Unit 2

The area preference or situs (place) of a property is commonly referred to as A. "Highest and best use." B. "Permanence of investment." C. "Nonhomogeneity." D. "Location, location, location."

The answer is "location, location, location." Area preference or situs (place) of property is commonly referred to as "location, location, location." This economic characteristic refers not only to geography but also to people's preference for a specific area. Area preference is based on several factors, such as convenience, reputation, and history.

An owner of land is entitled to all land created through an increase in the land resulting from the deposit of soil by the water's action called A. Accretion. B. Secretion. C. Erosion. D. Avulsion.

The answer is accretion. An owner of land is entitled to all land created through an increase in the land resulting from the deposit of soil by the water's action called accretion.

A homeowner acquired ownership of land that was deposited by a river running through his property by A. reliction. B. succession. C. avulsion. D. accretion.

The answer is accretion. Increases in land adjacent to a body of water resulting from the deposit of soil by the water's action is known as accretion, and the owner is entitled to that land.

Real estate brokers and real estate salespeople may NOT act as attorneys unless they A. are asked to do so by their clients. B. request an approval to do so from the state real estate licensing department. C. are also licensed attorneys representing clients in that capacity. D. provide appropriate disclaimers to their clients.

The answer is are also licensed attorneys representing clients in that capacity. Real estate brokers and real estate salespeople may not act as attorneys unless they are also licensed attorneys representing clients in that capacity.

The sudden removal of soil by an act of nature is called A. Accretion. B. Erosion. C. Avulsion. D. Acceleration.

The answer is avulsion. The sudden removal of soil by an act of nature is called avulsion.

The owner of a bicycle repair business installs trade fixtures in a rented space. When the business owner's lease expires, the business is moved to a new location. Any trade fixtures that remain on the premises after the end of the lease term A. Can be retained by the landlord but compensation must be paid to the former tenant. B. Were always real property and belong to the landlord. C. Are the personal property of the business owner and can be retrieved at a later date. D. Become the real property of the landlord.

The answer is became the real property of the landlord. While the tenant's lease was in effect, the tenant was entitled to install and remove trade fixtures. Once the lease expired, any fixtures remaining of the premises became the real property of the landlord.

Real estate professionals can't be experts in all areas of real estate law, A. nor are they expected to understand the basic principles. B. and they should research the law before explaining it to their clients. C. but they should strive to explain the law to their clients. D. but they should know and understand some basic principles.

The answer is but they should know and understand some basic principles. A real estate professional can't be an expert in all areas of real estate law; however, real estate professionals should know and understand some basic principles.

Another term for personal property is A. Chattels. B. Fixtures. C. Fructus naturales. D. Realty.

The answer is chattels. Fixtures, fructus naturales, and realty are all real property.

Laws that govern the ownership and use of water as well as the adjacent land vary among the states, but all are closely linked to A. Climactic and topographical conditions. B. Historical considerations. C. Economical considerations. D. Political considerations.

The answer is climactic and topographical conditions. Laws that govern the ownership and use of water as well as the adjacent land vary among the states, but all are closely linked to climatic and topographical considerations.

The real estate licensing laws passed by all 50 states, the District of Columbia, and all Canadian provinces A. differ in almost every respect. B. adhere to minimum federal standards. C. differ in some details, such as prelicensing education requirements. D. differ in all but prelicensing education requirements.

The answer is differ in some details, such as prelicensing education requirements. All 50 states, the District of Columbia, and all Canadian provinces have passed laws that require real estate brokers and real estate salespeople to be licensed, and all differ in some details, such as prelicensing education requirements. There are no federal standards for real estate licensing, even though there are many federal laws that affect real estate transactions.

When an owner of real estate sells the property to someone else, which of the "sticks" in the bundle of legal rights is the owner as seller using? A. Exclusion. B. Disposition. C. Legal enjoyment D. Control

The answer is disposition. To sell, will, transfer, or otherwise dispose of or encumber property is called disposition.

A property owner wants to use water from a river that runs through the property to irrigate a potato field. To do so, the owner is required by state law to submit an application to the Department of Water Resources describing in detail the plan for beneficial use of the water. If the department approves the owner's application, it will issue a permit allowing a limited amount of river water to be diverted onto the property. Based on these facts, it can be assumed that this property owner's state relies on which rule of law? A. Riparian rights. B. Littoral rights. C. Doctoring of highest and best use D. Doctoring of prior appropriation

The answer is doctrine of prior appropriation. Many states whose water is in relatively short supply have passed statutes authorizing a system of prior appropriation in which owners downstream do not necessarily have to wait for "what's left" after those upstream have drawn their fill. Priority—who is allowed to appropriate water first—is established, instead, by the date of approved filing and continued conformity with any rules and limitations on use imposed by the jurisdiction.

