Real Estate Test 1
Which of the following is an example of a statutory lien?
- An IRS tax lien is an example of a statutory lien because it is created by an act of law. - An IRS tax lien is an example of a statutory lien because it is created by an act of law.
The National Association of REALTORS® ethical guidelines are known as the:
- Code of Ethics
The first 9 articles of the NAR Code of Ethics are known as the:
- Duties to Clients and Customers
Under which law is a creditor outlawed from rejecting a borrower based on their marital status?
- ECOA - Under ECOA (the Equal Credit Opportunity Act), it is illegal for a lender to reject a borrower based on their marital status.
Net listings and open listings are the same thing.
- FALSE - An open listing allows multiple real estate brokers (and the owners themselves) the right to sell a property. A net listing, on the other hand, dictates the broker's commission based on the difference between the listing price and sales price.
What is the difference between novation and assignment?
- In novation, the old contract is replaced by a new one. In assignment, the contract is preserved but the rights and responsibilities are transferred to a new party.
"Coles Oak Grove subdivision, Block 636, Lot 8, Dallas County, Texas" is an example of which type of legal description?
- Lot and block
Which of these private groups provides additional education and guidance to real estate professionals?
- NAR - Fannie Mae is the first government-sponsored enterprise, created in 1938, which buys and securitizes loans. The role of NAR (the National Association of REALTORS®) is to provide education and guidance to improve the practice of their members.
If an individual faces civil or criminal liability, does that preclude any disciplinary action from the Texas Real Estate Commission?
- No, disciplinary action from the Texas Real Estate Commission does not relieve the person from civil or criminal liability. - An individual facing civil or criminal liability may still be subject to disciplinary action from the Texas Real Estate Commission. Likewise, disciplinary action from the Texas Real Estate Commission does not relieve the person from civil or criminal liability.
Can an agent act as an appraiser with their real estate salesperson license?
- No, to act as an appraiser, you need an appraiser license. - Practicing appraisal requires one to be a licensed appraiser. A licensed appraiser is needed to make a professional assessment of market value.
Which of these people is eligible to apply for a Texas real estate license?
- Tanya is 22, a Texas resident, and non-citizen who can legally work in the U.S. - Only Tanya meets all the eligibility requirements. She is over 18, a Texas resident, and legally able to work in the U.S.
What is the name of the piece of legislation that created the capital gains tax exclusion for homeowners?
- Taxpayer Relief Act of 1997 - The Taxpayer Relief Act of 1997 created the capital gains tax exemption, as well as the IRA withdrawal exception and the child care credit.
Which real estate body is made up of nine members and which is made up of 13 members?
- The Texas Real Estate Commission is comprised of nine members and the Broker-Lawyer Committee is comprised of 13 members.
Which of the following describes how special agency works in a typical real estate broker-client relationship?
- The authority given by the client is narrowly defined towards a single goal — the sale or purchase of property. Special agency restricts an agent's scope of authority to one or more specific acts as directed by the party — usually towards a single, specific objective, end, or goal. In a typical real estate broker-client relationship, the authority given by the client is narrowly defined towards a single goal — the sale or purchase of property.
What is unique about an exclusive right-to-sell listing agreement?
- The broker gets compensation regardless of who sells the property. - With an exclusive right-to-sell listing agreement, the broker gets compensation regardless of who sells the property.
If a court-ordered judgment goes against a license holder who cannot pay it, what recourse does the aggrieved party have?
- The court will award the funds and the aggrieved party will then apply to the Real Estate Commission for restitution. - If someone successfully sues a license holder, but the agent has no funds to pay, the plaintiff will be paid with funds from the Real Estate Recovery Trust Account. The court will award the funds and the aggrieved party will then apply to the Real Estate Commission for restitution.
In the context of contracts, what is assignment?
- the transference of obligations in a contract from one party to another - Yes, assignment is the transference of obligations in a contract from one party to another.
What are the primary duties of the Broker-Lawyer Committee?
- to draft and revise contract forms for the approval and adoption by TREC - The primary duties of the Broker-Lawyer Committee are to draft and revise contract forms for the approval and adoption by TREC.
How would an agent disclose to a potential buyer that they will be required to join an HOA if they purchase the property?
- use the Addendum for Property Subject to Mandatory Membership in a Property Owners Association - in Texas, mandatory HOA membership must always be disclosed through the Addendum for Property Subject to Mandatory Membership in a Property Owners Association, not within a letter with the offer acceptance.
A listing agreement creates a(n):
- agency relationship - Listing agreements and buyer representation agreements create an agency relationship between the broker and the client.
Areas around a condominium such as a swimming pool and laundry room are known as:
- common elements
The statute of limitations for filing a written complaint with the Commission against a license holder is what?
- four years
What should a broker do if they are planning to change their license status from active to inactive?
