Contracts Missed Questions
Charles is selling his property to Seth. Charles is financing part of the transaction for Seth, who will make payments to Charles while Charles retains the property title. What is this an example of? A land contract An assumable mortgage A straight-term loan A wraparound mortgage
A land contract
How can an easement be terminated? Abandonment Covenant Lis pendens Restriction
Abandonment
Through which covenant does a grantor offer assurances that there are no other claims or liens against the title, other than those in the public record or the deed itself? Against encumbrances Quiet enjoyment Right to convey Seisin
Against encumbrances
Which of the following is more likely to act as a closing agent? An attorney or title company representative The broker The lender The seller
An attorney or title company representative
Cynthia loves her apartment and would like to have the option to buy it once her lease is up. Who is the best person to help Cynthia prepare a lease option? A real estate attorney A real estate investor A real estate licensee Her landlord
Attorney
At the time of closing, the buyer and the seller agents will close on which contract? Brokerage agreement Listing agreement Sales contract Title insurance contract
Brokerage agreement
What mortgage document is most commonly used to secure a home loan in Texas? Deed of trust Land contract Mortgage VA loan
Deed of trust
What makes urea formaldehyde foam insulation a health hazard? It contains asbestos. It contains formaldehyde. It contains radon. Levels increase over time.
It contains formaldehyde.
Jasmine rents on a daily basis. If she decides to leave, she has to give her landlord 24 hours' notice. What type of tenancy does Jasmine have? Estate for years Month to month Periodic estate or tenancy at will Tenancy for shorter periods
Tenancy for shorter periods
Eva, Stella, and Lynn owned a vacation home two blocks from the beach. Sadly, Stella passed away over the winter, so when summer arrived, Eva and Lynn shared the home with Stella's nephew Drew, to whom Stella willed her share of the property. What type of ownership is this? Estate in severalty Joint tenancy Tenancy by the entirety Tenancy in common
Tenancy in common
In which form of co-ownership is a person's ownership inheritable? Joint tenancy Tenancy by the entirety Tenancy in common Tenancy in severalty
Tenancy in common
Sheila owns a timeshare that gives her ownership of the property for a certain number of weeks per year in perpetuity. What type of timeshare is this? Eternal timeshare Timeshare estate Timeshare in perpetuity Timeshare use interest
Timeshare estate
With a mortgage, who or what holds equitable title to the property? Borrower Lender State Trustee
Borrower
Who are the parties involved in a loan secured by a deed of trust? Beneficiary and lender Borrower and lender Borrower, lender, and trustee Lawyer, borrower, lender
Borrower and lender and trustee
What must sellers provide prospective buyers of homes built prior to 1978, in addition to the federally required disclosure form? EPA lead safety pamphlet List of reputable home improvement contractors Verbal assurance that the home is lead-free before offering it for sale Written proof that the home is lead-free
EPA lead safety pamphlet
Leon and Beth own 1/13 of a timeshare estate. They own weeks 20 and 21, and also weeks 40 and 41. These weeks are inheritable. What type of ownership is this? Estate for life Fee simple Leasehold estate Periodic estate
Fee simple
Which type of an estate doesn't end automatically when the stated event or condition occurs? Fee simple absolute Fee simple determinable Fee simple subject to a condition subsequent Freehold
Fee simple subject to a condition subsequent
In Texas, a suit for possession breach of lease remedy is also referred to as a _______. Actual conviction notice Forcible detainer notification Right of repossession Writ of possession
Forcible detainer notification
Calista is in the process of evicting one of her tenants. As part of the actual eviction process, she must file a suit for possession in the local justice of peace court. What is another name for this type of suit? Constructive eviction suit Forcible detainer suit Lease modification suit Writ of possession suit
Forcible detainer suit
Which one of the following new Texas licensees is exempt from liability under the 2011 amendment to the DTPA? Angela, who committed unintentional misrepresentation Jennifer, who advised a customer not to buy a listing because she wanted it for herself Justin who accidently advised his client incorrectly Vance, who knowingly committed fraud
Justin who accidently advised his client incorrectly
Which of the following statements about counter-offers is true? A counter-offer can be retracted only once. Once a counter-offer has been made, the prior offer is cancelled. Only the seller can make a counter-offer. To be legal, counter-offers must be numbered or lettered and dated.
