CHAPTER 2 -- TRANFER OF PROPERTY

Question 0

How is a deed indexed when it is recorded?

Answer 0

A deed is indexed by the names of the parties (grantor and grantee)

Question 1

What three things need to happen in order for a deed to convey title to real property?

Answer 1

The deed needs to be –
Executed
Delivered
Accepted

Question 2

What are the 7 things essential for a valid deed?

Answer 2

1. Grantor competent to convey (no non-emancipated minors)
2. Adequate description of the property
3. Grantee capable of receiving (not a fictitious person)
4. Action clause (granting clause) – “grant,” “transfer,” or “convey”
5. Proper description of the parties
6. In writing
7. Grantor’s signature (executed)

Question 3

Deeds are indexed at the County Recorder’s office by:

(A) legal descriptions; (B) sales price; (C) names of grantor and grantee; (D) tax assessors parcel number.

Answer 3

(C) names of grantor and grantee

Question 4

A valid deed may be:

(A) assigned to another grantee; (B) foreclosed by the lender; (C) revoked at a later date by the grantor; (D) signed by an “X.”

Answer 4

(D) signed by an “X.”

Question 5

A valid grant deed passes title when the deed is:

(A) notarized; (B) Signed; (C) Delivered; (D) recorded.

Answer 5

(D) recorded

Question 6

Does a deed need to be acknowledged in order to be recorded?

Answer 6

Yes, a deed must be acknowledged (a declaration before a notary) in order to be recorded.

Question 7

Can an employee of a corporation who is a notary notarize a deed involving the corporation?

Answer 7

Yes, as long as they don’t have a personal interest in the subject matter of the transaction.

Question 8

What are four examples of documents that need to be recorded to be effective?

Answer 8

• Mechanic’s liens
• Homestead exemptions
• Lis pendens
• Abandonment of homestead

Question 9

What are the two types of notice?

Answer 9

Actual and constructive (legal)

Question 10

What are the two implied warranties of a grant deed?

Answer 10

• The grantor has not conveyed title to any other person.

- The estate is free from undisclosed encumbrances.

Question 11

Which of the following is not essential to a valid deed?

(A) the parties are competent to convey and capable of receiving title; (B) a granting clause; (C) the deed must be acknowledged; (D) the deed must be in writing.

Answer 11

(C) the deed must be acknowledged

Question 12

The recording of a deed gives what kind of notice?

(A) actual notice; (B) positive notice; (C) negative notice; (D) constructive notice.

Answer 12

(D) constructive notice

Question 13

Adam sold his home to Tim, but negotiated a two year leaseback and remained in possession. Tim immediately placed the deed he received in a safe deposit box for safe keeping. Adam then sold this same home to Sally. Sally recorded the deed. Who owns the home?

(A) Tim, because he received the first deed; (B) Sally, because she recorded her deed; (C) Adam, because he still has three more deed ready to be sold; (D) Adam, because both sales were improper.

Answer 13

(B) Sally, because she recorded her deed

Question 14

How do trust deeds and reconveyance deeds differ from grant deeds?

Answer 14

They are loan documents, not deeds.

Question 15

What are the four unities of joint tenancy?

Answer 15

Time
Title
Interest
Possession

Question 16

What is the one thing that a joint tenant can’t do?

Answer 16

They can’t will their interest to anyone due to right of survivorship.

Question 17

Are the parties of a joint tenancy liable to creditors of a deceased joint tenant who holds unforeclosed liens?

Answer 17

No, they are not liable.

Question 18

Can a joint tenant sell their share of the joint tenancy?

Answer 18

Yes. The new party becomes a tenant in common, though.

Question 19

Each of the following deeds will contain at least some implied covenants from the grantor, EXCEPT:

(A) grant deed; (B) warranty deed; (C) quitclaim deed; (D) gift deed.

