Equitable Conversion and Risk of Loss

Equitable Conversion and Risk of Loss

Learn who owns the property, and who bears the risk of loss, in the interval between contract formation and the formal closing.


Equitable conversion is a legal doctrine that determines the buyer’s and seller’s property rights during the time between signing the contract and closing the sale. In this lesson, we’ll learn how equitable conversion works and how it affects each party.

I.               Background

Let’s start with some context. A sales contract is binding from the moment it’s signed, but it’s normal for the closing to take place weeks or...