Copyright © 2022 McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill.
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
18-1
,SOLUTION MANUAL FOR zl zl
Real Estate Finance And Investments 17th International Edition Jeffrey Fisher Willia
zl zl zl zl zl zl zl zl zl zl
m B. Brueggeman
zl zl
Chapter 1-23 zl
Solutions to Questions—Chapter 1 zl zl zl
An Introduction to Real estate Investment: Legal Concepts
zl zl zl zl zl zl zl
Question 1-1 zl
What is the difference between real property and personal property?
zl zl zl zl zl zl zl zl zl
Real property refers to the ownership rights associated with realty. Realty refers to land and all thin
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
gs permanently attached. Personal property refers to ownership rights associated with personalty.
zl zl zl zl zl zl zl zl zl zl zl zl
Personalty are all things, tangible, intangible that are movable. This includes all things that are not
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
realty.
Question 1-2 zl
What is meant by an estate? zl zl zl zl zl
Estate is used to denote a possessory or potentially possessory interest in real estate. However, not a
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ll interests in real property are estates. Ownership can be quite different from possession and a variet
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
y of legal factors affect the ownership rights associated with real estate. The economic benefits exp
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ected by lenders, investors, and other parties in a real estate transaction are affected by these legal fa
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ctors.
Question 1-3 zl
How can a leased fee estate have a value that could be transferred to another party?
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
The original fee owner can give up some property rights to a lessee. The value of the leased fee estat
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
e will depend on the amount of lease payments expected during the term of the lease plus the value
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
of the property when the lease terminates, and the original owner receives the reversionary interest
zl zl zl zl zl zl zl zl zl zl zl zl zl zl
.
Question 1-4 zl
What are title records? What is an abstract of title?
zl zl zl zl zl zl zl zl zl
Title records (sometimes referred to as deeds and conveyances records and/or real property record
zl zl zl zl zl zl zl zl zl zl zl zl zl
s) are created and maintained usually at the county level. These records identify all properties in a
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
county, including location, present ownership and any liens or encumbrances affecting each prope
zl zl zl zl zl zl zl zl zl zl zl zl
rty. These records are critical to investors who want to identify the owner of specific tracts or land, e
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
xisting buildings, etc. These records are also important because they contain evidence of encumbr
zl zl zl zl zl zl zl zl zl zl zl zl zl
ances such as mortgage liens, tax liens (to be covered in later chapters), etc. Example: a prospectiv
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
e investor sees a vacant tract of land that he is interested in purchasing. Because there is no signage
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
or any improvements on the land, how can the land owner be identified and contacted? By going to
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
the county records office (deeds and conveyancers department) the investor can use the address to
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
locate a property (usually in plat books), then the current owner. These records are used to link a pr
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ecise property to its owner. At some point, if this investor continues to be interested in purchasing t
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
he land, he will likely retain an attorney or abstractor to do a title search and abstract of title. The lat
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ter is done to not onlyzl zl zl zl zl
Copyright © 2022 McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill.
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
18-2
, identify the current owner but to trace all previous owners with commentary on the likelihood of ot
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
her parties who may ownership rights and /or interests in the tract of land.
zl zl zl zl zl zl zl zl zl zl zl zl zl
Question 1-5 zl
What is a deed? How is it different from the title?
zl zl zl zl zl zl zl zl zl zl
The deed is a document usually created by the owner of a property containing the property legal
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
I.D. and location in addition to any improvements that exist on the property. It also describes the ext
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ent to which the seller warrants that he is the owner of the property and has the right to convey own
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ership. A deed is used to convey the title from one person (the grantor) to another (the regrantee) b
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
y means of a written instrument. The term ―title‖ is an abstract term frequently used to link an indi
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
vidual or entity who owns property to the property itself. When a person has
zl zl zl zl zl zl zl zl zl zl zl zl zl
―title,‖ he is said to have all the elements, including the documents, records, and acts, that prove own
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ership. Title establishes the quantity of rights in real estate being conveyed from seller to It differs f
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
rom title because title provides evidence of ownership based on the collective records that exist per
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
taining to a property. zl zl zl
Question 1-6 zl
What is meant by a title record? Why are these records so important?
zl zl zl zl zl zl zl zl zl zl zl zl
The title record refers to records on file, usually at the county level, that help to specify tracts of real
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
estate and determine if a seller has the right to convey ownership of such real property.
