Promulgated Contracts Quizes
Which of the following might you see in the Special Provisions paragraph of the sales contract? A) "Additional sellers include..." B) "Buyer's earnest money check is hereby received for $8,000." C) "Sales price to be $257,500." D) " This contract is binding upon the parties."
A) "Additional sellers include..." This section may be used to clarify facts of the contract. It's not to be used in place of a promulgated form, if one exists to cover the situation.
Your seller client must include a lead-based paint disclosure if her home was built prior to what year? A) 1978 B) 1986 C) 1998 D) 2001
A) 1978 A lead-based paint disclosure must be included if the home was built prior to 1978.
What is the term length for a member of the Texas Real Estate Commission? A) 6 years B) there is no expiration on the terms of commission members, but they must be reappointed annually C) 3 years D) 2 years
A) 6 years Those appointed to TREC serve staggered six-year terms.
What type of contract do you have once the seller has accepted the buyer's offer in writing and the buyer has been notified of the acceptance? A) enforceable B) executed C) executive D) unenforceable
A) enforceable Assuming this contract contains all the essential elements of a valid contract, it's an enforceable contract that will stand up in court, because it has legal effect or force.
How would a licensee explain seller financing to a buyer? A) "Seller financing is another term for comparing the listing price of the property to the market." B) "Seller financing is when the buyer assumes the sellers mortgage loan." C) "Seller financing is when the seller accepts the buyer's third-party financing arrangements as part of the offer." D) "Seller financing is when the seller extends credit to the buyer for the purchase of the property. The buyer then pays back the loan with
D) "Seller financing is when the seller extends credit to the buyer for the purchase of the property. The buyer then pays back the loan with interest, over time." Seller financing is when the seller extends credit to the buyer for the purchase of the property. The licensee checks the appropriate box on the sales contract and completes the Seller Financing Addendum.
When does timing for certain contract requirements begin? A) on the date, the buyer initials the contract B) on the date, the contract is executed C) on the date, the seller initials the contract D) on the first full day after the executed date (effective)
D) on the first full day after the executed date (effective) The time period for certain contract requirements begins one day after the executed date.
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
A) acting outside the scope of one's license; offering legal advice or drafting legal forms The unauthorized practice of law is defined as acting outside, the scope of one's license, such as by offering legal advice or by drafting legal forms.
Which party to the contract will provide the sales price and financing to be used in the transaction? A) buyer B) buyers agent C) listing agent D) seller
A) buyer The buyer will provide the sales price in the sales contract, which is also known as the offer to purchase. The seller may then reject, accept, or counter that offer.
When crops are excluded from the sale of a farm or ranch, by when must they be removed from the property? A) 30 days before closing B) 60 days after closing C) 90 days after closing D) before closing
D) before closing If crops are excluded from the sale, they must be removed before closing.
Which of the following is the committee that is responsible for drafting and revising contract forms for TREC? A) The Accreditation Committee B) The Broker-Lawyer Committee C) The Review Committee D) TREC Committee for Contracts
B) The Broker-Lawyer Committee It's the Broker-Lawyer Committee's responsibility to draft and revise contract forms so they can be standardized for use by licensees.
On what TREC promulgated contract form does the seller need to enter information about crops and other assets? A) Farm and Ranch B) Minerals, Oil, and Timber C) One to Four Family D) Unimproved Property
A) Farm and Ranch Crops are a consideration with transactions involving agricultural property, such as farms and ranches.
If a contract is executed on January 1, what is the first day of the contingency period? A) February 1 B) January 1 C) January 2 D) January 4
C) January 2 The timing for certain contract requirements begins the first full day after the executed date.
What's providing legal advice to a client considered? A) a good habit B) going above and beyond C) great customer service D) the unauthorized practice of law
D) the unauthorized practice of law Offering legal advice to a client is considered the unauthorized practice of law.
If a fire occurs at a property prior to closing, what options does the buyer have? A) file a suit with the city B) sue the seller for negligence C) terminate, and forfeit any earnest money deposited D) terminate and receive a refund of earnest money
D) terminate and receive a refund of earnest money The buyer has several options, one of them being termination. Because the buyer is not at fault, the buyers earnest money would be refunded.
Unlike condo owners townhome owners have fee simple title to what? A) common area B) garage C) land beneath their units D) Owners' association
C) land beneath their units Townhome owners have fees, simple title to the land beneath their units, while condo owners do not.
The New Home Contract (Incomplete Construction) doesn't include improvements accessories or exclusions in the property section. Why is that? A) the home is unfinished B) these items appear in the property conditions section of the contract C) these items appear in the survey section of the contract D) these items should be listed under special provisions on the contract
A) the home is unfinished Because the home is unfinished, these items don't apply. Plans and specifications are included in the construction documents and appended to this contract.
