Real Estate Transactions Syllabus

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					                                      Real Estate Transactions Syllabus
                                    Emanuel B. Halper (516) 463-4252, (516) 625-8300
                                             Emanuel.Halper@hofstra.edu

GOAL FOR THE COURSE

         W elcome to Real Estate Transactions. I’m looking forward to teaching it, and I hope you enjoy it.

         The Real Estate Transactions course is a big undertaking. There’s lots to learn, and, as the semester
progresses, you’ll notice many differences from your first-year courses. One difference is the degree to which we’ll
focus on case law. Although, you’ll be reading cases and extracting important knowledge from them, case reading
won’t predominate.

           The impact of case law on real estate transactions is not nearly as great as its impact on litigation. Real
estate lawyers spend their careers negotiating transactions. They are employed to draft, review, and discuss
provisions of contracts of sale, leases, mortgages, and other documents. A transactional lawyer’s job is much more
like that of a legislator than a litigator. Real estate lawyers create rules governing relationships between buyers and
sellers, landlords and tenants, and lenders and borrowers. When we do a good job, litigation is highly unlikely.

          How do real estate lawyers decide what clauses to include in real estate documents they draft, and, for that
matter, how do we decide what to delete from or change in a document drafted by another lawyer? W e seldom look
to case law. To a much greater degree, we look to our own sense of fairness and justice and to another side of the
law – industry customs and usage. Business and technical considerations also play a huge role in the negotiation
process. Bookkeeping, accounting, engineering, construction, insurance, and banking issues influence contract,
lease, and mortgage clauses. You might even find what you remember of your high school geometry and college
geology courses very useful – perhaps for the first time.

          Contracts of sale, leases, and mortgages vary considerably. They are broad categories that include many
subcategories. Here’s an example. In the aggregate, the contract of sale represents one category, but that category
consists of many subcategories. Contracts to sell one-family houses, condominium units, virgin land, apartment
houses, shopping centers, and office buildings are among them. Although a contract to sell a one-family house is
similar to a contract to sell an office building in many respects, the differences between these subcategories are much
greater than their similarity. Chances are that a one-family house purchaser will live in the building he or she wants
to buy, but most office building purchasers don’t buy in the hope of relocating their office space to the building
under contract. Their primary interest in buying is the cash flow they expect to derive from the rent the building’s
tenants pay. Differences in the purchasers’ objectives alone make contracts of sale different from each other. Other
factors also make contracts of sale different from each other.

          My goal is to help you understand the basic issues raised by contracts of sale, leases, and mortgages; how
they influence each other; and how they differ from each other. Although this course alone can’t thrust you into the
ranks of the top real estate professionals, it can provide you with the background you’ll need regardless whether you
aspire to be a real estate lawyer or are merely concerned that you might need to tackle a real estate problem after you
leave law school.

          The real estate sector of our economy plays a role in almost every lawyer’s practice and in almost every
person’s life. A huge part of America’s wealth is lodged in private real estate assets, and every lawyer needs to know
real estate basics. Estate planning lawyers can’t prepare intelligent estate plans without considerable real estate
knowledge. Significant real estate assets tend to be among the assets wealthy people seek to protect by employing
them. Similarly, trust and estate administrators deal with real estate all the time and need to know a great deal about
it to do a good job. W hen a matrimonial lawyer drafts a separation agreement, real estate is often the most important
family asset and the most contentious issue. What about tax lawyers? Real estate investors pay them big fees to
structure their deals and are reluctant to pay for ignorance. Even negligence lawyers can’t ignore real estate. Some
of their most lucrative cases deal with gruesome accidents that take place in a shopping center parking lot or office

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building elevator shaft. Even conventional litigators can’t avoid learning something about real estate. Parties to real
estate contracts, leases, and mortgages often discover how poorly these documents are drafted just when they are at
odds with each other. Then, they run to litigators who must try to remember what they learned in law school.

          Although I can’t give you nearly all you need to be a good real estate lawyer in only fifty-six hours of class
time, you can follow up on what I teach you in Real Estate Transactions and learn much more before you leave
Hofstra. If that’s where you’re headed, plan on taking some of Hofstra’s abundant list of advanced real estate
courses in the time you have left here. The number and quality of our real estate courses are exceptional. If you do,
I’d like this course to provide a suitable foundation for you.

W HY CONSIDER REAL ESTATE LAW ?

          W hen I was in law school (a very long time ago), I couldn’t think of one good reason to focus on real estate.
After all, my hero was Clarence Darrow, the great trial lawyer who defended the poor and the persecuted (and, as I
learned later on, some very wealthy people). I wanted to follow in his footsteps. I saw myself battling hard for
clients – fighting for their rights and tilting swords with their tormentors. I was ready for a life of combat – albeit in
the courtroom.

          However, my fate lay elsewhere, and I’m very pleased it did. After bouncing around from job to job for a
while, I was hired as an assistant to the General Counsel of a clothing chain store organization. He got me started as
a real estate negotiator. Negotiation is very different from litigation, and the negotiator’s life is very different from
that of a litigator. Although, we negotiators compete with each other in many ways (and even clash once in a while),
we tend to cooperate to get the deal done and often become good friends when the deal is over. I try to make a new
friend every time. As I see it, the work of a real estate negotiator is pleasant, interesting, and creative. Moreover, we
who do this well are very well compensated.

