Promulgated Contract Forms

The Protect Your Family from Lead in Your Home booklet states that "Lead is especially dangerous to children under the age of _____." A. 6 B. 8 C. 10 D. 12

A. 6 (The Protect Your Family from Lead in Your Home booklet states that children under the age of 6 are particularly susceptible to lead.)

Steering is: A. Illegal B. Described as channeling a minority to or away from an area C. Usually intended to change the character of a neighborhood D. All of the above

D. All of the above (Steering, described as channeling a minority to or away from an area and usually intended to change the character of a neighborhood, is illegal.)

A contract is described as: A. Mutually binding B. Legally enforceable C. An agreement between two or more parties to do or not do something. D. All of the above

D. All of the above (A contract is an agreement between two or more parties to do or not do something. It is mutually binding and legally enforceable.)

An item that is attached to and remains with the property is called: A. A fixture B. An improvement C. Permanently installed D. All of the above

D. All of the above (Any item that is permanently installed or attached to the property is called a fixture or improvement.)

Federal Fair Housing Laws forbids discriminatory practices by parties including: A. Owners of properties B. Lenders C. Real estate brokers D. All the above

D. All the above (Discriminatory practices are NOT allowed in any transaction)

The TREC promulgated Seller Financing Addendum states that if the buyer does not furnish the required qualifying documentation within the time limit allowed: A. Seller may terminate the contract and keep the earnest money. B. Seller may terminate the contract but must return the earnest money. C. Seller must tell Buyer why he is terminating. D. Buyer will be liable for the cost of the credit report.

A. Seller may terminate the contract and keep the earnest money. (In a Seller Financed contract, the Seller acts as the bank. Seller can ask for the same qualifying documents to be provided that a bank or mortgage company requires. If the Buyer agrees to furnish these documents and fails to do so in the allotted time, the Seller can end the contract is allowed to keep the earnest money (per the terms of the contract).)

If an Agent receives confidential information from a Client while the agency agreement is in force, that agent may: A. Share that information once the agreement expires B. Share that information if the Client authorizes the agent to share it C. Never share the information with another client D. Share the information, but only to another agent

B. Share that information if the Client authorizes the agent to share it (An example of confidential information is when a Seller informs the agent that they are willing to accept any reasonable offer but asks the agent not to share it. The confidentiality extends beyond the expiration of the listing agreement unless, at that time, the Seller gives written permission to share it.)

When a "fixture" in a property does not remain for the buyer, how do we inform the buyer of that fact and make sure the item does not convey with the property? A. List the item as not included in the Listing Agreement B. List the item on the "Seller's Disclosure Notice" C. List the item on the "Residential Contract" D. List the item on the "Amendment" form

C. List the item on the "Residential Contract" (Paragraph 2D of the 1-4 Family Residential Contract allows the Seller to list any items that are considered "fixtures" (attached to the property) to exclude those items from the sale. It MUST be listed on the contract itself to avoid any confusion about what doesn't remain in the property.)

A voluntary dispute resolution is called: A. Litigation B. Mandatory arbitration C. Mediation D. Civil argument

C. Mediation (Residential real estate contracts call for mediation (a voluntary dispute resolution). If parties agree to mediation, it does not take away their right to sue.)

If a Seller has furniture he would like to sell, and the buyer would like to purchase, how should this be handled? A. This information should be written in Paragraph #11, Special Provisions. B. A list should be given to the title company and they will draw up a document to address the sale. C. Simply attach a list of the items and the price to be paid to the original contract. D. Use the Non-Realty Item Addendum to address the sale.

D. Use the Non-Realty Item Addendum to address the sale. (Any personal property that the Seller intends to leave behind with or without compensation from the buyer, should be listed in detail on the Non-Realty Item addendum.)

How does the Texas Real Estate License Act define the first face-to-face meeting which requires agency disclosure? A. When a licensee first meets a prospect B. When a prospect is ready to sign an agreement C. Only when a specific property is being shown D. When substantive dialogue about a specific real property occurs

D. When substantive dialogue about a specific real property occurs (Once a prospect enquires about a specific real property, the agent is required to inform the prospect who represents whom in a transaction (Agency law). The easiest way to do so is to use the Information About Brokerage Services form which describes the agency representation available to each party.)

A license holder must disclose if he is a party to the transaction, or acting on behalf of a spouse, parent, child, business entity in which the license holder owns more than 10%. This is done in Paragraph _____ of the One to Four Family Residential Contract (Resale). A. 4 B. 7 C. 19 D. 25

A. 4 (Paragraph 4 of the One to Four Family Residential Contract, allows the agent to disclose if they are a party in the contract (as required by law), or if they have any close family relationship to the buyer (or the seller).)

