National Real Estate #2

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) $97.00 C) $1,000.80 D) $999.99

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

What is the transfer tax that will be paid by the seller of a $510,000 home, if the seller's state requires payment of a transfer tax of $1.25 for each $500 (or fraction of $500) of the sales price of real estate? A) $1,150 B) $1,200 C) $975 D) $1,275

The answer is $1,275. $510,000 divided by the dollar amount per taxable unit ($500), equals 1,020 taxable units. The number of taxable units multiplied by the tax rate per unit equals the tax to be paid. So, 1,020 times $1.25 equals the $1,275 transfer tax the seller must pay to the state.

A parcel of land is two acres. It sells for $1.18 per square foot. What is the total selling price for the parcel? A) $51,400.80 B) $87,120.00 C) $102,801.60 D) $23,600.00

The answer is $102,801.60. An acre consists of 43,560 square feet. 43,560 × 2 = 87,120 total square feet. 87,120 × $1.18 = $102,801.60.

Six acres of prime undeveloped property are sold for $2.25 per square foot. How much did the buyer pay? A) $588,060 B) $612,360 C) $733,860 D) $466,560

The answer is $588,060. The buyer paid $588,060: square feet × 6 = 261,360 square feet 261,360 square feet × $2.25 = $588,060

In any township, what is the number of the section designated as the school section? A) 16 B) 36 C) 25 D) 1

The answer is 16. Section 16 is one of the centrally located sections in the standard township and is designated as the school section.

What is the square footage for this property described by the metes-and-bounds method? Beginning at a point on the southerly side of Smith Street, 200 feet easterly from the corner formed by the intersection of the southerly side of Smith Street and the easterly side of Johnson Street; then east 200 feet; then south 100 feet; then west 200 feet; then north 100 feet to the POB. A) 10,000 square feet B) 20,000 square feet C) 5,000 square feet D) 15,000 square feet

The answer is 20,000 square feet. The property is 200 × 100 = 20,000 square feet.

In the rectangular survey system, a township is divided into A) 36 sections with 640 acres per section. B) 12 sections with 4,000 acres per section. C) 6 sections with 3,840 acres per section. D) 4 sections with 10,000 acres per section.

The answer is 36 sections with 640 acres per section. A township contains 36 sections, and each section is one square mile or 640 acres.

Townships are subdivided into how many sections? A) 36 B) 50 C) 24 D) 100

The answer is 36. Townships are subdivided into 36 sections.

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 2 B) Step 3 C) Step 4 D) Step 1

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.

A deed would be valid without A) a competent grantor. B) execution by the grantor. C) words of conveyance. D) a competent grantee.

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.)

A point, line, or surface from which elevations are measured or indicated is A) a datum. B) a date down. C) a data line. D) a data point.

The answer is a datum. A point, line, or surface from which elevations are measured or indicated is a datum.

In determining the height of a structure or establishing the grade of a street, a surveyor uses A) a benchmark. B) a datum. C) a data line. D) a data point.

The answer is a datum. In determining the height of a structure or establishing the grade of a street, a surveyor uses a datum.

The document that acts as security for a promissory note is A) a quitclaim deed. B) a deed of trust. C) a conveyance deed. D) a general warranty deed.

The answer is a deed of trust. A deed of trust conveys title to a trustee, who holds it as security for a promissory note. Conveyance or grant deeds, such as a general warranty or quitclaim, transfer title to property.

The process of probate is A) the due diligence of the executor. B) a formal judicial process. C) able to be bypassed if the person died testate. D) the reading of the will.

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.

A grantor conveys property by delivering a deed. The deed contains five covenants. This is MOST likely A) a general warranty deed. B) a quitclaim deed. C) a will. D) a deed in trust.

The answer is a general warranty deed. A general warranty deed contains covenants of seisin, further assurance, quiet enjoyment, freedom from encumbrances, and warranty forever.

Real estate is bought and sold on the basis of A) a legal description. B) a street address. C) plat size only. D) plat and parcel.

The answer is a legal description. Real estate is described by accepted legal descriptions. The plat size and plat and parcel are examples of informal reference.

The type of deed that imposes the least liability on the grantor is A) a general warranty deed. B) a special warranty deed. C) a bargain and sale deed. D) a quitclaim deed.

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.

The document used to convey ownership to real property is A) an abstract and title opinion. B) a title policy. C) a promissory note. D) a quitclaim deed.

The answer is a quitclaim deed. Deeds transfer real property. Both a title policy and abstract with title opinion are used to verify and protect against defects of title.

A grantee who wants to obtain merchantable title via a valid deed should make sure the deed has all of the following EXCEPT A) execution by the grantor. B) words of conveyance. C) a recording stamp after closing. D) a competent grantor.

