Real Estate Promulgated Forms

A buyer and seller enter into a written contract for the sale of a four-bedroom home. If either party defaults under the contract, the other party has how much time to file a lawsuit for a specific performance? a. Four years b. Three years c. One year d. Unlimited

a.

Paragraph 7H of the contract indicates that who should review and decide on the company to use as the residential service company? a .The seller b. The buyer's agent c. The buyer d. The seller's agent

c. Paragraph 7H describes the buyer's right to choose a residential service contract and to negotiate for the seller to reimburse the buyer for the cost.

In the rental of housing, the Fair Housing Act prohibits discrimination on the basis of a. age b. sexual orientation c. familial status d. marital status

c. Protected classes under the Fair Housing Act include race, color, national origin, religion, sex, familial status, and disability.

When addendum is commonly used in a transaction involving an 80% fixed-rate loan? a. Addendum for Property Subject to Mandatory Membership in an Owners' Association. b. Environmental Assessment, Threatened or Endangered Species, and Wetlands Addendum. c. Third Party Financing Addendum. d. Addendum for Coastal Area Property.

c. The Third Party Addendum is used when a transaction involves a mortgage loan.

Issues addressed in the Farm and Ranch Contract do NOT include which of the following? a. Crops b. Equipment c. Mineral rights d. Surface leases

c. The Farm and Ranch Contract used to address the reservation of mineral rights by the seller, though TREC now has an addendum that must be attached to the sale contract for the seller to reserve some or all of the mineral rights.

How many contract forms are currently promulgated by TREC? a. 6 b. 7 c. 9 d. 10

a. The contract forms promulgated by TREC are the Unimproved Property Contract, One to Four Family residential Contractors, New Home Contract (Incomplete Construction), New Home Contract (Complete Construction), Farm and Ranch Contract, and Residential Condominium Contract

According to the standard wording in the Property Condition paragraph (paragraph 7E) of the TREC One to Four Family Residential Contract (Resale), who is required to pay for the lender-required repairs? a. No one b. Seller c. Buyer d. Lender

a. The paragraph states that neither the buyer nor the seller is obligated to pay for lender repairs unless otherwise greed in writing.

Which law requires a contract for real property to be in writing and signed to be enforceable? a. Texas Real Estate License Act b. Texas Statute of Frauds c. Texas Contract Law Act d. Texas Statute of Contracts

b. The Texas Statute of Frauds requires that, to be enforceable, all agreements affecting title to or interest in real estate in Teas to be in writing and signed by the parties. An oral agreement of sale is void and therefore unenforceable in Texas.

Which of the following is FALSE about paragraph 11, Special Provisions? a. A buyer and her attorney can include a legal right in paragraph 11. b. Licensees must not enter legal rights in paragraph 11. c. Anything that is addressed in one of the TREC addenda can adequately and legally be set down in this paragraph, if so desired by a licensee. d. Licensees must not enter "time is of the essence" in paragraph 11.

c. Licensees must use forms available from TREC, as opposed to writing something into special provision for which there is a TREC form available.

Which paragraph allows the buyer to terminate if the seller's disclosure is never received? a. Paragraph 6 b. Paragraph 7 c. Paragraph 11 d. Paragraph 15

b. The buyer has a right to terminate the contract within seven days of receiving the notice or up to the closing date, whichever is earlier, should the seller not deliver the seller's disclosure of property condition after the parties are in a contractual agreement.

A buyer enters into a contract that has an option period of seven days after the effective date of the contract. The effective date of the contract is July 2. The seller accepts a second contract with the Addendum for Back-Up attached with an effective date of July 6. The first buyer terminates on the last day of the option period and the seller immediately notifies the second buyer. What is the "amended effective date" of the contract with the Addendum for Back-Up attached to it? a. July 9 b. July 6 c. July 13 d. July 20

a.

According to paragraph 18 of the One to Four Family Residential Contract, at closing, earnest money is first applied to a. cash down payment b. buyer's expenses c. seller's expenses d. commission to agents

a.

The TREC Addendum for Property Subject to Mandatory Membership in a Property Owners Association provides for which of the following to act on behalf of the parties to obtain the subdivision information? a. Title company b. Buyer's agent c. Seller's agent d. Lender

a.

The TREC Mineral Rights Addendum provides that which of the following is considered as being a part of the mineral estate? a. Oil b. Gravel c. Water d. Sand

a.

When using a power of attorney to transfer title to real property, a. the document must include the legal description of the subject of the authority. b. an attorney-at-law must be present at the closing. c. a court of competent jurisdiction must affirm the document. d. neither the buyer nor the seller may be present at closing.

a. A power of attorney granting authority to transfer title to real property must recite the legal description of the subject of the authority.

