In Title Theory, who holds the title until the mortgage is satisfied or foreclosed?

In Title Theory, the mortgagee, who is the lender, holds the title to the property until the mortgage is either satisfied or the property is foreclosed. This means that the lender has a legal claim to the property and can exert rights over it, which include the ability to take possession in the event of default. The mortgagor, or borrower, retains what is called an equitable interest in the property, but they do not hold legal title.

This arrangement establishes a clear distinction in responsibilities and rights between the lender and the borrower. The lender’s retention of title secures their interest in the property as collateral for the loan, ensuring they have the legal right to take ownership should the borrower fail to meet the loan obligations.

In contrast to this, the other options suggest scenarios that do not align with the principles of Title Theory. For example, the first option of the mortgagor retaining title is characteristic of Lien Theory, where the borrower holds the title but the lender has a lien on the property. The notion that the title is vacant until sold does not reflect the ongoing legal status during the mortgage period, and stating that the court holds title during foreclosure misinterprets the role of the court in the foreclosure process, which typically