LEGAL TITLE VERSUS EQUITY TITLE
A legal title refers to the responsibilities and duties the owner has in maintaining, using, and controlling a property. Legal title is the actual ownership of the property. The documented name of the property owner, as visible through the public records, typically describes the person with legal title. Legal title grants true ownership of the property, and all that this entails – the bundle of rights that comes with land ownership.
While a legal title focuses on the duties of the property owner, equitable title refers to the enjoyment of the property. Equitable title is the benefits the buyer will get to use and enjoy when he or she becomes the legal owner. Equitable ownership is not “true ownership.” In other words, someone with equitable title could not argue that he or she was the legal owner or possessor of the property in a court of law. True ownership requires legal title. Equitable title does, however, grant the person more consistent control over the property. That’s right – equitable title can be more important than legal title.
The general rule is that a legal estate in property is enforceable against the whole world while an equitable interest is enforceable against the whole world but a bona fide purchaser for value without notice.
The main difference between an equitable title vs. a legal title is that the latter is the only one that gives actual ownership of the property.
Holding equitable title to real property does not make one the actual owner. The usual rights and obligations that go with ownership are vested in the party who has legal title to the property. This is usually the person (whether an individual or a corporation) whose name appears on the deed to the property.
In a nutshell, equitable title relates to the rights to enjoy the property, while legal title refers to the duties that come with owning the property. The holder of it, for example, may already be able to occupy and use the property. They may also enjoy the fruits of the property, as well as its appreciation in value. On the other hand, the holder of legal title is obligated to pay taxes on the property, unless they executed an agreement to the contrary with the holder.
Only the legal title holder may sell the property, but the equitable title holder may prevent the legal title holder from selling it to a third party. However, the equitable title holder may assign it to a third party, such as when a third party assumes a mortgage agreement. Most states, however, require the consent of the legal owner in order to do this.
EQUITABLE TITLE IN TRUST
Equitable title is the right to the use and enjoyment of assets. The concept often refers to having a financial interest in a property, even if title to it is held by another party. This situation most commonly arises in a trust, where the trustee holds title to property in the trust until a later date, when the property is transferred to one or more beneficiaries. During the trust period, the trustee holds legal title to the property, while the beneficiaries have equitable title in the property. As such, the beneficiaries have a right to any gains in value triggered by the appreciation of the property during the period of the trust.
NB: This article is not a legal advice, and under no circumstance should you take it as such. All information provided are for general purpose only. For information, please contact chamanlawfirm@gmail.com
WRITTEN BY CHAMAN LAW FIRM TEAM
EMAIL: chamanlawfirm@gmail.com
TEL: 08065553671, 08024230080