,ACEABLE AGENT – PRINCIPLES OF REAL ESTATE
2 (2025)
100 Complete Practice Questions & Answers
1. What is a general lien?
Answer:
A general lien is a claim against all property owned by a debtor, rather than one specific asset.
It allows a creditor to collect a debt by seizing any property of the borrower. Examples include
judgment liens and IRS tax liens.
2. What is a specific lien?
Answer:
A specific lien is attached to a particular property, such as a mortgage or mechanic’s lien. It
ensures that the creditor can recover money only from that identified property rather than the
owner’s entire estate.
3. What is a voluntary lien?
Answer:
A voluntary lien is one that the property owner agrees to, such as a mortgage or home equity
loan. The borrower gives the lender a legal claim on the property in exchange for financing.
4. What is an involuntary lien?
Answer:
An involuntary lien is placed on property without the owner’s consent, usually due to unpaid
debts such as taxes, court judgments, or contractor bills. These liens are created by law or court
order.
5. What is a mechanic’s lien?
,Answer:
A mechanic’s lien is placed by contractors or suppliers who were not paid for labor or materials
used to improve property. It allows them to force the sale of the property to recover their
unpaid costs.
6. What is a judgment lien?
Answer:
A judgment lien results from a court ruling that a debtor owes money. Once recorded, it
attaches to the debtor’s real estate, allowing the creditor to claim proceeds if the property is
sold.
7. What is a tax lien?
Answer:
A tax lien is placed by the government when property taxes or income taxes are unpaid. It has
priority over most other liens, meaning the government gets paid first if the property is sold.
8. What is lien priority?
Answer:
Lien priority determines which creditor gets paid first when a property is sold. The general rule
is “first in time, first in right,” except tax liens which usually take precedence.
9. What does “first in time, first in right” mean?
Answer:
This means that the lien recorded earliest generally has the highest priority. Creditors who
record later are paid only after earlier liens have been satisfied.
10. What is a mortgage?
Answer:
A mortgage is a voluntary lien in which real property is pledged as security for a loan. If the
borrower defaults, the lender may foreclose and sell the property to recover the debt.
, 11. What is a promissory note?
Answer:
A promissory note is a written promise to repay a loan. It includes the loan amount, interest
rate, payment schedule, and maturity date, making it the borrower’s legal obligation.
12. What is a deed of trust?
Answer:
A deed of trust involves three parties—the borrower, lender, and trustee. The trustee holds
legal title until the loan is repaid, and may sell the property if the borrower defaults.
13. What is equity?
Answer:
Equity is the difference between the property’s market value and the amount owed on liens. It
represents the owner’s financial interest in the property.
14. What is foreclosure?
Answer:
Foreclosure is the legal process by which a lender sells property after the borrower defaults on
a loan. The proceeds are used to pay off the debt.
15. What is a deficiency judgment?
Answer:
A deficiency judgment allows a lender to collect the remaining balance if a foreclosure sale
does not fully cover the mortgage debt.
16. What is a short sale?
Answer:
A short sale occurs when a lender agrees to accept less than what is owed on a mortgage to
avoid foreclosure.
2 (2025)
100 Complete Practice Questions & Answers
1. What is a general lien?
Answer:
A general lien is a claim against all property owned by a debtor, rather than one specific asset.
It allows a creditor to collect a debt by seizing any property of the borrower. Examples include
judgment liens and IRS tax liens.
2. What is a specific lien?
Answer:
A specific lien is attached to a particular property, such as a mortgage or mechanic’s lien. It
ensures that the creditor can recover money only from that identified property rather than the
owner’s entire estate.
3. What is a voluntary lien?
Answer:
A voluntary lien is one that the property owner agrees to, such as a mortgage or home equity
loan. The borrower gives the lender a legal claim on the property in exchange for financing.
4. What is an involuntary lien?
Answer:
An involuntary lien is placed on property without the owner’s consent, usually due to unpaid
debts such as taxes, court judgments, or contractor bills. These liens are created by law or court
order.
5. What is a mechanic’s lien?
,Answer:
A mechanic’s lien is placed by contractors or suppliers who were not paid for labor or materials
used to improve property. It allows them to force the sale of the property to recover their
unpaid costs.
6. What is a judgment lien?
Answer:
A judgment lien results from a court ruling that a debtor owes money. Once recorded, it
attaches to the debtor’s real estate, allowing the creditor to claim proceeds if the property is
sold.
7. What is a tax lien?
Answer:
A tax lien is placed by the government when property taxes or income taxes are unpaid. It has
priority over most other liens, meaning the government gets paid first if the property is sold.
8. What is lien priority?
Answer:
Lien priority determines which creditor gets paid first when a property is sold. The general rule
is “first in time, first in right,” except tax liens which usually take precedence.
9. What does “first in time, first in right” mean?
Answer:
This means that the lien recorded earliest generally has the highest priority. Creditors who
record later are paid only after earlier liens have been satisfied.
10. What is a mortgage?
Answer:
A mortgage is a voluntary lien in which real property is pledged as security for a loan. If the
borrower defaults, the lender may foreclose and sell the property to recover the debt.
, 11. What is a promissory note?
Answer:
A promissory note is a written promise to repay a loan. It includes the loan amount, interest
rate, payment schedule, and maturity date, making it the borrower’s legal obligation.
12. What is a deed of trust?
Answer:
A deed of trust involves three parties—the borrower, lender, and trustee. The trustee holds
legal title until the loan is repaid, and may sell the property if the borrower defaults.
13. What is equity?
Answer:
Equity is the difference between the property’s market value and the amount owed on liens. It
represents the owner’s financial interest in the property.
14. What is foreclosure?
Answer:
Foreclosure is the legal process by which a lender sells property after the borrower defaults on
a loan. The proceeds are used to pay off the debt.
15. What is a deficiency judgment?
Answer:
A deficiency judgment allows a lender to collect the remaining balance if a foreclosure sale
does not fully cover the mortgage debt.
16. What is a short sale?
Answer:
A short sale occurs when a lender agrees to accept less than what is owed on a mortgage to
avoid foreclosure.
