ree practice exam 1

Flag question: Question 1

Question 10.08 pts

Competition for the currently available supply of locations and space coupled with the existing supply of leasable space, determines:

Group of answer choices

the current level of rental rates for each submarket and property.

the riskiness of the expected cash flows of an income-producing property.

the timing of the expected cash flows of an income-producing property.

the cost of financing the purchase of a property.

Flag question: Question 2

Question 20.08 pts

Based on your understanding of the supply and demand dynamics of user/space markets, an increase in demand for leasable space would, all else equal, cause which of the following effects?

Group of answer choices

decrease equilibrium rental rates and decrease property value

decrease equilibrium rental rates and increase property value

increase equilibrium rental rates and decrease property value

increase equilibrium rental rates and increase property value

Flag question: Question 3

Question 30.08 pts

Capital markets can be divided into two broad categories: equity interests and debt interests. Equity investors in real estate expect to earn a return on their investment through:

Group of answer choices

the collection of rent and selling or refinancing the asset.

the collection of interest on the borrowed funds used to purchase the property.

the receipt of property taxes.

the case of a borrower default on required mortgage payments.

Flag question: Question 4

Question 40.08 pts

The demand for real estate derives from the need that market participants (e.g., owner occupants, tenants, renters) have for shelter and convenient access to other locations. This competition for physical location and space occurs in the:

Group of answer choices

user market.

capital market.

government sector.

property market.

Flag question: Question 5

Question 50.08 pts

The expected stream of rental income is capitalized into value by converting expected future cash flows into present value through a process called:

Group of answer choices

amortization.

discounted cash flow analysis.

direct capitalization.

proforma.

Flag question: Question 6

Question 60.08 pts

The term real estate is used in three fundamental ways. When real estate is defined as the land and its improvements, it is being viewed as purely a(n):

Group of answer choices

tangible asset.

intangible asset.

parallel asset.

personal asset.

Flag question: Question 7

Question 70.08 pts

Which of the following would be considered a tangible asset?

Group of answer choices

land

lease agreement

mortgage

listed REIT

Flag question: Question 8

Question 80.08 pts

If we desire to classify land by its use, land that consists of residential, industrial, commercial, and institutional land uses would be classified as:

Group of answer choices

rural land.

federal land.

urban land.

undeveloped land.

Flag question: Question 9

Question 90.08 pts

The investment grade property market is typically targeted by which of the following groups of investors?

Group of answer choices

pension funds.

individual investors.

listed equity REITs.

real estate private equity funds.

Flag question: Question 10

Question 100.08 pts

When viewed as a tangible asset, real estate can be defined as the land and its permanent improvements. Improvements on the land include:

Group of answer choices

fences.

walkways.

sewer systems.

streets.

Flag question: Question 11

Question 110.08 pts

Real estate is property, which can be either a tangible or an intangible asset. Which of the following would be considered an intangible asset?

Group of answer choices

land

building

mortgage

fence

Flag question: Question 12

Question 120.08 pts

Investors in real estate can choose to hold properties directly in the private market or indirectly through publicly traded real estate securities. The market for buying, selling, and leasing real estate can be characterized by which of the following?

Group of answer choices

localized markets.

highly segmented markets.

privately negotiated contracts.

low transaction costs.

Flag question: Question 13

Question 130.08 pts

Based on your understanding of the rules for determining when an object becomes a fixture, which of the following items would most likely be considered a fixture at the time of sale?

Group of answer choices

custom (built-in) bookshelves

refrigerator in a single-family residence being sold

fence installed by the tenant of a rental property

curtains

Flag question: Question 14

Question 140.08 pts

Which of the following types of estates involves the least enforceable bundle of rights?

Group of answer choices

fee simple absolute

legal life estate

ordinary life estate

tenancy at will

Flag question: Question 15

Question 150.08 pts

Following the completion of a contract for construction or other improvements to a property, a contractor has the right to establish a lien on a property as protection against the case that a property owner defaults on the construction contract and/or fails to pay for the completed work. This lien is more commonly referred to as a(n):

Group of answer choices

property tax lien.

mortgage lien.

assessment lien.

mechanics’ lien.

Flag question: Question 16

Question 160.08 pts

When identifying an easement appurtenant, the parcel of land that is constrained or diminished by the easement is referred to as the:

Group of answer choices

dominant parcel.

servient parcel.

licensed parcel.

gross parcel.

Flag question: Question 17

Question 170.08 pts

When identifying an easement appurtenant, the parcel of land that benefits from the right to use the land in question is referred to as the:

Group of answer choices

dominant parcel.

servient parcel.

licensed parcel.

gross parcel.

Flag question: Question 18

Question 180.08 pts

Which of the following types of direct co-ownership combines single person ownership with tenancy in common?

