Contract Law Quizzes
Which term is defined as someone who drafts a valid will? A) drafted B) testator C) testifier D) witness
B) testator A testator is someone who drafts a valid will.
The property holder owns the property subject to a condition in which type of fee simple estate? A) community property B) fee simple defeasible C) fee simple determinable D) fee simple subject to a condition subsequent
B) fee simple defeasible In a fee simple defeasible estate, the property holder owns the property subject to a condition.
Which of the following is a triggering term when used in advertising financing? A) "10% down" B) "financing available" C) "low monthly payments" D) "we work with all credit histories"
A) "10% down"
Your brokerage firm uses pre-printed sales contract forms, but your seller wants to add some language about staying in the house and renting from the buyer for a month after closing. What should you use to add this information? A) Addendum B) Amendment C) Annotation D) Appendix
A) Addendum An addendum is a separate page added to a complete contract and becomes part of the original agreement.
While an installment sales contract is executory, what type of title does the buyer hold? A) equitable B) legal C) remainderman D) reversionary
A) equitable The buyer has financial interest in the property, meaning equitable title, but not legal title.
When a buyer is taking possession of their new home, what type of contract must they have? A) executed B) executory C) option D) unilateral
A) executed This is an example of an executed contract, because the parties met all terms of the contract and successfully closed the sales transaction.
If you purchase a home and have all the rights of ownership, including the right to sell, and to convey the property to heirs at your death, what type of estate do you have? A) fee simple absolute B) fee simple defeasible C) fee simple determinable D) fee simple subject to a condition subsequent
A) fee simple absolute With a fee simple absolute estate, the property owner is granted all rights to the property by law.
In accordance with the TREC One to Four Family Residential Contract (Resale), which of the following expenses is paid by the buyer? A) inspection fees B) preparation of the deed C) release of existing liens D) release of loan liability
A) inspection fees The buyer's settlement cost includes loan-related fees, insurance, fees, inspection, fees, and half of the escrow fee.
How is timeshare ownership typically split? A) 12 months B) 52 weeks C) half-years D) years
B) 52 weeks Timeshare ownership is typically split into 52 weeks. In other words, someone who has 1/13th of a timeshare has the right to use that timeshare four weeks per year (because 52 ÷ 13 = 4)
Which type of mortgage has an interest rate that remains constant over the life of the loan? A) adjustable-rate B) fixed-rate C) growing equity D) pledged account
B) fixed-rate Since the total principal and interest payments remain the same, the loan payment remains relatively stable on a fixed rate loan (taxes, and insurance are usually figured in, so the payment may adjust periodically).
With a mortgage, who or what holds equitable title to the property? A) borrower B) lender C) state D) trustee
A) borrower The borrower holds both equitable and legal title when a mortgage is used as the security instrument. The lender has a lien on the property.
Which TREC addendum notifies buyers of the risks of purchasing coastal property? A) Addendum for Property Located Seaward of the Gulf Intracoastal Waterway B) Addendum for Reservation of Oil, Gas, and Other Minerals C) Erosion Addendum D) Tidal Wave and Other Coastal Hazards Addendum
A) Addendum for Property Located Seaward of the Gulf Intracoastal Waterway Contracts for sale of coastal zone properties must have the Addendum for Property Located Seaward of the Gulf Intracoastal Waterway attached.
In Texas, which of the following documents are license holders required to present to consumers prior to entering into a buyer agency agreement? A) Information About Brokerage Services B) Listing agreement C) Sales contract D) Seller's Disclosure Notice
A) Information About Brokerage Services In Texas, any time, a broker and consumer are considering working together, the broker must provide the consumer with the Information About Brokerage Services form. This form explains the consumer's agency relationship options.
What can be used as solid proof of ownership in Texas? A) a deed, and either certificate of title or title insurance B) certificate of title C) deed D) title insurance
A) a deed, and either certificate of title or title insurance A deed, and either certificate of title or title insurance, constitute proof of ownership in Texas.
What is a loan origination fee? A) a fee a lender charges for processing a loan B) a fee a lender charges for servicing a loan C) a fee a lender charges for the use of its money D) a fee a lender charges when a borrower pays off a loan
A) a fee a lender charges for processing a loan A loan origination fee is a fee a lender charges for processing or initiating a loan.
