Property ownership goes beyond simply purchasing a property and having complete control over it. There are circumstances where someone may have a legitimate interest in property, without being the legal owner of it. To account for this, there are two different types of title – legal and equitable. In this article, we’ll explain the less-common equitable title, and what it means.
Before understanding what an equitable interest is, we must first understand why it can arise. Equitable interests arise where there is an interest in a property, albeit the party with the interest does not have legal title. Legal title is the true and enforceable ownership of a property. This cannot easily be overridden, save for when an equitable interest exists.
A legal title carries with it many responsibilities such as maintaining, using, and controlling a piece of property. A common example of this is found in the Torrens title system of land ownership, where a legal interest is registered on the title of the property. Although this type of ownership appears to be absolute, there are circumstances where this can be challenged. This is what is called an ‘equitable interest’.
An equitable interest arises where there is an interest in the property, but no legal title exists. However, this title is not “true ownership”, and ordinarily, this type of interest can be overridden by legal ownership. The only way an equitable interest can be enforced is by the Court.
