CRE Test
What is maximum Recovery Trust Account payment award per transaction?
$50,000
What does "time is of the essence mean"?
A clause that allows each party to hold the other to strict performance by the date specified
What is not required when a offer is submitted for purchase?
A date of acceptance
What amount of gift can a broker give to an unlicensed client for a referral?
A gift up to $50
What real estate contract is an exception to the Statute of Frauds?
A lease for one year or less
What is encapsulation?
A popular way to treat asbestos
What is prescription?
A way to acquire an easement on or in real property belonging to another by occupying it continuously for a prescribed period of time
What is an escalation clause?
Allows a lender to raise the existing rate
What is an Easement Appurtenant?
An easement where the land and the landowner (or any new buyer) owns the easement
What is a bilateral contract?
An exchange of promises, which binds both parties. Both parties can be sued
To activate an inactive license, what does an individual have to do?
Apply through a broker, pay $50 and complete 18 hours of CE if necessary
What is agency?
Fiduciary relationship between a broker and principal
What does FSBO stand for?
For Sale by Owner
What is General Liability Insurance?
General Liability Insurance protects a company's assets if someone is injured on company property
What does a General Warranty Deed do?
Guarantees and protects against defects
How can the broker thank the seller?
He cannot pay commission at all
Without proper authorization, a sales agent may accept a commission directly from
His broker
What is mutual recession?
If one party cancels the agreement and the other accepts the cancellation, or if the parties agree to cancellation (mutual rescission), the contract is terminated
What is the owner of a life estate called?
Life Tenant
Water rights to a lake are also known as:
Littoral rights
Describe the income approach.
Method used for income producing properties, involving NOI and a cap rate
What is MIP?
Mortgage Insurance Premium; the insurance on the FHA loan
Where does the TREC Consumer Information 1-1 stored?
Must be displayed in the broker's office
What is true about all license holders?
Must treat all parties honestly and fairly
Does RESPA regulate apartments?
No
Will a verbal agreement be enforced by the court?
No
No homos, no alcoholics, no migrant workers, no alcohol - what violates the Civil Rights Act of 1968?
No Alcoholics
Will homeowner's insurance protect against flood? What about fire?
No and yes
Does TREC have a time limit to determine eligibility?
No but once they deny an application, they only have 30 days to notify the applicant
Do all contracts have to be in writing to be enforceable?
No; a lease for one year or less does not need to be in writing
What is the TREC Consumer Information 1-1?
Notifies the public of the recovery trust account
What is constructive eviction?
Occurs when a landlord is aware of a property condition and allows deterioration to the point that the building is uninhabitable and the tenants are forced to leave
What is a life estate?
Ownership for the duration of someone's life
What is fee simple ownership?
Ownership with the greatest bundle of rights. The owner has all the available rights to the property and can always pass it to his or her heirs
What is the difference between PMI and MIP?
PMI is found on high LTV convential loans and MIP is found on FHA loans; PMI insures a portion and MIP insures the total
If one of three joint tenants dies, how is the property split between the others?
Partition
What is Police Power?
Power given to a municipality to regulate and control the character and use of property
What does PMI stand for and what does it do?
Private mortgage insurance; PMI allows for the purchase of a home with a small down payment
What is RESPA? What do they regulate?
Real Estate Settlement and Procedures Act; regulates closings on family residential property with federally related financing
The person who gets the property after the life estate is ended is the:
Remainderman
What is the removal of asbestos called?
Remediation
Water rights to a river are also known as:
Riparian rights
The license holder fails to respond to the summons. What will TREC do?
Schedule a hearing at the TREC office in Austin
What are liquidated damages? What is an example?
Seller keeps the buyer's deposit; buyer defaults on the sales contract
What is the first step of the property manager?
Sign the management agreement
A property where there has been a murder or alleged haunting is called:
Stigmatized
Is a construction loan a straight loan or an open ended loan?
Straight loan
If a license holder fails to respond to a subpoena, what can TREC do?
TREC can file suit with the Attorney General to enforce the subpoena
What happens when a license holder defaults on his student loans?
TREC will not renew the license
What is the highest priority lien on real property?
Taxes
What is the order of payment of IRS lien, ad valorem tax lien, and mortgage in a foreclosure?
