Texas Promulgated Contracts
A federal disclosure requirement for residential properties built prior to 1978 is: (a) An energy efficiency audit (b) A lead-based paint disclosure (c) A seller's disclosure of property condition (d) A water district noticeAccording to the Seller
B
A new survey is always required for all transactions: (a) True (b) False
B
A purchaser of property seaward of the Gulf Intracoastal Waterway must be given a disclosure notice that (a) Dangerous marine life pose a significant risk to swimmers (b) Beach erosion and movement of the vegetation line could cause an owner to lose the property (c) Serious rip tides are a constant danger (d) Wave action and strong winds are a danger in these areas
B
A state government entity created to encourage agricultural development in Texas is the: (a) Texas Department of Parks and Wildlife (b) Texas Agricultural Development District (c) Texas Farm Bureau (d) Texas Farm Aid
B
According to a Financing Addendum, the interest rate is: (a) Set at 6% (b) Negotiated between the parties (c) Set by TREC (d) Determined at closing
B
An offer can be communicated by ___________________. (a) Phone (b) Hand delivery (c) E-mail (d) All of the above
B
A Seller's Disclosure Notice is not required (a) When the property being sold is a previously unoccupied new home (b) When the property is sold to an investor (c) When the property has an out of state owner (d) When the property is sold "as i"
A
A Seller's Disclosure Notice is not required: (a) when the property being sold is a previously unoccupied new home (b) when the property is sold to an investor (c) when the property has an out of state owner (d) when the property is sold "as is"
A
A building or community must not discriminate based on familial status, unless it qualifies as housing for older persons. (a) True (b) False
A
A(n) __________________ contract is defined as a contract that is binding on the parties, with one or more of the parties having contractual duties that have not yet been performed. (a) Executory (b) Executed (c) Bilateral (d) Void
A
A(n) property is one where a particular event has affected the desirability of said property. (a) Stigmatized (b) Undesirable (c) Unsellable (d) Foreclosed
A
According to the Seller Financing Addendum, the interest rate is: (a) Set at 6% (b) Negotiated between the parties (c) Set by TREC (d) Determined at closing
A
According to the TREC contract, accessories include: (a) Refrigerators (b) Stoves (c) Washing machines (d) Gas dryers
A
All of the TREC promulgated contracts provide that the Buyer is purchasing the property "as-is". (a) True (b) False
A
Damage or destruction of a property under contract prior to closing: (a) Can result in termination of the contract (b) Will result in a lawsuit against the seller (c) Will result in a lawsuit against the broker (d) Is never a legal cause for delay of closing
A
Exclusions to the sale must be removed (a) Prior to delivery of possession (b) At the convenience of the seller (c) When the offer becomes a binding contract (d) Two days prior to closing
A
Exclusions to the sale must be removed: (a) prior to delivery of possession (b) at the convenience of Seller (c) when the offer becomes a binding contract (d) two days prior to closing
A
If a buyer is concerned about the presence of endangered species, toxic substances or wetlands on a property, the agent should (a) Add the Environmental Assessment Addendum to the contract (b) Avoid the property at all costs (c) Add in Paragraph 11, Special Provisions, that the contract is subject to an environmental review (d) Explain to the buyer that environmental issues are rarely a problem
A
If the buyer is allowed to select certain items in the new home that is under construction, the builder (seller) may reject a selection if it adversely affects the market value of the home. (a) True (b) False
A
In the business of real estate, ___________ is defined as something given in exchange for a promise. (a) Consideration (b) Mutual assent (c) A bribe (d) Legal subject matter
A
The __________________ ensures compliance with TRELA, which requires that license holders advise buyers to have an abstract of title examined or to obtain title insurance. (a) Title commitment (b) Notice to Prospective Buyer (c) Seller's Disclosure (d) Inspection report
A
The condominium resale certificate must have been prepared within the previous: (a) 3 months (b) 6 months (c) 30 days (d) 60 days
A
When a party fails to perform according to the terms of a contract, the party is said to be: (a) in default (b) in avoidance (c) terminated (d) in violation
A
