Prep Agent- Transfer of Property
The best way to discover a flaw in the recorded title to a piece of real property is by:
a search of title. A title search is a must before making any real estate purchase. Title searches ensure that the seller has the legal right to sell the property, and that there are no other encumbrances (such as liens, mortgages etc.) or property line issues that could prevent the buyer from taking full possession.
Which of the following would be used to clear a defect from the title records?
a suit to quiet title
Interim Occupancy Agreement
an agreement allowing a buyer to take possession of a property as a tenant prior to close of escrow.
Subordination clause
an agreement which states that the current claim on any debts will take priority over any other claims formed in other agreements made in the future.
To determine property taxes on a residence:
assess land and improvements separately, then multiply the total by one tax rate.
On a settlement statement, the cost of the lender's title insurance policy required for a new loan is usually shown as a...
debit to the buyer.
On a settlement statement, prorations for real estate taxes paid in arrears are shown as a:
debit to the seller and a credit to the buyer.
The title to real estate passes when a valid deed is:
delivered and accepted. All that's necessary to create a legal sale is for one party to make an offer the other accepts.
Intestate
dying without a will
On the sellers closing escrow statement, what is usually a credit to the seller?
the proration of prepaid taxes
What provides a buyer with the best assurance of clear, marketable title?
title insurance
Deficiency Judgment
unsecured money judgment against a borrower whose mortgage foreclosure sale did not produce sufficient funds to pay the underlying promissory note, or loan, in full.
The cost of title insurance is based primarily on:
value of property
The rules of escrow can be found in the:
Financial Code
What kind of lien is created as a result of a judgment, estate or inheritance taxes, the decedent's debts, or unpaid federal income taxes?
General Lien- attaches to all personal and real property of a person.
What would terminate a license to cross private property?
If the property was sold, any license given by the previous owner to cross the property would be terminated.
As one of the qualifications for a depreciation deduction for income tax purposes, the real property must be:
Improved. Owner is allowed to take depreciation deductions on his property, but in order to qualify for this type of Deduction, he must have made some kind of improvement or improvements to the property in question.
Which of the following would not be subject to property tax:
Intangible Personal Property- Not subject to taxation.
When an owner sues the government to get compensated is known as:
Inverse condemnation
When real estate under an estate for years is sold, what happens to the lease?
It binds the new owner. Tenancy for years is the common form of rental agreements and binds all future owners for the term of the lease.
Intestate succession
Occurs when someone dies without leaving a will, or leaving an invalid will so that the property of the estate passes by the laws of succession
Quitclaim Deed
Operates as a release; intended to pass title, interest, or claim which the grantor may have in the property, but does NOT contain any warranty of a valid interest or title in the grantor.
A "bill of sale" is used to transfer the ownership of what?
Personal Property
Which of the following items is often short-rated?
Premiums on an insurance policy.
Personal income taxes are structured using rates that are:
Progressive- meaning the more you make, the more you pay. It might also be termed "graduated."
What items can be deducted for income tax purposes on real estate which is held as personal residence?
Property taxes and mortgage interest. Allowable Deductions for personal residence include Interest, Taxes, and some Uninsured Casualty Losses.
Until the land contract is paid in full, what is the status of the purchaser's interest in the property?
Purchaser has equitable title in the property. Equitiable title indicates the right to use and possess and enjoy the equity gained.
Real property is "sold to the state by operation of law" immediately after real property taxes become delinquent. The owner-occupant:
Remains in undisturbed possession for a period of five (5) years. During those five (5) years, the Owner is capable of redeeming the Property by paying all back taxes plus any interest and/or penalties that are owed.
The cost basis of a single family residence can be adjusted for which of the following?
Room or patio addition
When a trust deed is sold, the parties often use an escrow in order to:
To ensure that the terms of the transaction are met.
Acquisition of Title
To gain possession of title. Opposite of "alienation"!
Warranty Deed
Type of deed where the grantor (seller) guarantees that he or she holds clear title to a piece of real estate and has a right to sell it to the grantee (buyer).
When an escrow agent holds the buyer's deposit money because of a dispute between buyer and seller, the escrow agent can release the funds when....?
Upon receipt of an arbitrator's award, Upon receipt of a court ruling, or Upon receipt of written instructions signed by both buyer and seller.
Quit claim action
Voluntary used to clear up minor title issues.
