LAW OF CONTRACTS
Sale of Other Property Contingency:
Makes the transaction contingent on the buyer selling their current property first
Texas law requires school districts to offer a tax exemption on residence homesteads in what amount?
$25,000
Randy is buying a home for $300,000. He obtained two loans (one for $200,000 and another for $40,000). How much will Randy need to have in the cash portion of the sales contract?
$60,000
License:
(not to be confused with a real estate license), is a right to use the land of another that can be granted as well as terminated by the property owner. These rights typically do not run with the land or transfer with the transfer of deed or title. The license is temporary and can be withdrawn at any time, upon the sale of the property to someone else, or when one of the parties dies.
Fee Simple Estate:
Maximum ownership of real property; also called a fee or a fee simple absolute and is of indefinite duration, freely transferable, and freely inheritable
Types of Encumbrances:
-Liens -Easements -Deed Restrictions -Encroachments
4 Factors that can rebut (negate) the seven-day deadline:
1.The date the landlord receives notice 2.The severity and nature of the condition 3.The reasonable availability of materials and labor 4.The availability of utilities from the utility company
Larry, Moe, and Curly have a tenancy in common for a 200 acre plot of land. The ownership is divided evenly. What do they each own?
1/3 ownership of the property
Urban Homestead =
10 acre maximum
In Texas, an urban homestead cannot exceed:
10 acres
The Lead-Based Paint Addendum is required for properties built before:
1978
Rural Homestead =
200 acre maximum family; 100 acre maximum single person
How many brokers are on the Broker-Lawyer Committee?
6
Sole Proprietorship:
A business entity in which revenue, liability, and all responsibilities are owned by one person
Partnerships:
A business entity legally formed for two or more individuals to share profits
What does it mean if there is a contingency in a transaction?
A certain act needs to take place in order for the contract to be executed.
Amendment:
A change in a legal document made by adding, altering, or omitting a certain part or term
Special Assessment:
A charge that the government can assess against real estate parcels for specific public projects
Lien:
A claim or charge against property, usually as security for a debt
Corporation:
A company or group of people recognized as one entity under the law; owners purchase stocks in the corporation (shareholder) and the corporation is run by the board of directors (elected by the shareholders)
Executory Contract:
A contract that is not completely executed or performed
S Corp:
A corporation (that can only be formed with less than 100 shareholders) that is similarly taxed like a partnership to avoid double taxation
Fico Score:
A credit scoring system used by most lenders to determine credit risk
Special Warranty Deed:
A deed that only provides one covenant instead of five
Quitclaim Deed:
A deed used to correct a title defect usually discovered after the fact
Fee Simple Subject to Condition Subsequent:
A defeasible fee estate in which a grantor conveys a parcel of real estate subject to a condition of ownership; the grantor must go to court to assert their right to retake ownership (right of re-entry)
Fee Simple Determinable Estate:
A defeasible fee estate that will come to an end automatically and immediately upon the occurrence of a designated event, the time of such occurrence being uncertain
Amendement:
A document that changes the terms in a sales contract that has been previously agreed to by all the parties; requires all parties to sign the amendment for it to be valid Example: The property owner who sold Crystal her new home last week called today to ask for her to sign an amendment changing the date of closing.
Addendum:
A document that's attached to a purchase agreement that includes additional information or requests items not included in the purchase agreement
When the buyers took possession of their new home, they found that the seller had not followed through with a verbal agreement made two days earlier at closing to clean out the gutters. When confronted, the seller told them it was too expensive, so he decided not to do it. The buyers asked their agent for help and were told that there was legally nothing they could do. What common contractual mistake is this an example of?
A failure to get everything in writing.
Fair Housing Act:
A federal law that prohibits discrimination in housing based upon race, color, religion, or national origin and was amended to include sex, disability, and familial status
Periodic Estate:
A fixed-lease period; the lease is automatically renewed at the end of each lease period until the landlord or tenant act to terminate it
Non-Judicial Foreclosure:
A foreclosure that does not involve a suit or ruling of the court — the two types are power-of-sale foreclosures and strict foreclosures
Judicial Foreclosure:
A foreclosure that is processed through the court
Reversion:
A future interest in land that is created when a grantor transfers a qualified interest to another party for a specific amount of time, under the condition that the interest will revert to the grantor when that period expires
Estate for Years:
A leased possession of property for a certain, specific period of time; also known as a tenancy for years
Promissory Estoppel:
A legal doctrine that forces a party to keep a promise and prevents a party from backing out of an agreement
Bill of Sale:
A legal document that is signed and delivered, especially one regarding the ownership of property or legal rights
Deed:
A legal document that is signed and delivered, especially one regarding the ownership of property or legal rights
The Doctrine of Laches:
A legal principle used to bar dated claims; used in conjunction with an unreasonable delay or negligence in asserting or defending one's rights
Equal Credit Opportunity Act (ECOA):
A legal protection for consumers against unfair and discriminatory lending; located in Title VII of the Consumer Credit Protection Act
Contract:
A legally binding agreement that can be written or oral
Juan is interested in purchasing 1234 Racimo Drive, but there's a lien on the property. What does this mean?
A lender has a right to 1234 Racimo Drive if they are not repaid their loan.
Which of the following statements is TRUE?
A license holder is not directly involved in the loan approval process of their buyer client.
Mortgage Lien:
A lien on property that was purchased with money borrowed from a lender
Mechanic's Lien:
A lien that establishes a claim against a property to secure payment for labor or materials used to improve that property
Judgement Lien:
A lien that reflects a court decision concerning the rights and claims of parties in a suit
Exclusive Agency Listing:
A listing agreement in which the owner retains the right to sell the property themselves without paying a commission, or the commission will be paid to the named broker if the broker or any other party sells the property
Exclusive Right-to-Sell Listing:
A listing agreement which gives the agent the sole right to sell the property and guarantees that the broker receives a commission if the property is sold, even if the seller brings the buyer themselves
Seller Financing:
A loan that is provided by the seller to the purchaser of the property
Mutual Agreement:
A means of cancelling a contract in which all parties agree to the cancelation
What is a lis pendens?
A notice used to inform the public when a lawsuit that affects a specific piece of real estate
Joint Venture:
A partnership formed by a group of investors for one venture — it dissolves after the venture is complete
Remainderman interest:
A party who has been named as the recipient of a life estate by a grantor — the remainderman gains fee simple estate after the life estate is conveyed.
Testate:
A person who dies with a will
Interstate:
A person who dies without a will
Homestead:
A personal residence that is protected from creditor seizure except for mortgage liens, tax liens, or mechanic's liens.
Time is of the Essence:
A phrase used to communicate when a party to a contract must perform their contractual duties by a specific date and time in order to avoid a breach of contract
Executed Contract:
A pre-existing contract in which all terms have been fulfilled by all parties
Deed Restriction:
A provision in a deed that restricts the land use of a property
Contingency:
A provision within a contract that makes performance conditional upon the occurrence of a stated event
Short Sale:
A real estate transaction in which the property is sold for less than the existing mortgage balance
Agency:
A relationship where one party is authorized to act on behalf of the other
Which of the following is an example of an executory contract with a set end date?
A rent-to-buy lease where the tenant exercises an option to buy the property
Cooperative:
A residential building in which the title is held by a corporation, the residents are stockholders in the corporation, and the residents have a lease
Interest:
A right or legal share in a property
Foreclosure:
A sale of property required by the court in order to repay debt; occurs when a borrower cannot repay a loan for which their property serves as security
Equitable Interest:
A secondary and lesser interest in a property than the ownership interest with which it is associated (for example: a buyer as soon as they enter into a sales contract with a seller)
Equitable Interest:
A secondary and lesser interest in a property than the ownership interest with which it is associated.
Deed of Trust:
A security instrument that places the deed to the property in a trust held by the lender until the mortgage is paid off, when the trustee will transfer the deed to borrower Example: Mikayla financed the purchase of her new home through a deed of trust. A trustee will hold the title to her home until she, the borrower, pays off the money loaned to her by the lenders.
Which of the following agreements is enforceable in a Texas court?
A seller and a buyer sign a One to Four Family Residential Contract
Which of the following is an example of express acceptance?
A seller signs a sales contract
Condominium:
A single unit in a residential complex, which may or may not share common walls with neighbors, in which the owner owns the unit and a share of the common elements, but not the land
Community Property:
A special form of joint tenancy that exists between a married couple, with each owning a one-half interest; any house or real estate purchased during a marriage is considered community property Example: John and Mary are getting divorced. They bought their house while they were married, so it's considered community property in Texas and must be split evenly between the two of them. Note: Upon the death of someone who owns community property, the decedent's interest passes in a manner similar to tenants in common.
What's the main difference between a special warranty deed and a general warranty deed?
A special warranty deed only provides one covenant.
Encroachment:
A structure (or extension of) that extends onto another party's property
Negotiable Instrument:
A transferable, written promise by a party to pay a specific amount of money
Conventional Life Estate:
A type of freehold life estate created by a deed or will that lasts for the duration of the tenant's life
Legal Life Estate:
A type of freehold life estate created by an act of law; a Texas homestead would be one example
Pur Autre Vie:
A type of freehold life estate that grants someone ownership of a property for the duration of another person's life
Leasehold Estate:
A type of property interest allowing tenants to occupy and use a property they do not own; contains a reversionary right
Testamentary Trust:
A type of trust that is effective upon the death of the trustor
Deed:
A written instrument used to legally transfer a title from one person to another by voluntary conveyance
Under which conditions MUST a landlord make a repair regardless of what the lease says?
ALL CHOICES (when a tenant reports that they don't have hot water, when a tenant reports a broken heather in the middle of winter, and when a tenant reports a broken heater in the middle of winter)
Which of the following is true about mortgagee title policies?
ALL CHOICES ARE CORRECT (Lenders require a loan policy when issuing a mortgage loan, and it is typically based on the dollar amount of the loan. Plus, it protects the lender's interests in the property if a problem arises. The policy amount decreases and eventually disappears as the loan is paid off.)
Why can't license holders accept payment of any sort for referring clients to a bank?
ALL CHOICES ARE CORRECT (RESPA prohibits anyone from giving or accepting anything of value in exchange for referrals of settlement service business, fees and kickbacks are not allowed under RESPA, and Doing so may encourage unnecessary and ethically dubious charges).
Which situation is an exception to the requirement for license holders to use TREC promulgated forms?
ALL CHOICES ARE CORRECT (a transaction where an agent is purchasing property for themselves, a transaction where there are no standard contracts mandated by TREC, a transaction where the government requires that a different form be used)
To have an enforceable real estate contract in Texas, the contract must have:
ALL CHOICES ARE CORRECT (lawful purpose, an offer or proposal, and no doubt that there is a contract)
Which of these forms satisfies the written property disclosure requirement?
ALL CHOICES ARE CORRECT (TREC's Seller's Disclosure Notice, TAR's Seller's Disclosure Notice, & Seller's Disclosure forms provided by brokerages and associations that contain all of the disclosures required by law)
Which statement is TRUE about utility easements?
ALL CHOICES ARE CORRECT (The title company does not insure against utility easements that are a part of the public record and are attached to the deed. Utility easements pass with the property, and will be shown on the survey.)
Documentation of which of the following can be found in public records?
ALL CHOICES ARE CORRECT (pending lawsuits, easements, and mortgage liens)
Which of these is a possible response to a buyer's offer?
ALL CHOICES ARE CORRECT (rejection, total acceptance, and ignoring it)
In Texas, it is standard for the title policy to decline to cover _______.
ALL CHOICES ARE CORRECT. (In Texas, it is standard for the title policy to decline to cover any discrepancies, conflicts, or shortages in area or boundary lines, or any encroachments or protrusions, or any overlapping of improvements.)
Which of the following is an example of eminent domain?
Abilene claiming a 12 x 30 feet section of Lisa's property in order to add another lane to the highway.
Conditional Acceptance:
Acceptance based upon a specific condition or event happening
Which of the following best describes a joint venture?
After the business goal is finished, the investors part ways instead of continuing business together.
Which of the following is TRUE about the statute of frauds?
Agreements that are not written may not be enforceable.
What is a trait of the statute of limitations?
All claims must be filed prior to the statutory deadline or the legal right to press a claim is barred.
Title Contingency:
Allows the buyer to verify that a home's title is clear of any liens or other issues before completing the purchase of the home
Defeasible Fee Estate:
Also known as fee simple defeasible or qualified fee, is a type of freehold estate in which the person who has possession of the property is only able to hold the property until an event takes place or does not occur; two common defeasible fee estates are fee simple determinable and fee simple subject to condition subsequent
Promissory Note:
Also known just as a note, its a document in which the borrower acknowledges their debt and promises to repay the holder of the promissory note
All of the following legislation affects mortgage lending EXCEPT:
Americans with Disabilities Act
Abstract of Title:
An abbreviated history of a property, including info on any transfers, grants, wills, conveyances, liens, and encumbrances. Example: Before Alice purchases the house on 1701 J J Solice Drive, she should ask for the property's abstract of title.
Real Estate Settlement Procedures Act (RESPA):
An act designed to protect consumers from predatory lending and educate them about closing and settlement services
What's the difference between an addendum and an amendment?
An addendum is attached to a contract to create additional terms, and an amendment changes the terms within an existing contract.
Addendum:
An additional form attached to a real estate contract Example: Percy is adding an Addendum for Reservation of Oil, Gas, and Other Minerals to his ranch home sale because he wants to retain the rights to the natural gas he's selling to an oil company.
Security Deposit:
An advance of money (other than a rental application deposit or an advance payment of rent) given to secure a residential lease
Contract:
An agreement with two or more parties by which one party will receive consideration and the other will either perform an act or refrain from performing an act
What is the major difference between an assignment and novation?
An assignment changes the parties to the contractual obligations and a novation is a completely different or new contract
Utility Easement:
An easement that allows a utility provider the right to use and access a specific area of another's property for gas, electric, water, and/or sewer lines
Freehold Estate:
An estate in land in which ownership will last for an indeterminate duration
Life Estate:
An interest in property for the duration of an individual's life, usually the person receiving the property
Life Estate:
An interest in real estate that will end upon the death of the life tenant or the pur autre vie life
Easement:
An interest in, or a right to use, another individual's land or property, generally for a specific, limited purpose
Defect:
An item that was installed or is attached to the home and has an imperfection
Fixture:
An object that was once personal property but is now firmly attached to the land in such a way that it is considered to be a part of the real estate
Ownership Interest:
An undisputed right of an owner to their property
Seller's in a Seller's Market:
And the seller has to decide which offer is best, and it may not be the one offering the most amount of money.
