Real Estate Fin 355

If we desire to classify land by its use, land that does not include any improvements to the land would be categorized as:

"raw" land.

Using the I/RV formula, if a property's expected annual net operating income is $89,100 and its current market value is $1,060,000, the property's implied capitalization rate is:

8.4%.

Unlike other forms of evidence of title, title insurance guards the grantee against certain risks. However, there are a number of important limits to title insurance. Which of the following is an example of the limits to title insurance?

It does not protect the grantee from the threat of physical damage to the property.

The term real estate is used in three fundamental ways. When real estate is defined as a bundle of rights associated with ownership and the use of the site and improvements, it is being viewed as purely a(n):

Personal Asset?

Commercial real estate assets are unique when compared to other goods due to their heterogeneity, immobility, localized nature, illiquidity, and market segmentation. Based on your understanding of these characteristics, which of the following statements best describes what is meant by immobile markets?

Properties are difficult to physically move from one location to the next.

A law requiring any contract conveying a real property interest to be in writing in order to be enforceable is a modern application of the:

Statute of Frauds.

Which of the following is an example of an affirmative easement appurtenant?

a driveway easement across one parcel to another

Which of the following is an example of a negative easement appurtenant?

a scenic easement used to restrict construction on adjacent parcels so as to preserve a valued view

An easement is the right to use land for a specific and limited purpose. Which of the following easements involves a relationship between two parcels of land, is a permanent feature of both parcels involved, and gives the dominant parcel some intrusive use of the servient parcel?

affirmative easement appurtenant

The required rate of return that an individual or company expects from a real estate investment is determined in the:

capital market for both debt and equity.

Considered a fundamental pricing metric in commercial real estate markets, the ratio of a property's annual net operating income to its market value is more commonly referred to as a(n):

capitalization rate.

An example of a real estate asset that trades in the private debt market is a(n):

commercial mortgage.

By the power of eminent domain, the government can take private property for public purpose through due process and with just compensation. The process of exercising this power is known as:

condemnation.

Which of the following covenants in a deed promises that the property will not be claimed by someone with a better claim to title?

covenant of quiet enjoyment

The covenants in a deed are the most significant differences among types of deeds. Which of the following covenants promises that the grantor truly has good title and the right to convey it?

covenant of seizin

When identifying an easement appurtenant, the parcel of land that benefits from the right to use the land in question is referred to as the:

dominant parcel.

While the vast majority of conveyances of real property are private grants through a deed, there are multiple ways in which voluntary conveyance can occur without a deed. Which of the following types of easements can occur if a landowner gives an adjacent landowner permission to depend on her land? (E.g., A landowner may give a neighbor permission to rely on sewer access or drainage across his or her land.)

easement by estoppel

Jayden owns 150 acres between a highway and a public beach. The state would like to construct a road directly from the highway to the beach across a number of beach front properties including Jayden's. The space for this road would be considered a(n):

easement in gross.

When a landowner subdivides land in a way that causes a parcel to be landlocked, it is possible for property to be voluntarily conveyed without a deed. If the landlocked parcel has no prior path of access, which of the following types of easements will automatically be created to make the land useful?

easement of necessity

The permission to use land for a specific and limited purpose is more commonly referred to as a(n):

easement.

Consider the following excerpt from a sample deed: "The Seller is lawfully seized in fee simple of the above described property, less and except a prior reservation of all oil, gas and mineral rights in the property conveyed." The underlined portion of the preceding statement represents which of the following basic requirements of a deed?

exceptions and reservations clause

Which of the following types of ownership estates is the most complete bundle of rights, and therefore carries the greatest value?

fee simple absolute

When viewed as a tangible asset, real estate can be defined as the land and its permanent improvements. Improvements on the land include:

fences.

