PRACTICE-EXAM-SPRING2005

PRACTICE-EXAM-SPRING2005 - Name: Date: 1. Lisa purchased a...

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Unformatted text preview: Name: Date: 1. Lisa purchased a home from Carol in 1990. Lisa lived in her home continuously through 2003. She paid property taxes each year. She treated the property as her own for the entire 13-year period. The statute of limitations for adverse possession in her state is 10 years. In 2003, Lisa listed her home for sale. Bob sought to purchase the home. During the sale process, Bob discovered that Carol did not have full title when she sold the home to Lisa in 1990. Unbeknownst to Lisa, Carol's ex-husband Harry never signed a quitclaim deed on the property, so his name is still on title. A) Lisa does not own the property. B) Lisa may not transfer the property to Bob until Harry signs a quitclaim deed. C) In all likelihood, Lisa cut off Bob's rights to the property under the doctrine of adverse possession. D) Both “a” and 2. Agnew and Nixon own adjoining parcels of land. Nixon executes a written document that allows Agnew "and his heirs and assigns forever" to install pipes under Nixon‘s property for the purpose of pumping water from a nearby, publicly owned lake to Agnew's property for irrigation uses. Some years later, Nixon sells his property to Mitchell. Which of the following statements is accurate? A) Agnew had an easement appurtenant, which terminated when Mitchell purchased Nixon's property. B) Agnew has an easement in fee simple, which continues to exist even though Mitchell now owns the property Nixon had owned. C) Agnew's interest in Nixon's land is best characterized as a revocable license, which was revoked when Nixon sold his property to Mitchell. D) If Agnew now sells his land to Dean, Dean would have, as to Mitchell's land, the easement described in the facts. 3. Sally seeks to list her home with Barry, a real estate broker. Sally and Barry agree that Barry will receive a commission if the home sells within 90 days, regardless of who actually causes the sale of the property. Sally and Barry have a listing. A) Open. B) Exclusive agency. C) Exclusive right to sell. D) None of the above. Page 1 4. A violation of the Fair Housing Act: A) Is enforceable by the federal government. B) Is enforceable by an individual grievant. C) May result in injunctive relief. D) Both “a” and B) All of the above. 5. In order to be valid, a restrictive covenant requires that: A) The covenant must "run with the land." B) The parties to the covenant must be neighboring landowners. C) The covenant must be in writing. D) Each of the above. 6. Gordie has several tall trees that are located on his side of the property line. During wind and rainstorms, branches and leaves from these trees fall onto his neighbor's property, owned by Bob. A) If a court determines that Gordie's trees are causing an unreasonable intrusion onto Bob's property, it can order Gordie to eliminate the problem as a private nuisance. B) Bob may do nothing because Gordie is not doing anything illegal. C) Bob must show that the use and/or enjoyment of his land is substantially lessened by the interference. D) Both “a” and “c”. 7. April owned a house and two acres, which she conveyed to May by means of a deed that granted the property "To May, for life." Under these circumstances, which of the following statements is incorrect? A) May has a life estate in the property--she can convey during her life to another person. B) May has a present interest in the property, and April has a future interest in the property. C) April and May own the property as tenants in common for the remainder of May's life. D) Upon May's death, her interest in the property will automatically terminate. 8. Assume that a deed contains guarantees about the quality of titie conveyed, but restricts those guarantees to defects in title that arose after the grantor acquired the property. Such a deed is called: A) a special warranty deed. B) a quitclaim deed. C) a general warranty deed. D) an invalid deed. Page 2 9. Which of the following is a true statement about easements? A) A person may gain an easement in another's land by using it in a certain way for a time specified by law. B) Implied easements are prohibited by the Fair Housing Act. C) All easements must be in writing to be enforceable. D) Easement may pass with the land. 10. Nancy owned beachfront property. She wanted to remodel the home, so she applied for a building permit at the county building and safety office. In order to receive the permit, the county stated that Nancy had to grant the pubiic an easement across her property in the form of a footpath connecting the beach and the street. It refused to pay Nancy anything. A) This is a reasonable exercise of the police power granted to state and local governments. Since Nancy is not losing her property to the government, no compensation is required. B) The county may seek such an easement, but it must go through the condemnation process and pay just compensation. C) The county may not exercise such power under any circumstances. D) Only the federal government may exercise such power. 11. The City of Melonville hires Ace Construction Company to build its new City Hall. Integrity Insurance agrees to be liable for Ace's performance of its contract. The City of Melonville has Integrity and Ace both sign the contract which provides that Ace and Integrity will be “jointly and severally” liable for the performance. Which of the following statements regarding the contract is most accurate? A) Integrity is acting as a guarantor. B) Integrity can only be held to his guarantee after Ace defaults. C) Integrity is acting more as a surety than a guarantor. D) Both A and B. 12. Which of the following makes the promisor a surety rather than a guarantor? A) "I promise to pay D‘s debt in the event that I) first defaults." B) "I promise to pay D's debt and am primarily liable along with D on that debt." C) Both of the above. D) Neither of the above. 