CHAMPIONS SCHOOL OF REAL ESTATE SALESPERSON NATIONAL PREP EXAM 1 WITH ANSWERS

CHAMPIONS SCHOOL OF REAL ESTATE SALESPERSON NATIONAL PREP EXAM 1 WITH ANSWERSCHAMPIONS SCHOOL OF REAL ESTATE SALESPERSON NATIONAL PREP EXAM 1 WITH ANSWERS i. John owns the dominant estate with an easement appurtenant. John sells the property. What happens to the easement? a. A commercial tenant's lease will expire at the end of the month. It is terminated by the sale. b. It belongs to the buyer. c. (Its ownership must be negotiated outside the sale. d. John retains ownership of the easement. Appurtenant ­ In real property law, this describes any right or restriction that goes with that property, such as an easement to gain access across the neighbor's parcel, or a covenant (agreement) against blocking the neighbor's view. ii. A broker has a one­on­one relationship with a client. This is an example of: a. brokerage. b. agency. c. independent contractor status. d. a partnership. iii. When a broker sponsors a license holder, the license holder usually remains an independent contractor. If a broker moves an independent contractor to employee status, the broker MUST: a. pay payroll taxes for the license holder. b. require the license holder to make a full­time commitment. c. provide automobile liability insurance for the license holder. d. pay for the license holder's board and MLS fees. iv. Which of the following statements about general partners is FALSE? a. General partners are involved in running the partnership on a daily basis. b. General partners have unlimited liability for the debts of the partnership. c. General partners have liability that will not exceed their initial investment. d. General partners are part owners of the partnership. General partners have general duties (run the day to day operations) and general liability which may exceed their initial investment. v. A type of business ownership where the member or manager is not generally held liable for the debts, obligations or liabilities of the company is a(n): a. sole proprietorship. b. Limited Liability Company. c. Sub­Chapter S Corporation. d. partnership. LLCs are a good way to set up a partnership/corporation to limit a manager's personal liability for the debts of the company. vi. A young couple wants to purchase a home and take title so that if one spouse dies, the other immediately becomes the sole owner of the property. They ask their agent how to do this. The agent should: a. tell them to talk to an attorney about title concerns. b. tell them to take title as Tenants in Common. c. tell them to take title as Joint Tenants. d. tell them to take title as Tenants by the Entirety. Speaking to an attorney about legal matters (like how to take title) is a good idea. An attorney will advise the client on the legal consequences of taking title as tenancy in common or joint tenancy/tenancy by the entirety. vii. A buyer has a contract with a due diligence clause in it. If the buyer is not satisfied with the results of inspections on the property, the due diligence clause: a. allows the buyer to address his concerns with the seller. b. allows the buyer to terminate the contract during the due diligence period. c. allows the buyer to sue the seller to make repairs. d. allows the buyer to sue the seller for misrepresentation of property condition. viii. When should an agent advise a client to see an attorney? a. after all the paperwork has been filled out and signed. b. before viewing any properties. c. at the time that the agency agreement is negotiated. d. before the client signs anything he/she does not understand. ix. An investment property owner wants to do a 1031 tax deferred exchange. He contacts a license holder about it and asks for advice. The agent does not have any experience with this type of transaction. The agent should: a. advise the owner to talk to a commercial broker. b. tell the owner that he can handle this, and then get some advice from his broker. c. tell the owner the he is not experienced in this and advise the owner to talk to a Certified Public Accountant. d. agree to represent the owner, and then read up on 1031 exchanges. • A court order directing the county sheriff to seize and sell property of a debtor to satisfy a lien is: a. An injunction b. A writ of execution c. A lis pendens d. A judgment A writ of execution is used to enforce payment of a lien. An injunction is a court order to stop a behavior or practice, a Lis Pendins is a legal notice that a lawsuit has been filed but not yet heard in court and a judgment is a general lien on a property. • Which of the following would not terminate an easement? a. Merger b. Acquiring the adjacent property c. Prescription d. Abandonment Prescription is a way to create an easement by constant use of a property without permission for the required number of years. Merger and acquiring the adjacent property are the same. Both combine 2 or more properties and eliminate any easement. Abandonment also terminates an easement • Marcos and Roberto are brothers. They inherited the family farm as joint tenants upon the death of their father. Roberto sold his interest in the farm to their cousin Carlos. What type of ownership do Marcos and Carlos have? a. Tenancy by the entirety b. Tenancy at will c. Tenancy in severalty d. Tenancy in common • Mark and Bob are joint tenants in an investment property. One wants to sell, the other does not. How can this be settled? a. Partition b. Accession c. Recission d. Defeasance • Which of the following would not be an example of police power? a. Zoning b. Building codes c. Deed restrictions d. Regulation of coastal properties, floodplains, and wetlands Deed restrictions are private controls of land use rather than government controls. Police power gives the government the right to regulate and control land use through zoning and building codes, and to regulate special land areas like coastal property, floodplains and wetlands. • In discussing property taxes, which of the following statements would be false? a. Property taxes are an automatic lien on real property b. Property taxes are a general lien c. Property taxes are paid first at foreclosure d. Property taxes are based on the assessed value and the tax rate • John has waterfront property along the river and the right to use that water. What kind of rights does he have? a. Littoral rights b. Prior appropriation c. Accession d. Riparian rights • John owns a bar and restaurant on the corner of Broad St. The neighborhood is rezoned to category R­1(Residential Single­Family only). What does John have to do in order to keep his business at that location? a. Apply for a non­conforming use permit b. Nothing c. Apply for a variance d. John cannot keep his business at that location John does not have to do anything. Because he developed his property legally, when zoning is changed his property is automatically grandfathered as a non conforming use. The non­conforming use is permanent and he will be able to keep his business at that location. This use doesn't require a variance which is permission to violate the rules • Which of the following statements about foreclosure is false? a. Notice must be received by the borrower 21 days before the sale b. Notice must be mailed to the borrower 21 days before the foreclosure sale c. Notice must be posted at the door of the county courthouse d. Notice must be filed in the county clerk's office There is no requirement that the borrower receive the notice of foreclosure, only that the lender sends it 21 days before the foreclosure sale. The notice must be posted at the door of the county courthouse and filed in the county clerk's office. • The standard policy of title insurance: a. Protects the seller b. Protects the lender c. Protects the buyer d. Protects the listing broker • Which of the following is NOT covered by the standard title insurance policy? a. Defects missed by the title company in