Real Estate 101- Promulgated Contract Forms
On which of Forms 20-11and 25-9 is the seller allowed NOT to provide a seller's disclosure notice? a) Both Forms allow for this option. b) Neither Form allows for this option c) Only Form 20-11 allows for this option. d) Only Form 25-9 allows for this option.
Both Forms allow for this option.
On Form 24-12, what two amounts equal the sales price? a) Cash and Sum of Financing b) Loan Fees and Mortgage Fees c) Outstanding Promissory Notes and Earnest Money d) Listed Price and Offered Price
Cash and Sum of Financing
What paragraph of Form 24-12 deals with property damage? a) Mediation b) Escrow c) Casualty Loss d) Tax Requirements
Casualty Loss
How does a buyer determine if property is located in a flood plain? a) Check a FEMA Flood Map. b) Check with neighbors. c) Contact the county clerk. d) Check a with the National Flood Letter Office
Check a FEMA Flood Map.
Which paragraph on Form 23-12 directs a buyer to seek legal assistance as needed? a) Consult An Attorney b) Lawyer Duties c) Legal Guidance d) Agreements
Consult An Attorney
Buyer Jim has a signed document that would allow him to purchase a property within one year at an agreed upon price. Which contract feature allows this type of agreement? a) Contract Extension b) Contract Rider c) Contract Option d) Call Order
Contract Option
How should the rental rate be calculated for a Seller's Temporary Residential Lease? a) Daily rate b) Weekly rate c) Monthly rate d) Annual rate
Daily rate
A judge will look at a disputed contract using which of the following guidelines? a) Three Corners Rule b) Four Squared Rule c) Civil Due Process Doctrine d) Four Corners Doctrine
Four Corners Doctrine
Which of the following would NOT be noted in the 2B(1) farm and ranch improvements paragraph on Form 25-9? a) House b) Barns c) Tanks d) Sheds
House
Penalty funds collected from frequent transfer fee violators are deposited a) in the general revenue fund of the state. b) with the home owner's association. c) with the real estate board. d) in the buyer's account.
in the general revenue fund of the state.
If a situation arises and both the seller and buyer agree to change a signed Residential Contract a) a new Residential Contract must be filled out. b) a counteroffer must be submitted. c) the Amendment to Contract TREC 39-7 must be completed. d) it is too late and the contract cannot be changed.
the Amendment to Contract TREC 39-7 must be completed.
The Texas Real Estate License Act was formerly known as a) the Texas Agent Licensing Law. b) the Real Estate Broker Act. c) the Real Estate Dealer's License Act. d) the Real Estate Licensing and Regulation Act.
the Real Estate Dealer's License Act.
An example of information a broker would provide to an RSC is a) the number of people living in the house. b) the buyer's annual income. c) the brand and serial number of the air conditioning compressor. d) if the buyer has talked to any other residential service companies.
the brand and serial number of the air conditioning compressor.
The sale price should equal a) the listed price minus the down payment. b) the down payment and the loan amount. c) the offered price plus compensation. d) the loan amount and closing costs.
the down payment and the loan amount.
A seller can have another party assume his or her loan if a) the licensee is still able to receive a commission. b) no appraisal is performed. c) the lender allows it. d) no home inspection is performed.
the lender allows it.
If an agent fails to list an addendum on a contract a) the parties' intentions could be in jeopardy and the agent could be held responsible. b) the TREC will mediate an agreement between the two parties. c) the contract is void because it will not make sense. d) both parties have no choice but to adhere to the original contract.
the parties' intentions could be in jeopardy and the agent could be held responsible.
Under what circumstances would a licensee be allowed to practice law? a) If the licensee is also a lawyer b) If the licensee first meets with an attorney to get the right information c) If the licensee is working on a commercial real estate contract d) Under no circumstances
If the licensee is also a lawyer
Which of the following items cannot be changed by completing the Amendment to Contract TREC 39-7? a) Sales price b) Licensee compensation c) Extending the closing date d) Specifying additional repairs
Licensee compensation
On Form 9-10, what are the first two descriptions that are asked for regarding the location of the property? a) Zip code and Address b) County and City c) Lot and Block d) Zip code and Box Number
Lot and Block
In which paragraph on Form 20-11 and Form 9-10 would you find information on dispute resolution? a) Loss b) Settlement c) Proration d) Mediation
Mediation
What is the term used to describe when all terms in a contract are agreed to by all parties? a) Concession b) Agreement Order c) Term Assent d) Mutual Assent
Mutual Assent
What happens to the status of a back-up contract if the first contract is modified? a) Nothing changes. b) The back-up contract becomes primary. c) The buyer who submitted the back-up contract must be notified in 3 business days. d) The back-up contract becomes a counteroffer.
Nothing changes.
Which of the following is not information requested on the Subdivision Information TREC 37-4 form? a) The amount of the current regular assessment b) Any amounts due and unpaid for the property c) The number of current residents in the development d) The association's capital reserves
The number of current residents in the development
When a transfer fee is enforced, who receives the payment? a) The seller b) The original creator of the covenant or contractual agreement c) The buyer d) The loan originator
The original creator of the covenant or contractual agreement
Who regulates the real estate laws in Texas? a) Texas Legislature b) Texas Real Estate Commission c) Texas Secretary of State d) Texas Board of REALTORS
Texas Real Estate Commission
Who pays to have utilities turned on during inspections? a) The listing agent b) The broker c) The seller d) The buyer
The seller
Which statement about promulgated forms is FALSE? a) A form is considered promulgated once it is approved and required by the real estate commission for use by licensees. b) Promulgated forms change frequently. c) Working with an outdated contract or form is a violation of the TREC rules. d) The word "promulgated" means that the form was created by a lawyer and approved by the Secretary of State for use by licensees.
The word "promulgated" means that the form was created by a lawyer and approved by the Secretary of State for use by licensees.
In what paragraph of Form 24-12 is reference made to public improvement districts? a) Property Condition b) Closing c) Title Policy and Survey d) Possession
Title Policy and Survey
On Form 9-10, in what paragraph would you find information regarding property liens? a) Property b) Title Policy and Survey c) Property Condition d) Special Provisions
Title Policy and Survey
Why are home owners' associations formed? a) So residents have a voice b) To enforce deed restrictions c) To make sure homes are being painted in the trendiest colors d) To build the community through events such as pot-luck dinners
To enforce deed restrictions
Where on the Form 20-12 is the Equal Housing Opportunity logo? a) Upper left hand corner b) Upper right hand corner c) Lower left hand corner d) Lower right hand corner
Upper left hand corner
For a short sale to go through, the _____________ must give approval. a) licensees for both parties b) TREC c) title company d) bank holding the mortgage
bank holding the mortgage
A void contract has the same legal status as a) a bilateral contract. b) an extended contract. c) a contract that never existed. d) a dismissed contract.
c) a contract that never existed.
What type of contract is designed to prevent a specific act of performance? a) Directed b) Associated c) Forbearance d) Performance
Forbearance
For sellers who are carrying notes for buyers, TREC 26-6 requires a late payment fee of _________ for any payment made more than 10 days late. a) $100 b) $50 c) 5% d) 1%
5%
Using TREC 16-5 Buyer's Temporary Residential Lease, a buyer can lease a property up to ______ prior to closing. a) 30 days b) 45 days c) 90 days d) 180 days
90 days
Which of the following best describes the concept of statute of limitations? a) A legal situation that sets the maximum time after an event that legal proceedings based on that event may be initiated b) A legal situation that allows the parties to nullify and void the contract without any penalties c) A legal situation that provides for a third party intervention to resolve any disputes d) The time given to both parties to redress any concerns or complaints
A legal situation that sets the maximum time after an event that legal proceedings based on that event may be initiated
Which of the following items is on Form 20-11 and not on Form 9-10? a) Accessories b) Sales Price c) Financing d) Title Policy and Survey
Accessories
Which addendum on Form 30-10 does not appear on the Residential Sales Contract? a) Addendum for Coastal Area Property b) Addendum for Seller's Disclosure of Information on Lead-Based Paint and Lead-Based Paint Hazards as Required by Federal Law c) Third Party Financing Addendum for Credit Approval d) Addendum for Release of Liability on Assumption of FHA, VA, or Conventional Loan Restoration of Seller's Entitlement for VA Guaranteed Loan
Addendum for Release of Liability on Assumption of FHA, VA, or Conventional Loan Restoration of Seller's Entitlement for VA Guaranteed Loan
Licensee Aaron is working with Buyer Tom. Tom wants Aaron's opinion on whether or not he thinks the title is valid. What should Aaron do? a) Tell Tom what he thinks. b) Tell Tom he will check with the county clerk's office and get back to him. c) Advise Tom to consult an attorney. d) Check with his managing broker to determine how to handle the situation.
