Principles of Real Estate I

If a farm that's for sale measures one and three-quarter square miles, how many acres is it?

1,120 One square mile is 640 acres. Three-quarter square mile is 480 acres (640 x .75 = 480). So, 640 + 480 = 1,120 acres

The total educational requirement that Kyle must meet in order to receive his broker's license is _______.

900 classroom hours

What is a township?

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

Before being issued a real estate license in Texas, the candidate must submit which of the following to TREC?

A legible set of the candidate's fingerprints

Who is behaving unethically in the following scenarios?

A licensee who doesn't show potential buyers a home because he believes they aren't a cultural fit.

What is a section?

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

Each broker licensed in the state of Texas must maintain which of these items?

A physical place of business

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.

The Adams family is financing their loan through Acme Bank and their agent negotiated a great sales price on their new home. Smith Title Company processed the loan documents. The Adamses must purchase mortgage insurance. Who does the insurance protect?

Acme Bank

Which of the following statements about agency by ratification in Texas is true?

Agency by ratification is permitted in Texas.

What's market allocation?

Agreeing with a competing firm on how to split a market

Who is responsible for funding the Real Estate Recovery Trust Account?

All real estate license and certificate holders

Americo Realty and Heart of the Home Real Estate both charge the same commission rates. For this to be price fixing, what must occur?

An agreement between competing firms to standardize commission rates

Manuel wants to move to the U.S. from Spain. However, he will not be able to legally move to the U.S. for a while because the process will take several months. Along with his dream to move to the U.S., he has dreamed of getting his real estate license. When will Manuel be eligible for his license in Texas?

As soon as he becomes a U.S. citizen or is considered a legally admitted alien, meets the educational and other requirements, and passes his licensing exam

To calculate property taxes, multiply the ______ by the tax rate.

Assessed value

Shannon and Rene are sisters who entered into a contract to buy an income property. The sisters got into a dispute, and Shannon wants out of the deal. However, their uncle Jerry wants to replace Shannon on the contract. Shannon agrees to the substitution so they go ahead and do it. This is an example of ______.

Assignment

In the eyes of the law, why do people under age 18 lack contractual ability?

Because they're minors.

Jessica enters into a contract to acquire real property in return for some form of consideration. On the contract, Jessica is regarded as the ______.

Buyer

How is ad valorem property tax calculated?

By multiplying the property's assessed value by the tax rate

Christine listed her house with you. Tailleur represents the buyer, Rebecca, and the seller's mother, Freida, is paying your commission. Which of these factors determines how legal agency is determined in this situation?

Christine listed the property with you.

Which duty requires the client to pay an agent upon completion of the agent's duties?

Compensation

Which option best defines an equitable lien?

Created by a court of common law; doesn't give the right to possession of the property

In real estate, what are emblements?

Cultivated crops

Which Texas-specific law prohibits deceptive trade practices or acts that are "false, misleading, or deceptive"?

DTPA (Deceptive Trade Practices Act)

A ______ is a point, surface, or line used as a reference for measuring elevation.

Datum

Real estate sales contracts must be valid, express, bilateral, ______, and executed or executory.

Enforceable

Why do ethics matter in real estate?

Ethics uphold the profession.

There are three types of listing agreements. They are exclusive right to sell, _______, and open listing.

Exclusive agency

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

Brandon is interested in purchasing a piece of property, but before doing so, he'd like to verify the accuracy of the legal description. Which of these options will accomplish this?

Having a survey conducted.

Texas broker Clark has grown sick of the assumed business name he's been using for the past few years. What, if anything, must Clark do if he's decided to stop using it?

He must notify the commission in writing by the 10th day after the date the broker stops using the assumed business name.

Select the statement about homeowners insurance policies that is true.

Homeowners policies are comprised of several types of insurance.

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

Which of the following describes community property rights?

In some states, it's a form of property ownership for married couples with equal ownership and possession of any property acquired during the marriage.

The commission can impose up to a maximum of how much per violation of TRELA?

$5,000 The commission has the ability to impose up to $5,000 per violation. Each day the violation occurs is considered another violation (and that means another fine).

A parcel of land measures one half mile by 3,000 feet. If price per acre is $4,200, what's the list price for this parcel?

$763,560 Area = length x width. One mile = 5,280 feet. The area of this parcel is 7,920,000 s.f. ([5,280 ÷ 2] x 3,000). One acre = 43,560 s.f. The parcel is 181.8 acres (7,920,000 ÷ 43,560). So, the list price is $763,560 ($4,200 x 181.8).

