Real Estate Finance and Investment
Practice Questions with Answers and
Explanations | Advanced Exam Prep
Q1. Which deed provides the greatest protection to the buyer?
A) Special warranty deed
B) Quitclaim deed
C) General warranty deed ✅
D) Bargain and sale deed
Explanation: The general warranty deed guarantees a clear title with covenants covering past
and future defects.
Q2. A quitclaim deed is commonly used to:
A) Guarantee ownership
B) Convey after foreclosure
C) Clear a cloud on the title ✅
D) Provide title insurance
Explanation: Quitclaim deeds transfer only the grantor’s interest without warranties, often to
cure title defects.
Q3. Constructive notice of ownership is given by:
A) Word of mouth
B) Recording the deed ✅
C) Hand delivery of deed
D) Taking possession only
Explanation: Recording a deed in public records provides constructive notice to the world.
Q4. What type of notice results from direct knowledge of ownership, such as seeing
someone in possession?
A) Constructive notice
B) Actual notice ✅
C) Implied notice
D) Presumptive notice
Explanation: Actual notice occurs when someone has direct, personal knowledge of
ownership or rights.
Q5. Which clause in a deed states the intent to transfer ownership?
A) Habendum clause
B) Granting clause ✅
C) Covenant of seisin
D) Testimonium clause
Explanation: The granting clause is essential in a deed, stating the grantor’s intention to
transfer title.
, Q6. Which deed contains no covenants or warranties?
A) Quitclaim deed ✅
B) General warranty deed
C) Special warranty deed
D) Trustee’s deed
Explanation: Quitclaim deeds simply convey whatever interest the grantor may have, if any.
Q7. Title insurance protects against:
A) Physical defects in property
B) Known encroachments
C) Hidden defects in title ✅
D) Zoning violations
Explanation: Title insurance covers unknown risks such as forged documents or undisclosed
heirs.
Q8. Which legal process distributes the property of someone who dies intestate?
A) Probate ✅
B) Escheat
C) Eminent domain
D) Partition
Explanation: Probate is the court process of settling estates when no valid will exists.
Q9. What is adverse possession?
A) Leasing property without consent
B) Government seizure of land
C) Acquiring title through open, notorious, hostile, and continuous possession ✅
D) Purchasing at a tax sale
Explanation: Adverse possession allows ownership if statutory conditions are met over time.
Q10. Which type of deed is typically used in foreclosures or tax sales?
A) General warranty deed
B) Special warranty deed
C) Bargain and sale deed ✅
D) Quitclaim deed
Explanation: Bargain and sale deeds imply ownership but contain no warranties; often used in
forced sales.
Q11. Which covenant in a general warranty deed guarantees the grantor owns the
property?
A) Covenant of seisin ✅
B) Covenant against encumbrances
C) Covenant of further assurance
D) Covenant of quiet enjoyment
Explanation: The Covenant of Seisin confirms that the grantor has rightful ownership and the
right to convey.
Q12. Which covenant guarantees the grantee’s possession will not be disturbed?
A) Seisin
B) Quiet enjoyment ✅
C) Warranty forever
Practice Questions with Answers and
Explanations | Advanced Exam Prep
Q1. Which deed provides the greatest protection to the buyer?
A) Special warranty deed
B) Quitclaim deed
C) General warranty deed ✅
D) Bargain and sale deed
Explanation: The general warranty deed guarantees a clear title with covenants covering past
and future defects.
Q2. A quitclaim deed is commonly used to:
A) Guarantee ownership
B) Convey after foreclosure
C) Clear a cloud on the title ✅
D) Provide title insurance
Explanation: Quitclaim deeds transfer only the grantor’s interest without warranties, often to
cure title defects.
Q3. Constructive notice of ownership is given by:
A) Word of mouth
B) Recording the deed ✅
C) Hand delivery of deed
D) Taking possession only
Explanation: Recording a deed in public records provides constructive notice to the world.
Q4. What type of notice results from direct knowledge of ownership, such as seeing
someone in possession?
A) Constructive notice
B) Actual notice ✅
C) Implied notice
D) Presumptive notice
Explanation: Actual notice occurs when someone has direct, personal knowledge of
ownership or rights.
Q5. Which clause in a deed states the intent to transfer ownership?
A) Habendum clause
B) Granting clause ✅
C) Covenant of seisin
D) Testimonium clause
Explanation: The granting clause is essential in a deed, stating the grantor’s intention to
transfer title.
, Q6. Which deed contains no covenants or warranties?
A) Quitclaim deed ✅
B) General warranty deed
C) Special warranty deed
D) Trustee’s deed
Explanation: Quitclaim deeds simply convey whatever interest the grantor may have, if any.
Q7. Title insurance protects against:
A) Physical defects in property
B) Known encroachments
C) Hidden defects in title ✅
D) Zoning violations
Explanation: Title insurance covers unknown risks such as forged documents or undisclosed
heirs.
Q8. Which legal process distributes the property of someone who dies intestate?
A) Probate ✅
B) Escheat
C) Eminent domain
D) Partition
Explanation: Probate is the court process of settling estates when no valid will exists.
Q9. What is adverse possession?
A) Leasing property without consent
B) Government seizure of land
C) Acquiring title through open, notorious, hostile, and continuous possession ✅
D) Purchasing at a tax sale
Explanation: Adverse possession allows ownership if statutory conditions are met over time.
Q10. Which type of deed is typically used in foreclosures or tax sales?
A) General warranty deed
B) Special warranty deed
C) Bargain and sale deed ✅
D) Quitclaim deed
Explanation: Bargain and sale deeds imply ownership but contain no warranties; often used in
forced sales.
Q11. Which covenant in a general warranty deed guarantees the grantor owns the
property?
A) Covenant of seisin ✅
B) Covenant against encumbrances
C) Covenant of further assurance
D) Covenant of quiet enjoyment
Explanation: The Covenant of Seisin confirms that the grantor has rightful ownership and the
right to convey.
Q12. Which covenant guarantees the grantee’s possession will not be disturbed?
A) Seisin
B) Quiet enjoyment ✅
C) Warranty forever
