Exam Questions RE 1

Kenneth entered into a contract to sell his home to Valerie, who put down a $5,000 earnest money deposit. At the last minute, Valerie backed out of the deal and Kenneth kept the earnest deposit. This is an example of ______.

Accepting liquidated damages

A homeowner is not able to complete a repair or rebuild after a home is damaged. This is an example of what type of coverage?

Actual cash value

Under a basic policy, a homeowner has limited protection at what value?

Actual cash value **The amount of money the insured pays to the insurance company for covering risks is known as the insurance premium.

Rhonda and Oliver bought an old schoolhouse with the hope of transforming it into a residence. They owned the property as joint tenants. After Oliver died, how did Rhonda own the building?

In severalty **When there are only two joint tenants, the death of one dissolves the joint tenancy. Rhonda is now the sole owner of an estate in severalty.

Your client Frank is interested in selling a 54,450-square-foot lot. A comparable property in the vicinity sold for $3,500 per acre. What would be reasonable list price for Frank's property?

One acre = 43,560 square feet. Figure his lot acreage first (54,450 ÷ 43,560 = 1.25 acres). Since the two lots are comparable, calculate the price of the comp ($3,500 x 1.25 = $4,375), which is a good list price for Frank's lot.

Sam is an independent contractor licensee working for B & L Realty. Since Sam is an independent contractor, what supervisory responsibility does Sam's broker have?

Sam is an independent contractor licensee working for B & L Realty. Since Sam is an independent contractor, what supervisory responsibility does Sam's broker have?

Betty hired a contractor to replace her gutters. Within days, the gutters leaked and flooded her basement. She complained to the contractor, who replaced the gutters again. The next time it rained, the gutters leaked and flooded Betty's basement a second time. Frustrated, Betty decided to file a lawsuit against the contractor in an attempt to recover the money she lost. This is an example of ______.

Suing for damages and breach of contract

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

Tennancy in common **With tenancy in common, if one owner dies, that person's ownership is inheritable. It doesn't automatically pass to the other owners as it would with joint tenancy.

TREC is charged with passing rules to enforce, interpret, and explain the provisions of which of the following?

Texas Real Estate License Act

As a requirement of licensure, which of the following agencies perform a criminal background check on all license applicants?

The FBI and the Department of Public Safety

How does the Office of Fair Housing and Equal Opportunity support real estate consumers?

The FHEO provides support for protected classes through the fair housing complaint process.

Which of the following agreements does NOT have to be written down in order to be legally binding?

The Lees rent out their basement to some college students for three months.

All real estate licensees in Texas must abide by the Canons of Professional Ethics and Conduct enforced by ______.

The Texas Real Estate Commission

Which one of the following statements is true regarding a partially performed sales contract that otherwise contains all of the essential elements?

The contract is voidable. **If a party to a contract does some but not all of what the party has agreed to do, it's considered partial performance. The wronged party can agree to the partial performance or can choose to terminate the contract.

A family of four, with children ages six and nine, is denied the opportunity to view an available unit at a community that caters to seniors. Which of the following statements is true?

The federal Fair Housing Act allows an exemption for communities that are designed and operated for senior use. **A familial status exemption is available for senior communities that meet HUD's requirements.

Simon is a buyer represented by Peter. Peter shows Simon several homes currently on the market. What is Peter's relationship to the sellers, if he doesn't represent them?

The sellers are Peter's customers.

When state and federal laws differ, as they sometimes do with fair housing and/or human rights, which of these statements is true?

The state law may not remove rights granted to citizens under the federal law. **Fair housing laws are designed to protect citizens from discrimination. States can't make laws that remove rights that federal law grants to citizens.

Kellan and Stacy are in the midst of a property dispute. Each party has a legal description and survey that show conflicting boundaries between their properties. What may be the best way to resolve this dispute?

They must take the dispute to court. **When legal descriptions conflict, it will be up to the courts to decide the matter.

The Education Standards Advisory Committee is comprised of ______ members.

12 **The Education Standards Advisory Committee consists of 12 members, broken down as follows: seven active licensees, four education members, and one public member.

How many acres are in a quarter section in a rectangular survey?

160

What is a township?

A 36-square-mile square formed in the use of the rectangular government survey system

Who does the DTPA define as a consumer for the purposes of filing a lawsuit?

A business consumer that has assets of $25 million or less

Which of the following best describes a bilateral contract?

A contract that involves an exchange of consideration between two parties

Which of the following provides an example of a universal agent?