___________________ occurs when a buyer assumes and agrees to pay the seller's existing mortgage. (a) Loan assumption (b) Seller liability (c) Seller lien (d) Credit approval
A
____________________ is defined as something given in exchange for a promise. (a) Consideration (b) Legal subject matter (c) Mutual assent (d) Competent parties
A
Being within the extraterritorial jurisdiction of a municipality is an indication the property will: (a) Be condemned in the near future (b) Possibly be annexed in the future (c) Be unmarketable (d) Never be annexed by any municipality
B
If a license holder is receiving compensation from a residential service company, the compensation is: (a) Reported to TREC (b) Disclosed to the parties using the appropriate TREC form (c) Never disclosed to anyone (d) Reported to the attorney general for action
B
If a property is under contract to a buyer, another buyer may use the __________________ to enter into a contract for the property if the first contract fails to close. (a) Addendum for Sale of Other Property by Buyer (b) Addendum for Back-up Contract (c) 1-4 Family Residential Contract (d) Notice of Buyer's Termination of Contract
B
If an overage is incurred due to a change order, the excess is paid by: (a) The seller (b) The buyer (c) Splitting the overage equally between seller and buyer (d) The agent
B
If an overage is incurred on new home construction due to a change order, the excess is paid by: (a) the seller (b) the buyer (c) splitting the overage equally between seller and buyer (d) the agent
B
If in Paragraph B(2) is checked, and 50% entered in the Addendum for Reservation of Oil, Gas, and Other Minerals, (a) Seller reserves 50% of all of the mineral estate (b) Seller reserves 50% of whatever mineral estate the seller owns as of the closing date
B
If the sales priced is adjusted based upon a survey, either party may terminate the contract if the sales price varies by more than: (a) The amount entered in 3.C of the contract (b) 5% (c) 10% (d) The amount entered in 3.A of the contract
B
In Texas, the statute of limitations is _________________ for an oral agreement. (a) Four years (b) Two years (c) Eight years (d) Six Years
B
In the Farm and Ranch contract, the Seller generally has the right to harvest crops: (a) for one year after closing (b) until delivery of possession (c) until closing (d) for no more than 90 days after funding
B
Land, improvements and accessories are collectively referred to as: (a) The estate (b) The property (c) The listing (d) The homestead
B
On a VA assumption, the veteran Seller automatically obtains a release of liability and restoration of entitlement. (a) True (b) False
B
One possible issue with using the Seller's existing survey is that the Buyer may have no cause of action against the original surveyor in the event that an error is discovered. (a) True (b) False
B
TREC promulgated contracts allow the Buyer to have the property inspected: (a) by anybody selected by the buyer (b) by inspectors licensed by TREC or otherwise permitted by law (c) no more than three times (d) at any time by any person selected by their agent
B
The Lead-Based Paint Disclosure is: (a) Required for all properties (b) A federal requirement for residential property built prior to 1978 (c) A TREC requirement (d) The responsibility of the buyer's agent
B
The T-47 Residential Real Property Affidavit is not completed until ________________, in most cases. (a) Funding (b) Inspection (c) Closing (d) The listing is taken
B
The TREC-promulgated contract forms: (a) Are for optional use by real estate licensees (b) Are drafted by the Broker-Lawyer Committee (c) Are promulgated by the legislature (d) Are used in both commercial and residential transactions
B
The Third Party Financing Addendum For Credit Approval is used when: (a) The buyer is obtaining FHA financing (b) Paragraph 4.A(2)(a) is checked in the contract (c) The buyer is obtaining VA financing (d) The buyer is obtaining any kind of financing
B
The Third Party Financing Addendum for Credit Approval cannot be used for: (a) VA guaranteed loans (b) FHA insured loans (c) Seller Financing (d) Texas Veterans Loans
B
The buyer may terminate the contract and receive a refund of earnest money if lender required repairs: (a) Seem really high (b) Exceed 5% of the Sales Price (c) Exceed 3% of the Sales Price (d) Exceed $10,000
B
The commission agreement between the broker and the seller is usually found in the: (a) Sales contract (b) Listing agreement (c) Buyer representation agreement (d) IABS
B
The deed of trust securing seller financing is always assumable by a future buyer without approval: (a) True (b) False
