Veteran uses Cal-Vet residential loan program with installment sales contract. Who gives deed to property?
Audio Lesson
Duration: 2:42
Question & Answer
Review the question and all answer choices
Previous property owner
The previous property owner (vendor) typically holds title in a standard installment sale, but Cal-Vet loans are special financing arrangements where the state lender takes title as security, unlike conventional installment contracts.
Cal-Vet
Vendee
The vendee (buyer/veteran) is the recipient of the deed, not the giver. In Cal-Vet loans, the veteran obtains title only after full repayment, never gives the deed during the transaction.
Insufficient evidence provided
There is sufficient evidence in the question to determine the correct answer. The Cal-Vet loan program structure clearly indicates the state holds title and gives the deed upon full repayment.
Deep Analysis
AI-powered in-depth explanation of this concept
This question tests understanding of California's unique Cal-Vet loan program and how it interacts with installment sales contracts. In real estate practice, knowing who holds legal title is crucial for determining risk, liability, and contractual obligations. The question appears straightforward but requires knowledge of specialized financing programs. The key concept is that Cal-Vet loans are direct loans from the state, not conventional mortgages. In a standard installment sale, the seller (vendor) holds title until full payment, but Cal-Vet acts as the lender who takes title to secure their investment. Veterans using this program don't get title until they fully repay the loan. This question challenges students by combining two distinct concepts (Cal-Vet loans and installment contracts) that operate differently in typical real estate transactions.
Knowledge Background
Essential context and foundational knowledge
The California Department of Veterans Affairs (Cal-Vet) administers a unique residential loan program exclusively for eligible veterans. Unlike conventional mortgages where a private lender holds a lien, Cal-Vet provides direct loans and takes legal title to the property as security. This structure allows veterans to purchase homes with favorable terms while the state maintains ownership until repayment is complete. This program was established to help veterans achieve homeownership with benefits not available in conventional financing.
Think of Cal-Vet like a layaway program for a house. The store (state) keeps the item (deed) until you've made all payments. Only then do you get to take possession of the item with full ownership.
When you see Cal-Vet loans, remember the layaway analogy - the state holds the 'item' (deed) until complete payment.
For Cal-Vet questions, remember: Cal-Vet gives the deed. This direct lending program differs from conventional mortgages where the lender only holds a lien.
Real World Application
How this concept applies in actual real estate practice
A veteran purchases a home using the Cal-Vet loan program. The seller transfers title directly to Cal-Vet at closing. The veteran makes monthly payments to Cal-Vet. If the veteran defaults, Cal-Vet can foreclose on property they already own. After 30 years of payments, the veteran requests the deed from Cal-Vet to complete their ownership. The listing agent must explain this unique structure to both sellers and veterans during transactions.
More Real Estate Financing Episodes
Continue learning with related audio lessons
Ready to Ace Your Real Estate Exam?
Access 2,499+ free podcast episodes covering all 11 exam topics.