Real Estate Law

In determining the requirements for a sufficient legal description, there are a few general rules and many exceptions, but the general rule in Texas seems to be that the __________ is followed. (a) "Nucleus of description" theory (b) Metes-and-bounds theory (c) Rectangular Survey theory (d) "Long chord" theory

a. "Nucleus of description" theory

A residential landlord must return a security deposit with an explanation of any deductions within how many days? (a) 30 (b) 60 (c) 90 (d) 120

a. 30

A(n) _____ is a person who is employed to compile abstracts that affects certain parcels of real estate. (a) Abstractor (b) Grantor (c) Abstractee (d) None of the above

a. Abstractor

Which of the following warrants that there are no other encumbrances affecting the property other than those shown in the deed, if any? (a) Covenant against encumbrances (b) Covenant of Seizin (c) General Warranty Covenant (d) None of the above

a. Covenant against encumbrances

A _____ is basically a person who extends credit more than five times for a transaction secured by a dwelling in a preceding calendar year or in a current calendar year. (a) Creditor (b) Arranger (c) Finance charger (d) Consumer credit officer

a. Creditor

Which of the following is a type of nonfreehold estate? (a) Estate for years (b) Estate at preference (c) Estate by will (d) Estates by sufferance

a. Estate for years

The type of tenancy common in apartment rentals is an _____. (a) Estate from period to period (b) Estate for years (c) Estate at sufferance (d) Estate at will

a. Estate from period to period

The right to do certain acts on behalf of the principal even though the acts may not have been specified in the contract is known as _________. (a) Implied authority (b) Express authority (c) Special agency (d) None of the above

a. Implied authority

A ________ is a particular type of partnership where two or more partners jointly pursue a specified project. (a) Joint venture (b) Charter (c) General partner (d) Severalty

a. Joint venture

The antiquated idea that the first male child becomes the legal title holder to a property upon the death of the father is known as _____. (a) Primogeniture (b) The Rule Against Perpetuities (c) Title theory (d) Lien theory

a. Primogeniture

The ________ regulates certain forms of land use, which, in its opinion, involve securities, investment contracts, or sale of equity interests. (a) Securities and Exchange Commission (SEC) (b) Consumer Finance Protection Bureau (CFPB) (c) Department of Housing and Urban Development (HUD) (d) Office of Interstate Land Sales Registration

a. Securities and Exchange Commission (SEC)

Which of the following basic concepts in adverse possession provides that anyone in adverse possession of the property may tack on his years of adverse possession with those of his predecessor in interest so that the adverse possession can cumulatively total the requisite number of years to acquire title by limitation? (a) Tacking (b) Zoning (c) Acquiring and recording (d) Encroaching

a. Tacking

If a document is NOT recorded, what effect would that have on the instrument? (a) The instrument would only be binding for one year. (b) The instrument would not be binding upon the parties. (c) The instrument would still be binding upon the parties. (d) The instrument may be revoked until such time as it is recorded.

c. The instrument would still be binding upon the parties

The main characteristic of tenancy in common is the _____. (a) Liability (b) Joint tenancy (c) Unity of possession (d) Partition

c. Unity of possession

The state laws of Texas are codified, and bound in volumes called _____. (a) The United States Code Annotated (b) The Texas Constitution (c) Vernon's Annotated Texas Statutes (d) The Texas Compendium of Laws

c. Vernon's Annotated Texas Statutes

The sudden loss or addition of land by the action of water is known as _____. (a) subsidence (b) reliction (c) avulsion (d) accretion

c. avulsion

Once a surveyor has reached a point of beginning, the surveyor then describes the perimeter of the property using the plane coordinate system to determine the _____. (a) directions (b) distances (c) bearings and calls (d) elevations and degrees

c. bearings and calls

All the following are a violation under the DTPA EXCEPT: (a) saying that something is new when it is not (b) misrepresenting the need for a repair (c) charging a higher than average commission for your services (d) misrepresenting the rights a party has under a contract

c. charging higher than average commission for your services

When each party can come in at different times for closing, this is called _____. (a) using two different title companies (b) table funding (c) closing into escrow (d) using a lawyer instead of a title company

c. closing into escrow

A residential landlord in Texas is required to repair which of the following? (a) conditions caused by wear and tear (b) any condition requested by the tenant (c) conditions that materially affect the health and safety of the tenant (d) none of these

c. conditions that materially affect the health and safety of the tenant

In order for an instrument to be properly recorded, _____. (a) it can be in English or Spanish (b) it can be in any language (c) it must be in English (d) is must be signed in blue ink

