Practice Tests--Promulated Contracts
If a loan applicant intentionally lies on a mortgage loan application, the penalties are a possible prison term and ____________.
(c) A fine not to exceed $10,000
UFFI
- Urea Formaldehyde Foam Insulation is pumped into walls as a foam, it hardens and insulates. Moisture softens the hardened material and causes the release of hazardous gas. Landfills or waste disposal sites that are improperly constructed can lead to groundwater contamination. Know locations, and disclose. Recommend water testing.
EMFs
- electromagnetic fields, high-tension power lines are a controversial topic. Know their location, and disclose.
How can a license holder ensure that any relevant addenda or notices are officially included in a contract?
Checking the appropriate boxes in Paragraph 22 officially includes them as part of the contract
Which of these does NOT create housing occupancy standards?
Cities, states and sometimes housing providers enforce occupancy standards
Which of these is NOT a TREC promulgated form?
Condo Addendum is not a TREC promulgated form
Once an offer is countered it is what?
Considered REJECTED and is DEAD
What is the purpose of the Consumer Notice Concerning Hazards or Deficiencies in TREC promulgated contracts?
Consumer Notice Concerning Hazards or Deficiencies educates buyers on the purpose of property inspections
Can a seller convey items that are not fully paid off?
NO, the buyer should not be taking on any payments for the non-realty items
If a seller wants to reserve part of their mineral rights after selling, where on the Reservation of Oil, Gas and Other Minerals Addendum would they note what % they're keeping
Paragraph B2
What part of the Third Party Financing Addendum for Credit Approval specifically pertains to people getting FHA or VA loans?
Paragraph D of the Third Party Financing Addendum for Credit Approval concerns FHA and VA loans
A seller is selling a property that is under a lease. When does the seller have to deliver a coy of the lease and any move-in condition form to the buyer?
The seller must deliver a copy of the lease and any move-in condition form w/in 7 days after the effective date of the contract
By what time is the seller required to furnish any existing survey?
The seller must furnish the buyer a new survey no later than 3 days prior to closing
What is the difference between contracts that TREC has promulgated and those that TREC has approved?
They are optional if the situation calls for them
What part of the One to Four Family Residential Contract advises the buyer to get an abstract of title reviewed by a lawyer?
Title Notice under Paragraph 6E1 of the One to Four Family Residential Contract advises the buyer to get an abstract of title reviewed by a lawyer
The Broker-Lawyer Committee
drafts and edits forms.
Paragraph 6A8 in a TREC promulgated contract changes
if boxes are checked, most likely the title policy will be amended to read "shortage in area" rather than the standard exception
What information does the Disclosure of Relationship with Residential Service Company form convey?
required to be provided if a license holder receives any form of compensation from a residential service company.
In which of these scenarios could an HOA foreclose on a. property that belongs to the HOA?
the association can enforce their lien on the property and foreclose
How long after receiving an Addendum for Property Subject to Mandatory Membership in an Owner's Association does a buyer have to terminate the contract?
the buyer has 3 days to terminate
Mary has a rental property with a two year lease on it. She collected a $500 security deposit at the beginning of the lease. Now she is selling the property. What will happen to the security deposit?
Mary will TRANSFER the security deposit to the buyer at closing
When would it be appropriate to use the New Home Contract (Incomplete Construction)?
New home that is in the process of being built
A back-up buyer's contract is executed on Sept. 28 with a 4-day option period. On Oct. 4, the seller informed the back-up buyer that the first contract was terminated. When does the back-up buyer's option period end?
Oct. 8 5pm
In the Farm and Ranch Contract, where does a legal description and list of improvements staying with the property go?
Paragraph 2
in the farm and ranch contract where does a legal description and list of improvements staying with the property go
Paragraph 2
Paragraph A of the Addendum for Back-Up Contact specifies a back-up contract holder does what when they execute the contract
Paragraph A says the back-up buyer will pay any earnest and option money agreed to in the back-up contract
What is the name of the law that requires certain contracts (for example, sales contracts) to be written down and signed?
STATUE OF FRAUDS?
A buyer who discovers a defect which they believe was misrepresented has a certain time after discovery to make a claim for damages. This is known as the
Statute of Limitations
What does the date in the Third Party Financing Addendum provide a deadline to buyers for?
