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ND Real Estate practice questions

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Question 1Real Property Ownership, Interests, and Land Use

Which estate gives an owner the broadest bundle of rights, potentially lasting forever and passing to the owner's heirs?

  1. An easement in gross
  2. A tenancy for years
  3. A life estate measured by the owner's life
  4. Fee simple absolute Correct answer.

Explanation

A fee simple absolute is the largest estate known to the law; it endures indefinitely, is freely alienable, and descends to heirs when the owner dies intestate. Lesser estates are measured by a life or a fixed term, and an easement is only a nonpossessory interest.

Question 2Real Property Ownership, Interests, and Land Use

An easement that benefits a particular parcel of land and passes automatically when that parcel is sold is an easement:

  1. appurtenant Correct answer.
  2. by necessity
  3. by prescription
  4. in gross

Explanation

An easement appurtenant benefits a dominant parcel and burdens a servient parcel, and it transfers with the dominant estate automatically when that land is conveyed. An easement in gross benefits a person rather than a parcel.

Question 3Real Property Ownership, Interests, and Land Use

A grantor conveys property "to Alice for the life of Bob." Alice holds:

  1. a term estate for years
  2. a fee simple determinable
  3. a life estate pur autre vie Correct answer.
  4. a life estate for Alice's own life

Explanation

A life estate measured by someone other than the holder is a life estate pur autre vie, meaning "for the life of another." It ends when Bob dies, not when Alice dies, and Alice may freely transfer her measured interest during its existence.

Question 4Real Property Ownership, Interests, and Land Use

In determining whether an item installed on real property has become a fixture, courts give the greatest weight to:

  1. the item's market value
  2. the manner of attachment
  3. the date of installation
  4. the installer's intention Correct answer.

Explanation

Courts weigh attachment, adaptation to the property's use, and intention, but the intention of the party who installed the item is generally the controlling factor. Courts infer intention from the surrounding facts and the relationship of the parties.

Question 5Real Property Ownership, Interests, and Land Use

Three investors take title as tenants in common, each holding a one-third share. When one of them dies, that investor's share:

  1. reverts to the original grantor
  2. passes to the deceased owner's heirs or devisees Correct answer.
  3. is forfeited to the state
  4. is divided equally among the surviving co-tenants

Explanation

A tenancy in common carries no right of survivorship, so each co-tenant's share is freely devisable and descends to heirs upon death. Co-tenants hold undivided interests with no right of survivorship unless the deed expressly creates a joint tenancy.

Question 6Real Property Ownership, Interests, and Land Use

In North Dakota, a borrower who gives a mortgage on real estate generally:

  1. becomes a tenant of the lender
  2. conveys legal title to the lender until the debt is repaid
  3. retains title while the lender holds a lien Correct answer.
  4. gives the lender a deed in lieu of foreclosure

Explanation

North Dakota follows lien theory, so a mortgage creates a lien securing the debt while the borrower keeps legal and equitable title. Foreclosure is required to divest the borrower of title if the debt is not paid.

Question 7Real Property Ownership, Interests, and Land Use

Zoning ordinances, building codes, and public health regulations are exercises of which governmental power?

  1. Escheat
  2. Taxation
  3. Police power Correct answer.
  4. Eminent domain

Explanation

Police power is the state's authority to regulate private property to protect the public health, safety, and general welfare, and it is the basis for zoning and building codes. It does not transfer title and requires no compensation when the regulation is reasonable.

Question 8Real Property Ownership, Interests, and Land Use

An owner whose land borders a flowing river and who may use the water subject to the reasonable use of other bordering owners holds:

  1. prescriptive rights
  2. riparian rights Correct answer.
  3. appropriative rights
  4. littoral rights

Explanation

Riparian rights belong to owners of land bordering a river or stream and permit reasonable use of the water, subject to the correlative rights of other riparians. Littoral rights, by contrast, attach to land bordering a lake, sea, or ocean.

Question 9Real Property Ownership, Interests, and Land Use

In North Dakota, a person who actually, openly, exclusively, and continuously occupies another's land under a claim of right for the statutory period acquires title after:

  1. 10 years
  2. 7 years
  3. 20 years Correct answer.
  4. 30 years

Explanation

North Dakota's statute of limitations for recovery of real property is 20 years, and adverse possession requires possession that is actual, open, notorious, exclusive, hostile, and continuous for that full period. Payment of taxes is not the controlling test in North Dakota as it is in some states.

