Real Estate Principles 1

A subordination agreement

A bank agrees to make a home loan but insists on a written agreement between the bank and other prior lienholders to grant first-lien position to the bank, lowering the priority of other liens. What does the bank require?

independent contractors

A broker can control what licensed associates do but NOT how they will do it if the associates have the status of

$1,000,000

A broker found guilty of antitrust violations can receive a maximum of 10 years in prison and how much in fines?

Which statement reflects the experience and education requirements for broker and sales agent licensing?

A broker license applicant must have at least four years of active sales agent experience during the five years preceding the date of application.

implied

A broker took a listing for an office building. When it went under contract, the purchaser requested a property condition inspection. The broker hired an inspector who did not find three serious defects in the property. After the purchaser sued the broker, who was an agent of the seller, the courts determined that the broker was also acting as an agent of the purchaser under which kind of contract?

seller

A broker who acts as a subagent represents

the seller

A broker who acts as a subagent represents

sellers agent

A broker who lists the property for sale or lease represents the owner as

instruct another broker to negotiate directly with the client.

A broker who represents a party in a real estate transaction may NOT

Yes, the lien is on the property, not the property owner.

A builder does substantial work on a client's lake house, but the client refuses to pay and the builder files a mechanic's lien. The client subsequently sells the lake house. Can the builder still retrieve his money?

The buyer may request that the TREC-licensed property inspector complete the necessary repairs at the buyer's expense.

A buyer hired a Texas Real Estate Commission (TREC)-licensed property inspector and has received the property condition inspection report in which deficiencies were noted. The buyer's options for dealing with the reported deficiencies do NOT include which of the following?

encumbrance

A claim, charge, or liability that attaches to and is binding on real estate. It is a right or an interest held by a party who is not the fee owner of the property.

Texas Workforce Commission Civil Rights Division (TWCCRD).

A complaint of discrimination brought under the Texas Fair Housing Act can be filed with the U.S. Department of Housing and Urban Development or with the

life tenant

A conventional life estate is established by a deed from an owner of a fee simple estate to an individual

Real estate brokers hoping to list properties being sold by a corporation should secure what document before beginning work?

A copy of the corporate resolution authorizing the sale

express reservation.

A father sells a lakeside property to his daughter. He puts an easement in the deed that gives him the right to enter the property to fish. This is an easement by

$10,000

A first-time homebuyer may make a penalty-free withdrawal from an IRA of up to

$990

A homebuyer has a gross monthly income of $3,000. If the lender uses a total-debt or back-end ratio of 33%, what would be the maximum total debt allowed, including the house payment?

Which of the following is an example of a variance?

A homeowner needs to get a permit to build a home that encroaches on a side-yard setback.

HOA, IRS tax and mechanic liens

A homestead may suffer forced sale for either payment of annual real estate taxes or which of the following?

Which of the following statements about separate property is TRUE?

A house gifted by parents to one spouse as a wedding gift could be held separately.

What is the USA PATRIOT Act?

A law that requires licensees to only sell properties to U.S. citizens and requires discrimination against noncitizens (such as in bidding competitions for properties)

Under the discriminatory practices canon of the Canons of Professional Ethics and Conduct, which practice is permitted?

A license holder may inquire about the marital status of a current property owner.

Involuntary Lien

A lien placed on property without the consent of the property owner.

Stan wants to invest in real property. Rather than be a sole owner, Stan would prefer to pool his resources with other people to own and develop a small office building. He would prefer not to take part in the day-to-day responsibilities of the organization. What type of business venture would best fit his goals

A limited partnership real estate investment syndicate

an express agency.

A listing agreement between the seller and the broker creates

an implied agency

A listing agreement between the seller and the broker creates

the protection period

A listing contract contains the nature of the agency relationship with the seller, the date of possession, and

abandonment

A manufacturing company owns an easement over neighboring properties so that its trucks can pick up goods from its processing plant. If the company closes its processing plant, its easement is terminated by

real estate because the streets, sewers, and utilities represent "improvements."

A parcel of land near an airport that has streets, sewers and utilities, but is currently undeveloped in terms of homes or other buildings, is called

5%

A person is NOT eligible for appointment as a public member of the Commission if that person owns more than how much of an interest in an entity regulated by or receiving funds from the Commission?

18

A person may be removed from inactive status on proof of attendance of at LEAST how many classroom hours of CE during the two-year period preceding the filing of application?

control

A property owner's right to revert her yard to its natural state is an example of the right of

the selling broker under whom the sales agent is licensed.

A sales agent working for a buyer collects a commission from

the condominium declaration that sets out the rights and obligations of each unit owner.

A sales agent working with a buyer who is interested in condominiums should make sure the buyer has

special agent.

A seller employs a broker to list his home for sale. The broker is classified as

Failure of the owner's spouse to sign the deed

A seller has accepted an offer from a ready, willing, and able buyer, and the real estate agent is anticipating the closing of the transaction and receiving a commission. However, if the transaction does not close, the broker still would receive a commission under which circumstances?

net listing

A seller wants to get $190,000 from the sale of the property. The broker sells the property for $210,000, making a $20,000 commission. This is an example of

Mixed use

A structure that has retail shopping on the first two floors, offices on floors 3 through 15, and apartment units on floors 16 through 25, would have what classification?

two years

According to statutory redemption rights, if the property is a residence homestead or mineral interest or if it is designated for agricultural use, the owner may redeem the property within what period of time after the recording of the purchaser's deed?

the broker has control over how the associate performs a task.

All of the following are true about a licensed associate who is an independent contractor EXCEPT

What are accrued expense and prepaid expense items?

An accrued expense is something owed by the seller that eventually will be paid by the buyer, such as interest on an assumed loan; and a prepaid expense is something paid in advance by the seller but not yet used up, such as prepaid insurance.

one year

An aggrieved person who believes illegal discrimination has occurred may file a complaint within _________________ of the alleged discriminatory act?

an executed agreement.

An agreement in which the buyer and the seller have met all the obligations of the contract is called

Easement by Prescription

An easement acquired by continuous, open, and hostile use of the property for the period of time prescribed by state law. - lasts 10 years

Easement Appurtenant

An easement created to benefit adjacent land.

easement appurtenant

An easement that is annexed to the ownership and used for the benefit of another's parcel of land

Situs

Area preference is known as

duties of care

As an agent, the broker must exercise a reasonable degree of care while transacting business entrusted to the broker by the principal, and the broker is liable to the principal for any loss resulting from the broker's negligence or carelessness

Moral character, to make sure the prospective license holder has satisfied any outstanding conflicts with the law

Aside from a criminal background check, what other check may the Commission make—even before someone applies for a license?

Brokers may assign desk duty hours to employees, but may negotiate contracts with independent contractors that include desk duty expectations.

Brokers will often provide time for license holders to work "desk duty," a period in which the desk person fields incoming calls to the brokerage and may work with callers who are not otherwise affiliated with other sales agents. May brokers assign (order) sales agents to work specific hours of desk duty?

Which listing-related activity would a real estate agent legally be permitted to perform?

Depositing earnest money in a title company rather than holding it in a trust account maintained by the broker for that purpose

A mutual promise of love and affection

Charlotte contracts to purchase a home from her sister, Beverley. Which represents consideration given to create a valid, enforceable contract?

Supply

amount of goods offered for sale within the market at a given price during a given time

supply

amount of goods offered for sale within the market at a given price during a given time period

Price

amount paid for a property

Price

amount paid for the property

consideration

an act or a promise that is offered by one party to induce another to enter into a contract; it is that which is given in exchange for something from another

If a homeowner who has NOT hired a broker agrees to accept an offer brought to him by a broker, he may create

an agency by ratification

trade fixture

an article owned by a tenant and attached to a rented space or building for use in conduction a business

corporation

an artificial person, or legal entity, created under the authority of the laws of the state from which it receives its charter

An example of an appurtenance is

an easement

computerized loan organization

an electronic network for handling loan applications through remote computer terminals linked to several lenders' computers

a listing agreement between the seller and the broker creates

an expressed agency

A contract is void if it involves

an illegal purpose

reconciliation

analyzing and effectively weighing the findings from the three approaches

void contract

as no legal force or effect because it does not meet the essential elements of a contract

If there are only two remaining spec homes in a development of 100 completed and sold units, the prices of those remaining homes can be expected to rise. What economic principle is that?

as supply falls, demand increases

real property

as the earth's surface extending downward to the center of the earth and upward into space, including all things permanent

When the Texas IABS is delivered, the sales agent or the broker should

ask for a verbal or confirming email that the consumer has received it

An applicant for a Texas real estate license must be

at least 18 years old and be a legal resident of Texas at the time of filing the application, or be a legally admitted alien.

wage lien

attaches to all real and personal property belonging to an employer who owes back wages to an employee, as determined and ordered by the Texas Workforce Commission

Lumber is used to build a house so that what was personal property (lumber) is now real property (the house). The process is called

attachment

special agent

authorized to represent the principal in one specific act or business transaction, under detailed instructions

fixture

automatically included with the real property when a sale occurs, unless other provisions are made in the sales contract

Which is the sudden removal of soil by forces of nature?

avulsion

Value

based on objective and subjective factors

Common Law

based on past court cases and deals primarily with the ownership and transfer of real estate

income approach

based on the premise that the income derived from a property will, to a large extent, influence the value of that property

Should the seller be present for the home inspection?

because it is the seller's home, he is entitled to be present at the home inspection

Why does the Texas Real Estate Commission approve and/or promulgate specific forms to be used in real estate transactions?

because the vast majority of real estate transactions are similar in nature and standardized forms can help protect all parties involved

Personal property is conveyed by

bill of sale

Which technique finances more than one property?

blanket loan

commeical

business property - offices, shops, theaters, hotels, and parking facilities

Commercial

business property, including office space, shopping centers, stores, theaters, hotels, and parking facilities

The Commission may NOT prohibit a license holder from using for the sale, exchange, option, or lease of an interest in real property a contract form that is prepared by an attorney and required by the property owner or prepared

by the property owner.

A vendor's lien is a claim on real estate

by the seller of the property

contract for deed

can be used when mortgage financing is unavailable or too expensive or when the purchaser has insufficient down-payment funds

If a property has an involuntary lien against it, the lien

can remain and the purchaser will buy the property subject to the lien.

If an investor's adjusted basis in a property is $400,000 and the property has a net selling price of $500,000, the investor has a $100,000

capital gain

Cost

capital outlay necessary to bring a property into existence

cost

capital outlay necessary to bring a property into existence

principal duties of the law of agency

care

functional obsolescence

caused by a relative loss of building utility. This loss may be due to a deficiency such as a faulty building design, outmoded equipment, or a poorly arranged floor plan.

external obsolescence

caused by factors not on the subject property (such as environmental, social, or economic forces) and is incurable

That people buy at their own risk and should examine the property before they buy is expressed by the concept of

caveat emptor

Under Texas homestead exemption laws, a property occupied as the family home is exempt from forced sale for nonpayment of

certain judgements

If the value of a residential property increases because the zoning changed from residential to commercial, this is an example of the principle of

change

severance

changing an item of real estate to personal property (cutting down a tree)

attachment

changing personal property into real estate (constructing a concrete walk)

usury

charging interest at a rate higher than the maximum rate established by state law

What sets forth the powers of a corporation? The

charter

The distance a home must be set back from a city street is regulated by

city ordinance

agreement of parties

clarifies the understanding that no other agreements are to be relied on and identifies any TREC addenda or other forms to be a part of the contract

valid contract

complies with all the essential elements and is binding and enforceable on both parties

Loans that follow guidelines established by Fannie Mae and Freddie Mac in the secondary market are called

conforming loans

Which is an act or a promise that is offered by one party to induce another to enter into a contract

consideration

In the sales comparison approach to value, the probable sales price of a building may be estimated by

considering sales of similar properties.

Community property

consists of all other property, real and personal, acquired by either spouse during the marriage

If a borrower runs into financial trouble and believes he will be unable to make future payments on his home, he should

contact the lender immediately and discuss options for reduced payments.

characteristics that define land use

contour and elevation

Which economic principle states that the value of an improvement is equal to what it adds to the value of the whole property or what its absence subtracts from the value?

contribution

Bulk zoning

controls density and overcrowding

Texas Real Estate License Act

controls the licensing of persons permitted to practice real estate brokerage in Texas

Texas Real Estate License Act

controls the licensing of persons permitting to practice real estate brokerage in Texas

A person lives in an apartment building. The land and structures are owned by a corporation, with one mortgage loan securing the entire property. Like the other residents, this person owns stock in the corporation and has a lease to the apartment. This type of ownership is called a

cooperative

In a cooperative, who holds title to the real estate?

cooperative

Which of the following is NOT a physical characteristic of land?

cost

By definition, a lien on a property is typically defined in dollars and

could stop a property from being sold, or it could transfer with the property at sale.

forcible entry and detainer

court suit initiated by landlord to evict tenant after tenant has breached a term of the lease

agency

created at a broker level, not the sales agent level

implied agency

created by a brokers actions or words

involuntary lien

created by law and is either statutory or equitable

Statutory Lien

created by statute, federal tax liens, ad valorm liens, judgement liens, mechanic liens

statutory lien

created by statute; federal tax liens, ad valorem tax liens, judgment liens, and mechanics' and materialmen's liens

voluntary lien

created by the lienee's action, such as taking out a mortgage loan.

Reversionary Interest

created of a lifeestate does not convey the remainder interest to a third party - reverts to the original owner

buyer representation agreement

creates a broker-buyer agency agreement

surety bail bond lien

creates a legal requirement that the owner of surety provide assurance of a net worth at least twice the amount of the sum of the bail

Asbestos is MOST dangerous when it

crumbles and becomes airborne.

If a tenant in common dies, that person's ownership interest goes to

decedent's heirs

When supply increases, real estate prices usually

decrease

According to the income approach, if the capitalization rate increases, the property value

decreases

Remainder Interest

deed or will creates the life estate names a third party to whom title will pass on the death of the life estate owner, then third party is said to own the remainder interest or estate

If Bill and John own adjacent properties, and Bill grants John an easement to cross Bill's land to reach a main road, John's property is

dominant tenement

loyalty

e broker must NOT act in self-interest because of the duty of

Recovery under the DTPA for an act committed knowingly is limited to

economic plus mental anguish damages

Which of the following is suspected of causing serious health issues, although to date there is no proof?

electromagnetic fields

Abatement

elimination or reduction of real estate taxes to attract investment to an area

abatement

elimination or reduction of real estate taxes to attract investment to an area

Which of the following is personal property?

emblements

reverse mortgages

enable homeowners who are 62 years old or older to borrow against the equity in their homes

wraparound loan

enables a borrower to obtain additional financing from a second lender without paying off the first loan

Steering

encouraging buyers to limit search to regular neighborhoods based on factors such as race or religion

blockbusting

encouraging the sale or rental of property by claiming a protected class of people are moving into the area

Incentive zoning

ensure that certain uses are incorporated into developments

To earn a commission, a broker must

ensure that the transaction closes

Revival

equals Recovery

Recession

equals Slow Down

Depression

equals the Bottom

What kind of redemption rights allow the owner of a tax-delinquent property to redeem the property before the tax sale?

equitable

Which of the following is similar to a mutual fund?

equity REIT

Sara is a real estate investor; she owns several homes in Galveston that she rents out on both short- and long-term leases. She has mortgages on the homes that she pays monthly. What is the portion of her mortgages that is applied to the principal for each loan considered

equity buildup

trade fixtures

even though attached to real estate, belong to the tenant

legal description

exact way of describing real estate in a contract, deed, mortgage, or other document that will be accepted by a court of law

1988 Fair Housing Amendments Act

extended federal civil rights protection to families with children and to persons with physical and mental disabilities

It is permissible for a real estate agent to

fail to specify a definite termination date in a contract to perform property management services.

terms permitted by the HUD advertising guidelines

family room, mother-in-law suite, master bedroom, quiet neighborhood

Agricultural

farms, pastureland, ranches, and orchards

agricultural

farms, timberland, pastureland, ranches, orchards

Complaints of discrimination brought under the Civil Rights Act of 1866 must be taken directly to

federal court

In condominium ownership, the owner of each unit holds

fee simple title

Gloria is a sales agent who wishes to specialize in REOs. What should she have knowledge of in order to be considered competent to specialize in these types of real estate transactions?

financing and investment principles

For entrepreneurs to set up a real estate brokerage as a sole proprietorship, they must

first have a valid broker's license

1919

first real estate laws passed in California in

Monuments

fixed objects used to reference points. Ex: stones, trees, fence

specific performance

force the defaulting party to carry out the terms of the contract and/or seek such other relief as may be provided by law

How long does a nondefaulting party have to begin legal action against the defaulting party in a real estate breach of contract?

four years

The practice of having an appraiser arrive at a value that already has been approved by the lender is an example of

fraud

What type of association allows all the partners the ability to participate in the operation and management of the business?

general partnership

An income tax lien is what kind of lien?

general, involuntary

flexible payment plan

generally used to enable younger buyers and buyers in times of high interest rates to purchase real estate

earnest money deposit

gives evidence of the purchaser's intent to carry out the terms of the contract

lateral severence

gives property owners the right to sell or lease what is under the surface, on the surface, and theoretically above the surface

Property inspection involves

giving an opinion as to the condition of the structural, electrical, mechanical, and plumbing systems and equipment for a parcel of real estate.

rectangular survey system

government survey method, to standardize the description of land acquired by the federal government

littoral rights

granted to owners of land bordering on closed bodies of water

Riparian Rights

granted to owners of land located along the course of a river or stream

A potential purchaser learns that a new expressway overpass is to be constructed within two blocks of one of the houses she is considering. If this fact causes her to reduce the amount she offers for the property, that decision would likely be based on the economic characteristic of

improvements

Real estate salespeople involved in condo sales who have financial concerns about their buyers should remind them that

in addition to making a monthly mortgage payment and periodic property tax payments, they also will owe money for association fees and possibly special assessments.

An ideal CMA would include the value of similar homes sold

in the last six months

One of the basics of pricing land is to express the price

in the same unit in which cost is given - such as per square foot or per acre.

limited partnership

includes general partners as well as limited partners. The general partner or partners run the business; however, the limited partners do not participate in the management

the bundle of legal rights

includes the right to control the property within the framework of the law, the right of exclusion, the right of possession, the right of disposition, the right of enjoyment

Which of the following real-property objectives is also a real-property security objective?

income stream

When demand increases, real estate prices

increase

Adding more bathrooms to a three-bedroom house that has only one bathroom may be an example of

incurable functional obsolescence.

What is the typical employment status for a residential rental locator?

independent contractor

exception

indicating a deficiency in the grantor's title, such as a mineral interest held by a previous owner

reservation

indicating an interest being retained by the seller, such as a mineral right or an access easement

chattels

items of personal property (tangibles as chairs, tables, clothing, money, bonds, and bank accounts )

Why is it risky for an investor to purchase raw land with the expectation that there will be growth in the area in the future?

its potential appreciation and its intrinsic value is difficult to determine

The unities of possession, interest, time, and title are associated with which of the following?

joint tenancy

The purpose of the National Association of REALTORS® is to

keep members up to date on current housing trends, legal issues, and brokerage business practices.

Fuedal System

king owned title to all land, all the people paid him rent

Which of the following would be considered a fixture?

kitchen cabinets

Supply includes

labor, construction cost, government control

Which is NOT insured by property insurance?

land

Real estate is defined as

land at, above, and below the earth's surface.

Allodial System

land ownership where anyone can own land

If water is found on a property, that makes the property

land, because it is attached to the property by nature.

The legal theory of separating surface rights from subsurface rights and air rights is called?

lateral severance

The Texas Real Estate License Act is an example of which of the seven sources of law?

laws passed by the state legislature

antitrust laws

laws prohibit monopolies and contracts, combinations, and conspiracies that unreasonably restrain trade. The most common antitrust violations that can occur in the real estate business are price-fixing, boycotting competitors, and allocating customers or markets.

A sales agent wishes to specialize in apartment locating. In what areas of real estate should the agent be competent?

leasing laws

Real estate brokers working with budding entrepreneurs to set up Texas property companies are reminded that

legal and tax advice should be sought from professionals to determine the best form of business ownership for a particular situation.

primary mortgage market

lenders who supply funds to borrowers as an investment

Caveat Emptor

let the buyer beware

federal judgement liens

liens in favor of the federal government or any department or entity of the federal government for such debts as unpaid student loans and deficiencies on government-insured or government-guaranteed loans

The first step in the appraisal process is to state the problem or purpose of the appraisal. The second step is to

list the data needed and the sources.

no

listing broker assists buyer but does not represent.. does that make the broker the buyers agent?

exclusive right-to-sell listing

listing broker receives commission regardless of who is procuring cause, whether the seller or the broker

A developer who seeks to build apartments on the site of a former school must first receive the approval of

local government, typically including zoning and planning boards

A sales agent wants to become competent in commercial leasing. Knowledge of which of the following is important?

local zoning laws

The broker must NOT act in self-interest because of the duty of

loyalty

construction loan

made to finance the construction of improvements on real estate (homes, apartments, and office buildings).

The Deceptive Trade Practices Act (DTPA) does NOT apply to the actions of real estate agents when an agent

makes an exaggerated or unsubstantiated statement of value given as advice, judgment, or opinion when selling real estate.

To determine the applicable interest rate at the time of adjustment on an adjustable-rate mortgage, which of the following is added to the index rate?

margin

The brokers in a certain area meet and agree that some brokers will handle residential property under $100,000, others will handle residential property over $100,000, others will handle commercial property, and others will sell condominiums. This is an example of

market allocation

intermediary broker

may appoint a licensed associate (appointed license holder), with the written consent of the parties, to communicate with and carry out instructions of each party. The written consent must state who will pay the broker and set forth the broker's obligations

If the homesellers are confused about specific sections of a promulgated form, the real estate sales agent

may explain the meanings of the confusing sections.

If the owner of a condo in a large building defaults on his mortgage, the bank

may foreclose only on the owner of the unit

If a buyer provides a list of home repairs to a seller, based on the report of a licensed inspector, the seller

may ignore the list of repairs and reject any price adjustment.

Metes

measured in feet, compass degrees

A homestead may suffer forced sale for payment of claims for the costs of improvements to the property filed by materialmen and

mechanics

A homestead may suffer forced sale for either payment of annual real estate taxes or which of the following?

mechanics' liens, IRS tax liens, homeowners association assessment liens

REALTOR

member of NAR

Realtist

member of National Association of Real Estate Brokers

realist

member of the National Association of Real Estate Brokers

REALTOR®

member or NAR

Easement in Gross

mere personal interest in or right to use the land of another

A consumer has sent a complaint to the Texas Real Estate Commission (TREC) against a real estate agent, claiming a violation of the Canon of Integrity. The agent is accused of

misrepresenting the condition of the property by omitting pertinent facts.

What is the degree of risk associated with real estate investment?

moderately high

redlining

mortgage credit discrimination based on the characteristics of the neighborhood surrounding the would-be borrower's dwelling

cost

most helpful in appraising newer or special purpose buildings and estimates accrued depreciation

sales comparison

most reliable approach for single-family homes ad based on the principal of substitution

not a broker defense in DTPA

notice to the consumer before consummation of the sale that the broker is relying on verbal representations given by the seller, the appraisal district, or other providers of information.

An area of needless controversy that seems to come up regarding many listing is

number of rooms and accurate measurements

When a buyer purchases a property with an existing loan and agrees to be personally obligated for the payment of the debt, the property has been sold

on assumption

An aggrieved person who believes illegal discrimination has occurred may file a complaint within _________________ of the alleged discriminatory act?

one year

In the income approach, expenses that are an actual cash outlay, such as real estate taxes, insurance, utilities, and repairs, are called

operating expenses

the sources of real estate include

ordinances passed by local governments

federal tax requirements

outlines the procedures for the buyer to follow if the seller is a "foreign person," as defined by applicable law

Easement by necessity

owner sells land that buyer has no access to land except through the sellers land.

Which controls and maintains the common elements of a condominium and enforces the condominium bylaws?

owners association

bundle of rights

owners right to dispose of the property by giving it to a family member.

A woman owns and resides in a condominium. Title to her unit is

ownership in severalty

Which of the following is not a form of co-ownership?

ownership in severalty

Written agreements between brokers and the parties they represent should state how and by whom the broker will be

paid

If a buyer and a seller orally agree that the seller will pay the appraisal fee, but the final contract states that the buyer will pay, which of the following would affect the admissibility into court of the prior oral agreement?

parol evidence rule

An abbreviated formula for finding the commission amount is T × % = Pt. The Pt of this equation stands for which of the following?

part

Easement by Implication

parties actions may imply that they intend to create an easement

When used for real estate investments, the form of ownership used by a syndication is usually

partnership

Sales Agent

performs real estate activities while employed by or associated with a real estate broker

sales agent

performs real estate activities while employed by or associated with a real estate broker

In reference to real estate, which phrase means that investments are long term?

permanence of investment

fixture

permanent part of the building

Bench Marks

permanent reference markers, used for marking datums

License

personal privilege to enter the land of another for a specific purpose - can be canceled by the licenser

blanket mortgage

pledges more than one parcel or lot. It is usually used to finance subdivision developments; however, it can finance the purchase of improved properties or consolidate loans as well

A developer plans to combine two adjacent lots into one larger lot, for which her asking price will be more than she previously had been asking for the two lots. She believes the one larger lot is worth more than the two separate lots based on which economic principle of value?

plottage value

Metes and Bounds

points of beginning and monuments, used in most rural property in TX, measure in clockwise direction

equity REIT

pool of large-scale income properties wherein shares are sold to investors

Which of the following would be regarded as personal property?

portable BBQ

Eminent Domain

power of government to take private property for a public use

Restrictions

private agreements places in the public record that affect the use of land

If a sales agent leaves one company and becomes a sales agent for another firm, and that sales firm soon adopts the pricing, commission structure, and business practices of the first company, is that a violation of antitrust laws?

probably not

Equal Credit Opportunity Act

prohibits discrimination against protected classes in evaluating loan applicants

Civil Rights Act of 1968

prohibits discrimination in housing based on race, color, religion, and national origin

Fair Housing Act of 1968

prohibits discrimination in residential housing based on race, color, national origin, and religion

real estate tax rate in order

property assessments, appeals, budget adopted, appropriation, tax levy, tax rate, tax bill. tax collection

Separate property

property owned solely by either spouse before the marriage or acquired by gift or inheritance after the marriage

Farmer Mac

provides a secondary market for first-mortgage agricultural real estate loans by purchasing U.S. Department of Agriculture (USDA)‒guaranteed loans from agricultural mortgage lenders, pooling or bundling those loans, and issuing mortgage-backed securities, increasing the availability of credit for farmers, ranchers, and rural homeowners.

Rural Development

provides both direct and guaranteed loans for the purchase or construction of single-family homes, repair of existing homes, and the development of affordable rental housing

community property right of survivorship

provides for the existence of a community property estate with a right of survivorship

14th Amendment

provides local authorities the right to control private land through zoning, subdivision regulations, building codes, and environmental protections

alienation clause

provides that, on the sale of the property by the original borrower to a buyer who wants to assume the loan, the lender has the choice to either declare the entire loan balance immediately due and payable or permit the buyer to assume the loan at current market interest rates.

termination option

provides the buyer with an unrestricted right to terminate the contract for a specified fee within a specified number of days after the effective date (if an option fee is paid to the seller)

defeasance clause

provision in mortgages that cancels a specified right on the occurrence of a certain condition

For a government or public entity to exercise the right of eminent domain, the proposed use must be declared by the court to be which of the following?

public

warehousing agencies

purchase a number of mortgage loans and assemble them into packages called pools.

With which financing technique would the seller retain a lien right if she finances part of the selling price, yet permit the title to pass to the buyer?

purchase money mortgage

MOST Texas real estate contracts provide that

reasonable time is permitted for performance of contract rights and duties.

Shareholders in a real estate investment trust (REIT) generally

receive most of the trust's income each year

Which way of describing real estate uses two sets of intersecting lines that form a grid?

rectangular survey system

FHA loan

refers to a loan that is insured by the agency.

assignment

refers to a transfer of rights, duties, or both under a contract

real property

refers to the surface of the earth; to the center of the earth below; to infinity above; to natural things permanently attached; to man-made things permanently attached; and to legal interests, rights, and privileges?

Wetlands issues often are resolved by the Texas Commission on Environmental Quality, which enforces

regulation of state and federal agencies

when supply and demand increase or decrease together price..

remain stable

BOMA

represents building owners and managers.

private mortgage insurance

required on high LTV loans for which the borrower has invested less than 20%, that is, on loans with LTVs over 80%

Home Mortgage Disclosure Act

requires lenders to report the number of loans applied for an loans made in different parts of their service areas

An obsolete shopping center seized by the city for back taxes is sold for redevelopment as senior housing units with an expansive area for gardening vegetables and herbs, making its new classification

residential

The DTPA does NOT apply to transactions that exceed $100,000 where there is a written contract and the consumer is represented by legal counsel, EXCEPT for which type of property?

residential

Regulation Z applies when credit is extended for

residential loans

What was the primary specialty of Texas REALTORS® in 2013?

residential sales

Under which financing technique would no payment be due until the property is sold, the borrowers move from the home for longer than 12 months, all borrowers have died, or the borrower defaults?

reverse mortgages

Which is basically a will substitute and can be changed at any time?

revocable living trust

Easements

right acquired by one party to use the land of another for a special purpose

Right-of-way

right acquired through the accepted usage of contract to pass over a designed portion of the property - easement appurtenant

If a new airport is built near an existing residential community, what rights do the homeowners have?

right to require the airport operator to soundproof their homes and possibly even buy their homes.

Littoral Rights

rights of a landowner adjacent to a lake

subsurface rights

rights to the natural resources below the earth's surface.

Rights granted to owners of land located along the course of a river or stream and patented into private ownership before July 1, 1895, are which of the following?

riparian rights

open-end mortgage

secures a note executed by the borrower to the lender, as well as any future advances of funds made by the lender to the borrower

voidable contract

seems on the surface to be valid but may be rescinded, or disaffirmed, by the party who might be injured if the contract were to be enforced

If a VA loan is being assumed and the veteran wants full guaranty entitlement reinstated, the veteran must pay off a previous VA loan or

sell to a veteran who agrees to substitute his or her eligibility.

A corporation is a legal entity (an artificial person), according to state law. Property owned by the corporation is owned in

severalty

A tree is cut down for lumber so that the real property (tree) is now personal property (lumber). The process is called

severance

Bounds

shape or boundaries

Which loan package, typically used in commercial lending, rewards both the lender and the borrower?

shared-appreciation mortgages

Which of the following is most likely evidence of ownership in a cooperative?

shareholder's stock

Improvement Survey

shows location, size, and shape of building located on a lot

improvement survey

shows location, size, and shape of buildings located on a lot

Survey Sketch

shows the location and dimensions of the parcel

If the partners in a partnership holding property as "tenants in common" decide to sell property owned by the partnership, how many signatures are required on the documentation?

signatures of both partners

exclusive agency listing

single broker; seller must pay commission to broker only if the broker is the procuring cause of the sale

Because of the way the Texas homestead law is written, owners who do not pay their property taxes are

subject to foreclosure

If two similar homes are for sale, the lower-priced house will usually be purchased first. This is an example of the principle of

substitution

A buyer purchased a parcel of land and immediately sold the mineral rights to an oil company. The buyer gave up which of the following?

subsurface rights

When a large quantity of wood milled in the United States is exported to a foreign country, leaving a shortage for domestic construction projects, which would be negatively affected?

supply of housing

When real estate is used as security for a defendant to obtain temporary release from jail, it is called a

surety bail bond lien

The charge on real estate to raise funds to meet the public needs of a government is

taxation

buydown mortgage

temporarily lowers the initial interest rate through the payment of a lump sum of cash to the lender

Three people were concurrent owners of a parcel of real estate. When one owner died, her interest, according to her will, became part of her estate. The deceased was a

tenancy in common

If there is damage to the property when a trade fixture is removed, which party pays for the damage?

tenant

If MOST or all of the unit owners of a condominium are a party to a revocation agreement filed in the public record in the county where the property is located, all units owners would then become

tenants in common

Who may hold different percentages of ownership in the property?

tenants in common

life estate

terminate upon the death of the person on whose life they are based.

The subsurface right to extract minerals does not include the right to strip-mine coal, limestone, or iron ore because

that sort of mining substantially destroys the surface

procuring cause

that the broker had taken action to start or cause a chain of events that resulted in the sale

Money will only be paid out of the real estate recovery trust account if the Commission finds

that the offending license holder has insufficient assets in Texas or other states to satisfy the judgment.

If the Commission proposes to deny, suspend, or revoke a person's license or certificate of registration, the person is entitled to a hearing conducted by

the State Office of Administrative Hearings.

fidelity

the agent's primary duty to represent the interests of the client

implied contract

the agreement of the parties is demonstrated by their acts and conduct.

The mortgagor in a deed of trust is which of the following?

the borrower

improvement

the buildings erected on the land, as well as to streets, utilities, sewers, and other man-made additions to the property

When a business is owned in severalty, all title to real and personal property is held by which of the following?

the business entity as a sole owner

purchase money mortgage

the buyer gives the seller a note and mortgage

If the seller makes a counteroffer, which of the following occurs?

the buyer's original offer is void

A buyer maintains a seller inappropriately removed a driveway basketball pole and hoop that had been cemented into the ground. Who is likely to prevail?

the buyer, because the pole had been permanently placed on the property.

A sales agent working with a buyer who is interested in condominiums should make sure the buyer has

the condominium declaration that sets out the rights and obligations of each unit owner.

An aggrieved person may only be reimbursed from the real estate recovery trust account if the reimbursement is ordered by

the court that entered the judgement

caveat emptor

the courts charged the buyer with the responsibilities of inspecting the property and searching the public records to ascertain interests of other persons, including the rights of parties in possession.

When interest rates are so high that most potential buyers cannot afford to get a loan and property values are declining, this refers to

the demand for the property

capital gain

the difference between the adjusted basis of property and its net selling price

Texas Real Estate Broker-Lawyer Committee

the drafting and revising of standard contract forms to be used by real estate license holders because most real estate transactions are basically similar in nature

real estate

the earth's surface extending downward to the center of the earth and upward into space, including all things permanently attached to it by nature or by people (includes all man-made permanent improvements on and to the land)

land

the earth's surface extending downward to the center of the earth and upward to infinity

Regulations passed by governmental agencies have which of the following characteristics?

the effect of law

What happens to trade fixtures that are not removed by the time the lease expires?

the fixture becomes the property of the property owner to do with as the owner pleases.

fee simple

the highest type of interest in real estate recognized by law, one in which the holder is entitled to all rights incident to the property

The four statutory positions a broker might take

the intermediary position, seller representation, subagency, and buyer representation

shared-appreciation mortgage

the lender originates a deed of trust loan at a favorable interest rate (several points below the current rate) in return for a guaranteed share of the gain (if any) the borrower realizes when the property is sold

price-fixing

the practice of setting prices for products or services rather than letting competition in the open market establish those prices

automated underwriting

the process of electronically evaluating a loan application and subsequently providing a recommendation for or against loan approval

promissory note

the promise, or agreement, to repay the debt in definite installments with interest. The mortgagor executes one or more promissory notes to total the amount of the debt. The note creates the debt.

A listing contract contains the nature of the agency relationship with the seller, the date of possession, and

the protection period

Whose responsibility is it to make sure that all environmental issues (lead-based paint, asbestos, ground contaminants) are acknowledged by the property and the seller and disclosed to the potential buyer?

the real estate agent's responsibility

The canon regarding Consumer Information Form 1-1 relates to

the required display of a consumer notice concerning the real estate recovery trust account.

The bundle of legal rights includes all of the following EXCEPT

the right to cultivate any plant

groundwater rights

the right to pump water under the earth's surface

Prior appropriation

the right to use any water, with the exception of limited domestic use, is controlled by the state rather than by the adjacent landowner.

law of agency

the rights and duties of the parties in a real estate transaction—the principal, the agent, and the customer

air rights

the rights to use the air above the land, may also be sold or leased independently of the land.

surface rights

the rights to use the surface of the earth. (the owner of surface rights doesn't always control subsurface or air rights)

The amount for each fee collected by the Texas Real Estate Commission is stipulated in

the rules of the Texas Real Estate Commission

The responsibility for ensuring that a sales agent license is timely renewed belongs to

the sales agent

fee simple subject to a condition subsequent

the second type of defeasible fee estate, is similar to a determinable fee in that a grantor conveys a parcel of real estate subject to a condition of ownership, but it differs in the way the estate will terminate on violation of this condition

After paying the delinquent tax, interest, penalties, and attorney's fees, the winner at a tax sale receives a deed from

the sheriff

the purpose of antitrust laws is

to prevent a company or companies from joining together block competitors from entering the market while simultaneously agreeing how much to charge consumers.

disparate impact rule

to prohibit practices with an unjustified discriminatory effect, regardless of whether there was an intent to discriminate

The stated purpose of the Texas Appraiser Licensing and Certification Board (TALCB) is to

to protect consumers

Police Power

to protect the public health, safety, and morals; and to promote the general welfare

general agent

to represent the principal in a broad range of matters and may bind the principal to any contracts within the scope of the agent's authority.

the right of enjoyment

to use the property in any legal manner

A commercial leasing agent should have knowledge of which of the following?

trade fixtures

The four characteristics of value are demand, utility, scarcity, and

transferability

A legal arrangement under which the title to real property is held to protect the interests of a beneficiary is a

trust

When collecting and analyzing data for an appraisal, the appraiser should verify the data by checking information from at LEAST how many different sources?

two

According to statutory redemption rights, if the property is a residence homestead or mineral interest or if it is designated for agricultural use, the owner may redeem the property within what period of time after the recording of the purchaser's deed?

two years

How long after a discriminatory action does an aggrieved party in a discrimination dispute have to bring a private enforcement action in state or federal district court?

two years

Under the Texas Deceptive Trade Practices Act (DTPA), the statute of limitations is

two years from the date a buyer could reasonably have discovered the deceptive act.

Land is considered

unique

A mortgage lien on a home is

voluntary specific lien

Industrial

warehouses, factories, and land in industrial districts

industrial

warehouses, factories, and land in industrial districts

Groudwater

water under the earths surface below the saturation point

Property descriptions by metes and bounds is the oldest method of describing property. As such, property descriptions used today could date back to

when Texas was under the rule of Spain

executory agreement

when a real estate sales contract is negotiated and signed by both parties

sole proprietorship

when a single individual operates a business, owns all the assets, and assumes personal liability for all debts

pyramiding

when an investor refinances existing holdings and uses the proceeds to buy more properties

easement by implication

when the parties' actions may imply that they intend to create an easement.

trust

where title is held by a third person for the benefit of another (or others), called the beneficiary (or beneficiaries)

co-ownership

where title is held by two or more persons or two or more legal entities

tenants in common

If MOST or all of the unit owners of a condominium are a party to a revocation agreement filed in the public record in the county where the property is located, all units owners would then become

No, the FSBO is not guilty of discrimination.

If a FSBO owner, who only owns one property, advertises it for sale in a newspaper but then refuses to show it to a disabled veteran, is the FSBO owner in violation of fair housing law?

no

If a Hispanic applies for an apartment and meets all the landlord's publicized criteria, can that individual still be denied if the landlord would be more comfortable if the Hispanic had a better-paying job?

Home Mortgage Disclosure Act (HMDA)

If a borrower or a public official is concerned that a lending institution might be practicing redlining, which law requires a public reporting of economic and ethnic characteristics of neighborhoods served?

The broker may continue to operate the brokerage business until all pending transactions are closed.

If a broker puts his license on inactive status, which situation would NOT be true?

Yes, but the contract may be discharged through an agreement to pay the builder less the cost of waterproofing and staining.

If a builder substantially completes construction on the deck of a home but fails to provide waterproofing or staining as per the contract, must the homeowner pay the builder?

The partnership will be dissolved after the death, withdrawal, or bankruptcy of one of the partners.

If a business is organized as a general partnership, which would a partner NOT expect?

the partnership will be dissolved after the death, withdrawal, or bankruptcy of one of the partners.

If a business is organized as a general partnership, which would a partner NOT expect?

Parol evidence rule

If a buyer and a seller orally agree that the seller will pay the appraisal fee, but the final contract states that the buyer will pay, which of the following would affect the admissibility into court of the prior oral agreement?

Nothing happens; because the corporation is an entity that survives the death of it executives or board members, the listing would continue as originally conceive

If a corporation has a property listed with a sales agent but the CEO or chairman of the board dies suddenly, what happens to the listing?

tenancy in common

If a deed to real estate shows co-ownership but does NOT state what type of co-ownership is being created, the law assumes

alert and note report

If a home inspector finds a dangerous situation in the course of his inspection—a gas leak or perhaps electrical failing—what is his obligation?

Hiring a home inspector helps a buyer identify home flaws and decide whether to pursue the transaction.

If a home is offered "as is," is it worth the trouble of hiring a home inspector?

No, if the buyer agent did nothing to secure the home, no money is owed.

If a homebuyer makes an oral agreement with a buyer agent, but then finds a home without using the agent, does a fee still need to be paid to the buyer agent?

must take the delinquent taxpayer to court to foreclose on the tax lien.

If a homeowner does not pay the ad valorem taxes on his residence after they are billed, the tax collector

Yes, assuming all the agent needs to do is fill out blanks in the contract.

If a homeowner wants to sell his property to an adult child for $1, may a sales agent be involved in that transaction?

Yes, it is legal and enforceable provided the principals are of age and sound mind.

If a homeseller and a homebuyer draw up a valid real estate contract between them, without the assistance of a real estate broker or real estate attorney, is the transaction legal and enforceable?

No, the instruction is unlawful and the sales agent cannot comply.

If a homeseller specifically instructs the listing agent to only show the property to a specific class of people—for instance, white buyers—is the listing agent obligated to follow that instruction?

No, charging additional fees and deposits to force an individual to go elsewhere is considered a violation of fair housing law.

If a landlord receives a rental application online for an available apartment but determines in the course of an in-person interview that the applicant is a follower of Islam, may the landlord introduce extraordinary fees and deposits in an effort to persuade the applicant to go somewhere else?

No, the subagent has a duty of honesty to the buyer.

If a large vicious dog is in residence next to a property listed for sale and an agent acting as a subagent for the seller advises a buyer-customer about the presence of the dog, causing the deal to collapse, is the subagent liable to the seller?

no, subsurface rights specifically refer to "natural resources" below the surface

If a leaseholder has control of subsurface rights, but in the process of exploiting those rights (such as drilling) discovers other valuable assets—such as Native American relics or even Spanish artifacts such as gold - is the leaseholder entitled to those discoveries?

No, "integrity" means the listing agent will uphold his pledge of confidentiality with the seller.

If a listing agent, with fiduciary duty owed to the seller, is specifically asked by a buyer what the seller's lowest acceptable price is, is the listing obligated to respond?

the money goes to the fair housing group that brought the lawsuit.

If a local-level fair housing group wins a fair housing lawsuit against a landlord, who gets the money from the resulting judgment?

All real estate license holders may be charged an additional $10 fee at renewal, or if the replenishment is an urgent need, license holders could receive a special assessment.

If a major misdeed is committed by a brokerage that results in a substantial drain on the real estate recovery trust account, what options are available to replenish the fund?

Yes, it is discriminatory

If a minority buyer specifically requests to be shown only properties in "white" neighborhoods, is it discriminatory for the sales agent to comply with the request?

require the airport operator to soundproof their homes and possibly even buy their homes.

If a new airport is built near an existing residential community, what rights do the homeowners have?

$5,000 per day for each violation.

If a person violates the License Act, the Commission may assess an administrative penalty in an amount NOT to exceed

can remain and the purchaser will buy the property subject to the lien.

If a property has an involuntary lien against it, the lien

Damage to a detached garage

If a property is flooded, which loss would a homeowner expect to be covered by flood insurance?

The interest of the life tenant's heirs continues until the death of the person against whose life the estate is measured.

If a pur autre vie life tenant dies, what happens to the interest of the life tenant's heirs?

Before the 6th day after a signed copy of the contract or required time-share disclosure is received

If a purchaser does NOT receive a copy of the contract when it is signed, when may a purchaser of a time-share cancel the contract?

No, if the contract is changed without notice to parties, it could be discharged by operation of law.

If a real estate agent sees a mistake in a contract after it's been signed—such as noticing that an HOA fee should be $4,000 per year instead of $400—is it alright for him to just go ahead and change it?

no

If a real estate agent whose license has lapsed refers a client to a license holder, can the lapsed agent collect a referral fee?

a broker

If a real estate brokerage is organized as a business entity, it must be licensed as

No, real estate license holders are not exempt.

If a real estate license holder decides to rent out three units in her home to different families, does the agent qualify for the Mrs. Murphy exemption?

Yes, even though acting as a FSBO, no real estate license holder is exempt from fair housing law.

If a real estate license holder decides to sell his one personal residence as a FSBO but refuses to show it to a Muslim refugee family, is he in violation of fair housing law?

The Commission, the public, and the buyer

If a sales agent associated with or acting for a broker makes a material misrepresentation to a potential buyer concerning a significant defect known to the license holder, the broker is liable to which parties?

If a parent happens to zero in on a specific property the sales agent has listed

If a sales agent is at a parent school night and talks with other parents about "what they do for a living," at what point might the sales agent be obligated to provide an agency disclosure?

probably not

If a sales agent leaves one company and becomes a sales agent for another firm, and that sales firm soon adopts the pricing, commission structure, and business practices of the first company, is that a violation of antitrust laws?

an exclusive agency listing

If a seller believes—but is not certain—that a friend wants to buy his house, what kind of agreement should he sign with a broker?

No, the broker may discuss the difficulties of breaking into the other agent's farm but could not otherwise order the agent to work elsewhere.

If an independent contractor announces her "farm" will henceforth be the country club crowd, can the sponsoring broker redirect her if someone else in the office already is working the country club scene?

No, the sales agent working with the buyer does not become an employee of the listing broker.

If an independent-contractor sales agent working with a buyer - but not under contract as a buyer agent - becomes a subagent to the listing broker, does that make the sales agent working with the buyer an employee of the listing broker?

optionor's obligation and the optionee's right will expire.

If an option is NOT exercised within the time specified, the

will

If one spouse dies, the separate property of the deceased spouse and the deceased spouse's half of the community property are distributed according to the deceased's

no

If police have been called to an apartment because of domestic violence against a single mother by a former husband, may the leasing agent evict the woman?

fall

If residents began moving out of a community in large numbers, prices in those communities would tend to

fall, because more homes will be on the market competing with each other.

If residents began moving out of a community in large numbers, prices in those communities would tend to

the State Office of Administrative Hearings.

If the Commission proposes to deny, suspend, or revoke a person's license or certificate of registration, the person is entitled to a hearing conducted by

until the amount paid from the real estate recovery trust account on the license holder's account has been fully repaid, with interest, by the license holder.

If the Commission revokes a license after making a payment from the real estate recovery trust account to satisfy all or part of a judgment against a license holder, the license holder is NOT eligible to receive a new license

issue an advisory letter

If the Texas Real Estate Commission (TREC) determines that the facts revealed in the investigation of a complaint against a license holder do not warrant disciplinary action but, if not corrected, could lead to further complaints and ultimately to potential disciplinary action, what may TREC do?

If potential buyer is turned down for a loan, can the buyer get a full explanation for why?

If the borrower asks in writing within 60 days of rejection for a detailed report that includes the reasons for rejection, under the Equal Credit Opportunity Act, they are entitled to an explanation.

abandonment by the broker

If the broker has done nothing to market the property, the seller may be able to terminate the listing due to

Method of attachment

If the court learns that a wall-to-wall carpet is tacked to the floor of a property, the court will consider which tests of a fixture in determining whether the carpet is a fixture?

Under what circumstances might a seller want an appraiser to place a value on the property?

If the seller feels the property is unique and should be priced differently from what is suggested by the comps

The buyer's original offer is void.

If the seller makes a counteroffer, which of the following occurs?

for any reason

If the seller's disclosure notice is NOT given before the execution of the contract, the purchaser may, within seven days after receiving the notice, terminate the contract

signatures of both partners

If the two partners in a partnership holding property as "tenants in common" decide to sell property owned by the partnership, how many signatures are required on the documentation?

no

If there is a known sex offender in a neighborhood, is the seller obligated to disclose it?

tenant

If there is damage to the property when a trade fixture is removed, which party pays for the damage?

would not cover it

If trees, shrubs, and other landscaping is damaged by wind or hail, the homeowners insurance policy likely

land

If water is found on a property, that makes the property

The (nondefaulting) buyer may ask that the seller submit to mediation.

If, under a TREC promulgated contract, a seller fails to deliver according to the requirements of a contract (such as refusing to provide the deed), what remedies does the buyer have, short of suing for specific performance?

a community property right of survivorship.

In Texas, each spouse is liable for all community debts in

Which of these statements about community property is FALSE?

In Texas, if a spouse dies without a will and two common heirs, the property will go to the heirs in a trust.

$100 of appraised value.

In Texas, the MOST common method of applying the tax rate is in dollars per

The seller might default on a previous mortgage, which could result in a lien on the property

In a contract for deed, what are some potential problems a purchaser might run into?

The buyer could lease the property to a third party who could damage it, resulting in a loss of value if the buyer defaults.

In a contract for deed, what are some potential problems a seller might confront?

reservation

In a deed, which indicates subsurface interests being retained by the seller?

the title may be held either in the names of the individual partners as tenants in common or in the name of the partnership as owners in severalty.

In a limited partnership,

the actual distance between monuments takes precedence over linear measurements set forth in a description.

In a metes-and-bounds description,

Everyone in the office who has a real estate license

In a real estate brokerage company, who needs to understand the Texas law of agency?

real

In a real estate transaction, the ornamental shrubs around a house are considered which kind of property?

annual maintenance fee.

In a time-share occupancy, the owners pay the purchase price of their individual shares plus

Taxes and insurance for a month

In addition to principal and interest, which additional expenses must be included when using the housing-expense ratio?

50

In addition to proportionate responsibility for damages under the DTPA, a defendant may be held jointly and separately responsible for all damages recoverable if the defendant's percentage of responsibility is found to be more than what percentage?

Retirement communities

In addition to residential units, which type of property often provides shopping and recreational opportunities and, in some cases, health care facilities?

Yes, brokers may learn "the business of brokerage."

In an educational setting where competitors are in the same class, is it permissible to discuss how brokers may derive commission levels?

Permanence of investment

In reference to real estate, which phrase means that investments are long term?

a circle

In the metes-and-bounds description, 360° equals

Yes, any time two or more brokers join to take action against a single competitor, it would be considered boycotting.

Is it illegal for two brokers who have a policy of doing intermediary brokerage to jointly decide not to work with a broker who primarily serves as a buyer's broker?

Yes, because doctors are not a protected class.

Is it legal to ban medical doctors from living in neighborhoods if the residents object?

yes, money raised at auction pays off delinquent taxes and fees, but any excess may be returned to the delinquent owner.

Is it possible for a delinquent taxpayer to recover any funds once a property is sold at auction?

Yes, consumers may direct individual companies to stop calling them.

Is it possible for consumers to discriminate against some telemarketing calls?

No, but it is reasonable to expect a home inspector to find the vast majority of areas of concern.

Is it reasonable to expect the home inspector to identify every flaw in a home?

Yes, the chain of liability goes all the way up from the employee to the broker, to the owner of the company.

Is the sponsoring broker liable for the unauthorized misdeeds of a licensed employee?

no, contracts are responsible for their own malfeasance

Is the sponsoring broker liable for the unauthorized misdeeds of an independent contractor?

yes, if the subsurface and air rights already have been resolved.

Is there a scenario in which a new buyer could buy only surface rights to a property?

earthquake.

MOST Texas homeowners insurance policies exclude losses caused by

Can a mortgage lien be enforced if only one document—a promissory note or a deed of trust—is signed?

No, both the promissory note and deed of trust must be signed.

If the largest brokerage in a community decides to offer different competitors varying levels of commission splits or fees, is that considered boycotting or price-fixing?

No, brokers are entitled and encouraged to make business decisions regarding how they will compensate various competitors.

Must real estate sales agents adhere to USPAP standards when they prepare comparative market analyses and broker price opinions?

No, but brokers also must acknowledge that neither CMAs nor BPOs are appraisals.

If a homebuyer makes an oral agreement with a buyer agent, but then finds a home without using the agent, does a fee still need to be paid to the buyer agent?

No, if the buyer agent did nothing to secure the home, no money is owed.

If a real estate agent sees a mistake in a contract after it's been signed—such as noticing that an HOA fee should be $4,000 per year instead of $400—is it alright for him to just go ahead and change it?

No, if the contract is changed without notice to parties, it could be discharged by operation of law.

Is the sponsoring broker liable for the unauthorized misdeeds of an independent contractor?

No, in most cases independent contractors are responsible for their own malfeasance.

Must licensed real estate sales agents ALWAYS use promulgated forms?

No, licensees acting on their own behalf do not have to use promulgated forms.

Because some property owners prefer to use contracts they draw up themselves, are real estate licensees allowed to help draw up those contracts?

No, licensees are barred from assisting in the creation of forms.

When an aggrieved consumer and a license holder come to an agreement on how much the consumer is owed from the trust fund, is that the amount that must be paid?

No, once TREC has all the documentation from the case and reviews it, the Commission can still decide to relitigate the case.

Between Fannie Mae, Freddie Mac, and Ginnie Mae, are all real estate loans available for purchase on the secondary market?

No, private mortgage packagers exist outside the GSEs.

If a real estate license holder decides to rent out three units in her home to different families, does the agent qualify for the Mrs. Murphy exemption?

No, real estate license holders are not exempt.

Is it a violation of fair housing law to refuse to show a sex offender a home in a neighborhood of single-family homes with children?

No, sex offenders are not protected by fair housing law.

If a FSBO owner, who only owns one property, advertises it for sale in a newspaper but then refuses to show it to a disabled veteran, is the FSBO owner in violation of fair housing law?

No, the FSBO is not guilty of discrimination.

When a builder does substantial work on a client's lake house but client refuses to pay, may the builder file a lien against both the client's lake house and the client's main home?

No, the builder may only file a specific lien against the lake house.

If the value of a property decreases dramatically after a buyer has taken out an option, is the buyer still obligated to purchase the property at the higher price?

No, the buyer need only let the option contract expire without making a purchase.

Can a landlord decline to show a wheelchair-bound rental applicant an apartment on an upper floor?

No, the landlord is obligated to show any apartments that are within the price range of the applicant.

Is a license holder entitled to stop a transaction (refuse to close) if he or she believes either the seller or buyer will be unable to fulfill the compensation clause in the contract?

No, the license holders must permit the transaction to close and litigate compensation after the fact.

When a seller, on the advice of the listing agent, reduces the price of the home, are potential buyers entitled to know why?

No, the listing agent is not obligated to volunteer why there has been a price reduction.

If a property owner with fractional interest in a dozen rental units decides to sell his own home without a license holder, is the property owner exempt from fair housing law?

No, the property owner's fractional ownership in other properties would bring him under fair housing law.

Does the obligation to be honest with all parties extend to a sales agent, representing a seller, who is confronted by a potential buyer wanting to know why the seller is selling?

No, the sales representative should not lie but should not provide any personal or financial information about a property that the seller does not want released.

When a surveyor completes a sketch of a parcel of land and has it approved, does that sketch become a legally binding document?

No, the sketch is a very close approximation of the land but the legal description is what is binding.

Must real estate appraisers, at any level, have real estate sales licenses as a prerequisite?

No, there are no real estate sales prerequisites.

If a homeowner declares bankruptcy, is the mortgage lien wiped out?

No, while other debts may be discharged, lenders may still be allowed to foreclose.

If a person places their phone number on the do-not-call registry, how many years does it stay on the list before it is eligible again for cold calling?

Permanently

If a broker is forced into an intermediary position because a buyer expresses interest in a company listing, and therefore appoints two other associated license holders to represent seller and buyer, respectively, do the respective appointees need to be of roughly equal skill and experience?

Texas law is silent on the issue

escheat

Texas law provides for ownership of real estate to revert, or escheat, to the state when an owner dies and leaves no heirs and no will disposing of the real estate

yes

Texas real estate license holders may be fined and lose their license for advertising in a discriminatory way, but what about private homeowners who are for sale by owners?

Can a broker arbitrarily penalize an independent contractor based on varying factors, such as the sales agent's difficulty in closing a deal or failure to produce paperwork in a timely fashion?

Texas real estate regulations are silent on in-office compensation disputes.

What is a major flaw in comparative market analyses (CMAs) that real estate sales agents should discuss with their clients?

That CMAs typically include prices on homes that have not sold—many times because sellers were far too optimistic about the value of their property

When a sales agent prepares a brokers price opinion (BPO), what statement must be included?

That a BPO is not an appraisal

Which is an aggrieved person NOT required to show at a Texas Real Estate Commission (TREC) hearing on an application for payment from the real estate recovery trust account?

That the judgment debtor (license holder) filed for bankruptcy before the hearing

What is expected of a license holder in the category of "competence" in the Code of Ethics?

That the license holder remain current about issues and market trends both statewide and nationwide

What concerns the government when properties such as new homes appear in glossy display advertising in newspapers, magazines, and brochures?

That the people displayed in the ads will be racially diverse

What notice are all publishers—whether on paper or electronic—required to carry if they are advertising real estate for sale?

That the publication will not knowingly accept any advertising that violates fair housing law

If a seller fails to deliver according to the requirements of a contract (such as refusing to provide the deed), what remedies does the buyer have, short of suing for specific performance?

The (nondefaulting) buyer may ask that the seller submit to arbitration or mediation.

U.S. Constitution

The 14th Amendment, providing civil rights protections, is an example of which of the seven sources of law?

If a sales agent associated with or acting for a broker makes a material misrepresentation to a potential buyer concerning a significant defect known to the license holder, the broker is liable to which parties?

The Commission, the public, and the buyer

national origin, sex, marital status, age, or dependence on public assistance.

The Equal Credit Opportunity Act (ECOA) prohibits lenders and others who grant or arrange credit to consumers from discriminating against credit applicants on the basis of race, color, religion,

For Texas residents who are purchasing their first home or who have not owned a home in the past three years, which agency channels below-market interest rate mortgage money through participating Texas lending institutions to very-low-income to moderate-income persons and families?

The Texas Department of Housing and Community Affairs

A low-income Texas resident who is purchasing his first home and needs down payment and closing cost assistance could apply to which program?

The Texas First-Time Homebuyer Program

To what official government bodies must a real estate brokerage file paperwork regarding the brokerage's use of an assumed name?

The Texas Real Estate Commission and the county clerk in every county where the brokerage does business

Contact appropriate legal counsel to stay within guidelines

The Texas Real Estate Commission recommends that brokers and sales agents considering online promotions or telemarketing campaigns do what?

No, anyone can use the forms.

The Texas Real Estate Commission regulates licensed real estate brokers and sales agents in the state. May only licensees use form promulgated by the Commission?

competent legal counsel should be obtained by both seller and buyer.

The Texas Real Estate Commission warns that there is no promulgated contract-for-deed form, therefore

setting commission or compensation rates for sales transactions in Texas.

The Texas Real Estate Commission's powers and duties include all EXCEPT

the Texas Real Estate Commission.

The Texas Real Estate License Act is administered by

Laws passed by the state legislature

The Texas Real Estate License Act is an example of which of the seven sources of law?

What organization has the education of new and existing real estate license holders as its primary objective?

The Texas Real Estate Teachers Association

Performance Management Network

The Women's Council of REALTORS® offers training to receive which professional certification?

What is the maximum amount that the Commission will pay from the real estate recovery trust account for claims against any one license holder, until the account has been repaid in full by the license holder?

The answer is $100,000. Payments from the recovery trust account are subject to the following conditions: (1) they may only be made pursuant to an order of a court of competent jurisdiction; (2) payments for claims arising out of one transaction are limited in the aggregate to $50,000, regardless of the number of claimants; (3) payments for claims against any one license holder may not exceed in the aggregate $100,000, until the account has been reimbursed by the license holder for all amounts paid.

A house cost $100,000 five years ago, has depreciated by $5,000, and will cost $150,000 to rebuild today. If the homeowner has a full-replacement coverage policy that meets coinsurance requirements, what would the insurance company pay if the house burns completely to the ground?

The answer is $150,000. With full-replacement coverage, which meets coinsurance requirements, the insurance company pays for replacing the property with no reduction for depreciation. However, the total settlement cannot exceed the face value of the property unless an endorsement to the policy specifies otherwise.

Each section has an area of approximately

The answer is 1 square mile. Each section is one mile square and contains one square mile or 640 acres. Texas uses this section measurement for rural land. Under the rectangular survey system in other states, sections are numbered 1 through 36 starting with 1 in the northeast (top right) corner, then west (left) along the top row to the northwest (left) corner. The second row is numbered west (left) to east (right), and the remaining four rows continue the pattern.

A square foot is equal to

The answer is 144 square inches (12 inches × 12 inches). Although square inches are rarely used in legal documents, sales agents may find calculating square inches important in helping clients know whether furniture or appliances will fit in their homes.

The N½, SW¼, SE¼ of Section 13 contains

The answer is 20 acres. A section contains 640 acres. The parcel contains 20 acres (640 × ¼ × ¼ × ½).

For homeowners in upper-income brackets whose gains exceed $500,000 ($250,000 for a single taxpayer), the capital gains tax rate is limited to what percentage?

The answer is 20. For homeowners in upper-income brackets, the capital gains tax rate is limited to 20%, with a zero percentage rate for taxpayers in the 10% and 15% tax brackets.

Lenders may use a conservative rule-of-thumb formula that the monthly cost of buying a home (PITI payment) should NOT exceed what percentage of the borrower's gross monthly income?

The answer is 25 to 28. Guidelines are available to help determine the amount of debt a prospective homeowner should incur. Lenders may use a conservative rule-of-thumb formula that the monthly cost of buying a home (the housing-expense or front-end ratio—mortgage payments plus taxes and insurance) should not exceed 25%-28% of a borrower's gross monthly income. The payment on all debts (the total-debt or back-end ratio) should not exceed 33%-36% of gross monthly income.

After mold damage to a property has been remediated, a seller is required to give a copy of the certificate of mold remediation to a buyer. For how many years does this obligation extend?

The answer is 5. If a property is sold, a copy of each certificate of mold remediation issued for the property during the five years preceding the sale must be given to the buyer.

In addition to proportionate responsibility for damages under the DTPA, a defendant may be held jointly and separately responsible for all damages recoverable if the defendant's percentage of responsibility is found to be more than what percentage?

The answer is 50. A defendant who is only marginally at fault will be liable to the consumer for that defendant's percentage of responsibility. However, in addition, a defendant may be held jointly and separately responsible for all damages if (a) the defendant's percentage of responsibility is greater than 50% or (b) the defendant, with specific intent to do harm, acted with another person to commit a third-degree-or-higher felony. The actions of persons licensed under a broker are always the responsibility of the broker.

What real estate discipline is represented by BOMA?

The answer is BOMA represents building owners and managers. BOMA is a national group almost exclusively involved in issues concerning large-scale commercial enterprises—everything from planning to meeting environmental-quality goals and building security.

A borrower wants to determine a lending institution's participation in low- and moderate-income housing, community development, rehab projects, and in loan programs for small businesses and small farms. Which law requires a report that the borrower can request from the lender?

The answer is Community Reinvestment Act (CRA). The CRA requires a public annual statement containing a definition of the geographical boundaries of its community, an identification of the types of community reinvestment credit offered (such as residential housing loans, housing rehab loans, small-business loans, commercial loans, and consumer loans), and comments from the public about the institution's performance in meeting community needs.

Which requires lenders to report income and ethnicity data of loan applicants, as well as the type of loan applied for, where the property is located, and whether the application was approved, denied, or withdrawn?

The answer is Home Mortgage Disclosure Act (HMDA). The HMDA was passed to stop the process of redlining, in which certain areas of a community were excluded from eligibility for home loans as though red lines were drawn around them. It requires mortgage lenders to collect and report data to assist in identifying possible discriminatory lending practices: the race or ethnicity, sex, and income of mortgage applicants, as well as the type of loan they want, where the property is located by census tract, and whether the application was approved, denied, or withdrawn.

Which court decision is still cited in lawsuits concerning fair housing discrimination?

The answer is Jones v. Mayer. The decision barred all racial discrimination, private as well as public, in the sale or rental of property. The decision was handed down in 1968, more than 100 years after the first Civil Rights Act.