- inform all sponsored license holders (in writing) at least 30 days before submitting an application to change their status with TREC - The correct answer is that a broker who wishes to change their license status from active to inactive must provide a written notice to each sponsored license holder 30 days preceding the broker applying for inactive status, which should occur prior to the expiration of the broker's license.
Which of the canons requires license holders to, "avoid misrepresentation, in any wise, by acts of commission or omission"?
- integrity
The difference between fraud and misrepresentation is mainly in:
- intent - When fraud is the charge, it has to be proven that the defendant did the act intentionally. Misrepresentation is the unintentional spread of false information.
What do trade organizations like the NAR NOT do?
- issue licenses or handle licensing requirements - NAR does not issue licenses, in Texas, that is done by a state agency known as TREC.
According to the Canons of Professional Ethics, a broker should never:
- knowingly misrepresent a property - According to the Canons of Professional Ethics, a broker should never knowingly misrepresent a property.
A detailed description that uniquely identifies the property in such a way that a surveyor would be able to locate it is called a(n):
- legal description
Which of the following is NOT a duty an agent owes a customer or third party?
- loyalty - An agent owes customers and third parties the duties of disclosure, honesty and fair dealing, and reasonable care and skill. Loyalty is a fiduciary duty reserved only for a client.
Which of these is an agent's fiduciary duty to put the client's interests first, including over those of the agent?
- loyalty - An agent's fiduciary duty to put the client's interests first, including ahead of those of the agent, is the duty of loyalty.
Which of these should always be disclosed?
- material defects - Material defects need to be disclosed. For example, if a previous resident died by touching faulty wiring, or if the previous owner used the property as a meth lab.
Which term identifies an economic preference for a certain location?
- situs
What is required of lease contracts with a lease period of one year or more that is not required for leases of less than a year?
- they must be in writing - Like contracts for the sale of real estate, lease contracts with a lease period of one year or more must be in writing to be enforceable.
What does the Community Reinvestment Act require of banking institutions?
- to meet the credit needs of the communities they operate in - The Community Reinvestment Act requires banks to meet the credit needs of the neighborhoods they operate in by making loans to the people in those neighborhoods.
What is the goal of the Equal Credit Opportunity Act (ECOA)?
- to prevent lending discrimination
A married couple bought a home for $400,000. Five years later, they sold it for $550,000. How much of their sale is taxable capital gain?
- $0 - The married couple gets a $500,000 capital gains tax exclusion. Since they made $150,000 in profit, all of their profit is excluded from taxation.
A married couple bought a home for $130,000 in 2001. It was their primary residence. In 2017, they sold it for nearly double: $290,000. How much tax do they have to pay on their capital gain?
- $0 - The married couple's capital gain would be $290,000 - $130,000 = $160,000. Since they get a $500,000 capital gains tax exemption, they pay no capital gains taxes.
What is the standard capital gains exclusion for someone selling a primary residence?
- $500,000 for joint filers, $250,000 for single filers - The capital gains exclusion is $500,000/$250,000 for selling a primary residence.
The limit on a rural homestead is currently:
- 200 acres for families, 100 acres for individuals - The exemption in rural areas is 200 for families and 100 for individuals.
Which of the following is an example of an informal reference to a property?
- 4617 Jade St., Portland, OR - 4617 Jade St. is a street address, and street addresses, while they may appear on a contract to reference a property, should not be considered an adequate legal description.
All of the following are examples of legal descriptions of property EXCEPT:
- 8647 Notting Hill Drive, Berkshire, Colorado 52467 - 8647 Notting Hill Drive, Berkshire, Colorado 52467 is a regular street address, NOT a legal description of property. A legal description of a property is more detailed than a street address. It is a summary of a property that is distinct and precise enough to distinguish it from all other properties. These descriptions can be used by courts to clarify any disputes about the property that may arise.
What is a significant difference between Texas brokers licensed before and after October 31, 1991?
- A Texas broker licensed before October 31, 1991, is exempt from continuing education requirements for license renewal.
Which of these is a unilateral contract?
- A car dealership offers a $1,000 bonus to any salesperson who can sell 10 vehicles in a month. - This is a bilateral contract because it is binding on both parties. A unilateral contract is only binding on one party. The correct answer is the car dealership offering a bonus for meeting a sales goal. If a salesperson chooses to perform, the dealership must perform their end of the deal, but the salesperson is not required to sell 10 cars.
What is the difference between an abstract of title and a chain of title?
- A chain of title is thorough and exhaustive, whereas an abstract of title is an abbreviated history. - A chain of title documents both easements and liens. The difference between the two is that a chain of title is thorough and exhaustive, providing the entire chronological record of a property's ownership, whereas an abstract of title is an abbreviated history of a property.
Which one of these situations would title insurance protect against?
- After purchasing a home and living in it, Terrence is contacted by the heir of a deceased former owner who claims the home is actually hers. - Title insurance protects against title claims after buying property. It is a one-time purchase and protects the property's title until the owner sells it.
