Law of Contracts review 1
A defaulting owner handing the property back to the lender is officially classified as which of the following?
A Deed in Lieu of Foreclosure
Providing basic information regarding various standard aspects of real estate law is:
An important piece of the fiduciary duty to protect the client's best interests.
Exclusive right-to-sell listings must:
Be in writing with a seller's signed agreement to pay the commission no matter who produces the buyer.
Which of these is not considered an "environmental" issue in home buying? A.) Asbestos B.) Mold C.) Termites D.) Lead-based paint
C.) Termites
Computerized loan origination (CLO) systems have been approved by the U.S. Dept. of Housing and Urban Development so long as: A.) There is full disclosure of the fee B.) Multiple lenders are displayed on the screen in a neutral format to give borrowers freedom of choice C.) The fee charged is a dollar amount rather than a percentage of the loan D.) All of these
D.) All of these
Which of these might a certificate of title include? A.) Outstanding judgements against owner B.) Descriptions of any buildings on the property C.) Claims against the property D.) Any of these
D.) Any of these
A short sale can be advantageous for a lender because:
It pays off some of the debt without the added time and costs associated with foreclosure proceedings.
Which of these provides the broadest definition of land, property, and ownership rights?
Real property
A "mirror" will is a:
Reciprocal will
____________ is a form of ownership held by one party.
Severalty
Who pays for the inspections and subsequent repairs?
Who pays is open to negotiation and, once decided, should be entered into the sales agreement.
The purpose of Texas' The Real Estate License Act (TRELA) is to protect the public through all of these, except which of the following? A.) Regulation of licensed real estate brokerage practitioners. B.) Entities offering timeshare interests C.) Real estate inspectors D.) A separate court process for real estate law
D.) A separate court process for real estate law
Earnest money is a prospective buyer's demonstration of which of the following? A.) Neither of these B.) Their financial capability to raise the money C.) Their sincerity D.) Both of these
D.) Both of these
So long as certain that it is initialed in ink by the appropriate party's attorney or a licensee can: A.) Make changes directly on the form B.) Neither of these C.) Strike or insert an item D.) Both of these
D.) Both of these
The Sale and Leaseback is a type of agreement frequently used in commercial property for all of these reasons, except: A.) For accounting purposes when a depreciated asset can be sold to increase net worth B.) To raise capital fro business operations C.) To finance expansion D.) Evade encumbrances on the property
D.) Evade encumbrances on the property
Which of these areas of law are best for real estate agents to feel free to offer advice? A.) Tax B.) Contracts C.) None of these. Without appropriate legal credentials is it not appropriate for licensees to provide any legal advice. D.) Business
None of these. Without appropriate legal credentials it is nit appropriate for licensees to provide any legal advice.
For leases lasting than _______, oral agreements can be enforceable.
One year
Lease agreements lasting more than _______ must be in writing to be enforceable under the Texas Statute of Frauds.
One year
What items can be mentioned in an addendum?
Only items being modified are mentioned in the addendum
Which form of these lease types is focused primarily on commercial lessees? A.) Percentage lease B.) Gross lease C.) Net lease D.) Modified lease
Percentage lease
Contracts prepared and promoted by the TREC are called:
Promulgated
Owner/seller financing is most suitable to which of these circumstances? A.) Raw acreage and farmland sales B.) Commercial properties C.) Residential properties for easy-to-qualify buyers D.) Residential properties with low risk, well-funded buyers.
Raw acreage and farmland sales
The leasehold estate owner is said to hold a(n) _______ interest.
Revisionary
Contingencies are best described by which of the following?
Specific events or conditions that must occur or be removed for the offer/purchase agreement to be valid.
