Wisconsin Real Estate Sales Practice Exam

What type of title does the buyer hold during a land contract?

1. Vendee - legal title

2. Vendee - equitable title

3. Vendor - legal title

4. Vendor - equitable title

The correct answer is: Vendee - equitable title

In the context of a land contract, the buyer holds equitable title. This arrangement is unique because, in a land contract, the buyer (often referred to as the vendee) makes payments to the seller (the vendor) for the purchase of the property, while the seller retains legal title until the contract is fully executed and the buyer fulfills all payment obligations. Equitable title gives the buyer certain rights to the property, such as the right to occupy and use it, even though they do not hold the legal title yet. This means that while the buyer is not the legal owner of the property during the term of the land contract, they do possess a beneficial interest in it. Once all terms of the contract are met, the seller will transfer legal title to the buyer, completing the transaction. Understanding the distinction between legal and equitable title is crucial in real estate transactions, especially in the context of land contracts, as it impacts both the rights and responsibilities of the parties involved.