Practical Real Estate Law, 8th Edition
By Daniel F. Hinkel
Contents:
Preface Xvii
Acknowledgment Xx
C H A P T E R 1
Introduction To The Law
Of Real Property 1
Real Property Law 2
Laws That Govern Real Property Transactions 2
History of American Real Property Law 2
Real Property versus Personal Property 3
Fixtures 3
Physical Elements of Real Property 4
Case: Ex Parte Brown 5
Ownership of Real Property 8
Modern-Day Estates in Real Property 8
Fee Simple or Fee Simple Absolute 9
Fee Simple Determinable 9
Fee Simple on Condition Subsequent 9
Life Estate 10
Future Interests 11
Estate for Years 12
Estate at Will 12
Methods of Acquiring Ownership
to Real Property 12
Inheritance and Devise 12
Gift 13
Contract and Sale 14
Adverse Possession 14
Transfer of Ownership (Conveyances) 15
The Role of Paralegals in Real Estate
Legal Practice 16
Research Materials for Real Property Law 16
Ethics: Introduction 17
Summary 18
Key Terms 18
Review Questions 19
Case Problems 19
Practical Assignments 20
C H A P T E R 2
CONCURRENT OWNERSHIP 21
Types of Concurrent Ownership 21
Joint Tenancy with Right of Survivorship 22
Tenancy in Common 23
Tenancy by the Entirety 25
Community Property 26
Agreements of Cotenancy 28
Ethics: Unauthorized Practice of Law 35
Concurrent Ownership and the Role of
the Paralegal 35
Other Legal Entities 36
Corporation 36
General Partnership 36
Limited Partnership 37
Limited Liability Company 37
Summary 37
Key Terms 38
Review Questions 38
Case Problems 38
Practical Assignments 39
Addendum 39
C H A P T E R 3
SURVEYS AND LAND
DESCRIPTIONS 44
The Survey 45
Preparation of Surveys and Survey
Standards 45
Land Descriptions 47
Government Rectangular Survey Description 47
Platted Description 52
Metes and Bounds Description 52
Practice Tips for Reviewing A Survey 57
Ethics: Competency 59
Summary 59
Key Terms 59
Review Questions 60
Practical Assignments 60
Addendum 60
Platted Description Survey 61
Metes and Bounds Survey and Description
(including Curve with Description) 62
Metes and Bounds Survey—Mason Mill
Property 63
Metes and Bounds Survey—River Trail
Property 64
Metes and Bounds Survey—Lonesome Valley
Road Property 65
Metes and Bounds Survey with Legal
Description—Shallow Creek Property 66
Survey Review Checklist 67
C H A P T E R 4
PUBLIC REGULATION AND PRIVATE
ENCUMBRANCES 69
Public Regulation 70
Zoning 70
Building Codes and Subdivision Regulations 71
Environmental Protection Laws/CERCLA 71
Case: Shackford & Gooch, Inc. et al. v.
The Town of Kennebunk et al. 72
Power of Eminent Domain 76
Taxation 77
Federal and State Income Tax Liens 78
Private Encumbrances 78
Judgment Liens 78
Mechanic’s and Materialmen’s Liens 78
Mortgages and Trust Deeds 79
Easements 79
Restrictive Covenants 80
Ethics: Abandonment of Work 80
Summary 81
Key Terms 81
Review Questions 81
Case Problems 82
Practical Assignments 82
Addendum 82
R-4 Single-Family Residential District
Regulations 83
C-1 Community Business District Regulations 86
C H A P T E R 5
EASEMENTS AND LICENSES 91
Easements 92
Creation of Easements 92
Case: Russakoff v. Scruggs 99
Termination of Easements 101
Licenses 101
Practice Tips for the Paralegal 102
Ethics: False Witness 103
Summary 103
Key Terms 103
Review Questions 104
Case Problems 104
Practical Assignments 105
Addendum 105
Sanitary Sewer Easement and Ingress and Egress
Easement 106
Electric Power Company Right-of-Way
Easement 109
C H A P T E R 6
CONTRACTS 110
Requirements for a Valid Contract 110
