Table of Contents
Which states are lien theory states?
These are the states where mortgage laws are defined by lien theory:
- Arkansas.
- Connecticut.
- Delaware.
- Florida.
- Hawaii*
- Illinois.
- Indiana.
- Iowa.
What is a lien theory state?
What is lien theory? In lien theory states, the borrower holds the title to the property. Instead of a Deed of Trust, a Mortgage is recorded in the public record and acts as a lien against the property until the debt is paid off.
What is the difference between lien theory state and title theory state?
As we all know, real estate laws vary state by state. In title theory states, banks or mortgage lenders hold the title of a property until it is paid in full. In lien theory states, however, banks or mortgage lenders never retain title to the property.
What is a title theory state?
In title theory states, the borrower does not keep the title to the property during the loan term. The seller gives the buyer a deed to the property, but when the borrower signs the mortgage for the loan, the borrower gives the title back to the mortgage holder (lender).
Is New York a lien theory or title theory state?
Lien Theory States 2021
| State | Mortgage Theory |
|---|---|
| New York | Lien |
| New Mexico | Lien |
| New Jersey | Lien |
| Maryland | Lien |
Is Florida a lien theory state?
Lien Theory and Judicial Foreclosure Florida, along with slightly fewer than half of the United States, is a “lien theory” state. This means that a homeowner in Florida actually owns the home, regardless of whether or not he or she is still paying down a mortgage.
Is New York a lien theory state?
In a lien theory state such as New York, the property buyer/mortgagor continues to hold the deed to the property until the loan is satisfied, or fully paid back to the lender! At that time, a Satisfaction of Mortgage should be recorded.
Is Pennsylvania a lien theory or title theory state?
States either use the title theory or the lien theory, or a modified version called the intermediary theory….Lien Theory States 2021.
| State | Mortgage Theory |
|---|---|
| South Carolina | Lien |
| Rhode Island | Lien |
| Pennsylvania | Lien |
| Oklahoma | Lien |
What is the difference between lien theory and title theory state why does it matter from the borrower’s and lender’s point of view?
In title theory or mortgage states title is held in the lender’s name until the final payment is made, when title is passed or re-conveyed to the borrower. In lien theory states, title to the property is held in the name of the borrower with a security interest or lien to the property being granted to the lender.
What is the difference between title and lien?
Is Massachusetts a title theory or lien theory state?
Massachusetts is a well-established title theory state in both statutory and case law. Under title theory, a mortgage constitutes a “conveyance or transfer” of property. The plain language of the reverter clause in question clearly includes the right to enforce the reverter upon conveyance or transfer.
What is intermediate theory?
The intermediate theory: Based on title theory, the borrower retains title to the property and the mortgage is a lien. If the borrower defaults on the loan, title is conveyed to the lender. Intermediate theory makes the mortgagee go through the foreclosure process before the property can be sold to repay the debt.
What are the lien laws in New Jersey?
New Jersey is known as a lien theory state where the property acts as security for the underlying loan.
How does a lien theory state work?
Foreclosure proceedings in lien theory states are managed by a trustee. The non-judicial process is often resolved sooner than judicial foreclosures. Most non-judicial foreclosures are handled without any interaction with the courts.
What happens when a lien is placed on a property?
Lien Theory In a Lien State, the deed stays with the borrower, and the lender places a lien on the property using the mortgage. The lien is extinguished when the loan is paid off in full.
How are title and Lien theories used in mortgage law?
A modified version of title and lien theories may also be used as the basis of evaluating mortgage laws. In intermediary theory states, the borrower retains the title with the express agreement that the lender can take back the title when the borrower defaults on the loan.