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

Investment

What is the importance of a legal description appearing in real estate documents?

It precisely locates the land, improvements, encroachments, and easements that impact a property

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 considered an employee for licensing law purposes, but he's still an independent contractor for IRS purposes.

Mac isn't licensed, but he's helping his sister, Katie, find a new house. Which of the following activities can Mac legally do?

Search real estate sites and resources for Katie to find available homes in the area

To share information with other brokers and potential buyers about why your clients are selling the property, you first need authorization from your clients to release this information. Which form do you use to obtain this authorization?

Seller's Authorization to Release and Advertise Certain Information

The listing agent is responsible for marketing the clients' property based on the _______.

Sellers' authorizations

The federal Fair Housing Act prohibits discrimination in any form against the seven protected classes, including ______.

Sex

TREC rejected Baylee's sales agent application. She received a written notice about the rejection, but believes it rejected her application unfairly. What recourse does she have, if any?

She can file a notice for a hearing within 30 days.

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

Simon sold his house under a contract for deed arrangement to Garfield, but Garfield has failed to make the last three payments. Which of the following statements is true?

Simon can keep all of the proceeds received up to that point and repossess the property.

When both supply and demand increase, what tends to happen to prices?

Stay the same

Samantha is a real estate licensee. She's showing her client a property. The client asks about some spots on the ceiling and wonders if they're an indication of a roof leak. What should Samantha do?

Suggest that her client contact a roofing expert to make a determination.

What does the "T" in PITI stand for?

Taxes

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. Though not recognized in all states, the most likely form of co-ownership under which they would make this purchase is ______.

Tenancy by the entirety

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

Testamentary

What does the registration of an assumed business name with the secretary of state or county clerk's office in Texas show?

That the broker has the legal authority to use that name

Henry wants to submit an offer for Lacy's house. Under the statute of frauds, which of the following is NOT a requirement Henry must meet for his offer to become an enforceable purchase agreement?

The contract must be notarized.

Renee listed her property on March 13. After several months, lots of marketing and effort from the agent, a price adjustment, and several showings but no offers, Renee decided to list the property with another firm. Based on this situation, under which of these conditions can Renee list the property with another firm without breaching her agreement?

The listing agreement expired.

How is the grid that's used in the rectangular government survey system laid out?

The numbers start in the northeastern corner and follow a zigzag pattern.

Under a sole proprietorship form of business, ______.

The owner assumes personal liability for all debts

Exercise of police power must be in whose best interest?

The public

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

What's an easement?

The right to cross over or otherwise use another's land for a specified purpose

A sales agent may only accept a commission for a real estate transaction if the commission is paid by which of the following parties?

The sales agent's broker

Jim lives in Texas. If he dies with no will in place, and no creditors or heirs can be found, all of his personal and real property will revert to _________.

The state of Texas

The commission must maintain a file on each complaint that it receives. Each complaint must contain certain information, including _______.

The subject matter of the complaint

The purpose of Texas anti-trust laws is to prevent ______.

The substantial decrease of competition in any line of trade or commerce

Which of the following is a legitimate reason to terminate a lease agreement?

The term of the agreement has expired.

Both parties have to sign the agreement in order to demonstrate that ________.

They understand the terms

A group of 26 different families have shared ownership of a vacation condominium. Each family spends two weeks annually at the condominium. Legally, the condominium is considered a _______.

Timeshare property

Vicky and Lee vacation in Cancun, Mexico every year. They purchased the right to stay in a beach condo for the first two weeks in May, and their agreement continues for the next 10 years. They don't actually own the unit. What did they purchase?

Timeshare use

What's the purpose of licensing?

To protect the public by requiring certain education, training, and standards of licensees

Which of the following are possible effects of an incorrect legal description?

Unintentional encroachment, title and legal issues

Mrs. Jones is renting out the upstairs of her house to earn some extra money. She prefers female tenants and will only allow a single heterosexual female. Can she legally do this?

Yes, since she is the owner-occupant of a single-family principal residence.

Siblings Julia and Gene are co-owners of a small retail building in which a tanning salon is currently operating. Gene really wants to leave his ownership interest to his son when he dies, but the way in which they own the property doesn't allow him to do so. What type of ownership do they have?