Answer 19

(C) quitclaim deed

Question 20

A brother and sister held title to an apartment building as joint tenants. Other than this building, their business and personal affairs were conducted separately. At the time of the brother’s death, he was insolvent and owed creditors substantial unsecured amounts of money. Title to the apartment building would now be held by the sister:

(A) subject to the processes of a probate sale; (B) subject to the claims of the unsecured creditors; (C) free and clear of the debts of the brother; (D) as tenant in common with the creditors of the deceased brother.

Answer 20

(C) free and clear of the debts of the brother

Question 21

Which of the following would NOT terminate a joint tenancy between two owners?

(A) foreclosure on one of the joint tenant’s interest; (B) the sale of one joint tenant’s interest; (C) one of the joint tenants deeding his interest to a third party; (D) one joint tenant having a trust deed or mortgage recorded against his or her interest in the property.

Answer 21

(D) one joint tenant having a trust deed or mortgage recorded against his or her interest in the property

Question 22

What is the one unity of tenancy in common?

Answer 22

Possession

Question 23

Can a tenant in common grant an easement?

Answer 23

No, they cannot grant an easement

Question 24

How long does a non-consenting spouse have to void a purchase of real property encumbered by a loan?

Answer 24

1 year

Question 25

When a young couple decided to purchase their first home, they elected to take title as “John and Marsha Buyer, husband and wife.” How did they take title?

(A) sole ownership; (B) joint tenants; (C) tenants in common; (D) community property.

Answer 25

(D) community property

Question 26

John and Debbi, husband and wife, own a home as community property. If only one spouse signed a listing contract to sell the property, the listing is:

(A) an enforeable contract; (B) an unenforceable contract; (C) an unbinding contract; (D) a violation of the Statute of Frauds.

Answer 26

(A) an enforeable contract

Question 27

John and Martha, husband and wife, own a home as community property. If only one spouse signed the agreement to sell the property, the agreement is:

(A) an illegal contract; (B) an unenforceable contract; (C) a binding contract; (D) a violation of the Statute of Frauds.

Answer 27

(B) an unenforceable contract

Question 28

What are the four things covered by the standard (CLTA) title insurance policy?

Answer 28

1 - Matters of record
2 - Lack of capacity
3 - Forgery
4 - Defective delivery of deed

Question 29

On May 1, 2011, Dick offered to buy Bob’s home. The offer was accepted and escrow opened. Bob purchased the home in 1991, using an FHA loan, on which he is currently making payments. A preliminary title report dated May 9, 2011, will:

(A) include exactly the same information as a future CLTA policy of title insurance issued on the close of the escrow; (B) show a deed of trust with Bob as the trustor; (C) obligate the title company for insurance in an amount equal to the purchase price; (D) show title vested in Dick

Answer 29

(B) show a deed of trust with Bob as the trustor

Question 30

Which of the following items in a preliminary title report would the buyer insist be removed from title before the close of escrow?

(A) CC&Rs; (B) quitclaim deed; (C) mechanic’s lien; (D) property tax lien for the upcoming property tax year.

Answer 30

(C) mechanic’s lien

Question 31

Which of the following is correct concerning an ALTA title insurance policy?

(A) it protects against a lessee who occupies the property after the date shown on the title insurance policy; (B) the protection is limited to conditions affecting title as of the date of the issuance of the title policy; (C) it protects against encroachments that occur after the date of issuance of the policy; (D) it protects against easements created after the issuance of the title insurance policy.

Answer 31

(B) the protection is limited to conditions affecting title as of the date of the issuance of the title policy

Question 32

Does the standard coverage title insurance policy include a site inspection or a survey?

Answer 32

No, it doesn’t.

Question 33

What does the standard coverage title policy NOT protect against?

Answer 33

It does not protect against unrecorded events, such as rights of parties in possession or encroachments.

Question 34

What does the Extended Coverage Policy include?

Answer 34

The protection of a survey and protects against unrecorded events.

Question 35

What are the policy exclusions of both the standard and extented coverage title insurance policy?

