Law of Contracts

Which of the following committees is responsible for drafting and revising contract forms? Standards of Conduct Committee Broker-Lawyer Committee Committee on Promulgation of Contracts TREC Contract Committee

Broker-Lawyer Committee

A buyer wanted to move in early before closing. Which TREC-promulgated addendum should be used? Addendum for Buyer's Move-in Pre-Closing Buyer's Temporary Residential Lease Lease Prior to Closing Addendum Addendum for Maximum 90-Day Residential Lease

Buyer's Temporary Residential Lease

Which of the following is necessary for a valid legal contract? Government acceptance Legal purpose Statutory approval A Texas Real Estate Commission form

Legal purpose

Which of the following is a TREC-promulgated contract? Residential Condominium Contract Agricultural Property Contract Lake Property Contract Fine Homes and Estates Contract

Residential Condominium Contract

What is the make-up of the Broker-Lawyer Committee? Six brokers, six lawyers, and three members of the general public Three brokers, three lawyers, and three members of the general public Six brokers, six lawyers, and one member of the general public Six brokers and six lawyers

Six brokers, six lawyers, and one member of the general public

What law specifically prohibits license holders from practicing law? Real Estate Settlement Procedures Act (RESPA) Texas Real Estate License Act (TRELA) Texas Real Estate Commission (TREC) Deceptive Trade Practices Act (DTPA)

Texas Real Estate License Act (TRELA)

What must a plaintiff prove about a misleading statement in order to get triple damages under the DTPA? That the defendant acted negligently That the defendant acted indifferently That the defendant acted intentionally That the defendant acted with malice

That the defendant acted intentionally

Which of the following is TRUE? Selected Answer: The Broker-Lawyer Committee has rule-making authority, but the Texas Real Estate Commission does not. The Texas Real Estate Commission drafts and revises contract forms for use by real estate license holders. The Broker-Lawyer Committee develops forms and recommends their adoption, but it is the TREC that promulgates the forms for mandatory use. The Broker-Lawyer Committee promulgates forms for mandatory use by license holders.

The Broker-Lawyer Committee develops forms and recommends their adoption, but it is the TREC that promulgates the forms for mandatory use.

Which act created the Consumer Financial Protection Bureau (CFPB), an independent agency within the Federal Reserve Board, with oversight authority over many of the major federal financial consumer protection laws? The Truth in Lending Act (TILA) The Dodd-Frank Act The Mortgage Disclosure Improvement Act (MDIA) The Fair and Accurate Credit Transactions Act

The Dodd-Frank Act

With community property, which of the following is FALSE? Each spouse has an equal interest in the property. Title can be conveyed by one party without the approval of the other party. Each spouse has an undivided interest in the property. Each spouse can will their half of the property to anyone else.

Title can be conveyed by one party without the approval of the other party.

What is the primary difference between a lawsuit brought under the Deceptive Trade Practices Act (DTPA) and any other type of civil action? Damages are limited to actual damages only under the DTPA. Treble damages are available under the DTPA. Attorneys fees are not awardable under the DTPA. Costs are not awardable under the DTPA.

Treble damages are available under the DTPA.

A contract to perform an unlawful act is considered which of the following? Unilateral Void Voidable Enforceable

Void

Which of the following is an exception to using TREC-promulgated contract forms? All of these When a license holder is not representing either party in the transaction When the license holder is acting as a principal and not as an agent When the license holder is solely leasing property

When the license holder is acting as a principal and not as an agent

A seller accepted money from a buyer for his unrestricted right to cancel the purchase transaction (option to terminate) within ten days of the executed date of the sales contract. This agreement is: a bilateral contract. a covenant clause in the sales contract. a unilateral contract. an executory agreement.

a unilateral contract.

A homeowner is building a new enclosed front porch on his home. A truck load of timber that the homeowner purchased has been left in the driveway for use in building the porch. At this point, the lumber is considered real property because it will be permanently affixed to the existing structure. a chattel that is real property. personal property. a trade or chattel fixture.

personal property.

How many members are on the Broker-Lawyer Committee? 15 13 12 9

13

If a buyer receives TREC OP-H, and the Seller's Disclosure of Property Condition after the sales contract has been signed by all parties, how many days does the buyer have to terminate the contract? 10 5 3 7

7

How many commissioners are on the Texas Real Estate Commission? 9 6 12 13

9

A license holder representing a seller is asked by that seller, "What does paragraph 5 of this TREC-promulgated contract mean to me?" What is the best answer by that agent? That paragraph is no big deal, so let's just move on." "I'm not an attorney, so I can't answer that." "You are asking something I am not allowed to answer. I think you should seek out legal counsel." "I'm not an attorney, but here is what it means..."

