Unit 1 - 4

Question 1

How many commissioners are on the Texas Real Estate Commission?

Answers:

9

6

12

13

Answer 1

9

Response Feedback:
The answer is 9. The policy-making body of the Texas Real Estate Commission is a nine-member commission. Learning Objective 1.1

Question 2

Who appoints the TREC commissioners?

Answers:
House of representatives

Senate

Lt. governor

Governor

Answer 2

Governor

Answer Feedback:
The answer is governor. The commissioners are appointed by the governor with the advice and consent of the senate. Learning Objective 1.1

Response Feedback:
The answer is governor. The commissioners are appointed by the governor with the advice and consent of the senate. Learning Objective 1.1

Question 3

What is the term for a TREC commissioner?

Answers:
Staggered two-year terms

Members are on staggered four-year terms with the chairperson appointed to a ten-year term

Staggered six-year terms

Staggered four-year terms

Answer 3

Staggered six-year terms

Response Feedback:
The answer is staggered six-year terms. The commissioners are appointed for overlapping six-year terms. Learning Objective 1.1

Question 4

What is one of the purposes of the Texas Real Estate License Act?

Answers:
All of these

Regulation of licensed real estate inspectors

Regulation of licensed real estate brokerage practitioners

Regulation of entities offering timeshare interests

Answer 4

All of these

Response Feedback:
The answer is all of these. The purpose of the TRELA is to protect the public through regulation of licensed real estate brokerage practitioners, real estate inspectors, and entities offering time-share interests. Learning Objective 1.1

Question 5

Which of the following real estate-related entities has rule-making authority in the state of Texas?

Answers:
Attorneys

The Real Estate License Act

All of these

The commission

Answer 5

The commission

Response Feedback:
The answer is the commission. The commission has rule-making authority, and the rules of the commission have the full force and effect of law. Learning Objective 1.1

Question 6

What effect do the rules made by the commission have on license holders?

Answers:
The rules have full force and effect of law.

Any violation of the rules must be turned over to the state attorney general for investigation.

Any violation of the rules results in license revocation.

Any violation of the rules results in administrative fees.

Answer 6

The rules have full force and effect of law.

Response Feedback:
The answer is the rules have full force and effect of law. The commission has rule-making authority, and the rules of the commission have the full force and effect of law. Learning Objective 1.1

Question 7

What is the main purpose of the Texas Real Estate Commission?

Answers:
All of these

To protect REALTORS®

To protect the public

To draft and revise contracts

Answer 7

To protect the public

Response Feedback:
The answer is to protect the public. The commission was created to administer Texas Real Estate License Act (TRELA), and TRELA’s purpose is to protect the public through regulation of licensed real estate brokerage practitioners, real estate inspectors, and entities offering time-share interests. Learning Objective 1.1

Question 8

An agent represents a buyer. Which of the following forms of advice can the agent give to an unrepresented buyer?

Answers:
Advice on having the abstract examined by an attorney

Advice regarding the legal sufficiency of a paragraph of the contract

Advice on what price to offer

Advice on asking for repairs

Answer 8

Advice on having the abstract examined by an attorney

Response Feedback:
The answer is advice on having the abstract examined by an attorney. The TRELA specifically prohibits license holders from practicing law by giving opinions or counsel regarding the validity or legal sufficiency of an instrument that addresses real property rights or as to the status of title to real estate. Throughout the act, it is clearly established that, prior to signing a purchase contract, the license holder must give a buyer written advice to have the abstract covering the property examined by an attorney of the buyer’s selection or to obtain an owner’s title insurance policy prior to closing. Failure to do so may result in disciplinary action by the TREC. Learning Objective 1.2

Question 9

Which of the following is legal for the license holder to draw up?

Answers:
Contract

Note

Deed

None of these

Answer 9

None of these

Response Feedback:
The answer is none of these. The TRELA clearly establishes that it is illegal for the license holder to draw a deed, note, deed of trust, will, or other written instrument that transfers or may transfer an interest in or title to real property. However, the act goes on to give permission for a license holder to complete a contract form that may bind the sale, exchange, option, lease, or rental of any interest in real property as long as the forms used have been prepared by or are required by the property owner or have been provided by the real estate commission, prepared by an attorney licensed by the State of Texas, and approved by that attorney for a particular type of transaction. Learning Objective 1.2

Question 10

According to the Texas Real Estate License Act, which of the following requires that a license holder be a practicing attorney?

Answers:
Advising a person regarding the validity of title to real property

Advising a client to reject an offer

Filling in a TREC-promulgated contract

Determining the offering price for a seller

Answer 10

Advising a person regarding the validity of title to real property

Response Feedback:
The answer is advising a person regarding the validity of title to real property. TRELA Section 1101.654 states that “the commission shall suspend or revoke the license or certificate of registration of a license or certificate holder who is not a licensed attorney in this state and who, for consideration, a reward, or in a pecuniary benefit, present or anticipated, direct or indirect, or in connection with the person’s employment, agency, or fiduciary relationship as a license or certificate holder…advises a person regarding the validity or legal sufficiency of an instrument or the validity of title to real property.” Learning Objective 1.2

Question 11

What type of committee is the Broker-Lawyer Committee?

Answers:
Under-secretary

Advisory

Temporary

Rule making

Answer 11

Advisory

Response Feedback:
The answer is advisory. One of the advisory committees that exists under the statutes of the TRELA is the Broker-Lawyer Committee. Learning Objective 1.3

Question 12

What is the make-up of the Broker-Lawyer Committee?

Answers:
Six brokers, six lawyers, and three members of the general public

Three brokers, three lawyers, and three members of the general public

Six brokers, six lawyers, and one member of the general public

Six brokers and six lawyers

Answer 12

Six brokers, six lawyers, and one member of the general public

Response Feedback:
The answer is six brokers, six lawyers, and one member of the general public. The committee is composed of six Real Estate Commission appointees (who are licensed real estate brokers); six lawyers, appointed by the president of the State Bar of Texas; and one public member, appointed by the governor. They serve staggered six-year terms. Learning Objective 1.3

Question 13

Who promulgates contracts for mandatory use by license holders?

Answers:
Broker-Lawyer Committee

Real Estate License Act

Texas Real Estate Commission

Texas Contract Adoption Committee

Answer 13

Texas Real Estate Commission

Response Feedback:
The answer is Texas Real Estate Commission. The Broker-Lawyer Committee develops forms and recommends their adoption, but it is TREC that promulgates the forms for mandatory use. Learning Objective 1.3

Question 14

Who appoints the lawyers to the Broker-Lawyer Committee?

Answers:
Governor

Texas Real Estate Commission

Other real estate lawyers through election

President of the state bar

Answer 14

President of the state bar

Response Feedback:
The answer is president of the state bar. According to Section 1101.252, the six lawyers on the Broker-Lawyer Committee are appointed by the president of the state bar. Learning Objective 1.3

Question 15

Which of the following is NOT a TREC-promulgated contract?