What is the name of a document that describes additions to the scope of a contract? A) Addendum B) Agreement of parties C) Default D) Special Provisions
A) Addendum An addendum contains this information. It's important to indicate which addenda are used in the agreement of parties section of the contract.
When does buyer possession usually occur? A) after closing and funding B) one day after funding C) on the day before funding D) three days after closing
A) after closing and funding The buyer's possession of the property normally occurs after closing and funding.
According to the Addendum for Property Subject to Mandatory Membership in a Property Owners Association, what can buyers do if they receive the subdivision information and don't like it? A) they can negotiate a lower price with the seller B) they can negotiate with the POA to waive one or more of its requirements C) they can terminate the contract at any time D) they can terminate the contract during the timeframe specified in the addendum
D) they can terminate the contract during the timeframe specified in the addendum Buyers can terminate the contract, but they need to do so within the timeframe specified in the addendum.
Your client has fallen in love with a property and want to buy it. The only problem is that the property is already under contract. What Texas addendum can you help your client complete so that if the first contract falls through, your client will be next in line to purchase the home? A) Addendum for "Back-Up" Contract B) Addendum for Property Subject to Mandatory Membership in an Owners Association C) Addendum for Sale of Other Property by Buyer D) Short Sale Addendum
A) Addendum for "Back-Up" Contract The Addendum for "Back-Up" Contract allows the seller to negotiate with a second buyer when the property is already under contract. The back-up contract is contingent upon the termination of the first contract.
If a seller is willing to allow the buyer to assume his mortgage, what other TREC-promulgated addendum, besides the Loan Assumption Addendum, might the seller use to limit the seller's responsibility if the buyer defaults on the loan? A) Addendum for the Release of Liability on Assumed Loan and/or Restoration of Seller's VA Entitlement B) Non-Realty Items Addendum C) Seller Financing Addendum D) Third Party Financing Addendum
A) Addendum for the Release of Liability on Assumed Loan and/or Restoration of Seller's VA Entitlement If the parties apply to for a release of liability of the seller, they most likely would want to also use the Addendum for the Release of Liability on Assumed Loan and/or Restoration of Seller's VA Entitlement.
You're helping your client with a transaction and are careful to include the disposition of crops. What TREC promulgated contract form requires this information? A) Farm and Ranch B) New Home Contract (Incomplete Construction) C) Oil, Mineral, Gas, and Timber Land D) One to Four Family
A) Farm and Ranch Crops are a consideration with transactions involving agricultural property, such as farms and ranches.
Martin is selling his condo to Sheila. A fire has occurred and damaged the unit. Who's responsible for making the repairs? A) Martin B) Martin and Sheila C) Sheila D) the condominium association
A) Martin The seller must return the unit to its previous condition, as soon as possible, and before the closing date. If repairs can't be made by the closing date, the buyer has options on how to proceed.
What is the purpose of the Addendum for Sale of Other Property by Buyer? A) To disclose to the seller that the buyer has a contingency to sell their current property B) to notify the seller that the buyer currently owns another home C) to notify the seller that the buyer is interested in another property D) to provide the seller with a list of other properties that the buyer has sold in the past
A) To disclose to the seller that the buyer has a contingency to sell their current property If the buyer's purchase of the property is contingent upon the buyer having to sell their own property, first, the buyer must disclose this to the seller by attaching the Addendum for Sale of Other Property by Buyer document to the sales contract.
Which of the following parties to a sales contract would be in default of the TREC One to Four Family Residential Contract (Resale)? A) a buyer, who agreed to apply for an FHA loan by April 3, but hasn't done so by April 10 B) a buyer who was denied a loan for the property, and immediately informed the seller in writing C) a seller who countered the first offer she received on her home D) a seller whose property was destroyed by a tornado the day before closing, so she cannot restore the
A) a buyer, who agreed to apply for an FHA loan by April 3, but hasn't done so by April 10 Someone who doesn't do something promised in the contract, or doesn't do something by the agreed-upon date in the contract, is considered in default of the TREC One to Four Family Residential Contract (Resale).
As specified in the TREC Residential Condominium Contract (Resale), what must the seller of a condo prepare for the buyer at least three months before delivery to the buyer? A) a resale certificate B) a title policy C) condominium documents D) warranties for all appliances
A) a resale certificate The resale certificate, which contains information on HOA, financials, assessments, pending lawsuits, and more must be provided to the buyer, no more than three months before the date it is delivered to the buyer.
If, under the terms of an agreement, a buyer is supposed to put down an earnest deposit of $15,000, but actually only puts down $10,000, which the seller accepts in order to complete the sale, what is the seller doing to remedy the breach of contract? A) accepting partial performance B) rescinding the contract unilaterally C) suing for damages D) suing for specific performance
A) accepting partial performance In this example, the seller accepts partial performance, as a means of remedying the breach of contract.
