1
CHAMPIONS PROMULGATED CONTRACT FORMS
TEST Actual Exam 2026/2027: 100% Verified Complete
Questions and Answers | Graded A+ for Real Estate Success
– Pass Guaranteed - A+ Graded
Section 1: One to Four Family Residential Contract (Resale) (15 Questions)
Q1: A buyer wants to purchase a single-family home built in 1985 that is currently occupied by
tenants on a month-to-month lease. The buyer plans to obtain an FHA loan and wants to live in
the property as their primary residence. Which TREC promulgated contract form should the
licensee use?
A. New Home Contract (Incomplete Construction)
B. Residential Condominium Contract
C. One to Four Family Residential Contract (Resale) [CORRECT]
D. Unimproved Property Contract
Correct Answer: C
Rationale: The One to Four Family Residential Contract (Resale) (TREC No. 20-16) is the
correct form for purchasing an existing, previously occupied residential property. The property is
not new construction (eliminating A), not a condominium (eliminating B), and has improvements
(eliminating D). The licensee would also need to attach the Addendum for Residential Lease
(ARL) due to the existing tenancy and the Third Party Financing Addendum for the FHA loan.
Q2: In the One to Four Family Residential Contract, the option fee must be delivered to the seller
or listing broker within:
A. 3 days after the effective date of the contract
B. No later than 11:59 p.m. on the third day after the effective date [CORRECT]
C. 5 days after the effective date
D. At the time of contract execution
Correct Answer: B
Rationale: Paragraph 5 of the One to Four Family Residential Contract specifies that the option
fee must be delivered to the seller or listing broker no later than 11:59 p.m. (local time where the
property is located) on the third day after the effective date of the contract. Option A is incorrect
because it lacks the specific time deadline, C confuses the option period with the delivery
deadline, and D is incorrect because the option fee has a grace period for delivery.
,2
Q3: A buyer provides $5,000 as earnest money and $500 as an option fee. The buyer properly
terminates the contract during the option period due to inspection issues. According to the One to
Four Family Residential Contract, what happens to these funds?
A. Both the earnest money and option fee are refunded to the buyer
B. The earnest money is refunded, but the option fee is retained by the seller [CORRECT]
C. Both amounts are forfeited to the seller
D. The earnest money is credited toward purchase, and the option fee is refunded
Correct Answer: B
Rationale: Under Paragraph 5 of the contract, the option fee is consideration for the buyer's
unilateral right to terminate and is NOT refundable if the buyer exercises this right—it is retained
by the seller regardless of termination. The earnest money (Paragraph 7) is refundable upon
proper termination during the option period. Option A incorrectly suggests the option fee is
refundable, C incorrectly suggests earnest money is forfeited, and D reverses the proper
treatment of these funds.
Q4: The "Time is of the Essence" provision in the One to Four Family Residential Contract
means:
A. Deadlines are flexible if both parties agree
B. Strict compliance with stated deadlines is required [CORRECT]
C. Only business days count toward deadlines
D. The contract automatically extends deadlines by 3 days
Correct Answer: B
Rationale: "Time is of the Essence" (Paragraph 22) establishes that strict compliance with all
deadlines is required, and failure to perform by the specified date constitutes breach of contract.
This clause prevents either party from unilaterally extending deadlines. Option A contradicts the
provision's purpose, C is addressed separately in the contract's computation of time provisions,
and D describes a "time is not of the essence" scenario which is not applicable here.
Q5: Under the Property Condition section of the One to Four Family Residential Contract, the
seller's disclosure notice must be delivered to the buyer:
A. Within 5 days after the effective date
B. Before the effective date of the contract
C. On or before the effective date [CORRECT]
, 3
D. Within the option period only
Correct Answer: C
Rationale: Paragraph 7B of the contract requires the seller to deliver the Seller's Disclosure
Notice to the buyer on or before the effective date of the contract. If delivered after the effective
date, the buyer may terminate for any reason within 7 days after receipt or until closing,
whichever first occurs. Option A describes an incorrect timeframe, B suggests the disclosure
must precede the contract which is not required, and D incorrectly limits the delivery window.
Q6: A buyer is purchasing a home built in 1975. Under federal law and the One to Four Family
Residential Contract, what disclosure is required regarding lead-based paint?
A. No disclosure is required for homes built before 1978
B. The seller must provide the EPA lead-based paint disclosure form and pamphlet [CORRECT]
C. Only a verbal disclosure is required
D. The buyer must conduct their own lead testing
Correct Answer: B
Rationale: Federal law (42 U.S.C. 4852d) and Paragraph 7C of the contract require sellers of
residential properties built before 1978 to provide buyers with the EPA-approved Lead-Based
Paint Disclosure form and the "Protect Your Family from Lead in Your Home" pamphlet. This
must be completed before contract ratification. Option A is factually opposite, C violates federal
written disclosure requirements, and D describes buyer due diligence, not seller disclosure
obligations.
