Texas Real Estate Exam Prep - Practice Exam
In Texas, what type of leasehold is characterized by possession of a property, such as a situation in which a tenant continues to occupy an apartment after the lease has terminated? A. Freehold estate B. Periodic estate C. Tenancy at sufferance D. Tenancy at will
Tenancy at sufferance
As a requirement of licensure, which of the following agencies perform a criminal background check on all license applicants? A. The Department of Defense and the Department of Homeland Security B. The Department of Homeland Security and the FBI C. The Department of Public Safety and the Department of Defense D. The FBI and the Department of Public Safety
The FBI and the Department of Public Safety
Before Texas established its own occupancy standards law, the federal policy would have likely been considered. How does the Texas law differ from the federal law? A. The Texas law allows fewer individuals per bedroom than the federal occupancy standard. B. The Texas law allows for more adults per bedroom than the federal occupancy standard. C. The Texas law allows twice the amount of adults per bedroom than the federal occupancy standard. D. The Texas law mimics the federal occupancy standard.
The Texas law allows for more adults per bedroom than the federal occupancy standard.
Mom's Memories is a mom-and-pop scrapbook shop in the local strip mall. It leases a 1,500-sq.-ft. space for $11 per square foot. What's Mom's monthly rent payment? a. $1,375 b. $13,750 c. $1,650 d. $16,500
$1,375 1,500 * $11 /12 = $1,375
tu's seller client, Gabi, wants to figure out how much equity she has in the home she's selling. Gabi paid $200,000 eight years ago and made several great renovations over the years. She still owes $125,000. Stu calculates that comparable home values in her area have risen about 15% since Gabi bought. Assuming Stu pulled appropriate comps, about how much equity does she have? A. $105,000 B. $155,000 C. $205,000 D. $230,000
$105,000 $200,000 * (1 + 15%) - $125,000 = $105,000
The Smithwicks, your buyer clients, obtained a 90% loan on their new $400,000 home. At closing, they paid $6,150 for points at closing. How many points did they pay? A. .017 B. .02 C. 1.7 D. 1.71
1.71 A point is 1% of the loan amount. The Smithwicks' loan is $360,000 ($400,000 x .90), and they paid $6,150 for points at closing. Divide the cost in points by the loan amount to get the number of points they paid: ($6,150 ÷ 360,000 = 0.0170833, or 1.71).
A four-unit rental property has a sales price of $800,000. Annual gross rent is estimated at $72,000. What is the gross rent multiplier? Round if necessary. a. 11 b. 111 c. 133 d. 95
133 For this property, first calculate the monthly gross rent. The sale price divided by the monthly rent equals 133.33, making the multiplier 133.
Jared has a 70/30 split with his brokerage firm, and his firm has a 50/50 split with cooperating brokerages. Last month, he was paid $12,239.50 in commissions from his home sales, which totaled $538,000. What is Jared's brokerage's commission rate? A. 2.3% B. 3.8% C. 6.5% D. 7.6%
6.5% Jared was paid $12,239.50, which is 70% of the amount paid to his broker as commission. That makes his firm's commission $12,239.50 ÷ .70 = $17,485. Multiply that by two for the total commission the firm grossed, since it's shared 50/50 with a cooperating brokerage (the brokerage that brings the buyer to the sale), giving you $34,970. Then divide by the total sales amount for the brokerage's commission rate: $34,970 ÷ $538,000 = 0.065, or 6.5%.
Related to title insurance, what is "subrogation"? A. A covered party grants permission to the title company to pursue the party who caused a claim or loss. B. The act of conveyance when the seller turns over all property rights to the buyer with a clear, marketable title. C. The process by which the lender receives coverage under a title insurance policy the borrower has purchased. D. The process by which the title policy pays out any claims to the buyer or lender.
A covered party grants permission to the title company to pursue the party who caused a claim or loss.
Municipality XYZ created a document that regulates the permitted land uses and zoning classifications within the town boundaries, and does so while staying within the parameters of the comprehensive plan. Municipality XYZ has created _______. a. An environmental impact statement b. A SEQRA document c. A TDR document d. A zoning ordinance
A zoning ordinance
What's it called when all parties sign a contract, but before the seller's acceptance is delivered to the buyer? a. Acceptance b. Binding acceptance c. Contract closing d. Exercise of an option
Acceptance Acceptance occurs when all parties have signed a given contract. Binding acceptance occurs when the accepted offer is delivered.