COURSE COM PONENTS:

          Our course consists of five modules: (1) The Role of Real Estate Professionals; (2) Preserving Real
Property Ownership Rights, (3) Buying and Selling Real Property, (4) Leasing Real Property, and (5) Mortgaging
Real Property. Each of the latter three modules corresponds roughly to one of the principal segments of the real
estate sector of our economy. The modules are interdependent. Unless your parents give it to you, you aren’t likely
to own real estate unless you buy it. One very good reason for buying a building is to become entitled to the rent
paid by its tenants. Except in the case of mortgage loans to homeowners and companies that like to own the
premises from which they do business, mortgage lenders are far more interested in the rent flowing from leases than
the owner’s personal credit.

READING ASSIGNM ENTS:

         Here are the reading assignments for the semester as I see them now. The textbooks for this course are
Dukeminier, Krier, Alexander, and Schill, Property 1 (referred to below as “Duk”) and Halper, Supplementary
Materials on Real Estate Transactions (referred to as “SM ”). Just about everybody who took Property last semester
should own Duk. If you own Duk, you won’t need to invest anything in textbooks for this course. My
Supplementary M aterials are free of charge. You may get your copy when it’s ready by contacting my secretary,
Nancy Grasser.

          I’m also assigning cases and statutes you won’t find in either text. They are listed in this syllabus (with
citations), and you may download them from Lexis or find them in the library. Please note, that I might make
changes as the semester progresses.




         1
             Please use the 6th edition. 2006 only. Most likely it’s the same text you used for your Property course.

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         W ith our first class on the horizon, let’s talk a bit about preparing for the first few sessions. W ith total class
time limited to fifty-six hours, we can’t afford to waste any of them. I like to hit the ground running and will expect
you to be prepared for all class sessions including the first.

          For our first session, we’ll discuss the role of lawyers and brokers in real estate transactions. Our discussion
will include these issues. W hat do real estate lawyers do? What do brokers do? What do clients expect of them?
How do real estate lawyers relate to each other? How do real estate lawyers and real estate brokers relate to each
other?

          After that we’ll turn to property ownership and value. If you want to learn how to sell, lease, and mortgage
property, you ought to think first about the need to protect the property you own from potentially competing claims
and what your property is worth. To learn how to protect your property from competing claims, you need to know
more than you already know about recording, adverse possession, and title insurance. As to what your property is
worth, we’ll explore the concept of value. This issue has been debated by economists, philosophers, tax collectors,
and appraisers for ages, and it’s one of the basic issues on the table in every real estate transaction. I want you to
understand the concept from the point of view of the great classical economists as well as today’s tax collectors and
real estate appraisers. To this end, I will ask you to read excerpts from the works of John Locke, Adam Smith, and
David Ricardo. An essay I wrote on this subject is on your reading list. The next step is to review more
contemporary (but less contemplative) discussions of value by the Internal Revenue Service and real estate
appraisers.

         From there, we’ll tackle contracts of sale, leases, and mortgages in that order.

LECTURES AND CLASS PREPARATION:

          I don’t use what is commonly called the Socratic method to teach you about real estate deals. Rather, I tend
to lecture on what I think you need to know. Along the way, I’ll call on you to answer questions about your reading
assignments, and I’ll expect you to be prepared.

           You should feel free (better still eager) to ask questions and comment on the readings or anything I say.
Under most circumstances, your questions and comments will be constructive contributions. However, if class time
is short, I might defer answering a question or responding to a comment until after class.

         The lectures and the readings are equally important, and you shouldn’t decide to focus on one and skip the
other. Sometimes I lecture on the reading assignment, and sometimes I discuss a topic for which I haven’t assigned
reading material. The final exam may include questions on any article, case, or document I ask you to read as well as
any lectures including the lectures for which there is no reading assignment.

EXAM S:

         My exams are closed book and multiple choice. In addition to the final, I might schedule a midterm exam.

GRADING COM PONENTS:

         Your final grade will be based on the final exam but not entirely. If I schedule a midterm exam, the
midterm will count for 20 percent of your final grade. Also, your grade will be influenced by your attendance
record, your class participation, and your class preparation.

          My final exams are composed of about 100 multiple choice questions, and I do not grade them myself.
They are graded electronically. I assign letter grades to the exam scores when the only information I have about you
is an exam identification number and an exam score. I first learn the names of the students and their exam grades
after I complete the letter grading.



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         After that, I adjust the grades up or down to reflect attendance, class preparation, and class participation.
Seven percent of your grade will be based on class participation and class preparation or lack of them. Another 7
percent of your grade will be based on attendance. See the Attendance Rules below.

ATTENDANCE RULES:

         Let’s start with the rules of the New York State Court of Appeals, the American Bar Association, and the
Law School. These rules require law students to be “in good and regular attendance in the courses for which they are
registered.” To comply with these rules, you must attend at least 85 percent of your regularly-scheduled classes.
Thus, to get credit for the course, you may miss no more than 15 percent of your classes. A student enrolled in a
four-credit course may miss no more than eight hours of class.

        That said, I need to point out that missing any session of this course without a valid excuse may affect your
grade adversely. Conversely, excellent attendance will tend to have a favorable effect on your grade.

