Real Estate State Prep 1
If the Recovery Trust Account balance is not below _______ TREC simply continues to invest the funds
$1 million
If at any time in the calendar year the account balance is below ____________, the commission is authorized to assess each real estate broker and sales agent on renewal of his license during the following calendar year a fee of $10.00, or a pro rata shar of the amount necessary to bring the balance to $1,700,000. If the balance in the account exceeds _______ the excess goes into the state's General Fund.
$1 million , $3.5 million
If TREC does not have proof of CE at the time the license holder renews, the fee for renewal will include a ____ penalty. The renewal will be active for ____ days. After ____ days, if CE is not submitted to TREC, the license will automatically become inactive.
$200 , 60 days , 60 days
A license holder may give a referral gift up to ______ in value (not cash) to an unlicensed individual who provides a referral. Gift cards that cannot be converted to cash are acceptable.
$50
If a broker has more than one place of business, he must obtain a branch office license for each additional office at a cost of ______ per office. It is NOT necessary to have a licensed broker at each location.
$50
To active an inactive license, apply through a broker, pay ______ and complete _____ hours of CE if necessary
$50 , 18
People who must have a real estate license:
-Attorneys must have a license to participate in a commission split -auctioneers involved in any part of a real estate transaction -apartment locators -real estate sales agents -business entities that receive compensation on behalf of a license holder -the designated officer of a licensed real estate corporation. -a third party who controls the acceptance of collection of rent from a single family residence -any business entity that engages in real estate brokerage and is required to be registered to do business in Texas with the secretary of State
An unlicensed assistant may:
-Sit in an open house, welcome visitors, register guests, hand out fliers and refer inquiries to a license holder. -Set appointments to show a listing -Place for sale signs on a property, accompany an inspector, place advertisements as directed by the license holder -train and motivate license holders -manage an office -assist a buyer in arranging financing -perform all clerical activities for the broker, such as typing contracts, preparing reports and CMAs, filing, copying and organizing information.
What is a point?
1% of a loan amount
A broker must deliver mail and other correspondence from TREC to sponsored sales agents within ______ calendar days after the receipt of the mail or correspondence.
10
If you hire a mold remediator, he must give you a Certificate of Mold Remediation no later than ________ days after work is complete. The certificate verifies that the mold has been removed and certifies with a reasonable certainty that the underlying cause of the mold has been corrected.
10
An urban homestead has a maximum size of ______ acres. A rural homestead has a maximum size of ______ acres. On a property greater than ______ acres, the owners have the right to designate which land will be considered the homestead. One homestead per person or family.
10 , 200 , 200
If an application for licensure is disapproved by TREC, the applicant may make an appeal within_____ ______ after the receipt of the notice of denial. If no appeal is made within the time fram, the applicant gives up the right to do so, and the ruling of the Commission stands.
10 days
The designated officer of a licensed real estate corporation, or the designated manager of a licensed Real Estate limited liability Company must have a real estate license. The designated one is a broker. If a designated agent has a less than ____ interest in a real estate business entity, he must provide proof that the entity has E&O insurance with a minimum annual limit of ______ per occurrence. If the designated agent owns ______ or more of the business, then the required amount of E&O insurance is ______.
10% , $1 million , 10% , $0
When was TREC created?
1949
When a homestead is foreclosed on for unpaid property taxes, the owner has ______ years to redeem the property.
2
If a license is revoked by TREC, the individual must wait at least ___________ before trying to obtain a new license.
2 years
The title company has ________ days to provide the title commitment after they receive the sales contract
20
A broker must respond to sponsored sales agents, clients and license holders representing other parties in real estate transactions within _____ calendar days.
3
A buyer has _____ days to deliver the option fee to the seller.
3
Persons guilty of a violation of the License Act and whoever profited there from are liable for additional civil penalties of up to ______ times the amount of money received.
3
How long must a seller or landlord keep a copy of the lead paint disclosure?
3 years
Tenants may sign an agreement waiving a right to interest on the security deposit. Landlords must account for security deposits within _______ days after tenants leave.
30
There is no time limit for TREC to deny an application. However once TREC decides to disapprove an application they must notify the applicant with _____ ______.
30 days
To apply for a broker's license, you must have ____ ____ of active sales license holder experience during the 5 years preceding the date of the application
4 years
On selling a home, the law requires you provide the buyer with copies of all Certificates of Mold Remediation you have received for the property within the past _____ years.
5
A license holder has __________ days to enter a new listing into the M.L.S. If a client does not want the listed property in the MLS, the license holder may not enter it.
5 days
If lender required repairs exceed _________ of the price the buyer can terminate the contract. ________ is the criteria. No other number is the criteria.
5%
When a homestead is foreclosed on for unpaid homeowner/property owner association fees, the owner has _____ months to redeem the property.
6
Landlords must provide new locks on rental property no later than ______ days after a new occupant takes possession of a leasehold premise. Smoke detectors must be operational at the time the tenant is granted possession. Keyless deadbolts are required but not double cylinder locks.
7
In senior housing communities, at least one person over the age of 55 must be living in what percent of the units?
80%
TREC consists of _____ commission members, ____ represent the general public and _____ are real estate brokers. All are appointed by the ________ and approved by the Senate. They serve for _____ year terms
9 , 3 , 6 , governor , 6
The Seller's Temporary Lease Addendum TREC 15-3, and the Buyer's Temporary Lease Adden- dum TREC 16-3, are for use when the lease period is for _________ days or less.
90
Which of the following is false regarding the Civil Rights Act of 1968:
A FSBO who owns no more than four homes can discriminate when selling a home
Which of the following contracts would be voidable?
A contract with a minor
Which claim for damages would most likely be covered by a homeowner warranty policy?
A furnace that breaks down a few weeks after the buyers move in.
What is the difference between a general partner and a limited partner?
