1. Real estate law has its roots in both English common law and Spanish civil law.
a.
True
b.
False
2. In the simplest type of ownership, property is owned by a partnership.
a.
True
b.
False
False
1
Easy
18–1a Individual
3. A trust is a form of co-ownership of property.
a.
True
b.
False
False
1
Moderate
18–1f Trust
4. All tenants in common have an equal right to possession of the property.
a.
True
b.
False
True
1
Moderate
18–1b Tenancy in Common
5. The ownership interests of tenants in common are by definition equal.
a.
True
True
1
Easy
b.
False
6. The type of deed used by the seller determines the scope of the warranties the buyer is given.
a.
True
b.
False
True
1
Moderate
18–2a Title
7. An outstanding mortgage balance in excess of the value of a house is referred to as negative equity.
a.
True
b.
False
True
1
Challenging
8. Under a race recording statute, the first person to receive a valid deed will be deemed the owner of the property.
a.
True
b.
False
9. A ground lease is a very long-term lease.
a.
True
b.
False
True
False
1
Moderate
18–1b Tenancy in Common
10. The person that conveys real property by deed is called the grantee.
a.
True
b.
False
False
1
Easy
18-2 Transfer of Ownership
11. As part of any legislative proposal or other major governmental action that will significantly affect the quality of the
environment, the government must generally include an environmental assessment (EA).
a.
True
b.
False
False
1
18–12 Environmental Impact Statements and Assessments
12. As a general rule, a real estate broker may act for more than one person in a real property transaction without the
knowledge of all parties to the transaction.
a.
True
b.
False
False
1
Moderate
18-4 Brokers
13. A sublease is legally the same thing as an assignment of a lease.
a.
True
b.
False
False
1
Moderate
18–11a Types of Leases
14. A variance allows a landowner to construct something ordinarily not permitted under existing zoning regulations.
a.
True
b.
False
True
1
Moderate
18-13d Regulatory Schemes
15. English common law created a type of co-ownership of real property between husband and wife called joint tenancy.
a.
True
b.
False
False
1
Challenging
18–1d Tenancy by the Entirety
16. Inverse condemnation by the government constitutes a taking requiring just compensation.
a.
True
b.
False
True
1
Moderate
18-13b Regulatory Takings
17. Sales of real property interests to nonresident aliens may be regulated by the state but are not regulated by the federal
government.
a.
True
b.
False
False
1
1
Moderate
18-11b Assignments and Subleases
18. An environmental impact statement is not required from the government before actions are taken that will affect the
environment, but such a statement is required from private developers.
a.
True
b.
False
False
1
Moderate
18–12 Environmental Impact Statements and Assessments
19. The rate at which major financial institutions offer to lend to their most creditworthy customers is called the prime
rate.
a.
True
b.
False
True
1
Easy
18-8 Financing
20. As opposed to a general partnership, property may not be held in a limited partnership.
a.
True
b.
False
False
1
Easy
18–1h Limited Partnership
21. The Americans with Disabilities Act places requirements on employers regarding accommodating the disabled but
does not address accessibility to commercial facilities.
a.
True
b.
False
False
Moderate
18–5d Transactions With Foreigners
22. Which of the following are situations in which ownership rights are shared by two or more individuals?
a.
Tenancy in common
b.
Tenancy by the entirety
c.
Both tenancy in common and tenancy by the entirety
d.
Neither tenancy in common nor tenancy by the entirety
c
1
Moderate
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18-1 Forms of Ownership
Blooms: Comprehension
23. Which of the following is true regarding the passing of community property upon the death of one of the owners?
a.
The community-property interest of a spouse may be separately willed upon death; and in the absence of a
will, community property passes to the other spouse.
b.
The community-property interest of a spouse may be separately willed upon death; and in the absence of a
will, passes to the surviving spouse and any surviving children in equal shares upon the death of one of the
spouses.
c.
The community-property interest of a spouse may not be separately willed upon death and passes to the other
spouse automatically upon the death of one of the spouses.
d.
The community-property interest of a spouse may not be separately willed upon death and passes to the
surviving spouse and any surviving children in equal shares automatically upon the death of one of the
spouses.
a
1
Moderate
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–1e Community Property
Blooms: Comprehension
24. Which of the following sell beneficial shares that are traded in the stock markets and thereby permit small investors to
invest in a diversified portfolio of real estate?
a.
