Unit 4 Quiz Questions

Question 1

Which of these cannot take title as a joint tenant with right of survivorship?

a. Spouses
b. Two friends who are business partners
c. Two relatives who share a house
d. A corporation

Answer 1

A Corporation

Because a corporation continues indefinitely until terminated by legal action, a corporation may never take title as a joint tenant.

Question 2

When two or more individuals decide to buy a property together, the result is a form of

a. cooperation.
b. co-ownership.
c. community effort.
d. joint venture.

Answer 2

Co-Ownership

When two or more people buy property together, it is called co-ownership. A joint venture is a form of partnership in which two or more people carry out a single business project.

Question 3

Three brothers bought a farm together, and the deed listed only each of their names. What form of ownership are they presumed to have taken?

a. Tenancy by the entireties
b. Joint tenancy with right of survivorship
c. Tenancy in common
d. In severalty

Answer 3

Tenancy in Common

The brothers are presumed to be tenants in common because they did not take title as joint tenants with right of survivorship. Joint tenancy requires specific language. Severalty ownership indicates one owner.

Question 4

What form of ownership is employed when one person transfers ownership to someone else to hold and manage for a third person?

a. Joint venture
b. Joint tenancy
c. Trust
d. Severalty

Answer 4

Trust

A trust is a device by which one person transfers ownership of property to someone else to hold or manage for the benefit of a third party. Severalty indicates one owner. Joint tenancy
is a form of ownership in which, as joint owners die, the surviving owners acquire the deceased tenant’s interest.

Question 5

Two people, each of whom has children from a previous marriage, are now marrying each other.
They ask a real estate professional for advice about how to take title. What should the real estate professional suggest?

a. Tenancy in common, so that each one-half interest would go to each spouse’s children
b. Joint tenancy to protect each other, so that if one dies, the other gets the house
c. That they wait until the real estate professional finds out how best to advise them
d. That they consult with an attorney

Answer 5

That they consult with an attorney

Because the choice of ownership affects the ability to transfer the real estate, has tax implications, and decides rights to future claims, real estate professionals should tell their clients to discuss the issue with an attorney. Real estate professionals are not permitted to
give legal advice.

Question 6

A will provided that the local banker take title to and care for the deceased’s estate until the deceased’s children reach age 25. What kind of provision is this?

a. Testamentary trust
b. Living trust
c. Land trust
d. Trust deed

Answer 6

Testamentary trust

A testamentary trust is established by will after the trustor’s death. A living trust is established during the trustor’s lifetime. Real estate is the only asset in a land trust. A deed of
trust (also called a trust deed) is a financing instrument.

Question 7

What kind of ownership do the horizontal property acts regulate?

a. Cooperatives
b. Condominiums
c. Time-sharing
d. Planned unit development

Answer 7

Condominiums

Condominiums are regulated by a horizontal property act in most states.

Question 8

Shareholders in a cooperative receive shares of stock that entitle them to a

a. common element lease.
b. trust deed.
c. proprietary lease.
d. corporate deed.

Answer 8

Proprietary Lease

The proprietary lease is part of the ownership of the cooperative stock and gives the owner the right to occupy a specific apartment. Common elements refer to the property owned
jointly by condominium owners.

Question 9

Membership camping is similar to

a. cooperative ownership.
b. condominium ownership.
c. planned use development.
d. time-share use.

Answer 9

Time-Share use.

The owner of membership camping purchases the right to use the developer’s facilities, which is similar to a time-share. The owner may not be limited to a specific time, as is the case in a
typical time-share arrangement, however.

Question 10

In a large high-rise condominium, each unit is owned by individual owners. The elevators, parking garage, and swimming pool are called

a. community property.
b. separate property.
c. common elements.
d. proprietary elements.

Answer 10

Common Elements

The parts of a property that condominium owners own together are the common elements.
Community property is a system of property ownership based on the theory that each spouse
has an equal interest in property acquired during the marriage, which is distinct from property acquired by a spouse before marriage, making it that spouse’s separate property.

Question 11

Two individuals own an apartment building as joint tenants, sharing equally in the expenses and profits. If one of the co-owners sells that interest by signing and delivering a deed to a
buyer, which of these statements is TRUE?

a. The buyer will become a joint tenant with the remaining owner.
b. The buyer and the remaining owner will be tenants in common.
c. The buyer will be a tenant in common with the remaining owner and a joint tenant with
the departing owner.
d. The conveyance will be invalid; the two individuals will remain joint tenants

Answer 11

The buyer and the remaining owner will be tenants in common.

A co-owner can sell whatever the co-owner owns; however, once the unities of time, title, and interest are destroyed, as they are when a joint owner sells that interest, there can no longer be a joint tenancy.

