Property law
Part of the common law series
Types
Personal property Community property Real property Unowned property
Acquisition
Gift Adverse possession Deed Conquest Discovery Accession Lost, mislaid, and abandoned property Treasure trove Bailment License Alienation
Estates in land
Allodial title Fee simple Fee tail Life estate Defeasible estate Future interest remainder Concurrent estate Leasehold estate Condominiums Real estate Land tenure
Conveyancing
Bona fide purchaser Torrens title Strata title Deeds registration Estoppel by deed Quitclaim deed Mortgage Equitable conversion Action to quiet title Escheat
Future use control
Restraint on alienation Rule against perpetuities Rule in Shelley's Case Doctrine of worthier title
Nonpossessory interest
Lien Easement Profit Usufruct Covenant Equitable servitude
Related topics
Fixtures Waste Partition Practicing without a license Property rights Mineral rights Water rights prior appropriation riparian Lateral and subjacent support Assignment Nemo dat Quicquid plantatur Conflict of property laws Blackacre Security deposit
Other common law areas
Contract law Tort law Wills, trusts and estates Criminal law Evidence Higher category: Law and Common law
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Equitable doctrines
Doctrines
Equitable conversion Estoppel Hotchpot Knowing receipt Laches Marshalling Unconscionability Undue influence Subrogation
Defences
Bona fide purchaser Clean hands
Equitable remedies
Account of profits Constructive trust Declaratory relief Injunction Rectification Rescission Specific performance
Related
Court of Chancery Equitable interest History of equity Maxims of equity Tracing Trust law
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Equitable conversion is a doctrine of the law of real property under which a purchaser of real property becomes the equitable owner of title to the property at the time he/she signs a contract binding him/her to purchase the land at a later date. The seller retains legal title of the property prior to the date of conveyance, but this land interest is considered personal property (a right to the payment of money, rather than a right to the property ^[1]). The risk of loss is then transferred to the buyer – if a house on the property burns down after the contract has been signed, but before the deed is conveyed, the buyer will nevertheless have to pay the agreed-upon purchase price for the land unless the seller in possession or deemed in possession has failed to protect it. Such issues can and should be avoided by parties by stipulating in the contract who will bear the loss in such occurrences. The above rule varies by jurisdiction, but is the general rule.

Effect of death of a party

If one of the parties dies after the contract for sale of the property has been executed, the doctrine will govern how that party's interest will pass to his heirs. For example, the seller wills his real property to his son, and his personal property to his daughter. If the seller dies after a contract for conveyance is signed by a buyer, the seller's interest in the land will be treated as personal property, and the proceeds of the sale will pass to his daughter. In most jurisdictions, the real property interest created by the contract will pass to the buyer's heirs, while the seller's personal property interest created by the contract will pass to the seller's estate.

The State of New York does not recognize equitable conversion. In New York, as long as the buyer is without fault, the risk of loss remains on the seller until the buyer takes title or possession.

Uniform Vendor and Purchaser Risk Act

A growing minority of States have adopted the Uniform Vendor and Purchaser Risk Act (UVPRA) in one form or another. ^[2] The UVPRA bases the legal consequences of no-fault casualty loss on the right of possession of the property at the time the loss occurs. See Brush Grocery Kart v. Sure Fine Market, 47 P. 3d 680 (Colo. 2002). Generally, the provisions of the UVPRA can be modified or avoided in the Land Sale Contract.

The "Massachusetts Rule"

In Massachusetts and a handful of other states, the seller continues to bear the risk until the title is actually transferred to the buyer, unless there is an agreement to the contrary. See Brush Grocery Kart v. Sure Fine Market, 47 P. 3d 680 (Colo. 2002).

References