Contracts
Under the doctrine of equitable conversion, once a real estate purchase contract is signed:
AThe seller is treated as the equitable owner
BThe buyer is treated as the equitable owner of the property (even before closing)✓ Correct
CThe broker becomes a third-party beneficiary
DThe property's title automatically converts to joint ownership
Explanation
Under equitable conversion, once a binding purchase contract is executed, the buyer becomes the equitable owner of the property. The seller retains legal title as trustee until closing, when legal title is transferred.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
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