Escrow & Title
In Pennsylvania, what is 'equitable title' and who holds it during the executory period of a real estate contract?
AThe title that remains with the seller until closing
BThe buyer holds equitable title (the beneficial interest) from contract execution through closing; the seller retains legal title until the deed is delivered✓ Correct
CEquitable title is held jointly by buyer and seller pending closing
DEquitable title is held by the escrow agent during the closing process
Explanation
Under the doctrine of equitable conversion, once a Pennsylvania real estate contract is signed, the buyer holds equitable title — the beneficial ownership interest. The seller retains legal (paper) title as security for payment until the deed is delivered at closing. This distinction matters for risk of loss (which party bears the risk if the property is damaged before closing?) and estate planning (the buyer's interest is treated as real property; the seller's interest as personal property). Pennsylvania uses the 'risk of loss' rule requiring sellers to maintain insurance through closing.
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