Conversion, Equitable - Definition - Law Dictionary Home Dictionary Definition conversion-equitable

Definition :

Conversion, equitable. It is an established principle that money directed to be employed in the purchase of realty, and realty directed to be sold and turned into money, are considered inequity as that species of property into which they are directed to be converted; and this, in whatever manner the direction is given; whether by will, or contract, marriage articles, settlement, or otherwise; and whether the money is actually deposited, or only covenanted to be paid, or whether the land is actually conveyed, or only agreed to be conveyed, Fletcher v. Ashburner, (1779) 1 Bro CC 497; 1 W&TLC. This principle is governed by the doctrine of equity, that that which ought to be done shall be deemed as actually done.

The property thus equitably transmuted by anticipation will possess all the qualities, incidents, and peculiarities of that kind of property into which it is destined to be changed. See 3 & 4 Wm. 4, c. 74, s. 71.

But the beneficiary, or all the beneficiaries together, provided they are sui juris and unanimous, may elect to take the property in its existing shape before the actual conversion has taken place, and the property is then said to be 'reconverted' [Re Davidson, (1879) 11 Ch D 341]. Slight evidence of an intention so to elect will be sufficient [Re Lewis, (1885) 30 Ch D 656]. Thus, when a person entitled to the fee simple of an estate to be purchased with trust money causes some of the securities for the money to be changed and held in trust for himself, his executors and administrators [Leingen v. Sowray, (1711) q P. Wms. 172]; or where a person entitled absolutely to the money to arise by the sale of real estate makes a lease of the estate, reserving rent payable to himself, his heirs and assigns [Crabtree v. Bramble, (1747) 3 Atk 680], these circumstances have been considered to amount to an election.

The nature of the property cannot be altered by the election of a trustee or an infant. Before 1926 money equitably converted into land descended to the heir upon an intestacy and land converted into money to the personal representatives. The importance of this distinction has been diminished in the case of deaths occurring after 1925, the rule of descent of realty and personalty having been assimilated, s. 45, A.E. Act, 1925, except as to the rights of descent under the old law of the heirs of a lunatic who had attained the age of 21 in 1925 and died intestate without having recovered his testamentary capacity (s. 51 (2) ibid.) and otherwise, cf. ss. 51 (1) and 51 (3) ibid. The doctrine is still of importance in regard to the question whether the property is subject to a trust for sale or whether it is settled land and the rights of persons entitled as residuar, devisees or legatees under wills or settlements, Consult Lewin, Godefroi, or Underhill on Trusts.