medium · National Real Estate Exam
A buyer and seller sign a binding purchase agreement for a residential property. Two weeks before the scheduled closing, a lightning strike causes a fire that destroys the detached garage.
If the jurisdiction follows the traditional common law doctrine of equitable conversion and the contract is silent on the matter, what is the legal result?
- The buyer must proceed with the purchase at the full contract price because they hold equitable title.
- The buyer may rescind the contract and recover their earnest money without penalty.
- The contract is automatically voided due to the destruction of the improvements.
- The seller is responsible for the loss because they still hold legal title and possession.
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