Unit 6 Exam

Question 1

Quitclaim
General warranty
Special warranty
Bargain and sale

1. ) Provides the greatest protection to the buyer
2. ) Carries no covenants or warranties and generally conveys only whatever interest the grantor may have when the deed is delivered
3. ) Implies that the grantor holds title and possession of the property
4. ) Provides the protection that the grantor received title and that the property was not encumbered during the time the grantor held title, except as otherwise noted in the deed
5. ) Grantor is bound by several covenants (promises) or warranties
6. ) Provides grantee with the least protection of any deed

Answer 1

Quitclaim = 2, 6
General warranty = 1, 5
Special warranty = 4,
Bargain and sale = 3

Question 2

A title is not considered transferred until the deed is actually delivered to and accepted by the grantee. The grantor must deliver the deed to the grantee personally. T/F?

Answer 2

False. Grantor may deliver deed in other forms other than in person

Question 3

All of these are necessary to a valid deed EXCEPT

A)
the grantee’s signature.

B)
delivery.

C)
recital of consideration.

D)
words of conveyance.

Answer 3

The answer is the grantee’s signature. The grantee does not need to sign the deed, because the grantee receives the property.

Question 4

Title to property may be transferred without the owner’s consent by

A)
involuntary alienation.

B)
gift.

C)
voluntary alienation.

D)
sales contract.

Answer 4

Explanation
The answer is involuntary alienation. Involuntary alienation is the transfer of property without the consent of the property owner.

Question 5

In one state, the transfer tax is $0.80 per $500 or fraction thereof. There is no tax charged on the first $500 of the price. What tax must the seller pay if the property sells for $329,650?

A)
$525.60

B)
$527.20

C)
$526.40

D)
$528.00

Answer 5

Explanation
The answer is $527.20. The seller must pay $527.20:

$329,650 – the $500 = $329,150

$329,150 ÷ $500 = 658.3, rounded up to 659 659 × $0.80 = $527.20

Question 6

A sale to satisfy delinquent tax or mortgage liens is an example of

A)
adverse possession.

B)
involuntary acceleration.

C)
involuntary alienation.

D)
voluntary alienation.

Answer 6

Explanation
The answer is involuntary alienation. A sale to satisfy delinquent tax or mortgage liens is an example of involuntary alienation.

Question 7

The basic requirements for a valid conveyance are governed by

A)
state law.

B)
local custom.

C)
national law.

D)
the law of descent.

Answer 7

Explanation
The answer is state law. Although all the listed items influence it somewhat, state law has the greatest influence on requirements for a valid real property conveyance.

Question 8

Generally, where does a probate proceeding involving real property take place?

A)
In the county in which the executor or the beneficiary resides

B)
Only in the county in which the property is located

C)
In both the county where the decedent resided and the county in which the property is located

D)
Only in the county in which the decedent resided

Answer 8

Explanation
The answer is in both the county where the decedent resided and the county in which the property is located. There will be two probates conducted: one in the county where the decedent resided and another in the county where the real estate is located.

Question 9

Real estate that is inherited from a person who died testate is called

A)
a demise.

B)
a devise.

C)
a bequest.

D)
a legacy.

Answer 9

Explanation
The answer is a devise. The gift of real property by will is known as a devise, and the person who receives property by will is known as a devisee.

Question 10

The process of probate is

A)
able to be bypassed if the person died testate.

B)
the due diligence of the executor.

C)
the reading of the will.

D)
a formal judicial process.

Answer 10

Explanation
The answer is a formal judicial process. Probate is a legal procedure for verifying the validity of a will and accounting for the decedent’s assets. The process can take several months to complete.

Question 11

Which type of deed provides the BEST protection to the buyer?

A)
Quitclaim deed

B)
Bargain and sale deed

C)
Grant deed

D)
General warranty deed

Answer 11

Explanation

The answer is general warranty deed. The general warranty deed has the most comprehensive promises or warranties.

Question 12

A modification to a will is called

A)
a probate.

B)
an amendment.

C)
an addendum.

D)
a codicil.

Answer 12

Explanation
The answer is a codicil. Any modification to a previously executed will is contained in a separate document called a codicil. Additional agreements attached to an agreement of sale are addenda; an amendment is a change to the existing content of a contract. Probate is the process of determining the validity of a will.

