Review Test 9/47/48/49

A contract for the sale and purchase of real estate (the real estate binder) A. Must satisfy the general requirements applicable to all contracts as well as the statute of frauds. B. Is not effective unless recorded. C. Transfers title but not possession. D. Does not transfer risk of loss to the buyer until the closing unless the parties expressly agree otherwise.

Answer A is correct. A real estate binder is a contract, so the elements of a valid contract must be present: offer and acceptance, consideration, legality, and competent parties. The contract to sell also must be in writing and signed by the party to be bound. The contract should contain (1) a description of the property; (2) the time for conveyance; (3) the kind of deed; (4) the price; (5) the mode of financing; (6) the closing date; (7) the date of possession; (8) the date of prorating taxes, insurance, etc.; and (9) a provision for title insurance or an abstract of title.

The special warranty deed A. Warrants that the grantor has not encumbered the property or transferred any interest in it to another person. B. Warrants that the grantee will have quiet enjoyment of the property. C. Includes a covenant that the owner has the right to transfer a fee simple title. D. Makes no warranties but simply conveys whatever interest the grantor has.

Answer A is correct. A special warranty deed contains some warranties but less than a full warranty deed (which warrants against all lawful claims). Such a deed transfers the grantor's interest and warrants that (s)he has not encumbered the property or transferred any interest in it to another person. It does not contain a warranty that the acts of others have not created a defect in the title.

Marcia sent John a letter offering to sell a certain parcel of land. The undated offer was complete and definite and stated that it was to be held open for 14 days from the date of receipt. The letter was delayed by the postal service for 10 days. Assuming John did not know of the delay, he has A. 14 days in which to accept. B. A reasonable time to accept. C. 4 days in which to accept. D. 10 days in which to accept.

Answer A is correct. An offer may be worded so as to terminate after a specified period or on a specified date. Unless otherwise terminated, the offer remains open for the specified time. This specified time period begins to run when the offeree receives the offer.

Moss entered into a contract to purchase certain real property from Shinn. Which of the following statements is false? A. The contract is nonassignable as a matter of law. B. If Shinn fails to perform the contract, Moss can obtain specific performance. C. Any amendment to the contract must be agreed to by both Moss and Shinn. D. The statute of frauds applies to the contract.

Answer A is correct. Contracts are generally assignable. Assignment is ineffective if a risk or duty of a party to the contract is materially increased, or an exception otherwise applies.

By way of a gift, Pat executed a deed naming her son Mike as grantee. The deed contained a description as follows: All that part of my farm, being a square with 200-foot sides, the southeast corner of which is in the north line of my neighbor, John Brown. The deed contained covenants of general warranty, quiet enjoyment, and right to convey. Pat handed the deed to Mike, who immediately returned it to his mother for safekeeping. Pat kept it in a safe-deposit box. The deed was not recorded. Ignoring any question of the adequacy of description, the deed A.Transferred a property interest to Mike that he could enforce against Pat. B.Transferred nothing to Mike because it was never accepted by him. C.Transferred nothing to Mike because it was not recorded. D.Was not delivered to Mike because Pat maintained custody of the deed.

Answer A is correct. Delivery of a deed to a grantee completes the transfer of real property. Once a deed has been delivered, the property interest is conveyed. The grantee is not required to retain possession of the deed. Consequently, Mike has an enforceable property interest.

Taylor entered into an agreement to purchase a tract of land. The agreement specified that the seller was to provide title insurance, an attorney's opinion, or a title abstract at the purchaser's option. Which of the following is a true statement of the benefits of, and differences between, these three methods of title assurance? A. Title insurance from a licensed company usually provides the greatest protection against risk of loss. B. An abstract of title is a guarantee that the title is held by the person named. C. An attorney's opinion is usually the safest assurance because (s)he will be liable for malpractice if the opinion is incorrect. D. All of these methods are unnecessary because a seller warrants both title and the obligation of the seller to defend against claims of others in a general warranty deed.

Answer A is correct. Title insurance obtained from a licensed company usually provides the greatest protection against risk of loss. These companies are licensed by the state and have certain requirements as to financial condition and maintenance of reserves. Title insurance companies indemnify against defects, but abstract companies and title examiners are required to not be negligent.

Purdy purchased real property from Hart and received a warranty deed with full covenants. Recordation of this deed is A. Required primarily for the purpose of providing the local taxing authorities with the information necessary to assess taxes. B. Irrelevant if the subsequent party claiming superior title had actual notice of the unrecorded deed. C. Not necessary if the deed provides that recordation is not required. D. Necessary to vest the purchaser's legal title to the property conveyed.

Answer B is correct. Recordation gives constructive notice to a subsequent purchaser who then cannot qualify as a bona fide purchaser and take superior title despite the earlier transfer. If the deed is not recorded, a purchaser without actual notice or another form of constructive notice may prevail over an earlier grantee of the same grantor. In most jurisdictions, however, a grantee who has not recorded prevails over a subsequent party with actual notice even if that party records first.

Ann Mayer wrote Tom Jackson and offered to sell Jackson a building for $200,000. The offer stated it would expire 30 days from July 1. Mayer changed her mind and does not wish to be bound by the offer. If a legal dispute arises between the parties regarding whether there has been a valid acceptance of the offer, which of the following is true? A. The offer will not expire prior to the 30 days even if Mayer sells the property to a third person and notifies Jackson. B .If Jackson categorically rejects the offer on July 10, Jackson cannot validly accept within the remaining stated period of time. C. The offer cannot be legally withdrawn for the stated period of time. D. If Jackson phoned Mayer on August 1 and unequivocally accepted the offer, a contract would be formed, provided Jackson had no notice of withdrawal of the offer.

Answer B is correct. Rejection of an offer terminates it. An offeree cannot accept an offer after rejection is effective. An attempted acceptance after rejection is a new offer.

