REAL ESTATE -PROPERTY EXAM QUESTIONS AND
ANSWERS WITH RATIONALE GRADED A+ 2024-
2025
Sophia sells her property to Alex, reserving an express vendor's lien in the deed. Alex defaults, and
Sophia forecloses. Before the sale is complete, Alex files a mechanic's lien against the property for
unpaid construction work.
What is the priority of the mechanic's lien?
A. The mechanic's lien takes priority because it was filed before foreclosure.
B. The vendor's lien retains priority over the mechanic's lien.
C. Both liens are of equal priority and must share sale proceeds.
D. The mechanic's lien is extinguished by foreclosure.
Answer: B
Explanation: Vendor's liens typically have priority over subsequent encumbrances, including mechanic's
liens.
Liam takes out a home equity loan secured by his homestead in Texas. He later defaults, and the lender
initiates foreclosure. Liam argues that the loan agreement did not include required constitutional
disclosures.
What is the likely outcome?
A. The foreclosure is valid because Liam defaulted.
B. The foreclosure is void due to the lender's failure to meet constitutional requirements.
C. The foreclosure is postponed until disclosures are provided.
D. The lender can correct the error and proceed with foreclosure.
,Answer: B
Explanation: Failure to comply with Texas constitutional requirements for home equity loans renders the
loan and foreclosure void.
A lender refinances Maria's mortgage but fails to record the new deed of trust. A second lender
subsequently records a lien on the same property. When Maria defaults, which lender has priority?
A. The first lender retains priority despite the lack of recording.
B. The second lender has priority because it recorded its lien first.
C. Both lenders must split foreclosure proceeds equally.
D. Neither lender can foreclose until the borrower agrees.
Answer: B
Explanation: Under Texas law, priority is determined by recording, and the second lender has priority if
the first lender fails to record.
Connor sells his property to Emma but retains an implied vendor's lien. Emma defaults, and Connor sues
to foreclose. During litigation, Emma conveys the property to Buyer B, who is unaware of the lien.
What is Buyer B's interest in the property?
A. Buyer B takes free of the lien as a bona fide purchaser (BFP).
B. Buyer B takes subject to the lien because it was implied in the sale.
C. Buyer B must sue Connor to establish their rights.
D. Buyer B's interest is void because Emma defaulted.
Answer: B
,Explanation: Implied vendor's liens are enforceable against subsequent purchasers unless expressly
released.
Chris purchases property subject to a mortgage held by Bank Y. If Chris defaults, who is liable for the
remaining debt?
A. Only Chris, because he owns the property.
B. Both Chris and the original borrower.
C. Only the original borrower unless Chris assumes the mortgage.
D. Neither party is liable if the property is foreclosed.
Answer: C
Explanation: When a property is purchased subject to a mortgage, the original borrower remains
personally liable unless the buyer assumes the debt.
Under Texas law, which of the following is a valid ground for voiding a home equity loan?
A. The loan was secured by a vacation home.
B. The loan documents were signed electronically.
C. The loan included fees exceeding 3% of the principal.
D. The loan was used to refinance an existing mortgage.
Answer: C
Explanation: Texas constitutional limits on fees in home equity loans render such loans void if exceeded.
Leah signs a deed absolute conveying her homestead to Evan but claims it was intended as a mortgage.
What must Leah prove to prevail?
, A. That Evan agreed to reconvey the property.
B. That Leah retained possession of the property.
C. That Leah made regular payments to Evan.
D. That the transaction was intended as security for a loan.
Answer: D
Explanation: Courts will treat an absolute deed as a mortgage if evidence shows the transaction was
intended to secure a debt.
Nick sells his property to Laura, reserving an express vendor's lien in the deed. Laura later defaults, and
Nick files for foreclosure. Meanwhile, Laura conveys the property to Buyer Q without disclosing the lien.
What is Buyer Q's status?
A. Buyer Q takes the property free of the vendor's lien as a bona fide purchaser (BFP).
B. Buyer Q takes the property subject to the vendor's lien.
C. Buyer Q's purchase voids Nick's lien.
D. Buyer Q is personally liable for Laura's debt to Nick.
Answer: B
Explanation: A vendor's lien is enforceable against subsequent purchasers unless expressly released or
invalidated.
Rachel gives a mortgage on two parcels of land to secure a loan. After defaulting, she negotiates with
the lender to release one parcel from the lien in exchange for partial repayment. What happens to the
remaining parcel?