Once a counter-offer has been made, the prior offer is cancelled.
In Texas, the effective date of a contract, on which all deadlines are based is _______ the executed date of the contract. 15 days after One day after One day before The same as
One day after
When does substantial performance of a contract occur? Both parties fully meet the contract's terms. One or both parties have completed only a portion of the terms agreed to in the contract. One party did not meet the terms of the contract in the specified timeframe and is being required to do exactly what was agreed to in the contract. One party has met most but not all of the terms specified in the contract, and may be required to pay damages for the terms not met.
One party has met most but not all of the terms specified in the contract, and may be required to pay damages for the terms not met.
Margo is the potential buyer of the property in an option contract. Margo is the ______. Optee Opter Optionee Optionor
Optionee
Grant owns a property that's subject to an option contract. Grant is the ______. Optee Opter Optionee Optionor
Optionor
Chevy is an optionee. What's his sole responsibility? Exercise the option. Make an offer. Make monthly payments. Pay the option fee.
Pay the option fee.
Charles runs a small vacuum cleaner repair business. His commercial property ______ lease agreement has him paying a base rent plus an allocated amount of gross sales above a certain threshold. Graduated Gross Net Percentage
Percentage
Nancy Simons died without leaving a will. The court will determine who her rightful heirs are and appoint an administrator to distribute her estate's assets. What's this process called? Probate Probative investigation Rightful heir determination Underwriting
Probate
At the closing of a sales transaction, which parties close on the sales agreement? Buyer and title company representative Lender's representative and buyer Seller and buyer Seller and seller's agent
Seller and buyer
Which section of the TREC One to Four Family Residential Contract (Resale) explains how the deposit money is handled if either party defaults? The Default section The Deposit section The Financing section The Settlement section
The Financing section
Which of the following statements about a buyer accepting a property in "as-is" condition is true? The buyer can't request repairs. The buyer can't terminate the contract during the option period. The buyer retains the right to have the property inspected. The buyer waives the right to receive the seller's disclosure notice.
The buyer retains the right to have the property inspected.
Both parties must sign a multitude of documents at closing. Funds must change hands. Who keeps all of this straight? The buyer's agent The closing agent The court The seller's agent
The closing agent
You're about to attend your client's closing. Who will conduct the closing meeting? The closing agent The lender The seller You
The closing agent
In a real estate transaction for which financing has been obtained, what's recorded at the completion of a sales transaction? The deed or mortgage The listing agreement and buyer agency agreement, along with the deed or mortgage The promissory note, deed or mortgage, and loan documents The transactional documents
The deed or mortgage
Per TREC's One to Four Family Residential Contract (Resale), who is responsible for completing the contract and earnest money receipt? Either the seller's or buyer's agent The buyer The escrow agent The seller
The escrow agent
What is an annual percentage rate? A standardized measure for interest rates and other costs of the loan Fees charged by a lender, expressed as a percentage The amount a borrower pays in interest for a single year The amount a lender can collect in interest from a borrower during a single year
A standardized measure for interest rates and other costs of the loan
Where in the Texas sales contract should you indicate that addenda are being attached? Agreement of parties Settlement and other expenses Special provisions Termination option
Agreement of parties
The act of transferring ownership of a property is known as _______. Accession Alienation Devising Granting
Alienation
What TREC-promulgated form must be used to make a material change to an existing sales contract? Addendum to Contract Amendment to Contract TREC Addendum to Effect Material Change TX Change Form
Amendment to Contract
Which of the following statements about long-term lease agreements in Texas is true? A long-term lease agreement is one that is for six months or longer. A tenant who enters into a long-term lease agreement is required to make improvements to the property. The tenant is required to sign the agreement but the landlord's signature is optional. They must be in writing.