Answers:
One- to Four-Family Residential Contract

Unimproved Property Contract

New Home Contract

Contract for Deed

Answer 15

Contract for Deed

Response Feedback:
The answer is contract for deed. The other forms mentioned are three of the six promulgated contracts. Learning Objective 1.4

Question 16

Which of the following is a TREC-promulgated contract?

Answers:
Residential Condominium Contract

Agricultural Property Contract

Lake Property Contract

Fine Homes and Estates Contract

Answer 16

Residential Condominium Contract

Response Feedback:
The answer is Residential Condominium Contract. The Residential Condominium Contract is one of six TREC-promulgated contracts. Learning Objective 1.4

Question 17

Which of the following is a TREC-promulgated form?

Answers:
Non-Realty Items Addendum

Addendum for Sale of Other Property by Buyer

Seller’s Disclosure Notice

Notice to Prospective Buyer

Answer 17

Addendum for Sale of Other Property by Buyer

Response Feedback:
The answer is Addendum for Sale of Other Property by Buyer. The Addendum for Sale of Other Property by Buyer is a TREC-promulgated addendum; the other choices are TREC approved forms for voluntary use. Learning Objective 1.4

Question 18

A buyer wanted to move in early before closing. Which TREC-promulgated addendum should be used?

Answers:
Addendum for Buyer’s Move-in Pre-Closing

Buyer’s Temporary Residential Lease

Lease Prior to Closing Addendum

Addendum for Maximum 90-Day Residential Lease

Answer 18

A buyer wanted to move in early before closing. Which TREC-promulgated addendum should be used?

Response Feedback:
The answer is Buyer’s Temporary Residential Lease. The Buyer’s Temporary Residential Lease is a TREC-promulgated addendum. The other addenda listed do not exist. Learning Objective 1.4

Question 19

How many promulgated contracts does TREC issue?

Answers:
Eight

Nine

Four

Six

Answer 19

Six

Response Feedback:
The answer is six. TREC promulgates the following six contracts: Unimproved Property Contract; One-to-Four-Family Residential Contract (Resale); New Home Contract (Incomplete Construction); New Home Contract (Complete Construction); Farm & Ranch Contract; and Residential Condominium Contract. Learning Objective 1.4

Question 20

Which of the following is an exception to using TREC-promulgated contract forms?

Answers:
All of these

When a license holder is not representing either party in the transaction

When the license holder is acting as a principal and not as an agent

When the license holder is solely leasing property

Answer 20

When the license holder is acting as a principal and not as an agent

Response Feedback:
The answer is when the license holder is acting as a principal and not as an agent. One of the exceptions for when a license holder must use a TREC-promulgated contract form is in transactions in which the license holder is functioning solely as a principal, not as an agent. Learning Objective 1.4

Question 21

Which of the following is an exception to using a TREC-promulgated contract form?

Answers:
None of these

Transactions which are under $50,000 total sales price

Transactions in which the property will only be held for less than three years

Transactions in which a United States government agency requires a different form to be used

Answer 21

Transactions in which a United States government agency requires a different form to be used

Response Feedback:
The answer is transactions in which a United States government agency requires a different form to be used. When a United States government agency requires a specific form to be used, a TREC-promulgated form does not need to be used. Learning Objective 1.4

Question 22

If no standard form has been promulgated by the Texas Real Estate Commission, a real estate broker or sales agent may do any of the following EXCEPT

Answers:
use a form prepared by the Texas Real Estate Broker-Lawyer Committee and made available for trial use by license holders with the consent of the Commission.

use a form prepared by an attorney-at-law licensed by this state and approved by the attorney for the particular kind of transactions involved.

use a form prepared by an attorney and required by a principal to the transaction.

draft an instrument that transfers an interest in real property.

Answer 22

draft an instrument that transfers an interest in real property.

Response Feedback:
The answer is draft an instrument that transfers an interest in real property. When conducting transactions for which no standard contract form has been promulgated by the Commission, license holders may use a form prepared by an attorney-at-law licensed by Texas and approved by the attorney for the particular kind of transactions involved or prepared by the Texas Real Estate Broker-Lawyer Committee and made available for trial use by license holders with the consent of the Commission. Drafting a form would constitute the unauthorized practice of law. Learning Objective 1.4

Question 23

A seller wants to close using a contract for deed. Which of the following is MOST correct?

Answers:
This type of contract must be drafted by an attorney.

The listing agent, with her broker’s permission, could use a TREC-promulgated purchase agreement to handle this type of transaction.

The listing agent would be in violation for attempting this type of transaction because contract for deeds are not legal by federal statute.

The listing agent must use the TREC-promulgated Contract for Deed Contract.

Answer 23

This type of contract must be drafted by an attorney.

Response Feedback:
The answer is this type of contract must be drafted by an attorney. The contract for deed must be drawn up by an attorney licensed to practice law in Texas. Learning Objective 1.4

Question 24

If the seller does not provide a written seller’s disclosure notice, the TREC-promulgated forms allow the buyer what rights?

Answers:
The buyer could require the seller to renegotiate the entire contract.

The buyer has the right to terminate within a certain time frame.

The contract provides a blank for how the buyer would proceed in such a case.

The contract does not stipulate any buyer rights.

Answer 24

The buyer has the right to terminate within a certain time frame.

Response Feedback:
The answer is the buyer has the right to terminate within a certain time frame. The buyer can make an offer and ask the seller to provide the notice within a certain number of days. The risk for the sellers is that even if they deliver the disclosure within the proper time frame, the buyer can terminate the contract, for any reason, within seven days and receive the earnest money back. If the sellers never deliver it, the buyer has a right to terminate and receive the earnest money back up to the day of closing. Learning Objective 1.5

Question 25

A seller's disclosure notice is NOT required in the sale of real property Answers: by any person transferring more than one property in any one transaction. pursuant to a court order. by an individual in which the total property value is less than $12,500. by a non-profit organization.

Answer 25

pursuant to a court order. Response Feedback: The answer is pursuant to a court order. The notice is not required for transactions pursuant to a court order or foreclosure sale. Learning Objective 1.5

Question 26

A seller's disclosure notice is required Answers: pursuant to a foreclosure sale. in the sale of real property by a trustee in bankruptcy. in the sale of real property to a mortgagee by a mortgagor. in a transaction involving residential property comprising not more than one dwelling unit.

