State Exam

A real estate salesperson decides to sell his own property without using a broker. In offering his property for sale, what must the salesperson do?

(Once you become a licensee you must disclose this fact when selling or buying a home even if for your own property)

Section 5.008 of the property code states that a seller of a residential property of not more than ____ dwelling unit(s) to deliver a seller's disclosure notice to a buyer on or before the effective date of a contract

1(A seller's disclosure is only required on a single family home. There is no requirement for a duplex or any property with more than one unit.)

When was the Texas Real Estate Commission created

1949

A real estate license in Texas is issued by

A real estate license in Texas is issued by

If the seller is to remain in the property after closing:

A seller's temporary Lease Form promulgated by TREC should be attached to the contract. (If the seller of the property wants to remain in the property after closing a seller's temporary lease should be attached to the sales contract. The purchaser of the property becomes the owner of the property at closing.)

Which of the following properties would likely merit the highest capitalization rate?

A strip mall with limited access to traffic, the best choice here is the strip mall. Although it has limited access it will still produce more income then the other three choices.

Which of the following would NOT be exempt from the seller disclosure requirements of section 5.008 of the Texas property code?

A.) A home being sold by the executor of the estate of his mother who died last month. B.) A condominium unit currently occupied by the owners. <- CORRECT C.) A newly constructed single-family residence that will be ready for occupancy next week. D.) A home being sold by a bank that received title through a Deed In Lieu of Foreclosure. (All property owners selling their single unit property must deliver to the buyer a seller's disclosure according to state law)

Which of the following is NOT acceptable language for Special Provisions in paragraph 11?

A.) Buyer will pay for the owner's title policy and the mortgagee's policy. B.) Seller will pay for the appraisal called for in paragraph 12. C.) Time is of the essence when interpreting the provisions of this agreement. < CORRECT D.) Buyer will do a walk through prior to closing the transaction. (An licensee is prohibited from practicing law and can not add any details changing the provisions of the contract. The licensee may add factual information agreed to by all parties)

All of the following are violations of the Texas Real Estate Licensing Act EXCEPT

A.) Commingling. B.) Taking a net listing. <- CORRECT C.) Not disclosing a dual agency. D.) Accepting a secret profit. (Net listing are not illegal. This is common practice when dealing with commercial listings)

When electing to use the option paragraph of the contract, the buyer MAY within the time specified in the paragraph, do any of the following EXCEPT:

A.) Complete the repairs himself before the end of the option period. <-CORRECT B.) Terminate the contract. C.) Do nothing and proceed to closing. D.) Amend the contract waiving the right to terminate.

Which of the following is the Texas Real Estate Commission NOT empowered to do?

A.) Contract with a national firm to write and administer an exam to determine competency of a licensee applicant. B.) Suspend or revoke the license of a broker found guilty of giving legal advice. C.) Publish forms for mandatory use by those to whom it issues a broker or salesperson license. D.) Make a payment from the Recovery Fund to pay the legal fees of a salesperson that was found to be innocent. <-CORRECT (The recovery fund can only pay the aggrieved person who receives a judgement from a licensee in a court of law)

When presenting an offer to the seller, the agent's responsibility is to:

A.) Counsel, where necessary, but do not put words in the seller's mouth B.) Be sure the seller understands completely all the terms and conditions C.) Present the entire offer objectively an as favorably as possible D.) All of the above <- CORRECT (When presenting an offer to a seller, the agent should make sure they understand the offer, talk with them about their choices and present in a favorable manner)

What would not be covered under a construction warranty?

A.) Faulty workmanship B.) Faulty material C.) Faulty A/C unit D.) Structural defect <-CORRECT (The structure of a property is covered by a HOW that is issued at the time of closing to the homeowner. This are normally for a 10 year period)

When earnest money is deposited with an escrow agent, that escrow agent:

A.) Is not responsible for the performance of any signatory. B.) Has the right to secure a written release of all signatories. C.) Is not liable for interest on the money. D.) All of the above. <- CORRECT (The escrow agent is responsible for the money so received but is not responsible for the performance of the contract. They are not allowed to receive any interest on money that does not belong to them and since they are not a part of the contract they will require that all parties to the contract agree before releasing any money to either party of the transaction)

An agency relationship may be terminated by all of the following EXCEPT the

A.) Owner decides not to sell the house. B.) Broker discovers that the market value of the property is such that he or she will not make an adequate commission. <-CORRECT C.) Owner dies. D.) Broker secures a ready, willing and able buyer for the seller's property.

All are protected classes EXCEPT

A.) Race. B.) A 35-year old man. <CORRECT C.) Handicap. D.) National origin.

The Realtor Code of Ethics

A.) Recommends that all Realtors follow the golden rule B.) Recommends that all Realtors arbitrate C.) Sets standards of practice for all Realtors to follow D.) All of the above <- CORRECT

Which of the following is NOT registered, licensed, certified or regulated by the Texas Real Estate Commission?

A.) Residential rental locator's. B.) Appraisers. <- CORRECT CHECK!!!!!!!!!!!! C.) Residential service contract companies. D.) Easement and right-of-way agents.

The Texas Property Code addresses the landlord's responsibilities regarding

A.) Security devices. B.) Smoke detectors. C.) Both A and B. <-CORRECT (The Texas Property Code does address the minimum requirements for security devices and the insulation of smoke detectors. Smoke detectors must be working at the time the property is leased but it is the tenants responsibility to maintain the units)

Under the Texas Property Code, Sub chapter F, landlords are required to install smoke detectors. All of the following are true except:

A.) Smoke detectors must be in working order when the tenant moves in B.) The code specifies the number and placement of the detectors C.) It is the landlord's responsibility to change the batteries <-Your Answer CORRECT D.) Not required for temporary residential tenants not exceeding 90 days

In the event of buyer's default, the seller may:

A.) Terminate the contract. B.) Receive the earnest money as liquidated damages. <-Your Answer WRONG C.) Enforce specific performance. D.) All of the above.