The Women's Council of REALTORS® offers training to receive which professional certification?

The answer is Performance Management Network. The PMN courses specifically teach leadership skills in managing everything from a real estate team to a full-service brokerage company. Although it is offered by WCR, it is open to all REALTOR® members.

Members of the National Association of Real Estate Brokers refer to themselves as

The answer is Realtists. The National Association of Real Estate Brokers historically was a predominantly African American group of real estate brokers, but modern membership comprises licensees of all races and national origins.

If a broker is forced into an intermediary position because a buyer expresses interest in a company listing, and therefore appoints two other associated license holders to represent seller and buyer, respectively, do the respective appointees need to be of roughly equal skill and experience?

The answer is Texas law is silent on the issue. Brokers should, however, be cautious about who they appoint to represent buyers and sellers. Sales agents have differing strengths and weaknesses, including ability to negotiate, and clients are entitled to benefit from those talents.

To make sure contractors have paid all bills, including to subcontractors, on home improvement projects, what must the homeowner receive?

The answer is a "final bills paid affidavit." Homeowners are liable for subcontractor payments if the original contractor fails to make those payments. Failure could result in a lien against the property.

Which family is NOT protected under the familial status provisions of the Fair Housing Act?

The answer is a 55-year-old father, 40-year-old mother, and 17-year-old son who want to purchase a home in an age-restricted adults-only community. Familial status has been defined as one or more individuals (under the age of 18) living with a parent or legal guardian or the designee of such parent or guardian. It also includes a woman who is pregnant and someone who is in the process of securing legal custody of a child under age 18. Housing that is occupied solely by persons age 62 or housing that requires at least 80% of its units to be occupied by at least one person age 55 or older does not have to comply with familial status provisions of fair housing laws.

A listing contract is

The answer is a contract of employment. It is a contract between a broker and a landowner to sell real estate on the owner's terms, within a given time, for a commission. If the broker is to be able to collect a commission, a listing must be in writing and must include the seller's signed promise to pay the commission. The broker also must prove that a valid license existed at the time the commission liability arose and that the statutory title notice was given as required. A listing would terminate on the death of the broker but not the sales agent.

Real estate brokers hoping to list properties being sold by a corporation should secure what document before beginning work?

The answer is a copy of the corporate resolution authorizing the sale. In a corporation, executives cannot sell property unless the board approves a sale through a resolution, although a deed signed by an executive can be used as evidence that a resolution was passed.

Complaints of discrimination brought under the Civil Rights Act of 1866 must be taken directly to

The answer is a federal court. Discrimination complaints brought under the Texas Fair Housing Act can be filed with the Texas Workforce Commission Civil Rights Division (TWCCRD) or with the U.S. Department of Housing and Urban Development (HUD) within one year of the alleged discriminatory act.

The National Flood Insurance Program (NFIP) is

The answer is a federally backed flood insurance program that enables homeowners, renters, and business owners in designated flood zones to purchase flood-damage coverage. In exchange for a community's adopting and enforcing NFIP floodplain management regulations, the NFIP makes federally backed flood insurance available for purchase by homeowners, renters, and business owners in the community.

An agent's legal requirement to act in the client's best interest and with the utmost good faith is called

The answer is a fiduciary relationship. Agents and subagents have a fiduciary relationship with a principal—one in which a license holder has a legal requirement to act in the client's best interest and with the utmost good faith.

The National Flood Insurance Program's (NFIP) definition of flooding includes which of the following?

The answer is a general and temporary condition during which the normally dry land surface is partially or completely inundated by water. Covered losses include (1) an overflow of inland or tidal waters, (2) an unusual and rapid accumulation or runoff of surface waters, (3) mudslides or mudflows on the surface of normally dry land areas, and (4) the collapse of land along the shore of a body of water (under certain circumstances).

Which of the following statements regarding the responsibilities of a limited service broker after a contract is received on a listed property is FALSE?

The answer is a limited service broker may not ask another broker to deliver an offer to the seller. The minimum-services requirement of the License Act dictates that a limited service broker (1) must inform the client if material information related to the transaction is received by the broker, (2) must answer the client's questions and present any offer to or from the client, and (3) may not instruct another broker to negotiate directly with the client. Another broker may deliver an offer to the limited service broker's client under certain circumstances, as long as the other broker does not negotiate or attempt to negotiate the contract.

The governing body of a municipality or county has undertaken an improvement project, such as landscaping, erecting fountains, or installing special lighting, that benefits a definable part of the community. In turn, the owners of those properties pay an annual assessment to cover the costs and maintenance. If a property being sold is subject to such an assessment, the purchaser must be given

The answer is a notice of obligations related to public improvement district (PID). The seller of a single-family residence that is subject to a PID assessment must give written notice of the assessment to a prospective buyer before the effective date of a sales contract. If the notice is not received before the signing of the contract, the purchaser may terminate the contract for any reason within seven days after receiving the notice or on the day of closing, whichever is earlier.

Which describes a datum?

The answer is a point, line, or surface from which elevations are measured or indicated. Elevation is measured from New York Harbor, establishing a datum reference for surveys conducted in each city. Air subdivided above land creates air lots. A benchmark is a permanent reference marker in a sidewalk or other structure. A monument is a marker used to establish boundaries, corners, or points where directions change.

License holder compliance with the TREC's Canons of Professional Ethics and Conduct is

The answer is a regulation of the state and licensees can be held liable for violations. Alternatively, the NAR Code of Ethics is only applicable to members of that trade association and is not enforceable by the state government.

Which is NOT representative of a restriction as an encumbrance against land?

The answer is a restriction that is a personal privilege to enter the land of another for a specific purpose. A license is a personal privilege to enter the land of another for a specific purpose. A restriction is generally imposed by a developer, filed in the county clerk's office, made known to the buyer with the title commitment (if not sooner), and affects the use (not sale) of land.

A lien placed on a property by a contractor is

The answer is a specific statutory lien. A lien placed on a property by a contractor is a claim against a certain property. Therefore, it is a specific, statutory lien. (10.6)

Broker Y is cooperating with a listing broker by showing that broker's listing to a prospective purchaser/customer. She is, therefore, working as

The answer is a subagent. A broker who lists the property for sale or lease represents the owner as a seller's agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker and must place the interests of the owner first. A subagent is not sponsored by or associated with the listing broker's office and works with the buyer as customer rather than as client. A broker who acts as a buyer's agent represents the buyer as client, usually through a written buyer representation agreement.

A bank agrees to make a home loan but insists on a written agreement between the bank and other prior lienholders to grant first-lien position to the bank, lowering the priority of other liens. What does the bank require?

The answer is a subordination agreement. To allow the borrower to obtain a mortgage loan with a first-lien position, the prior lienholders would have to agree to a subordination agreement and accept second- or third-lien position in the event of a borrower default and a foreclosure sale of the property.

Sales agents are warned that metes-and-bounds descriptions "are highly complicated and should be handled with extreme care." Who should be called in to help with complex descriptions?

The answer is a surveyor who can take (or retake) precise measurements. A surveyor may be especially necessary when dealing with concave or convex curved lines.

In the metes-and-bounds description reading "beginning at an iron rod set for the corner; thence 90° 0' 0" E 180.0'; thence 0° 0' 0" S 160.0'; thence back to the POB," the parcel identified is

The answer is a triangle. To diagram the parcel, draw a line from a POB toward due east (toward the right, as on a map). East and west are 90° angles from north and south (which are described as 0°). Then south 0° would be straight south (or down). From the bottom of the line drawn south, connect back to the POB. The resulting figure is a triangle.

A mortgage lien on a home is

The answer is a voluntary specific lien. A voluntary lien is created by the lienee's action, such as taking out a mortgage loan. A specific lien is secured by a particular parcel of real estate and affects only that property.

If the court learns that the house in question has storm windows that are custom made, the court will consider which in determining whether the storm windows are fixtures?

The answer is adaptation of the item. These storm windows are fixtures because they were custom made.

A real estate broker's license is NOT required of persons who

The answer is advertise and lease their own properties. Any person who, for compensation or the promise of compensation, lists or offers to list; sells or offers to sell; buys or offers to buy; negotiates or offers to negotiate—either directly or indirectly—for the purpose of bringing about the listing, sale, exchange, purchase, option to purchase, auction, rental, or leasing of real estate is required to hold a valid real estate broker's license. Persons who deal only with their own property are not required to hold a real estate license.

In the creation of real estate advertising, which of the following is the BEST way to comply with fair housing laws?

The answer is agents describe characteristics of properties—square footage, amenities—rather than the people who are logical candidates to live there. Describing people, or showing them in photo displays, can quickly lead to misunderstandings and possible fair housing violations.

A property owner may divide the space above the property's surface into

The answer is air lots. The descriptions of tall buildings may include these air lots; for example, multistory condominiums include air lot descriptions. Air lot descriptions include elevations obtained from referencing a local datum marker or benchmark.

A developer wishes to build a commercial building in the space over the railroad tracks. To do this, the developer must purchase which right from the owner?

The answer is air. The developer is purchasing the rights to use, control, and occupy the space above the land.

Are the principals allowed to know how license holders divide the various commissions, splits, and fees between themselves?

The answer is all of these are correct. While there is no legal obligation by the license holders to explain how commissions and fees are divided, if a principal asks and the license holder is inclined to explain compensation, there is no statutory bar to that conversation.

A homestead may suffer forced sale for either payment of annual real estate taxes or which of the following?

The answer is all of these. A homestead is exempt from forced sale by creditors for payment of debts, with nine exceptions: 1) taxes on the property; 2) purchase money mortgages; 3) an owelty lien, including a loan to settle property in cases of divorce or death; 4) refinance of a lien against a homestead, including a federal tax lien; 5) mechanics' and materialmen's claims for the cost of improvements on the homestead property; 6) home equity loans for any purpose, up to 80% loan to value; 7) a reverse-annuity mortgage for a person age 62 or older; 8) a homeowners association assessment lien, if certain filing requirements have been met; and 9) conversion and refinance of a personal property lien secured by a manufactured home to a lien on real property.

Insurance companies settle property insurance claims on the basis of which of the following?

The answer is all of these. For example, with full-replacement coverage, the insurance company pays for replacing the property (whatever the current cost is) with no reduction for depreciation. Under a standard settlement, the insurance company will settle for the actual cash value of the property, which is the original cost minus depreciation. If the homeowner carries coverage of less than 80% of the full replacement cost of the dwelling, the loss will be settled either for the actual cash value or for a percentage of the replacement cost.

What is the reasoning MOST lenders gave for "redlining" neighborhoods?

The answer is all of these. Historically, banks did not want to make loans because they believed people of some races were unreliable borrowers—often making that decision on scant evidence. The Home Mortgage Disclosure Act attempts to overcome that prejudice.

If a home inspector finds a dangerous situation in the course of his inspection—a gas leak or perhaps electrical failing—what is his obligation?

The answer is all of these. In the case of a gas leak, the inspector likely will want to notify the gas department as well. Emergency conditions must be addressed promptly—failure to do so could result in a disaster and liability.

Which of these map directions to a real estate development could be considered discriminatory?

The answer is all of these. Noting the proximity to a Catholic school could imply the predominant religion of the community; Upper Crust Country Club could imply a wealthy white community; noting the statute of Tejano hero Toribio Losoya who died defending the Alamo may suggest a community is for Hispanics.

Factors influencing home ownership include mortgage terms, ownership expenses, ability to pay, type of home, location, and which of the following?

The answer is all of these. Purchasing a home offers certain financial advantages. For one thing, the mortgaged property represents an investment—that is, the purchase of an asset that has potential for profit. The profit may be in the form of present income received or a long-term gain from increased value when the asset is sold. Tax deductions provide an additional financial advantage.

Under what circumstances might a person buy a lease-option?

The answer is all of these. There are a variety of scenarios where a lease-purchase option makes sense, including attempting to secure a property at a specific price; the possibility of a portions of payments being used to acquire equity before outright purchase; and to deal with uncertainty in a work situation where the buyer might be transferred to another city.

If a homeowner who has NOT hired a broker agrees to accept an offer brought to him by a broker, he may create

The answer is an agency by ratification. The homeowner is ratifying the agency of the broker after the fact and is attempting to benefit from his actions. An agency by ratification is created when the principal agrees to be bound by the actions of a person acting as an agent who actually is not one—such as a for sale by owner accepting a contract and agreeing to pay a commission on a property that has not been listed.

In a time-share occupancy, the owners pay the purchase price of their individual shares plus

The answer is an annual maintenance fee. Time-share occupancy of vacation homes enables many people who otherwise would be unable to meet the high cost of owning a second home to enter the vacation home market. In a time-share occupancy, owners purchase ownership shares that entitle each owner to occupy the property for a definite, fixed period each year. Many time-share trade agreements exist among developers of this type of property.

A property owner who wishes to challenge the appraised value of property for real estate taxes must present objections and supporting documentation to the district appraiser's office for review and/or to appear before

The answer is an appraisal review board. A property owner who believes an error was made in appraising property may present objections and supporting documentation to the district appraiser's office for review and/or to appear before a local appraisal review board (ARB). If the property owner is not satisfied with the board's decision, she can then pursue the case to the state district court in which the property is located or submit the dispute to binding arbitration. To qualify for binding arbitration, the property must have an appraisal of $1 million or less or be a residential homestead.

Which is NOT one of the steps to achieve specific improvements that will result in a special assessment?

The answer is an assessment roll is issued to spread the cost of the improvement equally among all the parcels that will benefit from it. The assessment roll spreads the assessment over the various parcels of real estate that will benefit from the improvement. However, the amount of the assessment for each property varies from parcel to parcel because all will not benefit equally from the improvement. The assessment for each parcel may be determined by (1) the estimated benefit each tract will receive or (2) front footage of the lot.

If a seller believes—but is not certain—that a friend wants to buy his house, what kind of agreement should he sign with a broker?

The answer is an exclusive agency listing. The broker would likely suggest that if the seller can sell to his friend, there would be no commission payable—but if the broker found a buyer, there would be a commission.

The commission goes to the listing broker no matter who sells the property in

The answer is an exclusive right-to-sell listing. This is the only listing type where the broker is guaranteed a commission when the property sells, no matter who sells it—even if the seller sells his own property. The seller employs only one broker in an exclusive right-to-sell listing.

A real estate tax lien is

The answer is an involuntary specific lien. A real estate tax lien is granted to a local government and does not need the owner's consent (involuntary). It is also a claim against a certain property (specific).

Under the Fraud in Real Estate and Stock Transactions statute,

The answer is any person who stands to gain financially from a transaction is assumed to have knowledge of all aspects of the transaction. The statute provides for actual and punitive damages against not only the person making the misrepresentation or promise but also against any person who benefits from the transaction, has actual knowledge of the falsity, and fails to reveal it. If a broker or a seller is aware of the wrongful acts of another broker or seller, that broker can be liable for those acts if a benefit is received.

A family's wanting to buy a home near good schools is an example of which characteristic of real estate?

The answer is area preference. This also is called situs. Area preference is the most important economic characteristic of real estate.

Under the rule of capture regarding groundwater rights, the landowner may pump

The answer is as much groundwater as the landowner chooses. Landowners may pump as much groundwater as they choose without being held liable for damage to others. However, landowners may not maliciously take water for the purpose of injuring a neighbor, nor may they waste it.

What is the proper response of a listing agent who approaches a potential listing only to find a Confederate flag flying from the front porch?

The answer is ask the seller if the flag represents his racial prejudice and ask that it be removed. Real estate agents are business people, not social engineers. But if the agent feels the flag reflects racist attitudes that will permeate the transaction and result in diminished interest in the property, it might be best to avoid the listing.

To be eligible for an exclusion of capital gains income, a homeowner must have owned the residence and occupied it as a primary residence for how long before the sale or exchange?

The answer is at least two of five years. A homeowner who fails to meet these requirements because of a change of place of employment, health, death, natural or man-made disasters, acts of war (including terrorist attacks), divorce or legal separation, or other unforeseen circumstances, is able to exclude the fraction of the $500,000 ($250,000 if single) that is equal to the fraction of two years that these residency requirements are met.

Texas homeowners insurance policies combine five different types of coverage. Which is NOT included?

The answer is automobile. Texas homeowners insurance policies combine five different types of coverage: dwelling, personal property, liability, medical payments, and loss of use.

Which is the sudden removal of soil by forces of nature?

The answer is avulsion. For example, a river changes its course after a devastating flood. When avulsion occurs, there is generally no change in boundary or title. In contrast, a riparian owner loses title to any land washed away by erosion or the changing of a river's course over time.

Should the seller be present for the home inspection?

The answer is because it is the seller's home, he is entitled to be present at the home inspection. Listing agents typically strongly discourage sellers from hovering over home inspectors to prevent disputes from arising on the spot, suggesting that any questions be resolved or clarified after the report is made available to the buyer.

If a homeseller specifically instructs his listing agent not to show his home to lawyers, is the listing agent obligated to comply?

The answer is because lawyers are not a protected class, the request is lawful. Thoughtful sales agents should warn, however, they are unlikely to know the profession of every potential buyer and they may want to redirect their attention to making sure the home shows well enough to return top value.

The answer is it is best to verify from an independent source what a seller says. Agents should not trust even a well-meaning seller's memory, especially when public documents are readily available.

The answer is because of fair housing laws. Although listing proximity to a specific school or church might be factual, it also might suggest the area is poor or more dangerous than another area.

Which is a similarity between an exclusive agency listing and an exclusive right-to-sell listing?

The answer is both employ one broker only. Under an exclusive right-to-sell listing, the seller pays the broker a commission regardless of who sells the property. The seller reserves the right to personally sell the property, without commission obligation, in an exclusive agency listing.

Advertising, telephone charges, and other expenses in a broker's office may be paid by which of the following?

The answer is both of these. Some brokers pay for all office expenses and most promotional expenses, while some make licensed associates (sales agents) pay for advertising and other promotional expenses of listed properties.

One condition for an easement by necessity is that

The answer is both parcels must at one time have been part of a single unit. The other condition is that there must be an absolute necessity for the easement and the necessity must have existed as of the severance of the two estates.

Are violations of antitrust laws considered civil violations or criminal violations?

The answer is both. Antitrust violations not only can result in $1 million in civil fines against an individual but also up to 10 years in prison on the criminal side. Corporations that engage in antitrust actions can be fined up to $100 million.

Brokers will often provide time for license holders to work "desk duty," a period in which the desk person fields incoming calls to the brokerage and may work with callers who are not otherwise affiliated with other sales agents. May brokers assign (order) sales agents to work specific hours of desk duty?

The answer is brokers may assign desk duty to employees, but may negotiate contracts with independent contractors that include desk duty expectations. If brokers expect independent contractors to work desk duty, that expectation should be included in the contract and open to discussion.

The four statutory positions a broker might take when doing business include the intermediary position, seller representation, subagency, and

The answer is buyer representation. A broker who acts as a buyer's agent represents the buyer, usually through a written buyer representation agreement.

Which s a body of law developed by the courts based on custom and usage?

The answer is common law. Common law covers situations where there are no statutes.

Which aspect of the Canons of Professional Ethics and Conduct requires the broker or sales agent to be informed on market conditions and national, state, and local developments affecting the real estate business?

The answer is competency. The Texas Real Estate Commission has adopted the Canons of Professional Ethics as a part of its real estate license law to establish a basis for professional conduct of licensed real estate brokers and salespeople. Each applicant for such a license must pledge compliance with these canons: fidelity, integrity, and competency.

The Texas Real Estate Commission warns that there is no promulgated contract-for-deed form, therefore

The answer is competent legal counsel should be obtained by both seller and buyer. TREC also warns that trying to modify promulgated contracts into a contact for deed form could result in disciplinary action and even loss of license.

Which is an act or a promise that is offered by one party to induce another to enter into a contract?

The answer is consideration. Consideration is that which is given in exchange for something from another. The actual consideration is the mutual exchanges of promises by buyer and seller; that is, the buyer promises to give money and the seller promises to give title to the property.

When a broker has a question regarding a serious legal issue in a transaction, the proper course of action is to

The answer is consult an attorney. Although property transactions are conducted within a legal framework, neither brokers nor sales agents are skilled in the practice of real estate law. Legal issues should be discussed with licensed attorneys.

Courses for the renewal of an active real estate broker or sales agent license are called

The answer is continuing education (CE). To renew an active real estate broker or sales agent license, the license holder must provide the Texas Real Estate Commission proof of attending at least 18 classroom hours of continuing education approved by the Commission during the term of the current license.

In the metes-and-bounds description, the symbol ° stands for

The answer is degree. Compass bearings include degrees (°), minutes ('), and seconds ("). The following measurements are used as part of the description: circle = 360° (degrees), each degree = 60' (minutes), and each minute = 60" (seconds). Due north and due south are 0°; due east and due west are 90°.

In real estate markets, which may change quickly?

The answer is demand. Supply and prices are relatively slow to adjust, but demand may change quickly. For example, if mortgage rates drop suddenly, the demand for real estate may increase quickly as homebuyers rush to lock in the lower mortgage rates.

Broker X represents a prospective buyer. When he calls to schedule an appointment to show a property listed by another broker, X must

The answer is disclose that representation at the time he schedules the appointment to show the property. The Real Estate License Act requires a license holder who has an established agency relationship with one party in a proposed transaction to disclose that representation either orally or in writing at the time of the license holder's first contact with (1) another party to the transaction—the seller in this case—or (2) another license holder who represents another party to the transaction—the listing broker in this case.

Which duty requires the broker to keep the principal fully informed at all times of all information the broker obtains that could affect the principal's decisions?

The answer is disclosure. The broker may be held liable for damages resulting from failure to disclose such information.

The bundle of rights refers to an owner's right to

The answer is dispose of the property by giving it to a family member. The bundle of rights includes an owner's rights of possession, control, enjoyment, exclusion, and disposition—within the framework of the law.

Using force to obtain an agreement is

The answer is duress. The consenting party must not be coerced or pressured into the contract. For example, a real estate agent's pointing a gun at the heads of potential buyers forcing them to sign a sales contract is evidence of menace, threatening violence to obtain an agreement. In these instances, a "meeting of the minds" has not occurred.

Texas law permits the taking of private property for all conditions EXCEPT

The answer is economic development and enhancement of tax revenue. The taking of private property for economic development or enhancement of tax revenue is prohibited in Texas. Property may not be taken, damaged, or destroyed unless the taking is for public ownership, use, and enjoyment or for the elimination of urban blight on a particular parcel of property.

Can the Texas attorney general and the U.S. attorney general begin an investigation of fair housing abuse on their own accord, or must they wait until a formal complaint is made by the public?

The answer is either the state attorney general and the U.S. Justice Department may initiate investigations on their own. They do not need to refer cases to local prosecutors.

To protect themselves from financial loss due to liability for mistakes and negligence, many brokers and agents purchase which kind of insurance?

The answer is errors and omissions. The broker or agent pays an annual fee (or a per-transaction fee) to an insurance company, which defends him and pays legal costs and judgments. The insurance will not cover intentional acts of deception, misrepresentation, or negligence.

A vacant building that had previously been used as a restaurant is being leased by a person who is opening a coffee shop. Which statement BEST describes the trade fixtures installed by the owner of the coffee shop?

The answer is even though attached to the real estate, trade fixtures generally belong to the tenant. Trade fixtures may be affixed to a building so as to appear to be fixtures (real estate). However, the law gives a tenant the right to remove trade fixtures if the removal is completed before the lease expires and if the rented space is returned to approximately its original condition.

When a real estate contract is negotiated and signed by both parties, it is which of the following?

The answer is executory contract. When all parties have fulfilled all promises in the agreement, the contract is considered fully executed—that is, when closing and funding have occurred. In an implied contract, the agreement of the parties is demonstrated by their acts and conduct rather than through a written contract. A unilateral contract is a one-sided agreement whereby one party makes a promise to induce a second party to do something. A real estate sales contract is a bilateral contract because both parties make promises—to sell/deliver title and to buy/pay money.

If the homesellers are confused about specific sections of a promulgated form, the real estate sales agent

The answer is explain the meanings of the confusing sections. As part of their duty as real estate professionals, sales agents are expected to understand and explain the forms, but they may not provide legal advice concerning them.

A father sells a lakeside property to his daughter. He puts an easement in the deed that gives him the right to enter the property to fish. This is an easement by

The answer is express reservation. The father (the grantor) reserves in the deed a right over the property for himself. An easement by express grant in a deed gives another person a right over the property of the grantor. Easements may also be created by separate written agreement between the parties.

A seller has accepted an offer from a ready, willing, and able buyer, and the real estate agent is anticipating the closing of the transaction and receiving a commission. However, if the transaction does not close, the broker still would receive a commission under which circumstances?

The answer is failure of the owner's spouse to sign the deed. Generally, a broker has earned a commission when the broker performs under the terms of a listing contract or buyer representation agreement—when a completed sales contract has been signed by a ready, willing, and able buyer. There are a few exceptions, however, including (1) failure of the agent to give the required title notice to the buyer, (2) failure to have a written listing agreement signed by the seller(s), (3) failure to be licensed, (4) failure to state an amount of percentage rate of commission in a listing contract because commissions are negotiable in every case, and (5) failure (without fault) on the part of the seller to deliver an abstract or title insurance policy to the buyer. The refusal of the owner's spouse to sign the deed or the owner changing his mind and refusing to sell are among the circumstances under which a broker usually would still be entitled to a commission if the transaction does not close.

When the typical homebuyer purchases a home in Texas, he holds the property

The answer is fee simple. The owner of the property has control over it and may sell or pass it to her heirs in a will.

Which aspect of the Canons of Professional Ethics and Conduct requires a real estate agent to represent the interests of the client?

The answer is fidelity. The Texas Real Estate Commission has adopted the Canons of Professional Ethics as a part of its real estate license law to establish a basis for professional conduct of licensed real estate brokers and salespeople. Each applicant for such a license must pledge compliance with these Canons: fidelity (place no personal interest above that of the client), integrity (use prudence and caution to avoid misrepresentation), and competency (exercise judgment and skill and be informed on market conditions and national/state/local issues). Also included in the canons are Consumer Information Form 1-1 (giving consumers information about the availability of the real estate recovery trust account) and discriminatory practices (prohibiting discrimination based on race, color, religion, sex, national origin, ancestry, familial status, or handicap). The Canons are among the Rules of the Commission. They govern ethics and conduct of license holders, and they have the force and effect of the law.

Penalties for violating do-not-call regulations may be

The answer is fines up to $11,000 per call, or $16,000 if made from a robocall system. Penalties for such calls are extraordinarily high because the calls typically are pervasive and the public considers them pernicious violations of privacy.

To qualify for license renewal and continue in business, license holders must

The answer is follow certain prescribed standards of business conduct and meet continuing education requirements. In order to obtain a license, the applicant must possess certain stated personal and educational qualifications and pass an examination to prove adequate knowledge of the business. In addition, to qualify for license renewal and continue in business, the license holder must follow certain prescribed standards of business conduct and meet continuing education requirements.

How long does a nondefaulting party have to begin legal action against the defaulting party in a real estate breach of contract?

The answer is four years. However, a buyer victimized under the Deceptive Trade Practices Act has two years to commence legal action from the point of discovery of the deceptive act.

A broker who represents a seller knows that the house has structural defects that will need expensive repairs but does NOT tell prospective buyers. This is an example of

The answer is fraud. The broker has intentionally concealed an important fact. If the broker were unaware of the structural defects and said the structure was sound, the statement would be a misrepresentation.

Which one of these is NOT a standard unit of measurement used in Texas land transactions?

The answer is furlong. Historically, the terms chain and furlong described the length and breathe of an acre. A furlong is equal to one-eighth of a mile.

Groundwater is a precious commodity in Texas, and even though landowners are allowed to pump as much as they'd like—as long as they don't waste it—does that mean that there are no controls?

The answer is groundwater conservation districts may require landowners to report how much water they pump and regulate the spacing of wells. It is in the interest of the state not to allow aquifers to be pumped to the point they cannot recover.

An unlicensed assistant may

The answer is handle correspondence for a licensed agent. Unlicensed assistants, working under the direction and control of a real estate agent, may perform myriad tasks, among them: answering phone calls, maintaining records, handling correspondence, scheduling appointments, and serving as hosts or hostesses at open houses. They may not, however, engage in any activity for which a license is required (such as interviewing prospects, showing property, soliciting prospects or listings); and they may not at any time respond to inquiries about a property when the response requires communication of information that has not been advertised.

Under Texas law, real estate agents are permitted to call individuals on the do-not-call list if they have had a previous business relationship with the person, have received permission to call the person, or

The answer is if the call is personally dialed and is not, in itself, an attempt to sell a property over the phone. Robocalls may not be made, and the law stipulates that sales resulting from the call must be made as a result of face-to-face contact.

Under the provisions of the electronic transactions and recording acts, which statement would NOT be accurate?

The answer is if the law requires a signature on a document, that document must be presented to the county clerk as a paper document with an original signature. If there is a law or other requirement that a document be an original, on paper, in writing, signed, witnessed, or acknowledged, then a document in electronic form satisfies those requirements. However, if a nonoriginal paper document, such as a fax or email, is presented to a county clerk for recording, it must contain, or be attached as an exhibit to a document that contains, original signatures that are acknowledged or sworn to before a notary.

Under what conditions may a business fax unsolicited advertisements to other commercial enterprises?

The answer is if the receiving enterprise has agreed to receive faxes or has made its fax number known through its website or other method. On the first page of any commercial fax, the sender must include a method that allows the receiver to be removed from the fax list.

May a real estate sales agent simply write in an exception to a contract clause, or must an approved or promulgated addendum be used?

The answer is if there is an approved or promulgated form that addresses the modification, that form must be used. Sales agents are required to use an addendum if one is available.

After both parties have initialed all changes to a contract and have signed it, which is NOT acceptable notification of contract acceptance?

The answer is in a buyer brokerage transaction, notification of acceptance must be given directly to the buyer. An offer is not considered accepted until the person making the offer has been notified of the other party's acceptance. In a transaction involving subagency, notification of contract acceptance must be given directly to the buyer after seller acceptance because the buyer has no agent. Notification of acceptance to the seller can be given to the seller's broker or agent. In a buyer brokerage transaction, notification of acceptance is complete when the buyer's broker or agent has been notified.

Ad valorem taxes are paid

The answer is in arrears. Real estate taxes are paid in arrears—at the end of the period for which they are levied, not in advance. For example, taxes for 2014 are not due until December 31, 2014. However, because taxes and special assessments take priority over all other liens, an ad valorem real estate tax becomes a lien on January 1 of the year of the tax—in this example, January 1, 2014. Taxes become delinquent on February 1 of the year following the tax year—in this example, February 1, 2015.

When demand increases, real estate prices

The answer is increase. Demand and price move in the same direction. When demand increases, prices increase.

What is the classification of a warehouse property that is advertised as being ideal for conversion to residential loft units?

The answer is industrial. A property retains its classification, in this case "industrial," until zoning authorities change it to something else. Real estate professionals must warn potential buyers that rezoning is not always guaranteed and all transactions carry risks.

Warehouses, factories, and research facilities are classified as which kind of property?

The answer is industrial. Industrial property includes factories, warehouses, and research and development facilities. Agricultural property includes farms, orchards, timberland, ranches, and hatcheries. Special-purpose property includes churches, government land, and schools. Commercial property includes retail stores, shopping malls, office buildings, theaters, and parking lots.

Which aspect of the Canons of Professional Ethics and Conduct requires the broker or sales agent to employ prudence and caution in the discharge of duties so as to avoid misrepresentation?

The answer is integrity. The Texas Real Estate Commission has adopted the Canons of Professional Ethics as a part of its real estate license law to establish a basis for professional conduct of licensed real estate brokers and salespeople. Each applicant for such a license must pledge compliance with these canons: fidelity (place no personal interest above that of the client), integrity (use prudence and caution to avoid misrepresentation), and competency (exercise judgment and skill and be informed on market conditions and national/state/local issues). Also included in the canons are Consumer Information Form 1-1 (giving consumers information about the availability of the real estate recovery trust account) and discriminatory practices (prohibiting discrimination based on race, color, religion, sex, national origin, ancestry, familial status, or handicap). The canons are among the Rules of the Commission. They govern ethics and conduct of license holders—and they have the force and effect of the law.

If the court learns that the seller placed a sign that said "Not Included" on the stove every time a buyer looked at the property, the court will consider which of the following in determining whether the stove is a fixture?

