SU # 03__Ownership & Encumbrance

Question 1

An interest in real estate is best defined as ownership of

a. the full bundle of rights to real property.
b. an estate.
c. one or more of the bundle of rights to real property.
d. the right to possession and use of real property.

Answer 1

c. one or more of the bundle of rights to real property.

Question 2

Encumbrances and police powers are

a. interests that do not include possession.
b. limited forms of an estate.
c. unrelated to interests.
d. types of public interests.

Answer 2

a. interests that do not include possession.

Question 3

What distinguishes a freehold estate from a leasehold estate?

a. A freehold includes the right to dispose or use.
b. A leasehold endures only for a specific period of time.
c. A freehold cannot be defeasible.
d. A leasehold is subject to government restrictions

Answer 3

b. A leasehold endures only for a specific period of time.

Question 4

The highest form of ownership interest one can acquire in real estate is the

a. dower and curtesy.
b. conventional life estate.
c. defeasible fee simple estate.
d. absolute fee simple estate

Answer 4

d. absolute fee simple estate

Question 5

The distinguishing feature of a defeasible fee simple estate is that

a. it can be passed on to heirs.
b. it has no restrictions on use.
c. the estate may revert to a grantor or heirs if the prescribed use changes.
d. it is of unlimited duration.

Answer 5

c. the estate may revert to a grantor or heirs if the prescribed use changes.

Question 6

Upon the death of the owner, a life estate passes to

a. the original owner or other named person.
b. the owner’s heirs.
c. the state.
d. the owner’s spouse

Answer 6

a. the original owner or other named person.

Question 7

How is a conventional life estate created?

a. It happens automatically when title transfers unless a fee simple is specifically claimed.
b. A fee simple owner grants the life estate to a life tenant.
c. It is created by judicial action.
d. It is created by a statutory period of adverse possession.

Answer 7

b. A fee simple owner grants the life estate to a life tenant.

Question 8

What distinguishes a pur autre vie life estate from an ordinary life estate?

a. The pur autre vie estate endures only for the lifetime of the grantor.
b. The pur autre vie estate endures only for the lifetime of the grantee.
c. The pur autre vie estate endures only for the lifetime of a person other than the grantee.
d. The pur autre vie estate cannot revert to the grantor

Answer 8

c. The pur autre vie estate endures only for the lifetime of a person other than the grantee.

Question 9

Which of the following life estates is created by someone other than the owner?

a. Conventional life estate
b. Ordinary life estate
c. Legal life estate
d. Community property life estate.

Answer 9

c. Legal life estate

Question 10

Which of the following is true of a homestead?

a. A homestead interest cannot be conveyed by one spouse.
b. A homestead interest cannot be passed to the children of the head of household.
c. A homestead interest is a form of conventional life estate.
d. A homestead is a primary or secondary residence occupied by a family.

Answer 10

a. A homestead interest cannot be conveyed by one spouse.

Question 11

Dower refers to

a. joint tenancy of husband and wife.
b. a wife’s life estate interest in her husband’s property.
c. a wife’s homestead interest.
d. a child’s life estate interest in his or her parents’ homestead.

Answer 11

b. a wife’s life estate interest in her husband’s property.

Question 12

Which of the following is an illustration of the legal concept of elective share?

a. A surviving spouse places a lien on a debtor’s property.
b. A widow who was excluded from a will makes a claim to a portion of the couple’s principal residence.
c. A spouse who loses her home because of her husband’s gambling debt sues in court for exemption from the debt.
d. A widower whose spouse died without a will sues to change the provisions of the will.

Answer 12

b. A widow who was excluded from a will makes a claim to a portion of the couple’s principal residence.

Question 13

A one-year lease on a house has expired, but the tenant continues sending monthly rent checks to the owner, and the owner accepts them. What kind of leasehold estate exists?

a. Estate for years
b. Estate from period to period
c. Estate at will
d. Estate at sufferance

Answer 13

b. Estate from period to period

Question 14

When a single individual or entity owns a fee or life
estate in a real property, the type of ownership is

a. tenancy in severalty.
b. tenancy by the entireties.
c. absolute fee simple.
d. legal fee simple.

Answer 14

a. tenancy in severalty.

Question 15

Three people have identical rights but unequal shares in a property, share an indivisible interest, and may sell or transfer their interest without consent of the others. This type of ownership is

a. joint tenancy.
b. equal ownership.
c. tenancy in common.
d. estate in severalty

Answer 15

c. tenancy in common.

