Under which doctrine does the buyer bear the risk of loss between contract formation and possession?

Under which doctrine does the buyer bear the risk of loss between contract formation and possession?

• A. Equitable Conversion (Prop)
• B. Deeds (Prop)
• C. Notice Act (Prop)
• D. Race Act (Prop)

Answer: (A)

The concept being tested is the doctrine of equitable conversion. Once a contract for the sale of real property is formed, the buyer is treated as the owner of the land in equity. That means the risk of loss between contract formation and possession falls on the buyer. If the property is damaged or destroyed before closing, the buyer generally bears the loss, even though the seller still holds the legal title until the deed is delivered. This allocation reflects the idea that the buyer is the equitable owner from the moment the contract is made. The other doctrines listed deal with when title passes or with priority of interest in recording, not with who bears the interim risk of loss. Deeds concepts govern transfer of title, while Notice Act and Race Act relate to whose interest has priority when there are competing claims based on recording.

The concept being tested is the doctrine of equitable conversion. Once a contract for the sale of real property is formed, the buyer is treated as the owner of the land in equity. That means the risk of loss between contract formation and possession falls on the buyer. If the property is damaged or destroyed before closing, the buyer generally bears the loss, even though the seller still holds the legal title until the deed is delivered. This allocation reflects the idea that the buyer is the equitable owner from the moment the contract is made.

The other doctrines listed deal with when title passes or with priority of interest in recording, not with who bears the interim risk of loss. Deeds concepts govern transfer of title, while Notice Act and Race Act relate to whose interest has priority when there are competing claims based on recording.