Chapter 8

Contracts and Transferring Real Estate Interests

“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

Major Topics

“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

Documents used to transfer title to real estate

Concept of “good title” to real estate Insuring the title to real estate Transferring the title to real estate Requirements for transferring title

under a sales contract Types of Leases Landlord Tenant Laws Triple Net vs. Gross leases Sale-Leasebacks Leases with purchase options Important Lease Clauses

Introduction to DeedsDeed “A written instrument used to convey title to real estate”

Requirements for a valid Grantor

Age of capacity Sufficient mental capacity

“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

Introduction to Deeds (Contd.)

Requirements for a valid deed

1. Grantors & Grantees must be identified 2. Grantor’s Signature is required, and

signatory’s authority authenticated (Power of Attorney)

3. Consideration 4. Words of Conveyance5. Legal Description of the property6. Acknowledgement (Notary’s seal) 7. Deed must be delivered

“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

TYPE OF DEEDS

“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

1. Quitclaim Deed

2. General Warranty Deed

3. Special warranty Deed

4. Judicial Deed

Real Estate Title Transfer

“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

Most common method is the “sales contract” with underlying agreement between buyer and seller, which satisfy the following Common Law requirements:

The Offer

The acceptance

Consideration

Written evidence

Invalidating Contracts

“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

Major reasons

“Capacity”

Lack of full information

Material Defect

Undue Influence

Duress

Transferring Title to Real Estate

“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

By Inheritance

By Adverse Possession

Transferring Title to the Public: Eminent Domain

Temporary Transfer: Leases

“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

Leases are a class of real estate that include possession but no ownership

Long term leases can be just like ownership in the sense of having almost permanent possession

Forms of Tenancy Tenancy for years Periodic Tenancy: Month-to-month lease Tenancy at will Tenancy at Sufferance

Landlord Tenant Rights

“Uniform Residential Landlord and Tenant Act Security Deposit and Interest Landlord’s obligations:

Allow the tenant “Quiet Enjoyment” Keep property fit for occupancy Make timely repairs (unless these are the

responsibility of the tenant as stated in the lease)

“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

Commercial Leases

Base RentRent paid by tenant to landlord

Gross LeaseLandlord pays all operating

expenses Net Lease

Tenant pays certain defined expenses

Triple Net LeaseTenant pays for all operating

expenses

“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

Commercial Leases (Contd.)

How Rents May be Increased or Escalated

Ground Lease

Sale Leaseback

Lease with Purchase Options

Lease with Purchase Options

“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

END

“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner