SAEE SAEE Property Rights and Legal Considerations 5 — Questions and Answers
Question 1: A buyer purchases a property without knowledge that a judgment lien exists against the seller. The title company later discovers the lien. Under the doctrine of constructive notice, the buyer:
- Is protected because the lien was not disclosed
- Is charged with knowledge because the lien was recorded (Correct answer)
- Can void the purchase contract
- Must negotiate directly with the judgment creditor
Correct answer: Is charged with knowledge because the lien was recorded
Constructive notice holds that any lien or encumbrance properly recorded in public records is legally presumed to be known by all parties, regardless of actual knowledge.
Question 2: Two adjacent property owners share a driveway under a written easement agreement. When one owner sells their property, the easement:
- Terminates automatically upon transfer
- Must be renegotiated with the new owner
- Transfers automatically with the land as an easement appurtenant (Correct answer)
- Converts to a license revocable by the other owner
Correct answer: Transfers automatically with the land as an easement appurtenant
An easement appurtenant runs with the land and automatically transfers to subsequent owners of both the dominant and servient estates.
Question 3: A state law requires that all real property transfers be documented in writing to be legally enforceable. This requirement comes from the:
- Statute of Frauds (Correct answer)
- Statute of Limitations
- Parol Evidence Rule
- Rule Against Perpetuities
Correct answer: Statute of Frauds
The Statute of Frauds requires contracts for the sale of real estate to be in writing and signed to be legally binding and enforceable.
Question 4: An appraiser is asked to determine value for property tax assessment purposes. The legal standard for this type of value is typically defined by:
- Federal banking regulations
- State statutes governing assessment practices (Correct answer)
- USPAP Standard 1 exclusively
- The Uniform Standards of Professional Appraisal Practice alone
Correct answer: State statutes governing assessment practices
Property tax assessment standards and definitions of assessed value are established by individual state statutes, which appraisers must follow alongside USPAP.
Question 5: A property is subject to a deed restriction prohibiting commercial use. The current owner wants to open a small retail shop. Which party can MOST directly enforce this restriction?
- The local zoning board
- The neighboring property owners who benefit from the restriction (Correct answer)
- The county assessor
- The state real estate commission
Correct answer: The neighboring property owners who benefit from the restriction
Deed restrictions (restrictive covenants) are private agreements enforceable by the parties who benefit from them, typically neighboring property owners in the same subdivision.
Question 6: A property owner dies without a will and has no living heirs. Under the legal concept of escheat, the property:
- Is auctioned to the highest bidder
- Passes to the nearest neighbor
- Reverts to the state government (Correct answer)
- Is held in trust by the county indefinitely
Correct answer: Reverts to the state government
Escheat is the legal process by which property reverts to the state when an owner dies intestate with no heirs or when property is abandoned.
Question 7: Which of the following BEST describes the legal effect of recording a deed in the county recorder's office?
- It guarantees the title is free of all encumbrances
- It provides constructive notice of ownership to the public (Correct answer)
- It creates a valid contract between buyer and seller
- It establishes the property's assessed value for tax purposes
Correct answer: It provides constructive notice of ownership to the public
Recording a deed in the public records provides constructive notice to the world that the grantee has an interest in the property, protecting against subsequent competing claims.
SAEE SAEE Property Rights and Legal Considerations 5
A buyer purchases a property without knowledge that a judgment lien exists against the seller.
The title company later discovers the lien.
Under the doctrine of constructive notice, the buyer: