Basic Appraisal Practices Quiz (Point of Emphasis) Flashcards
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.”
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.
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.
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.
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. severalty
[Rationale] 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).
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.
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.
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.
Which is an example of voluntary alienation?
A. avulsion
B. condemnation
C. dedication
D. foreclosure
C. dedication
[Rationale] Voluntary alienation is the most common way to transfer ownership and includes sale, gift, dedication, and grant. Dedication is when, for example, a developer dedicates land for streets within a new subdivision or someone dedicates land for a park to a municipality.
Carol and Leslie enter into a contract stating that Carol will pay Leslie $650 per month for the next 20 years. Carol will live in the house and pay all expenses including property taxes, insurance, and maintenance
costs. Leslie will continue to hold the title until the property is paid off by Carol. What kind of contract do they have?
A. installment sales contract
B. land lease
C. lease purchase agreement
D. option agreement
A. installment sales contract
[Rationale] An installment sales contract is an agreement in which the buyer makes payments to the seller in exchange for the right to occupy and use the property, but no need or title is transferred until all, or a specified portion of, payments have been made.
In a triple-net lease scenario, which is NOT a typical expense of the lessee?
A. fire insurance on the building
B. property taxes
C. repairing a leaky faucet
D. replacing the roof on the structure
D. replacing the roof on the structure
[Rationale] A triple-net lease means the lessor pays for building repairs, and the lessee pays for real estate taxes, insurance, and maintenance.
A property that sold below market value due to a pending foreclosure is influenced mostly by
A. acceleration and depression.
B. cash equivalency.
C. haste and duress.
D. relationship to the lender.
C. haste and duress.
[Rationale] In foreclosure situations, those selling foreclosed properties are most influenced by haste and duress as cost of holding a property is often a primary consideration.
Going concern value is most accurately described as a valuation of the
A. business assets.
B. liquid and solid assets.
C. real and personal property.
D. tangible and intangible assets.
D. tangible and intangible assets.
[Rationale] Going concern value is the value in use of all property, which includes real property and personal property such as trade fixtures, inventory (all tangible assets), and the intangible assets of an established, operating business with an indefinite life.
