Georgia Real Estate Broker Exam — All Questions

A commercial tenant bolts custom display shelving to the walls to run a retail store. Absent any agreement to the contrary, what is the usual character of that shelving?

• a.A permanent fixture that automatically belongs to the landlord
• b.Real property that must be conveyed with the building
• c.A trade fixture the tenant may remove before the lease ends✓
• d.An easement appurtenant to the leased space

Items a commercial tenant installs to conduct business are trade fixtures. Even though they are attached, the law lets the tenant remove them before the lease ends (repairing any damage), because the tenant's intent was to use them in the business, not to improve the landlord's property permanently. This is an exception to the general rule that attached items become part of the realty. It is not an easement, which is a right to use another's land, not an object.

Three investors want to take title so that each owner's share will pass to that owner's own heirs at death, and the shares may be unequal. Which form of co-ownership fits?

• a.Joint tenancy
• b.Tenancy in common✓
• c.Tenancy by the entirety
• d.Community property

Tenancy in common allows undivided interests that may be unequal and, critically, has no right of survivorship, so each co-owner's share passes to that owner's heirs or devisees. Joint tenancy carries survivorship, so a deceased owner's share goes to the survivors, not to heirs. Tenancy by the entirety is limited to married couples and also has survivorship. Community property is a marital regime, not a fit for three unrelated investors.

For a valid joint tenancy to exist, the co-owners must share the four unities. Which set correctly lists them?

• a.Time, title, interest, and possession✓
• b.Time, title, income, and partition
• c.Possession, profit, survivorship, and consent
• d.Interest, income, delivery, and acceptance

Joint tenancy requires the four unities, remembered as PITT: Possession (each holds an undivided right to the whole), Interest (equal shares), Time (all acquired title at the same moment), and Title (all named in the same instrument). If any unity is broken, for example by one owner conveying a share, that share becomes a tenancy in common. The other options mix in terms like income, profit, or survivorship that are not part of the four unities.

An owner grants a neighbor a life estate in a parcel 'for the life of the neighbor.' When the neighbor dies, the deed names no one to take next. What happens to the property?

• a.It escheats to the state, because a life estate can never pass to anyone after the measuring life ends
• b.It passes under the neighbor's will to the neighbor's heirs as an inheritable fee simple
• c.It becomes a tenancy in common
• d.It reverts to the original grantor or the grantor's heirs✓

A life estate lasts only for the measuring life and cannot be inherited. When no remainderman is named to receive the property afterward, the grantor has kept a reversion, so title returns to the grantor (or the grantor's heirs if the grantor has died). Escheat happens only when an owner dies with no heirs and no will, which is not the situation here. The life tenant's heirs take nothing because the estate ended at death.

A buyer and seller dispute whether a custom wine rack screwed into a dining room wall conveyed with the house. Which factor do courts usually weigh most heavily?

• a.The dollar value of the item at the time of installation
• b.The intent of the party who annexed it, judged by objective evidence✓
• c.Whether the buyer noticed the item during the walkthrough
• d.Whether the seller paid a contractor to install the item

The classic fixture tests are method of annexation, adaptation to the realty, the relationship of the parties, and any agreement between them, but the thread running through all of them is intent, measured objectively rather than by what someone later claims to have meant. A rack screwed in and built for that wall signals an intent to make it permanent. Cost tells a court little, since expensive items are often personal property and cheap ones often fixtures. What a buyer happened to notice at a walkthrough does not change an item's legal character. Who performed the work is beside the point, because the annexer's intent controls.

A seller wants to keep an heirloom chandelier that is wired into the dining room ceiling. How should the listing broker handle it before the property is marketed?

• a.Have the seller remove and replace it before marketing begins✓
• b.Rely on the general rule that light fixtures are personal property
• c.Note it in the listing remarks and settle the question at closing
• d.Assume the chandelier's heirloom status excludes it from the sale

A wired-in chandelier is annexed to the realty and is presumed to be a fixture that conveys. The cleanest solution is severance before marketing: the seller physically removes it, installs a replacement, and no buyer ever forms an expectation about it. Treating light fixtures as personal property inverts the presumption and invites a dispute. Listing remarks are marketing copy, not a contract term, and rarely bind a buyer. Leaving the item to be sorted out at closing is how transactions collapse at the table. If the chandelier stays in place, the exclusion must be written into the purchase agreement, because an express agreement between the parties controls.

