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50 Cards in this Set
- Front
- Back
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Three people own a property as joint tenants. One of the joint tenants dies. How is the property now owned?
A) The two remaining owners are now tenants in common. B) The heirs of the deceased inherit the interest in the property. C) The two remaining joint tenants now own one half of the property each as joint tenants. D) The survivors must partition the property and sell it to satisfy the heirs of the deceased. |
The correct answer is "C - The two remaining joint tenants now own one half of the property each as joint tenants. " The essential feature of joint tenancy is automatic rights of survivorship. Thus, if one of the remaining two partners dies before the property is sold, the survivor becomes the sole owner.
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Oral contracts for the sale of real property are not necessarily void, but they are unenforceable because of:
A) the law of agency. B) the statute of limitations. C) the statute of frauds. D) the doctrine of laches. |
The correct answer is "C - the statute of frauds. " The statute of frauds, originally named and implemented specifically to cover issues of real estate title, states that contracts must be written to be enforceable.
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A bilateral contract is one:
A) where one party agrees to perform. B) where one party is given an option to perform. C) where a promise by one party is given in exchange for a promise by another party. D) which applies only to leases. |
The correct answer is "C - where a promise by one party is given in exchange for a promise by another party. " Most contracts are bilateral: "I agree to do X in exchange for your doing Y."
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Undue influence or duress applied to one party to a contract makes the contract:
A) void. B) voidable. C) invalid. D) unenforceable. |
The correct answer is "B - voidable. " Because all parties must enter a contract willingly and believe that doing so is in their best interests, attempts to influence an unwilling or reluctant participation can render the contract void. The court must be petitioned and agree before the contract becomes void.
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Dole and Randy each purchased homes in a subdivision of 346 homes. They agreed to the subdivision restrictions that said no large animals may be kept. Several years later, the 8-year-old daughter of Randy asked for a pony. Randy obtained the proper building permits and constructed a beautiful barn and white rail fence to house the new animal. The daughter was very happy until Dole insisted they get rid of the pony. Could Dole force Randy to remove the pony from the property?
A) Yes. Dole could force them to comply with the restrictions in the deed. B) Yes. Dole has a legal obligation to report the existence of the pony to the appropriate governmental agency. C) No. Since Dole did not adjoin Rand's property, Dole was not an interested party. D) No--since the action was not taken prior to the issuance of the building permits. |
The correct answer is "A - Yes. Dole could force them to comply with the restrictions in the deed. " Restrictive covenants are enforceable not only for as long as Dole and Randy occupy their homes, but on all successive buyers as well. Further, the restriction against housing large animals such as ponies is reasonable, so Randy will either have to move, house the pony at a stable or sell it.
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The government's right to make laws and regulations for the general welfare of the public is known as:
A) eminent domain. B) police power. C) escheat. D) the bundle of rights. |
The correct answer is "B - police power. " "Police power" refers not just to criminal law enforcement, but all powers of federal, state and local governments to enact and enforce laws for everything from parking to where, what and for what purposes people may construct buildings.
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The total collection of rights which may be claimed by private ownership is best described as:
A) the fee simple system. B) an estate. C) freehold. D) the bundle of rights. |
The correct answer is "D - the bundle of rights. " This is one of those (seemingly rare) instances where the name says exactly what it means.
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Several legal steps must sometimes be taken before a creditor can have his outstanding debt satisfied through the sale of the debtor's property. Which of the following is NOT one of the steps in the process?
A) judgment B) writ of persecution C) lis pendens - attachment. D) writ of execution |
The correct answer is "B - writ of persecution " A "writ of persecution" would be a written order of the court to persecute (not prosecute) a person. Clearly, there is no such thing.
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Jones was given a life estate. As a life tenant, he graciously conveys an easement to the Smith's to cross over his land. Jones dies one year after granting the easement. The easement will:
A) go to Jones' heirs. B) terminate. C) remain Smith's. D) not be enforceable because a life tenant cannot grant an easement without committing waste. |
The correct answer is "B - terminate. " Generally, life tenancy only grants people the right to use property, not assign other rights to third parties. Additionally, once a life tenant dies, all property rights revert to the grantor.
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Telephone lines are examples of:
A) an easement in gross. B) a legally valid encroachment. C) an easement appurtenant. D) a non-revocable license. |
The correct answer is "A - an easement in gross. " An easement in gross grants a company or individual limited rights to access another's property for a specific purpose--in this case, installing, maintaining and repairing telephone lines.
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Five individuals join together to purchase a property. They own the property in severalty. What type of business organization have they formed?
