Multiple Choice Identify the letter of the choice that best
completes the statement or answers the question.
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1.
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Which document contains a legal description of the real property?
a. | note | c. | promisory note | b. | mortgage | d. | bill of sale |
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2.
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Which document is most likely to be recorded?
a. | note | c. | buy - sell agreement | b. | mortgage | d. | listing
agreement |
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3.
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The borrower is the:
a. | mortgagor. | c. | vendor | b. | mortgagee. | d. | vendee |
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4.
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Which is correct about a mortgage and a note?
a. | The mortgage secures the note. | c. | there is no security in either
one | b. | The note secures the mortgage. | d. | there is security in both
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5.
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Both notes and mortgages are:
a. | forms of contracts. | c. | documents of conveyance. | b. | negotiable
instruments. | d. | unenforceable. |
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6.
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Which document is negotiable:
a. | mortgage note. | c. | agreement to purchase | b. | mortgage. | d. | agreement to sell |
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7.
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The evidence of the debt and promise to pay is the:
a. | mortgage note. | c. | the buy-sell agreement | b. | mortgage. | d. | the listing agreement |
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8.
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A mortgage is a?
a. | voluntary lien. | c. | debtor’s lien | b. | involuntary lien. | d. | sellers’s
lien |
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9.
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Which document pledges property as security for a debt?
a. | mortgage note | c. | buy-sell agreement | b. | mortgage | d. | listing
agreement |
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10.
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A mortgage:
a. | must be used if property is sold. | c. | must be used in any sell of real
property | b. | pledges property to secure a debt. | d. | is never used in the sale of real
property |
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11.
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A mortgage is a:
a. | pledge of property. | c. | a purchase agreement | b. | note. | d. | a listing
agreement |
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12.
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If there is more than one mortgage, the priority of the mortgages is determined
by the date:
a. | each is signed. | c. | the money is given to the borrower. | b. | each is
recorded. | d. | each is paid
off. |
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13.
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A mortgage must be signed by the:
a. | mortgagor. | c. | grantor | b. | mortgagee. | d. | lender |
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14.
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Which document personally obligates the borrower to repay the loan?
a. | mortgage note | c. | buy-sell agreement | b. | mortgage | d. | listing
agreement |
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15.
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Which mortgage clause grants priority to a later mortgage?
a. | alienation clause | c. | due on sale clause | b. | subordination clause | d. | deficiency
clause |
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16.
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The priority of liens may be changed by a/an:
a. | subordination clause. | c. | due on sale clause | b. | acceleration clause. | d. | deficiency
clause |
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17.
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A mortgage subordination agreement:
a. | prohibits mortgage assumptions. | c. | prohibits the sale of the
property | b. | gives a later mortgage priority. | d. | prohibits leasing the
property |
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18.
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A subordination clause changes:
a. | the balance due on the debt. | c. | nothing | b. | rights upon
foreclosure. | d. | who the seller
can sell to |
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19.
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A new buyer has no liability for an existing mortgage when purchasing
property:
a. | subject to the mortgage. | c. | ever | b. | under an
assumption. | d. | a new loan is
always required |
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20.
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A buyer purchased property subject to an existing mortgage. The mortgage was
foreclosed upon. Who is liable for the deficiency?
a. | the seller only | c. | the buyer only | b. | both the seller and buyer | d. | neither one |
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21.
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Under a purchase subject to, the person primarily liable for default is
the:
a. | seller. | c. | both the buyer and seller | b. | buyer. | d. | neither the buyer or seller |
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22.
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A buyer purchases mortgaged property and becomes personally liable. This is an
example of:
a. | an assumption. | c. | a bad deal | b. | a purchase subject to. | d. | buyer beware |
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23.
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In which situation is a mortgagor released when mortgaged property is
sold?
a. | a simple assumption | c. | an assumption with a novation | b. | a subject to
purchase | d. | a purchase subject
to without a novation |
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24.
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An assumption with a novation is known as a/an:
a. | simple assumption. | c. | good deal | b. | full assumption. | d. | bad deal |
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25.
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Buyers are best advised to take over an existing mortgage:
a. | with an assumption. | c. | never to do this | b. | by purchasing subject to. | d. | always get new
financing |
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26.
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The buyer guarantees the existing mortgage with:
a. | an assumption. | c. | a written guarantee | b. | a purchase subject to. | d. | a written
promise |
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27.
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Which mortgage clause prevents a later purchaser from assuming the loan?
a. | due on sale | c. | novation | b. | acceleration | d. | bad credit
clause |
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28.
