Chapter 8 Quiz

Question 1

Who pays for the primary title insurance policy?

A. The buyer

B. The listing firm

C. The lender

D. The seller

Answer 1

D. The primary title insurance policy is the buyer’s insurance on the property’s title. The seller pays for this policy. A lender will also want insurance on the property’s title. The buyer pays for this policy

Question 2

A parcel of real estate has a market value of $80,000 and is assessed for tax purposes at 85% of market value. The tax rate for the county in which the property is located is 30 mills. What is the tax bill?

A. $2,400
B. $3,000
C. $2,040
D. $2,250

Answer 2

C. $80,000 x .85 = $68,000 $68,000 x .030 = $2,040

Question 3

Which type of lien can attach to all real and personal property of a debtor?

A. Specific lien
B. Involuntary lien
C. Voluntary lien
D. General lien

Answer 3

D. General liens can attach to both real and personal propter. Specific liens attach only the property given as collateral.

Question 4

What interest does a quitclaim deed convey?

A. The grantor’s interest
B. The entire property
C. The claimant’s interest
D. The grantee’s interest

Answer 4

A. A quitclaim deed is a grant of the grantor’s interest in the property. It does not warrant title or possession.

Question 5

Title insurance offers coverage for:

A. Judgment liens recorded against a property.

B. Special assessments levied after a seller and buyer close on a property.

C. Losses sustained because of defects in the title other than those excepted by the policy.

D. Use-value assessments.

Answer 5

C. Title insurance protects buyers and lenders in the event that certain title defects develop after the title has been researched prior to a sale.

Question 6

The assessed value of property:

A. may be updated using building permit records, on-site evaluations, and transfer tax records

B. is a fixed amount and cannot be challenged by a property owner

C. determines the transfer tax when sold

D. is determined by the same formula throughout the state

Answer 6

A. Local government determines assessed value. Reevaluation may be triggered by applications for building permits that may indicate owner improvement to the property.

Question 7

A property has just sold for $125,000. It is currently assessed at $95,000. If the property is reassessed at 95% of market value what is the tax bill if the tax rate is 25 mills?

A. $3,368.25
B. $2,375.00
C. $2,968.75
D. $3,125.00

Answer 7

C. $125,000 market value x .95 = $118,750 assessed value. 25/1000 = .025 mills. $118,750 x .025 mills = $2,968.75.

Question 8

X hands Y a deed with the intent to pass title. X asks Y NOT to record the deed until X dies. When is the deed valid?

A. When X delivers the deed

B. When Y records the deed

C. When X dies

D. Never

Answer 8

A. A deed is valid when all of the requirements for validity have been satisfied. A valid deed will successfully transfer title. A deed will not however protect the titleholder from the claims of third parties unless it is recorded in public records.

Question 9

Peter has a fenced lot and the fence extends one foot over his lot line onto the property of a neighbor. What is the effect of the fence on the neighbor’s property?

A. It encumbers the property.

B. It causes a loss of title for the neighbor.

C. It creates an easement for Peter.

D. It creates lien rights for Peter.

Answer 9

A. When a structure or other improvement on property extends beyond the property’s lot lines, it creates an encroachment on the neighboring parcel. The encroachment is an encumbrance on the neighboring parcel.

Question 10

How is a transfer fee calculated and paid?

A. The seller calculates and pays the transfer fee based on the listing price.

B. The buyer calculates and pays the transfer fee based on the listing price.

C. The seller calculates and pays the transfer fee based on the selling price.

D. The buyer calculates and pays the transfer fee based on the selling price.

Answer 10

C. The transfer fee is based on the selling price rounded up to the nearest $100 and the seller is responsible for paying it.

Question 11

From what does a warranty deed protect a grantee?

A. Misrepresentation

B. Unenforceable contracts

C. Significant defects in the property

D. Defective title

Answer 11

D. A warranty deed is the most protective of all deeds and it protects a grantee from receiving a defective title to the property.

Question 12

Which deed creates the least liability for a grantor?

A. A quitclaim deed

B. A bargain and sale deed

C. A special warranty deed

D. A general warranty deed

Answer 12

A. A quitclaim deed transfers only the interest owned by the grantor. It does not warranty the grantor’s interest.

Question 13

An $89,000 property is assessed at 100%. The mill rate is .030. What is the tax bill for the property?

A. $2,670
B. $2,555
C. $1,745
D. $1,650

Answer 13

A. $89,000 x .030 = $2,670

Question 14

Where should a party record a real estate conveyance?

A. The register of deeds in the county where the property is located.

B. The title insurance company.

C. The register of deeds in the county where the buyer resides.

D. The clerk of court in the county where the property is located.

Answer 14

A. A party records a real estate conveyance at the register of deeds in the county where the property is located.

Question 15

When does a construction lien establish priority for payment?

