Lien Theory

A system used by most states, which practice that a mortgage does not give ownership to the mortgagee (lender). The mortgage only files a lien against the property, but the title remains with the mortgagor. If the mortgagor defaults on the loan, the mortgagee must foreclose on the owner to take possession. However, the defeasance clause reverts the title back to the mortgagor as soon as the loan is paid. Other states follow the title theory and intermediary theory systems. For more information, see the "Mortgage Deed and Promissory Note" article in the "Real Estate In-Depth" section.

Was this article helpful?

0 0
Real Estate Planning And Prosperity

Real Estate Planning And Prosperity

Entrepreneurs go against the flow. You've a business idea. Lots of individuals have business themes. The difference is that you, the entrepreneur, take action. Realty investors are the same.

Get My Free Ebook


Post a comment