Real Estate Sales Exam Transfer of Title 4 — Questions and Answers
Question 1: Adverse possession allows a trespasser to acquire title after meeting all statutory requirements, which typically include all of the following EXCEPT:
- Open and notorious use
- Continuous use for the statutory period
- Payment of fair market value to the owner (Correct answer)
- Hostile claim against the owner's interest
Correct answer: Payment of fair market value to the owner
Adverse possession never requires payment to the owner; it is acquired by meeting the statutory elements of open, notorious, continuous, hostile, and exclusive use.
Question 2: Which of the following conveyances would be recorded to correct an error in a previously recorded deed?
- Trustee's deed
- Correction deed (reformation deed) (Correct answer)
- Sheriff's deed
- Executor's deed
Correct answer: Correction deed (reformation deed)
A correction deed (also called a reformation deed) is used to fix a mistake, such as a misspelled name or incorrect legal description, in a previously recorded deed.
Question 3: A grantor conveys property to a grantee by a deed that omits the purchase price. This deed is:
- Void for lack of consideration
- Valid, because nominal or no consideration is legally sufficient (Correct answer)
- Voidable at the grantee's option
- Enforceable only if witnessed by two parties
Correct answer: Valid, because nominal or no consideration is legally sufficient
Courts generally uphold deeds even when consideration is nominal or not stated, as love and affection or a recital of '$1 and other valuable consideration' can suffice.
Question 4: A deed delivered to a neutral third party to be released to the grantee upon fulfillment of a condition is held in:
- Trust
- Escrow (Correct answer)
- Receivership
- Probate
Correct answer: Escrow
Escrow is the arrangement where a deed (or funds) is held by a neutral third party until specified conditions of the transaction are met.
Question 5: Which of the following would cause a deed to be VOID rather than merely voidable?
- Grantor was a minor at the time of signing
- Grantor was induced by fraud
- Deed was forged without the grantor's knowledge (Correct answer)
- Grantor was under duress when signing
Correct answer: Deed was forged without the grantor's knowledge
A forged deed is void because the grantor's signature is not genuine, giving the document no legal effect whatsoever and passing no title.
Question 6: The legal concept that protects a subsequent purchaser who buys in good faith and for value without notice of prior claims is called:
- Lis pendens
- Bona fide purchaser (BFP) doctrine (Correct answer)
- Equitable redemption
- Marketable title act
Correct answer: Bona fide purchaser (BFP) doctrine
The bona fide purchaser doctrine shields a buyer who pays value and has no actual, constructive, or inquiry notice of prior unrecorded interests.
Question 7: When a property owner dies testate, real property is transferred to heirs through a document called a:
- Sheriff's deed
- Deed of trust
- Executor's deed (Correct answer)
- Trustee's deed
Correct answer: Executor's deed
An executor's deed is used by the court-appointed executor of a deceased person's estate to transfer real property to the beneficiaries named in the will.
Real Estate Sales Exam Transfer of Title 4
Adverse possession allows a trespasser to acquire title after meeting all statutory requirements, which typically include all of the following EXCEPT: