Review 01: Ownership & Title (1-6)

Question 1

1 of 50
Which type of estate cannot pass by inheritance?
A. fee simple estate
B. fee simple condition subsequent estate
C. conventional life estate
D. pur autre vie life estate

Answer 1

C. conventional life estate
(A conventional life estate reverts back to the grantor automatically and immediately at the death of the life tenant. There is no interest remaining for the life tenant to pass on to their heirs)

Question 2

Which of the following liens is/are considered a “specific lien” on real estate?
A. deed of trust
B. mechanic’s lien
C. real estate taxes
D. ll of the above

Answer 2

D. ll of the above
(All of these liens are “specific.” That means that they are tied to a specific parcel of property. General liens include judgments and income tax liens)

Question 3

Which of the following statements is/are correct regarding the Interstate Land Sales Full Disclosure Act? 1. If a development contains 25 or more lots, the developer must furnish prospective buyers with a property report. 2. The property report must be given to a prospective purchaser prior to a sales contract being signed. 3. The purchaser can revoke, or rescind, the sales contract at his or her option until midnight of the fifth day following the signing of the contract. 4. This Act applies only to the sale of lots to consumers located in the state.
A. 1 and 2
B. 3 and 4
C. 2 and 4
D. 1 and 3

Answer 3

A. 1 and 2
(The Interstate Land Sales Full Disclosure Act was meant to protect buyers purchasing property from outside the state. It only applies to the sale of developments containing 25 or more lots and the disclosure report must be provided to the prospective purchaser at least three business days before a contract is signed)

Question 4

A rectangular-shaped parcel of land, which measures 400 feet by 600 feet, is divided into two equal lots by a creek that runs from the northeast corner to the southwest corner. What is the approximate acreage of each divided parcel?
A. 0.55 acres
B. 2.75 acres
C. 3.47 acres
D. 5.51 acres

Answer 4

B. 2.75 acres
(The total of both lots is 400 feet x 600 feet which equals 240,000 square feet. They are equal parcels, so each parcel contains 120,000 square feet (240,000÷2). There are 43,560 square feet in an acre. 120,000 square feet÷43,560 = 2.75 acres.)

Question 5

Assume annual real estate taxes amount to $1,800 and have been paid in advance for the calendar year by the seller. If closing is set for September 15, which of the following is correct?
A. credit seller $525; debit buyer $1,275
B. credit seller $1,275; debit buyer $525
C. credit buyer $525; debit seller $1,275
D. credit seller $525; debit buyer $525

Answer 5

D. credit seller $525; debit buyer $525
(The annual taxes are $1,800. The daily amount is $1,800 divided by 360 = $5 per day. The seller has been in the property for 255 days. (From Jan - Aug - 240 days + 15 days for the month of September = 255). 255 days at $5.00 per day means the seller owes $1,275. The seller has already paid $1,800. $1,800 - $1,275 = $525. The seller will be credited for the $525 and the buyer will be debited that amount at closing)

Question 6

Which of the following statements is/are true? 1. A freehold estate and a nonfreehold estate will never exist at the same time on the same property. 2. A life estate is a nonfreehold estate.
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2

Answer 6

D. Neither 1 nor 2
(A parcel could be utilized as both a freehold (ownership) and a non-freehold (less than ownership) if the owner of the property also decided to rent it. Therefore, the first statement is false. The second statement is also false because a life estate is a freehold interest. The life tenant is the owner of the property)

Question 7

Title to real property may be transferred by which of the following?
A. bill of sale
B. oral agreement
C. ceremony of seizing
D. laws of intestate succession

Answer 7

D. laws of intestate succession
(The law of intestate succession is a reference to the state laws which determine the heirs of an individual who dies without a will. This is a transfer of real estate. When real estate is transferred to the heirs from someone who died intestate it is called a “descent.”)

