California · state portion

Free California Transfer of Property practice questions

10 original questions with full explanations. 12 of the 150 scored exam questions (about 8%) come from this area.

1. 1

   A decedent's home was bought for $100,000 and is worth $900,000 at death. The heir sells for $920,000. Taxable gain?

   • A. $0
   • B. $20,000
   • C. $900,000
   • D. $820,000
   Show answer & explanation

   Answer: B

   Stepped-up basis to 900,000; gain = 920,000 − 900,000.

2. 2

   Buyer and seller both demand the deposit and neither will sign a release. What may escrow do?

   • A. File an interpleader and let a court decide
   • B. Hold the funds indefinitely without notice
   • C. Split the funds equally between them
   • D. Pay the party who deposited the funds
   Show answer & explanation

   Answer: A

   Interpleader lets the stakeholder deposit disputed funds with the court and withdraw from the dispute.

3. 3

   A seller's obligations under the purchase contract are generally absorbed at closing. What is that doctrine called?

   • A. Subrogation of the buyer's rights
   • B. Novation of the original agreement
   • C. Merger of the contract into the deed
   • D. Estoppel preventing later denial
   Show answer & explanation

   Answer: C

   On delivery of the deed the contract generally merges into it, though fraud and collateral promises can survive.

4. 4

   Which item normally appears as a debit to the buyer at closing?

   • A. The seller's prorated taxes owed
   • B. The purchase price
   • C. The earnest money deposit
   • D. The seller's loan payoff
   Show answer & explanation

   Answer: B

   The purchase price is what the buyer owes, so it is a debit to the buyer and a credit to the seller.

5. 5

   When does the escrow holder's agency change from dual to separate?

   • A. At closing, each party's agent for their own items
   • B. Never — escrow remains a dual agent at every stage
   • C. When the buyer's deposit clears the trust account
   • D. When either of the parties hires independent counsel
   Show answer & explanation

   Answer: A

   During escrow the holder is a limited dual agent; on close it becomes separate agent of each party for delivery.

6. 6

   New construction is completed mid-year. What tax event does that trigger?

   • A. A supplemental assessment from the completion date
   • B. A waiver of taxes until the next fiscal year
   • C. Reassessment of the entire neighbourhood
   • D. A transfer tax on the construction value
   Show answer & explanation

   Answer: A

   Completed new construction triggers reassessment of the addition and a prorated supplemental bill.

7. 7

   A deed names the grantee as 'John Smith, a single man.' What does that vesting indicate?

   • A. Community property
   • B. Joint tenancy
   • C. Tenancy in common
   • D. Sole ownership (severalty)
   Show answer & explanation

   Answer: D

   A single individual takes title in severalty.

8. 8

   Which vesting must be shown on a deed for a married couple to hold with survivorship as community property?

   • A. Community property with right of survivorship
   • B. Tenancy in common by halves
   • C. Sole and separate property
   • D. Community property generally
   Show answer & explanation

   Answer: A

   The survivorship feature must be expressly stated. Community property alone passes by will or succession rather than automatically.

9. 9

   By how much does California's homeowner exemption reduce the assessed value of a principal residence?

   • A. $70,000
   • B. $25,000
   • C. $4,000
   • D. $7,000
   Show answer & explanation

   Answer: D

   The homeowner exemption removes $7,000 of assessed value for an owner-occupied principal residence.

10. 10

    A buyer receives an extra tax bill shortly after purchase reflecting the new assessed value. What is it?

    • A. A documentary transfer tax
    • B. A supplemental assessment
    • C. A special assessment district levy
    • D. A delinquent tax penalty
    Show answer & explanation

    Answer: B

    A supplemental assessment bills the difference between the old and new assessed values for the remainder of the tax year.