A) general partnership B) limited partnership C) syndicate D) corporation |
The correct answer is "D - corporation " "Severalty" means sole ownership. Legally, a corporation is considered to be an individual; so, in order for multiple people to create "sole ownership" of a single property, they must create a corporation.
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Permission granted to hunt on another's land is an example of:
A) an incorporeal easement. B) a license. C) an easement by prescription. D) an easement appurtenant. |
The correct answer is "B - a license. " In this case, a license differs from an easement in several respects. First, it is the right to access a fairly large parcel of property, rather than a strip a few feet wide or a road, as is typically the case with an easement. Also, "hunting" is an activity rather than a business or maintenance function. Finally, the activity takes place wholly on the property, as opposed to access through it as might be the case with beach access rights.
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Which of the following is an example of a less-than-freehold estate?
A) estate in severalty B) leasehold estate C) fee simple estate D) fee simple determinable estate |
The correct answer is "B - leasehold estate " Freehold and various forms of fee simple estates mean ownership, while a leasehold estate means renting.
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Title held by a husband and wife may include all of the following forms of ownership EXCEPT:
A) severalty. B) tenancy by the entireties. C) joint tenancy. D) tenancy in common. |
The correct answer is "A - severalty. " Severalty means sole ownership and, other than forming a corporation, spouses can only hold property in common through some form of joint ownership.
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James Smith and Bill Ross purchased a property together for their business venture with stated proportionate interest of 1/3 and 2/3 respectively without the right of survivorship. Each of them wants his share to be inherited by his wife. They are a partnership and not a corporation. James and Bill most likely took title as:
A) joint tenants. B) tenants in common. C) in severalty. D) a general partnership. |
The correct answer is "B - tenants in common. " Tenants in common have flexibility in how they divide ownership and assign survivorship rights. Joint tenants, on the other hand, own property in equal shares while a general partnership is a business unit serving other shareholders. Severalty, as stated previously, is sole ownership.
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Which of the following types of tenancies refers to ownership of real property?
A) tenancy in common B) tenancy at will C) tenancy at sufferance D) tenancy for years |
The correct answer is "A - tenancy in common " As indicated above, tenancy in common is a form of ownership, while tenancy at will, at sufferance and for years are various forms of rental arrangements..
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There is only one unity in a tenancy in common ownership. That unity indicates that each party:
A) must have an equal interest. B) must have an undivided interest in the whole. C) must acquire the property at the same time. D) must have one title. |
The correct answer is "B - must have an undivided interest in the whole. " An undivided interest means that each person has an interest in the whole property, not a particular portion of it, and the property cannot be divided. For example, if Jane, Bill and Roger have an undivided interest in Chadwick Farms, Jane cannot decide she wants to sell "the lower forty" as her share. All must agree to sell the whole property.
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A husband and wife own property as tenants by the entireties. Which of the following is NOT true concerning tenancy by the entirety?
A) Both must consent to sell. B) Each may individually file a partition suit. C) Both are both liable for a debt secured by such a property. D) The tenancy by entirety could be ended by divorce or death of one of the parties. |
The correct answer is "B - Each may individually file a partition suit. " Partition suits occur when one co-owner of a property wants to sell and the other co-owners are unwilling to either sell the property or buy the other's interest. It's not relevant to married couples as they're viewed as a unit--unless it involves a property still jointly held after divorce, in which case they are no longer a couple.
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A deed to convey property would be SIGNED by:
A) the grantor. B) a notary public only. C) the grantee. D) any authorized public officer. |
The correct answer is "A - the grantor. " The "grantor" is the one conveying the property, so he or she signs the deed.
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Jones, a married man with children, died without leaving a will. His real estate holdings are valued at over one million dollars. Jones' real estate would:
A) be held in trust pending appearance of heirs. B) be distributed according to the laws of descent and distribution. C) revert to the state government. D) revert to the United States government. |
The correct answer is "B - be distributed according to the laws of descent and distribution. " Each state has provisions for distributing assets based on a priority of relationships--typically, spouse first, then children, then other relatives.
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Involuntary methods of conveying property include all of the following EXCEPT:
A) escheat. B) condemnation. C) quit claim. D) adverse possession. |
The correct answer is "C - quit claim. " A quit claim action is always voluntary and is usually used to clear up minor title issues.
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The creation of an easement by prescription is similar to:
A) adverse possession. B) unlawful detained action. C) accretion. D) police power. |
The correct answer is "A - adverse possession. " Easements by prescription must be ordered by a court. They mean essentially the same thing as adverse possession and have the same or similar requirements, depending on jurisdiction. Usually, they involve issues of right-of-way.