the search process b. Illegal acts of guardians, trustees or attorneys c. Survey or boundary problems d. Human error in copying or recording • What is the main disadvantage to a lender who chooses to accept deed in lieu of foreclosure? a. It takes longer than foreclosure b. The lender must accept responsibility for subordinate liens on the property c. It is more expensive for the lender than foreclosure d. It is more complicated than foreclosure which results in loss of time and money for the lender • A residential single­family home neighborhood was never fully built out. The developer has sold a tract of land in the middle of the subdivision to a group of investors who plan to build an industrial park on the land. The result of this will be many new jobs for the area. Based on appraisal principles what will happen to the value of the homes in the immediate vicinity of the industrial park? a. The industrial park will not affect the value of the homes b. The value of the homes will increase c. The value of the homes will decrease d. Appraisal principles do not address this type of situation or construction The value of the homes will decrease due to the presence of the industrial park. The principle of conformity addresses this situation. Properties have maximum value when they are surrounded by similar properties. • What is the distance between the lot line and the building line called? a. A setback b. Gross area c. Plottage d. Progression • A house has an unpopular floorplan. This is an example of: a. Physical deterioration b. Economic obsolescence c. Functional obsolescence d. Regression • A house is located in a subdivision that is six miles from the nearest elementary school. A new school will be opening in the subdivision for the coming school year. Listing agents in the area have started to raise list prices on homes in the neighborhood based on this fact. Which principle of appraisal are the agents applying? a. Anticipation b. Change c. Substitution d. Highest and best use x. A commercial tenant's lease will expire at the end of this month. He is currently in the process of removing his display cases from the shop. What is true? a. He is not permitted to do that. b. He must negotiate with the owner if he wants the fixtures. c. He can take these trade fixtures as long as he removes them prior to lease end. d. He can only take them if he pays for them. xi. John, Maria and Mark are joint tenants. Mark dies. Maria sells her share to Jane. John and Jane are: a. joint tenants. b. tenants by partition. c. sole owners. d. tenants in common. A partition to tenants in common is the only way to divide interest out of joint tenancy and sell to a third party. Nothing can be sold out of joint tenancy. There is no such thing as tenants by partition. There is more than one owner so it can't be sole owner(s). Also John and Jane do not have the unity of time or title, which is a requirement of Joint Tenancy. xii. Mark's fence is trespassing on John's land. This is an example of: a. an encroachment. b. a lien. c. an appurtenance. d. a prescriptive easement. xiii. John owns lakefront property. He has been granted water rights to the lake. He has: a. riparian rights. b. appropriative rights. c. littoral rights. d. prior appropriation. Water rights to lakes or oceans are called littoral rights in states that allow private ownership of navigable waters. Riparian rights are for rivers, creeks or streams. Appropriative rights relate to the use of water from all sources. Prior Appropriation Theory refers to first in time is first in right to use the water. xiv. A surveyor has described a property from a point of beginning 200 feet north on Broad St. from the oak tree at the intersection of Main St. and Broad St., then 90° east for 100 ft., then 90° north for 50 ft., then 90° west for 100 ft., then 90° south for 50 feet back to the point of beginning. What type of description is this? a. Government Survey System b. Metes and Bounds c. Monuments d. Lot, block and subdivision plot xv. Mary's parents gave her a life estate. John is the remainderman. Mary leased the property to Bob for 5 years. During the lease, Bob died. What happens to the property? a. When the tenant dies the property goes to John. b. When the tenant dies the property goes to Mary's parents. c. When the tenant dies the property goes to Mary's heirs. d. When the tenant dies the property goes to Mary. xvi. A property owner has defaulted on his mortgage and the lender has sent a notice of foreclosure. Before the foreclosure sale the owner is able to pay all he owes and reclaim the property. This is an example of: a. voluntary deed. b. redemption. c. accession. d. deed in lieu of foreclosure. xvii. The local government has changed property use from commercial to R­1 (single­family residential) in your neighborhood. This is an example of the right of: a. police power. b. eminent domain. c. taxation. d. escheat. xviii. Joe received payment from his title insurance company to compensate him for a defect in his title. Subsequently he was awarded a judgment against the seller, and collected the funds from the seller, to compensate him for the same defect. The title company has claimed the right to a refund from Joe. What clause in the title policy allows the title company to make this claim? a. subordination. b. arbitration. c. subrogation. d. defeasance. The "No Double Dipping" clause in a title insurance policy that the title company to go after the party that caused a title defect and collect the equivalent of any monies paid out to the policy holder. Subordination refers to a clause in a loan wherein the lender has a lower than first lien position. Defeasance means able to be defeated and arbitration is a dispute resolution process. xix. A buyer who wants to be sure he is getting good title to a property should rely on: a. an attorney's opinion of title. b. a title insurance policy. c. a general warranty deed. d. a title commitment based on the abstract of title from the title company. The general warranty deed protects you back to the sovereignty of the soil and is the best type of deed. Answers a, b and d all contain exceptions to coverage. xx. At closing a seller learns that he has an unsatisfied M&M Lien on his property. This is most likely the result of: a. property taxes. b. a fence that was built on the property, but not paid for. c. an IRS claim. d. a home improvement loan. A contractor's labor or materials not paid for are the reason for an M&M lien. M&M liens do not involve taxes or a loan. xxi. An appraiser requires a property to have four characteristics to have value: a. delivery, utility, security and transferability. b. demand, urgency, security and title. c. demand, utility, scarcity and transferability. d. durability, utility, scarcity and title. xxii. An appraiser has valued a single­family rental property in a neighborhood where almost all the homes are leased. What approach did he most likely use to determine the value for this property? a. the income approach b. the cost approach c. the sales comparison approach d. the GRM If the property produces income, use the income approach. The cost approach is for unique properties with no income or comps. The sales comparison approach is for residential properties with comps. The GRM is simply a tool with the income approach. xxiii. An older home has been updated for technology to eliminate what type of depreciation? a. physical deterioration b. economic obsolescence c. functional obsolescence d. external obsolescence xxiv. Using the market data approach, determine property value for a seller's 3 bedroom, 2­car garage home. There are two comparable home sales. The first has 4 bedrooms, a 2­car garage and sold for $300,000. The second has 3 bedrooms, a 1­car garage and sold for $285,000. A single garage has an estimated value of $5,000. A single bedroom has an estimated value of $10,000. The value is: a. $290,000.00 