The statutory limit for statutory fraud is ______ years. A. 4 B. 10 C. There is no limit. D. 20

A. 4 (The limit for statutory fraud is 4 years.)

The Residential Condominium Contract Resale: A. Allows a limit to the amount a Buyer will pay for Association transfer fees B. Can be used for new condominium construction C. Can be used on a residence with a Lot and Block legal description D. Does not address any parking assignments

A. Allows a limit to the amount a Buyer will pay for Association transfer fees (The limit a buyer must pay for transfer fees in a condominium is limited in the contract.)

According to The Real Estate License Act of Texas (TRELA), which one of the following actions is a fair and impartial act for an Intermediary? A. Appointing associated licensees to work with the parties B. Appointing subagents to work with the parties C. Agreeing to represent only the owner D. Agreeing to represent only the buyer

A. Appointing associated licensees to work with the parties (The Texas Real Estate Licensing Act states that to be fair and impartial the Broker may appoint a licensee associated with the Broker to represent the Seller and a different associated licensee to represent the Buyer.)

Time is of the essence means that certain items in the contract must be performed: A. As specified in the contract B. As verbally agreed between buyer and seller C. As verbally agreed between the sales agents representing buyers and sellers D. None of the above

A. As specified in the contract (Time is of the essence refers to any specific time that is inherent in the contract - i.e. number of days in an option period or the specific closing date written into the contract.)

When electing to use the option paragraph of the contract, the buyer may, within the time specified in the paragraph, do any of the following EXCEPT: A. Complete the repairs himself before the end of the option period B. Terminate the contract C. Do nothing and proceed to closing D. Amend the contract waiving the right to terminate

A. Complete the repairs himself before the end of the option period (The option money and time period give the buyer the right to terminate, to do nothing and proceed to closing, or to amend the contract.)

In Paragraph 6E (2) regarding Membership in a Property Owner's Association, the buyers are notified that they must pay the HOA assessments and if they do not, the HOA has the authority to ________________. A. Foreclose B. Assess additional fines C. Assess late fees and fines D. Not do anything. The HOA has no authority to enforcer HOA assessments.

A. Foreclose (A buyer must be made aware that if the property they are purchasing is in a Mandatory Home Owner's Association, the Association has the right to foreclose on the property for unpaid dues and/or assessments.)

The "effective" date of a contract: A. Is filled in by the agent when the last person initials all changes and signs the contract B. Occurs when the contract and earnest money are delivered to the title company C. Happens when the buyer has made the offer to the seller D. Is when the transaction goes to closing

A. Is filled in by the agent when the last person initials all changes and signs the contract (The person responsible for dating the contract to determine the effective date is the agent who has the contract after the last party signs and initials the contract. However, that does not prevent the other agent from dating the contract.)

In the Buyer Agreement, Intermediary is in Paragraph 8. The paragraph is the same in the Buyer Agreement and in the: A. Listing Agreement B. Sales contract C. Inspecting report D. Seller's Disclosure

A. Listing Agreement (The written agreements that allow intermediary are the Buyer/Tenant agency agreement on the buyer's side, and the Listing Agreement on the seller's side.)

The language in the One-to-Four Family contract makes _____________ mandatory. A. Mediation B. An amendment to the contract C. Leaving all fireplace tools D. Conveying personal property with the real property

A. Mediation (In the TREC contracts, mediation is mandatory. However, agreement to mediate does not take away the right to sue.)

The Third- Party Financing Condition Addendum is used for all the following financing options EXCEPT : A. Seller financing B. Reverse mortgage loans C. Conventional loans D. USDA government financing

A. Seller financing (Seller financing and assumptions have their own addendums.)

In the late 1960s and the early 1970s, the ___________ and the __________ attempted to resolve the dispute by agreeing to several earnest money contracts that would be acceptable for real estate practitioners to use in their daily business. A. Texas State Bar Association ----- Texas Association of REALTORS® B. The Broker Committee ----- local board C. Texas Real Estate Licensing Act ----- TAR D. The Multiple Listing Service ----- State Association of Commercial Brokers

A. Texas State Bar Association ----- Texas Association of REALTORS® (In the late 60's and early 70's these two associations agreed to several earnest money contracts that would be acceptable for use by real estate practitioners. This was to avoid those in the real estate business from practicing law without a license.)

What is the status of a contract if the seller does not make the buyer aware of a property being located within a municipal utility district? A. The contract is voidable by the buyer. B. The contract is void. C. The contract is voidable by the seller. D. The contract is voidable by the buyer or the seller.

A. The contract is voidable by the buyer. (The Seller is obligated to inform the buyer that the subject property is located within a MUD (municipal utility district). MUDs have the power to impose taxes plus create certain restrictions or obligations for properties within their boundaries. The buyer must be informed of such.)

If the Buyer does not give notice to the Seller that he/she cannot obtain credit approval within the number of days stated in the contract: A. The contract will no longer be subject to the buyer's credit approval. B. The contract will automatically terminate. C. The property is no longer subject to property approval by the lender. D. The time limit automatically extends 5 days.

