principles 1
Information About Brokerage Services
-A link to a completed IABS Notice in a readily noticeable place on the homepage of each business website should be provided. -The font size of the link should be 10-point if spelling out "Texas Real Estate Commission" and 12-point if using "TREC".
In what year was the National Association of REALTORS® Code of Ethics first adopted?
1913
The National Association of REALTORS® Code of Ethics consists of:
A preamble and 17 articles
Which of the following statements accurately describes the basic issues involved in the Jones v. Mayer Co. case?
A real estate company refused to sell a home because of the prospective buyer's race and was found guilty of violating the Civil Rights Acts of 1866
How often must a real estate license be renewed?
A real estate license must be renewed every two years.
According to the Canons of Professional Ethics and Conduct, the IABS notice can be provided to consumers:
According to the Canons of Professional Ethics and Conduct, the IABS notice can be provided to consumers either in person, by mail, or by email.
Which of the following is NOT one of the unethical or illegal activities performed by Ulysses?
Acting as a real estate agent without a license
ADA
Americans with Disabilities Act
Which of the following is an example of misrepresentation?
An agent thinks there are hardwood floors beneath the carpet of a property and implies to the buyer that there are, when in fact, there are not.
What is a protected category according to Texas fair housing laws, but not national ones?
Ancestry
Special Agency
Broker & Client
General Agency
Broker & Sales Agent
What law (chapter) imposes a code of ethics and standard of conduct on members of the Commission?
Chapter 572
Universal Agency
Child & Parent or Executor of will
Which was the first housing discrimination protection act?
Civil Rights act of 1866
HUD
Department of Housing and Urban Development
In an agency relationship, the agent owes the principal the fiduciary duties of loyalty, obedience, accounting, confidentiality, reasonable care, and what else?
Disclosure
If a lender refuses to make Harry a 30-year mortgage just because Harry is 85 years old, they will have violated:
ECOA
ECOA
Equal Credit Opportunity Act
Ulysses did nothing wrong in instructing the mortgage company to take money out of Sam's account.
FALSE
FHA
Fair Housing Act
Protected classes in the Fair Housing Act of 1968 include race, color, religion, national origin, sex, disability, and what other category?
Familial Status
When asked to inquire about the previous owner's death, how should Tom have responded?
He should tell his clients he's legally not allowed to inquire about the death
HMDA
Home Mortgage Disclosure Act
A tenant comes to a property manager asking to put in shower bars to accommodate their disability. When they property manager informs the landlord, the landlord balks, because the tenant is not a wheelchair user. What should the property manager do? Choose the BEST option.
Inform the landlord that not all disabilities are visible, and warn them they could be violating the Fair Housing Act by refusing accomodations
IABS
Information About Brokerage Services
Does misrepresentation require malicious or deceptive intent?
No, the seller, broker, or agent may be liable for misrepresentation even without malicious or deceptive intent.
How long does person who believes that they have been injured by the discriminatory practices of a real estate license holder have to file a complaint with HUD?
One Year
Which of these actions requires a real estate license to legally perform?
Shane helping his friend sell his home for $500.
You are working with a Black buyer, Tom, and you decide to show him homes in a neighborhood with a high Black population. This illegal act is known as:
Steering
DTPA
Texas Deceptive Trade Practices-Consumer Protection Act?
The Texas Real Estate License Act is Chapter 1101 of the:
Texas Occupation Code
What federal act was passed to help eliminate redlining?
The Community Reinvestment Act
Who designates a broker member of the Commission to serve as a presiding officer?
The Governor
Under the ECOA, it is legal for a lender to ask if a borrower is separated.
True
Integrity
employment of prudence and caution to avoid misrepresentation
The preamble of the National Association of Realtors Code of Ethics refers to which rule to use as a guide for making ethical decisions?
the Golden Rule
What is the name of the professional organization that created the Code of Ethics?
the National Association of REALTORS
A license holder is facing three separate complaints. The license holder must pay $45,000 for the first complaint, $62,000 for the second complaint and $21,000 for the third complaint. What is the amount that the Commission will pay on the license holder's behalf?