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A recorded valid deed must contain all of the following EXCEPT:
A) signature of the grantor. B) signature of the grantee. C) granting clause. D) an acknowledgment. |
The correct answer is "B - signature of the grantee. " For recording purposes, a deed only needs to have been granted; hence only that person's signature is required.
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Which of the following statements is incorrect?
A) A deed conveys a present interest in real estate. B) A will conveys no interest in real estate until after the death of the testator. C) A deed conveys a future interest in real estate if so specified by the grantee. D) A will conveys no interest in real estate until it is probated. |
The correct answer is "C - A deed conveys a future interest in real estate if so specified by the grantee. " The "grantee" is the person buying the property and he has no right to convey anything until the transfer is complete. At that point, he becomes the new owner and thus the "grantor" of any present or future interest he may wish to assign.
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The covenant in which a grantor promises that he owns the property and that he has the right to convey title to it is the:
A) covenant of warranty forever. B) covenant of seisin. C) covenant of quiet enjoyment. D) covenant of further assurances. |
The correct answer is "B - covenant of seisin. " Seisen means "to own" and carries with it the assurance of the seller that he or she has the right to sell and convey all rights of the property.
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Title to real property is conveyed by deed when:
A) signed by the grantor. B) recorded by the grantee. C) delivered to and accepted by the grantee. D) signed by the grantee and delivered to the grantor. |
The correct answer is "C - delivered to and accepted by the grantee. " Conveying title is different than recording and must be both signed and delivered by the grantor to the grantee and accepted and signed by the grantee.
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A person built a hangar next to an adjacent property. A construction lien was subsequently placed against the aircraft. Is this a valid lien?
A) Yes. The aircraft is more valuable than the hangar. B) Yes. The aircraft is kept in the hangar. C) No. It should have been placed against real and personal property. D) No. Construction liens can only be filed on the real property that was worked on. |
The correct answer is "D - No. Construction liens can only be filed on the real property that was worked on. " Construction or mechanic's liens can only be placed on the property or structure actually worked on. Liens against any other property the person may own are general liens and are generally not an option for contractors, builders or their subcontractors.
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In determining whether an item is a fixture, which of the following would not be considered?
A) method of attachment B) adaptation to the real estate C) value of the item D) intention of the parties when the fixture was installed |
The correct answer is "C - value of the item " A $5,000 built-in bookcase is as much a fixture as $2 light switch.
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An item which was personal property but has been attached to and become part of the real property is known as:
A) a trade fixture. B) an emblement. C) an appurtenance. D) a fixture. |
The correct answer is "D - a fixture. " There's a degree of subtlety here. A fixture is anything attached to a property. For example, a new cooktop is personal property until it's installed, at which point it becomes a fixture. A trade fixture is similar, but refers to commercial properties.
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Five acres of land were zoned residential and were surrounded by other properties that were also residential. The owner wanted to re-zone the 5 acres so that a commercial building could be built. Which of the following would have to be obtained to allow for the change?
A) non-conforming use B) spot zoning C) variance D) aesthetic zoning |
The correct answer is "B - spot zoning " Spot zoning refers to the practice of reclassifying one piece of property in a manner inconsistent with the surrounding properties. When it occurs, it is often widely criticized and often overturned, except in circumstances that benefit the surrounding area, such as a corner grocery store or recreation area.
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The primary purpose of a listing agreement is to:
A) serve as a contract of employment between the owner and the broker. B) list all improvements and amenities of the property. C) serve as a guide for a sales contact. D) give the broker permission to sell all of his principal's properties. |
The correct answer is "A - serve as a contract of employment between the owner and the broker. " A listing agreement is, in fact, a form of employment agreement in which Party A agrees to perform such and such tasks for Party B in exchange for a defined amount of compensation
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In some cases, a broker's commission can be earned if he can prove he set in motion a series of events which resulted in the sale of a property. If a broker produces a ready, willing and able buyer he would most likely:
A) have an exclusive right-to-sell listing. B) have secured the buyer's signature on the sales contract. C) be considered the procuring cause of the sale. D) showed property to the buyer. |
The correct answer is "C - be considered the procuring cause of the sale. " Producing a "ready, willing and able buyer" is the primary definition of a licensee's role and the basis on which he or she earns a commission.
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A broker and a salesperson both owe all but which of the following to the purchaser (customer):
A) assistance in negotiations to purchase the property at below the list price. B) honesty. C) accuracy. D) disclosure of defects. |
The correct answer is "A - assistance in negotiations to purchase the property at below the list price. " It's important to remember the distinction between "client" and "customer." Brokers and salespeople, of course, owe honesty, accuracy, and the disclosure of defects to all parties. However, they must also protect the best interests of their client, which (within the context of honesty and fairness) are contrary to those of the customer.