b. $295,000.00 c. $285,000.00 d. $292,500.00 xxv. Which of the following situations would require an appraisal? a. A seller wants to be sure to price his home competitively. b. A buyer wants to make a fair offer on a listed property. c. A parent wishes to gift a property to a child. d. A court­ordered partition is dividing a joint tenancy. Appraisals are required on any action involving the courts. For the other choices, a CMA would be sufficient. xxvi. A commercial property leases for $7,500/ month when fully occupied. Monthly operating expenses are $2,780. The property manager earns 8% of monthly rent. In March, one unit was vacant; rent for that unit is $725. How much did the property manager earn in March? a. $600.00 b. $166.80 c. $542.00 (7,500­725)*.08=$542 d. $283.20 xxvii. An investor has purchased a property that is giving him a 10% rate of return. Potential gross rents total $10,000.00 a month. Expenses for the property total $47,570.00 per year. The property has a vacancy rate of 8%. What is the market value of the property? a. $628,300.00 b. $724,300.00 c. $722,020.00 d. $664,258.00 $10,000 x 12 = $120,000 gross rent $120,000 x .92 (occupancy rate) = $104,000 $104,000 ­ $47,570 = $62,830 $62,830/.10(ror) = $628,300 xxviii. A party inherits a property. He wants to sell it quickly, as he wants the cash. He contacts a broker to list the property for $300,000. The broker knows that homes in that neighborhood are selling for $325,000 and more. What should the broker do? a. Take a net listing on the property. b. Buy the property himself as an investment or to resell. c. Provide the seller with a CMA and encourage the seller to price it correctly. d. List the property for $300,000 as this is what the seller wants. xxix. A broker has listed his own property for sale. Which of the following statements is true? a. The broker must always disclose this dual role. b. The broker must disclose his ownership interest if asked. c. This is called dual agency. d. The broker cannot list his own property as it creates a conflict of interest. xxx. What is true about the duties of all license holders? a. A license holder must treat all parties with honesty and full disclosure of all facts. b. A license holder owes all parties confidentiality and full disclosure. c. A license holder must treat all parties honestly and fairly. d. A license holder must treat all parties equally. xxxi. A buyer has provided confidential information about his income and bank account to his agent. The agent has forwarded this information to the listing agent. The listing agent has disclosed details to his seller client. Who is liable for violation of the duties of agency? a. The listing agent and the buyer's agent. b. The buyer's agent and broker. c. The listing agent and broker, and the buyer's agent and broker. d. The buyer's agent only. xxxii. A seller has received and accepted an offer on his property with a closing date of November 15th, time is of the essence. Two days before closing, the seller notifies the buyer that he will be unable to close on the required date, but will be able to close 2 days later if the buyer agrees. At that point this contract is: a. void. b. valid but unenforceable. c. voidable at the option of the buyer. d. invalid. xxxiii. A buyer's written offer was presented to a seller. The seller sent a written counteroffer to the buyer. The counteroffer expires at 5 pm on Friday. Which of the following is true? a. The seller may withdraw any time before the buyer accepts the counteroffer. b. The seller may withdraw the counteroffer until 5 pm on Friday. c. The seller may withdraw any time before closing. d. The seller may not withdraw before 5 pm on Friday. xxxiv. An agent's commercial listing is under contract. The closing date has been set and all contingencies have been met. The agent learns that government improvements in the area will have a big impact on the property value. The agent should: a. advise the seller to terminate the contract. b. disclose the information to the seller and continue with the sale. c. keep the information to himself. d. disclose the information to his broker and let the broker handle everything. xxxv. A contract that is signed but not yet carried out is: a. void. b. executory. c. fully executed. d. invalid. xxxvi. A buyer wants the right to purchase a property during the next two months at a negotiated price and terms. What type of agreement should he enter into with the seller? a. An option contract. b. A sales contract. c. A contract for deed. d. An implied contract. xxxvii. Which of the following creates a general agency relationship? a. A listing agreement. b. A buyer representation agreement. c. A management agreement. d. A sales contract. xxxviii. Which of the following statements about a bilateral contract is false? a. It is an exchange of promises. b. It is binding on both parties. c. It requires strict performance on the date specified. d. Both parties can be sued. xxxix. Which of the following best defines or describes a counteroffer? a. A rejection of the offer and the presentation of a new offer in response. b. When a seller accepts some of the terms of an offer and changes others. c. When a party makes a simple inquiry as to whether the offeror would be willing to change the terms of an offer. d. A partial acceptance of an offer. xl. When does a buyer's offer become a binding contract? a. When the buyer signs it. b. When it is delivered to the seller. c. When all negotiations are complete and both parties agree. d. When it is accepted and the acceptance is communicated. xli. Which of the following is false about a Buyer Representation Agreement? a. The agreement can be open­ended. b. The agreement commits the buyer's broker to protecting the buyer's interests at all points in the transaction. c. Compensation issues should be addressed in the agreement. d. Services provided to the buyer should be clearly stated in the agreement. xlii. A property where there has been a murder is referred to as: a. undesirable. b. condemned. c. red­flagged. d. stigmatized. xliii. A sales license holder markets her listing as being the most beautifully decorated home in the subdivision. This is an example of: a. misrepresentation. b. fraud. c. deceptive advertising. d. puffing. xliv. Which of the following statements about lead and the lead disclosure is FALSE? a. The disclosure allows the buyer to waive the right to a lead inspection. b. The disclosure must be provided for all properties built before 1978. c. All lead must be removed or remediated before the property can be sold. d. Lead is found in paint, pipes and soil. All known hazards must be DISCLOSED but do not have to be REMOVED. The other answers are true and found in the Lead Based Paint Disclosure. xlv. A popular method of dealing with an asbestos problem on a property is: a. mitigation. b. condemnation. c. assessment. d. encapsulation. xlvi. Which of the following actions would NOT be advisable for a real estate license holder trying to avoid liability with environmental issues? a. Becoming familiar with common problems in the area. b. Asking the seller about contamination. c. Performing basic tests for hazardous materials. d. Recommending inspections and disclosing all know hazards. xlvii. A seller was unaware of the presence of asbestos on his property. The buyer's inspection has found that asbestos is present. Which of the following statements is true? a. There is no duty for the seller to perform asbestos abatement. b. Asbestos removal is not considered hazardous, therefore, the seller can simply remove it before closing. c. The removal of asbestos is called remediation. d. As a result of EPA rulings, the presence of asbestos on a property automatically voids the sale. Hazards only must be disclosed not removed. Asbestos abatement is extremely hazardous and the presence of asbestos does not automatically void the sale. xlviii. CERCLA