Equitable interests

Topics: Property, Ownership, Common law Pages: 9 (3057 words) Published: December 8, 2013

Legal Property Rights, Equitable Property Rights and Personal Rights Explain the difference between Legal property rights, Equitable property rights and Personal Rights.

 In distinguishing legal property right, equitable property right and personal right, the nature of the rights will be discussed. A legal property right, sometimes termed as legal title implies actual ownership of the property whereas equitable property right which is also known as equitable title refers to the actual enjoyment of the property. In the context of equity and trust, a person who owns legal title is known as the trustee whereas a person who owns the equitable title is called the beneficiary. Both legal property right and equitable property right are proprietary in nature, meaning that it is transferable and is capable of binding on a third party, for example, a purchaser.  An example of legal property right and equitable property right is a lease. On the other hand, a personal right is merely personal in nature and is not binding on a third party. A person with a personal right is only able enforce his right against the party which he enters into contract with. An example of personal right is a license.

Equity is a separate body of rules and remedies which has developed alongside the common law. It has aided the protection of different rights and interests of and in relation to property. Although property can be seen as ‘things’, you can have different interests or rights in property depending on the persons relationship to the property and the nature of it.

Property can be seen to be a power relationship between a person and a resource, ownership is seen as the highest interest as you will have absolute power over that item. With full ownership a person is free to do whatever he pleases with that item. (Lawson and Rudden, The law of property (1982) p8) 

Lawson and Rudden identifies three main elements of ownership 1) to make physical use of a thing, 2) right to income from it and 3) power of management, including that of alienation. Although ownership something where nobody else has interest, there are other rights which other person  can enjoy in relation to the owned property, which may limit the owner’s entitlement to do as he wishes, those being personal or proprietary rights.

It is crucial to make a distinction between legal proprietary rights and equitable rights when identifying rights in relation to property. Historically the court of equity (Court of Chancery) and legal proprietary rights enforced by Common law, have operated parallel to facilitate the differences, however after the Judicature Acts 1975 effect has been given to both by the courts.

An equitable right is a ‘right against a particular person, and exists against others only when their relation to that person is such that in conscience they should be subject to duties’ (Williston, 1960). Legal right is concerned with a right enforceable against the world however it can be submitted that this enforceability is limited in its actual scope.

In the law of sales of chattels for instance, possession of legal title passes to the buyer without transfer, if that is the intention of the parties. However in some jurisdictions the seller in possession can destroy the buyer’s right by a resale. (Williston, 1960) Alternatively, where statutory provision is made for giving effective public notice of an equitable right, the equitable owner may acquire rights against the world; this enables one who has an equitable easement or other equitable right in real estate, based on contract, to protect himself against the world.

Having distinguished between equitable rights and legal proprietary rights it can be seen that equitable rights enjoy more rights enforceable against the world with less formalities whereas legal property rights are less enforceable against the world with more formalities.

Equitable rights are those which have been recognised...
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