Exam Prep Sales Agent Attempt #3 - TREBS 2021
The house was built in 1970 and has 4 bedrooms and 1 bathroom. The house is in very good condition, but it suffers from: A. Functional obsolescence B. Economic obsolescence C. Age obsolescence D. Plot obsolescence
Rationale: A is the correct answer. The house is functionally obsolete.
A title insurance policy to protect the lender is called the: A. Mortgagee's policy B. Owner's policy C. Quiet title policy D. Attorney's policy
Rationale: A is the correct answer. The mortgagee is the lender. The title policy protects the lender.
What protects an owner against financial loss if the title to the property has defects? A. The title insurance policy B. The deed of trust C. The deed D. An abstract prepared by an attorney
Rationale: A is the correct answer. The title insurance policy protects an owner against financial loss if the title to the property has defects.
Substitution of a new contract and a new party for a previous one is known as: A. Innovation B. Assignment C. Novation D. Subrogation
Rationale: C is the correct answer. A novation is the substitution of a new contract for an existing agreement with the intent of getting rid of the old contract.
What lien is superior to all other liens? A. Mortgage lien B. Mechanic's lien C. Tax lien D. Variable lien
Rationale: C is the correct answer. A property tax lien is placed on all properties at the beginning of each year. It is superior to any other lien. If property tax is not paid, the government can foreclose the property. It is an involuntary, specific lien.
The agency relationship will terminate if: A. The broker or the client dies. B. The agreement has been completed. C. The agency agreement expires. D. All of the above
Rationale: D is the correct answer. Death, completion of the agreement, or expiration of the agreement will all terminate an agency relationship.
Demand for property can be affected by: A. Population growth and wage levels B. Price of housing and unemployment C. None of the above D. Both A and B
Rationale: D is the correct answer. Demand for property is influenced by population growth, wage levels, the price of housing, and unemployment.
531.1 Fidelity, of The Canons of Professional Ethics and Conduct states: A. That the primary duty of the real estate agent is to represent the interest of the agent's client B. That the real estate agent be faithful and observant to trust placed in the agent C. That the real estate agent place no personal interest above that of the agent's client D. All of the above
Rationale: D is the correct answer. Fidelity means all of these things.
All of the following are benefits to the buyer and seller for a seller financing contract EXCEPT: A. Easier qualifying than with a lender B. Cash flow for the seller C. Fewer costs to obtain the financing D. A higher interest rate for the buyer
Rationale: D is the correct answer. Generally, if the seller is carrying the note on the property and there is less paperwork, qualifying standards, and less costs up-front for the buyer, the seller can often command a higher interest rate than the market rate.
In the event of buyer's default, the seller may: A. Terminate the contract B. Receive the earnest money as liquidated damages C. Enforce specific performance D. Any of the above
Rationale: D is the correct answer. If Buyer defaults on the contract, the Seller has the right to terminate and receive the earnest money, or sue for specific performance, or sue for compensatory damages.
The closing is set for April 10, 2018. 2017 taxes have been paid. Total taxes for the year are $17,500. Using a calendar year, how much would the seller owe the purchaser at closing? A. $4,794.52 B. $4,315.07 C. $3,856.90 D. $4,612.20
Rationale: A is the correct answer. $17,500 ÷ 365 (You are using a calendar year so divide by 365 vs 360) = $47.9452 (daily tax). Jan 31 days, Feb 28 days, March 31 days, April 10 days = 100 days total. $47.9452 × 100 days = $4,794.52.
A contract in which all the parties make promises and are bound to act is: A. Bilateral B. Not acceptable C. Unilateral D. An option agreement
Rationale: A is the correct answer. A bilateral contract is a promise for a promise. The One-to-Four TREC promulgated residential contract is a bilateral contract.
An encumbrance affecting the title of a property such as a mortgage on the property is a: A. Cloud on title B. Contract C. Personal rights D. Bill of sale
Rationale: A is the correct answer. A mortgage encumbrance would create a cloud on the title, meaning it "clouds" clear title to the property.
The land that has been created by accretion is called: A. Alluvion B. Reliction C. Erosion D. Avulsion
Rationale: A is the correct answer. Alluvion is the term for land created by accretion.
The primary duty of a real estate agent is: A. To represent the interests of the client B. To protect the broker in any potential lawsuit C. To meet the needs of the customer D. To be flexible in working with buyers
Rationale: A is the correct answer. An agent works for the interests of the client and with the customer.
The amount of earnest money deposit paid by the purchaser is: A. Determined by negotiation B. Set by state law C. Equal to the agent's commission D. The minimum required to make the contract valid
Rationale: A is the correct answer. Earnest money is merely an enticement to the seller to accept the offer, and is considered to be a gesture of good faith.
