An equitable interest refers to

• A. A leasehold
• B. An interest created by a contract before closing
• C. A freehold estate
• D. A mortgage

Answer: (B)

An equitable interest is the buyer’s rights in the property that arise from a contract for sale before the deed is delivered. Even though the seller still holds the legal title, the buyer has an equitable title—an interest recognized in equity that gives you the right to obtain ownership and to enforce the contract (often including the ability to compel conveyance). This isn’t a leasehold (a tenant’s possessory right), nor a freehold estate (full ownership with title), nor a mortgage (a lien to secure debt). So the description of an interest created by a contract before closing best fits.