This article describes the differences between Legal Ownership and Equitable Ownership.
Legal Ownership
-
The concept of legal ownership has arisen from the rules of common law.
-
Illustration: A has given loan to X, who executed a promissory note in favor of A. A is the legal owner of loan.
-
A legal owner is a trustee for the equitable owner in the eye of equity.
-
Legal ownership is certain.
-
Where these two rights conflict, legal ownership prevails.
-
A legal mortgage of land must be created by deed.
Equitable Ownership
-
The concept of equitable ownership has arisen from the rules of equity.
-
Illustration: B is the equitable owner of the debt.
-
The common law does not recognize the equitable ownership at all.
-
Equitable ownership is uncertain.
-
When these two rights conflict with each other equitable ownership becomes weaker than legal ownership.
-
An equitable mortgage may be created by a written agreement or by a deposit of title-deeds.