Real Estate Transactions

Unit 1

Good evening class, welcome to our first seminar. Seminars in your classes will now be audio. I will turn on the audio when we begin The syllabus is listed under the syllabus tab on the left of the screen. You should have received my welcome letter which tells you about me, by email. If you have not received it, it is also posted under the announcements.

I am glad they you all of chosen to continue your education with Kaplan University.

Please take this opportunity to introduce yourself to the others in the class, and your professor.

Also share your contact information for the class and your teammates.

My name is Tammi Clearfield and I will be your instructor for this course. I look forward to joining you for an enjoyable cyberspace learning experience.

I am an attorney with 15 years of experience.

I am licensed to practice in all Florida State Courts, as well as the Florida Southern District Federal Courts.

Please call me Tammi or Prof, use your preference.

Throughout this course, many discussion opportunities arise where you will be interacting with other students.

You will be having intellectual discussions on the topics presented, as well as socialize with your classmates and professor.

I would like to spend a few minutes going over the syllabus.

Although attendance in the seminar is not mandatory a small part of your grade is attributed to attendance. 4 points for units 1-4 and 5-9 or a total of 32 points.

Note at the beginning of each seminar I will see if you have any questions and I will leave 5 or 10 minutes at the end as well. This time is for questions on the lesson. Specific question (e.g.) question on your own work should be sent by e-mail. I respond fast.

If you miss a seminar, you do not have to ask permission to do an alternate assignment. Complete the assignment which is a 2 page paper on the subject matter covered in the unit and to review the seminar transcript to prepare a paper The paper is to be sent to me via e-mail within a week of the missed seminar and you can earn your 4 points I think it is best to attend the seminars as we will cover information that will assist with the assignments. Is everyone clear on the seminars?

Now let’s cover the Discussion Board. For each item in the DB you will need to have a substantive post and also at least 2 follow ups which are substantive. Do not merely post that it was an excellent post. That is not a substantive response. You also need to make your posts over at least 3 days for full credit. The class starts fast and we have a series of papers in the class. There are no quizzes or exams.

So the timing is all yours, meaning that you can work in advance.

However my grading will be done within 1 week of the close of the unit for items in that unit. I do not grade early submissions prior to the close of the unit it is due in.

The papers have detailed requirements that will require research, so I recommend you start early. If you have questions, do not get frustrated, send me an email. During Seminars, feel free to add your own experiences as it makes the class more interesting when we cover the materials.

This is not required, but it is helpful. You do not need to add any personal information that you are not comfortable discussing. If you work in a law firm do not add any client information.

Does anyone have any questions so far?

Let’s look at each of the papers we will have in the class.

Each paper is due at the end of the assigned unit. They will be graded by the Sunday following the due date.

In Unit 1 you need to write a 3 page letter that can be used by the firm for prospective clients that can be used to explain basic real estate concepts to clients.

Make sure you use terms in simple language, avoiding legal terminology which is unfamiliar; mention all important concepts; and explain why the concept may or may not play in role in the forthcoming real estate transaction.

In Unit 4 you are helping your firm again.

This time you will be preparing a brochure (handout) for your law firm. It needs to be detailed.

In a very focused, concise way, using simple language: (a) what a deed is (b) steps in a title search (c) reasons why lenders require buyers to buy title insurance (d) reasons why lenders will not finance residential property without a title search.

This document should be three pages in length.

In Unit 5 we have the midterm.

For your Midterm Paper, you will analyze and explain the components of a HUD-1 form. A sample form has been posted to Doc Sharing

In your paper, explain each component of the HUD-1 form.

As you identify each component, explain why this particular information is required. For example, a description of the property is necessary to identify correctly what underlies the real estate transaction.

Each explanation should be at least one paragraph in length.

Note: you are not expected to complete the form as part of your analysis.

In Unit 6 imagine that you work in a real estate practice.

Your supervising attorney has asked you to create another piece of literature for the firm’s clients.

He would like you to create a flow chart, in the form of a Word document, Excel spreadsheet, or a PowerPoint presentation, that outlines the steps involved in the recording process.

As part of your flow chart, you are to include a brief summary of each step.

In Unit 7 we are once again imagining that you are still working in a real estate practice.

Your supervising attorney has asked you to create a second piece of literature for the firm’s clients.

He would like you to create a flow chart, in the form of a Word document, Excel spreadsheet, or a PowerPoint presentation, that illustrates each step in the transfer of residential real estate from when purchasers make an offer on the property to the recording of the deed.

Be sure to include those steps that, if otherwise omitted, would mean that no real estate transfer would take place.

As part of your flow chart, you are to include a brief summary of each step.

In Unit 8 we have another written assignment.

For this one you need to draft two paragraphs on each of the following three items explaining the reasons for investing or not investing in each of them:

(a)A new REIT that will focus only on commercial property worth more than $10 million;

(b)A REIT made up only of commercial property in suburbs that has produced regular dividends over the past 20 years and wants to diversity into new markets; and

(c) A REIT that has for the past 10 years returned a good dividend from a portfolio made up of only residential buildings.

In Unit 9 we have our final written assignment.

For this final assignment you will analyze a model lease and identify and explain the essential components of the lease.

In your paper, you will also explain why these components are critical to creating a valid lease.

Then identify three elements that, if omitted, would most likely prevent the parties from entering into a valid lease, and write a paragraph on each, explaining why you believe these are vital elements.

