Escrow & Title
In South Carolina, which type of property interest is created when a lender places a lien on collateral as security for a construction loan?
AAn ownership interest in the property
BA security interest (deed of trust or mortgage lien)✓ Correct
CA leasehold interest
DA reversionary interest
Explanation
A construction lender's interest is typically secured by a deed of trust (or mortgage), creating a lien on the property as collateral. The lender has a security interest but not ownership.
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Key Terms to Know
Deed of Trust
A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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