Which of the following statements about employees and independent contractors is true? A. Independent contractors and employees are taxed differently. B. Independent contractors must file W-2s with the IRS. C. An independent contractor and an employee are basically the same thing. D. Employees set their own hours and pay their own expenses.
Rationale: A is the correct answer. Independent contractors and employees are taxed differently. Independent contractors do not file W-2s, they are different from employees, and employees do not set their own hours or pay their own expenses.
If a property was acquired after 1895 and abuts a river or a stream, the property is subject to: A. The doctrine of appropriation B. Littoral rights C. Groundwater rights D. Erosion
Rationale: A is the correct answer. Land that was acquired before 1895 carries riparian rights. Land acquired after 1895 is subject to the Doctrine of Appropriation which means the state has the right to control the use of the water, except for certain domestic purposes
Lisa is a real estate salesperson who is paid on the results she produces. She is not paid a salary and she pays her own expenses to conduct business. What best describes Lisa? A. She is an independent contractor. B. She is a sales associate. C. She is an employee. D. She is a broker.
Rationale: A is the correct answer. Lisa is an independent contractor.
You borrow $25,000 and repay $30,500 in 24 months. What rate of interest are you being charged? A. 11% B. 8.75% C. 16% D. 6.25%
Rationale: A is the correct answer. Remember the formula. P = R x B where the loan is the base and the part is the annual interest ($30,500 - $25,000 = $5500 interest for 24 months or 2 years). Divide by 2 = $2,750 interest per year. Part goes into calculator first ($2,750) ÷ $25,000 (loan) = .11 =11% (interest rate).
The practice of directing home seekers to a neighborhood because of race, religion, color, national origin, sex, handicap, or familial status is: A. Steering B. Blockbusting C. Fair housing D. ADA
Rationale: A is the correct answer. Steering is also sometimes referred to as "channeling."
Charles has decided to obtain his real estate license. After completing his education requirements, being fingerprinted, finding a broker, and passing the state licensing exam, which agency administers the license? A. The Texas Real Estate Commission B. The Governor's office C. The Comptroller's Office D. The Education Standards Advisory Committee
Rationale: A is the correct answer. TREC administers all licensees in the state of Texas.
An abandoned parcel of land that was used for industrial or commercial purposes that may or may not be contaminated due to hazardous waste is called a: A. Brownfield B. Blight C. Contaminant D. Wetland
Rationale: A is the correct answer. The Brownfields program supports communities by assessing and assisting with the redevelopment and revitalization of these properties, broadly referred to as Brownfields. The Brownfields program helps to facilitate the clean-up and redevelopment of contaminated properties to revitalize communities.
What are the Canons of Professional Ethics and Conduct for brokers and salesmen? A. Competency, integrity, fidelity B. Trust, honesty, faith C. Reverence, business, friendly D. Fiduciary, principal, knowledge
Rationale: A is the correct answer. The Canons of Professional Ethics and Conduct are updated every year by the National Association of Realtors.
Which of the following is the correct process for preparing to take the state licensing exam (as stated in the Candidate Information Brochure)? A. The potential licensee must have the TREC ID number issued by the TREC in the eligibility letter and make a reservation 24 hours in advance to have fingerprinting accomplished by Morpho Test. B. Once the pre-licensing courses are completed and the application filled out, the potential licensee may make an appointment to take the state licensing exam. C. TREC will conduct a background check prior to the potential licensing submitting an application. This is the first step in the process of obtaining a real estate license. D. The students provides a driver's license with TREC and an application and the rest of the steps can be completed at any time.
Rationale: A is the correct answer. The TREC ID number must be issued and the reservation made 24 hours in advance for fingerprinting.
When the salesperson leaves the sponsorship of the broker, the buyer's agreement as well as the listings obtained by the salesperson: A. Remain with the broker B. Are cancelled C. Are always given to the salesperson D. Doubles in length
Rationale: A is the correct answer. The Texas Real estate License Act states that the listings and buyers belong to the broker if the salesperson should leave the broker.
The phrase "time is of the essence" in sales contract means that: A. The time limits set by the contract must be faithfully observed or the contract is voidable. B. The parties are prohibited from giving each other an extension. C. The contract is void. D. The contract is a counteroffer.
Rationale: A is the correct answer. Time is of the essence means that certain items in the contract must be performed within the time limits specified in the contract and should be interpreted exactly. Examples: 1) The number of days allowed for the option period. 2) The number of days for a seller to provide an existing survey. 3) The number of days allowed for a buyer to object to the survey, the use of property, or provisions in the Homeowners' Association documents, etc. Many 'time is of the essence' limits are outlined in the promulgated contract forms.
