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NALA ACP Real Estate study materials
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NALA ACP Real Estate practice questions

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Question 1Real Property Ownership and Estates

A deed conveys Blackacre "to Chen and his heirs." Which estate does Chen hold?

  1. Estate at will
  2. Fee simple absolute Correct answer.
  3. Tenancy for years
  4. Life estate

Explanation

At common law, the words "and his heirs" are words of inheritance that create a fee simple absolute, the largest estate recognized, which is freely alienable, devisable, and descendible. Modern statutes usually presume a fee simple even without those words, but the result here is the same. An estate measured by a named person's life or a leasehold term is smaller than a fee simple.

Question 2Real Property Ownership and Estates

Two unrelated investors take title to a warehouse as tenants in common. Which feature distinguishes their tenancy from a joint tenancy?

  1. The owners must acquire title at the same moment
  2. Each owns an undivided share that passes to that owner's heirs Correct answer.
  3. Neither owner may convey a share without the written consent of the other owner
  4. Each owner holds a right of survivorship

Explanation

Tenants in common hold distinct, undivided fractional shares with no right of survivorship, so each share is inheritable and devisable. A joint tenancy requires the four unities, including time, title, interest, and possession, and it carries survivorship. Cotenants in common may acquire at different times and may convey their shares freely.

Question 3Real Property Ownership and Estates

Which of the following is classified as a freehold estate?

  1. Tenancy at sufferance
  2. Periodic tenancy
  3. Life estate Correct answer.
  4. Tenancy for years

Explanation

Freehold estates are of indefinite duration and historically carried seisin; they include fee estates and life estates. Leaseholds are nonfreehold estates, however long they run. Tenancies for years, periodic tenancies, tenancies at will, and tenancies at sufferance all fall in the leasehold category.

Question 4Real Property Ownership and Estates

O conveys Greenacre "to Alvarez for life, then to Brennan and her heirs." Brennan is alive and ascertained when the deed is delivered, and no condition precedes her gift. What estate does Brennan hold?

  1. A remainder for life
  2. A vested remainder in fee simple absolute Correct answer.
  3. A reversion in fee simple
  4. A contingent remainder in fee simple

Explanation

Because Brennan is born, ascertained, and not subject to a condition precedent, her remainder is vested rather than contingent. The phrase "and her heirs" supplies words of inheritance, so the remainder is in fee simple absolute. A reversion arises only when the grantor keeps the future interest instead of granting it away.

Question 5Real Property Ownership and Estates

A deed states: "to the City of Riverton so long as the parcel is used as a public park." Which estate did the city receive?

  1. Fee simple absolute
  2. Fee simple subject to condition subsequent
  3. Fee simple determinable Correct answer.
  4. Easement in gross

Explanation

The phrase "so long as" is durational language that automatically terminates the estate when the stated use ends, creating a fee simple determinable. The grantor keeps a possibility of reverter, which becomes possessory automatically. A fee simple subject to condition subsequent uses conditional language such as "but if" and requires the grantor to re-enter.

Question 6Real Property Ownership and Estates

Three sisters hold Redacre as joint tenants. One sister conveys her interest to a stranger. What is the effect of that conveyance?

  1. The conveyance is void because a joint tenant cannot convey without the consent of the other joint tenants
  2. The conveyed share is severed, and the stranger holds it as a tenant in common Correct answer.
  3. The stranger becomes a joint tenant alongside the two remaining sisters
  4. The entire joint tenancy is converted into a tenancy in common among all four owners

Explanation

A joint tenant may unilaterally convey an interest, and that conveyance severs the joint tenancy as to the transferred share. The grantee takes as a tenant in common because the unities of time and title are broken, while the remaining joint tenants continue to hold their shares with survivorship between them. Only the conveyed share is severed.

Question 7Real Property Ownership and Estates

Which statement about tenancy by the entirety is correct in states that recognize it?