Answer 35

• Defects known to the buyer and the seller which are not disclosed to the title company.
• Acts by government (such as zoning, eminent domain, etc.)

Question 36

Does a sales agreement for rural property require a legal description?

Answer 36

Yes, because it usually has no street address.

Question 37

What type of title insurance policy covers everything?

(A) ALTA; (B) extended; (C) standard; (D) no title insurance policy covers everything.

Answer 37

(D) no title insurance policy covers everything.

Question 38

A contract for the sale of rural property requires a:

(A) rural P.O. Box number; (B) parcel number; (C) legal description; (D) amount of acreage.

Answer 38

(C) legal description

Question 39

Reference to a monument in a legal description is usually considered to be less desirable because:

(A) monuments are difficult to describe in writing; (B) monuments may be destroyed; (C) monuments may be hypothecated; (D) monuments may not be mentioned in a recorded document.

Answer 39

(B) monuments may be destroyed

Question 40

What is the method used to describe large pieces of land (desert land, ranch land, and farms)?

Answer 40

Township and section method

Question 41

How many sections are in a township?

Answer 41

36

Question 42

How long is one side of a section?

Answer 42

One mile or 5,280 feet.

Question 43

How many acres are in 1/4 of a section?

Answer 43

160 acres (640 acres total)

Question 44

How many square miles are there in 1/2 a township? (A) 9; (B) 18; (C) 36; (D) 155

Answer 44

(B) 18

Question 45

How long is each side of a 1/4 of a section?

(A) 1/4 mile; (B) 1/2 mile; (C) 3/4 mile; (D) one mile.

Answer 45

(B) 1/2 mile

Question 46

When an easement runs the full length of one side of a section and covers an area of 3 acres, approximately how wide is the easement?

(A) 10 feet; (B) 20 feet; (C) 25 feet; (D) it is impossible to answer.

Answer 46

(C) 25 feet

Question 47

Who regulates the activities of an incorporated broker’s escrow activities?

Answer 47

The Department of Corporations (Not the Bureau of Real Estate)

Question 48

When must the buyer receive a structural pest report?

Answer 48

As soon as practical prior to close of escrow.

Question 49

When a termite report calls for preventative repairs, who pays?

Answer 49

The buyer usually pays for the work.

Question 50

How can escrow instructions be changed?

Answer 50

By WRITTEN mutual consent of the buyer and seller.

Question 51

Do escrow instructions need to be recorded?

Answer 51

No, they don’t need to be recorded.

Question 52

When a trust deed is sold, the parties often use an escrow in order to:

(A) obey the real estate code; (B) make sure that the terms and conditions are met prior to the closing of the transaction; (C) provide evidence as to the terms of the transaction; (D) provide recourse against the escrow company when there are disputes over the disposition of the deposit.

Answer 52

(B) make sure that the terms and conditions are met prior to the closing of the transaction

Question 53

A real estate broker may escrow a transaction:

(A) if he or she is involved as an agent for the buyer or seller in the transaction being escrowed; (B) whenever he or she is requested to do so by the broker; (C) under no circumstances unless he or she is acting as a principal; (D) only if he or she is incorporated and licensed by the Department of Corporations.

Answer 53

(A) if he or she is involved as an agent for the buyer or seller in the transaction being escrowed

Question 54

Escrow may do which of the following?

(A) act as a mediator when there is a dispute between buyer and seller; (B) change the selling price with the agreement of the buyer and seller; (C) change the terms of the financing with the consent of the seller; (D) decide when the escrow will close without the agreement of the buyer and seller.

Answer 54

(B) change the selling price with the agreement of the buyer and seller

Question 55

Who has the ability to carry out escrow instructions?

Answer 55

Buyers, sellers, and/or third parties

Question 56

What kind of documents can escrow prepare?

Answer 56

Simple, standard documents needed to complete the transaction – such as a grant deed. Documents necessitating negotiation, like a wraparound trust deed or a lease with an option to buy, must be done by a lawyer.