A land developer wants to divide a 15-acre tract of land into lots that are each 50' by 120' in size. If the developer allows 50,000 sq. ft. for streets, how many lots can be developed in the subdivision? A. 100 B. 108 C. 109 D. 110
Rationale: A is the correct answer. Total acreage: 43,560 x15 = 653,400 square feet in the tract - 50,000 square feet that will be taken up by the roads, leaving 603,400 square feet for the lots. 50 x 120 = 6000 square feet in each lot. 603,400 ÷ 6000 = 100.5666 rounded down to 100 lots.
In what year did the first of the laws regarding fair housing pass and what was the protected class? A. 1866 - Race B. 1968 - Handicapped C. 1912 - Race D. 1974 - Handicapped
Rationale: A is the correct answer. While the Civil Rights Act of 1866 had arguably required fair housing practices, it contained no provisions for federal enforcement. In 1968, Title Eight of the Civil Rights Act was passed. This law covered race, color, national origin, and religion. The law was amended in 1974 and sex was added as a protected class. The law was amended again in 1988 when handicapped and familial status were added.
A hospital is being built in an area that is zoned residential. The hospital will be a benefit to the public. The exception to the zoning is called a: A. Discrepancy B. Conditional use C. Variance D. Nonconforming use
Rationale: B is the correct answer. A conditional use permit allows the city to consider uses which may be essential or desirable, but which are not allowed as a matter of right within a zoning district, through a public hearing process. A conditional use permit can provide flexibility within a zoning ordinance.
When a grantor warrants that he/she is the owner of the property and has the right to convey title to it best describes: A. Reciprocity B. Covenant of seisin C. Deed of trust D. Tenancy in common
Rationale: B is the correct answer. A covenant that the grantor has an estate (or the right to convey an estate) of the quality and size that the grantor purports to convey (i.e., the grantor has both title to and possession of the property at the time of conveyance to the grantee).
What is a license to use land? A. An estate in land B. A personal privilege given to someone to use land C. A type of lease D. Limited to 500 acres
Rationale: B is the correct answer. A license to use land is a personal privilege given to someone to use land. It is not ownership in land. An example of a license to use land could be a ticket to a sporting event or a movie theater.
The listing agreement and the buyer's representation agreement are examples of: A. Real agency B. Special agency C. General agency D. Universal agency
Rationale: B is the correct answer. A special agency relationship is one in which the broker has certain authority to conduct certain activities on behalf of the principal such as marketing the property, putting the property in MLS and putting a lock box on the property.
The eaves of a house are over the survey line. This is a(n): A. Encumbrance B. Encroachment C. Easement D. Latent defect
Rationale: B is the correct answer. Anything that "hangs over" another's property is considered an encroachment.
The conversion of income into an indication of value is called: A. Enhancement B. Capitalization C. Reproduction cost D. Replacement cost
Rationale: B is the correct answer. Cap Rate is a real estate valuation measure used to compare different real estate investments. Although there are many variations, a cap rate is often calculated as the ratio between the net operating income produced by an asset and the original capital cost (the price paid to buy the asset) or alternatively its current market value.
An example of gratuitous agency is: A. Working for both the buyer and seller B. Working for free C. Setting your commission rate to high D. Giving advice and opinions to a customer
Rationale: B is the correct answer. Gratuitous means free.
An agent is working with a buyer as a customer. The agent shows the buyer a property listed with another real estate firm. The agent: A. Has become an intermediary B. Is a subagent of the listing broker C. Is doing something illegal D. Must pay the listing broker a fee
Rationale: B is the correct answer. In this case, the agent is a subagent of the listing broker. A relationship in which one firm sells a property listed by another firm to a customer-buyer who is not represented.
The Texas Real Estate Commission, which was created in 1949, includes all the following responsibilities EXCEPT: A. Granting licenses to applicants B. Regulating brokerage fees C. Protecting the public interest D. Regulation of the activities of licensees
Rationale: B is the correct answer. TREC was created to protect the public (consumers) of the state of Texas against the unscrupulous acts of licensees. TREC does not regulate or mediate brokerage fee disputes. They leave that up to the brokers and the Board of Realtors®.
The assessed value of a home is $575,000. The market value is $625,000. The tax rate is $.86 for city, $.75 for county, and $.80 for school taxes per $100 of assessed value. What are the annual taxes? A. $15,550 B. $13,857.50 C. $14,920.75 D. $13,050.50
Rationale: B is the correct answer. Taxes are figured on the assessed value of the property. Add the tax rates (. 86 + .75 + .80= 2.41). $575,000 ÷ 100 = 5750 × 2.41 = $13,857.50.