  1. It contains no right of survivorship
  2. One spouse's individual creditor generally cannot reach the property Correct answer.
  3. It can be created by two unmarried co-owners who take title together at the same time
  4. Either spouse may convey his or her own interest without the joinder of the other spouse

Explanation

Tenancy by the entirety is a marital estate held by husband and wife with a right of survivorship, and neither spouse may unilaterally convey or encumber the property. Because one spouse alone holds no separable interest, that spouse's individual creditor generally cannot reach the property during the marriage. A valid marriage is required to create the estate.

Question 8Real Property Ownership and Estates

A recorded easement allows the owner of Lot 1 to cross Lot 2 in order to reach a public road. The right benefits Lot 1's use and passes automatically when Lot 1 is sold. This right is best described as:

  1. A license
  2. An easement appurtenant Correct answer.
  3. A profit a prendre
  4. An easement in gross

Explanation

An easement appurtenant attaches to a dominant tenement and burdens a servient tenement, so it runs with the land and transfers automatically with the benefited parcel. Because the right here serves Lot 1 rather than a particular individual, it is appurtenant. An easement in gross benefits a person, a license is generally revocable, and a profit allows removal of resources.

Question 9Real Property Ownership and Estates

O deeds a parcel "to Hart and his heirs, but if the parcel is ever used for a commercial purpose, then to Ito and his heirs." Hart later opens a retail store. Who holds the fee simple after that event?

  1. O, because the grantor retains a right of entry
  2. Hart, because the limitation is an unenforceable restraint on alienation
  3. Hart, because Ito must sue to enforce the restriction
  4. Ito, because the executory interest shifts title automatically Correct answer.

Explanation

Because the shifted future interest is granted to a third party rather than retained by the grantor, Hart holds a fee simple subject to an executory limitation. When the stated event occurs, title passes automatically to Ito without any need for entry or litigation. The grantor kept nothing, since the entire future interest was given to Ito.

Question 10Real Property Ownership and Estates

Wade holds a life estate in a tract that contained an operating coal mine when his estate began; the remainder in fee simple belongs to Park. Which statement is correct?

  1. Wade may continue the existing mine but may not open new ones Correct answer.
  2. Wade must cease all mining because any removal of minerals is waste
  3. Wade may open new mines elsewhere on the tract because he owns the minerals for life
  4. Wade may clear-cut all timber and sell it, because a life tenant owns the surface

Explanation

Under the open mines doctrine, a life tenant may continue mineral extraction from a mine already open when the estate began, but may not open new mines because that would permanently diminish the remainder. The life tenant also owes the remainderman a duty not to commit waste. Timber cutting is limited to reasonable uses such as repairs or fuel, so clear-cutting for sale is waste.

Question 11Real Property Ownership and Estates

O conveys a farm 'to Bell for the life of Cyrus.' Bell and Cyrus are both alive. What estate does Bell hold?

  1. A life estate pur autre vie, measured by Cyrus's life. Correct answer.
  2. A life estate measured by Bell's own life.
  3. A term of years estate ending on a fixed date.
  4. A fee simple absolute, because the grant contains no condition.

Explanation

A life estate may be measured by the life of a person other than the tenant, which creates a life estate pur autre vie. Bell's estate lasts only until Cyrus dies, even if Bell survives him.

Question 12Real Property Ownership and Estates

In a state that uses the condominium form of ownership, what does an owner of a unit in a multi-unit building typically own?

  1. A joint tenancy in the entire building with all other unit owners.
  2. A fee interest in the unit plus an undivided share of the common elements. Correct answer.
  3. A life estate in the unit, with the remainder held by the association.
  4. Shares of stock in a corporation that owns the entire building, together with a proprietary lease.

Explanation

Condominium ownership combines a separate fee interest in the unit with co-ownership of common areas. The common elements are held as tenants in common in undivided shares tied to the unit.

Question 13Real Property Ownership and Estates

A commercial tenant's five-year lease expires on December 31. The tenant remains in possession on January 15 without the landlord's consent and without any new agreement. What estate does the tenant hold?

  1. A tenancy at will, because the landlord has not objected.
  2. An estate for years, because the original lease term has not been formally terminated.
  3. A tenancy at sufferance, because the tenant holds over without the landlord's consent. Correct answer.
  4. A periodic tenancy, because rent is customarily paid monthly.

Explanation

A holdover tenant who remains without consent holds a tenancy at sufferance, the lowest estate recognized at common law. The landlord may treat the tenant as a trespasser or consent to a new tenancy.

Question 14Real Property Ownership and Estates

A deed conveys a parcel 'to the Riverton School District, but if the parcel ceases to be used for school purposes, the grantor may re-enter and retake possession.' The grantor reserves no other interest. What estate does the school district receive?

  1. A fee simple determinable, because the parcel is limited to school use.
  2. A life estate, because the use restriction limits the duration of the grant.
  3. A fee simple subject to a condition subsequent, with a right of entry. Correct answer.
  4. A fee simple absolute, because the grantor's remedy is only a possibility of reverter.

Explanation

Language creating a fee simple subject to a condition subsequent gives the grantor a power of termination, often called a right of entry. The estate continues until the grantor elects to re-enter for breach, rather than ending automatically.

Question 15Real Property Ownership and Estates

A homeowner bolts a custom-built bookcase to the living-room walls and connects its lighting to the house's wiring. The bookcase is designed to fit that room and would be damaged if removed. In a dispute over whether the bookcase is real property, which factor is most significant?

  1. Whether the homeowner subjectively intended to leave the bookcase behind when selling.
  2. Whether the bookcase can be removed without leaving holes in the wall.
  3. Whether the bookcase was purchased with a credit card or with cash.
  4. The manner of annexation, adaptation to the property, and objective intention of the installer. Correct answer.

Explanation

Courts use a fixture test that weighs annexation, adaptation to the property, and the objective intention of the party who installed the item. A custom-built, attached bookcase adapted to the room is likely a fixture.

Question 16Real Property Ownership and Estates

O conveys Blackacre 'to Alvarez for life, then to Alvarez's first child to reach age 25.' Alvarez is alive and has one child, age 10. What interest does the child hold?

  1. A contingent remainder, because reaching age 25 is a condition precedent. Correct answer.
  2. A reversion, because O retained the future interest.
  3. An executory interest, because it follows a life estate.
  4. A vested remainder in fee simple, because the child is ascertained and alive.

Explanation

A remainder is contingent when it is held by an unascertained person or subject to a condition precedent. The child is ascertained, but reaching age 25 is a condition precedent, so the remainder is contingent.

Question 17Real Property Ownership and Estates

In a community property state, one spouse earns a salary during the marriage. Neither spouse has a prenuptial agreement. How is the salary characterized?

  1. Community property, but only if the salary is deposited in a joint account.
  2. Community property, with each spouse owning an undivided one-half interest. Correct answer.
  3. Separate property of both spouses equally, because each owns half.
  4. Separate property of the earning spouse, because wages are personal.

Explanation

Wages earned by either spouse during a marriage in a community property state are community property. Each spouse owns an undivided one-half interest in that property.

Question 18Real Property Ownership and Estates

L holds a life estate in a parcel, and R holds the remainder in fee simple. L conveys her life estate to R. What is the effect on ownership?

  1. R owns a fee simple absolute through merger of the two estates. Correct answer.
  2. R owns a fee simple subject to L's right of re-entry.
  3. R holds a life estate pur autre vie, because L's life continues.
  4. The conveyance is void because a life tenant cannot convey to the remainderman.

Explanation

When one person acquires all successive interests in the same estate, those interests merge into the largest estate. R's remainder and L's life estate combine to create a fee simple absolute.

Question 19Real Property Ownership and Estates

O conveys a ranch 'to A for life, then to A's first child to graduate from law school.' A is alive and has no children when the deed is delivered. Under the common-law Rule Against Perpetuities, what is the status of the gift to A's child?

  1. It is voidable, because the grantor may enforce the gift only during A's lifetime.
  2. It is void, because a child born after the conveyance could graduate more than 21 years after A's death. Correct answer.
  3. It is valid, because A is a life in being and any child will graduate within 21 years of A's death.
  4. It is valid, because the child will be ascertained at A's death.

Explanation

An interest must vest, if at all, no later than 21 years after the death of a life in being. A child of A could be born after the deed and graduate from law school more than 21 years after A dies, so the gift violates the Rule Against Perpetuities.