$100k
An administrative penalty cannot exceed
$5k
There are also exemptions to the license requirement. These roles do not require a license in order to practice their profession:
-A licensed attorney in Texas -A public official while engaged in official duties -An on-site manager of an apartment complex
Executory Contract
-MLS status shows "pending" rather than "for sale" or "sold" -a contract that is not completely executed or performed
Who TREC Oversees
-Real estate inspectors 🔎 -Easement/right-of-way agents 🛣 -Education providers for real estate & inspection courses 📚 -Developers of timeshares ⛱ -Residential service companies 🏠 -Real estate brokers and sales agents 🕵️
Executed Contracts
-The property's listing status in the MLS is changed from pending to sold. -a contract in which all terms have been fulfilled by all parties
Vendee's Liens
-a document declaring a claim from a buyer that the seller has not transferred title to the buyer -ensure the repayment of what the buyer paid
Rectangular Survey System
-a more refined version of the longitude and latitude system of mapping with a surveyed grid of meridians, baselines, townships, and ranges to describe a piece of land -example: "T1N, R1E"
Encroachment
-an illegal use of another land owner's property -a physical intrusion on someone else's property without direct permission
Concurrent Estates
-community property -joint tenancy
Unliateral Contract
-contests, rewards, and commissions are examples -a contract in which only one of the contracting parties is bound
Bilateral Contracts
-creates reciprocal obligations -an agreement in which both parties give consideration and promise to perform
Freehold Estate
-defeasible fee estate -life estate
Mutual Agreement
-discharge can be for any reason if all parties agree -when all parties mutually agree to cancel the contract
Bail Bond Liens
-enforceable by a court officer or the sheriff if the accused property owner does not appear in court -put up in the form of real estate in lieu of cash when a property owner is accused of a crime
Execution Liens
-gives court officers the right to confiscate and sell the debtor's property to satisfy the debt -can be issued by a court to force payment of monies owed from a judgment when a debtor does not pay
Equitable Estates
-if another party has an easement on your property -commonly created by encumbrances
Legal Description
-included in a deed to the property -required for a contract
Parcel
-individual lots combined to make block -A plat (a.k.a. plat map or recorded plat) is used to identify lot and block references for legal descriptions.
Obedience
-is only required if legal -the principal is the ultimate decision-maker
Vertical Land Description
-most commonly used when air rights and subsurface rights need specific explication -the method for expressing condominium ownership boundaries
Restrictions
-outline what someone may not do on their own personal piece of property -usually created by the developer of a subdivision
Leasehold Estates
-periodic estate -estate for years
Non-performance due to legal issues
-permissible discharge of a contract to avoid the violation of law -a party cannot be compelled to perform an illegal act to meet the terms of the contract
Partial Performance
-the party injured by the other party's failure to fully perform can seek legal restitution or discharge the contract -when at least one party performs only a portion of the agreed-upon contractual duties
Liens
-use subordination agreements to change the priority -evidence an owner's debt and obligation to pay the debt
Lot and Block System
-used when parcels of land are divided up into individual lots -example: Lot B, Block 22 of Rose Creek, Ace County, Texas
Easements
-usually created by an agreement between two parties or out of necessity -the rights of use by another will convey in the transfer of that deed or title
Substantial Performance
-when a party performs the majority of the contract's requirements, but not all -the under-performing party has usually fulfilled enough of the contract's obligations to gain legal enforcement of the contract
Mortgage Liens
-when a person buys a home, the home itself becomes collateral for the loan, so the lender obtains it -specific because they only apply to the property that is secured by the debt and voluntary because owner voluntarily enters into the contract
Judgement Liens
-when decrees given by courts specify the amount of money owed -takes effect only after it has been recorded in the county clerk's office
Within how many days of a move does a broker need to tell the Commission about their change of address?