This is the final and you will need to be very detailed analyzing all components.

As you can see it is weighted heavily at the end so you make choose to start work before the units.

OK let’s turn to our first unit subject matter.

During this week’s Seminar, we will discuss:

1. Differences in forms of ownership interest; joint tenancy vs. tenancy in common

2. Issues with conveying real property

Introduction to American Conveyancing

What are common real estate practices for attorneys?

Residential purchases and sales and/or commercial transactions involving real property

What are some of the many functions of real estate attorneys?

They serve as brokers, property inspectors, surveyors, mortgage lenders, appraisers, title abstractors, and title insurance companies, to name a few principal ones

When does residential work frequently come to the attorney’s attention?

During mid-transaction, most significantly after the contract of sale has been executed

For home sale practice, how is the attorney’s role limited?

By the contract and interpreting the contract as the executory period proceeds

What is the attorney’s role in commercial transactions?

Limiting the risks the client faces in proportion to the rewards the client expects

This entails balancing business and legal concerns in context of reviewing title of property purchased, selecting a note and mortgage, and negotiating their covenants

What is a broker’s listing agreement?

The real estate broker’s employment contract and defines the terms of the broker’s agency with the vendor

Can a purchaser in a commercial transaction employ a broker?

Yes

The contract of sale is product of what two statutes?

Two English statutes: the statute of Frauds (1677) and the Statute of Uses (1535)

What is the statute of Frauds (1677)?

Sections required writing for a transfer of interests in real property; Requires written contracts and deeds

What is the Statute of Uses (1535)?

Validates executor interest -The period of time between the execution of contract and the closing; Provides a legal mechanism for executing contracts of sale

What does a note, that is common along with a mortgage or deed of trust, provide?

They are financing instruments such as an IOU or security agreement necessary for either the vendor or third-party lender

What is included in closing documents?

The deed from the vendor to the purchaser, plus a collection of documents that 1.account for money changing in transaction, 2.protect the lender from defenses to the note or mortgage, 3.protects the purchaser’s title as offered by the vendor, or4.indicate compliance with various state and federal consumer and regulatory statutes.

To what degree would an attorney be involved with these documents?

The attorney may be involved in preparation, of various degrees, of all of them

Earliest purchasers were interested in what issue – or estate in real property?

The full fee simple absolute, anything less felt reminiscent of feudal relations Americans had with the Old World to escape.

Early American legislatures enacted legal reforms to make it more freely alienable with regard to feudal interests. How was this done?

They abolished primogeniture, abolished the common law presumption for the joint tenancy with a right of survivorship in favor of the tenancy in-common, and limited the common law marital estates of dower and courtesy to land seised at death

How did state legislatures get involved?

They created restraints on the fee for commercial interests (such as mechanic’s liens, permission to track junior and senior mortgage, and new forms of mortgage foreclosure)

With the passage of time, and records came to reflect a great number of transfers, the difficulty to obtain public records became extremely difficult.

How did this affect attorneys?

They acquired skills necessary to search titles, and the law conveyancing and title search became their domain.

How was this problem to the layperson?

Attorneys were not available everywhere and deeds drafted by layperson became confusing. If a deed and sale was not used, the lay conveyance and often the attorney threw in every legal verb in mind.

This resulted in the vendor using “give, enfeoff, grant, convey, bargain and sell, lease and release, covenant to stand seised, assign and transfer”. Whatever property it was that was changing hands.

How did this assortment of legal verbs come to mean?

“What I (vendor) have, I transfer it to you (purchaser).”

What did this result in?

The recognition of the quitclaim deed

Why is a title search necessary?

Purchasers want to know not only that the vendor is entitled to transfer the title, but that the title is “marketable”

What is meant by “marketable”?

Transferred in such a state that it in turn can be transferred to another future purchaser

What is the title searching attorney’s job?

To determine whether the vendor is eligible to transfer the title and whether there are any liens or encumbrances attaching to it

The attorney’s notes on these two issues are gathered together and arranged chronologically create what?

An “abstract of title”

What actions did attorneys take as a result of the increase in searches and accumulation of stacks of abstracts?

They hired nonattorney employees, thus beginning the practice of lay abstractors to title search

What was done about abstractor negligence?

Title insurance was devised

By the twentieth century, how were title insurers established?

As abstractors, reviewers, and insurers of titles in urban areas

In rural communities, attorneys and abstractors continued to do the business of conveyancing as before

From the 1890s to the 1930s, more than 20 state legislatures enacted Torrens statutes. What was that?

Title registration

How did they work?

A title search was performed and a certificate of title was issues; thereafter, a transfer of certificate was a transfer of the title

What issue is the biggest problem for attorney involvement in real property transactions?

They become involved too late, after the execution of contract of sale and can do little to have an influence on the transaction

Why is constant communication for the structure of a real estate transaction required?

Because the transaction ends in a closing, or receipt of escrow papers, and a client should never be permitted to be surprised at closing

When conflicts are reasonably foreseeable and before they arise, what is the obligation of the attorney?

To avoid them, even if that means withdrawing from the representations and the transactions

Why should attorneys look out for potential conflicts of interest?

Because attorneys often represent developers and mortgage lenders on a continuing basis, and consumers and housing buyers on an irregular basis

What do malpractice claims look at in regards to the attorney and client relationship?

Communication –

From the letter of engagement forward – a virtual monologue for the uninformed client, and constant communication about new aspects of the transaction with the experienced client