Group of answer choices

cooperative

tenancy by the entirety

condominium

partnership

Flag question: Question 19

Question 190.08 pts

Real estate can be viewed as a bundle of rights. How these bundles of rights are grouped together determines the type of ownership interest an individual (or group of individuals) can stake claim to. In an ordinary life estate with remainder interests, which of the following rights is detached from the traditional bundle of rights that typically defines a fee simple absolute interest?

Group of answer choices

possession

use

disposition

enjoyment

Flag question: Question 20

Question 200.08 pts

Every condominium buyer needs to know the details of which document(s):

Group of answer choices

Condominium declaration

Bylaws

Proprietary lease

Establishment delcaration

Flag question: Question 21

Question 210.08 pts

Which of the following types of liens is automatically superior to any other lien?

Group of answer choices

government property tax and assessment lien

mortgage lien

lien arising from a court judgment unrelated to ownership of the property

mechanics’ lien

Flag question: Question 22

Question 220.08 pts

The distinctive feature of a joint tenancy is the:

Group of answer choices

right of survivorship.

right of community property.

right of separate property.

right of cooperation.

Flag question: Question 23

Question 230.08 pts

Property rights created from legally enforceable marriage have a clear implication for real estate transactions. Which of the following marital property rights gives a spouse a one-half claim on all property acquired “from the fruits of the marriage?”

Group of answer choices

dower

curtesy

elective share

community property

Flag question: Question 24

Question 240.08 pts

Nonposessory interests (i.e. bundles of real property rights that do not include possession) include which of the following?

Group of answer choices

leasehold interests.

easements.

restrictive covenants.

liens.

Flag question: Question 25

Question 250.08 pts

Initially used to survey the Old Northwest Territory (Ohio, Indiana, Illinois, and Michigan) in 1789, which of the following methods of land description relies on townships and section numbers as essential units of identification?

Group of answer choices

metes and bounds

subdivision plat lot and block number

government rectangular survey

tax parcel number

Flag question: Question 26

Question 260.08 pts

Although deeds can only deliver what a grantor actually owns, they can still vary in “quality.” Which of the following types of deeds is considered to be the “highest quality” because it contains the full set of legal promises the grantor can make?

Group of answer choices

general warranty deed

special warranty deed

deed of bargain and sale

quitclaim deed

Flag question: Question 27

Question 270.08 pts

The description of land in a deed must be unambiguous. All of the following would be considered acceptable legal descriptions of land EXCEPT:

Group of answer choices

street address.

subdivision plat lot and block number.

government rectangular survey.

metes and bounds.

Flag question: Question 28

Question 280.08 pts

Select all of the following modes of conveying real property involuntarily without a deed.

Group of answer choices

title by adverse possession.

easement by estoppel.

action of water.

easement by prescription.

Flag question: Question 29

Question 290.08 pts

The quality of deeds differs based on the types of covenants they include. The special warranty deed is identical to the general warranty deed in all ways EXCEPT its conveyance of which of the following covenants?

Group of answer choices

covenant of seizin

covenant against encumbrances

covenant of quiet enjoyment

exceptions and reservation clause

Flag question: Question 30

Question 300.08 pts

At the death of a property owner, property will convey either in accordance with a will or without a will. If a will dictates the distribution of the decedent’s real property, the property is said to be:

Group of answer choices

patented.

devised.

conveyed by the law of descent.

dedicated.

Flag question: Question 31

Question 310.08 pts

Recognizing that only recent conveyances alter the status of title, states have established laws that set limits on how far back a title search must go. These laws are commonly referred to as:

Group of answer choices

Statute of Frauds.

recording statutes.

encroachments.

marketable title laws.

Flag question: Question 32

Question 320.08 pts

All of the following are modes of conveying real property voluntarily without a deed EXCEPT:

Group of answer choices

implied easement.

easement by estoppel.

dedication.

easement by prescription.

Flag question: Question 33

Question 330.08 pts

The purpose of acknowledgment in a deed is to confirm that the deed is, in fact, the intention and action of the grantor. Acknowledgment is always required for a deed to:

Group of answer choices

be valid (enforceable).

be placed in the public record.

convey what the grantor does not possess.

forego the offering of consideration as part of the transaction.

Flag question: Question 34

Question 340.08 pts

Consider the following excerpt from a sample deed: “The Seller is lawfully seized in fee simple of the above described property, less and except a prior reservation of all oil, gas and mineral rights in the property conveyed.” The underlined portion of the preceding statement represents which of the following basic requirements of a deed?

Group of answer choices

habendum clause

recital of consideration

covenant against encumbrances

exceptions and reservations clause

Flag question: Question 35

Question 350.08 pts

Which of the following covenants in a deed promises that the property is not burdened by liens, easements, or other limitations, except as noted in the deed?

