The instrument used to purchase property when the seller provides financing and the buyer takes the deed with the seller's lien is

• A. A deed of trust
• B. A lease option
• C. A promissory note
• D. A purchase money mortgage

Answer: (D)

When the seller provides financing, the loan is secured by a lien on the property created by a purchase money mortgage. The buyer receives the deed to the property, but the seller retains a lien to secure repayment of the loan. The buyer signs a promissory note agreeing to repay, and the mortgage (or, in some states, a deed of trust) records and enforces that lien. The term purchase money mortgage directly describes the loan that arises from the sale itself, making it the best fit for this scenario. A lease option isn’t a security instrument, a promissory note alone isn’t the lien, and while a deed of trust can serve a similar security function in some jurisdictions, the standard term for seller-financed purchases is purchase money mortgage.