"I'm not an attorney, but here is what it means..."

Which of the following is a TREC-promulgated form? Non-Realty Items Addendum Addendum for Sale of Other Property by Buyer Seller's Disclosure Notice Information About Brokerage Services Addendum

Addendum for Sale of Other Property by Buyer

Which of the following is NOT a TREC-promulgated addendum? Addendum for Seller's Right to Terminate Addendum for Release of Liability on Assumed Loan and/or Restoration of Seller's VA Entitlement Addendum for Back-Up Contract Seller's Temporary Residential Lease

Addendum for Seller's Right to Terminate

Which of the following is NOT a TREC-promulgated contract? One- to Four-Family Residential Contract Unimproved Property Contract New Home Contract Contract for Deed

Contract for Deed

Which of the following is NOT a test to determine if an item is a fixture or personal property? Cost of the item Method of annexation Adaptation Agreement

Cost of the item

Who appoints the TREC commissioners? House of representatives Senate Lt. governor Governor

Governor

Which type of death MUST be disclosed by the seller of residential property comprising not more than one dwelling unit? Accident unrelated to the condition of the property Suicide Natural causes None of these

None of these

Which of the following is an example of a unilateral contract? Open listing agreement Exclusive right to sell listing One to four residential contract Residential lease

Open listing agreement

How many promulgated contracts does TREC issue? Eight Nine Four Six

Six

What is the term for a TREC commissioner? Staggered two-year terms Members are on staggered four-year terms with the chairperson appointed to a ten-year term Staggered six-year terms Staggered four-year terms

Staggered six-year terms

Which of these is authorized to pass rules to interpret, define, and enforce the act's provisions, and includes the authority to promulgate contracts for required use by license holders? Consumer Financial Protection Bureau (CFPB) Texas Real Estate Commission (TREC) Regulation Z Fair and Accurate Credit Transactions Act

Texas Real Estate Commission (TREC)

Which of the following real estate-related entities has rule-making authority in the state of Texas? Attorneys The Real Estate License Act All of these The commission

The commission

Which statement BEST applies to joint tenancy? There is no right to file a partition suit. The last survivor becomes a severalty owner. A deed signed by one owner will convey a divided fractional interest. A deed will not convey any interest unless signed by both owners.

The last survivor becomes a severalty owner.

A married couple could not hold title by which of the following means? Community property rights Joint tenancy Tenancy in common Title in reservation

Title in reservation

What is the main purpose of the Texas Real Estate Commission? All of these To protect REALTORS To protect the public To draft and revise contracts

To protect the public

Which act requires escrow agents, title companies, and other persons involved in real estate closings and settlements to establish anti-money-laundering policies and procedures? Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) Fair and Accurate Credit Transactions Act USA PATRIOT Act Foreign Investment in Real Property Tax Act (FIRPTA)

USA PATRIOT Act

A person approaches an owner and says, "I'd like to buy your house." The owner says, "sure," and they agree on a price. What type of contract is this? Implied Void It is not a contract Unenforceable

Unenforceable

Which of these sets forth the procedures to be followed in developing an appraisal and the manner in which an appraisal is communicated? Texas Appraiser Licensing and Certification Board (TALCB) Uniform Standards of Professional Appraisal Practice (USPAP) Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) Texas Security-Freeze Law

Uniform Standards of Professional Appraisal Practice (USPAP)

Personal property is conveyed by: a deed. a bill of sale. a title. an affidavit of title.

a bill of sale.

Another term for personal property is: chattels. realty. fixtures. fructus naturales

chattels.

A married couple co-owns a farm. This arrangement is MOST likely: community property. severalty ownership. a tenancy in common. joint tenancy.

community property.

A contract must meet certain minimum requirements to be considered legally valid. All of the following are essential elements of a valid contract EXCEPT: consideration. legally competent parties. mutual agreement. earnest money.

earnest money.

The essential elements of a contract include all of the following EXCEPT: offer and acceptance. earnest money. competent parties. consideration.

earnest money.

One of the rights in the bundle of legal rights is the right of exclusion. amendment. easement. eminent domain.

exclusion.

After a real estate sales contract is signed but before title actually passes, the status of the contract is: executory. voidable. unilateral. implied.

executory

In condominium ownership, the owner of each unit holds: ownership in severalty. tenancy by the entirety. fee simple title. right to partition

fee simple title.