A. The remaining parcel is also released from the lien.
B. The lien continues to encumber the remaining parcel.
ANSWERS WITH RATIONALE GRADED A+ 2024-
2025
Sophia sells her property to Alex, reserving an express vendor's lien in the deed. Alex defaults, and
Sophia forecloses. Before the sale is complete, Alex files a mechanic's lien against the property for
unpaid construction work.
What is the priority of the mechanic's lien?
A. The mechanic's lien takes priority because it was filed before foreclosure.
B. The vendor's lien retains priority over the mechanic's lien.
C. Both liens are of equal priority and must share sale proceeds.
D. The mechanic's lien is extinguished by foreclosure.
Answer: B
Explanation: Vendor's liens typically have priority over subsequent encumbrances, including mechanic's
liens.
Liam takes out a home equity loan secured by his homestead in Texas. He later defaults, and the lender
initiates foreclosure. Liam argues that the loan agreement did not include required constitutional
disclosures.
What is the likely outcome?
A. The foreclosure is valid because Liam defaulted.
B. The foreclosure is void due to the lender's failure to meet constitutional requirements.
C. The foreclosure is postponed until disclosures are provided.
D. The lender can correct the error and proceed with foreclosure.
,Answer: B
Explanation: Failure to comply with Texas constitutional requirements for home equity loans renders the
loan and foreclosure void.
A lender refinances Maria's mortgage but fails to record the new deed of trust. A second lender
subsequently records a lien on the same property. When Maria defaults, which lender has priority?
A. The first lender retains priority despite the lack of recording.
B. The second lender has priority because it recorded its lien first.
C. Both lenders must split foreclosure proceeds equally.
D. Neither lender can foreclose until the borrower agrees.
Answer: B
Explanation: Under Texas law, priority is determined by recording, and the second lender has priority if
the first lender fails to record.
Connor sells his property to Emma but retains an implied vendor's lien. Emma defaults, and Connor sues
to foreclose. During litigation, Emma conveys the property to Buyer B, who is unaware of the lien.
What is Buyer B's interest in the property?
A. Buyer B takes free of the lien as a bona fide purchaser (BFP).
B. Buyer B takes subject to the lien because it was implied in the sale.
C. Buyer B must sue Connor to establish their rights.
D. Buyer B's interest is void because Emma defaulted.
Answer: B
,Explanation: Implied vendor's liens are enforceable against subsequent purchasers unless expressly
released.
Chris purchases property subject to a mortgage held by Bank Y. If Chris defaults, who is liable for the
remaining debt?
A. Only Chris, because he owns the property.
B. Both Chris and the original borrower.
C. Only the original borrower unless Chris assumes the mortgage.
D. Neither party is liable if the property is foreclosed.
Answer: C
Explanation: When a property is purchased subject to a mortgage, the original borrower remains
personally liable unless the buyer assumes the debt.
Under Texas law, which of the following is a valid ground for voiding a home equity loan?
A. The loan was secured by a vacation home.
B. The loan documents were signed electronically.
C. The loan included fees exceeding 3% of the principal.
D. The loan was used to refinance an existing mortgage.
Answer: C
Explanation: Texas constitutional limits on fees in home equity loans render such loans void if exceeded.
Leah signs a deed absolute conveying her homestead to Evan but claims it was intended as a mortgage.
What must Leah prove to prevail?
, A. That Evan agreed to reconvey the property.
B. That Leah retained possession of the property.
C. That Leah made regular payments to Evan.
D. That the transaction was intended as security for a loan.
Answer: D
Explanation: Courts will treat an absolute deed as a mortgage if evidence shows the transaction was
intended to secure a debt.
Nick sells his property to Laura, reserving an express vendor's lien in the deed. Laura later defaults, and
Nick files for foreclosure. Meanwhile, Laura conveys the property to Buyer Q without disclosing the lien.
What is Buyer Q's status?
A. Buyer Q takes the property free of the vendor's lien as a bona fide purchaser (BFP).
B. Buyer Q takes the property subject to the vendor's lien.
C. Buyer Q's purchase voids Nick's lien.
D. Buyer Q is personally liable for Laura's debt to Nick.
Answer: B
Explanation: A vendor's lien is enforceable against subsequent purchasers unless expressly released or
invalidated.
Rachel gives a mortgage on two parcels of land to secure a loan. After defaulting, she negotiates with
the lender to release one parcel from the lien in exchange for partial repayment. What happens to the
remaining parcel?
A. The remaining parcel is also released from the lien.
B. The lien continues to encumber the remaining parcel.
