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Chapter 49
TRANSFER AND CONTROL OF REAL PROPERTY
I. Transfer of Real Property
A. Contract of Sale
1. Formation
2. Marketable Title
3. Implied Warranty of Habitability
B. Deeds
1. Types of Deeds
a. Warranty
b. Special Warranty
c c. Quitclaim
2. Formal Requirements
d a. Description of the Land
e b. Quantity of the Estate
f c. Covenants of Title
g d. Execution
3. Delivery of Deeds
4. Recordation
C. Secured Transactions
1. Form of Mortgages
2. Rights and Duties
3. Mortgage Regulation
h 4. Transfer of Mortgage Interests
a. By Mortgagor
b. By Mortgagee
4. Foreclosure
D. Adverse Possession
II. Public and Private Controls
A. Zoning
1. Enabling Acts and Zoning Ordinances
2. Variance
3. Nonconforming Uses
4. Judicial Review of Zoning
a. Invalidity of Zoning Ordinance
b. Zoning Amounts to a Taking
5. Subdivision Master Plans
B. Eminent Domain
1. Public Use
2. Just Compensation
C. Private Restrictions Upon Land Use
1. Covenants Running with the Land
2. Restrictive Covenants in Subdivisions
3. Termination of Restrictive Covenants
4. Validity of Restrictive Covenants
Cases in This Chapter
VonHoldt v. Barba & Barba Construction, Inc. Kelo v. City of New London
Cappo v. Suda
Chapter Outcomes
After reading and studying this chapter, the student should be able to:
Explain (1) the essential elements of a contract of sale of an interest in
real property, (2) the meaning and importance of marketable title, and
(c) the concept of implied warranty of habitability.
Describe the fundamental requirements of a valid deed and
distinguish among warranty, special warranty, and quitclaim deeds.
(1) Describe the elements of a secured transaction, (2) distinguish
between a mortgage and a deed, and (3) distinguish between an
assumption of a mortgage and buying subject to a mortgage.
De$ne and give examples of (1) adverse possession, (2) a variance,
(3) a nonconforming use, and (4) eminent domain.
Describe the nature and types of restrictive covenants.
TEACHING NOTES
The law is and always has been very cautious about the transfer of title to
real property. In contrast with personal property, which may be transferred
easily and informally from owner to owner, real property can be transferred
only through compliance with a variety of formalities. Title to land may be
transferred (1) by deed, (2) by will or intestate succession and (3) by open,
continuous, and adverse possession by a nonowner for a statutorily
prescribed period of time.
I. TRANSFER OF REAL PROPERTY
The most common way of transferring real property is by deed. Usually, such
transfers involve a contract for the sale of the land, the subsequent delivery
of the deed, and the payment of the agreed-upon consideration. However,
the transfer may also be made as a gift.
*** Chapter Outcome ***
Explain (1) the essential elements of a contract for sale of an interest in real property,
(2) the meaning and importance of marketable title, and (3) the concept of implied
warranty of habitability.
A. CONTRACT OF SALE
Formation
General contract law governs the sale of real property. Thus, to be
enforceable under the statute of frauds, a contract for the sale of land must
be in writing and signed by the parties. The simplest agreement should
contain (1) the names and addresses of the parties, (2) a description of the
property to be conveyed, (3) the time for the conveyance (called the
closing), (4) the type of deed to be given, and (5) the price and manner of
payment.
Marketable Title
conveyance of the same property by the seller), and
(3) events that deprive the seller of title, such as adverse possession or
eminent domain.
If the title search reveals any defect not specifically expected in the contract,
the seller has materially breached the contract. The buyer’s remedies for
breach include specific performance with a price reduction, rescission and
restitution, or damages for loss of bargain.
Implied Warranty of Habitability
The traditional common law rule with regard to improvements to the land is
caveat emptor — let the buyer beware. Under this maxim, the buyer must
inspect the property thoroughly before the sale is completed, since any
undiscovered defect would not be the seller’s responsibility. The seller is
liable only for any misrepresentations or express warranties he may have
made about the property.