is under the administration of: a. HUD b. The Consumer Financial Protection Bureau c. The EPA (Environmental Protection Agency) d. The FTC EPA – The Environmental Protection Agency is charged with administering all environmental laws in the US. In addition to the laws mentioned above, the EPA administers CERCLA – the Comprehensive Environmental Response, Compensation and Liability Act that was passed in 1980, and created the Superfund to help pay for the cleanup of hazardous spills and waste. CERCLA sets guidelines for the cleanup of hazardous waste and spills. Past and present property owners are liable for cleanup. Anyone who contributed to the problem must share the cost of cleanup. xlix. A buyer tells his agent that he is concerned about the possible presence of radon on a property. The best response for the agent is: a. Tell the buyer he only has to worry about radon if he smokes. b. Tell the buyer to have an inspection. c. Tell the buyer there is no need to worry, because if radon were present they would be able to smell it. d. Tell the buyer not to purchase the property in question if he has radon concerns about it. l. A seller's disclosure is used in many states. Which of the following statements about the disclosure is FALSE? a. The license holder should never fill out the seller's disclosure. b. A seller's disclosure is not required if the property has been leased and the owner, who lives out of state, has not occupied the property for many years. c. A broker can be held liable for misrepresentation of material fact on the seller's disclosure if the misrepresentation could have been detected by visual inspection. d. The accuracy of the seller's disclosure is the responsibility of the seller. li. A broker has purchased General Liability Insurance for his company. This policy will protect the company assets if: a. An agent and client are involved in an automobile accident and both are injured. b. A client is injured while viewing properties. c. A client is injured on company property. d. The broker is found guilty of false advertising of properties for sale. Errors and Omissions Insurance ­ E&O – insurance protects both broker and sales licensees from a legal claim or liability for mistakes, errors, and negligence in usual listing and selling activities. It does not provide protection for fraud, punitive damages or the personal/non business actions of license holders. General Liability Insurance ­ liability risks may include bodily injury or property damage caused by direct or indirect actions of the insured. General Liability Insurance protects a company’s assets if someone is injured on company property. lii. A license holder has just taken a class in marketing on social media. She is very excited about the idea and has decided to market her listings this way. She has joined Facebook and Twitter, intending to use them as advertising media. Which of the following statements about advertising on social media is FALSE? a. The license holder does not need written permission from her clients to advertise their properties on social media. b. All advertising on social media must comply with Fair Housing and TILA rules. c. Puffing in advertising is permitted. d. Exaggerated puffing, which leads to misrepresentation, is not permitted. liii. What does the Uniform Electronic Transactions Act guarantee in court? a. Electronic signatures are always the legal equivalent of handwritten signatures. b. Electronic signatures will always be upheld if all parties agreed to their use. c. Electronic signatures are only valid for international transactions. d. Electronic signatures are not permitted for real estate transactions. Electronic signatures are valid and enforceable as long as all parties agree to their use. liv. The optional 10­year builder warranty covers new construction. Which of the following would not be covered by this warranty? a. the air conditioning units. b. the improper installation of the hot water heater. c. a defective roof that leaks after the first rain storm. d. doors that will not close because the framing is crooked. The Residential Service Contract is a one year warranty on built­in appliances and does not cover structural items or improper installation of items. lv. A sales agent has been working residential sales for 5 years. He has decided he wants to move to industrial sales. What should he do to become competent? a. Advertise himself as available for industrial sales. b. Read a book about industrial property and then advertise his services. c. Take a course about industrial marketing. d. Align himself with and work with an industrial property specialist to learn the business. lvi. Home Owner Warranty insurance on existing homes provides protection for buyers for: a. 1 year. b. as long as they own the home. c. 10 years. d. 5 years. lvii. The Civil Rights Act of 1866 prohibits discrimination based on: a. National Origin. b. Color. c. Religion. d. Age. lviii. If a discrimination complaint is filed w/ HUD regarding a license holder, what will HUD do? a. HUD will file suit against the agent seeking civil penalties. b. HUD will file a suit against the agent seeking criminal penalties. c. HUD will revoke the real estate license of any person accused of discrimination. d. HUD will fine the license holder $55,000 for the first violation. lix. A sales agent in your office has been farming a neighborhood and counseling sellers to sell now. He is mentioning the relocation to this area of a large number of immigrants. He is suggesting that property values may begin to fall. He is practicing: a. Channeling b. Good marketing technique. c. Steering. d. Blockbusting. lx. Which of the following advertisements would be in violation of the Federal Fair Housing Act of 1968 as it was amended in 1988? a. Apartment for rent: no soldiers. b. Apartment for rent: no homosexuals. c. Apartment for rent: no single parents with children. d. Apartment for rent: no migrant workers. Civil Rights Act of 1968, forbids discrimination on the basis of race, color, national origin, and religion. A 1974 amendment added sex as a protected category. Sexual orientation is not a protected category. This act was amended in 1988 to include family composition and the handicapped, and that amendment was enforceable in 1989. (Family composition may be referred to as familial status.) lxi. A property sells after the listing expires. The broker may be entitled to a commission if: a. the property is now listed with another broker, but it is sold during the protection period. b. the property is now FSBO and is sold to a buyer procured by the seller during the protection period. c. the property is now listed with another broker, but it is sold to a buyer procured during the first listing period. d. the property is now a FSBO and is sold during the protection period to a buyer procured by the listing broker. lxii. Which of the following would be a violation of the Sherman Anti­Trust Act? a. A broker assigning market areas to the sales agents he sponsors. b. An MLS service requiring a minimum commission rate for listings it accepts. c. A broker setting a commission rate for his business. d. A broker discussing commission rates with a sales agent he sponsors. lxiii. A senior apartment complex has more than 80% of the units occupied by someone 55 years old or older. There is a vacant apartment. Can they refuse to lease it to a single mother with a child? a. No. b. As long as they advertise "adults only". c. Yes. d. Only if her income is too low to meet their requirements. lxiv. Which of the following closings would be regulated by RESPA? a. an apartment building. b. a co­op. c. a retail outlet. d. a condominium. RESPA, the Real Estate Settlement Procedures Act, mandates certain disclosures in connection with the real estate settlement process so home purchasers can make informed decisions regarding their real estate transactions. Residential