The answer is intention of the parties. This seller clearly intended to take the stove when the property sold.

If a homeseller instructs the listing agent not to show his property to a real estate investor (fearful it could be turned into rental property), must the listing agent comply?

The answer is investors are not a protected class, meaning sales agents are permitted to turn away investors. The seller's motivation is not something the sales agent is required to investigate, but if the seller is fearful his home would be turned into rental units, and those units might be rented minorities or other protected classes, the agent could be looking at a legal issue.

To avoid liability, should listing agents simply accept the seller's word about pertinent information, such as property taxes, about their property?

The answer is it is best to verify from an independent source what a seller says. Agents should not trust even a well-meaning seller's memory, especially when public documents are readily available.

Because real estate is immobile,

The answer is its value is heavily influenced by changes in the surrounding area. The product cannot be transferred to another market, so an oversupply usually causes prices to drop. Also because of immobility, the real estate market is local in character, and it is easy for local governments to regulate and tax real estate.

The purpose of the National Association of REALTORS® is to

The answer is keep members up to date on current housing trends, legal issues, and brokerage business practices. The NAR offers state and national conferences to its members, where new concerns are raised and discussed and, if appropriate, responded to.

Which is NOT insured by property insurance?

The answer is land. Land is not insured, because it cannot be destroyed. Similarly, because of its indestructibility, land cannot be depreciated.

Which of the following terms refers not only to the surface of the earth but also below to the center of the earth, above to infinity, and natural things permanently attached but does NOT refer to artificial things permanently attached?

The answer is land. Land includes such things as the minerals below the surface, natural vegetation, and the space above the surface. An owner's right to use the surface is called surface rights, below the surface is called subsurface rights, and above the land is called air rights.

The legal theory of separating surface rights from subsurface rights and air rights is called?

The answer is lateral severance.

The Texas Real Estate License Act is an example of which of the seven sources of law?

The answer is laws passed by the state legislature. Laws passed by Congress and by state and local legislative bodies may establish specific provisions, or they may set broad standards of conduct and establish administrative enforcement agencies. Federal fair housing laws are examples of laws passed in Congress. The Texas Real Estate License Act is a state statute.

License holders may explain to the principals the meaning of factual statements and business details contained in promulgated forms as long as the license holders do NOT offer or give

The answer is legal advice. Nothing prevents the license holder from explaining to the principals the meaning of the factual statements or business details contained in a promulgated form so long as the license holder does not offer or give legal advice.

The insurance company will pay the actual cash value of the loss or a percentage of the replacement cost if a homeowner has a coinsurance clause and coverage on the property is

The answer is less than the coinsurance clause percentage. If coverage is less than 80% of the replacement cost, the insurance company will pay the larger of (1) the actual cash value of the loss (replacement cost less depreciation) or (2) a percentage of the replacement cost calculated as follows: percentage of coverage carried ÷ percentage of coverage required in the policy × amount of the loss.

Which liens be satisfied first in the case of a foreclosure or court-ordered sale?

The answer is loan for land filed on July 13, 2007, at 3:15 pm. After outstanding real estate taxes and other special assessments are satisfied, the priority of most remaining liens is usually established by the date and time they were recorded in the county where the property is located. The exceptions are as follows: (1) a Texas Workforce Commission wage lien for back wages owed takes priority over all liens, including previously recorded liens, except for ad valorem tax liens, and (2) mechanics' and materialmen's liens take priority from the date work was begun or materials delivered.

The broker must NOT act in self-interest because of the duty of

The answer is loyalty. Acting in self-interest would be putting loyalty to self ahead of loyalty to the principal. For example, brokers may not take advantage of confidential information to the principal's disadvantage, buy property they have listed without the principal's knowledge and consent, or profit from the agency beyond the agreed commission.

The Deceptive Trade Practices Act (DTPA) does NOT apply to the actions of real estate agents when an agent

The answer is makes an exaggerated or unsubstantiated statement of value given as advice, judgment, or opinion when selling real estate. The DTPA applies to real estate agents when the misrepresentation or action cannot be characterized as advice, judgment, or opinion. The practice of making exaggerated or unsubstantiated statements of value is called puffing. Although permissible under agency law and the DTPA, statements of opinion and puffing still should be avoided to steer clear of claims under the DTPA that the statements misled the consumer.

If homeowners loses their appeal to the appraisal review board, they

The answer is may further appeal the decision to the State Office of Administrative Hearings. A property owner may appeal an ARB order to the State Office of Administrative Hearings (SOAH) rather than to the state district court in the county in which the property is located in certain Texas cities. The cities include Austin, Beaumont, Corpus Christi, El Paso, Fort Worth, Houston, Lubbock, Lufkin, McAllen, Midland, San Antonio, Tyler, and Wichita Falls. However, the property must have been appraised at more than $1 million.

A homestead may suffer forced sale for payment of claims for the costs of improvements to the property filed by materialmen and

The answer is mechanics. A valid lien for labor or material on a homestead improvement must be based on a written contract, consented to by both spouses, and acknowledged and signed before the work was performed or materials delivered. The contract for the repairs must not be signed until five days after the loan application, and the owner may rescind the contract up to three days after signing. The contract must be signed at the office of the lender, an attorney, or the title company.

The following partial description is an example of which method: Beginning at the intersection of the east line of Jones Road and the south line of Skull Drive; then east along the south line of Skull Drive 200 feet; then south 15°, 30' east ...?c

The answer is metes and bounds. A metes-and-bounds description starts at a definite point called the POB. The circumference of the property is described until the description ends back at the POB. A metes-and-bounds description includes a POB, distances, and directions.

If the court learns that a wall-to-wall carpet is tacked to the floor of a property, the court will consider which tests of a fixture in determining whether the carpet is a fixture?

The answer is method of attachment. If tacked carpet is removed, it could damage the floor. Therefore, it is generally considered a fixture.

Which type of home is composed of prefabricated components that arrive on site in units preassembled at the factory and then lifted into place with a crane?

The answer is modular homes. Modular and prefab or kit homes are constructed with large wall and roof components that are built in factories. The pieces are trucked from a factory to a building site and lifted into place with a crane. Then workers finish the structure and install plumbing, wiring, and amenities. Modular homes can generally be built at a fraction of the time and cost for conventional construction.

Which may be a natural object, such as a tree or boulder, or a man-made object, such as a steel rod or stake driven into the ground?

The answer is monument. Monuments are used to establish real estate boundaries, corners, or points where directions change. They are sometimes natural objects, such as trees, streams, or piles of stones; but they are generally man-made objects, such as iron pipes, posts, or stakes.

What surprisingly casual (but fully acceptable) term might a real estate agent see when reading what should be exact measurements in a legal description?

The answer is more or less. When actual measurement differs from linear measurement in a legal description, the expression "more or less" is often used to cover the discrepancy. Actual distance takes precedence.

An agency can be terminated by which without liability for breach of contract?

The answer is mutual agreement. Discharge or resignation may leave one of the parties liable for breach of contract.

In any dispute involving the location of boundaries based on monuments, what is the typical resolution?

The answer is natural monuments take precedent over man-made monuments. Despite possible issues, over time natural monuments have proven more reliable in the use of property descriptions.

An owner sells part of his land that has no access to a public road but does have access over his remaining land. This creates an easement by

The answer is necessity. An easement by necessity is created by law to allow owners access to their land.

The amount of commission is determined by

The answer is negotiation between the seller and the broker. It is a violation of antitrust laws for brokers to collaborate in setting commissions or fees.

The Texas Real Estate Commission is composed of

The answer is nine members, six of whom are brokers and three of whom are lay members, each appointed by the governor with senate approval. Experienced real estate brokers are placed on the Commission because it is believed they can more quickly identify and understand wrongdoing by sales agents and other brokers, and have a better grasp of how consumers have been injured.

Which phrase, when used in advertising, would be considered unacceptable?

The answer is no children under six years of age. Advertisements, notices, or statements may not indicate a preference, limitation, or discrimination with regard to any fair-housing-protected classification. Descriptions of properties and symbols or terms relating to religious holidays are acceptable.

Are real estate salespeople exempt from so-called "no call" lists?

The answer is no, "no call" lists apply to anyone selling goods or services, including real estate agents. Creators of the law determined that real estate agents, as well as any other salespeople, could be irresponsible in the use of sales tactics and therefore included them in the prohibition list.

Must real estate properties for sale be listed only on TREC-approved real estate sites?

The answer is no, TREC only has authority over license holders. While license-holder websites and surrogates must adhere to TREC standards, consumers must beware of fly-by-night sites that attempt to lure buyers and investors.

If a property is being transferred through a will to a family member, is a disclosure necessary?

The answer is no, a property transferred via a will does not need a disclosure. Typically, the person who would fill out the disclosure is deceased. Persons inheriting the property might be wise to have it professionally inspected.

The Texas Real Estate Commission regulates licensed real estate brokers and sales agents in the state. May only licensees use form promulgated by the Commission?

The answer is no, anyone can use the forms. The forms are, however, designed to be used by people who have been trained in their use—licensees and real estate attorneys. But they are public documents and may be used by anyone.

If police have been called to an apartment because of domestic violence against a single mother by a former husband, may the leasing agent evict the woman?

The answer is no, because evicting the woman could violate the familial status clause of fair housing law and could expose her to additional harm. It is a fair housing violation (family status) to terminate the lease of a family unless extraordinary circumstances present themselves.

If a landlord receives a rental application online for an available apartment but determines in the course of an in-person interview that the applicant is a follower of Islam, may the landlord introduce extraordinary fees and deposits in an effort to persuade the applicant to go somewhere else?

The answer is no, charging additional fees and deposits to force an individual to go elsewhere is considered a violation of fair housing law. The intent of the landlord—to keep an eligible applicant out—would be clear in a court case.

Inside a brokerage office, if all the independent contractor sales agents are on the same commission split, is that price-fixing?

The answer is no, each real estate brokerage has its own policies regarding sales agent compensation and has the right to fix those amounts. Price-fixing issues typically involve illegal agreements among brokerages in a community to fix commission levels and splits between nonaffiliated offices.

If a homebuyer makes an oral agreement with a buyer agent, but then finds a home without using the agent, does a fee still need to be paid to the buyer agent?

The answer is no, if the buyer agent did nothing to secure the home, no money is owed. The contract would be considered unenforceable because the buyer agent performed no duties.

Would it be discriminatory for a buyer agent to decline to accompany a client to an open house for a home in a neighborhood the agent knows the buyer cannot afford?

The answer is no, it is not discriminatory. Open houses tend to be open to the public, but buyer agents are within their rights to marshal their time in endeavors that are likely to produce business. There typically would be no bar to the browsing buyer walking through the home.

If a homeowner defaults on a medical care debt, can a hospital foreclose on the individuals home?

The answer is no, medical bills cannot force the sale of a homestead. There are only nine ways to penetrate the Texas Homestead Act, and paying medical bills is not among them.

Because home builders are not required to provide property disclosures, should buyers also bypass home inspections?

The answer is no, new homes can have serious flaws that can be detected in home inspections. Homebuyers should never assume a new property will not have issues, including properly installed heating and cooling systems and even electrical work.

If property owners attempt to evict families from rental units because of mischief, noise, or vandalism, are they likely to run afoul of fair housing laws?

The answer is no, property owners are allowed to evict families on the basis of behavior of children. Fair housing law does not require property owners to abandon basic business practices, such as maintaining the upkeep of their property and evicting those who do not comply with reasonable rules.

If a real estate license holder decides to rent out three units in her home to different families, does the agent qualify for the Mrs. Murphy exemption?

The answer is no, real estate license holders are not exempt. The State of Texas holds its license holders to a higher standard in every aspect of real estate, including their own dealings.

Is it a violation of fair housing law to refuse to show a sex offender a home in a neighborhood of single-family homes with children?

The answer is no, sex offenders are not protected by fair housing law. They may be discriminated against. There may, however, be other laws that allow them to live wherever they'd like, within certain restrictions.

Can Mrs. Murphy escape the rules of fair housing law if she rents one part of her home to a family, another part of the home to the elderly grandparents of the family, and another unit to the adult, single-parent child of the family?

The answer is no, she would lose her exemption because the families in her home must live independently of each other. It would be difficult for the families to prove they do not interact in familial activities.

If a FSBO owner, who only owns one property, advertises it for sale in a newspaper but then refuses to show it to a disabled veteran, is the FSBO owner in violation of fair housing law?

The answer is no, the FSBO is not guilty of discrimination. As a property owner not using a real estate agent, the owner is exempt from fair housing law in this case.

If an independent contractor announces her "farm" will henceforth be the country club crowd, can the sponsoring broker redirect her if someone else in the office already is working the country club scene?

The answer is no, the broker may discuss the difficulties of breaking into the other agent's farm but could not otherwise order the agent to work elsewhere. The broker may suggest, or even urge, the intruding agent to go elsewhere but could not enforce that desire.

Must the buyer be present for the home inspection?

The answer is no, the buyer is not obligated to attend the inspection. However, and especially for first-time homeowners, the inspection is not only an opportunity to discover flaws in the property but also a chance to have a better understanding of how systems work, where problems are likely to arise in the future, and learn some basics of home care. Most professional inspectors appreciate having the buyer present and encourage questions.

If the value of a property decreases dramatically after a buyer has taken out an option, is the buyer still obligated to purchase the property at the higher price?

The answer is no, the buyer need only let the option contract expire without making a purchase. The buyer's money to purchase the contract, however, is lost to the owner of the property.

When it is obvious that a neighbor's shed actually intrudes several feet over onto a homeseller's property, is it permissible for the listing agent to redraw property's legal description to avoid any conflict?

The answer is no, the listing agent is not at liberty to change the property line as legally described in the survey. Only a licensed land surveyor can change a property line, though in this case it is likely the homeseller and neighbor will have to reach an accommodation rather than actually change the boundary.

When a seller, on the advice of the listing agent, reduces the price of the home, are potential buyers entitled to know why?

The answer is no, the listing agent is not obligated to volunteer why there has been a price reduction. The listing may, however, ask the seller if the reason can be made known. The listing agent cannot lie.

If clients want to buy a specific home but fall short of the 25%-28%/33%-36% ratios, will they automatically be disqualified from the purchase?

The answer is no. Although banking practices have become more rigid over the years, lenders still can be flexible based on the character of the borrower, their credit, and their capacity to pay. Often a sales agent's relationship with a lender can be the difference in a marginal buyer securing the home they'd like.

Which of the following are guaranteed to show a positive return on investment?

The answer is none of these. All real estate investments are subject to changes in market conditions. No real estate investment is recession-proof, and licensees should never guarantee returns. However, over the long term, property values have gone up.

Federal fair housing laws permit which of the following?

The answer is none of these. Blockbusting is inducing homeowners to sell below market prices by claiming that members of a certain race, color, religion, sex, national origin, disability, or familial status are entering the area. Steering, also known as channeling, is directing homeseekers or renters to particular areas to maintain the homogeneity of the area, thus steering them away from other areas. Steering promotes segregation.

Ownership extends to the center of the water if the water is

The answer is nonnavigable. An owner of land that borders a nonnavigable waterway owns the land under the water to the exact center of the waterway. Owners with riparian rights on navigable and nonnavigable waterways have the right to use the water for domestic purposes, provided the use does not interrupt or alter the flow of water or contaminate the water. All flowing water is owned by the State of Texas.

In a metes-and-bounds description, N 44° 31' 56" E is

The answer is north, 44 degrees, 31 minutes, 56 seconds, east. The following measurements are used as part of a metes-and-bounds description: a circle = 360° (degrees), each degree is divided into 60 equal minutes (60' minutes in a degree), and each minute is then further divided into 60 equal seconds (60" seconds in a minute). Due north and due south are 0°; due east and due west are 90°. This property boundary would head northeast at 44° 31' 56" from the monument—northeast at approximately a 45° angle.

The bearing of MOST property boundary lines in Texas is

The answer is northbound or southbound. Obviously, not all property lines go north to south, but the variance is described in angles and degrees.

An attorney who is NOT licensed by the Texas Real Estate Commission (TREC) but performs brokerage services in a transaction may

The answer is not receive part of a broker's commission on the sale of a property. A real estate license holder may not pay a commission, fee, or other valuable consideration to a person who is not licensed by TREC. This includes a prohibition against sharing a sales commission with an attorney or giving other valuable consideration (cash, gifts over $50, vacations, bonuses, etc.) to an attorney.

If a Deceptive Trade Practices Act (DTPA) lawsuit is filed against a real estate agent, broker defenses do NOT include

The answer is notice to the consumer before consummation of the sale that the broker is relying on verbal representations given by the seller, the appraisal district, or other providers of information. To avoid a finding of guilt in a DTPA lawsuit, a broker should put in writing all information requested by and/or presented to the agent's principal on behalf of the seller, the appraisal district, the mortgage lender, or other providers.

It is unlawful for a person to act in the capacity of or claim to be a real estate broker without first

The answer is obtaining a license from the Texas Real Estate Commission. Any person who, for compensation or the promise of compensation, lists or offers to list; sells or offers to sell; buys or offers to buy; negotiates or offers to negotiate—either directly or indirectly—for the purpose of bringing about the listing, sale, exchange, purchase, option to purchase, auction, rental, or leasing of real estate is required to hold a valid real estate broker's license. Persons who deal only with their own property are not required to hold a real estate license.

An aggrieved person who believes illegal discrimination has occurred may file a complaint within what time frame following the alleged discriminatory act?

The answer is one year. If filed with HUD, the complaint will be referred to the Texas Workforce Commission Civil Rights Division (TWCCRD) because Texas has a HUD-approved "substantially equivalent" fair housing law that allows complaints to be heard at the state level rather than at the federal level. The TWCCRD has 100 days to investigate the complaint. If no conciliation agreement is reached, the TWCCRD must dismiss the complaint or file charges.

Alice gives Betty a life estate. Betty is the life tenant of the property, and the life estate will continue as long as Betty is alive. What kind of life estate is this?

The answer is ordinary. Ordinary life estates are based on the lifetime of the life tenant. When the life tenant dies, the estate is terminated and the ownership will pass to the grantor or his heirs or to another designated individual. This type of life estate is a conventional life estate. Homestead is a legal life estate in land that is owned and occupied as the family home.

The demand for real estate is affected by which of the following?

The answer is population. For example, the movement of people to the western and southern states creates a greater demand for housing in those areas. Other factors affecting demand are demographics and employment and wage levels.

What is the difference between a "TREC-approved" form and a "TREC-promulgated" form?

The answer is promulgated forms must be used, while approved forms may be used. Approved forms typically offer consumers and sales agents a uniform way to handle issues specific to some transactions, and they have the advantage of having been acknowledged by TREC should legal issues arise.

For a government or public entity to exercise the right of eminent domain, the proposed use must be declared by the court to be which of the following?

The answer is public. Land in Texas cannot be condemned for private use. The governmental entity or private entity granted the power of eminent domain determines the location and the amount of land that is reasonably required for projects such as highways, airports, and parks. Then the entity must give the landowner a copy of the Landowner's Bill of Rights. The entity proposing to take a property for public use must make a good-faith offer to acquire the real property through direct negotiation and purchase from the owner. If the parties cannot agree, the entity may begin a condemnation suit.

A parcel of land near an airport that has streets, sewers and utilities, but is currently undeveloped in terms of homes or other buildings, is called

The answer is real estate because the streets, sewers, and utilities represent "improvements." Street and other improvements are attached to the earth.

Which statement is TRUE?

The answer is real estate markets are usually different in different sections of the same city. Real estate markets can be different in the same city because real estate markets are very local.

Which term refers NOT only to the surface of the earth but also to the center of the earth below, to infinity above, to natural things permanently attached, and to man-made things permanently attached?

The answer is real estate. Real estate includes the land, as well as man-made permanent improvements on and attached to the land.

Attaching a manufactured home to land is one of the requirements for treating the home as which kind of property?

The answer is real. For an owner to treat a manufactured home as real property, the home must be attached to land owned by the owner of the manufactured home or leased to the owner under a long-term lease. It must be attached by means of a stabilization system, which may or may not be a permanent foundation.

Which of the following stages of the business cycle is characterized by a general economic decline?

The answer is recession. The normal business cycle has a period of growth or expansion, followed by a peak and a slow down or recession, followed by a depression and trough (or low point), followed by a period of renewed growth or revival.

Which way of describing real estate uses two sets of intersecting lines that form a grid?

The answer is rectangular survey system. The rectangular survey system, also called the government survey system, was established by Congress in 1785 to standardize the description of land acquired by the federal government. This system describes the location of property by using two sets of intersecting lines that form a grid. Properties in some Texas counties bordering neighboring states have the appearance of using the rectangular survey system; however, the township and range description is completed with "as described by metes and bounds as follows".

One of the primary goals of the National Flood Insurance Program (NFIP) is to

The answer is reduce flood damage through a community's adopting and enforcing floodplain management regulations. In exchange for a community's adopting and enforcing NFIP floodplain management regulations, the NFIP makes federally backed flood insurance available for purchase by homeowners, renters, and business owners in that community.

Under the federal Fair Housing Act, real estate organizations, such as multiple listing services, may NOT do which because someone is in a protected group?

The answer is refuse membership or put conditions on participation. For example, a multiple listing service that refused to accept listings from a certain ethnic group because it felt the group was too hard to work with would be in violation of the Act.

Which action is permitted under the federal Fair Housing Act?

The answer is refusing to sell a home to a minority individual because of a poor credit history. Fair housing laws affect every phase of the real estate sales process from listing to closing, and all brokers and salespeople must comply with them. The goal of legislators who have enacted fair housing laws and regulations is to create an unbiased housing market—one in which all homeseekers have the same opportunity to buy any home in the area they choose, provided the home is within their financial means.

When supply decreases and demand decreases, real estate prices

The answer is remain stable. When supply and demand increase or decrease together, prices remain stable.

Federal flood insurance policies are available on which types of properties?

The answer is residential, commercial, industrial, and agricultural. All types of buildings are required to maintain coverage for either the value of the improvement or the amount of the mortgage loan, subject to the maximum limits available, if they are in high-risk flood areas.

Under what real estate classification must a broker list a property if that property—once a very large single-family home—has since been carved into three condominium units and one rental apartment?

The answer is residential. If the large home has been legally divided into smaller units in an area where multifamily units are permissible, there is no reason to change the classification. Classification does not make a distinction between single- and multifamily dwellings.

What is the classification of a legal, single condominium for sale that is above a retail store that is not for sale?

The answer is residential. Legal condominiums are classified as residential units, provided they are being sold separately from surrounding real estate properties. They are residential regardless of the classification of surrounding units.

May sales agents who work for competing companies, but in the same tier of property values, share information with each other about properties that are either new on the market or about to be brought to market?

The answer is sales agents may form loose networks with each other as long as price-fixing does not take place, fair housing laws are not violated, and sales agents from outside the confederation also are allowed to present buyers. Such informal networks often exist because associates see each other while marketing homes in the same price range. There is no state law against private sales between agents in a network, although trade associations may consider it a rules violation.

The Texas Real Estate Commission's powers and duties include all EXCEPT

The answer is setting commission or compensation rates for sales transactions in Texas. Commission or compensation rates are negotiated between a real estate broker and a seller or a buyer. Among the other duties and powers of the Real Estate Commission are adopting rules to establish a fee schedule, promulgating or approving contract forms prepared by the Texas Real Estate Broker-Lawyer Committee, subpoenaing witnesses and records for examination, and developing policies to encourage alternative dispute resolution.

A tree is cut down for lumber so that the real property (tree) is now personal property (lumber). The process is called

The answer is severance. When the tree is detached from the property, what was real property is made personal property.

Ownership of a condominium, which shares party walls with other units, involves which kind of ownership of common facilities such as halls, elevators, and surrounding grounds, as undivided interests?

The answer is shared. Ownership of a condominium, which shares party walls with other units, involves individual fee simple ownership of the airspace within the unit itself, plus shared ownership of common facilities such as halls, elevators, and surrounding grounds, as undivided interests.

If the partners in a partnership holding property as "tenants in common" decide to sell property owned by the partnership, how many signatures are required on the documentation?

The answer is signatures of both partners. If the partners own the property as "tenants in common," both partners (or all the partners if more than one) must sign off on the transaction.

The primary source of income from the land does NOT have to be farming to qualify for which method of rural land valuation?

The answer is special open-space valuation. Farming must be the primary source of income for the property with an agricultural use valuation. The open-space valuation relates to the same type of property, but the primary source of income does not have to be farming. Each special valuation is subject to a rollback lien if the property is sold or the use is changed. The tax rollback recovers the difference between taxes based on the special valuation and taxes at market value, plus interest.

The homeowners in an older subdivision decide they want the alleys behind their homes paved and petition the local government to complete the improvement. The resulting special assessment is what kind of tax?

The answer is specific, voluntary. Sometimes called improvement taxes, special assessments often are levied to pay for such improvements as streets, alleys, street lighting, curbs, and gutters. Special assessments are always specific, statutory liens. When property owners petition the local government to install public improvements, the assessments are voluntary. However, improvements initiated by a public agency create involuntary liens. Special assessments and ad valorem real estate taxes generally take priority over all other liens.

Income tax deductions on loan interest on first and second homes are

The answer is subject to limitations. Income tax deductions for homeowners include loan interest on first and second homes, real estate taxes, certain loan origination fees, and some loan discount points.

Under what classification of legal rights is underground water?

The answer is surface rights because Texas law places it under surface rights.

Under what classification of legal rights is underground water?

The answer is surface rights because Texas law places it under surface rights. Subsurface water is bundled under the surface estate under Texas law.

Nonhomogeneity and heterogeneity are

The answer is synonymous terms. Nonhomogeneity and heterogeneity are synonymous terms, and both indicate that no two parcels of land are ever exactly the same. All parcels differ geographically.

Priority of tax liens in the event of a borrower's default and foreclosure on a property is generally which of the following?

The answer is tax liens have priority over all other liens against a property. Real estate taxes and special assessments generally take priority over all other liens, and they are not extinguished in a mortgage foreclosure.

In addition to principal and interest, which additional expenses must be included when using the housing-expense ratio?

The answer is taxes and insurance for a month. The figures included in the housing-expense ratio are principal and interest on the loan for the home plus taxes and insurance for a month—and any mortgage insurance or homeowners association dues that might be escrowed.

What has been the impact on housing to date of environmental concerns such as climate change and the potential for an increase in hurricanes and flooding from severe storms?

The answer is that prices of homes with water views have been largely resilient to environmental factors. Although climatologists believe coastline dwellings will be destroyed by climate change, that fear has not translated to deterioration of prices. Brokers should, however, be mindful of climate forecasts as they work with buyers.

If market analysis suggests there is need for a new condo development, but two developments are constructed across the street from each other, will supply and demand determine which is successful?

The answer is that success is likely to be based on something other than supply and demand, such as pricing. Quality of buildings also is important, as well as amenities. Brokers should educate themselves about the qualities of both buildings.

What is expected of a license holder in the category of "competence" in the Code of Ethics?

The answer is that the license holder remain current about issues and market trends both statewide and nationwide. Competency suggests that the license holder's obligation goes beyond understanding real estate law to also be able to identify trends and issues that could affect consumers in the years ahead.

What notice are all publishers—whether on paper or electronic—required to carry if they are advertising real estate for sale?

The answer is that the publication will not knowingly accept any advertising that violates fair housing law. Publishers, like real estate brokers, can be held liable for advertising that tends to eliminate any protected class.

A lender must judge an applicant only on the basis of income, net worth, job stability, and credit rating as required by

The answer is the Equal Credit Opportunity Act (ECOA). The ECOA prohibits lenders and others who grant or arrange credit to consumers from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant is of legal age), or dependence on public assistance. Credit applicants must be judged only by criteria based on income, net worth, job stability, and credit rating.

Standard contract forms used by real estate license holders in Texas are drafted and revised by

The answer is the Texas Real Estate Broker-Lawyer Committee. Once the forms have been drafted by the Texas Real Estate Broker-Lawyer Committee, the Texas Real Estate Commission has the option of approving or promulgating the forms for use by brokers and their salespeople.

Forms that are promulgated by the Texas Real Estate Commission are drafted by

The answer is the Texas Real Estate Broker-Lawyer Committee. The committee meets to review and update forms as necessary to make sure they meet current practices and address new issues.

If a question arises over the behavior of a licensed real estate sales agent or broker, a consumer usually will first file a complaint with

The answer is the Texas Real Estate Commission. The Commission has the authority to discipline real estate license holders, with punishments ranging from monetary fines to loss of license. Lower courts will often refuse to hear license-holder complaints, deferring to Commission action.

A complaint of discrimination brought under the Texas Fair Housing Act can be filed with the U.S. Department of Housing and Urban Development or with

The answer is the Texas Workforce Commission Civil Rights Division. Complaints of discrimination brought under the Civil Rights Act of 1866 must be taken directly to a federal court. All other complaints are filed with the Texas Workforce Commission Civil Rights Division because Texas has a HUD-approved "substantially equivalent" fair housing law.

In a metes-and-bounds description,

The answer is the actual distance between monuments takes precedence over linear measurements set forth in a description. In addition, natural objects take precedence over man-made monuments if discrepancies exist in descriptions.

What key additions (protections) were added to fair housing laws in 1988?

The answer is the addition of families with children and people with disabilities to the law. Before the law, many rental and condominium properties did not want children in their units because of noise, and permitting disabled individuals would mean costly additions such as wheelchair ramps and railings in bathrooms.

A buyer hired a Texas Real Estate Commission (TREC)-licensed property inspector and has received the property condition inspection report in which deficiencies were noted. The buyer's options for dealing with the reported deficiencies do NOT include which of the following?

The answer is the buyer may request that the TREC-licensed property inspector complete the necessary repairs at the buyer's expense. When deficiencies are reported, it is the buyer's responsibility to determine whether to terminate the contract under the termination option paragraph, if within the time frame; obtain further evaluations; request that the seller make all or some of the necessary repairs at seller's expense; make the repairs; or simply live with the reported deficiencies. As discussed in the License Act chapter, an inspector may not perform repairs or maintenance in connection with a real estate inspection under an earnest money contract.

If a seller fails to close on a property after signing an agreement to sell (such as suddenly realizing the land is worth far more than the agreed price), what options does the buyer have?

The answer is the buyer may sue for specific performance of the contract—requiring enforcement of the agreement as signed. In turn, the seller theoretically could seek damages from whoever advised him on pricing the property.

What must happen for a nondefaulting party in a contract to receive earnest money being held in escrow?

The answer is the defaulting party must sign a release form and provide it to the title company. The title company would then be allowed to deliver the earnest money to the party not in default.

What may happen if the defaulting party in a contract refuses to release the escrow money?

The answer is the defaulting party will be liable to the other party for liquidated damages. The nondefaulting party could receive an amount equal to the sum of (1) the earnest money, (2) reasonable attorney's fees, and (3) all costs of suit.

Appurtenant easement rights transfer with

The answer is the dominant tenement. These easement rights transfer with the dominant property forever, unless they have time limitations or are released by the owner. Easements in gross have no dominant tenement, and they are held by individuals rather than transferring with the property.

The king owns the land and individuals are merely tenants under

The answer is the feudal system. In the United States, individuals can hold absolute ownership rights in land. This is called allodial ownership or private ownership.

Once a home inspector has identified areas of concern in a home, should the inspector be part of the negotiating teams to reduce the cost of the property?

The answer is the inspector's report typically will enter into home price discussions, but the inspector does not participate in negotiations. The inspector is typically hired by the buyer to discover deficiencies in the property but is not involved in the decision-making process between the buyer and the seller.

If a pur autre vie life tenant dies, what happens to the interest of the life tenant's heirs?

The answer is the interest of the life tenant's heirs continues until the death of the person against whose life the estate is measured. A pur autre vie life estate is created when the grantor conveys property to the life tenant for the life of another, and the estate ends with the death of that third party. A pur autre vie life estate may be inherited by the life tenant's heirs, but only until the death of the person against whose life the estate is measured.

A dwindling number of Texas communities have laws on the books that appear to be discriminatory—such as forbidding blacks or Hispanics to own property. Can those laws be enforced, even though they appear to contradict fair housing law?

The answer is the laws are obsolete and no longer enforceable. Texas statutes now state that deed restrictions are no longer enforceable by state courts, meaning discriminatory language in local ordinances is moot.