John owns a manufactured home and has elected to have it classified as real property. Which of the following would NOT support the home's classification as real property? A. It is attached to real property owned by the owner of the home. B. A certified copy of the statement of ownership has been filed. C. He intends to move it every six months. D. The tax assessor-collection has been notified of the filing of the real property election.

The answer is he intends to move it every six months. If the property is being moved continually, it cannot be classified as real property. The home would be classified as personal property.

The development of one parcel of land can have a significant impact on its value, as well as the value of nearby parcels, because of the economic characteristic that considers A. the scarcity of land for a particular purpose. B. area preference for a particular location. C. the situs of the land. D. improvements to the land.

The answer is improvements to the land. An improvement on one parcel of land can affect the land's value and use, as well as that of neighboring tracts and whole communities.

The purpose of real estate license laws is to protect the public in real estate transactions from fraud, dishonesty, and A. Agency repeat tat ion. B. Excessive commissions. C. An agent's "puffing." D. Incompetence.

The answer is incompetence. The purpose of real estate license laws is to protect the public from fraud, dishonesty, and incompetence in real estate transactions.

Which of the following is a physical characteristic of land? A. Indestructibility. B. Improvements C. Area preference D. Scarcity

The answer is indestructibility. The ability to make improvements, preference for the area, and relative scarcity of similar property are all economic matters. The land's indestructibility is a physical matter, even though it is subject to both natural and human forces.

Land is considered to be A. Subject to personal property rights. B. A waste asset. C. Indestructible. D. Immune to the forces of supply and demand.

The answer is indestructible. Land is considered permanent and indestructible. This does not mean it is immune to the forces of supply and demand and cannot be abused by overuse or depletion.

The specific areas of law that are important to the real estate professional do NOT include A. maritime law. B. the general property law. C. the law of agency. D. law of contracts.

The answer is maritime law. The specific areas of law that are important to the real estate professional include the law of contracts, the general property law, and the law of agency.

The concept that no two parcels of property are exactly the same or in the same location is called A. Immobility. B. Indestructibility. C. Nonhomogeneity. D. Permanence.

The answer is nonhomogeneity. Uniqueness, or nonhomogeneity, is the concept that no two parcels of property are exactly the same or in the same location. The characteristics of each property, no matter how small, differ from those of every other. An individual parcel has no substitute because each is unique.

Which of the following is considered personal property? A. Wood-burning fireplace B. Patio furniture C. Bathtub D. Awnings

The answer is patio furniture. Personal property, such as patio furniture, is movable. A fireplace, bathtubs, and awnings are all attached to the property and considered real property.

Land development costs for capital and labor contribute to the economic characteristic of A. Permanence of investment. B. Area preference. C. Improvements. D. Scarcity.

The answer is permanence of investment. The capital and labor used to make improvements to real estate represent a large fixed investment that is considered permanent, despite the fact that buildings can disintegrate or be demolished.

A truckload of lumber that a homeowner purchased has been left in the driveway for use in building a porch. The lumber is considered A. Real property. B. A trade or chattel fixture. C. A chattel that is real property. D. Personal property.

The answer is personal property. The lumber will become realty if and when it is later affixed in the course of construction. Until then, it is personal property—a chattel—of the landowner.

According to law, a trade fixture is usually treated as A. A fixture. B. Personally. C. A license. D. An easement.

The answer is personalty. An item used in conducting business is considered a trade fixture and can be removed by the tenant. It is considered personal property (personalty) even though it may be attached to a building.

In some states, a landowner must demonstrate a beneficial use for water under the doctrine of A. Littoral rights. B. Riparian rights. C. Prior appropriation. D. Fair use.

The answer is prior appropriation. In a state that recognizes the doctrine of prior appropriation, a landowner must demonstrate to a state agency that a proposed use of water (aside from limited domestic use) is beneficial.

The right to use any water except for limited domestic use and controlled by the state rather than the landowner adjacent to the water is called A. Proper appropriation. B. Prior appropriation. C. Principal appropriation. D. Police appropriation.

The answer is prior appropriation. The right to use any water except for limited domestic use and controlled by the state rather than the landowner adjacent to the water is called prior appropriation.

Common law rights granted to owners of land along the course of a river, stream, or similar body of water are called A. Appropriation rights. B. Riparian rights. C. Littoral rights. D. Accretionary rights.

