Appraising Special Interests Chapter 13 Quiz Questions PDF

Chapter 13: Appraising Special Interests Chapter 13 Quiz 1. In most situations, an appraiser is asked to 7. The most common reason that contract rent evaluate what type of property interest? differs from market rent is because: A. A complete ownership interes...

Chapter 13: Appraising Special Interests Chapter 13 Quiz 1. In most situations, an appraiser is asked to 7. The most common reason that contract rent evaluate what type of property interest? differs from market rent is because: A. A complete ownership interest A. the lease agreement calls for a step-down B. A leasehold interest lease C. An easement B. market rents have remained stable while D. A partial interest the contract rent Àuctuates C. the landlord had to make special conces- sions in the original lease agreement 2. The sale of condominium units in a multiple- D. the contract rent has remained stable while story building is an example of: market rents have increased A. horizontal subdivision B. shared subdivision C. vertical subdivision 8. A lease where the rent may be periodically D. diagonal subdivision changed as the market value of the property changes is known as a/an: A. index lease 3. Easements in gross are often owned by: B. reevaluation lease A. landlords C. step-down lease B. neighboring landowners D. step-up lease C. utility companies D. tenants 9. In a gross lease, for which expenses is the tenant responsible? 4. A security interest that allows a lender to en- A. 2nly making monthly rent payments cumber a borrower’s property is a: B. Rent plus maintaining the property A. lease C. Rent plus taxes and maintenance B. easement D. Rent plus all expenses related to the prop- C. deed erty, including taxes and insurance D. lien 10. The most effective way of appraising interests 5. Which of the following is considered an “arti- in leased property is the: ¿cial person´ in legal terms? A. cost approach A. A tenancy by the entirety B. income approach B. The bundle of rights C. sales comparison approach C. A corporation D. market approach D. A joint tenancy 11. The best way to analyze the effect of an ease- 6. If the terms of a lease are equivalent to current ment on value is by: market terms, the value of the leased fee is A. determining the income created by the considered equal to: easement A. zero B. calculate the value of the bene¿t to the B. the annual rent under the lease easement holder C. the net operating income of the property C. examining the effect of similar easements D. the value of the fee simple interest on comparable properties D. using the cost approach to value 9  Real Estate Appraisal Instructor Materials 12. The appraisal of a partial ownership interest should: A. reduce the value if it includes control over the use and disposition of the property B. consider factors associated with partial ownership that might affect the value of the interest C. require appraisal of the value of the entire property D. be determined based on the percentage of the ownership interest as a percentage of the value of the property 13. A condominium unit owner has what property interest in the airspace inside the unit? A. Leased fee B. Leasehold interest C. Easement D. )ee simple interest 14. Physically, a planned unit development (PUD) most closely resembles a/an: A. cooperative B. apartment building C. subdivision D. condominium 15. Which of the following is a characteristic of a cooperative? A. All residents own the same number of shares in the corporation B. Individual residents have a direct ownership interest in real estate C. The cost of shares is generally more than the cost of buying a similar condominium unit D. Residents have a proprietary lease on the unit they occupy 10  Chapter 13: Appraising Special Interests Answer Key 1. A. Most appraisals estimate the value of 9. A. In a gross lease, the tenant is respon- a complete ownership interest, or fee sible for making regular rent payments simple estate. and paying for some utilities, and the landlord is responsible for other prop- 2. C. Selling ownership rights to airspace erty expenses. above the land, as with condominium units, is vertical subdivision. 10. B. The most effective method of apprais- ing a leased fee or a leasehold interest 3. C. Utility companies often own easements is the income approach. in gross that provide a right of access in order to perform maintenance. 11. C. Easements are normally analyzed us- ing the sales comparison approach, 4. D. A lien allows the lienholder to sell the based on the effect of similar ease- property under certain circumstances ments on comparable properties. to satisfy the borrower’s debt. 12. B. The most important consideration in 5. C. A corporation is considered by the appraising partial ownership interests law to be an “arti¿cial person,´ so it is not the value of the whole, but fac- can own property directly rather than tors associated with partial ownership through an individual. that might increase or decrease the value of the interest. 6. D. The value of the leased fee is con- sidered equal to the value of the fee 13. D. The owner of a condominium unit has simple interest if the lease is on current full title to the unit. market terms. The income from rent on the property is equal to the income that 14. C. A PUD physically resembles a subdivi- a comparable leased property would sion, but the residences are combined generate. with open spaces owned in common by a homeowners association, much 7. D. In many situations, the lease sets the like a condominium. contract rent at the market rates that are current when the lease is negoti- 15. D. In a cooperative, residents own shares ated. As a result, when market rents go in the cooperative corporation and up later, the contract rent is still ¿xed receive a proprietary lease on the unit at the earlier rate. they occupy, but the land and building are owned by the corporation. 8. B. Rent adjustment may be tied to market conditions. If the rent changes peri- odically in response to changes in the property’s market value, this is called a reevaluation lease. 11