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ALC practice questions

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Question 1Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A ranch owner wants to sell 640 acres described as the NE 1/4 of a section. How many acres are in a full section under the U.S. Public Land Survey System?

  1. 640 acres Correct answer.
  2. 320 acres
  3. 160 acres
  4. 1,280 acres

Explanation

Under the Public Land Survey System a standard section contains 640 acres, and an aliquot quarter of a section contains 160 acres. The NE 1/4 therefore equals 160 acres, while the full section remains 640 acres.

Question 2Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

Which legal description method is most commonly used for rural acreage tracts because it relies on recorded survey monuments and bearings?

  1. Tax parcel number
  2. Lot and block
  3. Metes and bounds Correct answer.
  4. Street address

Explanation

Metes and bounds descriptions trace boundaries using bearings, distances, and natural or artificial monuments, which suits irregular rural tracts. Lot and block is used for platted subdivisions, and addresses or tax numbers are not legal descriptions.

Question 3Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker lists a 200-acre farm at $4,500 per acre and earns a 6% commission on the sale price. What is the gross commission?

  1. $54,000 Correct answer.
  2. $45,000
  3. $9,000
  4. $27,000

Explanation

The sale price is 200 acres times $4,500, or $900,000. Six percent of $900,000 is $54,000.

Question 4Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

In a farm sale, which item is typically treated as a fixture that conveys with the real property unless excluded in the contract?

  1. A tractor stored in the barn
  2. A portable livestock feeder
  3. A grain inventory in the silo
  4. A center-pivot irrigation system bolted to concrete pads Correct answer.

Explanation

An item permanently affixed to the land, such as an irrigation system anchored to concrete pads, is generally a fixture and conveys with the realty. Movable equipment and stored crops are personal property unless the contract says otherwise.

Question 5Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A buyer of a recreational hunting tract wants assurance that hunting rights transfer with the land. What interest must the seller convey to include those rights?

  1. An easement for access only
  2. A leasehold for one hunting season
  3. The full fee simple title including all appurtenant rights Correct answer.
  4. A life estate measured by the seller's life

Explanation

Hunting rights are among the bundle of rights that pass with fee simple title unless previously severed and conveyed to another party. Lesser interests such as a life estate, a short lease, or an access easement do not transfer full ownership of those rights.

Question 6Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A listing agreement gives a broker the right to a commission if anyone, including the owner, sells the property during the listing term. Which type of listing is this?

  1. Exclusive right to sell Correct answer.
  2. Net listing
  3. Open listing
  4. Exclusive agency

Explanation

An exclusive right to sell entitles the broker to compensation regardless of who procures the buyer, including the owner. Exclusive agency and open listings leave the owner free to sell without paying in certain circumstances.

Question 7Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

Which federal program primarily provides subsidized crop insurance to producers of commodity and specialty crops?

  1. Community Development Block Grant
  2. National Flood Insurance Program
  3. Section 8 Housing Choice Vouchers
  4. Federal Crop Insurance Program Correct answer.

Explanation

The Federal Crop Insurance Program, administered through the Risk Management Agency, subsidizes insurance protecting producers against yield and revenue losses. The other programs address housing, community development, and flood insurance, not crop risk.

Question 8Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker is showing a wooded property and discloses to the buyer that the seller has an easement allowing a neighbor to cross the land. This disclosure concerns which type of encumbrance?

  1. An easement appurtenant Correct answer.
  2. A mechanic's lien
  3. A deed restriction on use
  4. A mortgage

Explanation

An easement appurtenant benefits a neighboring parcel and burdens the servient land, allowing the neighbor to cross it. Liens and mortgages are monetary encumbrances, and deed restrictions limit use rather than grant passage.

Question 9Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A 480-acre ranch is being valued using a sales comparison approach. Appraiser A uses $3,000/acre for irrigated land and $1,500/acre for dry grazing land. If 160 acres are irrigated and the balance is dry, what is the indicated value?

  1. $1,200,000
  2. $840,000
  3. $960,000 Correct answer.
  4. $720,000

Explanation

Irrigated value is 160 acres times $3,000, or $480,000. Dry value is 320 acres times $1,500, or $480,000. The total indicated value is $960,000.

