California: “Legal Aspects of Real Estate” Chapter 10 quiz with no answers


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1 of 25 How many years are attachment liens valid from the date of the writ of attachment?

A.    4 years

B.     7 years

C.     5 years

D.     3 years

California Legal Aspects of Real Estate

2 of 25 A creditor who places a lien on a property is called

A.    the lienee.

B.     the mortgagor.

C.     the mortgagee.

D.     the lienor.

3 of 25 California law requires a lien filer to be a licensed contractor unless the homeowner knows the worker was unlicensed and the work performed was less than how much?

A.    $700.00

B.     $1,000.00

C.      $500.00

D.    $1,200.00

4 of 25 What describes involuntary, specific liens against real property by a local government entity such as street or sewer improvements?

A.    An HOA lien

B.     A state tax lien

C.      A special assessment

D.    A judgment lien

5 of 25 For how long can a California income tax lien be in force?

A.    A maximum of 10 years

B.      A maximum of 30 years

C.     A maximum of 20 years

D.    A maximum of 5 years

6 of 25 What type of lien is also known as a construction lien?

A.    A vendor’s lien

B.     A federal lien

C.      A mechanic’s lien

D.    An involuntary lien

7 of 25 What type of lien occurs when someone loses a lawsuit and a judgment is placed against real property to pay for the judgment?

A.    A real estate tax lien

B.     A franchise lien

C.      A judgment lien

D.    A state inheritance tax lien

8 of 25 What type of lien is one that a legal process places against a property which the property owner did not agree or consent to?

A.    A statutory lien

B.      An involuntary lien

C.     An equitable lien

D.    A judgment lien

9 of 25 What is a nonfinancial encumbrance that restricts the use of a property itself and enables others to use the property, regardless of the owner’s desires?

A.    A lien

B.     A profit encumbrance

C.      An easement

D.    A restriction

10 of 25 What type of superior lien does local government entities place against certain properties to ensure payment for local improvement projects such as new roads, schools, sewers or libraries?

A.    An ad valorem tax lien

B.      A special assessment lien

C.     A mechanic’s lien

D.    A judgment lien

11 of 25 What type of lien exists when the IRS sends a taxpayer a bill entitled “Notice for Demand and Payment” and the bill is either ignored or not paid in full?

A.    An equitable lien

B.     A statutory lien

C.     A general lien

D.     A federal lien

12 of 25 The two types of homestead exemptions in California are the automatic homestead exemption and the

A.    implied homestead exemption.

B.      declared homestead exemption.

C.     express homestead exemption.

D.    equitable homestead exemption.

13 of 25 What homestead law term describes the discontinued use of property?

A.    Discarded

B.     Uninhabited

C.     Revoked

D.     Abandoned

14 of 25 What type of lien secures a purchase money mortgage, a seller’s loan to a buyer to finance the sale of property?

A.    A federal lien

B.     An involuntary lien

C.      A vendor’s lien

D.    A judgment lien

15 of 25 A lien is put on a property by

A.     creditors.

B.     owners.

C.     lessees.

D.    sellers.

16 of 25 Once a lien is placed on a property, the most common way to remove it is for the property owner to

A.    request a release.

B.     file for bankruptcy.

C.      pay the debt.

D.    retain an attorney.

17 of 25 Many states have enacted their own homestead laws that specify

A.    foreclosure timeframe.

B.      exemption amounts for individuals and families.

C.     minimum sale price.

D.    payment for selling costs.

18 of 25 What is the term used to describe an interest in and a right to real property that limits the legal owner’s freehold interest?

A.    An encroachment

B.      An encumbrance

C.     A deed restriction

D.    A license

19 of 25 What is an option a creditor can obtain to receive payment by forcing the sale of attached property and collect a debt?

A.     A writ of execution

B.     A constructive notice

C.     A right of rescission

D.    A credit assessment

20 of 25 What puts a mechanic’s lien on the balance of funds from a sale?

A.    A lien release

B.      A stop notice

C.     A notice of responsibility

D.    A notice of cessation

21 of 25 What does a writ of attachment do?

A.     It stops a debtor from selling or concealing property.

B.     It forces the sale of a property.

C.     It protects certain property from being sold.

D.    It determines the sale price of a property.

22 of 25 What is not one of the four ways a judgment lien can be terminated?

