Promulgated Contracts Test Questions
D
A contract that is "pending" is: A) bilateral B) extended C) executed D) executory
D
In Texas, what are the two entities that promulgate contracts? A) Fannie Mae and REMICs B) FHA and TREC C) FDIC and NAR D) TREC and TAR
A
In an offer, Jordan wrote, "This contract is contingent upon the seller replacing the broken window in the bedroom before closing" in Paragraph 11, Special Provisions. Is this unlawful practice of law and/or a violation of the Rules or the License Act by the agents? A) Yes, this is unlawful practice of law. B) No, this is legal.
B
In the event of a casualty loss, who is responsible for restoring the property to its previous condition by the closing date? A) the buyer's agent B) the seller C) the buyer D) the listing agent
B
Paragraph 3, regarding sales price in the TREC contract forms, is: A) different in every contract B) the same in five of the six contracts C) only different in the Unimproved Property Contract D) different in both New Home Contracts
A
TREC has six promulgated sales contract forms. The contracts are as similar as possible, but when they are different, it's because: A) The types of properties have different requirements to fulfill the laws that apply to each. B) TREC and the Broker-Lawyer Committee couldn't arrive at a consensus on contract format. C) Buyer's agents and listing agents have to use different purchase contracts. D) The Broker-Lawyer Committee wanted to set a wide range of legal contract precedents.
B
To transfer contract obligations without necessarily relieving the original party from obligations, you need a(n): A) trade B) assignment C) contract transfer D) novation
B
Under the Addendum for Release of Liability on an Assumed Loan and/or Restoration of Seller's VA Entitlement, what happens if the parties cannot obtain the release by the closing date? A) The contract terminates and the earnest money is refunded to the buyer. B) The parties either agree to close anyway OR agree to terminate the contract, refunding earnest money to the buyer. C) The parties agree they will close anyway. D) The parties split the earnest money.
A
When would the Seller's Temporary Residential Lease be used? A) when the seller occupies the property for no more than 90 days after closing B) in every transaction upon closing and funding C) when the buyer occupies the property for no more than 90 days prior to closing D) when the seller occupies the property for at least one year after closing
B
Where does "time is of the essence" appear in the TREC promulgated sales contract? A) the legal description section B) the earnest money and option section C) the closing and possession section D) the purchase price section
D
Which TREC-promulgated contract form allows for the sales price to be adjusted because of the survey? A) the One to Four Family Residential Contract B) the New Home Contract (Completed Construction) C) the Unimproved Property Contract D) the Farm and Ranch Contract
A
Which contract has different wording for Paragraph 14 to account for the owner owning the dwelling but not the land beneath it? A) Residential Condominium Contract B) New Home Contract (Incomplete Construction) C) Unimproved Property Contract D) New Home Contract (Completed Construction)
B
Which of the following are bilateral contracts? A) Juan signs a buyer's representation agreement with Melvin. B) Fran leases an apartment unit to Sylvia. C) Greg signs a listing agreement with Aliki. D) Broker Jessi offers a $1,000 bonus for closing three houses this month. E) Ron signs an option-to-purchase contract with Phil.
A
Which of the following could be included in the Special Provisions section? A) business details desired by the principals B) information about mineral rights C) things that are covered by TREC addenda D) changes to parties' legal rights
B
Which of the following is TRUE of VA loans? A) A veteran will receive an automatic release of liability after the property is sold. B) The veteran is held liable if the person who assumed the loan after purchase defaults on it. C) A veteran can use the VA program again only when the original loan is paid off. D) VA loans are available to everyone.
C
Which of the following is TRUE of seller financing? A) The buyer cannot lease a seller-financed property. B) Seller financing is a wrap-around mortgage. C) Closing costs are reduced by a large amount. D) Only the buyer attains rights of ownership.
C
Which of the following is true of mineral estate? A) Mineral estate and surface estate are treated equally. B) Surface estate is dominant over mineral estate. C) Mineral estate is dominant over surface estate.
D
Which types of loans can be used with the Third Party Financing Addendum? A) seller financed loans only B) non-conventional loans only C) conventional loans only D) conventional and non-conventional loans
D
While calculating escrow, the lender will estimate the amount that the borrower will owe over the next: A) 2 years B) 6 months C) 30 days D) 12 months
B
Who fills out the Condominium Resale Certificate? A) the buyer B) the HOA's managing agent C) the seller D) the Board of the HOA
B
Who fills out the effective date on a contract? A) the buyer's agent B) the agent who finalizes the contract C) the seller's agent D) the seller
A
Who is required to sign the Buyer's Notice of Termination of Contract? A) the buyer B) the title company C) the seller D) the buyer and seller
B
Why are surveys often necessary for a farm or ranch sale? A) Surveys establish ownership of livestock. B) A property may have been in the family for years, and not been surveyed for a long time. C) Surveys are necessary to capture the number and extent of hunting leases. D) Mineral rights must be properly described by a survey.