CASE 49-1
VONHOLDT v. BARBA & BARBA CONSTRUCTION, INC.
Supreme Court of Illinois, 1997
175 Ill.2d 426, 677 N.E.2d 836, 222 Ill.Dec. 302
http://scholar.google.com/scholar_case?case=17693796651563455274&q=677+N.E.2D+836&hl=en&as_sdt=2,34
Miller, J.
The plaintiff, John W. VonHoldt, Jr., brought the present action in the circuit court of Cook
County against defendant, Barba & Barba Construction, Inc. The complaint alleged that
defendant breached an implied warranty of habitability in its construction of a structural
addition to an existing residence. * * *
Background
Shortly after taking occupancy, plaintiff noticed a deflection of the wood flooring at the
partition wall separating the master bedroom from an adjoining bathroom. This deflection
created a depression in the floor plane. Plaintiff maintained that, due to the thickness of the
carpet, the depression was nearly concealed. An investigation revealed that the addition was
not constructed in accordance with the architectural plans approved by the Village of
Glenview or the Glenview Building Code. Specifically, the partition wall between the master
bedroom and the bathroom was constructed as a bearing element supporting a portion of
both the roof and ceiling construction. This variance resulted in excessive stress on the floor
joists and inadequate support for a portion of the roof and ceiling causing a greater than
expected floor deflection.
Discussion
The Implied Warranty’s Applicability to Additions
On appeal to this court, plaintiff contends that the appellate court erred in rejecting his claim
of breach of an implied warranty of habitability. Plaintiff asks us to extend the implied
warranty of habitability to a cause of action by a subsequent purchaser for damages against a
builder constructing a later addition to a house. Defendant argues that the protection of the
implied warranty of habitability should be limited to actions against builder-vendors and that
plaintiff’s action, if any exists, is time-barred. For the reasons expressed below, we find that
the implied warranty of habitability extends to cases brought by subsequent purchasers
involving subsequent additions to homes.
The implied warranty of habitability is a judicially created doctrine designed to avoid the
unjust results of caveat emptor and the doctrine of merger. [Citation.] Initially, Illinois courts
applied the doctrine to the sale of new homes to protect innocent purchasers who did not
* * *
Plaintiff claims that the implied warranty of habitabil-ity should now be extended to
include actions against a builder brought by a subsequent purchaser for latent defects in a
later addition to a home. In [citation], this court held that the defendants were not subject to
the implied warranty of habitability for a condominium-conversion project. The court held
that the doctrine of implied warranty of habitability did not apply because the refurbishing
and renovation of the project had not been significant. [Citation.] In the present case, the
builder made a major addition to an existing home. We now hold that, when a builder makes
We must next determine whether the plaintiff can bring this action even though he is a
subsequent purchaser. In [citation], this court extended the implied warranty of habitability
to subsequent purchasers of a new home, finding that there was no need for privity of
contract because the warranty of habitability exists independently of the contract for sale.
Because the doctrine of implied warranty of habitability has been extended to actions by
subsequent purchasers of new homes, we can see no reason why the doctrine should not be
extended to actions by subsequent purchasers of a home for latent defects in a significant
addition to the home made prior to the time of sale.
* * *
Conclusion
*** Chapter Outcome ***
Describe the fundamental requirements of a valid deed and distinguish among
warranty, special warranty, and quitclaim deeds.
B. DEEDS
A deed is a formal document transferring any interest in land. The party who
transfers property by a deed is called the grantor; the transferee of the
property is the grantee.
Types of Deeds
The rights conveyed by a deed vary, depending on which of the three basic
types is used.
Warranty — By a warranty deed, the grantor promises the grantee that the
grantor has a valid title to the property.
• In addition, the grantor, either expressly or implicitly, obliges herself to
make the grantee whole for any damage the grantee suffer, should the
grantor’s title prove defective.
• A warranty deed includes certain promises or covenants, the most usual
being title, against encumbrances, quiet enjoyment, and warranty.
These constitute an assurance that the grantee will have undisturbed
Special Warranty — deed warrants only that the title has not been
impaired, encumbered, or made defective because of any act or omission of
the grantor. The grantor warrants the title as it concerns his own acts or
omissions; does not warrant title as to the acts or omissions of others.