What's a non-conforming loan? A) a loan that fails to meet the criteria set for by Fannie Mae and Freddie Mac B) a loan that meets certain criteria that are accepted by Fannie Mae and Freddie Mac C) a loan that requires larger than usual one time payment at the end of the term D) a loan to buy a high-priced or luxury home
A) a loan that fails to meet the criteria set for by Fannie Mae and Freddie Mac A loan is considered to be nonconforming. If it doesn't meet the criteria set by Fannie Mae and Freddie Mac. Non-conforming loans are harder to sell on the secondary mortgage market.
What must be in place before a licensee can advise a client? A) a signed agency agreement B) a signed sales contract C) the buyer client must have chosen a home on which to make an offer D) the sales client must legally own property and have the right to sell
A) a signed agency agreement Without a side agency agreement between the licensee, and the buyer, the licensee cannot, by law, advise the buyer
What is the difference, is any, between a TREC-approved form and a TREC-promulgated form? A) an approved form is optional; a promulgated form is required B) a promulgated form is optional; an approved one is required C) They are the same thing; there is no difference D) TREC-approved forms have been published; promulgated form are awaiting approval
A) an approved form is optional; a promulgated form is required A form may be required by law, but not promulgated by TREC. In that case, there's often a TREC-approved form available for licensee use; other forms that contain the same elements may be used as well.
What must be obtained by a seller from a buyer when the property is subject to a condominium or homeowner association? A) approval of homeowners and condominium association document B) notice of additional tax liability C) notice of obligations related to public improvement district D) private transfer fee obligation
A) approval of homeowners and condominium association document This notice states among other things, that the buyer is obligated to be a member of a homeowners or property owners association, pay fees, or dues associated with the association, and abide by association rules.
Which of the following refers to the inherent or automatic rights that are the natural consequences of property ownership such as water rights? A) appurtenance B) bundle of rights C) servient D) title
A) appurtenance Appurtenance conveys a sense of attachment and belonging and includes the inherent and automatic rights that are the natural consequences of property ownership and run with the land when the property is transferred.
Why is a deed not enough to establish proof of ownership in Texas? A) because it contains no proof of the condition of the grantor's title, at the time of conveyance B) because it is not an official document used by the state of Texas to establish proof of ownership C) because it is not signed by the grantor D) because only title insurance can establish proof of ownership
A) because it contains no proof of the condition of the grantor's title, at the time of conveyance A deed is not enough to establish proof of ownership, because it contains no proof of the condition of the grantor's title at the time of conveyance .
With a deed of trust, who or what has equitable title to the property? A) borrower B) lender C) state D) trustee
A) borrower The borrower holds equitable title, and the deed of trust gives legal title to a trustee to hold until the loan is repaid.
If a contract is signed under duress or undue influence, what essential element of a contract is missing? A) consent B) consideration C) in writing D) legal purpose
A) consent If any party to a contract signed under duress or undue influence, the contract has been without true consent.
Which area of real estate law governs the use of contracts, explains the elements required to make a contract valid and describes what happens if a breach of contract should occur? A) contract law B) general property law C) law of agency D) state-specific license law
A) contract law Contract law governs the use of contracts and the required elements to make a contract valid, as well as what happens if a breach of contract should occur.
What is the primary goal of a home inspector completing a home inspection for the first-time buyers? A) document health and safety issues that may affect both the cost and enjoyment of the home B) estimate how much cosmetic upgrades may cost the buyer C) verify lot lines, and acreage calculations D) verify the presence of any easement or encroachment on the property
A) document health and safety issues that may affect both the cost and enjoyment of the home Inspectors will seek to uncover any safety or health hazards on a property during a home inspection, as well as defects that could jeopardize a structures, integrity, such as moisture or pest intrusion.
What's the purpose of a sales contract? A) to document the agreement between a buyer and a seller in a real estate sales transaction B) to notify the public that an offer has been made on a specific property C) to serve as an agreement between the seller and the licensee that the seller intends to sell the house D) to verify the seller has the right to sell the property
A) to document the agreement between a buyer and a seller in a real estate sales transaction The sales contract documents, the buyers offer to buy and the sellers agreement to sell the property identified in the agreement.
