Real Estate Exam

Question 1

A couple owns property as community property. If one spouse dies testate (that is, with a will) and had children outside of this marriage, how will the community property be distributed?

Answer 1

According to the will

Question 2

What is a leasehold estate?

Answer 2

When a property occupant has possession for a specified period of time with no ownership rights.

Question 3

Wesley just bought a house with a creek that flows along the south boundary. He wants to use the water to irrigate his garden. Through which set of rights is he entitled to use this water?

Answer 3

Riparian rights

Question 4

In a rectangular survey system, a line that runs east-west every 6 miles is called a:

Answer 4

Township line

Question 5

A detailed description that uniquely identifies the property in such a way that a surveyor would be able to locate it is called a(n):

Answer 5

Legal description

Question 6

What civil rights law prohibits discrimination based on disability, and creates consistent and enforceable standards regarding discrimination based on disability?

Answer 6

Americans with Disabilities Act

Question 7

Broker Anna has helped her client negotiate the purchase of a single-family home. The week before close, the sellers back out of the sale without any explanation. Anna’s clients have all the options below EXCEPT:

Answer 7

Filing a Formal complaint with TREC

Question 8

What do the TREC canons require to be displayed in a readily noticeable location in each place of business the broker or inspector maintains?

Answer 8

the Consumer Protection Notice TREC No. CN 1-3

Question 9

A limited partner is usually NOT involved in:

Answer 9

The day to day activities of the business

Question 10

According to the Canons of Professional Ethics, a broker should never:

Answer 10

Knowingly misrepresent a property

Question 11

How would an agent disclose to a potential buyer that they will be required to join an HOA if they purchase the property?

Answer 11

use the Addendum for Property Subject to Mandatory Membership in a Property Owners Association

Question 12

Who determines the topics and number of hours of continuing education a licensee must take in the two years between renewals of their license?

Answer 12

the Texas Real Estate Commission

Question 13

Agent Amy did some bad things, and one of her clients received a judgment against her. Amy can’t pay the judgment. What happens now?

Answer 13

the client can apply to the Commission for funds from the Real Estate Recovery Trust Account

Question 14

According to the Equal Credit Opportunity Act (ECOA), which of these factors can a lender NOT take into consideration when approving or denying a loan?

Answer 14

whether or not a person uses Public Assistance

Question 15

What will a CLUE report tell you about a parcel of real estate?

Answer 15

whether there has been an insurance claim on it in the last 5 years

Question 16

What is required of lease contracts with a lease period of one year or more that is not required for leases of less than a year?

Answer 16

they must be in writing

Question 17

Which of these is NOT a function of a special agent?

Answer 17

Act as an attorney for the client

Question 18

What are rights that govern lakefront or oceanfront property and usually allow the property owner to use the water bordering their property?

Answer 18

Littoral rights

Question 19

Which one of the following actions should an intermediary broker AVOID?

Answer 19

telling the buyers the seller may accept a lower price without the seller’s knowledge

Question 20

Fructus naturales are:

Answer 20

Trees, persistent decorative plantings (such as perennial landscape plants), and uncultivated plants

Question 21

Which of these is a tax lien?

Answer 21

Only the lien applied by the taxing authority is a tax lien. Tax liens can come from the IRS, the city, the county, or any other taxing authority.

Question 22

What is a fixture?

Answer 22

A fixture is an object that was once personal property but is now firmly attached to the land in such a way that it is considered to be real property.

Question 23

Which of the professional canons states that the primary duty of the real estate agent is to represent the interests of the agent’s client?

Answer 23

The canon of FIDELITY states that the primary duty of the real estate agent is to represent the interests of the agent’s client.

Question 24

What does the ADA do?

Answer 24

Prohibits the discrimination of people with disabilities

Question 25

According the rectangular survey system, what is the acreage of an area of land identified as the N 1/2 of the S/W 1/4 of the NE 1/4?

Answer 25

To find the acreage we would need to multiply 640 x 1/2 x 1/4 x 1/4 to get a total of 20 acres.

Question 26

What is the citizenship requirement for being granted a Texas real estate license?

Answer 26

Any U.S. citizen or “lawfully admitted alien” is eligible to receive a real estate license. Currently, this does not include DACA recipients.

Question 27

A broker has two sales agents, one representing the buyer and one representing the seller for the same transaction. The broker is:

Answer 27

A broker has two sales agents, one representing the buyer and one representing the seller for the same transaction. The broker is acting as an intermediary.

Question 28

Gil purchases a new light fixture for his dining room. While the light fixture is still new, wrapped in the box, and unattached to the ceiling, what is it considered to be?

Answer 28

Personal property is unattached to real estate and can easily be moved. If the ceiling fan were attached to the ceiling, it would likely be considered real property.

Question 29

How long are the terms of the Texas Real Estate Commission members?

Answer 29

the nine members of TREC serve staggered six-year terms.

Question 30

The Taxpayer Relief Act of 1997 made these two changes to how homeowners figured their tax liability:

Answer 30

The Taxpayer Relief Act of 1997 created the capital gains exemption and allowed early IRA withdrawals for down payments.

Question 31

The Fair Housing Act includes the protected classes of:

Answer 31

race, color, religion, national origin, sex, disability, family status.

Question 32

Which of the following would NOT be considered real property (and would therefore be considered personal property)?