Question 12

In February, a seller conveyed an undivided one-half interest in a parcel of land to a buyer. In March, the seller conveyed the remaining one-half interest to a different buyer. The deed to
the second buyer included this statement: “This buyer is to be a joint tenant with the buyer of the other half-interest in the parcel.” Both deeds were recorded. Based on these facts, which of these statements is TRUE?

a. The second buyer and first buyer hold title to the land as joint tenants under the terms of the two conveyances from the seller.
b. The second buyer and first buyer own the land by partition.
c. The second buyer and first buyer are tenants in common.
d. The second buyer owns a half-interest in the land as a joint tenant; the first buyer owns a half-interest in the land as a tenant in common.

Answer 12

The second buyer and first buyer are tenants in common.

Because there are two deeds made at different times, the four unities of joint tenancy have not been met. This means that the second buyer and first buyer are tenants in common.

Question 13

Three people own a large parcel of undeveloped land in joint tenancy. One of them wants to build a shopping center on the property, while the other two want to use it as an organic farm.
The would-be developer tries to buy the other tenants’ interests, but they refuse to sell. Which of these is the developer’s BEST option?

a. File a suit for partition
b. Begin building a shopping center on one-third of the property
c. Wait for the other two to die
d. File a suit to quiet title

Answer 13

File a suit for partition.

When co-owners cannot come to an agreement, they must file for partition in court. The property will not physically be divided; rather, one or more will be given the opportunity to
buy the others out. If this is not possible, then the property will be sold, and the proceeds will be divided appropriately.

Question 14

Fee simple ownership of a cottage in a lakefront community includes an undivided percentage interest in a parking lot, a golf course, and a swimming pool, all located in the development.
Based on these facts alone, the ownership interest is probably BEST described as a

a. time-share estate.
b. time-share use.
c. condominium.
d. cooperative.

Answer 14

Condominium

It appears that this is condominium ownership because it includes ownership of a cottage as well as an interest in the common elements. Cooperative ownership is ruled out because the ownership does not have a proprietary lease. It is not a time-share, because it includes more than the right to use the property at a specific time

Question 15

M, R, and N agree to purchase and operate a commercial property as a permanent investment. M and R each contribute $50,000. N contributes $30,000 and agrees to run the business, which the owners call “Property Group Partners.” Neither M nor R has any right to participate in the operation of the venture. Based on these facts, what type of business organization have M, R, and N established?

a. Joint venture
b. Limited partnership
c. General partnership
d. Limited liability company

Answer 15

Limited Partnership

A limited partnership limits the participation of the silent partners, but also limits their liability. A general partnership would require that all be equally involved in running the
operation and would expose all to liability

Question 16

Based on the facts in the previous question, if the building on the property collapses, resulting in injury and property damage worth $275,000, what will be M’s liability?

a. None
b. $50,000
c. $91,667
d. $100,000

Answer 16

$50,000

Each of the limited partners is limited in liability to the $50,000 amount of the original investment.

Question 17

A joint tenancy requires

a. unity of relationship.
b. unity of possession.
c. unity of purpose.
d. unity of name.

Answer 17

Unity of Possession

To create joint tenancy ownership, four unities are required: possession, interest, time, and title.

Question 18

A characteristic of a tenancy by the entirety is that

a. title may be conveyed by a deed signed by either party.
b. a spouse may dispose of their interest by will.
c. the spouses can agree to own unequal interests.
d. the surviving spouse automatically owns the property acquired during the marriage

Answer 18

The surviving spouse automatically owns the property acquired during the marriage

Under tenancy by the entirety, title may be conveyed only by a deed signed by both parties, each spouse owns an equal, undivided interest in the property, and the surviving spouse
automatically becomes the owner upon the death of the other.

Question 19

A trust is created to pay for a student’s college education. An attorney makes payments on behalf of the student directly to the college. Based on these facts, which of these statements
BEST characterizes the relationships among the parties to the trust?

a. The attorney is the trustor, the student is the beneficiary, and the creator of the trust is the trustee.
b. The creator of the trust is the trustor, the college is the beneficiary, and the attorney is the trustee.
c. The creator of the trust is the trustor, the student is the beneficiary, and the attorney is the trustee.
d. The creator of the trust is the trustor, the attorney is the trustee, and the college is the fiduciary.

Answer 19

The creator of the trust is the trustor, the student is the beneficiary, and the attorney is the trustee.

The creator of the trust is the owner-trustor, the student is the beneficiary, and the attorney is the trustee, the person who manages the trust.

Question 20

A company is a legal entity, created by charter under the laws of the state. The company is managed and operated by a board and is permitted to buy and sell real estate. When one of its directors dies, the company continues to operate. Because of its structure, the company’s income is subject to double taxation. The company is BEST described as a

a. partnership.
b. condominium trust.
c. corporation.
d. limited liability company.

