National
Bob the Bigot imposes a deed restriction on his property, which prohibits the sale of his home to anyone from France. Bob's deed restriction is: A. Voidable B. Void C. Enforceable D. Irrelevant
B (private controls) Illegal covenants are void (not voidable) and unenforceable. Discrimination based on national origin is illegal under fair housing laws; therefore, Bob's deed restriction is void and unenforceable. While Bob's restriction is arguably irrelevant since it is unenforceable, that answer choice is not the "best" choice because it expresses an opinion.
Larry sells property to David, and the deed contains the following covenants: seisin, quiet enjoyment, against encumbrances, and further assurances. Following the transfer, David discovers utility poles on the property, which lead to a nearby transformer. Larry failed to list the utility poles in the deed. Larry's failure to identify such encumbrances violates: A. The covenant of quiet enjoyment B. The covenant against encumbrances C. The covenant against grantor's acts D. None of the above
D (deed elements) A covenant against encumbrances is the grantor's guarantee that there are no encumbrances against the property except those specifically disclosed. The utility poles are indeed an encumbrance. However, the covenant against encumbrances is NOT breached by merely failing to list an open and visible encumbrance, such as a power line or drainage ditch. Open and visible encumbrances provide actual notice to purchasers. Therefore, such encumbrances need not be listed in the deed.
The state decides to widen a highway. It will be necessary to use six feet of private property on each side. The state's power to take this property is derived from: A. the police power B. zoning power C. condemnation proceedings D. none of the above
D (government rights in land) When the state takes property for the good of the public, it does so through the POWER of Eminent Domain. This is a separate from the police power. Like all government powers, eminent domain is derived from the Constitution. The PROCESS through which the state takes property from a person who refuses to give it up is a condemnation proceeding.
Who pays excise taxes? A. Grantor B. Grantee C. Broker D. Both A and B
D (tax aspects) An excise tax is a tax assessed for a service. For the grantor, excise taxes may include transfer taxes paid at settlement. For the grantee, excise taxes may include recordation taxes.
A quitclaim deed may be used to: A. Transfer ownership of a fee simple estate B. Transfer interest in a life estate C. Terminate an easement D. Any of the above
D A quitclaim deed may be used to: types of deeds) A quitclaim deed CAN be used to transfer any interest in real property from one party to another. It is normally used for the transfer of an interest that is less than fee simple.
If a seller deposits the deed with an escrow agent, but the seller dies before it is delivered to the purchaser, the transfer of title becomes effective on the date the deed was deposited into escrow due to the: A. parties' consent B. law of contracts C. parole evidence rule D. doctrine of relation-back
D If a seller deposits the deed with an escrow agent, but the seller dies before it is delivered to the purchaser, the transfer of title becomes effective on the date the deed was deposited into escrow due to the:
Which of the following is an example of the police power of government? A. escheat B. eminent domain C. taxation D. building codes
D government rights in land) The rights that a government withholds from private ownership are escheat, eminent domain, taxation and police powers. However, escheat, eminent domain, and taxation are explicit powers unto themselves, not derived from any other power. Of the listed choices, only zoning and building code restrictions are derived from the police powers of government.
Restrictive (negative) covenants cannot: A. be based on aesthetic considerations alone B. restrict the owner's lawful use of the land C. be enforced over a zoning ordinance, unless they are less restrictive than the zoning ordinance D. be too broad
D private controls) Private restrictions found in restrictive (negative) covenants in a deed must not be too broad or violate the law in order to be enforceable. Deed restrictions may be based on aesthetic considerations alone and do restrict an owner's lawful use of the land. However, deed restrictions may never be enforced over zoning ordinances unless they are MORE (not less) restrictive.
Zelda wants to move into a subdivision with her giraffe. Which of the following would best determine whether she could move into a home and keep her giraffe on the property? A. the Constitution B. zoning ordinances C. deed restrictions D. both 2 and 3
D public controls based in police power) Zoning ordinances determine property uses permitted, including the types of animals that my be kept. Deed restrictions could impose similar limitations. Therefore, Zelda must check both the local zoning and her deed restrictions.