A farm tenant plants and cultivates a corn crop. Through no fault of the tenant, the tenancy ends before harvest. Under the doctrine of emblements, the tenant may:

• a.Claim a lien against the land for the value of seed and labor
• b.Force the landlord to renew the tenancy through the harvest season
• c.Reenter the land to tend and harvest that year's planted crop✓
• d.Collect nothing, because growing crops belong to the landowner

Emblements are annual crops produced by the tenant's own labor, and the law treats them as the tenant's personal property. When a tenancy of uncertain duration ends through no fault of the tenant, the doctrine allows the tenant back onto the land to tend and gather that season's crop. It does not create a lien on the land itself, and it does not extend or renew the tenancy, since the right is limited to the crop. Saying the owner takes everything confuses cultivated annual crops with naturally growing trees and perennial plants, which are part of the real property and pass with a conveyance of the land.

A broker explains that a client is buying real property, not merely land. Beyond the surface, the subsurface, and the airspace, what does the term real property add?

• a.Only the buildings and other permanent improvements on the site
• b.The improvements plus the bundle of legal rights of ownership✓
• c.The seller's personal property left behind at the property
• d.The right to use adjoining public streets and utilities

Land means the surface of the earth, everything beneath it to the center of the earth, and the airspace above it. Real estate is land plus the permanent improvements attached to it. Real property is real estate plus the bundle of rights that come with ownership: possession, control, enjoyment, exclusion, and disposition. Stopping at the improvements describes real estate, one step short of the answer. Personal property a seller abandons is not part of the realty and does not pass by deed. A right to use public streets or receive utility service arises from public dedication or a separate easement, not from the definition itself.

An owner sells the mineral rights under a ranch to an energy company but keeps the surface. What is the position of a buyer who later purchases the surface estate?

• a.The buyer acquires the minerals because they pass with the surface
• b.The severance is void unless the state approves the split estate
• c.The buyer may block all drilling by refusing to sign a lease
• d.The buyer takes subject to the mineral owner's right of reasonable access✓

Subsurface and mineral rights, like air rights, can be severed from the surface and sold separately, creating what is called a split estate. Once severed, the mineral estate is generally dominant: its owner retains an implied right to make reasonable use of the surface to reach the minerals, so a later surface buyer takes subject to that burden. Minerals do not quietly reattach to the surface on a subsequent sale. The surface owner cannot veto extraction by withholding a lease, because the mineral owner already holds that interest. No state approval creates the split; a deed or reservation does, which is why the title search must reveal it.

A listing fronts a large lake in a state that follows the prior appropriation doctrine. Which statement correctly pairs the owner's water-related rights with that doctrine?

• a.Littoral rights attach to the land; use rights come by permit✓
• b.Riparian rights attach to the land, allowing reasonable use of the flow
• c.Littoral rights let the owner divert any quantity from the lake
• d.Prior appropriation gives the oldest deed on the lake first use

Land bordering a lake, sea, or ocean carries littoral rights, while riparian rights belong to land along a flowing waterway such as a river or stream, so calling lakefront rights riparian misuses the term. In prior appropriation states, most of them arid western states, the right to use water does not ride along with land ownership at all; the state grants it based on first beneficial use and administers it through permits. Neither doctrine allows an owner to draw unlimited water. Priority under appropriation depends on the date use actually began, not on how old the shoreline owner's deed happens to be.

A sudden storm shifts a river channel overnight, leaving several acres of a riverfront owner's land on the far side of the new channel. How is this treated?