A. The contract will no longer be subject to the buyer's credit approval. (Buyer must give notice to Seller that they cannot obtain the loan they are seeking within the number of days stated in the contract. If they don't, then the contract is no longer subject to credit approval.)

A title commitment spells out: A. The terms and conditions on which the title insurance underwriter will issue the title insurance B. The name of the underwriter C. The option paragraph D. Both A and C

A. The terms and conditions on which the title insurance underwriter will issue the title insurance (The commitment just says that if all these conditions and terms are met, then we will agree to insure the title against any defects in the title.)

The option period allows buyers ____________. A. The unrestricted right to terminate the contract within a certain time period. B. The right to terminate under certain conditions spelled out in Paragraph 23. C. 10 days to provide the seller a list of all repairs requested by the buyer. D. 15 days from the date of the end of the option period to close the transaction.

A. The unrestricted right to terminate the contract within a certain time period. (When there is a fee paid for a specific time period for the option, the buyer can terminate for any reason. All other rights of the buyer to terminate depend on something that has been done, or not done, according to the terms of the contract.)

The "Closing Disclosure" form replaces the ___________ and the __________. A. Truth-in-Lending Act and the HUD-1 Settlement Statement B. Real Estate Settlement Procedures Act and the loan application C. loan application and the HUD-1 D. The appraisal and the credit report

A. Truth-in-Lending Act and the HUD-1 Settlement Statement (The Closing Disclosure form replaces two forms previously used by the lender and the title company - truth-in-lending and the HUD-1 settlement form.)

The TREC One-to-Four Family Residential Contract (Resale) states that if the license holder is a party to the transaction and owns more than _____ of the property, the other party must be notified in writing before entering into a contract. A. 50% B. 10% C. There are no guidelines for disclosure in the One-to-Four Family Contract. D. The licensee cannot be a party to a contract.

B. 10% (If a license holder owns more than 10% of the property in the transaction, the other party must be notified in writing of that ownership prior to entering into a contract.)

Chapter 531 Canons of Professional Ethics and Conduct includes: A. Fidelity B. Integrity C. Competency D. All of the above

D. All of the above (Fidelity, Integrity and Competency are all a part of Canons of Professional Ethics.)

The Third-Party Financing Addendum allows the buyer: A. To finance his/her closing costs B. A certain number of days to obtain loan approval C. The right to terminate the contract at any time prior to closing D. To have automated underwriting for the loan

B. A certain number of days to obtain loan approval (The Third-Party Financing addendum allows a certain number of days to obtain loan approval. If that deadline is passed, then the contract is no longer subject to the buyer obtaining financing.)

Standard forms of TREC must be used unless: A. A broker or salesperson wishes to use a different form. B. A principal in the transaction requests a different form to be used. C. The listing broker disagrees with certain language in the contract. D. A lender requires a different form to be used.

B. A principal in the transaction requests a different form to be used. (Standard TREC forms must be used in real estate transactions. However, a principal in the transaction can request a different form be used. A principal is considered to be either Buyer, Seller, Landlord, or Tenant. Builders (as Sellers) typically use their own contract forms.)

Your buyers have signed a contract to buy a new home. The contract is subject to the sale of their present home. This is called a: A. Chattel B. Contingency C. Cooperation D. Coinsurance

B. Contingency (A Subject to Sale of Other Property addendum creates a contingent contract - in other words the contract cannot move forward until the contingency requiring the buyer to receive funds from a house they are selling is removed.)

The special warranty deed guarantees no liens or encumbrances against the property: A. From the sovereignty of the land B. During the seller's ownership C. From the Spanish land grants D. Forever

B. During the seller's ownership (A special warranty deed only guarantees that during their ownership there have been no liens or other encumbrances placed on the property.)

A license holder who gives advice or opinion as to the legal effect of a contract or gives opinions concerning the status or validity of title to real estate: A. Is allowed to do this if they are a broker B. Is practicing law C. May give legal opinions to a client but not to a customer D. May give legal opinions if they have been a broker for four years

B. Is practicing law (You cannot give legal advice — period. If you do give legal advice to a buyer or seller, you could have your license suspended or revoked.)

Earnest money: A. Constitutes the consideration B. Is used to make the offer more enticing to the seller C. Is required in the contract D. Always equals 1% of the sales price

B. Is used to make the offer more enticing to the seller (Earnest money is a gesture of good faith and is used to make the offer more enticing to the seller. It can be any amount that the Buyer wishes to offer, and the Seller is willing to accept.)

On the Seller's default, what should happen to the earnest money? A. It belongs to the Broker. B. It should be returned to the Buyer. C. The Seller should retain it. D. The title company should keep it.

B. It should be returned to the Buyer. (If a Seller defaults on the contract, the earnest money should be returned to the Buyer. The buyer also has the right to sue for specific performance or for compensatory damages.)

