New Mexico Real Estate Law Exam Questions and Answers

New Mexico Real Estate Law Exam Questions and Answers A broker is performing as a property manager and deposits rent into her operating account. This is an example of which of the following? - Correct Answer ️️ -The answer is COMMINGLING. Mixing a broker's money with a client's money is commingling (and illegal). A lessee has the greatest protection with a(n) - Correct Answer ️️ -The answer is ESTATE FOR YEARS. An estate for years locks the holder into the lease for a specific period of time, which cannot be terminated without cause, even if the property is sold. A broker who has done a proper CMA discusses the probable market value of the property with the seller, but the seller wants to list the property for an unrealistic price. The broker may do all the following EXCEPT - Correct Answer ️️ -The answer is TAKE THE LISTING AT THE PROPOSED SELLER'S PRICE, PLANNING ON REDUCING THE PRICE IN THE FUTURE WHEN THE SELLER IS MORE REALISTIC. Whether a CMA or a formal appraisal is used, the figure sought is the property's market value, and while it is the property owner's privilege to set whatever listing price the owner chooses, a broker should consider rejecting any listing that is severely out of line. What is the LEAST specific method for identifying real property? - Correct Answer ️️ - The answer is STREET ADDRESS. A legal description is a precise method of identifying a parcel of land and includes metes and bounds, rectangular survey, and lot and block as methods for identification. A street address is not a legal description and, therefore, not as precise. The disadvantage of a buyer receiving a quitclaim deed is that - Correct Answer ️️ - The answer is THE GRANTOR MAKES NO WARRANTIES REGARDING THE TITLE OF THE PROPERTY. The quitclaim deed contains no warranties and only states that if the grantor owns the property, the property will become the grantee's. A property owner contracted to have a swimming pool installed on her property. When the pool was complete, she refused to pay for the improvement, and the contractor filed a lien for nonpayment. This lien was MOST likely a - Correct Answer ️️ -The answer is MECHANIC'S LIEN. The lien filed by the contractor would be a mechanic's lien and would be a specific, involuntary lien on the property. Which of the following is an example of involuntary alienation? - Correct Answer ️️ - The answer is ADVERSE POSSESSION. Involuntary alienation means a property owner is forced to give ownership to all or a portion of the property involuntarily. Of the answer choices, only adverse possession represents such a case. When another individual meets the adverse possession criteria for the required length of time, the individual can go to court and obtain title to the property. An exercise room in a condominium development is considered to be a common element owned by - Correct Answer ️️ -The answer is ALL CURRENT OWNERS AS TENANTS IN COMMON. All owners would be able to use the exercise room, so it is known as a common element. An example of a limited common element is a balcony because only the unit owner would be allowed (limited) to use it. According to the law, a trade fixture is usually treated as - Correct Answer ️️ -The answer is PERSONAL PROPERTY. An item used in conducting business is considered a trade fixture and can be removed by the tenant. It is considered personal property (personalty), even though it may be attached to a building. A description that states, "start at the street sign at the corner of Ash and 11th, go 100 feet south, then 50 feet west" is MOST likely what type of legal description? - Correct Answer ️️ -The answer is METES AND BOUNDS. Metes-and-bounds descriptions use starting points and read in a clockwise direction. Which is an example of constructive eviction? - Correct Answer ️️ -The answer is A TENANT WHO MOVES BECAUSE THE UNIT NO LONGER HAS WATER. When conditions cause a rental unit to no longer be habitable, the renter has constructive eviction. Without water, a tenant is unable to bathe, cook, wash clothes, and so on. The tenant must leave, not just withhold rent. A deed conveying land to two parties on a 1/3 and 2/3 share basis establishes a - Correct Answer ️️ -The answer is TENANCY IN COMMON. Only tenants in common can have unequal shares of ownership. A buyer and seller have entered into a binding contract for the sale of real estate. What type of title is held by the buyer? - Correct Answer ️️ -The answer is EQUITABLE. The buyer has equitable title, which recognizes that he has an interest but has not received legal title. Legal title will pass at closing when the seller gives the buyer the deed. In the absence of a notice to terminate, a lease that continues automatically is a - Correct Answer ️️ -The answer is PERIODIC TENANCY. Periodic tenancy is an automatically renewing lease unless one party terminates. How does a tenancy in common differ from a joint tenancy? - Correct Answer ️️ -The answer is TENANTS IN COMMON MAY HAVE UNEQUAL INTEREST. Tenancy in common is the only form of ownership that can have fractional (unequal) shares of ownership. What is a lease in which the tenant's rent is the same for the term of the lease? - Correct Answer ️️ -The answer is GROSS. Fixed rent, in which the rent payment stays the same each month during the entire lease, is paid in a gross lease. This is common in residential rentals. When parties own property as tenants in common, each owner - Correct Answer ️️ - The answer is HAS OWNERSHIP OF NO SPECIFIC PART OF THE PROPERTY. Tenants in common have an undivided interest in the entire property. Survivorship and unity of time and title apply to joint tenants. Lisa granted an estate to Terri for the duration of Terri's lifetime. Upon Terri's death, the estate will pass back to Lisa. During Terri's lifetime, Lisa's interest is referred to as - Correct Answer ️️ -The answer is REVERSIONARY INTEREST. Terri is the life tenant and holds a life estate. Lisa, the grantor under the life estate, retains a reversionary right so when Terri dies, Lisa's estate will return to fee simple absol