Law Of Contracts
valid listing includes:
-name and sig of all prop owners and listing agent -prop description -list price determined by seller -def. start/end date -broker compensation
law prevents the forced sale of the homestead for payment of all debts, with five exceptions:
1. Non-payment of property taxes 2. Non-payment of a mortgage lien 3. Non-payment of mechanic's and materialman's lien 4. Non-payment of property owner association fees or dues 5. Non-payment of a home equity loan
implied contract
A contract created by behavior
express contract
A contract created by offer and acceptance
bilateral contract
A contract requiring both parties to perform certain duties
executory contract
A contract that is binding on the parties even though certain contractual duties have not yet been performed
valid contract
A contract that must have competent parties, offer and acceptance, legal purpose, consideration, and be in writing,
contract for deed
Also called an installment contract, a land contract or a real estate contract
lease
An agreement that transfers the right to possess a property for a period of time
C/S: Natalie and Frankie get married and move into Frankie's home. Natalie decides to rent out her townhome for additional income. What is the status of the income from Natalie's townhome?
Community property (Note that in Idaho, Louisiana, Texas, and Wisconsin, income from most separate property is community income.)
listing agreement
Employment agreement for listing broker
buyer-agency agreement
Employment agreement for selling broker
option agrement
Gives a potential buyer or tenant the right to purchase or lease a property
Broker Bernardo has a signed sales contract that has not yet gone to the closing table. Therefore, Bernardo has a(n) _____ contract. a. Executory b. Executive c. Non-binding d. Voidable
a
Todd planted two live oaks and four magnolia trees on his 3-acre property. These trees are examples of _____. a. Improvements b. Emblements c. Fixtures d. Personal property
a
If Anna gets half (50%) of her broker's commission, how much does Anna make on the deal? a. $8,250 b. $9,166 c. $83,250 d. $27,272
a-Rationale: $16,500 ÷ 2 = $8,250
property taxes are known as ___ taxes. That is, they are according to value.
ad valorem
Real Estate Recovery Trust Account
administered by TREC to protect aggrieved individuals who suffer a monetary loss due to illegal acts of license holder
emblements
annual crops that are considered personal property even though they are attached to the land
improvements
any man-made additions to the land that are permanent
is a right or privilege or improvement that belongs to and passes with land, but is not necessarily a part of the land
appurtenance
. Cities and municipalities have the right to regulate the type of buildings constructed in an area through _____. a. Escheat b. Zoning c. Eminent domain d. Taxation
b
An active sales agent license may only be issued under _____. a. Court order b. The sponsorship of a licensed broker c. The supervision of a fellow sales agent d. The Deceptive Trade Practices Act
b
In order to comply with the _____, contracts for the conveyance of an interest in real estate or leases for a term of more than one year must be in writing. a. SAFE Act b. Statute of Frauds c. Statute of Limitations d. Real Estate Settlement Procedures Act
b
Bryan's client shows up to his closing after drinking three beers at a baseball game. Due to his consumption of alcohol, the closing cannot take place because Bryan's client is not legally _____ to sign. a. Impaired b. Intelligent enough c. Competent d. Sane
c
If Nick were to refuse to pay the commission what would happen? a. Anna could sue Nick b. Nick would automatically be arrested c. Anna's broker could sue Nick d. Nick is not legally bound to pay the commission
c
Patti, David, and Arthur inherited several acres from their parents. They each own a third of the estate. What type of ownership do the siblings have? a. Joint tenancy b. Estate in severalty c. Tenancy in common d. Community property
c
Which of the following is a requirement for a Texas real estate sales agent license? a. College degree b. 30 hours of Real Estate Principles only c. Show competency by passing the licensing exam d. Must be Texan by birth
c
T/F: Texas homestead laws limit an urban homestead to 10 acres, but do not place a limit on rural homesteads.
false, 100 acres single, 200acres married
T/F The Statute of Frauds requires that contracts for the conveyance of an interest in real estate for a term of six months or less must be in writing
false, for more than 1 year
T/F: Property that was owned before marriage falls under community property once a couple is married.
false, separate
T/F All contracts are assignable, no exceptions
false, some exceptions (like mortgages)
T/F An option contract is binding on both parties
false- buyer can exercise option and purchase property but doesn't have to
T/F: The best type of ownership is conditional fee ownership.
false- fee simple
T/F: Curtesy is the interest a wife has in her husband's property
false- interest husband has in wife property
T/F: A Phase I ESA is also known as the "remediation" phase
false- ph 3
prior appropriation
first in time is first in right
A contract that is clear in its terms has historically been interpreted under the _____ rule that states that the terms for performance under a contract may be determined by a reading of the entire contract
four corners
police power
gov's right to regulate land usage
Tenancy at sufferance is an interest in leased property created when a _____ tenant is occupying the leased property against the owner's will.
holdover
subsurface rights
includes the rights to deed oil, gas, and other minerals
Real estate license holders negotiate sales and _____ agreements between sellers and buyers and landlords and tenants
lease
Clients who wish to enter into a _____ agreement should be referred to an attorney because license holders in Texas are specifically prohibited from writing them.
