What term describes the portion of a property's total value owned outright by the holder of the title?

The term that describes the portion of a property's total value owned outright by the holder of the title is equity. Equity represents the actual ownership in a property, calculated as the difference between the property's market value and any outstanding debts or liens against it. Essentially, it reflects the value that the owner could potentially sell or leverage if the property were to be sold, making it a crucial concept in real estate ownership and financing.

Equity is important because it signifies the financial stake an owner has in a property and can influence decisions related to refinancing, selling, or borrowing against that property. This understanding of equity is fundamental for anyone involved in real estate, finance, or property management.

Other terms such as equitable title pertain to rights and interests in a property that may not include full ownership but rather a claim to ownership, often seen in contracts for the sale of property. Encroachment refers to an unauthorized intrusion of a structure onto another person's property, while an encumbrance is a legal claim or liability against the property that may affect its value or transferability. Understanding these distinctions helps clarify why equity is the correct term in this context.