What must a seller of a new construction property disclosed to prospective buyers? A) all known defects and issues that would impact a buyers decision to buy B) nothing; the Seller's Disclosure Notice is not required C) the buyers must be provided with a Seller's Disclosure Notice D) whether the property was ever divided
A) all known defects and issues that would impact a buyers decision to buy No Seller's Disclosure Notice is required for new homes, but the seller is required to disclose any issue with the property that would affect the buyers use of it.
What information is included in the Broker Information section of the TREC One to Four Family Residential Contract (Resale)? A) both the listing and selling agents' brokers' information B) the buyers brokers information only C) the commission fees, being paid to both the buyer's broker and the seller's broker D) the seller's broker's information only
A) both the listing and selling agents' brokers' information The broker information section is for all brokers associated with the transaction to fill in information about the agents and companies.
You'd like to add your own touches to the TREC forms that are being used in your office. How can you modify the forms? A) by adding your brokers business logo B) by replacing the Equal Housing Opportunity logo with your own C) by replacing the form title with the name of your broker D) by replacing the number with today's date
A) by adding your brokers business logo You can add your brokers, business name or logo as long as it is at the top, outside the border. You can also insert your brokers name into any blanks provided for that purpose.
Your client is in the market for some unimproved land. She's concerned that she doesn't know enough about the risks involved, and how to interpret all the information. What should you tell her? A) it would be wise to consult a real estate attorney before making a purchasing decision B) she shouldn't worry, because you are very experienced in this area of real estate C) you can provide all the advice she will need D) you will investigate and make sure she has the information she needs
A) it would be wise to consult a real estate attorney before making a purchasing decision There are many pitfalls to purchasing unimproved property. Remember you're not expected to be an expert in everything. The best course of action is to advise your client to consult a real estate attorney.
How many members does TREC have? A) 10 B) 9 C) 6 D) 3
B) 9 The governor appoints the nine members of the commission.
Which of the following is used to make a change to the original terms of the contract? A) a hand-written change notice B) an amendment form C) an electronic generated memo D) a TREC-promulgated addendum form
B) an amendment form When added, an amendment changes the original terms of the sales contract. This is unlike an addendum, which may be added, without changing other terms already agreed upon in the sales contract.
To make an offer attractive to the seller, what can a buyer include in the offer to show sincere intention to purchase the property? A) a loan origination fee B) an earnest money deposit C) an option fee D) a pre-approval letter from a lender
B) an earnest money deposit Buyers can place an earnest money deposit in escrow to show the seller a good faith intention to complete a transaction.
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 clients actions C) using existing forms an attorney has reviewed D) using standard language for addenda
B) interpreting the legal consequences of a clients actions Interpreting legal consequences should be left to someone who practices law (an attorney). If a licensee does this, it's an unauthorized practice of law.
What is another term for earnest money that is dispersed to the non-defaulting party when a contract terminates due to default? A) consequential funds B) liquidated damages C) lost deposit D) restitution money
B) liquidated damages When a party to a contract default, the non-defaulting party can receive the earnest money as liquidated damages.
The Addendum for Property Subject to Mandatory Membership in a Property Owners Association is meant to do which of the following? A) help sellers reduce the POA fees that they must pay when they transfer their properties B) make buyers aware of the CC&R's that govern the neighborhood of the house they're purchasing C) make POA membership, optional for buyers of houses within a POA jurisdiction D) relieve seller of the burden of providing the subdivision information to buyers
B) make buyers aware of the CC&R's that govern the neighborhood of the house they're purchasing This addendum is meant to make buyers aware of the POA's rules and regulations that are in effect in the neighborhood where the house they are buying is located.
A week from closing on a sales contract, a buyer loses her job and notifies the seller right away, because without a job, the buyer won't be able to get a mortgage. The seller understands the situation, and the two agree to cancel the contract. What have the parties agreed to in this situation? A) acceptance of partial performance B) mutual rescission C) suing for specific performance D) unilateral rescission
B) mutual rescission Mutual rescission occurs when the buyer and seller agreed to cancel the contract.
You have a signed contract in your hand but it's missing the effective date. Is this a binding contract? A) no, the contract isn't binding because the brokers haven't agreed on their commission B) no, the contract isn't binding because the effective date hasn't been filled in C) yes, the contract is binding because both parties have signed it D) yes, the contract is binding because it's in writing
B) no, the contract isn't binding because the effective date hasn't been filled in Until the contract is finalized with the filled-in effective date, and the parties are notified of the acceptance and sent a copy of the finalized contract. The property is still technically for sale.
What is your responsibility when presenting offers to a client? A) don't present offers below the asking price B) present all offers in a timely manner C) present only offers at asking price D) use your judgment to decide which offers to present
B) present all offers in a timely manner It is your responsibility to present all offers to a client in a timely manner.
