Law of Contracts

Novation

Blane is assuming Carla's loan. Which of the following may be used to ensure Carla is no longer responsible for the loan? Alienation clause Due-on-sale clause Novation Sales agreement

Real property

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

Periodic estate

Finley's tenancy comes with an automatic renewal clause. Which of the following type of tenancy does he have? Periodic estate Tenancy by a service member Tenancy from month to month Written estate for years

Unilateral

Hank leases 150 acres from Sara and Jesse. He has an option contract attached to his lease, with an option to purchase that can be exercised within the next two years. What type of contract is this? Bilateral Executed Unilateral Voidable

180

Hiram plans to do a 1031 tax-deferred exchange. He just sold his property. How many days does he have to close on a new property? 180 30 45 60

Zero

How many lawyers does the governor appoint to the Broker-Lawyer Committee? Four One Six Zero

B (Is not required to inform her why her application was rejected)

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 ______. A. Is forbidden from rejecting her if she qualifies financially B. Is not required to inform her why her application was rejected C. Must inform her why her application was rejected D. Must inform the state why the application was rejected

4

Leon and Beth own 1/13 of a timeshare estate. How many weeks each year do they get to use the timeshare unit? 10 13 16 4

C (Okay if Marvin's client required that form)

Licensee Marvin is using a real estate contract form drawn up by his property owner client, instead of using a form with a similar purpose promulgated by the Texas Real Estate Commission. This is ______. A. A violation of real estate rules and regulations B. Illegal C. Okay if Marvin's client required that form D. Okay if the form was required by the buyer

Legal title rights

Quentin is the seller in a Texas contract for deed agreement. What type of rights to the property does he have during the contract for deed process? Equitable title rights Legal title rights Partial title rights Restricted title rights

Happy Bank

Ralph is a borrower obtaining an FHA loan from Happy Bank. The loan is secured by a mortgage. Who or what entity is the mortgagee in this scenario? FHA Happy Bank Ralph VA

D (Making timely mortgage payments)

The mortgagor is responsible for ______. A. Assigning the mortgage B. Charging late payment penalties C. Foreclosing on the property if in default D. Making timely mortgage payments

Intermediary

Who handles all of the 1031 exchange paperwork? Broker Intermediary IRS Title company representative

tenant

Who is the lessee in a lease agreement? Landlord/owner Leasing agent Real estate broker Tenant

The grantor

Who or what entity executes a Texas deed? The grantee The grantor The record office The subscribing witness

D (Seller and seller's agent)

At the closing of a sales transaction, which parties close on the listing agreement? A. Agents' brokerage firms B. Buyer and seller agents C. Seller and buyer D. Seller and seller's agent

B (Lender's representative and buyer)

At the closing of a sales transaction, which parties close on the mortgage loan commitment? A. Buyer and title company representative B. Lender's representative and buyer C. Seller and buyer D. Seller and seller's agent

B (Buyer and title company rep)

At the closing of a sales transaction, which parties close on the title insurance contract? A. Buyer and seller agents B. Buyer and title company rep C. Lender's representative and buyer D. Seller and seller's agent

Compensation agreement

At the time of closing, the agents' brokerage firms will close on which contract? Compensation agreement Listing agreement Sales contract Title insurance contract

The sales agreement

At the time of closing, the buyer and the seller close on which contract? The listing agreement The mortgage loan commitment The sales agreement The title insurance contract

Quitclaim deed

Dean just signed over any rights he had to the property to his twin sister, Jean. The deed clears any clouds that may exists on the title, but it does not offer any warranties to Jean. What type of deed is this? Bargain and sale deed Executor's deed Quitclaim deed Referee's deed

Seven days

During the earnest money demand process, how many days after receiving a request to send a release of earnest money notice to the escrow agent do the parties to the transaction have to respond? 10 days Five days Seven days Two days

Executed

If you really want a contract to conclude, what type of contract would make you happiest? Executed Executory Implied Invalid

Title theory

In Texas, the property title remains in trust until payment in full occurs for the underlying loan. which means it's a _______ state. Judicial Lien theory Title theory Trustee

A prepayment penalty

Jim decided to refinance his three-year-old mortgage that has a balance of $300,000. He has to pay a fee of 5% of the loan amount to the original lender for paying off the mortgage early. What is this fee called? A prepayment penalty Closing costs Origination fee Points

Proper advance notice

Kylie has a tenancy-at-will lease agreement with her landlord. How much notice must she give her landlord when she's ready to terminate the lease? 30 days None Proper advance notice Two weeks

Tenancy by the entirety

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

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

Net

Rhonda, a small business owner and lessee, has a commercial property ______ lease agreement with her landlord. Rhonda pays the rent and some expenses related to the property, such as maintenance and insurance, separately. Graduated Gross Net Percentage

Promulgate

The Texas Real Estate Commission is the only entity that can ______ contract forms, making their use mandatory by real estate licensees in Texas. Fill in the blanks on Promulgate Review licensee-drafted Write clients any

Littoral

The right to access navigable ponds, lakes, and other stationary bodies of water is called _________ rights. Homeownership Littoral Mineral Riparian

Riparian

The right to access non-navigable rivers, streams, and other flowing bodies of water adjacent to a property is called ______ rights. Land Littoral Mineral Riparian

Suing for specific performance

When Flip, the buyer, tried to cancel just prior to closing, Wilson, the seller, used the courts to compel him to go through with the purchase. This is an example of ________. Accepting partial performance Rescinding the contract unilaterally Suing for money damages Suing for specific performance

TREC

Which entity was formed for the purpose of enforcing the Real Estate Dealers Act in Texas? NAR TAR TREC TRELA

Taxation

Which government power can place a lien on a property? Eminent domain Escheat Police power Taxation

Interest

Which of the following describes the amount a lender charges a borrower for using money? Discount point Interest Principal Usury

License

Which of the following involves permission to do something on another's land without actually possessing any interest or ownership in the land? Grant License Permission Reserve

B (Corporations are tangible and nontaxable)

Which of the following is NOT a characteristic of a corporation? A. Corporations are recognized legal entities. B. Corporations are tangible and nontaxable. C. Corporations are taxable. D. Corporations have tax rates separate from individual tax rates.

Deed restriction

Which of the following may an owner place on the land when it's sold to limit the use of the property? Charter Deed restriction Lis pendens Subordination agreement

B (They differ in the way they are installed)

Which of the following statements is true about septic systems? A. There are many different types. B. They differ in the way they are installed. C. They do not require inspection. D. They do not require maintenance.

Citibank

Which of these is a member of the primary mortgage market? CitiBank Fannie Mae Freddie Mac Ginnie Mae

Severance

Which term describes the process of real property becoming personal property by detaching it from the land? Accoutrement Annexation Emblement Severance

C (To roll the cost of rehabilitating the purchased home into the mortgage)

Why might a homebuyer use an FHA 203(k) loan instead of the standard 203(b) loan? A. To create a loan-to-value ratio that's more acceptable to the lender B. To reduce the amount of the MIP paid on the loan C. To roll the cost of rehabilitating the purchased home into the mortgage D. To shorten the term of the mortgage loan

Reliction

______ is the gradual receding of water, which uncovers new land. Accretion Erosion Exclusion Reliction

prior to marriage

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

mortgage

A Texas homeowner may be forced to sell a homestead property for failure to pay their ______. Car payment Credit card bill Mortgage Utility bills

D (Written contract between a potential buyer of property and the seller of the property)

A Texas sales contract is a legally binding ______. A. Oral contract between a potential buyer of property and a listing agent B. Oral contract between a potential buyer of property and the seller of the property C. Written contract between a potential buyer of property and a listing agent D. Written contract between a potential buyer of property and the seller of the property

timeshare use

A _______ gives the purchaser the right to possess the property at given times for a given duration but doesn't convey ownership. Condominium ownership Cooperative membership Timeshare estate Timeshare use

Timeshare estate

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

Nonfreehold estate

A _____________ is the term used for an estate that conveys possession and control, but not title. Freehold estate Nonfreehold estate Temporary estate Titlefree estate

Void

A contract for the sale of real property is missing consideration and isn't signed by the parties, so this contract is _____. Enforceable Executory Void Voidable

A (Both parties are obligated to act)

A contract is bilateral when ______. A. Both parties are obligated to act B. One party is a minor C. Only one party is obligated to act D. The contract hasn't been performed

June 2

A contract is executed in Texas on June 1. What is the effective date on which all contingency deadlines will be based? June 1 June 2 June 30 May 31

Voidable

A contract that's binding for one party, but gives the other party the choice to terminate is ____________. Bilateral Unenforceable Void Voidable

A (Allows the lender to direct the trustee to sell the property in the case of buyer default)

A deed of trust ______. A. Allows the lender to direct the trustee to sell the property in the case of buyer default B. Demonstrates the good faith of the parties C. Specifies certain rules and conditions, such as what would happen if the payment is late or if the loan goes unpaid D. Specifies the rate of interest charged and if and when that rate will change

TREC

A form may be required by law, but not promulgated by TREC. In that case, there's often a _____-approved form available for licensee use. Broker-Attorney Committee Governor's Legal Team TREC TRELA

A lis pendens

A legal notice that a lawsuit is pending that affects the title of a property is called _______. A judgment lien A lis pendens An estate and inheritance tax lien A voluntary lien

Tax-deferred exchange

A like-kind exchange, or 1031 exchange, is also referred to as a ______. Incentive exchange One-to-one exchange Property swap Tax-deferred exchange

Coastal areas

A listing agent must include provisions informing parties of the availability of natural hazards information applicable to residents near _____ in Texas. Coastal areas Farm and ranch lands Rural areas Wetland areas

Lender

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? Borrower Lender Loan Property

B (Spoken and then put into writing by a witness)

A nuncupative will is a will that is _____________________. A. Captured on video tape B. Spoken and then put into writing by a witness C. Translated from one language to another D. Written by hand

Executory

A sales contract in which one or both parties have not yet completed the terms of the contract is ____________. Executive Executory Invalid Void

Holdover tenant

A tenant who continues to occupy property after lawful authority has expired is known as a _______. Holdover tenant Settler Squatter Vagrant

Performs a title search

A title insurance company ______ to prove that a seller has ownership rights to a property. Creates a settlement statement Performs an appraisal of the property Performs an inspection Performs a title search

The seller

According to custom, who pays the costs on the day of closing for property taxes, utilities, etc.? The buyer The buyer and seller split these costs. The seller Typically, the broker pays the costs on the day of closing.

A (An applicant can only be judged by income, net worth, job stability, and credit rating)

According to the ECOA, ______. A. An applicant can only be judged by income, net worth, job stability, and credit rating B. Applicants may only be judged by race, income, and job stability C. Certain races are excluded from needing credit ratings D. It only applies to applicants who are over the age of 65

B (An attorney on behalf of a property owner)

According to the Texas rules relating to contract forms, the commission can't ban a licensee's use of a contract form when the form was prepared by a property owner or ______. A. A buyer B. An attorney on behalf of a property owner C. A property manager D. The governor

Seven business days

According to the rules in the Mortgage Disclosure Improvement Act, how long does the borrower have, after receiving the Loan Estimate, to sign the loan documents and return them to the lender? Five days Seven business days Six days Three business days

Month to month

After Bill's one-year lease expired, he continued to rent from his landlord for several months. If he decides to leave, he will be required to give a month's notice. What type of tenancy does Bill have? Estate for years Month to month Periodic estate or tenancy at will Tenancy for shorter periods

Suing for monetary damages

After Chester moved into the old house on the hill, he found that it was infested with termites—something his inspector missed, and the seller failed to disclose. He pursued his monetary remedy in court. This is an example of ________. Accepting partial performance Rescinding the contract unilaterally Suing for monetary damages Suing for specific performance

Lockout

After proper notice, Texas landlord Liam changed his tenant's locks in attempt to collect rent. What type of breach of lease remedy is Liam using? Actual eviction Illegal Lockout Utilities interruption

C (Any additional information based on negotiations and specific situations)

All commercial leases should contain the conditions under which the lease can be terminated; the names and signatures of all parties; and ______. A. A clause determining who will pay to have an attorney review the agreement B. A list of repairs the landlord needs to make to the property before the tenant can move in C. Any additional information based on negotiations and specific situations D. Restrictions as to utilities use

Area preference

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

Accretion

Alluvion describes new deposits of land that are the result of what natural process? Accretion Erosion Exclusion Reliction

Sub-surface

Along with property ownership, rights are granted to use the land's physical components. Which right allows a property owner to use or sell the underground resources, such as natural gas and minerals? Air Sub-surface Surface Water

A (Accepting partial performance)

Although Bill's inspection turned up dry rot which Jill promised to have fixed (and didn't), Bill agreed to close anyway. This is an example of ________. A. Accepting partial performance B. Mutually rescinding the contract C. Rescinding the contract unilaterally D. Suing for money damages

Codicil

Amending a will involves drafting an additional document, called a/an _________________. Addendum Amendment Coda Codicil

C (Limits on the liability of members for company debts or other obligations)

An advantage of organizing a business as a limited liability company is its ______. A. Ability to designate a proportional interest in the real property to each member B. Ability to operate without registering with the state C. Limits on the liability of members for company debts or other obligations D. Taxation as a corporation

A modification

An amendment to a contract is defined as which of the following? A modification An addition A new contract A provision

Started

An executory contract is one that's been ______. Breached Completed Signed Started

Only spoken

An oral offer is one that is ________. An enforceable contract Either spoken or in writing Only in writing Only spoken

Automatic renewal

Andrew's original 18-month commercial lease has ended, and now, with his landlord's permission, he has gone into a month-to-month lease situation. What type of clause was in the original lease agreement that enabled this situation to occur? Automatic renewal Indemnity Option to renew Use

C (The seller can keep all of the proceeds received up until that point, and repossess the property)

Andy is in a contract for deed arrangement in Texas and has been paying the seller for over a year. Unfortunately, Andy lost his job several months ago and can no longer make the payments. What will happen with the contract for deed arrangement now that Andy can no longer meet his financial obligations to the seller? A. Andy must immediately terminate the contract if he wants to have his previous payments refunded. B. Andy must pay an additional three installments and provide notice of his termination. C. The seller can keep all of the proceeds received up until that point, and repossess the property. D. The seller can repossess the property but must refund all of Andy's payment up until that point.

Net

Andy, a tenant, has a commercial property lease in which he pays some of the expenses related to the property, such as insurance and taxes. What type of commercial lease does Andy have? Gross Net Percentage Sublease

D (Taxes, maintenance, insurance)

Ann Marie is a tenant with a triple net lease. Per her lease, she pays for which of the following expenses related to the property? A. Insurance, utilities, maintenance B. Maintenance, insurance, debt service C. Taxes, debt service, lease payment D. Taxes, maintenance, insurance

Scarcity

Annette really wants to move to San Francisco, but she's unsure whether she'll be able to afford to live there. Housing is very expensive because there simply is no room to build any new housing units. Which economic characteristic does this reflect? Area preference Improvements Permanence Scarcity

Mortgagor

Another name for the borrower of a loan is ______. Beneficiary Mortgagee Mortgagor Trustee

C (Negotiate a new closing date)

As a licensee, what should you do if closing will be delayed? A. Don't tell your clients. B. Instruct your client to default on the contract. C. Negotiate a new closing date. D. Write a new contract.

C (Deceptive Trade Practices-Consumer Protection Act)

As a real estate licensee in Texas, if you advertise, otherwise market, or deal with a consumer using lies, misrepresentations, fraud, or other deceptive practices or acts, which act are you violating? A. Business Opportunity Act B. Debt Collection Act C. Deceptive Trade Practices-Consumer Protection Act D. Texas Fair Housing Act

Voidable

As part of the terms of the sales contract, the seller was supposed to provide a copy of the seller's disclosure but failed to do so. What type of contract is this? Implied Incomplete Valid Voidable

B (Ensure that the disclosure is made in the Special Provisions section of the contract)

As the Texas seller's agent, you are notified that the buyer wishes to do a 1031 exchange. What should you do? A. Do nothing B. Ensure that the disclosure is made in the Special Provisions section of the contract. C. Ensure that the IRS is contacted. D. Notify the intermediary hired by the investor.