A. When the first visible work commenced.

B. When a judge orders a writ of execution.

C. When an attorney prepares an abstract of title.

D. When it is filed in public records.

Answer 15

A. Construction liens can create hidden liens because they establish priority for payment from the date that work first commenced rather than the date the lien holder records the lien. Because the lien can be effective before the date the lien holder records it, it may not show up on a title search and would not be covered by title insurance.

Question 16

Which of the following is true of a buyer’s title insurance policy?

A. It precludes the need for a buyer’s attorney.

B. It insures against all title defects.

C. It is not an absolute guarantee that the title is free from defects.

D. It provides protection for one year from the date of closing.

Answer 16

C. Title insurance does not guarantee that the title the buyer is obtaining is free from all possible defects. If title defects arise after the effective date of a title insurance policy, the title insurance will provide coverage to the buyer for all potential defects covered by the policy.

Question 17

After Desmond had purchased his house and moved in, he discovered that his neighbor regularly used Desmond’s driveway to reach a garage located on the neighbor’s property. Desmond’s attorney explained that ownership of the neighbor’s real estate includes and easement over the driveway. What is Desmond’s property?

A. The dominate estate

B. A leasehold

C. The servient estate

D. A tenancy

Answer 17

C. The servient estate is the parcel over which an easement runs.

Question 18

The assessed value of a property is 95% of the appraised value, which is $89,000. What is the assessed value?

A. $89,000
B. $84,550
C. $88,000
D. $87,000

Answer 18

B. $89,000 x .95 = $84,550

Question 19

A house is valued at $125,000 and assessed at 90% of its value. The tax bill is $3,937.50. What is the tax rate per $100 of assessed value?

A. $3.00
B. $2.75
C. $3.50
D. $1.15

Answer 19

C. $125,000 x .90 = $112,500, assessed value $3,937.50/$112,500 = .035, .035 x 100 = $3.50 $3,937.50 / $112,500 = .035 or $3.50

Question 20

Which of the following is NOT true?

A. A party must pay the transfer fee when selling a land contract.

B. The transfer tax is 30 cents for each $100 in value.

B. The buyer pays the transfer fee.

D. A party must fill out the transfer fee from and pay to record a buyer’s deed.

Answer 20

C. Taxation and Transfer Fee Wis. Stat. § 77.22: There is imposed on the grantor of real estate a real estate transfer fee at the rate of 30 cents for each $100 of value or fraction thereof on every conveyance not exempted or excluded under this subchapter…. submission of a completed real estate transfer return and collection by the register of the fee shall be prerequisites to acceptance of the conveyance for recording. Wis. Stat. § 77.22(5)(14): A transfer fee is exempt on a partition and under a foreclosure or a deed in lieu of foreclosure to a person holding a mortgage or to a seller under a land contract.

Question 21

What is a chain of title?

A. A history of the documents appearing in the public record.

B. Proceedings affecting a specific parcel of land.

C. The succession of conveyances from some starting point whereby the present owner derives title.

D. An instrument or document that protects the insured parties, subject to specific exceptions, against defects in the examination of the record and hidden risks such as forgeries, undisclosed heirs, and errors in the public records.

Answer 21

C. The chain of title is a chronological record of a property’s ownership. Each owner should be linked to subsequent owners.

Question 22

How does a party give notice that a parcel of real estate is the subject of a lawsuit?

A. File a notice of foreclosure.
B. File a lis pendens.
C. File a lien.
D. File a writ of attachment.

Answer 22

B. A lis pendens is a notice of a possible future litigation involving the real estate.

Question 23

Which of the following deeds provides the highest guarantee of title?

A. Executor’s deed

B. General warranty deed

C. Personal representative’s deed

D. Quitclaim deed

Answer 23

B. A grantor of a quitclaim deed does not make any promises regarding title. The deed serves to transfer the interest of the grantor.

Question 24

Determine the responsible party and the transfer fee for a property that sold for $64,350.

A. The seller pays $193.05

B. The seller pays $195.20

C. The buyer pays $193.05

D. The buyer pays $193.20

Answer 24

B. To calculate the transfer fee, round the selling price up to the nearest $100. Multiply that amount by .003 to calculate the fee, which is 30 cents for every $100 of value transferred. $64,400 x .003 = $193.20. The fee can also be calculated by dividing the purchase price by 100 and multiplying that answer by 30 cents. $64,400/ 100 = 644. 644 x .3 = $193.20. The seller is responsible for paying the transfer fee.

Question 25

Writs of Attachment are used to:

A. Place property in the custody of courts to prevent a debtor from transferring the property.

B. Transfer encumbered property from a seller to a buyer.

C. Create appurtenant easements on servient estates.

D. Create general lien on mortgaged property.

Answer 25

A. Writs of attachment are used to prevent a property owner from disposing of property that is currently the subject of litigation.

