texas real estate practice exam

The three principal brokerage firms in a market agree to pay sales agents 15% more than any other competitor currently in practice. This is an example of a) Collusion. b) Price-fixing. c) Allocation of markets. d) Steering.

a) Collusion.

Cash flow is a measure of how much pre-tax or after-tax cash an investment property generates. To derive cash flow it is therefore necessary to exclude a) Cost recovery expense. b) Interest expense. c) Loan principal payments. d) Net operating income.

a) Cost recovery expense.

Which of the following is a violation of license law? a) Discouraging a seller from hiring an attorney. b) An attorney advising a client on real estate matters without a real estate license. c) Using a promulgated contract for a suited purpose even though it may not be necessary. d) Refusing to rewrite a contract clause requested by a buyer who couldn't understand it.

a) Discouraging a seller from hiring an attorney.

Which of the following is an exception to the "must-use" rule concerning promulgated contracts? a) In transactions where there is no promulgated form, licensees can use a form approved by the Texas Real Estate Broker Lawyer Committee. b) In sales transactions where both principal parties insist on using a previously used form. c) In transactions where the principal or principals immediate family member is a licensee. d) There are no exceptions to the "must-use" rule.

a) In transactions where there is no promulgated form, licensees can use a form approved by the Texas Real Estate Broker Lawyer Committee.

Which of the following items would affect a homeowner's adjusted basis? a) Installing a higher capacity air conditioning and purifying system. b) Replacing a washing machine. c) Stripping and staining hardwood floors. d) Replacing a broken picture window.

a) Installing a higher capacity air conditioning and purifying system.

Real estate contracts that are not personal service contracts: a) May be assigned. b) Are not assignable. c) Must be in writing. d) Are exempt from the statute of frauds.

a) May be assigned.

What are tenant improvements? a) Modifications to a rental suite to conform to a tenant usage specification. b) Marketing programs that yield a higher quality of tenant. c) Increased revenue resulting from a rise in rental rates. d) Increased occupancy resulting from a population increase in the market area.

a) Modifications to a rental suite to conform to a tenant usage specification.

To minimize the risk of violating fair housing laws, a licensee should a) Refuse to use terms that refer to or describe any of the classes of persons protected by the laws. b) Avoid working in neighborhoods that are predominantly occupied by a single ethnic group. c) Make discriminatory or derogatory remarks in conversation only, never in writing. d) Give better service to members of a protected class then is standard for other clients or customers.

a) Refuse to use terms that refer to or describe any of the classes of persons protected by the laws.

Emily sells Ryan a property containing a deed restriction. The condition stipulates that the forested portion of the property must never be razed for development. Three months later Ryan proceeds to harvest the trees and turn the area into an executive golf course. What recourse, if any, does Emily have under the deed restriction? a) She has the right to repossess the property because the grantee has violated that condition. b) The condition has ceased to apply because she allowed the violation to continue for a certain period of time. c) She can claim the proceeds from the harvested trees. d) She can force Ryan to sell the property to a new owner who agrees to comply with the condition.

a) She has the right to repossess the property because the grantee has violated that condition.

Which of the following is a listing requirement without which subjects licensees to license suspension? a) Specifications of a termination date. b) A complete legal description. c) The specific financial penalty for failure to complete a sale. d) The licensee's marketing plan.

a) Specifications of a termination date.

Deceptive trade practices, as codified in the Deceptive Trade Practices Act, are strictly prohibited in real estate practice. Three of the following instances are examples, but one is acceptable. Which one is it? a) Telling a buyer that a property's price has been drastically reduced. b) Bragging about a warranty that doesn't apply to a given claim. c) Disparaging competitors with non-factual innuendos. d) Telling a buyer that an air conditioner will easily last another five years.

a) Telling a buyer that a property's price has been drastically reduced.

There are numerous requirements associated with managing a trust account. Which of the following is not such a requirement? a) The account need not be identified as a trust account. b) Earned commissions must be withdrawn within 30 days of when they became earned. c) All withdrawals must be documented. d) The broker may keep an amount of non-trust fund money is in the account to cover bank fees.

a) The account need not be identified as a trust account.