Question 13

The words of conveyance are found in which clause?

A)
Habendum clause

B)
Granting clause

C)
Reservations clause

D)
Acceleration clause
Explanation

Answer 13

The answer is granting clause. For a deed to be valid, it must contain words of conveyance, which are in the granting clause.

Question 14

The grantee receives greatest protection with what type of deed?

A)
General warranty

B)
Quitclaim

C)
Bargain and sale with covenant

D)
Executor’s

Answer 14

Explanation
The answer is general warranty. In the general warranty—often just called warranty—deed, the grantor makes more promises and gives the grantee more covenants than in any other deed.

Question 15

All of the following are associated with adverse possession EXCEPT

A)
hostile.

B)
off and on for the last five years.

C)
adverse.

D)
open.
Explanation

Answer 15

The answer is off and on for the last five years. The law recognizes that the use of land is an important function of its ownership. The statutory periods range from as few as 5 years in some states to as many as 30 years in others.

Question 16

When a corporation transfers ownership of property, the deed must be signed by

A)
a broker.

B)
an authorized officer.

C)
a grantee.

D)
a shareholder.
Explanation

Answer 16

The answer is an authorized officer. Proper authority for the sale must be given by bylaws or by a resolution passed by the board of directors. Shareholders are not necessarily officers, nor are brokers. A grantee does not sign a deed.

Question 17

A resident of Denver bought acreage in a distant county, never went to see the acreage, and did not use the ground. An artist moved a mobile home onto the land, had a water well drilled, and lived there for 22 years. The artist may become the owner of the land if the artist is in compliance with the state law regarding

A)
requirements for a valid conveyance.

B)
avulsion.

C)
adverse possession.

D)
voluntary alienation.

Answer 17

Explanation
The answer is adverse possession. Adverse possession is (hostile) possession of real estate without the permission of the owner and contrary to the owner’s best interests. If it continues in an open, conspicuous (notorious) way for the time set by statute (the statutory period), the adverse possessor may take legal action to be declared the owner on the basis of all these facts.

Question 18

The gift of real property by will is known as

A)
a grant.

B)
a legacy.

C)
a devise.

D)
a bequest.

Answer 18

Explanation

The answer is a devise. Real property left by will is a devise, and the person who receives it is a devisee.

Question 19

The type of deed that imposes the least liability on the grantor is

A)
a general warranty deed.

B)
a quitclaim deed.

C)
a bargain and sale deed.

D)
a special warranty deed.

Answer 19

Explanation
The answer is a quitclaim deed. A quitclaim deed carries no covenants or warranties and generally only conveys whatever interest the grantor has when the deed is delivered.

Question 20

Any limitations or reservations that a grantor intends to make part of a conveyance of real estate should be

A)
included in the deed.

B)
noted in a separate document that is conveyed with the deed.

C)
included in a document that is delivered to the grantee before issuance of the deed.

D)
noted in the deed by the phrase “with certain reservations.”

Answer 20

Explanation
The answer is included in the deed. And limitations, exceptions, or reservations that the grantor intends to make must be specifically noted in the deed.

Question 21

What is the purpose of probate?

A)
All of these

B)
Satisfy the decedent’s debts

C)
Account for all assets that exist

D)
Distribute all assets correctly

Answer 21

Explanation
The answer is all of these. The purpose of probate is to see that the assets are distributed correctly, that all assets are accounted for, and that the decedent’s debts are satisfied.

Question 22

In legal terminology, the property owner is

A)
the devisor, grantee, legatee, and lessee.

B)
the grantor, mortgagee, optionor, and trustee.

C)
the devisor, grantor, lessor, and mortgagor.

D)
the devisee, grantee, legator, and lessor.

Answer 22

Explanation
The answer is the devisor, grantor, lessor, and mortgagor. In most cases, a good way to remember the term that applies to the property owner is to look for the term ending in “or.”

Question 23

In one state, transfer tax is $1.20 for each $300 (or fraction of $300) of the sales price of any parcel of real estate. If a seller’s property sold for $250,000, what will be the amount of the transfer tax due?