c. it must be in English

Ad valorem translates from the Latin as _____. (a) Redlining (b) Forever (c) Death and taxes (d) According to value

d. According to value

Texas homesteads also have a protected interest for homestead occupants at least 65 years of age. These occupants are not required to pay their _____. (a) Child support liens (b) Judgment liens (c) Mortgages (d) Ad valorem taxes

d. Ad valorem taxes

As a subdivision developer draws a survey and records the subdivision plat, which of the following does the condominium developer file to create the condominium regime? (a) Master deed (b) Master lease (c) Declaration (d) All of the above

d. All of the above

When one steps out of the realm of the real estate purchaser and homeowner negotiating a contract, the determination of fixtures becomes very important to which of the following? (a) Vendors (b) Mechanics and materialmen (c) Holder of the mortgage on the house to which the item has become attached (d) All of the above

d. All of the above

Which of the following qualifies as an appraisal exemption? (a) Religious use (b) Agricultural use (c) Timberland use (d) All of the above

d. All of the above

Which of the following documents is the actual promise to repay a loan when funds are borrowed to purchase a property? (a) Lien (b) Deed of trust (c) Mortgage (d) Promissory note

d. Promissory note

Which of the following is NOT required for the clock to start ticking on the return of a security deposit? (a) tenant’s advance notice of intent to surrender the unit (b) actual surrender of the unit (c) tenant provides a forwarding address in writing (d) a final walkthrough with the tenant

d. a final walkthrough with the tenant

The increase in land caused by the gradual deposition of solid material from the operation of natural causes is known as: (a) reliction (b) alluvion (c) avulsion (d) accretion

d. accretion

A closing is _________. (a) purely a legal function (b) not purely a legal function (c) a business function (d) both b and c

d. both b and c

A broker can preclude the award of treble damages in a DTPA suit by _____. (a) ignoring the demand letter. (b) hiring a lawyer within the 60-day notice period. (c) counter-suing the plaintiff (d) making a reasonable settlement offer within the 60-day notice period.

d. making a reasonable settlement offer within the 60-day notice period

The type of legal description that identifies a property by specifying the shapes and boundaries of the perimeter is known as _____. (a) a registered survey (b) a rectangular survey (c) a recorded plat (d) metes and bounds

d. metes and bounds

In a traditional real estate transaction, the _____ is represented by a _____, with the property being sold to a _____. (a) broker (agent) - buyer (customer) - seller (principal) (b) buyer (customer) - seller (principal) - broker (agent) (c) seller (principal) - buyer (customer) - broker (agent) (d) seller (principal) - broker (agent) - buyer (customer)

d. seller (principal) - broker (agent) - buyer (customer)

Which of the following is NOT required before a landlord has a duty to repair a residential rental dwelling? (a) The landlord and tenant must have a written lease signed by both parties. (b) The tenant must be current in rent. (c) The tenant has given proper notice of the need to repair a condition on the property. (d) Notice is sent to the person who collects rent or to the place where rent is paid.

a. The landlord and tenant must have a written lease signed by both parties.

Which of the following is NOT a defense available to a defendant in a DTPA case? (a) The plaintiff is not a resident of the state of Texas. (b) The consumer relied on written information from another source. (c) The plaintiff purchased the property “as is.â€\x9D (d) The statute of limitations expired.

a. The plaintiff is not a resident of the state of Texas

Which of the following would NOT terminate homestead protection in Texas? (a) Written waiver of the homestead protection by the property owner (b) Death of the homestead owner (c) Alienation (sale or transfer of ownership) (d) Abandonment of the homestead

a. Written waiver of the homestead protection by the property owner

What is a statute? (a) a law created by a state legislature or by Congress (b) a law created by a city or municipality (c) a law created by court rulings (d) a law created by a state or U.S. Supreme Court

a. a law created by a state legislature or by Congress

All the following are a remedy available to a consumer suing under the DTPA EXCEPT: (a) a one-year jail sentence (b) economic damages (c) damages for mental anguish (d) treble damages

a. a one-year jail sentence

Subsidence is when water _____. (a) advances to cover previously dry land (b) is artificially pumped in to cover previously dry land (c) recedes to reveal previously submerged land (d) increases its depth due to severe storms

a. advances to cover previously dry land

A listing agreement is a _________ because only one party, the owner, promises to perform. (a) Unilateral contract (b) Bilateral contract (c) Tenancy agreement (d) None of the above

a. unilateral contract

A consumer must give a provider of goods or services how many days notice before filing a DTPA suit? (a) 30 (b) 60 (c) 90 (d) 120