Question 10Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A buyer is acquiring timberland and wants to know the present value of a planned harvest. Which appraisal method is most appropriate for valuing the standing timber?

  1. Replacement cost of the trees
  2. Assessed value from the county tax roll
  3. Income capitalization of expected harvest revenue Correct answer.
  4. Original acquisition cost of the land

Explanation

Standing timber is an income-producing asset, so discounting or capitalizing expected harvest revenue reflects its income potential. Cost, assessed value, and historical cost do not capture the timber's earning capacity.

Question 11Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A vineyard owner leases land to a winery for ten years with rent based on a percentage of grape sales. Which lease structure is this?

  1. Ground lease
  2. Graduated lease
  3. Percentage lease Correct answer.
  4. Gross lease

Explanation

A percentage lease ties rent to a share of the tenant's gross or net revenue. A gross lease uses a flat rent, a graduated lease steps rent on a schedule, and a ground lease concerns land only, without the revenue feature.

Question 12Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker is preparing a comparative market analysis for a 40-acre recreational parcel. Which adjustment is most appropriate when the comparable sold six months ago in a rising market?

  1. Apply a location adjustment downward
  2. Apply a time or market conditions adjustment upward Correct answer.
  3. Apply a size adjustment upward
  4. Apply a financing adjustment downward

Explanation

A time adjustment accounts for changes in market conditions between the comparable's sale date and the effective date. In a rising market the comparable's price is adjusted upward to reflect current values.

Question 13Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A farmer wants to sell a 320-acre tract but retain the mineral rights beneath it. What type of transaction accomplishes this?

  1. A severance of the mineral estate Correct answer.
  2. A quitclaim of the surface only
  3. A life estate in the minerals
  4. An easement for mineral access

Explanation

Severing the mineral estate divides the bundle of rights so the seller can convey the surface while retaining subsurface rights. A quitclaim, life estate, or access easement does not achieve that division.

Question 14Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker represents a seller of a hunting ranch and learns the property has a leaking septic system. Under general agency disclosure duties, the broker should:

  1. Keep the information confidential because it favors the seller
  2. Disclose the known material defect to prospective buyers Correct answer.
  3. Recommend that buyers conduct their own inspection without disclosure
  4. Disclose the defect only after a written offer is accepted

Explanation

Agents owe a duty to disclose known material defects that affect value or desirability, even while representing the seller. Confidentiality does not extend to concealing material adverse facts from buyers.

Question 15Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A buyer of an orchard wants to confirm the trees and irrigation are included in the sale. What contract provision best protects the buyer?

  1. A right of first refusal
  2. An inclusion clause listing trees, irrigation, and appurtenances Correct answer.
  3. A liquidated damages clause
  4. A hold-harmless clause

Explanation

An inclusion clause expressly identifies fixtures and appurtenances that convey with the land, preventing disputes over what is included. The other clauses address remedies, future offers, or liability, not property inclusion.

Question 16Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker is asked to estimate the carrying capacity of a 1,000-acre grazing ranch. Which factor is most directly used in the calculation?

  1. Timber stumpage price
  2. Cost of barbed wire fencing
  3. County property tax rate
  4. Animal unit months per acre Correct answer.

Explanation

Carrying capacity is estimated by multiplying available forage, expressed in animal unit months per acre, by the grazed acreage. Tax rates, stumpage prices, and fencing costs do not measure forage capacity.

Question 17Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A landowner wants to place a conservation easement on a wetland portion of a farm. What is the primary legal effect of that easement?

  1. It allows public hunting access in all cases
  2. It guarantees the landowner a tax deduction of a fixed amount
  3. It transfers full fee title to the government
  4. It permanently restricts development to protect conservation values Correct answer.

Explanation

A conservation easement is a deed restriction that limits future development to preserve conservation values while leaving title with the owner. It is not a fee transfer, the tax benefit varies with appraisal, and public access is not automatic.

Question 18Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A seller of a farm receives two offers: one at full price with a 90-day closing and one slightly lower with a 30-day closing and no financing contingency. Which factor most affects the seller's net proceeds analysis?

  1. The buyer's financing contingency and closing timeline Correct answer.
  2. The number of photos in the listing
  3. The listing broker's years of experience
  4. The color of the barn

Explanation

Net proceeds analysis weighs price against the certainty and timing of closing, including financing contingencies. Cosmetic, experience, and marketing details do not directly affect net proceeds.