Answer 26

in a transaction involving residential property comprising not more than one dwelling unit. Response Feedback: The answer is in a transaction involving a residential property comprising not more than one dwelling unit. The notice is not required for transactions pursuant to a court order or foreclosure sale, by a trustee in bankruptcy, or to a mortgagee by a mortgagor or successor in interest, or to a beneficiary of a deed of trust by a trustor or successor in interest. Learning Objective 1.5

Question 27

A husband and wife divorce, and the wife receives the real estate in the decree. Which of the following statements is TRUE when referring to the seller's disclosure notice? Answers: The notice must be provided within 30 days after the judge signs the decree. The notice is only required if the husband has not moved out prior to the finalization of the divorce. This is an exception and no notice is required. The notice must be provided prior to the judge signing the decree.

Answer 27

This is an exception and no notice is required. Response Feedback: The answer is this is an exception and no notice is required. The notice is not required for transactions between spouses resulting from a decree of dissolution of marriage or a decree of legal separation or from a property settlement agreement incidental to such a decree. Learning Objective 1.5

Question 28

A man dies and his property transfers to his heirs through probate. Who is required to provide the seller's disclosure notice? Answers: No one The trustor The trustee The closest heir

Answer 28

No one Response Feedback: The answer is no one. The notice is not required for transactions by a fiduciary in the course of the administration of a decedent's estate, guardianship, conservatorship, or trust. Learning Objective 1.5

Question 29

Which type of death MUST be disclosed by the seller of residential property comprising not more than one dwelling unit? Answers: Accident unrelated to the condition of the property Suicide Natural causes None of these

Answer 29

None of these Response Feedback: The answer is none of these. Under Texas law, a seller or seller's agent has no duty to disclose a death by natural causes, suicide, or an accidental death that is unrelated to condition of the property. Such disclosure is not prohibited; it is simply not required. Most murders and deaths that are related to condition of the property must be disclosed. Learning Objective 1.5

Question 30

What is the primary difference between a lawsuit brought under the Deceptive Trade Practices Act (DTPA) and any other type of civil action? Answers: Damages are limited to actual damages only under the DTPA. Treble damages are available under the DTPA. Attorneys fees are not awardable under the DTPA. Costs are not awardable under the DTPA.

Answer 30

Treble damages are available under the DTPA. Response Feedback: The answer is treble damages are available under the DTPA. Treble damages and mental anguish are available in the DTPA action. Court costs and attorneyâ s fees may also be added. Learning Objective 1.6

Question 31

Which of these is a consumer protection act that protects the public from false and misleading acts? Answers: Texas Property Code Real Estate Settlement Procedures Act Real Property Disclosures Act Deceptive Trade Practices Act

Answer 31

Deceptive Trade Practices Act Response Feedback: The answer is Deceptive Trade Practices Act. The Deceptive Trade Practices Act (DTPA) protects the public from false, misleading or deceptive acts and a license holder taking advantage of the consumerâ s lack of knowledge. Learning Objective 1.6

Question 32

Under the DTPA, to get triple damages, a plaintiff must prove Answers: that the defendant made the statement intentionally. that the defendant did not know the misleading statement was false. that the defendant had a vested interest in the deal. that the defendant acted with malice and negligence.

Answer 32

that the defendant made the statement intentionally. Response Feedback: The answer is that the defendant made the statement intentionally. If the defendant is found to have committed the act intentionally, then the economic and mental anguish damages may be trebled. Learning Objective 1.6

Question 33

As compared to any other type of civil action, in a Deceptive Trade Practices Act (DTPA) action, a plaintiff Answers: may not be awarded court costs. may not be awarded attorney' s fees. may be awarded treble damages. may be awarded actual damages only.

Answer 33

may be awarded treble damages. Response Feedback: The answer is may be awarded treble damages. Treble damages and mental anguish are available in the DTPA action. Court costs and attorneyâ s fees may also be added. Learning Objective 1.6

Question 34

Under the DTPA, which statement is FALSE? Answers: A real estate agent may be sued under the DTPA for giving bad advice related to a real estate transaction. A real estate agent can be liable for fraud. A real estate agent can be liable for misrepresentation. A real estate agent can be liable for failing to disclose factual information.

Answer 34

A real estate agent may be sued under the DTPA for giving bad advice related to a real estate transaction. Response Feedback: The answer is a real estate agent may be sued under the DTPA for giving bad advice related to a real estate transaction. A real estate agent may not be sued under the DTPA for giving bad advice related to a real estate transaction, but the agent can be liable for fraud, misrepresentation, or failing to disclose factual information. Learning Objective 1.6

Question 35

A seller has sold his property and is now transferring title to the new owner. The instrument he will use is Answers: a contract. an abstract of title. a deed. caveat emptor.

Answer 35

a deed. Response Feedback: The answer is a deed. This is the document by which an owner transfers title to the real property. A contract is the agreement to sell. The abstract of title is a history of the property's title. Caveat emptor is "buyer beware." Learning Objective 2.1

Question 36

An example of an appurtenance is Answers: a tax lien. a trade fixture. a mortgage. an easement.

Answer 36

an easement. Response Feedback: The answer is an easement. It is a right, privilege, or improvement belonging to and passing with the land; it "runs with the land." If you sell a piece of property with an easement to cross over another's property, then the easement and the property go together; they cannot be separated. Learning Objective 2.1

Question 37

Which of the following may be leased? Answers: The contract The deed The air rights The title

Answer 37

The air rights Response Feedback: The answer is the air rights. These rights may be sold or leased as long as the rights have not been preempted by law. A contract is for the purchase of real estate. The deed transfers real estate, and the title shows the property ownership. Learning Objective 2.1

Question 38

The earth's surface to the center of the earth and the airspace above the land, including the trees and water, plus permanent human-made additions, is Answers: land. real estate. real property. personal property.

Answer 38

real estate. Response Feedback: The answer is real estate. The term real estate, or realty, is similar to the term land (the earth's surface to the center of the earth and the airspace above the land, including the trees and water) but also includes all permanent man-made improvements on and to the land. Learning Objective 2.1

Question 39

The bundle of legal rights includes all of the following EXCEPT Answers: the right of possession. the right to control the property. the right of enjoyment. the right to cultivate any plant.

Answer 39

the right to cultivate any plant. Response Feedback: The answer is the right to cultivate any plant. There are limitations imposed on what type of plants may be cultivated on a property. For example, the property owner does not generally have the legal right to cultivate marijuana on the property because it is illegal to do so in Texas. Learning Objective 2.1

Question 40

One of the rights in the bundle of legal rights is the right of Answers: exclusion. amendment. easement. eminent domain.

