Texas Law of Contracts: Quiz Questions

Statute of Frauds

A State law requiring certain contracts to be in writing and signed before they will be enforceable at law is known as the...? Statute of Limitations Statute of Frauds Statute of Agency Statute of Contracts

Contingency

A clause written in a sales contract that states the buyer must be allowed to terminate the contract if he/she cannot obtain financing is an example of which of the following...? Contingency Acknowledgement Notice Bulletin

Executory Contract

A contract in which something remains to be done by one or both of the parties is considered a/an...? Executed contract Executory contract Void contract Open contract

Executed Contract

A contract that has been fully performed is considered a/an...? Void contract Closed contract Executory contract Executed contract

Life Estate

A freehold estate created for the duration of the life or lives of certain named persons is known as a...? Fee simple absolute estate Leasehold estate Fee simple determinable estate Life estate

12 Months

A home warranty is typically valid for up to how many months after a buyer purchases a property....? 3 months 6 months 12 months 24 months

Lessor

A landlord is also referred to as a...? Lessor Grantee Grantor Lessee

Lender

A mortgagee is typically the...? Seller Buyer Lender Borrower

Borrower

A mortgagor is also referred to as a...? Lender Seller Borrower Creditor

Retail Tenant

A percentage lease is typically used with what type of tenant...? Industrial tenant Retail tenant Office tenant Residential tenant

All of the Above

A ready, willing, and able buyer means the buyer...? Is ready to sign the sales contract Has the financial means to close on the property Is ready to move towards closing on the property All of the above

Ground Lease

A real estate developer may be interested in which of the following types of leases...? Net lease Percentage lease Gross lease Ground lease

Gross Lease

A residential lease is typically what type of lease...? Ground lease Net lease Gross lease Percentage lease

Easement

A right acquired by one party to use the land of another party for a special purpose is referred to as a/an...? Easement Encroachment Lien Homestead

Fix a Defect in Title

A suit to quiet title is used to do which of the following...? Remove an owner from title Fix a defect in title Add on to a title Record a title

Lessee

A tenant is also referred to as a...? Grantee Lessor Grantor Lessee

Beneficiary

A trust involves a trustor, trustee, and a...? Attorney Broker Grantor Beneficiary

All of the Above

A valid contract must include which of the following...? Offer and acceptance Consideration Legal purpose All of the above

Grantor

After a fee simple determinable estate ends, the interest in the property reverts back to the...? Remainderman Grantee Tenant Grantor

All of the Above

Amy is negotiating the purchase of a new house. What contingencies may Amy add to the sales contract...? Appraisal contingency Mortgage contingency Title contingency All of the above

Uniform Residential Appraisal Report

An appraiser will document the appraised value of a house on the...? Uniform Residential Appraisal Report Texas Appraisal Report National Appraisal Report HUD Appraisal Form

Bilateral Contract

An independent contractor agreement is considered what type of contract...? Unilateral contract Implied contract Bilateral contract Void contract

One to Four Family Residential Contract (resale)

An options agreement is included in which of the following contracts...? Exclusive Right to Sell Agreement Net Listing Agreement One to Four Family Residential Contract (resale) Residential Listing Contract

Consideration

Anything given or promised by a party to include another to enter into a contract is called...? Consideration Novation Conversion Assignment

Involuntary Alienation

David recently lost his property through a foreclosure sale. This is an example of...? Voluntary grant Voluntary alienation Improper transfer Involuntary alienation

Appraisal Contingency

Ely is in the process of purchasing a new house and needs to obtain a mortgage. In addition to a mortgage contingency, what other contingency may Ely add to the sales contract...? Appraisal contingency Credit contingency Disclosure contingency Moving contingency

All of the Above

How can an agent avoid the unauthorized practice of law...? Refuse to provide legal advice Have their client's attorney perform any edits to the contract form Refer their client to an attorney for legal advice All of the above

They Add Content to the Existing Contract

How do addendums affect a contract...? They add content to the existing contract They void the contract They modify the existing content of the contract All of the above

It Give the Buyer an Idea of How Much They Can Afford

How does a pre-approval letter from a lender help a buyer...? It gives the buyer an estimated closing date It determines what size house a buyer can purchase It gives the buyer an idea of how much they can afford It determines where a buyer can purchase a house

Performance

If a contract requires a party to do something, it is referred to as...? Closing Performance Consideration Forbearance

Forbearance

If a contract requires a party to not do something, it is referred to as...? Blocking Forbearance Consideration Performance

Breach of Contract

If a party cannot close on the agreed upon closing date, and an amendment isn't made to the contract, the party is said to be in...? Rescission of contract Blocked contract Breach of contract Execution of contract

Before the Prospective Buyer Makes an Offer

In order to help prevent the buyer from withdrawing their offer, when should a seller provide a prospective buyer with the property disclosure form...? After the contract is signed with the prospective buyer Before the prospective buyer makes an offer After the prospective buyer's offer is accepted After the prospective buyer's home inspector conducts their inspection of the property