Encumbrance:
Any claim or right against a property held by another that is not the fee title owner
Improvement:
Any permanent man-made addition to land
Encumbrance:
Any restriction, encroachment, claim, or lien on a property (such as a mortgage) that affects the value or use of the property Example: Jane owns the title to that house, but the IRS has a tax lien on the property so if she ever sells the house, the IRS will make sure they get their money first.
Annexation:
Attaching (or affixing) personal property to real estate in a way that transforms the personal property into real property
When should the buyer receive the Seller's Disclosure?
Before making an offer
Bob, who has been thinking of buying a new home, learns that his company is planning to lay off several people in his department. How will this affect Bob's plans to buy?
Bob will be less likely to buy a new home.
When a married couple purchases a home in Texas, who is required to sign the deed?
Both partners
Buyer's in a Seller's Market
Buyers have to deal with intense competition, the process is very emotional, and they have very little control.
Which of the following is an example of a security interest?
City Federal Credit Union seizes Shane's property as collateral because he defaults on his payments.
Acceleration Clause:
Clause in a security instrument (mortgage/deed of trust) which makes the entire loan amount due immediately upon default
Joint Tenancy:
Co-ownership in which the parties have the right of survivorship — when one dies, the others receive that person's portion of the estate
Tenancy in Common:
Co-ownership with rights of inheritance; assumed form of co-ownership if joint tenancy is not declared
Which of the following statements about community property is TRUE?
Community property is a special form of joint tenancy that exists between a married couple.
Which of the following can help a borrower get loan approval quickly and automatically?
Computerized Loan Origination System
Promulgated Contracts:
Contracts promoted by the Texas Real Estate Commission and required for use by all real estate sales agents when completing the transaction for which the contract was created
Approved Contracts:
Contracts that are allowed by the Texas Real Estate Commission but not required
Dodd-Frank Wall Street Reform Act:
Created a new consumer watchdog to prevent mortgage companies and payday lenders from exploiting consumers
Emblements:
Crops growing on a property which require annual care and are considered the personal property of the owner
Which law protects consumers from fraudulent schemes?
Deceptive Trade Practices Act
Which commonly used document in Texas places the property in trust with a trustee in case the borrower defaults on the loan?
Deed of Trust
Why was it easy for a seller to cheat a buyer by selling a property multiple times?
Deeds were not always recorded.
In Severalty:
Describes undivided ownership of an estate, with an interest that is exclusive from other owners
Townhouses:
Detached or adjoining housing units in which common elements are shared and each owner owns their home and the land it sits on
Which of the following statements is TRUE?
Digital signatures are a more secure subset of electronic signatures
Which of the following is true about ESIGN?
ESIGN is a federal law that ensures the legal validity of electronic contracts.
Truth in Lending Act (TILA):
Educates and protects consumers against inaccurate and unfair credit billing and credit card practices by requiring lenders to to standardize the way costs associated with borrowing are calculated and disclosed
The four main types of estate in land are Freehold Estate, Leasehold Estate, ________ Estate, and Concurrent Estate.
Equitable
Michael has entered into a sales contract with the seller of 444 Ocean Avenue. What type of interest does Michael have?
Equitable Interest
Michelle, a property owner, passed away without a will or any heirs; the title to her property was then transferred to the State of Texas. What is this government right called?
Escheat
PETE stands for Police Power, Eminent Domain, Taxation, and:
Escheat
Housing for Older Persons Act:
Established that a planned living community could require a minimum age for new residents
In the case of a Seller Financing Addendum, the seller makes payments to the buyer.
FALSE
TRUE or FALSE: License holders can always create their own forms to use in real estate transactions.
FALSE (Explained: License holders CANNOT always create their own forms for transactions. The Commission, however, does not prohibit a license holder from using a form that is prepared by the property owner or prepared by a lawyer and required by the property owner.)
TRUE or FALSE: A digital signature is an image of your signature placed on a document.
FALSE (Explanation: An electronic signature is an image of your signature placed on a document. A digital signature is a secure way to verify the person who is signing the document is the person you sent it to.)
There are no exemptions from the Fair Housing Act.
FALSE (Explanation: Certain exemptions do exist from the Fair Housing Act.)
TRUE or FALSE: Desktop underwriter is designed to increase the subjective element involved in underwriting loans.
FALSE (Explanation: Desktop underwriter is designed to reduce the subjective element involved in underwriting loans.)
TRUE or FALSE: In a suit for condemnation, land or land access is revoked due to improper use of the property.
FALSE (Explanation: In a suit for condemnation, the court can order a private owner to surrender their real estate to the state or federal government.)
In the case of either party defaulting or breaching a contract, the defaulting party has remedies and the non-defaulting party has burdens or obligations.
FALSE (Explanation: In the case of either party defaulting or breaching a contract, the defaulting party has burdens or obligations and the non-defaulting party has remedies.)
In Texas, the owner of the property can give or revoke access at their will to the owner of the subsurface rights.
FALSE (Explanation: In the state of Texas, the mineral estate is the dominant estate. That means the surface estate exists for the rights of the mineral estate owner, and grants various rights to the mineral owner.)
TRUE or FALSE: License holders can always create their own forms to use in real estate transactions.
FALSE (Explanation: License holders CANNOT always create their own forms for transactions. The Commission, however, does not prohibit a license holder from using a form that is prepared by the property owner or prepared by a lawyer and required by the property owner.)
License holders should only advise homebuyers to get a lead-based paint inspection if they are expecting children.
FALSE (Explanation: License holders should ALWAYS advise homebuyers to get a lead-based paint inspection.)
An agent should record any notes they have on the transaction in Paragraph 11.
FALSE (Explanation: Paragraph 11 is sacred ground that can change the legality of a contract. An agent should not write anything in this paragraph unless they are absolutely positive it belongs. And still, consulting a lawyer is a good idea before adding anything.)
Voidable contracts can never be valid contracts.
FALSE (Explanation: Voidable contracts are potentially valid contracts where at least one party has the option to rescind the contract.)
When completing the Seller's Disclosure Notice, the seller only needs to disclose malfunctions, not defects.
FALSE (Explanation: When completing the Seller's Disclosure Notice, the seller needs to disclose BOTH malfunctions and defects.)
If a buyer is in the process of countering an offer, the seller cannot sell the property to anyone else.
FALSE (Explanation: While buyers are countering, license holders should let them know that the property is still available and the seller is free to sell it to someone else.)
When a homebuyer goes to a lender to make a loan, the consumer is doing business with a secondary lender.
FALSE (Explanation:When a homebuyer goes to a lender to make a loan, the consumer is doing business with a primary lender.)
License holders MUST enforce implied contracts.
FALSE (Explanation: In Texas, real estate contracts must be in writing to be enforceable by a license holder.)
Mutual consent must be written down in an agreement to be valid.
FALSE (Explanation: Mutual consent can be expressed or implied by actions. Either way, there must be evidence of it.)
TRUE or FALSE: Restrictive covenants dictate everything EXCEPT how the buyer can and cannot use the property.
FALSE (Explanation: Restrictive covenants dictate how the buyer can and cannot use the property.)
In Texas, if a buyer purchases the surface rights, they automatically acquire the subsurface rights.
FALSE (Explanation: Subsurface, surface, air, and water rights may be sold separately.)
You can enter into a Buyer/Tenant Representation Agreement even if the client is currently represented by another agent.
FALSE (Explanation: You CANNOT enter into a Buyer/Tenant Representation Agreement if the client is currently represented by another agent.)
Inserting a provision in the contract form is sufficient in protecting mineral rights.
