• Equitable conversion is based on the maxim that equity regards as done that which ought to be done. The most common situation involves transferring real property as the parties to a contract intended before the seller experienced a change in circumstances, such as marriage or death, that could affect the property’s ownership. When a contract is made, the buyer acquires equitable title to the property, and the seller retains legal title. But the seller’s interest is treated as one in personal property rather than in real property because the seller’s true interest is in the proceeds (usu. personal property such as cash); the legal title is security for the buyer’s payment. Courts usu. apply the doctrine of equitable conversion to recognize the transfer of equitable title, including the right of possession, to the buyer when the contract was signed. The buyer then acquires legal title by performing under the contract. [Cases: Conversion 1. C.J.S. Conversion §§ 2–4.]
equitable conversion
A change in the nature of property so that real property is treated as personal property, or vice versa, in certain circumstances.