Question 57

Who can give the buyer permission to move in or make repairs prior to the close of escrow?

Answer 57

The seller ONLY.

Question 58

When a buyer moves in prior to the close of escrow, what should the salesperson have both parties sign?

Answer 58

An Interim Occupancy Agreement

Question 59

In an interim occupancy agreement, what is the relationship between the principals?

Answer 59

Landlord and tenant

Question 60

Escrow can legally prepare which of the following?

(A) a wraparound trust deed; (B) a lease with an option to buy; (C) escrow instructions and grant deed; (C) all of the above.

Answer 60

(C) escrow instructions and grant deed

Question 61

In the purchase of a home, when would a buyer take possession of a property?

(A) midnight of the day of closing of escrow; (B) morning of the day of closing of escrow; (C) at the time agreed upon by the buyer and the seller; (D) when the loan is funded.

Answer 61

(C) at the time agreed upon by the buyer and the seller

Question 62

When the buyer of a home wants to move in before close of escrow, what should the broker do?

(A) deny the buyer permission to move in; (B) grant the buyer permission to move in; (C) make the buyer sign a lease before granting buyer permission to move in; (D) prepare an interim occupancy agreement, and get the seller’s consent before allowing the buyer to move in.

Answer 62

(D) prepare an interim occupancy agreement, and get the seller’s consent before allowing the buyer to move in

Question 63

Is the purchase price a credit or debit on the buyer’s closing statement?

Answer 63

It is a debit.

Question 64

Are prepaid taxes a credit or debit on the seller’s closing statement?

Answer 64

Prepaid taxes are a credit for the seller.

Question 65

Will the interest on a loan assumed by a buyer a credit or a debit on the seller’s closing statement?

Answer 65

Interest on a loan assumed by a buyer would appear as a debit on the seller’s closing statement. Interest on a loan assumed by the buyer WILL NOT BE A DEBIT ON THE BUYER’S CLOSING STATEMENT.

Question 66

Are the debits and the credits on the closing statement supposed to equal for both the buyer and seller?

Answer 66

NO. It CAN BE, but they are both spending and receiving different amounts.

Question 67

What items are prorated during escrow?

Answer 67

• Taxes
• Insurance
• Interest on an assumed loan
• Rent

Question 68

Are title insurance fees prorated in escrow?

Answer 68

No. It is a non-recurring fee.

Question 69

What is it called when a home is sold and the fire insurance is cancelled, creating a refund that is less than received by proration?

Answer 69

A Short Rate Refund

Question 70

Which of the following items would NOT normally be listed as a debit on a buyer’s closing statement?

(A) discount points on a new FHA loan; (B) homeowner’s insurance premiums; (C) prorations for property taxes; (D) interest on a loan assumed by the buyer.

Answer 70

(D) interest on a loan assumed by the buyer

Question 71

The seller of a home has paid the annual property taxes of $1,380; escrow will close on May 1. If the buyer and seller agree to prorate the property taxes as of the sale date, the buyer’s portion of the taxes will be most nearly:

(A) $115, (B) $230, (C) 345, (D) $1,380.

Answer 71

(B) $230

Question 72

When one party agrees to indemnify another for a named loss in return for a periodic payment is called:

(A) insurance; (B) a fidelity bond; (C) performance agreement; (D) none of the above.

Answer 72

(A) insurance

Question 73

What is the limit of the tax rate set by proposition 13?

Answer 73

1% of the purchase price (assessed value, taxable value, full cash value, fair market value) PLUS an amount to cover existing bond debt.

Question 74

A home sold for $210,000. The buyer agreed to a total down payment of $50,000. A new loan from the bank for $130,000. The seller agreed to take back a purchase money second trust deed for the balance of the purchase price. If the Documentary Transfer Tax rate is $.55 per $500 of consideration or fraction thereof, what would be the total Documentary Transfer Tax?