Legal Capacity to Contract 111
Mutual Agreement 115
Consideration 115
Lawful Purpose 115
Written Agreements 116
Remedies for Breach of a Real
Estate Contract 117
Specific Performance 117
Money Damages 117
Rescission 118
Liquidated Damages 119
Real Estate Brokers 119
Case: Southeastern Land Fund,
Inc. v. Real Estate World, Inc. 120
Agency Relationship 122
Services Provided by a Real Estate Broker 123
Listing Agreements 124
Open Listing 124
Exclusive Listing 124
Exclusive Right-to-Sell Listing 124
Real Estate Brokers and the Internet 133
Taxation and the Sale of Real Property 134
Federal Income Tax 134
Federal Income Tax on the Sale of a Home 134
Federal Income Tax on the Sale of
Commercial Property 135
Ethics: Commingling of Client Funds 136
Summary 136
Key Terms 137
Review Questions 137
Case Problems 137
Practical Assignments 138
C H A P T E R 7
PREPARATION AND REVIEW
OF A REAL ESTATE
CONTRACT 139
Elements of a Real Estate Contract 140
The Parties 140
Consideration 141
The Agreement 141
The Property 141
The Price 142
The Method of Payment 143
Quality of Title 145
Possession of the Property 146
Closing or Settlement 147
Closing or Settlement Documents 147
Proration, Closing Costs, and Financial
Adjustments 149
Condition of the Property and Risk of Loss 150
Earnest Money 151
Brokers 152
Merger 153
Assignment of Contract 154
Time Is of the Essence 154
Warranties of the Parties 154
Contingencies 156
Definitions 157
Default 157
Notice 157
Entire Agreement 158
Applicable Law 158
Additional Provisions 158
Offer and Acceptance 158
Execution 159
Caveat Emptor and the Seller Disclosure
Form 160
Short Sale Contracts 160
Special Commercial Contract Issues 161
Description of the Property 161
Representations, Warranties, and Covenants 161
Purchaser’s Inspection or Free Look 162
Closing Documents 162
Rent Prorations 165
Lease Commissions 166
Security Deposits 166
Seller’s Covenants Regarding Operation
of Property 167
Hazardous Materials 167
Indemnification 168
Seller’s Disclaimer of Warranty 169
Options 169
Contracts and Computers 170
Ethics: Illegal or Fraudulent Activity 174
Summary 175
Key Terms 175
Review Questions 176
Case Problems 176
Practical Assignments 177
Addendum 178
Contract for Purchase and Sale of a Home 179
Contract for Purchase and Sale of a Large Tract
of Vacant Land 187
Seller’s Property Disclosure Statement 193
Contract for Purchase and Sale of a Retail
Shopping Center 200
Option to Purchase 217
Acknowledgment 178
C H A P T E R 8
DEEDS 218
Historical Development of Deeds 218
Types of Deeds 219
General Warranty Deed 219
Case: Lunsford v. King 221
Limited (Special) Warranty Deed 221
Quitclaim Deed 222
Executor’s and Administrator’s Deeds 222
Trustee Deeds 223
Basic Requirements of a
Valid Deed 223
Written Instrument 223
Competent Grantor 223
Identity of the Grantee 224
Words of Conveyance 224
Description of the Property 224
Consideration 224
Signature of Grantor 224
Witnesses of Deeds 224
Delivery to Grantee 225
Preparation of a Valid Deed 225
Caption 225
Premises or Preamble 225
Granting Clause 225
Description 226
Habendum 227
Warranty Clause 227
Testimonium 227
Completing Sections of a Deed 227
Preamble 227
Granting Clause 228
Description 228
Testimonium 229
Practical Exercises in Deed
Preparation 231
Correction of Deeds 234
Reformation and Cancellation of Deed 234
Practical Tips for The Paralegal 236
Grantor 236
Grantee 236
Legal Description 237
Witnessing a Deed 237
