Texas Real Estate Exam Practice Question

Randall's land is 120 feet wide by 300 feet deep how many square feet does he own and how many acres? A. 36,000 ft.²; .82645 acres B. 420 ft.²; .25 acres C. 43,560 ft.²; 1 acre D. 34,350 ft.²; .7885 acres

A 120' X 300'= 36000 Square feet There are 43,560 ft.² in an acre 36,000 / 43560= .82645 acres

Borrowers with Fannie Mae, Freddie Mac, FHA and VA loans are required to have flood insurance it's a subject property is in which of the following FEM a flood zone categories A. A B. B C. C D. X

A. The federal emergency management is ministration or FEMA has created flood zone designations that indicate the flood risk level for certain geographical areas there are two main risk levels:

Which of the following can cause a cloud on title and a real estate sales transaction? A. Misspelled owner names B. A typo in a legal description C. Outstanding Lien D. All of the above

A cloud on title is a situation where the title to property is impaired due to the existence of some defect in the documents or the existence of a lien or encumbrance that has not been satisfied or remedied. A cloud on title is usually found to exist during a title surge and the sale of a property. Some of the most common clouds on title are misspelled names and in accurate legal descriptions are encroachment. The most common encroachment is a fence. To clear a cloud on the title a quick claim deed can be used which releases a persons interest or a suit to quiet title can be filed in court in order for a buyer to receive a general warranty deed and title insurance.

With a sales price of $450,000 loan payoff for $375,480 in closing costs of $15,780 what will be the sellers net at closing? A. $74,520 B. $450,000 C. $58,740 D. $434,220

C. Net means the amount left over after all proper deductions from the gross or total sales amount $450,000 -$375,480 loan payoff -$15,780 closing cost equals 58,740 sellers net

A buyer is paying two discount points on a $250,000 loan. How much money will the buyer pay for these two points? A. $5000 B. $2500 C. $500 D. $250

A. $5000 Discount points are paid out to buy down a borrowers interest rate each point is 1% of the loan amount $250,000 loan amount times 2% or 0.02 equals 5000 each point paid only buys down the interest about 1/8%

One authorized by principal to perform any and all acts associated with the continued operation of a particular job or certain business of the principal is ___________. A. General agent B. Universal agent C. Special agent D. Respondeat superior

A. Explanation: one authorized by principal to perform any and all acts associated with the continued operation of a particular job or certain business of the principle as a general agent. The words particular job or certain business or words that pertain to general agency. A universal agent is authorized by a principal to perform any and all business for the principal with or without regards to a particular job and without regard to whether the business is certain or uncertain. A special agent is authorized to perform only ask associated with one transaction. The special agency is concluded with the transaction when it's concluded

Tara has applied for a mortgage financing and has a limited amount of fines for a down payment. She makes a good salary at work but has only fair credit score of 590. Chara has opted to obtain financing backed by Federal housing administration or FHA if the house she wants to buy is priced at $120,000 what is the minimum down payment she will have to make to qualify for FHA back to loan? A. $420 B. $4200 C. $14,200 D. $24,000

A. FHA guidelines allow a borrower with at least a 580 credit score and qualifying monthly income to make a minimal down payment of 3.5% to purchase at home. Since the house Chara is considering his price at 120,000 she would have to make $4200 minimum down payment to qualify for a loan backed by the FHA $120,000 X .035 = $4200

You are the listing agent on a $500,000 home. You discover that there has been a roof leak in the home some years back. After the leak, a homeowners insurance covered the necessary repairs, and the roof was made good as new both structurally and aesthetically. However, on the ceiling of the home, there is a water stain that is visible with a casual visual inspection. The legal term that we use to describe the water stain on the ceiling is ____________ A. Red flag B. Latent material defect C. Concealed material defect D. Covert physical defect

A. Red flag explanation: the term red flag is used to describe indications in or on a property that would alert a reasonable person with the same or similar knowledge to that of a real estate agent to a possible defect in the property. Latent defects, generally do not come with red flags such as a water stain. If for instants the seller of a home in the scenario would have painted the ceiling to conceal the water stain, the physical defect of the leaking roof would be considered latent most states do not make the real estate licensee responsible to see and disclose latent defects but most states do make the real estate licensee responsible for disclosure of material defects that show red flags

Real estate settlement procedures act RESP a prohibits certain activities of persons involved in real estate transactions connected with mortgage financing. Which of the scenarios below is a prohibited act under RESPA? A. A sales agent receives $250 referral fee from a loan officer for each buyer they refer B. Sales agent received a $50 restaurant gift card from a mortgage broker after closing of a transaction. C. Sales agent was surprised to receive a gift basket $45 value as a thank you from a loan officer that oversaw and completed the financing for agents buyer D. All of the above are prohibited by RESPA

A. Section 8 of RES PA and regulation ex prohibits the giving or excepting of a kickback, fee or anything of value not to exceed $50 in value and may not be cash in exchange for referrals of settlement services business that involves a mortgage loan that is federally related as well as splitting a fees or receiving unearned fees for services not actually performed. All gifts or referral fees must not be expected by the referring real estate agent. Answers BNC are under the $50 limit and are not cash gift so they are not prohibited under RESPA

Federal US T or underground storage system regulation applies to all the following except A. A septic tank B. Underground tank that stores fuel at a service station C. Holding tank for hazardous chemicals at a refinery D. Petroleum tank holding 3000 gallons of unleaded fuel

A. Underground storage system that are regulated federally are those that contain petroleum and certain hazardous chemicals exceptions to the regulation or tanks that are used and or store farm and residential tanks with 1100 gallons or less of motor fuel used for non-commercial purpose tanks that store heating oil on a premises, septic tanks, flow through process tanks, thanks for the 110 gallon or less capacity, emergency spill in overfill tanks

In addition to covering the protected classes under the fair housing act, the equal credit opportunity act ECOA covers three additional classes. What are they? A. Race color and religion B. Family status disability marital status C. Age marital status and receipt of public assistance D. Age sex and national origin

C. The ECOA covers the seven protected classes included in the federal fair housing act; Race color religion national origin sex familial status handicap disability and adds three additional classes age Reseda public assistance and marital status

An appraiser has been hired to appraise a parcel of unimproved land. To arrive and an opinion or estimate of value what principle of value will be especially important to the appraiser for this appraisal? A. Comparables B. Highest and best use C. Contribution D. All of the above

Answer : B Unimproved land is vacant land the highest and best use for unimproved land will be especially important for the appraiser. The appraiser must determine what is the financially feasible geographically possible and legally permissible for this parcel of vacant land. A is incorrect The comparables will be important after the appraiser has determined the highest and best use of the subject property. Also appraisers use comparables to arrive at an estimate or opinion of value. The word itself is not a principle of value. C is incorrect: The principle focuses not on what an improvement costs but what the improvement adds to the market value of subject property. But the test question states that there are no improvements on this parcel of vacant land

State Q has a statute that requires that prior to the establishment of dual agency; the agent must obtain prior informed written consent of all principles who are to be represented. John Jones is a broker and has a listing for a small office building in excellent condition that produces a reliable income stream. For these reasons, Amber one of his sales associates, decides to purchase the building as an investment for herself. What action was John Jones insure that Amber takes? A. Inform the SEC of Amber's intent because it is considered an inside trade B. Inform the owner in writing that she is a licensee and acting as a dual agent C. Have a third-party purchase the property on her behalf and maintain a professional arm's-length relationship D. There's no special action Amber mistake, because Amber is not a dual agent

Answer : B. Explanation because Amber is representing both the buyer herself and the seller her firm that holds the listing she must disclose her dual agency status. Of course licensees must also always disclose the fact that they are a real estate professional whenever they buy or sell a property on their own behalf. In most states if a brokerage firm holds the listing, all of the agents in that firm are considered agents of the seller. If an agent in the firm becomes a buyer there is an inherent dual agency. Furthermore most states have a strict statutes that require real estate licensees acting as a buyer or seller to disclose their status as a licensee

