Unit 5

Question 1

The title to real estate passes when a valid deed is

a. signed and recorded.
b. delivered and accepted.
c. filed and microfilmed.
d. executed and mailed.

Answer 1

b. delivered and accepted.

Question 2

The primary purpose of a deed is to

a. prove ownership.
b. transfer title rights.
c. give constructive notice.
d. prevent adverse possession.

Answer 2

b. transfer title rights

Question 3

A property is under contract for a sales price of $357,800. The buyer will assume the seller’s outstanding loan balance of $225,000, secure a second mortgage for $100,000, and pay the remainder in certified funds at settlement. On the settlement statement, the seller will be charged excise tax in the amount of

a. $265.60.
b. $358.00.
c. $715.60.
d. $716.00.

Answer 3

d. $716.00.

Question 4

In a real estate transaction, excise taxes are the responsibility of the

a. buyer.
b. seller.
c. escrow agent.
d. broker.

Answer 4

b. seller.

Question 5

Title to real estate inherited from a person who died testate is referred to as a

a. legacy.
b. bequest.
c. devise.
d. demise.

Answer 5

c. devise.

Question 6

Which of the following documents is signed by the owner of the real estate?

a. A gift deed
b. A trustee’s deed
c. A reconveyance deed
d. A tax deed

Answer 6

a. A gift deed

Question 7

Which of the following deeds contains no expressed or implied warranties?

a. Special warranty deed
b. Quitclaim deed
c. Warranty deed
d. Grant deed

Answer 7

b. Quitclaim deed

Question 8

Which of the following is an essential element of a valid North Carolina deed?

a. A seal
b. Recordation
c. The signature of the grantee
d. Words of conveyance

Answer 8

d. Words of conveyance

Question 9

All the following are non-essential elements of valid North Carolina deed
EXCEPT
a. exact sales price.
b. recordation.
c. the names of the grantor and the grantee.
d. signatures given under seal.

Answer 9

c. the names of the grantor and the grantee.

Question 10

A valid will devises the decedent’s real estate after the payment of all debts, claims, inheritance taxes, and expenses through the

a. administrator of the estate.
b. law of intestate succession.
c. granting clause established in the will.
d. court action known as probate.

Answer 10

d. court action known as probate

Question 11

When the grantor does NOT wish to convey certain property rights,

a. exceptions must be noted in a separate document.
b. the deed must convey the property with all rights intact.
c. exceptions may be noted in the deed of conveyance.
d. the grantor must convey the entire premises and have the grantee reconvey the rights to be retained by the grantor.

Answer 11

c. exceptions may be noted in the deed of conveyance.

Question 12

An investor bought acreage in a distant county, never went to see it, and did not personally use it, although he regularly paid the real estate taxes on it. A woman moved her mobile home onto the investor’s property, drilled a well for water, and lived there for many years. The woman may have become the owner of the acreage if she has met the requirements regarding

a. intestate succession.
b. adverse possession.
c. the covenant of quiet enjoyment.
d. the statute of limitations.

Answer 12

b. adverse possession.

Question 13

In which of the following situations would a quitclaim deed be the most appropriate type of deed to use?

a. Conveyance of a marketable title
b. Transfer of a nominal real estate interest
c. Removal of a cloud on a title
d. Warranting validity of a title

Answer 13

c. Removal of a cloud on a title

Question 14

A trespasser built a log cabin in a remote area of a national park and occupied the structure for more than 25 years. That person will never be able to claim the property under adverse possession statutes, because the

a. possession was not notorious.
b. possession was not open.
c. property was not privately owned.
d. property was not properly fenced.

Answer 14

c. property was not privately owned.

Question 15

Grantee is to a deed as devisee is to a

a. trust.
b. will.
c. estate.
d. sales contract.

Answer 15

b. will.

Question 16

All of the following are true about adverse possession EXCEPT

a. possession of the property occurs without the owner’s consent.
b. continuous occupancy of the property occurs over a minimum time period.
c. just compensation is given to the owner upon passing of the required period of possession.
d. the person taking possession possibly becomes the owner of the property.

