Arizona Real Estate License Practice Exam 2025 – All-in-One Resource to Pass with Confidence!

A promissory note is primarily a financial instrument that represents a borrowing obligation rather than a type of collateral lien document. It is essentially a written promise to pay a specific sum of money to a creditor at a future date under agreed-upon terms. While a promissory note may accompany collateral liens, such as a mortgage or trust deed, it does not create a lien against the property itself.

In contrast, a land contract, mortgage, and trust deed do establish liens against the property that serve as collateral for the loan. A land contract involves an agreement where the seller retains legal title until the buyer fulfills the payment obligations. A mortgage is a legal agreement in which the borrower pledges property to secure a loan, creating a lien on the property. Similarly, a trust deed involves transferring the title of the property to a trustee as security for a loan. These documents clearly establish the right of the lender to claim the property in case of default, which is the primary function of a collateral lien document.