In a DTPA suit the consumwe must prove

A.) That the rules governing disclosure are intentionally violated B.) That the defendant intended to hurt him C.) reliance on his detriment u7p[on the act or comission of the defendant D.) all of the above <- CORRECT

An agency relationship may not be terminated because of

A.) The death of the agent B.) The buyer not being able to qualify for a loan C.) The buyer requires the agent violate the Fair Housing laws D.) The buyer terminates a sales contract with the seller of the property<-CORRECT (The termination of a sales contract does not terminate any agency relationship agreement with the broker)

The "Code of Ethics and Standards of Practice" cover all of duties to the following EXCEPT

A.) The public B.) Other Realtors C.) To clients and customers D.) To the Real Estate Commission CORRECT (The "Code of Ethics and Standards of Practice" relates to the duties to other Realtors, the public and clients & customers. Realtors have no duties to the Real Estate Commission.)

The financing paragraph will be used if financing is to be

A.) Third party financing B.) Assumption C.) Seller Financing D.) All of the above

The seller and the buyer have agreed to all of the terms of a contract but later decide to agree to a change in the agreement. What form should the agent use to make this change?

An Amendment (An amendment is use to change a contract after all parties have agreed to the terms. You may not add to the existing contract after the agreement has been signed by all parties)

A broker has received the necessary written permission from the seller and the buyer to function as an intermediary. She has also received written permission to appoint sales persons to each of the parties. When the broker has given the proper written notice to each of the parties about who is appointed to whom, which of the following statements is true?

An appointed salesperson may give advice and opinions to one of the parties. (Only the appointed salesperson may give advice and opinions to the party that they are appointed. The other salesperson may only give advice and opinions to the party they are appointed. The broker may not give advice to either party)

A licensee must use the earnest money contract forms, addenda and leases promulgated by the commission unless

An attorney prepares the forms and the property owner requires their use. (If the property owner requires the use of another contract that has been prepared by a licensed attorney: the licensee may use that contract form provided by the attorney. In all other cases the licensee must use the promulgated contract forms)

The right that a power company acquires in order to lay a service line across a customer's property is called

An easement in gross. (An easement in gross is the proper term to be used an does not pass with the property to any future purchasers)

According to the provisions of Texas Real Estate Licensing Act, which of the following must be included in every listing agreement with a Texas Licensed Broker?

An ending date that is not subject to prior notification. (ALL listing agreements must have a termination date that are not subject to prior notice)

A leasehold estate that continues for a definite period of time whether it be for years, months or weeks is a(n):

An estate for years has nothing to do with years. Any lease that has a definite start date and ending date, whether for a day, month or years is considered to be an estate for years

Which one of the following BEST describes a conventional life estate?

An estate in which there is not time limit on its existence. (A conventional life estate has no time limit but the property will revert to the remainderman upon the death of the life estate)

Andrew Wang filed an application for licensure with the Texas Real Estate Commission. The application was rejected. Which of the following would be the reason for which the application was rejected?

Andrew turned seventeen on his birthday last month. (In order to receive a license to practice real estate the minimum age is 18)

When offering property for cooperation through the Multiple Listing Service, the listing broker is assuring all of the following EXCEPT that

Any offer will be accepted as written. (The MLS is just a means to advertise the property to other licensee's and compensation will be paid if another broker finds a buyer that presents an acceptable buyer to the seller and the seller contracts to sell the property)

According to Real Estate license act of Texas which one of the following actions would be a fair and impartial act of an intermediary?

Appointing associated licensee to work with the parties in a transaction would be a fair and impartial act for an intermediary

According to the Real Estate License Act, which of the following is a fair and impartial act for an intermediary

Appointing associated licensees to work with both the buyer and seller (When a broker moves to the intermediary position, he/she must appoint associated licensees to work with both the buyer and the seller while remaining neutral themselves)

Under community property, the co-owners

Are spouses. (Community property refers to property owned by husband and wife.)

The Real Estate Recovery Fund has a balance of $699,000 at the end of a calender year. What is the Texas Real Estate Commission authorized or required to do?

Assess each licensee a prorate share to replenish the fund. (If the recovery fund drops below $1,000,000 at the end of a calender year, each licensee will be assessed $10 or their share to bring the fund back to a minimum of $1,700,000)

When must a licensee present the statutory "Information About Brokerage Services" to a prospective seller or purchaser?

At the time a meeting occurs where substantive discussion about a specific property takes place (The IABS needs to be presented to any party before any substantive discussion takes place about any specific property. This allowing that party to understand the relationship between the parties involved)

The option paragraph of the contract creates an executed contract.

False (An executed contract is when ALL parties have completed all the terms of the contract. This happens upon closing and the seller conveys the property to the buyer and the buyer pays the purchase price.)

The seller must notify the buyer to have the abstract of title examined by an attorney or obtain a policy of title insurance:

False (The broker must inform (in writing) that the buyer should obtain an abstract of title examined by an attorney or obtain a policy of title insurance)

A voluntary dispute resolution process is called litigation.

False (This is call mediation)

The seller and the buyer has the right to terminate the contract under the option period

False, only the buyer may terminate (only the buyer may terminate the contract with no limitations or restrictions. They may terminate for any reason during the option period)

Responding to or facilitating inquiries about the ancestry or familial status would put the licensee in the position of violating

Federal and state laws as well as the Texas Real Estate Commission rules.(A license may not discriminate because of familial status (families with children) or because of the ancestry of a party. They are protected by federal law, state law, and the rules of TREC)

Under the authority of a broker or salesperson license, a Real estate licensee may

Fill in the blanks to reflect the wishes of the party being represented. (A licensee may not give legal advise. However they may fill in the blanks of a real estate contract as directed by the parties. Remember, the contract is between the purchaser and the owner, not the licensee's)

Reckless disregard for truth with the intent to obtain a financial advantage over another is a definition of

Fraud. (Fraud is defined as willfully and knowingly taking advantage over another to gain financially)

All of the following are required by the Canons of Professional Ethics and Conduct of the Texas Real Estate Commission EXCEPT that the licensee

Fulfill his or her fiduciary duty to third parties. (The licensee has no duty to third parties (customers) other then to treat them fairy and honestly. The licensee's duty are always for their clients. The licensee must fulfill his or her fiduciary duties to their client above all others.)