According to the Canons of Professional Ethics, what must every broker do with Consumer Protection Notice TREC No. CN 1-2?
- Brokers must display Consumer Protection Notice TREC No. CN 1-2 in a readily noticeable location. - Brokers must display Consumer Protection Notice TREC No. CN 1-2 in a readily noticeable location.
What is the name of the database that contains information on any claims made in the past five years by owners on specific properties?
- Comprehensive Loss Underwriting Exchange (CLUE)The database that - contains information on any claims made in the past five years by owners on specific properties is called the Comprehensive Loss Underwriting Exchange (CLUE).
Which of the following situations would be impacted by an owner's subsurface rights?
- Gerry drills for oil under his property, making his neighbor's oil drill produce less. - Subsurface rights are ownership rights to all that is found beneath the surface of the tract of land owned, extending downward to the center of the earth. So, Gerry drilling for oil under his property (and making his neighbor's oil drill produce less) is an example of how with subsurface rights, under the rule of capture, a landowner who drills a well for gas or oil on their land is entitled to all that well produces — even if the gas or oil migrates from beneath a neighbor's property.
Broker Bob is the intermediary for Buyer B and Seller C. Broker Bob appoints Mary to assist the buyer and John to assist the seller. Who can give advice and opinions to the seller?
- John - An intermediary broker with more than two sponsored associates can make appointments to each of the parties (one to the seller and one to the buyer), which will allow the appointed associates to legally provide advice and opinions to the person they were appointed to. The broker (Bob) cannot give advice and opinions to either party. The correct answer is John, because John was appointed to the seller.
Ashley is transgender. She alleges that Ray, a landlord, refused to rent to her on that basis. Has Ray violated the federal Fair Housing Act?
- Maybe. While the Fair Housing Act does not explicitly include gender identity as a protected class, some court cases have found that gender identity discrimination can be prosecuted under the Fair Housing Act under one of its seven protected classes (such as sex). - The federal Fair Housing Act does NOT explicitly include sexual orientation or gender identity as protected classes. However, some court cases have found that discrimination under sexual orientation or gender identity can be prosecuted under the Fair Housing Act under one of its seven protected classes. For example, if a landlord sexually harasses a woman who is transgender, he may have violated the Fair Housing Act's prohibition against sex discrimination.
Can the original offer be reconsidered and accepted by a party after they have already extended a counteroffer?
- No. A counteroffer is a rejection of the original offer, therefore, the original offer can no longer be accepted. - Once a counteroffer is made, the original offer is dead. A counteroffer is considered a rejection of the original offer. Even if the offeree hasn't accepted the counteroffer, the offeror can't go back and accept the original offer.
Jasmine lives in a single-family home and shares amenities like a pool, golf course, and park with her neighbors. An HOA owns and maintains these amenities, and Jasmine pays a monthly fee to the HOA. She most likely lives in a:
- PUD - A PUD is a development or subdivision operated by a homeowners association, usually containing amenities only for use by the HOA owners.
A buyer is looking for a property where they have access to some common elements that they don't have to maintain, but will also own their own private yard and building. Which of these common interest ownership properties BEST fits their needs?
- PUD - A PUD would give the buyer some common elements while also allowing them their own yard and building.
How does a condo differ from a PUD?
- PUD buyers purchase both the building AND the land it sits on while condo buyers do NOT purchase land. - Owners of a PUD own the structure and the land it sits on. Condo ownership excludes the land the condo sits on.
What is the main difference between how real and personal property are conveyed?
- Real property is conveyed by deed. Personal property is conveyed by a bill of sale.
Which two rights refer to waterfront properties?
- Riparian and littoral - Riparian and littoral rights refer to waterfront properties.
Which of these owners or groups of owners are MOST likely to take title as tenants in common with no rights of survivorship?
- Sarah and Sally, an unmarried couple - Unmarried couples are most likely to take title as tenants on common with no right of survivorship. Remember that the right of survivorship means that when a co-owner dies, the surviving co-owners inherit the deceased co-owner's ownership interest in the property.
What is meant by the term "right of survivorship"?
- The right of survivorship predetermines that when one co-owner dies, their ownership interest reverts to the surviving co-owners.
Sales agents may accept commissions from:
- Their sponsoring broker only.
Select the statement that describes why trade fixtures are considered personal property.
- Trade fixtures are items that a tenant uses in their business that will be removed at the end of the lease. - Trade fixtures are considered personal property because they are items that a tenant uses in their business that will be removed at the end of the lease.
Which of these properties can be said to be held in severalty?
- Ursula owns a home by herself. - Remember, the term severalty is derived from the word "sever," which means to make separate or individual. When a property is held in severalty, it usually belongs to a single individual, a married couple, or a corporation.
If an applicant fulfills all requirements for licensure but hasn't found a sponsoring broker yet, are they able to get licensed?
