BASIC APPRAISAL PRINCIPLES ACTUAL EXAM TEST
QUESTIONS AND ANSWERS SURE A+
✔✔List some important characteristics of land: - ✔✔1) Unique Location: different
topography, access, subsoil & orientation
2) Immobility: fixed in location & sensitive to its immediate surroundings
3) Durability: classified as a long-lasting asset & has a longer physical and economic life
than other assets
4) Finite Supply: limited supply therefore increasing the demand
✔✔Subsurface Rights - ✔✔1) The rights to the use and profits of the underground
portion of a designated property; usually refers to the right to exact coal, minerals, oil,
gas or other hydrocarbon substances as designated in the grant; may include a right of
way over designated portions of the surface.
2) The right to construct and maintain tunnels, subways, subcellars, pipelines, sewers,
etc.
*The rights can be sold or leased to another party*
✔✔Air Rights - ✔✔The right to undisturbed use and control of designated air space
above a specific land area within stated elevations. Such rights may be acquired to
construct a building above the land or building of another or to protect the light and air of
an existing proposed structure on an adjoining lot.
*The exchange of air rights is more common with commercial or industrial properties.*
✔✔Fixture - ✔✔An article that was once personal property but has since been installed
or attached to the land or building in a rather permanent manner so that it is regarded in
law as part of the real estate.
*A fixture could be a shrub or tree but generally fixtures are man-made things*
In order to determine whether something is a fixture ask:
-How permanent is it?
-Can it be removed without doing substantial permanent damage?
-What was the intent? Was it meant to be permanent or temporary?
✔✔Personal Property - ✔✔1) Identifiable tangible objects that are considered by the
general public as being "personal" (furnishings, machinery, artwork); all tangible
property that is not classified as real estate.
2) Consists of every kind of property that is not real property; movable without damage
to itself or the real estate; subdivided into tangible and intangible. Also called
personalty.
*Personal property is something that is portable*
Ex: window ac unit,free standing range, washer/dryer, countertop microwave, portable
dishwasher & chandelier
✔✔Real Estate versus Personal Property - ✔✔-Typically personal property is not
included in the appraisal of residential properties for mortgage loans.
,-Financing of personal property may be more common in commercial or income
properties; where the personal property may be essential to the operation of a business
(restaurant or hotel).
-Appraisers may appraise personal property if they are knowledgeable and experienced
in this area.
✔✔Trade Fixtures - ✔✔-Articles placed in or attached to rented buildings by a tenant to
help carry out the trade or business of the tenant (shelves, display cases, bars, pizza
ovens, etc.)
-Found only in rented space and for use in commercial property
-Installed by the tenant and they may/not remain after the lease expires
✔✔Real Property - ✔✔1) The interests, benefits and rights inherent in the ownership of
real estate
2) All the rights, interests and benefits related to the ownership of real estate. Real
property is a legal concept distinct from real estate, which is a physical asset. There
may also be potential limitations upon ownership rights to real property
*Real estate is the physical being (land & improvements)
*Real Property is the rights and benefits inherent in the ownership of real estate
-We are real property appraisers NOT real estate appraisers
✔✔Bundle of Rights Theory - ✔✔The concept that compares property ownership to a
bundle of sticks with each stick representing a distinct and separate right of the property
owner; the right to use, sell, lease, give away, transfer by will/trust or do nothing.
✔✔4 Public Restrictions - ✔✔1) Taxation
2) Eminent Domain
3) Police Power
4) Escheat
✔✔Taxation - ✔✔all real property is subject to taxation at the local level; this tax creates
a lien against your property and failure to pay the tax could result in your property being
transferred to the taxing authority to be sold.
✔✔Eminent Domain - ✔✔1) The right of government to take private property for public
use upon the payment of just compensation. The Fifth Amendment, aka the 'taking
clause', guarantees payment of just compensation upon appropriation of private
property.