Which of the following appraisal methods would yield the most accurate appraisal for a-newly Constructed warehouse? A. Sales comparison approach B. Cost approach C. Market data approach D. Income approach

Answer B Call Sue purge is an appraisal method best used on new construction where the cost to construct a building is known it is also used on special use properties like library schools and churches where there's no income and few comparable sales. The cost approach establishes value by calculating the cost to reproduce or replace an equivalent building, less appreciation, plus the cost of land there are two types of Cost appraisal methods reproduction which establishes the cost to build a replica with original materials and a replacement method which establishes the cost to build a new structure with the same function newer materials and designs

All of the following are agency relationships except_______ A. The attorney client relationship B. The real estate sales person - buyer relationship C. The real estate sales broker -buyer relationship D. The real estate sales broker Dash seller relationship

Answer B explanation; although a sales person likely refers to himself as an agent the sales person is not an agent the broker is the agent the sales person owes all of the fiduciary duties to the client principle that an agent owes but most All of the agents real estate related activities must be supervised by a broker

Susan, a real estate agent, generated a comparative market analysis or CMA for John who wanted to sell his home. The CMA was based on like kind homes recently sold in the area in the past six months. The CMA showed the estimated value of the home to be $525,000 John told Susan that he thought the value was $550,000. Susan listed the home for $540,000 and sold it for $535,000. Which amount represents the actual market value in the scenario? A. $550,000 B. $540,000 C. $535,000 D. $525,000

Answer D Market value is an estimate of value based on current market and uses comparables, recent sold listings that are comparable to the subject property, to determine value. A real estate agent uses a CMA to estimate the market value for a seller. In the example, the sellers opinion of value was at $550,000 it's not necessarily based on the actual market data but on desired amount. The agents list price of $540,000 Will often be set just above or at the top of the market value range in order to leave room for negotiation. $535,000 is the actual market price which is distinguished from a market value because it reflects a price instead of an estimate of value

A contract is bilateral when both parties agree to perform. A seller agrees to transfer a title and a buyer agrees to pay a negotiated amount of money for the ownership transfer. However there are some contracts that are unilateral. A unilateral contract requires one party to act before another party will perform which of the following is a unilateral contract? A. Option contract B. Purchase contract C. Lease D. Installment contract

Answer: A An option agreement is a unilateral contract, and a unilateral contract only one party makes a promise, but it's only bound to honor that promise if the party acts. The option agreement might be used when someone is considering whether or not to buy a particular parcel of real estate. The owner of the property is called the optionor. The person considering whether to purchase the property is called the optionee. The optionor is making the promise not to sell the property to anyone other than the option in during the times specified in the option agreement and makes this promise for the nonrefundable option fee. It's an option he decides to buy the property the price has already been negotiated and stated in the option agreement. If the option he decides not to purchase the property, the option or still keeps option fee. An option agreement can also be used for someone considering whether or not to rent real estate. Purchase contract, leases and installment contracts are all bilateral which Our promises exchanged for promises and both parties agree to ask simultaneously

Terrence has contracted to buy Gloria's home located on Willow Road. Terrence will make monthly payments of $750 directly to Gloria for 20 years at which time the financing will be fully amortized. Who has the legal title during the performance of this contract? A. Gloria B. Terrence C. Lender D. Recorder of deeds

Answer: A Gloria has the legal title until the financing is fully amortized. Terrence has signed and agreed to an installment contract with Gloria. Installment contracts also known as contract for deed is a form of seller financing whereby the seller retains legal title until the buyer has fulfilled all the payment obligations under the contract the buyer will have received an amortization schedule and holds equitable title, which includes the right to possess and use the property

Which of the following clauses in a real estate contract limits the amount of money a buyer is obligated to pay the seller in the event the buyer is not able to close on a real estate contract? A. Liquidated damages clause B. Risk of loss clause C. Marketable title clause D. Mortgage financing contingency clause

Answer: A A liquidated damages clause sets the predetermined amount of money to be paid as damages for failure to perform under contract. Real estate contracts typically require the buyer to deposit in an escrow for a certain amount of money upon signing every real estate contract, typically 3% or less of the total contract purchase price. A contract will include the liquidated damages clause either in the escrow clause or in a purchasers default clause. For a liquidated damages clause to be legal, actual damages must be speculative at the time of contracting and the amount set must be reasonable and not punitive

Hey Tena is paying a base rent of $500 per month and 2% of gross sales over $250,000. Last month the gross sales exceeded the $250,000 by $23,000. The tenant will pay $960 for rent when the rent payment is due. What type of lease does the tenant have? A. Percentage lease B. Net lease C. Gross lease D. Graduated lease

Answer: A A percentage lease is used in commercial real estate the rent involves a base or minimum rent and additionally a percentage of Licis revenue earned while doing business at the premises. The percentage lease is attractive to businesses because it is typically offering a lower bass rent and is attracted to Landlord's because it offers an upside potential that a standard lease does not offer. Typically, a breakpoint level of sales is negotiated for the percentage payments to occur. A gross lease requires the tenant to pay a fixed rental amount and includes all of the cost associated with the use of the property, including taxes, insurance and utilities, which the landlord will pay. A net lease is the opposite of a gross lease. In a net lease, the tenant pays the taxes, insurance and maintenance costs in addition to the rent. A graduated lease allows periodic adjustments to the rental amount based on certain market conditions or an increase in the value of a leased property

Which of the following is not an essential element of a valid real estate contract? A. Earnest money B. Signatures for all of the parties C. Legal description of the property D. Consideration

Answer: A In order to have a valid real estate contract, there needs to be: Competent parties Mutual agreement Lawful objective Consideration Sufficient legal description of the property Be in writing and signed when required by law Earnest money is not an essential element of a valid contract, there does not need to be earnest money to have a valid contract. Earnest money shows good faith by the buyer. If the buyer has agreed in the contract to deposit earnest money and felt to do so with the time agreed, the seller may terminate the contract Or exercise remedies

The following ad appears in a local newspaper: For lease: lovely two bedroom 1.5 bath cottage in post oak trails; plenty of parking; large backyard looking out onto public golf course; close to shopping and entertainment. This is an adult only residence, no children. Call today move in tomorrow. What protected class if any did the agent violate in the ad? A. Familial status B. Sex or gender C. Marital status D. Race

Answer: A The ad specifically is denying rental to families with children and violates the fair housing act. The fair housing act of 1968 established seven protected classes. It has been amended twice and today prohibits discrimination based on: Color, race, national origin, religion, sex, familial status, and people with mental or physical disabilities. There was no mention of race or gender restriction. Marital status is protected under ECOA, not fair housing

Of the bundle of legal rights inherent in real estate ownership which one empowers the owner to convey the property to another? A. Disposition B. Exclusion C. Enjoyment D. Possession

Answer: A Disposition There are five rights in the bundle of legal rights and real estate ownership, these rights coupled with the real estate are referred to as real property. The owner has the rights of: C - Control ( owner has the right to control the property) D - disposition (The owner has the right to convey their ownership interest to another without prior permission or authorization) E - enjoyment ( The right to use the property and enjoy it) E- exclusion (The right to exclude others from being on their property) P - possession ( to be in possession of the property) Remember the acronym C Deep for property rights

Yankee doodle realty has dual agency agreements with both the buyer and the seller in the same transaction Alyssa, a Yankee doodle sales person has been working with the buyer. If a purchase is contingent on financing, what information may she share with the buyer and the seller? A she may disclose the fact that the buyer filed bankruptcy six months ago B. She may disclose the seller that the buyer is willing to pay above the offering price C. She may disclose to the bar that the seller is willing to except less than the listing price D. She may just go to the buyer that the seller is getting a divorce

Answer: A she may disclose the fact the buyer filed bankruptcy six months ago Explanation: she may not share financial information with either party unless it is directly impact the ability of either party to perform the requirements of the contract. The buyers bankruptcy certainly impacts the buyers ability to get financing. While she needs to represent both parties equally, she may not disclose the confidential bargaining positions of either party. This is part of the common law duty of confidentialities

