Also known as:vendor & purchaser · vendors and purchasers · V&P · vendor-purchaser
Written by attorneys · grounded in primary & secondary sources — see below
The body of law governing contracts for the sale of real property from formation until closing. Equity treats the buyer as owner of the land and the seller as owner of the purchase money once a binding contract exists. A principal consequence is that risk of loss from casualty before closing passes to the buyer at contract formation in jurisdictions following the traditional rule.
Sources & Authorities
How it applies
Common Examples
2
Fire Damage Before Closing
Valor Capital signed a binding contract to buy a warehouse from Voss Shipping for a fixed price with closing set ninety days later. The contract contained no risk-allocation clause. Thirty days after signing a fire destroyed the main building. Valor Capital refused to close at the original price. Voss Shipping sued for specific performance. Because the jurisdiction follows the traditional approach to risk of loss the buyer remains obligated to pay the full price and close despite the destruction.
Seller's Nondisclosure of Defects
Violet Vidal contracted to purchase a residence from Vincente Vukovic. Vukovic knew of a latent structural defect but did not disclose it. Vidal later discovered the defect and sued for rescission. The court held that the vendor's failure to disclose known material defects constituted fraud in the vendor-purchaser relationship and permitted the purchaser to avoid the contract.
When does risk of loss pass from vendor to purchaser under the traditional doctrine?+
Risk of loss passes to the purchaser at the moment a binding contract for the sale of land is formed. The purchaser must still pay the full price even if the property is destroyed before closing unless the contract provides otherwise.
Supporting sources
Does the vendor's duty to disclose known defects survive the contract signing?+
Yes. A vendor who knows of a latent defect that affects the value or desirability of the property must disclose it to the purchaser. Failure to disclose constitutes actual fraud and allows the purchaser to rescind.
Supporting sources
How does equitable conversion affect the parties' creditors?+
After contract formation the purchaser's creditors may reach the equitable interest in the land while the vendor's creditors may reach only the right to the purchase money.
Supporting sources
559 P.2d 1038 (Alaska 1976)Property
…many cases cited therein. See generally, Annot., 59 A.L.R. 632 (1929); An-not., 162 A.L.R. 556, 560-62 (1946); 77 Am. Jur.2d, Vendor and Purchaser, §§ 711 — 13. On the other hand, there is also authority which holds that a quitclaim grantee cannot be a good faith purchaser. See 28 Ore.L.Rev. 258, at 259 n. 2. See also the…