Question 20Real Property Ownership and Estates

Two siblings own a lake cabin as tenants in common. One sibling lives in the cabin, pays all expenses, and maintains the property for 12 years while the other sibling lives abroad and receives no rent. The statutory adverse possession period is 10 years. When does the limitation period begin to run against the absent sibling?

  1. When the absent cotenant first learns of the occupation, regardless of any repudiation.
  2. Only after a clear repudiation or ouster is communicated to the absent cotenant. Correct answer.
  3. Immediately when the occupying cotenant moves in, because possession by one cotenant is adverse to the others.
  4. When the occupying cotenant pays the property taxes for the first time.

Explanation

A cotenant's possession is presumed permissive and not adverse to the other cotenants. The limitation period runs only after an ouster or a clear repudiation communicated to the absent cotenant.

Question 21Real Property Ownership and Estates

In a jurisdiction that still recognizes the fee tail, a deed conveys "to Morgan and the heirs of her body." What estate does Morgan hold?

  1. A fee tail Correct answer.
  2. A life estate pur autre vie
  3. A fee simple absolute
  4. A fee simple subject to condition subsequent

Explanation

At common law, the words "and the heirs of her body" create a fee tail, which limits inheritance to lineal descendants. A fee tail is not a fee simple absolute because it can end when the line of descendants fails. Many states have abolished or modified the estate, but the question assumes a jurisdiction that retains it.

Question 22Real Property Ownership and Estates

A buyer purchases an apartment in a cooperative building. What ownership interest does the buyer typically acquire?

  1. A tenancy in common interest in the whole building
  2. Shares in the cooperative plus a proprietary lease Correct answer.
  3. A fee simple deed to the individual apartment unit
  4. A life estate measured by the corporation's existence

Explanation

A cooperative corporation owns the building, and the buyer receives shares in that corporation plus a proprietary lease for the apartment. The buyer does not receive a deed to the unit, as in a condominium. The lease and shares together give the buyer the right to occupy.

Question 23Real Property Ownership and Estates

A written lease grants a tenant the right to occupy a store for exactly 24 months beginning January 1. No notice is required to end it at the stated expiration. What estate has the tenant received?

  1. A fee simple determinable estate
  2. A periodic tenancy that renews automatically
  3. A tenancy at will terminable on notice
  4. A term of years tenancy Correct answer.

Explanation

A lease for a fixed period with a stated expiration creates a term of years tenancy. It ends automatically at the end of the term and does not require notice to terminate. Periodic tenancies, by contrast, renew automatically until proper notice is given.

Question 24Real Property Ownership and Estates

A conveyance grants Ruiz "the right to enter Dixon's land and remove up to 500 tons of gravel each year." What interest has Ruiz received?

  1. A profit à prendre Correct answer.
  2. A fee simple determinable in the gravel
  3. An easement in gross for passage only
  4. A license revocable at Dixon's will

Explanation

A profit à prendre is the right to enter another person's land and take natural resources such as gravel, timber, or crops. An easement gives only a right of use or passage, while a license is generally revocable and does not create an estate or interest in land.

Question 25Real Property Ownership and Estates

A claimant seeks title by adverse possession. Which element must the claimant ordinarily prove?

  1. The owner received written notice of the claim before the possession began
  2. The claimant held a future interest in the parcel at the time of entry
  3. Possession that is actual, open, hostile, exclusive, and continuous for the statutory period Correct answer.
  4. The claimant paid all property taxes in every state and county where the land lies

Explanation

Adverse possession generally requires possession that is actual, open and notorious, exclusive, hostile, and continuous for the statutory period. The claimant must also satisfy any state-specific requirements, such as payment of taxes in some jurisdictions. A future interest or written notice to the owner is not a universal element.

Question 26Real Property Ownership and Estates

A tenant occupies an apartment under a month-to-month periodic tenancy. How may either party ordinarily terminate it?

