Testbank I. 5. The point at which supply and demand are balanced is known as a. highest and best use. b. balance. c. conformity. d. equilibrium.

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1 Testbank I Chapter 1: Basic Real Estate Concepts 1. All of the following factors would affect supply EXCEPT a. population. b. construction costs. c. government controls. d. the labor force. 2. Which of the following real property use categories would include shopping centers? a. Residential b. Commercial c. Agricultural d. Industrial 3. All of the following would affect demand EXCEPT a. population. b. demographics. c. wage levels. d. fiscal policy. 4. The word improvement refers to all of the following EXCEPT a. a street. b. a sewage system. c. a trade fixture. d. a foundation wall. 5. The point at which supply and demand are balanced is known as a. highest and best use. b. balance. c. conformity. d. equilibrium. 6. When the supply of a commodity decreases a. prices tend to rise. b. prices tend to drop. c. demand tends to rise. d. demand tends to drop Dearborn Real Estate Education 1

2 7. All of the following are physical characteristics of land EXCEPT a. indestructibility. b. uniqueness. c. immobility. d. scarcity. 8. Land a. is indestructible. b. is a depreciating asset. c. does not react to the forces of supply and demand. d. has a highest and best use that remains constant. 9. All of the following are economic characteristics of land EXCEPT a. scarcity. b. permanence of investment. c. uniqueness. d. area preference. 10. An important characteristic of land is that it may be modified or improved at any given time. Depending on its type, an improvement may increase the value of real estate greatly. All of the following would be considered improvements to land EXCEPT a. sewers. b. buildings. c. sidewalks. d. roads. 11. The geographic location of any parcel of land can a. be changed as some substances are removable from the land. b. never be changed. c. be changed because the topography can be changed. d. be changed only under certain legal circumstances. 12. Improvements on the land would refer to all of the following EXCEPT a. houses. b. outbuildings. c. underground utilities. d. decorative fencing. 13. Which of the following statements about real estate brokerage in North Carolina is TRUE? a. A provisional broker must be supervised by a broker-in-charge while performing brokerage services for compensation. b. Homeowners must be active real estate brokers to sell their own property. c. Brokerage compensation is always a percentage of the gross sales price. d. A real estate licensee may perform an appraisal on a parcel of land Dearborn Real Estate Education 2

3 14. Which of the following is considered to have the greatest impact on the value of a property? a. Area preference b. Permanence of investment c. Scarcity d. Uniqueness Chapter 2: Property Ownership and Interests 1. Which of the following is generally considered real property? a. Emblements b. Annual crops c. A shrub planted in a decorative pot d. A perennial shrub planted in t he backyard 2. The phrase, bundle of legal rights a. is part of the definition of real property. b. is another name for legal description. c. refers to the legal documents used in real estate transactions. d. refers to the tenant s rights in a lease. 3. Zoning ordinances generally regulate such things as the a. height of buildings. b. placement of buildings on property. c. bulk and density of buildings. d. all of the above. 4. A trade fixture is considered a. a fixture. b. an easement. c. personalty. d. a license. 5. Which of the following is considered personal property? a. Masonry fireplace b. Porch and window awnings c. Bathtubs d. Patio furniture 6. Real property can become personal property by a. severance. b. purchase. c. hypothecation. d. attachment Dearborn Real Estate Education 3

4 7. A seller is under contract to sell a property using the standard offer to purchase and contract. The elegantly decorated master bedroom has vertical window blinds, hand-painted light switches and electrical outlet covers, and draperies fashioned from fabric coordinated with the wallpaper. Which of the following items may the seller legally remove before the close of the transaction? a. None of the items b. The draperies and blinds c. The hand-painted items d. The draperies 8. A rancher owns a parcel of land with all subsurface, air, and water rights in tact. If oil is discovered on the parcel, who owns the oil? a. The rancher b. The tenant farmer to whom the property has been leased c. The state government d. The federal government 9. A commercial tenant attaches several items to the rental property during the term of the lease. Those items are considered a. fixtures and become part of the landlord s real property. b. emblements and are treated as personal property of the tenant. c. trade fixtures and may be removed by the tenant by the end of the lease. d. easements and increase the value of the property. 10. Personal property includes all of the following EXCEPT a. chattels. b. trade fixtures. c. emblements. d. fixtures. 11. Fixtures are a. real property. b. chattels. c. removable by a tenant before the expiration of the lease. d. removable by a tenant after the expiration of the lease. 12. After construction of a building over a railroad right-of-way, the trains may a. operate as usual. b. no longer use the tracks under the building. c. use the tracks under the building only if they cause no problem for the building's occupants. d. use the tracks under the building as long as they first obtain the building owner's permission Dearborn Real Estate Education 4

