California requires that a deed of trust include which clause that enables non-judicial foreclosure?
Correct Answer
C) Power of sale clause
The power of sale clause in a California deed of trust authorizes the trustee to sell the property at auction without court involvement if the borrower defaults.
Why This Is the Correct Answer
The power of sale clause in a California deed of trust authorizes the trustee to sell the property at auction without court involvement if the borrower defaults.
Why the Other Options Are Wrong
Option A: Acceleration clause
An acceleration clause allows the lender to demand full payment upon default, but doesn't authorize the sale itself.
Option B: Due-on-sale clause
A due-on-sale clause requires full payoff upon property transfer, not foreclosure authority.
Option D: Defeasance clause
A defeasance clause relates to the title reverting to the borrower upon full payment, not foreclosure.
Memory Technique
CA -> ca-foreclosure-property-servicing-and-debt-collection
Exam Tip
Legacy California general items should be used sparingly; they are kept officially supported for existing content but new MLO growth should focus more on DFPI/DRE, CFL, CRMLA, covered-loan, and usury rules.
Common Mistakes to Avoid
- -Using a national baseline answer when California has agency-specific DFPI or DRE requirements
- -Confusing CFL, CRMLA, covered-loan, usury, servicing, and DRE endorsement rules
- -Relying on legacy California state-exam or education assumptions instead of current NMLS source pages
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