Sec. 69. Where the contract is for value, and is made by persons competent on both sides to bind themselves, gives rights which the parties may mutually enforce against each other, and its enforcement in terms is practicable and necessary for the purpose of complete justice, a court of equity will ordinarily, in its sound discretion, at the suit of either buyer or seller, decree a specific performance of the agreement by requiring the buyer to pay the price and the seller to execute a deed. (Curwen on Abstracts.)
Sec. 70. Where the contract of sale is silent on the subject, the seller is entitled to the possession of the premises until he delivers his deed and receives payment in full; but the buyer is considered as the equitable owner from the date of the contract and is entitled to any increase in the value of the land, and is subject to the risk of any decrease or loss.
Sec. 71. In Form No. 2, it will be noted that the premises are to be conveyed "free and clear of incumbrances." In California the word "incumbrances" includes taxes, assessments and all liens upon real property.
Sec. 72. In California, the law provides that where the seller inserts in an agreement for the sale of real property, the phrase "to give the usual covenants," he thereby binds himself to insert in the deed, conveying the property, the following covenants: "Seisin," "quiet enjoyment," "further assurance," "general warranty" and "against incumbrances." (See also Chapter on Deeds).
Sec. 73. Where a sale of lands is made by one person to another, and the seller retains the legal title as security for the payment of the remainder of the purchase price, the seller is called the vendor and the buyer, the vendee, and the seller has what is called a vendor's lien on the premises. "A vendor retaining the title may sue at law for the balance of the purchase money, or file his bill in equity for the specific performance of the contract, and take an alternative decree that if the purchaser will not accept a conveyance and pay the purchase price, the premises be sold to raise such money, and that the vendee pay any deficiency remaining after the application of the proceeds upon such sale. The vendor is at liberty to ask either for a decree, directing performance, and in case of refusal, a sale of the premises, or a decree barring the right of the vendee to claim a conveyance under the contract. He may, however, insist upon the sale where the performance is refused, and is not bound to take a mere foreclosure of the vendee's right to a deed." (Sparks vs. Hess, 15 Cal. 186.) See Forms Nos. 4, 5 and 7.
Sec. 74. In the case of a breach of a contract to convey real estate, the detriment caused is deemed to be the price paid and the expense properly incurred in examining the title and preparing the necessary papers, with interest thereon. If the party failing to convey has acted in bad faith, there is also to be added the difference between the price agreed to be paid and the value of the estate agreed to be conveyed, at the time of the breach, and the expenses properly incurred in preparing to enter upon the land. (California Civil Code, Sec. 3306.)
Sec. 75. In case of a breach of a contract to purchase an estate in real property, the detriment is deemed to be the excess, if any, of the amount which would have been due to the seller, under the contract, over the value of the property to him. (Cal. C. C, Sec. 3307.)
Sec. 76. A contract may be extinguished by its rescission, and if the contract has not been recorded, this may be accomplished by the destruction or cancellation of the contract, or of the signatures of the parties liable thereon, by the consent of all such parties. Where the contract has been recorded, its extinguishment may be effected by means of a written instrument of rescission, duly signed and acknowledged by all of the parties liable on the contract, and when such instrument of rescission has been placed of record it becomes notice to all parties that the recorded contract has been extinguished.
Sec. 77. A party who has made a contract, may rescind without the consent of the other parties to the contract, if he finds that his consent was given or obtained by means of duress, menace, fraud or undue influence exercised by or with the connivance of the other party to whom he rescinds or of any other party to the contract jointly interested with the party rescinding, or if the consideration of such other party fails or becomes entirely void, or if such consideration, before being rendered to the party rescinding, fails in a material respect. The party rescinding, upon discovering facts which entitle him to rescind, must rescind promptly, and must restore to the other party everything of value received from him under the contract; or he must offer to restore the same upon the condition that the other party shall do likewise, unless the latter is unable or positively refuses to do so; in other words, the parties must place themselves in the positions in which they were just prior to entering into the contract. (Cal. Civil Code.)
Sec. 78. Every person who has a considerable number of real estate deals to transact, should be sufficiently familiar with agreements of purchase and sale to draw up an agreement such as will fully and clearly set forth the terms of each transaction. In submitting the following forms in this connection, the author does so in the hope that the user will find them concise, pertinent and specially adapted to ordinary transactions of the kind.
Sec. 79. A corporation, with respect to its contracts, is placed on a different footing than an individual. The powers of a corporation are in its Board of Directors. (See Section 87-b-c.) The President or other officer of a corporation cannot give a binding option or other contract for sale of land unless such act is authorized or ratified by the Board of Directors of the Corporation. For form of resolution authorizing such sale see Form No. 12.