Real Estate License Practice Test – Transfer of Property

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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?

Correct! Wrong!

Explanation:
The transfer process requires delivery and acceptance to be complete. Recording presumes delivery and acceptance since the recorded deed is mailed to the grantee.

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?

Correct! Wrong!

Explanation:
First, determine the amount of the capital gain or loss. 750,000 purchase + 300,000 improvements = 1,050,000 adjusted basis. Asale price of 950,000 creates a 100,000 capital loss. However, capital losses are not permitted on a primary residence.

A deed is a ____

Correct! Wrong!

Explanation:
A deed does not need to be recorded to be valid, but must be recorded to give constructive notice.

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

Correct! Wrong!

Explanation:
Answer uLandscaping expenses” is the only option that is not tax deductible for owner-occupied residences.

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

Correct! Wrong!

Explanation:
Note the words “chain of title" in the question, which is something that may also be covered in another question. The record of title is summarized in the abstract of title.

A real estate licensee is prohibited from doing all of the following, except , unless otherwise/vise licensed.

Correct! Wrong!

Explanation:
All other answers except sell real estateare not covered under real estate licensure.

The word "recurring costs" is used in an escrow statement to refer to

Correct! Wrong!

Explanation:
“Recurring" means costs that will repeat. In this question, only impounds are recurring.

Which of the following individuals or entities is prohibited from working in the escrow industry?

Correct! Wrong!

Explanation:
A principal in the transaction cannot perform as an escrow agent in the same transaction as they are not impartial or neutral.

Sarah Collins, a single woman, holds the recorded title to a piece of real estate. She executes a transfer to the property exclusively in the name of Angel Castro, a married woman, after her marriage to James Castro. The following is a discrepancy in the grantor's name:

Correct! Wrong!

Explanation:
An inconsistency in the names of the title holder and grantor on the deed will require clarification, creating a cloud on title until this has been accomplished.

Mr. Rodrigo's duplex had a $750,000 cost base when he bought it. According to the tax assessor, the value breakdown is 80 percent renovations and 20 percent land. Mr. Rodrigo depreciated the improvements at a rate of 2% per year for the first five years. Mr. Rodrigo then paid $50,000 to a licensed contractor to install a swimming pool. How much will the property's modified cost base be once the pool is finished?

Correct! Wrong!

Explanation:
Depreciation can only be taken on the improvements (80%) portion of the purchase price. In this example: 80% x 750,000 2 600,000 (improvement portion of the original basis). 600,000 x 0.02 (2%) = 12,000 per year x 5 years = 60,000 (accrued depreciation). Then, subtract the accrued depreciation from the original cost basis. 750,000 (original cost basis) - 60,000 (accrued depreciation) = 690,000 (depreciated cost basis). Finally, add 50,000 for the new swimming pool improvement + 690,000 (depreciated cost basis) = 740,000 (adjusted cost basis).

The title chain refers to ____.

Correct! Wrong!

Explanation:
This is an example of one question delivering the answer to a different question. Another question ir this section defines the chain of title as a written summary of public records.

A standard title insurance policy covers the ____

Correct! Wrong!

Explanation:
Only the American Land Title Association (ALTA) policy will give additional coverage, such as for encroachments and prescriptive easements. Incompetence of any of the parties is covered by both standard and extended policies.

A probate property is valued at $960,000. The highest bid at auction is $900,000. Any other offer would have to be at least for the court to consider it.

Correct! Wrong!

Explanation:
A probate court will only consider a subsequent bid that is raised by an amount equal to 10% of the first 10,000 (1,000), plus 5% on the balance (44,500).

An ad valorem tax is defined as which of the following?

Correct! Wrong!

Explanation:
Ad valorum is the tax assessor’s valuation for real estate.

Which of the following is the most likely reason for a real estate sales escrow to be terminated?

Correct! Wrong!

Explanation:
Escrow can be cancelled by mutual agreement between both principals, not unilaterally by one party- The broker is not a party to the escrow, therefore, they cannot authorize termination. In the event of the death of either party, their estate is still responsible for performing.

Which isn't true of a tenancy in common?

Correct! Wrong!

Explanation:
All other answer selections are true of a tenancy in common, as distinct from a community interest such asjoint tenancy. However, a tenant in common may will their interest in the property to others on their death.

An escrow agent opened a preliminary title report order for the sale of a property on April 1, 2020. The seller bought the house in 1998 with the help of a Federal Housing Administration (FHA) loan, which they are still paying down. On April 5, 2020, a preliminary title report will ____.

Correct! Wrong!

Explanation:
On April 5th the seller will still be the owner and the trustor on the Federal Housing Administration (FHA) loan. Thus, answer choice B is the only correct answer.

A ____ doesn't need to be recorded.

Correct! Wrong!

Explanation:
A grant deed is valid whether or not it is recorded.

Which of the following amounts for documented transfer tax stamps is incorrect?

Correct! Wrong!

Explanation:
Transfer stamps come in multiples of 0.55.

An occupant must show ____ in order to establish adverse possession title.

Correct! Wrong!

Explanation:
Only this answer choice fits the requirements for adverse possession. The period of possession must be at least five years, not two. This is why answer choice ”they have been in posseeion...” is incorrect.

The ____ is the instrument that is used to transfer title to personal property.

Correct! Wrong!

Explanation:
A bill of sale is used to transfer personal property.

In a _, implied warranties are not included.

Correct! Wrong!

Explanation:
The quitclaim deed is the exception here. There are no guarantees or warranties with a quitclaim deed.

An offer was made and accepted on the basis of assuming a $300,000 loan. It was revealed during escrow that the loan was for $290,000 rather than $300,000. Which outcome is the most likely?

Correct! Wrong!

Explanation:
This is an example of a contingency in an escrow. This contingency favored the buyer and allowed them to void the sale since the loan balance was not as previously stated.

For a (n) _, a writ of execution is issued.

Correct! Wrong!

Explanation:
A sheriff’s sale will cause a writ of execution to be drawn and recorded.

A land contract differs from a grant deed transfer in the ____.

Correct! Wrong!

Explanation:
All of these will differ between a contract and a deed.

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