         Insofar as my grading policies are concerned, an excused absence will not mar otherwise excellent
attendance. For the purpose of my grading policies, excused absences will include religious observance, illness, and
family emergencies. If you are absent from a session for one of these reasons, send me an e-mail message, and I’ll
enter your excused absence in my records. If you have a fever or anything contagious, don’t come to class. Stay
home, send me an e-mail message, and your absence will be excused.

          Since I am teaching both the day and evening sessions of Real Estate Transactions, some of you may be
tempted to attend a session for which you are not registered. If you want to do that, you’ll be welcome in class, but
attending that class will not excuse an absence from the session for which you are registered. Keeping track of
student attendance is difficult under the best of conditions, and allowing students to substitute an evening session
class for a day session class or vice versa makes the process more difficult.

PACE OF THE COURSE:

          I will try my best to stick to the schedule you’ll see below, but that might not be possible. My habit is to try
to answer every student’s questions thoroughly. That could slow the pace a bit but also has its rewards. The pace
will also depend on how quickly I feel the students are learning. If I sense that you’re grasping what I’m trying to get
across, I’ll move ahead rapidly. If I sense you’re having a hard time, I’ll slow down and delete some of the topics.

THE HELP M ENU:

         I’m available for special help, and here’s how I intend to go about it.

         I will assign each student to a group of approximately twelve students, and I will ask them to meet with me
before or after class as a group now and then. Attendance at a group session will not be compulsory, and your
absence from a group session will not diminish your grade. However, attending a group session will give you a
chance to ask any questions you weren’t able to ask during class time and seek help about anything that confuses
you.

         If you need to talk to me one on one, I’ll be there for you. Call me, e-mail me, or catch me after class.

1.       The Role of Professionals in Real Property Transactions [Session 1]
         a.     The Lawyers
                i.       “Professionalism for the Real Estate Law Practitioner,” Peter W . Salsich, Jr. (DL: 36 Real
                         Property, Probate and Trust Journal 594, 2001)
                ii.      “Role of a Lawyer,” Halper (SM 01a)
                iii.     Survival Guide for Real Estate Lawyers (SM 01b)
         b.     The Brokers - Broker Agreements, Barasch (SM 01c)

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2.   Owning Real Property [Sessions 2 - 6]
     a.     Protecting Your Ownership Rights
            i.       Notice of Ownership Rights by Recording
                     (1)      Introduction (Duk 559-560)
                     (2)      The Indexes (Duk 561-565)
                              (a)      Luthi v. Evans (Duk 565-571)
                              (b)      Orr v. Byers (Duk 574-578)
                              (c)      Note 3 (Duk 579-580)
                     (3)      Types of Recording Acts (Duk 580-582)
                              (a)      Note 4 (Duk 583)
                              (b)      Messersmith v. Smith (Duk 583-588)
                              (c)      Note 4 (Duk 589)
                     (4)      Chain of Title Problems
                              (a)      Introduction (Duk 589-590)
                              (b)      Board of Education of Minneapolis v. Hughes (Duk 590-592)
                              (c)      Guillette v. Daly Dry W all, Inc. (Duk 592-594)
                              (d)      Note 1 (Duk 594)
                     (5)      Persons Protected by the Recording System
                              (a)      Introduction (Duk 597-598)
                              (b)      Horton v. Kyburz (DL: 53 Cal. 2d 59, 246 P. 2d 399, 1959)
                              (c)      Daniels v. Anderson (Duk 598-600)
                              (d)      Lewis v. Superior Court (Duk 600-603)
                              (e)      Alexander v. Andrews (Duk 603)
                              (f)      Notes (Duk 603-604)
            ii.      Notice of Ownership Rights by Registration
                     (1)      Note on Registration (Duk 617, 618)
                     (2)      Thomas J. Miceli and G.F. Sirmans, Torrens vs. Title Insurance: An Economic
                              Analysis of Land Title Systems (Duk 618)
            iii.     Notice of Ownership Rights Pursuant to Other Public Records
                     (1)      Tax Records: United States v. Union Central Life Insurance (DL: 368 U.S. 291,
                              1961)
                     (2)      Mechanics Lien Records: Hadrup v. Sale 201Va. 421, (DL: 111 S.E. 2d 405,
                              1959)
            iv.      Notice of Ownership Rights Pursuant to Physical Possession, Surveys, Mechanics Liens
                     (1)      Inquiry Notice
                              (a)      Introduction (Duk 604)
                              (b)      Harper v. Paradise (Duk 604-607)
                              (c)      Note (Duk 607-608)
                              (d)      Miller v. Green (Duk 612)
                              (e)      W hitehurst V. Abbott (DL: 225 N.C. 1, 33 S.E. 2d 129, 1945)
                     (2)      Introducing the Survey (Sample Survey - SM 01a i)
                     (3)      Possession as Notice
                              (a)      W aldorff Insurance and Bonding, Inc. v. Eglin National Bank (Duk
                                       608-611)
                              (b)      First Federal Savings v. Fisher (DL: 60 So 2d 496, 1952)
                              (c)      Martinique Realty Corp. v. Hull (DL: 64 N.J. Super. 599, 166 A. 2d
                                       803, 1960)
                              (d)      Notice of Possession (Kiser v. Clinchfield Coal - DL: 200 Va. 517, 106
                                       S.E.2d 601, 1959)
            v.       Losing Ownership Rights by Virtue of Adverse Possession
                     (1)      The Theory and Elements of Adverse Possession
                              (a)      Powell on Real Property §91.01 (Duk 112-113)