• a.Accretion, so the acreage now belongs to the far-bank owner
• b.Avulsion, so the boundary and ownership stay unchanged✓
• c.Reliction, so the owner loses title to the exposed streambed
• d.Erosion, so the boundary shifts with the new channel location

Avulsion is a sudden, perceptible loss or movement of land, typically from a flood or a shifting channel, and the settled rule is that boundaries do not move with it: the former owner keeps title even though the parcel now sits across the water. Accretion is the slow build-up of soil deposited by moving water, which does add to the abutting owner's holdings. Reliction is land uncovered as water permanently recedes, which likewise benefits the abutting owner. Erosion is the gradual wearing away of land, and gradual processes do move boundaries. Suddenness is exactly what keeps this line where it was.

A deed conveys land to a city so long as it is used as a public library. The city later converts the building into administrative offices. What is the result?

• a.The grantor must file a court action to recover the parcel
• b.The city keeps fee simple absolute because the condition is void
• c.Title ends automatically and returns under a possibility of reverter✓
• d.The grantor holds a right of re-entry and may elect to reclaim it

The words so long as create a fee simple determinable, an estate that ends by its own terms the moment the stated use stops, leaving the grantor's retained future interest as a possibility of reverter. Title returns without any election by the grantor, though a court action may still be needed to recover physical possession. Language such as but if or on condition that instead creates a fee simple subject to a condition subsequent, where the grantor holds a right of re-entry and must act to reclaim the land. The limitation is not void, and it is what prevents the city's estate from being fee simple absolute. This is the common-law rule the national portion tests; a minority of states have abolished the determinable fee by statute or limit how long a possibility of reverter survives.

A life tenant on a wooded parcel begins clear-cutting mature timber for income, which will permanently reduce the property's value. What can the remainderman do?

• a.Sue to stop the cutting as waste that harms the future interest✓
• b.Do nothing until the life tenant dies and the estate ends
• c.Take possession immediately and evict the life tenant
• d.Collect rent from the life tenant for the ongoing use

A life tenant may use and profit from the property but must not commit waste, meaning acts that permanently reduce the value of what the remainderman or reversioner will eventually receive. Stripping mature timber for income is the textbook example, and the holder of the future interest can seek an injunction or damages while the life estate is still running. Waiting for the life tenant to die would leave the loss unremedied. The remainderman has no present right of possession, so eviction is unavailable. No rent is owed either, because possession for the measuring life is precisely what the life estate grants, and a life tenant can convey no more than that.

A grantor conveys a cottage to Ann for the life of Ben. Ann dies while Ben is still living, and the deed names a remainderman. What becomes of the cottage?

• a.It passes to Ann's heirs and lasts until Ben dies✓
• b.It vests in Ben, the measuring life named in the deed
• c.It reverts to the grantor because Ann's death ends it
• d.It is sold and the proceeds divided among the parties

An estate measured by the life of someone other than its holder is an estate pur autre vie. Because Ben is the measuring life, Ann's death does not end the estate; her interest passes to her heirs or devisees, who hold it until Ben dies. Only then does the named remainderman take, and only where no remainderman is named would the property fall back to the grantor as a reversion. Ben receives nothing merely for serving as the yardstick. Nothing in a life estate triggers a forced sale with proceeds divided; that describes a partition of co-owned property rather than the end of a life tenancy.

A brokerage's commercial client asks how a leasehold estate differs from a freehold estate. Which statement should the broker give as accurate?

• a.A leasehold gives possession while the landlord keeps a reversion✓
• b.A leasehold is simply a freehold estate that lasts a limited number of years
• c.A leasehold conveys title to the land for the term of the lease
• d.A leasehold cannot be assigned, sold, or used as loan security

Freehold estates, meaning fee simple and life estates, are of indefinite duration and carry ownership. Leasehold or less-than-freehold estates give the tenant a right of possession for a determinable period while the landlord retains the reversion and the underlying title. A leasehold is therefore not a kind of freehold no matter how long the stated term runs, which is the distinction the categories exist to draw. The lease conveys possession, not title to the land. And leaseholds are real property interests that can often be assigned, subleased, sold, or pledged as security, subject to whatever the lease itself permits.

Two neighbors share a driveway under a recorded easement that benefits each lot and burdens the other. One neighbor sells to a new owner. What is the buyer's position?

