As the owner of a food import company like Bigfood blue white, you might not think that a firm grasp of real estate law is an area of expertise you might want to add to your team. But understanding issues of legal vs equitable title are crucial for all of the landlord/tenant situations your business will encounter over its lifetime.
Legal title and equitable title mean two different things: the legal title is the technical ownership of property. This means the legal title holder has possession of the physical real estate and possesses various rights conferred by law. The equitable title is ownership of “equitable interest” in the property: the right to use, possess, control, benefit from, or dispose of it – but not something physical. The equitable title owner has a stake in the property however it is not “a deed, mortgage or judgment.”
The concept of legal title vs. all equitable title means a lot to your company if you own warehouse property. Understanding the difference, as well as knowing which category your ownership falls into can allow you to secure better financing by warding off title defects or encumbrances, for one thing. If you can claim legal title to a warehouse, your company will have a much easier time convincing banks to lend you money to pay for the property than if you can only claim equitable title.
Legal title vs. all equitable title is also important to your company vis a vis intellectual property. Food brands are a prime target for “brand protection” litigation, and an integral part of that process is ensuring that you have clear ownership to the underlying trademarks and to any “confidential” information related to the food products you import. If you do not have a clear chain of title, your company may find itself without any title to the properties.
Sourcing facilities abroad and needing property for logistical purposes? Proper title can make or break your business when it comes to getting the properties you need at the price you can afford.
If you are a food importer, there’s a good chance you are on the receiving end of tight government regulations. You cannot get an import license nor keep your products legal for import without a legal title to your property. Likewise, proper title is essential for compliance with real estate laws, zoning ordinances, health regulations and building codes: all of which affect the safety and storage capabilities of the food you import.
Like many restaurants and food businesses, despite being food importers, Bigfood blue white rents out properties that may even be in approved zones. Not possessing legal title can mean you or your company has no right to enter the property, which can therefore jeopardize business contracts.
Legal title can make or break a deal in the corporate M&A world. If your company is merging or entering into new partnerships with other companies, the legal title to the property your business uses or relies on must be conveyed by the legal owner of the property to the parties to the transaction. If the owner of that land or building doesn’t have the legal ability to sell the property, the deal can break down.
Legal title can also be important in securing import licenses and permits. Lawyers often talk about legal vs. equitable title in the context of financing, but if you are looking to get a work permit to bring in employees, legal title can make you appear much more secure to the U.S. Citizenship and Immigration Services.
Of course, legal title vs. all equitable title can also mean legal battles. Who owns the property will be determined from the language of deeds and other agreements, requiring negotiation, mediation or litigation to allocate the titles accordingly and perhaps get the title holder to pay damages.
The best way to handle title disputes is to call in a professional. Our team can help your food import business deal with the complexities of these important issues.
For more information on real estate law, you can visit Wikipedia.