Question 16

The “four unities” required to create a joint tenancy include which of the following conditions?

a. Parties must acquire respective interests at the same time.
b. Parties must be legally married at the time of acquiring interest.
c. Parties must be family members.
d. Parties must have joint financial resources.

Answer 16

a. Parties must acquire respective interests at the same time.

Question 17

Unlike tenants in common, joint tenants

a. own distinct portions of the physical property.
b. cannot will their interest to a party outside the tenancy.
c. may own unequal shares of the property.
d. cannot sell their interest to outside parties

Answer 17

b. cannot will their interest to a party outside the tenancy.

Question 18

In a community property state, a basic distinction is made between

a. property acquired together and property acquired separately over the duration of the marriage.
b. property owned privately versus property owned by the state.
c. property acquired during a marriage and property already owned by each party at the time of marriage.
d. property acquired during the marriage and property acquired after the marriage.

Answer 18

c. property acquired during a marriage and property already owned by each party at the time of marriage.

Question 19

Who are the essential parties involved in an estate in trust?

a. Owner, trustor and lawyer
b. Owner, trustor and trustee
c. Trustee, title company, and beneficiary
d. Trustor, trustee and beneficiary

Answer 19

d. Trustor, trustee and beneficiary

Question 20

The distinguishing features of a condominium estate are

a. ownership of a share in an association that owns one’s apartment.
b. tenancy in common interest in airspace and common areas of the property.
c. fee simple ownership of the airspace in a unit and an undivided share of the entire property’s common areas.
d. fee simple ownership of a pro rata share of the entire property.

Answer 20

c. fee simple ownership of the airspace in a unit and an undivided share of the entire property’s common areas.

Question 21

Who owns the property in a time-share estate?

a. Ownership is shared by the developer and the broker.
b. The property is owned by tenants in common or by a freehold owner who leases on a time-share basis.
c. A real estate investment trust holds a fee simple estate.
d. A general partner holds a fee simple interest and interval estates are owned by limited partners.

Answer 21

b. The property is owned by tenants in common or by a freehold owner who leases on a time-share basis.

Question 22

Which of the following is true of a cooperative?

a. A cooperative may hold an owner liable for the unpaid operating expenses of other owners.
b. The owners have a fee simple interest in the airspace of their respective apartments.
c. Owners may retain their apartments even if they sell their stock in the cooperative.
d. The proprietary lease is guaranteed to have a fixed rate of rent over the life of the lease term.

Answer 22

a. A cooperative may hold an owner liable for the unpaid operating expenses of other owners.

Question 23

One difference between a cooperative estate and a condominium estate is that

a. a default by a coop owner may cause a foreclosure on the entire property instead of just a single unit, as with a condominium.
b. the condominium owner must pay expenses as well as rent.
c. the coop owner owns stock and a freehold real estate interest whereas the condominium owner simply owns real estate.
d. the condominium owner owns the common elements and the airspace whereas the coop owner only owns the apartment.

Answer 23

a. a default by a coop owner may cause a foreclosure on the entire property instead of just a single unit, as with a condominium

Question 24

A unique feature of a land trust is that

a. the trustee controls both the trustor and the beneficiary.
b. the trustee takes ownership of both land and improvements.
c. the identity of the beneficiary may not be identified.
d. the properties in the trust are probated in the states where the properties are located.

Answer 24

c. the identity of the beneficiary may not be identified.

Question 25

Easements and encroachments are types of

a. lien.
b. deed restriction.
c. encumbrance.
d. appurtenance

Answer 25

c. encumbrance.

Question 26

An affirmative easement gives the benefited party

a. the right to possess a defined portion of another’s real property.
b. the right to prevent the owner of a real property from using it in a defined way.
c. the right to a defined use of a portion of another’s real property.
d. the right to receive a portion of any income generated by another’s real property.

Answer 26

c. the right to a defined use of a portion of another’s real property.

Question 27

There are two adjoining properties. An easement allows property A to use the access road that belongs to property B. In this situation, property A is said to be which of the following in relation to property B?

a. Subservient estate
b. Servient estate
c. Senior tenant
d. Dominant tenement

Answer 27

d. Dominant tenement

Question 28

Which of the following describes a situation in which an easement might be created against the wishes of the property owner?

a. The property has been continuously used as an easement with the knowledge but without the permission of the owner for a period of time.
b. The owner of an adjoining property asks the property owner for an easement, is refused, and then uses the property anyway without the knowledge of the owner.
c. The owner of an adjoining property decides he needs to widen his driveway by sharing his neighbor’s driveway and sues in court to create an easement by necessity.
d. The owner of an adjoining property grants an easement to a third party that includes an easement on the first property.

