ContractsIntermediateArizona Exam

Equitable title in an Arizona real estate transaction refers to:

AThe right to receive legal title after a contract is signed and before closingCorrect

BEqual undivided shares of the property granted to joint tenants under a joint tenancy deed, giving each tenant an identical legal interest in the whole property

CThe appraised value of the property's title rights as determined by a licensed appraiser, used by courts to calculate just compensation in eminent domain proceedings

DA title cleared of all liens, encumbrances, and adverse claims, certified as marketable by a licensed Arizona title insurance company before it is conveyed

Why The right to receive legal title after a contract is signed and before closing Is Correct

Answer A: The right to receive legal title after a contract is signed and before closing

Once a valid purchase contract is signed, the buyer acquires equitable title—the beneficial interest in the property and the right to receive legal title upon completion. The seller retains legal title until the deed is delivered at closing.

Exam Tip: Contracts

Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.

Key Contracts Terms in This Question

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

Encumbrance

Any claim, lien, charge, or liability attached to real property that affects its value or limits its use.

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

Title Insurance

Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.

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Key Terms to Know

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

Encumbrance

Any claim, lien, charge, or liability attached to real property that affects its value or limits its use.

Earnest Money

A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.

Contingency

A condition in a purchase contract that must be satisfied before the sale can proceed to closing.

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