What does Lien Theory state about the ownership of property?

Lien Theory asserts that in a mortgage agreement, the property title remains with the mortgagor, who is the borrower or homeowner. This legal concept highlights the distinction between the lien that the mortgagee (the lender) has on the property and the actual ownership of the property. Under Lien Theory, even though the lender has a legal claim (lien) against the property until the mortgage is paid off, the mortgagor retains ownership rights.

This perspective is crucial because it influences how property is viewed in terms of rights and responsibilities. The mortgagor retains the ability to manage and use the property, while the mortgagee has a secured interest that governs the repayment conditions. This theory contrasts with Title Theory, where the lender holds the title until the debt is satisfied. Recognizing the implications of Lien Theory is important for understanding mortgage dynamics, foreclosure processes, and property rights in property law.