Answer 28

a. The property has been continuously used as an easement with the knowledge but without the permission of the owner for a period of time.

Question 29

What is the primary danger of allowing an encroachment?

a. An encroachment automatically grants the benefiting party an easement.
b. The encroached party may be liable for additional real estate taxes to cover the area being encroached upon by the neighboring property.
c. Over time, the encroachment may become an easement by prescription that damages the property’s market value.
d. An encroachment creates a lien.

Answer 29

c. Over time, the encroachment may become an easement by prescription that damages the property’s market value.

Question 30

A property owner who is selling her land wants to control how it is used in the future. She might accomplish her aim by means of

a. an injunction.
b. a deed restriction.
c. an easement.
d. a land trust.

Answer 30

b. a deed restriction.

Question 31

What distinguishes a lien from other types of encumbrance?

a. It involves a monetary claim against the value of a property.
b. It lowers the value of a property.
c. It is created voluntarily by the property owner.
d. It attaches to the property rather than to the owner of the property.

Answer 31

a. It involves a monetary claim against the value of a property.

Question 32

A certain property has the following liens recorded against it: a mortgage lien dating from three years ago; a mechanic’s lien dating from two years ago; a real estate tax lien for the current year; and a second mortgage lien dating from the current year. In case of a foreclosure, which of these liens will be paid first?

a. First mortgage lien
b. Mechanic’s lien
c. Real estate tax lien
d. Second mortgage lien

Answer 32

c. Real estate tax lien

Question 33

The lien priority of junior liens can be changed by a lienor’s agreement to

a. forgive portions of the debt.
b. assign the note.
c. foreclose on the note.
d. subordinate

Answer 33

d. subordinate

Question 34

Among junior liens, the order of priority is generally established according to

a. the date of recordation.
b. the amount.
c. the order of disbursement.
d. special agreement among lienees.

Answer 34

a. the date of recordation.

Question 35

What is meant by a “lien-theory” state?

a. A state in which liens are given priority over other encumbrances
b. A state in which a mortgagor retains title to the property when a mortgage lien is created
c. A state in which the holder of a mortgage lien receives title to the mortgaged property until the debt is satisfied
d. A state in which liens exist in theory but not in practice

Answer 35

b. A state in which a mortgagor retains title to the property when a mortgage lien is created

Question 36

A homeowner has hired a contractor to build a room addition. The work has been completed and the contractor has been paid for all work and materials but fails to pay the lumber yard for a load of lumber. What potential problem may the home owner experience?

a. The contractor may place a mechanic’s lien for
the amount of the lumber against the homeowner’s real property.

b. The lumber yard may place a vendor’s lien against the contractor and the homeowner for the amount of the lumber.
c. The lumber yard may place a mechanic’s lien for the amount of the lumber against the homeowner’s real property.
d. The homeowner has no liability because the contractor was paid for the lumber.

Answer 36

c. The lumber yard may place a mechanic’s lien for the amount of the lumber against the homeowner’s real property.

Question 37

The process of enforcing a lien by forcing sale of the lienee’s property is called

a. execution.
b. attachment.
c. foreclosure.
d. subordination

Answer 37

c. foreclosure.

Question 38

An important difference between a judicial foreclosure and a non-judicial foreclosure is

a. there is no right to redeem the property in a non-judicial foreclosure.
b. a judicial foreclosure forces a sale of the property.
c. a non-judicial foreclosure ensures that all liens are paid in order of priority.
d. the lienor receives title directly in a non-judicial foreclosure.

Answer 38

a. there is no right to redeem the property in a non-judicial foreclosure.

Question 39

A defaulting borrower may avoid foreclosure by giving the mortgagee

a. a promissory note.
b. a deed in lieu of foreclosure.
c. a redemption notice.
d. a lis pendens.

Answer 39

b. a deed in lieu of foreclosure.

Question 40

A property survey reveals that a new driveway extends one foot onto a neighbor’s property. This is an example of

a. a easement appurtenant.
b. an encroachment.
c. an easement by prescription.
d. a party wall easement

Answer 40

b. an encroachment.

Question 41

A property owner has an easement appurtenant on her property. When the property is sold to another party, the easement

a. terminates.
b. transfers with the property.
c. transfers with the owner to a new property.
d. becomes a lien on the property.

Answer 41

b. transfers with the property.

Question 42

A brick fence straddles the property line of two neighbors. The neighbors agree not to damage it in any way. This is an example of

a. a party wall.
b. an encroachment.
c. a trade fixture.
d. a deed restriction

Answer 42

a. a party wall.

