Equitable Interest

What is a equitable interest?

When a valid purchase contract is signed, the buyer acquires an equitable interest in the property even though legal title stays with the seller until closing. Under the doctrine of equitable conversion, the buyer is treated as the beneficial owner and the seller holds legal title essentially as security for the purchase price.

This equitable interest is a real, assignable property right — it is what a wholesaler assigns when they assign a contract. Because it is a genuine interest in land, it can be protected by recording notice of the contract.

Recording a Memorandum of Contract is the practical way to make that equitable interest visible in the public record so third parties are on notice of it.