Midterm Examination / Page 1
Midterm Examination
1.
Which of the following terms best describes an item that was once personal property but has
become real property when attached to real estate?
a.
b.
c.
d.
2.
Which of the following types of real estate descriptions defines property by outlining its boundaries
using directions and distances from a specific point of beginning?
a.
b.
c.
d.
3.
gross lease.
percentage lease.
graduated lease.
net lease.
Able and Baker bought a house, taking title as tenants in common. If Able dies, which of the
following is true about ownership of the house?
a.
b.
c.
d.
6.
Enters into a sublease with another tenant
Remains in possession of the property after expiration of the lease
Assigns the leasehold to another party
Exercises an option to renew the lease
If a tenant pays a fixed amount of rent plus all the property’s expenses, the tenant’s lease is known as
a
a.
b.
c.
d.
5.
Rectangular survey
Metes and bounds
Plat of survey
Datum system
A “holdover tenant” refers to a lessee who takes which of the following actions?
a.
b.
c.
d.
4.
Chattel property
Appliance
Emblemement
Fixture
Baker holds fee simple ownership in Able’s share of the property.
Baker holds a life estate in Able’s share of the property.
Baker continues to hold his original interest, and Able’s interest goes to Able’s heirs.
Baker owns the property in severalty.
Which of the following situations is an example of an encroachment?
a.
b.
c.
d.
A property owner’s fence that extends over the property line between the owner’s property
and the adjoining property
A right-of-way for high voltage electric lines that cross a property
An access road that runs across a property from a public road
A tenant’s auto parked on the leaser’s property
Midterm Examination / Page 2
7.
A husband and wife take title to a property as tenants in common. The form of ownership in this
situation provides for
a.
b.
c.
d.
8.
What government power allows the state to acquire title to property that has been abandoned?
a.
b.
c.
d.
9.
lender’s title insurance.
loan origination fees.
title examination.
broker’s commission.
Swimming pools and laundry rooms for the use of the unit owners in a condominium building are
best described as
a.
b.
c.
d.
13.
must pay assessments.
own shares of stock.
own real property.
receive an annual real estate tax bill.
The seller at a real estate closing usually is responsible for paying the
a.
b.
c.
d.
12.
ground lease.
graduated lease.
percentage lease.
leaseback.
Both owners of condominium units and owners of cooperative apartments
a.
b.
c.
d.
11.
Eminent domain
Taxation
Police power
Escheat
A lease that provides for periodic increases of the rent at regular intervals is called a
a.
b.
c.
d.
10.
the right of survivorship.
unequal shares of ownership.
ownership in severalty.
life estates in the property.
leasehold elements.
common elements.
fee simple elements.
shareholder elements.
What best describes the interest held by a developer who leases real property from the owner with the
intention of constructing an office building on the property?
a.
b.
c.
d.
Leasehold
Lease option
Sale and leaseback
Land contract
Midterm Examination / Page 3
14.
A lessee would no longer be obligated to pay rent if the
a.
b.
c.
d.
15.
Title insurance on a property is $280. The fee for the title search is $90, and other miscellaneous fees
amount to $100. If the seller pays 60% of the total charges and the buyer pays the balance, how much
more will the seller pay than the buyer?
a.
b.
c.
d.
16.
building codes.
codicils.
restrictive covenants.
eminent domain.
A real estate buyer also wishes to purchase the seller’s lawn mower. Which of the following
documents would be prepared to accomplish this?
a.
b.
c.
d.
20.
borrower against default in loan payments.
lender against undisclosed title defects.
lender against default in loan payments.
borrower against unrecorded liens.
An attorney reviewing the deed in a real estate transaction noted a number of limitations regarding
its use. These limitations are commonly known as
a.
b.
c.
d.
19.
exclusion.
variance.
amendment.
nonconforming use.
A lender’s title policy will protect the
a.
b.
c.
d.
18.
$94
$188
$282
$470
The continued use of a property that was lawful at the time the use began but now is in violation of a
zoning regulation is an example of a(n)
a.
b.
c.
d.
17.
lessee is constructively evicted.
owner sells the property.
owner declares bankruptcy.
lessee abandons the property.
A bill of sale
A wraparound loan
An option
An installment contract
In a real estate closing, the buyer usually pays for the
a.
broker’s sale commission.
Midterm Examination / Page 4
b.
c.
d.
21.
Which of the following deeds should the grantor use to transfer title without providing any
warranties to the grantee?
a.
b.
c.
d.
22.
ground lease.
net lease.
percentage lease.
gross lease.
The buyer in a real estate transaction records the documents affecting his title and interest in the real
estate to legally provide
a.
b.
c.
d.
26.
fee simple ownership in the property.
legal title to the property.
a defeasible fee interest in the property.
equitable title to the property.