What is the purpose of the Broker-Lawyer Committee? A) to draft contract forms B) to promulgate forms C) to review clients' legal complaints D) to sue citizens
A) to draft contract forms TREC promulgates the forms drafted by the Broker-Lawyer Committee.
When does offer an acceptance occur? A) when one party makes an offer, and the other party, signs it, and returns to the original party B) when one party makes an offer on a property, and the other party turns it down C) when one party makes an offer to a second party, and the second party makes a counter-offer D) when one party signs, a contract voluntarily with full understanding of the terms
A) when one party makes an offer, and the other party, signs it, and returns to the original party Offer and acceptance, which is also known as mutual agreement, occurs when the parties enter into the agreement with a full understanding of the contract terms. When both parties sign the contract, they're indicating they understand, and agree to the terms.
Which of the following addenda is required as part of the TREC residential One to Four Family (resale) contract when the buyers purchase of the property is contingent upon the buyer having to sell their own property first? A) Addendum for "Back-up" contract B) Addendum for Sale of Other Property by Buyer C) Buyer's Temporary Residential Lease D) Seller Financing Addendum
B) Addendum for Sale of Other Property by Buyer This situation requires the buyer complete the Addendum for Sale of Other Property by Buyer.
A buyer and a seller signed a sales contract with a definite closing date of May 15. If the buyer needs to move the closing date to June 15, what document would the buyer use to make this change? A) Addendum B) Amendment C) Annotation D) Appendix
B) Amendment When added, an amendment changes the original terms of the sales contract. This is unlike an addendum, which may be added, without changing other terms already agreed to in the sales contract.
What TREC-promulgated form must be used to make a material change to an existing sales contract? A) Addendum to Contract B) Amendment to Contract C) TREC Addendum to Effect Material Change D) TX Change Form
B) Amendment to Contract The amendment to contract is the required TREC-promulgated form when changing terms within a sales contract.
Which Texas laws protect the homeowner from general creditors? A) equal credit laws B) Homestead laws C) Lien laws D) police power rights
B) Homestead laws A purpose of the Texas Homestead law is to protect homeowners against removal from their home by general creditors.
A contract is executed in Texas on June 1. When is the effective date on which all contingency deadlines will be based? A) June 1 B) June 2 C) June 30 D) May 31
B) June 2 The effective date is the day after the contract is signed by the parties.
Who or what is the mortgagee? A) Borrower B) Lender C) Loan D) Property
B) Lender The lender has the mortgage on the property, so the lender is the mortgagee.
A mortgage is a legally binding document that creates a lien on a piece of property and gives the lender the right to foreclose on the property if the borrower defaults. Who or what entity is considered the mortgagee? A) Borrower B) Lender C) Loan D) Property
B) Lender The lender holds the mortgage on the property, so the lender is the mortgagee.
What is probate? A) a background check B) a legal process to determine a will's validity C) a release from jail on your own recognizance D) a review of a will by an attorney or witnesses
B) a legal process to determine a will's validity Probate is the legal process to determine the validity of a will, and to ensure the will accurately reflects the deceased persons wishes. It can also be used in situations where there is no will.
The act of transferring ownership of a property is known as ________. A) accession B) alienation C) devising D) granting
B) alienation Alienation is the act of transferring ownership of a property. It may be voluntary (with the owner's consent) or involuntary (without the owner's consent).
Which option best describes a computerized loan origination (CLO) system? A) an automated system for making mortgage loan payments B) an automated system that allows borrowers to compare loan products, electronically, and even apply for a loan C) an automated system that allows borrowers to compare loan products electronically, but not apply for a loan D) a system that underwrites use when determining whether to grant a consumer a loan
B) an automated system that allows borrowers to compare loan products, electronically, and even apply for a loan A computerized loan origination system is an automated computer system that allows borrowers to compare loan products, electronically, and if they so desire, to apply for a loan. CLO's come into flavors: closed and open.
Which of the following may an owner place on the land when it's sold to limit the use of the property? A) charter B) deed restriction C) lis pendens D) subordination agreement
B) deed restriction An owner may place a deed restriction on a property to preserve the use of the property, or to preserve the quality of the neighborhood.