Which of the following is true regarding license procurement in Texas? a) The applicant must be 18 years old and a United States citizen. b) Active or veteran military personnel must meet education requirements but are exempted from passing the exam. c) An application need not be an American citizen. d) Applications are terminated if all requirements are not completed within six months of the filing date.

a) The applicant must be 18 years old and a United States citizen.

The key feature of an adjustable-rate mortgage loan is that a) The interest rate may vary. b) The monthly payment increases over the life of the loan. c) The principal balance does not amortize. d) The loan term can be shortened or lengthened.

a) The interest rate may vary.

Licensees must be compensated according to certain regulations. One of the most important regulations regarding compensation is that a) The sales agent may only receive compensation from the sponsoring broker. b) The sales agents must abide by the standard rate of commission prevalent in the local market. c) Sales agents cannot receive compensation from sales agents or principals - only other brokers. d) Sales agents and brokers comply with commission guidelines promulgated by the TREC.

a) The sales agent may only receive compensation from the sponsoring broker.

A sale contract contains an open-ended financing contingency: if the buyer cannot obtain financing within a reasonable time the deal is off. Six months later the buyer still cannot secure financing. Which of the following is true? a) The seller may cancel the contract since it can be ruled invalid. b) The buyer can continue indefinitely to seek financing, and the seller's property must remain off the market since "reasonable" is not defined. c) The escrow agent is entitled to the buyer's deposit. d) The seller can force a lender to commit to a loan under fair financing laws.

a) The seller may cancel the contract since it can be ruled invalid.

What is the essential purpose of legal descriptions of real property? a) To create a consistent, unchanging standard for uniquely locating a property. b) To enable courts and attorneys to calculate property size accurately. c) To comply with common law for real property. d) To eliminate cumbersome metes and bounds description.

a) To create a consistent, unchanging standard for uniquely locating a property.

A transaction broker should disclose his or her agency relationship to prospective buyers and sellers: a) Upon first substantive communication. b) Upon completion of the listing agreement. c) Immediately following completion of any offer. d) Immediately prior to closing.

a) Upon first substantive communication.

One difference between a cooperative estate and a condominium estate is that: a) a condominium owner owns a unit of air space whereas the co-op owner owns a proprietary lease. b) A condominium sale adversely affects other unit owners. c) The co-op owner owns stock and a freehold real estate interest whereas the condominium owner simply a proprietary lease. d) The condominium owner owns the common elements and the air space whereas the co-op owner only owns the apartment.

a) a condominium owner owns a unit of air space whereas the co-op owner owns a proprietary lease.

Maria acquires a property from her uncle Alfonso. When Maria dies the estate will pass to Alfonso's other niece Serena. The type of estate that Maria has in the property is: a) conventional life estate. b) Legal life estate. c) Fee simple defeasible estate. d) Tenancy by the entirety's.

a) conventional life estate.

A buyer agrees to all terms of a seller's offer except the length of time for a contingency to procure financing. The buyer extends the financing period in the offer by one week, signs the form, and mails it back to the seller. At this point, the seller's offer: a) is void. b) Becomes an executory contract. c) Becomes a counteroffer. d) Has been accepted, since the modification was a contingency.

a) is void.

With various types of junior liens, the order of payment priority is generally established according to: a) the date of recordation. b) What form of tax is in question. c) The order of disbursement. d) Whether the lien was subordinated.

a) the date of recordation.

George and Mary have owned a rental house for 10 years. They bought it for $240,000 and estimated the land value at 25%. If the property is depreciated on a 39-year schedule and appreciation total is 50% over the period, what is their gain if they sell the property today? a) $159,230. b) $166,150. c) $181,538. d) $120,000.

b) $166,150.

The roof of a property cost $20,000. The economic life of a roof is 20 years. Assuming the straight-line method of depreciation, what is the depreciated value of the roof after three years? a) $20,000. b) $17,000. c) $14,000. d) $3000.

b) $17,000.

If net income on a property is $40,000 and the cap rate is 10%, the value of the property using the income capitalization method is a) $100,000. b) $400,000. c) $1 million. d) $4 million.

b) $400,000.