When a seller proposes a deviation from the terms of an offer, the seller is considered to be: ejecting the offer. revoking the offer. claiming the offer as a backup. making a counteroffer.

making a counteroffer

A contract that complies with all the basic requirements may still be voidable. To be valid, the contract must have: one essential element. title approval. mutual agreement. underwriter approval.

mutual agreement

A real estate listing agent receives an offer on one of his listings; the seller agrees to the offer and signs the sales contract. The contract is: an executed contract. not enforceable. valid. an executory contract.

not enforceable.

A woman owns and resides in a condominium. Title to her unit is: single person title. community property. time-share. ownership in severalty.

ownership in severalty

If property is owned by two or more owners as joint tenants, the interest of the deceased co-owners will be passed to the heirs of the deceased. state, under the law of escheat. trust under which the property was owned. surviving owner or owners.

surviving owner or owners.

The bundle of legal rights includes all of the following EXCEPT the right of possession. the right to control the property. the right of enjoyment. the right to cultivate any plant.

the right to cultivate any plant.

What type of committee is the Broker-Lawyer Committee? Under-secretary Advisory Temporary Rule making

Advisory

What is one of the purposes of the Texas Real Estate License Act? All of these Regulation of licensed real estate inspectors Regulation of licensed real estate brokerage practitioners Regulation of residential service companies

All of these

Which of the following addenda are promulgated by TREC? Seller Financing Addendum Addendum for Property Located Seward of the Gulf Intracoastal Waterway All of these Addendum for Coastal Area Property

All of these

Which of the following is considered an executory contract? A contract for deed A lease-option contract A lease-purchase contract All of these

All of these

Which of the following is NOT a promulgated TREC form? Addendum for Coastal Area Property Buyer's Temporary Lease Deed Unimproved Property Contract

Deed

Which of the following is personal property? Perennial shrubbery Emblements A vineyard An orchard

Emblements

Which act prohibits lenders from discriminating against credit applicants? Fair and Accurate Credit Transactions Act Equal Credit Opportunity Act (ECOA) Mortgage Disclosure Improvement Act of 2008 (MDIA) USA PATRIOT Act

Equal Credit Opportunity Act (ECOA)

Which of the following could not be held as separate property after marriage? Gift Inheritance Personal property acquired by a spouse after marriage Property that was owned solely by either spouse before marriage

Personal property acquired by a spouse after marriage

What type of contract is a license holder prohibited from completing because doing so would be considered the unauthorized practice of law? Prepared by a licensed escrow agent Prepared by an attorney and required by the property owner Prepared by an attorney licensed in Texas and approved by the attorney for the type of transaction for which the form is used Prepared by the property owner

Prepared by a licensed escrow agent

Which EPA-approved pamphlet must sellers and landlords provide to prospective buyers or tenants? Protect Your Family from Lead in Your Home Federal Lead Disclosure The Dangers of Lead How to Detect Lead in Your Home

Protect Your Family from Lead in Your Home

Mary owned an apartment that included a parking space for her car. This space is called a(n): accession. appurtenance. addendum. binder.

appurtenance

For which of the following actions may the Texas Real Estate Commission NOT suspend a license holder? All of these are violations and are subject to suspension. The license holder explains to the principals the meaning of the factual statements or business details contained in the contracts. The license holder used a TREC-promulgated purchase agreement that was specifically designed to work for a different type of transaction. The license holder drafts an instrument (other than a form promulgated by TREC) that transfers an interest in real property.

The license holder explains to the principals the meaning of the factual statements or business details contained in the contracts.

Which of the following is TRUE about community property? Husband and wife are considered one entity The married couple are equal partners in the marriage Property acquired by one person during the marriage is separate property Community property laws are federally mandated

The married couple are equal partners in the marriage

What effect do the rules made by the commission have on license holders? The rules have full force and effect of law. Any violation of the rules must be turned over to the state attorney general for investigation. Any violation of the rules results in license revocation. Any violation of the rules results in administrative fees.

The rules have full force and effect of law.

Which of the following is TRUE? The Texas Real Estate Commission can sentence a violator to no more than two years in jail. The Texas Real Estate Commission meets only during the Texas legislative session. When the Texas Real Estate Commission receives a formal complaint, the Commission will suspend a license holder until a full investigation is completed. The rules of the Texas Real Estate Commission have the full force and effect of law.

The rules of the Texas Real Estate Commission have the full force and effect of law.

