TX Principles of Real Estate I Practice Test

Mitch, your seller client, asked you about the tax ramifications of selling his townhome. What's your best response?

"That's not my area of expertise. You should ask your tax advisor."

How much would a lot that is 400 feet wide by 500 feet long cost at $900 per acre?

$4,132

A 4-bedroom, 4-bath 4,875 square feet house was listed at $445,000. Andreas, the seller, accepted an offer that was 95% of the listing price. What price per square foot did he get for the house?

$86.72

Limited liability companies and limited liability partnerships are favorable forms of business because ______.

They don't require a general partner.

Police power is the government's authority at what level(s)?

At any level

Where might a legal description be found?

At the county recorder's office or online county offices, or through a title company

In Texas, when is a licensee required to provide an agency disclosure?

At the time that the licensee is having the first substantive dialogue about a specific property with the party whom they are not representing in the transaction

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.

Ezra's lease on his condo includes an option to purchase. He told his landlord, Sherm, that he's ready to purchase the condo, and they've negotiated a purchase price and closing date. What kind of contract is this?

Bilateral

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.

Which of the following statements is true regarding community property rights and property ownership?

Both partners may own other properties purchased before the marriage separately (in severalty), but any properties purchased during their marriage are owned equally.

Which of the following is included in HMDA data?

Census tract information

Bart just toured his fourth patio home of the day. To help him remember what he saw in each one, he's making notes about décor, updates, and inclusions that will stay with the property. Which of the following items is NOT considered personal property and would therefore stay with a home?

Chandelier in the foyer

Renae moved to the U.S. from Nigeria and became a citizen. Which act specifically provides Renae with the right to buy, sell, convey, inherit, and possess property?

Civil Rights Act of 1866

Title VIII of which law prohibits discrimination in the sale, rental, and financing of housing?

Civil Rights Act of 1968 also referred to as The Federal Fair Housing Act of 1968

In several states, married couples usually hold property as ______.

Community property

The client owes the agent the primary duties of ______, information, indemnification, and availability.

Compensation

The process in which the government actually takes someone's property through the power of eminent domain is called __________.

Condemnation

Which written notice must the seller of unimproved real property that is to be used for residential purposes provide to the purchaser of the property, on or before the effective date of a sales contract for the property?

Conditions Under Surface

What's an antitrust violation's central element?

Conspiracy

Which option best defines a statutory lien?

Created by law and gives right of possession

Javier represents Marcus, who's selling his rental property to Ben. Ben is represented by another real estate licensee, Francis. What is Ben's relationship to Javier?

Customer

Which protected class is protected against discriminatory practices, such as against placing limitations on the number or age of children in the residence?

Familial status

Which act created an agency to investigate antitrust practices?

Federal trade commission act

The seven members of the ESAC committee who are real estate professionals must have been actively engaged in the practice of real estate for at least ____ years before appointment.

Five

Which of the following states that the person who committed the fraud, as well as anyone who knew about the fraud, failed to disclose it, and benefited from it, can be held liable for actual damages?

Fraud in Real Estate and Stock Transactions

Personal property includes which of the following?

Free standing TV

Phil is a property manager, which means he serves as a ______ agent to his landlord/client.

General

Which of these situations represents an illegal tie-in arrangement?

Grayson tells his seller client, Geneva, that he'll reduce the listing commission if Geneva uses MBS Title Services to close her transaction.

Several brokerages in a certain area agree to stop running advertisements in a local publication. What type of antitrust violation is this?

Group boycotting

Once taxes are delinquent, what action might be taken?

If the property is in a city or village, the municipality will enforce its tax lien through a tax sale

Which type of contract is the opposite of an express contract?

Implied

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 - death of Oliver dissolved the joint tenancy

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

Income, net worth, job stability, and credit rating

When strong winds and tidal action from storms change the vegetation line, what can happen?

Private property can become subject to the public beach easement

Before using a showing service to automate the scheduling and showing of the property to prospective buyers, the listing agent must have the sellers review and sign the _______ form.

Showing Service Information

Elisa agreed to list Simone's house for sale. After the listing contract was signed, Simone lost her job, and her father, George, offered to help Simone by paying Elisa's listing commission. The buyer's agent, Carl, also reduced his commission by a quarter percent to help Simone. Who is Elisa's client?

Simone

Rex needs to handle some money he acquired during an "unsavory" business deal. He agrees to sign his boat over to his colleague, Ben, if Ben can launder the money and return it to Rex as part of a legal business dealing. What kind of contract do Rex and Ben have?