Answer 40

exclusion Response Feedback: The answer is exclusion. Exclusion is the right to keep others from entering and using the property. The five rights include disposition, exclusion, enjoyment, possession, and control. Learning Objective 2.1

Question 41

Which of the following is NOT a test to determine if an item is a fixture or personal property? Answers: Cost of the item Method of annexation Adaptation Agreement

Answer 41

Cost of the item Response Feedback: The answer is cost of the item. The overall test used to determine whether an item is a fixture (real property) or personal property is a question of intent. Did the person who installed the item intend for it to remain permanently on the property or to be removable in the future? In determining intent, courts use the following three basic tests: method of annexation, adaptation to real estate, and agreement. Cost is not one of the tests applied. Learning Objective 2.1

Question 42

Mary owned an apartment that included a parking space for her car. This space is called a(n) Answers: accession. appurtenance. addendum. binder.

Answer 42

appurtenance Response Feedback: The answer is appurtenance. This is a right or a privilege associated with the property, connected to the property, and transfers to the new owner when the property is sold. An appurtenance cannot be separated from the original property. Learning Objective 2.1

Question 43

John owns a manufactured home and has elected to have it classified as real property. Which of the following would NOT support the home's classification as real property? Answers: He intends to move it every six months. It is attached to real property that is owned by the owner of the home. A certified copy of the statement of ownership has been filed. The tax assessor-collector has been notified of the filing of the real property election.

Answer 43

He intends to move it every six months. Response Feedback: The answer is he intends to move it every six months. If the property is being moved continually, it cannot be classified as real property. The home would be classified as personal property. Learning Objective 2.2

Question 44

Another term for personal property is Answers: chattels. realty. fixtures. fructus naturales.

Answer 44

chattels. Response Feedback: The answer is chattels. Chattels are items that can be easily removed from property. The other items are real property. Learning Objective 2.2

Question 45

An item of real property can become personal property by Answers: a codicil. the bundle of legal rights. caveat emptor. severance.

Answer 45

severance Response Feedback: The answer is severance. For example, a tree is classified as real property until the owner cuts it down, severing it from the property. Learning Objective 2.2

Question 46

A legal test of a fixture is Answers: an encumbrance. the method of annexation. a fiduciary. a kickback.

Answer 46

the method of annexation. Response Feedback: The answer is the method of annexation. The fixture is permanently attached to the real property. The rest of the answers have nothing to do with determining real and personal property. Learning Objective 2.2

Question 47

A trade fixture is transferred by Answers: a bill of sale. a contract. an addendum. none of these.

Answer 47

a bill of sale. Response Feedback: The answer is a bill of sale. As the trade fixture is the personal property of the tenant, it should be transferred by a bill of sale. Without a bill of sale, the items would be considered the tenant's because they are part of the tenant's trade. Learning Objective 2.2

Question 48

The method of annexation, adaptation to real estate, and agreement between the parties are the legal tests for determining whether an item is Answers: a trade fixture or personal property. a fixture or personal property. real property or real estate. an improvement.

Answer 48

a fixture or personal property. Response Feedback: The answer is a fixture or personal property. If there is no agreement about an item, and there is a disagreement as to whether the item is attached to the property, a judge could determine if the item materially affects the use of the property as designed. If it does, the judge could rule that it is real property and must remain with the property. Learning Objective 2.2

Question 49

Which of the following is NOT an economic characteristic of real estate? Answers: Scarcity Improvements Permanence of investment Immobility

Answer 49

Immobility Response Feedback: The answer is immobility. The economic characteristics of real estate include scarcity, improvements, permanence of investment, and area preference. Immobility is a physical characteristic of land. Learning Objective 2.3

Question 50

Which of the following is NOT a physical characteristic of land? Answers: Immobility Cost Indestructibility Uniqueness

Answer 50

Cost Response Feedback: The answer is cost. The physical characteristics of land never change. Learning Objective 2.3

Question 51

Land is considered Answers: unique. a tenancy at will. a defeasance. an encumbrance.

Answer 51

unique Response Feedback: The answer is unique. No two parcels of land are exactly the same whether in the same location or different locations. An individual parcel has no substitute as each is unique. Learning Objective 2.3

Question 52

The term nonhomogeneity refers to Answers: area preference. an improvement. the value of a parcel of land. Correct the fact that no two parcels of land are alike.

Answer 52

the fact that no two parcels of land are alike. Response Feedback: The answer is the fact that no two parcels of land are alike. The term nonhomogeneous refers to a lack of uniformity. As no two parcels of land are exactly alike, real estate is said to be nonhomogeneous. Learning Objective 2.3

Question 53

Which of the following can reduce land's value? Answers: Ownership in severalty Improvements on the land Tenancy in common None of these

Answer 53

Improvements on the land Response Feedback: The answer is improvements on the land. These improvements can depreciate and become obsolete, which may reduce the land's value considerably. The other answers are types of ownership and partnerships. Learning Objective 2.3

Question 54

The unities of possession, interest, time, and title are associated with which of the following? Answers: Community property Severalty ownership Tenants in common Joint tenancy

Answer 54

Joint tenancy Response Feedback: The answer is joint tenancy. To create joint tenancy, four groups or unities are needed: possession, interest, time, and title. Learning Objective 2.4

Question 55

Three people are joint tenants with rights of survivorship in a tract of land. One owner conveys interest to a friend. Which statement is TRUE? Answers: The first two owners remain joint tenants. The new owner has severalty ownership. They all become tenants in common. They all become joint tenants.

Answer 55

The first two owners remain joint tenants. Response Feedback: The answer is the first two owners remain joint tenants. The new owner owns a one-third interest in severalty as a tenant in common with the other two joint tenants, who continue to own their undivided two-thirds interest as joint tenants. Learning Objective 2.4

Question 56

Three people were concurrent owners of a parcel of real estate. When one owner died, her interest, according to her will, became part of her estate. The deceased was a Answers: joint tenant. tenant by the entirety. tenant in common. severalty owner.

Answer 56

tenant in common. Response Feedback: The answer is tenant in common. Tenants in common do not have the right of survivorship, so their interests are passed on to their heirs through probate. Learning Objective 2.4

Question 57

Which of the following is NOT a form of co-ownership? Answers: Tenancy in common Joint tenancy Community property Ownership in severalty

Answer 57

Ownership in severalty Response Feedback: The answer is ownership in severalty. With severalty, the rights of all others have been severed away. Learning Objective 2.4

Question 58

A married couple could hold title by which of the following means? Answers: Title in state Title in servitude Tenancy in reservation Community property

Answer 58

Community property Response Feedback: The answer is community property. Community property is co-ownership by married couples. All other answers are made up answers. Learning Objective 2.4

Question 59

Which of the following is TRUE about community property in Texas? Answers: A surviving spouse owns at least one half of the property upon death of the spouse. The surviving spouse always inherits all of the community property. The surviving spouse has a right of survivorship. All of these.