5 13. Generally, personal property can be distinguished from real property by its a. size. b. mobility. c. value. d. multiplicity of use. 14. A business owner rents an empty building to use as an ice cream parlor. The tenant subsequently installs large freezer units and several service counters. These additions a. are considered permanent improvements to the property. b. became the landlord s property once attached to the building. c. can be legally removed by the tenant at the termination of the lease d. can only be removed by the tenant with the landlord s permission. 15. All of the following are tests for determining a fixture EXCEPT a. intent of the parties. b. size of the item. c. method of attachment of the item. d. adaptation of the item to the real estate. 16. The owner of a house wants to fence the yard for a dog. When the fence is erected, the fencing materials are converted to real estate by a. severance. b. annexation. c. immobility. d. indestructibility. 17. The rights of ownership of real property include all of the following EXCEPT a. disposition. b. exclusivity. c. control. d. compatibility. 18. A person who has complete control over a parcel of real estate is said to own a a. leasehold estate. b. fee simple estate. c. life estate. d. defeasible fee estate. 19. A portion of a building was built on the neighbor s land. This is called an a. accretion. b. avulsion. c. encroachment. d. easement Dearborn Real Estate Education 5

6 20. A North Carolina beachfront property owner owns the land on the ocean side of the property to the a. average high tide line. b. average low tide line. c. international waters line. d. middle of the foreshore. 21. Which of the following has an indefinite ownership period? a. Freehold estate b. Nonfreehold estate c. Estate for years d. Estate at will 22. If the owner of the dominant tenement becomes the owner of the servient tenement and merges the two properties, the easement a. becomes dormant. b. is unaffected. c. is terminated. d. is not held by the owner of the merged properties. 23. A decedent left a will giving a neighbor the right to use a well on the decedent's land as long as the neighbor was alive. The neighbor's interest in the property is properly called a(n) a. leasehold estate. b. easement in gross. c. easement appurtenant. d. life estate. 24. A homeowner acquired the ownership of land that was deposited by a river running through her property by a. reliction. b. succession. c. avulsion. d. accretion. 25. A woman wishes to donate a vacant lot that she owns in fee simple absolute to a hospital that is located next to her lot. An attorney prepares a deed that conveys the ownership of the lot to the hospital as long as it is used for medical purposes. After the completion of the gift, the hospital will hold a a. pur autre vie estate. b. fee simple absolute estate. c. fee simple determinable estate. d. fee simple to a condition subsequent estate Dearborn Real Estate Education 6

7 26. The most all-inclusive type of real property ownership is a a. fee simple estate. b. conventional life estate. c. qualified fee estate. d. reversionary interest. 27. The rights of the owner of property located along the banks of a small stream are called a. littoral rights. b. subjacent rights. c. riparian rights. d. hereditaments. 28. The ownership rights to real estate include all of the following EXCEPT a. buildings located on the property. b. air space above the property. c. easements running with the land. d. navigable rivers running through the property. 29. A deed that conveys ownership to the grantee as long as the existing building is not destroyed creates a a. life estate. b. non-destructible estate. c. fee simple estate. d. defeasible fee estate. 30. The North Carolina owner of a secluded area adjacent to the Atlantic Ocean noticed that people from town walked along the shore in front of this property. The owner learned that the local citizens had been walking along this beach for years. The owner went to court to try to stop people from walking along the water's edge in front of the property. The owner is likely to be a. unsuccessful, because the local citizens have been doing this for years and thus have an easement. b. unsuccessful, because the owner's property extends only to the highwater mark and the public can use the land beyond this point. c. successful, because the owner's property extends to the middle of the water bed. d. successful, because the owner can control access to his own property. 31. A woman conveys a life estate to her son-in-law and stipulates that upon his death the estate will pass to her grandson. The grandson has an a. estate in reversion. b. estate in remainder. c. estate pur autre vie. d. estate for the life of another Dearborn Real Estate Education 7

8 32. A life estate conveys to the life tenant a. a leasehold for life. b. a reversionary interest. c. an estate pur autre vie. d. ownership for life. 33. A property owner conveys the ownership of his apartment building to a nursing home, anticipating that the rental income will help pay for his father's care at the home. When his father dies, the original owner will recapture the ownership of the apartment building. This is an example of a a. remainder life estate. b. conventional life estate. c. life estate pur autre vie. d. leasehold estate. 34. A buyer contracts to purchase real property with the intention of having title transfer to her children upon her death. Which of the following is the best way for the buyer to take title to the purchased property? a. A conventional life estate b. A fee estate c. A joint tenancy d. An estate with reversionary interest 35. A person who acquired ownership that can be inherited, with the provision that the land must always be used for recreational purposes, has a. a fee simple absolute estate. b. a fee simple determinable estate. c. a fee simple to a condition subsequent estate. d. an estate that cannot be sold. 36. A brother and sister bought a commercial building and took title as joint tenants with right of survivorship. The brother died testate. The sister now owns the building a. as a joint tenant with right of survivorship with her brother s heirs. b. in severalty. c. as a tenant in common with her brother s heirs. d. as a life tenant with her brother s heirs having remainder interest. 37. An owner of a fee simple estate sells the property with the condition that he will continue to own the entire property until his death. The seller has a a. conventional life estate. b. dower interest. c. reversionary interest. d. remainder interest Dearborn Real Estate Education 8