B
The elements of a valid contract are, competent parties, consideration, legal subject matter, in writing, and ___________. (a) Default (b) Mutual consent (c) Property condition (d) Recording
B
The process of dividing ongoing expenses between the buyer and seller at the closing is called: (a) assessing (b) prorating (c) collecting expenses (d) accounting
B
The process of dividing ongoing expenses such as taxes and POA fees between the buyer and seller at closing is called: (a) assessing (b) prorating (c) collecting expenses (d) accounting
B
The title company is: (a) A party to the transaction (b) Not a party to the transaction (c) Liable for the performance of the parties (d) Responsible for arranging suitable financing for the buyer
B
When one party defaults under a contract, the other party is known as the: (a) Breaching party (b) Injured party (c) Party to the suit (d) Liable party
B
When should a licensee advise a client to consult an attorney: (a) at first contact with the client (b) before signing the contract if the client does not understand the effect of signing the sales contract or the terms or conditions in the agreement (c) after the contract has been signed by all parties (d) a licensee should never advise a client to consult an attorney
B
When should a licensee advise a party to a contract to consult an attorney? (a) At first contact with the client (b) Before signing the contract if the client does not understand the effect of signing the sales contract or the terms or conditions in the agreement (c) After the contract has been signed by all parties if the party does not understand the contract (d) A licensee should never advise a client to consult an attorney
B
Which of the following activities is specifically prohibited under the Civil Rights Act of 1968? (a) Denying availability of property when it is available (b) Refusing to sell, or rent to, deal or negotiate with any person (c) Steering or blockbusting (d) All of the above activities are specifically prohibited under the Civil Rights Act of 1968
B
Any material changes to subdivision information require the ________________ to give notice of said changes promptly. (a) Buyer (b) Listing Agent (c) Seller (d) Broker
C
Buyer Sarah is purchasing a residential property. She plans to live in the home and operate a daycare business in the home as well. Having mentioned this to her agent, the agent should: (a) write a paragraph describing the business in Paragraph 11, Special Provisions (b) disclose the daycare using a TREC Special Use addendum (c) specify the use as a daycare in Paragraph 6: Objections (d) not mention the daycare because the future use of a property is not an issue
C
During the time between execution and closing/funding, a contract is a(n): (a) tentative contract (b) voidable contract (c) executory contract (d) fully executed contract
C
IRS statutes require a buyer to: (a) Purchase property only from U.S. citizens (b) Withhold 20% of the price from a foreign seller of U.S. property (c) Withhold 10% of the sale proceeds in excess of $300,000 when a foreign person has no social security card or green card (d) None of the above
C
If a home is to be sold, with lender's consent, at a price less than the outstanding balance on a mortgage, the sale is known as a (a) Deed in lieu of foreclosure (b) Foreclosure (c) Short sale (d) Distress sale
C
If a seller wants to continue to occupy the property for two days after the closing and the buyer agrees: (a) This can be written into the special provisions paragraph of the contract (b) The buyer and seller should negotiate a periodic tenancy agreement (c) The Seller's Temporary Residential Lease form should be used (d) The TAR Residential Lease form should be used
C
If the Seller agrees to contribute to the Buyer's closing costs, the amount should be: (a) entered in Paragraph 11, Special Provisions (b) paid in cash to the Buyer after closing (c) entered in Paragraph 12.A(1)(b) (d) added to the sales price in Paragraph 3
C
If the property is currently under an agricultural exemption, and the use of the property changes, the buyer may be charged a: (a) Fine (b) Penalty (c) Rollback tax (d) d. Change of use fee
C
In a Farm and Ranch sale, the buyer will receive all of the following items except: (a) Windmills (b) Tanks (c) Trucks (d) Pens
C
In the Farm and Ranch contract, if the Sales Price is adjusted based upon a survey, either party may terminate the contract if the Sales Price varies by more than: (a) the amount entered in 3.C of the contract (b) 5% (c) 10% (d) the amount entered in 3.A of the contract
