TEXAS REAL ESTATE PAST PAPER 2025/2026 QUESTIONS
AND SOLUTIONS GRADED A+
✔✔Liquidation Value - ✔✔is an estimate of the amount of money that could be gained if
the property was quickly sold in a low-demand market. The liquidation value becomes
relevant if the property has to be auctioned or is being sold after foreclosure.
✔✔Supply and Demand - ✔✔-is essentially the quantity of goods being offered for sale
within the market at any particular time
-is the desire for those goods, in this case, houses, that consumers are able and willing
to buy at a particular price.
✔✔The Business Cycle - ✔✔is a constant expansion and contraction of the economy
for a certain area, from an entire country, down to a specific jurisdiction.
Expansion - growth or a growing economy
Recession - a contraction or generally slowing down of the economy
Depression - the lowest point of the business cycle
Revival - the recovery period after a depression where the economy is heading back
into expansion.
✔✔What is the primary purpose for real estate licensing laws? - ✔✔-To protect licensed
brokers and sales agents from unfair or improper competition.
-To set out minimum standards and qualifications for licensing brokers and sales
agents.
-To protect the general public during real estate transactions from dishonest or
incompetent brokers and sales agents.
✔✔The Texas Real Estate Commission - ✔✔consists of nine members appointed by
the governor with the advice and consent of the senate as follows:
(1) six members who have been engaged in the brokerage business as licensed
brokers as their major occupation for the five years preceding appointment; and
(2) three members who represent the public.
(b) Each member of the commission must be a qualified voter.
(c) Appointments to the commission shall be made without regard to the race, color,
disability, sex, religion, age, or national origin of the appointee.
✔✔"Texas trade association" - ✔✔means a cooperative and voluntarily joined statewide
association of business or professional competitors in this state designed to assist its
members and its industry or profession in dealing with mutual business or professional
problems and in promoting their common interest.
✔✔Per 1101.2051(b), information or material prepared or compiled by the commission
in connection with a complaint, investigation, or audit may be disclosed: - ✔✔to the
respondent of the complaint.
,✔✔Real property, often referred to as real estate - ✔✔is land and any structures
attached directly to that land. This includes improvements such as buildings, roads, and
fences, but also includes natural resources like water, minerals, and crops. This means
that oil, gas, and timber qualify as real property because they are considered a part of
the land.
Real estate is generally classified in the following six categories:
-Residential
-Commercial
-Industrial
-Mixed Use
-Agricultural
-Special Purpose
✔✔Emblements - ✔✔Annual cultivated crops. such as vineyards, fruit orchards, hay
fields, and vegetable crops, require labor and are planted each year. hey are treated as
the tenant's property rather than the landowner's. This implies the tenant's right for her
harvest. That means, basically, that farmers are entitled to the fruits of their labor. Even
if a landowner terminates a tenant's lease in the middle of a growing season, the tenant
still owns the crop and shall be granted legal access to the land to harvest their crop.
✔✔Severance - ✔✔-First, it applies to joint tenancy, a form of shared ownership
-Second, severance describes the cutting and removal of anything attached to the land,
such as timber or crops
-Third, severance is used when the government exercises eminent domain.
✔✔Trade Fixtures - ✔✔is a business- or trade-related item attached to a rental building
by a business tenant. These items-such as booths, bars, display cases, and lights-are
used for the storage, handling, and display of stock for a business.
✔✔Fixtures - ✔✔is a physical object that has been attached to a piece of land or other
structure so that the object is now legally considered real property. Fixtures have a
hybrid nature, since they were once personal property, but are transformed into real
property. Disputes can arise when determining if an object is a fixture.
Since no clear line can be drawn between what is and what is not a fixture, there are
five tests which work to alleviate confusion: (1) manner of attachment, (2) adaptation of
the object, (3) intention of the installer, (4) existence of an agreement, and (5)
relationship of the parties.
✔✔Manufactured Homes - ✔✔is the ruling authority for manufactured homes,
sometimes called mobile homes, in Texas. Texas allows that they may be considered
real estate under certain circumstances.
In order for an owner to be able to treat their home as real property (see the first bullet
point above), the home must be physically attached:
to land owned by the owner of the manufactured home (through a deed or a contract for
deed) OR
to land leased to the owner of the home under a long-term lease.
