Transfer of Property

"and wife." (The "et" in Latin is " and;" "ux" means wife or spouse.)

"Et ux" written into a document means:

free and clear. (Joint tenancy properties are transferred to the surviving tenant free and clear of any debt owed by the deceased joint tenant.)

A brother and sister held title to a duplex as joint tenants. All their other business and personal properties were held separately. The sister, who was insolvent, died with outstanding debts owed to creditors. After her death, title to the duplex is held by the brother:

the grantor and grantee names alphabetically. (The names of both parties to the transfer are named and indexed accordingly.)

A deed is recorded and indexed based on:

does not have to be recorded to transfer title. (This question runs parallel to Question 19. A deed does not need to be recorded to be valid, but must be recorded to give constructive notice (answer selection A).)

A deed:

signed by the grantor. (A signature completes the execution. The transfer process requires delivery and acceptance to be complete.)

A grant deed has been executed once it has been:

valid. (A grant deed signed with an "X" is valid. However, it will require proof that the "X" was an intended signature by the grantor.)

A grant deed signed with an "X" is:

executrix. (The term for manager of a will is executor. As the wife is managing the will, the correct answer is the feminine form of this word: executrix.)

A husband nominates his wife to manage his will. Thus, she will function as an:

All of the above. (interest conveyed. signatures of the principal parties. designation of purchase price.) (All of these will differ between a contract and a deed.)

A land contract, when compared to a grant deed transfer, is different in the:

has sole ownership of the property. (The word "severalty" is similar to "sever." Thus, a person holding title to real property in severalty has sole ownership of a property.)

A person holding title to real property in severalty:

945500 (A probate court will only consider a subsequent bid that is raised by an amount equal to 10% of the first $10,000 ($1,000), plus 5% on the balance. Here, the accepted offer was $900,000. Added to this is $1,000 (10% of the first $10,000) plus $44,500 (5% of $890,000 - the balance of the original bid minus the $10,000). The minimum overbid is thus $945,500 (the original $900,000 bid plus $45,500).)

A property in probate is appraised at $960,000. At auction, the highest bid is $900,000. For the court to consider any other offer, it would have to be at least:

California. (Property is probated in the state where it is located regardless of the owner's residency or place of death.)

A resident of Nebraska who owns property in California dies while in Vermont. The probate procedures for this property are handled in:

110 (The transfer tax is based on the cash and new debt created in the transfer. In this question, the amount is $100,000 ($400,000 purchase price - $300,000 assumed note and trust deed). Determine how many times $500 factors into $100,000: $100,000/$500 = $200. Multiply this amount by the tax rate: $200 x .55 = $110.)

A residential duplex was purchased for $400,000. The buyer assumed an existing note and trust deed against the property for $300,000. The documentary transfer tax for this county is $.55 per $500 of consideration. The transfer tax is:

incompetence of any of the parties. (Only the American Land Title Association (ALTA) policy will give additional coverage, such as for encroachments and prescriptive easements. Incompetence of any of the parties is covered by both standard and extended policies.)

A standard policy of title insurance covers:

All of the above. (unrecorded liens. easements and liens on the property not revealed by the public records. rights of parties in possession.) "

A standard policy of title insurance does not cover:

the federal registry. (A title company performs a title search by viewing the records of the county clerk's office, county recorder and the secretary of state. A search of the public records of all entities is required to determine a property's chain of title and any relevant records for the buyer or seller (e.g. an income tax lien). A federal registry of any sort of least likely to contain information relevant to a property's title.)

A title company performs a title search by viewing the records of all except:

the grantee is nonexistent. (A nonexistent grantee is likely an unlawful attempt by the grantor to hide an asset. Thus, a deed which transfers ownership to a nonexistent grantee is void as the purpose is unlawful. Fictitious names frequently have a reasonable and legal purpose, and thus answer selections A and C cannot be correct. A deed is obtained through false representations is voidable, but not void at its inception.)

A transfer by deed is void when:

sheriff's sale. (A sheriff's sale will cause a writ of execution to be drawn and recorded.)