TWO-PART: 1. If the buyer fails to notify the seller within the termination time period that they did not receive buyer approval, the buyer 2. forfeits their right to EARNEST $$
One to Four Family Residential Contract Paragraph 23
Termination Option
A contract has an effective date of July 21st, with a 7 day option period. What is the latest that contract can be terminated without penalty?
Thanks to "day zero," the 7 day option period starts on July 22 and ends at 5 pm on July 28
If a buyer is sent an Addendum for Property Subject to Mandatory Membership in an Owner's Association and they don't like the terms, what remedy do they have?
The Addendum for Property Subject to Mandatory Membership in an Owner's Association notifiers the buyer of the HOA and gives them 3 days to terminate the contract
What info does the Disclosure of Relationship with Residential Service Company form convey?
The Disclosure of Relationship with Residential Service Company form states that it is a violation of RESPA for a license holder to receive a referral fee for simply passing on a name to a service provider
Why does the Notice of Buyer's Termination of Contract only have to be signed by the buyer?
The Notice of Buyer's Termination of Contract needs to be signed by the buyer only because the buyer's termination rights are in the contract. The seller does not need to approve.
What is the purpose of the Short Sale Addendum?
The Short Sale Addendum protects the seller by referring to "net proceeds" and giving them a way to break the contract if the lender doesn't approve the sale
A buyer needs more option period time. They have asked the seller, who agreed, and signed TREC's Amendment to Contract. What else must they do to make the extension official?
The buyer can get more option time by PAYING the seller an additional option fee and SIGNING a mutual amendment agreeing to the additional option time
According to the Environmental Assessment, Threatened or Endangered Species, & Wetlands Addendum, what happens if the buyer can provide the seller with a report proving that the use of the property is negatively affected by one of the noted factors (before the agreed-upon deadline)?
The buyer can terminate the contract and get their earnest money back
Which of the following is TRUE regarding a contract to transfer real estate which contains no earnest money?
The contract is valid
Which of these is appropriate to put in the Special Provisions section of the One to Four Family Residential Contract?
**provides space for the addition of contract terms that are NOT ALREADY INCLUDED IN THE SALES CONTRACT, or for which a TREC promulgated form does not already exist**
A buyer and seller have been in negotiations. They have everything in writing, have agreed to all terms, the contract is signed and changes initialed. Today, the written acceptance of the final agreement has been communicated to the other party. What is today called?
The effective date is the date when everything is in writing, the parties have totally accepted all of the terms, the contract is signed and all changes are initialed, and the written acceptance of the final agreement has been communicated, by some method, to the other party or their agent.
Laura 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 Laura and her contract?
The seller can accept the back-up offer and notify Laura that she may waive the Contingency by an agreed upon date or Laura's contract terminates.
Underground storage fuel tanks, old, rusty or leaking containers can cause groundwater contamination. Sometimes found on both commercial and residential properties, these are commonly called
USTs. Recommend water testing.
Which of these is an example of time when it is acceptable not to use a TREC promulgated form?
Unless authorized to practice law in the state of TX, a broker cannot prepare and approve a form for an agent to use
Best way to write a married couple's names on a contract that is buying property
Use FULL NAMES and specify ANY RELATION between the parties
When both parties mutually agree to terminate a contract, who provides the appropriate form?
While there is not a promulgated form for mutual termination, the title company can provide the parties with a form for each of them to sign for the release of contract that will address what will happen with the earnest money.
According to Paragraph 6B: Commitments in the promulgated One to Four Family Residential Contract, what must be provided to the buyer along with the title policy documents
You would NOT include comments about the material condition of the property in Paragraph 6B
When a contract has been fully executed, what has happened to it?
after being fully executed, it is TERMINATED
The objection section of the sales contract is where the ___________________________ lists their dealbreakers
buyer
NOT appropriate to put in Paragraph 11 (The Special Provisions section) of a TREC promulgated contract
can be used for relevant business info(such as names of the parties of the property description) that did not fit in the fields provided?
Additions to the standard coverage in a title policy can be purchased via
endorsements
Paragraph 10B, Possessions, prohibits seller from doing what after the effective dte
execute a lease without the buyer's permission
Paragraph 23 of One to Four Family Residential Contract
gives the buyer the right to terminate for any reason, within a limited time frame, but only if the buyer has purchased an option to terminate.
If nothing is added in Paragraph 7D, the agreement says that the buyer is accepting the property:
in its present condition
In TREC promulgated contracts, what does paragraph 6E(8) say about private transfer fees?
informs the consumer that if the property is subject to a PRIVATE TRANSFER FEE, the seller must notify the buyer
What happens when a homebuyer takes out a residential service contract on their newly-purchased home?