Void - contracts for illegal purposes are void

In contract law, when does partial performance occur?

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

In which of the following situations is it okay for a Texas broker acting as an intermediary to disclose any confidential information about a party to the transaction?

When it required by law or court order

Texas sales agent applicant Frank's license application was denied. Which of the following parties is responsible for notifying Frank?

TREC

Considering TREC's authority under the laws of TRELA, which of the following statements is true?

TREC has the authority to suspend or revoke any license holder's license.

How is priority determined in cases where more than one judgment lien is filed against a property?

Whoever filed their claim first receives priority

What's the best definition of legal purpose?

Written for a lawful objective

What is the continuing education requirement for Texas real estate licensees?

18 course hours for each licensed term

Your neighbor bought rights that will prevent you from ever building above two stories. What type of rights are these?

Air

______ must abide by the Canons of Professional Ethics and Conduct, enforced by the Texas Real Estate Commission.

All Texas real estate licensees

Which of the following is a true statement about single-family detached homes vs. condos?

All else being equal, single-family homes typically cost more than condominiums

Which statement most accurately describes a licensee's responsibility related to written offers on their listing, according to the NAR Code of Ethics and Standards of Practice?

All formal written offers received by the licensee must be presented to the owner until closing or execution of a lease, unless the client waives this obligation in writing.

TREC will charge this fee to all license holders yearly.

Annual registration

The term "real estate" refers to which of the following under TRELA's general provisions?

Any interest in real property, including a leasehold, located in or outside of Texas

April and Wayne are the buyer and seller of a condo, respectively. April is represented by Steve. Wayne is represented by Wanda. Name the principal(s) in this transaction.

April and Wayne

Allen and Lewis are friends who each recently purchased real estate. Allen purchased a patio home in a small town an hour from the city, while Lewis purchased a condo in a really hot area near the city center. Although they paid similar amounts for their properties, Lewis' condo is worth much more two years later. Which economic characteristic does this demonstrate?

Area preference

Which type of valuation is used by government tax assessment offices?

Assessed value

What type of involuntary lien is placed on a person's estate after their death if there are unpaid debts to creditors?

Deceased person's debt lien

Which of the following is used to provide documented proof that buildings and improvements are properly raised to minimize flood damage?

Elevation certificate

With which type of government power is a property owner compensated when the government imposes an involuntary title conveyance for the public good?

Eminent Domain

Kelo v. City of New London was a court case that focused on the power of ____________.

Eminent domain

As a stipulation of the ______, lenders must offer reasons when rejecting loan applications and must respond to all applications within 30 days.

Equal Credit Opportunity Act of 1974

Erica is preparing to take her licensing exam, so she's following the process outlined in the candidate bulletin. Which of these actions should Erica take to follow the process correctly?

Erica must make a reservation at least 24 hours in advance to have her fingerprints taken by MorphoTest. She'll need her TREC ID number from her eligibility letter.

If someone passes away without a will and attempts to locate heirs or creditors have come up empty, the state can claim the property. What is this an example of?

Escheat

What type of lien is defined as an involuntary lien placed on all of the property received by a deceased person's heirs?

Estate/inheritance lien

There are three types of listing agreements. They are _______, exclusive agency, and open listing.

Exclusive right to sell

Home ownership tax deductions include __________________.

Interest on mortgage loan

In Texas, the Information About Brokerage Services form ______.

Is required by law

Sam and Bridget are cousins who jointly own property. They are both named on the deed, they received title at the same time, they have the right of survivorship, and they each have equal interest and undivided rights of possession. What type of ownership do they have?

Joint tenancy

The residents of Blair Avenue are a close-knit bunch. They're all young couples with small children, and they don't want this dynamic to change when two of the couples have to move. Those couples sign an agreement promising not to sell to anyone without kids or to anyone over the age of 50. The contract can't be enforced because it's missing ______.

Legal purpose

Under the statute of ______, if legal remedy is sought against a person, the pursuer must bring a court action within a specified period of time.

Limitations

Which of the following is deductible on an income tax return if the criteria is met?

Loan origination fee

Which type of legal description is this: "Plat of Block 28, Woodmen Heights Tract, recorded in Map Book 27, page 68, at the Eldor County Records Office"?

Lot and block

A legally competent party means that an individual has the capacity, legally and ______, to enter into a contract.

