Which type of title reflects a holder's right to acquire formal ownership?

The correct answer, which indicates the type of title that reflects a holder's right to acquire formal ownership, is equitable title.

Equitable title is the interest a person has in property that gives them the right to obtain formal legal title in the future. This concept involves an ownership interest that is recognized and protected in equity, even if the legal title is held by another person. For example, if a buyer enters a purchase agreement for a property, they may have equitable title, which allows them to benefit from the property and seek legal ownership once the contract is fulfilled.

This understanding is crucial because it differentiates between the concepts of ownership and the rights associated with that ownership. In practical terms, while the buyer has equitable title, the seller maintains legal title until the transaction is complete and the deed is transferred.

In contrast, marketable title refers to a title that is free from significant defects and legally sufficient to be accepted by a purchaser, while legal title signifies the formal ownership of the property as recognized by law. Sole title refers to ownership by one individual, as opposed to joint or shared ownership. However, none of these options specifically align with the right to acquire formal ownership in the way equitable title does.