Texas Pre-License - Promulgated Contracts
Agent Kara signed a buyer's representation agreement with her client that set her commission at 3%. The listing broker of the home her client chose offered 3.5% to the buyer's broker. What percentage of the sale price of the home will Kara's commission be?
3.5%
What is the statute of limitations to claim fraud or misrepresentation against a license holder?
4 years from discovery
Seller Vera agrees to allow another veteran to assume their mortgage loan. To make sure Vera can get their VA entitlement restored, what must be attached to the contract?
Addendum for Release of Liability on an Assumed Loan and/or Restoration of Seller's VA Addendum
Anthony changed the use of his land from farm land to residential before he sold it. According to TREC rules, who is responsible for any rollback taxes he might owe?
Anthony
Which of these agent scenarios involving contracts is NOT inappropriate or in violation of TRELA?
Avery explains the meaning of factual statements or business details in the contract form.
What is the only time it is acceptable for a license holder not to present all offers to a seller client?
if the listing agreement specifies that it is not necessary
Which of these is NOT something that is appropriate to put in Paragraph 11 (the Special Provisions section) of a TREC promulgated contract?
that the contract is contingent on the inspection
Which of these is an example of a time when it is acceptable not to use a TREC promulgated form?
the U.S. government requires a different form to be used
Who pays for an investigation of an environmental, endangered species, or wetlands issue, according to the Environmental Assessment, Threatened or Endangered Species, & Wetlands Addendum?
the buyer
Paragraph C2 on the Lead Based Paint Disclosure states that:
the buyer has 10 days to have the property inspected for lead-based paint
According to Paragraph 9B, what happens when someone buys a property that currently under a lease?
the buyer must honor the lease, and the seller transfers them the security deposit
Which of these is NOT true about a Seller's Temporary Residential Lease?
the buyer/landlord has no recourse if the seller/tenant overstays
Which of these is NOT necessary for a contract to be binding and effective?
the contract must be hand delivered to the title company
A buyer and seller have been in negotiations. They have everything in writing, have agreed to all terms, the contract is signed and changes initialed. Today, the written acceptance of the final agreement has been communicated to the other party. What is today called?
the effective date
Which of the following bodies appoints the public member on the Broker-Lawyer Committee?
the governor
When seller financing is being used, the seller becomes:
the lender
Which of these is appropriate to put in the Special Provisions section of the One to Four Family Residential Contract?
the names of sellers that wouldn't fit in Paragraph 1
Which of these is NOT a place where commission split agreements between cooperating brokers can be determined?
the sales contract
Which of these is an example of something that could go in Paragraph 12 of the One to Four Family Residential Contract?
the seller plans to pay some of the buyer's closing costs
What is special about the earnest money section (paragraph five) and the option money section (paragraph 23) in the TREC promulgated sales contract?
they contain "time is of the essence" language
There are three different types of financing choices in Paragraph Three of TREC's One to Four Family Residential Contract. They are:
third party, assumption, seller financing
Which is the purpose of the Information About Brokerage Services form?
to inform clients how a license holder can represent a party in a real estate transaction
What is the purpose of the Short Sale Addendum?
to protect a seller who is selling their home for less than they owe their lender
What is the purpose of the "Listing Broker's fee" section at the bottom of Page 9 of the One to Four Family Residential contract?
to reflect a previously agreed-upon commission
A contract which courts cannot compel the parties to perform is:
unenforceable
In loan fraud, the lender is usually the ________.
victim
What is the Addendum for Property Located Seaward of the Gulf Intracoastal Waterway for?
warns buyers that if their property become located on the beach area by erosion, they can be required to remove the structure at their own expense
When should a license holder use form T-47, Residential Real Property Affidavit?
when a seller wants to use an existing survey
The Seller's Temporary Residential Lease will only be used:
when the seller will remain on the property for no more than 90 days after closing
In TREC promulgated contracts, what does Paragraph 21: Notices provide information about?
where to send official notices about the contract
Reggie made Betty an offer on her house. She countered, but Reggie has not yet accepted. Then along comes Archie with a better offer. Before accepting Archie's offer, what must Betty do?
withdraw her counter to Reggie
A seller is selling a property that is under a lease. When does the seller have to deliver a copy of the lease and any move-in condition form to the buyer?
within seven days after the effective date
A married couple is buying a property. Which is the BEST way to write their names in the contract?
Georgianna Serif and spouse Bryan Serif
What form must be provided to any unrepresented buyer or seller a license holder talks with?