Sellers of property outside a municipality's jurisdiction are required to provide which statutory notice to a purchaser of unimproved real property? A. Addendum for Property Located in a Certificated Service Area of a Utility Service Provider B. Addendum for Property Subject to Mandatory Membership in Property Owners Association C. Conditions Under Surface D. Notice of Additional Tax Liability
Addendum for Property Located in a Certificated Service Area of a Utility Service Provider
Roseanne is a seller who agrees to allow the buyer to assume her VA loan. What addendum will she need if she wants to indicate that she does not want the closing to be delayed if restoration of her VA entitlement is not approved by the closing date? A. Addendum for the Release of Liability on Assumed Loan and/or Restoration of Seller's VA Entitlement B. Loan Assumption Addendum C. Seller Financing Addendum D. Third Party Financing Addendum
Addendum for the Release of Liability on Assumed Loan and/or Restoration of Seller's VA Entitlement
The town planning and zoning board is considering some new zoning regulations to ensure that one of the neighborhoods maintains its designation on the National Register of Historic Places. What type of zoning are they likely to enact? a. Aesthetic zoning b. Bulk zoning c. Incentive zoning d. Registry zoning
Aesthetic zoning Aesthetic zoning is the process of zoning a specific area to create a certain aesthetic look. Local zoning regulations are used to focus on the beauty of the community within its jurisdiction.
Millie is a buyer who has given her agent an earnest money check for $10,000 with an offer to purchase. When will the check be deposited? a. After Millie receives loan approval for the purchase b. After the seller accepts the purchase offer c. At least 10 days prior to closing on the sale d. Immediately upon receipt by her agent
After the seller accepts the purchase offer Earnest money funds are typically deposited after the seller accepts the buyer's offer.
What is the difference, if any, between a TREC-approved form and a TREC-promulgated form? A. An approved form is optional; a promulgated form is required. B. A promulgated form is optional; an approved one is required. C. They are the same thing; there is no difference. D. TREC-approved forms have been published; promulgated forms are awaiting approval.
An approved form is optional; a promulgated form is required.
Looking at a survey drawing, you see this measurement at the corner of a property boundary: S 42° 05' 16" W, which means 42 degrees, five minutes, 16 seconds from the south to the west. What is this measurement called? a. Bearing b. Circumference c. Distance d. Scale
Bearing In land surveying, a bearing is the clockwise or counterclockwise angle between north or south and a direction.
Of the following examples, which one describes a landlord's basic duty under the Texas law? A. Allow for rent payments to be made within 14 days of the first of the month. B. Comply with state and local laws that relate to health and safety of the tenant. C. Landscape the common areas. D. Maintain a clean rental unit.
Comply with state and local laws that relate to health and safety of the tenant.
Easements are a type of encumbrance that can affect a property. Which of the following is true about easements? a. An easement is a right acquired by one party to use the land of another party, usually for one day. b. An easement requires the property owner's express permission. c. Easements are often established by a written agreement between the parties. d. They are always permanent.
Easements are often established by a written agreement between the parties. Easements come in many forms, are of varying duration, and may be established with or without the owner's permission. They're often established by a written agreement between the parties.
Nick and Chris tine own a Taco Bell franchise. They built the restaurant on land they've leased from the Fargood Foundation. What type of lease do they have? a. Flat lease b. Ground lease c. Lease option d. Percentage lease
Ground Lease A ground lease is a situation where the ground is owned by one entity and someone else leases the ground so they can build something. These are usually long-term leases to allow the builder to recoup the cost of the building.
Simon recently passed away. He owned title to his property in severalty, as a fee simple absolute estate. What will happen to his property? A. His heirs, as described in his will or the state law of descent, will get the property. B. His property will transfer to a colleague. C. The property will have no owner and must be sold at auction. D. The property will revert to a remainderman.
His heirs, as described in his will or the state law of descent, will get the property.
Which Texas laws protect the homeowner from general creditors? A. Equal credit laws B. Homestead laws C. Lien laws D. Police power rights
Homestead laws
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 states that its purpose, in part, is to require that real estate appraisals used in connection with federally related transactions be performed ______. A. By licensed real estate professionals B. By members of the Appraisal Foundation C. In the most expeditious and inexpensive way possible D. In writing, and in accordance with uniform standards
In writing, and in accordance with uniform standards
Which one of these would NOT be an element of comparison an appraiser would use when applying the sales comparison approach to a property valuation? a. Financing terms and cash equivalency b. Income generated c. Market conditions at time of sale d. Physical characteristics of the property
Income generated The sales comparison approach doesn't factor in any income a property may have generated; that's an aspect of the income approach.
Which of the following is an example of sub-agency? A. Kayla is a licensee with ABC Realty and lists a property for seller Devon. Maurice is a salesperson with XYZ Realty Group and brings a buyer to the table, but owes fiduciary duties to the seller. B. Kermit is represented by Bert, an agent with Street Realty. Today they're seeing Oscar's house, which has been listed by Oscar's agent, Ernie, from Energy Realty. C. Rita is a licensee with Hawthorne Realty. She has a client, Dinah, who's selling her condo. Rita thinks Dinah's house will be perfect for Ruby, a customer. D. Tim and Tom are both licensees with Acme Realty. Tim is the listing agent on a home where Tom represents the buyer.