10
After receiving a notice of violation, how many days does a license holder have to request a hearing?
20 days
After how many days will the Commission notify an applicant of their moral determination?
30
1 township
36 sections
Township lines intersect with range lines to create townships, which are how many square miles?
36 square miles
1 acre
43,560 square feet
How many square feet are there in an acre?
43.560
1 mile
5,280 feet
Township lines run west and east, parallel to the baseline. How many miles apart from each other are they?
6 miles
How many lawyers are on the Broker-Lawyer Committee?
6 six
1 section
640 acres = 1 square mile
Plat
A drawing of a development used in the lot and block method
Is "123 Buyer Lane, San Antonio, TX 78216" an adequate legal description? Why or why not?
A street address is not an adequate legal description; it is considered an informal reference. For purposes of legal documents, the exact size and location of a property requires precise measurements and descriptions.
An abbreviated history of a property, including info on any transfers, grants, wills, conveyances, liens, and encumbrances is called what?
Abstract of title
What is the difference between actual and punitive damages?
Actual damages are designed to compensate the claimant; punitive damages are designed to punish the defendant
What right does an easement grant?
An easement gives a party the right to use the property owned by another party.
What must you have if you wish to sell, buy, lease, or transfer an easement or right-of-way?
Certificates are necessary to perform transactions with easements or right-of-ways. Be sure to review the revocation rules to make sure you keep yours!
Which of the following phrases would be considered discriminatory if used in an advertisement?
Christian Neighborhood
Who is responsible for informing employees of their conduct expectations and responsibilities?
Commissioners
CRA
Community Reinvestment Act
What two documents were sent to TREC by Deb for her claim?
Deb sent the Writ of Execution and Abstract of Judgement along with all other necessary paperwork to TREC.
A person who possesses a broker's license and is responsible for not only their own actions, but the actions of every license holder in their real estate office is called a:
Designated Agent
Sally and Fred are two single people buying a home together. The lender is threatening to deny them a loan because he does not like their lifestyle. If the lender does that, it will be a violation of the:
ECOA
When a person passes the Texas exam for real estate, they:
Have met the competency requirement under TRELA
What is one instance in which the commission allows license holders to use alternatives to the required, or promulgated, forms?
If the alternative form is prepared by the property owner themselves
Lot
Individual parcel of land measured and defined by the metes and bounds system
Which legal description will likely include the phrase "point of beginning"?
Metes and bounds
Shane learned that a seller has already signed a listing agreement with another agent in town. Wanting to represent the seller, Shane attempted to convince the seller to terminate their current agency agreement and sign a representation agreement with him instead. Is this legal? Why or why not?
No, it is against TREC rules to try and convince someone to terminate an agreement with another license holder
Was Tom right in discouraging his clients from taking the closing documents to an attorney?
No, you should never discourage clients from seeking the advice from an attorney
What is the term for when a defendant in a criminal court does not admit they are guilty but still accepts punishment for a crime?
Nolo contendere
When a property is talked about in a meeting or via written communication, that is called:
Substantive dialogue
Promulgated contracts are prepared by
TREC
Where did Deb file the paperwork for her claim?
TREC
If an agent closes a sale unaware of hidden water damage to the roof, the agent would be most likely covered by errors & omissions insurance if a lawsuit were to be filed.
TRUE
TCEQ
Texas Commission on Environmental Quality
TRELA is a law passed by the Texas Legislature to govern:
Texas Real Estate
Who enforces the Texas Real Estate License Act?
Texas Real Estate Commission
Chapter 1101 of the Texas Occupations Code is the _____________________.
The Real Estate License Act
How does the Real Estate License Act require brokers to provide consumers with information for the purpose of filing complaints?
The broker must display Consumer Protection Notice TREC No. CN 1-2 in each place of business
What happens when the association of a salesperson and a sponsoring broker is terminated?
The broker returns the sales agent's license to the commission
Who pays for mortgage title insurance?
