Example of common law title prevailing over equitable title
Stan has given property to terry to be held on trust for Ursula. As we have already seen, Terry will have a legal (that is, common law) title to the property, whereas Ursula’s right is equitable . suppose that Terry sells the trust property to Vera, who buys it in good faith and without any knowledge of Ursula of Ursula’s claim to the property In such a case, vera would become the legal owner of property ,leaving Ursula with an action for damages for breach of trust against Terry.
If, however, vera had notice of Ursula’s interest in the property ,vera’s claim would be defeated.
Since trusts are by no means the only situations where a person may obtain equitable title to property (for example, an informal assignment of an insurance policy as security for a debt may give an equitable title to the assignee),students who go to work in a financial services environment may frequently encounter equitable titles to property.
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