Advise Tom to consult an attorney.
When does a contract stop being an executory document? a) After the closing b) Upon acceptance of earnest money c) Upon acceptance by the seller d) Upon signature of an offer by the buyer
After the closing
What are the four elements of a contract? a) Order, File, Value exchange, Agreement b) Agreement, Consideration, Competent parties, Legal objective c) Offer, Acceptance, Review, Close d) Offer, Agreement, Contract, Receivables
Agreement, Consideration, Competent parties, Legal objective
How should a licensee communicate acceptance of a contract? a) Phone call b) Email c) Text message d) All means possible and available
All means possible and available
What is the process to release earnest money called? a) Call b) Lay away c) Promise d) Demand
Demand
Bylaws and Rules of a Condo are referred to as what? a) Proof of Ownership b) Documents c) Directives d) Orders of Performance
Documents
How should the loan amount be entered into paragraph 3? a) Percentage amount b) Cost plus commission c) Dollar amount d) Percent of the listed price
Dollar amount
Under TREC 16-5 Buyer's Temporary Residential Lease, what would be considered a breech of contract? a) Failure to comply with any laws or rules in the subdivision where the home is located. b) Purchasing a dog. c) Calculating rent on a monthly basis. d) Allowing someone who is not an immediate family member to move in.
Failure to comply with any laws or rules in the subdivision where the home is located.
In what paragraph of Form 23-12 is seller financing noted? a) Sales Price b) Financing c) Earnest Money d) No reference on this Form is given.
Financing
Why would a licensee give the Subdivision Information form to the seller to take to the association? a) In case the HOA charges a fee to provide the information b) Only the seller can request the Subdivision Information. c) The HOA will normally waive any fees if a seller requests the information. d) The information is confidential and only available for current residents.
In case the HOA charges a fee to provide the information
Who signs TREC 38-4 Notice of Buyer's Termination of Contract? a) The buyer and seller b) All parties, including the licensees c) Only the seller, to acknowledge receipt d) Only the buyer
Only the buyer
Which paragraph causes the most complaints against licensees? a) Paragraph 11 - Special Provisions b) Paragraph 9 - Reported Conditions c) Paragraph 10 - Repairs d) Paragraph 13 - Escrow
Paragraph 11 - Special Provisions
What paragraph on Form 23-12 allows space to write buyers names? a) Parties b) Property c) Sales Price d) Buyers and Sellers
Parties
What must be done to have a seller's name removed and a buyer's name added to an HOA's records? a) Notify the HOA within 30 days of closing b) Pay a transfer fee as specified in TREC 36-7 c) Bring a utility bill in the buyer's name to the HOA office d) The HOA will be notified after closing by the bank.
