Study: Course 4 Exam

Under Section _______ of the Internal Revenue Code, an investor in real property can sell that property, reinvest the proceeds in a "like-kind" property, and defer paying capital gains taxes.

1031

Within how many days after the title company receives a copy of the signed sales contract is the seller required to deliver commitment for title insurance to the buyer, according to the TREC One to Four Family Residential Contract (Resale)?

20

What's the maximum size for a rural homestead family in Texas?

200 acres

Before the title company will issue an insurance policy to a Texas buyer, which of the following must the seller furnish to the buyer?

A commitment

Which of the following is an example of constructive eviction?

A tenant moves out of the apartment after repeated unsuccessful requests to the landlord to repair the broken water heater.

How can an easement be terminated?

Abandonment

Rachel's loan to buy Scott's house fell through because Rachel couldn't obtain financing. No one told her not to run up a lot of credit card debt on the way to closing. Rachel's earnest money was all Scott had to show for six weeks of his home being off the market. This is an example of _________.

Accepting liquidated damages

Although Bill's inspection turned up dry rot which Jill promised to have fixed (and didn't), Bill agreed to close anyway. This is an example of ________.

Accepting partial performance

What is the difference, if any, between a TREC-approved form and a TREC-promulgated form?

An approved form is optional; a promulgated form is required.

Which type of easement provides a right-of-way for a railroad?

An easement in gross

Gloria has an option to purchase the cottage she leases from her landlord. She can exercise the option within the next two years. To gain that right, Gloria paid the landlord $5,000. This is called ______.

An option fee

Ted's seller client is adamant that she'll be uprooting and taking most of the fruit trees in the backyard when she sells her home. Ted makes a note to himself that he'll need to include the ______ of the trees in the comments for his listing.

Severance

Sherman, a Texas real estate licensee, gave his client, Stew, legal advice about how to take title. If Sherman isn't an attorney, what might happen?

Sherman could have his license revoked.

Which of the following requires that contracts transferring ownership of real property be in writing to be enforceable?

Statute of frauds

Ann Marie is a tenant with a triple net lease. Per her lease, she pays for which of the following expenses related to the property?

Taxes, maintenance, insurance

Which one of the following types of ownership termination allows each tenant to have a specific, divided portion (partition) of the property exclusively?

Termination of co-ownership by partition

Which authority is responsible for providing promulgated contract forms and enforcing license law in Texas?

Texas Real Estate Commission

Texas licensee Alexandra is helping her clients, the Kents, fill out the Sales Price section of the TREC One to Four Family Residential Contract (Resale). What amount will they put in this space?

The Kents' purchase offer

In which section of the TREC One to Four Family Residential Contract (Resale) can the parties add terms to the agreement that aren't captured elsewhere in the contract?

The Special Provisions section

Contingencies normally include the responsible party's name, the deadline for the contingency removal, and ______.

The actions required for removal

What term explains the complexity of property ownership rights and how rights for a single property can be "owned" by multiple parties at the same time?

The bundle of rights

Your buyer client is considering a contract for deed. Which of the following is an advantage of such an arrangement for the buyer?

The buyer doesn't have to have the money for a traditional down payment.

If the buyer is putting earnest money down, which of the following statements is true?

The buyer must specify the exact amount in the contract.

A Texas licensee may only strike through a clause or line item if it is not applicable to the transaction and the deletion is at the request of ______.

The client

Consent is not present when _______.

The contract is signed under duress or undue influence

Your 15-year-old son just signed a contract joining a health club, which costs $50 a month. Which of the following best describes this contract?

The contract is voidable.

What happens if the seller is unable to furnish the buyer with the commitment and exception documents within 20 days after the title company has received a signed copy of the TREC One to Four Family Residential Contract (Resale)?

The deadline for delivery is automatically extended.

Per TREC's residential One to Four Family (resale) contract, who's authorized to pay the buyer's broker fee at closing?

The escrow agent

Commercial leases may contain an automatic renewal clause. If this is the case, what happens after the lease's original term has come to an end?

The lease continues on a month-to-month basis.

In a 1031 exchange, there are rules governed by Section 1031 of the Internal Revenue Code. The rules include _______.

The property in an exchange must be like-kind.