13. Which of the following is true of a guaranty (as opposed to suretyship) relationship? A) The guarantor is primarily liable along with the principal debtor. B) A guarantor must be compensated. C) A contract of guaranty must be written or it is not enforceable. D) A guarantor has no right of subrogation. Page 3 l4. 16-year~old Pete's mother Patsy agrees to be a surety for Pete on his purchase of a motorcycle. Pete stops making payments to the motorcycle dealer. Which of the following defenses are available to Patsy? A) Pete was a minor who lacked the capacity to enter into the contract. B) The motorcycle is defective in breach of the dealer‘s warranty. C) Pete was insane at the time the contract was formed. D) All of the above. 15. Under an agreement between Don and Calbert, Don owes Calbert a $500,000 debt. However, there is no consideration to support the agreement. The agreement also makes Sandy a surety for Don's debt. If Don defaults on his obligation, who can use the absence of consideration as a defense against Calbert? A) Only Dori. B) Only Sandy. C) Both Don and Sandy. D) Neither Don nor Sandy. 16. Today, most artisan's liens: A) Have been repealed by statute. 13) Are handled by Article 7 of the UCC. C) Require that the artisan have possession of the debtor's property. D) Apply whether or not the owner consented to the work performed by the artisan. 17. Under which of the following systems of foreclosure does the creditor have no right to recover any deficiency between the value of the property and the amount of the debt? A) Strict foreclosure. ' B) Conditional foreclosure. C) Action and sale. D) Power of sale. 18. Under which of the following does a subcontractor or materialman who performs work for a general contractor on real property retain his lien against the property despite the general contractor's default? A) Strict foreclosure. B) The New York system. C) Conditional foreclosure. D) The Pennsylvania system. Page 4 19. Which of the following is mgst generally true about state statutes establishing mechanic's and materialman's liens? A) They require that the contract must be in writing. B) They require that work be done or materials be furnished in the performance of a contract to improve real property. C) They include submaterialmen. D) They require that the materialman prove that the material furnished was actually incorporated into the structure. 20. A valid mechanic‘s or materialman's lien has priority over all competing liens that are: A) Not recorded. B) Not in writing. C) Filed after the filing of the mechanic‘s or materialman's lien. D) Attaching after the first work is performed or the first materials are furnished. 21. One important implication of a person's being a guarantor rather than a surety is that: A) Guarantors must be paid for their services. B) Contracts of guaranty can be oral. C) Guarantors can assert defenses personal to the principal debtor, while sureties cannot. D) The principal debtor must first default on the debt before a guarantor is liable. 22. Deb borrows $10,000 Carl, using her deposit account at Big Bank as collateral. How can Carl perfect his interest in the account? A) Filing a financing statement in the appropriate public office. B) Becoming Big Bank’s customer for the deposit account. C) Agreeing with Big Bank and Deb that the bank will comply with his instructions regarding funds in the account. D) Both B and C.. 23. A secured creditor repossesses the collateral from the debtor and sells it to satisfy the debt. Which of the following has the fir—st claim on the proceeds of the sale? A) Satisfaction of the debt itself. B) Consequential damages suffered by the creditor due to the debtor's default. C) Court costs. D) Expenses of repossessing, storing, and selling the collateral. Page 5 24. Secured Party perfects its security interest in the collateral by filing on January 10. In a contest for that collateral, which of the following parties will Secured Party defeat? A) Another secured party who perfected on January 2. B) A party who gets a mechanic's lien on the collateral on January 12. C) A buyer of the collateral in the ordinary course of business who buys on January 12. D) None of the above. 25. CI files a financing statement on D's collateral on March 1. However, attachment of this interest does not occur until March 4. C2 attaches a security interest on the same collateral on March 2, and files a financing statement on March 3. Which interest has priority and why? A) Cl's interest, because Cl filed before C2 filed or perfected. B) C2's interest, because C2 attached first. C) Cl's interest, because Cl filed before C2 attached. D) C2's interest, because C2 filed before C1 attached. 26. In comparing the written security agreement normally used for attachment with the financing statement normally used to perfect, which of the following is most true? A) Both must be signed by the debtor. 13) Both must describe the collateral in detail. C) Both must be filed with an appropriate state agency. D) Both must be signed by the debtor and the creditor. 