Ethics: Falsification of Documents 238
Summary 238
Key Terms 239
Review Questions 239
Case Problems 239
Practical Assignments 240
Addendum 240
Sample Warranty Deed 241
General Warranty Deed—North Carolina 242
General Warranty Deed—Texas 244
Warranty Deed Joint Tenancy—Illinois 246
Limited Warranty Deed—Georgia 247
Grant Deed—California 248
Quitclaim Deed—Georgia 250
Quitclaim Deed—California 251
Executor’s Deed—New York 252
Administrator’s Deed—Georgia 254
Trustee Deed—Georgia 255
C H A P T E R 9
FINANCING SOURCES IN REAL
ESTATE TRANSACTIONS 256
Sources of Mortgage Loans 256
Savings Banks 256
Commercial Banks 257
Life Insurance Companies 257
Credit Unions 257
Pension Funds 258
Mortgage Banking Companies 258
Residential Nonbank Lenders 258
Issuers of Mortgage-Backed Bonds 258
Types of Loans 259
Conventional Loans 259
Insured or Guaranteed Loans 259
Subprime Lending 260
Secondary Market 261
Fannie Mae and Freddie Mac 261
Permanent and Construction Loans 262
Interest 262
Payment Plans 264
Ethics: Overbilling 265
Summary 266
Key Terms 266
Review Questions 266
Case Problems 266
Practical Assignments 267
Addendum 267
Amortization Calculator 268
Amortization Schedule of Direct Reduction
Loan 268
C H A P T E R 1 0
LEGAL ASPECTS OF REAL ESTATE
FINANCE 273
Promissory Note 274
Endorsement 275
Payment 276
Prepayment 277
Usury 278
Execution 279
Practice Tips for the Paralegal 279
Case: Acord v. Jones 279
Guaranty 282
Mortgages, Deeds of Trust, and
Security Deeds 282
Mortgage 282
Deed of Trust 283
Deed to Secure Debt 283
Requirements of a Mortgage 283
Parties to a Mortgage 283
Secured Debt 284
Secured Property 284
Assignment of Mortgage 285
Transfer of Property Encumbered by a
Mortgage 285
“Subject to” versus “Assumption” 286
Cancellation or Satisfaction of Mortgage 287
Second Mortgage Loans 288
Foreclosure and other Mortgage
Remedies 289
Foreclosure 290
Grounds for Foreclosure 290
Waiver of Default 294
State Limits on Foreclosure 294
Debtor’s Remedies and Defenses to
Foreclosure 294
Injunction 295
Suit for Conversion or Wrongful Foreclosure 295
Bankruptcy 295
Ethics: Confidentiality of Client
Information 296
Summary 297
Key Terms 297
Review Questions 297
Case Problems 298
Practical Assignments 299
Addendum 299
Fannie Mae/Freddie Mac Residential Fixed-Rate
Note 300
Fannie Mae/Freddie Mac Residential Adjustable-
Rate Note 303
Commercial Loan Note 308
Payment Guaranty 312
Florida Mortgage 315
North Carolina Deed of Trust 318
Georgia Commercial Deed to Secure Debt 320
C H A P T E R 1 1
MORTGAGE FORMS AND
PROVISIONS 323
Residential Mortgage Covenants 323
Transfer of Rights in the Property 324
Uniform Covenants 324
Nonuniform Covenants 342
Commercial Mortgage Provisions 343
Assignment of Rents and Leases 343
Security Agreement 344
Books, Records, and Financial Statements 344
Hazardous Waste 345
Nonrecourse or Exculpation Provisions 346
Cross-Collateralization and Cross-Default 347
Miscellaneous Commercial Loan
Documents 349
Security Agreement and Financing
Statement 350
Assignment of Rents 352
Construction Loan Agreement 352
Role of the Paralegal 354
Ethics: Misrepresentation 354
Summary 355
Key Terms 355
Review Questions 355
Case Problems 356
Practical Assignments 357
Addendum 357
Assignment of Leases and Rents 358
Construction and/or Development Loan
Agreement 361
C H A P T E R 1 2
TITLE EXAMINATIONS 368
Bona Fide Purchaser for
Value Rule 369
Recording Statutes 371
Case: City of Richland Hills v.