D
Why might a buyer receive the Subdivision Information form? A) the learn about commission rates in the neighborhood B) to check the sales price of similar properties C) because the seller has back-up offers D) because the property being bought is subject to mandatory HOA membership
B
A back-up contract was executed on August 9th. The parties agreed to a 12-day option period. On August 15th, the seller notified the buyer that the first contract had terminated. When does the back-up buyer's option period end? A) midnight on August 27th B) 5 pm on August 27th C) 5 pm on August 21st D) midnight on August 21st
B
A backup contract was executed on June 1st. The buyer is willing to be in back-up position until June 15th and see if the first contract will terminate. The backup buyer: A) will not need to put any money down B) will pay any earnest AND option money agreed to in the back-up contract C) will pay ONLY the option money agreed to in the back-up contract D) will pay ONLY the earnest money agreed to in the back-up contract
A
A best practice for agents is to: A) include a copy of the survey as an attachment to the contract B) trust the legal description given by the seller and take no further action to review it C) make all copies of the legal description based on the MLS D) contact the local post office to obtain the legal address for a property
D
A buyer considering buying property adjoining a beach area should: A) check the rates of erosion B) consult with their attorney C) make sure they understand all the risks D) All choices are correct.
D
A couple signed a contract to sell their home. They're anxious to buy another property but don't want to end up with two house payments. They found a home they like and want to make an offer, but don't want to be obligated to purchase if their home doesn't close. Their agent can use which addendum? A) Loan Assumption Addendum B) Third Party Financing Addendum C) Addendum for "Back-Up" Contract D) Addendum for Sale of Other Property by Buyer
D
An option-to-buy contract is a(n): A) bilateral contract B) unenforceable contract C) one-sided contract D) unilateral contract
B
Buyer Billy made an offer in writing to Seller Susan on October 5th. Seller Susan agreed in writing to all the terms on October 7th. Her agent communicated her acceptance on October 8th. What is the effective date of this contract? A) October 5 B) October 8 C) October 6 D) October 7
B
Buyer Brandon purchases a home from Seller Shalini. Neither party requires a temporary residential lease. When is Seller Shalini required to deliver possession of the property to Buyer Brandon? A) within 30 days of closing and funding B) upon closing and funding C) within seven days of closing and funding D) within one calendar year of closing and funding
A
By how much must the loan balance at closing differ from the amount agreed upon in the Loan Assumption Addendum before either party can elect to terminate the contract? A) more than $500 B) more than $2,000 C) more than $1,000 D) more than $250
C
By whom should the language "time of the essence" be added? A) the license holder B) the buyer C) an attorney D) the seller
C
Property taxes are paid: A) daily B) every other year C) in arrears D) in advance
C
Which party does escrow protect? A) the buyer B) none C) both the seller and the buyer D) the seller
A
A buyer furnishes their credit report to the seller and the seller determines that it's not acceptable. The seller doesn't want to do seller financing for this buyer. What can the seller do? A) terminate the contract and refund the earnest money to the buyer B) terminate the contract and keep the earnest money C) The seller is under contract and cannot do anything. D) talk with the buyer to determine their attitude about this loan
C
Can real estate agents charge referral fees? A) Yes, but only to loan companies. B) No, but the service provider can choose to offer money for referrals. C) No, they can only take money for actual services rendered. D) Yes, they should charge fees for any referrals they made.
A
Candi is moving out of town. Her friend wants to take over her lease on her apartment. Candi does not want to have any future liability for the lease. The landlord agrees to release Candi and create a new lease with her friend. This is called a(n): A) novation B) termination C) abandonment D) assignment
A
Clark is selling 50 acres of land he owns and intends to transfer 10% of his mineral rights to the potential buyer, Tracy. He previously sold 25% of the rights to Rohit. In what section of the form should this be noted, and what figure should be included? A) Paragraph B2; 65% B) Paragraph B1; 75% C) Paragraph B1; 65% D) Paragraph B2; 90%
False
T/F Earnest money is required for a contract to be valid.
False
T/F If a buyer is in the process of countering an offer, the seller cannot sell the property to anyone else.