Kayla is a licensee with ABC Realty and lists a property for seller Devon. Maurice is a salesperson with XYZ Realty Group and brings a buyer to the table, but owes fiduciary duties to the seller.
Dean's new business venture is a software services firm where IT professionals handle programming and customer service tasks for a number of business clients. His employees all work at tables in an open office space. Dean most likely has a _______ lease for the office space. A. Gross B. Loft C. Percentage D. Triple net
Loft A loft lease is usually for a large open space that may have few amenities. A loft lease generally prohibits the tenant from making structural changes or any change that would require a change or upgrade to utility services.
In a trust, the trustee is the person who ______. a. Creates the trust b. Is empowered to void the trust for any reason c. Makes sure the terms of the trust are carried out d. Receives the benefits of the trust
Makes sure the terms of the trust are carried out The trustee is the person in charge of carrying out the terms of the trust.
Which legal description method uses compass headings and directions? A. Block & Grid B. Metes & Bounds C. Rectangular Survey System D. Lot & Block
Metes & Bounds
Who is required to complete a property disclosure notice in Texas? A. All sellers of property transfers B. Most sellers of single-family residential properties C. Only sellers who are listing single-family residential properties built prior to 1978 D. The listing agent for the seller
Most sellers of single-family residential properties
Craig is a Texas tenant with a written estate-for-years tenancy. How much notice must he give his landlord if he wants to terminate his lease upon expiration of the lease term? A. 30 days B. None C. Three weeks D. Two weeks
NONE
A seller has signed an Addendum for "Back-Up" Contract and likes the second offer better than the first. May the seller terminate the original offer? A. No, both parties are bound to the original agreement unless the seller defaults B. No, the seller may not unilaterally terminate C. Yes, by paying an option fee to the original buyer D. Yes, if the original offer is contingent on the sale of another property
No, the seller may not unilaterally terminate
An agency agreement between a buyer and a single agent that allows the buyer to work with other agents is a(n) __________. a. Exclusive buyer agency b. Exclusive buyer designated agency c. Non-exclusive buyer agency d. Non-exclusive buyer designated agency
Non-exclusive buyer designated agency Buyers can work with licensees from the same or a different agency.
Mary has a contract to buy her mother's house when her mother is finally ready to move to a senior living community. This way, the house stays in the family. After her mother finds a suitable senior apartment and moves, Mary writes a check for the agreed-upon amount, and her mother transfers the deed to Mary. What is happening in this scenario? a. Assignment b. Breach c. Novation d. Performance
Performance This is an example of contract performance. Performance means that the two parties have met the terms of the contract.
Which types of forms are the Property Located Seaward of the Gulf Intracoastal Waterway and the Coastal Area Property? A. Promulgated Addenda B. Promulgated Contracts C. Promulgated Notices D. Promulgated Resale Certificates
Promulgated Addenda
Which of the following situations may result in inverse condemnation? A. Property taxes rise because of an increase in property value. B. Property values decrease because adjacent property was rezoned. C. Property values decrease because the property was rezoned. D. The government takes private property for public use and compensates the owner.
Property values decrease because adjacent property was rezoned.
The Hendersons don't have enough money to make the full 20% down payment their institutional lender requires. To close the sale, the seller is willing to finance a loan for the amount between the home's list price and what the institutional lender is willing to loan. What's this type of financing called? a. Equity mortgage b. Purchase agreement c. Purchase money mortgage d. Seller-insured loan
Purchase money mortgage A purchase-money mortgage is a mortgage issued to the borrower by the seller of a home as part of the purchase transaction. Also known as a seller or owner financing, this is usually done in situations where the buyer cannot qualify for a mortgage through traditional lending channels. It is also called seller financing or owner financing.
In accordance with the TREC One to Four Family Residential Contract (Resale), which of the following expenses are paid by the seller? A. Appraisal fees B. Credit reports C. Loan document preparation D. Releases of existing liens
Releases of existing liens
Orla represents the seller, and Pardeep, an agent from a different firm, represents the buyer in the same transaction. What type of agency relationship does Orla have with her client? a. Buyer agency b. Dual-licensee dual agency c. Seller agency d. Single-licensee dual agency
Seller Agency
An easement dictates that property owner A gives the right to property owner B to use a portion of the property. Which term describes property A? a. Domain estate b. Dominant estate c. Service estate d. Servient estate
Servient Estate Property A is the servient estate. It serves the dominant estate, Property B.
Which of these tasks that Jenna performs does NOT represent the fiduciary duty of accounting? a. She avoids commingling trust funds with her firm's operating funds. b. She discloses the terms of the listing agent's compensation to her client. c. She meticulously manages all her clients' transactional paperwork. d. She properly records the earnest money her buyer client gave her.
She discloses the terms of the listing agent's compensation to her client. The fiduciary duty of accounting means that the licensee properly handles all funds, paperwork, and property.
