Buying and Selling Property

Every conveyance of real estate consists of a two-step process. First, there must be a land contract. The land contract is short-lived and endures only until step two, the closing of the transaction.

Land Contract

A contract for the sale of land must typically be in writing, signed by the buyer and the seller, and describe the land to be sold. In every land contract:

• The seller impliedly promises to provide marketable title. Marketable title means that the land to be sold is free from lawsuits and the threat of litigation. For example, title would be unmarketable if the land is in violation of an applicable zoning regulation or is the subject of another's competing claim of ownership. Marketable title also means that there are no liens on the property from unpaid judgments payable by the seller.
• In the contract, the seller also implies promises not to make any false statements of significant fact. In most states, the seller will be liable not only for misrepresentations about the premises but also for the failure to disclose any hidden, noteworthy defects of which the seller has knowledge or reason to know.
• When a builder-vendor sells a new residential dwelling to a buyer, the land contract contains an implied warranty of fitness and workmanlike construction. Thus, a builder selling a new home implicitly promises that the premises have been built in a safe, inhabitable, and fit manner.

Once the contract has been signed, there is a time period allowing the buyer to obtain the necessary financing to make the purchase and to obtain a title search of the premises. Once this is accomplished, the closing takes place.

Closing the Transaction

At the closing, a legal document called a deed passes ownership from the seller to the buyer, in exchange for the buyer remitting the balance of the purchase price. The deed must be lawfully executed, meaning that it must be in writing, signed by the parties, and describe the land. It must also be delivered meaning that, as a legal matter, the seller intends to be immediately bound by the transaction. Most deeds contain various promises known as covenants. For example, the seller promises that:

• the seller has good title to convey
• the land is free from outstanding liens or other encumbrances
• the buyer will not be disturbed in possession because of someone else's lawful claim to the premises

The final step in a land transaction is the recording of the deed or other document representing the purchaser's interest in the property. Generally, this is accomplished by sending the deed to the county clerk's office for filing in the public records. The filing of the deed is public notice of the ownership of the property and gives the purchaser certain rights against others who might have a claim to the property. For example, once the deed has been recorded, subsequent debts or other obligations of the prior owner do not become a lien on the property.

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