Question 1

Two-party secured transactions occur when a seller sells goods to a buyer on credit and retains a security interest in the goods.

Accepted Answer

A) True 
 B)False

Question 2

An arrangement where an owner of real property borrows money from a lender and pledges the real property as collateral to secure the repayment of the loan is known as a(n)________.

Accepted Answer

A)  consignment 
B)  foreclosure 
C)  mortgage 
D)  assignment 
A)  consignment 
B)  foreclosure 
C)  mortgage 
D)  assignment

Question 3

The nonrecordation of a mortgage does not affect the legality of the instrument between the mortgagor and the mortgagee.

Accepted Answer

A) True 
 B)False

Question 4

An arrangement in which a third party promises to be primarily liable with the borrower for the payment of the borrower's debt is referred to as ________.

Accepted Answer

A)  foreclosure arrangement 
B)  disposition arrangement 
C)  surety arrangement 
D)  guaranty arrangement 
A)  foreclosure arrangement 
B)  disposition arrangement 
C)  surety arrangement 
D)  guaranty arrangement

Question 5

Which of the following is true of financing statements?

Accepted Answer

A)  They cannot be electronically filed. 
B)  They are effective for one year from the date of filing. 
C)  They cannot be extended for another term before expiry. 
D)  They are available for review by the public. 
A)  They cannot be electronically filed. 
B)  They are effective for one year from the date of filing. 
C)  They cannot be extended for another term before expiry. 
D)  They are available for review by the public.

Question 6

Explain surety arrangement with an example.

Accepted Answer

In a surety arrangement,a third person,k

Question 7

Explain the difference between writ of attachment and writ of execution.

Accepted Answer

Attachment is a prejudgment court order

Question 8

Which of the following is true of priority of claims?

Accepted Answer

A)  If two or more secured parties claim an interest in the same collateral but only one has perfected his or her security interest, the perfected security interest has priority. 
B)  Although one of the parties to claim an interest in the collateral has perfected his or her security interest, all the parties are given fair and equal priority over the collateral. 
C)  If two or more secured parties claim an interest in the same collateral but neither has a perfected claim, they are given equal priority irrespective of attachments. 
D)  If two or more secured parties claim an interest in the same collateral but neither has a perfected claim, the first to claim has priority. 
A)  If two or more secured parties claim an interest in the same collateral but only one has perfected his or her security interest, the perfected security interest has priority. 
B)  Although one of the parties to claim an interest in the collateral has perfected his or her security interest, all the parties are given fair and equal priority over the collateral. 
C)  If two or more secured parties claim an interest in the same collateral but neither has a perfected claim, they are given equal priority irrespective of attachments. 
D)  If two or more secured parties claim an interest in the same collateral but neither has a perfected claim, the first to claim has priority.

Question 9

A(n)________ is property that a debtor acquires post the execution of a security agreement.

Accepted Answer

A)  repossessed property 
B)  after-acquired property 
C)  attachment 
D)  future advance 
A)  repossessed property 
B)  after-acquired property 
C)  attachment 
D)  future advance

Question 10

When is credit said to have occurred?

Accepted Answer

A)  when one party reclaims money lent to another party 
B)  when one party sells goods to another party for cash 
C)  when one party gives a loan to another party 
D)  when one party pays back money that he owes to another party 
A)  when one party reclaims money lent to another party 
B)  when one party sells goods to another party for cash 
C)  when one party gives a loan to another party 
D)  when one party pays back money that he owes to another party

Question 11

A mortgage is a three-party instrument.

Accepted Answer

A) True 
 B)False

Question 12

If two or more secured parties have perfected security interests in the same collateral,the last to perfect has priority.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following procedures permits foreclosure without court proceedings and sale of the property through an auction?

Accepted Answer

A)  deficiency sale 
B)  remortgage 
C)  power of sale 
D)  refinancing sale 
A)  deficiency sale 
B)  remortgage 
C)  power of sale 
D)  refinancing sale

Question 14

A(n)________ refers to a security interest in property that was not in the possession of the debtor when the security agreement was executed.

Accepted Answer

A)  floating lien 
B)  mortgage 
C)  attachment 
D)  future advance 
A)  floating lien 
B)  mortgage 
C)  attachment 
D)  future advance

Question 15

Which of the following is true of surety arrangement?