A writ of execution is issued for a(n):

alienation. (Alienation is a transfer of property, such as a sale. Thus, it is the opposite of acquisition, which is a purchase of a property.)

Acquisition is the opposite of:

The escrow officer cannot return the deed based on the seller's request. (The neutral escrow agent cannot unilaterally make a decision that affects either principal. Once the buyer has deposited money or the seller has deposited documents, approval by both parties is required before either can be released.)

After escrow instructions have been signed, the seller asks escrow to return the grant deed to them so they can have an attorney check it. What is the result of this activity?

transferring an estate. (Alienation of title refers to a transfer of ownership.)

Alienation of title refers to:

delinquent interest. (Delinquent interest is a seller expense and not prorated for the buyer.)

All of the following items contained in a closing statement are generally prorated, except:

mortgage interest. (The exception here is mortgage interest. The other three answer selections are related in that monies are accumulated in the impound account against an annual or semi-annual payment.)

All of the following may be impound requirements for a borrower, except:

partnership (An investment property owned by several people is described as a partnership.)

Although title to an income-producing property held by co-owners for profit is vested in the names of all the co-owners, it is collectively called a(n):

Creating a new deed. (A deed becomes valid once it is delivered. To transfer a property to another individual or back to the previous owner, a new deed is to be executed and delivered. Failure to do so may render the ownership ambiguous and create a cloud on title.)

Amelia deeds a property to Buster which is never recorded. How would Buster transfer title back to Amelia?

the location of property lines according to a formal survey. (Answer selection C is one of the extended benefits of an American Land Title Association (ALTA) policy.)

An American Land Title Association (ALTA) policy of title insurance goes beyond the protection afforded by a California Land Title Association (CLTA) policy in guarding against:

a written summary of documents shown in the title history of the property. (An abstract of title is a summary or digest of all transfers, conveyances, legal proceedings, and any other facts relied on as evidence of title, showing continuity of ownership and any elements of record which may impair title. It does not define the borders of a property or replicate the function of a preliminary title report. Further, as the abstract provides a written summary of documents related to the history of a specific property, it is not a generic, boilerplate form.)

An abstract of title issued by a title insurance company is:

Accept written instructions from the seller and buyer to change the price and terms without the approval of any broker. (When an escrow office is given instructions written and signed by both principals, the escrow officer does not need approval from the broker. Escrow officers cannot make decisions themselves nor resolve issues between the principals.)

An escrow officer may do which of the following when real property is being escrowed?

they have paid all taxes assessed against the property during their occupancy. (Only answer choice D fits the requirements for adverse possession. The period of possession must be at least five years, not two. This is why answer choice C is incorrect.)

An occupant who wishes to establish title by adverse possession needs to show:

The buyer can void the contract. (This is an example of a contingency in an escrow. This contingency favored the buyer and allowed them to void the sale since the loan balance was not as previously stated.)

An offer based on a $300,000 loan assumption was made and accepted. During escrow, it was discovered the loan was for $290,000, not $300,000. What is the most probable outcome?

By assessing the land and improvements separately, then multiplying the total by one tax rate. (The land and improvements are valued separately though the tax rate is the same.)

An owner of a home is required to pay property taxes. How are the property taxes determined?

Landscaping expenses. (Answer selection D is the only option that is not tax deductible for owner-occupied residences.)

An owner-occupied single family dwelling contains tax deductions under federal income tax laws related to all of the following, except:

bona fide purchaser. (A bona fide purchaser is a buyer who lacks knowledge the property they are buying is the subject of a sale to another buyer, and purchases the property for valuable consideration. A bona fide purchaser needs to have made a good faith effort to discover the existence of the previous transfer. If there is no reasonable way for the second buyer to have known and be put on constructive notice, they will be given title to the property when they record their deed.)

An unsuspecting buyer who acquires the ownership of real estate without actual knowledge or recorded notice of a pre-existing enforceable purchase agreement held by another buyer regarding the same property is referred to as a(n):

plottage. (Assemblage is the act of combining parcels of land to derive an increase in value, called plottage.)