A.    Lien payment

B.     Lien expiration

C.      Discharge by exemption

D.    Discharge by creditor

23 of 25 What type of laws protect family members against losing their homes to general creditors attempting to collect on debts?

A.    Land use laws

B.     Familial laws

C.      Homestead laws

D.    Real estate laws

24 of 25 Once a mechanic’s lien has been paid, what must be recorded to show the lien has been discharged and satisfied?

A.    A deficiency judgment

B.     Equitable title

C.     An expense report

D.     A lien release

25 of 25 Which of the following is NOT a superior lien?

A.    Special Assessment

B.     Federal and State Inheritance Tax

C.      Federal Income Tax

D.    Real Estate Tax

Bonus  Chapter10 questions with NO answers

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1.      Define an encumbrance.

2.      List three types of nonfinancial encumbrances.

3.      What is the purpose of deed restrictions?

4.      What is a lien?

5.      What are four legal features of a lien?

6.      List the two main differences between a deed of trust and mortgage.

7.      What is an involuntary lien?

8.      Compare general and specific liens.

9.      What two factors primarily determine lien priority?

10.  Give an example of when lienholders may subordinate their liens.

11.  What types of liens are considered superior liens?

12.  Which tax liens are junior liens?

13.  Define a judgment lien.

14.  List the four ways a judgment lien can be terminated.

15.  The homestead exemption does not apply to which two specific types of judgment liens?

16.  What is the purpose of a writ of attachment?

17.  What does a mechanic’s lien do?

18.  What is the purpose of a preliminary notice?

19.  If a notice of completion or cessation is filed by a homeowner, how long do general and subcontractors have to file a mechanic’s lien against the property?

20.  What happens if a lienor does not enforce a mechanic’s lien within 90 days of it being recorded?

21.  Describe a property tax lien.

22.  List the four ways a federal income tax lien can be removed.

23.  How long is a California income tax lien valid?

24.  What is a municipal utility lien?

25.  What is the purpose of homestead laws?

26.  List four types of liens not subject to the homestead exemption?

27.  When a homestead property is foreclosed by a judgment creditor, who is the first to receive sale proceeds?

28.  What additional benefits does a California homeowner gain by recording a homestead declaration?

California: “Legal Aspects of Real Estate” Chapter 11 quiz with no answers


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1 of 25 What was passed by Congress in 1977 to prevent redlining and to encourage banks and thrifts to help meet the credit needs of all segments of their communities, including low-and moderate-income neighborhoods?

A.    The Economic Recovery Act

B.     The Equal Opportunity Act

C.     The Tax Relief Act

D.    + The Community Reinvestment Act

2 of 25 What transfers legal title to a lienholder and something a defaulting borrower may use to avoid court actions and costs by voluntarily deeding the property to the mortgagee?

A.    Voluntary assignment

B.     A strict foreclosure

C.     + Deed in lieu of foreclosure

D.    Conveyance

3 of 25 The primary method of foreclosure in California is the

A.    strict foreclosure.

B.     judicial foreclosure.

C.     voluntary foreclosure.

D.    + non-judicial foreclosure.

4 of 25 What type of mortgage loan is the most common and generally viewed as the most secure?

A.    An FHA loan

B.     + A conventional mortgage

C.     A government backed loan

D.    A rural housing loan

5 of 25 What type of clause requires a borrower to pay a penalty or late charge for any payments that are considered to be late?

A.    A graduated payment clause

B.     + A late payment penalty clause

C.     A lender clause

D.    A pay off clause

6 of 25 In an adjustable rate loan, index plus the margin establishes the

A.    adjustment period.

B.     initial rate.

C.     amortization period.

D.    + calculated rate.

7 of 25 Which of these regulates how borrowers apply for credit and how lenders evaluate income and grant credit?

A.    The Federal Trade Commission

B.     + The Equal Credit Opportunity Act

C.     The Department of Housing and Urban Development

D.    The Department of Fair Housing

8 of 25 What describes the right of a mortgagor who has defaulted on a note to redeem or get back the title to the property by paying off the entire mortgage note before the foreclosure sale?

A.    + The right of redemption

B.     The right of rescission

C.     The right of action

D.    The right of payment

9 of 25 What conveys title rights in a property over to an assigned trustee?