In order for a broker to bring suit to collect a brokerage fee, the broker must do all of the following EXCEPT

Have the transaction close (The client has hired you to preform an act. Seller, to find a qualified buyer. Buyer, to find them a property suitable to purchase. If you preform your duties, are licensed at the time of the sale, are employed, and inform the buyer to have the abstract examined by an attorney you are due your commission even if the sale is not completed)

A real estate salesperson decides to sell his own property without using a broker. In offering his property for sale, what must the salesperson do?

He must disclose to the buyer that he holds a real estate license. (Once you become a licensee you must disclose this fact when selling or buying a home even if for your own property)

What must the Texas Real Estate Commission do before revoking a salesperson's or broker's license?

Hold a hearing. (The Texas Real Estate Commission must hold a hearing giving the licensee the opportunity to be heard before the commission)

A Texas homeowner may be allowed certain protection from judgments of creditors as a result of the state

Homestead laws. (Texas homestead laws protect the homeowner from creditors unrelated to the property. Thus, outside creditors can not force the sell of a homesteaded property because the owner has not paid other creditors unrelated to the homesteaded property)

To comply with the Texas Real Estate License Act, an advertisement for property offered by a license should

Identify the advertiser as a licensed broker or agent. (Anytime a licensee advertises property for sale or lease they must identify that they are a licensed broker or agent in the advertisement)

Failure to act timely to have a court enforce deed restrictions may result in the violations being allowed because of the legal concept called

If a property owner does not exercise their right to have a deed restriction enforced within a timely matter, that deed restriction may become null and void through a legal term called laches

When a salesperson leaves the association of a broker for any reason, how soon must the broker return the salesperson's license to the Texas Real Estate Commission and notify the salesperson in writing that the sponsorship is terminated?

Immediately. (When a salesperson is terminated, the broker must immediately return the license to TREC and notify the agent in writing that the sponsorship had been terminated)

An agreement created by the actions of the two parties involved sometimes not intended

Implied Contract (Implied means that a contract or is created because of the two parties actions. Such as one party doing repairs on a property thinking that he/she would be able to purchase the property after the repairs were completed because the seller said he/she would be selling the house at a certain price after repairs were complete)

An earnest money check has been returned to the title company by the prospective buyer's bank marked NSF (Non-Sufficient Funds). What should the listing agent do?

Inform the seller. (The contract is an agreement between the seller and the buyer, not the agent. You should inform the seller of the situation and you may advise, but the decision to what to do is that of the seller.)

A real estate broker loses the right to a commission if he or she

Is not licensed when a sale occurs. (A broker MUST be licensed at the time of the sale of the property. This is when the broker produces a ready, willing and able buyer at the terms that the seller had requested.)

A real estate broker acting as the special agent of the seller

Is obligated to render faithful service to the seller. (A real estate broker is to put his/her client above all others and to represent the client to the best of his/her ability. The broker CAN NOT make decisions for the client or sign any agreement that is binding on the principle/client)

Earnest money

Is used to make the offer more enticing to the seller. (Earnest money is NOT required to have a valid contract. The seller will normally require earnest money before accepting the offer. This does make the offer/contract more inviting to the seller)

The buyer as well as the seller must initial each page of the residential listing agreement:

It is only naecessary for the seller to initial the residential listing aqreement since he/she is listing the property for sale

Sherry Goodfellow always said that her two best friends would inherit her property when she died. Six months ago she died without having gotten around to writing a will. She has no living relatives. What will happen to her property?

It will become the property of the state of Texas under the state's legal provisions. (If someone dies without a will (intestate) and has no heirs, the property will go to the state of Texas. This is call escheat.)

Prorate the seller's taxes for a closing on March 18, 2001, in which the valuation of the property is $265,000 and the combined tax rate is $3.85 per $100 valuation. Taxes for 2000 have been paid. Use a calender year.

January 31 days, February 28 days, March 18 days = 77 days $265,000 x .0385 = $10,202.50 / 365 x 77 =$2,152.31

Daryl Graves, a widower, died without leaving a will or other instruction. His surviving children may acquire ownership of his real estate holdings by

Law of Intestate Succession. (According to the law of intestate succession all real property will first pass to the surviving children of the property owner of a unmarried person)

What law governs the relationship between a real estate licensee and a client?

Law of agency. (The laws of agency governs the relationship between licensee's and clients (principles))

A title insurance in favor of the mortgagee will insure the:

Lender, The lender is called the mortgagee

A Landlord not offering as many properties to a family with children that were offered to a single prospect is an example of

Less favorable treatment, By not offering all the available properties to all applicants is considered to be less favorable treatment and is prohibited by Fair Housing Laws

The One-to-Four Residential contract states

Licensees cannot give legal advice (A licensee is never allowed to give legal advice. You should always inform the parties if they need legal advice to consult an attorney)

The One-to-Four Residential contract states:

Licensees cannot give legal advice (A licensee is never allowed to give legal advice. You should always inform the parties if they need legal advice to consult an attorney)

An advantage for organizing a business as a limited liability company is its

Limits on the liability of members for company debts or other obligations. (As a limited liability company the company is responsible for the debt and obligations of the company and the members are limited to the amount that they invested.)

Encumbrances on real estate

May include liens, easements and deed restrictions. (If the purchaser is willing to accept the property with the encumbrances then, this will not stop the sell of the property. The title company and the survey will inform the purchaser of the encumbrances)

Under riparian rights, Bill, owner of land located along the course of a non-navigable stream

May own the land under the water to the exact center of the waterway, If it is a non-navigable waterway the owner of the property owns the land under the water to the center of the waterway. If the stream is navigable the owner owns only up to the mean vegetation line

Who can use the forms produced by the Texas Apartment Association of Realtors.

Members. (Only member's of the Texas Apartment Association of Realtors are authorized to use their forms)

A salesperson is about to change firms. Should he contact all of his buyer clients and advise them that he will still represent them at his new firm?

No, because the buyer's agreement is with the broker. (All listing and buyer clients belong to his/her broker and are the property of their sponsoring broker)

If a property has had mold but it has been remediated, is the seller required to disclose this to the purchaser?

No, if it has been more then 5 years (Mold must be disclosed even if it has been remediated, for a period of 5 years. This applies even if the current owner is not the party that had the mold issue or had the remediation done)

A buyer defaults under the terms of an agreement that used a Texas Real Estate Commission 20-11 contract form. The sellers are willing to accept earnest money as liquidated damages. Later the sellers decide that the liquidated damages were insufficient to compensate them for their financial losses. Can the seller come back and seek additional money damages?

Not according to the term of the Texas Real Estate Commission 20-11 contract form. (Once the earnest money is returned neither party may sue the other party. If either party wants to sue the other for any reason the earnest money is not to be returned until the suit is completed)

Which of the following does the Statute of Frauds require to be in writing

Notes and mortgages on real estate, All documents that transfer title or that will cause a lien on a property MUST be in writing per the Statute of Frauds

Each resident broker must maintain a fixed office within Texas. What must a broker do when he or she wants to maintain multiple offices?

Obtain a branch office license for each location.

Under the Texas Real estate Licensing Act, all of the following actions are cause to suspend or revoke a license held by a broker or salesperson EXCEPT

Offering property for sale without a signed listing agreement. (Although not recommended, offering property for sell without a signed listing agreement is not illegal. The listing agreement states the amount to be paid if the property does sell. Without a listing agreement there is no written agreement from the owner to pay the broker upon closing and therefore the broker can not sue for a commission.)

A Real Estate salesperson may receive compensation from

Only the employing broker (Only the sponsoring broker may pay the salesperson. All compensation must be paid by the sponsoring broker as of the date that the agent earned the compensation)

Can a broker or salesperson use pictures of another broker or salesperson for their own marketing/ What are the restrictions on doing so

Only with the consent of the other broker or salesperson who took the pictures (The pictures of anther broker or salesperson is their personal property and cannot be used by another broker or salesperson without their consent)

A real estate licensee must use a TREC promulgated form unless a form has been written and is required by the

Owner of the property (The owner may draft their own sales contract and request that the licensee use the contract. It must be written by the owner or the owners attorney

The Canons of Professional Ethics and Conduct for brokers and salesperson licensed by the Texas Real Estate Commission requires a licensee to

Place the interest of his/her client above all others including his/her own. (A licensee MUST place their clients interest above all others including his/her own. This is can fiduciary duties)

Your seller says that he doesn't want to accept any offers from buyers who are represented by a buyer's agent. What should you do when a buyer's agent brings an offer on the listing on behalf of his/her client?

Present it to the seller. (You must present ALL offers to your client. The seller may reconsider once an offer is presented from the buyer agent.)

A seller received an offer last evening and is considering how to respond to it. While the seller is still thinking about the first offer, another offer is given to the listing agent. What should the listing agent do?

Present the second offer immediately. (All offers MUST be presented to the seller unless you have written instructions from the seller not to present any more offers.)

In an agency relationship, the person identified as the client is usually the

Principal.

When must the buyer receive the Seller's Disclosure Notice

Prior to making an offer on the property (A buyer must receive the Seller's Disclosure Notice prior to making any offer on the property or the contract becomes voidable)

An outside leasing agent involved in lease negotiations, coordination of the transaction, and fee collection is a

Real Estate Agent (In order to be involved in negotiation of the transaction and collect a fee if working outside the property as an independent agent, the person must be licensed as a broker or salesperson)

Who is NOT protected under the provisions of the Texas Deceptive Trade Act?

Real estate brokers who sponsor sales persons. (Real Estate brokers and salesperson are not protected under the TDPA. Parties of the transaction are protected)

The "Termination Option" in a contract:

Requires a fee for a specified time period. (In order to have a valid option period money must be exchanged. The option money is non-refundable if the buyer does not close for any reason. If the contract so states the option money may be credited to the buyer upon closing)

The option to purchase agreement

Requires a fee for specified time period (In order to have a valid option, some money must exchange hands or there is NO option agreement There is no minimum amount.)

he seller says that he is going to sell you one hundred acres of land, but he is going to retain the mineral rights. What is this called?

Reservation, The seller is reserving the mineral right to the property and will retain ownership of those rights.

When a broker discharges a salesperson, he should

Return the salesperson's license to TREC (As soon as a broker discharges a salesperson it is required that he/she return the salesperson's license to the commission)

What recourse is available when a broker and a salesperson have a dispute over the commission split on a transaction?

Seeking mediation, arbitration, or civil court action. (The Real Estate Commission will NOT get involved over commission entitlements due a salesperson and therefore the parties must seek mediation, arbitration or civil court action. Remember TREC is there to protect the public.)

The statement " A broker must be employed to recover a commission for his or her services" means that the

Seller must have signed an agreement to pay a commission to the broker for selling the property.(The seller ha "hired" the broker to help him/her market their property and find a ready, willing and able buyer. This is done by having a signed listing agreement (employment contract) with the seller stating how the commission will be paid and the amount that the broker will receive)

A licensee who draws an earnest money contract instead of using a form promulgated for a specific purpose

Shall have his or her license revoked or suspended. (A licensee who draws an earnest money contract is illegal practicing law and their license WILL be revoked or suspended. Practicing law without a license is the only time a license WILL be suspended or revoked. Any other violation of the act, the license MAY be revoked or suspended)

Susie salesperson has a signed buyer representation agreement to represent Bill and Beth Buyer. She shows them a home listed by Leslie Lindeman who tells Susie that the sellers are desperate and that she is sure that she can get them to accept $10,000 less than the asking price. What should Susie do?

Share the information with Billy and Beth. (Although the listing agent should not have disclosed this information, the buyer's agent (knowing this information) should always share it with her client)

A landlord refuses to return a security deposit to a tenant who has fulfilled the terms of the lease, returned the keys to the landlord, furnished a forwarding address and left the premises in good condition by most people's standards. What remedy is available to the aggrieved tenant?

She may file suit, after waiting 30 days, in the Justice of the Peace Court and be awarded three times the amount of the security deposit plus reasonable attorney fees and $100, A landlord that wrongly withholds a security deposit may be subject to 3 times the amount of the security deposit, attorney fees and $100 if the courts find in favor of the tenant. This is filed in the JP court in the precinct that the property is located

No Federal Fair Housing laws are violated if a landlord refuses to rent to

Students. (Students are not a protected class by the Federal Fair Housing laws. You should always check with local law in your area.)

