RE 3381 Test 1 Review Questions and Answers Fully Solved Latest Version 2025-2026
Utility (FFV) - AnswersAbility for a property to satisfy a want, need or desire
Scarcity (FFV) - AnswersThe present or anticipated supply of property relative to the demand for it
Anticipation - AnswersValue is created by the anticipation of benefits to be derived in the future
Fundamental Factors of Value - AnswersUtility, scarcity, anticipation
Investors select a mix of investments based on... - Answersexpected risk and returns
Demand for real estate is a function of 2 key variables: - AnswersLocational economics and locational
demographics
Real estate is considered a _____ investment class - Answersinefficient
Captial Intensive - AnswersLargely indivisible and leveraged transactions
User/Space Markets - AnswersConsists of "the physical world"
Asset/Capital Markets - AnswersConsists of "the financial world"
Four Quadrants of RE Investing - AnswersPrivate equity, private debt, public equity, public debt
Real Property - AnswersRights in land and its permanent structures (surface, air and beneath the earth)
Personal Property - AnswersRights to all other property (personal goods, business property)
Air Rights - AnswersThe right to use the open space above a property, usually allowing the surface to be
used for another purpose
Subsurface Mineral Rights - AnswersOwnership rights in a parcel of real estate to the water, minerals,
gas, oil, and so forth that lie beneath the surface of the property.
Mineral Rights Logistics - AnswersConsidered to be dominant to the surface and can be divided by
grantor
DUPE - AnswersDisposition, Use, Possession, Exclusion
Interest - AnswersAny set of rights in a physical property
Fee Simple Estates - AnswersCan be divisible, or split up into separate leases (rights also divisible)
Non-possessory interests - AnswersInterests that encumber property (Easements, licenses, restrictive
covenants, liens)
Easements "Appurtenant" - AnswersNon-possessory relationship between two adjacent parcels of land
, Dominant vs. Servient parcel (Appurtenant) - AnswersDominant "enjoys" the rights; servient is
encumbered by the rights
Easement "In Gross" - AnswersRight to use land unrelated to any other parcel (no dominant parcel)
License Agreements - AnswersSimilar to easement in gross, but conveys permission rather than right
(temporary and limited in purpose)
Restrictive Covenants - AnswersImposes restrictions on land use; owner must take/abstain from a
specific action
Liens - AnswersAn interest in property as security for an obligation
General Liens - AnswersArise from events unrelated to the property
Specific Liens - AnswersArise from ownership and use of the property
Perfection (Liens) - AnswersMeans that the security interest in favor of the secured party is protected
from competing claims from third parties
Priority (Liens) - AnswersSet of rules which determine who wins when two secured parties have
conflicting interest in the same collateral
Three Levels of Priority in Liens - Answers1. Property Tax and Assessment Liens
2. Mortgages and Mechanics Liens
3. Judgement Liens
Indirect Co-ownership - AnswersEntity (LLC, partnership) owns title, ownership passes through entity,
undivided interest
General Partnership - AnswersType of indirect co-ownership, different investment amounts carry same
liability/control levels
Limited Partnership - AnswersOne general partner, then many limited partners who make up one
investor class; general partner carries all liability
Limited Liability Company (LLC) - AnswersEverybody can have control, but company status limits liability;
can be a single member
Real Estate Investment Trust (REIT) - AnswersTax designation for a corporation investing in real estate
that reduces/eliminates corporate income taxes
REIT Requirements - AnswersAt least 100 shareholders; 75% of gross income must come from passive
sources; 90% of taxable income must be paid out as dividends
Utility (FFV) - AnswersAbility for a property to satisfy a want, need or desire
Scarcity (FFV) - AnswersThe present or anticipated supply of property relative to the demand for it
Anticipation - AnswersValue is created by the anticipation of benefits to be derived in the future
Fundamental Factors of Value - AnswersUtility, scarcity, anticipation
Investors select a mix of investments based on... - Answersexpected risk and returns
Demand for real estate is a function of 2 key variables: - AnswersLocational economics and locational
demographics
Real estate is considered a _____ investment class - Answersinefficient
Captial Intensive - AnswersLargely indivisible and leveraged transactions
User/Space Markets - AnswersConsists of "the physical world"
Asset/Capital Markets - AnswersConsists of "the financial world"
Four Quadrants of RE Investing - AnswersPrivate equity, private debt, public equity, public debt
Real Property - AnswersRights in land and its permanent structures (surface, air and beneath the earth)
Personal Property - AnswersRights to all other property (personal goods, business property)
Air Rights - AnswersThe right to use the open space above a property, usually allowing the surface to be
used for another purpose
Subsurface Mineral Rights - AnswersOwnership rights in a parcel of real estate to the water, minerals,
gas, oil, and so forth that lie beneath the surface of the property.
Mineral Rights Logistics - AnswersConsidered to be dominant to the surface and can be divided by
grantor
DUPE - AnswersDisposition, Use, Possession, Exclusion
Interest - AnswersAny set of rights in a physical property
Fee Simple Estates - AnswersCan be divisible, or split up into separate leases (rights also divisible)
Non-possessory interests - AnswersInterests that encumber property (Easements, licenses, restrictive
covenants, liens)
Easements "Appurtenant" - AnswersNon-possessory relationship between two adjacent parcels of land
, Dominant vs. Servient parcel (Appurtenant) - AnswersDominant "enjoys" the rights; servient is
encumbered by the rights
Easement "In Gross" - AnswersRight to use land unrelated to any other parcel (no dominant parcel)
License Agreements - AnswersSimilar to easement in gross, but conveys permission rather than right
(temporary and limited in purpose)
Restrictive Covenants - AnswersImposes restrictions on land use; owner must take/abstain from a
specific action
Liens - AnswersAn interest in property as security for an obligation
General Liens - AnswersArise from events unrelated to the property
Specific Liens - AnswersArise from ownership and use of the property
Perfection (Liens) - AnswersMeans that the security interest in favor of the secured party is protected
from competing claims from third parties
Priority (Liens) - AnswersSet of rules which determine who wins when two secured parties have
conflicting interest in the same collateral
Three Levels of Priority in Liens - Answers1. Property Tax and Assessment Liens
2. Mortgages and Mechanics Liens
3. Judgement Liens
Indirect Co-ownership - AnswersEntity (LLC, partnership) owns title, ownership passes through entity,
undivided interest
General Partnership - AnswersType of indirect co-ownership, different investment amounts carry same
liability/control levels
Limited Partnership - AnswersOne general partner, then many limited partners who make up one
investor class; general partner carries all liability
Limited Liability Company (LLC) - AnswersEverybody can have control, but company status limits liability;
can be a single member
Real Estate Investment Trust (REIT) - AnswersTax designation for a corporation investing in real estate
that reduces/eliminates corporate income taxes
REIT Requirements - AnswersAt least 100 shareholders; 75% of gross income must come from passive
sources; 90% of taxable income must be paid out as dividends
