In title theory, who retains equitable title?

In title theory, the mortgagor retains equitable title to the property. This means that although the mortgagee holds the legal title to the property (which is typically the lender or bank), the mortgagor (the borrower) maintains an interest in the property and the right to use it. Equitable title gives the mortgagor the benefits and rights associated with ownership, including the right to enjoy and occupy the property, as long as they fulfill their obligations under the mortgage agreement.

This distinction between legal and equitable title is important in the context of real estate transactions, as it helps clarify the roles and rights of both the mortgagee and the mortgagor. The legal title represents the formal ownership and is held by the lender until the mortgage is paid off, at which point full legal title transfers back to the mortgagor.

Understanding this concept is crucial for anyone involved in real estate, as it describes the relationship between the parties involved in a mortgage and what rights each party possesses in the property throughout the duration of the loan.