Missed and guessed Q's from Law of Contracts

Texas licensee Alexandra is helping her clients, the Kents, fill out the Sales Price section of the TREC residential One to Four Family (resale) contract. What amount will they put in this space?

The Kents' purchase offer

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 ______.

Okay if Marvin's client required that form

Prior to closing, who should request a loan payoff statement?

Th seller

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

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

Appurtenance

Before the title company will issue an insurance policy to a Texas buyer, which of the following must the seller furnish to the buyer?

A commitment

Charles is selling his property to Seth. Charles is financing part of the transaction for Seth, who will make payments to Charles while Charles retains the property title. What is this an example of?

A land contract

An amendment to a contract is defined as which of the following?

A modification

What is an annual percentage rate?

A standardized measure for interest rates and other costs of the loan

The appraisal on Jean's property came in at $22,000 less than the agreed-upon sales price, so the buyer, Thomas, wants to renegotiate the terms. If they can come up with a new price that is satisfactory to both parties, what will they use to document this?

Amendment A change to an existing sales contract is called an amendment, which changes one or more of the contract's original terms.

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

Texas licensee Chip needs a form. TREC hasn't promulgated a form for this specific use, but does have an approved form available. Chip should ______.

Ask his broker which form to use.

Ken, Barbie, and Skipper owned a property as a joint tenancy. When Skipper moved out of state, she sold her interest to Midge. Two years later, Ken died. How is the interest in the property divided?

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

According to the TREC residential One to Four Family (resale) contract, If one of the parties refuses or fails to sign the initial release for earnest money during the demand for earnest money process, that party can ______.

Be liable for damages, the earnest money, attorney fees, and all court costs.

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

Which required clause in a Texas deed acknowledges the grantor's receipt of the grantee's consideration?

Consideration acknowledgment

A buyer and seller sign a sales contract in Texas on Feb. 15. It provides a 7-day deadline for the buyer to deposit earnest money. The buyer is in default if they wait until ________ to deposit the earnest money.

Feb. 23

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 determinable

Which type of an estate doesn't end automatically when the stated event or condition occurs?

Fee simple subject to a condition subsequent

What purpose does the promissory note serve?

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

You're representing a buyer of a condo. You ask for CC&Rs and __________.

Minutes of the last several association meetings

What is the buyer of a condominium required to pay that a co-op buyer isn't?

Mortgage recording tax

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?

Negotiate leases.

Per the TREC One to Four Family Residential Contract (Resale), which of the following statements about lender-required repairs is true?

Neither party is obligated to pay for lender-required repairs.

If a broker helps a client identify a potential property, and then just after the agreement terminates, the buyer purchases the property directly with the seller, or through another broker, the first broker is still owed their commission. This provision is known as the ______.

Protection period

What is a down payment?

The amount of money the buyer plans to bring to the table as part of the closing costs

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 broker

Before closing, evidence of title and title insurance should be provided by _____.

The buyer

The secondary mortgage market operates in part to _____.

Service loans

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?

Happy Bank

Compared with condominiums, the monthly fees for a cooperative owner are typically ______.

Higher Monthly fees for cooperatives are generally higher because they include taxes, mortgage payments, and fees for maintaining common areas and facilities.

Pledging a property for a mortgage is known as _________.

Hypothecation

Who or what is the mortgagee?

Lender

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?

Locate and qualify potential tenants.

Which covenant is used by the grantor to assure the grantee that they will not be disturbed in the use of the property because of a title defect passed on by the grantor?

Quiet enjoyment

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?

Sales contract

If Jemma were looking for the requirements for completing a promulgated form in Texas, where should she look?

Texas Property Code

A Texas seller should complete the seller disclosure form at which phase in the transaction?

Time of Listing

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

Unenforceable

When does a transfer tax become payable?

Upon recording of the deed

Which option best describes marketable title?

A title to property that's free and clear of liens and only subject to loan payoff and any taxes owed

How many members does TREC appoint to the Broker-Lawyer Committee?

Six

Who or what entity executes a Texas deed?

The grantor

Katherine purchased a property for $255,000, borrowing $242,250. The assessed value of the property is $249,700. The property appraisal came in at $257,000. Which of these amounts is used in calculating the transfer tax?

$255,000 Transfer tax is based on the sales price

At the time of closing, the agents' brokerage firms will close on which contract?

Compensation agreement

Through which covenant type does a grantor promise that they actually hold the title specified in the deed?

Seisin

How many days after receiving the buyer's list of objections to defects, exceptions, or encumbrances to title does the seller have to cure the objections under the TREC One to Four Family Residential Contract (Resale)?

15 days

Mindy and Seth have had to terminate their TREC One to Four Family Residential Contract (Resale). 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?

