Texas Real Estate Contracts

4 Exam A broker who has been authorized in writing by the parties to a purchase agreement to represent both parties following Section 1101.559 of the Texas Real Estate Act is a(n):

intermediary

2 Exam One person may give another the authority to act on his or her behalf. The legal document that creates this relationship is called a:

power of attorney

5 Exam If a buyer works exclusively with a broker or sales associate, what must the broker or sales associate first do before entering into a buyer representation agreement?

present a written disclosure regarding the agency relationship

1 Exam It is important to know TRELA Section 16 and Article 13 of the National Association of Realtors Code of Ethics because these rules:

prohibit a licensee from providing legal counsel to his or her client

6 Exam Section 24 of the One to Four Family Residential Contract (Resale) form states that a licensee may:

refer the client to an attorney for legal counsel

1 Exam The Texas Real Estate License Act was enacted to:

regulate licensing and provide ground rules for licensees filling out and reviewing contracts

4 Exam In which section of the lasting agreement should a broker indicate additional addenda and other documents that the seller may need to provide?

section 19

8-2 Section 28 of the Residential Lease Form states that a sublessor is:

still primarily liable for paying rent to the owner

7 Exam A separate provision called an addendum may be attached to a sales contract if:

the buyer and seller both agree

5 Exam Under Section 7 of the Buyer Representation Agreement, the parties under this contract must have:

the mental capacity to bind them to a contract and legal authority to bind them to the contract

6 Exam Who is in charge of a mediation form?

the neutral party

2 Exam What happens to an original offer if a counteroffer is made?

the person making the original offer is no longer bound by it

1-2 A licensee does not have to use a promulgated contract form if a transaction involves a contracts form prepared by whom?

the property owner or an attorney for a contract required by the property owner

4-4 If a seller does not want the broker, who is listing their home for sale, to represent the buyer on the purchase of their home, how would the salesperson complete the Listing Agreement in order to reflect the seller's wishes?

the salesperson would check block 9(B) No Intermediary Status - on the listing agreement.

3 Exam What determines the difference between a special agent and a general agent?

the scope of authority delegated to the agent by the principal.

4-5 If a seller, during the listing period, decides to rent a room in the home they have listed for sale, what are they obligations of the seller to the broker?

the seller may rent a room to someone during the listing period, after advising her or her listing broker and providing copies of any rental agreements to the broker.

4-2 If a seller does not want to include in the sale of their home the chandelier that hangs over the table in the formal dining room, which section of the TAR 1101 form should the agent complete?

the seller should compete property Section 2(D) and list the chandelier as a fixture that the seller will not leave with the property.

5-2 According to Section 3 of the Residential Buyer/Tenant Representation Agreement. when is a lease transaction considered closed?

when the landlord and tenant enter into a binding lease of the property

7 Exam When could an Addendum for Sale of Other Property by Buyer be attached to the residential sales contract?

when the purchase of the buyer's new home is contingent on the sale of buyer's present home

6-3 Within what period of time after the Title Company receives a copy of the purchase contract, must the seller furnish the buyer a commitment for the title insurance?

within 20 days

6-4 After the seller provides the Seller's Disclosure of Property Condition, how long does the buyer have to review the seller's disclosure and terminate the contract, if they choose to do so?

within 7 days

3 Exam In order for an intermediary relationship to exist, it is mandatory to have a(n):

written employment contract signed and agreed on by tho buyer and seller.

8 Exam Which requirement is not needed to create a valid lease?

written lease agreement

1 Exam By filling out a real estate contract correctly, you can:

-PROTECT YOURSELF -PROTECT YOUR CLIENT -PROVIDE LEGAL COUNSEL

2-3 What is a reason for discharge of a contract?

-RECESSION -ASSIGNMENT -BREACH

7 Exam Regarding the Addendum for the Back-Up Contracts, what occurs if the first contract does not terminate?

-THE BACK UP CONTRACT TERMINATES -THE BUYER IS REFUNDED HIS OR HER EARNEST MONEY DEPOSIT

7 Exam Why should a seller take precautionary measures when allowing a buyer to occupy a property before the closing of a sales transaction?

-THE BUYER MAY BE UNABLE TO COMPLETE THE TRANSACTION -IF THE BUYER OCCUPIES THE PROPERTY, HE OR SHE MAY NOT VACATE -IF THE SELLER IS FORCED TO EVICT THE BUYER THE SALE OF THE PROPERTY MAY BE DELAYED

3 Exam What is a listing agreement?

-THE MOST COMMON WAY TO CREATE AN AGENCY RELATIONSHIP -A WRITTEN CONTRACT BY WHICH A PRINCIPAL, OR SELLER, EMPLOYES A BROKER TO SELL REAL ESTATE -AN AGREEMENT THAT OCCURS WHEN A SELLER PROMISES TO PAY A COMMISSION UPON PRESENTATION OF READY, WILLING, AND ABLE BUYER WHO MEETS ALL TERMS OF THE LISING.