Assemblage is closest to:

tax deed. (The answer to this question is contained in the language of the question itself.)

At a tax foreclosure sale, the winning bidder receives a(n):

an exact history of conveyances and encumbrances affecting title to a property. (See Question 17. This is another example of one question delivering the answer to a different question.)

Chain of title refers to:

notify the buyer and seller of the discrepancy and obtain written instructions as to which report to use. (Remember, only the principals can make decisions about transaction terms to escrow.)

During a sales escrow, the escrow officer receives two structural pest control reports. The escrow officer is to:

360 (Escrow works on a 30 day month multiplied by 12 months. Thus, for the purpose of calculating prorations, escrow considers there to be 360 days in a year.)

Escrow calculates prorations based on _________ days in a year.

Draft escrow instructions and the grant deed. (Escrow officers can draft escrow instructions and the grant deed. They are neutral agents for the principals to the escrow. Thus, they are not permitted to make decisions for the principals nor mediate between them.)

Escrow can legally prepare or do which of the following activities?

owes the buyer $250. (Remember, escrow calculates a month as 30 days, as stated in Question 2 so disregard the reference to the literal number of days in the month. The 16th day of the month is first day of the second half of the month and thus the seller owes the buyer precisely half of $500.)

Escrow closes on the 16th day of February (28 days). The seller receives $500 in rent for the month of February. The seller:

Any of the above. (buyers. sellers. third parties.) (A buyer, seller or third persons may execute escrow instructions.)

Escrow instructions can be executed by:

accept the deed as immediately effective. (For delivery of a deed to occur, the grantee needs to accept the deed as immediately effective, not effective at a later date.)

For delivery of a deed to occur, a grantor must intend to convey title and the grantee needs to:

housing is one of the largest expenses for consumers. (The answer is part of the question. Housing is the largest single expense for most consumers.)

Housing expenses are one of the largest denominators in the Consumer Price Index (CPI)since:

provide a new grant deed to the seller. (Once the deed is recorded, a new deed is needed to transfer the property to anyone else.)

If a buyer and seller decide to rescind a deal after the deed has been recorded, the buyer is to:

file an interpleader action. (When a dispute arises in escrow, the escrow agent can file an interpleader action with the courts asking for judicial resolution. The escrow officer is a neutral agent and cannot make decisions for the parties. Further, they have no authority to cancel an escrow or arbitrate on behalf of the principals.)

If a dispute arises during escrow between the buyer and seller preventing the close of escrow, the escrow agent may:

No holding period is required. (Once the state has acquired property through escheat, there is no requirement to delay disposing of the property.)

If the state acquires title to an owner's property by escheat, how long must it wait before disposing it?

within a reasonable period of time. (An escrow is to close within a reasonable time. In some instances this may be shorter than 30 days or longer than 90, and thus there is no specific time period prescribed. A prudent person is able to adjust the closing of escrow in accordance with a specific type of property, location or market condition.)

If there is no specific closing date named in the escrow instructions, escrow is to close:

quitclaim deed. (The quitclaim deed is the exception here. There are no guarantees or warranties with a quitclaim deed.)

Implied warranties are not included in a:

a debit to the buyer. "

In a buyer's closing statement, the selling price is listed as:

habendum. (Habendum is the clause that defines the nature of the estate being granted. This reiterates the importance of terminology. Answer selection A. seisin is the ownership and possession of property. Answer selection C. subrogation is the substitution of one person for another in a legal matter. Answer selection D. due on is a trust deed provision used by lenders to call the loan immediately due and payable on an owner's transfer of any interest in the real estate.)

In a deed, the clause that defines the nature of the estate being granted is the:

impound account items. ("Recurring" means costs that will repeat. In this question, only impounds are recurring.)

In an escrow statement, the term "recurring costs" is in reference to:

Delivery of a valid deed. (A more complete answer might say "delivery and acceptance" of a deed. However, given the choices offered, only D. Delivery of a valid deed is acceptable.)

In order to transfer fee title to a parcel of real estate, which of the following is required?