lease-purchase
A(n) _____ estate gives one possession and use of a property without ownership. The person giving the use (the owner, landlord) is the _____.
leashold, lessor
Contract for deed transactions are inexpensive, quick, and easy because a _____ is not involved, and because title does not transfer, the deal is closed quickly, often without the benefit of the services of a title company or title insurance.
lender
__ is often referred to as a meeting of the minds
mutual consent
freehold estate
occurs when an individual owns property
A lease option allows a tenant to buy the property at a preset price and terms for a given period of time. This can also be called a lease with a(n ) _____ to buy.
option
Any attempt by a group of brokers to set the commission rates in their area or between a group of brokerage firms would be considered illegal _____ fixing
price
Producing Cause
requires proof that the act or omission was a significant factor in bringing about injury
equitable estate
rights or privileges in land that are less than ownership, but exist
C/S: Arthur was driving to work one day when a work truck plowed into his car. Arthur and his attorney successfully sue the driver's company for compensation for pain and suffering. He and his wife are embroiled in a contentious divorce, and she lays claim to his settlement. What is the status of Arthur's settlement?
separate property
C/S: Eric is a married individual who inherited his grandfather's house after his death. He and his wife bought a home together, but divorced five years later. What is the status of Eric's grandfather's house?
separate property
C/S: Fernando's family has a company that owns and manages several commercial properties. When he and his wife, who is a doctor and not involved in the family business, begin divorce proceedings, she inquires about the family's holdings. What is the status of his family's commercial holdings?
separate property
C/S: Shanay and Travis are a hardworking couple who have been saving for a home for their family, but life keeps getting in the way. The house next door to her family goes on the market, and Shanay's parents decide to gift her the house. What is the status of Shanay and Travis's new house
separate property
C/S: Steve purchases a home. Four years later, he asks his girlfriend to move in. He pays all of the bills associated with the house. She pays for cable, groceries, and half of the entertainment budget. What is the status of Steve's home?
separate property
T/F According to the TREC-promulgated contract forms, all representations made by seller and buyer "survive closing," which means that both parties remain liable beyond closing for their representations made in the contract
t
Tenancy at will or estate at will is a leasehold in which a _____ occupies real estate with the permission of the owner for an uncertain or unspecified length of time; this is a very loose agreement.
tenant
surface rights
the ability to use extrcted resources such as stone, gravel, and limestone
"bundle of rights"
the right to possess or occupy and use the property, the right to exclude others, the right to sell, lease, mortgage, give away, or abandon property, the right to pass property to heirs and devisees, or the right to refuse to do any of these things
personal property
things of a temporary or movable nature
A cooperative sale is one in which one broker lists the property and a different broker sells it.
true
Contract for deed transactions are inexpensive, quick, and easy
true
Leases are generally discharged at the end of their term, assuming that there are no further obligations on the part of landlord or tenant.
true
T/F A contract for an illegal purpose is void.
true
T/F A novation may include new parties to a contract.
true
T/F A person entering into a contact who is under the influence of narcotics could be considered mentally impaired.
true
T/F Mutuality is found in bilateral contracts.
true
T/F: A seller may convey all of the mineral rights to a piece of property to the buyer, or may reserve the rights for himself/herself.
true
T/F: An easement is an example of an appurtenance
true
T/F: Texas is one of nine states that adhere to the concept of community property.
true
T/F: The Texas Railroad Commission controls all drilling for oil and gas in the state and regulates all drilling activity in the state.
true
The agent uses sale information from the MLS data to show a seller the market value of the property.
true
The listing agreement or buyer representation agreement is an employment contract.
true
When a lease agreement comes to the end of the lease period, it is discharged, and is terminated
true
While the Broker Information section of TREC-promulgated contracts contains information regarding a fee split, it is not a fee-splitting agreement with the listing broker, because brokers are not parties to the contract.
true
t/F: An easement can be terminated by merger
true
The general presumption is that an individual signing a contract has not taken time to read it and understand it.
false
T/F Consideration is always monetary.
false (anything given in exchange for a promise)
A double net lease is one in which the tenant pays rent and property taxes only.
false
A periodic tenancy is a lease with a definite beginning date and definite ending date.