Which of these professions is NOT regulated by the TREC? A.) Home mortgage lenders B.) Home warranty companies C.) Real estate sales agents D.) Home inspectors
A.) Home mortgage lenders
It is legal for a licensee to draft their own version of which of these for a client? A.) None of these B.) Note C.) Will D.) Deed of trust
A.) None of these
Which of these IS NOT one of the "bundle of rights"? A.) Reformation B.) Dispostion C.) Possession D.) Enjoyment
A.) Reformation
Rescission of contract is BEST described by which of the following? A.) When one or both parties choose to withdraw and nullify the agreement B.) Both of these C.) Neither of these D.) Where the parties reform, or rewrite, the old contract into a new agreement
A.) When one or both parties choose to withdraw and nullify the agreement
Acts of nature such as mudslides, earthquakes, and volcanic eruptions can have an immediate and major impact on land known as:
Avulsion
An appraisal coming up short of the asking price can lead to a number of different potential outcomes, including which of the following? A.) Borrower agrees to provide the difference between appraisal and offer price B.) Parties agree to cancel the deal C.) All of these D.) Seller agrees to accept sale at appraiser's price
C.) All of these
An encumbrance is a(n) ___________ real property. A.) Claim against B.) A liability against C.) All of these D.) A limitation on
C.) All of these
Which of these is a standard request in a listing agreement? A.) Advertising on line B.) Install a lockbox on the door C.) All of these D.) Posting a sign in the yard
C.) All of these
Accurate prorating DOES NOT involve which of the following considerations? A.) Nature of the item being prorated B.) Whether the item is accrued and requires the determination of an earned amount C.) Anticipated costs of the item for the following year. D.) Whether the item is prepaid and requires the determination of an unearned amount
C.) Anticipated costs of the item for the following year
Common real estate contract contingencies include all of these, except which of the following? A.) Inspection contingency B.) Financing contingency C.) Buyer finding employment D.) Buyer sale of another home contingency
C.) Buyer finding employment
Which of these elements would NOT normally be found in a listing agreement? A.) Listed price of the property B.) Broker's authority C.) Buyer's annual income D.) Term of the listing
C.) Buyer's annual income
Which of these IS NOT a common defense to breach of contract? A.) Coercion B.) Mistake C.) Novation D.) Repudiation
C.) Novation
For a valid contractual offer, the offer must do all except which of the following? A.) Clearly outline the terms of what is being offered B.) Include any contingencies or covenants applicable C.) Provide terms for an acceptable counteroffer D.) Specify the respective obligations of the parties
C.) Provide terms for an acceptable counteroffer
Which of the following best describes handling of oral offers? A.) Do not require transmission to the client because of the Statute of Frauds B.) Have no place in negotiations C.) Should still be presented to a client D.) Can be used to override existing written sales agreements
C.) Should still be presented to a client
Which of these forms of ownership allows for unequal interests between the owners? A.) Joint Tenancy B.) Tenancy by the Entirety C.) Tenancy in Common D.) Community Property
C.) Tenancy in Common
Once signed by borrowers, the note is which if the following? A.) Neither of these B.) A valid real estate sales contract C.) Both of these D.) A fully enforceable and negotiable instrument of debt
D.) A fully enforceable and negotiable of debt
In what instances may parol (oral) evidence be used to dispute a contractual obligation?
When a party made promises that they never intended to fulfill but used to induced the other party to sign the contract.
In order to recover damages under the DTPA, the consumer has to show that the information was withheld:
With intent to induce the consumer into a transaction
The buyer takes possession of a home with 60 days left to go in the property tax year. Based on a 360-day year, Seller has already paid $1,800 for the year. How much does Buyer owe Seller at closing?
$300
The number of hours of continuing education required to renew a license has increased to:
18 hours
Contracts for deed, lease-purchases, and lease-options for longer than (minimum mandatory) ________ days are legally defined as executory contracts.
180
Valid exceptions to an alienation clause would include which of the following? A.) The property is transferred to a living trust and the borrower is the trust's beneficiary B.) The transferee is pre-approved by a separate lender C.) The transferor was unaware of the clause D.) The property is transferred to a living trust with a third party as the trust's beneficiary
A.) The property is transferred to a living trust and the borrower is the trust's beneficiary.
Parties entering into a contract must have legal capacity, which includes all of the following qualifications EXCEPT for which of these? A.) Individuals must be 18 years of age or older B.) Business entities must be in compliance with state requirements by filing annual documents and complying with assumed business name requirements C.) They must be a natural born or naturalized citizen D.) Individuals must not be under court order depriving them of ability to make contracts due to a disability and placing them under legal supervision to manage their financial affairs.
C.) They must be a natural born or naturalized citizen.
The use of outdated promulgated forms:
Can be considered as the unauthorized practice of law
A major difference between a lien for federal or state income taxes versus a lien for property taxes is which of the following? A.) Both of these are correct B.) Neither of these is correct C.) Property tax liens can be attached to any personal property D.) Federal and state income tax liens can be placed against any individual property, while property taxes generally attach to the property on which the tax is owed.
D.) Federal and state income tax liens can be placed against any individual property, while property taxes generally attach to the property on which the tax is owed.