Pay a transfer fee as specified in TREC 36-7
What form does seller financing take? a) Cash b) Personal check c) Bank draft d) Promissory note
Promissory note
What is the collective term given to land, improvements, and accessories? a) Personal Property b) Land c) Sale Items d) Property
Property
On Form 9-10, in what paragraph would you find information regarding environmental matters? a) Notices b) Title Policy and Survey c) Property Condition d) Provisions
Property Condition
What paragraph of Form 23-12 denotes a ready-for-occupancy date? a) Special Provisions b) Seller Disclosure c) Property Condition d) Closing
Property Condition
In what paragraph of Form 30-10 would you find items dealing with improvements? a) Property and Condominium Documents b) Sale Price c) Title Policy d) Tax District
Property and Condominium Documents
What paragraph of Form 24-12 deals with the seller accepting back up offers? a) Mediation b) Default c) Notices d) Representations
Representations
What does the sales price in paragraph 3D deal with on Form 25-9? a) Sale price based on a percentage of the down payment b) Sale price based on the amount financed c) Sale price based on calculated acreage d) Sale price based on the escrow amount
Sale price based on calculated acreage
What paragraph of Form 30-10 deals with requiring the buyer to pay for any deposits mandated by the Association? a) Seller Disclosures b) Title Policy c) Settlement and Other Expenses d) Sale Price
Settlement and Other Expenses
When a seller is contemplating a loan assumption, the seller must respond to the buyer within how many days or it is assumed that the seller has given his or her approval? a) Five days b) Seven days c) Fourteen days d) 30 days
Seven days
Which of the following best define the concept of "consideration?" a) An offer to purchase b) Something in exchange for something else c) Counteroffer to an original offer d) Something placed on the table
Something in exchange for something else
Seller Steve sold his home to Buyer Bill and closing is set for November 1. It is October 26 and Steve been unable to find a new home because his daughter was seriously ill. Buyer Bill has agreed to wait until November 15. What should Steve's agent do? a) Steve's agent should send an Amendment to Contract 39-7 with the new closing date to Bill's agent. b) Steve's agent should send a counteroffer to Bill's agent. c) Steve's agent should strike through the closing date and write in the new one and send the contract to Bill's agent. d) As long as Bill agrees to the new date, no further action is necessary by Steve's agent.
Steve's agent should send an Amendment to Contract 39-7 with the new closing date to Bill's agent.
What can the commission do if a license holder fails to use a required contract form? a) Fine the licensee. b) Bring civil charges against the licensee. c) Turn the licensee over to the Texas attorney general for appropriate action. d) Suspend the licensee's license.
Suspend the licensee's license.
What form should an agent use if a buyer needs to sell his or her current home before closing on the new home? a) TREC 10-6 Addendum for Sale of Other Property by Buyer b) TREC OP-K Information about Brokerage Services c) TREC 40-5 Third Party Financing Addendum d) There is no promulgated form and the buyer should contact an attorney.
TREC 10-6 Addendum for Sale of Other Property by Buyer
Which of these actions would not be considered practicing law without a license? a) Give an opinion about the legal effect of the contract. b) Tell the client known facts about the property that might affect the title. c) Give advice about the tax consequences of the purchase. d) Offer an opinion regarding the validity of the title.
Tell the client known facts about the property that might affect the title.
What is the best action to take when an attached item is NOT to be sold with the house? a) Tell the seller to mark the item with a tag that states that the item does not go with the sale. b) Photograph the item and attach it to the listing file. c) Tell the seller to remove the item before any showings. d) Tell other licensees that the item is not part of the house sale.
Tell the seller to remove the item before any showings.
What agreement is typically made when a buyer moves in before the actual close? a) Occupant permit b) Temporary lease c) Pre-close agreement d) Short-term rental
Temporary lease
The Johnsons received an offer on their home contingent on the buyers, the Raleighs, selling their home. While waiting for the Raleighs, the Johnsons receive a back-up offer without a contingency. What can the Johnsons do? a) The Johnsons cannot accept any offers until the deadline to sell has passed on the Raleigh's contract. b) The Johnsons can ask the Raleighs to waive their contingency within an agreed upon timeframe or terminate the contract. c) The Johnsons can accept the new offer but must wait until the deadline to sell has passed on the Raleigh's contract. d) The Johnsons can terminate the Raleigh's contract with no notice or explanation.
The Johnsons can ask the Raleighs to waive their contingency within an agreed upon timeframe or terminate the contract.
On Form 24-12, what happens if the buyer fails to deposit agreed upon earnest money? a) The buyer is given a 5-day grace period. b) The buyer is in default. c) The buyer must pay a cash penalty. d) The buyer is charged a late fee not to exceed $50 per day.
The buyer is in default.
