Real Estate 306 Midterm 1 Test Questions with Correct Answers Graded A+
Property - Answers Anything that can be owned or possessed
Tangible Assets - Answers Physical things, such as automobiles, clothing, land, or buildings
Intangible assets - Answers Nonphysical and include contractual rights (mortgage and lease
agreements), financial claims, interests, patents, or trademarks
Real Estate - Answers The land and its permanent improvements
Improvements on the land - Answers Any fixed structures such as buildings, fences, walls, and decks
Improvements to the land - Answers The components necessary to make the land suitable for building
construction or other uses
Land - Answers Earth + improvements to the land
Raw Land - Answers Larger area that does not include any improvements
Real Property - Answers Same as real estate
Personal Property - Answers Things that are movable and not permanently affixed to the land
Acre - Answers 43,560 ft / 206 square ft / 640 acres in 1 square mile
User Markets - Answers Characterized by competition amongst users for physical locations and space
Capital Markets - Answers Allocate financial resources among households and firms requiring funds
(Equity Interests / Debt Interests)
Property Markets - Answers Determine the required property-specific investment returns, property
values, capitalization rates, and construction feasibility
Capitalization Rate - Answers Ratio of a property's annual net income to its value
Investment-grade properties - Answers More valuable commercialized properties, generally well over
$10 million
Personal Rights - Answers (Personal freedoms) from Constitution / Bill of Rights
Property Rights - Answers Rights to things both tangible and intangible (Possession, Use, Disposition)
Real Property - Answers Rights in land and its permanent structures
Personal Property - Answers Rights in any other kind of object, including intellectual rights
Interests - Answers Name for bundles of rights
, Estates - Answers Interests in real property that include possession (Complete bundle called Fee Simple
Absolute)
Freeholds - Answers Titled interests we commonly think of as ownership
Fee Simple Absolute - Answers Most complete bundle of rights possible, has greatest value
Fee Simple Conditional - Answers Ownership is subject to a condition or trigger event
Reverter (Interest) - Answers Uncertain interest held by the previous owner (or heirs)
Ordinary Life Estate - Answers The rights of disposition of the fee simple absolute are unbundled and
separated completely
Remainder Estate - Answers Owner retains a life estate but gives it up when he/she dies
Legal Life Estate - Answers Created by the action of law
Leasehold - Answers Possessory interests and are therefore estates. These differ from freehold estates
in three respects: 1) they are limited in time 2) the right of disposition is diminished because the
property reverts to the landlord 3) they are not titled interests
Tenancy for years - Answers Leasehold interests for a specific period of time
Periodic Tenancy - Answers Any lease that has no definite term at the start
Tenancy at will - Answers An agreement that the tenant will stay until either landlord or tenant gives
notice
Tenancy at sufferance - Answers Occurs when a tenant that is supposed to vacate does not
Easement - Answers The right to use land for a specific and limited purpose
Easement Appurtenant (Affirmative / Negative) - Answers Have two distinguishing features:
1) Relationship between two distinct parcels of land (Dominant Parcel) - benefits from the easement
while the (Servient Parcel) - is constrained or diminished by the easement
2) "Runs with the land," it becomes a permanent and inseparable feature of both parcels involved
Easement in Gross - Answers The right to use land for a specific, limited purpose unrelated to any
adjacent parcel (One or more servient but no dominant parcels)
License - Answers Not a right to use another's land but permission to do so
Restrictive Covenants - Answers Impose limits on the uses of land
Declaration of Covenants - Answers A series of restrictions on the use of the lots in order to improve the
perceived quality, stability, and value of the lots
Property - Answers Anything that can be owned or possessed
Tangible Assets - Answers Physical things, such as automobiles, clothing, land, or buildings
Intangible assets - Answers Nonphysical and include contractual rights (mortgage and lease
agreements), financial claims, interests, patents, or trademarks
Real Estate - Answers The land and its permanent improvements
Improvements on the land - Answers Any fixed structures such as buildings, fences, walls, and decks
Improvements to the land - Answers The components necessary to make the land suitable for building
construction or other uses
Land - Answers Earth + improvements to the land
Raw Land - Answers Larger area that does not include any improvements
Real Property - Answers Same as real estate
Personal Property - Answers Things that are movable and not permanently affixed to the land
Acre - Answers 43,560 ft / 206 square ft / 640 acres in 1 square mile
User Markets - Answers Characterized by competition amongst users for physical locations and space
Capital Markets - Answers Allocate financial resources among households and firms requiring funds
(Equity Interests / Debt Interests)
Property Markets - Answers Determine the required property-specific investment returns, property
values, capitalization rates, and construction feasibility
Capitalization Rate - Answers Ratio of a property's annual net income to its value
Investment-grade properties - Answers More valuable commercialized properties, generally well over
$10 million
Personal Rights - Answers (Personal freedoms) from Constitution / Bill of Rights
Property Rights - Answers Rights to things both tangible and intangible (Possession, Use, Disposition)
Real Property - Answers Rights in land and its permanent structures
Personal Property - Answers Rights in any other kind of object, including intellectual rights
Interests - Answers Name for bundles of rights
, Estates - Answers Interests in real property that include possession (Complete bundle called Fee Simple
Absolute)
Freeholds - Answers Titled interests we commonly think of as ownership
Fee Simple Absolute - Answers Most complete bundle of rights possible, has greatest value
Fee Simple Conditional - Answers Ownership is subject to a condition or trigger event
Reverter (Interest) - Answers Uncertain interest held by the previous owner (or heirs)
Ordinary Life Estate - Answers The rights of disposition of the fee simple absolute are unbundled and
separated completely
Remainder Estate - Answers Owner retains a life estate but gives it up when he/she dies
Legal Life Estate - Answers Created by the action of law
Leasehold - Answers Possessory interests and are therefore estates. These differ from freehold estates
in three respects: 1) they are limited in time 2) the right of disposition is diminished because the
property reverts to the landlord 3) they are not titled interests
Tenancy for years - Answers Leasehold interests for a specific period of time
Periodic Tenancy - Answers Any lease that has no definite term at the start
Tenancy at will - Answers An agreement that the tenant will stay until either landlord or tenant gives
notice
Tenancy at sufferance - Answers Occurs when a tenant that is supposed to vacate does not
Easement - Answers The right to use land for a specific and limited purpose
Easement Appurtenant (Affirmative / Negative) - Answers Have two distinguishing features:
1) Relationship between two distinct parcels of land (Dominant Parcel) - benefits from the easement
while the (Servient Parcel) - is constrained or diminished by the easement
2) "Runs with the land," it becomes a permanent and inseparable feature of both parcels involved
Easement in Gross - Answers The right to use land for a specific, limited purpose unrelated to any
adjacent parcel (One or more servient but no dominant parcels)
License - Answers Not a right to use another's land but permission to do so
Restrictive Covenants - Answers Impose limits on the uses of land
Declaration of Covenants - Answers A series of restrictions on the use of the lots in order to improve the
perceived quality, stability, and value of the lots