A.    A right of assignment

B.     A subordination clause

C.     + A deed of trust

D.    A release of deed

10 of 25 What authorizes an official, such as the county sheriff, to seize and sell a foreclosed property?

A.    A right of redemption

B.     A right to sell

C.     + A writ of execution

D.    A power of sale

11 of 25 What refers to all calendar days except Sundays and holidays specified in 5 U.S.C. 6103 or the observed legal holiday?

A.    A weekday

B.     + A business day

C.     A nautical day

D.    A bank day

12 of 25 What term describes a measure of economic conditions?

A.    Margin

B.     Rate

C.     + Index

D.    Deficit

13 of 25 What involves the transfer of an interest in land as security for a loan or other obligation?

A.    A deed

B.     + A mortgage

C.     A transaction

D.    A lease

14 of 25 What describes a legal procedure in which the property that is used as security for a debt is sold to satisfy the debt in the event of a default?

A.    An eviction

B.     A seisen

C.     A repossession

D.    + A foreclosure

15 of 25 What type of mortgage loan allows a borrower who has an existing loan to get another loan from a second lender without paying off the first loan?

A.    + A wraparound mortgage

B.     A swing loan

C.     A bridge loan

D.    A construction mortgage

16 of 25 What Act requires each of three nationwide credit reporting companies to give consumers a free copy of their credit report, at their request, once every 12 months?

A.    The Credit Reporting Act

B.     The Home Mortgage Disclosure Act

C.     + The Fair Credit Reporting Act

D.    The Mortgage Choice Act

17 of 25 In a graduated payment mortgage the interest owed and not paid in the initial months is added back to the principal causing what is referred to as

A.    indemnification.

B.     recompensation.

C.     graduated subsidy.

D.    + negative amortization.

18 of 25 What clause, in a non-judicial foreclosure, enables a mortgagee to order a public sale without a court decree?

A.    A due-on-sale clause

B.     + A “power of sale” clause

C.     A subordination clause

D.    A release clause

19 of 25 What covenant in a deed of trust document states that if the borrower violates any of the covenants of the contract, the beneficiary may call for payment of the loan in full and the trustee may sell the property after he or she has filed all the proper notices?

A.    Reconveyance

B.     + Acceleration

C.     Assignment of rents

D.    Expenditures

20 of 25 What describes an interest-only note, whereby the borrower agrees to pay the interest periodically and to pay the entire principal when the note comes due?

A.    An installment note

B.     A periodic note

C.     A rate note

D.    + A straight note

21 of 25 What clause in a standard mortgage states that if the borrower repays the debt when due, the words “of grant” are void, the mortgage is canceled, and the title is given back to the borrower?

A.    An acceleration clause

B.     A seisen clause

C.     + A defeasance clause

D.    A granting clause

22 of 25 What was created in 1974 to ensure that the buyer and seller in a residential real estate transaction, involving a new first mortgage loan, have knowledge of all settlement costs?

A.    The Consumer Financial Disclosure Act

B.     The Real Estate Protection Agency

C.     The Department of Housing and Urban Development

D.    + The Real Estate Settlement Procedure Act

23 of 25 With what type of loan does the monthly payment for principal and interest gradually increase by a certain percentage each year for a certain number of years and then it levels off for the remaining term of the mortgage?

A.    A purchase money mortgage

B.     A package mortgage

C.     + A graduated payment mortgage

D.    An ARM

24 of 25 What acceleration clause requires the borrower to pay off the entire mortgage debt when the property is sold?

A.    A subordination clause

B.     A “subject to” clause

C.     + A due-on-sale clause

D.    A “power of sale” clause

25 of 25 What type of prepayment clause prohibits the borrower from paying the mortgage loan in full before a specific date?

A.    A lienholder clause

B.     A lender clause

C.     A due-on-sale clause

D.    + A lock-in clause

Bonus  Chapter11 questions with NO answers

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1.      Define leverage.

2.      What document is a real estate promissory note attached to?

3.      List three provisions that are common to most notes.

4.      What does the covenant of seisin provision of a mortgage document state?

5.      What is a deed of trust?

6.      List two reasons that lenders prefer to use the deed of trust when making loans.

7.      Define acceleration.

8.      List two differences between a mortgage and a deed of trust.

9.      What is California’s position regarding late payments on a loan?

10.  Describe a lock-in clause.

11.  What is the main advantage and what is the main disadvantage to a borrower to purchase a property “subject to” the mortgage?