If either party to a sales contract fails to perform or comply with any of the contract's terms and conditions, the party is in __________. A) danger B) default C) defeasance D) dire straight
B) default A party who fails to make a full settlement or comply with any of the contract's terms and conditions is in default.
In which of the following scenarios is impossibility of contract performance occurring? A) both parties fully meet the terms of the contract B) due to circumstances beyond their control, the parties can't legally or practically do what they've agreed to do C) one or both parties have completed only a portion of the terms agreed to in the contract D) one party didn't meet the terms of the contract in the specified timeframe and is being required to do exactly what was agreed to in the contract
B) due to circumstances beyond their control, the parties can't legally or practically do what they've agreed to do Impossibility of performance of a contract occurs when the parties can't legally or practically do what they've agreed to do due to circumstances beyond their control.
Which of the following properties requires a lead disclosure? A) commercial building built in 1960 B) duplex built in 1959 C) duplex built in 1979 D) single-family home built in 1999
B) duplex built in 1959 A lead disclosure is required for residential properties built before 1978 because paint manufacturers used lead-based paint before it was banned that year.
Which government power is used upon the death of a property owner when no will, heirs, or creditors can be found? A) eminent domain B) escheat C) police power D) taxation
B) escheat Escheat is a government power typically used when a property owner dies, and no will, heirs, or creditors can be found.
A seller and a buyer have entered into a sales contract. There about three weeks into the transaction, with several terms of the agreement yet to be met. What type of contract do the parties have? A) executed B) executory C) option D) unilateral
B) executory A valid contract that is in progress is an executory contract, which means that one or more terms of the agreement remain undone.
Which Texas-specific law prohibits deceptive trade practices or acts that are "false, misleading, or deceptive"? A) anti-spam B) Anti-Telemarketer Act of 2000 C) DTPA D) No Call List
C) DTPA The Texas Deceptive Trade Practices Act (DTPA) prohibits deceptive trade practices or acts that are "false, misleading, or deceptive."
Which of the following is considered unauthorized practice of law? A) explaining a clause in a contract to a client B) interpreting the legal consequences of a client's actions C) using existing forms and attorney has reviewed D) using standard language for addenda
B) interpreting the legal consequences of a client's actions Interpreting legal consequences should be left to someone who practices law (an attorney). If a licensee does this, it's an unauthorized practice of law.
Which of the following, once completed, initiates the loan process? A) closing disclosure B) loan application C) loan estimate D) pre-qualification request
B) loan application Prospective borrowers complete an application to get the loan process going. As part of the application, they may also need to provide supporting documentation.
When, and to whom, is a Texas licensee allowed to provide advice? A) at the time the sales contract is being explained, his client B) never C) once the sales contract has been signed by all parties, to the licensee's client D) once the sales contract has been signed, to the other party
B) never Real estate licenses are prohibited from providing legal advice, either directly or indirectly.
Per the TREC One to Four Family Residential Contract (Resale), when is the seller required to give the buyer possession of the property? A) no more than two days after closing B) on the date indicated in the contract C) the day before closing D) the day following closing
B) on the date indicated in the contract The seller is required to give the buyer possession of the property on the date indicated in the contract.
Where are real estate loans originated? A) government market B) primary market C) secondary market D) stock market
B) primary market The primary market comprises the lender that lend directly to customers. The secondary market is where those loans are resold.
In which market do lenders that originate real estate loans operate? A) government market B) primary mortgage market C) real estate investment trust market D) secondary mortgage market
B) primary mortgage market The primary mortgage market is where loans are made to consumers before their bundled and sold on the secondary market.
Which of the following types of ownership termination allows each tenant to have a specific, divided portion (partition) of the property exclusively? A) termination by division B) termination of co-ownership by partition C) termination of estate in severalty D) termination of joint tendencies
B) termination of co-ownership by partition Termination of tenancy in common by partition allows each tenant to have a specific, divided portion of the property exclusively. If the property can't be divided, the court may rule that the property be sold, and the proceeds divided by the tenants.