FALSE (Explanation:In order to truly protect mineral rights, license holders should provide the Addendum for Oil, Gas and Other Minerals to the parties who wish to negotiate mineral reservations.)
Default:
Failure to fulfill an obligation by duty, contract, or law
Civil Rights Act of 1968:
Federal act prohibited discrimination concerning the sale, rental, and financing of housing based on race, religion, and national origin, a.k.a. the Fair Housing Act
2 common forms of defeasible fee estates:
Fee Simple Determinable Fee Simple Subject to Condition Subsequent
Emmy owns her house. She has full ownership rights to her property, could sell it whenever she wants, and can pass the property on to her heirs. What kind of estate does Emmy have?
Fee simple absolute estate
3 Types of Freehold Estates:
Fee simple absolute estate Defeasible fee estate (also called "qualified fee") Life Estate
Freehold Estates: Recap
Fee simple absolute estate (infinite duration, freely transferable, freely inheritable) Defeasible fee estate/qualified fee (estate ends if qualified event takes place) Fee simple determinable (estate ends automatically upon occurrence of event) Fee simple subject to condition subsequent (previous owner can go to court regain estate after event happens) Life estate (estate for duration of individual's life) Conventional (life estate duration is based upon the life of a tenant or another) Pur autre vie (life estate that is based on the life of someone other than the life tenant) Legal (a life estate created by a state statute — the Texas homestead exemption is an example)
Stand-by Fees:
Fees charged by the water district to owners of unimproved property in an area where the property has potable (drinking) water and sewers available
Which one of these is NOT a TREC promulgated contract?
First Time Home Buyer Contract
Estates in Land: Recap
Freehold Estates -Fee simple absolute estate -Defeasible fee estate -Life Estate -Conventional life estate -Legal life estate -Pur Autre Vie Leasehold Estates -Estate for Years -Periodic Estate -Estate at Will -Tenancy at Sufferance Equitable Estates Concurrent Estates
The fulfillment of what two requirements should precede a license holder ever showing properties to a prospect?
Give the prospect the IABS form and have them sign a Buyer/Tenant Representation Agreement.
Power-of-Sale Clause:
Gives lenders the ability to post property for foreclosure if the debtor is behind on payments
Inspection Contingency:
Gives the buyer the right to get the home inspected and negotiate further if there are repair issues
Termination Option:
Gives the buyer the right to terminate for any reason, within a limited time frame, if the buyer has purchased an option to terminate
Public land-use controls:
Government-issued land-use controls such as zoning ordinances, subdivision regulations, and building codes
Periodic Estate:
Has a fixed lease period, meaning that the lease is automatically renewed at the end of each lease period until the landlord or tenant acts to terminate it; also known as periodic tenancy
Unilateral:
Having or involving one side; performed by one party without imposing obligation of performance on another party
Bilateral:
Having or involving two sides, often with some degree of reciprocal impact or obligation
If Michael finds a buyer who will pay less than the amount owed on his home, which of the following statements BEST describes what must happen before he can proceed with the sale?
His lender must approve the short sale.
The Americans with Disabilities Act:
Identified and defined protected disabilities, as well as required all new buildings with employees or public access to provide reasonable access for people with protected disabilities
When is the mineral estate included in the sale?
If an owner doesn't explicitly limit the transfer of ownership to "surface only"
If the seller does NOT intend to leave the chandelier in the dining room, where should they list that information?
In Paragraph 2D, Exclusions
Remainderman interest:
In this scenario, the grantor (original owner) of the life estate names another party to receive the life estate with fee simple (all rights) upon the termination of the life estate. This party is called the remainderman.
All of the following are the three different ways that an estate can be held in Texas EXCEPT:
In time
Real Property:
Includes land and any permanent human-made improvements attached to it, plus the bundle of legal rights of ownership
Real Estate:
Includes the land AND any permanent human-made improvements attached to it
Consumer Financial Protection Bureau (CFPB):
Independent agency created under the Dodd-Frank Wall Street Reform Act to supervise financial companies, banks, and credit unions as well as enforce federal consumer financial laws
Which of the following is NOT a common type of contingency?
Insurance Contingency
When building a transaction checklist, which of the following should be the most important consideration?
It aligns with the agency policies of your sponsoring broker
What did the Housing for Older Persons Act of 1995 do?
It allowed planned living communities to discriminate based on age.
What rights does a leasehold estate establish?
It establishes a tenant's legal right to use and occupy a property they do not own.
Conventional life estate:
It is an estate created by the grantor that is based on the life of the life tenant OR the life of another. When a life tenant in a conventional life estate dies, the estate is returned either to the original grantor by way of reversion or to some other designated person as a remainderman.
Radon is one of the most important factors to consider during inspection because:
It is an odorless, colorless, life-threatening gas.
How does an agent obtain written consent from a buyer so that the agent can review loan documents or the closing statement?
It is included in the Third Party Financing Addendum.
All of the following is true about the practice of redlining EXCEPT:
It limits the number of lenders that can operate within a specific community or city
Concurrent Estates:
Joint Tenancy: Property that is owned by two or more persons at the same time in equal shares. Tenants in Common: When two or more parties own a property as a tenancy in common, each owner has a partial ownership interest and partial rights in a property. Community Property: Recognized in Texas (and 8 other states), as the type of joint tenancy that exists between married couples.
4 main types of foreclosure:
Judicial foreclosure Non-judicial foreclosure Auction Deficiency judgments
Which of the scenarios below BEST describes fee simple subject to condition subsequent?
Katie is conveying the title of her land to Tim on the condition that no illegal drugs are consumed on the property or she can reclaim the title.
What is real estate?
Land and improvements
Private land-use controls:
Land-use controls that are put into place by non-governmental entities, such as real estate developers
Common Law:
Law derived from past judicial decisions of courts
Statutory Law:
Law formally created by legislatures
Statute of Limitations:
Legal concept that establishes time limits from the date of event for bringing certain kinds of legal actions
Community Reinvestment Act (CRA):
Legislation that ensures depository institutions meet the credit needs of low- and moderate-income families
Which of the following is NOT true regarding what a license holder can do to help a client with understanding the sales contract?
License holders can give the client their legal opinion of what to do.
Four Types of Encumbrances: Recap
Lien: A claim or charge against property, usually as security for a debt Easement: The right to use another owner's property for a specific purpose Deed Restriction: A provision in a deed that restricts the land use of a property Encroachments: A structure (or extension of) that extends onto another party's property
Earnest Money:
Money the buyer offers to deposit towards the purchase price of the property in order to show their serious intentions to the seller Example: Jane has signed the contract to purchase the home on Castle Drive and has deposited $5,000 in earnest money to the title company. It's legit; she's going to buy the house! Note: Earnest money is not the same as the down payment, but the money does go towards the down payment. If the buyer breeches the contract and does not purchase the house, the seller may keep the earnest money. If the broker receives a deposit or earnest money, the broker must deposit the money by the close of business on the second working day after the effective date of the contract.
Personal Property:
Movable assets, a.k.a. chattel and personalty
Which of the examples below is the BEST example of identifying a single purchaser?
Nancy Everett, a single person
All of the following are advantages of computerized loan origination EXCEPT:
No human intervention ever takes place
A buyer has paid for an option period in Paragraph 23 of the One to Four Family Residential Contract. He cancels the contract during the option period. Is this a breach of contract?
