basic 2 Flashcards
Paramount within USPAP is an appraiser’s obligation to promote and preserve
a. adequate compensation for appraisers
.b. appraisal as an honorable profession.
c. his right to advocate for his client.
d. public trust in appraisal practice.
d. public trust in appraisal practice.[Rationale] There are standards of practice in appraising and within these standards there is an obligation of promoting and preserving public trust in appraisal practice.
The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) recognizes which as the current industry standards for appraisals?a. appraisal organizationsb. Fannie Maec. state regulatory agenciesd. USPAP
d. USPAP[Rationale] Within the definition for the FIRREA, it states that “…recognizes USPAP as the current industry standard for appraisals…”
The act or process limited to the development and reporting of an opinion regarding the quality of another appraiser’s work is an
a. appraisal review assignment.
b. appraisal within an appraisal review.
c. example of advocacy within appraisal practice.
d. unacceptable appraisal practice.
a. appraisal review assignment.[Rationale] Appraisers perform appraisal reviews which is an opinion of the quality of another appraiser’s work.
Within the definition of an appraiser, which is NOT one of the expectations of an appraiser’s performance?
a. advocacy
b. impartiality
c. independence
d. objectivity
a. advocacy[Rationale] An appraiser is defined as “one who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective.”
The appraisal process begins with problem identification and concludes with
a. compensating the appraiser.
b. determining the appropriate scope of work.
c. reconciliation of the appraiser’s conclusions.
d. reporting of the appraiser’s conclusions.
d. reporting of the appraiser’s conclusions.[Rationale] The appraisal process begins with problem identification and follows the process through reporting of the appraiser’s opinions and conclusions.
Which is required in order to establish a person or entity as the appraiser’s client in an assignment?
a. employment contract signed by all parties
b. engagement of the appraiser’s services
c. exchange of confidential information
d. payment for the appraiser’s services
b. engagement of the appraiser’s services[Rationale] USPAP defines the client as: “the party or parties who engage an appraiser (by employment or contract) in a specific assignment.”
At what point in the assignment must other intended users be identified by the client?
a. anytime during or after the conclusion of the appraisal process
b. at the time of the assignment
c. during the scope of work decision
d. within a reasonable time after completion
b. at the time of the assignment[Rationale] Identification of the intended use and the intended user(s) at the time of the assignment based upon communication with the client.
The scope of work in an assignment must include the research and analysis necessary to produce results.
a. conclusive
b. credible
c. indisputable
d. reasonable
b. credible[Rationale] The scope of work must include the research and analyses necessary to produce credible results. Credible means to be worthy of belief.
When an individual offers both appraisal and real estate brokerage services, which statement is TRUE in circumstances when he is acting as a real estate broker?
a. The appraiser is acting contrary to the ETHICS RULE of USPAP.
b. He can perform in that capacity provided he does not misrepresent his role.
c. He must always choose to act in the role of an appraiser when providing any valuation service.
d. Regardless, the service would be considered appraisal practice.
b. He can perform in that capacity provided he does not misrepresent his role.[Rationale] When an individual is acting in the role of an appraiser, the expectation is that the individual will perform as an appraiser.
Which is an obligation of the COMPETENCY RULE of USPAP?
a. decline all assignments for which the appraiser does not initially possess competency
b. disclose the the lack of competency to the client prior to agreeing to perform the assignment
c. keep the lack of knowledge and experience confidential in the appraisal report
d. refer the assignment to an appraiser who possesses competency
b. disclose the the lack of competency to the client prior to agreeing to perform the assignment[Rationale] An appraiser must disclose the lack of competency to the client prior to agreeing to perform the assignment.
The term describing the conversion of personal property to real property is
a. annexation
.b. appropriation.
c. capture.
d. platting.
a. annexation.[Rationale] Annexation is the term used for conversion of personal property to real property.
Which would most likely be considered real property?a. area rugb. built-in window seatc. lawn furnitured. sleeper sofa
b. built-in window seat[Rationale] Real property is defined as not only the physical land and everything attached to it (real estate) but also the rights of ownership (bundle rights) in the real estate. Placement of an item such as this typically represents intent to annex the item as real property.
Which would be a natural attachment that would be classified as fructus industrial?
a. grass
b. ornamental tree
c. perennial flowers
d. wheat
d. wheat[Rationale] Fructus ndustrials represent plants planted and cultivated by people (“fruits of industry”), such as crops or orchards.
