Lesson 6
Chapter 12-14
1.
The right to or ownership of land is referred to as
a.
title
b.
deed
c.
voluntary alienation
d.
none of these
2.
The document that transfers the right to or ownership of land is referred to
a.
title
b.
deed
c.
voluntary alienation
d.
none of these
3.
The owner who is transferring ownership of a property is called
a.
the grantor
b.
the grantee
c.
the broker
d.
the trustee
4.
Generally speaking, what type of deal would the grantee like to receive
a.
bargain and sale deed
b.
general warranty deed
c.
quitclaim deed
d.
special warranty deed
e.
none of these
In which type of deed does the grantor warrant that the title is unencumbered to
the beginning of time (unless otherwise noted)
a.
bargain & sale deed
b.
general warranty deed
c.
quitclaim deed
d.
special warranty deed
e.
none of these
5.
6.
In which type of deed does the grantor warrant that the title was not encumbered
only while owned by the grantor (unless otherwise noted)
a.
bargain & sale deed
b.
general warranty deed
c.
quitclaim deed
d.
special warranty deed
e.
none of these
7.
In which type of deed does the grantor transfer their ownership rights, whatever
those ownership rights may be?
a.
bargain & sale deed
b.
general warranty deed
c.
d.
e.
quitclaim deed
special warranty deed
none of these
8.
In a typical real estate transaction the mortgagor is
a.
the bank
b.
the borrower
c.
the seller
d.
the real estate broker
e.
none of these
9.
In a typical real estate transaction the mortgagee is
a.
the bank
b.
the borrower
c.
the seller
d.
the real estate broker
e.
none of these
10.
A mortgage is
a.
a type of bank loan
b.
the security instrument that creates a lien on the property
c.
the act of pledging of property as security for a loan
d.
all of these
e.
none of these
11.
You want to buy an $80,000 house. You have $10,000 to put down. The bank will
charge 1% for loan originators fees and 5 points. How much will the final bank
loan be?
a.
70,000
b.
74,200
c.
74,800
d.
84,800
e.
none of these
12.
The clause that allows the lender to declare the entire debit due and payable
immediately in event of defaults is
a.
acceleration
b.
defeasance clause
c.
usury & is illegal
d.
hypothecation
e.
none of these
13.
If a buyer acquires a property subject to a mortgage
a.
they become personally liable for the outstanding balance of the note in
the event they default on the loan
b.
c.
d.
the original mortgagor is still responsible for the outstanding balance in
the event the new buyer defaults
a&b
none of these
14.
If the lender includes a clause that prevents the loan from being assumed, this
clause is known as
a.
alienation clause
b.
call clause
c.
due on sale clause
d.
release clause
e.
all of these
15.
The priority of a loan may be changed with an argument known as:
a.
a foreclosure agreement
b.
an alienation clause
c.
a subordination agreement
d.
none of these: the priority is set by the date recorded at the recorder’s
office
16.
The foreclosure procedure that requires the property to be sold to the highest
bidder is called
a.
friendly foreclosure
b.
strict foreclosure
c.
statutory right of redemption
d.
all of these
e.
none of these
17.
An alternative to foreclosure where the borrower delivers title to the property is
known as
a.
friendly foreclosure
b.
strict foreclosure
c.
statutory right of redemption
d.
all of these
e.
none of these
18.
Which of the following documents is signed by the owner of the real estate?
a.
A gift deed
b.
A trustee’s deed
c.
A reconveyance deed
d.
A tax deed
19.
All of the following are requirements for acquiring ownership of property by
adverse possession EXCEPT
a.
Occupancy of the property must be without the owner’s consent.
b.
Occupancy must be continuous and over a specified time.
c.
d.
The person in possession must compensate the owner.
The person in possession must occupy the property openly rather than in
secret.
20.
The type of deed in which the granting clause states “grant, bargain, and sell” is a
a.
special warranty deed.
b.
bargain and sale deed.
c.
general warranty deed.
d.
reconveyance deed.
21.