Buyer and seller agents

At the closing of a sales transaction, which parties close on the brokerage agreement? Agents' brokerage firms Buyer and seller agents Lender's representative and buyer Seller and buyer

A (Agents' brokerage firms)

At the closing of a sales transaction, which parties close on the compensation agreement? A. Agents' brokerage firms B. Buyer and title company representative C. Lender's representative and buyer D. Seller and title company representative

B (The mortgage loan commitment)

At the time of closing, the lender's representative and the buyer will close on which contract? A. The listing agreement B. The mortgage loan commitment C. The sales agreement D. The title insurance contract

The listing agreement

At the time of closing, the seller and the seller's agent will close on which contract? The listing agreement The mortgage loan commitment The sales agreement The title insurance contract

C (Once the contract is paid in full)

At what point in the Texas contract for deed process does the buyer receive the deed from the seller? A. Once 50% of the contract has been paid B. Once the buyer has proven their creditworthiness C. Once the contract is paid in full D. Once the seller financing addendum has been signed by both parties

D (Before the attorney's clients sign the contract)

At what point in the sales transaction process should an attorney review the contract? A. After the buyers have signed the contract, but before the seller signs it B. After the contract has been executed C. A week prior to closing D. Before the attorney's clients sign the contract

It's illegal

Atticus is considering using utilities interruption as a means of collecting rent. Which of the following statements is true about what Atticus is planning to do? It's illegal. It's legal if the tenants owe rent, and they have damaged the property. It's legal in most states. It's legal to turn off electricity for 24 hours as a warning, but it is never legal to turn off water.

Freehold estate

Barry owns a property, and holds all rights associated with ownership. His interest in his property is a ______. Freehold estate Leasehold estate Lease-option Reversionary

Disposition

Basic property rights include the rights of possession, control, exclusion, enjoyment, and ______. Destruction Disposition Encroachment Reliction

B (Kathy Simone and John Simone, a married couple)

Because Texas is a community property state, marital status should be included when naming the parties. What is the correct way to name these parties on the contract? A. John and Kathy Simone B. Kathy Simone and John Simone, a married couple C. Mr. and Mrs. John Simone D. Mr. and Mrs. Simone

C (Addendum for Property Located Seaward of the Gulf Intracoastal Waterway)

Because of where his property is located, Weston is required to present any prospective buyers with a notice as to the legal and economic risks of purchasing coastal property that is near a beach. Which TREC addendum is Weston required to include as part of the sales contract? 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 Seller's Disclosure of Information on Lead-based Paint and Lead-based Hazards

The Real Estate Dealers Act

Before being amended and renamed as the Texas Real Estate License Act, what was the name of the act that regulated licensed real estate activity? The Real Estate Dealers Act The Secretary of State The Texas Real Estate Commission The Texas Real Estate Provision Act

The buyer

Before closing, evidence of title and title insurance should be provided by _____. The buyer The lender The seller The title insurance representative

Buyer

Before closing, who should get an appraisal of the property if the transaction's being financed? Buyer Homeowner's insurance company Seller Title insurance company

B (Pass the timeshare on to an heir)

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

B (Forcible detainer suit)

Calista is in the process of evicting one of her tenants. As part of the actual eviction process, she must file a suit for possession in the local justice of peace court. What is another name for this type of suit? A. Constructive eviction suit B. Forcible detainer suit C. Lease modification suit D. Writ of possession suit

Executory

Carl and Belinda entered into a contract. Carl was to clean out her gutters and Brenda was to pay him $100. Until Carl finishes the work and Brenda pays him, this contract is ________. Executed Executive Executory Invalid

Townhome

Charlene shares one wall with her neighbors to the side, but her home has three levels and she has no upstairs or downstairs neighbors nor a neighbor on the other side. What type of dwelling does Charlene own? Detached home Mobile home Modular home Townhome

Percentage

Charles runs a small vacuum cleaner repair business. His commercial property ______ lease agreement has him paying a base rent plus an allocated amount of gross sales above a certain threshold. Graduated Gross Net Percentage

Variable

Charlotte has a lease in which the amount she owes increases at predetermined intervals. What type of commercial lease does Charlotte have? Lease purchase Proprietary Sandwich Variable

Campground membership

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

primary

Commercial lenders operate in the _____mortgage market, making loans directly to consumers. Government Primary Secondary Sub-prime

Higher

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

Rent

Consideration is one element of a valid contract. In a lease, which of the following does the lessee give as consideration? Possession Rent Term Use

A (The actions required for removal)

Contingencies normally include the responsible party's name, the deadline for the contingency removal, and _______. A. The actions required for removal B. The date the contingency was added C. The reason the contingency was added D. Three reasons why the contingency is required

D (For the sale of real property)

Contracts that must be in writing to be valid include contracts ______. A. For a cash reward B. For medical services rendered C. For personal services, such as manicures D. For the sale of real property

A real estate attorney

Cynthia loves her apartment and would like to have the option to buy it once her lease is up. Who's the best person to help Cynthia prepare a lease option? A real estate attorney A real estate investor A real estate licensee Her landlord

D (Locate and qualify potential tenants)

Damien was representing a commercial property owner. Which one of the following duties can the owner expect Damien to perform on the property owner's behalf? A. Assist the owner in locating a property to lease. B. Collect the first month's rent from the tenant and hold it in a separate bank account for the owner. C. Explain potentially confusing lease clauses and determine the best monthly lease amount for the tenant. D. Locate and qualify potential tenants.

B (A tenant's indemnity is usually limited to matters arising in the leased premises, and doesn't include those claims or losses that arise from the landlord's or the landlord's agents' negligence or willful misconduct)

Darcie is reviewing a commercial lease with her client, Archie. When they reach the section having to do with indemnity, Archie asks Darcie what a tenant's indemnity usually encompasses. What should Darcie's response be? A. A tenant has no indemnity concerns with regard to damages or losses to commercial property. B. A tenant's indemnity is usually limited to matters arising in the leased premises, and doesn't include those claims or losses that arise from the landlord's or the landlord's agents' negligence or willful misconduct. C. Indemnity provisions in the lease rarely require that a tenant pay a landlord for damages in the event a claim is filed against the landlord. D. Landlords seldom agree to a tenant's request to indemnify the tenant from and against any and all liability, damage, and expense arising out of or in connection with matters having to do with the common areas of the building.

Restrictive covenants

Deed restrictions imposed by a developer who wants to maintain specific standards in a subdivision under development are often called _______. Developer standards New build standards Restrictive covenants Restrictive standards

Property taxes

Deirdre lost her job, and the bank foreclosed on her condo. Which of the following of her outstanding debts will the bank pay first? Credit card balance Medical bills Property taxes Student loan

Void

Dennis signed a contract with the Wheatleys for the sale of property he didn't own. What type of contract is this? Enforceable Unilateral Void Voidable

A (Liable for the rent for the term of the lease)

Dexter can't make next month's rent and is thinking about vacating his apartment before the lease term is up. If Dexter moves out before the lease term expires, he will be ______. A. Liable for the rent for the term of the lease B. Liable only for rent for the month during which the move-out occurred C. Required to forfeit the security deposit and all personal property D. Subject to heavy fines and potential jail time if caught

D (He should remind them that every dwelling, no matter the age or size, should have a home inspection)

Donald and Martina decided to purchase a newly built home, and their agent, Ed, recommended that they get a professional home inspection done. The couple tell Ed that they thought inspections were only for older homes. How should Ed respond to that? A. Ed needs to inform his clients that home inspections are most important for newer properties. B. Ed should tell him that he doesn't trust the builder. C. He should let them know that lenders for new construction loans require inspections. D. He should remind them that every dwelling, no matter the age or size, should have a home inspection.

Reversionary right

During the term of the lease, the lessor retains the rights to possession of the property after the lease term has expired. What is this right known as? Reversionary right Right of ownership Right of possession Right of return

September 18

Elizabeth is financing a new home. She submitted her loan application on Monday, August 3. She's set to close on Thursday, September 21. By what date must her lender provide the Closing Disclosure? August 6 July 31 September 18 September 24

D (The utility company that needs to access the power line that crosses a corner of Elizabeth's land)

Elizabeth's property is encumbered by an easement in gross with which of these entities? A. The neighbor who constructed his new backyard fence six inches across Elizabeth's property line B. The owner of the empty lot down the street that Elizabeth uses as a vegetable garden with the owner's permission C. The resident of the adjoining property to whom Elizabeth has given permission to store some items in her gardening shed D. The utility company that needs to access the power line that crosses a corner of Elizabeth's land

Probate

Elmer died and left a will. Before his estate can be distributed according to his wishes, it must go through ______. A lawyer Devise Escheat Probate

Easement in gross

Eloise is interested in buying a bungalow on the outskirts of the city. Her agent is reviewing the property details and informs her that there are several easements on the property. In particular, the gas company has a right of way because the natural gas line for the neighborhood runs through the back of the lot. What type of easement would this be? Easement appurtenant Easement by necessity Easement by prescription Easement in gross

Tenancy in common

Eva, Stella, and Lynn own a vacation home two blocks from the beach. Sadly, Stella passed away this winter, and so when summer arrives Eva and Lynn will be sharing 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

D (Shelves attached to the wall with brackets)

Examples of real property include which of the following? A. Above-ground pool and pool accessories B. Bathroom mirror hanging on a hook C. Photos and wall hangings D. Shelves attached to the wall with brackets

Sale and leaseback

Ezekiel owns a commercial building that he wants to keep, but he needs capital. He has a plan to recoup 100% of the current equity in the building without having to move business locations by entering into a lease agreement with an investor. What type of commercial lease can Ezekiel use to achieve his goals? Ground Lease purchase Proprietary Sale and leaseback

Bilateral

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 Executed Unilateral Voidable

B (The testator must sign the will)

For a will to be valid, which of the following must occur? A. The testator must be of both sound mind and body. B. The testator must sign the will. C. The will must be notarized by an attorney. D. The will must be witnessed and acknowledged by a devisee.

A (One or both parties are in default)

For which of the following reasons can a Texas real estate sales contract be terminated? A. One or both parties are in default. B. The buyers elect not to go with the option fee approach. C. The seller decides after signing that the buyer's offer is not high enough. D. The spouse of the buyer dies suddenly.

Time is of the essence

Gail was supposed to close on her new home by the end of May, but she kept asking the sellers if they could push the closing date back. Soon the summer was over and she still hadn't closed. Gail was guilty of not adhering to which aspect of the contract? Assignment Novation Reasonable time Time is of the essence

Time is of the essence

Garrett wanted to move his real estate closing so that he can get through his wedding first. His broker and attorney encouraged him not to do it because of which contract clause? Contract novation Indemnification Liquidated damages Time is of the essence

Open listing

Gary hates that he has entered into a listing agreement with a seller that allows the seller to contract with many other real estate licensees in hopes of locating a buyer. But business has been slow, and Gary is sure he can bring in a buyer and grab the commission. What type of listing agreement does Gary have with the seller? Exclusive agency Exclusive right to sell Net listing Open listing

Prior to closing

Gary, the seller, has a list of repairs from the buyer that he has agreed to make. Per the TREC One To Four Family Residential Contract (Resale), when must Gary have the repairs completed? Five days prior to closing No later than the day of closing No more than three days after closing Prior to closing

Discount point

Gerard has been offered a 4% interest rate on a $300,000 mortgage. His monthly mortgage payment would run about $950 per month. He plans to pay $2,000 up front to drop his interest rate to 3.75% and his payment to $920 per month. What is this upfront charge called? Discount point Interest Notes Usury

An option fee

Gloria has an option to purchase the cottage she leases from her landlord. She can exercise the option within the next two years. To gain that right, Gloria paid the landlord $5,000. This is called ______. A deposit A down payment An option fee Earnest money

Inspection contingency

Glynnis is ready to close on her new house, but her agent told her that they have to wait for the homeowner to fix the electrical box as agreed. What clause in her contract allowed her to request the repair? Appraisal contingency Financing contingency Home sale contingency Inspection contingency

Phase III: Clean-up

Government agencies usually become involved during which phase of an environmental assessment? Phase III: Clean-up Phase I: Investigation Phase II: Testing Phase IV: Management

Optionor

Grant owns a property that's subject to an option contract. Grant is the ______. Optee Opter Optionee Optionor

Implied

Hank, a licensee, and Steve, a buyer, don't have a written agency agreement, but Hank continues to show him houses and answer his questions about negotiation and terms. What type of contract do Hank and Steve have? Bilateral Executory Implied Voidable

B (Seller and buyer as an intermediary)

Harrison is representing both the seller and the buyer in a single sales transaction. Which of the following representation options will he check as part of the Broker Information section in TREC's residential One To Four Family (resale) contract? A. Buyer only as buyer's agent B. Seller and buyer as an intermediary C. Seller as listing broker's sub-agent D. Seller only as seller's agent

Ground

Hart and his wife Hanna are leasing the property where they intend to build a permanent structure. What type of commercial lease do Hart and his wife have? Ground Lease purchase Proprietary Sale and leaseback

A reverse tax-deferred exchange

Harvey is an investor who found and closed on an investment property, then decided to sell a property other than the one originally marked for the exchange. What is this an example of? A buy and hold A fickle investor A fix and flip A reverse tax-deferred exchange

A (Extend the time of performance up to 15 days)

Hilda is a buyer in a sales transaction. Unfortunately, the home she hopes to close on in three days' time was just damaged by an electrical fire. The seller can't get someone out to repair the damage before closing. Other than terminating the contract or accepting the property in its damaged state, what option does Hilda have? A. Extend the time of performance up to 15 days. B. Pay to have the damage repaired out of her own pocket. C. Require the seller to drop the price of the home by the amount of damage. D. Sue the seller for negligence.

A (Document health and safety issues that may affect both the cost and enjoyment of the home)

Home inspector Murray is explaining to first-time buyers what he looks for during a home inspection. What is his primary goal? 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 buyers. C. Verify lot lines and acreage calculations. D. Verify the presence of any easements or encroachment on the property.

D (Review the inspection report with her and discuss options)

Homebuyer Nancy has made an offer to purchase a house and has plans to schedule a home inspection. How can her agent assist her in relation to the home inspection? A. Negotiate a kickback from the home inspector. B. Pay for the home inspection. C. Require the buyer to use the agent's favorite home inspector. D. Review the inspection report with her and discuss options.

C (Real property because of the method of annexation)

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 ______. A. Personal property because Shaun installed them himself B. Personal property because they're not an original part of the building C. Real property because of the method of annexation D. Real property because Shaun conveyed them to the buyer

C (The tax bill will be prorated to the day of closing)

How are accrued real estate taxes that have been assessed but not yet due handled in a real estate transaction? A. The assessment amount is split evenly between the buyer and seller and is paid on the day of closing. B. The buyer is responsible for all taxes accrued in the year of purchase, and will pay the tax bill when due. C. The tax bill will be prorated to the day of closing. D. Typically, the seller pays the full assessed tax for the year on the day of closing.

C (Pay all outstanding liens against the property)

How can a foreclosure 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 lienholders.

Abandonment

How can an easement be terminated? Abandonment Covenant Lis pendens Restriction

A (By charging loan origination fees)

How does a lender in the primary mortgage market earn money when a loan is originated? A. By charging loan origination fees B. By preparing tax records C. By purchasing loans D. By setting interest rates

preparing tax records

How does a lender in the primary mortgage market earn money when acting as a loan servicer? By _______ collecting tax payments preparing tax records purchasing loans setting interest rates

In severalty

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

B (If the buyer breaches the contract, the seller may remedy the breach by keeping the earnest money, as well as the property)

How does earnest money encourage the buyer not to breach the agreement of sale? A. If the buyer breaches the contract, the earnest money will be used to pay legal fees for the seller, regardless of the outcome. B. If the buyer breaches the contract, the seller may remedy the breach by keeping the earnest money, as well as the property. C. If the buyer breaches the contract, the state will confiscate the earnest money. D. If the seller files a lawsuit due to the buyer's breach of contract, the court often awards the seller a lump sum that is at least five times the amount of the earnest money deposited.

C (The landlord doesn't charge a percentage of sales until the tenant's sales exceed a break-even point)

How does the "break-even point" relate to percentage leases? A. Sales proceeds must exceed last year's total before the percentage applies. B. The landlord charges a percentage of the cost for improvements to all tenants. C. The landlord doesn't charge a percentage of sales until the tenant's sales exceed a break-even point. D. The landlord must receive enough in rent plus the share of sales to break even on the debt service.

