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1
Q

All of the following can be classified as real property EXCEPT?

A) condominium unit ownership.

B) ownership in severalty of a house.

C) a tenancy in common that includes the right to occupy one of three units in a residential building.

D) cooperative unit ownership.

A

D.

The answer is cooperative unit ownership. Because it involves receiving shares of stock and a leasehold—both of which are considered by common law to be personal property—cooperative ownership is personal, not real, property.

2
Q

An estate in severalty is associated with which of the following?

A) Joint ownership with the right of survivorship

B) Multiple ownership with no right of survivorship

C) Ownership by a husband and wife

D) Sole and separate ownership

A

D.

The answer is sole and separate ownership. An estate in severalty is “severed” from other estates and is held by an individual owner.

3
Q

A primary feature of property held in joint tenancy is that?

A) a maximum of two people can own the real estate.

B) there is right of survivorship.

C) additional owners may be added later.

D) the owners may hold unequal shares.

A

B.

The answer is there is right of survivorship. Right of survivorship is the distinctive feature of joint tenancy. Any number of persons can own a property in joint tenancy providing they all have equal shares and identical interests, come into ownership at the same moment and via the same granting document, and have equal rights of possession.

4
Q

Real estate can be owned under a variety of trusts, including living or testamentary trusts and?

A) a real estate earnings trust (REET).

B) an investors’ real estate trust (IRET).

C) a real estate commercial trust (RECT).

D) land trusts.

A

D.

The answer is land trusts. Real estate can be owned under a variety of trusts, including living or testamentary trusts and land trusts.

5
Q

Which statement applies to both joint tenancy and tenancy by the entirety?

A) A deed will not convey any interest unless signed by both spouses.

B) A deed signed by one owner will convey a fractional interest.

C) There is no right to file a partition suit.

D) The last survivor becomes a severalty owner.

A

D.

The answer is the last survivor becomes a severalty owner. Tenancy by the entirety is a type of joint tenancy recognized by some states that is reserved for married couples. In both, there is a right of survivorship. The last survivor becomes sole (severalty) owner.

6
Q

Which of the following is TRUE regarding community property rights?

A) Income earned from a spouse’s second job is considered separate property.

B) Community property laws are based on the idea that spouses, rather than being equal partners, are considered one entity.

C) All of these.

D) Any property acquired during a marriage is considered to be obtained by mutual effort.

A

D.

The answer is any property acquired during a marriage is considered to be obtained by mutual effort. Community property laws are based on the idea that spouses, rather than merging into one entity, are equal partners in the marriage. Under community property laws, any property acquired during a marriage is considered to be obtained by mutual effort. Community property law varies among the states, but all recognize two kinds of property: separate property and community property.

7
Q

A broker who is asked how a married couple should take title would advise them?

A) as joint tenancy.

B) to seek legal advice.

C) as tenants by the entirety.

D) as tenants in common.

A

B.

The answer is to seek legal advice. A broker or sales associate should never provide advice to prospective buyers on how they should take title to real estate.

8
Q

The partition of property that is owned concurrently can be accomplished by

A) posting a notice of partition by any one of the owners.

B) court action.

C) agreement of the majority of the owners.

D) death of one of the co-owners.

A

B.

The answer is court action. If co-owners do not voluntarily agree to terminate their interests in the property, a court can be asked to determine whether the property can be divided into separate parcels without destroying its value or whether it must be sold and the proceeds distributed to the owners according to their fractional interests.

9
Q

A parcel of property was purchased by two friends. The deed they received from the seller at closing transferred the property without stipulating a form of ownership. The two friends took title as which of the following?

A) Community property owners

B) Tenants by the entirety

C) Tenants in common

D) Joint tenants

A

C.

The answer is tenants in common. When joint tenancy is not clearly prescribed by the deed, grantees take title as tenants in common—to avoid accidental joint tenancy. Unmarried persons are unable to hold community property or be tenants by the entirety because both are reserved for married couples.

10
Q

Title to a property is held by two or more individuals; this property is held in

A) severalty.

B) trust.

C) co-severalty.

D) co-ownership.

A

D.

The answer is co-ownership. When title to a property is held by two or more individuals, the property is being held in co-ownership.

11
Q

A corporation is a legal entity, recognized as an artificial person. Property owned solely by the corporation is owned in

A) trust.

B) severalty.

C) survivorship tenancy.

D) partnership.

A

The answer is severalty. The term person does not always refer to a natural individual—a human; the law regards a corporation as an artificial person. Because this is so, a corporation can own real estate in severalty (alone).