(A) $55; (B) $198; (C) $231; (D) $462.

Answer 74

(C) $231

Question 75

For property taxes, the tax assessment roll, showing the assessed value of property in a county, is used to:

(A) determine the proportionate share paid by each property owner; (B) establish the property tax rate; (C) establish the tax base for the county; (D) equalize the taxes paid by the property owners in that county.

Answer 75

(C) establish the tax base for the county

Question 76

If a property owner believes that the assessed value on his property has been set too high, the owner my file an appeal with the:

(A) County Board of Supervisors; (B) Assessment Appeals Board; (C) Tax Collector; (D) State Board Of Equalization.

Answer 76

(B) Assessment Appeals Board

Question 77

Does the property tax bill use a legal description?

Answer 77

No, it uses an assessor’s parcel number.

Question 78

How much of the assessed value is applied to each property that is owner occupied in a Homeowner’s Exemption?

Answer 78

$7,000 of assessed value.

Question 79

Who should senior citizens contact to defer payment of property taxes?

Answer 79

The State Controller’s Office

Question 80

Does declaring a “declaration of homestead” have any impact on property taxes?

Answer 80

No, it does not.

Question 81

The due date and delinquent date of the second installment of property taxes in California respectively:

(A) November 1 and December 10; (B) July 1 and November 1; (C) February 1 and April 10; (D) January 1 and March 10.

Answer 81

(C) February 1 and April 10

Question 82

Which of the following are property tax exemptions stated in the California law?

(A) single family residence; (B) occupied single family residence; (C) owner occupied single family residence; (D) any of the above.

Answer 82

(C) owner occupied single family residence

Question 83

Which of the following would have the least impact on property taxes?

(A) new development; (B) compacted population density; (C) tax deferment; (D) a recorded homestead.

Answer 83

(D) a recorded homestead

Question 84

What can special assessments NOT be used for?

Answer 84

Construction of homes or to buy land.

Question 85

What was the law that allowed cities, counties and even developers to use special assessments against property to pay for specific local improvements such as streets, walks, curbs, etc.?

Answer 85

The Street Improvement Act of 1911

Question 86

Do assessments appear as lien against the property at the close of escrow?

Answer 86

No. They are usually paid by the seller in escrow.

Question 87

What is a progressive tax?

Answer 87

The higher your income, the higher percentage you pay. The federal income tax is an example.

Question 88

Special assessments levied under the Street Improvement Act of 1911 may be used for any of the following purposes, EXCEPT:

(A) new drainage and sewer systems; (B) to purchase vacant land; (C) build off-site local improvements; (D) improve street lighting.

Answer 88

(B) to purchase vacant land

Question 89

The difference between property taxes and special assessments is that:

(A) assessment liens are always subordinate to property tax liens; (B) assessment liens can only be levied by local improvement districts; (C) foreclosure of assessment liens can only be achieved by court foreclosure; (D) special assessments are levied for the cost of specific local improvements, while property tax revenue goes into the general fund.

Answer 89

(D) special assessments are levied for the cost of specific local improvements, while property tax revenue goes into the general fund

Question 90

The marginal tax rate:

(A) is the total income tax a person must pay; (B) is the minimum income tax rate a person must pay; (C) determines the tax rate applied to the next dollar earned; (D) none of the above.

Answer 90

(C) determines the tax rate applied to the next dollar earned

Question 91

Can the building of a wall be deducted as an expense?

Answer 91

No. This is a capital improvement. It is added to the cost basis when calculating the adjusted cost basis.

Question 92

What are the three benefits of ownership of real estate under Federal Income Tax law?

Answer 92

• Depreciation
• 1031 tax deferred exchanges
• Installment sales

Question 93

What are four residence expenses that may considered allowable to be deducted on income tax?

Answer 93

• property taxes
• interest payments (a prepayment penalty can be an interest expense)
• some uninsured casualty losses
• a debt against a common area (condos only)

Question 94

What can an income property owner deduct?