C (By the signed, written agreement of the joint owners)

How is a joint tenancy relationship created? A. By a verbal or written agreement to create such a relationship B. By a written agreement to create such a relationship, if it is signed by one of the owners C. By the signed, written agreement of the joint owners D. It is assumed if two or more unmarried people hold an interest in the property

Three business days

How many days must the borrower be given if the APR of a loan changes more than .125% from the prior Loan Estimate? Five days Seven business days Six days Three business days

Six

How many members does TREC appoint to the Broker-Lawyer Committee? 13 Four One Six

C (Multiply 350,000 by .0004)

How would you calculate a transfer tax of .04% on a $350,000 property? A. Divide .04 by 350,000 B. Divide 350,000 by .004 C. Multiply 350,000 by .0004 D. Multiply 350,000 by 4

A (Complete loan application)

Identify the item that appears on the buyer's checklist as something that should be completed before closing. A. Complete loan application B. Give an affidavit of title to the title insurance company C. Make all requested repairs to the property D. Request a loan payoff statement

open and closed

Identify the two types of CLO systems. Active and constructive Fixed and variable Implied and undisclosed Open and closed

A (Fannie Mae and Freddie Mac guidelines)

If Acme Bank, a primary lender, wants to sell its loans on the secondary market, it would be easier for it to do so if its loans meet ______. A. Fannie Mae and Freddie Mac guidelines B. FDIC guidelines C. FHA guidelines D. VA guidelines

B (The seller can terminate the contract and keep the earnest money)

If a buyer defaults in a sales transaction, what recourse does the seller have per the Default section of TREC's residential One to Four Family (resale) contract, other than suing for specific performance? A. The buyer must agree to double the amount of the earnest money. B. The seller can terminate the contract and keep the earnest money. C. The seller must accept the buyer's written apology for having defaulted on the contract. D. The seller must sign a waiver relieving the buyer from any liability.

D (Respond with a written counter-offer)

If a buyer makes an offer that the seller finds lacking, which of the following actions is the seller most likely to take? A. Ask the seller's agent to talk with the buyer's agent. B. Call the buyer to negotiate better terms. C. Increase the asking price. D. Respond with a written counter-offer.

B (The transaction can be delayed)

If a checkbox isn't properly filled out, what can happen to the transaction? A. Nothing will happen to the transaction B. The transaction can be delayed C. The transaction will be unenforceable D. The transaction will be void

signed

If a negotiable instrument is transferrable, it must be ___________. Include a "not to exceed" clause On a government-issued form Payable at an indefinite time Signed

C (Place a lien on the property)

If a property owner fails to pay taxes, what can the government do? A. Evict those living on the property. B. Nothing. C. Place a lien on the property. D. Take ownership of the property through escheat.

D (The buyer could sue the seller for specific performance)

If a seller is in breach of contract, which of the following is the possible remedy for the buyer? A. The buyer can rely on the seller's agent to act in the place of the seller to complete the terms of the contract. B. The buyer can request payment of earnest money from the seller. C. The buyer can sue his agent according to the terms of the buyer broker agreement. D. The buyer could sue the seller for specific performance.

A (Has accepted them)

If a seller provides a buyer with HOA documents and the buyer fails to review them by the deadline, the buyer __________. A. Has accepted them B. Is in default C. May receive a refund of earnest money D. May terminate up to seven days prior to closing

A (Nothing will happen)

If an appraisal contingency is in place, what happens when a property appraises higher than the agreed-upon sales price? A. Nothing will happen. B. The lender will lend the larger amount, whether it is the appraised value or the sales price. C. The sales price changes to the appraised value. D. The seller may terminate and remarket the property.

Operation of law

If an individual acquires rights or liabilities automatically due to law, and not through an agreement or act of their own, this is known as ______. Automatic liability Due process Liability by default Operation of law

C (The buyer must specify the exact amount in the contract)

If the buyer is putting earnest money down, which of the following statements is true? A. The buyer can require the seller to subtract that amount from the asking price. B. The buyer has to pay for an escrow account to be set up and managed. C. The buyer must specify the exact amount in the contract. D. The earnest money must be in the form of cash and personally delivered to the seller.

A (Add an addendum to the contract)

If the intent of a 1031 exchange wasn't initially disclosed by the seller in the TREC One to Four Family Residential Contract, what must the seller's agent do? A. Add an addendum to the contract. B. Contact the IRS. C. Replace the contract with a new one. D. Substitute a new party for the original party.

A (The sales contract identifies the terms of a real estate sales transaction between the seller and the buyer)

If you had to describe the purpose of a sales contract to a Texas client, which of the following statements would you use? A. The sales contract identifies the terms of a real estate sales transaction between the seller and the buyer. B. The sales contract identifies the terms of the buyer agent/buyer agency relationship. C. The sales contract identifies the terms of the landlord/tenant relationship. D. The sales contract identifies the terms of the listing agent/buyer agency relationship.

Fee simple

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 is this? Fee simple Fee simple defeasible Fee simple determinable Fee simple subject to a condition subsequent

D (The revocation or suspension of one's real estate license)

In Texas, a potential consequence for the unauthorized practice of law is ______. A. A fine of $30,000 B. Being banned from the state bar of Texas C. Being sent to prison for one year D. The revocation or suspension of one's real estate license

B (Forcible detainer notification)

In Texas, a suit for possession breach of lease remedy is also referred to as a _______. A. Actual conviction notice B. Forcible detainer notification C. Right of repossession D. Writ of possession

B (Once both parties have signed it)

In Texas, at what point is the sales contract considered executed? A. Once an attorney reviews it B. Once both parties have signed it C. Once the buyer's earnest money has been placed in escrow D. Once the buyer signs it

C (Until the foreclosure sale is held)

In Texas, how long does a homeowner have to pay off outstanding liens against their property to prevent a foreclosure sale? A. 20 days B. One week before the foreclosure sale is held C. Until the foreclosure sale is held D. Up to 10 years

Tenancy at will

In Texas, in what type of leasehold is the duration of the lease unknown at the time it is created? Estate for years Periodic estate Tenancy at sufferance Tenancy at will

One day after

In Texas, the effective date of a contract, on which all deadlines are based is _______ the executed date of the contract. 15 days after One day after One day before The same as

Estate for years

In Texas, which type of leasehold lasts for a defined time period and automatically terminates when that period ends? Estate for years Periodic estate Tenancy at sufferance Tenancy at will

Trustee

In a deed of trust situation, person or entity that holds "legal" title is a ______. Beneficiary Deeder Trustee Trustor

Trustor

In a deed of trust situation, the borrower/property owner is a ______. Beneficiary Deeder Trustee Trustor

Beneficiary

In a deed of trust situation, the lender is a ______. Beneficiary Deeder Trustee Trustor

Right to occupy the property

In a lease agreement, what consideration does the landlord give to the tenant? Option to buy Rent Right of first refusal Right to occupy the property

A (The deed or mortgage)

In a real estate transaction for which financing has been obtained, what's recorded at the completion of a sales transaction? A. The deed or mortgage B. The listing agreement and buyer agency agreement, along with the deed or mortgage C. The promissory note, deed or mortgage, and loan documents D. The transactional documents

D (Releases of existing liens)

In accordance with the TREC residential One to Four Family (resale) contract, which of the following expenses are paid by the seller? A. Appraisal fees B. Credit reports C. Loan document preparation D. Releases of existing liens

Escrow fees

In accordance with the TREC residential One to Four Family (resale) contract, which of the following expenses is split equally between the seller and the buyer? Credit reports Deed preparation Escrow fees Loan document preparation

D (The purpose for which the space is being rented)

In addition to the property address, the lease agreement start and end dates, and the monthly rent and deposit amounts, which of the following pieces of information should all commercial leases contain? A. A complete list of the other tenants and their rental rates B. A copy of the tenant's credit report C. A detailed description of the property D. The purpose for which the space is being rented

Decreases

In an amortized mortgage, the monthly payment is the same each month. The part used to pay the principal increases each month, while the amount going toward interest ______. Decreases Increases Increases and then decreases Stays the same

Sub-surface rights

In many areas of the country, Marcellus shale has become a hot commodity. This type of rock produces gas, which can be mined, stored, and sold. Abe learned that his family farmstead sat over a rich deposit of Marcellus shale. What type of rights does Abe have relative to this shale? Air rights Sub-surface rights Surface rights Water rights

Cultivated crops

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

Descent and distribution

In situations where no will exists, the deceased person's estate's assets are distributed according to the law of __________________. Descent and distribution Dispersal Heir intestacy Inheritance

Seller

In the case of a "subject to" loan, who or what is the responsible party if the property is foreclosed on? Bank Buyer Lender Seller

C (Ownership includes both the structure and the land)

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

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

Secondary mortgage market

In which market do lenders purchase packaged loans? Housing market Primary mortgage market Secondary mortgage market Stock market

A (Court-ordered partition of property)

In which method of involuntary alienation does a court decide how the proceeds from the sale of land owned by tenants in common will be distributed? A. Court-ordered partition of property B. Eminent domain C. Foreclosure D. Regulatory taking

B (Due to circumstances beyond their control, the parties can't legally or practically do what they've agreed to do)

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 (It can be applied to the buyer's cash down payment)

In which of the following ways can earnest money be used at closing? A. It can be applied to either party's closing costs. B. It can be applied to the buyer's cash down payment. C. It can be used as a bonus to the buyer's agent. D. It can be used to offset the seller's repair bills.

The default section

In which section of TREC's residential One to Four Family (resale) contract is default of contract defined? The Casualty Loss section The Default section The Mediation section The Settlement and Other Expenses section

Earnest money

In which section of the TREC One To Four Family Residential Contract (Resale) do buyers indicate the amount of earnest money they are putting down? Earnest Money Financing Property Sales Price

Sales price

In which section of the TREC residential One to Four Family resale contract do buyers indicate the price they're offering for the property? Earnest Money Financing Property Sales Price

Closing section

In which section of the TREC residential One to Four Family resale contract does the buyer specify the closing date? Closing section Possession section Settlement and Other Expenses section Special Provisions section

Loan contingency

In which section of the sales contract can the buyer indicate whether the sale of the property is contingent upon the buyer obtaining financing? Loan contingency Possession Property condition Title contingency

A (Include a kick-out clause in the sales contract)

Jack has received an offer on his Texas property, but the buyers have to sell their current home before they can afford to purchase his home. He doesn't like this. What if another offer comes in that doesn't have a sale contingency? How can he protect himself? A. Include a kick-out clause in the sales contract. B. Not list the property as pending. C. Offer to buy the buyer's home. D. Require a non-refundable earnest money deposit.

D (Jackson wants to reduce the base rent)

Jackson is leasing a small store front. He has signed a lease in which he gives a percentage of his sale proceeds to his landlord. Why would he choose to enter into such an arrangement? A. Jackson and the landlord are in business together. B. Jackson is hoping the landlord will sell the building to him. C. Jackson is naïve. D. Jackson wants to reduce the base rent.

Permanence

Jacob is a developer who purchased 78 acres and had it subdivided into half-acre lots. He decided to install sewer and underground electric for the entire subdivision, because he thinks that he will easily recoup his initial infrastructure investment. This is an example of which economic characteristic of real property? Area preference Improvements Permanence Scarcity

D (The smaller number)

Jacqueline found a ready, willing, and able buyer for her client's condo, with a sales price of $20,000 more than the asking price. However, the appraisal came in just under the asking price. Which number will the lender use to calculate the loan-to-value ratio? A. A middle point between the two numbers B. A weighted average based on the sales price, appraisal amount, and recent sales C. The larger number, as a buyer has already been found D. The smaller number

Reliction

Jamie owns a home on Clear Lake. Over a period of years, the water has receded quite a bit, doubling the size of the sand beach on his property. What is the name of this process? Accretion Erosion Exclusion Reliction

D (Tenancy for shorter periods)

Jasmine rents on a daily basis. If she decides to leave, she has to give her landlord 24 hours' notice. What type of tenancy does Jasmine have? A. Estate for years B. Month to month C. Periodic estate or tenancy at will D. Tenancy for shorter periods

C (Periodic estate or tenancy at will)

Jeb's lease renewed every six months. If he decided to leave, he was required to give his landlord two months' notice. What type of tenancy does Jeb have? A. Estate for years B. Month to month C. Periodic estate or tenancy at will D. Tenancy for shorter periods

$300,000

Jeffrey has accepted an offer of $310,000 for his house. The buyer is making a $50,000 down payment, and the buyer's appraisal came in at $300,000. On what number will the buyer's lender base the loan-to-value ratio? $249,000 $299,000 $300,000 There's no way to tell given the data provided.

A (To detail all costs Jennings will owe at closing)

Jennings has received a Closing Disclosure from his lender. What's the purpose of this form? A. To detail all costs Jennings will owe at closing B. To disclose the distribution of commissions that will occur at closing C. To estimate closing costs D. To estimate the seller's net proceeds

B (She is not required to use a TREC form per the exception that she is selling the home on her own)

Jessica is selling her own home. What promulgated form must she use per TREC rules? A. Addendum for Sale of Other Property B. She is not required to use a TREC form per the exception that she is selling the home on her own C. She must get an attorney to represent her if she is selling her home on her own D. The One to Four Family Residential Contract Form

Fee simple determinable

Joe gave land to a school, but still wanted to have some control over its use, so a deed was prepared that gave the school title as long as the land is used for educational purposes. What type of interest does the school have? Fee simple conditional Fee simple determinable Fee simple subject to a condition subsequent Legal life estate

Improvements

Juan has decided to invest his small inheritance in real estate. He is drawn to the fact that he can add a building where there wasn't one previously and immediately increase the value of his investment. Which economic characteristic of real property is this? Area preference Improvements Permanence Scarcity

D (Barbie owns two-thirds, and Midge owns one-third)

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

Partition

Ken, Dale, and James are brothers who own more than 100 acres as tenants in common. The relationship between Ken and James disintegrated, and so James initiated a lawsuit. The end result is that the court gave each brother a designated set of acres to own. What was granted by the court? Bifurcation Parcel Partition Severalty

D (The Loan Estimate permits Kenneth to comparison shop)

Kenneth plans to shop around for his mortgage loan to be sure he's getting the best interest rate and terms. What lender-provided document outlines loan rates and fees so he can make comparisons? A. Kenneth's settlement statement details all closing costs, so he can use it to compare lender loan products. B. The buyer's net sheet provides all the figures necessary for comparing loan products. C. The Closing Disclosure discloses all loan costs, so he can compare costs between lenders. D. The Loan Estimate permits Kenneth to comparison shop.

Mediation

Kevin and Inez are having a dispute with the seller about an apparent undisclosed item in the sales contract. What type of resolution approach are the parties required to use first in an attempt to resolve the dispute? Arbitration Fisticuffs Litigation Mediation

B (The buyer may not be able to complete the transaction if their current home doesn't sell)

Kim's seller just received an offer accompanied by the Texas Addendum for Sale of Other Property by Buyer. What do we know about this transaction? A. The buyer is doing a 1031 tax-deferred exchange. B. The buyer may not be able to complete the transaction if their current home doesn't sell. C. The buyer wants the seller to do a property exchange. D. The property is located in a coastal flood zone.

Novation

Kirk and his cousin Dewey decided to buy a vacation home. They entered into a contract with the seller, Crystal. Before finalizing the sale, Dewey wanted out, but he doesn't want to let his cousin down. So instead of pulling out altogether, Dewey convinced his son to replace him in the purchase contract. Kirk and Crystal agreed to the substitution, and Dewey was released from all his obligations under the contract. Dewey's son is now the contracting party. What's this an example of? Assignment Fraud Misrepresentation Novation

D (Review the Information About Brokerage Services form with her)

Kyle is meeting with Martha, a prospective tenant client who wants him to negotiate a one-year lease for her. Prior to entering into an agency representation agreement with Martha, what must Kyle do in accordance with Texas law? A. Check his prospective client's credit rating B. Locate one or more potential rental properties for his prospective client C. Negotiate the terms of his commission D. Review the Information About Brokerage Services form with her

Voidable

Lack of capacity has made the contract non-binding, so the contract is _____. Illegal Unenforceable Void Voidable

B (After the transaction closes)

Legally speaking, at what point is a sales contract executed? A. After the inspection B. After the transaction closes C. When it's signed D. When it's written

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

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

Fee Simple

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

Personal property

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

Subchapter S Corporation

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

D (Seller only as seller's agent)

Lillian is acting as a single agent for the seller. Which of the following representation options will she check as part of the Broker Information section in TREC's residential One to Four Family (resale) contract? A. Buyer only as buyer's agent B. Seller and buyer as an intermediary C. Seller as listing broker's subagent D. Seller only as seller's agent

D (Represent her client's interest in all negotiations and transactions regarding the lease of the property)

Liz is assisting a client who's looking for a commercial space to lease. Which of the following duties will Liz be expected to perform on her client's behalf? A. Determine what clauses should be included in the lease agreement and the monthly lease amount. B. Help market her client's business once the lease has been signed. C. Manage her client's monthly lease payments to the owner. D. Represent her client's interest in all negotiations and transactions regarding the lease of the property.