The difference between forms "promulgated" and forms "approved" by the commission is that

The answer is the license holder must use the promulgated forms, whereas the license holder may use the approved forms. The license holder may use approved forms and still enjoy immunity from unauthorized practice of law, provided the forms are used correctly (which also applies to the use of promulgated contract forms).

May a seller refuse to a pay a commission if a buyer refuses to pay full price for a property?

The answer is the listing agreement properly signed by the seller and the broker is a legal document that sets compensation. The broker does not set the price, the seller does, nor does the broker instruct the seller what price to accept.

Acceptance of a written offer to purchase real estate requires the signature of

The answer is the offeree. It is the offeror that has presented the offer; the offeree may accept. The agent/broker, unless operating under a signed power of attorney from the buyer or the seller, is not a party to the contract. An offer or a counteroffer may be withdrawn at any time before it has been accepted.

The seller of one single-family home would NOT be in violation of the Fair Housing Act even if

The answer is the owner discriminated on the basis of religion. The Fair Housing Act of 1968, as amended, makes it unlawful to discriminate against protected classes on the basis of race, color, religion, national origin, sex, handicap (disability), and familial status when selling or leasing residential property. A few exemptions are provided for special circumstances. However, no exemptions are permitted for racial discrimination and no exemptions apply when a real estate license holder is involved in a transaction. The sale or rental of a single-family home is exempted when the home is owned by an individual who does not own more than three such homes at one time and when a real estate agent is not used, and discriminatory advertising is not used, the owner was not the most recent occupant, and the owner has not made another such sale within the previous 24 months. The exemption will apply to one sale or rental within a two-year period, unless the owner was the most recent occupant.

When there are two or more liens on a property, the order in which the liens will be satisfied when the property is sold will be determined by

The answer is the priority of the liens. Outstanding real estate taxes and special assessments take priority over all other liens. Texas Workforce Commission (TWC) wage liens against an employer who owes back wages to an employee take priority over all liens, other than ad valorem tax liens. Mechanics' and materialmen's liens take priority from the date work was begun or materials delivered. The priority of the remaining liens usually is established by the date and time they were recorded.

"Escheat" refers to land that becomes ownerless, usually through death when no heir can be found. What happens to it when the Texas General Land Office takes control of a property?

The answer is the property is sold and money is put into the Foundation School Fund. The school fund is used to help ensure equal access to education, regardless of the wealth of individual school districts.

What "right" might be quoted to remove "squatters" (people who are not authorized to occupy a property) from a piece of land or a home?

The answer is the right of exclusion. Under exclusion, the owner controls who may enter and occupy a property.

The parties to the listing contract are

The answer is the seller and the broker. The broker is hired as the agent of the seller to find a ready, willing, and able buyer for the seller's real estate. Even though a sales associate may get a listing negotiated and signed, the agency relationship is between the broker and the seller.

In a contract for deed, what are some potential problems a purchaser might run into?

The answer is the seller might default on a previous mortgage, which could result in a lien on the property. Also, if the seller were to die, the deed would be tied up in court.

A rural property that is in a utility district is going under contract. Which of the following describes the utility district tax?

The answer is the seller must furnish a statutory notice about the utility district tax before final execution of the contract. Some examples of utility districts are water control districts, underground water conservation districts, municipal utility districts (MUDs), and drainage districts. A utility district is generally created by a property developer and the utilities are paid for with bonds, which are retired by the levying of taxes. Unpaid taxes can result in the creation of a lien.

After paying the delinquent tax, interest, penalties, and attorney's fees, the winner at a tax sale receives a deed from

The answer is the sheriff. The steps in a tax sale include (1) rendering of a judgment and ordering the sale of the property by the court; (2) publication of the notice of the sale according to rules set in the law; (3) holding a tax sale pursuant to a published notice; (4) sale of the property for at least the amount of the delinquent taxes, interest, penalties, and attorney's fees or the appraised value of the property, whichever is less; and (5) the successful bidder receiving a deed from the sheriff or constable conducting the sale.

On certain higher-risk loans, on which lenders typically charge a higher interest rate, lenders are also required to report the spread. What does the term "spread" refer to?

The answer is the spread is the difference between the interest rate given and the interest rate that would have been available for a lower risk loan. The spread is one of the key indicators in whether the borrower has been abused.

In terms of fair housing enforcement in Texas, what do Dallas, Fort Worth, Garland, Corpus Christi, Austin, and San Antonio have in common?

The answer is they all have fair housing municipal laws that are substantially the equivalent of the federal fair housing law. Substantial equivalency means the cities may bring cases against potential violators without going through the federal court system.

In order to earn a commission under the terms of the License Act, a licensed broker must meet several stipulations and advise the buyer to obtain what type of insurance?

The answer is title. According to common law, to be entitled to a commission, brokers must first be able to show that they were the procuring cause of the sale (that they did something to cause the sale to be completed). Then the License Act requires that brokers (1) be licensed, (2) have a written memorandum for a commission, and (3) advise the buyer to obtain title insurance or have an abstract examined by an attorney of the buyer's choice.

The purpose of antitrust laws is

The answer is to prevent a company or companies from joining together block competitors from entering the market while simultaneously agreeing how much to charge consumers. Antitrust laws do not exist to make small companies successful, but only to allow them to bring their theories of business and pricing to the market so that consumers can fairly evaluate them.

Proceeds from the sale of the homestead are exempt from creditors for six months. Why?

The answer is to provide the family time to purchase a new property. The State of Texas believes homeownership is a citizen's right and has gone to great length to defend it.

Which type of housing is constructed on lots owned by individual homeowners and may either be connected by a common wall or be freestanding homes separated by airspace and attached to each other by exterior shingles and brick or siding?

The answer is town houses. Town houses, called "row houses" in some parts of the country, give the appearance of being a single, lengthy construction with evenly spaced entry doors.

Which is owned by the tenant?

The answer is trade fixture. A trade fixture is an article attached by a tenant to a building for use in conducting a trade or business. One example of a trade fixture is a display counter. A trade fixture is the personal property of the tenant and can be removed by the tenant on or before the expiration of the lease. A fixture, such as a built-in kitchen cabinet, when permanently attached to a building, becomes part of the real property and cannot be removed when the owner sells the property.

Which is owned by the tenant?

The answer is trade fixture. A trade fixture is an article attached by a tenant to a building for use in conducting a trade or business. One example of a trade fixture is a display counter. A trade fixture is the personal property of the tenant and can be removed by the tenant on or before the expiration of the lease. The tenant is responsible for any damage to the property caused by its removal. A fixture, such as a built-in kitchen cabinet, when permanently attached to a building, becomes part of the real property and cannot be removed when the owner sells the property.

How long after a discriminatory action does an aggrieved party in a discrimination dispute have to bring a private enforcement action in state or federal district court?

The answer is two years. The private lawsuit can be filed even though an administrative complaint is filed with the Texas Workforce Commission Civil Rights Division (TWCCRD). However, if a conciliation agreement is entered on the complaint or if a hearing commences before an ALJ, the private lawsuit must be terminated.

According to statutory redemption rights, if the property is a residence homestead or mineral interest or if it is designated for agricultural use, the owner may redeem the property within what period of time after the recording of the purchaser's deed?

The answer is two years. When exercising statutory redemption rights, the property owner must pay the amount paid at the tax sale plus interest and other charges. The winner at a tax sale receives an additional 25% of the purchase price if the property is redeemed in the first year, 50% in the second year. If the property is the residence homestead or a mineral interest or if it is designated for agricultural use, the owner may redeem the property within two years after the purchaser's deed was recorded. For other properties, the redemption period is six months.

While forbidden from practicing general law or business law, agents are allowed to practice real estate law if

The answer is under no circumstances are real estate licensees allowed to practice any form of law unless they also are licensed attorneys. Licensees who are not attorneys may lose their real estate license if they go beyond the bounds established by TREC.

An oral listing agreement is which of the following?

The answer is unenforceable. An unenforceable contract has all of the elements of a valid contract; however, neither party can use the other to force performance. Because contracts for the sale of real estate must be in writing to be enforceable, a broker who takes an oral listing risks being unable to sue a seller if the broker sells the seller's property but is not paid a commission as promised.

An option contract is what kind of contract?

The answer is unilateral. An option contract is a unilateral contract because only the seller is promising (to sell) and the buyer makes no promise to buy.

If a sales agent is working with sellers and makes a mistake in a transaction, in theory the party responsible for the mistake is

The answer is usually the sales agent's sponsoring broker. The sales agent works with sellers on behalf of the broker (who is employed by the sellers), but that does not mean that sales agent will always escape responsibility for their actions.

A claim against a seller's property in the event that the seller fails to deliver title is which of the following?

The answer is vendee's lien. A vendee's lien usually occurs when property is purchased under an installment contract or contract for deed and the seller fails to deliver title after all other terms of the contract have been satisfied. The vendee's lien is a specific, equitable, involuntary lien for any money paid plus the value of any improvements made by the buyer.

Contracts agreed to under undue influence are which of the following at the option of the injured party?

The answer is voidable. Offer and acceptance requires that a contract be entered into as a free and voluntary act of each party. Contracts signed by a person under duress (use of force), menace (threat of violence), or undue influence or as a result of misrepresentation or fraud are voidable (may be canceled) by the injured party or by a court.

If you enter into a contract to purchase a home from a 16-year-old boy who inherited the property and the boy signs the sales contract, the contract is

The answer is voidable. The boy is not of legal age (18) and, therefore, the contract is voidable at the option of the minor party. A voidable contract seems valid on the surface but may be rescinded by the party that might be injured if the contract were to be enforced. A contract with a minor or one in which fraud can be proven is usually voidable. A minor generally is permitted to disaffirm a real estate contract at any time while underage (less than 18) or within a reasonable time after reaching legal age. A voidable contract will be considered valid by the courts if the party who has the option to disaffirm the agreement does not do so within a prescribed period. Only the disadvantaged party may void the contract.

Removing minerals without the remainderman's permission and failure of the life tenant to make repairs are examples of

The answer is waste. Waste could result from the unauthorized use or neglect of the property. A life tenant may not perform acts that would permanently injure the property.

What is an example of discharging because of "impossibility of performance"?

The answer is when one principal or the other dies before the contract can be signed. The contract could not be executed unless both principals sign, meaning that one of the signatures would have to be forged.

Homeowners who are unable to pay taxes owed to the school district may

The answer is work out a deal to perform services for the school district. Boards will decide whether to offer work contracts to delinquent taxpayers but are not under an obligation to do so.

If the owner of a lot in a new subdivision announces he is going to build a modern architecture home on the property while all the other homes in the division are Spanish style, can he be stopped?

The answer is yes he can be stopped if the subdivision has a deed restriction requiring all homes to be of Spanish architecture. Deed restrictions set limits or conditions on how properties may be used or what kind of structures may be built on them.

Texas real estate license holders may be fined and lose their license for advertising in a discriminatory way, but what about private homeowners who are for sale by owners?

The answer is yes, FSBO owners must comply with fair housing advertising law. The owner may be exempt from other portions of fair housing law by being a FSBO, but the Court's ruling in United States vs. Hunter found that FSBO owners may not advertise their intent to discriminate.

Clients who have signed listing agreements may "fire" their broker. Is a broker permitted to fire a client?

The answer is yes, a broker may fire a client. If a client is proving too demanding or too difficult to work with or refuses to comply with such requests as keeping the property in a showable condition, the agreement can be terminated.

Are real estate fees and commissions negotiable?

The answer is yes, and no. It is true that commission rates and fees are not set by any institution and therefore consumers are free to negotiate. However, commissions and fees are set by the real estate company based on its cost of doing business plus profit, and individual brokers have no obligation to negotiate those numbers.

Are all forms of media - including the internet - obligated to follow fair housing advertising law?

The answer is yes, any media that carries real estate advertising is subject to the requirements of fair housing law. While free speech is generally protected across all media, advertising is not protected and must follow federal guidelines.

Does a person appointed by the governor to the Texas Real Estate Commission have to be trained before joining the governmental body?

The answer is yes, appointees must understand license law and regulation of the industry, must understand open meetings law, and must be acquainted with TREC audits. The appointee may not vote on the Commission until the training is completed.

Is it legal to ban medical doctors from living in neighborhoods if the residents object?

The answer is yes, because doctors are not a protected class. However, neighborhoods that ban doctors—or just about any profession—are likely to draw scrutiny of fair housing leaders.

May tenants who are members of a protected class file a fair housing complaint if they believe their landlord is delaying making needed repairs to their unit in an effort to drive them out of the building?

The answer is yes, failing to make repairs in an effort to drive out a tenant is a violation of fair housing law. This can be a difficult case to make, especially if the entire building is in disrepair. But if the tenant can demonstrate that others in the building have received more favorable treatment, a fair housing complaint may be warranted.

Can a buyer broker accept both a portion of a commission split from the listing broker and a fee from the buyer client?

The answer is yes, if the buyer agent agreement calls for a fee to be paid, and the listing agreement also calls for a commission split, the buyer broker may collect from both sides of the transaction. However, it would not be unusual for a lender to reject the high cost of the deal, and there likely would be a stipulation in both the listing agreement and the buyer broker agent that would cap the fees.

If a gold mining company with an easement by implication with the property owner stops mining for gold and begins mining for uranium, can the owner of the property forbid access?

The answer is yes, if the purpose of the original easement no longer exists, it can be terminated. The question ultimately may lie in how specific the mineral rights contract was.

May sales agents working as independent contractors play golf every day and report to the office only periodically?

The answer is yes, independent contractors set their own hours. If the country club is the sales agent's "farm" and transactions occur because of networking, and all legal compliance rules are met, the independent contractor would be free to play golf every day.

If an undocumented worker asks to be shown a property in a specific neighborhood, would it be discriminatory to refuse?

The answer is yes, it is illegal to discriminate against noncitizens. Fair housing law prohibits discrimination on the basis of national origin. It is not illegal for noncitizens to own property in the United States.

It is clearly a violation of the Fair Housing Act to deny an apartment to someone based on their faith, such as being Muslim, but is it illegal to evict them because they have frequent guests who also are Muslim?

The answer is yes, it is illegal to evict someone just because a landlord does not like their guests. Fair housing law protects both tenants and guests on the basis of race, color, and national origin.

Does the lack of permanence of investment have an impact on development potential for a community?

The answer is yes, lack of forward-looking infrastructure makes investors leery of committing to projects. Projects often are built with razor-thin margins and sharing the cost of infrastructure improvements can kill a deal.

Are surveys required in an average real estate transaction?

The answer is yes, most significantly if the buyer has a loan that may be sold on the secondary market. When real estate is used to back a mortgage, a survey is required.

Does the Fair Housing Act allow a childless, but pregnant, woman to claim protection under the familial status section of law?

The answer is yes, pregnant women are protected under the familial status provisions of the law. It also would protect anyone who is currently seeking custody of a child under the age of 18.

Are certain homeowners singled out and required to have multiple insurance policies?

The answer is yes, some owners along the coast may be required to have separate flood and wind damage policies from different companies. The Texas Windstorm Insurance Association, for instance, writes policies along the coast, and some properties in low-lying areas require separate flood insurance.

A builder does substantial work on a client's lake house, but the client refuses to pay and subsequently sells the lake house. Can the builder still retrieve his money?

The answer is yes, the lien is on the property, not the property owner. The new property owner would have been made aware of the lien before the sale and likely would have negotiated a price that reflected repayment to the builder.

If flash flooding forces a property owner out of a residence for six months, but the person has otherwise lived in the home for a year and half out of the past five years, is the owner still entitled to the capital gain exclusion on the sale of the property?

The answer is yes, the period of time the owner is forced out of a residence because of a flood does not count for the purpose of capital gains rules. Brokers must always be mindful of rules changes enacted by Congress. The capital gains tax is a frequent target of legislation.

May sellers disclose the fact that a sex offender lives in a neighborhood?

The answer is yes. Listing agents always should discuss the presence with homesellers and follow their choice. Sex offenders are not a protected fair housing class.

What are the primary ways that local governments can control the use of property?

The answer is zoning and building codes. Neither the federal government nor state governments have zoning laws, but there are other ways they can make their influence felt, such as with wetlands rules.

What would be the proper description of a vast piece of property whose only "improvement" is an abandoned and heavily deteriorated barn that would likely have to be razed?

The answer the property would be called real estate. At the time of the offer to see, the property has an improvement on it, even though a decaying one of no use. Technically, it would be considered real estate.

Consumer Information Form

The broker must display a notice concerning the real estate recovery trust account

Brokerage

The business of bringing people together interested in making a real estate transaction.

the required display of a consumer notice concerning the real estate recovery trust account.

The canon regarding Consumer Information Form 1-1 relates to

demographics.

The demand for real estate is affected by

accession

The fixture becomes the property of the owner through a process

buyer representation.

The four statutory positions a broker might take when doing business include the intermediary position, seller representation, subagency, and

demands by nonlegal authorities to come onto the property.

The legal rights of a Texas property purchaser, called the bundle of legal rights, means that the owner is exempt from

lateral severance

The legal theory of separating surface rights from subsurface rights and air rights is called?

A seller lists his home with a sales agent for a local large brokerage. Another sales agent working for the same brokerage brings a buyer. Is the seller obligated to pay a full commission under an exclusive right-to-sell agreement?

The listing agreement is the ruling document, meaning that the seller would owe the commission regardless of where the buyer came from.

Review & Revise

The main objective of the Education Standards Advisory Committee (ESAC) is to _________________ curriculum standards, course content requirements, and instructor certification requirements.

Which of the following is TRUE about community property?

The married couple are equal partners in the marriage

If a local-level fair housing group wins a fair housing lawsuit against a landlord, who gets the money from the resulting judgment?

The money goes to the fair housing group that brought the lawsuit.

the seller and the broker.

The parties to the listing contract are

Special open-space valuation

The primary source of income from the land does NOT have to be farming to qualify for which method of rural land valuation?

indemnification

The principal agrees to indemnify or reimburse the broker if the broker suffers financial injury while performing duties as broker. This means the broker is "held harmless" during the agency relationship.

compensation

The principal is liable for compensating the broker by paying the specified fee on completion of the broker's duties. This means that the principal must pay a commission or fee when the broker has performed the broker's portion of the listing agreement and produced a buyer who is ready, willing, and able to purchase.

availability

The principal must be available at reasonable times to consider offers, accept notices, or permit the showing of the property. If the principal will not be available, arrangements must be made to ensure accessibility for the broker.

information

The principal must furnish accurate information requested by the broker. The broker is entitled to rely on such information, unless he has reason to know of its falsity.

The Declaration of Independence that underlines the concept that anyone may pursue happiness

The principle that all Americans should have equal opportunity—in this case, in the right to buy property—is driven by what concept in which early document?

Why must brokerages display information about the Texas real estate recovery trust account?

The real estate recovery trust account is one of the ways Texas protects consumers in the event of misdeeds by license holders.

A rural property that is in a utility district is going under contract. Which of the following describes the utility district tax?

The seller must furnish a statutory notice about the utility district tax before final execution of the contract.

limited to the amount of their investment.

The shareholders' liability for the debts of a corporation is

Can the Texas attorney general and the U.S. attorney general begin an investigation of fair housing abuse on their own accord, or must they wait until a formal complaint is made by the public?

The state attorney general and the U.S. Justice Department may initiate investigations on their own.

destroys the surface

The subsurface right to extract minerals does not include the right to strip-mine coal, limestone, or iron ore because

personal

The tenants in a cooperative hold what kind of property?

What is the purpose of a Market Conditions Addendum?

To provide a clear and accurate understanding of market trends and conditions in the neighborhood

Under Texas law, who owns the property on the day of closing, and therefore is responsible for any expenses up to that day (or is owed any rents on a rental property up to that day)?

Under Texas law, the seller owns the property on the day of closing and is responsible for expenses and/or may collect rents.

Community

Under community property law in Texas, income from separate property is generally considered what kind of property?

community property

Under community property law in Texas, property acquired during marriage is generally

separate

Under community property law in Texas, property separated during marriage by a written contract is considered what kind of property?

While forbidden from practicing general law or business law, agents are allowed to practice real estate law if

Under no circumstances are real estate licensees allowed to practice any form of law unless they also are licensed attorneys.

Herself plus three others.

Under the "Mrs. Murphy" exemption, how many families can live in her house?

two years from the date of closing.

Under the Texas Deceptive Trade Practices Act (DTPA), the statute of limitations is

A license holder may inquire about the marital status of a current property owner.

Under the discriminatory practices canon of the Canons of Professional Ethics and Conduct, which practice is permitted?

restricting the rental of lodgings owned by a private club based on membership in the club

Under the federal Fair Housing Act of 1968, which is permitted?

If the law requires a signature on a document, that document must be presented to the county clerk as a paper document with an original signature.

Under the provisions of the electronic transactions and recording acts, which statement would NOT be accurate?

Subsurface

Under what classification of legal rights is underground water?

If the receiving enterprise has agreed to receive faxes or has made its fax number known through its website or other method

Under what conditions may a business fax unsolicited advertisements to other commercial enterprises?

Any property owner may create his own contract

Under what conditions might a property owner create his own sales contract?

Reversionary

Under what kind of interest does the property return to the heirs of the original owner who has died?

Residential

Under what real estate classification must a broker list a property if that property—once a very large single-family home—has since been carved into three condominium units and one rental apartment?

Owner dies without leaving a will but has heirs

Under which circumstance would real property NOT escheat to the state?

Selling, exchanging, purchasing, or leasing real estate for another person for compensation

Under which circumstances would a broker's license be required?

Condominium owners are entitled just to the space between the walls, and floor to ceiling, and an interest in common areas, while town-house residents own all of those, plus the ground the town house sits on.

What is a fundamental difference between condominium ownership and town-house ownership?

When a broker dies before the broker sells the property for a seller under a listing agreement between the broker and the seller

What is an example of discharging a contract because of "impossibility of performance"?

That the license holder remain current about issues and market trends both statewide and nationwide

What is expected of a license holder in the category of "competence" in the Code of Ethics?

Profits are subject to double taxation unless organized as an S corporation.

What is one of the chief drawbacks of corporate ownership of income property?

Residential

What is the classification of a legal, single condominium for sale that is above a retail store that is not for sale?

Mixed Use

What is the classification of a legal, single condominium unit that is being sold along with a retail unit on the ground floor below it?

Industrial

What is the classification of a warehouse property that is advertised as being ideal for conversion to residential loft units?

Approved forms must be used, while promulgated forms may be used.

What is the difference between a "TREC-approved" form and a "TREC-promulgated" form?

No impact

What is the effect on housing when a city is named the site of a major event—such as a political convention or sporting events—that will employ a large number of local people?

There will be little to no impact.

What is the effect on housing when a city is named the site of a major event—such as a political convention or sporting events—that will employ a large number of local people?

The addition of families with children and people with disabilities to the law

What key additions (protections) were added to fair housing laws in 1988?

Equitable

What kind of redemption rights allow the owner of a tax-delinquent property to redeem the property before the tax sale?

The defaulting party must sign a release form and provide it to the title company.

What must happen for a nondefaulting party in a contract to receive earnest money being held in escrow under a TREC promulgated contract?

Fee simple estate

What type of estate exists for an unlimited time and entitles the holder to complete ownership?

The property would be called real estate.

What would be the proper description of a vast piece of property whose only "improvement" is an abandoned and heavily deteriorated barn that would likely have to be razed?

property would be called land

What would the proper name be for a vast piece of acreage whose only "improvements" were a large billboard stating it was available for sale and zoned for commercial development and a large number of surveyor flags?

Consult an Attorney

When a broker has a question regarding a serious legal issue in a transaction, the proper course of action is to

Yes, the new-to-the-state broker may become a Texas broker if the originating state has education requirements comparable with Texas requirements.

When a broker-level license holder moves from another state to Texas, can that broker become a broker in Texas?

No, the builder may only file a specific lien against the lake house.

When a builder does substantial work on a client's lake house but client refuses to pay, may the builder file a lien against both the client's lake house and the client's main home?

no, a lien does not give a creditor ownership in a property

When a builder does substantial work on a client's lake house but the client refuses to pay, may the builder seize the lake house (move in) until the debt is paid?

encroachment

When a building (or some portion of it) or a fence or a driveway illegally extends beyond the land of its owner and covers some land of an adjoining owner or a street or alley,

The business entity as sole owner

When a business is owned in severalty, all title to real and personal property is held by which of the following?

Maybe, if the directors pass a resolution restricting the kind of property the corporation can own, only that kind of property can be held.

When a corporation is formed, its directors may pass a resolution allowing it to buy and own property as a business entity unto itself. Is the corporation limited to what kind of real estate it can buy?

Special commissioners appointed to hear evidence from all parties

When a government or public entity exercises the right of eminent domain through a condemnation suit, who determines the amount of compensation the landowner will receive?

Supply of housing

When a large quantity of wood milled in the United States is exported to a foreign country, leaving a shortage for domestic construction projects, which would be negatively affected?

balloon payment

When a mortgage or deed of trust loan requires periodic payments that will not fully amortize the amount of the loan by the time the final payment is due, the final payment is larger than the others.

the listing sales agent and the selling broker.

When a property is listed for sale, an agency relationship is created between

Texas Real Estate Commission

When an aggrieved person brings an action for a judgment that may result in an order for payment from the real estate recovery trust account, the registrant or license holder must notify which entity in writing at the time the action begins?

$10

When applying for a real estate license, the applicant must pay an additional fee of what amount for deposit into the real estate recovery trust account?

reversionary interest

When the creator of a life estate (the original fee simple owner) does not convey the remainder interest to a third party (or parties), then on the death of the life estate owner, full ownership reverts to the original fee simple owner—or if that person is deceased, to the heirs or devisees set forth in the fee simple owner's will

remainder interest

When the deed or will that creates the life estate names a third party (or parties) to whom title will pass on the death of the life estate owner, then such third party is said to own the remainder interest or estate

township squares

When the horizontal township lines and the vertical range lines intersect

Jones v. Mayer

Which court decision is still cited in lawsuits concerning fair housing discrimination?

The seller selects the inspectors and pays for inspections and any required repairs.

Which does NOT describe the process involved in a buyer's getting a property condition report?

information

Which duty owed to the agent by the principal consists of furnishing accurate information when requested by the broker?

disclosure

Which duty requires the broker to keep the principal fully informed at all times of all information the broker obtains that could affect the principal's decisions?

A 55-year-old father, 40-year-old mother, and 17-year-old son who want to purchase a home in an age-restricted adults-only community

Which family is NOT protected under the familial status provisions of the Fair Housing Act?

Tenants in common and Joint tenants

Which has the unity of possession

Joint tenants and tenants in common

Which has the unity of possession?

Conducting undercover or covert investigations of most complaints

Which is NOT a part of the Texas Real Estate Commission's (TREC) complaint investigation and disposition procedures?

avulsion

Which is the sudden removal of soil by forces of nature?

Navigable

Which kind of water is considered a public highway in which the public has an easement, or right, to travel?

A written notice to a purchaser that a death occurred on a property by natural causes, suicide, or accident unrelated to the condition of the property

Which notice or disclosure is NOT required by the Texas Real Estate Commission (TREC)?

Certified Residential Appraiser

Which of the following designations is NOT offered by the National Association of REALTORS®?

consideration

Which term does NOT refer to an agreement by the parties to the terms of the contract?

land

Which term refers NOT only to the surface of the earth but also to the center of the earth below, to infinity above, and to natural things permanently attached?

real estate

Which term refers NOT only to the surface of the earth but also to the center of the earth below, to infinity above, to natural things permanently attached, and to man-made things permanently attached?

real property

Which term refers to the surface of the earth; to the center of the earth below; to infinity above; to natural things permanently attached; to man-made things permanently attached; and to legal interests, rights, and privileges?

Brokerage

Which term refers to working with the parties in negotiating the sale, rental, or purchase of real estate?

town houses

Which type of housing is constructed on lots owned by individual homeowners and may either be connected by a common wall or be freestanding homes separated by airspace and attached to each other by exterior shingles and brick or siding?

Manufactured homes

Which type of housing is delivered on a permanent chassis to a purchaser's homesite, where it is connected to gas, water, and electricity?

seller

Which ultimately decides the listing price of the property?

Consumers

Who benefits most from the use of TREC-promulgated and/or approved forms?

A licensed surveyor

Who is responsible for the preparation of a subdivision plat that must be filed and approved by county officials before lots can be assigned?

tenants in common

Who may hold different percentages of ownership in the property?

Both the corporation and the shareholders

Who pays income tax on corporate profits?

Ginnie Mae

Wholly owned corporation within HUD that administers special assistance programs

buyers agent

Whose responsibility is it to disclose how long a property has been listed?

Because the vast majority of real estate transactions are similar in nature and standardized forms can help protect all parties involved

Why does the Texas Real Estate Commission approve and/or promulgate specific forms to be used in real estate transactions?

Brown v. Topeka Board of Education was the first decision that overturned the "separate but equal" doctrine.

Why is the 1954 court decision Brown v. Topeka Board of Education consider a benchmark ruling in fair housing?

Because unhappy real estate clients and customers often contend they did not understand the legal relationship between themselves and "their agent"

Why is understanding and being able to explain "agency" an important element in a license holder's professional life?

The real estate recovery trust account is one of the ways Texas protects consumers in the event of misdeeds by license holders.

Why must brokerages display information about the Texas real estate recovery trust account?

Under Texas law, does a person have a right to fly a drone over another individual's property without permission?

Yes, Texas law gives aircraft operators the right to fly over private property.

If a seller decides to take an expensive chandelier that the contract states will convey with the property, is that considered a breach of contract?

Yes, a breach of contract is anything that falls short of the four corners of the agreement.

Could a property owner sell the surface and subsurface rights (and theoretically the air rights) and still retain control over the property?

Yes, an owner could sell mineral rights to an oil company and surface rights to a rancher, and simply collect fees.

Is it illegal for a sales agent receive a "finder's fee" directly from a lender in exchange for sending potential mortgage business to the bank?

Yes, any time two or more brokers join to take action against a single competitor, it would be considered boycotting.

If all the franchise offices in a community—each one independently owned but all under the same franchise flag—agree on how they will compensate each other, is that considered price-fixing?

Yes, anytime independent brokerages agree to set fees between themselves, it is considered price-fixing.

If a homeowner wants to sell his property to an adult child for $1, may a sales agent be involved in that transaction?

Yes, assuming all the agent needs to do is fill out blanks in the contract.

Are there consumer advantages to a fixed-rate mortgage?

Yes, because consumers know exactly how much they are going to pay through the duration of the loan and can budget accordingly.

If a real estate license holder decides to sell his one personal residence as a FSBO but refuses to show it to a Muslim refugee family, is he in violation of fair housing law?

Yes, even though acting as a FSBO, no real estate license holder is exempt from fair housing law.

May tenants who are members of a protected class file a fair housing complaint if they believe their landlord is delaying making needed repairs to their unit in an effort to drive them out of the building?

Yes, failing to make repairs in an effort to drive out a tenant is a violation of fair housing law.

If a broker obtains a listing agreement and counsels the seller on matters such as the right price and home preparation, can that broker then claim neutrality if a buyer approaches the broker later with an interest in the property?

Yes, if the brokerage is large enough, the broker may appoint two associates, one to represent the buyer and one to represent the seller, who may then counsel those principals.

Are the actions of former real estate license holders addressed and available for compensation from the trust fund?

Yes, if the former real estate license holder held a license when the act was committed.

If a gold mining company with an easement by implication with the property owner stops mining for gold and begins mining for uranium, can the owner of the property forbid access?

Yes, if the purpose of the original easement no longer exists, it can be terminated.

Can a seller challenge an inspection report?

Yes, if the seller is presented with a list of items from the report, he may discuss and refute them.

Is there a scenario in which a new buyer could buy only surface rights to a property?

Yes, if the subsurface and air rights already have been resolved.

If a sales agent hopes to buy a property listed by another brokerage, is that agent obligated to inform the seller that he is also a license holder?

Yes, in Texas, real estate license holders must always disclose their backgrounds when buying property on their own behalf.

In an educational setting where competitors are in the same class, is it permissible to discuss how brokers may derive commission levels?

Yes, instructors are permitted to teach "the business of brokerage."

If a minority buyer specifically requests to be shown only properties in "white" neighborhoods, is it discriminatory for the sales agent to comply with the request?

Yes, it is discriminatory

If an undocumented worker asks to be shown a property in a specific neighborhood, would it be discriminatory to refuse?

Yes, it is illegal to discriminate against noncitizens.

Does the lack of permanence of investment have an impact on development potential for a community?