-The process of taking property by eminent domain is called condemnation
-Appraisers are called in to determine 'just compensation'
✔✔Police Power - ✔✔1) The right of government, through which property is regulated,
to protect public safety, health, morals and general welfare
Ex: zoning, building codes, subdivision regulations, electrical codes, plumbing codes &
energy codes
,✔✔Escheat - ✔✔1) The right of government that gives the state titular ownership of a
property when its owner dies without a will or any ascertainable heirs
-Considered a public restriction on real property ownership
✔✔4 Private Restrictions - ✔✔1) Mortgages
2) Mechanic's Lien
3) Deed Restriction
4) Conditions, Covenants & Restrictions (CC&RS)
✔✔Mortgage - ✔✔1) A pledge of a described property interest as collateral or security
for the repayment of a loan under certain terms and conditions
*Mortgage Note: A document or a clause in a document in which the borrower accepts
responsibility for the repayment of a debt
-Mortgage creates a lien against the property
✔✔Mechanic's Lien - ✔✔1) A legal claim placed on real estate by someone who is
owed money for labor, services or supplies contributed to the property for the purpose
of improving it. Typical lien claimants are general contractors, subcontractors and
suppliers of building materials. A mechanic's lien claimant can sue to have the real
estate sold at auction and recover the debt form the proceeds.
✔✔Deed Restriction - ✔✔1) A provision written into a deed that limits the use of land.
Deed restrictions usually remain in effect when title passes to subsequent owners
2) Lawful limitations which run with the land and may affect the use, development and
conveyance of ownership
-Most restrict the use of the property. Ex: never a rental property, cannot be subdivided
in less than 10 acres
-May also promulgate a non-compete clause in commercial properties. Ex: dry cleaner
cannot be sold and turned into anything other than a dry cleaner
-Can stipulate property never be sold to person/relative
-Deed restrictions can be overturned but not easily
✔✔CC&Rs - ✔✔1) A list of expresses assurances and limitations on land use; often
found in contracts between a land subdivider and a lot purchaser. CC&Rs should be
specified in the conveyance
-Similar to deed restrictions but are applied to more than one property; typically
promulgated by a developer to establish regulations for a subdivision; common in
condos
Ex: min. building size, min. building cost, pets, livestock, RV storage, any kind of signs,
outbuildings, outdoor lighting, landscape, sheds, etc.
✔✔Legal Description - ✔✔1) A description of land that identifies the real estate
according to a system established or approved by law; an exact description that enables
the real estate to be located and identified.
, -The description must be unique enough to delineate a particular piece of real estate
without question
-3 most common systems of legal description: lot and block, metes and bounds and
rectangular survey
✔✔Lot and Block - ✔✔1) A system for the legal description of land that refers to parcels'
lot and block numbers, which appear on recorded maps and plats of subdivided land;
may also be used for assessment maps
-The most recent system of legal description, became common in 1950s
-It tells nothing about property location, size or shape & is meaningless without a
reference map that displays this info
✔✔Metes and Bounds - ✔✔1) A system for the legal description of land that refers to
the parcel's boundaries, which are formed by the point of beginning (POB) and all
intermediate points (bounds) and the courses or angular direction of each point (metes)
-The earliest system of legal description used in the US; primarily in the 13 colonies
✔✔Metes - ✔✔-refers to bearing or direction relative to North or South
1 Full circle = 360 degrees
1 degree = 60' (60 "minutes")
1' = 60" (60 "seconds")
1 degree = 3,600" (60 seconds per minute x 60 minutes per degree)
Ex: A property boundary is North 33degrees10'12" East, would read North 33 degrees,
10 minutes, 12 seconds East
✔✔Bounds - ✔✔-the distances that a boundary runs at that prescribed angle; distances
are indicated by feet
1 Mile = 8 Furlongs
1 Furlong = 660 Feet, or 10 Chains
1 Chain = 66 Feet, or 4 Rods
1 Rod = 16.5 Feet, or 25 Links
1 Link = 7.92 Inches, or 0.67 Feet
✔✔Gunter's Chain - ✔✔-many modern units of measurement based on Gunter's Chain
-1607 designed a chain 4 perches in length divided in 100 links
-In Gunter's combination system an acre was 10 square chains
✔✔How many square feet in an acre? - ✔✔43,560
✔✔How many feet in a mile? - ✔✔5,280
✔✔How can a chain and link measurement be converted to feet? - ✔✔multiply the
number of chains by 66 and the number of links by 8 inches or 0.67 feet.
