Real Estate License Practice Test – Transfer of Property

Question 1

Miguel recorded a grant deed to Tom. Miguel afterward changed his mind and attempted to cancel the delivery, saying there had 
been no delivery to Tom. Why did Miguel's attempt fail?

Accepted Answer

With recording, delivery and acceptance are assumed.

Answer

When a deed is recorded in public records, it creates a legal presumption that the deed has been delivered by the grantor and accepted by the grantee. This act provides constructive notice to the world of the transfer of ownership. Therefore, once recorded, Miguel cannot unilaterally claim there was no delivery to invalidate the transfer.

Question 2

Bell got $950,000 for her home residence. She paid $750,000 for the house four years ago. During her ownership,
 she invested $300,000 in capital renovations. What may Bell deduct on her tax return?

Accepted Answer

None of the above

Answer

Bell's adjusted cost basis is her original purchase price plus capital renovations ($750,000 + $300,000 = $1,050,000). Since her selling price ($950,000) is less than her adjusted cost basis, she incurred a loss of $100,000. Under federal income tax laws, losses on the sale of a personal residence are not tax-deductible.

Question 3

A deed is a ____

Accepted Answer

It is not necessary to record the transfer of title.

Answer

A deed is a legal instrument that transfers title to real property. While recording a deed provides constructive notice to the public and protects the grantee's interest against subsequent claims, it is not a legal requirement for the transfer of title itself to be valid between the grantor and grantee. The transfer of title occurs upon proper delivery and acceptance of the deed.

Question 4

In the case of an owner-occupied single-family dwelling, which of the following is not tax deductible under federal income tax laws?

Accepted Answer

Expenses for landscaping.

Answer

Under federal income tax laws, certain expenses for an owner-occupied single-family dwelling are tax-deductible, such as mortgage interest payments, property taxes, and sometimes mortgage prepayment penalties. However, expenses for landscaping are considered personal maintenance or improvements and are generally not tax-deductible.

Question 5

A written summary of the chain of title is known as a (n) ____ once the public records have been reviewed.

Accepted Answer

the title's abstract

Answer

An abstract of title is a condensed history of all recorded documents affecting a particular parcel of real estate. It is prepared by an abstractor after reviewing public records and summarizes the chain of ownership, liens, encumbrances, and other relevant legal instruments. This document helps determine the current status of the title.