Question 8

Which of the following statements is/are correct? A. A “deed of gift” must be recorded within 3 years to be valid. B. A deed that warrants only against defects or encumbrances that have occurred “by, through, or under the grantor” is a special warranty deed.
A. A only
B. B only
C. Both A and B
D. Neither A nor B

Answer 8

B. B only
(A deed of gift must be recorded within two years of the gift or it will be considered absolutely void)

Question 9

Smith is interested in purchasing a warehouse for the storage of inventory from his business. If the building which he is considering purchasing is 30 feet high, 28 feet wide and 62 feet long, how many cubic feet of storage space will the building provide?
A. 52,080 cubic feet
B. 177,000 cubic feet
C. 18,000 cubic feet
D. 1,860 cubic feet

Answer 9

A. 52,080 cubic feet
(The formula to calculate volume and cubic feet is length x width x height. 62x28x30 = 52,080 cubic feet)

Question 10

Public land use controls include all of the following, EXCEPT:
A. subdivision regulations
B. environmental protection laws
C. master plan specifications
D. deed restrictions

Answer 10

D. deed restrictions
(Deed restrictions are considered private land use restrictions, not public ones)

Question 11

When an old service station is located in an area that has been rezoned for residential use only, the station may be permitted to continue to operate as a service station under a: 1. Legal nonconforming use 2. Variance 3. Illegal nonconforming use
A. 1 only
B. 2 only
C. 3 only
D. Both 1 and 2

Answer 11

A. 1 only
(When zoning changes, pre-existing uses and buildings which were legal, but following the change do not meet current zoning codes, are allowed to remain as legal non-conforming use. It is also known as grandfathered use. The owner does not have to get a variance, apply for a permit or take any action in order to continue their previous use of the property)

Question 12

Which of the following would be considered a “material fact” by law in NC? 1. Recorded lien on the property 2. Information about a pending zoning change that would enhance the value of a seller’s property even if the agent is a buyer’s agent.
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2

Answer 12

C. Both 1 and 2
(A material fact is information which affects the seller’s willingness to sell or a buyer’s willingness to buy. Both of these items are material facts. Material facts must always be disclosed to all parties in the transaction)

Question 13

Aunt Fran decides to sell her property to a church with a fee simple interest, but Aunt Fran reserved or excepted a conventional life estate. Which of the following statements is true regarding this transfer?
A. The church is the life tenant and Aunt Fran has a reversionary interest.
B. Aunt Fran is the life tenant and the church has a remainder interest.
C. The church owns the property and Aunt Fran has established a non-freehold interest.
D. This is best referred to as a life estate pur autre vie.

Answer 13

B. Aunt Fran is the life tenant and the church has a remainder interest.
(Aunt Fran is the life tenant and she owns a freehold interest. It is a conventional life estate. When Aunt Fran dies the property will not revert back to her as the grantor, it will pass automatically and immediately at the time of her death to the church. The church has a remainder interest in the life estate created by Aunt Fran)

Question 14

The basic premise for controlling the use of land is to protect and promote the health, safety, welfare and morals of the general public. As imposed under the government’s right to police power, zoning ordinances do NOT regulate:
A. the use to which a property may be put
B. the placement of buildings on the property
C. the bulk and density of buildings
D. minimum acceptable material and construction standards

Answer 14

D. minimum acceptable material and construction standards
(Acceptable material and construction standards are usually regulated by building codes, not zoning restrictions)

Question 15

Joe, Moe and Harry are joint tenants without survivorship owning a parcel of land. Harry conveys his interest to his long-time friend, Will. After the conveyance, Joe and Moe:
A. become tenants in common
B. continue to be joint tenants with Harry
C. become joint tenants with Will
D. remain joint tenants with Will becoming a tenant in common

Answer 15

D. remain joint tenants with Will becoming a tenant in common
(A joint tenant without survivorship can convey their interest in the property without the approval or consent of the other joint tenants. Joe and Moe will remain joint tenants. Will cannot be a joint tenant because his ownership does not meet the four unities required of joint tenancy. He did not come into ownership at the same time or on the same title as Moe and Joe. Will, therefore, would have to hold title to the property as a tenant in common)

Question 16

Land is sold to a church so long as the land is used only for religious purposes. What type of freehold estate is described?
A. tenancy for years
B. fee simple absolute
C. conventional life estate
D. defeasible fee

Answer 16

D. defeasible fee
(A transfer in which the grantor imposes conditions on the grantee, such as “so long as the land is used for religious purposes” is a defeasible fee. The ownership has conditions imposed by the grantor)

