Texas Real Estate 1 practice exam questions

Which one of Gerry's statements to a client crosses the line into unauthorized practice of law?

"Most couples take ownership of property as joint tenants, so that's what I'd advise."

Sasha's home has a current fair market value of $193,200. She has a first mortgage of $160,000 and second mortgage of $13,200. What is her current equity?

$20,000

What's a special assessment?

A levy local government applies to individual parcels of real estate that will benefit from road or other infrastructure improvements

How does TRELA define the term broker?

A person who, for a commission or other valuable consideration, performs specific real estate-related acts for another person

"A party to a transaction and the person for whom the agent acts" is the definition of ________.

A principal

What type of buyer is most likely to be involved in an assignment of contract?

A wholesaler **Wholesalers often write a contract to purchase a property and include an assignment clause. The wholesaler then finds another buyer who pays more than the wholesaler agreed to pay originally, thus earning the wholesaler a profit.

Which of the following could a listing agreement be considered?

An employment contract between a licensee representing the brokerage company and a seller

A person performing real estate activities under the judgment or order of a court, such as a trustee in a bankruptcy, is _______.

An exception to the real estate licensing requirement

In what way or ways do consumers compensate brokers for their services?

As a flat fee, fee for service, and/or percentage of sale

What is it called when one party to a contract transfers the contractual rights and obligations to another but remains liable for the contract terms?

Assignment **Parties to a contract can assign their rights and obligations under the contract to a new party. This technique is most often used by wholesalers, and is generally allowable only if specifically agreed to in the contract.

Cheri wants to find the legal description for her property. Where could she look?

At a deed

Mavis plans to file a lawsuit under the DTPA. How many days prior to filing the lawsuit is Mavis required to send written notification to the licensee that she is suing him for damages?

At least 60 days

What is one of the reasons that illegal discrimination still occurs?

Discrimination is often not visible to the public.

The Canons of Professional Ethics and Conduct are divided into five sections: fidelity, integrity, competency, consumer information, and ______.

Discriminatory practices

Evan has his home and cell number on the Do Not Call Registry. He received an unwanted solicitation call from a new real estate licensee in the city. He told the licensee his number is on the Do Not Call Registry and that he does not wish to do business with the licensee. A few days later, he got another unwanted call from the licensee. What federal act is the licensee possibly violating?

Do Not Call Implementation Act of 2003

In which of the following scenarios is impossibility of contract performance occurring?

Due to circumstances beyond their control, the parties can't legally or practically do what they've agreed to do.

The ultimate police power which allows the government to take private land for public use is known as ___________________.

Eminent domain

Mr. Gray owns property in the city. He passed away, leaving no will, no heirs, and no creditors. The state can acquire the property through which process?

Escheat

Jay has a listing agreement with Maury. Even if Maury finds the buyer during the listing term, Jay has earned his listing commission. What type of listing agreement do they have?

Exclusive right-to-sell

Jericho and Cindy, an unmarried couple, have three children, ages 3, 5, and 12. A seller's broker refuses to show them a house in a neighborhood where residents tend to be older, and no one else has children. Which protected class status applies?

Familial status

Which act created an agency to investigate antitrust practices?

Federal Trade Commission Act

Which type of estate gives the owner condition-free interest in a property? This type of estate conveys the highest possible interest.

Fee simple absolute

In which type of listing agreement will a seller contract with multiple agents and only pay commission to the agent who locates a buyer?

Open listing

A(n) ______ is an offer to purchase a specific piece of real estate, but without the obligation to buy it.

Option agreement

The list price is the price for which the _____ has agreed to sell a property.

Owner

Who are the parties to a property management agreement?

Owner and property manager

As supply decreases, what happens to price?

Increases **Supply and price move in opposite directions, so price increases when supply decreases. When there is less to go around, prices increase. This is the same thing as saying demand exceeds supply.

The Johnsons have owned a small restaurant for more than 20 years. It's open for lunch and dinner six days a week, and 80% of its weekday revenue comes from the happy hour drink and appetizer specials. The town in which their restaurant is located recently constructed a new middle school and stripped the liquor license from the Johnsons' restaurant, because it no longer complies with the ordinance to be 500 feet from a school property. The Johnsons have accused the town of _____.

Inverse condemnation

As demand decreases, what happens to the price?

It decreases.

Brandon has a right-to-use timeshare. What can he NOT do with this type of timeshare?

Pass the timeshare on to an heir.

Which of the following statements about a partnership is true?

It is a business organization owned by two or more partners.

Which of the following is a true statement about the MLS and sellers?

It's rare for sellers to decline advertising their property on the MLS. **In every listing agreement, sellers state whether they give permission for their property to be listed on an MLS. It's rare that sellers decline this opportunity, since the MLS is the most powerful tool that real estate professionals have at their disposal.

What amount of liability does a Texas licensee who acted in cooperation with another person(s) to commit a third-degree felony have?

Joint and separate responsibility for all damages

Which of the following best indicates that Harold is Kelsey's seller client?

Kelsey and Harold have a signed agency agreement.

