Issue: How does the Executory period affect the interest of a pending sale of a piece of property owned by the decedent in California?
| Area of Law: | Business Organizations & Contracts, Real Estate Law |
| Keywords: | Executory Period; Property interest; Equitable conversion doctrine |
| Jurisdiction: | California |
| Cited Cases: | None |
| Cited Statutes: | None |
| Date: | 03/01/2001 |
The time period between the execution of a contract for the sale and purchase of real estate and the closing of the sale (“Executory Period”) creates unique property interests in the parties to the contract. There are three sources of law that may apply to the Executory Period and affect these interests:
1. Contractual Terms – The parties to the contract may expressly determine the specific nature of their interests during the Executory Period.
2. Statute – Some states have specific statutes governing the relationship between the parties during the Executory Period and the nature of their property interests.
3. Common Law Doctrine – Common law doctrines may be applied to equitably determine the parties’ property interests during the Executory Period.
R. Powell, 14 Powell on Real Property § 81.03 (2000). When circumstances change during the Executory Period, the above sources will provide guidance to determine the just result.
The common law doctrine that is generally applied to changed circumstances during the Executory Period of a real estate contract is the equitable conversion doctrine. The equitable conversion doctrine essentially creates an equitable ownership in the property for the purchaser and an equitable ownership in the purchase money for the seller. Powell, supra, ‘ 81.03[1]. When applied, a conversion in interest actually occurs: the purchaser=s interest in the contract is converted to a real estate interest even though the purchaser does not yet have possession or legal title to the property and […]