A builder is required to secure a loan with mortgages on three properties. This is an example of a) A participation mortgage loan. b) A blanket mortgage loan. c) A permanent mortgage loan. d) A bridge loan.

b) A blanket mortgage loan.

If a manufacturer that is the major employer in a small city moves its operations to another city, it is reasonable to expect: a) a fall in housing demand, but no other changes in the real estate market. b) A decline in demand for all types of real estate in the real estate market. c) An immediate fall in the demand for industrial real estate, but no other changes in the real estate market. d) An immediate decline in the prices for industrial and office real estate, but no impact on the residential market.

b) A decline in demand for all types of real estate in the real estate market.

Agent Bob who works for Broker Bill obtains an owner listing to lease a building. Bill's other agent, Sue, locates a tenant for Bob's listing. Broker Bill in this instance is: a) An employed agent. b) A dual agent. c) A single agent. d) A sub agent.

b) A dual agent.

Real estate advertising must not be deceptive. Which of the following would be considered an unacceptably deceptive advertising or practice? a) A for sale advertisement continues to run for five days after the closing. b) A licensee advertises another agent's listing without mentioning the listing agent's name. c) An ad states that a property's use is agricultural even though there is no farm on the property. d) An ad promotes an office to be under new management when in fact the new manager has been there over a month.

b) A licensee advertises another agent's listing without mentioning the listing agent's name.

What is a lien theory state in contrast to a title theory state? a) A state in which liens are given priority over other encumbrances b) A state in which a mortgage retains title to the property when a mortgage lien is created. c) A state in which the holder of a mortgage lien receives title to the mortgage and property until the debt is satisfied. d) A state in which liens must be recorded to be enforceable.

b) A state in which a mortgage retains title to the property when a mortgage lien is created.

Why is a wraparound mortgage loan potentially interesting to a home seller as an investment? a) It is a senior loan that can be easily subordinated for additional debt. b) A wraparound lender can profit when the interest rate of the wraparound exceeds that of the underlying mortgage. c) The underlying loan is retired early. d) The second mortgage borrower may make payments directly to the first mortgage lender.

b) A wraparound lender can profit when the interest rate of the wraparound exceeds that of the underlying mortgage.

The amount of available property that becomes occupied over a period of time is called: a) vacancy. b) Absorption. c) Equilibrium. d) Occupation.

b) Absorption.

Which of the following parties does not have to have a real estate license to operate legally? a) A hostess at an open house who explains how the property's price was identified. b) Answering questions to confirm the terms of advertised property. c) An operator of a real estate rental agency. A person who supervises licensees.

b) Answering questions to confirm the terms of advertised property.

The income capitalization approach to appraising value is most applicable for which of the following property types? a) Single-family homes. b) Apartment buildings. c) Undeveloped land. d) Churches.

b) Apartment buildings.

Which of the following communication records must (as opposed to should) be kept? a) Notes on every conversation. b) Copies of required communications to principles. c) Notes from company training sessions. d) Business cards of licensees one meets at open houses.

b) Copies of required communications to principles.

A sales agent becomes aware of a material defect in a property septic field. Disclosing this fact would be detrimental to the client's interest. What should the agent do? a) Inform the seller that it would be preferable to include the septic field issue in the property condition report. b) Disclose the defect since it is a material fact concerning the properties condition. c) Consider the defect since it violates the agent's fiduciary duty of promoting the client's best interest. d) Conceal the defect since it is something that an agent would not normally know about.

b) Disclose the defect since it is a material fact concerning the properties condition.

Which of the following are examples of closing items not prorated between buyer and seller? a) Taxes. b) Inspection fees. c) Utilities. d) Condominium assessments.

b) Inspection fees.

The amount of a real estate broker's commission is established by: a) Agreement among competing buyers. b) Negotiation with clients. c) The local Board of Realtorsâ. d) State real estate license law.

b) Negotiation with clients.

Which of the following is true of a loan with negative amortization? a) The interest rate on the loan increases as the principal balance decreases. b) Payments are not sufficient to retire the loan. c) The loan balance is diminishing or going negative. d) Additional interest as being added to the monthly payment.

b) Payments are not sufficient to retire the loan.

