A Louisiana real estate agent is advising a client on the closing process for the sale of a residential property. Which of the following statements about the Louisiana Act of Sale is NOT accurate?
Correct Answer
C) The Act of Sale automatically extinguishes all existing mortgages and liens on the property upon execution
The statement that the Act of Sale automatically extinguishes all existing mortgages and liens upon execution is NOT accurate. Mortgages and liens encumbering the property must be separately cancelled in the mortgage records through a release or cancellation instrument signed by the creditor. The Act of Sale conveys ownership but does not by itself cancel existing encumbrances — the title must be cleared through separate payoff and release procedures at or before closing.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
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- → A Rhode Island licensee encounters a listing contract is drafted. What should the licensee remember?
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- → Which Rhode Island rule applies when a listing agreement lists property with a multiple listing service?
- → A Rhode Island licensee encounters a listing agreement lets the principal broker retain a portion of deposit money upon buyer default. What should the licensee remember?
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