Question 1

What is the primary security instrument used in California real estate transactions instead of a mortgage?

Accepted Answer

A deed of trust (trust deed), which involves three parties: the trustor (borrower), trustee (neutral third party), and beneficiary (lender).

Question 2

What is the difference between a promissory note and a deed of trust?

Accepted Answer

A promissory note is the borrower's personal promise to repay the debt (the IOU), while the deed of trust is the security instrument that pledges the property as collateral.

Question 3

Under a deed of trust in California, what is the foreclosure process called that does NOT require court action?

Accepted Answer

Nonjudicial foreclosure (also called foreclosure by trustee's sale or power-of-sale foreclosure), which is the most common foreclosure method in California.

Question 4

What is the reinstatement period under a California nonjudicial foreclosure, and when does it end?

Accepted Answer

The reinstatement period allows the borrower to cure the default by paying overdue amounts plus costs. It ends 5 business days before the scheduled trustee's sale.

Question 5

What is a 'due-on-sale' clause in a mortgage or deed of trust?

Accepted Answer

A due-on-sale (or alienation) clause requires the borrower to pay the full loan balance when the property is sold or transferred, preventing assumption of the loan without lender approval.

Real Estate Finance – California Salesperson Exam Prep

Study Modes

Practice Test

Study Guide

Try These Cards

Want to keep studying?

Related Study Decks

Agency & Ethics – California Real Estate Salesperson Exam

Agency Law – California Real Estate Salesperson Exam

CA Real Estate Law – California Salesperson Exam Prep

California Real Estate Contracts & Disclosures

California Real Estate Exam: Math & Calculations

California Real Estate Salesperson Exam — Complete Bundle

Unlock the Full California Real Estate Salesperson Exam Study Bundle