Zoning is used by local governments to plan and control the development of real property. It A. Allows for a special-use permit if a landowner cannot reasonably use the land, if the adverse effect of the ordinance is unique to the petitioner, and if the character of the zone will not be substantially changed. B. Is an exercise of the police power to promote the public health, safety, and welfare. C. Is ordinarily allowed unless a state statute declares otherwise. D. Is an exercise of the power to take private property for a public purpose if the owner is fairly compensated.

Answer B is correct. Zoning ordinarily consists of local ordinances to plan and control development of real property. Zoning ordinances are passed under the governmental police power. Regulations promulgated under this police power ensure the public health, safety, and welfare. Many other laws based on the inherent police power of government subunits affect land-use controls.

In determining whether a contract has been formed, the courts will consider whether the parties made their intentions clear. Which of the following factors will a court not consider? A. The amount of time required for performance. B. The complexity of the parties' negotiations. C. The subject of the contract. D. Prior dealings between the parties.

Answer C is correct. A contract is formed when an agreement is reached or when the agreement is put into writing and signed. If the parties did not make their intentions clear, a court will attempt to determine their intentions from all of the surrounding facts and circumstances: (1) prior dealings between the parties, (2) the amount of money involved, (3) the number and complexity of the details, and (4) the amount of time required for performance. In determining the intent of the parties to form a contract, the courts do not usually consider the subject of the contract (unless it is obviously illegal or otherwise void).

The difference between the title theory and the lien theory is that, under the A. Title theory, a mortgage acts merely to protect the mortgagee's interest and has no other purpose. B. Title theory, the mortgagor is entitled to any rents and profits generated by the underlying real property. C. Lien theory, the mortgage is not considered a conveyance of legal title to the real property but merely a lien on the property to secure payment of the debt. D. Lien theory, the mortgagee (lender) acquires title but does not acquire the right of possession unless and until the mortgagor defaults.

Answer C is correct. A mortgage is drafted as either a conveyance to the mortgagee or a lien to secure the payment of debt. Under the title theory, a mortgage is viewed as a conveyance of property. Under the lien theory, a mortgage is not considered a conveyance of legal title to the real property but merely a lien on the property to secure payment of the debt. Under the lien theory, a mortgage acts merely to protect the mortgagee's interest and has no other purpose. Today, a mortgage is viewed as a lien on land rather than title to land. The mortgagor remains the real owner of the property.

Which of the following unities (elements) are required to establish a joint tenancy? Time Title Interest Possession A. Yes Yes No No B. No No Yes Yes C. Yes Yes Yes Yes D. Yes No Yes No

Answer C is correct. At common law, four unities must exist to create a joint tenancy: (1) time (the interests must vest at the same time), (2) title (the interests must be acquired under the same instrument), (3) interest (the interests must be of the same type and duration), and (4) possession (the interests must represent identical rights of enjoyment).

Bea Barnes held an annual auction at her farm to sell tools, animals, and leftover crops. Ana Adam bid $50 for a plow, and no one bid against her. The auctioneer did not accept Adam's bid and stated that the plow would not be sold for such a low price. What is the legal effect of the bid and its rejection? A. The plow could not be withdrawn from the auction. B. Adam's bid constituted an acceptance, which formed a valid contract. C. Two bids must be made before an auction is deemed to be without reserve. D. Adam's bid was only an offer.

Answer D is correct. Auctioning property is an invitation to negotiate. The purchasers make offers by bidding. The auctioneer accepts an offer by the falling of the hammer or an announcement that the property is sold. Adam's bid was only an offer, so no contract was formed.

Community property is a form of property ownership in 9 states and Puerto Rico. Community property law differs from the law determining ownership of property in the rest of the United States. Community property law A. Provides that people who move from a community property state to a noncommunity property state are relieved of the ownership sharing that had been imposed upon them. B. Is similar to the rules of a condominium association because each person owns a part of the property but is subject to the rules determined by the group. C. Has not been adopted in a majority of states because it is widely thought of as a step toward socialism. D. Provides that a husband and wife each own a 1/2 interest in the property acquired during their marriage.

Answer D is correct. Community property law directly affects only the ownership of property between a husband and wife. Each owns a 1/2 interest in property acquired during their marriage. It applies to both real and personal property. It is similar to a tenancy in common, but the rights and duties of the husband and wife vary from state to state.

Certain contracts have absolutely no effect and are not recognized under law. If two or more parties enter into such an agreement, it is A.Voidable. B.Valid. C.Unenforceable. D.Void.

Answer D is correct. Contracts that are of no effect and not recognized under law are void. Neither party has a legal obligation to the other based on the contract. The parties may go through with their performance, but the law provides no remedy for a breach.

Abe Franklin and Teddy Jefferson own adjacent properties. A party wall is on their property line that existed before each purchased his property. Jefferson wants the wall to be torn down, but Franklin does not. Which of the following is a true statement about their rights and duties? A. Jefferson is entitled to have the wall torn down because it extends over his property line. B. Franklin must compensate Jefferson if he does not agree to tear down the wall. C. Each property owner has an undivided interest in the entire wall. D. Franklin has an easement of support from Jefferson's side of the wall.

Answer D is correct. Each party is entitled to the use of a party wall and also has an easement of support from the other side. Without the easement, the right to retain an existing wall would be illusory.

A mortgagor of real property will ordinarily be in default when (s)he A.Leases the property and collects rent. B.Dies and the property is transferred to an heir. C.Borrows money and uses the property as security. D.Fails to insure the property against fire.

Answer D is correct. For a mortgagor to be in default, (s)he must commit a material breach. Besides failing to make prompt payments, a mortgagor can be in default as a result of one of the following: Failing to keep the property in good repair Selling the property to a third party subject to the mortgage Allowing insurance to lapse on the property Not paying property taxes and assessments

Which of the following statements is true about a transfer of an interest in mortgaged property? A. The mortgagee cannot transfer the note and mortgage because they represent a personal contract between the parties. B. The mortgagor can transfer the property without paying off the mortgage if the agreement includes a due-on-sale clause. C. If the mortgagor transfers the property, (s)he will also be relieved of the mortgage. D. The mortgagee can transfer the note and mortgage by an assignment in a lien theory state.