If a bonus is offered by an owner or owner's agent, the Buyer's broker: A. Must always share the bonus with the buyer B. May retain the additional compensation C. Does not need to disclosure to the buyer that there is a bonus offered D. Must, by law, refuse the additional compensation

B. May retain the additional compensation (Since commissions are paid to the Broker, the Broker may retain any bonus that may be offered by the owner or owner's agent. Or they may split with their agent according to the written agreement between Broker and Agent.)

What is the number one reason for lawsuits with contracts? A. Misrepresentation B. Non-disclosure C. Property condition issues D. Title problems

B. Non-disclosure (The largest number of lawsuits regarding contracts concerns non-disclosure, whether of something in the property or failing to disclose which party or parties an agent/broker represents.)

If a Buyer wants the Seller to pay some or all their closing costs, it should be added to the One to Four Family Residential Contract (Resale) in: A. Paragraph #11 (Special Provisions) B. Paragraph #12 (Seller Participation in Buyer's Costs) C. Third-Party Financing Addendum D. All the above

B. Paragraph #12 (Seller Participation in Buyer's Costs) (Paragraph 12A.(1)(b) allows a seller to pay a portion of the buyers' closing costs.)

If either party withdraws their offer before it is accepted by the other party, it is called: A. Rejection B. Rescission C. Reflection D. A withdrawal symptom

B. Rescission (If either party withdraws their offer or counteroffer before it is accepted by the other party, it is known as recession.)

Which of the following is NOT promulgated by TREC? A. Unimproved Property Contract B. Residential Lease Contract C. Farm and Ranch Contract D. New Home Contract (Complete Construction)

B. Residential Lease Contract (The residential lease contract is not promulgated by TREC. That means the tenant and landlord can use any form they choose to agree to the terms of the lease. A Residential Lease Contract is available through Texas Association of REALTORS® and also many Boards of REALTORS®. Also, a real estate attorney can draw up a lease agreement between Landlord and Tenant.)

What type of deed is used in a foreclosure sale? A. General warranty deed B. Special warranty deed C. Quitclaim deed D. Deed of trust

B. Special warranty deed (When a buyer purchases a bank or HUD foreclosure, the buyer is typically furnished a special warranty deed instead of a general warranty deed.)

If there is an existing survey on the property, what does the seller take to the title company and the lender? A. The existing survey B. The existing survey and a notarized affidavit stating if there have been any changes in the survey since the time the existing survey was completed C. A copy of the deed and the existing survey D. The seller's appraisal and a copy of the survey

B. The existing survey and a notarized affidavit stating if there have been any changes in the survey since the time the existing survey was completed (Both the lender and the title company, as well as the buyer, need to know if there have been any changes since the provided survey was done (date on the survey). Any change to the surveyed property may affect the loan and also the title and may delay or prevent the closing.)

Any changes to the original contract once it is finalized and receipted must be done: A. At the title company on the original contract B. Using the Amendment C. On the Third-Party Financing Addendum D. On a real estate change form

B. Using the Amendment (Once a contract has been signed and agreed to by all parties, and receipted by the escrow agent, any and all changes must be done using an Amendment. The original contract stays with the escrow agent.)

Paragraph 6 of the Seller's Temporary Residential Lease gives information about: A. Term of the lease B. Utilities C. Pets D. Deposit

B. Utilities (Paragraph 6 of the Seller's Temporary Residential Lease (where the Seller remains in the property after closing) deals with who pays for the utilities)

If there is no time limit specified in a contract, then the time limit would be: A. Determined to be "time is of the essence" B. Within a reasonable time C. Determined by the lender D. Three weeks

B. Within a reasonable time (If a time limit is not specified in the contract, then the task must be performed within a 'reasonable time.')

Within ____ days after the title company receives a copy of the contract, Seller shall furnish to Buyer a Commitment for title insurance. A. 10 B. 5 C. 20 D. 30

C. 20 (On behalf of the Seller, the escrow office will issue a title commitment within 20 days after receiving a copy of the finalized contract. The title commitment contains information about the property's title, plus will list any issues that must be cleared before they can provide a title policy insuring a clear title for the purchaser.)

In Texas: A. Dual agency is legal. B. An agent may represent both buyer and seller without any agreement from either. C. A Broker may represent both buyer and seller under signed intermediary agreements. D. A Broker may not, under any circumstance, represent both Buyer and Seller.

C. A Broker may represent both buyer and seller under signed intermediary agreements. (There is no dual agency in the State of Texas. However, it is possible for a Broker to represent both the buyer and seller under intermediary. Agreement from the parties needs to be in writing for Intermediary to be allowed.)

If a seller wants to remain in the property after closing: A. It can be agreed verbally between the buyer and the seller. B. A lease agreement sold by an office supply company can be used. C. A TREC promulgated temporary residential lease agreement should be used. D. There does not need to be an agreement. The Seller can just stay in the home if they wish.