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                                 (b)       Henry W . Ballantine, Title by Adverse Possession (Duk 113)
                                 (c)       Oliver W endell Holmes, The Path of the Law (Duk 113-114)
                                 (d)       Van Valkenburgh v. Lutz (Duk 115-124)
                                 (e)       Notes 1, 2, and 4, (Duk 124-128)
                                 (f)       Note: Color of Title and Constructive Adverse Possession (Duk 129)
                                 (g)       Mannillo v. Gorski (Duk 130-134)
                                 (h)       Notes, Questions, and Problems (Duk 134-135)
                        (2)      The Mechanics of Adverse Possession
                                 (a)       Howard v. Kunto (Duk 136-141)
                                 (b)       Problems: Tacking (Duk 141-142)
                                 (c)       Problems: Disabilities (Duk 142-143)
                        (3)      Adverse Possession Against the Government, Note: (Duk 143-144)
                        (4)      Tacking - (Zeglin v. Gahagen - DL: 812 A.2d 558, Pa 2002)
             vi.        Protecting Ownership Rights with Title Insurance
                        (1)      Introduction to Title Insurance
                                 (a)       A Beginners Guide to Commitment for Owners Title Insurance, Levey
                                           (SM 02a ii)
                                 (b)       Sample Title Commitment - Marked (SM 02a iii)
                                 (c)       The 2006 ALTA Title Insurance Policies: W hat New Protection Do
                                           They Give?, Joyce Dickey Palomar (DL: 42 Real Property, Probate and
                                           Trust Journal 1 - Spring 2007 )
                        (2)      W hat Does Title Insurance Cover?
                                 (a)       Lick Mill Creek Apartments v Chi Title Ins Co. (Duk 630-634)
                                 (b)       First National Bank and Trust Company v. New York Title Insurance
                                           Co. (DL: 171 Misc. 854, 12 N.Y.S. 2d 703, 1939)
                                 (c)       L. Smirlock Realty Corp. v. Title Guaranty Company (DL: 52 N.Y. 2d
                                           179, 418 N.E. 650 (1981)
                                 (d)       W alker Rogge, Inc. v. Chelsea Title & Guaranty Co. (Duk 624-629)
                                 (e)       Lick Mill Creek Apartments v. Chicago Title Insurance Co. (Duk 630-
                                           634)
                                 (f)       Notes (Duk 635).
     b.      The    Value of Your Ownership Rights
             i.         Two Treatises of Government (Value), Locke (SM 02b i)
             ii.        Principles of Political Economy and Taxation, Ricardo (SM 02b ii)
             iii.       Of the Real and Nominal Price of Commodities, Smith (SM 02b iii)
             iv.        W hat Does Value Mean, Halper (SM 02b iv)
             v.         Extracts from MAI Special Appraisal (SM 02b v)
             vi.        Determining Market Value, IRS (SM 02b vi )

3.   Buying and Selling Property: [Sessions 8 - 14]
     a.      The Contract of Sale
             i.      Statute of Frauds
                     (1)      (Duk 472)
                     (2)      Hickey v. Green (Duk 474)
                     (3)      Note 1 (Duk 477)
                     (4)      The Statute of Frauds and Electronic Transactions, Note: (Duk 478)
             ii.     Contract of Sale Categories
                     (1)      Purchasing for use:
                              (a)      Looking Out for the Home Buyer, Halper (SM 03a i)
                              (b)      Contract of Sale - New Construction (SM 03b i)
                              (c)      Contract of Sale - Condominium Apartment Unit in New York,
                                       http://www.ny-condos.com/sample-condo-sales-contract.html)
                     (2)      Purchasing for development:

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                (a)      “Buying Land for Development,” Halper (SM 03a ii )
                (b)      Contract of Sale - new construction of a retail store (SM 03b ii)
       (3)      Purchasing for investment:
                (a)      (SM 03a iii - “How to Buy an Apartment House,” Halper & Seeve)
                (b)      (SM 03a iv - “Representation Clauses in Apartment House Sales
                         Contracts,” Halper)
iii.   Structure of a Contract of Sale
       (1)      Introductory clauses
                (a)      Title of the contract
                (b)      Names of the parties and their addresses (SM - 03b iii - “Exculpation
                         Clauses in Contracts,” Halper)
                (c)      Describing the property to be sold
                         (i)       Description by Government Survey (Note:- Duk 571-574)
                         (ii)      Metes and bounds descriptions. (SM - 03b iv - Metes &
                                   Bounds Exercise
                (d)      Avoid using ritualistic and difficult-to-understand lawyer words
                (e)      The seller agrees to sell the buyer agrees to buy
       (2)      The purchase price
                (a)      Total purchase price
                (b)      Down payment and escrow provisions
                (c)      Payments between contract and closing
                (d)      Mortgage contingency or purchase money mortgage
                (e)      The closing date, time, and place
       (3)      The parties’ obligations and privileges between contract and closing
                (a)      Rights of entry
                         (i)       W ho may enter?
                         (ii)      Inspection
                         (iii)     Rights to post signs
                         (iv)      Testing (test borings)
                         (v)       Purchaser’s duty to use due care to preserve and protect the
                                   property, to repair any damage, and to fill any holes created by
                                   purchaser
                (b)      Condition of the property between contract and closing
                         (i)       Contractual provisions on maintenance
                         (ii)      Property insurance
                         (iii)     Liability insurance
                         (iv)      Compliance with laws
                (c)      Seller’s duty to cooperate with purchaser to achieve purchaser’s goals
                         (i)       Applications for zoning variances and site plan approval
                         (ii)      Applications for mortgage financing
                (d)      Title to the Subject Property
                         (i)       Searching the title
                         (ii)      Marketable Title (Duk 479)
                                   1)        Lohmeyer v. Bower (Duk 479)
                                   2)        Notes and Questions (Duk 482)
                (e)      Notice of pending condemnation and pending lawsuits
                (f)      Purchaser’s mortgage financing
                (g)      Discharging real estate taxes and liens
                (h)      Discretionary early termination option
                         (i)       Exercising the option
                         (ii)      Consequences of Discretionary Early Termination
                (i)      Leasing vacant space
                (j)      Investment of escrow funds

