Aceable 6 Promulgated Contracts Practice Test
What contract language phrase is used to convey that a time period is inflexible?
"time is of the essence"
What is TRUE of a unilateral contract?
A unilateral contract is a promise exchanged for performance.
Which MUST be disclosed to potential buyers?
Prior flood damage that was repaired by the owner
Jill's client bought a new home but never lived there. Eight months later, she decided to sell it. When they found a buyer, Jill used the One to Four Family Residential Contract. Why didn't she use the New Home Contract (Completed Construction)?
The New Home Contract (Completed Construction) is only appropriate for the first time a new home is sold
Which of these is NOT true about a Seller's Temporary Residential Lease?
the buyer/landlord has no recourse if the seller/tenant overstays
Commission is determined in:
the listing agreement, buyer representation agreement, or agreements between brokers (usually in MLS)
The T-47 Residential Real Property Affidavit is only required when:
the seller provides the existing survey
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
Your buyer client has received their inspection report. In it, there are several identified items that they want the seller to fix. The seller has agreed to fix these items before closing. What will you need to include in the contract to ensure this agreement is enforced? Note that the contract has already been signed.
an amendment
According to Paragraph 6B (Commitments) in the promulgated One to Four Family Residential Contract, what must be provided to the buyer along with the title policy documents?
any restrictive covenants
George Jr. inherited the family compound after George Sr. died. The will was contested, and some family is still disgruntled. George is now selling the property. How can a buyer best protect themselves from any claims on the title?
ask the family to signa quitclaim deed
To be valid and enforceable, a contract must be in writing, represent a complete agreement, have acceptance communicated, and:
be signed by all parties
How can a license holder ensure that any relevant addenda are officially included in the One to Four contract?
by checking the appropriate boxes of the attached addenda in Paragraph 22 (Agreement of the Parties)
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 a buyer ensure they pay the least possible amount of pre-paid interest to the mortgage company?
close near the end of the month
When a contract has been fully executed, it becomes:
closed
Justine and Marilyn are legally competent parties. They want to create a valid real estate contract. What else do they need?
consideration
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
Additions to the standard coverage in a title policy can be purchased via:
endorsements
A contract that is fully performed is referred to as:
executed
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
Which of the following is TRUE regarding a contract to transfer real estate that contains no requirement of earnest money?
it is valid
Agent Ted, who represents Buyer Bob, advises Bob that the title to the property Bob 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
Jim signed a contract with his 17-year-old cousin to sell him his car. That contract is voidable — why?
it was made with a minor
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
Housing occupancy standards are created by:
local laws
Seller Ben wants to make sure that their agent offers a cooperating broker a commission. Ben believes this will drive better traffic to the listing. How can Ben BEST make sure this is a part of the transaction?
make sure it appears in the listing agreement that Ben signs with the broker
A buyer needs more option period time. They have asked the seller, who agreed, and signed TREC's Amendment to Contract. What else must they do to make the extension official?
pay an additional option fee
A landlord may have to make adjustments for a tenant with a disability to be able to live in a dwelling. Those adjustments do not include:
permitting a tenant to use illegal drugs
A stand-alone refrigerator would be considered:
personal property that will not transfer
What are brokers required to do regarding Consumer Protection Notice TREC No. CN 1-2?
post it in each office
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
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
Who is tasked with drafting and editing Texas's promulgated contracts?
the Broker-Lawyer Committee
The seller of a residential condominium is required to provide financial and restrictive information to the buyer in the form of a certain document. This document should be completed by the HOA. What is this document?
the Condominium Resale Certificate
If a property is occupied solely by people over the age of 62 and qualifies as senior housing, it is exempt from:
the Fair Housing Act
A contract contains these elements: An attached hunting lease The provision that the sales price may be adjusted due to the survey A place for Exception Documents and Surface Leases to be listed What contract is this?
the Farm and Ranch Contract
Which TREC-promulgated form allows for the sales price to be adjusted because of the survey?
the Farm and Ranch Contract
Agents are required to give all buyers a written copy of the title notice. Aside from Paragraph 6E(1) of the One to Four Family Residential contract, where else can this notice be found?
the Notice to Prospective Buyer
If the seller is providing an existing survey during a real estate transaction, what must the license holder give to the buyer?
the T-47 Residential Real Property Affidavit
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
Agent Alicia is helping her client buy a newly built home. The home is ready for move-in, and the client can't wait! For the transaction, Alicia does not use the New Home Contract (Completed Construction). What is the most likely reason why?
the builder requires that she use their contract
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 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
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
After agreement by both parties, one of their agents filled in the blanks in Paragraph 9 of the One to Four Family (Resale) contract so that it read: "The closing of the sale will be on or before May 7, 2023." What does this mean?
the parties can close on or before May 7, 2023 (but not after)
Paragraph 12 of the One to Four Family Residential Contract is also known as the "Settlement and Expenses" paragraph. What's an example of something that could be noted in this paragraph?
the seller plans to pay some of the buyer's closing costs
According to Paragraph 9B, what happens when someone buys a property that is currently under a lease?
the seller transfers the security deposit to the buyer
As outlined in the TREC-promulgated sales contracts, what obligations does the seller have regarding the property condition at the time of sale?
the seller's obligations are a matter of negotiation with the buyer
A seller is renting back a property from a buyer using the Seller's Temporary Residential Lease. The seller damages the property while they are staying there. Who is responsible for the cost of the repairs?
