law of contracts

Which of the following statements are TRUE?

All liens are encumbrances and an easement is an encumbrance.

Seller Tom sold and deeded his property to Jim in January. Jim plans to fix the property up some day and rent it but for now Jim is just too busy. The property is sitting vacant and Jim has not recorded his deed. In April Seller Tom sold his property to Mary. Mary took out a loan to buy the property and neither the title company nor the lender found anything in the public records about Jim's ownership. Mary closed at the title company and they immediately sent Mary's deed to be recorded. If the dual ownership goes to court who do you believe will get to keep the property?

Mary

The act of documenting a deed or lease in the county clerk's office is called _______.

Recording

If an owner is interested in selling his or her property to free up capital, which lease might he or she consider?

Sale-leaseback

What does the Texas Real Estate License Act say will happen if a licensee drafts a contract form instead of using the TREC promulgated form available?

The Commission shall suspend or revoke the license of a licensee, who is not an attorney, for drafting an instrument.

The seller wants to stay in the property for three days after closing. What promulgated form will need to be attached to the contract?

The Seller's Temporary Lease

Which entity approves and promulgates contract forms?

The Texas Real Estate Commission

A seller has put his home on the market and on the first day it is on the market he received three offers. His listing agent has made him aware each time an offer arrived. One came in at 10 am, one at 2 pm and another at 4 pm. The seller must do which of the following things?

The seller does not have to respond in any order. Seller should only counter one offer at a time, however seller can invite all three to raise their offers as long as it is clear this is not a counter offer.

With which type of ownership does a group of people own a property together and each has individual rights of possession during specific time periods?

Timeshare

Who is responsible for writing commission checks to the brokers?

Title company

What can a party do if he or she wants to withdraw from a contract without terminating the agreement?

Transfer his or her rights and duties to a third party

An oral contract to lease real estate for a four-year period is _______.

Unenforceable

An oral contract to purchase real estate is _______.

Unenforceable

What is it called when a buyer wants to rescind a contract because he or she has determined the contract is based on fraud?

Unilateral rescission

Real estate salespeople may _______.

Use fill-in-blank forms

What is the purpose of the Texas Real Estate Commission?

-Protect consumers -Enforce the laws the legislature passed in the license act -Ensure the availability of capable and honest real estate service providers -All of the above

Which of the following laws affect the mortgage business?

-RESPA -Truth in Lending -Federal Fair Lending Laws -All of the above

Which of the following TREC forms create a contingency?

-The Short Sale Addendum -The Sale of Other Property Addendum -The Back-Up Addendum -All of the above three addenda create contingencies

What is the difference between personal property and real property?

-The land and everything under the land and everything over the land is considered real estate. -All things attached to the land or growing in or on the land are still real property. -Unattached, moveable items are personal property.

On which of the following grounds may a licensee have his or her license suspended or revoked?

-The licensee has failed to make good a check issued to the commission. -The licensee acts negligently or incompetently. -The licensee makes a false promise that is likely to influence a person to enter into an agreement. -All of the above.

Frank is writing an offer on a property that was built in 1969. Is there anything special Frank needs to attach to the contract?

-Yes, the TREC approved Lead Based Paint Addendum -Yes, the TAR provided Lead Based Paint Addendum -Yes, the Lead Based Paint Addendum created for his Broker by an attorney -Any of the above are acceptable

What is earnest money?

A deposit that a buyer gives the seller to show that he or she intends to carry out the terms in the agreement

Nicki and George are under contract to buy a home and have just had their new home inspected. There were a couple of things on the inspection report that George wanted done and the seller has orally agreed. How do they get this new part of the agreement in writing? Their agent can prepare a(n) _______, have the buyer sign it, and deliver it to the listing agent for the seller's signature.

Amendment

All of the following are examples of real estate contracts EXCEPT _______.

An exclusive right to sell An agreement of sale A prospectus A lease

What is a leasehold estate?

An interest a tenant holds in a rental property. Tenant has possession for a limited period of time but does not have ownership.

A person must be of the age of majority to _______.

Appoint an agent

How is an implied agency relationship created?

Assumption

Why are void contracts usually unenforceable?

