Contracts
In Louisiana, 'equitable conversion' means that once a purchase agreement is signed, the buyer has:
AFull legal title to the property
BAn equitable interest in the property while the seller retains legal title until closing✓ Correct
CThe right to use the property immediately
DAn obligation to obtain insurance before the contract is formed
Explanation
Under the doctrine of equitable conversion, once a binding real estate contract is executed, the buyer has equitable ownership while the seller holds the legal title in trust for the buyer. This affects how risk of loss is allocated if the property is damaged before closing.
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Key Terms to Know
Purchase Agreement
A 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.
Earnest MoneyA 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.
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