CE Shop: Texas 30-Hour Law of Contracts

What is a syndicate? A business organization owned by two or more partners An illegal organization that is involved in criminal activities An organization with many investors who jointly participate in a real estate investment A temporary organization formed by two or more parties to invest in real estate

An organization with many investors who jointly participate in a real estate investment

DTPA Definition

Any false, misleading, or deceptive actions or practices in the advertising, offering for sale, selling, or leasing personal property or real property are prohibited.

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 Improvements Permanence Scarcity

Area Preference

How Well Do You Know the Commission? The Texas Real Estate Commission has broad authority. Select whether the following choices fall under TREC's authority. Administer the law known as TRELA Authority Not an authority

Authority

How Well Do You Know the Commission? The Texas Real Estate Commission has broad authority. Select whether the following choices fall under TREC's authority. Adopt rules and policies to protect the public Authority Not an authority

Authority

How Well Do You Know the Commission? The Texas Real Estate Commission has broad authority. Select whether the following choices fall under TREC's authority. Establish rules requiring real estate licensees to use contract forms adopted by the commission Authority Not an authority

Authority

To administer the laws, policies and rules under TRELA A: TRELA rule on contract forms B: The purpose of TREC C: The purpose of TRELA

B

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 and Midge each own 50%. Barbie and Skipper each own 50%. Barbie, Midge, and Ken's heirs each own one-third. Barbie owns two-thirds, and Midge owns one-third.

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

To protect the public through the regulation of real estate professionals A: TRELA rule on contract forms B: The purpose of TREC C: The purpose of TRELA

C

Clint was looking for alternatives to the traditional vacation condo rental for his family. He purchased the right to use a given set of facilities at any point throughout the year. What did Clint purchase? Campground membership Condo estate Timeshare estate Timeshare use

Campground membership

Property with ownership by more than one person is known as ______. Co-ownership Dual ownership Estate by severalty Property partnership

Co-ownership

The assessed value of a condominium is usually higher than a similar ______ because of outright ownership. Cooperative Single-family home Townhome Vacation property

Cooperative

In real estate, what are emblements? Cultivated crops Detached fixtures Free-standing plants Open spaces

Cultivated crops

Mike and his buddy Daryl own a business together. They are jointly and separately liable for any debts the business may incur. What type of partnership do Mike and Daryl have? Dual partnership General partnership Joint liability partnership Limited partnership

General partnership

Compared with condominiums, the monthly fees for a cooperative owner are typically ______. Higher Much less Slightly less The same

Higher

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 Tenancy by the entirety Tenancy in common Tenancy in severalty

Joint tenancy

The term "right of survivorship" is closely linked with _____________________. A corporation A trust Joint tenancy Tenancy in common

Joint tenancy

Which form of real property ownership (for owners other than married couples) means there's equal ownership shares with undivided possession rights? Joint tenancy Tenancy by the entirety Tenancy in common Tenancy in severalty

Joint tenancy

Which ownership type is defined by four unities: time, title, interest, and possession? Freehold estate Joint tenancy Tenancy by the entirety Tenancy in common

Joint tenancy

Lucas, Ivan, Chad, and Trace own a property as joint tenants. After a few years, Ivan sells his interest to Tom (with permission from Lucas, Chad, and Trace). Chad dies intestate but is survived by a wife, Amy. Trace also then passes away but wills his property to Monique. Who owns the property after Trace's death? Lucas Lucas and Tom Lucas, Monique, and Amy Lucas, Tom, Amy, and Monique

Lucas and Tom

What is the buyer of a condominium required to pay that a co-op buyer isn't? Monthly fees Mortgage interest Mortgage recording tax Property taxes

Mortgage recording tax

Condominiums involve what type of ownership? Borrowed property Personal property Real property Temporary property

Real Property

Which area of real estate law covers the requirements of a licensee when performing real estate activities within the state, including continuing education requirements, supervisory requirements, and prohibited conduct? Contract law General property law Law of agency Real estate license law

Real estate license law

Eva, Stella, and Lynn owned a vacation home two blocks from the beach. Sadly, Stella passed away over the winter, so when summer arrived, Eva and Lynn shared the home with Stella's nephew Drew, to whom Stella willed her share of the property. What type of ownership is this? Estate in severalty Joint tenancy Tenancy by the entirety Tenancy in common