Which of the following is an example of a bilateral contract? a. A purchase contract b. An option to lease c. A nonexclusive listing contract d. A nonexclusive buyer contract

a. A purchase contract is bilateral, in which a promise is exchanged for a promise.

Which of the following can the licensee never disclose? a. Death due to AIDS b. Representation c. Death due to suicide d. Haunted property

a. Illness or death due to AIDS or HIV is a protected class. It is mandatory for licensees to disclose representation of one or both of the parties. There is no duty to disclose a death due to suicide. However, such a disclosure is not prohibited. A material fact can be real or imagined, so if the seller believes their home is haunted, the licensee should disclose this belief.

Which form does NOT address rollback taxes? a. One To Four Family Residential Contract (Resale) b. Farm and Ranch Contract c. New Home Contract (Completed Construction) d. Unimproved Property Contract

a. It is rare to have to deal with rollback taxes in the sale of a one- to four-family residential home. The remaining forms address rollback taxes in paragraph 13.

Which of the following is NOT an exception to the rules requiring that promulgated forms be used by the licensee? a. When the contract form has been prepared by the buyer and the buyer wants the agent to fill in the blanks. b. When the contract form has been prepared by the seller's attorney and is required by the seller. c. When an agency of the United States government requires a different form. d. When the licensee is functioning solely as a principal.

a. Licensees should only fill in the blanks of TREC-promulgated forms.

If the seller allows the buyer to move in prior to the closing of the sale, the seller is a. a landlord b. a tenant c. a wise seller b. an owner in waiting

a. Once the seller allows someone to move into the property, the seller becomes a landlord and is subject to rules and laws relating to landlord-tenant issues. Using a TREC temporary lease reduces some of those requirements. For example, the seller would not have to replace locks or install smoke alarms.

Can a party accept earnest money as liquidated damages and also sue the other party for specific performance? a. No b. Yes c. Usually d. Only if the parties agreed to it in paragraph 15

a. The contract allows only for the earnest money to serve as the liquidated damages.

When may a potential purchaser's offer to buy real estate be withdrawn? a. Anytime prior to seller acceptance and buyer notification of acceptance. b. Only after the seller has turned it down. c. At any time, if no earnest money was tendered. d. Anytime prior to opening title.

a. Until acceptance, there is no agreement.

When is the seller required to deliver a title commitment to the buyer? a. 20 days after the title company receives the contract. b. 20 days after the executed date of the contract. c. 20 days prior to closing. d. 15 days after the executed date of the contract.

a. Within 20 days after the title company receives a copy of the contract, the seller must furnish to the buyer a commitment for title insurance (commitment) and, at the buyer's expense, legible copies of restrictive covenants and documents evidencing exceptions in the commitment (exception documents) other than the standard printed exceptions.

All of the following is a specifically listed right, privileges and appurtenances in the TREC Unimproved Property Contract EXCEPT a. water rights b. harvest rights c. claims d. strips and gores

b.

In the TREC new home contracts the R-Value addresses what issue? a. hot water heater b. insulation c. appraisal d. air conditioner

b.

The TREC Buyer's Temporary Residential Lease would be used when the a. seller wants to stay in the home after closing for no more than 90 days. b. buyer wants to move in before closing for no more than 90 days. c. buyer wants to move in before closing for at least 90 days. d. seller wants to stay in the home after closing for at least 90 days.

b.

The primary intention of HUD regarding occupancy standards is to make sure the occupancy standards do not eliminate the protection of a. older persons b. families with children c. single parent families d. multi-family households

b.

Which form must be displayed in the residential broker's office? a. Franchise Disclosure b. TREC Consumer Information Notice c. FHA Mortgage Information Form d. Soldiers and Sailors Act Notice

b.

How many resale certificates are currently promulgated by TREC? a. One b. Two c. Three d. Six

b. 1. Condominium Resale Certificate 2. Subdivision Information, Including Resale Certificate for Property Subject to Mandatory Membership in an Owner's Association.

A seller's instruction not to present back-up offers a. is contract to licensing laws. b. must be given to the licensee in writing. c. must be given when the listing is signed. d. may only be given after an offer has been accepted.

b. Failure to present an offer is a breach of a licensee's fiduciary duties, as well as the possible basis for a tortious interference lawsuit. Unless instructed otherwise by the owner, all offers must be presented. A seller's instruction not to present back-up offers must be given to the licensee in writing.

