title theory

Title theory is a legal concept used in real estate to determine how ownership of a property is transferred and held. Under title theory, when you buy a property with a mortgage, the lender retains legal ownership (title) until you fully pay off the loan. During this time, you have equitable interest, meaning you have the right to use and enjoy the property, but the lender technically holds the title. Once the mortgage is paid, the title transfers fully to the buyer, giving them complete ownership. This approach affects the rights and responsibilities of both parties during the mortgage period.