Taxes, mortgage, and then IRS
What does TRELA stand for?
Texas Real Estate License Association
What is a Redemption?
The borrower has the right to step in and pay what is owed and reclaim the property
If a buyer wishes to protect against boundary defects in the title, what can he do?
The buyer can request extra coverage in the title policy and pay an additional fee
Who does the TREC Consumer Information 1-1 apply to?
Both real estate liscence holders and inspectors
An unlicensed assistant is showing property for her broker. Which of the following penalties would apply and to whom?
Both the broker and the unlicensed assistant would be subject to fines by TREC
What is the most undesirable neighborhood property?
Brownfield
What is a subrogation clause?
Clause in a title policy that allows the title company to assume the rights of a buyer with respect to any claim against the seller
Is an independent contractor paid based on commission or hours worked?
Commission
What is a CMA?
Comparative Market Analysis
Which of the following legal documents can be prepared by a Texas real estate licensee?
Contract addendum
What does a 1031 exchange of property do to taxes?
Defers taxes
An appraiser requires a property to have four characteristics to have value. They are:
Demand, utility, scarcity and transferability
What is an appurtenance?
Describes rights, privileges or improvements that belong to and pass with the land
What is a Metes and Bounds survey?
Descriptions that use terminal points and angles and always have a p.o.b. (point of beginning)
Which party benefits from the easement: dominant or servient?
Dominant
Who oversees CERCLA?
EPA
What does the Uniform Electronic Transactions Act guarantee in court?
Electronic signatures will always be upheld if all parties agreed to their use.
What does partition do to joint tenancy?
End the joint tenancy
A contract that is signed but not yet carried out is?
Executory
Does the sponsoring broker or independent contractor pay for payroll taxes?
The independent contractor
What does deed in lieu mean?
The lender accepts a deed from the borrower. The lender must also accept any junior liens on the property. This would be the fastest way for the lender to get title to the property
What is an option contract?
The right to purchase property within a definite time period at a definite price
What is a right of survivor-ship?
The surviving owner automatically absorbs a dying owner's share of the property
What is the Market Data Approach?
Using comps to add or subtract to the value of comparables
What is an encroachment?
When a structure of improvement overlaps or trespasses onto another's property
When may a sales agent that transferred brokerage shops engage in new business?
When his fees and sponsorship forms have been mailed to TREC
When does a buyer's offer become binding?
When it is accepted and communicated
What is dual agency?
When the broker represents both parties
What does title insurance do? Which party does it protect?
agrees to compensate or reimburse the insured against any losses sustained as a result of defects in the title; protects the buyer
What is blockbusting?
causing panic selling by homeowners, also known as panic peddling
What is steering? What is another word?
directing buyers into or away from certain areas because of their race, color, etc. This is also known as channeling
What is partition?
procedure to divide the co-tenant's interests in real property
What is redlining?
the refusal to lend in a particular geographic area
Can a tenant be fined for not installing a wheelchair ramp?
yes and so can the landlord
What is Functional Obsolescence?
It is mostly curable; examples include: inferior materials to cut costs, curb appeal, not enough baths/bedrooms, an unpopular floorplan, property that lacks updating for modern technology
What is Contract for Deed financing?
It is seller financing that does not transfer legal title immediately
What types of transactions require an appraisal?
Those involving financing or the courts
Why is commingling illegal?
To protect clients funds from claims by creditors of the broker
If a broker is helping a buyer and seller reach an agreement, what is his role?
Transaction Broker
Can both parties be sued in bilateral contract?
Yes
Does an Independent Contractor status require a written agreement?
Yes
Can a foreign broker be paid a commission?
Yes as long as the broker does not negotiate in Texas
Does joint tenancy have rights of survivorship? What is a right of surviorship?
Yes; the surviving owner automatically absorbs a dying owner's share of the property
What is the most common type of Police Power?
Zoning
What is conversion?
a broker uses a client's money or commingled funds for his or her own purposes
What is Megan's law?
a federal law requiring all states to release information to the public about known convicted sex offenders when necessary to protect the public's safety
What is a conforming loan?
a standardized loan written on uniform documents that meets the purchase requirements of Fannie Mae and Freddie Mac
What is a budget mortgage?
includes principal, interest, taxes, and insurance in the monthly payment, known as PITI