Real estate investment trusts
b.
Real estate mutual funds
c.
Land diversification trusts
d.
Investment land diversifications
a
1
1
Moderate
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–14 Physical Accessibility to Commercial Facilities and Public Accommodations
Blooms: Comprehension
25. The conveyance of a(n) __________ interest conveys absolute ownership of real property.
a.
fee absolute
b.
ownership unlimited
c.
total ownership
d.
fee simple
d
1
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18-2 Transfer of Ownership
Blooms: Comprehension
26. Which of the following is NOT a type of recording statute?
a.
Race statute
b.
Notary statute
c.
Pure notice statute
d.
Race-notice statute
27. __________ each own an undivided fractional interest in a parcel of real property.
a.
Tenants in common
b.
Joint tenants
c.
Tenants by the entirety
d.
Community property tenants
1
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–1b Tenancy in Common
Blooms: Application
28. A title insurance policy does not insure against:
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–1f Trust
Blooms: Comprehension
a.
defects in title.
b.
undisclosed liens.
c.
defects in warranties.
d.
errors in the abstraction of the title.
29. A warranty of__________ is applied in a minority of jurisdictions and involves a warranty at the inception of a
commercial lease that there are no latent defects in the premises that will prevent the premises from being used for its
intended purpose and that the premises will remain in a suitable condition.
a.
habitability
b.
merchantability
c.
suitability
d.
fitness for a particular purpose
c
1
Moderate
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
Blooms: Comprehension
30. A majority of states impose on commercial builders of houses a(n):
a.
express warranty of quality.
b.
implied warranty of merchantability.
c.
warranty of deed.
d.
implied warranty of habitability.
d
1
Moderate
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–2d Representations, Warranties, and Duty to Disclose
Blooms: Comprehension
31. Title companies often hold purchase money in __________, meaning in a special account, until the conditions for the
sale have all been met.
a.
open account
b.
dedication
c.
escrow
d.
closed account
c
1
Moderate
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–3a Title Searches, Insurance, and Escrows
Blooms: Comprehension
32. In a(n) __________ listing, the listing broker will receive a commission only if he or she procures a ready, willing,
and able buyer.
a.
exclusive
b.
open
c.
net listing
d.
broker
b
1
Moderate
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–4b Listing Agreements
Blooms: Comprehension
33. In a(n) __________ listing, the broker will receive any sales proceeds in excess of the net listing amount specified by
the seller.
a.
exclusive
b.
open
c.
net listing
d.
broker
c
1
18–4b Listing Agreements
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–4b Listing Agreements
Blooms: Comprehension
34. Which of the following have been identified as valid uses of a state’s police power?
a.
Efforts to address threats to the public health and safety, such as fires and unsanitary conditions.
b.
Rent control within constitutional limits and efforts to address threats to the public health and safety, such as
fires and unsanitary conditions
c.
Rent control within constitutional limits; efforts to address threats to the public health and safety, such as fires
and unsanitary conditions; and restrictions on off-site advertising signs.
d.
Only efforts involving legislation addressing the conduct of police officers both on and off the job because the
state’s police power is limited to supervision of law enforcement officers within the state’s jurisdiction.
c
1
Moderate
c
1
Moderate
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–3a Title Searches, Insurance, and Escrows
Blooms: Comprehension
35. A(n) __________ is an agreement by a lender to replace a construction loan with a permanent loan, usually after
certain conditions, such as the timely completion of the project, have been met.
a.
substitution agreement
b.
interim agreement
c.
development commitment
d.
take-out commitment
d
1
Challenging
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–8b Construction Loans
Blooms: Comprehension
36. A(n) __________ gives the mortgagor the right, after a foreclosure, to reacquire property within a statutory limited
period.
a.
interim statute
b.
right of redemption
c.
mortgagee relief statute
d.
right of relief
b
1
Moderate
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–8f Foreclosure and Rights of Redemption
Blooms: Comprehension
37. A one-point charge will generate a fee of _____ on a loan of $10,000.
a.
$1,000
b.
$100
c.
$10
d.
$1
b
1
Easy
United States – BUSBROG: – Analytic
18–8a Permanent Loans
Blooms: Knowledge
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–13 Government Regulation of Land Use
Blooms: Comprehension
38. In a __________ financing transaction, the second lender lends the owner the additional funds and agrees to take over
the servicing of the first loan.
a.
permanent
b.
wraparound
c.
mortgage
d.
deed of trust
39. Which of the following references the power of government to acquire private property needed for a public use?
a.