  1. By notice equal to the rental period Correct answer.
  2. Only by filing an eviction action after the tenant stops paying rent
  3. By recording a notice of termination with the county recorder
  4. By surrendering a deed of reconveyance to the other party

Explanation

A periodic tenancy renews automatically at the end of each period until either party gives proper notice. At common law, the notice must equal the length of the rental period, so a month-to-month tenancy ordinarily requires one full month's notice. Filing an eviction action or recording a notice is not the ordinary method of termination.

Question 27Real Property Ownership and Estates

A life tenant holds a life estate in a parcel that is subject to a mortgage. Who is responsible for paying the mortgage interest during the life tenancy?

  1. The mortgage lender, because it holds title
  2. The life tenant, because interest is an ordinary carrying charge Correct answer.
  3. The remainder holder, because the debt is principal
  4. Neither party, because the mortgage is suspended during a life estate

Explanation

A life tenant must pay ordinary carrying charges on the property, including mortgage interest and property taxes, because the life tenant is entitled to current possession and income. The remainderman pays the mortgage principal because doing so protects the remainder interest. This allocation prevents the life tenant from consuming the inheritance.

Question 28Real Property Ownership and Estates

In a community property state, one spouse receives a $50,000 inheritance and keeps it in a separate account titled only in that spouse's name. How is the inheritance characterized?

  1. Tenancy by the entirety property, because marriage creates that estate
  2. Separate property, because property acquired by inheritance is separate Correct answer.
  3. Community property, because all property acquired during marriage is community
  4. Joint tenancy property, because spouses always hold equal shares

Explanation

In a community property state, property acquired by gift or inheritance during marriage is generally the separate property of the receiving spouse. Community property generally consists of property acquired through the labor or efforts of either spouse during marriage. Keeping the inheritance in a separately titled account helps preserve its separate character.

Question 29Real Property Ownership and Estates

A jurisdiction retains the Rule in Shelley's Case. A deed conveys "to Whitfield for life, then to Whitfield's heirs." What estate does Whitfield hold under the rule?

  1. A fee simple absolute Correct answer.
  2. A life estate, with a contingent remainder in Whitfield's heirs
  3. A fee tail
  4. A life estate pur autre vie

Explanation

The Rule in Shelley's Case applies when a single instrument gives a life estate to a person and then gives the remainder to that person's heirs. In a jurisdiction that retains the rule, the two interests merge into a fee simple absolute in the life tenant. The rule has been abolished in most states, so it applies only where the question says it is still in force.

Question 30Real Property Ownership and Estates

A jurisdiction retains the Doctrine of Worthier Title. A grantor conveys "to Lam for life, then to the grantor's heirs." What interest does the grantor retain?

  1. A vested remainder in the grantor's heirs
  2. A possibility of reverter
  3. A reversion Correct answer.
  4. A shifting executory interest

Explanation

The Doctrine of Worthier Title provides that a grantor cannot create a remainder in the grantor's own heirs. When a deed says "to Lam for life, then to the grantor's heirs," the remainder to the heirs is disregarded and the grantor keeps a reversion. The doctrine has been abolished or limited in many states but applies where retained.

Question 31Real Property Ownership and Estates

A deed states: "To Morgan and his heirs and assigns forever." Under traditional common-law rules, what estate does Morgan receive?

  1. A life estate measured by Morgan's life.
  2. A fee tail.
  3. A fee simple absolute. Correct answer.
  4. A fee simple determinable.

Explanation

The phrase "and his heirs" is a traditional word of limitation that creates an inheritable fee estate, and "and assigns forever" confirms that the interest is transferable. No durational language or limitation to heirs of the body appears, so the estate is not defeasible or a fee tail.

Question 32Real Property Ownership and Estates

Kai and Lena take title to a duplex "as tenants in common." Kai dies with a valid will leaving all his property to his sister. What happens to Kai's interest in the duplex?

  1. It escheats to the state because a cotenant died.
  2. It passes automatically to Lena by right of survivorship.
  3. It passes to Kai's sister under the will, and Lena keeps her share. Correct answer.
  4. It is divided equally between Lena and Kai's sister.

Explanation

A tenancy in common has no right of survivorship, so each cotenant may devise or convey an undivided share. Kai's share passes under his will to his sister, while Lena retains only her own original share. The sister becomes a tenant in common with Lena.

