practice quiz 1 Flashcards
What are the four unique characteristics of real estate?
Heterogeneity – Every property is unique due to location, structure, and modifications.
Immobility – Real estate cannot be moved; it is fixed in location.
Durability – Buildings and land last for long periods.
Segmentation – Market conditions vary by location.
What is the difference between real property and personal property?
Real property includes land and permanently attached structures.
Personal property includes movable items, like vehicles or furniture.
What is the key difference between possessory and nonpossessory interests?
Possessory interests include ownership or tenancy rights (e.g., freehold or leasehold estates).
Nonpossessory interests grant a right to use land without ownership (e.g., easements, liens).
What are the three main methods of legally describing land?
Metes and bounds – Uses distances and angles from physical landmarks.
Government rectangular survey – Divides land into a grid using townships and sections.
Lot and block (plat map) – Common in urban areas, identifies parcels in recorded maps.
What are two direct forms of co-ownership, and how do they differ?
Tenancy in Common (TIC): Owners can have unequal shares and freely transfer ownership.
Joint Tenancy: Includes the right of survivorship, meaning ownership transfers to co-owners upon death.
What is an easement, and what are its two main types?
An easement is the legal right to use another’s land for a specific purpose.
Easement appurtenant – Benefits a neighboring property (e.g., shared driveway).
Easement in gross – Benefits an entity, not tied to land ownership (e.g., utility lines).
What is a lien, and which lien has the highest priority?
A lien is a legal claim against property for debt repayment.
Property tax liens have the highest priority, followed by mortgage liens.
What are the four types of leasehold estates?
Tenancy for years – Fixed-term lease (e.g., a 12-month apartment lease).
Periodic tenancy – Renews automatically (e.g., month-to-month lease).
Tenancy at will – No formal agreement, can be terminated at any time.
Tenancy at sufferance – Tenant remains after lease expiration without landlord consent.
What are four government powers that can restrict real estate use?
Police power – Zoning laws and building codes.
Eminent domain – Government can take private land for public use (with compensation).
Taxation – Property taxes fund public services.
Escheat – Government claims property when the owner dies without heirs.
Why is the real estate market considered inefficient compared to stock markets?
Properties are unique and not standardized.
Transactions take time and involve negotiation.
Information is not always readily available.
Government regulations and financing requirements slow down transactions.
One of the characteristics of real estate is that it is “heterogeneous.” What are the primary ways in
which real estate is heterogeneous?
There are several primary ways in which real estate is heterogeneous. For instance, every parcel of land is uniquely located, and therefore distinct. Since every parcel is uniquely located, every house, building, structure, or even unit is also uniquely located. Even though similar structures or unit maybe located nearby, small differences in their location can matter materially. Finally, as structures age and are occupied, they are modified by their owners or occupants. The modifications lead to structures becoming increasingly distinct and heterogeneous
Explain what are the key distinctions between easements appurtenant and easements in gross? Provide an example of an easement in gross?
Easements appurtenant necessarily involve two adjacent parcels of land, whereas easements in
gross are a right to use land unrelated to any adjacent parcel. An example of an easement in
gross would be a portion of a residential property used to carry electrical power lines across the
neighborhood.
