SOLUTION MANUAL for Real Estate
Finance And Investments 17th
International Edition| Jeffrey Fisher &
William B. Brueggeman
ALL CHAPTERS COVERED| VERIFIED STUDY
GUIDE| A+ PASS GUARANTEED
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, Solutions to Questions—Chapter 1: An Introduction to Real estate Investment: Legal
Concepts
Question 1-1
What is the difference between real property and personal property?
Real property refers to the ownership rights associated with realty. Realty refers to land and all things
permanently attached. Personal property refers to ownership rights associated with personalty.
Personalty are all things, tangible, intangible that are movable. This includes all things that are not
realty.
Question 1-2
What is meant by an estate?
Estate is used to denote a possessory or potentially possessory interest in real estate. However, not all
interests in real property are estates. Ownership can be quite different from possession and a variety
of legal factors affect the ownership rights associated with real estate. The economic benefits
expected by lenders, investors, and other parties in a real estate transaction are affected by these legal
factors.
Question 1-3
How can a leased fee estate have a value that could be transferred to another party?
The original fee owner can give up some property rights to a lessee. The value of the leased fee estate
will depend on the amount of lease payments expected during the term of the lease plus the value of
the property when the lease terminates, and the original owner receives the reversionary interest.
Question 1-4
What are title records? What is an abstract of title?
Title records (sometimes referred to as deeds and conveyances records and/or real property records)
are created and maintained usually at the county level. These records identify all properties in a
county, including location, present ownership and any liens or encumbrances affecting each property.
These records are critical to investors who want to identify the owner of specific tracts or land,
existing buildings, etc. These records are also important because they contain evidence of
M
encumbrances such as mortgage liens, tax liens (to be covered in later chapters), etc. Example: a
prospective investor sees a vacant tract of land that he is interested in purchasing. Because there is no
as
signage or any improvements on the land, how can the land owner be identified and contacted? By
going to the county records office (deeds and conveyancers department) the investor can use the
te
address to locate a property (usually in plat books), then the current owner. These records are used to
link a precise property to its owner. At some point, if this investor continues to be interested in
r
purchasing the land, he will likely retain an attorney or abstractor to do a title search and abstract of
Cl
as
2
s
, title. The latter is done to not only identify the current owner but to trace all previous owners with
commentary on the likelihood of other parties who may ownership rights and /or interests in the tract
of land.
Question 1-5
What is a deed? How is it different from the title?
The deed is a document usually created by the owner of a property containing the property legal
I.D. and location in addition to any improvements that exist on the property. It also describes the
extent to which the seller warrants that he is the owner of the property and has the right to convey
ownership. A deed is used to convey the title from one person (the grantor) to another (the regrantee)
by means of a written instrument. The term ―title is an abstract term frequently used to link an
individual or entity who owns property to the property itself. When a person has title, he is said to
have all the elements, including the documents, records, and acts, that prove ownership. Title
establishes the quantity of rights in real estate being conveyed from seller to It differs from title
because title provides evidence of ownership based on the collective records that exist pertaining to a
property.
Question 1-6
What is meant by a title record? Why are these records so important?
The title record refers to records on file, usually at the county level, that help to specify tracts of real
estate and determine if a seller has the right to convey ownership of such real property.
These records are the most important sources of events affecting real estate ownership over time and
are usually reviewed when trying to identify the ―quality of title that investors will receive if they
purchase. After a review of these records (usually by an attorney), if in his opinion, they are
complete, he will indicate that the seller has ownership and title to the property. Most of the
instruments that affect title to real estate are recorded, in accordance with the recording acts of the
various states, at what is typically called the county recorder’s office.
Question 1-7
What is a future estate? Give an example?
M
We think of most real estate transactions as acquiring ownership at the present time. However,
ownership can also occur at a later time, say after the current owner dies. The person who becomes
the owner at that time is said to be a ―remainder estate. Future estates include a reversion and
as
remainder. A reversion results in the state reverting back to the original possessor whereas the
remainder results in a third-party obtaining possession at some point in the future.
te
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, Question 1-8
Name the three general methods of title assurance and briefly describe each. Which would you
recommend to a friend purchasing real estate? Why?
General Warranty Deed - the grantor warrants that the title he/she conveys to the property is free and
clear of all encumbrances, other than those that are specifically listed in the deed.
Special Warranty Deed - makes the same warranties as a general warranty deed except that it limits
their application to defects and encumbrances which occurred only while the grantor held title to the
property.
Quitclaim Deed - offers the grantee the least protection in that it imply conveys to the grantee
whatever rights,, interests,, and title that the grantor may have in the property. No warranties are
made about the nature of these rights and interests or of the quality of the grantor’s title to the
property.
Would recommend the General Warranty Deed, because it offers the most comprehensive warranties
about the quality of the title.
Question 1-9
Would it be legal for you to give a quitclaim deed for the Statue of Liberty to your friend? Yes, the
quitclaim deed simply says that the grantor ―quits whatever claim he has in the property (which
may well be none) in favor of the grantee.
Solutions to Questions—Chapter 2: Financing: Notes and Mortgages
Question 2-1
Distinguish between a mortgage and a note.
A note admits the debt and generally makes the borrower personally liable for the obligation. A
mortgage is usually a separate document which pledges the designated property as security for the
debt.
M
Question 2-2
as
What does it mean when a lender accelerates on a note? What is meant by forbearance?
te
The acceleration clause gives the lender the right or option to demand the loan balance owed if a
default occurs. Forbearance by the lender allows the borrower time to cure a deficiency without the
r
lender giving up the right to foreclose at a future time.