Question 19Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker lists a parcel described as the S 1/2 of the SW 1/4 of Section 12. How many acres does this parcel contain?

  1. 160 acres
  2. 80 acres Correct answer.
  3. 20 acres
  4. 40 acres

Explanation

A quarter-section is 160 acres, and half of that quarter is 80 acres. The S 1/2 of the SW 1/4 therefore equals 80 acres.

Question 20Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker is marketing a property that includes a working cattle operation and asks whether the herd is real property. The herd is best classified as:

  1. Personal property that may be sold separately Correct answer.
  2. An appurtenance that always conveys
  3. A fixture attached to the land
  4. A mineral interest

Explanation

Livestock are movable personal property and do not automatically convey with the land unless the contract includes them. They are not fixtures, appurtenances, or mineral interests.

Question 21Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A 1,200-acre timberland tract is valued at $2,400 per acre. If the tract is revalued using a 5% annual appreciation over two years, what is the approximate value at the end of the period?

  1. $3,024,000
  2. $3,456,000
  3. $2,880,000
  4. $3,175,680 Correct answer.

Explanation

The initial value is 1,200 acres times $2,400, or $2,880,000. Compounding 5% for two years gives $2,880,000 times 1.1025, or about $3,175,680.

Question 22Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker is comparing two ranch listings: one with senior water rights and one with junior water rights. Why does the senior right typically command a higher price?

  1. Senior rights always include recreational use
  2. Senior rights have priority in times of shortage under prior appropriation Correct answer.
  3. Junior rights are exempt from state regulation
  4. Junior rights convey with the land automatically

Explanation

Under prior appropriation, earlier (senior) rights receive water first during shortages, making them more reliable and valuable. Recreational use, regulatory exemption, and automatic conveyance are not features of seniority.

Question 23Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A seller of a farm wants to defer capital gains by exchanging into a larger ranch. Which requirement is essential for a valid Section 1031 like-kind exchange?

  1. The seller must reinvest all proceeds in cash
  2. Both properties must be held for productive use in a trade or business or for investment Correct answer.
  3. The replacement property must be purchased within 180 days with no identification period
  4. The properties must be located in the same state

Explanation

Like-kind exchange treatment requires that both the relinquished and replacement properties be held for productive use in a trade or business or for investment. The rules also impose a 45-day identification and 180-day closing period, and do not require same-state property or cash reinvestment.

Question 24Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker is reviewing a title commitment for a ranch and sees a deed restriction limiting the property to agricultural use. How should the broker advise the buyer?

  1. Recommend ignoring the restriction until a neighbor complains
  2. Suggest that a new survey will remove the restriction
  3. Advise that the restriction is void because the land is rural
  4. Explain that the restriction runs with the land and limits future use Correct answer.

Explanation

A deed restriction is a covenant that runs with the land and binds future owners, limiting use as stated. Rural location, neighbor complaints, or a new survey do not eliminate a recorded restriction.

Question 25Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker is advising a client on the tax treatment of a conservation easement donation. Which statement best reflects the general federal rule?

  1. The donation must be sold to the government at fair market value
  2. A qualifying donation may generate a charitable deduction based on appraised value, subject to limits Correct answer.
  3. The donation always eliminates all property taxes permanently
  4. The donation converts the land to public ownership

Explanation

A qualifying conservation easement donation can yield a charitable income tax deduction based on the appraised value of the donated interest, subject to statutory limits. It does not automatically eliminate property taxes, require a sale, or transfer ownership.

Question 26Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker is preparing a listing presentation for a 200-acre irrigated farm. Which set of comparable sales characteristics most directly supports an accurate per-acre valuation?

  1. List prices of farms currently advertised for sale in the same county
  2. Recent sales of similarly irrigated farms in the same region with comparable soils and water rights Correct answer.
  3. Assessed values published by the county tax office for the subject parcel
  4. Sales of residential lots in a nearby town that closed within the past year

Explanation

A sales comparison approach relies on closed transactions of properties with similar highest and best use, soils, water availability, and location. Assessed values and asking prices are not evidence of market value, and residential lots serve a different use.

