Real Estate Prelicensing Unit 10
Sheryl, Mica and Emanuel purchase a property as joint tenants. Which of the following statements is TRUE? Choose only ONE best answer. A In the event that Mica dies, the property will automatically pass to Sheryl and Emanuel. B In the event that Mica dies, the property will pass to his heirs as determined by his will. C Sheryl, Mica and Emanuel may have different levels of ownership. D In the event that Sheryl wants to sell the property and the other owners refuse, she can sue to quiet title.
A)In the event that Mica dies, the property will automatically pass to Sheryl and Emanuel. You do not pass a joint to your kids. A will cannot defeat joint tenancy's right of survivorship. The property automatically passes to the other co-owners upon Mica's death. In order for joint tenancy to exist, there are certain unities - the property must be purchased at the same time, from the same source, with each owner having the same level of ownership. A suit for partition is used to force the sale of a property. The suit to quiet title is used to settle which party has the highest claim to the property and is used in adverse possession/easement by prescription claims, foreclosure and other cases where a title dispute needs to be settled. To force the sale of a property, an owner would file for a suit to partition (property divorce).
A title insurance policy is designed to protect the insured against events that: Choose only ONE best answer. A occurred before the policy is issued. B may occur after the policy is issued. C defects discovered by an attorney prior to settlement. D defects discovered by an attorney prior to closing.
A)occurred before the policy is issued. The correct answer is 'A' A title insurance policy covers against events that took place prior to settlement that were missed by the title search and attorney's opinion of title. It protects against past events. NOTE: An attorney that discovers title defects prior to settlement/closing must report them to the title insurance company. Insurance carriers will not cover known losses that occurred before the policy was issued. If you did not have flood insurance, and your house suffered a flood loss, when you obtain the new policy it will not cover the past damage.
An owner's title insurance policy: Choose only ONE best answer. A remains in force indefinitely. B renews annual at a lower premium. C terminates when the loan is paid off. D protects the owner from eminent domain.
A)remains in force indefinitely. The correct answer is 'A' An owner's policy remains in effect indefinitely, with the premium paid once at closing. A lender's policy decreases with principle payments. The maximum coverage of a lender's policy is the amount owed to the lender. Eminent domain is the right of government to take property for public good (expand a highway, address flooding issues, build a school), with the owner compensated for the fair market value of the property.
All of the following are legal requirements for the validity of a deed in North Carolina, EXCEPT: Choose only ONE best answer. A the grantee's signature. B words of conveyance. C delivery and acceptance. D property description.
A)the grantee's signature. The correct answer is 'A' Only grantors are required to sign the deed. All grantors, meaning all owners of the property, must sign the deed to transfer the property. Remember IGPWED. I get paid with every deal. A deed must be in writing, grantor must be competent, adequate property description, words of conveyance, execution - signing and delivery / acceptance.
A grantor promises to protect a grantee's title against all claims of superior title with the covenant of Choose only ONE best answer. A warranty and quiet enjoyment. B right to covey. C seisin. D specific performance.
A)warranty and quiet enjoyment. Warranty and quiet enjoyment state that there are no superior claims against the property. The covenant of the right to convey assures the grantor has the capacity to convey the property. The covenant of seisin warrants that the grantor has good title and has not contracted to sell the property to another. Specific performance is used to force the sale of a property, often when the seller defaults on a valid contract.
When a married couple owns real property as tenants by the entirety, and one spouse dies intestate, the surviving spouse's right to that property will be handled according to: I. the provisions made in the will. II. the right of survivorship. Choose only ONE best answer. A I Only B II Only C Both I and II D Neither I nor II
B)II Only Tenancy by the entirety provides protections to married couples. It has the right of survivorship, meeting the property transfers automatically to the surviving spouse when one spouse dies. A will cannot defeat tenancy by the entirety. The problem states that the spouse died intestate, meaning there is no will and even if there had been a will, it cannot defeat tenancy by the entirety. That is why option I is not correct.
Which of the following statements regarding deeds is TRUE regarding deeds? Choose only ONE best answer. A The grantor under a special warranty deed warrants that he will defend and protect the grantee's title against any claims. B The grantor under a quitclaim deed only conveys whatever interest he/she has in the property. C A trustee's deed transfers ownership after a sheriff sells the property under a writ of execution. D A bargain and sale deed is most often used deed when transferring real estate.
B)The grantor under a quitclaim deed only conveys whatever interest he/she has in the property. A quitclaim deed makes no warranties whatsoever. The grantor quits whatever claim they may or may not have to the property. A general warranty deed is the strongest and best deed, which offers the most assurances to the grantee. A special warranty deed is limited to the time that the owner actually owned the property. A trustee's deed transfers ownership when the foreclosure auction finalizes. A bargain and sale deed is similar to a quitclaim deed except that the grantor implies ownership of the property.