Answer 94

• Interest
• depreciation
• taxes
• insurance
• management
• maintenance
• utilities

Question 95

What can an income property owner NOT deduct on their income taxes?

Answer 95

Vacancy losses

Question 96

Mr. Smith purchased an apartment building for $180,000. The listed price was $200,000. Mr. Smith considered this a good deal on his part since he only put $18,000 down and acquired a new first trust deed for the difference. The tax assessed value was indicated at $130,000. Mr. Smith’s cost basis for income tax purposes would be:

(A) $18,000; (B) $130,000; (C) $180,000; (D) $200,000.

Answer 96

(C) $180,000

Question 97

The term “tax shelter” refers to:

(A) mortgage relief; (B) real property taxes; (C) interest income; (D) income taxes.

Answer 97

(D) income taxes

Question 98

A homeowner sold his personal residence and took a $30,000 loss on the sale. For federal tax purposes:

(A) he may not deduct the loss on the sale of his personal residence from his income tax; (B) 40% of the loss is tax deductible; (C) he can deduct the $30,000 capital loss from any capital gain received during the tax year; (D) $10,000 of the loss is tax deductible.

Answer 98

(A) he may not deduct the loss on the sale of his personal residence from his income tax

Question 99

What is the minimum depreciation period for a commercial building?

Answer 99

39 years

Question 100

What is the minimum depreciation period for a residential income property?

Answer 100

27.5 years

Question 101

Which of the following is true regarding the depreciation of land under federal income tax law?

(A) land may be depreciated by the 125% declining balance method; (B) an owner may deduct the accrued depreciation of land over time; (C) land may be depreciated by the sum of the year digits method; (D) land cannot be depreciated under federal income tax law.

Answer 101

(D) land cannot be depreciated under federal income tax law

Question 102

Tom recently bought a commercial office building. What is the minimum period of time in which he may depreciate the building for federal income tax purposes:

(A) 27.5 years; (B) 39 years; (C) 40 years; (D) 50 years.

Answer 102

(B) 39 years

Question 103

Albertson owns a large apartment complex that he wants to exchange for another property so he will be able to defer paying income taxes in the year of the exchange. He should exchange his apartment complex for:

(A) a personal residence with a loan on it equal to or greater than the mortgage on his apartment complex; (B) a less valuable apartment complex and assume a smaller loan than the mortgage on his current apartment complex; (C) a more valuable apartment complex, assuming a larger loan and paying cash boot to balance the equities; (D) a less valuable apartment complex, receiving money from the other party to compensate for any difference in equities.

Answer 103

(C) a more valuable apartment complex, assuming a larger loan and paying cash boot to balance the equities

Question 104

What is the upside of a sale-leaseback?

Answer 104

An owner of a business could sell the property to an investor and then write off the rent on their income tax as a business expence.

Question 105

The buyer of a commercial building in a sale-leaseback would be LEAST concerned with:

(A) access to transportation for the property; (B) zoning of the property; (C) physical condition of the improvements; (D) the seller’s depreciated book value of the improvements.

Answer 105

(D) the seller’s depreciated book value of the improvements.

Question 106

A grant deed has been executed once it has been:

(A) signed by the grantor; (B) delivered to escrow; (C) recorded; (D) delivered to the grantee.

Answer 106

(A) signed by the grantor

Question 107

Mr. Johnson executed a grant deed to Mr. Green and recorded it. Later, Mr. Johnson changed his mind and sought to set the conveyance aside, claiming that there had been no delivery to Mr. Green. Why was Mr. Johnson unsuccessful in his effort?

(A) he was unsuccessful only if Mr. Green can prove he also took possession of the property; (B) delivery and acceptance is presumed with recording; (C) the recording validates the deed; (D) recording establishes the priority of lien.