Cl
as
4
s
Finance And Investments 17th
International Edition| Jeffrey Fisher &
William B. Brueggeman
ALL CHAPTERS COVERED| VERIFIED STUDY
GUIDE| A+ PASS GUARANTEED
M
as
te
r
Cl
as
1
s
, Solutions to Questions—Chapter 1: An Introduction to Real estate Investment: Legal
Concepts
Question 1-1
What is the difference between real property and personal property?
Real property refers to the ownership rights associated with realty. Realty refers to land and all things
permanently attached. Personal property refers to ownership rights associated with personalty.
Personalty are all things, tangible, intangible that are movable. This includes all things that are not
realty.
Question 1-2
What is meant by an estate?
Estate is used to denote a possessory or potentially possessory interest in real estate. However, not all
interests in real property are estates. Ownership can be quite different from possession and a variety
of legal factors affect the ownership rights associated with real estate. The economic benefits
expected by lenders, investors, and other parties in a real estate transaction are affected by these legal
factors.
Question 1-3
How can a leased fee estate have a value that could be transferred to another party?
The original fee owner can give up some property rights to a lessee. The value of the leased fee estate
will depend on the amount of lease payments expected during the term of the lease plus the value of
the property when the lease terminates, and the original owner receives the reversionary interest.
Question 1-4
What are title records? What is an abstract of title?
Title records (sometimes referred to as deeds and conveyances records and/or real property records)
are created and maintained usually at the county level. These records identify all properties in a
county, including location, present ownership and any liens or encumbrances affecting each property.
These records are critical to investors who want to identify the owner of specific tracts or land,
existing buildings, etc. These records are also important because they contain evidence of
M
encumbrances such as mortgage liens, tax liens (to be covered in later chapters), etc. Example: a
prospective investor sees a vacant tract of land that he is interested in purchasing. Because there is no
as
signage or any improvements on the land, how can the land owner be identified and contacted? By
going to the county records office (deeds and conveyancers department) the investor can use the
te
address to locate a property (usually in plat books), then the current owner. These records are used to
link a precise property to its owner. At some point, if this investor continues to be interested in
r
purchasing the land, he will likely retain an attorney or abstractor to do a title search and abstract of
Cl
as
2
s
, title. The latter is done to not only identify the current owner but to trace all previous owners with
commentary on the likelihood of other parties who may ownership rights and /or interests in the tract
of land.
Question 1-5
What is a deed? How is it different from the title?
The deed is a document usually created by the owner of a property containing the property legal
I.D. and location in addition to any improvements that exist on the property. It also describes the
extent to which the seller warrants that he is the owner of the property and has the right to convey
ownership. A deed is used to convey the title from one person (the grantor) to another (the regrantee)
by means of a written instrument. The term ―title is an abstract term frequently used to link an
individual or entity who owns property to the property itself. When a person has title, he is said to
have all the elements, including the documents, records, and acts, that prove ownership. Title
establishes the quantity of rights in real estate being conveyed from seller to It differs from title
because title provides evidence of ownership based on the collective records that exist pertaining to a
property.
Question 1-6
What is meant by a title record? Why are these records so important?
The title record refers to records on file, usually at the county level, that help to specify tracts of real
estate and determine if a seller has the right to convey ownership of such real property.
These records are the most important sources of events affecting real estate ownership over time and
are usually reviewed when trying to identify the ―quality of title that investors will receive if they
purchase. After a review of these records (usually by an attorney), if in his opinion, they are
complete, he will indicate that the seller has ownership and title to the property. Most of the
instruments that affect title to real estate are recorded, in accordance with the recording acts of the
various states, at what is typically called the county recorder’s office.
Question 1-7
What is a future estate? Give an example?
M
We think of most real estate transactions as acquiring ownership at the present time. However,
ownership can also occur at a later time, say after the current owner dies. The person who becomes
the owner at that time is said to be a ―remainder estate. Future estates include a reversion and
as
remainder. A reversion results in the state reverting back to the original possessor whereas the
remainder results in a third-party obtaining possession at some point in the future.
te
r Cl
as
3
s
, Question 1-8
Name the three general methods of title assurance and briefly describe each. Which would you
recommend to a friend purchasing real estate? Why?
General Warranty Deed - the grantor warrants that the title he/she conveys to the property is free and
clear of all encumbrances, other than those that are specifically listed in the deed.
Special Warranty Deed - makes the same warranties as a general warranty deed except that it limits
their application to defects and encumbrances which occurred only while the grantor held title to the
property.
Quitclaim Deed - offers the grantee the least protection in that it imply conveys to the grantee
whatever rights,, interests,, and title that the grantor may have in the property. No warranties are
made about the nature of these rights and interests or of the quality of the grantor’s title to the
property.
Would recommend the General Warranty Deed, because it offers the most comprehensive warranties
about the quality of the title.
Question 1-9
Would it be legal for you to give a quitclaim deed for the Statue of Liberty to your friend? Yes, the
quitclaim deed simply says that the grantor ―quits whatever claim he has in the property (which
may well be none) in favor of the grantee.
Solutions to Questions—Chapter 2: Financing: Notes and Mortgages
Question 2-1
Distinguish between a mortgage and a note.
A note admits the debt and generally makes the borrower personally liable for the obligation. A
mortgage is usually a separate document which pledges the designated property as security for the
debt.
M
Question 2-2
as
What does it mean when a lender accelerates on a note? What is meant by forbearance?
te
The acceleration clause gives the lender the right or option to demand the loan balance owed if a
default occurs. Forbearance by the lender allows the borrower time to cure a deficiency without the
r
lender giving up the right to foreclose at a future time.
Cl
as
4
s