Yes, lack of forward-looking infrastructure makes investors leery of committing to projects.

May individuals ask TREC to make a moral character check on them before actually applying for a real estate license?

Yes, moral character checks can precede the actual licensing of an individual.

Are surveys required in an average real estate transaction?

Yes, most significantly if the buyer has a loan that may be sold on the secondary market.

Does the Fair Housing Act allow a childless, but pregnant, woman to claim protection under the familial status section of law?

Yes, pregnant women are protected under the familial status provisions of the law.

Are real estate brokers and agents obligated to advise consumers that the trust fund is available to offset losses caused by malfeasance by a license holder?

Yes, real estate brokers are obligated to post notices to consumers that the fund is available.

May a sales agent receive a "finder's fee" directly from a lender in exchange for sending potential mortgage business to the bank?

Yes, receiving referral fees from lender is illegal, plus sales agents may only be compensated through their sponsoring broker.

The term "sections" is used throughout the real estate industry, and throughout Texas, but is the term of any practical use in urban areas?

Yes, section numbers are still key to locating property on maps, even if descriptions eventually are broken down into much smaller units.

If a loan's principal is reduced under forbearance, can the lender make that money back?

Yes, the amount the loan is reduced is added to the end of the mortgage term and usually is paid back in a balloon payment.

Is the sponsoring broker liable for the unauthorized misdeeds of a licensed employee?

Yes, the chain of liability goes all the way up from the employee to the broker, to the owner of the company.

Once a judgment is entered against a license holder to be paid by the trust fund, can the license holder be further disciplined by the Commission?

Yes, the judgment in no way restricts the Commission from taking additional disciplinary action.

When the owner of a rental property is declared in default of his mortgage, can he continue to receive rent collections?

Yes, the landlord may continue to collect rents on properties.

If a landowner has a nonnavigable stream cutting across his property, does he own the stream?

Yes, the legal theory is that the landowner owns to the middle of the stream, but because he owns the land on both sides, he essentially owns the stream.

When a broker-level license holder moves from another state to Texas, can that broker become a broker in Texas?

Yes, the new-to-the-state broker may become a Texas broker if the originating state has education requirements comparable with Texas requirements.

Is a real estate licensee required to go beyond the services stated in the listing agreement?

Yes, the real estate license holder is also subject to provide services required by law

Four

_________ members are either owners of TREC - accredited real estate schools or approved instructors.

Freddie Mac

a GSE chartered by Congress as a private corporation. In September 2008, it too was placed into conservatorship with the FHFA

The Smiths are purchasing a home for $80,000 on which the monthly payments will be $792.24 each month up to the final payment of $56,340. Their loan has

a balloon payment

vendee's lien

a buyer's claim against a seller's property in the event that the seller failed to deliver title. This usually occurs when property is purchased under an installment contract or contract for deed and the seller fails to deliver title after all other terms of the contract have been satisfied.

loan origination fee

a charge made by the lender for the expense involved in taking the loan application and processing and closing the loan.

Taxation

a charge on real estate to raise funds to meet the public needs of a government

Liens

a claim against property to secure payment of a debt or to satisfy a debt

In Texas, each spouse is liable for all community debts in

a community property right of survivorship.

A listing contract is

a contract of employment

By applying and interpreting the laws in relation to a specific event

a court decision expands the meaning of the laws, establishing a precedent for future decisions

A seller has sold his property and is now transferring title to the new owner. The instrument he will use is

a deed

A land trust is created for

a definite time (usually 20 years)

An agent's legal requirement to act in the client's best interest and with the utmost good faith is called

a fiduciary relationship

the zoning board of adjustment

a group typically is assigned to hear applications for zoning variances

syndicate

a joining together of two or more people or firms to make and operate a real estate investment

homestead

a legal life estate in land that is owned and occupied as the family home

foreclosure

a legal procedure whereby the property that is pledged as security in the mortgage document or deed of trust is sold to satisfy the debt

title theory

a lender has the right to possession of and rents from the mortgaged property on default by the borrower

mortgagee

a lender in a mortgage loan transaction

REO

a lender-owned property that failed to sell at foreclosure for at least the amount owed by the borrower

Who is responsible for the preparation of a subdivision plat that must be filed and approved by county officials before lots can be assigned?

a licensed surveyor

package loan

a loan that includes both real and personal property

physical deterioration

a loss in value due to wear and tear from use, age, weather, lack of maintenance, or even vandalism

substantive communication

a meeting or written communication that involves a substantive discussion relating to specific real property. A face-to-face meeting with a prospective client in which properties are discussed is a substantive communication.

A REALTOR® is BEST described as an individual who is

a member of the National Association of REALTORS®.

Which one of these adds objective value to a property?

a new roof

unilateral contract

a one-sided agreement whereby one party makes a promise in order to induce a second party to do something

familial status

a parent or another person having legal custody of such individual, or

broker

a person who is licensed to buy, sell, exchange, or lease real property for others and to charge a fee for services.

market

a place where goods and services can be bought and sold and relatively stable price levels established

Datum

a point, line, or surface from which elevations are measured

syndicate

a private or public business venture to own property

base lines

run east and west

principal meridians

run north and south

Courses for the renewal of a sales agent license during the two years after initial licensing are called

sales agent apprentice education (SAE)

economic characteristics

scarcity

The money supply decreases and the economy slows if the Federal Reserve (the Fed)

sells governmental securities

beneficiary

The party on whose behalf a trust is administered is

Written notice of a proposed foreclosure sale must be given at LEAST how many days before the date of the sale?

21

exclusive agency

With what kind of listing does the seller employ only one broker?

What is the minimum amount of course work needed to become an appraiser trainee?

79 hours of qualifying education

What did the owners originally pay for their home if they sold it for $98,672, which gave them a 12% profit over their original cost?

88,100

In most cases, the homestead is exempt from forced sale by creditors for payment of debts. However, how many lien rights have been determined to be foreclosable?

9

a square yard how many square feet

9 square feet

Property owners on one street have petitioned the city to install paved alleys behind their homes. If Marcus has a rectangular lot that measures 90 feet by 140 feet, on what amount would he pay the special assessment?

90 feet

A fence is being built to enclose a lot 125 feet by 350 feet. How many running feet of fence will it take to enclose the lot?

950

Actual eviction

defaulted tenant is physically ousted from the rented property pursuant to a court order

Estate in land

degree, quantity, nature, and extent of interest a person has in real property

In real estate markets, which may change quickly?

demand

Demand includes

demographics, employment and wage levels, and population

Rectangular (government) survey

description of land on the grid system, based on location with reference to meridans and ranges and base lines and tiers

township tiers

designated by consecutive numbers north or south of the base line

If a condition of ownership is violated, title to the subject property automatically reverts to the original owner in

determinable fee estate

Broker X represents a prospective buyer. When he calls to schedule an appointment to show a property listed by another broker, X must

disclose that representation at the time he schedules the appointment to show the property.

The bundle of rights refers to an owner's right to

dispose of the property by giving it to a family member.

Which is the right to sell or give property to someone else?

disposition

A loan-to-value ratio is calculated by

dividing the loan amount by the lesser of sales price or appraisal.

IRS tax liens

do not have a specific priority, they are general liens

Expansion

equals Growth

Arnold has watched television commercials promoting the use of pyramiding as a real estate investment technique. If Arnold wants to try this approach, which action would he take?

Contact his bank to arrange a refinance of one of his investment properties, thereby obtaining cash to buy another rental house

Voidable

Contracts agreed to under undue influence are which of the following at the option of the injured party?

What is a basic requirement to legally participate in property auctions?

must be licensed as an auctioneer

An agency is terminated by which without liability for breach of contract

mutual agreement

Exclusive right-to-sell listing

"Only if the listing broker was in any way a procuring cause in the transaction may the listing broker be entitled to a commission" does NOT apply to which listing?

sole proprietorship

"The owner has the opportunity to operate independently and to make all decisions related to the operation of the company" describes a

agency by ratification

"after the fact"

appraisal

"the act or process of developing an opinion of value; an opinion of value."

bench marks

permanent references markers used for marking datums

The tenants in a cooperative hold what kind of property?

personal

The Commission will pay no more than what amount from the real estate recovery trust account for claims against any one license holder until the fund has been repaid in full by the license holder?

$100,000

A broker found guilty of antitrust violations can receive a maximum of 10 years in prison and how much in fines?

$1,000,000

What is the total cost of a driveway that is 15 feet wide, 40 feet long, and 4 inches thick if the concrete costs $60 per cubic yard and the labor costs $1.25 per square foot?

$1,194

If a lender agrees to an $80,000 loan at 9% for 15 years with 2 loan discount points, what amount will be charged at closing for the points?

$1,600

When applying for a real estate license, the applicant must pay an additional fee of what amount for deposit into the real estate recovery trust account?

$10

In Texas, the MOST common method of applying the tax rate is in dollars per

$100 of the appraised value

If a property is worth $320,000 and has loans of $10,000 against it, the owner's equity is

$310,000

If the bank gave John a 90% loan on a house valued at $88,500, how much additional cash must he produce as a down payment if he already paid $4,500 in earnest money?

$4,350

If a person violates the License Act, the Commission may assess an administrative penalty in an amount NOT to exceed

$5,000 per day for each violation.

If the broker's 5% commission is $2,500, the total sales price of the property was

$50,000

Eight years ago the homeowner purchased the property for $500,000. The market in that price range has basically been stagnant since then, and the owner now tells his sales agent (working on a 5.5% commission) he wants to sell the property and at least break even. How much should he list it for?

$527,500, the original cost plus commission

The seller wants to net $65,000 from the sale of his house after paying the broker's fee of 6%. His gross sales price will be

$69,149

Using the cost approach, estimate the value of a property using the following values: cost to replace, $100,000; depreciation, $40,000; land value, $20,000.

$80,000

With an outstanding loan balance of $12,000 at an interest rate of 9% and a monthly payment of $100, the amount of the first payment that goes toward interest is

$90

If a house sells for $110,000 and the appraisal is $100,000, the maximum FHA-insured commitment is

$96,500

The seller owes $2,400 in taxes for the current year. With a May 28 closing date and using a calendar year, the seller will be debited how much? (Assume it is NOT a leap year.)

$973.10

principal

(client)

fructus industriales

(fruits of industry or emblements)

fructus naturales

(fruits of nature)

Voluntary Lien

-created by lienee's actions

A monthly mortgage insurance premium (MIP), with an annual rate of what percentage, is paid on the base loan amount as part of the borrower's monthly payment on a 30-year Federal Housing Administration (FHA) loan?

0.85

Each section has an area of approximately

1 square mile

Which condition is a factor to be considered in deciding whether a manufactured home is real property?

1. A certified copy of the statement of ownership and location has been filed with the county clerk.

cost approach

1. Estimate the value of the land as if it were vacant and available to be put to its highest and best use.

A rural homestead is limited to how many acres for a single person?

100

primary ingredients in creation of agency

1. delegation of authority by the principal

stages of a business cycle

1. expansion

the three legal tests of a fixture

1. intention of the parties (most important)

factors affecting supply

1. labor supply

3 basic methods used to describe real estate

1. metes and bounds

factors affecting demand

1. population

seven exemptions of the Fair Housing Act

1. religious organizations

the appraisal process

1. state the problem

trade fixture differences

1. trade fixtures are installed by tenants, fixtures belong to the owner of real estate

A member may be removed from the Commission if absent for more than how many of the regularly scheduled meetings?

1/2

An urban homestead is limited to a lot or lots NOT to exceed how many acres?

10

A warehouse is 80 feet wide and 120 feet long with ceilings 14 feet high. If 1,200 square feet of floor surface has been partitioned off, floor to ceiling, for an office, how many cubic feet of space will be left in the warehouse?

117,600.

What was the price per front foot for a 100-foot-by-125-foot lot that sold for $125,000?

1250

A square foot is equal to

144 square inches

How many hours of Appraiser Qualifications Board (AQB) courses are required to become a state-licensed real estate appraiser?

150 hours, including 15 hours of USPAP

How many acres are in a quarter-section parcel of land

160

A person may be removed from inactive status on proof of attendance of at LEAST how many classroom hours of CE during the two-year period preceding the filing of application?

18

Sellers and landlords must disclose to buyers and tenants any knowledge of lead-based paint in properties built before

1978

How long does a lender have to file for a deficiency judgment?

2 years after the sale of the property

How much experience is required to become a state-licensed real estate appraiser?

2,000 hours of experience spread over 12 months

About what percentage of new Texas sales agents begin their careers as something other than a residential sales agents?

20%

a cubic yard is how many cubic feet?

27 cubic feet

When must the consumer receive the Closing Disclosure form, which replaced the HUD-1 and the Final Truth in Lending Disclosure?

3 days before close

What is a typical amount a borrower may pay under a mortgage modification?

31% of gross monthly income

How many inches are in a vara?

33 1/3

Each township contains how many sections?

36 sections

reasonable time is permitted for performance of contract rights and duties

MOST Texas real estate contracts provide that

Closing costs on equity loans may NOT exceed

4%

Each acre contains how many square feet?

43,560 square feet

an acre contains

43,560 square feet.

After mold damage to a property has been remediated, a seller is required to give a copy of the certificate of mold remediation to a buyer. For how many years does this obligation extend?

5

In addition to proportionate responsibility for damages under the DTPA, a defendant may be held jointly and separately responsible for all damages recoverable if the defendant's percentage of responsibility is found to be more than what percentage?

50

A developer wishes to build a commercial building in the space over the railroad tracks. To do this, the developer must purchase which right from the owner?

Air

Each section contains how many acres?

640 acres

A unit of measurement used almost exclusively in farm and ranch deals is the "chain." How long is a chain?

66 feet (four rods, 100 links)

What is the LTV of a property with a sales price of $200,000 and an appraised value of $220,000, secured by a $160,000 loan?

73%

No, because the hospital is owned by the Catholic church, it is exempt from fair housing law.

A Catholic-owned hospital wants to sell a piece of property that it owns but does not want to sell it for the development of family-oriented rental properties. Is that a fair housing violation?

a member of the National Association of REALTORS®

A REALTOR® is BEST described as an individual who is

The buyer, because the pole had been permanently placed on the property.

A buyer maintains a seller inappropriately removed a driveway basketball pole and hoop that had been cemented into the ground. Who is likely to prevail?

the housing-expense ratio.

A borrower's monthly PITI payment is also called

benchmark

A brass plate embedded on the siding of an historical building near the Texas coast contains the words "elevation 30 feet above mean sea level." The brass plate is which?

Vendee's lien

A claim against a seller's property in the event that the seller fails to deliver title is which of the following?

lien

A claim against property that provides security for repayment of a debt or obligation of the property owner

trade fixtures

All are included in the real estate sales contract EXCEPT

A bill of sale is issued to transfer title to which kind of property?

personal property

Requiring a license holder to pay a consumer triple damages

A complaint against a license holder was filed with the Texas Real Estate Commission (TREC). After a hearing, the Commission determined that the license holder had violated the Real Estate License Act. Which is NOT a disciplinary action available to TREC?

Which of the following could not be held as separate property after marriage?

Personal property acquired by a spouse after marriage

misrepresenting the condition of the property by omitting pertinent facts

A consumer has sent a complaint to the Texas Real Estate Commission (TREC) against a real estate agent, claiming a violation of the Canon of Integrity. The agent is accused of

unilateral contract

A contract in which one party is persuaded to act because of a promise made by another party is

an illegal purpose.

A contract is void if it involves

voidable

A contract that seems to be valid on the surface but may be rejected by one or both of the parties is

real

A deed is issued to transfer title to which kind of property?

local government

A developer who seeks to build apartments on the site of a former school must first receive the approval of

air

A developer wishes to build a commercial building in the space over the railroad tracks. To do this, the developer must purchase which right from the owner?

What is a loan discount point?

A discount point is an up-front amount paid to the lender that has the effect of lowering a monthly payment.

survey sketch

A document that shows the location and dimensions of a property, as well as its legal description

ARELLO

Association of Real Estate License Law

each have the opportunity to earn the entire commission.

A homeowner gives open listings to three brokers. The brokers

a definite time (usually 20 years)

A land trust is created for

Homestead

A legal life estate in real estate occupied as the family home.

Fraud for profit involves which illegal action?

A lender's obtaining a loan on fictitious properties

specific statutory lien

A lien placed on a property by a contractor is

Which BEST defines the secondary mortgage market?

A market where loans are bought and sold after they have been originated

easement in gross

A mere personal interest in or right to use the land of another

license

A personal privilege to enter the land of another for a specific purpose

a voluntary specific lien.

A mortgage lien on a home is

limited partnership

A partnership with one or more general partners and one or more limited partners.

not more than $4,000.

A person acting as a real estate broker, real estate sales agent, or a right-of-way agent without a license or registration is guilty of a Class A misdemeanor that is punishable by a fine of

Which person is required to hold a real estate broker's license?

A person assisting a real estate agent by calling on for sale by owners, referring them to the agent, and receiving a fee for each listing obtained

The house and surrounding property reverts to the original owner or heirs of the original owner.

A person with a large home and surrounding property creates a determinable fee estate so long as a specific church uses it for the church's services. What happens to the property if the church goes out of business?

datum

A point, line, or surface from which elevations are measured or indicated

improvements.

A potential purchaser learns that a new expressway overpass is to be constructed within two blocks of one of the houses she is considering. If this fact causes her to reduce the amount she offers for the property, that decision would likely be based on the economic characteristic of

What is a mortgage modification?

A procedure by which troubled borrowers may work with lenders to avoid foreclosure

be guilty of price-fixing.

A real estate agent tells a seller during a listing presentation that the firm's commission is in line with those of other real estate firms in the area. The broker may

maintain a fixed office in this state

A resident licensed broker must

easement

A right acquired by one party to use the land of another party for a special purpose

100

A rural homestead is limited to how many acres for a single person?

Which real estate discipline is represented by BOMA?

BOMA represents building owners and managers

a variety of real estate disciplines because condos can be residential properties, office properties, and even warehouse properties.

A sales agent who specializes in condo sales needs to be an expert in

The law that applies to organizing a business in Texas is

the Texas Business Organization Code

breach of contract.

A seller breaks a sales contract by NOT delivering title to the buyer under the conditions stated in the agreement. This is called

severalty

which means that title is held by one owner

What is a "substantial equivalency" fair housing law?

A state or local law that is basically the same as the federal fair housing law

Which of the following is TRUE about community property in Texas?

A surviving spouse owns at least one half of the property upon death of the spouse.

Fiduciary Relationship

An agent's legal requirement to act in the client's best interest and with the utmost good faith is called

a living trust

A trust created to manage property during a property owner's lifetime is which of the following?

In the creation of real estate advertising, which of the following is the BEST way to comply with fair housing laws?

Agents describe characteristics of properties—square footage, amenities—rather than the people who are logical candidates to live ther

66 feet (four rods, 100 links)

A unit of measurement used almost exclusively in farm and ranch deals is the "chain." How long is a chain?

feudal system

According to old English common law, the government or the king held title to all lands

Upon receiving a real estate license in Texas, which organization(s) are license holders required to join?

A) The National Association of REALTORS® and Texas Land Title Association B) The National Association of Home Builders and National Association of Real Estate Appraisers C) The Texas Association of REALTORS® ***D)None of these Although membership in professional organizations can be important to individual career development, none are required under state law. It is likely, however, that new license holders hoping to work in specific brokerages will be required to join a specific organization as a condition of employment.

The true yearly rate of interest describes

APR

the offeree.

Acceptance of a written offer to purchase real estate requires the signature of

January 1 of the tax year.

Ad valorem taxes become a lien on a property on

Economic Characteristics

Affect the value of real estate

The deed conveys all right, title, and interest of the defaulted taxpayer, including the right to use and possess the property.

After a tax foreclosure sale, a deed is given to the successful bidder. Which of the following is a condition of that deed?

In a buyer brokerage transaction, notification of acceptance must be given directly to the buyer.

After both parties have initialed all changes to a contract and have signed it, which is NOT acceptable notification of contract acceptance?

5

After mold damage to a property has been remediated, a seller is required to give a copy of the certificate of mold remediation to a buyer. For how many years does this obligation extend?

the sheriff

After paying the delinquent tax, interest, penalties, and attorney's fees, the winner at a tax sale receives a deed from

Deceptive Trade Practices Act

Although permissible under agency law, statements of opinion and puffing should be avoided because of possible claims under the Deceptive Trade Practices Act that they mislead the consumer.

Which requires equal access in employment, government activities, public accommodations, commercial facilities, transportation, and telecommunications?

Americans with Disabilities Act

What are the three factors that determine cash flow?

Amount of rent received, operating expenses and method of debt repayment

death of listing agent

An agency relationship may be terminated for a number of reasons. Which would NOT be just cause for terminating a listing agreement?

What is a real estate advertisement under TREC rules?

An advertisement is a written or oral statement by a license holder that attempts to induce a member of the public to use the licensee's services.

mutual agreement

An agency can be terminated by which without liability for breach of contract?

duties of loyalty

An agent must always place a principal's interests above those of the agent and above those of others with whom the agent deals.

the court that entered the judgment.

An aggrieved person may only be reimbursed from the real estate recovery trust account if the reimbursement is ordered by

at least 18 years old and be a legal resident of Texas at the time of filing the application, or be a legally admitted alien.

An applicant for a Texas real estate license must be

number of rooms and accurate measurements.

An area of needless controversy that seems to come up regarding many listing is

not receive part of a broker's commission on the sale of a property.

An attorney who is NOT licensed by the Texas Real Estate Commission (TREC) but performs brokerage services in a transaction may

If a seller believes—but is not certain—that a friend wants to buy his house, what kind of agreement should he sign with a broker?

An exclusive agency listing

When a loan is made using a deed of trust, the title is conditionally conveyed to the trustee by whom for whose benefit?

By the borrower for the lender's benefit

General, involuntary

An income tax lien is what kind of lien?

Which of the following designations is NOT offered by the National Association of REALTORS®?

Certified Residential Appraiser

Special purpose

Churches, government land, and schools are classified as which kind of property?

treat all parties honestly.

An intermediary broker (or appointed license holder) must

Under Texas law, may a property be sold to someone who is not a U.S. citizen?

Citizenship is not listed as a required element for a valid contract.

Fair Housing Act

Civil Rights Act, Housing and Community Development Act, Fair Housing Amendments Act

yes

Clients who have signed listing agreements may "fire" their broker. Is a broker permitted to fire a client?

adjusted basis

An investor may defer federal income taxes on a portion of the gain on the sale of a property, provided all sales proceeds are not received during the year of the sale

Which person is NOT required to hold a real estate broker's license?

An onsite manager of an apartment complex

Unenforceable

An oral listing agreement is

Drop

An over supply usually causes prices to _________.

Cooperative

An owner of which kind of property does NOT own the unit itself but owns shares of stock in the corporation that holds title to the building?

necessity

An owner sells part of his land that has no access to a public road except over his remaining land. This creates an easement by

handle correspondence for a licensed agent.

An unlicensed assistant may

solicit prospects or listings for a licensed agent.

An unlicensed assistant may NOT

Under what conditions might a property owner create his own sales contract?

Any property owner may create his own contract.

What are the filing responsibilities of a real estate brokerage set up as a limited partnership?

Any real estate brokers must be licensed by TREC, the business itself must be registered with the secretary of state, and an Assumed Name Certificate must be filed with the country clerk of every county where it does business.

Which classification permits a person with no real estate appraisal experience to enter the real estate appraisal profession and work toward the requirements to become a licensed appraiser?

Approved appraiser trainee

yes, some owners along the coast may be required to have separate flood and wind damage policies from different companies

Are certain homeowners singled out and required to have multiple insurance policies?

Lenders are required to ask, but borrowers need not offer the information.

Are lenders required by law to attempt to identify borrowers by race, national origin, gender, and ethnicity, and are borrowers required to provide the data?

Although financial background is a not a protected class, if they can afford the home, they are not prohibited from buying it.

Are lower-income individuals allowed to purchase homes in upper-income neighborhoods?

Yes, real estate brokers are obligated to post notices to consumers that the fund is available.

Are real estate brokers and agents obligated to advise consumers that the trust fund is available to offset losses caused by malfeasance by a license holder?

Yes, a broker's commission is negotiable, although a broker has no obligation to negotiate

Are real estate fees and commissions negotiable?

TREC offers an approved form that may be voluntarily used to identify personal property.

Are sales agents obligated to list conveying personal property on a TREC-promulgated form?

yes and no

Are the principals allowed to know how license holders divide the various commissions, splits, and fees between themselves?

Civil and Criminal

Are violations of antitrust laws considered what violations?

What are some basic areas of knowledge that sales agents should have in order to be involved in the farm and ranch land real estate specialty?

Basic understanding of agricultural production and farm markets

Why is "area preference" considered the single-most important economic characteristic of land?

Because "area preference" expresses an individual's desire to own a property that meets what often is an abstract need, such as a home on a golf course or a highrise condo with specific view

If a homeseller specifically instructs his listing agent not to show his home to lawyers, is the listing agent obligated to comply?

Because lawyers are not a protected class, the request is lawful.

written agreement

Because licensed associates (sales agents) are agents of the broker, they should have which with the broker?

No, as long as sponsoring brokers have active licenses, they are not rechecked.

Before new sales agents go to work, does the Commission have to verify that their sponsoring broker is acceptable?

If a purchaser does NOT receive a copy of the contract when it is signed, when may a purchaser of a time-share cancel the contract?

Before the 6th day after a signed copy of the contract or required time-share disclosure is received

Where homestead or community property is involved and both spouses have an interest in the property, who must sign the note and deed of trust?

Both spouses must sign the note and deed of trust.

Who pays income tax on corporate profits?

Both the corporation and the shareholders

If a sponsoring broker suggests that an independent contractor violate rules - such as altering or backdating a property disclosure form - who is liable?

Both the sponsoring broker and the independent contractor would be held liable for the infraction.

disclose that representation at the time he schedules the appointment to show the property.

Broker X represents a prospective buyer. When he calls to schedule an appointment to show a property listed by another broker, X must

a subagent.

Broker Y is cooperating with a listing broker by showing that broker's listing to a prospective purchaser/customer. She is, therefore, working as

Which term refers to working with the parties in negotiating the sale, rental, or purchase of real estate?

Brokerage

will need to submit similar information each time their license is up for renewal.

Brokers and sales agents who submit required criminal background information and fingerprints to TREC when seeking their original license

escrow or trust account

Brokers are required to maintain, and to place all money received from clients in, which of the following?

Brokers will often provide time for license holders to work "desk duty," a period in which the desk person fields incoming calls to the brokerage and may work with callers who are not otherwise affiliated with other sales agents. May brokers assign (order) sales agents to work specific hours of desk duty?

Brokers may assign desk duty hours to employees, but may negotiate contracts with independent contractors that include desk duty expectations.

Why is the 1954 court decision Brown v. Topeka Board of Education consider a benchmark ruling in fair housing?

Brown v. Topeka Board of Education was the first decision that overturned the "separate but equal" doctrine.

What type of designation indicates competency in apartment management?

CAM

Dolores Bannon is a sales agent with experience in residential sales and leasing. She would like to become competent in property management. Which of the following designations would be an indication that she has gained competency to do property management?

CPM-certified property manager

Yes, the broker may monitor an independent contractor's compliance with continuing education requirements and instruct the independent contractor to attend classes.

Can a broker monitor an independent contractor's compliance with continuing education requirements and instruct the independent contractor to attend classes?

Yes, associations can file assessment liens.

Can a homeowners association place a lien against a homestead?

Yes, if the seller is presented with a list of items from the report, he may discuss and refute them.

Can a seller challenge an inspection report?

A sponsoring broker has the authority to instruct an employee when to take classes and which classes to take.

Can a sponsoring broker monitor a licensed employee's progress in continuing education and instruct that employee when to take classes and what classes to take?

No, aggrieved consumers may only collect from the fund if they did business with license holders.

Can an aggrieved consumer collect from the real estate recovery trust account if the person posing as a sales agent or broker was not actually licensed to practice real estate nor affiliated with real estate‒related business?

No, banning LGBT individuals would violate fair housing law.

Can neighborhood homeowners and associations demand that real estate brokerages not show their properties to lesbian, gay, bisexual, or transgender individuals?

The state attorney general and the U.S. Justice Department may initiate investigations on their own.

Can the Texas attorney general and the U.S. attorney general begin an investigation of fair housing abuse on their own accord, or must they wait until a formal complaint is made by the public?

An investor decides to liquidate property previously acquired through a 1031 exchange. If she is not acquiring replacement property in this transaction, which statement regarding capital gains taxes would be TRUE?

Capital gains taxes are due on the total capital gain accumulated since the purchase of the initial property.

a federal court.

Complaints of discrimination brought under the Civil Rights Act of 1866 must be taken directly to

What is a fundamental difference between condominium ownership and town-house ownership?

Condominium owners are entitled just to the space between the walls, and floor to ceiling, and an interest in common areas, while town-house residents own all of those, plus the ground the town house sits on.

In what kind of business does a landman engage?

Conducting business activities related to oil exploration

No, motorcycle riders are not a protected class.

Could a motorcycle rider and member of an "outlaw motorcycle gang" claim discrimination if a real estate agent refused to show him properties in a quiet neighborhood?

yes

Could a property owner lease the surface and subsurface rights (and theoretically the air rights) and still retain control over the property?

sales agent apprentice education (SAE).

Courses for the renewal of a sales agent license during the two years after initial licensing are called

Establish precedent

Courts in one jurisdiction have what effect on the decisions of courts in other jurisdictions?

time, title, interest, and possession.

Creating a joint tenancy requires four unities:

Personal

Cultivated annual crops are classified as which kind of property?

What is the effective life of a datum or benchmark?

Datums and benchmarks are considered permanent markers that can be (and have been) used for more than 100 years.

Population, Demographics, Employment levels, Wage Levels

Demand factors that influence real estate

The legal rights of a Texas property purchaser, called the bundle of legal rights, means that the owner is exempt from

Demands by nonlegal authorities to come on the property.

The Texas Supreme Court has ruled that certain franchises may pay different rates.

Do all franchises pay the same level of tax?

No, if a homeowner is preparing to sell the property, a higher appraisal would help justify a higher listing price.

Do homeowners always want the lowest possible appraisal?

No, an unlicensed friend, neighbor, or even stranger can sell property but may not be compensated for the services.

Do you have to be a licensed real estate broker or sales agent to sell real estate in Texas?

Yes, appointees must understand license law and regulation of the industry, must understand open meetings law, and must be acquainted with TREC audits.

Does a person appointed by the governor to the Texas Real Estate Commission have to be trained before joining the governmental body?

Which of the following illustrates what the government means by "selective use of advertising media or content"?

Doing a mailing to "just white neighborhoods" or placing billboards where only Hispanics are likely to see them

Sellers and landlords must hire certified renovators to complete repairs that disturb more than 6 square feet of surface area for interior work or 20 square feet for exterior work.

EPA Renovation, Repair, and Painting (RRP) regulations require which action?

What is the difference between an equity REIT and a real estate syndicate?

Equity REITs pool properties and sell shares to investors, while real estate syndicates pool several investors' funds to purchase one property.

A nonrecourse note and mortgage may prohibit a lender from seeking a deficiency judgment against a borrower. Under what circumstances might a lender agree to a nonrecourse loan?

Equity loans and reverse-annuity mortgages

Who loses when a home is sold in foreclosures?

Everybody, because the borrower has ruined credit and the lender has spent thousands of dollars in legal fees it cannot recoup

What is an example of where permanence of investment can improve property values?

Extension of sewer, water, gas, and electric into areas primed for development

expenses, ability to pay, terms

Factors influencing home ownership include which of the following?

A seller has accepted an offer from a ready, willing, and able buyer, and the real estate agent is anticipating the closing of the transaction and receiving a commission. However, if the transaction does not close, the broker still would receive a commission under which circumstances?

Failure of the owner's spouse to sign the deed

federal, state, and local laws

Fair-housing-protected classes are established by

US Congress

Federal fair housing laws are passed by

none

Federal fair housing laws permit which of the following?

Residential, commercial, industrial, and agricultural

Federal flood insurance policies are available on which types of properties?

A licensed real estate broker is not authorized to practice law unless also a licensed attorney. Which contract activity is a real estate license holder allowed to perform?

Filling in the blanks of a contract form promulgated or approved for that use by the Texas Real Estate Commission (TREC)

Which occurs during the property valuation phase of the annual tax levy process?