The answer is riparian rights. Common law rights granted to owners of land along the course of a river, stream, or similar body of water are called riparian rights.

An item of real property can become personal property by A. Caveat emptor. B. The bundle of legal rights. C. A codicil. D. Severance.

The answer is severance. For example, a tree is classified as real property until the owner cuts it down, severing it from the property.

Which of the following is considered an improvement? A. Subdivision plat B. Tenant C. Lease D. Sewer

The answer is sewer. It is an infrastructure added to the land. An improvement is anything that is added as a fixture to the land.

The specific areas of law that are important to the real estate professional include the law of contracts, the general property law, the law of agency, and specific A. Local real estate license law. B. Federal real estate license law. C. State tax law . D. State real estate license law.

The answer is state real estate license law. The specific areas of law that are important to the real estate professional include the law of contracts, the general property law, the law of agency, and specific state real estate license law. Federal regulations, such as environmental laws, as well as federal, state, and local tax laws, also play an important role in real estate transactions.

A buyer purchased a parcel of land and immediately sold the mineral rights to an oil company. The buyer gave up which of the following? A. Air rights B. Occupancy rights C. Subsurface rights D. Surface rights

The answer is subsurface rights. Sub means under or beneath. iSubsurface then, is below the surface—the place where most minerals are found.

A landowner sells his property but retains the rights to any oil and gas found beneath the property. These rights are called A. subsurface rights. B. air rights. C. surface rights. D. water rights.

The answer is subsurface rights. They are the rights to natural resources below the earth's surface. An owner may transfer surface rights without transferring subsurface rights.

The phrase bundle of legal rights is properly included in A. The definition of real property. B. Leases for less than one year. C. A legal description. D. Real estate transactions.

The answer is the definition of real property. Purchasing real property means buying rights of ownership, or a bundle of legal rights.

Many states determine the order of water rights to which users of the water hold recorded beneficial use permits. This allocation of water rights is controlled by A. littoral theory. B. the doctrine of prior appropriation. C. accretion. D. riparian theory.

The answer is the doctrine of prior appropriation. The doctrine of prior appropriation usually applies in states where water is scarce. The landowner receives a permit to a specified amount of water, and priority of water rights is usually determined by the oldest recorded permit date.

A woman rents space in a commercial building where she operates a bookstore. In the bookstore, she has installed large reading tables fastened to the walls and bookshelves that create aisles from the front of the store to the back. These shelves are bolted to both the ceiling and the floor. Which of the following BESTcharacterizes the contents of the bookstore? A. Because the women is a tenant, the shelves and tables are fixtures and may not be removed except with the building owner's permission. B. The shelves and tables are trade fixtures and may properly be removed by the woman before her lease expires, and the tenant would be responsible to the landlord for any damage that their removal caused to the premises. C. The shelves and tables are trade fixtures and will transfer when the property owner sells the building. D. Because the shelves and tables are attached to the building, they are treated the same as other fixtures.

The answer is the shelves and tables are trade fixtures and may be properly removed by the woman before her lease expires, and the tenant would be responsible to the landlord for any damage that their removal caused to the premises. Common law protects business tenants who install fixtures for their business by treating these trade fixtures as their personal property and giving tenants the right to remove them before the end of their lease. Any damage to the building due to removal of the fixtures must be repaired by the departing tenant. A real estate professional who participates in the sale of business properties should make known to purchasers what, if any, trade fixtures will not convey with the building.

A woman rents space in a commercial building and fastens shelves to the walls and large tables to the floor. These items are A. Trade fixture and will transfer to the property owner. B. Are treated the same as other fixtures. C. Trade fixtures and may be properly removed. D. May not be removed with building owner's permission.

The answer is trade fixtures and may be properly removed. Common law protects business tenants who install fixtures for their business by treating these trade fixtures as their personal property and giving tenants the right to remove them before the end of their lease. Any damage to the building due to removal of the fixtures must be repaired by the departing tenant. A real estate professional who participates in the sale of business properties should make known to purchasers what, if any, trade fixtures will not convey with the building.

The term nonhomogeneity refers to A. Uniqueness. B. Immobility. C. Scarcity. D. Indestructibility.

The answer is uniqueness. The characteristics of each property differ from one another; this is also called heterogeneity.

All of the following are economic characteristics of land EXCEPT A. Permanence of investment. B. Area preference. C. Uniqueness. D. Scarcity.

The answer is uniqueness. Uniqueness is a physical characteristic of real estate, along with immobility and indestructibility.