A rule of agency law holding that The principal is liable to third parties for all wrongful acts of the agent committed while transacting the principles affairs is the rule of______\\ A. Respondeat superior B. Dual agency C. Fiduciary D. Ostensible agency

Answer: A. Respondeat superior Exclamation: respondeat superior is the rule of agency law holding that the principal is liable to third parties for all wrongful acts of the agent committed while transacting the principles affairs. For instance, if a listing agent miss represents a certain aspect of the property, and the buyer relies on the misrepresentation, the seller is liable to the buyer, because the listing agent committed a wrongful act while transaction with sellers affairs. Likewise if a buyers agent miss represents the buyers ability to perform on a contract, and the seller relies on the misrepresentation, the buyer is liable to the seller for the buyers agents wrongful conduct. In other words the agents words and actions are directly at tributable to the client and can cause liability for the client

Becky is looking to lease an apartment at Lakeville Glenn's apartments. Lakeville does not allow pets. becky has a service dog named smooch, who is her companion as well. Lakeville must allow Becky to lease an available unit of her choice and must allow smooch to live there with Becky pursuant to: A. Equal credit opportunity act B. Americans with disabilities act C. Fair housing act D. Service animals act

Answer: B Americans with disabilities act mandates that a landlord allow service animals even if they do not accept pets. Service animals are defined as dogs that are individually trained to do work or perform tasks for people with disabilities. Landlords must allow a handicapped or disabled person to make needed accommodations to a unit, at the tenants expense, and may or may not require the tenant to restore the unit upon vacating. Ramps and other mobility property modifications are the landlords responsibility and expense

A buyer and seller enter into a land sales contract with closing set in 60 days. The deed is placed in escrow until settlement. During the time before closing, what ownership or title does the buyer have, if any? A. Legal title B. Equitable title C. Both legal and equitable title D. The buyer holds no interest

Answer: B During the time of Adidas place in escrow, the seller holds the legal title to the property until closing and settlement and prior to closing and settlement, the buyer has equitable title equitable title does not give possession in the scenario, but it entitles the buyer to benefit from any appreciation in value to the property and the right to obtain legal title. Upon settlement the legal title will be transferred to the buyer. Should there be a termination of the contract before closing all parties must sign a release to remove the buyers equitable title interest for the seller to convey the property to someone else

Which of the following has full access to multiple listing services MLS to find information about property? A. Seller B. Real estate broker C. Home inspector D. All of the above

Answer: B Most MLS systems restrict access to licensed real estate brokers and their agents. With the advance of the Internet, some portions of the MLS has become accessible to the public via other websites that share information from the MLS. However, only full access is given to a licensed real estate brokers and their agents

The rule of agency law that stipulates that when a contract is required by law to be in writing, the authority of an agent to enter into such a contract on behalf of the principal must also be in writing is the_________. A. Statute of frauds B. Equal dignities roll C. Scope of authority D. Respondent superior

Answer: B equal dignity's rule Explanation that equal dignity's rule is the role of agency law that stipulates that when a contract is required by law to be in writing, the authority of the agent represent a party to the contract must also be in writing. All states have a statute of frauds that requires real estate contracts to be in writing to be enforceable, so that equal dignity's rules applies to real estate agency contracts in all states. The term scope of authority and respondent superior are associated with the rule of agency law that holds that a principal might be liable for the wrongful acts committed by his agent while transacting the principles business.

Amy has been leasing an apartment from Marty for the past five years. Marty recently notified Amy that he was no longer going to lease the home after the lease expires in two months. 2 1/2 months have passed by, and Amy has not moved, and Marty has not excepted a rent payment. At this point, what type of tenancy exists? A. Tenancy at will B. Tenancy at sufferance C. Periodic tenancy D. Verbal tenancy

Answer: B tenancy at sufferance When a tenant has stayed past the expiration date of his or her lease, they are a holdover tenant. If the landlord does not except the tenants rent payment and wants possession of the unit, this creates a tenancy at sufferance. The landlord is at sufferance and must take legal action against the tenant to take possession of the unit. If the landlord excepts the rent payment, a tenancy at will, with a periodic tenancy is established and now a notice must be provided to the other party equivalent to one rent interval. The difference between a tenancy at will and a tenancy at sufferance is that the landlord gives permission to the tenant to stay on the premises under his tenancy at will

For a real estate deed to be valid and transferable, it must meet certain requirements, like be in writing and signed. Which of the following parties must sign the deed for it to be valid? A. Grantee B. Grantor C. Both the grantor and a grantee D. None of the above

Answer: B the grantor The grantor is the only party needed to sign a deed of conveyance for it to be valid. The deed must be signed by the grantor to satisfy the Texas statute of frauds. The deed must name the grantor and a grantee, have the accurate legal description of the property, state the consideration, include a habendum clause, include reservations, restriction and easements, be in writing and signed by the grantor only then delivered to the grantee and the grantee must accept it to validate the title transfer. The deed does not need to be recorded in the public record. However recording gives constructive notice to the public of the title transfer. The deed would have to be acknowledged or notarized to be filed in public record in the county where it is located

Stephen has an 18 month old lease that will expire at the end of this month. What type of lease does Stephen have? A. Periodic tenancy B. Estate for years C. TAA lease D. Oral lease

Answer: B. Estate for years A leasehold estate that has a definite termination date and no periodic tenancy clause or month-to-month is known as an estate for years. A periodic tenancy does not have a specific end date and continues for successive periods until the landlord or tenant give up or give notice of termination. And an estate for years there's no notice requirement to terminate the lease, as it expires on its own accord. An oral lease can be an estate for years or a periodic tenancy depending on whether the termination date is agreed-upon. The lease in this case could not be oral, because the statute of frauds requires leases for more than one year to be in writing to be enforceable. Oral leases that have a periodic tenancy require notice equal to the one rent interval by either party. In Texas, a TAA Lease is a lease that uses a form provided by the Texas apartment association

Legally what is the nature of agency relationships between listing brokers and sellers? A General agency B. Specific agency C. Universal agency D. Limited power of attorney

Answer: B. Specific agency Exclamations specific agency or special agency means that a licensee they act on the principles of half only unlimited Waze for a limited time; generally for one transaction. General agency is an agency we're by the agent is given authorization to act as an agent for range of activities. Universal agency is unlimited rights to act on the principles behalf. A limited power of attorney grants authority to act on the principles behalf, but limits the authorization to only those acts that are named

Which of the following is not common to listing agreements? A. Broker protection clause B. Negotiable commission clause C. Exclusive contract automatic extension clause D. Multiple listing clause

Answer: C An exclusive listing agreement must have a specific termination date. Extensions cannot be automatic: there must be an agreement in writing and signed if both parties are willing to extend a listing agreement past its original termination date, and there must be a new termination date. A, B, and D are commonly found in listing agreements. A broker protection clause also called a broker safety clause protects the broker if the property sells to a buyer who saw the property prior to the expiration date of the listing. The broker is required to give a list of the names to the seller after the expiration of the listing term. It must be stated in the listing agreement that the commissions are not fixed by law, but are set by individual brokers, and may be negotiable. The negotiable commission clause must be included for residential properties of up to four units and manufactured homes A multiple listing clause is very common in listing agreements this clause allows the property to be listed on multiple listing services and typically authorizes the listing agent to pay a cooperation fee to another broker out of the listing agents commission

What type of listing agreement allows a listing broker to be compensated regardless of who procures are ready, willing and able buyer? A. Exclusive listing B. Open listing C. Exclusive right to sell listing D. Net listing

Answer: C In an exclusive right to sell listing, the broker will receive a commission even if the seller finds a buyer. In an exclusive listing agreement, if the seller finds the buyer, the broker will not receive a commission. An agreement that allows the seller to make agreements with multiple brokers and whomever finds the buyer will receive the commission is an open listing. A net listing is legal in Texas, but illegal in most states and is an agreement that establishes a net price for the seller and the broker will take the difference in the sales price and the net price as a commission TRAC does not recommend using net listings

Susan is the buyer under a signed land sale contract the contract requires her to deposit earnest money with a title company within five days of signing the contract. On day seven Susan had not made the deposit. Which of the following describes her current situation? A. The contract has been voided B. The contract is unenforceable C. The contract has been breached D. The performance date has been extended

Answer: C Susan is in the fault of the contract since she has not complied with its terms. She has a breach the contract. She wants to pay the deposit money into escrow in five days and fell to do so. When a party breaches the contract the contract is not voided and Romain salad. I legal contract is enforceable regardless of a breach by Susan. The seller can choose to cancel the contract and seek any damages that may be available for breach of contract or gift Susan an extension of time to perform. It is the sellers choice to Grant an extension in this case not Susans.

