What is the difference between legal title and equitable title?
Legal title and equitable title are two types of title to property in Arkansas. Legal title is the right to own and dispose of a property as recognized by the court and the law. This title is determined by a deed or other document that transfers the ownership from one person to another. Legal title is also known as “fee simple” and it denotes ownership of a property in its entirety. Equitable title, on the other hand, is the right to benefit from a property owned by someone else. This type of title can be granted in situations where someone inherits the property, or where a contract for sale exists but legal title has not yet been transferred. For example, if a buyer has signed a contract to purchase a property and deposits have been made but the closing has not yet occurred, the buyer has equitable title to the property. In Arkansas, equitable title may be inherited via will or intestacy. When a person dies, their legal title is transferred to their heirs but their equitable title remains intact until their estate is settled. Once the estate is settled, either by court order or by agreement of the involved parties, legal title is officially transferred to the heir(s) or beneficiary.
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