11. What is the difference between easement by necessity and easement by prescription?

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1 In class work with answers for chapter What does it mean for the government to have governmental powers? Government powers supersede individual rights to real estate for the protection of the general welfare. 2. Explain Police Power, Eminent Domain, Taxation and Escheat? Police power includes zoning regulations and building codes Eminent Domain is the right of the government to purchase property from a private person for a fair price Taxation is the ability of the government to levy a tax against a property Escheat is the government taking of a property when no heirs can be found 3. What does the term estate in land mean? It is the degree, quantity, nature or interest in real property 4. What is difference between a Freehold and Leasehold estate? Freehold estate is for an indeterminable length of time; whereas, leasehold is for a specific length of time 5. What is the difference between a life estate and a fee simple estate? Fee simple is the highest interest recognized by law; intended to run forever and pass to heirs. Life estate is also a freehold estate for the life of an individual and it is not inheritable. 6. What is the homestead exemption in Colorado and what type of debt does it protect from? It is a legal life estate and produces the homestead exemption, which is a protection against certain types of creditors. It carves out a specific dollar amount for the homeowners from the home value. In Colorado, the amount is $60,000 and $90,000 for someone who is disabled or 60+ years old. Mortgage debt, mechanics liens and taxes are excluded from the homestead exception. 7. What is the difference between a lien and encumbrance (trick question)? A lien is a type of encumbrance with a financial nature. An encumbrance is claim, charge or liability that attaches to real estate such as deed restrictions, easements, licenses, liens and encroachments. 8. What is a deed? And what is a deed restriction? A deed is the document by which real property is transferred. A deed restriction is a phrase or clause in a deed that restricts the use of the real property and is said to run with the land. 9. What are CCR s Covenants, Conditions and Restrictions: are private agreements that affect land use and are embedded in a deed. Typically there are restrictive covenants imposed by the developer to maintain a desired land use for the community. They may be enforced by a local HOA board. 10. What is an appurtenant easement and which properties are the servient and dominant tenements? An easement is the right to use the land of another for a specific purpose. An appurtenance easement is attached to property of one owner for use of an adjacent property. The property over which the easement runs is the servient and the other is dominant. It takes two properties with different ownership to create an easement.

2 11. What is the difference between easement by necessity and easement by prescription? An easement by necessity is allowed by law as necessary for the full enjoyment of a parcel of real estate. For ex. A right of ingress or egress over a grantor s land. A typical example of an easement by necessity is when a grantor sells off a parcel and landlocks it by failing to grant access. An easement by prescription is using someone s land for a specific period of time ranging from years. The taking of use by one owner from another for use of their land must be visible, open, and notorious (without permission) and must also be continuous and exclusive. It is typically proven by the same standards as adverse possession. 12. What is an easement in gross? It is an individual or company s interest in, or right to use, someone else s land; such as a railroad or utility company holds an easement in gross. 13. How are easement by prescription and adverse possession (pg. 202) similar and different? Easement by prescription is for use; whereas adverse possession provides for ownership. 14. How are tenants in common and joint tenancy different? They are both types of co-ownership; however, joint tenancy includes PITT and has right of survivorship. 15. What does the acronym PITT mean? Simultaneous possession, equal interest, time and title known as the four unities it goes with Joint Tenancy 16. Explain figure 8.2 on page 128? Joints tenants of three become joint tenants of two upon death of one co-owner and then a severalty owner upon the death of a second co-owner. The death of severalty allows his interest to be inheritable thus passing ½ interest to each heir who become tenants in common. 17. What is a trust and what are the three required parties in a trust? A trust is a device by which one person transfers ownership to another party for the benefit of a third party. It takes a trustor, trustee and beneficiary with the trustee having fiduciary responsibilities to the beneficiary. 18. What is the difference between community property and tenants by the entirety? A tenant by the entirety is exclusively for a husband and wife in some states, with right of survivorship. Community property has equal ownership of real or personal property acquired during marriage but does not have right of survivorship. 19. What are three basic methods to describe land? Metes and bounds, Rectangular (or government) survey and Lot and block (recorded plat) 20. What are POBs, POEs, and monuments? Distinct objects used in metes and bounds to determine the point of beginning, point of ending and land monuments during description. 21. How many acres are in the SE ¼ or the SE ¼? 40 acres 22. How many feet in a mile, acres in a section, sq. ft. in acre, and sections in a township? Mile feet, Section- 640 acres, Acre - 43,560 sq. ft., Township -36 sections 23. How are townships laid out and which section is reserved for schools?

