APPRAISAL PRINCIPLES QUESTIONS AND ANSWERS
RATED A+ NEW UPDATE ASSURED SATISFACTION.
◉ Deed Answer - 1) A written. legal instrument that conveys an estate or interest in real
property when it is executed and delivered
-Grantor is the seller
-Grantee is the buyer
-Title officially passes when the deed is delivered by the grantor and accepted by the grantee
-To be legally valid: deed must be in writing, description of the parties, grantor must be legally
capable, property adequately described, legally acceptable grantee clause, must be an amount,
signed by the grantor & deed must be delivered to the grantee
◉ Grant Deed Answer - 1) A deed in which the grantor warrants that he or she has not
previously conveyed or encumbered the property; does not ensure that the grantor is the owner
of the property or that the property is unencumbered; conveys any after-acquired title of the
grantor, unless a different intent is expressed
-The grantor does not expressly warrant the title as being free and clear of all encumbrances
and does not even warrant that he or she is the owner of the property
◉ Quitclaim Deed Answer - 1) A form of conveyance in which any interest the grantor possesses
in the property described in the deed is conveyed to the grantee without warranty of title
-Weakest for of a deed
-Makes no claims or warrants to the quality of the title, "buyer beware"
◉ Bargain and Sale Deed Answer - 1) A deed that conveys real property from a seller to a buyer
but does not guarantee clear title; used by court officials to convey property they hold by force
of law, but to which they do not hold title
-Step up from quitclaim, does not guarantee a clear title but it implies that the grantor does hold
title to the property
Ex: a sheriff's deed, given to the purchaser of a property at a court-ordered sale
-Most do not have covenants or warranties
◉ Tax Deed Answer - 1) A deed that conveys title to a property purchased at a tax sale; may or
may not convey absolute title, free of all prior claims and liens, depending on state law
,-Essentially a bargain and sale deed but used specifically for tax sales where properties have
been taken over for non-payment of real estate taxes
◉ Warranty Deed Answer - 1) A deed that conveys to the grantee title to the property free and
clear of all encumbrances, except those specifically set forth in the document
-Best and most powerful deed
-Grantor guarantees free and clear title and if any issues or claims are made on the title the
grantor must make it right
◉ Deed of Trust Answer - 1) A legal instrument similar to a mortgage document, except that
three parties are involved in securing the debt; the borrower, a lender and a trustee who holds
property title when the deed of trust is executed and delivered. The trustee transfers title to the
lender if the borrower defaults and to the borrower if the note is repaid
-Similar to a mortgage, title is vested in a third party, the trustee, until the mortgage lien is
satisfied
◉ Reconveyance Answer - 1) Passing of title to real property back to the original owner. Ex: in a
deed of trust arrangement, upon liquidation of the debt the property is reconveyed from a third-
party trustee to the trustor (borrower)
-If a deed of trust is recorded and then the loan is paid off, the reconveyance document passes
title back to the borrower
◉ Do deeds need to be recorded in order to be valid? Answer - No, but it is in the best interest of
the parties to record the deed in public records (county clerk)
◉ Contract Answer - 1) A legally binding agreement between two or more persons that
represents their promise to do or not to do a particular thing.