No, a buyer who cancels during the option period is not in a breach of contract
A seller tells his agent that his house had never flooded. The agent checks the flood zone map and finds the property is not within the limits. After the house is sold, it is discovered that the property has flooded many times before and the buyer is furious. Could the agent be in violation of the DTPA?
No, it was the seller who made the false claim, and the agent had no reason to doubt him.
Which of the following statements about forbearance agreements is TRUE?
None of these are true.
John has an easement appurtenant in order to cross Sally's land to enter and exit his property. Sally is selling her property. Once Sally's property is sold, John will:
Not have a problem as easements go with the land
Actual Notice:
Notice given to a specific party regarding the ownership of a property
Trade Fixture:
Objects affixed to the leased property that are owned by and necessary for the tenant's trade or business
Statutory Redemption:
Occurs after the foreclosure sale (auction) of the property and allows defaulting debtors to regain possession of the property
Equitable Redemption:
Occurs before the foreclosure sale (auction) of the property and allows defaulting debtors to pay the defaulted portion of the debt and prevent foreclosure
Substantial Performance:
Occurs when a party performs the majority of the contract's requirements but does not perform according to the contract's stipulations
Tenancy at Sufferance:
Occurs when a tenant remains in possession of the property beyond their lease's terms, without the consent of the landlord
Partial Performance:
Occurs when one or more of the contracting parties perform only a portion of the agreed-upon contractual duties
Inverse Condemnation:
Occurs when the government has over-regulated a property so that it can't be fairly used via restrictions, permitting, etc., that virtually eliminate any use of the property
3 stages of a contract -
Offer, Acceptance, & Performance
Michael owns the surface rights to 3333 ABC Drive. Oil Company B owns the mineral rights to 3333 ABC Drive. Which of the following statements IS TRUE?
Oil Company B has the right to use the surface estate as much is "reasonably necessary" to access the mineral estate without Michael's permission.
Which of the following happens in escheat?
Ownership interest in the property is transferred directly to the state without the deceased's consent.
Co-ownership:
Ownership of an estate by multiple individuals or entities
Air Rights
Ownership rights to the air above a property, extending from the surface of the land up into space Note: The concept of air rights (and subsurface rights) comes from the Latin phrase "For whoever owns the soil, it is theirs up to heaven and down to hell."
PETE:
P is for Police Power E is for Eminent Domain T is for Taxation E is for Escheat
Forbearance Agreements:
Part of a contract that requires one or more of the contracting parties to refrain from actions they are otherwise legally entitled to perform
Performance Agreements:
Part of a contract that requires the contracting parties either to perform certain actions or to uphold certain contractual promises
Limited Partner:
Person who is only liable for the amount they have invested into the business venture
General Partner:
Person who takes the lead on day-to-day relationships and assumes full liability for the business
Shane bought a ceiling fan from Home Depot. It's still in the box and not attached to the ceiling. What is it considered?
Personal property
Reversionary Right:
Possession of the property reverts back to the landlord after the lease term has expired
Lien Theory States:
Principle where mortgagors (borrower) retain legal and equitable rights to their property; mortgagee (lender) has a lien on the property until payment of loan
Title Theory States:
Principle where the trustor (borrower) conveys the legal title to the lender (or another party) and the borrower retains equitable title and right of possession until payment of loan
Community Property:
Property owned by a married couple in which each spouse has ½ ownership of any property obtained during the marriage, plus a right of survivorship ownership after the death of either spouse
Separate Property:
Property owned by either spouse prior to the marriage or by gift or inheritance during the marriage
Jami has a beautiful 10-year-old oak tree planted in her backyard. What is the oak tree considered to be?
Real Estate
The seller has a flat screen TV. To mount the TV, the seller put brackets on the wall. What are the brackets considered?
Real property
Constructive Notice:
Recording of a deed in publicly accessible records
Reversionary Interest:
Refers to an estate wherein, upon the death of the life estate owner, full ownership reverts to the original fee simple owner; also known as a revisionary right
Accession:
Refers to the acquisition of new land or real property by artificial or natural means
A seller is concerned about continuing to have liability for their mortgage after they sell the property and a buyer assumes the loan. The seller should attempt to get this document from their lender:
Release of Liability
Financing Contingency:
Requires that the buyer get approved for a loan before being able to complete the purchase of a home
Timeshare:
Residence with multiple owners who share the right to possession for a specific period of time with the other owners
Taxation:
Right of the state to charge real estate to pay for services provided by the government
Police Power:
Right of the state to regulate and restrict land-use in order to protect the public, including enforcing zoning and building codes
Eminent Domain:
Right of the state to seize a citizen's private property for public use without the owner's consent but with compensation
Escheat:
Right of the state to seize a deceased person's estate if an individual dies without a will and has no surviving spouse, lineal descendants, or other known heirs
Littoral Rights:
Rights that govern lakefront or oceanfront property and usually allow the property owner to use the water bordering their property
Riparian Rights:
Rights that govern the use of flowing water, such as rivers and streams that pass through or border a property
If someone has a river on their property, what type of rights would be associated with it?
Riparian
Bob is making an offer on a property, but he wants the offer to be contingent upon his current home closing. What should be added to his contract?
Sale of Other Property Addendum
Martha is selling her home in order to downsize and live closer to her grandchildren. She has been looking at a property to buy, and while the sellers are eager to close the sale, Martha has made it clear she won't buy until her current property is sold. What is this an example of?
Sale of Other Property Contingency
What type of contingency is meant to protect buyers from owning two homes at once?
Sale of other property contingency
Deed of Trust:
Security instrument which places the deed to the property in a trust held by the trustee, who holds it as security on behalf of the beneficiary (lender)
Don is selling his home. His mortgage was paid in full years ago. If he can find a buyer that is willing to put up a down payment of 10% in cash, Don is willing to become the lender and finance the other 90%. When Don's' agent prepares an offer, what form will he need to use to spell out the financing details?
Seller Financing Addendum
If a seller wants to be the lender in a transaction, what form should they fill out?
Seller Financing Addendum
What is a reasonable time for making repairs in a residential tenancy?
Seven days
All of the following are main types of foreclosure EXCEPT:
Short Sale
Consideration:
Something of value exchanged by the parties as evidence of agreement to the terms of a contract
A law that requires real estate contracts to be in writing is the ______.
Statute of Frauds
A Promulgated Contract's Life Cycle -
Step One: The Texas Broker-Lawyer Committee identifies a real estate transaction that needs a standardized contract. Step Two: The Committee then creates a contract for the transaction. Step Three: The Committee then posts proposed contracts to the public in order to receive feedback. Step Four: The Committee makes any necessary revisions and then submits it to TREC. Step Five: TREC decides whether the Committee's proposed contract should be:
Contingencies:
Stipulations or conditions that must be satisfied before the contract can be performed
Allodial System:
System of ownership in which land is owned completely, without an obligation of services or duties to another
What form should be used when opting out of a Texas real estate sales contract?
TREC's Notice of Buyer's Termination of Contract form
During the option period, if negotiation is a minute late (according to TREC's option period deadline of 5 p.m.), the property is sold under the original terms.
TRUE
Most executory contracts are created with the ultimate goal of being fully executed.
TRUE
TRUE or FALSE: Seller financing is not typically used in residential transaction.
TRUE
TRUE or FALSE: The most common reason people lose their property is their failure to make payments on their mortgage.
TRUE
The Texas Real Estate Commission does not write or change TRELA.
TRUE
When the seller signs a document of conveyance, ownership interest has been conveyed from the grantor to the grantee.
TRUE
Who enforces TRELA and oversees the licensing of agents?