Patti on the parcel of vacant land and wants to sell it. She wants to try to find a buyer for the property. But, she also wants multiple brokers working to try and find a buyer for her. Patty only wants to pay a commission to a broker if that broker finds the buyer. Which of the following listing agreement Would satisfy these conditions? A. Net listing agreement B. Exclusive right to sell listing agreement C. Open listing agreement D. Exclusive agency listing agreement

Answer: C The open listing agreement is a unilateral contract: a unilateral contract is one in which only one party makes a promise and does so in order to motivate the other party to perform. With the open listing agreement, the property owner is promising to pay a commission to the one broker who performs by finding a buyer. If Patty finds the buyer herself, none of the brokers will receive a commission because none of them performed. Multiple brokers can work under the open listing agreement, and there does not need to be a specific termination date for this type of listing agreement

A buyers agent accidentally cracks a sliding glass door window while showing a home to the client. The broker who employs the buyers agent is responsible for the damage caused to the sellers home under what theory of liability? A. Broker liability B. Employer liability C. Vicarious liability D. Strict liability

Answer: C Vicarious liability is one an employer is deemed responsible for the harm caused by its employees, agents, and contractors. The theory covers both negligence and intentional conduct. Liability is imputed on the employer for the acts of its employees, agents and contractors as long as the acts which caused the harm are connected to and within the scope of the employment. Additionally, a broker is liable for the acts of any sales agents associated with or acting for the broker. TRELA1101.803

Susan has moved in with her uncle Ben to be his caretaker. Uncle Ben changed his date to allow Susan to live on his property until he passes away, I set a time the property will be given to his daughter by way of well. Susan has to pay the bills associated with the house, including the property taxes. What type of interest does Susan have in the property? A. Life estate B. Fee simple absolute C. Life is state Pur Autre Vie D. Leasehold Estate

Answer: C Susan has a life estate Pur Autre Vie ( For another's life) A life estate is an interest in real estate, the term which is measured by human life and life as it gives a holder of the interest or the life estate tenant a limited right to use the property during the Life of the person by whom it is measured. The life estate tenant has a responsibility to pay the expenses related to the property, such as maintenance costs, property taxes, and insurance. The life estate tenant cannot seller transfer the interest. When the life estate is held by the person whose life measures the term of the life estate, it is referred to as a life estate. When the life estate is measured by the life of someone other than the life estate tenant, it is referred to as a life estate PUR AUTRE VIE When the person by whom the life estate is measured dies, the life estate will transfer upon death to a person named as a remainderman in the deed or will revert to the original owner or owners estate.

Which of the following real estate contracts is voidable? A. Where a seller enters into a contract to sell a property he does not own B. A contract that leaves out the consideration for the sale C. Where unbeknownst to the seller a buyer signs a contract when intoxicated D. After a lease is signed, the apartment building burns down before the tenant moves in

Answer: C I have audible contract is a contract that is binding on one party and the other party has the right to rescind it or legally avoid its contractual obligations. A void contract on the other hand lacks one of the requirements to form a contract and is binding on neither party. Only answer see involves a voidable contract. If the buyer can prove here she was intoxicated and did not have the intent to be legally bound, the buyer can cancel the contract. The seller would be bound to the contract and would not have any right to rescind based on the buyers condition. Answers to ANB like the consideration needed for a valid contract an example the seller must own a property in a fee simple to convey it it's a performance is a contrac becomes impossible like when a tenant can no longer move into an apartment building that burns down the contract will be void not voidable because the purpose of the contract cannot be carried out

The seller has backed out of the contract two days before closing all contingency deadlines have passed. The seller has a breach the agreement. What remedy should the buyer seek if she still wants to obtain the property? A. Sue for compensatory damages B. Sue for rescission C. Sue for specific performance D. Sue for liquidated damages

Answer: C Specific performance is a remedy that is typically sold out by an agreed buyer when his seller wants to back out of the Valley land sale contract. With specific performance, the court ordered the transfer of land to the buyer and the payment to the seller. This is civic performance is suited to real estate transactions because the land is unique and monetary damages may not fully compensate an agreed buyer

The fair housing act FHA applies to which of the following owners? A. Nathan, who lives in one side of a duplex he owns and is looking for a tenant without a brokers help. B. Barbara, living in an apartment building she owns that has three units where she rents them out herself. C. Brad an owner of a single-family home that is listed for sale by rooftop realty Inc. D. Saint James Presbyterian church renting out rooms exclusively to students of its seminary

Answer: C The FHA protects tenants and homebuyers from the housing discrimination. It applies to most types of housing but there are some exclusions. The FHA does not cover owner occupied buildings with less than four units, single-family homes sold or rented without a broker as long as the owner does not on more than three homes, and religious organizations that lease apartments for non-commercial purposes. In this question, Brad the single-family home owner, is not exempt from FHA because he uses a realtor to sell his home

Carl has a contract to sell an undeveloped tract of land to Steven and the contract has a closing date of May 10. Carl prepared for closing and was ready to close on May 10 but Steve was not ready for closing and requested an extension. What condition should Carl have included when the contract was drawn, and can be made a condition of an extension, if granted? A. A punitive damages clause B. A specific performance clause C. A time is of the essence clause D. Waiver of liability

Answer: C Time is of the essence means that all parties to the contract will perform and complete their responsibilities by a certain date. Failing to perform on time results in a breach of the contract. Without a time is of the essence clause, contracts may be interpreted to allow reasonable time to perform, and if and when a contract is breached is more indefinite. In this scenario, if Carl's contract did not have a time is of the essence clause, it would be advisable to include a time is of essence clause into the contract with an agreement on an extension, so Steve will be motivated to be ready on time at the next closing date, and if he's not ready Carl can declare a breach so if he chooses

An investor wants to quickly determine if a rental property would be a profitable investment she uses the gross rent multiplier to see how it compares with other properties. What formula establishes the gross rent multiplier? A. Property Price X Gross Rental Income B. property price X Gross Operating expenses C. Property price / Gross Rental income D. Property price / Gross Operating Expenses

Answer: C Property price / Gross rental income The formula to find the gross rent multiplier is GRM= PP / GRI For example, if the purchase price is $1,500,000 and the annual rental income from the property is $250,000 the GRM is 6. Investor will compare this number with other similar rental properties in the area and if the GRM for these properties is 8 to 9, the subject property would appear to be a profitable investment

Ignacio except Patrick's offer to purchase Ignacio's home, and both have signed the contract. Closing will take place on or before February 28, I'm on the way. The contract is now a _________ contract. A. Executed B. Executive C. Executory D. Unilateral

Answer: C executory And executory contract is a contract that is not fully performed are completed. Most contract in real estate begin as executory contract. A mortgage agreement, for example is a contract which the borrower pays money over a term to the lender. Another example is a listing contract a real estate broker Mark is a property for a defined time. Until it sold. Finally an installment contract is an executory contract, were the buyer except seller financing and paid overtime to acquire legal title. An executed contract is a contract that is complete a confirmation, like a sales contract when the customer purchases good at the store

What is the assessed value of real estate? A. The current market value of property based on appraisal B. A properties value determined by a willing buyer and seller C. A properties value used to determine applicable taxes D. The present worth of the futures benefit of ownership

Answer: C. A properties value used to determine applicable taxes An assessment and properties assessed value is a government valuation of property for tax purposes. Tax assessors conduct the evaluation process and it is done on a periodic basis. If the properties assessed value add appraised value or current market value may be the same, but assessed value typically does not keep up with the fluctuations of the market which is due to the periodic nature of the assessment process

Which of the following would be considered a functional obsolescence? A. High replacement costs B. Unrepaired water damage to a ceiling C. In efficient or outdated floor plan D. Lack of exterior maintenance

Answer: C. inefficient or outdated floor plan Functional obsolescence refers to the reduction of the usefulness of real estate due to an outdated design feature that cannot easily be changed. Functional obsolescence results in a loss of property value due to an obsolete feature. The real estate may have been made inferior because of the technical advances. Some examples are inadequacy of wiring, plumbing and HVAC systems, and an efficient number of bathrooms or closets, faulty design, or lack of automation. It is considered curable if it can be fixed without too great and effort or expense.