Trade Fixtures

Items that are installed by a commercial tenant and are removable upon termination of the tenancy are considered...? Emblements Fixtures Trade fixtures Real property

The Borrower

Judicial foreclosure favors which of the following...? The broker The lender The Trustee The borrower

The Date When the Lien was Recorded

Liens are generally prioritized based on which of the following...? Liens are not prioritized over one another The amount of the lien The desire of the property owner The date when the lien was recorded

Voidable

Lisa recently signed a sales contract to purchase a new house. In the contract, Lisa needed to add a mortgage contingency. This contingency makes the contract a/an ................contract? Executed Unenforceable Assigned Voidable

All of the Above

Mark recently obtained a mortgage and signed a promissory note with the lender. Which of the following is most likely included in Mark's promissory note...? The amount of the debt The interest rate of the loan The time and method of payment of the debt All of the above

Community Property

Married couples in Texas typically own property as...? Community property Severalty ownership Tenancy by the entirety Joint tenancy

The Lender

Non-judicial foreclosure favors which of the following...? The broker The Trustee The lender The borrower

Promulgated

Once TREC approves a form drafted or edited by the Broker/Lawyer Committee, the form is considered...? Void Promulgated Recorded Reviewed

Proprietary Lease

Ownership in a cooperative consists of which of the following...? Proprietary lease Title Real property Deed

Chattels

Personal property is also known as...? Real estate Chattels Emblements Fixtures

Fixture

Personal property that has become real property by having been permanently attached or adapted to real property is known as a...? Chattel Fixture Trade fixture Emblement

Man-Made Improvements

Real estate is considered land plus...? Bundle of rights Surface rights All of the above Man-made improvements

Real Property

Real estate plus the bundle of rights is known as...? Land Real estate Real property Chattels

Rules Regarding the Texas Contract Forms

Section 1101.155 of the Texas Real Estate License Act deals with which of the following...? Rules regarding independent contractors Rules regarding the Texas contract forms Rules regarding broker conduct Rules regarding agency relationships

Consumers

The DTPA helps protect...? Agents Consumers Sellers Attorneys

The Lesser of the Contract Price or the Appraised Value

The amount that a bank will lend on a property is based on which of the following...? The contract price only The appraised value only The higher of the contract price or the appraised value The lesser of the contract price or the appraised value

Principal

The buyer is the .....................in a Buyer Agency Agreement? Broker Principal Agent Customer

The Escrow Agent

The buyer's earnest money is normally held by which of the following...? The County Clerk The escrow agent The seller themselves The buyer's attorney

Conversion

The commingling of funds may lead to which of the following...? Conversion Steering Blockbusting Redlining

Proration

The division of certain settlement costs between a buyer and seller is known as...? Escrow Settlement Proration Conversion

TRELA

The duties and powers of TREC are described in which of the following documents...? RESPA TRELA DTPA NAR

Closing Agent

The escrow agent typically serves as the...? Closing agent Attorney Seller's agent Lender representative

Trustor

The individual who contributes real property to a trust is considered the...? Trustee Trustor Grantee Beneficiary

Ethics

The moral principles that govern a person's or group's behavior are known as...? Ethics Statutes Guidelines Laws

Counter-Offeree

The party that receives a counter-offer is called the...? Counter-offeree Counter-offeror Offeror Offeree

Offeree

The party that receives the offer is called the...? Grantee Offeree Grantor Offeror

Bundle of Rights

The rights of an owner of a freehold estate to possession, enjoyment, control, and disposition of real property is known as...? Real estate Title Bundle of rights Chattels

Grantor

The seller in a residential sales transaction is considered the...? Trustor Trustee Grantee Grantor

Assumption of Mortgage

The taking of a title to property by a grantee wherein the grantee assumes liability for payment of an existing note secured by a mortgage or deed of trust against the property, is known as...? Release of a mortgage "Subject-to" a mortgage Assumption of mortgage Alienation of a mortgage

Voluntary Alienation

The transfer of title freely by the owner is referred to as...? Voluntary alienation Granting Trustor Involuntary alienation

Leasehold Estates

There are two primary types of estate in land, freehold estates and...? Trust estates Absolute estates Temporary estates Leasehold estates

Adverse Possession

This form of involuntary alienation involves the taking of property through the open, notorious, continuous, and hostile occupancy of the property...? Adverse possession Foreclosure Condemnation Eminent domain

Negative Amortization

This occurs when monthly installment payments are insufficient to pay the interest accruing on the principal balance, so that the unpaid interest must be added to the principal due...? Inflation Deflation Negative amortization Amortization

Easement by Necessity

This type of easement exists when a landowner has no access to roads and is landlocked...? Dominant easement Easement by prescription Easement in gross Easement by necessity