A general partner has full liability and a limited partner has limited liability.
Which of the following conveys title to real property and insures good title?
A general warranty deed
Ownership by two or more with rights of survivorship
A joint tenancy
What type of verbal lease agreement would be enforceable?
A lease for one year or less
A leased property is not for sale at this time. The tenant has a four year lease on the space. The tenant also has the right to match or better any offer before the property will be sold to anyone else. What agreement between the landlord and tenant gave the tenant that right?
A lease with a Right of First Refusal
Which of the following loans would not have a three day right of rescission?
A loan to purchase a vacation property
A couple is moving to a new city and they would like time to learn the city before they purchase a home. What type of lease should their agent recommend?
A periodic tenancy
When participating in interstate land sales a broker must provide the buyer with:
A property report
Acting in the dual capacity of broker and undisclosed principal is ____________. A license holder must disclose if he is representing his spouse, parent, or child.
A reason for suspension or revocation of a license
Advertising without first identifying the person advertising as an agent or broker is ________
A reason for suspension or revocation of a license
Commingling money is ________. Earnest money must be placed in an escrow account, not in with broker personal or operating accounts. Conversion - spending commingled funds is also prohibited.
A reason for suspension or revocation of a license
Disbursing money deposited in a trust account before the transaction concerned has been consummated (at closing) or finally otherwise terminated is _________
A reason for suspension or revocation of a license
Enters a plea of guilty or nolo contendere to, or is convicted of a felony or a criminal offense involving fraud is _________
A reason for suspension or revocation of a license
Failing to specify a definite termination date in a Buyer's Representation Agreement or a Listing contract that is not subject to prior notice is ______
A reason for suspension or revocation of a license
Fails to honor within a reasonable time a check issued to the Commission after the Commission has sent, by certified mail, a request for payment to the license holder's last known business address is _________
A reason for suspension or revocation of a license
Fails to notify the Commission not later than the 30th day after the date of a final conviction or the entry of a plea of guilty of nolo contendere to a felony is _________. (NOTE: a second DWI conviction in TX is NOT a felony).
A reason for suspension or revocation of a license
Giving legal advice is ____________. Reminder: we can prepare a real estate contract addendum but we can never write a contract or draft a lease purchase agreement.
A reason for suspension or revocation of a license
Knowingly making a substantial misrepresentation is ________. Puffing is not misrepresentation.
A reason for suspension or revocation of a license
Not advising a purchaser in writing to get an attorney's opinion of title on the abstract or to obtain an Owner's Title Policy is _________
A reason for suspension or revocation of a license
Not furnishing copies of a document to one of the signatories, upon demand is ________
A reason for suspension or revocation of a license
Placing a sign offering to sell, rent, or lease real estate without first obtaining the written permission of the owner is _________
A reason for suspension or revocation of a license
Selling real estate by lottery is ______
A reason for suspension or revocation of a license
Steering of prospective buyers is ________. You are also subject to federal and state prosecution.
A reason for suspension or revocation of a license
Threatening to sue for a commission you have not earned is ________
A reason for suspension or revocation of a license
Guaranteein future profits is ________
A reason for suspension or revocation of license
Sales agents receiving commissions directly from selling, leasing, negotiating, appraising, or auctioning real estate is ________
A reason for suspension or revocation of license
The best description of a counteroffer is:
A rejection of an offer
A retired couple is on a fixed income. They own their own home. They are having a hard time making ends meet, yet they do not want to sell their home. What type of loan should they consider?
A reverse annuity mortgage
According to Regulation Z, which of the following is not a trigger term?
APR
A broker has a trust account set up to hold client funds. He has earnest money deposits from several clients in the account at the same time. This is:
Acceptable as long as he has written records
A broker has written permission to represent both the seller and the buyer as a dual agent. Under these circumstances, which of the duties of an agent would be the easiest for him to fulfill?
Accounting
All of the following are hazardous substances that a license holder should be aware of except:
Acrylic paint
Which of the following is an example of an involuntary, statutory, specific lien?
Ad valorem tax lien
A one on one relationship between a broker and a client is called:
Agency
An agent has acted without authority to do so. His principal has found out about the actions and accepted them. What kind of agency does this describe?
Agency by ratification
When an agent is also the seller or the buyer, this is called ____________________________________ and this dual role must always be disclosed.
Agency coupled with an interest
After several years of selling residential property a license holder wishes to begin working on industrial sales. He should:
Align himself with a broker or sales license holder who has experience in industrial
A commission mediator will have at least 40 hours of formal training in ADR (_________________________________) procedures.
Alternative Dispute Resolution
What type of business entity is owned by shareholders, but avoids "double taxation'?
An S corporation
A license holder has just taken a class on networking and marketing through social media. She is very excited about the possibilities and has established Facebook, Twitter, LinkedIn and Pinterest accounts. She is also writing a blog. She has decided to market a new listing on these sites. The property has been built to resemble an Antebellum mansion. How can she advertise the property?
Antebellum style mansion
E signatures or electronic signatures: _______________ for parties that have agreed to their use with the consent of the other parties.
Are valid
Property owners can _________________ their own properties without a license.
Assess and remediate
Substitution of a NEW PARTY in an existing contract is:
Assignment
A license holder may use an ___________ or __________ in business. TREC must be notified in writing, by the broker, of the broker's or the sponsored sales agent's use of an assumed name within 30 days of starting or stopping use of the name.
Assumed name or DBA
TREC has the power to subpoena books, records, and witnesses. If a license holder fails to respond to a subpoena, TREC can file suit with the _______ ________ to enforce the subpoena
Attorney General
The main goal of the ADA is the removal of barriers. All of the following are required under ADA except:
Automatic doors
The Seller's Disclosure of Property Condition must be given to a buyer _______________________ to make that offer binding on the buyer. If the buyer does not have the disclosure before signing, he has _______ days to terminate his offer, after receiving the disclosure.
Before he signs an offer , 7 days
A practice of trying to induce homeowners to sell by convincing them that a minority group is moving into the area causing property values to drop is:
Blockbusting
The law prohibits ___________________ - causing panic selling by homeowners, also known as ____________________
Blockbusting , panic peddling
A chemical manufacturing company purchases a plant. After closing they discover that the previous owners had spilled hazardous materials on the land. According to CERCLA, who is liable for the cost of the cleanup?
Both the new owners and the previous owners.
An individual may not hold a _______ and a ______ ______ license at the same time. Texas is a one person, one license state. However, any licensed broker may act as a sales agent and a broker at the same time.
Broker , Sales agent
The ____________________________ writes the promulgated contract forms. TREC promulgates them.
Broker Lawyer Committee
The ______ _______ _______ writes the promulgated contract forms. The committee has ____ members. ____ are brokers appointed by TREC. ____ are lawyers appointed by the President of the State Bar Association. ___ is a public member appointed by the governor
Broker Lawyer Committee , 13 , 6 , 6 , 1
When advertising listed property, the ____________
Broker or company name must be included in the ad
Land known to be hazardous is:
Brownfields
Which of the following properties would be the least desirable neighbor?
Brownfields
Receiving a _____________________________________ is an advantage for a homeowner because it prevents an insurer from making an underwriting decision on the property based on previous mold damage or claims.
Certificate of Mold Remediation
If property is located in a ___________________________ of a Utility Service Provider, a disclosure to buyers that there may be a charge for turning on or connecting water and sewer services is required by the Texas Water Code.
Certificated Service Area
People engaged in the real estate brokerage business without having secured a license from TREC are guilty of a __________________ and subject to a fine of not more the ____________ or imprisonment in the county jail for not more than ____ ____, or both. Trials for this would be held in the county court.
Class A Misdemeanor , $4,000 , 1 year
A seller of coastal property abutting tidally influenced water must provide the "Addendum for ___________________________________." This notice tells buyers that owners may gain or lose portions of the land due to the actions of water.
Coastal Area Property
Persuading someone to do something by using force or threats
Coercion
TREC has promulgated sales contract forms for most residential properties including Farm and Ranch. TREC has no forms for ________________ transactions. TREC has no forms for the sale of ________________________.
Commercial , Co-ops or mobile homes
A __________ can never be paid to any unlicensed person in Texas. A license holder may share or rebate a portion of the commission to a client within a transaction. For example: list at a lower than expected commission rate or contribute to a buyers' closing costs on the CD. A license holder may rebate a portion of the commission to a customer with the client's permission.
Commission
Nonresident brokers must work through resident brokers. A foreign broker, or a broker from another state may collect a __________ from a Texas broker, as long as that broker does not negotiate in Texas. A ____________ may be paid in the form of cash or a gift. (Example: $1,000 watch)
Commission
All property acquired after marriage, including property acquired with labor, is jointly owned by the husband and wife. Income on separate property is considered ________________ property. An increase in value of separate property is not community property. However, once community efforts, credit, or funds are used to increase the value or improve the property, community property rights accrue.
Community
___________________ - short term loan with funds advanced periodically during the stages of construction. This is a term loan - interest only. The interest rate on this loan is higher than the rate on a permanent loan.
Construction loan
Occurs when a landlord is aware of a property condition and allows deterioration to the point that the building is uninhabitable and the tenants are forced to leave.
Constructive eviction
When a landlord allows the property condition to deteriorate so much that the tenants are forced to leave it is called:
Constructive eviction
A clause in a contract requiring a condition to be met is a _____________________________. If a contingency cannot be met, the buyer is generally entitled to a refund of his earnest money.
Contingency clause
The rental income as stipulated by the parties in a contract.
Contract rent
Which of the following deaths on a property should never be disclosed?
Death due to HIV/Aids
A listing agent would probably not disclose:
Death on the property due to natural causes
The _____________________________ allows for the recovery of triple damages. An individual has 2 years from the discovery of the deception to file a complaint.
Deceptive Trade Practices Act (DTPA)
A property owner has installed a chain link fence on his property. He has received an official notice requiring the removal of this type of fence. This fence is most likely a violation of:
Deed restrictions or deed covenants
Non-performance of a duty under a contract is:
Default
Type of physical depreciation (wear and tear) that results from postponing maintenance on the property.
Deferred maintenance
If your license is revoked by TREC, you may appeal the decision to the _______ _______.
District court
___________________ is a loss of value due to outside factors. This is also called external obsolescence, and is incurable (zoning, air pollution, noise, traffic, jobs, etc.) It is also called environmental obsolescence.
Economic obsolescence
The rent the property could currently command on the open market.
Economic rent
Refers to the inherent right of the government to take private property for a public use.
Eminent domain
An ______________ or _____________ is a lease that can be terminated by either party at will without notice.
Estate at will or tenancy at will
An ________________ is a lease with a specific starting and ending date. This lease survives death and/or the sale of the property. No notice is required to terminate.
Estate for years
Ownership by one person is called an __________________________ or sole ownership. Corporations or Partnerships often hold title this way. If only one signature is required to sell a piece of property, then there is only one owner.
Estate in Severalty
When a lease agreement comes to the end of the lease period and terminates.
Expiration
If a broker or sales agent renews after the expiration date, a Late Renewal Penalty will apply. The license is considered __________ until the late renewal is processed by TREC. The maximum period of time for late renewal with monetary penalties is _____ months
Expired , 6
Senate Bill 489 requires a license holder representing a party to disclose this representation at ______________ with another party or license holder. Oral or written disclosure is allowed.
