Property OwnershipIntermediateAlaska Exam

Which of the following tests is used in Alaska to determine if an item is a fixture?

AThe manufacturer's classification

BThe method of attachment, adaptation to the property, and intention of the partiesCorrect

CThe cost of the item relative to the property value, though this can vary by county

DWhether the item is listed on the tax assessment

Why The method of attachment, adaptation to the property, and intention of the parties Is Correct

Answer B: The method of attachment, adaptation to the property, and intention of the parties

Courts apply the MAI test: Method of attachment (how firmly attached), Adaptation (how specifically tailored to the property), and Intent of the parties at the time of attachment.

Exam Tip: Property Ownership

Property ownership questions test the bundle of rights and different forms of ownership. Know the differences between joint tenancy, tenancy in common, and community property, including the right of survivorship.

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Key Terms to Know

Encumbrance

Any claim, lien, charge, or liability attached to real property that affects its value or limits its use.

Debt-to-Income Ratio (DTI)

A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.

Deed of Trust

A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.

Capitalization Rate (Cap Rate)

A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.