If a licensee misrepresents a warranty or guarantee, what law is he/she breaking? A. Anti-Spam Act B. The Deceptive Trade Practices Act C. The Default Act D. Community Reinvestment law
Rationale: B is the correct answer. The DTPA: makes it illegal to use false, misleading, or deceptive acts or practices in the advertising, offering for sale, selling, or leasing of any real or personal property. The act provides for civil penalties and, in some cases, for mandatory triple damages and attorney fees for the aggrieved party.
Which is NOT a purpose of the CFPB? A. The CFPB helps the consumer make an informed decision about loan choices. B. The CFPB helps the consumer choose the right real estate inspector. C. The CFPB helps the consumer understand the real cost of the loan. D. The CFPB helps the consumer compare loan offers.
Rationale: B is the correct answer. The Dodd-Frank Act granted rulemaking authority under the TILA to the Consumer Financial Protection Bureau who is charged with overseeing the Federal financial laws that specifically protect consumers. The CFPB is charged with enforcing clear, consistent rules that allow banks and other consumer financial services providers to compete on a level playing field and that let consumers see clearly the costs and features of products and services.
A property owner wants to add a pool to his home. He lives in a deteriorating area. He could use the principle of _______________ to determine whether the pool would add value to his property. A. Supply and demand B. Contribution C. Anticipation D. Plottage
Rationale: B is the correct answer. The Principle of Contribution refers to the value an improvement gives to a property.
Adjustments for differences between the subject property and the comparable property are made to: A. The subject property B. The comparable property C. Either property as indicated by the appraiser's findings D. The appraiser's final estimate of the value of the subject property
Rationale: B is the correct answer. The adjustments the appraiser makes are on the comparable properties so the appraisal can make the comparable homes as close to the subject home as possible.
When a broker receives more than one offer, what is the responsibility of the broker to the seller? A. The broker must only present the first offer B. All offers must be presented to the seller. C. The broker should choose the best offer to present. D. The broker should tell the buyers to stop making offers.
Rationale: B is the correct answer. The broker must present all offers to the seller UNLESS the seller has specifically asked that certain offers not be presented.
If someone is found guilty of willfully violating the antitrust laws, the injured party is entitled to recover what damages? A. Attorneys' fees of the non-prevailing party only B. Three times the amount of the damages C. Damages for pain and suffering only D. Ten times the amount of damages
Rationale: B is the correct answer. The injured party is entitled to three times the amount of damages.
Mary contracted to purchase a condominium at the West Palm Condominiums. She was in the process of obtaining loan approval when she decided that she no longer wanted to purchase this property. She decided to tell the seller that she was no longer interested in the property. What is this called in legal terms? A. Admission of guilt B. Breach of contract C. Fraudulent dealings D. Unauthorized contracting
Rationale: B is the correct answer. Think of breach as synonymous with 'break.' This means breach of contract can be defined as a broken contract, stemming from failure to fulfill any term of a contract without a justifiable, lawful excuse.
How long must a broker keep accounting records for an established trust account? A. Six months B. Four years C. Ten years D. Brokers are not allowed by law to have trust accounts.
Rationale: B is the correct answer. Under Texas law, brokers can set up trust accounts and the records must be kept for four years. Remember that brokers can lose their license if they "commingle" the client's funds with the broker's operating funds.
What is a legal description that starts at the point of beginning, describes the property's boundaries, and returns to the point of beginning? A. A lot and block description B. A metes and bounds description C. A recorded plat D. A government survey system
Rationale: B is the correct answer. Where the survey starts is called the point of beginning (POB) or point of commencement (POC), and the survey must always return to the POB to enclose the entire property. The surveyor refers to a permanent reference mark in relation to the monument. The two are said to be connected by a connection line. A benchmark is often used as the permanent reference mark. The benchmark can be an engraved brass disk set in concrete. It gives location as well as elevation.
A license holder who gives advice or opinion as to the legal effect of a contract or gives opinions concerning the status or validity of title to real estate: A. Is allowed to do this if they are a broker B. Is practicing law C. May give legal opinions to a client but not to a customer D. May give legal opinions if they have been a broker for four years
Rationale: B is the correct answer. You cannot give legal advice — period. If you do give legal advice to a buyer or seller, you could have your license suspended or revoked.
