ILLINOIS REAL ESTATE STUDY EXAM GUIDE 2026
QUESTIONS AND ANSWERS SURE A+
✔✔Testate - ✔✔Person dies with a will- real property is given to named heir
✔✔Intestate - ✔✔Person dies without a will- state attempts to find living relatives to heir
real property to
✔✔Escheatment - ✔✔When a state is unable to find living heirs for real property.
IL=property escheats to the county in which it is located.
✔✔Voluntary lien - ✔✔Created intentionally by owner (mortgage loan).
✔✔Statutory lien - ✔✔Involuntary lien created by law/statute (taxes).
✔✔Equitable lien - ✔✔Involuntary lien created by judgements.
✔✔What is the priority of liens? - ✔✔1. Taxes
2. Mortgage
3. Homestead (if applicable)
4. Creditors in order of application
5. Owner
✔✔General Warranty Deed - ✔✔Greatest protection; the grantor "promises"...
1. that he/she owns the property
2. there are no encumbrances, unless listed
3. the title is good against third parties
4. the title will be delivered and good
5. the deed is good forever
✔✔Special Warranty Deed - ✔✔The grantor "promises"...
1. that he/she received the title
2. there are no encumbrances when the grantor held the title, unless listed
✔✔Bargain and Sale Deed - ✔✔Carries no warranties or liens, implies the grantor has
right to convey title, but grantor may add warranties:
The grantor "promises"...
1. he/she holds a fee-simple estate
2. there are no encumbrances made by the grantor, unless listed
3. the title is good against third parties
✔✔Quitclaim Deed - ✔✔Least protection; conveys whatever interest the grantor has.
May be used to...
1. convey less than fee-simple estate
2. cure a defect (misspelled name)
,3. an inheritance may have an invalid deed
✔✔Deed in Trust - ✔✔Conveyance of a deed from a truster to a trustee
✔✔Trustee's Deed - ✔✔Conveyance of a deed from a trustee to a third party
✔✔Constructive notice - ✔✔Recorded information that is available with reasonable
inquiry
✔✔Actual notice - ✔✔Information that is available and has been read
✔✔Mortgagee - ✔✔The lender
✔✔Mortgagor - ✔✔The borrower
✔✔Title Theory - ✔✔The borrower (mortgagor) holds the legal title to the property and
the lender (mortgagee) holds an equitable title; the lender owns the land, and on full
payment of the mortgage, the borrower becomes the land-owner
✔✔Lien Theory - ✔✔The borrower (mortgagor) holds both the legal title and an
equitable title to the property; if the lender (mortgagee) wanted to obtain the legal title,
they would do so in a foreclosure
✔✔Increasing reserve requirements... - ✔✔1. raises rates
2. decreases money flow
3. slows economy and purchases
4. slows inflation
✔✔Decreasing reserve requirements.... - ✔✔1. lowers rates
2. increases money for loans
3. stimulates market
4. increases inflation
✔✔Fannie Mae - ✔✔Federal National Mortgage Assosiation; Secondary market for
conventional, VA, and FHA loans. Limited loans.
✔✔Ginnie Mae - ✔✔Government National Mortgage Assosiaction; Secondary market
for special assistance programs and guarantees mortgage backed securities with FHA
and VA loans as collateral.
✔✔Freddie Mac - ✔✔Federal Home Loan Mortgage Cooperation; Secondary market for
conventional loans
, ✔✔Secondary Mortgage Market - ✔✔Agencies purchase existing mortgages and
assemble them into blocks or pools (packages)
✔✔Primary Mortgage Market - ✔✔Lenders that originate mortgage loans
✔✔Straight Loan - ✔✔Interest only/Term loan; non-amortized loan divided into periodic
payments of interest only and a principal payment due in full at the end of the term.
✔✔Amortized Loan - ✔✔Direct reduction loan; periodic payments to partially pay off
interest and principal over a term of years (generally 15 or 30)
✔✔Adjustable Rate Mortgage - ✔✔ARM's; originate at one rate of interest and
fluctuates up or down during the loan term based on economic indicators.
✔✔Balloon Loan - ✔✔Partially amortized loan; periodic payments with a final payment
larger than the others
✔✔Growing Equity Mortgage - ✔✔Rapid-payoff mortgage; fixed interest rate, but
increasing principal payments according to an index
✔✔Reverse Mortgage - ✔✔People over 62 can borrow money from the equity in their
home in a variety of ways; interest is charged at a fixed rate, and no payment is due
until the property is sold, or the borrower defaults, moves, or dies
✔✔Nonrecourse Loans - ✔✔The borrower is not held responsible if they default (usually
used for commercial properties where the property itself is adequate collateral
✔✔Conventional Loans - ✔✔Lowest LTV; Loan is usually 80% of value with 20% down
payment
✔✔Package Loan - ✔✔Includes real and personal property
✔✔Blanket Loan - ✔✔Covers more than one parcel or lot of real property
✔✔Wraparound Loan - ✔✔A borrower obtains additional financing from a second
lender without repaying the first loan; the second lender assumes the first loan
payments and the borrower only pays the second lender
✔✔Open-End Loan - ✔✔The borrower can increase the loan amount; interest rates are
only fixed for original amount
✔✔Construction Loan - ✔✔Interim financing; finances improvements; the lender
commits to the full amount of the loan but disburses the funds in payments for
QUESTIONS AND ANSWERS SURE A+
✔✔Testate - ✔✔Person dies with a will- real property is given to named heir
✔✔Intestate - ✔✔Person dies without a will- state attempts to find living relatives to heir
real property to
✔✔Escheatment - ✔✔When a state is unable to find living heirs for real property.