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(4)   Representations and Conditions to Closing
      (a)     Representations
              (i)       Quality of the purchased property
                        1)        Common law rule: caveat emptor
                        2)        Stambovsky v. Ackley: (Duk 484):
                        3)        NYRPTL 443-a overrides the decision by
                                  proclaiming that a failure to disclose a number
                                  circumstances will not be considered a material
                                  defect.
                        4)        Express warranties: Garriffa v. Taylor. 675 P. 2d
                                  1284 (1984).
                        5)        Duty to Disclose Defects (Duk 484)
                                  a)        Stambovsky v. Ackley (Duk 484)
                                  b)        Johnson v. Davis (Duk 488)
                                  c)        Notes and Questions (Duk 489
                        6)        Implied W arranty of Quality (Duk 494)
                                  a)        Lempke v. Dagenais (Duk 494)
                                  b)        Notes and Questions (Duk 501)
                        7)        Implied warranty of fitness and habitability: Albrecht
                                  v. Clifford, 767 N.E.2d 42 (Mass. 2002)
              (ii)      The Occupants
              (iii)     Seller's General Ledger
              (iv)      Employees
              (v)       Service Contracts
              (vi)      Mortgages
              (vii)     Litigation
              (viii)    Authority to enter into the transaction
              (ix)      Drainage and Sewer
              (x)       Zoning and municipal ordinances
              (xi)      Environmental
              (xii)     Insurance
              (xiii)    Brokerage
      (b)     Conditions to Closing
              (i)       Destruction of the Premises
                        1)        Skelly Oil v. Ashmore 365 S.W . 2d 582 (Mo. 1963)
                        2)        Note: Equitable Conversion (Duk 483)
              (ii)      Condemnation
              (iii)     Title
              (iv)      Accuracy of representations and warranties
              (v)       Mortgage contingency:
                        1)        (Malus v. Hager 312 N.J. Super 483, 712 A. 2d 238)
                        2)        Bean v. W alker (Duk 554-558)
              (vi)      Estoppel certificates
(5)   Closing
      (a)     The closing date
      (b)     The closing documents
      (c)     Guidelines for the closing
      (d)     Adjustments for the closing
      (e)     Consummating the closing
(6)   Remedies for Breach of the Sales Contract (Duk 502)
      (a)     Liability of the Parties
              (i)       Jones v. Lee (Duk 502
              (ii)      Kutzin v. Pirnie (Duk 506)

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                                       (iii)     Seller’s inability to convey
                                       (iv)      Purchaser’s default
                              (b)      Liability of the Title company
                     (7)      Post closing obligations
                              (a)      Adjustments not ascertainable at closing
                              (b)      Survival of representations, warranties and covenants
                              (c)      Indemnity as to security deposits
                     (8)      Interpretation and notice
                              (a)      Captions and headings
                              (b)      Merger - Note: (Duk 494)
                              (c)      Interpretation
                              (d)      Communications
                              (e)      Heirs, successors and assigns
                              (f)      Counterparts and exhibits
     b.      The Deed
             i.      Execution of the Deed
                     (1)      W arranties of Title (Duk 513-514)
                     (2)      General W arranty Deed (Duk 514-515)
                     (3)      Notes and Questions: (Duk 515-518)
                     (4)      Brown v. Lober (Duk 518-520)
                     (5)      Questions (Duk 520-521)
                     (6)      Frimberger v. Anzellotti (Duk 521-525)
                     (7)      Notes, Questions, and Problems (Duk 525-527)
                     (8)      Rockafellor v. Gray (Duk 527-531)
                     (9)      Note 4 (Duk 531-532)
                     (10)     Note: Estoppel by Deed (Duk 532)
             ii.     Delivery of the Deed
                     (1)      Introduction (Duk 532-533)
                     (2)      Sweeney v. Sweeney (Duk 533-534)
                     (3)      Notes and Questions (Duk 534-536)
                     (4)      Note: Delivery W ithout Handing Over (Duk 536)
                     (5)      Rosengrant v. Rosengrant (Duk 536-540)
             iii.    Deed Forms
                     (1)      Pennsylvania General W arranty Deed (SM 03c i)
                     (2)      Pensylvania Special W arranty Deed (SM 03c ii)
     c.      The Closing
             i.      Preparing the Closing Agenda - (Closing Checklist Form - SM 03d i)
             ii.     Adjusting the Purchase Price
             iii.    Reviewing the Title Commitment
             iv.     The Closing Statement - (Closing Statement Form - SM 03d ii)
             v.      Delivering the Deed for Recording
             vi.     Receipt for the Deed
             vii.    Transfer Taxes
             viii.   Reviewing Checks or Evidence of Funds Transmission