When a government entity exercises its powers to create zoning ordinances, what must be followed? A. Federal zoning codes B. The area's comprehensive plan C. The state's zoning codes D. Universal design standards
The area's comprehensive plan
Which of these statements accurately represents one of the required elements in a deed? A. The deed includes an act of conveyance. B. The grantee must be legally competent. C. The grantee must be of legal age. D. The grantee must sign the deed and provide consideration.
The deed includes an act of conveyance.
Bonnie has a mortgage on her investment property, but she allows the homeowners insurance to lapse. Which of these is a possible consequence of this action? A. Bonnie's mortgage loan interest will increase. B. Bonnie won't be allowed to pay off her loan early. C. The lender can place Bonnie's loan in default. D. The lender can sue Bonnie.
The lender can place Bonnie's loan in default. If borrower fails to homeowners maintain insurance, loan can be placed in default and mortgage lender could foreclose on the home.
Which of these actions is a violation of the Residential Lead-Based Paint Hazard Reduction Act when a property constructed before 1978 is being marketed by a licensee? a. The buyer is given more than 10 days to complete a lead inspection of the property. b. The buyer's agent fails to complete the lead-based paint disclosure form. c. The seller refuses to perform lead abatement work requested in buyer's offer. d. The seller's agent fails to provide the pamphlet, "Protect Your Family from Lead in Your Home," to prospective buyers.
The seller's agent fails to provide the pamphlet, "Protect Your Family from Lead in Your Home," to prospective buyers. Federal law doesn't require lead abatement work, and buyers may negotiate to have more than the requisite 10 days to perform lead inspections, but the EPA pamphlet must be provided to prospective buyers, and that's the listing agent's responsibility.
What is the purpose of the Addendum for Property Subject to Mandatory Membership in a Property Owners Association? A. To explain how homeowners associations operate B. To explain to buyers the advantages of a homeowners association C. To give buyers the opportunity to request subdivision information D. To provide buyers with information about the homeowners association
To give buyers the opportunity to request subdivision information
Which of the following statements about Texas business entities is true? A. A broker can act as the designated broker for a business entity while the broker's license is inactive, but not while it's suspended or revoked. B. As long as someone who works at a business entity holds some type of Texas real estate license, the entity can act as a real estate broker. C. It's illegal for business entities in Texas to hold real estate licenses. D. Unless a business entity holds a real estate license, that entity may not act as a broker.
Unless a business entity holds a real estate license, that entity may not act as a broker.
You sign a contract to purchase a machine that will allow you to travel back in time and meet Abraham Lincoln. Assuming that time machines don't actually exist (for now), what type of contract is this? a. Enforceable b. Unilateral c. Void d. Voidable
Voidable A party can't promise to do something that's actually impossible in a contract. This contract is void because the seller of the machine literally can't perform his side of it.
How many lawyers does the governor appoint to the Broker-Lawyer Committee? A. ONE B. TWO C. SIX D. ZERO
ZERO
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? A. Eighteen months B. Four years C. Six months D. Two years
FOUR YEARS
When a licensee has broad responsibility to handle all details of a specific transaction, what type of real estate agency relationship usually exists? a. Designated b. General c. Special d. Universal
General
Which one of the following types of ownership termination allows each tenant to have a specific, divided portion (partition) of the property exclusively? a. Termination by division b. Termination of co-ownership by partition c. Termination of estate in severalty d. Termination of joint tenancies
Termination of co-ownership by partition Termination of tenancy in common by partition allows each tenant to have a specific, divided portion of the property exclusively. If the property can't be divided, the court may rule that the property be sold and the proceeds divided by the tenants.
What is the correct way to list the buyer's name on the Texas sales contract? A. Ms. Drew B. S. Drew C. Sheila D. D. Sheila Mae Drew, a single person
Sheila Mae Drew, a single person
Nico is buying a home for $625,000. His earnest money deposit is 8%. He wants to avoid private mortgage insurance (PMI) on his conventional loan, and he owes 5% of the purchase price in closing costs. How much money should he bring to closing? a. $106,250 b. $156,250 c. $31,250 d. $81,250
$106,250 $625,000 * (20% + 5% - 8%) = $106,250
If you represent the buyer and seller in the same transaction, what type of agency relationship do you have with your clients? A. Buyer agency B. Dual-license dual agency C. Seller agency D. Single-license dual agency
Single-license dual agency You are in a single-license dual agency relationship with your clients because you represent both the buyer and the seller.
Nellie and Victor own a suburban ranch home and fell behind on paying their property taxes when Victor lost his job last year. Victor is working again, but they still haven't saved enough to pay their back taxes. They're worried that the county may begin foreclosure proceedings. What type of lien is this? A. Attachment B. General C. Special assessment D. Specific
Specific Property tax liens are specific, because they represent a lien against a specific piece of property.
The appraisal report submitted to Jenkins, the lender, notes that the property is being conveyed with all property rights intact. Which step in the appraisal process does this represent? a. Determine highest and best use. b. Estimate the land value. c. Gather and analyze data. d. State the problem.