Tenancy in common

In which form of co-ownership is a person's ownership inheritable? Joint tenancy Tenancy by the entirety Tenancy in common Tenancy in severalty

Tenancy in common

Which one of the following types of ownership termination allows each tenant to have a specific, divided portion (partition) of the property exclusively? Termination by division Termination of co-ownership by partition Termination of estate in severalty Termination of joint tenancies

Termination of co-ownership by partition

TREC is the acronym for the

Texas Real Estate Commission

TRELA is the acronym for

Texas Real Estate Licensing Act

Under a sole proprietorship form of business, ______. The owner assumes personal liability for all debts The owner is subject to double taxation The owner's personal assets are protected from business creditors' claims The owner works alone, without employees

The owner assumes personal liability for all debts

The right of control

The owner controls the use of the property.

The right of possession

The property is owned and may be possessed by the title holder.

The right of exclusion

The right to decide who may or may not access the property.

The right of disposition

The right to sell or convey the property.

TREC Members:

There are nine (six brokers, with at least five years of real estate experience, and three members of the public)

Which of the following statements about limited liability companies (LLCs) and limited liability partnerships (LLPs) is true? Owners of the LLC or LLP are called shareholders. Owners of the LLC or LLP are personally liable for LLC/LLP obligations. They are taxed as partnerships. They require a general partner.

They are taxed as partnerships.

In what way is a townhome similar to a condominium? They are both detached structures. They are both multi-family dwellings. They both typically have detached garages. They both typically have HOA dues.

They both typically have HOA dues.

A ______ is a piece of real estate owned by multiple unrelated individuals who, in addition to their ownership rights, each hold the right to occupy the dwelling unit based on the specific terms of a timeshare agreement, usually in one- to two-week intervals during the year. Campground membership Timeshare estate Timeshare use Vacation ownership

Timeshare Estate

Sheila owns a timeshare that gives her ownership of the property for a certain number of weeks per year in perpetuity. What type of timeshare is this? Eternal timeshare Timeshare estate Timeshare in perpetuity Timeshare use interest

Timeshare estate

Which of the following statements is true regarding timeshare estates? Timeshare estates are illegal. Timeshare estates can be sold or passed down to heirs. Timeshare estates cannot be passed down to heirs. Timeshare estates cannot be sold.

Timeshare estates can be sold or passed down to heirs.

Rules Relating to Contract Forms Is the following statement true or false? TREC may adopt rules that are in the public's best interest requiring license holders to use contract forms prepared by the Texas Broker-Lawyer Committee and adopted by the commission.

True

Physical characteristics of land include its immobility, indestructibility, and ______.

Uniqueness

Which physical characteristic of land addresses the concept that land isn't interchangeable, and one piece of land isn't exactly like another? Immobility Indestructibility Permanence of investment Uniqueness

Uniqueness

Surface rights include

both land and water rights.

Listing Form Rules Now let's see what you remember about rules related to contract forms pertain to the listing form. Identify the two provisions that must be included in the listing form. 1. A provision informing the parties that real estate commissions are set by the parties to the listing agreement 2. A provision providing a listing agreement party to be informed of coastal natural hazards that may pertain to a property area 3. A provision explaining TREC's authority to protect the public interest

1 & 2

Who makes up the Texas Real Estate Broker-Lawyer Committee?

13 members. Six of these members are appointed by TREC, six are members of the State Bar of Texas and are appointed by its president, and one is a member of the public, appointed by the governor

James Barth is a real estate sales licensee. Currently, he's working with his clients, the Smiths, to help them purchase a home. When completing the required Promulgated One to Four Family Residential Contract, the Smiths look to him for better understanding, so he begins to explain the document to them. A. James explained the meaning of statements and facts of the contract. He took care to not give any legal advice or opinions when doing so. B. James did not explain the meaning of the contract and instead suggested that the Smiths find an attorney to explain it to them.

A

Licensees must use forms that are promulgated by the Broker-Lawyer Committee and adopted by TREC A: TRELA rule on contract forms B: The purpose of TREC C: The purpose of TRELA

A

TREC Duties:

Administers TRELA, establish policy and rules to enforce, interpret, and explain the provisions of TRELA TREC also creates and implements what are known as promulgated forms drafted by the Broker-Lawyer committee.