,✔✔Housing Cooperatives - ✔✔is a type of cooperative (often an incorporated entity)
that owns real property, usually residential buildings. Members, by virtue of owning
shares in the cooperative, are granted the right to occupy one of the units in the
building.
Since the resources of each member are pooled, the buying power of the organization
is leveraged, which lowers the cost to members for services and products associated
with home ownership. Members also can control who can occupy units in a cooperative-
owned building.
✔✔Townhouses and Rowhouses - ✔✔multiple physical houses are combined into a
single architectural building. Each unit owner owns an identified plot of land and the
building affixed to it, but that building is physically part of a larger building that spans
lots. There is a continuous roof and foundation and a single wall divides adjacent
townhouses.
It is essentially under contract to the townhouse owners to maintain the parts of the
building that are hard to divide. Even the walls between townhouses are usually outside
the purview of the HOA, being jointly owned and maintained by the owners of the
townhouses on either side. Like the condominium, the townhouse complex often has
common areas for roads, parking, clubhouses, and such.
A rowhouse is like a townhouse in that they share at least one common wall and a roof.
Some use the term interchangeably, but row houses are in a row and townhouses are
multiple story with no additional residential units above or below.
✔✔A planned unit development (PUD) - ✔✔is a type of building development and also
a regulatory process. As a building development, it is a designed grouping of both
varied and compatible land uses, such as housing, recreation, commercial centers, and
industrial parks, all confined within a particular development or subdivision. One
characteristic of these developments is the choice of varied housing options, anything
from apartments to single family homes to townhouses and condos.
✔✔Converted-use Property - ✔✔are common in urban areas where existing structures
used for one purpose, such as factories, warehouses, or office buildings, are converted
into residential use either as rental apartments or condominiums.
✔✔Retirement Homes and Communities - ✔✔address a housing option for the large
number of baby boomers who are retiring. These units are either apartments and
condos or attached single family residences in communities that also provide shopping,
entertainment, recreation, and medical services, and that can provide graduated care as
the residents get older and potentially require more care in their homes.
✔✔Mixed-use Developments - ✔✔combine condos and apartments with restaurants,
shopping, and recreation, in one building or multiple units, generally in an urban or
suburban area, that also provide access to mass transit. Usually these developments
are pitched to urban professionals, not retirees or young families. A hallmark of mixed-
use developments is that they are self-contained.
, ✔✔Manufactured or Mobile Homes - ✔✔personal property, built off-site and then,
generally, trailered to the owners' homesites where the homes are attached to a
foundation in a site leased from the 'manufactured home park' owner. Generally, there
are common facilities available for the homeowners to share in the use of, such as
green space or even recreational venues, but the land underneath remains the property
of the park owner.
✔✔Modular or Prefab Homes - ✔✔also factory built, like manufactured homes, but
instead of being put together in the factory, the pieces are delivered and construction is
finished on the actual homesite. Once the pieces are in place, the home is built just like
any other stick-built construction. In these cases, the homeowner owns the house and
the land.
✔✔Timeshare Homes - ✔✔usually purchased as a second home or vacation home. The
way it works is that several owners purchase a property together and each is entitled to
use the property for certain periods throughout the year.
✔✔Five Elements of Location - ✔✔Employment Opportunities
Cultural Opportunities
Governmental Structure
Social Services
Transportation
✔✔Tax Deduction - ✔✔lowers a taxpayer's taxable income.
✔✔Tax Credit - ✔✔is a direct reduction in the amount of taxes that a taxpayer must pay.
✔✔Income tax - ✔✔is a governmental tax levied at a wage earner's total personal
income.
✔✔Points - ✔✔are fees charged by the lender to "buy down" the interest on a loan, with
each 'point' generally equal to one eighth or one quarter (depends on the lender) of 1%
of the loan amount.
✔✔Mortgage interest - ✔✔is the percentage charged on a mortgage that must be paid
above the principal amount. It is essentially the 'cost' of the borrowed money for the
loan.
✔✔Loan Origination Fee - ✔✔charges from a lender upon entering a loan agreement
that cover the cost of processing the loan (administrative needs, setting up the loan file,
creating the mortgage itself, preparing documents, lender paperwork, underwriting the
loan, general service charge). Generally, this is a flat fee that is payable at the time of
the loan closing, and ranges from 0.5-1% of the loan amount for FHA and VA loans and
up to 2% for other types of loans.