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Which mortgage clause requires the balance to be paid in full when the property
is conveyed?
a. | acceleration | c. | novation | b. | alienation | d. | subordination |
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29.
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What best protects a seller under an assumption?
a. | a novation | c. | subordination | b. | an alienation clause | d. | promisory note |
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30.
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What protects a buyer purchasing already mortgaged property?
a. | an assumption | c. | new loan | b. | purchasing subject to the
mortgage | d. | subordination |
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31.
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Which mortgage clause requires the balance to be paid in full when the mortgagor
defaults:
a. | acceleration. | c. | promisory note | b. | alienation. | d. | habendum |
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32.
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A property sold for $100,000 subject to a $50,000 mortgage. The buyer defaulted.
The lender may:
a. | foreclose and hold only the seller liable. | c. | foreclose and hold both the seller
and buyer liable. | b. | foreclose and hold only the buyer
liable. | d. | foreclose and hold
neither liable. |
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33.
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Which best protects the seller?
a. | A novation. | c. | A foreclosure. | b. | A buyer assumes the loan. | d. | A buyer purchases subject to the
loan. |
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34.
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Which clause is contained only in nonassumable mortgages?
a. | alienation clause | c. | novation clause | b. | acceleration clause | d. | subordination
clause |
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35.
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Which clause in the mortgage prevents a later buyer from purchasing either by an
assumption or subject to the existing mortgage?
a. | alienation clause | c. | subordination clause | b. | acceleration clause | d. | novation clause |
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36.
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Which clause makes a mortgage nonassumable?
a. | acceleration | c. | subordination | b. | alienation | d. | novation |
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37.
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Which clause allows the mortgagee to call the full loan balance due upon
default?
a. | alienation clause | c. | subordination | b. | acceleration clause | d. | novation |
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38.
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An alienation clause requires which of the following to be paid when the
property is sold?
a. | the balance owing on the mortgage | c. | utilities | b. | all taxes and
liens | d. | insurance |
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39.
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If a mortgagor sells to a new buyer, what releases the mortgagor from
liability?
a. | novation | c. | subordination | b. | alienation | d. | due on sale |
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40.
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The mortgagee may require immediate payment of the loan upon default if the
mortgage contains a/an:
a. | novation clause. | c. | contingency clause. | b. | acceleration clause. | d. | defeasance
clause. |
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41.
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If a lender claims that a mortgage is not assumable, the mortgage must
contain:
a. | a due on sale clause. | c. | novation clause | b. | an acceleration clause | d. | subordination
clause |
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42.
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Who signs the novation to release the mortgagor?
a. | the mortgagor | c. | an attorney | b. | the mortgagee | d. | both the mortgagor and
mortgagee |
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43.
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The mortgage clause allowing the mortgagee to call the loan upon default
is:
a. | acceleration. | c. | subordination | b. | alienation. | d. | novation |
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44.
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An existing mortgagor is released of liability if a new buyer:
a. | assumes the mortgage. | c. | says he will do it | b. | assumes the mortgage with a
novation. | d. | agrees to
subordination |
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45.
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With a full assumption:
a. | the mortgagor is released of liability for mortgage default through a
novation. | b. | the mortgagor remains liable if the new buyer defaults. | c. | nothing really
changes | d. | the subordination agreement becomes effective |
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46.
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With a simple assumption:
a. | the mortgagor remains liable for mortgage default. | b. | the existing
mortgage must be paid off prior to closing. | c. | the buyer must get new
financing | d. | subordination becomes important |
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47.
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Who should insist that a Notice of Assignment be recorded?
a. | the assignor | c. | the title company | b. | the assignee | d. | the court |
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48.
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If the mortgagee sells the note and mortgage to Stockman’s Bank (the
assignee), what document should the assignee record to notify the mortgagor to send the monthly
payments to the assignee?
a. | Notice of Assignment | c. | Notice of Subordination | b. | Notice of
Foreclosure | d. | Notice of
Novation |
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49.
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A mortgage:
a. | secures the note by giving a lien to the mortgagor. | b. | gives the mortgagee
the right to force the sale of the property upon default. | c. | is a good thing to
have | d. | is given by the lender |
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50.
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The deed used when a defaulting mortgagor transfers the mortgaged property to
the mortgagee to avoid a court foreclosure sale is known as a:
a. | deed in lieu of foreclosure. | c. | deed under
duress | b. | warranty deed. | d. | invalid deed |
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51.
