Texas Real Estate Exam Study with Complete Solutions

*Law of Contracts* 1. Which of the following practices could be considered practicing law by a real estate broker for the sale or lease of real property? A. Use of a form prepared by the broker's company B. Use of a form prepared by an attorney C. Use of a form prepared by the property owner D. Use of a form promulgated by TREC - ANSWER-A 2. When a seller and a buyer wish to convey personal property, this is done with a: A. Deed B. Bill of sale C. Deed of Trust D. Nothing is required - ANSWER-B 3. When an offer becomes a contract, which step is not required? A. Signatures of buyer and seller are required B. Both agents must meet to review the contract C. Notice must be delivered to all parties D. All changes to offer must be initialed - ANSWER-B 4. An act or practice which, to a consumer's detriment, takes advantage of the lack of knowledge, ability, experience, or capacity to a grossly unfair degree is called: A. Fraud B. Unauthorized practice of law by the broker C. Conveyance D. Unconscionable action - ANSWER-D 1. Law handed down by the legislature: A. Agency law B. Common law C. TREC D. Statutory law - ANSWER-D 2. The land and all structures manmade: A. Real Property B. Real Estate C. Chattel D. Personal property - ANSWER-B 3. Location of the property: A. Permanence B. Chattel C. Situs D. None of the above - ANSWER-C 4. Which business organizations can own property and transact business in its name? A. Trust B. Partnerships C. Corporations D. Associations - ANSWER-D 5. A form of ownership where the owner receives shares: A. Cooperatives B. Condominiums C. Townhomes D. Time Share - ANSWER-A 1. An agreement created by the actions of the parties involved, but is not written or spoken: A. Unilateral contract B. Bilateral contract C. Implied contract D. Offer and acceptance - ANSWER-C 2. A formal agreement between two parties that may be rendered unenforceable for a number of legal reasons: A. Void contract B. Unenforceable contract C. Voidable contract D. Valid contract - ANSWER-C 3. Examples of this include lack of appraisal, financing, or completed repairs: A. Executed contract B. Void contract C. Unilateral contract D. Executory contract - ANSWER-D 1. Police power, taxation, eminent domain, and escheat are four examples of: A. Physical characteristics of land B. Economic characteristics of land C. Governmental powers D. Estates in land - ANSWER-C 2. What is the degree, nature, quantity, and extent of interest that a person has in real estate called? A. Equitable title B. Estate in land C. Encumbrance D. Consideration - ANSWER-B 3. This is also called a non-freehold estate: A. Tenant estate B. Joint tenant estate C. Leasehold estate D. Statutory estate - ANSWER-C 4. A burden, obstruction, or impediment on property: A. Police power B. Encumbrance C. Statutory estate D. Joint tenant - ANSWER-B 5. An individual who owns mineral rights has the right to enter land that is occupied by another and remove the minerals. A. True B. False - ANSWER-A 1. Which of the following is false when negotiating binding contracts for the sale, lease, exchange, or rental of any interest in real property? A. A real estate agent in Texas must use only contracts promulgated by TAR B. A real estate agent in Texas may create his own contract form when functioning as a principle C. A Texas real estate agent may use a contract form created by an attorney and required by a principle D. A Texas real estate agent may use a form created by an agency of the United States Government - ANSWER-A 2. Which of the following does not terminate a contract? A. Assignment B. Mutual consent C. Completion of purpose D. Default - ANSWER-A 3. Sources of forms available for use by the REALTOR® include which of the following? A. TREC B. TAR C. Lawyers D. All of the above - ANSWER-D 4. The most widely used residential listing form in Texas is: A. Exclusive agency B. Exclusive right to sell C. Exclusive open listing D. Exclusive net listing - ANSWER-B 5. What kind of listing is created when the owner wishes to receive a set amount of money from the sale of the property? A. Exclusive agency listing B. Open listing C. Net listing D. None of the above - ANSWER-C 6. Buyer's agency agreements can be created in which of the following ways? A. Expressed oral agreement B. Implied agency C. Both A & B D. None of the above - ANSWER-C 7. Which statement is true? A. In