Equitable Conversion

The doctrine holds that equitable title passes to the purchaser as soon as the enforceable contract to sell land is entered into, even though it is clear that legal title will remain with the seller until closing and delivery of the deed.

•    Characterization: real property or personal property interest?
•    Risk: If something happens to the property during the executory period that jeopardizes the property’s value or usefulness, who must absorb the risk or sustain the loss?
•    Uniform Vendor and Purchaser Risk Act: If legal title or possession has passed, and there is no fault of the vendor or eminent domain, the purchaser has a duty to pay the price.  If legal title or possession has not passed, vendor bears the risk.
•    TX LAW:  As a practical matter, when the seller can demand specific performance, the risk of loss passes to the buyer.  Typically, the risk allocation is included in the contract.