A real estate agent represents sellers under an exclusive right to sell agreement. However, before a buyer astound, the agent passes away. What is the effect of the death of the real estate agent on the agency relationship with the seller? A. It terminates the agency relationship B. It makes the agency avoidable C. It suspends agency relationship D. It has no effect on the agency relationship

Answer: D An agency relationship can be terminated in a number of ways including the successful completion of objective of the relationship, the expiration of the duration of the agency relationship, the death of a principal and the death or bankruptcy of the broker for whom the agent works. A real estate agency agreement is between the seller or buyer and the broker, not the agent. The death of a real estate agent does not terminate the agency relationship. If the agent passes away the broker can assign another agent to represent the seller or buyer

Which of the following addenda add a contingency to closing on a real estate contract? A. Addendum for coastal area property B. Addendum for buyers temporary residential lease C. Addendum regarding fixture leases D. Addendum for sale of other property by buyer

Answer: D The addendum for sale of other property by buyer makes the transaction contingent on the buyers selling their existing property before closing the current transaction. Buyers do this when they need the funds from the closing of their current property to close on their purchase. If the closing does not happen as stated, the buyer may terminate the contract and have their earnest money deposited in the escrow return to them. The other agenda listed as option do not contain contingencies, but serve another purpose such as notice of existing conditions

The buyer and seller agree in the real estate sales contract that the buyer will pay $150 for a seven day termination option. The buyer or the buyers agent is to deliver the option fee to the escrow agent within three days of the effective date of the contract. The contract was effective on March 13. It is now March 20 and the option fee has not been delivered to the escrow agent. The buyer wants to exercise his right to terminate the option can the buyer exercise the terminate option under these conditions? A. Yes because a contract can be terminated within seven days after signing B. Yes if the buyer since the fee on the seventh day C. Maybe if the buyer has a good excuse for delivering the fee to the escrow agent D. No termination option exists

Answer: D The termination option never came into being since the buyer felt to deliver the option fee within the time stated in the contract. Without the stated amount being paid within the time required there is no option to terminate, and the buyer may not unilaterally terminate the real estate contract. The time is of essence with termination options and strict compliance for performance is required.

An appraiser estimated the value of 6803 Palm Tree Ln. at $375,000. The seller was in a rush to sell quickly due to a job transfer to another state. The home sold for $347,500. The home is insured for $400,000, and the seller had recently spent $50,000 on upgrades to the home, what is the homes market price? A. $400,000 B. $375,000 C. $425,000 D. $347,500

Answer: D $347,500 is the market price. Market price is the price of the buyer actually paid. Market price and value are many times about the same. Insured value and upgrades play no role in determining a market price

Nelly has specialize in apartment locating in her short career as a broker. A client asked her to be property manager for a large commercial office building. If Millie excepts this work, An issue may arise in which of the following fiduciary duties? A. Loyalty B. Obedience C. Accounting D. Reasonable care and skill

Answer: D An agent must use reasonable care and skill in serving the principles interest the standard of care is that of a competent Real estate professional who've change the facts and conducts investigations that a prudent real estate agent would be expected to conduct. Since the broker is an apartment locating specialist, she would be working outside of her area of expertise and may be unable to provide the reasonable care and skill needed to manage a commercial office building. Nelly should receive some education and experience in property management before taking on this client. A broker owes the following fiduciary duties to a client: Obedience, loyalty, disclosure, confidentialities, accounting, reasonable care and skill Use the acronym OLDCART remember these duties. The duty of obedience means that an agent must act in the direction of his principal the duty of accounting means the agent must be responsible with the fines of his principal the duty of loyalty means that the agent must put clients interest ahead of its own and always act in the best interest of the principal

In order to receive compensation in a real estate transaction, the agent representing the buyer needs to demonstrate that she has a current, active real estate license and that sheet: A. Prequalified the bar before showing the property B. Contracted with the buyer in prior sales C. Knows the market area in which the house is located D. What is the procuring cause of sale

Answer: D And a real estate transaction, the determined factors that secure the payment of commissions to a buyers agent our current, active real estate license and proof that the agent was the procuring cause that brought the buyer the property which led to a purchase and sell contract. The realtor does not need to be present when the deal is signed, but needs to show that the realtor initiated an unbroken chain of events that led to the agreements and the sell between the buyer and seller. Generally the law requires a bit more than just showing a property to a buyer

An example of involuntary title transfer would be: A. Barry sells his land to Evelyn B. Harry gifts the property to his son C. Alvin wills his home to his sister D. Zack's property is sold in foreclosure

Answer: D For closure is done without the consent of the owner and is, therefore, involuntary. When an owner has the choice to choose the disposition of the property, that is voluntary. When the right has been removed due to the default by the bar or on a mortgage or statutory notorious use by another without the property owners permission, this is involuntary alienation

Steve just moved to the area and is looking to buy a home. A coworker referred Steve to Carol, a real estate agent. After talking on the phone, Carol showed Steve a few homes and Steve ask Carol to prepare a written offer to send to a sellers agent, which Carol did. What is the nature of the relationship between Steve and Carol? A. General agency B. Special agency C. Implied agency D. Both B and C

Answer: D The nature of carols agency is special and implied. An agency relationship can either be general, special, or universal. A general agency authorizes an agent to handle a broad range of tasks for the principle. A real estate agent typically has a special agency, where the agent is authorized to act on a specific task. A universal agency is where the agent is authorized to act on behalf of the principal in all legal matters. In this case Carol was retained for one specific task, namely to find a home for safe, so she is a special agent. The agency between Stephen Carol is also implied since there's no evidence that the parties verbally agreed to form an agency relationship. An agency relationship can either be expressed or implied. An agency relationship is expressed when there is a specific agreement that covers the relationship either in writing or verbally if there is no such express agreement an agency relationship may be implied if the party's acting such a way that the manifest an agency relationship

A broker that provides property management services must place funds received as a security deposit and advance rent in: A. The landlords account B. The brokers operating account C. The landlord's business account D. The property management trust account

Answer: D Real estate brokers in Texas must have a trust or escrow account in regarding a tenant security deposit and advance rents when doing property management, separate from the brokers operating account. A broker is prohibited from commingling money received by way of property management activities and his or how on account. Paying an operating expense from a brokers trust account is evidence of commingling

A seller has instructed an agent, in writing, to sell the property on the MLS for an amount set by agent so long as the seller receives $100,000 from the sale proceeds. The agent informed the seller of the markets conditions and expressed hope that the property with the higher than the desired amount. The arrangement allowed the broker to keep as her commission the amount that exceeds $100,000 in the sales proceeds this type of listing is a ________________. Is this type of listing legal in Texas? A. Pocket listing, no B. Open listing, yes C. Exclusive right to sell, no D. Net listing, yes

Answer: D Net listing, yes And that listing is more like a form of compensation and then a listing. A seller must be fully aware of market conditions and insist on it in writing. While it is illegal in many states due to the potential for a conflict of interest, it is legal in Texas. TREC, however does not recommend it. There are rules in place to protect sellers in net listings. A pocket listing is a listing in which the seller does not want the broker to list the property for sale on the MLS or share it with other brokers. It is intended to sell the property without marketing it publicly. The national Association of realtors has moved to make pocket listings illegal

