California Real Estate License Exam Prep: Unlocking the DRE Salesperson and Broker Exam ANSWER SHEET INSTRUCTIONS: The exam consists of multiple choice questions. Multiple choice questions are answered by selecting A, B, C, or D. You may use pen or pencil. Chapter 1: Property ownership and land controls and regulations A B C D A B C D 1. o o o o 26. o o o o 2. o o o o 27. o o o o 3. o o o o 28. o o o o 4. o o o o 29. o o o o 5. o o o o 30. o o o o 6. o o o o 31. o o o o 7. o o o o 32. o o o o 8. o o o o 33. o o o o 9. o o o o 34. o o o o 10. o o o o 35. o o o o 11. o o o o 36. o o o o 12. o o o o 37. o o o o 13. o o o o 38. o o o o 14. o o o o 39. o o o o 15. o o o o 40. o o o o 16. o o o o 41. o o o o 17. o o o o 42. o o o o 18. o o o o 43. o o o o 19. o o o o 44. o o o o 20. o o o o 45. o o o o 21. o o o o 46. o o o o 22. o o o o 47. o o o o 23. o o o o 48. o o o o 24. o o o o 49. o o o o 25. o o o o 50. o o o o Chapter 1: Property ownership and land use controls and regulations 17 Chapter 1: Property ownership and land use controls and regulations Key Concepts Critical real estate concepts equaling approximately 15% of the state licensing exam. • Classes of property • Public controls • Property characteristics • Environmental hazards and regulations • Encumbrances • Private controls • Types of ownership • Water rights • Descriptions of property • Special categories of land • Government rights in land Key Terms Fundamental real estate vocabulary likely to appear on the state exam with reference to the quiz questions illustrating its application. See the Real estate glossary on page 331 for the full definitions. adverse possession (q. 36) hypothecate (q. 28) solar easement (q. 45) appurtenance (q. 37) ingress and egress (q. 44) Subdivided Lands Law (q. 46) easement (q. 17, 34) life estate (q. 30) Subdivision Map Act (q. 11) eminent domain (q. 21) lis pendens (q. 19, 35) tenement (q. 43) encroachment (q. 47-48) police power (q. 8-10) township (q. 6) encumbrance (q. 31-35) reversion (q. 26) zoning (q. 8, 10) escheat (q. 4, 20, 21) riparian rights (q. 12) estate (q. 38-42) section (q. 5) Note: This section is designed to give you a broad understanding of the basic principles which relate to the subject matter of this chapter. However, it is not exhaustive. For further reading on this concept, see your Real Estate Principles licensing course materials. 18 Unlocking the DRE Salesperson and Broker Exam, Sixth Edition JUST THE FACTS Classes of property For most people, the term property means a physical or tangible thing, i.e., something which is owned, such as land, a car or share of stock. However, property is more broadly defined, focusing on the rights which arise out of the object. Thus, property is sometimes referred to as a bundle of rights in a thing, which for the purposes of this material is specifically real estate. Property is anything which can be owned. In turn, ownership is the right to possess the property owned and use it to exclude others from entry. The right to possess and use property includes the right to: • occupy; • sell or dispose; • encumber; or • lease the property. Next, the classes of property are divided into two primary categories: • real estate, sometimes called real property; and • personal property, sometimes called chattel. Real estate is immovable and illiquid. Personal property is movable and defined, by way of exclusion, as all property which is not classified as real estate. Both real and personal property can be hypothecated, i.e., used as collateral for a loan while the owner retains ownership of the asset. Personal property is transferred by a bill of sale signed by the seller. A search of public records will NOT show title to personal property, but will for real estate. Bundle of rights go with the land and are real property. Appurtenances, incidental rights in adjoining property such as stock in a mutual water company, are real property as well. Crops can be real when, like a fruit tree, they remain after harvesting the fruit. However, crops are generally considered personal property when they are planted annually. Crops are also personal property when they are harvested, mortgaged or sold. Property characteristics The physical components of real estate include: • the land; • anything affixed to the land, such as a fixture; • anything appurtenant to the land; and • anything which cannot be removed from the land by law. Real estate includes buildings, fences, trees, watercourses and easements within a parcel’s horizontal and vertical boundaries. Anything below the surface, such as water and minerals, or above the surface in the air space, such as timber, is part of the real estate. Chapter 1: Property ownership and land use controls and regulations 19 A fixture is a personal property item which has become permanently attached to the real estate. When personal property becomes a fixture, it is part of the real estate and is thereafter conveyed with it. Fixtures test M = method of attachment. A = agreement of the parties. R = relationship of the parties. I = intention of the parties. A = adaptability of the fixture. Trade fixtures, which are used to render services or make products for the trade or business of a tenant, are always personal property. The primary component of real estate is land. Land includes: • soil; • rocks; • other materials of the earth; and • the reasonable airspace above the earth. Improvements are the structures built upon land, including residential and commercial properties consisting of: • foundations, generally built as slab foundations or as footingsAPPRAISAL supportingAPPRAISAL AND VALUATION floorAND VALUATION joists and 397 397 subflooring containing a crawl space below it; • framing, consisting of: ROOF TYPESROOF TYPES ° joists and headers which are horizontal; APPRAISALAPPRAISAL AND ANDVALUATION VALUATION 397 397 ° studs whichAPPRAISAL are vertical; AND VALUATION and 397 APPRAISAL AND VALUATION 397 ROOFROOF TYPES TYPES ° rafters which are angled to the roof beam; and ROOF TYPES • roofing. [See FigureROOF TYPES 1] SINGLE DORMERSSINGLE DORMERS SHED DORMER,SHED DORMER, APPRAISAL AND VALUATION 397 APPRAISAL AND VALUATION 397 or DUSTPANor DUSTPAN Figure 1 Roof Styles ROOF TYPES SINGLESINGLE DORMERS DORMERS SHEDSHED DORMER, DORMER, or DUSTPANor DUSTPAN SINGLE DORMERS SHED DORMER, SINGLE DORMERS SHED DORMER, or DUSTPAN GAMBRELGAMBREL GABLE GABLE or DUSTPAN GAMBRELGAMBREL GABLEGABLE SingleSINGLE Dormers DORMERS ShedSHED Dormer, DORMER, or Dustpan Gambrel Gable or DUSTPAN GAMBREL GABLE GAMBREL GABLE MANSARDMANSARD HIP HIP MANSARDMANSARD HIP HIP GAMBREL GABLE PYRAMIDPYRAMID FLAT FLAT MANSARD HIP MANSARD HIP Mansard Hip Pyramid Flat Building QualityBuilding Quality One of theOne most of importantthe most reasonsimportantPYRAMID PYRAMIDfor reasons inspecting for inspectinga property ais property to determine is toFLAT determineits qualityFLAT itsof qualityconstruction of construction and and condition. Thecondition. appraiser The must appraiser be knowledgeable must be knowledgeable as to structural as to detailsstructural of buildings.details of Allbuildings. exposed All portions exposed of portions a of a MANSARDPYRAMID HIPFLATbuilding shouldbuilding be shouldclosely beinspected closely toinspected ascertain to the ascertain materials the used,materials the presentused, the condition, present condition,and the type and and the type and PYRAMID FLATquality of construction,quality of construction, which may which be classified may be as classified follows: as follows: Building Quality A.Building Low quality.QualityA. Low quality. One ofOne the of most the importantmost important reasons reasons for inspecting for inspecting a property a property is to determineis to determine its quality its quality of construction of construction and and 1. Competitive 1. Competitive low cost house low costwhich house does which not exceed does notthe exceedminimum the buildingminimum codes. building codes. Building Quality condition.condition. The appraiser The appraiser must bemust knowledgeable be knowledgeable as to struas toctural stru cturaldetails details of buildings. of buildings. All exposed All exposed portions portions of a of a Building Quality One of the most important reasons for inspecting a property is to determine itsB. buildingquality Fairbuilding ofquality.shouldB. construction Fairshould be quality.closely be and closely inspected inspected to ascertain to ascertain the materials the materials used, used,the present the present condition, condition, and the and type the andtype and One of the most important reasons for inspecting a property is to determine its qualityquality of construction of construction, and which may be classified as follows: condition. The appraiser must be knowledgeable as to structural details of buildings. quality All1. exposed ofPlain construction, and1. portions inexpensivePlain which ofand a inexpensive mayfinishes be classified on finishes both interior as on follows: both and interior exterior. and exterior. condition. The appraiser must PYRAMIDbe knowledgeable as to structural details of buildings.FLAT All exposed portions of a building should be closely inspected to ascertain the materials used, the present condition,A. and the type and building should be closely inspected to ascertain the materials used, the present A. condition, 2.Low Cheap quality. Low and2. quality quality. the Cheap type finish andquality hardware, finish lightinghardware, fixtures, lighting and fixtures, heating.