1) The net value of real estate, determined by subtracting the amount of unpaid debts secured by the property from its market value. 2) A set of legal principles that operates in addition to statutes and common law and is intended to give judges flexibility to achieve a just result. If traditional legal remedies (which usually involve compensation with money) wouldn't be fair in a particular case, a judge can use an equitable remedie. A court might issue an order (injunction) directing someone to do something or stop doing something. For example, if someone has built a garage that extends over the neighbor's property, a court might order the garage owner to tear it down. By contrast, the legal remedy would be for the owner to compensate the neighbor for the loss in property value. The rules of equity arose in England when the strict limitations of common law would not solve all problems, so the crown set up courts of chancery (equity) to provide remedies through the royal power. Most eastern states had courts of equity or chancery separate from courts of law, but now most states combine law and equity.
FAQs
What does equity mean in simple terms? ›
The term “equity” refers to fairness and justice and is distinguished from equality: Whereas equality means providing the same to all, equity means recognizing that we do not all start from the same place and must acknowledge and make adjustments to imbalances.
What is an example of equity? ›Equity is providing a taller ladder on one side or propping the tree up so it's at an angle where access is equal for both people. A line of people of different heights are watching an event from behind a fence. Equality is giving equal opportunity for each person to get a box to stand on to get a better view.
What is equity to a person? ›Equality means each individual or group of people is given the same resources or opportunities. Equity recognizes that each person has different circ*mstances and allocates the exact resources and opportunities needed to reach an equal outcome. Equality. Equity.
What is equity in business? ›It is the total value of your company's assets, minus the sum of its liabilities. To put it another way, if your company were to go out of business tomorrow and all of your assets were to be liquidated, your equity would be the amount that is divided between shareholders after your creditors have been satisfied.
What basically is equity? ›Equity can have multiple meanings, but at its core means ownership, or more specifically, the value of an ownership stake in an asset or company. Some of the most recognizable forms of equity are ownership in a company or your home's value after subtracting your mortgage balance.
What is equity for dummies? ›Equity is equal to total assets minus its total liabilities. These figures can all be found on a company's balance sheet for a company. For a homeowner, equity would be the value of the home less any outstanding mortgage debt or liens.
How does equity work? ›Equity is the difference between what you owe on your mortgage and what your home is currently worth. If you owe $150,000 on your mortgage loan and your home is worth $200,000, you have $50,000 of equity in your home.
What is an example of equity in your life? ›Another example is when a person with a disability is included in a workgroup with all the necessary accommodations to perform tasks just like other team members. These are just a few ways equity manifests in society, but there are many ways to promote it every day.
What is the synonym of equity? ›Synonyms: justice, objectivity, justness, disinterest. Antonyms: bias, injustice, prejudice, partisanship, partiality, inequity, discrimination.
Is equity good or bad? ›If you lack creditworthiness – through a poor credit history or lack of a financial track record – equity can be preferable or more suitable than debt financing. Learn and gain from partners. With equity financing, you might form informal partnerships with more knowledgeable or experienced individuals.
How do you give someone equity? ›
There are two common ways to grant Common Stock to employees: through stock options or restricted stock. As an early-stage startup, stock options are by far the most common way to grant equity to employees. However, it's important for you to understand the alternative so you can make the best possible decision.
What is equity in a relationship? ›Equity is more about how much we are contributing to the relationship or family than it is about both giving the same thing. If both partners are contributing about the same amount, even though the things they are doing are different, equity can be established.
What is equity in simple words? ›Equity is the amount of capital invested or owned by the owner of a company. The equity is evaluated by the difference between liabilities and assets recorded on the balance sheet of a company. The worthiness of equity is based on the present share price or a value regulated by the valuation professionals or investors.
How to own equity? ›A common way to own equity in a company is to invest in a publicly traded company listed on a stock exchange. For public companies, information about the company is transparent.
What does it mean to own equity? ›Owner's equity is the portion of a company's assets that an owner can claim; it's what's left after subtracting a company's liabilities from its assets. Owner's equity is listed on a company's balance sheet. Owner's equity grows when an owner increases their investment or the company increases its profits.
What is equity short answer? ›Equity is the amount of capital invested or owned by the owner of a company. The equity is evaluated by the difference between liabilities and assets recorded on the balance sheet of a company. The worthiness of equity is based on the present share price or a value regulated by the valuation professionals or investors.
What is a simple way to understand equity? ›Equity can be defined as the amount of money the owner of an asset would be paid after selling it and any debts associated with the asset were paid off. For example, if you own a home that's worth $200,000 and you have a mortgage of $50,000, the equity in the home would be worth $150,000.
What does equity mean in kid words? ›Contrary to what many children believe, equity and equality are not synonymous. By this, we mean that equity does not signify that everyone receives the same thing, whether that be treatment, assistance, gifts, awards, allowance, etc. Instead, equity means that everyone receives the same level of what they need.
What is the word equity short for? ›In a brokerage account, equity equals the value of the account's securities minus any debit balance in a margin account. Equity is also shorthand for stock market investments.