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Champions Principles of Real Estate 2 Actual
Exam 2026/2027: Questions and All Correct
Answers | 100% Solved and Guaranteed Success
for Licensing – Pass Guaranteed - A+ Graded
SECTION 1: Real Estate Contracts (12 questions)
Q1: Which element is NOT required for a valid real estate contract under Texas law?
A. Offer and acceptance
B. Consideration
C. Written form (for contracts involving real estate)
D. Notarization of all signatures
Correct Answer: D
Rationale: While real estate contracts must be in writing to satisfy the Statute of Frauds (Texas
Business and Commerce Code §26.01), notarization is not a legal requirement for contract
validity. Notarization is only required for documents to be recorded (deeds, mortgages). Essential
elements include: offer/acceptance (A), consideration (B), competent parties, legality of object,
and written form (C). [CORRECT]
Q2: A buyer submits an offer on a property using the TREC One to Four Family Residential
Contract (Resale). The seller makes a counter-offer changing the closing date and purchase price.
What is the legal status of the original offer?
A. The original offer remains open for acceptance
B. The original offer is automatically rejected and terminated by the counter-offer
C. The original offer is suspended for 48 hours
D. The buyer must accept the counter-offer
Correct Answer: B
Rationale: Under contract law, a counter-offer acts as a rejection of the original offer and
terminates it. The original offer cannot be accepted once a counter-offer is made (unless the
counter-offer is rejected and original offer specifically revived). The counter-offer creates a new
power of acceptance in the original offeror (buyer). [CORRECT]
,2
Q3: Under the TREC Third Party Financing Addendum, if the buyer cannot obtain credit
approval within the time specified, what is the buyer's remedy?
A. The buyer automatically loses the earnest money
B. The buyer may terminate the contract and receive a full refund of earnest money if notice is
given within the time specified
C. The buyer must proceed with cash purchase
D. The buyer has no recourse and must forfeit all deposits
Correct Answer: B
Rationale: The TREC Third Party Financing Addendum (Paragraph 2) provides that if buyer
gives written notice within the specified time period that they cannot obtain credit approval after
making good faith effort, the contract terminates and earnest money is refunded. This is a
financing contingency protecting buyers. Failure to give timely notice waives the right to
terminate. [CORRECT]
Q4: Which contract classification describes a contract where both parties have made promises to
perform (e.g., seller promises to convey title, buyer promises to pay purchase price)?
A. Unilateral contract
B. Bilateral contract
C. Executed contract
D. Implied contract
Correct Answer: B
Rationale: A bilateral contract involves mutual promises—both parties are obligated to perform.
Most real estate purchase contracts are bilateral. A unilateral contract (A) involves one party
making a promise in exchange for the other party's performance (e.g., option contract—optionor
promises to sell if optionee exercises and pays). Executed (C) means fully performed. Implied
(D) arises from conduct. [CORRECT]
Q5: A seller accepts a buyer's offer but mistakenly believes the purchase price is $10,000 higher
than stated in the contract. The seller later discovers the error and wants to avoid the contract.
What defense might the seller assert?
A. Specific performance
B. Mutual mistake or unilateral mistake (if buyer knew or should have known of error)
C. Liquidated damages
D. Assignment
, 3
Correct Answer: B
Rationale: A unilateral mistake (one party mistaken) generally does not void a contract unless
the non-mistaken party knew or should have known of the mistake, or the mistake is material and
enforcement would be unconscionable. If both parties were mistaken about a material fact
(mutual mistake), the contract may be voidable. Specific performance (A) is a remedy, not
defense. Liquidated damages (C) is a remedy for breach. [CORRECT]
Q6: Which TREC-promulgated contract form should be used for the purchase of an existing
single-family residence?
A. New Home Contract (Incomplete Construction)
B. One to Four Family Residential Contract (Resale)
C. Unimproved Property Contract
D. Farm and Ranch Contract
Correct Answer: B
Rationale: The One to Four Family Residential Contract (Resale) is the standard TREC form for
existing residential properties (1-4 units). New Home Contract (A) is for new construction.
Unimproved Property (C) is for vacant land. Farm and Ranch (D) is for agricultural properties
with specific provisions for minerals, crops, and livestock. Using wrong forms can create
liability. [CORRECT]
Q7: Under the TREC One to Four Family Residential Contract, when is the option fee typically
paid?
A. At closing
B. Within 3 days after the effective date of the contract
C. Within 10 days after the effective date
D. Only if the buyer terminates
Correct Answer: B
Rationale: Paragraph 23 of the TREC contract requires the option fee to be paid within 3 days
after the effective date of the contract. If not timely paid, seller may terminate. The option period
gives buyer unrestricted right to terminate for any reason (typically used for inspections). The fee
is credited to sales price if transaction closes, but seller retains it if buyer terminates.
[CORRECT]
Q8: A buyer provides $5,000 earnest money and $500 option fee. The buyer properly terminates
during the option period. What happens to these funds?