Adverse possession
b.
Area plan
c.
Eminent domain
d.
Call
c
1
Moderate
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–13a Eminent Domain
Blooms: Comprehension
40. In community property states, property acquired by inheritance during the marriage is:
a.
community property.
b.
separate property.
c.
a tenancy by the entirety.
d.
a tenancy in common.
b
1
Moderate
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–1e Community Property
Blooms: Comprehension
41. Which of the following is not true regarding the legal requirements of a deed?
a.
It must specifically describe the interest that is conveyed.
b.
It must signed by the named grantee.
c.
It must be delivered to the named grantee.
d.
It must be accepted by the named grantee.
b
b
1
Moderate
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–8e Wraparound Financing
Blooms: Knowledge
42. Which of the following is NOT one of the three basic types of deeds?
a.
A grant deed
b.
A specific deed
c.
A quitclaim deed
d.
A warranty deed
b
1
Moderate
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–2b Types of Deeds
Blooms: Knowledge
43. Until a developer obtains a(n) __________ right, meaning a fully guaranteed right, to develop a property, the
regulation governing that property may be changed.
a.
vested
b.
acknowledged
c.
known
d.
discretionary
a
1
Moderate
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18-13g Vested Development Rights
Blooms: Comprehension
44. __________ is the division of a city into districts and the application of specific land-use regulations in each district.
a.
Zoning
b.
Nonconforming use
c.
Subdivision process
d.
Constitutional taking
a
1
Moderate
United States – BUSPROG: – ANALYTIC
DISC: – AICPA: BB-Legal
18-13d Regulatory Schemes
Blooms: Comprehension
1
Moderate
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18-2 Transfer of Ownership
Blooms: Comprehension
45. What is generally meant by a reference to a triple net industrial lease?
a.
That the tenant pays all taxes, insurance, and operating maintenance expenses.
b.
That the lessor pays all taxes, insurance, and operating maintenance expenses.
c.
That the tenant pays insurance and operating maintenance expenses, but that the lessor pays taxes.
d.
That the lessor pays insurance and operating maintenance expenses, but that the tenant pays taxes.
46. In a(n) __________, the potential buyer pays the seller for the right, but not the obligation, to purchase the property
during a given time period.
a.
right of first refusal
b.
real estate investment trust
c.
option contract
d.
preliminary agreement
1
United States – BUSBROG: – Analytic
18–7a Option Contract
Blooms: Comprehension
47. A __________ gives a person the right to negotiate the purchase of the property before the seller enters negotiations
with another party.
a.
letter of agreement
b.
letter of intent
c.
right of first refusal
d.
right of first negotiation
d
1
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–7b Right of First Refusal
Blooms: Comprehension
48. A __________ is the right, conferred by a written contract, to purchase property on the same terms offered by or to a
third party.
a.
letter of agreement
b.
letter of intent
1
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–11 Commercial Leasing
Blooms: Application
c.
right of first refusal
d.
right of first negotiation
49. CASE 18.1 Eaton v. Federal National Mortgage Association (2012) dealt with the underlying promissory note, the
assignments to a third party, and the true mortgagee-in-fact. After reviewing the relevant common and statutory laws, the
court concluded that the true __________ means the party __________.
a.
mortgagee, securing the note on the real property
b.
mortgagor, transferring legal title of the real property to the lender
c.
mortgagee, transferring legal title of the real property to the lender
d.
mortgagee, holding the underlying mortgage note
d
1
United States – BUSPROG: – ANALYTIC
DISC: – AICPA: BB-Legal
18–8f Foreclosure and Rights of Redemption
Blooms: Analysis
50. In CASE 18.2 Kelo v. City of New London (2005), the U.S. Supreme Court held that the “takings clause” of the U.S.
Constitution’s __________ Amendment now means __________ and a city can force private citizens to sell their houses
and other property to a __________.
a.
First, a regulatory taking, private entity
b.
Fifth, public use, public entity only
c.
Fifth, economic development, private party
d.