Answer 16

c. just compensation is given to the owner upon passing of the required period of possession.

Question 17

In order for a deed to be valid

a. the grantor must be legally competent.
b. the signature of the grantor must be witnessed.
c. the deed must be recorded.
d. the grantee must sign the deed.

Answer 17

a. the grantor must be legally competent.

Question 18

The seller conveyed a quitclaim deed to the buyer. Upon receipt of the deed, the buyer may be certain that

a. the seller owned the property.
b. there are no encumbrances against the property.
c. the buyer now owns the property subject to certain claims of the seller.
d. any and all of the seller’s interests in the property belong to the buyer.

Answer 18

d. any and all of the seller’s interests in the property belong to the buyer.

Question 19

Which of the following is TRUE regarding a special warranty deed?

a. A grantor makes additional warranties beyond those given in a general warranty deed.
b. The grantor retains an ownership interest in the property.
c. The grantor is warranting that no undisclosed encumbrances exist against the property.
d. The grantor’s warranties are limited to the time the grantor owned the property.

Answer 19

d. The grantor’s warranties are limited to the time the grantor owned the property.

Question 20

Which of the following is an involuntary alienation of property?

a. Quitclaim
b. Inheritance
c. Eminent domain
d. Gift

Answer 20

c. Eminent domain

Question 21

In order for the government to acquire land under the right of eminent domain,

a. the acquisition must be for a public purpose.
b. there must be a statutory dedication.
c. the owner must agree to the taking.
d. there must be constructive notice.

Answer 21

a. the acquisition must be for a public purpose.

Question 22

Which of the following statements about North Carolina deeds is CORRECT?

a. A general warranty deed is the best way for the buyer to receive title.
b. A special warranty deed gives the seller the greatest degree of liability.
c. A bargain and sale deed is very much like the special warranty deed.
d. A gift deed must be recorded within 30 days to remain valid.

Answer 22

a. A general warranty deed is the best way for the buyer to receive title.

Question 23

A grantor does not wish to be responsible for any defect(s) in the title that may arise from previous ownership but will guarantee the title for the time the grantor held the ownership. What type of deed would the grantor convey?

a. General warranty deed
b. Bargain and sale deed
c. Reconveyance deed
d. Special warranty deed

Answer 23

d. Special warranty deed

Question 24

Which of the following is an example of involuntary alienation?

a. Selling a property to pay off debts
b. Donating a piece of land to the zoo
c. Having a piece of land auctioned for delinquent taxes
d. Letting another person plant crops on an unused portion of a piece of land

Answer 24

c. Having a piece of land auctioned for delinquent taxes

Question 25

Which of the following deeds would probably be used to transfer title by a grantor to a grantee when the grantor is providing no warranties on the title?

a. Quitclaim deed
b. Bargain and sale deed
c. Special warranty deed
d. Trustee’s deed

Answer 25

a. Quitclaim deed

Question 26

Which of the following offers the most assurance of marketable title to a grantee?

a. A trust deed
b. A warranty deed
c. A title insurance policy
d. An affidavit

Answer 26

c. A title insurance policy

Question 27

Which of the following would be used to clear a defect from the title records?

a. A lis pendens
b. An estoppel certificate
c. A suit to quiet title
d. A writ of attachment

Answer 27

c. A suit to quiet title

Question 28

All of the following may be discovered by a title search EXCEPT

a. the legal description of the property.
b. liens and judgments.
c. easements.
d. encroachments.

Answer 28

d. encroachments.

Question 29

A bill of sale is used to transfer the ownership of

a. real property.
b. fixtures.
c. personal property.
d. appurtenances.

Answer 29

c. personal property.

Question 30

The North Carolina Marketable Title Act

a. guarantees that general warranty deeds transferred in North Carolina are free of defects and therefore, fully marketable.
b. states that a title search conducted on a property’s history of the previous 30 years will normally extinguish any defects that pre-date that period.
c. negates all claims to a property through adverse possession.
d. requires title searches to review the chain of title since North Carolina became a state.

