FIN 365 MIDTERM QUESTIONS COMPLETE EXAM QUSTIONS WITH DETAILED
VERIFIED ANSWERS /ALREADY GRADED A+
1 . Which of the following sources would be the least satisfactory for obtaining a legal
description of a parcel of real property?
A. Deeds
B. Preliminary title reports
C. Escrow instructions
D. Real property tax bills - (answer)D. Real property tax bills
Explanation: A real property tax bill usually identifies the property by the tax assessor's
parcel number. While the bill may also include a legal description of the property, that's
often an abbreviated description instead of the complete legal description.
2. The land description method that makes reference to sections, townships, and
ranges is the:
A. government survey method
B. recorded map method
C. metes and bounds method
D. Torrens system - (answer)A. government survey method
Explanation: The government survey method of land description identifies property by
specifying its location in a particular section, township, and range.
3. A ranch is 36 miles square. What is the number of townships contained in the ranch?
A. 1
B. 6
C. 36
D. 1,296 - (answer)C. 36
Explanation: A township is six miles on each side. Therefore, the ranch (which is 36
miles long on each side) is 6 townships wide and 6 townships high. Multiply 6 times 6 to
find that the ranch contains 36 townships. Note: Miles square and square miles mean
different things. 36 miles square means a square that is 36 by 36 miles. A square
property that was only 36 square miles would be 6 miles square.
4. Which of the following is not considered to be appurtenant to land?
A. Watercourses
B. Fences
C. Dwellings
D. Trade fixtures - (answer)D. Trade fixtures
Explanation: Trade fixtures (items installed by a tenant for use in a trade or business)
are not appurtenant to land. The tenant is presumed to have installed them with the
intention of removing them at the end of the lease, so they remain the tenant's personal
property.
,5. When a title company issues an ALTA policy, it will extend the risk beyond that which
is covered by a standard policy, to include all of the following, except:
A. the rights of parties in possession
B. unrecorded easements
C. the effect of zoning regulations
D. unrecorded mechanic's liens - (answer)C. the effect of zoning regulations
Explanation: Title insurance policies -- whether standard coverage, extended (ALTA)
coverage, or some other type -- do not insure against losses caused by governmental
actions, such as zoning changes.
6. The right to use and enjoy another person's property that falls short of an estate is
a/an:
A. easement
B. leasehold
C. deed
D. devise - (answer)A. easement
Explanation: A nonpossessory right to use another person's property is an easement.
(An estate, such as a leasehold, is a possessory interest.)
7. A seller accepted a proper offer in writing to purchase his property. He then refused
to complete the transaction. If the buyer were to bring suit for failure to perform the
contract, under the statute of limitations he would need to do so within:
A. 1 year
B. 2 years
C. 3 years
D. 4 years - (answer)D. 4 years
Explanation: In California, the statute of limitations for written contracts is four years. A
lawsuit regarding breach of a written contract must be filed within this four-year period.
8. A city passes a bond issue to improve streets in a particular neighborhood. The
properties in that area will be burdened:
A. according to the value of the property
B. according to the size of the lot
C. in proportion to the benefits that the land will receive
D. identically - (answer)C. in proportion to the benefits that the land will receive
Explanation: While general real estate taxes are levied based on the value of the taxed
properties, special assessments are levied according to the amount each property will
benefit from the improvement.
9. Al willed his property to his three children (Barry, Chris, and Dara) as joint tenants.
Barry then died, leaving behind a will stating that his share of the property would pass to
,his daughter Mary. Dara then sold her portion of the property to her friend Vera. At this
point, how is the property owned?
A. Mary and Chris own it as joint tenants
B. Vera and Chris own it as tenants in common
C. Mary, Vera, and Chris own it as tenants in common
D. Mary and Chris own their shares as joint tenants, while Vera owns her share as a
tenant in common - (answer)B. Vera and Chris own it as tenants in common
Explanation: When Barry died, his attempt to pass his share to Mary failed. A joint
tenant may not will his interest. Therefore, Chris and Dara were left as joint tenants.
When Dara sold her share of the property, that terminated the joint tenancy between
Dara and Chris. Chris and Vera continue to own the property together, but as tenants in
common.
10. A person was judicially declared incompetent and then was willed a parcel of real
property by his brother. Can he take title to this property?
A. He can accept title only if it is placed with a trustee
B. He can accept title to real property that passes to him by will
C. He cannot accept title because he is incompetent
D. He can accept title to personal property but not real property - (answer)B. He can
accept title to real property that passes to him by will
Explanation: An incompetent person may not contract to purchase property, but may
receive real or personal property by gift or will.
