When a buyer finances property and signs a promissory note in favor of the lender, what accompanies the promissory note?

• A. Deed of trust
• B. Title insurance
• C. Mortgage
• D. Note of compliance

Answer: (C)

The main idea is that a promissory note is the borrower’s promise to repay the loan, and it’s paired with a security instrument that guarantees the loan by placing a claim on the property. The instrument that accompanies the promissory note is the mortgage. The mortgage attaches a lien to the real estate, giving the lender a legal right to foreclose if the borrower defaults, which is how the loan is secured beyond just the promise to pay. In Michigan, this security instrument is typically a mortgage (deeds of trust are used in other states, but not here). Title insurance, while important for protecting against title defects, does not secure the loan itself. A “note of compliance” isn’t a standard real estate instrument.