Lucas and Tom

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

B (Deductible on his personal income tax returns)

Luke recently moved from a condominium to a cooperative. With a cooperative, his share of mortgage interest and real estate taxes will be ______. A. Considered as capital gains B. Deductible on his personal income tax returns C. Fully refundable to him D. Not deductible on his personal income tax returns

C (They may receive a refund of earnest money, but they're responsible for expenses associated with the completed inspection and appraisal)

Lyle and his wife, Carol, were unable to obtain the loan they needed to buy the home they wanted, and have had to terminate their contract with the seller. Which of the following statements about Lyle and Carol is true? A. They can't apply for another mortgage loan for 12 months. B. They can't enter into an agreement of sale with another seller for six months. C. They may receive a refund of earnest money, but they're responsible for expenses associated with the completed inspection and appraisal. D. They will forfeit their earnest money.

D ( The buyers can terminate the contract and get their earnest money back)

Maevis is in the process of selling her home and is a few weeks from closing when the house is damaged by flooding. Due to circumstances outside of her control, Maevis can't get the house repaired before closing. Per the Casualty Loss section of TREC's residential One to Four Family (resale) contract, what course of action can her buyers pursue? A. The buyers can purchase the home at a 5% discount. B. The buyers can require Maevis to pay all of the closing costs. C. The buyers can require Maevis to pay for two years' worth of flood insurance on the property. D. The buyers can terminate the contract and get their earnest money back.

Time is of the essence

Many real estate contracts contain the phrase ______, reminding the parties to avoid unnecessary delays to the transaction, and to adhere to all contract dates. Haste makes waste Patience is a virtue Seek the advice of an attorney Time is of the essence

Optionee

Margo is the potential buyer of the property in an option contract. Margo is the ______. Optee Opter Optionee Optionor

Lease purchase

Marigold is leasing her commercial space with an option to buy the property when the lease expires. What type of commercial lease does Marigold have? Lease purchase Proprietary Sale and leaseback Variable

B (Depending on his state's laws, Mario may have marketable title)

Mario lives in a state that requires an abstract of title for property conveyance. The chain of title is broken approximately 50 years prior to the current date. Which of these properly identifies the status of Mario's title? A. As long as the chain of title is traceable for at least the past 30 years, Mario will have marketable title. B. Depending on his state's laws, Mario may have marketable title. C. Mario will have to perform his own research to find information necessary for repairing the broken link. D. Unless the chain of title can be tracked back to its beginning, Mario won't have marketable title.

Executory

Mark met all of the terms of his contract with Cindy. Cindy has yet to meet one of her obligations. This contract is __________. Executed Executory Invalid Void

Gross

Mark, the landlord, has a commercial property ______ lease agreement with his tenants. Mark pays all expenses related to the property and passes the costs on to the tenants in their rent payments. Gross Net Percentage Triple net

A (Buyer only as buyer's agent)

Markus is acting as a single agent for the buyer. Which of the following representation options will he check as part of the Broker Information section in TREC's residential One to Four Family (resale) contract? A. Buyer only as buyer's agent B. Seller and buyer as an intermediary C. Seller as listing broker's sub-agent D. Seller only as seller's agent

Executory

Martin and Dean have entered into a sales contract. They are about two and a half weeks into the transaction, with several terms of the agreement yet to be met. What type of contract do Martin and Dean have? Bilateral Executed Executory Unilateral

Assignment

Mary agreed to buy her mother's house when her mother planned to move to a senior living community. They signed a purchase agreement, but when Mary had to move because of work, she signed her rights in the contract over to her sister, Tina. Mary may still owe money if Tina can't come up with the agreed-upon funds. What's happening in this scenario? Assignment Breach Novation Performance

Performance

Mary has a contract to buy her mother's house when her mother is finally ready to move to a senior living community. This way, the house stays in the family. After her mother finds a suitable senior apartment and moves, Mary writes a check for the agreed-upon amount, and her mother transfers the deed to Mary. What is happening in this scenario? Assignment Breach Novation Performance

B (The lease doesn't terminate and becomes the responsibility of the tenant's heirs)

Mason was leasing lakeside property when his one-person sailboat capsized, and he drowned. Under Texas law, which of the following occurs if a tenant dies during the term of lease? A. The lease becomes part of the deceased tenant's estate and must be sold at auction. B. The lease doesn't terminate and becomes the responsibility of the tenant's heirs. C. The lease is subject to a constructive eviction. D. The property is considered abandoned, and the landlord may sue the tenant's family for damages.

Title contingency

Maura is purchasing a townhome. When the title report comes back, there is a defect on the title. What contingency will protect Maura, and allow her to terminate and receive a refund of her earnest money? Appraisal contingency Financing contingency Inspection contingency Title contingency

The operation of law

Meredith died, leaving behind a will. Although her instructions to devise her property to her daughter were explicit, her husband inherited. Why might this be? Escheat Intestate Testate The operation of law

General partnership

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

15 days

Mindy and Seth have had to terminate their TREC residential One to Four Family (resale) contract. Both parties signed the request to release the earnest money, but only Mindy submitted a written demand for the funds. How many days does Seth have to submit a written objection after receiving notice from the escrow agent of the demand? 10 days 15 days 20 days Five days

Prorations

Miscellaneous charges that must be adjusted to the day of closing are referred to in the TREC residential One to Four Family (resale) contract as ______. Adjustments Alterations Prorations Sundries

D (During the final walk-through)

Misunderstandings between a buyer and seller regarding personal and real property are most often discovered ___________________. A. At the closing table B. During negotiations of the contract C. During offer and acceptance of the contract D. During the final walk-through

Proprietary

Muriel is one of several owners of cooperative apartments who have purchased shares of the corporation that owns the building. What type of lease do Muriel and the other cooperative apartment owners have? Ground Lease purchase Proprietary Sale and leaseback

Probate

Nancy Simons died without leaving a will. The court will determine who her rightful heirs are and appoint an administrator to distribute her estate's assets. What's this process called? Probate Probative investigation Rightful heir determination Underwriting

D (Nick is required to disclose his relationship to the seller in writing prior to the parties entering into the contract)

Nick, a Texas license holder, is helping his son, Peter, locate a home he can afford to buy and is acting as Peter's agent. Peter has found a property that he wants to make an offer on. Which of the following statements regarding this situation is true? A. As a license holder in Texas, Nick is not allowed to represent family members in a sales transaction. B. Nick does not have to disclose his relationship to the seller because he is acting as the buyer's agent. C. Nick has to deliver Peter's offer in person to the seller and disclose his relationship if the seller accepts the offer. D. Nick is required to disclose his relationship to the seller in writing prior to the parties entering into the contract.

Estate for years

Nina signed a six-month lease with her landlord. When her six months were up, she moved out without being required to give notice, and the landlord rented to a new tenant. What type of tenancy did Nina have? Estate for years Month to month Periodic estate or tenancy at will Tenancy for shorter periods

D (Nonny will receive prorated rents beginning the day of closing)

Nonny is purchasing a rental property where the tenants pay month-to-month rent. Which of the following is the most likely way for the rent to be prorated? A. Nonny will begin to receive prorated rents starting on the first of the month following the closing date. B. Nonny will receive all rents collected as of the first of the month in which the closing is held, even if closing is on the last day of that month. C. Nonny will receive full rents for tenants whose leases expire within one month of the closing date, and prorated rents as of the day of closing for other tenants. D. Nonny will receive prorated rents beginning the day of closing.

Four years

Norman buys Connie's Texas home, and in the sales contract, he specifies that the outdoor grill must stay with the home. Connie ends up taking the grill when she moves out. If Norman wants to sue Connie for taking the grill, he must do so within ______. 15 days 15 years Four weeks Four years

C (Unpaid real estate taxes)

Of the following, which is considered a typical accrued adjustment? A. Heating oil in the tank B. Prepaid taxes C. Unpaid real estate taxes D. Utilities billed and paid in advance

Equity of redemption

One way to avoid foreclosure is for the borrower to pay the amount owed. What's this called? Deed in lieu of foreclosure Equity of redemption Lis pendens Short sale

A (Once closing has occurred)

Per TAR's Residential Buyer/Tenant Representation Agreement, when has the broker earned their fee? A. Once closing has occurred B. Once the title on the property has been cleared of all defects C. Two days prior to closing D. Upon the seller's acceptance of the buyer client's purchase offer

B (Injury to persons or property as a result of broker negligence)

Per TAR's Residential Real Estate Listing Agreement Exclusive Right to Sell contract, for which of the following is a broker liable? A. Failure on the seller's part to make appropriate disclosures. B. Injury to persons or property as a result of broker negligence C. Loss or damage of personal or real property caused by seller negligence D. Security of the property if it becomes vacant

D (The seller must pay the broker's fee as specified in the agreement)

Per TAR's Residential Real Estate Listing Agreement Exclusive Right to Sell contract, what happens with the broker's commission if the seller breaches the terms of the listing agreement? A. The agreement is terminated, and the broker is out of a commission. B. The seller must pay a fine, but the broker receives no commission. C. The seller must pay half of the broker's fee that is specified in the agreement. D. The seller must pay the broker's fee as specified in the agreement.

B (The seller can opt in or opt out of having the property listed on the MLS)

Per TAR's Residential Real Estate Listing Agreement Exclusive Right to Sell contract, what option does the seller have with regard to having their property listed on the MLS? A. The seller can decide whether or not they want to subscribe to and become a member of the MLS. B. The seller can opt in or opt out of having the property listed on the MLS. C. The seller is required to list their property on the MLS. D. The seller must agree to list the property on the MLS for a minimum of 15 days.

The escrow agent

Per TREC's residential One to Four Family (resale) contract, who is responsible for completing the contract and earnest money receipt? Either the seller's or buyer's agent The buyer The escrow agent The seller

D (The seller or the seller's agent)

Per TREC's residential One to Four Family (resale) contract, who is responsible for completing the option fee receipt if the buyer decides to go with the termination option? A. Either the seller's or buyer's agent B. The buyer or buyer's agent C. The escrow agent D. The seller or the seller's agent

The escrow agent

Per TREC's residential One to Four Family (resale) contract, who's authorized to pay the buyer's broker fee at closing? The escrow agent The listing agent The other broker The sub-agent

The seller

Per the Casualty Loss section of TREC's residential One to Four Family (resale) contract, who is responsible for insuring the property until closing? Both the seller and buyer The buyer The listing broker The seller

The seller

Per the Casualty Loss section of TREC's residential One to Four Family (resale) contract, who's responsible for restoring the property to its previous condition in the event the property is damaged or destroyed? The buyer The listing broker The seller The seller and buyer

C (In the parties' respective agency agreements)

Per the TREC One to Four Family Residential Contract (Resale), where are the parties' obligations with regard to brokers' fees to be found? A. In the Brokers' Fees section of the sales contract B. In the Information About Brokerage Services form C. In the parties' respective agency agreements D. In the Settlement and Other Expenses section of the sales contract

An escrow agent

Per the TREC residential One to Four Family (resale) contract, to whom does the buyer pay the sale price funds at closing? An escrow agent The buyer's agent The seller The seller's agent

Free-standing TV

Personal property includes which of the following? Built-in microwave Custom curtains Free-standing TV In-ground pool

Uniqueness

Physical characteristics of land include its immobility, indestructibility, and ______. Location Permanence of investment Scarcity Uniqueness (nonhomogeneity)

Hypothecation

Pledging a property for a mortgage is known as _________. Hypercollateral Hyperinflation Hyperventilation Hypothecation

The seller

Prior to closing, who should request a loan payoff statement? The buyer The lender The seller The title insurance representative

The buyer

Prior to closing, who should review the Loan Estimate? The buyer The lender The seller The title insurance rep

A (Assured themselves that the conditions and contingencies of the purchase agreement have been met)

Prior to signing the closing documents, what should the parties have already done? A. Assured themselves that the conditions and contingencies of the purchase agreement have been met B. Moved locations C. Paid the balance of the purchase price to the seller D. Paid the title representative for the closing

Profit and license

Property owners may keep, sell, or lease their rights. Those rights include which of the following? Collusion Encroachment Profit and license Tax-free status

Co-ownership

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

A (Consult an attorney)

Real estate licensee William is preparing a sale agreement that will include an unusual circumstance. What's his best course of action? A. Consult an attorney. B. Create his own forms. C. Use an existing form and write an addendum that covers the unusual circumstance. D. Use existing forms but modify the language to address the unusual circumstance.

A (No, because Rick does not own more than 10% of the business)

Rick is representing a business in a sales transaction. Rick owns 3% of the business. Is Rick required to provide a written license holder disclosure notice to the other party in the transaction? A. No, because Rick does not own more than 10% of the business. B. No, because the disclosure does not apply to business relationships. C. Yes, because Rick has personal ties to the business. D. Yes, because the disclosure is required for all transactions.

Deed of trust

Robin has obtained a loan to purchase a home. Which of the following serves as security for that loan? Deed of trust Interest Principal Promissory note

Bilateral

Rona has a signed listing agreement with her clients, the Jenkins. In exchange for helping the Jenkins list, market, and sell their home, the Jenkins have agreed to pay Rona a commission. What type of agreement do Rona and the Jenkins have? Bilateral Executed Mutual Unilateral

Partial performance

Ruby enters into a contract to buy Jayden's home. The contract specifies that Jayden must leave the freezer with the home and he must repair the fence in the backyard before closing. After closing, Ruby arrives at the home and sees the fence has been repaired, but Jayden took the freezer with him. This is an example of ______ of the contract. Partial performance Performance Reinforcement Voiding

Joint tenancy

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? Estate in severalty Joint tenancy Tenancy by the entirety Tenancy in common

Equitable title rights

Samantha is the buyer in a contract for deed arrangement. What type of rights to the property does she have during the contract for deed process? Equitable title rights Legal title rights Partial title rights Restricted title rights

Deed in trust

Samuel is using a deed that conveys real estate to a trustee for the beneficiary named in the deed. What type of deed is this? Deed in trust Executor's deed Quitclaim deed Referee's deed

180

Samuel wants to do a 1031 exchange. He sold his investment property and has identified the property he'd like to buy next. Within how many days must he close on this property in order for it to qualify as part of the exchange? 180 30 45 60

Indestructibility

Sander and Ginny bought an old industrial site and plan to get grant money to put an environmental education center on the site. There are a few structures on the property, but they are in disrepair, and it will likely be less expensive to tear them down and build new than to rehabilitate them. However, the new owners are sure that they've made a great investment because the land is in great shape. This reflects which physical characteristic of real property? Immobility Improvements Indestructibility Uniqueness

Deed

Sandra is selling her property and has a certificate of title. What else does she need in order to establish proof of ownership? Abstract of title Chain of title Deed Title insurance

Exclusion

Sarah owns her own home. As part of her basic property rights, she has the right to decide who may or may not access the property. Which right is this? Disposition Enjoyment Exclusion Possession

A ("I highly recommend a home inspection contingency with your offer to protect yourself in the event there are major defects with the house")

Seth is a licensee working for a buyer, Britney. Britney wants to make sure the seller accepts her offer on a charming Cape Cod, so she tells Seth she wants to make a full-price, non-contingent offer right away. How should Seth respond? A. "I highly recommend a home inspection contingency with your offer to protect yourself in the event there are major defects with the house." B. "Since you love this house, this is the best way to make sure you get it. Let's write up the offer and send it over right now." C. "Your offer may be more attractive if we come in at $5,000 over the list price." D. "Your offer would be more attractive if it were all cash."