A license holder who completes a contract for the sale of real property is not engaged in the unauthorized practice of law if the license holder uses a form that is: prepared by an attorney licensed in Texas and approved by the attorney for the type of transaction for which the form is used. prepared by the property owner or by an attorney and required by the property owner. adopted by the commission for the type of transaction for which the form is used. all of these.

all of these.

The TREC Seller's Disclosure of Property Condition form is: an approved optional/voluntary use form. a promulgated consumer disclosure. a promulgated addendum. a promulgated amendment.

an approved optional/voluntary use form.

Once a sales contract is completed with all parties fulfilling their promises, the ownership changing hands, and the seller receiving the sales price amount, the sales contract is: a valid contract. an executed contract. an executory contract. a voidable contract.

an executed contract.

A revocation is when: an offeror revokes their offer before acceptance by the offeree. an offeree revokes their offer. a seller has accepted an offer and revokes it for a better offer. an offeree revokes the offer after acceptance

an offeror revokes their offer before acceptance by the offeree.

Real estate brokers who are members of the Broker-Lawyer Committee become members by being: appointed by the Texas Real Estate Commission. elected in a public election. appointed by the president of the State Bar of Texas. appointed by the governor.

appointed by the Texas Real Estate Commission.

Under the statute of frauds, all contracts for the sale of real estate must be: in writing to be enforceable. originated by a real estate broker. on preprinted forms. accompanied by an earnest money deposit.

in writing to be enforceable.

Texas Real Estate Commission (TREC) Form OP-H, Seller's Disclosure of Property Condition is an approved form for voluntary use. is a mandatory form. is a promulgated form. contains additional information not found on the Texas Association of REALTORS® (TAR) Seller's Disclosure of Property Condition.

is an approved form for voluntary use.

A valid legal contract must have: legally competent parties. earnest money. consent of at least one of the parties. acceptable offer.

legally competent parties

When a contract appears to be valid on the surface, but neither party can sue the other to force performance, it is: admissible. tacking. unenforceable. defenseless.

unenforceable.

When a contract contains all of the essential elements that make it legally sufficient or enforceable and is binding in a court of law, it is: void. valid. absolute. affirmed.

valid.

When a contract lacks one of the essential elements of a legal contract it is: void. valid. deficient. meritless.

void

When a contract appears to be valid but may be rescinded or disaffirmed by one or both parties based on some legal principle, it is: enforceable. unperformable. valid. voidable.

voidable

A contract with a person under duress is: void. voidable. enforceable. valid.

voidable.

Which of the following statements about separate property is TRUE? Any income earned from one person's second occupation is considered separate property. Separate property can only be conveyed with both spouse's signatures. A house gifted by parents to one spouse as a wedding gift could be held separately. All of these are true.

A house gifted by parents to one spouse as a wedding gift could be held separately.

Which of the following is TRUE about community property in Texas? A surviving spouse owns at least one half of the property upon death of the spouse. The surviving spouse always inherits all of the community property. The surviving spouse has a right of survivorship. All of these.

A surviving spouse owns at least one half of the property upon death of the spouse.

A potential buyer offers to purchase the sellers' real property for $10,000 less than the listed price on a TREC-promulgated One to Four Residential Contract. The seller responds by signing the contract and transmitting it to the buyer's agent. What is the seller's response called? Acceptance Counteroffer Repudiation Validation

Acceptance

According to the Texas Real Estate License Act, which of the following requires that a license holder be a practicing attorney? Advising a person regarding the validity of title to real property Advising a client to reject an offer Filling in a TREC-promulgated contract Determining the offering price for a seller

Advising a person regarding the validity of title to real property

Which of the following is TRUE regarding community property rights? Any property acquired during a marriage is considered to be obtained by mutual effort Community property laws are based on the idea that a husband and wife, rather than being equal partners, are considered one entity Income earned from a spouse's second job is considered separate property All of these

Any property acquired during a marriage is considered to be obtained by mutual effort

A married couple could hold title by which of the following means? Title in state Title in servitude Tenancy in reservation Community property

Community property

According to some states, any real property that either spouse of a married couple owns at the time of the marriage remains separate property. Further, any real property acquired by either spouse during the marriage (except by gift or inheritance) belongs to both of them equally. What is this form of ownership called? Partnership Community property Joint tenancy Tenancy by the entirety

Community property

Which of the following is required for a valid contract? Standard real estate commission agreement Title policy Consideration Survey

Consideration

Which act is administered by the CFPB and was designed to expand consumer access to credit, enhance the accuracy of consumers' financial information, and help fight identity theft? Fair and Accurate Credit Transactions Act Truth in Lending Act (TILA) Regulation Z Real Estate Settlement Procedures Act (RESPA)