a lease, the lessor will lease from the lessee. B. In a lease, the lessee will lease from the lessor. C. In a lease, the landlord will lease from the lessor. D. In a lease, the tenant will lease from the lessee. - ANSWER-B 8. A non-freehold estate is the same thing as a leasehold estate. A. True B. False - ANSWER-A 9. This lease has a defined specific beginning and ending date. A. Estate at sufferance B. Estate at will C. Estate from period to period D. Estate for years - ANSWER-D 10. The lease agreement must contain all of the following EXCEPT: A. The amount of the security deposit B. A description of the landlord's maintenance responsibilities C. Any late charge or fee charged for any service or facility D. Landlord's home telephone number - ANSWER-D 11. This type of lease provides that if a tenant achieves a certain amount of gross sales in a given year, a percentage of such gross sales will be paid to the landlord as additional rent. A. Open lease B. Percentage lease C. Net lease D. No such thing exists - ANSWER-B 12. The state of the contract between the execution date and the closing. A. Fully executed contract B. Executed contract C. Option contract D. Executory contract - ANSWER-D 1. The transfer of property from one person to another and the document and/or instrument by which that is effected defines: A. Recording B. Conveyance C. Escrow D. Closing - ANSWER-B 2. The TREC ONE-TO-FOUR RESIDENTIAL RESALE CONTRACT requires the seller to deliver to the buyer at closing: A. Deed of trust B. General Warranty Deed C. Special Warranty Deed D. Quit Claim Deed - ANSWER-B 3. Who is charged with the responsibility of properly recording documents in the county courthouse? A. Escrow officers B. Real estate agents C. Seller D. Buyer - ANSWER-A 4. Which of the following is not required to make the STATUTE OF FRAUDS enforceable? A. The agreement must be in writing B. The agreement must contain a promise or agreement C. The agreement must be recorded at the county D. The agreement must be signed by the person being charged - ANSWER-C 5. A failure to perform. A break. A refusal to honor a promise. A. Fraud B. Deceptive trade C. Default D. Breach - ANSWER-D 1. An uncertain event or chance is: A. Default B. Addendum C. Breach D. Contingency - ANSWER-D 2. A contingency added by sellers to provide a measure of protection against a house sale is a(n): A. Amendment B. Addenda C. Kick-out D. Kick back - ANSWER-C 3. The formal procedure of adding to, subtracting from, modifying, changing, or correcting an existing contract is an: A. Addenda B. Ad Valorem C. Amendment D. Abstract - ANSWER-C 4. A thing added to the offer is an: A. Abstract B. Addenda C. Amendment D. Ad Valorem - ANSWER-B 1. Redlining is prohibited by: A. Regulation Z B. Fair housing act C. Equal credit opportunity act D. Community reinvestment act - ANSWER-D 2. The collateral or property given, deposited, or pledged to ensure the fulfillment of an obligation or payment of debt is: A. Lien B. Debt C. Homestead D. Security - ANSWER-D 3. The legal instrument that secures the payment for the debt is called the _________. A. Mortgage B. Deed C. Deed of trust D. Promissory note - ANSWER-C 4. Which party is not involved on the DEED OF TRUST? A. Mortgagor B. Mortgagee C. Trustor D. Trustee - ANSWER-C 5. The sale of a property where the lender agrees to settle for less than the amount owed on the property is known as: A. Short sale B. Foreclosure C. Acceleration D. Alienation - ANSWER-A 6. A list of lenders and their loan rates to consumers is the: A. CLO B. CEO C. COO D. ECOA - ANSWER-A 1. The evidence of right which a person has to the ownership and possession of land, commonly considered a history of rights, is called: A. Deed B. Deed of trust C. Grant D. Title - ANSWER-D 2. Deeds can be divided into three major categories. Which of the following is NOT one of those categories? A. Warranty deeds B. Deeds without warranty C. Quitclaim deeds D. Deeds with mortgages - ANSWER-D 3. Which deed has language that speaks to the warranty being limited to the grantor and not extended to previous owners? A. Special warranty deed B. General warranty deed C. Deed of trust D. Quitclaim claim deed - ANSWER-A 4. Which is NOT a form of INVOLUNTARY ALIENATION? A. Escheat B. Will C. Adverse possession D. Eminent domain - ANSWER-B 5. The right of the government or its agent to expropriate private property for public use with payment of