- Yes, the applicant can receive an inactive license from the Commission. - Yes, an applicant that fulfills all requirements for licensure other than finding a broker to sponsor them can receive an inactive license from the Commission. That license can be activated once a sponsoring broker is found.
What two elements must be present in order for a contract to be considered executory?
- a binding contract on multiple parties and one or more of those parties has yet to perform their contractual duties - Yes, for a contract to be considered executory, two things must be present: a binding contract on multiple parties and one or more of the parties has yet to perform their contractual duties.
In which of the following examples would the ADA most likely NOT apply?
- a business with nine employees - Among other categories, the ADA applies to buses and trains, as well as their stations; hospitals and dental offices; amusement and recreation parks; and businesses with 15 or more employees. It does not apply to businesses with less than 15 employees.
Who can refer to themselves as a REALTOR®?
- a member of the National Association of REALTORS®
Of the following, who may legally be denied the opportunity to rent an apartment?
- a single father with poor credit who belongs to a minority group - All applicants would be protected by familial status. There is no requirement, however, to rent property to a tenant who is unable to pay the rent.
Which of the following best defines the rectangular survey system?
- a system of legal land description that uses the global lines of longitude and latitude to create a surveyed grid of meridians, base lines, townships, and ranges to describe a piece of land - because this definition is describing the lot and block system. The rectangular survey system is a system of legal land description that uses the global lines of longitude and latitude to create a surveyed grid of meridians, base lines, townships, and ranges to describe a piece of land.
Which of the following is a fiduciary duty that an agent owes to a client?
- accounting - The agent owes the client fiduciary duties. They are the duty of obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care.
Which of these is an example of emblements?
- an annually cultivated crop - Annually-cultivated crops are called fructus industriales, or, emblements. They are generally considered to be personal property
Which of the following provides the BEST definition of a freehold estate?
- an estate with full ownership for an undetermined or unspecified period of time and the right of disposition or right to convey the interest - When the property owner has ownership for an undetermined or unspecified period of time with full ownership rights and the right of disposition or right to convey the interest they own, they have a freehold estate.
What is an exclusive right to sell listing agreement?
- an exclusive agreement in which the listing broker receives a commission if the property is sold even if the seller brings the buyer - An exclusive right to sell agreement is an exclusive agreement in which the listing broker receives a commission if the property is sold even if the seller brings the buyer themselves.
What is a fixture?
- an object that was once personal property but is now firmly attached to the land in such a way that it is considered to be real property - A fixture is an object that was once personal property but is now firmly attached to the land in such a way that it is considered to be real property.
How are married couples most likely to hold property in the state of Texas?
- as community property - Not quite. When two or more parties own a property as a tenancy in common, each owner has a partial ownership interest and partial rights in a property. The default way to take title as an unmarried couple is as tenants in common (with no right of survivorship). Though married couples can choose to be tenants in common if they want to, it is most common for married couples to hold property as community property. Remember, Texas is a community property state.
Ainsley is considering buying a home, but she has some concerns about things that came up on the inspection report. What could she do if she wanted to find out the history of insurance claims on the property?
- ask for a CLUE report - A CLUE report will tell Ainsley if any insurance claims have been made on the property in the last five years.
Which of these requirements are needed in order to apply for real estate licensure in Texas?
- at least 18 years of age, honesty and trustworthiness, a citizen or lawfully admitted alien. - An applicant for licensure is required to be 18 years of age or older, a Texas resident, and a citizen of the United States or a lawfully admitted alien at the time the application is filed. Note that DACA recipients are not currently eligible for licensure in Texas.
What is the name given to the recipient of advantage or gain from an act or instrument such as a trust, will, or insurance policy?
- beneficiary - The recipient of advantage or gain from an act or instrument such as a trust, will, or insurance policy is a beneficiary.
Ashley and Leslie have entered into a contract agreement where they both have promises to fulfill. Based on this information, you can infer that they have entered into what kind of contract?
- bilateral - A bilateral contract is an agreement in which both parties make a promise to perform the actions specified in the contract.
What type of contract is a real estate sales contract?
- bilateral contract - Yes, real estate sales contracts are bilateral contracts. Both parties have rights and reciprocal obligations.
How would a property owner ensure that their property is covered in the event of a flood?
- buy a separate flood insurance policy - Flood insurance policies are generally separate policies.
Which of these is the increase in the value of an asset?
- capital gain - The increase in the value of an asset is capital gain.
An acceptable term for any unattached, movable asset on the property not considered real estate is:
- chattel
An owner lives in a single-family dwelling. They only own the unit and not the land below it. The homeowners association owns and maintains the grounds, the pool, and the exercise room. All of the owners in the area share the common areas. This describes a:
- condominium - Since we know that the owner does NOT own the land below their unit, we can conclude that this is a condominium. In a condominium, ownership typically provides single ownership of the unit itself (from floor to ceiling and wall to wall), and joint ownership of the land and shared space.