Accepted Answer

A)  The surety is not liable for paying the principal debtor's debt when it is due. 
B)  The creditor should have exhausted all other remedies before seeking payment from the surety. 
C)  The creditor has the right to initiate legal actions only against the principal debtor and not against the surety. 
D)  The principal debtor does not have to be in default on the debt before seeking payment from the surety. 
A)  The surety is not liable for paying the principal debtor's debt when it is due. 
B)  The creditor should have exhausted all other remedies before seeking payment from the surety. 
C)  The creditor has the right to initiate legal actions only against the principal debtor and not against the surety. 
D)  The principal debtor does not have to be in default on the debt before seeking payment from the surety.

Question 16

What is the statutory period of redemption?

Accepted Answer

A)  The time limit that a trustee can claim legal title to the real property. 
B)  The time allotted to a mortgagor to redeem the property even after foreclosure. 
C)  The time by which the mortgagor has to pay his debts before foreclosure. 
D)  The time allotted by which a mortgagee must start legal proceedings against a defaulter. 
A)  The time limit that a trustee can claim legal title to the real property. 
B)  The time allotted to a mortgagor to redeem the property even after foreclosure. 
C)  The time by which the mortgagor has to pay his debts before foreclosure. 
D)  The time allotted by which a mortgagee must start legal proceedings against a defaulter.

Question 17

A legal procedure by which a secured creditor causes the judicial sale of a secured real estate property to pay a defaulted loan is known as ________.

Accepted Answer

A)  attachment 
B)  refinancing 
C)  land sales contract 
D)  foreclosure sale 
A)  attachment 
B)  refinancing 
C)  land sales contract 
D)  foreclosure sale

Question 18

Ashton borrows $25,000 from Amanda.Amanda lends the money to Ashton without taking an interest in collateral for the loan.Amanda is relying on Ashton's credit standing when she makes the loan.What kind of creditor is Amanda?

Accepted Answer

A)  an unsecured creditor 
B)  a secured creditor 
C)  an administrative claim creditor 
D)  a post-petition creditor 
A)  an unsecured creditor 
B)  a secured creditor 
C)  an administrative claim creditor 
D)  a post-petition creditor

Question 19

________ is a situation in which a creditor agrees to extend credit only if the purchaser pledges some personal property as collateral for the loan.

Accepted Answer

A)  Floating lien 
B)  Attachment 
C)  Lien release 
D)  Secured credit 
A)  Floating lien 
B)  Attachment 
C)  Lien release 
D)  Secured credit

Question 20

The rule of perfection by possession of collateral requires a financing statement to be filed.

Accepted Answer

A) True 
 B)False

Exam 23: Credit, Real Property Financing, and Secured Transactions

Two-party secured transactions occur when a seller sells goods to a buyer on credit and retains a security interest in the goods.

An arrangement where an owner of real property borrows money from a lender and pledges the real property as collateral to secure the repayment of the loan is known as a(n)________.

The nonrecordation of a mortgage does not affect the legality of the instrument between the mortgagor and the mortgagee.

An arrangement in which a third party promises to be primarily liable with the borrower for the payment of the borrower's debt is referred to as ________.

Which of the following is true of financing statements?

Explain surety arrangement with an example.

Explain the difference between writ of attachment and writ of execution.

Which of the following is true of priority of claims?

A(n)________ is property that a debtor acquires post the execution of a security agreement.

When is credit said to have occurred?

A mortgage is a three-party instrument.

If two or more secured parties have perfected security interests in the same collateral,the last to perfect has priority.

Which of the following procedures permits foreclosure without court proceedings and sale of the property through an auction?

A(n)________ refers to a security interest in property that was not in the possession of the debtor when the security agreement was executed.

Which of the following is true of surety arrangement?

What is the statutory period of redemption?

A legal procedure by which a secured creditor causes the judicial sale of a secured real estate property to pay a defaulted loan is known as ________.

Ashton borrows $25,000 from Amanda.Amanda lends the money to Ashton without taking an interest in collateral for the loan.Amanda is relying on Ashton's credit standing when she makes the loan.What kind of creditor is Amanda?

________ is a situation in which a creditor agrees to extend credit only if the purchaser pledges some personal property as collateral for the loan.

The rule of perfection by possession of collateral requires a financing statement to be filed.

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