9 38. A person currently has the legal right to occupy and use a certain residential structure. The interest in the property could be all of the following EXCEPT a. fee simple. b. remainder. c. leasehold. d. life estate. 39. A brother and a sister can NOT concurrently own real estate in North Carolina as a. remainder devisees. b. tenants by entireties. c. joint tenants. d. tenants in common. 40. A man lives in an apartment building. The land and structures are owned by a corporation, with one mortgage loan covering the entire property. Like the other residents, the man owns stock in the corporation and has a lease to his apartment. This type of ownership is called a a. condominium. b. planned unit development. c. time-share. d. cooperative. 41. Co-owners of a fee simple interest in a small office building are neither related to nor a creditor to each other. One owner dies intestate. The surviving owner would become the sole owner of the property under which of the following rights? a. Adverse possession b. Reversionary interest c. Survivorship d. Foreclosure 42. Three joint tenants own a parcel of land. One owner sells his interest to a longtime friend. After the conveyance, the remaining original owners a. become tenants in common with each other. b. become tenants in common with each other and the newest owner. c. become joint tenants with the newest owner. d. remain joint tenants with each other. 43. An ownership interest that is based on pre-set occupancy periods occurring over five years or more is called a. leasehold interest. b. time-share ownership. c. condominium ownership. d. cooperative membership Dearborn Real Estate Education 9

10 44. One of two owners holds an undivided 60 percent interest and the other holds an undivided 40 percent interest. The two owners probably hold their interests as a. cooperative owners. b. joint tenants. c. community property owners. d. tenants in common. 45. A person who owns one unit in a multi-unit structure together with a specified undivided interest in the common elements would own a a. cooperative. b. share in a real estate investment trust. c. condominium. d. time-share interest. 46. The owner of a condominium unit learns that a neighbor has failed to pay his real estate taxes. If the neighbor does NOT pay the taxes a. a lien can be filed against the condominium complex. b. a lien can be filed against the neighbor's unit. c. a lien can be filed only against the common areas of the condominium. d. the taxing authority can order the condominium be dissolved. 47. All of the following are true statements about a condominium EXCEPT a. a declaration must be filed before any units may be sold. b. each unit owner has a fractional undivided interest in the common elements. c. each owner receives a separate real estate tax statement. d. each owner has a proprietary lease with the owners association for the unit. 48. In order to create a joint tenancy relationship in the ownership of real estate, there must be unities of a. grantees, ownership, claim of right, and possession. b. title, interest, encumbrance, and survivorship. c. possession, time, interest, and title. d. ownership, possession, heirs, and title. 49. A property held as tenancy by the entirety in North Carolina requires that a. the co-owners must be husband and wife. b. the property in question must be residential property. c. upon the death of a co-tenant, the decedent's interest passes to the heirs. d. in the event of a divorce, the property will escheat Dearborn Real Estate Education 10

11 50. An elderly couple no longer need their large house, so they decide to sell the house and move into a cooperative apartment building. In a cooperative, they will a. become stockholders in a corporation. b. own their individual apartment unit. c. own a portion of the common elements. d. receive a lifetime lease to their apartment. 51. Under the condominium form of ownership, the owner's interest in their individual unit would normally be a. a life estate. b. a fee simple estate. c. a reversionary estate. d. a proprietary leasehold. 52. Which of the following is NOT TRUE about condominium ownership? a. It can be mortgaged. b. All the land is owned as part of the common elements. c. The ownership can be left to someone through a valid will. d. The limited common elements can be sold separately. 53. A buyer purchases a fee simple estate and has an undivided interest in common elements associated with the property that includes all the land. What form of ownership interest does the buyer hold? a. Planned unit development b. Cooperative c. Condominium d. Timeshare 54. A joint tenant sells her interest to a third party. If the original ownership interests were equal, what is the relationship of the new owner with the remaining original owner? a. They are joint tenants. b. They are tenants in common. c. There is no relationship because a joint tenant cannot sell to a third party. d. The original owner owns a ⅔ interest and the buyer owns a ⅓ interest. 55. The severalty owner of a parcel of land sells it. The buyer insists that the owner's wife also sign the deed. The purpose of obtaining the wife's signature is to a. terminate any rights the wife may have in the property. b. defeat any curtsey rights. c. provide evidence that the owner is married. d. subordinate the wife's signature to the buyer Dearborn Real Estate Education 11

12 56. Condominium owners are responsible for paying a monthly common area maintenance fee. If an owner fails to make this payment, a. that owner is evicted. b. the debt is collected from other owners. c. a lien is filed against that owner s unit. d. the debt is added to that owner s mortgage payment. 57. All of the following statements about manufactured housing in North Carolina are true EXCEPT a. a manufactured home is constructed per HUD construction standards. b. it has a vehicle identification number while mobile. c. an attached HUD label is required for transfer of title. d. removal of the wheels and axles converts a manufactured home to real property. 58. In North Carolina, a modular home a. becomes part of the real estate as soon as it is assembled on site. b. has a steel chassis with wheels and axles. c. has a HUD label that is required for transfer of title. d. is constructed per HUD construction standards. 59. Emblements are a. part of the real estate as soon as planted. b. naturally occurring vegetation that does not require cultivation. c. the same thing as fructus industriales. d. not allowed to be severed from the land. 60. A North Carolina seller had signed a security agreement to finance a new heat pump prior to listing his house. Since the seller has only ten more payments left, a. the heat pump is a part of the real estate that conveys at settlement. b. the creditor could not repossess the heat pump after closing if the seller did not finish paying all the payments. c. the buyer must take over the payments on the heat pump after closing. d. the heat pump remains personalty that can be removed prior to closing. 61. A homestead estate is one that a. protects land that includes the family home from creditors. b. has remained in a family s ownership for more than five generations. c. was obtained through adverse possession. d. exists in all American states and some foreign countries. 62. An example of a limited common element in a condominium project is a a. community swimming pool and cabanas. b. locked storage unit. c. picnic area with playground. d. trash disposal and recycling center Dearborn Real Estate Education 12

