Contract for Deed – General – North Dakota
NORTH DAKOTA STATUTES
TITLE 9 CONTRACTS AND OBLIGATIONS
CHAPTER 9-01 GENERAL PROVISIONS
In this title, unless the context or subject matter otherwise requires:
1. A contract is an agreement to do or not to do a certain thing.
2. An obligation is a legal duty by which a person is bound to do or not to do a certain thing.
9-01-02 Requisites of contract
It is essential to the existence of a contract that there should be:
1. Parties capable of contracting;
2. The consent of the parties;
3. A lawful object; and
4. Sufficient cause or consideration.
9-01-03. Executed and executory contracts defined.
An executed contract is one, the object of which is performed fully. All other contracts are executory.
9-01-04. Joint and several contracts.
A promise is presumed to be joint and several when:
1. All the parties thereto receive some benefit from the consideration, whether past or present; and
2. It is made in the singular number but executed by several persons.
NORTH DAKOTA STATUTES
TITLE 9 CONTRACTS AND OBLIGATIONS
CHAPTER 9-02 PARTIES
9-02-01. Persons capable of contracting.
All persons are capable of contracting except minors and persons of unsound mind.
9-02-02. Minors and persons of unsound mind.
Minors and persons of unsound mind have only such capacity as is specified in statutes relating to such persons.
9-02-03. Identity of parties essential to validity.
It is essential to the validity of the contract, not only that the parties should exist, but that it should be possible to identify them.
9-02-04. Third-party beneficiary may enforce contract.
A contract made expressly for the benefit of a third person may be enforced by that person at any time before the parties thereto rescind it.
NORTH DAKOTA STATUTES
TITLE 9 CONTRACTS AND OBLIGATIONS
CHAPTER 9-03 CONSENT
9-03-01. Requisites of consent.
The consent of the parties to a contract must be:
3.Communicated by each to the other.
NORTH DAKOTA STATUTES
TITLE 9 CONTRACTS AND OBLIGATIONS
CHAPTER 9-06 FORMATION OF CONTRACT
9-06-01. Express and implied contracts defined.
A contract is either express or implied. An express contract is one the terms of which are stated in words. An implied contract is one the existence and terms of which are manifested by conduct.
9-06-02. What contracts may be oral.
All contracts may be oral except such as are specially required by statute to be in writing.
9-06-03. Written contract prevented by fraud – Oral contract enforceable.
When a contract which is required by law to be in writing is prevented from being put into writing by the fraud of a party thereto, any other party who by such fraud is led to believe that it is in writing and acts upon such belief to that party’s prejudice may enforce it against the fraudulent party.
9-06-04. Contracts invalid unless in writing- Statute of frauds.
The following contracts are invalid, unless the same or some note or memorandum thereof is in writing and subscribed by the party to be charged, or by the party’s agent:
1. An agreement that by its terms is not to be performed within a year from the making thereof.
2. A special promise to answer for the debt, default, or miscarriage of another, except in the cases provided for in section 22-01-05.
3. An agreement for the leasing for a longer period than one year, or for the sale, of real property, or of an interest therein. Such agreement, if made by an agent of the party sought to be charged, is invalid unless the authority of the agent is in writing subscribed by the party sought to be charged.
4. An agreement or promise for the lending of money or the extension of credit in an aggregate amount of twenty-five thousand dollars or greater.
5.An agreement or promise to alter the terms of repayment or forgiveness of a debt that is in an aggregate amount of twenty-five thousand dollars or greater.
9-06-06. Auction sale – Auctioneer memorandum sufficient.
When a sale of any goods or choses in action is made by auction, an entry by the auctioneer in the auctioneer’s salebook at the time of the sale of the kind of property sold, the terms of sale, the price, and names of the purchaser and person on whose account the sale is made is a sufficient memorandum.
9-06-07. Written contract supersedes oral negotiations.
The execution of a contract in writing, whether the law requires it to be written or not, supersedes all the oral negotiations or stipulations concerning its matter which preceded or accompanied the execution of the instrument.
9-06-08. Written contract takes effect on delivery.
A contract in writing takes effect upon its delivery to the party in whose favor it is made or to that party’s agent.
9-06-09. Law of transfers of property applies.
The provisions of the laws of this state concerning the delivery of grants, absolute and conditional, apply to all written contracts.
9-06-11. Seals abolished.
All distinctions between sealed and unsealed instruments are abolished.
NORTH DAKOTA STATUTES
TITLE 32 JUDICIAL REMEDIES
CHAPTER 32-18 CANCELLATION OF LAND CONTRACTS
32-18-01. Instruments for future conveyance — Cancellation — Owner must give written notice to vendee or purchaser.
