Persons deemed owners: Overview, definition and example
What are persons deemed owners?
Persons deemed owners refers to individuals or entities that, by the terms of a contract, law, or regulation, are considered to have ownership rights over certain property or assets, even if they do not hold legal title to the property. These individuals are treated as owners for purposes of the contract, regulation, or legal proceeding, often due to their control, possession, or financial interest in the property.
For example, a person or entity that has the right to exercise control over the voting rights of shares, even if the legal title to those shares is held by someone else, may be considered a "person deemed owner."
Why are persons deemed owners important?
Persons deemed owners are important because they may hold certain rights and responsibilities associated with ownership, even if they are not the legal titleholder. This concept is used to ensure that the practical realities of ownership, such as control or economic interest, are acknowledged in legal agreements, even if the formal legal title is held by another party.
Including a clause about persons deemed owners in contracts can clarify who is entitled to exercise certain rights (e.g., voting, profit-sharing) or bear certain obligations (e.g., liability, maintenance costs), even if they do not hold the formal title to the property.
Understanding persons deemed owners through an example
A company enters into a lease agreement for office space. The lease specifies that a parent company is deemed to be the owner of the leasehold interest, even though the legal title to the property is held by a subsidiary. The parent company is therefore responsible for fulfilling the lease obligations, despite not owning the property outright.
An example of a persons deemed owners clause
Here’s how a persons deemed owners clause might appear in a contract:
“For the purposes of this Agreement, the Party listed as the controlling shareholder of the property shall be deemed the owner, entitled to exercise all rights associated with ownership, including the right to vote on decisions related to the property, even if the legal title is held by another entity or individual. The deemed owner shall also be responsible for fulfilling all obligations and liabilities arising from the property, unless otherwise specified in this Agreement.”
Conclusion
The concept of persons deemed owners is crucial in situations where practical ownership or control over property or assets is treated as equivalent to legal ownership, even if the individual or entity does not hold the title. By defining persons deemed owners in contracts, parties can ensure that rights and responsibilities are properly assigned, even in complex ownership structures. A well-drafted clause helps clarify who holds control and accountability in such scenarios, preventing ambiguity and ensuring proper enforcement of obligations.
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.