Certified Residential Appraiser Practice Exam

What occurs during a reconveyance?

1. Title is sold to a new owner

2. Title is passed back to the original owner

3. New liens are created on the property

4. Title is transferred to a third party

The correct answer is: Title is passed back to the original owner

During a reconveyance, the title to the property is returned to the original owner from whom it was held as security for a loan or obligation. This typically occurs after the borrower has fulfilled their repayment obligations, such as paying off a mortgage. Once the loan is satisfied, the lender will execute a deed of reconveyance, effectively removing their lien from the property and restoring full ownership rights to the borrower. This process signifies the completion of the financial obligation and the restoration of the owner's rights over their property. This understanding of reconveyance is critical in the context of real estate and property law, as it reinforces the significance of mortgage satisfaction and the removal of liens upon fulfilling payment obligations. The other options discuss actions that do not align with the concept of reconveyance, such as transferring title to a new owner or creating new liens, which would imply a continuation of obligations or ownership changes rather than the original owner's reinstatement of full rights.