Property Ownership
Kentucky's doctrine of equitable conversion holds that once a real estate contract is signed:
AThe buyer has legal title
BThe buyer has equitable title and the seller holds legal title as a trustee✓ Correct
CThe transaction cannot be cancelled under any circumstances
DThe seller retains all ownership rights until closing
Explanation
Under equitable conversion, once a purchase contract is signed, the buyer is treated as the equitable owner (bearing the risk of loss in most states) and the seller holds legal title in trust for the buyer pending closing.
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Key Terms to Know
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.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
Chain of TitleThe sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
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