A
A seller is concerned about continuing to have liability for their mortgage after they sell the property and a buyer assumes the loan. The seller should attempt to get this from their lender: A) a release of liability B) Assumption Certification C) copy of the buyer's approval D) non-liability affidavit
C
A seller wants to keep the artificial fireplace logs that are in his home. They were a gift and the seller intends to use them in their new home. Where in the contract will the seller retaining the fireplace logs need to be mentioned? A) The contract indicates that all improvements and accessories will remain with the property. The seller cannot take the fireplace logs. B) Paragraph 10 - Possession C) Paragraph 2D - Exclusions D) Non-Realty Items
D
According to Paragraph 14 (Casualty Loss) of the sales contract, what would happen if the property were damaged or destroyed during the contract period? A) The contract will automatically terminate. B) The buyer and seller will negotiate who makes the repairs. C) The buyer will be responsible for filing insurance claims and repairing after close. D) The seller must restore it to its original condition before closing.
C
According to Texas state law, a contract for deed and a lease with an option to buy are considered: A) unenforceable contracts B) executed contracts C) executory contracts D) bilateral contracts
D
According to the One to Four Family Residential Contract (Resale), how much time does a buyer have to terminate the contract after having received the Seller Disclosure Notice? A) 5 B) 3 C) 10 D) 7
False
Agents may use the street address of a property as the legal description in all contracts promulgated by TREC. FALSE TRUE
D
An agent needed to add some information to a TREC-promulgated contract form. What other promulgated form should she look for on the TREC website to add to the initial contract? A) notice B) amendment C) disclosure D) addendum
B
Broker Adam found there was no promulgated listing contract. He had his Texas licensed attorney draw up one that he liked. Is he violating the license act? A) Yes, the broker can only use promulgated forms. B) No, there was no standard form, and he had a Texas attorney prepare it. C) Yes, he must use the one that the Texas Realtors (TR) has prepared. D) No, but the broker could have just written it himself.
B
Eleanor is in contract for a home. Her contract contains a Sale of Other Property by Buyer Addendum. The seller has just accepted a back-up contract for the property that doesn't have this contingency. What happens to Eleanor and her contract? A) The seller is not allowed to pursue back-up offers. Eleanor should notify the seller that they must proceed with her contract if they want to avoid a lawsuit. B) Eleanor can waive the addendum by a date she and the seller agree on. Otherwise, her contract terminates. C) Eleanor is out of luck — the seller can terminate her contract and accept the more attractive one. D) The seller already accepted Eleanor's contract, so they are required to wait until she sells her home.
D
How many TREC-promulgated contracts are there? A) five B) seven C) four D) six
C
How many days does a buyer have after receiving Subdivision Information before they must decide if they want to terminate the contract? A) 7 B) 5 C) 3 D) 14
D
If a seller wants to restore their entitlement, the VA is not obligated to approve restoration, the seller must pay for fees associated with release and/or restoration, and: A) the seller is ineligible if they have missed more than two consecutive loan payments B) the buyer must agree to a higher sales price to offset the entitlement C) the buyer must be active military personnel D) the buyer must be an eligible veteran/qualified buyer
A
If any leased fixtures that are not assumed by the buyer damage the property when removed, who is responsible for repairing the damage? A) seller B) Both parties split the cost. C) It's negotiable. D) buyer
A
If no temporary residential lease is required on a property, when is the seller required to deliver possession to the buyer? A) upon closing and funding B) 90 days prior to closing and funding C) within 90 days after closing and funding D) within 7 days after closing and funding
D
If one of the parties defaults and the non-defaulting party accepts the earnest money as damages, they may also: A) Sue for both specific and other damages. B) Sue for specific damages. C) Sue for other damages. D) Do nothing more, as the contract is terminated.
D
If rollback taxes are assessed because the seller changed the usage prior to closing, then: A) There will be no rollback taxes. B) The developer will be obligated to pay the rollback taxes. C) The buyer will be obligated to pay the rollback taxes. D) The seller will be obligated to pay the rollback taxes.
C
If the seller chooses not to seek liquidated damages as a remedy for default, what other option do they have? A) press criminal charges against the buyer B) none of these C) sue the buyer for specific performance D) sue the buyer's agent for misrepresentation
C
If the seller wants to continue to show the property for backup offers: A) The agent must add it to Special Provisions. B) The agent must add an addendum. C) The contract already permits the seller to do so. D) The seller must ask the buyer for permission first.
A
Kevin is writing an offer for a buyer. The buyer is really concerned about the transaction closing on time because his children will be starting school a week later. To reassure the client, Kevin wrote "time is of the essence" in the Special Provisions section of the contract. Is this unlawful practice of law and/or a violation of the Rules or the License Act by the agent? A) Yes, this is unlawful practice of law. B) No, this is legal.