Which of the following statements is TRUE with regard to a mortgagee's title insurance policy? Choose only ONE best answer. A It covers the lender for losses that were discovered by the closing attorney prior to closing. B The premium is paid once and no additional premium payments are required. C The mortgagee's policy remains at the purchase price. D Covers defects caused by the mortgagor.
B)The premium is paid once and no additional premium payments are required. The mortgagee policy is the lender's policy, which is paid for by the buyer at the time of closing. It covers defects in the title that were not discovered by the attorney's title search and opinion on title. No additional premium payments are required. The coverage amount for the mortgagee policy declines with each payment that the borrower makes towards principal and will eventually terminate when final payment is received by the lender. The mortgagor's or owner's policy covers the purchase price and does not decline. Title insurance covers the sins of the past, not issues created by the current property owner.
A deed that does not contain any warranty other than implying that the grantor owns the property is best defined as a: Choose only ONE best answer. A limited warranty deed. B bargain and sale deed. C quitclaim deed. D trustee's deed.
B)bargain and sale deed. The correct answer is 'B' A bargain and sale deed does not contain any warranties to the buyer other than implying that the grantor has ownership rights to the property. A quitclaim deed has no warranties whatsoever and is very similar to the bargain and sale deed. A trustee's deed is used to transfer the property in an auction in a title theory state. A limited or special warranty deed warrants claims originating from the time the grantor owned the property.
Ralph Smith, a single man, owned a parcel of land, and died without a will. Subsequent to Smith's death, the courts must determine who should gain title to land. The court's determination would be in accordance with the State's laws regarding individuals who die Choose only ONE best answer. A testate. B intestate. C corporeal. D incorporeal.
B)intestate. When a person dies intestate it means that they did not have a will. The state will be involved in settling the deceased's estate. When a person dies testate, think last will and testament, they have a will. Corporeal and incorporeal rights have not been tested in modern times
What type of deed is typically used to convey property to a spouse following divorce proceedings? Choose only ONE best answer. A general warrant deed B quitclaim deed C trustee's deed D special warranty deed
B)quitclaim deed The correct answer is 'B' A quitclaim deed is used to transfer the property making no assurances whatsoever. Most property is transferred by general warranty deed, which makes the most assurances to the buyer. A trustee's deed is used to transfer the property after the successful completion of a foreclosure action. A special warranty need make assurances to the grantee that the grantor will be responsible for any defects resulting during the grantor's ownership.
A deed that warrants only those defects in a title that originate during the grantor's ownership is a Choose only ONE best answer. A general warranty deed. B special warranty deed. C quitclaim deed. D trustee's deed.
B)special warranty deed. The correct answer is 'B' A special warranty (or limited warranty) deed only protects a buyer from defects that originate during the grantor's ownership. A general warranty deed warrants the title for ever for past problems. A quitclaim deed makes no warranties whatsoever and is used to remove a cloud from the title or to transfer ownership after a divorce. A trustee's deed is used to transfer the property at the conclusion of a foreclosure auction.
When a married couple owns real property as tenants by the entirety, and one spouse dies intestate, the surviving spouse's right to that property will be handled according to: Choose only ONE best answer. A the provisions made in the will. B the right of survivorship. C Federal property transfer laws. D State property transfer laws.
B)the right of survivorship. Tenancy by the entirety provides protections to married couples. It has the right of survivorship, meeting the property transfers automatically to the surviving spouse when one spouse dies. A will cannot defeat tenancy by the entirety. The problem states that the spouse died intestate, meaning there is no will. A will cannot defeat tenancy by the entirety. State property transfer laws apply when someone dies intestate, without a will.
Which of the following types of deeds is most often used to clear up defects in a chain of title? Choose only ONE best answer. A General Warranty B Special Warranty C Quitclaim D Bargain and Sale
C) Quitclaim The correct answer is 'C' A quitclaim deed is used to clear defects on the title. A quitclaim deed makes no warranties whatsoever. A quitclaim deed and a bargain and sale deed are the most similar, however the bargain and sale deed implies ownership.