Question 26

A property has a market value of $120,000 and is assessed at 60% of market value. What is the property’s tax bill if the tax rate is 30 mills?

A. $2,160
B. $4,200
C. $3,600
D. $1,750

Answer 26

A. $120,000 x .60 = $72,000 assessed value 30 mills = 30/1000 = .03 $72,000 x .03 mills = $2,160 tax bill.

Question 27

Which of the following is used to secure payment for specific municipal improvements?

A. A special assessment.
B. A construction lien.
C. A utility lien.
D. An ad valorem.

Answer 27

A. A special assessment is a tax or levy customarily imposed against only those specific parcels of realty that will benefit from a proposed public improvement.

Question 28

The order in which liens are paid depends on:

A. the kind of lien and when it was recorded

B. the property owner who decides which debts will be satisfied first

C. the age of the lien with the newest claim being paid first

D. the size of the lien with the largest debts being paid first

Answer 28

A. Order and payment of liens is determined by Wisconsin statutes. Some liens can take precedence to dates prior to recording.

Question 29

Nancy is the owner of a dominant estate that has an easement that runs with the land. Tom has the servient estate for the easement. Which of the following circumstances would NOT terminate the easement?

A. Tom purchases and merges Nancy’s property with his own.

B. Nancy abandons the use of the easement.

C. Nancy sells the dominant estate to Gretchen.

D. Tom’s property is destroyed.

Answer 29

C. Because the easement runs with the land, transfer of title will not terminate the estate. Abandonment will terminate the easement as will destruction of the property and merger of the dominant and servient estates.

Question 30

Which of the following insures and gives evidence of marketable title?

A. Abstract of title.
B. Warranty deed.
C. Quitclaim deed.
D. Title insurance.

Answer 30

D. Deeds transfer title and, in some cases, warrant the condition of title but do not give evidence of title. To prove clear title one would need title insurance or an abstract of title.

Question 31

What happens when a property has been assessed under the use-value system?

A. In addition to the penalties imposed for change of use there are deed conditions that control future uses of the property.

B. The seller of the property must pay a penalty to the state upon transfer of title.

C. Buyers of agricultural land are required to complete a search of public records for penalties assessed under the use-value system prior to closing.

D. The owner who changes the use of the land to something other than agricultural must pay a penalty to the state.

Answer 31

D. Use-value applies to land that is devoted primarily to agricultural use. Owners who change the use of agricultural land subject to the use-value assessment to a non-agricultural use must pay a penalty.

Question 32

Which one of the following statements best explains why instruments affecting real estate are recorded with the register of deeds in the county where the property is located?

A. Recording proves the execution of the instrument.

B. The law requires that such instruments be recorded.

C. The instruments must be recorded to comply with the terms of the statute of frauds.

D. Recording gives constructive notice to the world of the rights and interests in a particular parcel of real estate.

Answer 32

D. Recording an ownership interest creates constructive notice. Constructive notice gives the public notice or knowledge of a title holder’s ownership of a parcel. Constructive notice creates the right of quiet enjoyment. It protects the owner from another party challenging the ownership of a property.

Question 33

Who examines an abstract and prepares an opinion of title?

A. An attorney.
B. The abstract company.
C. The buyer.
D. A firm.

Answer 33

A. A buyer’s attorney reviews an abstract and prepares an attorney’s opinion of title.

Question 34

Evelyn buys a property from Jimmy but does not record the deed. Jimmy dies and through honest error, his estate sells the property to Donna who acts in good faith and promptly records her deed. Who is the recognized owner of the property?

A. There is no recognized owner and the parties must go to court to decide ownership.

B. Evelyn is the recognized owner.

C. Evelyn is the recognized owner but Donna has a lien on the property.

D. Donna is the recognized owner.

Answer 34

D. By recording her deed, Donna is the recognized owner. She has given constructive notice of her ownership and Wisconsin statutes recognize the owner on record.

Question 35

What happens when a party records a deed?

A. Recording a deed insures the title.

B. The recording party guarantees the title.

C. The party passes title to the new owner.

D. Recording a deed gives constructive notice of ownership.

Answer 35

D. Recording the deed gives the public notice of the titleholder’s ownership.

Question 36

The Bowman’s home on Lombard Street is valued at $95,000. Property in their area is assessed at 60% of its value, and the local tax rate is $2.85 per hundred dollars. How much do the Bowman’s owe for this year’s property taxes?

A. $2,451.00
B. $1,624.50
C. $1,470.60
D. $125.38

Answer 36

B. $95,000 x .60 = $57,000 assessed value $2.85 / 100 = .0285 $57,000 x .0285 = $1,624.50