What should a buyer do if he or she wants to submit an offer on a home that already has a contract on it? a) The buyer should wait and see if the first contract terminates and then submit an offer. b) The buyer should have his or her licensee submit a counteroffer. c) The buyer should have his or her licensee submit an offer with TREC 11-7 Addendum for Back-up Contract attached. d) The buyer should contact the seller directly and convince them to drop the first contract.
The buyer should have his or her licensee submit an offer with TREC 11-7 Addendum for Back-up Contract attached.
For purposes of performance, what is the effective date of a back-up contract? a) The date the listing expires. b) The termination date of the first contract. c) The date the buyer is notified that the first contract terminated. d) The closing date.
The date the buyer is notified that the first contract terminated.
What happens if a seller rejects just one term of an offer? a) The offer automatically becomes a counteroffer. b) The buyer has grounds to terminate the contract. c) The entire offer is rejected. d) The seller must provide a valid reason for rejecting that term.
The entire offer is rejected.
When can a tenant keep pets in a home under TREC 15-5 Seller's Temporary Residential Lease? a) The seller is guaranteed to keep any pets the seller owned prior to selling the home. b) The seller can only have pets in the home if the buyer approves. c) The seller has a right to privacy and has full rights to any pets he or she desires whether they were owned prior to selling or purchased after. d) Pets are excluded from TREC 15-5 due to the damage they may cause.
The seller can only have pets in the home if the buyer approves.
What can be done if a seller needs extra time and wants to remain in the home past the closing date? a) The seller should ask the buyer for permission and correct the closing date on the contract. b) The seller should ask the buyer for permission and both should sign a temporary lease. c) The buyer should ask the lending institution for approval. d) The buyer and seller should contact the office administering the closing for approval.
The seller should ask the buyer for permission and both should sign a temporary lease.
Which of the following best defines the condition known as "novation?" a) The addition of two or more riders to a contract b) A contract without any terms c) Null and illegal contract d) The substitution of a new contract for an old one
The substitution of a new contract for an old one
Under which of these circumstances could a licensee be exempt from using a TREC promulgated form? a) When the licensee is functioning solely as a principal, not as an agent b) When the broker has solicited an attorney to draft a form c) When a licensee has his or her own form to use d) When the licensee has received permission from the Texas Secretary of State
When the licensee is functioning solely as a principal, not as an agent
The Third Party Financing Addendum for Credit Approval (TREC 40-5) is used when a) a seller is carrying the note for the buyer. b) a buyer is paying cash for the property and not using financing. c) a buyer is applying for a loan with conventional, FHA, VA or other forms of financing. d) both parties to the transaction are trading one property for another.
a buyer is applying for a loan with conventional, FHA, VA or other forms of financing.
In a contract, earnest money is a) the consideration. b) a contract term. c) non-negotiable. d) viable only when in the form of cash.
a contract term.
A listing contract adopted by the commission for use by licensees must contain a) a notice that it was prepared by an attorney. b) a provision informing the parties to the contract that real estate commissions are negotiable. c) a disclaimer saying that the form was not promulgated by Texas. d) language about agency representation.
a provision informing the parties to the contract that real estate commissions are negotiable.
TREC 26-6 Seller Financing Addendum is used when a) a seller is carrying the note for all or a portion of the sales price for the buyer. b) the buyer is carrying the note for all or a portion of the sales price for the seller. c) the licensee is carrying the note for all or a portion of the sales price for the seller. d) the licensee is carrying the note for all or a portion of sales price for the buyer.
a seller is carrying the note for all or a portion of the sales price for the buyer.
Form 9-10 has paragraph 6.E.8 which you will not find on Form 20-11. This paragraph deals with a) wetlands. b) agricultural development districts. c) litigation. d) endangered species.
agricultural development districts.
A sale form completed by a buyer and delivered to a seller a) is an offer. b) constitutes a voidable contract. c) cannot be rescinded. d) is an enforceable contract.
is an offer.
A bilateral contract a) is between two parties. b) is not viable in Texas. c) requires a monetary exchange to enforceable. d) must be written and reviewed by an attorney.
is between two parties.
