Texas 30-Hour Law of Contracts with Flex Units

Cynthia loves her apartment and would like to have the option to buy it once her lease is up. Who is the best person to help Cynthia prepare a lease option?

A real estate attorney

Your buyer, Billy, wants to make an offer on the craftsman house he saw today, but he wants the sellers to start the paperwork for a tax reassessment before closing. This isn't part of the standard sales contract in your area. What will you use to accomplish this request?

Addendum

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

Addendum for Property Located Seaward of the Gulf Intracoastal Waterway

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

Amendment

Which of the following would be a factor that would cause a delay in closing?

An appraisal lower than the contracted price

In which section of the TREC One to Four Family Residential Contract (Resale) does the buyer specify the closing date?

Closing section

A listing agent must include provisions informing parties of the availability of natural hazards information applicable to residents near ______ in Texas.

Coastal areas

Donald and Martina decided to purchase a newly built home, and their agent, Ed, recommended that they get a professional home inspection done. The couple tells Ed that they thought inspections were only for older homes. How should Ed respond to that?

Ed should remind them that every dwelling, no matter the age or size, should have a home inspection.

Which of the following best describes a marketable title?

Ensures the title to property is free and clear of liens and only subject to loan payoff and any taxes owed.

Glynnis is ready to close on her new house, but her agent told her that they have to wait for the homeowner to fix the electrical box as agreed. What clause in her contract allowed her to request the repair?

Inspection contingency

Is it ever appropriate for a Texas licensee to provide legal counsel?

No, because that would be unauthorized practice of law.

Henry is a Texas real estate licensee representing Ginger, a buyer. Henry recommended Ginger obtain a professional home inspection. Ginger asked Henry for a referral. What should Henry do?

Provide several names for Ginger to contact, ultimately letting her decide who will perform the inspection.

What type of arrangement allows the buyer to retain title to the property, but places a security interest in the property on behalf of the seller?

Purchase money mortgage

Hugo was the highest bidder on a foreclosed property. What type of deed gives him ownership rights?

Referee's deed

Who or what entity is responsible for determining the validity of a will as part of the probate process?

The court

Per TREC's One to Four Family Residential Contract (Resale), who is responsible for signing and dating the option fee receipt if the buyer decides to go with the termination option?

The escrow agent

How are accrued real estate taxes that have been assessed but not yet due handled in a real estate transaction?

The tax bill will be prorated to the day of closing.

What is the transfer tax in Texas?

There is no transfer tax in Texas.

Which of the following is a triggering term when used in advertising financing?

"10% down"

A legal notice that a lawsuit is pending that affects the title of a property is called _______.

A lis pendens

What's a marketable title?

A title that is clear and free of encumbrances

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

Accessories

Your brokerage firm uses pre-printed sales contract forms, but your seller, Marcus, wants to add some language about staying in the house and renting from the buyer for a month after closing. What should you use to add this information?

Addendum

Kelly is a Texas real estate licensee, and her client has just asked for legal advice. Kelly should _____________.

Advise her client to seek legal counsel

The Federal Reserve System is made up of 12 Federal Reserve districts. Which of the following statements about the Fed is true?

All national banks must be part of the Fed.

Camille, a buyer, wants to change the price already agreed to in a sales contract. What document should she use?

Amendment

What TREC-promulgated form must be used to make a material change to an existing sales contract?

Amendment to Contract

What is a proration?

An amount apportioned according to use

What is a syndicate?

An organization with many investors who jointly participate in a real estate investment

What must be obtained by a seller from a buyer when the property is subject to a condominium or homeowners association?

Approval of homeowners and condominium association documents

Buyer Ed is reviewing the Loan Estimate he received from the lender he's working with. He notices the loan terms include a prepayment penalty. Because he's a savvy consumer, which of the following does Ed do?

Ask the lender if there are other options available that would not involve a prepayment penalty.

Which of the following documents is an example of a promissory note?

Borrower Keesha just signed a document that states that she pledges to pay back her mortgage loan of $310,000.

Who's responsible for calculating prorations at closing?

Closing agent

Real estate licensee William is preparing a sale agreement that will include an unusual circumstance. What's his best course of action?

Consult an attorney.

Which of the following acts protects Texas consumers against real estate licensees who use false, misleading, or deceptive actions or practices in the advertising, offering for sale, selling, or leasing of personal property or real property?

DTPA

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

Deductible on personal income tax returns

What mortgage document is most commonly used to secure a home loan in Texas?

Deed of trust

In situations where no will exists, the deceased person's estate's assets are distributed according to the law of __________________.

Descent and distribution

Basic property rights include the rights of possession, control, exclusion, enjoyment, and ______.

Disposition

In which section of the TREC One To Four Family Residential Contract (Resale) do buyers indicate the amount of earnest money they are putting down?

Earnest Money section

Bart's listing agreement with his seller client prohibits the seller from listing the property with another brokerage prior to the expiration of the listing contract. What type of listing agreement do Bart and his client have?

Exclusive right to sell

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

Feb. 23

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

Fee simple subject to a condition subsequent

Which type of mortgage has an interest rate that remains constant over the life of the loan?

Fixed-rate

Contracts that must be in writing to be valid include contracts ______.

For the sale of real property

You and your new buyer client have just signed a buyer agency agreement. Per Texas law, how long must your broker keep a copy of the agreement on file?

Four years

Barry owns a property, and holds all rights associated with ownership. His interest in his property is a ______.

Freehold estate

Which of the following individuals would be a competent party to a contract?

Graciella, a 28-year-old unemployed parolee

What is a code of ethics?

