Exam 4 Practice Test Questions

When a buyer assumes a seller's loan, who may be held responsible for repayment of the debt?

Buyer and seller

Which statement best describes an amortized loan?

Debt that is paid off by making periodic payments consisting of interest and principal

Samuel is using a deed that conveys real estate to a trustee for the beneficiary named in the deed. What type of deed is this?

Deed in trust

In situations where no will exists, the deceased person's estate's assets are distributed according to the law of __________________.

Descent and distribution

Which task is NOT the responsibility of an escrow officer?

Determine how earnest money is to be distributed in case of a dispute.

Which of the following is a guideline used by Fannie Mae and Freddie Mac when determining if a loan is conforming?

Down payment

Misunderstandings between a buyer and seller regarding personal and real property are most often discovered ___________________.

During the final walk-through

Hector's seller clients want to reserve the right to find a buyer or tenant themselves and avoid paying a brokerage fee and yet they still want Hector to make sure their property receives the broadest possible market exposure. What type of listing agreement do Hector's clients want to have?

Exclusive agency

Which best describes a purchase money mortgage?

May be a first mortgage, a junior mortgage, or a junior wrap-around mortgage.

Another name for the borrower of a loan is ______.

Mortgagor

What type of foreclosure is commonly used when a deed of trust is the security instrument?

Non-judicial

Jessica is selling her own home. What promulgated form must she use per TREC rules?

She is not required to use a TREC form per the exception that she is selling the home on her own

Rachel's loan to buy Scott's house fell through because Rachel couldn't obtain financing. No one told her not to run up a lot of credit card debt on the way to closing. Rachel's earnest money was all Scott had to show for six weeks of his home being off the market. This is an example of _________.

Accepting liquidated damages

Items that aren't attached permanently to the real property but are assumed to belong to the house, such as draperies, fireplace inserts and screens, and above-ground swimming pools, are referred to in the Property section of the TREC residential One to Four Family (resale) contract as ______.

Accessories

Identify the item that appears on the buyer's checklist as something that should be completed before closing.

Complete loan application

Which of the following is an example of a clouded title?

Conflicting legal description

If Acme Bank, a primary lender, wants to sell its loans on the secondary market, it would be easier for it to do so if its loans meet ______.

Fannie Mae and Freddie Mac guidelines

Rhonda and Oliver bought an old schoolhouse with the hope of transforming it into a residence. They owned the property as joint tenants. After Oliver died, how did Rhonda own the building?

In severalty

What purpose does the promissory note serve?

It's a promise the buyer makes to the lender that the note will be repaid in full.

Which of the following is a trustor responsibility?

Keep the property in good repair Remember that the trustor is the borrower.

If an individual acquires rights or liabilities automatically due to law, and not through an agreement or act of their own, this is known as ______.

Operation of law

Jeb's lease renewed every six months. If he decided to leave, he was required to give his landlord two months' notice. What type of tenancy does Jeb have?

Periodic estate or tenancy at will

Lester is interested in a two-bedroom unit in a cooperative. A residence in a cooperative, unlike a condominium, is legally considered ______.

Personal property

Deed restrictions imposed by a developer who wants to maintain specific standards in a subdivision under development are often called _______.

Restrictive covenants

Tina has fee simple ownership of her timeshare unit. Which of these is NOT an example of the type of ownership she may have?

Right-to-use

Which of the following statements is true regarding the financing of a cooperative purchase?

Some lenders refuse to offer loans for cooperative purchases.

In which form of co-ownership is a person's ownership inheritable?

Tenancy in common

What's used to calculate the loan-to-value ratio?

The lower of the sales price or appraised value

Which of the following statements is true about septic systems?

They differ in the way they are installed.

What's the purpose of the E-Sign Act?

To identify what can be used as an electronic signature

Texas licensee Jenna is working with a seller who doesn't want to complete the property condition disclosure. What is a good response?

"This form can help protect you from litigation."

Within how many days after the title company receives a copy of the signed sales contract is the seller required to deliver commitment for title insurance to the buyer, according to the TREC One to Four Family Residential Contract (Resale)?

20

If you had to describe a listing agreement, which of the following statements would you choose?

A legally binding, written contract between a seller of a property and a listing broker

Darcie is reviewing a commercial lease with her client, Archie. When they reach the section having to do with indemnity, Archie asks Darcie what a tenant's indemnity usually encompasses. What should Darcie's response be?

A tenant's indemnity is usually limited to matters arising in the leased premises, and doesn't include those claims or losses that arise from the landlord's or the landlord's agents' negligence or willful misconduct.

Which of the following actions performed by a subscribing witness, such as a notary public, is required for a Texas deed to be recorded?

Acknowledgment

When Will was found guilty of violating the Deceptive Trade Practices Act, the actual damages to his client were $7,000. But the court required Will to pay $21,000. Why might this be?

It was an intentional violation.