Question 43

A property owner allows Betty Luanne to cross his property as a shortcut to her kindergarten school bus. One day the property owner dies. What right was Betty given, and what happens to it in the future?

a. A personal easement in gross, which continues after the owner’s death
b. An easement by prescription, which continues after the owner’s death
c. A license, which continues after the owner’s death
d. A license, which terminates at the owner’s death

Answer 43

d. A license, which terminates at the owner’s death

Question 44

A court renders a judgment which authorizes a lien to be placed against the defendant’s house, car, and personal belongings. This is an example of a

a. specific judgment lien.
b. general judgment lien.
c. voluntary judgment lien.
d. superior judgment lien.

Answer 44

b. general judgment lien.

Question 45

Which of the following is a feature of a testamentary trust?

It takes effect only when the trustor dies.

It only applies to real property.

It is activated at the time of signing.

It is created in probate.

Answer 45

It takes effect only when the trustor dies.

Question 46

How is a conventional life estate created?

Answer 46

A fee simple owner grants the life estate to a life tenant.

Question 47

A tenant has refused to vacate an apartment after his lease expires. This is called

an estate In escrow.

a tenancy at sufferance.

an estate in trust.

an estate at forbearance.

Answer 47

a tenancy at sufferance.

Question 48

Upon the death of the life tenant, a life estate passes to

Answer 48

the original owner or other named person.

Question 49

The highest form of ownership interest one can acquire in real estate is the

Answer 49

fee simple estate.

Question 50

A tenancy at will ____.

has a definite expiration date.

is also called an estate at sufferance.

survives the death of the lessor or lessee.

remains in effect as long as lease conditions are met.

Answer 50

remains in effect as long as lease conditions are met.

Question 51

What distinguishes a freehold estate from a leasehold estate?

A freehold includes the right to dispose or use.

The duration of the owner’s rights cannot be determined in a freehold.

A freehold cannot be defeasible.

A leasehold is subject to government restrictions.

Answer 51

The duration of the owner’s rights cannot be determined in a freehold.

Question 52

Which of the following statements regarding month-to-month leases is FALSE?

They are also called periodic tenancies.

They may exist without any written agreement.

They have a definite ending date.

They can be terminated with proper notice.

Answer 52

They have a definite ending date.

Question 53

Who are the essential parties involved when real estate is placed into a trust?

Owner, trustor and lawyer

Owner, trustor and trustee

Trustee, title company, and beneficiary

Trustor, trustee, and beneficiary

Answer 53

Trustor, trustee, and beneficiary

Question 54

In a cooperative, unit owners/members own

stock.

real property.

a promissory note.

the holding

Answer 54

stock.

Question 55

When an interest-holder lacks the right of ownership, what kind of interest is it that he or she has?

A trust

An encumbrance

An entailment

A tenancy

Answer 55

An encumbrance

Question 56

A certain property has the following lien recorded against it: a mortgage lien dating from three years ago; a mechanic’s lien dating from two years ago; a mechanic’s lien dating from two years ago; a real estate tax lien for the current year; and a second mortgage lien dating from the current year. In case of a foreclosure, which of these liens will be paid first?

First mortgage lien

Mechanic’s lien

Real estate tax lien

Second mortgage lien

Answer 56

Real estate tax lien

Question 57

An interest in real estate is best defined as ownership of

the full bundle of rights to real property.

an estate.

one or more of the bundle of rights to real property.

the right to possession and use of real property.

Answer 57

one or more of the bundle of rights to real property.

Question 58

Three people have identical rights but unequal shares in a property, share an indivisible interest, and may sell or transfer their interest without consent of the others. This type of ownership is

joint tenancy.

equal ownership.

tenancy in common.

estate in severalty.

Answer 58

tenancy in common.

Question 59

Jim knowingly acquired a property with a lien attached. What happens to the lien?

The property incurs a second lien.

The original owner must remove the lien prior to taking possession.

The lien is abolished.

The lien continues to be against Jim’s property

Answer 59

The lien continues to be against Jim’s property

Question 60

The distinguishing features of a condominium estate are

ownership of a share in an association that owns one’s apartment.

tenancy in common interest in airspace and common areas of the property.

fee simple ownership of the airspace in a unit and an undivided share of the entire property’s common areas.

fee simple ownership of a pro rata share of the entire property

Answer 60

fee simple ownership of the airspace in a unit and an undivided share of the entire property’s common areas.

Question 61

There are two adjoining properties. An easement allows property A to use the access road that belongs to property B. In this situation, property A is said to be which of the following in relation to property B?

Subservient estate

Servient estate

Senior tenant

Dominant tenement

Answer 61

Dominant tenement