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

The primary heirs of the deceased are the surviving spouse and close blood relatives (such as children, parents, brothers, sisters, aunts, uncles, and, in some cases, first and second cousins) under A) federal law. B) a state's law of descent and distribution. C) the state's real estate laws. D) common law.

The answer is a state's law of descent and distribution. The primary heirs of the deceased are the surviving spouse and close blood relatives (such as children, parents, brothers, sisters, aunts, uncles, and, in some cases, first and second cousins) identified under a state's law of descent and distribution.

A metes-and-bounds description is required in a rectangular survey system description when A) a tract is too large to be described by quarter-sections. B) a tract follows the lot or block lines of a recorded subdivision. C) describing a regular tract. D) a tract is too small to be described by quarter-sections.

The answer is a tract is too small to be described by quarter-sections. Metes-and-bounds descriptions within the rectangular survey system usually occur when describing an irregular tract, when a tract is too small to be described by quarter-sections, or when a tract does not follow the lot or block lines of a recorded subdivision , quarter-section lines, or other fractional section lines.

Title acquired through adverse possession must be open, notorious, continuous, hostile, and A) obtained only after notifying the true owner. B) adverse to the true owner's possession. C) not required through the legal process in the court system. D) compatible with the true owner's possession.

The answer is adverse to the true owner's possession. Title acquired through adverse possession must be open, notorious, continuous, hostile, and adverse to the true owner's possession.

The air above a property owner's land may be subdivided into A) sky parcels. B) air parcels. C) air lots. D) sky lots.

The answer is air lots. The air above a property owner's land may be subdivided into air lots.

The rectangular survey system includes which of the following? A) Townships B) Meridians C) All of these D) Base lines

The answer is all of these. Base lines, meridians, and townships are elements of the rectangular survey system.

What is the purpose of probate? A) Satisfy the decedent's debts B) All of these C) Distribute all assets correctly D) Account for all assets that exist

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.

Which of the following ways may title to real estate be transferred? A) By sale B) By operation of law C) All of these D) By gift

The answer is all of these. Title to real estate may be transferred voluntarily by sale or gift. Alternatively, title may be transferred involuntarily by operation of law. The property may be transferred while the owner lives or, after the owner dies, either by will or as provided by state law if the owner died without leaving a will.

Which of these is a guarantee that the grantor has the right to convey the property? A) Covenant of further assurance B) Covenant against encumbrances C) Covenant of seisin D) Covenant of quiet enjoyment

The answer is covenant of seisin. The covenant against encumbrances is a warranty that the property is free from encumbrances, except as so noted. The grantor further assures that everything will be done to make the title good. Quiet enjoyment guarantees that the title will be good against third parties who might try to bring legal action to gain the property.

Which of the following would convey an owner's interest in real property? A) Deed B) Bill of sale C) Survey D) Mortgage

The answer is deed. Deeds are used to convey real property. A deed mortgage creates a lien interest but does not convey title. A survey defines the location of property boundaries and a bill of sale conveys personal property.

Title is NOT considered transferred until the deed is A) delivered to the grantee. B) delivered to and accepted by the grantee. C) released from escrow. D) signed by the grantor.

The answer is delivered to and accepted by the grantee. The most complete answer is delivered to and accepted by the grantee during the grantor's lifetime.

An individual who makes a claim to certain property, takes possession of it, and most important, uses it, and takes title away from an owner who fails to use or inspect the property for a period of years A) must be related to the true owner. B) has acquired the title through adverse possession. C) must notify the owner in writing before claiming such title. D) has committed theft.

The answer is has acquired the title through adverse possession. An individual who makes a claim to certain property, takes possession of it and, most important, uses it, and takes title away from an owner who fails to use or inspect the property for a period of years has acquired the title through the principle of adverse possession.

In the rectangular survey system, a township is a square formed by A) horizontal township lines and vertical range lines. B) base lines and tiers. C) vertical township lines and horizontal range lines. D) base lines and principal meridians.

The answer is horizontal township lines and vertical range lines. Townships are the basic units of the rectangular survey system.

Land lost through erosion is an example of A) adverse possession. B) involuntary acceleration. C) involuntary alienation. D) voluntary alienation.

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

Title to real estate may be transferred during a person's lifetime by A) escheat. B) involuntary alienation. C) devise. D) descent.

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.

A legal description stating "start at the street sign at the corner of Ash and 11th, go 100' south to the tree, then 50' west ..." is MOST likely what type of legal description? A) Urban B) Lot and block C) Metes and bounds D) Government survey

The answer is metes and bounds. Metes and bounds descriptions have a point of beginning, move in a clockwise direction, and then return to the point of beginning.