What is the term for a rejection of an offer to buy or sell made with the simultaneous substitution of a new offer?
- counteroffer
Texas homestead laws can protect a primary residence from:
- credit card companies - Credit card companies would not be authorized to take your homestead property or force you to sell it.
Texas homestead laws can protect a primary residence from:
- credit card companies - Texas homestead laws protect houses from general creditors, but not from mortgage or tax foreclosure.
Broker Camille owes Buyer Jake the duties of honesty, fair dealing, reasonable care, disclosure, and accounting, but not loyalty or confidentiality. What is the agency relationship between Camille and Jake?
- customer - Broker Camille owes Buyer Jake the duties of honesty, fair dealing, reasonable care, disclosure, and accounting, but not loyalty or confidentiality. This indicates that Jake is a customer to whom the fiduciary duties of loyalty and confidentiality are NOT owed.
In Texas, mandatory membership in an HOA must be:
- disclosed
Land that is high demand and low supply is an example of which quality of real estate?
- economic scarcity - Economic scarcity describes land that is in high demand, with limited supply.
What does the Texas Commission on Environmental Quality (TCEQ) do?
- enforces federal and state laws about water rights - The Texas Commission on Environmental Quality (TCEQ) is responsible for governing water rights in Texas, as well as applying federal and state laws under the Texas Water Code.
The goal of the Community Reinvestment Act is to:
- ensure credit availability in all communities - The goal of CRA is to ensure credit availability in all communities regardless of how wealthy.
Juan is in contract to purchase a house, but the sale has not yet closed. The seller, Anthony, still has ownership interest, but Juan, by entering into a sales contract with Anthony, now has what type of estate?
- equitable estate - Juan's situation — being in contract but not yet closed on a house — is an equitable estate. An equitable estate is what happens when a freehold estate owner has ownership interest on the property, but another party has an interest in the property that is less than the interest afforded by ownership.
An agreement that gives one broker and the owner the right to sell the property is called a(n):
- exclusive agency listing - An exclusive agency listing agreement is an agreement between a broker and an owner in which the owner retains the right to sell the property while giving the exclusive right to one broker to sell the property.
Which of the professional canons states that the primary duty of the real estate agent is to represent the interests of the agent's client?
- fidelity - The canon of fidelity states that the primary duty of the real estate agent is to represent the interests of the agent's client.
In a breach of contract scenario, which of these four options would allow the wronged party (the seller) to keep the earnest money that had been put up by the buyer?
- forfeit - The correct answer is forfeit. If the contract is forfeit, the seller keeps the earnest money put up by the buyer.
Which of these is NOT one of the things license-holders must do, according to TREC?
- get a client the best deal, no matter how - TREC doesn't want you to use shady dealings to get clients a better deal.
To legally act as an intermediary in the state of Texas, a broker must do what?
- get written consent from both parties
Karen bought a house. What is the best way she can protect her title from ownership claims?
- getting title insurance - Title insurance will protect Karen from any claims to the property's title, even after she has closed.
According to Article 12 of the NAR Code of Ethics, where is one place that NAR members must include the word "Realtor"?
- in any ad copy they create - NAR's Code of Ethics requires Realtors to identify themselves as such in ad copy.
When land is in short supply and in high demand:
- it will be more valuable - When land is in short supply and in high demand it will be more valuable.
Why can't brokers draft their own contracts for transfers of real property?
- it's considered an unauthorized practice of law - Drawing up contracts is something that should only be done by a lawyer. Brokers must use promulgated contracts.
Which is NOT one of the canons of professional ethics?
- justice - Justice is not included in the canon of ethics. The 6 canons of ethics are: fidelity, integrity, competency, consumer information, discriminatory practices, and Information About Brokerage Services.
Under the ECOA, it is illegal for lenders to discriminate on the basis of:
- marital status - Under the ECOA, it is illegal for lenders to discriminate on the basis of race, color, religion, national origin, sex, marital status, age, receipt of income from any public assistance program, or for exercising in good faith their rights under the Consumer Credit Protection Act. Employment information is a legal way that lenders evaluate a borrower's creditworthiness.
"Beginning at the intersection of Main Street, and Oakgrove Lane, proceed due north 300 feet to the creek; then due east 500 feet, more or less, to the U.S.G.S. benchmark; then proceed due south 300 feet to the maple tree, then proceed west about 500 feet, returning to the point of beginning." is an example of a legal description using which type of survey method?
- metes and bounds - The description given would be an example of the metes and bounds system, which uses written legal land description identifying a piece of real estate's exact dimensions and location in reference to a fixed and permanent monument.
Beginning at the intersection of Main Street, and Oakgrove Lane, proceed due north 300 feet to the creek; then due east 500 feet, more or less, to the U.S.G.S. benchmark; then proceed due south 300 feet to the maple tree, then proceed west about 500 feet, returning to the point of beginning." is an example of a legal description using which type of survey method?