The excise tax required to be paid when a property sells for $300,000 with the buyer obtaining a $280,000 loan and has an assessed value of $320,000, is: Choose only ONE best answer. A $1,200 B $640 C $600 D $560
C)$600 The correct answer is 'C' Excise tax is calculated by taking the sales price and dividing by $500, then rounding up. The taxman is greedy. The assessed value is a distractor. Excise Tax: $300,000 ÷ 500 = $600
Trevor sold a lot that was 800' deep and 960,000 square feet to a neighbor that owned an adjoining lot along the same road. The neighbor's lot measured 1,000' X 700'. How many front feed did the neighbor own? Choose only ONE best answer. A 1,500' B 1,900' C 2,200' D 2,500'
C)2,200' The correct answer is 'C' Length X Width = Square Footage The first call number = Front Footage Square Footage ÷ Depth = Front Footage: Lot Front Footage: 960,000 square feet ÷ 800' = 1,200Total Front Footage: 1,200 + 1,000 = 2,200
Nancy owns a lot that measures 1,100' X 950'. She purchased an adjoining lot that measures 850' X 550'. Assuming she assembled the two lots into one, how many acres does she own? Choose only ONE best answer. A 23.9 acres B 10.7 acres C 34.7 acres D 43.9 acres
C)34.7 acres The correct answer is 'C' Length X Width = Square Footage There are 43,560 ft.² in an acre Lot one: 1,100' X 950' = 1,045,000 ft.²Lot two: 850' X 550' = 467,500 ft.²Total square footage: 1,045,000 + 467,500 = 1,512,500Acreage: 1,512,500 ft.² ÷ 43,560 = 34.7 acres
In North Carolina, which of the following elements is not required to form a valid and binding deed? Choose only ONE best answer. A Sane grantor B Written agreement C Monetary consideration D Delivery
C)Monetary consideration The correct answer is 'C' Money is not required. Consideration can be a mutual exchange of promises. Remember IGPWED. I get paid with every deal. A deed must be in writing, grantor must be competent, adequate property description, words of conveyance, execution - signing and delivery / acceptance.
Which of the following statements is TRUE about laws protecting buyers and sellers? Choose only ONE best answer. A The Connor Act extinguishes old claims that are greater than 30-years old. B The Marketable Title Act protects against 3rd party transfers when the deed is recorded. C The Statute of Frauds requires certain real estate documents to be in writing to be enforceable. D The Torren's Syst
C)The Statute of Frauds requires certain real estate documents to be in writing to be enforceable. The Statute of Frauds requires real estate sales contracts, options to purchase, right of first refusal, right of first opportunity and certain lease agreements greater than 3 years to be in writing in order to be enforceable. The Connor Act protects against 3rd party transfers by giving constructive notice of the change in ownership when the deed is recorded. The Marketable Title Act extinguishes old claims against the property after 30 years. The Torren's System protects against adverse possession claims. A suit to quiet title is often used to settle disputes about a property by asking the courts to determine which party has the highest claim and is often used in adverse possession claims.
Title to real property passes to a grantee under a deed with protection against third party transfers as of the date: Choose ALL answers that apply. A the grantors sign. B of closing. C of recordation. D of delivery.
C)of recordation. The correct answer is 'C' Title refers to the rights granted in a deed. The act of recording protects the title rights by giving constructive notice to third parties (Conner Act). When a deed is not recorded, the previous owner might be able to sell the deed to another party that does record. The new buyer would have the highest claim to the property. The deed between the first buyer and the seller would be valid but unenforceable. The deed between the seller and the second buyer, when recorded, would be valid and enforceable.
All of the following title defects are normally covered by an attorney's title opinion, EXCEPT: Choose only ONE best answer. A recorded mortgage liens. B recorded judgments. C recorded forgeries. D property tax liens.
C)recorded forgeries. The correct answer is 'C' An attorney will review recorded documents - the chain of title, search for mortgage liens, recorded judgments, and outstanding property taxes. A title opinion cannot determine if a deed has been forged. It is recommended that a buyer obtain title insurance to protect against forgeries.
A title abstract is properly performed: Choose only ONE best answer. A to insure good title. B conveys title when it is delivered to the grantee. C to summarize public records affecting title. D to guarantee good title.
C)to summarize public records affecting title. An abstract of title is a summary of the public record where the attorney lists out the chain of title, detailing each transfer of the property. The attorney researches property records to determine if the title is insurable. Title insurance is obtained by a buyer to protect against defects that the attorney may have missed and represent a potential loss to the buyer. A prudent buyer will hire an attorney to perform a title search and obtain both a lender and owner title insurance policy to protect against errors or unknown defects.
The party that places the winning bid at a foreclosure action would typically receive a Choose only ONE best answer. A general warrant deed. B bargain and sale deed. C trustee's deed. D special warranty deed.
C)trustee's deed. The correct answer is 'C' A trustee's deed is used to transfer the property after the successful completion of a foreclosure action. Most property is transferred by general warranty deed, which makes the most assurances to the buyer. A bargain and sale deed is very similar to a quitclaim deed, where it makes no warranties whatsoever but implies ownership. A special or limited warranty deed makes assurances to the grantee that the grantor will be responsible for any defects resulting during the grantor's ownership.