Answer 59

A surviving spouse owns at least one half of the property upon death of the spouse. Response Feedback: The answer is a surviving spouse owns at least one half of the property upon death of the spouse. In Texas, if one spouse dies without a will and the heirs are common to both spouses (e.g., no stepchildren, etc.), the surviving spouse inherits the decedentâ s half of the property. If the heirs are not common to both spouses, the decedentâ s half of the property is split among the decedentâ s heirs. Learning Objective 2.4

Question 60

With community property, which of the following is FALSE? Answers: Each spouse has an equal interest in the property. Title can be conveyed by one party without the approval of the other party. Each spouse has an undivided interest in the property. Each spouse can will their half of the property to anyone else.

Answer 60

Title can be conveyed by one party without the approval of the other party. The answer is title can be conveyed by one party without the approval of the other party. With community property, each spouse has an equal, undivided interest in the property. During their lives, they can convey title only by a deed signed by both parties. One party cannot convey a one-half interest, but the spouse may will their half of the property to anyone they desire. Learning Objective 2.4

Question 61

A married couple could not hold title by which of the following means? Answers: Community property rights Joint tenancy Tenancy in common Title in reservation

Answer 61

Title in reservation Response Feedback: The answer is title in reservation. Title in reservation is a made-up answer. All the other answers are ways a married couple could hold title to real property. Learning Objective 2.4

Question 62

Which of the following is TRUE about community property? Answers: Spouses are considered one entity The married couple are equal partners in the marriage Property acquired by one person during the marriage is separate property Community property laws are federally mandated

Answer 62

The married couple are equal partners in the marriage Response Feedback: The answer is the married couple are equal partners in the marriage. Community property laws are based on the idea that spouses, rather than merging into one entity, are equal partners in the marriage. Under community property laws, any property acquired during a marriage is considered to be obtained by mutual effort. Community property law varies widely among the states. Learning Objective 2.4

Question 63

Which of the following statements about separate property is TRUE? Answers: Any income earned from one person's second occupation is considered separate property. Separate property can only be conveyed with both spouse's signatures. A house gifted by parents to one spouse as a wedding gift could be held separately. All of these are true.

Answer 63

A house gifted by parents to one spouse as a wedding gift could be held separately. Response Feedback: The answer is a house gifted by parents to one spouse as a wedding gift could be held separately. Separate property is real or personal property that was owned solely by either spouse before the marriage, acquired by gift or inheritance during the marriage, or purchased with separate funds during the marriage. Separate property can be mortgaged or conveyed by the owning spouse without the signature of the non-owning spouse. Learning Objective 2.4

Question 64

Which of these statements about community property is FALSE? Answers: In Texas, if a spouse dies without a will and two common heirs, the property will go to the heirs in a trust. Any conveyance requires the signatures of both spouses. Spouses can will their half of the community property. All of these are true.

Answer 64

In Texas, if a spouse dies without a will and two common heirs, the property will go to the heirs in a trust. Response Feedback: The answer is in Texas, if a spouse dies without a will and two common heirs, the property will go to the heirs in a trust. Community property consists of real and personal property acquired by either spouse during the marriage. Any conveyance or encumbrance of community property requires the signatures of both spouses. Spouses can will their half of the community property to whomever they desire, but upon the death of one spouse, the surviving spouse automatically owns one-half of the remaining property. If one spouse dies without a will, the other half is inherited by the surviving spouse or by the decedent's other heirs, depending on state law. In Texas, if one spouse dies without a will and the heirs are common to both spouses (e.g., no stepchildren, etc.), the surviving spouse inherits the decedent's half of the property. If the heirs are not common to both spouses, the decedent's half of the property is split among the decedent's heirs. Learning Objective 2.4

Question 65

A legal arrangement under which the title to real property is held to protect the interests of a beneficiary is a Answers: corporation. trust. limited partnership. general partnership.

Answer 65

trust Response Feedback: The answer is trust. A trust can be formed for almost any reason. A trust is a device by which one person transfers ownership of property to someone else to hold or manage for the benefit of a third party. Learning Objective 2.5

Question 66

A corporation is a legal entity (an artificial person), according to state law. Property owned by the corporation is owned in Answers: trust. partnership. severalty. survivorship tenancy.

Answer 66

A corporation is a legal entity (an artificial person), according to state law. Property owned by the corporation is owned in Response Feedback: The answer is severalty. With severalty, the rights of all others have been severed away and no one else has any interest. Corporations can own property in severalty because they are considered one entity. Learning Objective 2.5

Question 67

An LLC is a form of business organization that combines the most attractive features of Answers: limited partnerships and corporations. joint tenancies and tenancies in common. time-shares and planned unit developments. cooperative and condominium ownership.

Answer 67

limited partnerships and corporations. Response Feedback: The answer is limited partnerships and corporations. The LLC has the individualism of a limited partnership with the protection of a corporation. Many smaller companies are now LLCs for these reasons. Learning Objective 2.5

Question 68

The death of one of the directors of a corporation Answers: does not affect title to property owned by the corporation. formally dissolves the corporation. forces the sale of property owned by the corporation. does none of these.

Answer 68

does not affect title to property owned by the corporation. Response Feedback: The answer is does not affect title to property owned by the corporation. The corporation is a separate entity in itself. Corporations live forever, and the corporation would simply replace the director without any discontinuation of operations. Learning Objective 2.5

Question 69

Which of the following is a legal entity that exists independently of its members? Answers: Limited liability company Partnership Corporation All of these

Answer 69

All of these Response Feedback: The answer is all of these. Business organizations, such as limited liability companies, partnerships, and corporations, are legal entities that exist independently of their members. Ownership by a business organization makes it possible for many people to hold an interest in the same parcel of real estate. Investors may be organized to finance a real estate project in various ways. Some provide for the real estate to be owned by the entity; others provide for direct ownership by the investors. Learning Objective 2.5

Question 70

What type of association allows all the partners the ability to participate in the operation and management of the business? Answers: Corporation Limited partnership General partnership Limited liability company

Answer 70

General partnership Response Feedback: The answer is general partnership. A partnership is an association of two or more persons who carry on a business for profit as co-owners. In a general partnership, all the partners participate in the operation and management of the business and share full liability for business losses and obligations. Learning Objective 2.5

Question 71

What type of business association allows some members to participate in decision making while others are prohibited? Answers: General partnership Limited partnership All partnerships All of these

Answer 71

Limited partnership

Question 72

Which of the following is considered an artificial person? Answers: Severalty LLC Sole proprietorship Corporation

Answer 72

Corporation Response Feedback: The answer is corporation. A corporation is a legal entity "an artificial person" "created under the authority of the laws of the state from which it receives its charter. A corporation is managed and operated by its board of directors. Learning Objective 2.5

Question 73

What sets forth the powers of a corporation? The Answers: charter. declaration. proclamation. state in which the corporation is formed.