In contract law, a "legally competent" party has the ______ to enter into a contract.

Legal and mental capacity

Shannon is reading through paperwork related to her upcoming home purchase when she comes across the following: "Southwest quarter of Southwest quarter (SW ¼ of SW ¼) and West Half of Southeast quarter of Southwest quarter (W½ SE¼ SW¼) of Section Eleven (11), Township Four (4) North of Range Eight (8) West." What did Shannon just find?

Legal description

Which of the following scenarios best describes a net listing?

Maeve wants to get at least $350,000 when she sells her property and tells her listing agent, Stan, that he can keep anything above that amount.

Which of the following is one of a listing agent's duties?

Maintain seller confidentiality.

What must a licensee do when preparing a CMA for a consumer?

Make a statement that the opinion isn't an appraisal.

A couple of licensees you know from different firms are tired of competing with one another for the same listings. You overhear them saying, "You take the north side of town and I'll take the south, so we aren't stepping on each other's toes." You stop their conversation to tell them they're committing an antitrust violation. Which one is it?

Market allocation

The Community Reinvestment Act requires lenders to invest in development and ______ efforts that will enable low- and moderate-income individuals and families to afford a home.

Rehabilitation

Anyone working for a property management company in Texas and who works for more than one owner is _______.

Required to have a minimum of a sales agent license to collect rent and perform other real estate functions

Deed restrictions imposed by a developer who wants to maintain specific standards in a subdivision under development are often called _______.

Restrictive covenants

Navigable and non-navigable waterways are a smaller classification within what kind of water rights?

Riparian

Which of the following would be something that could be improved by using funds from a special assessment tax?

Road repaving

Sam grants Steve a license to hunt deer on his property. Which of the following statements about the license is true?

Sam can revoke the license at any time.

Fair housing complaints submitted to the Texas Workforce Commission Civil Rights Division must ______.

Specify the protected class that was discriminated against

What's the term for the illegal practice of nudging buyers away from or toward a specific area based on the presence or absence of protected class members?

Steering

Absent a legal description, what are other ways to identify a property?

Street addresses and tax map personal identification numbers

Which type of government power uses the legal power of a lien?

Taxation

In which form of co-ownership is a person's ownership inheritable?

Tenancy in common

Which of the following trusts is created according to the terms of the will of a deceased person?

Testamentary

The ESAC makes recommendations to which agency?

Texas Real Estate Commission

Anderson is interested in becoming a real estate sales agent in Texas. After he completes the requirements for obtaining his license to practice, which agency will administer Anderson's license?

The Texas Real Estate Commission

_____ enforces the Canons of Professional Ethics and Conduct in Texas.

The Texas Real Estate Commission **The Texas Real Estate Commission enforces the Canons of Professional Ethics and Conduct.

Real estate licensees in Texas need to pay attention to updates from what agency, which is responsible for enforcing Texas Fair Housing Law?

The Texas Workforce Commission Civil Rights Division

In Texas, the commission is responsible for preparing information outlining its purpose and duties. It must then make this information available to whom?

The public

In the real estate market, when demand exceeds supply, what does it mean?

There are more buyers than available homes, and prices will be higher.

Shakira is attending an association meeting when, in a small group breakout, her group begins discussing how to deal with the new kid in town: a real estate firm that charges a flat $500 to list properties, then lets the sellers fend for themselves. Why should Shakira leave the discussion?

This conversation sounds like it might become an antitrust violation.

Daisy and her kids loved their new pool, but Daisy wasn't so happy when she received notice that the general contractor who poured the concrete had placed a lien on her home. Daisy went through her records and discovered that she had never paid the general contractor. What's true about this situation?

This is a legal mechanic's lien.

What's the purpose of testing for discrimination?

To uncover hidden discrimination

Charlene shares one wall with her neighbors to the side, but her home has three levels, and she has no upstairs or downstairs neighbors or neighbors on the other side. What type of dwelling does Charlene own?

Townhome

Margaret, a consumer in a DTPA lawsuit, was able to prove that the licensee in her suit knowingly failed to disclose information. What type of damages is Margaret entitled to?

Up to three times the original damages

Martha is completing an addendum for her client. She should make sure that it's written ______.

Using standardized language

In a contract, the element of consent is also called _____.

Voluntary agreement

Burt terminated his exclusive right-to-sell listing agreement with Scott, his listing broker, without cause. Burt may legally do this as long as he's ______.

Willing to pay Scott's commission anyway

Can an application for a sales agent license in Texas be terminated if the applicant fails to submit a required fee after the Commission makes written request for payment?

Yes, if the applicant submits the fee after 20 days

You've just purchased a rural property, and the attorney at the closing tells you, "You have a dominant estate." What does that mean to you?

You'll be using an easement across your neighbor Jim's property.

What is the length of the statute of limitations to file a fair housing complaint with HUD?

One year

Office space in a downtown high rise rents annually at $33.40 per square foot. Max's tenant client is interested in renting two adjacent suites: one is 7,152 s.f., and the second is 3,560 s.f. What's the monthly rental rate?