Question 17

Deed restrictions are a means by which:
A. local zoning laws are enforced
B. the planning commission controls developers
C. municipalities enforce building restrictions
D. grantors control the future use of the property

Answer 17

D. grantors control the future use of the property
(Deed restrictions are private land use restrictions created by a previous grantor. They are not created, enforced or regulated by the government or municipalities)

Question 18

Which of the following would terminate a Tenancy by the Entireties?
A. Divorce
B. A partition action
C. Legal separation
D. A unilateral sale of an interest in the property

Answer 18

A. Divorce
(Only married couples can hold title as tenants by the entireties. Therefore, a divorce would end that form of ownership. A legal separation is not the end of the marriage. Tenants by the entireties do not have the right to file an action for partition and neither of them may convey their interest without the consent of the other party. Therefore a unilateral transfer is not possible)

Question 19

Which of the following items would be included in the bundle of rights of a land owner? A. Mineral rights B. Easements C. The land D. The privilege or right to sell the land.
A. C and D
B. A, B and C
C. C only
D. A, B, C and D

Answer 19

D. A, B, C and D
(The bundle of rights includes the land, the mineral and air rights and all other rights and privileges which are appurtenances and get transferred with the land. The easements and right to sell the land are part of the bundle of rights as well)

Question 20

What type of ownership is an individual unit owner’s parking space at a condominium complex?
A. Amenity utilization of the common area.
B. Limited common area
C. Proprietary lease of common areas.
D. Joint tenancy with right of survivorship of the common area.

Answer 20

B. Limited common area
(Limited common areas are those areas and facilities that may be available for use by one or more of the tenants, but not all)

Question 21

A developer owns 2 acres and plans to subdivide them into 6 individual lots. If the six lots are all equal in size and each one is 100 feet wide, what is the depth of the lots?
A. 189.60 feet
B. 249.50 feet
C. 145.20 feet
D. 329.25 feet

Answer 21

C. 145.20 feet
(The entire parcel is 2 acres. There are 43,560 square feet in an acre. 43,560x2 = 87,120 square feet. There are six lots, each one is 100 feet side so the frontage of the parcel is 600 feet. 87,120 square feet (total of the parcel)÷600 = 145.20 feet is the depth of the lots)

Question 22

What is true about eminent domain?
A. The Department of Transportation is exempted from compensating land owners for critical road widening projects.
B. In order to establish eminent domain the government must meet the elements of adverse possession.
C. Should the government condemn a rental property, the lease is automatically terminated.
D. Eminent domain is the process by which the government condemns land.

Answer 22

C. Should the government condemn a rental property, the lease is automatically terminated.
(Eminent domain terminates the lease and the government may owe compensation to both the property owner and the tenant as a result of exercising eminent domain over a property occupied by a tenant)

Question 23

A city evicts tenants of an apartment complex by the power of eminent domain because of a planned highway expansion. Does the city have to pay compensation and does the city have to let the tenants finish their lease terms?
A. The city would have to allow the tenants to complete their lease term and must pay them compensation.
B. The city may never condemn an apartment building or other facility that is currently occupied.
C. The city does not have to allow the tenants to complete their lease term, but the city will have to compensate the tenants.
D. The city does not have to allow the tenants to finish their lease terms an because they are not the owner of the apartment building, the tenants have no right to compensation.

Answer 23

C. The city does not have to allow the tenants to complete their lease term, but the city will have to compensate the tenants.
(The right of the government to exercise eminent domain is absolute. The just compensation may include compensation to both the owner and to tenants adversely affected by the condemnation proceeding)

Question 24

A neighbor regularly mows a vacant lot next door. After several years the neighbor erects a fence on the vacant lot. After several more years the neighbor wishes to claim adverse possession of the vacant lot. Can the neighbor claim adverse possession?
A. No, his use was not open and notorious.
B. Yes, assuming the neighbor met the minimum number of years to claim adverse possession.
C. Yes, because all the neighbor had to do was physically occupy the land.
D. No, because the neighbor has failed to pay vacant lot’s property taxes.