2) An agreement between persons which obliges each party to do or not to do a certain thing
3) An agreement with specific terms between two or more persons or entities in which there is
a promise to do something
◉ Promise Answer - 1) A firm agreement to perform an act, refrain from acting or make a
payment or delivery
-As in a promissory note, we promise to repay something
-Contracts are promises that the law will enforce
,◉ Oral vs Written Contracts Answer - -An oral contract may be just as valid as a written
agreement, but proving its existence and clarifying its terms may be difficult
-An oral contract is sometimes provable by action taken by one or both parties and it works as
long as both parties agree
-Statute of limitations for suing for breach of an oral contract is shorter than for written
contracts
-Most contracts that can be completed within one year can be written or oral; major exceptions
are contracts involving ownership of real estate and commercial contracts for goods in excess of
$500, they need to be in writing to be enforceable
◉ Mutual Assent Answer - -consent of both parties to a contract should be free, mutual and
communicated by each to the other
-established by the process of offer and acceptance
◉ Offer Answer - 1) A manifestation of willingness to enter to into a bargain, which creates in
the offeree the power of acceptance
2) A specific proposal to enter into an agreement with another
-Offers remain open until they are: accepted, rejected, retracted, countered or expired by their
own terms
-Offers may be revoked any time prior to the communication of acceptance of the offer
-Once an offer is accepted in all terms by another party, a contract is created and can be
enforced
◉ Acceptance Answer - 1) A manifestation of willingness to be bound by the terms of an offer
made in a manner invited or required by the offer
-All terms of the offer must be accepted without change or condition
-May occur as express or implied
◉ Express Contract Answer - -the existence of the contract and its terms are stated in words or
writings of the parties
-may be either oral or written
Ex: listing agreements, purchase offers, mortgages, leases & installment contracts
◉ Implied Contract Answer - -the existence of the contract and its terms are inferred or implied
from the conduct of the parties
, -the distinction between an express and implied contract is only in the manner in which the
agreement is shown
Ex: if you order food at a restaurant you imply a promise to pay for the food
◉ Bilateral Contract Answer - -both parties have made promises to each other, one promise in
exchange for another
-most commercial contracts of any substance are bilateral
Ex: a real estate sales contract
◉ Unilateral Contract Answer - -one party makes a promise in order to induce another party to
do something, the second party is not legally obligated to comply
◉ Executed Contract Answer - -one that has been fully performed & all promises fulfilled
according to the terms of the contract
◉ Executory Contract Answer - -one that has not been fully performed or completed
Ex: a listing contract or a mortgage
◉ Valid Contract Answer - -one that is binding and enforceable on all parties
Ex: a real estate deal that has cleared all contingencies but has not closed
◉ Advisory Councils to The Appraisal Foundation Answer - 1) The Appraisal Foundation Advisory
Council (TAFAC): comprised of 75 non-profit organizations and government entities; it serves to
involve the public in the appraisal standards & qualifications development process; makes
recommendations to the ASB, AQB & BOT regarding major issues pending before the Board
2) Industry Advisory Council (IAC): gives for-profit entities an opportunity to provide advice and
counsel to The Appraisal Foundation, members include lending institutions, accounting firms,
appraisal companies, etc.
3) International Valuation Council (IVC): provides global info and support to TAF
◉ The Appraisal Subcommittee Answer - -The ASC is a federal entity and has significant enforcement
authority
-created under Section 1103 of Title XI of FIRREA to: monitor state licensure & certification, maintain
national registry of state certified and licensed appraisers eligible to perform appraisal in federally
related transactions, transmit annual report to Congress & monitor the practices, procedures &
activities of The Appraisal Foundation
RATED A+ NEW UPDATE ASSURED SATISFACTION.
◉ Deed Answer - 1) A written. legal instrument that conveys an estate or interest in real
property when it is executed and delivered
-Grantor is the seller
-Grantee is the buyer
-Title officially passes when the deed is delivered by the grantor and accepted by the grantee
-To be legally valid: deed must be in writing, description of the parties, grantor must be legally
capable, property adequately described, legally acceptable grantee clause, must be an amount,
signed by the grantor & deed must be delivered to the grantee
◉ Grant Deed Answer - 1) A deed in which the grantor warrants that he or she has not
previously conveyed or encumbered the property; does not ensure that the grantor is the owner
of the property or that the property is unencumbered; conveys any after-acquired title of the
grantor, unless a different intent is expressed
-The grantor does not expressly warrant the title as being free and clear of all encumbrances
and does not even warrant that he or she is the owner of the property
◉ Quitclaim Deed Answer - 1) A form of conveyance in which any interest the grantor possesses
in the property described in the deed is conveyed to the grantee without warranty of title
-Weakest for of a deed
-Makes no claims or warrants to the quality of the title, "buyer beware"
◉ Bargain and Sale Deed Answer - 1) A deed that conveys real property from a seller to a buyer
but does not guarantee clear title; used by court officials to convey property they hold by force
of law, but to which they do not hold title
-Step up from quitclaim, does not guarantee a clear title but it implies that the grantor does hold
title to the property
Ex: a sheriff's deed, given to the purchaser of a property at a court-ordered sale
-Most do not have covenants or warranties
◉ Tax Deed Answer - 1) A deed that conveys title to a property purchased at a tax sale; may or
may not convey absolute title, free of all prior claims and liens, depending on state law
,-Essentially a bargain and sale deed but used specifically for tax sales where properties have
been taken over for non-payment of real estate taxes
◉ Warranty Deed Answer - 1) A deed that conveys to the grantee title to the property free and
clear of all encumbrances, except those specifically set forth in the document
-Best and most powerful deed
-Grantor guarantees free and clear title and if any issues or claims are made on the title the
grantor must make it right
◉ Deed of Trust Answer - 1) A legal instrument similar to a mortgage document, except that
three parties are involved in securing the debt; the borrower, a lender and a trustee who holds
property title when the deed of trust is executed and delivered. The trustee transfers title to the
lender if the borrower defaults and to the borrower if the note is repaid
-Similar to a mortgage, title is vested in a third party, the trustee, until the mortgage lien is
satisfied
◉ Reconveyance Answer - 1) Passing of title to real property back to the original owner. Ex: in a
deed of trust arrangement, upon liquidation of the debt the property is reconveyed from a third-
party trustee to the trustor (borrower)
-If a deed of trust is recorded and then the loan is paid off, the reconveyance document passes
title back to the borrower
◉ Do deeds need to be recorded in order to be valid? Answer - No, but it is in the best interest of
the parties to record the deed in public records (county clerk)
◉ Contract Answer - 1) A legally binding agreement between two or more persons that
represents their promise to do or not to do a particular thing.