• a.The buyer must negotiate and record a new easement with the neighbor
• b.The buyer takes both the benefit and the burden automatically✓
• c.The buyer may use the drive but owes no maintenance share
• d.The easement ends because it was personal to the seller

A shared-driveway arrangement of this kind creates cross easements that are appurtenant: each lot is a dominant tenement as to its own right of use and a servient tenement as to the neighbor's. Appurtenant easements run with the land, so they transfer with the parcel and bind later owners without any new document. They are not personal to a particular owner, which would describe an easement in gross. Maintenance obligations spelled out in the recorded instrument travel with the benefit, so a buyer who enjoys the driveway also carries the recorded share of upkeep rather than using it at the neighbor's expense.

A power company holds a recorded right to run transmission lines across a ranch. No neighboring parcel is benefited by the right. This interest is best described as:

• a.A license the ranch owner may revoke at any time
• b.An easement appurtenant to the utility's substation
• c.A profit a prendre allowing removal of ranch resources
• d.A commercial easement in gross, which is freely assignable✓

An easement in gross benefits a person or a company rather than a neighboring parcel, so no dominant tenement exists; utility, pipeline, and railroad easements are the standard illustrations. Commercial easements in gross are treated as property interests that may be assigned or sold, unlike a personal easement in gross, which generally cannot. Calling this a license is wrong because a license is a revocable personal privilege, while this right is recorded and permanent. It cannot be appurtenant when there is no benefited parcel to attach to. A profit lets its holder take something from the land, such as timber or gravel, which transmission lines do not do.

An owner splits a large tract and sells the back half, which has no access to any public road. The buyer's deed says nothing about access. What is the buyer's remedy?

• a.Ask the county to condemn a public road across the front parcel
• b.Sue to rescind the sale for failure to disclose the access
• c.Claim an easement by prescription after years of open use
• d.Claim an easement by necessity over the seller's land✓

When a parcel is left landlocked because a single tract was divided, courts imply an easement by necessity across the grantor's remaining land, reasoning that the parties must have intended the buyer to be able to reach the property. It arises by operation of law even though the deed is silent. Prescription is a different route, requiring open, notorious, continuous, and hostile use for the period set by state law, and a brand-new buyer has used nothing yet. Condemnation is a government power exercised for public use, not a private access fix. Rescission is a drastic remedy that ignores the implied easement already available.

A neighbor has openly driven across a corner of an adjoining lot for many years without permission, and the owner never objected. What claim does the neighbor have?

• a.An easement by implication created when the lots were divided
• b.Fee title to the strip crossed, under adverse possession
• c.Nothing, because using land without permission is trespass
• d.An easement by prescription, if the statutory period is met✓

Use that is open, notorious, continuous, and hostile, meaning without the owner's permission, can ripen into an easement by prescription once it continues for the period the state sets, giving the neighbor a right to keep crossing. It does not convey ownership: adverse possession requires exclusive possession and passes title, while prescription passes only a use right, and driving across a corner is plainly not exclusive. Dismissing the conduct as bare trespass ignores the doctrine that converts long unchallenged use into a legal right. Implication arises from prior apparent use at the moment a single parcel is severed, which did not occur here.

The owner of a dominant tenement buys the servient parcel next door and now holds both lots in fee simple. What happens to the easement between them?

• a.It survives and may still be used by the common owner
• b.It is suspended until either lot is sold again
• c.It converts into an easement in gross by law
• d.It is terminated by merger of the two title estates✓

An easement presupposes two separately owned parcels. When one person acquires both the dominant and the servient tenements, the easement is extinguished by merger, and it does not spring back automatically if the lots are later divided again; a new easement must be created. The interest is ended, not merely suspended, and an owner needs no easement to cross land already owned. It cannot transform into an easement in gross, which benefits a person rather than a parcel. Easements can also end by written release from the dominant owner, by abandonment shown through conduct, or when the purpose they served has come to an end.