Because they call for an illegal act or engage minors or mentally incompetent individuals

Bob bought a home while he was single. He lived there two years before he met and married Susan. The property is Bob's separate property. Susan and Bob have lived in the property, in Texas, for several more years. Now they are selling the property. Who will probably be required to sign the deed at closing?

Both Bob and Mary

Who is responsible for choosing and ordering the Residential Service Policy and delivering it and invoicing it to the title company?

Buyer

In the mortgage arena, if a lender says they offer CLOs, what does CLO stand for?

Computerized Loan Origination

What is essential for creating an agency relationship?

Consent of both parties

Under voluntary alienation property may be transferred by:

Deed

What is parol evidence? come back to this

Evidence of an oral agreement It is information outside of the written contract. It is proof of the parties' written agreement. It is proof of an express contract. It is proof of a void contract.

Once the terms of a contract have been fully carried out, it is referred to as a(n) _______.

Executed contract

What is the best kind of offer and acceptance?

Express offer and acceptance

What is the difference between an implied contract and an express contract?

In an express contract, the parties explicitly state the terms and conditions of the agreement, whereas in an implied contract, they do not.

As a general rule, an oral sales contract involving the sale of real estate:

Is unenforceable

If two people own property as tenants in common and one dies, without a will, what happens to the deceased's property?

It goes to the deceased owner's estate.

Four men want to buy a property together as investment property set it up so if one of them dies, their portion automatically goes to the other three. What type of ownership they want?

Joint tenancy

In Texas, if a homeowners' association wants to foreclose on a property for past due HOA dues they will have to use a _______.

Judicial foreclosure

TREC has several approved forms for Notices and Disclosures. Are Notices and Disclosures considered as attachments to the contract?

No, they are not a part of the contract and are not listed in the contract

The document the borrower signs that is a promise to pay is called the ________.

Note

What happens to a lease when lessor dies?

Nothing Automatically terminates The tenant receives the title to the unit Automatically extended for one month Feedback: There are several ways a lease can be discharged: Upon expiration of the primary term or month-to-month term after proper notice has been provided; By agreement of both the landlord and tenant By a breach of one the parties or By operation of law (Lesson Five, Discharge of Lease)

The person extending the contract is known as the _______.

Offeror

Which of the following statements is TRUE about agency agreements?

Oral agreements are held to the same rules of agency relationships as written ones.

A verbal contract is also known as a(n) _______.

Oral and written contract

John is under contract for a property out in the country. He has a 10-day option period. He wants to get an inspection on the septic tank and when he tried to schedule it he found it was going to take them 3 weeks to get out there. How can John's agent assist him?

Prepare an Amendment of Contract changing the number of option days. Get it signed by John and deliver it and a check for the additional option fee to the seller's agent for signature.

With which type of deed does the new owner only receive whatever the previous owner owned?

Quit claim deed

What is the makeup of the Broker-Lawyer Committee?

Six brokers, six lawyers, and one public member

If a licensee is found guilty of a violation of the license act they are subject to license _______.

Suspension or revocation

Alice is showing a property to a buyer. The buyer asks about the big screen TV set that is hanging on the wall. The buyer wants to know if the TV stays with the property. How should Alice answer her? Alice should explain that _______.

The brackets that are attached to the wall are real estate according to paragraph two of the TREC contract forms. The TV just slips off the brackets and it is personal property and does not stay with the property.

Since real estate property taxes are paid at the end of the year for the current year, most sellers will owe for some pro-rated taxes at closing. Jan 1st through the day of closing will be due. That becomes a debt to the seller and a credit to the buyer. Who owes the 12 months tax bill that the new owner receives at the end of the year?

The buyer

How do lenders recover their money when borrowers do not pay their mortgage?

The lender can foreclose, take title to the property and resale it to recover as much money as possible.

The recorded plat system is also known as _______.

The lot-block-tract system

When does contract performance occur?

The parties carry out the terms of their agreement.

Which of the following is NOT a right that comes with the power of attorney?

The right to make personal investments with the principal's funds

Which of the following is the most important document in a real estate transaction?

The sale contract

Another name for personal property is _______.

chattel