If a commercial real estate market is under supplied, it is likely that: a) rental prices in that market will fall. b) Rental prices in that market will rise. c) Rental prices will remain stable until equilibrium is reached. d) Construction will increase to the point of equilibrium.

b) Rental prices in that market will rise.

One of the most important foundations in landlord-tenant relations is the concept of habitability. The concept of habitability and landlord tenant relations generally holds that a) Repairs affecting habitability must be made within a 48-hour time period from the tenant's notice. b) Residential landlords must, at their expense, maintain the rental premises in such a condition that the health and safety of the tenant is not adversely affected in any material way. c) The tenant must maintain the habitability of the premises as it existed upon taking occupancy. d) The tenant is responsible for repairs inside of the premises while the landlord is responsible for availability of the overall property.

b) Residential landlords must, at their expense, maintain the rental premises in such a condition that the health and safety of the tenant is not adversely affected in any material way.

TREC makes a payment from the recovery fund to satisfy a judgment against a licensee. Which of the following applies? a) TREC must make a one-time increase in fees to licensees to recoup the deficit caused by the payment. b) TREC may revoke the licensee's license until he or she makes a complete re-payment with interest. c) The licensees license is canceled for three years. d) The licensee must refund the recovery account within 90 days or have his or her license revoked.

b) TREC may revoke the licensee's license until he or she makes a complete re-payment with interest.

A property owner is precluded by the restriction from developing a 30-foot boat dock. The limitation prompts the owner to sell to another party. The new owner: a) is free to build the dock since the next-door neighbor built a similar dock two weeks later. b) Takes title subject to the same restriction. c) Can build a dock with special permission from the zoning board. d) May build, since the restriction is extinguished by the sale.

b) Takes title subject to the same restriction.

A protection period clause in an exclusive listing provides that: a) The owner is protected from all liabilities arising from the agent's actions performed within the agent's scope of duties. b) The agent has a claim to a commission if the owner sells or leases to a party within a certain time following the listing's expiration. c) Agents are entitled to extend a listing agreements term if a transaction is eminent. d) An owner is not liable for a commission if a prospective customer delays in completing an acceptable offer.

b) The agent has a claim to a commission if the owner sells or leases to a party within a certain time following the listing's expiration.

There are several requirements for establishing an intermediary relationship. Which of the following is not a requirement? a) Each party to the agreement must give written consent. b) The agreement must stipulate the duty of confidentiality to either buyer or seller. c) How and who will compensate the agent must be set forth. d) The duties of the intermediary must be clearly identified.

b) The agreement must stipulate the duty of confidentiality to either buyer or seller.

Ad valorem taxes are based on a) The replacement value of property. b) The assessed value of property. c) The millage value of property. d) The broker's estimate of value.

b) The assessed value of property.

Two leading agencies jointly agreed to raise commissions charge to residential sellers to 7.5% of the sales price. Which of the following is true? a) This is a perfectly legitimate business practice. b) The brokers have illegally fixed prices. c) The brokers have allocated markets. d) The brokers have engaged in legal collusion.

b) The brokers have illegally fixed prices.

A client revoked an exclusive right to sell listing two months prior to expiration. The reason stated: the client is too busy to meet with the agent. In this case: a) The client is criminally liable for negligence. b) The client may be liable for compensation commission and marketing expenses. c) The agent can sue the client for a specific performance even if no customer had been located. d) The agent must except the revocation without the possibility of the possibility of damage recovery.

b) The client may be liable for compensation commission and marketing expenses.

A lease automatically terminates under which of the following circumstances? a) The tenant fails to pay rent. b) The leased property is foreclosed. c) The tenant goes out of business. d) The landlord canceled the lease.

b) The leased property is foreclosed.

A loan to value ratio is used as an underwriting mechanism because a) The LTV determines the profitability of the loan. b) The loan amount needs to be less than the property's value. c) Borrowers tend to inflate the true value of the property. d) A full price loan over finances the borrower.

b) The loan amount needs to be less than the property's value.

