Tennessee Realtor State Practice Exam

What is the name of the clause that allows a lender to foreclose non-judicially in a deed of trust?

1. Power of foreclosure.

2. Power of sale.

3. Equitable title clause.

4. Legal title clause.

The correct answer is: Power of sale.

The term that describes the clause allowing a lender to foreclose non-judicially in a deed of trust is known as the Power of Sale. This clause grants the lender the authority to sell the property in the event of default without the need for court proceedings. The Power of Sale provisions are beneficial for lenders because they streamline the foreclosure process, enabling them to quickly recover the outstanding debt by selling the property directly. This method is often viewed favorably because it avoids the drawn-out and potentially costly court process associated with judicial foreclosures. Other choices like Power of Foreclosure, Equitable Title Clause, and Legal Title Clause do not specifically relate to the non-judicial process. The terms refer to other aspects of real estate law but do not provide the same functional ability for lenders as the Power of Sale clause does in the context of a deed of trust.