Equity Legal Meaning and Definition

Here is a simplified definition of the legal term Equity.

Equity (noun)

1. A principle of fairness and justice, employed by courts to provide fair solutions which the strict rules of common law may not allow. Courts can apply equity by: altering property lines, seizing assets, enforcing a lien, dividing assets, or preventing potential harm via an injunction (a court order to perform or refrain from an action). The concept originated in England to counteract the rigid limitations of the common law.

2. The financial value of a property after deducting any outstanding secured debts. This is calculated by subtracting any unpaid debts which are secured against the property from the property's appraised value.