A landowner writes to a hunting club saying its members may cross the back field during hunting season. The writing says nothing about being permanent. This is:

• a.A license the owner may revoke at will✓
• b.An easement in gross that runs to later owners
• c.An implied easement from prior seasonal use
• d.A leasehold estate for the hunting season

Permission to use land that is personal, temporary, and revocable is a license, not an easement. A license creates no interest in the land and generally ends when the owner withdraws it, when the owner dies, or when the property is sold. An easement in gross is an interest in land that would survive a transfer, and casual seasonal permission does not create one. An implied easement arises from prior apparent use when a single parcel is divided, not from a neighborly invitation. A lease would hand the club exclusive possession of the field, whereas crossing it to hunt is a limited privilege on land the owner still occupies and controls.

A survey ordered before closing shows that the neighbor's garage extends two feet across the boundary onto the property being sold. This condition is:

• a.A prescriptive easement the buyer is forced to accept
• b.An encroachment that clouds the buyer's title✓
• c.A zoning violation that a variance filing would cure
• d.A minor defect that title insurance always covers

A structure extending over a boundary line is an encroachment. It is an encumbrance that can cloud title, reduce the usable value of the land it sits on, and support a claim for removal or damages, which is why a survey rather than a title search alone is the tool that brings it to light. Long unchallenged encroachment can eventually ripen into a prescriptive easement, but that is a possible future outcome, not what this survey found. Standard owner's policies commonly except survey matters unless extended coverage is purchased. And a boundary intrusion is a private dispute between owners, not a zoning question a variance would resolve.

A creditor records a court judgment against a debtor who owns several parcels in the same county. How is the resulting lien classified?

• a.General and voluntary, because the debtor agreed to the underlying debt
• b.Specific and voluntary, like a purchase money mortgage
• c.Specific and involuntary, attaching to one named parcel
• d.General and involuntary, reaching all the debtor's property✓

A recorded judgment lien is general, meaning it attaches to all of the debtor's non-exempt property in the jurisdiction rather than to a single asset, and involuntary, because a court imposed it without the owner's consent. A mortgage is the mirror image, specific to one described parcel and voluntary because the borrower signed it. Property tax liens are specific and involuntary, since they burden only the taxed parcel. Owing money does not make a lien voluntary; voluntariness turns on whether the owner created the lien by agreement, which a defendant who lost a lawsuit obviously did not do.

A parcel carries a first mortgage recorded years ago, a recent mechanic's lien, and unpaid property taxes and special assessments. At a forced sale, which claim is paid first?

• a.The first mortgage, because it was recorded earliest
• b.The mechanic's lien, because the work improved the land
• c.They share the proceeds in proportion to their amounts
• d.The property tax and special assessment liens, ahead of all others✓

Real property tax liens are specific, involuntary, statutory liens on the taxed parcel, and they take priority over other liens regardless of when those were recorded, because the taxing authority's claim arises by statute rather than by the recording race; special assessment liens carry a comparable statutory priority in most states. That is why first in time, first in right is only the general rule among private liens, and why the earliest recorded mortgage does not automatically head the line. Improving the property gives a mechanic's lien a strong position relative to other private claimants but not ahead of taxes. Sale proceeds are distributed strictly by priority rather than shared pro rata, which is how junior lienholders end up with nothing.

A contractor records a mechanic's lien after finishing a remodel. A lender that recorded its mortgage during construction is surprised to find itself subordinate. Why can that happen?

• a.Mechanic's liens are general liens that outrank all mortgages
• b.A recorded mortgage never gains priority over a later lien
• c.The lender failed to obtain the contractor's written consent
• d.Many states relate the lien back to when work or materials began✓

Mechanic's lien statutes commonly assign the lien a priority date that relates back to the start of work or the first delivery of materials rather than the day the claim is recorded, so a lender that funded after visible construction began can be leapfrogged even though it recorded first. That relation-back concept is why construction lenders inspect the site and collect lien waivers before each advance. The lien is specific to the improved parcel, not general across the owner's holdings. Recording does establish priority for most private liens, with this rule as the notable exception, and no contractor consent is needed for a mortgage to be recorded.

A buyer sues a seller for specific performance and records a notice of the pending lawsuit against the property. What does that recorded notice accomplish?