First contact
Senate Bill 489 requires a license holder to give Information About Brokerage Services (disclosure of agency) to a prospect at the ___________________________. This includes a FACE-TO-FACE meeting where substantive discussion of real estate takes place or any mailing with a substantial amount of information about a particular property. Exceptions include Open Houses, when meeting with a party represented by another license holder, or when the proposed transaction is for a residential lease for not more than one year, and no sale is being considered. The TREC IABS form is voluntary. If any other form is used it must contain the IABS information using the same wording as that on the TREC form, in at least 10-point type.
First substantive dialogue
Which of the following statements about flood insurance is FALSE?
Flood insurance is not necessary if a property owner has a comprehensive homeowner's policy.
Legal term used for eviction:
Forcible entry and detainer
An individual has _____ years from the effective date of a contract or the date of the incident to file a complaint with TREC regarding the license holder involved. After ______ years, TREC will no longer investigate a complaint. The complaint must be written and signed.
Four
Where does the secondary market get its funds?
From investors
A builder is using inferior siding and paint in an effort to construct affordable housing. This would be an example of:
Functional obsolescence
____________________ is brought about by factors in the property. It is often or mostly curable (inferior materials to cut costs, curb appeal, not enough baths/bedrooms, an unpopular floorplan, property that lacks updating for modern technology).
Functional obsolescence
The property management agreement creates what kind of agency?
General agency
_____________ gives the agent the power to bind his principal in a particular trade or business. Power to bind a principal is the power to sign a legally binding agreement in the name of your principal. The general agent's signature binds or commits the client to the agreement. Limited Power of Attorney
General agency
a lease with scheduled rent increases often based on expected business growth.
Graduated lease
A mortgage with low initial monthly payments that gradually increase overtime
Graduated payment mortgage
Land that has never previously been developed:
Greenfields
The landlord pays all the expenses of the property. The tenant pays only rent.
Gross lease
Type of commercial lease where the landlord pays for the buildings property taxes, insurance, and maintenance
Gross rent
the tenant is usually making a long-term commitment, up to 99 years. This lease is more often for industrial or commercial land use. The tenant will build on the leased property.
Ground lease
The __________________ addendum allows a buyer to obtain a resale certificate on the property.
HOA or POA
A broker has listed a seller's property. The seller travels extensively and would like the broker to have the authority to accept a full price offer if he receives one. The seller's lawyer prepares a limited power of attorney authorizing the broker to accept any offer for at least list price. Once the broker has the authority to accept a full price or better offer for the seller, what is his agency role with that seller?
He is a general agent
Which of the following is FALSE about a property manager?
He is a universal agent to the owner
A property owner receives a notice that his land is in an improvement district. What does this mean?
He will receive an additional tax bill.
Broker B has signed a Buyer Representation Agreement with his clients. As a buyer's agent he must not disclose:
His buyer's ability to make a higher offer
An appraiser is using the Market Data Approach to determine the value of a residential property. What is FALSE?
His comparables should not be more than one year old
A broker who has a web site must include _______________ on each page of the web site
His name or company name
A broker owes customers:
Honesty and fairness
Which of the following is the best example of puffing?
I think this is the best floor plan available from this builder
The fact that an individual must go to the land describes which of the physical characteristics of land?
Immobility
TREC allows ________ status. TREC will hold a broker or sales license for the licensed person.
Inactive
The ________ license holder does not need a sponsoring broker during the period
Inactive
In order to stay in _______ status, the license holder must still pay renewal fees and meet SAE requirements. Once past SAE requirements, _____ is NOT required.
Inactive , CE
An appraiser has been hired to value a commercial office building that is fully leased. What approach to appraisal will he use to determine his opinion of value?
Income approach
The _____________________ or capitalization method is used for income-producing properties.
Income approach
An option fee must be paid ______________________ of any other consideration. The option fee and the earnest money deposit cannot be combined in one check.
Independently
Which of the following would be considered an operating expense by a property manager preparing an operating budget for the owner?
Interior painting of apartments
A broker who agrees to represent both the buyer and the seller MUST do so as an ______________.
Intermediary
As an _______________ it would be appropriate for a broker to appoint associates to work with the parties to the transaction.
Intermediary
Senate Bill 489 allows a broker to act as an intermediary in a transaction where he represents both the seller and the buyer and has the written permission of both parties including how the broker will be paid. Only a broker can be an ______________. Statutory Intermediary takes precedence over common law _____________.
Intermediary , Dual agency
A broker who works alone or who only sponsors 1 license holder must be an _____________________
Intermediary without appointments
Intestate Succession - This refers to how property passes when a person dies without a will (____________) or with a will that makes only a partial distribution of his/her property.
Intestate
Investment property owners can defer taxation with a trade of real property. Regarding tax deferred exchanges, what is FALSE?
Investors must hold the property for 5 years before exchanging it
Ownership by two or more with rights of survivor-ship is called ________________. Upon your death, your share goes to surviving co-owners, immediately. This is sometimes called a "poor man's will" as it eliminates the need for a will. Joint tenancy overrides a will. This is not an estate of inheritance.
Joint Tenancy
To prevent any accidental cases of ________________, there are four unities required for this type of ownership - time, title, interest and possession. All owners acquire their interest at the same time, from the same legal document. Their shares are equal and undivided - each owns a percentage of the whole, rather than a piece of the whole.
Joint Tenancy
also called a lease with an option to buy - gives a tenant the right to purchase at a future date. The price is set when the agreement is negotiated. It is advantageous to the tenant-buyer.
Lease-purchase agreement
_____ is insurance on FHA loans and ______ is on Conventional loans
MIP - FHA loans PIM - Conventional
Mark had an Open Listing on a seller's property. He had shown the property three times to the same potential buyers. Each time, he notified the sellers of the showing by phone. He heard from the sellers that he should no longer show the property as it was sold. Several weeks later, he learned that it was sold to the buyers he brought to the property. What are Mark's rights with respect to a commission from the sellers?