12
Q

Depending on the type of trust and its purpose, the trustor, trustee, and beneficiary

A) must be related.
B) can all be either people or legal entities.
C) must all be actual persons.
D) cannot be related.

A

The answer is can all be either people or legal entities. Depending on the type of trust and its purpose, the trustor, trustee, and beneficiary can all be natural persons or legal entities.

13
Q

If a condominium unit owner has not paid homeowners association fees for the length of time required by state law, the HOA’s remedy may be to

A) place a lien on the property.
B) change the locks on the unit to keep out the unit owner until all amounts owed have been paid.
C) call the sheriff to serve notice of nonpayment on the unit owner.
D) enter the property and confiscate the personal possessions of the occupant.

A

The answer is place a lien on the property. When HOA fees are unpaid, the association’s remedies may include seeking a court-ordered judgment to have the delinquent owner’s unit sold to cover the outstanding amount or to place a lien on the property.

14
Q

A trust is a device by which one person transfers ownership of property to someone else to hold or manage for

A) only a related party.
B) a governmental entity.
C) the benefit of a third party.
D) the benefit of a corporation.

A

The answer is the benefit of a third party. A trust is a device by which one person transfers ownership of property to someone else to hold or manage for the benefit of a third party.

15
Q

In a tenancy in common, if the fractions of ownership are NOT stated in the deed, how are they determined?

A) The tenants are presumed to hold equal shares.
B) The tenants need a judicial decision to determine the fractional shares.
C) The tenants settle the issue through binding arbitration.
D) The tenants must terminate the tenancy in common through partition.

A

The answer is the tenants are presumed to hold equal shares. The deed creating a tenancy in common may or may not state the fractional interest held by each co- owner; if no fractions are stated, the tenants are presumed to hold equal shares.

16
Q

Ownership of property by two people is considered

A) concurrent ownership.
B) dual ownership.
C) tenancy by co-owners.
D) ownership in severalty.

A

The answer is concurrent ownership. Ownership in severalty is ownership by one individual. Two or more individuals can own property together in a form of concurrent ownership.

17
Q

Which of the following is a legal entity that exists independently of its members?

A) Partnership
B) Corporation
C) Limited liability company
D) All of these

A

The answer is all of these. Business organizations such as limited liability companies, partnerships, and corporations, are legal entities that exist independently of their members. Ownership by a business organization makes it possible for many people to hold an interest in the same parcel of real estate.

Investors may be organized to finance a real estate project in various ways. Some provide for the real estate to be owned by the entity; others provide for direct ownership by the investors.

18
Q

A man owns one of 20 units in fee simple, along with a 5% ownership share in the parking facilities, recreation center, and grounds. What kind of property does he own?

A) Cooperative
B) Condominium
C) Land trust
D) Time-share

A

The answer is condominium. When a person owns part of a development in fee and a percentage of the rest in common with the other unit owners, this is condominium ownership.

19
Q

The forms of property ownership are controlled by

A) the local governments.
B) the title insurance customary practices.
C) the federal government.
D) the state.

A

The answer is the state. The forms of property ownership are controlled by the state.

20
Q

The advantages of the limited liability company include all of the following EXCEPT

A) a streamlined method of formation provided by Congress.
B) a flexible management structure.
C) the limited liability offered by the corporate form of ownership.
D) the tax advantages of a partnership.

A

The answer is a streamlined method of formation provided by Congress. A limited liability company is established in compliance with state law, which varies from state to state. The LLC offers the tax advantages of a partnership in that income flows directly to members of the LLC and the LLC offers a flexible management structure without the complicated requirements of a corporation or the restrictions of a limited partnership.

21
Q

An estate left the decedent’s farm to eight grandchildren. Because no form of ownership was specified in the decedent’s will, each of the grandchildren receives

A) a one-eighth interest in the property as a tenant in common.
B) a right of possession to one-eighth of the property.
C) a joint interest in the entire property.
D) a severalty interest in one-eighth of the property.

A

The answer is a one-eighth interest in the property as a tenant in common. If no other form of ownership is specified, each co-owner is a tenant in common with the other co-owners. While each owner in this case has a one-eighth ownership interest, each shares unity of possession, which means the right to use the entire property.

22
Q

All of these unities are required for a joint tenancy EXCEPT

A) unity of title.
B) unity of time.
C) unity of ownership.
D) unity of possession.

A

The answer is unity of ownership. To create joint tenancy ownership, four unities are required: possession, interest, time, and title.

