Promulgated contracts practice exam

In which of these scenarios would it be correct to use the Residential Condominium Contract (Resale)?

A client is buying a property where the land is not owned individually and the common areas are shared equally among the community's owners.

Which of these is NOT necessary for a contract to be binding and effective?

For an offer to become a contract, it must be in writing, it has to be signed by all parties with changes initialed, acceptance must be completed, and acceptance of the contract must be communicated to the other party. There is not a faxing or delivery requirement.

Why does the Option to Terminate require an extra consideration in the form of option money?

The Option to Terminate is a contract within the contract, and valid contracts require consideration.

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.

Which of these forms is least likely to be involved in the sale of unimproved property?

The Unimproved Property Contract would not be involved in the sale of a condo.

Agent Aaron was drawing up a contract, and opted to use his brokerage's (lawyer-created) Seller's Disclosure Notice instead of TREC's. Is this allowed? Why or why not?

The agent can use either, because the TREC form is not promulgated

A seller is selling a property that is under a lease. When does the seller have to deliver a copy 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 within seven days after the effective date of the contract.

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?

They can terminate the contract within the first three days.

Why are there multiple promulgated contracts for use in Texas?

because different types of properties have different specific contract needs

When do brokers determine how the commission from a sale will be split?

before closing

A buyer was unable to obtain financing. How would they notify the seller that they are terminating the contract?

by sending a promulgated Notice of Buyer's Termination

How can an agent help protect the earnest money of a buyer who is financing their purchase?

by submitting a Third Party Financing Addendum

Because many things in the contract depend on these two items, it is important that the agent finalizing the acceptance of the contract fill in which of the following dates for their broker:

effective and executed date

Additions to the standard coverage in a title policy can be purchased via:

endorsements

According to Paragraph 10B, Possessions, what is a seller prohibited from doing after the effective date?

execute a lease without the buyer's permission

A contract that is fully performed is referred to as:

executed

In a TREC promulgated contract, what is the Third Party Financing Addendum concerned with?

financing contingencies

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 agreed to all terms of the offer, have signed the offer, and have initialed any changes that took place during negotiations.

Which element of the TREC promulgated contracts is the same across all contract forms?

Paragraph 1 identifies the the parties to the contract.

The words "time is of the essence" are in:

Paragraph 23 of the One to Four Family Contract

Which is TRUE regarding buyer rebates?

Undisclosed buyer rebates are not legal.

Alex is a licensed sales agent. Her client is selling her single-family home. In order not to violate TRELA contract law and run afoul of TREC, how should she create the contract?

Using TREC's promulgated One to Four Family Residential Contract

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

Buyer Raz goes into contract on a house in Texas. At the last minute, he is unable to obtain financing. What would he need to have in his contract to terminate it without penalty?

a Third Party Financing Addendum

What is an express contract?

a contract that has a very specific offer and acceptance

In Paragraph 9 of the One to Four Family (Resale) contract, what must happen "on or before" the specified date?

closing

According to TREC rules, which of these must be delivered to the seller within three days of a contract's effective date?

earnest money

What should an agent do if asked to violate anti-discrimination laws by a client?

educate the seller about anti-discrimination laws and say they cannot honor the request

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?

pay an additional option fee

A stand-alone refrigerator would be considered .

personal property that will not transfer

Paragraph 7D(2) of the contract indicates:

repairs that must be completed by the seller before closing

Which of these is NOT a protected class of people, according to Fair Lending Laws?

sexuality

How many lawyers are on the Broker-Lawyer Committee?

six

In a Texas real estate contract, what does an Addendum for Property Subject to Mandatory Membership allow a buyer to do?

terminate a contract if not given information about the property's HOA

According to the Addendum for Back-Up Contract, if a first contract is terminated and the seller notifies the back-up buyer of the termination, what happens?

that date becomes the effective date of the back-up contract

In TREC promulgated contracts, what does paragraph 6E(8) say about private transfer fees?

that if they exist, the seller must notify the buyer

Which of these does NOT create housing occupancy standards?

the Federal Housing Administration

Which of these is NOT a place where commission split agreements between cooperating brokers can be determined?

Commission split agreements are not determined in the contract.

Which of these is NOT a TREC promulgated form?

Condo Addendum

What is the purpose of TREC form OP-C Notice to Prospective Buyer?

Form OP-C Notice to Prospective Buyer provides a notice to buyers using their own contract to obtain an Abstract of Title.

Jim signed a contract with his seventeen year old cousin to sell him his car. That contract is voidable — why?

It was made with a minor.

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?

Laura can waive the addendum by a date she and the seller agree on, otherwise her contract terminates.

Buyer Javier sends a formal offer to Seller Joy: $250,000 and the appliances stay. Joy counters: $250,000, no appliances. She then reconsiders and accepts the first offer. Is Javier obligated to buy the home? Why or why not?

No, because the first offer was dead when Joy countered.

What is one thing that differentiates TREC from the Broker-Lawyer Committee?

TREC members are only appointed by the governor, Broker-Lawyer Committee members can be appointed by different people.

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?

That would be noted in Paragraph B2 of the Reservation of Oil, Gas and Other Minerals Addendum.

What information 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.