Question 27Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A rancher wants to sell a property while keeping the right to graze livestock on it for the next five years. What arrangement should the broker document?

  1. A quitclaim deed transferring grazing rights to the buyer
  2. A mechanic's lien recorded against the property
  3. A reserved grazing right or leaseback created in the sale documents Correct answer.
  4. A subdivision plat dedicating the pasture to public use

Explanation

An owner may reserve an interest, such as a grazing right, or lease the pasture back from the buyer when the property is conveyed. Either approach must be documented in the sale contract and deed so it binds the buyer and future owners.

Question 28Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

What is the principal purpose of a grazing lease on ranch land?

  1. To give the tenant the right to subdivide and sell building lots
  2. To transfer fee title to the pasture to the tenant at the end of the term
  3. To convert the ranch into a conservation easement held by the tenant
  4. To grant a tenant the right to use pasture forage for livestock for a stated term and rent Correct answer.

Explanation

A grazing lease is a possessory agreement that lets the tenant use forage and pasture for livestock during a defined period in exchange for rent. It does not convey title or change the zoning or conservation status of the land.

Question 29Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker is marketing a 60-acre parcel zoned for agricultural use that has road frontage and a building envelope. Which term best describes the attribute most likely to attract recreational and rural-home buyers?

  1. Mineral estate
  2. Crop allotment
  3. Timber basis
  4. Development potential Correct answer.

Explanation

Road frontage plus an available building envelope signals potential for a homesite or future division, which many rural and recreational buyers value. Mineral estate, timber basis, and crop allotments are separate attributes that do not describe that potential.

Question 30Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A seller of a 640-acre farm asks the broker whether the property can be listed for sale while a farm operating loan remains outstanding. What is the most appropriate response?

  1. The broker must personally guarantee the loan before listing
  2. The property cannot be listed until the loan is fully repaid
  3. The property may be listed, but the existing lien must be addressed at or before closing through payoff or release Correct answer.
  4. The listing is void unless the lender becomes a co-listing party

Explanation

An outstanding mortgage or deed of trust does not prevent a sale; the lien is typically paid off from sale proceeds or released at closing. The listing agreement itself is unaffected, and the broker has no obligation to guarantee the debt.

Question 31Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker is evaluating a potential listing of a ranch whose access road crosses a neighboring property. Which document provides the strongest assurance that the road may lawfully be used?

  1. A statement from the current owner that access has always been allowed
  2. A recorded easement appurtenant benefiting the subject parcel Correct answer.
  3. An unrecorded letter from the neighbor granting permission
  4. A utility company's map showing the road

Explanation

A recorded easement appurtenant runs with and benefits the dominant parcel, giving enforceable access that survives changes in ownership. Informal permission, letters, and third-party maps do not establish a durable legal right.

Question 32Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A buyer of a producing orchard is reviewing the seller's income records. Which figure best reflects the property's operating performance for valuation purposes?

  1. The original purchase price the seller paid for the land
  2. The seller's total household income including off-farm wages
  3. Net operating income after deducting production expenses from gross orchard revenue Correct answer.
  4. Gross sales revenue for the most recent harvest

Explanation

Income capitalization uses net operating income, which nets allowable operating expenses against gross revenue. Gross revenue, personal income, and historical purchase price do not measure the property's earning capacity.

Question 33Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker lists timberland on behalf of an out-of-state seller and receives an offer from a buyer who wants to close in 45 days. Which contingency most commonly protects the buyer's ability to evaluate the timber resource before closing?

  1. A timber cruise and inspection contingency Correct answer.
  2. A home inspection contingency
  3. A financing contingency
  4. A survey contingency

Explanation

Timberland buyers typically condition the purchase on a cruise or inventory verifying species, volume, and condition of the stand. Financing, home inspection, and survey contingencies address different concerns and do not evaluate the timber itself.

Question 34Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker is advising a buyer who plans to use a rural parcel for a commercial hunting operation. Which due diligence item most directly affects whether that use is permissible?

  1. The type of deed used to convey the parcel
  2. Local zoning and land use regulations applicable to the parcel Correct answer.
  3. The seller's asking price per acre
  4. The age of the property's fencing

Explanation

Whether a commercial hunting operation is allowed depends on zoning, land use rules, and any recorded restrictions on the parcel. Price, fencing age, and deed form do not determine permitted use.