Information About Brokerage Services form
When all parties have agreed to all terms of an offer, have signed the offer, and have initialed any changes that took place during negotiations, what happens to the offer?
It becomes a contract.
Which of the following is TRUE regarding a contract to transfer real estate which contains no earnest money?
It is valid.
Agent Ted advises his client that the title to the property he is buying is clear — no need to do a further title search. Why is this inappropriate?
It may constitute unauthorized practice of law under TRELA.
Agent Ralph has a buyer client that wants the seller to leave them the refrigerator, built-in microwave, and vent hood. Ralph notes this expectation in the Special Provisions section. What is wrong with this scenario?
It should be written in a Non-Realty Items Addendum, not in the Special Provisions section.
Mary has a rental property with a two year lease on it. She collected a $500 security deposit at the beginning of the lease. Now she is selling the property. What will happen to the security deposit?
Mary will transfer the security deposit to the buyer at closing.
Which of these is an example of a unilateral contract?
Mike signs a listing agreement with Broker Amy, agreeing to pay a 6% commission if she sells his house.
A seller is planning to convey a refrigerator through the Non-Realty Items Addendum. They financed the appliance purchase, and still have a few payments left. Is this allowed? Why or why not?
No, items conveyed through the Non-Realty Items Addendum must be owned fully by the seller.
What are rules about the maximum number of people allowed to live together in a single dwelling called?
Occupancy standards
A back-up buyer's contract is executed on September 28 with a four-day option period. On October 4, the seller informed the back-up buyer that the first contract was terminated. When does the back-up buyer's option period end?
October 8, 5 pm
Which element of the TREC promulgated contracts is the same across all contract forms?
Paragraph 1 identifies the the parties to the contract.
The words "time is of the essence" are in:
Paragraph 23 of the One to Four Family Contract
What part of the One to Four Family Residential Contract advises the buyer to get an abstract of title reviewed by a lawyer?
Paragraph 6E1
What part of the Third Party Financing Addendum for Credit Approval specifically pertains to people getting VA loans?
Paragraph D
Rollback taxes are addressed in all of the following EXCEPT:
Residential Service Contract
As outlined in the TREC promulgated sales contracts, what obligations does the seller have regarding the property condition at the time of sale?
Seller's obligations are a matter of negotiation with the buyer.
A buyer who discovers a defect which they believe was misrepresented has a certain time after discovery to make a claim for damages. This is known as the:
Statute of Limitations
What are two real estate governing bodies that were formed as a result of TRELA?
TREC and the Broker-Lawyer Committee
What is one thing that differentiates TREC from the Broker-Lawyer Committee?
TREC members are only appointed by the governor, Broker-Lawyer Committee members can be appointed by different people.
What is the name of the document prepared by a condo association (or HOA) to outline the fees and rules of the condo for a prospective buyer?
The Condominium Resale Certificate
Which TREC promulgated form allows for the sales price to be adjusted because of the survey?
The Farm and Ranch Contract
How can an agent change a contract after it has been signed by both parties?
adding an amendment to contract
Which of the following would constitute unauthorized practice of law and/or be a violation of TRELA?
adding or striking things from pre-printed contract forms
To be valid and enforceable, a contract must be in writing, represent a complete agreement, have acceptance communicated, and:
be signed by all parties
Why are there multiple promulgated contracts for use in Texas?
because different types of properties have different specific contract needs
hen do brokers determine how the commission from a sale will be split?
before closing
A buyer was unable to obtain financing. How would they notify the seller that they are terminating the contract?
by sending a promulgated Notice of Buyer's Termination
How can an agent help protect the earnest money of a buyer who is financing their purchase?
by submitting a Third Party Financing Addendum
What does Paragraph A of the Addendum for Back-Up Contract specify a back-up contract holder do when they execute the contract?
deposit the earnest and option money agreed to in the contract
According to TREC rules, which of these must be delivered to the seller within three days of a contract's effective date?
earnest money
What should an agent do if asked to violate anti-discrimination laws by a client?
educate the seller about anti-discrimination laws and say they cannot honor the request
According to Paragraph 10B, Possessions, what is a seller prohibited from doing after the effective date?
execute a lease without the buyer's permission
According to TRELA, which of these does one NOT need to be a licensed attorney to do?
fill out a TREC promulgated contract
In a TREC promulgated contract, what is the Third Party Financing Addendum concerned with?
financing contingencies
When would it be appropriate to use the New Home Contract (Incomplete Construction)?
for a client buying a new home that is being built
Emily and Josh signed a real estate contract with each other. The contract is now fully executed. What does that mean that Josh and Emily have done?
fulfilled the material terms of the contract
What does paragraph 7A of the One to Four Family Residential Contract grant every buyer the right to do?
have the property inspected
Seller Xavier's home is in a special statutory tax district. According to the Texas Water Code, what does Xavier have to do before going into contract with a buyer?
have them sign a notice informing them of the extra taxes
If a buyer is sent an Addendum for Property Subject to Mandatory Membership in an Owner's Association and they don't like the terms, what remedy do they have?
