Ch3-5
An important effect of agglomeration economies on real estate is its impact upon market risk. Based on your understanding of this relation, which of the following statements is TRUE?
Properties located in a city with more advanced development of agglomeration economies will carry less risk and therefore suffer a smaller price decline during an economic downturn.
Nearly half of states in the U.S. use the sale of tax lien certificates to manage defaulted property taxes. The certificates are auctioned to the public at:
a discount from the face value of the property taxes due
According to the bid-rent model, which of the following individuals would be the one most likely to live closest to the central business district (CBD)? (Hint: Assume that work locations are located adjacent to each other at the center of the CBD)
a doctor at the city hospital who must walk to work
Real estate taxes represent the largest single source of revenue for a large portion of local governments. Most property taxes are applied in relation to the value of the property, or in other words, they are:
ad valorem taxes
An owner of land may involuntarily and unknowingly give up the rights to land. When a fee simple interest is conveyed to a new owner without a deed and without the consent or knowledge of the original owner, this is said to be conveyed by:
adverse possession
Cities such as New York are able to host a variety of complex industries because of the development of specialized resources that support their growth. When specialized resources emerge in response to demand from multiple industries, this is referred to as:
agglomeration economies
According to the bid-rent model, which of the following changes in the model's underlying assumptions would most likely result in a decrease in rents for properties closest to the central business district (CBD)?
an increase in the average traveling speed of the individuals commute
The location of competitors within a particular land use area may be influenced by whether the types of services and products are convenience activities or comparison activities. Which of the following is an example of a comparison activity?
apparel store
A major problem in buildings constructed prior to the early 1970's, which of the following environmental hazards commonly associated with insulation has been the focus of costly cleanups at many public buildings, especially schools?
asbestos
Within the framework of the bid-rent model, as rents increase with proximity to the central business district (CBD), the tendency is for development to:
build upward on lots within the CBD to allow multiple tenants
Which of the following tools of public land use control represents the earliest method of police power to regulate land use? (Hint: Standards for energy efficiency and sustainability are the most recent trends in the application of this land use control)
building codes
Providers of convenience activities find it profit-maximizing to disperse over the region of potential customers to the point where each establishment is equidistant from another and is separated by the minimum distance that allows sufficient customers to support each establishment. The resulting pattern of establishment locations is referred to as:
central place patern
Because a city's output capacities change slowly over time, it is important to understand the supply side (long-run) factors affecting urban growth. Which of the following would NOT be considered a supply-side factor that impacts a city's economic growth?
city's export activity
Six suburban office buildings have been constructed along six consecutive blocks in Roseland, New Jersey. This is an example of:
clustering
State and federal control of land uses has increased greatly over the past 40 years due in part to an increased awareness of environmental hazards. Which of the following federal environmental control laws was responsible for establishing the "Superfund" to finance emergency responses and cleanups of abandoned and unregulated waste dumps?
comprehensive environmental response compensation and liability act
Growth management laws at the state level require local jurisdictions to plan for and meet certain requirements. One such requirement prohibits local development unless adequate infrastructure, schools, police/fire protection, and social services have been put in place first. This requirement is referred to as the:
concurrency requirement
Eminent domain is the right of government to acquire private land, without the owner's consent, for public use, with due process and just compensation. The legal procedure for exercising the right of eminent domain is referred to 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
In order for a deed to be a valid conveyance of property, there must be an observable, verifiable transfer of the deed to the grantee. Typically this is accomplished when the grantor hands the deed to the grantee at closing. Which of the following basic requirements of a deed does this represent?
delivery
At the death of a property owner, property will convey either in accordance with a will or without a will. If a will dictates the distribution of the decedent's real property, the property is said to be:
devised
Once a document conveying an interest in real property is placed in the public records it is binding on the public, whether or not they make an effort to learn of it. Based on the common law tradition, this policy is known as the:
doctrine of constructive notice
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
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
A city's potential for growth or its susceptibility to decline is determined by a set of economic activities that the city provides for the world beyond its boundaries. Economists refer to this set of activities as a city's:
economic base
Zoning ordinances that tend to exclude lower income groups by large lot size, or that do not adequately provide low- and moderate-income housing are referred to as:
exclusionary uses
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?
expectations and reservations clause
While most real property in the United States is privately owned, government regulations limit private property use and therefore play an important role in the determination of property value. Proponents of government intervention argue that regulation is needed to address the unintended and unaccounted for consequences of one land user upon others, more commonly referred to as:
externalities
A developer plans to place a subdivision slightly outside the city limits in an area that is rapidly developing. However, the city claims to have the right to control urban development even in the proposed area. The right the city is attempting to invoke is referred to as:
extraterritorial jurisdiction
Although deeds can only deliver what a grantor actually owns, they can still vary in "quality." Which of the following types of deeds is considered to be the "highest quality" because it contains the full set of legal promises the grantor can make?
