Also known as: legal title · equitable title · legal title vs equitable title · bare legal title
Written by attorneys · grounded in primary & secondary sources — see below
A distinction in property law between formal ownership recorded in a deed and the beneficial interest recognized in equity. The party holding legal title often acts as trustee for the party possessing the equitable interest, which carries rights to possession, rents, and risk allocation during the executory period.
Luke Latham signed a contract to buy a warehouse from Lone Peak Energy. Before closing a fire destroyed the structure. Under the majority rule Luke bears the loss and must complete the purchase while Lone Peak Energy holds legal title only as trustee.
Lucia Lopez contracted to purchase a farm from Legacy Motors. Lightning struck the barn before the deed was delivered. Equity treats Lucia as owner so she cannot rescind and Legacy Motors holds legal title merely as trustee for her benefit.
Lillian Locke agreed to buy an apartment building from Linden Bank. Before closing a tenant paid rent directly to the bank. The bank must account for the rents to Lillian because she holds the equitable interest while the bank retains only legal title in trust.
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Lena Lawson granted a mortgage on her office building to Lexicon Media under a title-theory jurisdiction. After default the lender claimed immediate possession. Because the mortgagee holds legal title Lena retains only an equity of redemption and the lender may take possession without foreclosure.
Landon Long purchased a retail strip center from Lone Peak Energy under an installment land contract and paid forty percent of the price. When Landon defaulted the seller sought forfeiture. The seller still holds legal title while Landon possesses only an equitable interest subject to state foreclosure protections.
Latoya Lane executed an absolute deed conveying her ranch to Linden Bank to secure a loan. After repayment the bank refused to reconvey. Parol evidence showed the deed was security only so Latoya retains an equitable right of redemption and the bank must restore legal title upon satisfaction of the debt.
Under the majority rule the buyer bears the risk once the contract is formed because equitable conversion treats the buyer as owner. The seller holds legal title only as trustee and cannot avoid the contract merely because improvements are destroyed.
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The mortgagee receives legal title while the mortgagor retains only an equity of redemption. Upon default the mortgagee may take possession without foreclosure because it already holds the legal estate.
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The buyer receives equitable title and possession while the seller retains legal title until the final payment. Upon default the seller may pursue forfeiture or foreclosure depending on state law.
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The grantor keeps an equitable right of redemption even though legal title passes to the grantee. Parol evidence is admissible to prove the deed was intended only as security and the grantee must reconvey upon repayment.
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…of completion of the appointment and that the appointment conferred a legal right to the office for five years; (2) having this legal title he has a consequent right to the commission and a refusal to deliver it is a plain violation of that right for which the laws afford him a remedy. Third, is he entitled to the remedy for…