Legal Definitions - title

In legal terms, title refers to the comprehensive legal right to own, possess, and control a specific piece of property or an asset. It represents the sum of all rights a person has over that property, confirming their ownership and allowing them to use, sell, or transfer it. While often associated with real estate, title applies to various types of property, from vehicles to intellectual property.

There are two primary types of title:

• Legal Title: This is the formal, documented ownership of property, typically recorded in public records. Holding legal title means you have the full authority to exercise all ownership rights, such as selling the property, developing it, or granting others permission to use it. For real estate, legal title is usually evidenced by a deed.
• Equitable Title: This refers to the right to enjoy and benefit from a property, even if the formal legal ownership has not yet been fully transferred or recorded. A person with equitable title has a beneficial interest in the property and can often compel the legal title holder to transfer full ownership to them under certain conditions, such as completing a purchase agreement.

Examples:

• Real Estate Purchase Agreement: Imagine Sarah signs a contract to buy a house from John. She pays a deposit and is allowed to move in before the official closing date, which is scheduled for next month. At this stage, Sarah holds equitable title. She has a contractual right to the property and can enjoy its use, and John is legally obligated to transfer full ownership to her. John, however, still holds legal title until the closing occurs and the deed is formally transferred and recorded in Sarah's name. Once the closing is complete, Sarah will then hold both legal and equitable title.

• Vehicle Ownership: When David purchases a new car from a dealership, he completes the payment and paperwork. A few weeks later, he receives a certificate of title for the car from the Department of Motor Vehicles (DMV) in his name. This certificate serves as proof of David's legal title to the vehicle. This document formally establishes his ownership, allowing him to register the car, sell it, or make modifications. Without this title, he would not have the legal right to claim full ownership or transfer it to another person.

• Property Held in a Trust: An elderly couple, the Millers, decide to place their vacation home into a revocable living trust for the benefit of their children. The trust document names a bank as the trustee. In this scenario, the bank, as the trustee, holds legal title to the vacation home; its name appears on the deed in public records. However, the Millers' children, as the beneficiaries of the trust, hold equitable title. They have the right to benefit from the property according to the terms of the trust (e.g., use it, receive rental income), even though they do not hold the formal legal ownership themselves. The trustee manages the property for their benefit.