Joint tenancy

Jonathan has always wanted to be a real estate broker, owning his own brokerage and showing other individuals the real estate ropes in Texas. He received his license as a sales agent three years ago today. As he celebrates his third anniversary, he is looking forward to meeting the experience requirement so that he can pursue his broker's license someday. How much longer must Jonathan wait to apply for his broker's license?

Jonathan must wait another full year before he can apply, because the requirement is to be an active agent for 48 of the previous 60 months.

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

Kelsey and Harold have a signed agency agreement.

Which one of the following statements is true about land trusts?

Land trusts generally continue for a specified term, such as 10, 20, or 30 years.

Which area of real estate law covers lease agreements?

Landlord-tenant

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.

Stan and Emile are arguing over their shared lot line, since Stan thinks that Emile planted a privet hedge on Stan's property. Stan filed a civil legal action against Emile. What will the court use to determine the actual lot line?

Legal descriptions of both properties

What type of rights to the property does a seller have during the contract for deed process?

Legal title rights

What type of water rights are granted to landowners whose land borders closed bodies of water, such as lakes or the ocean?

Littoral

Putting clients' interests ahead of all others describes which fiduciary duty?

Loyalty

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

Makes sure the terms of the trust are carried out

Morty, a land surveyor, was called out to survey a property. After doing some research, he located the legal description for the property in question. Now, if he could just find the point of beginning located at the iron pin on the southerly line of state route 117, 30 feet east of the oak tree next to Bear Creek. What type of legal description is Morty working with?

Metes and bounds

Sunshine Surveyors Inc. created a lot and block survey for a new residential development, Happy Acres. The first thing the surveyor did when he surveyed the new neighborhood was to reference what type of description?

Metes and bounds description

By making sure all of your contracts are in writing, you not only comply with the law, you also ______.

Minimize the likelihood of misunderstandings and the chances of a lawsuit

What type of zoning applies to MUDs and PUDs?

Mixed-use

Nathan is a sales agent. He convinced one of his clients to purchase in a specific area of town, guaranteeing that it would be the next hot spot in the city and that he was sure to make a profit when his client sold. Six months after closing on the home, his client lost his job and needed to sell. The area had taken a turn, and the client's home was now worth less than what he paid for it. Nathan should have never promised his client a profit. Which of the following is true?

Nathan committed a prohibited action and could have his license suspended or revoked by TREC.

Texas broker Max has registered his assumed business name with TREC. He's about to run an ad using the business name. Has he met the requirements to do so?

No. Max must also provide written evidence of his legal authority to use the assumed business name in Texas.

Real estate licensees are seldom guilty of blatant discrimination, but unintentional discrimination does exist. What's one example of unintentional discrimination?

Not showing homes in neighborhoods where the client may become a victim of racial bias

Someone whose license has been expired for 90 days or less may renew their license by paying TREC a fee. How much is the renewal fee in these instances?

One-and-a-half times the regular required renewal fee

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

Option agreement

In an addendum to the purchase and sale contract, the seller agrees to paint the house before conveying the house to the buyer. The weather changes, and the seller is unable to finish painting the house before closing. This is an example of _______.

Partial performance

What is included in most home owners' mortgage payments?

Principal, interest, taxes, and insurance

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

Drew and Hank were camping at Hank's riverfront cabin. Hank told Drew that he rarely used the cabin and was thinking of selling it. Drew said that he'd buy it from Hank for $80,000, which Hank agreed was a fair price. It's two months later, and Hank is upset that Drew now says he won't buy it. Why isn't this contract enforceable?

Real estate contracts must be in writing.

Homeowner Shaun loves DIY projects and decided to build some bookshelves for his home office. He bolted the shelves to the wall and installed trim around them so they became an integral part of the room. When he sells his home, the bookshelves will be considered ______.

Real property because of the method of annexation

Richard is interested in purchasing some rural land and included outbuildings. When reviewing the legal description, he sees the name of a principal meridian. What type of legal description is this?

Rectangular government survey

How can you determine lot size, easements, and encroachments of a property? Select the answer that would provide the most comprehensive search.

Research the deed and title history, check maps at the county recorder's office, and review land surveys

Jackson is a broker who specializes in high-rise apartment buildings in metro areas. What types of properties are these?

Residential

Any agreement between competing firms that restricts trade, discourages competition, or _______ is a violation of antitrust law.

Restricts choices for consumers

In which type of housing would you find mostly older adults, group activities, healthcare facilities, and minimal or no yard maintenance?

Retirement community