11. Which of the following statements concerning estates is correct?
A. A life estate is a leasehold estate
B. An estate may be held with another estate in the same property
C. Title to an estate must pass using a grant deed
D. An estate always gives the right of immediate possession - (answer)B. An estate
may be held with another estate in the same property
Explanation: A common example of two estates being held in the same property is
when a landlord leases her property. The landlord (the owner) continues to have a
freehold estate, while the tenant has a leasehold estate.
12. How many acres are in a property that is described as the "S 1/2 of the NW 1/4 of
the NE 1/4 of the NE 1/4 of Section 23"?
A. 5
B. 10
C. 20
D. 40 - (answer)A. 5
Explanation: To solve this problem, start with the size of a section (640 acres) and work
backwards. 640 ÷ 4 = 160. 160 ÷ 4 = 40. 40 ÷ 4 = 10. 10 ÷ 2 = 5.
, 13. A buyer consented to purchase a property, but his consent was induced by
fraudulent statements made by the seller's broker. The buyer's purchase agreement
would be:
A. valid
B. voidable
C. void
D. illegal - (answer)B. voidable
Explanation: If a party is induced by fraud to enter into a contract, that contract is
voidable. This means that the defrauded party may rescind the contract or proceed with
it. The other party must abide by whichever decision the defrauded party makes.
14. A reversionary interest would be held by a:
A. state government under the right of eminent domain
B. mortgagee in the event of default by the borrower
C. lessor under the terms of a lease
D. person who gained title through adverse possession - (answer)C. lessor under the
terms of a lease
Explanation: A lessor (landlord) has a reversionary interest in the leased property.
When the lease expires and the tenant vacates, the property will revert to the lessor.
15. A minor who owns property asks a broker to assist in the sale of the property. The
broker may not accept a listing from the minor because:
A. a minor is incapable of appointing an agent
B. the minor may be able to disaffirm a real estate contract later
C. a broker is incapable of a fiduciary relationship with a minor
D. it is illegal for a minor to enter into any sort of contract - (answer)A. a minor is
incapable of appointing an agent
Explanation: A minor may not appoint an agent because a minor does not have
contractual capacity.
16. Which of the following is not a consideration in determining whether or not an item is
a fixture?
A. Relationship between parties
B. Intention of annexor
C. Manner of annexation
D. Time of annexation - (answer)D. Time of annexation
Explanation: Time of annexation is not one of the fixture tests that courts apply. The
tests include the relationship of the parties, intention of the annexor, and method of
attachment (manner of annexation), along with adaptation of the item to the realty and
written agreement.
VERIFIED ANSWERS /ALREADY GRADED A+
1 . Which of the following sources would be the least satisfactory for obtaining a legal
description of a parcel of real property?
A. Deeds
B. Preliminary title reports
C. Escrow instructions
D. Real property tax bills - (answer)D. Real property tax bills
Explanation: A real property tax bill usually identifies the property by the tax assessor's
parcel number. While the bill may also include a legal description of the property, that's
often an abbreviated description instead of the complete legal description.
2. The land description method that makes reference to sections, townships, and
ranges is the:
A. government survey method
B. recorded map method
C. metes and bounds method
D. Torrens system - (answer)A. government survey method
Explanation: The government survey method of land description identifies property by
specifying its location in a particular section, township, and range.
3. A ranch is 36 miles square. What is the number of townships contained in the ranch?
A. 1
B. 6
C. 36
D. 1,296 - (answer)C. 36
Explanation: A township is six miles on each side. Therefore, the ranch (which is 36
miles long on each side) is 6 townships wide and 6 townships high. Multiply 6 times 6 to
find that the ranch contains 36 townships. Note: Miles square and square miles mean
different things. 36 miles square means a square that is 36 by 36 miles. A square
property that was only 36 square miles would be 6 miles square.
4. Which of the following is not considered to be appurtenant to land?
A. Watercourses
B. Fences
C. Dwellings
D. Trade fixtures - (answer)D. Trade fixtures
Explanation: Trade fixtures (items installed by a tenant for use in a trade or business)
are not appurtenant to land. The tenant is presumed to have installed them with the
intention of removing them at the end of the lease, so they remain the tenant's personal
property.
,5. When a title company issues an ALTA policy, it will extend the risk beyond that which
is covered by a standard policy, to include all of the following, except:
A. the rights of parties in possession
B. unrecorded easements
C. the effect of zoning regulations
D. unrecorded mechanic's liens - (answer)C. the effect of zoning regulations
Explanation: Title insurance policies -- whether standard coverage, extended (ALTA)
coverage, or some other type -- do not insure against losses caused by governmental
actions, such as zoning changes.
6. The right to use and enjoy another person's property that falls short of an estate is
a/an:
A. easement
B. leasehold
C. deed
D. devise - (answer)A. easement
Explanation: A nonpossessory right to use another person's property is an easement.
