Question 1

The notice of lien typically must be filed within what period of time?

Accepted Answer

A)  Within 24 hours
B)  30 to 90 days after the last work is performed
C)  136 days from when the last work is performed
D)  365 days from when the last work is performed

Question 2

Payne borrowed $500 from Long Bank.At the time the loan was made to Payne,Gem orally agreed with Long that Gem would repay the loan if Payne failed to do so.Gem received no personal benefit as a result of the loan to Payne.Which of the following is most likely to be true,under the circumstances?

Accepted Answer

A)  Gem must provide a collateral to Long.
B)  Both Gem and Payne are primarily liable to repay the loan.
C)  Gem is free from liability concerning the loan.
D)  Payne must provide a lien to Gem for the amount of the debt.

Question 3

A(n) ________ is secondarily liable for the debt of the principal debtor.

Accepted Answer

A)  surety
B)  guarantor
C)  beneficiary
D)  executor

Question 4

Robert cosigns a note for his friend Amelia,which she has given to Credit Union to secure a loan.Suppose the note was originally for $5,000 and payable in 12 months with interest at 10 percent a year.Credit Union and Amelia later agree that Amelia will have 24 months to repay the note but that the interest will be 13 percent per year.Robert is not aware of this change of terms.In the event of Amelia defaulting on the loan,will Robert have to repay the debt?

Accepted Answer

A)  Robert will have to pay the debt because he is the surety.
B)  Robert will not have to pay the debt because he has not received any compensation from Amelia for being a surety.
C)  Robert will have to pay the debt because he is the guarantor.
D)  Robert will not have to pay the debt because he has not accepted the changed terms of the loan.

Question 5

Nancy is the mortgagor of a property subject to a mortgage.Can she sell the property?

Accepted Answer

A)  Yes,but only with the consent of the mortgagor.
B)  Yes,but the sale does not affect the mortgagee's interest in the property or the mortgagee's claim against the mortgagor.
C)  Yes,but the sale will affect the mortgagee's claim against the mortgagor.
D)  No,not until the mortgage is satisfied.

Question 6

The key difference between secured and unsecured credit is that unsecured credit transactions are permissible only in a commercial context.

Accepted Answer

A) True 
 B)False

Question 7

Today,most artisans' liens:

Accepted Answer

A)  have been repealed by statute.
B)  are handled by Article 7 of the UCC.
C)  require that the artisan have possession of the debtor's property.
D)  apply whether or not the owner consented to the work performed by the artisan.

Question 8

What Article of the UCC deals with carriers' liens and warehousemen's liens?

Accepted Answer

A)  Article 2
B)  Article 7
C)  Article 3
D)  Article 1

Question 9

Can a mechanic or materialman's lien be claimed if the contract is not in writing?

Accepted Answer

A)  It depends upon state law
B)  Always
C)  Never
D)  It depends upon the value of the improvements or material

Question 10

Which of the following statements is true regarding a guarantor?

Accepted Answer

A)  In order to be a guarantor,a person must enter into a deed of trust with the principal debtor.
B)  A guarantor is primarily liable for the debt along with the principal debtor.
C)  Generally,a guarantor's promise must be made in writing to be enforceable under the statute of frauds.
D)  A guarantor joins the principal debtor in making a promise.

Question 11

When a creditor keeps property in satisfaction of debt and the owner's rights are cut off,this is called ________.

Accepted Answer

A)  strict foreclosure
B)  power of sale
C)  action and sale
D)  artisan's lien sale

Question 12

John receives certain goods from Tom.He promises to pay Tom later.This transaction is based on a(n) ________.

Accepted Answer

A)  deed of trust
B)  unsecured credit
C)  mortgage
D)  subrogation

Question 13

To be relieved of obligations as surety,a compensated surety must show that:

Accepted Answer

A)  he is secondarily liable for the payment of the debt.
B)  a change in the contract was material and prejudicial to him.
C)  he lacks the capacity to fulfill his promise.
D)  he has provided adequate collateral to the creditor.

Question 14

The most common kind of change affecting a surety is ________.

Accepted Answer

A)  a change in interest rate
B)  an extension of time to perform the contract
C)  a change from a compensated surety to an accommodation surety
D)  a change from a surety to a guarantor

Question 15

Xavier deeds to Peter,a trustee,his property in the form of security for the loan,which is lent by Smith,the beneficiary of the trust.The nature of this transaction renders it as a deed of trust.Under these circumstances,if Xavier defaults to pay the loan,which of the following is the appropriate way in which Smith can recover his loan?

Accepted Answer

A)  By asking Xavier to enter into an action and sale contract
B)  By exercising the right of exoneration
C)  By exercising right of reimbursement
D)  By notifying Peter to sell the property

Question 16

In the case of ________,after the foreclosure,the proceeds of the sale are applied to the payment of the mortgage debt,and any surplus is paid over to the mortgagor.

Accepted Answer

A)  strict foreclosure
B)  foreclosure by action and sale
C)  accommodative foreclosure
D)  foreclosure by redemption

Question 17

A ________ is a type of contractual security device by which real estate may be used as a security

Accepted Answer

A)  surety contract
B)  conditional sales contract
C)  trust deed
D)  trust receipt

Question 18

Under which of the following systems of foreclosure does the creditor have no right to recover any deficiency between the value of the property and the amount of the debt?

