TEXAS EXAM 01-03

Payments from the Real Estate Recovery Fund are limited to what aggregate amount for claims arising from a single transaction?

$50,000

What is the maximum payment the Recovery Trust Account can pay to an individual?

$50,000 for a single transaction, or $100,000 for multiple claims against 1 licensee.

Which of the following statements is TRUE of an exclusive-right-to-sell listing agreement?

It must specify a definite termination date not subject to prior notice. The only requirement of an exclusive-right-to-sell listing agreement is that it must specify a definite termination date not subject to prior notice by either party.

For which of the following conditions does a standard form promulgated by the Texas Real Estate Commission NOT exist?

When a large lot is intended as a future site for a multi-family (5 or more) residence complex. The Texas Administrative Code presents the variety of standard contract forms promulgated by TREC. These include; a standard form promulgated for use as an addendum to be attached to promulgated forms of contracts where there is a Veterans Administration release of liability or restoration entitlement; a standard form promulgated for use in the sale of a new home where construction is incomplete; a standard form promulgated for use in the sale of a new home where construction is completed. No form has been developed for the sale of unimproved property where intended use is for a multi-family (5 or more) residence.

When is it mandatory for the seller to provide a copy of the "Seller's Disclosure of Property Condition"?

When the buyer has occupied the dwelling as a tenant. There are several exceptions to providing the disclosure including spouse to relative, a trustee or pursuant to a court order or foreclosure sale.

A buyer's agent MUST disclose which of the following facts to a prospective buyer?

Where to obtain copies of Covenants, conditions, and restrictions Before the close of a sale a real estate agent must inform the prospective buyer to obtain copies of any covenants, conditions and restrictions (CC&Rs) on use of property that bind everyone who owns land in the development. CC&Rs are usually enforced by a Homeowner's Association.

Once a salesperson has received her real estate license, she must complete 90 hours of SAE education within how much time?

Within 2 years of licensure

When must earnest money funds be delivered to the escrow agent?

Within 3 days after the execution of a real estate contract.

Tony is a Texas licensee who also holds a Oklahoma license. Can he use his Oklahoma CE hours towards renewing his Texas license?

Yes, Texas licensees who hold a license in another state MAY have those courses evaluated for CE elective credit. Texas licensees who hold a license in another state and have completed continuing education to renew the out of state license may have those courses evaluated for CE elective credit. An CE Credit Request for an Out of State Course form and the course completion certificate, should be submitted to request such credit.

A licensed Texas real estate salesperson in Fort Worth is browsing real estate websites when she views an ad placed by licensed real estate salesperson in Dallas that promises a bonus cash payment for client referrals. Can the Fort Worth agent receive cash payments for any referrals she makes to the Dallas agent?

Yes, as long as the referral be is paid directly to the broker, because it is a business referral between 2 real estate licensees. Since the Fort Worth agent is a licensee, she can accept a commission from the Dallas agent for any referrals; the amount of the commission is determined by the Dallas agent and the Fort Worth agent's sponsoring broker must consent to the commission. If an unlicensed individual receives a cash payment or a tangible gift valued at more than $50 as compensation for referring clients, both the individual and the agent providing compensation are in violation of the Texas Real Estate License Act.

A tenant moved out of his apartment without paying the last month's rent on a 1-year lease. What action may the landlord take?

Take the tenant to court to collect the rent owed.

What is the maximum time a creditor has to enforce a judgment?

10 years

The Salesperson Apprentice Education (SAE) Requirements stipulate all salespersons have completed a total of _____ classroom hours of education, by the end of their second year of licensure.

270 classroom hours The Salesperson Apprentice Education (SAE) Requirements stipulate all salespersons have completed a total of 270 classroom hours of education, by the end of their second year of licensure.

How much notice must a landlord give a delinquent tenant, in writing, before filing an action to evict?

3 days

Jake rents his above-garage studio apartment to a college student on a month-to-month basis. When Jake decides to terminate the rental agreement and convert the apartment into a private studio for his artwork, how much notice is he required to give his tenant?

30 days

All trust fund records must be kept for at least ____ years from the date of transaction.

4 years

For how long does the TREC require real estate companies to keep records of completed real estate transactions?

4 years

What is the statute of limitations for investigation of a licensed person in connection with a Texas real estate complaint?

4 years

What is the time limit on filing a fair housing complaint with the Texas Commission on Human Rights?

6 months

The Texas Real Estate Commission is composed of ____ members.

9 members The Texas Real Estate Commission is composed of 9 members. 6 members must be licensed real estate brokers who have been engaged in the real estate for at least 5 years preceding their appointments. 3 members must be members of the general public who are not employed in real estate.

The term "holographic" refers to which of the following types of wills?

