Unpublished Flashcard
This flashcard is not publicly visible and is only accessible to admin users.
🏠
Real Property • Security Interests in Real Estate
PROP#217
Legal Definition
In title theory states, the mortgagee holds legal title until the mortgage has been satisfied or foreclosed, and is entitled to possession upon demand.
Plain English Explanation
A mortgagee (the lender) can take possession of a property and start collecting rents before foreclosure under certain legal theories, depending on the state. Here's how it breaks down:
(1) Title theory: In title theory states, the mortgage gives the lender legal ownership of the property, while the borrower only has possession until they default. So, if the borrower defaults on the loan, the lender can take possession of the property and start collecting rents before foreclosure because they technically already hold the title.
(2) Intermediate theory: In these states, the lender gets the title to the property when the borrower defaults, but they don’t have ownership until that happens. So, if the borrower misses payments, the lender can step in, take possession, and collect rents before going through the full foreclosure process.
(3) Lien theory: In lien theory states, the mortgage is treated as a lien on the property rather than giving the lender ownership. The borrower keeps title and possession of the property unless and until foreclosure happens. So, the lender cannot take possession or collect rents before foreclosure in these states.
(1) Title theory: In title theory states, the mortgage gives the lender legal ownership of the property, while the borrower only has possession until they default. So, if the borrower defaults on the loan, the lender can take possession of the property and start collecting rents before foreclosure because they technically already hold the title.
(2) Intermediate theory: In these states, the lender gets the title to the property when the borrower defaults, but they don’t have ownership until that happens. So, if the borrower misses payments, the lender can step in, take possession, and collect rents before going through the full foreclosure process.
(3) Lien theory: In lien theory states, the mortgage is treated as a lien on the property rather than giving the lender ownership. The borrower keeps title and possession of the property unless and until foreclosure happens. So, the lender cannot take possession or collect rents before foreclosure in these states.