Answer D is correct. In a lien theory state, the mortgage is merely a security interest in the real property. Thus, it can be transferred by an assignment rather than by deed. In a title theory state, a deed must be given to transfer a mortgage.

Emma Perkins was a real estate wheeler-dealer. She owned a tract of land on which she intended to build a shopping center. Perkins obtained a loan from Bill Brown, giving a mortgage in return. The mortgage provided that it was intended to secure the current loan and any future advances, and would also apply to any real property acquired by Perkins subsequent to the mortgage until the debt was repaid. Which of the following is true? A. A mortgage cannot secure future advances. Instead, an additional mortgage must be entered into when the subsequent loan is made. B. If Perkins acquires additional property and then sells it, Brown will have a priority for his mortgage over any purchasers. C .The after-acquired property clause is invalid. D. In many states, Brown can make an additional loan to Perkins, and retain priority over junior liens that have arisen after the mortgage was recorded.

Answer D is correct. In many states, a future advance clause permits the mortgagee to retain the same priority for a future advance as for the original mortgage. This rule is based on the theory that persons with subsequent liens have notice of the mortgage and the future advance clause.

Which of the following is a true statement about the real estate mortgage? A. The substance of the transaction is that the mortgagee conveys ownership of the property to the mortgagor subject to nullification by payment of the debt. B. The mortgage is security for the debt owed by the mortgagee to the mortgagor. C. The mortgage is the debt owed by the mortgagor to the mortgagee. D. The mortgagor executes a promissory note and a mortgage evidencing the debt and the conveyance of a security interest, respectively.

Answer D is correct. Most states recognize the mortgage as a security interest. The mortgagor-debtor signs a promissory note for the sum borrowed from the mortgagee-creditor. (S)he also signs a mortgage document representing the right of the mortgagee to seek judicial foreclosure and sale of the property upon default. The mortgage is an interest in real property, so it should comply with the requirements of contract law, the statute of frauds, and the execution of deeds.

In Year 1, Rae Rogers, owner of Blackacre and Whiteacre, executed and delivered separate deeds by which she conveyed the two tracts of land. Blackacre was conveyed "to Allan and his heirs as long as it is used exclusively for residential purposes, but, if it is ever used for other than residential purposes, then to the American Heart Association." Whiteacre was conveyed "to Bobbi and her heirs as long as it is used exclusively for residential purposes, but, if it is used for other than residential purposes prior to Year 21, then to the American Cancer Society." (there is more) In Year 2, the interest of the American Heart Association (AHA) in Blackacre could be best described as a A. Void contingent remainder. B. Valid executory interest. C. Valid contingent remainder. D. Void executory interest.

Answer D is correct. The conveyance by Rogers created a valid fee simple determinable in Allan and a void executory interest in the AHA. It was void because it violated the rule against perpetuities. This failed future interest was intended to be an executory interest. (1) It was in a transferee (as opposed to a reversionary interest in the transferor), and (2) it would arise by divesting the preceding estate (as opposed to taking effect upon the natural termination of the preceding estate as a remainder).

Pix borrowed $80,000 from Null Bank. Pix gave Null a promissory note and mortgage. Subsequently, Null assigned the note and mortgage to Reed. Reed failed to record the assignment or notify Pix of the assignment. If Pix pays Null pursuant to the note, Pix will A. Be primarily liable to Reed for the payments made to Null. B. Not be liable to Reed for the payments made to Null because Reed failed to record the assignment. C. Be secondarily liable to Reed for the payments made to Null. D. Not be liable to Reed for the payments made to Null because Reed failed to give Pix notice of the assignment.

Answer D is correct. Valid assignment of rights is effective between assignor and assignee even if the obligor is without notice. But an obligor is discharged to the extent of performance rendered to the assignor before receiving notice of assignment. However, the assignor is deemed to be a trustee of pre-notice payments for the assignee.

Which of the following factors is least significant in determining whether an item of personal property has become a fixture? A. The adaptability of the item to the real estate. B. The value of the item. C. The extent of injury that would be caused to the real property by the removal of the item. D. The manner of attachment.

Answer B is correct. If the intention of the party who attached the personal property to the realty is unclear, the court examines other factors to deduce that intent. For example, the mode of annexation and the injury caused by removal are important factors in determining intent. Accordingly, a central heating system is usually deemed to be a fixture. If an item is beneficial or necessary (adapted) to the ordinary uses to which the realty is put, the court usually infers an intent to make it a fixture even though it is easily removable. A hot water heater is an example. Intent also may be inferred from the parties' relationship. For example, a lessee seldom intends to make a gift of a fixture to a lessor upon vacating the premises. Value, however, is not significant in determining whether personal property has become a fixture.

Several forms of ownership of property are joint. Which of the following is true? A. A tenancy in common may be created only by a grant containing an express negation of a joint tenancy. B. The interest of a joint tenant with a right of survivorship will not pass under a will. C. Any conveyance of a joint ownership interest must be joined by the other cotenants to be valid. D. The interest of a joint tenant with a right of survivorship cannot be separately conveyed.

Answer B is correct. Joint tenancy is a form of co-ownership in which each tenant owns an undivided interest in the entire estate. The distinctive characteristic of a joint tenancy is the right of survivorship. Upon the death of one joint tenant, the surviving cotenants own the entire property. No interest in the property passes to the heirs of the decedent. Hence, a decedent's will has no effect on the property.