A handwritten will

The Texas Real Estate Commission provides an online system for license application and renewals. Which of the following IS required for an electronically submitted license application?

A signature submitted to the commission before the license can be issued. Candidates submitting licensure applications via the website MUST: supply all the required information for the online version of the application form; pay the required fee for an evaluation of the candidate's educational record; supply the commission with their signature to authenticate their application. A photo or birth certificate is NOT required.

A real estate licensee works as a residential rental locator for a property management company. In preparing advertisements of available properties, which of the following guidelines does he NOT have to follow?

Advertisements placed in a publication that receives an advance/contingent fee must include a disclaimer to that end. The Act stipulates that any person who contracts to advertise real estate in exchange for a contingent fee must be licensed as a salesperson or broker. The guidelines a residential locator must follow include: using clear language (visible to motorists and passersby) to identify the advertiser as a real estate broker or agent; including verbiage when describing general features and amenities of a set of properties in a single ad that addresses the difference in rental prices and amenities of the differing units. It is the duty of the rental locator to be certain that a unit meeting the general descriptions is available either for the period of time stated in the advertisement or within at least 30 days of the advertisement's submission.

A married man separately owns an apartment building. Which of the following is TRUE?

All earnings from community property and separate property (if commingled) are presumed to be community property. In Texas, couples can legally partition property and arrange for certain income to be separate, but given that Texas is a community property state, income from community property and separate property (if commingled) is generally (in the absence of legal action) presumed by Texas law to be community property.

Which of the following situations could be considered illegal in Texas and put a licensee's license in jeopardy of suspension or revocation?

An agent signs a listing agreement that allows the listing to continue indefinitely. Since a listing must contain a definite termination date not subject to prior notice, an agent's indefinite listing period puts him in jeopardy of having his real estate license suspended or revoked.

From what source may a Texas real estate salesperson legally collect compensation?

From the salesperson's sponsoring broker Only the salesperson's sponsoring broker may legally disburse compensation.

A licensee has neglected to pay their license renewal fee for 5 weeks after the expiration date. Which of the following is TRUE?

As long as the licensee pays the fee and penalty within 90 days of the expiration date, the license will be renewed and the licensee can continue working. If the fee and penalty is not paid or the MCE hours not completed within 90 days of the expiration date of the license being renewed, the license will be placed on inactive status during which time a licensee must cease doing business.

To be eligible to apply for a Texas real estate broker license, an individual must prove they have completed which of the following?

At least 4 years active experience as a licensed real estate salesperson during the previous 60 months before filing of the application.

By what date must the current year's real estate taxes be paid in order to avoid a penalty and interest on the taxes?

By January 31st of the next year To avoid having to pay a penalty and interest on taxes, property owners must remit the current year's real estate taxes in full by January 31st of the next year.

It is the responsibility of a broker to let clients know that a real estate recovery trust account exists to pay damages to aggrieved persons. Which of the following ways is NOT an acceptable method to communicate to clients the availability of this trust account?

By directing them to the web site of the Texas Real Estate Commission. A broker has the responsibility to let clients know that a real estate recoverey trust account exists to pay damages to aggrieved persons. This information can be communicated through: a written contract for the license or certificate holder's services; on a brochure that the license or certificate holder distributes; on a prominent sign in the broker's place of business; on a bill or receipt for professional services; in a prominent display on the website of a regulated person. The notice must include the commission's name, mailing address, and telephone number. Directing clients to the TREC website is not sufficient notification.

Which of the following is a qualification for obtaining a prescriptive easement in Texas?

Continuous, open, and notorious use of land for a minimum period of 10 years To establish an easement by prescription in Texas, an individual must prove continuous, open, and notorious use of the land for a period of 10 years.

A broker receives an earnest money deposit from the buyer for an offer on a house. What must the broker do with the money?

Deposit the money into the brokerage's existing non-interest-bearing escrow account for all such transactions. However, most of the time the money is given to a title company to go in their escrow account Earnest money must be deposited into an account for escrow funds; although the account need not separate one client's funds from another client's funds, in no circumstances may the money be commingled with the broker's personal funds.

The intent of the seller's disclosure notice is to do which of the following?

Disclose any known structural defects. The seller's disclosure notice is a form completed by the seller indicating all known substantive and structural defects and malfunctions of the property. The notice does not constitute any type of warranty. The seller should deliver the notice to the buyer on or before the date the purchase contract is executed. If for some reason, the contract is executed before the seller provides the notice, then the buyer has 7 days to terminate the contract, for any reason, after receiving the notice.

What information, if any, is required to be included in a website advertising a broker's firm?

Each page of the site must have the name of the broker or company.

Quentin has a large yard bordering a creek through which his neighbor frequently passes on the way to do some fishing. Which of the following actions is sufficient to prevent a neighbor from acquiring an easement to cross Quentin's property?

