Chapter 1
A license holder representing a seller is asked by that seller, "What does paragraph 5 of this TREC-promulgated contract mean to me?" What is the best answer by that agent?
The answer is "I'm not an attorney, but here's what it means..." The license holder is free to explain to the principals the meaning of the factual statements or business details contained in the contracts as long as no legal advice is offered or given.
If a buyer receives TREC OP-H, and the Seller's Disclosure of Property Condition after the sales contract has been signed by all parties, how many days does the buyer have to terminate the contract?
The answer is 7. According to the Texas Property Code Section 5.008 and the TREC-promulgated sales contract, the buyer has seven days to terminate the contract after receiving the form.
How many commissioners are on the Texas Real Estate Commission?
The answer is 9. The policy-making body of the Texas Real Estate Commission is a nine-member commission.
A buyer wanted to move in early before closing. Which TREC-promulgated addendum should be used?
The answer is Buyer's Temporary Residential Lease.
Which of these is a consumer protection act that protects the public from false and misleading acts?
The answer is Deceptive Trade Practices Act.
Which of the following groups of real estate professionals subscribes to a code of ethics?
The answer is National Association of REALTORS®.
Which of the following forms is approved by TREC for a written seller's disclosure notice?
The answer is OP-H.
Which of the following is a TREC-promulgated contract?
The answer is Residential Condominium Contract. The Residential Condominium Contract is one of six TREC-promulgated contracts.
Who promulgates contracts for mandatory use by license holders?
The answer is Texas Real Estate Commission. The Broker-Lawyer Committee develops forms and recommends their adoption, but it is TREC that promulgates the forms for mandatory use.
What law specifically prohibits license holders from practicing law?
The answer is Texas Real Estate Licensing Act (TRELA).
An agent represents a buyer. Which of the following forms of advice can the agent give to an unrepresented buyer?
The answer is advice on having the abstract examined by an attorney.
According to the Texas Real Estate License Act, which of the following requires that a license holder be a practicing attorney?
The answer is advising a person regarding the validity of title to real property.
What type of committee is the Broker-Lawyer Committee?
The answer is advisory. One of the advisory committees that exists under the statutes of the TRELA is the Broker-Lawyer Committee.
A new home builder wants to use her own contract. What are the agent's legal options?
The answer is the agent can use the contract because it is an exception.
A buyer found a contract form on the internet and wants her agent to help her fill out and adapt it for Texas law. Which of the following is TRUE regarding an agent's ability to help the buyer complete the form?
The answer is the agent is prohibited from helping her adapt and fill out the form.
A buyer wants the seller to leave several items of personal property. The agent uses a Bill of Sale for this transaction. Which of the following is TRUE regarding the agent's actions?
The answer is the agent may use the form.
A real estate broker modifies a 1992 TREC-promulgated contract form and updates it to fit a particular transaction. Which of the following could happen?
The answer is the broker could have his license suspended or revoked for practicing law.
Which of the following real estate-related entities has rule-making authority in the state of Texas?
The answer is the commission.
Which of the following statements is FALSE regarding use of reproduced forms approved or promulgated by TREC?
The answer is the form may be reproduced on any size paper at least as large as the size used by TREC.
For which of the following actions may the Texas Real Estate Commission NOT suspend a license holder?
The answer is the license holder explains to the principals the meaning of the factual statements or business details contained in the contracts.
What effect do the rules made by the commission have on license holders?
The answer is the rules have full force and effect of law.
Which of the following is TRUE?
The answer is the rules of the Texas Real Estate Commission have the full force and effect of law.
A seller of residential property in Texas must give to the buyer of the property notice of the property's condition. Which of the following is TRUE?
The answer is the seller could use any form as long as it is in writing.
The seller's spouse had an HIV infection. Under the Texas Property Code, what is the sellers' duty to disclose the illness?
The answer is the seller has no duty to disclose the illness.
An owner of a property is selling the land to another. The land has a house on it, but the house is insignificant to the buyer. Which of the following is TRUE?
The answer is the seller's disclosure notice is required unless the value of any dwelling does not exceed 5% of the value of the property.
What is the primary difference between a lawsuit brought under the Deceptive Trade Practices Act (DTPA) and any other type of civil action?
The answer is treble damages are available under the DTPA.
A consumer who wishes to file a DTPA lawsuit must do so within
The answer is two years after the consumer discovered the deceptive act.