general warranty deed
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
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
In the state of Florida, for example, homeowners may qualify for a tax exemption in which up to $50,000 will be deducted from the assessed value of the property before taxes are calculated as long as the property owner occupies a home as the family's principal residence and has claimed residency within the state. This exemption is better known as the:
homested exemption
Negative externalities can diminish a property's value by imposing costs on the community at large. In order to offset this detrimental impact, economists advocate "internalizing" these externalities by implementing:
impact fees
After a structure is built, it is impractical for even a building expert to fully assess the quality of the construction and the safety hazards it may harbor. This is an example of which of the following problems that plagues private real estate markets?
incomplete information
A fishing company was formed in Juneau, Alaska. Over the next decade, a canning plant, a processing plant, and a boat repair facility also opened in Juneau. This is an example of:
industry economies of scale
Most research oriented universities have many different colleges, each with separate administrations, students, curricula, and facilities. However, the university continues to exist as a total unit because of:
industry economies of scale
The growth of the motion picture industry in Los Angeles, the petrochemical industry in Houston, the software industry in "Silicon Valley," are all examples of how the growth of an industry within a city can create cost advantages for future growth. Economists refer to this phenomenon as:
industry economies of scale
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
Based on your understanding of the effect of agglomeration economies in real estate, you would expect institutional investors to most favor real estate investments in which of the following areas?
large urban markets
The demand for access between land uses is considered the "gravity" that holds a city together. These relationships between land uses are commonly referred to as:
linkages
In efficient financial markets, unregulated competitive bidding should bring about the most productive use of an asset and the price paid for that asset should reflect fair value based on its usefulness. In real estate, this is not always the case. For example, there is no substitute for certain pieces of land which gives the owner a bargaining advantage in determining the value of the land. This feature of real estate markets is commonly referred to as:
locational monopoly
In contrast to base activities, local economic activities (or secondary activities) serve the local business and households that are recirculating the income derived through the city's economic base. In other words, we can distinguish local economic activities from export activities by thinking about whether or not the activity brings money into the city from outside sources. Which of the following activities is NOT an example of land use for local economic activity?
manufacturing center
Recognizing that only recent conveyances alter the status of title, states have established laws that set limits on how far back a title search must go. These laws are commonly referred to as:
marketable title laws
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
The most flexible method of land description, capable of describing even the most irregular of parcels, can be described as a very precise, compass-directed walk around the boundary of a parcel. This method is commonly referred to as:
metes and bounds
Understanding the revenue generating ability of the core export activities of a local area has important implications on the market value of real estate. When the income that these activities generate is re-spent within the community on other local goods and services, the community is benefiting through a:
multiplier process
A contemporary planning movement that explicitly advocates a traditional grid pattern of development designed to give pedestrian life priority over motor vehicles (e.g., including narrowed streets with houses close to the street and garage access through side alleys) is commonly referred to as:
new urbanism
When a zoning ordinance is revised, some existing land uses then fall outside the new zoning classification. These land uses are referred to as:
nonconforming uses
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 grantor to be legally competent and of legal majority age.
While several kinds of real property conveyances result from events beyond the control of the grantor, the majority of conveyances are voluntary through a deed. Which of the following is an example of a voluntary conveyance of real property with a deed?
patent
A traditional zoning ordinance includes all of the following EXCEPT:
performance standards
Traditional zoning regulations are criticized for often being too rigid in forcing uniform types of development. One proposed solution to this issue allows traditional zoning requirements to vary in exchange for an enhancement to the community, such as the construction of a park. This is more commonly referred to as a:
planned unit development
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: This type of deed may be used by a developer to convey certain lands of a subdivision to the local government through dedication.)
quitclaim deed
One of the main criticisms of property taxes is that the property tax of lower income households is higher than that of higher income households, as a percentage of their respective incomes. In other words, taxes are criticized for being:
regressive
Which of the following models of urban form is characterized by radial corridors or wedges representing the pattern of residential land use in relation to the location of the central business district (CBD)?
sector model
It was not until the late 1960's that land use controls moved to the forefront of public interest, as the belief that the environment was an endless and costless resource was replaced with the notion that the world was a closed system with limited space, air, water, and other resources. Environmentalists coined which of the following terms to refer to this new point of view?
spaceship earth
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
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 numbeer
In order for the board of adjustment to approve a variance, all of the following conditions must be met EXCEPT:
the condition is common to other parcels of land in the vicinity
Special assessments are levied to pay for specific improvements that benefit a particular group of properties. All of the following characteristics of special assessments are true EXCEPT:
they are considered ad valorem taxes
A public planning movement that explicitly advocates a cul-de-sac hierarchy of development, an automobile oriented society, and separated land use is more commonly referred to as:
traditional residential planning
Development taking place in rural areas well beyond the urban fringe is commonly referred to as:
urban sprawl
When land use controls impose exceptional hardship and loss of value, a relief mechanism must be provided. This relief is referred to as a:
variance
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
Given the following information, calculate the total annual tax liability of the homeowner. Market value of property: $350,000, Assessed value of property: 40 % of the market value, Exemptions: $2,000, State Millage Rate: 0.25 mills, County Millage Rate: 13.70 mills.
