Contracts
In Texas, the 'doctrine of equitable conversion' holds that after a real estate contract is signed but before closing:
AEither party can back out without penalty
BThe buyer holds equitable title and bears the risk of loss unless the contract provides otherwise✓ Correct
CThe seller retains all risk of loss
DTREC determines who bears the risk
Explanation
Under equitable conversion, once a valid contract is signed, equity treats the buyer as the equitable owner of the property. This means the buyer may bear the risk of loss if the property is damaged or destroyed before closing, unless the contract provides otherwise (as TREC contracts do with a seller's maintenance obligation).
Related Texas Contracts Questions
- The TREC One to Four Family Residential Contract is:
- The Addendum for Property Located Seaward of the Gulf Intracoastal Waterway informs buyers about all of the following EXCEPT:
- In Texas, the TREC contract's 'Acceptance of Property Condition' clause means the buyer is agreeing to:
- A Texas real estate sales contract becomes binding when:
- Under the Texas One to Four Family contract, the default for who pays the escrow fee is:
- Under the TREC residential contract, if the seller makes repairs that are not completed satisfactorily, the buyer's primary remedy before closing is to:
- Under the TREC One to Four Family Contract, if the property does not pass the buyer's inspection and the buyer and seller cannot agree on repairs during the option period, the buyer's right is to:
- The Seller's Disclosure Notice (TREC OP-H) is NOT required for which type of Texas sale?
Practice More Texas Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Texas Quiz →