For homeowners age 65 or older or disabled who sell a home and purchase another one in Texas, the value of the new home for school tax purposes will be at a value proportional to the tax freeze value of the old home.

taxes

For income tax purposes, a homeowner may deduct, from gross income, real estate

Continuous, uninterrupted

For a prescriptive easement, a claimant is required to have what kind of use of the land?

first have a valid broker's license.

For entrepreneurs to set up a real estate brokerage as a sole proprietorship, they must

the Texas Real Estate Broker-Lawyer Committee

Forms that are promulgated by the Texas Real Estate Commission are drafted by

LLC, Corporations, chapter S, and Professional Business

Franchise operations, with revenues in excess of $1 million, are obligated to pay a franchise tax while doing business in Texas. What kind of corporate structures must pay the tax?

Which secondary market entity primarily provides a secondary market for conventional loans?

Freddie Mac

How is radon produced?

From the decay of other radioactive materials in rocks under the surface of the earth

Which of these can be seen as harming the objective value of a property?

Furnace beyond its usable lifespan

special purpose.

Government-owned building complexes that are sold to school districts for educational purposes should be classified as

riparian rights

Granted to owners of land located along the course of a river or stream.

Groundwater conservation districts may require landowners to report how much water they pump and regulate the spacing of wells.

Groundwater is a precious commodity in Texas, and even though landowners are allowed to pump as much as they'd like—as long as they don't waste it—does that mean that there are no controls?

John owns a manufactured home and has elected to have it classified as real property. Which of the following would NOT support the home's classification as real property?

He intends to move it every six months

If a borrower or a public official is concerned that a lending institution might be practicing redlining, which law requires a public reporting of economic and ethnic characteristics of neighborhoods served?

Home Mortgage Disclosure Act

Which requires lenders to report income and ethnicity data of loan applicants, as well as the type of loan applied for, where the property is located, and whether the application was approved, denied, or withdrawn?

Home Mortgage Disclosure Act (HMDA)

Are home equity loans foreclosable again Texas homesteads?

Home equity loans, regardless of purpose, are foreclosable.

work out a deal to perform services for the school district.

Homeowners who are unable to pay taxes owed to the school district may

May a government take over a property, or even a neighborhood, just because it is unsightly?

Homes that are rundown, abandoned, and in unlivable condition may be taken and razed.

There is no difference in punishment.

How is punishment for violating the racial aspects of fair housing law different from punishment for violations involving complaints about familial status?

two years

How long after a discriminatory action does an aggrieved party in a discrimination dispute have to bring a private enforcement action in state or federal district court?

Four years

How long does a nondefaulting party have to begin legal action against the defaulting party in a real estate breach of contract?

Nine members: six real estate professionals and three public members

How many members are appointed to the Texas Real Estate Commission (TREC)?

What is a major concern of MOST sellers that sales associates may be able to provide an estimate for?

How much they will net if they list and sell at a specific price

What is a critical problem in using made-made monuments in metes-and-bounds property descriptions?

Humans may move the monuments by mistake or fraud.

specific, involuntary

If Center City levies a special assessment against residents in a new subdivision for the extension of water lines into the new area, it is what kind of tax?

Because lawyers are not a protected class, the request is lawful.

If a homeseller specifically instructs his listing agent not to show his home to lawyers, is the listing agent obligated to comply?

Yes, a breach of contract is anything that falls short of the four corners of the agreement.

If a seller decides to take an expensive chandelier that the contract states will convey with the property, is that considered a breach of contract?

a tenant in common.

If a tenant in a joint tenancy sells or conveys her interest in the property, the new owner becomes

tenant in common

If a tenant in a joint tenancy sells or conveys her interest in the property, the new owner becomes

decedent's heirs

If a tenant in common dies, that person's ownership interest goes to

the decedent's heirs

If a tenant in common dies, that person's ownership interest goes to

owner

If a tree falls on a house with homeowners insurance, who gets paid?

Yes, it is discriminatory

If a white buyer specifically requests to only be shown properties in "white" neighborhoods, is that discriminatory for the sales agent to comply with the request?

all of these

If a woman who is a homeowner wants to take in a boarder, can she advertise the rental unit for a "single, white, older, Christian woman"?

No, complying would be a violation of fair housing law.

If an LGBT homebuyer assertively instructs his contracted buyer agent to "only show me homes in conservative Christian neighborhoods," is the buyer agent obligated to comply?

adaption of the item

If the court learns that the house in question has storm windows that are custom made, the court will consider which in determining whether the storm windows are fixtures?

the written agreement of the parties

If the court learns that the seller listed several items in the sales contract that she wanted to take with her and the buyer agreed to the contract, the court will consider which in determining whether those items are fixtures?

may explain the meanings of the confusing sections.

If the homesellers are confused about specific sections of a promulgated form, the real estate sales agent

no

If the largest brokerage in a community decides to offer different competitors varying levels of commission splits or fees, is that considered boycotting or price-fixing?

Under what conditions may a seller refuse to pay a listing broker?

If the listing broker failed to meet the terms of the listing contract, such as widely market the property, negotiate effectively, or generally show a lack of competence in the transaction

may foreclose only on the owner of the unit.

If the owner of a condo in a large building defaults on his mortgage, the bank

disclose information

If the owner tells the buyer's agent something the owner would NOT want the buyer to know, the buyer's agent must

Under what conditions may a business fax unsolicited advertisements to other commercial enterprises?

If the receiving enterprise has agreed to receive faxes or has made its fax number known through its website or other method

the trustee

In a land trust, title to property is held by

personal

In a real estate transaction, a refrigerator is considered which kind of property?

title

In order to earn a commission under the terms of the License Act, a licensed broker must meet several stipulations and advise the buyer to obtain what type of insurance?

Demand

In real estate markets, which may change quickly?

Special provisions

In real estate sales contracts, which term is used to clarify any business aspects of the sale NOT covered by any provisions of the printed earnest money contract form?

special provisions

In real estate sales contracts, which term is used to clarify any business aspects of the sale NOT covered by any provisions of the printed earnest money contract form?

Agents describe characteristics of properties—square footage, amenities—rather than the people who are logical candidates to live there.

In the creation of real estate advertising, which of the following is the BEST way to comply with fair housing laws?

The independent contractor sales agent

In the supervising broker relationship with an independent contractor sales agent, who is responsible for setting aside funds for income tax purposes?

multiple

In what kind of listing is information shared with other brokers?

person is employed by or for an owner of real estate to sell a portion of the real estate

In which situation would a broker's license be required?

portfolio income

Income from interest, stock dividends, and royalties

renting an apartment

Individuals who do not want to pay for the upkeep of the exterior of their home, nor pay property taxes, should consider

Which duty owed to the agent by the principal consists of furnishing accurate information when requested by the broker?

Information

no, the license holders must permit the transaction to close and litigate compensation after the fact.

Is a license holder entitled to stop a transaction (refuse to close) if he or she believes either the seller or buyer will be unable to fulfill the compensation clause in the contract?

no

Is a real estate consumer, a seller, for instance, allowed to withhold the payment of a commission if the home "sells too quickly," suggesting "the agent priced it too low"?

Yes, the real estate license holder is also subject to provide services required by law

Is a real estate licensee required to go beyond the services stated in the listing agreement?

no

Is it a violation of fair housing law to refuse to show a sex offender a home in a neighborhood of single-family homes with children?

when the seller delivers the deed.

It is customary to make the commission payable

Which is TRUE regarding an FHA loan?

It is insured up to a specific limit by the Federal Housing Administration.

fail to specify a definite termination date in a contract to perform property management services.

It is permissible for a real estate agent to

duties of disclosure

It is the broker's duty to keep the principal fully informed at all times of all facts or information the broker obtains that could affect the principal's decisions. The broker may be held liable for damages for failure to disclose such information.

Ad valorem taxes become a lien on a property on

January 1 of the tax year

general involuntary lien

Jo sues Sam and gets a judgment for $50,000, which Sam is unable to pay. The judgment lien is

Which court decision is still cited in lawsuits concerning fair housing discrimination?

Jones v. Mayer

Indestructibility

Land cannot be destroyed therefore not insurable

If water is found on a property, that makes the property?

Land, because it is attached to the property by nature.

Immobile

Land, which is the earths surface, is __________

Regulations passed by governmental agencies are a means of implementing and enforcing which kind of act?

Legislative

Are lenders required by law to attempt to identify borrowers by race, national origin, gender, and ethnicity, and are borrowers required to provide the data?

Lenders are required to ask, but borrowers need not offer the information.

28

Lenders may use a conservative rule-of-thumb formula that the monthly cost of buying a home (PITI payment) should NOT exceed what percentage of the borrower's gross monthly income?

a regulation of the state and licensees can be held liable for violations

License holder compliance with the TREC's Canons of Professional Ethics and Conduct is

a regulation of the state and licensees can be held liable for violations.

License holder compliance with the TREC's Canons of Professional Ethics and Conduct is

What type of business association allows some members to participate in decision making while others are prohibited?

Limited partnership

Profits on partnership income are passed through to the individuals' income tax returns.

Limited partnerships are a popular method of pooling enough cash to make a substantial investment in real estate. But how are profits treated?

What is the BEST way for an investor to get the maximum return on an initial investment?

Making a small down payment, paying low interest rates, and spreading mortgage payments over a long period of time

puffing

Making exaggerated or unsubstantiated statements of value when selling real estate

What is an example of a situation in which one would need to obtain a conditional-use permit?

Managing a bed and breakfast in a residential neighborhood

they have full control over their method of business and are directly responsible for income and expenses.

Many business entrepreneurs see real estate as a profession with good opportunities and one where they can directly enjoy —or lament—their personal work. Many of those people enter the business as "sole proprietors" because

Yes, Hispanics are an ethnic group and are a protected class.

May Hispanics live in predominantly African American neighborhoods?

Homes that are rundown, abandoned, and in unlivable condition may be taken and razed.

May a government take over a property, or even a neighborhood, just because it is unsightly?

referral fees may be accepted if they are disclosed to the client ahead of time.

May a real estate broker or sales agent receive a referral fee from a cable service provider

If there is an approved or promulgated form that addresses the modification, that form must be used.

May a real estate sales agent simply write in an exception to a contract clause, or must an approved or promulgated addendum be used?

No, receiving referral fees from lender is illegal, plus sales agents may only be compensated through their sponsoring broker.

May a sales agent receive a "finder's fee" directly from a lender in exchange for sending potential mortgage business to the bank?

Yes, moral character checks can precede the actual licensing of an individual.

May individuals ask TREC to make a moral character check on them before actually applying for a real estate license?

sales agents may form loose networks with each other as long as price-fixing does not take place, fair housing laws are not violated, and sales agents from outside the confederation also are allowed to present buyers.

May sales agents who work for competing companies, but in the same tier of property values, share information with each other about properties that are either new on the market or about to be brought to market?

When a corporation is formed, its directors may pass a resolution allowing it to buy and own property as a business entity unto itself. Is the corporation limited to what kind of real estate it can buy?

Maybe, if the directors pass a resolution restricting the kind of property the corporation can own, only that kind of property can be held.

the work was begun or first materials delivered.

Mechanics' and materialmen's liens take priority from the date

If the court learns that a wall-to-wall carpet is tacked to the floor of a property, the court will consider which tests of a fixture in determining whether the carpet is a fixture?

Method of attachment.

stating that a property is being sold "as is."

Misleading or deceptive practices according to the Deceptive Trade Practices Act (DTPA) include all of the following EXCEPT

that the offending license holder has insufficient assets in Texas or other states to satisfy the judgment.

Money will only be paid out of the real estate recovery trust account if the Commission finds

If the number of skilled workers to frame houses in a particular city has declined in the last few months, that factor would

More likely to affect the supply of housing A shortage of skilled labor or building materials or a significant increase in the cost of labor or materials can decrease the amount of new construction.

The buyer must use a Texas-licensed inspector.

Must a buyer use a licensed home inspector to review the house (can he use a relative or friend)?

No, licensees acting on their own behalf do not have to use promulgated forms.

Must licensed real estate sales agents ALWAYS use promulgated forms?

No, TREC only has authority over license holders.

Must real estate properties for sale be listed only on TREC-approved real estate sites?

paid employees of builders or developers do not need to be licensed.

Must sales people working for time-share builders or developers have real estate licenses?

Telemarketers are required to transmit their phone number to caller IDs, and their names if possible.

Must telemarketers identify themselves via caller IDs?

A copy of the bylaws of the business entity must be on file at TREC.

NOT required for brokerage by TREC

1908

National Association of Realtors (NAR) was founded in

In any dispute involving the location of boundaries based on monuments, what is the typical resolution?

Natural monuments take precedent over man-made monuments.

How many properties may benefit from a zoning variance?

No more than one property may be granted a variance.

In case of foreclosure, under Texas law, how long does a borrower have to redeem and repossess the forfeited property?

No provision under Texas law for redemption of owner-occupied property foreclosed under a deed of trust

Non homogeneity

No two parcels of land are ever the same

If a listing agent, with fiduciary duty owed to the seller, is specifically asked by a buyer what the seller's lowest acceptable price is, is the listing obligated to respond?

No, "integrity" means the listing agent will uphold his pledge of confidentiality with the seller.

Must real estate properties for sale be listed only on TREC-approved real estate sites?

No, TREC only has authority over license holders.

If a property is being transferred through a will to a family member, is a disclosure necessary?

No, a property transferred via a will does not need a disclosure.

Do real estate educators need to have a broker-level real estate license to teach in Texas?

No, a real estate license is not required to be a real estate educator.

The Texas Real Estate Commission regulates licensed real estate brokers and sales agents in the state. May only licensees use form promulgated by the Commission?

No, anyone can use the forms.

Before new sales agents go to work, does the Commission have to verify that their sponsoring broker is acceptable?

No, as long as sponsoring brokers have active licenses, they are not rechecked.

If property owners attempt to evict families from rental units because of mischief, noise, or vandalism, are they likely to run afoul of fair housing laws?

No, because property owners are allowed to evict families on the basis of behavior of children

The Civil Rights Act of 1866 is largely credited as Congress's first real attempt to extend the right to own property to all citizens. Did it succeed?

No, because various courts and state legislatures ruled the Act only applied to discrimination by the government, not individuals against other individuals.

If a landlord receives a rental application online for an available apartment but determines in the course of an in-person interview that the applicant is a follower of Islam, may the landlord introduce extraordinary fees and deposits in an effort to persuade the applicant to go somewhere else?

No, charging additional fees and deposits to force an individual to go elsewhere is considered a violation of fair housing law.

Inside a brokerage office, if all the independent contractor sales agents are on the same commission split, is that price-fixing?

No, each real estate brokerage has its own policies regarding sales agent compensation and has the right to fix those amounts.

synonymous terms.

Nonhomogeneity and heterogeneity are

both parcels must at one time have been part of a single unit.

One condition for an easement by necessity is that

Facts

Objective value is based on

a broker's license to be revoked or suspended.

Obtaining a license through the use of fraud is just cause for

To receive a real estate license in Texas, potential sales agents must complete course work on contract law. Which of the following are included in the course?

Offer and acceptance of a contract, remedies for breach of contract, and the unauthorized practice of law

The spread is the difference between the interest rate given and the interest rate that would have been available for a lower risk loan.

On certain higher-risk loans, on which lenders typically charge a higher interest rate, lenders are also required to report the spread. What does the term "spread" refer to?

Yes, the judgment in no way restricts the Commission from taking additional disciplinary action.

Once a judgment is entered against a license holder to be paid by the trust fund, can the license holder be further disciplined by the Commission?

in the same unit in which cost is given - such as per square foot or per acre.

One of the basics of pricing land is to express the price

NAR

Only members that can be called REALTORS

Commercial/industrial sales

Open listings can be used for any property, but MOST often are found where?

the mean vegetation line.

Owners with littoral rights own the land to

shared

Ownership of a condominium, which shares party walls with other units, involves which kind of ownership of common facilities such as halls, elevators, and surrounding grounds, as undivided interests?

A homebuyer is told he will be required to have private mortgage insurance (PMI). What does the PMI cover?

PMI insures the lender against borrower default on the loan and loss due to foreclosure.

What two terms are essentially interchangeable in legal property descriptions. They are

POB and POC (point of beginning and point of commencement).

Must sales people working for time-share builders or developers have real estate licenses?

Paid employees of builders or developers do not need to be licensed.

all of these

Paid executives for real estate trade associations—such as the Texas Association of REALTORS®—are not permitted to serve on the Real Estate Commission. Who else is NOT allowed to be a commissioner?

fines up to $11,000 per call, or $16,000 if made from a robocall system.

Penalties for violating do-not-call regulations may be

The Women's Council of REALTORS offers training to receive which professional certification?

Performance Management Network

While it is obviously permissible to sell off pieces of a section in a land transaction, is it permissible to blend pieces of sections together?

Pieces of adjoining sections may be combined without restriction so long as the legal description is accurate.

The Straders plan to purchase a home within the next two months. To strengthen their position when their offers are presented to sellers, they get which of the following from a lender?

Preapproved, after the lender has verified income, debt, and savings and has run a thorough credit check

What has been the impact on housing to date of environmental concerns such as climate change and the potential for an increase in hurricanes and flooding from severe storms?

Prices of homes with water views have been largely resilient to environmental factors.

Tax liens have priority over all other liens against a property.

Priority of tax liens in the event of a borrower's default and foreclosure on a property is generally which of the following?

restrictions

Private agreements placed in the public record that affect the use of land are deed

To provide the family time to purchase a new property

Proceeds from the sale of the homestead are exempt from creditors for six months. Why?

What is one of the chief drawbacks of corporate ownership of income property?

Profits are subject to double taxation unless organized as an S corporation.

Limited partnerships are a popular method of pooling enough cash to make a substantial investment in real estate. But how are profits treated?

Profits from the venture are passed through to the partners as income, distributed proportionally according to the level of investment.

Under what circumstances does a legal land description not return to its point of beginning (POB)?

Property descriptions always return to their POB (closure)

The shares owned by tenants in a cooperative give them what kind of long-term lease to a unit in the building?

Proprietary

Prorations are various financial responsibilities that need to be dealt with in closing a transaction. Who takes care of the prorations?

Prorations are ongoing property expenses that are divided between the buyer and the seller.

Fannie Mae

Quasi-government agency that buys pools of mortgages from lenders in exchange for mortgage-backed securities

Doug Jones is a real estate sales agent. He has been licensed for three years and has focused his work entirely in residential sales and leasing. Doug would probably be MOST competent to do which of the following?

REO sales

How an ordinary reader would interpret the ad

Rather than outlaw specific words and phrases from the advertising of real estate, the federal court has established what test to determine whether an advertisement is discriminatory?

Which of the following is NOT an institute or society under the umbrella of the National Association of REALTORS®?

Real Estate Law School

A deed is issued to transfer title to which kind of property?

Real Property.

What is the primary difference between a price placed on a property by a real estate sales person and a value placed by a professional appraiser?

Real estate agent pricing is informal, while professional appraisers offer a formal or accurate number.

legal and tax advice should be sought from professionals to determine the best form of business ownership for a particular situation.

Real estate brokers working with budding entrepreneurs to set up Texas property companies are reminded that

License holders or Agents

Real estate license holders who are not members of the National Association of REALTORS® may call themselves

economic plus mental anguish damages

Recovery under the DTPA for an act committed knowingly is limited to

May a real estate broker or sales agent receive a referral fee from a cable service provider?

Referral fees may be accepted if they are disclosed to the client ahead of time.

Legislative

Regulations passed by governmental agencies are a means of implementing and enforcing which kind of act?

The effect of law

Regulations passed by governmental agencies have which of the following characteristics?

waste

Removing minerals without the remainderman's permission and failure of the life tenant to make repairs are examples of

Community Reinvestment Act

Requires lender to meet the deposit and credit needs of their low-and moderate- income housing communities

In a deed, which indicates subsurface interests being retained by the seller?

Reservations in a deed indicate subsurface interests being retained by the seller. Exceptions in a deed reflect interests retained by a previous property owner.

What was the original importance of the school section (Section 16) on a township map?

Revenue from rent or sale of that section was, by law, directed to support local schools.

Riparian rights

Rights granted to owners of land located along the course of a river or stream and patented into private ownership before July 1, 1895, are which of the following?

a member of the building association board of directors to make sure rules are clear about assessments and expectations of fellow condo owners.

Sales agents assisting condo buyers may want to introduce their buyer to

May sales agents who work for competing companies, but in the same tier of property values, share information with each other about properties that are either new on the market or about to be brought to market?

Sales agents may form loose networks with each other as long as price-fixing does not take place, fair housing laws are not violated, and sales agents from outside the confederation also are allowed to present buyers.

Is it permissible for a sales agent to suggest that a real estate attorney is NOT needed in a transaction?

Sales agents must not discourage the use of an attorney.

Schools

Section 16 is reserved for?

Which sellers must provide a seller's disclosure notice to a buyer on or before the effective date of a contract?

Seller of residential property of not more than one unit

1978

Sellers and landlords must disclose to buyers and tenants any knowledge of lead-based paint in properties built before

What is a common tool used to determine whether a landlord is violating provisions of the Fair Housing Act?

Sending paired testers to apartments to attempt to rent apartments

Under community property law in Texas, property purchased with separate funds after marriage is considered what kind of property?

Separate

Property owners always should inform themselves when confronted with an eminent domain proceeding.

Should homeowners consult with a real estate professional before entering into negotiations regarding an eminent domain proceeding?

TIF district

Tax incremental financing district

Priority of tax liens in the event of a borrower's default and foreclosure on a property is generally which of the following

Tax liens have priority over all other liens against a property.

did discriminate, intentionally or unintentionally.

Someone bringing a fair housing discrimination complaint must prove that the defendant

When a government or public entity exercises the right of eminent domain through a condemnation suit, who determines the amount of compensation the landowner will receive?

Special commissioners appointed to hear evidence from all parties

Additional Education

Specialization in these types of brokerages may require _________________ and experience to maintain competency in that area.

the Texas Real Estate Broker-Lawyer Committee.

Standard contract forms used by real estate license holders in Texas are drafted and revised by

If market analysis suggests there is need for a new condo development, but two developments are constructed across the street from each other, will supply and demand determine which is successful?

Success is likely to be based on something other than "supply and demand," such as pricing.

not required

Suicide on the property requires disclosure by a seller under which scenario?

Same

Supply and Demand move in the __________ direction

Opposite

Supply and Price move in ___________ direction

Six year

TREC Commission are appointed by the governor in what staggered terms?

Are sales agents obligated to list conveying personal property on a TREC-promulgated form?

TREC offers an approved form that may be voluntarily used to identify personal property.

Must telemarketers identify themselves via caller IDs?

Telemarketers are required to transmit their phone number to caller IDs, and their names if possible.

A first-time homebuyer may make a penalty-free withdrawal from an IRA of up to

The answer is $10,000. The maximum penalty-free withdrawal from an IRA for a first-time homebuyer is $10,000.

Escrow officers are licensed by which of the following agencies?

Texas Department of Insurance

Auctioneers are licensed by which of the following entities?

Texas Department of Licensing and Regulation

Home inspectors are licensed by which of the following agencies?

Texas Real Estate Commission

Texas Legislature

Texas Real Estate License Act are passed by

A complaint of discrimination brought under the Texas Fair Housing Act can be filed with the U.S. Department of Housing and Urban Development or with the

Texas Workforce Commission Civil Rights Division (TWCCRD).

Automobile

Texas homeowners insurance policies combine five different types of coverage. Which is NOT included?

to instruct another broker to negotiate an offer with the sellers on his behalf.

The Andersons have contracted with a minimum-services real estate broker to assist them in marketing their home. By law their broker has all of these duties EXCEPT

by the property owner.

The Commission may NOT prohibit a license holder from using for the sale, exchange, option, or lease of an interest in real property a contract form that is prepared by an attorney and required by the property owner or prepared

$100,000

The Commission will pay no more than what amount from the real estate recovery trust account for claims against any one license holder until the fund has been repaid in full by the license holder?

residential

The DTPA does NOT apply to transactions that exceed $100,000 where there is a written contract and the consumer is represented by legal counsel, EXCEPT for which type of property?

Which court decision essentially undermined the Civil Rights Act of 1866?

The answer is Plessy v. Ferguson. The court decision created the doctrine of "separate but equal," essentially legalizing segregation in everything from schools to housing.

the Federal Emergency Management Agency (FEMA)

The National Flood Insurance Program is a program within

A general and temporary condition during which the normally dry land surface is partially or completely inundated by water

The National Flood Insurance Program's (NFIP) definition of flooding includes which of the following?

What exam must be passed to achieve the level of state real estate appraiser?

The National Uniform State Appraiser Exam.

The National Association of REALTORS®

The Resort and Second Home Property Specialist designation is conferred on real estate professionals by what organization?

When sales agents work as independent contractors, what is the commission split required by TREC regulations?

The Texas Real Estate Commission does not regulate commissions

information about brokerage services

The agent must provide the notice explaining brokerage services in Texas.

Fair-housing-protected classes are established by

The answer is federal, state, and local laws. The federal Fair Housing Act as amended has seven protected classes: race, color, religion, national origin, sex, handicap (disability), and familial status. State and/or local laws may contain additional protected classes.

Variations in flood insurance rates are based on

The answer is where the improved property is located in the floodplain. Rates now reflect true flood risk in specific areas.

If a landowner grants a dog breeder a piece of property, but only on the condition that the breeder raise only farm dogs—but who is then found be raising toy poodles—can the grantor take back the property?

The answer is yes, but the grantor would have to go to court to retrieve the title. The grantor also could petition the court to recover rents, profits, and damages for the period the condition was violated.

When an appraiser reconciles the values received from the three approaches of value, which of the following occurs?

The appraiser places more weight on the estimate of value from the sales comparison approach when valuing existing single-family properties.

northbound or southbound.

The bearing of MOST property boundary lines in Texas is

Agent

The broker acts as a ___________ of the seller/buyer in negotiating the sale, purchase, or rental of the broker.

duties of obedience

The broker is obligated to act in good faith at all times, obeying the principal's instructions.The broker, however, is not required to obey unlawful or unethical instructions because illegal acts do not serve the principal's best interest.

duties of accounting

The broker must be able to report the status of all funds received from or on behalf of the principal. The Texas license law requires that brokers give accurate copies of all documents to all parties affected.

competent parties

The buyer and the seller must be of legal age and free from a mental handicap that would make them incompetent

Who is entitled to a copy of the inspection report?

The buyer is the only one entitled to the inspection report.

Must a buyer use a licensed home inspector to review the house (can he use a relative or friend)?

The buyer must use a Texas-licensed inspector.

be faithful and observant to trust placed in the agent and be scrupulous and meticulous in performing the agent's function.

The canon of fidelity requires that a real estate broker or sales agent, while acting as an agent for another,

If a listing agent advertises a property as "valued at more $25,000 above similar homes on the same block," does that claim have to be backed up?

The claim does not have to be proven, but the agent should be prepared to offer some measurement on which the claim is based.

Seven

The committee consists of ____________ members who have been actively practicing real estate for at least five years before appointment.

5

The contract for a valid lien for labor or material on a homestead improvement must NOT be signed until how many days after the loan application?

What happens to delinquent properties if there are no bidders at the auction?

The correct answer is the property is "struck off" or sold to the taxing authority seeking delinquent taxes and may be used for whatever purpose it sees fit. The taxing authority may ultimately offer it for sale on the open market.

What would the proper name be for a vast piece of acreage whose only "improvements" were a large billboard stating it was available for sale and zoned for commercial development and a large number of surveyor flags?

The correct answer is the property would be called land. Despite the zoning, temporary promotional signage, and temporary surveying flags, the acreage would not be considered "improved" until something was actually built on it.

What must happen for a nondefaulting party in a contract to receive earnest money being held in escrow?

The defaulting party must sign a release form and provide it to the title company.

estate in land

The degree, quantity, nature, and extent of interest that a person has in real property

Population

The demand for real estate is affected by which of the following?

the license holder must use the promulgated forms, whereas the license holder may use the approved forms

The difference between forms "promulgated" and forms "approved" by the commission is that

city ordinance.

The distance a home must be set back from a city street is regulated by

Errors and omissions

To protect themselves from financial loss due to liability for mistakes and negligence, many brokers and agents purchase which kind of insurance?

What happens if more than $3.5 million is in the trust fund at the end of the year?

The excess money is transferred to the general fund of the state.

a notice of obligations related to public improvement district (PID).

The governing body of a municipality or county has undertaken an improvement project, such as landscaping, erecting fountains, or installing special lighting, that benefits a definable part of the community. In turn, the owners of those properties pay an annual assessment to cover the costs and maintenance. If a property being sold is subject to such an assessment, the purchaser must be given

Sensitive

The housing industry is __________ to changes in interest rates.

inflation

The increase of money in circulation coupled with a rise in prices, resulting in a decline in the value of money

plottage value

The increased utility and value resulting from the combining or consolidating of adjacent lots into one larger lot

Once a home inspector has identified areas of concern in a home, should the inspector be part of the negotiating teams to reduce the cost of the property?

The inspector's report typically will enter into home price discussions, but the inspector does not participate in negotiations.

The license holder has a substantive dialogue with a buyer.

The license holder is required to furnish a written statement providing general information concerning agency positions under which of the following cases?

the license holder has a substantive dialogue with a buyer

The license holder is required to furnish a written statement providing general information concerning agency positions under which of the following cases?

May a seller refuse to a pay a commission if a buyer refuses to pay full price for a property?

The listing agreement properly signed by the seller and the broker is a legal document that sets compensation.

the limited liability offered by a corporate form of ownership.

The members of an LLC have

36%

The payment on all debts (the total-debt or back-end ratio) should not exceed

back - end ratio

The percentage used in the formula for calculating a buyer's payment on all debts, including the house payment, installment loans, and credit card debt, is called

is computed using calendar days, not business days.

The period of time prescribed or allowed for negotiating a contract or for meeting a contract obligation

Underground storage tanks are dangerous for which of the following reasons?

The possibility of exposure to leaking gasoline

eminent domain

The power of a government or a public entity such as a utility or railroad company to take private property for a public use

boycotting the competition.

The practice of unfairly excluding brokers from real estate professional associations or withholding patronage from other businesses is known as

If a large factory that employs a large number of local residents closes, what will the impact on housing likely be?

The price of housing would tend to be depressed.

rights

The primary purpose of the U.S. Constitution and the individual state constitutions is to delineate the limits of governmental authority and establish citizens'

Rights of Citizens

The primary purpose of the US Constitution and the individual state constitutions is to establish ________ and limit government authority.

What are the two parts to the mortgage called?

The promissory note and the deed of trust

What happens to delinquent properties if there are no bidders at the auction?

The property is "struck off" or sold to the taxing authority seeking delinquent taxes and may be used for whatever purpose it sees fit.

to prevent a company or companies from joining together block competitors from entering the market while simultaneously agreeing how much to charge consumers.

The purpose of antitrust laws is

A utility district

The purpose of which of the following is to provide water, sewer, drainage, and flood-control-protection facilities for properties located outside the boundaries of a town or city?

listing agreement

The real estate broker-seller relationship generally is created by an employment contract

partition

The right of partition is a legal way to dissolve a co-ownership when the parties do not voluntarily agree to its termination

Prior Appropriation

The right to use any water, with the exception of limited domestic use, is controlled by the state rather than by the landowner adjacent to the water.

Before beginning to specialize in a specific discipline of real estate, from whom must the sales agent receive permission?

The sales agent's supervising broker

the owner discriminated on the basis of religion.

The seller of one single-family home would NOT be in violation of the Fair Housing Act even if

Proprietary

The shares owned by tenants in a cooperative give them what kind of long-term lease to a unit in the building?

On certain higher-risk loans, on which lenders typically charge a higher interest rate, lenders are also required to report the spread. What does the term "spread" refer to?

The spread is the difference between the interest rate given and the interest rate that would have been available for a lower risk loan.

all signatures

The statute of frauds requires which element?

What is considered extraterritorial jurisdiction (EJT)?

The subdivision of land located within one-half to five miles of an incorporated village, town, or city

That sort of mining substantially destroys the surface

The subsurface right to extract minerals does not include the right to strip-mine coal, limestone, or iron ore because

number of people living in an area.