- metes and bounds - The metes and bounds system starts at a readily identifiable point of beginning and defines the boundaries of a property in terms of distances and compass directions, finally returning to the point of beginning. The description given is an example of a piece of land surveyed using the metes and bounds system.
The Fair Housing Act does not cover:
- non-dwelling buildings
Gabby and Daniel agree to replace their existing contract with a new one and to allow Kelsey to take Daniel's place in the new contract as a party to the agreement with Gabby. Kelsey now has all of Daniel's rights and obligations in the contract. This is an example of:
- novation - Novation is a mutual agreement of the parties to replace an existing contract with a new one. It can also be an agreement to substitute one party for another in a new contract without necessarily changing the other terms and conditions of the original agreement.
Which of the following is a downside to living in a co-op?
- one resident's actions can harm the entire cooperative - Co-op owners pay a monthly fee called a maintenance payment, which can pay for upgrades that all the co-op owners approve, such as pools, recreation areas, and other common area amenities. The correct answer is that one resident's actions can harm the entire cooperative. If the residents do not pay their mortgage, assessments, or association fees, it may cause all of the tenants to suffer as a result.
If pursuing action through HUD, a fair housing complaint must be filed within how long of the alleged violation?
- one year - HUD allows a full year to pass before the statute of limitations ends regarding a fair housing complaint.
A corporation has what type of ownership?
- ownership in severalty - Ownership in severalty is ownership by a single person or entity. Corporations are legally people, so a single corporation would own their property in severalty.
"Limited" and "general" are the names of the two kinds of what?
- partnership
Gil purchases a new light fixture for his dining room. While the light fixture is still new, wrapped in the box, and unattached to the ceiling, what is it considered to be?
- personal property - Personal property is unattached to real estate and can easily be moved. If the ceiling fan were attached to the ceiling, it would likely be considered real property.
What is the primary distinction between real and personal property?
- personal property can be moved, real property is attached to the land - Personal property, also called chattel, is movable and can be taken with the owner. Real property is affixed to the land, and is considered immovable.
What is a trade fixture?
- personal property owned by and needed for a tenant's business - A trade fixture (or chattel fixture) is personal property that is owned by and needed for a tenant's business. It is not subject to the same rules of transfer as fixtures in general.
The drawing of a development indicating the locations and dimensions of lots in a lot and block system is called a:
- plat - A plat is a map indicating the locations and dimensions of lots in a lot and block system.
Which unities are required by joint tenancy?
- possession, interest, time, and title
What does the ADA do?
- prohibits discrimination against people with disabilities - The Americans with Disabilities Act prohibits discrimination against people with disabilities in employment, transportation, public accommodation, communications, and governmental activities.
When a person owns a tract of earth, improvements, and the full bundle of rights associated with their property, they can be said to own:
- real property
Antonia owns a piece of land, some human-made additions including a new deck, and has the full bundle of rights associated with ownership. Because she owns all three elements, Antonia owns:
- real property - Antonia also has the full bundle of rights associated with ownership. Real property is the land plus improvements plus a bundle of rights. Antonia owns real property.
Which of the following terms refers to the land, improvements, and the bundle of rights?
- real property - Real property refers to the land, improvements, and the bundle of rights.
The act of severance is the most common way to convert:
- real property into personal property - Severance is the act of separating some element of the real estate from the land. The most common way that real property is converted to personal property is through the act of severance.
Which of these would create constructive notice that you owned a property?
- recording the deed with the county - Recording the deed creates constructive notice. People can find the information if they want to. Every other example is of actual notice.
Which is exempt from the federal Fair Housing Act?
- renting a room in a house occupied by the owner - It does not apply to the rental of rooms or units in a dwelling containing living quarters occupied (or intended to be occupied) by no more than four families living independently of each other if the owner actually occupies one of the living units as their residence.
When a sponsoring broker and license holder terminate their association, what should the sponsoring broker do?
- return the sponsored salesperson's license to the Commission - The correct answer is that when the association of a sponsoring broker and a license holder is terminated, the broker must immediately return the sales agent's license to the Commission. The Commission changes the status of an unsponsored sales agent license holder to an inactive status, provided the license is not expired.
Wesley just bought a house with a creek that flows along the south boundary. He wants to use the water to irrigate his garden. Through which set of rights is he entitled to use this water?
- riparian rights - Flowing water is governed by riparian rights.
Conga installed her family's candelabras on the wall in her dining room when she first moved in. Ten years later, when she gets ready to move, she removes the candelabras from the walls so she can take them with her. What process did Conga go through when she removed the candelabras?
- severance - Conga removing the candelabras from the wall is an example of severance, which is taking an item that is attached to the land and removing it as personal property.
The act of converting real property into personal property is called:
- severance - Severance is the act of converting real property into personal property. You could say, then, that severance is the opposite of affixation.
How many TREC promulgated contract forms are there?
