Real Estate National Test Questions Flashcards
On January 1, George paid the $2,345 in taxes for the current year. If he sold the property on June 23 of that same year, how much would he be credited at closing? (Use a 360-day year.)
A) $1,158.78
B) $1,293.53
C) $1,218.10
D) $1,772.50
C. $1,218.10
Because the taxes were paid in advance the buyer will owe the seller for the time the buyer owns the house: June 24 to December 30, since this is a 360-day year. Total owed ÷ total days × days owed = amount due $2,345 ÷360 × 187 = $1,218.097 rounded to $1,218.10
Rights or privileges that are connected with real property are?
A) improvements.
B) appurtenances.
C) not conveyed with the real estate.
D) restricted to air and water rights.
B. Appurtenances
Appurtenances are rights or privileges associated with the property and generally convey with the sale.
A home mortgage loan closed on July 1 for $765,000 at 5.5% interest amortized over 25 years at $4,697.77 per month. Using a 360-day year, what would the principal amount be after the monthly payment was made August 1?
$763,808.48
Four Steps
- Find annual interest based on the interest rate and principal balance ($765,000 × 5.5% = $42,075).
- Find one month’s interest by dividing the annual interest by 12 ($42,075 ÷ 12 = $3,506.25).
- Find the amount of the first monthly payment remaining after paying interest ($4,697.77 – $3,506.25 = $1,191.52).
- Find the principal balance after paying $1,191.52 against the balance ($765,000 – $1,191.52 = $763,808.48).
A woman held fee simple title to a vacant lot adjacent to a business. She was persuaded to make the lot available to the business. She had her attorney prepare a deed that conveyed ownership of the lot to the business “so long as it is used for commercial purposes.” After the completion of the gift, the business will own
A) a life estate.
B) a tenancy for years.
C) a periodic tenancy.
D) a determinable fee estate.
D. Determinable Fee Estate
The words “so long as” create a fee simple determinable that limits use of the property for commercial purposes. The former owner retains the possibility of reverter.
The term improvements, when referring to real estate, includes?
A) shrubbery.
B) trees.
C) lawns.
D) sidewalks.
D. Sidewalks
An improvement is an artificial thing attached to the land.
A sidewalk is a man-made addition.
What is the principal difference between an estate for years and an estate from period to period?
A) An estate for years cannot be terminated.
B) An estate from period to period must be in writing.
C) An estate from period to period has no expiration date.
D) An estate for years is a life estate.
C. An estate from period to period has no expiration date.
An estate from period to period, or periodic tenancy, does not have a specific expiration date as it automatically renews until notice is given by the tenant or landlord.
An estate (tenancy) for years has specific beginning and ending dates.
Neither estate is a life estate. Each can be terminated.
Both an estate for years and an estate from period to period must be in writing to be enforceable.
A woman owns 50 acres of land with 500 feet of frontage on a desirable recreational lake. She wishes to subdivide the parcel into salable lots, but she wants to retain control over the lake frontage while allowing lot owners to have access to the lake. Which of the following types of access rights would provide the greatest protection for a prospective lot purchaser?
A) Appurtenant easement
B) Easement in gross
C) Easement by necessity
D) License
A. Appurtenant Easement
An appurtenant easement is annexed to the ownership of one parcel and allows the owner use of the neighbor’s land.
The easement transfers with the title and so provides the greatest protection for a prospective purchaser.
Jamal and Tina bought a store building and took title as joint tenants. Tina died testate. Jamal now owns the store
A) as a joint tenant with rights of survivorship.
B) in severalty.
C) as a tenant in common with the dead woman’s heirs.
D) in trust.
B. In Severalty
Joint tenancy includes the right to survivorship, to the property passing to the other owner(s) upon the death of one tenant.
In this case, Jamal and Tina took title as joint tenants, meaning that upon one’s death, there is only one owner who owns the property in severalty.
In a tenancy in common, the owners own an undivided fractional interest in the property and that interest is passed on according to the owner’s will, to heirs, or to a trust.
A trust that is established after the death of the owner is called?
A) a testamentary trust.
B) a trust by will.
C) a beneficial trust.
D) a living trust.
A. a testamentary trust.
A trust established by will after the owner’s death is called a testamentary trust, as opposed to a trust created by agreement during the owner’s lifetime, which is called a living trust.
A farmer owns the W½ of the NW¼ of the NW¼ of a section. The adjoining property can be purchased for $2,300 per acre. Owning all of the NW¼ of the section would cost the farmer?
A) $600,000.
B) $322,000.
C) $120,000.
D) $480,000.
B. $322,000
If a person wishes to own the entire quarter (160 acres) of a 640-acre section in which that person already owns 20 acres (½ × ¼ × ¼ = 1/32 and 640 × 1/32 = 20), then the portion of the section still to be acquired is 140 acres (160 acres – 20 = 140). At a cost per acre of $2,300, the adjoining property will cost $322,000 (140 × $2,300 = $322,000).
When grantors do NOT wish to convey certain property rights, they
A) may note the exceptions in the deed of conveyance.
B) must note the exceptions in a separate document.
C) may not do so because the deed conveys the entire premises.
D) must convey the entire premises and have the grantee reconvey the rights to be retained by the grantor.
A. may note the exceptions in the deed of conveyance.
If the grantors convey less than their complete interest, the wording in the granting clause must indicate this limitation.
Mineral rights, water rights, and easements are frequently retained by grantors.
In order for a deed to be valid,
A) the signature of the grantee must be witnessed.
B) the deed must be recorded.
C) the grantee must sign the deed.
D) the grantor must be legally competent.
D. the grantor must be legally competent.
The competency of the grantor is one of the requirements for a valid deed.
The grantor must be of lawful age and sound mind. Witnessing the grantee’s signature is never needed as the grantee does not sign the deed and recording a deed is not required for the validity of the deed.
A man owned two acres of land. He sold one acre to a neighbor and reserved for himself an appurtenant easement over his neighbor’s land for ingress and egress. The man’s land
A) is the dominant tenement.
B) is the servient tenement.
C) can be cleared of the easement when the man sells the withheld acre to a third party.
D) is subject to an easement in gross.
A. Is the dominant tenement.
The man’s parcel benefits from the easement and is the dominant tenement.
The neighbor’s tract, over which the easement runs, is the servient tenement.
A condominium community has a swimming pool, tennis courts, and a biking trail. These facilities are MOST likely owned by?
A) the condominium board.
B) the corporation in which the unit owners hold stock.
C) the unit owners in the form of percentage undivided interests.
D) the unit owners in the form of proportional divided interests.
C. the unit owners in the form of percentage undivided interests.
Common areas, including amenities such as swimming, biking, and tennis areas, are owned by the unit owners in undivided percentage interests as tenants in common.
Arun and Ben are joint tenants. Ben sells his interest to George. What is the relationship of Arun and George?
A) They are tenants in common.
B) They are joint tenants.
C) There is no relationship because Ben cannot sell to George.
D) Arun owns a two-thirds interest and George owns a one-third interest.
A. They are tenants in common
When joint tenants sell their interest in the jointly held property, the unities of time and title are destroyed.
The new owner, George, becomes a tenant in common with Arun.
If the borrower paid $189.06 interest last month on a $27,500 loan, what is the interest rate?
8¼%.
$189.06 monthly interest × 12 months = $2,268.72 annual interest; $2,268.72 annual interest ÷ $27,500 loan amount = 0.08249 or 8¼% interest rate.
