Legal title: Overview, definition and example
What is legal title?
Legal title refers to the official ownership of property or assets, granting the holder the right to control and transfer the property according to the law. It is distinct from beneficial ownership, where the person benefits from the property, but may not have the legal right to sell or control it.
Why is legal title important?
Legal title is important because it establishes who has the right to make decisions about a property or asset, such as selling, transferring, or using it. Without legal title, someone may not have the authority to act on the property’s behalf, even if they are benefiting from it. It’s essential in determining who can legally enter contracts or take legal actions regarding the property.
Understanding legal title through an example
Imagine a person buys a house. The buyer receives the legal title, meaning they are the official owner of the house, with the legal right to live in it, sell it, or make any decisions regarding the property. If the house is sold to someone else, the new owner would receive the legal title and the associated rights.
In a business context, a company might hold the legal title to assets like patents or trademarks. Even if an employee uses the trademark in their work, the company, as the legal title holder, controls decisions about its use or sale.
Example of a legal title clause
"The Legal Title to the Property shall remain with the Seller until full payment has been made by the Buyer."
Conclusion
Legal title is a fundamental concept in property and asset ownership, as it determines who has the official rights to control and manage the property. It’s crucial for ensuring that transactions and decisions involving assets are legally binding and enforceable. Understanding legal title helps clarify ownership rights and responsibilities in contracts and transactions.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.