Consider the following excerpt from a sample deed: "The Seller covenants with The Buyer that it has a good right to convey, that the property is free from all encumbrances, and that it forever warrants to defend all of the property so granted to The Buyer against every person lawfully claiming the same." Based on your understanding of the relation between a deed's covenants and the type of deed being conveyed, which type of deed is being conveyed in the statement above?

general warranty deed

Which of the following types of liens is automatically superior to any other lien?

government property tax and assessment lien

Initially used to survey the Old Northwest Territory (Ohio, Indiana, Illinois, and Michigan) in 1789, which of the following methods of land description relies on townships and section numbers as essential units of identification?

government rectangular survey

Consider the following excerpt from a sample deed: "The Seller, for itself and its heirs, hereby covenants with the Buyer, its heirs and assigns forever, that the Seller is lawfully seized in fee simple of the above described property." The underlined portion of the preceding statement represents which of the following basic requirements of a deed?

habendum clause

Each commercial property has unique features, whether it is its age, the building design of its structures, occupancy or its location. As such, real estate markets consist of assets that are considered:

heterogeneous.

The national government can have a significant impact on the value of real estate through:

income tax policy.

A primary determinant of the feasibility of new construction is the relationship between the current level of market value and the cost of new construction. We would expect the supply of properties to:

increase if current market values are greater than the cost of construction.

A fixture is an object that formerly was personal property but has become real property. Of the following four rules for determining whether an object has become a fixture, which is the most dominant (i.e., if there is a conflict, which rule prevails)?

intention of the parties

Nonpossessory interests (i.e., bundles of real property rights that do not include possession) include all of the following EXCEPT:

leasehold interests.

Suppose a homeowner lives adjacent to an expanding university that is interested in acquiring her residence for future university use. To allow the homeowner to continue to retain all rights of exclusive possession, use, and enjoyment during her lifetime, yet provide the university with the right of disposition, the university may want to purchase a(n):

legal life estate with remainder interest.

Primarily through land use controls and property tax policy, which of the following branches of government has the largest influence on real estate values?

local government

Following the completion of a contract for construction or other improvements to a property, a contractor has the right to establish a lien on a property as protection against the case that a property owner defaults on the construction contract and/or fails to pay for the completed work. This lien is more commonly referred to as a(n):

mechanics' lien.

One of the most important requirements of a land description is for it to be unambiguous. Which of the following methods of property description is the most unambiguous and is appropriate for use in legal documents?

metes and bounds

A contract for sale of real estate usually calls for the seller to provide evidence of title as a requisite to completing the sale. Today, the predominant medium through which a seller meets this requirement is by providing:

only a title insurance commitment.

A deed is a special form of written contract used to convey a permanent interest in real property. Unlike most contracts, a deed requires:

only the grantee to be legally competent and of legal majority age.

The actions of local, state, and federal governments affect real estate values

primarily through user markets. primarily through the capital market. primarily through their taxation policies.

Considered a "questionable conveyance of title" by most courts, which of the following types of deeds is worded to imply no claim of title, but rather only convey what interest the grantor actually has? (Hint: A developer may use this type of deed to convey certain lands of a subdivision to the local government through dedication.)

quitclaim deed

Tom recently purchased a home in a residential subdivision. While mowing his lawn and planting new shrubs for the first time since moving in, Tom's neighbor came outside to inform him that he was violating one of the subdivision's rules which required the use of a specific professional lawn service for all property landscaping needs. Assuming this requirement can be enforced by the subdivision authority, this would be an example of a(n):

restrictive covenant.

When identifying an easement appurtenant, the parcel of land that is constrained or diminished by the easement is referred to as the:

servient parcel.

The description of land in a deed must be unambiguous. All of the following would be considered acceptable legal descriptions of land EXCEPT:

street address.

Most often used in the description of urban property, which of the following methods of land description contains information regarding the location of various easements and may even contain a list of restrictive covenants?

subdivision plat lot and block number

Capital markets can be divided into two broad categories: equity interests and debt interests. Equity investors in real estate expect to earn a return on their investment through:

the collection of rent and selling or refinancing the asset.

A principal definition of real estate is as a bundle of rights associated with the possession, use, and disposition of property. Each of the following is a fundamental characteristic of property rights EXCEPT:

they apply only to tangible assets.

Real estate is defined as land and its permanent improvements. Which of the following is an example of an improvement to the land?

water and sewer systems

The type of deed offered by the grantor is communicated through a phrase such as "does herby grant, bargain, sell and convey unto . . ." This clause is referred to as the:

words of conveyance.