In law, an equitable interest is an "interest held by virtue of an equitable title (a title that indicates a beneficial interest in property and that gives the holder the right to acquire formal legal title) or claimed on equitable grounds, such as the interest held by a trust beneficiary". The equitable interest is a right in equity that may be protected by an equitable remedy. This concept exists only in systems influenced by the common law (as opposed to civil law) tradition, such as New Zealand, England, Canada, Australia, and the United States.
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Equitable interest in the context of Conveyancing
In law, conveyancing is the transfer of legal title of real property from one person to another, or the granting of an encumbrance such as a mortgage or a lien. A typical conveyancing transaction has two major phases: the exchange of contracts (when equitable interests are created) and completion (also called settlement, when legal title passes and equitable rights merge with the legal title). The electronic execution of conveyancing processes and documents is known as e-conveyancing.
The sale of land is governed by the laws and practices of the jurisdiction in which the land is located. It is a legal requirement in all jurisdictions that contracts for the sale of land be in writing. An exchange of contracts involves two copies of a contract of sale being signed, one copy of which is retained by each party. When the parties are together, both would usually sign both copies, one copy of which being retained by each party, sometimes with a formal handing over of a copy from one party to the other. However, it is usually sufficient that only the copy retained by each party be signed by the other party only — hence contracts are "exchanged". This rule enables contracts to be "exchanged" by mail. Both copies of the contract of sale become binding only after each party is in possession of a copy of the contract signed by the other party—i.e., the exchange is said to be "complete". An exchange by electronic means is generally insufficient for an exchange, unless the laws of the jurisdiction expressly validate such signatures.
Equitable interest in the context of Title (property)
In property law, title is an intangible construct representing a bundle of rights in a piece of property in which a party may own either a legal interest or equitable interest. The rights in the bundle may be separated and held by different parties. It may also refer to a formal document, such as a deed, that serves as evidence of ownership. Conveyance of the document (transfer of title to the property) may be required in order to transfer ownership in the property to another person. Title is distinct from possession, a right that often accompanies ownership but is not necessarily sufficient to prove it (for example squatting). In many cases, possession and title may each be transferred independently of the other. For real property, land registration and recording provide public notice of ownership information.
Possession is the actual holding of a thing, whether or not one has any right to do so. The right of possession is the legitimacy of possession (with or without actual possession), evidence for which is such that the law will uphold it unless a better claim is proven. The right of property is that right which, if all relevant facts are known (and allowed), defeats all other claims. Each of these may be in a different person.
Equitable interest in the context of Assignment (law)
Assignment is a legal term used in the context of the laws of contract and of property. In both instances, assignment is the process whereby a person, the assignor, transfers rights or benefits to another, the assignee. An assignment may not transfer a duty, burden or detriment without the express agreement of the assignee. The right or benefit being assigned may be a gift (such as a waiver) or it may be paid for with a contractual consideration such as money.
The rights may be vested or contingent, and may include an equitable interest. Mortgages and loans are relatively straightforward and amenable to assignment. An assignor may assign rights, such as a mortgage note issued by a third party borrower, and this would require the latter to make repayments to the assignee.