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Chapter Quiz
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1
A creditor who extends secured credit to an individual assumes greater degree of risk than one who extends unsecured credit.
A)True
B)False
2
If a person fails to pay the balance due on a loan, a surety may be required to pay it if he cosigned on the loan.
A)True
B)False
3
John stayed at ABC Hotel for seven nights. John refused to pay his bill. ABC Hotel has a right common law right to claim a lien on John's luggage.
A)True
B)False
4
In order for a mortgage to be valid, it must be recorded against the secured land.
A)True
B)False
5
A person who acts as a surety for monetary compensation is known as an accommodation surety.
A)True
B)False
6
As a surety for a principal, the surety may use any defenses against the third party creditor that the principal may have.
A)True
B)False
7
A contractor who provides services and/or materials to a parcel of real estate and who does not receive payment as promised may file and record:
A)a deed of trust.
B)a land contract.
C)a mechanics lien.
D)a mortgage lien.
8
Which of the following statements regarding a lienholder are true?
A)A lienholder automatically has the right to sell the goods if his charges are not paid.
B)Lienholders are generally not required to give notice to debtors before selling the property.
C)A and B
D)After obtaining a judgment for his charges, the lienholder can have the sheriff seize the property and sell it at a judicial sale.
9
Kim tells Sam, owner of Sam's Auto: "I will guarantee payment of my daughter Deb's debt to you for the purchase of the Sam's SUV if she does not pay it." Kim:
A)may be held liable for the debt even if Sam has not asked Deb to pay first.
B)has made a promise that must be in writing to be enforceable under the Statute of Frauds.
C)is a surety.
D)Both A and B
E)All of the above
10
Jan cosigns a promissory note for $500.00 at the credit union for her sister Amy. Amy defaults on the note, and the credit union collects $500.00 from Jan. Jan may collect $500.00 under:
A)their rights of contribution.
B)their rights of subrogation.
C)their rights to reimbursement.
D)Both B and C





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