Contracts

Which of the following statements regarding mineral rights and surface rights is TRUE?

Between Mineral estate and surface estates, mineral estate rights are dominant

What are the three parties to the deed of trust?

Borrower, lender and trustee

All of the following statements apply to express offer and acceptance EXCEPT:

Both parties agree to offer but there will always be more price negotiations before the sale officially closes

The buyer and seller closed on a property on June 17th. The tax bills will not come in until November. Who will receive and pay the taxes when the tax bill arrives?

Buyer

When dealing with contracts, which of the following best describes assignment?

One party to a contract relinquishes the responsibilities and benefits of a contract to another party who takes their place

Which of the following statements regarding agency agreements is TRUE?

Oral agreements are held to the same standards of agency relationships as written ones

What is severance?

Severance of the mineral estate and surface estate occurs when an owner sells the surface and retains all or part of the minerals

Who creates and approves various types of contracts, addenda, notices, and consumer disclosures (all of which are promulgated)?

The Texas Real Estate Commission

How do lenders recover their money when borrowers do not pay their mortgage?

The lender can foreclose, take title to the property and sell it to recover as much money as possible

Which of the following statements is TRUE if a license holder is acting solely as a principal and selling her own home?

The license holder can use the promulgated form, but it is not required.

What does it mean when a party discharges a contract?

The terms and conditions of the contract have been fulfilled or cancelled.

What is one limiting factor put on urban homesteads and rural homesteads?

There are limitations on size

According to the TREC contracts, the title company (on behalf of the seller) will send what to the buyer within 20 days after they receive the signed contract?

commitment for title insurance

With net leases, each added "net" requires a tenant to pay for an additional expense that may have otherwise fallen on the landlord. All of the following are expenses that could be paid under a net lease EXCEPT:

debt interest

The forced sale of a mortgaged property at a public auction is called a:

foreclosure

In Texas, the statute of limitations for specific performance of a contract for the conveyance of real property is:

four years

Where do FHA and VA get money to loan?

from lenders

One of the most common examples of a judicial foreclosure is a:

homeowners association foreclosure

A title premium is only charged once, is paid at closing, and is paid:

in full upfront

A buyer who needs to ensure they are able to sell their old home before committing to the purchase of a new home should:

include the promulgated addendum with the contract

An estate for years, a periodic estate, an estate at will, and a tenancy at sufferance are all:

leasehold estates

What is a net listing?

listing agreement in which the brokers commission is determined by the difference between the seller's expected sale price and the actual sale price

A TREC amendment form serves to:

modify a fully accepted and agreed upon contract

Commercial properties most commonly utilize which type of lease?

net lease

Which type of power of attorney is used for specific transactions?

nondurable

License suspension or revocation, fines, and further education requirements are all:

possible penalties TREC may impose for violating License Act

In a real estate transaction, the seller knows they must provide a commitment for title insurance. The buyer and the seller know they can back out of the contract if the other party does not fulfill their obligations by the closing date. What outlines these rights and obligations?

pre-ordained contingencies in the one to four family residential contract

A seller knows they need to correct a title defect when they convey their property. They will likely utilize a:

quitclaim deed

For Sale by Owner properties are exempt from Fair Housing discrimination laws under certain circumstances EXCEPT:

race, color, or national origin

When a party performs their obligation to a contract that they could have rescinded (i.e. if they entered into a contract underage or incapacitated but later chose to perform their obligation to the contract), this is known as a:

ratified contract

Land and everything growing on it or attached to it including, sheds, buildings, trees, and crops are identified as:

real estate and real property

Which of the following regarding personal and real property is TRUE?

real property is land plus improvements on the land, so a house is an example of real property,

Fannie Mae and Freddie Mac participate in which of the following?

secondary mortgage market

Real estate loans are bought and sold on the:

secondary mortgage market

WHAT enables the lender to seize the property if the borrower defaults on making payments?

