Equitable title represents the interest held by a prospective buyer who has agreed to purchase a property but has not yet completed the transaction.
A Title-Theory State is one in which the law splits the title to mortgaged property into legal title held by the lender and equitable title held by the borrower. The borrower gains full title to the property upon retiring the mortgage debt. In a title-theory state, mortgage lenders may possess the property upon default of the borrower.