Mentally

Which of these situations does the Americans with Disabilities Act address?

Meridian Apartments provides a gym and pool area for residents, but it's not accessible to residents who use wheelchairs

Which of the following is a benefit of living in a retirement community?

Nearby medical facilities

A Texas resident who's performing real estate activities under the judgment or order of a court, such as a trustee in a bankruptcy, is _______.

Not required to have a real estate license

Under what conditions can a licensee contact sellers who are under an exclusive listing agreement with another agent?

Only to arrange a showing to a buyer

In what way is a townhome similar to a single-family detached home?

Ownership includes both the structure and the land

Eileen entered into a contract to buy Peter's home. The contract specified that Peter must leave the refrigerator with the home, and he must replace the roof before closing. During the pre-closing walk-through, Eileen confirmed the house had a nice new roof, but also found that Peter took the refrigerator with him. Eileen decided she didn't want the refrigerator that much anyway so she didn't make a fuss. This is an example of ______ of the contract.

Partial performance

Brandon has a right-to-use timeshare. What can he NOT do with this type of timeshare?

Pass the timeshare on to an heir

Peter wants to set up a land trust so that his children can benefit from his real estate investments after he dies. He asked his financial advisor Tom to manage the trust, and Tom agreed. How is the trust created?

Peter conveys the real estate to Tom

What does the lot and block system use to develop a property's legal description?

Plat references

"Separate property" is property most likely acquired ______.

Prior to marriage

In the real estate business, whose primary role is to estimate property value based on established valuation guidelines?

Real estate appraiser

Drew and Hank were camping at Hank's riverfront cabin. Hank told Drew that he rarely used the cabin and was thinking of selling it. Drew said that he'd buy it from Hank for $80,000, which Hank agreed was a fair price. It's two months later, and Hank is upset that Drew now says he won't buy it. Why isn't this contract enforceable?

Real estate contracts must be in writing

Which area of real estate law covers what's required of a licensee when performing real estate activities within the state, including license law, continuing education requirements, supervisory requirements, and prohibited conduct?

Real estate license law

What's the main point of the statute of frauds?

Real estate purchase and sale contracts must be in writing to be enforceable.

What is the best definition of real property?

Real estate, plus all of the interests, benefits, and rights included in ownership

Navigable and non-navigable waterways are a smaller classification within what kind of water rights?

Riparian

Which of these statements most accurately represents existing federal antitrust legislation?

The Clayton Act supports the Sherman Antitrust Act's purpose of prohibiting monopolies by prohibiting mergers or acquisitions that would create a monopoly

Real estate licensees in Texas need to pay attention to updates from what agency, which is responsible for enforcing Texas Fair Housing Law?

The Texas Workforce Commission Civil Rights Division

When the listing agreement's purpose has been fulfilled, what happens to the agency agreement?

The agency agreement terminates by completion.

Two large local brokerage firms agreed to lower their commission rates to the same amount—approximately 1% less than any other firm in town. After extensive marketing of their new lower rate, these two firms began to see a big increase in the number of listings they received, costing their competitors substantial amounts of money. What about this situation makes it a per se antitrust violation?

The agreement between the two firms

Jenson signed a seller agency agreement with Susan. Right before closing, a hurricane destroyed the property. What happened to Jenson and Susan's agreement?

The agreement terminates by force of law

Trina's property is listed with Avalon Homes. The market is a little slow, and Trina's listing is a high-end home, where sales are even slower. She's had several showings, but no offers. The term of the listing agreement is nearly over. What happens when the termination date is reached?

The listing expires and is automatically terminated

To be considered real property in Texas, a manufactured home must be permanently attached to a foundation and ______.

The owner must file a certified copy of the home's Statement of Ownership and Location (SOL) in the real property records of the county where the home is located

Agency may be legally terminated in which of the following ways?

The principal broker becomes incapacitated

As a listing agent, when are you no longer obligated to present offers to your client?

The sale has closed.

A sales agent may only accept a commission for a real estate transaction if the commission is paid by which of the following parties?

The sales agent's broker

Who determines if a property will be marketed using the MLS?

The seller

Jonas recently sold a house to his friend Josh's parents. Because his friend Josh referred Jonas as the broker for their real estate transaction, Josh wanted to repay the favor by paying Josh a portion of his commission check. Doing so would violate TRELA. What is the maximum administrative penalty Jonas could be fined for this illegal act?

Up to 5,000 a fine

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