27. For which of the following is the filing of a financing statement necessary for perfection to occur? A) A security interest in documents of title. B) A security interest in instruments. C) A security interest in consumer goods. D) A security interest in general intangibles. Page 6 28. Carter sells a $20,000 boat to Davis on credit. Davis will use the boat for personal, family, and household purposes. As part of the deal, Davis completes an installment note payable to Carter and a security agreement giving Carter a security interest in the boat. Carter's security interest attaches on July 1. Carter never files a financing statement.0n August 1, Davis borrows $15,000 from Bank, using the boat as security. Thus, Davis completes a security agreement giving Bank a security interest in the boat. This interest attaches on August 1, and Bank files a financing statement on August 6.Later, Davis defaults on both his installment payments to Carter and his loan obligation to Bank. Each of these parties wants to satisfy Davis's obligation by repossessing and selling the boat. Which security interest in the boat has priority, and why? A) Carter, because his security interest was perfected before Bank's interest. B) Bank, because Carter never filed. C) Bank, because Carter never perfected. D) Bank, because Bank perfected within ten days after Davis received the collateral. 29. The Cutco Lawn Products Company sells 100 riding lawn mowers to the Smith Hardware Company, which is in the business of selling such products to consumers. Smith pays for the mowers with a $50,000 loan from the Bass Bank. Bass takes a security interest in the mowers to secure payment of the loan, and perfects it by filing. Later, Smith sells one of the mowers to Cal Consumer, who buys in good faith and in the ordinary course of Smith's business. As it happens, however, Cal knows that Bass has a security interest in the mowers. Still later, Smith defaults on its loan payments, and Bass moves to repossess all the mowers, including the mower sold to Cal. Can it repossess the mower sold to Cal? A) Yes, because Bass attached its security interest. B) Yes, because Bass filed a financing statement on its security interest. C) Yes, because Cal knew about Bass's security interest. D) No. 30. Fanny and her husband Fred own a farm in Iowa. Unfortunately, after earning a $50,000 income on the farming operation and $10,000 in non-related endeavors in 2002, Fanny and Fred accumulated $100,000 in farm~related debt. Their only other debt is a $10,000 on a truck purchased in 2001. Fanny and Fred want to file for a Chapter 12 plan. Which of the following statements is most accurate? A) Fanny and Fred do not qualify for protection under Chapter 12. B) Fanny and Fred will probably not be able to remain in possession of their farm under the plan. C) A trustee will be allowed sell unnecessary assets such as equipment. D) A trustee will not be appointed under the plan. Page 7 31. A voluntary petition under Chapter 7: A) Cannot be filed by an insurance corporation. B) Requires that the debtor's debts exceed his assets by $5000. C) Requires that the debtor have at ieast three creditors. D) Cannot be made by an individual. 32. Under the Bankruptcy Act's preference provision: A) The trustee must prove by a preponderance of the evidenCe that the debtor was bankrupt within 90 days of the petition. B) Transfers made within one year of the petition may be preferential if the creditor is an insider. C) Fraudulent transfers that delay or defraud creditors are rendered voidable. D) Preferential liens and security interests are not covered. 33. Which of the following fits within one of the exceptions to the Bankruptcy Act's preference provision? A) A perfected Article 9 security interest. B) A transfer to an insider of the debtor. C) A transfer made in payment of a debt incurred in the ordinary course of the debtor's business within 45 days after the debt was incurred. D) A consumer's transfer of less than $2000 to a creditor who has sold her consumer goods. 34. Under the Bankruptcy Act's exemption provisions: A) The debtor must choose either the state or the federal exemption scheme (unless state law says otherwise). B) The full value of one's motor vehicle is exempt. C) Federal exemptions defeat state exemptions in case of a clash between them. D) States exemption laws that exceed the federal limits (i.e., that are too generous) are void. E) c and d. 35. In a proceeding under Chapter 7, which of the following claims incurred within 180 days before the petition will be paid last? A) Back taxes owed to a state government. B) Utility bills arising the ordinary course of the debtor's business. C) Up to $2000 per employee in wages. D) Up to $2000 per employee in employer contributions to an employee pension fund. Page 8 36. Under Chapter 7, a debtor is denied discharge of all debts when: A) The debtor has transferred property in order to defraud creditors. B) The debtor has unpaid tax liabilities. C) The debtor has made a preferential transfer to a creditor. D) The debtor has made a fraudulent transfer. 37. To which of the following is Chapter 11 not available? A) Manufacturing corporations. B) A sole proprietorship that sells used cars. C) A bank. D) A natural person. 38. Under chapter l3 of the Bankruptcy Act: A) The petition may be voluntary or involuntary. B) No debt extensions are permitted. C) No plan may be approved if an unsecured creditor objects. D) No trustee is appointed. 39. Under which of the following can the bankruptcy petition o_nly be voluntary? A) Chapter 7. B) Chapter 11. C) Chapter 13. D) None of the above. 40. Under chapter 12 of the Bankruptcy Act: A) Only farms with an aggregate debt exceeding $5 million are covered. B) The debtor must cease to operate the farm. C) No trustee is appointed. D) The debtor is usually permitted to remain in possession to operate the farm. 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PRACTICE-EXAM-SPRING2005 - Name: Date: 1. Lisa purchased a...

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