Chapter 8 Quiz Flashcards
Who pays for the primary title insurance policy?
A. The buyer
B. The listing firm
C. The lender
D. The seller
D. The primary title insurance policy is the buyer’s insurance on the property’s title. The seller pays for this policy. A lender will also want insurance on the property’s title. The buyer pays for this policy
A parcel of real estate has a market value of $80,000 and is assessed for tax purposes at 85% of market value. The tax rate for the county in which the property is located is 30 mills. What is the tax bill?
A. $2,400
B. $3,000
C. $2,040
D. $2,250
C. $80,000 x .85 = $68,000 $68,000 x .030 = $2,040
Which type of lien can attach to all real and personal property of a debtor?
A. Specific lien
B. Involuntary lien
C. Voluntary lien
D. General lien
D. General liens can attach to both real and personal propter. Specific liens attach only the property given as collateral.
What interest does a quitclaim deed convey?
A. The grantor’s interest
B. The entire property
C. The claimant’s interest
D. The grantee’s interest
A. A quitclaim deed is a grant of the grantor’s interest in the property. It does not warrant title or possession.
Title insurance offers coverage for:
A. Judgment liens recorded against a property.
B. Special assessments levied after a seller and buyer close on a property.
C. Losses sustained because of defects in the title other than those excepted by the policy.
D. Use-value assessments.
C. Title insurance protects buyers and lenders in the event that certain title defects develop after the title has been researched prior to a sale.
The assessed value of property:
A. may be updated using building permit records, on-site evaluations, and transfer tax records
B. is a fixed amount and cannot be challenged by a property owner
C. determines the transfer tax when sold
D. is determined by the same formula throughout the state
A. Local government determines assessed value. Reevaluation may be triggered by applications for building permits that may indicate owner improvement to the property.
A property has just sold for $125,000. It is currently assessed at $95,000. If the property is reassessed at 95% of market value what is the tax bill if the tax rate is 25 mills?
A. $3,368.25
B. $2,375.00
C. $2,968.75
D. $3,125.00
C. $125,000 market value x .95 = $118,750 assessed value. 25/1000 = .025 mills. $118,750 x .025 mills = $2,968.75.
X hands Y a deed with the intent to pass title. X asks Y NOT to record the deed until X dies. When is the deed valid?
A. When X delivers the deed
B. When Y records the deed
C. When X dies
D. Never
A. A deed is valid when all of the requirements for validity have been satisfied. A valid deed will successfully transfer title. A deed will not however protect the titleholder from the claims of third parties unless it is recorded in public records.
Peter has a fenced lot and the fence extends one foot over his lot line onto the property of a neighbor. What is the effect of the fence on the neighbor’s property?
A. It encumbers the property.
B. It causes a loss of title for the neighbor.
C. It creates an easement for Peter.
D. It creates lien rights for Peter.
A. When a structure or other improvement on property extends beyond the property’s lot lines, it creates an encroachment on the neighboring parcel. The encroachment is an encumbrance on the neighboring parcel.
How is a transfer fee calculated and paid?
A. The seller calculates and pays the transfer fee based on the listing price.
B. The buyer calculates and pays the transfer fee based on the listing price.
C. The seller calculates and pays the transfer fee based on the selling price.
D. The buyer calculates and pays the transfer fee based on the selling price.
C. The transfer fee is based on the selling price rounded up to the nearest $100 and the seller is responsible for paying it.
From what does a warranty deed protect a grantee?
A. Misrepresentation
B. Unenforceable contracts
C. Significant defects in the property
D. Defective title
D. A warranty deed is the most protective of all deeds and it protects a grantee from receiving a defective title to the property.
Which deed creates the least liability for a grantor?
A. A quitclaim deed
B. A bargain and sale deed
C. A special warranty deed
D. A general warranty deed
A. A quitclaim deed transfers only the interest owned by the grantor. It does not warranty the grantor’s interest.
An $89,000 property is assessed at 100%. The mill rate is .030. What is the tax bill for the property?
A. $2,670
B. $2,555
C. $1,745
D. $1,650
A. $89,000 x .030 = $2,670
Where should a party record a real estate conveyance?
A. The register of deeds in the county where the property is located.
B. The title insurance company.
C. The register of deeds in the county where the buyer resides.
D. The clerk of court in the county where the property is located.
A. A party records a real estate conveyance at the register of deeds in the county where the property is located.
When does a construction lien establish priority for payment?