23
Q

In a land trust, the beneficiary is usually also

A) the trustee.
B) the attorney in fact.
C) the fiduciary.
D) the trustor.

A

The answer is the trustor. In a land trust, the beneficiary is usually also the trustor. The beneficiary retains management and control of the real property and has the right of possession as well as the right to any income.

24
Q

The death of one of the directors of a corporation

A) None of these
B) forces the sale of property owned by the corporation.
C) formally dissolves the corporation.
D) does not affect title to property owned by the corporation.

A

The answer is does not affect title to property owned by the corporation. The corporation is a separate entity. Corporations may have the potential to live forever and the corporation would simply replace the director without any discontinuation of operations.

25
Q

The real property interest that takes the form of personal property is

A) tenancy in common.
B) ownership in severalty.
C) cooperative unit ownership.
D) condominium unit ownership.

A

The answer is cooperative unit ownership. Because it involves receiving shares of stock and a leasehold—both of which are considered by common law to be personal property—cooperative ownership is personal, not real, property.

26
Q

A grandparent creates a trust to pay for a grandchild’s education. The trust is operated by an attorney who makes payments directly to the school. Based on these facts, which of these statements BEST characterizes the relationships among these parties?

A) The attorney is the trustor, the grandchild is the beneficiary, and the grandparent is the trustee.

B) The grandparent is the trustor, the grandchild is the beneficiary, the attorney is the trustee, and the school is the fiduciary.

C) The grandparent is the trustor, the grandchild is the beneficiary, and the attorney is the trustee.

D) The grandparent is the trustor, the school is the beneficiary, and the attorney is the trustee.

A

The answer is the grandparent is the trustor, the grandchild is the beneficiary, and the attorney is the trustee. The grandparent is the owner-trustor, the grandchild is the beneficiary, and the attorney is the person who manages the trust—that is, the trustee.

27
Q

A will provided that the local banker take care of the deceased’s estate until the deceased’s children reach age 25. What kind of trust is this?

A) Trust deed
B) Testamentary trust
C) Living trust
D) Land trust

A

The answer is a testamentary trust. A testamentary trust is established by will after the trustor’s death. A living trust is established during the trustor’s lifetime. Real estate is the only asset in a land trust. A deed of trust (also called a trust deed) is a financing instrument.

28
Q

The term severalty comes from the fact that

A) there are several owners.
B) a sole owner is severed or cut off from other owners.
C) the term sever refers to government ownership.
D) a corporation usually consists of several shareholders.

A

The answer is a sole owner is severed or cut off from other owners. The term severalty comes from the fact that a sole owner is severed or cut off from other owners.

29
Q

All of the following can be classified as real property EXCEPT

A) condominium unit ownership.

B) a tenancy in common that includes the right to occupy one of three units in a residential building.

C) ownership in severalty of a house.

D) cooperative unit ownership.

A

The answer is cooperative unit ownership. Because it involves receiving shares of stock and a leasehold—both of which are considered by common law to be personal property—cooperative ownership is personal, not real, property.

30
Q

Three friends agree to purchase and operate a property as a permanent investment. Two friends each contribute $50,000. The third contributes $30,000 and agrees to manage the day-to-day operations of the business, which the friends call “Property Group Partners.” Only the third friend has any right to participate in the operation of the venture. If a structure on the property collapses, resulting in injury and property damage worth $275,000, what will be the liability of the friend who contributed $50,000?

A) $100,000
B) $50,000
C) $91,667
D) None

A

The answer is $50,000. A limited partner is limited in liability to the amount of the original investment.

31
Q

A brother and sister were co-owners of a lot. The sister became the sole owner automatically when the brother died. The form of ownership they had was

A) severalty.
B) community property.
C) joint tenancy.
D) tenancy by the entirety.

A

The answer is joint tenancy. Because the sister automatically inherited, she and her brother must have been joint tenants.

32
Q

Two people own an apartment building together as joint tenants. They share equally in the expenses and profits. One day, one of the owners decides to end the relationship. If that owner signs and delivers a deed to the buyer, which of these statements is TRUE?

A)
he buyer and the other owner will be tenants in common.

B) The buyer will be a tenant in common with the other owner and a joint tenant with the seller.

C) The conveyance will be invalid; the two original owners will remain joint tenants.

D) The buyer will become a joint tenant with the other owner.

A

The answer is the buyer and the other owner will be tenants in common. A co-owner can sell whatever the co-owner owns; however, once the unities of time, title, and interest are destroyed, as they are if one joint tenant sells that interest, there can no longer be a joint tenancy.