b. 60

An actual and visible appropriation of real property, commenced and continued under a claim of right inconsistent with and hostile to the claim to of another person is called _____. (a) Reverse possession (b) Adverse possession (c) Positive possession (d) Hostile takeover

b. Adverse possession

What is a rule of contract construction that tells us that if any part of the contract is unclear, a court will interpret the provision against the party that drew the contract? (a) Interlineations (b) Against maker (c) The Four Corners Doctrine (d) The Parol Evidence Rule

b. Against maker

What type of agency occurs when an agent has an interest or estate in the property as part or all of his/her compensation? (a) Agency by ratification (b) Agency coupled with an interest (c) Special agency (d) Ostensible agency

b. Agency coupled with an interest

A(n) _____ could include real estate brokers who arrange for sellers to take second lien loans. (a) Creditor (b) Arranger (c) Finance charger (d) Finance charger

b. Arranger

The basic formula for calculating the tax an individual pays on real estate is: (a) Income x Time = Tax payment (b) Assessed value x Tax rate = Tax payment (c) Market value / Assessed value = Tax Payment (d) GRM = Sales Price / Monthly Rent

b. Assessed value x Tax rate = Tax payment

Personalty is also known as _____. (a) Cattle (b) Chattel (c) Easements (d) Security

b. Chattel

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 established the ________ that protects the consumer by writing rules and monitoring markets for risks to consumers. (a) Securities and Exchange Commission (SEC) (b) Consumer Finance Protection Bureau (CFPB) (c) Department of Housing and Urban Development (HUD) (d) Office of Interstate Land Sales Registration

b. Consumer Finance Protection Bureau (CFPB)

Which of the following means that the grantor has not conveyed the same estate previously, has good title to the property, and will indemnify the grantee against claims due to failure of title? (a) Covenant against encumbrances (b) Covenant of Seizin (c) General Warranty Covenant (d) None of the above

b. Covenant of Seizin

Those who have any interest in the property that is subordinate or inferior to the owner's full legal title of the property have what is commonly referred to as an equity interest, or ________, to that property. (a) Primogeniture (b) Equitable title (c) Entailment (d) None of the above

b. Equitable title

Which type of deed, both in statute and case law, ensures the highest warranty the law recognizes? (a) Special warranty deed (b) General warranty deed (c) Quitclaim deed (d) Trustee's deed

b. General warranty deed

Which of the following is required for joint tenancy? (a) Creation (b) Interest (c) Formation (d) All of the above

b. Interest

A(n) _____ is a charge on the property of a person for the payment or discharge of a debt or duty owed by that person. (a) Easement (b) Lien (c) Fixture (d) Statute

b. Lien

A(n) _____, or memorandum thereof, is normally considered to be specific enough when it is in writing and is signed by the person to be charged with the commission, promises definite commission will be paid, and it specifies the name of the broker to whom the commission is to be paid. (a) Exemption agreement (b) Listing agreement (c) Tenancy agreement (d) Non-Disclosure memorandum

b. Listing agreement

_____ is an essential prerequisite to the formation of a contract and is often the most difficult factor to determine. (a) Informal consent (b) Mutual assent (c) Formal consent (d) Bilateral assent

b. Mutual assent

What is actual notice? (a) Recording the document (b) Possession of notice after a diligent inquiry (c) Signing the document before a public official (d) Verification of the truth of a recorded instrument

b. Possession of notice after a diligent inquiry

A _____ cannot be greater than 200 acres and must include the portion of acreage with the claimant's home on it. (a) Urban homestead (b) Rural homestead (c) Suburban homestead (d) All of these are correct

b. Rural homestead

All timeshare properties must now be registered with _____. (a) Texas Railroad Commission (b) Texas Real Estate Commission (c) Secretary of State (d) Comptroller of Accounts

b. Texas Real Estate Commission

The _____ establishes statutory guidelines for condominiums in Texas. (a) Texas Appraiser Licensing and Certification Board (TALCB) (b) Texas Uniform Condominium Act (TUCA) (c) Texas Landlord-Tenant Act (d) Condominium and Timeshare Act

b. Texas Uniform Condominium Act (TUCA)

What happens to the tenant’s security deposit if the tenant does not provide a forwarding address in writing? (a) The deposit is forfeited by the tenant. (b) The duty to refund is waived. (c) The duty to refund stays the same. (d) The landlord retains 20% of the deposit.

