I.  ANALYZING PROPERTY TRANSFER AGREEMENTS

  1. 6 Elements
  2. Parties
  3. Identify all needed parties (lenders, co-owners, etc.)
  4. Ability to Perform
  5. Financial Responsibility
  6. Preconditions
  7. What has to happen before the opposing party must perform?
  8. Is my client protected from obligations that should not exist?
  9. Opponents’ Obligations
  10. Are their obligations unambiguous?
  11. Is any performance expressly required?
  12. Do the obligations fit with what my client thinks?
  13. Clients’ Obligations
  14. What does my client have to do?
  15. Is it unambiguous or can the opposition expect something different?
  16. Breach & Remedies
  17. Can we clearly prove a breach?
  18. What relief do we get?
  19. Can the other party claim breach after we perform according to our understanding?
  20. Can the other side claim ruinous damages?
  21. Termination
  22. Can you tell when both parties’ obligations end?
  23. What happens after the end?

II.  INTELLECTUAL PROPERTY

  1. US Constitution Art I. § 8, cl.8
  2. Congress shall have Power…: To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries…
  3. Copyright (The Copyright Act – 17 U.S.C. § 102)
  4. Original works of authorship (minimum originality)
  5. Fixed in a tangible medium of expression
  6. Disputes: A has idea, B fixes the idea
  7. Not Functional
  8. Yes: Literary, musical, dramatic, pantomimes, choreographic, pictorial, graphic, sculptural, motion pictures, audiovisual, sound recordings, architectural
  9. Not: ideas, procedures, processes, systems, methods of operation, concepts, principles, or discoveries regardless of whether or how they are described
  10. Copyright created upon authorship
  11. Notice (© mark no longer needed, but helpful)
  12. Downside:
  13. Full protection only if registered within 3 months of creation
  14. Must be Registered to Pursue Litigation
  15. Can Prevent:
  16. Unauthorized copy, derivative work, reproduction
  17. Limited by “fair use”
  18. Purpose and character of use, nature of work, amount and substantiality used, effect on market or market value
  19. Not independent authorship
  20. Patent (Patentability Statutes – 35 U.S.C. §§ 101, 103)
  21. Process, machine, manufacturing process, composition, useful improvement
  22. RULE: Novelty, utility, non-obvious
  23. Novelty – difference from prior art
  24. Utility – usefulness
  25. Non-obvious
  26. Differences to prior art not obvious to one with ordinary skill in the art
  27. Tests include:
  28. Commercial success?
  29. Successfully licensed?
  30. Adopted as industry standard?
  31. Initial expert skepticism?
  32. Subject of efforts to copy?
  33. Satisfies a long felt need?
  34. Unexpected results?
  35. Synergistic results? (US v. Adams)
  36. Downside:
  37. Expensive, delayed, and risky process
  38. Puts information into the public domain
  39. Limited time (w/r to trade secret)
  40. Only have a year after a trigger event, or you lose rights
  41. Claims
  42. Broadest possible claims offer greatest protection against future products
  43. Misappropriation
  44. Not knowing of patent is not an excuse
  45. Trademark (Lanham Act – 15 U.S.C. §§ 1127, 1052, 1114)
  46. RULE: To be trademarked, a mark must (1) be used or intended for use in commerce of a good or service (2) not resemble another mark so as to be likely to cause confusion, (3) not be functional, (4) be merely descriptive or misdescriptive
  47. Strength of Mark
  48. Arbitrary, Fanciful, Suggestive are STRONG marks (inherently distinctive)
  49. Descriptive must have SECONDARY MEANING
  50. 5 years exclusive, continual use is prima facie evidence
  51. Generic cannot be given trademark
  52. Infringement
  53. Use in commerce, reproduce, copy, counterfeit, colorable image
  54. In commerce, advertising, or packaging
  55. Use of same or similar mark on goods or service, resulting in “likelihood of confusion”
  56. Requirements
  57. Trademark – word, name, symbol, device, …
  58. Used by a person or which a person has a bona fide intention to use in commerce
  59. To identify the source/distinguish goods from those sold by others
  60. Used on goods or services
  61. Does not extend to overall design of goods themselves
  62. Can be extended to packaging or presentation
  63. Downside:
  64. Failure to register will limit your resources
  65. Trade Secret (Uniform Trade Secret Act - UTSA)
  66. Organization, arrangement, and application of information such as formula, pattern, compilation, program, device, method, technique, process, etc.
  67. Economic value/Business use (actual or future)
  68. Substantially secret not absolute secrecy
  69. Reasonable efforts to maintain secrecy
  70. Unlimited in duration
  71. Misappropriation
  72. Disclosure, use, acquisition of secret through illegitimate means
  73. Reverse-engineering, independent creation cannot be stopped
  74. Downside:
  75. Must make considerable efforts (confidentiality agreements, employee education, etc.) to maintain secrecy
  76. May become difficult to keep information secret from customers in the future