B (Packaging loans into mortgage-backed securities)

Several actions take place on the secondary mortgage market. Which of these is a common activity? A. Issuing loans to consumers B. Packaging loans into mortgage-backed securities C. Regulating primary lenders D. Setting loan origination fees

C (Terminate, as long as she does so by the stated deadline)

Sheila is buying a condo with an active condominium owners association. The seller provided her with the covenants, conditions and restrictions (CC&Rs) for the association. If Sheila finds something in the documents that she objects to, she may __________. A. Not object, because CC&Rs are public record, and she could have reviewed them at any time prior to making the offer B. Petition the association for a change in the rules C. Terminate, as long as she does so by the stated deadline D. Terminate at any time

Timeshare estate

Sheila owns a timeshare that gives her ownership in 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

B (The seller and buyer share the cost of the mediation)

Shelley is the seller and is in mediation with her buyer over a dispute with the sales contract. Who's responsible for paying for the cost of the mediation? A. The buyer, because the buyer is at fault B. The seller and buyer share the cost of the mediation C. The seller, because she initiated the action D. The Texas Association of REALTORS®

joint tenancy

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

Sale contingency

Sinclair wants to purchase his neighbor's property, but he can't afford both his home and the neighbor's home. What can he include in the offer to protect himself if his current home doesn't sell? Appraisal contingency Inspection contingency Refundable earnest money contingency Sale contingency

Children

Some groups of people are more vulnerable to lead poisoning and its effects than others. Of those listed, who is most vulnerable? Children Men Pets Women over age 70

A (Whether consent was voluntary)

Sondra thinks the new business contract she signed with her business partner is valid. Both parties are legally competent, the contract has a legal purpose, an offer was made and accepted, and a fee has been negotiated and documented. Which essential element of a valid contract has Sondra not yet considered? A. Whether consent was voluntary B. Whether the contract has been translated into all possible languages C. Whether the contract is in writing D. Whether the parties are over 21

A lien theory state

Sondra, a buyer, signs all the required mortgage documentation, promising to make all payments to her lender. Unfortunately, Sondra falls on hard times and misses multiple payments, and the bank indicates that it's going to foreclose on her. The foreclosure proceedings are more difficult for the lender because Sondra holds the title to the land. What kind of state does Sondra live in? A deed of trust theory state A lien theory state An intermediary theory state A title theory state

Oil or gas

Stacy and her husband, Blake, have a special lease agreement in which they, as the land owners, receive a cash payment for executing the lease, with more to come if the lessee's drilling efforts are successful. What type of commercial lease do Stacy and Blake have with the lessee? Ground Lease purchase Oil or gas Sale and leaseback

D (It will be put through probate)

Susan Duffield died testate at age 49. What can be said about Susan's estate? A. Because of Susan's age, any 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 (The sales contract will be terminated, and Sylvia's earnest money will be refunded)

Sylvia is in the process of buying a home in Texas, and her offer is contingent on obtaining financing. Her lender is requiring that certain repairs be made to the home before it will approve the loan. Neither Sylvia nor the seller is willing to pay for the repairs, although the repairs are less than 5% of the sales price. Which of the following statements regarding termination of this contract is true? A. Because the repairs are less than 5% of the sales price, Sylvia can't terminate the contract and will be forced to pay for the cost of the repairs. B. Only the seller has the option to terminate in this situation. C. The parties are not allowed to terminate the contract and will be required to split the cost of the repairs. D. The sales contract will be terminated, and Sylvia's earnest money will be refunded.

The senate

TREC is made up of nine members, all of whom are appointed by the governor, with the advice, consent, and approval of ______. The Secretary of State The Senate The state attorney general The Texas Association of Realtors

Severance

Ted's seller client is adamant that she'll be uprooting and taking most of the fruit trees in the backyard when she sells her home. Ted makes a note to himself that he'll need to include the ______ of the trees in the comments for his listing. Abatement Annexation Defenestration Severance

A (The original tenant and the landlord)

Tenant A is leasing commercial property from the landlord. Tenant A then sublets to Tenant B. Which of the following parties have a sandwich lease? A. The original tenant and the landlord B. The original tenant and the sublessee C. The original tenant, the sublessee, and landlord D. The sublessee and the landlord

D (They will remain with Brokerage A unless that brokerage allows otherwise)

Texas licensee Jackson is leaving Brokerage A and joining Brokerage B. What will happen to Jackson's active listings? A. Jackson will be allowed to take half of his active listings to Brokerage B. B. Jackson will have to split any commissions resulting from the listings with Brokerage A. C. Jackson will take them with him to Brokerage B. D. They will remain with Brokerage A unless that brokerage allows otherwise.

Sales contract

Texas licensee Janice is working with a buyer who's decided to use seller financing to purchase the property. To which type of contract will Janice attach the seller financing addendum? Buyer agency agreement Listing agreement Option agreement Sales contract

Fee simple defeasible

The Crows gave their son, Gibson, the family property, so long as he doesn't join his friend's rock band. If he joins the band, the property goes back to them. What type of estate is this? Fee simple absolute Fee simple defeasible Fee simple determinable Fee simple subject to a condition subsequent

A (All national banks must be part of the Fed)

The Federal Reserve System is made up of 12 Federal Reserve districts. Which of the following statements about the Fed is true? A. All national banks must be part of the Fed. B. All state banks must be part of the Fed. C. All state banks must purchase stock in the national banks. D. Each district is served by two Federal Reserve Banks.

Grace

The Nicholsons just bought a mid-century modern home that will require lead paint abatement. Tom and Genna, their three-year-old daughter Grace, and Genna's mom Pat are waiting to move into the split level until the abatement is complete. Who would be at the most risk of adverse lead effects if they moved in before the abatement was finished? Genna Grace Pat Tom

Executed

The Smiths and the Carsons have just closed on their sales contraction. The Carsons have the keys to their new home and will start moving in tomorrow. What type of contract do the Smiths and the Carsons have? Bilateral Executed Executory Unilateral

Public

The Texas Real Estate Commission establishes rules in the best interest of the ___________. Governor Public Real estate licensees Senate

The seller

The _____ should provide the title insurance company with an affidavit of title when necessary. The buyer The closing agent The lender The seller

Title insurance policy

The _____ will be issued only if title is acceptable and a certificate of title opinion is provided by the attorney. Chain of title Deed Survey Title insurance policy

Amendment to contract

The ______ form promulgated by TREC must always be used when there is an amendment to the contract. Addendum to Amend Contract Amendment to Contract Change Request Modification to Original Contract

B (Mortgage Disclosure Improvement Act)

The ________ requires lenders that provide mortgage loans to adhere to a certain disclosure schedule and notify borrowers that receipt of the disclosures does not obligate them to consummate the loan. A. Dodd-Frank Wall Street Reform and Consumer Protection Act B. Mortgage Disclosure Improvement Act C. Real Estate License Act D. Real Estate Settlement Procedures Act

Cooperative

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

Mortgage insurance premium

The borrower is charged a ______ for all FHA loans. Discount point Mortgage insurance premium Pre-payment penalty Private mortgage insurance

A lease

The contract that allows a tenant to live on the property is _______. A binder A lease A leasehold An estate agreement

Devisee

The person named as the recipient of real property in a will is called the _______. Beneficiary Devisee Grantee Trustee

Cleanup

The phases of an environmental assessment include investigation, testing, ______ , and management. Assessment Cleanup Diligence Monitoring

Fee simple defeasible

The property holder owns the property subject to a condition in which type of fee simple estate? Community property Fee simple defeasible Fee simple determinable Fee simple subject to a condition subsequent

B (Addendum for Property Subject to Mandatory Membership in a Property Owners' Association)

The property that Anna is selling is subject to mandatory membership in an owner's association. Which TREC addendum is she required to include as part of the sales contract? A. Addendum for Property Located Seaward of the Gulf Intracoastal Waterway B. Addendum for Property Subject to Mandatory Membership in a Property Owners' Association C. Addendum for Sale of Other Property by Buyer Addendum for Seller's Disclosure of Information on Lead-Based Paint and Lead-Based Hazards

B (Addendum for Property Subject to Mandatory Membership in a Property Owners' Association )

The property that Anna is selling is subject to mandatory membership in an owner's association. Which TREC addendum is she required to include as part of the sales contract? A. Addendum for Property Located Seaward of the Gulf Intracoastal Waterway B. Addendum for Property Subject to Mandatory Membership in a Property Owners' Association C. Addendum for Sale of Other Property by Buyer Addendum for Seller's D. Disclosure of Information on Lead-Based Paint and Lead-Based Hazards

B (Addendum for Property Subject to Mandatory Membership in a Property Owners' Association)

The property that Joan is selling is subject to mandatory membership in a POA. Which TREC addendum is she required to include as part of the sales contract? A. Addendum for Property Located Seaward of the Gulf Intracoastal Waterway B. Addendum for Property Subject to Mandatory Membership in a Property Owners' Association C. Addendum for Sale of Other Property by Buyer D. Addendum for Seller's Disclosure of Information on Lead-based Paint and Lead-based Hazards

B (Specify how the tenant may use the property, including allowable activities)

The purpose of the use statement in a Texas lease agreement is to ______. A. Identify whether the lease is automatically renewable B. Specify how the tenant may use the property, including allowable activities C. Specify how the tenant will pay the rent D. State the term of the lease

Possession

The right to use the property and to live or work there is known as _____________. Control Inheritance Possession Quiet enjoyment

B (Ensure funds are available to borrowers)

The secondary mortgage market buys loans from the primary market. In other words, it helps ______. A. Avoid foreclosure of borrower properties B. Ensure funds are available to borrowers C. Prevent bank runs by consumers D. Streamline lenders' bankruptcy processes

Service loans

The secondary mortgage market operates in part to _____. Avoid inflation Originate loans Raise interest rates Service loans

C (The secondary market purchases loans from primary lenders and helps keep credit available to loan originators)

The secondary mortgage market serves a very important role in real estate finance. Which of these statements best describes that role? A. The secondary market funds junior mortgages. B. The secondary market makes loans to less creditworthy consumers. C. The secondary market purchases loans from primary lenders and helps keep credit available to loan originators. D. The secondary market regulates lenders in the primary market.

The seller's lender

The seller and ______ must approve a short sale. A broker A short sale specialist The new buyer The seller's lender

Three to five days

The tenants in 6B are late with the rent again. They are now officially three months behind. Texas landlord Mia Landers is tired of playing the understanding landlord and is going to start playing the demanding landlord. She's going to give the tenants ______ advance written notice and then she's going to change the locks. 24 hours One week Three to five days Two weeks

joint tenancy

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

Operation of law

The terms of a person's will are subject to ______. Intestate succession Legal duress Nothing Operation of law

D (Making timely payments to pay off the loan)

The trustor/mortgagor in a deed of trust is responsible for ______. A. Assigning the mortgage B. Charging late payment penalties C. Foreclosing on the property if in default D. Making timely payments to pay off the loan

A (Foreclosure properties)

There are a few exceptions to the Texas rule requiring sellers to complete a seller property condition disclosure. Which of the options below is an example of such an exception? A. Foreclosure properties B. If the seller elects to be exempt C. When a lawyer argues on behalf of his client that the form is unnecessary D. When the seller is selling within one year of purchase

B (When the property is new construction)

There are a few exceptions to the Texas rule that requires a seller to complete a property condition disclosure. Which of the following is an example of such an exception? A. When a lawyer argues that the seller is unable to complete the form. B. When the property is new construction. C. When the seller is a member of the commission. D. When the seller is selling the home within one year of purchase.

D (Total debt to income, loan amount, LTVR)

There are several criteria that Fannie Mae and Freddie Mac use as guidelines when determining if a loan is conforming. What are these criteria? A. Down payment amount, interest rate, and discount points B. Interest rate, loan amount, LTVR C. LTVR, discount points, down payment amount D. Total debt to income, loan amount, LTVR

Testing

This phase of an environmental site assessment is only conducted when necessary. If a problem is found during the investigation phase, this phase is put into action next. Diligence Purchasing Resource budgeting Testing

Deed

Through which method of voluntary alienation does the grantor convey real property and transfer title to the grantee? Deed Descent Escheat Will

Valid

Tim, an attorney for the buyer, was extremely satisfied with the sales contract his client was planning to sign. The contract contained all the essential elements. What type of contract is this? Complete Executed Implied Valid

right-to-use

Tina has fee simple ownership of her timeshare unit. Which of these is NOT an example of the type of ownership she may have? Interval ownership Right-to-use Tenancy in common Timeshare estate

D (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)

To be considered real property in Texas, a manufactured home must be permanently attached to a foundation and ______. A. The home must be at least a double-wide B. The home must have been manufactured in Texas C. The home must have passed a HUD inspection D. 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

D (The grantor must deliver the deed to the grantee and the grantee must accept it)

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 grantor 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.

C (Seller as listing broker's sub-agent)

Toni works for the listing agent but is representing the buyer in a sales transaction. Which of the following representation options will she check as part of the Broker Information section in TREC's residential One to Four Family (resale) contract? A. Buyer only as buyer's agent B. Seller and buyer as an intermediary C. Seller as listing broker's sub-agent D. Seller only as seller's agent

D (Performance of this part of the contract)

Tyne entered a contract to buy Fred's home. Per the terms of the contract, Tyne agreed to pay $20,000 for the earnest money deposit by this coming Wednesday and have the property inspected within seven days. She submitted the earnest money deposit on time and had the property inspected within five days. This is an example of ______. A. A purposeful voiding of the contract B. Buyer misrepresentation C. Partial performance of this part of the contract D. Performance of this part of the contract

1031

Under Section _______ of the Internal Revenue Code, an investor in real property can sell that property, reinvest the proceeds in a "like-kind" property, and defer paying capital gains taxes. 1031 1040 180 360

A (The owner assumes personal liability for all debts)

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

Three

Under the MDIA, how many business days after a borrower applies for a loan does a lender have to provide the buyer with a Loan Estimate? Five Seven Six Three

B (Inform the parties of a real estate transaction that commissions are negotiable)

Under the rules relating to contract forms of TRELA, what must a listing agent do? A. Draft a listing form that meet the needs of the brokerage and the client. B. Inform the parties of a real estate transaction that commissions are negotiable. C. Inform the property owner that the commission is established at 3.5%, and there is no room for negotiation. D. Inform the seller that the licensee's first priority is to the licensee's brokerage.

Limitations

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. Efficiency Fairness Limitations Timeliness

D (Buyers can terminate the contract and have their earnest money refunded)

Under the terms of the TREC One To Four Family Residential Contract (Resale) , what recourse do buyers have if a seller is unable to deliver the title commitment and exception documents to the buyer within the allotted time, due to factors beyond the seller's control? A. Buyers can demand that the sales price be lowered. B. Buyers can request the deadline for delivery be extended by another 15 days. C. Buyers can sue the seller for damages. D. Buyers can terminate the contract and have their earnest money refunded.

B (By acceptance of both parties)

Under the terms of the TREC residential One to Four Family (resale) contract, if mediation is required due to a dispute between parties to a real estate transaction, how is the mediator selected? A. Based on availability and price B. By acceptance of both parties C. By the courts D. By the party who brought the dispute forward

Timeshare use

Vicky and Lee vacation in Cancun, Mexico every year. They purchased the right to stay in a beach condo for the first two weeks in May, and their agreement continues for the next 10 years. They don't actually own the unit. What did they purchase? Condo estate Cooperative unit Timeshare estate Timeshare use

Yolanda

Victor bought a property from Yolanda for $200,000. Under the terms of a land contract, Victor agreed to pay Yolanda in monthly installments of $4,000 over the course of 50 months. Until Victor pays Yolanda the $200,000, who retains the title? A trustee Victor Victor's beneficiary Yolanda

Amendment to Contract

What TREC-promulgated form must be used to make a material change to an existing sales contract? Addendum to Contract Amendment to Contract TREC Addendum to Effect Material Change TX Change Form

C (Collect reasonable fees to cover costs to access the borrower's credit history)

What can a lender do before a borrower receives a Loan Estimate for a loan according the rules under the MDIA? A. Collect payment for servicing the loan B. Collect processing fees in excess of what is needed to access the borrower's credit history C. Collect reasonable fees to cover costs to access the borrower's credit history D. Sell the loan to the secondary mortgage market

A (A deed and either certificate of title or title insurance)

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

B (Lenders might not have funds available to make new loans to the public)

What could be a consequence if there were no secondary mortgage market? A. Interest rates would fall. B. Lenders might not have funds available to make new loans to the public. C. There wouldn't be any institutions available to service loans. D. Unemployment would rise.

Legality

What does a void contract lack that makes it void? Compensation It hasn't been committed to writing Legality Signatures

A (Fannie Mae, Ginnie Mae, Freddie Mac, Farmer Mac, and lending institutions that buy loans from other lenders)

What entities make up the secondary mortgage market? A. Fannie Mae, Ginnie Mae, Freddie Mac, Farmer Mac, and lending institutions that buy loans from other lenders B. Lending institutions that lend directly to consumers C. Savings and loans, thrifts, and credit unions D. The U.S. Department of Veterans Affairs and the Federal Housing Administration

A (Fannie Mae and Freddie Mac)

What entity or entities set the criteria for conforming loan limits? A. Fannie Mae and Freddie Mac B. Federal Home Financing Agency C. Federal Housing Administration D. Federal Reserve

A (A month-to-month tenancy is automatically created)

What happens if a tenant under a lease stays beyond the lease's terms, and the landlord continues to accept rent from that tenant? A. A month-to-month tenancy is automatically created. B. The landlord can evict the tenant without notice. C. The landlord can raise the rent. D. The tenant is given 30 days to renew the lease and select a different type of tenancy.