15 days

What's the maximum size for a rural homestead family in Texas?

200 acres

Items that aren't attached permanently to the real property but are assumed to belong to the house, such as draperies, fireplace inserts and screens, and above-ground swimming pools, are referred to in the Property section of the TREC residential One to Four Family (resale) contract as ______.

Accessories

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

Texas homeowner James is required to present any prospective buyers with a notice as to the legal and economic risks of purchasing coastal property. Which TREC addendum is James required to include?

Addendum for Property Located Seaward of the Gulf Intracoastal Waterway

Which TREC addendum notifies buyers of the risks of purchasing coastal property?

Addendum for Property Located Seaward of the Gulf Intracoastal Waterway

At the closing of a sales transaction, which parties close on the compensation agreement?

Agents' brokerage firms

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

Buyer and seller

At the closing of a sales transaction, which parties close on the brokerage agreement?

Buyer and seller agents

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?

Buyers can terminate the contract and have their earnest money refunded.

How does a lender in the primary mortgage market earn money when a loan is originated?

By charging loan origination fees

Which of these is a member of the primary mortgage market?

CitiBank

Who's responsible for calculating prorations at closing?

Closing agent

With cooperatives, the resident's share of mortgage interest and real estate taxes is ______.

Deductible on personal income tax returns

Through which method of involuntary alienation may the government take private land for public use?

Eminent Domain

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

In accordance with the TREC One to Four Family Residential Contract (Resale), which of the following expenses is split equally between the seller and the buyer?

Escrow fees

Hilda is a buyer in a sales transaction in Texas. 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?

Extend the time of performance up to 15 days.

Which of the following statements about the contract for deed default process in Texas is true?

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

If your aunt asks your sister to paint her house and pays her $1,000, asks your brother to plant her garden and pays him $1,000, and then asks you to build her deck and doesn't pay you, this would feel like a breach of which type of contract?

Implied

Per the TREC One to Four Family Residential Contract (Resale), where are the parties' obligations with regard to brokers' fees to be found?

In the parties' respective agency agreements

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?

Indestructibility

Why is a home inspection recommended?

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

Which new Texas licensee is exempt from liability under the 2011 amendment to the DTPA?

Justin who accidentally advised his client incorrectly.

At the closing of a sales transaction, which parties close on the mortgage loan commitment?

Lender's representative and buyer

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 ______.

Liable for the rent for the term of the lease

Which is the correct way to describe a property on the Texas sales contract?

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

The trustor in a deed of trust is responsible for ______.

Making timely payments to pay off the loan Remember that the trustor is the borrower.

What type of loan fails to meet the criteria set forth by Fannie Mae and Freddie Mac?

Non-conforming loan

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?

Performance

In what form can a buyer pay earnest money?

Personal check

In accordance with the TREC One to Four Family Residential Contract (Resale), which of the following expenses are paid by the seller?

Releases of existing liens

If the buyer is putting earnest money down, which of the following statements is true?

The buyer must specify the exact amount in the contract.

Which of the following statements about the closing date in the TREC One to Four Family Residential Contract (Resale) is true?

The buyer selects the settlement date.

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) ?

The deadline for delivery is automatically extended.

Which of the following statements about the escrow agent's role in a residential sales transaction in Texas is true?

The escrow agent is not a party to the contract.

Which of these is the best definition of a straight loan?

The periodic payments go to interest only and the entire principal amount is due at the end of the term. With an amortized loan, the monthly payment covers both principal and interest until the principal is paid off. Payments for a straight loan are applied only to interest, but the entire principal is due in a lump sum at the end of the loan term.

According to custom, who pays the costs on the day of closing for property taxes, utilities, etc.?

The seller

Per the Casualty Loss section of the TREC One to Four Family Residential Contract (Resale), who is responsible for insuring the property until closing?

The seller

Per the Casualty Loss section of the TREC One to Four Family Residential Contract (Resale), who's responsible for restoring the property to its previous condition in the event the property is damaged or destroyed?

The seller

Which of the following is a true statement about the sales contract form in Texas?

There is no one standard form in Texas for the sales contract.

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

Three

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.

Three to five days'

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?

Timeshare estate

What's the purpose of pre-qualification?

To determine in which price range the buyer should shop

What is the purpose of the Broker-Lawyer Committee?

To draft contract forms

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?

Townhome

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

Trustee

In a deed of trust situation, the borrower/property owner is a ______.

Trustor

Lack of capacity has made the contract non-binding, so the contract is _____.

Voidable

Which form of alienation occurs with the owner's consent?

Voluntary

At what point in a real estate transaction is transfer tax payable?

When the deed is recorded

What is specified in TREC's Loan Assumption Addendum?

Whether the seller will remain responsible for the note on the loan