Contracts
In Michigan, the doctrine of equitable conversion in a purchase agreement means:
AThe seller can convert the sale to a lease at any time
BThe buyer acquires equitable title upon signing, and the seller holds legal title as trustee until closing✓ Correct
CBoth parties have equal rights after signing
DThe earnest money converts to a non-refundable deposit
Explanation
Upon execution of a valid purchase agreement, the doctrine of equitable conversion vests equitable title in the buyer, while the seller retains legal title as a form of security until the purchase price is paid at closing.
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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.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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.
Math Concepts
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