Which concept elaborates on tenant crops?
a. appropriative rights
b. bundle of rights
c. doctrine of emblements
d. rule of capture
c. doctrine of emblements[Rationale] A tenant farmer’s crops are referred to as emblements. The doctrine of emblements allows a tenant farmer to re-enter land to harvest the crops he planted even after tenancy has ended.
Air rights of land ownership are limited by the federal government relating to the
a. horizontal distance to which a building may be constructed
.b. ownership of gasses contained in the air.
c. prevention of interference with air traffic.
d. prohibition of transfer of air rights to others.
c. prevention of interference with air traffic.[Rationale] The federal government has active control over air rights; however, the property owner continues to have the right to use the airspace above the property provided there is no interference with air traffic.
Water rights dealing primarily with the shoreline of a non-flowing body of water are known as
a. annexation rights.
b. appropriative rights.
c. capture rights.
d. littoral rights.
d. littoral rights.[Rationale] Littoral rights are associated with non-flowing bodies of water, such as lakes and ponds and primarily addresses how the shoreline of the body of water can be used by the property owner.
For a landowner possessing riparian rights, which is typically an accompanying right?a. Building
a dam to stop or divert the water flow.
b. Releasing sewage in reasonable amounts into the water flow.
c. Taking water from the property to irrigate non-riparian property the riparian owner also owns.
d. Using water in reasonable amounts to irrigate crops on the riparian property.
d. Using water in reasonable amounts to irrigate crops on the riparian property.[Rationale] Riparian rights are associated with bodies of water, such as rivers or streams, where there are flowing waters, and primarily addresses how the water can be used by the property owner. Riparian owners share the right to take water for purposes such as irrigation or power.
According to the rule of capture, a property owner
a. is permitted to drain oil or gas from under his own property or from under a neighboring property.
b. may not extract oil or gas that came from under a neighbor’s land.
c. must surrender all of the minerals found under the ground to the federal government.
d. owns none of the oil or gas that was produced on his property.
a. is permitted to drain oil or gas from under his own property or from under a neighboring property.[Rationale] The rule of capture states that whoever drills a well on his land owns all the oil or gas the well produces, even though it may have migrated from under a neighbor’s land.
Which is NOT a physical characteristic of real property?
a. immobility
b. indestructibility
c. transferability
d. uniqueness
c. transferability [Rationale] Transferability is the ability to freely buy, sell, encumber, or dispose of property in any way the owner sees fit.
If a site is 152’ x 169’, it contains how many acres?a. 0.51
b. 0.57
c. 0.59
d. 0.90
c. 0.59 [Rationale] Multiply 152 feet × 169 feet = 25,688 square feet and then divide (there are 43,560 square feet in one acre), so 25, 688 square feet ÷ 43,560 square feet = 0.59 acre.
If a property is legally described using the terms “rod” or “pole,” what is the distance being referenced?
a. 3 yards
b. 12 feet
c. 16.5 feet
d. 66 feet
c. 16.5 feet[Rationale] A rod or pole each consist of 16.5 feet or 5.5 yards.
How many linear feet are along one side of the NE 1/4 of a township section?
a. 330
b. 660
c. 1,320
d. 2,640
d. 2,640[Rationale] Township sections are 1 mile by 1 mile in dimensions and there are 5,280 (linear) feet in a mile. Therefore, the NE 1/4 is 2,640 x 2,640.
If Joe leases property that he owns to Susan, what type of ownership interest is held by Joe due to the lease?
a. fee simple absolute
b. fee simple defeasible
c. leased fee
d. leasehold
c. leased fee[Rationale] A leased fee interest is a the lessor’s (also known as the landlord) interest in a leased the property. So, in this question, Joe is Susan’s landlord or lessor, and Susan is the lessee.
Which is a characteristic of a fee simple defeasible estate?
a. The estate is subject to the termination of a lease.
b. The owner possesses the full bundle of rights with no conditions on ownership.
c. Ownership could be forfeited if certain events occur.
d. Possession terminates upon death of the life tenant.
c. Ownership could be forfeited if certain events occur.[Rationale] A fee simple defeasible estate is a type of real property ownership that may be defeated or undone if certain events occur or certain conditions are not met.
