Modern Real Estate Practice in Texas 18E Principles I Online Component

Question 1

What does GDP mean?

Answer 1

Gross Domestic Product (GDP) is a measurement of economic output.
GDP is the most commonly used measure of economic activity.

GDP is the way we measure the U.S. economy and its growth.
Texas is the United States’ second largest economy

Question 2

What is the difference between real estate agent, real estate broker, and realtor?

Answer 2

-A real estate agent is licensed to help people buy and sell real estate, and is paid a commission when a deal is completed. The agent may represent either the buyer or the seller.

-A real estate broker does the same job as an agent but is licensed to work independently and may employ agents. Brokers are paid on commission but also get a cut of the commissions of agents who work for them./A broker is a real estate agent who meets advanced licensing requirements to oversee other agents.

-A realtor is a member of the National Association of Realtors (NAR) and may be an agent or a broker, among other professions in the industry.

KEY TAKEAWAYS
Real estate agents have a professional license to help people buy, sell, and rent real estate. They must work for a sponsoring broker or brokerage firm.
Brokers are real estate agents who have completed additional training and licensing requirements. They can work independently and hire other real estate agents to work for them.
A Realtor is a licensed real estate agent or broker (or other real estate professional) who is a member of the National Association of Realtors (NAR). Members must comply with NAR’s strict code of ethics

Question 3

What are real estate agents?

Answer 3

Real estate agents are individuals who are licensed to help people buy, sell, and rent real estate. They are ultimately responsible for bringing buyers and sellers together and are paid a commission—usually a percentage of the property’s sale price.
Real estate agents organize transactions between buyers and sellers, as well as those between owners and renters. Agents are responsible for carrying offers and counteroffers between each party, along with any queries they may have. An agent will work with another agent when an offer is accepted, guiding clients through the process of filling out paperwork. They also make sure their clients are fully aware of any requirements to complete the sale, including home inspections, moving, and important dates such as the closing

Real estate agents work for brokers or agencies and are normally paid on a commission basis. This means they receive a percentage of the sale price of a property—so the higher the sale price, the higher the commission.

Question 4

What is a Real estate broker?

Answer 4

A real estate broker is a real estate agent who continues their education and successfully receives a state real estate broker license. Unlike real estate agents, brokers can work independently and start their own brokerage and hire other real estate agents.

Question 5

What is a realtor?

Answer 5

A Realtor is a real estate professional who is a member of the National Association of Realtors (NAR), the largest trade association in the U.S. Although the term “Realtor” is commonly confused with that of “real estate agent,” the designation is open to a variety of professions within the real estate industry, including:

Residential and commercial real estate brokers
Salespeople
Property managers
Appraisers

Question 6

What types of real estate brokerage require specialization
and sometimes additional education and experience to maintain competency in that area?

Answer 6

Property management, apartment
locating, commercial brokerage, and the sale of farm and ranch property.

Question 7

Despite the size and complexity of the real estate business, many people think it only consists
of brokers and salespersons. In reality, the real estate industry is much bigger than that and
encompasses a wide variety of related disciplines interacting together. What are some Real Estate–Related Disciplines?

Answer 7

Some real estate–related disciplines include appraising, lending and financing, property
inspection, property development, real estate counseling, real estate education, title insurance
and abstracting, urban planning, time-share sales, petroleum landsmen and women, and
easement and right-of-way registrants.

Question 8

What are the 6 different types of real estate property?

Answer 8

Just as there are many areas of specialization within the real estate industry, there are many
different types of property in which to specialize (see Figure 1.1). Real estate generally can be
classified as:
1. Residential—all property used for housing, from small city lots to acreage, both
single-family and multifamily, in urban, suburban, and rural areas;
2. Commercial—business property, including offices, shopping centers, stores, theaters,
hotels, and parking facilities;
3. Industrial—warehouses, factories, and land in industrial districts;
4. Agricultural—farms, timberland, pastureland, ranches, and orchards;
5. Special purpose—places of worship, schools, cemeteries, and government-held lands; or
6. Mixed use—any lawful combination of the other five basic categories of real property permitted by local zoning.