In addition to the property address, the lease agreement start and end dates, and the monthly rent and deposit amounts, which of the following pieces of information should all commercial leases contain?

The purpose for which the space is being rented

Which of the following is a reason a seller might consider selling his property through an installment contract rather than a traditional sale?

The seller may pay less in capital gains taxes if he receives the proceeds from the sale over time rather than in a lump sum.

Jacqueline found a ready, willing, and able buyer for her client's condo, with a sales price of $20,000 more than the asking price. However, the appraisal came in just under the asking price. Which number will the lender use to calculate the loan-to-value ratio?

The smaller number

Which of the following documents insures the buyer against loss because of title issues and must be furnished by the seller to the buyer?

The title insurance owner's policy

What phrase do many real estate contracts contain that reminds the parties to avoid unnecessary delays to the transaction, and to adhere to all contract dates?

Time is of the essence

What is the purpose of the Broker-Lawyer Committee?

To draft contract forms

Physical characteristics of land include its immobility, indestructibility, and ______.

Uniqueness

Aubrey, an attorney for the seller, was extremely satisfied with the purchase offer his client was planning to sign. The sales contract contained all of the essential elements. What type of contract is this?

Valid

Warren signed a contract with the Samsons for the sale of property he didn't own. What type of contract is this?

Void

As part of the sales contract, Garth, the seller, was supposed to provide a copy of the seller's disclosure to the buyer, Melanie, but he failed to do so. What type of contract is this?

Voidable

Which required clause in a Texas deed describes the type of warranty being made by the grantor?

Warranty

The four phases of an environmental assessment include investigation, testing, and management. Which phase is missing?

Cleanup

In which section of the TREC One to Four Family Residential Contract (Resale) does the buyer specify the closing date?

Closing section

Through which method of voluntary alienation does the grantor convey real property and transfer title to the grantee?

Deed

Which of the following is an example of reversionary right?

During a lease transaction, the lessor retains the rights to possession of the property after the lease term has expired.

When a contract is executory (for instance, in an installment sales contract), what type of title does the buyer hold?

Equitable

The Nettles have accepted the Briars' purchase offer, and both parties have signed the sales contract. The funds, and the title, should transfer in a matter of days, but otherwise all elements and terms of the contract have been met. What type of contract do the Nettles and the Briars have?

Executory

Luther has a buyer client who is purchasing a duplex built before 1978 and located in the heart of Texas. The buyer's purchase is contingent upon getting a mortgage loan. Which document must Luther ensure that his client receives from the seller?

Federal lead-based paint disclosure called "Protect Your Family From Lead in Your Home"

Calista is in the process of evicting one of her tenants. As part of the actual eviction process, she must file a suit for possession in the local justice of peace court. What is another name for this type of suit?

Forcible detainer suit

Theo is a buyer who's contemplating a land contract. Why might he choose this route over traditional financing?

He doesn't qualify for traditional financing.

Compared with condominiums, the monthly fees for a cooperative owner are typically ______.

Higher

Nettie does not need to take out a loan to purchase the property she wants to buy. How should she indicate this in the Sales Price section of the TREC residential One to Four Family (resale) contract?

Leave each box unchecked and write "N/A" in each blank.

Which of the following is an essential element of a valid real estate contract?

Legal purpose

Quentin is the seller in a Texas contract for deed agreement. What type of rights to the property does he have during the contract for deed process?

Legal title rights

Dexter can't make next month's rent and is thinking about vacating his apartment before the lease term is up. If Dexter moves out before the lease term expires, he will be ______.

Liable for the rent for the term of the lease

Carol and her husband, Mick, have decided that instead of taking out a loan to help finance their property purchase, they are going to take up where the seller left off on the seller's current mortgage. What type of financing is this?

Loan assumption

Texas licensee Jan drafted a sales contract, which the buyer and the seller of the home both signed. Jan could ______.

Lose her license

Per TAR's Residential Real Estate Listing Agreement Exclusive Right to Sell contract, what does the broker have the authority to do?

Market the seller's property in an effort to secure a buyer and negotiate a sale.

Which method of involuntary alienation involves accession, accretion, reliction, or avulsion?