4525 Moonstruck Ln. known as Lot 223, block 12 of Spring Oaks section 3 is unique and its location. No other real estate can be defined exactly as this property due to its physical characteristics of: A. Area preference B. Immobility C. Indestructibility D. Non-homogeneity

Answer: D Non-Homogeneity The physical characteristics of land are as follows: Immobility means the land cannot be moved to another location, indestructibility means that the land cannot be destroyed or virtually remains unchanged over time, non-homogeneity means no to parcels of land share the same exact geographical location Area preference is the location and is an economic characteristic of land

Salsa petro, seller and Bob Smith, a broker entered into a written listing agreement to sell Pedro's condominium. The type of listing agreement wasn't exclusive right to sell. Pedro told Smith not to show the condo to anyone prior to the carpet being replaced with hardwood floors. While the installers were taking out the wall-to-wall carpeting and installing the hardwood floors, broker Bob showed the home to Emily Chen. Jen submitted an all cash offer for higher than the listing price, and Pedro excepted it. One month later the transaction closed and title was transferred to the new owner. What type of agency did the listing agreement create between Pedro and Smith A. Agency by ratification B. Agency by estoppel C. Ostensible agency D. Express agency

Answer: D express agency Explanation: express agency is an agency relationship intentionally created by the principle in the agent. It is expressly stated either in formal written form or through a verbal agreement. Here are the exclusive right to sell listing agreement between the seller and the broker is the formal written expression of the agency relationship between these two parties

An appraiser is assigned the valuation of a property that is adjacent to an expressway. After inspecting the property the appraiser adjust the volume down due to the excessive noise, what is the factor called, an appraisal that reduces the value to such things as continual sound of a nearby expressway, A. Physical deterioration B. Functional obsolescence C. Insurable depreciation D. External obsolescence

Answer: D external obsolescence External obsolescence occurs when a property loses value due to negative influences outside the control of the owner such as an expressway adjacent to the property or neighborhood deterioration due to several foreclosures in the neighborhood

Listing agent dick Richards advertise his listing on the MLS and represented that the master bathroom in the home had been " Totally remodeled" Richards relied on what his client told him and did not further investigate. In fact, the remodel of the bathroom did not include plumbing, pipes and lighting fixtures. Could agent Richards be liable for the misrepresentation? A. Yes, because he intentionally placed a misleading advertisement B. No, because he was merely relaying information conveyed to him by the seller C. Now because reasonable people would understand that totally remodeled doesn't really mean completely remodeled. The word totally is a figure of speech D. Yes because he preached a duty of care when he misrepresented facts in his advertisement

Answer: D. Explanation: superlatives, such as totally or completely when combined with descriptive words like remodeled and upgraded can mislead. The phrase totally remodeled master bathroom, for example can mean many things. Is everything in the bathroom new? What about the pipes or lighting fixtures? If the listing agent doesn't know for sure and it's not enough to rely on the sellers word, it's safer to replace totally with neutral Characterization like beautiful your impeccably. Generally negligent misrepresentation occurs when the agent has not filled the duty of discovery and due care

Two brokers in Spring branch meet to discuss each other's commission structure. They discussed that they heard that a large brokerage office in the area has been charging 7% listing fees. Together they agreed that they will to charge all sellers 7% on listings. They feel this will give them leverage and demanding higher commissions. This practice is prohibited in which of the following acts? A. Sherman anti-trust act B. Fair credit reporting act C. Federal trade commission act D. Truth in lending act

Answer: Sherman antitrust act Promotes fair competition by prohibiting agreements amongst competitors to fix prices. In a real estate transactions commissions must be negotiable and brokers cannot fix listings or selling commissions or fees to force a non-negotiable fee on consumers

Stephen owns a property in Smithville Texas he is the only owner and does not have to share this bundle of legal rights with any other person. What type of estate does he have? A.Fee simple absolute B. Estate for years C. Tenancy in common D. Life estate

Answer: a Fee simple absolute Stephen owns the property and fee simple absolute. It is ownership by one person or entity without any limitations or conditions. The owner may do what they wish with the property only subject to encumbrances such as liens, Deed restrictions, police powers and taxation

The sales comparison approach or market data approach to establish the value of a property in an appraisal is based on which of the following principles? A. Substitution B. Transferability C. Utility D. Replacement

Answer: a substitution The principle of substitution forms the basis for the sales comparison approach or market data approach in the appraisal. The principle states that a properties highest value is established by the cost to purchase an equivalent substitute, with the same use and design, in the same geographical area. The principal demonstrated, by example, with the question why would someone spend $500,000 for a property if they can get a similar property in the same area for $300,000? The sales comparison approach is often used to determine the value of a property and consist of selecting similar properties with the comparable physical, geographical, and financing characteristics, among others, and evaluating the recent sells data to arrive at the most probable market value. The cells considered relevant are usually no older than one year old. More recent sales are preferred. Appraisers will make adjustments to comparable assets to account for any minor differences, like number of rooms or bathrooms, to arrive at a market value. Real estate agents will use the approach more generally and will typically use the comparable sales to arrive at an average cost per square foot that can be applied to the property they seek to buy or sell

Which of the following basic formulas will determine the net operating income or in oh I have an apartment building when used in the income method of appraisal? A. NOI= Gross Revenue + operating costs B. NOI = operating costs X Gross revenue C. NOI = Gross revenue - operating costs D. NOI = operating costs / Gross revenue

Answer: c NOI= Gross revenue - operating cost The NOI measures the profitability of an income producing property. To find an OI the appraiser deducts or subtracts The operating expense incurred on the property from the gross income of the property. Special considerations such as vacancy rates in apartment buildings must also be considered. After the NOI is established, it is divided by a capitalization rate which represents the rate of return expected on the investment. For example, a building with an NOI of $500,000 and a cap rate of 8% is worth $6.25 million

Which of the following powers allow a state to take privately owned land for the expansion of a major highway that requires the state to file a petition in court for condemnation and offer a fair market value to the private landowner? A. Escheat B. Taxation C. Eminent domain D. Zoning

Answer: eminent domain Eminent domain is the right of the state to take privately held land for public use after falling for condemnation with the court offering fair market value for the property and proving it is for the greater good for the public. Police power is a governing agency's right to impose regulations that affect our property owner uses a property or how structures are built. The street is the taking of privately held land when a person has died interstate and the state cannot find And heir to pass it to. In the event an heir cannot be found, the state will auction off the property and place monies collected in the Texas school fund

Darrell has purchased property in a housing development and his dad has restrictive covenants created by the developer to manage the neighborhood. By the rules, he is not able to put his trash out before 6 AM the day of pick up. What type of land use control is this?

Answer: private land use control Deed restrictions are private land use controls created by developers in a housing development to maintain property value and aesthetics of a community. The restriction run with the land in that they are past from owner to owner over time when ownership is transferred. Public land-use controls our governments police power to provide health, safety, and welfare to its citizens and the community. A government police power includes the powers of taxation, zoning and environmental regulation. Municipal and zoning ordinance our government regulations.

