Real Estate Exam

Question 1

How many TREC members must NOT be currently affiliated with a real estate broker?

Answer 1

Three members of the public must NOT be currently affiliated with a real estate broker.

Question 2

What must a person do to receive payment from the Real Estate Recovery Trust Account?

Answer 2

Obtain a money judgment from the courts against the licensee.

Question 3

Who is required to have a real estate license?

Answer 3

A person who procures or attempts to procure a person to affect the sale of real estate.

Question 4

How long does a broker have to return a salesperson’s license after termination?

Answer 4

Immediately.

Question 5

What is commingling in real estate?

Answer 5

Depositing client money in a personal account.

Question 6

What is conversion in real estate?

Answer 6

Spending client funds for personal use.

Question 7

What is a broker’s responsibility regarding a salesperson’s actions?

Answer 7

Responsible for all acts and conduct performed by the salesperson associated with the broker.

Question 8

What is a rebate in real estate?

Answer 8

A broker can rebate a portion of the commission to a principal.

Question 9

What does agency disclosure refer to?

Answer 9

The explanation of the relationship where one party acts for another under authority.

Question 10

When does an agency end?

Answer 10

When all terms of the agreement have been satisfied.

Question 11

What is prohibited according to the Texas Real Estate License Act?

Answer 11

Sharing a commission with an attorney unless the attorney is also licensed.

Question 12

What is termination by acts of the parties?

Answer 12

When a principal or agent cancels a listing agreement.

Question 13

What type of listing entitles a commission only to the broker who was the procuring cause?

Answer 13

An open listing.

Question 14

What fiduciary duty does a broker NOT owe to the principal?

Answer 14

Availability.

Question 15

What does the statute of frauds require?

Answer 15

Written instruments for transfers of title or interest, except for leases of one year or less.

Question 16

Who is responsible for damages if a tree falls on a property before closing?

Answer 16

The seller.

Question 17

What must be kept open to the public according to the Texas Open Beach Law?

Answer 17

Low tide to the vegetation line.

Question 18

What is the purpose of the statute of frauds?

Answer 18

To require instruments to be in writing to be enforceable.

Question 19

Can a lease contract be performed by a handshake if it is for nine months?

Answer 19

No, it must be in writing.

Question 20

Who are NOT considered heirs of the deceased under Texas law?

Answer 20

Adopted children are not considered heirs of ancestors of the adopting parents.

Question 21

What is exempt from forced sale by creditors in Texas?

Answer 21

Homestead is exempt, except for valid mechanic’s or materialman’s claims.

Question 22

What is NOT true about the equitable right of redemption?

Answer 22

If another person redeems the real estate, the borrower is not responsible to that person.

Question 23

What does the Landlord and Tenant Act address?

Answer 23

Landlord’s right of entry, maintenance of premises, and disclosure of owner’s names.

Question 24

What is actual notice?

Answer 24

Direct knowledge from inspecting public records.

Question 25

What is NOT a purpose of maintaining public records?

Answer 25

The background of previous owners is not a matter of public record.

Question 26

What is NOT considered when determining if an item is a fixture?

Answer 26

The value of the annexed item.

Question 27

Is a license considered an encumbrance?

Answer 27

No, a license is revocable and does not burden the property owner's title.

Question 28

What describes a legal description based on a baseline and principal meridian?

Answer 28

Rectangular survey system.

Question 29

When does inverse condemnation occur?

Answer 29

When a property owner sues the government for compensation or to loosen land use restrictions.

Question 30

When does eminent domain occur?

Answer 30

When the government takes private land for public use.

Question 31

What happens during spot zoning?

Answer 31

A change of zoning classification for a specific parcel of land.

Question 32

How are building codes primarily enforced?

Answer 32

Through the issuance of permits.

Question 33

What is an appurtenance?

Answer 33

A right that runs with the land.

Question 34

What is a voluntary lien?

Answer 34

A mortgage.

Question 35

What is true regarding a Power of Sale clause?

Answer 35

It allows a lender to foreclose without court oversight.

Question 36

Which is NOT an example of a Freehold Estate?

Answer 36

Periodic Tenancy.

Question 37

What type of co-ownership do A, B, and C have if B's heirs receive 1/3 interest upon B's death?