According to the provisions of the sales contract, who will purchase a residential service contract, if so desired? a. Lender b. Buyer c. Seller d. Listing agent

b. If the buyer does so, paragraph 7H provides for the seller to reimburse the buyer at closing for the cost up to an agreed-upon amount.

Which of the following is NOT addressed by a TREC-promulgated form? a. Assumption of an FHA-insured loan. b. A purchase using a contract for deed. c. A purchase using seller financing. d. The purchase of a fee-simple town house.

b. TREC does not promulgate a contract for deed.

The notice about obtaining an abstract or title policy is a required notice from a. seller to buyer. b. licensee to buyer. c. buyer to seller. d. licensee to seller.

b. TREC requires licensees to advise buyers to have an abstract of title covering the property examined by an attorney of the buyer's selection, or the buyer should be furnished with or obtain a title policy.

According to the contract, the seller will provide a copy of the restrictive covenants at whose expense? a. The seller's b. The buyer's c. The title company's d. The lender's

b. The agreement calls for the seller to furnish the buyer a commitment for title insurance, and at the buyer's expense, legible copies of deed restrictions (restrictive covenants) and documentation of any exceptions in the commitment within 20 days after the title company receives a copy of the contract.

How many back-up contracts can be created using the TREC-promulgated addendum for that purpose? a. Equipment b. As many as the seller wants c. One d. No more than two

c.

In Texas, the statute of limitations for a non-defaulting party to an oral contract to enforce their rights in the event of default is a. four years b. three years c. two years d. six year

c.

The paragraph that is different in each of the six TREC contracts is a. paragraph 1 b. paragraph 23 c. paragraph 2 d. paragraph 8

c.

When a legally enforceable promise is exchanged for a legally enforceable promise, a. an offer is made. b. an executed note is made. c. a contract is created. d. an acceptance and counteroffer is made.

c. A contract is created when a legally enforceable promise is exchanged for a legally enforceable promise or when a promise is exchanged for money, such as in an option contract.

Which of the following is NOT an essential element of a contract for the purchase of a one- to four family residential resale property? a. Competent parties b. Consideration c. Earnest money d. Offer and acceptance

c. A valid contract does not require earnest money.

Which of the following is addressed as part of the real estate in paragraph 2 of the One to Four Family Residential Contract (Resale)? a. Countertop microwave oven b. Portable dishwasher c. Draperies d. All area rugs

c. Accessories, lists various items, including drapes.

Which of the following offers must be communicated to the seller by the listing agent? a. All offers, regardless of the seller's instructions to the contract. b. Only offers within 10% of the asking price. c. Offers made to the principal before the principal has accepted an offer. d. Offers made after a binding contract has been executed between a seller and a buyer.

c. Although the general rule is that all offers must be communicated to the seller by the listing agent, there are a few exceptions. These include instances in which the seller has specifically instructed the listing broker in writing not to bring the seller any offers below a certain price, or situations in which a binding contract has been executed between a seller and a buyer. TREC rules provide that "the license holder shall have no duty to submit offers to the principal after the principal has accepted an offer."

If one of the parties defaults and the non-defaulting party accepts the earnest money as damages, that party can a. also sue for specific damages. b. also sue for other damages. c. do nothing more; the contract is terminated. d. both sue for specific damages and sue for other damages.

c. By accepting the earnest money as liquidated damages, the contract is terminated and both parties are released from the contract.

Financing approval occurs when a. both the borrower and the property meet the lender's underwriting guidelines. b. the property is acceptable to and approved by the lender. c. the lender determines that the buyer's assets, income, and credit are satisfactory. d. the property meets the lender's underwriting guidelines.

c. Financing approval and loan approval are two different things. Financing approval comes when the borrower is acceptable to and approved by the lender --- when the buyer's assets, income, and credit history are adequate to meet the lender's underwriting requirements. Loan approval comes when both the borrower and the property being offered as collateral meet the lender's underwriting guidelines.

Where would the seller reserve the mineral rights? a. Paragraph 11 of the One to Four Family Residential Contract (Resale) b. On the Amendment to Contract form c. Addendum for Reservation of Oil, Gas and Other Minerals d. Seller's Disclosure of Property Condition

c. If this addendum is not used, the sale will transfer any rights and interest the seller had prior to the sale's funding.

Which financing option listed in paragraph 3 requires the use of a promulgated addendum? a .Third-party conventional b. Assumption c. All of these d. Seller finance

c. It is the seller's right to be given information regarding the type of loan the buyer is acquiring. The details of any financing need to be explained on the appropriate addendum.

