Contracts
The doctrine of equitable conversion in real estate means that after a valid purchase contract is signed:
AThe buyer has legal title and the seller has equitable title
BThe buyer is treated as the equitable owner and bears the risk of loss✓ Correct
CThe contract converts to a lease until closing
DThe seller may continue to negotiate with other buyers
Explanation
Under equitable conversion, once a valid, enforceable contract is signed, the buyer is treated as the equitable owner of the property. In most jurisdictions, this means the buyer bears the risk of casualty loss to the property (though Oklahoma contracts typically specify risk of loss provisions).
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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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