Home Law Naked Title (Legal Definition: All You Need To Know)

Naked Title (Legal Definition: All You Need To Know)

What is naked title?

How do you legally define it?

What are the important elements that you must know!

Keep reading as we have gathered exactly the information that you need!

Let’s dig into our legal dictionary!

Are you ready?

Let’s get started!

What is naked title

A naked title (bare title or bare legal title) is having a title to a property without the typical rights associated with full property ownership.

Owning a property comes with a bundle of rights and privileges, such as:

  • Legal title 
  • Easement rights
  • Right of possession
  • Right of use 
  • Alienation rights 
  • Mineral rights 
  • Development rights
  • Farming rights
  • Grazing rights
  • Air rights 
  • Hunting rights 
  • Appearance rights 

These rights may be dissociated and separated from one another where a different person will have a different type of right on the property.

When the legal title is stripped from the other rights associated with the property, we’ll say that the legal title has become “naked” or “bare”.

In other words, the title does not provide the title holder with the full scope of privileges associated with ownership.

We see this quite often when trustees hold properties.

In essence, when a trustee holds the legal title to a property, the law recognizes that the beneficiaries are the ones who truly exercise the ownership rights.

In essence, the beneficiaries have an equitable title in the property while the trustee has a naked title.

Naked title definition

What is the definition of naked title in real estate?

According to The Free Dictionary by Farlex, citing The Complete Real Estate Encyclopedia by Denis L. Evans, naked title is defined as:

Bare legal title to property, carrying with it none of the benefits of ownership. Usually the title held by a trustee, with the beneficiary holding equitable title.
Author

In other words, a naked title is a “bare legal title” giving the title holder none of the rights associated with full ownership.

In essence, the trustee holds the bare title to a property assigned to it by the trustor when the deed of trust is executed.

Example: Mortgage hypothecation

Holding a naked legal title to a property is holding a bare title to a property stripped of the rights and privileges usually associated with property ownership.

You have examples of naked titles held by a trustee in the context of a home loan or mortgage.

This process is called hypothecation.

In some cases, a bank, financial institution or lender may require that the borrower assign the title to a real estate property (like land, home or other) to a trustee until the loan is fully paid off.

A deed of trust will be signed for setting up a hypothecation mortgage where the trustee will have the effective legal title to the property.

The trustee holding the title to the property will have a bare title or naked title to the property until it is required to convey the title to the lender (in the event of default) or reconvey to the borrower (when the mortgage is paid off).

In this example, the borrower (the homeowner), maintains all other rights associated with the property (except for the legal title), such as:

  • Possession of the property
  • Use of the property
  • Occupancy of the property
  • Enjoyment of the asset 

However, if the homeowner defaults on the payment, the trustee may assign the property’s legal title to the lender.

Takeaways 

So what is the bare legal title definition?

How do you define naked title?

Let’s look at a summary of our findings.

Naked Title:

  • Naked title is a person having the legal title to a property without any of the other benefits of ownership 
  • Mortgage hypothecation is a process where a lender requires the borrower’s title to be transferred to a third party (trustee) until the mortgage is paid off
  • A bare title is having the right to transfer and convey title

Related legal terms and concepts

Legal title 
Equitable title
Trustor in real estate 
Hypothecation 
Deed of trust 
Beneficiary
Covenant of seisin 
Deed of reconveyance 
Mortgagor 
Mortgagee 
Title theory 
Power of sale 
Usufruct 
Author
Editorial Staff
Hello Nation! I'm a lawyer by trade and an entrepreneur by spirit. I specialize in law, business, marketing, and technology (and love it!). I'm an expert SEO and content marketer where I deeply enjoy writing content in highly competitive fields. On this blog, I share my experiences, knowledge, and provide you with golden nuggets of useful information. Enjoy!

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