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Which of the following is not true regarding a subagency relationship?
A) The listing broker is a principal of the selling broker. B) A subagent has an implied authority to act as a dual agent (disclosed or undisclosed). C) A subagent can only perform the activities delegated to him and cannot be involved in making decisions, which would directly affect the welfare of the seller. D) The selling company should contact the listing company before showing property to a prospect. |
The correct answer is "B - A subagent has an implied authority to act as a dual agent (disclosed or undisclosed). " The responsibilities of a subagent are specific, not implied. Moreover, they must always be disclosed and written permission obtained from both buyer and seller.
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The amount of a broker's commission usually is:
A) based upon standard rates, established in the area, which are mandated by the Sherman Anti-Trust Law. B) established by agreement between the broker and the seller or the buyer. C) established by the real estate commission. D) 6% or 7% for a single-family residence, depending on the area. |
The correct answer is "B - established by agreement between the broker and the seller or the buyer. " Commissions are always negotiated on a case-by-case basis.
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A listing that allows the owner to sell the property himself without being liable for a commission, but which appoints only one broker to act as his sole agent is a(n):
A) exclusive agency listing. B) open listing. C) exclusive right to sell listing. D) net listing. |
The correct answer is "A - exclusive agency listing. " It's very important to note the difference between an "exclusive agency listing" and an "exclusive listing." In the first case, as noted, no commission is owed to the broker if the owner sells the house himself. In the second, however, a commission is owed regardless of who sells the property.
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In order to be valid all exclusive listings must include:
A) a dragnet clause. B) permission for the listing broker to appoint subagents. C) a definite date of expiration. D) an automatic renewal clause. |
The correct answer is "C - a definite date of expiration. " Listing agreements must have specific "from-to" dates attached. Moreover, they may not be automatically renewed, but must be renegotiated. (Usually that's just a routine extension, but a new agreement, nonetheless.)
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Typically a listing broker is usually considered to be:
A) the principal in the transaction. B) the client in the transaction. C) a fiduciary (agent) of the seller. D) a dual agent. |
The correct answer is "C - a fiduciary (agent) of the seller. " A "fiduciary" relationship involves more than just acting on the behalf of a client. It is a set of responsibilities that can be summed up as safeguarding the client's best interests as if they were one's own.
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In order to collect the same amount for any sale, regardless of the list price of the house, a broker desired to charge a flat fee to all sellers. The broker could do this only:
A) if the broker applies to the state legislature. B) if there was a history of this in that area. C) by showing the seller the flat fee versus the percentage of the list price. D) by informing the seller, prior to the listing, and obtaining an agreement. |
The correct answer is "D - by informing the seller, prior to the listing, and obtaining an agreement. " Any legal form of compensation agreeable to both the licensee and client is acceptable.
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An owner says that he wants to net $25,000 from the sale of his home, where he still owes $253,000. Broker Bailey accepts the listing with permission to offer the home for sale at $300,000. Which of the following is true, assuming closing costs of 4,000 excluding the broker's fee?
A) The agreement constitutes a net listing. B) The broker negotiated a 6% commission. C) The broker cannot take a listing under these circumstances. D) The broker would have to sell the property for more than $300,000 to take care of other expenses related to the sale. |
The correct answer is "B - The broker negotiated a 6% commission. " This is simply stating standard commission-based compensation in a different way. Changing the language slightly, however, would result in a "net listing agreement" which is illegal in some states and viewed with disfavor in the rest.
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Legally, what is the nature of agency relationships between brokers and principals?
A) General agency. B) Specific agency. C) Universal agency. D) Limited power of attorney. |
The correct answer is "B - Specific agency. " "Specific agency" means that a licensee may act on a principal's behalf only in limited ways for a limited time. For example, an agent can show a potential buyer a client's property, but he cannot make the decision to accept an offer.
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Who administers license law in California?
A) The real estate commissioner. B) The California Department of Real Estate. C) The Attorney General. D) HUD |
The correct answer is "A - The real estate commissioner. " The commission is the chief executive officer of the California Department of Real Estate and, as such, is responsible for administering the rules and regulations governing real estate practices. It should be noted that while the commission does not pass laws, per se (that's the responsibility of the legislature), his or her rulings have the effect of law.
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How is the commissioner selected?
A) He or she is elected by the Real Estate Commission. B) He or she is appointed by the governor. C) He or she is elected by the Senate. D) He or she is elected by the California Association of Realtors® |
The correct answer is "B - He or she is appointed by the governor. " The governor appoints the commissioner, who in turn appoints the ten member Real Estate Advisory Board.