What does it mean when a Texas buyer accepts a property "as is" under the terms of the TREC One to Four Family Residential Contract (Resale)? A) the buyer has opted not to purchase a residential service contract B) the buyer is accepting the property in its current condition with any and all defects and without warranty C) the buyer is matching the sellers asking price D) the buyer waves the right to inspect the property
B) the buyer is accepting the property in its current condition with any and all defects and without warranty Even if a buyer accepts the property " as is" under the terms of this contract, the buyer still has the right to have the property, inspected and to request repairs of items that come up in that inspection.
Who or what entity is responsible for determining the validity of a will as part of the probate process? A) a court-appointed administrator B) the court C) the decedent's heirs D) the executor of the will
B) the court As part of the probate proceedings, the court holds a hearing to determine the validity of the will and/or the order of descent, if a valid will doesn't exist.
What's the purpose of the ECOA? A) to increase employment B) to prevent discrimination in lending C) to prevent discrimination in transportation D) to simplify credit card applications
B) to prevent discrimination in lending The ECOA, is designed to prevent discrimination in financing by requiring lending decisions to be based on credit worthiness, and not personal characteristics.
Which of the following would be a violation of the Texas Deceptive Trade Practices-Consumer Protection Act (DTPA)? A) advising a buyer client on the amount to offer in a sales transaction B) identifying the availability of a home warranty for a property as part of the MLS listing C) Misrepresenting the facts about the reasons for a price decrease D) presenting a seller client with a competitive market analysis and discussing a listing price for the property
C) Misrepresenting the facts about the reasons for a price decrease Misrepresenting the facts about the reasons for a price decrease is a violation of the Texas DTPA.
Which of the following entities promulgates forms for Texas licensees? A) the Broker-Lawyer Committee B) the State Forms Committee C) TREC D) TRELA
C) TREC TREC promulgates the forms drafted by the Broker-Lawyer Committee.
Which of the following describes a buyer agency agreement? A) a legally binding, oral contract between a potential buyer of property and a buyer agent B) a legally binding, oral contract between a potential buyer of property and a listing agent C) a legally binding, written contract between a potential buyer of property, and a buyer agent D) a legally binding, written contract between a potential buyer of property and a listing agent
C) a legally binding, written contract between a potential buyer of property, and a buyer agent A buyer agency agreement is a binding, written contract, entered into by a prospective buyer of a property and the buyers agent. These include the scope of the buyers agents, responsibility, and how compensation may be earned.
Which type of easement provides a right-of-way for a railroad? A) an easement by necessity B) an easement by prescription C) an easement in gross D) this is not an easement
C) an easement in gross An easement engross is a right to use the land (not necessarily involving an adjoining property), such as the placement of utility lines.
Who are the parties involved in a loan secured by a deed of trust? A) beneficiary and lender B) borrower and lender C) borrower, lender, and trustee D) lawyer, borrower, lender
C) borrower, lender and trustee A deed of trust involves three parties: the borrower, the lender, and the trustee.
What's the difference between a unilateral contract and a bilateral contract? A) in a unilateral contract, both parties agreed to do something; in a bilateral contract, one party, agrees to do something B) in a unilateral contract, both parties must act; in a bilateral contract, one party must act C) in a unilateral contract, one party must act; in a bilateral contract, both parties must act D) there's no difference as long as the contract is in writing
C) in a unilateral contract, one party must act; in a bilateral contract, both parties must act A unilateral contract is one which consideration (such as a promise) is only given to one party. A bilateral contract involves an exchange of promises, or other consideration between two parties.
How does a sole proprietorship own property? A) joint tenancy B) in partnership C) in severalty D) in trust
C) in severalty When only one person owns a piece of property, and title is in that person's name, this is ownership in severalty, because ownership interest is severed from all others.
Which clause allows the Texas seller to keep their property on the market after accepting an offer contingent on the sale of the purchasers current home? A) assumption B) free market C) kick-out D) reversal
C) kick-out A Texas seller may accept a contingent offer, but continue to market the home by using a kick-out clause. If a subsequent offer is received, the contingent buyer has the opportunity to terminate or remove the contingency.
Which of the following is a broker's obligation per TAR's Residential Buyer/Tenant Representation Agreement? A) automatically assume intermediary status if the seller is represented by the buyer client's broker B) avoid working with other clients during the term of the agreement C) locate a property that meets the client's criteria within a specified market area D) share confidential information with a seller if it will result in the buyer's offer being accepted.
C) locate a property that meets the client's criteria within a specified market area
When can specific performance be enforced under a sales contract? A) both parties have fully met the terms of the contract B) one or both parties have completed only a portion of the terms agreed to in the contract C) one party didn't meet the terms of the contract in the specified timeframe, and is now being required to do exactly what was already in the contract D) the parties to a contract, can't legally or practically do what they've agreed to do due to circumstances out of their control
C) one party didn't meet the terms of the contract in the specified timeframe, and is now being required to do exactly what was already in the contract Specific performance is enforced under a sales contract when 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
how can forclosure be stopped or prevented? A) flee the state B) it cannot be stopped. Once started, the property must be sold at auction. C) pay all outstanding liens against the property D) refuse to pay all lien holders
C) pay all outstanding liens against the property This is called the right of redemption, and is an option available to the homeowner up until the day before. The property is sold at the foreclosure sale.
Which government power is used to do what's right for the public good where the owner may or may not be compensated? A) eminent domain B) escheat C) police power D) taxation
C) police power Police power gives the government the authority to take action for the public good, even if it infringes on individual rights.
What type of arrangement allows the buyer to retain title to the property, but places a security interest in the property on behalf of the seller? A) a straight-term loan B) land contract C) purchase money mortgage D) wrap-around mortgage
C) purchase money mortgage Purchase money mortgages, allow the buyer to retain title to the property, but the seller has security interest in the property.
With a land contract, who retains the title to the property? A) beneficiary B) Buyer C) seller D) trustee
C) seller The seller retains the title in a land contract. With a purchase, money mortgage, the buyer retains the title.
What is the definition of a legally competent party? A) a minor, who enters into a contract with an adult B) someone who has experience writing contracts C) someone who has the legal and mental capacity to enter into a contract D) someone who knows how the legal system works
C) someone who has the legal and mental capacity to enter into a contract A legally competent party is a party who has the capacity (legal and mental) to enter into a contract.
What's a promissory note? A) a lien on a property B) an agreement for consumer to buy a new condominium C) the borrower's promise to repay a certain sum of money to another party (the lender or holder of the note) under specified terms D) the lender's promise to repay a certain sum of money to another party
C) the borrower's promise to repay a certain sum of money to another party (the lender or holder of the note) under specified terms A promissory note is the borrower's documented promise to repay the loan.
Per the Casualty Loss section of the TREC One to Four Family Residential Contract (Resale), who is responsible for restoring the property to its previous condition in the event the property is damaged or destroyed? A) the buyer B) the listing broker C) the seller D) the seller and buyer
C) the seller In the event, the property is damaged or destroyed prior to closing, the seller is responsible for restoring the property to its previous condition.
In Texas, the property title remains in trust until payment in full occurs for the underlining loan. What type of theory for who owns what in a mortgage is this? A) judicial B) lien theory C) title theory D) trustee
C) title theory In title theory, states like Texas, actual legal title to the property temporarily passes to a trustee to secure the debt.
If a party to a contract signs a contract with a buyer for a sale of property the "seller" doesn't legally own, what type of contract is this? A) enforceable B) unilateral C) void D) voidable
C) void A party can't promise to do something impossible in a contract. Doing so makes the contract void.
Which of the following addenda is required as part of the TREC residential One to Four Family (Resale) contract if the seller wants to retain all or a portion of the properties mineral estate? A) Addendum for Coastal Area Property B) Addendum for Property in a Propane Gas System Service Area C) Addendum for Property Located Seaward of the Gulf Intracoastal Waterway D) Addendum for Reservation of Oil, Gas and Other Minerals
D) Addendum for Reservation of Oil, Gas and Other Minerals This situation requires the seller, completes the Addendum for Reservation of Oil, Gas and Other Minerals and has the buyer review and sign it.