Following Texas statutory procedures. To prevent a neighbor from acquiring an easement to cross his property, Quentin must follow statutory procedures prescribed by Texas. Measures, such as fencing the property, denying the neighbor permission, and erecting a "No Trespassing" sign may be insufficient to prevent an easement.

A broker wishing to renew his license has defaulted on his student loan payments. What, if anything, will be the consequences?

He will not have his license renewed because state law prohibits the renewal if a licensee has defaulted on a student loan guaranteed by Texas Guaranteed Student Loan Corporation (TG) State law prohibits the renewal if a licensee has defaulted on a student loan guaranteed by Texas Guaranteed Student Loan Corporation (TG)

Connie is a licensed real estate salesperson working at a small brokerage in Amarillo. Which of the following functions can she perform without an agency agreement in place?

Helping prospective buyers find the right ranch house in Amarillo. A licensee can help a buyer find a house. No advice can be given unless an agency agreement is in place. A CMA would be considered advice.

What, if any, is the restriction on protected acres of rural homestead per family in the state of Texas?

Limited to 200 acres In Texas, a family is limited to owning a maximum of 200 protected acres.

What is the primary method of describing rural property boundaries in Texas?

Metes and bounds

A salesperson has a policy of not charging a fee to prospective renters because she receives a commission from local landlords for each qualified rental. A wealthy renter hires the salesperson to represent him to find a suitable apartment. Can the salesperson inform the landlord that the renter can afford a higher rent?

No, although the landlord pays the salesperson a fee, her loyalty is to the renter since she is representing him.

Is it legal for a broker to assist a buyer in obtaining a loan by giving the prospective lender an inflated value for sales price on a property?

No, because brokers can't be parties to dual contracts. It is unlawful for brokers to, and such an action would put a broker in jeopardy of losing his or her license or being fined by the commission and possible be in violation of federal mortgage fraud laws

A family purchased their two-story brick home 20 years ago and have 10 years left on their mortgage which has an interest rate of 13%. They would like to pay it off now. Will they be subject to a prepayment penalty?

No, because the interest rate is greater than 12%. When the interest rate is greater than 10% a prepayment penalty may NOT be levied.

If an onsite property manager for an apartment complex is responsible for negotiating and signing apartment leases, does the individual need to be licensed to fulfill this function?

No, he or she is exempt from licensing requirements.

Robert's sponsoring broker has asked him to provide an appraisal for one of Odessa Realty's clients. Is Robert authorized to provide an appraisal under the Real Estate License Act?

No, the Texas Occupations Code prohibits anyone that is not a licensed appraiser to complete appraisals.

Which of the following regarding buyer representation agreements is FALSE?

TREC requires such an agreement to be in a certain format For a buyer's representation agreement to be valid and enforceable in Texas it must be in writing and have a termination date not subject to prior notice; this is not a TREC promulaged form. TAR makes this form available to REALTOR members

A sponsoring broker has made the decision to terminate his sponsorship of Rosa. What step must he take?

Notify Rosa in writing and return her license to the Texas Real Estate Commission immediately. When a sponsoring broker decides to terminate his sponsorship of a salesperson, he must immediately return their license to the Texas Real Estate Commission and notify the agent in writing of the termination.

Which of the following must be disclosed to a prospective buyer?

One of the previous occupants died from a fall caused by a rotten plank in the basement stairwell. Although violent deaths may be disclosed with the express permission of the owner, the only requirement is for a broker or salesperson to disclose deaths related to the condition of the property. Disclosure of an AIDS-related death is against fair housing laws.

A licensee found to be in violation of the Act, has been ordered to pay an administrative penalty of $1,000. He now has 30 days to do which of the following?

Pay the penalty, stay the penalty, or contest the decision. Not later than the 30th day after the date the commission's order becomes final, a licensee has to either pay the administrative penalty in full or stay the penalty by paying the amount to the administrator to be placed in escrow or by paying the amount in supersedeas bonds approved by the administrator. If a licensee is financially unable to pay the penalty he can file an affidavit stating so, or to pay the amount in supersedeas bonds. Alternatively he could file a petition for judicial review with a district court contesting either the violation, the penalty, or both.

When should a salesperson or broker present the "Seller's Disclosure of Property Condition" to a buyer?

Prior to preparing a written offer for a buyer The buyer needs this information in order to make an informed offer, so the salesperson must share the "Seller's Disclosure of Property Condition" prior to preparing a written offer on a property, otherwise, the contract may be invalid.

Which of the following does the Texas Real Estate Commission NOT regulate?

Real estate developers The TREC has the authority to regulate all persons and business active in the buying and selling of real estate. Construction of real estate is NOT regulated by the TREC.