C (The deadline for delivery is automatically extended)

What happens if the seller is unable to furnish the buyer with the commitment and exception documents within 20 days after the title company has received a signed copy of the TREC One to Four Family Residential Contract (Resale) ? A. The buyer's earnest money is refunded. B. The contract is automatically terminated. C. The deadline for delivery is automatically extended. D. The seller must pay a late fee.

Final closing costs

What information does the Loan Estimate NOT provide to buyers under required disclosures law? Estimated closing costs Final closing costs Loan fees Loan payment schedule

C (The borrower turns the deed over to the lender rather than face foreclosure proceedings)

What is a deed in lieu of foreclosure? A. The borrower pays back their loan, thus avoiding foreclosure. B. The borrower sells their property, but for less than the amount owed on their property. C. The borrower turns the deed over to the lender rather than face foreclosure proceedings. D. The lender receives the deed as a result of foreclosure proceedings.

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

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

B (A contract that is in process)

What is an executory contract? A. A contract that has been carried out completely B. A contract that is in process C. A contract that is missing one or more of the essential elements D. A contract that is unenforceable

B (The curing of the default prior to the foreclosure sale)

What is equitable right of redemption? A. The curing of the default even after the foreclosure sale B. The curing of the default prior to the foreclosure sale C. The right of the lender to seize the property or force a foreclosure sale D. The right of the licensee to seek redemption compensation for fees owed by clients

B (A legal process to determine a will's validity)

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 and witnesses

D (Whether the seller will remain responsible for the note on the loan)

What is specified in TREC's Loan Assumption Addendum? A. The seller will take over the buyer's loan payments if the buyer is unable to make them B. The terms the buyer is assuming, based on the rate lock negotiated with the lender C. When the buyer may resell the property D. Whether the seller will remain responsible for the note on the loan

A (The curing of the default even after the foreclosure sale)

What is statutory right of redemption? A. The curing of the default even after the foreclosure sale B. The curing of the default prior to the foreclosure sale C. The right of the lender to seize the property or force a foreclosure sale D. The right of the licensee to seek redemption compensation for fees owed by clients

Mortgage recording tax

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

D (Sheila Mae Drew, a single person)

What is the correct way to list the buyer's name on the Texas sales contract? A. Ms. Drew B. S. Drew C. Sheila D. D. Sheila Mae Drew, a single person

A (The change in ownership must be recorded)

What is the final step to a successful closing? A. The change in ownership must be recorded. B. The closing must be performed. C. The earnest money must be deposited. D. The title search must reveal a clear title.

D (Novation releases the original party from all obligations, while assignment does not)

What is the key difference between assignment and novation of a contract? A. Assignment releases the original party from all obligations, while novation does not. B. Individual contracts must specifically allow novation, but not assignment. C. Novation is disallowed in many states, while assignment is not. D. Novation releases the original party from all obligations, while assignment does not.

D (The bundle of rights)

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

D (To identify that electronic signatures are just as binding as written signatures)

What is the purpose of the Uniform Electronic Transactions Act? A. To ensure that all contracts are in writing and signed by both parties B. To ensure that both parties are legally competent C. To ensure that the seller has title insurance D. To identify that electronic signatures are just as binding as written signatures

A (The borrower may pay back any owed funds before the date of the foreclosure sale and retain ownership)

What is the right of redemption in Texas with regard to foreclosures? A. The borrower may pay back any owed funds before the date of the foreclosure sale and retain ownership. B. The lender may seize the property or force a foreclosure sale. C. The licensee may seek redemption compensation for fees owed by the seller. D. The lien holder may obtain funds from the sale of a foreclosed property.

six years

What is the term length for a member of the Texas Real Estate Commission? Six years There is no expiration on the terms of commission members, but they must be reappointed annually. Three years Two years

A (Acting outside the scope of one's license; offering legal advice or drafting legal forms)

What is the unauthorized practice of law in Texas? A. Acting outside the scope of one's license; offering legal advice or drafting legal forms B. Explaining the forms and items within the contract forms to a client C. Mentioning to a client that contract forms are legal and binding D. Recommending the right to seek legal counsel to a client

Private mortgage insurance

What may the lender require if the borrower is unable to put at least 20% down on a conventional loan? Discount point Mortgage insurance premium Pre-payment penalty Private mortgage insurance

Deed of trust

What mortgage document is most commonly used to secure a home loan in Texas? Deed of trust Land contract Mortgage VA loan

A (Approval of homeowners and condominium association documents)

What must be obtained by a seller from a buyer when the property is subject to a condominium or homeowners association? A. Approval of homeowners and condominium association documents B. Notice of additional tax liability C. Notice of obligations related to public improvement district D. Private transfer fee obligation

C (The existing mortgage must be paid off)

What must occur before the deed can be recorded in the buyer's name? A. The closing agent must supply the IRS with a Form 1099-S. B. The commission must be paid to the brokers. C. The existing mortgage must be paid off. D. The seller must have occupied the home for at least two years.

D (Time is of the essence)

What phrase in the Termination Option section of TREC's residential One to Four Family (resale) contract means the buyer needs to comply with the deadlines agreed upon in this section of the contract? A. Get the lead out. B. Haste makes waste. C. There's no time like the present. D. Time is of the essence.

Foreclosure

What process is initiated when the borrower doesn't meet their responsibilities to the lender? Alienation Foreclosure Penalization Redemption

D (It's a promise the buyer makes to the lender that the note will be repaid in full)

What purpose does the promissory note serve? A. It gives the lender the right to begin foreclosure proceedings if the buyer defaults. B. It gives the trustee the right to begin foreclosure proceedings if the buyer defaults. C. It's a promise made to the buyer that the lender will not foreclose as long as the note is kept current. D. It's a promise the buyer makes to the lender that the note will be repaid in full.

Purchase money mortgage

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 straight-term loan Land contract Purchase money mortgage Wrap-around mortgage

Non-judicial

What type of foreclosure is commonly used when a deed of trust is the security instrument? Eviction Judicial Non-judicial Strict

Judicial

What type of foreclosure is commonly used when a mortgage is the security instrument? Eviction Judicial Non-judicial Strict

Reversionary interest

What type of interest involves the property ownership going back to the original owner at the end of the life estate? Dual ownership Pur autre vie Remainder interest Reversionary interest

Conforming loan

What type of loan meets certain criteria that are accepted by Fannie Mae and Freddie Mac? Conforming loan Government loan Jumbo loan Non-conforming loan

Constructive notice

What type of notice results from publicly recording a title transfer? Actual notice Attorney notice Constructive notice Proper notice

A qualified intermediary

What type of professional must an investor use to conduct a tax-deferred exchange? A certified public accountant A licensed real estate professional An appraiser or real estate broker A qualified intermediary

Vacation

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

Extended title

What type of title insurance covers defects of an incorrect survey and boundary encroachments? Extended title Homeowners Standard title Title survey and boundary

D (The lower of the sales price or appraised value)

What value would the lender use to calculate loan-to-value ratio? A. Appraised value B. Interest C. Sales price D. The lower of the sales price or appraised value

B (It's an encumbrance on the dominant property)

What's NOT true of an easement appurtenant? A. It involves adjoining property. B. It's an encumbrance on the dominant property. C. It's a permanent right that runs with the land. D. The dominant property is a neighbor to the servient property.

A (An upfront charge to make up for the difference between the rate the borrower is receiving and the rate the lender normally requires)

What's a discount point? A. An upfront charge to make up for the difference between the rate the borrower is receiving and the rate the lender normally requires B. The amount a borrower charges a lender for using its money, charged either monthly or annually C. The amount a lender charges to initiate a loan D. The interest rate at which a bank is allowed to borrow money from the Fed; this rate changes with the stock market

B (Explain the purpose of the title search to the buyer)

What's a licensee's role in the title search process? A. Conduct an independent investigation of title. B. Explain the purpose of the title search to the buyer. C. Select the title insurance company on behalf of the buyer. D. Split the cost of the title search with the buyer.

D (A title that is clear and free of encumbrances)

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

A (A loan that fails to meet the criteria set forth by Fannie Mae and Freddie Mac)

What's a non-conforming loan? A. A loan that fails to meet the criteria set forth 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 a larger-than-usual one-time payment at the end of the term D. A loan to buy a high-priced or luxury home

B (A document that describes additions to the scope (or the terms) of a contract)

What's an addendum in Texas? A. A document that changes the terms of an existing contract B. A document that describes additions to the scope (or the terms) of a contract C. A document that describes what happens in the event of a contract failing D. An agreement between two or more parties

Discount point

What's an up front charge to make up for the difference between the interest rate the borrower is paying and the rate the lender normally requires? Discount point Interest Note Usury

Short sale

What's it called when a property is sold for less than the amount owed? Deed in lieu of foreclosure Eviction Foreclosure Short sale

D (The ratio of the amount of a loan to the value of the property)

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

C (Pre-qualification, loan application, mortgage commitment)

What's the correct order of the buyer's loan process? A. Loan application, pre-qualification, mortgage commitment B. Mortgage commitment, loan application, pre-qualification C. Pre-qualification, loan application, mortgage commitment D. Pre-qualification, mortgage commitment, loan application

200 acres

What's the maximum size for a rural homestead family in Texas? 100 acres 200 acres 300 acres 400 acres

10 acres

What's the maximum urban homestead size in Texas? 10 acres 15 acres 20 acres Five acres

Three

What's the minimum number of business days prior to closing that lenders have to provide borrowers with the Closing Disclosure form? Five Four Three Two

A (To document the agreement between a buyer and seller in a real estate sales transaction)

What's the purpose of a sales contract? A. To document the agreement between a buyer and 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 that the seller has the legal right to sell the property

B (To determine in which price range the buyer should shop)

What's the purpose of pre-qualification? A. To be pre-approved B. To determine in which price range the buyer should shop C. To determine the market value of the home D. To guarantee the seller that the buyer can qualify for a loan

C (Explains what happens in the event that either the seller or the buyer defaults)

What's the purpose of the Default section of TREC's residential One to Four Family (resale) contract? A. Defines Texas's policy of no-fault defaults. B. Explains the process of how the seller or buyer sues for damages. C. Explains what happens in the event that either the seller or the buyer defaults. D. Provides detailed examples of default behavior and resulting consequences.

B (To prevent discrimination in lending)

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

C (To identify what can be used as an electronic signature)

What's the purpose of the ESIGN Act? A. To ensure that all contracts are in writing and signed by both parties B. To ensure that both parties are legally competent C. To identify what can be used as an electronic signature D. To require the use of electronic signatures

B (To maintain favorable and balanced economic conditions)

What's the purpose of the Federal Reserve System? A. To loan money to consumers B. To maintain favorable and balanced economic conditions C. To monitor the activities of state and national banks D. To purchase loans from the primary market

A (The purpose is to protect the buyer. If the property doesn't appraise, the buyer may terminate and get their earnest money back)

What's the purpose of the appraisal contingency in a sales contract? A. The purpose is to protect the buyer. If the property doesn't appraise, the buyer may terminate and get their earnest money back. B. The purpose is to protect the buyer. If the property doesn't appraise, the buyer's appraisal fee is returned. C. The purpose is to protect the lender. If the buyer doesn't get an appraisal, the lender may charge a higher interest rate. D. The purpose is to protect the seller. If the property doesn't appraise, the buyer may not terminate.

B (To provide notice from the lender that the loan has been approved)

What's the purpose of the loan commitment? A. To provide information about the market value of the property B. To provide notice from the lender that the loan has been approved C. To provide notice that the title is free and clear D. To provide verification of the buyer's income

Actual notice

What's the term for a notice given directly to and received by a person? Actual notice Constructive notice Proper notice UPS notice

B (It was an intentional violation)

When Will was found guilty of violating the Deceptive Trade Practices Act, the actual damages to his client were $7,000. But the court required Will to pay $21,000. Why might this be? A. He was an experienced licensee, who should have known better. B. It was an intentional violation. C. It was his third violation. D. The plaintiff had a great attorney.

Buyer and seller

When a buyer assumes a seller's loan, who may be held responsible for repayment of the debt? Buyer Buyer and seller Lender Seller

Buyer

When a loan is assumed, who or what takes on the responsibility of the debt? Bank Buyer Lender Trustee

A (Add a standard addendum using standard language)

When a sales contract doesn't cover the terms needed by the parties, which of the following actions is a licensee allowed to take? A. Add a standard addendum using standard language. B. Draft an amendment using whatever language is needed to capture the missing terms. C. Hire an attorney and invoice the client. D. Terminate the contract on the client's behalf.

Executory

When a sales contract has been accepted, but before title passes, the status of the contract is ____________. Executed Executory Implied Unenforceable

C (One party didn't meet the terms of the contract in the specified time frame, and is now being required to do exactly what was agreed to in the contract)

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 time frame, and is now being required to do exactly what was agreed to in the contract. D. When the parties to 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)

When does a breach of contract occur? A. A buyer refuses to make a counter-offer. B. A seller fails to accept a buyer's initial purchase offer. C. Both parties of a contract cannot 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.

B (When it's committed to writing and both parties sign the contract)

When does an oral offer for a real estate transaction become part of an accepted contract? A. At closing B. When it's committed to writing and both parties sign the contract C. When it's presented D. While it's being negotiated

A (When both parties sign a contract with a full understanding of the terms)

When does offer and acceptance occur? A. When both parties sign a contract with a full understanding of the terms. B. When one party makes an offer on a property, and the seller 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.

D (One party has met most but not all of the terms specified in the contract, and may be required to pay damages for the terms not met)

When does substantial performance of a contract occur? A. Both parties fully meet the contract's terms. B. One or both parties have completed only a portion of the terms agreed to in the contract. C. One party did not meet the terms of the contract in the specified timeframe and is being required to do exactly what was agreed to in the contract. D. One party has met most but not all of the terms specified in the contract, and may be required to pay damages for the terms not met.

D (When the seller's current loan will remain in place)

When is the Loan Assumption Addendum used in Texas? A. When the buyer must obtain financing B. When the buyer reserves the right to terminate if financing can't be arranged C. When the seller reserves the right to terminate if the buyer can't obtain financing D. When the seller's current loan will remain in place

C (Margo no longer has the unrestricted right to terminate the contract)

When preparing her purchase offer to the seller, Margo elected to take the termination option because she just wasn't certain she could pull the necessary funds together in time and she wanted an out. The seller accepted her offer, and Margo forgot all about needing to get the option fee into the seller's hand within three days of signing the contract. Given the situation, which of the following statements is true? A. Margo can retain the unrestricted right to terminate the contract as long as she agrees to forfeit her earnest money. B. Margo can still pay the fee as long as she does so before the termination notification date. C. Margo no longer has the unrestricted right to terminate the contract. D. Margo still has the unrestricted right to terminate the contract as long as she does so by the specified date.

C (Mutually rescinding the contract)

When the Stevensons found out that they were pregnant with twins, the one-bedroom condo they'd been planning to purchase held very little appeal. The seller was happy to let them off the hook. This is an example of ________. A. Accepting liquidated damages B. Accepting partial performance C. Mutually rescinding the contract D. Suing for specific performance

C (Rescinding the contract unilaterally)

When the buyer's repair addendum included adding a new wing, the seller balked. The buyer then terminated. This is an example of ________. A. Accepting partial performance B. Mutually rescinding the contract C. Rescinding the contract unilaterally D. Suing for money damages

A (The borrower has an FHA mortgage)

When would a lender require a mortgage insurance premium? A. The borrower has an FHA mortgage. B. The borrower is unable to put at least 20% down on a conventional loan. C. The borrower is unable to put at least 25% down on a conventional loan. D. The borrower wishes to lower his interest rate on a loan.

