Equitable title is created when the contract is signed and the buyer has an interest in the land.

• A. upon signing
• B. upon closing
• C. when deed is recorded
• D. only when the mortgage is paid

Answer: (A)

Equitable title is created when the contract is signed and the buyer has an interest in the land. Once a binding contract is in place, the buyer has a recognized, enforceable interest in the property even though the seller still holds legal title until the transfer occurs at closing. This equitable interest gives the buyer certain rights (like the ability to sue for specific performance if the seller backs out) and creates obligation on both sides as performance heads toward closing. The deed and legal title pass only at closing, when the transfer is completed. Recording the deed later affects notice and priority but does not create the buyer’s equitable interest. Paying off the mortgage doesn’t establish or transfer title either. So the moment the contract is signed is when equitable title arises.