Principles of Real Estate l - Practice Exam

Sue Ellen has a contract to buy Roger's house, which she has always admired, when Roger decides he's ready to move to a senior living community. After Roger finds a suitable senior apartment and moves, Sue Ellen writes a check for the agreed-upon amount, and Roger transfers the deed to her. What is happening in this scenario?

Performance

Anderson is interested in becoming a real estate sales agent in Texas. After he completes the requirements for obtaining his license to practice, which agency will administer Anderson's license?

The Texas Real Estate Commission

Which of the following may an owner place on the land when it's sold to limit the use of the property?

Deed restriction

A real estate licensee is acting as what type of agent when assigned by the broker to represent one party in an in-house transaction?

Designated

Jay has a listing agreement with Maury. Even if Maury finds the buyer during the listing term, Jay has earned his listing commission. What type of listing agreement do they have?

Exclusive right-to-sell

Layla, a licensee, has had a few casual meetings with a potential client, Marcus. Marcus has told Layla the type of home and locations he's interested in. Layla has mentioned a few homes that she thinks Marcus might be interested in. Although Layla hasn't said that she will continue to look for homes for Marcus, Marcus believes she'll do just that. Which of these statements about this situation is correct?

Layla's actions may have created an implied agency agreement with Marcus.

To what type of estate does pur autre vie apply?

Life estate

Martin placed all of his real estate investments in a trust, and the proceeds are distributed through the trust to his son Nathan. Martin still manages the properties indirectly, and Nathan currently benefits, as he's past the required beneficiary age of 18. What type of trust is this?

Living trust

Which of the following is a specific lien filed by a supplier of products for the construction or improvement of a building?

Materialmen's

When both supply and demand increase, what tends to happen to prices?

Stay the same

How does topography impact land value?

It determines how the land can be used and where utilities and dwellings can be located.

Which of the following statements best describes a lease agreement's purpose?

It identifies the terms of a lease transaction between the landlord and the tenant.

In a contract, consideration is the giving of ______.

Something of value in exchange for something of value

Sasha's home has a current fair market value of $193,200. She has a first mortgage of $160,000 and second mortgage of $13,200. What is her current equity?

$20,000

Your client Frank is interested in selling a 54,450-square-foot lot. A comparable property in the vicinity sold for $3,500 per acre. What would be reasonable list price for Frank's property?

$4,375

Alana and Michael want to build a 5,000-square-foot ranch home on two acres of land they just bought. Once the house is built, how many acres of land will remain unbuilt?

1.89 acres

If the Texas Real Estate Commission rejects an application for a real estate broker's license, what may the applicant request?

A hearing

Which of the following constitutes fraud in real estate according to the Fraud in Real Estate and Stock Transactions Statute?

A listing agent purposely fails to mention the structural damage caused by a recent electrical fire in the wall.

What is the starting point for any land surveyor who has been asked to perform a survey?

A review of existing historical records

Grace found herself in a breach of contract situation where the other party met some of the terms but not others. Grace thought it would cost a lot of time and money to sue, so she decided to accept the work that had been done and call it good. This is an example of ______.

Accepting partial performance

The "MAIA" acronym helps to identify the four tests of a fixture. In "MAIA," the two As stand for __________________________.

Adaptability of the item to the land's use and agreement of the parties

What's the term for someone who's been given the authority to act on behalf of someone else?

Agent

Americo Realty and Heart of the Home Real Estate both charge the same commission rates. For this to be price fixing, what must occur?

An agreement between competing firms to standardize commission rates

To calculate property taxes, multiply the ______ by the tax rate.

Assessed value

Cheri wants to find the legal description for her property. Where could she look?

At a deed

Ken, Barbie, and Skipper owned a property as a joint tenancy. When Skipper moved out of state, she sold her interest to Midge. Two years later, Ken died. How is the interest in the property divided?

Barbie owns two-thirds, and Midge owns one-third.

When should the continuing education requirement be completed in Texas?

Before renewal of the two-year licensing period for license holders

Why would a buyer want to know if any easements or encroachments exist on a property?

Both easements and encroachments affect the property's lot size, enjoyment, and use, which can affect a property's value.

Anastasia wants to get her real estate license and bring together buyers and sellers. This means she will be involved in which of the following?

Brokerage

Carl is a sales agent who works under the supervision of a broker. Which of the following is true?

Carl can be either an employee or an independent contractor.

Carmen is a new licensee who wants to drum up some business. There are a lot of high-end homes in her area, and she would love to sell one of them. She sees a few for sale signs and thinks perhaps she could convince the sellers to drop their current agent and allow her to represent them. Which of the following is true?

Carmen may not try to persuade sellers to break the contract they have with another licensee.