Buyers of newly-constructed homes must follow the procedures established in Chapter 27 of the Texas Property Code in order to do what? A) have access to the home before it's completed B) recover damages for construction defects C) request changes to the original plans D) take occupancy
B) recover damages for construction defects To recover damages for construction defects, buyers of newly constructed homes must follow the procedures established in Chapter 27 of the Texas Property Code.
In a contract, consideration is giving of __________. A) notice to attorneys that they may review the terms of the agreement B) something value in exchange for something of value C) some value in exchange for something without value D) thoughtfulness and courtesy to all parties
B) something value in exchange for something of value Consideration is the giving of something of value in exchange for something of value.
What's one key difference between the One to Four Family Residential (Resale) Contract and the New Home Contract (Incomplete Construction)? A) the New Home Contract (Incomplete Construction) doesn't contain a property condition section B) the New Home Contract (Incomplete Construction) doesn't contain improvements, accessories, or exclusions C) the New Home Contract (Incomplete Construction) doesn't have a title policy and survey section D) the New Home Contract (Incomplete Construction) doesn
B) the New Home Contract (Incomplete Construction) doesn't contain improvements, accessories, or exclusions Because the home is new, and still under construction, there may not be improvements, accessories or exclusions. There also won't be access and inspections, construction documents, cost adjustments, buyer's selection, and completion information included.
What does it mean when a Texas buyer accepts a property " as is" under the terms of the TREC One to Four Family Residential Contract (Resale)? A) the buyer has opted not to purchase a residential service contract B) the buyer is accepting the property in its current condition with any and all defects and without warranty C) the buyer is matching the sellers asking price D) the buyer waves the right to inspect the property
B) the buyer is accepting the property in its current condition with any and all defects and without warranty Even if a buyer accepts the property "as is" under the terms of this contract, the buyer still has the right to have the property inspected and to request repairs of items that came up in that inspection.
At whose request may a licensee strike through a clause or line item on a Texas promulgated form if it is not applicable to the transaction? A) the buyer's agent B) the client C) the managing broker D) the seller's agent
B) the client A licensee may only strike through an item on a promulgated form at the clients request, and when it's in the best is interest of the client.
Which of the following data is crucial in a proration? A) the current date B) the number of days in the proration period C) the type of expense for which the proration is charged D) who the prorator is
B) the number of days in the proration period Step one is to calculate the daily rate. Next, the number of days in the proration. Is multiplied by the daily rate to get the prorated amount.
If a checkbox isn't properly filled out, what can happen to the transaction? A) nothing will happen to the transaction B) the transaction will be delayed C) the transaction will be unenforceable D) the transaction will be void
B) the transaction will be delayed It's important that checkboxes and blanks aren't overlooked when completing contracts because doing so can cause a delay in the transaction.
What's the purpose of the Addendum for Back-Up Contract? A) to allow a buyer to make more than one offer on a property in hopes that a seller accepts one of the offers B) to allow a buyer to place a back up offer on a property that's already under contract C) to enable the seller to negotiate a higher offer than the first buyer D) to provide notice to the first buyer that the seller has accepted a second offer, and what that offer is
B) to allow a buyer to place a back up offer on a property that's already under contract The Addendum for Back-Up Contract allows the seller to accept a second buyers offer (the back up offer), and have that offer at the ready. Should the transaction with the first buyer fall through.
What's the purpose of the Condominium Resale Certificate? A) to explain the advantages and disadvantages of membership in a condominium owners association B) to provide information about the condominium owners, association, fees, issues, and finances C) to provide proof that the seller of the condominium has rights of ownership D) to resell condominiums in a quick and efficient manner
B) to provide information about the condominium owners, association, fees, issues, and finances The Condominium Resale Certificate provides information about the condominium owners, association, fees, issues, and finances.
In contract law, when does partial performance occur? A) when a party acknowledges receipt of the contract B) when a party does some, but not all, of what the party has agreed to do C) When a party meets all the terms of the contract D) when a party rejects all terms of the contract
B) when a party does some, but not all, of what the party has agreed to do An example would be when a seller agreed to paint a house prior to closing, but neglected to paint the backside. A buyer would likely accept partial performance to close on time, and may ask for a seller credit to pay for the additional work needed.
Which of the following is an exception to the required use of promulgated contract forms in Texas? A) when a broker drafts a form, because one that meets the needs of the transaction doesn't exist B) when an attorney drafts the necessary form on the owners behalf C) when the home is new construction D) when the transaction involves the resale of a condo unit
B) when an attorney drafts the necessary form on the owners behalf One of the exceptions to the rule is, when the owners attorney drafts the form on the owners behalf.