AND SOLUTIONS GRADED A+
✔✔Liquidation Value - ✔✔is an estimate of the amount of money that could be gained if
the property was quickly sold in a low-demand market. The liquidation value becomes
relevant if the property has to be auctioned or is being sold after foreclosure.
✔✔Supply and Demand - ✔✔-is essentially the quantity of goods being offered for sale
within the market at any particular time
-is the desire for those goods, in this case, houses, that consumers are able and willing
to buy at a particular price.
✔✔The Business Cycle - ✔✔is a constant expansion and contraction of the economy
for a certain area, from an entire country, down to a specific jurisdiction.
Expansion - growth or a growing economy
Recession - a contraction or generally slowing down of the economy
Depression - the lowest point of the business cycle
Revival - the recovery period after a depression where the economy is heading back
into expansion.
✔✔What is the primary purpose for real estate licensing laws? - ✔✔-To protect licensed
brokers and sales agents from unfair or improper competition.
-To set out minimum standards and qualifications for licensing brokers and sales
agents.
-To protect the general public during real estate transactions from dishonest or
incompetent brokers and sales agents.
✔✔The Texas Real Estate Commission - ✔✔consists of nine members appointed by
the governor with the advice and consent of the senate as follows:
(1) six members who have been engaged in the brokerage business as licensed
brokers as their major occupation for the five years preceding appointment; and
(2) three members who represent the public.
(b) Each member of the commission must be a qualified voter.
(c) Appointments to the commission shall be made without regard to the race, color,
disability, sex, religion, age, or national origin of the appointee.
✔✔"Texas trade association" - ✔✔means a cooperative and voluntarily joined statewide
association of business or professional competitors in this state designed to assist its
members and its industry or profession in dealing with mutual business or professional
problems and in promoting their common interest.
✔✔Per 1101.2051(b), information or material prepared or compiled by the commission
in connection with a complaint, investigation, or audit may be disclosed: - ✔✔to the
respondent of the complaint.
,✔✔Real property, often referred to as real estate - ✔✔is land and any structures
attached directly to that land. This includes improvements such as buildings, roads, and
fences, but also includes natural resources like water, minerals, and crops. This means
that oil, gas, and timber qualify as real property because they are considered a part of
the land.
Real estate is generally classified in the following six categories:
-Residential
-Commercial
-Industrial
-Mixed Use
-Agricultural
-Special Purpose
✔✔Emblements - ✔✔Annual cultivated crops. such as vineyards, fruit orchards, hay
fields, and vegetable crops, require labor and are planted each year. hey are treated as
the tenant's property rather than the landowner's. This implies the tenant's right for her
harvest. That means, basically, that farmers are entitled to the fruits of their labor. Even
if a landowner terminates a tenant's lease in the middle of a growing season, the tenant
still owns the crop and shall be granted legal access to the land to harvest their crop.
✔✔Severance - ✔✔-First, it applies to joint tenancy, a form of shared ownership
-Second, severance describes the cutting and removal of anything attached to the land,
such as timber or crops
-Third, severance is used when the government exercises eminent domain.
✔✔Trade Fixtures - ✔✔is a business- or trade-related item attached to a rental building
by a business tenant. These items-such as booths, bars, display cases, and lights-are
used for the storage, handling, and display of stock for a business.
✔✔Fixtures - ✔✔is a physical object that has been attached to a piece of land or other
structure so that the object is now legally considered real property. Fixtures have a
hybrid nature, since they were once personal property, but are transformed into real
property. Disputes can arise when determining if an object is a fixture.
Since no clear line can be drawn between what is and what is not a fixture, there are
five tests which work to alleviate confusion: (1) manner of attachment, (2) adaptation of
the object, (3) intention of the installer, (4) existence of an agreement, and (5)
relationship of the parties.
✔✔Manufactured Homes - ✔✔is the ruling authority for manufactured homes,
sometimes called mobile homes, in Texas. Texas allows that they may be considered
real estate under certain circumstances.
In order for an owner to be able to treat their home as real property (see the first bullet
point above), the home must be physically attached:
to land owned by the owner of the manufactured home (through a deed or a contract for
deed) OR
to land leased to the owner of the home under a long-term lease.