It is unlawful for a person to act as a real estate salesperson unless

Such person is legally associated with a licensed Texas Real Estate broker. (All salesperson must be sponsored by a real estate broker before performing any acts as a real estate licensee)

When a client tells an agent to do something illegal, what should the agent do?

Terminate the agency relationship. (Anytime a client ask a licensee to do something illegal and the client insist that it be done, the licensee has no choice but withdrawal for the agreement)

The seller's disclosure notice is part of

Texas property code

Which of the following must be disclosed by a licensee when offering a seller's property for sale?

That the deceased owner was murdered. (If there has been a murder or a death related to the condition of the property, it must be disclosed by the seller. Suicide or death by natural causes does not have to be disclosed)

A Texas deed lists both the wife and the husband as owners of the property in which they have taken up residence. It is presumed

That the property is community property with each of them owning a half undivided interest. (Since both wife and husband are on the deed and it is their residence, the property is considered community property. To convey the property both must sign the deed and any other documentation to sell the property. The property is also their homestead and that requires both to sign to release any homestead rights.)

Who or what requires a person to hold a license issued by the Texas Real Estate Commission prior to performing acts of brokerage such as selling, leasing, or locating real property for sale or lease?

The Texas Legislature. (The state of Texas requires that before performing any acts as a broker or salesperson you must first obtain a license that is issued by the Texas Real Estate Commission)

A closing occurs on July 5. According to the terms of the agreement created by using the Texas Real Estate Commission 20-11 form, which of the following statements is true?

The seller is considered to own the property the day of closing and therefore would be responsible for the taxes the day of closing

When does the seller agree or disagree to allow sub-agency

The seller must agree to sub-agency at the time the listing agreement is signed

Which of these are NOT included in an appraisal report

The survey is done independent of the appraisal. A surveyor will do the survey that will be required by the mortgage company if a loan is involved

Even if the number of days in paragraph one of the Third Party Financing Addendum is left blank, the buyer still has the right to terminate the contract if they cannot obtain financing

This is false (If there are no days stipulated in the Third Party Financing Addendum, than the buyer may not terminated the contract if they are unable to obtain financing)

One form of title insurance is a:

Title policy

One form of title insurance is a

Title policy (One form of title insurance is a title policy)

Which of the following is an appropriate action for an intermediary

To appoint associated licensees to work with the parties (When the broker enters into an intermediary position; if he/she appoints an associated licensee to work for one party he/she must appoint an associated licensee to work for the other party as not to favor one party over the other. The broker must not help either associated licensee with the negotiations)

What is the stated purpose of the Texas Real Estate Recovery Fund?

To protect the public from monetary loss due to the illegal acts of licensees. (The recovery fund was established to protect the public from monetary loss due to illegal acts of a licensee.)

A fiduciary relationship is primarily a relationship of

Trust (A fiduciary relationship is a relationship of trust that the principle places with their agent. The agent must place the principles interest above that of his own and all others)

A legal arrangement whereby title to property is held for the benefit of a beneficiary is a

Trust. (Under a trust agreement the trustee manages the trust for the benefit of the beneficiary while legal title is held by the trust)

Salesperson Betty Johnson has found the perfect house for herself. She learns that the owner may be interested in selling, so she introduces herself and is allowed to make a listing presentation. She gets the listing for her brokerage after presenting a CMA (Competitive Market Analysis) that emphasizes the lowest priced homes in the neighborhood. As a result of the CMA (Competitive Market Analysis), the seller decides on a relatively low asking price. Betty immediately presents full-price offer from her cousin, but does not reveal the relationship to the seller. The offer is accepted by the seller. A few days after the sales closes, Betty buys the property from her cousin. Betty's conduct is

Unacceptable as a violation of her fiduciary obligations to her principal. (When you have a listing agreement, you full fiduciary duties are that of your client. These duties are above all others and of the licensee)

Pat, who lives in a suburb in which many homes are rented, decides to open a rental agency in order to assist her friends in finding suitable renters. Pat's conduct is

Unacceptable because it involves an activity for which a Real Estate license is required. (Anyone engaging in the rental of a property for another MUST first obtain a real estate license)

Salesperson Jason Smith is employed by A to Z Realty, Inc. Jason learns that A to Zs broker of record missed her licensing renewal deadline. When Jason questions the broker about this, the broker laughs and says, "Don't worry. There is always a grace period to renew." Jason knows that this in not true, but decides not to say any more about it. Jason's conduct is

Unacceptable because upon expiration of his sponsoring broker's license, Jason's salesperson license is inactive. (If a broker fails to renew their license as required and the broker license become EXPIRED, all agents sponsored by that broker will immediately go inactive until they find a new broker to sponsor them)

Under which of the following situations may a property be foreclosed in Texas without judicial action?

Under the provisions of a duly executed and recorded Deed of Trust Mortgage instrument. (The Deed of Trust does allow for foreclosure without going to court under the provisions of the document. This is called a non-judicial foreclosure.)

An oral contract to lease real estate for a four year period is:

Unenforceable. (Any lease for one year or longer must be in writing to be enforceable)

The broker's responsibility at the closing is to

Verify and receive the brokerage fee. (The closing of the property is between the buyer and the seller. The brokers only duty to be performed at the closing is to verify and receive his/her commission)

What is the effective date of the contract?

When the last person signs and initials all changes (When all parties have signed and initialed the contract it then becomes effective)

When may a broker functioning as an intermediary appoint one licensee to communicate with the seller and another licensee to communicate with the buyer?

When written permission to do so has been obtained from the parties. (The broker may appoint a licensee to communicate with the seller and another communicate with the buyer only after receiving written permission from BOTH parties)

A seller told her broker that she wanted a net $150,000 after she paid off the $60,000 loan that she owned to Deep Pocket Mortgage Company. The broker found a buyer willing to pay $300,000 for the property. The broker arranged the sale and gave the seller the $150,000 she wanted. Which of the following statements is FALSE?