Mark is not entitled to any commission as he did not bring the offer to the sellers.
Appraisers are most often asked to determine:
Market value
Our contracts require the parties to agree to ___________ for dispute resolution. In ____________, a mediator hears both sides and tries to help the parties come to an agreement.
Mediation
A property is surveyed to determine a legal description. The surveyor works from a point of beginning, and measures terminal points and angles. What method of land description is he using?
Metes and Bounds
Testing ________ is not necessary to determine if it should be removed. If visible, it should be removed.
Mold
Testing after __________ remediation is not required.
Mold
A pledge of real property as security for a promissory note
Mortgage
Which of the following is the best definition of market value?
Most probable price
The purpose of a ___________________________ (also called a water supply corporation) is to provide flood control or drainage, water and sewers to residents of the district. If property is located in a M.U.D., this must be disclosed, as well as the bonded indebtedness, the tax rate, and standby fees of the M.U.D. Texas Legislation allows a buyer to back out of an offer if the bonded indebtedness is not disclosed prior to closing.
Municipal Utility District
When a lease is terminated by agreement of the parties.
Mutual rescission
Which of the following terms is used to describe a situation where a buyer and seller agree to terminate a contract?
Mutual rescission
An example of a license holder in violation of DTPA would be - ___________________________________.
Negligent misrepresentation of material fact
The length of the protection period in the listing agreement is ________________
Negotiable
The landlord pays the expenses of the property. The tenant pays rent and utilities. What kind of lease is this?
Net lease
the tenant pays rent plus some of the expenses of the property.
Net lease
John has a three year lease on office space. In the second year the landlord dies. His heirs inherit the property. They do not want it and they sell it. The new owner wants John to move out. Does John have to leave?
No, because he has a lease
A property at 123 Main Street has been listed by Mary, a sales license holder at ABC Realty for several weeks. Last week, Mary died. What effect will Mary's death have on the Listing Agreement?
None
Which of the following does NOT pledge property as security for a debt?
Note
Which of the following instruments is the promise to repay a debt?
Note
It is your personal promise to pay. It is not recorded. Included would be the terms of the loan, the rates charged, and the amortization schedule.
Note (promissory note)
A property owner has a gas station on his land. The zoning committee changes the zoning to R-1. What must the property owner do?
Nothing - his property is automatically considered a non-conforming use.
Substitution of a NEW CONTRACT for an existing one is:
Novation
this lease gives the tenant the right to extract oil and gas from a specific property. Upfront fees and royalties from production are usually associated with this type of lease.
Oil and gas lease
Where can you expect to find MIP (Mortgage Insurance Premium)?
On an FHA loan
If a broker has more than ____________ on a listed property, he must present all offers, but there is no required order of presentation.
One offer
When a person who has been given the appearance of being an employee is:
Ostensible agency
John has a loan with equal regular payments of principal and interest. Long before the debt is satisfied, the balance is due in a payment substantially larger than all the others. This is best described as a:
Partial Amortization Loan
Balloon loan - a final payment substantially larger than others but with a lower interest rate
Partial amortization loan
__________________ - Two or more lenders invest in one loan. This allows the lenders to share the risk. Another form of participation loan allows the lenders to share in the profitability of the property, in addition to collecting principal and interest on the loan. If a lender collects principal and interest and
Participation loan
Mark has an option to purchase Bob's property. The option expires at the end of the month and Mark would like to extend the option. What would he need to do?
Pay an additional option fee
lease in which all or part of the rent amount is based on the receipts of the tenant's business (Typical shopping center lease).
Percentage lease
Form of rent paid in addition to base or minimum rent
Percentage rent
John has leased commercial property and pays rent based on the receipts of his business. This type of rent is referred to as:
Percentage rent
A _______________ is a lease with a fixed period that is automatically renewed unless the tenant or landlord acts to terminate it. A month-to-month lease is this type. Notice to terminate is usually required, typically 30 days' notice.
Periodic tenancy
In preparing an appraisal, which of the following would have the least impact on the appraiser's estimate of value?
Physical deterioration
___________________ is ordinary wear and tear. It is curable. This has the least impact on the appraisal because all buildings have it (chipped paint, worn flooring).
Physical deterioration
Maintaining of prices at a certain level by agreement is:
Price fixing
Two brokers meet and discuss setting equal commission rates for their markets. This is an example of:
Price fixing
_____________ is the judicial process to prove or confirm a will, or to settle the estate of someone who dies intestate. This must begin within 4 years of death. A district court judge transfers title to real property at a ___________ hearing. That transfer of title is final after 30 days.
Probate
A seller who sells property located seaward of the Gulf Intracoastal Waterway must provide the "Addendum for ____________________________________" to disclose that structures must not be erected seaward of the vegetation line. If a structure is erected seaward of that line, or becomes seaward as a result of natural causes, the structure would be subject to a lawsuit by the State of Texas for removal.
Property Located Seaward of the Gulf Intracoastal Waterway
A license holder advertises a listed property as having the most beautiful landscaping in the neighborhood. This is an example of:
Puffing
___________ is not misrepresentation. __________ is marketing. ___________ uses adjectives and opinions rather than details or facts. Exaggerated ________ can lead to misrepresentation.
Puffing
A landowner wants to sell his property. A title search uncovers a cloud on the title. There is no one available to sign a quit claim deed to clear up the cloud. What can the owner do?
Pursue an action to quiet title in court
_____________________ must use promulgated forms for residential inspections.
Real Estate Inspectors
This was created by TREC to pay aggrieved persons who suffered a monetary loss due to an unscrupulous acts of the license holders. These persons can receive up to three times the amount of money lost.
Real Estate Recovery Trust Account
What are an agent's duties to his principal?
Reasonable care, obedience, loyalty, disclosure, accounting and confidentiality
A buyer's agent is working with a buyer to purchase a property. The buyer is concerned about the location of the fence as it appears to be encroaching. What should the buyer's agent do?