Susan earns $128,000 per year. She has located a lender that will quality her using a 28% ratio. What is Susan's maximum affordable payment? (Round up to the nearest dollar.) A. $1,914 B. $3,025 C. $2,987 D. $1,850
Rationale: C is the correct answer. $128,000 ÷ 12 = 10,666.66 (monthly income) × .28 = $2,986.666 = $2,987.
A property for sale at $650,000 has a first-year cash flow of $32,000 and an initial investment of $150,000 is required on the property. What is the cash-on-cash return? A. 40% B. 32.16% C. 21.33% D. 23.95%
Rationale: C is the correct answer. $32,000 (cash flow) ÷ $150,000 = .213333 = 21.33%.
Your aunt bought her house one year ago for $62,400. Property in her neighborhood is said to be increasing at a rate of 7% annually. If this is true, what is the current market value of your aunt's house? A. $65,520 B. $66,144 C. $66,768 D. $66,971
Rationale: C is the correct answer. $62,400 × 107% = $66,768.
A broker is not allowed to commingle funds. Commingle means to: A. Spend the client's money B. Receive a commission from a customer C. Place the client's money in the broker's operating account D. Pay the client a rebate
Rationale: C is the correct answer. A broker could set up a special trust account if handling the owner's funds ( generally in a property management arrangement); however, the money cannot be commingled with the broker's "operating" account.
If a buyer makes an offer on a property and the seller counters the offer (makes changes), the counter is considered: A. A reflection B. A rescission C. A rejection D. A resentment
Rationale: C is the correct answer. A counteroffer is a rejection of the buyer's offer. If the seller counters, the buyer has no obligation to proceed with the contract.
What is the main problem with underground storage tanks? A. They take up too much room underground. B. They cause owners problems because they cannot build anything on surface above the tank. C. They were built of bare steel and over time corrode and leak into the environment. D. There really is no problem with underground storage tanks.
Rationale: C is the correct answer. According to the EPA, there are approximately 570,000 underground storage tanks that house hazardous waste and petroleum. The greatest threat is from leaking into the groundwater which is the source for drinking water for over 50% of all Americans.
A salesperson may accept a commission from: A. Their client B. Their customer C. Their sponsoring broker D. All of the above
Rationale: C is the correct answer. All commissions paid to the salesperson must go through the broker.
The owner of a single-family house in which he lives wants to sell. If he does not use discriminatory language in advertising, has not sold any other house within the past two years, and does not employ an agent, may he discriminate on the basis of race in selecting a purchaser? A. Yes, because the fair housing laws permit discrimination under these conditions. B. Yes, because the law applies only to sales made by licensed agents. C. No, because this would be prohibited by the Civil Rights Act of 1866. D. No, because this would be prohibited by the Fair Housing Act of 1978.
Rationale: C is the correct answer. All owners of property fall under the Civil rights Act of 1866 which prohibits discrimination against race.
An unconditional written promise of one person to pay a sum of money to another at a future specified time is: A. Recorded plat B. Novation C. Promissory note D. MIP
Rationale: C is the correct answer. Also called a credit instrument, a promissory note is the promise by the debtor to pay back money owed.
Jim leased an apartment in Austin. The lease began on March 1 and ended on September 30. The lease did not automatically renew for another 6 months. The lease is a/an: A. Periodic tenancy B. Month-to-month lease C. Estate for years D. Estate at sufferance
Rationale: C is the correct answer. An estate for years is a lease with a definite beginning date and end date.
By law, a licensee must reveal all of the pertinent facts about a transaction to their client. Which fiduciary duty is this? A. Care B. Accountability C. Disclosure D. Responsibility
Rationale: C is the correct answer. Disclosure is a key in representing the client. Lack of disclosure is the reason there are more lawsuits than any other reason.
Samantha is a real estate agent representing Thomas and Lori Jones who have just moved to Texas from Michigan. The couple are under contract and it is now time to complete loan applications, inspections, etc. Thomas asks Samantha to refer an inspector to them as they are unfamiliar with inspectors in the area. What should Samantha do? A. Give the Jones' the inspector Samantha uses whenever she can. B. Tell the Jones' to do their own google search and find an inspector on their own. C. Provide several names to the Jones' who can interview, price compare and decide who they would like to use for the inspection. D. Ask her broker to talk to the Jones' about inspections and the process.
Rationale: C is the correct answer. Do not give a single name, instead provide several names to the Jones' who can interview, price compare and decide who they would like to use for the inspection.
Errors and Omissions Insurance (E and O) is a form of: A. Life insurance B. Hazard insurance C. Malpractice insurance D. Homeowners insurance
Rationale: C is the correct answer. E and O is a form of malpractice insurance. It is not required by TREC to be carried by the broker unless the broker owns less than 10% of the company.