The buyer
How can a potential student find the pass rates of real estate education providers?
They are posted publicly online by TREC
How do the time requirements for online continuing education classes compare to in-person continuing education classes?
They are the same
Range lines run parallel to the meridian, running north to south.
True
The TCEQ is tasked with regulating which of these things?
Water Rights
Municipal Utility Liens
When a property owner refuses to pay bills for municipal utilities
Can a license holder renew their expired license if it has been expired for 5 months?
Yes, but they must pay an additional fee equivalent to twice the amount of the renewal fee
Block
a collection of lots (parcels)
Who is eligible to request that the Real Estate Commission pay out of the trust account to a defendant who has lost a case?
a defendant's previous employer
Committing a real estate act without a license is what kind of crime?
a misdeamor
About how long can you have an expired license but still be eligible to reactivate your license without retaking the state exam?
about 2 years
Subpoena authority exists to:
allow the commission to bring witnesses to court
Nolo contendere means that a person was accused of something and was a defendant in a trial:
and will accept the decision of the court without pleading guilty to the charge
Metes and bounds
are a written legal land description identifying a piece of real estate's exact dimensions and location in reference to a fixed and permanent monument.
When does the information about intermediary brokerage contained in the IABS need to be given to a consumer?
at the first face-to-face meeting where substantive dialogue about a specific property occurs
Which party must remain neutral during a transaction?
broker acting as intermediary
What is it called when an agent illegally mixes their money with client money?
commingling
In order to get their license, a TREC real estate license applicant MUST:
demonstrate competence by passing the licensing exam
As a license holder, what could help protect you against mistakes you might make in real estate transactions?
errors and omissions insurance
TREC requires applicants to pay renewal fees every how many years to maintain an inactive license?
every two years
Where does the money in the recovery fund come from?
fees and fines paid by license holders
What is one way an applicant can satisfy the related post-secondary education required for a broker's license?
getting a college degree
How do you pay a penalty while still ensuring that your payment does not go through until the appeal is over?
give a supersedeas bond
Once all hearings and appeals have been completed, a broker or sales agent will have to start paying what on any owed funds?
interest
What are nolo contendere pleas sometimes referred to as?
no contest pleas
How long from the TREC filing date does an applicant have to take the state exam?
one year
Metes
refers to the distance measurements used in the description
The National Association of REALTORS® Code of Ethics:
requires a higher standard than the law requires
In order for an individual to be eligible for a real estate license, they MUST:
satisfy the commission as to their integrity
Agent Sam owes Agent Layla a referral fee. How must he get it to her?
send it to Layla's sponsoring broker
All listing contracts in Texas must include two pieces of information: the special rules concerning anyone who lives on a coast and what else?
that all commissions are negotiable
If the buyer asks if the seller has AIDS or HIV, the agent's response should be:
to give notification that the question might be violation of the Fair Housing Act
When can a salesperson start practicing real estate?
when their physical license is received by their sponsoring broker
The Broker-Lawyer Committee
-Members: 13 (6 brokers appointed by TREC, 6 lawyers appointed by the president of the Texas Bar, 1 public member appointed by the governor.) -Membership Term Length: 6 years -Committee Purpose: Draft and revise contract forms for the approval and adoption by TREC.
Texas Real Estate Commission (TREC)
-Members: 9 (All appointed by the governor and confirmed by at least 2/3 of Texas Senate.) -Membership Term Length: 6 years -Committee Purpose: Enforce the Texas Real Estate License Act
Discriminatory Practices
-closely resemble the Fair Housing Laws -The protected classes include race, color, religion, sex, national origin, ancestry, familial status, or disability. -prohibit license holders from answering questions that would lead to disclosures about the protected classes
Which of these tenants is protected by the Fair Housing Act?
A seeing-impaired woman who uses a service dog in a pet-free building
Why is it important to stay on top of your license renewal and expiration dates?
After a license has expired there is an extra fee for renewal
How often will you be formally evaluated in the workplace?