A)
$1,250.50
B)
$999.99
C)
$97.00
D)
$1,000.80

Answer 23

Explanation
The answer is $1,000.80. The transfer tax due is $1,000.80:

$250,000 ÷ $300 = 833.33, rounded up to 834 834 × $1.20 = $1,000.80

250,000(1.20) = 300,000

300,000/300 = 1000

Question 24

At which of the following steps did title to the house actually transfer or pass to B?

Step 1: A decided to convey a house to B.

Step 2: A signed a deed transferring title to B.

Step 3: A gave the signed deed to B, who accepted it.

Step 4: B took the deed to the county recorder’s office and had it recorded.

A)
Step 3

B)
Step 2

C)
Step 1

D)
Step 4

Answer 24

Explanation
The answer is Step 3. Title in this case was transferred upon delivery and acceptance of the deed. At that moment, the deed was binding between the parties. The purchaser, when later recording the deed, was then also protected against third parties.

Question 25

A bank wants to convey title to a foreclosed property but does not want to give any title warranties or have any future claims or liabilities. Which type of deed should the bank use?

A)
Bargain and sale deed

B)
Quitclaim deed

C)
Sheriff’s deed

D)
General warranty deed

Answer 25

Explanation
The answer is quitclaim deed. A quitclaim deed conveys the grantor’s interest but contains no warranty that the grantor even has any interest.

Question 26

When a person dies intestate, the title to real estate owned by the deceased may pass to the state in an example of

A)
adverse possession.

B)
involuntary acceleration.

C)
involuntary alienation.

D)
voluntary alienation.

Answer 26

Explanation
The answer is involuntary alienation. When a person dies intestate (with no will) and no heirs can be located, the title to the real estate passes to the state, an example of involuntary alienation.

Question 27

An important purpose of a living trust is to

A)
have all property of the trustor included in the estate for purposes of probate.
B)
avoid paying estate taxes.
C)
avoid having property in the trust go through probate.
D)
have a notice of all property of the trustor included in the public record.

Answer 27

Explanation
The answer is avoid having property in the trust go through probate. On the trustor’s death, the trust need not go through a probate proceeding because title automatically passes to the beneficiary named in the trust. The living trust has no effect on the value of the estate for estate tax purposes, however.

Question 28

An example of involuntary alienation is

A)
a deed.

B)
adverse possession.

C)
a mortgage.

D)

Answer 28

blockbusting.
Explanation
The answer is adverse possession. Involuntary alienation means that a property owner is forced to give up ownership to all or a portion of the property without their approval. When another individual meets the adverse possession criteria for the required length of time, the individual can go to court and obtain title to the property from the original owner. A deed is a voluntary instrument in which an owner transfers an interest in real property. A mortgage is a voluntary use of property to make it security for a debt.

Question 29

Conveyance of title occurs the moment a deed is

A)
signed by the grantor.

B)
recorded.

C)
signed by the grantee.

D)
delivered and accepted.

Answer 29

Explanation
The answer is delivered and accepted. Delivery by the grantor and acceptance by the grantee defines the moment of conveyance.

Question 30

When a person dies testate, title to real property transfers to

A)
the testator.

B)
the devisee.

C)
the descendant .

D)
the deceased person’s heirs.

Answer 30

Explanation
The answer is the devisee. A person who dies testate has died with a valid will. The gift of real property by will is known as a devise, and a person who receives real property by will is known as a devisee.

Question 31

The possession of property by an adverse possession claimant must be

A)
hostile.

B)
notorious.

C)
open.

D)
all of these.

Answer 31

Explanation
The answer is all of these. The possession by the claimant must be open (obvious to anyone who looks), notorious (known by others), continuous (uninterrupted), hostile (without the true owner’s consent), and adverse (to the true owner’s possession).

Question 32

Transfer of property by foreclosure of a mortgage loan is

A)
probate.

B)
voluntary transfer.

C)
involuntary transfer.

D)
illegal.

Answer 32

Explanation
The answer is involuntary transfer. Involuntary transfers are usually carried out by operation of law—such as by condemnation, foreclosure of a mortgage loan, or a sale to satisfy delinquent tax or mortgage liens.

Question 33

A person who has died without a will has died

A)
intestate.

B)
in valid conveyance.

C)
under the acknowledgment clause.

D)
testate.

