A contract to make a contract

Agree to let deed change hands at a date in the future

• Identify party, properties, and material terms
• Establish length of Executory Interval (period between signing and closing)
• Establish contingencies to be met
• Must be written and signed (Statute of Frauds)

• Partial Performance
• Reliance 

• Specific Performance
• Benefit of the Bargain (KP - MP)
• Down Payment plus Interest
• Other Expenses

• Specific Performance
• Keep Down Payment

(Majority Rule) Where the property is lost during the Executory Interval:

• Seller has Legal Title
• Buyer has Equitable Title and is liable for loss
• Buyer has right to proceeds from any insurance

Substantial Loss:  Seller is liable and K is cancelled

Non-Substantial Loss:  Seller is liable for loss and either party can demand SP and may adjust price for loss

Mortgage - a type of loan

Mortgagee - the bank lending the mortgage

Mortgager - the consumer of the mortgage

• A typical residential mortgage
• 25-30 years
• Pay same amount each month over life of loan

• Adjustable rate
• Payment/Interest rate start small
• Get bigger over life of loan

• Pay same amount of Principle each month
• Pay accrued interest each month
• Total payments shrink over life of loan

• No down payment
• Ownership of property once fully paid
• harsh if default so some jurisdictions give a grace period or repayment of money over rent

• higher rent paid
• Modest balloon payment at end

• First in time, first in right
• first person to purchase the property is the rightful owner

• First person to record purchase is the first person in right

• A person is first in right if a subsequent purchaser has notice of them

2 prongs

• Was there notice of a prior purchase? yes - prior purchase has right; no - next prong
• Who recorded first? they have right

• Grantor books
• Recorded wills
• Recorded property taxes
• Actual/Inquiry Notice

• The seller's promise that the property is not subject to any liens, easements, etc. except those explicitly listed
• If buyer is sued, seller indemnifies buyer

• Seller does not promise there are no potential lawsuits on the property
• Seller does not indemnify Buyer

• A property than a Title Company will insure at normal rates

• A lesser Title than what was promised

• Some Jurisdictions give Seller an opportunity to cure defect
• If minor defect, Seller can demand Specific Performance
• If major defect, Buyer can rescind or request a lower price

• A collection of covenants between Buyer and Seller (i.e. Quiet Enjoyment)
• States Seller owns and has right to sell to Buyer
• Must list any defects explicitly and is liable for anything not mentioned
• Most common residential property transaction

• No covenants
• Seller owns and has right to sell to Buyer
• Seller not liable for any defects
• Common for Commercial Transactions

Where Consumer can no longer make mortgage payments, mortgagee owns property

Many courts give grace period