If mold is found on a property and then professionally remediated, the licensed contractor who did the work will issue a certificate. If the property is sold, the buyer must be provided with copies of each such certificate issued for the property within the past five years. What is this certificate called?

Certificate of Mold Remediation

In Texas, "someone who has agency representation with the real estate sales agent or broker" is the definition of a ________.

Client

Homestead exemptions ______ property taxes for all homeowners by protecting a certain amount of a Texas home's value from tax.

Decrease

Sally and Jake haven't found any homes they can afford in their desired neighborhood. In fact, there are hardly any available at all. Those that go on the market usually end up in bidding wars, and sell for about twice the price of similar homes in neighborhoods 15 minutes away. What is the state of the market in Sally and Jake's desired neighborhood?

Demand exceeds supply.

Emilio wants out of his contract, because he doesn't believe his buyer agent is working hard enough to find him a property that meets his criteria. What must happen before the buyer agency agreement can be terminated?

Emilio and his agent must mutually agree in writing to terminate their agreement.

Real estate sales contracts must be valid, express, bilateral, ______, and executed or executory.

Enforceable

The state's claim to property when a property owner dies, leaving no will, heirs or creditors, is the power of ______.

Escheat

Which type of estate gives the owner condition-free interest in a property? This type of estate conveys the highest possible interest.

Fee simple absolute

Jeremy owns undeveloped acreage deeded to him by his aunt. In the middle of the property is a beautiful old tree. His aunt gave him the property to hold so long as the tree lives, at which point it will automatically revert to her (or her heirs if she's dead). What type of estate in this property does Jeremy have?

Fee simple determinable

The Crows gave their son, Gibson, the family property, so long as he doesn't join his friend's rock band. If he joins the band, the property goes back to them. What type of estate is this?

Fee simple determinable

Rhonda and Oliver bought an old schoolhouse with the hope of transforming it into a residence. They owned the property as joint tenants. After Oliver died, how did Rhonda own the building?

In severalty

Which of the following best explains how the statute of frauds protects consumers?

It provides requirements that certain contracts have to meet to be legally enforceable.

Siblings Julia and Gene are co-owners of a small retail building in which a tanning salon is currently operating. Gene really wants to leave his ownership interest to his son when he dies, but the way in which they own the property doesn't allow him to do so. What type of ownership do they have?

Joint tenancy

Which area of real estate law covers lease agreements?

Landlord-tenant

To whom/which entity should a licensee who's been threatened with violence after refusing to violate fair housing law report the threat?

Law enforcement officials

A new real estate professional is getting to know licensees at his new firm, Tremont Homes. One licensee tells him there's an unwritten agreement with a neighboring firm that Tremont serves the mid-town area, and everyone who has prospective clients in that area refer their leads to Tremont. What's this an example of?

Market allocation

For what are datums and benchmarks used?

Measuring elevations

Does an on-site manager of an apartment complex in Texas need a real estate license?

No, a real estate license is not required.

Jared, a seller, has found his own buyer and wants to terminate his exclusive right-to-sell listing agreement with Sue, his listing broker. Can he do so without penalty?

No, because the listing agreement is contractually binding.

When does partial performance of a contract occur?

One or both parties have completed only a portion of the terms agreed to in the contract.

"Separate property" is property most likely acquired ______.

Prior to marriage

At least 60 days prior to filing a lawsuit under DTPA, what is the consumer required to do?

Provide a written notice to the person against whom the suit is to be filed

Before a broker in Texas can start using an assumed business name in an advertisement, the broker must register the name with TREC and:

Provide evidence of legal authority to use the assumed business name in Texas.

Jayne was tired of waiting for her subcontractor to get his part of the deal done. The agreed-upon deadlines came and went, and Jayne lost money waiting for the subcontractor to come through. She decided that if the subcontractor weren't going to honor his commitments, neither was she, so Jayne consulted with her attorney and then terminated the contract. This is an example of ______.

Rescinding the contract unilaterally

Any agreement between competing firms that restricts trade or discourages competition is a violation of antitrust law. An agreement between competitors to do which of the following is also an antitrust violation?

Restrict choices for consumers

Which of the following statements about sales agent compensation in Texas is true?

Sales agents may receive compensation for real estate services through their broker only

Evan bought into a housing cooperative that's focused on cultural exchange. Each month, the co-op residents have dinner meetings and share food and information about the culture of their respective regions. When Evan made his purchase, he received a proprietary lease for his unit. What else did he receive?

Shares in the cooperative corporation

What are the four types of government power?

Taxation, eminent domain, escheat, and police power

Marshall is a home inspector who is walking the lot of the property he's inspecting with a survey in hand. Which of the following will he note as an encroachment on the inspection report?

The neighbor installed a basketball hoop next to his driveway, six inches over the property line.