Answer 73

charter Response Feedback: The answer is charter. The charter sets forth the powers of the corporation, including its right to buy and sell real estate (based on a resolution by the board of directors). Because the corporation is a legal entity, it can own real estate in severalty or as a tenant in common. Some corporations are permitted by their charters to purchase real estate for any purpose; others are limited to purchasing only the land necessary to fulfill the entities' corporate purposes. Learning Objective 2.5

Question 74

An owner purchased an interest in a beachfront property. The owner is entitled to the right of possession only between July 6 and August 10 of each year. Which of the following is most likely the type of ownership that has been purchased? Answers: Cooperative Condominium Time-share Town house

Answer 74

Time-share Response Feedback: The answer is time-share. A time-share is for a limited time each year. The rest have ownerships for an undeterminable length of time. All have fee simple ownership except for the cooperative. Learning Objective 2.6

Question 75

Which of the following is most likely evidence of ownership in a cooperative? Answers: Tax bill for an individual unit Existence of a reverter clause Shareholder's stock Right of first refusal

Answer 75

Which of the following is most likely evidence of ownership in a cooperative? Response Feedback: The answer is shareholder's stock. The ownership of the stock does not give the owner a fee simple title, but it does allow the owner a proprietary lease to one of the units and a tenancy in common partnership with respect to the common areas. Learning Objective 2.6

Question 76

An ownership interest that is based on annual occupancy intervals is a Answers: leasehold. time-share. condominium. cooperative.

Answer 76

time-share. Response Feedback: The answer is time-share. A time-share has annual occupancy intervals that allow the owner to occupy the property for a certain length of time each year. A leasehold estate can be for more than a year, and it is continuous possession for that length of time. The condominium is ownership forever, as is the cooperative (as long as the owner keeps the stock). Learning Objective 2.6

Question 77

Which of the following laws in Texas govern condominiums? Answers: Uniform Condominium Act Texas Condominium and Townhome Act Combined Ownership Act of Texas Residential Condominium Restrictions Act

Answer 77

Uniform Condominium Act Response Feedback: The answer is Uniform Condominium Act. The condominium form of ownership has become increasingly popular throughout the United States. Condominium laws, often called horizontal property acts, have been enacted in every state (in Texas, this is the Uniform Condominium Act, which is Chapter 82 of the Texas Property Code). Learning Objective 2.6

Question 78

The individual unit owners of a condominium also own a specified share of the undivided interest in the remainder of the building and land called Answers: single units. time-share estate. homeowners' association. common elements.

Answer 78

common elements. Response Feedback: The answer is common elements. Common elements include land, courtyards, lobbies, hallways, the exterior structure, elevators, and the roof. Owners own the common elements as tenants in common, and each has the right to an undivided interest in all of the common areas. Learning Objective 2.6

Question 79

In condominium ownership, the owner of each unit holds Answers: ownership in severalty. tenancy by the entirety. fee simple title. right to partition.

Answer 79

fee simple title. Response Feedback: The answer is fee simple title. Fee simple title is absolute ownership. However, condominium ownership does include a shared interest in the common areas, such as a clubhouse or swimming pool, designated for the entire community. Learning Objective 2.6

Question 80

A woman owns and resides in a condominium. Title to her unit is Answers: single person title. community property. time-share. ownership in severalty.

Answer 80

ownership in severalty. Response Feedback: The answer is ownership in severalty. There is no such thing as single person title. It is not community property because the woman is a single person, so the interest is in severalty. A time-share has annual occupancy intervals that allow the owner to occupy the property for a limited length of time each year. Learning Objective 2.6

Question 81

Which act created the Consumer Financial Protection Bureau (CFPB), an independent agency within the Federal Reserve Board, with oversight authority over many of the major federal financial consumer protection laws? Answers: The Truth in Lending Act (TILA) The Dodd-Frank Act The Mortgage Disclosure Improvement Act (MDIA) The Fair and Accurate Credit Transactions Act

Answer 81

The Dodd-Frank Act Response Feedback: The answer is the Dodd-Frank Act. The Dodd-Frank Act was created in part to address problems that caused the financial crisis in 2008. The CFPB has oversight over RESPA and TILA. Learning Objective 2.7

Question 82

Which act stipulates that if the seller is a foreign person, the buyer must withhold 15% of the sales proceeds and pay that amount to the IRS? Answers: Foreign Investment in Real Property Tax Act (FIRPTA) USA PATRIOT Act Equal Credit Opportunity Act (ECOA) Secure and Fair Enforcement for Mortgage Licensing Act

Answer 82

Foreign Investment in Real Property Tax Act (FIRPTA) Response Feedback: The answer is Foreign Investment in Real Property Tax Act (FIRPTA). The buyer may be liable for the tax if the seller is a foreign person and the buyer fails to withhold the tax from the sales proceeds. Learning Objective 2.7

Question 83

Which act requires escrow agents, title companies, and other persons involved in real estate closings and settlements to establish anti-money-laundering policies and procedures? Answers: Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) Fair and Accurate Credit Transactions Act USA PATRIOT Act Foreign Investment in Real Property Tax Act (FIRPTA)

Answer 83

USA PATRIOT Act Response Feedback: The answer is USA PATRIOT Act. The USA PATRIOT Act is an acronym for Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism. The USA PATRIOT Act was passed by Congress as a response to the terrorist attacks of September 11, 2001. Learning Objective 2.7

Question 84

Which of these is authorized to pass rules to interpret, define, and enforce the acts provisions, and includes the authority to promulgate contracts for required use by license holders? Answers: Consumer Financial Protection Bureau (CFPB) Texas Real Estate Commission (TREC) Regulation Z Fair and Accurate Credit Transactions Act

Answer 84

Texas Real Estate Commission (TREC) Response Feedback: The answer is Texas Real Estate Commission (TREC). The rules of the Texas Real Estate Commission may be amended by the Commission and are subject to review by the legislature. Learning Objective 2.7

Question 84

Which act is administered by the CFPB and was designed to expand consumer access to credit, enhance the accuracy of consumers financial information, and help fight identity theft? Answers: Fair and Accurate Credit Transactions Act Truth in Lending Act (TILA) Regulation Z Real Estate Settlement Procedures Act (RESPA)

Answer 84

Fair and Accurate Credit Transactions Act Response Feedback: The answer is Fair and Accurate Credit Transactions Act. TILA, Regulation Z, and RESPA are all administered by the CFPB but have different purposes. Learning Objective 2.7

Question 85

Which act prohibits lenders from discriminating against credit applicants? Answers: Fair and Accurate Credit Transactions Act Equal Credit Opportunity Act (ECOA) Mortgage Disclosure Improvement Act of 2008 (MDIA) USA PATRIOT Act

Answer 85

Equal Credit Opportunity Act (ECOA) Response Feedback: The answer is Equal Credit Opportunity Act (ECOA). Administered by the CFPB, ECOA prohibits lenders and others who grant or arrange credit to consumers from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant is of legal age), or dependence on public assistance. Learning Objective 2.7