Question 33Real Property Ownership and Estates

O conveys Blackacre "to Priya and Quinn as joint tenants with right of survivorship." Without Quinn's consent, Priya conveys her interest to Ravi. Priya and Quinn are both alive. What is the ownership structure now?

  1. Ravi becomes a joint tenant with Quinn, so Ravi and Quinn have survivorship rights.
  2. Ravi and Quinn hold as tenants in common, with no survivorship between them. Correct answer.
  3. Priya and Quinn remain joint tenants, and Ravi takes nothing until Quinn dies.
  4. The conveyance is void because all joint tenants must consent to a severance.

Explanation

A joint tenant may unilaterally convey her interest, and that conveyance severs the joint tenancy as to the transferred share. Because only Quinn remained after Priya's conveyance, Quinn and Ravi now hold as tenants in common, and neither has a right of survivorship in the other's share.

Question 34Real Property Ownership and Estates

A deed grants "to the owner of Lot 2 a perpetual right to cross Lot 1 for access to the public road." Lot 2 is later sold. What is the nature of the interest?

  1. A license revocable at will by the owner of Lot 1.
  2. A fee simple estate in the roadway itself.
  3. An easement appurtenant that passes with Lot 2. Correct answer.
  4. An easement in gross held personally by the original owner.

Explanation

An easement appurtenant benefits a dominant parcel and runs with that land, so it passes automatically when the dominant estate is transferred even if the deed of sale does not mention it. The grant ties the right to ownership of Lot 2 and to access, which indicates an appurtenant easement rather than a personal interest.

Question 35Real Property Ownership and Estates

For 12 years, a neighbor has used a dirt path across Owen's land to reach a lake. The use has been open, notorious, continuous, and without Owen's permission. The statutory period is 10 years. What interest has the neighbor most likely acquired?

  1. An easement by prescription. Correct answer.
  2. A tenancy at will.
  3. A license that Owen may revoke at any time.
  4. A fee simple absolute to the path.

Explanation

Open, notorious, continuous, and adverse use for the statutory period creates a prescriptive easement. Unlike adverse possession, a prescriptive easement gives a right of use rather than title to the land, and use by permission would defeat the adversity element.

Question 36Real Property Ownership and Estates

A life tenant owns a wooded parcel for life, with the remainder to Nadia. The life tenant wants to sell all mature timber for cash, beyond what is needed for routine maintenance or clearing for cultivation. Under traditional waste doctrine, may the life tenant do so?

  1. No, because a life tenant may never cut timber for any reason.
  2. No, because the sale would be voluntary waste absent authorization or good husbandry. Correct answer.
  3. Yes, because a life tenant has full ownership during the life estate.
  4. Yes, because timber is a natural resource the life tenant may exploit freely.

Explanation

A life tenant may make reasonable use of the land but cannot commit voluntary waste by stripping timber for sale unless the grant authorizes it or the cutting is consistent with good husbandry. The remainderman's future interest protects the long-term productivity of the parcel.

Question 37Real Property Ownership and Estates

O conveys "to Alma for life, then to Alma's grandchildren who reach 21." Alma is alive, has no children, and has no grandchildren. Under the common-law Rule Against Perpetuities, what is the status of the gift to Alma's grandchildren?

  1. Voidable at the election of Alma's estate.
  2. Valid, because it must vest within Alma's life plus 21 years.
  3. Valid, because grandchildren are always treated as lives in being.
  4. Void, because vesting could occur beyond the perpetuities period. Correct answer.

Explanation

A class gift violates the common-law Rule Against Perpetuities if any possible member could vest too remotely. Alma's future children are not lives in being, and a grandchild born through such a child could reach 21 more than 21 years after Alma's death, so the gift is void from the outset.

Question 38Real Property Ownership and Estates

A subdivision deed contains a promise that each lot will be used only for single-family homes. A successor owner with notice seeks damages from another successor for breach. In addition to intent, touch and concern, and notice, which requirement must be met for the promise to run as a real covenant at law?

  1. Payment of separate consideration by the successor.
  2. Horizontal and vertical privity of estate. Correct answer.
  3. Approval by the local zoning board.
  4. A recorded declaration signed by every current owner.

