Unit 2.2 Estates and Ownership Quiz

Question 1

When the granting clause of a deed reads “from A to B so long as the property is used as a restaurant,” it is proper to say that:

Choose only ONE best answer.

A
ownership is fee simple absolute.

B
ownership is pur autre vie.

C
ownership is defeasible.

D
ownership is non-transferable.

Answer 1

C
ownership is defeasible.

The granting clause creates a reversionary interest if the restriction is violated. B will own the property – and can will it, sell it or transfer it with the same restriction up to the point that the restriction is violated. This ownership is defeasible, which means able to be defeated. Defeasible estates may be determinable (automatic loss) or conditional (courts). Pur autre vie is a life estate that is inheritable as someone else is the measuring life.

Question 2

A life tenant may do which of the following during his life estate?

Choose only ONE best answer.

A
Sell or rent his life estate

B
Timber the land to pay property taxes.

C
Mortgage the property requiring future owners to pay the balance.

D
Refuse to repair a leaking roof.

Answer 2

A
Sell or rent his life estate

A life tenant can sell his/her interest and mortgage the property, however it can only be for the period of time that the life estate exists. The new owner of the life estate would lose his/her interest in the property when the original life tenant dies. Estovers permits a life tenant to cut down trees for fuel or repairs. The life tenant cannot waste the property by selling off trees or failing to make repairs.

Question 3

The degree, quantity, nature and extent of interest which a person has in real property is known as a (an)

Choose only ONE best answer.

A
estate.

B
appurtenance.

C
encumbrance.

D
first deed of trust.

Answer 3

A
estate.

This is the definition of an estate. An appurtenance is an improvement to the property. An encumbrance is a charge against the property – lien, restrictive / protective covenants, encroachment, deed restriction, etc. A deed of trust is a financial lien against the property in a title theory state.

Question 4

The most complete interest one can hold in a property is known as a

Choose only ONE best answer.

A
qualified fee estate.

B
quitclaim estate.

C
fee simple estate.

D
life estate.

Answer 4

C
fee simple estate.

The greatest form of ownership is ownership in fee or fee simple absolute. A qualified fee – fee simple determinable or conditional is less complete as it is possible to lose the property when the deed restriction is violated. A life estate is only for the lifetime of the party granted the life estate and is not inheritable (unless pur autre vie – but still limited to the measuring life).

Question 5

John was given real property for his natural life. Which of the following statements in INCORRECT?

Choose only ONE best answer.

A
John has a freehold estate

B
John has a fee simple estate

C
The duration of this estate is only for the length of John’s life

D
The estate can be encumbered by John, but only for the duration of his life

Answer 5

B
John has a fee simple estate

John has a freehold estate, however does not have an inheritable fee simple estate such as fee simple absolute. He does have a non-inheritable conventional life estate. A conventional life estate is only for the person’s lifetime. Conventional life estates are intentionally created.

Question 6

The right of a life tenant to take wood from the premises for necessary fuel and/or repairs is called the right of

Choose only ONE best answer.

A
replacement.

B
estovers.

C
devise.

D
emblements.

Answer 6

B
estovers.

Estovers is the right of a life tenant to use timber for fuel or repairs, however does not permit the life tenant to waste the property and sell it for profit. A devise is a gift of real property in a will. Emblements are annual crops (fructus industrialis) that are personal property.

Question 7

Victor receives possession of property under a deed that states that he shall own the property as long as the present building standing on the property is not torn down. Victor holds a

Choose only ONE best answer.

A
life estate.

B
non-destructible estate.

C
pur autre vie estate with qualifications.

D
defeasible fee estate.

Answer 7

D
defeasible fee estate.

When a owner will automatically lose ownership interest if they violate a deed restriction it is a fee simple determinable estate. Fee simple conditional or subject to a condition subsequent requires a challenge to ownership in court. A life estate will end upon the death of the life tenant. Pur autre vie is a life estate, where someone else is the measuring life, not the life tenant.

Question 8

John and Marsha each own property prior to marriage. After marrying, Marsha wants to sell her “pre-marriage” property. Which of the following is TRUE?

Choose only ONE best answer.

A
Marsha and John must sign the deed to legally transfer the property to avoid a cloud on the title.

B
Ownership changes to tenancy by the entirety so both spouses must sign the deed.

C
Marsha may sell the property without John’s signature since the deed lists ownership in severalty.

D
John may sell the property without Marsha’s signature since he is her spouse.

Answer 8

A
Marsha and John must sign the deed to legally transfer the property to avoid a cloud on the title.

In North Carolina, when a couple marries each spouse has a marital interest in the property owned by the other spouse, including pre-marriage property, unless a prenuptial agreement is signed. To convey property both spouses must sign the deed to sell the property (1 to buy; 2 to sell).

NOTE: To own property as tenancy by the entirety, a couple must be married at the time of purchase. Marriage does not change the ownership without specific legal action. Tenancy by the entirety is presumed for married couples as it has the most assurances.

Question 9

Mrs. Gonzales and her son, Jose, own property as joint tenants with the right of survivorship. Mrs. Gonzales is married to her husband Kevin for over 30 years. If Mrs. Gonzales dies, her son:

Choose only ONE best answer.

A
inherits the property.

B
will own in severalty through survivorship.

C
receives half of the interest and her husband receives the other half by marital rights

D
Her husband receives her interest through survivorship

Answer 9

B
will own in severalty through survivorship

When a property is owned by 2 people as joint tenants and one of the joint tenant’s dies, the surviving tenant will own in severalty. Joint tenancy has the right of survivorship (passes to other joint tenants) rather than being inheritable and passing to the heirs. The transfer is automatic and does not require court action. The husband would not have an interest in the property.

Question 10

Adam, Ben and Charles purchase a property and hold title as tenants in common. If Adam later sells his interest to David, then David, Ben and Charles will jointly own the property as:

Choose only ONE best answer.

A
tenants by entirety.

B
partners with survivorship.

C
joint tenants.

D
tenants in common.

Answer 10

D
tenants in common.

When a tenant in common sells his/her interest in a property to another, the new tenant will own as a tenant in common. To own as joint tenants the purchase must have the unities of possession, interest, time and title. This means that joint tenants must acquire the property at the same time, from the same source , with the same level of ownership.

NOTE: Joint tenancy is treated differently in NC. It should not be tested on the State exam, however will be tested on the National exam.

Question 11

When two or more individuals own real property as tenants in common, each owner holds certain ownership rights. Of the following rights, a tenant in common may NOT

Choose only ONE best answer.

A
sell her interest.

B
mortgage her interest.

C
exclude other tenants from the property.

D
will her interest.

Answer 11

C
exclude other tenants from the property

When multiple individuals or co-tenants own a property they own a percentage of the whole property and cannot exclude other co-tenants from the property. Their interest can be sold to another without permission from the other co-tenants. They can pledge their interest in the property as collateral for a debt, however cannot mortgage the entire property. When a property is owned as tenants in common it is inheritable.

Question 12

If Mary and Joe purchase a property and hold the title as tenants by the entireties, and Joe subsequently dies, his interest will automatically pass to

Choose only ONE best answer.

A
whoever Joe left his interest to in his will.

B
Joe’s heirs at law.

C
Joe’s co-owner and wife Mary.

D
Joe’s children who survive him.

Answer 12

C
Joe’s co-owner and wife Mary.

When a property is owned tenancy by the entireties, it automatically passes to the surviving spouse regardless of what is stated in a will or if there is no will at all. Tenancy by the entirety ownership is only available to married couples.

NOTE: A will cannot defeat joint tenancy or tenancy by the entirety.

Question 13

Which of the following statements is TRUE regarding property ownership?

Choose only ONE best answer.

A
A buyer can be deeded fee simple title of a condominium unit.

B
The owner of a co-op apartment unit owns an undivided tenancy in common interest in his or her unit.

C
Only townhouses and condominiums can be built in a planned unit development.

D
A townhouse owner only owns the airspace of his/her unit an co-owns the common areas.

Answer 13

A
A buyer can be deeded fee simple title of a condominium unit.

An owner of a condo will own the airspace of the unit and co-own the common areas. Condo ownership blends severalty and tenants in common ownership. Planned unit developments may include single-family dwellings, townhouses, condos, and commercial property. When an individual purchases a co-op, they are purchasing a share of stock and a proprietary lease. They do not own the real estate directly as a tenant in common or otherwise. Townhouse owners own the unit and the land that it rest on, and the H.O.A. owns the common areas.

NOTE: A co-op is corporation owned property. What do you get when you purchase a corporation? A share of stock.

Question 14

Which of the following would best define a tenancy for years?

Choose only ONE best answer.

A
Rental of a property from period to period that automatically renews for 30 days unless either party terminates.
B
Rental of a vacation home for 2-weeks that automatically terminates.
C
Rental of a property for an indefinite period of time which can be terminated at will.
D
Rental of a vacation home for a period that does not exceed 90 days.

Answer 14

B
Rental of a vacation home for 2-weeks that automatically terminates.

An estate for years or tenancy for years has an automatic end date. No notice is required to be given since it has a definite end date.

A periodic estate that automatically renews is an estate from period to period or year to year. Either landlord or tenant may give notice to terminate based on the agreed upon time frame in the lease agreement. An estate that can be terminated by either party without notice is best know as an estate at will. A vacation rental is defined as rental of a property that is not the tenant’s primary residence for 90-days or less.

Question 15

Matt, Chris, Samarah and Tiffany own a property under joint tenancy. Chris dies, and upon review of his will he has left all of his property to his daughter Ellie. Which of the following statements is TRUE?

Choose only ONE best answer.

A
Matt, Samarah, Tiffany and Ellie now own the property as joint tenants with the right of survivorship.

B
Matt, Samarah, and Tiffany continue to own the property as joint tenants and Ellie owns Chris’s share of the property as a tenant in common.

C
Matt, Samarah and Tiffany own the property as joint tenants.

D
Matt, Samarah, Tiffany and Ellie own the property as tenants in common.

Answer 15

C
Matt, Samarah and Tiffany own the property as joint tenants.

Joint tenancy cannot be defeated by a will. You don’t pass a joint to your kids. When Chris died his share automatically pass to the other surviving joint tenants, who now own a 1/3 interest in the property.

NOTE: Had Chris sold his 25% interest in the property to another party, they would have owned as tenants in common without disturbing Matt, Samarah and Tiffany’s ownership as joint tenants.

Question 16

Which of the following hybrid forms of ownership would be defined as ownership of the unit purchased as well as the land that it rests upon, with the homeowners association owning the common areas?

Choose only ONE best answer.

A
Rowhouse
B
Condominium
C
Timeshare
D
Co-op

Answer 16

A
Rowhouse

A townhouse may also be called a rowhouse, where the owner purchases the townhome unit as well the land the unit rests upon, while the HOA owns the common areas. An owner of a condo would own the airspace of the unit as well as co-ownership of the common area, thus blending ownership in severalty and tenants in common. The definition of a timeshare is an interval ownership where the buyer must have 5 or more non-consecutive periods of time, for at least 5 years, have 5 days to terminate or rescind the contract and the developer must retain sale proceeds in escrow account for at least 10 days unless the buyer terminates. A co-op is corporation owned property – the buyer receives a share of stock and a proprietary lease, thus they do not have direct ownership of a unit.

Question 17

Kyle purchased a property in severalty in 2009 which he has lived in with his son Mike. In 2018 Kyle marries Meredith and they celebrate their honeymoon in Aruba. In a freak diving accident, Kyle is killed by a shark. Which of the following statements FALSE if Kyle died intestate?

Choose only ONE best answer.

A
Meredith owns the property in severalty.
B
Kyle’s heirs will have an ownership interest in the property that will be transferred by the court.
C
Meredith has a marital interest in the property.
D
Mike is an heir to the property.

Answer 17

A
Meredith owns the property in severalty.

Getting married will never change any form of ownership interest. Meredith has a marital interest in the property and both she and Mike are heirs. Since Kyle died intestate, the heirs are “in-the-state” where the courts will disperse his assets. Only a couple that is married at the time of purchase can take title as tenants by the entirety.