Which of the following is true of an option to buy agreement? a) The potential buyer, the optionee, is obligated to buy the property once the option agreement is completed. b) The optionor must perform if the optionee takes the option, but the optionee is under no obligation to do so. c) The contract can be executed at no cost to the optionee. d) It is a bilateral agreement.

b) The optionor must perform if the optionee takes the option, but the optionee is under no obligation to do so.

A principal instructs an agent to inform minority buyers that the property for lease was just leased an hour ago and is no longer available. The agent refuses to comply. In this case: a) The agent should not exercise caution until the listing expires, then decline to renew it. b) The principal has proposed an illegal act, which the agent should not obey. c) The agent is liable for breaching the listing terms. d) The agent may sue the principal for discrimination and misrepresentation.

b) The principal has proposed an illegal act, which the agent should not obey.

A leasing company representing the landlord takes and processes apartment applications and charges applicants a fee for their subsequent screening work. To conduct this process properly, which of the following must occur? a) The landlord must disclose that the deposit will be returned if the applicant is rejected. b) The tenant must acknowledge that he/she has been informed of the selection criteria and the grounds for denial. c) Prospective tenants have paid a fee must be processed within a 48-hour period. d) Application fees must be applied to the rent if the application is accepted.

b) The tenant must acknowledge that he/she has been informed of the selection criteria and the grounds for denial.

Which of the following characterizes a metes and bounds description? a) They use meridians and baselines. b) They identify an enclosed area, beginning and ending at the same point. c) They use lot and block numbers. d) They incorporate elevation into the descriptions.

b) They identify an enclosed area, beginning and ending at the same point.

What is the essential purpose of a Texas Homestead law? a) To give families a tax break on portions of the value of their principal residence. b) To protect a family's residence from the unilateral conveyance by one party or a forced sale to collect a debt. c) To give a family immunity from the collection of debts. d) To prevent husbands from gambling away all interest in the property.

b) To protect a family's residence from the unilateral conveyance by one party or a forced sale to collect a debt.

A farmer temporarily installs produce coolers in a leased farm stand in order to prevent spoilage. The coolers would be considered which of the following? a) Trade fixtures that are real property. b) Trade fixtures that are personal property. c) Temporary real property. d) Emblements.

b) Trade fixtures that are personal property.

A property owner has an easement appurtenant on her property. One day the property is sold to another party who is opposed to the easement. Following the closing, this particular form of easement: a) terminates. b) Transfers with the property. c) Transfers with the owner to a new property. d) Becomes a license on the property.

b) Transfers with the property.

In the past, borrowers were often surprised by unexpected or undisclosed borrowing fees and expenses at closing. This phenomenon has been largely corrected through disclosure requirements mandated by which of the following laws? a) Equal Credit Opportunity Act. b) Truth in Lending Laws. c) National Disclosure Procedures Act. d) Federal Fair Housing Laws.

b) Truth in Lending Laws.

A family purchased a $90,000 lot to build a custom home. At the date of closing the lot was assessed at $84,550 and the tax rate was $1.91 per $100 assessed valuation. When they completed the home, the assessment increased by $235,000 to include the new construction. If the monthly tax escrow is based on the assessed value, what will the monthly tax escrow be? a) $517 b) $6096 c) $508 d) $367

c) $508

Adelpha's home is valued at $250,000. She has insurance coverage of $160,000 with an 80% coinsurance clause. If Adelpha has a damage claim amounting to $100,000 how much will she receive from her policy? a) $32,000. b) $60,000. c) $80,000. d) $100,000.

c) $80,000.

A lender offers an investor a maximum of 70% LTV loan on the appraised value of a property. If the investor pays $230,000 for the property, and this is 15% more than the appraised value, how much will the investor have to pay as a down payment? a) $93,150. b) $79,350. c) $90,000. d) $69,000.

c) $90,000.

A house is being appraised using the sales comparison approach. The house has three bedrooms, two bathrooms, and a patio. The appraiser selects a comparable house that has three bedrooms, 2 ½ bathrooms, and no patio. The comparable house just sold for $100,000. A half bath is valued at $5000 and a patio at $1000. Assuming all else is equal what is the adjusted value of the comparable? a) $100,000. b) $104,000. c) $96,000. d) $106,000.

c) $96,000.