True
T/F The Broker-Lawyer Committee creates and revises the contracts, but TREC actually promulgates the contracts.
D
Obligations often times must be completed within a certain number of days of: A) none of these B) the possession date C) the closing date D) the effective date
B
On all new construction homes, the Federal Trade Commission requires the builder to disclose the: A) R-value of the ceiling B) R-value of the insulation being used C) R-value of the heating system D) R-value of the hot water heater
False
T/F When a seller remains in the property after closing, the seller now becomes the landlord and the buyer becomes the tenant.
A
Sam is a listing agent. Another agent in his office showed him a contract form that was written by an attorney who was licensed in Florida. It is a very simple form, and Sam just likes it better than the TREC form. So Sam decides to order some copies from the attorney and begins using that form anytime he writes any offers. Is this unlawful practice of law and/or a violation of the Rules or the License Act by the agents? A) Yes, this is unlawful practice of law. B) No, this is legal.
B
Selena wants to purchase Rafael's home and assume his existing loan. They agree upon a deadline by which she is to provide Rafael with documentation of her creditworthiness. Which of the following would explain why the earnest money was returned to Selena when Rafael terminated the contract? A) The earnest money would be returned to a buyer regardless the cause for termination in a real estate transaction involving a loan assumption. B) After reviewing Selena's creditworthiness documentation, Rafael deemed her a poor credit risk. C) The earnest money is never returned to a buyer when a real estate transaction involving a loan assumption is terminated. D) Seven days past the deadline, Selena had yet to provide her creditworthiness documentation.
C
Since Kamala's taxes on her home are paid in arrears, when she sells it in July, an estimate will need to be made as to how much of the full year's amount she and the buyer should each be responsible for as of closing day. Through what process will this be done? A) settlement B) provision C) proration D) conveyance
D
Since Texas is a community property state, the title company might want to know a couple's or person's: A) birth date(s) B) number of children C) anniversary date D) marital status
False
T/F An agent should record any notes they have on the transaction in Paragraph 11 (Special Provisions).
True
T/F Both TREC and the Broker-Lawyer Committee were created in response to TRELA.
True
T/F Both members of TREC and members of the Broker-Lawyer Committee have six-year terms.
False
T/F Earnest money and other escrow deposits are loosely regulated.
False
T/F In a real estate sale, the license holder must use the appropriate TREC-promulgated form UNLESS another contract form is required by the buyer's lender.
False
T/F Listing agents and buyer's agents are legally obligated to follow ALL instructions from their clients.
True
T/F Statutes of limitations vary in length depending on the type of lawsuit or crime.
B
The Broker-Lawyer committee drafted a new promulgated form and TREC approved it for mandatory use. An agent continued to use the old form. The agent is guilty of: A) a violation of contract law B) a violation of the License Act C) a violation of RESPA D) nothing (it was an honest mistake.)
B
The Seller Financing Addendum may require the buyer to furnish certain items to the seller to establish the buyer's creditworthiness. Those items include all of the following EXCEPT: A) verification of employment B) a history of medical records C) verification of deposit D) credit report
C
The Unimproved Property Contract can be used for: A) personal properties B) properties with improvements C) small city lots D) ranches with windmills and pens
B
The buyer and the seller have agreed on everything in the offer except the closing date. Is the seller free to consider other offers? A) No, the first buyer now believes they have the house. B) Yes, the seller should withdraw their last counteroffer to the first buyer before countering another. C) Yes, the seller can go ahead and counter the 2nd offer and then decide what to do with the 1st offer. D) No, they are too close to quit now.
C
The parties agree that the seller is going to leave the washer and dryer for the new buyers. Since those items are not real estate, where should this information be listed? A) The parties can have a verbal agreement to leave the items. B) noted in Paragraph 11, Special Provisions C) on the Non-Realty Items Addendum D) noted in Paragraph 2D, Exclusions
C
The buyer wants to make sure they will get the table and chairs that are currently in the home. Does anything need to be added to the contract? A) Yes, in Special Provisions. B) No, just a verbal agreement. C) Yes, the items should be added to the Non-Realty Items Addendum. D) Those items would automatically convey and don't need to be listed.
C
The effective date of the contract is the date that: A) A written contract has been accepted, signed, and communicated to the title company. B) A written contract has been accepted, signed, and delivered to the other party. C) A written contract has been accepted, signed, and communicated to the other party. D) A written contract has been accepted, signed, and faxed to the other party.