33
Q

An owner purchased an interest in a house in Beachfront. The owner is entitled to the right of possession only between July 10 and August 4 of each year. Which of the following is MOST likely the type of ownership that has been purchased?

A) Time-share
B) Cooperative
C) Condominium
D) Partnership

A

The answer is time-share. When a person holds an interest in property for a stated time each year, that person is sharing the property according to a time plan. It is a time-share.

34
Q

What kind of ownership do the horizontal property acts regulate?

A) Planned unit developments
B) Cooperatives
C) Condominiums
D) Time-shares

A

The answer is condominiums. Condominiums are regulated by the horizontal property acts enacted in most states.

35
Q

A trust is a device by which one person transfers ownership of property to someone else to hold or manage for

A) the benefit of a third party.
B) only a related party.
C) the benefit of a corporation.
D) a governmental entity.

A

The answer is the benefit of a third party. A trust is a device by which one person transfers ownership of property to someone else to hold or manage for the benefit of a third party.

36
Q

Which of the following refers to ownership by one person?

A) Tenancy in common
B) Tenancy by the entirety
C) Severalty
D) Community property

A

The answer is severalty. Severalty ownership is ownership by one person severed—cut off—from all others.

37
Q

Two friends are buying a house together. One of them wants a local charity to inherit that share of the property. The friends should hold title as

A) tenants in severalty.
B) joint tenants.
C) tenants by the entirety.
D) tenants in common.

A

The answer is tenants in common. Because one owner wants that interest to pass to a charity, the owners, should take title as tenants in common so that each may write a will.

38
Q

A parcel of property was purchased by two friends. The deed they received from the seller at closing transferred the property without stipulating a form of ownership. The two friends took title as which of the following?

A) Joint tenants
B) Tenants in common
C) Tenants by the entirety
D) Community property owners

A

The answer is tenants in common. When joint tenancy is not clearly prescribed by the deed, grantees take title as tenants in common—to avoid accidental joint tenancy. Unmarried persons are unable to hold community property or be tenants by the entirety because both are reserved for married couples.

39
Q

A tenancy in common differs from a joint tenancy in that

A) tenants in common have divided interests.

B) tenants in common may have unequal interests.

C) there is a survivorship right if a tenant in common dies without a will.

D) tenants in common must acquire their interest at the same time.

A

The answer is tenants in common may have unequal interests. Tenancy in common is the only form of ownership that can have unequal shares of ownership.

40
Q

When a corporation takes complete ownership of a property, it is considered to be ownership in

A) joint tenancy.
B) partnership.
C) severalty.
D) tenancy in common.

A

The answer is severalty. A corporation is an artificial person, which means that it can hold ownership in severalty.

41
Q

A resident owns and lives year-round in a cottage in a lakefront community. The resident’s ownership of the cottage is in fee simple. The resident also owns an undivided percentage interest in a parking lot, a golf course, and a swimming pool, all located in the development. Based on these facts alone, the resident’s ownership is probably BEST described as

A) a time-share estate.
B) a cooperative.
C) a time-share use.
D) a condominium.

A

The answer is a condominium. It appears that the resident has condominium ownership, because the resident owns the cottage as well as the interest in the common elements. Cooperative ownership is ruled out, because the resident does not have a proprietary lease. It is not a time-share, because the resident clearly owns more than the right to use the property only at specific times.

42
Q

A company is a legal entity, created by charter under the laws of the state. The company is managed and operated by a board and is permitted to buy and sell real estate. When one of its directors dies, the company continues to operate. Because of its structure, the company’s income is subject to double taxation (first by the company, and then by its shareholders). The company is BEST described as

A) a partnership.
B) a condominium trust.
C) a limited liability company.
D) a corporation.

A

The answer is a corporation. The corporation would not be affected if one of the directors dies. The company’s income is subject to double taxation, which defines the company as a corporation.

43
Q

A corporation is a legal entity, recognized as an artificial person. Property owned solely by the corporation is owned in

A) survivorship tenancy.
B) trust.
C) severalty.
D) partnership.

A

The answer is severalty. The term person does not always refer to a natural individual—a human; the law regards a corporation as an artificial person. Because this is so, a corporation can own real estate in severalty (alone).

44
Q

The death of one of the directors of a corporation

A) does not affect title to property owned by the corporation.

B) forces the sale of property owned by the corporation.

C) None of these

D) formally dissolves the corporation.

A

The answer is does not affect title to property owned by the corporation. The corporation is a separate entity. Corporations may have the potential to live forever and the corporation would simply replace the director without any discontinuation of operations.