Sally and Jake are ready to give up apartment living and buy a home. Which of the following is a true statement about their situation?

The price of homes in their area will depend on the market.

Which of the following best describes condominium ownership?

The space inside the unit itself belongs to the unit owner, and all owners also share in the ownership of the common elements.

Jim lives in Texas. If he dies with no will in place, and no creditors or heirs can be found, all of his personal and real property will revert to _________.

The state of Texas

A living trust differs from a testamentary trust in that a living trust is established to convey property as well as to ______.

Transfer ownership before death and avoid probate

All trusts have three parties: the trustor, the beneficiary, and the ______.

Trustee

Which of the following is an example of price fixing?

Two brokerages determine a standard commission rate.

In a contract, the element of consent is also called _____.

Voluntary agreement

In contract law, when does partial performance occur?

When a party does some, but not all, of what the party has agreed to do

A passing score on the Texas real estate licensing exam demonstrates to the Texas Real Estate Commission that the applicant is:

Competent

What's an antitrust violation's central element?

Conspiracy

The _______ value affects a property's income tax basis.

Depreciated

Which fiduciary duty is missing: loyalty, reasonable skill and care, obedience, confidentiality, accounting, and ______?

Disclosure

In which of the following scenarios is impossibility of contract performance occurring?

Due to circumstances beyond their control, the parties can't legally or practically do what they've agreed to do.

Mr. Gray owns property in the city. He passed away, leaving no will, no heirs, and no creditors. The state can acquire the property through which process?

Escheat

Which type of an estate doesn't end automatically when the stated event or condition occurs?

Fee simple subject to a condition subsequent

A Texas broker must maintain written records of all trust fund activity for how long?

Four years

For how many years following an incident does TREC allow a person to file a complaint against a license holder?

Four years

Property managers most often serve as which type of agents?

General

Which area of real estate law covers how an agency relationship is created and explains the duties of an agent to the principal?

Law of agency

In contract law, a "legally competent" party has the ______ to enter into a contract.

Legal and mental capacity

A valid contract must include which of the following elements?

Legally competent parties

The rights of Minnie's land were sold separately. Which of the following would be considered dominant?

Minerals

Eric is a new licensee who wants to specialize in manufacturing and large office buildings. He is probably interested in which type of specialization?

Mixed use

What are the two primary types of income tax deductions homeowners may take for their primary residence?

Mortgage interest and property taxes

A person in Texas, who is authorized to conduct a real estate transaction under a court order, is:

NOT required to have a real estate license

When can specific performance be enforced under a sales contract?

One party didn't meet the terms of the contract in the specified timeframe, and is now being required to do exactly what was agreed to in the contract.

You represent seller April, who is your Uncle Clyde's girlfriend. You receive an offer from Barry on behalf of a prospective buyer. Whose interests do you represent, and in what order?

Only April's

In 1934, when the Federal Housing Administration was created, it adopted the practice of crossing off cities and neighborhoods it considered risky and withheld mortgage funds from those areas. What is this action called?

Redlining

Which of the following is the definition of a client in Texas?

Someone who has agency representation with the real estate sales agent or broker.

Texas resident Sonny, who doesn't have a real estate license, helps his brother's neighbor, Nicole, sell her house. He charges her a commission of $3,000, which she happily pays. Which of the following is true in this situation?

Sonny may have to pay administrative and civil penalties.

For the benefit of whom does the Recovery Trust Account exist?

The account is established for the benefit of the public.

What type of estate involves a piece of real estate that's owned by multiple unrelated individuals who, in addition to their ownership rights, each hold the right to occupy the dwelling unit in one- to two-week intervals during the year?

Timeshare

What type of timeshare involves a buyer agreeing to pay a one-time purchase price and an annual maintenance fee, and in return selecting an accommodation time and having the right to use the unit for a specified number of years?

Vacation

When does a seller's market occur?

When supply is low and demand is high

The Equal Credit Opportunity Act specifies that credit applicants must be judged using only what criteria?

Income, net worth, job stability, and credit rating

Which physical characteristic of land addresses the concept that while improvements may deteriorate over time, the land itself cannot be destroyed?

Indestructibility

As a business entity, is a brokerage firm eligible to be licensed in Texas?

Yes, a business entity is eligible for a license provided it's managed by a designated broker

The city of River Heights is experiencing a shortage of skilled workers in the construction trades. Is this likely to affect the real estate market, and if so, how?

Yes, this would impact the supply of homes on the market, potentially creating a seller's market.

How large is a section used in the rectangular survey system?

640 acres

You are the Texas agent for the buyers, the Jansens. The Yothers are the sellers, and their mortgage holder is Richard Steele. To which of these parties must you disclose your agency status?

The Yothers only