$1,925.10
A new faculty member at the local university pays $1500 per month to rent an apartment in the downtown area. She teaches on campus 3 days a week and works from home the remaining 2 days. On the days in which she must commute, given the heavy traffic congestion, it takes her 2 hours to commute from downtown to campus. According to the assumptions of the bid-rent model, what should this professor be willing to pay in rent per month to live near campus if her hourly wage rate is $25? (In your calculations, assume there are 4 weeks in a given month)
$2700
Given the following information, calculate the total annual tax liability of the homeowner. Market value of property: $350,000, Assessed value of property: 40 % of the market value, Exemptions: $2,000, Millage Rate: 33.95 mills.
$4,685.10
An individual works downtown and pays $600 per month in rent for an apartment located 10 miles from her office. She has calculated that she spends 30 minutes per day driving each way to the office and it costs her $4 per day in gas and lost productivity. Using the framework of the bid-rent model, how much would she be willing to pay for an apartment downtown, assuming a 20 workday month?
$680
Given the following information, compute the effective tax rate for the particular piece of property in percentage terms. Market value of property: $325,000, Assessed value of property: $250,000, Exemptions: $50,000, Taxes paid: $5,363.
1.65%
Using the following information, determine the location quotient for Motor City. Employment in Motor Vehicle Manufacturing within Motor City: 12,643; Total Employment in Motor City: 560,379; Employment in Motor Vehicle Manufacturing (nationally): 152,750; Total Employment (nationally): 106,201,232
15.7
Given the following information, calculate the effective tax rate expressed in mills. Market value of property: $280,000, Assessed value of property: 50 % of the market value, Exemptions: $2,000, Annual tax liability: $4,685.10.
16.73 mills
Using the following information, determine the location quotient for this industry. Percentage of employment in financial services industry within the local community: 15%, Percentage of employment in financial services industry for the entire U.S.: 4.4%.
3.4
Given the following information, compute the taxable value for the particular piece of property in dollar terms. Market value of property: $500,000, Assessed value of property: 85 % of the market value of the property, Exemptions: $50,000, Taxes paid: $8,250.
375,000
Given the following information, compute the property tax rate for the community in percentage terms. Total budget expenditures: $108 million, Total non-property tax income: $50 million, Total assessed value of all properties: $2 billion, Total exemptions: $550 million.
4.0%
Tax rates are usually stated in mills. Assuming the tax rate in percentage terms is 6.5%, convert this rate to mills.
65 mills
Based on the following information, determine the location quotient for Amusement City and whether this city has a competitive advantage in the amusement industry. Employment in Amusements and Recreation in Amusement City: 54,446; Total Employment in Amusement City: 578,477; Employment in Amusements and Recreation (nationally): 1,381,377; Total Employment (nationally): 106,201,232.
7.24; Yes, the city has a competitive advantage in this industry
An early model of land use is the concentric ring model of urban form developed by E.W. Burgess. Of the following land uses, which would be closest to the downtown area of the central business district (CBD) according to Burgess' model?
A zone of transition containing warehousing and other industrial land uses exists between the downtown area and the residential area.
The covenants in a deed are the most important differences among types of deeds. Which of the following covenants promises that the grantor truly has good title and the right to convey it? A. Covenant of seizin B. Covenant against encumbrances C. Covenant of quiet enjoyment D. Exceptions and reservation clause
A.) covenant of seizin
In the history of eminent domain, the Kelo v. New London, Connecticut decision of the U.S. Supreme Court in 2005 affirmed the possibility of a community being:
Able to use eminent domain to acquire property for private development if is serves public purpose even if the current land use is not blighted.
All of the following statements are true in describing the determination of just compensation EXCEPT: A. The value of the property is based on its highest and best use at the time. B. The value of the property is determined solely by its current use. C. The value is the amount that restores the property owner to a financial position equivalent to that existing before the property was taken. D. The value is the market value of the property if completely taken, or the total value of all financial loss if partially taken.
B
A city's economic base can be viewed in terms of a multiplier process, in which the money that is brought in through export activities is then respent within the city. Which of the following economic activities is the least likely to be considered a high-impact or high-multiplier economic base activity? A. Tourism B. Retirement C. Computer assembly D. Specialized medical services
C.) computer assembly
Externalities can play an important role in determining a property's price, either by adding value through positive externalities or by diminishing value through negative externalities. Which of the following is most likely to be considered a negative externality? A. Nearby parks and recreation facilities B. Quality neighborhood schools C. Public assistance facilities such as homeless shelters. D. Well-kept landscapes.
C.) public assistance facilities such as homeless shelters
The magnitude of an economic base multiplier depends upon the amount of money that "leaks" out through expenditures outside of the city limits. The economic multiplier tends to be higher with each of the following EXCEPT: A. A higher percentage of local household income is respent within the city. B. The larger the city is. C. The less isolated the city is from other cities. D. The more tourism a city brings in.
C.) the less isolated the city is from other cities
Which of the following clauses contained in a deed defines or limits the type of interest being conveyed? A. Recital of consideration B. Words of conveyance C. Covenant D. Habendum clause
D.) habendum clause