Recommend a survery
A buyer's agent has helped a buyer to find a home. The buyer has expressed concern about the possible presence of radon. What should the buyer's agent do in this case?
Recommend an inspection for hazardous materials
Removal of mold is called _________
Remediation
You have recently purchased property in an area regulated by zoning. It has come to your attention that you have a zoning violation on the property. What should you do?
Request a variance from the zoning board
Which of the following actions of a broker could jeopardize the independent contractor status of the license holders he sponsors?
Requiring his license holders to work scheduled hours
A broker may refer clients to a ___________________________ with whom he has a professional connection as long as the broker discloses the connection using the required TREC form. (TREC Form RSC-1, Disclosure of Relationship with Residential Service Company). Any fee must be commensurate with the service provided.
Residential Service Company
______________________ - allows homeowners 62 years of age or older, for all borrowers involved, to borrow against their equity without making any payments on the amount borrowed. The lender makes periodic payments to the homeowner, based on the equity in the property. The loan comes due when the last surviving borrower leaves the property (due to sale of the property or death). This is the most expensive home equity loan.
Reverse annuity mortgage
A right under American federal law that gives a borrower the right to cancel a home equity loan or line of credit with a new lender or to cancel a refinance transaction with another lender within 3 days of closing. No questions asked basis.
Right of rescission
If a broker accepts an earnest money deposit, and acts as an escrow agent, the money must be deposited in a trust account by the close of business of the ______________ business day after the effective date of the contract. A broker must keep records of this account for 4 years.
Second
If a brokerage or business entity elects to do business under an assumed name, the assumed name should be filed with the ______________, _________, and the _________. If a broker has an assumed name, it must be filed with the county clerk in every county in which he has an office.
Secretary of State , TREC, and the local county clerk
One of the property owners in a subdivision is violating the deed restrictions. What can the other property owners do to get him to comply?
Seek an injuction from the courts
A license holder is representing a young couple purchasing their first home. She shows them many properties and finally they find one to buy. They have some concerns about the contract and ask to speak to an attorney. The agent should:
Send the clients to an attorney of their choice before they sign
Property acquired prior to marriage, or during marriage by inheritance (devise or descent), or gift, may remain ____________ property.
Separate
In the event that a person dies intestate, the courts will appoint an administrator to __________________________. Property will be distributed according to the Laws of Descent and Distribution. Heirs to any real property will have ______________________. Property goes to kindred - male and female. Spouse and children have priority under the laws of descent. If a married couple has all adult children, and one spouse dies intestate, the surviving spouse can sell his/her real property with only that spouse's signature. Title transfers to heirs at probate.
Settle the estate , Title by Descent
An investor/developer has borrowed money to build a retail shopping center. His lender has provided a very competitive interest rate, however when the investment property is completed and sold the lender will collect the amount borrowed plus a percent of the developer's profits. What type of loan is this?
Shared appreciation loan
A license holder is showing her own listing to a buyer customer. While showing the property she notices that there is a serious slope to the porch floor. What should she do?
She must point it out to the buyers
___________________ gives the agent the power to perform only specific acts and no others. This agent does NOT have the power to bind his client/principal. (Seller - Broker)
Special or limited agency
License holders must use ________________ forms when applicable. Exceptions are: those prepared by Attorneys from this state or any other state, or those specified by governmental agencies, property owners, or their lawyers.
Standard Contract
The _______________________ requires that all contracts that relate to the transfer of any interest in real estate must be in writing to be enforceable. This also applies to compensation/employment agreements, such as listings and buyer representation agreements. Verbal agreements make you a volunteer in the eyes of the courts.
State of Frauds
COMMUNITY PROPERTY is a __________ estate in Texas.
Statutory
HOMESTEAD is a _______________ estate in Texas. Homestead protection is automatic and cannot be waived. The homestead of a family is protected from forced sale by all creditors except: mortgage, property taxes( ad valorem taxes), mechanics and materialmen's liens, and homeowner/property owner associations.
Statutory
The law prohibits __________ - directing buyers into or away from certain areas because of their race, color, etc. This is also known as _________________.
Steering , Channeling
When an investment property owner is depreciating his improvements on his income taxes what method of depreciation will he use?
Straight line method
__________________ - a method of depreciation of equal annual installment amounts. For example: $100,000 depreciated over 10 years would be $10,000 per year. Using this method, you can calculate the depreciation of a property (depreciation is gone), or the depreciated value of a property (depreciated value remains after depreciation is deducted).
Straight line method
If a license holder defaults on Texas State ___________, TREC will refuse to renew the license of that individual.
Student loans
________________ - loans with risk based pricing - the rates are not published. Borrowers are rated A-F where a prime borrower has an A rating. A-minus to F borrowers will pay one to five % higher than those with good credit. This loan would be likely to have a prepayment penalty to protect the lender from loss of interest.
Sub-prim loans
________________ clause - allows a lender to move to or take a lower lien position. This clause would be found in a second mortgage, a home improvement loan, or a home equity loan.
Subordination
A buyer has discovered a defect in title and has suffered a loss due to the defect. The title company has compensated the buyer for the loss. Subsequently, the buyer is awarded a judgment against the seller. The title company is entitled to a portion of the judgment as reimbursement for the claim it paid. This describes:
Subrogation
Title policies may contain a ____________ clause. This clause allows the title company to assume the rights of a buyer with respect to any claim against a seller, if the title company has made payments to that buyer to satisfy that claim.
Subrogation
In the event of breach of contract, where one party is in default, all TREC contracts state: "The injured party can ______ for specific performance, seek such other relief as may be permitted by law, or both."
Sue
A signed employment agreement is necessary to:
Sue for a commission
Only _______ has the power to issue or revoke Real Estate Licenses. A hearing for the revocation or suspension is held at _______ in Austin unless a license holder requests the hearing to be held in his county.