Answer 33

Explanation
The answer is intestate. When a property owner dies intestate, title to the property will pass to the decedent’s heirs, as provided in the state laws of descent.

Question 34

Title to real estate may be transferred during a person’s lifetime by

A)
devise.

B)
descent.

C)
escheat.

D)
involuntary alienation.

Answer 34

Explanation
The answer is involuntary alienation. Transfer of title by devise (will), descent (death intestate), or escheat (for lack of a will and lack of heirs) all occur after death. Involuntary alienation, such as condemnation, foreclosure sale, or tax sale, can occur during a person’s lifetime.

Question 35

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

A)
the administrator of the estate.

B)
the granting clause established in the will.

C)
the law of testate succession.

D)
the court action known as probate.

Answer 35

Explanation
The answer is the court action known as probate. For the title to pass to the devisees, state laws require that on the death of a testator, the will must be filed with the court and probated. Probate is the legal procedure verifying the validity of a will and accounting for the decedent’s assets.

Question 36

Under state law, one-half of an intestate decedent’s property goes to the decedent’s spouse, one- fourth is divided equally among the decedent’s children, and one-fourth goes to the state. If there is no spouse, the children divide three-fourths equally. A citizen of this state dies intestate, survived by an ex-spouse and seven adult children. If the estate is $865,550, how much will each child receive under state law?

A)
$123,650.00

B)
$61,825.25

C)
$92,737.50

D)
$0

Answer 36

Explanation
The answer is $92,737.50. The ex-spouse gets nothing. The state gets one-fourth and the remaining three-fourths will be divided equally among the seven children: $865,550 ÷ 4 = $216,387.50 to the state. The remaining amount, $649,162.50, is divided seven ways, leaving $92,737.50 per child.

865,550/4 = 216,387.50 State’s 1/4th

865,550 - 216,387.50 = 649,162.50

649,162.50/7 = 92,737.50/per Child

Question 37

Eminent domain and escheat are two examples of

A)
adverse possession.

B)
voluntary alienation.

C)
transfers of title by descent.

D)
involuntary alienation.

Answer 37

Explanation
The answer is involuntary alienation. The right of eminent domain allows a government entity to compel the transfer of a property to that entity for a price set by court process—condemnation. This transfer of title (alienation) is forced and so is involuntary. When a person dies without a will (intestate) and without heirs, the property passes (escheats) to the state. This process was neither planned nor initiated by the owner before death and so is classified as involuntary.

Question 38

Land lost through erosion is an example of

A)
involuntary alienation.

B)
involuntary acceleration.

C)
voluntary alienation.

D)
adverse possession.

Answer 38

Explanation

The answer is involuntary alienation. Land lost through erosion is an example of involuntary alienation.

Question 39

A bargain and sale deed contains how many express warranties?

A)
5

B)
0

C)
2

D)
3

Answer 39

Explanation
The answer is 0. A bargain and sale deed contains no express warranties against encumbrances; however, it does imply that the grantor holds title and possession of the property.

Question 40

When a person dies, ownership of real estate

A)
passes immediately.

B)
passes via the laws of descent and distribution.

C)
passes upon notice to all the devisees in a will.

D)
must go through probate.

Answer 40

Explanation
The answer is passes immediately. When a person dies, ownership of real estate immediately passes either to the heirs by descent or to the persons named in the will. Before full title and possession of the property may be taken, the estate must go through a judicial procedure called probate.

Question 41

A general power of attorney

A)
is illegal in most states.

B)
provides authority to carry out all of the business dealings of the person giving it.

C)
requires delivery and acceptance by the grantee.

D)
provides general legal authority for intestate succession.

Answer 41

Explanation
The answer is provides authority to carry out all of the business dealings of the person giving it. A general power of attorney provides authority to carry out all of the business dealings of the person giving it. A special power of attorney permits the execution of only certain acts.

Question 42

A deed would be valid without

A)
execution by the grantor.

B)
words of conveyance.

C)
a competent grantor.

D)
a competent grantee.

Answer 42

Explanation
The answer is a competent grantee. While the grantor must be legally competent, the grantee could be legally incompetent—for example, a minor (provided a guardian or other person with legal authority over the property of the incompetent person accepts the deed on that person’s behalf.)

