Delaware uses which security instrument?
Question & Answer
Review the question and all answer choices
Deed of trust only
Deeds of trust involve three parties — borrower, lender, and a neutral trustee — and allow for non-judicial (trustee's sale) foreclosure, which is not the standard instrument or foreclosure process used in Delaware.
Mortgages
Both equally
While some states like North Carolina use both mortgages and deeds of trust, Delaware does not equally employ both instruments; mortgages are the standard security instrument used in Delaware real estate transactions.
Land contracts only
Land contracts (also called contracts for deed) are seller-financing instruments where the seller retains title until the buyer completes all payments, and they are not the primary security instrument used in Delaware's conventional lending market.
Why is this correct?
Delaware is a lien theory state that uses mortgages as its primary security instrument, governed by Delaware Code Title 25. Because Delaware uses mortgages rather than deeds of trust, lenders must pursue judicial foreclosure through the Court of Chancery when a borrower defaults, which provides borrowers with greater legal protections and due process. This is consistent with Delaware's historically court-centered approach to property and equity law.
Continue Learning
Explore this topic in different formats
More Real Estate Financing Videos
Continue learning with related video lessons
Ready to Ace Your Real Estate Exam?
Access 2,000+ free video lessons covering all 11 exam topics.