While net listings are not illegal, per Se, the broker took unfair advantage of the client. (Although net listings are not illegal, the broker SHOULD have informed the seller of the true value of their property. This could be considered as taking an unfair advantage of their client)

Tenancy in common with a separate agreement for use is called

With a time share, the owners of the property are tenants in common with the other owners. With each owner having a designated time in which they are allowed to use or occupy the property

If a seller insist that you not disclose a "latent defect" in the property, what should you do

Withdraw or do not take the listing (If a seller does not want to disclose a "latent defect" in the property you have no choice but to withdraw from the transaction or not take the listing)

What is required in order for a salesperson, who has been appointed and assigned to one of the parties, to be able to convey confidential information about the other party to the party to whom he or she has been appointed?

Written permission of the other party (Confidential information may only be disclosed with WRITTEN permission from the other party)

A buyer using FHA insured financing is required to pay a Mortgage Insurance Premium.

Yes. (All persons using FHA financing must pay MIP. No matter how much they are paying as a down payment)

A buyer makes an offer to purchase a property and specifies that the owner accept or reject the offer within 48 hours. Before hearing back from the owner, the buyer locates a more attractive property and withdraws the offer. is the buyer legally entitled to withdraw the offer?

Yes; either party may withdraw an offer or counteroffer at any time prior to its acceptance. (Either party may withdraw an offer or counteroffer at any time prior to its acceptance by the other party)

The opposite of an alienation clause would be

assumption, Alienation clause, sometimes referred to as the "due on sale" clause, meaning that the loan CAN NOT be assumed

What information is required to be presented at a licensees first face-to-face meeting with a consumer

duties of the broker representing one of the parties or acting as an intermediary (The document that is required to all consumers is the Information About Brokerage Services. This briefly states information about working for sellers, buyers, sub-agency and the intermediary positions)

The most common form of listing agreement is the

exclusive right to sell listing

A contract in which both partieshave fulfilled their promises and have performed on the contract is?

executed contract

A contract in which both parties have fulfilled their promises and have performed on the contract is?

executed contract (When both parties have fulfilled all parts of the contract it is then considered executed)

Rules and regulations set by the TREC..

have the same full force and effect as law (The Real Estate Commission has the right to make rules and to enforce those rules for the protection of the public)

If a salesperson from Spencer Properties list a property and another salesperson from Spencer Properties who represents the buyer, sells the property, what is the role of the broker

intermediary (The broker MUST move to the intermediary position. The broker represents both the buyer and the seller and can not favor one over the other other. The broker may appoint an agent for the buyer and another for the seller, this giving both parties representation.)

Failure on the part of the broker to advise the purchaser in writing to have an abstract examined by a lawyer of his own selection or to be furnished with or obtain a title policy:

may be cause to havce your licnese suspended or revoked, and precludes recovery of any commission to be paid on the sale (Not advising the purchaser to obtain an attorney if he/she wishes to do so is against TREC regulations)

A salesperson wants to offer a home for sale by lottery. This method is:

prohibited and grounds for suspension or revocation of their license

Qualifying a tenant includes examining the applicant's

rental history (When examining a tenants applicant the landlord may only check credit, criminal background, employment, and eviction filing. They may not discriminate because of race, color, religion, national origin, familiar status, of because of handicap)

The Texas Real Estate Commission is composed of

six brokers and three public members appointed by the governor with senate approval

The buyer who agrees to pay an existing mortgage but does not officially take personal responsibility for it is

taking the property subject to the mortgage, If a buyer assumes an exiting mortgage but the original mortgagor is still responsible for payment if the buyer does not pay as agreed with the terms of the note, this is a form of an assumption but it is subject to the seller NOT being relieved of liability of the loan. The purchaser is not personally responsible for the repayment of the loan

A person empowered to act for another is the ____________

Agent (An agent is given the authority to act for another, the principle. The listing agreement gives the authority for the broker (agent) to act for the seller (principle)

A licensee may appeal a decision of TREC by filing for a hearing in district court within 30 days

Agent (An agent is given the authority to act for another, the principle. The listing agreement gives the authority for the broker (agent) to act for the seller (principle))

The Texas Real Estate Commission does require ___________ to be licensed.

All apartment locators must be licensed if doing outside locating for a customer and/or client

Twenty-five cubic yards is equal to ________________ cubic feet.

25 x 27 = 675

What are the required number of MCE hours needed to renew a salesperson license after all SAE requirements have been met

3 hours of ethics, 3 hours of legal, and 9 hours of related MCE hours

Seth and Sarah are occupying an apartment on a month-to-month lease with rent due and payable on the 15th day of each month. How much notice must they give their landlord to terminate their tenancy-at-will?

30 days unless otherwise stipulated on the rental agreement. (30 days unless otherwise stipulated on the rental agreement.)

What is the composition of the Broker-Lawyer Committee?

6 Brokers and 6 Lawyers. 1 Public member (They all hold six year terms.'0

When the licensee functions as a principal and not an agent:

A form other than one promulgated may be used. (A licensee while seller or purchasing a property for themselves has all the rights as does any seller or buyer and therefore may draw up their own contract forms.)

A receptionist told a broker about a client who was looking for a new house. The broker contacted the receptionist's client and sold him a home. May the broker pay the receptionist for the lead?

A gift with a value of not more than $50 may be given. (A gift may be given to a non-licensed person but there is a limit of $50 in value)

A contract is said to be bilateral if:

All parties of the contract are bound to act.

Who does a buyer employ when signing a Buyer Representation Agreement?

A Broker. (Agency is always created at the broker level; therefore the agreement is between the broker and the buyer)

A prospect for the lease of a commercial property feels the need for adversarial representation and hires a broker to negotiate the lease on his behalf. The contract entered into between the prospect and the broker is called

A buyer broker agreement. (What is commonly used is the TAR form "Buyer/tenant representation agreement" Giving the broker the right to represent the client in both the lease and purchase of a property)

A violation of a provision of the Texas Real Estate License Act constitutes what type of legal violation?

A class A misdemeanor, A violation of the TRELA is a class A misdemeanor and can result in jail time and or fines. A class A misdemeanor is the highest misdemeanor and is just below a felony

Henry owns a fee simple title to unit 12 and 5 percent of the common elements. What does Henry own?