13 Chapter 3: Encumbrances on Real Property 1. A homeowner objected when a local utility company dug up his garden to install a natural gas line. The company claimed it had a valid easement supported by the county records. The homeowner claimed the easement was not valid because he was unaware of its existence. The easement was a. a valid easement in gross even though the owner did not know about it. b. a valid appurtenant easement owned by the utility company. c. not valid because the owner did not authorize the easement. d. not valid because the owner was not informed of its existence when he purchased the property. 2. A homeowner tells her neighbor that he can park his camper in the corner of her backyard. No rent is charged for the use of her yard. This is an example of an a. easement appurtenant. b. easement by necessity. c. easement by prescription. d. easement in gross. 3. In order to reach the garage on their property, the property owner utilizes an easement appurtenant that gives the right to use the neighboring property s driveway. The neighboring property is the a. leasehold interest. b. dominant tenement. c. servient tenement. d. licensing property. 4. A recent patio addition extends one foot over the property line onto the lot next door. This best describes an a. easement. b. encumbrance. c. encroachment. d. entitlement. 5. The owner of two acres of land sold one acre but retained an appurtenant easement over that land for ingress and egress to his retained lot. The retained lot a. is the dominant tenement. b. serves as the servient tenement. c. can be cleared of the easement when it is sold to a third party. d. is subject to an easement in gross Dearborn Real Estate Education 13

14 6. A developer owns 50 acres of land that she wishes to subdivide into individual residential lots. The developer grants access to the individual parcels so that utility companies can install their lines and pipes. Each utility company has been granted a. an easement in gross. b. an appurtenant easement. c. an easement by necessity. d. a license. 7. The developer grants the power company the right to install transmission lines throughout the subdivision. This right is called a. a license. b. an easement in gross. c. an easement by prescription. d. a conditional use permit. 8. A lot is encumbered by a sewer easement that runs where the property owner wishes to put the foundation of a house. How will this placement affect construction? a. It will have no effect because the sewer line is deeper than the foundation would be. b. The house must be constructed to avoid the easement. c. The municipality must move the sewer line prior to construction. d. Any easement through the lot will prevent construction. 9. A small parcel of land is completely surrounded by other lots and has no street access. Which of the following is TRUE? a. The municipality must construct a street to create access. b. The owner must create an easement by condemnation to provide access. c. An easement by prescription should be granted. d. An easement by necessity should be created for the land-locked parcel. 10. When a personal judgment is properly recorded in the county in which the defendant resides and owns real property, the judgment becomes a. a voluntary lien. b. a specific lien. c. an involuntary lien. d. an equitable lien. 11. When a company furnishes building materials for a house and is subsequently not paid, the company may file a. a deficiency judgment. b. a lis pendens. c. an estoppel certificate. d. a mechanic's lien Dearborn Real Estate Education 14

15 12. Which of the following liens is NOT required to be recorded in order to be valid? a. Mortgage lien b. Ad valorem tax lien c. Judgment lien d. Mechanic's lien 13. A state income tax lien would be properly classified as a. an equitable lien. b. a specific lien. c. a mechanic s lien. d. a general lien. 14. The current market value of a property is $135,000. For tax purposes, it is assessed at 60 percent of market value. The tax rate is $2.45 per $100 of assessed value. What is the annual tax liability? a. $1,190 b. $1,323 c. $1,984 d. $3, Under which of the following liens can both the real property and the personal property of the debtor be sold to pay the debt? a. Real estate tax lien b. Mechanic's lien c. Judgment lien d. Assessment lien 16. Which of the following is a voluntary lien? a. Mortgage lien b. Estate tax lien c. Real estate tax lien d. Judgment lien 17. The excise tax to be paid on a North Carolina property selling for $175,000, with $25,500 down and the buyer assuming an existing mortgage of $149,500 is a. $51. b. $175. c. $299. d. $ Which of the following liens holds first priority regardless of when it was recorded? a. Mortgage lien b. Purchase money lien c. Ad valorem tax lien d. Federal income tax lien 2012 Dearborn Real Estate Education 15