Texas Real Estate Commission
What is the most valid reason why real estate agents should NOT create their own contracts?
That would be the unauthorized practice of law.
The new restaurant down the street has a ramp to provide access to patrons using wheelchairs. Which federal act requires establishments to do this?
The Americans with Disabilities Act
Which government agency is responsible for enforcing the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA)?
The Consumer Financial Protection Bureau
Which federal act prohibits unfair and discriminatory practices?
The Fair Housing Act
Severance:
The act of separating real property from the land (and hence, turning it into personal property)
Novation:
The act of substituting one contract for another
Title:
The actual ownership of a real property that includes the bundle of rights in which a party may own a legal or equitable interest; not an actual document
Misrepresentation:
The bona fide representation of a falsehood while believing that falsehood to be true at the time stated. Misrepresentation is different from fraud in that with misrepresentation there is NO intent to deceive. Misrepresentation can render an otherwise valid contract unenforceable.
Which of the following is the BEST example of a legally valid contract?
The buyer and seller of 6602 Krollton are both of sound mind and over the age of 18
Which of the following is the most definitive way for a buyer to know what encumbrances exist on the property being purchased?
The buyer should review the title commitment.
Estate:
The degree, quality, nature, and extent of one's interest in property
Fraud:
The deliberate and willful misrepresentation by a party to gain advantage over another. Proving intent is key in determining fraud. A valid contract must be absent of fraud.
Severance:
The division of the mineral estate and surface estate
Land:
The earth's surface, or the physical portion of real estate — land has unique characteristics that are different from any other type of investment
Situs:
The economic significance of a property's location
Supply and Demand:
The existing inventory of a commodity, product, or service available and the desire of consumers for it; factors that combine to influence price
Fixity:
The fact that real estate exists in a fixed location and cannot be moved
What happens if a borrower's loan application is rejected by a CLO?
The file goes to a live underwater for review.
Which is TRUE about the the final acceptance of the contract?
The final date of acceptance is the date on which all parties agree to all terms of the contract.
Closing:
The final step in the homebuying process, when the title to the property is transferred from the seller to the buyer and consideration is paid to the seller Example: Tomorrow is Shane's closing date for his new house and I can't tell who is more excited, Shane or his mom, who will finally have an empty basement again.
Fee Simple subject to condition subsequent:
The grantor conveys the property with the intent of it being fee simple absolute but attaches a condition to the grant where the grantor may regain the property if not followed.
Reversion interest:
The grantor of a life estate may choose not to name a remainderman. In this scenario, ownership would revert to the grantor upon the end of the life estate.
Beneficiary:
The individual who receives the trust
Escheat:
The legal doctrine by which the decedent's property will pass to the state without their consent if that individual dies without a will, a surviving spouse, lineal descendants, or other known heirs
Foreclosure:
The legal process whereby a lender takes control of a property held by a borrower in default and sells it to recover the lender's losses
Trustee:
The manager of the trust
Who initiates the foreclosure on an 80-10-10 loan?
The mortgage company
General Warranty Deed:
The most frequently used deed format, provides the greatest protection of all the deeds
Intention:
The owner's intent for an item — was it designed to be a part of the real property
Eminent Domain:
The power of the government or a public entity to take private property for public use without consent of the property owner
Market Value:
The price for which a property will sell if offered openly under normal conditions
Alienation:
The process and act of transferring property from one party to another
Security Interest:
The right of a lender to claim ownership of a property if a borrower defaults on payments
What does the "rule of capture" refer to?
The right of a surface estate owner to use all groundwater that they can bring to their surface.
Easement:
The right to use another owner's property for a specific purpose
Public ownership of land:
The role of government to own and maintain public land such as streets, highways, and parks
What is the Covenant of Further Assurance?
The seller promises to make good any problems with the title
In the case of a Seller's Temporary Residential Lease:
The seller will be the tenant and the buyer will be the landlord.
If Jenna had the water rights to a property, to what would she have rights?
The stream
Land:
The surface of the earth, extending down to the center of the earth and up into space
Assignment:
The transference of obligations in a contract from one party to another
Trustor:
The transferor or creator of the trust
Statutory Estate:
The type of estate that is created by community property is also referred to as a statutory estate, since it's an estate that was established by law in the legal union of marriage. We'll discuss the specifics of joint tenancy, tenancy in common, community property, and other forms of co-ownership later in Level 11, but for now all you need to know is that any type of estate that is co-owned by multiple parties is considered a concurrent estate.
Duress:
The unlawful effort (such as the making of threats of physical violence or other pressures) to coerce a party to perform an act. A valid contract will be absent of duress.
Adaptation:
The use and modification of a particular item for a specific use in a property — specific use for a property could deem an item as real property
Conveyance:
The voluntary alienation and transfer of an interest and rights in real property
Dedication:
The voluntary gift of one's land to the public
Conveyance:
The voluntary transfer of an interest and rights in real property, such as a home or commercial real estate
What do FHA and VA loans have in common?
They are funded by lenders.
Which is true about holographic wills?
They are not legal in every state.
Tom is selling his home. He has looked everywhere and cannot find his original deed. How will the title company solve this problem?
They will order a copy of the recorded deed from the county records.
If a purchaser plans to obtain a loan from the USDA to buy a property, what will be attached to the contract?
Third Party Financing Addendum
Defeasible Fee Estates:
This is a type of estate in which the person who has possession of the property will only be able to hold the property until an event takes place or does not occur.
All of the following are contracts promulgated by TREC EXCEPT:
Timeshare/Resort Residential Contract
Living Trust:
Type of trust created during someone's life to manage their assets in life and in death
One important distinction between unilateral and bilateral contracts is:
Unilateral contracts contain a promise to pay for ACCOMPLISHED performance, whereas a bilateral contract offers to pay for the PROMISE of performance.
What do general partners assume in a partnership?
Unlimited Personal liability
When an owner leaves a property to his son in his will, it is a form of _______.
Voluntary alienation
Doug granted Betsy a life estate for a property he owned and named his son as the remainderman. When will his son become the owner of the property?
When Betsy dies
Pur Autre Vie:
When a conventional life estate is based on the life of someone other than the life tenant, it is referred to as pur autre vie. This means "for the life of another" in French. Pur autre vie describes a life estate that grants one party ownership of a property for the duration of another individual's life.
Estate at Will:
When a tenant is occupying a property and the landlord wants the tenant occupying the property
Easement by necessity:
When an owner cuts up a larger piece of property into two or more pieces to sell them off, it is possible that the owners of the properties in the back will not have a road or way to get in or out of the property unless they drive across someone else's land. Since there is no other choice but to use someone else's land, the people who need a way in and out will be granted an easement by necessity.
Malfunction:
When something is designed or built to perform a certain function and no longer does so
Implied Acceptance:
When the parties bound by the contract act in a manner that just implies acceptance of the offer; unenforceable in Texas
Express Acceptance:
When the parties explicitly state that they agree to the terms of the offer
A broker is helping a government agency locate a building they can buy for an office. The agency has their own forms they want the agent to use when they make their offer. Can the agent do that legally?
Yes, a government agency can require their own form to be used.
Maybeth is buying a house. Does the contract need to be in writing?
Yes, because it involved the sale or transfer of real estate.
Frank has a listing that he is aware has had the foundation repaired. Frank believes that information could harm his seller so Frank does not give that information to potential buyers. Frank advised the seller not to mention it on his seller's disclosure. Is Frank in danger of ending up in court?