Question 86

Which act requires that a licensed or certified appraiser perform any appraisal used in connection with a federally related transaction of $250,000 and above? Answers: Texas Appraiser Licensing and Certification Act Secure and Fair Enforcement for Mortgage Licensing Act Uniform Standards of Professional Appraisal Practice Act (USPAP) Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)

Answer 86

Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) Response Feedback: The answer is Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA). Federally related transactions are real estate financial transactions that require the services of an appraiser and ones in which a federal financial institution, regulatory agency, or secondary market participant engages. Learning Objective 2.7

Question 87

Which EPA-approved pamphlet must sellers and landlords provide to prospective buyers or tenants? Answers: Protect Your Family from Lead in Your Home Federal Lead Disclosure The Dangers of Lead How to Detect Lead in Your Home

Answer 87

Protect Your Family from Lead in Your Home Response Feedback: The answer is Protect Your Family from Lead in Your Home. License holders may use the TREC Addendum for Sellerâ s Disclosure of Information on Lead-Based Paint and Lead-Based Paint Hazards as Required by Federal Law, Form No. OP-L, to provide the required disclosures. However, a copy of the pamphlet is also required. Learning Objective 2.7

Question 88

Which of these sets forth the procedures to be followed in developing an appraisal and the manner in which an appraisal is communicated? Answers: Texas Appraiser Licensing and Certification Board (TALCB) Uniform Standards of Professional Appraisal Practice (USPAP) Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) Texas Security-Freeze Law

Answer 88

Uniform Standards of Professional Appraisal Practice (USPAP) Response Feedback: The answer is Uniform Standards of Professional Appraisal Practice (USPAP). All appraisers must adhere to the USPAP. Learning Objective 2.7

Question 89

Which of these is an example of a bilateral contract? Answers: Option to purchase Open listing agreement Independent contractor agreement All of these

Answer 89

Independent contractor agreement Response Feedback: The answer is independent contractor agreement. An independent contractor agreement is a bilateral agreement that clarifies the relationship between a sales agent and a sponsoring broker; the parties exchange promises regarding their respective duties and obligations. Learning Objective 3.1

Question 90

A license holder uses a TREC-promulgated residential contract to create a contract for deed. Which statement is TRUE? Answers: The license holder is following the proper legal procedure for creating a contract for deed. The license holder will have a valid contract for deed, but the buyer may not like the format. The license holder is at risk for criminal prosecution. The license holder is at risk of having his license suspended or revoked for engaging in the unauthorized practice of law.

Answer 90

The license holder is at risk of having his license suspended or revoked for engaging in the unauthorized practice of law. Response Feedback: The answer is the license holder is at risk of having his license suspended or revoked for engaging in the unauthorized practice of law. In 2005 and subsequent legislative sessions, the Texas Legislature placed several statutory disclosure and recording requirements on executory contracts for which closing and delivery of a deed will occur more than 180 days after the execution (signing by both parties) of the contract to give more protection to purchasers. Executory contracts under this definition include contracts for deed, lease-purchase, or lease-option transactions. The Texas Real Estate Commission does not promulgate contract forms for these types of transactions. Learning Objective 3.1

Question 91

A legally enforceable agreement under which two parties promise to do something for each other is classified as Answers: an escrow agreement. a bilateral contract. a legal pledge. an option agreement.

Answer 91

a bilateral contract. Response Feedback: The answer is a bilateral contract. A contract is bilateral if both parties to the agreement promise to do something in exchange for the other's promise to do something. Learning Objective 3.1

Question 92

When the parties agree to terms and show their intentions in words, whether orally or written, the agreement is said to be Answers: an executed contract. a unilateral contract. an express contract. a voidable contract.

Answer 92

an express contract. Response Feedback: The answer is an express contract. In an express contract, the parties state the terms and show their intentions in wordsâ "oral or written. Most real estate contracts are express contracts; they have been committed to writing. Under the statute of frauds, certain types of contracts must be in writing to be enforceable in a court of law. Learning Objective 3.1

Question 93

A contract is said to be implied if the Answers: seller signs a listing agreement. buyer signs a buyer representation agreement. prospective buyers sign an Information About Brokerage Services disclosure. agreement of the parties is demonstrated by their acts and conduct.

Answer 93

agreement of the parties is demonstrated by their acts and conduct. Response Feedback: The answer is agreement of the parties is demonstrated by their acts and conduct. In an implied contract, the agreement of the parties is demonstrated by their acts and conduct. For example, when someone enters a restaurant and orders a meal, there is an implied contract that the customer will pay the bill when it comes. Learning Objective 3.1

Question 94

Once a sales contract is completed with all parties fulfilling their promises, the ownership changing hands, and the seller receiving the sales price amount, the sales contract is Answers: a valid contract. an executed contract. an executory contract. a voidable contract.

Answer 94

an executed contract. Response Feedback: The answer is an executed contract. At closing, after the seller has conveyed the property to the buyer and the seller has received the sales price amount, the contract is considered an executed contract. Learning Objective 3.1

Question 95

A seller accepted money from a buyer for his unrestricted right to cancel the purchase transaction (option to terminate) within ten days of the executed date of the sales contract. This agreement is Answers: a bilateral contract. a covenant clause in the sales contract. a unilateral contract. an executory agreement.

Answer 95

a unilateral contract. Response Feedback: The answer is a unilateral contract. This is a one-sided agreement with the seller's promise to sell enticing the buyer to buy his property. The buyer is not legally obligated to act, but the seller is obligated to keep his promise. Learning Objective 3.1

Question 96

A person approaches an owner and says, "I'd like to buy your house." The owner says, "sure," and they agree on a price. What type of contract is this? Answers: Implied Void It is not a contract Unenforceable

Answer 96

Unenforceable Response Feedback: The answer is unenforceable. An oral contract may be valid if all parties continue to agree, but it is not able to be enforced. The statute of frauds requires that real estate contracts be in writing. Learning Objective 3.3

Question 97

When a contract contains all of the essential elements that make it legally sufficient or enforceable and is binding in a court of law, it is Answers: void. valid. absolute. affirmed.

Answer 97

valid. Response Feedback: The answer is valid. A valid contract meets all of the required essential elements (i.e., offer and acceptance, consideration, legal purpose, consent, and legal capacity). Learning Objective 3.3

Question 98

A contract to perform an unlawful act is considered which of the following? Answers: Unilateral Void Voidable Enforceable

Answer 98

Void Response Feedback: The answer is void. A contract must be for a legal act. No one may enter into a legal contract for an illegal purpose. Learning Objective 3.3

Question 99

When a contract lacks one of the essential elements of a legal contract it is Answers: void. valid. deficient. meritless.