State the Problem The first step in the appraisal process is to state the problem. This includes a description of the rights associated with the property.
Francis, an associate broker, promised his brother, Fred, who is unlicensed and not an attorney or trustee, that he would pay him a portion of his commission when he closed on the Maple Street transaction. Under what circumstances would this be legal? A. If Fred were a party to the transaction, and this rebate was paid by Francis's broker B. If it were a referral fee C. If it were paid after the fact by Francis D. If it were paid through Francis' broker
If Fred were a party to the transaction, and this rebate was paid by Francis's broker
Seth is a licensee working for a buyer, Britney. Britney wants to make sure the seller accepts her offer on a charming Cape Cod, so she tells Seth she wants to make a full-price, non-contingent offer right away. How should Seth respond? a. "I highly recommend a home inspection contingency with your offer to protect yourself in the event there are major defects with the house." b. "Since you love this house, this is the best way to make sure you get it. Let's write up the offer and send it over right now." c. "Your offer may be more attractive if we come in at $5,000 over the list price." d. "Your offer would be more attractive if it were all cash."
"I highly recommend a home inspection contingency with your offer to protect yourself in the event there are major defects with the house." The primary reason why a buyer should make their offer contingent on a home inspection is to ensure the home does not have any major deficiencies. It's almost a guarantee that a home inspector will find issues with every home.
A real estate transaction has a closing date of May 20. The seller, who's responsible for closing costs up to but not including the day of settlement, has already paid annual property taxes of $1,949. Using calendar year proration, the seller will be ______ on the closing statement (round to the nearest dollar). a. Credited $1,207 b. Credited $742 c. Debited $1,207 d. Debited $742
Credited $1,207 $1,949 / 365 * (365 - 139) = $1,207
An agent practices dual agency without informed consent. This is ______. A. Acceptable, as long as the broker is made aware B. Acceptable, as long as the parties don't raise a ruckus C. Acceptable, as long as the parties sign a waiver D. Illegal
Illegal
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? a. Appraisal contingency b. Financing contingency c. Home sale contingency d. Inspection contingency
Inspection contingency
Sunshine Surveyors Inc. created a lot and block survey for a new residential development, Happy Acres. The first thing the surveyor did when he surveyed the new neighborhood was to reference what type of description? A. Map B. Metes and bounds description C. Monument D. Plat book
Metes and bounds description
Which statement most accurately describes the type of notice provided by recording a change of ownership document? a. Recording the deed provides actual notice of the property sale. b. Recording the deed provides constructive notice of the property sale. c. Recording the new owner's title policy serves as constructive notice of the sale. d. Recording the promissory note provides constructive notice of the property sale.
Recording a document provides constructive notice; recording the deed provides constructive notice of property ownership.
Farquhar bought a house at a foreclosure auction. A few weeks later, he was notified that he couldn't take possession of or title to the property. What likely happened? A. The lender received another offer higher than the one Farquhar made at the auction. B. The lender revised the previous owners' loan and permitted them to remain in the property. C. The other lien holders protested the auction sale, so the lender retained the property. D. The previous owners redeemed the property by paying all mortgage payments and fees.
The previous owners redeemed the property by paying all mortgage payments and fees. Some states have a statutory redemption period after a foreclosure sale within which the homeowners can pay all funds owed to the lender to retain ownership.
Marion gave her granddaughter Sheila the deed to a brand new home, on the condition that Sheila complete her PhD in astronautics. When Sheila dropped out of school and got a job as a greeter at a big box store instead, Marion ______ to regain ownership of the property. a. Had no recourse b. Had to purchase the property from Sheila c.Had to take legal action d. Wasn't required to take any action
Wasn't required to take any action The estate granted to Sheila describes a fee simple subject to a condition subsequent, since it uses the phrase "on condition that." Marion's right of reentry requires her to take legal action to regain ownership if the condition is violated.
Jamie's new home has multiple defects. He has tried repeatedly to resolve the issues with the contractor, to no avail. According to the New Home (Incomplete Construction) Contract, Jamie must provide notice to the contractor by certified mail, return receipt requested no later than ________days before the date he intends to file suit to recover damages. A. 120 B. 30 C. 60 D. 90
60
Cambridge Apartments provides an open parking lot for its residents. There is adequate parking, and all spaces are available on a "first-come, first-served" basis. Alton has multiple sclerosis and uses a motorized wheelchair. Must Cambridge reserve a parking place specifically for Alton if he requests? a. As long as the current parking policy were already in place before Alton made application, Cambridge need not make an exception. b. Cambridge must allow an exception to the first-come, first-served policy for Alton. c. Cambridge must provide a space for Alton that is no farther than 50 feet from an accessible building entrance. d. Provided at least two parking spaces per living unit are available, a parking space need not be reserved for Alton.
