Chapter 02: Property Ownership & Interests

Question 1

The concept by which land would increase automatically along a river or stream is known as:
A. accretion
b. littoral rights
C. avulsion
D. reliction

Answer 1

A. accretion
(Accretion is the gradual buildup of land along a river a stream. It increases automatically because the land owner does not have to do anything to gain the increase. It is the opposite of erosion)

Question 2

Which of the following is generally considered real property?
A. emblements
B. trade fixtures
C. a shrub planted in a decorative pot
D. a perennial shrub planted in the backyard

Answer 2

D. a perennial shrub planted in the backyard
(Real property includes the land and all of the appurtenances that go with it. Emblements, the right of the previous owner to harvest crops through the current growing season is not considered part of the land. Both trade fixtures and the shrub in a separate container or pot are considered personal property and not part of the land)

Question 3

The phrase “bundle of legal rights”:
A. is part of the definition of real property
B. is another name for a legal description
C. refers to the legal documents used in real estate transactions
D. refers to the tenant’s rights in a lease

Answer 3

A. is part of the definition of real property
(The transfer of real property includes the transfer of a bundle of rights, including all of the rights, interests and appurtenances that are part of the property. These are referenced by the acronym DEEPC, disposition enjoyment, exclusion, possession and control.)

Question 4

A trade fixture is considered:
A. a fixture
B. an easement
C. personality
D. a license

Answer 4

C. personality
(Typically fixtures are part of the real property and get transferred with the property. Trade fixtures are those items used in a trade and business and they remain personalty. This means the tenant may remove these items so long as they do so before the expiration of the lease)

Question 5

Real property can become personal property by:
A. severance
B. purchase
C. hypothecation
D. attachment

Answer 5

A. severance
(The act of permanently attaching personal property and transforming it into a fixture is called annexation. The act of turning real property into personal property is called severance. A good example would be the trees growing on the property which are considered real property. Severance occurs when they are cut down and severed from the property and they become firewood which is personal property)

Question 6

A seller is under contract to sell a property using the standard offer to purchase and contract. The elegantly decorated master bedroom has vertical window blinds, hand-painted light switches and electrical outlet covers and draperies fashioned from fabric coordinated with the wallpaper. Which of the following items may the seller legally remove before the close of the transaction?
A. none of the items
B. the draperies and blinds
C. the hand-painted light switches and electrical outlet covers
D. the draperies

Answer 6

D. the draperies
(Parties to a transaction are able to specifically contract for certain items to either transfer or remain with the property. The standard NCBA/NCAR purchase contract considers and lists all of the other items as fixtures which are to remain with the property. The draperies are not considered a fixture and the seller may remove them)

Question 7

A business owner rents an empty building to use an ice cream parlor. The tenant subsequently installs large freezer units and several service counters. These additions:
A. are considered permanent improvements to the property
B. become the landlord’s property once attached to the building
C. can be legally removed by the tenant at the termination of the lease
D. can only be removed by the tenant with the landlord’s permission

Answer 7

C. can be legally removed by the tenant at the termination of the lease
(These items are considered trade fixtures and as such remain personalty)

Question 8

The owner of a house wants to fence the yard for a dog. When the fence is erected, the fencing materials are converted to real estate by:
A. severance
B. annexation
C. immobility
D. indestructibility

Answer 8

B. annexation
(This is the process of taking items of personal property and converting them to real estate. The fence materials were personal property. Once the fence was incorporated into the real estate the fence became part of the real property through the process of annexation)

Question 9

Which of the following has an indefinite ownership period?
A. fee simple estate
B. life estate
C. estate for years
D. estate at will

Answer 9

A. fee simple estate
(A fee simple estate, also known as a “fee” is the highest and best form of ownership. The owner possesses all of the rights or interests and the ownership lasts forever, therefore it is considered indefinite.)

Question 10

Oil, gas, and other subsurface rights are generally considered to be:
A. separate and apart from the rights or interest in the real estate
B. an item which can never be separated from the real estate and must transfer with the property
C. items of personality which the owner can either include or exclude from the transfer
D. be part of the real estate and its bundle of rights and automatically transfer to a subsequent owner unless specifically reserved or excepted in the deed

Answer 10

D. be part of the real estate and its bundle of rights and automatically transfer to a subsequent owner unless specifically reserved or excepted in the deed

Question 11

A woman wishes to donate a vacant lot that she owns in fee simple absolute to a hospital that is located next to her lot. An attorney prepares a deed that conveys the ownership of the lot to the hospital “so long as it is used for medical purposes.” After the completion of the gift, the hospital will hold a:
A. pur autre vie estate
B. fee simple absolute estate
C. defeasible fee
D. fee simple to a condition subsequent estate

Answer 11

C. defeasible fee
(The property was transferred subject to a condition that the property only be used for medical purposes. Such a condition creates a defeasible fee which if violated will return ownership to the original grantor through a reversion.)

