Tx 30 Hr Law of Contracts Practice Exam

Basic property rights include the rights of possession, control, exclusion, enjoyment, and ______.

Disposition

A _______ gives the purchaser the right to possess the property at given times for a given duration but doesn't convey ownership.

Timeshare use

Which section of the TREC residential One to Four Family (resale) contract identifies the party who will pay for title insurance and the extent of the policy coverage?

Title Policy and Survey section

What's the purpose of the Federal Reserve System?

To maintain favorable and balanced economic conditions

When does a transfer tax become payable?

Upon recording of the deed

In a deed of trust situation, the borrower/property owner is a ______.

Trustor

According to the TREC residential One to Four Family (resale) contract, If one of the parties refuses or fails to sign the initial release for earnest money during the demand for earnest money process, that party can ______.

Be liable for damages, the earnest money, attorney fees, and all court costs.

Regulation B is the set of regulations used to ______ the Equal Credit Opportunity Act.

Enforce

Which covenant is used by the grantor to assure the grantee that they will not be disturbed in the use of the property because of a title defect passed on by the grantor?

Quiet enjoyment

What type of interest involves the property ownership going back to the original owner at the end of the life estate?

Reversionary interest

This phase of an environmental site assessment is only conducted when necessary. If a problem is found during the investigation phase, this phase is put into action next.

Testing

Jacqueline found a ready, willing, and able buyer for her client's condo, with a sales price of $20,000 more than the asking price. However, the appraisal came in just under the asking price. Which number will the lender use to calculate the loan-to-value ratio?

The smaller number

When the buyer's repair addendum included adding a new wing, the seller balked. The buyer then terminated. This is an example of ________.

Rescinding the contract unilaterally

Which section of TREC's residential resale contract states that if one party breaches the agreement and the non-breaching party hires an attorney to enforce their rights, the breaching party can be forced to pay all of the legal expenses of the non-breaching party?

The Attorney's Fees section

Which section of the TREC residential One to Four Family (resale) contract identifies miscellaneous charges that must be adjusted to the day of closing?

Prorations

What is statutory right of redemption?

The curing of the default even after the foreclosure sale

Jeffrey has accepted an offer of $310,000 for his house. The buyer is making a $50,000 down payment, and the buyer's appraisal came in at $300,000. On what number will the buyer's lender base the loan-to-value ratio?

$300,000

Mindy and Seth have had to terminate their TREC residential One to Four Family (resale) contract. Both parties signed the request to release the earnest money, but only Mindy submitted a written demand for the funds. How many days does Seth have to submit a written objection after receiving notice from the escrow agent of the demand?

15 days

The appraisal on Jean's property came in at $22,000 less than the agreed-upon sales price, so the buyer, Thomas, wants to renegotiate the terms. If they can come up with a new price that is satisfactory to both parties, what will they use to document this?

Amendment

Which of the following is more likely to act as a closing agent?

An attorney or title company representative

All commercial leases should contain the conditions under which the lease can be terminated; the names and signatures of all parties; and ______.

Any additional information based on negotiations and specific situations

Mary agreed to buy her mother's house when her mother moves to a senior living community. They sign a purchase agreement, but when Mary has to move because of work, she signs her rights in the contract over to her sister, Tina. Mary may still owe money if Tina can't come up with the agreed-upon funds. What's happening in this scenario?

Assignment

Breanna signed a purchase offer stating she'd buy Kathy's home for $150,000. Kathy rejected that offer but said she'd sell it to Breanna for $200,000. Breanna agreed to these terms, and they added their signatures. Which of the following statements is correc

Breanna accepted the offer Kathy made.

When a buyer assumes a seller's loan, who may be held responsible for repayment of the debt?

Buyer and seller

Which document establishes path and proof of ownership?

Chain of title

The phases of an environmental assessment include investigation, testing, ______ , and management.

Cleanup

In which section of the TREC residential One to Four Family resale contract does the buyer specify the closing date?

Closing section

Which area of real estate law governs the use of contracts and explains the elements required to make a contract valid, as well as describing what happens if a breach of contract should occur?

Contract law

What mortgage document is most commonly used to secure a home loan in Texas?

Deed of Trust

Which of the following is a guideline used by Fannie Mae and Freddie Mac when determining if a loan is conforming?