In the TREC One to Four Family Residential Contract (Resale), the Title Policy paragraph has checkboxes to indicate which of the following? A) to indicate which exceptions apply to the title policy B) whether the seller or the buyer will pay for the title policy C) whether the title policy will be issued to the seller or to the buyer D) whether the title policy issued in the amount of the sales price or in the amount of the financing
B) whether the seller or the buyer will pay for the title policy The check box is in paragraph 6A indicate whether the title policy will be furnished at the seller's or the buyer's expense.
How many days does the Texas seller have to deliver a "commitment for the title insurance" to the buyer under the terms of the TREC One to Four Family Residential Contract (Resale)? A) 10 B) 15 C) 20 D) 35
C) 20 The seller has 20 days to deliver a " commitment for title insurance" to the buyer according to the terms of the TREC One to Four Family Residential Contract (Resale).
For which of the following homes should the New Home Contract (Completed Construction) be used? A) Harvey is purchasing a condominium B) Harvey is purchasing a home that's still under construction C) Harvey is purchasing a home that was recently built D) Harvey is purchasing an existing home that was built in 2010
C) Harvey is purchasing a home that was recently built The New Home Contract (Completed Construction) should only be used for completed homes, not for incomplete construction, condominiums, or resale properties.
Your client is interested in keeping the sellers free-standing workbench that's in the garage, and is willing to pay the seller to leave it behind. Which form will you help your client complete to submit to the seller for consideration? A) Addendum for Sale of Other Property by Buyer B) A resale certificate C) Non-Realty Items Addendum D) Seller's Disclosure of Property Condition
C) Non-Realty Items Addendum If the buyer is interested in personal property that's not already included in the sale, the buyer should complete the Non-Realty Items Addendum, and ask the seller to consider leaving the property behind.
If the buyer wishes to purchase a television or some other item of personal property as part of the property transaction, where can this be addressed in the TREC residential One to Four Family (resale) contract? A) Addendum for Sale of Other Property by Buyer B) Exclusions C) Non-Realty Items Addendum D) Special Provisions
C) Non-Realty Items Addendum Personal property included in a sale is considered a non-realty item and can be negotiated with the seller on the Non-Realty Items Addendum.
Which of the following TREC-promulgated forms is the most frequently used sales contract? A) Farm and Ranch Contract B) New Home Contract C) One to Four Family Residential Contract (Resale) D) Residential Condominium Contract
C) One to Four Family Residential Contract (Resale) Used for the resale (not new construction) of residential properties, the One to Four Family Residential Contract (resale) is the most frequently used TREC-promulgated sales contract.
Which of the following entities promulgates forms for Texas licensees? A) The Broker-Lawyer Committee B) The State Forms Committee C) TREC D) TRELA
C) TREC TREC promulgates the forms drafted by the Broker-Lawyer Committee.
Which contract is used for the purchase of townhouses in Texas? A) Farm and Ranch contract B) Residential Condominium Contract (Resale) C) TREC One to Four Family Residential Contract (Resale) D) Unimproved Properties Contract
C) TREC One to Four Family Residential Contract (Resale) Townhome owners have fee, simple title to the land beneath their units, unlike condominium owners, so the TREC One to Four Family Residential Contract (Resale) is used.
Which authority is responsible for providing promulgated, contract forms, and enforcing license law in Texas? A) Broker-Lawyer Committee B) Secretary of State C) Texas Real Estate Commission D) Texas Real Estate license law
C) Texas Real Estate Commission TREC is the authority responsible for enforcing real estate law and providing promulgated contract forms in Texas.
What does the Federal Trade Commission require information to be included in or attached to the New Home Contract (Incomplete Construction)? A) appliances installed B) chemicals used in flooring C) insulation installed D) lead-based paint used
C) insulation installed The FTC requires that insulation information be supplied to buyers purchasing new homes that are incomplete. This information can be either provided in the insulation section of the contract or attached.
What is an advantage to using meditation as a problem-solving tool in a contract dispute? A) it costs much more that the parties often come to terms without utilizing it so they don't have to pay for it B) it is preferred in an open setting so that anyone can sit in and know about the decisions that are made C) it offers a win-win solution because both parties come out with satisfactory results D) it slows down the contract timeline long enough to give the parties time to calm down
C) it offers a win-win solution because both parties come out with satisfactory results In addition to creating a win-win scenario for the parties, mediation is quick, low cost, and private.
A residential service contract is an agreement to repair or replace major appliances and electrical, plumbing, heating, or air-conditioning systems that fail under what kind of circumstances? A) damage to the dwelling B) natural disasters C) normal wear and tear D) war or civil unrest
C) normal wear and tear Residential service companies provide home warranties to repair or replace appliances and systems that fill during the year that's covered.
Rescission, suit for specific performance, liquidated damages, and acceptance of partial performance are all examples of ______. A) clauses found in an agreement of sale B) mediation techniques used to resolve agreement of sale disputes prior to closing C) options a wronged party has to remedy a breach of contract D) types of contingencies
C) options a wronged party has to remedy a breach of contract When a breach occurs, the wronged party has options to remedy the breach. This includes rescission, suit for specific performance, liquidated, damages, and acceptance of partial performance.