C. A TREC promulgated temporary residential lease agreement should be used. (If a Seller wants to remain in the property after closing or a buyer wants to move in prior to closing, the TREC promulgated temporary lease should be used. It is designed to create a legal relationship (Landlord/Tenant) between the buyer and seller and outlines the terms and conditions under the lease.)

If a buyer makes an offer on a property and the seller counters the offer (makes changes), the counter is considered to be: A. A reflection B. A rescission C. A rejection D. A resentment

C. A rejection (A counter offer is a rejection of the buyer's offer. If the seller counters, the buyer has no obligation to proceed with the contract.)

In a real estate transaction, the legal description is NOT: A. Lot and block B. Metes and bounds C. A street address D. A description of the property from a surveyor's field notes

C. A street address (The legal descriptions in Texas are: Lot and block, and metes and bounds (sometimes also called surveyor's field notes). A street address is NOT a legal description.)

All are protected classes under the Texas Fair Housing Act EXCEPT: A. Religion B. Sex C. Age D. National origin

C. Age (Age is not one of the protected classes under the Texas Fair Housing Act.)

If you understand all the facts, you can: A. Give legal advice to a client B. Interpret a survey for the client showing setback and building lines and utility easements C. Explain the real estate terms in a title policy D. Advise the client they have the right to receive a title policy or abstract of title

D. Advise the client they have the right to receive a title policy or abstract of title (This is something that is pre-printed on the TREC residential contracts; however, the agent needs to be aware that it is their responsibility to tell the buyer.)

An agent must provide Information About Brokerage Services: A. Even if the prospect is already under contract on the property. B. Unless the prospect will be leasing a property for less than a year C. At the time of the first substantive dialogue about a specific real property D. At the first face-to-face meeting

C. At the time of the first substantive dialogue about a specific real property (An agent must provide the Information About Brokerage Services (IABS) when a member of the public wants information about a specific real property. The best and safest way to provide this information is to use the form provided (but not required) by TREC.)

Fraud is: A. A crime B. A civil law violation C. Both A and B D. Only B

C. Both A and B (Fraud can be prosecuted as a crime. Fraud charges also can go through the courts as civil law violations.)

If a property has a "Sale of Other Property" contingency contract on it, Seller: A. Cannot accept another offer B. Must take the property off the market C. Can ask the original buyer to remove the contingency if the Seller has accepted another offer as a back-up D. None of the above

C. Can ask the original buyer to remove the contingency if the Seller has accepted another offer as a back-up (The Sale of Other Property addendum allows the Seller to seek other offers, and if the Seller accepts one of the offers and signs it as a back-up, the Seller can ask the first buyer to either remove the contingency or to terminate their contract.)

Transfer of personal property in a real estate transaction: A. Is not allowed B. Should be agreed between buyer and seller outside of the sale C. Can be done on the Non-Realty Items Addendum D. Can only be done if the personal property matches something in the real property

C. Can be done on the Non-Realty Items Addendum (Any personal property that the Seller agrees to leave with the property can be handled by listing it on the Non-Realty Items Addendum.)

Use of the TREC promulgated One to Four Family Residential Contract (Resale): A. Is allowed on the sale of a residential condominium B. Can be used for a vacant residential lot C. Covers single family, duplex, triplex, and four-plex transactions D. All the above

C. Covers single family, duplex, triplex, and four-plex transactions (The TREC One to Four Family Residential Contract (Resale) covers single family, duplex, triplex, and fourplex transactions.)

Broker's fees are: A. Included in the One to Four Family Residential Contract (Resale) between the Buyer and the Seller B. Determined by writing in the Information About Brokerage Services C. Determined by writing in the Listing Agreement D. Both B and C

C. Determined by writing in the Listing Agreement (Broker fees are agreed in the listing agreement between the Seller and the Broker. The Broker has the ability to share those fees with an agent from an outside company who works with a buyer.)

If a property was built before 1978, what specific addendum is required? A. Walk Through and Acceptance Addendum B. Addendum for asbestos inspection C. Disclosure of Lead-Based Paint Addendum D. Addendum for Inspection with Right to Terminate

C. Disclosure of Lead-Based Paint Addendum (Properties built before 1978 may contain lead-based paint, so the appropriate addendum is required.)

If the property is subject to any lease to which the seller is a party, the seller will deliver the lease to the buyer within 7 days after the: A. Purchasers submit the offer to the seller. B. Buyers have gone to loan application and have pending approval for their loan. C. Effective date of the contract D. Survey is complete.

C. Effective date of the contract (The seller must provide to the buyer any lease on the property, if applicable, within 7 days of the effective date of the contract.)