Fifth, a regulatory scheme, private party
1
United States – BUSPROG: – ANALYTIC
DISC: – AICPA: BB-Legal
18–13a Eminent Domain
Blooms: Analysis
51. A __________ sets forth the general terms and conditions of a proposed purchase until a formal acquisition agreement
can be signed.
a.
letter of agreement
b.
letter of intent
c.
form of contract
d.
formal delineation
b
1
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–7b Right of First Refusal
Blooms: Comprehension
52. In relation to notice in connection with a property interest, courts may find __________ notice if a reasonable inquiry
would have disclosed a prior interest.
a.
actual
b.
absolute
c.
constructive
d.
necessary
53. An alternative to acquiring real property for cash is a(n) __________, whereby the seller exchanges its property for
another piece of property.
a.
tax-deferred exchange
b.
sale and leaseback
c.
option contract
d.
wraparound financing
a
1
Challenging
United States – BUSPROG: – ANALYTIC
DISC: – AICPA: BB-Legal
18–5b Tax-Deferred Exchange
Blooms: Application
54. A __________ permit allows uses that are not permitted as a matter of right under a zoning ordinance and imposes
conditions to ensure that the use will be appropriate for the particular situation.
a.
conditional-use
b.
limited-access
c.
nonconforming
d.
division
a
1
Challenging
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
1
Comprehension
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18–7c Letter of Intent
Blooms: Comprehension
Fact Pattern 18-1
Prudence wants to develop a shopping center in her town. She is very interested in developing the center at the location of
an old dump. She can purchase the property cheaply, and it is near one of the fastest growing areas of the city. She is
concerned, however, about being held liable for all cleanup costs. She has heard about federal and state funds that may be
available; but she is concerned that if she purchases the property knowing that contamination is likely there, she will not
be eligible to participate in government assistance programs for cleanup. She decides to discuss her problem with Bruce, a
law student studying environmental law.
55. Refer to Fact Pattern 18–1. Which of the following is a term used for the dump in which Prudence is interested?
a.
Black area
b.
Brownfield
c.
Red zone
d.
Danger zone
b
1
Challenging
United States – BUSPROG: – ANALYTIC
DISC: – AICPA: BB-Legal
18–6a Brownfields
Blooms: Analysis
56. Refer to Fact Pattern 18–1. What should Bruce advise Prudence regarding her plans?
a.
That she should forget the project because she would be ineligible for any cleanup assistance and, as owner,
would be individually liable for the entire project.
b.
That she should buy the property without any investigation and deny knowledge of contamination if later
questioned because under federal law she can only be held liable if she had full and informed knowledge of
contaminants when she made the purchase.
c.
That she should incorporate because while an individual is liable for the entire costs of cleanup, a corporation
is not.
d.
That by taking appropriate steps to become a bona fide prospective purchaser, she can avoid liability for
legacy contamination.
d
1
Challenging
United States – BUSPROG: – ANALYTIC
DISC: – AICPA: BB-Legal
18–6a Brownfields
Blooms: Analysis
57. In the Stevens v. Premier Cruises, Inc. (2000) case referenced in the text, the plaintiff—who was confined to his
wheelchair—sued Premier Cruises under the __________ Act, claiming that the portions of the ship that were considered
“__________” were not in-fact wheelchair accessible.
a.
Title III of the Civil Rights, public accommodations
18-13d Regulatory Schemes
Blooms: Comprehension
b.
Americans With Disability, public accommodations
c.
Department of Justice Disability, public accommodations
d.
Americans With Disability, private accommodations
58. In CASE 18.3 Koontz v. St. Johns River Water Management District (2013), plaintiff Koontz purchased 14.9 acres of
undeveloped land classified as “wetlands.” The State of Florida found Koontz’s land-use permit proposal (which included
land and cash) to develop the land inadequate and imposed more “conditions” to the permit. Koontz found these
conditions were excessive under the Nolan and Dollan cases, and filed suit. The U.S. Supreme Court __________ the
Florida Supreme Court, holding that the government’s demand for property (and cash) for land under the __________
requirements amounted to a(n) __________ of Koontz’s land.
a.
affirmed, Kelo, unconstitutional taking
b.
reversed, Nolan and Dollan, unconstitutional taking
c.
reversed, Kelo, nonconforming use
d.