Joe conveys property to Vivian by delivering a deed. The deed contains five covenants. This is MOST likely a:
Warranty Deed
Littoral Rights
Water rights in regard to a body of waters that stand still such as a lake.
Riparian Rights
Water rights in regard to a moving body of water like a river or a stream.
In which of the following situations would property be reassessed at fair-market value?
When there is a change in ownership. Property is always reassessed upon sale.
"Boot" is a term used in a 1031 tax Exchange when which of the following happens?
When there is a difference between the equity of properties being exchanged.
A valid deed must contain:
A granting clause
An attachment is:
A lien
Lis Pendens
A pending notice of a lawsuit giving notice of a possible claim to the property. May affect title to real property based on the results of the lawsuit. Gives constructive notice that an action affecting a certain property has been filed in court
A standard title insurance policy insures against:
A recorded deed in the chain of title that was not properly delivered.
Abstract of Title
A written summary of the history of all conveyances and legal proceedings affecting a specific parcel of real estate; Which lists transfers of title, rights, and liabilities.
The seller conveyed a quitclaim deed to the buyer. Upon receipt of the deed, the buyer may be certain that:
All of the seller's interests in the property belong to the buyer. Quitclaim deeds have no guarantees beyond the signer's declaration that he or she is giving up all claims to the title.
A grant deed has been issued to Eric Ryba that reads, "Eric Ryba, et ux." What does "et ux" mean?
And wife.
When a judgment is fully recorded, subsequent buyers and innocent purchasers who are ignorant of the recording have received:
Constructive notice- attaches once a document is recorded. Once recorded, subsequent buyers will be deemed to have received "Constructive Notice" regarding the document and its effect on the property in question.
The "recording" of an instrument gives:
Constructive notice: Attaches once a document is "recorded". Once recorded, subsequent buyers will be deemed to have received "Constructive Notice" regarding the document and its effect on the property in question.
To alienate title to property one must...
Conveys title
General Lien
Covers all of a debtor's property/ all property. This is both the real property and personal property the individual owns, not just one specific real property (like in the case of a foreclosure).
On a "closing statement" in a typical real estate transaction, the buyer's earnest money deposit is reflected as a:
Credit to the buyer and a debit to the seller. Because the buyer has already paid the earnest money and doesn't need to bring it to the table to close the transaction, it is listed as a credit on their closing statement.
In a settlement statement, how will a proration of prepaid water, gas, and electric charges be reflected?
Debit to the buyer and a credit to the seller
Which lien has priority in a foreclosure sale?
Delinquent property taxes. Taxes take priority over all other liens.
What is the main duty of a county assessor?
Determine the amount of tax to be paid by property owners. The assessor is a local government official who estimates the value of real property within a city, town, or village's boundaries.
The holder of a life estate may do all of the following to his holding except:
Devise it. (gift it, or give it away). They may mortgage it, rent it, or sell it.
The owner of a hardware store who owned real property where it was located, sold the real property and leased it back for a long term. For income tax purposes, the seller may:
Deduct 100% future rent. In a Sale-Leaseback the Seller becomes a Tenant, thus allowing the Seller to deduct all of his future rent payments as business expenditures.
What can't be added to the original cost basis of a property to arrive at an adjusted basis for federal income tax purposes?
Mortgage payments
A deed does not have to....
...be recorded to transfer title. Deeds are considered "officially executed" when signed by the Grantor.
If a person buys property in a California land project and then changes his mind, he can obtain a refund of his money without a specific reason within how long
A Buyer in a Land Project has fourteen (14) days to rescind his purchase.
If a condominium owner lives in his condo what would be deductible for federal tax purposes?
Any interest that he pays on a mortgage for his share of the common areas.
For federal income tax purposes, capital expenditures for improvements:
Are added to the "Cost Basis" of the property and then depreciated.
When a dam broke, the flow of water cut away a strip of land from the riverbank. This would be known as:
Avulsion: rapid and forceful washing away of land by water.
For homestead to be effective, when must a homeowner assert those rights?
Before any court judgments are recorded. In bankruptcy proceedings, a judgment is first "rendered" before it is "recorded" and made final. Homestead rights may be asserted up to that last moment.