- six - The six TREC promulgated contract forms are: One to Four Family Residential Contract (Resale), Unimproved Property Contract, New Home Contract (Incomplete Construction), New Home Contract (Completed Construction), Farm and Ranch Contract, and Residential Condominium Contract (Resale).
In terms of the scope of authority granted, what are the three classifications of agency?
- special, general, and universal - In terms of scope of authority granted, the three classifications of agency are special, general, and universal.
According to what legal concept do contracts involving the sale or transfer of real estate need to be in writing?
- statute of frauds - No, power of attorney is one party's ability to represent another party in their stead. The correct answer is the statute of frauds. The statute of frauds requires that real estate contracts be in writing in order to be enforceable in court.
How would a listing broker BEST share a listing with other agents?
- submit it to the MLS
What are ownership rights to all that is found beneath the surface of the tract of land owned, extending downward to the center of the earth?
- subsurface rights - Riparian rights govern the use of flowing water, such as rivers and streams that pass through or border a property. Ownership rights to all that is found beneath the surface of the tract of land owned, extending downward to the center of the earth are known as subsurface rights.
What are the possible consequences if a licensee attempts to lure away the already represented client of another broker in Texas?
- suspension and/or revocation of their license - The possible consequences if a licensee attempts to lure away the already represented client of another broker in Texas include suspension and/or revocation of license.
Requirements to become a Texas real estate license holder include:
- taking the required education classes, passing the Texas Real Estate Licensing Exam, being of legal age - Requirements to become a Texas real estate license holder include taking the required education classes, passing the real estate exam, and being of legal age.
Oswald's home was foreclosed on. A contractor put a $5,000 mechanic's lien on the property on January 22, 2019. He owed $187,000 on his mortgage, originally taken out on May 1, 2015. He also owed $18,000 on a second mortgage, taken out September 13, 2017. He also owed $12,000 in property taxes. When the house is sold, in what order will these debts most likely be paid?
- taxes, mortgage, second mortgage, mechanic's lien - In lien priority, taxes will almost always come first. Then the debts will be satisfied in the order they were created, unless one has a subordination clause.
Which one of the following actions should an intermediary broker AVOID?
- telling the buyers the seller may accept a lower price without the seller's knowledge - As an intermediary broker, a representative of both sides (seller and buyer) is prohibited from disclosing the owner's acceptance of a price less than the asking price, unless it's with written consent. The same goes for a buyer's or tenant's willingness to pay more than the offer price.
What does a quitclaim deed do?
- terminates a person's claim to a property - A quitclaim deed "quits" or terminates a person's claim or potential claim to a property. It can be used to quickly clear an encumbrance from a title.
TREC's rules for the conduct of license holders in the practice of real estate is known as:
- the Canons of Professional Ethics and Conduct - TREC's Canons of Professional Ethics and Conduct serve as rules for the conduct of license holders in the practice of real estate.
According to the canons of professional ethics, what two things MUST be linked to a brokerage's website?
- the IABS Notice and the Consumer Protection Notice TREC No. CN 1-2 - The canons of consumer information and information about brokerage services require the IABS Notice and the Consumer Protection Notice TREC No. CN 1-2 to be linked to a brokerage's website.
Which canon states to treat all parties honestly and fairly?
- the canon of fidelity - The canon of fidelity states the primary duty of the real estate agent is to represent the interests of the agent's client; and the agent's position, in this respect, should be clear to all parties concerned in a real estate transaction.
An agent owes the duty of obedience to which of the following people?
- the client - The fiduciary duties an agent owes a client have been organized into six categories - and OLD CAR can help you remember them! The duties are Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care and skill. Remember that customers are owed the duties of honesty and fair dealing, disclosure, accounting, and reasonable care and skill - so agents do not owe customers the duties of obedience and loyalty.
A limited partner is usually NOT involved in:
- the day to day activities of the business - Limited partners are typically NOT involved in the day-to-day activities of the business, those activities are left to general partners.
Mutual assent, legally competent parties, consideration, lawful objective, and adherence to the statute of frauds are:
- the five components of a valid contract - No, mutual assent, legally competent parties, consideration, lawful objective, and adherence to the statute of frauds are the five components of a valid contract.
Who must be confirmed by two-thirds of the Texas Senate?
- the governor's appointed TREC commissioners - The correct answer is that the governor's appointed TREC commissioners must be confirmed by two-thirds of the Texas senate.
Real estate refers to the land and improvements on it, while real property refers to:
- the land, improvements, and the bundle of legal rights of ownership
After a lease expires in a unit where the landlord made modifications for the tenant's disability:
- the landlord may require tenants to return the property to its unmodified condition - The landlord can require the tenant to return the property to its unmodified condition at the end of the lease.
After a lease expires in a unit where the landlord made modifications for the tenant's disability:
- the landlord may require tenants to return the property to its unmodified condition - the ADA does not reimburse landlords for modifications. The landlord can require the tenant to return the property to its unmodified condition at the end of the lease.