45
Q

All of these are characteristics of a tenancy by the entirety EXCEPT

A) title may be conveyed only by a deed signed by both parties.

B) each spouse owns an equal, undivided interest in the property as a single, indivisible unit.

C) the surviving spouse automatically becomes sole owner of the property upon the death of the other spouse.

D) the surviving spouse automatically owns one-half of the property acquired during the marriage.

A

The answer is the surviving spouse automatically owns one-half of the property acquired during the marriage. Under tenancy by the entirety, title may be conveyed only by a deed signed by both parties, each spouse owns an equal, undivided interest in the property, and the surviving spouse automatically becomes the owner of the entire property upon the death of the other.

46
Q

The forms of property ownership are controlled by

A) the title insurance customary practices.
B) the local governments.
C) the federal government.
D) the state.

A

The answer is the state. The forms of property ownership are controlled by the state.

47
Q

Which of the following is MOST likely evidence of ownership in a cooperative?

A) Existence of a reverter clause
B) Right of first refusal
C) Tax bill for an individual unit
D) Shareholder stock

A

The answer is shareholder stock. The documents that show ownership in a cooperative are shares of stock in the cooperative corporation and a proprietary lease.

48
Q

The real property interest that takes the form of personal property is

A) condominium unit ownership.
B) tenancy in common.
C) cooperative unit ownership.
D) ownership in severalty.

A

The answer is cooperative unit ownership. Because it involves receiving shares of stock and a leasehold—both of which are considered by common law to be personal property—cooperative ownership is personal, not real, property.

49
Q

A will provided that the local banker take care of the deceased’s estate until the deceased’s children reach age 25. What kind of trust is this?

A) Land trust
B) Testamentary trust
C) Living trust
D) Trust deed

A

The answer is a testamentary trust. A testamentary trust is established by will after the trustor’s death. A living trust is established during the trustor’s lifetime. Real estate is the only asset in a land trust. A deed of trust (also called a trust deed) is a financing instrument

50
Q

In a land trust, the beneficiary is usually also

A) the attorney in fact.
B) the trustee.
C) the fiduciary.
D) the trustor.

A

The answer is the trustor. In a land trust, the beneficiary is usually also the trustor. The beneficiary retains management and control of the real property and has the right of possession as well as the right to any income.

51
Q

Three friends agree to purchase and operate a property as a permanent investment. Two friends each contribute $50,000. The third contributes $30,000 and agrees to manage the day-to-day operations of the business, which the friends call “Property Group Partners.” Only the third friend has any right to participate in the operation of the venture. Based on these facts, what type of business organization have these friends established?

A) General partnership
B) Limited liability company
C) Joint venture
D) Limited partnership

A

The answer is limited partnership. A limited partnership limits the participation of the silent partners, and also limits their liability. A general partnership would require that all are equally involved in running the operation, which would mean that all are exposed to liability.

52
Q

Ownership in severalty is property

A) owned by two or more individuals.
B) held by one individual for the benefit of another.
C) held in a trust.
D) that has a single owner.

A

The answer is that has a single owner. Ownership in severalty is property owned by one individual or corporation.

53
Q

An LLC is a form of business organization that combines the MOST attractive features of

A) co-operative and condominium ownership.
B) the limited partnership and the corporation.
C) joint tenancy and tenancy in common.
D) time share and planned unit development.

A

The answer is the limited partnership and the corporation. The LLC has the individualism of a limited partnership with the protection of a corporation. Many smaller companies are now LLCs for these reasons.

54
Q

A neutral individual holds title for the benefit of another when property is held in

A) co-ownership.
B) co-severalty.
C) trust.
D) severalty.

A

The answer is trust. Property held by a neutral individual for the benefit of another is being held in trust.

55
Q

Three people are joint tenants with rights of survivorship in a tract of land. One owner conveys his interest to a friend. Which statement is TRUE?

A) The new owner has severalty ownership.
B) They all become joint tenants.
C) The other two owners remain joint tenants.
D) They all become tenants in common.

A

The answer is the other two owners remain joint tenants. When one of three joint tenants sells to a new person, the other two remain joint tenants with respect to each other. The new person is a tenant in common,, and not owner in severalty of the entire property because severalty is sole ownership.

56
Q

A fee simple estate may be held

A) only in severalty.

B) in three basic ways.

C) in co-ownership, but without the right of survivorship.

D) in trust, provided the trustee is a corporation.

A

The answer is in three basic ways. A fee simple estate may be held in three basic ways: in severalty, in trust, or in co-ownership.