Which of the following addenda is required as part of the TREC residential One to Four Family (resale) contract when the seller and the buyer have agreed to the seller can continue to occupy the property for a maximum of 90 days after closing? A) Addendum for "Back-Up" Contract B) Buyer's Temporary Residential Lease C) Seller Financing Addendum D) Seller's Temporary Residential Lease
D) Seller's Temporary Residential Lease This situation requires that the seller and the buyer complete the Seller's Temporary Residential Lease, in which the seller is the tenant, and the buyer is the landlord.
What is one of the exceptions to the rules requiring the use of TREC-promulgated forms? A) a broker may prepare an alternate form B) a buyer may prepare an alternate form C) a licensee may prepare an alternate form D) a property owner may prepare an alternate form
D) a property owner may prepare an alternate form One of the exceptions to the required use of a contract form is using a form, prepared by a property owner. Another exception is using a form, prepared by an attorney at the request of a property owner.
What's a marketable title? A) a title that a relative has gifted B) a title that has been granted by public grant C) a title that is about to go on the market D) a title that is clear and free of encumbrances
D) a title that is clear and free of encumbrances A marketable title provides assurance that there are no unrecorded liens, or claims on the property.
What a triggering term? A) a fee, charged by a lender, expressed as a percentage B) a standardized measure for interest rates, and other costs of the loan C) a way to establish loan terms that lenders must follow D) a word or phrase that, when used in advertising, requires the disclosure of all the terms of a loan
D) a word or phrase that, when used in advertising, requires the disclosure of all the terms of a loan Triggering details include a specific payment, rate, or down payment amount that's used in advertising, which prompts the requirement for full disclosure of all the terms of a loan.
Susan Duffield died testate at age 49. What can be said about Susan's estate? A) because of Susan's age, and will is invalid B) because of the will, it will avoid probate C) because she died without a will the estate becomes property of the state D) it will be put through probate
D) it will be put through probate Testate means with a will; the estate of a person who died with a will still must go through the probate process.
When does a breach of contract occur? A) A buyer refuses to make a counter offer B) a seller fails to accept a buyers initial purchase offer C) both parties of a contract can't legally or practically do what they've agreed to do due to circumstances out of their control D) one party fails to meet the obligations of the contract
D) one party fails to meet the obligations of the contract A breach of contract occurs when one party fails to meet the obligations of the contract.
If a seller agrees to make repairs requested by a buyer when, per the TREC One to Four Family Residential Contract (Resale), must the repairs be completed? A) five days prior to closing B) no later than the day of closing C) no more than three days after closing D) prior to closing
D) prior to closing The seller must have all repairs and treatments completed prior to closing.
Which part of a loan is the agreement to repay the debt? A) deed of trust B) interest C) mortgage D) promissory note
D) promissory note The mortgage or deed of trust will act as the security on the loan. The promissory note is the debt.
Which area of real estate law conveys the requirements of a licensee when performing real estate activities within the state, including continuing education, requirements, supervisory requirements, and prohibited conduct? A) contract law B) general property law C) law of agency D) real estate license law
D) real estate license law Real estate license law covers the requirements of a licensee when performing real estate activities within the state, including continuing education, requirements, supervisor, requirements, and prohibited conduct.
A licensee has thoroughly reviewed the sales contract with his client and confirms that they understand all the terms and provisions. In order to avoid the unauthorized practice of law, what should the licensee do next for his clients? A) ask if he can provide them with any legal advice about the contract B) ask them to complete a satisfaction survey, and rate their experience with him D) recommend that they review the contract attorney before signing it
D) recommend that they review the contract attorney before signing it It's always a good idea for licenses to recommend that their clients review the sales contract with an attorney before signing it.
What type of deed gives ownership writes to the highest bidder on a foreclosure property? A) bargain and sale deed B) executor's deed C) full covenant and warranty deed D) referee's deed
D) referee's deed A referees deed is granted to the highest bidder of a foreclosure property.
Which term describes the process of real property, becoming personal property by detaching it from the land? A) accoutrement B) annexation C) emblement D) severance
D) severance Severance occurs when real property is detached it from the land. An example would be a tree that's dug up, or built-in hot tub that's removed.
What's it called when a property is sold for less than the amount owed? A) deed in lieu of foreclosure B) eviction C) foreclosure D) short sale
D) short sale A short sale occurs when a buyer sells a property for less than the balance owed (plus closing costs).
