JPiper’s definition is on the mark here. The buyer’s interest, when a Contract is signed, is known as the equitable title.
Here in the Commonwealth of Virginia, for example, state law actually places the risk of damage to the property prior to settlement on the Buyer - although the standard Realtor’s contracts in use in the state change this to place the risk on the Seller, so if this clause is missing, and you’re buying, look out!
This equitable title interest is also considered to be real property; it can be assigned or transferred, and is binding on the heirs of the Seller and Buyer to complete the transaction, unless otherwise stipulated in the Contract.
Definition of Equitable title - Posted by Les Faison
Posted by Les Faison on October 19, 1998 at 15:01:39:
The following appeared in my investors club newsletter: Flipping property is the process of taking control of a property with equitable title (not physical title). It just hit me that this might refer to the earnest money given to bind the contract. Is this correct? Please tell. Any and all info greatly appreciated.
However, when the buyer and seller have an executed contract signed by both, the buyer acquires an interest in the property called “equitable title”. The rights of the buyer who has equitable title will vary depending on the state.
This does not have anything to do with earnest money.
Equitable title would be that you deserve some equity in a piece of real property because of something you did, such as made a series of payments towards the property, or you considerably raised the market value of the property by making improvements to it.
While equitable title is arguable in court, it is not as secure as having an actual lien, or some other form of recorded instrument against the property.