Chapter 3: Finance Instruments

Question 1

promissory notes

Answer 1

financing instruments that evidence a promise to pay a specific amount of money to a specific person within a specific time frame.

Question 2

equitable right of redemption

Answer 2

save or redeem the property prior to the confirmation of sale

Question 3

statutory right of redemption

Answer 3

allows debtors to redeem themselves after the final sale

Question 4

deed in lieu of foreclosure

Answer 4

debtors still lose the property, but by conveying it voluntarily before final court action, they avoid having a foreclosure on their credit record

Question 5

acceleration clause

Answer 5

gives the lender the right to declare the entire loan balance due immediately due to borrower default or violation of other contract provisions.

Question 6

alienation clause

Answer 6

gives the lender certain stated rights when there is a transfer of ownership in the property.

Question 7

defeasance clause

Answer 7

clause in a legal document that states that in the event a stated condition has been fulfilled, the document becomes null and void

Question 8

partial release, satisfaction, or reconveyance clause

Answer 8

obligates the creditor to release part of the property from the lien and convey title to that part back to the debtor once certain provisions of the note or mortgage have been satisfied. (builder)

Question 9

prepayment clause

Answer 9

gives the lender the right to charge the borrower a penalty for paying off the loan early

Question 10

covenants

Answer 10

promises

Question 11

demand clause

Answer 11

lender may demand that the default be cured or the note is due and payable immediately