Which of the following is a true statement about real estate mortgages and their alternatives? A. Judicial foreclosure is avoided in some states under the traditional land sale contract. B. Use of a trust deed simplifies foreclosure because the court acts as trustee of the deed given at the time of sale by the seller. C. Most states adhere to the title theory of mortgages and thus permit strict foreclosure. D. Due-on-sale clauses in mortgages are unconstitutional.

Answer A is correct. A land sale contract is an agreement between a purchaser and a seller for the conditional sale of land, subject to payment of the entire purchase price by the purchaser. Under a land sale contract, the seller retains legal title of the property until final payment is made. In the majority of states, rather than perform a judicial foreclosure in the case of a default, the seller is required to either permit the purchaser to cure the default by paying all installments plus interest or remit any equity in the land to the purchaser and reclaim possession of the property.

Albert, who is the owner of a house and lot, leased it to Marvin Barnes for a term of 5 years. There was also an unattached brick two-car garage. For his hobbies, Barnes installed a work bench, electric lights, and a radiator in the garage. He also laid pipes connecting the radiator with the heating plant inside the house. Thereafter, Albert mortgaged the premises to Good Bank to secure a loan. Barnes was not given notice of the mortgage, but it was recorded. Later, Albert defaulted on his mortgage payments, and Good Bank began foreclosure proceedings. By this time, Barnes's lease had almost expired. Barnes began the removal of equipment he had installed in the garage. Good Bank brought an action to enjoin the removal of the equipment mentioned above. If the court refuses the injunction, it will be because

A. Barnes was without notice of the mortgage. B. The circumstances reveal that the equipment was installed for Barnes's exclusive benefit. C. The statute of frauds precludes the bank from claiming any interest in the equipment. D. In the absence of a contrary agreement, a residential tenant is entitled to remove any personal property (s)he voluntarily brings upon the premises.

In Year 1, Rae Rogers, owner of Blackacre and Whiteacre, executed and delivered separate deeds by which she conveyed the two tracts of land. Blackacre was conveyed "to Allan and his heirs as long as it is used exclusively for residential purposes, but, if it is ever used for other than residential purposes, then to the American Heart Association." Whiteacre was conveyed "to Bobbi and her heirs as long as it is used exclusively for residential purposes, but, if it is used for other than residential purposes prior to Year 21, then to the American Cancer Society." (more)... In Year 11, Allan and Tony entered into a contract with Mark in which they agreed to sell Blackacre to Mark in fee simple. After examining title, Mark refused to perform on the grounds that Allan and Tony could not give good title. Allan and Tony joined in an action against Mark for specific performance. Specific performance will be

A. Granted, because Allan alone owns the entire fee simple in Blackacre. B. (Correct) Denied, because John has a valid interest in Blackacre. (Correct) C. Denied, because the American Heart Association has a valid interest in Blackacre. D. Granted, because Allan and Tony together own a fee simple absolute in Blackacre.

In Year 1, Rae Rogers, owner of Blackacre and Whiteacre, executed and delivered separate deeds by which she conveyed the two tracts of land. Blackacre was conveyed "to Allan and his heirs as long as it is used exclusively for residential purposes, but, if it is ever used for other than residential purposes, then to the American Heart Association." Whiteacre was conveyed "to Bobbi and her heirs as long as it is used exclusively for residential purposes, but, if it is used for other than residential purposes prior to Year 21, then to the American Cancer ...(more)" In Year 4, a contract was entered into in which Bobbi and the American Cancer Society agreed to sell Whiteacre to Fuller in fee simple. After examining title, Fuller refused to perform on the ground that Bobbi and the ACS could not convey marketable title. Bobbi and the ACS joined in an action for specific performance. Specific performance will be

A. Granted, because Bobbi and the ACS together own a fee simple absolute in Whiteacre. B. Granted, because the attempted restrictions on the use of Whiteacre are void as a violation of the rule against restraints on alienation. C. (Correct) Denied, because Bobbi and the ACS cannot convey marketable title unless Rogers joins in the deed. (Correct) D. Granted, because the attempted restrictions on the use of Whiteacre are void as a violation of the rule against perpetuities.

Which of the following conditions must be met to have an enforceable mortgage? A. An accurate description of the property must be included in the mortgage. B. Present consideration must be given in exchange for the mortgage. C. A negotiable promissory note must accompany the mortgage. D. The amount of the debt and the interest rate must be stated in the mortgage.

Answer A is correct. A mortgage relates to an interest in land and is within the statute of frauds. Because a mortgage is executed with the same formalities as a deed, it must contain a legally sufficient description of the property, that is, one precise enough to determine accurately the location of the land.

Abram owned a fee simple absolute interest in certain real property. Abram conveyed it to Fox for Fox's lifetime with the remainder interest upon Fox's death to Charlie. What are the rights of Fox and Charlie in the real property? A. Fox has a possessory interest in the land and Charlie has a future interest. B. Charlie must outlive Fox to obtain any interest in the real property. C. Any conveyance by either Fox or Charlie must be joined in by the other party to be valid. D. Charlie may not sell his interest in the property until the death of Fox.

Answer A is correct. A fee simple absolute interest includes the full rights allowed by law. Abram's conveyance split the ownership into two types: a life estate to Fox and a remainder interest to Charlie. The life estate gives Fox the right to possess and enjoy the property for life. The remainder interest gives Charlie a future interest in the property. It will become a fee simple absolute upon termination of Fox's life estate.

A mortgagor's right of redemption will be terminated by a judicial foreclosure sale unless A. The jurisdiction has enacted a statutory right of redemption. B. The proceeds from the sale are not sufficient to fully satisfy the mortgage debt. C. The mortgage instrument does not provide for a default sale. D. The mortgagee purchases the property for market value.

Answer A is correct. A foreclosure sale occurs when a mortgage is in default and the mortgagee elects to satisfy its debt by sale of the property rather than by obtaining a personal judgment against the mortgagor. It generally terminates the mortgagor's equitable right of redemption. A statutory right of redemption provides the mortgagor with the opportunity to repurchase the property after the foreclosure sale. This right may be exercised for a certain statutorily specified period generally not exceeding 1 year and by payment of the auction sale price.