• a.It transfers a partial interest in the property to the buyer
• b.It creates a money judgment lien on the owner's assets
• c.It blocks any sale
• d.It warns later buyers and lenders of the claim✓

A lis pendens is a recorded notice that litigation affecting title to a described parcel is pending. Its whole function is notice: anyone who buys or lends after it is recorded takes subject to the outcome of the suit, which as a practical matter freezes the market for that property. It does not itself transfer any interest to the plaintiff, and it does not legally bar a sale, since a closing can still occur with the new owner bound by the eventual judgment. It is not a judgment lien either, because no judgment has been entered and no money has yet been awarded.

A homeowner in a platted subdivision paints the house a color the recorded CC&Rs prohibit. Who can enforce the restriction, and by what means?

• a.The city's code enforcement office, by issuing citations
• b.Other owners or the association, by suing for an injunction✓
• c.The county recorder, by rejecting future filings for the lot
• d.No one, because private color rules are unenforceable

CC&Rs and other private deed restrictions run with the land and are enforced privately: another lot owner or the homeowners association may sue, usually seeking an injunction ordering compliance, and a court can award damages as well. Government code enforcement polices public controls such as zoning and building codes, not private covenants, so a city citation is the wrong instrument. The recorder's office merely records documents and holds no enforcement power. Private restrictions are enforceable encumbrances on title, although a court may decline to enforce one that has been widely abandoned or that is itself illegal, such as a racial covenant.

Three siblings hold title as joint tenants with right of survivorship. One sibling sells her interest to an outside investor. What is the resulting ownership structure?

• a.The investor is a tenant in common with the joint siblings✓
• b.The sale is void without the other owners' consent
• c.The investor joins as a third joint tenant with the siblings
• d.All three interests become a tenancy in common

A joint tenant may convey her interest without asking the others, and the conveyance breaks the unities of time and title as to that share. The buyer takes a one-third interest as a tenant in common, while the two remaining siblings continue to hold their two-thirds as joint tenants with survivorship as between themselves. The entire joint tenancy is not destroyed when two or more joint tenants remain. The sale is not void, since no consent is required. And a stranger cannot simply be grafted into an existing joint tenancy, because the unities of time and title cannot be met by a later deed.

Two co-owners of an unimproved parcel cannot agree on whether to sell it. One of them asks a court to end the co-ownership. What is the court most likely to do?

• a.Order the objecting owner to buy out the other's share
• b.Refuse to act, since co-owners must reach agreement
• c.Divide the land, or sell it and split proceeds✓
• d.Convert the title into a joint tenancy for both owners

A partition action is the standard remedy for co-owners at an impasse. A court first considers partition in kind, physically dividing the land between them, and if that is impractical or would destroy value it orders a partition by sale and distributes the net proceeds according to each owner's fractional interest. Courts do not force one co-owner to buy out another at a price neither negotiated. Refusing to act would lock the owners in the very deadlock partition exists to break. And a court will not manufacture a joint tenancy with survivorship, which requires the owners' own intent expressed in a deed.

A married couple in a state that recognizes tenancy by the entirety and its creditor protection holds their home that way. A creditor of one spouse alone obtains a judgment against that spouse. What is the usual effect on the home?

• a.The creditor cannot reach the home for one spouse's debt✓
• b.The creditor may force a partition sale of the whole home
• c.The creditor takes that spouse's half as a tenant in common
• d.The judgment automatically severs the tenancy by the entirety

In states recognizing tenancy by the entirety, spouses hold as a single legal unit and neither may convey or encumber the property alone. That unity is what shields the home from a creditor pursuing only one spouse, though a creditor of both spouses jointly stands in a different position. Because neither spouse owns a separately divisible share, there is nothing for a lone creditor to partition or to take as a tenancy in common. A judgment does not sever the estate either; severance generally requires a joint conveyance, divorce, or death. A minority of entireties states do let a creditor reach the debtor spouse's survivorship interest, so the extent of the shield is a state-law question. Community property states, where assets acquired during marriage are owned equally while separate property is not, resolve such claims under their own framework.

Four investors want to buy an apartment building, limit each investor's personal liability, and be taxed once at the investor level. Which ownership entity best fits?

