Unit 3 Flashcards
In a quitclaim deed, the grantor covenants
A. That the title is marketable
B. Nothing
C. That she owns the property and has the right to convey title
D. That she will defend any claims against the title
B
Nothing-There are no covenants (promises) in a quitclaim deed
To be valid, a deed must have a
A. Signature of the grantor
B. List of encumbrances
C. Competent grantee
D. Description of all improvements
A
Valid deeds must be signed by the grantor (person conveying the interest). The grantee does not have to sign a deed
In regards to a deed, the term Execution refers to
A. Notarization
B. Recordation
C. Delivery and acceptance
D. The signature(s) of the grantor (s).
D.
Execution of a document refers to the act of signing it
Ownership in severalty refers to
A. More than one owner
B. The right of survivorship
C. Ownership between a husband and a wife
D. Ownership by one person or entity
D-severalty refers to sole (severed) ownership
Which of the following is NOT essential to the validity of a deed?
A. Recording
B. Competent grantor
C. Execution by the grantor
D. Words of conveyance
A. Recording
Deeds to not have to be recorded to be valid
Conveyance of title occurs at the moment the
A. Deed is accepted by the grantor
B. Deed is recorded
C. Grantor receives the consideration
D. Deed is signed by the grantor
A
Deed is accepted by the grantee
Title transfers upon acceptance of the deed by the grantee
The form of ownership in which the owners own and finance their individual unit plus own a share of common elements is called
A. A condominium
B. General partnership
C. A cooperative
D. Limited partnership
A
In a condominium, the owner owns and financed an individual unit. In a cooperative, the owner finances the shares of stock that represents ownership in the cooperative and has a propriety lease providing rights of possession to the title
An owner of a ranch is very reclusive and has not left his home for 30 years. On the far side of the ranch, his neighbor built a barn and corral 25 years ago. In this situation the neighbor
A. Will lose all the improvements and land if the owner gives notice.
B. Has stolen real property and may go to prison
C. May try to claim title through adverse possession and a suit to quiet title
D. Will have the right to sell the improvements to the ranch owner because no notice was given
C
If the neighbor has possessed the property for the statutory amount of time required by state, the neighbor may use a suit to quiet title to try and obtain the title to the property
The common elements in a condominium are owned by
A. All the members of the HOA as joint tenants
B. All former and current unit owners as tenants in common
C. The HOA and current shareholders in severalty
D. All current owners as tenants in common
D
Common elements are owned by all unit owners as tenants in common
Standard coverage title insurance protects against all of the following EXCEPT
A. A forged deed
B. Encroachments
C. Errors in the public record
D. Errors in the title report
B
Standard coverage title insurance does not protect against claims involving surveys or encroachments, or other problems that would only be discovered by an inspection of the property
A title search follows documents from the current to the first known source. The examiner is following or creating the
A. Title commitment
B. Title opinion
C. Owner policy
D. Chain of title
D. Chain of title
The examiner is following the chain of title
A second mortgage can be distinguished from a first mortgage by the date the mortgage was
A. Acknowledged
B. Given
C. Recorded
D. Delivered and accepted
C. Recorded
Priority of rights is determined by the date of public notice. The most accepted form of public notice is document recordation
A deed that has not been recorded may NOT provide
A. Competent parties
B. Constructive notice
C. Actual notice
D. A valid document
B.
A deed that has not been recorded lacks constructive notice, which is also known as legal notice
Title insurance premiums are paid
A. Once, at the time the policy is issued
B. Monthly with mortgage payment
C. Semiannually along with property taxes
D. Annually along with the homeowners insurance premium
A
Title insurance policies protect against title flaws that already exist but have not been discovered yet. Therefore the title company charges only one premium which is typically paid at closing
Jacobson deeds property to Keene, who neither records her deed nor takes possession of the property. Jacobson later deeds the same property to Linder, who records his deed and takes possession of the property. Linder is not aware of the earlier conveyance to Keene. Who holds legal title to the property?
A. Jacobson, because Keene did not record her deed
B. Keene, because Keene’s deed is dated first
C. Linder, because his deed was recorded first
D. Keene and Linder as tenants in common , because the form of ownership was not specified in the deed.
D
In a race/notice recording system, a subsequent purchaser who records his deed first has good title to the property, as long as he did not have actual notice of the earlier conveyance
Before closing, a cloud on the title was found. Which of these should the seller use to clear title?
