medium · National Real Estate Exam contracts
A buyer and seller enter into a valid written purchase agreement. Two weeks before the scheduled closing, the house is destroyed by a fire.
Under the common-law doctrine of equitable conversion, who typically bears the risk of loss, and why?
- The seller, because they still hold legal title to the property until the deed is delivered.
- The buyer, because they acquired equitable title the moment the contract was signed.
- Both parties equally, as the contract remains executory and neither holds full ownership.
- The insurance company, because the contract is automatically voided by the destruction of the improvements.
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