Real Estate Sales Exam Transfer of Title 5 — Questions and Answers
Question 1: A 'lis pendens' filed against a property is intended to provide:
- Proof of clear title to the property
- Notice that pending litigation affects the property's title (Correct answer)
- A lien superior to all existing mortgages
- Evidence that the property taxes are current
Correct answer: Notice that pending litigation affects the property's title
A lis pendens (Latin for 'suit pending') is recorded to notify prospective buyers and lenders that the title is subject to ongoing litigation.
Question 2: Which of the following instruments transfers title to real property when a borrower defaults and the lender forecloses under a deed of trust?
- Trustee's deed (Correct answer)
- Warranty deed
- Executor's deed
- Bargain and sale deed
Correct answer: Trustee's deed
When a trustee sells foreclosed property, they convey title to the successful bidder via a trustee's deed.
Question 3: The government's power to take private property for public use upon payment of just compensation is known as:
- Police power
- Escheat
- Eminent domain (Correct answer)
- Adverse possession
Correct answer: Eminent domain
Eminent domain is the inherent power of government to condemn and acquire private property for public use, provided just compensation is paid.
Question 4: If a property owner dies without heirs and without a will, title to the real property passes to the state through a process called:
- Condemnation
- Escheat (Correct answer)
- Intestate succession
- Eminent domain
Correct answer: Escheat
Escheat is the legal process by which property reverts to the state when an owner dies intestate with no identifiable heirs.
Question 5: A title search reveals a 'cloud on title.' This means the property has:
- Been recently appraised below market value
- An outstanding claim or encumbrance that may affect marketability (Correct answer)
- A pending zoning variance application
- Been listed as a historic landmark
Correct answer: An outstanding claim or encumbrance that may affect marketability
A cloud on title is any document, claim, or encumbrance that appears in the record and casts doubt on the owner's clear title.
Question 6: Under what doctrine can a court reform a written deed to reflect the true agreement of the parties when a mutual mistake was made?
- Merger doctrine
- Doctrine of reformation (Correct answer)
- Parol evidence rule
- Estoppel by deed
Correct answer: Doctrine of reformation
Under the doctrine of reformation, a court can rewrite a deed to correct a mutual mistake so that it accurately reflects the parties' original intent.
Question 7: When a buyer accepts a deed at closing, the doctrine of merger means that:
- The buyer and seller's interests combine into a joint tenancy
- The purchase contract is absorbed into and superseded by the deed (Correct answer)
- The title insurance merges with the deed of trust
- All liens merge into a single encumbrance
Correct answer: The purchase contract is absorbed into and superseded by the deed
Under the merger doctrine, acceptance of the deed at closing merges the prior sales contract into the deed, making the deed the final and controlling document.
Real Estate Sales Exam Transfer of Title 5
A 'lis pendens' filed against a property is intended to provide: