PCF FINAL REVIEW
It is required by law that a seller disclose any information they have regarding their property. They may use any form or notice they wish. A. True B. False
A. True
What is true about the TREC promulgated contracts? A. The contracts are available to any persons. B. TREC revises contracts every year. C. Only brokers must use the promulgated contracts. D. A licensee must be in the real estate business for three months before using the pro-mulgated forms.
The correct answer is A. The contracts are available to any persons. TREC, however, advises the public to have an attorney or a licensee assist them in filling out the contract.
TREC does NOT promulgate listing forms and Buyer Representation Agreements. A. True B. False
The correct answer is A. True. TREC promulgates (approves) contracts for the sale of property. The Texas Association of Realtors® has created listing forms and Buyer Representation Agreements that are commonly used in Texas.
The main purpose of the Broker-Lawyer Committee is to draft and revise contracts for use by the licensees in Texas. A. True B. False
The correct answer is A. True. Their primary purpose is to draft and revise contracts for use by the licensees in Texas.
All the following are true about the Texas Real Estate Commission EXCEPT: A. There are nine members. B. All members are brokers with a minimum of 5 years' experience. C. Members of the Commission are appointed by the Governor. D. Members serve six years staggered terms.
The correct answer is B. All members are brokers with a minimum of 5 years' experience. There are six members of the Commission who are brokers and three who are public members.
You can give legal advice to a buyer or seller if you understand all the facts. True or false.
The correct answer is B. False. You cannot give legal advice period. If you do give legal advice to a buyer or seller, you can have your license suspended or revoked.
The obligation to the client's interests is primary but that does not relieve Realtors® of the obligation to _____________________. A. Explain your relationship with your client to all other parties in the transaction B. Treat all parties honestly C. Disclose your client's position D. Make the other party feel that they are being respected too.
The correct answer is B. Treat all parties honestly. The Realtor® Code of Ethics states that even though an agent owes his primary interest and loyalty to his client, he/she still needs to treat all parties honestly and fairly.
The effective date is determined by the final date of acceptance. All the following are elements of final acceptance EXCEPT: A. The final contract must be in writing. B. Acceptance must be unequivocal. C. An email must be attached to the contract. D. The buyer and seller must sign the contract and initial all handwritten changes.
The correct answer is C. An email must be attached to the contract. Email attachments to contracts do not constitute final acceptance.
In a contract to purchase real property, what is the name of the provision that states that the buyer will NOT be held responsible to complete the purchase if the buyer cannot obtain sufficient financing? A. Acceleration clause B. Escalation clause C. Contingency clause D. "As is" clause
The correct answer is C. Contingency clause. Anytime the buyer has an "out" in the contract, the clause is called a contingency.
All the following are common errors in the contracts EXCEPT: A. Improper use of the Special Provisions section B. Terms for performance too short C. Not disclosing what stays with the property D. Failure to date the contract
The correct answer is C. Not disclosing what stays with the property. A, B, and D are all considered very common errors. Normally, the seller will disclose what is not going to convey with the property.
In the Third-Party Financing Addendum, all the following are true EXCEPT: A. The contract is not subject to financing approval. B. The addendum is for an FHA or VA contract. C. The option of seller financing is part of the Third-Party Financing Addendum. D. The Buyer has the right to terminate and have earnest money refunded if they cannot obtain a loan.
The correct answer is C. The option of seller financing is part of the Third-Party Financing Addendum. The Seller Financing Addendum is a separate addendum from third-party financing.
What year was the Texas Real Estate Commission created to administer TRELA?
The correct answer is D. 1949. The Texas Real Estate License Act was established in 1939, and in 1949 the Texas Real Estate Commission was established to oversee the rules and laws of the License Act.
If the buyers are concerned about the subsurface rights, what should they do? A. Force the seller to give up rights. B. The seller should contract the insurance company for additional coverage. C. Write a memo on the contract. D. They need to attach and sign the Oil and Gas Addendum.
The correct answer is D. They need to attach and sign the Oil and Gas Addendum. If Natural Resource Leases such as subsurface leases exist, the Addenda related to those leases will need to be attached to the contract.
To bring an action for statutory fraud, there must be: A. A contract entered into between the parties. B. The plaintiff must prove the defendant's knowledge. C. A lawsuit filed within 8 years. D. The parties must be at least 25 years old.
The correct answer is: A. A contract entered into between the parties. The suit must be filed within four years, not eight years.
7. A bilateral contract is: A. A promise in exchange for a promise B. A promise made only by the agent C. A promise made only be the seller D. No promises
The correct answer is: A. A promise in exchange for a promise. The Residential One-to-Four Family Contract is a bilateral contract.
The reason a buyer would want "shortages in area" covered under the title policy is that only the original person who paid for the survey has recourse. A. True B. False
The correct answer is: A. In the One-to-Four Family Residential Contract, the title company can make the decision whether they will consider using the seller's existing survey. The seller will need to sign an affidavit called a T-47 and provide the original survey. If the title company does accept the survey and there is a future discrepancy in the boundary of the property, the buyer will not be protected if they do not request "shortages in area" covered in the title policy.
Interest is paid ______________. A. In arrears B. In advance C. At the time it is borrowed D. By the title company
The correct answer is: A. Interest is paid in arrears. For example, when the borrower makes a house payment in June, they are actually paying the interest for May.
If a buyer elects 8-B (No Intermediary Status), in the Residential Buyer/Tenant Representation Agreement, the client will: A. Not be shown any of the broker's listings B. Show buyer only the broker's listings C. Be a customer of the broker D. Be appointed to another company as subagent
The correct answer is: A. Not be shown any of the broker's listings. If the buyer does not want the broker to "assign" an agent to work with the seller, then the broker will not be shown any of that company's listings.
If a buyer checks item 7D (2) under Property Condition, the buyer can only ask for specific repairs and cannot use general terms such as "subject to inspection." A. True B. False
The correct answer is: A. Only specific repairs stated will be considered by the seller.
What is an occupancy standard? A. That only a certain number of people can live in the property B. That occupancy is limited to handicapped people C. That the buyer intends for owner to occupy the property D. That the property managers need to know how many people and animals are living in the property they manage
The correct answer is: A. That only a certain number of people can live in the property. A landlord can limit the number of occupants who live in a house or an apartment
What addendum creates a contingency? A. Sale of Other Property by Buyer B. Walk-through and Acceptance form C. Addendum for Reservation of Oil, Gas, and Minerals D. Back-up Contract
The correct answer is: A. The Sale of Other Property by Buyer creates a contingency contract which is that the sale is contingent upon the buyer selling his/her home.
Which one of the following, with written consent, may act as an intermediary? A. The broker representing the seller and buyer B. The broker cooperating with the listing broker C. The salesman working with the seller and buyer D. The salesman sponsored by a broker representing the seller
The correct answer is: A. The broker representing the seller and buyer. Only the broker can be an intermediary. He/she becomes one when they have an in-house sale where one party represents the seller and one party represents the buyer.
FHA loans are government insured. VA loans are guaranteed by the government. A. True B. False
The correct answer is: A. True.
3. If a seller counters a buyer's offer, it is considered a rejection. A. True B. False
The correct answer is: A. True. A counter offer is a rejection of the buyer's offer. If the seller counters, the buyer has no obligation to proceed with the contract.
8. A unilateral contract only binds one party to perform. A. True B. False
The correct answer is: A. True. A unilateral contract only binds one party to perform.
Earnest money is merely a gesture of the purchaser's good faith and is used to make the offer more enticing to the seller. A. True B. False
The correct answer is: A. True. Earnest money is NOT a requirement for consideration.
Fraud is defined as a deliberate act of deception made for personal gain or to damage another individual. A. True B. False
The correct answer is: A. True. Fraud itself can be either a civil or criminal wrong. The purpose of fraud may be monetary gain or other benefits. An example of fraud would be obtaining a driver's license or qualifying for a mortgage by way of false statements.
A Condominium Contract can include a description of the parking assigned to the unit. A. True B. False
The correct answer is: A. True. In paragraph 2, along with the legal description and address of the property, assigned parking areas are described here
4. It is considered illegal for a contract to include any discriminatory provisions. A. True B. False
The correct answer is: A. True. The Civil Rights Act prohibits discrimination on contracts or otherwise.
The Federal Fair Housing Act prohibits discrimination for all the following reasons: Race, color, religion, nation origin, sex, handicap, or familial status. A. True B. False
The correct answer is: A. True. The Federal Fair Housing Act covers all these reasons.
An agent is required by law to cover the agency relationships described in the Information About Brokerage Services. A. True B. False
The correct answer is: A. True. The agent needs to be very familiar with the terms: client, customer, sub-agent, and intermediary. The agent must also be able to explain these terms and relationships with the buyer.
Paragraph 4 is about leases. A. True B. False
The correct answer is: A. True. The new contract (effective April 1, 2021) has Leases as paragraph 4. This is a change from the previous contract which was License Holder Disclosure.
The TREC promulgated Seller Financing Addendum states that if a seller determines at seller's sole discretion that the buyer's credit is unacceptable, the seller may terminate the contract and return the earnest money to the buyer. A. True B. False
The correct answer is: A. True. This is stated in the Seller Financing Addendum. Since the seller is carrying the note on the property, the seller has full authority and right to determine if the purchaser's credit is acceptable to him or not.
Can an agent work with a buyer without representing them? A. Yes B. No
The correct answer is: A. Yes, the agent can work with the buyer as a "customer" not a client.
The Farm and Ranch Contract should be used with properties in excess of ______ acres. A. 5 B. 15 C. 100 D. 200
The correct answer is: B. 15. This is stated in the Farm and Ranch Contract.
In the Farm and Ranch Contract, Paragraph _____ is the mediation paragraph. A. 3 B. 16 C. 17 D. 1
The correct answer is: B. 16. The parties to the contract agree to mediation if there is a dispute between Seller and Buyer.
The proof of false representation to prove statutory fraud case must be: A. An email record the party to the lawsuit has B. A false promise made with the intent not to fulfill it. C. In writing D. Notarized
The correct answer is: B. A false promise made with the intent not to fulfill it. It must be proved that the false promise was made with the intention of not fulfilling it.
The Federal Fair Housing Act exempts all the following EXCEPT: A. Owner-occupied buildings with no more than four units B. Apartment building in rural areas C. Landlords who own only a few single-family homes that were sold or leased without a broker D. Housing operated by organizations and private clubs that limit occupancy to members
The correct answer is: B. Apartment building in rural areas. The Federal Fair Housing exempts all but the apartment building in a rural area.
An agent must provide Information About Brokerage Services even if the party is already under contract to purchase the property. A. True B. False
The correct answer is: B. False. If someone is already under contract, the Information about Brokerage Services is not required
Once a contract goes to closing and the funds are dispersed to the seller, the seller has no further liability for any representations the seller may have made prior to the closing. A. True B. False
The correct answer is: B. False. No, all representation made by the seller does survive closing, and the seller can be held responsible for misrepresenting something after the closing.
For a broker to act as intermediary in a transaction requires written consent from only one of the parties. A. True B. False
The correct answer is: B. False. No, it requires written consent from both parties
Regarding mediation, the buyer and seller are obligated under the terms of the Residential Contract to abide by the ruling of the mediator. A. True B. False
The correct answer is: B. False. No, the paragraph states that the buyer and seller agree to have mediation, but they are not obligated to abide by the ruling of the mediation
If the buyer is seeking FHA or VA financing and the appraisal comes in below the asking price, the buyer must come up with the difference in the down payment. A. True B. False
The correct answer is: B. False. The FHA or VA buyer may terminate the contract if the appraisal comes in low and the earnest money will be refunded to the buyer. However, the buyer may proceed with the sale; they just do not HAVE to.
Federal Fair Housing Laws forbid discrimination based only on race. A. True B. False
The correct answer is: B. False. The Federal Fair Housing Laws cover race, color, religion, national origin, sex, handicap, familial status, and HIV.
The seller must notify the buyer to have the abstract of title examined by an attorney or obtain a policy of title insurance. A. True B. False
The correct answer is: B. False. The buyer's agent has the responsibility to explain to the buyer that they should have an abstract examined by an attorney or obtain a title policy. This is something that is pre-printed in the promulgated contracts; however, the agent needs to be aware that it is their responsibility to tell the buyer.
If a buyer decides to terminate a contract during the option period, the seller must agree to the termination. A. True B. False
The correct answer is: B. False. The seller could possibly sue the buyer for specific performance and may not agree to the termination
An agent would use the same contract for new construction no matter if it was completed or incomplete. A. True B. False
The correct answer is: B. False. There is a separate TREC promulgated contract for incomplete construction and complete construction.
A survey is required on all Condominium Contracts. A. True B. False
The correct answer is: B. False. There is no need for a survey as the land is commonly owned.
Your buyers are considering consulting their attorney while you are preparing the offer. You should: A. Try to get them to sign the offer and call their attorney later B. Offer to deliver the contract to their attorney C. Advise them there is no need to consult an attorney since all real estate transactions are routine D. None of the above
The correct answer is: B. Offer to deliver the contract to the attorney. If the buyer wants to seek legal advice, you as the agent should not suggest otherwise. You may want to suggest that they see an attorney who specializes in real estate
If the buyer does not deposit the earnest money within the designated time, the buyer is considered to be: A. Negligent B. In default C. Not dealing fairly D. Not being represented properly
The correct answer is: B. The buyer is considered to be in default on the contract. This presents all kinds of problems and the agent is responsible for getting the earnest money to the title company in two day
Why do lender-required repairs take priority? A. Lender repairs are the most serious repairs needed. B. The buyer cannot get the loan without these being done. C. FNMA sets the standards for what repairs are most important. D. The seller and the lender work together to determine the priority of repairs
The correct answer is: B. The lender will not make the loan if the "lender required repairs" are not completed. That is why their repairs have priority.
The Resale Certificate must be prepared no more than ________ before the date it is delivered to the buyer. A. One year B. 3 months C. 6 months D. 2 weeks
The correct answer is: B. Three months. The requirement for the Resale Certificate is in paragraph C which is three months.
Per Paragraph 9 (Closing), what type of deed is called for in a standard residential sale? A. Special warranty deed B. Quit claim deed C. General warranty deed D. A deed of trust
The correct answer is: C. In a standard residential contract, the property will be conveyed by general warranty deed, meaning that the title company will guarantee clear title back to the sovereignty of land. In a bank foreclosure, the lender does not want to make that guarantee and will only guarantee clear title while they (the lender) owned the property. In these situations, the property will be conveyed by special warranty deed.
5. The biggest majority of lawsuits come from the issue of: A. Fixtures vs. personal items that convey with the property B. Misunderstandings between brokers C. Non-disclosure D. Repair items
The correct answer is: C. Non-disclosure. These can be a problem in getting to a successful closing, but non-disclosure is number one.
The "Special Provisions" Paragraph (11) of the Residential Contract is for: A. Naming all the additional personal items the buyer would like to have B. Excluding any other provisions of a contract that are not mutually agreed upon C. Inserting factual statements and business details where no addendum is required D. Name the parties involved in the transaction
The correct answer is: C. Special care should be taken to only add factual statements. Long, involved descriptions or explanations in this paragraph could be construed as the unauthorized practice of law.
9. The clause in a contract stating that "time is of the essence" would indicate: A. The contract must be finalized immediately. B. The contract must include the time of day the contract was executed. C. Strict performance of certain acts within the time stated in the contract. D. Monetary penalties will be incurred if the provisions are not met by certain times.
The correct answer is: C. Strict performance of certain acts within the time stated in the contract. Time is of the essence is a term used to mean that all time limits and time deadlines in the contract must be met.
If a tenant files a suit against an owner, the owner is prohibited by law from doing all of the following EXCEPT: A. To threaten B. To intimidate C. To counter sue D. To coerce
The correct answer is: C. To counter sue. If a tenant files a lawsuit against an owner, the landlord can counter sue the tenant.
6. A seller, age 30, enters into a contract with a buyer, age 17. The contract is: A. Valid for both parties B. Void for both parties C. Voidable by the buyer D. None of the above
The correct answer is: C. Voidable by the buyer. If an under-aged person enters into a contract, the contract is voidable.
The Non-Realty Items Addendum for transfer of personal property can include all the following EXCEPT: A. An agreed dollar amount between buyer and seller for the conveyance B. A place to list the personal property to be conveyed C. A representation by Seller that the items are owned free and clear of encumbrances D. A warranty and guarantee from the seller that the items are in working condition
The correct answer is: D. A warranty and guarantee from the seller that the items are in working condition
All the following fees will be prorated at closing EXCEPT: A. Taxes B. Rents C. Interest D. Credit report fees
The correct answer is: D. All items except credit report fees will be prorated as of the closing date. Each party pays for the time they owned the property within the year.
What is earnest money? A. Earnest money is a deposit made by the buyer into a trust or escrow account. B. Money used to show the seller that the buyer has entered into the transaction in good faith. C. Money that will be returned to the buyer if the seller terminates the transaction. D. All of the above
The correct answer is: D. All of the above. In all circumstances, the return of the earnest money is governed by the contract between the buyer and seller.
The property may not be approved by the lender's underwriter for many reasons including: A. Something that has arisen in the title search B. Mistakes on the survey C. Condominium not on the lender's approved list (FHA, VA) D. All of the above
The correct answer is: D. All of the above. It is a good idea to check with a lender to see what concerns the underwriter may have for the loan
1. Essential elements of a contract include: A. Competent parties B. Offer and acceptance C. Consideration D. All of the above
The correct answer is: D. All of the above. The four elements of a contract are: offer and acceptance, competent parties, consideration, and legality of object.
A TREC promulgated New Home Contract (Incomplete) can include: A. Landscaping B. Appliances C. Color choices D. All of the above
The correct answer is: D. All of the above. The purpose of this contract is to allow flexibility depending on the stage of the construction of the house what the buyer can select.
What is considered the "Documents" of the association? A. Declaration B. By-laws C. Rules D. All of the above
The correct answer is: D. All of the above. These rules of the community are also called the CC+R's (Covenants, Conditions + Restrictions).
All the following can be awarded in a statutory fraud case EXCEPT: A. Exemplary damages B. Court costs C. Attorney's fee D. Fees for pain and suffering
The correct answer is: D. Fees for pain and suffering. The damages that can be awarded are exemplary damages, court costs, and attorney's fees. It does not include damages for pain and suffering.
An agent must provide the Information About Brokerage Services (IABS) notice at the time of the first substantive dialogue with the party to the transaction for all of the following EXCEPT: A. When selling or leasing a commercial property B. When functioning as a tenant representative C. When leasing a residential property for a term of two years D. When leasing a residential property for a term of six months
The correct answer is: D. If a property is leased for less than one year, the Information about Brokerage Services is not required.
In the event of the seller's default, the buyer may do any of the following EXCEPT: A. Terminate the contract B. Enforce specific performance C. Seek such relief as provided by law D. Move into the property
The correct answer is: D. Move into the property. Remedies under the law for default on a contract state specifically A, B and C. Moving into the property is not something the buyer may do.
If the buyer cannot obtain financing for the purchase: A. The earnest money is automatically refunded. B. The lender will notify the seller. C. The underwriter will notify the seller. D. The buyer must terminate the contract within a certain number of days or lose the right to terminate.
The correct answer is: D. The buyer has a certain number of days to terminate the contract and must be proactive in doing so or may lose their earnest money.
In Paragraph 2 of the standard residential contract form, which of the following items would NOT be included in the sale unless otherwise provided for: A. Mini-blinds B. Stove C. Ceiling fans D. Oriental living room rug
The correct answer is: D. The oriental rug would be considered personal property as it is not "attached" to the property.
2. The One-to-Four Family Contract includes all the following EXCEPT: A. Street address and legal description B. Down payment, loan amount, and sales price C. Full and legal names of both parties D. Type of loan the buyer is obtaining
The correct answer is: D. The type of loan is on an addendum to the contract called "Third Party Financing Addendum" or "Seller Financing Addendum."
Some sellers are exempt from the requirements of section 5.008 of the Texas Property Code. They include: A. New home or builder exemption B. Foreclosure sale C. Seller of residential property consisting of more than one dwelling unit D. All of the above
The correct answer is: D. There are 11 exclusions to the property code. The answer options are some of the exclusions
The purpose of the Information About Brokerage Services is: A. To provide etiquette guidelines for agents B. To spell out the advice a broker can give to his client C. To give the broker a written agreement for their commission D. To clarify who is being represented and how they will be
The correct answer is: D. To clarify who is being represented and how they will be. It is important that the buyers know they are not being represented and should only disclose facts to the agent as this and any other information will be communicated to the seller.
Who is the escrow agent in paragraph 18? A. The listing broker B. The selling broker C. The attorney's assistant D. Whoever is holding the earnest money.
The correct answer is: D. Whoever is holding the earnest money. The title company often holds the earnest money and does the closing, but the closing could be done by an attorney and the earnest money would then be held by the attorney.
10. If there is no time limit specified in an offer, then the time limit will expire: A. 30 days B. As stated by the broker. C. As determined by the seller D. Within a reasonable time
The correct answer is: D. Within a reasonable time. A "reasonable time" is often misinterpreted in the contract.
The legal description in a Condominium Contract includes the unit being conveyed along with ownership of the undivided interest of the land, and common interests jointly owned by the condominium owners. A. True B. False
True. What a person buys when they buy a condominium is the unit itself and an undivided interest in the land and common areas. For example, if there were 24 condominiums in the project, the buyer would own 1/24 of the entire land and common area, not a specific 1/24 but an undivided 1/24.
The Non-Realty Items Addendum is used for personal property that is being conveyed. It is not a mandatory form required by TREC. A. True B. False
correct answer is: A. True. The Non-Realty Items Addendum clearly explains how personal property is transferred from the seller to the buyer.
During the option period in the 1-4 Family Residential Contract (Resale), the buyer has the unrestricted right to terminate the contract. A. True B. False
A. True