Because there were no deadlines specified in the contract, a buyer delayed applying for a loan to help purchase the property. The seller ended up suing the buyer for breach of contract, stating that the delay was impacting the seller's ability to purchase a new home. What did the buyer fail to do? A) complete the loan application correctly B) notify the seller about a loan contingency C) perform contractual obligation within a reasonable time D) talk to the seller about the seller's ...
C) perform contractual obligation within a reasonable time When a contract doesn't provide specific dates for the terms of the contract, that need to be meant, performance must take place within a "reasonable time".
When multiple offers are received, Texas licensees should do which of the following? A) Encourage the seller to accept the highest price offer B) give preference to the first offer C) present all offers D) reject the lowest offer
C) present all offers Licensees should present all offers and not give preference to an offer just because it was the first received or offers the highest sales price. It is up to the seller, not the licensee, to make all decisions about offers.
If a buyer is in default of a TREC One to Four Family Residential Contract (Resale), what may the seller do? A) file a default claim against the buyer with an attorney present B) move forward with the contract once the buyer has been scolded by an attorney C) terminate the contract, and receive the earnest money D) terminate the contract, but the seller would not receive the earnest money
C) terminate the contract, and receive the earnest money The seller may terminate the contract and receive the earnest money as liquidated damages if the buyer is in default.
If a party to a contract lacks legal capacity but enters into a contract anyway, which party may void the contract? A) both parties B) the broker C) the party lacking legal capacity D) the party possessing legal capacity
C) the party lacking legal capacity If the party doesn't have legal capacity and enters into a contract, anyways, the contract is voidable by the party, lacking legal capacity. So an adult cannot hold a minor to a contract; However, the minor can hold the adult to the contract.
If a property sustain fire damage before a transaction closes, who, or what entity is responsible for the repairs to the property? A) the buyer B) the escrow agent C) the seller D) the title company
C) the seller The seller is responsible for restoring the property to its original condition (its condition when the sales contract was signed).
What happens when a Texas buyer who has paid the seller an option fee under the TREC One to Four Family Residential Contract (Resale) terminates the contract after the option period expires? A) the buyer gets both the option fee and the earnest money back B) the seller keeps the earnest money, and the buyer gets the option fee back C) the seller keeps the option fee and may get to keep the buyers earnest money D) the seller keeps the option fee, and the buyer gets the earnest money back
C) the seller keeps the option fee and may get to keep the buyers earnest money Because " time is of the essence" means that the option. As specified will be strictly followed, the buyer loses the unrestricted right to terminate the contract. Unless the buyer has another bona fide reason for terminating after the option, period expired, the seller would get to keep any earnest money and the option fee.
The Unimproved Property Contract doesn't include improvements, accessories, or exclusions in the property section. Why is that? A) these items appear in the property conditions, section of the contract B) these items appear in the survey section of the contract C) these items don't apply to unimproved land D) these items should be listed under special provisions on the contract
C) these items don't apply to unimproved land Unimproved land doesn't have improvements, accessories, or exclusions, which is why they don't appear in the contract.
What is the purpose of the Addendum for Property Subject to Mandatory Membership in a Property Owners Association? A) to explain how homeowners associations operate B) to explain to buyers the advantages of a homeowners association C) to give buyers the opportunity to request subdivision information D) to provide buyers with information about the homeowners association
C) to give buyers the opportunity to request subdivision information Buyers can use the Addendum for Property Subject to Mandatory Membership in a Property Owners Association to request subdivision information, which includes the subdivisions restrictions, bylaws, the homeowners association, rules, and a resale certificate.
What's the purpose of the E-Sign 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 signature
C) to identify what can be used as an electronic signature The E-Sign Act, defines an electronic signature as an electronic sound, symbol or process that is attached to a contract.
The purpose of promulgated forms in Texas is ______. A) to employ The Texas Broker-Lawyer Committee B) to make all transactions seamless by requiring all transactions to use one form, no exceptions C) to make contractual terms crystal clear to the parties involved, and to protect the parties involved D) to prohibit lawyers from creating their own real estate transaction forms
C) to make contractual terms crystal clear to the parties involved, and to protect the parties involved Promulgated forms in Texas serve to make all terms clear and concise, and to protect the parties involved.
If a party to a contract signs a contract with a buyer for a sale of property the "seller" doesn't legally own, what type of contract is this? A) enforceable B) unilateral C) void D) voidable
C) void A party can't promise to do something impossible in a contract. Doing so makes the contract void.