12.  What types of transactions often include a release clause?

13.  Define foreclosure.


14.  What three types of foreclosure processes enforce mortgage liens?

15.  Explain when a judicial foreclosure is used and how a lender files a suit.

16.  What is a deficiency judgment?

17.  What does a “power of sale” provision in a deed of trust or mortgage allow a lender to do?

18.  Describe a Notice of Default.

19.  In a non-judicial foreclosure sale, the new purchaser will receive a trustee’s deed to the property. But what potential problem exists?

20.  What is the main problem with a strict foreclosure?

21.  Most conventional loans require the borrower to make how much of a down payment?

22.  List two advantages of conventional loans over government-backed loans.

23.  What are the two distinct features of fixed-rate, fully-amortized loans?

24.  What is a payment cap?

25.  Why might a graduated payment mortgage be appealing to someone who is just starting a career?

26.  What is a release clause and in what type of mortgage would you find this clause?

27.  Describe a reverse annuity mortgage.

28.  Define a purchase money mortgage.

29.  What is the purpose of the Real Estate Settlement Procedures ACT (RESPA)?

30.  List three types of loans that do not require compliance with the TRID rule?

31.  When must the Loan Estimate be delivered to the borrower?

32.  Who is generally responsible for ensuring the Closing Disclosure is delivered to a buyer no later than 3 business days before closing?

33.  What does the Truth in Lending Act require lenders to disclose to buyers?

34.  Who does Regulation Z apply to?

35.  Why was the Community Reinvestment Act passed?

36.  List three warning signs of predatory lending

California: “Legal Aspects of Real Estate” Chapter 12 quiz with no answers


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1 of 25 Who must sign and acknowledge escrow instructions?

A.    The buyer

B.     The broker

C.      The seller and buyer

D.    The seller

2 of 25 Escrow doesn’t officially close until the deed has been

A.    signed.

B.      recorded.

C.     transferred.

D.    conveyed.

3 of 25 Within how many days is a creditor generally required to provide the Loan Estimate of the receipt of the consumer’s loan application?

A.    10 business days

B.     30 business days

C.     7 business days

D.     3 business days

4 of 25 What type of special title insurance policy is used when a property is being purchased through a land sales contract, purchase money mortgage, or purchase money trust deed?

A.    A leaseholder policy

B.     An early issue endorsement

C.      A vendee policy

D.    An oil and gas interest policy

5 of 25 What settlement process refers to signing and transferring all documents and distributing funds?

A.    Commitment

B.     Conveyance

C.     Servicing

D.     Closing

6 of 25 Who is RESPA administered by?

A.    The Office of Fair Housing (OFH)

B.      The Consumer Financial Protection Bureau (CFPB)

C.     The Office of Equal Opportunity (OEO)

D.    The Department of Housing and Urban Development (HUD)

7 of 25 When can licensees recommend specific individuals or companies to their clients and accept a referral fee?

A.    When there is a dual agency created

B.      Never

C.     When the licensee is also acting as an escrow agent

D.    When the licensee is acting as a transaction broker

8 of 25 What was created in 1974 to ensure that a buyer and seller in a residential real estate transaction have knowledge of all settlement costs?

A.    The Real Estate Acquisition Act (REAA)

B.     The Residential Real Estate Act

C.      The Real Estate Settlement and Procedures Act (RESPA)

D.    The Settlement and Real Estate Transaction Act

9 of 25 What term describes the process in which a disinterested third party holds all money and documents relating to a transaction until all terms and conditions have been satisfied?

A.    Transference

B.     Recording

C.      Escrow

D.    Modification

10 of 25 Interest is always paid

A.    in advance.

B.     by the lender.

C.      in arrears.

D.    before closing.

11 of 25 Which section of a Closing Disclosure includes names and addresses for both the borrowers and sellers and the lender’s name?

A.    The closing information

B.     The loan information

C.     The summary information

D.     The transaction information

12 of 25 What describes written authorization and instructions for how an escrow agent will perform in a transaction?