No owner of real estate, or owner of any equity therein, who shall make or execute a contract for deed, bond for deed, or other instrument for the future conveyance of any such real estate or equity therein, shall have the right to declare a cancellation, termination, or forfeiture thereof or thereunder, except upon written notice to the vendee or purchaser, or the vendee’s or purchaser’s assigns, as provided in this chapter, and such notice shall be given to such vendee or purchaser or such vendee’s or purchaser’s assigns, notwithstanding any provision or condition in any such instrument to the contrary.
32-18-02. Default- Contents of notice.
Whenever any default shall have been made in the terms or conditions of any such instrument for future conveyance of real estate or equity therein, and the owner or vendor shall desire to cancel or terminate the same, the owner or vendor, within a reasonable time after such default, shall cause a written notice to be served upon the vendee or purchaser, or the vendee’s or purchaser’s assigns, stating that such default occurred and that said contract will be canceled or terminated, and the time when said cancellation or termination shall take effect, which shall be as provided in section 32-18-04.
32-18-03. Notice of default- How served.
Notice of cancellation shall be served upon the vendee or purchaser, or the vendee’s or purchaser’s assigns, in the manner provided for the service of a summons in the district court of this state, if the person to be served resides within the state. If such vendee or purchaser, or such vendee’s or purchaser’s assigns, as the case may be, resides without the state or cannot be found therein, of which fact the return of the sheriff of the county in which said real estate is situated that such person cannot be found in the sheriff’s county shall be prima facie evidence, then such notice shall be served by the publication thereof in a legal newspaper within said county, or, if there is no legal newspaper within said county, then in a newspaper published in an adjoining county and having a general circulation in the county, once each week for three successive weeks.
32-18-04. Time allowed to correct default.
The vendee or purchaser, or the vendee’s or purchaser’s assigns, shall have the following periods of time after the service of notice of cancellation upon such party in which to perform the conditions or comply with the provisions upon which the default shall have occurred:
1.If the amount claimed due under such instrument at the date of notice is more than sixty-six and two-thirds percent of the original indebtedness, the time allowed to correct the default shall be six months.
2.In any other case, the time for correction shall be one year.Upon such performance and upon making such payments, together with the cost of service of such notice, such contract or other instrument shall be reinstated and shall remain in full forceand effect as if no default had occurred therein. If, however, such vendee or purchaser, or such vendee’s or purchaser’s assigns, shall not complete such performance or make such payment within the time periods provided by this section, the contract shall be terminated and shall not be reinstated by any subsequent offer of performance, or tender of payment. No provisions in any contract for the purchase of land or an interest in land shall be construed to obviate the necessity of giving the aforesaid notice and no contract shall terminate unless such notice is given, any provision in such contract to the contrary notwithstanding, but the notice herein required shall not be deemed necessary if the contract in question is sought to be terminated by an action at law or in equity brought for that purpose upon failure to perform. This section shall apply to all instruments for a future conveyance of real estate or an equity therein which are executed on or after July 1, 1971. The time allowed to correct the default shall not be less than one year except in contracts involving an area not to exceed three acres.
32-18-05. Notice of cancellation to be recorded.
In all cases of cancellation by notice of any contract for deed which has been recorded in the office of the recorder, the following documents shall also be recorded in that office: a copy of the notice of cancellation served upon the vendee, together with an affidavit of service and an affidavit of the vendor or the vendor’s assigns that the default of the vendee under the terms of the contract was not cured, after the date of service of such notice, within the time periods provided in section 32-18-04.
32-18-06. Counterclaim – Injunction against canceling contract.
When it shall be made to appear by affidavit of the vendee or purchaser, or the vendee’s or purchaser’s assigns, agent, or attorney, to the satisfaction of a judge of the district court of the county where the property is situated, that the vendee or purchaser, or the vendee’s or purchaser’s assigns, has a legal counterclaim or any other valid defense against the collection of the whole or any part of the amount claimed to be due on such contract, such judge, by an order to that effect, may enjoin the vendor or the vendor’s successor in interest from the cancellation of such contract by notice and may direct that all further proceedings for the cancellation be had in the district court properly having jurisdiction of the subject matter, and, for the purpose of carrying out the provisions thereof, service may be made upon the vendor or the vendor’s assigns or upon the vendor’s attorney or agent.
47-10-01. Method of transfer.
An estate in real property, other than an estate at will or for a term not exceeding one year, can be transferred only by operation of law or by an instrument in writing, subscribed by the party disposing of the same or by the party’s agent thereunto authorized by writing. This does not abridge the power of any court to compel the specific performance of any agreement for the sale of real property in case of part performance thereof.
47-10-02. Sale of realty – Duty of seller.
An agreement to sell real property binds the seller to execute a conveyance in form sufficient to pass the title to the property.
47-10-03. Agreement to give usual covenants on sale – Duty imposed.
An agreement on the part of a seller of real property to give the usual covenants binds the seller to insert in the grant covenants of seizin, quiet enjoyment, further assurance, general warranty, and against encumbrances.