Answer 24

B. Yes, assuming the neighbor met the minimum number of years to claim adverse possession.
(The neighbor is not required to pay the taxes. In order to claim adverse possession, he must meet the statutory requirements of OCEAN, open, continuous, exclusive, adverse and notorious. If he meets these requirements and the minimum number of years (20 in NC) then he may be able to claim ownership through adverse possession)

Question 25

Which method of land measurement uses meridians and range lines?
A. Government plat maps.
B. Assessor’s parcel numbers.
C. Government metes and bounds.
D. Government rectangular survey.

Answer 25

D. Government rectangular survey.
(The government rectangular survey uses meridians, base lines, township lines and range lines. It is the grid used in states other than North Carolina)

Question 26

What is the system of land measurement that uses stakes, markers and monuments?
A. Lot and block.
B. Metes and bounds.
C. Government rectangular survey.
D. Recorded plat.

Answer 26

B. Metes and bounds

Question 27

A developer requires all builders within the subdivision to build a certain standard home and also requires that no home may be built smaller than 4,000 square feet. What type of restriction has the developer created and how may it be enforced?
A. Building permits, enforced through the city or county in which the property is located.
B. Private deed restrictions, enforced through a court of law.
C. Building codes, enforced through state and city building councils.
D. Zoning, enforced through the zoning board.

Answer 27

B. Private deed restrictions, enforced through a court of law.
(The government will have no involvement in the enforcement of these restrictions. They will appear as private deed restrictions from the grantor or developer and will have to be privately enforced with a court action. They will not be enforced by zoning or the permitting departments)

Question 28

Two friends are interested in purchasing a piece of real estate as co-owners. What is the MOST likely way that they will hold title in North Carolina?
A. Severalty.
B. Joint tenants.
C. Tenants in common.
D. Tenancy by the entireties.

Answer 28

C. Tenants in common.
(Tenants in common is the presumed and most common method of co-ownership for unmarried co-owners in North Carolina)

Question 29

A “Quiet Title Action” can best be described as a lawsuit which is:
A. used by a seller to convey title to a buyer through a quit claim deed.
B. filed to establish ownership or interests of real property and/or to remove a cloud on title.
C. used to evict a disruptive tenant.
D. used by a buyer to force a seller to sell the property because the seller is in breach

Answer 29

B. filed to establish ownership or interests of real property and/or to remove a cloud on title.
(Quiet title actions are lawsuits to resolve disputes or interests about the ownership or use of real property. When concerns arise about adverse possession, easement interests and the reversionary interests of defeasible fees a quiet title action is utilized to resolve the dispute)

Question 30

Which of the following adds land due to natural changes along non-navigable streams?
A. Accretion
B. Avulsion
C. Erosion
D. Reliction

Answer 30

A. Accretion
(When accretion occurs (the natural increase of land along waterways) the size of the land is automatically increased and the owner does not have to take any legal actions to benefit from this increase in land)

Question 31

Which of the following would be considered emblements?
A. Oil and minerals
B. Wheat and corn
C. Water and air
D. Trees and bushes

Answer 31

B. Wheat and corn
(Emblements are the right of a tenant farmer or previous owner to re-enter the land and harvest the crops for the current growing season)

Question 32

Liens, easements, mechanic’s liens and restrictive covenants are all examples of:
A. estates
B. encumbrances
C. estovers
D. emblements

Answer 32

B. encumbrances
(An encumbrance is a right or an interest by someone other than the owner. Each of these items is a right or interest held by someone other than the owner of the property)

Question 33

The condemnation of private property for public use is exercised under which government right?
A. Escheat
B. Taxation
C. Eminent Domain
D. Manifest Destiny

Answer 33

C. Eminent Domain
(Eminent domain is the right of the government to take private property for public use by paying just compensation. The process by which the government does so is called condemnation)

Question 34

The recording of a deed:
A. insures the interest in a parcel of real estate.
B. warrants the title to real property.
C. gives constructive notice of the ownership of real property.
D. is all that is required to transfer the title to real estate.