Annually
If a license holder does not disclose a defect in a property to a customer or client because the broker or sales agent did not know about the defect, the license holder is still liable.
FALSE
What direction do longitude lines, or meridians, run?
North to South, Perpendicular to the equator
Tract
The totality of the property represented on a plat
How many tries does an applicant have to pass the state licensing exam?
Three
Who is at fault for not filing the closing paperwork in a timely manner?
Ulysses (Agent)
Bounds
on the other hand, are the descriptions of the boundaries that enclose a parcel of real estate.
What is one promulgated form that TAR has and TREC does not?
the Intermediary Relationship Notice form
What is the recovery fund used for?
to pay damages to a person from the public who wins a court case against a license holder
At what age does a child living with his or her parents no longer qualify for familial status protection under the Fair Housing Act?
18, they are no longer considered a child by the Fair Housing Act and do not receive the act's protections.
Which statement is NOT true regarding death on a property?
Agents are able to disclose deaths at their discretion
Using the general terms of agency law, which party is represented by another party?
Principal
The introduction to the National Association of REALTORS® Code of Ethics is called the:
The preamble.
Since Ulysses said he would take care of closing, did he technically do anything wrong with Sam's money?
Yes, agents should never hold onto money that does not belong to them.
What is a main function of the Texas Real Estate Commission?
adopt and enforce rules for governing real estate practitioners
If a salesperson has no interest in opening their own brokerage, why might they still want to get a broker's license?
for marketing purposes
What should a license holder do when reporting facts in an advertisement?
quote the source of the information
Equal Credit Opportunity Act
-illegal to discourage anyone from applying for credit -illegal to offer anyone credit on terms that are less favorable than terms offered to someone with similar qualifications
Why do most brokerages fall within the scope of the ADA, and therefore must be extra careful about accessibility?
Because of their location or because they have 15 or more employees
What does the integrity portion of the Canons of Professional Ethics charge license holders with avoiding?
Misrepresentation
What is the definition of misrepresentation?
Misrepresentation is an unintentional mistake, written or spoken.
What is the difference between the NAR Code of Ethics and the Canons of Professional Ethics and Conduct?
The NAR Code of Ethics is enforced by NAR; the Canons of Professional Ethics and Conduct are enforced by TREC
If the Code of Ethics and the law conflict, which takes precedence?
The law
What is the best definition of blockbusting?
The practice of encouraging people to sell their homes due to beliefs about how the entry of a protected class will affect an area's property values
The protected class of disability is defined as anyone who has:
a physical or mental impairment that affects the performance of one or more major life activities
Competency
-It is the obligation of a real estate agent to be knowledgeable as a real estate brokerage practitioner. -The agent should be informed on market conditions affecting the real estate business. -The agent should exercise judgment and skill in the performance of the work.
Which of the following is NOT true regarding a license holder's obligation to disclose a property defect:
-Only if the Buyer asks -A license holder is required to disclose a property defect if the seller has disclosed the defect at all.
Fair Housing Act
-a federal law that prohibits discrimination in housing based upon race, color, religion, or national origin and was amended to include sex, disability, and familial status -does not apply to housing developments that are designed for senior citizen living
Home Mortgage Disclosure Act
-allows HUD to spot problematic lending patterns and helps support lawsuits or other disciplinary measures -requires lenders to disclose specific lending information for HUD to map lending patterns
Integrity
-employment of prudence and caution -Don't advise on matters outside the scope of your real estate license. -avoid misrepresentation -Don't exaggerate, misrepresent, or conceal any important facts relating to a property or transaction.