To be effective, an offer must be definite and complete. Under the law of contracts, A. Only reasonable definiteness is necessary. B. Absolute definiteness is required. C. The acceptance cannot be used to meet the definiteness requirement. D. All terms in the offer must be expressed.

Answer A is correct. The terms of a contract must be reasonably definite and complete. The agreement will not be enforced if an essential term has been omitted. The parties, the subject matter, the price, and the place and time of performance are terms usually regarded as vital to the agreement.

The city of Nirvana determined that a particular railroad street crossing was hazardous and constructed an underpass below the tracks. In doing so, the city cut off the plaintiff's entry and exit to the street from his or her property. Which of the following is true? A. The city's action was a taking of the plaintiff's property in the constitutional sense. B. Because the plaintiff's land was left intact and none was physically taken, there was no taking in the constitutional sense. C. The action of the city was a constitutional exercise of police power for which no compensation is payable. D. The city's action cannot be a valid eminent domain action because only a small percentage of the public can be expected to use the underpass.

Answer A is correct. Eminent domain is the power of the government to take privately owned property for "public use." In a 1984 decision, the Supreme Court stated a test that apparently defines "public use" very broadly. It held that, if "the exercise of the eminent domain power is rationally related to a conceivable public purpose," the court would not proscribe a "compensated taking." Thus, the city can take the property from the plaintiff if the taking is for a public use and the city compensates the plaintiff. The issue is whether the city's action is an exercise of police power or an eminent domain action. Although eminent domain usually involves a physical invasion of a citizen's property, courts have recognized that certain government action unfairly burdens one or more property owners with a loss that should be borne by the public as a whole. The city's action of building the underpass is a taking in the constitutional sense and not merely regulation for purposes of public health, safety, and welfare. The courts would interpret ownership of property to include the right of access.

Nix sent Castor a letter offering to employ Castor as controller of Nix's automobile dealership. Castor received the letter on February 19. The letter provided that Castor would have until February 23 to consider the offer, and, in the meantime, Nix would not withdraw it. On February 20, Nix, after reconsidering the offer to Castor, decided to offer the job to Vick, who accepted immediately. That same day, Nix called Castor and revoked the offer. Castor told Nix that an acceptance of Nix's offer was mailed on February 19. Under the circumstances, A. Castor's acceptance was effective when mailed. B. Nix's offer was irrevocable until February 23. C. Any revocation of the offer would have to be in writing because Nix's offer was in writing. D. No contract was formed between Nix and Castor because Nix revoked the offer before Nix received Castor's acceptance.

Answer A is correct. If the offer does not state the means of acceptance, an acceptance is effective when dispatched if transmitted by a reasonable means, i.e., the means used to transmit the offer. Revocation of an offer received after effective acceptance does not cancel the contract formed on acceptance.

An agreement is an essential element of a contract. Ordinarily, the required mutual assent is achieved by means of an offer and an acceptance. Acceptance A. Requires an indication of an intent to accept. B. May ordinarily be made by anyone with knowledge of the offer. C. Requires a subjective intent to accept. D. Is never accomplished by silence.

Answer A is correct. Mutual assent requires that a valid offer be accepted by the intended offeree in a manner stipulated by the offeror. The overt indication of the offeree's assent should signify an intent to accept. For example, performance of an act requested by an offer does not result in a contract if the offeree had not yet learned of the offer.

For a deed to be effective between the purchaser and seller of real estate, one of the conditions is that the deed must Answers A. Be delivered by the seller with an intent to transfer title. B. Be recorded within the permissible statutory time limits. C. Contain the signatures of the seller and purchaser. D. Contain the actual sales price.

Answer A is correct. Real property cannot be conveyed unless a valid delivery and acceptance of the deed have occurred. The grantor must intend to transfer title and surrender control of the document. Subsequent return of the deed or destruction of the deed, even if intentional, is not sufficient to rescind the conveyance. A reconveyance is required.

Which of the following statements is the best definition of real property? A. Real property is land and everything permanently attached to it. B. Real property is only land. C. Real property is all tangible property including land. D. Real property is land and intangible property in realized form.

Answer A is correct. Real property encompasses rights with respect to land and attached items. Real property generally consists of rights with respect to (1) the surface of the land; (2) items attached to the land, e.g., trees, structures, and fixtures (otherwise personal property annexed to the land and structures); (3) materials below the surface; and (4) airspace.

In general, which of the following statements is true with respect to a real estate mortgage? A. The mortgagee may assign the mortgage to a third party without the mortgagor's consent. B. The mortgage must be signed by both the mortgagor (borrower) and mortgagee (lender). C. The mortgage may not be given to secure an antecedent debt. D. The mortgage must contain the actual amount of the underlying debt.

Answer A is correct. The majority of states adhere to the lien theory under which the mortgage is merely a security interest in the real property. Thus, the mortgage can be transferred by an assignment without the mortgagor's consent rather than by deed (which would be required in a title theory state). The note and mortgage are assignable in most states because they represent only a right to payment and security, respectively.

Dee gave Bee a mortgage on her office building, and Bee promptly recorded. Bee then learned that Lee held a prior unrecorded mortgage on the same real property. A. In the event of default, Lee could foreclose although her interest is subordinate to Bee's. B. Only the recorded mortgage covers Dee's detachable trade fixtures. C .If Dee becomes insolvent, the trustee in bankruptcy cannot defeat Lee's mortgage because the trustee is merely a hypothetical lien creditor. D. The mortgagee whose interest was first in time has priority upon default.