only. lxv. Two brokers are discussing commissions at a social function with the intention of setting a rate for their market. After the function, they never act on their conversation. What is true? a. They have done nothing wrong in having this discussion. b. The discussion is a violation of Anti­Trust law. c. They should not have had the discussion, but since they never acted upon it, there is no violation. d. The discussion is pointless as all license holders charge the same rate, set by the local Board of Realtors®. lxvi. The Smiths purchased their home for $200,000 with an LTV of 80%. They have repaid $27,000 of their original loan amount. They have just sold the home for $229,000. What is their equity at closing? a. $56,000.00 b. $69,000.00 c. $96,000.00 (200,000*.8=160,000, 160,000­27,000=133,000, 229,000­ 133,000=96,000) d. $65,000.00 lxvii. In many instances a lender will require a buyer to purchase PMI when financing the purchase of a home. What does PMI do? a. Insures the total loan amount. b. Insures the lender's exposure of risk, usually the top 25­30% of the loan amount. c. Pays off the loan in the event of the death of one of the property owners. d. Ensures the lender will receive the entire balance due at a foreclosure sale, regardless of the price of the property at that foreclosure sale. lxviii. Which of the following can be used to protect a lender from loss of interest income? a. discount points. b. a buy down. c. a prepayment penalty. d. origination points. Guarantees the investors a set number of years of interest. Discount points are used when buying down a mortgage, essentially paying the lender up front for a part of their interest. Origination points are the lender's commission. lxix. A borrower is aware that interest rates are set to be lowered in the next few months. He wants to purchase property now. What type of loan should he get to allow him to take advantage of lower rates in the future? a. a budget mortgage. b. a sub­prime loan. c. a blanket mortgage with a release clause. d. an ARM. lxx. When does the vendee receive the deed in Contract for Deed financing? a. When he moves into the property. b. After he makes the final loan payment. c. When the contract is signed by both the vendor and vendee. d. After he places a vendee's lien on the property. The vendee is the borrower in a contract for deed and receives the deed when the final payment is made to the vendor. lxxi. Where would you find PMI? a. On an FHA insured loan. b. On secondary financing. c. On any unsecured loan. d. On a high LTV conventional loan. lxxii. A lot is sold for $100,000 with a 90% LTV. The seller has agreed to pay three discount points and an origination point for the buyer at closing. How much will the seller owe at closing? a. $2,700.00 b. $4,000.00 c. $3,600.00 d. $3,000.00 lxxiii. What type of loan does a borrower have if the monthly payment includes principal, interest, 1/12th of the annual property taxes and 1/12th of the annual homeowner insurance premium? a. a package mortgage. b. a budget mortgage. This type of loan budgets for your taxes and insurance and is called a PITI loan. c. a participation loan. d. a sub­prime loan. lxxiv. An increase in interest rates will: a. cause the demand for rental property to go down. b. have no effect on the demand for rental property. c. cause the demand for rentals to rise. d. cause rent rates to fall. If no one can afford to buy, more people will have to rent. lxxv. An agreement allowing a tenant to match or better any purchase offer the landlord receives before the property will be sold to another is called: a. a lease with an option to buy. b. a right of first refusal agreement c. an option contract. d. a rescission agreement. lxxvi. A new tenant has moved into a retail property. The landlord is convinced the new business will thrive in this location. What lease agreement can the landlord negotiate that would be most favorable to the landlord in this case? a. a graduated lease b. a net lease. c. a percentage lease d. a gross lease lxxvii. In a property manager's quarterly report to the owner, which of the following would be considered an operating expense? a. mortgage payments/debt reduction. b. capital improvements c. depreciation. d. property maintenance/repainting This is a monthly operating expense in a quarterly report. The other expenses are capital expense items. lxxviii. When a landlord allows the property to become so run­down that the tenants are forced to leave, this is called: a. constructive eviction. b. action of forcible detainer. c. alienation. d. termination. lxxix. A broker has accepted a buyer's deposit check and placed one half of the deposit in the escrow account and the other half in his operating account. He has used the funds in the operating account to pay his office expenses. The broker is guilty of: a. commingling. b. conversion. c. fraud. d. embezzlement. When the broker spends a client's funds this is conversion. Commingling is putting it in the wrong account. Fraud and embezzlement are criminal and civil offenses that must be proven in court. lxxx. When a licensee is also a principal to the transaction, he must disclose this dual role: a. only if the other agent asks about it. b. only if the license holder does not have E&O insurance. c. even if the license holder only has an economic interest in the property. d. only if a relative of the license holder ever lived in the property. • A license holder has been asked to prepare a CMA on a single­family home for a prospective client. Which of the following facts will be most important to the license holder when choosing comparables? a. The assessed value of the comparable property b. The total value of all liens on the comparable property c. The depreciated value of the comparable property d. The date of sale of the comparable property The date of sale of the comparable will be significant. The best comparables will have sold in the past six months or less. Assessed value and market value are often dramatically different, and liens and depreciation have nothing to do with market value. • A commercial property has potential gross rents of $20,000 per month and an occupancy rate of 80%. The expenses per year are $60,000 and the market value is $1,100,000. What is the owner's rate of return? a. 8% b. 10% c. 12% (20,000*12)*.8)­$60,000= X/1,100,000 d. 14% • An appraiser has been asked to value a single­family home. The home has two bathrooms and a fireplace. He has found two comparable properties in the neighborhood. The first comparable has 2­1/2 bathrooms and a fireplace and sold for $180,000. The second has two bathrooms and no fireplace and sold for $175,000. The appraiser has determined that a ½ bath is worth $2,000 and a fireplace is worth $3,000. What is the appraised value of the subject property? a. $178,000 b. $175,000 c. $179,000 d. $180,000 • A broker has entered into an agency relationship by securing a listing on a seller's property. As an agent the broker must: a. Arrange financing for qualified buyers b. Manage the listed property c. Account for any funds received in connection with the property d. Accept any offer for at least list price An agent must always account for any funds received in connection with the property of his client. A listing agent is not a property manager, or a loan officer and he does not have the authority to accept offers. All offers must be presented to the seller for the seller to decide • When should a license holder advise a client to have a contract examined by an attorney? a. Before a client signs a document he/she does not understand b. At first substantive dialogue with a client c. Prior to closing on a property d. Never, as it is a waste of time and money and that is not in the client's best interest • A listing agent and an unlicensed assistant were driving to a seller's home to present an offer on the property. They were involved in an