Question 43

Title to real estate means the right to or ownership of the land and represents the owner’s

A)
barrel of legal rights but in itself does not serve as evidence of ownership.

B)
bundle of legal rights but in itself does not serve as evidence of ownership.

C)
bundle of legal rights and also serves as evidence of ownership.

D)
barrel of legal rights and also serves as evidence of ownership.

Answer 43

Explanation
The answer is bundle of legal rights and also serves as evidence of ownership. Title to real estate means the right to or ownership of the land and represents the owner’s bundle of legal rights and also serves as evidence of ownership.

Question 44

A feature of holding title as joint tenants is that

A)
owners can have unequal interests.

B)
there is no right of survivorship.

C)
it requires equal sharing of rent payments.

D)
upon death the title transfers without going through probate.

Answer 44

Explanation
The answer is upon death the title transfers without going through probate. The right of survivorship is transferred without a will or the process of probate.

Question 45

Any limitations or reservations that a grantor intends to make part of a conveyance of real estate should be

A)
noted in the deed by the phrase “with certain reservations.”

B)
noted in a separate document that is conveyed with the deed.

C)
included in a document that is delivered to the grantee before issuance of the deed.

D)
included in the deed.

Answer 45

Explanation
The answer is included in the deed. And limitations, exceptions, or reservations that the grantor intends to make must be specifically noted in the deed.

Question 46

In a recent property sale, the deed of conveyance contained only the following guarantee: “This property was not encumbered during the time the current owner owned it, except as noted in this deed.” What type of deed makes such a covenant?

A)
Special warranty

B)
Bargain and sale

C)
General warranty

D)
Quitclaim

Answer 46

Explanation
The answer is special warranty. This is a special warranty deed because the grantor accepts responsibility only for encumbrances that arose during ownership.

Question 47

For a deed to be recorded, MOST states require that it be

A)
signed by the grantee.

B)
acknowledged.

C)
certified.

D)
registered.

Answer 47

Explanation

The answer is acknowledged. Having the deed notarized or acknowledged shows that the grantor freely signed the document.

Question 48

An important feature of adverse possession is that the individual who intends to make a claim to property owned by someone else must

A)
post a notice of ownership on the property.

B)
publish a note of claim in a newspaper of general circulation in the state in which the property is located.

C)
keep the claim a secret until the claim has ripened for the number of years required by state law.

D)
use the property.

Answer 48

Explanation
The answer is use the property. The claimant’s property use must be open, notorious, continuous, hostile, and adverse to the true owner’s right of possession for the statutory period.

Question 49

Which of the following is FALSE about probate?

A)
None of these.

B)
Tenancy in entirety passes without probate.

C)
The laws of probate are set at the national level.

D)
Estate taxes must be paid before distribution.

Answer 49

Explanation
The answer is the laws of probate are set at the national level. Estate taxes must be paid before any distribution. The laws of each state govern the probate proceedings. Property held in tenancy by the entirety passes immediately.

Question 50

A grantee who wants to obtain merchantable title via a valid deed should make sure the deed has all of the following EXCEPT

A)
a recording stamp after closing.

B)
words of conveyance.

C)
execution by the grantor.

D)
a competent grantor.

Answer 50

Explanation

The answer is a recording stamp after closing. Deeds do not need to be recorded to be valid.

Question 51

All of these are reasons for probate EXCEPT

A)
to identify which persons get any of the estate.

B)
to confirm that the will is valid.

C)
to ensure that the heirs do not fight among themselves.

D)
to determine the exact assets of the deceased person.

Answer 51

Explanation
The answer is to ensure that the heirs do not fight among themselves. Preventing fights among heirs is not the reason for probate.

Question 52

When conveying interests in real estate using a quitclaim deed, the extent of promises given by the grantor to the grantee are

A)
to furnish title insurance to protect the grantee.

B)
to defend the title against any claims that may have arisen during the grantor’s period of ownership.

C)
to defend the title against claims that might have arisen before or during the grantor’s period of ownership.

D)
none.

Answer 52

Explanation
The answer is none. A quitclaim deed gives no warrants to the grantee. Claims during the grantor’s ownership would be covered by a special warranty deed. A general warranty deed provides the same warranties as a special warranty deed but also covers claims made before the grantor’s ownership of the property. No deed requires the grantor to supply title insurance.