Principles of Real Estate 1

Calculate the equity in a property currently valued at $225,000 if the owner still owes $250,000 on the mortgage loan.

-$25,000

Anastasia wants to get her real estate license and bring together buyers and sellers. This means she will be involved in which of the following?

Brokerage

Which of the following describes a modular home?

Built using precise pieces and very energy efficient

Which of the following is NOT a characteristic of a corporation?

Corporations are tangible and nontaxable.

Private mortgage insurance protects the lender in case the borrower takes which of the following actions?

Defaults on the loan

Which fiduciary duty is missing: loyalty, reasonable skill and care, obedience, confidentiality, accounting, and ______?

Disclosure

Without this easement—usually involving access to a road—the owner requiring the right of passage would be landlocked.

Easement by necessity

Gene and Alex bought a property that backed up to a neighborhood park. The previous owner mentioned that ever since the park was built eight years ago, the next door neighbor who works at the park has cut through the yard to get to the park rather than going around via the streets, which saves about half a mile. What kind of easement is this?

Easement by prescription

Because of the topography of Elsie's and Lawrence's respective yards, Elsie had to install her fence at the top of a hill, which is actually two feet over Lawrence's property line. What word or phrase best describes Elsie's fence?

Encroachment

Justin decided to build a privacy fence around his yard. He thought the fence was along the property line, but it turns out he built it one foot inside his neighbor's property. What will an inspector document as existing on the neighboring property?

Encroachment

According to TRELA, when is a consumer, licensee, or subagent to a real estate transaction liable for misrepresentations or concealment of material facts?

If the individual had knowledge of the falsity and failed to disclose it

Which of the following scenarios best describes a net listing?

Maeve wants to get at least $350,000 when she sells her property and tells her listing agent, Stan, that he can keep anything above that amount.

A consumer is moving to a new area and uses social media to try to line up a real estate professional to help him find a new home. He asks how much he'll need to pay his licensee. One firm he contacts tells him that all licensees in the area charge at least 2%. What antitrust violation does this imply?

Price fixing

According to the Department of Justice, an agreement between competitors to establish or adhere to uniform price discounts is a type of which antitrust violation?

Price fixing

Niall is helping his seller client prepare a Bill of Sale. What amount should they write in for the sale price?

The amount that was negotiated with the buyer

A lot measuring 108,900 square feet is for sale. How many acres is this?

Two-and-a-half An acre is 43,560 square feet, so 108,900 square feet is equal to two-and-a-half acres.

Which of these scenarios describes a voluntary specific lien?

When Rob and Sue bought their house using a mortgage, the lender put a lien on the property.

When does express agency exist?

When a written or oral agreement is in place

In Texas, when is a licensee required to provide an agency disclosure to the party they are not representing in a transaction?

When engaging in substantive dialogue about a specific property

When measuring elevations, what is used instead of a point of beginning?

Datum

Sean had been showing homes to potential clients, Amy and Chris Williams, for weeks before the couple finally agreed to sign a buyer agency agreement with him and acknowledge him as their agent. What type of agency is this considered?

Agency by ratification

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?

Deceptive Trade Practices-Consumer Protection Act

What language may be included in a contract after the assignor's name to make it clear that the contract is assignable?

"And/or assigns"

How should you respond if your buyer says the following? "We're looking for a three-bedroom, two-bathroom home. We have young children, so we want to make sure we're in a good neighborhood—somewhere safe, where we'll find a lot of good families and neighbor kids that we'd want our children to play with."

"If you provide me with specific neighborhood names, I can certainly look for homes in those areas. You can learn about the different neighborhoods in the area at neighborhoodscout.com."

Which phrase should Melanie use to avoid excluding anyone on the basis of familial status?

"Quiet street"

Your client Frank is interested in selling a 54,450-square-foot lot. A comparable property in the vicinity sold for $3,500 per acre. What would be reasonable list price for Frank's property?

$4,375

The Education Standards Advisory Committee is comprised of ______ members.

12

Which of the following is the best example of a tie-in arrangement?

A business requires its clients to also purchase services from another business.

Which of the following best describes a buyer agency agreement?

A legally binding, written contract between a potential property buyer and a buyer's agent

Which one of the following options best describes a sales contract?

A legally binding, written contract between a property's potential buyer and seller

When accepting compensation, which of the following statements is most accurate, according to the NAR Code of Ethics?

A licensee shall not accept compensation from more than one party to a transaction without the consent of all parties.