Answer 34

C. gives constructive notice of the ownership of real property.
(Recording is never required to have a valid transfer. It is required in order to give constructive notice against 3rd parties and to create a deed which is enforceable)

Question 35

Which of the following is less than a freehold estate?
A. Life estate
B. Leasehold estate
C. Defeasible fee estate
D. Fee simple absolute estate

Answer 35

B. Leasehold estate
(There are two major categories of estates. Freehold (ownership) estates which include, fee simple, life estates and defeasible fees. The other category includes leasehold estates which are less than freehold ownership interests)

Question 36

What type of deed is normally used to convey real estate in a typical sale of residential real estate?
A. Special warranty deed
B. Bargain and sale deed
C. General warranty deed
D. Quit claim deed

Answer 36

C. General warranty deed
(The highest and best deed is a general warranty deed and it is typically used in residential sales transactions)

Question 37

John and Marsha each owned property prior to their marriage. The individual parcels that they owned were held in severalty. Once John and Marsha got married what is the status of the title to the property?
A. The property will remain in their individual names as property held in severalty.
B. They will hold title to the property as joint tenants with a right of survivorship.
C. They will hold title to the property as tenants in common.
D. They will automatically hold the property as tenants by the entireties.

Answer 37

A. The property will remain in their individual names as property held in severalty.
(The fact that John and Marsha got married does not automatically change the form of ownership. Although married couples in NC typically hold property as tenants by the entireties, the act of getting married does not automatically change the manner in which title was held)

Question 38

In the governmental rectangular survey system, what is the size of a section of real estate?
A. 640 acres
B. 43,560 square feet
C. 6 miles square
D. 460 acres

Answer 38

A. 640 acres
(A section of land contains 640 acres and measures one mile by one mile)

Question 39

How many acres are contained in the following legal description: the SW1/4 of the NE 1/4 of the NW 1/4 and the SW 1/2 of the NW 1/4?
A. 160 Acres
B. 70 Acres
C. 120 Acres
D. 90 Acres

Answer 39

D. 90 Acres
(There are two parcels, separated by the word “and.” The first parcel has 640 acres÷4,÷4,÷4 = 10 acres, plus the second parcel which is 640 acres÷4,÷2 = 80 acres. 80 acres + 10 acres is a total of 90 acres)

Question 40

What is the amount of the excise taxes charged to a seller who sells a property for $143,250?
A. $287
B. $300
C. $242
D. $378

Answer 40

A. $287
(The amount of the excise tax is $1 for each $500 of value. The sales price must be rounded up to the nearest $500. $143,500÷$500 = $287)

Question 41

The owner of a property wants to build a garage which is in violation of the existing setback requirements for the parcel of real estate. In order to build the garage and eliminate issues with the setback requirements, the homeowner will need to obtain:
A. an easement from their neighbor.
B. approval from the local HOA.
C. a license issuing them permission.
D. a variance.

Answer 41

D. a variance.
(Setback requirements are enacted pursuant to the police power by municipalities and are part of zoning requirements. Because they are governmental restrictions, the homeowner will need to obtain a variance)

Question 42

Subdivision regulations in North Carolina are administered and enforced by:
A. the city and county local municipalities.
B. through the state office of Code Enforcement.
C. the state Department of Transportation.
D. the developer and the local homeowner’s association.

Answer 42

A. the city and county local municipalities.
(In NC subdivision regulations are enforced at the local level by cities, counties and municipalities)

Question 43

With regard to road disclosures in North Carolina:
A. a public street is guaranteed to be approved and maintained by NCDOT.
B. a licensee must disclose whether the streets are public or private and who has the responsibility for maintaining the street.
C. the buyer representative and the listing agent are not required to make street disclosures. Such disclosures are the seller’s responsibility.
D. all public streets are maintained by NCDOT or our automatically maintained by the municipality where the streets are located.

Answer 43

B. a licensee must disclose whether the streets are public or private and who has the responsibility for maintaining the street.
(Licensees must disclose to prospective buyers whether the streets are public or private and who has the responsibility for maintaining the street. Just because a street is public does not mean the government maintains it in North Carolina)

Question 44

Jason, a buyer, is purchasing a property and is concerned about the location of a fence and the exact size of the parcel. He expresses his concerns about these items to his buyer representative. What is the BEST response of the licensee who is representing Jason?
A. Reassure Jason that the closing attorney will provide him with a full opinion letter that will address these issues.
B. Advise Jason that if he is concerned about encroachments and property lines, he should obtain a survey.
C. Advise Jason that when the property is appraised, the appraiser will verify these items.
D. Tell him that title insurance provides coverage for such defects and issues.

