Equitable Title vs. Legal Title

Quiet title within the context of a partition action in California

A partition action is a court-ordered equitable division of property which brings an end to real estate co-ownership disputes by forcing the sale of jointly owned property. Most properties have clear title, meaning that it is clear who the owners of the property are. However, there are times when it is unclear who the rightful owners of the property are. In these situations, a partition action can encompass a claim by a co-owner who is not named in the deed. Courts and attorneys may refer to this a quiet title action, a constructive trust, a resulting trust, equitable title, equitable ownership, or otherwise. Very often, we see quiet title actions paired with partition actions when the legal ownership of the home is in question.

What is the difference between legal title and equitable title?

Legal title is defined as: “A title that evidences apparent ownership but does not necessarily signify full and complete title or a beneficial interest.” Legal Title, Black’s Law Dictionary (11th ed. 2019).  A deed that has been properly recorded is an example of legal title. By contrast, equitable title is defined as: “A title that indicates a beneficial interest in property and that gives the holder the right to acquire formal legal title.” Equitable Title, Black’s Law Dictionary (11th ed. 2019). An interest held by a trust beneficiary, for example, is considered equitable title.

These two are not mutually exclusive as there are a few instances in which a holder of legal title, known as a the grantee, may not be the true owner of the property, meaning they do not have equitable title.

Filing for a partition action with equitable ownership

The partition statutes make clear that: “The interests of the parties, plaintiff as well as defendant, may be put in issue, tried, and determined in the action.” Code Civ. Proc. § 872.610; see Determination of Interests, 12 Witkin, Summary 11th Real Prop (2022) § 70.

“An equitable interest is sufficient to support a partition action.” Powers v. Powers (1963) 221 Cal.App. 2d 746, 750; see Capuccio v. Caire (1922) 189 Cal. 514, 525–26 (“the legal or equitable owners of their respective interests in said real property,…were, therefore, entitled to institute and maintain this action for the partition of said real property as between themselves and the other co-owners thereof”); Varni v. Devoto (1909) 10 Cal. App. 304, 306 (while “defendants first claim that the plaintiff, being the holder of the equitable and not the legal title to the property, cannot maintain this action; but in this state it is held to the contrary”); Demetris v. Demetris (1954) 125 Cal.App. 2d 440, 445 (“In such action the parties may assert any title they have, legal or equitable, and the court will decree what is equitable and proper”); Murphy v. Crowley (1903) 140 Cal. 141, 145 (“The owner of an equitable title is the owner of real property, and may maintain an action to establish his equitable right, and in the same action obtain a partition of the real property to which he claims a complete title in equity.”).

Indeed, the California Supreme Court found “no reason why the owner of the equitable title may not sue to establish his right, and when so established, if he is a tenant in common, ask for and have a partition of the common estate….” Watson v. Sutro (1890) 86 Cal. 500, 528–29 (finding that “Equity will not permit litigation by piecemeal, but will determine the whole controversy, so as to prevent future litigation”).

In fact, Luco v. De Toro (1981) 91 Cal. 405 set forth clearly “that in this action for a partition there can be no doubt that the parties may assert any title which they have, legal or equitable.”

Filing a quiet title action with equitable ownership

Further, “it is the general rule that the holder of equitable title cannot maintain a quiet title action against a legal owner.” (See G.R. Holcomb Estate Co. v. Burke (1935) 4 Cal.2d 289, 297 (“[i]t has been repeatedly held in this state that an action to quiet title will not lie in favor of the holder of an equitable title as against the holder of a legal title”.) Banks v. Wells Fargo Bank, N.A. (Cal. Ct. App., Apr. 23, 2020, No. A156501) 2020 WL 1950785, at *8, vacated. “The limited exception permitting the holder of an equitable interest to maintain a quiet title action against a legal owner is relatively narrow and has been recognized primarily in cases involving fraud or breach of fiduciary duty by the holder of legal title.” (See, e.g., Strong v. Strong (1943) 22 Cal.2d 540, 545–546 [equitable rights could not be established in quiet title action absent finding of fraud.]) Banks v. Wells Fargo Bank, N.A. (Cal. Ct. App., Apr. 23, 2020, No. A156501) 2020 WL 1950785, at *8, vacated.

Further, according to 5 Witkin, Cal. Procedure (2020) Pleading, § 667, a “Plaintiff who attacks the legal title on equitable grounds is in effect contending that the Defendant obtained legal title by fraud or similar inequitable conduct, and must specifically allege the facts constituting that conduct.”

Is it enough to be an owner on title?

“Of particular significance in this case, record title of the property is not conclusive; it is merely one item of evidence a court considers in addition to any express agreement of the parties regarding their interests in the property or a different understanding of their interests that the court can infer from the parties’ conduct.” Shaffer v. Wallace (Cal. Ct. App., Sept. 25, 2007, No. B189371) 2007 WL 2773841.

Talkov Law's Partition Attorneys Can Help

If you want to end your co-ownership relationship, but your co-owner won’t agree, a partition action is your only option. With seven, full time partition lawyers, Talkov Law is the #1 partition law firm in California and has handled over 300 partition actions throughout California. Every case has resulted in a sale to either a third party or one of the co-owners. Not a single court has denied our clients the right to partition or declared our client to be a non-owner. Plus, for qualified cases, there is no fee until we settle or win your case!

If you're looking to end your co-ownership dispute, contact California's premier partition action law firm by calling Talkov Law at (844) 4-TALKOV (825568) or sending us a message today.

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