In Texas, when is a licensee required to provide an agency disclosure to the party they are not representing in a transaction? A) when delivering an offer for a specific property B) when determining a listing price for a specific property C) when engaging in substantive dialogue about a specific property D) when entering into an agency agreement
C) when engaging in substantive dialogue about a specific property You must disclose whatever agency, or broker, relationship you have at the time of the first substantive dialogue with the party you are not representing in the transaction.
Which addendum should a seller complete an attached to the TREC One to Four Family Residential Contract (Resale) to reserve a portion of the mineral estate? A) Addendum for Property in a Propane Gas System Service Area B) Addendum for Property Located Seaward of the Gulf Intracoastal Waterway C) Addendum for Property Subject to Mandatory Membership in a Property Owners Association D) Addendum for Reservation of Oil, Gas, and Other Minerals
D) Addendum for Reservation of Oil, Gas, and Other Minerals The Addendum for Reservation of Oil, Gas, and Other Minerals should be completed if the seller wants to reserve all or a portion of the mineral estate.
Karen, the seller, has sent a counter-offer to Fred, a potential buyer. Before Fred accepts the counter-offer on the Texas property, Karen receives another offer from James that is even better. She wants to accept James's offer. What should Karen do? A) Karen is free to counter the offer from James B) Karen must let Fred know of the offer about James C) Karen must wait to hear from Fred D) Karen must withdraw the counter-offer to Fred before responding to James's offer
D) Karen must withdraw the counter-offer to Fred before responding to James's offer Karen should withdraw the counter-offer from the first offer, before responding to the second person's offer. Otherwise, she may end up accidentally selling the property to more than one party.
Which of the following is sufficient as a legal description of a property on the TREC residential resale contract? A) 385 Nottingham Ln., Dallas B) 385 Nottingham Ln., Dallas City and County C) 385 Nottingham Ln., Dallas City and County, 78703 D) Lot 2, Block 12, Greendale subdivision in the city and county of Dallas
D) Lot 2, Block 12, Greendale subdivision in the city and county of Dallas A legal description identifies a property by referring to a recorded plat or meets and bounds description. Plats contain lot, block, and subdivision identifiers for the property.
Which of the following forms should the Texas buyer or seller use if there is personal property that the parties want to be included in the sale of the property? A) Addendum of Sale for Other Property by Buyer B) Consumer Protection Notice C) Information About Brokerage Services D) Non-Realty Items Addendum
D) Non-Realty Items Addendum The Non-Realty Items Addendum is used to add items of personal property that are to remain with the property as part of the sale. This form also specifies what, if any, compensation, the buyer will give to the seller for the items.
What is the correct way to do the buyer's name on the Texas sales contract? A) Miss Drew B) S. Drew. C) Sheila D. D) Sheila Mae Drew, a single person
D) Sheila Mae Drew, a single person It is best to include the person's full name and marital status, because Texas is a community property state.
A seller must sell her home immediately, but it's worth far less than she owes. What form must she complete? A) Addendum for "Back-Up" Contract B) Addendum for Sale of Other Property by Buyer C) Loan Balance Addendum D) Short Sale Addendum
D) Short Sale Addendum Before your client can sell her property as short sale transaction, she will need the consent, approval, and cooperation of the lender. The Short Sale Addendum is used to give notice to potential buyers that the sale of the property is contingent upon the seller, obtaining the lenders consent and approval.
The seller and the buyer have agreed to make a change to the sales price of the Texas property. Which of the following will be used to indicate the change? A) a hand-written change notice B) an electronic generated memo C) a TREC-promulgated addendum form D) TREC amendment form
D) TREC amendment form The TREC amendment form should be used when there are changes to the original terms of the sales contract. All parties should sign the amendment.
If the buyer will move into the property prior to closing, what form must be prepared in Texas? A) Addendum to Contract B) Closing Possession Addendum C) Closing Possession Amendment D) Temporary Lease
D) Temporary Lease Two TREC-propagated forms are temporary leases. One of these is the Seller's Temporary Residential Lease (for seller hold-over) and one is the Buyer's Temporary Residential Lease (for early possession by the buyer).
If a buyer is applying for FHA financing, which addendum to the TREC One to Four Family Residential Contract (Resale) will be needed? A) Loan Assumption Addendum B) Seller Financing Addendum C) Short Sale Financing Addendum D) Third Party Financing Addendum
D) Third Party Financing Addendum VA Guaranteed Financing, FHA Insured Financing, and other government issued loans are all examples of third-party financing.
Which section of the TREC One To Four Family Residential Contract (Resale) identifies the party who will pay for the title insurance and the extent of the policy coverage? A) Earnest Money section B) Financing section C) Property section D) Title Policy and Survey section
D) Title Policy and Survey section The details of which party will pay for the title insurance, and if the buyer will be amending, the standard policy are in the Title Policy and Survey section.