TREC
_____ plays no part in resolving conflicts between license holders.
TREC
__________ rules always favor the consumer and have the full force and effect of the law.
TREC
_____________ Information notice: -Notifies the public of the recovery trust account -Applies to both real estate license holders and inspectors -Must be displayed in the broker's office
TREC Consumer Information notice
__________ was passed by legislation in 1939 to protect the public against unscrupulous brokers and sales agents.
TRELA
The ________ loan program allows eligible Texas veterans to borrow up to $125,000 from the ________ to purchase unimproved property. The buyer must obtain a survey and pay 5% down for a 30-year loan. The minimum tract size is one acre.
TVLB (Texas Veterans Land Board)
The _________ program is also available for the surviving spouse of a veteran listed as Missing In Action or whose death was service connected.
TVLB (Texas Veterans Land Board)
The housing assistance program allows an eligible Texas veteran to have his/her mortgage loan sold to the __________ instead of to the secondary market. The benefit to the borrower is an interest rate significantly lower than prevailing market rates.
TVLB (Texas Veterans Land Board)
Disability is not a requirement. Neither program is available to any dishonorably discharged veteran.
TVLB (Texas Veterans Land Board) programs
What expenses of home ownership can a buyer deduct on his income taxes?
Taxes and interest on his mortgage
______________ for listings is legal in Texas, however, a real estate license is required. An unlicensed assistant is not permitted to _____________ for listings. When __________________ or "cold calling" a license holder must observe the Federal "Do Not Call" list and the State " No Call" list. The Federal list regulates interstate and international calls. The Federal list is administered by the FTC (Federal Trade Commission). The Texas list regulates interstate and intrastate calls. A license holder can _________________ people on the lists with whom he has a past professional relationship. A license holder can also _______________ anyone who has contacted him/her within the past 3 months (90) days.
Telemarketing , telemarket
A couple is purchasing a home and ask their agent how they should take title so that if one spouse dies, immediately the surviving spouse will be the sole owner of the property. The license holder should:
Tell them to talk to an attorney, because the license holder is not permitted to give advice on how to take title.
In arbitration the arbitrator hears both sides and then __________________________________.
Tells the parties what to do
Mary and John are married with grown children. Both are intestate. If John dies and Mary immediately becomes the owner of their home, what type of ownership did they have?
Tenancy by the entiredty
____________________________ is a specific type of joint tenancy where the co-owners are husband and wife. One advantage of this type of ownership is that it avoids probate. (This is also true of joint tenancy.)
Tenancy by the entirety
Ownership by two or more without rights of survivorship is called _____________________. This is the most common type of joint ownership. It is an estate of inheritance. A condominium is multi-unit housing with individual ownership of apartments and ____________________ ownership of the common areas. Upon your death, your share goes to your heirs, at probate. Unequal shares are permitted. You may sell your share without the permission of the other owners. In the absence of any other instructions, the title company will always assume _________________________ with equal shares.
Tenancy in Common
John and Mary are co-owners of a property. John has a 60% interest in the property and Mary has a 40% interest. What type of freehold estate do they have?
Tenancy in common
Interest only until the term of the loan
Term loan
_______________ - interest only until the end of the term, when the entire principal is repaid. This is a zero-amortization loan. This is also called a ____________________.
Term loan , Straight loan
When the time period on a lease ends or is cut short.
Termination
You can find "Time is of the Essence" in the Sales Contract in the ____________________ paragraph and it is found in the third Party Financing Addendum, and Addendum for Sale of Other Property by Buyer. You can also find it in the _________________ and in the Short Sale Addendum.
Termination/option , Back-up addendum
If a party dies with a will, ___________, the executor appointed in the will distributes the property and the heirs are said to have Title by Devise. As with intestate succession, title transfers at probate.
Testate
What form replacing the HUD-1 must be provided to the consumer and when must it be provided?
The CD (Closing Disclosure) at least three days before closing
The secondary notice of Intermediary - _________________________ -is used when a buyer client wants to purchase an in-house listing.
The Intermediary Relationship Notice
Under a new construction Home Owner Warranty policy, which of the following would not be covered?
The air conditioning unit
Which of the following statements about the difference between a license holder who is an employee and a license holder who is an independent contractor would be true?
The broker is legally liable for the acts of all license holders, independent contractors, and employees alike.
A property has foundation problems. The seller has painted over them to hide them. He lists his property for sale "as is", and does not disclose the problem. The listing broker views the property but does not detect any defects. A buyer purchases the property and after closing discovers the problems. Which of the following statements is true?
The broker will be protected by his E&O insurance because the problem was not able to be detected by visual inspection and the seller misrepresented the property.
Mary, a single woman, has no children. She owns real property and dies intestate. What happens to her real property?
The court will appoint an administrator and it will be distributed to her heirs by the Law of Descent.
What is the advantage to the borrower of a VA loan?
The guarantee on the VA loan is free.
What is the least important factor for a license holder preparing a CMA?
The information from expired listings of unsold property in the area.
Who would use the remedy of Forcible Entry and Detainer?
The landlord
An applicant who has applied with a broker and passed the test cannot engage in business until _________. An applicant applying without a broker cannot engage in business until a broker is selected and receives the applicant's license.
The license is received in the broker's office
If a license holder lists himself as a real estate sales agent in the phone book he must include __________
The name of his broker OR company in the information
A license holder with a web site must include ______________
The name of his sponsoring broker OR company
A builder is very successful and active in a new subdivision. Homes in the subdivision are selling well, and the builder is making a good profit on the sales. Two new builders arrive and begin to sell in the same subdivision. All experience a lower level of profit. This demonstrates which principle of appraisal?
The principle of competition
A single property is regulated by building codes, zoning and deed restrictions. The rules are in conflict with one another. Which must the property owner obey?
