Modern Real Estate Practice in Texas, 16th Edition
Chapter 9 Answer Key
1. a
2. b
3. d
4. d
5. a
6. b
7. c
8. c
9. a
10. a
11. b
12. c
13. b
Timesharing permits multiple purchasers to buy undivided interests in real
property whereby each purchaser has the right to use the property for a fixed or
variable time period.
The grantees in a deed must be identified explicitly as joint tenants or Texas
will presume the interest is held as tenants in common.
A joint tenant (Shari) may convey his or her interest to a non-joint tenant
(Sandra). The remaining owners still hold title as joint tenants with right of
survivorship (Martin and Eduardo); however, they now have a tenancy in
common relationship with Sandra.
Common law dictates that four unities are required to create a joint tenancy:
time, title, interest, and possession.
Cooperative ownership involves the purchase of stock shares in a corporation
that holds title to a building. In return for purchasing stock, the stockholder
receives a proprietary lease granting him or her the right to occupy a specific
unit in the building and use the common areas. The right ceases when the stock
is resold to the corporation, often at the original purchase price of the stock.
Title to real estate vested in one entity (i.e., one person or a business) is
ownership in severalty. A business (partnership, corporation, or limited liability
company) holds title to property in severalty when title is held in the name of
the company rather than in the names of individual people.
The right of survivorship is one of the distinguishing characteristics of joint
tenancy.
Ownership in severalty exists when title is vested in one entity. A corporation in
Texas must be registered with the Secretary of State and is considered to be a
legal entity (artificial person).
One of the distinguishing characteristics of a land trust in Texas is that the
public records do not indicate the beneficiary’s identity. The beneficiary
(original trustor) retains management and control of the property through the
trustee. A land trust generally continues for a definite term.
In a trust, the trustor (the entity creating the trust) conveys title to the trustee,
the entity entrusted with carrying out the trustor’s instructions regarding the
purpose of the trust. The beneficiary is the person who benefits from the trust.
On the death of a tenant in common, there is no right of survivorship for the
remaining tenants in common. Instead, the interest of the deceased tenant
(Gwen) passes to her heirs or to whomever she specifies in her will (the
devisee).
Community property consists of all property, real and personal, acquired by
either spouse during the marriage—with the exception of property acquired by
gift, inheritance, purchase from separate funds, sale of separate property,
personal injury settlement, or written contract with a spouse.
Under the Texas Uniform Condominium Act, as an owner of a condominium
unit, Harold would hold fee simple title to his unit and a specified share (in this
case, 5%) of the indivisible parts of the building and land (i.e., the common
elements) with the remaining 19 owners.
©2014 Kaplan, Inc.
Modern Real Estate Practice in Texas, 16th Edition
14. a
A trust is a device by which one person (trustor) transfers ownership of
property to someone else (trustee) to hold or manage for the benefit of a third
party (beneficiary).
15. a
Community property is a system of property ownership based on the theory
that each spouse has an equal interest in all property acquired during marriage;
therefore, it is a form of co-ownership involving husband and wife.
16. a
Creating a condominium requires the owner or developer to first file a
condominium declaration (setting out the rights and obligations of each unit
owner) and a condominium regime plat (description of how the land and
buildings are subdivided into units, including the fractional shares of the
common elements assigned to each unit).
17. b
The creation of joint tenancy in Texas must be by written agreement specifically
stating the intention to create the joint tenancy. In addition, the grantees in the
deed must be explicitly identified as joint tenants.
18. c
Conveyance of homestead property requires the signature of both spouses, even
if the homestead is separate property of one spouse.
19. c
Although states’ community property laws vary widely, they all recognize two
kinds of property: separate property (owned prior to marriage) and community
property (acquired during the marriage, with some exceptions).
20. c
The members of an LLC enjoy the pass-through tax advantages of a partnership
and the limited liability offered by a corporate form of ownership. Neither the
members nor managers are liable for company debts, obligations, or liabilities.
21. b
Income earned from separate property is generally classified as community
property. Separate property includes property acquired during marriage by gift,
inheritance, purchase from separate funds, sale of separate property, settlement
or judgment for personal injury, or written contract with a spouse.
22. d
A sole proprietorship exists when a single individual operates a business, owns
all the assets, and assumes personal liability for all debts. It is the simplest form
of business organization. A sole proprietorship may have employees, but only
one person controls the business. All profits and losses from a sole
proprietorship are reported directly on the sole owner’s personal income tax
return.
23. c A partnership is an association of two or more people who operate a business as
co-owners and share in the business’s profits and losses. Title may be held in the
names of the individual partners (as tenants in common or as joint tenants) or in
the name of the partnership (as owners in severalty). In a general partnership all
partners participate in the management of the business and may be held jointly
and severally liable for all business losses and obligations. A limited partnership
includes general partners as well as limited partners. Limited partners do not
participate in the management and their liability is limited to the extent their
investment. Partnerships, whether general or limited, may be continued after the
death, withdrawal, or bankruptcy of one of the partners.
©2014 Kaplan, Inc.