Title State Law and Legal Definition

Title state is a state or jurisdiction which follows the title theory. Title theory is a doctrine of property law that a mortgage transfers legal title of the property to the mortgagee, who holds it until the mortgage has been satisfied or foreclosed.

In title theory states the lender holds title to the property, as security only, until all loan payments have been made. During that time the borrower has the right to possession of the property, and the lender delivers the deed back to the borrower only after the loan obligation has been satisfied.

In "title theory" states, the mortgagee holds title to the land from the outset of the loan until the debt has been satisfied. [O'Neal Steel, Inc. v. E B Inc. (In re Millette), 186 F.3d 638, 644 (5th Cir. 1999)]

Generally, foreclosures in title state occur through non-judicial proceeding. Only a few American states have adopted this theory.