A residential service contract usually offers a home warranty to the buyer or seller of an existing home at the the of the sale or purchase of the property. The typical term of coverage for a home warranty is 1 year
The Foreclosure Rescue Scam
involves a homeowner who is deceived into signing over title to the property with the belief that he or she will be able to remain in the house as a renter and eventually buy it back over time. In this case, the terms are impossible to live up to; the homeowner loses his or her home, and any equity he or she may have built. In the other case, the homeowner thinks he or she is signing documents to bring the mortgage current, but instead actually surrenders his or her ownership. The homeowner usually does not know about the scam until the day he or she is evicted.
Radon
is a naturally occurring, colorless and odorless gas produced by the decay of radioactive materials in rocks under the ground. Radon enters homes through the foundations. HUD does not require radon testing for FHA loans. Mitigation is the term used to describe meth- ods used to lower levels of radon in homes and other buildings.
Radon
is a naturally occurring, colorless and odorless gas produced by the decay of radioactive materials in rocks under the ground. enters homes through the foundations. HUD does not require testing for FHA loans. Mitigation is the term used to describe methods used to lower levels of said gas in homes and other buildings.
The Straw Buyer
is a person who is used to buy property in order to conceal the actual owner. The straw buyer does not intend to occupy the property or make payments and often deeds the property to the other individual immediately after closing. The straw buyer is usually compensated for use of his or her identity.
The Straw Buyer
is a person who is used to buy property in order to conceal the actual owner. does not intend to occupy the property or make payments and often deeds the property to the other individual immediately after closing. is usually compensated for use of his or her identity.
Churning
is excessive selling/lending activity for the purpose of generating fees and commissions. Lenders encourage refinancing to earn additional fees rather than to help the customer.
Third Party Financing Addendum
most commonly used addendum on the One to Four Family Residential Contract
Chunking
occurs when a fraudster promises to show investors how to get rich by investing in the real estate market. These unsuspecting investors have multiple loan applications submitted to various lenders without disclosing the intent to purchase additional properties all the while, the fraudster has promised to handle the transactions, including leasing of the investment properties. He takes a significant portion of the loan amounts as his fee and never leases the property. Investors are left with overpriced, vacant properties. Many go to foreclosure, destroying the investor's credit history.
Property Flipping
occurs when a property is refinanced or resold immediately after purchase for an artificially inflated value. (Note: Property flipping does not always involve fraud or artificially-in- flated values.)
Equity Theft
occurs when fraudsters forge a deed transfer or a satisfaction of lien, and then obtain new liens on the property. The homeowner does not know about it until he or she receives an eviction notice.
The words "time is of the essence" are in
paragraph 23 TERMINATION OPTION?
If a seller wants to reserve part of their mineral rights after selling, where on the Reservation of Oil, Gas, and Other Minerals Addendum would they note what percentage they're keeping?
paragraph B2
One to Four Family Residential Contract Paragraph 11
special provisions provides space for the addition of contract terms that are not already included in the sales contract, or for which a TREC promulgated form does not already exist. BE CAREFUL WITH THIS PARAGRAPH. do not use this paragraph to write in info where there is an addenda that is promulgated in the state of TX. ask: home cleaned, carpet cleaned, actions not things
If clients want to make an offer to the seller offering a "lease with option to buy," the buyer's agent should"
tell the client they will need an attorney to draw up the documents
What is the purpose of the IABS form?
the IABS notice informs clients of the types of license holders, a broker's minimum duties, and how a license holder can represent a party in a real estate traction
License holders are not allowed
to give an opinion on the validity of a title, or the legal sufficiency of a real estate instrument. In addition, they are not allowed to prepare a deed, note, deed of trust, will, or another document that transfers any interest in real property.
Buyer Ashley is shopping for empty lots on which to build a home. She found a lot for sale that looks promising, but she's concerned it's located on a. wetland. What should her agent do?
use the Unimproved Property contract and attach the Environmental Assessment, Threatened or Endangered Species and Wetlands Addendum
What is the Addendum for Property Located Seaward of the Gulf Intracoastal Waterway for?
warns buyers that, if their property comes to be located on the beach area because of storms or erosion of the soil, the STATE CAN REQUIRE THEM to remove the structure at their OWN EXPENSE
The Seller's Temporary Residential Lease will only be used
when the seller will be staying no more than 90 days on the property after the closing
IN Paragraph 9 of the One to Four Family (Resale) contract, what must happen "one or before" the specified date?
where the "one or before" closing date is noted
**Within how many days after the title company receiving a copy of the contract will the buyer receive the title policy documents?
within 20 days of the title company receiving the contract
Paragraph 7A of the One to Four Family Residential Contract grants every buyer the right to do
Have the property INSPECTED
In TREC promulgated contracts, what does Paragraph 21: Notices provide info about?