QUESTIONS AND ANSWERS SURE A+
✔✔List some important characteristics of land: - ✔✔1) Unique Location: different
topography, access, subsoil & orientation
2) Immobility: fixed in location & sensitive to its immediate surroundings
3) Durability: classified as a long-lasting asset & has a longer physical and economic life
than other assets
4) Finite Supply: limited supply therefore increasing the demand
✔✔Subsurface Rights - ✔✔1) The rights to the use and profits of the underground
portion of a designated property; usually refers to the right to exact coal, minerals, oil,
gas or other hydrocarbon substances as designated in the grant; may include a right of
way over designated portions of the surface.
2) The right to construct and maintain tunnels, subways, subcellars, pipelines, sewers,
etc.
*The rights can be sold or leased to another party*
✔✔Air Rights - ✔✔The right to undisturbed use and control of designated air space
above a specific land area within stated elevations. Such rights may be acquired to
construct a building above the land or building of another or to protect the light and air of
an existing proposed structure on an adjoining lot.
*The exchange of air rights is more common with commercial or industrial properties.*
✔✔Fixture - ✔✔An article that was once personal property but has since been installed
or attached to the land or building in a rather permanent manner so that it is regarded in
law as part of the real estate.
*A fixture could be a shrub or tree but generally fixtures are man-made things*
In order to determine whether something is a fixture ask:
-How permanent is it?
-Can it be removed without doing substantial permanent damage?
-What was the intent? Was it meant to be permanent or temporary?
✔✔Personal Property - ✔✔1) Identifiable tangible objects that are considered by the
general public as being "personal" (furnishings, machinery, artwork); all tangible
property that is not classified as real estate.
2) Consists of every kind of property that is not real property; movable without damage
to itself or the real estate; subdivided into tangible and intangible. Also called
personalty.
*Personal property is something that is portable*
Ex: window ac unit,free standing range, washer/dryer, countertop microwave, portable
dishwasher & chandelier
✔✔Real Estate versus Personal Property - ✔✔-Typically personal property is not
included in the appraisal of residential properties for mortgage loans.
,-Financing of personal property may be more common in commercial or income
properties; where the personal property may be essential to the operation of a business
(restaurant or hotel).
-Appraisers may appraise personal property if they are knowledgeable and experienced
in this area.
✔✔Trade Fixtures - ✔✔-Articles placed in or attached to rented buildings by a tenant to
help carry out the trade or business of the tenant (shelves, display cases, bars, pizza
ovens, etc.)
-Found only in rented space and for use in commercial property
-Installed by the tenant and they may/not remain after the lease expires
✔✔Real Property - ✔✔1) The interests, benefits and rights inherent in the ownership of
real estate
2) All the rights, interests and benefits related to the ownership of real estate. Real
property is a legal concept distinct from real estate, which is a physical asset. There
may also be potential limitations upon ownership rights to real property
*Real estate is the physical being (land & improvements)
*Real Property is the rights and benefits inherent in the ownership of real estate
-We are real property appraisers NOT real estate appraisers
✔✔Bundle of Rights Theory - ✔✔The concept that compares property ownership to a
bundle of sticks with each stick representing a distinct and separate right of the property
owner; the right to use, sell, lease, give away, transfer by will/trust or do nothing.
✔✔4 Public Restrictions - ✔✔1) Taxation
2) Eminent Domain
3) Police Power
4) Escheat
✔✔Taxation - ✔✔all real property is subject to taxation at the local level; this tax creates
a lien against your property and failure to pay the tax could result in your property being
transferred to the taxing authority to be sold.
✔✔Eminent Domain - ✔✔1) The right of government to take private property for public
use upon the payment of just compensation. The Fifth Amendment, aka the 'taking
clause', guarantees payment of just compensation upon appropriation of private
property.
