Florida Real Estate Practice Exam

Who retains ownership of the house in a title theory state until the loan is paid off?

1. The borrower

2. The lender

3. Both the borrower and lender

4. A third party

The correct answer is: The lender

In a title theory state, the lender retains ownership of the house until the loan is paid off. This is different from a lien theory state, where the borrower retains ownership of the house and the lender has a lien on the property. It is important to note that in a title theory state, the borrower still has the right to possess and use the house until the loan is paid off, but the legal ownership remains with the lender. The other options are incorrect because the borrower does not retain ownership in a title theory state, both the borrower and lender do not share joint ownership, and a third party is not typically involved in the ownership of a property in this scenario.