Chapter 1- Book Quiz (plus)

Which phrase BEST defines real estate?

• Land and the air above it

• Land and all things permanently attached by nature

• Land and all things permanently affixed to it

• Land and the mineral rights in the land

Answer explanation

The answer is land and all things permanently affixed to it. Real estate includes in its definition all things permanently attached to the land either by nature or by man. (p. 5)

The term nonhomogeneity refers to

• scarcity

• immobility

• uniqueness

• indestructibility

Answer explanation

The answer is uniqueness. Nonhomogeneity is another way of stating one of the physical characteristics of land, the characteristic that recognizes that land is unique. (p. 12)

The bundle of legal rights is included in the definition of

• land

• real estate

• real property

• trade fixtures

Answer explanation

The answer is real property. The definition of real property includes more than the physical nature of either “land” or “real estate.” Real property includes interests rights and the benefits associated with ownership. (p. 5)

The bundle of legal rights include all of the following rights EXCEPT

• possess the property

• enjoy the property within the framework of the law

• sell or otherwise convey the property

• use the property for any purpose, legal or otherwise

Answer explanation

The answer is use the property for any purpose legal or otherwise the bundle of legal rights recognizes the right of an owner to use the property for a legal purpose there is no legal right to use property for an illegal purpose. (p. 5)

Which of the following is a physical characteristic of real estate?

• Location or area preference

• Permanence of investment

• Scarcity

• Indestructibility

Answer explanation

The answer is indestructibility. Indestructibility refers to a physical characteristic of real estate not an economic characteristic. (p. 12)

Which of the following would NOT be a consideration when determining whether an item is real property?

• Cost of the item when purchased

• Method of its attachment to other real property

• Intended use of the item by its owner

• Manner in which the item is actually used with other real property

Answer explanation

The answer is cost of the item when purchased. Tests used to determine whether an article is a fixture include intention, manner of annexation, adaptation to the real estate, and the existence of an agreement. The cost of an article is not a relevant issue. (p. 9)

Which of the following is NOT an economic characteristic of real estate?

• Indestructibility

• Permanence of investment

• Location or area preference

• Scarcity

Answer explanation

The answer is indestructibility. Indestructibility refers to a physical characteristic of real estate not an economic characteristic. (p. 11)

Real property can be converted into personal property through

• severance.

• accession.

• conversion.

• inference.

Answer explanation

The answer is severance. It is possible to change an item of real estate to personal property by severance. A growing tree is real estate until the owner cuts it down, at which point the lumber becomes personal property. (p. 8)

The tenant of a single-family home installs an awning over the building’s front windows to keep the sun away from some delicate hanging plants. Which of the following is TRUE?

• The tenant must remove the awning before the rental period is over.

• Because of its nature, the awning is considered personal property.

• The awning is considered a fixture.

• Because of the nature of the property, the awning is considered a trade fixture.

Answer explanation

The answer is the awning is considered a fixture. Once attached to the real estate, the awning becomes a fixture and is therefore classified as real estate. The fact that it was attached by a tenant rather than the owner is not relevant. (p. 9-10)

What is the purpose of real estate license laws?

• To limit the number of real estate licensees.

• To protect the public from fraud, dishonesty and incompetence.

• To ensure that there are agents to meet the needs of the public.

• To prevent any one company from monopolizing the marketplace.

Answer explanation

The answer is to protect the public from fraud, dishonesty and incompetence. Because real estate licenses are involved with other people's real estate and money, states require a certain amount of education but for granting a real estate license. (p. 13)