What is the statute of limitations to claim fraud or misrepresentation against a license holder?

The statute of limitations to claim fraud or misrepresentation against a license holder is 4 years from discovery.

In which of these scenarios could an HOA foreclose on a property that belongs to the HOA?

a property owner fails to pay their HOA assessments

What does the Residential Condominium Contract require in the legal description of the property?

a unit number

Per Paragraph 7D, what is it called when a buyer accepts the property, "with any and all defects and without warranty"?

accepting it in "as is" condition

Which of these is NOT true about a Seller's Temporary Residential Lease?

the buyer/landlord has no recourse if the seller/tenant overstays

According to the NAR Code of Ethics, unless the agent has written instructions stating otherwise, they must present all offers until:

the closing

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

When seller financing is being used, the seller becomes:

the lender

If legal action is required regarding a TREC sales contract, what will the non-prevailing party be responsible for?

the prevailing party's reasonable attorney fees and court costs

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 time of the sale or purchase of the property. The typical term of coverage for a home warranty is one year.

What is TRUE of a unilateral contract?

A unilateral contract is a promise exchanged for performance.

A potential buyer's current home is under contract. He has found a home he would like to make an offer on, but does not want to take a chance on being obligated to buy if his current home does not close. What form can help this buyer?

Addendum for Sale of Other Property by Buyer

Which of these agent scenarios involving contracts is NOT inappropriate or in violation of TRELA?

Avery explains the meaning of factual statements or business details in the contract form.

Even the most experienced home inspectors have limitations. Which of these are frequently difficult to vet by visual inspection?

HVAC, leaks, and environmental toxins

Agent Ted advises his client that the title to the property he is buying is clear — no need to do a further title search. Why is this inappropriate?

It may constitute unauthorized practice of law under TRELA.

A murder/suicide took place in a property. The crime was widely publicized. What is the disclosure requirement for this crime?

It must be disclosed forever.

Agent Ralph has a buyer client that wants the seller to leave them the refrigerator, built-in microwave, and vent hood. Ralph notes this expectation in the Special Provisions section. What is wrong with this scenario?

It should be written in a Non-Realty Items Addendum, not in the Special Provisions section.

Which MUST be disclosed to potential buyers?

Prior flood damage that was repaired by the owner

Which of these is a possible result of when zoning is changed and a property no longer qualifies for a previous exemption?

Rollback taxes can be assessed when zoning is changing and the property no longer qualifies for a previous exemption.

As outlined in the TREC promulgated sales contracts, what obligations does the seller have regarding the property condition at the time of sale?

Seller's obligations are a matter of negotiation with the buyer.

Paragraph D of the Short Sale Addendum contains a date by which the seller must get approval from their lender for the sale. What happens if the lender does not give approval by the date?

The contract will terminate and the earnest money will be refunded to the buyer.

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.

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?

amendment

Which of these is an example of something that could go in Paragraph 12 of the One to Four Family Residential Contract?

the seller plans to pay some of the buyer's closing costs

Emily and Josh signed a real estate contract with each other. The contract is now fully executed. What does that mean that Josh and Emily have done?

fulfilled the material terms of the contract

What does paragraph 7A of the One to Four Family Residential Contract grant every buyer the right to do?

have the property inspected

Seller Xavier's home is in a special statutory tax district. According to the Texas Water Code, what does Xavier have to do before going into contract with a buyer?

have them sign a notice informing them of the extra taxes

What is the purpose of the Consumer Notice Concerning Hazards or Deficiencies in TREC promulgated contracts?

it educates buyers on the purpose of property inspections

When a contract has been fully executed, what has happened to it?

it has been terminated

Which of these is NOT something TREC has the power to do?

licensing developers and builders

Seller Ben wants to make sure that their agent offers a cooperating broker a commission. Ben believes this will drive better traffic to the listing. How can Ben BEST make sure this is a part of the transaction?

make sure it appears in the listing agreement that Ben signs with the broker

Which of these is NOT something that is appropriate to put in Paragraph 11 (the Special Provisions section) of a TREC promulgated contract?

that the contract is contingent on the inspection

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

A seller is renting back a property from a buyer using the Seller's Temporary Residential Lease. The seller damages the property while they are staying there. Who is responsible for the cost of the repairs?

the seller/tenant

What is special about the earnest money section (paragraph five) and the option money section (paragraph 23) in the TREC promulgated sales contract?

they contain "time is of the essence" language

Which is the purpose of the Information About Brokerage Services form?

to inform clients how a license holder can represent a party in a real estate transaction

What is the purpose of the "Listing Broker's fee" section at the bottom of Page 9 of the One to Four Family Residential contract?

to reflect a previously agreed-upon commission

In loan fraud, the lender is usually the .

victim

What is the Addendum for Property Located Seaward of the Gulf Intracoastal Waterway for?

warns buyers that if their property become located on the beach area by erosion, they can be required to remove the structure at their own expense

When should a license holder use form T-47, Residential Real Property Affidavit?

when a seller wants to use an existing survey

When is it acceptable for a seller not to give a buyer a seller's disclosure notice?

when the buyer has indicated in the contract it isn't necessary

The Seller's Temporary Residential Lease will only be used:

when the seller will remain on the property for no more than 90 days after closing