Answer 107

(B) delivery and acceptance is presumed with recording

Question 108

Why are warranty deeds rarely used in California, but commonly used in other states?

(A) the buyer may recover double damages when a grant deed is used; (B) warranty deeds are illegal in california; (C) recourse against a title company works better than trying to collect from a grantor; (D) the law favors the use of the grant deed because the express covenants run with the land, while convenants of the warranty deed are personal to one particular buyer.

Answer 108

(C) recourse against a title company works better than trying to collect from a grantor

Question 109

Who signs a quitclaim deed?

(A) the property owner; (B) the occupant; (C) the seller; (D) the grantor.

Answer 109

(D) the grantor

Question 110

Martha and David, single people, owned a home as joint tenants. Martha borrowed $10,000 to pay medical bills without the knowledge or consent of David. She secured the loan by recording a trust deed against the home. Shortly thereafter, Martha died, with the debt still unpaid. Which of the following best describes the subsequent title vesting?

(A) David and the lender would become tenants in common, each owning a one-half interest in the property; (B) David would own all of the property free and clear of the trust deed; (C) David would receive ownership in severalty, but would still be liable to the lender for the $10,000 trust deed; (D) David and the lender would own the property as joint tenants, each with one-half interest.

Answer 110

(B) David would own all of the property free and clear of the trust deed

Question 111

Concurrent ownership of real property by two or more parties, each of whom has an undivided interest (not necessarily equal) without right of survivorship, would be described as:

(A) community property; (B) joint tennancy; (C) tenancy in common; (D) ownership in severalty.

Answer 111

(C) tenancy in common

Question 112

Which of the following is the most commonly distributed according to the Statute of Succession?

(A) community property; (B) joint tenancy; (C) tenancy in common; (D) separate property.

Answer 112

(D) separate property

Question 113

An uncle bought a home two years ago and purchased a standard title insurance policy. The uncle died and willed the home to his nephew. During probate it was discovered there was a defect in the title to the home because the grantor who sold the home to the uncle had been legally incompetent at the time of the sale. The title company denied any liability under the title policy. The probable outcome of the lawsuit will be:

(A) the title company was liable because its obligation under the policy is not terminated by the death of the uncle; (B) the title company was not liable because the standard title insurance policy does not cover damage resulting form an incompetent grantor; (C) the title company was liable if the nephew filed his lawsuit within one year of the uncle’s death; (D) title company was not liable because the death of the policy holder terminated the obligation to defend the title.

Answer 113

(A) the title company was liable because its obligation under the policy is not terminated by the death of the uncle

Question 114

The ALTA policy of title insurance (insuring the lender) goes beyond the protection afforded to the grantee by a CLTA policy in that the ALTA policy also insures against damages caused by:

(A) existing liens and encumbrances as disclosed in public records; (B) the location of property lines; (C) a reconveyance deed issued by a minor; (D) an error in the sequence of recording trust deed loans.

Answer 114

(B) the location of property lines

Question 115

Which of the following is incorrect in regards to a “metes and bounds” discription?

(A) using a watercourse as a boundary; (B) metes and bounds is a method used to legally describe land, not measure it; (C) using a boulder as a boundary; (D) “metes” are boundaries and “bounds” are measurements.

Answer 115

(D) “metes” are boundaries and “bounds” are measurements.

Question 116

A 36 mile square contains how many townships?

(A) 1 township; (B) 6 townships; (C) 18 townships; (D) 36 townships.

Answer 116

(D) 36 townships

Question 117

How long is each side of a square parcel of land containing 160 acres?

(A) 1/4 mile; (B) 1/2 mile; (C) 1 mile; (D) 6 miles.

Answer 117

(B) 1/2 mile

Question 118

In the typical escrow, once all the conditions of the escrow have been satisfied, the escrow officer becomes:

(A) an advisor to both the buyer and the seller; (B) an advocate for the best interests of the principals; (C) a separate agent for each party, whereas during the escrow, the escrow officer is a dual agent for both parties; (D) none of the above.

