Principles of Real Estate 1

Which of the following is NOT recommended during a downcycle?

Increase your advertising.

Cindy, a seller, tells the buyer of her home that the property will soon be part of the public water system. She makes this claim based on erroneous information the city supplied to her. The buyer relies upon this information and moves forward with the purchase of the home. This is an example of ______.

Innocent misrepresentation

What is a sketch that shows the location, size, and shape of any improvements on a property being surveyed?

Spot survey

What's the term for the illegal practice of nudging buyers away from or toward a specific area based on the presence or absence of protected class members?

Steering

Which of the following defines an income tax lien?

Involuntary lien placed against a property owner's property for due and unpaid taxes

A ______ gives the purchaser the right to possess the property at given times for a given duration but doesn't convey ownership.

Timeshare use

Texas resident Sonny, who doesn't have a real estate license, helps his brother's neighbor, Nicole, sell her house. He charges her a commission of $3,000, which she happily pays. Which of the following is true in this situation?

Sonny may have to pay administrative and civil penalties.

Which is the following may an owner place on the land when it's sold to limit the use of the property?

deed restriction

A property is 330 feet long by 100 feet wide. How many square feet is the property?

33,000

Broker applicants in Texas must have how much experience as an active license holder in the previous five years?

4 years

Margie needs to know the square footage for the first floor of the condo her client is interested in buying. The kitchen is 10 feet by 15 feet, the living/dining combo is 20 feet by 25 feet, and the office and bedroom are each 10 feet by 10 feet. What's the total square footage?

850 square feet

Rhonda is an unrepresented buyer who's purchasing Tony's townhome. Gary represents Tony in the sale of his property. What's Rhonda's relationship to Gary?

A customer

Which of the following best describes a lease agreement?

A legally binding, written contract between a landlord and a tenant

Which of the following best describes a contract for deed?

A legally binding, written contract between a property buyer and the seller that allows the buyer to pay for the property in installments

Who is behaving unethically in the following scenarios?

A licensee who doesn't show potential buyers a home because he believes they aren't a cultural fit.

Which of the following is an example of an easement?

A path providing neighborhood access to a pond cuts through part of Hillary's property.

What is assessed value?

A percentage of market value; also the amount of property value to which the tax rate is applied

The Simpsons are buying a five-acre lot that was part of a much larger tract of acreage. When the owners of the large acreage decided to subdivide it, they needed to have a legal description created for the five-acre lot. What was used as the starting point for creating that legal description?

A survey

What type of buyer would be most attracted to a single-family dwelling?

A young couple planning a family

The Adams family is financing their loan through Acme Bank and their agent negotiated a great sales price in their new home. Smith Title Company processed the loan documents. The Adamses must purchase mortgage insurance. Who does the insurance protect?

Acme Bank

A person performing real estate activities under the judgment or order of a court, such as a trustee in a bankruptcy, is _______.

An exception to the real estate licensing requirement

Where might a legal description be found?

At the county recorder's office or online county offices, or through a title company

Ken, Barbie, and Skipper owned a property as a joint tenancy. When Skipper moved out of state, she sold her interest to Midge. Two years later, Ken died. How is the interest in the property divided?

Barbie owns two-thirds, and Midge owns one-third.

To be eligible for a real estate license in Texas, a person must be at least 18 years of age, and:

Be a citizen of the United States or a lawfully admitted alien

Which one of the following statements is true about specializing in a specific type of property transaction?

Both brokers and sales agents may specialize in one or more types of property.

In Texas, "someone who has agency representation with the real estate sales agent or broker" is the definition of a ________.

Client

Which of the following real estate-related activities may be performed by someone who does NOT hold a real estate license?

Condemning property on behalf of the state

Javier represents Marcus, who's selling his rental property to Ben. Ben is represented by another real estate licensee, Francis. What is Ben's relationship to Javier?

Customer

A new business moves into town, significantly increasing the availability of good paying jobs. How is this likely to affect the town's housing market?

Demand will go up, creating a seller's market.

Revealing all material facts to the client that are pertinent to the transaction describes which fiduciary duty?

Disclosure

The duty of ______ requires a licensee to reveal all material facts that are pertinent to the transaction to both clients and customers.

Disclosure

Which of the following scenarios is an example of novation?

Doug is buying Norm's farm, but has a serious accident and no longer wants to own a farm, so his daughter Linda decides to buy the property. Norm agrees to the substitution of Linda for Doug in the purchase contract, effectively creating a new contract.

Which of the following is the TREC committee that is responsible for reviewing the performance of any educational program that is performing below TREC's established standards?

Education Standards Advisory Committee

The Equal Credit Opportunity Act specifies that credit applicants must be judged using only what criteria?

Income Net worth Job stability Credit rating

Emilio wants out of his contract, because he doesn't believe his buyer agent is working hard enough to find him a property that meets his criteria. What must happen before the buyer agency agreement can be terminated?

Emilio and his agent must mutually agree in writing to terminate their agreement.