C
In the Third Party Financing Addendum for Credit Approval: (a) The buyer has no incentive to obtain financial approval (b) The buyer has a definite time to notify seller of the inability to obtain financing approval (c) The buyer's earnest money will not be returned if the buyer does not obtain financing (d) The option period is explained
C
Reservations of oil, gas and other minerals will generally be inserted in: (a) Paragraph 2 (b) Paragraph 11 (c) TREC Addenda form (d) Paragraph 7
C
Rollback taxes would most likely be imposed when: (a) a property that has been used for agricultural purposes is no longer productive (b) a borrower rolls loan fees into a refinance (c) a property that has been under an agricultural exemption is developed into a subdivision (d) when the use of a property changes from residential to commercial
C
The State of Texas encourages the parties to resolve all conflicts and disputes through alternative dispute resolution procedures such as: (a) Arbitration (b) Going to court (c) Mediation (d) Termination of the contract
C
The loan amount in Paragraph 3.B. of the sales contract includes: (a) The amount of the mortgage insurance (b) The loan plus origination fees (c) Only the amount borrowed by the buyer (d) The loan amount minus the earnest money
C
The number of days allowed for objections to title or survey is: (a) ten days (b) a number of days equal to the option period (c) the number of days entered in paragraph 6. (d) any time prior to closing
C
The sales contract identifies the agency relationships between the broker(s) and parties: (a) In paragraph 23 (b) In paragraph 17 (c) In the Broker Information section (d) In paragraph 9
C
Usual expenses of the buyer as stated in the contract include: (a) deed preparation fee (b) release of existing liens (c) loan application fees (d) tax statements
C
Usual expenses of the seller as stated in the contract include: (a) Appraisal fees (b) VA loan funding fee (c) Release of existing lien (d) Copies of easements and restrictions
C
Who is responsible for filling in the effective date of the contract? (a) The listing salesperson (b) The title company (c) The broker (d) The selling salesperson
C
_______________ occurs when a property is refinanced or resold immediately after purchase for an artificially inflated value. (a) Chunking (b) Churning (c) Property flipping (d) Equity theft
C
A Buyer wishes to make an offer on a property, but is concerned that the rare and endangered fluted tree scorpion occupies the land. In preparing the offer, the agent should: (a) include in special provision authorization for the Buyer to conduct assessments of endangered species on the land (b) include that the Seller provide an affidavit stating that the land is free of all endangered species (c) insist that the Seller take immediate action to remove all fluted tree scorpions from the land (d) include the TREC Environmental Assessment, Threatened or Endangered Species, and Wetlands Addendum
D
A licensee might be guilty of the unlawful practice of law if he or she: (a) wrote a will for a client (b) advised the buyer regarding title issues (c) drafted a lengthy and complex provision in special provisions (d) any of the above
D
According to the Third Party Financing Addendum for Credit Approval of a VA loan, if the purchase price or cost exceeds the reasonable value of the property as determined by the Department of Veterans Affairs the Buyer: (a) Can terminate the transaction without penalty (b) Can pay the excess amount in cash from a source which Buyer agrees to disclose to the VA (c) Can negotiate with the seller to have the seller lower the sales price to an amount equal to the VA reasonable value (d) All of the above
D
All written notices between the parties are effective when: (a) Mailed (b) Hand-delivered (c) Faxed or emailed (d) Any of the above
D
An exception to a license holder using a TREC-promulgated contract form would be: (a) if the broker does not want to use the forms (b) if the license holder prepared his or her own form (c) if the sale is for a vacant lot in a subdivision (d) if an attorney-prepared form is used
D
At closing the buyer should bring a: (a) personal check for the amount of closing costs and down payment (b) a promissory note for the amount of closing costs and down payment (c) cash for the amount of closing costs and down payment (d) a cashier's check or wire transfer for the amount of closing costs and down payment
D