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
These records are the most important sources of events affecting real estate ownership over time an
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
d are usually reviewed when trying to identify the ―quality‖ of title that investors will receive if the
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
y purchase. After a review of these records (usually by an attorney), if in his opinion, they are com
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
plete, he will indicate that the seller has ownership and title to the property. Most of the instrument
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
s that affect title to real estate are recorded, in accordance with the recording acts of the various stat
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
es, at what is typically called the county recorder’s office.
zl zl zl zl zl zl zl zl zl
Question 1-7 zl
What is a future estate? Give an example?
zl zl zl zl zl zl zl
We think of most real estate transactions as acquiring ownership at the present time. However, ow
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
nership can also occur at a later time, say after the current owner dies. The person who becomes the
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
owner at that time is said to be a ―remainder‖ estate. Future estates include a reversion and remain
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
der. A reversion results in the state reverting back to the original possessor whereas the remainder r
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
esults in a third-party obtaining possession at some point in the future.
zl zl zl zl zl zl zl zl zl zl zl
Question 1-8 zl
Name the three general methods of title assurance and briefly describe each. Which would you reco
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
mmend to a friend purchasing real estate? Why? zl zl zl zl zl zl zl
General Warranty Deed - zl zl zl
the grantor warrants that the title he/she conveys to the property is free and clear of all encumbranc
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
es, other than those that are specifically listed in the deed.
zl zl zl zl zl zl zl zl zl zl
Special Warranty Deed - zl zl zl
makes the same warranties as a general warranty deed except that it limits their application to defe
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
cts and encumbrances which occurred only while the grantor held title to the property.
zl zl zl zl zl zl zl zl zl zl zl zl zl
Quitclaim Deed - zl zl
offers the grantee the least protection in that it imply conveys to the grantee whatever rights,, inter
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ests,, and title that the grantor may have in the property. No warranties are made about the nature of
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
Copyright © 2022 McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill.
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
18-3
, these rights and interests or of the quality of the grantor’s title to the property.
zl zl zl zl zl zl zl zl zl zl zl zl zl zl
Copyright © 2022 McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill.
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
18-4
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
18-1
,SOLUTION MANUAL FOR zl zl
Real Estate Finance And Investments 17th International Edition Jeffrey Fisher Willia
zl zl zl zl zl zl zl zl zl zl
m B. Brueggeman
zl zl
Chapter 1-23 zl
Solutions to Questions—Chapter 1 zl zl zl
An Introduction to Real estate Investment: Legal Concepts
zl zl zl zl zl zl zl
Question 1-1 zl
What is the difference between real property and personal property?
zl zl zl zl zl zl zl zl zl
Real property refers to the ownership rights associated with realty. Realty refers to land and all thin
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
gs permanently attached. Personal property refers to ownership rights associated with personalty.
zl zl zl zl zl zl zl zl zl zl zl zl
Personalty are all things, tangible, intangible that are movable. This includes all things that are not
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
realty.
Question 1-2 zl
What is meant by an estate? zl zl zl zl zl
Estate is used to denote a possessory or potentially possessory interest in real estate. However, not a
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ll interests in real property are estates. Ownership can be quite different from possession and a variet
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
y of legal factors affect the ownership rights associated with real estate. The economic benefits exp
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ected by lenders, investors, and other parties in a real estate transaction are affected by these legal fa
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ctors.
Question 1-3 zl
How can a leased fee estate have a value that could be transferred to another party?
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
The original fee owner can give up some property rights to a lessee. The value of the leased fee estat
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
e will depend on the amount of lease payments expected during the term of the lease plus the value
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
of the property when the lease terminates, and the original owner receives the reversionary interest
zl zl zl zl zl zl zl zl zl zl zl zl zl zl
.