(An estate, such as a leasehold, is a possessory interest.)
7. A seller accepted a proper offer in writing to purchase his property. He then refused
to complete the transaction. If the buyer were to bring suit for failure to perform the
contract, under the statute of limitations he would need to do so within:
A. 1 year
B. 2 years
C. 3 years
D. 4 years - (answer)D. 4 years
Explanation: In California, the statute of limitations for written contracts is four years. A
lawsuit regarding breach of a written contract must be filed within this four-year period.
8. A city passes a bond issue to improve streets in a particular neighborhood. The
properties in that area will be burdened:
A. according to the value of the property
B. according to the size of the lot
C. in proportion to the benefits that the land will receive
D. identically - (answer)C. in proportion to the benefits that the land will receive
Explanation: While general real estate taxes are levied based on the value of the taxed
properties, special assessments are levied according to the amount each property will
benefit from the improvement.
9. Al willed his property to his three children (Barry, Chris, and Dara) as joint tenants.
Barry then died, leaving behind a will stating that his share of the property would pass to
,his daughter Mary. Dara then sold her portion of the property to her friend Vera. At this
point, how is the property owned?
A. Mary and Chris own it as joint tenants
B. Vera and Chris own it as tenants in common
C. Mary, Vera, and Chris own it as tenants in common
D. Mary and Chris own their shares as joint tenants, while Vera owns her share as a
tenant in common - (answer)B. Vera and Chris own it as tenants in common
Explanation: When Barry died, his attempt to pass his share to Mary failed. A joint
tenant may not will his interest. Therefore, Chris and Dara were left as joint tenants.
When Dara sold her share of the property, that terminated the joint tenancy between
Dara and Chris. Chris and Vera continue to own the property together, but as tenants in
common.
10. A person was judicially declared incompetent and then was willed a parcel of real
property by his brother. Can he take title to this property?
A. He can accept title only if it is placed with a trustee
B. He can accept title to real property that passes to him by will
C. He cannot accept title because he is incompetent
D. He can accept title to personal property but not real property - (answer)B. He can
accept title to real property that passes to him by will
Explanation: An incompetent person may not contract to purchase property, but may
receive real or personal property by gift or will.
11. Which of the following statements concerning estates is correct?
A. A life estate is a leasehold estate
B. An estate may be held with another estate in the same property
C. Title to an estate must pass using a grant deed
D. An estate always gives the right of immediate possession - (answer)B. An estate
may be held with another estate in the same property
Explanation: A common example of two estates being held in the same property is
when a landlord leases her property. The landlord (the owner) continues to have a
freehold estate, while the tenant has a leasehold estate.
12. How many acres are in a property that is described as the "S 1/2 of the NW 1/4 of
the NE 1/4 of the NE 1/4 of Section 23"?
A. 5
B. 10
C. 20
D. 40 - (answer)A. 5
Explanation: To solve this problem, start with the size of a section (640 acres) and work
backwards. 640 ÷ 4 = 160. 160 ÷ 4 = 40. 40 ÷ 4 = 10. 10 ÷ 2 = 5.
, 13. A buyer consented to purchase a property, but his consent was induced by
fraudulent statements made by the seller's broker. The buyer's purchase agreement
would be:
A. valid
B. voidable
C. void
D. illegal - (answer)B. voidable
Explanation: If a party is induced by fraud to enter into a contract, that contract is
voidable. This means that the defrauded party may rescind the contract or proceed with
it. The other party must abide by whichever decision the defrauded party makes.
14. A reversionary interest would be held by a:
A. state government under the right of eminent domain
B. mortgagee in the event of default by the borrower
C. lessor under the terms of a lease
D. person who gained title through adverse possession - (answer)C. lessor under the
terms of a lease
Explanation: A lessor (landlord) has a reversionary interest in the leased property.
When the lease expires and the tenant vacates, the property will revert to the lessor.
15. A minor who owns property asks a broker to assist in the sale of the property. The
broker may not accept a listing from the minor because:
A. a minor is incapable of appointing an agent
B. the minor may be able to disaffirm a real estate contract later
C. a broker is incapable of a fiduciary relationship with a minor
D. it is illegal for a minor to enter into any sort of contract - (answer)A. a minor is
incapable of appointing an agent
Explanation: A minor may not appoint an agent because a minor does not have
contractual capacity.
16. Which of the following is not a consideration in determining whether or not an item is
a fixture?
A. Relationship between parties
B. Intention of annexor
C. Manner of annexation
D. Time of annexation - (answer)D. Time of annexation
Explanation: Time of annexation is not one of the fixture tests that courts apply. The
tests include the relationship of the parties, intention of the annexor, and method of
attachment (manner of annexation), along with adaptation of the item to the realty and
written agreement.
