During a pre-license class in Virginia, a student asks: 'In a deed of trust, the borrower gives legal title to the trustee. What does the borrower actually keep?' The instructor correctly explains that the borrower retains which type of title?
Correct Answer
D) Equitable title, representing the right to use and benefit from the property
In a Virginia deed of trust, the trustor (borrower) conveys legal title to the trustee but retains equitable title. Equitable title represents the borrower's right to use, occupy, and benefit from the property, as well as the right to regain full legal title upon repayment of the loan. This split between legal title (held by the trustee) and equitable title (retained by the trustor) is a fundamental characteristic of the deed of trust structure.
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Related Topics & Key Terms
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Related Concepts
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
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