A court-appointed guardian

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

A principal

What's the definition of a judgment lien?

An involuntary lien due to a court decree resulting from a lawsuit

Darnell is disappointed when he receives written notification from TREC that his broker license application has been rejected. He plans to file a notice for a hearing, but he misses the deadline by two days. Which of the following is true of this situation?

Because he didn't file the notice in time, TREC's decision to deny his license is final.

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

Benchmark

Anastasia wants to get her real estate license and bring together buyers and sellers. This means she will be involved in which of the following?

Brokerage

How is ad valorem property tax calculated?

By multiplying the property's assessed value by the tax rate (ASSESSED VALUE X TAX RATE)

Gregory has been bombarded with emails from a local real estate licensee. He keeps opting out of these emails, but they just keep coming. What federal law is the licensee possibly violating?

CAN-SPAM Act of 2003 **The CAN-SPAM Act of 2003 protects consumers against unwanted email solicitations.

Which of the following is included in HMDA data?

Census tract information

Renae moved to the U.S. from Nigeria and became a citizen. Which act specifically provides Renae with the right to buy, sell, convey, inherit, and possess property?

Civil Rights Act of 1866

Title VIII of which law prohibits discrimination in the sale, rental, and financing of housing?

Civil Rights Act of 1968 **Title VIII of the Civil Rights Act of 1968 is also referred to as the Fair Housing Act of 1968, prohibits discrimination in the sale, rental, or financing of housing based on race, color, national origin, and religion.

What does the metes and bounds system use to develop a property's legal description?

Compass headings and directions

What's an antitrust violation's central element?

Conspiracy

The Equal Credit Opportunity Act is regulated by the ______.

Consumer Financial Protection Bureau **The ECOA is regulated by the Consumer Financial Protection Bureau and is designed to prevent lending discrimination.

Under a land trust, the owner directs a ______ to hold title to the real estate.

Corporate fiduciary

Indicate which of the following statements is true regarding legal life estates.

Created by operation of law

An unrepresented ______ who's a party to a transaction is known as a principal.

Customer **A customer is a principal when the customer is a party to a transaction, such as a buyer or a seller.

Kelo v. City of New London was a court case that focused on the power of ____________.

Eminent Domain

Erica is preparing to take her licensing exam, so she's following the process outlined in the candidate bulletin. Which of these actions should Erica take to follow the process correctly?

Erica must make a reservation at least 24 hours in advance to have her fingerprints taken by MorphoTest. She'll need her TREC ID number from her eligibility letter.

_____ is an estate for an unknown period of time in which either party may terminate the lease by giving notice to the other.

Estate at will

Peter is a tenant in a single-family home owned by Cheyenne. What type of interest does Cheyenne have in the property?

Freehold

Which of the following would be a description used for real property and a fixture?

In-ground

Applying a capitalization rate to the net operating income is one way to determine a property's ______ value.

Investment

Harmony is looking at the legal description on her purchase contract. It mentions that the plat of her property is recorded in Map Book 12, page 14, at the county courthouse. What type of legal description is this?

Lot and Block

An inheritable freehold estate that's a fee simple defeasible (where the grantor can reclaim ownership) is also known as ______.

Qualified Fee **qualified fee is an inheritable freehold estate that's defeasible, where the grantor can terminate the title.

Before using a showing service to automate the scheduling and showing of the property to prospective buyers, the listing agent must have the sellers review and sign the _______ form.

Showing Service Information **By signing the Showing Service Information form, your clients agree to allow you to use an automated service to schedule showings with and collect feedback from potential buyers.

Per the Texas statute of frauds, a contract for the sale of real estate is only enforceable if it is in writing and ______.

Signed by the person to be charged with the promise/agreement **To be enforceable, a contract for the sale of real estate must be in writing and signed by the person to be charged with the promise/agreement, or by someone who is legally authorized to sign for that person.

If the private individual owner doesn't own more than three single-family homes at one time, which exemption from the Fair Housing Act could apply?

Single-family housing sold or rented without the use of a broker

Which option describes a real property tax lien?

Specific and involuntary

What is a sketch that shows the location, size, and shape of any improvements on a property being surveyed?

Spot survey **A spot survey includes the location, size, and shape of any improvements on a property.

How is equity calculated?

Subtract loan balance from home value

Which entity's website includes information about the laws regarding what real estate licensees may and may not do in the course of their jobs?

