In a lien theory state, who retains the title of the property?

In a lien theory state, the borrower retains the title of the property. This means that when a borrower takes out a mortgage to purchase real estate, they hold legal title to the property while the lender retains a lien on the property as security for the loan. This lien allows the lender to take action, such as foreclosure, if the borrower defaults on the loan. The borrower can occupy and use the property as their own, which is a fundamental principle of lien theory.

In lien theory states, the relationship between the borrower and lender is distinct from title theory, where the lender may hold the title until the mortgage is paid off. This characteristic reinforces the borrower's ownership and control over the property, despite the lender's financial interest in it through the lien.

This framework facilitates a clearer understanding of property ownership within lien theory states, emphasizing the borrower's rights and responsibilities in comparison to the lender's security interest in the property.