Creation and construction of real estate contracts - Next Generation Bar Exam

1. A buyer orally agrees to buy a house, pays the full price, moves in, and builds an addition. What is the status of the contract under the statute of frauds?

   It is enforceable under the part performance doctrine. Payment, possession, and improvements are unequivocally referable to the contract.

2. What is the effect of an 'as is' clause on a seller's liability for fraud or concealment?

   It does not shield the seller from liability for fraud or concealment. An 'as is' clause disclaims implied warranties but not fraudulent misrepresentation.

3. What is the effect of a mortgage financing contingency on the buyer's obligation?

   The buyer's duty to close is conditioned on obtaining the specified financing. The buyer must make good-faith efforts to obtain financing.

4. What is the general rule on a seller's duty to disclose defects in residential property?

   The seller must disclose known material latent defects not readily discoverable by the buyer. Many states impose this duty by statute or common law, and active concealment is actionable everywhere.

5. When does the merger doctrine extinguish obligations under a land sale contract?

   At closing, when the deed is accepted, for obligations related to title. Collateral obligations, such as a promise to repair, survive the closing.

6. Under equitable conversion, a seller dies after signing a land sale contract but before closing. Who receives the sale proceeds?

   The persons who inherit the seller's personal property. The seller's interest is treated as personal property, the right to the purchase price.

7. What remedy is generally available to a buyer when a seller breaches a land sale contract?

   Specific performance. Each parcel of land is considered unique, making damages inadequate.

8. Under the prevailing view, when is time of the essence in a land sale contract?

   Only when the contract expressly so provides or circumstances show the parties so intended. Otherwise, a party may close within a reasonable time after the stated date.

9. Under equitable conversion, who bears the risk of loss when property is destroyed before closing without either party's fault?

   The buyer, absent a contrary contract provision or statute. Under the Uniform Vendor and Purchaser Risk Act, the seller bears the risk until the buyer takes title or possession.

10. Under the part performance doctrine, what acts typically take an oral land sale contract out of the statute of frauds?

    At least two of possession, payment, and substantial improvements. The acts must be unequivocally referable to the contract.

11. What writing requirement applies to a contract for the sale of land?

    A writing signed by the party to be charged, under the statute of frauds. The writing must contain the essential terms, such as the parties, the land, and the price.

12. What is the doctrine of equitable conversion?

    Once a land sale contract is signed, the buyer holds equitable title and the seller holds legal title as security. The doctrine applies only to specifically enforceable contracts.

13. What title does a seller impliedly promise to deliver in a land sale contract?

    Marketable title. The implied covenant applies at closing, not at contract signing.

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