Which of these would NOT be a requirement to create a valid .... agreement? A.) Capacity B.) Legal objective C.) Consideration D.) Financing disclosure
D.) Financing Disclosure
Which of these IS NOT an encumbrance on property? A.) Encroachment B.) Lien C.) Easement D.) Homestead law
D.) Homestead law
All of these are categories of liens, except: A.) Statutory liens B.) Judgment liens C.) Consensual liens D.) Implied liens
D.) Implied Liens
Common addenda in Texas real estate contracts [TREC 1-4 Sec. 22] include all, EXCEPT for which of these? A.) Buyer's Temporary Residential Lease B.) Non-Realty Items Addendum C.) Third Party Financing Addendum D.) Seller-Financing Credit Approval
D.) Seller-Financing Credit Approval
All of the following are required for an amendment to make changes to an existing real estate contract in Texas, EXCEPT for which of these? A.) An amendment must be agreed upon and signed by all parties B.) An amendment must be in the approximate form of the TREC Promulgated "Amendment to Contract Concerning Property at" form. C.) The amendment must have a legal purpose D.) The amendment must be included in the actual language of the contract and so requires a new contract to be signed.
D.) The amendment must be included in the actual language of the contract and so requires a new contract to be signed
A properly executed promissory note is a complete contract which generally states all of these, except: A.) The amount of the debt. B.) The rate of interest C.) Timing and method of payment D.) The original asking price of the property.
D.) The original asking price of the property
Zoning, taxing, and "takings" are all examples of:
Government police powers
A holographic will is one that is:
Handwritten
Oral agreements in relation to business purchases or hiring of services can be enforceable under which of these circumstances?
If the words used can be proven and the intent reasonably discerned from those words
A(n) _______ contract can be formed where no contract was ever actually intended.
Implied
In 1955, what duty was added as the name of the law changed to The Real Estate License Act?
Licensing
Damages that are accounted for in advance by agreeing to a specific amount of compensation should the anticipated event occur, are referred to as:
Liquidated damages
TILA-RESPA replaced the formerly required documents with:
The Loan Estimate the Closing Disclosure
Privity of Contract is:
The direct relationship that exists between parties to the same contract.
Lead is an issue encountered primarily in homes built before which of these dates (pick most specific to the law change) ?
1978
To qualify for a Jumbo Loan, lenders generally require a credit score of ______ or above, and at least _____ months of reserves in the borrower's bank accounts.
700, 6
Buyer A purchases home from Seller B, but the home burns down the week before closing - the cause a cigarette dropped by A during a walk-through. As a result:
A could be obligated to complete the purchase or otherwise be liable for the damages because the damage was A's fault.
Texas is which of these descriptions pertaining to the handling of real property titles?
A lien theory and non-judicial foreclosure state.
When a property is mortgaged, the buyer executes (signs) which two separate instruments?
A promissory note and a security document (either a mortgage or deed of trust)
Examples of a "cloud" on a title include all of these potentials, EXCEPT which of these? A.) A "taking" of the property for a private party B.) A claim by a former spouse C.) A government lien D.) A private party lien, e.g. mechanic's lien
A.) A "taking" of the property for a private party
Under a land sales contract which of the following statements is accurate? A.) All of these are accurate B.) The buyer holds equitable title and possession C.) The buyer pays in monthly installment and might begin the contract with a down payment (per their individual agreement) D.) The seller retains legal title to the property
A.) All of these are accurate
Which of these forms of business provide protection from personal liability? A.) Both of these B.) LLCs C.) None of these D.) Corporations
A.) Both of these
A contract for deed is also known as: A.) Both of these names B.) Installment sales contract C.) Real estate contract D.) Neither of these names
A.) Both of these names
Which of these IS NOT/ARE NOT considered to be "closing costs"? A.) Broker's commissions B.) Recording fees C.) Title search fees D.) Title insurance
A.) Broker's commissions
Within the real estate profession, the term "title" can mean: A.) Either of these B.) Neither of these C.) The right to or ownership of the land D.) A way of referring to ownership
A.) Either of these
Which of these primary residences would not be fully protected under the Texas Homestead Act? A.) A family's 150 acre rural residential property B.) A city residence on 12 acres C.) A city residence on 0.5 acres D.) A single person's 58-acre rural residential property
B.) A city residence on 12 acres
A non-exclusive/not for compensation buyer-broker agreement: A.) The broker is not exclusive; the buyer can use other brokers' real estate services B.) All of these C.) Has two primary features that set it apart from the other forms of representation D.) Buyer is not obligated to pay if the buyer chooses a different broker for the final sale, or finds a property on their own.