Group of answer choices

covenant of seizin

covenant against encumbrances

covenant of quiet enjoyment

exceptions and reservation clause

Flag question: Question 36

Question 360.08 pts

A deed is a special form of written contract used to convey a permanent interest in real property. Unlike most contracts, a deed requires:

Group of answer choices

both parties to be legally competent and of legal majority age.

only the grantee to be legally competent and of legal majority age.

only the grantor to be legally competent and of legal majority age.

both parties to make promises to perform.

Flag question: Question 37

Question 370.08 pts

A contract for sale of real estate usually calls for the seller to provide evidence of title as a requisite to completing the sale. Today, the predominant medium through which a seller meets this requirement is by providing:

Group of answer choices

only a title abstract.

only an attorney’s opinion of title.

only a title insurance commitment.

only a seller’s disclosure.

Flag question: Question 38

Question 380.08 pts

Given the following information, the effective tax rate is ___________mills:

Market value of property: $314,634

Assessed value of property: 92 % of the market value

Exemptions: $36,391

Annual tax liability: $3,498

Flag question: Question 39

Question 390.08 pts

Tax rates are usually stated in mills. Assuming the tax rate in percentage terms is 5.9%, this rate coverts to _________ mills.

Flag question: Question 40

Question 400.08 pts

Given the following information, compute the effective tax rate for the particular piece of property in percentage terms (enter answer as a decimal):

Market value of property: $347,500

Assessed value of property: $268,502

Exemptions: $29,785

Taxes paid: $6,777

Flag question: Question 41

Question 410.08 pts

Given the following information, calculate the total annual tax liability of the homeowner:

Market value of property: $381,175

Assessed value of property: 88% of the market value

Exemptions: $32,890

Millage Rate: 21 mills

Flag question: Question 42

Question 420.08 pts

Given the following information, compute the taxable value for the particular piece of property in dollar terms:

Market value of property: $568,088

Assessed value of property: 86 % of the market value of the property

Exemptions: $30,219

Taxes paid: $5,765

Flag question: Question 43

Question 430.08 pts

Negative externalities can diminish a property’s value by imposing costs on the community at large. In order to offset this detrimental impact, economists advocate “internalizing” these externalities by implementing:

Group of answer choices

performance standards.

impact fees.

growth moratoriums.

planned unit developments.

Flag question: Question 44

Question 440.08 pts

State and federal control of land uses has increased greatly over the past 40 years due in part to an increased awareness of environmental hazards. Which of the following federal environmental control laws was responsible for establishing the “Superfund” to finance emergency responses and cleanups of abandoned and unregulated waste dumps?

Group of answer choices

Clean Water Act

Resource Conservation and Recovery Act

Toxic Substances Control Act

Comprehensive Environmental Response Compensation and Liability Act

Flag question: Question 45

Question 450.08 pts

One of the main criticisms of property taxes is that the property tax of lower income households is higher than that of higher income households, as a percentage of their respective incomes. In other words, taxes are criticized for being:

Group of answer choices

regressive.

comprehensive.

concurrent.

extraterritorial.

Flag question: Question 46

Question 460.08 pts

In their comprehensive plan, local governments must include a “reasonable and fair” component of new housing construction for lower-income families. This requirement is referred to as the:

Group of answer choices

economic and environmental impact requirement.

concurrency requirement.

affordable housing allocation requirement.

extraterritorial jurisdiction requirement.

Flag question: Question 47

Question 470.08 pts

State laws may provide local governments the power to plan and control urban development outside their boundaries until annexation can occur. In doing so, the local government establishes what is more commonly referred to as:

Group of answer choices

urban service.

urban sprawl.

concurrency.

extraterritorial jurisdiction.

Flag question: Question 48

Question 480.08 pts

Real estate taxes represent the largest single source of revenue for a large portion of local governments. Most property taxes are applied in relation to the value of the property, or in other words, they are:

Group of answer choices

effective tax rates.

ad valorem taxes.

tax-exempt.

regressive.

Flag question: Question 49

Question 490.08 pts

Which of the following tools of public land use control represents the earliest method of police power to regulate land use? (Hint: Standards for energy efficiency and sustainability are the most recent trends in the application of this land use control.)

Group of answer choices

subdivision regulation

zoning

building codes

planned unit developments

Flag question: Question 50

Question 500.08 pts

Growth management laws at the state level require local districts to plan for and meet certain requirements. One such requirement prohibits local development unless adequate infrastructure, schools, police/fire protection, and social services have been put in place first. This requirement is referred to as the:

Group of answer choices

economic and environmental impact requirement.

concurrency requirement.

affordable housing requirement.

extraterritorial district requirement.

Flag question: Question 51

Question 510 pts

Are students guaranteed to do well on the actual exam if the student scores well on this practice exam?

Group of answer choices

Yes

No, but students are very likely to do well on the actual exam if they take the practice exam multiple times, without using their notes or other assistance, and do well on the practice exam several times in a row. (this is the correct answer)