What does lien theory imply about the mortgagor's title?

In lien theory, the significance lies in the nature of the relationship between the mortgagor (borrower) and the mortgagee (lender) concerning the property title during the term of the mortgage. When lien theory is in effect, the mortgagor retains both legal and equitable title to the property.

Legal title refers to ownership rights as recognized by law, while equitable title represents the right to enjoy the benefits of the property, such as living in it or deriving income from it. Because of lien theory's framework, the mortgagor maintains full ownership rights and responsibilities, despite having borrowed money against the property, and the lender holds a lien on the property as security for the debt. This means that the mortgagee does not own the property but has a legal claim to it only if the mortgagor defaults on the loan.

Thus, the concept that the mortgagor maintains both legal and equitable title is a fundamental aspect of lien theory, illustrating the rights and responsibilities of ownership despite the existence of a mortgage.