b. The duty to refund is waived

Which of the following is NOT considered criteria in the determination of whether or not a specific item is a fixture? (a) Annexation (b) Valuation (c) Adaptation (d) Intention

b. Valuation

The most commonly used mortgage in Texas is a ____. (a) regular mortgage (b) deed of trust (c) absolute deed (d) trustee mortgage

b. deed of trust

A marketable title is one that is free of _____. (a) maintenance fees (b) defects of record (c) title assurance (d) any binding law

b. defects of record

A lien that applies to all property owned by a debtor is a _____ lien. (a) specific (b) general (c) realty (d) personal

b. general

When a buyer purchases a property and obtains a loan to do so, one of two legal theories prevails. If the buyer holds title to the property, it is considered _____ theory. (a) buyer (b) lien (c) title (d) mortgage

b. lien

A lien that attaches only to specific parcels of real estate is a _____. (a) general (b) specific (c) realty (d) personal

b. specific

_____ has full contractual capacity under the general rule of law. (a) The mentally infirm (b) A minor (c) A person who is illiterate (d) A person under the influence of drugs or alcohol

c. A person who is illiterate

Declarations of the agent alone are not sufficient; it must be acts of the principal that create apparent authority. Creation of agency through this type of conduct has also been called _____. (a) Agent by estoppel (b) Agency by apparent authority (c) Both a and b (d) None of the above

c. Both a and b

Real estate is defined by the Texas Real Estate License Act as a _____. (a) Leasehold (b) Interest or estate in land (c) Both a and b (d) None of the above

c. Both a and b

Which of the following entities pass ordinances? (a) Congress (b) States (c) Cities and counties (d) Judges

c. Cities and counties

Title refers to a regular chain of transfers from or under the sovereignty of the soil, and _____ is meant as a consecutive chain of such transfers down to the person in possession. (a) Condemnation (b) Ten-year statute (c) Color of title (d) Adverse possession

c. Color of title

Which of the following statements regarding homesteads in Texas is TRUE? (a) Homesteads are created by signing specific documents filed in the county courthouse. (b) Property owners must take an oath before a justice of the peace when creating their homestead. (c) Creation of a homestead requires no formal designation whatsoever (d) Homesteads can only be rural, not urban.

c. Creation of a homestead requires no formal designation whatsoever

A _____ is a written instrument by which a landowner transfers the ownership of his land. (a) Real Estate Contract (b) Unilateral contract (c) Deed (d) None of the above

c. Deed

The ________ officer is normally one who is trusted by both parties, he or she helps ease the air of suspicion or distrust that may exist in a transaction when the parties think of themselves as adversaries. (a) Loan (b) Mortgage (c) Escrow (d) Closing

c. Escrow

The borrower in a deed of trust is called the _____. (a) Trustee (b) Beneficiary (c) Grantor (d) Grantee

c. Grantor

_____ requires four unities: time, title, interest and possession. (a) Homestead (b) Ownership in severalty (c) Joint tenancy (d) Tenancy in common

c. Joint tenancy

Which of the following was established to administer the rules, regulations, and statutes pertaining to the Interstate Land sales Full Disclosure Act? (a) Department of Housing and Urban Development (b) Federal Housing Administration (c) Office of Interstate Land Sales Registration (d) Department of Veteran Affairs

c. Office of Interstate Land Sales Registration

Which of the following is an exhaustive publication dealing with almost every imaginable area of extension of credit? (a) The Community Reinvestment Act (CRA) (b) The Home Owners Equity Protection Act (HOEPA) (c) Regulation Z (d) The Equal Credit Opportunity Act (ECOA)

c. Regulation Z

To be eligible for a Texas real estate sales agent's license, the sales agent must be joined in his/her application by a _____ on a form prescribed by the commission. (a) Real estate instructor/college professor (b) Personal reference (c) Sponsoring broker (d) Legal United States citizen

c. Sponsoring broker

Another name for a leasehold estate is a(n) _____. (a) Lien (b) Encumbrance (c) Tenancy (d) Statute

c. Tenancy

In the method of __________ the title to the real estate is reflected by a registration certificate, similar to that used in Texas for an automobile title. (a) Mediation (b) Arbitration (c) The Torrens System (d) Title Insurance

