Missouri is classified as which type of state with respect to real estate security instruments and the theory of title during a loan?
Correct Answer
D) A title-theory state, where legal title passes to a trustee when the borrower executes a deed of trust
Missouri is a title-theory state (also called a deed-of-trust state). Under RSMo §§ 443.290–443.430, when a borrower executes a deed of trust, bare legal title passes to a neutral trustee. The borrower retains equitable title and possession, but legal title is held by the trustee as security for the loan. This title-theory approach enables the non-judicial trustee's sale foreclosure process that is unique to Missouri and other deed-of-trust states.
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