By signing the RSC 1 form, a buyer a) is only acknowledging that the licensee disclosed his or her relationship with the RSC to the buyer. b) agrees to use the RSC that the licensee is affiliated with. c) agrees to receive a quote from the RSC the licensee is affiliated with. d) allows the licensee to share confidential information with the RSC.
is only acknowledging that the licensee disclosed his or her relationship with the RSC to the buyer.
Compliance for the TREC 10-6 Addendum for Sale of Other Property by Buyer a) is flexible. b) is open until the buyer's property sells. c) is strict because time is of the essence. d) is waived if multiple offers are received.
is strict because time is of the essence.
According to the paragraph dealing with Property Condition, the purchase of a residential service contract is a) mandatory. b) not required on new construction. c) required by all condo associations with more than 20 units at one location. d) optional.
optional.
Per Paragraph E of TREC 45-1, the residential contract will ______________ if the lender does not give approval. a) terminate b) be re-negotiated c) be counteroffered d) be amended to the amount owed
terminate
To write a legal description for a large ranch, the licensee would a) want to give the commonly accepted property reference. b) want to use a tract report. c) need to attach a aerial photo. d) probably have to attach an addendum to completely describe the property.
probably have to attach an addendum to completely describe the property.
TREC 37-4 Subdivision Information is used to a) notify the HOA of the buyer's information. b) waive any fees the HOA may charge. c) request information from the HOA to give to the buyer. d) provide the lender with information on HOA fees when the lender is qualifying the buyer.
request information from the HOA to give to the buyer.
Some HOA's for high-end developments may a) perform a background check on new residents. b) perform a credit check on new residents. c) require a year's HOA payments in advance on new residents. d) require a one-time membership fee which could be over $1,000.
require a one-time membership fee which could be over $1,000.
On TREC 45-1, what is defined as the sales price less seller's expenses? a) seller's gross b) seller's net proceeds c) buyer's mortgage amount d) licensee commission
seller's net proceeds
A Residential Service Company a) provides maintenance for vacant homes listed on the MLS. b) sells warranties to buyers covering any repairs which may arise in the first year after the purchase of the home. c) is another name for a brokerage specializing in residential sales. d) seeks restitution for buyers when items break in the first year after a home is sold.
sells warranties to buyers covering any repairs which may arise in the first year
If, during the loan assumption process, it becomes known that the lender will be charging an interest rate that is higher than the buyer would like to pay a) the buyer must accept the bank's interest rate because he or she has signed a contract. b) the buyer can terminate the contract but will have to forfeit the earnest money deposit. c) the buyer can terminate the contract and receive a refund of his or her earnest money. d) the seller can try and intervene on the buyer's behalf.
the buyer can terminate the contract and receive a refund of his or her earnest money.
If a buyer only has enough money for a 10% downpayment a) the buyer will not be approved as all lenders require a 20% downpayment. b) the seller will most likely reduce the selling price by 10%. c) the buyer may apply for two loans - one for 80% and the second for 10%. d) the agent will reduce his or her commission to make up the difference.
the buyer may apply for two loans - one for 80% and the second for 10%.
Paragraph 2 of TREC 38-4 allows a buyer to terminate an agreement due to a) the seller's failure to disclose material facts. b) Subdivision Information from an HOA. c) the buyer's failure to gain credit approval for a mortgage loan. d) cold feet.
the buyer's failure to gain credit approval for a mortgage loan.
TREC 12-3 Addendum for Release of Liability on Assumption is used when a buyer wishes to assume a loan and a) the seller wants to be released from any further liability. b) the seller must submit it to the lender for approval. c) the lender wants the seller to remain liable as a co-signer until the loan is satisfied. d) the buyer changes his or her mind and wishes to be released from the assumption.
the seller wants to be released from any further liability.
If a contract is terminated using TREC 38-4, _______________ determine(s) if the buyer's earnest money will be refunded. a) the reason for terminating b) the terms of the original contract c) the licensee's negotiating skills d) the local REALTOR® board
the terms of the original contract
One reason that a survey may not be required is because a) they are inaccurate. b) they are time-consuming and tedious. c) they are based on dated land grant maps. d) they require final approval by a board of land granters.
they are time-consuming and tedious.