TREC

What is the maximum civil penalty for an individual found guilty of antitrust violations in Texas?

Up to $1 million

The city of River Heights is experiencing a shortage of skilled workers in the construction trades. Is this likely to affect the real estate market, and if so, how?

Yes, this would impact the supply of homes on the market, potentially creating a seller's market. **The availability of skilled labor to build homes is a factor that will affect the supply of homes on the market. Low supply can potentially create a seller's market.

Which of the following is true about property taxes?

You may have a property tax lien on your property right now. **You could have a lien on your property right now. Unpaid property taxes create an automatic lien, whether delinquent or not.

What type of policy is an HO-A amended policy?

Non-standardized

An agent who buys, sells, leases, or transfers easements is also known as what kind of agent?

Right-of-way agent

What does the parol evidence rule state?

In certain cases, oral evidence can be used to support or complete an otherwise incomplete or ambiguous contract.

How long is a member of TREC's term?

6 years **Commission members serve for six years. If a member's term ends early, the vacancy must be filled, and the governor will appoint another member.

What is a principal meridian?

A north-south line used as a reference point in the rectangular government survey system **The north-south line that runs through the initial point is a true meridian (called the principal meridian). There are 37 principal meridians, and they are referred to when distinguishing between the various surveys.

Which of these is an example of blockbusting?

A real estate agent approaches a homeowner as soon as a demographic shift starts to occur in her neighborhood and convinces her that she needs to sell now, or she'll never be able to sell. **Any attempt to convince property owners that property values are set to decline or sales will be difficult because of a specific protected group moving into the area is considered blockbusting.

Not wanting to delay closing, Alice, the seller's agent, didn't disclose when the seller informed her a week before closing that the hot water heater needed to be replaced. Which fiduciary duty to the customer is Alice violating?

Honesty and fair dealing

For how many years following an incident does TREC allow a person to file a complaint against a license holder?

Four years **TREC will allow a complaint to be filed against a license holder up to the fourth year from the date of the transaction in which the incident occurred. TREC will not investigate a complaint that is filed after the fourth year has passed.

Which of the following states that the person who committed the fraud, as well as anyone who knew about the fraud, failed to disclose it, and benefited from it, can be held liable for actual damages?

Fraud in Real Estate and Stock Transactions **According to the Fraud in Real Estate and Stock Transactions Statute, the person who committed the fraud, as well as anyone who knew about the fraud, failed to disclose it, and benefited from it, are liable.

Billie (Wilhelmina) Silva was just licensed as a broker, and she plans to hang out a shingle and go into business for herself. As a sole proprietor, which of the following business names can she NOT use?

Happy Homes Realty **Sole proprietors can use their names or their names in some combination with a business name. However, using"Real Estate" in the business name is not allowed.

Texas license applicant George just found out he aced his licensing exam. He submitted his application and was already thinking of how he was going to spend that first commission check. But then he received written notification from TREC that he forgot to submit the license fee with his application, and he must submit the payment immediately. How long does George have to pay this fee after TREC made its written request for payment?

It must be paid within 20 days. **TREC will terminate/reject an application if the applicant doesn't submit a required fee within 20 days after TREC makes written request for payment.

What's inverse condemnation?

It occurs when government actions deprive a property owner of the value of the property without offering just compensation.

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

Joint Tenancy

Which of the following statements is true about the rule of capture?

Landowners can use or sell all the water they can drill from beneath their land.

Which federal disclosure required under Title X requires the sellers of residential dwellings built before 1978 to disclose any known information about the existence of lead-based paint on their property?

Lead-Based Paint and Lead-Based Hazards Disclosure of Information

TREC has established that two continuing education courses must be taken, and the remaining hours needed can be made up of electives. Eight of the mandatory 18 CE hours must be devoted to which two courses of study?

Legal updates I and II

An advantage of organizing a business as a limited liability company is its ______.

Limits on the liability of members for company debts or other obligations

Which of the following is deductible on an income tax return if the criteria is met?

Loan origination fee **The loan origination fee is deductible; other closing costs are not. The following criteria must be met: The points are average for the geographical area, the home is used as the borrower's primary residence, and the documentation reflects the points were paid by the borrower as seen on the closing disclosure or settlement statement.

In a trust, the trustee is the person who ______.

Makes sure the terms of the trust are carried out

Which of the following is the duty of the State Office of Administrative Hearings at a hearing of an alleged violator?