Natural processes

Per the TREC One to Four Family Residential Contract (Resale), which of the following statements about lender-required repairs is true?

Neither party is obligated to pay for lender-required repairs.

Is it ever appropriate for a Texas licensee to provide legal counsel?

No, because that would be unauthorized practice of law.

Kyle is meeting with Martha, a prospective tenant client who wants him to negotiate a one-year lease for her. Prior to entering into an agency representation agreement with Martha, what must Kyle do in accordance with Texas law?

Review the Information About Brokerage Services form with her

Which term refers to the rights of an owner of a property that touches a stream or river?

Riparian

In which section of the TREC One to Four Family Residential Contract (Resale) do buyers indicate the price they're offering for the property?

Sales Price section

Russel Maverick likes to get things done quickly, so when he decided to buy Kent Regent's property, he asked Kent if he'd be willing to take a promissory note for the difference between the down payment and the purchase price that he would pay off in installments. Kent agreed. What type of financing is this?

Seller financing

Sondra thinks the new business contract she signed with her business partner is valid. Both parties are legally competent, the contract has a legal purpose, an offer was made and accepted, and a fee has been negotiated and documented. Which essential element of a valid contract has Sondra not yet considered?

Whether consent was voluntary

Under the terms of the TREC One to Four Family Residential Contract (Resale), what recourse do buyers have if a seller is unable to deliver the title commitment and exception documents to the buyer within the allotted time, due to factors beyond the seller's control?

Buyers can terminate the contract and have their earnest money refunded.

Under the terms of the TREC One to Four Family Residential Contract (Resale), if mediation is required due to a dispute between parties to a real estate transaction, how is the mediator selected?

By acceptance of both parties

You're representing a tenant client in a lease transaction. Which of the following duties do you owe your client?

Represent the client's interest in all negotiations and transactions regarding the lease of the property

With a cooperative, the transfer of ownership ______.

Requires board approval

Which physical characteristic of land addresses the concept that the geographic location of a piece of land is fixed and can never be changed?

Immobility

What's the difference between a unilateral contract and a bilateral contract?

In a unilateral contract, one party must act; in a bilateral contract, both parties must act.

How does a sole proprietorship own property?

In severalty

Per TAR's Residential Real Estate Listing Agreement Exclusive Right to Sell contract, for which of the following is a broker liable?

Injury to persons or property as a result of broker negligence

Which one of the following statements is true about a sales contract that's been signed by both parties, and both parties have been notified of its acceptance?

It's a legally binding contract.

If an appraisal contingency is in place, what happens when a property appraises higher than the agreed-upon sales price?

Nothing will happen.

What's the key difference between assignment and novation of a contract?

Novation releases the original party from all obligations, while assignment does not.

Brynn's listing agent told potential buyers that all offers on Brynn's property would be considered at 5 p.m. on May 3. By that date and time, there were four offers. The persons making these offers are the ______.

Offerors

Gary hates that he has entered into a listing agreement with a seller that allows the seller to contract with many other real estate licensees in hopes of locating a buyer. But business has been slow, and Gary is sure he can bring in a buyer and grab the commission. What type of listing agreement does Gary have with the seller?

Open listing

Which of the following is true about volatile organic compounds?

Paint, air fresheners, and cleaners are primary sources.

Jeb's lease renewed every six months. If he decided to leave, he was required to give his landlord two months' notice. What type of tenancy does Jeb have?

Periodic estate or tenancy at will

Muriel is one of several owners of cooperative apartments who have purchased shares of the corporation that owns the building. What type of lease do Muriel and the other cooperative apartment owners have?

Proprietary

If a broker helps a client identify a potential property, and then just after the agreement terminates, the buyer purchases the property directly with the seller, or through another broker, the first broker is still owed their commission. This provision is known as the ______.

Protection period

The Texas Real Estate Commission establishes rules in the best interests of the ___________.

Public

Which term means "for another's life"?

Pur autre vie

In accordance with the TREC One to Four Family Residential Contract (Resale), which of the following expenses are paid by the seller?

Releases of existing liens

______ is the gradual receding of water, which uncovers new land.

Reliction

Consideration is one element of a valid contract. In a lease, which of the following does the lessee give as consideration?

Rent