_________ is the power of the government to take private land for public use.

Eminent domain

The state's claim to property when a property owner dies, leaving no will, heirs or creditors, is the power of ______.

Escheat

What type of lien is defined as an involuntary lien placed on all of the property received by a deceased person's heirs?

Estate/inheritance lien

Kirby has a listing agreement with Bob. If Kirby or another agent locates the buyer, Kirby gets his listing commission. However, if Bob locates the buyer, Kirby does not earn a commission. What type of listing agreement do they have?

Exclusive agency

Joe gave land to a school, but still wanted to have some control over its use, so a deed was prepared that gave the school title as long as the land is used for educational purposes. What type of interest does the school have?

Fee simple determinable

To qualify for and maintain a real estate license, a business entity must designate someone who:

Holds an active Texas real estate broker license.

Which of the following best explains how the statute of frauds protects consumers?

It provides requirements that certain contracts have to meet to be legally enforceable.

Mika has borrowed $5,000 from her cousin Jun and not repaid it. Now, Mika is selling her house to Jun's nephew, Cheong. As Mika writes up the contract, Jun tells her that if she doesn't sell the house at a steeply discounted price, Jun will take the matter of the $5,000 to court. What is true about this situation?

Jun's influence is invalidating Mika's consent.

Stan and Emile are arguing over their shared lot line, since Stan thinks that Emile planted a privet hedge on Stan's property. Stan filed a civil legal action against Emile. What will the court use to determine the actual lot line?

Legal descriptions of both properties

Which of these is a recommended strategy for a real estate professional who wants to avoid being asked to violate fair housing laws?

Let consumers know up front that you adhere to fair housing laws.

Martin placed all of his real estate investments in a trust, and the proceeds are distributed through the trust to his son Nathan. Martin still manages the properties indirectly, and Nathan currently benefits, as he's past the required beneficiary age of 18. What type of trust is this?

Living trust

Which type of legal description is this: "Plat of Block 28, Woodmen Heights Tract, recorded in Map Book 27, page 68, at the Eldor County Records Office"?

Lot and block

Lucas, Ivan, Chad, and Trace own a property as joint tenants. After a few years, Ivan sells his interest to Tom (with permission from Lucas, Chad, and Trace). Chad dies intestate but is survived by a wife, Amy. Trace also then passes away but wills his property to Monique. Who owns the property after Trace's death?

Lucas and Tom

Which of the following scenarios best describes a net listing?

Maeve wants to get at least $350,000 when she sells her property and tells her listing agent, Stan, that he can keep anything above that amount.

Which of the following is one of a listing agent's duties?

Maintain seller confidentiality.

Seller Tad has found a buyer, Minnie, for his property. The two of them are about to enter into a contract when Tad receives an email from Minnie. Turns out that Minnie's co-worker used to date Tad and told Minnie he'd cheated on his construction contractor licensing exam. Minnie threatens to spill the beans unless Tad comes down $10,000 on the sales price. Tad reluctantly agrees and they sign the contract. What is true about this situation?

Minnie used duress against Tad, so the contract is invalid.

Eric is a new licensee who wants to specialize in manufacturing and large office buildings. He is probably interested in which type of specialization?

Mixed use

Four brokerage firms operate in the same small city as Jackson's firm. All the firms charge approximately the same listing commission and pay approximately the same cooperating commission to the selling broker. The commission splits within each firm are also similar. Is this an antitrust violation? Why or why not?

Not necessarily. The fact that the firms' commission rates and splits are similar doesn't necessarily mean they agreed to fix those values.

Which type of power gives the government the authority to do what's right for the public good and the owner may or may not be compensated?

Police power

Which of the following is a legitimate reason to terminate a sales contract?

One or both parties are in default.

When does partial performance of a contract occur?

One or both parties have completed only a portion of the terms agreed to in the contract.

The list price is the price for which the _____ has agreed to sell a property.

Owner

In what way is a townhome similar to a single-family detached home?

Ownership includes both the structure and the land.

According to the Department of Justice, an agreement between competitors to establish or adhere to uniform price discounts is a type of which antitrust violation?

Price fixing

The duty of ______ requires licensees to provide both clients and customers with quality, knowledgeable, and prudent service, and live up to the trust placed in them.

Reasonable skill and care

Which legal description method is regulated by the U.S. Department of the Interior's Bureau of Land Management?

Rectangular government survey

if an applicant for a real estate license in texas receives a written notice of denial from the texas real estate commission,the applicant may accept the denial or:

Request a hearing in writing within 30 days of the notice

Anyone working for a property management company in Texas and who works for more than one owner is _______.

Required to have a minimum of a sales agent license to collect rent and perform other real estate functions

An apartment building is an example of what kind of property?

Residential

Ron's company leased a building so that it could build an escape room experience. After operating for two years, attendance (and thus its profits) started to drop significantly, so it decided to close the location. When the workers started taking down the installation, they realized that some of the structures would damage the walls if they were to try to remove them. Which of these is true about these trade fixtures?