16 19. Typically, the priority of general liens is determined by the a. order in which they are filed or recorded. b. order in which the cause of action arose. c. size of the claim. d. court. 20. Which of the following is a lien on real estate? a. An easement b. A recorded deed of trust c. An encroachment d. A restrictive covenant 21. Charges levied on a property owner to pay for the installation of sewer and water lines are a. ad valorem taxes. b. general property taxes. c. special excise taxes. d. special assessments. 22. Debts that are incurred by an individual and become liens against any real or personal property owned by that person are a. general liens. b. specific liens. c. fiduciary encumbrances. d. special assessments. 23. A mechanic s lien could be filed in all of the following scenarios EXCEPT a. the hardwood flooring company was not paid after installation was completed five months ago. b. a family friend repaired the disposal in the kitchen for the agreed price of $60. c. the architect has not received final payment for the blueprints. d. the general contractor did not pay the subcontractors after closing. 24. What will be the amount of tax payable where the property s assessed value is $185,000 and the tax rate is 40 mills in a community in which an equalization factor of 110 percent is used? a. $4,625 b. $5,087 c. $7,400 d. $8, Dearborn Real Estate Education 16

17 Chapter 4: Property Description 1. A metes-and-bounds legal description a. can be made only in areas excluded from the rectangular survey system. b. is not acceptable in court in most jurisdictions. c. must commence and finish at the same identifiable point. d. is used to define areas omitted from recorded subdivision plats. 2. How many lots, each measuring 72.5 feet wide by 100 feet deep, could be made from a 2-acre parcel of land? a. 6 b. 7 c. 12 d The system of legal description that defines a parcel of land by its perimeter is the a. geodetic survey. b. rectangular survey. c. lot and block system. d. metes-and-bounds system. 4. All the following are true about a metes-and-bounds legal description EXCEPT a. it is only used in states west of the Mississippi River. b. the point of beginning must be an identifiable landmark or monument. c. it will have a series of calls in relationship to monuments. d. the final call must return to the point of beginning. 5. A lot with a depth of 80 feet and an area of 4,800 square feet was sold for $350 per front foot. What was the total sales price? a. $21,000 b. $28,000 c. $31,800 d. $35, The method of describing land by degrees, feet, and monuments is known as the a. angular system. b. metes-and-bounds system. c. rectangular survey system. d. lots and blocks system Dearborn Real Estate Education 17

18 7. The best way to ensure that there are no encroachments and verify the boundaries of a parcel of land is to a. personally inspect the property. b. get a property survey. c. locate the monuments. d. verify the benchmarks. 8. Which statement is TRUE regarding property description? a. Street address is an adequate legal description for a sales contract. b. Government rectangular survey method is most commonly found in the original thirteen colonies. c. The use of the street address with a reference to a recorded plat description is a very acceptable legal description used in listing a residential property located in a subdivision. d. Metes and bounds descriptions are most likely to have errors so are used as a last resort by surveyors. 9. Which statement is TRUE regarding surveys? a. A topographical survey shows the location of improvements on the parcel. b. A locational survey shows the lay of the land or elevations. c. Title insurance excludes many title defects from coverage if no property survey was completed. d. Encroachments are discovered and disclosed by a survey. 10. How many acres are contained in a rectangular land parcel that has a width of 175 feet and a depth of 685 feet? a acres b acres c acres d acres 11. A farmer owns the W½ of the NW¼ of the NW¼ of a section. The adjoining property can be purchased for $300 per acre. Owning all of the NW¼ of the section would cost the farmer a. $6,000. b. $12,000. c. $42,000. d. $48, Which of the following terms is not associated with the rectangular survey method? a. Monument b. Township c. Section d. Range 2012 Dearborn Real Estate Education 18

19 Chapter 5: Transfer of Title to Real Property 1. The title to real estate passes when a valid deed is a. signed and recorded. b. delivered and accepted. c. filed and microfilmed. d. executed and mailed. 2. The primary purpose of a deed is to a. prove ownership. b. transfer title rights. c. give constructive notice. d. prevent adverse possession. 3. A property is under contract for a sales price of $357,800. The buyer will assume the seller s outstanding loan balance of $225,000, secure a second mortgage for $100,000, and pay the remainder in certified funds at settlement. On the settlement statement, the seller will be charged excise tax in the amount of a. $ b. $ c. $ d. $ In a real estate transaction, excise taxes are the responsibility of the a. buyer. b. seller. c. escrow agent. d. broker. 5. Title to real estate inherited from a person who died testate is referred to as a a. legacy. b. bequest. c. devise. d. demise. 6. 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 7. Which of the following deeds contains no expressed or implied warranties? a. Timber deed b. Quitclaim deed c. Warranty deed d. Grant deed 2012 Dearborn Real Estate Education 19

20 8. Which of the following is an essential element of a valid North Carolina deed? a. A seal b. Recordation c. The signature of the grantee d. Words of conveyance 9. All the following are non-essential elements of valid North Carolina deed EXCEPT a. exact sales price. b. recordation. c. the names of the grantor and the grantee. d. signatures given under seal. 10. A valid will devises the decedent's real estate after the payment of all debts, claims, inheritance taxes, and expenses through the a. administrator of the estate. b. law of intestate succession. c. granting clause established in the will. d. court action known as probate. 11. When the grantor does NOT wish to convey certain property rights a. exceptions must be noted in a separate document. b. the deed must convey the property with all rights intact. c. exceptions may be noted in the deed of conveyance. d. the grantor must convey the entire premises and have the grantee reconvey the rights to be retained by the grantor. 12. An investor bought acreage in a distant county, never went to see it, and did not personally use it, although he regularly paid the real estate taxes on it. A woman moved her mobile home onto the investor's property, drilled a well for water, and lived there for many years. The woman may have become the owner of the acreage if she has met the requirements regarding a. intestate succession. b. adverse possession. c. the covenant of quiet enjoyment. d. the statute of limitations. 13. In which of the following situations would a quitclaim deed be the most appropriate type of deed to use? a. Conveyance of a marketable title b. Transfer of a nominal real estate interest c. Removal of a cloud on a title d. Warranting validity of a title 2012 Dearborn Real Estate Education 20

