An air loan describes a loan on which of the following?

An air loan describes a loan on which of the following?

• A. A real, recorded property
• B. A fictitious home that does not exist on the land
• C. A loan secured by personal property only
• D. A construction loan

Answer: (B)

An air loan is a loan secured by property that doesn’t physically exist on the land. In other words, the collateral is imaginary—often described as a fictitious home that hasn’t been built or isn’t on the lot yet. That’s why this description matches the idea of an “air” loan. Think of the other scenarios as different kinds of real or personal property financing: a loan on an actual parcel with a recorded property is a standard mortgage on real estate; a loan secured by personal property uses movable collateral rather than real estate; a construction loan is for building on land that exists, with funds disbursed as work progresses. The defining feature of an air loan is the absence of a real, existing structure on the land, hence the description of a fictitious home that does not exist on the land.

An air loan is a loan secured by property that doesn’t physically exist on the land. In other words, the collateral is imaginary—often described as a fictitious home that hasn’t been built or isn’t on the lot yet. That’s why this description matches the idea of an “air” loan.

Think of the other scenarios as different kinds of real or personal property financing: a loan on an actual parcel with a recorded property is a standard mortgage on real estate; a loan secured by personal property uses movable collateral rather than real estate; a construction loan is for building on land that exists, with funds disbursed as work progresses. The defining feature of an air loan is the absence of a real, existing structure on the land, hence the description of a fictitious home that does not exist on the land.