compensation is estimated by the amount that the existence of the encumbrance reduces the market value of the land. A lease encumbrance falls in the latter category because it is not such as may be satisfied and extinguished at the will of the owner by the payment of money. The instant lease could only be extinguished with consent of the lessee. The amount paid in the present case was such as was arrived at and agreed to by plaintiff and the County after negotiation. Accordingly, the proper measure of damages should have been the amount by which the existence of the lease reduced the market value of the land at the time the conveyance was made, and not the sum paid by plaintiff to the County to extinguish the lease. [That amount was allowed, however, because of a procedural technicality.] The judgment is affirmed. [Plaintiff–buyer cannot recover, although normally he would have been entitled to the damages caused by the lease." ThE LaW honey v. henry’s franchise Leasing Corp .64 C.2d 801 (1966) [Plaintiff purchased property from defendant for $135,000 under a land sales contract. After the buyer had paid a total of $33,450, he defaulted on the contract. The trial court, under these facts, entered judgment for the seller quieting title on the condition that the seller return to the defendant buyer the amount his payments exceeded the rental value of the property during the buyer’s occupancy. The issue on appeal is whether the defaulting buyer is enti-tled to any refund of his payment and, if so, what amount.] TRAYNOR, JUSTICE. Even a willfully defaulting vendee may recover the excess of his part payments over the damages caused by his breach. We agree with defendant’s contention that the trial court erred in measuring its damages under this rule by the rental value of the property while plaintiff was in possession instead of by the loss of the benefit of defendant’s bargain. Because the trial court found that the fair market value of the property at the time of the trial was $90,000, defendant contends that the difference between the contract price of $135,000 and the fair market value of the property exceeded plaintiff ’s part payments of $33,450.The rule of the Freedman case [an earlier decision by this court] precludes penalties and forfeitures by denying the vendor the right on the vendee’s default to retain both the property and any pay-ments that have been made in excess of the actual damages caused by the default. The Freedman case, however, did not restrict the right of a vendor to realize the benefit of his bargain. Because rules precluding forfeitures and antideficiency legislation have put the latter type of contract substantially on a par in many respects with mortgages and deeds of trust, amicus curiae [an adviser to the judge] suggests that the law governing those security devices should be adopted with appropriate modifications in determining the remedies for breaches of installment contracts. The value of the property to the seller is ordinarily the market value of the property at the date of the breach. This rule presupposes that the vendee is free to use or dispose of the property on that date. Accordingly, if the vendee has interfered with the vendor’s freedom in this respect, by retaining possession or asserting an interest in the property, the vendor may include any additional damages caused thereby in the amount necessary to give him the benefit of his bargain." In the present case, defendant repossessed some of the property before trial, and it is impossible to determine from the record whether the value of all of the property at the time of the trial was equal to its value at the time of the breach plus any consequential damages that may have been incurred. Accordingly, the judgment is reversed with directions to retry the issue of damages only and to enter the appropriate judgment.[Therefore, defendant buyer is entitled to a refund based on what-ever amount, if any, his total payments exceeded the seller’s actual damages. However, the seller’s damages are not calculated by using the fair rental value of the property, because that measure applies only to rescission. When the seller selects a quiet title action, his dam-ages are calculated as the difference between the contract purchase price and the value of the property at the date of breach, plus any other provable damages sustained because of the buyer’s breach.]"