A tenant enters into a lease agreement on a commercial property that provides that the rent will be
$2,000 per month plus 5% of the tenant’s gross monthly sales. This type of lease is called a
a.
b.
c.
d.
25.
Gross lease
Net lease
Percentage lease
Ground lease
At the time the buyer and seller enter into a real estate sales contract, the buyer’s interest in the real
estate is known as
a.
b.
c.
d.
24.
Special warranty deed
General warranty deed
Quitclaim deed
Grant bargain and sale deed
The owners of a shopping center negotiating a lease with a department store wish to base the rent on
payments that reflect the store’s sales. What type of lease should the owners use?
a.
b.
c.
d.
23.
preparation of the deed.
release of the seller’s existing mortgage.
recording of the new mortgage.
legal notice.
constructive notice.
actual notice.
unilateral notice.
Z owns and operates a barber shop in an area that was recently annexed by the neighboring suburb.
The area annexed was zoned as a single family residence by the suburb but Z is allowed to continue
operating the barber shop. The allowance for Z’s continued operation is known as
a.
b.
c.
nonconforming use.
conditional use.
spot zoning.
Midterm Examination / Page 5
d.
27.
variance.
The fee a condominium owner would be least likely to pay for is a
a.
b.
c.
d.
homeowner’s association fee.
hazard insurance fee.
maintenance fee.
stock transfer fee.
28.
wish to terminate the lease?
a.
b.
c.
d.
29.
A property owner sells a house to a buyer and agrees to finance $25,000 of the purchase price. The
entry on the closing statement for the $25,000 will be a
a.
b.
c.
d.
30.
tenancy in common.
joint tenancy.
tenancy by the entirety.
tenancy in severalty.
The purpose of the title commitment used in a sale of real estate is to
a.
b.
c.
d.
33.
laws of descent and distribution.
statute of limitations.
right of survivorship.
laws of escheat.
An unmarried couple want to buy a house and take title so that when one of them dies the deceased’s
share will go to the deceased’s heirs. The form of ownership they should use when they purchase the
house is
a.
b.
c.
d.
32.
debit to the buyer and a debit to the seller.
debit to the buyer and a credit to the seller.
credit to the buyer and a debit to the seller.
credit to the buyer and a credit to the seller.
The sole owner of a property with a fee simple absolute ownership interest dies and leaves no will.
The owner’s title passes in accordance with the
a.
b.
c.
d.
31.
Tenancy for years
Tenancy at will
Tenancy from month to month
Tenancy at sufferance
correct any defects found in the title abstract.
guarantee the sale will close as provided in the sales contract.
indicate that the title insurance company will insure the title.
pay for losses that might be incurred by the lender.
The essential characteristic of condominium ownership is best described as
Midterm Examination / Page 6
a.
b.
c.
d.
34.
A tenant has a three-year lease on a property that is being taken by the state under its right of eminent
domain. Which of the following statements is true if two years of the lease remain?
a.
b.
c.
d.
35.
escheat.
descent.
eminent domain.
remainder.
Real estate taxes for a property are based on an assessed value of $45,000 and a tax rate of 6.5%.
Taxes for the current year are due on December 31. If the closing for the sale of the property is on
September 15, what is the entry for taxes on the closing statement?
a.
b.
c.
d.
38.
reversionary right.
contingency clause.
lease option.
subordination.
A person dies in testate with no will or heirs. The government may take possession of the property
through its right of
a.
b.
c.
d.
37.
The property owner must provide the tenant with substitute space for the remaining year.
The tenant must be compensated by the state for interruption of the lease.
The state cannot take the property until after the lease period ends.
The remaining term of the lease will end and the tenant will not be compensated by the
state.
A lease agreement contains a clause that gives the tenant the right to purchase the property at a
specified price. This type of agreement is referred to as a
a.
b.
c.
d.
36.
ownership of the property by a corporation with each tenant owning shares in the
corporation.
units individually owned and common areas of the building jointly owned.
an association in which each tenant has a lease governed by corporate bylaws.
a planned development of residential and commercial units.
Credit to the seller of $731.25
Credit to the buyer of $853.13
Credit to the seller of $1,950.00
Credit to the buyer of $2,071.88
A property manager is negotiating new leases with the tenants. If the manager believes inflation is
climbing, which type of lease would the manager try to avoid?
a.
b.
c.
d.
Indexed lease
Graduated lease
Variable rate lease
Fixed rent lease
Midterm Examination / Page 7
39.
An individual has an ownership interest in a property that involves occupancy for a specified period
of time and use of the property’s common areas such as the swimming pool, tennis courts, and
grounds. This type of ownership is known as a
a.
b.
c.
d.
40.
cooperative.
condominium.
time-shares.
partnership.
The owner of a property died and left a will written entirely in the owner’s handwriting. This type
of will is called a
a.
b.
c.
d.
holographic will.
living will.
nuncupative will.
formal will.