-The process of taking property by eminent domain is called condemnation
-Appraisers are called in to determine 'just compensation'
✔✔Police Power - ✔✔1) The right of government, through which property is regulated,
to protect public safety, health, morals and general welfare
Ex: zoning, building codes, subdivision regulations, electrical codes, plumbing codes &
energy codes
,✔✔Escheat - ✔✔1) The right of government that gives the state titular ownership of a
property when its owner dies without a will or any ascertainable heirs
-Considered a public restriction on real property ownership
✔✔4 Private Restrictions - ✔✔1) Mortgages
2) Mechanic's Lien
3) Deed Restriction
4) Conditions, Covenants & Restrictions (CC&RS)
✔✔Mortgage - ✔✔1) A pledge of a described property interest as collateral or security
for the repayment of a loan under certain terms and conditions
*Mortgage Note: A document or a clause in a document in which the borrower accepts
responsibility for the repayment of a debt
-Mortgage creates a lien against the property
✔✔Mechanic's Lien - ✔✔1) A legal claim placed on real estate by someone who is
owed money for labor, services or supplies contributed to the property for the purpose
of improving it. Typical lien claimants are general contractors, subcontractors and
suppliers of building materials. A mechanic's lien claimant can sue to have the real
estate sold at auction and recover the debt form the proceeds.
✔✔Deed Restriction - ✔✔1) A provision written into a deed that limits the use of land.
Deed restrictions usually remain in effect when title passes to subsequent owners
2) Lawful limitations which run with the land and may affect the use, development and
conveyance of ownership
-Most restrict the use of the property. Ex: never a rental property, cannot be subdivided
in less than 10 acres
-May also promulgate a non-compete clause in commercial properties. Ex: dry cleaner
cannot be sold and turned into anything other than a dry cleaner
-Can stipulate property never be sold to person/relative
-Deed restrictions can be overturned but not easily
✔✔CC&Rs - ✔✔1) A list of expresses assurances and limitations on land use; often
found in contracts between a land subdivider and a lot purchaser. CC&Rs should be
specified in the conveyance
-Similar to deed restrictions but are applied to more than one property; typically
promulgated by a developer to establish regulations for a subdivision; common in
condos
Ex: min. building size, min. building cost, pets, livestock, RV storage, any kind of signs,
outbuildings, outdoor lighting, landscape, sheds, etc.
✔✔Legal Description - ✔✔1) A description of land that identifies the real estate
according to a system established or approved by law; an exact description that enables
the real estate to be located and identified.
, -The description must be unique enough to delineate a particular piece of real estate
without question
-3 most common systems of legal description: lot and block, metes and bounds and
rectangular survey
✔✔Lot and Block - ✔✔1) A system for the legal description of land that refers to parcels'
lot and block numbers, which appear on recorded maps and plats of subdivided land;
may also be used for assessment maps
-The most recent system of legal description, became common in 1950s
-It tells nothing about property location, size or shape & is meaningless without a
reference map that displays this info
✔✔Metes and Bounds - ✔✔1) A system for the legal description of land that refers to
the parcel's boundaries, which are formed by the point of beginning (POB) and all
intermediate points (bounds) and the courses or angular direction of each point (metes)
-The earliest system of legal description used in the US; primarily in the 13 colonies
✔✔Metes - ✔✔-refers to bearing or direction relative to North or South
1 Full circle = 360 degrees
1 degree = 60' (60 "minutes")
1' = 60" (60 "seconds")
1 degree = 3,600" (60 seconds per minute x 60 minutes per degree)
Ex: A property boundary is North 33degrees10'12" East, would read North 33 degrees,
10 minutes, 12 seconds East
✔✔Bounds - ✔✔-the distances that a boundary runs at that prescribed angle; distances
are indicated by feet
1 Mile = 8 Furlongs
1 Furlong = 660 Feet, or 10 Chains
1 Chain = 66 Feet, or 4 Rods
1 Rod = 16.5 Feet, or 25 Links
1 Link = 7.92 Inches, or 0.67 Feet
✔✔Gunter's Chain - ✔✔-many modern units of measurement based on Gunter's Chain
-1607 designed a chain 4 perches in length divided in 100 links
-In Gunter's combination system an acre was 10 square chains
✔✔How many square feet in an acre? - ✔✔43,560
✔✔How many feet in a mile? - ✔✔5,280
✔✔How can a chain and link measurement be converted to feet? - ✔✔multiply the
number of chains by 66 and the number of links by 8 inches or 0.67 feet.
