Which statement is true regarding lien theory and title theory?

In the context of property management and real estate, understanding the difference between lien theory and title theory is essential. Lien theory primarily refers to a legal framework where the borrower holds the title to the property, while the lender has a lien on the property as security for the loan. This means that the homeowner retains ownership rights, and the lender can only claim the property through foreclosure if the borrower defaults on the mortgage.

On the other hand, title theory indicates that the lender holds the title to the property until the mortgage is paid in full. In this situation, the borrower has an equitable interest in the property but does not hold legal title until they satisfy the debt.

Both statements acknowledging these two theories illustrate their fundamental differences and explain how property ownership and security interests operate in different legal contexts. Therefore, acknowledging the validity of both statements means accepting that lien theory and title theory are both legitimate concepts that play significant roles in property law. Understanding these theories is critical for anyone involved in property management or real estate transactions in Oregon.