They must be in writing.
Texas buyer Lydia has opted to have the seller reimburse her for insurance that protects her if something goes wrong with any of the home's major systems or appliances. ______ provides this type of insurance. A homeowners policy A residential service contract The title company TREC
A residential service contract
What type of CLO system is used through an intermediary, such as a real estate or mortgage professional? Closed CLO MLS Open CLO Quid pro quo
Closed CLO
How many days after receiving the Texas buyer's list of objections to defects, exceptions, or encumbrances to title does the seller have to cure the objections under the TREC One to Four Family Residential Contract (Resale)? 10 days 15 days 20 days Five days
15 days
Which of the following is an example of a unilateral contract? A car purchase A contest with a prize A restaurant order A sales contract
A contest with a prize
Texas licensee Chip needs a form. TREC hasn't promulgated a form for this specific use, but does have an approved form available. Chip should ______. Ask his broker which form to use. Create his own form. Use the TREC-approved form, because he's required to use a TREC-approved form if one is available. Wait until a promulgated form is available.
Ask his broker which form to use.
Andrew's original 18-month commercial lease has ended, and now, with his landlord's permission, he has gone into a month-to-month lease situation. What type of clause was in the original lease agreement that enabled this situation to occur? Automatic renewal Indemnity Option to renew Use
Automatic renewal
With cooperatives, the resident's share of mortgage interest and real estate taxes is ______. Deductible only on the board's tax returns Deductible on personal income tax returns Not deductible on personal income tax returns Paid by the board
Deductible on personal income tax returns
Through which method of voluntary alienation does the grantor convey real property and transfer title to the grantee? Deed Descent Escheat Will
Deed
The person named as the recipient of real property in a will is called the _______. Beneficiary Devisee Grantee Trustee
Devisee
asic property rights include the rights of possession, control, exclusion, enjoyment, and ______. Destruction Disposition Encroachment Reliction
Disposition
Which of the following is an example of reversionary right? During a lease transaction, either party has the right to change their mind and cancel the agreement. During a lease transaction, the lessor retains the rights to possession of the property after the lease term has expired. Prior tenants have priority over new tenants if they both want to lease the same property. The lessor can offer a discount on the rent for a few months and then revert to the standard amount with one month's notice.
During a lease transaction, either party has the right to change their mind and cancel the agreement.
When a contract is executory (for instance, in an installment sales contract), what type of title does the buyer hold? Equitable Legal Remainderman Reversionary
Equitable
Hector's seller clients want to reserve the right to find a buyer or tenant themselves and avoid paying a brokerage fee and yet they still want Hector to make sure their property receives the broadest possible market exposure. What type of listing agreement do Hector's clients want to have? Exclusive agency Exclusive right to sell Net listing Open listing
Exclusive agency
Who or what entity executes a Texas deed? The grantee The grantor The record office The subscribing witness
Grantor
Mark, the landlord, has a commercial property ______ lease agreement with his tenants. Mark pays all expenses related to the property and passes the costs on to the tenants in their rent payments. Gross Net Percentage Triple net
Gross
Hart and his wife Hanna are leasing the property where they intend to build a permanent structure. What type of commercial lease do Hart and his wife have? Ground Lease purchase Proprietary Sale and leaseback
Ground
Pledging a property for a mortgage is known as _________. Debt Equitable title Hypothecation Security
Hypothecation
Which of the following statements about the contract for deed default process in Texas is true? A buyer in default must immediately agree to terminate the contract and forfeit all payments made to the seller. If the buyer is in default, the seller can take possession of the property without notice. If the buyer is in default, the seller must provide the buyer with a notice before taking further action. The seller must give a buyer in default a 30-day warning, followed by a notice of termination.