Which of the following is an exception to the TREC rules on contract use?
The answer is when the buyer requires another form to be used.
What must a plaintiff prove about a misleading statement in order to get triple damages under the DTPA?
The answer is that the defendant acted intentionally.
A license holder who completes a contract for the sale of real property is not engaged in the unauthorized practice of law if the license holder uses a form that is
The answer is all of these. Notwithstanding any other law, a license or certificate holder who completes a contract form for the sale, exchange, option, or lease of an interest in real property incidental to acting as a broker is not engaged in the unauthorized or illegal practice of law in this state if the form was (1) adopted by the commission for the type of transaction for which the form is used; (2) prepared by an attorney licensed in this state and approved by the attorney for the type of transaction for which the form is used; or (3) prepared by the property owner or by an attorney and required by the property owner.
Keeping the DTPA in mind, which of the following acts are MOST applicable to real estate license holders?
The answer is all of these. Other acts most applicable to real estate include the following: making false statements of fact concerning the reasons for a price reduction, misrepresenting the authority of an agent to negotiate the final terms of a sales contract, and representing that work has been done on real or personal property when the work has not been done.
Texas Real Estate Commission (TREC) Form OP-H, Seller's Disclosure of Property Condition
The answer is an approved form for voluntary use.
Which groups provide forms that can be used by sellers to make the required property disclosure?
The answer is any of these. All the information required by the property disclosure can be found on forms provided by the Texas Association of REALTORS®, the Texas Real Estate Commission, and individual broker firms.
When is the seller's disclosure notice required to be delivered to a purchaser?
The answer is any time prior to the contract becoming binding on the purchaser.
Real estate brokers who are members of the Broker-Lawyer Committee become members by being
The answer is appointed by the Texas Real Estate Commission.
Which of the following is NOT a TREC-promulgated contract?
The answer is contract for deed
What does the Broker-Lawyer Committee do?
The answer is drafts contracts. The Broker-Lawyer Committee develops forms and recommends their adoption, but it is the TREC that promulgates the forms for mandatory use.
Which statement is TRUE, as it relates to the DTPA?
The answer is errors and omissions insurance does cover fraud or intentional violations of the DTPA.
Who appoints the TREC commissioners?
The answer is governor.
A property sells for $25,000, and the dwelling built thereon is only valued at $1,000. What does Section 5.008 of the Texas Property Code say about this situation?
The answer is it does not require the seller to provide a written notice of the property's condition.
One co-owner conveys interest to another co-owner. What does Section 5.008 of the Texas Property Code say about this situation?
The answer is it does not require the selling co-owner to provide a written notice of the property's condition.
Which of the following concerns led to the Texas Real Estate License Act prohibiting license holders from practicing law?
The answer is license holders giving counsel regarding the validity of an instrument that addresses real property rights.
As compared to any other type of civil action, in a Deceptive Trade Practices Act (DTPA) action, a plaintiff
The answer is may be awarded treble damages.
Which of the following is the correct composition of the Texas Real Estate Commission?
The answer is nine members appointed by the governor for six-year terms.
A man dies and his property transfers to his heirs through probate. Who is required to provide the seller's disclosure notice?
The answer is no one.
Which of the following is legal for the license holder to draw up?
The answer is none of these. The TRELA clearly establishes that it is illegal for the license holder to draw a deed, note, deed of trust, will, or other written instrument that transfers or may transfer an interest in or title to real property.
Which of the following is legal for the license holder to draw up?
The answer is none of these. The TRELA clearly establishes that it is illegal for the license holder to draw a deed, note, deed of trust, will, or other written instrument that transfers or may transfer an interest in or title to real property. However, the act goes on to give permission for a license holder to complete a contract form that may bind the sale, exchange, option, lease, or rental of any interest in real property as long as the forms used have been prepared by or are required by the property owner or have been provided by the real estate commission, prepared by an attorney licensed by the State of Texas, and approved by that attorney for a particular type of transaction.
What type of contract is a license holder prohibited from completing because doing so would be considered the unauthorized practice of law?
The answer is prepared by a licensed escrow agent.
Who appoints the lawyers to the Broker-Lawyer Committee?
The answer is president of the state bar.
What is the term for a TREC commissioner?
The answer is staggered six-year terms. The commissioners are appointed for overlapping six-year terms.