Guidelines for conduct

Which Texas laws protect the homeowner from general creditors?

Homestead laws

Which of the following criteria may be used by lenders when evaluating a loan application?

Income, net worth, job stability, and credit rating

Douglas is meeting with a prospective buyer client. In Texas, which of the following documents are license holders required to present to consumers prior to entering into a buyer agency agreement?

Information About Brokerage Services

Per TAR's Residential Real Estate Listing Agreement Exclusive Right to Sell contract, for which of the following is a broker liable?

Injury to persons or property as a result of broker negligence

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

Inspection fees

Widget Corporation just bought land on which it plans to build a new manufacturing facility. How is the land owned?

It's owned as an estate in severalty.

Because Texas is a community property state, marital status should be included when naming the parties. What is the correct way to name these parties on the contract?

Kathy Simone and John Simone, a married couple

What could be a consequence if there were no secondary mortgage market?

Lenders might not have funds available to make new loans to the public.

An advantage of organizing a business as a limited liability company is its ______.

Limits on the liability of members for company debts or other obligations

Environmental hazards are considered ______ and must be disclosed.

Material facts

Which of the following would be a violation of the Texas Deceptive Trade Practices—Consumer Protection Act (DTPA)?

Misrepresenting the facts about the reasons for a price decrease

Nick, a Texas license holder, is helping his son, Peter, locate a home he can afford to buy and is acting as Peter's agent. Peter has found a property that he wants to make an offer on. Which of the following statements regarding this situation is true?

Nick is required to disclose his relationship to the seller in writing prior to the parties entering into the contract.

Wynona is a Texas tenant with a written estate-for-years tenancy. How much notice must she give her landlord if she wants to terminate her lease upon expiration of the lease term?

None

For which of the following reasons can a Texas real estate sales contract be terminated?

One or both parties are in default.

You have a net listing with your seller client. With what other type of listing (or listings) may the net listing be used?

Open, exclusive agency, or exclusive right to sell

If an individual acquires rights or liabilities automatically due to law, and not through an agreement or act of their own, this is known as ______.

Operation of law

Margo is the potential buyer of the property in an option contract. Margo is the ______.

Optionee

Grant owns a property that's subject to an option contract. Grant is the ______.

Optionor

Which one of the following recommendations may a Texas real estate licensee make and still be acting within the approved scope of expertise?

Recommend that buyers obtain professional home inspections.

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

Releases of existing liens

Jamie owns a home on Clear Lake. Over a period of years, the water has receded quite a bit, doubling the size of the sand beach on his property. What is the name of this process?

Reliction

______ is the gradual receding of water, which uncovers new land.

Reliction

During the term of the lease, the lessor retains the rights to possession of the property after the lease term has expired. What is this right known as?

Reversionary right

Which of the following is an example of a fixture that is real property?

Shelves attached to the wall with brackets

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

Six

Where in the Texas resale sales contract should you indicate that it is being used for a 1031 exchange?

Special Provisions

Along with property ownership, rights are granted to use the land's physical components. Which right allows a property owner to use or sell the underground resources, such as natural gas and minerals?

Sub-surface

Which right allows a property owner to use or sell underground resources?

Sub-surface

Once Greg and Caitlin were married, they decided to purchase a home together. Since it was a shotgun wedding after a weekend in Vegas, they made sure that their ownership included the right of survivorship as well as protection from the other spouse attempting to sell the house from under them. Though not recognized in all states, the most likely form of co-ownership under which they would make this purchase is ______.

Tenancy by the entirety

Who's responsible for doing the final walk-through of a property?

The buyer and the buyer's agent

Kim's seller just received an offer accompanied by the Texas Addendum for Sale of Other Property by Buyer. What do we know about this transaction?

The buyer may not be able to complete the transaction if their current home doesn't sell.

Which of the following statements about a buyer accepting a property in "as-is" condition is true?

The buyer retains the right to have the property inspected.

To effect a transfer of title by deed in Texas, what must occur?

The grantor must deliver the deed to the grantee and the grantee must accept it.

At the time of closing, the seller and the seller's agent will close on which contract?

The listing agreement

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

The periodic payments go to interest only and the entire principal amount is due at the end of the term.

If you had to describe the purpose of a sales contract to a Texas client, which of the following statements would you use?

The sales contract identifies the terms of a real estate sales transaction between the seller and the buyer.

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

The seller

Which of the following is a reason a seller might consider selling his property through an installment contract rather than a traditional sale?

The seller may pay less in capital gains taxes if he receives the proceeds from the sale over time rather than in a lump sum.

Maura is purchasing a townhome. When the title report comes back, there is a defect on the title. What contingency will protect Maura, and allow her to terminate and receive a refund of her earnest money?

Title contingency

What is the purpose of the Truth in Lending Act?

To better educate consumers about the cost of credit or obtaining a loan

What is the purpose of the Uniform Electronic Transactions Act?

To identify that electronic signatures are just as binding as written signatures

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

Trustor

Which of the following would be a factor that would make a title marketable?

Unbroken chain of ownership

Of the following, which is considered a typical accrued adjustment?

Unpaid real estate taxes

When does a transfer tax become payable?

Upon recording of the deed

Charlotte has a lease in which the amount she owes increases at predetermined intervals. What type of commercial lease does Charlotte have?

Variable

Which covenant is a promise by grantors to grantees that they will warrant and defend the title against the lawful claims of others?

Warranty

How many lawyers does the governor appoint to the Broker-Lawyer Committee?

Zero

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

\Corporations are tangible and nontaxable.

Which of the following would be considered personal property?

fridge