They can terminate the contract within the first three days.
Buyer Ashley is shopping for empty lots on which to build a home. She found a lot for sale that looks promising, but she's concerned its located on a wetland. What should her agent do?
Use the Unimproved Property contract and attach the Environmental Assessment, Threatened or Endangered Species and Wetlands Addendum.
A Residential Real Property Affidavit Promulgated by the Texas Department of Insurance (T-47 Affidavit) must be furnished to the buyer _______________________.
When the seller provides the existing survey
Buyer Jeremy gave Seller Anthony $800 in earnest money and an additional $200 in option money. During the option period, Jeremy decided to terminate the contract. Anthony gave him back $800. Is this correct? Why or why not?
Yes, because option money is never refundable.
Which one of these is a bilateral contract?
Zelda agrees to pay Gus $250,000 for ownership of his house.
An agent's buyer client wants to keep the curtains in the home they are buying, and the seller has agreed. What does the agent need to include with the contract to ensure this happens?
a Non-Realty Items Addendum
Buyer Raz goes into contract on a house in Texas. At the last minute, he is unable to obtain financing. What would he need to have in his contract to terminate it without penalty?
a Third Party Financing Addendum
In which of these scenarios could an HOA foreclose on a property that belongs to the HOA?
a property owner fails to pay their HOA assessments
What does the Residential Condominium Contract require in the legal description of the property?
a unit number
What information does the Disclosure of Relationship with Residential Service Company form convey?
that it is a violation of RESPA for a license holder to receive a referral fee for passing on a name to a service provider
Which of these is NOT a protected class of people, according to Fair Lending Laws?
sexuality
In a Texas real estate contract, what does an Addendum for Property Subject to Mandatory Membership allow a buyer to do?
terminate a contract if not given information about the property's HOA
If an agent makes a change to Paragraph 6A8 in a TREC promulgated contract, which of these is most likely to be the result?
The title policy will be amended to read "shortage in area" rather than the standard exception.
Which of these is NOT a TREC promulgated form?
Condo Addendum
Which of these forms is least likely to be involved in the sale of unimproved property?
Condominium Resale Certificate
Which of these does NOT create housing occupancy standards?
Federal Housing Administration
When a property is purchased and then quickly resells at a higher value it is called:
Flipping
According to the Environmental Assessment, Threatened or Endangered Species, & Wetlands Addendum, what happens if the buyer can provide the seller with a report proving that the use of the property is negatively affected by one of the noted factors (before the agreed-upon deadline)?
The buyer can terminate the contact and get their earnest money back.
According to the NAR Code of Ethics, unless the agent has written instructions stating otherwise, they must present all offers until:
The closing
Paragraph D of the Short Sale Addendum contains a date by which the seller must get approval from their lender for the sale. What happens if the lender does not give approval by the date?
The contract will terminate and the earnest money will be refunded to the buyer.
If a property is occupied solely by people over the age of 62 and qualifies as senior housing it is exempt from:
The familial status portion of the Fair Housing Act
If nothing is added in Paragraph 7D, the agreement says that the buyer is accepting the property:
in its present condition
Agent Sarah knows her client wants to make the sales contract contingent on appraisal, so she adds a notation to that effect in the Special Provisions section of the contract. Why is that wrong?
it could be considered the unauthorized practice of law
If a seller is still accepting counteroffers, what is true about their property?
it is not yet officially in contract
According to the Short Sale Addendum the effective date of the contract is amended to the date the Seller notifies the Buyer that the ____________________________.
lender has approved the short sale
Which of these is NOT something TREC has the power to do?
licensing developers and builders
Which of these materials would be considered part of a property's mineral estate?
oil
What are brokers required to do regarding Consumer Protection Notice TREC No. CN 1-2?
post it in each office
Which of these is something TREC is empowered to do by TRELA?
require license holders to use contract forms for certain transactions