Question 10Real Property Ownership, Interests, and Land Use

For more than 20 years, a neighbor has regularly crossed a corner of Rosa's farm to reach a public road, doing so openly and without Rosa's permission. The neighbor has most likely acquired:

  1. title by adverse possession
  2. an easement in gross by grant
  3. a prescriptive easement Correct answer.
  4. a license revocable at will

Explanation

Open, adverse, and continuous use of another's land for the 20-year statutory period creates a prescriptive easement limited to the use made of the land. Because the use is a passage rather than exclusive possession of the tract, the result is an easement, not a fee title.

Question 11Real Property Ownership, Interests, and Land Use

A parcel becomes landlocked after a single owner sells off the surrounding acreage piece by piece. The owner of the landlocked parcel may generally claim:

  1. a prescriptive easement
  2. a profit à prendre
  3. an easement by necessity Correct answer.
  4. a license

Explanation

When a tract is cut off from any public way through a common grantor's severance of the surrounding land, the law implies an easement by necessity over the remaining land. Strict necessity must exist at the time of severance, and the easement ends when the necessity ends.

Question 12Real Property Ownership, Interests, and Land Use

Two friends hold title as joint tenants. One of them later deeds her interest to a third party. That third party then holds:

  1. no interest, because a joint tenancy cannot be severed
  2. a tenancy in common interest Correct answer.
  3. a joint tenancy interest with right of survivorship
  4. a life estate pur autre vie

Explanation

A unilateral conveyance by one joint tenant severs the joint tenancy as to that share, so the grantee takes a tenant-in-common interest with the remaining owner. The remaining owner keeps a life estate in the whole under survivorship principles, but the transferee holds no survivorship rights.

Question 13Real Property Ownership, Interests, and Land Use

Regarding how married couples may hold title to North Dakota real property, the law provides that spouses may take title:

  1. only in the husband's name
  2. only as community property
  3. only as tenants by the entirety
  4. either as joint tenants or tenants in common Correct answer.

Explanation

North Dakota is not a community property state, and it does not require spouses to use a single form of co-ownership. A married couple may take title as joint tenants, as tenants in common, or in one spouse's name alone, subject to the surviving spouse's statutory protections.

Question 14Real Property Ownership, Interests, and Land Use

A landowner conveys away all oil, gas, and mineral rights while keeping the surface. The grantee of the minerals holds:

  1. a severed mineral estate Correct answer.
  2. a mere license to explore
  3. an easement in gross only
  4. a life estate in the minerals

Explanation

Severing the minerals from the surface creates a separate, inheritable mineral estate that carries an implied right of reasonable access to develop the minerals. The surface owner retains the surface but must accommodate the mineral owner's reasonable development.

Question 15Real Property Ownership, Interests, and Land Use

In a cooperative apartment building, residents typically own:

  1. a life estate in a unit
  2. a long-term ground lease on a unit
  3. corporate shares and a proprietary lease Correct answer.
  4. a fee simple deed to a specific unit

Explanation

A cooperative is owned by a corporation; residents buy shares in the corporation and receive a proprietary lease giving them the right to occupy a particular unit. This differs from a condominium, where each unit is separately deeded in fee simple.

Question 16Real Property Ownership, Interests, and Land Use

A homeowner wants to build a garage that would violate the current side-yard setback requirement. The proper request to the zoning board is for:

  1. a special assessment
  2. a nonconforming use
  3. rezoning of the district
  4. a variance Correct answer.

Explanation

A variance is an administrative authorization to depart from the literal terms of a zoning ordinance because of hardship peculiar to the property. A nonconforming use protects a use that lawfully existed before the ordinance was adopted and does not authorize new construction.

Question 17Real Property Ownership, Interests, and Land Use

A city takes private land for a new public road and pays the owner its fair market value. This is:

  1. inverse condemnation
  2. a special assessment
  3. condemnation Correct answer.
  4. escheat

Explanation

Condemnation is the formal exercise of eminent domain, by which government takes private property for a public use upon payment of just compensation. Inverse condemnation is the owner-initiated claim that arises when government takes property without filing a condemnation action.