Answer A is correct. The purposes of recording a mortgage are to (1) give notice to transferees or subsequent mortgagees of the mortgagee's security interest in the real property and (2) establish the priority of liens if the mortgagor becomes insolvent. A mortgagee's failure to record his or her security interest may lead to the forfeiture or subordination of that interest. In this case, because Lee did not record her mortgage, her interest becomes subordinate to Bee's, who promptly recorded.

Dunbar Dairy Farms, Inc., pursuant to an expansion of its operations in Tuberville, purchased from Moncrief a 140-acre farm strategically located in the general area in which Dunbar wishes to expand. Unknown to Dunbar, Lamont Cranston, an adjoining landowner, had fenced off approximately 5 acres of the land in question. Lamont Cranston installed a well, constructed a storage shed and garage on the fenced-off land, and continuously farmed and occupied the 5 acres for approximately 22 years prior to Dunbar's purchase. (there is more) Which true? A. Under the circumstances, Cranston has title to the 5 acres. B. If Dunbar is unaware of Cranston's presence and Cranston has failed to record, Dunbar can oust him as a trespasser. C. At best, the only right that Cranston could obtain is an easement. D. If Moncrief had properly recorded a deed that includes the 5 acres in dispute, Moncrief has good title to the five acre

Answer A is correct. Title to real property may be acquired by adverse possession if certain requirements are met. The possession must be (1) open and notorious, (2) continuous (without interruption) for the statutory period, (3) hostile, (4) exclusive, and (5) actual. Cranston's fencing, farming, etc., constituted actual and exclusive possession. Furthermore, the possession was in such a manner that the owner knew or should have known of the possession. Also, absent permission from Moncrief, the activities of Cranston are hostile to the rights of the owner.

The principal legal authority governing contractual activity is state common law. Article 2 of the Uniform Commercial Code (UCC), however, also applies to many sales transactions. The UCC applies to contracts involving sales of Answers A. Tangible personal property. B. Patents and copyrights. C. Services. D. Real property.

Answer A is correct. UCC Article 2 applies to contracts for the sale of goods. Goods are defined as tangible, movable personal property. Article 2 removes transactions in goods from the common law by establishing a uniform set of rules in every state to facilitate commercial transactions and provide a reasonable basis for resolving problems. However, Article 2 does not replace all common law contract rules. When Article 2 does not provide a specific rule that addresses the particular problem, the relevant common law rule applies to a sale of goods. Thus, Article 2 replaces only those rules that do not facilitate commercial transactions.

A life estate is the right of a person to use property for the rest of his or her life. This person is a life tenant. Certain duties and limitations are imposed on the life tenant to safeguard the remainderman's rights. The life tenant A. Is entitled to the use of the land but must not take profits from it. B. May exploit natural resources of the land in reasonable amounts if the land was so used when the life estate was granted. C. Is not responsible for taxes on the land because the remainderman is to receive the long-term benefits from the land. D. Must preserve the land in the same repair as when the life estate was granted.

Answer B is correct. A life tenant is entitled to reasonable use of the land, including the profits. The life tenant ordinarily is not entitled to exploit the natural resources of the land, such as timber, minerals, and oil. But if the land was so used when the life estate was granted, the grantor is deemed to have intended continued reasonable use by the life tenant.

Mortgages are flexible devices that increase the availability of credit. The variations of the basic mortgage include a A. Purchase money security interest. B. Wraparound mortgage. C. Land lease contract. D. Deed of equity.

Answer B is correct. A mortgage is a collateral arrangement in which a real property owner (mortgagor) borrows money from a creditor (mortgagee), who uses a deed as a collateral for repayment of the loan. There are various forms of mortgages, including equitable mortgages, purchase money mortgages, second mortgages, open-end mortgages, and wraparound mortgages.

Tom Payne had a toothache, so he visited Dennis Dentist, DDS, during his lunch hour. Although the visit was Payne's first, Dentist accepted him as a patient without discussion of the cost of dental services. Dentist extracted a tooth and sent Payne a bill for $600. Payne was outraged and asserted that a contract was never formed. Payne was A. Not liable because he never made an offer for Dentist to accept. B. Liable only for a reasonable amount. C. Not liable because he never accepted any offer. D. Liable for the $600 because he accepted Dentist's services.

Answer B is correct. A person who accepts the services of another known to be in the business of providing services for a fee is liable for the reasonable value of the services. This contract is implied. The intent of the parties is inferred from the circumstances. The reasonable value is measured by what others in the locality charge, i.e., the market price.

The real estate binder must satisfy the requirements of general contract law. It must also satisfy the statute of frauds and be signed by the party to be bound. The binder A. Determines when the seller must compensate the broker. B. Should contain a description of the property, the kind of deed, a provision for title assurance, and the mode of financing. C. Is usually prepared by the seller's broker along with the deed and other closing documents. D. Transfers title to, and possession of, the real property.

Answer B is correct. A real estate binder is a contract, so the elements of a valid contract must be present: offer and acceptance, mutual assent, consideration, legality, and competent parties. The contract to sell also must be in writing and be signed by the party to be bound. The contract should contain (1) a description of the property; (2) the time for conveyance; (3) the kind of deed; (4) the price; (5) the mode of financing; (6) the closing date; (7) the date of possession; (8) the date of prorating taxes; (9) insurance, etc.; and (10) a provision for title insurance or an abstract of title.

Donor gave a quitclaim deed to certain real property to Donee as a gift. A month later, wishing to revest title in Donor, Donee destroyed the deed. Which of the following is true? A. Because the original conveyance lacked consideration, Donee never held title. B. Donee is the owner despite destruction of the deed. C. Donor may now be liable to Donee for breach of a warranty of title. D. Donee could not own the property in fee simple because a quitclaim deed does not transfer full title.

Answer B is correct. Delivery of a deed to a grantee completes the transfer of real property. Once a deed has been delivered, cancellation or destruction of the instrument will not revest ownership of the property in the grantor. Therefore, Donee retains his ownership rights.

