Also known as: executory periods
Written by attorneys · grounded in primary & secondary sources — see below
The interim period between the execution of a land-sale contract and the closing of the transaction. During this interval the contract remains executory because both parties have ongoing performance obligations. Equitable conversion treats the buyer as the equitable owner and the seller as the holder of legal title in trust, shifting benefits such as rents and burdens such as taxes or risk of loss to the buyer.
Edward Everett signed a contract to sell an apartment building to Emma Erickson with closing scheduled ninety days later. After signing but before closing, tenants continued paying monthly rents to Edward. Under equitable conversion the rents belong to Emma as equitable owner, so Edward must account for them at closing.
Eileen Epstein contracted to buy a church property from Elijah Edwards with closing set for sixty days later. Before closing a judgment was entered against Elijah. The judgment creditor could reach only Elijah's interest in the purchase price because Eileen already held the equitable interest in the land.
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The period begins when the parties execute a binding land-sale contract and ends at closing when the deed is delivered. During this interval the contract remains executory because performance obligations are still outstanding.
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The buyer is treated as the equitable owner, so post-contract rents and other benefits belong to the buyer while taxes and risk of loss generally shift to the buyer as well. The seller's creditors can reach only the seller's interest in the purchase price rather than the land itself.
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Yes. In jurisdictions following the traditional rule the risk of accidental loss passes to the buyer at contract formation because the buyer holds the equitable interest. The seller retains only bare legal title as security for payment.
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