In Paragraph 3B of the sales contract, the 'sum of all financing:" A. Includes the earnest money deposited at the time the contract is executed B. Includes the closing costs C. Excludes any loan funding fee or mortgage insurance premium D. All the above

C. Excludes any loan funding fee or mortgage insurance premium (The sum of all financing applies to the amount of the loan. It does not include any closing costs. The FHA mortgage insurance and the VA funding fee are part of the closing costs and can be financed, but these are handled separately by the loan company.)

In Paragraph 2 of the standard residential contract form, which of the following would NOT be included in the sale unless otherwise provided for? A. Ceiling fan B. Chandelier C. Flat screen TV D. Window shades

C. Flat screen TV (A flat screen TV is considered personal property and would not convey with the sale unless otherwise agreed in writing.)

TREC is a nine-member commission. Six are brokers and three are not licensed by the commission. The three unlicensed members must: A. Have experience in the real estate market B. Have a degree in real estate C. Have no financial interest in real estate, except as consumers D. All of the above

C. Have no financial interest in real estate, except as consumers (Of the nine-member TREC commission, the three unlicensed members must not have a financial interest in real estate except as a consumer.)

Once a contract is finalized and receipted: A. It cannot be changed. B. It can be amended only one time. C. It can be amended multiple times if all parties agree. D. It can only be amended by the buyer.

C. It can be amended multiple times if all parties agree. (There is no limit to the number of amendments that can be used in a transaction. A party can amend a previous amendment as well as the contract.)

Under Property Condition (Paragraph 7 in the One to Four Family Residential Contract), if a buyer checks item 7D (1) accepting the property "As Is:" A. The buyer cannot negotiate for repairs. B. The buyer has opted not to have the property inspected. C. It does not preclude any rights of the Buyer including the right to amend the contract. D. The buyer does not need to ask for a "Seller Disclosure."

C. It does not preclude any rights of the Buyer including the right to amend the contract. (Accepting the property "as is" does not preclude the Buyer from having the property inspected and amending the contract at a later time.)

The agent is not practicing law if the agent: A. Uses a form adopted by the Commission. B. Uses a form prepared by an attorney licensed in Texas. C. Uses a form prepared by the property owner. D. All of the above

D. All of the above (An agent is not practicing law if the agent uses a form adopted by the Commission, a form prepared by an attorney, or a form prepared by the property owner.)

Failure on the part of the broker to advise the purchaser in writing to have an abstract examined by an attorney or obtain a title policy: A. Is in no way a violation of the Texas Real Estate License Act B. Is the normal practice in Texas C. May be cause for an agent to have their license suspended or revoked, and precludes the receipt of any commissions paid at the sale D. Is the correct action as this is clearly a legal matter

C. May be cause for an agent to have their license suspended or revoked, and precludes the receipt of any commissions paid at the sale (Even though this is pre-printed in the TREC Residential contracts, an agent should be aware that it is their responsibility to tell the buyer that they have a right to a title policy or an abstract of title showing the status of the title on the property.)

Failure on the part of the broker/sales associate to advise the purchaser in writing to have an abstract of title examined by an attorney or obtain a title insurance policy: A. Is not a violation of the Texas Real Estate License Act B. Is the normal practice in Texas C. May be cause to have the agent's license suspended or revoked, and precludes receiving any commissions or agreed fees associated with the sale D. Is the correct action as this is clearly a legal matter

C. May be cause to have the agent's license suspended or revoked, and precludes receiving any commissions or agreed fees associated with the sale (Broker/Agent must inform the buyer that they have the right to a title policy or an abstract of title. Failure to do so has consequences.)

The right to terminate per Paragraph 23: A,. Is available to the seller as well as the buyer B. Does not expire until the contract is closed C. Requires a fee for a specified time D. Is not available in the Condominium contract

C. Requires a fee for a specified time (In order for the buyer to have the right to terminate under Paragraph 23, both blanks must be filled out - dollar amount and number of days.)

All the following are covered by home warranty's basic coverage EXCEPT: A. Exhaust fans B. Heating and electrical system components C. Roof D. Sump pump

C. Roof (A Home Warranty covers the systems (HVAC, water heater, electric, plumbing, etc.) but not the structure.)

If there are unusual circumstances surrounding a transaction, the client should: A. Not close on the property B. Ask the owner to finance the property C. Seek the advice of an attorney D. Make his agent responsible for removing any problems

C. Seek the advice of an attorney (An agent should suggest to their client to consult an attorney if there are any unusual circumstances in a transaction. The agent cannot give legal advice.)

A Buyer/Tenant Representation Agreement is: A. Only available through the Texas Real Estate Commission (TREC) B. Only available through the Texas Association of REALTORS® (TAR) C. Sometimes available through local REALTOR® Boards D. Available to the public on the TREC website

C. Sometimes available through local REALTOR® Boards (The Texas Real Estate Commission does not have a promulgated form for Buyer/Tenant Representation Agreement. Those are available from TAR or also can be available through the agent's local REALTOR® board.)