The term "fiduciary" is also called: A. Faith B. Loyalty C. Trust D. Amiable
Rationale: C is the correct answer. Fiduciary comes from Latin fiduciarius "(holding) in trust," from fiducia "trust" from root of fidere "to trust."
The broker working with a buyer customer and representing the seller through the seller's broker is a: A. Buyer B. Seller C. Subagent D. Intermediary
Rationale: C is the correct answer. For subagency to exist there must be two sponsoring brokers. One of the brokers has a seller client and the other broker must have a buyer customer.
The clause that gives the lender the right to call in the note if the mortgaged property is sold or otherwise conveyed by the borrower, is known as the: A. Due-on-sale clause B. Alienation clause C. Both A and B D. Neither A nor B
Rationale: C is the correct answer. If an owner defaults, it's called acceleration. If the owner sells and the note is called due at the time of the sale, it is called alienation or due-on-sale.
John owns a track of land. He divides the land into 2 lots. The lot at the back of the property does not have access to the street. John must give the owner of the back lot an ____________ across the front lot. A. Easement by prescription B. Easement in gross C. Easement by necessity D. Acceleration
Rationale: C is the correct answer. In Texas, property cannot be landlocked, and the owner of the property must give access to another. This is called easement by necessity.
A company that works only with buyers or sellers but not with both: A. Will do intermediary B. May make appointments C. Is practicing single agency D. Is practicing dual agency
Rationale: C is the correct answer. In these companies, the broker does not practice intermediary.
Which of the following tasks is prohibited by a licensee who is working with an investor? A. Preparing an offer B. Estimating the return on the investment for the investor C. Recommending a specific investment D. Advising the investor to obtain a title policy
Rationale: C is the correct answer. Licensees can find and evaluate and can provide data and information to the investor, but they are not allowed to recommend a specific investment for an investor. It is the investor's ultimate decision what type of investment he/she will buy.
Which of the following is NOT one of the duties of an agent? A. Loyalty B. Confidentiality C. Possession D. Accounting
Rationale: C is the correct answer. Possession is not one of the duties of an agent to their client (remember OLDCAR).
Tom owns a property that has a small stream running thru it. What type of rights does Tom have to the use of the water? A. Lake water B. Groundwater C. Littoral D. Riparian
Rationale: D is the correct answer. An owner's rights in land that borders on or includes a stream, river, or lake. These rights include access to and use of the water for domestic purposes.
Deed restrictions are also known as: A. Covenants, Conditions, and Restrictions B. CC&Rs C. Both A and B D. None of the above
Rationale: C is the correct answer. Real estate deed restrictions are written into a property's deed and can take the form of conditions, covenants, and restrictions (sometimes called "CC&Rs"). The property's past or present owner, developer, builder, neighborhood, or homeowner's association usually imposes them. Deed restrictions are usually aimed at ensuring that there is an aesthetic uniformity between your property and neighboring properties and that certain other activities are limited. Reasons for including these restrictions may be to maintain the value of a property or to promote good relations within a residential community.
The broker must maintain on a current basis written policies and procedures to ensure that: A. Each sponsored salesperson is advised of the scope of the salesperson's authorized activities subject to the Act. B. Each sponsored salesperson is competent to conduct authorized activities. C. Both A and B D. The agent can make money.
Rationale: C is the correct answer. TREC rules state that "a broker shall maintain on a current basis written policies and procedures to ensure that:(1) Each sponsored salesperson is advised of the scope of the salesperson's authorized activities subject to the Act and is competent to conduct such activities."
The Americans with Disabilities Act deals primarily with: A. Single family residences B. Multifamily residences C. Commercial property D. All real estate
Rationale: C is the correct answer. The ADA deals primarily with commercial property.
What government agency would have regulations that would apply to a property that was used for a gas station in the past? A. Fair Housing Act B. Sherman Antitrust Act C. Environmental Protection Act D. Truth in Lending Act
Rationale: C is the correct answer. The Comprehensive Environmental Response, Compensation, and Liability Act was passed in 1980. The Act created the Superfund. The Superfund allows the United States Environmental Protection Agency to clean up toxic waste dumps and spills.
If a property has a "Sale of Other Property" contingency contract on it, the seller: A. Cannot accept another offer B. Must take the property off the market C. Can ask the original buyer to remove the contingency if the Seller has accepted another offer as a back-up D. None of the above
Rationale: C is the correct answer. The Sale of Other Property addendum allows the Seller to seek other offers, and if the Seller accepts one of the offers and signs it as a back-up, the Seller can ask the first buyer to either remove the contingency or to terminate their contract.
