What is the primary characteristic of a Lien Theory State?

In a Lien Theory State, the primary characteristic is that the mortgage creates a lien on the property while the mortgagor retains title. This means that when a borrower takes out a mortgage, they hold the title to the property, and the lender merely has a secured interest in it through the lien. If the borrower defaults on the loan, the lender can foreclose on the property to recover the debt, but the borrower is considered the owner until that point.

This understanding is crucial as it highlights the distinction between lien theory and title theory states. In title theory states, the lender holds the title until the debt is paid off, which contrasts with the lien theory approach where ownership remains with the borrower. Therefore, in a lien theory system, the borrower has more control and responsibility regarding the property rights until those rights are affected by default or foreclosure.