47-10-04. Form of covenants.
The covenants mentioned in section 47- 10-03 must be in substance as follows:
The party of the first part covenants with the party of the second part that the former now is seized in fee simple of the property granted, that the latter shall enjoy the same without any lawful disturbance, that the same is free from all encumbrances, that the party of the first part and all persons acquiring any interest in the same through or for the party of the first part on demand will execute and deliver to the party of the second part, at the expense of the latter, any further assurance of the same that reasonably may be required, and that the party of the first part will warrant to the party of the second part all the said property against every person lawfully claiming the same.
47-10-05. Grants-Execution – Witnesses sufficient – Seal unnecessary.
The execution of a grant of an estate in real property to entitle the same to be recorded, if it is not acknowledged, must be proved by a subscribing witness or as otherwise provided in sections 47-19-23 and 47-19-24. The absence of the seal of any grantor or grantor’s agent from any grant of an estate made in real property shall not invalidate or in any manner impair the same.
47-10-05.1. Presumption of corporate authority of officers – Application.
An officer of any foreign or domestic corporation, or a manager of any foreign or domestic limited liability company, is presumed to have the power and authority to execute and acknowledge, in its behalf, any instrument granting, conveying, or otherwise affecting any interest in or lien upon any property of the corporation or limited liability company, including contracts, mortgages, deeds, plats, replats, easements, rights of way, options, dedications, restrictions, releases, and satisfactions. Any such instrument executed by an officer of the corporation or limited liability company prior to July 1, 1983, and otherwise proper, is valid and effective.
47-10-06. Form of grant.
A grant of an estate in real property may be made in substance as follows:
This grant made the ________ day of ______, in the year of ______, between A.B., of ______, of the first part, and C.D., of ______, of the second part, witnesseth: That the party of the first part hereby grants to the party of the second part in consideration of ______ dollars, now received, all the real property situated in ______, and bounded
(or described) as follows:
Witness the hand of the party of the first part.
47-10-07. Deed – Execution – Post- office and street address of grantee a prerequisite.
Each deed executed in which real estate is described shall contain the post-office address,and any known or existing street address if within the corporate boundaries of a city, of each grantee named in such deed.
47-10-08. Grant conclusive against whom.
Every grant of an estate in real property is conclusive against the grantor and every one subsequently claiming under the grantor, except a purchaser or encumbrancer who in good faith and for a valuable consideration acquires a title or lien by an instrument that first is duly recorded.
47-10-09. Grant valid pro tanto.
A grant made by the owner of an estate for life or years, purporting to transfer a greater estate than the owner could transfer lawfully, does not work a forfeiture of the owner’s estate but passes to the grantee all the estate which the grantor could lawfully transfer.
47-10-13. Grant presumes fee simple title.
A fee simple title is presumed to be intended to pass by a grant of real property unless it appears from the grant that a lesser estate was intended.
47-10-14. Grant takes effect on performance of condition.
An instrument purporting to be a grant of real property to take effect upon a condition precedent passes the estate upon the performance of the condition.
47-10-15. After – acquired title.
When a person purports by proper instrument to convey real property in fee simple and subsequently acquires any title or claim of title to the real property, the real property passes byoperation of law to the person to whom the property was conveyed or that person’s successor. A quitclaim deed that includes the word “grant” in the words of conveyance, regardless of the words used to describe the interest in the real property being conveyed by the grantor, passes after-acquired title. The use of a quitclaim deed, with or without the inclusion of after-acquired title in the deed, does not create any defect in the title of a person that conveys real property.This section applies to any conveyance regardless of when executed.
47-10-16.Reconveyance when estate defeated by nonperformance of condition subsequent.
When a grant is made upon condition subsequent and subsequently is defeated by the nonperformance of the condition, the person otherwise entitled to hold under the grant must reconvey the property to the grantor or the grantor’s successors by grant duly acknowledged for record.
47-10-18. Liability of grantor.
Whoever conveys real estate by deed or mortgage containing a covenant that it is free from all encumbrances, when an encumbrance appears of record to exist thereon, whether known or unknown to that person, shall be liable in an action of contract, to the grantee and the grantee’s heirs, executors, administrators, successors, grantees, or assigns for all damages sustained in removing the same.
47-10-19. Covenants implied from use of word grant.
From the use of the word “grant” in any conveyance by which an estate of inheritance or fee simple is to be passed, the following covenants, and none other, on the part of the grantor for the grantor and the grantor’s heirs to the grantee and the grantee’s heirs and assigns, are implied unless restrained by express terms contained in such conveyance:
1. That previous to the time of the execution of such conveyance, the grantor has not conveyed the same estate, nor any right, title, or interest therein, to any person other than the grantee; and
2. That such estate, at the time of the execution of such conveyance, is free from encumbrances done, made, or suffered by the grantor, or any person claiming under the grantor. Such covenants may be sued upon in the same manner as if they had been inserted expressly in the conveyance.