Question 12

The rights of the owner of a property located along the banks of a small stream are called:
A. littoral rights
B. subjacent rights
C. riparian rights
D. hereditaments

Answer 12

C. riparian rights
(Riparian water rights exist along rivers and streams. The rights along large bodies of water that are subject to tides are littoral rights.)

Question 13

A deed conveyed ownership to a grantee “so long as the existing building on the property is not destroyed.” Following the transfer, the original grantor has what type of interest?
A. life estate
B. ongoing ownership in the property that lasts as long as the condition
C. fee simple estate
D. reversionary estate

Answer 13

D. reversionary estate
(The original grantor no longer has an ownership interest. All ownership is with the grantee who holds a defeasible fee subject to the condition. The original grantor does have a right to regain the property if the condition is violated. That future right or interest of the grantor is called a reversionary interest, an estate in reversion or a reversionary estate.)

Question 14

A woman conveys a life estate to her son-in-law and stipulated that upon his death the estate will pass to her grandson. The grandson has an:
A. estate in reversion
B. estate in remainder
C. estate pur autre vie
D. estate for the life of another

Answer 14

B. estate in remainder
(At the termination of a life estate the interest in the property can be transferred back to the grantor in which case it is a reversionary life estate. If the interest is transferred to anyone other than the grantor it is called a remainder interest. Here the property is not returning to the original grantor (woman), but instead is passing to her grandson who has a remainder interest.)

Question 15

A person who acquired ownership that can be inherited, with the provision “that the land must always be used for recreational purposes,” has:
A. a fee simple absolute estate
B. a defeasible fee
C. a fee simple to a condition subsequent estate
D. an estate that cannot be sold

Answer 15

B. a defeasible fee
(A defeasible fee is a transfer of real property that is subject to a condition.)

Question 16

A brother and sister bought a commercial building and took title as joint tenants with right of survivorship. The brother died. The sister now owns the building:
A. as a joint tenant with right of survivorship with her brother’s heirs
B. in severalty
C. as a tenant in common with her brother’s heirs
D. as a life tenant with her brother’s heirs having remainder interests

Answer 16

B. in severalty
(A right of survivorship means that at the death of one of the property owners, the remaining joint tenants will inherit the deceased persons interest in the real estate. Since the sister would not be the only surviving owner she will hold title to the property in severalty)

Question 17

A person currently has the legal right to occupy and use a certain residential structure. The interest in the property could be all of the following, EXCEPT:
A. fee simple
B. remainder
C. leasehold
D. life estate

Answer 17

B. remainder
(All of the other choices include a right to occupy the property. A remainder interest is a future interest which a person will acquire. It does not include a current right to occupy the property)

Question 17

One of two owners holds an undivided 60% interest and the other holds an undivided 40% interest. The two owners probably hold their interest as:
A. cooperative owners
B. tenants by the entireties
C. community property owners
D. tenants in common

Answer 17

D. tenants in common
(Tenants in common may hold different percentages of ownership in the property. Typically the share or interest of joint tenants must be equal, although in North Carolina that element of joint tenancy is not required.)

Question 18

Co-owners of a fee simple interest in a small office building are neither related to nor a creditor to each other. One owner dies intestate. The surviving owner would become the sole owner of the property under which of the following rights?
A. adverse possession
B. reversionary interest
C. survivorship
D. foreclosure

Answer 18

C. survivorship
(A surviving property owner acquires the interest of a deceased property owner when the property is co-owned with a right of survivorship.)

Question 19

Three joint tenants with rights of survivorship own a parcel of land. One owner sells his interest to a long-time friend. After the conveyance, the remaining original owners:
A. become tenant in common with each other
B. become tenants in common with each other and the newest owner
C. become joint tenants with the newest owner
D. remain joint tenants with the newest owner

Answer 19

D. remain joint tenants with the newest owner
(The original owners would still remain joint tenants because they meet the four unities of joint tenancy; time, title, interest and possession. People can always sell or transfer their interest prior to their death. The long-time friend who purchased the interest would become a tenant in common with the other owners.)