Which of the following leases would be unenforceable in court, unless it was in writing? A. A two-week lease of a cottage B. A month-to-month lease C. A three-year commercial lease D. A six-month lease on an apartment
Rationale: C is the correct answer. The Texas Statute of Frauds requires all leases for over one year to be in writing to be enforceable.
A fair housing violation complaint was filed against agent Jessica through the Texas Workforce Commission Civil Rights Division. Which of the following statements is true? A. The Texas Workforce Commission can revoke Jessica's real estate license. B. The Texas Workforce Commission can only refer the complaint to the Texas Real Estate commission. C. Both the Texas Workforce Commission and the Texas Real Estate Commission can sanction Jessica. D. Jessica does not have to do anything because the complaint was filed with the wrong agency.
Rationale: C is the correct answer. The Texas Workforce Commission can also award monetary damages to the complainant.
Jim has bought a home and will be closing on the property on June 1. He has borrowed $250,000 from a well-known lending company. How many days' worth of interest will he pay at closing? A. 10 days B. 1 day C. 30 days D. 29 days
Rationale: C is the correct answer. The borrower must pay interest for the rest of the month including the day of closing.
What reason would a property owner place a reserve amount with a property manager? A. To be used by the property owner for tax purposes B. To cover the manager's insurance plan C. To be used by the manager to pay any expenses related to the leasing and management of the Property (including but not limited to Broker's fees) D. To be used by the owner to pay the loan on the property
Rationale: C is the correct answer. The information is in Paragraph 6. RESERVES of the TAR Residential Leasing and Property Management Agreement.
The regulations that implement the enforcement of the Truth in Lending Act are known as: A. Regulation Y B. Regulation T C. Regulation Z D. Regulation L
Rationale: C is the correct answer. The law requiring credit institutions to inform borrowers of the true cost of obtaining credit: is called the Truth-in-Lending Act.
What would NOT be considered a property lien? A. Special assessments B. Property taxes C. Leased land D. Mechanic's lien
Rationale: C is the correct answer. The legal claim on someone's property as security for a debt. Examples of liens are mortgage liens, property tax liens, mechanics liens, and judgment liens.
What would an appraiser need to calculate the square footage of a house? A. The ceiling height B. A copy of the survey C. Length and width D. A legal description
Rationale: C is the correct answer. The length times the width of the house will give the square footage of the house.
When the holder of a mortgage agrees to accept a position of lower lien priority and to allow another mortgage to advance in priority, the process is known as: A. Subrogation B. Substitution C. Subordination D. Subterfuge
Rationale: C is the correct answer. The term subordinate means relegation to a lesser position, usually in respect to a right or security.
The loss of value of a property for any reason is: A. Spot zoning B. Setbacks C. Economic life D. Depreciation
Rationale: D is the correct answer. (1) In appraisal, a loss of value in property due to any cause, including physical deterioration, functional obsolescence and external obsolescence. Remember that depreciation can only be for the improvements on the land, not on the land itself. Land cannot be depreciated. (2) In real estate investment, an expense deduction for tax purposes taken over the period of ownership of income property.
If an agent inserts a provision into the contract that may materially affect the legal rights or duties of the parties, the provision: A. May render the contract voidable B. Is grounds for civil penalties C. Could result in a foreclosure D. May be considered the unauthorized practice of law
Rationale: D is the correct answer. Agents are not allowed to insert provisions into contracts. This constitutes the unauthorized practice of law.
A broker may delegate another license holder the responsibility to assist in administering compliance. With the TREC rule, however, the broker: A. May not relinquish overall responsibility for the supervision of license holders sponsored by the broker B. Delegation must be in writing. C. Must submit a form to the Commission on any delegation that is anticipated to last more than six months. D. All of the above
Rationale: D is the correct answer. In layman terms, the broker is allowed to delegate his authority to another person to help manage the office, the salespeople, and the operation as long as he complies with the above TREC rules.
No two parcels of land are exactly alike because no two parcels can occupy the same position on the globe. This is known as: A. Township B. Section C. Scarcity D. Nonhomogeneity
Rationale: D is the correct answer. Nonhomogeneity is a lack of uniformity or dissimilarity. Because no two parcels of land are exactly alike, real estate is said to be nonhomogeneous.
In what way do consumers compensate brokers for their services? A. Flat fee B. Percentage of the sale C. Fee for service D. All of the above
Rationale: D is the correct answer. Normally consumers pay real estate brokers a percentage of the sale price of the property; however, they can also pay the broker a fee for the service or a flat fee.