Ron may take the fixtures as long as he repairs any damage caused by removal.

Sam grants Steve a license to hunt deer on his property. Which of the following statements about the license is true?

Sam can revoke the license at any time.

To become a Texas sales agent, how many 30-hour pre-licensing courses must an applicant complete?

Six 30-hour courses

When there are more homes for sale in an area than there are buyers, it means what?

Supply exceeds demand.

Conversion means to ______.

Take money from an escrow account and use it for someone who is not entitled to it

The ESAC makes recommendations for improvements to real estate education to the ______, which is tasked with implementing the new standards.

Texas Real Estate Commission

Niall is helping his seller client prepare a Bill of Sale. What amount should they write in for the sale price?

The amount that was negotiated with the buyer

In Texas, whose responsibility is it to supervise associated licensees and review transactional paperwork and advertising?

The broker's

Which entity decides the matter when two different legal descriptions conflict?

The courts

Which of the following is a legitimate and legal way that an exclusive right-to-sell listing agreement may terminate without the seller owing a commission?

The listing agent stops working on the listing.

Marshall is a home inspector who is walking the lot of the property he's inspecting with a survey in hand. Which of the following will he note as an encroachment on the inspection report?

The neighbor installed a basketball hoop next to his driveway, six inches over the property line.

The purpose of Texas anti-trust laws is to prevent ______.

The substantial decrease of competition in any line of trade or commerce

In the eyes of the law, why do people under age 18 lack contractual ability?

They're minors.

What type of estate involves a piece of real estate that's owned by multiple unrelated individuals who, in addition to their ownership rights, each hold the right to occupy the dwelling unit in one- to two-week intervals during the year?

Timeshare

Which of the following describes a manufactured home?

Traditional mortgage financing is difficult to obtain.

A lot measuring 108,900 square feet is for sale. How many acres is this?

Two-and-a-half

Duke is a legal guardian for his mother, who suffers from a mental illness. His mother would like to buy a luxury condo, but Duke tells her she can only afford a cheap condo. In reality, his mother could easily afford a luxury condo, and Duke hopes to transfer her excess money into his personal account. Duke's mother trusts his word, and enters into a contract to buy a cheap condo. This is an example of ______.

Undue influence

Physical characteristics of land include its immobility, indestructibility, and ______.

Uniqueness

Martha is completing an addendum for her client. She should make sure that it's written ______.

Using standardized language

Burt terminated his exclusive right-to-sell listing agreement with Scott, his listing broker, without cause. Burt may legally do this as long as he's ______.

Willing to pay Scott's commission anyway

First Baptist Church in Houston owns two apartments next door to the church, which used to be housing for its ministerial staff. It does not rent to non-Baptists. Is this legal in Texas?

Yes, as long as it does not discriminate based on race, color, or national origin.

At what point must a listing agent disclose material facts to all parties involved in the transaction?

as soon as possible

Terri just bought her first home! She's so excited to be living the American Dream. She owns her home's interior, including the walls, but not the land on which it sits. What type of home does Terri own?

condominium

Sally and Jake haven't found any homes they can afford in their desired neighborhood. In fact, there are hardly any available at all. Those that go on the market usually end up in bidding wars, and sell for about twice the price of similar homes in neighborhoods 15 minutes away. What is the state of the market in Sally and Jake's desired neighborhood?

demand exceeds supply

Phil is a property manager, which means he serves as a _______ agent to his landlord/client.

general

Which economic characteristic of land contains the concept that a land's value can be affected by the changes made to it, such as construction of buildings or fences?

improvements

Shannon is reading through paperwork related to her upcoming home purchase when she comes across the following: "Southwest quarter of Southwest quarter (SW ¼ of SW ¼) and West Half of Southeast quarter of Southwest quarter (W½ SE¼ SW¼) of Section Eleven (11), Township Four (4) North of Range Eight (8) West." What did Shannon just find?

legal description

What is the value a buyer and a seller agree upon?

market value

What type of listing agreement provides the sellers with the opportunity to enter into listing contracts with multiple agents and still reserve the right to sell the property themselves,owing no commission?

open listing

Zack enters into a contract to buy Olivia's home. Per the terms of the contract, Zack must put down a $10,000 earnest money deposit and have the property inspected within five days. In reality, he puts down a $12,000 deposit and has the property inspected within two days.Of what is this an example?

performance of the contract

The government authority to do what it can ti ensure the health,safety,and welfare of its citizens is called ______.

police power

Who can request a CLUE report?

property owner

Which of the following would be something that could be improved by using funds from a special assessment tax?

road repaving

Evan brought into a housing cooperative that's focused on cultural exchange. Each month, the co-op residents have dinner meetings and share food and information about the culture of their respective regions. When Evan made his purchase, he received a proprietary lease for his unit. What else did he receive?

shares in the cooperative corporation

which of the following is a legitimate reason to terminate a lease agreement?

the term of the agreement has expired

When does a sellers market occur?

when supply is low and demand is high