4.   Leasing Real Property: [Sessions 15 - 22]
     a.      W hat is a Lease?
             i.        Common Law Leasehold Estates (Duk 363)
                       (1)     Term of Years (Duk 363)
                       (2)     Periodic Tenancy (Duk 364), Problems (Duk 364)
                       (3)     Tenancy at W ill (Duk 365)
                               (a)      Garner v. Gerrish (Duk 365)
                               (b)      Question and Problems (Duk 367)

                                                   9
                (4)       Tenancy at Sufferance
                          (a)       Holdovers (Duk 368)
                          (b)       Crechale & Polles, Inc. v. Smith (Duk 369)
                          (c)       Notes 1 and 2 (Duk 371, 372)
     ii.        Distinguishing a Lease from a License (Duk 373)
     iii.       Conveyance or Contract (Duk 374)
b.   The    Functions of Leases
     i.         Leasing Property for Use
                (1)       Retail Uses: (SM 04a i- “Can You Find a Fair Lease?” Halper)
                (2)       Office Uses:
                          (a)       (SM 04a ii - “The Strange Language of Office Leasing,” Halper)
                          (b)       (SM 04a iii - “Guide to American Office Rentals,” Halper)
                (3)       Industrial Uses: (SM 04a iv - “Leasing Industrial Property,” Halper)
                (4)       Apartment Uses (SM 04a v - “Sign It or Find Another Apartment,”)
     ii.        Leasing property for development (SM 04a vi - “Don't Confuse a Ground Lease with a
                Ground Lease,” Halper)
     iii.       Leasing Property for Investment (SM - 04a vii “Negotiating the Operating Lease,”
                Halper)
c.   The    Strange Language of Lease Drafters
     i.         W itnesseth
     ii.        W hereas, W hereas, W hereas. Now, Therefore.
     iii.       W hat’s an Indenture?
     iv.        In Consideration of $1.
     v.         Hereafter, Hereinafter, Theretofore, Herein, Therein, the Same, of Even Date.
     vi.        Including, but Not Limited To, Any and All, Each and Every, Covenants and Agrees.
d.   The    Structure of Leases
     i.         Introductory clauses
                (1)       Title of the Lease
                (2)       the Names of the Parties and Their Addresses (“Exculpation Clauses in
                          Occupancy Leases,” Halper, SM - 04b i)
                (3)       Describing the Property to Be Leased and Property Subject to Easements
                          Granted to the Tenant
                          (a)       (Site Plan, Ground Lease in Multi-Use Project - SM 04b ii)
                          (b)       (Site Plan, Shopping Center Lease SM 04b iii)
                (4)       Granting clause
     ii.        The Term
                (1)       Delivery of Possession (Duk 384)
                          (a)       Hannan v. Dusch (Duk 384)
                          (b)       Notes 1 and 2 (Duk 387)
                (2)       Commencement Date
                (3)       Expiration Date
                (4)       Term Certificate
                (5)       Memo of Lease
     iii.       Construction
                (1)       Shopping center
                          (a)       Cost stop
                          (b)       Net lease
                          (c)       Turnkey job
                          (d)       Shell and allowance
                          (e)       Tenant-build
                (2)       Office building
                          (a)       New tenant alteration
                          (b)       As is

                                            10
      (3)     Factory
              (a)     Standard shell
              (b)     Shell improved to suit tenant's specifications
iv.   Rent
      (1)     How does the businessperson look at rent?
              (a)      Percentage of sales, fees, or commissions
              (b)      Other costs of operating a store, office, or factory
      (2)     Relationship of rent to economic variables
              (a)      Credit of tenant
              (b)      Term of lease
              (c)      Cost of construction
              (d)      Financing cost
              (e)      Services rendered by landlord
      (3)     Rent structure of commercial and industrial properties
              (a)      Shopping Center
                       (i)       Minimum rent
                       (ii)      Percentage rent - “Record Keeping and Reporting Obligations
                                 Under Percentage Leases,” Halper (SM 04c)
                       (iii)     Cost of living
                       (iv)      Common area charges
                       (v)       Tax contributions
                       (vi)      Insurance contributions
                       (vii)     Merchant's association dues
              (b)      Office Building
                       (i)       Basic rent
                       (ii)      Utilities charged
                       (iii)     Operating cost escalation
                       (iv)      Tax escalation
                       (v)       Parking lot maintenance
                       (vi)      Porter’s wage clauses
              (c)      Factory
                       (i)       Rent attributable to the shell
                       (ii)      Rent attributable to tenant improvements
                       (iii)     Cost of living increase
                       (iv)      Tax contributions
                       (v)       Common area maintenance
v.    Use and condition of the premises and common elements
      (1)     Tenant mix for a shopping center - with whom will a retailer share a shopping
              center?
              (a)      Department stores
              (b)      Supermarkets
              (c)      Drug stores
      (2)     Use and exclusive clauses
      (3)     Condition of the Premises
              (a)      Repair Clauses in Leases
                       (i)       Residential Leases
                       (ii)      Shopping Center Leases
                       (iii)     Freestanding stores
                       (iv)      Office Buildings
              (b)      Common Law Duties Regarding the Condition of the Premises (Duk
                       421)
                       (i)       Landlord's Duties; Tenant's Rights and Remedies (Duk 421)
                       (ii)      Quiet Enjoyment and Constructive Eviction (Duk 422)

