In most jurisdictions, who bears the risk of loss during a transaction according to equitable conversion?

In most jurisdictions, under the doctrine of equitable conversion, the buyer bears the risk of loss during a real estate transaction once the contract is signed and the title has not yet transferred. This legal principle establishes that, although the seller holds legal title, the buyer is considered the equitable owner of the property.

At the moment the purchase agreement is executed, the buyer assumes the benefits and burdens of ownership, which includes the risk of physical loss or damage to the property. This means that if the property is damaged or destroyed before the closing, the buyer must typically still go through with the sale and pay the agreed price. This principle is rooted in the concept of equity, which aims to uphold the intent of the parties in a transaction and protect the interests of the buyer, who has already committed to the purchase.

This understanding of risk during the sales process underscores the importance for buyers to consider insurance or safeguards during the period between contract signing and closing. Various jurisdictions may have additional statutes or rules that could inform how risk is allocated, but the general rule under equitable conversion places that responsibility upon the buyer.