Cambridge must allow an exception to the first-come, first-served policy for Alton. Reasonable accommodation requirements preserve Alton's right to a reserved parking space that fits his needs.
Eloise is interested in buying a bungalow on the outskirts of the city. Her agent is reviewing the property details and informs her that there are several easements on the property. In particular, the gas company has a right of way because the natural gas line for the neighborhood runs through the back of the lot. What type of easement would this be? A. Easement appurtenant B. Easement by necessity C. Easement by prescription D. Easement in gross
Easement appurtenant
Kurt bought a vacant lot in a development that was 85% completed. When he started working with the builder to lay out where the house and driveway would lie, it was determined that he would need an easement because his driveway would spill over onto the adjacent lot by a few feet. What type of easement is this? A. Easement appurtenant B. Easement by necessity C. Easement by prescription D. Easement in gross
Easement appurtenant
Which of these statements about equitable title is true? A. Buyers obtain equitable title to a property when any mortgage loan is paid in full. B. Equitable title equates to ownership. C. Equitable title is the same as legal title. D. Equitable title refers to the borrowers future rights.
Equitable title refers to the borrowers future rights.
Homestead Realty had a listing agreement with Gertrude. The listing expired, and Gertrude moved the listing to another firm. Another licensee at Homestead Realty has a buyer client who's interested in Gertrude's property. What restrictions are in place for Homestead Realty? a. Homestead may not represent a buyer for the previously listed property. b. Homestead may represent the buyer but may not disclose any information about the property or previous offers on it. c. Homestead may represent the buyer, must disclose material facts about the property, and must maintain Gertrude's confidentiality. d. No restrictions are in place since the previous property listing expired.
Homestead may represent the buyer, must disclose material facts about the property, and must maintain Gertrude's confidentiality. Homestead must adhere to its fiduciary duties of confidentiality (to Gertrude) and disclosure (to all parties).
With a straight mortgage, what type of payments are made up until the end of the loan term? a. Insurance b. Interest c. Points d. Principal
Interest A straight loan (aka term loan) is a type of loan where only the interest is paid during the term of the loan and the principal is paid at the end of the term.
In the early years of a mortgage loan term, which portion of the payment is likely to be the largest? a. Insurance b. Interest c. Principal d. Taxes
Interest The amount of a mortgage payment is composed of a combination of interest and principal repayment. Over the life of the mortgage, the proportion of interest to principal will change. Initially, the homeowner's payment will be primarily interest, with a small amount of principal included. As the mortgage matures, the principal portion of the payment will increase, and the interest portion will decrease. This is because the interest charged is based on the current outstanding balance of the mortgage, which decreases as more principal is repaid. The smaller the mortgage principal, the less interest charged.
Tom sold new construction property that was formerly zoned agricultural to Brenda and Lee. Who's responsible for paying rollback taxes on this property? A. Brenda and Lee, but only for their first year's taxes B. No one; rollback taxes would not apply in this case C. The county tax assessor in which the property is located D. Tom
TOM The party who changed the property's assessed value/use (in this case, Tom) would be responsible for the rollback taxes.
In Texas, a real estate licensee doesn't have to have any additional licenses to sell manufactured homes as long as _________________. A. The licensee informs the chief tax appraiser B. The licensee informs the Texas Department of Housing and Community Affairs C. The licensee is a broker D. The licensee negotiates for the consumer while acting as the consumer's broker or sales agent
The licensee negotiates for the consumer while acting as the consumer's broker or sales agent
Sylvia, who's 15 years old, and her neighbor Marge, who's 24, agree that Sylvia will babysit Marge's toddler for the summer for $10 an hour. What type of contract is this? a. Enforceable b. Unilateral c. Valid d. Voidable
Voidable A voidable contract appears to be valid, but one or both parties have the right to rescind the contract. In this case Sylvia can enforce the contract against Marge but Marge cannot enforce against Sylvia.
Gene and Alex bought a property that backed up to a neighborhood park. The previous owner mentioned that ever since the park was built eight years ago, the next door neighbor who works at the park has cut through the yard to get to the park rather than going around via the streets, which saves about half a mile. What kind of easement is this? a. Easement by prescription b. Easement in gross c. Express easement d. Visible easement
Easement by prescription Easements by prescription, also called prescriptive easements, are implied easements granted after the dominant estate has used the property in a hostile, continuous and open manner for a statutorily prescribed number of years. Prescriptive easements differ from adverse possession by not requiring exclusivity. An easement in gross is a right allowing an individual or an entity to use someone else's land/property. An easement in gross agreement benefits the property owner as an individual, not the property. An easement holder will be unable to transfer the benefits to another party.