B.) All of these
The Deceptive Trade Practices Act allows for which of the following? A.) Public remedies B.) All of these C.) Private remedies D.) Economic damages
B.) All of these
Intent to form a contract requires which of the following? A.) Use of a specific set of words B.) An agreement to exact terms C.) Neither of these D.) Both of these
B.) An agreement to exact terms
A new survey is not essential under which of these circumstances? A.) There is no dispute as to the boundaries of the property B.) An existing survey is agreed to by all parties in the transaction, including the lender and title company C.) The buyer agrees to accept it D.) It was performed within the past 18 months
B.) An existing survey is agreed to by all parties in the transaction, including the lender and title company
The amendment form may include space at the bottom to: A.) Reject B.) Any of these C.) Counter offer D.) Accept
B.) Any of these
An Addendum for "Back-Up" Contract generally states which of the following? A.) The requirements for the Back-up Contract B.) Both of these C.) Neither of these D.) That an amendment to a first contract does not remove that contract from its primary position
B.) Both of these
Fixity refers specifically to which of the following? A.) To the immobility of property B.) Both of these C.) The fact that land, buildings, and other improvements require significant periods of time to recover their actual cots D.) Neither of these
B.) Both of these
In the community property state of Texas, which of the following is accurate? A.) Full names must be used B.) Both of these C.) Neither of these D.) Martial status must be indicated
B.) Both of these
Which of these is considered a relatively new concept in residential home sales? A.) Leasing agreements B.) Buyer Agency agreements C.) Leasehold estates D.) Listing agreements
B.) Buyer Agency agreements
Forms of voluntary alienation include all, except: A.) Sale B.) Escheat C.) Gift D.) Testamentary devise ( i.e., through a will)
B.) Escheat
Which of these IS NOT listed among the special inspections? A.) Sewer or septic B.) Home appliances C.) Arborist D.) Fireplace
B.) Home appliances
The Deed of Trust is easier to foreclosure on for which of the following reasons? A.) The Deed of Trust is held by the lender B.) The Deed of Trust is held by a third party C.) The Deed of Trust is held by the borrower D.) None of these is correct
B.) The Deed of Trust is held by a third party
An alienation clause calls for which of the following? A.) The seller to convey the property on demand B.) The borrower to pay off the mortgage balance if the borrower intends to transfer ownership to another party C.) The contract to remain valid if one portion of the contract is cancelled or invalidated D.) One party of the contract to be replaced by a third party
B.) The borrower to pay off the mortgage balance if the borrower intends to transfer ownership to another party
Which of these IS NOT currently a complete enforceable form of contract but could become one if ratified? A.) All of these B.) Voidable C.) Void D.) Valid
B.) Voidable
A partially amortized loan is sometimes referred to as a(n):
Ballon payment loan
Section 22 of the One to Four Residential Sales Contract (Resale) provides for which of the following? A.) Liquidated damages for anticipated breach B.) Disbursement instructions for escrow money in the event of a buyer default C.) A list of potential addendum or other supplemental forms D.) An escape clause for the offeror.
C.) A list of potential addendum or other supplemental forms
CFPB stands for which of the following?
Consumer Financial Protection Bureau
In terms of the closing process, Texas is an _______ state.
Escrow
When a tenant under an agreement with the owner status after the agreed term of the lease has expired without owner consent, it is called which of the following?
Estate at Sufferance
Which type of listing agreement is the only one to guarantee the broker a commission in the event of a successful sale?
Exclusive-right-to-sell
Fee simple determinable and fee simple subject to a condition subsequent are the two forms of:
Fee simple defeasible
An advantage to buyers in a lease-purchase option is which of the following? A.) It can be easier for a difficult to qualify buyer in purchase a home with a lower down payment. B.) It easier to evict and retain the down payment C.) None of these are advantages to a buyer in a lease-purchase option. D.) It guarantees a lower price.
It can be easier for a difficult to qualify buyer to purchase a home with a lower down payment.
A Deed of Trust allows for what type of foreclosure?
Non-judicial
"Consummation" as used in the real estate-related profession refers to:
The specific point in time where the borrower becomes contractually obligated to the lender.
Graduated and index leases are what types of leases?
Variable