Yes, he could be sued under DTPA
A seller had a roof repaired years ago. The roof shows no current problems. Does the seller still need to disclose the repairs?
Yes, the SDN needs to list any repairs in place.
Timmy owns the rights to a lot in Abilene, Texas. He wants to build a laundromat but the City of Abilene will not give him permission because of his location. What is this an example of?
Zoning
Police Power:
Zoning Building codes Private controls on land Application of rules
The Environmental Protection Agency requires sellers of houses built before 1978 to furnish buyers with:
a Lead-Based Paint Disclosure Form
What is a specific lien?
a claim against a particular parcel of real estate
Of the following examples, which requires disclosure?
a death caused by a defect of the property
In which document does a borrower promise to repay their loan?
a promissory note.
Which of the following is required for a contract to become binding and effective?
acceptance of the contract must be communicated to the other party
To personalize a standard contract to fit many different situations, TREC has promulgated additions that can be added to the contract when the offer is created. These additions are called:
addenda
What is added to a completed contract that specifies supplementary information to the contract that was not previously included in the contract?
addenda
General Liens:
affect any property an individual or institution owns, including both real and personal property. This includes many kinds of taxes, such as IRS and inheritance taxes.
What does a leasehold estate accomplish?
allows tenants to use and occupy a property they do NOT own
The parties to a contract have decided that they want to change the closing date. The agent will need to prepare a(n):
amendment
RESPA requires that a lender must provide a loan applicant with all of the following EXCEPT:
an abstract of title and an original copy of their deed
Without permission, Betsy's neighbor built a fence that extends onto Betsy's property. What is the fence?
an encroachment
The Real Estate Settlement Procedures Act (RESPA) requires lenders to deliver:
an estimate of the buyer's closing costs to the buyer after application.
What is a concurrent estate?
any type of estate that is co-owned by multiple parties
A policy of title insurance provides a defense against ______.
anyone or anything that makes a claim against the title
Vendee's Lien:
applies to the property to ensure the repayment of what the buyer paid in. It is a specific, involuntary lien that protects buyers.
Specific Liens:
are claims against particular parcels of real estate and they do not affect any other property. Examples of specific liens are vendor's liens, execution liens, vendee's liens, surety bail bond liens, mechanic's liens, mortgages, special assessments, property taxes, and attachments.
Building Codes:
are sets of regulations pertaining to building design, materials, safety, sanitation, and structure.
An agent thinks that their client is accepting an offer for reasons that discriminate against a protected class. The agent should:
ask questions to determine if the actions were really discriminatory
The statute of frauds requires all real estate contracts:
be in writing
All persons with an ownership interest in the property must:
be named in the listing agreement and sign the document
Jane is selling her house and wants to sell the washer to the buyer as well. The washer is not annexed to the real estate and is considered personal property. What kind of document should Jane's license holder use to transfer ownership of the washer?
bill of sale
Who are the three parties on a deed of trust?
borrower, lender, trustee
A ___________ happens when one or more of the contracting parties either partially or completely fails to fulfill the contractual obligations.
breach of contract
What laws dictate what types of real estate buildings can be built in a geographical area?
building and zoning laws
Which of the following types of loans is NOT covered by TILA?
business loans
The objections section of the sales contract is where the ______ lists their dealbreakers.
buyer
How is a listing broker's commission on the sale of a property established?
by agreement between the seller and the listing broker
How does a purchaser verify clear title to a property?
by getting a title policy or an abstract of title
Writ of execution:
can be issued by a court to force payment of monies owed from a judgment when a debtor does not pay. It gives court officers the right to confiscate and sell the debtor's property to satisfy the debt. The writ of execution is itself an involuntary lien, called an execution lien. It attaches to the property until it is sold.
Which of these advertisements violates the Truth in Lending Act?
condo for sale: 3 bed, 2 bath, $1,200/month mortgage
The acceleration clause causes the entire balance to become due upon:
default of the loan terms by the borrower
Equitable redemption occurs before the auction of property and allows:
defaulting debtors to pay the defaulted portion of the debt and prevent foreclosure
A legal description MUST ____.
describe a property in a precise and distinct manner
Which of the following is NOT an essential element of a valid contract?
earnest money
The right of one party to access or use the land of another is a(n) ______.
easement
The government claimed a portion of Michael's land in order to build a new highway. What is the right to do this called?
eminent domain
If a buyer does not pay for a property in full, that's an example of a(n) _________.
equitable lien
A buyer is arranging for financing and getting inspections while a seller is ordering the title policy, doing required repairs, etc. Based on its stage of existence, what kind of contract is this?
executory
Easement Appurtenant:
exists when two tracts of adjacent land are owned by two different people. Because property cannot be landlocked in Texas, one of the owners has the easement, or right to cross the other's land.
Michael owns his house, and he has the right to sell it both today or in the future, including by will upon his death. What type of conveyance is this?
fee simple absolute
Jane owns her house. For the duration of her lifetime, she has the right to her property (unless she sells it) and can will her property title to her children after her death. What type of estate does Jane have?
fee simple estate
All of the following are possible penalties for unauthorized practice of law EXCEPT:
finishing a mandatory 100 hours of community service
Federal judgement lien:
for failure to pay certain debts, such as student loans. These liens are filed in the county where real property is held. A judgment lien is a general, involuntary lien. It may attach to all of the owner's property except their homestead property.
The goal of foreclosure is ____.
for the lender to recoup their losses on the loan the borrower defaulted on
When it comes to contracts, a best practice is to:
get it in writing
Paragraph 23 of the One to Four Family Residential Contract ____.
gives the buyer the right to terminate for any reason within the option period
If no third party is named as remainderman, when a life estate owner dies, the property reverts to the ______________.
grantor
Thanks to the rule of capture, surface right owners have the right to ____.
groundwater (if they can pump it up to the surface)
High inflation is usually accompanied by:
high interest rates
To describe a contract as "executory" is to:
identify its stage of existence
What type of agency occurs when a party assumes consent to a relationship based solely upon inferences formed by the actions, conduct, and words of either or both parties?
implied agency
Easement in gross:
in which an individual or company is allowed to be on the owner's property for specific purposes.
Writ of Attachment (attachment lien):
in which the court seizes property until it reaches a judgment. This protects creditors from a conveyance of title before a judgment is rendered. A writ of attachment is also called an attachment lien. (So don't get too attached to the writ part!) An attachment lien is a general, involuntary lien and may attach to all of the owner's property except their homestead property.
All of the following are part of land's unique characteristics EXCEPT:
inherent value
Once a contract has been created, it falls into one of four categories or classifications. Which of the following is NOT a category or classification of a contract?
invalid
Due Process of Law:
is a constitutional guarantee which blocks the government from impacting its citizenry in an abusive manner.
Encroachment:
is an illegal use of another landowner's property. It occurs when the property of one owner extends beyond their property boundaries and onto (encroaching on) the adjacent property. An encroachment is a physical intrusion on someone else's property without direct permission.
Mechanic's Lien:
is created when a worker has not been paid for work done on a property. Mechanic's liens protect suppliers, contractors, architects, engineers, surveyors, and other parties whose labor or materials has improved the value of real property. Mechanic's liens are based on the enhancement of value theory: the parties who performed the labor or supplied the materials used have increased the value of the real estate, and thus have an interest in the property. The property itself becomes security for money owed. Mechanic's liens are specific, involuntary, statutory liens.