Question 18

Curt is selling his house to Hank. Curt advertised the property on Craigslist and Facebook, including his washer and dryer in the sale of the property. Hank writes an offer with no mention of the washer and dryer. Which of the following statements is TRUE?

Choose only ONE best answer.

A
Curt is obligated to leave the washer and dryer because he offered to convey them to the buyer in the online advertisement.
B
Curt is obligated to leave the washer and dryer as they are connected to the plumbing and electrical systems and therefore are considered fixtures.
C
Curt is not obligated to the leave the washer and dryer as they are trade fixtures that can be removed without further agreement.
D
Curt is not obligated to leave the washer and dryer as they are personal property and should have been requested in the contract.

Answer 18

D
Curt is not obligated to leave the washer and dryer as they are personal property and should have been requested in the contract.

A washer, dryer and refrigerator are typically personal property. The buyer must request them in the offer to purchase and contract for the seller to obligated to leave them. A fixture must be left with the property, such as light fixtures, ceiling fans and mailboxes. A trade fixture is an item that is used in a trade or business.

NOTE: To determine if something is a fixture or personal property first check the Offer to Purchase and Contract. Agreement between the parties controls. Otherwise, apply the Total Circumstance Test - I.R.M.A. 1) What was the INTENTION of the party that attached? 2) What was the RELATIONSHIP? Owner or renter? 3) METHOD - Will it cause damage to remove. and 4) ADAPTATION - Has it been customized to the space?

Question 19

Barb allowed a friend, Carol, to stay in her guest house when she recently lost her job. Due to Carol’s misfortune, Barb has charged her no rent on the property. Recently, Barb had an opportunity to rent the guest house but Carol is refusing to leave voluntarily. Which of the following statements is true?
Choose only ONE best answer.

A
Carol is a tenant at will and, as such, she can be forced out at any time
B
Carol is a tenant at sufferance and will need to be evicted if she refuses to leave.
C
Barb can call the sheriff’s department to have Carol removed as a trespasser since she did not leave when asked
D
Barb may cut off the utilities to the guest house in an effort to make the property uncomfortable so that Carol will leave

Answer 19

B
Carol is a tenant at sufferance and will need to be evicted if she refuses to leave.

Since Carol stayed “beyond” her welcome, she is a tenant at sufferance and her rights can only be severed by an eviction. Once Carol has established residency, she is not considered a trespasser, even if she refuses to leave. Cutting off utilities is known as a self-help eviction and is always illegal.

Question 20

All of the following are examples of non-freehold estates, EXCEPT?
Choose only ONE best answer.

A
Estate for Years
B
Life Estate
C
Periodic Tenancy
D
Estate at Sufferance

Answer 20

B
Life Estate

A life estate is a freehold estate (of ownership) that is not inheritable. Non-freehold estates are leasehold estates: tenancy for years, tenancy from year to year, tenancy at will and tenancy at sufferance. Note: tenancy and estate can be used interchangeably.

Question 21

A commercial tenant was given a lease for 3 years exactly, with no rights for renewal. This lease would be described best as a(n)?
Choose only ONE best answer.

A
Tenancy for Years
B
Periodic tenancy
C
Life Estate
D
Defeasible estate

Answer 21

A
Tenancy for Years

An estate or tenancy for years is defined as a “fixed-term” lease. Periodic tenancies allow for renewals or terminations, with notice. Life estates and defeasible estates are freehold estates.

Question 22

All of the following are considered to be rights of a tenant in a residential lease, EXCEPT
Choose only ONE best answer.

A
Right of possession
B
Right of Use for any legal purpose
C
Right to renew lease at the end of of lease period
D
Expectation of quiet enjoyment

Answer 22

C
Right to renew lease at the end of of lease period

The landlord does not have to renew the lease at the end of the lease term. A tenancy for years terminates without notice on a definite end date. The tenant has the right of possession and quiet enjoyment to use the property for legal purposes. The tenant has a leasehold interest while the landlord has a leased fee interest.