The term demographics does NOT include

assignment

The transfer of rights and/or duties under a contract is called

failure to disclosure issues, keep place clean, and showing rejections

There are an assortment of reasons why sellers might "fire" their listing agent. What are legitimate reasons for listing agents to "fire" their client?

transactions in which a relocation company requires a different form to be used

There are four exceptions to the requirement for a license holder to use a contract that has been promulgated for a particular contract situation. Which is NOT an exception?

What is the effect on housing when a city is named the site of a major event—such as a political convention or sporting events—that will employ a large number of local people?

There will be little to no impact.

In terms of fair housing enforcement in Texas, what do Dallas, Fort Worth, Garland, Corpus Christi, Austin, and San Antonio have in common?

They all have fair housing municipal laws that are substantially the equivalent of the federal fair housing law.

Texas Deceptive Trade Practices-Consumer Protection Act

This act declares, among other things, that "false, misleading or deceptive acts or practices" in the advertising, offering for sale, selling, or leasing of any real or personal property are unlawful.

power-of-sale clause

This provision allows the trustee to conduct a foreclosure sale without going through court proceedings.

What should sales agents understand about the resort industry?

Thorough knowledge of time-share sales rules and consumer protection

The buyer may terminate the contract during the option period for any reason.

Through its termination option paragraph, the Texas-promulgated residential sales contract allows the buyer to do what?

In order to earn a commission under the terms of the License Act, a licensed broker must meet several stipulations and advise the buyer to obtain what type of insurance?

Title

To be able to cite past instances in which the broker did not discriminate

To avoid being found guilty of discrimination violations, which would NOT be an effective practice for brokers?

at least 2 to 5 years

To be eligible for an exclusion of capital gains income, a homeowner must have owned the residence and occupied it as a primary residence for how long before the sale or exchange?

If, in the course of purchasing a farm, the buyer mentions that he intends to grow marijuana, may a real estate agent go forward with the contract?

To be valid, a contract must not contemplate a purpose that is illegal or against public policy.

legality of object

To be valid, a contract must not contemplate a purpose that is illegal or against public policy.

ensure that the transaction closes

To earn a commission, a broker must do all of the following EXCEPT

What is an EEM used for?

To finance the purchase of a new energy-efficient home

Why are appraisal management companies (AMCs) needed?

To make sure appraisers are independent of lenders, thus reducing fraud.

Offer and acceptance of a contract, remedies for breach of contract, and the unauthorized practice of law

To receive a real estate license in Texas, potential sales agents must complete course work on contract law. Which of the following are included in the course?

Which of the following is an example of bulk zoning?

To require that a new building in an area not be taller than 10 stories

prior appropriation.

To secure water rights, a person must show a beneficial use for the water, such as crop irrigation, under the doctrine of

What are the main reasons for refinancing a mortgage?

To take advantage of lower interest rates or change from an adjustable-rate to a fixed-rate loan

The 14th Amendment, providing civil rights protections, is an example of which of the seven sources of law?

U.S. Constitution

certain judgments.

Under Texas homestead exemption laws, a property occupied as the family home is exempt from forced sale for nonpayment of

Any buyers who inquire about the property

Under Texas law, a sales agent who has secured a listing (for the broker) must make that relationship clear to the seller and who else?

four

Under Texas law, any action for the specific performance of a written contract for the conveyance of real property must be commenced within how many years from the date of the breach?

yes, Texas law gives aircraft operators the right to fly over private property.

Under Texas law, does a person have a right to fly a drone over another individual's property without permission?

Citizenship is not listed as a required element for a valid contract

Under Texas law, may a property be sold to someone who is not a U.S. citizen?

if the call is personally dialed and is not, in itself, an attempt to sell a property over the phone.

Under Texas law, real estate agents are permitted to call individuals on the do-not-call list if they have had a previous business relationship with the person, have received permission to call the person, or

Which of the following laws in Texas govern condominiums?

Uniform Condominium Act

Which of the following is the MOST common appraisal report used today?

Uniform Residential Appraisal Report (URAR)

What do the initials USPAP stand for?

Uniform Standards of Professional Appraisal Practices

Which of the following is a man-made material that becomes dangerous because of the gases released from the material after it hardens?

Urea formaldehyde foam insulation

28%

Using conservative lending practices, a loan officer would MOST likely use a front-end ratio of

duress

Using force to obtain an agreement is

Which of the following is the BEST example of a green building program?

Using native plants in landscaping that don't need extra watering for landscaping

The Texas Real Estate Teachers Association

What organization has the education of new and existing real estate license holders as its primary objective?

The right of exclusion.

What "right" might be quoted to remove "squatters" (people who are not authorized to occupy a property) from a piece of land or a home?

paired testers are actors, for instance a white couple and a black couple, who are given similar (but fake) identities and financial data, who attempt to rent units from the same landlord

What are "paired testers"?

You accept all the risk of the enterprise and responsibility for all the debt.

What are some of the drawbacks of being a sole proprietor of a real estate brokerage?

The general partner runs the business, but the limited partners cannot participate in management.

What are some of the qualities of a limited partnership that will invest in real estate?

Debt to income ratio

What do the initials DTI mean?

The property is "struck off" or sold to the taxing authority seeking delinquent taxes and may be used for whatever purpose it sees fit.

What happens to delinquent properties if there are no bidders at the auction?

Sending paired testers to apartments to attempt to rent apartments

What is a common tool used to determine whether a landlord is violating provisions of the Fair Housing Act?

Natural monuments such as trees and rock piles may change or be destroyed over time.

What is a critical problem in using "natural" monuments in metes-and-bounds property descriptions?

Humans may move the monuments by mistake or fraud.

What is a critical problem in using made-made monuments in metes-and-bounds property descriptions?

none

What land features tend to warp property descriptions in surveys?

A poster stating the fair housing promise not to discriminate and showing the fair housing logo

What poster must every real estate office have that is required by HUD?

Widowed or divorced women may have no credit ratings in their own name.

What specific issues might women confront when seeking a mortgage?

more or less

What surprisingly casual (but fully acceptable) term might a real estate agent see when reading what should be exact measurements in a legal description?

The assassination of Martin Luther King Jr.

What tragic event helped spur passage of the Fair Housing Act of 1968?

Executory contract

When a real estate contract is negotiated and signed by both parties

surviving joint tenants

When a tenant in a joint tenancy dies, that person's share of the ownership goes to

surviving joint tenants.

When a tenant in a joint tenancy dies, that person's share of the ownership goes to

no specific definition

When advertising that a roof is "new," how "new" does it have to be?

No, once TREC has all the documentation from the case and reviews it, the Commission can still decide to relitigate the case.

When an aggrieved consumer and a license holder come to an agreement on how much the consumer is owed from the trust fund, is that the amount that must be paid?

easement by necessity

When an owner sells part of the land that has no access to a street or public way except over the seller's remaining land,

Rise

When demand increases, price _________

terrific large family home

When describing homes, it is improper to use language that would segment society and suggest some people are not wanted. Which of the following should not be used in advertising?

On the first substantive dialogue with the seller

When must the broker or the sales agent give the seller the Information About Brokerage Services form that explains agency positions?

surety bail bond lien.

When real estate is used as security for a defendant to obtain temporary release from jail, it is called a

TREC does not regulate commissions.

When sales agents work as independent contractors, what is the commission split required by TREC regulations?

remain stable

When supply decreases and demand decreases, real estate prices

decrease.

When supply increases, real estate prices usually

Because of fair housing laws

When taking listing information, why must sales agents be careful what they write about such facilities as churches and schools?

easement by prescription

When the claimant has made use of another's land for a certain period as defined by state law, which limits the landowner's use of the property.

No, the vast majority of sellers to do not exceed the exclusion amount.

When the vast majority of homeowners sell their homes, do they end up paying large amounts of tax on their capital gains?

Integrity

Which aspect of the Canons of Professional Ethics and Conduct requires the broker or sales agent to employ prudence and caution in the discharge of duties so as to avoid misrepresentation?

Working for a builder to sell properties the builder constructed

Which career choice is available, with compensation, before he obtains a real estate sales agent license?

owners association

Which controls and maintains the common elements of a condominium and enforces the condominium bylaws?

The tax rate is computed for all taxing units by adding together all monies needed by all taxing district entities and dividing that total by the total appraisal of all real and personal property in the appraisal district.

Which is NOT a step in the adoption of a tax rate?

Failing to advise a buyer or a seller regarding the validity of title to real estate

Which is NOT a violation for which the Texas Real Estate Commission (TREC) may suspend or revoke a license or take other disciplinary action?

Land

Which is NOT insured by property insurance?

An assessment roll is issued to spread the cost of the improvement equally among all the parcels that will benefit from it.

Which is NOT one of the steps to achieve specific improvements that will result in a special assessment?

A restriction that is a personal privilege to enter the land of another for a specific purpose

Which is NOT representative of a restriction as an encumbrance against land?

A copy of the bylaws of the business entity must be on file at TREC.

Which is NOT required by the Texas Real Estate Commission (TREC) for a real estate brokerage organized as a business entity?

The seller pays real estate taxes and insurance premiums.

Which is NOT typical of a contract for deed?

Common Law

Which is a body of law developed by the courts based on custom and usage?

earnest money

Which is a means by which the buyer in a real estate contract carries out the terms of the agreement?

Lis pendens

Which is a notice in the public records of a pending lawsuit involving real estate?

consideration

Which is an act or a promise that is offered by one party to induce another to enter into a contract?

judgement debtor (license holder) filed bankruptcy before the hearing

Which is an aggrieved person NOT required to show at a Texas Real Estate Commission (TREC) hearing on an application for payment from the real estate recovery trust account?

Equal Credit Opportunity Act (ECOA)

Which is designed to make credit available to every financially qualified applicant?

Area preference

Which is the MOST important economic characteristic of real estate?

disposition

Which is the right to sell or give property to someone else?

Enjoyment

Which is the right to use the property in any legal manner?

If the designated broker owns less than 10% of the entity, the entity must have $1 million of E&O coverage.

Which of the following is TRUE regarding errors and omissions insurance requirements for real estate brokerage firms in Texas?

CAN-SPAM act

Which of the following prohibits email-based marketing of a real estate listing if the subject line of the advertisement contains false, misleading, or deceptive information?

Recession

Which of the following stages of the business cycle is characterized by a general economic decline?

water rights, attached to land

Which of the following statements is TRUE regarding littoral rights?

A limited service broker may not ask another broker to deliver an offer to the seller.

Which of the following statements regarding the responsibilities of a limited service broker after a contract is received on a listed property is FALSE?

An onsite manager of an apartment complex

Which person is NOT required to hold a real estate broker's license?

Buyer/seller who has been adjudicated to be incompetent

Which person would NOT be considered a competent party for the purpose of creating a valid, enforceable contract?

No children under six years of age

Which phrase, when used in advertising, would be considered unacceptable?

Civil Rights Act of 1866

Which prohibits, without exception, all discrimination based on race in any real estate transaction?

escheat

Which provides for ownership of real estate to revert to the state when an owner dies and leaves no heirs and no will?

The Commission may recommend that a real estate license holder serve up to three years in jail.

Which remedy is NOT available to the Texas Real Estate Commission (TREC) upon finding that a Texas license holder has violated the Canons of Professional Ethics and Conduct?

Community Reinvestment Act (CRA)

Which requires that lenders serve their local communities first—to meet the deposit and credit needs of their low-income and moderate-income housing communities?

none

Which site on the internet is guaranteed to have a list of all the homes for sale, their current prices, and the latest information about interest rates?

The owner of a 20-unit apartment building refuses to rent apartments to women.

Which situation is considered discriminatory under the federal Fair Housing Act?

Complying with the law ensures that a real estate agent performs ethically.

Which statement about professional ethics is NOT accurate?

If a broker permits a sponsored sales agent to conduct activities beyond the authorized scope, the broker is not responsible for those unauthorized activities.

Which statement does NOT accurately reflect the broker-sales agent relationship?

A family can have several homestead properties at one time.

Which statement does NOT apply to homestead property in Texas?

The Texas Real Estate Commission and the county clerk in every county where the brokerage does business

With what official government bodies must a real estate brokerage file paperwork regarding the brokerage's use of an assumed name?

30

Within how many days of the execution of a contract for deed must the seller record the contract and statutorily required disclosure statements with the county clerk?

No, it is legal to discriminate on the basis of political beliefs.

Would it be discriminatory for a Republican homeowner to refuse show his home to a member of the Democratic Party?

No, it is not discriminatory

Would it be discriminatory for a buyer agent to decline to accompany a client to an open house for a home in a neighborhood the agent knows the buyer cannot afford?

Yes, because it could be viewed as expressing a preference for families over seniors and single individuals

Would placing a for-rent advertisement that states "kids OK" represent a violation of the Fair Housing Act?

If the owner of a lot in a new subdivision announces he is going to build a modern architecture home on the property while all the other homes in the division are Spanish style, can he be stopped?

Yes he can be stopped if the subdivision has a deed restriction requiring all homes to be of Spanish architecture.

Can a buyer broker accept both a portion of a commission split from the listing broker and a fee from the buyer client?

Yes, if the buyer agent agreement calls for a fee to be paid, and the listing agreement also calls for a commission split, the buyer broker may collect from both sides of the transaction.

Mortgage rates respond to a variety of influences. Is one of them supply and demand?

Yes, if the financial system has an excess of money and few buyers, rates may drop.

A brass plate embedded on the siding of an historical building near the Texas coast contains the words "elevation 30 feet above mean sea level." The brass plate is which?

a bench mark

Uniform Commercial Code

a body of law that attempts to codify and make uniform throughout the country all laws relating to commercial transactions.

mortgagor

a borrower who conveys his or her property as security for a loan

If a real estate brokerage is organized as a business entity, it must be licensed as

a broker

Obtaining a license through the use of fraud is just cause for

a broker's license to be revoked or suspended.

Before construction of a new building or the alteration of an existing structure, code enforcement officials issue

a building permit

A real estate investor may expect which of the following concerning her investment?

a rate of return higher than the prevailing interest rate

License holder compliance with the TREC's Canons of Professional Ethics and Conduct is

a regulation of the state and licensees can be held liable for violations.

A subdivision declaration reads, "No property within this subdivision may be further subdivided for sale or otherwise, and no property may be used for other than single-family housing." This is an example of

a restrictive covenant

contract for deed

a sales/financing agreement under which the buyer purchases the seller's real estate on time

Which of the following is a means of diversification into a real estate security while continuing to hold a real estate investment?

a seller takes back a mortgage on a house he sells to a buyer

A homeowner may apply for a federal residential renewal energy tax credit to get a credit toward installation of which of the following systems?

a solar water heater

A lien placed on a property by a contractor is

a specific statutory lien.

A bank agrees to make a home loan but insists on a written agreement between the bank and other prior lienholders to grant first-lien position to the bank, lowering the priority of other liens. What does the bank require?

a subordination agreement

Ad Valorem Tax

a tax levied on the assessed value of real and personal property

Special Assessment

a tax levied on the improvement tax

If a tenant in a joint tenancy sells or conveys her interest in the property, the new owner becomes

a tenant in common

To be entitled to a commission, a broker must advise a prospective buyer in writing that the buyer should have the abstract to the property examined by an attorney or obtain

a title insurance policy

In the metes-and-bounds description reading "beginning at an iron rod set for the corner; thence 90° 0' 0" E 180.0'; thence 0° 0' 0" S 160.0'; thence back to the POB," the parcel identified is

a triangle

option

a unilateral contract by which an optionor (generally an owner) gives an optionee (a prospective purchaser or lessee) the right to buy or lease the owner's property at a fixed price within a stated period of time.

competitive market analysis

a variation of the sales comparison approach that is prepared by real estate agents to assist sellers and buyers with the determination of listing prices and offering prices

A sales agent who specializes in condo sales needs to be an expert in

a variety of real estate disciplines because condos can be residential properties, office properties, and even warehouse properties.

breach

a violation of any of the terms or conditions of a contract without legal excuse

If the broker has done nothing to market the property, the seller may be able to terminate the listing due to

abandonment by the broker

Items for which the buyer is credited at the time of closing are known as

accrued items

Objective Value

actual value measured in dollars of an aspect of construction or location

objective value

actual value measured in dollars of an aspect of construction or location

Housing and Community Development Act

added se as another basis on which discrimination is prohibited

The value of a feature that is present in the subject, but NOT in the comparable property, is

added to the sales price of the comparable property.

Which is calculated by adding the initial cost of an investment property, plus the cost of subsequent improvements, minus the amount of any depreciation claimed as a tax deduction

adjusted basis

Seven sources of law

affects the ownership and transfer of real estate

seven sources of law

affects the ownership and transfer of real estate 1. U.S. Constitution

Integrity

agent must be honest and morally sound

Competency

agent must be knowledgeable about the national, state, and local issues and conditions

Fidelity

agents primary duty is to represent the interests of the client

Which of the following may be leased?

air rights

What kind of clause in a deed-of-trust document prevents the loan from being assumed by another borrower without the lender's consent?

alienation

When time is computed in a real estate contract, days counted are

all days including weekends and holidays

residential

all housing, including small city lots, single family and multi family in all areas

general partnership

all members share equally in the managerial decisions, profits, and losses involved with the investment

general partnership

all partners participate to some extent in the operation and management of the business and may be held jointly and severally (together and separately; personally) liable for all business losses and obligations

personal property (personalty)

all property that does not fit the definition of real estate. has the unique characteristic or being moveable

Residential

all property used for housing, from small city lots to acreage, both single-family and multifamily, in urban, suburban, and rural areas

residential property includes

all property used for housing, from small city lots to acreage, both single-family and multifamily, in urban, suburban, and rural areas.

Texas Fair Housing Act

allow any aggrieved party to file a complaint against discriminatory practices and to pursue enforcement through administrative proceedings, attorney general litigation, or private litigation

residential sales contract

allows a buyer to purchase the property "as is" with no stipulations for repairs or treatments, in most cases, it is not a wise decision to do so because most buyers are not experts in home construction

statue of limitations

allows a specific time limit during which parties to a contract may bring legal suit to enforce their rights

biweekly payment plan

alls for 26 half-month payments a year (reducing the principal balance approximately twice each month and resulting in one full month's additional payment each year).

Recorded Subdivision Plat

also known as lot and block, used in most urban property in TX

recorded subdivision plat

also known as lot-and block

Demand

amount of goods consumers are willing and able to buy at a given price during a given time

demand

amount of goods consumers are willing and able to buy at a given price during a given time period

price

amount of money paid for a property

Real estate generally includes all of the following EXCEPT

annual crops

The value of a commercial property increases because it is believed a major highway interchange might be built close to it. This is an example of the principle of

anticipation

depreciation

any condition that adversely diminishes the value of an improvement to real property; it can be curable or incurable.

Mixed Use

any lawful combination of the other five basic categories of real property permitted by local zoning

mixed use

any lawful combination of the other five basic categories of real property permitted by local zoning

open listing

any number of brokers; seller must pay commission only if one of the brokers is the procuring cause of the sale

If a legal partnership, framed as "tenants in common" but holding land in the name of the partnership, decides to sell the property, how many partners must sign the agreement?

any one partner's signature

A residential rental locator typically is paid by which of the following?

apartment owner

A parcel of property that increases in value because of its location in the center of an affluent and rapidly growing neighborhood is an example of

appreciation through intrinsic value

equitable lien

arises out of common law

Equitable Lien

arises out of common law; court ordered judgement

State laws passed requiring registration of securities to protect the public from investing schemes are commonly called

blue-sky laws

common law

body of law based on custom, usage and court decision

Common Law

body of law based on custom, usage, and court decisions

bilateral contract

both parties promise to do something; one promise is given in exchange for another.

Who is required to sign a listing agreement or sales contract for the proposed sale of homestead community property in Texas?

both spouses

Survey

boundaries are measured and land areas are determined

survey

boundaries are measured and land areas are determined

The practice of unfairly excluding brokers from real estate professional associations or withholding patronage from other businesses is known as

boycotting the competition

net listing

broker's commission is the difference between the sales proceeds and the identified amount desired by the seller

The ownership rights of real property are described as the

bundle of legal rights

brokerage

business of bringing buyers and sellers together in the marketplace

Land on which three contiguous residential properties were razed and replaced by a legally rezoned parking lot would carry what classification?

commercial

Open listings can be used for any property, but MOST often are found where?

commercial/industrial properties

An agent received a cash deposit for a client's property. The agent placed the deposit in his personal checking account and then wrote a check to his trust account. For this action, the agent was found guilty of

commingling

A married couple could hold title by which of the following means?

community property

The Texas Real Estate Commission warns that there is no promulgated contract-for-deed form, therefore

competent legal counsel should be obtained by both seller and buyer.

To protect themselves from financial loss due to liability for mistakes and negligence, many brokers and agents purchase which kind of insurance?

errors and omissions

Which provides for ownership of real estate to revert to the state when an owner dies and leaves no heirs and no will?

escheat

Brokers are required to maintain, and to place all money received from clients in, which of the following?

escrow or trust account

Freehold Estate

estates of indeterminable length, such as those existing for a lifetime or forever

freehold estate

estates of indeterminable length, such as those existing for a lifetime or forever. Fee simple and defeasible fee estates continue for an indefinite period and are inheritable by the heirs of the owner.

Step 1 in estimating property value using the income approach is to

estimate annual potential gross income

boycotting competitors

esults when brokers are unfairly excluded from real estate professional associations or when two or more businesses conspire against other businesses or agree to withhold their patronage to reduce competition

unenforceable contract

has all the elements of a valid contract; however, neither party can sue the other to force performance

term loan

hat calls for periodic payments of interest, with the principal to be paid in full at the end of the loan term. Term loans are generally used for home improvement loans, second mortgages, and investor loans rather than for residential first-mortgage loans.

If a real estate broker operates a business as a sole proprietorship,

he must inform TREC within 30 days if he adopts an assumed name and the Assumed Name Certificate must be filed with the county clerk.

joint tenancy

he ownership of real estate by two or more people, typically with the right of survivorship

Which economic principle states that there is one legal function that provides a property its greatest value?

highest and best use

Fee Simple

highest type of interest in real estate - complete ownership, no time limit to existence

Tier

horizontal town of township - runs east-west

property owner

if tenant does not get the trade fixtures at the time the lease expires, who gets the fixtures?

Encroachment

illegally extends beyond the land of its owner and covers land of neighbor

Which of the following is NOT an economic characteristic of real estate?

immobility

physical characteristics

immobility

A real estate broker is a person who

in exchange for a commission, or other valuable consideration or with the expectation of receiving a commission or other valuable consideration, performs for another person one of the acts requiring a real estate license.

fraud

intentional misstatement of a material fact made for the purpose of harming or taking advantage of another person

Life Estate

interest in real estate that that is limited. in duration to the lifetime of its owner or some other designated person

To be exempt from federal income tax, real estate investment trusts (REITS) must be structured to

invest at least 75% of its assets in real estate, other REITs, securities, or cash.

One of the disadvantages of investing in real estate is

investors need expert help

secondary mortgage market

investors who buy and sell loans after funding

allocation of customers or markets

involves an agreement between brokers to divide their markets and refrain from competing against one another

To find the area, which of the following would you divide into identifiable parts, calculate the areas of those parts, and add them?

irregular figure

One

is a public member

Subjective Value

is affected by the perception of the individual

Because each city or town is permitted to establish datums, the elevation point

is decided by the U.S. Geological Survey and is the accurate local measurement of height above sea level in New York Harbor.

If the Texas Real Estate Commission (TREC) determines that the facts revealed in the investigation of a complaint against a license holder do not warrant disciplinary action but, if not corrected, could lead to further complaints and ultimately to potential disciplinary action, what may TREC do?

issue an advisory letter

Because real estate is immobile,

its value is heavily influenced by changes in the surrounding area.

Yuri has purchased an investment property through the use of borrowed funds. In doing so, he is taking advantage of

leverage

Real estate license holders who are not members of the National Association of REALTORS® may call themselves

license holders or agents

Sales Agent

licensed holder employed by or associated with a broker who conducts brokerage activities on behalf of the broker

What are the two theories of mortgage law?

lien theory and title theory

Which is a notice in the public records of a pending lawsuit involving real estate?

lis pendens

real estate markets are

local

An owner sells part of his land that has no access to a public road except over his remaining land. This creates an easement by

necessity

If a property has a yearly income of $100,000 and ownership expenses of $110,000, the property provides the investor $10,000 in

negative cash flow

A sales agent specializes in short sales. Of which of the following should the sales agent have a good grasp?

negotiation with lenders

The bearing of MOST property boundary lines in Texas is

northbound or southbound

A person acting as a real estate broker, real estate sales agent, or a right-of-way agent without a license or registration is guilty of a Class A misdemeanor that is punishable by a fine of

not more than $4,000

An attorney who is NOT licensed by the Texas Real Estate Commission (TREC) but performs brokerage services in a transaction may

not receive part of a broker's commission on the sale of a property

How much can real estate professionals do to ease the anxiety of potential buyers who are fearful that someone with AIDS either occupied or died in a listing?

nothing

The term demographics does NOT include

number of people living in an area

A homeowner is building a new enclosed front porch on his home. A truck load of timber that the homeowner purchased has been left in the driveway for use in building the porch. At this point, the lumber is considered

personal property

In a tenant-occupied and -furnished property being used as a produce shop, a free-standing refrigerator would be considered

personal property

A five-year-old building with defective air-conditioning equipment is an example of what type of depreciation?

physical deterioration

special purpose

places of worship, schools, cemeteries, and government - held lands

Special Purpose

places of worship, schools, cemeteries, and government -held lands

hypothecation

pledge of specific real or personal property as security without surrendering possession of it

The land on either side of a principal meridian is divided into six-mile-wide strips by lines that run north and south, parallel to the meridian. These north-south strips of land are called

ranges

Attaching a manufactured home to land is one of the requirements for treating the home as which kind of property?

real

Which term refers NOT only to the surface of the earth but also to the center of the earth below, to infinity above, to natural things permanently attached, and to man-made things permanently attached?

real estate

A license holder who has several years of experience in the industry decided to retire from actively marketing properties. Now, she helps clients choose among the various alternatives involved in purchasing, using, or investing in property. What is her profession?

real estate counselor

Which of the following matters should the agent have knowledge of in order to be competent in commercial sales?

real estate investment principles

Different

real estate markets are usually___________ in different sections of the same city.

Members of the National Association of Real Estate Brokers refer to themselves as

realists

An unlicensed assistant may not

solicit prospects or listings for a licensed agent

In real estate sales contracts, which term is used to clarify any business aspects of the sale NOT covered by any provisions of the printed earnest money contract form?

special provisions

Aesthetic zoning

specifies architecture types for new buildings

earnest money

specifies the amount of earnest money and identifies the escrow agent

default

specifies the remedies available to each party in the event the other party breaches the contractual agreements

casualty loss

specifies the seller's responsibility for a casualty loss before closing and the buyer's options

Air and solar rights are regulated by

state and local laws and ordinances

Rules passed by the Texas Real Estate Commission are which of the seven sources of law?

state regulations

Escheat

state takes property upon an owners death if there is no will & no heirs exist.

substitution

states that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property.

escrow agreement

states the obligations of each party to a transaction and the duties of the escrow agent, who is a disinterested third party and will not benefit from the contract.

A federal tax lien is

statutory involuntary lien

Forms that are promulgated by the Texas Real Estate Commission are drafted by

the Texas Real Estate Broker-Lawyer Committee

The Texas Real Estate License Act is administered by

the Texas Real Estate Commission

If a question arises over the behavior of a licensed real estate sales agent or broker, a consumer usually will first file a complaint with

the Texas Real Estate Commission in Austin.

metes and bounds

the actual distance between monuments takes precedence over linear measurements set forth in a description.-points of beginning and monuments

fiduciary relationship

the agent is placed in a position of trust and confidence and normally is responsible for the money and/or property of another

discriminatory practices

the agent may not discriminate based on legally protected classes

integrity

the agent must be honest and morally sound

competency

the agent must be knowledgeable about national, state, and local issues and conditions

The difference between forms "promulgated" and forms "approved" by the commission is that

the license holder must use the promulgated forms, whereas the license holder may use the approved forms

The members of an LLC have

the limited liability offered by a corporate form of ownership.

When a property is listed for sale, an agency relationship is created between

the listing agent's broker and the seller

zoning and building ordinances are established by

the local government

Owners with littoral rights own the land to

the mean vegetation line

deed of trust

the mortgage document generally used in Texas to secure payment of the debt

Acceptance of a written offer to purchase real estate requires the signature of

the offeree

The seller of one single-family home would NOT be in violation of the Fair Housing Act even if

the owner discriminated on the basis of religion

express agency

the parties state the contract's terms and express their intentions

express contract

the parties state the terms and show their intentions in words

economic life

the period over which a building can be profitably utilized.

police power

the power vested in a state to establish legislation to preserve order; to protect the public health, safety, and morals; and to promote the general welfare

novation

the substitution of a new contract for an existing agreement with the intent of extinguishing the old contract, is another way to perform a contract.

Trade fixtures are usually installed by

the tenant of the property

In a limited partnership,

the title may be held either in the names of the individual partners as tenants in common or in the name of the partnership as owners in severalty.

In a land trust, title to property is held by

the trustee

misrepresentation

the unintentional misstatement of a fact

Mechanics' and materialmen's liens take priority from the date

the work was begun or first materials delivered.

One condition for an easement by necessity is that

there must be at least two parcels of land separated by another parcel.

Many business entrepreneurs see real estate as a profession with good opportunities and one where they can directly enjoy —or lament—their personal work. Many of those people enter the business as "sole proprietors" because

they have full control over their method of business and are directly responsible for income and expenses.

Creating a joint tenancy requires four unities:

time, title, interest, and possession.

resort

time-share ownership is usually used for what kind of properties?

the right of disposition

to be able to sell or otherwise convey the property

the right of exclusion

to keep others from entering or occupying the property. might be quoted to remove squatters

If the Commission revokes a license after making a payment from the real estate recovery trust account to satisfy all or part of a judgment against a license holder, the license holder is NOT eligible to receive a new license

until the amount paid from the real estate recovery trust account on the license holder's account has been fully repaid, with interest, by the license holder.

multiple listing contracts

used by those brokers who are members of a multiple listing organization. Such an organization consists of a group of brokers within an area who agree to pool their listings

Rectangular Survey System

used in most of the Country

sale-and-leaseback

used to finance large commercial or industrial properties

income

uses gross rent multiplier in valuing single-family residences and based on present value of rights to future income

Lot and Block

uses numbers referred to in a plat map

lot-and-block

uses numbers referred to in a plat map

leveraging

using borrowed money to finance the bulk of an investment

general liens

usually affect all of a debtor's property, both real and personal, and include judgments, estate and inheritance taxes, debts of a deceased person, IRS taxes, and federal judgment liens.

specific liens

usually are secured by a particular parcel of real estate and affect only that property

If a sales agent is working with sellers and makes a mistake in a transaction, in theory the party responsible for the mistake is

usually the sales agent's sponsoring broker

The purpose of which of the following is to provide water, sewer, drainage, and flood-control-protection facilities for properties located outside the boundaries of a town or city?

utility district

Range

vertical row of township - runs north-south

If you enter into a contract to purchase a home from a 16-year-old boy who inherited the property and the boy signs the sales contract, the contract is

voidable

None

which organization(s) are license holders required to join?

the Sunset Act

which recommends retaining or abolishing the state entity under review

Public Land Survey

which states use metes and bounds and which states use the rectangular survey method for describing property

Brokers and sales agents who submit required criminal background information and fingerprints to TREC when seeking their original license

will need to submit similar information each time their license is up for renewal.

A broker may act as an intermediary

with the written consent of each party to the transaction.

Subordination Agreement

written agreement between lienholders to change the priority of mortgage, judgment or other liens..

subordination agreements

written agreements between lienholders to change the priority of mortgage, judgment, and other liens

If a landowner grants a dog breeder a piece of property, but only on the condition that the breeder raise only farm dogs—but who is then found be raising toy poodles—can the grantor take back the property?

yes, but the grantor would have to go to court to retrieve the title.

May sales agents working as independent contractors play golf every day and report to the office only periodically?

yes, independent contractors set their own hours

Is it possible for a delinquent taxpayer to recover any funds once a property is sold at auction?

yes, money raised at auction pays off delinquent taxes and fees, but any excess may be returned to the delinquent owner.

A builder does substantial work on a client's lake house, but the client refuses to pay and subsequently sells the lake house. Can the builder still retrieve his money?

yes, the lien is on the property, not the property owner