2) An agreement between persons which obliges each party to do or not to do a certain thing
3) An agreement with specific terms between two or more persons or entities in which there is
a promise to do something
◉ Promise Answer - 1) A firm agreement to perform an act, refrain from acting or make a
payment or delivery
-As in a promissory note, we promise to repay something
-Contracts are promises that the law will enforce
,◉ Oral vs Written Contracts Answer - -An oral contract may be just as valid as a written
agreement, but proving its existence and clarifying its terms may be difficult
-An oral contract is sometimes provable by action taken by one or both parties and it works as
long as both parties agree
-Statute of limitations for suing for breach of an oral contract is shorter than for written
contracts
-Most contracts that can be completed within one year can be written or oral; major exceptions
are contracts involving ownership of real estate and commercial contracts for goods in excess of
$500, they need to be in writing to be enforceable
◉ Mutual Assent Answer - -consent of both parties to a contract should be free, mutual and
communicated by each to the other
-established by the process of offer and acceptance
◉ Offer Answer - 1) A manifestation of willingness to enter to into a bargain, which creates in
the offeree the power of acceptance
2) A specific proposal to enter into an agreement with another
-Offers remain open until they are: accepted, rejected, retracted, countered or expired by their
own terms
-Offers may be revoked any time prior to the communication of acceptance of the offer
-Once an offer is accepted in all terms by another party, a contract is created and can be
enforced
◉ Acceptance Answer - 1) A manifestation of willingness to be bound by the terms of an offer
made in a manner invited or required by the offer
-All terms of the offer must be accepted without change or condition
-May occur as express or implied
◉ Express Contract Answer - -the existence of the contract and its terms are stated in words or
writings of the parties
-may be either oral or written
Ex: listing agreements, purchase offers, mortgages, leases & installment contracts
◉ Implied Contract Answer - -the existence of the contract and its terms are inferred or implied
from the conduct of the parties
, -the distinction between an express and implied contract is only in the manner in which the
agreement is shown
Ex: if you order food at a restaurant you imply a promise to pay for the food
◉ Bilateral Contract Answer - -both parties have made promises to each other, one promise in
exchange for another
-most commercial contracts of any substance are bilateral
Ex: a real estate sales contract
◉ Unilateral Contract Answer - -one party makes a promise in order to induce another party to
do something, the second party is not legally obligated to comply
◉ Executed Contract Answer - -one that has been fully performed & all promises fulfilled
according to the terms of the contract
◉ Executory Contract Answer - -one that has not been fully performed or completed
Ex: a listing contract or a mortgage
◉ Valid Contract Answer - -one that is binding and enforceable on all parties
Ex: a real estate deal that has cleared all contingencies but has not closed
◉ Advisory Councils to The Appraisal Foundation Answer - 1) The Appraisal Foundation Advisory
Council (TAFAC): comprised of 75 non-profit organizations and government entities; it serves to
involve the public in the appraisal standards & qualifications development process; makes
recommendations to the ASB, AQB & BOT regarding major issues pending before the Board
2) Industry Advisory Council (IAC): gives for-profit entities an opportunity to provide advice and
counsel to The Appraisal Foundation, members include lending institutions, accounting firms,
appraisal companies, etc.
3) International Valuation Council (IVC): provides global info and support to TAF
◉ The Appraisal Subcommittee Answer - -The ASC is a federal entity and has significant enforcement
authority
-created under Section 1103 of Title XI of FIRREA to: monitor state licensure & certification, maintain
national registry of state certified and licensed appraisers eligible to perform appraisal in federally
related transactions, transmit annual report to Congress & monitor the practices, procedures &
activities of The Appraisal Foundation
