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7. If the man wins, it will be because
The neighbor had been told that contracts for the purchase and sale of real property require consideration and concluded that because he had made no earnest money down payment, he could refuse to close and not be liable. The neighbor notified the man of his intention not to close and, in fact, did refuse to close on the date set for the closing. The man brought an appropriate action to compel specific performance by the neighbor.
Another property came on the market that the neighbor wanted more than Blackacre. The neighbor decided to try to escape any obligation to the man.
The man orally gave the neighbor permission to park his car on Blackacre without charge prior to the closing. Thereafter, the neighbor frequently parked his car on Blackacre.
A man was the owner of Blackacre, an undeveloped city lot. The man and a neighbor executed a written document in which the man agreed to sell Blackacre to the neighbor and the neighbor agreed to buy Blackacre from the man for $100,000; the document did not provide for an earnest money down payment. The man recorded the document, as authorized by statute.
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However, nearly every land transfer will be preceded by a land sale contract. Parties to these conveyances will sign the land sale contract, which is followed by a gap in time before the actual conveyance of the title to the property. During this gap, parties usually arrange financing and check title. Land sale contracts normally provide a settlement date for the «closing» (passage of title from the owner to the buyer) to occur.
B is correct. The call of this question asks a hypothetical: IF the man wins the lawsuit against the neighbor, WHICH legal doctrine or concept ensures this outcome? The best way to answer a question like this is to work backward and identify which legal doctrine or concept is the decisive issue for the man.
If the man wins, it will be because the court found that there was an enforceable agreement between the two parties during the closing period. To find an enforceable agreement, the court would have to rely on principles of contract construction. Here, the exchange of promises by the neighbor and the man constitutes consideration even though no earnest money or deposit was paid by the neighbor.
A is incorrect. There is one major exception to the Statute of Frauds for land sale contracts. Under the doctrine of part performance, a party who has taken action in reliance on the contract may be able to gain at least limited enforcement of it at equity. However, courts are in sharp disagreement as to what specific acts by the purchaser constitute part performance entitling the purchaser to specific performance.
Here, however, it is obvious that the neighbor has not partially performed «enough» for the man to be entitled to specific performance. The performance the neighbor was obligated to make was paying the man $100,000 — use of the lot in no way constitutes a part performance of that payment.
C is incorrect. Under the doctrine of equitable conversion, once a contract is signed and each party is entitled to specific performance, equity regards the purchaser as the owner of the real property. This doctrine addresses who bears the risk for damage or destruction of a property after the sale contract is executed or in the event that a party to a contract dies before the contract has been completed. In general, it holds that a deceased seller's interest passes as personal property and a deceased buyer's interest as real property. However, the doctrine of equitable conversion is irrelevant to the facts presented.
D is incorrect. In the contracting phase of a real estate transaction, «recording» is only relevant to the determination of whether title to the property is marketable. The validity of title must be apparent «from the record,» meaning the validity of the title is clear without resorting to unrecorded documents or other external evidence. Here, the recording of the contract is irrelevant to the man's right to seek specific performance, because the marketability of the property is not at stake.