What is chain of title? a) The list of all parties who have ever owned real estate. b) The bundle of rights linked to the recorded title to a parcel. c) A chronology of successive owners of record of a parcel of real estate. d) Involuntary conveyance of title by statutory roles of descent.

c) A chronology of successive owners of record of a parcel of real estate.

Which of the following best describes an intermediary? a) A dual agent who represents a buyer and a seller regardless of who the broker is. b) An agent who represents a buyer or a seller in a transaction without fiduciary obligation to the represented party. c) A licensee who facilitates a buyer and seller in consummating a transaction without becoming involved as an agent to either party. d) A dual agent within a single brokerage who owes fiduciary duties to both parties.

c) A licensee who facilitates a buyer and seller in consummating a transaction without becoming involved as an agent to either party.

Which of the following contracts must be in writing to be enforceable? a) A parol contract. b) A six month lease. c) A two year lease. d) An executory contract.

c) A two year lease.

Which of the following is a bona fide characteristic of TREC's disciplinary procedures? a) TREC issues a notice of violation and penalty to a licensee once it has concluded that the violation has occurred. Therefore, the violator has 60 days to request a hearing. b) If a suspension is eminent, the licensee is entitled to a hearing conducted by the TREC judiciary committee. c) Complaints are always investigated if the initial evidence warrants reasonable cause. d) Complaints may be investigated whether the complaint is identified or remains anonymous.

c) Complaints are always investigated if the initial evidence warrants reasonable cause.

In essence, the Statute of Frauds states which of the following? a) To be enforceable all contracts must be in writing. b) Conveyance contracts and leases must be in writing to be enforceable. c) Conveyance contracts and leases exceeding one year must be in writing to be enforceable. d) Both oral and written conveyance contracts are enforceable unless fraudulent.

c) Conveyance contracts and leases exceeding one year must be in writing to be enforceable.

The method for deriving an investor's return on investment, or ROI, is by a) Dividing net operating income by cash flow. b) Multiplying the required yield times after-tax cash flow. c) Dividing net income by the price paid for the property. d) Multiplying cash flow times the price paid for the property.

c) Dividing net income by the price paid for the property.

In the income capitalization approach, an appraiser a) Estimates gross income and multiplies times the gross income multiplier. b) Estimates effective of income, subtracts tax, and applies a capitalization rate. c) Estimates net income and applies the capitalization rate to it. d) Estimates potential income and applies a capitalization rate to it.

c) Estimates net income and applies the capitalization rate to it.

A condominium owner enjoys a: a) share in an association that owns one's apartment. b) Tenancy in common interest in air space and common areas of the property. c) Fee simple ownership of the airspace in a unit and an undivided share of the entire property's common areas. d) The simple ownership of a pro rata share of the entire property.

c) Fee simple ownership of the airspace in a unit and an undivided share of the entire property's common areas.

What fundamental legal purpose is fulfilled by title records? a) Keeping the county apprised of tax payments. b) Preventing identity theft. c) Giving constructive notice of one's rights and interests in the property. d) Assembling all relevant documents in a single place.

c) Giving constructive notice of one's rights and interests in the property.

For the proper handling of client and owner monies, a property manager is generally required to a) Deposit all funds every month in the management firm's central operating account. b) Employ a notary to witness and record every deposit or payment received. c) Maintain a special trust account and a qualified financial depository. d) Disperse all funds to their legal owners on a weekly basis.

c) Maintain a special trust account and a qualified financial depository.

A store owner enters into a lease that charges rent per square foot, a common area fee, and a portion of the store owner's gross income from the property. This kind of lease is a: a) triple charge, or triple net lease. b) Proprietor's lease. c) Percentage lease. d) Retailer's gross lease.

c) Percentage lease.

Net operating income is equal to a) Potential income minus expenses minus debt service. b) Effective gross income minus potential income. c) Potential gross income minus vacancy and credit loss minus expenses. Effective gross income minus vacancy and credit loss.

c) Potential gross income minus vacancy and credit loss minus expenses.

