Principles of Real Estate 1 Final Exam
Why have the states passed laws that require real estate brokers and sales agents
to be licensed? - Answer- To protect the public
What year was the TRELA passed? - Answer- 1949
What is the potential fine for acting as a sales agent or broker in Texas without a
license? - Answer- $4,000
Who may be a Realtor®? - Answer- A real estate license holder who joins a local
board of Realtors
What are the 7 sources of law? - Answer- 1. US Constitution
2. Federal Laws
3. Federal regulations
4. State Constitutions
5. State Laws & Regulations
6. Local Ordinances
7. Court Decisions
Is a license to practice real estate in Texas valid in other states, and vice versa? -
Answer- No
What is the common law? - Answer- Historical body of custom and legal precedent
True or False: The legal concept of precedent grew out of statutory law - Answer-
False
What are the features of community property in Texas? - Answer- Property acquired
during marriage , other than gifts of inheritances, belong equally to married parties.
Names 3 types of single family residences. - Answer- 1. Detached single-family
2. Town homes
3. Condominiums
Define the term land. - Answer- Surface of the Earth, plus subsurface and air rights
What are improvements? - Answer- personal property attached to the land that
becomes part of the real estate
What is the definition of real property? - Answer- Land, improvements , and legal
rights associated with real estate ownership
The "bundle of legal rights" consist of what? - Answer- Right to :
1. Occupy
2. Use
3. Exclude
, 4. Improve
5. Encumber
6. Etc.
Contrast fructus naturales with fructus industriales. - Answer- Fructus Naturales -
landscaping ( improvement )
Fructus Industriales - personal property ( annual crops )
If a seller of real property does not own the mineral rights can he/she receive lease
royalties from the property? - Answer- No
What is the legal test of a fixture? - Answer- 1. Intent
2. Adaptation
3. Method of Annexation
What is the rule for trade fixtures? - Answer- Remain personal property of tenant,
and must be removed when the lease expires
Factors that influence the demand for real estate include what? - Answer- 1.
Population
2. Demographics
3. Employment and wage levels
How does price differ from cost and value? - Answer- Price - what the buyer will pay
and the seller accepts
Cost - Expense required to make something
Value - measure of the present worth for specific purpose
What is meant by the term area preference? - Answer- Since all parcels of real
estate are unique, different buyers will prefer different parcels
What are the physical and economic characteristics of land? - Answer- Physical-
immobility, indestructability, nonhomogeneity
Economic- scarcity, improvement, area preference, permanence of investment
What is the penalty for a license holder failing to give a buyer the required statutory
title notice? - Answer- License holder cannot collect a commission on the transaction
and may be subject to license suspension or revocation
Tom and Mary have been married for one year. Shortly before they married, Tom
sold his townhouse for $75,000 resulting in a taxable gain of $25,000. Six months
ago, the couple purchased a new home in Dumbdonkey, Texas for $120,000. The
couple has an HO-B insurance policy on their new home. Are they insured for
flooding damage to their home resulting from a leaky pipe in the attic? Are they
covered for flooding damage if a nearby creek overflows due to a storm?How much
of the $25,000 gain could Tom have excluded on the sale of his town house before
they were married?Since Tom used his exclusion with the past two years, how much
gain, if anything, may the couple exclude from income assuming that they sell their 6
month old home this year for $150,000? Assuming they keep this house, what real
estate related deductions may they claim on next year's tax return? Tom finds a
Why have the states passed laws that require real estate brokers and sales agents
to be licensed? - Answer- To protect the public
What year was the TRELA passed? - Answer- 1949
What is the potential fine for acting as a sales agent or broker in Texas without a
license? - Answer- $4,000
Who may be a Realtor®? - Answer- A real estate license holder who joins a local
board of Realtors
What are the 7 sources of law? - Answer- 1. US Constitution
2. Federal Laws
3. Federal regulations
4. State Constitutions
5. State Laws & Regulations
6. Local Ordinances
7. Court Decisions
Is a license to practice real estate in Texas valid in other states, and vice versa? -
Answer- No
What is the common law? - Answer- Historical body of custom and legal precedent
True or False: The legal concept of precedent grew out of statutory law - Answer-
False
What are the features of community property in Texas? - Answer- Property acquired
during marriage , other than gifts of inheritances, belong equally to married parties.
Names 3 types of single family residences. - Answer- 1. Detached single-family
2. Town homes
3. Condominiums
Define the term land. - Answer- Surface of the Earth, plus subsurface and air rights
What are improvements? - Answer- personal property attached to the land that
becomes part of the real estate
What is the definition of real property? - Answer- Land, improvements , and legal
rights associated with real estate ownership
The "bundle of legal rights" consist of what? - Answer- Right to :
1. Occupy
2. Use
3. Exclude
, 4. Improve
5. Encumber
6. Etc.
Contrast fructus naturales with fructus industriales. - Answer- Fructus Naturales -
landscaping ( improvement )
Fructus Industriales - personal property ( annual crops )
If a seller of real property does not own the mineral rights can he/she receive lease
royalties from the property? - Answer- No
What is the legal test of a fixture? - Answer- 1. Intent
2. Adaptation
3. Method of Annexation
What is the rule for trade fixtures? - Answer- Remain personal property of tenant,
and must be removed when the lease expires
Factors that influence the demand for real estate include what? - Answer- 1.
Population
2. Demographics
3. Employment and wage levels
How does price differ from cost and value? - Answer- Price - what the buyer will pay
and the seller accepts
Cost - Expense required to make something
Value - measure of the present worth for specific purpose
What is meant by the term area preference? - Answer- Since all parcels of real
estate are unique, different buyers will prefer different parcels
What are the physical and economic characteristics of land? - Answer- Physical-
immobility, indestructability, nonhomogeneity
Economic- scarcity, improvement, area preference, permanence of investment
What is the penalty for a license holder failing to give a buyer the required statutory
title notice? - Answer- License holder cannot collect a commission on the transaction
and may be subject to license suspension or revocation
Tom and Mary have been married for one year. Shortly before they married, Tom
sold his townhouse for $75,000 resulting in a taxable gain of $25,000. Six months
ago, the couple purchased a new home in Dumbdonkey, Texas for $120,000. The
couple has an HO-B insurance policy on their new home. Are they insured for
flooding damage to their home resulting from a leaky pipe in the attic? Are they
covered for flooding damage if a nearby creek overflows due to a storm?How much
of the $25,000 gain could Tom have excluded on the sale of his town house before
they were married?Since Tom used his exclusion with the past two years, how much
gain, if anything, may the couple exclude from income assuming that they sell their 6
month old home this year for $150,000? Assuming they keep this house, what real
estate related deductions may they claim on next year's tax return? Tom finds a