Down payment

Which of the following is an example of reversionary right?

During a lease transaction, the lessor retains the rights to possession of the property after the lease term has expired.

Mark met all of the terms of his contract with Cindy. Cindy has yet to meet one of her obligations. This contract is __________.

Executory

Which type of an estate doesn't end automatically when the stated event or condition occurs?

Fee simple subject to a condition subsequent

Norman buys Connie's Texas home, and in the sales contract, he specifies that the outdoor grill must stay with the home. Connie ends up taking the grill when she moves out. If Norman wants to sue Connie for taking the grill, he must do so within ______.

Four years

Which physical characteristic of land addresses the concept that the geographic location of a piece of land is fixed and can never be changed?

Immobility

Susan Duffield died testate at age 49. What can be said about Susan's estate?

It will be put through probate.

The term "right of survivorship" is closely linked with _____________________.

Joint Tenancy

Which form of real property ownership (for owners other than married couples) means there's equal ownership shares with undivided possession rights?

Joint tenancy

A contract is executed in Texas on June 1. What is the effective date on which all contingency deadlines will be based?

June 2

Because Texas is a community property state, marital status should be included when naming the parties. What is the correct way to name these parties on the contract?

Kathy Simone and John Simone, a married couple

Which clause allows the Texas seller to keep their property on the market after accepting an offer contingent on the sale of the purchaser's current home?

Kick-out

Who is the lessor in a lease agreement?

Landlord/owner

What does a void contract lack that makes it void?

Legality

A mortgage is a legally binding document that creates a lien on a piece of property and gives the lender the right to foreclose on the property if the borrower defaults. Who or what entity is considered the mortgagee?

Lender

Dexter can't make next month's rent and is thinking about vacating his apartment before the lease term is up. If Dexter moves out before the lease term expires, he will be ______.

Liable for the rent for the term of the lease

The mortgagor is responsible for ______.

Making timely mortgage payments

The trustor in a deed of trust is responsible for ______.

Making timely payments to pay off the loan

The borrower is charged ______ for all FHA loans.

Mortgage insurance premium

Another name for the borrower of a loan is ______.

Mortgagor

Which type of listing is illegal in some states due to its inherent conflict of interest?

Net listing

Your buyer client, Jacob, is planning to obtain financing for a new home. What should his first step be?

Obtain a pre-qualification letter.

In Texas, the effective date of a contract, on which all deadlines are based is _______ the executed date of the contract.

One day after

If an individual acquires rights or liabilities automatically due to law, and not through an agreement or act of their own, this is known as _______________________.

Operation of Law

The terms of a person's will are subject to ______.

Operation of law

Which of the following is true about volatile organic compounds?

Paint, air fresheners, and cleaners are primary sources.

Charles runs a small vacuum cleaner repair business. His commercial property ____________ lease agreement has him paying a base rent plus an allocated amount of gross sales above a certain threshold.

Percentage

The right to use the property and to live or work there is known as _____________.

Possession

Elmer died and left a will. Before his estate can be distributed according to his wishes, it must go through ______.

Probate

The seller's disclosure notice is a required form by Texas law; however, it is not ______ by TREC.

Promulgated

Which area of real estate law covers the requirements of a licensee when performing real estate activities within the state, including continuing education requirements, supervisory requirements, and prohibited conduct?

Real estate license law

Which of the following is a responsibility of the Texas Real Estate Commission, as provided in the Texas Real Estate License Act?

Rulemaking authority for real estate licensees that has the full force and effect of the law

In the case of a "subject to" loan, who or what is the responsible party if the property is foreclosed on?

Seller

When a buyer takes on a seller's loan subject to an existing mortgage, who or what is directly responsible for repayment of the entire debt?

Seller

Shawnda, a Texas real estate licensee, has violated the Deceptive Trade Practices Act. She is required to compensate the victim $25,000. If it's found that she intentionally violated the act, what might the courts decide?

She will have to pay the victim $75,000 instead.

How many members does TREC appoint to the Broker-Lawyer Committee?

Six

After Chester moved into the old house on the hill, he found that it was infested with termites—something his inspector missed, and the seller failed to disclose. He pursued his monetary remedy in court. This is an example of ________.

Suing for monetary damages

Ann Marie is a tenant with a triple net lease. Per her lease, she pays for which of the following expenses related to the property?