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To reduce the effect of a mortgage default, a mortgagor could give the
lender:
a. | a mortgage. | c. | a new promise to pay | b. | a deed in lieu of
foreclosure. | d. | a
subordination agreement |
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52.
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Business executives borrowing money for their business are advised to
use:
a. | nonrecourse financing. | c. | recourse financing | b. | mortgages upon their homes. | d. | any promise to pay
contract |
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53.
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A power of sale clause:
a. | allows a mortgagee to foreclose without a court hearing. | b. | allows a licensed
broker to handle the foreclosure process. | c. | allows the borrower extra time before the
foreclosure | d. | automatically gives the borrower the right to give a deed in lieu of
foreclosure |
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54.
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The only deed which requires court approval is the:
a. | warranty deed. | c. | quit claim deed | b. | sheriffs deed. | d. | special deed |
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55.
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When a mortgage note is paid in full, the title will be cleared by:
a. | a quitclaim deed. | b. | a mortgage release, satisfaction, or
certificate of discharge. |
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56.
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The defeasance clause is triggered when the mortgagor:
a. | pays off the loan. | b. | defaults. |
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57.
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A mortgage may be foreclosed upon:
a. | in any county in the state. | b. | only in the county where the property is
located. |
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58.
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Prior to a foreclosure sale, the mortgagor has:
a. | an equitable right of redemption. | b. | a statutory right of
redemption. |
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59.
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After a foreclosure sale, the prior owner has:
a. | an equitable right of redemption. | b. | a statutory right of
redemption. |
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60.
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After purchasing Al's property subject to the mortgage, Betty defaulted and
filed for bankruptcy. The property was foreclosed upon and Al was asked to pay the deficiency. Is Al
liable?
a. | No, due to the bankruptcy. | c. | Yes, because Al was never granted a
release from liability. | b. | No, because the property was purchased subject
to the mortgage. | d. | Yes,
because Al cannot legally be released from liability until the mortgage note is paid in
full. |
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61.
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The mortgage used when the seller lends the buyer all or part of the purchase
price is a/an:
a. | reverse annuity mortgage. | c. | straight
mortgage | b. | purchase money mortgage. | d. | lenders mortgage |
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62.
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A mortgage used in seller financing is a:
a. | reverse annuity. | c. | annuity mortgage | b. | purchase money. | d. | regular
mortgage |
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63.
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If the seller keeps title until the purchase price has been paid, the parties
have a:
a. | contract for deed. | c. | regular mortgage | b. | lease. | d. | reverse annuity
mortgage |
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64.
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Payment of all or part of the purchase price may be deferred with a:
a. | contract for deed. | c. | option | b. | lease. | d. | mortgage |
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65.
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The seller under a contract for deed (installment land contract) retains:
a. | actual title. | c. | buyer’s title | b. | equitable title. | d. | nothing |
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66.
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The purchaser under a contract for deed is the:
a. | vendee. | c. | vendor | b. | mortgagee. | d. | mortgagor |
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67.
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Sally bought a home by using a contract for deed. If the last payment has not
yet been made, Sally:
a. | may not sell her equity. | c. | may not lease her
home. | b. | may not bequeath her equity to heirs | d. | may list and sell her
equity. |
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68.
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A buyer under an installment land contract (contract for deed) wants:
a. | possession before making the last payment. | b. | the deed to remain
unsigned until the last payment has been made. | c. | the seller to verbally promise to turn over the
deed at some point | d. | to have an attorney
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69.
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Who wants the contract for deed to be recorded immediately?
a. | the seller | c. | the title company | b. | the buyer | d. | the court |
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70.
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The buyer under a contract for deed wants the seller's deed to be
signed:
a. | at the time of closing. | c. | at some time in the
future | b. | when the last payment is made. | d. | they really don’t
care |
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71.
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Under a contract for deed, the buyer's default usually results in:
a. | the return of all payments made. | c. | they get some payments
back | b. | the forfeiture of all payments made. | d. | a partnership with the
seller |
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72.
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Under a contract for deed, who wants the deed signed at closing?
a. | vendor | c. | mortgagor | b. | vendee | d. | mortgagee |
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73.
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Under a contract for deed, the buyer gets the deed when:
a. | the closing is held. | c. | the contract is recorded. | b. | 51% of the purchase
price is paid. | d. | the final
payment is made. |
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74.
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What title does the buyer have under a contract for deed?
a. | equitable title | c. | no title | b. | actual title | d. | a title that is as good as that with a
mortgage |
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75.
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What title does the seller have under a contract for deed?
a. | equitable | c. | no title | b. | legal | d. | a future interest
title |
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