Can an owner take a mortgage on property they have agreed to sell?

The owner can indeed take a mortgage on property they have agreed to sell until the closing. This is rooted in the fact that the seller retains ownership of the property until the sale is officially finalized at closing. Until that point, they are typically free to encumber the property as they wish, which includes taking out a mortgage.

This ability allows the seller to finance other endeavors or obligations. However, it is important to understand that doing so could complicate the sale, as any new encumbrance must be disclosed to the buyer, and lenders may have specific requirements in scenarios involving a pending sale. If the buyer is unaware of the mortgage taken by the seller and it isn't properly accounted for at closing, it could lead to significant legal issues.

The other options imply restrictions that do not accurately reflect the seller's rights prior to the closing of the transaction, leading to a misunderstanding of the legal relationship and responsibilities that exist until the property officially transfers to the buyer.