2000000 (Cost basis is the cost incurred to acquire and improve property and is used primarily for tax reporting and recovery of capital. Loans have no effect on a property's cost basis, and neither does a seller's list price.)

Marc purchased an apartment building for $2,000,000. The list price was $2,500,000. Marc put $500,000 down and acquired a new first trust deed for the difference. Marc's cost basis for income tax purposes is:

Delivery and acceptance is presumed with recording. (Look to Question 32 for a hint to resolve this question. Recording presumes delivery and acceptance since the recorded deed is mailed to the grantee.)

Mike executed a grant deed to Trevor and recorded it. Later, Mike changed his mind and sought to set the conveyance aside, claiming there had been no delivery to Trevor. Why was Mike unsuccessful in his effort?

the state superior court. "

Most real estate sales lawsuits are heard in:

$220.00 (Transfer taxes are charges against new money only. Since the transaction included the assumption of a $450,000 existing mortgage, the only tax charged is against the $200,000 down payment. The transfer tax rate in the county where the property is located is $0.55 per $500, which equals $1.10 per $1,000. Multiply $1.10 by 200, totaling $220 in transfer taxes paid on the sale.)

Mr. Black purchased a home for $650,000. The terms of the sale stated Mr. Black will make a down payment of $200,000 and assume an existing first trust deed for the balance of the purchase price. At a basic rate of $0.55 per $500, how much will the transfer tax be?

community property. (In California, when a married couple buys property jointly, it is presumed to be community property. This is known as the community property presumption.)

No matter how vested, all property acquired jointly by a married couple is presumed to be:

show a deed of trust with the seller as trustor. (On April 5th the seller will still be the owner and the trustor on the Federal Housing Administration (FHA) loan. Thus, answer choice B is the only correct answer.)

On April 1, 2015, an escrow agent opened a preliminary title report order for the sale of a property. The seller purchased the home in 1998, financing it with a Federal Housing Administration (FHA) loan on which they are currently making payments. A preliminary title report dated April 5, 2015 will:

a creditor of the grantor. (Creditors of a grantor may void a transfer by a gift deed. The grantor cannot gift the property to another in order to avoid debt held by a creditor.)

Property can be transferred without consideration with a gift deed. However, the transfer by a gift deed may be voided by:

grant deed. (A grant deed is valid whether or not it is recorded.)

Recording is not required for a:

Sara owns the property free and clear of the encumbrance. (Joint tenants receive title clean of any obligations made by the deceased partner. Further, joint tenants do not need to be married and joint tenancy is not limited to only two people.)

Sara and Marshal are joint tenants. Marshal obtains a loan from a lender secured by his interest in the property. When Marshal dies:

Mel will have a period of time to redeem the property. (With seller carryback financing, the seller (as the mortgage holder) will normally pursue a nonjudicial trustee's sale to foreclose on the loan. A trustee's sale provides the borrower 90 days to redeem the property by paying the default before the sale procedure begins.)

Seller Suzy provides carryback financing to Buyer Mel secured by a trust deed. Mel goes into default. Which of the following statements is true?

encumbrances which are created or become encumbrances after issuance of the policy. (Both the California Land Title Association (CLTA) standard and American Land Title Association (ALTA) policies provide coverage for all answer selections except C.)

The California Land Title Association (CLTA) standard policy and the American Land Title Association (ALTA) policy does not protect the insured against:

California Financial Code. "

The Escrow Law is contained in the:

escrow closes. (Real estate commissions are typically paid when the sale is complete, i.e., when escrow closes.)

The broker's commission is typically paid when:

are always different from one another. (The buyer's and seller's closing statements will always be different. The two principals will have opposite positions on a number of entries. For example, the sales price is a credit to the seller and a debit for the buyer.)

The closing statements the buyer and seller get from escrow:

bill of sale. (A bill of sale is used to transfer personal property.)

