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Joaquín, an excited buyer who is looking to purchase his first home. In his search, he finds the perfect home through Allison, an experienced real estate agent who has been helping people like Joaquín find their dream homes.
A common question that arose during his purchasing process was: “What type of interest does Joaquín acquire once he signs a real estate sales contract with Allison?” The key answer was “Equitable title“.
The Meaning of “Equitable title“
When Joaquín and Allison sign a real estate sales contract, Joaquín acquires an interest in the property known as “Equitable title" either "ownership in equity“. This means that, although legal title to the property has not yet been transferred, Joaquín has rights and benefits linked to the property.
Right to Specific Performance
An essential aspect of equitable title is that, if Allison fails to perform her obligations under the contract, Joaquin has the right to seek a “specific performance“. This implies that Joaquín can legally request that Allison transfer legal title to the property once payment of the agreed price in the contract is made.
If the seller defaults and the buyer can show good faith performance, the buyer can sue for specific performance, that is, to compel the seller to transfer legal title upon payment of the contract price.
Requirements for Specific Performance
So that Joaquín can achieve possible success in a lawsuit for specific performance, certain requirements must be met:
- Good Faith Performance (good faith performance): Joaquín must demonstrate that he acted in good faith and fulfilled his obligations under the contract.
- Allison's Disability: Allison must be in breach of contract due to an unwillingness or inability to transfer legal title.
- Remediable Damage: Joaquin must demonstrate that damages resulting from Allison's breach cannot be adequately compensated by monetary damages and that the only just remedy is the transfer of title.
Protection of Joaquín
He "Equitable title” provides protection to Joaquín by giving him a solid legal basis to seek a transfer of title in the event that Allison defaults on the contract. This protection is essential to ensure that Joaquín has a recourse in case of problems during his real estate purchasing process.
In summary
In Joaquín and Allison's experience, once the real estate sales contract was signed, Joaquín acquired an interest known as “”Equitable title“. This interest provides Joaquín the right to seek specific performance if Allison fails to meet her contractual obligations. This situation exemplifies the importance of “Equitable title” in the real estate purchasing process, ensuring that each transaction is carried out fairly and equitably.