47-10-20. Attornment – When unnecessary.
Grants of rents, reversions, or remainders are good and effectual without attornments of the tenants, but no tenant, who before notice of the grant shall have paid rent to the grantor, must suffer any damage thereby.
47-10-23. Transfer by grantor to himself and another in joint tenancy.
Any person, firm, corporation, or limited liability company owning a legal or equitable title to or interest in any real property in the state of North Dakota may sell, transfer, and convey the same as grantor to the grantor and any other person, firm, corporation, or limited liability company, including the spouse of said grantor, in joint tenancy, with right of survivorship, without the necessity of any transfer or conveyance to or through any third person.
47-10-23.1. Nontestamentary transfer between spouses — Presumption.
A nontestamentary transfer of real property between spouses shall be presumed to be for a consideration, and not a gift, unless otherwise stated in writing at the time of transfer. This presumption is conclusive.
47-10-24. Description and definition of minerals in leases and conveyances.
All conveyances of mineral rights or royalties in real property in this state, excluding leases, shall be construed to grant or convey to the grantee thereof all minerals of any nature whatsoever except those minerals specifically excluded by name in the deed, grant, or conveyance, and their compounds and byproducts, but shall not be construed to grant or convey to the grantee any interest in any gravel, clay, or scoria unless specifically included by name in the deed, grant, or conveyance.
No lease of mineral rights in this state shall be construed as passing any interest to any minerals except those minerals specifically included and set forth by name in the lease. For the purposes of this paragraph the naming of either a specific metalliferous element, or nonmetalliferous element, and if so stated in lease, shall be deemed to include all of its compounds and byproducts, and in the case of oil and gas, all associated hydrocarbons produced in a liquid or gaseous form so named shall be deemed to be included in the mineral named. The use of the words “all other minerals” or similar words of an all-inclusive nature in any lease shall not be construed as leasing any minerals except those minerals specifically named in the lease and their compounds and byproducts.
47-10-25. Meaning of minerals in deed, grant, or conveyance of title to real property.
In all deeds, grants, or conveyances of the title to the surface of real property executed on or after July 1, 1983, in which all or any portion of the minerals are reserved or excepted and thereby effectively precluded from being transferred with the surface, all minerals, of any nature whatsoever, shall be construed to be reserved or excepted except those minerals specifically excluded by name in the deed, grant, or conveyance and their compounds and byproducts. Gravel, clay, and scoria shall be transferred with the surface estate unless specifically reserved by name in the deed, grant, or conveyance.
NORTH DAKOTA CASE LAW
Where the vendor and purchaser have entered into a contract for the sale of land, and the purchaser is in default, vendor cannot have contract cancelled to enable him to get back the land, and at the same time keep it alive to enable him to get purchase price or any part of it. Dennis v. Pease, 240 N.W. 611, 1932
Where a vendor retakes possession of land sold by an executory contract on the ground of default by the vendee in paying the purchase price according to its terms, he cannot thereafter assert further claims against the vendee on account of the unpaid balance of the purchase price. Id.
A contract for the sale of land cannot be avoided by the vendee in the absence of fraud or mistake unless vendor abandons the contract or fails to comply with its terms. Johnston Farm Investment Company v. Huff, 204 N.W. 333, (1925)
Where defendant went into possession of land under contract to purchase and made improvements thereon, he is not entitled to compensation for such improvements after he forfeited the contract. Id.
A seller may waive his right to cancel a contract for deed upon a buyer’s default if the seller, having a full knowledge of the facts, acts in a manner inconsistent with the right to cancel or forfeit the contract. However, waiver by the seller of the right to cancel a contract cannot be based upon the conduct of the seller which occurred while the seller was acting without a full knowledge of the facts. Sadler v. Ballantyne, 268 N.W.2d 119 (1978)
A purchaser rescinding a contract for deed must offer to account for the rents collected or to pay the reasonable value of the use and occupation of the premises. Alton v. Long, 352 N.W.2d 198
Section 32-18-01 is applicable only where there is an operative and binding contract for deed; where purchaser was required to make a down payment to put the contract into effect and was unable to do so, the contract was never operative, and seller was free to sell the property to another without proceeding under this section.Gerhardt v. Fleck, 256 N.W.2d 547 (N.D. 1977).
Cancellation of a contract for deed by notice pursuant to this chapter is not an exclusive remedy, and the seller may elect to cancel the contract by action whereby written notice of intent to cancel the contract is not required; when a seller chooses to cancel by action, there is not a statutorily prescribed period for redemption and that matter is left within the sound discretion of the district court. Straub v. Lessman, 403 N.W.2d 5 (N.D. 1987).