Question 1

The value of the lessee's interest in real property can be measured by capitalizing the difference between the contract and market rents.

Accepted Answer

This statement is true. The difference between the contract rent and market rent represents the value of the lessee's interest in the property, and this value can be capitalized to determine the present value of the leasehold.

Question 2

According to HUD, mobile homes constructed after 1976 are properly classified as manufactured homes.

Accepted Answer

HUD (U.S. Department of Housing and Urban Development) defines manufactured homes as those built after 1976, when new codes were put in place for construction and safety standards. Therefore, mobile homes constructed after 1976 are properly classified as manufactured homes.

Question 3

The owners of row houses and townhouses usually own the individual lot where the unit is located.

Accepted Answer

Row houses and townhouses are typically owned by individual owners who each have ownership over the lot where their unit is located. This is in contrast to condominiums where owners only have ownership over the interior of their unit and share ownership of common spaces with other unit owners.

Question 4

The landlord's interest in investment property is called the leasehold estate.

Accepted Answer

The landlord's interest in investment property is called the landlord's estate or fee simple estate.

Question 5

Planned unit developments usually involve common areas and homeowners' associations.

Accepted Answer

Planned unit developments typically include common areas, such as parks, playgrounds, and community centers, which are maintained and managed by a homeowners' association.

Question 6

A gross lease requires the tenant to pay all operating expenses.

Accepted Answer

A gross lease is a type of lease in which the landlord pays for all operating expenses (such as utilities, maintenance, taxes, etc.) and the tenant typically pays only for rent.

Question 7

A condominium unit may be described as the ownership of an airspace combined with a joint ownership of the land and the common areas.

Accepted Answer

This is a standard definition of a condominium unit where the owner owns the airspace within the walls and ceiling of the unit, as well as a shared or joint ownership of the land and common areas such as hallways, elevators, and parking areas.

Question 8

The benefits that belong to the leased fee interest include the lease income and the rights to the reversion.

Accepted Answer

The leased fee interest is the ownership interest in a property that includes the right to collect rent from tenants. This also includes the right to the property at the end of the lease term (reversion). Therefore, the benefits that belong to the leased fee interest include the lease income and the rights to the reversion.

Question 9

Eminent domain appraisals involve essentially the same general purpose as other appraisals; the estimate of market value.

Accepted Answer

Eminent domain appraisals are conducted to determine the market value of a property that is being considered for acquisition by the government under its right of eminent domain. The purpose of the appraisal is to ensure that the property owner is fairly compensated for the loss of their property. Therefore, the estimate of market value is the main focus of the appraisal.

Question 10

In mortgaged property, the market value of the lender's real property ownership interest can be less than the remaining balance on the loan.

Accepted Answer

This is because the market value of the property can fluctuate based on various factors such as changes in the economy or location of the property, while the loan balance remains fixed. Therefore, the value of the lender's ownership interest can be lower than the loan balance.

Deck 17: Appraising Special Ownership and Interests