6-1 When creating a valid sales contract, which element is necessary?

-THE OFFER AND ACCEPTANCE -EARNEST MONEY -EQUITABLE TITLE

3-2 An agency relationship may be terminated by all of the following, except:

-a fire destroying the property that is subject of the agency contract -THE PRINCIPALS REFUSAL OF AN OFFER TO PURCHASE PRESENTED IN THE NAME OF A THIRD PARTY -mutual agreement of both the principal and the agent before the original term expires -the renunciation of the agency the the agent

3 Exam An agency relationship may be terminated by all of the following, except:

-a fire destroying the property that is the subject of the agency contract -THE PRINCIPAL'S REFUSAL OF AN OFFER TO PURCHASE PRESENTED IN THE NAME OF A THIRD PARTY -mutual agreement of both the principal and the agent before the original term expires -the renunciation of the agency by the agent

4-8 Which of these is not part of the broker's authority as outlined in the Residential Real Estate Listing Agreement - Exclusive Right to Sell form?

-advertise the property in various forms of media -provide information about the property to other brokers and buyers -OBTAIN THE HIGHEST POSSIBLE COMMISSION -place a "for sale" sign on the property

3 Exam The principal or agent may terminate the agency at any time during the agency, except:

-in the event of death or insanity of the broker or principal -if the property is in excellent condition -IN AN AGENCY COUPLED WITH AN INTEREST -in an agreement with unexpired terms

6 Exam Which statement regarding the One to Four Family Residential Contract (Resale) is true?

-the same form is used for all types of property -the contract only refers to commercial property -the contract only refers to a condominium -DIFFERENT VERSIONS OF THE FORM EXIST DEPENDING ON THE TYPES OF PROPERTY

1 Exam Which promulgated contract form is currently used for a One to Four Family Residential Contract (Resale)?

20-11

2 Exam In Texas, how many requirements must a contract meet to be valid?

6

4 Exam Information relevan to Section 21 of the Residential Real Estate Listing Agreement - Exclusive Right to Sell form refers to the:

-PROPERTY BEING SUBJECT TO FAIR HOUSING LAWS -SELLER'S RIGHT TO REVIEW ANY INFORMATION THE BROKER SUBMITS TO THE MLS OR OTHER LISTING SERVICE -PROPERTY'S COMPLIANCE WITH STATUTES AND ORDINANCES

10-1 Which of these in an example of a closing cost?

-PROPERTY TAXES -RECORDING FEES -TITLE INSURANCE

7 Exam According to the Seller Financing Addendum, what must the buyer provide to the seller?

-A CREDIT REPORT -VERIFICATION OF EMPLOYMENT WITH SALARY HISTORY -A CURRENT FINANCIAL STATEMENT

5 Exam Typically, what does a buyer representation agreement involve?

-A DEFINITE TERMINATION DATE -THE DESCRIPTION OF THE BROKER'S COMPENSATION -THE CREATION OF AN AGENCY RELATIONSHIP

6-5 In Section 11 of the One to Four Family Residential Contract (Resale) both patios can include special provisions. These special provisions may include:

-A WALK THROUGH INSPECTION -AN INVENTORY LIST -the amount of earnest money

2 Exam Which party is considered legally competent to enter into a contract?

-AN 18 YEAR OLD INDIVIDUAL -AN EMANCIPATED INDIVIDUAL -AN INDIVIDUAL SERVING IN THE MILITARY

2 Exam Which situation constitutes mutual consent?

-AN OFFER BY ONE PARTY AND ACCEPTANCE BY ANOTHER -GENUINE ASSENT

7-1 Who can insert a contingency in a sales contract?

-BUYER -SELLER -broker

6 Exam In Section 7 of the One to Four Family Residential Contract (Resale), a buyer may choose to have a professional evaluate the property. This professional may be a(n):

-ELECTRICIAN -PLUMBER -LEAD INSPECTOR

5 Exam According to Section 18 of the Buyer Representation Agreement, when might a buyer seek professional assistance from somewhere other than the broker?