Right or Wrong Joni is a new licensee representing the sellers of a home. Darla, also a new licensee, overhears Joni speaking with her clients when they ask about the Seller's Disclosure of Property Condition, and if they must disclose a crack in their home's foundation. Joni replies that, because the seller disclosure form is optional, there's no need to complete it if the sellers don't want to. Darla realizes that she needs to speak with Joni to inform her that the seller disclosure is in fact required, and even though the form TREC offers is optional, the disclosure itself is required by law. Is Darla right or wrong? Darla is right. Darla is wrong.

Darla is right.

DTPA is the acronym for

Deceptive Trade Practices Act

With cooperatives, the resident's share of mortgage interest and real estate taxes is ______. Deductible only on the board's tax returns Deductible on personal income tax returns Not deductible on personal income tax returns Paid by the board

Deductible on personal income tax returns

Do or Don't? Advise your client to get an attorney if one is needed (especially if the contract has unusual stipulations).

Do

Do or Don't? Explain sections of a promulgated form to your client, and be sure your clients understand what they're signing.

Do

Do or Don't? Let your clients know that any contractual document they're about to sign is binding. That's a must.

Do

Do or Don't? Add a provision to a sales contract, or create an addendum for it if there's a promulgated form already available for that purpose.

Don't

Do or Don't? Retain an attorney or pay for one on your client's behalf. (You can get one for yourself, if necessary.)

Don't

Basic Duties of the Broker-Lawyer Committee Let's check your understanding of the Broker-Lawyer Committee. Select the correct duty from the options provided. File charges against violators of TRELA. Draft legally promulgated forms for TREC. Draft new laws under TRELA.

Draft legally promulgated forms for TREC.

More Rule or Not a Rule Identify whether these statements are a rule or an exception to a rule relating to contract forms. A contract form prepared by an attorney and required by the property owner is used in lieu of a TREC promulgated form. Exception to the rule Rule

Exception to the rule

Rule or Not a Rule Relating to Contract Forms Got your rules down yet? Identify whether these statements are a rule or an exception to a rule relating to contract forms. A property owner may draft a contract for use in a real estate transaction. Rule Exception to the rule

Exception to the rule

Leon and Beth own 1/13 of a timeshare estate. They own weeks 20 and 21, and also weeks 40 and 41. These weeks are inheritable. What type of ownership is this? Estate for life Fee simple Leasehold estate Periodic estate

Fee Simple

Which of the following is true regarding the purchase of a condominium? If the prospective buyer has the financial means to buy the condominium, neither the association nor the residents can block the purchase. The condominium association can reject the prospective buyer's application for any reason. The condominium residents can reject the prospective buyer's application for any reason. The Uniform Condominium Act requires state approval of all purchases.

If the prospective buyer has the financial means to buy the condominium, neither the association nor the residents can block the purchase.

How does a sole proprietorship own property? In joint tenancy In partnership In severalty In trust

In severalty

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? As a joint tenant with rights of survivorship As a tenant in common with Oliver's heirs In severalty In trust

In severalty

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

Indestructibility

TRELA Listing agreement law has provisions that:

Informs the parties to the contract that real estate commissions are negotiable Explains the availability of Texas coastal natural hazards information important to coastal residents, if appropriate

Janice, who has lived in an apartment for many years, is interested in moving to a cooperative. She submits an application to the cooperative's review board, but her application is rejected. The board ______. Is forbidden from rejecting her if she qualifies financially Is not required to inform her why her application was rejected Must inform her why her application was rejected Must inform the state why the application was rejected

Is not required to inform her why her application was rejected

Which of the following statements about a partnership is true? A limited partnership cannot hold real estate. All partners must have an equal interest in the business. It is a business organization owned by two or more partners. Property owned by a partnership is owned in severalty.

It is a business organization owned by two or more partners.

