Real estate exam terms
9 terms, each with a plain definition, the term it is most often confused with, and how the license exam actually asks about it.
A borrower voluntarily conveying the property to the lender to avoid foreclosure
It saves both sides the cost and time of a foreclosure, and the lender must be willing to accept it. A lender generally will not where junior liens exist, because those liens survive rather than being wiped out as they would be at a foreclosure sale.
The junior lien problem is the examinable reason a lender might refuse one.
A judgment for the shortfall when a foreclosure sale raises less than the debt
It makes the borrower personally liable for the remaining balance. Availability is a matter of state law, and several states bar it after a non-judicial foreclosure or on purchase-money loans.
This is what a "subject to" buyer avoids, since they never became personally liable on the note.
The borrower’s right to pay the debt in full and stop a foreclosure sale
It exists before the sale takes place. Curing the default and paying the accelerated balance redeems the property and ends the proceeding.
Contrast statutory redemption, which some states allow for a period after the sale. Before the sale is equitable; after the sale is statutory.
The process by which a lender forces the sale of property to satisfy a debt
Triggered by default and made practical by the acceleration clause. Whether it goes through a court or through a power of sale in the security instrument depends on the state and on which instrument was used.
Judicial, non-judicial and strict foreclosure are the three forms, and the first two carry nearly all the items.
Foreclosure through a court proceeding ending in a court-ordered sale
The lender sues, the court confirms the default and the amount owed, and the property is sold under the court’s supervision. It is slower and more expensive than the alternative, and it is the norm in lien theory states.
A deficiency judgment is generally available here, because a court is already involved and can enter one.
Foreclosure under a power of sale in the security instrument, without a lawsuit
The trustee under a deed of trust sells the property following the statutory notice procedure. It is markedly faster than the judicial route, and several states restrict or bar a deficiency judgment afterwards as the trade-off.
Connect it to the deed of trust and the power of sale clause. That chain — instrument, clause, procedure — is what the questions follow.
A clause authorizing sale on default without going to court
Written into a deed of trust and, in some states, into a mortgage. It is the authority the trustee relies on to conduct a non-judicial foreclosure, and it is why the choice of instrument has such practical consequences.
Its presence or absence in the fact pattern tells you which foreclosure route the question is about.
A sale for less than the debt, requiring the lender’s consent
The lender agrees to release its lien for less than it is owed so the sale can close. The transaction runs on the lender’s timetable, and whether the remaining balance is forgiven or pursued is a separate question from the sale itself.
The lender’s approval is the defining feature. Without it there is no short sale, only a listing.
A right in some states to reclaim property for a period after the foreclosure sale
Where it exists, the former owner may recover the property within the statutory window by paying the sale price plus costs and interest. Many states provide no such right at all.
Timing is the whole distinction from equity of redemption, and the exam tests only that.
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