the seller/tenant
What is the name of the law that requires certain contracts (for example, sales contracts) to be written down and signed?
the statue of frauds
When both parties mutually agree to terminate a contract, who provides the appropriate form?
the title company
What happens when a homebuyer takes out a residential service contract on their newly purchased home?
they get a warranty for the property, usually for a year
A contract which courts cannot compel the parties to perform is:
unenforceable
In Paragraph 10 of the sales contract, the parties check a box saying that possession of the property will be transferred:
upon closing and funding or according to a temporary residential lease agreement
The seller of a vacant lot needs to provide a seller's disclosure. The seller should:
use a form from a local board that addresses seller's disclosure for vacant lots or use Paragraph 7E of the Unimproved Property Contract
When should a license holder use form T-47, Residential Real Property Affidavit?
when a seller wants to use an existing survey
With the One to Four Family contract, when is it acceptable for a seller NOT to give a buyer a seller's disclosure notice?
when the buyer has indicated in the contract it isn't necessary
When is the Addendum for Sale of Other Property by Buyer used?
when the buyer needs the money from the first sale to complete the second sale
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
What determines which New Home Contract a license holder should use?
whether or not the building has been completed
Agent Larry has a client applying for a mortgage to purchase a home. His client is planning to claim some income they didn't actually make in an effort to qualify for a larger mortgage. They've disclosed this to Larry. What should he do in this situation to avoid committing mortgage fraud?
withdraw from the transaction
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 offer to Reggie
What is the difference between contracts that TREC has promulgated and those that TREC has approved?
Promulgated contracts are required. Approved contracts are an option if needed.
How can an agent help protect the earnest money of a buyer who is financing their purchase through a lending institution?
advise the buyer to include the Third Party Financing Addendum
Which of these is an example of an illegal buyer rebate?
an agent gives their buyer client half of their commission without disclosing it on the settlement statement
Angela's buyer has decided to terminate their contract during the option period. The buyer has sent a written demand to the escrow agent to release the earnest money, but Angela wants to keep it. What penalty might she eventually face, according to the TREC contract?
Angela will have to pay back the earnest money, attorney fees, and the cost of a lawsuit
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 that a license holder talks to?
Information About Brokerage Services form
What is the purpose of the Texas Real Estate Consumer Notice Concerning Hazards or Deficiencies?
It gives examples of certain problems in the home (for example, malfunctioning smoke alarms) that licensed inspectors must report
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
What is the Addendum for Property Located Seaward of the Gulf Intracoastal Waterway for?
It warns buyers that if their property becomes located on the beach area by erosion, they can be required to remove the structure at their own expense
Laura is in contract for a home. Her contract contains a Sale of Other Property by Buyer Addendum. The seller has just accepted a back-up contract for the property that doesn't have this contingency. What happens to Laura and her contract?
Laura can waive the addendum by a date she and the seller agree on. Otherwise, her contract terminates
Which of these must the broker maintain a copy of for three years following a sale?
Lead-Based Paint Addendum
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
Which of these is NOT a TREC-promulgated form?
Mutual Termination of the Contract
Which TREC-promulgated contract are all the other contracts based on?
One to Four Family Residential Contract
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
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
Agent Aaron was drawing up a contract, and opted to use his brokerage's (lawyer-created) Seller's Disclosure Notice instead of TREC's. Is this allowed? Why or why not?
Yes, because the Seller's Disclosure Notice is not promulgated by TREC
Agent Yugo pads the income numbers on their client's loan application. What is TRUE regarding this situation?
Yugo has committed loan fraud
Which one of these is a bilateral contract?
Zelda agrees to pay Gus $250,000 for ownership of his house.
TRELA empowers TREC to require license holders to use certain contract forms. Which of these would NOT meet TREC's requirements?
a contract created by a license holder's sponsoring broker
Which of these constitutes a voidable contract?
a contract made with a minor
What is an express contract?
a contract that is either oral or written and has a very specific offer and acceptance
The date in the Third Party Financing Addendum provides a deadline to buyers for:
informing a seller they didn't get their financing approved
What is special about the earnest option money section in the TREC promulgated sales contract?
it contains "time is of the essence" language
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
What information does the Disclosure of Relationship with Residential Service Company form convey?
it is a violation of RESPA for a license holder to receive a referral fee for simply passing on a name to a service provider
What is the purpose of the Notice to Prospective Buyer?
it is an alternative method of giving the required notice to the buyer that they need a title policy
Which of these is NOT a protected class of people, according to Fair Lending Laws?
level of education
According to the One to Four contract, the buyer should receive their title policy documents within how many days after the title company receives the contract?
20 days
According to the Addendum for Property Subject to Mandatory Membership in an Owner's Association, how long does a buyer have to terminate the contract after receiving the Subdivision Information?
3 days
How many lawyers are on the Broker-Lawyer Committee?
6
Seller Vera agrees to allow another veteran to assume her mortgage loan. Vera then wants to make sure that she can regain the amount the VA initially guaranteed her on a loan. What must be attached to the contract?
Addendum for Release of Liability on an Assumed Loan and/or Restoration of Seller's VA Entitlement
How can an agent change a contract after it has been signed by both parties?
adding an amendment to contract
It would be appropriate to use the New Home Contract (Incomplete Construction) for a client buying:
a new home that is being built
Paragraph 10 of the One to Four Family Residential Contract describes possession. What happens if possession does not occur the same day as closing?
a written lease should be created for that time period