Question 23

***A buyer purchases a property with a tenant in place with 9 months remaining on a one year lease. Which of the following is most correct regarding this scenario?
Choose only ONE best answer.

A
The purchaser must honor the existing lease

B
The purchaser may terminate the lease with 90 days notice since he plans to live in the unit

C
The tenant may opt to terminate the lease with as little as 10-days notice

Answer 23

A
The purchaser must honor the existing lease

(come back to this one for description)

Question 24

Which of the following best describes a landlord’s interest in a rented property?
Choose only ONE best answer.

A
A leased fee interest
B
A leasehold estate
C
Defeasible fee estate
D
Estate at Sufferance

Answer 24

A
A leased fee interest

This is a question best answered through elimination. The tenant has possession or a hold on the property and therefore has the leasehold interest. A defeasible estate is one that can be defeated - which is either determinable or conditional and has nothing to do with leasing. An estate at sufferance occurs when the tenant will not vacate after the tenancy has ended. This leaves only the first choice as an option.

Question 25

A family rented a beach house for a two-week vacation. Their leasehold interest in the beach house is an estate
Choose only ONE best answer.

A
at will.
B
for years.
C
for sufferance.
D
from period to period.

Answer 25

B
for years.

Any definite period of time that does not automatically renew itself is considered a lease (or estate) for years. Periodic tenancies will have some statement about automatic renewal or the need to give notice to terminate. An estate at will is one with no binding terms….no period of time, no promise to stay or promise to pay. An estate at sufferance happens when a tenant stays past (holds over) the time when they should have vacated the property.

Question 26

Lily, Jane, and Martin purchased a property together electing to be Joint Tenants in the purchase. Several Years later, Jane sells her share to Sam despite the fact that Lily and Martin disagree with this action. Upon Sam’s death, what is the legal status of the property’s ownership?

Choose only ONE best answer.

A
Lily and Martin will each own 1/2 of the interest in the property as joint tenants with one another.

B
Lily, Martin, and Sam’s heirs will share ownership with each party having a 1/3 interest in the property. Lily and Martin will remain joint tenants while Sam’s heirs will be tenants in common.

C
Lily, Martin, and Sam’s heirs will all have a 1/3 undivided interest in the property as tenants in common with each other

D
Lily, Martin, and Sam’s heirs will each have a 1/3 interest in the property as joint tenants.

Answer 26

B
Lily, Martin, and Sam’s heirs will share ownership with each party having a 1/3 interest in the property. Lily and Martin will remain joint tenants while Sam’s heirs will be tenants in common.

Lily, Martin, and Jane begin the ownership together at the same time as joint tenants meaning they have chosen to have the right of survivorship between them. Jane is free to sell her share even if Lily and Martin do not agree. The new purchaser, Sam, cannot be a joint tenant because he did not join the ownership group at the same time as the other joint tenants. Therefore, Sam will be a tenant in common. When Sam (a tenant in common) dies, his share goes to his heirs.

Tenant in Common Dies….that share goes to the heirs of that owner

Joint Tenant Dies…that share goes to any surviving other joint tenants

Question 27

Which of the following best describes condominium ownership?

Choose only ONE best answer.

A
Condominium unit owners share in the ownership expenses such as taxes and maintenance for the land, structures, and improvements.

B
Condominium owners purchase only the land that their unit is located on

C
Condominium unit owners purchase the airspace of their unit as a tenant in common with the other unit owners in the building.

D
Condominium unit owners have limited time access to amenities in the facility

Answer 27

A
Condominium unit owners share in the ownership expenses such as taxes and maintenance for the land, structures, and improvements.

Condo purchases separate the real estate transaction into 2 separate items….

1. The land/structures/buildings/improvements
2. The airspace of the unit itself

Condo purchasers share in #1 (land, structures, improvements) with everyone else who owns a unit in that development. They are all tenants in common for these common areas. They all must share in the expenses of ownership such as taxes and maintenance. There may or may not be a Homeowner’s Association to administer things.

Condo purchasers DO NOT share the airspace of their unit (#2) with the other owners. They own their own airspace units in severalty.