Chapter 2
A license holder is purchasing property for himself. A TREC promulgated contract is appropriate for this purchase, but the license holder decides to be creative and draft his own contract from what he has learned in his real estate classes. Which of the following is most likely to be TRUE?
The answer is the license holder has the right to draft his own contract.
How many members are on the Broker-Lawyer Committee?
The answer is 13. The committee is composed of 6 Real Estate Commission appointees (who are licensed real estate brokers) and 6 lawyers, appointed by the president of the State Bar of Texas, and 1 public member, appointed by the governor. They serve staggered six-year terms.
The Broker-Lawyer Committee consists of how many members?
The answer is 13. There are 13 members: 6 brokers, 6 lawyers and 1 member of the public.
Which of the following is a TREC promulgated contract?
The answer is Residential Condominium Contract.
A seller wants to use her own contract. What are the agent's legal options?
The answer is the agent can use the contract because it is an exception.
Which of the following is NOT an exception to the promulgated form requirement?
The answer is transaction in which the seller is a licensed attorney.
Which of the following is the better way to communicate acceptance of an offer?
The answer is verbally, followed by confirming text, fax, or hand-delivered written acceptance.
The buyer and the seller have gone through a number of offers and counteroffers, and the most recent counter from the seller is acceptable to the buyer. When does this "new" agreement become a contract?
The answer is when all parties have agreed to all terms of the offer and have signed the contract.
If no standard form has been promulgated by the Texas Real Estate Commission, a real estate broker or salesperson may do any of the following EXCEPT
The answer is draft an instrument that transfers an interest in real property. Drafting a form would constitute the unauthorized practice of law.
The Broker-Layer Committee ____________ for use by Texas brokers.
The answer is drafts and revises forms. TREC promulgates (publishes) the forms and is the rule-making body for Texas license holders.
What can a license holder add to a promulgated form?
The answer is factual statements.
Although TREC-promulgated forms are loaded onto my firm's computer system, I just discovered that the form I need (the most recent TREC version) is not there. I am in a hurry and must get the completed contract printed in the next 30 minutes. I should
The answer is go to the TREC site to download the most recent form.
How might you identify that a form is provided by TREC for voluntary use by license holders?
The answer is it indicates "approved" at the top of the form.
A license holder representing a seller is asked by that seller, "What does paragraph 5 of this TREC promulgated contract mean to me?" What is the best answer by that agent?
The answer is "I'm not an attorney, but here's what it means..."
If the offer is acceptable to the seller, the offer is signed and dated and returned to the buyer. It is now a contract for sale. If the offer is rejected, the offer is returned to the buyer marked
The answer is "rejected."
Which of the following is NOT a TREC promulgated addendum?
The answer is Reverse Mortgage Financing Addendum.
Which of the following would likely fall under the unauthorized practice of law?
The answer is a license holder drafting for a client a form that transfers ownership in real property. The other choices are all permissible under the rules and regulations.
Which of these items does NOT constitute the unauthorized practice of law?
The answer is a license holder using a contract for a transaction that was written by an attorney and required by the owner.
The Seller's Disclosure Notice is
The answer is a voluntary use form.
Once presented an offer from a prospective buyer, the seller can do any of the following EXCEPT
The answer is accept it after making a counteroffer.
Which of the following forms of advice can a license holder give to an unrepresented buyer?
The answer is advice on having the abstract examined by an attorney.
Which of the following addenda are promulgated by TREC?
The answer is all of these. All of these are TREC promulgated addenda.
Which of the following persons would be eligible for appointment to the Broker-Lawyer Committee?
The answer is all of these. So long as they otherwise met either the broker, lawyer, or member of the public standard, all of the persons are eligible for appointment. The statute is clear that appointments must be made without regard to race, creed, sex, religion, or national origin.
Which of these describes the Non-Realty Items Addendum?
The answer is approved addendum.
The forms drafted and revised by the Broker-Lawyer Committee are to be
The answer is capable of being standardized.
When faced with a client who is in a hurry to have the contract drafted and signed and who wants the agent to do the drafting and get the deal underway, the agent should
The answer is complete the promulgated form insofar as possible and have the client take the other issues to her attorney.