Which of the following statements is true with respect to a real estate mortgage? It must be signed but only by the mortgagor. It must be recorded to be effective between the mortgagor and mortgagee. It must be recorded to be effective against third parties. Answers A. I, II, and III. B. I and III. C. I and II. D. II and III.

Answer B is correct. Generally, the mortgage must be in writing, it must contain an adequate description of the property, it must be signed by the mortgagor, and it must identify and describe the debt that it secures.

Miltown borrowed $60,000 from Strauss upon the security of a first mortgage on a business building owned by Miltown. The mortgage has been amortized down to $50,000. Sue Sanchez is buying the building from Miltown for $80,000. Sanchez is paying only the $30,000 excess over and above the mortgage. Sanchez may buy "subject to" the mortgage, or she may "assume" the mortgage. Which is a true statement under these circumstances? A. Sanchez will acquire no interest in the property if she takes "subject to" instead of "assuming" the mortgage. B. The financing agreement ultimately decided upon must be recorded in order to be binding upon the parties. C. Sanchez would be better advised to take "subject to" the mortgage rather than to "assume" the mortgage. D. The financing arrangement is covered by the Uniform Commercial Code if Sanchez takes "subject to" the existing first mortgage.

Answer C is correct. By taking subject to the mortgage, Sanchez avoids personal liability to both Strauss and Miltown. If Sanchez stopped making payments, the mortgagee could foreclose on the property, and Sanchez would have no additional liability. By assuming the mortgage, Sanchez is liable to Miltown and to Strauss if foreclosure of the property yielded insufficient proceeds to satisfy the debt. If a mortgage is conveyed without recourse, the creditor has no recourse against personal assets of a defaulting mortgagor. Thus, the mortgagor or one who assumes the mortgage is not liable for a deficiency after application of foreclosure sale proceeds.

A valid assignment of a mortgage need not A. Be in writing. B. Describe the property. C. Be for the benefit of the mortgagee. D. Be supported by consideration to be irrevocable

Answer C is correct. For the assignment of a mortgage to be valid, it must meet the following requirements: Be in writing Identify the parties Describe the property Describe the debt Be supported by consideration to be irrevocable The assignment is not required to be for the benefit of the mortgagee. The mortgage and note are property belonging to the mortgagee and may be transferred by sale or gift. Whether the transfer benefits the mortgagee is not an element of a valid assignment.

Cutter purchased a building and land from Murley. Cutter made a downpayment to Murley and gave a mortgage for the balance of the purchase price. The property was already subject to an existing mortgage that Murley agreed to continue to pay. A. Murley's original mortgage became due immediately on the sale to Cutter. B .Murley has committed a fraud by taking a mortgage on the property without paying off the existing mortgage. C. Murley's mortgage takes priority over a judgment that had been rendered against Cutter prior to the sale. D. In the event of a default on the mortgages, the mortgage from Cutter to Murley will take priority because it is a purchase-money mortgage.

Answer C is correct. Murley obtained a purchase-money mortgage on the sale of the property. A purchase-money mortgage takes priority over pre-existing debts of the mortgagor. Accordingly, a prior judgment against Cutter might become a lien on the real property but would be subordinate to Murley's mortgage.

Toni Tenant leased an office from Landlord. Tenant was an attorney and had a need for substantial shelf space. Thus, she attached bookshelves to all the walls. Because clients came to the building on a regular basis, Tenant also put decorative shrubbery outside. At the termination of the lease, Tenant wished to remove the bookshelves and the shrubbery, but Landlord claimed they were part of the realty. A. Because the shrubbery was not attached to part of the leased office space, it can be removed. B. Both the bookshelves and shrubbery are most likely ordinary fixtures to which Landlord is entitled at the termination of the lease. C. The bookshelves are probably trade fixtures that may be removed by Tenant. D. If removing the bookshelves would cause any damage to the building, they may not be removed.

Answer C is correct. Trade fixtures were once personal property but have become part of the real property as a result of being annexed to the land by a tenant for monetary gain.To encourage trade and industry, a tenant is entitled to remove trade fixtures within a reasonable time after expiration of a lease. The bookshelves qualify as trade fixtures, and Toni Tenant may remove them.

The legal rights of a mortgagee may depend on the nature of the mortgage and of competing claims. Which of the following is false? Answers A. Buck mortgages Blueacre and its fixtures to pay a tort judgment. Buck then buys goods from Lindy and gives her a security interest in the goods and Blueacre's furnace. If Lindy properly files before Bank, she has priority in the furnace. B. Jane wins a lawsuit and records a judgment against Dee. Dee subsequently finances the purchase of Redacre by giving a mortgage to Bank. Bank's interest in Redacre has priority over Jane's. C. Nell raised business capital by giving a home mortgage to Bank, which it promptly recorded. Later, she purchased a fixture from Paul. He perfected a security interest in it by a proper fixture filing 25 days after its attachment. Paul has priority in the fixture. D. Bank finances the construction of White's new home. White then purchases a fixtu

Answer C is correct. Under UCC 9-334, a perfected purchase money security interest in fixtures has priority over the conflicting interest of a mortgagee when the conflicting interest arose before the goods became fixtures and the security interest is perfected by a fixture filing in the real estate records no later than 20 days after the goods become fixtures. The priority is given although the mortgagee filed first. Because Paul did not file within 20 days after annexation, Bank's earlier recorded real estate mortgage gives it priority in the fixture.

Which of the following is a true statement about the rights of landowners? A. Except for oil and gas, materials below the surface are not part of the realty. B. Individuals with subsurface rights do not acquire a right of entry. C. Vegetation growing on the land at the time of sale will belong to the purchaser, unless otherwise agreed. Which of the following is a true statement about the rights of landowners? D. A landowner owns all the airspace above the land.

Answer C is correct. Whether or not cultivated, the vegetation on the land is transferred with the real property unless the seller expressly reserves rights thereto. A seller who fails to do so cannot harvest crops or timber growing on the land. If the timber has been felled or the crops have been harvested, however, they are personal property and do not pass with the land.