If the buyer is in default, the seller must provide the buyer with a notice before taking further action.
Per the TREC One to Four Family Residential Contract (Resale), when is the seller required to give the buyer possession of the property? No more than two days after closing On the date indicated in the contract The day before closing The day following closing
On the date indicated in the contract
How does a sole proprietorship own property? In joint tenancy In partnership In severalty In trust
In severalty think sole/severed
When Marcy toured her new client's house, she noticed paint peeling off of the shutters. When she asked the seller if the house was painted with lead-based paint, he replied, "I'm not sure ... I inherited the house from my dad, who built it in the '50s." What is Marcy required to do? Based on the build date, she should assume the property has lead-based paint and advise the seller that it must be remediated before listing the property. Have the seller test for lead-based paint. Inform the seller that he needs to complete the lead-based paint disclosure form and provide potential buyers with the EPA pamphlet regarding lead hazards. Take a sample of the peeling paint with her, have it tested, and have the seller reimburse her for the testing cost at settlement.
Inform the seller that he needs to complete the lead-based paint disclosure form and provide potential buyers with the EPA pamphlet regarding lead hazards.
Wilma died without a will. How will her heirs be determined? A committee appointed by the court Intestate bequest Intestate succession The process of escheat
Intestate succession
What must take place in order for an oral offer involving the transfer of real property to become an accepted valid contract? Both parties must orally agree to the terms. It must be committed to writing and both parties must sign the contract. One party signs the contract. Something of value must be given in return for a promise.
It must be committed to writing and both parties must sign the contract.
Which ownership type is defined by four unities: time, title, interest, and possession? Freehold estate Joint tenancy Tenancy by the entirety Tenancy in common
Joint tenancy
A tenant's right to occupy real estate is known as a(n) _____________. Contract Estate agreement Freehold estate Leasehold estate
Leasehold estate
A mortgage is a legally binding document that creates a lien on a piece of property and gives the lender the right to foreclose on the property if the borrower defaults. Who or what entity is considered the mortgagee? Borrower Lender Loan Property
Lender
At the closing of a sales transaction, which parties close on the mortgage loan commitment? Buyer and title company representative Lender's representative and buyer Seller and buyer Seller and seller's agent
Lender's representative and buyer
Which one of the following is a true statement regarding prepayment penalties? All loans involve prepayment penalties. Lenders don't have to tell borrowers about prepayment penalties until the borrower's payoff amount is received. Lenders must disclose up front if they reserve the right to charge a prepayment penalty, and under what conditions a penalty will apply. Prepayment penalties are illegal.
Lenders must disclose up front if they reserve the right to charge a prepayment penalty, and under what conditions a penalty will apply.
Lucas, Ivan, Chad, and Trace own a property as joint tenants. After a few years, Ivan sells his interest to Tom (with permission from Lucas, Chad, and Trace). Chad dies intestate but is survived by a wife, Amy. Trace also then passes away but wills his property to Monique. Who owns the property after Trace's death? Lucas Lucas and Tom Lucas, Monique, and Amy Lucas, Tom, Amy, and Monique
Lucas and Tom
Per TAR's Residential Real Estate Listing Agreement Exclusive Right to Sell contract, what does the broker have the authority to do? Automatically assume intermediary status if the buyer is represented by the seller's broker. Execute documents in the name of or on behalf of the seller concerning the property. Market the seller's property in an effort to secure a buyer and negotiate a sale. Share confidential information with potential buyers if it will result in a sale.
Market the seller's property in an effort to secure a buyer and negotiate a sale.