A purchaser of real property should record his deed of conveyance because only a recorded deed: Choose only ONE best answer. A as it makes the deed valid between the parties. B as it makes the deed legal in the eyes of the state. C as it registers the property for ad valorem and excise tax assessments . D as it gives notice to third parties.
D) as it gives notice to third parties. Recording a document gives constructive notice that a property conveyance has taken place (Conner Act). A valid deed must meet IGPWED - in writing, grantor is competent, property description, words of conveyance, execution and delivery/acceptance.
Property reverts to the state when a decedent dies intestate without any known heirs. This occurs because of the government's right of Choose only ONE best answer. A equity redemption. B dower reversion. C eminent domain. D escheats.
D) escheats. When a person dies without any known heirs, the property falls back to the State. Equity of redemption will be discussed in finance chapters. It is the right of an owner to redeem property prior to the foreclosure sale taking place. Dower is an outdated term that you will not see on the exam. Eminent domain is part of police power, where the government can take private property for the public good by paying the owner fair market value.
In order for a deed to be valid in North Carolina, it must be Choose ALL answers that apply. A acknowledged. B dated. C recorded. D delivered.
D)delivered. The correct answer is 'D' When determining if it deed is valid, is it important to remember IGPWED. I get paid with every deal. A valid deed must be 1) in writing, 2) grantor is competent, 3) property description is adequate, 4) there are words of conveyance, 5) execution - grantor has signed and 6) delivery and acceptance. It is not a requirement that a deed is recorded although the new buyer would not be protected against third-party transfers. A deed does not need to be acknowledged, meaning notarized, however must be acknowledged to be recorded.
All of the following may be discovered by a title search EXCEPT: Choose only ONE best answer. A the legal description of the property. B liens and judgments. C easements. D encroachments.
D)encroachments. The correct answer is 'D' Encroachments are discovered when the buyer obtains a survey. The remainder would be researched by an attorney prior to the issuance of an opinion regarding insurable title.
When a seller warrants in a deed that he will forever defend the title he conveys against anyone who makes a claim against it, the deed is a Choose only ONE best answer. A special warranty deed. B quitclaim deed. C bargain and sale deed. D general warranty deed.
D)general warranty deed. A general warranty deed provides the most assurances to a buyer. It protects the buyer against any claims resulting from the past. A special warranty deed only warrants for the period of time that the seller on the property. A quitclaim deed provides no warranties whatsoever. A bargain and sale deed implies ownership however makes no warranties.
A purchaser of real property should record his deed because only a recorded deed Choose only ONE best answer. A is valid between the grantor and grantee. B is legal in the eyes of the State. C registers the property for ad valorem and excise tax assessments. D gives notice to third parties of ownership transfer.
D)gives notice to third parties of ownership transfer. The correct answer is 'D' Recording a document gives constructive notice that a property conveyance occurred, which protects the owner from third party transfers (Conner Act). A deed that is not recorded is enforceable between the grantor and grantee, but not against third parties.
A description that is characterized by describing perimeter boundaries of a property is called Choose only ONE best answer. A the government grid survey. B a subdivision plat. C an informal reference. D metes and bounds.
D)metes and bounds. A metes and bounds property description describes the perimeter boundaries. It starts at the point of beginning and ends back at the point of beginning. The government rectangular survey system conveys property by referencing sections within a township. A plat map shows multiple lots in an area.
In a quitclaim deed, a grantor Choose only ONE best answer. A promises that his title is good and will be guaranteed against any future claims. B guarantees that his title is good for as long as he owned the property. C promises that he will "quickly defend any claims." D promises nothing regarding the condition of his titl
D)promises nothing regarding the condition of his title. The correct answer is 'D' A quitclaim deed provides no warranties whatsoever. It is often used to correct then issue with the deed, where the title is clouded. In a quitclaim deed the grantor quits whatever claim they may or may not have to the property. NOTE: In a divorce, ownership is transferred from one ex to the other via a quitclaim deed.
All of the following are requirements to claim property ownership by adverse possession in North Carolina, EXCEPT: Choose only ONE best answer. A actual possession. B exclusive use. C continuity of possession. D use with the true owner's permission.
D)use with the true owner's permission. The correct answer is 'D' It is important to remember the mnemonic H.I. O.C.E.A.N. which is: hostile, intentional, open, continuous, exclusive, adverse and notorious. The owner of the property does not need to be aware that the party claiming adverse possession has been using the property. A suit to quiet title is used to obtain the title to the property. With color of title, the claim can be made in 7 years. Color of title means a mistaken belief that the party claiming the property owns it. Without color of title, the claim can be made after 20 years.
