Texas Agency Law: Unit 3

With respect to mortgagee title insurance, which of the following is a TRUE statement?

Coverage decreases as the loan balance decreases.

Which of the following is typically covered as part of standard coverage in a Texas title policy?

Defects found in public records

Which of the following nearby activities would a license holder be required to disclose because it might impact the client's decision to make, accept, or reject offers?

Noisy, obnoxious neighbors

Which of the following is a TRUE statement regarding disclosure of information related to sex offenders to prospective buyers?

Texas law relieves real estate agents from a duty to disclose such information.

Which of the following is NOT a statutory exception to providing the Seller's Disclosure Notice?

Transfer under a contract for deed

A listing broker must explain to the seller that the seller's full disclosure responsibility includes

material facts that may be of importance to the buyer's decision.

The subagent showing a property to a buyer forgets to mention that even though the property is connected to the city water and sewage, it also has an abandoned septic tank. The subagent has

misrepresented by omission.

What does Texas law require the Texas Department of Safety to do with information regarding high-risk sex offenders?

Mail notice to each residential address within three blocks in a subdivided area.

What rights does the buyer have if a seller provides the Seller's Disclosure Notice to the buyer three days after the contract is signed by both parties?

The buyer may terminate the contract within seven days after receiving the notice.

An abstract of title for a subject property contains a condensed version of

instruments filed into the property records.

The listing associate, Betty Principi, gives the seller the Seller's Disclosure Notice. The seller says there is really nothing to disclose, and because he broke his writing hand playing golf, he asks Betty to fill out and sign the form for him. Which statement is TRUE?

Although Betty may explain each section of the form, she should neither mark the boxes nor sign on the seller's behalf.

For which of the following types of properties is protection against defects in the title for items of personal property particularly applicable?

Commercial real estate

Why is a home inspection not considered a warranty of the inspected systems?

Because the home inspection only verifies that the system was or was not functioning properly at the time of inspection

Which of the following is the MOST common complaint against listing brokers?

Failing to disclose material defects or property condition

Indicate whether the following state is true or false and why: A broker owes the same duties to a third party buyer as they owe to a client seller under a listing agreement.

False. A broker has fiduciary duties to a client and duties of honesty and fairness to a third party buyer.

What are three duties a listing broker has to a customer buyer?

Honesty, fairness, and good faith

Which of the following is a TRUE statement regarding the Seller's Disclosure Notice?

If a seller fails to provide the notice at or before the time the contract is signed, the buyer may terminate the contract within seven days after receiving the notice.

What are license holders in Texas responsible for telling buyers regarding quality of title?

License holders must advise buyers to obtain either an attorney's opinion of title, based on an abstract, or a policy of title insurance.

A seller is selling property in which the seller's son committed suicide in the home. Does the law require a license holder to disclose the suicide to potential buyers?

No, because a license holder is not required to disclose a death by suicide.

Title insurance provides the policyholder with

Protection against defects in the title, up to policy limits.

Which of the following would be considered a psychological stigma attached to the property that would need to be disclosed by a real estate license holder?

Someone was murdered on the property.

What is the duty of a license holder regarding the disclosure of the fact that an occupant of the property died of AIDS?

The Canons of Professional Ethics and Conduct prohibit its disclosure.

George is a sales agent who represents Janet under a listing agreement to sell her new construction, never-inhabited four-plex that she has owned for 11 months. Is Janet required to provide the Seller's Disclosure Notice (SDN) to potential purchasers? Why or why not?

The answer is Janet is not required to provide the SDN because the four-plex has four dwelling units. Section 5.008 does not require that a seller provide the SDN if the property has more than one dwelling unit.

Megan's Law

The answer is does not require agents to make a disclosure of sex offenders reportedly living near their listed properties. In fact, if an agent discloses where sex offenders reportedly live, the agent could be sued by the occupants of the home if the sex offender no longer lives there. While including the website address on promotional material about the property is a very good idea, it is not required by any law.

A seller and a buyer enter into a contract for the buyer to purchase the seller's property. The seller is a trustee in a bankruptcy. Is the seller required to give buyer the Seller's Disclosure Notice (SDN)?

The answer is no, the requirement to provide the SDN does not apply to a bankruptcy sale. There are several exceptions to providing the SDN, including a sale by a trustee in bankruptcy.

Which of the following is TRUE regarding surveys?

The answer is surveys are required when showing the location of new improvements. Surveys are generally required when conveying a portion of a given tract of land, when obtaining a mortgage loan, when government entities acquire land through condemnation procedures, when showing the location of new or existing improvements, and when determining legal descriptions of properties.

What does Texas law require of enforcement officials regarding publication of sex offender information?

The answer is that they publish information regarding the offender in a local newspaper. Current Texas law enacted as a result requires a released sex offender to register with local law enforcement agencies and be photographed and fingerprinted. Enforcement officials must publish information regarding the offender in a local newspaper, including the name, age, and gender; a brief description of the offense; the street name, zip code, and municipality of residence; and the person's risk level, generally.

Which of the following should NOT be disclosed by a broker about an owner and a property?

The answer is the owner must sell because of personal financial problems. Material facts that may impact the buyer's decision must be disclosed, but the broker should not disclose information that is not material and may harm the seller's negotiation position with the buyer.

Which of the following would probably NOT be considered a material fact that would need to be disclosed by a real estate agent?

The answer is the window in the bedroom was replaced five years ago. The question is whether a reasonable purchaser would want to know about the fact. The other physical items in the question are addressed in the Seller's Disclosure Notice, which indicates that the legislature thought it was important to disclose. A reasonable person would want to know of persistent criminal activity in the neighborhood.

An opinion of title is produced by a(an)

attorney

The Seller's Disclosure Notice, which has been developed by TREC,

does not relieve the seller or the listing agent of their responsibility to disclose property issues not covered by the form.

While acting as a subagent, Harry shows a property to a customer and becomes aware that the current owner suffers from AIDS. Two weeks later, Harry is now acting as an agent of a prospective buyer who also happens to be Harry's cousin. Harry may

not reveal the information.