If Stephanie conveyed the fee simple estate subject to a condition subsequent to Larry, Stephanie has
a. created a life estate that is conditioned on the duration of the life tenant.
b. forfeited any rights to a potential future interest in the estate which was conveyed.
c. power of termination to re-enter and possibly begin proceedings to recover the real estate.
d. retained the entire bundle of rights until certain conditions have been satisfied.
c. power of termination to re-enter and possibly begin proceedings to recover the real estate.[Rationale] A fee simple subject to a condition subsequent is when the owner holds title “on the condition that.” Something does or does not happen. The former owner has a power of termination, meaning the former owner can take steps to re- enter the land to see if the condition is being complied with, and if not, legally take possession away from the landowner through due process.
If Jerry conveys property subject to a life estate to Samuel, who will gain title in fee simple when the party holding the life estate passes away, Samuel is known as the
a. life tenant.
b. measuring life.
c. remainderman.
d. reverter.
c. remainderman.[Rationale] Samuel will become the remainderman, which is the party in a life estate who is entitled to the remainder of the property interest after the life estate is terminated. When the life estate ends, the remainderman takes title in fee simple.
Which characteristic is common to all freehold estates?
a. Freehold estates do not include future rights of possession
.b. No party possesses the full bundle of rights.
c. Ownership could revert to the previous owner if certain conditions are not met.
d. Possessory interest is of an uncertain duration.
d. Possessory interest is of an uncertain duration.[Rationale] The primary characteristics of a freehold estate are possession either immediately or in the future, indefinite durations of possession, and property ownership.
Surrender is the action of
a. forfeiting title in a fee simple estate subject to a condition subsequent.
b. nullifying a life estate.
c. passing title to a remainderman in a life estate.
d. terminating a lease by mutual consent.
d. terminating a lease by mutual consent.[Rationale] Ending a lease by mutual consent is called surrender.
Which is a characteristic of a tenancy at will that is NOT common to other types of leasehold estates?a. It automatically terminates at the death of either the landlord or tenant.
b. The landlord must use force to regain possession of the property.
c. Leases are fully assignable.
d. The tenant is a holdover without the landlord’s permission.
a. It automatically terminates at the death of either the landlord or tenant.[Rationale] A tenancy at will automatically ends on the death of either the landlord or the tenant, which is not true of the other leasehold estates.
Felicia has entered into an agreement with her mother, allowing her mother to occupy a property owned by Felicia for a specified duration of six months. What type of estate was created?
a. estate for years
b. life estate
c. periodic tenancy
d. tenancy at will
a. estate for years[Rationale] An estate for years is any leasehold estate for a fixed time period. The term does not have to be a period of years.
Christine has a one-year lease with the property owner, William. When the lease expires Christine continues to pay rent to William at the beginning of each month. What type of arrangement was created when William accepted rent in this manner?
a. estate for years
b. periodic tenancy
c. tenancy at sufferance
d. tenancy at will
b. periodic tenancy[Rationale] Periodic tenancy is a leasehold estate for a duration of time, not a specific date.
Craig holds a life estate in a property owned by his stepfather, Charles. Craig may occupy the property for as long as his mother, Charles’ wife, is alive. When Craig’s mother dies, possession of the property goes back to Charles. What type of arrangement is illustrated?
a. life estate pur autre vie
b. life estate with the possibility of reverter
c. life estate with power of termination
d. ordinary life estate
a. life estate pur autre vie[Rationale] Pur autre vie, meaning “for another’s life,” is when a life estate is based on the lifetime of someone other than the life tenant.
John and Suzanne, a married couple, form a corporation in which to hold title of their real estate assets with no provision for survivorship. How is title to the property being held?
a. joint tenants
b. severalty
c. tenancy in common
d. tenants by the entireties
[b. severaltyRationale] Ownership in severalty is ownership by one person or entity. Entities can hold ownership in severalty which include corporations and Real Estate Investment trusts (REITs).b. severalty
In co-ownership, reference to an undivided interest emphasizes that the
a. co-ownership provides for survivorship when one of the co-owners dies.
b. exact fractional component of ownership cannot be determined.
c. party holding ownership is an entity rather than an individual.
d. property is not physically divided according to co-owners.
d. property is not physically divided according to co-owners.[Rationale] Co-ownership is any form of ownership where two or more people share title to real property with each person having an undivided interest in property ownership.
Which is NOT one of the four unities of property ownership?
a. investment
b. possession
c. time
d. title
a. investment[Rationale] The four unities of property ownership are: possession, interest, time, and title. Remember the acronym PITT.
