Marcus purchases a home in Columbia, South Carolina, and finances the purchase with a bank loan secured by the property. After closing, which of the following best describes the legal relationship between Marcus and the bank regarding the property?
Correct Answer
C) Marcus holds legal title to the property, and the bank holds a mortgage lien against it
South Carolina follows the lien theory of mortgages. The mortgagor (Marcus) retains legal title to the property after closing, while the mortgagee (the bank) holds a lien — not title — as security for the debt. This lien gives the bank the right to foreclose if Marcus defaults, but the bank does not own the property.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
A comparison of the major mortgage loan types—conventional, FHA, VA, and USDA—covering their eligibility requirements, down payment amounts, mortgage insurance rules, and best use cases.
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