Question 35Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker is preparing a listing for a farm that includes a residence, barns, and cropland. How should the broker most accurately describe the property in the marketing materials?

  1. As commercial retail space
  2. As bare farmland with no improvements
  3. As a mixed-use agricultural property disclosing the residence and the income-producing cropland Correct answer.
  4. As a single-family residence only

Explanation

Accurate marketing describes the property's actual components and highest and best use, including both residential improvements and agricultural income potential. Mischaracterizing the property as solely residential, bare land, or retail would mislead buyers.

Question 36Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker represents a buyer of a vineyard and learns the seller's winery contract obligates the buyer to continue purchasing grapes at a fixed price for three years. What should the broker do?

  1. Disclose the contract obligation to the buyer and confirm whether it runs with the land Correct answer.
  2. Recommend the buyer sign the contract without reviewing it
  3. Ignore the contract because it is a personal matter between the seller and winery
  4. Advise the buyer that grape contracts never bind successors

Explanation

Contracts affecting the use or income of the property may bind successors if they run with the land, so the buyer must be informed and given the chance to review. A broker should never advise a client to disregard or sign a contract without review.

Question 37Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker is comparing a ranch with senior water rights to one with junior water rights on the same stream. Why does the senior right typically add value?

  1. Senior rights automatically include mineral ownership
  2. Senior rights are exempt from all state water regulation
  3. Junior rights always carry a lower annual fee
  4. Senior rights have priority for diversion during shortage, making the water supply more reliable Correct answer.

Explanation

Under prior appropriation, earlier (senior) rights are satisfied before later (junior) rights when supply is short, so senior rights provide a more dependable water supply. Neither class is exempt from regulation, and water rights do not include minerals.

Question 38Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker is asked to estimate the market rent for a 500-acre dryland farm. Which approach is most appropriate?

  1. Use the county's assessed value multiplied by a fixed rate
  2. Compare rents for similar dryland farms in the area and adjust for soil and location Correct answer.
  3. Apply the rent charged for nearby commercial warehouse space
  4. Use the owner's mortgage payment as the rent

Explanation

Market rent is best estimated from comparable leases of similar land, adjusted for differences in soils, productivity, and location. Assessed values, unrelated property types, and the owner's debt service are not measures of market rent.

Question 39Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A seller of a large recreational property wants to attract multiple offers quickly. Which pricing strategy is generally most effective in a competitive rural market?

  1. Price well above market to leave room for negotiation
  2. Price near the supported market value based on recent comparable sales Correct answer.
  3. Price at the seller's original purchase price plus all improvements
  4. Price based on the highest offer the seller hopes to receive

Explanation

Pricing at or near supported market value tends to generate buyer interest and competition, which can produce strong offers. Inflated or cost-based pricing often prolongs marketing time and discourages showings.

Question 40Land brokerage (farms, ranches, recreational, timberland, vineyards, orchards)

A broker is reviewing a title commitment for a farm and finds an unreleased deed of trust from a prior owner. What is the most appropriate action?

  1. Ignore the lien because it predates the current owner
  2. Notify the seller and request that the lien be released or paid off before closing Correct answer.
  3. Record a new deed transferring the property to the broker
  4. Advise the buyer to purchase without title insurance

Explanation

An unreleased lien clouds title and must be satisfied or released so the buyer receives clear title. The broker should raise the issue with the seller and coordinate with the title company; ignoring it or skipping title insurance leaves the buyer exposed.

Question 41Undeveloped, transitional and development land; subdivision and lot wholesaling

A parcel of raw land has no utilities, no road frontage, and no approved site plan. In appraisal terms, this parcel is best described as which type of land?

  1. Transitional land
  2. Improved land
  3. Developed lot
  4. Raw land Correct answer.

Explanation

Raw land is acreage with no improvements, utilities, or approvals and is valued mainly on its potential. Improved land has been altered with infrastructure or site work, and a developed lot is a finished, buildable parcel.

Question 42Undeveloped, transitional and development land; subdivision and lot wholesaling

A developer buys a 40-acre tract and records a plat dividing it into 80 single-family lots. The business of selling those lots to individual homebuilders is known as what?