Clear Title

Title which is not encumbered or burdened with defects is known as...? General title Clear title Clouded title Effective title

Easement in Gross

Utility companies typically hold what type of easement...? Easement by prescription Dominant easement Easement by necessity Easement in gross

Equitable Title

What does the vendor offer a vendee in a transaction...? A property free of any cosmetic defects Equitable title Money All of the above

All of the Above

What should a buyer do in preparation for closing...? Conduct the final walk-through Obtain a cashier's check Compare the good faith estimate to the HUD-1 form All of the above

At the Sale of the Property

When is an acceleration clause typically executed...? At the assignment of mortgage When the property is leased When the property is taxed At the sale of the property

Information About Brokerage Services

When representing a seller, what is the very first form the broker must have the seller review and sign...? Purchase contract Disclosure of Agency Information About Brokerage Services Listing contract

TREC Website

Where can agents and brokers look to find the most up to date promulgated contract forms...? Realtor.com TREC website BRE website All of the above

Mortgage Disclosure Improvement Act

Which of the following Acts helps prevent consumers from getting charged higher than anticipated fees by lenders at closing...? Mortgage Disclosure Improvement Act Lender Disclosure Act Mortgage Settlement Act Financing Disclosure Act

PETE

Which of the following acronyms can be used to describe the powers the government possesses over real property...? PETE PITI SADDLE RESPA

Third Party Financing Addendum

Which of the following addenda are used when the buyer is obtaining a conventional mortgage to purchase a property...? Sellers financing addendum Reverse mortgage addendum Loan assumption addendum Third party financing addendum

Property Sale Contingency

Which of the following contingencies allows a buyer to get out of a sales contract if he/she cannot sell their existing home...? Property sale contingency Inspection contingency Exchange contingency Mortgage contingency

Title Contingency

Which of the following contingencies ensures that the buyer will receive clear title to the property...? Appraisal contingency Title contingency Mortgage contingency Inspection contingency

General Warranty Deed

Which of the following deeds is most commonly used to transfer residential property in Texas...? Quitclaim deed Bargain and sale deed Deed without covenants General warranty deed

General Warranty Deed

Which of the following deeds offers the most amount of protection to the buyer...? General warranty deed Bargain and sale deed Special warranty deed Quitclaim deed

Tenancy at Will

Which of the following exists without a contract or lease, and is unspecified in duration or exchange of payment...? Estate for years Temporary estate Tenancy at sufferance Tenancy at will

Open Listing

Which of the following is an example of a unilateral contract...? Net listing Open listing Exclusive right to sell agreement Exclusive agency agreement

Mortgage Lien

Which of the following is an example of a voluntary lien...? Tax lien Mortgage lien Judgment lien All of the above

All of the Above

Which of the following is an example of an involuntary lien...? Mechanic's lien Tax lien Judgment lien All of the Above

All of the Above

Which of the following is considered a bilateral contract...? Net listing agreement Sales contract Exclusive right to sell agreement All of the above

The Lender's Loan Origination Fee

Which of the following is included in a lender's good faith estimate...? A survey of the property The lender's loan origination fee An appraisal of the property All of the above

Abstract of Title

Which of the following is obtained as a result of a title search...? Record of title Abstract of title Survey of title Summary of title

All of the Above

Which of the following is required in a valid deed...? Habendum clause Consideration A granting clause All of the above

Mortgage Contingency

Which of the following is the most common type of contingency found in sales contracts...? Insurance contingency 1031 Exchange contingency Seller financing contingency Mortgage contingency

Estate from Period to Period

Which of the following leasehold estates will automatically renew...? Estate at sufferance Estate from period to period Estate at will Estate for years

All of the Above

Which of the following may impact an owner's interest in a property...? Easements Liens Encumbrance All of the above

All of the Above

Which of the following must be included in a valid sales contract...? Legal description of the property The signatures of buyer and seller The price and terms of the transactions All of the above

All of the Above

Which of the following operates in the primary mortgage market...? Credit unions Commercial banks Savings and loans All of the above

All of the Above

Which of the following operates in the secondary mortgage market...? Fannie Mae Ginnie Mae Freddie Mac All of the above

Amend the Original Contract

Which of the following should be done if the seller agrees to offer the buyer a credit for defects found during the property inspection...? Provide an addendum to the original contract Provide a bulletin to the original contract Amend the original contract Draft a new contract

A Title Abstractor

Who conducts a title search...? A title abstractor A real estate broker A lender A property owner

Attorneys

Who is authorized to provide legal advice to sellers...? Attorneys Brokers Agents All of the above

The Texas Real Estate Commission

Who oversees the Broker/Lawyer Committee...? The Texas Attorney General The Texas Real Estate Commission The Texas Governor The Texas Bureau of Real Estate

An Independent Third Party Service

Who selects the appraiser to be used to appraise a property under contract...? The buyer's broker The lender The seller's broker An independent third party service