Alabama Real Estate Practice Exam

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Master your Alabama real estate exam with our comprehensive practice test. Tailored feedback, expert tips, and up-to-date questions to ensure your success!

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What happens to the title of the property when a mortgage is issued?

The lender holds the legal title
The borrower loses both equitable and legal title
The mortgager keeps both equitable and legal title until it's paid off
The title is held in escrow until the loan is repaid

The correct answer is: The mortgager keeps both equitable and legal title until it's paid off

When a mortgage is issued, the borrower does not lose both equitable and legal title to the property. Instead, the mortgager retains both equitable and legal title until the loan is repaid. Option A is incorrect because while the lender does have a legal interest in the property, they do not hold the legal title. Option B is incorrect because the borrower retains equitable title, which refers to the right to use the property and make payments towards the loan. Option D is also incorrect because the title is not held in escrow, as that would involve a neutral third party holding the title until certain conditions are met.