Who is designated as responsible for promptly sending a copy of the contract to any attorneys who are named in the contract? A. The title company B. The lender C. The broker D. The buyer

C. The broker (It is the Broker's responsibility to send a copy of the contract to any attorneys named in the contract so that the attorney can accept or decline the job of reviewing the contract.)

Even though a buyer and/or seller agree to mediate: A. They cannot do so within the promulgated contract. B. They have agreed to mandatory arbitration. C. They are not giving up their right to pursue relief through the courts. D. The party who requested mediation will pay for the cost of the mediator.

C. They are not giving up their right to pursue relief through the courts. (In other words, if seller/buyer cannot come to terms in mediation, they still have the right to sue.)

A suit for specific performance is: A. To force the buyer not to default on the contract B. To force the seller not to default on the contract C. To force either the buyer or the seller to perform on the terms of the contract D. A lawsuit against the inspection company

C. To force either the buyer or the seller to perform on the terms of the contract (Either a buyer or a seller may sue the other party to force performance under the terms of the signed and agreed contract.)

If a contract has a correct street address but an incorrect legal description, the contract is: A. Legal and binding B. Irrevocable C. Voidable D. Irrefutable

C. Voidable (A contract must include the correct legal description which can be lot and block, building and unit, or metes and bounds. A street address is not a legal description.)

Leases for less than ____ days are exempt from security devices statutes. A. 30 B. 60 C. 180 D. 90

D. 90 (TREC promulgated leases where the buyer moves in prior to closing or the seller stays in the property after closing are effective for 90 days. If the rental lasts beyond 90 days, then the lease must be converted to another type of lease.)

Closing costs could include: A. Origination Fee. B. Loan Application Fee. C. Discount Points. D. All of the above

D. All of the above (Closing costs can include an origination, loan application, discount points as well as other lender fees and title company charges.)

The sales price in Paragraph 3: A. Is determined by adding the down payment (3A) and the loan amount (3B) B. Does not include closing costs C. Can be all cash D. All the above

D. All of the above (The sales price is the cash down payment plus the loan amount (which does not include any closing costs). 3A (down payment) + 3B (loan amount, if any) = 3C (sales price). If the offer is all cash, then 3B will be zero because there will be no loan involved.)

A Municipal Utility District (MUD): A. Has the authority to impose taxes B. Is a political subdivision of the State of Texas C. Provides water, sewage, drainage, and other services D. All the above

D. All the above (A Municipal Utility District (MUD) has taxing authority, plus provides water, sewage, and other services to properties in its jurisdiction.)

A residential survey includes: A. An official and permanent official record of land placement, property lines, easements, and boundaries B. Protects against property line disputes C. Provides a point of reference in determining land value D. All the above

D. All the above (A survey is different from a plat. A plat only shows the property lines. A survey places buildings, if any, on the land. It will also show building lines, easements, fences, and contains other information pertinent to the land.)

The Information About Brokerage Services (IABS) states the broker may represent: A. The owner B. The buyer C. Both owner and buyer as intermediary D. All the above

D. All the above (In a transaction the IBS (Information About Brokerage Services) states that a Broker may represent the Owner, the Buyer, and both the owner and buyer in an Intermediary position.)

Intermediary requires: A. Disclosure of who represents whom in a transaction B. Written agreement by both seller and buyer C. Involvement of only one company D. All the above

D. All the above (Intermediary requires involvement of only one company with written agreement from all parties, and a disclosure of who represents whom in the transaction. Buyer and Seller in a sales transaction; Landlord and Tenant in a lease transaction.)

Items that must be completed in Paragraph 23 are: A. The dollar amount of the options money B. The number of days for the option C. What happens to the option money at closing D. All the above

D. All the above (Paragraph 23 covers the buyer's option. In order for the option to be valid, both blanks in the paragraph must be filled out (requires a fee for a specified period of time) or the buyer will not have an option to terminate during that period. There is also a check box to specify if the option fee will be credited to the buyer at closing, or not be credited.)

A TREC promulgated Farm and Ranch Contract can include: A. Buildings B. Crops C. Equipment D. All the above

D. All the above (The Farm and Ranch contract can include a house, other buildings, farm equipment, and crops, if applicable.)

Addendum for Lead-Based Paint Disclosure requires: A. That any home built prior to 1978 needs a disclosure B. Owner to check either knowledge of lead-based paint in the home or that he has no knowledge of the existence of lead-based paint C. Buyer to acknowledge receipt of Protect Your Family from Lead in Your Home pamphlet D. All the above

D. All the above (The addendum for Lead-Based paint is required for homes built prior to 1978, and discloses presence of lead, if any, any reports, if any, regarding this, and also the Buyer needs to acknowledge that they have received this information, plus receipt of the Protect Your Family from Lead in the Home pamphlet.)

