Property Ownership
In Minnesota, the legal doctrine of 'equitable conversion' means that once a purchase agreement is signed:
AThe buyer receives full legal title immediately
BThe buyer holds equitable title while the seller retains bare legal title until closing✓ Correct
CThe seller may not accept other offers
DThe contract is automatically recorded in the public record
Explanation
Equitable conversion holds that once a binding purchase agreement is signed, the buyer's interest converts to equitable title (the right to own) while the seller holds bare legal title as trustee for the buyer. This has implications for insurance, risk of loss, and estate matters.
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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.
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Abstract of TitleA condensed history of a property's title, summarizing all recorded documents and encumbrances affecting it from the earliest record to the present.
Chain of TitleThe sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.
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