What distinguishes the buyer's ownership right in a scenario where the title is with the seller but funds are stolen?

In the scenario where the title is held by the seller but the buyer has made a purchase agreement, the concept of equitable conversion is key to understanding the buyer's rights. Equitable conversion refers to the doctrine in which, at the moment of entering a valid purchase contract, the buyer is considered the equitable owner of the property, even if the legal title remains with the seller. This means that if funds are stolen either before or during the transaction, the buyer's ownership rights may still be recognized depending on the timing of the theft in relation to when the buyer's rights were established.

In practical terms, if a theft occurs after the buyer has entered into the purchase agreement but before the title is transferred, the loss may not affect the buyer's rights because they have an equitable interest in the property. The equitable interest can protect the buyer in a variety of legal circumstances, allowing them to assert claims to the property even if legal ownership has not yet transferred. Therefore, the principle that addresses this situation is equitable conversion and its implications regarding ownership rights at the time of the theft.