A mortgage creates a lien on real property; which statement best describes this relationship?

• A. A mortgage creates a lien on real property
• B. A mortgage transfers title
• C. A mortgage cancels liens
• D. A mortgage is unrelated to liens

Answer: (A)

A mortgage is a security instrument that creates a lien on real property to secure the loan. When you borrow to buy a home, the lender records a lien against the property. This encumbrance gives the lender a legal claim to the property if you don’t repay, which is why foreclosure can occur to satisfy the debt. Importantly, the owner generally keeps the title while the loan is outstanding; the mortgage does not transfer title. It also doesn’t cancel other liens; rather, it adds the lender’s security interest to the property. So, describing the relationship as a mortgage creating a lien on real property captures the essential connection between the loan and the property.