III.  REAL PROPERTY OWNERSHIP

  1. Creation
  2. Gift
  3. Donative, Devise, or Descent
  4. To be valid
  5. Delivery
  6. Something must move or change hands
  7. Signed, acknowledged, and recorded deed is presumed to be delivered
  8. Offer/Donative Intent and Acceptance
  9. Was it really given, or just loaned to you
  10. Can rebut delivery, offer, and acceptance by evidence
  11. Cannot grant property against a person’s will
  12. Burden of proof is on Donee by clear and convincing evidence
  13. Purchase/Contract
  14. Brings about passage of equitable title
  15. Legal title transferred upon execution of a deed
  16. Adverse possession
  17. Entitlement to full title to land another holds title to
  18. Requires:
  19. Actual and clearly visible appropriation (unmistakably assert claim)
  20. Declaration or open and visible act
  21. To serve notice to owner of AP claim
  22. Continuous, Hostile, Non-permissive
  23. Tacking permits successive interests
  24. Pasture land needs enclosure, unless additional use satisfies other requirements
  25. Multiple Ownership of Real Property
  26. Note: “Heirs” is a word of art and not part of the transfer
  27. Fee Simple Absolute
  28. One person owns the land
  29. “X To Y and His Heirs”
  30. Life Estate and Remainder
  31. “X to Y for Life and then to Z and His Heirs”
  32. Tenancy in Common
  33. “X to Y & Z and Heirs”
  34. Cannot exclude others, cannot waste, must be accountable
  35. If one uses property for a profit, must supply others with proportional interest of net profit
  36. If no profits, and property used in good faith to make it profitable, no profits due to others
  37. Problems
  38. When sides cannot agree what to do with property
  39. Joint Tenancy (Right of Survivorship)
  40. “X to Y & Z as Joint Tenants with Right of Survivorship”
  41. Tenancy in common until death of one party, then other owns entire interest
  42. Poor person’s will
  43. Conveyance of an interest may “sever” the joint tenancy
  44. Severance is not a transfer of property and can be effected by one party to create Tenancy in Common
  45. Tenancy by the Entirety
  46. Joint Tenancy between Husband and Wife
  47. Severed only upon divorce to create tenancy in common
  48. Transfer creates a tenancy in common, at time of transfer not divorce
  49. Marital Property
  50. Community property can be divided at court’s discretion
  51. Presumption: Tenancy in Common
  52. Unless proof that is separate:
  53. Tracing
  54. Gift
  55. Inheritance
  56. If community property is used to enhance separate property, courts can order reimbursement
  57. Some states hold profits from separate property as community
  58. Advanced degrees
  59. Most states hold that advance degrees are not community property
  60. Cannot be sold, assigned, transferred, etc.
  61. Can, however, take education into account for maintenance/alimony
  62. Goodwill/Business Reputation
  63. Some states characterize as marital property, others separate
  64. Personal goodwill not marital property
  65. NY holds celebrity status, education, etc. as marital property

