What Is Equitable Interest in Real Estate?
In real estate, equitable interest means a buyer gains certain ownership rights once a purchase contract is signed—even before the deed transfers. The buyer holds the equitable title, while the seller keeps the legal title until closing.
How Equitable Interest Works
When both parties sign a purchase agreement, the buyer’s equitable interest begins. From that point:
- The buyer can enforce the contract if the seller backs out without cause.
- The seller must maintain the property’s condition until transfer.
- The buyer’s rights end if contingencies fail or the contract is canceled.
This concept often overlaps with the MLS status Under Contract.
Why Equitable Interest Matters for FSBO Sellers
Understanding equitable interest helps FSBO sellers know when buyers gain enforceable rights. Once your home is under contract, you can’t accept new offers unless the deal terminates. It’s part of protecting both sides during inspections, financing, and title review.
This knowledge also applies to land flippers who assign or resell contracts—they rely on equitable interest to control property rights before closing.
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