A condominium. (An owner of a condominium owns their individual unit and has a percentage of the undivided interest in the common elements)

Alley lives in the elegant Howell Tower. If a proprietary lease evidences her possessory interest, what does she own?

A cooperative unit. (With a cooperative, the property is owned by the cooperative and each share holder owns stock in the cooperative with the right to occupy one of the units under a proprietary lease)

The Texas Homestead Law provides for a reduction in ad valorem tax liability on a principal residence for all but which of the following individuals?

A couple who own a condominium in Corpus Christi and claim a Homestead in Colorado. (By Texas Law an owner can only legally have one homesteaded property at a time.)

When no promulgated form meets the needs of a particular transaction, the license may use which of the following?

A form created by a Texas licensed attorney for that type of transaction (A licensee may use a contract form prepared by a Texas licensed attorney, which is not a violation of practicing law without a license)

When the licensee functions as a principal and not an agent

A form other than one promulgated may be used

A Real Estate salesperson may

Accept compensation only from the broker under whom the salesperson is or was licensed (A salesperson can not accept a commission from anyone other then their sponsoring broker. The agent can not pay another agent or person a fee of any kind, this must be paid through their sponsoring broker)

All the salespersons in Alan's brokerage firm work as independent contractors. Their office most likely provides them with which of the following?

Access to the MLS. (As a independent contractor the sales person is responsible for paying their own taxes, health insurance and do not receive vacation benefits.)

A Real Estate broker's license is NOT required of a person who

Advertises and leases his or her own properties. (Any person may list and sell their own personal property without a license)

What should a licensee do when there are unusual matters involved in a transaction?

Advise the client to seek legal advise before signing anything. (At anytime there is a question that involves unusual matter you should refer the parties to seeks legal advise from a real estate attorney before signing anything)

Which of the following actions could leave a broker open to a charge of practicing law without a license?

Advising a seller that, in the broker's opinion, title to the subject property is not valid. (No licensee may practice law without a license and should NEVER advise on the legality of title or any other legal subject. Practicing law without a license is the only time that a real estate licensee WILL lose their license to practice real estate)

A seller is uncomfortable with some of the provisions written into an offer by a prospective purchaser. When should the seller consult his or her attorney?

Before signing the agreement. (If any party is uncomfortable with any aspects of an offer, they should seek legal advise before signing anything)

A contract which states that one promise is given in exchange for another can best be described as a:

Bilateral contract. (A bilateral contract is a contract where all parties to the contract must perform. Thus one promise is exchanged for another.)

Encouraging owners to sell their property stating that minorities are moving into the area will devalue the owners' property is called

Blockbusting (Stating that a minority is moving into the area and that property values will go down is called blockbusting and is illegal. Property value will decrease if several property owners decide to place their property on the market at the same time and therefore will flood the market and result in a lower sales price)

"I hear they're moving in. There goes the neighborhood! Better put your house on the market before value drops!" This is an example of

Blockbusting.

Which of the following would NOT be considered a violation of antitrust laws?

Brokers throughout the city set their commission rates unilaterally without consulting with competitors. (Commission rates cannot be set by companies agreeing to do so as to set pricing. Markets may not be allocated, nor can there be set rates for management fees. Brokers may however set their rate for their company as long as they do it without consulting other competitors)

Which of the following would be acceptable language to enter in the "special provision" paragraph of a Texas Real Estate Commission promulgated contract form

Buyer will do a "walk-through" of the property one day before closing (Saying that a "walk-through" will be done one day before closing is a business detail, states what someone is going to do. The other choices may attempt to create language that gives the buyer an opportunity to terminate the contract)

When the law does not speak to specific situations it is decided by

Case law (When the law does not speak to specific situations is decided by Case law)

Which of the following licensed entities does not fall under the regulatory authority of the Texas Real Estate Commission?

Certified general real estate appraiser. (Appraisers are not regulated by the Texas Real Estate Commission)

Texas Real Estate Act is now a part of

Chapter 1101 & 1102 (Chapter 1101 and 1102 is a part of the Real Estate Act)

According to the Texas Real Estate Commission Canons of Professional Ethics and Conduct, to whom do Texas brokers owe the duties of fidelity, integrity and competency?

Clients. (Your loyalties always are with your client (principle)

A broker who places earnest monies in the company's operating account is guilty of what?

Commingling. (Any money received by the broker and held by the broker MUST be deposited in a trust account within 48 hours after receiving the money.)

he term separate property is MOST CLOSELY associated with which of the following?

Community property.(Community property is property owned by both husband and wife. So when talking about separate property it relates back to property owned by the husband or wife that was acquired before the marriage or acquired after the marriage because it was inherited or received by some other means that does not qualify as community property

A real estate broker hired to sell a parcel of real estate must

Comply with the law of agency. (All real estate salesperson and broker must comply with the laws of agency. Putting the interest of their client above all others while treating all other parties honestly)

If a landlord fails to maintain his property to a safe and habitable standard, the tenant may have the remedy of

Constructive eviction, The landlord must keep the property in a safe and habitable condition or the tenant has the right to vacate the property after proper notice.

Deeds are recorded to provide:

Constructive notice, By the filing of the deed in the public records, (in the county where the property is located) this provides for constructive notice to the world. Any party can check public records and see whom the owner of the property is and any other recorded documents attached to the property

Each active real estate broker licensed by the Texas Real Estate Commission shall display in a prominent location in their place of business a

Consumer Information Form 1-1. (This informs persons that the broker and agents are licensed by the Texas Real Estate Commission and give the consumer information as to where they can file a complaint if need be)

Your buyers have signed a contract to purchase a home but the contract is subject to the sale of their current home. This is called a

Contingency (Being subject to the sale of their current home creates a contingency that must be satisfied or released prior to closing of the contract to purchase)

In a contract to purchase real property, what is the name of the clause that states that the buyer will NOT be held responsible to complete the purchase if the buyer cannot obtain sufficient financing?