compensation is called: A. Condemnation B. Foreclosure C. Eminent domain D. Adverse possession - ANSWER-C 6. An instrument conveying real property may not be recorded unless it is signed and acknowledged or sworn to by the: A. Mortgagor B. Mortgagee C. Grantor D. Grantee - ANSWER-C 7. It is NOT possible to transfer title to property in Texas without recording the deed in public records. A. True B. False - ANSWER-B 1. Approval of the loan, the property and the HUD-1 is the responsibility of the: A. Underwriter B. Loan officer C. Escrow officer D. Broker - ANSWER-A 2. Dividing of expenses between the buyer and the seller in proportionate shares is called: A. Prorations B. Assignment C. Allotment D. Conveyance - ANSWER-A 3. The process that brings the note into legal existence is: A. Execution B. Escrow C. Underwriting D. Closing - ANSWER-D 1. Paragraph 6 of the ONE-TO-FOUR RESIDENTIAL RESALE contract talks about the survey. In order to fully comply with this paragraph, the buyer must provide both the survey and the T47. A. True B. False - ANSWER-B *Promulgated Contract Forms* 1. Essential elements of a contract include: A. Competent parties B. Offer and acceptance C. Consideration D. All of the above - ANSWER-D 2. A contract must include all of these items except: A. Legal Description B. Sales Price C. Names of parties D. Type of loan - ANSWER-D 3. If a Seller counters a Buyer's offer, it is considered a rejection. A. True B. False - ANSWER-A 4. It is considered illegal for a contract to include any discriminatory provisions. A. True B. False - ANSWER-A 5. The biggest majority of lawsuits come from the issue of: A. Fixtures vs. personal items that convey with the property B. Misunderstandings between brokers C. Non-disclosure D. Repair items - ANSWER-C 6. You can give legal advice to a buyer or seller if you understand all the facts. A. True B. False - ANSWER-B 7. A Seller, age 30, enters into a contract with a Buyer, age 17. The contract is: A. Valid for both parties B. Void for both parties C. Voidable by the buyer D. None of the above. - ANSWER-C 8. A bilateral contract is: A. A promise in exchange for a promise B. A promise made only by the agent C. A promise made only be the seller D. No promises - ANSWER-A 9. A unilateral contract only binds one party to perform. A. True B. False - ANSWER-A 10. The clause in a contract stating that "time is of the essence" would indicate: A. The contract must be finalized immediately B. The contract must include the time of day the contract was executed C. Strict performance of a certain act within the time stated in the contract D. Monetary penalties will be incurred if the provisions are not met by certain times - ANSWER-C 11. If there is no time limit specified in an offer, then the time limit will expire: A. In 30 days B. As stated by the Broker C. As determined by the Seller D. Within a reasonable time - ANSWER-D 1. An agent must provide the Information About Brokerage Services (IBS) notice at the time of the first substantive dialogue with the party to the transaction for all of the following EXCEPT: A. selling or leasing a commercial property B. functioning as a tenant representative C. leasing a residential property for a term of two years D. leasing a residential property for a term of six months - ANSWER-D 2. An agent must provide Information About Brokerage Services even if the party is already under contract to purchase the property. A. True B. False - ANSWER-B 3. An agent is required by law to cover the agency relationships described in the Information About Brokerage Services. A. True B. False - ANSWER-A 4. An Agent must represent someone in a transaction. Therefore, if they do not represent the Buyer or Tenant through an expressed agreement, they are, by default, representing the Owner. A. True B. False - ANSWER-A 5. Which one of the following, with written consent, may act as an Intermediary? A. The Broker representing the seller and buyer B. The Broker cooperating with the listing broker C. The salesman working with the seller and buyer D. The salesman sponsored by a broker representing the seller - ANSWER-A 6. For a Broker to act as Intermediary in a transaction, it requires written consent from only one of the parties. A. True B. False - ANSWER-B 1. An expressed agency cannot be orally agreed but must be in writing. A. True B. False - ANSWER-B 2. Implied agency is created by the actions of the agent. A. True