IV.  TRUSTS

  1. Multiple Ownership
  2. Trustee has the legal title and manages the trust
  3. Beneficiary has the equitable title
  4. Settlor sets up the trust
  5. Trust Creation
  6. Clearly identify parties and property
  7. Normally written, possibly oral
  8. Fiduciary Duties
  9. Very strict and highly enforceable
  10. Loyalty to beneficiary and estate
  11. Co-trustee loyalty to estate, not to other trustees
  12. No Self-Dealing
  13. Automatically a breach of duty
  14. Reasonable and Prudent Investment
  15. Preservation of Property
  16. Non-Commingling
  17. Accountability to Beneficiary
  18. Trustees have to be more than honest, also must be wise business decision makers
  19. Legal counsel doesn’t always help because the decisions are business decisions
  20. Trustees generally should follow market and not try to out-smart market
  21. Conflict of interest is not, per se, a breach of duty unless accompanied by unfair dealing
  22. Damages
  23. To avoid premature sales, liable executors have to pay for value at time of trial, not at time of sale (appreciation damages)
  24. To avoid holding assets, liable executors have to pay for value at time of sale, not at time of trial
  25. Trust Creation
  26. By transfer of property and appointment of trustee
  27. No consideration required
  28. Must be written
  29. Must have a trust property

