RE 602 Final Part 1

Which of the following federal environmental control laws was responsible for giving the EPA authority to control discharges of pollutants into waters of the United States?

Clean Water Act

Participants in the capital markets can be divided into four main categories: private equity, public equity, private debt, and public debt. A limited liability corporation's ownership of real property occurs in the:

Private equity market

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.

Commercial real estate assets are markedly different from assets in other financial markets 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 highly segmented markets?

Properties can be grouped based on classifications such as property type, location, investor type or price.

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.

A recent college graduate has obtained employment at a major financial institution in a big city. Since she just graduated, she has decided to continue to rent her college apartment in the suburbs and make the daily commute to the city for work. She currently pays $1,000 per month to rent an apartment in the suburbs. She works at the bank 5 days a week and it takes her 1 hour to commute from her home to her office. According to the assumptions of the bid-rent model, what should this recent grad be willing to pay in rent per month to live in the big city if her hourly wage rate is $20? (In your calculations, assume there are 4 weeks in a given month.)

$1,800

Given the following information, calculate the total annual tax liability of the homeowner: Market value of property: $537,500 Assessed value of property: 60 % of the market value Exemptions: $2,500 School District Millage Rate: 29.25 mills County and Township Millage Rate: 5.75 mills

$11,200.00

While property tax rates can vary across geographic regions, ad valorem taxes are typically levied at rates between _____________

1.0 to 4.0 percent

Given the following information, compute the property tax rate for the community in mills. Total budget expenditures: $250 million, Total non-property tax income: $150 million, Total assessed value of all properties: $5 billion, Total exemptions: $900 million.

24.3 mills

Using the following information, determine the location quotient for Springfield: Employment in Aerospace Products within Springfield: 30,044 Total Employment in Springfield: 208,054 Employment in Aerospace Products (nationally): 474,905 Total Employment (nationally): 106,201,232

32.29

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%.

The investment grade property market is typically targeted by all the following groups of investors EXCEPT: - pension funds. - Listed Equity REITs - Individual Investors - All of these are correct

All of these are correct.

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.

An important distinction is the difference between an easement and a license. All of the following characteristics pertain to a license EXCEPT:

a license is enduring.

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

Of the following land uses, which would be closest to the downtown area of the central business district (CBD) according to the concentric ring model of urban form?

a zone of transition containing warehousing and other industrial land uses exists between the downtown area and the residential area

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 it serves public purpose and the current land use is blighted.

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 individual's commute

The City of Baltimore installed a new water main along a main roadway. The city then decided to charge the property owners along this main roadway a proportional cost of the new water main. If a property owner refuses to pay their proportional share of the cost, the city may file a(n):

assessment lien.

Which of the following boards for administration of the zoning ordinance is responsible for reviewing petitions and variances?

board of adjustment

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

Real estate values derive from the interaction of three different sectors in the economy. Which of the following sectors serves to allocate financial resources among households and firms requiring funds?

capital market

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.

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 pattern.

Property rights created from legally enforceable marriage have a clear implication for real estate transactions. Which of the following marital property rights gives a spouse a one-half claim on all property acquired "from the fruits of the marriage?"

community property

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 recirculated within the city. Which of the following economic activities is the least likely to be considered a high-recirculation or high-multiplier economic base activity?

computer assembly

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

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.

Requirements to create a joint tenancy are quite restrictive. They require the presence of the "four unities," which include all of the following EXCEPT:

condition.

The habendum clause defines or limits the type of interest being conveyed. The legal tradition recognizes certain words and phrases as signals of various real property interests. For example, the use of the phrase, "as long as," can communicate which of the following types of interests?

conditional fee with reverter

Which of the following types of direct co-ownership combines single person ownership with tenancy in common?

condominium

Services and products that users seek to obtain from the closest available source are more commonly referred to as:

convenience activities.

Which of the following forms of co-ownership, historically used for apartment buildings, is not considered a form of true direct co-ownership, but rather qualifies as a proprietary corporation?

cooperative

Which of the following covenants in a deed promises that the property is not burdened by liens, easements, or other limitations, except as noted in the deed?

covenant against encumbrances

When entities such as roadways and utilities in subdivisions become the property and responsibility of the local government to maintain, this process is more commonly referred to as:

dedication.

In considering the acquisition of real property, it is important to remember that certain factors may limit ownership rights. Which of the following is an example of a situation in which ownership rights can be fully removed from the property?

defaulted lien

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

The expected stream of rental income is capitalized into value by converting expected future cash flows into present value through a process called:

discounted cash flow analysis.

Real estate can be viewed as a bundle of rights. How these bundles of rights are grouped together determines the type of ownership interest an individual (or group of individuals) can stake claim to. In an ordinary life estate with remainder interests, which of the following rights is detached from the traditional bundle of rights that typically defines a fee simple absolute interest?

disposition

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

Since an easement is a non-possessory interest, it is important to understand the right of disposition that is associated with it. In which of the following types of easements is the right of disposition claimed as part of the easement?

easement in gross

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.

Proposals for large-scale developments must be accompanied by studies that analyze the project's effect on the surrounding area. This requirement is referred to as the:

economic and environmental impact requirement.

A city's potential for economic and population 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.

The right of government to acquire private property, without the owner's consent, for public use in exchange for just compensation is referred to as:

eminent domain.

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

equity REIT.

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

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.

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

In a deed, the person or entity conveying the real property interest is more commonly referred to as the:

grantor.

All of the following are modes of conveying real property voluntarily without a deed EXCEPT:

implied easement.

Based on your understanding of the supply and demand dynamics of user/space markets, an increase in demand for leasable space would, all else equal, cause which of the following effects?

increase equilibrium rental rates and increase property value

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):

intangible asset.

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

Which of the following would be considered a tangible asset?

land

In supporting their local economic base, cities may at times incur expenses from doing business with entities located outside of their local community (e.g., in cities with high tourist activity, souvenirs are likely to come from low-wage countries). These expenses are an example of _____________

leakages

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

license.

A lien is an interest in real property that serves as security for an obligation. Which of the following is an example of a general lien?

lien arising from a court judgment unrelated to ownership of the property

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.

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

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 least likely to be an example of land use for local economic activity?

manufacturing plant

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.

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.

Real estate is property, which can be either a tangible or an intangible asset. Which of the following would be considered an intangible asset?

mortgage

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.

Deeds are a special form of contract that serve as the primary means for conveying interests in real property. Unlike most normal business contracts, a deed requires:

only the grantor to perform.

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

Traditional zoning regulations are criticized for often being too rigid in forcing uniform types of development. One proposed solution to this issue relaxes traditional zoning requirements to allow a specific proposed plan for variable density and more flexible setbacks, in exchange for open spaces and recreational areas. This is more commonly referred to as a:

planned unit development.

Externalities can play a key 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?

public assistance facilities such as homeless shelters

Sophisticated firms recognize that their "cost of doing business" can depend on the support of local governments in assuring roads, utilities, reasonable taxation, and compatible land use controls are in place. Based on your understanding of the factors influencing the growth of a city, the previous statement best aligns with which of the following supply-side factors?

quality of life and leadership within a community

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

The concentric ring model was based on the design of a city (Chicago) in which _____________

railways

Laws requiring that a document conveying an interest in real property must be placed in the public records are more commonly referred to as:

recording statutes.

Based on your understanding of the differences between convenience and comparison activities, which of the following property subtypes is designed to provide mostly comparison goods and services to its customers?

regional mall

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.

The distinctive feature of a joint tenancy is the:

right of survivorship.

Activities in a city that serve local businesses and households will recirculate the income derived through a city's economic base. These types of activities are more commonly referred to as:

secondary (or local economic) activities.

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

Helping to constrain entry into real estate related occupations, which of the following branches of government is directly involved in establishing rules and regulations for the licensing of professionals in the field of real estate?

state government

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

The term real estate is used in three fundamental ways. When real estate is defined as the land and its improvements, it is being viewed as purely a(n):

tangible asset.

Which of the following leasehold estates best describes the situation in which a tenant who previously occupied a property under a legitimate leasehold interest refuses to vacate?

tenancy at sufferance

Which of the following types of direct co-ownership is a form of joint tenancy for spouses created by marriage that protects each spouse from liens arising from either spouse alone?

tenancy by the entirety

At the death of a property owner, property will convey either in accordance with a will or without a will. When a property is conveyed without a will, this involuntary mode of conveyance is more commonly referred to as:

testate.

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.

Competition for the currently available supply of locations and space coupled with the existing supply of leasable space, determines:

the current level of rental rates for each submarket and property.

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:

the less isolated the city is from other cities.

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.

When multiple individuals have use of a property, but their interests are not simultaneous, this type of co-ownership is referred to as a:

timeshare.

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.

According to the Department of Agriculture, which of the following land types constitutes the lowest percentage of land use in the United States?

urban land

If we desire to classify land by its use, land that consists of residential, industrial, commercial, and institutional land uses would be classified as:

urban land.

Delineated areas in which local governments plan to provide public services and facilities are more commonly referred to as:

urban service areas.

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?

words of conveyance

Which of the following federal environmental control laws was responsible for giving the EPA authority to monitor and control 75,000 industrial chemicals, and new ones that are created?

Toxic Substances Control Act

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.