Explanation

A real covenant that runs at law requires intent, touch and concern, notice, and privity. Horizontal privity connects the original covenanting parties, and vertical privity connects a successor to the original party; equitable servitudes may be enforced without privity but ordinarily support only injunctive relief.

Question 39Real Property Ownership and Estates

A grantor signs and notarizes a deed, then places it in a desk drawer and tells her lawyer, "I will deliver this to my nephew next month." Before she does, she dies. What is the effect of these facts on the conveyance?

  1. The deed is effective because it was signed and notarized.
  2. The deed is ineffective because delivery requires present intent to transfer. Correct answer.
  3. The deed is effective because notarization substitutes for delivery.
  4. The deed is effective if the nephew finds it in the drawer.

Explanation

A deed must be delivered with present intent to pass title; signing and notarizing alone do not convey an interest. Retaining the deed with an intent to deliver later shows that no present transfer occurred, so the conveyance fails.

Question 40Real Property Ownership and Estates

A tenant has a five-year lease of a store. With the landlord's required consent, the tenant transfers the entire remaining term to a new occupant but retains no right to re-enter. What has occurred?

  1. A novation that releases the original tenant from all lease obligations.
  2. A license, revocable by the landlord at any time.
  3. An assignment, so the new occupant is in privity of estate with the landlord. Correct answer.
  4. A sublease, so the original tenant remains in privity of estate with the landlord.

Explanation

Transfer of the entire unexpired lease term is an assignment, and the assignee comes into privity of estate with the landlord. The original tenant may remain liable in privity of contract unless the landlord expressly releases the tenant, but the tenant no longer holds a reversion.

Question 41Real Estate Contracts and Transactions

A buyer and seller orally agree on the price and closing date for a residential lot. Before closing, the seller refuses to perform. Which requirement must the buyer satisfy to enforce the sale under the statute of frauds?

  1. Notarization of the buyer's oral statements by a notary public
  2. A writing signed by the party to be charged Correct answer.
  3. Full payment of the purchase price before the seller signs anything
  4. Recording of the oral agreement in the county land records

Explanation

Real estate sale contracts fall within the statute of frauds, so enforcement requires a writing or memorandum signed by the party against whom enforcement is sought. Notarization and recording affect proof or priority but are not what makes the contract enforceable between the parties.

Question 42Real Estate Contracts and Transactions

In a residential purchase contract, what is the primary function of the buyer's earnest money deposit?

  1. It gives the seller an immediate right to keep the funds if the buyer dies.
  2. It shows good faith and is usually credited to the purchase price at closing. Correct answer.
  3. It pays the real estate broker's commission at signing.
  4. It transfers legal title to the property before the deed is delivered.

Explanation

Earnest money demonstrates the buyer's seriousness and is normally held in escrow and credited toward the purchase price at closing. The contract, not the label alone, controls whether it is refundable or can be retained as liquidated damages.

Question 43Real Estate Contracts and Transactions

A seller signs and hands a deed to the buyer with the intent to presently convey the property. Which additional element is generally required for the conveyance to be effective?

  1. Recording the deed in the county records
  2. Obtaining a title insurance policy
  3. The buyer's acceptance of the deed Correct answer.
  4. A new survey of the property

Explanation

A deed must be delivered by the grantor with present intent to convey and must be accepted by the grantee; delivery and acceptance are the operative conveyance elements. Recording, surveys, and title insurance protect or evidence interests but are not required for the conveyance to be effective between the parties.

Question 44Real Estate Contracts and Transactions

A purchase contract makes the buyer's obligation subject to obtaining a specified mortgage loan. The buyer applies diligently but is denied financing that meets the stated terms. What is the buyer's usual right?

  1. The buyer must assign the contract to another purchaser.
  2. The buyer must close using seller financing at the same rate.
  3. The buyer may terminate and recover the earnest money. Correct answer.
  4. The buyer loses the earnest money as liquidated damages.

Explanation

A financing contingency excuses the buyer's performance if the buyer cannot obtain the specified loan after complying with the contract's application and diligence requirements. If the contingency is properly invoked, the buyer may terminate and recover the earnest money rather than forfeit it.

