What is one major distinction between legal title and equitable title in real estate?

The distinction between legal title and equitable title is foundational in understanding property rights in real estate. Legal title identifies who is recognized by law as the actual owner of the property, possessing full legal rights to it, including the right to use, transfer, or encumber the property. This title is the recognized form of ownership with clear legal documentation, such as a deed.

Equitable title, on the other hand, refers to the individual's interest or claim in the property, even if they do not hold legal title. This can arise in various situations, such as when a buyer has entered into a contract to purchase a property but has not yet completed the transaction. Equitable title grants the buyer the right to enjoy the property and, in essence, to benefit from ownership, despite not being the legal owner on record. This concept allows parties with equitable title to assert certain rights and protections under the law, although they may not have full dispositional rights yet.

Understanding this distinction is crucial in scenarios like foreclosure, where equitable interest may still give parties certain rights, even in the absence of legal title. Legal title and equitable title represent different aspects of property ownership that interact within legal contexts and affect the rights and obligations of the parties involved.