Question 9

Do real estate firms specialize in all classes of property?

Answer 9

No,
Most real estate firms prefer to specialize in one class of property due to the complexity and unique characteristics associated with each type.
Specialization allows firms to develop expertise and better serve the specific needs of their clients.
This specialization is more prevalent in urban areas, where the real estate market tends to be diverse and dynamic.

Question 10

What can the market for each of the types of real estate properties be further subdivided into?

Answer 10

The market for each of these types of properties can be further subdivided into (1) the sales
market, which involves the transfer of title, and (2) the rental market, which involves the use
of space on a lease basis.

there are two main markets: one for buying and selling (sales market) and another for leasing or renting (rental market).

Question 11

How was the Education Standards Advisory Committee (ESAC) in Texas created?

Answer 11

The Texas Legislature created the Education Standards Advisory Committee (ESAC) by
amending the Texas Real Estate License Act (TRELA) in 2011.

Question 12

The mission of the ESAC?

Answer 12

The Education Standards Advisory Committee (ESAC) was established to oversee (regularly review and revise) the curriculum standards and instructor certification requirements for real estate education courses.

Overall, the ESAC plays a crucial role in ensuring that real estate education in Texas meets the necessary standards and remains current and relevant to the industry.

Question 13

Texas real estate schools are accredited by whom?

Answer 13

real estate schools
that are accredited by the Texas Real Estate Commission (TREC)

Question 14

Difference Between Real Estate and Personal Property Transactions? What does this mean for real estate agents and brokers?

Answer 14

Real estate transactions involve the transfer of ownership of real property, such as land, buildings, or parcels of land, while transactions involving personal property include purchases like groceries, clothing, automobiles, and other consumer goods.
Real Estate Transactions tend to be more legally complex.

In any sales transaction, there is a change of ownership. This includes both real estate and personal property transactions.

The key point here is that, despite the apparent simplicity, real estate transactions inherently involve a body of complex laws.
The difference is that even the simplest of real estate transactions brings into play a body of complex
laws.

2. Real estate brokers and sales agents must have a broad understanding of law and how it affects real estate activities; ensuring compliance with regulations, and facilitating smooth transactions.

Question 15

If legal questions or problems arise, what must the real estate practitioner advise?

Answer 15

if legal questions or problems arise, the real estatepractitioner must advise the parties to consult an attorney, preferably one who specializes in
real estate law

Despite their knowledge of real estate laws, real estate practitioners are not legal experts. If legal questions or problems arise during a transaction, it is imperative for the parties involved to seek advice from a qualified attorney. Preferably, they should consult an attorney who specializes in real estate law, as they will have the expertise needed to address specific issues related to real property transactions

Question 16

In the United States, what are the seven sources of law that affect the ownership and transfer of real estate?

Answer 16

These sources are the
1. Constitution of the United States;
2. Laws passed by Congress;
3. Federal regulations adopted by the various agencies and commissions created by Congress;
4. State constitutions;
5. Laws passed by state legislatures;
6. Ordinances passed by cities,
towns, and other local governments
7. Court decisions.

Question 17

Which countries laws have influenced the development of Texas legal principles and how?

Answer 17

Because the Spanish, Mexican, and
French flags are among the “six flags over Texas,” the laws of those countries have influenced
the development of Texas legal principles.

Question 18

Where does the “Six flags over Texas” phrase come from?

Answer 18

The phrase “Six Flags Over Texas” refers to the six different nations or governments that have had sovereignty over the territory of Texas throughout its history.