Question 18Real Property Ownership, Interests, and Land Use

A subdivision's recorded covenants restrict all lots to single-family homes. A later buyer who has actual notice of the restrictions is:

  1. bound by the covenant because it runs with the land Correct answer.
  2. free to build a duplex because the covenant is personal to the developer
  3. free to build a duplex if city zoning permits it
  4. bound only if the covenant is repeated in the buyer's deed

Explanation

A restrictive covenant that touches and concerns the land, was intended to bind successors, and appears in the chain of title runs with the land and binds later purchasers with notice. Recorded notice satisfies the notice requirement even when the covenant is not restated in the buyer's deed.

Question 19Real Property Ownership, Interests, and Land Use

A fence and a storage shed built by a neighbor extend two feet onto Kim's lot. Kim's best remedy to have them removed is:

  1. an action to compel removal of the encroachment Correct answer.
  2. a request for a zoning variance
  3. an action to quiet title against the neighbor's lender
  4. a claim of easement by necessity

Explanation

An encroachment is a physical intrusion of improvements onto another's land, and the owner may sue to compel removal or to recover damages. Courts sometimes deny removal and award damages instead when the hardship is severe and the encroachment was unintentional.

Question 20Real Property Ownership, Interests, and Land Use

A restaurateur leases space and bolts a walk-in oven to the floor for use in the business. When the lease ends, the oven is generally:

  1. a fixture that stays with the building
  2. a gift to the landlord by operation of law
  3. the landlord's property only if the landlord paid for it
  4. a trade fixture the tenant may remove Correct answer.

Explanation

Items installed by a tenant to carry on a trade or business are trade fixtures, which remain the tenant's personal property and may be removed before the lease ends. The tenant must repair any damage caused by removal and must remove the items within a reasonable time.

Question 21Real Property Ownership, Interests, and Land Use

An owner grants a neighbor an easement over a 20-acre tract. Years later the owner buys the neighbor's parcel, uniting both properties in one owner. The easement is terminated by:

  1. merger Correct answer.
  2. prescription
  3. abandonment
  4. estoppel

Explanation

Merger occurs when one person acquires both the dominant and servient estates, because an owner cannot hold an easement over his own land. If the parcels are later separated, the easement does not automatically revive.

Question 22Real Property Ownership, Interests, and Land Use

"To Priya for life, then to Quinn." Priya clear-cuts mature timber from the parcel and sells the logs, far beyond any reasonable use for maintenance. Quinn may sue Priya for:

  1. waste Correct answer.
  2. trespass
  3. adverse possession
  4. nuisance

Explanation

A life tenant may make reasonable use of the land but may not permanently deplete it to the injury of the remainderman; such conduct is waste. The remainderman may seek damages or an injunction to stop the destructive conduct.

Question 23Real Property Ownership, Interests, and Land Use

The North Dakota Constitution restricts ownership of farmland by:

  1. nonresident individuals only
  2. corporations Correct answer.
  3. families with more than two children
  4. anyone who is not a licensed real estate broker

Explanation

Article XI, Section 29 of the North Dakota Constitution generally prohibits corporations and other business entities from owning or leasing farmland, subject to limited exceptions such as family farm corporations. The restriction is a land-use rule unique to agricultural states.

Question 24Real Property Ownership, Interests, and Land Use

An owner conveys to an airport authority the right to fly aircraft over her land below a stated altitude. She has conveyed:

  1. a riparian interest
  2. a fee simple determinable
  3. an avigation easement Correct answer.
  4. a license revocable at will

Explanation

An avigation easement is a limited right to fly over land and to cause the noise and vibration that accompany flight, and it is often purchased in connection with airport expansion. Because it is an easement, it is an interest in land that binds successors rather than a revocable privilege.

Question 25Real Property Ownership, Interests, and Land Use

A county adopts an ordinance barring any building on a large tract, leaving the owner with no economically viable use of the land. A court is most likely to find:

  1. a valid exercise of police power with no remedy
  2. a public nuisance requiring abatement
  3. a dedication to public use
  4. a regulatory taking requiring compensation Correct answer.

Explanation

A regulation that denies an owner all economically viable use of the property goes beyond permissible police power and amounts to a regulatory taking requiring just compensation. Courts weigh the economic impact, interference with investment-backed expectations, and the character of the government action.