security interest

Which of the following is TRUE about business entities that can hold real estate investments?

sole proprietorships, partnerships (general, limited, and joint ventures), corporations, and S corps are ALL entities that CAN hold real estate investments

Which ownership rights can be sold separately from a property's surface rights?

subsurface, air, and water rights

A license holder can have their license suspended or revoked if:

the failed to use a contract form required by TREC

Who owns the water beneath a property?

the owners of the land above it

Which of the following is NOT a right that comes with the power of attorney?

the right to make personal investments with the principal's funds

Regarding buyer and seller credits and debits, a seller is charged for taxes from January 1st through closing. WHO pays for the actual day of closing?

the seller

During a contract for deed:

the seller holds the legal title to the property and the buyer is entitled to possession and equitable title to the property

What does it mean when a contract has lawful objective?

the subject of the contract adheres to all the necessary laws and regulations

Clarence is an agent and writes "time is of the essence" 6 times in a contract, including it in various clauses, to ensure a deadline is met. He believes this to be especially important, as he is working with a particularly slow client. Which of the following is TRUE about Clarence?

the way Clarence utilized "time is of the essence" would be considered unauthorized practice of law

Jack and Jill own a property as tenants in common. Jack dies. What happens to Jack's interest in the estate?

Jack's interest will go to Jack's heirs

After a tenants moves out of their unit, the landlord has HOW MANY days to mail them their security deposit as per WHAT code?

30 days as per the Texas Property Code

Helder is a buyer who wants to breach his contract and back out of his sale contract. But he also doesn't want to lose money. Which of the following is most TRUE of Helder's situation?

Helder will forfeit his earnest money if he backs out

There are a few special scenarios in which license holders are NOT required to use promulgated contracts. All of the following qualify as these special scenarios (and are therefore exempt from the need to use promulgated forms) EXCEPT:

If the contract is prepared by the license holder and all involved parties consent to use the contract.

An example of voluntary alienation is:

Property passing to a party according to a will

A seller advertises a home's mortgage payments with the best possible terms.This violates:

TILA

Regulation Z contains most of:

TILA

Protecting consumers of real estate services, enforcing the laws the legislature passed in the License Act, and ensuring the availability of capable and honest real estate service providers are all responsibilities of the:

TREC

The legislation code that governs real estate licensing today and the activities of licensed agents in Texas is the:

TRELA

Which of the following pieces of legislation do NOT affect the mortgage lending business?

TRELA

Which entity drafts and edits contract forms?

The Broker-Lawyer Committee

Adverse possession is:

When a person develops legitimate ownership interests in another persons property through an openly hostile and continuous occupation of the land

What is a unilateral contract?

a contract in which one party (the offeror) makes a promise in exchange for a reciprocal act (or performance) on the part of the second party (the offeree).

What is an executed contract?

a contract that has been fully performed on both sides

What is a statutory law?

a law formally created by legislatures

Who is allowed to require that a promulgated form is used?

a property owner OR a government agency

A seller's homeowner's insurance policy is cancelled at the time of closing. They will receive WHAT after closing for the part of their premium that was paid in advance?

a refund check

A sale and leaseback agreement is:

a way for landlords to free up capital while maintaining the same overhead expenses

Though a title is not an actual document, it still signifies the:

actual ownership of a property

A seller should counter, accept, and respond to offers on their property:

as they see fit because they are not required to respond

When a couple buys a coastal area property, they are cautioned that they may lose part of their land every year due to storms and the constant waves hitting the soil. The loss is called:

avulsion

How many parties are there to a deed of trust?

three

Which one of the following is NOT a type of acceptance?

uniform

An offer that does not describe the method and terms of financing but does state the price is:

valid

A seller's inability to provide good title or a buyer's inability to obtain financing are both:

valid reasons for cancelling a contract

Ernesto is a buyer who puts earnest money towards a transaction. He is worried because his credit is not immediately applied. When will Ernesto's earnest money be applied?

when the sale closes