These six flags are:

1. Spain: The first European power to claim sovereignty over Texas was Spain. Spanish explorers arrived in the region in the early 16th century, and Spain maintained control over Texas until the early 19th century.
2. France: In the early 17th century, French explorers began to establish settlements in parts of Texas. France briefly held control over portions of Texas, particularly in the eastern region, until the territory was ceded to Spain in the 18th century.
3. Mexico: After gaining independence from Spain in 1821, Texas became a part of Mexico. Mexican rule lasted until Texas declared independence in 1836.
4. Republic of Texas: Following its declaration of independence from Mexico in 1836, Texas became an independent republic known as the Republic of Texas. This period lasted until Texas joined the United States in 1845.
5. United States of America: Texas joined the United States as the 28th state in 1845, and the American flag flew over the territory.
6. Confederate States of America: During the American Civil War, Texas seceded from the Union and joined the Confederate States of America. The Confederate flag flew over Texas until the end of the Civil War in 1865.

The phrase “Six Flags Over Texas” is often associated with the amusement park of the same name, which opened in Arlington, Texas, in 1961. The park’s name pays homage to the historical significance of Texas and its diverse cultural heritage.

Question 19

The primary purpose of the U.S. Constitution and the individual state constitutions?

Answer 19

Constitutions, whether at the federal (U.S. Constitution) or state level (individual state constitutions), serve two main purposes:
-Protecting Citizens’ Rights: They outline the rights and freedoms that citizens have and ensure that these rights are respected and upheld by the government.These rights include fundamental freedoms, such as freedom of speech, religion, and assembly, as well as protections against governmental overreach, such as unreasonable searches and seizures.
-Limiting Government Power: They define the powers and responsibilities of the government and set limits to prevent it from overstepping its authority.Constitutions establish the framework of government, including the separation of powers among different branches (such as the executive, legislative, and judicial branches) and the system of checks and balances to prevent any one branch from becoming too powerful.

examples of specific constitutional provisions and their implications for legal principles and legislation:
The 14th Amendment to the U.S. Constitution provides civil rights protections, including the guarantee of equal protection under the law and due process. These protections serve as the foundation for federal fair housing legislation, which prohibits discrimination in housing based on race, color, religion, national origin, sex, familial status, or disability.
Homestead and community property laws in Texas derive from provisions in the Texas Constitution. These laws establish protections for homeowners and regulate the ownership and distribution of property, particularly in the context of marriage and family law.

Question 20

The primary purpose of Laws passed by Congress and by state and local legislative bodies?

Answer 20

Different legislative bodies can pass laws that establish regulations for real estate. Congress creates federal laws that apply nationwide, such as fair housing regulations. State legislatures, like the Texas Legislature, enact laws specific to their states, like the Texas Real Estate License Act. Local governments also pass laws, known as ordinances, which apply within their jurisdictions. Laws can be broad or specific, with some applying only to certain types of property, like residential or commercial.

Congressional Laws: The United States Congress passes federal laws that apply across the entire country. These laws may include specific provisions addressing certain issues, such as fair housing laws that prohibit discrimination in housing based on factors like race, religion, or disability. Federal laws often set broad standards of conduct and establish federal agencies to enforce them.
State Legislative Laws: State legislatures, such as the Texas Legislature, pass laws that apply within their respective states. These state statutes may cover a wide range of issues, including the regulation of professions like real estate. For example, the Texas Real Estate License Act is a state law enacted by the Texas Legislature to regulate the activities of real estate professionals in Texas.
Local Legislative Laws: Local governments, such as cities or counties, also have the authority to pass laws known as ordinances. These ordinances address matters specific to their jurisdiction, such as zoning regulations or building codes.
Specificity of Laws: Laws can be tailored to apply to specific types of property or situations. For instance, landlord-tenant laws may vary between residential and commercial properties. Different laws and regulations may govern issues like lease terms, eviction procedures, or tenant rights depending on the type of property involved.

Question 21

The primary purpose of Governmental agencies?

