Contracts
In New Mexico, 'equitable conversion' under contract law means that once the purchase contract is executed:
AThe seller immediately receives all proceeds
BThe buyer holds equitable title and the seller retains legal title until closing✓ Correct
CTitle passes to the buyer immediately
DThe contract is automatically void after 30 days
Explanation
Equitable conversion holds that upon contract execution, the buyer acquires equitable title (the right to compel specific performance) while the seller retains legal title as trustee. The buyer generally bears the risk of loss.
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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.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA 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.
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