The difference between a car legal title (total ownership) and equitable title (only possession) may seem esoteric, but it is vital that you clearly understand the different meaning of these terms.
Consider your car. Do you own it? Even if it is fully paid off and you have a “Certificate of title” the answer is — NO. You only have a certified equitable title to “use” that vehicle, but the state has total legal title and therefore fully owns and can absolutely control that vehicle. Why do you think it has a state registration and a metal state property control number tag bolted on it?
When you purchase a new car, truck, motorcycle or other “motor vehicle”, one of the documents in the “9-Pack” of forms the car dealer has waiting for you, is one the dealership quickly glosses over and carefully does not elaborate on. Most people are so excited and busy signing their name on all of the paperwork that they don’t question anything on the forms anyway. What this particular document does is “gift” the legal title and total ownership of the vehicle to your State (Department of Motor Vehicles), to whom the original Manufacturer’s Certificate of Origin (MCO) is sent by the dealer.
The MCO is the actual real title, i.e., legal (substance) title. You, as the user, have only “equitable title,” meaning they get the substance and you only get the illusion (equitable liability). You receive a “pink slip” at the end of your car payments, which is a “certificate of title.” A certificate of title is not a title; it is simply a document stating that the real title exists somewhere else and is held by the state corporation. Your new car is now fully owned and registered by the state. That is why they send you a metal license plate with their state name and their unique state property registration number that you must attach to their new vehicle.
NOTE: If you are involved in an accident where the other vehicle is at fault such as you being rear ended — you should always file a claim for damages and a lawsuit against both the other driver (operator) AND the state (actual owner).
If you owned your car (had legal title), you would not have to license, register, or insure it unless you did so voluntarily. However, because the state owns legal title to “your” car, it can force you to pay for the license, registration, insuring, and maintaining (fix tail lights, etc.) of the vehicle. Further, since you are only entitled to possess and drive the vehicle, if you fail to completely meet the state owner’s rules, you can be ticketed, fined, jailed, or compelled to forfeit the vehicle back to the state.
Think not? Check your state’s current law against “grand theft auto”. In Texas, there’s no such crime. Instead, if I take your car, I will be charged with “unauthorized use of a motor vehicle”. Why? Because I can’t steal a car from someone who does not legally own (have legal title to) that car. You merely have the equitable title and therefore equitable right of possession! use of “your” car – not legal title and ownership (real control). Taking “your” car is no more theft than an eight-year old boy “taking” his ten-year old sister’s bicycle. Since neither child actually “owns” their bike, no theft took place. You can’t be robbed of that which you don’t own.
And how do you own something? By paying for it with lawful money (gold & silver). It is legally impossible to repay a loan with modern debt-based currency like Federal Reserve Notes (FRNs). You can not “pay” a debt with another debt. So given that our FRNs and associated forms of funny “money” are all loaned into existence, they are all debt- based (promises to pay) and can not truly “pay” for anything. As a result, it appears that we can not own (buy legal title) to any property purchased with FRNs. Sound crazy? It is.
Without legal title, you have no legal rights to that property, you have no standing in law or access to courts of law (which are intended to determine legal rights). You have only equitable rights and access to courts of equity wherein you have no legal rights and the judge can slap you around however he likes. This flows from the terms of the contract that you signed when you registered and “gifted” your car to the state.
Three forms of title
There is some variation in the names, but essentially they are:
1) legal title (the right of ownership, control and disposal of property);
2) equitable title (the right to use the property); and,
3) perfect or complete title (which contains both legal and equitable combined).
The difference between the three titles can be illustrated by considering a man who has perfect or complete title to a house. He owns the house (has legal title to control it to the exclusion of all others) and he lives in the house (has equitable title to use the house). But he could divide the perfect title to the home into its legal and equitable sub-titles. He could keep ownership (legal title) for himself, and rent the house (equitable title, right of use) to someone else. He could create a trust and place the perfect title into the trust, and divide the sub-titles (legal and equitable) between the trustee (who gets legal title and the obligation of controlling the property) and a beneficiary (who gets the equitable title and the right to use and live in the house).
The point is that not all titles are created equal. You can do some things with legal title that you can’t do with an equitable title. You can do some things with the equitable title that you can’t do with only the legal title. More importantly, contrary to what most people would imagine, not all titles are legal titles (titles of true ownership and control). Some are merely equitable titles which convey an equitable interest in a particular property, but no legal rights. As a result, it’s entirely possible to have a title to piece of property (your car, for example) and assume it’s the legal or perfect title when it’s really just an equitable title.
So if you had only an equitable title to your car, you not only wouldn’t truly own the car, you’d be subject to whatever rules were made for the car by the true owner (the entity – STATE – that held legal title). If the owner said you must have a drivers license, registration and insurance before you could use his car, you’d have no legal basis to argue against the owner’s rules. You could raise the Constitution or even the Magna Charta, but so long as you had only equitable title, you’d be absolutely subject to whatever rules were made by the person or entity that holds the legal title to the car. Those rules are spelled out in the contracts that you signed when you applied for a state driver license and when you registered the car to get a state license plate.
Further, anytime you went to court over an issue involving the car, since you don’t have legal title, your case would be heard in equity where the judge could rule any way he liked. And if the judge happened to work for the same entity (say, the state) that owned legal title to your car, you can see that the judge will always rule in favor of his employer – the state.
Could that happen?
It does happen. Virtually every time.
The reason the state can order you to have license, registration and insurance to drive the car is because it’s not really your car. You only have equitable title a right of use, much like a renter. The state owns legal title to virtually all cars and can thus compel all drivers to obey the state-owner’s rules. Without legal title, you have no legal rights relative to the car, and virtually no defense against any decision reached by a judge in equity based strictly on his conscience.
The same scenario applies to any property, even to your children if you don’t have legal title – with only a certificate of birth.
No legal title. No legal rights. No standing in law. No access to courts of law. Those four phrases are synonymous. To say any one is to imply the other three.
Now you can begin to understand why a legal title is so important !