21 14. A trespasser built a log cabin in a remote area of a national park and occupied the structure for more than 25 years. That person will never be able to claim the property under adverse possession statutes, because a. the possession was not notorious. b. the possession was not open. c. the property was not privately owned. d. the property was not properly fenced. 15. Grantee is to a deed as devisee is to a a. trust. b. will. c. estate. d. sales contract. 16. All of the following are true about adverse possession EXCEPT a. possession of the property occurs without the owner's consent. b. continuous occupancy of the property occurs over a minimum time period. c. just compensation is given to the owner upon passing of the required period of possession. d. the person taking possession possibly becomes the owner of the property. 17. In order for a deed to be valid a. the grantor must be legally competent. b. the signature of the grantor must be witnessed. c. the deed must be recorded. d. the grantee must sign the deed. 18. The seller conveyed a quitclaim deed to the buyer. Upon receipt of the deed, the buyer may be certain that a. the seller owned the property. b. there are no encumbrances against the property. c. the buyer now owns the property subject to certain claims of the seller. d. any and all of the seller's interests in the property belong to the buyer. 19. Which of the following is TRUE regarding a special warranty deed? a. A grantor makes additional warranties beyond those given in a general warranty deed. b. The grantor retains an ownership interest in the property. c. The grantor is warranting that no undisclosed encumbrances exist against the property. d. The grantor's warranties are limited to the time the grantor owned the property Dearborn Real Estate Education 21

22 20. Which of the following is an involuntary alienation of property? a. Quitclaim b. Inheritance c. Eminent domain d. Gift 21. In order for the government to acquire land under the right of eminent domain, a. the acquisition must be for a public purpose. b. there must be a statutory dedication. c. the owner must agree to the taking. d. there must be constructive notice. 22. Which of the following statements about North Carolina deeds is CORRECT? a. A general warranty deed is the best way for the buyer to receive title. b. A special warranty deed gives the seller the greatest degree of liability. c. A bargain and sale deed is very much like the special warranty deed. d. A gift deed must be recorded within 30 days to remain valid. 23. A grantor does not wish to be responsible for any defect(s) in the title that may arise from previous ownership but will guarantee the title for the time the grantor held the ownership. What type of deed would the grantor convey? a. General warranty deed b. Bargain and sale deed c. Reconveyance deed d. Special warranty deed 24. Which of the following is an example of involuntary alienation? a. Selling a property to pay off debts b. Donating a piece of land to the zoo c. Having a piece of land auctioned for delinquent taxes d. Letting another person plant crops on an unused portion of a piece of land 25. Which of the following deeds would probably be used to transfer title by a grantor to a grantee when the grantor is providing no warranties on the title? a. Quitclaim deed b. Bargain and sale deed c. Special warranty deed d. Trustee's deed 26. Which of the following offers the most assurance of marketable title to a grantee? a. A trust deed b. A warranty deed c. A title insurance policy d. An affidavit 2012 Dearborn Real Estate Education 22

23 27. Which of the following would be used to clear a defect from the title records? a. A lis pendens b. An estoppel certificate c. A suit to quiet title d. A writ of attachment 28. All of the following may be discovered by a title search EXCEPT a. the legal description of the property. b. liens and judgments. c. easements. d. encroachments. 29. A bill of sale is used to transfer the ownership of a. real property. b. fixtures. c. personal property. d. appurtenances. 30. The North Carolina Marketable Title Act a. guarantees that general warranty deeds transferred in North Carolina are free of defects and therefore, fully marketable. b. states that a title search conducted on a property s history of the previous 30 years will normally extinguish any defects that pre-date that period. c. negates all claims to a property through adverse possession. d. requires title searches to review the chain of title since North Carolina became a state. 31. Which of the following is TRUE? a. The grantor under a special warranty deed warrants that the grantee s title will be defended and protected against any claims whatsoever. b. The grantor under a general warranty deed promises that the grantee s title will be defended and protected only against claims resulting from the grantor s ownership. c. The grantor under a quitclaim deed only conveys any interest the grantor may have in the property. d. A minor will convey absolute ownership interest in a property as long as the signature is obtained in the presence of a parent. 32. The recorded history of all matters that affect the title to a specific parcel of real property is a. a chain of title. b. a certificate of title. c. a title insurance policy. d. an abstract of title Dearborn Real Estate Education 23