Formal Requirements
Any interest in land that is of more than a limited duration falls within the
statute of frauds and must be in writing. The wording in almost all deeds,
whatever the type, follows nearly the same pattern:
Description of the Land — must be clear enough to permit identification of
the property conveyed.
Quantity of the Estate — description of type of estate being conveyed to
grantee (e.g., life estate).
Delivery of Deeds
A deed does not transfer title to land until it is delivered. Delivery, or an
intent that the deed is to take effect, is evidenced by the acts or statements
of the grantor. Physical transfer of the deed is usually the best evidence of
intent, but it is not necessary.
Recordation
In most states, recording a deed is not necessary to pass title. However,
unless the grantee has the deed recorded, someone who in good faith
subsequently purchases the same property for value will acquire title
superior to that of the grantee. Recordation consists of delivering a duly
executed and acknowledged deed to the recorder’s o<ce in the county
where the property is located. There, a copy of the instrument is inserted in
the current deed book and is indexed. Once recorded, documents such as
deeds, easements, and mortgages or deeds of trust become public records.
The purpose of recordation is to give constructive notice to the rest of the
world that an interest in property has been conveyed.
*** Chapter Outcome ***
(1) Describe the elements of a secured transaction, (2) distinguish between a mortgage
and a deed, and (3) distinguish between an assumption of a mortgage and buying
subject to the mortgage.
C. SECURED TRANSACTIONS
A secured transaction involves
• a debt or obligation to pay money and
• the creditor’s interest in specific property that secures performance of
the obligation.
A security interest in property cannot exist apart from the debt it secures:
discharging the debt in any manner terminates the interest.
When real estate secures a debt, the debtor is referred to as the mortgagor;
the creditor is the mortgagee.
Forms of Mortgages
A mortgage is a security interest in land. The mortgage instrument must be
in writing, must contain an adequate description of the property, and must
be executed and delivered.
Rights and Duties
Mortgagor’s rights: (1) In most states, the mortgagor retains title and is
entitled to possession of the premises to the exclusion of the mortgagee,
even if the mortgagor defaults. Only through foreclosure (sale) or through
the court appointment of a receiver can the right of possession be taken
from the mortgagor. (2) The mortgagor has the right to redeem his
mortgaged property by paying the debt that the mortgage secures. This
right of redemption can be defeated only by operation of law.
Mortgagor’s duty: The mortgagor has a duty not to commit waste, which
would impair the security. For example, the debtor’s failure to pay taxes or to
discharge a prior lien may impair the security of the mortgagee.
Mortgagee’s rights: (1) The mortgagee has a right to recover the amount
of the debt. (2) And he or she has the right to foreclose the mortgaged
property upon default to satisfy the debt. Foreclosure is an action through
the debt immediately due and payable, permitting foreclosure for the entire
amount.
NOTE: See Figure 49-1: Fundamental Rights of Mortgagor and Mortgagee
Mortgage Regulation
In July 2010, President Obama signed into law the Dodd-Frank Wall Street
Reform and Consumer Protection Act (Dodd-Frank), the most signiticant
change to U.S. financial regulation since the New Deal. One of the many
stand-alone statutes included in the Dodd-Frank is the Mortgage Reform and
Anti-Predatory Lending Act of 2010, which modi$es the Truth-in-Lending Act
Transfer of Mortgage Interests
By Mortgagor — A purchaser who assumes the mortgage takes the
property and is personally liable for payment to the mortgagee. This
requires an assumable mortgage and the consent of the mortgagee. If the
property is taken subject to the mortgage the transferee's liability is limited
Foreclosure
After default by the mortgagor the property is sold to pay the debt. Some
mortgages provide that upon default of one installment payment the entire
*** Chapter Outcome ***
De$ne and give examples of (1) adverse possession, (2) a variance
(3) a nonconforming use, and (4) eminent domain.
D. ADVERSE POSSESSION
This is a very rarely used method of transfer of title to land. It is involuntary
and takes place without any deed or other formality.