Land-use controls may be public or private. They may be imposed by law or arise by agreement. Which of the following is a true statement about private means of control? A. An equitable servitude is enforceable although the promise is oral. B. A covenant running with the land must touch and concern the land but the original parties need not have intended that successors be bound. C. An equitable servitude is a promise that is enforceable only if the parties are in privity of estate. D. A covenant running with the land is enforceable by an action for damages brought by a successor of the covenantee against a successor of the covenantor.

Answer D is correct. A covenant runs with the land if (1) it affects the use or value of the land ("touches and concerns the land"), (2) the original parties intended it to bind their successors, (3) it is contained in a writing, and (4) the original parties were in privity of estate (e.g., grantor-grantee or testator-devisee). For example, assume that (1) X is a developer who sells a lot in a subdivision to Y and (2) the deed states that Y and his or her successors, heirs, and assigns may use the property only for residential purposes. The restriction meets the criteria for a covenant that will run with the land. It will be enforceable by successors of X (other purchasers of lots in the subdivision) against a successor of Y (such as a person to whom Y sold the lot).

In most jurisdictions, failure to record a warranty deed with full covenants will A. Result in revesting of the legal title in the grantor. B. Not affect the grantee's rights against bona fide purchasers unless (s)he fails to pay taxes. C. Be treated as an invalid delivery and acceptance. D. Not preclude legal title from vesting in the grantee.

Answer D is correct. A deed is a written instrument expressing a grantor's intent to convey or pass an interest in real property to a grantee. Execution and delivery of a deed is the traditional method of transferring title. A deed does not need to be recorded to be valid between the grantor and grantee.

If a promissory note secured by a mortgage on real property is not paid, the creditor is entitled to sell the property to satisfy the debt. This proceeding is a foreclosure sale. Which statement is true concerning foreclosure in most states? A. The mortgagee is entitled to the entire proceeds of the foreclosure sale, regardless of the amount of the unpaid debt. B. The mortgagee may sell the property at a public auction. C. The mortgagee is limited to collection of the proceeds from the sale even if they do not satisfy the debt in its entirety. D. The mortgagor is entitled to repurchase the land within a statutory period.

Answer D is correct. A foreclosure sale occurs when a mortgage is in default, and the mortgagee elects to satisfy its debt by sale of the property rather than by obtaining a personal judgment against the mortgagor. After the sale, the mortgagor ordinarily has a right to redeem (to repurchase) the land for a statutory period.

Richard Rogers has a large lot on which he collected old cars. He gave permission to Tim Thomas to enter on his land and remove them. Thomas sells them, keeping all proceeds for himself. If after a month Rogers decides he wants Thomas to remove no more cars, his best legal argument is that Thomas A. Has an easement. B. Is a trespasser. C. Has a license coupled with an interest. D. Is a licensee.

Answer D is correct. A license is the mere right to be on the land of another without being a trespasser. It is revocable at any time. When the right is retracted, the licensee is required to leave the premises.

Ole McDonald owns a small farm located on the edge of a small creek that he uses for irrigation. Grubb, Inc. has purchased the land just upstream from McDonald and is building a 20-story condominium project. In the construction, the creek was blocked and detoured to another creekbed one mile away. The building will also cut off the sunlight needed to grow crops on McDonald's land. Which of the following rights does McDonald have? A. The right to be free from the construction dust and later from automobile exhaust. B. The right to the magnificent mountain view that previously existed from McDonald's land. C .The right to the sunlight in order to grow crops. D .The right to have the water continue to flow in its natural course.

Answer D is correct. A riparian landowner (one who owns land along a waterway) may make reasonable use of the water. However, a lower riparian owner has the right to the continued flow of the water without unreasonable diminution. The "natural flow" theory allows use of the water as long as the natural condition of the waterway is retained. The "reasonable use" theory allows use of the water as long as it does not interfere with other riparian owners. Under either theory, the blocking of the creek by Grubb is a violation of McDonald's right that may require the creek to be rediverted to its natural course.

On July 1, Silk, Inc., sent Blue a letter offering to sell Blue a building for $80,000. In the letter, Silk stated that it would give Blue 30 days to accept the offer. On July 15, Blue sent Silk a letter that included the following statement: "The price for your building seems too high. Would you consider taking $75,000?" This letter was received by Silk on July 16. On July 19, Tint made an offer to Silk to purchase the building for $82,000. Upon learning of Tint's offer, Blue, on July 27, sent Silk a signed letter agreeing to purchase the building for $80,000. (More)... If Blue commences an action against Silk for breach of contract, Blue will A. Lose because Blue used an unauthorized means of communication. B. Lose because Blue sent the July 15 letter. C. Win because Silk was obligated to keep the offer open for the 30-day period. D. Win because Blue effectively accepted Silk's offer on July 27.

Answer D is correct. An attempt by the offeree to vary an offer operates as a rejection and counteroffer. But it is reasonable to construe Blue's letter as a mere inquiry about terms because the letter is tentative and does not indicate intent to reject the offer. Blue was still considering the offer. Also, Blue's knowledge of Tint's offer did not revoke the offer. Termination of the offer prior to acceptance, e.g., by a sale to Tint communicated to Blue, would have revoked the offer. Blue should prevail because it validly accepted an offer that had not terminated by lapse of time, rejection, or revocation.

An easement A. Must be created to benefit a particular parcel of land rather than a specified person. B. May not be created by reservation in a deed. C. Must be created to benefit a particular person rather than a specified parcel of land. D. Created by an express oral grant is not enforceable.

Answer D is correct. An easement is a nonpossessory interest in land that confers the right to use that land. The express grant of an easement is a transfer of an interest in land and therefore must be in writing, be signed by the grantor to comply with the statute of frauds, and meet all other formal requirements of a deed.