affirmed, Nolan and Dollan, unconstitutional taking
b
1
United States – BUSPROG: – ANALYTIC
DISC: – AICPA: BB-Legal
18–13e Conditions and Unconstitutional Takings
Blooms: Analysis
59. Susie has a great farm bordering on a river and plans to build a house on a cliff overlooking the water. She was also
considering building a couple of guest cottages to rent to vacationers. One day a land conservatory came to Susie and
asked her to designate the land as a pristine area whereby no development or building could take place. Susie told them to
get lost. The next thing she knew, the jurisdiction in which she lived had passed a regulation permanently prohibiting
riverfront owners in her area from building any structures within one half mile of the river. There had been no such
restriction in her state or county previously, and Susie suspects that the regulation is part of a plot to force landowners to
agree to the request of the land conservatory. Susie tells her builder to go ahead with plans to construct the home because
the government cannot take land through excessive regulation. Is Susie correct that the government cannot take land
through excessive regulation?
a.
Susie is incorrect although if the government action constitutes a taking, compensation to the landowner must
be provided.
b.
Susie is incorrect, and no compensation to the landowner is required.
c.
Susie is incorrect although she would only be entitled to compensation for any lost profits she can establish.
d.
Susie is correct, and the regulation would be overturned by a federal court.
1
United States – BUSPROG: – ANALYTIC
DISC: – AICPA: BB-Legal
b
1
United States – BUSPROG: – ANALYTIC
DISC: – AICPA: BB-Legal
18–14 Physical Accessibility to Commercial Facilities and Public Accoomodations.
Blooms: Analysis
60. Blaire and Jimmy have been married for many years and own a home through tenancy by the entirety. Blaire has
grown children from a previous marriage, Andy and Candy; and her will provides that her interest in the home should go
to them upon her death. Blaire dies at age 90, and a few weeks later Jimmy finds a new girlfriend and moves her into the
home. Andy and Candy object and tell Jimmy to get out because they have an ownership interest in the home, and they
believe that Jimmy is being disrespectful to their mother. Which of the following is true regarding the ownership claim of
Andy and Candy?
a.
Blaire’s children are correct; and each of them, along with Jimmy, have a 1/3 ownership interest in the home.
b.
Blaire’s children are correct, and they each have a 25% interest in the home with Jimmy owning the other 50%
interest.
c.
Blaire’s children are correct, and they each have a 10% interest in the home with Jimmy owning the other
80%.
d.
Blaire’s children are incorrect, and Jimmy solely owns the home.
d
1
Challenging
United States – BUSPROG: – ANALYTIC
DISC: – AICPA: BB-Legal
18–1d Tenancy by the Entirety
Blooms: Analysis
61. Compare and contrast joint tenancy and tenancy by the entirety.
possession, use, and revenue of the property. The modern view is that divorce converts a
tenancy by the entirety to a tenancy in common.
1
Challenging
United States – BUSBROG: – Analytic
DISC: – AICPA: BB-Legal
18-1 Forms of Ownership
Blooms: Comprehension
62. Describe in detail the three basic types of deeds including any warranties or guarantees the deeds provide.
executed the grantor does not have title to the real property referred to in the grant deed,
18–13 Government Regulation of Land Use
Blooms: Analysis
63. What must a person do to acquire a parcel of land by adverse possession?
64. Lawrence owns several apartments in a large city. The city just enacted a rent control ordinance limiting the amount of
rent that can be charged with apartments. Lawrence heard that Susan, a friend of his, just graduated from law school and
passed the bar. Lawrence asks Susan if there is any way he can avoid the rent control measures. What should Susan tell
him?
65. John owns a 20-acre parcel of land in Smallville. Bob is a developer that wants to build a subdivision in Smallville. He
offers John $1,000 for a 30-day option to purchase the land for $1 million. John agrees. Clara is John’s sister and has a
valid right of first refusal on the same land. Bob has been told by his bank that the bank will provide a construction loan
for the development. What rights did Bob legally obtain when he purchased his option? What effect will Clara’s rights
have on Bob’s option? Explain the three types of loans⎯construction, gap, and take-financing⎯that could be involved to
complete the development. Discuss fully.
66. Bob is selling his home. During the inspection with his broker, Bob discovered that some of the pipes in the walls had
developed tiny leaks. The cost of fully repairing this condition would cost thousands of dollars and take approximately
three months. Instead, Bob verbally represented to each and every buyer that the house was “in great shape” and “had no
problems.” Carl bought Bob’s house; and six months after the deal closed, a pipe broke causing ten thousand dollars in
damages. What remedies does Carl have against Bob regarding the sale of the house? Discuss fully.