Primary market

Where are real estate loans originated? Government market Primary market Secondary market Stock market

C (In older homes and former industrial sites)

Where are underground storage tanks primarily found? A. In newer homes B. In newer industrial sites C. In older homes and former industrial sites D. In parks and golf courses

Agreement of parties

Where in the sales contract should you indicate that addenda are being attached? Special provisions Settlement and other expenses Agreement of parties Termination option

Special provisions

Where in the sales contract should you indicate that it's being used for a 1031 exchange? Special Provisions Settlement and Other Expenses Agreement of Parties Termination Option

A (Addendum for Property Located Seaward of the Gulf Intracoastal Waterway)

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

Loan assumption addendum

Which Texas addendum is required when the buyer is assuming the seller's current loan on the property? Buyer's Temporary Residential Lease Loan Assumption Addendum Seller Financing Addendum Short Sale Addendum

Homestead laws

Which Texas laws protect the homeowner from general creditors? Equal credit laws Homestead laws Lien laws Police power rights

B (Buyer's Temporary Residential Lease)

Which addendum is required as part of the TREC residential One to Four Family (resale) contract when the seller and buyer have agreed that the buyer can occupy the property prior to closing, but for no more than 90 days? A. Addendum for Back-Up Contract B. Buyer's Temporary Residential Lease C. Seller Financing Addendum D. Seller's Temporary Residential Lease

Real estate license law

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

Contract Law

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? Contract law General property law Law of agency State-specific license laws

Texas Real Estate Commission

Which authority is responsible for providing promulgated contract forms and enforcing license law in Texas? Texas Real Estate Commission Texas Real Estate License Law The Broker-Lawyer Committee The Secretary of State

B (The funds are often used for home renovations or to fund a college education)

Which best describes a home equity loan? A. May be a first mortgage, a junior mortgage, or a junior wraparound mortgage. B. The funds are often used for home renovations or to fund a college education. C. The lender is loaning on land, air, and a promise to build. D. This might be used in the case of a furnished condominium.

Kick-out

Which clause allows the Texas seller to keep their property on the market after accepting an offer contingent on the sale of the purchaser's current home? Assumption Free market Kick-out Reversal

Right to convey

Which covenant is a promise that the grantor has the legal capacity to convey the title and has the title to convey? Further assurances Quite enjoyment Right to convey Seisin

Chain of title

Which document establishes path and proof of ownership? Abstract of title Chain of title Deed Title insurance

Deed

Which document is used to establish proof of ownership? Abstract of title Chain of title Deed Title insurance

Abstract of title

Which document is used to provide a summary of the title history? Abstract of title Chain of title Deed Title insurance

Improvements

Which economic characteristic of land contains the concept that a land's value can be affected by the changes made to it, such as construction of a home or shopping center? Improvements Permanence of investment Scarcity Situs (location)

D (Addendum for Reservation of Oil, Gas and Other Minerals)

Which form is used when a seller wants to reserve mineral rights? A. Addendum for Sale of Other Property by B. Buyer Seller Financing Addendum C. Addendum for Coastal Area Property D. Addendum for Reservation of Oil, Gas and Other Minerals

Eminent domain

Which government power allows it to convey title to a property involuntarily, while paying the property owner? Eminent domain Escheat Police power Taxation

Police power

Which government power is used to do what's right for the public good where the owner may or may not be compensated? Eminent domain Escheat Police power Taxation

B (Lot 26 Block 05, Section 16 of Crystal Falls Addition, City of Leander, County of Travis, Texas, known as 1900 High Lonesome Street, Leander, TX 78641)

Which is the correct way to describe a property on the Texas sales contract? A. 1900 High Lonesome St., Travis, TX 78641 B. Lot 26 Block 05, Section 16 of Crystal Falls Addition, City of Leander, County of Travis, Texas, known as 1900 High Lonesome Street, Leander, TX 78641 C. Lot 26 Block 05, Section of Crystal Falls Addition, City of, County of Travis, Texas, known as 1900 High Lonesome 78641 D. Lot 26 Block 05, Section of Crystal Falls Addition, City of Leander, County of Travis, Texas, known as 1900 High Lonesome 78641

Homestead law

Which law protects the Texas property owner from loss of a family home due to claims by general creditors? Creditor law Doctrine of Prior Appropriation General debt law Homestead law

Natural processes

Which method of involuntary alienation involves accession, accretion, reliction, or avulsion? Adverse possession Descent Natural processes Regulatory taking

D (Learn and understand tenant rights)

Which of the following actions concerning tenant rights should real estate licensees take? A. Advise landlords on their rights and responsibilities under law. B. Advise tenants on their rights and responsibilities under the law. C. Ignore tenant rights. D. Learn and understand tenant rights.

Acknowledgment

Which of the following actions performed by a subscribing witness, such as a notary public, is required for a Texas deed to be recorded? Acknowledgment Delivery and acceptance Granting Seal of approval

DTPA

Which of the following acts protects Texas consumers against real estate licensees who use false, misleading, or deceptive actions or practices in the advertising, offering for sale, selling, or leasing of personal property or real property? CPSIA DTPA FDA FDIC

D (Addendum for Reservation of Oil, Gas and Other Minerals)

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 property's 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 (Third Party Financing Addendum)

Which of the following addenda is required as part of the TREC residential One to Four Family (resale) contract when the buyer needs to obtain a mortgage loan from a lender to purchase the property? A. Addendum for Back-Up Contract B. Loan Assumption Addendum C. Seller Financing Addendum D. Third Party Financing Addendum

B (Addendum for Sale of Other Property by Buyer)

Which of the following addenda is required as part of the TREC residential One to Four Family (resale) contract when the buyer's 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

D (Seller's Temporary Residential Lease)

Which of the following addenda is required as part of the TREC residential One to Four Family (resale) contract when the seller and buyer have agreed that 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

VOCs

Which of the following are substances found in air fresheners, cleansers, paint, and building materials that can make indoor air quality toxic at high levels? BPA Natural scents PCBs VOCs

B (Ensures the title to property is free and clear of liens and only subject to loan payoff and any taxes owed)

Which of the following best describes a marketable title? A. Conveys ownership of the property. B. Ensures the title to property is free and clear of liens and only subject to loan payoff and any taxes owed. C. Protects the buyer from defects in the title. D. Provides a title commitment or abstract of title via a search of public records.

Usury

Which of the following defines when a lender charges a borrower more than the highest allowable interest rate? Default Discount points Note Usury

B (One in which only one party is obligated)

Which of the following describes a unilateral contract? A. One in which negotiations have stalled B. One in which only one party is obligated C. One that may only be filled once D. One that requires one person to execute it

Local credit union

Which of the following entities commonly acts in the primary market? Fannie Mae Federal Home Loan Bank Local credit union Private investors

TREC

Which of the following entities promulgates forms for Texas licensees? The Broker-Lawyer Committee The State Forms Committee TREC TRELA

C (Locate a property that meets the client's criteria within a specified market area)

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.

Down payment

Which of the following is a guideline used by Fannie Mae and Freddie Mac when determining if a loan is conforming? Discount points Down payment Interest rate PMI

Homestead

Which of the following is a legal life estate? Dedication Determinable fee Fee simple interest Homestead

A (Rulemaking authority for real estate licensees that has the full force and effect of the law)

Which of the following is a responsibility of the Texas Real Estate Commission, as provided in the Texas Real Estate License Act? A. Rulemaking authority for real estate licensees that has the full force and effect of the law B. Rulemaking authority that is primarily a set of guidelines and suggestions for licensees to follow C. The right to appoint a governor D. Veto authority on any laws of TRELA they no longer agree with

B (There is no one standard form in Texas for the sales contract)

Which of the following is a true statement about the sales contract form in Texas? A. In Texas, there is only one sales contract form that is used for real estate sales transactions. B. There is no one standard form in Texas for the sales contract. C. There is no sales contract form that can be used statewide in Texas. D. Unlike in other states, the sales contract in Texas is not legally binding.

D (Keep the property in good repair)

Which of the following is a trustor/mortgagor's responsibility? A. Assign the mortgage. B. Charge late payment penalties. C. Foreclose on the property if in default. D. Keep the property in good repair.

Deed in lieu of foreclosure

Which of the following is an alternative to foreclosure? Deed in lieu of foreclosure Default Deficiency judgment Eviction

A sales contract

Which of the following is an example of a bilateral contract? A beauty pageant A contest with a prize An offer of a reward A sales contract

C (An investor finds and closes on an investment property and then decides to immediately sell another investment property)

Which of the following is an example of a reverse exchange? A. A homeowner finds and closes on a house and then decides to sell their existing home. B. A homeowner sells a property and then finds and closes on a new property. C. An investor finds and closes on an investment property and then decides to immediately sell another investment property. D. An investor sells a property and then finds and closes on another investment property.

B (A contest with a prize)

Which of the following is an example of a unilateral contract? A. A car purchase B. A contest with a prize C. A restaurant order D. A sales contract

D (A tenant moves out of the apartment after repeated unsuccessful requests to the landlord to repair the broken water heater)

Which of the following is an example of constructive eviction? A. A landlord locks a tenant out of her unit after she fails to pay her rent for three months. B. A tenant chooses not to renew a lease when the term expires and moves out. C. A tenant dies. D. A tenant moves out of the apartment after repeated unsuccessful requests to the landlord to repair the broken water heater.

B (During a lease transaction, the lessor retains the rights to possession of the property after the lease term has expired)

Which of the following is an example of reversionary right? A. During a lease transaction, either party has the right to change their mind and cancel the agreement. B. During a lease transaction, the lessor retains the rights to possession of the property after the lease term has expired. C. Prior tenants have priority over new tenants if they both want to lease the same property. D. The lessor can offer a discount on the rent for a few months and then revert to the standard amount with one month's notice.

B (Interpreting the legal consequences of a client's actions)

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 an attorney has reviewed D. Using standard language for addenda

Enjoyment

Which of the following is included with real property rights? Enjoyment Hazardous acts Right to destroy Right to encroach

A (An attorney or title company representative)

Which of the following is more likely to act as a closing agent? A. An attorney or title company representative B. The broker C. The lender D. The seller

A (Monthly rent is a tax deduction as a business expense)

Which of the following is one benefit to business owners for leasing instead of buying real estate for their business? A. Monthly rent is a tax deduction as a business expense. B. Rental rates can include annual escalations based on market conditions. C. The landlord holds the right of reversion at lease end. D. The tenant may have little or limited control over what the property owner decides to do.

A (Business owners can often make more money on their business than they can on the appreciation of the building where they conduct that business)

Which of the following is one reason for the popularity of commercial leasing? A. Business owners can often make more money on their business than they can on the appreciation of the building where they conduct that business. B. Rental rates can include annual escalations based on market conditions. C. The landlord holds the right of reversion at lease end. Tenants may be required to move at the end of the lease. D. There can be many obligations and hidden costs in a lease, which can be onerous for tenants if they aren't aware of them.

Easement by prescription

Which of the following is the term meaning an easement acquired through long-term trespassing? Easement appurtenant Easement by necessity Easement by prescription Easement in gross

A (They allow the owner to use the open space above buildings)

Which of the following is true about air rights? A. They allow the owner to use the open space above buildings. B. They allow the owner to use the space directly below buildings. C. They cannot be bought or sold. D. They include mineral rights.

B (Duplex built in 1959)

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

Title insurance

Which of the following protects the owner against financial loss if the real estate title has defects? Abstract of title Chain of title Deed Title insurance

Secondary market

Which of the following provides funds for lenders to keep making mortgage loans to the public? Government market Primary market Secondary market Stock market

D (Recommend that buyers obtain professional home inspections)

Which of the following recommendations may a Texas real estate licensee make and still be acting within the scope of her expertise? A. Recommend a specific professional. B. Recommend clients take certain actions related to tenant/landlord rights and responsibilities. C. Recommend specific investments or forecast profits/losses. D. Recommend that buyers obtain professional home inspections.

Appurtenance

Which of the following refers to the inherent or automatic rights that are the natural consequences of property ownership such as water rights? Appurtenance Bundle of rights Servient Title

C (It is a business organization owned by two or more partners)

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

C (They are taxed as partnerships)

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

D (They must be in writing)

Which of the following statements about long-term lease agreements in Texas is true? A. A long-term lease agreement is one that is for six months or longer. B. A tenant who enters into a long-term lease agreement is required to make improvements to the property. C. The tenant is required to sign the agreement but the landlord's signature is optional. D. They must be in writing.

B (An existing survey may be used if it's accompanied by a Residential Real Property T-47 affidavit)

Which of the following statements about obtaining a property survey for the title company and lender is true? A. A new survey is always required. B. An existing survey may be used if it's accompanied by a Residential Real Property T-47 affidavit. C. A survey is not required for homes built before 1978. D. If a new survey is required, the seller must always pay for it.

B (The beginning and end dates of the lease must be clearly stated)

Which of the following statements about term provisions in lease agreements in Texas is true? A. Tenants who sign a year's lease do not have to pay a security deposit. B. The beginning and end dates of the lease must be clearly stated. C. There must be a specific start date but the end date may be left open. D. The term of the lease agreement must be for a minimum length of one year.

A (After the lease term has expired, the lease will be automatically renewed on a month-to-month basis)

Which of the following statements about the TAR Residential Lease agreement's automatic renewal policy is true? A. After the lease term has expired, the lease will be automatically renewed on a month-to-month basis. B. The agreement does not allow for the automatic renewal of the lease. C. The automatic renewal of the lease is left to the landlord's discretion. D. The tenant must consent in writing to an automatic renewal of the lease.

C (If the buyer is in default, the seller must provide the buyer with a notice before taking further action)

Which of the following statements about the contract for deed default process in Texas is true? A. A buyer in default must immediately agree to terminate the contract and forfeit all payments made to the seller. B. If the buyer is in default, the seller can take possession of the property without notice. C. If the buyer is in default, the seller must provide the buyer with a notice before taking further action. D. The seller must give a buyer in default a 30-day warning, followed by a notice of termination.

D (The escrow agent is not a party to the contract)

Which of the following statements about the escrow agent's role in a residential sales transaction in Texas is true? A. The escrow agent is liable for interest on the earnest money. B. The escrow agent is liable for the loss of any earnest money caused by the financial institution in which the funds are deposited. C. The escrow agent is liable for the performance and non-performance of the parties to the transaction. D. The escrow agent is not a party to the contract.

B (The inclusion of numerous contingencies makes it less likely that the buyer's offer will be accepted)

Which of the following statements about the number of contingencies in a sales contract is true? A. Every sales contract should contain a minimum of three contingencies. B. The inclusion of numerous contingencies makes it less likely that the buyer's offer will be accepted. C. The more contingencies, the better from the seller's perspective. D. The number of contingencies is directly related to the cost of the home. The higher the asking price, the greater number of contingencies.

A (Buyers who choose to take the option and pay the option fee can terminate the contract by giving notice within a specified time frame.)

Which of the following statements about the termination option in TREC's residential One to Four Family (resale) contract is true? A. Buyers who choose to take the option and pay the option fee can terminate the contract by giving notice within a specified time frame. B. Buyers who choose to take the option and pay the option fee can terminate the option at any time without giving notice. C. Buyers who exercise the option to terminate are refunded both their earnest money and option fee. D. Buyers who exercise the option to terminate forfeit both their earnest money and option fee.

C (The combined fair market value of the property (or properties) selected can't be more than 200% of the relinquished property)

Which of the following statements best describes the 200% rule as it relates to tax-deferred exchanges? A. The capital gains realized from the property sale can't be more than 200% of the original purchase price. B. The capital gains realized from the property sale can't be more than 200% of the sale price. C. The combined fair market value of the property (or properties) selected can't be more than 200% of the relinquished property. D. The fair market value of the relinquished property must be 200% more than the property (or properties) selected.

D (The total value of the property (or properties) selected as exchanges must be at least 95% of the value of the property being sold)

Which of the following statements best describes the 95% rule as it relates to tax-deferred exchanges? A. The combined fair market value of the property (or properties) selected as exchanges can't be more than 95% of the relinquished property. B. The fair market value of the relinquished property must be 95% more than the property (or properties) selected as exchanges. C. The total value of the property being sold must be at least 95% of the value of the profit to be made on the property (or properties) selected as exchanges. D. The total value of the property (or properties) selected as exchanges must be at least 95% of the value of the property being sold.

C (An investor can identify up to three replacement properties and not encounter a restriction as to fair market value as long as debt load requirement is met)

Which of the following statements best describes the three-property rule as it relates to tax-deferred exchanges? A. An investor can exchange no more than three properties per exchange. B. An investor can exchange no more than three properties per year. C. An investor can identify up to three replacement properties and not encounter a restriction as to fair market value as long as debt load requirement is met. D. An investor must own at least three properties to qualify for a tax-deferred exchange.

