California Real Estate Practice Exam

What is the purpose of a deed of reconveyance?

1. To transfer title to a new buyer

2. To return title to a trustor when the debt is paid

3. To record a lien on the property

4. To change the zoning classification of the property

The correct answer is: To return title to a trustor when the debt is paid

A This answer is incorrect because a deed of reconveyance does not transfer title to a new buyer. C: This answer is incorrect because recording a lien on the property is a separate process from a deed of reconveyance. D: This answer is incorrect because changing the zoning classification of a property is not the purpose of a deed of reconveyance. A deed of reconveyance is a legal document used to transfer the title of a property from a lender back to the borrower (trustor) once the debt has been fully paid off. It is typically used in mortgage loans and signifies that the borrower has fulfilled their obligations to the lender and now has full ownership of the property. This is an important document to have as it proves the release of the lender's interest in the property and allows the borrower to have a clear title. This also means that the property is no longer used as collateral for the loan. Therefore, the correct answer is B.