What is a special flood hazard area?

An area where flood insurance is mandatory

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

Where might a legal description be found?

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

Clarisse, your client, is a traveling salesperson. What type of housing would she likely prefer?

Condominium, for its easy living

In which of the following types of contracts does one or more of the contract's terms still need to be completed?

Executory contract

Which of the following is true regarding express agreements?

Express agreements may be written or verbal.

Commingling is ______.

Forbidden by law in all states

A Texas broker must maintain written records of all trust fund activity for how long?

Four years

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

Fraud in Real Estate and Stock Transactions

To what type of estate does pur autre vie apply?

Freehold estate

Property managers most often serve as which type of agent?

General

Which statement describes a code of ethics?

Guidelines for conduct

Jim is a listing agent. What offers must he present to his client, and when?

He must present all offers as soon as is practical.

Which of the following statements about escheat in Texas is true?

In Texas, the state has the right to use the power of escheat.

Rhonda and Oliver bought an old schoolhouse with the hope of transforming it into a residence. They owned the property as joint tenants. After Oliver died, how did Rhonda own the building?

In severalty

Which of the following is a true statement about the Texas seller's disclosure of property condition law?

It requires sellers of single-family residential properties to disclose material facts to buyers.

Which form of real property ownership (for owners other than married couples) means there's equal ownership shares with undivided possession rights?

Joint tenancy

Joshua won his lawsuit against Savannah. The judge awarded him $30,000. Savannah was unable to pay, so the court placed a ______ on her home.

Judgment lien

Mika has borrowed $5,000 from her cousin Jun and not repaid it. Now, Mika is selling her house to Jun's nephew, Cheong. As Mika writes up the contract, Jun tells her that if she doesn't sell the house at a steeply discounted price, Jun will take the matter of the $5,000 to court. What is true about this situation?

Jun's influence is invalidating Mika's consent.

Which of the following best indicates that Harold is Kelsey's seller client?

Kelsey and Harold have a signed agency agreement.

In contract law, a "legally competent" party has the ______ to enter into a contract.

Legal and mental capacity

Shannon is reading through paperwork related to her upcoming home purchase when she comes across the following: "Southwest quarter of Southwest quarter (SW ¼ of SW ¼) and West Half of Southeast quarter of Southwest quarter (W½ SE¼ SW¼) of Section Eleven (11), Township Four (4) North of Range Eight (8) West." What did Shannon just find?

Legal description

Stan and Emile are arguing over their shared lot line, since Stan thinks that Emile planted a privet hedge on Stan's property. Stan filed a civil legal action against Emile. Which of these would the court use to determine the actual lot line?

Legal descriptions of both properties

Which type of value is found on the MLS?

List price.

What type of water rights are granted to landowners whose land borders closed bodies of water, such as lakes or the ocean?

Littoral

Martin placed all of his real estate investments in a trust, and the proceeds are distributed through the trust to his son Nathan. Martin still manages the properties indirectly, and Nathan currently benefits, as he's past the required beneficiary age of 18. What type of trust is this?

Living trust

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 and Tom.

The ESAC does which of the following?

Makes recommendations for improvements to real estate education.

For what are datums and benchmarks used?

Measuring elevations

How do you determine the cost of purchasing land?

Multiply the land area by the cost per unit

Nathan is a sales agent. He convinced one of his clients to purchase in a specific area of town, guaranteeing that it would be the next hot spot in the city and that he was sure to make a profit when his client sold. Six months after closing on the home, his client lost his job and needed to sell. The area had taken a turn, and the client's home was now worth less than what he paid for it. Nathan should have never promised his client a profit. Which of the following is true?

Nathan committed a prohibited action and could have his license suspended or revoked by TREC.

Four brokerage firms operate in the same small city as Jackson's firm. All the firms charge approximately the same listing commission and pay approximately the same cooperating commission to the selling broker. The commission splits within each firm are also similar. Is this an antitrust violation? Why or why not?

Not necessarily. The fact that the firms' commission rates and splits are similar doesn't necessarily mean they agreed to fix those values.

Parker entered into a contract with seller Derrick to buy Derrick's home. Before finalizing the sale, Parker had a change of heart and decided to renounce all worldly possessions. He no longer wanted to buy Derrick's home. With Derrick's approval, Parker is released and Parker's brother, Tom, takes Parker's place as the buyer in the purchase contract. Of what is this an example?