A. When the first visible work commenced.
B. When a judge orders a writ of execution.
C. When an attorney prepares an abstract of title.
D. When it is filed in public records.
A. Construction liens can create hidden liens because they establish priority for payment from the date that work first commenced rather than the date the lien holder records the lien. Because the lien can be effective before the date the lien holder records it, it may not show up on a title search and would not be covered by title insurance.
Which of the following is true of a buyer’s title insurance policy?
A. It precludes the need for a buyer’s attorney.
B. It insures against all title defects.
C. It is not an absolute guarantee that the title is free from defects.
D. It provides protection for one year from the date of closing.
C. Title insurance does not guarantee that the title the buyer is obtaining is free from all possible defects. If title defects arise after the effective date of a title insurance policy, the title insurance will provide coverage to the buyer for all potential defects covered by the policy.
After Desmond had purchased his house and moved in, he discovered that his neighbor regularly used Desmond’s driveway to reach a garage located on the neighbor’s property. Desmond’s attorney explained that ownership of the neighbor’s real estate includes and easement over the driveway. What is Desmond’s property?
A. The dominate estate
B. A leasehold
C. The servient estate
D. A tenancy
C. The servient estate is the parcel over which an easement runs.
The assessed value of a property is 95% of the appraised value, which is $89,000. What is the assessed value?
A. $89,000
B. $84,550
C. $88,000
D. $87,000
B. $89,000 x .95 = $84,550
A house is valued at $125,000 and assessed at 90% of its value. The tax bill is $3,937.50. What is the tax rate per $100 of assessed value?
A. $3.00
B. $2.75
C. $3.50
D. $1.15
C. $125,000 x .90 = $112,500, assessed value $3,937.50/$112,500 = .035, .035 x 100 = $3.50 $3,937.50 / $112,500 = .035 or $3.50
Which of the following is NOT true?
A. A party must pay the transfer fee when selling a land contract.
B. The transfer tax is 30 cents for each $100 in value.
C. The buyer pays the transfer fee.
D. A party must fill out the transfer fee from and pay to record a buyer’s deed.
C. Taxation and Transfer Fee Wis. Stat. § 77.22: There is imposed on the grantor of real estate a real estate transfer fee at the rate of 30 cents for each $100 of value or fraction thereof on every conveyance not exempted or excluded under this subchapter…. submission of a completed real estate transfer return and collection by the register of the fee shall be prerequisites to acceptance of the conveyance for recording. Wis. Stat. § 77.22(5)(14): A transfer fee is exempt on a partition and under a foreclosure or a deed in lieu of foreclosure to a person holding a mortgage or to a seller under a land contract.
What is a chain of title?
A. A history of the documents appearing in the public record.
B. Proceedings affecting a specific parcel of land.
C. The succession of conveyances from some starting point whereby the present owner derives title.
D. An instrument or document that protects the insured parties, subject to specific exceptions, against defects in the examination of the record and hidden risks such as forgeries, undisclosed heirs, and errors in the public records.
C. The chain of title is a chronological record of a property’s ownership. Each owner should be linked to subsequent owners.
How does a party give notice that a parcel of real estate is the subject of a lawsuit?
A. File a notice of foreclosure.
B. File a lis pendens.
C. File a lien.
D. File a writ of attachment.
B. A lis pendens is a notice of a possible future litigation involving the real estate.
Which of the following deeds provides the highest guarantee of title?
A. Executor’s deed
B. General warranty deed
C. Personal representative’s deed
D. Quitclaim deed
B. A grantor of a quitclaim deed does not make any promises regarding title. The deed serves to transfer the interest of the grantor.
Determine the responsible party and the transfer fee for a property that sold for $64,350.
A. The seller pays $193.05
B. The seller pays $195.20
C. The buyer pays $193.05
D. The buyer pays $193.20
B. To calculate the transfer fee, round the selling price up to the nearest $100. Multiply that amount by .003 to calculate the fee, which is 30 cents for every $100 of value transferred. $64,400 x .003 = $193.20. The fee can also be calculated by dividing the purchase price by 100 and multiplying that answer by 30 cents. $64,400/ 100 = 644. 644 x .3 = $193.20. The seller is responsible for paying the transfer fee.