$29,815.07 **The combined monthly rental rate for the two suites is $29,815.07. The total square footage is 10,712 (7,152 + 3,560), so the annual rental amount is $357,780.80 (10,712 x $33.40). Divide that amount by 12 to get the monthly rental rate.

What age does a person become eligible for real estate licensure in Texas?

18 years

Which of the following is an example of illegal market allocation?

Acme Realty and Hawthorne Realty Group agree to divide the city in half, each working its own half.

Sean had been showing homes to potential clients, Amy and Chris Williams, for weeks before the couple finally agreed to sign a buyer agency agreement with him and acknowledge him as their agent. What type of agency is this considered?

Agency by ratification

What's market allocation?

Agreeing with a competing firm on how to split a market

What's the permanent marker used primarily for marking datums when measuring elevation?

Benchmark

Which of these is usually a brass marker that is used to mark a datum?

Benchmark

Which of the following is NOT a good method for real estate companies to avoid penalties for making accidental calls to numbers on the DNC list?

Calling consumers on the DNC list for four weeks after they are added to the registry **Real estate companies can avoid penalties for making accidental calls to numbers on the DNC list by training staff on procedures, documenting processes used in making calls, and updating records as required.

Which act was the first to prohibit any exceptions for discrimination based on race or color?

Civil Rights Act of 1866

A property manager who _______ must have a license.

Collects rent **When a property manager collects rent or works for more than one owner, a real estate license is required. Owners who manage their own properties don't need a license.

Office buildings, shopping centers, and hotels are examples of ____________ properties.

Commercial

Which of the following real estate-related activities may be performed by someone who does NOT hold a real estate license?

Condemning property on behalf of the state

Mark is the listing agent for a home owned by the Browns. At the open house, a colleague, Brandon, indicates that he has a buyer for the Browns' home. Mark has had numerous interactions with Brandon on other listings, and found that they don't get along. He really doesn't want to work with him on this deal. In order to behave ethically, what can Mark do?

Cooperate with Brandon because it's in the best interest of his clients.

A registered land surveyor is preparing a plat map that will show elevations and boundaries for a multi-level condominium complex. What is used as a reference point for measuring elevation?

Datum **When measuring elevations, the surveyor will reference datum.

Mike and his buddy Daryl own a business together. They are jointly and separately liable for any debts the business may incur. What type of partnership do Mike and Daryl have?

General partnership

Jim is a listing agent. What offers must he present to his client, and when?

He must present all offers as soon as is practical.

To qualify for and maintain a real estate license, a business entity must designate someone who:

Holds an active Texas real estate broker license.

In the real estate business, whose primary role is to perform a visual inspection of a property's structure, systems, and site conditions?

Home inspector

Our Sanctuary is a senior living community. It can reject occupancy by families with young children under which of the following circumstances?

If all residents are required to be age 62 or above

Which of the following is a contract that exists based on an understanding or assumption, rather than on specifically defined terms?

Implied contract

Tim and Tina Wells bought a home with absolutely beautiful perennial gardens in the back. The plantings were designed to bring birds, bees, and butterflies and to provide color for most of the year. When they did the final walkthrough, they were dismayed to see that many of the shrubs and flowering plants had been removed. They expected these plantings to be considered part of the real property because of the ______.

Method of annexation

How do you determine the cost of purchasing land?

Multiply the land area by the cost per unit

Five competing brokerage firms in the same area agreed to cooperate in setting a standard commission rate for the area. This makes them guilty of a per se antitrust violation. What is a per se antitrust violation?

No intent needs to be proven **With a per se violation of antitrust law, such as price fixing, guilt is determined on the face of the evidence. No intent needs to be established.

Which of the following is an advantage of condominium ownership?

No yard work

Does an on-site manager of an apartment complex in Texas need a real estate license?

No, a real estate license is not required

Sue Ellen has a contract to buy Roger's house, which she has always admired, when Roger decides he's ready to move to a senior living community. After Roger finds a suitable senior apartment and moves, Sue Ellen writes a check for the agreed-upon amount, and Roger transfers the deed to her. What is happening in this scenario?

Performance **This is an example of contract performance, which means that the two parties have met the terms of the contract.

Brandon is the listing agent for Jane's property. After a couple of weeks on the market, two formal written offers come through. One is for well below the listing price, and another is a bit closer, but still under the list price. What should Brandon do with the offers?

Present both offers to Jane.

Which of these groups of protected classes is included in the NAR Code of Ethics' definition of discriminatory behavior?

Race, color, religion, sex, disability, familial status, national origin, sexual orientation, or gender identity

In the real estate business, whose primary role is to estimate property value based on established valuation guidelines?

Real estate appraiser

Which of the following legal descriptions is not used in Texas?

Rectangular government survey **The rectangular survey system is not used in the states that were the original 13 colonies, or in Texas, West Virginia, or Kentucky.

Early in its history, the Federal Housing Administration officially supported keeping "incompatible" racial groups out of the newly developed white suburbs. What is this practice known as?

Redlining