false
T/F In Texas, an individual under the age of 21 is considered a minor
false
Two brokers, Michael and Kathleen, discussed how they list their properties. Michael informs Kathleen that he recently joined a private listing group on HipRocket, a social listing service site for real estate agents. He encourages Kathleen to join the listing group. Michael informs her that his group shares listings that they do not enter into the MLS amongst themselves in order to keep the "undesirables" from stomping through their sellers' houses. Kathleen thinks this a good idea and asks Michael how to join the group on HipRocket. Michael tells her that it's an "open group" as far as HipRocket is concerned, mainly because the brokers don't want to break antitrust rules. He then tells her to keep it a secret from Surrealty because no one wants to work with the agents from that firm. Kathleen agrees to keep it quiet and interjects that she doesn't want to work with the agents at Surrealty either. 1. Does the fact that the HipRocket group is classified as "open" protect the brokers from violations of antitrust laws? a. No b. Yes c. No, if they take additional steps to exclude others d. Yes, if they take additional steps to exclude others 2. Is the HipRocket group itself an actual violation of antitrust laws? a. Yes b. No 3. Concerning Michael and Kathleen's discussion about Surrealty, could it be a potential violation of antitrust laws if they were not discussing access to the HipRocket group, and just agreeing that they did not like working with them? a. No b. Yes
c,a,b
Nick has been looking for a home for his family ever since he got a big promotion. He hires real estate agent Anna who negotiates a 5.5% commission on the sale. Anna helps Nick purchase a home listed at $325,900, for $300,000. 1. How much does Anna's broker collect in commission? a. $18,333 b. $54,545 c. $16,500 d. $166,500
c-Rationale: $300,000 × 5.5% = $16,500
Mr. and Mrs. Smith have hired Jay to list the home they have been renting out for the last five years. When Jay first walked through the home with the Smiths, he noticed a large water stain on the living room ceiling. He also noted that the roof was not in the best condition. When Jay received the signed Seller's Disclosure Notice from the Smiths, he noticed that they listed the roof's age at 8 years and did not indicate any condition issues. He also noticed that the Smiths had painted over the stain on the ceiling. 1. Jay should: a. Ignore the issue since the seller is responsible for the accuracy of the Seller's Disclosure. b. Document the stain on the ceiling and ask a roofer to give him an opinion about the roof. c. Discuss his observations with the Smiths, inform them of the potential liability issues, encourage them to be honest, ask that they disclose the ceiling stain, and suggest that they look into the issue since it may not have been reported by the tenants. d. Discuss his observations with the Smiths, inform them of their legal duty to disclose all material defects related to the property, encourage them to be honest about the stain, document their efforts to contact the tenants, and request a roof certificate.
c. - Rationale: The agent's role is to encourage honesty and full disclosure. While it is a broker's responsibility to discover and disclose that there may be problems on a property, that responsibility is limited to areas accessible for visual inspection. In this case, the ceiling stain was obviously caused by something and the listing agent can enlist the help of the home owners to find out what caused it or at least document their efforts to find out. If the listing agent was unable to detect any roof problems by visual inspection, then the agent is not responsible for taking any additional steps to discover if the roof is in good condition. Also, D cannot be the answer because sellers are responsible to disclose any "known" material defects
C/S: Edgar and Kaycee purchase their first home together after ten years of apartment living. They separate, and Kaycee and her sister buy a home together with funds they received from a sizable family inheritance. Two years later, they finalize the divorce. What is the status of the home Edgar and Kaycee purchased together?
community property
C/S: Eric and his wife divide up their assets during the divorce. What is the status of the home they purchased together?
community property
C/S: Nadine inherits $40,000 from h \er grandfather's estate. She deposits the check into her and her husband's savings account into which they both deposit funds each month. Six years later, Nadine and her husband use their savings to purchase a vacation home. She and her husband part ways amicably. What is the status of the vacation home?
community property
CC&Rs
covenants, conditions, and restrictions
statutory estate
created by law
Texas Real Estate Commission
created by legislature in 1949 to carry out provisions of TRELA
Real Estate Center
created by legislature in 1970s to collect and compile data about real estate in TX
A license holder must not prepare which of the following documents? a. Option agreements b. Title commitments c. Wills d. A license holder must not prepare any of these documents
d
If you hire a mold remediator, he must give you a(n) _____ no later than 10 days after work is complete. a. Dept. of State and Health Services Agreement b. Texas Property Code receipt c. EPA Certificate d. Certificate of Mold Remediation
d
Many states recognize statutory estates, including: a. Community property b. Homestead c. Tenancy by the entirety d. All of these may be recognized
d
Lynne purchased a lake front lot in order to build her dream home. Under _____, Lynne has the right to construct a boat dock and anchor her pontoon boat on the water. a. Riparian rights b. Docking rights c. Appropriative rights d. Littoral rights
d- right to use water from LAKE on or next to property
2. What are some ways Jay can handle this issue to minimize the risk of liability for him and his broker? a. Require the Smiths to document the ceiling stain b. Document the steps he took to encourage honesty and full disclosure c. Make sure he and his broker are covered by Errors and Omissions insurance d. All of these are correct
d. - Rationale: It is a broker's responsibility to discover and disclose that there may be problems on a property, and that responsibility is limited to areas accessible for visual inspection. Documentation is a good defense when it shows that the license holder fulfilled all of his legal obligations. Errors & Omissions insurance can protect a broker if the seller misrepresents property condition, the broker is unaware of the misrepresentation, and could not have detected it by visual inspection.
Terms such as _____ and _____ vary in their meaning from region to region.
double net, tripe net
Broker-Lawyer Committee
establish by TREC to write mandatory residential contract forms for license holders
lease purchase agreement
f- Combines some of the elements of a sale with a lease.