Answer 37

Tenancy in common.

Question 38

What best describes a real estate investment business organized as a trust?

Answer 38

REIT.

Question 39

What does effective gross income refer to?

Answer 39

Income before expenses.

Question 40

What does the rule of conformity say about property values?

Answer 40

Properties maintain value best when similar in size, style, and function.

Question 41

What is NOT considered when determining net operating income?

Answer 41

Interest expense.

Question 42

What describes two licensees with the same brokerage representing opposing sides of a transaction?

Answer 42

Split agency.

Question 43

What is called when the principal terminates the agency relationship before it expires?

Answer 43

Revocation.

Question 44

What is transferring one's rights and obligations under a contract to another called?

Answer 44

Assignment.

Question 45

What is negligence that causes harm referred to as?

Answer 45

Tort.

Question 46

What is evidence of the agency relationship between broker and buyer?

Answer 46

Buyer-broker contract.

Question 47

What is anticipatory repudiation?

Answer 47

When one party notifies the other they will not perform as agreed.

Question 48

Which is not a fiduciary duty?

Answer 48

Achievement.

Question 49

What is an expressed contract?

Answer 49

An agreement put into words.

Question 50

Is there a valid contract if a buyer makes an offer that is accepted but not communicated?

Answer 50

No.

Question 51

When does an agent working for the seller have a fiduciary duty to the buyer?

Answer 51

When acting as a dual agent.

Question 52

What is a net listing?

Answer 52

An agreement allowing the broker to keep any amount above the seller's stated preference.

Question 53

What term describes a holdover tenant?

Answer 53

Tenancy at sufferance.

Question 54

What duty does an agent breach if they vent frustration to another brokerage after listing a property?

Answer 54

Loyalty.

Question 55

What topic should real estate brokers avoid discussing in meetings?

Answer 55

Personal commission schedules.

Question 56

What terminates a listing agreement?

Answer 56

Death of the principal.

Question 57

How much commission is due if Seller A and Seller B swap homes after their contracts expire?

Answer 57

No commission is due.

Question 58

To whom does a salesperson have a direct fiduciary duty?

Answer 58

The broker.

Question 59

Are there exemptions under the Civil Rights Act of 1866?

Answer 59

No exemptions.

Question 60

Why was asbestos used before its harmful effects were known?

Answer 60

As a flame retardant in buildings.

Question 61

What disclosure does a salesperson owe when entering into a buyer-broker contract with a family member?

Answer 61

Disclose the material and family relationship.

Question 62

What is NOT an approved method of removing asbestos?

Answer 62

Using saws and pry bars to destroy it.

Question 63

What is NOT an environmental law regarding dumping?

Answer 63

Water Resource Act.

Question 64

What right allows a landowner to cross neighboring property for water?

Answer 64

Appropriative rights.

Question 65

Which is not an environmental law regarding dumping in navigable waters or wetlands?

Answer 65

Water Resource Act.

Question 66

What right allows a land owner to run a pipeline from a river to his land by crossing over a neighbor's property?

Answer 66

Appropriative rights.

Question 67

A note that calls for periodic payments of principal only, with a balloon payment at the end of the loan term is called a _______.

Answer 67

Installment note.

Question 68

Who is the mortgagor?

Answer 68

The borrower.

Question 69

Which clause has the lender violated if they refuse to cancel the mortgage after the loan is paid off?

Answer 69

Defeasance clause.

Question 70

Which is not a feature of an FHA-insured loan?

Answer 70

No MIP insurance.

Question 71

A closing conducted by a disinterested third party is best described as a/an _______.

Answer 71

Escrow closing.

Question 72

What type of installment agreement allows the buyer to make payments but not receive title until most terms have been met?

Answer 72

Land contract.

Question 73

The act of pledging a property as security for a loan is called _______.

Answer 73

Hypothecation.

Question 74

Who receives the mortgage in a loan agreement?

Answer 74

The lender.

Question 75

Mortgages are recorded in order to _______.

Answer 75

Create a valid lien.

Question 76

Which deed is most commonly used to clear up clouds on a title?

Answer 76

Quit claim deed.

Question 77

How much will a buyer pay for points if the loan amount is $325,000 and they agreed to pay 1.5 points at closing?

Answer 77

$4,875.