What is the primary purpose of the doctrine of equitable conversion?

The doctrine of equitable conversion primarily serves to treat the property as belonging to the buyer once a contract is signed. This principle operates under the notion that, upon entering into a binding purchase agreement, the buyer is considered to have an equitable interest in the property. This means that while legal title remains with the seller until closing, the buyer assumes the benefits and burdens associated with ownership, including the risk of loss.

This doctrine is essential in real estate transactions because it clarifies the rights of both parties during the period between contract execution and the actual transfer of title. It emphasizes that the buyer is entitled to the property and is responsible for its preservation, thus establishing a legal framework for responsibility and risk management prior to formal closing.

This concept is fundamental in ensuring that the parties understand that the buyer has a vested interest in the property, which can influence various aspects of the transaction, including financing and liability.