In a real estate transaction, transfer taxes that are due are charged
a.
to the buyer unless this is forbidden by statute or regulation.
b.
according to local custom unless the parties are from different
jurisdictions.
c.
to the parties as agreed in the contract of sale.
d.
to the closing agent and real estate broker if the contract does not specify
who pays.
22.
Real estate that is inherited from a person who died testate is referred to as
a.
legacy.
b.
bequest.
c.
devise.
d.
demise.
23.
All of the following are true regarding public records EXCEPT
a.
They give notices of encumbrances.
b.
They establish priority of liens.
c.
They guarantee marketable title.
d.
They provide constructive notice about interests in the property.
24.
The body of law that governs personal property transactions (but does not apply
to real estate) and involves use of security agreements, financing statements and
bulk transfers is the
a.
American Land Title Association.
b.
Uniform Commercial Code.
c.
Parol Evidence Rule.
d.
Statute of Limitations.
25.
The part of the title insurance policy that sets forth all of the encumbrances and
defects that will NOT be insured against is called the
a.
schedule of defects.
b.
citation clause.
c.
nonexclusionary clause.
d.
exclusions.
26.
The best reason for a buyer to obtain title insurance is
a.
b.
c.
d.
that the mortgage lender requires it.
to ensure that the seller can deliver marketable title.
to ensure that the abstractor has prepared a complete summary of title.
to pay future liens that may be filed.
27.
The type of title insurance that will protect the owner and heirs is called a(n)
a.
lender’s policy.
b.
owner’s policy.
c.
leasehold policy.
d.
certificate of sale policy.
28.
A person who assumes an existing mortgage loan is
a.
not personally liable for the repayment of the debt.
b.
not in danger of losing the property by default.
c.
personally responsible for paying the principal balance.
d.
generally released from liability, but not always.
29.
A land contract provides for
a.
sale of unimproved land only.
b.
sale of real property under an option agreement.
c.
conveyance of legal title at a future date.
d.
immediate transfer of reversionary rights.
30.
The mortgage foreclosed on a property after the borrower defaulted on the loan
payments. At the foreclosure sale, however, the house sold for only $129,000.
The unpaid balance of the loan at the time of the sale was $140,000. What must
the lender do to recover the $11,000 the borrower still owes?
a.
Sue for damages
b.
Sue for specific performance
c.
Seek a judgment by default
d.
Seek a deficiency judgment
31.
Under an installment contract, the title to the property is held by the
a.
vendor.
b.
vendee.
c.
trustor.
d.
trustee.
32.
A promissory note.
a.
may not be executed in connection with a real estate loan.
b.
is an agreement to perform or not to perform certain acts.
c.
makes the borrower personally liable for the debt.
d.
is a guarantee by a government agency.
33.
A deed contains a promise that the title conveyed is good and a promise to obtain
and deliver any documents necessary to ensure good title. This promise is an
example of which covenant?
a.
Further assurance
b.
Seisin
c.
Quiet enjoyment
d.
Warranty forever
34.
Which of the following types of deeds merely implies, but does not specifically
warrant, that the grantor holds good title to the property?
a.
Special warranty
b.
Bargain and sale.
c.
Quitclaim
d.
Trustee’s
35.
Luis conveys property to Ken by deed. The deed contains the following: (1) Ken’s
name, spelled out in full; (2) a statement that Luis has received $10 and Ken’s
love and affection; and (3) a statement that the property is for Ken “to have and to
hold.” Which of the following correctly identifies, in order, these three elements
of the deed?
a.
Grantee; consideration; granting clause
b.
Grantee; consideration; habendum clause
c.
Grantor, habendum clause; legal description
d.
Grantee; acknowledgment; habendum clause
36.
Every deed must be signed by the
a.
grantor.
b.
grantee.
c.
grantor and grantee.
d.
devisee.
37.
Title to real estate may be transferred during a person’s lifetime by
a.
devise.
b.
descent.
c.
involuntary alienation.
d.
escheat.
38.