What is the borrower charged for all FHA loans? Discount point Mortgage insurance premium Pre-payment penalty Private mortgage insurance
Mortgage insurance premium
Wynona is a Texas tenant with a written estate-for-years tenancy. How much notice must she give her landlord if she wants to terminate her lease upon expiration of the lease term? 30 days None Three weeks Two weeks
None
Which element of a valid contract is established by getting the signatures of all parties? Competent parties Consideration Lawful objective Offer and acceptance
Offer and acceptance
The Hendersons don't have enough money to make the full 20% down payment their institutional lender requires. To close the sale, the seller is willing to finance a loan for the amount between the home's list price and what the institutional lender is willing to loan. What's this type of financing called? Equity mortgage Purchase agreement Purchase money mortgage Seller-insured loan
Purchase money mortgage
During the term of the lease, the lessor retains the rights to possession of the property after the lease term has expired. What is this right known as? Reversionary right Right of ownership Right of possession Right of return
Reversionary right
The right to access non-navigable rivers, streams, and other flowing bodies of water adjacent to a property is called ______ rights. Land Littoral Mineral Riparian
Riparian
When would a lender require a mortgage insurance premium? The borrower has an FHA mortgage. The borrower is unable to put at least 20% down on a conventional loan. The borrower is unable to put at least 25% down on a conventional loan. The borrower wishes to lower his interest rate on a loan.
The borrower has an FHA mortgage.
If the buyer is putting earnest money down, which of the following statements is true? The buyer can require the seller to subtract that amount from the asking price. The buyer has to pay for an escrow account to be set up and managed. The buyer must specify the exact amount in the contract. The earnest money must be in the form of cash and personally delivered to the seller.
The buyer must specify the exact amount in the contract.
Which of the following statements about the escrow agent's role in a residential sales transaction in Texas is true? The escrow agent is liable for interest on the earnest money. The escrow agent is liable for the loss of any earnest money caused by the financial institution in which the funds are deposited. The escrow agent is liable for the performance and non-performance of the parties to the transaction. The escrow agent is not a party to the contract.
The escrow agent is not a party to the contract.
How does the "break-even point" relate to percentage leases? Sales proceeds must exceed last year's total before the percentage applies. The landlord charges a percentage of the cost for improvements to all tenants. The landlord doesn't charge a percentage of sales until the tenant's sales exceed a break-even point. The landlord must receive enough in rent plus the share of sales to break even on the debt service.
The landlord doesn't charge a percentage of sales until the tenant's sales exceed a break-even point.
At the time of closing, the seller and the seller's agent will close on which contract? The listing agreement The mortgage loan commitment The sales agreement The title insurance contract
The listing agreement
What value would the lender use to calculate loan-to-value ratio? Appraised value Interest Sales price The lower of the sales price or appraised value
The lower of the sales price or appraised value
In addition to the property address, the lease agreement start and end dates, and the monthly rent and deposit amounts, which of the following pieces of information should all commercial leases contain? A complete list of the other tenants and their rental rates A copy of the tenant's credit report A detailed description of the property The purpose for which the space is being rented
The purpose for which the space is being rented
There are several criteria that Fannie Mae and Freddie Mac use as guidelines when determining if a loan is conforming. What are these criteria? Down payment amount, interest rate, and discount points Interest rate, loan amount, LTVR LTVR, discount points, down payment amount Total debt to income, loan amount, LTVR
Total debt to income, loan amount, LTVR
When does a transfer tax become payable? 30 days after recording of the deed Upon recording of the deed When an offer to buy is made When the inspection report is complete
Upon recording of the deed
Which covenant is a promise by grantors to grantees that they will warrant and defend the title against the lawful claims of others? Against encumbrance Further assurances Quiet enjoyment Warranty
Warranty
Sondra thinks the new business contract she signed with her business partner is valid. Both parties are legally competent, the contract has a legal purpose, an offer was made and accepted, and a fee has been negotiated and documented. Which essential element of a valid contract has Sondra not yet considered? Whether consent was voluntary Whether the contract has been translated into all possible languages Whether the contract is in writing Whether the parties are over 21
Whether consent was voluntary