The property owner must obey whichever rules are the strictest or most limiting.
The local government needs your land to build a new high school. They have the right to take your land for the public good. This is called:
The right of eminent domain
Who is responsible for providing a lead paint disclosure?
The seller
A buyer has signed an agreement to purchase a property from a seller. He has met all the terms and conditions of the listing. The listing broker has taken the agreement to the seller. The seller has changed his mind about selling and refuses to sign the agreement. What is true?
The seller does not have to sell, but he owes the listing broker a commission.
A property has lead paint in the interior and on the exterior. Which of the following statements is true?
The seller has no duty to remediate lead, simply to disclose it.
A young couple leases an apartment in an apartment complex for one year. During the year, they become concerned about crime in the area and ask for permission to install an alarm system in the apartment. The landlord grants permission. When the lease is up, what happens to the alarm system?
The system stays as it is now a fixture
If an applicant applies without a broker and passes the test, there _________________.
There is no time limit for choosing a broker.
A seller's property is listed for $399,900. A buyer makes an offer for $389,000. The seller counter offers for $392,500. The buyers have not responded to the counteroffer. The sellers receive another offer for $395,000. They would like to accept this new offer. What is true?
They can accept the new offer, but ONLY after withdrawing their counteroffer.
For what group of buyers would the ARM (Adjustable rate mortgage) be the least desirable?
Those on a fixed income
Your property borders a non-navigable waterway and you have riparian rights. You have built a 10-foot pier at the water's edge. How do you measure your property?
To the middle of the waterway
A license holder sponsored by a broker must have a written agreement:
To work as an independent contractor
Which of the following is not a duty of an agent?
Trust
When measuring gross area the appraiser measures the:
Under roof
_________________ gives the agent the authority to represent his client in all matters, both business and personal. It is the equivalent of having unlimited power of attorney and is very rare in real estate.
Universal agency
A buyer and his agent visit a listed property. The buyer loves the property and wants to purchase it. He speaks with the seller, who is at home at the time, and they come to an agreement regarding price and terms. They shake hands on the agreement and the buyer happily leaves the property. His agent should:
Warn the buyer that the verbal sales contract is unenforceable
If the broker wishes to terminate sponsorship, he must notify the sales agent in ___________ and return the sales agent's license certificate to the Commission _____________. A sales license holder who wishes to terminate his association with the sponsoring broker must do so in writing.
Writing , immediately
The broker is responsible for all professional acts or occupational activities of the sales agents he sponsors including advertising, use of promulgated forms, proper disclosure, etc. The broker must provide __________________ of sponsored activities to sponsored license holders.
Written standards
The last party to sign a contract is the party _____________________________. The broker is responsible for filling in the effective date. This will also be the effective date of the option period if there is one.
accepting the final change
Both mold ___________ and mold _____________ must be licensed.
assessors and remediators
A spouse can waive _____________________________ by written agreement.
community property rights
A seller's disclosure is not required in a _____________ sale, _______________ sale, sale by guardian, executor, or administrator, or sale by a builder of a new home that has not been lived in . A seller's disclosure is not required if the house is worth less than _______________ of the price of the property.
foreclosure , tax , 5%
The ______________________ - a tax benefit, should not be confused with the homestead protection. Homeowners must apply for the exemption and must occupy the home on January 1st to qualify! You can back file for two years if you have failed to claim this exemption.
homestead exemption
If a broker dies, or is declared legally insane or if a broker's license is suspended, his sales agent must change to another broker ___________.
immediately
When changing to a new broker, a license holder is authorized to engage in the business as soon as his fees and sponsorship forms have been ____________. This is also true when re-activating an inactive license.
mailed to TREC
A broker who is not a registered property-tax consultant _____ still legally perform property-tax consulting services for single-family residences. He can provide this service for free or for a fee.
may
When an amount is paid out of the Real Estate Recovery Trust Account on behalf of a license holder, the license of the individual can be ______ or _______. This license may never be recovered until the account has been repaid with interest. State law limits the maximum payment, which is ______ per license holder & ________ per transaction.
revoked , suspended , $100,000 , $50,000
The accuracy of the Seller's Disclosure is the responsibility of the ____________.
seller
A ______________ is a license holder who represents the seller, while being sponsored by a broker other than the listing broker. He is working with a buyer customer rather than a buyer client.
subagent
A ____________________ occurs when a lease expires and the tenant refuses to move out. The landlord is not receiving rent. This holdover tenant has no right to be there. If the holdover tenant pays rent and the landlord accepts that rent, a holdover tenancy is created.
tenancy at sufferance
All backup offers must be presented to the seller. For a backup offer to become effective the previous contract must be ________________ and the backup buyer must pay any option fee, name any option period, and deposit any earnest money with an escrow agent.
terminated
Senate Bill 489 limits the liability of a license holder for the acts or misrepresentations of a party or subagent as long as _________________________
the license holder was unaware of the misrepresentation or concealment of material fact
A broker has a listing on a property. The seller has accepted an offer from the buyer, but the transaction fails to close. Under which of the following conditions would the broker be eligible for a commission?
the seller has refused to clear up a cloud on the title and the property cannot be transferred to a buyer.
An appointed associate, ____________________ , may give advice and/or opinions to one party in a transaction. A broker may never give advice and/or opinions to either party. He may only disclose facts about the property.
under an Intermediary
An _______ ________ must be careful to avoid activities requiring a license. Both the _________ _________ and the license holder could be fined.
unlicensed assistant
A license holder may advertise another broker's listing with the _________ permission of that broker.
written
A broker who represents a party or who lists real property under an exclusive agreement must:
• inform the party of material information related to the transaction, including the receipt of an o er by the broker • answer the party's questions and present any o er to or from the party • refrain from telling another broker to negotiate directly with the broker's client.
