ANSWERS TO MULTISTATE-STYLE EXAM QUESTIONS

5. A  Whether they apply the doctrine of equitable conversion, the Uniform Vendor and Purchaser Risk Act, or some other system for apportioning the risk of loss under a real estate sales contract, all jurisdictions agree that the risk of loss from causes other than the fault of the vendor passes to the vendee when he takes possession of the realty prior to closing.

B and C are incorrect because passage of the risk of loss does not depend on the purchase of fire insurance by either party. D is incorrect because the risk of loss passed to Bryant when he took possession of the realty.

6. C  Some jurisdictions hold that an abstractor of title impliedly warrants the abstract to be accurate; all jurisdictions agree that there is at least an implied warranty that the service will be performed in a reasonable manner. Since the right-of-way deed was properly recorded, Titleco’s failure to include it in the abstract which it furnished was a breach of either the promise to perform reasonably or the implied warranty of accuracy. In either event, since Belden was an intended creditor beneficiary of the contract between Sofield and Titleco, Belden can enforce it.

If there was an implied warranty of accuracy A is incorrect because liability is imposed without fault for its breach. If there was no implied warranty of accuracy, A is incorrect because liability may be imposed if Titleco’s lack of awareness of the right-of-way resulted from its failure to act reasonably. Since the right-of-way deed from the owner of Westacre to Johnson Chemical Company was properly recorded before any of the grants of Westacre took place, it was not outside the chain of title, and B is incorrect. D is incorrect because the liability of Titleco does not depend on covenants made by Sofield.

7. C  The covenant against encumbrances is a representation that there are no easements or liens burdening the realty. If the realty is, in fact, burdened by such an encumbrance, the covenant is breached and liability is imposed on the covenantor.

This is so even though the purchaser relied on assurances in addition to the covenant, and even though the grantor was unaware of the existence of the encumbrance at the time he executed the covenant. A and B are, therefore, incorrect. D is incorrect because there is no indication that Sofield failed to act reasonably (i.e., was “negligent”).