Which of the following is NOT a TREC promulgated contract?
The answer is contract for deed. The other forms mentioned are three of the six promulgated contracts.
A client (the seller) directs the broker to tell buyer A that the seller will accept the offer if the buyer will remove the home inspection contingency, and to tell buyer B that the seller will accept the offer if the buyer will offer $10,000 more than the asking price. The agent should
The answer is decline to do so and explain that the same information must be provided to all bidders.
The seller says the neighbor has, for years, been using the path across the back part of the property to access his (the neighbor's) pond on adjacent property because it is more convenient, though there is no formal agreement. The title insurance policy does not show a recorded easement or easement agreement. The buyer asks his agent if this is a problem. The agent should answer,
The answer is it sounds as if it could be, but you should definitely check with your attorney to determine if there is any concern.
Which of the following is an exception to the use of a promulgated form requirement?
The answer is no promulgated form but a form approved by the Real Estate Broker-Lawyer Committee and available for trial use.
A Texas license holder is selling his own custom-built home. Due to the complexity of the contract, he has elected to prepare his own contract to be sure all of the inclusions and exclusions are properly identified. Promulgated forms exist that would adequately document the deal. Does he run the risk of penalties from TREC as a result of not using a promulgated form?
The answer is no, because he is acting as a principal in the transaction and not as an agent.
The seller reviews and signs the offer at 6:00 pm Saturday. She texts her acceptance to her broker. The broker does not read the text until 7:00 am Sunday, and then immediately forwards it to the buyer's broker. Meanwhile, the buyer changes her mind and texts a withdrawal of the offer directly to the seller. A few minutes later, the seller's broker texts the original notice of acceptance to the seller. Is there a binding contract?
The answer is no, because the withdrawal of the offer was made and communicated to the seller before the buyer was notified of the acceptance.
As the seller's agent, you believe one of the three offers received for the property is by far the most beneficial to your client. Realizing your duty to always put the client's interests first, you should
The answer is present all offers, but explain why you prefer one of the offers over all others.
Who appoints the lawyers to the Broker-Lawyer Committee?
The answer is president of the state bar.
What is the make-up of the Broker-Lawyer Committee?
The answer is six brokers, six lawyers, and one member of the general public.
A license holder who drafts a contract for the sale of her client's property is
The answer is taking part in the unauthorized practice of law.
Your neighbor asks if you, as a licensed broker, have access to a form he could use to write up a contract for the sale of vacant land to his brother. He has heard of promulgated forms but doesn't know how or where to find them. Your reply should be
The answer is that you can direct him to the TREC website, where promulgated forms can be downloaded and printed.
The buyer and her broker noticed a large crack in the unfinished basement floor, and the seller assured her it was many years old, had not increased in size, and would not be a problem, but that he would fix it later if it did become an issue. She trusts the seller but asks you as her broker to insert in the contract the representations the seller made, as well as the agreement to fix the crack later if it becomes an issue. You say
The answer is that you cannot insert that sort of agreement and that she should have her lawyer draw up or insert the appropriate language.
The client has received offers from four different buyers, and against the advice of his broker, decides to accept them all to be sure at least one of the deals goes through. Which buyer will be deemed to have the first offer accepted?
The answer is the buyer whose offer is accepted and whose acceptance is communicated to that buyer first.
How long shall a member of the Broker-Lawyer Committee hold office?
The answer is until a successor is appointed. While the terms are six years, the statute provides that members hold office until a successor is appointed.
The seller is concerned about some of the unusual requirements for the contract being made by the buyer and wonders if she should hire an attorney. The license holder assures her that his 25 years of experience and negotiating skill make that expense unnecessary. Is this a problem?
The answer is yes, a license holder should not discourage any principal from hiring a lawyer.
A Texas license holder is selling his own custom-built home to the FBI (a government agency) to use as a "safe" house in which to lodge government witnesses before major trials. He has managed to negotiate a commission from the government in addition to the purchase price of the property. Because of the unusual nature of the transaction, the FBI requires the use of a contract form prepared by its attorney. Can the agent allow this without violating the TREC-promulgated contract rules?
The answer is yes, because it is a U.S. government agency that is requiring a different form.