Which is a true statement regarding tenancy in common?
a. Only one of the four unities is always present.
b. The ownership includes right of survivorship.
c. Ownership interests cannot be unequal.
d. There may be one or more co-owners.
a. Only one of the four unities is always present.[Rationale] Tenancy in common is the most basic form of co-ownership. The unity of possession is always present with tenancy in common.
Joseph owns property with his wife, Cassandra, in joint tenancy. Joseph’s will specifies that his undivided interest in the property will go to his children, who are Cassandra’s stepchildren. Which is a true statement?
a. Cassandra will continue to be a joint tenant after Joseph’s death.
b. Joseph’s children will become joint tenants with Cassandra.
c. The property will be physically divided upon Joseph’s death automatically.
d. Survivorship will override Joseph’s will.
d. Survivorship will override Joseph’s will.[Rationale] Joint tenancy includes survivorship so upon the death of a joint tenant that joint tenant’s ownership rights are distributed equally among the remaining (surviving) joint tenants. Survivorship supersedes any direction within a last will and testament.
The primary intent of marital property rights is to protect the rights of a surviving spouse when
a. both spouses are named as joint tenants.
b. property ownership is held as tenants by the entireties.
c. the surviving spouse is not specified in the property title.
d. survivorship is specified in the particular ownership.
c. the surviving spouse is not specified in the property title.[Rationale] Marital property rights laws primarily address property rights of surviving spouses when title to a property is held in severalty by the other spouse.
Fred has conveyed his property to a trust. His attorney will hold the asset on behalf of Fred’s children, who will receive net proceeds from the property. What participant in the trust is Fred’s attorney?
a. beneficiary
b. guardian
c. trustee
d. trustor
c. trustee[Rationale] A trust is used for holding and controlling property on behalf of someone else. The trustor (in this scenario, Fred) conveys title to the trustee (his attorney).
How many investors, at a minimum, are required to form a REIT?
a. 30
b. 50
c. 100
d. 300
c. 100 [Rationale] A Real Estate Investment Trust (REIT) is a real estate investment corporation or trust with at least 100 investors.
Craig, Jason, and Hugh own real estate as joint tenants. If Craig and Jason die simultaneously, Hugh will
a. become a joint tenant with Craig and Jason’s heirs.
b. hold the entire property interest in severalty.
c. own an undivided one-third interest.
d. take title individually as a tenant in common.
b. hold the entire property interest in severalty.[Rationale] Joint tenancy includes survivorship so upon the death of a joint tenant that joint tenant’s ownership rights are distributed equally among the remaining (surviving) joint tenants.
If Paula has the right to use and enjoy a timeshare, which is owned in fee by a hotel corporation, Paula has
a. co-ownership with other timeshare owners.
b. a non-fee ownership of the timeshare.
c. ownership in severalty in the timeshare.
d. a proprietary lease for the specified unit.
b. a non-fee ownership of the timeshare.[Rationale] A non-fee timeshare there is no real property co-ownership but the non-fee owner has the right to use and enjoy the property and is not restricted to the same property.
The basis for governmental regulation of the use of private property is
a. eminent domain.
b. the National Environmental Policy Act.
c. police power.
d. the zoning clause.
c. police power.[Rationale] Police power is the constitutional power of government to enact and enforce laws that protect he public’s health, safety, morals, and general welfare.
A section of the neighborhood has recently been rezoned for residential use only. Zachary’s store is located in this section. Because the property was used as a store prior to the zoning, he will be allowed to continue to use his property as a store. This is known as a
a. conditional use.
b. nonconforming use.
c. spot zone.
d. variance.
b. nonconforming use.[Rationale] When a new law imposes a zoning designation on a neighborhood, these landowners are permitted to continue using their land the same way they always have under non-conforming use.
An easement allows the present and any future owner of “Lot D” to drive across a neighbor’s property “Lot S” to reach her own property. This is an example of a(n)
a. appurtenant easement.
b. defeasible easement.
c. easement in gross.
d. encroachment.
a. appurtenant easement.Rationale] Appurtenant easements burden one parcel of land for the benefit of another parcel of land. An appurtenant easement benefits and burdens the same two properties; no matter who owns the land.
Ben’s property has an easement in gross that allows Ben to hunt on his neighbor’s land. When the neighbor sells his land to Ben, the easement terminates through
a. abandonment.
b. destruction of the dominant tenement.
c. failure of purpose.
d. merger.
d. merger.[Rationale] Merger is the uniting of two or more separate properties by transferring ownership of all to one person.