Answer 20

Corporation

The corporation would not be affected if one of the directors dies. The most important fact provided is the double taxation that applies to corporations.

Question 21

When a corporation takes complete ownership of a property, the ownership is in

a. joint tenancy.
b. tenancy in common.
c. partnership.
d. severalty.

Answer 21

Severalty

A corporation is treated as a person and may hold ownership in severalty.

Question 22

In a tenancy in common, if the fractions of ownership are not stated in the deed, how are they
determined?

a. The tenants need a judicial decision to determine the fractional shares.
b. The tenants are presumed to hold equal shares.
c. The tenants settle the issue through binding arbitration.
d. The tenants must terminate the tenancy in common through partition

Answer 22

The tenants are presumed to hold equal shares.

The deed creating a tenancy in common may or may not state the fractional interest held by each co-owner. If no fractions are stated, the tenants are presumed to hold equal shares.

Question 23

In a land trust, the beneficiary is usually also the

a. trustor.
b. trustee.
c. fiduciary.
d. attorney in fact.

Answer 23

Trustor

In a land trust, the beneficiary is usually also the trustor. The beneficiary retains management
and control of the real property and has the right of possession and the right to any income.

Question 24

The four unities of possession, interest, time, and title are associated with which of the following?

A. Community property
B. Severalty ownership
C. Tenants in common
D. Joint tenancy

Answer 24

Joint Tenancy

The answer is joint tenancy. A joint tenancy can only be created by an intentional act and requires the four unities—PITT—to be present.

Question 25

A parcel of property was purchased by two friends. The deed they received from the seller at closing transferred the property without stipulating a form of ownership. The two friends took title as which of the following?

A. Joint tenants
B. Tenants in common
C. Tenants by the entirety
D. Community property owners

Answer 25

Tenants in Common

The answer is tenants in common. When joint tenancy is not clearly prescribed by the deed, grantees take title as tenants in common—to avoid accidental joint tenancy. Unmarried persons are unable to hold community property or be tenants by the entirety because both are reserved for married couples.

Question 26

Three people are joint tenants with rights of survivorship in a tract of land. One owner conveys his interest to a friend. Which statement is TRUE?

A. The other two owners remain joint tenants.
B. The new owner has severalty ownership.
C. They all become tenants in common.
D. They all become joint tenants.

Answer 26

The other two owners remain joint tenants

The answer is the other two owners remain joint tenants. When one of three joint tenants sells to a new person, the other two remain joint tenants with respect to each other. The new person is a tenant in common, and not owner in severalty of the entire property because severalty is sole ownership.

Question 27

A man owns one of 20 units in fee simple, along with a 5% ownership share in the parking facilities, recreation center, and grounds. What kind of property does he own?

A. Cooperative
B. Condominium
C. Time-share
D. Land trust

Answer 27

Condominium

The answer is condominium. When a person owns part of a development in fee and a percentage of therest in common with the other unit owners, this is condominium ownership.

Question 28

A trust is a legal arrangement in which property is held for the benefit of a third party by

A. a beneficiary.
B. a trustor.
C. a trustee.
D. an attorney-in-fact.

Answer 28

Trustee

The answer is a trustee. The trustor creates a trust that is held for the benefit of the beneficiary who will ultimately benefit from the trust. A third party, the trustee, holds legal title to the property and carries out the trustor’s instructions.

Question 29

According to some states, any real property that either spouse owns at the time of marriage remains separate property. Further, any real property acquired by either spouse during the marriage (except by gift or inheritance or with the proceeds of separate property) belongs to both of them equally. What is this form of ownership called?

A. Partnership
B. Joint tenancy
C. Tenancy by the entirety
D. Community property

Answer 29

Community Property

The answer is community property. This arrangement falls under community property law, which is found—with some variations in details—in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin, and as an option in Alaska.

Question 30

Three people were concurrent owners of a parcel of real estate. When one of the owners died, that interest became part of the deceased’s estate. The deceased was

A. a joint tenant.
B. a tenant in common.
C. a tenant by the entirety.
D. a severalty owner.

Answer 30

A Tenant in Common

The answer is a tenant in common. If the deceased had been a joint tenant, the property would not have passed to an heir as prescribed in her will because joint tenancy supersedes a will. The deceased also was not a tenant by the entirety, a category reserved for spouses. Nor was the deceased an owner in severalty because that requires property to be held by only one person.

Question 31

A legal arrangement under which the title to real property is held to protect the interests of a beneficiary is

A. a trust.
B. a corporation.
C. a limited partnership.
D. a general partnership.

Answer 31

A trust

The answer is a trust. Trusts protect beneficiaries. Partnerships can protect limited partners; corporations can protect stockholder-owners.