In describing real estate, the method that may use a property's physical features to determine boundaries and measurements is A) lot and block. B) government survey. C) rectangular survey. D) metes and bounds.

The answer is metes and bounds. Monuments are the turning points in the metes-and-bounds method of describing property. In this method, natural, tangible features, such as a distinctive rock or a great tree, were sometimes used as monuments. The path of a stream might serve as all or part of a boundary line. Metes means distance; bounds refers to direction (not boundaries). The description gives distance in a compass direction from the point of beginning (POB) and then from each succeeding monument, until it returns to the POB.

In describing real estate, which of the following methods uses a property's physical features to determine boundaries and measurements? A) Rectangular survey B) Lot and block C) Government survey D) Metes and bounds

The answer is metes and bounds. Monuments are the turning points in the metes-and-bounds method of describing property. In this method, natural, tangible features, such as a distinctive rock or a great tree, were sometimes used as monuments. The path of a stream might serve as all or part of a boundary line. Metes means distance; bounds refers to direction (not boundaries). The description gives distance in a compass direction from the point of beginning (POB) and then from each succeeding monument, until it returns to the POB.

What are the turning points in the metes-and-bounds method of property description? A) Divisions B) Monuments C) Acres D) Sections

The answer is monuments. Monuments are the turning points in the metes-and-bounds method of describing property. In this method, natural, tangible features, such as a distinctive rock or a great tree, were sometimes used as monuments. The path of a stream might serve as all or part of a boundary line. Metes means distance; bounds refers to direction (not boundaries). The description gives distance in a compass direction from the point of beginning (POB) and then from each succeeding monument, until it returns to the POB.

What limits are set by the covenants in a general warranty deed? A) The covenants are limited to matters that occurred during the time the grantor owned the property. B) The covenants are limited to the matters that occurred before the grantor owned the property. C) No limits are set. D) The covenants are limited to the matters that occurred within the last 10 years.

The answer is no limits are set. No limits are set by the covenants in a general warranty deed; the grantor defends the title against the grantor and all those who previously held title.

All of the following are associated with adverse possession EXCEPT A) hostile. B) open. C) off and on for the last five years. D) adverse.

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.

What type of deed provides the grantee with the LEAST protection? A) Quitclaim deed B) General warranty deed C) Bargain and sale deed D) Special warranty deed

The answer is quitclaim deed. The quitclaim deed carries no covenants or warranties and generally conveys only whatever interest the grantor may have in the identified property at the time the deed is delivered.

Probate is a formal judicial process that does all of the following EXCEPT A) see that assets are distributed correctly, but only if the deceased was unmarried. B) prove or confirm the validity of a will. C) determine the precise assets of a deceased person. D) identifies the people to whom the assets are to pass.

The answer is see that assets are distributed correctly, but only if the deceased was unmarried. Married couples, as well as unmarried individuals, normally are subject to probate rules. The use of living trusts by spouses can postpone probate until the second spouse dies. Probate confirms the validity of a will, determines the precise assets, and identifies to whom those assets will pass.

All of the following are essential elements of a deed EXCEPT A) competent grantor. B) signature of the grantee. C) legal description. D) delivery and acceptance of the deed.

The answer is signature of the grantee. The grantee is not required to sign the deed; only the grantor must sign it. The grantee is identified in the deed as the party receiving the conveyance. The elements for a valid deed include competent grantor, execution of the deed by grantor, identifiable grantee, delivery of the deed (by the grantor) and acceptance (by the grantee), legal description, consideration, and words of conveyance.

Party Y receives a deed from party X. The granting clause of the deed states, "I hereby remise, release, alienate, and convey to Y the following real property." What type of deed has Y received? A) Bargain and sale B) General warranty C) Special warranty D) Quitclaim

The answer is special warranty. The quoted granting clause does not use the word quitclaim but does use the word convey, so it is not a quitclaim deed. It does not use the words warrant generally, so it is not a general warranty deed, and it does not use the phrase bargain and sell. A special warranty deed uses such words as remise, alienate, and convey.

Which of the following is NOT a valid way to define a legal description? A) Metes and bounds B) Street address C) Survey D) Lot and block

The answer is street address. While usually enough to find the location of a particular building, the street address is not precise enough to describe legal ownership. Addresses change as streets are renamed, or rural roads might become public streets in growing communities. Sales contracts, deeds, and mortgages require a more specific description of property to be binding.

Which is the process by which boundaries are measured by calculating the dimensions and area to determine the exact location of a piece of land? A) Survey B) Appraisal C) Square foot analysis D) Metes and bounds

The answer is survey. A survey is the process by which boundaries are measured and land areas are determined, including the onsite measurement of lot lines, dimensions, and a house's position on a lot, as well as the determination of any existing encroachments or easements.