D (An unenforceable contract is a valid contract, but it will not be enforced by the courts)

Which of the following statements is correct? A. A legally enforceable contract can never be made orally. B. An implied contract is not enforceable. C. An unenforceable contract is always implied. D. An unenforceable contract is a valid contract, but it will not be enforced by the courts.

C (The funds a buyer brings to closing must be provided in the form of a cashier's check, a certified check, or a wire transfer)

Which of the following statements is true about activities related to the closing process? A. A lender's attorney is always present at a title closing. B. At closing, the seller must be paid the balance of the purchase price with a personal check. C. The funds a buyer brings to closing must be provided in the form of a cashier's check, a certified check, or a wire transfer. D. With the seller's signed, written agreement, the buyer may bring a personal check to pay for all closing funds.

A (The court may award damages to the tenants and order the landlord to make repairs)

Which of the following statements is true about constructive eviction in Texas? A. The court may award damages to the tenants and order the landlord to make repairs. B. The court may order the vacated tenants to pay monetary damages to the landlord. C. The landlord can shut off the power to the unit, thereby forcing the tenant out. D. The tenants who abandoned the property may never legally re-enter the premises.

A (If the buyer can't meet the terms of the agreement due to the inability to obtain a loan, the agreement is terminated)

Which of the following statements is true if a loan contingency is in effect in a sales contract? A. If the buyer can't meet the terms of the agreement due to the inability to obtain a loan, the agreement is terminated. B. If the buyer can't obtain a loan, the buyer's broker may loan the client the money so that the deal can go through. C. If the buyer can't obtain a loan, the seller may be forced to drop the price of the property so that the buyer can afford to purchase the home with available funds. D. If the buyer can't obtain a loan, the transaction is placed on hold until the buyer can find another lender.

C (The underwriter determines if a loan meets the lender's underwriting standards)

Which of the following statements is true of the mortgage commitment stage of the loan approval process? A. Funds for taxes and insurance are collected at the time of pre-approval. B. The lender is required to issue a loan once the borrower has been pre-approved. C. The underwriter determines if a loan meets the lender's underwriting standards. D. Underwriting is performed before the loan package is complete.

D (Some lenders refuse to offer loans for cooperative purchases)

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

D (The term has a specified start and end date)

Which of the following statements is true regarding the length of term of the TAR's Residential Buyer/Tenant Representation Agreement? A. The term can be automatically renewed. B. The term for the contract must begin the day the buyer client signs the agreement. C. The term has a specific start date but the end date remains open to allow flexibility. D. The term has a specified start and end date.

B (Timeshare estates can be sold or passed down to heirs)

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

Title insurance policy

Which of the following will be issued only if title is acceptable and an attorney provides a certificate of title opinion? Chain of title Deed Survey Title insurance policy

B (An appraisal lower than the contracted price)

Which of the following would be a factor that would cause a delay in closing? A. All loan documents obtained on time B. An appraisal lower than the contracted price C. An inspection performed with no findings D. An unbroken chain of ownership

C (Unbroken chain of ownership)

Which of the following would be a factor that would make a title marketable? A. Incorrect legal description B. The neighbors fence causes an encroachment C. Unbroken chain of ownership D. Unpaid mortgage

C (Reggie sells an apartment complex and purchases a new complex a month later in a different part of the city)

Which of these property owners is eligible to take advantage of a 1031 tax-deferred exchange? A. Ann owns a single-family home, but rents it out to a coworker while she's on a two-year military tour. B. Chanel sells an investment property. A year later, she finds an almost identical investment property to purchase, and does so. C. Reggie sells an apartment complex and purchases a new complex a month later in a different part of the city. D. Sigmund sells his single-family home and purchases a new home for his family to reside in.

D (The lease agreement start and end dates)

Which one of the following pieces of information should all commercial leases contain? A. A confidentiality clause B. A non-compete clause C. A nondisclosure agreement D. The lease agreement start and end dates

Negotiate leases

Which one of the following responsibilities requires the licensee to secure a profitable deal for the landlord that is also affordable for the commercial tenant? Evict tenants who fail to comply with the terms and conditions of the lease agreement. Negotiate leases. Oversee the maintenance of buildings on the property. Qualify potential tenants.

C (It's a legally binding contract)

Which one of the following statements is true about a sales contract that's been signed by both parties, and both parties have been notified of its acceptance? A. It can also be called the consumer notice. B. It consists of two pages: a brief description of the agreement and a signature page. C. It's a legally binding contract. D. It's the document buyers and their agents use to enter into a business relationship.

of co-ownership by partition

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 of co-ownership by partition of estate in severalty of joint tenancies

A (HUD's Manufactured Housing Program)

Which organization regulates and enforces the construction methods used for manufactured homes? A. HUD's Manufactured Housing Program B. Texas Department of Housing and Community Affairs (TDHCA) C. Texas Department of Transportation D. Uniform Construction Code

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

Promissory note

Which part of a loan is the agreement to repay the debt? Deed of trust Interest Mortgage Promissory note

Phase IV: Management

Which phase of the environmental site assessment involves addressing any on-going or potential issues? Phase III: Clean-up Phase I: Investigation Phase II: Testing Phase IV: Management

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

Immobility

Which physical characteristic of land addresses the concept that the geographic location of a piece of land is fixed and can never be changed? Immobility Indestructibility Situs (location) Uniqueness

Indestructibility

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

"Subject to"

Which required clause in a Texas deed contains reservations or exceptions placed by the grantor on the conveyance of the property? Granting Habendum "Subject to" Warranty

Warranty

Which required clause in a Texas deed describes the type of warranty being made by the grantor? Consideration acknowledgment Granting Habendum Warranty

Granting

Which required clause in a Texas deed, also known as "words of conveyance," contains words that state the grantor's intention to convey the property at this time? Consideration acknowledgment Granting Habendum Warranty

Sub-surface

Which right allows a property owner to use or sell underground resources? Air Sub-surface Surface Water

A (The Attorney's Fees section)

Which section of TREC's residential resale contract states that if one party breaches the agreement and the non-breaching party hires an attorney to enforce their rights, the breaching party can be forced to pay all of the legal expenses of the non-breaching party? A. The Attorney's Fees section B. The Default section C. The Mediation section D. The Settlement and Other Expenses section

The default section

Which section of the TREC residential One to Four Family (resale) contract explains how the deposit money is handled if either party defaults? The Default section The Deposit section The Financing section The Settlement section

Prorations

Which section of the TREC residential One to Four Family (resale) contract identifies miscellaneous charges that must be adjusted to the day of closing? Financing Prorations Settlement and Other Expenses Special Provisions

C (The Settlement and Other Expenses section)

Which section of the TREC residential One to Four Family (resale) contract identifies the fees associated with closing the sales transaction that both the seller and the buyer are responsible for paying? A. The Financing section B. The Sales Price section C. The Settlement and Other Expenses section D. The Special Provisions section

Title policy and survey

Which section of the sales contract stipulates that the seller is conveying the property to the buyer with a good and marketable title? Possession Property condition Special provisions Title policy and survey

A (Depositing the earnest money)

Which step of the transaction process involves the buyer writing a check to show good faith in making the offer? A. Depositing the earnest money B. Getting homeowners insurance C. Performing the property appraisals D. Performing the property inspections

A (Determine how earnest money is to be distributed in case of a dispute)

Which task is NOT the responsibility of an escrow officer? A. Determine how earnest money is to be distributed in case of a dispute. B. Manage transaction documents from all parties. C. Prepare closing documents and manage the closing meeting. D. Verify funding of the buyer's loan.

Transfer tax

Which term is defined as a tax that's applied when property changes ownership? Income tax Property tax Sales tax Transfer tax

Grantee

Which term refers to the person receiving title, often called the "party of the second part," in a deed? Grantee Grantor Notary public Witness

C (Fee simple subject to a condition subsequent)

Which type of an estate doesn't end automatically when the stated event or condition occurs? A. Fee simple absolute B. Fee simple determinable C. Fee simple subject to a condition subsequent D. Freehold

Easement in gross

Which type of easement provides a right-of-way for a railroad? An easement by necessity An easement by prescription An easement in gross This is not an easement.

Net listing

Which type of listing is illegal in some states due to its inherent conflict of interest? Exclusive agency Exclusive right to sell Net listing Open listing

Government

Which type of loan is insured by the Federal Housing Administration? Conventional Government Home equity line of credit Rural development

The injured party

Who has the option to terminate a contract when a breach occurs? Both parties Neither party The injured party The party who committed the breach

The borrower

Who has the right to waive the three-day disclosure waiting period when the APR for the loan changes on the Loan Estimate? The borrower The closing agent The lender The lender's attorney

The seller

Who is responsible for delivering a signed deed to the buyer? The buyer's agent The lender The seller The seller's agent

Landlord (owner)

Who is the lessor in a lease agreement? Landlord (owner) Leasing agent Real estate broker Tenant

Party doing the exchange

Who must disclose the fact that a Texas transaction will be part of a 1031 exchange? Buyer Party doing the exchange Seller Title company representative

The seller

Who or what determines the listing price for the seller's property that will appear in the Listing Price section of TAR's Residential Real Estate Listing Agreement Exclusive Right to Sell contract? An appraiser The broker The buyer The seller

The court

Who or what entity is responsible for determining the validity of a will as part of the probate process? A court-appointed administrator The court The decedent's heirs The executor of the will

The broker

Who or what entity must keep records of all funds deposited into the custodial or trust account that indicate the date and from whom the broker received the funds, the date deposited, the date any withdrawals are made, and other necessary information? The bank of deposit The broker The buyer The seller

D (The cost of the mediation service or provider is split equally by the parties to the transaction)

Who pays for the mediation service or provider in a sales transaction dispute under the terms of the TREC residential One to Four Family (resale) agreement? A. The cost of the mediation service or provider is paid by the buyer's brokerage firm. B. The cost of the mediation service or provider is paid by the courts. C. The cost of the mediation service or provider is paid by the party who brought the dispute forward. D. The cost of the mediation service or provider is split equally by the parties to the transaction.

D (The buyer and the seller)

Who should review the settlement statement before closing? A. Only the buyer B. Only the seller C. The buyer and the lender's attorney D. The buyer and the seller

The buyer

Who's generally responsible for ordering and reviewing a survey of the property? The buyer The lender The seller The title insurance representative

Closing agent

Who's responsible for calculating prorations at closing? Buyer Buyer and seller Closing agent Seller

A (The buyer and the buyer's agent)

Who's responsible for doing the final walk-through of a property? A. The buyer and the buyer's agent B. The lender C. The seller and the seller's agent D. The title insurance representative

B (So borrowers can compare loans and make decisions regarding the affordability of loans offered)

Why are lenders required to provide the Loan Estimate and Closing Disclosure forms to loan applicants and borrowers? A. Because interest rates may rise if the buyer doesn't close on time B. So borrowers can compare loans and make decisions regarding the affordability of loans offered C. So government entities can track the numbers of borrowers who decline certain types of loans D. So they can collect information about loan applicants and borrowers

A (Because it contains no proof of the condition of the grantor's title at the time of conveyance)

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 (It gives the buyer a snapshot in time of the home's condition)

Why is a home inspection recommended? A. It gives the buyer a snapshot in time of the home's condition. B. It helps the buyer identify cosmetic changes that must be made. C. It's free to the buyer. D. It's required by law for most residential transactions.

D (To understand what happens in the event of a contract failing)

Why is it important for the parties to read and understand the default section of the Texas sales contract? A. To know where to place blame in the event of a failed contract B. To understand a clouded title C. To understand that a delay is possible D. To understand what happens in the event of a contract failing

B (It provides evidence that the title is marketable)

Why is proof of ownership required when transferring real property? A. It places the new owner's name on the deed. B. It provides evidence that the title is marketable. C. It provides proof that property taxes have been paid for the property. D. It verifies the property address.

Flexibility in moving

Why might a business owner opt to lease a building rather than purchase it? Control over the property Desire for equity Fixed monthly payments over time Flexibility in moving

B (To determine the borrower's credit risk)

Why would a lender want to pull a credit report during the pre-approval state of the loan approval process? A. To determine a clear title B. To determine the borrower's credit risk C. To verify income and work history D. To verity title insurance

C (It's owned as an estate in severalty)

Widget Corporation just bought land on which it plans to build a new manufacturing facility. How is the land owned? A. It's a joint tenancy. B. It's held as a tenancy in common. C. It's owned as an estate in severalty. D. There isn't enough information given to tell.

Intestate succession

Wilma died without a will. How will her heirs be determined? A committee appointed by the court Intestate bequest Intestate succession The process of escheat

Seller

With a land contract, who retains the title to the property? Beneficiary Buyer Seller Trustee

Borrower

With a mortgage, who or what holds equitable title to the property? Borrower Lender State Trustee

Adjustable rate

With which type of mortgage does the interest rate vary according to a specified index? Adjustable rate Balloon rate Fixed rate Straight term

Easement by necessity

Without this easement—usually involving access to a road—the owner requiring the right of passage would be landlocked. Easement appurtenant Easement by necessity Easement by prescription Easement in gross

None

Wynona is a Texas tenant with a written estate-for-years tenancy. How much notice must she give her landlord if she wants to terminate her lease upon expiration of the lease term? 30 days None Three weeks Two weeks

Four years

You and your new buyer client have just signed a buyer agency agreement. Per Texas law, how long must your broker keep a copy of the agreement on file? Eighteen months Four years Six months Two years

B (It allows investors to defer capital gains taxes when selling a property, provided they buy a like-kind property within a set amount of time)

You have an investor client who's interested in learning more about the advantages of a 1031 tax-deferred exchange. What might you tell him? A. It allows an investor to avoid ever paying taxes from gains realized on their investments. B. It allows investors to defer capital gains taxes when selling a property, provided they buy a like-kind property within a set amount of time. C. It offsets capital gains for homeowners who have lived in the home for at least two years. D. It provides a tax shelter for non-real estate investments.

B (Minutes of the last several association meetings)

You're representing a buyer of a condo. You ask for CC&Rs and __________. A. Demographics of unit owners B. Minutes of the last several association meetings C. Names of all other unit owners D. Utility bills and records

D (Represent the client's interest in all negotiations and transactions regarding the lease of the property)

You're representing a tenant client in a lease transaction. Which of the following duties do you owe your client? A. Collect the tenant's first month's rent and security deposit, and present it to the owner after the lease agreement has been signed B. Determine what clauses should be included in the lease agreement and the monthly lease amount C. Market the property that is being leased D. Represent the client's interest in all negotiations and transactions regarding the lease of the property

D (Gather information about the type of property that the owner wants to lease, and then list and market the property accordingly)

You're representing an owner client in a lease transaction. Which of the following duties do you owe your client? A. Assist the owner in locating a property to lease B. Collect the first month's rent and security deposit from the tenant and hold it in a separate bank account for the owner C. Determine what clauses should be included in the lease agreement and the monthly lease amount D. Gather information about the type of property that the owner wants to lease, and then list and market the property accordingly

$720

You're working with a buyer who's purchasing a home that appraised at $80,000. The buyer is obtaining a 90% loan, and the lender will charge a one-point origination fee at closing. How much will the loan origination fee be? $712 $720 $728 $800

C (The buyer doesn't have to have the money for a traditional down payment)

Your buyer client is considering a contract for deed. Which of the following is an advantage of such an arrangement for the buyer? A. If the buyer has to default for any reason, all prior payments are refunded. B. The buyer can avoid paying federal capital gains taxes all at once. C. The buyer doesn't have to have the money for a traditional down payment. D. The buyer takes immediate ownership of the property.

Addendum

Your buyer, Billy, wants to make an offer on the craftsman house he saw today, but he wants the sellers to start the paperwork for a tax reassessment before closing. This isn't part of the standard sales contract in your area. What will you use to accomplish this request? Addendum Amendment Annotation Appendix

Lead

Your buyers love the 1891 Victorian they have under contract, but they want to get both the water and the paint tested as soon as possible. What are they testing for in both water and paint? Asbestos Lead Mold Radon

A loan origination fee

______ is a fee that a lender charges for the processing of a loan. A discount point A loan origination fee Interest Usury

Annual percentage rate

_______ is a standardized measure for interest rates and other costs of the loan. Annual percentage rate Discount rate Federal funds rate Prime rate

Unenforceable

A contract that is in theory legal, but is not defensible in court, would be considered _________. Unenforceable Valid Void Voidable

option agreement

A(n) ______ is an offer to purchase a specific piece of real estate, but without the obligation to buy it. Buyer agency agreement Listing agreement Option agreement Sales contract