Your 15-year-old son just signed a contract joining a health club, which costs $50 a month. Is this contract valid? A) the contract is missing a legal object B) the contract is missing offer, and acceptance C) the contract is void D) the contract is voidable
D) the contract is voidable While legal capacity includes whether or not all parties are of legal age, contracts, signed by minors, are avoidable by the minor.
To effect a transfer of title by deed in Texas , what must occur? A) a notary must acknowledge the grantor's signing of the deed B) the grantee must have the deed recorded C) the grand tour and grantee, must sign the deed in front of a witness D) the grantor must deliver the deed to the grantee, and the grantee must accept it
D) the grantor must deliver the deed to the grantee, and the grantee must accept it Delivery and acceptance are the actions that are required to effect a transfer of title by deed. However, acceptance is usually implied.
If a minor enters into a contract with an adult, which party can hold the other part to the contract? A) Either party may hold the other party to the contract B) neither party since the contract is void C) the adult may legally hold the minor to the contract D) the minor may legally hold the adult to the contract
D) the minor may legally hold the adult to the contract If a minor enters into a contract with an adult, the minor may legally hold the adult to the contract, but the adult cannot legally hold the minor to the contract.
What's loan-to-value ratio? A) a line of credit that the borrower can use to make improvements on a property B) a way to lower the interest rate on a loan C) the most secure type of loan D) the ratio of the amount of a loan to the value of the property
D) the ratio of the amount of a loan to the value of the property LTV is a ratio of the loan to the value of a property. Value is determined by the lower of the sales price or appraised value.
The seller and _________ must approve a short sale. A) a short sale specialist B) the broker C) the new buyer D) the seller's lender
D) the seller's lender Both the seller and the sellers lender must approve a short sale, because the lender will be receiving less than the amount owed.
Which of the following documents insures the buyer against loss because of title issues and must be furnished by the seller to the buyer? A) a copy of the deed B) the survey C) the title commitment D) the title insurance owner's policy
D) the title insurance owner's policy The title insurance owners policy protects the buyer against loss related to title issues. Although most lenders require the buyer to have a title policy, either party can pay for it.
What is the transfer tax in Texas? A) 0.5% per $1,000 B) 5% per $1,000 C) it depends on the county in which the property is located D) there is no transfer tax in Texas
D) there is no transfer tax in Texas Although most states have transfer taxes on real estate, Texas does not.
In what way is a townhome similar to a condominium? A) they are both detached structures B) they are both multi-family dwellings C) they both typically have detached garages D) they both typically have HOA dues
D) they both typically have HOA dues Like condominiums, townhomes are single-family homes, and they both often have a homeowners association to which owners must pay dues.
What contingency in the Texas sale contract will protect a buyer if there's a defect on the title by allowing the buyer to terminate and receive a refund of any earnest money? A) appraisal contingency B) financing contingency C) inspection contingency D) title contingency
D) title contingency The title policy and survey section of the sales contract stipulates that the seller is conveying the property to the buyer with good and marketable title. A title contingency allows a buyer to terminate if the title is not good and marketable.
Which of the following protects the owner against financial loss if the real estate title has defects? A) abstract of title B) chain of title C) deed D) title insurance
D) title insurance Title insurance protects the owner against financial loss if the title to the real estate has defects. It only protects the owner from insured defects. Not every defect is covered.
What's the purpose of the earnest money deposit? A) To encourage the seller to come down in the asking price for the property B) to provide the seller with funds to make required repairs to the property before selling it C) to retain the services of a licensee D) to show the seller that the buyer is serious and intends to go through with the purchase
D) to show the seller that the buyer is serious and intends to go through with the purchase The earnest money deposit is the buyer's indication to the seller that the offer is serious and the buyer intends to go through with the purchase.
As part of the sales contract, the seller was supposed to provide a copy of the seller's disclosure to the buyer, but he failed to do so. What type of contract is this? A) implied B) incomplete C) valid D) voidable
D) voidable Avoidable contract can be canceled by one or more parties because it's missing an essential element. And this situation, Melanie, the buyer, has the right to cancel the contract, and have her earnest money refunded.