An appraiser has steps a follow together and evaluate information in order to come to an estimate or opinion of value for a property. What is the final step prior to issuing the appraisal report where the appraiser reviews the data and develops an opinion of value after considering the different approaches to value, like the sales comparison approach? A. Statement of purpose B. List of data needed C. Gather market data D. Reconciliation

Answer:D The last step for an appraisal prior to issuing that final report is reconciliation. The appraiser may use multiple appraisal approaches for one appraisal, like the sales comparison approach, they cost approach, and the income approach the appraiser does not average out the different approaches instead here she will review the information and use the applicable approaches to the value and then reconcile them in an opinion of value

An owner replace the roof on their home seven years ago and paid $5400. This roof has a 25 year economic life. What would be the depreciated economic value of the roof today using a standard depreciation method? A. $1512 B. $3888 C. $3780 D. $4320

B. $5400 / 25 year economic life =$ 216 depreciation per year 18 years left X $216 per year = $3888

What type of insurance will protect her broker for mistakes her agents make in the paperwork of real estate transactions that lead to financial harm to clients? A. Business interruption B. Errors and omissions C. General liability D. Casualty

B. Errors and omissions insurance also referred to as professional liability insurance, covers erroneous, late or incomplete work that causes financial harm to clients. It is specialized insurance purchase in addition to general liability insurance. Errors and omissions insurance only covers circumstances where the acts of omissions of the agent were unintentional without knowledge of the error or omission in other words negligence it does not cover matters were fraud was committed. Business interruption insurance is for business loss due to business shut down for various reasons. General liability covers claims for bodily injury or property damage resulting from a business operation. Casualty insurance protects the insured if they are found legally responsible for an accident that causes injury to another person or their property. TRAC now requires errors and omissions insurance for brokers who do not own at least 10% of a brokerage

A seller of a home built part of 1978 must provide to buyer a required lead-based paint disclosure what must accompany the disclosure? A. Lead inspection report B. The pamphlet protect your family from lead in your home C. The sellers disclosure notice that the seller received when purchasing the home D. The environmental assessment addendum

B. If a home is built prior to 1978 a seller is required by federal law to provide when written disclosure of lead-based paint or lead-based paint hazards that they are aware of on the property. Lead-based paint is especially dangerous to children. Along with closure, the seller must deliver to the buyer the pamphlet "protect your family from lead in your home"

You are the listing agent on a $250,000 home the property is an escrow and you discover that there has been a roof leak in the home some years back. After the leak, the homeowners insurance cover the necessary repairs and the roof was made good as new both structurally and aesthetically. The history of the roof leak is not readily apparent when a physical defect is not readily apparent that defect is a ______. A. Patent material defect B. Latent material defect C. The fact that the agent is responsible to disclose D. Defect that should always remain a secret

B. Latent material defect explanation: the word latent means not readily apparent. Most states do not make the real estate licensee responsible to see and disclose latent defects the word patent means readily apparent a patent material defect is one that is visible without special tools and without opening up structural elements of the home. The word material pertains to issues associated with the physical condition of the home or land. Since the roof is clearly part of the physical property, any defect whether current or past is material the licensee is responsible to disclose all material defects that are known or that Should have been known

A person that fraudulently makes a misrepresentation of fact, opinion, intention, or a law for purpose of inducing another to act or refrain from action, is subject to liability to the other in deceit for pecuniary loss cause to him by his justifiable _____________ upon the misrepresentation. A. Lawsuit B. Reliance C. Outrage D. Profit loss

B. Reliance explanation: the agent is obligated to discover facts that a reasonable person would feel are important in choosing a course of action, irrespective of whether those facts are favorable or unfavorable to the clients position. The statement in the question in this case law arising from Arizona case of Coleman versus watts 1990 887SSUPP2D944

The Texas real estate commission TRAC was established in the late 1940s to administer and enforce Texas real estate license act TRE LA. The commission has which of the following powers to command witness testimonies when investigating consumer complaints against the licenses and unlicensed activity? A. Power of attorney B. Subpoena power C. Power to arrest D. Power to enforce the states penal code

B. TRAC has been granted the power of subpoena to commander witness testimony by virtue of TRELA1101.157 subpoena authority under TRELA1101.552-1 101.702, TRECE may impose disciplinary actions and assess penalties on violators from $1000 up to $5000 per day per violation

Which federal agency is given authority to set pollution discharge limits and enforce regulations under the federal clean water act? A. Federal trade commission B. Environmental protection agency C. Department of agriculture D. Department of housing and urban development

B. The clean air act was enacted to protect the nations waterways through regulations that limit the type of amount of pollutants that property owners can discharge into the waterways the environmental protection agency EPA was given the authority under the act to set pollution discharge limits and enforced regulations

What clause in a mortgage requires a lender to release the land or transfer title to the borrower upon the borrower satisfying all payment conditions? A. Acceleration clause B. Defeasible clause C. Due on sale clause D. Alienation clause

B. The defeasance clause in a mortgage stipulates at the property title will be transferred from the lender to the borrower and a release of lien will be filed by the lender upon receipt of the final payment from the borrower

A developer is interested in purchasing a commercial property that has been occupied by a convenience store business with fuel pumps on site. On the agents advice the developer orders a phase 1 environmental assessment. What does a phase 1 assessment determine? A. Whether there is actually contamination present B. What type of contamination is present C. The likelihood of contamination being present D. The levels of contamination

C. An environmental site assessment consists of two possible phases one and two the phase 1 assessment investigate the possibility or likelihood of the environment toll contamination being present. A phase 1 investigation is done by visual inspection review of the youth history on the site and review of governmental records if phase 1 identifies a recognize environmental condition a phase 2 study would be warranted a phase to study assesses what are the contamination is in fact present a phase 2 study and thought sampling and laboratory testing in phase 2 soil and water samples may be taken and a valuated at a lab and of dangerous levels are found recommendations for remediation may be made a phase 1 assessment may be required by a lender

When does asbestos become dangerous? A. When it gets wet B. When it's covered and or sealed by a barrier C. When it is moved and particles become airborne D. None of the above

C. Asbestos is made by combining six natural occurring minerals that resist heat. It was used in the construction of real estate for many years. Siding floor tiles are common items made of asbestos That's still must be disclosed in real estate practice asbestos is regulated and is not banned in the United States asbestos is friable meaning that it has fibers that break down over time and become dangerous when moved her disturbed causing particles to become airborne. Dangers arise when someone is repairing remodeling or tearing down the structure containing the contaminant. If not done properly particles become airborne or in held. Asbestos Is known to cause mesothelioma lung cancer and other cancers

Which The following was established under the comprehensive environmental response compensation and liability act CERCLA to help further the cleanup of contaminated sites across the nation A. Tribal sovereignty B. Water management plan C. Superfund D. Emissions standards

C. CERC LA became law in the United States in the 1980s it created attacks on petroleum and chemical industries and a broad federal authority to respond to release or threatened release of toxic and hazardous substance that could endanger the public. $1.6 billion was collected the first five years, which was increased to 8.5 billion under the superfund amendments and reauthorization act as a RA. Informally known as a suuuper fund, it provides the funds to pay for the cleanup and restoration of the contaminated sites. Where there is no viable response party, the super funds pay for the cleanup and remediation. If a responsible party is found they can be forced to do the cleanup themselves or reimburse the government for an EPA led cleanup

Martin purchase his home for $325,000.10 years ago. His principal and interest balance on his mortgage is $228,253 a recent appraisal valued his home at $515,000 how much equity does Barton have? A. $96,747 B. $121,747 C. $286,747 D $840,000

C. Equity value is Basically the market value above the total sum of debt on the home to determine equity subtract the sum of all debts usually the amount left on the mortgage and subtract that from the current market value in this case; $515,000 -$228,253 equals $286,747 equity value

A mortgage insurance premium MIP is required for which of the following types of loans A. Conventional loans B. VA insured loans C. FHA loans D. Both B and C

C. FHA loans help low income and or low credit borrowers become homeowners persons with credit scores as low as 580 and with low down payment at least 3.5% can obtain FHA back home loans to protect the lender mortgage insurance premiums are required for FHA loans borrowers have to pay an MIP each month which is added to the amount they pay for their mortgage conventional loans sometimes require private mortgage insurance PMI which is similar but Different than the MIP a conventional mortgage is a mortgage that is not backed by a governmental agency PMI as usually required when a borrower cannot make a down payment of 20% on the home purchase price the insurance benefits of the lender if the borrower defaults on the loan PMI is typically paid for by the borrower by adding an amount for the PMI to the monthly mortgage payment there is no monthly insurance payment with VA loans a fee is charged by the VA

Which of the following constitutes the unauthorized practice of law? A. An agent advises a seller how much he should list at home. B. An agent explains to the buyer how to de posit the earnest money C. An agent tells her seller that it's OK to cancel contract because the risk is small D. An agent schedules and communicates with a home inspection company

