There are two basic types of states when it comes to purchasing a home through a lender: a lien theory state and a title theory state. The state of Florida is a lien theory state. It's valuable for a homeowner to know which type of state he lives in because it determines who will hold the title to the property during the length of the mortgage -- the buyer or the lender.
Lien Theory State
A lien theory state is a state in which the buyer holds the deed to his home throughout the duration of the mortgage. In a lien theory state, the mortgage acts as a lien against the home. The buyer retains the title to the home and once the buyer has fulfilled the mortgage, the lender removes the lien.
Title Theory State
In a title theory state, the buyer receives the title to the home from the seller, then hands it over to the lender. Once the buyer has fulfilled the terms of their mortgage, the lender returns the title.
Intermediary Theory State
A small number of states will allow the buyer to hold on to the title over the course of the mortgage, but if the buyer defaults on the mortgage, the lender can take the title away. This is known as an intermediary theory state.
Advantage of a Lien Theory State
The advantage to a buyer that lives in a lien theory state like, Florida, is that if the home goes into foreclosure, proceedings can be more difficult for the lender because the buyer still possesses the title.