Answer 21

Governmental agencies, like the federal Consumer Financial Protection Bureau (CFPB) or the Texas Real Estate Commission, along with local zoning boards, create rules and regulations. These rules serve several purposes:

Implementation and Enforcement: They put into action and ensure compliance with laws passed by legislatures.
Detailed Guidance: Regulations provide specific instructions on what actions or practices are allowed or prohibited under the law.
Penalties and Violations: They outline consequences for breaking the rules, including fines or other penalties.
Extension of the Law: Regulations effectively expand on the law itself, adding details and clarifications that have the same force and effect as the law itself.

Question 22

The primary purpose of Decisions handed down by federal, state, and municipal courts? (Explain “precedents”)

Answer 22

Courts at the federal, state, and local levels play a crucial role in interpreting laws, regulations, and constitutional provisions. When a court applies and interprets laws to a specific case, its decision helps to clarify the law and establish precedent. This precedent serves as a standard for similar cases in the future.

However, courts are not always bound by precedent. While decisions in one jurisdiction may influence similar cases in other jurisdictions, courts in different areas are not required to follow each other’s rulings. Additionally, a higher court within its jurisdiction may choose to overturn a decision made by a lower court if it believes the ruling was incorrect or inconsistent with the law. Therefore, while precedent is important, courts have the authority to interpret and apply the law independently in each case they hear.

Question 23

Real estate ownership and transfer are influenced by something called “common law.” What is that?

Answer 23

common law is a set of old rules that people still use because they’re stable, adaptable, and widely understood. It started in England and has been part of the United States since before the American Revolution.

It’s like a legal tradition that has stood the test of time.
Even though they’re old, these rules can adapt to new situations.
udges often look at what other judges decided in the past (precedent) and use those decisions to help make new decisions.

Legal systems often build upon established principles and precedents, and common law provides a foundational framework that has evolved over centuries.

Question 24

Sometimes, the punishments or solutions under common law were seen as too strict. So, another type of court called “courts of equity” developed
What are the courts of equity?

Answer 24

Common Law:
Common law is like a set of traditional rules that have been around for a long time.
It’s used in courts to decide legal cases based on precedent (previous decisions).
Courts of Equity:
These are like special courts created to be more fair and just when common law rules seemed too strict.
Instead of just following the old rules, these courts focus on fairness and doing what’s right.Even though they used to be separate, now judges can use both to make sure decisions in legal cases are fair and right.

Although Texas does
not have separate courts of law and equity, Texas judges are permitted to grant both legal and
equitable remedies to ensure justice

Question 25

What are the laws that affect real estate practice?

Answer 25

The general sources of law encompass a number of specific areas that are important to the
real estate practitioner. These include the law of contracts, general property law, landlord-tenant
law, the law of agency (which covers the obligations of a broker to the person who engages
his services), the real estate license law, and consumer protection laws.

Question 26

What is The Purpose of Real Estate License Laws?

Answer 26

Because real estate brokers and sales agents engage in the business of handling other people’s
real estate and money, the need to regulate their activities has long been recognized. In an
effort to protect the public from fraud, dishonesty, or incompetence in the buying and selling
of real estate, all states, the District of Columbia, and all Canadian provinces have passed laws
that require real estate brokers and sales agents to be licensed. The first real estate license law
was passed in California in 1919

Question 27

What legislative act initiated the licensing of real estate agents in Texas and what was established 10 years later?

Answer 27

The licensing of real estate agents in Texas began with the passage of the Real Estate Dealers License Act in 1939. (Its name was changed to the Texas Real Estate License Act (TRELA) in 1955.)

In 1949, the Texas Legislature established the Texas Real Estate Commission (TREC).

Question 28

What is the primary responsibility of the Texas Real Estate Commission?

Answer 28

TREC is the regulatory agency responsible for enforcing the provisions of TRELA.
It is a self-directed, semi-independent state agency.
TREC oversees the licensing and certification of real estate sales agents and brokers, home inspectors, and right-of-way registrants.
Additionally, TREC handles the registration of timeshare developments and home warranty companies, as well as the accreditation of pre-license and continuing education providers.
TREC approves real estate courses and instructors.