A resident of Oklahoma has a premium parcel of undeveloped land that stretches from Oklahoma into Texas. Which of the following is TRUE if he wishes to sell the land?

Since he is not a Texas resident he is not obligated to engage a Texas real estate licensee to sell the property. According to Texas real estate laws, the owner need only engage a Texas real estate licensee if ALL 3 of the following conditions are met: the buyer is a Texas resident, the seller is a Texas resident, and the property is located in whole or in part within the state of Texas. If even 1 of the above criteria is not satisfied, the real estate agent handling the transaction need not possess Texas licensure.

A real estate salesperson wishes to sell her zero-lot home without using a broker. What professional disclosure does the law require in this case?

That she disclose her status as a real estate salesperson in the listing. It would be sufficient for her to list her status as "owner-agent" when offering her home for sale.

A seller has just received a promotion that requires her to relocate to Georgia within 2 months. She would like to have the proceeds from the sale of her house to finance her move. At the suggestion of her real estate salesperson, the house is listed as having an "assumable mortgage." What does this mean?

That the buyers can assume the seller's mortgage on its current terms, as long as the lender approves. An assumable mortgage is an existing mortgage that can be taken over by the buyer on the same terms given to the original borrower. Should the mortgage be foreclosed and the property sold for a lesser amount than that due, the buyer who has assumed and agreed to pay the debt secured by the mortgage is personally liable for the deficiency and the original borrower is exempt from liability. The lender must accept the transfer of liability for payment of the note in order for the original borrower to be released from liability. Also known as simple assumption.

Whose duty is it to prepare promissory notes for a closing statement?

The attorney representing the lender

When a seller has a change of heart AFTER accepting an offer, which of the following applies to the seller's broker?

The broker IS entitled to collect a commission. The seller had accepted the offer, thus the broker had earned a commission. However, the broker may not take his commission from the deposit, which must be returned to the buyer.

A salesperson's license is in its second year and is due for renewal on the 31st day of the month. The salesperson pays the appropriate renewal fee but has only completed 265 hours of the 270 hour MCE courses and they complete the remaining 5 hours on the 1st of the following month. Which is TRUE?

The licensee will be subject to a $200 deferral fee. If the renewal fee is paid and a license is renewed in an active status, the required MCE hours MUST be completed during the term of the license. If not the licensee will be subject to a $200 deferral fee.

How long does each member of the TREC serve for?

The members are appointed for 6 year terms, with the terms of 3 members expiring every 2 years.

How are the members of the TREC appointed?

The members of the Texas Real Estate Commission are appointed by the Governor with the concurrence of the Senate.

The Texas Real Estate Commission retains which of the following powers?

The power to probate, suspend, or revoke a license or reprimand or place on probation a licensee for a violation of the Act or a rule of the Commission. The Commission has the power to conduct hearings and render final decisions in contested cases, including probating, suspending or revoking a license for violations of the Act or a rule of the Commission. The Commission does not mediate disputes regarding sales commissions or to recommend individual licensees to the public. Licensure examinations are conducted by an independent testing firm.

What is required of a seller's agent who shows a property to a prospective buyer?

The seller's salesperson must advise the buyer to enter into a buyer's representation agreement with a qualified licensee.

What information must a real estate salesperson include in any advertisement that specifies a specialty in residential property?

The sponsoring broker's name

Who is responsible for trust fund money and trust fund accounts?

The supervising broker The supervising broker maintains sole responsibility for all trust funds deposited into and withdrawn from the trust account. The supervising broker may elect to have a third party escrow agent handle trust funds, but the supervising broker remains accountable for trust fund activity of his or her designated escrow agent.

How will his estate of the husband and father of 4 adult children from a previous marriage be divided among his current wife and children in the absence of a valid will?

The wife inherits half the estate; the remainder of the estate is divided equally among the children. Half the estate passes to the wife and the other half is divided equally among the 4 children from the previous marriage. If the 4 children were from the present marriage the wife would inherit the entire estate, since Texas is a community property state

What is the legal view of dower and curtesy in Texas?

They are not recognized.

Homestead protection serves what purpose?

To protect a homeowner's equity

Canyon Realty has current agency agreements with both the sellers and a buyer. If the buyer makes an offer on the seller's property would it be legal?

Yes, the situation is permissible if Canyon realty discloses the situation to both parties and receives written permission from both parties to enter into an intermediary relationship

Can a broker place any of his own money into a trust fund account?

Yes, to cover service charges and minimum balance requirements of the account. A broker may maintain his own funds in each trust account to cover service charges, minimum balance requirements or to avoid the account being closed when there are no other funds in the account.

The URLTA legislation states that if a lease does not have a clear expiration date, the lease is

a tenancy from period-to-period.