Property can be converted from real to personal property and from personal property to real property by means of which processes respectively? a) Assemblage and plottage. b) Application and dissolution. c) Severance and affixing. d) Planting and harvesting.

c) Severance and affixing.

Which of the following is a required disclosure to be completed in writing prior to closing? a) That the buyer is well-advised to obtain an appraisal prior to closing. b) That the seller should obtain an inspection. c) That the buyer should have an attorney examine the title abstract or get title insurance. d) That the buyer should obtain a preapproval for a loan sufficient in an amount to qualify for a given price range.

c) That the buyer should have an attorney examine the title abstract or get title insurance.

Real estate advertising must conform to regulatory standards and requirements. One requirement is a) A broker may only place blind ads in social media outlets. b) A broker must have all advertising approved by the local real estate board. c) The advertising must not be deceptive. d) Sales agents may only advertise in their own name.

c) The advertising must not be deceptive.

An agent received a full price offer from a minority party. The agent presents the offer to the seller and discloses the buyer's minority status. The seller at that point instructs the agent to inform the buyer that the property has just gone under contract. The agent duly complies telling the offeror that the home has just been temporarily removed from the market and is unavailable, but may be available soon as the contract falls through. Which party or parties, if any, have violated fair housing laws? a) The agent only. b) The owner only. c) The agent and the owner. d) Neither agent nor owner.

c) The agent and the owner.

Which of the following accurately characterizes the relationship between brokers and sponsored sales agents? a) The sales agent is required to identify and abide by a loyal commitment to the broker. b) The sales agent must stipulate what license activities here she will commit to, and over what period of time. c) The broker is obligated to identify and communicate the sales agents authorized activities. d) The broker must delegate all responsibility for delineated activities to be conducted by sponsored sales agents.

c) The broker is obligated to identify and communicate the sales agents authorized activities.

A county or municipal authority usually grants a certificate of occupancy for new construction only after: a) all contractor's work has been inspected. b) All work has been completed for at least 60 days. c) The construction conforms to building codes. d) The tax assessor has valued the improvement.

c) The construction conforms to building codes.

The distinguishing feature of a defeasible fee simple estate is that: a) It could be passed onto heirs. b) It has no restrictions on use. c) The estate may revert to a grantor or heirs if the prescribed use changes. d) It is of unlimited duration.

c) The estate may revert to a grantor or heirs if the prescribed use changes.

Which of the following is true with respect to real property taxation by the federal government? a) It imposes ad valorem property taxes and capital gain tax. b) It may not impose property taxes or tax liens. c) There are no federal ad valorem taxes on real property. d) It imposes ad valorem tax but not capital gain tax.

c) There are no federal ad valorem taxes on real property.

Jennifer advised her clients that they needed to paint their living room before showing the property. The walls of these rooms were all 8 feet high. The wall lengths were 14 feet, 18 feet, 16 feet, and 18 feet. If a gallon of paint covers 200 ft.², how many whole gallons would the home sellers have to buy? a) One. b) Two. c) Three. d) Six.

c) Three.

Which of the following provides the strongest evidence of marketable title? a) A general warranty deed. b) A title certificate. c) Title insurance. d) An attorney's opinion.

c) Title insurance.

The central purpose of the Information About Brokerage Services brochure is a) To inform consumers just what it is that agents do to earn their commission. b) To shed light on the advantages and disadvantages of the exclusive listing versus selling or buying without representation. c) To explain to prospects the types of relationships they may choose with licenses, and what services they get for each alternative. d) To explain to consumers why it is far preferable legally and economically to list with agents, and the many ways they can do that successfully.

c) To explain to prospects the types of relationships they may choose with licenses, and what services they get for each alternative.

Which of the following best describes the purpose of the Texas real estate license law? a) To promote the integrity and honesty of the general public in real estate transactions. b) To institute operable relationships between real estate licenses and their clients. c) To protect the public and to promote licensee competence. d) To ensure brokers exercise care and skill in developing regulations for their practices.

c) To protect the public and to promote licensee competence.

Andra can afford to spend $5000 in closing cost to refinance her home. The lender quotes closing costs of $800 +2 points. The house appraised out at $240,000 and she can get an 80% loan. Can Andra afford to refinance? a) No she is short by $64. b) No she is short by $1600. c) Yes with $360 left over. d) Yes she in fact breaks even.

c) Yes with $360 left over.