All of the following are examples of insurable title defects except: A. Forged documents B. Undisclosed heirs C. Mental incompetence D. Unrecorded easements
D title defects) All of the listed items, except unrecorded easements are common insured title defects. Unrecorded easements and other rights of parties in possession are generally excluded, along with facts than an accurate survey would reveal, taxes, assessments not yet due or payable, zoning, and other governmental restrictions.
Deed restrictions are imposed by: A. developers B. zoning ordinances C. neighborhood associations D. all of the above
A (private controls) Deed restrictions are imposed on property by property owner. Of the choices given, a developer is the only property owner listed. Neighborhood associations can create rules to enforce deed restrictions, but these rules must be consistent with the deed restrictions.
Jon wants to build a house on his lot. The house will sit 20 ft. from the front lot line. The city ordinance calls for a minimum setback of 25 ft. May Jon build his house in the manner described? A. no, unless Jon receives a zoning variance B. yes, so long as Jon obtains spot zoning C. yes, so long as Jon receives a special use permit D. either 1 or 3
A (public controls based in police power) Conditional/Special use permits and variances are similar in function, but different in availability. Generally, variances can be issued to remedy case-specific hardships. Meanwhile, conditional use permits are used where no hardship exists, but the change will benefit the community as a whole. At face value, there appears to be no benefit to the neighborhood as a whole for this individual homeowner's addition.
When an owner of real property obtains a new mortgage to pay off an old mortgage, it is known as: A. refinancing B. foreclosure C. assumption D. subordination
A commercial property/income property) This is refinancing. In effect, the owner is selling the property to himself. He obtains a new loan on his own property and uses the money to pay off his old loan. This is very common during periods of falling interest rates.
he covenant in a deed where the grantor guarantees that she owns the property and has the right to sell it is known as: A. Seisin B. Against encumbrances C. Warranty forever D. Quiet enjoyment
A deed elements) A covenant of seisin is a promise by the grantor to the grantee that the grantor has the degree of ownership that the grantor claims she can convey.
Which of the following is NOT a cloud on title? A. A valid first mortgage B. A recorded contract for deed under which the buyer's rights have been judicially terminated C. A recorded option contract whose option period has expired D. A recorded mortgage that has been paid in full but a satisfaction has never been recorded
A title searches) This question is intended to distinguish between "cloud on title," "title defect," and "marketable title." Cloud on title is an indication of a potential, but uncertain defect that may be cleared. A valid first mortgage is certain to be a title defect (encumbrance) that prevents marketable title. Therefore, it is not a "cloud" because there is no ambiguity. The question is intended to illustrate these very fine distinctions and more importantly, to demonstrate the difficulty of the PSI exam.
What should Sally Salesperson do with an earnest money deposit check she received from Billy Buyer? A. Deposit it in her escrow account B. Give it to her broker C. Attach the check to the contract and file it D. Give it to the seller
B (escrow or closing) The deposit should be given to the broker as soon as the buyer's offer is accepted by the seller and a contract exists. Remember a salesperson does NOT have an escrow account; only the broker does.
he State of Order plans to condemn several pieces of inner city property in order to build a sports complex. This will displace many poor families. The State of Order then plans to lease the assembled property to three private citizens, who will operate the complex. Is this use of eminent domain consistent with the US Constitution? A. yes, but only if the lots are vacant B. yes, if just compensation is paid to the land-owners C. no, because there is no public purpose D. no, because condemned property cannot benefit private individuals
B (government rights in land) The state has the power to do this through its power of eminent domain. The construction of a sports complex could be considered in the public good because it would create taxes and offer employment. The US Supreme Court has upheld the taking of property for private use, while recognizing that states may impose different standards (including legislation which prohibits taking property for private use). Therefore, while states CAN take property for private use consistent with the US Constitution, they may also choose not to.
The police power includes all of the following EXCEPT: A. zoning and building codes B. condominium covenants, rules, and regulations C. government land-use regulations D. real estate licensing laws
B (public controls based in police power) Police power authorizes governments to enact zoning and building codes, land use regulations, and real estate licensing laws. Condominium covenants, rules, and regulations are private concerns.
Quincy sold Ralph a piece of property and transferred title to Ralph through a quitclaim deed. Later, a court determined that Quincy did not own the property. Which of the following is true in this situation? A. Ralph owns the property because the court action was after he bought after title transferred B. Ralph has no interest in the property C. Ralph has a good claim against Quincy for misrepresentation D. Both B and C
B (types of deeds) With a quitclaim deed, the grantor does not promise that he has any interest or rights to convey. Because Quincy had no interest, he had nothing to sell, and Ralph has no interest in the property. On these facts, Ralph has no basis for a suit because through the quitclaim deed, Quincy never asserted he had an interest at all.
The difference between an easement and a deed restriction turns on: A. one can "run with the land" and the other cannot B. one controls use and the other controls access C. one is created in a deed and the other is not D. both require a writing
B private controls) Both easements and deed restrictions can run with the land. However, an easement allows access to property while a deed restriction limits an owner's use of property. Easements can be created in deeds (by express grant, for example), and deed restrictions are, by definition, created in deeds. While a deed restriction must be written, an easement may be created by implication.
Zoning appeals boards are intended to satisfy: A. Equal Protection B. Due Process C. Takings Clause D. master plans
B public controls based in police power) In order to satisfy due process, most communities have established zoning appeals boards to hear complaints from individual property owners about local zoning ordinances.
Title passes from the grantor to the grantee after a deed is: A. Signed B. Acknowledged C. Delivered D. Recorded
C (deed elements) Legal title to real property conveys (passes) to a purchaser (grantee) when the deed is delivered by the seller (grantor) and accepted by the grantee. Acceptance is legally presumed in absence of evidence to the contrary.
What is a written instrument or thing of value that held by a disinterested third party, but must be handed over upon satisfaction of specified conditions? A. A bond B. A deed of trust C. An escrow closing D. An assignment
C (escrow or closing) The question describes an escrow closing. In an escrow closing, documents (deeds, mortgages, etc) and funds are held by a third party until closing is complete. Upon closing (and as specified in the purchase agreement), the escrow agent turns over the deed and funds to the proper parties.
The purpose of a recording act is to: A. Ensure title is marketable B. Raise revenue C. Create a local public record D. Protect property owners
C (recording acts) Recording acts create local public records that are available for public inspection and ensures public notice of all recorded information.
Pete purchased a home from Tony. He did not record his deed, but took immediate possession. Tony died a few months later and according to the terms of his will, the property was to go to his nephew, Bob. Bob knew his friend Angela was interested in buying a house. They inspected the property and Angela agreed to buy it from Bob. Angela recorded her deed. Who owns the property? A. Angela, because she recorded the deed B. Bob, because Tony died testate C. Pete, because he purchased it from Tony D. Pete, due to the relation back doctrine
C (recording acts) Remember that a deed need not be recorded to effectuate a valid transfer of title. If Bob and Angela inspected the property, they would have actual notice that Pete was in possession of the property (and should have questioned the ownership rights). There could be a fight in court if Angela sues, but the property legally belongs to Pete. Note that the relation-back doctrine applies where the grantor dies while the property is in escrow.
The Government's right to control private land is limited by: A. just compensation clause B. right to privacy C. rational relationships D. none of the above
C public controls based in police power) Constitutional limitations on the police power are contained in the due process, equal protection, and takings clauses of the Constitution. There is no such thing as the "just compensation clause." The right to privacy has nothing to do with real property. Due process consists of substantive and procedural Due Process. For example, Substantive Due Process requires that land regulations be rationally related to a legitimately stated objective (or within the scope of the police powers). Therefore, government power in this situation is limited by "rational relationships."
Zoning ordinances are established by: A. the Federal government B. state governments C. counties, towns, and municipalities D. all of the above
C public controls based in police power) Counties and towns establish zoning ordinances. In come cases, these decisions may be directed by either State or Federal regulations.