California Real Estate Practice Exam

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Study for the California Real Estate Exam with confidence. Engage with interactive questions designed to enhance your understanding of real estate principles, laws, and practices. Prepare thoroughly for your licensing test and ensure you have the knowledge to succeed in your real estate career!

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The offer of pledging real property to secure a loan is known as what?

Mortgaging
Lien
Hypothecation
Collateralization

The correct answer is: Hypothecation

Mortgaging refers specifically to obtaining a loan for the purpose of purchasing real property, whereas hypothecation applies to using real property as collateral for any type of loan or debt. Lien refers to a legal claim on a property used to secure payment of a debt or obligation, but does not necessarily involve a loan. Collateralization can refer to using any type of asset, not just real property, as security for a loan. Therefore, the offer of pledging real property to secure a loan is best known as hypothecation.