Texas Real Estate Exam

Category - Texas

Concerning the following, which would be correct?
  1. A note is the security for a trust deed
  2. A trust deed has more value than a note
  3. A trust deed is security for a note
  4. The note must be recorded to perfect a lien on the property
Explanation
Answer: C. The property held as collateral under the terms of the Deed of Trust secures the promissory note. A Trust Deed by itself has no value. It is the promissory note that is the negotiable instrument. A note cannot be recorded by itself. However, a Trust Deed can be recorded, which perfects the lien. If the Trust Deed is recorded, the note may be recorded along with it, as the Trust Deed secures the note.
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