Bertelsen 372
Practice Tips for Ordering a
Title Examination 373
Information Needed to Do an
Examination 374
Examining Title to Real Property 374
Where to Search 374
Period of Examination 374
What to Search 375
Reviewing the Various Instruments in
the Chain of Title 377
Other Things to Examine 377
Preliminary Title Report 379
Title Examination Example 380
Title Defects and Problems 382
Record Title Holder 382
Breaks in the Chain of Title 383
Errors in Prior Recorded Deeds 383
Name Variances 384
Improper or Missing Power of Attorney 384
Sales Contracts, Options, and Leases 384
Unsatisfied or Unreleased Mortgages 384
Notice of Lis Pendens 385
Easements 385
Restrictive Covenants and Conditions 385
Mechanic’s and Materialmen’s Liens 386
UCC Financing Statements 386
Judgment Liens 386
Tax Liens 387
Title through Estates 387
Role of a Paralegal and Practice Tips 388
Record Rooms and Electronic Records 389
Ethics: Document Falsification 390
Summary 392
Key Terms 392
Review Questions 392
Case Problems 393
Practical Assignments 394
Acknowledgments 394
C H A P T E R 1 3
TITLE INSURANCE 395
Title Assurance and Title Insurance 396
Owner’s Policy 397
Insuring Provisions of an ALTA Owner’s Policy:
Basic Provisions 398
Case: Title & Trust Company of
Florida v. Barrows 399
Exclusions from Coverage 402
Schedule A 405
Schedule B 407
Mortgage or Loan Policies 410
Insurance Provisions 410
Miscellaneous Provisions 412
Endorsements 412
Construction Loan Title Insurance 414
Commitments for Title Insurance 414
Practice Tips for the Preparation and Review of a
Title Insurance Commitment 415
Practice Tips for the Preparation and
Review of a Title Insurance Policy 417
Ethics: Personal Conflict of Interest 418
Summary 420
Key Terms 420
Review Questions 420
Case Problems 421
Practical Assignments 422
Addendum 422
Owner’s Policy—ALTA 423
Owner’s Affidavit 434
Completed Owner’s Policy of Title Insurance 435
Loan Policy—ALTA 437
Zoning Endorsement 451
Comprehensive Endorsement 452
Survey Endorsement 454
Access Endorsement 455
Contiguity Endorsement 456
Usury Endorsement 457
Utility Facility Endorsement 458
Subdivision Endorsement 459
Tax Parcel Endorsement 460
Future Advance Endorsement 461
Title Commitment 462
Title Opinion 467
Sample Title Commitment 469
Title Examination Form for Practical
Assignment 470
Title Commitment Forms for Practical
Assignment 472
Acknowledgments 422
C H A P T E R 1 4
REAL ESTATE CLOSINGS 474
Real Estate Closing 475
The Parties and Environment 476
Anatomy of a Real Estate Closing 478
File Creation 478
Information Gathering 479
Reviewing the Real Estate Contract 479
Contact with Seller, Purchaser,
and Broker by the Paralegal 484
Ordering the Title Examination 485
Ordering the Survey 485
Ordering Hazard and Fire Insurance 486
Obtaining the Termite Clearance
Letter or Bond 487
Reviewing the Title Examination 488
Satisfaction of Loans and Liens 488
A Paralegal’s Review of the Mortgage
Loan Commitment 488
Parties 489
Loan Amount 489
Interest Rate 489
Term of Loan 489
Repayment Terms 489
Prepayment Terms 489
Security 489
Appraisal 490
Insurance 490
Escrow for Taxes and Insurance 490
Title Insurance 490
Survey 490
Hazardous Waste 491
Compliance with Law 491
Financial Documents 491
Documents 491
Defaults and Late Charges 491
Commitment Fee 491
Loan Expenses 491
Closing and Commitment Expiration Date 492
Disbursement of Loan Proceeds 492
Acceptance of a Loan Commitment 492
Assignability 492
Special Provisions in a Construction Loan
Commitment 499
Leasehold Loan Commitment 500
The Closing and Aftermath 500
Disbursing, Recording, and Transmitting
Final Documents 501
Final Closeout by the Paralegal 502
Closing the Short Sale 505
Truth-in-Lending Right of Rescission 505
New Methods of Closing 507
Technology for Document Production 507
Use of Email 508
Ethics: Conflicts of Interest 510
Summary 510
Key Terms 511
Review Questions 511
Case Problems 511
