PSI Oklahoma Real Estate Practice Test

Once an agreement of sale is signed, the purchaser has what type of title?

1. Legal title

2. Equitable title

3. Formal title

4. Conditional title

The correct answer is: Equitable title

The correct response is equitable title. When a purchaser signs an agreement of sale, they acquire equitable title in the property. This means they have a right to obtain full ownership (legal title) once the conditions set forth in the sale agreement are satisfied, such as payment or fulfillment of certain contingencies. Equitable title grants the purchaser an interest in the property and the right to enjoy its benefits, although they do not yet have legal title or formal ownership until the transaction is completed, typically at closing. The distinction is essential in real estate as it underscores the rights held by the buyer even before the legal transfer of property occurs. Legal title, on the other hand, represents formal ownership and conveys complete control over the property, which the buyer does not possess until all terms of the sale are fulfilled. Formal title is not a recognized term in real estate, and conditional title is not applicable in this context, as it implies ownership under specific conditions that do not fit the typical nature of a real estate sale following an agreement.