Do You Know Which Form Is Required? Review these forms and determine if each is optional or required. Lead-Based Paint Addendum

Optional

Is a Promulgated Form Optional or Required? Review these forms and determine which are optional and which are required according to TREC. Seller's Disclosure of Property Condition

Optional

Is a Promulgated Form Optional or Required? Review these forms and determine which are optional and which are required according to TREC. Texas Real Estate Consumer Notice Concerning Hazards or Deficiencies

Optional

In what way is a townhome similar to a single-family detached home? It often has a detached garage. It's also detached. Ownership includes both the structure and the land. They're always multi-story.

Ownership includes both the structure and the land.

Brandon has a right-to-use timeshare. What can he NOT do with this type of timeshare? Allow a friend to use his week. Pass the timeshare on to an heir. Purchase an additional week if it becomes available. Try to exchange weeks with another timeshare holder.

Pass the timeshare on to an heir.

Lester is interested in a two-bedroom unit in a cooperative. A residence in a cooperative, unlike a condominium, is legally considered ______. Borrowed property Personal property Real property Temporary property

Personal property

"Separate property" is property most likely acquired ______. As community property As tenants in common In joint tenancy Prior to marriage

Prior to marriage

TRELA Purpose:

Protect the public through regulation of licensed real estate brokerage practitioners, real estate inspectors, residential service companies, and entities offering timeshare services

Homeowner Shaun loves DIY projects and decided to build some bookshelves for his home office. He bolted the shelves to the wall and installed trim around them so they became an integral part of the room. When he sells his home, the bookshelves will be considered ______. Personal property because Shaun installed them himself Personal property because they're not an original part of the building Real property because of the method of annexation Real property because Shaun conveyed them to the buyer

Real property because of the method of annexation

Do You Know Which Form Is Required? Review these forms and determine if each is optional or required. Unimproved Property Contract

Required

With a cooperative, the transfer of ownership ______. Involves a transfer of real property Is regulated by the federal government Must be made public Requires board approval

Requires board approval

More Rule or Not a Rule Identify whether these statements are a rule or an exception to a rule relating to contract forms. A listing form outlines the availability of Texas coastal hazards information to coastal residents. Exception to the rule Rule

Rule

Rule or Not a Rule Relating to Contract Forms Got your rules down yet? Identify whether these statements are a rule or an exception to a rule relating to contract forms. A listing form states that real estate commissions are negotiable. Rule Exception to the rule

Rule

Which of the following statements is true regarding the financing of a cooperative purchase? All lenders offer loans for cooperative purchases. Loan rates are significantly lower for cooperative purchases than single-family home purchases. No lenders offer loans for cooperative purchases. Some lenders refuse to offer loans for cooperative purchases.

Some lenders refuse to offer loans for cooperative purchases.

Lewis and Elliot started a real estate investment business together. After much discussion with their attorney, they decided to incorporate, but in such a way that they are treated like a partnership and don't have to pay corporate taxes. What form of business do they have? Double proprietorship Limited liability partnership Subchapter C corporation Subchapter S corporation

Subchapter S corporation

Only _______________ has the authority to promulgate contract forms.

TREC

TRELA Contract forms law

TRELA Licensees must use forms promulgated by the Texas Real Estate Broker-Lawyer Committed and adopted by TREC except when by the property owner or by an attorney and required by the property owner

Once Greg and Caitlin were married, they decided to purchase a home together. Since it was a shotgun wedding after a weekend in Vegas, they made sure that their ownership included the right of survivorship as well as protection from the other spouse attempting to sell the house from under them. Though not recognized in all states, the most likely form of co-ownership under which they would make this purchase is ______. Estate in severalty Joint tenancy Tenancy by the entirety Tenancy in common

Tenancy by the entirety

The right of enjoyment

The ability of the owner to use the property in any legal manner.

What is the name of a term that explains the complexity of property ownership rights and how rights for a single property can be "owned" by multiple parties at the same time? Littoral rights Physical component rights Riparian rights The bundle of rights

The bundle of rights

Leo would like to sell his membership share in a cooperative to Mariah. Which of the following statements is true? At Leo's request, the cooperative is obligated to approve Mariah's application. Leo can sell his membership share to whomever he wants, regardless of what the cooperative board says. Mariah need not submit an application to the cooperative board. The cooperative board must approve Mariah's application before Leo can sell his membership share to her.

The cooperative board must approve Mariah's application before Leo can sell his membership share to her.

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? Lifelong Permanent Renewable Vacation

Vacation