Texas Promulgated Forms PRACTICE EXAM 1

If the buyer pays the $100,000 sales price and puts 15% down and the seller offers a 10% second loan, what is entered in paragraph 3C of the TREC-promulgated contract?

100,000

1. A property was built prior to 1978. The buyer has it inspected for lead-based paint and finds lead-based paint or lead-based paint hazards are present. The buyer may terminate the contract by giving the seller written notice within how many days after the effective date of the contract?

14 days

In Texas, the statute of limitations for a non-defaulting party to an oral contract to enforce their rights in the event of default is

2 years

Agents must make clear where notices are to be delivered. This is done in One to Four Family Residential Contract (Resale) paragraph

21

How many contract forms are currently promulgated by TREC?

6

According to the Seller Financing Addendum, if a buyer fails to deliver to the seller the buyer's credit documentation the seller may terminate the contract within

7 days after expiration of the time for delivery

Which of the following is NOT addressed by a TREC-promulgated form?

A lease with an option to purchase

Which of the following is an example of a bilateral contract?

A purchase contract

Which of the following is NOT a valid legal description for real property in Texas?

A street address does not constitute an adequate description of the property for contract and conveyance purposes. The Texas Statute of Frauds calls for the agreement to contain a legal description that is of such certainty and accuracy that one can go to and identify it. The two commonly used legal descriptions are reference to a recorded plat (lot, block, section number, and subdivision name); and metes and bounds.

Which of the following addenda contains the phrase "time is of the essence"?

Addendum for Back-Up Contract

1. Which addendum warns buyers that Texas may have the right to take their property?

Addendum for Property Located Seaward of the Gulf Intracoastal Waterway

Where would the seller reserve the mineral rights?

Addendum for Reservation of Oil, Gas and Other Minerals

1. A buyer must object no later than the closing date or within how many days after receiving the commitment, exception documents, and survey?

An agreed-upon number

A short sale must be approved by

The seller's lender

According to the provisions of the sales contract, who will purchase a residential service contract, if so desired?

Buyer

1. Which addendum is commonly used in a transaction involving a 90% fixed-rate loan with PMI?

Third Party Financing Addendum

When parties are held to strict deadlines for performance the contract or addendum includes which of the following phrases?

Time is of the essence

The TREC Addendum for Property Subject to Mandatory Membership in a Property Owners Association provides for which of the following to act on behalf of the parties to obtain the subdivision information?

Title company

The seller agrees to sell the buyer all of the living room furniture. What should the agent do?

Use the Non-Realty Items Addendum.

When a license holder uses a builder's contract or a form prepared by an attorney that is not promulgated by TREC, what is the wisest way to notify the buyer about title insurance or abstracts?

Using the TREC Notice to Prospective Buyer form

If a seller fails to provide the buyer with the seller's disclosure of property condition as required by Section 5.008 of the Texas Property Code, what is the status of the purchase contract?

Voidable at the option of the buyer

Which of the following is NOT an exception to the rules requiring that promulgated forms be used by the license holder?

When the contract form has been prepared by the buyer and the buyer wants the agent to fill in the blanks

Which of the following can the license holders never disclose?

Death due to AIDS

Which of the following disclosures is required when selling a home?

Death due to an accident related to property condition.

Which of the following is a real estate license holder allowed to do?

Explain business details

Which contract is used for a 50-acre tract with a small cottage outside the city?

Farm and Ranch Contract

Purchasing a property and then quickly reselling it at a value that is artificially inflated by false appraisals is

Fraud

All of the following promulgated forms provide that "time is of the essence" EXCEPT

Loan Assumption Addendum.

Issues addressed in the Farm and Ranch Contract do NOT include which of the following?

Mineral rights

What information is needed in paragraph 1 of the One to Four Family Residential Contract (Resale)?

Names of the parties

Which financing addendum will the purchaser use when purchasing a property for cash?

None

Which of the following is acceptable language for a license holder to enter in paragraph 11, Special Provisions, in TREC contract forms?

None

Which form does NOT address rollback taxes?

One To Four Family Residential Contract (Resale)

What is something a real estate license holder should never put in paragraph 11 of the TREC-promulgated contract?

Statements making the contract "time is of the essence"

What is a legal proceeding brought by a party to a contract against another party to compel action called for in the agreement?

Suit for specific performance

1. A buyer wants to buy a new home but must sell her current property first. What TREC form should be included as a part of the contract?

The Addendum for Sale of Other Property by Buyer

1. An agreement to pay the broker's commission is included as the last page in which of the following TREC contracts?

The Farm and Ranch Contract

A seller agrees to sell the buyer the home theater center. What form or paragraph in the contract should the agent use?

The Non-Realty Items Addendum

A seller is selling a fully furnished lake house. The personal property should be addressed using what form or paragraph?

The Non-Realty Items Addendum

Paragraph 7H of the contract indicates that who should review and decide on the company to use as the residential service company?

The buyer

According to the contract, the seller will provide a copy of the restrictive covenants at whose expense?

The buyer's

Who must convey to the principal all known information that would affect the principal's decision to accept or reject offers?

The license holder

If one of the parties defaults and the non-defaulting party accepts the earnest money as damages, that party can

do nothing more; the contract is terminated

The notice about obtaining an abstract or title policy is a required notice from

license holder to buyer.

Earnest money is

not necessary to bind the contract.

According to the One to Four Family Residential Contract (Resale), the title policy cost is the responsibility of the

party that agreed to pay the cost in the contract

The TREC Addendum for Property Subject to Mandatory Membership in a Property Owners Association provides that the seller is to provide information to buyer regarding material changes to the subdivision information

promptly

1. Paragraph 2 of the Residential Condominium Contract different from the One to Four Family Residential Contract in that it addresses

the condominium unit.

When using a power of attorney to transfer title to real property

the document must include the legal description of the subject of the authority.

An offer becomes a binding contract when

the last party has signed and the other party has been notified

Financing approval occurs when

the lender determines that the buyer's assets, income, and credit are satisfactory.

1. When the existing survey is NOT acceptable to either the lender or the title company, the buyer may obtain a new survey no later than how many days prior to the closing date?

three

Under the Addendum for Sale of Other Property by Buyer, if the seller accepts a back-up offer the

The answer is first buyer may waive the contingency before the agreed upon date.

If clients want the broker to write a statement that defines a legal remedy, the

broker should advise them to consult an attorney. When the parties need to add a factual statement or business detail to their agreement, they may use paragraph 11. When the parties want to define legal rights and remedies, they should seek competent legal advice. When the parties ask their agents to write language that defines legal rights and remedies, the agents should advise them to seek competent legal advice.

All of the following are assumed in a short sale using the TREC Short Sale Addendum EXCEPT

buyer agrees to a purchase price sufficient to pay the balance of seller's mortgage loan.

1. All of the following included TREC Notice of Buyers Termination of Contract EXCEPT

buyer wants a refund of earnest money.

In Texas, the statute of limitations for a non-defaulting party to enforce their rights is the event of default is

four years for a written contract.

A real estate license holder may do all of the following EXCEPT

give legal advice

All of the following is a required disclosure EXCEPT

suicide on the property.

1. According to paragraph 12, seller's expenses include

tax certificates.