legal
Legal Title
The formal recorded ownership of property, evidenced by a deed and held by the seller in a contract for deed until full payment.
In depth
Legal title is the public, recorded ownership of real estate, demonstrable by deeds in the chain of title and tax assessor records. The legal title holder has the apparent right to convey, encumber, and transfer the property. Misconception: legal title alone does not guarantee absolute ownership; equitable claims, tax liens, and easements can all impair the holder's freedom of action. Practically, in a contract for deed, the seller retains legal title until the buyer satisfies the payment terms, then conveys via a warranty deed. The seller can be sued for damages or specific performance if they encumber the property in ways that impair the buyer's eventual ability to take clear title. Title insurance helps protect against legal title defects.
Educational content only. Definitions reflect typical usage in US owner-finance and FSBO transactions; statutes and case law vary by state. Consult a licensed real-estate attorney for fact-specific guidance.