Question 26Real Property Ownership, Interests, and Land Use

A deed conveys a tract 'to the City of Mandan so long as it is used for park purposes, and then back to the grantor.' What estate does the city hold?

  1. Fee simple determinable, ending automatically on nonuse Correct answer.
  2. Fee simple subject to condition subsequent
  3. Fee simple absolute, since the city holds full title
  4. A life estate measured by the city's use of the land

Explanation

Words of duration such as 'so long as' or 'while' create a fee simple determinable, and the grantor keeps a possibility of reverter. The estate ends automatically by operation of law when the stated use stops, with no lawsuit or re-entry required. A condition subsequent, by contrast, requires the grantor to exercise a right of entry.

Question 27Real Property Ownership, Interests, and Land Use

A landowner tells his neighbor she may keep her boat tied at his dock 'whenever you like.' Nothing is written, no rent is paid, and no end date is set. Two years later the owner tells her to remove the boat. What is the neighbor's interest?

  1. An easement by prescription, because the use lasted two years
  2. A license, revocable at the owner's will Correct answer.
  3. A profit a prendre, because the dock is attached to the land
  4. An easement appurtenant that passes with her land

Explanation

Permission to use another's land that is informal, unpaid, and not tied to a stated term is a license, which is revocable at any time. A license is a personal privilege, not an interest in land, so it does not survive revocation or transfer with the land. Easements, by contrast, require a writing or a qualifying prescriptive period.

Question 28Real Property Ownership, Interests, and Land Use

A grantor deeds a pipeline company a right-of-way 'so long as the same is used for the transmission of gas.' The company later abandons the line and removes the pipe. What is the status of the right-of-way?

  1. It matures into a fee simple title in the company after twenty years of continuous use.
  2. It ends automatically when the stated use ceases, with no re-entry required. Correct answer.
  3. It ends only when the grantor records a written notice of termination.
  4. It continues indefinitely unless the grantor files suit to quiet title, because recorded easements are perpetual.

Explanation

An easement granted with durational words such as 'so long as' is limited by a special limitation and terminates automatically when the stated use stops. Cessation of the pipeline use ends the easement by operation of law, without any notice, recording, or lawsuit by the servient owner.

Question 29Agency Relationships and Contract Law

A seller signs a written listing agreement authorizing a broker to market the seller's property. The agency relationship in this situation is created by:

  1. Operation of law
  2. Ratification
  3. Express agency Correct answer.
  4. Estoppel

Explanation

Agency may be created by an express agreement, written or oral, in which the principal authorizes the agent to act on the principal's behalf. A signed listing agreement is the classic example of express creation of agency between a seller and a broker.

Question 30Agency Relationships and Contract Law

A broker representing the seller learns that the seller would accept a price well below the listing price. If the broker shares that information with the buyer, the broker has breached the fiduciary duty of:

  1. Loyalty Correct answer.
  2. Accounting
  3. Disclosure
  4. Care

Explanation

Loyalty obligates the agent to put the principal's interests first and to avoid revealing the principal's confidential negotiating position to the opposing party. Disclosing the seller's bottom line would undercut the seller's bargaining position and benefit the buyer.

Question 31Agency Relationships and Contract Law

Under the statute of frauds, which of the following agreements must be in writing to be enforceable?

  1. A listing of business inventory
  2. An oral agreement to pay a finder's fee
  3. A one-month equipment lease
  4. A contract to sell real estate Correct answer.

Explanation

The statute of frauds requires that contracts for the sale of an interest in real property be evidenced by a writing signed by the party to be charged. An oral agreement to convey land is therefore generally unenforceable.

Question 32Agency Relationships and Contract Law

For a real estate purchase agreement to be enforceable, consideration is best described as:

  1. The earnest money deposit held in trust
  2. The buyer's written loan commitment
  3. A promise to pay a finder's fee
  4. Bargained-for value exchanged Correct answer.

Explanation

Consideration is a benefit received or a detriment suffered that the parties bargain for and exchange, such as a promise to pay in return for a promise to convey. Earnest money is merely evidence of consideration and is not itself required.

Question 33Agency Relationships and Contract Law

Which event automatically terminates an agency relationship by operation of law?