accident and the license holder was taken to the hospital. What must the unlicensed assistant do? a. Deliver and explain the offer to the seller b. Deliver the offer to the seller without any explanation of the offer c. Return the offer to the broker d. Wait for instructions from the listing agent • A residential property has been listed under an exclusive right to sell listing agreement with ABC Realty. The sellers have confided to the listing broker that they would like a quick sale as they are in the process of getting a divorce. The listing broker tells a buyer­customer to put in a low offer because the sellers are anxious to sell. The buyer offers 15% below list price and the sellers accept the offer. What is true? a. The broker has violated the confidentiality of the seller, but since the sellers accepted the offer, the broker's actions are not considered unethical or improper b. The broker has violated his agency relationship with the seller c. Encouraging bidding is an effective marketing technique d. The broker's actions were in the sellers' best interests as they resulted in a quick sale • Mary is a sales agent at ABC Realty. She is sponsored by her broker, John. Mary sells 123 Main St., a property listed by XYZ Real Estate, to her buyer­ client Jim. The broker at XYZ Real Estate is Marcos. The transaction goes to closing, and the commission is paid by the seller. What is true? a. Mary can receive her part of the commission from her buyer­client b. Mary can receive her part of the commission from XYZ Real Estate c. Mary can receive her part of the commission from ABC Realty d. Mary can receive her part of the commission from the seller • The law requiring that real estate contracts be in writing to be enforceable is: a. The Statute of Frauds b. The Statute of Limitations c. The Law of Agency d. The Sherman Anti­Trust Act • When does an offer to purchase real property become a sales contract? a. When it is signed by the buyer b. When it is signed and acceptance is communicated c. When it is signed by the seller d. When the last party signs • Two brothers have inherited the family farm. The brothers are 19 and 16 years old. The 19 year old does not want the property and deeds his share to the 16 year old. The 16 year old sells the property. At this point the sales contract is: a. Void b. Voidable c. Terminated d. Unenforceable • A buyer has defaulted on a sales contract. The seller has agreed to keep the earnest money deposit as compensation. What remedy has the seller agreed to? a. Liquidated damages b. Partial performance c. Suit for specific performance d. Money damages • A listing agreement is: a. A bilateral contract b. Terminated by the death of the listing agent c. An employment contract d. A conveyance The listing agreement employs the broker to try to find a buyer for the seller. If the broker sells the property, then the seller will pay a commission. This is a unilateral contract. It is terminated by the death of the broker, or the seller, not the death of the salesperson. • At what age is an individual considered to have contractual ability? a. 25 b. 21 c. 18 d. 19 • What real estate contract is an exception to the Statute of Frauds? a. A lease for one year or less b. An option contract c. A listing contract d. A buyer representation agreement • A sales agent has negotiated a listing with a commission rate of 5.5% with 3% going to the selling broker and 2.5% going to the listing broker. The property sells for $365,000. The listing sales agent receives 60% of her broker's commission. How much does the listing sales agent receive? a. $9,125 b. $10,950 c. $6,570 d. $5,475 • A sales license holder has negotiated a listing agreement with a seller. This agreement establishes an agency relationship between: a. the broker and the seller b. the seller and any prospective buyers c. the seller and the actual buyer d. the seller and the sales license holder • A license holder who advertises a listed property as having "the most beautiful view of the city" is probably: a. Liable for damages if sued by the buyer b. Guilty of fraud c. Guilty of misrepresentation d. Puffing • A law requiring all states to release information to the public regarding convicted sex offenders when necessary to protect public safety is: a. CERCLA b. Federal Interstate Land Sales Full Disclosure Act c. Environment Protection Act d. Megan's Law • A property is found to have asbestos on site. What is true? a. Asbestos must be remediated by the seller b. Asbestos must be removed by the seller c. Encapsulation of the asbestos containing materials can be used to solve the problem d. Property must be tented in order to remove asbestos safely • Many states require a seller's disclosure of property condition. Which statement about a seller's disclosure is FALSE? a. A broker is responsible for discovering and disclosing all problems in areas accessible for visual inspection b. A broker's role is to encourage honesty and full disclosure by the seller c. A broker is not liable for hidden defects not disclosed by the seller d. Both the broker and the seller are responsible for the accuracy of the disclosure form The seller is responsible for the accuracy of the disclosure. The broker is responsible for discovering and disclosing all problems in areas accessible for visual inspection. His role with the disclosure is to encourage honesty and full disclosure. The broker is not liable for hidden defects not disclosed by the seller. • Which of the following statements about radon is false? a. Radon is colorless and odorless b. HUD does not require radon testing for FHA loans c. Radon is only harmful to individuals who smoke or have lung disease d. Radon enters homes through their foundations • A seller tells the listing agent that the home has 3400 sq. ft. The listing agent should: a. Use tax records or appraiser's numbers to confirm the size b. Rely on the information provided by the seller c. Confirm the information with the broker d. Avoid mentioning size in the listing • Which of the following situations or conditions regarding a property should never be disclosed? a. Murder on the property b. The property is alleged to be haunted c. A previous owner died from HIV/Aids d. A structural problem on the property resulted in a death on the property • A license holder is showing a property with a pond. He notices iridescence on the surface of the pond and is concerned about the possible causes. What should the license holder do? a. Advise the buyer to look for another property b. Mention his concerns about the pond and tell the buyer to seek expert advice c. Recommend that the buyer have inspections on the property, but not mention his concerns d. Ignore the issue, because he does not know for sure if it is a problem and he does not want to be sued by the seller • A buyer's inspection report on a property shows the presence of asbestos on the property. Which of the following statements about asbestos is FALSE? a. The asbestos abatement plan outlines the control of asbestos on a property b. The owner of the property must remove the asbestos c. Methods of abatement include encapsulation d. The dust from the removal of asbestos is extremely hazardous • A property owner who wants to be protected in the event that an individual is injured on his property should purchase: a. Errors and Omissions Insurance b. Health and Safety Insurance c. General Liability Insurance d. A homeowner warranty • A Builder Warranty for new construction would not cover: a. A new dishwasher b. Defects in materials c. Faulty workmanship d. Structural problems • In order to advertise your client's property on social media, you need: a. Access to the owner's Facebook page b. Written permission from the owner c. Access to the owner's Twitter account d. Verbal permission from the owner • Electronic signatures are the equivalent of handwritten signatures: a. If both the buyer and seller