-FOR ISSUES REGARDING PROPERTY INSPECTION -FOR INFORMATION ON ENVIRONMENTAL ASSESSMENTS -FOR ASSISTANCE WITH SURVEYING

2 Exam In regard to contract law, a mistake in an agreement does not include:

-IGNORANCE -INCOMPETENCE -POOR JUDGEMENT

1 Exam A competent real estate licensee:

-KEEPS INFORMED ABOUT ISSUES AND DEVELOPMENTS IN THE REAL ESTATE INDUSTRY -EXERCISES GOOD JUDGEMENT AND SKILL IN PERFORMING HIS OR HER WORK -FOLLOWS ANTI-DISCRIMINATION RULES AND REGULATIONS

2 Exam Discharge of Contract refers to the completion, cancellation, or termination of a contract. Contracts are discharged by:

-PERFORMANCE OR RELEASE -RESCISSION OR ASSIGNMENT -NOVATION OR BREACH

9-1 Although homebuyers and sellers use the services of real estate agents, most have limited understanding of the agency representation. Therefore, what are real estate agents required to provide at the first personal meeting with potential sellers or buyers?

Agency Disclosure Statement

6-7 The One to Four Family Residential Contract (Resale) is the most common sales contract, however _____ additional sales contracts are also used in Texas.

Five

3 Exam What did listing agent Bo say to the buyer that violated his agency relationship with seller Gary?

Gary's house has been for sale for almost one year. I think it is listed too high, don't you? Let's see if he will take a lower offer.

5-7 "If buyers find out that the Listing Agreement on a home their salesperson has already shown them may expire in 30 days, and the buyers decide to wait and negotiate directly with the seller when the listing expires, how is the broker's commission protected?"

If TAR Form 1501 is completed properly, the buyer is obligated to pay the broker's earned fee upon the close of the sale

1 Exam TREC Rules 537.11 lists the forms currently promulgated for use by real estate licensees. It also offers:

instructions for completing the forms

3 Exam In 1995, the Texas legislature created a uniform process regarding the Texas Real Estate License Act, resulting in which two rules?

Initial Meetings and Representation.

4-6 If a seller moves out of their home and leave it vacant during the listing period, which section of the Listing Agreement obligates the seller to notify their insurance company that the property is now vacant?

Limitation of Liability - Section 14(A)

8-1 Sam agrees to enter a lease agreement to have Jane occupy his property in exchange for rent. Who holds a reversionary right to the property?

Sam

6-6 If the buyer is securing an FHA loan, the seller is required to pay a portion of the buyer's closing costs. In which section of the contract would the agent enter this amount?

Section 12(A)(1)(b) - Settlement and Other Expenses

6 Exam Which Section of the One to Four Family Residential Contract (Resale) form may be used to list any fixtures or exclusions that will not transfer with the sale?

Section 2

5-4 If a buyer has an agreement to pay a percentage of the buyer's side commission to a relocation company, where in the Residential Buyer/Tenant Representation Agreement would the buyer place that information?

Section 7(D) - Representations

5-5 If a buyer or tenant does not want to be shown or acquire any of the broker's listings, what part of the Residential Buyers/Tenant Representation Agreement should be completed?

Section 8 - Intermediary 8(B)

7-2 Which addendum allows the seller to assist with the purchase of the property by offering the buyer a loan payable with interest?

Seller Financing Addendum

2-2 Which statute declares that a valid contract must be in writing and signed by the parties to be enforceable?

Statute of Frauds

1 Exam What does TREC form OP-H address?

The Seller's Disclosure of Property Condition

6-2 What addendum should an agent attach to the One to Four Family Residential Contract (Resale) if the buyer's loan has not been approved at the time of the offer?

Third Party Financing Addendum for Credit Approval

10-2 An escrow is termed "complete" when:

all terms and conditions of the escrow instructions have been fulfilled

7 Exam Something that changes an existing element of the contract according to the agreement of both the buyer and the seller refers to a(n):

amendment

6 Exam Regarding earnest money, the final amount a buyer should put forth is:

an amount agreed upon by both the buyer and the seller

3 Exam Although there was no prior approval for an agency relationship, seller Phil agreed to accept an offer presented by salesperson James. In addition, Phil agreed to pay James a commission. Was a valid agency relationship created?

Yes, agency was created through ratification. (Ratification of an agency relationship is created by approving acts after they are done. A seller can accept an offer presented by a licensee and agree to pay a commission, even though no agency has been approved).

5-6 If a seller receives offers from 3 different buyers, may the seller's (listing) agent disclose the terms of the competing offers to each of the buyers?

Yes. If a listing agent receives multiple offers, the listing agent is obligates to treat the competing buyers fairly

4-3 With an Exclusive Right to Sell Listing Agreement, can a broker be compensated before the close of the sale?

