Transfer of Property practice exam

Ad valorem

according to value

Property taxes are described as

ad valorem

Example of “boot” for income tax purposes

debt relief from a mortgage in a 1031 exchange

Boot

cash or non like kind property received in a 1031 exchange, which triggers immediate taxes on that portion, even while deferring gains on the rest of the exchange.

Under federal income tax laws, the basis of a real property is the property’s

cost

quitclaim deed

contains no expressed or implied warranties

Warranty deed

A warranty deed transfers ownership while guaranteeing the buyer that the seller has clear title and will protect them against any future ownership claims.

Grant deed

transfers ownership and promises that the seller owns the property and has not placed any undisclosed liens during their ownership.

Quitclaim deed

transfers whatever interest the seller may have in the property, with no guarantees that they own it or that the title is clear.

Bargain and sale deed

transfers ownership but does not guarantee that the property is free of liens or claims.

a suit to quiet title

used to clear a defect from the title records

Bill of sale

used to transfer the ownership of personal property

Title to real property is conveyed by deed when

delivered to and accepted by the grantee

Valid deed must contain

a granting clause

Which of the following would cause a grant deed to be invalid at its inception

Legal incompetence of the grantor

In order for a grant deed to be effective in transferring title to property, it must

Be delivered and accepted

Adjusted Cost Basis

the net cost of an asset after adjusting for various tax-related items

For federal income tax purposes, a taxpayer could adjust the cost basis of their personal residence for which of the following items?

The addition of a concrete patio

The seller conveyed a quitclaim deed to the buyer. Upon receipt of the deed, the buyer may be certain that

All of the seller's interests in the property belong to the buyer

A "cloud on title" means

there is something affecting the title that may prevent its transfer

Which of the following deeds would least likely contain implied covenants by the grantor?

Quitclaim deed

Gift deed

transfers property ownership from one person to another without any money being exchanged.

Chain of title

the complete history of ownership transfers for a piece of real estate.

Title guarantee

a promise that the seller has legal ownership of the property and the right to transfer it.

Title report

a document that lists the current owner of a property and any liens, easements, or claims against it.

Title search

the process of reviewing public records to confirm who owns the property and whether there are any title problems.

In making the decision of whether or not to issue a title policy, the title insurance company would be most concerned with those documents that appear within the

chain of title

abstract of title is a

written summary of documents relating to the title of the property

An agreement wherein one party agrees to reimburse the other party for

damages suffered in the event of a clearly defined risk, in exchange for payment of monetary consideration

An insurance policy

Which of the following items is often short-rated

Premiums on an insurance policy

Conveying the title will

alienate (transfer from one owner to another) the title to property.

Fixtures

objects attached to real property or incorporated into the land which are now considered real property.

Emblements

crops produced by human labor that belong to the tenant and may be harvested even after the tenancy ends.

Appliances

items like refrigerators, stoves, and washers that may be either personal property or real property depending on whether they are permanently attached to the home.

Personalty

movable property that is not permanently attached to real estate and does not transfer with the property unless specifically included in the sale.

The covenant in a deed which states that the grantor is the owner and has the right to convey the title

covenant of seisin

Covenant of seisin

a promise that the seller legally owns the property and has the estate they claim to be transferring.

Covenant of right to convey

a promise that the seller has the legal authority to transfer ownership of the property.

Covenant against encumbrances

a promise that the property is free from undisclosed liens, easements, or other title defects.

Covenant of quiet enjoyment

a promise that the buyer’s ownership and possession of the property will not be disturbed by someone with a superior legal claim

Covenant of warranty

a promise that the seller will defend the buyer’s title against lawful ownership claims.

Covenant of further assurances

a promise that the seller will take future actions necessary to correct any title defects.

A partition suit is used

to force a division of property without all the owners consent

Special assessment

A tax bill derived by calculating the cost-per-front-foot

All title insurances policies

don't cover anything

Brokers are generally required to

keep records of all financial dealings related to real estate transactions they are brokering.

If a seller has already paid for a period of property tax that must be reimbursed by the buyer

 it is a credit on the seller's closing statement.

Improvement taxes

taxes charged to property owners to pay for public improvements like sidewalks, roads, or sewer systems that benefit the property.

Special taxes

taxes levied for a specific purpose or project rather than for general government expenses

General real estate property taxes levied for the operation of the government are called

ad valorem taxes.

Equitable title means

that the prospective buyer has obtained the right to acquire ownership of a property currently owned and occupied by another.

Purpose of deed

transfer title rights

Deficiency judgement

a court ruling that requires a borrower to pay the remaining loan balance when a foreclosure sale does not cover the full debt.

may appear on a closing statement as a credit to the buyer

The balance of an assumed loan

Writ of attachment

a court order allowing a creditor to seize a debtor’s property to secure a judgment.

On a settlement statement, the cost of the required lender’s title insurance policy is usually shown as a

debit to the buyer.

Devise

the transfer of real property to an heir through a will

Unless there is a deed restriction that states otherwise, the holder of a life estate may do all of the following to their estate except

devise it.

Avulsion

the sudden and noticeable loss or addition of land caused by a natural event, such as a flood.

Erosion

the gradual loss of land caused by water, wind, or natural forces

Accretion

gradual increase of land due to natural deposits of soil along a body of water.

On a settlement statement, the selling price is always

a debit to the buyer.

The recording of a deed

gives constructive notice of the ownership of real property

rehabilitate real property

to restore real property to an improved state. The restoration is usually needed because the property's condition has worsened.

Tenancy for years is the common form of rental agreements, it generally

binds all future owners of the property for the term of the lease.

What is the difference between a general lien and a specific lien?

A specific lien is a lien against a certain parcel of real estate, while a general lien covers all of a debtor’s property.

Boot” is a term used in a 1031 Exchange when which of the following happens?

When there is a difference between the equity of properties being exchanged

The term "boot" would probably be considered in connection with a(n):

exchange

Statutory right of redemption

right created by law that allows a former owner to reclaim property after foreclosure by paying the required amount.

Owners right of redemption

right to reclaim property by paying the full debt before foreclosure is completed.

Equitable right of redemption

allows a borrower to stop foreclosure by paying the debt in full before the foreclosure sale.

Vendees right of redemption

allows a buyer under a land contract to reclaim the property by paying the amount owed before default becomes final.