3 It is laid out with section 1 being in the northeast corner with the numbering of lot winding across and down, like you are plowing a field. Section 16 is reserved for schools. 24. What are the four ways to create a lien VISE explain? Voluntary (mortgage), Involuntary (mechanic s lien), Statutory (laws-property taxes) and Equitable (court-judgment) 25. What does it mean to change the priority of a lien through subordination? Liens are attached to properties according to the date they were recorded against a property. This creates a priority list of liens on a property. Property taxes and special assessments automatically are in first place in line of priority. Subordination is the changing of priority of liens by written agreement. 26. What is the difference between a mortgage lien and a mechanic s lien? Mortgage is voluntary and mechanic is involuntary. 27. What is a les pendens and why should a real estate agent never place one on a house to secure payment of commissions? A les pendens is a notice of a pending or future lien or litigation on a property. It becomes a warning to future property owners and may produce a cloud on the title. Real estate agents may not place a les pendens on a property to secure payment of commission at closing or after closing, because of the potential financial harm it could cause to the seller. 28. What are the five elements of a contract? Offer and acceptance Consideration Legally competent parties Consent Legal purpose 29. What are the differences between an expressed and implied contract? Expressed contracts are written or spoken. Real Estate contracts according to the STATUTE OF FRAUDS must be in writing to be enforceable. Implied contracts are created through actions. 30. What are the differences between a unilateral a bilateral contract? A unilateral contract requires only one party to act, such as an option sale. A unilateral contract has one promise. A bilateral contract requires both parties to act such as a buy and sell and has two promises. 31. What are the differences between valid, void, voidable and unenforceable and what are the elements that make a contract valid there are 5 of them Valid is a contract in full force and effect, void is a contract that was never created due to defect in creation, voidable is a contract which may be cancelled by one party such as a minor or mentally impaired person, and unenforceable contract meets the test, but is not actionable by both parties such as a real estate sales contract made verbally. The 5 elements a contracts needed to be valid are: 1) must be voluntary 2) must contain an agreement or a promise 3) must be made by legally competent parties 4) must be supported by legal consideration 5) must be for a legal act 32. What are the differences between assignment and novation? Assignment is the substitution of parties to a contract; whereas novation is a substitution of a new contract.

4 33. Who is the grantor and grantee and what is the deed? The grantor is the seller and the grantee is buyer. The deed is the document by which real estate ownership is transferred. The grantor s signature is required and grantee s signature is not required. 34. What are the four types of deeds-explain their differences? General warranty deed-all 5 covenants what we want to ask for for our buyers and the best Special warranty deed-2 warrants used by investors who have never lived there and banks and has the clause Grantor remises, releases, alienates, and conveys Quit claim deed-no expressed or implied warrants or covenants generally used to cure a defect in title or remove or add someone to a deed (ex. Marriage or divorce) Bargain and sale deed-no express warrants; however implication of title and possession 35. How are the deed of trust, reconveyance deed, and trustee s deed different--explain? The deed of trust is used to convey real estate from the trustor to the trustee for the benefit or the beneficiary. The reconveyance deed is used by the trustee to return title to the trustor upon completion of mortgage payments. A trustee s deed may be used in case of buyer default. Trustee sells the property to clear a delinquent mortgage with a trustee s deed. 36. What is the difference between testate and intestate? If a person dies testate they have prepared a will and intestate is if they have not. 37. What are the differences between devise, bequest and legacy? Devise is the transfer or gift of real property. Bequest is the transfer or gift of personal property and legacy is the transfer or gift of cash through a will. 38. What is the law of descent? It is the law that explains which heirs received property through a probated will. 39. What is chain of title? The record of property ownership 40. What is the difference between constructive notice and actual notice? Constructive notice is either the recording of a document or assumed when due diligence would reveal its existence. Actual notice is the actual or direct knowledge a person has about a property, through documents, public records or inspection. 41. What is a cloud on title and how can it be fixed? A cloud on title is a defect or missing link in a title chain. It can be remedied by a quit claim deed and insured through a title policy. 42. What is marketable title and how is it insured? Marketable title or merchantable title is a title that can be transferred without impacting the value of the property. Most properties utilize a title policy to protect the buyer from an unknown title defect. 43. What does a title company do and who hires the title company? The title company is hired by the listing broker and works as his Schrivner. They are paid a small fee for this act. $5 Schrivner fee in Colorado. The responsibility for actuate title work resides with the listing broker. The title company sells two title polices at closing one to protect the buyer paid by the seller and one to protect the lender paid by the buyer. The buyer s agent also has a responsibility to the buyer to make sure all information prepared by the title company

5 is correct. In Colorado the Buyer or the Seller may select the Title company but if the buyer chooses the title company, then they will also be paying for the Seller s policy.