Who determines the amount a cooperating broker will be compensated?
- the listing broker - The amount offered to a cooperating broker is at the sole discretion of the listing broker.
What is one thing TREC will judge license applicants on over the course of their application?
- their moral character - TREC will determine if each applicant meets their standards for honesty, integrity, and moral character. This determination must be made within 30 days of a person applying.
In general, what is the purpose of the Texas Department of Housing and Community Affairs?
- to protect and expand affordable housing
What is one of the major objectives of the Texas License Law?
- to protect consumers from incompetent or unethical brokers and salespeople
In a rectangular survey system, a line that runs east-west every 6 miles is called a:
- township line
A store owner builds and attaches a display case to the wall when leasing a convenience store that he will take with him at the end of the lease. The display case is an example of a:
- trade fixture - a fixture refers to an object that was once personal property, but which has now been permanently attached to the land in such a way that it becomes part of the real estate. The display case is an example of a trade fixture. Trade fixtures are items that a tenant uses in their business that will be removed at the end of the lease.
Fructus naturales are:
- trees, persistent decorative plantings (such as perennial landscape plants), and uncultivated plants - Trees, persistent decorative plantings (such as perennial landscape plants), and uncultivated plants are referred to as fructus naturales and are usually considered to be real property because of their permanence.
Grandma owns property that she wants to pass on to Junior when she dies. She places it in a trust managed by Ms. Manager. In this scenario, what term best describes Ms. Manager?
- trustee - Junior is the beneficiary. Grandma is the trustor, and Ms. Manager is the trustee.
Who holds title and manages the property in a trust?
- trustee - The trustee carries out the trustor's wishes by holding title to the trust and performing according to the trustor's wishes concerning the property. Think of the trustee as the trusty helper taking care of the title until the property can be transferred. The individual who receives the trust is called the beneficiary.
A broker drafting a legal document that transfers an interest in real property could be considered:
- unauthorized practice of law - Incorrect; Drafting a legal document that transfers an interest in real property would be considered the unauthorized practice of law by a broker.
In what kind of contract is only one of the parties obligated to perform?
- unilateral - A unilateral contract is a contract in which only one of the contracting parties is bound to act. It is a contract made between two or more parties in which only one of those parties makes a promise or otherwise accepts an obligation.
In what kind of contract are there TWO parties but ONE promise?
- unilateral - No, there is no such thing as a multilateral contract. The correct answer is unilateral. In a unilateral contract there are TWO parties but ONE promise. Only one party is required to perform.
Which term refers to the fact that no two tracts of land are the same?
- uniqueness - Uniqueness refers to the fact that no two tracts of land are the same.
Which of the following can be used to determine air rights, as well as condominium ownership boundaries?
- vertical land description - A vertical land description is most commonly used when air rights and subsurface rights need specific explication. It can also be the method for expressing condominium ownership boundaries.
Which of the following is NOT a federally protected class?
- veteran - Race, national origin, sex, familial status, disability, religion, and color are all federally protected classes, but military status is not considered in federal fair housing.
What is redlining?
- when a lender refuses to lend to people in an area - lenders would actually draw a line around a certain area on a map and refuse to lend to people in that area at all.
Which of the following best describes when a broker might act as an intermediary in Texas?
- when both the seller and the buyer are clients of the same broker - A broker can act as an intermediary in a transaction in Texas when both the seller and the buyer are clients of theirs. The broker must have written consent from both parties to be an intermediary.
What is gratuitous agency?
- when the real estate agent works for free and receives no commission - When an agent is held to the obligations of an agency relationship, despite the fact that no compensation is offered or paid, they are providing gratuitous agency.
According to the Equal Credit Opportunity Act (ECOA), which of these factors can a lender NOT take into consideration when approving or denying a loan?
- whether or not a person uses public assistance.
The primary difference between an executory and an executed contract has to do with:
- whether or not the terms of the contract have been completely fulfilled by all parties - The primary difference between an executory and an executed contract has to do with whether or not the terms of the contract have been completely fulfilled by all parties.
What will a CLUE report tell you about a parcel of real estate?
- whether there has been an insurance claim on it in the last five years - A CLUE report shows whether any insurance claims have been made on a piece of property in the last five years, and if so, the details of those claims.
If a licensee changes their address, how long do they have to notify TREC of the change?
- within 10 days of moving - No, the correct answer is that a licensee must notify TREC of a change of address within 10 days of moving.
What is required for a broker to act as an intermediary in a real estate transaction?
- written consent from both parties - In order for a broker to act as an intermediary and represent both the buyer and seller in a single transaction in a real estate transaction, they must receive written consent from both parties, treat each party fairly and honestly, and not disclose confidential information to either party.
The Golden Rule says to treat others like:
- you would want to be treated - According to the Code of Ethics of the National Association of REALTORS@, brokers can make the best ethical decisions by following the Golden Rule: treat others as you wish to be treated