IL=property escheats to the county in which it is located.
✔✔Voluntary lien - ✔✔Created intentionally by owner (mortgage loan).
✔✔Statutory lien - ✔✔Involuntary lien created by law/statute (taxes).
✔✔Equitable lien - ✔✔Involuntary lien created by judgements.
✔✔What is the priority of liens? - ✔✔1. Taxes
2. Mortgage
3. Homestead (if applicable)
4. Creditors in order of application
5. Owner
✔✔General Warranty Deed - ✔✔Greatest protection; the grantor "promises"...
1. that he/she owns the property
2. there are no encumbrances, unless listed
3. the title is good against third parties
4. the title will be delivered and good
5. the deed is good forever
✔✔Special Warranty Deed - ✔✔The grantor "promises"...
1. that he/she received the title
2. there are no encumbrances when the grantor held the title, unless listed
✔✔Bargain and Sale Deed - ✔✔Carries no warranties or liens, implies the grantor has
right to convey title, but grantor may add warranties:
The grantor "promises"...
1. he/she holds a fee-simple estate
2. there are no encumbrances made by the grantor, unless listed
3. the title is good against third parties
✔✔Quitclaim Deed - ✔✔Least protection; conveys whatever interest the grantor has.
May be used to...
1. convey less than fee-simple estate
2. cure a defect (misspelled name)
,3. an inheritance may have an invalid deed
✔✔Deed in Trust - ✔✔Conveyance of a deed from a truster to a trustee
✔✔Trustee's Deed - ✔✔Conveyance of a deed from a trustee to a third party
✔✔Constructive notice - ✔✔Recorded information that is available with reasonable
inquiry
✔✔Actual notice - ✔✔Information that is available and has been read
✔✔Mortgagee - ✔✔The lender
✔✔Mortgagor - ✔✔The borrower
✔✔Title Theory - ✔✔The borrower (mortgagor) holds the legal title to the property and
the lender (mortgagee) holds an equitable title; the lender owns the land, and on full
payment of the mortgage, the borrower becomes the land-owner
✔✔Lien Theory - ✔✔The borrower (mortgagor) holds both the legal title and an
equitable title to the property; if the lender (mortgagee) wanted to obtain the legal title,
they would do so in a foreclosure
✔✔Increasing reserve requirements... - ✔✔1. raises rates
2. decreases money flow
3. slows economy and purchases
4. slows inflation
✔✔Decreasing reserve requirements.... - ✔✔1. lowers rates
2. increases money for loans
3. stimulates market
4. increases inflation
✔✔Fannie Mae - ✔✔Federal National Mortgage Assosiation; Secondary market for
conventional, VA, and FHA loans. Limited loans.
✔✔Ginnie Mae - ✔✔Government National Mortgage Assosiaction; Secondary market
for special assistance programs and guarantees mortgage backed securities with FHA
and VA loans as collateral.
✔✔Freddie Mac - ✔✔Federal Home Loan Mortgage Cooperation; Secondary market for
conventional loans
, ✔✔Secondary Mortgage Market - ✔✔Agencies purchase existing mortgages and
assemble them into blocks or pools (packages)
✔✔Primary Mortgage Market - ✔✔Lenders that originate mortgage loans
✔✔Straight Loan - ✔✔Interest only/Term loan; non-amortized loan divided into periodic
payments of interest only and a principal payment due in full at the end of the term.
✔✔Amortized Loan - ✔✔Direct reduction loan; periodic payments to partially pay off
interest and principal over a term of years (generally 15 or 30)
✔✔Adjustable Rate Mortgage - ✔✔ARM's; originate at one rate of interest and
fluctuates up or down during the loan term based on economic indicators.
✔✔Balloon Loan - ✔✔Partially amortized loan; periodic payments with a final payment
larger than the others
✔✔Growing Equity Mortgage - ✔✔Rapid-payoff mortgage; fixed interest rate, but
increasing principal payments according to an index
✔✔Reverse Mortgage - ✔✔People over 62 can borrow money from the equity in their
home in a variety of ways; interest is charged at a fixed rate, and no payment is due
until the property is sold, or the borrower defaults, moves, or dies
✔✔Nonrecourse Loans - ✔✔The borrower is not held responsible if they default (usually
used for commercial properties where the property itself is adequate collateral
✔✔Conventional Loans - ✔✔Lowest LTV; Loan is usually 80% of value with 20% down
payment
✔✔Package Loan - ✔✔Includes real and personal property
✔✔Blanket Loan - ✔✔Covers more than one parcel or lot of real property
✔✔Wraparound Loan - ✔✔A borrower obtains additional financing from a second
lender without repaying the first loan; the second lender assumes the first loan
payments and the borrower only pays the second lender
✔✔Open-End Loan - ✔✔The borrower can increase the loan amount; interest rates are
only fixed for original amount
✔✔Construction Loan - ✔✔Interim financing; finances improvements; the lender
commits to the full amount of the loan but disburses the funds in payments for
