An equitable interest is an "interest held by virtue of an equitable title (a title that indicates a beneficial interest in property and that gives the holder the right to acquire formal legal title) or claimed on equitable grounds, such as the interest held by a trust beneficiary." The equitable interest is a right in equity that, if violated (suffers a harm), is subject to satisfaction by an equitable remedy

Equitable remedy

Equitable remedies are judicial remedies developed and granted by courts of equity, as opposed to courts of common law. Equitable remedies were granted by the Court of Chancery in England, and remain available today in most common law jurisdictions. In many jurisdictions, legal and equitable...

. This concept only exists in the common law

Common law

Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...

.

Equity

Equity is a concept of rights distinct from legal rights, i.e., "the body of principles constituting what is fair and right (natural law)." It was "the system of law or body of principles originating in the English Court of Chancery and superseding the common and statute law (together called 'law' in the narrower sense) when the two conflict." In equity, a judge determines what is fair and just and makes a decision as opposed to deciding what is legal.

An example of an equitable interest, may be found in a trust. In a trust, the trustee

Trustee

Trustee is a legal term which, in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another...

 has a legal interest in the trust

Trust law

In common law legal systems, a trust is a relationship whereby property is held by one party for the benefit of another...

. However, the beneficiaries

Beneficiary (trust)

In trust law, a beneficiary or cestui que use, a.k.a. cestui que trust, is the person or persons who are entitled to the benefit of any trust arrangement. A beneficiary will normally be a natural person, but it is perfectly possible to have a company as the beneficiary of a trust, and this often...

 to the trust has an equitable interest in the trust. The trustee has the power of attorney

Power of attorney

A power of attorney or letter of attorney is a written authorization to represent or act on another's behalf in private affairs, business, or some other legal matter...

, or legal rights over the trust. Meanwhile the beneficiaries, the holder of the equitable interest has an equitable right in the trust. If the trustee fails to perform his or her duties, then the beneficiary may sue the trustee in equity to perform his or her duties. Such a situation includes the trustee failing to disburse cash from the trust's property, corpus, to the beneficiary. Likewise a trustee may embezzle the trust's property and, although the trustee has a legal interest in the trust, the beneficiary has an equitable interest in the trust and so may sue for the trustee to return the trust's property or reimburse the trust for the value of the property embezzled.

Land Law

An equitable interest over land which is not conveyed correctly may still be effective because of the rule in Walsh v Lonsdale

Walsh v Lonsdale

Walsh v Lonsdale 21 Ch D 9 is an English property law case about the effect of the Judicature Acts. It is the authority for the equitable maxim that "Equity regards as done that which ought to be done"...

. In this case it was held that 'equity looks on as done that which ought to be done' and a contract, which does not meet the requirements of a deed, may be specifically enforced

Specific performance

Specific performance is an order of a court which requires a party to perform a specific act, usually what is stated in a contract. It is an alternative to award/ for awarding damages, and is classed as an equitable remedy commonly used in the form of injunctive relief concerning confidential...

 to convey the equitable interest to the new purchaser. This rule has had a significant impact because it allows interests which have not been conveyed by a deed to still be binding on future purchasers, through the doctrine of constructive notice

Constructive notice

Constructive notice also known as the Doctrine of Constructive Notice is a legal fiction used in the law of both common law and civil law systems to signify that a person or entity is legally presumed to have knowledge of something, even if they have no actual knowledge of it.-Intellectual...

. However, the UK Parliament

Parliament of the United Kingdom

The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...

has weakened the impact of this rule, with the Law of Property (Miscellaneous Provisions) Act 1989 s.2 which requires all contracts for the sale of land (which could be specifically enforceable) to be in writing and be signed by both parties. Any contracts which are not in writing and signed by both parties cannot be specifically enforced, therefore will not create or transfer an equitable interest in land.