Question 90

A buyer has equitable title.

In every valid contract for sale, the buyer is granted equitable title, which gives them an interest in the property, allowing them certain rights before the formal transfer of legal title occurs.

A) has equitable title.

This option is correct as it accurately reflects the legal principle that upon entering a valid contract for sale, a buyer receives equitable title. This title signifies the buyer's beneficial interest in the property, even though the legal title has not yet been transferred.

B) must make a down payment.

This option is incorrect because while many contracts may require a down payment, it is not a universal requirement for every valid contract. The necessity for a down payment depends on the terms negotiated between the buyer and seller, not on the validity of the contract itself.

C) has the right of immediate possession.

This option is incorrect as well. Although a buyer may gain the right to possess the property at some point, this right is not guaranteed in every valid contract. The specifics of possession are determined by the contract terms, and immediate possession is not always granted upon signing.

D) must provide for a financing contingency.

This option is also incorrect. A financing contingency is not mandatory in every contract; it is an optional clause that buyers can include if they wish to protect themselves in case financing does not go through. The presence or absence of this clause does not affect the validity of the contract.

Conclusion

The correct answer is definitively A, as it highlights the essential legal principle of equitable title that comes with a valid contract for sale. The other options either misrepresent the rights and responsibilities of a buyer or describe conditions that are not universally applicable in every contract scenario. Understanding equitable title is crucial for buyers to comprehend their rights during the transaction process.