c. The Torrens System

Scenario 2: Chapter 11

Broker Alberto Fernandez (Al to his friends) is not having a good day. A local lawyer had sent Al a demand letter that was a 60-day notice of his intent to sue Al under the Deceptive Trade Practices Act (DTPA). The lawyer represented Gloria and Bobby Hamilton, buyers Al had represented in the purchase of their home four years ago. The Hamiltons allege that their roof and foundation have defects, and that Al knew of these defects but withheld the information from them so that they would sign the purchase contract. They demand that Al pay them $180,000! Al knows he is innocent of any wrongdoing in the transaction, but he still is filled with a sense of dread. Al prepares a list of questions to ask his attorney:• Exactly what violations was he being accused of? What damages could be asked for in this situation? What other penalties could he face under the law? How should he respond to the demand letter? What were his defenses under the law? Al emails a copy of the demand letter to his lawyer and then calls her. Within the hour, Al's lawyer is sitting in his office. Al's lawyer has dealt with many DTPA cases in her law practice over the years. She knows that the DTPA comes down to three things: deceptions, damages, and defenses. First, she explains that the deceptions are enumerated in what is called "The Laundry List." This list describes over 20 practices that are unlawful under the DTPA. The damages the Hamiltons could receive if they win the case include:• economic damages• damages for mental anguish• treble damages which could triple the amount of economic or mental anguish damages awarded to the plaintiff• court orders that enjoin acts or failures to act• orders to restore consumers to their previous financial condition• any other relief the court deems proper. Al has defenses under the law that he can claim or invoke. These include:• use mediation• make a reasonable settlement offer that could bar a claim later for treble damages• provide written information from another source with notice of reliance on that information• establish that he provided "advice or opinion" as a professional• show that the Hamiltons lack proof that he made a material misrepresentation• show that the Hamilitons lack proof that he knew of the defects and withheld that information• prove that the Hamiltons relied on inspections that were completed by professional inspectors or accepted the disclosures that were made by the seller.• prove that the Hamiltons knew about the defects but purchased the property anyway.• invoke the "as is" clause which is contained in TREC promulgated contracts used to purchase property• verify that the suit was brought within the statute of limitations, which is within 2 years after the deceptive act took place or within 2 years of the consumer "discovering" the act. She feels that the Hamiltons do not have a strong case, and that Al has ample defenses.

Scenario 1: Chapter 9

Carol Chow has lived her entire life next to water; the more water around her, the better. After years of searching and with the assistance of a Texas real estate broker, Carol has found the perfect property. It sits on a jut of land with a large lake to one side and a sizable pond on the other. Even her household water supply comes from groundwater pulled from a well. Over the years, Carol noticed her land was changing because the river was changing course over time. On one side, the soil was slowly being washed away. Farther down the stream, at a bend in the river, soil was slowly being deposited. One one occasion, after several days of server storms, she noticed that an entire piece of land had washed away completely. Carol notice that the lake was moving closer to her house over time. She hired a hydrologist to look at the the situation, and he reported that her land was singing a little, probably due to the water she was pulling from underground through her well. On the other hand, the pond was shrinking, revealing more land. Half an acre was now exposed. The hydrologist explained what was going on with her property, using words such as accretion, alluvion, reliction, erosion, avulsion, subsidence, and submergence. After a little research and the use of a real estate law textbook her broker had used in her real estate studies, Carol and the broker were able to find definitions for the terms used by the hydrologist.

Scenario 3: Chapter 19

Clayton Booth is a real estate sales agent with one of the largest firms in town. Although he has done residential sales, he has more experience with leasing and property management. His broker asked him to form and oversee a team to handle the leasing and property management functions of the firm. Clayton finds six people to join the team, Westside Property Management Group . Some of the new team members had experience with leasing and property management, but a few did not. After some initial discussions with his team, Clayton directed his team to the websites of the Texas Legislature and the Real Estate Center where they could read the statutes about landlord and tenant law. One of the most disputed issues between residential landlords and tenants deals with the landlord's duty to repair the property. Tenants often think that the landlord should repair everything; landlords think they should repair nothing. The truth, of course, is somewhere in between. The landlord must make a diligent effort to repair or remedy any condition when• the tenant has specified the condition in a notice to the person who collects rent or to the place where rent is paid (such notice should be in writing if required by the written lease),• the tenant is current in rent when the notice is given, and• the condition materially affects the health or safety of an ordinary tenant. Another often disputed issue between landlords and tenants is security deposits. The amount of the security deposit is negotiable between the parties, but the law is specific about the return of the deposit and about written explanations of deductions made from that deposit. The deposit and written explanation of any deductions must be sent to the tenant within 30 days after the tenant "surrenders the premises" (or 60 days if the property is commercial real estate). A landlord is required to return a deposit within 30 days after three requirements are met: Tenant has given advance notice of intent to surrender the premises if such was required in the written lease in underlined or bold print. The tenant surrenders the premises. The tenant has provided a forwarding address in writing.