agree to their use b. If the listing agent is willing to use them c. Never d. If both the listing broker and selling broker agree to their use • A sales license holder has worked in residential real estate for five years. He has decided to move to industrial sales. He should: a. Pursue industrial listings and learn from experience b. Advertise himself as an industrial broker to obtain clients c. Visit some industrial properties and provide the property owners with his business card d. Join a firm with a broker who specializes in industrial property and work with that broker to learn the business and develop competency • Homeowner's insurance will NOT protect property from: a. flood b. fire c. vandalism d. storms A homeowner’s policy will protect the property from damage due to a variety of reasons, including but not limited to fire, storms, smoke, vandalism and other perils. • All of the following are penalties for violation of the Federal Fair Housing Act except: a. Fines b. Up to one year in jail c. Injunctions d. Assessment of attorney fees Violation of Fair Housing Laws is a civil offense. Criminal penalties (jail) are not used. Fines, injuntions and assessment of attorney fees are all possible penalties. • Mary, an unlicensed individual, owns a three­family property. She lives in one unit and rents out the other two. She chooses to discriminate when selecting her tenants. As long as the services of a broker are not involved and she does not discriminate in her advertising, she can discriminate for any reason except: a. Color/Race b. Age c. Religion d. Sex • The required employment of qualified applicants regardless of disability is a result: a. Equal Opportunity Employment Act b. Title VIII c. The Civil Rights Act of 1866 d. The ADA The Americans with Disabilities Act, the ADA, requires the employment of qualified applicants regardless of disability. There is no Equal Opportunity Employment act. Title VIII is the Civil Rights Act of 1968. Civil Rights acts do not address employment. • A physically handicapped tenant has modified an apartment to meet his needs at his own expense. His lease is almost up and he plans to move. The landlord wants the apartment restored to its original condition. What is true? a. The tenant has no responsibility to restore the apartment b. The tenant must restore the apartment at the landlord's expense c. The tenant must restore the apartment at his own expense d. The tenant only has to restore structural changes that might impair the rights of other tenants A handicapped tenant who has modified an apartment to meet his needs must restore the apartment if the landlord requires that, at the tenant's own expense. • An apartment complex is advertising for new tenants. Which of the following statements in advertising would violate Fair Housing Laws? a. No drugs b. No students c. No alcohol d. No alcoholics Alcoholics are considered to be handicapped, and therefore advertising no alcoholics would violate the law. • Persuading a property owner to sell by stating that minorities are moving into the area is called: a. Steering b. Panic peddling c. Channeling d. Marketing • John owns a residential rental property. He has leased an apartment to a visually impaired tenant who has a guide dog. John's usual lease agreement has a "no pets policy" clause. What is true in this situation? a. John does not have to allow the tenant to keep the guide dog in the apartment b. John must allow the tenant to keep the dog if the tenant provides a court order to that effect c. John must allow the tenant to keep the guide dog d. John must allow the tenant to keep the guide dog if the tenant can provide written proof that he needs the dog A landlord must allow a visually impaired tenant with a guide dog to keep that dog in the apartment. The tenant does not have to provide written proof that he needs the dog. • A sales license holder is working with a minority couple to find a home for them. The license holder is only showing the buyers homes in minority neighborhoods. The license holder is guilty of: a. Target marketing b. Blockbusting c. Panic peddling d. Steering • A sales license holder has advertised a property. Her ad states that the property is in a family­ oriented neighborhood and can be purchased for $1,100 a month. What is wrong with this advertisement? a. It violates Federal Fair Housing laws b. It violates Federal Fair Housing laws and Truth in Lending c. It violates Truth in Lending and the Equal Credit Opportunity Act d. It violates the Equal Credit Opportunity Act and the Consumer Credit Protection Act • A borrower is aware that interest rates are going down in the near future. He wants to purchase property now, and be able to take advantage of the lower rates in the future. What type of loan should he secure? a. A term loan b. A budget loan c. An ARM d. A fixed rate loan • Which of the following statements about a conforming loan is FALSE? a. It is a standardized conventional loan b. It is not eligible for sale in the secondary market c. It is written on uniform documents that meet the purchase requirements of Fannie Mae and Freddie Mac d. Both the loan amount and borrower characteristics are considered in determining if a loan is conforming or not A conforming loan is one that is eligible to be sold in the secondary market. It is a standardized conventional loan, written on uniform documents ­ the Fannie Mae/Freddie Mac forms. Both the loan amount and the borrower characteristics are considered in determining if a loan is conforming or not. • According to the Equal Credit Opportunity Act, a lender cannot deny credit if the borrower's sole source of income is: a. Alimony b. Child support c. A result of participation in public assistance programs d. A pension plan • In what document would you find the loan amount and an amortization schedule? a. The Deed of Trust b. The lien c. The mortgage d. The note The note is the instrument for the debt and the personal promise to pay that debt. All the details of the loan, including the amortization schedule are found in the note. The Deed of Trust, or mortgage, is the borrower's pledge or real property as security for the note. The lien is created by recording the mortgage. • Which of the following statements about VA loans is false? a. Certain surviving spouses of veterans are eligible for these loans b. Parents of veterans are eligible for VA loans c. A non­veteran can assume an existing VA loan d. To qualify, a veteran must have 181 days of active duty and be honorably discharged Parents and siblings of veterans are not eligible for VA loans. Certain surviving spouses can qualify for a VA loan. You do not have to be a veteran to assume a VA loan. A veteran must have served 181 days of active duty and have been honorably discharged to be eligible for a VA loan. • Which of the following would be least likely to have a negative impact on a person's credit rating? a. Short sale b. Foreclosure c. Assumption subject to d. Straight assumption A straight assumption releases the seller from liability for the loan being assumed by the buyer, therefore, it will not have any impact on a seller's credit rating or score. A short sale can result in a loss of as much as 200 points on a credit score. A foreclosure will have a negative impact for up to seven years. In an assumption subject to, the seller remains liable even though he no longer owns the property, so if the buyer defaults, the lender turns to the seller for payment. If foreclosure results, the seller has a foreclosure on his credit rating even though he sold the property. • A property was purchased for $200,000 with an 80% loan­to­value purchase mortgage. The owner has paid off $53,000 and is now selling the property for $225,000. What is the seller's equity? a. $78,000 b. $47,000 c. $118,000 d. $88,000 • A homebuyer plans to purchase a home using a $200,000 loan with a loan factor of $5.30. The tax and