Making findings of fact and conclusions of law ***While the State Office of Administrative Hearings makes findings of fact and legal conclusions and may make proposal recommendations about the decision, it's actually TREC that, by order, determines whether or not a violation occurred and imposes the administrative penalty.

What type of home is built on a permanent chassis to ensure transportability?

Manufactured home **A manufactured home is factory-built rather than stick-built, and is then driven out in one or a few pieces to the site.

What is the value a buyer and a seller agree upon?

Market Value **The value a buyer and a seller agree upon is called the market value. It's also referred to as a "meeting of minds."

"Beginning at a stake and stones about 30 feet from the center of the brook that runs across the road Southwesterly from the dwelling house of the late Henry Nelson ..." is an example of what type of legal description?

Metes and bounds

Nate represents Elena in the purchase of a house. Katherine represents the seller, Timothy. Which of the following statements accurately reflects the agency duties owed?

Nate owes Timothy the duty of disclosure.

Which of the following is an advantage of condominium ownership?

No yard work **Condominium properties have homeowners associations and often come with shared walls with the neighbors, but they don't come with any yard work.

Gabi owns one parcel measuring one square mile and another parcel measuring one mile x half a mile. She combined the parcels and sold them for $2.5 million. What price per acre did she receive for the land?

One square mile is 640 acres. The area of the second parcel is 5,280' x 2,640' = 13,939,200 sq. ft. Divide that by 43,560 (sq. ft. in an acre) to get 320 acres. 640 + 320 = 960 acres. $2.5 million divided by 960 acres = $2,604.17 per acre.

Grant owns a property that's subject to an option contract. Grant is the ______.

Optionor **The property seller in an option contract is known as the optionor.

Mary has a contract to buy her mother's house when her mother is finally ready to move to a senior living community. This way, the house stays in the family. After her mother finds a suitable senior apartment and moves, Mary writes a check for the agreed-upon amount, and her mother transfers the deed to Mary. What is happening in this scenario?

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

Which of the following is a key consideration and starting reference for a metes and bounds descr

Point of beginning **A key consideration is the point of beginning. Unless it's easily identifiable, the rest of the description won't be of much use to anyone, because everything is based off of that point. The point of beginning is also the ending.

Which of the following fiduciary duties is owed to both clients and customers?

Prompt presentation of all written offers and counter-offers

Texas sales agent applicant Drew has already taken 30 hours each of Principles of Real Estate I and II, Law of Contracts, and Law of Agency. Which two additional 30-hour courses must he take to complete his pre-licensing education requirements?

Promulgated Contract Forms and Real Estate Finance

Who owns the dry sandy part of the beach that extends from the "wet beach" to the line of vegetation on the shore?

Property Owners

In the real estate business, whose primary role is it to provide clients with the information they need to make informed decisions about their own specific real estate interests?

Real estate counselor

Tristan refused to let Marla list his property on the MLS, even though Marla told him that more exposure to the property would generate more potential buyers. Which two fiduciary duties are at odds in this situation?

Reasonable skill and care and obedience

Kelvin isn't sure how to read this legal description, but his agent said something about reading it from right to left. Here's the description: "The north half of the northwest quarter of Section 6, Township 8 North, Range 68 west of the 5th principal meridian." What land description method did surveyors use for this piece of property?

Rectangular government survey **Legal descriptions that use the RGSS usually include the state, name of the principal meridian, township, and range designations with compass directions and section numbers.

What is the name of the set of regulations used to enforce the Equal Credit Opportunity Act?

Regulation B

Which of these is an example of antitrust violations common to real estate?

Tie-in arrangements, market allocation agreements, and group boycotting

Which of the following describes a manufactured home?

Traditional mortgage financing is difficult to obtain. **Traditional mortgage financing is difficult to obtain for a manufactured home, because it is considered personal property instead of real property.

Travis is a new real estate licensee and is writing up his first offer to purchase for his buyer clients. Which of these statements is true?

Travis should include the legal description in the offer, because it provides a complete description of the property.

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

Uniqueness (nonhomogeneity) **Nonhomogeneity is a unique characteristic of land. Even within a single subdivision, two identically sized parcels will have their own unique characteristics: views, access, proximity to other amenities, etc.

You sign a contract to purchase a machine that will allow you to travel back in time and meet Abraham Lincoln. Assuming that time machines don't actually exist (for now), what type of contract is this?

Void

A central element of an antitrust violation is _______.

a contract **Antitrust involves a contract and conspiracy among competitors.