Question 29

What was the original name of the legislative act governing real estate licensing in Texas, and when was its name changed?

Answer 29

The original name of the legislative act governing real estate licensing in Texas was the Real Estate Dealers License Act. Its name was changed to the Texas Real Estate License Act (TRELA) in 1955.

Question 30

What is the primary responsibility of the Texas Real Estate License Act (TRELA)

Answer 30

The
purpose of TRELA is to protect the public through regulation of real estate license holders,
real estate inspectors, residential service companies, and entities offering timeshare interests.

TRELA is a legislative act that governs real estate licensing and regulation in Texas.
It sets forth the requirements for obtaining and maintaining a real estate license.
TRELA outlines the duties and responsibilities of real estate license holders, inspectors, residential service companies, and entities offering timeshare interests.
Its primary purpose is to protect the public through the regulation of various entities involved in real estate transactions.

Question 31

Difference between TREC and TRELA?

Answer 31

TRELA is the law that governs real estate licensing and regulation in Texas, while TREC is the regulatory agency tasked with enforcing the provisions of TRELA and overseeing various aspects of the real estate industry in the state.

Question 32

What is the Texas Appraiser Licensing and Certification Board (TALCB)?

Answer 32

An independent
nine-member board housed within the Texas Real Estate Commission that licenses real estate
appraisers in Texas under state and federal laws.

Question 33

which individuals are not required to hold a license?

Answer 33

Individuals who deal only with their own property are not required to hold a real estate license.
As in,

Question 34

Exceptions to Licensing Requirements?

Answer 34

everal exceptions exist, including attorneys licensed in Texas, individuals acting under a duly authorized power of attorney for a limited number of transactions, public officials in their official capacity, licensed auctioneers conducting real estate auctions without engaging in other brokerage activities, and various other specific scenarios outlined in the passage.

Question 35

Exclusions from Real Estate Brokerage?

Answer 35

Certain activities, such as constructing, remodeling, or repairing buildings; sponsoring or managing real estate investments; and entering into secured obligations related to real property, are not considered real estate brokerage under the License Act.

Question 36

What are some requirements for license renewal and continuing in business?

Answer 36

A real estate license applicant must possess certain stated personal and educational
qualifications and must pass an examination to prove adequate knowledge of the business. In
addition, to qualify for license renewal and continue in business, the license holder must pay
renewal fees, follow certain prescribed standards of business conduct and meet continuing
education requirements

Question 37

List some professional associations for various real estate specializations

Answer 37

The
organizations include, among others, the Appraisal Institute, the National Association of Real
Estate Brokers, the National Association of REALTORS®, the Texas Association of Real Estate
Inspectors, the American Society of Home Inspectors, the Texas Land Title Association, and
the Texas Real Estate Teachers Association. The members of the National Association of Real
Estate Brokers (NAREB) are known as Realtists.

Question 38

The largest real estate trade organization is?

Answer 38

National Association of REALTORS® (NAR)

It serves members’ interests by keeping them apprised of developments
in their field, publicizing the services of members, improving standards and practices,
and recommending or taking positions on public legislation and regulations affecting the
operations of members and member firms. NAR also sponsors various affiliated institutes and
societies that offer professional designations to brokers, sales agents, and others who complete
required courses in areas of special interest.

Question 39

Only members of NAR may be called ____; other agents are simply called ___.

Answer 39

1. REALTORS®
2. real estate license
   holders or agents

Question 40

Real estate possesses what seven basic characteristics that determine its value and affect its use?
These characteristics fall into what two broad categories?

Answer 40

relative scarcity, improvements, permanence of investment, area preference, immobility,
indestructibility, and nonhomogeneity

economic and physical

Question 41

What are the 4 economic characteristics?