Contingency clause. (This is called a "contingency clause" Meaning the contract is contingent on the purchaser being able to get the financing as described in the "Third Party Financing Addendum")

The correct formula for estimating value using the cost approach is

Cost to reproduce - depreciation + value of land = Value, When using the cost approach: The cost to reproduce less depreciation plus the cost of the land. Remember land can not be depreciated

Jane is a real estate broker. Dan lists a home with Jane for $89,500. Later that same day, Jim comes into Jane's office and asks for general information about homes for sale in the $80,000 to $100,000 price range. Based on these facts, which of the following statements is true?

Dan is Jane's client; Jim is a customer. (Dan, the seller, is Jane;s client and Jim is only a customer at this point. Jane owes complete fiduciary duties only to Dan)

If a salesperson is in a room where two brokers are talking about raising their commission rate because business is slow and they believe that they could raise the rate together and control what clients are required to pay, the agent should

Denounce that they have anything to do with the conversation and will not be a part of the discussion and leave the room (The agent should make sure that the brokers know that he/she is not a part of the conversation and leave the room. This is your best defense against being involved in price fixing)

A licensee should make no changes to the promulgated contracts except a change which is:

Desired by the principals. (The broker is not a part of the contract. The contract is between the purchaser and the seller. Therefore the broker can only make changes to the contract if so desired by the parties of the contract (the principles))

If the TREC finds a licensee guilty of a violation of the TRELA, the licensee can appeal to

District court (A licensee may appeal a decision of TREC by filing for a hearing in district court within 30 days)

For there to be a valid right to purchase or terminate, an option contract must contain

Dollar consideration. (The courts have ruled that in order to have a valid option period there must be some dollar consideration with the option period. The time for the option period is by agreement of the parties)

If the owner of real estate in Texas does not take action to force removal of an encroachment before ten years have passed, then the encroachment may continue through a(n)

Easement by prescription. (Easement by prescription.)

Dan has constructed a fence that extends one foot over his lot line onto the property of a neighbor. The fence is an example of a(n)

Encroachment. (When a structure extends beyond the bounds of the property. In this case the fence is extending into the property of another and therefore Dan is encroaching upon the property of another.)

The Real Estate broker's equivalent of medical malpractice insurance is known as

Errors and Omissions insurance.

A contract in which both parties have fulfilled their promises and have performed on the contract is an:

Executed contract (An executed contract is A contract in which both parties have fulfilled their promises and have performed on the contract is an)

During the period after a real estate sales contract is signed but before title actually passes, the status of the contract is:

Executory (Once the contract is signed by all parties the contract is said to executory. The contract is not executed until all parties have completely performed on the contract. This is normally at closing when the deed is transferred and the purchase price is paid)

When determining long term debt for an FHA loan, you may disallow the debt as the debt will be paid off in:

FHA does not consider a debt to be long term if it will be paid off in 9 months or less

Which of the following statements best describes the role of an intermediary broker?

The broker is acting on behalf of both the buyer and seller and must not disclose any confidential information to either party without written permission. (The broker is representing both the buyer and the seller. The broker is not allowed to disclose anything that would give one party an unfair advantage over the other and there fore must remain neutral to all parties)

A seller principle asks a salesperson to do something in a particular way. The broker disagrees with the seller and instructs the salesperson to handle the matter differently. Whose instruction should the salesperson follow?

The broker. (The agreement is with the seller and the broker. Therefore the instructions of the broker should be followed by the salesperson)

To collect a commission through litigation, the seller's broker is NOT required to prove

The buyer was aware of the commission amount. (The buyer does not have to be aware of the amount of commission that the seller's (listing) broker is receiving as compensation)

When completing the finance portion of the contract, the number of days you select to get the buyer's loan approved should not exceed:

The closing date. (The purchaser must have loan approval prior to closing therefore approval must occur before the closing date)

Bill and Beth enter into a contract to purchase a single family home currently owned and occupied by Lenny and Linda. Lenny and Linda do not furnish Bill and Beth with a seller's Disclosure form. Which of the following statements is true?

The contract is voidable at the option of Bill and Beth. (If the seller does not provide the purchaser with a "Seller' Disclosure Notice" the purchaser has a right to void the contract at any time prior to closing)

Which of the following is true of a joint tenancy?

The conveyance must specifically state the intention to create a joint tenancy. (Because most people do NOT want to be joint tenants, in order to have joint tenants the conveyance must state that they do want to hold the property as joint tenants)

If a licensee has their license revoked by TREC, they may appeal to

The district court (If a licensee has their license revoked by TREC, they may appeal to District court and a judge will determine if TREC was justified in revoking the licensee license)

If there is an existing survey on the property, what does the seller deliver to the title company and the buyers lender

The existing survey and an affidavit stating there has been no changes since the last survey was completed (The existing survey and an affidavit stating there has been no changes since the last survey was completed)

If no form has been promulgated for a particular type of transaction then

The form should be prepared by one of the principals or their attorney. (If there is no form that has been created for this particular type of transaction then one of the parties to the transaction should draw up the contract or have an attorney of their choice draw up the contract. The brokers can NOT draw up a contract. This would be considered practicing law without a license)

What penalties would a licensee face if, while on inactive status, he or she completes a lease negotiation or sells a property?

The full penalty provisions of the act. (Acting without a sponsoring broker is the same as practicing real estate without a license. The inactive licensee is subject to the full penalty of practicing real estate without a license)

Fee simple estate means?

The highest form of ownersahip in real estate

A listing agent of a residential property who fails to investigate the cause of an apparent underlying defect in the listed property may be

The listing agent is not a home inspector and therefore is not required to inspect the property

In comparing a competitive market analysis to a comparative market analysis, what is the differing factor?

The major difference between the two is that the competitive market analysis will consider current properties on the market other then just the sold properties as in the comparative market analysis

The maximum amount recoverable from the Real Estate Recovery Fund for losses caused by one licensee is

The maximum amount that will be paid on any one licensee is $100,000. There is a maximum of $50,000 per transaction no matter how many claimants.

A real estate licensee muset use a TREC promulgated form, unless a form has been written and is required by the :

The owner of the property (Unless written and rquired by the owner of the property it is required that a licensee use a promulgated form from TREC)

Who is responsible to the TREC, their clients, and the public for the actions of a real estate salesperson

The salesperson's broker is responsible for all occupational acts of any salesperson sponsored by the broker