To be valid, a deed must include all of the following EXCEPT A) name of the grantee. B) tax. C) legal description. D) consideration.

The answer is tax. Tax is not included in the deed. Typically, a transfer tax, if any, is imposed by the county in which the property is located at the time the deed is recorded. 38.

What is the proper description of this shaded area of a section using the rectangular survey system? A) N½ of the NE¼ of the SW¼ and the SE¼ of the NW¼ B) SW¼ of the SE¼ of the NW¼ and the N½ of the NE¼ of the SW¼ C) S½ of the SW¼ of the NE¼ and the NE¼ of the NW¼ of the SE¼ D) SW¼ of the NE¼ and the N½ of the SE¼ of the SW¼

The answer is the N½ of the NE¼ of the SW¼ and the SE¼ of the NW¼. The location and size of a property can be determined using the rectangular survey system.

All of the following are true of the holder of a fee simple absolute estate EXCEPT A) the estate terminates upon death. B) the holder has the maximum estate available in land. C) the holder has maximum control over the property. D) the holder can transfer rights to others.

The answer is the estate terminates upon death. Fee simple absolute estates potentially last forever.

Every deed must be signed by A) the grantor. B) the grantor and grantee. C) the grantee. D) the devisee.

The answer is the grantor. Either the grantor, or someone acting under the grantor's authority, must execute (sign) every deed, and the grantor must have legal capacity to do so.

For the purpose of the United States Geological Survey (USGS), the term datum is defined as A) the mean elevation at the geographical center of the continental United States. B) the official data used by each local city. C) the mean sea level in San Francisco Bay. D) the mean sea level at New York Harbor

The answer is the mean sea level at New York Harbor. For the purpose of the United States Geological Survey (USGS), the term datum is defined as the mean sea level at New York Harbor.

A method of property description using monuments, distances, and compass directions is A) the plat map. B) the lot and block method. C) the rectangular survey method. D) the metes-and-bounds method.

The answer is the metes-and-bounds method. The metes-and-bounds method of legal description uses distance and direction measurements to describe the boundaries of a property.

Another name for the lot-and-block method of describing a parcel of land is A) the government survey system. B) the Torrens system. C) the metes-and-bounds method. D) the recorded plat method.

The answer is the recorded plat method. This system uses lot and block numbers referred to in a plat map filed in the public records of the county where the land is located.

The person who makes a will is called A) the testant. B) the testamonor. C) the testator. D) the testamentor.

The answer is the testator. The person who makes a will is called the testator.

In a special warranty deed, the grantor promises A) nothing. B) to furnish title insurance to protect the grantee. C) to defend the title against any encumbrances during the grantor's period of ownership. D) to defend the title against encumbrances before or during the grantor's period of ownership.

The answer is to defend the title against any encumbrances during the grantor's period of ownership. A special warranty deed promises that while the seller owned the property, the seller did not cloud the title. The seller only defends against clouds on title that may have occurred during the seller's ownership period.

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) use the property. C) keep the claim a secret until the claim has ripened for the number of years required by state law. D) publish a note of claim in a newspaper of general circulation in the state in which the property is located

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.

A 15-year-old recently inherited a parcel of real estate and has decided to sell it. If the 15-year-old executes a deed conveying the property to a purchaser, such a conveyance would be A) valid. B) voidable. C) void. D) invalid.

The answer is voidable. Real estate contracts entered into by minors are generally voidable by the minor until the minor reaches the age of majority—18 in most states—or shortly thereafter.

A property owner who dies testate can transfer title to real estate upon death through which type of document? A) Quitclaim deed B) Warranty deed C) Special warranty deed D) Will

The answer is will. A will is made by an owner to convey title to real property after the owner's death.

When surveying land, a surveyor refers to the principal meridian that is A) not more than 40 townships or 15 ranges distant from the land being surveyed. B) furthest from the land being surveyed. C) in the same state as the land being surveyed. D) within the rectangular survey system area in which the land being surveyed is located.

The answer is within the rectangular survey system area in which the land being surveyed is located. No matter how many ranges or tiers it takes, the description must always refer to the principal meridian and the base line of the survey system area in which the land being described is located.

The clause in all deeds that passes on the rights and obligations is known as A) consideration. B) the seisin clause. C) words of conveyance. D) delivery and acceptance.

The answer is words of conveyance. The words of conveyance, or granting clause, passes title from the grantor to the grantee.

Which of these MOST accurately describes the dimensions of a quarter-section? A) ½ mile by ½ mile B) ½ mile by 1 mile C) ¼ mile by ¼ mile D) ⅛ mile by ⅛ mile

The answer is ½ mile by ½ mile. A section is 1 square mile.