• a.A general partnership in which every partner manages and is liable
• b.A C corporation whose shareholders elect a board of directors
• c.A limited liability company electing pass-through taxation✓
• d.A sole proprietorship holding title in one investor's name

A limited liability company gives its members liability protection while income and losses pass through to them, avoiding the double taxation a C corporation faces when the entity pays tax and shareholders pay again on dividends. In a general partnership every partner holds management authority and unlimited personal liability, which is exactly what these investors want to escape; a limited partnership solves that only for the limited partners and leaves the general partner exposed. A sole proprietorship cannot hold four owners at all. Any of these group arrangements can be the vehicle for a real estate syndication, which describes the pooling of investors rather than a distinct legal form.

An investor wants exposure to a diversified pool of income properties without managing any of them, and asks a broker about real estate investment trusts. Which statement is accurate?

• a.A REIT holds real estate assets and investors own its shares✓
• b.A REIT keeps its status only by reinvesting all earnings
• c.A REIT is a private syndicate closed to ordinary investors
• d.A REIT investor receives a recorded deed to a share of each property

A REIT is a company that owns, and frequently operates, income-producing real estate. Investors buy shares in the trust rather than an interest in any particular parcel, so nothing is deeded into an investor's name and no individual property title changes hands. Many REITs trade publicly and are open to small investors, which is much of their appeal, so describing them as closed private syndicates gets it backward. REITs are also known for the opposite of retaining earnings: to keep their favorable tax treatment they must distribute the large majority of taxable income to shareholders, which is why they are held for dividend income.

A buyer is comparing a condominium unit with a cooperative apartment. Which description correctly states what the cooperative buyer actually receives?

• a.Shares in the corporation plus a proprietary lease on the unit✓
• b.A recorded deed to the airspace and an HOA membership
• c.Fee title to the unit plus a share of the common elements
• d.A life estate in the unit that ends when the owner moves

A cooperative buyer purchases stock in the corporation that owns the entire building and receives a proprietary lease conferring the right to occupy a particular unit, so the interest acquired is personal property rather than real property. Fee title to a unit together with an undivided interest in the common elements describes a condominium, where the deed conveys the unit's airspace and the owner joins the association. Limited common elements such as an assigned balcony or parking stall serve one unit while remaining part of the commonly owned property. A life estate belongs to neither form and would not end merely because the owner moved out.

A condominium unit carries a 1.5% undivided interest in the common elements, and assessments are allocated by that percentage. If the association adopts an annual budget of $840,000, the unit's annual assessment is:

• a.$12,600✓
• b.$1,260
• c.$8,400
• d.$126,000

Assessments in a condominium are allocated by each unit's undivided percentage interest in the common elements, so multiply the budget by that percentage: 0.015 x $840,000 = $12,600 per year, which is $1,050 per month. Check it a second way: 1% of $840,000 is $8,400, half of that is $4,200, and $8,400 + $4,200 = $12,600. Using a flat 1% produces $8,400, misreading the figure as 0.15% produces $1,260, and reading it as 15% produces $126,000. Because unpaid assessments can become a lien on the unit, closing should confirm the seller's account is current.

A resort sells buyers a deeded one-week interval in a specific unit, recorded like other real property. How does that differ from a right-to-use timeshare?

• a.The buyer receives a membership that renews each season
• b.The buyer holds only a contract right lasting a stated term of years
• c.The buyer becomes a shareholder in the resort's operator
• d.The buyer owns a real property interest that can be willed✓

A timeshare estate, usually sold as an interval, conveys a recorded fee interest in a specific unit for a recurring period, so the owner may sell, mortgage, or devise it and the interest continues indefinitely. A right-to-use timeshare is instead a contractual license to occupy for a set number of years, after which the right simply expires and nothing passes to heirs, so describing the deeded product that way reverses the two. Neither arrangement makes the buyer a shareholder in the operating company, which is how a cooperative is structured. A season-renewing membership describes a vacation club, again a use contract rather than ownership.

A metes-and-bounds description calls for a course running to an old stone wall, but the stated distance stops 15 feet short of that wall. Which call governs the boundary?

