TREBS Exam 4 Questions with Complete
Solutions
The only provision in the TREC contract for which time is of the essence is the:
A. Loan approval clause of the contract
B. Mandatory Homeowner's Association documents
C. Termination Option section of the contract
D. U.S. Constitution
Rationale: The correct answer is C. The option money paragraph is strictly enforced and must
not be handled loosely, so the language, "Time is of the Essence" is included to let all parties
know this.
If a party to the contract defaults, what option(s) does the non-defaulting have?
A. To terminate the contract and receive the earnest money
B. To enforce specific performance
C. Both A and B
D. Either A or B
Rationale: The correct answer is D. If a party defaults to the contract, in paragraph #15, the most
important word in the paragraph is the OR as the non-defaulting party has the contracted right to
,sue for specific performance OR receive the earnest money as damages and release all parties
from the contract. The OR in the paragraph is why the Either A or B is the correct answer.
If a party to the contract defaults, what option(s) does the non-defaulting have?
A. To terminate the contract and receive the earnest money
B. To enforce specific performance
C. Both A and B
D. Either A or B
Rationale: The correct answer is D. If a party defaults to the contract, in paragraph #15, the most
important word in the paragraph is the OR as the non-defaulting party has the contracted right to
sue for specific performance OR receive the earnest money as damages and release all parties
from the contract. The OR in the paragraph is why the Either A or B is the correct answer.
An agency relationship which is created after the fact when the principle agrees to be bound by
the actions of another person who is acting without authority is called:
A. Agency by ratification
B. Implied agency
C. Expressed oral agency
,D. Expressed written agency
Rationale: The correct answer is A. Agency by ratification often transpires while the owner is
contracting with an agent for a different real estate service. Instead a different type of transaction
occurs which the agent was not originally contracted for, like an agent listing a property for sale
and subsequently writing a lease for the property to be leased instead of sold.
This estate may be terminated at will of either party. It has no duration limitation.
A. Estate at will
B. Estate from period to period
C. Estate for years
D. Freehold estate
Rationale: The correct answer is A. As the question includes the words "at the will" this indicates
the correct answer estate at will which allows for either party to terminate the lease with enough
notice.
With this lease, the tenant pays the taxes, insurance, and maintenance.
A. Gross lease
B. Percentage lease
C. Net lease
, D. Ground lease
Rationale: The correct answer is C. This is a common commercial lease structure and it is known
as the triple net lease if the tenant is paying the taxes, maintenance, and insurance, or can be a
single net lease with only one of the additional costs, double net for two.
Paragraph 13 of the ONE-TO-FOUR FAMILY RESIDENTIAL RESALE CONTRACT
addresses prorations. Which of the following is prorated at closing?
A. Utilities
B. Taxes
C. Escrow fees
D. Title policy
Rationale: The correct answer is B. Paragraph 13 of the 1-4 Family Resale Contract, Prorations,
speaks specifically on taxes, which accrue daily and continue for the calendar year. The seller
will be charged up through the day of closing for their portion which is credited to the buyer,
who will cover the entire cost at the end of the calendar year.
This is a communication that gives the listener the power to conclude a contract.
A. Representation
B. Acceptance
Solutions
The only provision in the TREC contract for which time is of the essence is the:
A. Loan approval clause of the contract
B. Mandatory Homeowner's Association documents
C. Termination Option section of the contract
D. U.S. Constitution
Rationale: The correct answer is C. The option money paragraph is strictly enforced and must
not be handled loosely, so the language, "Time is of the Essence" is included to let all parties
know this.
If a party to the contract defaults, what option(s) does the non-defaulting have?
A. To terminate the contract and receive the earnest money
B. To enforce specific performance
C. Both A and B
D. Either A or B
Rationale: The correct answer is D. If a party defaults to the contract, in paragraph #15, the most
important word in the paragraph is the OR as the non-defaulting party has the contracted right to
,sue for specific performance OR receive the earnest money as damages and release all parties
from the contract. The OR in the paragraph is why the Either A or B is the correct answer.
If a party to the contract defaults, what option(s) does the non-defaulting have?
A. To terminate the contract and receive the earnest money
B. To enforce specific performance
C. Both A and B
D. Either A or B
Rationale: The correct answer is D. If a party defaults to the contract, in paragraph #15, the most
important word in the paragraph is the OR as the non-defaulting party has the contracted right to
sue for specific performance OR receive the earnest money as damages and release all parties
from the contract. The OR in the paragraph is why the Either A or B is the correct answer.
An agency relationship which is created after the fact when the principle agrees to be bound by
the actions of another person who is acting without authority is called:
A. Agency by ratification
B. Implied agency
C. Expressed oral agency
,D. Expressed written agency
Rationale: The correct answer is A. Agency by ratification often transpires while the owner is
contracting with an agent for a different real estate service. Instead a different type of transaction
occurs which the agent was not originally contracted for, like an agent listing a property for sale
and subsequently writing a lease for the property to be leased instead of sold.
This estate may be terminated at will of either party. It has no duration limitation.
A. Estate at will
B. Estate from period to period
C. Estate for years
D. Freehold estate
Rationale: The correct answer is A. As the question includes the words "at the will" this indicates
the correct answer estate at will which allows for either party to terminate the lease with enough
notice.
With this lease, the tenant pays the taxes, insurance, and maintenance.
A. Gross lease
B. Percentage lease
C. Net lease
, D. Ground lease
Rationale: The correct answer is C. This is a common commercial lease structure and it is known
as the triple net lease if the tenant is paying the taxes, maintenance, and insurance, or can be a
single net lease with only one of the additional costs, double net for two.
Paragraph 13 of the ONE-TO-FOUR FAMILY RESIDENTIAL RESALE CONTRACT
addresses prorations. Which of the following is prorated at closing?
A. Utilities
B. Taxes
C. Escrow fees
D. Title policy
Rationale: The correct answer is B. Paragraph 13 of the 1-4 Family Resale Contract, Prorations,
speaks specifically on taxes, which accrue daily and continue for the calendar year. The seller
will be charged up through the day of closing for their portion which is credited to the buyer,
who will cover the entire cost at the end of the calendar year.
This is a communication that gives the listener the power to conclude a contract.
A. Representation
B. Acceptance