Question 32

A person lives in an apartment building. The land and structures are owned by a corporation, with one mortgage loan securing the entire property. Like the other residents, this person owns stock in the corporation and has a lease to the apartment. This type of ownership is called

A. condominium.
B. planned unit development.
C. time-share.
D. cooperative.

Answer 32

Cooperative

The answer is cooperative. In a cooperative, a corporation holds title to the property and offers stock shares to the residents, who then receive a proprietary lease to the apartment

Question 33

An owner purchased an interest in a house in Beachfront. The owner is entitled to the right of possession only between July 10 and August 4 of each year. Which of the following is MOST likely the type of ownership that has been purchased?

A. Cooperative
B. Condominium
C. Time-share
D. Partnership

Answer 33

Time-Share

The answer is time-share. When a person holds an interest in property for a stated time each year, that person is sharing the property according to a time plan. It is a time-share.

Question 34

A corporation is a legal entity, recognized as an artificial person. Property owned solely by the corporation is owned in

A. trust.
B. partnership.
C. severalty.
D. survivorship tenancy.

Answer 34

Severalty

The answer is severalty. The term person does not always refer to a natural individual—a human; the law regards a corporation as an artificial person. Because this is so, a corporation can own real estate in severalty (alone).

Question 35

Which of the following refers to ownership by one person?

A. Tenancy by the entirety
B. Community property
C. Tenancy in common
D. Severalty

Answer 35

Severalty

The answer is severalty. Severalty ownership is ownership by one person severed—cut off—from all others

Question 36

A married couple co-owns a farm and has the right of survivorship. This arrangement is MOST likely

A. severalty ownership.
B. community property.
C. a tenancy in common.
D. an estate by the entirety.

Answer 36

An Estate by the entirety

The answer is an estate by the entirety. Married persons may own property together as tenants in common, joint tenants, or as community property. Being more than one person, a couple cannot own in severalty. The right of survivorship is a distinguishing feature of tenancy by the entirety, which some states recognize as a form of joint tenancy reserved for a married couple.

Question 37

The real property interest that takes the form of personal property is

A. ownership in severalty.
B. cooperative unit ownership.
C. condominium unit ownership.
D.tenancy in common.

Answer 37

Cooperative Unit Ownership

The answer is cooperative unit ownership. Because it involves receiving shares of stock and a leasehold— both of which are considered by common law to be personal property—cooperative ownership is personal, not real, property.

Question 38

Two people are co-owners of a small office building with the right of survivorship. One of the co-owners dies intestate and leaves nothing to be distributed to heirs. Which of the following would explain why the surviving co-owner acquired the deceased’s interest?

A. Severalty
B. Joint tenancy
C. Community property
D. Condominium

Answer 38

Joint Tenancy

The answer is joint tenancy. Upon the death of one party in a joint tenancy arrangement, all remaining interests do not pass to the heirs or according to the will but to the surviving joint tenant.

Question 39

Which of the following is MOST likely evidence of ownership in a cooperative?

A. Tax bill for an individual unit
B. Existence of a reverter clause
C. Shareholder stock
D. Right of first refusal

Answer 39

Shareholder Stock

The answer is shareholder stock. The documents that show ownership in a cooperative are shares of stock in the cooperative corporation and a proprietary lease

Question 40

An ownership interest that can be an estate interest or a right of use is

A. a leasehold.
B. a time-share.
C. a condominium.
D. a cooperative.

Answer 40

A Time-Share

The answer is a time-share. A real property interest and the right to use the facilities for a certain period of time is called a time-share.

Question 41

Which statement applies to both joint tenancy and tenancy by the entirety?

A. There is no right to file a partition suit.
B. The last survivor becomes a severalty owner.
C. A deed signed by one owner will convey a fractional interest.
D. A deed will not convey any interest unless signed by both spouses

Answer 41

The last survivor becomes a severalty owner.

The answer is the last survivor becomes a severalty owner. Tenancy by the entirety is a type of joint tenancy recognized by some states that is reserved for married couples. In both, there is a right of survivorship. The last survivor becomes sole (severalty) owner.

Question 42

Which of the following is a form of sole ownership?

A. Tenancy in common
B. Ownership in severalty
C. Tenancy by the entirety
D. Community property

Answer 42

Ownership in Severalty

The answer is ownership in severalty. When just one individual owns property, the form of ownership is known as ownership in severalty.

Question 43

If property is held by two or more owners as joint tenants, the interest of a deceased co-owner will be passed to

A. the surviving owner or owners.
B. the heirs of the deceased.
C. the state, under the law of escheat.
D. the trust under which the property was owned.

Answer 43

The surviving owner or owners

The answer is the surviving owner or owners.Survivorship means that the interest of a deceased cotenant will pass to, and be divided equally among, the still-living (surviving) cotenants.