Title to personal property is transferred by:
Bill of sale
Under federal income tax law, the "basis" of real property is the property's:
COST (Basis, cost, cost basis, and purchase price)
The "unadjusted basis" of a taxpayer's residence would be:
COST: For federal income tax purposes in determining gain or loss on real property, the term "unadjusted basis" most nearly means "original cost."
Earthquake fault maps used for disclosure purposes are produced by the:
California State Geologist
Which of the following is specifically a history of conveyances and encumbrances?
Chain of title- the sequence of historical transfers of title to a property.
Who is usually required to report the sale of a single family residence to the Internal Revenue Service?
Escrow
Whenever there is a real estate sales transaction, it must be reported to the Internal Revenue Service by the:
Escrow- reports to the IRS on the respective sales transactions. They are the ones writing the checks.
The term "boot" would probably be considered in connection with:
Exchange- Commonly used in discussing the tax consequences of a Section 1031 tax-deferred exchange.
Alissa died intestate, leaving a large estate and no heirs. What is the most likely disposition of her property?
It will "escheat" to the state if no claims are made by possible heirs
Real property taxes become a lien on:
January 1st.
Which of the following would cause a grant deed to be invalid at its inception:
Legal incompetence of the grantor
Chain of Title
The list of previous owners of conveyance from whom the present real estate owner derives his or her title.
When using a grant deed, title transfers at the time of:
Signing by the grantor. Grant Deeds are considered officially executed when signed by the Grantor.
When buying a home, buyers prefer which of the following policies?
Standard: The basic form of coverage used in California, is known as the California Land Title Association Standard Coverage Policy Form.
Stephen, his nephew, and his niece are joint tenants. Stephen sells his interest to his sister, and then his nephew dies.
Stephen's niece and sister are tenants in common. All tenants in common hold an individual, undivided ownership interest in the property.
Pest control reports which contain information concerning wood destroying insects are kept on file with the:
Structural Pest Control Board.
A clause on a trust deed where the lender's right shall be secondary to a subsequent trust deed:
Subordination clause
A person agrees to sell a property for $500,000. The buyer gives the seller $150 as valuable consideration for a six-month option.
The $150 is valuable consideration if the seller accepted it.
Which policy covers improvements on Adjoining land?
The Extended Insurance Policy
a Deed Requires:
The Grantor to be Legally Competent, it must be Delivered and accepted and Contain a Granting or Action Clause.
What may appear on a closing statement as a credit to the buyer?
The balance of an assumed loan. It is money the buyer doesn't need to bring to the table at closing, so it's a credit to the buyer on the closing statement (even though it's a debit to the buyer's personal accounts).
"closed" escrow means..
The closing process has been successfully completed.
A Writ of Execution
The court order to sell property to satisfy a judgment.
The purpose of the assessment roll, as compiled by the assessor's office is:
The establishment of the tax roll. The assessment roll serves as the tax base.
Insurance policy
The promise of reimbursement for damages for the promise to pay.
The two requirements which governmental units must observe in the exercise of the power of eminent domain are:
The proposed use must be public, and just compensation must be paid to the owner
An apartment house was purchased for $180,000. At the time of purchase, it had a fair market value of $200,000, and an assessed value of $140,000. The basis of the property for federal income tax purposes would be:
The purchase price of $180,000
David, a life tenant, sells his estate to Joe. David dies. Title belongs to:
The remainderman. A life tenant is allowed to sell their interest in a property. Once a life tenant sells the real estate, the buyer of the property should know that the purchase expires when the life tenant dies.
Earnest Money Deposit (EMD)
The security money deposited by the purchaser at the time of signing the earnest money or sales contract.
Escheat
The state takes property upon an owners death if there is no will & no heirs exist. Which is what will happen if no heirs come forward and establish a valid claim within the 5 year period.
Avulsion
The sudden tearing away or removal of land by action of water.
The "marginal tax rate" is defined as:
The tax rate which is applied to the next dollar earned
Cloud on Title
There is something affecting the title that may prevent its transfer. The discrepancy between the two names could cause a cloud on the title.
Specific Lien
a lien against a certain parcel of real estate. Granted only with respect to a particular asset.
Turn-key
a property that is ready for occupancy, and ready to be put into immediate use- meaning it is equipped with, or includes, everything needed to operate it.
Voluntary alienation refers to:
a sale or gift. Transfer of real property through one's intentional actions.
When the grantor does not wish to convey certain property rights, he or she:
may note the exceptions in the deed of conveyance.
