Contracts
Under the doctrine of equitable conversion in Nebraska, once a valid purchase agreement is signed:
AThe buyer owns legal title to the property
BThe buyer holds equitable title and bears the risk of loss from casualty in most cases✓ Correct
CThe seller retains all ownership interests until closing
DThe lender becomes the equitable owner of the property
Explanation
Equitable conversion holds that once a purchase agreement is signed, the buyer holds equitable title. In many jurisdictions, the buyer bears the risk of loss from casualty damage during the executory period, though Nebraska contracts often address this with risk-of-loss provisions.
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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.
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.
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.
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