In a seller-financed sale where the buyer becomes owner of record and the seller retains a lien, the financing is evidenced by

• A. A lease with option
• B. A Purchase Money Mortgage
• C. A promissory note
• D. A deed of trust

Answer: (B)

In seller-financed sales, where the buyer takes title and the seller keeps a lien as security, the financing is evidenced by a purchase money mortgage. This instrument specifically creates and records the lender’s security interest in the property for the loan provided by the seller to the buyer. The promissory note records the borrower’s promise to repay, but the lien that ties that debt to the property is established by the mortgage (or deed of trust, depending on jurisdiction). A lease with option is unrelated to creating a loan security interest. While a deed of trust can serve the same security purpose in some states, the term that best describes the financing arrangement in this context is a purchase money mortgage.