6.1 Title to Real Estate

Title to Real Estate

Owning title to real property means owning the full bundle of rights that attach to the property, including possession. Legal title is the actual ownership of the property, while equitable title is the right to obtain legal title in accordance with a contract.

• Legal title: Complete ownership, including the right to possess, use, and transfer the property.
• Equitable title: The right to obtain legal title in the future (for example, a buyer under a contract for deed, or a lender under a strict foreclosure clause).

Notice of Title: Proving who owns title can be complex. Courts rely on evidence, and our legal system uses two forms of notice:

• Actual notice: Direct knowledge gained by seeing, hearing, or experiencing evidence (e.g., reading a deed, seeing someone in possession).
• Constructive notice: Legal notice gained by recording ownership documents in public records. The law presumes everyone has knowledge of what’s recorded.

The strongest claim to ownership is when both actual and constructive notice exist.

Transferring Title: Also called alienation, this can occur voluntarily (by sale or gift) or involuntarily (by law or court action).

• Voluntary: Sale or gift (private grant), or by government to a private party (public grant). Transfers use a deed of conveyance or a will.
• Involuntary: Without owner’s consent, such as by descent, escheat, foreclosure, eminent domain, adverse possession, or estoppel.

Check-In Questions

• What is the difference between legal title and equitable title?
  Legal title is actual ownership; equitable title is the right to obtain legal title
  Equitable title gives possession, legal title does not
  Legal title is temporary, equitable title is permanent
  There is no difference
  Show Answer

  Correct Answer: Legal title is actual ownership; equitable title is the right to obtain legal title
  Legal title means full ownership, while equitable title is a contractual right to become the owner.
• What is constructive notice?
  Direct knowledge from visiting a property
  Knowledge presumed by law from recorded documents
  A verbal agreement
  A court order for possession
  Show Answer

  Correct Answer: Knowledge presumed by law from recorded documents
  Recording documents in public records gives everyone constructive notice of ownership.