V.  PURCHASE AGREEMENT

  1. Steps
  2. Brokerage, Negotiations, Earnest Money Contract, Precondition Fulfillment (Financing, Inspection, Title), Preparation of the Core Documents (Note, Deed, Mortgage, Deed of Trust), Preparation of other Documents (Disclosures, releases, etc), Closing: Execution of the Documents, Title Insurance w/Funding, Recording, Delivery, and Possession
  3. Brokerage
  4. Agreement
  5. Written document for the Statute of Frauds
  6. Usually provides for exclusive agency
  7. Non-exclusive: more than one broker can sell
  8. Multiple Listing Service (MLS): lists property for other brokers to view
  9. Lists legal description
  10. Duration of agreement
  11. Commission for securing a ready, willing, and able buyer within time period
  12. May require an addendum to release broker from liability on misinformation about property
  13. Broker added to the Earnest Money Agreement supercedes the Brokerage Agreement
  14. Broker may be entitled to commission even after brokerage agreement ends
  15. Liability
  16. Three approaches to determining liability
  17. Strict liability – any misrepresentations can make the broker liable (Texas)
  18. Negligence liability – a broker must act within a reasonable broker standard within the specific circumstances of the case to ensure the accuracy of the representations
  19. No duty to buyer – buyer has own duty to find out accuracy and exact property specifications
  20. Brokers can reduce liability by
  21. Having clients fill out condition addendum
  22. Providing less information to the buyer
  23. Issuing disclaimers to buyers and ask them to rely on their own, expensive inspections
  24. Merger Clause – sets out that the written agreement is the entire agreement, and supercedes any prior agreement
  25. Parol Evidence Rule – cannot supplement or contradict an unambiguous agreement/writing
  26. Negotiations
  27. “Agreement to Negotiate” or “Letter of Intent/Understanding”
  28. Most states find them unenforceable
  29. Seem to provide a partial contractual obligation
  30. Difficult or impossible to estimate damages from a breach
  31. Enforcement may bind people to terms when they only agree to try and come to terms
  32. Useful in showing a moral duty to negotiate in good faith
  33. Can specifically say that it is not a contract
  34. Even then, social factors may make it a contract
  35. Status Letters
  36. Non-contract to make both sides aware of positions and agreed terms
  37. Sets out agreed terms
  38. Sets out contract that this is not a contract, and breach occurs for claiming it is a contract
  39. Techniques
  40. Firm, fair offer
  41. Set a minimum value and refuse to negotiate beyond that value
  42. Standard technique
  43. Make an unreasonable offer, pretending to believe it is reasonable, to have other side make offer that approaches the ballpark
  44. Conceals your position in case it is overvalued by opposition
  45. Success of negotiation not generally based on the merits
  46. Ethics
  47. Misrepresentation of material facts and overstatement of position, when used to oppress or be unjust, can be a fraud or duress tort
  48. Liability
  49. Liable for fraud when grossly misrepresent the strength of your side or the material facts of your case
  50. Property Transfer Agreement (Earnest Money Agreement)
  51. Statute of Frauds
  52. Property Description
  53. Texas requires a property to be sufficiently described to distinguish it from any other property owned by seller
  54. Other states
  55. Some hold that writing alone must entirely define property
  56. Others hold that an agreement alone, without description, is sufficient
  57. Price or financing should be included
  58. May also include inspection, type of title ownership, warranties, etc.
  59. Conditions Precedent
  60. Financing
  61. Protect buyer
  62. Specific financing requirements, down payment, length of term, etc
  63. Protect seller
  64. Buyer must act reasonably within a reasonable time
  65. Statute of Frauds
  66. Some courts won’t enforce an agreement without specific financing terms
  67. If missing the buyer is obligated to buy, even without suitable financing
  68. If condition is not met, agreement may terminate
  69. Types
  70. Adjustable – rate varies based on T-Bill or other measure
  71. Fixed – Same interest rate for duration of loan (higher than adjustable)
  72. Rollover – pay less, then a large “balloon” payment due at end
  73. Graduated Payments – lower payments gradually increase to higher payments
  74. Inspections
  75. Structural, mechanical, environmental, termite, radiation, etc.
  76. Limited time to procure inspection
  77. Costs usually incurred by the buyer
  78. Should be unambiguous and indicate what happens if the inspection is unsatisfactory
  79. Can it be terminated? Who pays for inspections?
  80. Title
  81. Seller and buyer will have different goals for the title condition
  82. Seller wants termination only if unusual restrictions exist
  83. Buyer wants option to terminate for any restrictions
  84. Free Look concern – when the seller takes the property off the market, the buyer has a free look if there are no conditions obligating him to buy
  85. Good & Indefeasible, marketable, or insurable
  86. Options
  87. For a paid amount, the buyer has an option to back out of the agreement
  88. Should contain all the contract terms for the agreement should the buyer not opt out
  89. Should be precise in indicating the terms of how and when an option can be exercised, how an extension can be implemented, and when the option ends
  90. Oral agreement to exercise option is normally not binding
  91. Escrows
  92. Money is held in trust by an escrowee
  93. Usually $$$ is placed by buyer as the earnest money or by seller as an assurance that property will be adequately remedied
  94. Escrowee is under fiduciary duties to protect
  95. To protect, should have a clause indicating when escrow $$$ can be released
  96. Agreement fixes the escrow amount as liquidated damages for breaches
  97. Escrowee seeks to avoid liability by (1) clause allowing release followed (2) provision limiting liability

VI.  NOTE

  1. Provisions
  2. Negotiable Instrument, Promise to Pay, Interest, Payments, Prepayment, Default, Late Fees, & Acceleration explanations, Right to avoid usury, Parties contact methods, provides for uniform security interest
  3. Interest Rates
  4. Adjustable Rate – how calculated and when changed
  5. Fixed Rate – same rate for the duration of a loan
  6. Caps – maximum and minimum rages, and changes in rate
  7. Payment
  8. Date, time, place, etc.
  9. Prepayment – can you pre-pay with or without penalty
  10. Liability
  11. Borrowers joint and severally liable, even if sale of property
  12. Assumption Sale
  13. New buyer purchases property, assumes loan payments and liability on the note
  14. Estoppel Letter: want lender to indicate balance due and the absence of default
  15. Subject To Sale
  16. New buyer purchases property, assumes loan payments but not liability on note

VII.  DEED