Predatory lenders generally target: A. Minorities B. Poor people C. Elderly people D. All of the above
Rationale: D is the correct answer. Predatory lending is any lending practice that imposes unfair or abusive loan terms on a borrower. It is also any practice that convinces a borrower to accept unfair terms through deceptive, coercive, exploitative, or unscrupulous actions for a loan that a borrower doesn't need, doesn't want, or can't afford.
The Fair Housing Act protected classes include: A. Race, color, national origin B. Religion, sex C. Handicap, familial status D. All of the above
Rationale: D is the correct answer. Race, color, national origin, and religion became law in 1968. Sex was added in1974; handicap and familial status were added in1988.
The Equal Credit Opportunity Act prohibits discrimination based on: A. Race, color, religion B. National origin, age, sex C. Marital status, income from a public assistance program D. All of the above
Rationale: D is the correct answer. The ECOA makes it unlawful for any creditor to discriminate against any applicant on the basis of race, color, religion, national origin, sex, marital status, or age; income derived from a public assistance program; or to the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act. The ECOA does not allow discrimination based on age. This does not apply to someone under 18, rather it means a lender cannot discriminate because they believe someone is too old to borrow money.
The ____________________ explains the basic information about the terms of a mortgage loan for which the consumer applied. A. HUD-1 B. Deed of Trust C. Closing Statement D. Loan Estimate
Rationale: D is the correct answer. The Loan Estimate and Closing Statement became mandatory for use October 3, 2015. This change came out of the Dodd Frank legislation which directed the CFPB to publish a single, integrated disclosure for mortgage transactions. The amendments are called the TILA-RESPA Integrated Disclosure Rule (or "TRID") and the documents became the Loan Estimate and the Closing Disclosure, which are now the mandatory documents to be used for 1-4 Family Residences that require financing.
When working with the buyer as a customer, the broker may: A. Show property to the buyer B. Fill out an offer for the buyer C. Collect a commission for the transaction D. All of the above
Rationale: D is the correct answer. The broker may not give advice and opinions to the buyer customer.
There are four duties owed by the client to the agent. They are indemnification, availability, compensation, and _______. A. Loyalty B. Exclusivity C. Privacy D. Information
Rationale: D is the correct answer. The four duties owed by the client to the agent are indemnification, availability, compensation, and information.
In the deed, the clause which sets forth the extent of the title being conveyed is: A. The hereditament B. The demising clause C. The indenture clause D. The habendum clause
Rationale: D is the correct answer. The habendum clause often follows the granting clause and states the interest being conveyed, Fee Simple, Life Estate, or Defeasible Fee. The habendum clause begins with the words "to have and hold."
The lease can terminate if: A. The lease could expire. B. The tenant could abandon the lease. C. The tenant and the landlord could both agree to cancel. D. All of the above
Rationale: D is the correct answer. The lease could expire, both parties could agree to cancel, or the tenant could abandon the lease. When the tenant does that, it is called a "skip."
If the seller breaches the exclusive right-to-sell listing agreement: A. The agent has no remedy. B. Nothing can be done as the seller can rescind the listing at any time. C. The seller is subpoenaed to appear at an ethics hearing at the local Board of Realtors®. D. The seller will be liable to pay the broker's fee.
Rationale: D is the correct answer. The listing agreement is a contract between the seller and the broker. If the seller breaches the contract, the seller may be liable for the broker's commission.
Under what circumstances is a listing broker is not required to present an offer? A. The broker presented one offer, and the seller is thinking about it. B. The offer is for less than the listing price. C. The broker thinks a better offer will be made tomorrow. D. None of the above
Rationale: D is the correct answer. The only time it is permissible for a listing broker to NOT present an offer is when the seller (owner) gives strict instructions to the broker not to present a particular offer.
The Texas Real Estate Commission may suspend or revoke a license or take other disciplinary action authorized by Chapter 1101 if the license holder, while acting as a broker or salesperson: A. Acts negligently or incompetently B. Commingles money that belongs to another person with the license holder's money C. Solicits, sells, or offers for sale real property by means of a lottery D. All of the above
Rationale: D is the correct answer. There are many reasons given in the TRELA for revoking a real estate license. An agent must be competent, is not allowed to commingle money, and may not use a lottery to sell a property.
Which of the following is required in texts or on social media? A. The license holder's name of team name and the broker's name may be located on a separate page or on the account user profile page of the license holder. B. The account profile or separate page must be readily accessible by a direct link from the social media or text. C. The license holder's name or team name and the broker's name must be readily noticeable on the account profile page or separate page that is linked. D. All of the above
Rationale: D is the correct answer. These are all required for social media or texting.