At the closing the buyer should bring: (a) A personal check for the amount of closing costs and down payment (b) A promissory note for the amount of closing costs and down payment (c) Cash for the amount of closing costs and down payment (d) A cashier's check or wire transfer for the amount of closing costs and down payment
D
For a valid option to exist (a) The option fee must be paid directly to the seller or listing broker (b) All of the blanks in paragraph 23 must be filled in (c) The fee must be paid within three days of the effective date of the contract (d) All of the above
D
How long does a buyer have to object to defects, exceptions and encumbrances to title disclosed in the survey and title commitment? (a) Within 3 days of the effective date of the contract (b) Up to 5 days prior to closing (c) Within 7 days of becoming concerned (d) The negotiated number of days stated in the contract
D
If a buyer makes an offer without having received the Seller's Disclosure Notice, how many days does the seller have to provide the notice? (a) Not less than 3 days prior to closing (b) Not more than 5 days after the effective date of the contract (c) Within 7 days of loan approval (d) The number of days negotiated in the contract
D
If a buyer makes an offer without having received the Seller's Disclosure Notice, how many days does the seller have to provide the notice? (a) not less than 3 days prior to closing (b) not more than 5 days after the effective date of the contract (c) within 7 days of loan approval (d) the number of days negotiated in the contract
D
If a seller wants to continue to occupy the property for two days after the closing and the buyer agrees: (a) this can be written into the special provisions paragraph of the contract (b) because it is for only two days, the parties should just enter into an oral agreement (c) the buyer and seller should negotiate a periodic tenancy agreement (d) the Seller's Temporary Residential Lease form should be used
D
If not using a temporary lease, the buyer is entitled to possession of the property: (a) 24 hours before closing (b) When the seller has moved out (c) On closing day (d) Upon closing and funding
D
In a lease with a "right of first refusal" provision: (a) The price is set when the lease agreement is negotiated (b) The tenant has promised to buy the property (c) The TREC promulgated form must be used (d) The tenant has the right to match or better any offer the landlord receives to prevent the property from being sold to someone else
D
In the Farm and Ranch contract, the Sales Price may be adjusted based upon a survey. If the sales price is adjusted, _____________. (a) the cash portion can be adjusted (b) the amount financed can be adjusted (c) the cash portion and amount financed can be adjusted proportionately (d) any of the above are possible
D
TREC has promulgated forms for: (a) lease purchase transactions (b) cooperatives (c) right of first refusal (d) residential transactions
D
The Buyer and Seller Temporary Residential Lease forms are good for any period up to: (a) 14 days (b) 30 days (c) 60 days (d) 90 days
D
The Third Party Financing Addendum For Credit Approval can be used when: (a) the buyer is obtaining FHA financing (b) the buyer is obtaining seller financing (c) the buyer is obtaining VA financing (d) the buyer is obtaining any kind of third party financing
D
The closing date: (a) is negotiated by the buyer and the seller (b) is an "on or before" date (c) may be extended in some cases (d) all of the above
D
The earnest money is: (a) Always 5% of the purchase price (b) Set by TREC (c) Negotiated between the parties (d) Paid at closing
D
The sales price in 3.C. is always: (a) The loan amount plus the cash portion (b) 3.A. + 3.B. (c) The amount borrowed plus the down payment (d) All of the above
D
The sales price may be adjusted based upon a survey. If the sales price is adjusted, ____________. (a) The cash portion can be adjusted (b) The amount financed can be adjusted (c) The cash portion and amount financed can be adjusted proportionately (d) Any of the above are possible
D
The special provisions paragraph of the contract allows licensees to insert: (a) Factual business details (b) Statements not addressed in the contract (c) Information for which there is no TREC promulgated addendum, lease or mandatory form (d) All of the above
D
When a seller wishes to retain certain fixtures or accessories, these items are called: (a) personal property (b) problems (c) exceptions (d) exclusions
D
___________________ occurs when a property is refinanced or resold immediately after purchase for an artificially inflated value. (a) Chunking (b) Churning (c) Equity theft (d) Property flipping
D
