Equitable ownership, equitable assignment, and equitable title are all terms used to describe the transfer of ownership of an asset without the need for a formal legal document. In
securitisation, this type of transfer is often used to transfer ownership of loans to a special purpose vehicle (SPV).
Equitable ownership is a legal concept that refers to the right to possess and enjoy an asset, even if the owner does not have
legal title to the
asset. Equitable assignment is the transfer of equitable ownership of an asset from one person to another. Equitable title is the right to obtain legal title to an asset in the future.
In securitisation, the transfer of ownership of loans to an SPV is typically done by way of an equitable assignment. This means that the original lender still retains legal title to the loans, but the SPV is granted equitable ownership. This allows the SPV to issue securities backed by the loans, without having to go through the time and expense of obtaining legal title to the loans.
The use of equitable ownership in securitisation has a number of benefits. It allows securitisations to be structured more quickly and efficiently. It also allows securitisations to be structured in a way that minimizes the risk of legal challenges.
However, there are also some risks associated with the use of equitable ownership in securitisation. One risk is that the original lender may not be able to enforce its rights against the SPV if the SPV defaults on its obligations. Another risk is that the original lender may not be able to obtain legal title to the loans if the SPV is dissolved.