The instrument used to transfer title to personal property is the:

abstract of title. "

The least protection from a defect in a property's title is provided by a(n):

$740,000.00 (Depreciation can only be taken on the improvements (80%) portion of the purchase price. In this example: 80% x $750,000 = $600,000 (improvement portion of the original basis). $600,000 x 0.02 (2%) = $12,000 per year x 5 years = $60,000 (accrued depreciation). Then, subtract the accrued depreciation from the original cost basis. $750,000 (original cost basis) - $60,000 (accrued depreciation) = $690,000 (depreciated cost basis). Finally, add $50,000 for the new swimming pool improvement + $690,000 (depreciated cost basis) = $740,000 (adjusted cost basis).)

The original cost basis on a duplex purchased by Mr. Brown was $750,000. The tax assessor stated the breakdown of values to be 80% improvements and 20% land. Over the first five years, Mr. Brown depreciated the improvements at a rate of 2% each year. Mr. Brown then hired a licensed contractor to install a swimming pool at a cost of $50,000. Once the pool was completed, how much will the adjusted cost basis in the property be?

give evidence of the change in title or transfer of an interest in real property. (The primary purposes of a deed is to give evidence of a change in title. In order for the deed to provide constructive notice, it needs to be recorded. While answer choice C is correct, it is not the primary purpose of the deed.)

The primary purpose of any deed is to:

attachment, judgment, execution. (The order of events in a court proceeding are as follows: the attachment of the property though a lis pendens to ensure its availability if a judgment is awarded. Then, after judgment has been made, it is executed.)

The proper order of events in a court proceeding involving real estate is:

joint tenancy. (Time, title, interest and possession (TTIP) relate to joint tenancy only.)

The words "time, title, interest and possession" are most closely related to which of the following concepts:

All of the above. (holds harmless. reimburses. indemnifies) (Title insurance is a form of indemnity insurance by which a title insurance company holds harmless a person who acquires an interest in real estate against a monetary loss caused by an encumbrance on title that is not listed in the policy and the insured was unaware of when the policy was issued. The title insurance company then reimburses the insured for a later claim.)

Title insurance is the means by which the title insurance company __________ a person who acquires an interest in real estate against a monetary loss caused by an encumbrance on title.

the monthly mortgage payments. (Mortgage payments are the exception. The other three answer selections have similarities and may be added to the original cost basis of real property to arrive at an adjusted basis for federal income tax purposes.)

To arrive at an adjusted basis for federal income tax purposes, all of the following may be added to the original cost basis of real property, with the exception of:

be contained in a deed or a written agreement. (Restrictions, such as conditions, covenants and restrictions (CC&Rs) for a subdivision need to be recorded as a statement on the deed or as a reference to another recorded document such as the subdivision restrictions.)

To be valid, restrictions in a grant deed need to:

Standard policy. (This is a LEAST LIKELY question. A standard policy of title insurance is least likely to require the title insurance company physically inspect the property. Note that answer selection B. Abstract of title and D. Preliminary title report are not insurance policies. Answer selection C. Extended coverage policy suggests something greater than the standard policy, and thus would be more likely to entail a physical inspection.)

Under which type of title insurance policy is a title insurance company least likely to physically inspect the property?

sell real estate. (Answer selections B, C and D are not covered under real estate licensure.)

Unless otherwise licensed, a real estate licensee is prohibited from doing all of the following, except:

The original cost of a property. (Be careful! The unadjusted basis is the original cost of the property. One is generally asked to identify the adjusted basis, which is the original cost of a property plus improvements minus depreciation. This value is required for capital gains tax purposes. However, this question is looking for the unadjusted basis.)

What is meant by "unadjusted basis"?

Real estate tax. (Ad valorum is the tax assessor's valuation for real estate.)

What kind of tax is an ad valorem tax?

one-third to the spouse and two-thirds to the children. "

When a married person dies intestate leaving a spouse and two children, their separate property is delivered:

can be conveyed. "

When a property is vested with "alienable title," this means it:

the California Department of Veterans Affairs. (The CalVet sale is a land sales contract with the California Department of Veterans Affairs as the seller (vendor).)

When an eligible veteran purchases a home under the CalVet program, the grant deed is in favor of:

court approval is required. (A sale from an estate involves a court and will therefore require court approval.)