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Who sits on the Real Estate Advisory Board?
A) They are selected from the state senate. B) They are real estate professionals selected from the California Association of Realtors® C) They are a combination of real estate professionals and public members. D) They are attorneys specializing in real estate law. |
The correct answer is "C - They are a combination of real estate professionals and public members. " The advisory board is comprised of six brokers and four public members appointed, as mentioned, at the discretion of the commissioner. The board and commissioner meet at least four times a year with the aim of achieving maximum protection for consumers as well as serving the industry.
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While Nick Thomas was completing the course work for his real estate license, his neighbor asked him for help selling his house and offered a 5% commission. Nick agreed, found a buyer and the transaction was completed two days after he received his license. However, the neighbor now refuses to pay the agreed-upon commission. Can Nick sue?
A) No, only recognized brokerage firms can sue individuals for commissions. B) No, Nick had to have been licensed at the time of the agreement to win any compensation. C) Yes, although he was not licensed at the time of the agreement, Nick's neighbor made an unsolicited offer which he accepted and it is enforceable under contract, but not real estate law. D) Yes, because Nick was licensed when the transaction closed. |
The correct answer is "B - No, Nick had to have been licensed at the time of the agreement to win any compensation. " A person must hold a valid license before he or she undertakes any real estate activity on behalf of a third party for compensation.
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Which of the following would NOT result in a possible fine, suspension or revocation of a broker's license?
A) Agreeing with a seller to list a property with a higher than normal commission rate. B) Being convicted of a felony. C) Being over four months delinquent in child support payments. D) Depositing escrow funds into a personal checking account. |
The correct answer is "A - Agreeing with a seller to list a property with a higher than normal commission rate. " Real estate commissions are negotiated on a case-by-case basis and may be whatever both parties agree to. In the case of child support, the licensee will remain on suspension until the delinquency is satisfied.
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Which of these is a duty of licensees under both commission rules and fiduciary responsibility?
A) To keep all information provided by sellers confidential. B) To keep all information provided by both buyers and sellers confidential. C) To disclose all facts that might affect the sale. D) To disclose material information that might affect the price and/or sale of the property, even if the buyer does not ask for it. |
The correct answer is "D - To disclose material information that might affect the price and/or sale of the property, even if the buyer does not ask for it. " Confidential information must be respected, but not all information qualifies as confidential. Moreover, in certain circumstances, confidential information may be disclosed, with permission, on a "need to know" basis. However, material information such as a faulty foundation or plans calling for a new shopping center to be constructed immediately behind the property must be disclosed even if potential buyers never raise the issue.
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Which of the following would NOT violate the California Fair Housing Law.
A) The owner of a single-family residence refuses to sell to a couple because they are unmarried. B) The owner of a duplex refuses to rent a unit to a couple because they are black. C) The owner of a single-family residence refuses to rent a room in their house because of a person's religion. D) The owner of an apartment complex refuses to rent to a gay couple because all the other tenants are married with children. |
The correct answer is "C - The owner of a single-family residence refuses to rent a room in their house because of a person's religion. " The owner of a single-family residence renting to only one person who will live with the owner is not bound by California fair housing laws.
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Lisa purchased an apartment building for $200,000 with a $50,000 down payment and a $150,000 mortgage. One year later, the apartment building is worth $220,000. Which term best describes this situation?
A) Depreciation. B) Liquidity. C) Equity. D) Appreciation. |
The correct answer is "D - Appreciation. " Lisa was able to increase her equity in the property from $50,000 to $70,000 (an increase of 40%) while the property as a whole appreciated by 10%. However, equity is the interest or value remaining in property after payment of all liens or other charges on the property. Lisa is not selling the property so the best answer here is appreciation.
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A couple purchased a property and the lender required that they take out an ALTA title insurance policy. When the house was purchased, it included a large brick patio on one side of the house that came within 10 feet of the property line. After the title had passed to the new owners, it was discovered the terrace violated a city code calling for setbacks of at least 15 feet for all structures, patios, terraces, or other permanent improvement. Based on this information, which of the following remedies would be covered under the ALTA policy?
A) The cost to remove, but not replace the terrace. B) The cost to correct the problem. C) The cost to remove the terrace plus the difference between the home's purchase price and its now reduced value. D) Compensation to the affected neighbors for encroachment plus any fees to the town for obtaining a variance. |
The correct answer is "B - The cost to correct the problem. " In this case, that would mean reducing the size of the patio five feet so it was in compliance. Whether the lost square footage would be added elsewhere would depend on the property and the policy. Remember, even though ALTA policies are generally more comprehensive than CLTA, individual policies often have unique characteristics.
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