California Real Estate Practice Exam

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How can a seller protect himself from future liability when a buyer takes over the seller's mortgage?

  1. By increasing the interest rate

  2. By demanding full payment

  3. By making sure that the buyer assumes the mortgage

  4. By applying for a new loan

The correct answer is: By making sure that the buyer assumes the mortgage

It is important for a seller to make sure that the buyer assumes the mortgage in order to legally transfer the responsibility of the loan to the new owner. Choosing "A" by increasing the interest rate would put an unnecessary financial burden on the buyer. Choosing "B" by demanding full payment would be unrealistic and unfeasible for most buyers. Choosing "D" by applying for a new loan would not protect the seller from liability as they would still be responsible for the original mortgage.

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