                                   11
                                         (iii)    Reste Realty Corp. v. Cooper (Duk 422)
                                         (iv)     Notes and Questions (Duk 427 - 429)
                                         (v)      Note: The Illegal Lease (Duk 430)
                               (c)       The Implied W arranty of Habitability (Duk 431)
                                         (i)      Hilder v. St. Peter (Duk 431)
                                         (ii)     Notes 1, 2, and 3 (Duk 437 - 439)
                      (4)      Condemnation and Destruction
                      (5)      Indemnity and Liability Insurance (DL - Allocation of Insurable Risks in
                               Commercial Leases, Sidney G. Saltz, Fall 2002 Real Property, Probate and Trust
                               Journal 480)
                      (6)      Property Insurance (DL - Allocation of Insurable Risks in Commercial Leases,
                               Sidney G. Saltz, Fall 2002 Real Property, Probate and Trust Journal 480)
                      (7)      Covenant against liens
             vi.      Transfer of interest
                      (1)      Subleases and Assignments
                               (a)       Distinguishing Assignment from Subletting:
                                         (i)      Ernst v. Conditt (Duk 388-393)
                                         (ii)     Note 1 (Duk 393)
                               (b)       Must the Landlord be Reasonable?
                                         (i)      Kendall v. Ernest Pestana, Inc. (Duk 395)
                                         (ii)     Notes and Questions (Duk 400)
                                         (iii)    “Can the Landlord Say No?” Halper (SM 04d)
                      (2)      Transfer of tenant entity
                      (3)      Transfer of landlord’s interest
             vii.     Default and remedies
                      (1)      Abandonment - Berg v. W iley (Duk 403)
                      (2)      W hen Is a Tenant in Default, Halper (SM 04e)
                      (3)      Lease termination
                               (a)       Regaining possession
                                         (i)      Self-Help (Forcible Repossession) - Notes 1 and 2 (Duk 408)
                                         (ii)     Note: Summary Proceedings (Duk 409)
                               (b)       Assessing Damages
                               (c)       Duty to M itigate Damages
                                         (i)      Sommer v. Kridel (Duk 410)
                                         (ii)     Notes and Questions (Duk 416)
                               (d)       Note: Retaliatory Eviction (Duk 439)
                               (e)       Tenant Duties; Landlord’s Rights and Remedies (Duk 441)
                      (4)      Self-help
                      (5)      Late payment fee
                      (6)      Reimbursement for litigation expense
                      (7)      Security - Notes: Landlord's Remedies and Security Devices (Duk 419)
             viii.    Notice clause

5.   M ortgaging Real Property [Sessions 23 - 28]
     a.      Introductory material
             i.       Introduction (Duk 541-546)
             ii.      Problems and Notes (Duk 546)
             iii.     Murphy v. Fin. Dev. Corp. (Duk 546-551)
             iv.      Grant S. Nelson & Dale A. W hitman, Real Estate Finance Law §7.21 (Duk 551-552)
             v.       Notes 4 and 5 (Duk 552-554)
             vi.      Notes (Duk 558).
     b.      Mortgage M arket and Mortgage Lenders:
             i.       Mortgage Insurance: (DL Private Mortgage Insurance, Johnstone 39 W ake Forest L. Rev.

                                                   12
             783 - first thirteen pages only)
             (1)       FHA
             (2)       VA
             (3)       PMI (Private Mortgage Insurers).
     ii.     Mortgage Lenders:
             (1)       Commercial Banks
             (2)       Savings & Loan Associations
             (3)       Savings Banks
             (4)       Insurance Companies
             (5)       Conduits
c.   Types of Real Estate Security Transactions
     i.      Lending Against the Security of Real Estate Interests
     ii.     Permanent Loan Security Instruments
             (1)       Mortgage
             (2)       Deed of Trust
             (3)       Deed Absolute
             (4)       Installment Land Contracts
             (5)       Sale-leaseback
             (6)       Purchase Money and Borrowed Money Mortgages: (DL: ALH Holding
                       Company v. Bank of Tellurde, 18 P. 3d 742).
     iii.    Construction Loan Security Instruments
     iv.     Leasehold Loan Security Instruments (“Anatomy of a Ground Lease,” Halper - SM 05a)
     v.      Secondary Security Devices
             (1)       Second Mortgage
                       (a)       Risk: Greater than That of the First Mortgagee
                       (b)       Interest: Usually Much Higher than the First
                       (c)       Protecting the Lender:
                                 (i)       Rights to Cure Defaults in the First
                                 (ii)      Notice of Default in the First
                                 (iii)     No Change in the First Without Consent of the Second.
             (2)       W raparound Mortgage
d.   Mortgage Documents
     i.      Application
     ii.     Commitment
             (1)       Commitment fees
             (2)       Negotiating the Commitment
                       (a)       (DL: “Precontractual Liability and Preliminary Agreements,” E. Allan
                                 Farnsworth, 87 Colum. L. Rev. 217 - 1987 - first twenty-seven pages
                                 only)
                       (b)       Rider to Mortgage Commitment (SM 05b)
             (3)       Enforcing the Commitment: (DL: Lincoln National Life Insurance v. NCR 603
                       F. Supp. 1393)
     iii.    Promissory Note
             (1)       The Debt
                       (a)       Amount of the Mortgage Debt
                                 (i)       Relationship Between the Mortgage Debt and Cost of
                                           Acquisition
                                 (ii)      Loan to Value Ratio
                                 (iii)     relationship Between the Debt and the Property’s Cash Flow
                       (b)       Term of the mortgage loan
                       (c)       Exculpation
                                 (i)       (“Mortgage Exculpation Clauses,” Halper, SM 05c)
                                 (ii)      (DL - “Real Estate Financing - Carveouts to Nonrecourse