A.    Escrow analysis

B.     Performance instructions

C.     Agent authorization

D.     Escrow instructions

13 of 25 Items that are paid in advance such as property taxes are called

A.    credits.

B.      prepaid expenses.

C.     prorations.

D.    advancements.

14 of 25 Which section of a Closing Disclosure shows the actual payments the borrower will make for principal and interest and mortgage insurance, an estimated amount for the escrow payment, and the total estimated monthly mortgage payment?

A.    Loan terms

B.     Calculations

C.      Projected payments

D.    Descriptions

15 of 25 What refers to the succession of property owners of record dating back to the original grant of title from the state to a private party?

A.    Deed-in-lieu

B.     Clouded title

C.     Eminent domain

D.     Chain of title

16 of 25 A quiet title suit is also called a suit to remove

A.    an assignment.

B.     a defect.

C.      a cloud.

D.    a contingency.

17 of 25 Which part of a Loan Disclosure indicates whether or not the lender will allow a loan assumption on a future sale or transfer?

A.    Demand feature

B.      Assumption

C.     Escrow Account

D.    Other disclosures

18 of 25 What refers to money that the buyer or seller needs to pay at closing?

A.    A fee

B.     A credit

C.     A settlement

D.     A debit

19 of 25 What type of deed transfers title from the seller to the buyer?

A.    A deed of reconveyance

B.     A deed of trust

C.      A grant deed

D.    A specific deed

20 of 25 In a real estate transaction what party chooses the escrow holder?

A.    The seller

B.      Either party

C.     The buyer

D.    The lender

21 of 25 What is an extended title coverage policy that insures against many of the items excluded in the CLTA standard policy?

A.    The Mortgage Title Insurance Policy

B.      The American Land Title Association (ALTA)

C.     The Real Property Title Association (RPTA)

D.    The California Title Association

22 of 25 What is a contract of indemnity where an insurance company agrees to compensate the insured, either a homeowner or a lender, for financial losses that the insured has incurred because of defects to the title of the property?

A.    A transfer of ownership

B.      A title insurance policy

C.     A title report

D.    Hazard insurance

23 of 25 What describes expenses that the seller incurred but have not yet been billed for at the time of closing?

A.    Settlement expenses

B.     Mortgage expenses

C.      Accrued expenses

D.    Estimated expenses

24 of 25 The two methods that are typically used when closing agents and lenders calculate items that need to be prorated are the 12-month/360 day method and the

A.     365 day method.

B.     half year method.

C.     prorated calculation method.

D.    6-month/180 day method.

25 of 25 What is the standard title policy in California?

A.    The California Home Title Policy

B.     The First American Land Title Policy (FALTP)

C.     The American Title Association

D.     The California Land Title Association (CLTA)

Bonus  Chapter12 questions with NO answers

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1.      What is escrow?

2.      Describe an escrow agent.

3.      When can a broker act as an escrow agent?

4.      List the five basic steps of the escrow process.

5.      What are escrow instructions?

6.      What activities are all escrow agents prohibited from doing?

7.      Besides the escrow agent, who else has responsibilities to ensure the closing occurs smoothly and on time?

8.      List three duties of real estate agents during the escrow process.

9.      Explain marketable title.

10.  What is the purpose of the preliminary title report?

11.  Describe a title insurance commitment. 

12.  Who needs title insurance and why? 

13.  Explain why title insurance is unlike other forms of insurance.

14.  Who typically pays for the homeowner’s title insurance at closing?

15.  What is the difference between CLTA and ALTA policies?

16.  What items are not covered by any title insurance policy? 

17.  Although it’s not required, why is it a good idea for agents to attend escrow closings?

18.  What are closing costs?

19.  When does an escrow close?


20.  What is the Foreign Investment in Real Property Tax Act?

21.  What does prorated mean?

22.  Name three items that are prorated for closing.

23.  How are prorated items shown on the closing statement?

24.  Closing agents and lenders typically use one of two methods when calculating items that need to be prorated. Name the two methods.

25.  Explain the Real Estate Settlement and Procedures Act (RESPA).

26.  What types of closings must follow the TRID rule?

27.  When must the Closing Disclosure be delivered to the borrower?

28.  Define consummation.

29.  Which pages of the Closing Disclosure will always look the same regardless of the loan type?

30.  What information does the Loan Terms section of Page 1 provide?

31.  What does the Other Costs section include on Page 2 of the Closing Disclosure?

32.  What is a borrower affirming by signing the Confirm Receipt section of the Closing Disclosure?


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