I know some of you have come to The Budget Socialite to find ways in which you can ‘live richly for less’, after all, that is what this blog is all about. Well I must say, keeping up with real estate prices, and knowing the heights of the housing market just how far you can stretch your budget plays a humungous role in your ability to live richly and within your means. Real estate prices and how you manage/lower your mortgage payment, and successfully maneuver through the many different types of home purchase scenarios is extremely important if you want your home to grow in value over the next 5-10 years. Learning about legal vs equitable title can make the difference between making an intelligent home purchase and doing one that will work against you financially.
While researching another topic I ran across this promoted post over at Legal v. Equitable Title in Real Property that I found to be interesting since it was something I was not too familiar with. It gave a detailed rundown on some of the different purchasing scenarios for real property that I had not considered before and made me think twice about the consequences of buying a home. I suggest you read the article if you are serious about purchasing a home because “who owns legal title to property also has power over how property owned and sold.” Knowing whether you hold legal or equitable title to your property or not will empower you greatly when it comes to making smart buying decisions.
Understanding the meaning behind legal title and equitable title along with how it can affect the money you spend is critical if you want to keep to a budget. Basically legal title is what actually registers on government records as real property ownership, whereas equitable title is what the actual grants of title and deeds provide to the purchaser of property. Legal title must be transferred if you want to officially own a property whether new or used. Equitable title is what allows the buyer to use the property as their own.
So while having legal title may mean less money up front for a home purchase, not understanding the repercussions of selling a home with equitable title could cost you much more in the long run. If a buyer holds equitable title to a property, they do not make a decision on the selling price, the seller does. And, the buyer is bound by the seller’s decisions in the sale of that property. If you don’t hold legal title to a property you cannot make decisions on the sale of that property, and must trust the seller to honestly give you what the home is worth.
The difference between legal vs equitable title is important if you are looking to purchase property to sell later on down the line for a profit. Knowing whether you hold legal or equitable title to a given property will make you much more savvy when it comes time to sell, and this can mean saving you thousands upon thousands of dollars.
For more information on property ownership, you can visit Wikipedia’s page on Property Law.