When the administrator of an estate sells a parcel:

abstract of title. (Note the words "chain of title" in the question, which is something that may also be covered in another question. The record of title is summarized in the abstract of title.)

When the public records have been examined, a written summary of the chain of title is known as a(n):

A tenant in common may not will their interest in the property to others on their death. (Answer selections A, C and D are true of a tenancy in common, as distinct from a community interest such as joint tenancy. However, a tenant in common may will their interest in the property to others on their death.)

Which is not true of a tenancy in common?

The property may not be used for religious purposes. (A deed restriction can prohibit religious use of a property but not discriminate against minorities or females.)

Which of the following deed provisions are enforceable?

A zoning or regulation dispute. (This is an EXCLUDED question. There are no title insurance policies that will insure against zoning or regulation disputes.)

Which of the following is excluded from any policy of title insurance?

A bill of sale. (This is an INSUFFICIENT question. The question asks which cannot transfer real estate. A bill of sale is used for personal property and thus cannot be used to transfer real estate.)

Which of the following is insufficient to transfer an interest in real estate?

Interest on a loan assumed by the buyer. (This is a LEAST likely question. Answer selection B. may seem like a tempting red-herring. Interest on an assumed loan will be a credit on a buyer's closing statement. The transaction didn't require new financing, but rather the assumption of an existing loan. Loan interest is paid in arrears. Thus, when escrow closes, the buyer will be credited for however many days there were between the due date of the previous payment and the close of escrow. All other answer selections will likely appear as a debit on the buyer's closing statement.)

Which of the following is least likely to appear as a debit on a buyer's closing statement?

A deed. (A deed is a written instrument which, when signed and delivered (executed), conveys title to real property from one person (grantor) to another (grantee). Listings are employment contracts. Mortgages are loan contracts. A land sales contract is a contract by name.)

Which of the following is not considered to be a contract?

It does not need to be signed by the grantor. (A grant deed is signed by the grantor and the records of the proof of identity are kept by the notary. This is another example of a question that offers potentially useful information that may be helpful when answering other questions on the state exam.)

Which of the following is not true regarding a notary acknowledgment contained in a grant deed?

The person possessing an unrecorded quitclaim deed who does not occupy the property. (The question speaks to constructive notice. Answer selection A refers to a quitclaim deed that is not recorded nor does the person occupy the property. Recording documents as well as physical possession of a property are both cause for someone to recognize and question an interest in property.)

Which of the following parties is in the weakest position against loss of property due to a claimof title by a third party?

An escrow officer. (Escrow officers are most similar to accountants in the nature of their assignment in a transaction. Appraisal work is more analytical and brokerage practice is more concerned with selling, people and relationships.)

Which of the following positions requires the most advanced knowledge of accounting procedures?

Once escrow has closed, the escrow agency changes from a dual agency to a separate agency of each principal. (Escrow officers act as dual agents during the escrow process and become a single agent to both after the close of escrow. While the escrow office owes an agency duty to both participants in the transaction, they are neutral and thus cannot act as an advocate or advisor for either.)

Which of the following statements is true concerning typical escrow procedures?

The broker's order to terminate escrow. "

Which of the following will not terminate an escrow?

$111.00. (Transfer stamps come in multiples of $0.55.)

Which of the following would be an incorrect amount for documentary transfer tax stamps?

The mutual agreement of the buyer and the seller. "

Which of the following would most likely result in the termination of a real estate sales escrow?

The effect of a "sale to the state" by the tax collector is to start the redemption period running. (The redemption period begins with the sale.)

Which of these is most correct concerning delinquent taxes and redemption rights?

Escheat. (This is a NOT question. Individuals cannot acquire property by escheat, which is possible only by the state government.)

Which of these is not a method by which an individual may take title to real property?

A principal in the transaction. (A principal in the transaction cannot perform as an escrow agent in the same transaction as they are not impartial or neutral.)

Which of these persons or entities may not engage in the escrow business?

No title policy covers all risks. (No title insurance policy can insure against all risk. Exceptions are included in all policies of title insurance.)

Which type of title insurance policy insures against all title risks?