Americans with Disabilities Act
-establishes requirements for telecommunications relay services -prohibits discrimination against people with disabilities in employment, transportation, public accommodation, communications, and governmental activities
Disclosure
-if it will help the client, the agent should share it -including sharing of material facts about a property
Community Reinvestment Act
-requires lenders to assist their local communities by participating in community development projects -enables all parts of a community to have access to credit
Reasonable Care
-standard is based on what most agents would do -assumes agent expertise will be used in handling client's concerns
Competency
-stay informed on market conditions affecting the real estate business -complete the continuing education -exercise judgment and skill in the performance of the work -limit your activities to only the services that you're fully qualified to provide
Loyalty
-the buyer's agent should get the lowest price possible, even if it means less commission -the principal's best interests come before the agent's interests
Which parties need to be told if an agent is representing anyone?
A license holder must disclose orally or in writing to others of their representation of a party to a real estate transaction at the first contact.
Why should real estate agents refrain from giving legal advice to clients?
Agents aren't licensed to give legal advice and if they do, they could be held liable
What is the BEST way to avoid giving misinformation (and consequently, violating the Texas Deceptive Trade Practices-Consumer Protection Act)?
Cite a source for any information you give a client about a property
What form does the Canons of Professional Ethics and Conduct say must be on display in a readily noticeable location in each of the real estate brokers places of business?
Consumer Protection Notice 1-2`
A person who is employed to rent and by the owner needs a real estate license
FALSE
Families Crave Resorts Not Small Damp Ramps
Familial Status Colors Religion National Origin Sex Disability Race
Canons of Professional Ethics and Conduct
Fidelity Integrity Competency Consumer Information Discriminatory Practices Information About Brokerage Services
Fraud vs. Misrepresentation
Fraud is intentional; misrepresentation is not. Fraud generally includes both affirmative misrepresentations and affirmative concealment, and the person making the misrepresentation is aware of the true facts.
Discriminatory Practices
No real estate license holder shall inquire about an owner of real property which indicates any preference, limitation, or discrimination based on a person's inclusion in a protected class.
An elderly couple is going to rent their vacant basement for extra income. The couple does not want a family with children. The couple asks their granddaughter, who is a real estate agent, to help them with finding tenants. Is this legal? Why or why not?
No, the couple is not allowed to discriminate against families with children if they are helped by their granddaughter because she is a license holder
Carla has clients looking for a rental property who only speak Spanish. What should she do to accommodate them?
Non-English speakers should be treated the same as English-speakers, and should therefore be shown the same properties, regardless of language. However, there are official translated lease forms that could help them understand the contract they're signing.
OLD CAR
Obedience (if legal) Loyalty (100%) Disclosure (full) Confidentiality (forever) Accounting (forever) Reasonable care
What is one important difference between REALTORS and other practitioners?
REALTORS are held to a higher standard than the law by the NAR Code of Ethics
Fair Housing Act Protected classes
Race Color Religion National origin Sex Disability Familial status
Which one of the following actions is most likely to be a violation of the Texas Deceptive Trade Practices-Consumer Protection Act?
The Deceptive Trade Practices Act prohibits the license holder from knowingly and/or intentionally deceiving the consumer in the selling or leasing of any real property. Providing a list of professionals to choose from does not violate the law. Continue
Information About Brokerage Services
The Notice could be delivered by the broker or sales agent, first class mail or overnight common carrier delivery service, in the body of or as an attachment of an email. Brokers and agents need to provide this notice to consumers.
What is the name given to the duties owed by agents to their clients?
The duties owed by agents to their clients are known as fiduciary duties.
According to the Canons of Professional Ethics, the primary duty of a real estate agent is to represent:
The interests of their client
Landlords are required to allow tenants to make modifications to their property in order to accommodate their disability. Who's responsible for paying for these modifications?
The tenant
What categories of people are barred from serving on the Commission?
Trade association employees and lobbyists are barred from membership
What is one of the major tenets in the NAR Code of Ethics?
Treat all parties fairly and honestly, not just those you represent
Was it a violation for Tom to agree to inquire about the previous owner's death?
Yes, Tom's inquiry was in violation of Fair Housing Laws
Which of the following people would need a real estate license?
a person selling their neighbor's home for a free
What two important classifications were added to the list of protected classes under the 1988 Housing and Community Development Act amendment?
familial status and disability