Question 20

The owner of a condominium unit learns that a neighbor has failed to pay his condominium association dues. If the neighbor does NOT pay the dues:
A. a lien can be filed against the condominium complex
B. a lien can be filed against the neighbor’s unit
C. a lien can only be filed against the common areas of the condominium
D. the taxing authority can order the condominium be dissolved

Answer 20

B. a lien can be filed against the neighbor’s unit
(Unpaid condominium or HOA dues can become a lien against the property)

Question 21

In order to create a joint tenancy relationship in the ownership of real estate, there must be unities of:
A. grantees, ownership, claim of right and possession
B. title, interest encumbrance and survivorship
C. time, title, interest, and possession
D. ownership, possession, heirs and title

Answer 21

C. time, title, interest, and possession
(Joint tenancy requires four unities. All owners must come into ownership at the same time, through the same title or deed. They all have an equal interest in the property and they all have an equal right to possess the property)

Question 22

The severalty owner of a parcel of land sells it. The buyer insists that the owner’s wife also sign the deed. The purpose of obtaining the wife’s signature is to:
A. terminate any rights the wife may have in the property
B. defeat any curtsey rights
C. provide evidence that the owner is married
D. subordinate the wife’s signature to the buyer

Answer 22

A. terminate any rights the wife may have in the property
(It is possible for married people to own property and hold title in their own name without their spouse listed as an owner. However, because most states recognize some marital interest of a spouse in the property (even though their name does not appear on title) the spouse’s signature will usually be required at the time of sale)

Question 23

Which item(s) listed below would be considered part of the “total circumstances test” to determine whether or not an item is a fixture? I. The value II. The size
A. I only
B. II only
C. Both I and II
D. Neither I nor II

Answer 23

D. Neither I nor II
(The total circumstances test, or IRMA uses the following factors to determine if an item is a fixture; intent, relationship, method and attachment. Cost, value and size are never factors in determining if something is a fixture)

Question 24

Chrissy owns property that borders a large, navigable lake that has tides. Her property ends:
A. at the mean high-water mark of the lake
B. at the lake border
C. at the center of the lake
D. five feet before the lake

Answer 24

A. at the mean high-water mark of the lake
(Littoral rights along large bodies of water that have tides extend ownership to the mean high water mark. In North Carolina the foreshore between high and low tides is public land)

Question 25

In North Carolina, what is the rescission period for the purchase of a new condominium?
A. 3 calendar days
B. 5 calendar days
C. 7 calendar days
D. 10 calendar days

Answer 25

C. 7 calendar days
(The purchaser of a condominium has a seven calendar day rescission period in North Carolina)

Question 26

In North Carolina, what is the rescission period for the purchase of a new timeshare?
A. 5 calendar days
B. 5 business days
C. 7 calendar days
D. 7 business days

Answer 26

A. 5 calendar days
(In North Carolina a purchaser of a timeshare has a five calendar day rescission period. Rescission periods are always calendar dates, not business or banking days)

Question 27

Jack is not married and buys a vacant lot as his sole and separate property. Jack later married Jill and they buy a house together. How is the ownership of the vacant lot now classified?
A. Jack and Jill own the lot as tenancy by the entirety.
B. Jack and Jill own the lot as joint tenants.
C. Jack owns the lot in severalty.
D. They both own the lot and house as tenants in common.

Answer 27

C. Jack owns the lot in severalty
(Ownership to property does not change due to the fact that someone got married. If an individual owns a property in severalty and gets married they still own the property in severalty)

Question 28

With regard to a tenancy in common, which of the following is true?
A. Each tenant in common has an equal right to possession and use of the land.
B. The interest of all of the tenants in common must be equal.
A. A only
B. B only
C. Both A and B
D. Neither A nor B

Answer 28

A. A only
(Tenants in common all have equal rights to possess and use the property. Their ownership rights do not have to be equal. They can own differing percentages of ownership)

Question 29

Vonda Lee and William purchased a home together in 2003 with the deed simply listing both of them as “grantees” without specifying how they were to hold title. They married each other in early 2004. How do they now likely hold title to the house purchased in 2003 if they have not made any other adjustments to their deed?
A. tenancy by the entirety
B. tenancy in severalty
C. joint tenancy
D. tenancy in common

Answer 29

D. tenancy in common
(Since they were not married at the time they acquired the property they could not have owned it as tenants by the entireties. They could have chosen various forms of ownership, however, in North Carolina the default position for unmarried people who do not otherwise specify a form of ownership is as tenants in common)

Question 30

When two people who own property under tenancy by the entirety sign a formal separation agreement, which of the following statements is correct?
A. The ownership changes immediately to tenancy in common.
B. The ownership changes immediately to joint tenancy.
C. The ownership must be determined by a court of law.
D. There is no change in the form of ownership at this time.