A real estate licensee has a business relationship with a home warranty company where the licensee receives a referral fee. Which form is required? a. Loan Assumption Addendum b. Non-Realty Items Addendum c. Disclosure of Relationship with Residential Service Company d. Information About Brokerage Services

c. The compensation is the fee for the services that the listing broker or other broker, either directly or through an agent, provides to the company. As required by the Real Estate Settlement Procedures Act and HUD Regulation X, any fees paid to a settlement services provider are limited to the reasonable value of services actually rendered.

Who may give opinions concerning the status or validity of title to real estate? a. The licensee b. The broker c. An attorney d. TREC

c. The licensee may not give opinions concerning the status or validity of title to real estate; and the licensee may not attempt to prevent more, in any manner whatsoever, discourage any principal to a real estate transaction from employing a lawyer. However, nothing limits the licensee's fiduciary obligation to disclose to principals all pertinent facts that are within the knowledge of the licensee, including facts that might affect the status of title to real estate.

Paragraphs found in every purchase agreement include all of the following EXCEPT a. property b. price c. parcel d. parties

c. Usually the following are found in every real estate purchase agreement: - Identification of the parties - Identification of the property - Establishment of the price

A short sale must be approved by a. escrow officer. b. HUD c. title company d. seller's lender

d.

All of the following are listed as a farm and ranch improvement in Paragraph 2 the TREC Farm and Ranch Contract EXCEPT a. barns b. pens c. fences d. irrigation equipment

d.

All of the following promulgated forms provide that "time is of the essence" EXCEPT a. Addendum for Sale of Other Property by Buyer. b. Addendum for Back-Up Contract. c. Third Party Financing Addendum. d. Loan Assumption Addendum.

d.

Which of the following is TRUE about TREC addenda? a. Every TREC contract must have at least one TREC addendum. b. All TREC addenda are promulgated. c. Any addenda used as part of an agreement need to be listed in paragraph 23 of the contract. d. Any addenda used as part of an agreement must be listed in paragraph 22 of the contract.

d. Addenda are only used if necessary to the agreement, and not all TREC addenda are promulgated; some are approved by TREC for voluntary use.

Agents must make clear where notices are to be delivered. This is done in One to Four Family Residential Contract (Resale) paragraph a. 1 b. 11 c. 23 d. 21

d. An agent's failure to define in paragraph 21 where notices are to be delivered can cause confusion on the part of the buyer and the seller.

Which financing addendum will the purchaser use when purchasing a property for cash? a. Financing addendum exception. b. Assumption addendum. c. Special provisions addendum. d. None of these.

d. If a buyer will pay cash in the purchase of a property and no loan is involved, the purchases will not need to use any of the financing addenda. The purchaser should complete paragraphs 3 and 12 of the purchase agreement.

In the Third Party Financing Addendum, what should be the cap on interest rates? a. 6.5% b. 11% c. 12% d. A rate the buyer will pay that is available in the market

d. It doesn't make sense to capture the interest rate at 6% when nothing is available at less than 6.5% and at a rate the buyer is not willing to accept.

According to the preprinted language, what type of deed is to be used at closing to convey the title to the real property that is being sold using a TREC-promulgated contract form? a. Quitclaim b. Bargain and sale c. Special warranty d. General warranty

d. Paragraph 9B(1) provides for the seller to provide a general warranty deed.

The promulgated form for the purchase of One to Four Family Residential Contract (Resale) was authored by the a. Texas Real Estate Commission b. Texas TREC-Lawyer Committee c. Texas Broker-TREC Committee d. Texas Broker-Lawyer Committee

d. The One to Four Family Residential Contract (Resale) was authored by the Texas Broker-Lawyer Committee and promulgated by TREC.

A seller furnishes the existing survey to the buyer, but it is not acceptable to the buyer's lender. The cost of a new survey will be at whose expense? a. The buyer's b. The lender's c. The seller's d. A party negotiated in the contract

d. The cost of a new survey is negotiated and stated in paragraph 6C(1) of the contract.

The premium for title insurance policies a. varies widely in different counties. b. is always paid by the buyer. c. can vary by as much as 2% within the same county. d. is the same throughout the state.

d. The title policy premium cost is the same at all title companies in the state to insure the title of the property with the same sales price.

Which of the following is the BEST way to extend the closing date on a contract? a. Change the date on the original contract and have the buyer, the seller, and both agents initial it. b. Change the date on the original contract and have the buyer and the seller initial and date the change. c. Cross out the old date, enter the new date, and send a written notification of the change to the title company. d. Use the TREC Amendment to Contract and have the buyers and the sellers sign it.

d. This is one of the uses of paragraph 3 of the amendment.