TREBS EXAM 4 2025 QUESTIONS AND
ANSWERS
For a sum of money negotiated between the parties, the buyer has a time period, stated in this
paragraph, for the "unrestricted right" to terminate. Which paragraph does this reference? :
A. Sales price paragraph
B. Earnest money paragraph
C. Option money paragraph
D. Repairs escrow paragraph - ANS C. Option money paragraph
With regard to common mistakes on contracts, it is recommended that the seller's name be
used on the contract as it is named in the ____________.
A. Deed
B. Previous contract when they bought the house.
C. Survey
D. Mortgagee's title policy
Rationale: The correct answer is A. The deed is the document of ownership, so the deed is the
best source for the owner's name that intends to transfer ownership to the buyer. - ANS
In an S Corporation, the earnings of the shareholders are __________.
A. Deferred
B. Taxed
C. Automatically put into a tax free IRA
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, D. Shifted to an C Corporation if there are profits in the S Corporation
Rationale: The correct answer is B. In an S Corporation, the earnings of the shareholders are
taxed, each at their own individual rate depending on their individual incomes. - ANS
TREC exists to protect:
A. Real estate agents
B. The citizens of Texas
C. Real estate brokers
D. Lenders, appraisers, and all licensees - ANS B. The citizens of Texas
What is the law that established the Texas Real Estate Commission?
A. TREC
B. TRELA
C. TAR
D. TCEQ
Rationale: The correct answer is B. TRELA (or The Texas Real Estate License Act) required
someone to administer it which created the need for the Texas Real Estate Commission. -
ANS
All of the following are reasons that contracts may terminate EXCEPT:
A. Fraud
B. Misrepresentation
C. When there is a suit for specific performance
D. Previous agreement
Rationale: The correct answer is C. A contract may not terminate if the non-defaulting party is
suing for performance of the contact, thereby continuing the contract until the suit concludes. -
ANS
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, What kind of law is handed down by the legislature?
A. Agency Law
B. Common Law
C. TREC
D. Statutory Law
Rationale: The correct answer is D. Statutory laws are the laws passed by the State Legislature. -
ANS
Land and all items attached to the property are considered:
A. Attachments
B. Real property
C. Personal property
D. Personal items
Rationale: The correct answer is B. When land is improved with attached items, they become
part of the property and therefore become part of the real estate. - ANS
General Partnership is a flow-through business entity where profits and losses flow to the
individual partners just as they do in a(n):
A. C Corporation
B. S Corporation
C. Sole proprietor
D. There are no other entities that are follow-through.
Rationale: The correct answer is B. Losses from a general partnership "flow through" giving the
hint to the correct answer, S corporations, where the individual partners are taxed based on
their personal incomes. - ANS
Nonhomogeneity, immobility, and indestructibility are examples of:
A. Physical characteristics of property
B. Economic characteristics of property
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ANSWERS
For a sum of money negotiated between the parties, the buyer has a time period, stated in this
paragraph, for the "unrestricted right" to terminate. Which paragraph does this reference? :
A. Sales price paragraph
B. Earnest money paragraph
C. Option money paragraph
D. Repairs escrow paragraph - ANS C. Option money paragraph
With regard to common mistakes on contracts, it is recommended that the seller's name be
used on the contract as it is named in the ____________.
A. Deed
B. Previous contract when they bought the house.
C. Survey
D. Mortgagee's title policy
Rationale: The correct answer is A. The deed is the document of ownership, so the deed is the
best source for the owner's name that intends to transfer ownership to the buyer. - ANS
In an S Corporation, the earnings of the shareholders are __________.
A. Deferred
B. Taxed
C. Automatically put into a tax free IRA
1|P a g e C o p y r i g h t © 2 0 2 5 T H E B R I G H T A L L R I G H T S R E S E R V E D
, D. Shifted to an C Corporation if there are profits in the S Corporation
Rationale: The correct answer is B. In an S Corporation, the earnings of the shareholders are
taxed, each at their own individual rate depending on their individual incomes. - ANS
TREC exists to protect:
A. Real estate agents
B. The citizens of Texas
C. Real estate brokers
D. Lenders, appraisers, and all licensees - ANS B. The citizens of Texas
What is the law that established the Texas Real Estate Commission?
A. TREC
B. TRELA
C. TAR
D. TCEQ
Rationale: The correct answer is B. TRELA (or The Texas Real Estate License Act) required
someone to administer it which created the need for the Texas Real Estate Commission. -
ANS
All of the following are reasons that contracts may terminate EXCEPT:
A. Fraud
B. Misrepresentation
C. When there is a suit for specific performance
D. Previous agreement
Rationale: The correct answer is C. A contract may not terminate if the non-defaulting party is
suing for performance of the contact, thereby continuing the contract until the suit concludes. -
ANS
2|P a g e C o p y r i g h t © 2 0 2 5 T H E B R I G H T A L L R I G H T S R E S E R V E D
, What kind of law is handed down by the legislature?
A. Agency Law
B. Common Law
C. TREC
D. Statutory Law
Rationale: The correct answer is D. Statutory laws are the laws passed by the State Legislature. -
ANS
Land and all items attached to the property are considered:
A. Attachments
B. Real property
C. Personal property
D. Personal items
Rationale: The correct answer is B. When land is improved with attached items, they become
part of the property and therefore become part of the real estate. - ANS
General Partnership is a flow-through business entity where profits and losses flow to the
individual partners just as they do in a(n):
A. C Corporation
B. S Corporation
C. Sole proprietor
D. There are no other entities that are follow-through.
Rationale: The correct answer is B. Losses from a general partnership "flow through" giving the
hint to the correct answer, S corporations, where the individual partners are taxed based on
their personal incomes. - ANS
Nonhomogeneity, immobility, and indestructibility are examples of:
A. Physical characteristics of property
B. Economic characteristics of property
3|P a g e C o p y r i g h t © 2 0 2 5 T H E B R I G H T A L L R I G H T S R E S E R V E D