Question 45Real Estate Contracts and Transactions

A sale contract requires the seller to convey marketable title at closing. Which recorded matter would ordinarily make title unmarketable?

  1. A public utility easement running along the rear lot line
  2. A zoning ordinance limiting the lot to single-family residential use
  3. An unreleased prior mortgage the seller has not satisfied Correct answer.
  4. A recorded restrictive covenant prohibiting commercial use of the lot

Explanation

Marketable title means title free from unreasonable encumbrances or defects that would expose the buyer to litigation or loss of use. An unsatisfied prior mortgage is a lien on the property, while recorded utility easements, zoning limits, and use restrictions are commonly accepted if disclosed and not violated.

Question 46Real Estate Contracts and Transactions

A contract gives the buyer a ten-day inspection period and requires written notice to terminate based on unsatisfactory inspections. On day eight the buyer's inspector reports a major defect, and the buyer wants to cancel. What must the buyer do to preserve the contractual right?

  1. Wait for the seller to cure the defect before giving any notice
  2. Deliver written termination notice before the period expires Correct answer.
  3. Record a notice of defect in the county land records
  4. Notify the seller's agent orally before the period ends

Explanation

When the contract makes written notice the method for exercising an inspection contingency, the buyer must follow that method before the deadline. Oral notice or filing in the land records does not substitute for the contractual notice, and waiting may waive the right.

Question 47Real Estate Contracts and Transactions

For a residential mortgage loan subject to the TILA-RESPA integrated disclosure rules, when must the consumer receive the Closing Disclosure?

  1. At least three business days before consummation Correct answer.
  2. At least seven business days before consummation
  3. Within three business days after consummation
  4. No later than the day of consummation

Explanation

Under the TILA-RESPA integrated disclosure rules, the creditor must ensure the consumer receives the Closing Disclosure at least three business days before consummation. The three-day period gives the borrower time to review final loan terms and costs.

Question 48Real Estate Contracts and Transactions

A purchase agreement for a residential lot says nothing about assignment. Before closing, the buyer assigns the contract to a third party and notifies the seller. The seller refuses to close solely because the contract was silent. What is the likely result?

  1. The assignment is invalid because real estate contracts are nonassignable by law.
  2. The assignment is effective only if the seller signs a new deed to the assignee before closing.
  3. The assignment discharges the original buyer from all contractual duties automatically.
  4. The assignment is generally valid, and the assignee may enforce the contract. Correct answer.

Explanation

When a real estate purchase contract is silent on assignment, the buyer generally may assign the contract unless the contract prohibits it or the seller's performance is personal in nature. The assignee may enforce the contract, but the original buyer usually remains liable for its obligations unless the seller agrees to a novation.

Question 49Real Estate Contracts and Transactions

A commercial sale contract states that time is of the essence and sets a firm closing date of June 1. The buyer tenders performance on June 2 without any prior extension. How is the buyer's tender treated?

  1. It is a material breach that permits the seller to terminate. Correct answer.
  2. It is a minor breach that never permits termination in real estate contracts.
  3. It is cured automatically by the seller's acceptance of the late tender.
  4. It is irrelevant because courts ignore closing dates in commercial contracts.

Explanation

A time-is-of-the-essence clause makes the closing date a material term, so tender after the deadline is a material breach unless the seller waives the delay or grants an extension. Courts do not ignore such clauses in commercial contracts when the parties expressly agreed to them.

Question 50Real Estate Contracts and Transactions

At closing, the buyer accepts a deed that makes no mention of the seller's pre-closing promise to install a new septic system. The promise is not repeated in the deed or a separate closing document. Which doctrine most directly determines whether the promise survives closing?

  1. The rule against perpetuities
  2. The statute of frauds
  3. The doctrine of merger Correct answer.
  4. The doctrine of equitable conversion

Explanation

The merger doctrine provides that contract terms merge into the deed at closing, so promises intended to be included in the deed generally do not survive it. A collateral promise not intended to merge may remain enforceable if the facts show it was separate from the deed terms.