The expression Equitable Title can be applied whenever the ownership involvement in real estate property was held by somebody who doesn’t have legal title. It’s in addition relevant whenever, in the interest of fairness, the true owner of the real estate property needs protection against the feasible adverse effects by the holder of the bare legal title to the property. A good illustration of this is a payment agreement in which the seller retains title to the real estate property between the date of the written agreement and the date when the title deeds are provided for the buyer.
Any time an individual holds the ownership interested in the property but they do not possess the actual title the term Equitable Title can be applied. At times the actual owner of the real estate property needs protection from the title holders and it can be applied here as well. A good illustration of this is an installment written agreement in which the seller retains title to the real estate property between the date of the written agreement and the date whenever the title deeds are delivered to the buyer.
In the course of this period of time, the purchaser may be looked at to hold equitable title to the property even though the seller has been said to hold bare or naked title which bears no ownership rights. The buyer has the right to demand certain performance of the agreement in a court and might exchange the title by deed or assignment and sell or mortgage loan the property. On his death, the title to the real estate property travels on to his legal beneficiaries.
It is essential to understand the difference between equitable title and legal title particularly in the event you are considering the purchase or sale of real estate property. Legal title is a watertight interest in the real estate property and the legal owner has the proper protection of the law if a third party attempts to infringe on his real estate property rights. Legal title gets split up from equitable title in the case of an installment agreement for the sale of the real estate property and the seller transfers equitable title to the buyer in exchange for a legal agreement to make payments punctually. Put simply, it can be stated that equitable title provides the buyer with a financial interest in the property. http://www.realestate.com
You need to note that this difference doesn’t take place in the case of traditional home loans where bank home loans ensure both legal and equitable title. The lender continues to hold an interest in the real estate property until the mortgage has been totally paid back. Any default on the house loan might be penalized by real estate foreclosure. You can think of equitable title as the flip side of the coin associated with legal title. The legal title holder cannot reap the benefits of an appreciation in the price of the real estate property but has the right to defend his title against violation. However, equitable title holders need to recognize the terms of the agreement but are in position to take advantage of any increase in the price of the property. Prospective house buyers must realize that equitable title does not confer complete property rights on the purchaser.