Novation

How long after the date of filing a license application does an applicant have to pass the real estate licensing examination in Texas?

One Year

Before a broker in Texas can start using an assumed business name in an advertisement, the broker must register the name with TREC and:

Provide evidence of legal authority to use the assumed business name in Texas.

Which legal description method is regulated by the U.S. Department of the Interior's Bureau of Land Management?

Rectangular government survey

Which of the following legal descriptions is not used in Texas?

Rectangular government survey

The Community Reinvestment Act requires lenders to invest in development and ______ efforts that will enable low- and moderate-income individuals and families to afford a home.

Rehabilitation

Anyone working for a property management company in Texas and who works for more than one owner is _______.

Required to have a minimum of a sales agent license to collect rent and perform other real estate functions

Jayne was tired of waiting for her subcontractor to get his part of the deal done. The agreed-upon deadlines came and went, and Jayne lost money waiting for the subcontractor to come through. She decided that if the subcontractor weren't going to honor his commitments, neither was she, so Jayne consulted with her attorney and then terminated the contract. This is an example of ______.

Rescinding the contract unilaterally

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

Restrictive covenants

Tina has fee simple ownership of her timeshare unit. Which of these is NOT an example of the type of ownership she may have?

Right-to-use

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

Riparian

Ron's company leased a building so that it could build an escape room experience. After operating for two years, attendance (and thus its profits) started to drop significantly, so it decided to close the location. When the workers started taking down the installation, they realized that some of the structures would damage the walls if they were to try to remove them. Which of these is true about these trade fixtures?

Ron may take the fixtures as long as he repairs any damage caused by removal.

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?

Scarcity

In a contract, consideration is the giving of ______.

Something of value in exchange for something of value

What's it called when lien holders allow another lien holder's claim to have priority over their own?

Subordination agreement

Jasmine is in the market for a new property for her, her partner, and their young child. Tanner is Jasmine's agent and has shown her several properties. Even though several properties meet the criteria his client is seeking, Tanner has intentionally weeded out properties close to the local college campus, because he doesn't think the location would be suitable for a family with young children. What, if anything, has Tanner done wrong?

Tanner has discriminated against Jasmine using familial status as a reason for not showing her properties.

Which type of government power uses the legal power of a lien?

Taxation

Which of the following trusts is created according to the terms of the will of a deceased person?

Testamentary

James is a real estate licensee in Texas. A complaint has been filed through the TWCCRD against James for a fair housing violation. Which of the following agencies could impose sanctions on James?

The TWCCRD and the Real Estate Commission

Anderson is interested in becoming a real estate sales agent in Texas. After he completes the requirements for obtaining his license to practice, which agency will administer Anderson's license?

The Texas Real Estate Commission

In Texas, whose responsibility is it to supervise associated licensees and review transactional paperwork and advertising?

The broker's

What happens when a municipality completes an "in rem" foreclosure?

The municipality obtains title to the property.

Identify which description best fits that of an urban homestead in Texas.

The property is located within the limits of a municipality and does not exceed 10 acres in size.

Which of the following best describes a net listing?

The seller specifies a desired price for the property and agrees to pay the broker any amount received that's more than that price.

Simon is a buyer represented by Peter. Peter shows Simon several homes currently on the market. What is Peter's relationship to the sellers, if he doesn't represent them?

The sellers are Peter's customers.

Which of the following is a legitimate reason to terminate a buyer agency agreement?

The term of the agreement has expired.

What would happen if you bought a house and later found out that there were unpaid liens against the property?

The unpaid liens could trigger a foreclosure on your property.

In the real estate market, when demand exceeds supply, what does it mean?

There are more buyers than available homes, and prices will be higher.

In what way is a townhome similar to a condominium?

They both typically have HOA dues.

Which of the following actions can licensees take related to signs?

They can place signs on an owner's property with the owner's written consent.

Which of the following is true about net listings?

They often involve a conflict of interest.

How do licensees create implied agency?

Through the parties' actions

Ellen and Isaac have a timeshare near the Grand Canyon. They'll be able to use it for two weeks every September for the next eight years. What type of timeshare is this?

Timeshare use

Which of the following is a recommended way for listing brokers to use the MLS?

To advertise their listings.

Which of the following best describes the purpose of a buyer agency agreement?

To identify the terms of the buyer agent/buyer agency relationship

Which one of the following is a true statement?

Topography determines how the land can be used and where utilities and dwellings can be located

What's the best definition of legal purpose?

Written for a lawful objective