24 33. If a defect is found in the title to real property, the usual effect on a sales contract is that a. the contract is immediately void. b. a new contract must be written. c. the buyer has a reasonable time to find another property. d. the seller has a reasonable time to correct the defect. 34. A title insurance policy is designed to protect the insured against events that a. occurred before the policy was issued. b. occur as a result of the policyholder s actions. c. occurred prior to the time period researched for the title search. d. occur in the years following policy issuance. 35. The recordation of a warranty deed a. guarantees ownership. b. protects the interests of the grantee. c. prevents claims of parties in possession. d. provides defense against adverse possession. 36. The best assurance of good title that a real estate purchaser can obtain is a a. valid warranty deed signed by the seller. b. valid quitclaim deed signed by the seller. c. title insurance policy. d. certificate of title. 37. A document that protects a grantee against hidden risks such as forgeries and loss due to defects in the title, subject to specific exceptions, is called a. a chain of title. b. an abstract of title. c. a certificate of title. d. a title insurance policy. 38. The recording of a deed a. is required in order to fully transfer the title to real estate. b. gives constructive notice of the ownership of real property. c. insures the grantee s interest in a parcel of real estate. d. warrants the grantee s title to real property. 39. A grantee took delivery of the deed to his newly purchased North Carolina property but neglected to record the deed. Under these circumstances, the a. transfer of the property from the seller is ineffective. b. grantee s interest is not fully protected against third parties. c. deed is invalid after 120 days. d. deed in invalid after 2 years Dearborn Real Estate Education 24

25 40. Under the North Carolina Conner Act, all the following documents must be recorded to be valid against third parties EXCEPT a. a lease for three years in duration. b. a deed of trust. c. a purchase contract. d. a set of restrictive covenants. 41. A defect or a cloud on the title may be cured by a. obtaining quitclaim deeds from all interested parties. b. bringing an action to register title. c. paying cash for the property at closing. d. obtaining title insurance. 42. All of the following are true regarding public records EXCEPT a. they give notice of encumbrances. b. they establish priority of liens. c. they guarantee marketable title. d. they provide constructive notice about interests in the property. 43. A typical title insurance policy will usually protect the purchaser against all of the following EXCEPT a. misrepresentation of the true owners of the property. b. defects discoverable by a survey that was not conducted. c. mistakes in recording legal documents. d. documents executed under fraudulent powers of attorney. 44. An attorney s statement that indicates the quality of title as of a certain time is a a. title abstract. b. title opinion. c. title search. d. title insurance binder. 45. An outstanding claim which, if valid, would impair an owner's title is a a. clear title. b. cloud on the title. c. quiet title. d. subrogation. 46. Quieting a title refers to a. a title insurance company's search of the title. b. a mortgagor relinquishing title after foreclosure. c. the deposit of a title with an escrow agent. d. the removal of a cloud on the title by court action Dearborn Real Estate Education 25

26 47. A development company owned property that the city expressed interest in acquiring for the extension of the runways at the municipal airport. If the company refuses to negotiate with the city, the city may successfully acquire the property by a. escheat. b. accretion. c. confiscation. d. eminent domain. 48. Before the government can exercise its right of eminent domain, the use of the property must be a. of public benefit for which the property owner will be fairly compensated. b. established for the health, safety, and welfare of the government. c. a local use that will benefit the residents in the immediate area. d. established as a fee simple determinable estate for a particular use. 49. Legislation designed to convert residential zoning into conservation or recreational purposes a. is usually supported by all of the residents of a given area so that the majority rules. b. may be found by the courts to be a taking without the payment of just compensation to the property owner. c. is generally supported by special interest groups whose power might be greater than that of the courts. d. has been determined by the courts to be an excessive use of police power and was therefore ruled as unconstitutional. 50. In a widely-publicized dispute, an owner refused to sell his land to the local school district. He believed that the price offered him was not sufficient consideration. If the school district were to pursue the matter in court, what legal proceeding would it institute to force the owner to sell his land to them? a. Escheat b. Foreclosure c. Probate d. Condemnation 51. Every valid North Carolina real estate deed must contain all of the following EXCEPT a. the identity of the grantor and a grantee b. the signature of the grantee. c. the signature of the grantor. d. the legal description of the property Dearborn Real Estate Education 26

27 Chapter 6: Land Use Controls 1. Deed restrictions can be created by all of the following EXCEPT a. deed. b. statute. c. written agreement. d. general plan of a subdivision. 2. Restrictive covenants a. are no longer effective when the title is transferred. b. apply only until the developer has conveyed the title. c. are often removed by a court of competent jurisdiction. d. apply to and bind all successive owners of the property. 3. The primary intent of zoning ordinances is to a. ensure the health, safety, and welfare of the community. b. demonstrate the police power of the state. c. limit the amount and types of businesses in a given area. d. protect residential neighborhoods from commercial encroachment. 4. Last week, the city council passed a zoning ordinance that prohibits packaged food sales in the area where a family-run grocery store has operated for the last 30 years. The store is now an example of a. an illegal enterprise. b. a nonconforming use. c. a violation of the zoning laws. d. a variance of the zoning laws. 5. Deed restrictions could legally restrict all of the following EXCEPT a. sizes and types of structures to be built. b. potential future uses of the properties. c. future owners and occupants of the properties. d. exterior finish and decoration of the structures. 6. Which of the following BEST describes the purpose of a building permit? a. To override or substantiate deed restrictions b. To control the volume of construction c. To provide evidence of compliance with municipal regulations d. To serve as a means of regulating the area and size of buildings 7. A residential developer's deed restrictions would probably include all of the following EXCEPT a. easements in gross for the installation of public utilities. b. an agreement not to sell without the consent of the neighbors. c. the minimum square-footage for any home to be built in the subdivision. d. a reference to the use of community facilities by residents only Dearborn Real Estate Education 27