A. Abstract with title opinion
B. Title commitment
C. Title insurance
D. Suit to quiet title
D
The seller would use a suit to quiet title. Title commitments and opinions would identify the cloud on the title but not clear it
The four unities of joint tenancy are
A. Possession, interest, title, and time -TTIP
B. Possession, interest, title, and years of ownership -PITY
C. Possession, occupancy, separate ownership, and time -POST
D. Possession, unity of deed, no survivorship, and title -PUNT
A
Possession, interest, title, and time are the four unities of joint tenancy. The memory aid is TTIP
Community property is presumed for married couples unless stated to the contrary in the
A. Marriage certificate
B. Marriage vows
C. Mortgage
D. Deed
D-community property status is presumed for property owned by married couples unless it stated otherwise in the deed. The burden of proving separate property status is on the spouse claiming separate property status.
The act of conveying real estate ownership is also known as
A. Substitution
B. Subordination
C. Alienation
D. Execution
C
Alienation (making the ownership alien to yourself) is the act of conveying real estate ownership
A deed conveys whatever interest is held by the grantor unless it is specifically stated that it is conveying a
A. Greater interest
B. Liability interest
C. Marginal interest
D. Lesser interest
D
A deed conveys the interest held by the grantor unless it states a lesser interest
An example of an involuntary deed is a
A. Grant deed
B. Sheriff’s deed
C. Gift deed
D. Quitclaim deed
B.
A sheriffs deed is given as a result of a foreclosure sale and is an involuntary deed. Tax deeds and trustee’s deeds are also involuntary deeds
An essential element to gain ownership through adverse possession is
A. Permissive use of the property
B. Nonpayment of property taxes
C. Open and notorious occupation
D. A deed from the owner
C. Open and notorious occupation
Adverse possession required the adverse possessor to occupy the property in a manner that is open (it can’t be in the middle of the night and notorious (the owner has to be negligently ignoring who is on the property and what they are doing there)
The standard policy of the title insurance is referred to as
A. California Land and Title Association. CLTA
B. American Land Title Association ALTA
C. Owners Policy of Title Insurance OPTI
D. Lenders Association Standard Title LAST
A
The CLTA
California Land Title Association
Is the most commonly used standard form of title insurance in California for owners. It is referred to as an owner’s policy
The document that can be recorded to give interested parties notice that a lawsuit is pending, affecting the title to real property is called a
A. Real estate lawsuit notice
B. Lawsuitius pendulous
C. Lis pendens
D. Notice of default
C. Lis pendens
Is Latin for “legal action pending”. It does not stop a seller from selling a property when a lawsuit is filed, but it can make it more difficult by alerting potential purchasers, lenders, and title insurance companies that there are legal issues that may cloud the title
An example of an expense involving real property that would not be deductible on federal income taxes is
D. Homeowners association dues are not deductible for owner-occupied residential properties. Association dues for rental properties are deductible because they are an operating expense for the business
The holding period for a real property investment to qualify as a long/term capital gain is more than
A. One month
B. Six Months
C. Twelve months
D. Two years
C twelve Months
Is the holding period to qualify as a long term capital gain for real property
The maximum amount of gain that may be excluded from taxation on the sale of a principal residence for a married couple filing a joint return
A. $500,000
B. $500,000 but only if they acquire a replacement residence within two years
C. $250,000
D. Unlimited
A
The maximum amount is $500,000 and while there are limitations, the two-year replacement rule is no longer required
To qualify for the exclusion from taxation rule, homeowners must own and occupy the property for
A. Five out of the last ten years
B. Two out of the last five years and the years do not have to be sequential
C. Two years from any period of time in the past
D. Two out of the last five years, and the years have to be sequential
B. Two out of the last five years and the years do not have to be sequential
The homeowner must have occupied the property for at least two out of the past fine years to qualify for the exclusion.
For example a qualified homeowner could have lived in the home for six months, moved out for one year, and then moved back in for another year and a half
Which of the following is TRUE about like-kind exchanges?
A. Like-kind exchanges can be used to completely avoid paying capital gains taxes on the sale of property
B. Like-kind exchanges allow homeowners to sell their residence and transfer taxes to the new residence
C like-kind exchanges enable investors and business property owners to defer payment of capital gains taxes on investment properties
D. Like-kind exchanges are too complex and difficult to understand so real estate agents never do them
C-
C like-kind exchanges enable investors and business property owners to defer payment of capital gains taxes on investment properties
Like-kind exchanges(also called tax-deferred exchanges, or sometimes erroneously called tax exchanges) are used to defer paying capital gains taxes on investment properties until the property traded into is sold. Real estate agents who specialize in these kinds of transactions can make very large incomes
Property taxes become a lien on
A. November 1
B. December 10
C. April 1
D. January 1 of the year preceding the tax year
D. The tax year in California starts July 1 and goes through June 30. Property taxes become a lien on January 1 of the year preceding the tax year. The “Lein date” or the date at which the taxes are an obligation on the property is January 1 of the preceding tax year even though the actual amount of the lien will not be determined until approximately September or October of that year