Yes. The broker is compensated when he property is sold, whether the seller finds a buyer or a cooperating broker brings a buyer during the term of the listing agreement.

5-8 Does the Limitation of Liability, Section 15, of the Residential Buyer/Tenant Representation Agreement protect the broker if the buyer's child breaks a crystal vase in a property the broker is showing the buyer?

Yes. This section of the agreement indemnifies the broker against any claims for damage the buyer causes to the property of others

7 Exam Which requirement states that something must occur before the goal of the contract - the property sale - can occur?

a contingency

3 Exam Which position is the agent's in a fiduciary relationship?

a position of trust or confidence with the principal and a duty of loyalty, integrity, and utmost care to the principal.

2 Exam Which contract is created when the second party is not obligated to act, but if he or she does, the first party must keep their promise?

a unilateral contract

3-1 A legal relationship in which a principal authorizes an agent to act as the principal's representative when dealing with third parties is known as:

agency.

7 Exam According to a Loan Assumption Addendum, if the seller does not terminate the sales contract after reviewing the buyer's credit, it can be assumed that the seller:

approves the buyer's credit

6 Exam A title insurance company performs a title check of a property's chain of ownership records before issuing insurance in order to:

be sure there is no question about who owns the property when ownership is transferred

4 Exam Which party is responsible for the cost of mediation in Section 17 of the Residential Real Estate Listing Agreement - Exclusive Right to Sell form?

both broker and seller will split the cost evenly

2-1 A(n) _____ is an agreement created by separate parties to perform or not perform certain acts.

contract

4 Exam According to Section 13 of Real Estate Listing Agreement - Exclusive Right to Sell form, the seller promises to:

cooperate with the broker to facilitate the showing and marketing of the property.

2-4 If the original terms in an acceptance offer change in any way, the offer becomes a _____, and the first offer terminates.

counter offer

1 Exam TRELA Section 16 prohibits a realtor from providing legal counsel to his or her client or:

creating his or her own forms

9-2 An "as is" clause in a real estate purchase agreement:

does not relieve a seller from the responsibility to disclose all known material facts to a buyer

5 Exam By agreeing to the Buyer Representation Agreement, the broker must fulfill the fiduciary duties owned to the buyer. According to Section 5, which obligation does that include?

doing everything in the broker's power to help the buyer purchase real property

5-9 The protection period under the Buyer Representation Agreement will entitle a broker to a commission unless the buyer:

enters into another agreement with a different broker after the agreement ends

6 Exam When the buyer holds an interest on property that is legally vested in the name of another person it is known as:

equitable title

9-5 Which tax laws are affected by the Foreign Investment in Real Property Tax Act (FIRPTA)?

federal and state

4 Exam According to Section 12 of the Residential Real Estate Listing Agreement - Exclusive Right to Sell form, the seller represents that:

he or she is not bound to another listing agreement with another broker.

1-1 A real estate contract is important because it:

identifies the parties and the property provides a written record of the transaction sets forth the rights and obligations of the parties

4 Exam According to Section 20 of the Residential Real Estate Listing Agreement - Exclusive Right to Sell form, both parties agree that the listing agreement:

is subject to Texas law

5-3 How long does a typical term for a buyer representation agreement last?

it is negotiable

9-3 Where on the Seller's Disclosure of Property Condition does the seller indicate whether or not they are occupying the property?

just above Section 1

4-7 If a property is tenant occupied, and the salesperson has reached agreement with the tenant and owner to provide easy access to the property, which addendum form would the salesperson secure from the tenant at the time the listing is taken?

key box authorization by tenant

5-1 Which of the following would never be a party to a Residential Buyer/Tenant Representation Agreement?

landlord (it would either be... buyer to broker or tenant to broker)

9-4 Regarding the Seller's Disclosure of Property Condition form, if an answer is "yes" to a question regarding the condition of of the property, what should the seller do if there is not enough space on the form to provide a complete answer?

make a note on the form that the buyer should see the attached sheet providing a more detailed answer

4 Exam According to Section 14 of the Residential Real Estate Listing Agreement - Exclusive Right to Sell form, if the property becomes vacated during the listing agreement, the seller must:

notify his or her casualty insurance company and request a vacancy clause from the insurance company.

7 Exam When all contingencies of a contract are fulfilled, a buyer is:

obligated to complete the purchase

3 Exam To avoid confusion when deterring whether the selling agent represents the buyer or the seller, it is best to:

obtain a buyer's representation agreement.

4-1 One of the most commonly used real estate contract forms is the listing agreement. Which of the following is a type of listing agreement?

open listing, net listing, and exclusive right to sell listing.