New Jersey Real Estate License Exam Practice Question
What is the function of a promissory note or bond when used in conjunction with a mortgage?
Correct Answer: B
Rationale: A promissory note or bond establishes a personal obligation for the borrower to repay the debt, ensuring accountability. This legal document signifies the borrower's commitment to the lender, detailing the amount owed and the repayment terms.
Option A is incorrect because a legal description of the property is typically found in the mortgage document, not the promissory note. Option C misrepresents the role of the note; while it supports the mortgage, it does not provide the necessary elements for validity. Option D is misleading, as a promissory note does not limit the lender's rights to interest only; rather, it outlines the total debt obligation, including principal and interest.
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