Allodial (complete) ownership system:
is one in which the land is owned completely without an obligation of services or duties to another. This new system is what most real estate ownership looks like today.
Texas Deceptive Trade Practices Act (DTPA):
is the primary consumer protection law in Texas. While the law has changed from its original version in 1973, it continues to provide protection to consumers against: -False and misleading statements or deceptive practices -Unconscionable (inexcusable, unforgivable) actions -Breaches of warranty The DTPA gives consumers the right to sue for economic damages.
Lis pendens:
is used to inform the public when a lawsuit is filed that affects a specific piece of real estate. This informs the public and any interested parties of the potential claim on the property.
How may the deadline for the option fee be satisfied?
it must be delivered to the seller or listing broker by the deadline
Four friends bought a piece of property. They all closed at the same time, they each own 25% and they all have the right of possession and if any of them die their share passes to the other three owners. The friends have a _________________ with right of survivorship.
joint tenanacy
What is real property?
land and everything that is permanently attached to the land, plus all the things growing above and below the surface of the land
All of the following make up the three stages to a contract EXCEPT:
lawful objective
An estate in land that does not include ownership and limits the term for the right of possession is a ____.
leasehold estate
Statutory laws are formally created by _____.
legistlatures
Since Texas is a community property state, the title company might want to know a couple's or person's _____.
marital status
Which of these is NOT governed by TREC?
mortgage banker
A common tax-deductible expense associated with a real estate purchase is:
mortgage interest
The SAFE Act regulates the licensure of which type of real estate professionals?
mortgage loan originators
The primary purpose of a transaction checklist is to ____.
move a transaction from signed contract to closing
If a borrower is making mortgage payments directly to the seller, they have a ____ loan.
non-traditional
An estate at will allows the tenant to ______.
occupy the property until either the tenant or the landlord decides tenancy should end
A lease agreement that creates an estate at will allows the tenant to ______.
occupy the property until either they or the landlord decides tenancy should end
Equitable estates:
occur when a freehold estate owner has ownership interest in the property, but another party has interest in the property that is less than the interest afforded by ownership.
Leasehold Estate:
one party owns the property, but someone else lives there. Tenants don't own the property, but they have the right of possession for a period of time. And, whereas a freehold estate may be evidenced by a deed, a leasehold estate may be evidenced by a lease. Some residential property may be sold while it is possessed by tenants who have a lease.
What type of listing provides a commission to the broker ONLY if their activities bring about a sale?
open
What is a fixture?
personal property that's transformed into real property
Mary has one of her listings under contract. The contract calls for possession at closing. Now the seller asks if she can stay for three days after closing. The buyer orally agrees. What does Mary need to do now?
prepare an amendment and add the Seller's Temporary Lease Agreement
Jane, a listing agent, just received three offers. Which of the following is a fiduciary duty owed by Jane to her client?
presenting all offers to her client
A homestead right DOES NOT ____.
prevent a homeowner from being evicted if they default on their mortgage.
A form that TREC requires agents to use is called a(n) ______.
promulgated contract
In a bilateral contract, what kind of obligations are created?
reciprocal obligations
A judgement lien:
reflects a court decision concerning the rights and claims of parties in a suit
Which of the following are land's economic characteristics?
scarcity, situs (location), modification, fixity
All of these issues would need to be disclosed EXCEPT:
sex offenders in the neighborhood
What do cooperative members own?
shares of the corporation that owns the building(s)
When a lender agrees to allow the borrower to sell the property and accept less than a full pay off amount, it is referred to as a ________.
short sale
Buyer/Tenant Representation Agreement:
should define the obligations of each party to the other. The buyer commits to working exclusively with the broker, and the broker commits to working diligently to locate property for the buyer and to negotiate an offer in the best interests of the buyer. Much like with the listing agreements, the buyer/tenant representation agreement is essentially an employment contract.
To complete the process of voluntary alienation, a seller must ____.
sign the deed
A mortgage is an example of a ____.
specific, voluntary lien
An oral contract to buy a piece of real estate is unenforceable because it does not comply with the:
statute of frauds
Which of the following is NOT an option the non-breaching party or the party who fulfills (or wants to fulfill) their part of the contract has in the event of a breach of contract?
sue for new contract
All of the following are examples of how a new homeowner can give notice of their ownership to the world EXCEPT:
telling your sales agent you want to buy a house
If the seller does not provide the buyer with a completed Seller's Disclosure Notice before signing the contract, the buyer has a legal right to:
terminate the contract within seven days of receiving the notice
A structure build before 1978 requires ___.
that the sellers furnish a Lead-Based Paint Disclosure
In Texas, all of the following laws affect real estate EXCEPT:
the Commercial Property Act
When dealing with a property sale that includes mineral rights, an agent is required to use:
the TREC promulgated contract addendum
Easement by prescription:
the area in question would have to have been used by the non-owner of the property for at least ten years. That person would have had to use the easement continuously, exclusively, and without the owner's permission.
Single-family home owners own:
the building and the lot on which it stands
If a buyer has given the seller earnest money:
the buyer's credit will be applied at the closing of the sale
Paragraph 21 of the One to Four Family Residential Contract is where ______.
the contact information for the involved parties goes
In real estate, interest is defined as a right or legal share in a property. The type of interest you have depends on ____.
the extent of your share in that property.
Which of the following does a condo owner own?
the interior of their unit
To whom does the property revert at the end of a lease?
the landlord
What is foreclosure?
the legal process whereby a lender takes control of a property held by a borrower in default and sells it to recover the lender's losses
What happens when the property and the buyer have both met the lender's underwriting requirements?
the loan is approved
A couple renting a home have a leasehold estate, which means they have ____.
the right of possession
The major difference between tenancy in common and joint tenancy is _______.
the right of survivorship
All of the following are common examples of unilateral contracts EXCEPT:
the sale of a good or service
Who must fill out the Seller's Disclosure Notice?
the seller
Landlords must give tenants a written copy of their lease within ____.
three business days
Bob is in the process of buying a new home, but has made it clear that he will only complete the purchase if the title is verified. What is this an example of?
title contingency
What is the primary purpose of the Broker-Lawyer Committee?
to create, edit and recommend contract forms to TREC
What is the purpose of the TREC promulgated form Amendment to Contract?
to make a change to a term that was originally agreed to in the signed contract
What is the purpose of the Amendment to Contract form?
to make changes or modifications to an already agreed upon contract
Once created, a contract can be valid, void, voidable, or:
unenforceable
Which of the following negatively affects homestead?
unpaid income tax
All real estate agents MUST:
use contracts promulgated by TREC
A seller sells their property to a buyer. However, the buyer does not pay them the full price. The seller can place a lien on the home and maintain the right to repossess the home until the buyer pays the full price to the seller. What is this kind of lien?
vendor's lien
A conveyance is the __________.
voluntary transfer of an interest and rights in real property
Endangered Species Act of 1973 (ESA):
was signed on December 28, 1973, and provides for the conservation of species that are endangered or threatened throughout all or a significant portion of their range, and the conservation of the ecosystems on which they depend. This means that in 2012, when an endangered species of spiders was discovered at a highway construction site in San Antonio, Texas, the project was immediately halted.
A promissory note includes a promise to pay; the time and place of payments; and the amount of the payments, interest rate, and loan. What other element does it typically include?
what consequences will result if the borrower fails to make the payment to the lender
When is a borrower most likely to seek a short sale?
when the borrower owes more than the current market value of the property
In a leasehold estate, when does the tenant's right of possession end?
when their lease has expired