Final answer:
The purchaser holds an equitable title once an agreement of sale is signed because it indicates a protected interest in the property under equity laws, despite the legal title not yet being transferred. Only after closing does the purchaser obtain legal title.
Step-by-step explanation:
When a purchaser signs an agreement of sale for real property, the type of title they hold is known as an equitable title. This is because the agreement signifies that the purchaser has an interest in the property that is protected by equity laws, even though the legal title has not been transferred yet. This interest allows the purchaser to obtain specific performance, meaning that a court can order the sale to go through as planned if the seller tries to back out.
The legal title, in contrast, represents full ownership and the right to control the property, which only transfers after the closing of the sale when the deed is executed and delivered. Until this point, the seller retains the legal title. Therefore, while an agreement of sale is in effect, the purchaser's equitable title gives them a right to acquire full legal ownership, pending fulfillment of the contract terms.