B
The mineral estate is comprised of all minerals including oil and which of the following? A) limestone B) gas C) iron D) water
A
The only TREC contract that talks about construction documents and cost adjustments is the: A) New Home Contract (Incomplete) B) Farm and Ranch Contract C) Unimproved Property Contract D) New Home Contract (Complete)
B
Wanda's client told her that he was a little worried about signing a contract because he was in the process of getting a divorce, and therefore, was not sure what his attorney would advise. Wanda suggested they write in that the offer was contingent upon approval by his attorney. Is this unlawful practice of law and/or a violation of the Rules or the License Act by the agent? Why or why not? A) No, the Special Provisions section is filled in manually for each transaction. B) Yes, you must never rewrite what it says in an addendum approved by TREC. C) No, as long as both parties agreed on the contingency in advance. D) Yes, offers can never be contingent on the sale of another property.
A
What does the One-to-Four Family Residential Contract describe as "permanently installed and built-in items"? A) improvements B) legal descriptions C) exclusions D) accessories
A,B,C,D
What is TRUE about presenting offers? (Select All That Apply) A) The seller has no duty to respond to the offers in any particular order. B) The listing agent's fiduciary duty is to their seller. C) Because of the statute of frauds, all real estate offers in Texas must be in writing. D) The seller has no legal duty to respond to any offer. E) The NAR Code of Ethics requires an agent to submit all offers to the seller until the first offer has been accepted. F) If a seller has countered one offer and then a better offer comes in, the seller can accept the better offer without withdrawing their counteroffer.
C
What is a good risk-prevention strategy agents can use when filling out the One-to-Four Family Residential Contract? A) Never use nicknames or abbreviations. B) Verify the seller is listed on the deed. C) All choices are correct. D) Ask the parties to write their own names down.
B
What is in ALL residential real estate contracts promulgated by TREC? A) a provision that the sales price can change depending on the survey B) a description of the property being sold C) a section on mineral rights D) a determination of broker fees
B
What is the purpose of the Notice of Buyer's Termination of Contract? A) The seller notifies the buyer that the buyer's termination may not be possible, and what legal recourse the buyer would then have. B) The buyer notifies the seller that they are terminating the contract, and gives their reasons for doing so. C) The buyer notifies the lender of the buyer's intent to terminate any financing agreements. D) The buyer notifies the agent of grievances with the agent that led to the buyer's termination of the contract.
A
What is the purpose of the Special Provisions section of the sales contract (Paragraph 11)? A) to add contract terms that are not already included in the sales contract or for which a TREC-promulgated form does not already exist B) to list all of the defects and malfunctions discovered by the home inspection C) for the listing agent and buyer's agent to negotiate commission D) to list the personal property that is to remain in the home, such as refrigerators, lawnmowers, etc.
c
What is the purpose of the Texas Real Estate Consumer Notice Concerning Hazards or Deficiencies? A) to provide information when a property is going to sell for less than what a seller owes on their mortgage B) to inform consumers about TREC's real estate recovery funds, as well as how they can contact TREC and how to file a complaint C) to educate buyers on the purpose of property inspections D) to familiarize buyers with the risk of purchasing waterfront property
C
What is the relationship between TREC and the Broker-Lawyer Committee? A) TREC creates and revises real estate forms that are then approved and promulgated by the Broker-Lawyer Committee. B) TREC supervises the Broker-Lawyer Committee. C) The Broker-Lawyer Committee creates and revises real estate forms, and TREC approves and promulgates them. D) The Broker-Lawyer Committee is the governing body of TREC.
A
When does the option money and earnest money need to be paid on a contract with a short sale addendum attached? A) option money to seller within 3 days of original effective date; earnest money to title company by the close of business on the 2nd working day B) neither amount should be deposited before closing C) earnest money to seller within 3 days of amended effective date; option money to title company by the close of business on the 2nd working day D) both submitted after lender approval
D
When does the right to terminate begin in the Short Sale Addendum and the Back-Up Addendum? A) on the amended effective date B) three days after the amended effective date C) three days after the effective date D) on the original effective date
C
When filling out the One to Four Family Residential Contract, you'll need to include: A) whether the property was built before 1978 B) any repairs that the buyer wants included C) All choices are correct. D) a legal description of the property
A
When is the Buyer's Temporary Residential Lease terminated? A) upon the closing and funding of the sale B) 90 days after the closing and funding of the sale C) 7 business days after the closing and funding of the sale D) 7 business days after signing the lease agreement
A
When purchasing waterfront property, which is true when considering the risks assumed or rights available to a buyer? A) Owners of property on the coast can lose property because of erosion. B) If a property comes to be on a beach area, the state will remove it at their expense. C) Owners of coastal property can sue the state of Texas for loss of land from erosion. D) The state of Texas can enforce additional regulations for private beaches,