  1. Death of the principal Correct answer.
  2. A sharp change in market values
  3. The agent's one-week vacation
  4. The principal's request for a comparative market analysis

Explanation

Agency terminates by operation of law upon the death or incapacity of either the principal or the agent, because the agent can no longer act for a principal who no longer exists in law. Temporary absences and market shifts do not end the relationship.

Question 34Agency Relationships and Contract Law

The fiduciary duty of accounting requires a licensee to:

  1. Remit funds belonging to the principal Correct answer.
  2. Keep the principal informed of every offer received
  3. Recommend the highest available price
  4. Share confidential information with the other party

Explanation

Accounting requires the agent to safeguard money and property entrusted by the principal, keep accurate records, and promptly deliver the principal's funds. It is a bookkeeping and custodial duty rather than a duty to advise on price.

Question 35Agency Relationships and Contract Law

The party who employs a broker and to whom the broker owes full fiduciary duties is known as the:

  1. Third party
  2. Subagent
  3. Customer
  4. Principal Correct answer.

Explanation

The principal is the party who grants authority to an agent, and that relationship carries fiduciary obligations such as loyalty, confidentiality, and accounting. A customer receives services from the agent but is not owed those fiduciary duties.

Question 36Agency Relationships and Contract Law

Which of the following is required for a valid real estate sales contract?

  1. Review by an attorney for each side
  2. Mutual assent to the terms Correct answer.
  3. Notarization by both parties
  4. Recording with the county recorder

Explanation

A valid contract requires offer and acceptance resulting in mutual assent, plus consideration, capacity, and a lawful purpose. Recording, notarization, and attorney review are not elements of contract validity.

Question 37Agency Relationships and Contract Law

A buyer submits a full-price offer. The seller signs it but changes the closing date and returns it to the buyer. This response is:

  1. An acceptance forming a binding contract
  2. An option to purchase the property
  3. A counteroffer that rejects the offer Correct answer.
  4. A voidable acceptance of the offer

Explanation

A purported acceptance that alters a material term operates as a counteroffer and terminates the original offer. No binding contract exists until the buyer accepts the seller's new terms.

Question 38Agency Relationships and Contract Law

In North Dakota, a licensee who wishes to act as a limited agent representing both the buyer and the seller in the same transaction must first:

  1. Obtain court approval before the closing
  2. Appoint a separate licensee for each party
  3. Notify only the seller at the closing
  4. Get written consent from both parties Correct answer.

Explanation

North Dakota permits a licensee to serve as a limited agent for both sides only after written disclosure of the conflict and the informed written consent of both the buyer and the seller. Without that consent the licensee may represent only one of the parties.

Question 39Agency Relationships and Contract Law

A broker's website lists a salesperson as a team member, and a buyer reasonably relies on that listing when submitting an offer. Even without a written agreement between the broker and the salesperson, the salesperson may be treated as the broker's agent under:

  1. Agency created by ratification
  2. Agency by estoppel Correct answer.
  3. Agency by statute
  4. Agency created by necessity

Explanation

Agency by estoppel, also called apparent or ostensible agency, arises when the principal's conduct leads a third party to reasonably believe that a person is the principal's agent and the third party relies on that belief. The broker's own website created that appearance.

Question 40Agency Relationships and Contract Law

After a listing expires and the seller hires a different broker, the former listing broker should:

  1. Publish the seller's motivation to the MLS
  2. Keep the seller's confidences secret Correct answer.
  3. Disclose prior offers to any interested buyer
  4. Share the seller's contact list with other brokers

Explanation

The duty of confidentiality survives the end of the agency relationship, so the former agent may not reveal or exploit information gained during the representation. Only information that becomes public or that the principal releases may be disclosed.

Question 41Agency Relationships and Contract Law

A purchase agreement includes a financing contingency. The buyer applies promptly and in good faith, but the lender denies the loan. Under the contingency, the buyer generally may:

  1. Forfeit the earnest money to the seller
  2. Assign the contract to another buyer
  3. Cancel and recover the earnest money Correct answer.
  4. Close only by paying all cash

Explanation

A financing contingency makes the buyer's duty to close conditional on obtaining the specified loan. If the condition fails after a good-faith application, the buyer may terminate without breach and recover the deposit.