• a.The stated distance, since written figures are more precise
• b.The monument, which controls over the stated distance✓
• c.The distance, unless the seller agrees to the monument
• d.Neither, so the entire description fails for uncertainty

In a metes-and-bounds description, calls to monuments, whether natural like a stream or artificial like a stone wall or an iron pin, control over stated distances and bearings when the two conflict, because monuments show where the parties actually walked the boundary. Such a description begins at a point of beginning, follows its courses, and must close by returning to that same point. Written figures are treated as the likelier source of error, since a number can be mistranscribed while a wall stays put. A conflict of this kind does not void the description, and the monument rule applies without any party's agreement.

A developer must describe a condominium unit on the eleventh floor so that the deed captures the unit's airspace. Which descriptive tool does the surveyor rely on?

• a.Elevations measured from an official datum, tied to a benchmark✓
• b.A metes-and-bounds course around the building's footprint
• c.The section and township numbers from the government survey
• d.The lot and block numbers shown on the recorded plat

Vertical descriptions state elevations above or below an official datum, a defined reference plane, with local monuments called benchmarks marking known elevations that surveyors work from. That is how a deed fixes the floor and ceiling of a unit's airspace on a given story. A metes-and-bounds perimeter or a lot-and-block reference to a recorded plat locates the parcel horizontally but says nothing at all about height, and township and section numbers do the same at a far coarser scale. In practice a condominium deed pairs a horizontal description of the underlying land with vertical elevations for the individual unit.

An investor is offered the N1/2 of the SW1/4 of the NE1/4 of Section 14. Using 640 acres per section and 43,560 square feet per acre, how large is that parcel?

• a.20 acres, or 871,200 square feet✓
• b.10 acres, or 435,600 square feet
• c.40 acres, or 1,742,400 square feet
• d.80 acres, or 3,484,800 square feet

Read the calls from right to left, dividing as you go. The NE1/4 of the section is 640 / 4 = 160 acres. The SW1/4 of that quarter is 160 / 4 = 40 acres. The N1/2 of that tract is 40 / 2 = 20 acres. Then 20 x 43,560 = 871,200 square feet. Check by multiplying the fractions first: 1/2 x 1/4 x 1/4 = 1/32, and 640 / 32 = 20 acres. Stopping one step early leaves 40 acres, dropping the NE1/4 call gives 80 acres, and treating the half call as another quarter gives 10 acres.

A listing's street address, the county tax parcel number, and the recorded legal description in the seller's deed do not all describe the same land. What should the broker do before the description is used?

• a.Rely on the recorded legal description and resolve the conflict first✓
• b.Rely on the tax parcel number, since assessor records are official data
• c.Rely on the street address, because that is what buyers and lenders use
• d.Leave the choice among the three to the closing agent at settlement

The land conveyed is the land the recorded legal description identifies, whether that description is metes and bounds, lot and block on a recorded plat, or a government survey call. A street address locates a building for mail and marketing, and a tax parcel number organizes the assessor's roll; either can be assigned to the wrong land, split after a lot line change, or left stale, and neither conveys anything by itself. Both are aids, not descriptions. Facing a conflict, the broker should take the description from the recorded instrument, have the title company or a surveyor reconcile the discrepancy, and get it corrected before the listing or the deed goes out rather than leaving the settlement agent to guess.

A city rezones a corridor, condemns three parcels for a transit line, bills annual property taxes, and takes title to a lot whose owner died leaving no heirs and no will. Which power supported the last action?

• a.Police power, exercised through the zoning ordinance
• b.Taxation, which funds the city's public services
• c.Escheat, which claims property left with no owner or heirs✓
• d.Eminent domain, used to acquire land for the line

Escheat sends property to the state, or in some places to a local government, when an owner dies intestate leaving no heirs, so that land does not sit ownerless. The four government powers over private property are often remembered as PETE: police power, eminent domain, taxation, and escheat. Police power is regulation for health, safety, morals, and general welfare, which is what the rezoning was, and no compensation is owed for it. Eminent domain is the taking of private property for a public use and does require just compensation, as with the transit parcels. Taxation funds public services and is secured by a lien on each parcel.