Kovats Real Estate School Practice Test

The definition of foreclosure is centered around the legal process through which a lender is able to take possession of a property. This typically occurs when the property owner fails to meet the obligations of the mortgage agreement, such as making the required payments. In such cases, the lender has the right to initiate foreclosure proceedings to recover the balance of the loan. This process often involves court intervention and may result in the property being sold at auction to satisfy the outstanding debt.

The other options present distinct concepts unrelated to foreclosure. Settling property disputes generally involves mediation or negotiation and does not directly concern the loss of property due to unpaid loans. Selling a property at auction can happen as a result of foreclosure but is not the definition of foreclosure itself; it's merely a potential outcome. A voluntary agreement to transfer property ownership describes a completely different scenario, such as a sale or transfer of property rights, rather than the involuntary nature of foreclosure driven by default on mortgage payments.