Also known as: title theory
Written by attorneys · grounded in primary & secondary sources — see below
A mortgage doctrine under which the mortgagee holds legal title to the mortgaged property from the time the mortgage is executed. The mortgagor retains only an equity of redemption that permits reacquisition of full title by paying the debt. Default allows the mortgagee to exercise possessory rights and collect rents without first completing foreclosure.
TechVista Solutions borrowed funds from Threshold Capital and granted a mortgage on its headquarters building. After TechVista missed several payments, Threshold Capital appointed a receiver who began collecting rents from subtenants. Because the jurisdiction follows the title theory, Threshold Capital holds legal title and may exercise immediate possessory rights and redirect income without awaiting foreclosure.
Tanner Thompson and Tabitha Taylor held land as joint tenants. Tanner alone executed a mortgage on the parcel to secure a personal loan. Under the title theory, the mortgage transferred legal title to the lender and thereby severed the joint tenancy, leaving Tabitha as a tenant in common with the lender.
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Under the title theory the mortgagee already holds legal title, so default permits the mortgagee to take possession and collect rents without first completing foreclosure. The mortgagor retains only the equity of redemption.
Supporting sources
Yes. Because the mortgage transfers legal title, it severs the joint tenancy and converts the co-owners into tenants in common with the mortgagee.
Supporting sources
The mortgagor retains only the equity of redemption, the right to regain full title by paying the secured debt before foreclosure cuts it off.
Supporting sources
…of land, the assignment of a mortgage is a conveyance of an interest in land that requires a writing signed by the grantor. In a title theory state like Massachusetts, a mortgage is a transfer of legal title in a property to secure a debt. Therefore, when mortgage loans are pooled in a trust and converted into mortgage-backed…