Question 1-4 zl
What are title records? What is an abstract of title?
zl zl zl zl zl zl zl zl zl
Title records (sometimes referred to as deeds and conveyances records and/or real property record
zl zl zl zl zl zl zl zl zl zl zl zl zl
s) are created and maintained usually at the county level. These records identify all properties in a
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
county, including location, present ownership and any liens or encumbrances affecting each prope
zl zl zl zl zl zl zl zl zl zl zl zl
rty. These records are critical to investors who want to identify the owner of specific tracts or land, e
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
xisting buildings, etc. These records are also important because they contain evidence of encumbr
zl zl zl zl zl zl zl zl zl zl zl zl zl
ances such as mortgage liens, tax liens (to be covered in later chapters), etc. Example: a prospectiv
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
e investor sees a vacant tract of land that he is interested in purchasing. Because there is no signage
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
or any improvements on the land, how can the land owner be identified and contacted? By going to
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
the county records office (deeds and conveyancers department) the investor can use the address to
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
locate a property (usually in plat books), then the current owner. These records are used to link a pr
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ecise property to its owner. At some point, if this investor continues to be interested in purchasing t
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
he land, he will likely retain an attorney or abstractor to do a title search and abstract of title. The lat
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ter is done to not onlyzl zl zl zl zl
Copyright © 2022 McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill.
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
18-2
, identify the current owner but to trace all previous owners with commentary on the likelihood of ot
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
her parties who may ownership rights and /or interests in the tract of land.
zl zl zl zl zl zl zl zl zl zl zl zl zl
Question 1-5 zl
What is a deed? How is it different from the title?
zl zl zl zl zl zl zl zl zl zl
The deed is a document usually created by the owner of a property containing the property legal
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
I.D. and location in addition to any improvements that exist on the property. It also describes the ext
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ent to which the seller warrants that he is the owner of the property and has the right to convey own
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ership. A deed is used to convey the title from one person (the grantor) to another (the regrantee) b
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
y means of a written instrument. The term ―title‖ is an abstract term frequently used to link an indi
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
vidual or entity who owns property to the property itself. When a person has
zl zl zl zl zl zl zl zl zl zl zl zl zl
―title,‖ he is said to have all the elements, including the documents, records, and acts, that prove own
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ership. Title establishes the quantity of rights in real estate being conveyed from seller to It differs f
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
rom title because title provides evidence of ownership based on the collective records that exist per
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
taining to a property. zl zl zl
Question 1-6 zl
What is meant by a title record? Why are these records so important?
zl zl zl zl zl zl zl zl zl zl zl zl
The title record refers to records on file, usually at the county level, that help to specify tracts of real
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
estate and determine if a seller has the right to convey ownership of such real property.
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
These records are the most important sources of events affecting real estate ownership over time an
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
d are usually reviewed when trying to identify the ―quality‖ of title that investors will receive if the
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
y purchase. After a review of these records (usually by an attorney), if in his opinion, they are com
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
plete, he will indicate that the seller has ownership and title to the property. Most of the instrument
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
s that affect title to real estate are recorded, in accordance with the recording acts of the various stat
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
es, at what is typically called the county recorder’s office.
zl zl zl zl zl zl zl zl zl
Question 1-7 zl
What is a future estate? Give an example?
zl zl zl zl zl zl zl
We think of most real estate transactions as acquiring ownership at the present time. However, ow
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
nership can also occur at a later time, say after the current owner dies. The person who becomes the
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
owner at that time is said to be a ―remainder‖ estate. Future estates include a reversion and remain
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
der. A reversion results in the state reverting back to the original possessor whereas the remainder r
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
esults in a third-party obtaining possession at some point in the future.
zl zl zl zl zl zl zl zl zl zl zl
Question 1-8 zl
Name the three general methods of title assurance and briefly describe each. Which would you reco
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
mmend to a friend purchasing real estate? Why? zl zl zl zl zl zl zl
General Warranty Deed - zl zl zl
the grantor warrants that the title he/she conveys to the property is free and clear of all encumbranc
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
es, other than those that are specifically listed in the deed.
zl zl zl zl zl zl zl zl zl zl
Special Warranty Deed - zl zl zl
makes the same warranties as a general warranty deed except that it limits their application to defe
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
cts and encumbrances which occurred only while the grantor held title to the property.
zl zl zl zl zl zl zl zl zl zl zl zl zl
Quitclaim Deed - zl zl
offers the grantee the least protection in that it imply conveys to the grantee whatever rights,, inter
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
ests,, and title that the grantor may have in the property. No warranties are made about the nature of
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
Copyright © 2022 McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill.
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
18-3
, these rights and interests or of the quality of the grantor’s title to the property.
zl zl zl zl zl zl zl zl zl zl zl zl zl zl
Copyright © 2022 McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill.
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
18-4