Practical Assignments 512
Addendum 512
Sample Contract for Closing Checklist 513
Mortgage Loan Commitment 517
Escrow Instruction Letter 522
Rescission Model Form (General) 525
Nonrescind Statement 525
Acknowledgments 512
C H A P T E R 1 5
REAL ESTATE CLOSING FORMS
AND EXAMPLES 526
Affidavits 527
Title Affidavit 527
Hazardous Waste Affidavit 527
Affidavit of No Change 528
Same Name Affidavit 528
Similar Name Affidavit 529
Foreign Person Affidavit 530
Sale and Transfer Documents 531
Deed 532
Bill of Sale 532
Assignment of Warranties 533
Assignment of Leases 533
Assignment of Contracts 535
Mortgage Loan and Other Real Estate
Closing Documents 537
Loan Documents 537
Corporate Resolution 537
Agreement Regarding Survival of Loan
Commitment 539
Indemnity of Fees 539
Attorney’s Opinion 540
Compliance Agreements 542
1099-B Report Form 543
Settlement or Closing Statement 544
Closing Example 552
Title Examination 552
Title Commitment 553
Survey 553
Corporate Resolution 553
Foreign Person Affidavit 553
Owner’s Affidavit 553
Transfer Tax Certificate 553
Warranty Deed 554
Bill of Sale 554
Termite Letter 554
Borrower’s Affidavit 554
Promissory Note 554
Deed to Secure Debt 554
Hazard Insurance 554
Settlement Statement 554
Ethics: Case Problem 557
Summary 558
Key Terms 558
Review Questions 558
Case Problems 559
Practical Assignments 559
Addendum 560
Sales Contract 561
Loan Commitment 563
Title Examination 564
Corporate Resolution 564
Foreign Person Affidavit 565
Owner’s Affidavit 566
Transfer Tax Certificate 567
Warranty Deed 568
General Warranty Bill of Sale 569
Owner’s Affidavit 570
Promissory Note 571
Security Deed 574
C H A P T E R 1 6
CONDOMINIUMS AND COOPERATIVES 592
Condominiums 592
Birth of a Condominium 593
Articles and Bylaws of a Condominium
Association 594
Case: Forest Villas Condominium
Association, Inc. v. Camerio et al. 596
Subcondominiums 597
Practice Tips for the Paralegal 598
Cooperatives 599
Differences between Condominiums and Cooperatives 599
Time-Shares 600
Ethics: Paralegal Correspondence 600
Summary 601
Key Terms 601
Review Questions 602
Case Problems 602
Practical Assignments 602
Addendum 603
State Condominium Act Requirements for Declaration 604
Condominium Declaration 607
State Condominium Act Requirements for
Condominium Plat 617
Articles of Incorporation 619
Condominium Association Bylaws 622
C H A P T E R 1 7
LEASES 629
Common Law and Leases 630
Commercial Lease Provisions 630
Parties to Lease 630
Premises 631
Use 631
Term 631
Possession and Commencement of the Lease 632
Rent 632
Percentage Rent 632
Gross versus Net Lease 635
Rent Escalation Clauses 636
Security Deposit 637
Maintenance and Alterations of Premises 637
Insurance 638
Damage or Destruction to the Premises 639
Obligation to Repair 639
Condemnation and Eminent Domain 639
Default 640
Landlord’s Remedies for Tenant’s Default 640
Landlord’s Right to Perform Tenant’s
Obligations 640
Landlord’s Lien 643
Grace Periods 643
Tenant’s Remedies for Landlord’s Default 643
Quiet Enjoyment 643
Surrender of the Premises 644
Estoppel Certificate 644
Memorandum of Lease 645
Limitation on the Landlord’s Liability 645
Assignment, Subletting, Or Mortgaging of the Leased Premises 645
Special Sublease Issues 647
Provisions Normally Contained in a
Sublease 648
Landlord or Tenant Mortgage 648
Miscellaneous Lease Issues 649
Lease Guaranty 649
Rejection of Leases in Bankruptcy 649
Uniform Residential Landlord and Tenant Act 650
Protection of Residential Tenants from Eviction after a Foreclosure Sale 651
Ethics: Legal Needs of the Poor 655
Summary 655
Key Terms 656
Review Questions 656
Case Problems 656
Practical Assignments 657
Addendum 658
Estoppel Certificate 659
Short-Form Memorandum 660
Subordination, Attornment, and Nondisturbance
Agreement 661
Guaranty of Lease 664
Apartment Lease 666
Small Commercial Retail Space Lease 668
Acknowledgment 658
GLOSSARY 671
INDEX 679