Answer 44

B. Advise Jason that if he is concerned about encroachments and property lines, he should obtain a survey.
(Jason should be advised to get a survey. Title insurance generally excludes coverage for errors or encroachments, which a survey would have revealed. The attorney’s opinion letter does not usually address such issues. The attorney’s opinion letter and the title insurance are usually based only on review of the recorded documents)

Question 45

Which of the following is an example of an encumbrance?
A. A lis pendens filed at the register of deeds.
B. A driveway that is shared by two neighbors.
C. A lien which has been satisfied and paid in full.
D. A fence that is extending two feet over the property line.

Answer 45

A. A lis pendens filed at the register of deeds.
(The lis pendens is an encumbrance. The rights of a hunter to use the land of another is a license or a personal easement in gross. The driveway is not an encumbrance, because driveways can be shared without the creation of a formal easement. A fence which is over the property line is considered an encroachment)

Question 46

The Marketable Title Act of NC is best summarized by which of the following statements?
A. The seller is assuring that they have good marketable title and the buyer, in turn, will have good marketable title.
B. A fixture always remains personal property until it has been paid for in full.
C. A deed is considered to be of good quality if an unbroken chain of title can be documented for the past 30 years.
D. The attorney shall disburse no funds from closing until the buyer’s deed has been properly recorded.

Answer 46

C. A deed is considered to be of good quality if an unbroken chain of title can be documented for the past 30 years.
(The Marketable Title Act requires the attorney or closing agent to document the chain of title for a 30 year period in order for it to be considered marketable)

Question 47

Which of the following debts or liens would be subject to the Homestead Exemption Act of NC?
A. Liens of judgment creditors.
B. A mechanic’s lien which has been appropriately recorded.
C. Past due taxes which have not been paid.
D. A first deed of trust on which the lender is attempting to foreclose.

Answer 47

A. Liens of judgment creditors.
(The NC Homestead Exemption only applies to the liens of judgment creditors. It would have no effect on past due taxes, a mortgage or deed of trust being foreclosed or a mechanic’s lien)

Question 48

When do real property taxes become a lien in North Carolina?
A. September 1st
B. Once they are past due
C. July 1st
D. January 1st of the current year

Answer 48

D. January 1st of the current year
(The property taxes become a lien on January 1st of the current calendar year. Tax bills get issued in July and the taxes are due September 1)

Question 49

Karen purchased a property and has a written and recorded document that gives her permanent ingress and egress to her parcel across an adjacent property. Which of the following statements is correct regarding Karen’s situation?
A. Karen has a license which will end when her term of ownership terminates.
B. Karen has an easement in gross which is an appurtenance and travels with the property.
C. She owns the dominant parcel and the adjacent property is the servient parcel.
D. She owns the servient parcel and the parcel over which the easement runs is the dominant parcel.

Answer 49

C. She owns the dominant parcel and the adjacent property is the servient parcel.
(What Karen possesses is a permanent right to use the property of another. It is an easement appurtenant. Her parcel benefits from the existence of the easement and is the dominant parcel. The adjacent parcel which is being utilized for the easement is the servient one)

Question 50

The North Carolina Real Estate Commission consists of nine members, three of which must have a license and two which must be members of the public and not licensed. Which of the following is also true regarding the NCREC?
A. The NC Real Estate Commission will not hear commission disputes between the agent and their client, but they will assist in the resolution of fee disputes between real estate licensees
B. The terms of the NC Real Estate Commission are life-long appointments.
C. Seven of the NC Real Estate commission members are appointed by the Governor, one is appointed by the house, and one is appointed by the senate.
D. The NC Real Estate Commission is led by a commission chair that is also appointed by the Governor.

Answer 50

C. Seven of the NC Real Estate commission members are appointed by the Governor, one is appointed by the house, and one is appointed by the senate.