Answer 99

void. Response Feedback: The answer is void. A contract that is lacking in one or more of the essential elements is void and has no legal force or effect. A contract that is void was never a legal contract. Learning Objective 3.3

Question 100

When a contract appears to be valid but may be rescinded or disaffirmed by one or both parties based on some legal principle, it is Answers: enforceable. unperformable. valid. voidable.

Answer 100

voidable. Response Feedback: The answer is voidable. A contract with a minor, for example, is voidable. However, a voidable contract is considered by the courts to be valid if the party who has the option to disaffirm the agreement does not do so within a period of time. Learning Objective 3.3

Question 101

When a contract appears to be valid on the surface, but neither party can sue the other to force performance, it is Answers: admissible. tacking. unenforceable. defenseless.

Answer 101

unenforceable Response Feedback: The answer is unenforceable. There is a distinction between a suit to force performance and a suit for damages, which is permissible in an oral agreement. An unenforceable contract is said to be "valid as between the parties." This means that once the agreement is fully executed and both parties are satisfied, neither has reason to initiate a lawsuit to force performance. Learning Objective 3.3

Question 102

A couple starts celebrating the sale of their home after their listing agent calls them with the news that they've received an acceptable offer. The listing agent says he is coming over to get their acceptance and signatures. However, by the time the agent arrives the sellers are completely inebriated. The agent has them sign the contract and then takes it to the title company. This contract is Answers: lacking legal consideration. voidable. void. illegal.

Answer 102

voidable. Response Feedback: The answer is voidable. If a contract was made under duress, with misrepresentation, under the influence, or with intent to defraud, it is voidable. Learning Objective 3.3

Question 103

A contract with a person under duress is Answers: void. voidable. enforceable. valid.

Answer 103

voidable. Response Feedback: The answer is voidable. If a contract was made under duress, with misrepresentation, under the influence, or with intent to defraud, it is voidable. Learning Objective 3.3

Question 104

A contract must meet certain minimum requirements to be considered legally valid. All of the following are essential elements of a valid contract EXCEPT Answers: consideration. legally competent parties. mutual agreement. earnest money.

Answer 104

earnest money. Response Feedback: The answer is earnest money. The essential elements of a valid contract are offer and acceptance, consideration, legally competent parties, mutual agreement, and legal purpose. Earnest money is not required for a valid contract. Learning Objective 3.2

Question 105

Which of the following is required for a valid contract? Answers: Standard real estate commission agreement Title policy Consideration Survey

Answer 105

Consideration Response Feedback: The answer is consideration. Consideration is something of legal value offered by one party and accepted by another as an inducement to perform or to refrain from performing some act. Anything that has been bargained for and exchanged is legally sufficient to satisfy the requirement for consideration. Learning Objective 3.2

Question 106

A valid legal contract must have Answers: legally competent parties. earnest money. consent of at least one of the parties. acceptable offer.

Answer 106

legally competent parties. Response Feedback: The answer is legally competent parties. The parties must be of legal age and have enough mental capacity to understand the nature or consequences of their actions in the contract. Learning Objective 3.2

Question 107

Which of the following is necessary for a valid legal contract? Answers: Government acceptance Legal purpose Statutory approval A Texas Real Estate Commission form

Answer 107

Legal purpose Response Feedback: The answer is legal purpose. A contract for an illegal purpose or an act against public policies is not a valid contract. Learning Objective 3.2

Question 108

A contract that complies with all the basic requirements may still be voidable. To be valid, the contract must have Answers: one essential element. title approval. mutual agreement. underwriter approval.

Answer 108

mutual agreement. Response Feedback: The answer is mutual agreement. A contract must be entered into by mutual agreement. It means that there must be a â meeting of the mindsâ ; that is, there must be complete agreement between the parties about the purpose and terms of the contract. Learning Objective 3.2

Question 109

A real estate listing agent receives an offer on one of his listings; the seller agrees to the offer and signs the sales contract. The contract is Answers: an executed contract. not enforceable. valid. an executory contract.

Answer 109

not enforceable. Response Feedback: The answer is not enforceable. An acceptance is a promise by the offeree to be bound by the exact terms proposed by the offeror. The acceptance, however, must be communicated to the offeror before it becomes a valid enforceable contract. Learning Objective 3.2

Question 110

When a seller proposes a deviation from the terms of an offer, the seller is considered to be Answers: rejecting the offer. revoking the offer. claiming the offer as a backup. making a counteroffer.

Answer 110

making a counteroffer. Response Feedback: The answer is making a counteroffer. The rejection of an offer with a proposal of a deviation from the terms of the offer is called a counteroffer. Learning Objective 3.2

Question 111

A revocation is when Answers: an offeror revokes their offer before acceptance by the offeree. an offeree revokes their offer. a seller has accepted an offer and revokes it for a better offer. an offeree revokes the offer after acceptance.

Answer 111

an offeror revokes their offer before acceptance by the offeree. Response Feedback: The answer is an offeror revokes their offer before acceptance by the offeree. A revocation is a rejection by the offeror of an offer before it is accepted by the offeree. An example is if a buyer gives a seller three days to accept an offer, and on the third day the buyer's broker calls the seller's broker and cancels the offer. At that point, the offer is void. Learning Objective 3.2

Question 112

The essential elements of a contract include all of the following EXCEPT Answers: offer and acceptance. earnest money. competent parties. consideration.

Answer 112

earnest money. Response Feedback: The answer is earnest money. To be legally valid, a contract does not require earnest money. Consideration can be the mutual exchange of promises. Learning Objective 3.2

Question 113

Which of the following is an example of a unilateral contract? Answers: Open listing agreement Exclusive right to sell listing One to four residential contract Residential lease

Answer 113

Open listing agreement Response Feedback: The answer is open listing agreement. An open listing agreement is an offer by the property owner to compensate the first agent that produces a buyer; the agent makes no promises. Learning Objective 3.1

Question 114

Which of the following is considered an executory contract? Answers: A contract for deed A lease-option contract A lease-purchase contract All of these

Answer 114

All of these Response Feedback: The answer is all of these. Under subchapter D, chapter 5 of the Texas Property Code an executory contract for which closing and delivery of the deed will occur more than 180 days after both parties sign the contract include contracts for deed, lease-purchase, and lease-option transactions. Learning Objective 3.1

Question 115

A potential buyer offers to purchase the sellers' real property for $10,000 less than the listed price on a TREC-promulgated One to Four Residential Contract. The seller responds by signing the contract and transmitting it to the buyer's agent. What is the seller's response called? Answers: Acceptance Counteroffer Repudiation Validation

Answer 115

Acceptance Response Feedback: The answer is acceptance. An acceptance is a promise by the offeree to be bound by the exact terms proposed by the offeror. Learning Objective 3.3