The James family purchased a home for $180,000 5 years ago and obtained a 80% LTV loan. Now the property has appreciated 25%. In addition, the loan has been paid down $11,000. What is the James' current equity in the home? a) $47,000. b) $81,000. c) $45,000. d) $92,000.

d) $92,000.

What is the Texas continuing education requirement in the subsequent renewal periods following completion of the post license requirements? a) Six hours for salespersons and 15 hours for brokers. b) Nine hours for salespersons and 15 hours for brokers. c) 15 hours for brokers and salespersons including a three-hour broker responsibility course. d) 18 hours for both salespersons and brokers, including four hours of legal updates and four hours of ethics.

d) 18 hours for both salespersons and brokers, including four hours of legal updates and four hours of ethics.

An investor just purchased a rectangular 2 acre lot for $250 a frontage foot. If she paid $100,000 total what was the depth of the lot? a) 400 feet. b) 250 feet. c) 871 feet. d) 218 feet.

d) 218 feet.

Which of the following activities is not allowed under the Real Estate Settlement and Procedures Act? a) A broker having any business relationship with an insurance company that is involved in the broker's transaction. b) A broker pre-qualifying a buyer for a mortgage loan. c) A lender requiring a deposit from a borrower for a tax and insurance escrow account. d) A lender paying a fee to a broker for referring a borrower to the lender.

d) A lender paying a fee to a broker for referring a borrower to the lender.

Which of the following is a violation of license law? a) Disclosing confidential information. b) Having one's broker compensate a licensed party for a referral after the closing has occurred. c) Informing a buyer that the seller client will take a 95% offer even if authorized by the seller. d) A sponsoring broker paying a licensed applicant a referral fee.

d) A sponsoring broker paying a licensed applicant a referral fee.

The highest form of ownership interest one can acquire in real estate is the: a) legal life estate. b) Conventional life estate. c) Defeasible fee simple estate. d) Absolute fee simple estate.

d) Absolute fee simple estate.

Which of the following is not a brokerage activity requiring licensure? a) Auctioning real estate. b) Offering to exchange real estate. c) Selling an option to a buyer that the buyer refuses. d) Advertising one's principal residence for sale.

d) Advertising one's principal residence for sale.

In the event of a buyer's default a provision for liquidated damages in a sale contract enables the seller to: a) sue the buyer for a person specific performance. b) Force the buyer to quitclaim equitable title. c) Sue the buyer for the broker's marketing expenses. d) Claim the deposit as compensatory damages for the buyer's failure to perform.

d) Claim the deposit as compensatory damages for the buyer's failure to perform.

A transaction facilitator in a residential transaction represents: a) The seller. b) The buyer. c) Both seller and buyer. d) Neither seller nor buyer.

d) Neither seller nor buyer.

An owner lease has a property to a business in exchange for rent and the tenant is required to pay all operating expenses as well. This is an example of a _______. a) Proprietary lease. b) Percentage lease. c) Gross lease. d) Net lease.

d) Net lease.

Which of the following is an important function of the secondary mortgage market? a) Participants borrow funds from banks so the banks can make more loans. b) Participants issued tax certificates and sell them to primary lenders. c) Participants purchase pools of defaulted loans from lenders to keep them solvent. d) Participants sell mortgage-backed securities in order to buy pools of loans.

d) Participants sell mortgage-backed securities in order to buy pools of loans.

A retirement facility prohibits ownership of any unit by persons under 55 years of age. The association claims it has made the prohibition properly. Which of the following is true? a) They are violating the Civil Rights Act of 1866. b) They are violating the Fair Housing Amendments Act of 1988. c) They are guilty of age discrimination. d) The prohibition maybe legal if performed correctly.

d) The prohibition maybe legal if performed correctly.

Who are the essential parties involved in an estate and trust? a) Owner trustor, and lawyer. b) Owner, trustor, and trustee. c) Trustee, title company, and beneficiary. d) Trustor, trustee, and beneficiary.

d) Trustor, trustee, and beneficiary.