Answer 118

(C) a separate agent for each party, whereas during the escrow, the escrow officer is a dual agent for both parties

Question 119

A real estae broker placed a deposit received with an offer to purchase the property in his trust account. After the seller accepted the offer, but before escrow was opened, the buyer informed the broker that she had terminated the contract and demanded the return of her deposit. The broker, unsure of what was the proper course of action, turned the deposit over to the court. This would be an example of:

(A) a surrender action; (B) an interpleader action; (C) an equitable assignment; (D) an estoppel deposition.

Answer 119

(B) an interpleader action

Question 120

When examining a properly prepared escrow closing statement, a broker would discover that the purchase price would appear as:

(A) a debit to the buyer; (B) a debit to the seller; (C) a credit to both the buyer and the seller; (D) a credit to the buyer.

Answer 120

(A) a debit to the buyer

Question 121

A property owner who carries the proper amount of fire insurance coverage will be indemnified in the event of loss. In such a case, the insured:

(A) might gain, but definitely will not lose money; (B) should neither lose or gain; (C) might lose, but certainly will not gain; (D) should gain or lose a little.

Answer 121

(B) should neither lose or gain

Question 122

A home sold for $90,750. The buyer assumed an existing $30,000 trust deed and paid for the balance of the purchase price. If the documentary transfer tax rate is $.55 per $500 of consideration, what was the documentary transfer tax?

(A) $33.00; (B) $66.83; (C) $67.10; (D) 100.10.

Answer 122

(C) $67.10

Question 123

For property tax purposes, when is property normally reassessed?

(A) whenever the property is sold; (B) only when the building is remodeled; (C) every year; (D) every three years.

Answer 123

(A) whenever the property is sold

Question 124

Senior citizens may be able to defer the payment of the property taxes on their residence. In order to find out if they qualify for the program, the senior citizen should contact the:

(A) Real Estate Commissioner; (B) State Controller; (C) State Housing Authority; (D) County tax assessor.

Answer 124

(B) State Controller

Question 125

A young couple purchased a home for $200,000. Shortly after moving in they discovered they had a problem. Their dog kept running away because the backyard was not enclosed. “Dog gone!” they exclaimed. They built a wall at a cost of $5,000. For federal income tax purposes:

(A) they have a $5,000 deduction that year from their reported income; (B) the $5,000 expense of building the wall has no impact on federal income taxes; (C) the $5,000 cost of the wall is subtracted from their cost basis in the home; (D) the $5,000 cost of the wall is added to their cost basis in the home.

Answer 125

(D) the $5,000 cost of the wall is added to their cost basis in the home.

Question 126

Who is responsible for the disclosure of Mello Roos bonds against the property?

(A) seller; (B) seller’s agent; (C) buyer’s agent; (D) both buyer’s and seller’s agents.

Answer 126

(A) seller

Question 127

A benefit of ownership of real estate under the Federal Income Tax law is:

(A) depreciation; (B) 1031 tax deferred exchange; (C) installment sale; (D) all of the above.

Answer 127

(D) all of the above

Question 128

Debbi recently bought a 10 unit apartment building. What is the minimum period of time in which she may depreciate the building for federal income tax purposes?

(A) 27.5 years; (B) 39 years; (C) 40 years; (D) 50 years.

Answer 128

(A) 27.5 years

Question 129

Laura currently has a freehold estate, which of the following would result in her having a less-than-freehold estate?

(A) leasing her property to a tenant for 5 years; (B) selling the mineral rights to a third party; (C) a sale-leaseback; (D) granting her father a life estate.

Answer 129

(C) a sale-leaseback

Question 130

In a sale-leaseback transaction, the seller does all of the following EXCEPT:

(A) retains possession of the property being sold; (B) guarantees the mortgage payments; (C) receives an infusion of cash; (D) becomes a tenant.

Answer 130

(B) guarantees the mortgage payments