The Real Estate Encyclopedia
Who Holds Legal Title To A Property Until The Loan Is Paid Off?
Category - Home Selling Questions - Selling Legal & Closing FAQ's

In a lien-theory state, the borrower receives the deed to the property at the closing and the lender establishes a lien position on the property by recording the note and mortgage.  Should the borrower default, the mortgage gives the lender the right to foreclose on the property, the note determines how much money the lender can collect and the lien establishes the order in which the lenders are paid.  In a title-theory state, the law construes the lender to have legal title to the property and the borrower to have an equitable title.  Because the lender holds the title to the property, the lender has the right to possession of the property on default.

 
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Home Selling Questions - Selling Legal & Closing FAQ's
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