Answer 30

D. there is no change in the form of ownership at this time
(Since the couple is still legally married, the form of ownership does not change with a separation. Tenants by the entireties would end if they are divorced, deceased or if they voluntarily chose to hold title in another manner)

Question 31

Which of the following statement(s) is/are true regarding timeshares in NC? A. The NC Real Estate Commission can fine a timeshare broker for violations of the NC Timeshare Act. B. If there are violations of the NC Timeshare Act, the fine per violation is $1,000.
A. A only
B. B only
C. Both A and B
D. Neither A nor B

Answer 31

D. Neither A nor B
(The North Carolina Real Estate Commission can never fine a licensee. They can fine the developer of a time share project and the maximum fine is $500)

Question 32

33 of 40
Which of the following statements is true? A. A life estate is a freehold estate. B. It is possible to have a freehold estate and a non-freehold estate on the same property at the same time.
A. A only
B. B only
C. Both A and B
D. Neither A nor B

Answer 32

C. Both A and B
(Freehold means ownership and a life estate is an ownership interest in real property. It is possible to have a property that is both owned and leased at the same time)

Question 33

The right to occupy a property for five or more periods of time involving five or more years is considered a: A. Timeshare B. Interest in real property
A. A only
B. B only
C. Both A and B
D. Neither A nor B

Answer 33

C. Both A and B
(This is the definition of a timeshare. It is a right or interest in real property that is for five or more periods of time involving five or more years)

Question 34

Five days after signing a contract to purchase a new timeshare, the buyer backs out of the deal. How long does the developer have to refund the purchaser’s money?
A. He has no obligation to return it, as there is a contract.
B. Thirty days from the date of purchase contract.
C. Thirty days from the date of cancellation.
D. Thirty days from the ten-day period in which these monies had to remain in the trust account.

Answer 34

B. Thirty days from the date of purchase contract.
(A timeshare developer has 30 days within which to refund the money if a timeshare transaction is rescinded and the 30 days runs from the date of the purchase contract, not the date of cancellation or rescission)

Question 35

Which of the following would be considered real property? A. Electrical switch plate covers B. Gas logs attached to a fireplace
A. A only
B. B only
C. Both A and B
D. Neither A nor B

Answer 35

C. Both A and B
(Both of these items meet the total circumstances test and would be considered fixtures that are part of the real property and transfer with it)

Question 36

Which of the following best defines the ownership in a condominium?
A. divided fee simple interest in the unit and an undivided tenant in common interest in the common areas
B. a divided interest in the unit and a divided interest in the common areas
C. shared ownership rights of both the unit and the common area as tenants in common
D. separate interest in the unit with the association holding title to the common area

Answer 36

A. divided fee simple interest in the unit and an undivided tenant in common interest in the common areas
(This is the definition of a condominium. When purchasing a condominium an owner acquires a separate divided interest in their unit and an undivided interest in the common area as a tenant in common)

Question 37

Jason’s property is adjacent to a navigable river in North Carolina and Jason wants to sell his property. Which of the following statements is true?
A. Jason can restrict the public from using that portion of the river that is next to his property
B. An owner can sell the property and retain his rights to access the river once it is sold
C. Jason’s land ends at the center of the waterway
D. If Jason obtains proper permits and builds a dock on the river, the dock will automatically become owned by the public

Answer 37

B. An owner can sell the property and retain his rights to access the river once it is sold
(An owner may always except or reserve certain rights out of the bundle of rights)

Question 38

A homeowner objected when a local utility company dug up his garden to install a natural gas line. The company claimed it had a valid easement supported by the county records. The homeowner claimed the easement was not valid because he was unaware of its existence. The easement was:
A. a valid easement in gross even though the owner did not know about it
B. a valid appurtenant easement owned by the utility company
C. not valid because the owner did not authorize the easement
D. not valid because the owner was not informed of its existence when he purchased the property

Answer 38

A. a valid easement in gross even though the owner did not know about it

Question 39

The owner of two acres of land sold one acre but retained an appurtenant easement over that land for ingress and egress to his retained lot. The retained lot:
A. is the dominant tenement
B. serves as the servient tenement
C. can be cleared of the easement when it is sold to a third party
D. is subject to an easement in gross

Answer 39

A. is the dominant tenement