Fair and Accurate Credit Transactions Act

Which act requires that a licensed or certified appraiser perform any appraisal used in connection with a federally related transaction of $250,000 and above? Texas Appraiser Licensing and Certification Act Secure and Fair Enforcement for Mortgage Licensing Act Uniform Standards of Professional Appraisal Practice Act (USPAP) Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)

Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)

Which act stipulates that if the seller is a foreign person, the buyer must withhold 15% of the sales proceeds and pay that amount to the IRS? Foreign Investment in Real Property Tax Act (FIRPTA) USA PATRIOT Act Equal Credit Opportunity Act (ECOA) Secure and Fair Enforcement for Mortgage Licensing Act

Foreign Investment in Real Property Tax Act (FIRPTA)

John owns a manufactured home and has elected to have it classified as real property. Which of the following would NOT support the home's classification as real property? He intends to move it every six months. It is attached to real property that is owned by the owner of the home. A certified copy of the statement of ownership has been filed. The tax assessor-collector has been notified of the filing of the real property election.

He intends to move it every six months.

Which of the following concerns led to the Texas Real Estate License Act prohibiting license holders from practicing law? License holders giving counsel regarding the validity of an instrument that addresses real property rights Individuals using contracts that are not promulgated by TREC Contracts for the sale of a business that do not include a real property interest All of these

License holders giving counsel regarding the validity of an instrument that addresses real property rights

Which of the following is the correct composition of the Texas Real Estate Commission? Thirteen members appointed by the governor for six-year terms. Thirteen members appointed by the President of the State Bar of Texas for staggered two-year terms. Nine members appointed by the governor for six-year terms. Nine members appointed by the senate for two-year terms.

Nine members appointed by the governor for six-year terms.

Which of the following is not a form of co-ownership? Tenancy in common Joint tenancy Community property Ownership in severalty

Ownership in severalty

A buyer found a contract form on the internet and wants her agent to help her fill out and adapt it for Texas law. Which of the following is TRUE regarding an agent's ability to help the buyer complete the form? The agent may help her because she requires its use. The agent is prohibited from helping her adapt and fill out the form. The agent may help her if it was created by an attorney. The agent may help her if she waives her right to an attorney.

The agent is prohibited from helping her adapt and fill out the form.

Which of the following may be leased? The contract The deed The air rights The title

The air rights

A real estate broker modifies a 1992 TREC-promulgated contract form and updates it to fit a particular transaction. Which of the following could happen? The broker should use current promulgated forms, but this type of revision is allowed under section 1105.145 of the Texas Real Estate License Act. The broker could charge an additional fee to cover the cost of this additional service. The broker could have his license suspended or revoked for practicing law. The transaction closes; as long as each party signs, it is a valid and enforceable contract.

The broker could have his license suspended or revoked for practicing law.

The buyer and seller of a home are debating whether a certain item is real or personal property. The buyer says it is real property and should convey with the house. The seller says it is personal property and would not convey without a separate bill of sale. In determining whether an item is real or personal property, a court would NOT consider which of the following? Whether its removal would cause severe damage to the real estate Whether the item is clearly adapted to the real estate Any relevant agreement of the parties in their contract of sale The cost of the item when it was purchased

The cost of the item when it was purchased

Which of the following statements is FALSE regarding use of reproduced forms approved or promulgated by TREC? The broker's name may be inserted in any blank provided for that purpose. The form may be reproduced on any size paper at least as large as the size used by TREC. The business name or logo of a broker, organization, or printer may appear at the top of a form outside the border. The form must be reproduced on the same size paper used by TREC.

The form may be reproduced on any size paper at least as large as the size used by TREC.

What is the possible result for an owner not providing a seller's disclosure notice when required by the Texas Property Code (TPC), according to the standard purchase agreement promulgated by the Texas Real Estate Commission (TREC)? The seller would be in violation of failing to disclose, and the buyer could terminate the contract. The TREC does not address TPC regulations. The seller would commit fraud. The seller would commit misrepresentation.

The seller would be in violation of failing to disclose, and the buyer could terminate the contract.

A couple starts celebrating the sale of their home after their listing agent calls them with the news that they've received an acceptable offer. The listing agent says he is coming over to get their acceptance and signatures. However, by the time the agent arrives the sellers are completely inebriated. The agent has them sign the contract and then takes it to the title company. This contract is: lacking legal consideration. voidable. void. illegal.

voidable.