An owner dies without a will or heirs, and the property remains unclaimed. Title passes to the state through:
Correct Answer
C) Escheat
Escheat applies when property is unclaimed after a reasonable period; title then passes to the state. Eminent domain requires compensation for a public use, and adverse possession transfers title to a private claimant.
Why This Is the Correct Answer
Option C is correct because escheat applies when property is unclaimed after a reasonable period of time, and title then passes to the state. An owner dying without a will or heirs leaves no one to claim the property. Escheat is seldom used, but it fits these facts exactly.
Why the Other Options Are Wrong
Option A: Eminent domain
Option A, eminent domain, is wrong because eminent domain is the government's power to take private property for public use with just compensation. Here no taking occurs; the property passes because no one claims it.
Option B: Police power
Option B, police power, is wrong because police power is the government's right to regulate property for public health, safety and welfare, as with zoning and building codes. It does not transfer title.
Option D: Adverse possession
Option D, adverse possession, is wrong because adverse possession transfers title to a private claimant who occupies the property under legal conditions over time, not to the state.
PETE the government
Government powers are Police power, Eminent domain, Taxation and Escheat; escheat is the one where property returns to the state for lack of an owner.
How to use: Use PETE to recall the four powers and then match escheat to unclaimed property.
Exam Tip
No will, no heirs and no claimant points to escheat; compensation for public use points to eminent domain.
Common Mistakes to Avoid
- -Confusing escheat with eminent domain
- -Thinking adverse possession transfers title to the state
- -Treating police power as a way of transferring title
Concept Deep Dive
Analysis
This question tests the four government powers over private property: police power, eminent domain, taxation and escheat. When an owner dies without a will or heirs and the property stays unclaimed, title passes to the state. That reversion to the state is escheat.
Background Knowledge
Private ownership is limited by four public powers: police power (regulation), eminent domain (taking with compensation), taxation, and escheat (reversion to the state when there is no owner or heir). Appraisers consider these because they can limit or change the rights being valued. Escheat rarely affects appraisal assignments but is a standard exam topic.
Real-World Application
A county asks an appraiser to value a house whose owner died without a will or known heirs, after the state took title through escheat. The appraiser values the fee simple interest the state now holds, ahead of a planned public sale.
More Market Questions
In market area analysis, what characteristic distinguishes a district from a neighborhood?
Under USPAP Standards Rule 1-3(a), which item must an appraiser identify and analyze when necessary for credible results in a market value assignment?
How does the Fannie Mae Selling Guide define a neighborhood?
Several homes in a neighborhood are vacant and boarded up. Which market force does Fannie Mae classify this as?
Infrastructure investment such as a new interchange typically affects nearby land by:
A city raises property tax rates and tightens building regulations. Which market force does Fannie Mae classify these as?
An appraiser believes, without market evidence, that a nearby group home lowers values. What does Fannie Mae require?
Which three categories are used to report the supply of properties in a Fannie Mae neighborhood section?
An appraiser is asked for a retrospective value opinion as of three years ago. When must the appraiser meet the Competency Rule?
Can mixed land uses in a residential neighborhood ever enhance home values, according to Fannie Mae?
People Also Study
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Previous Question
A competitive segment recorded 18 closed sales in the first 3 months of the past year and 63 closed sales in the following 9 months. There are 54 active listings now. Using the average monthly sales pace over the full 12 months, what months of supply is indicated? Round to one decimal place.
Next Question
A survey of competing residential rental units on one date finds 36 vacant units out of 900 total units. What is the vacancy rate, expressed as a ratio?