Equitable title definition

What is Equitable Title?

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. Equitable title provides some level of protection to the holder, as courts can enforce the rights associated with it, even if legal title is not yet held.

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.

In real estate, when a buyer signs a purchase agreement and the seller accepts, the buyer often gains equitable title. This means that while the seller still holds the legal title until closing, the buyer has the right to the benefits of ownership, such as the right to sell the property or the right to force the completion of the sale.

Equitable Title vs. Legal Title

Equitable title is someone’s right to use and enjoy property, while legal title is the actual ownership of the property. Further, someone who has legal title to property also has the right to transfer the ownership of it to another party, which someone with equitable title cannot do.

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