Accepted Answer

A)  Strict foreclosure
B)  Conditional foreclosure
C)  Accommodative foreclosure
D)  Compensated foreclosure

Question 19

Which of the following is generally true about state statutes establishing mechanic's and materialman's liens?

Accepted Answer

A)  Most of them require the mechanics and the materialmen to sign a deed of trust.
B)  They require that work be done in the performance of a contract to improve real property.
C)  They do not allow subrogation by mechanics and materialmen.
D)  They require mechanics and materialmen to enter into a quasi contract with the contractor.

Question 20

The riskiest transaction for a creditor is a(n) ________.

Accepted Answer

A)  unsecured credit transaction
B)  secured credit transaction
C)  mortgage
D)  credit transaction involving a surety

Exam 28: Introduction to Credit and Secured Transactions

Today,most artisans' liens:

Correct Answer
verified

A ________ is a type of contractual security device by which real estate may be used as a security

Correct Answer
verified

Which of the following is generally true about state statutes establishing mechanic's and materialman's liens?

Correct Answer
verified

John receives certain goods from Tom.He promises to pay Tom later.This transaction is based on a(n) ________.

Correct Answer
verified

Nancy is the mortgagor of a property subject to a mortgage.Can she sell the property?

Correct Answer
verified

The most common kind of change affecting a surety is ________.

Correct Answer
verified

When a creditor keeps property in satisfaction of debt and the owner's rights are cut off,this is called ________.

Correct Answer
verified

Payne borrowed $500 from Long Bank.At the time the loan was made to Payne,Gem orally agreed with Long that Gem would repay the loan if Payne failed to do so.Gem received no personal benefit as a result of the loan to Payne.Which of the following is most likely to be true,under the circumstances?

Correct Answer
verified

The notice of lien typically must be filed within what period of time?

Correct Answer
verified

Which of the following statements is true regarding a guarantor?

Correct Answer
verified

A(n) ________ is secondarily liable for the debt of the principal debtor.

Correct Answer
verified

The riskiest transaction for a creditor is a(n) ________.

Correct Answer
verified

Under which of the following systems of foreclosure does the creditor have no right to recover any deficiency between the value of the property and the amount of the debt?

Correct Answer
verified

Can a mechanic or materialman's lien be claimed if the contract is not in writing?

Correct Answer
verified

Correct Answer
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What Article of the UCC deals with carriers' liens and warehousemen's liens?

Correct Answer
verified

Correct Answer
verified

In the case of ________,after the foreclosure,the proceeds of the sale are applied to the payment of the mortgage debt,and any surplus is paid over to the mortgagor.

Correct Answer
verified

The key difference between secured and unsecured credit is that unsecured credit transactions are permissible only in a commercial context.

Correct Answer
verified

To be relieved of obligations as surety,a compensated surety must show that:

Correct Answer
verified

Exam 28: Introduction to Credit and Secured Transactions

Today,most artisans' liens:

Correct AnswerverifiedShow Answer

A ________ is a type of contractual security device by which real estate may be used as a security

Correct AnswerverifiedShow Answer

Which of the following is generally true about state statutes establishing mechanic's and materialman's liens?

Correct AnswerverifiedShow Answer

John receives certain goods from Tom.He promises to pay Tom later.This transaction is based on a(n) ________.

Correct AnswerverifiedShow Answer

Nancy is the mortgagor of a property subject to a mortgage.Can she sell the property?

Correct AnswerverifiedShow Answer

The most common kind of change affecting a surety is ________.

Correct AnswerverifiedShow Answer

When a creditor keeps property in satisfaction of debt and the owner's rights are cut off,this is called ________.

Correct AnswerverifiedShow Answer

Payne borrowed $500 from Long Bank.At the time the loan was made to Payne,Gem orally agreed with Long that Gem would repay the loan if Payne failed to do so.Gem received no personal benefit as a result of the loan to Payne.Which of the following is most likely to be true,under the circumstances?

Correct AnswerverifiedShow Answer

The notice of lien typically must be filed within what period of time?

Correct AnswerverifiedShow Answer

Which of the following statements is true regarding a guarantor?

Correct AnswerverifiedShow Answer

A(n) ________ is secondarily liable for the debt of the principal debtor.

Correct AnswerverifiedShow Answer

The riskiest transaction for a creditor is a(n) ________.

Correct AnswerverifiedShow Answer

Under which of the following systems of foreclosure does the creditor have no right to recover any deficiency between the value of the property and the amount of the debt?

Correct AnswerverifiedShow Answer

Can a mechanic or materialman's lien be claimed if the contract is not in writing?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What Article of the UCC deals with carriers' liens and warehousemen's liens?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the case of ________,after the foreclosure,the proceeds of the sale are applied to the payment of the mortgage debt,and any surplus is paid over to the mortgagor.

Correct AnswerverifiedShow Answer

The key difference between secured and unsecured credit is that unsecured credit transactions are permissible only in a commercial context.

Correct AnswerverifiedShow Answer

To be relieved of obligations as surety,a compensated surety must show that:

Correct AnswerverifiedShow Answer

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