Answer 32

A motorcycle would be considered personal property, NOT real property. Real property is land plus permanent improvements. It is considered real estate.

Question 33

All of the following are grounds for disciplinary action, including revocation or suspension of a license, EXCEPT:

Answer 33

Asking buyers to provide their own transportation to inspect a property is not grounds for revoking or suspending a person’s license (thank goodness!).

Question 34

Andrew is renting his property to a tenant for a period of two years. For this lease to be valid, what must Andrew do?

Answer 34

Leases one year or longer must be in writing to adhere to the statute of frauds.

Question 35

Which of these is a characteristic of land?

Answer 35

Land is considered to be indestructible.

Question 36

Which unities are required by joint tenancy?

Answer 36

Joint tenancy requires the four unities: possession, interest, time, and title.

Question 37

Net listings and open listings are the same thing.

Answer 37

False. An open listing allows multiple real estate brokers (and the owners themselves) the right to sell a property. A net listing, on the other hand, dictates the broker’s commission based on the difference between the listing price and sales price.

Question 38

What are the possible consequences if a licensee attempts to lure away the already represented client of another broker in Texas?

Answer 38

The possible consequences if a licensee attempts to lure away the already represented client of another broker in Texas include suspension and/or revocation of license.

Question 39

If demand for real estate falls, then:

Answer 39

If demand for real estate falls, then supply will increase, lowering prices. The inverse is true as well. If there is more demand for real estate, then there will be less supply and prices will be higher.

Question 40

Surface, subsurface, and air rights are all parts of:

Answer 40

Surface, subsurface, and air rights are all parts of land.

Question 41

What type of estate causes the title to automatically revert to the original owner if the deed requirements regarding property use are violated?

Answer 41

The correct answer is a fee simple determinable. This is a type of fee simple defeasible estate which causes the title to automatically revert to the original owner if the deed requirements regarding property use are violated.

Question 42

The first 9 articles of the NAR Code of Ethics are known as the:

Answer 42

Duties to Clients and Customers.

Question 43

Mutual assent, legally competent parties, consideration, lawful objective, and adherence to the statute of frauds are:

Answer 43

the 5 components of a valid contract

Question 44

What organization determines a Texas real estate license applicant’s competency?

Answer 44

TREC must determine a license applicant’s competency in order to protect consumers.

Question 45

What type of contract is a real estate sales contract?

Answer 45

real estate sales contracts are bilateral contracts

Question 46

How does a condo differ from a PUD?

Answer 46

Owners of a PUD own the structure and the land it sits on. Condo ownership excludes the land the condo sits on.

Question 47

What do trade organizations like the NAR NOT do?

Answer 47

NAR does not issue licenses, in Texas, that is done by a state agency known as TREC.

Question 48

Marcela has a mango tree in her backyard. It’s not part of a commercial orchard; it’s just a decorative planting. She picks a mango from the tree to eat. What kind of property is the picked mango?

Answer 48

The tree itself is real property (fructus naturales) because it was not part of an orchard set up for annual cultivation. But once Marcela picks the fruit, it becomes personal property. This is known as severance.

Question 49

For a married couple that has lived in their home for the past three years, how much of a capital gains tax exemption are they eligible for?

Answer 49

A married couple that has lived in a primary residence for two of the past five years is eligible for a $500,000 capital gains tax exemption.

Question 50

When a broker signs a listing agreement with a seller, under what classification of agency are they operating?

Answer 50

Special agency would be more appropriate since it gives the agent a restricted or narrow authority to act on a principal’s behalf in order to achieve a specific, short-term goal, which, in this case, is selling a property.

Question 51

Which of the following is NOT a federally protected class?

Answer 51

Veteran

Question 52

In which type of residential property does a resident hold no actual ownership in the property, but instead holds a proprietary lease as a stockholder?

Answer 52

A co-op is a corporation that owns a building, and the owners hold proprietary leases and stock in the company.

Question 53

What is a chain of title?

Answer 53

A chain of title is the complete history of the title, including all transfers from the original owner up until the present owner.

Question 54

The difference between fraud and misrepresentation is mainly in:

Answer 54

Intent

Question 55

What is unique about an exclusive right-to-sell listing agreement?

Answer 55

With an exclusive right-to-sell listing agreement, the broker gets compensation regardless of who sells the property.

Question 56

Which of these is an individual with whom a license holder has no agency relationship nor fiduciary duties but to whom fairness and honesty are still required?

Answer 56

An individual with whom a license holder has no agency relationship nor fiduciary duties but to whom fairness and honesty are still required is a customer.

Question 57

What does the Community Reinvestment Act require of banking institutions?

Answer 57

The Community Reinvestment Act requires banks to meet the credit needs of the neighborhoods they operate in by making loans to the people in those neighborhoods.

Question 58

Barry owned a piece of property. To ensure that it can easily be passed on to his heirs when he dies, he transferred ownership of the property to someone else, who manages it for his future heirs. What kind of ownership is this describing?

Answer 58

In a trust, a trustee manages a property given to them by a trustor for a future beneficiary.

Question 59

Texas offers several exemptions for reduction of property taxes including the:

Answer 59

Texas offers a homestead tax exemption (not to be confused with the homestead right) that can be filed at the appraisal district in the county in which the property is located. This homestead tax exemption will reduce the amount of ad valorem taxes paid on the homestead.