C. In Texas, as an Allstate, only licensed attorneys are authorized to practice law. The practice of law is defined as the application of legal principles in judgment with regards to situations that require the knowledge and skill of a person trained in the law. Brokers and agents must not engage in the practice of law the practice of law includes such acts as giving legal advice on whether a breach occurs or the consequences of a breach of contract. If a broker or agent engages in an unauthorized practice of law, it violates the ethical and legal provisions for real estate professionals. Brokers and agents can explain the meeting of a contract. They can perform transaction management duties such as scheduling home inspections or a closing. They can advise their client on real estate. However, they are not permitted to: draft legal papers, explain the potential legal outcomes of a dispute, or evaluate a legal issue and give advice on how to proceed

A broker or sales agent may be disciplined by TREC for all of the following acts except: A. Sharing that a client will pay more or except less than the listed price B. Negotiating for a party other than the client C. Disclosing to the seller client that the buyer cannot afford the sellers property D. Disclosing that their client is having financial problems

C. Licensee has a duty of loyalty and are never permitted to disclose their clients Confidential personal information or information that would place their client in a less favorable bargaining position except for the information that is required by law to disclose an agents duty as it is close partner and material facts related to the property condition if the representing the seller or that the buyer is financially capable of making the purchase if representing the buyer a clients personal matters are to remain confidential forever TRE LA 1101.65 to be

Varney is showing his client fire Trina a listing from another broker. During the showing Varney tells Trina that the jetted garden tub in the hall bath is a new Jacuzzi believing it to be so. Trina liked the idea of having a Jacuzzi in the house and makes an offer which is accepted after closing trying to find out the tub is a standard American tub and a Jacuzzi trying to contact her attorney and Sue's Barney for the difference in value between the tub and a Jacuzzi plus attorneys in court cost under what theory of liability will only be found liable to Trina if any? A. Fraud B. Puffing C. Misrepresentation D. Non-disclosure

C. Misrepresentation can be either intentional or unintentional. In this case Barney's miss statement appears to be unintentional consumers in Texas are protected from unintentional and intentional misrepresentation under the DTPA

If a loan is made through a local bank, it is originated in the ___________market? A. Bond B. Secondary mortgage C. Primary mortgage D. Principal

C. Mortgage loans are originated in the primary mortgage market. Origination our loan applications. These loan applications are made through banks, mortgage bankers, and mortgage brokers the secondary mortgage market is a market where investors buy and sell previously issued mortgage loans

Friends best friend Susie on seven rental houses and is going out of the country for two months. Susie asked Friend to perform all tasks necessary for the rentals including arrangements for repair persons to come when needed pay bills with a company checkbook collect tenants rent payments issue receipts and make deposits into her trust account while she is gone Susie has offered Friend $400 per month for her health can Fran help Susie in this way? A. Yes as an independent contractor B. Yes since Susie is the owner she can delegate those tasks C. Yeah since the conversation is nominal D. No

D Friend is not licensed and cannot perform the task for Susie under the Texas law Fran would be considered a broker since she would receive valuable consideration for performing these tasks including collecting and depositing rent and paying bills

in a Lein theory state Which party to a mortgage loan transactions hold legal titles to the real estate over the term of the loan? A. Trustee B. Lender C. Underwriter D. Borrower

D. In a lien theory state, the borrower holes legal title over the term of the loan and the lender has a lien against the title until it's paid off. When the loan is paid off to Linda release is Elaine from the title in a title theory state such as Texas a deed of trust is used which appoints the trustee to hold the title for the benefit of the lender over the terms alone. The trustee transfer is the title of the borrower once the borrower pays the debt

How does a purchaser of real estate achieve bona fide perspective purchase or status under CERCLA to avoid liability for hazardous substances on the property? A. Perform due diligence before acquiring the property B. Take reasonable steps to stop continuing releases of contamination C. Call me cooperate with EPA response actions D. all the above

D. Prior to 2002 if I purchase or either knew of a contamination or field to do due diligence to learn of possible contamination the purchaser was liable for the cost of the cleanup of contamination on the property under CERCLA. Amendments to CERCLAN 2000 to change this approach amendments in CERCLA in 2002 created a status called bona fide prospective purchaser BFPP who did not become liable for the cost of remediation even if the purchaser knew of or had reason to know that the contamination existed on the property

Of the following statements used in bank advertising for home mortgage loans which one would trigger full disclosure under the truth in lending act TILA regulation Z A. No credit check, low down payment B. 100% financing for those who qualify C. Special financing for credit scores below 620 D. 5% down, payment 750 per month for 25 years

D. TILA was enacted in 1968 and is implemented by the federal reserve board through regulation to protect consumers in transactions with lenders and creditors. TILA apply to most types of credit. The regulation protects customers from inaccurate and unfair practices on the part of the lenders. The chief part of TILA is requirement For the proper disclosure of information and credit transactions. When certain terms called triggering terms are used in advertising literature, broadcasted online, the regulations require the presentation of the terms of the credit agreement. The triggering terms are set and monitored by the federal trade commission. Triggering terms are terms that defined the conditions under which a consumer will borrow money when certain terms are use there's a trigger term requiring certain disclosures when any of the following terms are used disclosures must be made in accordance with TILA regulations: -the amount of a down payment expressed as a percentage or dollar amount -The amount of any payment expressed as a percentage of a dollar amount -The number of payments -total time required to pay -The finance charge amount If any of the above terms are use the following disclosures must be made: The amount or percentage of the down payment, the repayment terms, and the Angel percentage rate terms must be set forth in full

The Texas water code defines a wetland as an area that has soils that are unindicted or saturated by surface or ground water in a way that supports vegetation that grows in water which of the following is not included as a wetland under the code? A. Swamp B. Marsh C. Prairie pothole D. Irrigated farmland

D. The Texas water code does not include the following in the definition of wetland: Irrigated farmland, man-made wetlands of less than 1 acre, and man-made wetlands not made with the objective to be a wetland

A property manager is trying to figure out what an apartment communities occupancy ratio is she knows that there are three model units 12 units available for lease and a total of 225 units on the property what is her current occupancy rate? A. 95% B. 94.6% C. 67% D. 93.33%

D. To determine the occupancy rate first determine the number of units occupied: 225 units -3 models -12 on occupied units = 210 units occupied by tenants Next divide the difference by the total number of units; 210÷225 = 93.33%

Unpaid property taxes appear on the settlement statement as a: A. Debit to buyer B. Credit to seller C. Debit to buyer and credit to seller D. Debit to seller and credit to buyer

D. Unpaid property taxes are prorated and reflected in the closing statement as a credit to the buyer and the debit to the seller

90 year old Zachary signed a written power of attorney given his daughter Gail authority to handle any and every kind of business for Zachary, including decisions about his finances or death decisions disposition of real estate and any other transactions that might arise. Gail has what kind of agency A. Implied agency B. Express agency C. Universal agency D. General agency E. Both B & C

E explanation Gail is authorized to perform Andy and all business for her father. With or without regard to particular job and without regard to what are the business is certain or uncertain does she has a universal agency the agency as stated in his therefore also an express agency universal agency should be in writing in order to carry weight in the other parties at the transaction although writing is not required for enforcement of the agency in court

Kyle a real estate broker received an offer on one 0574 Meadow Flowers Ln. from an attorney that represents the buyer. The attorney has asked Kyle to split the commission with him as he would do with any other cooperating broker what should Kyle tell the attorney?

Tell the attorney that the broker cannot share commissions with an unlicensed person. TRAC rules prohibit a broker from splitting commissions with an unlicensed person 535.147 the attorney would have to see compensation from his client

Buyer Jane Wyman Falls a civil suit against her agent Jack planned for not informing her of the presence of mold when he had knowledge it was present. After a trial the court ruled in Jan's favor and entered a judgment against jack if Jack is unable to pay the judgment amount is Jan provided another means by which To collect on her judgment?

Yes through the Recovery trust account TREC collects $10 per broker per sales person application to fund the recovery trust account RTA a consumer that has been a grieved by the acts of a licensee may make application for payment from the RTA after obtaining a court judgment. The RTA will pay up to $50,000 per transaction and no more than $100,000 per licensee for multiple transactions. The licensee will have to pay back funds to the RTA and the licensee may be disappoints suspended or revoked of their license by TRAC and or assessed penalties in the process