What are the documents that the title company provides to the buyer along with a title commitment? A. Agreement by a title company to issue title insurance under certain conditions B. Evidence of exceptions in the title commitment C. Insurance against financial loss if title to real estate is defective D. Promises that appear on a deed and prohibit or require specific use of the property
Evidence of exceptions in the title commitment
Jenner purchased his first home, to which he'll have access forever, as far as he knows. Jenner owns a(n) ______. a. Estate for years b. Freehold estate c. Leasehold estate d. Ownership estate
Freehold Estate A freehold estate implies ownership for an unlimited amount of time—the "free" refers to the ownership agreement being free of an end date.
What does a balloon payment represent at the end of a loan term? a. It means that some principal remains at the end of the loan term. b. It means that the loan has been fully amortized. c. It refers to the entire principal due over the course of the loan. d. It refers to the lump sum of the total amount of interest due on the loan.
It means that some principal remains at the end of the loan term.
When preparing her purchase offer to the seller, Margo elected to take the termination option because she just wasn't certain she could pull the necessary funds together in time and she wanted an out. The seller accepted her offer, and Margo forgot all about needing to get the option fee into the seller's hand within three days of signing the contract. Given the situation, which of the following statements is true? A. Margo can retain the unrestricted right to terminate the contract as long as she agrees to forfeit her earnest money. B. Margo can still pay the fee as long as she does so before the termination notification date. C. Margo no longer has the unrestricted right to terminate the contract. D. Margo still has the unrestricted right to terminate the contract as long as she does so by the specified date.
Margo no longer has the unrestricted right to terminate the contract.
Marsha leases a ranch house in a bedroom community. When the owner decided to sell the house, Marsha was given the opportunity to purchase it but declined. What does Marsha have? a. Lease with obligation to buy b. Lease with option to buy c. Option contract d. Right of first refusal
Right of first refusal With a right of first refusal, the holder of the right waits until the owner wants to sell and then can exercise that right or let the property go. This is a reactive position as compared to an option to buy, which is more proactive.
A default judgment in an action commenced against non-resident broker Phil may not be granted until ______. A. The 21st day after the date the pleading was mailed to the defendant B. The 28th day after the date the pleading is mailed to the defendant C. The 30th day after the date the pleading was mailed to the defendant D. The 31st day after the date the pleading was mailed to the defendant
The 21st day after the date the pleading was mailed to the defendant
Meredith is a mother of five children, two of whom are age 18 or older. What is the minimum number of bedrooms she's allowed to rent, according to the occupancy standards under the Texas Landlord and Tenant Act? A. Four B. One C. Three D. Two
ONE Three adults per bedroom is the occupancy limit in Texas, as established by the Texas Landlord and Tenant Act.
In order to qualify as one of the ______ real estate professional members of the ESAC, you must have been actively engaged in the practice of real estate for five years prior to appointment. A. 10 B. Five C. Seven D. Three
SEVEN
Tennyson represents Micah in the sale of Micah's house. Micah's parents offer to give Tennyson a bonus if the property sells within two weeks. Which of these statements is true? a. Tennyson can accept this payment directly from Micah's parents. b. Tennyson can't be compensated by anyone but the client. c. Tennyson may only be compensated based on the commission agreed to in the contract. d. Tennyson must disclose this compensation to Micah.
Tennyson must disclose this compensation to Micah. Tennyson may accept this payment through his broker, but he must disclose it to Micah.
Simon is looking for a facility for a large grocery distribution operation. He found two options, one of which is offering him a triple net lease, and the other an absolute net lease. Why is his attorney arguing against the latter? A. An absolute net lease has no legal defenses if Simon fails to pay. B. An absolute net lease will cost more in the long run. C. Simon will still be responsible for insurance in an absolute net lease. D. Simon will still be responsible for taxes with an absolute net lease.
An absolute net lease has no legal defenses if Simon fails to pay.
When you're using the sales comparison approach to value a property, which of the following is considered a category of adjustment? A. Area demographics B. Financing terms and cash equivalency C. Seller motivation D. Types of obsolescence
Financing terms and cash equivalency Categories of adjustment include financing terms and cash equivalency, conditions of sale, market conditions at time of contract and closing, location, and physical characteristics.
Siblings Julia and Gene are co-owners of a small retail building in which a tanning salon is currently operating. Gene really wants to leave his ownership interest to his son when he dies, but the way in which they own the property doesn't allow him to do so. What type of ownership do they have? a. Joint tenancy b. Tenancy by the entirety c. Tenancy in common d. Tenancy in severalty
Joint Tenancy When joint tenants have right of survivorship, it means that the property shares of one co-tenant are transferred directly to the surviving co-tenant (or co-tenants) upon their death.
Tony has just signed an offer to purchase. The contingency period on his contract begins ______ day(s) after the day it is executed. A. ONE B. SEVEN C. THREE D. TEN
One
Leigh Ann is a licensee. Her cousin, Carly, is interested in buying a house. Leigh Ann shows Carly how to look for properties online and runs some CMAs for her. When Carly finds a property she likes and asks Leigh Ann to help her make the offer, Leigh Ann decides she should ratify the agreement with Carly. What are Leigh Ann's options for accepting an agency relationship after the fact? A. Continue to assist Carly and have her sign an estoppel certificate. B. Leigh Ann's only option is to get a signed listing agreement. C. Prepare an agency agreement or continue to assist Carly with the purchase. D. Prepare an estoppel certificate and a listing agreement.