Champions Principles of Real Estate 2 Actual
Exam 2026/2027: Questions and All Correct
Answers | 100% Solved and Guaranteed Success
for Licensing – Pass Guaranteed - A+ Graded
SECTION 1: Real Estate Contracts (12 questions)
Q1: Which element is NOT required for a valid real estate contract under Texas law?
A. Offer and acceptance
B. Consideration
C. Written form (for contracts involving real estate)
D. Notarization of all signatures
Correct Answer: D
Rationale: While real estate contracts must be in writing to satisfy the Statute of Frauds (Texas
Business and Commerce Code §26.01), notarization is not a legal requirement for contract
validity. Notarization is only required for documents to be recorded (deeds, mortgages). Essential
elements include: offer/acceptance (A), consideration (B), competent parties, legality of object,
and written form (C). [CORRECT]
Q2: A buyer submits an offer on a property using the TREC One to Four Family Residential
Contract (Resale). The seller makes a counter-offer changing the closing date and purchase price.
What is the legal status of the original offer?
A. The original offer remains open for acceptance
B. The original offer is automatically rejected and terminated by the counter-offer
C. The original offer is suspended for 48 hours
D. The buyer must accept the counter-offer
Correct Answer: B
Rationale: Under contract law, a counter-offer acts as a rejection of the original offer and
terminates it. The original offer cannot be accepted once a counter-offer is made (unless the
counter-offer is rejected and original offer specifically revived). The counter-offer creates a new
power of acceptance in the original offeror (buyer). [CORRECT]
,2
Q3: Under the TREC Third Party Financing Addendum, if the buyer cannot obtain credit
approval within the time specified, what is the buyer's remedy?
A. The buyer automatically loses the earnest money
B. The buyer may terminate the contract and receive a full refund of earnest money if notice is
given within the time specified
C. The buyer must proceed with cash purchase
D. The buyer has no recourse and must forfeit all deposits
Correct Answer: B
Rationale: The TREC Third Party Financing Addendum (Paragraph 2) provides that if buyer
gives written notice within the specified time period that they cannot obtain credit approval after
making good faith effort, the contract terminates and earnest money is refunded. This is a
financing contingency protecting buyers. Failure to give timely notice waives the right to
terminate. [CORRECT]
Q4: Which contract classification describes a contract where both parties have made promises to
perform (e.g., seller promises to convey title, buyer promises to pay purchase price)?
A. Unilateral contract
B. Bilateral contract
C. Executed contract
D. Implied contract
Correct Answer: B
Rationale: A bilateral contract involves mutual promises—both parties are obligated to perform.
Most real estate purchase contracts are bilateral. A unilateral contract (A) involves one party
making a promise in exchange for the other party's performance (e.g., option contract—optionor
promises to sell if optionee exercises and pays). Executed (C) means fully performed. Implied
(D) arises from conduct. [CORRECT]
Q5: A seller accepts a buyer's offer but mistakenly believes the purchase price is $10,000 higher
than stated in the contract. The seller later discovers the error and wants to avoid the contract.
What defense might the seller assert?
A. Specific performance
B. Mutual mistake or unilateral mistake (if buyer knew or should have known of error)
C. Liquidated damages
D. Assignment
, 3
Correct Answer: B
Rationale: A unilateral mistake (one party mistaken) generally does not void a contract unless
the non-mistaken party knew or should have known of the mistake, or the mistake is material and
enforcement would be unconscionable. If both parties were mistaken about a material fact
(mutual mistake), the contract may be voidable. Specific performance (A) is a remedy, not
defense. Liquidated damages (C) is a remedy for breach. [CORRECT]
Q6: Which TREC-promulgated contract form should be used for the purchase of an existing
single-family residence?
A. New Home Contract (Incomplete Construction)
B. One to Four Family Residential Contract (Resale)
C. Unimproved Property Contract
D. Farm and Ranch Contract
Correct Answer: B
Rationale: The One to Four Family Residential Contract (Resale) is the standard TREC form for
existing residential properties (1-4 units). New Home Contract (A) is for new construction.
Unimproved Property (C) is for vacant land. Farm and Ranch (D) is for agricultural properties
with specific provisions for minerals, crops, and livestock. Using wrong forms can create
liability. [CORRECT]
Q7: Under the TREC One to Four Family Residential Contract, when is the option fee typically
paid?
A. At closing
B. Within 3 days after the effective date of the contract
C. Within 10 days after the effective date
D. Only if the buyer terminates
Correct Answer: B
Rationale: Paragraph 23 of the TREC contract requires the option fee to be paid within 3 days
after the effective date of the contract. If not timely paid, seller may terminate. The option period
gives buyer unrestricted right to terminate for any reason (typically used for inspections). The fee
is credited to sales price if transaction closes, but seller retains it if buyer terminates.
[CORRECT]
Q8: A buyer provides $5,000 earnest money and $500 option fee. The buyer properly terminates
during the option period. What happens to these funds?