By law, a Seller must disclose anything they know about the property. To do this, they must use: A. A TREC promulgated disclosure form B. A form provided by the local REALTOR® Board C. The Seller Disclosure form from the Texas Association of REALTORS® or The Texas Real Estate Commission D. Any form they choose

D. Any form they choose (By law, a seller must disclose anything they know about the property. They do not have to use any particular form to do so.)

In the event of buyer's default, the seller may: A. Terminate the contract B. Receive the earnest money as liquidated damages C. Enforce specific performance D. Any of the above

D. Any of the above (If Buyer defaults on the contract, the Seller has the right to terminate and receive the earnest money, or sue for specific performance, or sue for compensatory damages.)

In Paragraph #14 of the Residential Contract (Casualty Loss), if a seller cannot complete the repairs within the time limit, the buyer has the option of: A. Terminating the contract B. Extending the closing C. Accepting the property in the damaged condition with an assignment of insurance proceeds D. Any of the above

D. Any of the above (If required repairs are not completed before closing, then the Buyer has the right to terminate, extend the closing, accept the condition of the property without the repairs, accept any insurance proceeds if damage was insurable, or be able to come to an agreement for the repairs to be done after closing.)

A broker may not disclose any confidential information unless: A. The broker is given permission in writing by the client. B. It is required by law. C. Confidentially is not required in real estate. D. Both A and B

D. Both A and B (Confidential information received from a client to their agent may not be disclosed unless the agent has been given written permission to disclose, or if the disclosure is required by law.)

In the sales contract, under Broker Information, the "Other Broker firm" is given a choice of who they represent. What are the choices? A. Buyer only as Buyer's Agent B. Seller and Buyer as an intermediary C. Seller as Listing Broker's subagent D. Both A and C

D. Both A and C (On page 9 of the sales contract, the "other broker" (not the listing broker) is checked that either the agent is representing the buyer as the buyer's agent or representing the seller as the listing broker's subagent.)

In the Buyer's Temporary Lease, who pays the utilities? A. Seller because it is still their home. B. The listing agent C. Buyer and seller will prorate at closing. D. Buyer

D. Buyer (TREC promulgated Buyer's Temporary Lease prior to closing requires the buyer-occupant to pay for the utilities.)

Required attachments in a Resale Certificate are all of these EXCEPT: A. Rules of the Association B. Current Operating Budget C. Certificate of Insurance for the common areas and facilities D. Names of all the existing members of the Association

D. Names of all the existing members of the Association (A Resale Certificate outlines the current health of the Association (budget, insurance, reserve funds, and other pertinent information) and should also include copies of the rules and regulations of the Association.)

Which contract cannot be used for new construction? A. TREC promulgated contract for New Home (Incomplete Construction) B. TREC promulgated contract for New Home (Completed Construction) C. Builder's contracts D. Residential Condominium Contract (Resale)

D. Residential Condominium Contract (Resale) (The TREC Residential Condominium Contract is used for resale only but not new condo construction. The Texas Association of REALTORS® has a Condominium (New Construction) contract that may be used, or, in many cases, the builder furnishes the contract for newly constructed condos.)

The updated Information About Brokerage Services must list the following license holder contact information EXCEPT: A. Licensed broker's firm name B. Designated broker of firm C. Sales associate's name and license number D. Sales associate's or broker's website

D. Sales associate's or broker's website (On the updated IABS (Information About Brokerage Services) there are places to list the contact information (phone number, email, license number but NOT a web site) for the Broker's Firm Name, Designated Broker, Licensed Supervisor, and the Agent.)

The Texas Real Estate Commission (TREC) promulgates an addendum to be used in a short sale. This Short Sale Addendum is to be signed by: A. The listing agent B. The buyers' agent C. The lien holder D. The buyer and seller

D. The buyer and seller (Even though a short sale requires the loan company's agreement, they do not sign the actual purchase contract. The contract and the Short Sale Addendum are signed by the Buyer and the Seller.)

According to the TREC 1-4 Residential Contract (Resale), who is responsible for paying the owner policy of title insurance fee? A. The buyer B. The seller C. The title company named in the contract. D. The party stipulated in the contract.

D. The party stipulated in the contract. (The party stipulated means the party that is named in the contract to complete the item required by the contract. In this case, it is the party who will pay for the owners' title policy.)

The Seller contracts to furnish the buyer an existing survey, but neglects to furnish an "affidavit" within the time specified. The lender requests a new survey be furnished. Who pays for the new survey? A. If the existing survey is rejected, then whoever is stated in the contract pays. B. The title company can approve the existing survey and override the lender. C. The buyer D. The seller

D. The seller (When the Seller is furnishing the existing survey, the survey must be accompanied by the Real Property Affidavit which is signed in front of a notary. The affidavit states that since the survey was performed (date on survey) there have been no changes. Any changes will be noted by the seller on the affidavit. If the Seller fails to provide the affidavit, then the Seller will pay for a new survey.)