Prepare an agency agreement or continue to assist Carly with the purchase. Leigh Ann can achieve ratification either by getting a signed agency agreement or by continuing to act as Carly's agent.
The purpose of the Truth in Lending Act (TILA) is to ______. a. Require lenders to make disclosures that allow consumers to compare the costs of making a purchase using credit from different lenders, and to compare those with the cost of using cash b. Require lenders to publicly disclose all data regarding credit applicants and the disposition of mortgage loan applications c. Require lenders to treat all applicants fairly, regardless of their religion, race, color, national origin, age, disability, or familial status d. Require lenders to treat others as they would treat themselves
Require lenders to make disclosures that allow consumers to compare the costs of making a purchase using credit from different lenders, and to compare those with the cost of using cash The Truth in Lending Act (TILA) of 1968 is a United States federal law designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed.
Which of these statements about the homeowner's right of redemption is true? a. Homeowner right of redemption applies to foreclosures, short sales, and REOs. b. Only foreclosures are subject to homeowner's redemption rights. c.Right of redemption timelines are longer for foreclosures than they are for short sales. d. Rights of redemption window with REOs may have expired.
Rights of redemption window with REOs may have expired. Because of the length of time it takes to process a property after the foreclosure sale, the homeowner's redemption period may have expired before the lender puts the REO on the market. Real estate owned (REO) is the term for a property owned by a lender because it failed to sale in a foreclosure auction after the borrower defaulted on his or her mortgage. Banks attempt to sell their REOs using a real estate agent or by listing the properties online.
Per the Notice of Buyer's Termination Contract, which of the following is a reason why a buyer may terminate the contract? A. The buyer didn't think the seller was honest in the seller's disclosure notice. B. The buyer had a change of heart. C. The buyer had the unrestricted right to terminate the contract under Paragraph 23 of the contract. D. The buyer suspected the home inspector was paid off.
The buyer had the unrestricted right to terminate the contract under Paragraph 23 of the contract.
Which statement regarding fee simple defeasible estates is true? A. A fee simple absolute estate becomes fee simple defeasible when the owner dies intestate. B. A fee simple defeasible estate is granted upon the completion of a court-ordered condition. C. The estate includes only some of the bundle of legal rights; inheritability isn't included. The estate includes the full bundle of legal rights, but ownership is based on a condition. D. A fee simple defeasible estate includes the full bundle of legal rights, but ownership may be terminated if the required condition is violated.
The estate includes the full bundle of legal rights, but ownership is based on a condition.
Olivia took out a 15-year loan secured with a deed of trust. She worked two jobs in order to pay the loan back and finally made her last payment this month. What happens now? a. The lender releases the deed of trust that secured her mortgage loan. b. The lender releases the mortgage that secured her mortgage loan. c. The lender tells the trustee to release the title to Olivia. d. The trustee releases the mortgage that secured her mortgage loan.
The lender tells the trustee to release the title to Olivia Because the property deed was held by a third-party trustee instead of the lender, the trustee grants a reconveyance deed to Olivia, which grants her the title.
Rachel is talking with a co-worker, Shawna, about homebuying. Rachel shares some general market trends and talks about the impact of rising interest rates. She notes that the listing price of Shawna's neighbor's house seems lower than it should be, and then they talk about the importance of getting pre-approved for a loan early in the process. Which of her statements might have created an implied agency situation? a. Current market trends b. Loan pre-approval c. The impact of rising interest rates d. The listing price of the neighbor's property
The listing price of the neighbor's property General real estate discussions are safe. However, Shawna may mistake Rachel's comment about the neighbor's list price as an expert's opinion on value. Based on this, Shawna may make an offer, thinking she's getting a deal.
Steve is positive that his late cat, Chester, still roams the six-bedroom Texas home where he's lived for 40 years. Steve has made the decision to move from this large property and into a retirement community where he can golf and do other exciting activities with fellow retirees. Steve feels that disclosing the fact the Chester is still "in the home" may scare buyers away. What do you do? A. You tell Steve that as long as he doesn't tell anyone else about Chester, he won't need to disclose the fact that his late cat still roams the property. B. You tell Steve that even though he feels Chester's presence, it's a subjective feeling, so it doesn't need to be disclosed. C. You tell Steve that you, as a licensee, are required to disclose this information to potential buyers because "hauntings" and other paranormal occurrences are considered material facts. D. You tell Steve to keep quiet about his feeling. You don't want to be embarrassed and risk your professional reputation.
You tell Steve that you, as a licensee, are required to disclose this information to potential buyers because "hauntings" and other paranormal occurrences are considered material facts.
