Brief Fact Summary.
Defendant Arko Enterprises, Inc. entered into a contract for the purchase of land, soon the land was acquired under eminent domain.
Synopsis of Rule of Law.
A property buyer becomes an equitable owner upon signing the purchase contract under the doctrine of equitable conversion.
Defendant Arko Enterprises, Inc. entered into a contract for the purchase of land. Defendant Jackson paid Arko part of the purchase price upon the contract’s execution and agreed to pay the balance after Arko’s completion of improvements. Jackson was either a trustee for Plaintiffs John T. Wood and E.L. Coleman or a party to a joint venture with plaintiffs. The City of Cocoa acquired the land by eminent domain. Plaintiffs sought a declaration of their rights under the contract and Arko’s reimbursement for the amount paid at the contract’s execution. The judge found in favor of Wood, Coleman, and Jackson. Arko appealed.
Whether a property buyer becomes an equitable owner upon signing the purchase contract under the doctrine of equitable conversion.
Yes. The lower court’s judgment is reversed, and the case is remanded.
It has long been the law of this jurisdiction that the vendor's act in executing a contract to convey the legal title to property upon the payment of an agreed purchase price constitutes the vendee as the real beneficial owner, legal title remaining in the vendor as trustee with the obligation to convey upon compliance with the terms of the contract.View Full Point of Law
The trial court’s result should be affirmed. The doctrine of equitable conversion does not apply to this case. The contract was mostly executory, because Arko was supposed to perform several conditions prior to closing.
In this case, under the doctrine of equitable conversion, a seller holds a property lien that cannot be destroyed by an eminent-domain proceeding. The parties should have contemplated that the land could be taken by eminent domain. Jackson is liable for the full purchase price, less the deductions. If the deductions exceed the purchase price, the excess must be awarded to the buyer.