insurance payment on the property is $900 per month. What income does the buyer need to qualify for the loan if lenders are qualifying at 28%? a. $7,500 b. $7,000 c. $8,000 d. $7,750 If lenders are qualifying at 28% that means PITI = 28% of Monthly income. Therefore, PITI/28% = monthly income. Given the loan factor and the loan amount we can calculate the monthly principal and interest payment using the formula: Loan divided by 1000 x factor = Principal and Interest. $200,000/1000 = 200 x $5.30 = $1,060 P&I. We need PITI, so we must add T&I of $900 to our P&I calculation. $1,060 + 900 = $1,960 PITI/28% = $7,000 monthly income required. • A three­year lease on office space would be terminated by: a. Death of the landlord b. Death of the tenant c. Mutual rescission d. Sale of the property • A lease with a specific starting and ending date is called: a. a periodic tenancy b. an estate for years c. an estate at will d. a holdover tenancy A lease with a starting and ending date is called an estate for years. A periodic tenancy automatically renews itself until one party gives notice to terminate. An estate at will is terminated by either party without notice and a holdover tenancy exists when a lease ended, the tenant stayed and is paying rent. Usually this arrangement will be terminated with notice by one party. • A lease has ended and the tenant has refused to leave. He is not paying rent. The tenant's interest in the property at this time is: a. an illegal tenancy b. an estate at will c. a tenancy at sufferance d. a holdover tenancy Because the tenant did not leave when the lease ended, he is a holdover tenant. When a holdover tenant is not paying rent, he is there illegally, but it is not called an illegal tenancy, instead his interest in the property is called tenancy at sufferance. If a holdover tenant pays rent it is called a holdover tenancy. An estate at will does not involve a holdover. It is simply a lease that can be terminated by either party at will without notice. • Constructive eviction is a result of: a. actions of the tenants b. pest infestation c. the presence of noisy neighbors d. actions or inactions of the landlord • The landlord pays the expenses of the property. The tenants pay rent plus utilities. What type of lease is this? a. a net lease b. a percentage lease c. a graduated lease d. a ground lease • Why is commingling illegal? a. To protect the broker from claims by creditors of the clients b. To protect clients' funds from claims by creditors of the broker c. Due to the difficulty of maintaining accurate records of clients' funds d. To prevent a broker from earning interest on client funds Commingling is illegal to protect clients' funds from being seized by a creditor of the broker. The broker must keep accurate written records of all funds held. Funds in the escrow account do not earn interest. • A business organization in which a member or manager is not generally held liable for debts, obligations or liabilities of the company is called: a. a Sole Proprietorship b. a Sub­chapter S Corporation c. an LLC d. a Corporation • Which of the following is NOT required for Independent Contractor status? a. a written agreement between the broker and sales license holder b. the broker must pay taxes for the sales agent c. the sales agent must be paid based on production rather than hours worked d. the sales agent must have a real estate license • A license holder has procured a new listing and has determined that the neighborhood consists of mostly Russian­speaking residents. He has decided to advertise the property on two Russian websites. He is not advertising the property anywhere else. This is a violation of: a. Fair Housing b. Truth in Lending c. The Sherman Anti­trust Act d. RESPA • A license holder sponsored by a broker is: a. a special agent for the broker b. a universal agent for the broker c. a general agent for the broker d. a limited agent for the broker • A broker has placed his own funds with client funds in his trust account. He has then used those funds to pay his office rent. The broker is guilty of: a. commingling b. conversion c. subversion d. misrepresentation • A buyer has had inspections on property and is not pleased with some of the information. He has terminated his contract to buy. His right to do so suggests that his contract had: a. a due diligence clause b. a substitution clause c. a default clause d. an alienation clause • Two buyers have told their agent that they are purchasing a house together. One buyer is paying 60% of the price and the other is paying 40% of the price. They want to know how to take title to the property. The agent should tell them: a. because they have unequal shares, they can only take title as tenants in common b. they should talk to an attorney c. they should form a partnership and buy the property in the name of the partnership d. they should set up a trust • The buyer's agent is working with a couple who have decided on a particular property. They are concerned about the boundaries as it appears the fence from a neighboring property encroaches. The buyer's agent should: a. check the listing to determine if there is an encroachment b. talk to the listing agent to determine if there is an encroachment c. contact the sellers to ask if they are aware of any encroachment d. recommend that the buyers get a survey • A listing agent will always: a. give advice and opinions to the buyer and the seller b. give full disclosure of all facts to both parties c. treat both parties with honesty and fairness d. support and defend the needs of the customer Real Estate Salesperson State Prep Exam 1 (Timed) 1. TREC has the power to order witnesses to appear and/or produce records of documents for its investigations and hearings. This is called subpoena power. If a license holder fails to respond to a subpoena, what can TREC do? (a) TREC can assess an administrative penalty against the license holder for up to $4,000. hearing. fraud. (b) TREC can immediately revoke the license of the license holder without a (c) TREC can file suit with the Attorney General to enforce the subpoena. (d) TREC can file charges of felony against the license holder, based on 2. A license holder in violation of the TRELA has received a summons from TREC that a hearing will be held regarding the possible revocation or suspension of his license. The license holder fails to respond to the summons. What will TREC do? (a) Schedule a hearing in the county court where the license holder practices real estate (b) Schedule a hearing at the TREC office in Austin (c) Schedule a hearing in the district court serving the license holder (d) Schedule a hearing at the main office or business address of the license holder 3. With the knowledge and consent of her broker/employer, an unlicensed assistant is showing property to prospective buyers. What is true about this situation? (a) The broker and unlicensed assistant are both guilty of a third degree felony (b) Both the broker and unlicensed assistant can be fined an administrative penalty of $5,000 per day (c) Only the unlicensed assistant can be fined by TREC for this activity (d) Only the broker can be fined by TREC for this activity 4. TREC has received an application for a Texas Real Estate Sales License from Mary. Mary has completed all her educational requirements, and passed the state exam. At this point TREC will begin the background check. Which of the following statements is FALSE? application (a) TREC has no time limit for determining integrity (b) TREC has 30 days to complete the background check (c) TREC has 30 days to notify Mary of a decision to disapprove her (d) Mary has 10 days to appeal a denial of her application 5. Marcos was a Texas licensed Real Estate Sales agent for some time. He then chose to become inactive and TREC has been holding his license in inactive status. He now wishes to activate the license. What will he have to d