Answer 30

b. states that a title search conducted on a property’s history of the previous 30 years will normally extinguish any defects that pre-date that period.

Question 31

Which of the following is TRUE?

a. The grantor under a special warranty deed warrants that the grantee’s title will be defended and protected against any claims whatsoever.
b. The grantor under a general warranty deed promises that the grantee’s title will be defended and protected only against claims resulting from the grantor’s ownership.
c. The grantor under a quitclaim deed only conveys any interest the grantor may have in the property.
d. A minor will convey absolute ownership interest in a property as long as the signature is obtained in the presence of a parent.

Answer 31

c. The grantor under a quitclaim deed only conveys any interest the grantor may have in the property.

Question 32

The recorded history of all matters that affect the title to a specific parcel of real property is

a. a chain of title.
b. a certificate of title.
c. a title insurance policy.
d. an abstract of title.

Answer 32

d. an abstract of title.

Question 33

If a defect is found in the title to real property, the usual effect on a sales contract is that

a. the contract is immediately void.
b. a new contract must be written.
c. the buyer has a reasonable time to find another property.
d. the seller has a reasonable time to correct the defect.

Answer 33

d. the seller has a reasonable time to correct the defect.

Question 34

A title insurance policy is designed to protect the insured against events that

a. occurred before the policy was issued.
b. occur as a result of the policyholder’s actions.
c. occurred prior to the time period researched for the title search.
d. occur in the years following policy issuance.

Answer 34

a. occurred before the policy was issued.

Question 35

The recordation of a warranty deed

a. guarantees ownership.
b. protects the interests of the grantee
c. prevents claims of parties in possession.
d. provides defense against adverse possession.

Answer 35

b. protects the interests of the grantee

Question 36

The best assurance of good title that a real estate purchaser can obtain is a

a. valid warranty deed signed by the seller.
b. valid quitclaim deed signed by the seller.
c. title insurance policy.
d. certificate of title.

Answer 36

c. title insurance policy.

Question 37

A document that protects a grantee against hidden risks such as forgeries and loss due to defects in the title, subject to specific exceptions, is called

a. a chain of title.
b. an abstract of title.
c. a certificate of title.
d. a title insurance policy.

Answer 37

d. a title insurance policy.

Question 38

The recording of a deed

a. is required in order to fully transfer the title to real estate.
b. gives constructive notice of the ownership of real property.
c. insures the grantee’s interest in a parcel of real estate.
d. warrants the grantee’s title to real property.

Answer 38

b. gives constructive notice of the ownership of real property.

Question 39

A grantee took delivery of the deed to his newly purchased North Carolina property but neglected to record the deed. Under these circumstances, the

a. transfer of the property from the seller is ineffective.
b. grantee’s interest is not fully protected against third parties.
c. deed is invalid after 120 days.
d. deed in invalid after two years.

Answer 39

b. grantee’s interest is not fully protected against third parties.

Question 40

Under the North Carolina Connor Act, all the following documents must be recorded to be valid against third parties EXCEPT

a. a lease for three years in duration.
b. a deed of trust.
c. a purchase contract.
d. a set of restrictive covenants.

Answer 40

a. a lease for three years in duration.

Question 41

A defect or a cloud on the title may be cured by

a. obtaining quitclaim deeds from all interested parties.
b. bringing an action to register title.
c. paying cash for the property at closing.
d. obtaining title insurance.

Answer 41

a. obtaining quitclaim deeds from all interested parties.

Question 42

All of the following are true regarding public records EXCEPT

a. they give notice of encumbrances.
b. they establish priority of liens.
c. they guarantee marketable title.
d. they provide constructive notice about interests in the property.

Answer 42

c. they guarantee marketable title.

Question 43

A typical title insurance policy will usually protect the purchaser against all of the following EXCEPT

a. misrepresentation of the true owners of the property.
b. defects discoverable by a survey that was not conducted.
c. mistakes in recording legal documents.
d. documents executed under fraudulent powers of attorney.

Answer 43

b. defects discoverable by a survey that was not conducted.