,✔✔Housing Cooperatives - ✔✔is a type of cooperative (often an incorporated entity)
that owns real property, usually residential buildings. Members, by virtue of owning
shares in the cooperative, are granted the right to occupy one of the units in the
building.
Since the resources of each member are pooled, the buying power of the organization
is leveraged, which lowers the cost to members for services and products associated
with home ownership. Members also can control who can occupy units in a cooperative-
owned building.
✔✔Townhouses and Rowhouses - ✔✔multiple physical houses are combined into a
single architectural building. Each unit owner owns an identified plot of land and the
building affixed to it, but that building is physically part of a larger building that spans
lots. There is a continuous roof and foundation and a single wall divides adjacent
townhouses.
It is essentially under contract to the townhouse owners to maintain the parts of the
building that are hard to divide. Even the walls between townhouses are usually outside
the purview of the HOA, being jointly owned and maintained by the owners of the
townhouses on either side. Like the condominium, the townhouse complex often has
common areas for roads, parking, clubhouses, and such.
A rowhouse is like a townhouse in that they share at least one common wall and a roof.
Some use the term interchangeably, but row houses are in a row and townhouses are
multiple story with no additional residential units above or below.
✔✔A planned unit development (PUD) - ✔✔is a type of building development and also
a regulatory process. As a building development, it is a designed grouping of both
varied and compatible land uses, such as housing, recreation, commercial centers, and
industrial parks, all confined within a particular development or subdivision. One
characteristic of these developments is the choice of varied housing options, anything
from apartments to single family homes to townhouses and condos.
✔✔Converted-use Property - ✔✔are common in urban areas where existing structures
used for one purpose, such as factories, warehouses, or office buildings, are converted
into residential use either as rental apartments or condominiums.
✔✔Retirement Homes and Communities - ✔✔address a housing option for the large
number of baby boomers who are retiring. These units are either apartments and
condos or attached single family residences in communities that also provide shopping,
entertainment, recreation, and medical services, and that can provide graduated care as
the residents get older and potentially require more care in their homes.
✔✔Mixed-use Developments - ✔✔combine condos and apartments with restaurants,
shopping, and recreation, in one building or multiple units, generally in an urban or
suburban area, that also provide access to mass transit. Usually these developments
are pitched to urban professionals, not retirees or young families. A hallmark of mixed-
use developments is that they are self-contained.
, ✔✔Manufactured or Mobile Homes - ✔✔personal property, built off-site and then,
generally, trailered to the owners' homesites where the homes are attached to a
foundation in a site leased from the 'manufactured home park' owner. Generally, there
are common facilities available for the homeowners to share in the use of, such as
green space or even recreational venues, but the land underneath remains the property
of the park owner.
✔✔Modular or Prefab Homes - ✔✔also factory built, like manufactured homes, but
instead of being put together in the factory, the pieces are delivered and construction is
finished on the actual homesite. Once the pieces are in place, the home is built just like
any other stick-built construction. In these cases, the homeowner owns the house and
the land.
✔✔Timeshare Homes - ✔✔usually purchased as a second home or vacation home. The
way it works is that several owners purchase a property together and each is entitled to
use the property for certain periods throughout the year.
✔✔Five Elements of Location - ✔✔Employment Opportunities
Cultural Opportunities
Governmental Structure
Social Services
Transportation
✔✔Tax Deduction - ✔✔lowers a taxpayer's taxable income.
✔✔Tax Credit - ✔✔is a direct reduction in the amount of taxes that a taxpayer must pay.
✔✔Income tax - ✔✔is a governmental tax levied at a wage earner's total personal
income.
✔✔Points - ✔✔are fees charged by the lender to "buy down" the interest on a loan, with
each 'point' generally equal to one eighth or one quarter (depends on the lender) of 1%
of the loan amount.
✔✔Mortgage interest - ✔✔is the percentage charged on a mortgage that must be paid
above the principal amount. It is essentially the 'cost' of the borrowed money for the
loan.
✔✔Loan Origination Fee - ✔✔charges from a lender upon entering a loan agreement
that cover the cost of processing the loan (administrative needs, setting up the loan file,
creating the mortgage itself, preparing documents, lender paperwork, underwriting the
loan, general service charge). Generally, this is a flat fee that is payable at the time of
the loan closing, and ranges from 0.5-1% of the loan amount for FHA and VA loans and
up to 2% for other types of loans.