                                           13
                                        Loans: They Mean W hat They Say,” Murray - ALI-ABA
                                        Course of Study Materials, Modern Real Estate Transactions,
                                        Volume 2, July 2007)
             (2)     Interest Rates
                     (a)       Adjustable rate mortgages: (DL: Crowly v. Banking Center, 1994 W L
                               685023, Superior Court Of Connecticut, 1994)
                               (i)      Base Index:
                               (ii)     Starting interest rates:
                               (iii)    Caps on Rate Increases:
                               (iv)     Debt service and maturity dates:
                     (b)       Usury laws:
                               (i)      (DL: In re Dominguez, 995 F.2d 883)
                               (ii)     (DL: Thomas v. Hunt Mfg. Corp. 269 P. 2d 12)
                               (iii)    (DL: Duke v. Levy 181 P. 496 – 1929)
            (3)      Amortization
            (4)      Prepaying the debt:
                     (a)       Voluntary
                     (b)       After Acceleration
     iv.    Assignment of Leases and Rents
     v.     Environmental Guaranties
     vi.    Appraisal
     vii.   Estoppel Certificates
     viii.  Subordination and Nondisturbance Agreements
     ix.    Title Insurance Policy
e.   Mortgage Provisions
     i.     The Security
            (1)      A Mortgage Isn’t a Debt Instrument. It Secures a Note or Bond.
            (2)      Distinguishing a Mortgage from a Deed (W ensel v. Flatte, 27 Ark. App. 5)
            (3)      Describing the Security
            (4)      Maintaining the Security
                     (a)       Use of the Security
                               (i)      Use of Buildings and Common Facilities
                               (ii)     Alterations
                               (iii)    Leasing Vacant Space
                     (b)       Repairs, Replacements, Maintenance, Destruction
                     (c)       Insuring the Security
                               (i)      Liability Insurance
                               (ii)     Property Insurance (DL: Mortgagee’s Interest in Casualty Loss
                                        Proceeds, Randolph - 32 Real Property, Probate and Trust
                                        Journal 1, Spring 1997)
                     (d)       Indemnifying the Lender
                     (e)       Condemnation
                     (f)       Covenant Against Liens
            (5)      Disposition of the Security
            (6)      No Modification or Voluntary Lease Termination
     ii.    Lender Remedies
            (1)      Distinguish Foreclosure Remedy from Acceleration.
            (2)      Foreclosure and Judicial Sale of the Property. (DL: Facing the Facts: an
                     Empirical Study of the Fairness and Efficiency of Foreclosures and a Proposal
                     for Reform, Stark - 30 University of Michigan Journal of Law Reform 639,
                     Summer, 1997, pages one through five only)
                     (a)       Surplus to Mortgagor
                     (b)       Deficiency Judgments

                                           14
      (c)       Mortgagee’s Right to Bid
      (d)       Junior Security Interests: (DL: Shultis v. W oodstock Land Dev.
                Assoc., 188 A.D.2d 234)
      (e)       Postforeclosure Redemption Rights
      (f)       Deficiency Judgments
                (i)      (DL: State Bank of Albany, Plaintiff v Amak Enterprises, Inc.,
                         77 Misc. 2d 340; 353 N.Y.S.2d 857; 1974 N.Y. Misc. 1134)
                (ii)     (DL: Union Bank v. Gradsky 265 Cal. App. 2d 40, 71 Cal.
                         Rptr. 64)
(3)   Deeds in Lieu of Foreclosure - (DL: “Deeds in Lieu of Foreclosure: Practical
      and Legal Considerations, John C. Murray,” 26 Real Property, Probate & Trust
      Journal, Fall 1991 - Pages 460-498 only)
(4)   Acceleration:
      (a)       Graf v. Hope Building, (DL: 171 N.E. 884, NY 1930)
      (b)       Jacobson v. Mclanahan, 264 P. 2d 253 (1953)
(5)   Self-help
(6)   Appointment of a Receiver: Home Life Ins. Co. v. American National Bank and
      Trust Co., 777 F. Supp. 629 (1991)
(7)   Taking Possession of the Security: (DL: Harbel Oil Co. v. Steele, 83 Ariz. 181)




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