Principals of Real Estate

1. A couple starts celebrating the sale of their home after their listing agent calls them with the news that they've received an acceptable offer. The listing agent says he is coming over to get their acceptance and signatures. However, by the time the agent arrives the sellers are completely inebriated. The agent has them sign the contract and then takes it to the title company. This contract is

Void

1) How is paragraph 7 different in both New Home Contracts, the Unimproved Property Contract, and the Farm and Ranch Contract from the residential contract?

There are different seller's disclosures required depending on the type of property

1) Buyer and seller enter into a contract for buyer to purchase seller's condominium unit using the TREC Residential Condominium Contract with an effective date of January 5. Seller delivers the condominium documents three days after the effective date. Assuming no option period, what is the latest date on which buyer may cancel the contract and still get her earnest money refunded?

a. January 14

1) What is the status of an option fee that has been physically delivered to the seller's agent?

a. Legally it has been delivered to the seller.

1. Which of the following concerns lead to the Texas Real Estate License Act prohibiting licensees from practicing law?

a. Licensees giving counsel regarding the validity or an instrument that addresses real property rights

1) The seller wants to keep the above ground pool. How should it be addressed if using the TREC One to Four Family Residential Contract?

a. List the pool in paragraph 2, Exclusions

1. The seller wants to keep the built-in, high-end stovetop. How should the seller's agent note that?

a. List the stovetop in paragraph 2, Exclusions.

1. Which of the following is not included in the legal description in paragraph 2 of the One to Four Family Residential Contract?

a. Name and marital status of the parties

1) What font size must be used to disclose the Information About Brokerage Services?

a. No smaller than 10-point type

1. Which of the following is legal for the licensee to draw up?

a. None of these

1) If the back-up buyer (buyer 2) has an option to terminate, when does the option period start?

a. On the original effective date of the back-up contract

1) Which of the following is NOT considered a construction document in the TREC New Home Contract (Incomplete Construction)?

a. Survey

1. TREC promulgates the Loan Assumption Addendum. In a transaction where a buyer is assuming a seller's loan

a. TREC's Loan Assumption Addendum is required.

1) Under paragraph 9 of the TREC One to Four Family Residential Contract, the buyer needs to move in before closing because she is starting a new job and she is moving in from out of state. What kind of tenancy is formed if she moves in early if the parties fail to negotiate a written lease?

a. Tenancy at sufferance

1. What law specifically prohibits licensees from practicing law?

a. Texas Real Estate License Act (TRELA)

1) In what way is paragraph 2 in the TREC Farm and Ranch Contract different from paragraph 2 of the One to Four Family Residential Contract?

a. The Farm and Ranch Contract calls for a metes-and-bounds legal description rather than reference to a recorded plat.

1) A seller of real property wishes to sell to a buyer for an additional price the home theater television. Which form or paragraph in the contract should be used?

a. The Non-Realty Items Addendum

1. Which law requires that a contract have a proper legal description?

a. The Statute of Frauds

1. A seller wants to use her own contract. What are the agent's legal options?

a. The agent can use the contract because it is an exception.

Under the TREC Loan Assumption Addendum, who gets the earnest money if the note holder fails to consent to the loan assumption?

a. The buyer

1) What happens if a buyer fails to pay to the seller an option fee she promises to pay within three days of execution of the contract under paragraph 23 of the TREC One to Four Family Residential Contract?

a. The buyer will not have the right to terminate the contract.

1) Who selects the appraiser to appraise a home when financing is involved?

a. The lender

1) What happens to the option fee if the buyer terminates within the option period under paragraph 23 of the TREC One to Four Residential Contract?

a. The option fee is not refunded to the buyer.

1) Who should fill out the Seller's Disclosure of Property Condition?

a. The seller

1) Buyers are buying property from a trustee in bankruptcy sale. How should the seller trustee reply to the buyers' offer where the seller would be required to provide the seller's disclosure notice within five days of execution of the contract under paragraph 7 of the One to Four Family Residential Contract?

a. The seller should counter by indicating that he is not required to provide the notice.

1) Which of the following forms should be attached and referenced on the One to Four Family Residential Contract?

a. Third Party Financing Addendum

1. A person approaches an owner and says, "I'd like to buy your house." The owner says, "Sure" and they agree on a price. What type of contract is this?

a. Unenforceable

1. The seller wishes to sell to the buyers all of the flower pots on the patio. What should the agent do?

a. Use the Non-Realty Items Addendum.

1. Which of the following is an exception to using TREC promulgated contract forms?

a. When the licensee is acting as a principal and not as an agent

1. What information is NOT needed to complete paragraph 23 of the TREC One to Four Family Residential Contract?

a. Whether the option fee is refundable

1. Property approval, according to paragraph B2 in the Third Party Financing Addendum, includes

a. all of these.

1. According to the Texas legislature, a contract involving the sale of a residence that will take place more than 180 days after the execution of the contract is

a. an executory contract.

1. A contract must meet certain minimum requirements to be considered legally valid. All of the following are essential elements of a valid contract EXCEPT

a. earnest money.

1. The statute of limitations in Texas is

a. four years for a written contract.

1. The statute of limitations for a written contract for the sale of real estate in Texas is

a. four years.

1. The down payment in a transaction is indicated

a. in paragraph 3A of the contract.

1) According to the One to Four Family Residential Contract (Resale), the title policy cost is the responsibility of the

a. party that agreed to pay the cost in the contract.

1. A seller accepted money from a buyer for his unrestricted right to cancel the purchase transaction (option to terminate) within ten days of the executed date of the sales contract. This agreement is a(n)

unilateral contract

1) Buyer and seller have entered in a contract for buyer to purchase residential property from seller. Buyer wants to move in early and begin remodeling so that the house will be ready to move in at closing. What are the buyer's rights under the TREC Buyer's Temporary Residential Lease?

The buyer has no right to remodel without the prior written consent of the seller.

1) Under paragraph 23 of the One to Four Family Residential Contract, what happens to the earnest money if seller timely terminates the contract within the option period?

Seller may not terminate under paragraph 23

1) The buyer agrees to purchase a home "as is" in part relying on an existing inspection report. The buyer uses the One to Four Family Residential Contract with an option period of 14 days. What are the buyer's choices during the option period?

The buyer may have the property inspected again

What happens if buyer's credit is not approved under the TREC Third Party Financing Addendum, and the buyer gives timely notice to the seller?

The contract will terminate and the buyer will get the earnest money.

1. Which of these promulgated forms does NOT include "time is of the essence"?

a. Loan Assumption Addendum

1) How many different notices are in paragraph 6E of the One to Four Family Residential Contract?

a. Nine.

1. Which of the following is NOT a TREC promulgated addendum?

a. Reverse Mortgage Financing Addendum

1) When does the Seller's Temporary Residential Lease terminate?

a. When the term in paragraph 3 expires

1. An offer to purchase by a potential buyer is considered accepted when the

a. buyer is notified that the seller has accepted the offer.

1. One party cancelling or terminating a contract as though it had never been made is

a. rescission.

1) According to paragraph 23, the option money is to be delivered to the

a. seller.

1) Most builders in Texas

provide their own contract

1) Where in the One to Four Family Residential Contract would a licensee indicate that she is the seller in the transaction and that she has a real estate license?

a. Paragraph 4

1. Sellers contribution to a residential service contract is addressed is which paragraph of the TREC One to Four Family Residential Contract?

a. Paragraph 7

1) What happens if coastal erosion moves the public easement to a public beach in the Texas Gulf Coast?

a. Private coastal real property may become a public beach.

1) Using the One to Four Family Residential Contract, the sellers must provide which of the following documents along with the existing survey if they wish to rely on an existing survey of the property?

a. Residential Real Property Affidavit

1) Which of the following is considered a surface material that may be used for developing or removing oil, gas, or other minerals?

a. Sand

1) In the TREC Unimproved Property Contract, who is responsible for payment of assessments if seller's change in use of the property prior to closing results in assessments for periods prior to closing?

a. Seller

1) Under paragraph 13 of the TREC Residential Condominium Contract, who is responsible to pay for any special condominium assessment due and unpaid at closing?

a. Seller

1) Under the TREC Unimproved Property Contract, why should an adequate termination option be purchased?

a. To provide a sufficient amount of time to make absolutely certain that the property is suitable

1. An offer is not considered accepted until the person making the offer has been notified of the other party's

a. acceptance.

1) Restrictive covenants may include rules regarding

a. all of these.

1. In Texas, the statute of limitations for an oral contract for a lease of less than one year is

a. two years.

1) Rollback taxes can be assessed when

a. zoning is changing and the property no longer qualifies for a previous exemption.

1. The essential elements of a valid real estate contract include

all of these

1. Real estate brokers who are members of the Broker-Lawyer Committee become members by being

appointed by the Texas Real Estate Commission

1. If the buyer wants to be sure the fireplace screen stays with the property, the buyer's agent should

do nothing; it is already in the contract

1. A buyer makes an all-cash offer of $168,000. How will paragraphs 3A, 3B, and 3C be filled out?

3A is $168,000, 3B is $0, and 3C is $168,000

1. A buyer and a seller enter into a contract using the One to Four Family Residential Contract, which is one of TREC's six promulgated contracts. The effective date of the contract is February 4, and the seller has 4 days to fulfill a duty under the contract. By when must the seller complete the duty?

A. February 8 at midnight

1. A licensee is purchasing property for himself. A TREC promulgated contract is appropriate for this purchase, but the licensee decides to be creative and draft his own contract from what he has learned in his real estate classes. Which of the following is most likely to be TRUE?

A. The licensee has the right to draft his own contract.

1) What is the difference in paragraph 2 between the two TREC New Home Contracts and the One to Four Family Residential Contract?

Improvements and accessories are not addressed in the New Home Contracts

1) Buyer enters into a short sale agreement with seller with an option to terminate 14 days after the effective date using the TREC Short Sale Addendum. The effective date is February 5. The seller has until February 19 to notify buyer that seller has obtained lienholder's consent and agreement. The seller notifies the buyer that the lienholder has consented to the sale on February 20, even though he received the notice on February 19. What is the status of the earnest money?

It is refunded to buyer

1) Buyer and seller enter into a contract for buyer to purchase seller's property using the One to Four Family Residential Contract. Buyer purchases a 14-day option to terminate the contract. What happens to the earnest money if buyer terminates on the 14th day?

It is refunded to the buyer

1) How is paragraph 3 different in the Farm and Ranch Contract from the other five contracts?

Sales price can be adjusted after the effective date

What does the Broker-Lawyer Committee do?

a. Drafts contracts

1. A real estate broker modifies a 1992 TREC promulgated contract form and updates it to fit a particular transaction. Which of the following could happen?

The broker could have his license suspended or revoked for practicing law

1. If the offer is acceptable to the seller, the offer is signed and dated and returned to the buyer. It is now a contract for sale. If the offer is rejected, the offer is returned to the buyer marked

a. "rejected."

1. If parties to a real estate contract in Texas are held to very strict deadlines for performance, the contract likely includes the phrase

a. "time is of the essence."

1. If the buyer wishes to make an all cash offer, how should paragraph 3 of the TREC One to Four Family Residential Contract be completed?

a. 3A and 3C will be the same amount.

1) When must the agent deliver the earnest money to the title company?

a. By the close of business on the second day after the effective date

1. Which of the following is NOT a TREC promulgated contract?

a. Contract for Deed

1) Which of the following is FALSE regarding earnest money?

a. Earnest money is necessary to bind the contract.

1) Which type of loans have unallowable fees that a buyer is prohibited from paying under the TREC One to Four Family Residential Contract?

a. FHA loans

1) Buyer and seller enter into a contract for buyer to purchase seller's property using the One to Four Family Residential Contract. Buyer purchases a seven-day option to terminate the contract, but pays the option fee on the fifth day after the effective date of the contract. Does the buyer have an option to terminate?

No, the option fee must be paid within three days after the effective date

1) Under paragraph 5 of the TREC One to Four Family Residential Contract, what happens if the buyer fails to deposit the earnest money?

The buyer is in default.

1. A buyer and seller enter a contract for the sale of a 3-bedroom residential property. Shortly after the contract is in place, the buyer has an inspection done. As a result of the inspection, the buyer wants the seller to fix the fence and replace the garage door opener. The seller agrees. How should the parties proceed?

The parties must use an amendment form

1) The buyer gets buyer's remorse and cannot decide whether to close on a home already under contract with the seller. Under paragraph 9 of the TREC One to Four Family Residential Contract, what can the seller do if the buyer fails to close the sale by the closing date?

The seller may exercise a remedy under paragraph 15

1) Buyers are buying property from a trustee in bankruptcy sale. How should the seller trustee reply to the buyers' offer where the seller would be required to provide the seller's disclosure notice within five days of execution of the contract under paragraph 7 of the One to Four Family Residential Contract?

The seller should counter by indicating that he is not required to provide the notice

1. According to the Loan Assumption Addendum, if the buyer does not deliver the credit information within the required time, the seller has how many days to terminate after expiration for the time of delivery?

a. 7

1) How are the earnest money and option fee typically paid under the One to Four Family Residential Contract?

a. A check to the title company and a check to the seller

1) Who is allowed to insert legal rights or remedies in the special provisions paragraph of the One to Four Family Residential Contract?

a. A party

1) What type of home is typically purchased using the TREC New Home Contract (Completed Construction)?

a. A spec home

1) The Statutory Tax District Notice in paragraph 6 of the One to Four Family Residential Contract applies to which of the following?

a. A utility district that provides water services

1) Which of the following addenda contains the words time is of the essence?

a. Addendum for Sale of Other Property by Buyer

1. What type of committee is the Broker-Lawyer Committee?

a. Advisory

1) Who receives the earnest money if the buyer terminates the contract because of lender required repairs under the One to Four Family Residential Contract?

a. Buyer

1) Under the TREC One to Four Family Residential Contract, what type of warranty deed is conveyed at closing?

a. General warranty deed

1. How should the TREC One to Four Family Residential Contract be filled out if the property is not located within a city?

a. In the blank for "city" put "unincorporated" or "none."

Where should TREC's Consumer Information Form be prominently displayed?

a. In the office of every licensed inspector and broker in Texas

1) Seller wishes to contribute $1,000 to buyer's closing costs. Using the TREC One to Four Family Residential Contract, what should the seller's agent advise the seller?

a. Insert $1,000 into paragraph 12A(1).

1) Who is responsible for paying for the owner's title policy under the TREC Unimproved Property Contract?

a. It is negotiated by the parties

1) Buyer and seller enter into a contract for buyer to purchase seller's condominium unit using the TREC Residential Condominium Contract with an effective date of January 5. Seller delivers the condominium documents before the effective date. Assuming no option period, what is the latest date in which buyer may cancel the contract based on the documents and still get her earnest money refunded?

a. January 11