Ace the California Real Estate Exam 2026 – Your Key to Property Success!

The correct answer is C. The final amount of payoff on the 48th month will be $4,040. This is because the monthly payment is $40, which includes both principal repayment and interest. With a 12% annual interest rate on a $4,000 note, the monthly interest would be $40 ($4,000 x 0.12 / 12 months = $40). Therefore, each monthly payment of $40 includes interest, and by the 48th month, the accumulated interest would total $40 x 47 = $1,880. Adding the original principal amount of $4,000 to the interest brings the total payoff amount to $4,000 + $1,880 = $4,880.

The other options are incorrect:

Option A is incorrect because when a trust deed is used as security, the legal title to the property is held by a trustee, not by the broker.

Option B is incorrect because usury laws prohibit charging excessively high-interest rates. In this scenario, with a 12% annual interest rate, the broker is not in violation of usury laws.

Option D is incorrect because as explained above, option C is true.