If a tax assessor estimated the market value of a property to be $340,000, what are the annual real property taxes if the assessment ratio is 35% and mills are 51.7?
a. $5,932.60
b. $6,152.30
c. $6,847.21
d. $7,166.55
b. $6,152.30[Rationale] First, take $340,000 market value of the property × 35% the assessment ratio = $119,000 to find the assessed value. If the mills are 51.7 the calculation would look like this: $119,000 ÷ 1,000 = 119 × 51.7 = $6,152.30
Which is NOT a power of government?
a. deed restrictions
b. eminent domain
c. escheat
d. police power
a. deed restrictions[Rationale] Government has four powers (remember P-E-T-E): police power, eminent domain, taxation, and escheat.
A cost for an improvement that is divided among several property owners on a street and billed by a jurisdiction would be an example ofa. escheat.b. improvement burden.c. special assessment.d. special tax bill.
c. special assessment.[Rationale] With a special assessment the owners of the properties that enjoy the benefit of the improvement divide the cost of the improvement and share in paying for it. In most cases, the cost to each property owner is for a period of years.
The county is taking part of Bill’s land for a new park. What is this process called?
a. annexation
b. condemnation
c. eminent domain
d. involuntary takeover
b. condemnation[Rationale] Condemnation is the action of taking of private property for public use, with just compensation, through the government’s power of eminent domain. This is also called appropriation.
Which established power to the government for taking private property with the payment of just compensation?
a. allodial system
b. comprehensive plan
c. covenants, conditions, and restrictions
d. Fifth Amendment of the U.S. Constitution
d. Fifth Amendment of the U.S. Constitution[Rationale] The U.S. Constitution through its Fifth Amendment provides power to government for takings and requires the government to pay the owner “just compensation” for the property, which is generally market value.
Which statement is FALSE regarding a gross easement?
a. A dominant tenant’s rights can be assigned but do not automatically run with the land.
b. If the servient property is transferred, the easement terminates.
c. It always has both a dominant tenant and a servient tenant.
d. There is no dominant tenement.
b. If the servient property is transferred, the easement terminates.[Rationale] With an easement in gross, if the owner of the property burdened by the easement transfers the servient property, the easement continues to be binding upon the next owner
If semi-annual taxes for a property are $1,260, what is the assessed value of the property if the tax rate is 48 mills?
a. $37,000
b. $41,600
c. $52,500
d. $63,900
c. $52,500[Rationale] Take $1260 the semi annual taxes × 2 = $2,520 ÷ 48 mills = 52.5 × 1,000 = $52,500 the assessed value of the property.
A non-possessory interest in real property is also called a(n
)a. encumbrance.
b. leasehold estate.
c. license.
d. servient tenement.
[Rationale] Non-possessory interests in real property are called encumbrances, since they encumber or burden the title or use of the land.a. encumbrance.
Which is an involuntary, specific lien?
a. easement created by an express agreement
b. IRS lien
c. mechanic’s lien
d. mortgage
c. mechanic’s lien[Rationale] Mechanic’s liens are involuntary, specific liens claimed by someone who performed work on, or supplied materials for, real property—construction, remodeling, repairs, or demolition—and has not been paid.
When liens are paid off out of the proceeds of a foreclosure sale,
a. a judgment lien generally has lowest priority.
b. a lien for real property taxes always has highest priority.
c. a mortgage always has highest priority.
d. priority depends on the amount of the lien.
b. a lien for real property taxes always has highest priority.[Rationale] Liens are given priority according to the order in which they were attached to the property. However, there is an exception, real property taxes always have the highest lien priority and are paid before any other lien.
Which would most likely result in a general lien?
a. IRS lien
b. mechanic’s lien
c. mortgage
d. real estate tax lien
a. IRS lien[Rationale] Unpaid federal income taxes create another type of tax lien. When payment is overdue, liens attach to all of the taxpayer’s personal and real property. Income tax liens are involuntary, general liens.
In a real estate transaction, the grantor is the _________ and the grantee is the ________.
a. buyer / seller
b. lender / buyer
c. seller / buyer
d. seller / lender
c. seller / buyer[Rationale] When conveying property the party conveying the interest is the grantor, the party receiving the interest is the grantee.
All are essential elements for a valid deed EXCEPT
a. competent grantor.
b. delivery and acceptance.
c. grantee’s signature.
d. legal description.
c. grantee’s signature.[Rationale] A deed must contain the signatures of all grantors.