Question

1. Which of the following is true about property rights?

1. You don’t need property rights for real estate to have some value.
2. The right of use cannot be transferred.
3. They are the same in different states.
4. They give value to real estate.

2. What is the order of the Capital Stack in the order of first claims priority?

a. Senior Debt, Mezzanine, Junior Debt, Common Equity, Preferred Equity

b. Preferred Equity, Common Equity, Junior Debt, Mezzanine, Senior Debt

c. Senior Debt, Junior Debt, Mezzanine, Preferred Equity, Common Equity

d. Mezzanine, Common Equity, Senior Debt, Preferred Debt, Junior Equity

3. What type of lien can become senior to all other claims to a property?

1. Mechanics lien
2. Tax lien
3. Specific lien
4. General lien

4. Real Estate is the single largest component of wealth in society

True/False

Answer 1

Answers

1) d. They give value to real estate.

Reason

Property rights give the owner or the right holder the ability to do with the property what they choose.The property rights (these laws) define the ownership and any associated benefit that come with holding the property.Also the property rights allows the owner to hold the property,to sell or rent it out or for transferring it to another party.Property rights are different in various states.

2) c. Senior Debt,Junior Debt,Mezzanine,Preferred Equity,Common Equity

Reason

Senior debt holds priority over all other positions in the capital stacks.It means that Senior debt lenders are to be paid first before any other investor is given a return on its investment.The next priority is for Junior debt or Mezzanine,both coming under subordinated debts and denotes the same.The next priority is for preferred equity who enjoys enhanced rights over common equity.Common equity holders get paid after all other parts of the capital stack and preferred equity investors have recieved their payments.

3.b) Tax Lien

Reason

Generally,the rule for priority of liens is "first come,first served".So Usually liens take priority from the date they are recorded in the public records of the country in which the property is situated.But Real Estate Tax Liens are an exception to this rule;Therefore these tax liens generally take priority over all other liens,regardless of the order in which liens are recorded.So it implies that real estate tax liens are paid first from the proceeds of a court-ordered sale.The remainder of proceeds will be used to pay other outstanding liens.

4.True

Reason

Yes,Real Estate is the single largest component of wealth creation in our society.