  1. Commercial leasing
  2. Easement acquisition
  3. Land banking
  4. Lot wholesaling Correct answer.

Explanation

Lot wholesaling is the sale of platted, subdivided lots to builders or end users rather than holding the land or leasing it. The subdivision creates the inventory that is then sold off lot by lot.

Question 43Undeveloped, transitional and development land; subdivision and lot wholesaling

Which factor most directly determines the number of lots a developer can create from a given tract?

  1. The name of the recorded subdivision
  2. The color of the soil on the site
  3. The seller's original purchase price
  4. The zoning density and minimum lot size rules Correct answer.

Explanation

Yield of lots is governed by the zoning code's density and minimum lot area requirements, along with physical constraints. Purchase price affects profitability but not the legal lot count.

Question 44Undeveloped, transitional and development land; subdivision and lot wholesaling

A builder is deciding whether to buy finished lots in a recorded subdivision or raw acreage to develop. Which is a primary advantage of buying finished lots?

  1. Lower total cost per buildable unit
  2. Higher entitlement risk
  3. Greater control over lot layout
  4. Shorter time to start vertical construction Correct answer.

Explanation

Finished lots already carry approvals and infrastructure, so a builder can begin construction sooner. Raw land may be cheaper per unit but requires entitlement and site work, adding time and risk.

Question 45Undeveloped, transitional and development land; subdivision and lot wholesaling

In a subdivision, the process of legally dividing land into lots and recording a map of the layout with the local government is called what?

  1. Escrowing
  2. Zoning
  3. Assessing
  4. Platting Correct answer.

Explanation

Platting is the preparation and recording of a subdivision map showing lot lines, streets, and easements. Zoning regulates permitted uses, while assessing sets taxable value.

Question 46Undeveloped, transitional and development land; subdivision and lot wholesaling

A developer must install streets, water, sewer, and storm drainage before lots can be sold. This work is generally referred to as what?

  1. Horizontal development Correct answer.
  2. Land banking
  3. Vertical development
  4. Highest and best use analysis

Explanation

Horizontal development refers to the site infrastructure-roads, utilities, and drainage-that prepares land for building. Vertical development is the construction of buildings on the lots.

Question 47Undeveloped, transitional and development land; subdivision and lot wholesaling

What does the term 'absorption rate' measure in a land development pro forma?

  1. The percentage of a lot covered by a building
  2. The rate at which rainwater drains from a site
  3. The pace at which lots or units are expected to sell over time Correct answer.
  4. The interest rate on a construction loan

Explanation

Absorption rate estimates how many lots or units the market will take per month or year, which drives the sell-out schedule. It is distinct from drainage, financing, and coverage metrics.

Question 48Undeveloped, transitional and development land; subdivision and lot wholesaling

A 'paper lot' or 'paper subdivision' generally refers to what?

  1. Lots owned by a government agency
  2. Lots created solely for agricultural use
  3. Lots made of recycled paper products
  4. Lots platted on a recorded map but lacking infrastructure or practical access Correct answer.

Explanation

Paper subdivisions are platted on paper without the roads, utilities, or market demand needed to make the lots usable. The term highlights the gap between recorded lot lines and real buildability.

Question 49Undeveloped, transitional and development land; subdivision and lot wholesaling

A developer is evaluating a 120-acre tract zoned for one dwelling per acre but constrained by 15 acres of wetlands and a requirement to dedicate 10 acres for a park. Approximately how many lots can be created?

  1. 105
  2. 135
  3. 120
  4. 95 Correct answer.

Explanation

Start with 120 acres, subtract 15 acres of unbuildable wetlands and 10 acres of park dedication, leaving 95 acres. At one dwelling per acre, roughly 95 lots can be created, subject to further site constraints.

Question 50Undeveloped, transitional and development land; subdivision and lot wholesaling

A developer expects to sell 90 lots at a rate of 6 lots per quarter. Ignoring any other timing factors, how many years will the sell-out take?

  1. 3.75 years Correct answer.
  2. 1.5 years
  3. 2.5 years
  4. 5.0 years

Explanation

At 6 lots per quarter, 90 lots take 15 quarters to sell. Fifteen quarters divided by 4 quarters per year equals 3.75 years.