Question 42Agency Relationships and Contract Law

A seller grants a buyer the right to purchase the property at a fixed price within 60 days in exchange for a $5,000 payment. This arrangement is:

  1. A lease with an option to buy
  2. An option contract Correct answer.
  3. A right of first refusal
  4. An installment land contract

Explanation

An option is a unilateral contract in which the seller must hold an offer open for the stated period and the buyer pays for that privilege. The buyer is not obligated to purchase, but the seller is bound if the buyer exercises the option.

Question 43Agency Relationships and Contract Law

A 17-year-old signs a purchase agreement to buy a house. Because of the buyer's age, the contract is:

  1. Enforceable after 30 days
  2. Void from the outset
  3. Fully enforceable by both parties
  4. Voidable by the minor Correct answer.

Explanation

A contract entered into by a person who lacks contractual capacity because of minority is voidable at the minor's election. The minor may disaffirm the agreement, while the adult party generally remains bound if the minor affirms upon reaching majority.

Question 44Agency Relationships and Contract Law

A fully integrated written purchase agreement is later disputed, and one party wants to introduce an earlier oral statement that contradicts the writing. A court will most likely:

  1. Admit it to prove the parties' intent
  2. Reform the contract to match the statement
  3. Exclude it under the parol evidence rule Correct answer.
  4. Enforce it as a separate oral agreement

Explanation

When the parties intend a writing to be the final and complete expression of their agreement, prior or contemporaneous oral statements that contradict it are inadmissible. The parol evidence rule protects the integrity of the integrated writing.

Question 45Agency Relationships and Contract Law

A tenant transfers the entire remaining lease term to another party, who assumes all obligations, and the landlord agrees in writing to release the original tenant. This transaction is:

  1. A sublease
  2. A novation Correct answer.
  3. An assignment without release
  4. A periodic tenancy

Explanation

A novation substitutes a new party for the original one and extinguishes the original obligation with the consent of all parties. Because the landlord released the original tenant, the transaction is more than a mere assignment.

Question 46Agency Relationships and Contract Law

Because each parcel of real estate is treated as unique, the remedy a court may award to a buyer when a seller refuses to convey is:

  1. Specific performance Correct answer.
  2. Reformation of the deed
  3. Rescission and restitution
  4. An award of treble damages

Explanation

Land is considered unique, so money damages are often inadequate to put the buyer in the position promised. A court may therefore order the seller to convey the property, which is the equitable remedy of specific performance.

Question 47Agency Relationships and Contract Law

A licensee is given authority to advertise a property for sale. Authority to place that advertising is best classified as:

  1. Apparent authority to third parties
  2. No authority at all
  3. Implied authority Correct answer.
  4. Express authority only

Explanation

Implied authority is the power to do what is reasonably necessary to carry out the express grant. A broker given a listing implicitly may advertise, place signs, and take similar routine steps to market the property.

Question 48Agency Relationships and Contract Law

A contract states that if the buyer defaults, the seller keeps the earnest money as agreed damages. A court will enforce that clause if the amount is a:

  1. Set at three times the deposit
  2. Payable only by the broker
  3. Calculated after the default occurs
  4. Reasonable forecast of actual loss Correct answer.

Explanation

An earnest money clause operates as liquidated damages only if the amount is a reasonable estimate of probable loss at the time of contracting and actual damages would be hard to determine. Otherwise the clause is treated as an unenforceable penalty.

Question 49Agency Relationships and Contract Law

An agent signs a purchase agreement without authority. The principal later learns of the contract and accepts the buyer's earnest money. The principal's conduct most likely results in:

  1. Personal liability of the buyer for the agent's act
  2. Ratification of the unauthorized act Correct answer.
  3. Termination of the agency by operation of law
  4. A void contract from the beginning

Explanation

A principal who, with knowledge of the facts, accepts the benefits of an unauthorized act ratifies that act. The contract then binds the principal as though the agent had been authorized from the start.

Question 50Agency Relationships and Contract Law

A licensee wants to buy her own client's listed property. To satisfy her fiduciary duties, the licensee must:

  1. Buy it through a relative to avoid the conflict
  2. Wait until the listing expires, then buy it
  3. Have another licensee submit the offer without disclosure
  4. Disclose all facts and obtain consent Correct answer.

Explanation

An agent who deals with the principal's property for the agent's own account engages in self-dealing, which breaches loyalty unless the principal consents after full disclosure of all material facts. The disclosure and consent must be clear and documented.