TEXAS LAW OF CONTRACTS LEVEL 1 EXAM QUESTIONS AND
ANSWERS
abstract of title - CORRECT ANSWER✅✅an abbreviated history of a property, including info on any
transfers, grants, wills, conveyances, liens, and encumbrances
air rights - CORRECT ANSWER✅✅ownership rights to the air above a property, extending from the
surface of the land up into space
deed in trust - CORRECT ANSWER✅✅a security instrument that places the deed to the property in a
trust held by the lender until the mortgage is paid off, at which point, the trustee will transfer the deed
to the borrower
earnest money - CORRECT ANSWER✅✅the money the buyer offers as a deposit towards the purchase
price of the property in order to show their serious intentions to the seller
Equal Credit Opportunity Act (ECOA) - CORRECT ANSWER✅✅a federal law enacted to provide legal
protection for consumers against unfair and discriminatory lending; located in Title VII of the Consumer
Credit Protection Act
closing - CORRECT ANSWER✅✅the final step in the home-buying process, during which the title to the
property is transferred from the seller to the buyer and consideration is paid to the seller
deed - CORRECT ANSWER✅✅a legal written document that conveys the intangible ownership rights
(title) of a real estate property to another party
community property - CORRECT ANSWER✅✅a special form of joint tenancy that exists between a
married couple, with each owning a one-half interest; any house or real estate purchased during a
marriage is considered community property
encumbrance - CORRECT ANSWER✅✅any restriction, encroachment, claim, or lien on a property (such
as a mortgage) that affects the value or use of the property
ANSWERS
abstract of title - CORRECT ANSWER✅✅an abbreviated history of a property, including info on any
transfers, grants, wills, conveyances, liens, and encumbrances
air rights - CORRECT ANSWER✅✅ownership rights to the air above a property, extending from the
surface of the land up into space
deed in trust - CORRECT ANSWER✅✅a security instrument that places the deed to the property in a
trust held by the lender until the mortgage is paid off, at which point, the trustee will transfer the deed
to the borrower
earnest money - CORRECT ANSWER✅✅the money the buyer offers as a deposit towards the purchase
price of the property in order to show their serious intentions to the seller
Equal Credit Opportunity Act (ECOA) - CORRECT ANSWER✅✅a federal law enacted to provide legal
protection for consumers against unfair and discriminatory lending; located in Title VII of the Consumer
Credit Protection Act
closing - CORRECT ANSWER✅✅the final step in the home-buying process, during which the title to the
property is transferred from the seller to the buyer and consideration is paid to the seller
deed - CORRECT ANSWER✅✅a legal written document that conveys the intangible ownership rights
(title) of a real estate property to another party
community property - CORRECT ANSWER✅✅a special form of joint tenancy that exists between a
married couple, with each owning a one-half interest; any house or real estate purchased during a
marriage is considered community property
encumbrance - CORRECT ANSWER✅✅any restriction, encroachment, claim, or lien on a property (such
as a mortgage) that affects the value or use of the property