Taxes, maintenance, insurance

Who has the right to waive the three-day disclosure waiting period when the APR for the loan changes on the Loan Estimate?

The borrower

Who's responsible for receiving, handling, and disbursing earnest money for a residential sales transaction in Texas?

The escrow agent

Which of the following must be included as part of the property section in TAR's Residential Real Estate Listing Agreement Exclusive Right to Sell contract?

The legal description of the property

In addition to the property address, the lease agreement start and end dates, and the monthly rent and deposit amounts, which of the following should all commercial leases contain?

The purpose for which the space is being rented

The _____ should provide the title insurance company with an affidavit of title when necessary.

The seller

Which of the following statements about long-term lease agreements in Texas is true?

They must be in writing.

What's the minimum number of business days prior to closing that lenders have to provide borrowers with the Closing Disclosure form?

Three

Hank leases 150 acres from Sara and Jesse. He has an option contract attached to his lease, with an option to purchase that can be exercised within the next two years. What type of contract is this?

Unilateral

Physical characteristics of land include its immobility, indestructibility, and ______.

Uniqueness (nonhomogeneity)

A contract that's binding for one party, but gives the other party the choice to terminate is ____________.

Voidable

As part of the terms of the sales contract, the seller was supposed to provide a copy of the seller's disclosure but failed to do so. What type of contract is this?

Voidable

Which of these statements about voluntary alienation is true?

Voluntary alienation occurs when the property owner decides who will acquire the property.

Sondra thinks the new business contract she signed with her business partner is valid. Both parties are legally competent, the contract has a legal purpose, an offer was made and accepted, and a fee has been negotiated and documented. Which essential element of a valid contract has Sondra not yet considered?

Whether consent was voluntary

Property with ownership by more than one person is known as ______.

co-ownership

The state has seized a strip of Marge's land. It's relatively small but goes right through her sheep pastures. She just found out that the state will use it for a six-lane highway. She's pretty sure that the value of her land is going to plummet, and she can't figure out how to use it as pastureland anymore. What kind of involuntary alienation is she dealing with?

Regulatory taking

Lyle and his wife, Carol, were unable to obtain the loan they needed to buy the home they wanted, and have had to terminate their contract with the seller. Which of the following statements about Lyle and Carol is true?

They may receive a refund of earnest money, but they're responsible for expenses associated with the completed inspection and appraisal.

In which section of the sales contract can the buyer indicate whether the sale of the property is contingent upon the buyer obtaining financing?

Loan contingency

Stacy and her husband, Blake, have a special lease agreement in which they, as the land owners, receive a cash payment for executing the lease, with more to come if the lessee's drilling efforts are successful. What type of commercial lease do Stacy and Blake have with the lessee?

Oil or gas

Margo is the potential buyer of the property in an option contract. Margo is the ______.

Optionee

Grant owns a property that's under an option contract. Grant is the _______.

Optionor

The primary mortgage market operates to _____

Originate loans

Identify the correct order of the loan approval process.

Pre-qualification, loan application, mortgage commitment

Once Greg and Caitlin were married, they decided to purchase a home together. Since it was a shotgun wedding after a weekend in Vegas, they made sure that their ownership included the right of survivorship as well as protection from the other spouse attempting to sell the house from under them. The most likely form of co-ownership under which they would make this purchase is ________.

Tenancy by the entirety

The property that Joan is selling is subject to mandatory membership in a POA. Which TREC addendum is she required to include as part of the sales contract?

Addendum for Property Subject to Mandatory Membership in a Property Owners' Association

What's an up front charge to make up for the difference between the interest rate the borrower is paying and the rate the lender normally requires?

Discount point

In a deed of trust situation, person or entity that holds "legal" title is a ______.

Trustee

Prior to signing the closing documents, the parties should have already ______.

Assured themselves that the conditions and contingencies of the purchase agreement have been met

At the closing of a sales transaction, which parties close on the brokerage agreement?

Buyer and seller agents

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

Tenancy in common

Harry is meeting with a prospective buyer client, June. Harry has presented June with the Information About Brokerage Services form and explained June's agency relationship options. Harry is now ready to present June with a buyer agency agreement. What will he say is the purpose of the contract?

To identify the terms of the buyer agent/buyer agency relationship