PSI Oklahoma Real Estate Practice Test

When viewed as a lien on real property, what theory does the mortgage fall under?

1. Mortgage Theory

2. Title Theory

3. Debt Theory

4. Lien Theory

The correct answer is: Lien Theory

The correct answer is Lien Theory. In the context of real estate, when a mortgage is viewed as a lien on the property, it means that the mortgage loan creates a claim against the property, which serves as collateral for the loan. The borrower retains ownership of the property while the lender holds a lien, which is a legal right or interest that a lender has in the borrower's property, granted until the debt obligation is satisfied. Under Lien Theory, the borrower maintains the title to the property despite the mortgage, and the mortgage acts as a security interest in the event of default. The lender does not have ownership rights to the property; they have a claim that can be enforced through foreclosure if the borrower defaults on the loan. This principle is fundamental in understanding the relationship between the mortgage and the property in many jurisdictions, including Oklahoma. Mortgage Theory, Title Theory, and Debt Theory, on the other hand, represent different concepts regarding the relationship between the borrower and the property. Title Theory suggests that the lender takes ownership or title to the property until repayment, while Debt Theory centers on the obligation created by the debt itself rather than its relationship to the property. However, Lien Theory specifically emphasizes the lien aspect, making it the best choice in this