For how long after closing can a seller reserve the right to harvest a crop on a farm property? A) 30 days B) 60 days C) 90 days D) anytime agreed to in writing
D) anytime agreed to in writing The seller can also reserve the right to come back and harvest for as long as agreed in writing.
What is the purpose of the Addendum for "Back-Up" Contract? A) it allows the buyer to agree to increase the offering price should a better offer be received by the seller during the option period B) it allows the buyer to make offers on two or more properties, but only be bound by one offer C) it allows the buyer to opt out of the purchase should a better property be found D) it allows the seller to contract with two buyers, so that if the 1st buyer backs out, the back-up buyer moves into 1st
D) it allows the seller to contract with two buyers, so that if the 1st buyer backs out, the back-up buyer moves into 1st position The Addendum for Back-Up Contract allows a seller to contract with a second buyer when a property is already under contract.
A valid contract must include which of the following elements? A) counter-offer B) electronic signature C) fairness clause D) legally competent parties
D) legally competent parties To be valid, a contract needs to be in writing, and have legally competent parties, as well as an offer and acceptance, legal purpose, and consideration.
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 for the terms not met
D) one party has met most, but not all of the terms specified in the contract, and may be required to pay for the terms not met Substantial performance of a contract occurs when 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.
What is the purpose of TREC's Consumer Protection Notice? A) educates consumers about the services that brokerages provide B) educates license holders about how they can protect themselves from unwanted civil lawsuits C) gives notice to license holders that they can be sued by consumers D) tells consumers how to submit a complaint against a license holder
D) tells consumers how to submit a complaint against a license holder The Consumer Protection Notice tells consumers how they can submit a complaint to TREC against a license holder. It also alerts consumers that two discovery funds are available to satisfy as civil court judgment against a license holder.
What happens when a Texas buyer who has paid the seller and option fee under the TREC One to Four Family Residential Contract (Resale) terminates the contract during the option period? A) the buyer gets both the option fee and the earnest money B) the seller keeps the earnest money and the buyer gets the option fee back C) the seller keeps the earnest money and the option fee D) the seller keeps the option fee, and the buyer gets the earnest money back
D) the seller keeps the option fee, and the buyer gets the earnest money back When a buyer who has paid the seller, an option fee, terminates the contract for any reason during the option period, the earnest money will be refunded to the buyer. The seller will keep the option fee.
In the eyes of the law, why do people under age 18 lack contractual ability? A) they have insufficient resources B) they lack intelligence C) they're immature D) they're minors
D) they're minors A minor doesn't have contractual ability because they're not a legal age.
What's the purpose of the earnest money deposit? A) to encourage the seller to come down in the asking price for the property B) to provide the seller with funds to make required repairs to the property before selling it C) To retain the services of a licensee D) to show the seller that the buyer is serious and intends to go through with the purchase
D) to show the seller that the buyer is serious and intends to go through with the purchase The earnest money is the buyers indication to the seller that the offer is serious, and the buyer intends to go through with the purchase.
The TREC Environmental Assessment, Threatened or Endangered Species, and Wetlands Addendum gives the buyers time to have an evaluation what right if there's an adverse finding? A) to decrease the sales price B) to require the seller to mitigate C) to sue D) to terminate the contract
D) to terminate the contract The buyer may terminate the contract if anything in the report adversely affects the use of the property.
Which type of contract won't stand up in court? A) enforceable B) executed C) executory D) unenforceable
D) unenforceable An example of an unenforceable contract is one that once contained all of the essential elements, but now, due to a change in circumstances, no longer meets all the requirements for a valid contract.
A buyer has signed an option agreement, which is an offer to purchase a specific piece of real estate without the obligation to buy it until the buyer exercises the option to buy, only the seller is bound by the option agreement; the seller may not sell the property to anyone else During the option period. What type of contract does this describe? A) bilateral B) executed C) mutual D) unilateral
D) unilateral A contract in which consideration is only offered by one of the parties is a unilateral contract. In other words, the consideration only goes one way.
In which of the following Texas real estate transactions must a Seller's Temporary Residential Lease be completed? A) during a back-up offer B) when the buyer is taking early possession C) when the buyer must make the purchase contingent on the sale of another property D) when the seller will remain in the property after closing
D) when the seller will remain in the property after closing There are 2TREC promulgated temporary leases. One of these is the Sellers Temporary Residential Lease (for seller hold-over), and one is the Buyers Temporary Residential Lease (for early possession by the buyer).
Besides the name of the title company, which of the following information is needed in the Title Policy paragraph of the TREC One To Four Family Residential Contract (Resale) in Texas? A) a list of exceptions B) amount of the insurance coverage C) date the title policy will be issued D) whether the buyer or the seller will pay for the title policy
D) whether the buyer or the seller will pay for the title policy Paragraph 6 A has a blank line for the name of the title company, and checkboxes to indicate whether the title policy will be furnished at the seller's or the buyer's expense.