Tennessee Realtor State Practice Exam

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In lien theory states, what does the lender possess?

Equitable title.
A lien against the property.
Legal title only.
Ownership of the property.

The correct answer is: A lien against the property.

In lien theory states, the lender possesses a lien against the property. This means that the lender has a legal claim or security interest in the property which serves as collateral for the loan. Typically, the borrower, or mortgagor, holds the legal title to the property, while the lender retains a lien that allows them to foreclose if the borrower defaults on the loan. In this context, equitable title refers to the borrower's rights in the property while they are making payments, which is distinct from the lien itself held by the lender. Also, owning the property outright (legal title or ownership) does not apply to the lender in lien theory, as they do not possess ownership but rather an interest in the property through the lien for the purpose of securing their loan. Therefore, the presence of a lien is what accurately describes the lender's position in lien theory states.