An owner of real estate was declared legally incompetent and was committed to a
state mental institution. While institutionalized, the owner wrote and executed a
will. The owner later died and was survived by a spouse and three children. The
real estate will pass
a.
to the owner’s spouse.
b.
the heirs mentioned in the owner’s will.
c.
according to the state laws of descent.
d.
to the state.
39.
Which of the following would not be acceptable evidence of ownership?
a.
Attorney’s opinion
b.
Title insurance policy
c.
Abstract
d.
Deed signed by the last seller
40.
Date and time a document was recorded help establish which of the following?
a.
Priority
b.
Abstract of title
c.
Subrogation
d.
Marketable title
41.
General Title Company settled a claim against its insured by making a substantial
payment to the person who sued its client. General Title may now seek damages
from the person who originally gave its insured a general warranty deed. Through
what right can General Title recover the amount it paid on the settlement?
a.
Escrow
b.
Encumbrance
c.
Subordination
d.
Subrogation
42.
Paul bought Linden’s house, received a deed and moved into the residence but
neglected to record the document. One week later, Linden died, and his heirs in
another city, unaware that the property had been sold, conveyed title to Mark,
who recorded the deed. Who owns the property?
a.
Paul
b.
Mark
c.
Linden’s heirs
d.
Both Paul and Mark
43.
Which of the following statements best explains why instruments affecting real
estate are recorded?
a.
Recording gives constructive notice to the world of the rights and interests
claimed by a party in a particular parcel of real estate.
b.
Failing to record will void the transfer.
c.
The instruments must be recorded to comply with the terms of the statute
of frauds.
d.
Recording proves the execution of the instrument.
44.
Sally is frantic because she cannot find her deed and now wants to sell her
property. She
a.
may need to sue for quiet title.
b.
must buy title insurance.
c.
does not need her original deed if it has been recorded.
d.
should execute a replacement deed to herself.
45.
In the state of West Columbia, a mortgagee holds legal title to real property
offered as collateral for a loan, and the mortgagor retains the rights of possession
and use. If the borrower defaults, the lender is entitled to immediate possession
and rents. Wet Columbia can be best characterized as what kind of state?
a.
Lien theory
b.
Mortgage theory
c.
Intermediate theory
d.
Title theory
46.
A buyer purchased a home under an agreement that made the buyer personally
obligated to continue making payments under the seller’s existing mortgage. If the
buyer defaults and the court sale of the property does not satisfy the debt, the
buyer will be liable for making up the difference. The buyer has
a.
purchased the home subject to the seller’s mortgage.
b.
assumed the seller’s mortgage.
c.
benefited from the alienation clause in the seller’s mortgage.
d.
benefited from the defeasance clause in the seller’s mortgage.
47.
A state law provides that lenders cannot charge more than 24 percent on any loan.
This kind of law is called
a.
a Truth-in-Lending Law.
b.
a usury law.
c.
the statute of frauds.
d.
RESPA
48.
Pledging property for a loan without giving up possession is referred to as
a.
hypothecation.
b.
defeasance.
c.
alienation.
d.
novation.
49.
Which of the following allows a mortgagee to proceed to a foreclosure sale
without having to go to court first?
a.
Waiver of redemption right
b.
Power of sale
c.
Alienation clause
d.
Hypothecation
50.
When a seller is freed of any future liability for a loan assumed by a buyer, the
seller has signed a(n)
a.
alienation clause.
b.
acceleration clause.
c.
release of contract.
d.
novation.
Essay questions are for your convenience to prepare for the midterm and final. You do
not have to turn them in for a grade.
1.
For a deed to be valid, it must contain several elements. Describe each of these
elements.
2.
The text lists eight types of deeds. Compare and contrast them with respect to the
rights being transferred.
3.
A general warranty deed contains 5 covenants. Describe these covenants.
4.
What is the relationship between constructive and actual notice, and priority?
5.
What is the relationship between the chain of title, a title search, and an abstract
of title?
6.
Compare and contrast title theory and lien theory.
7.
The term ‘ mortgage ‘ is commonly used to identify a type of bank loan. Explain
why this is not an accurate description.
8.
Compare and contrast buying subject to a mortgage and assuming a mortgage.