INFORMS PARTIES where to send official notices
How can an agent help protect the earnest money of a buyer who is financing their purchase?
If a buyer is getting financing in order to purchase property, submitting a THIRD PARTY FINANCING ADDENDUM protects their earnest money
Which of these is an example of something that could go in Paragraph 12 of the One to Four Family Residential Contract?
In paragraph 12B, Settlement and Other Expenses, each party's closing expenses are noted.
Protected classes of people, according to Fair Lending Laws
1. Age, 2. Marital Status, 3. Receipt of Public Income
3 different types of financing choices in Paragraph 3 of TRECs One to Four Family Residential Contract
1. Third Party 2. Assumption 3. Seller Financing
6 Materials NOT included in a property's mineral estate (GOT)
1. water 2. sand 3. caliche 4. gravel 5. limestone 6. iron
According to Paragraph 6B: Commitments in the promulgated One to Four Family Residential Contract, what must be provided to the buyer along with the title policy documents?
???A copy of the inspection report???
A Residential Real Property Affidavit Promulgated by the Texas Department of Insurance (T-47 Affidavit) must be furnished to the buyer _______________________.
???When the seller provides the existing survey???
What is one exception to HUD's occupancy guideline of two people per bedroom?
???infants in a room with parents???
In a Texas real estate contract, what does an Addendum for Property Subject to Mandatory Membership allow a buyer to do?
A buyer may elect to terminate a contract through the Paragraph B1 of the Third Party Financing Addendum if they aren't provided with the appropriate subdivision information sheet.
Unilateral Contract
A contract that results when an offer can be accepted only by the offeree's performance.
Quitclaim Deed
A deed to relinquish any interest in property which the grantor may have, without any warranty of title or interest.
In which of these situations is the seller required to provide a seller's disclosure?
Investors ONLY have to provide seller's disclosures. The rest do not.
Agents are required to give all buyers a written copy of the title notice. Aside from Paragraph 6E(1) of the One to Four Family Residential contract, where else can this notice be found?
Agents may give TRELA's notice in Paragraph 6E(1) to every buyer in the TREC promulgated contract form, in the TAR Buyer's Representation Agreement, and the Notice to Prospective Buyer
Your buyer client has received their inspection report. In it, there are several identified items that they want the seller to fix. Seller has agreed to fix these items before close. What will you need to include in the contract to ensure this agreement is enforced?
An amendment is something that is attached to the contract after it is accepted that changes the contract's requirements. Must be signed by sellers by 5pm of last option day or buyer has to cancel or accept "as is"
When all parties have agreed to all terms of an offer, have signed the offer, and have initialed any changes that took place during negotiations, what happens to the offer?
An offer becomes a contract when all parties have 1. agreed to all terms of the offer, 2. signed the offer, and 3. have initialed any changes that took place during negotiations
Who pays for an investigation of an environmental, endangered species, or wetlands issue, according to the Environmental Assessment, Threatened or Endangered Species & Wetlands Addendum?
Any investigation of an issue related to an Environmental Assessment, Threatened or Endangered Species, & Wetlands Addendum is done at the BUYER'S expense
Stigmatized Property
Any property where there has been a murder, alleged haunting, or in the vicinity of the residence of a known sexual offender
Which of the following was added to federal fair housing laws as a protected class in 1974?
Gender
Listing agents and buyer's agents are legally obligated to follow ALL instructions from their clients
FALSE
Who pays for an investigation of an environmental, endangered species, or wetlands issue, according to the Environmental Assessment, Threatened or Endangered Species, & Wetlands Addendum
BUYER?
Reggie made Betty an offer on her house. She countered, but Reggie has not yet accepted. Then along comes Archie with a better offer. Before accepting Archie's offer, what must Betty do?
Before accepting Archie's offer, Betty has to withdraw her counteroffer to Reggie.
A murder/suicide took place in a property. The criticism was widely publicized. What is the disclosure requirement for this crime?
It must be disclosed forever