28 8. All the following are true about historic preservation zoning EXCEPT a. it is an overlay district. b. owners must obtain a certificate of appropriateness to make changes to the property. c. property owners may be entitled to tax credits. d. it is available only on residences of historical value. 9. A tire company has a manufacturing plant located in an area that has just been rezoned for residential use. The company is allowed to continue operating the plant under the new zoning classification. If the plant is destroyed by fire or other hazard, the tire company a. may not be allowed to rebuild the plant in the neighborhood, absent obtaining a zoning variance. b. may not be allowed to rebuild the plant in the neighborhood unless provided for by building codes. c. may rebuild the plant if it obtains the consent of the residents then living in the neighborhood. d. may rebuild the plant if the homeowners' association approves it. 10. If the buyer of a vacant lot builds a house that violates the restrictions in the deed, the buyer may face all of the following types of enforcement EXCEPT a. creating a cloud on the title to the property. b. being sued and required to conform with the restrictions. c. being sued and required to pay damages to the other residents in the neighborhood. d. being disciplined by the North Carolina Real Estate Commission. 11. All of the following are examples of police power EXCEPT a. zoning ordinances. b. building codes. c. restrictive covenants. d. subdivision regulations. 12. All of the following statements are true regarding zoning EXCEPT a. Zoning is local in nature. b. Some municipalities have the power to regulate land use outside their corporate limits in extraterritorial jurisdiction areas. c. Zoning will prevail over any conflict with restrictive covenants. d. Building permits help ensure compliance with zoning requirements. 13. Aesthetic zoning would be an example of a. illegal use of police power. b. an overlay district. c. spot zoning. d. conditional use Dearborn Real Estate Education 28

29 14. Which of the following statements is TRUE regarding North Carolina subdivisions? a. The final subdivision plat must be recorded before closing on any lot. b. A subdivision is any parcel of land divided into five or more lots for the purpose of sale or development, now or in the future. c. No contract to purchase any lot is allowed until the final subdivision plat is recorded. d. Subdivision streets must be privately maintained by the developer until the last lot is sold to the public. 15. A conveyance that includes a condition controlling or limiting the use of the transferred property is an example of a a. gift deed. b. deed restriction. c. need for a zoning appeal. d. zoning variance. 16. Local zoning ordinances often regulate all of the following EXCEPT a. height of buildings in an area. b. density of population. c. use of the property. d. price of the property. 17. Deed restrictions are a means by which a. local zoning laws are enforced. b. the planning commission controls developers. c. municipalities enforce building restrictions. d. grantors control the future use of the ownership. 18. The owner constructed a building that is seven stories high. Several years later the municipality changed the zoning ordinance, prohibiting buildings that exceed six stories in height. Which of the following is TRUE regarding the use of the existing seven-story building? a. It is a nonconforming use. b. The building must be demolished. c. It is a conditional use requiring a permit. d. A variance must be obtained for the building. 19. Under an existing ordinance, no building signs may extend more than three feet above the highest point of the roof. An owner wants to erect a nine-foot-high revolving sign on the roof of the store. In order to legally do this, the owner must be successful in obtaining a a. special use permit. b. variance. c. nonconforming use permit. d. court order Dearborn Real Estate Education 29

30 20. A proposed area rezoning amendment will change land use from residential to manufacturing. Several homes are already located within the area proposed for rezoning. If the current zoning is amended, the residences will probably a. become a preexisting nonconforming use. b. be required to be torn down. c. be required to convert to commercial use. d. be required to be physically moved to a residential use area. 21. A municipality establishes development goals through its a. subdivision regulations. b. restrictive covenants. c. environmental regulations. d. comprehensive master plan. 22. The purpose of building permits is to a. generate revenue for the municipality. b. control the activities of building inspectors. c. ensure compliance with building codes. d. prevent encroachments. 23. Which of the following BEST describes a variance? a. An exception to a zoning ordinance b. A court order prohibiting certain land uses c. A pre-existing use that varies from the current code d. A comprehensive land use amendment for an area 24. A city issued a building permit to a homeowner for the addition of a family room and additional bedroom with full bath. Before the addition can be built and used, a. no further permission from the city is needed. b. the adjacent neighbors must give written consent for the addition. c. the municipality must issue an occupancy permit. d. the municipality must finalize a special-use permit. 25. Which of the following statements is TRUE regarding building permits in North Carolina? a. A property owner does not need a building permit to construct his own personal residence. b. Unpermitted space may be uninsurable for hazard insurance purposes. c. A certificate of occupancy is needed only for construction costing more than $30,000. d. Permits are to ensure compliance with restrictive covenants Dearborn Real Estate Education 30