Q7: In the One to Four Family Residential Contract, if the property is damaged by fire (casualty
loss) after the effective date but before closing, and the cost to restore exceeds 5% of the sales
price:
A. The buyer must still close and accept the property as-is
B. The seller must restore the property, and closing is extended
C. Either party may terminate the contract, and the buyer's earnest money is refunded
[CORRECT]
D. The seller's insurance proceeds automatically go to the buyer
Correct Answer: C
Rationale: Paragraph 14 (Casualty Loss) provides that if damage from fire or other casualty
exceeds 5% of the sales price, either party may terminate the contract by written notice within a
specified timeframe, and the earnest money is refunded to the buyer. If the cost is less than 5%,
CHAMPIONS PROMULGATED CONTRACT FORMS
TEST Actual Exam 2026/2027: 100% Verified Complete
Questions and Answers | Graded A+ for Real Estate Success
– Pass Guaranteed - A+ Graded
Section 1: One to Four Family Residential Contract (Resale) (15 Questions)
Q1: A buyer wants to purchase a single-family home built in 1985 that is currently occupied by
tenants on a month-to-month lease. The buyer plans to obtain an FHA loan and wants to live in
the property as their primary residence. Which TREC promulgated contract form should the
licensee use?
A. New Home Contract (Incomplete Construction)
B. Residential Condominium Contract
C. One to Four Family Residential Contract (Resale) [CORRECT]
D. Unimproved Property Contract
Correct Answer: C
Rationale: The One to Four Family Residential Contract (Resale) (TREC No. 20-16) is the
correct form for purchasing an existing, previously occupied residential property. The property is
not new construction (eliminating A), not a condominium (eliminating B), and has improvements
(eliminating D). The licensee would also need to attach the Addendum for Residential Lease
(ARL) due to the existing tenancy and the Third Party Financing Addendum for the FHA loan.
Q2: In the One to Four Family Residential Contract, the option fee must be delivered to the seller
or listing broker within:
A. 3 days after the effective date of the contract
B. No later than 11:59 p.m. on the third day after the effective date [CORRECT]
C. 5 days after the effective date
D. At the time of contract execution
Correct Answer: B
Rationale: Paragraph 5 of the One to Four Family Residential Contract specifies that the option
fee must be delivered to the seller or listing broker no later than 11:59 p.m. (local time where the
property is located) on the third day after the effective date of the contract. Option A is incorrect
because it lacks the specific time deadline, C confuses the option period with the delivery
deadline, and D is incorrect because the option fee has a grace period for delivery.
,2
Q3: A buyer provides $5,000 as earnest money and $500 as an option fee. The buyer properly
terminates the contract during the option period due to inspection issues. According to the One to
Four Family Residential Contract, what happens to these funds?
A. Both the earnest money and option fee are refunded to the buyer
B. The earnest money is refunded, but the option fee is retained by the seller [CORRECT]
C. Both amounts are forfeited to the seller
D. The earnest money is credited toward purchase, and the option fee is refunded
Correct Answer: B
Rationale: Under Paragraph 5 of the contract, the option fee is consideration for the buyer's
unilateral right to terminate and is NOT refundable if the buyer exercises this right—it is retained
by the seller regardless of termination. The earnest money (Paragraph 7) is refundable upon
proper termination during the option period. Option A incorrectly suggests the option fee is
refundable, C incorrectly suggests earnest money is forfeited, and D reverses the proper
treatment of these funds.
Q4: The "Time is of the Essence" provision in the One to Four Family Residential Contract
means:
A. Deadlines are flexible if both parties agree
B. Strict compliance with stated deadlines is required [CORRECT]
C. Only business days count toward deadlines
D. The contract automatically extends deadlines by 3 days
Correct Answer: B
Rationale: "Time is of the Essence" (Paragraph 22) establishes that strict compliance with all
deadlines is required, and failure to perform by the specified date constitutes breach of contract.
This clause prevents either party from unilaterally extending deadlines. Option A contradicts the
provision's purpose, C is addressed separately in the contract's computation of time provisions,
and D describes a "time is not of the essence" scenario which is not applicable here.
Q5: Under the Property Condition section of the One to Four Family Residential Contract, the
seller's disclosure notice must be delivered to the buyer:
A. Within 5 days after the effective date
B. Before the effective date of the contract
C. On or before the effective date [CORRECT]
, 3
D. Within the option period only
Correct Answer: C
Rationale: Paragraph 7B of the contract requires the seller to deliver the Seller's Disclosure
Notice to the buyer on or before the effective date of the contract. If delivered after the effective
date, the buyer may terminate for any reason within 7 days after receipt or until closing,
whichever first occurs. Option A describes an incorrect timeframe, B suggests the disclosure
must precede the contract which is not required, and D incorrectly limits the delivery window.
Q6: A buyer is purchasing a home built in 1975. Under federal law and the One to Four Family
Residential Contract, what disclosure is required regarding lead-based paint?
A. No disclosure is required for homes built before 1978
B. The seller must provide the EPA lead-based paint disclosure form and pamphlet [CORRECT]
C. Only a verbal disclosure is required
D. The buyer must conduct their own lead testing
Correct Answer: B
Rationale: Federal law (42 U.S.C. 4852d) and Paragraph 7C of the contract require sellers of
residential properties built before 1978 to provide buyers with the EPA-approved Lead-Based
Paint Disclosure form and the "Protect Your Family from Lead in Your Home" pamphlet. This
must be completed before contract ratification. Option A is factually opposite, C violates federal
written disclosure requirements, and D describes buyer due diligence, not seller disclosure
obligations.
Q7: In the One to Four Family Residential Contract, if the property is damaged by fire (casualty
loss) after the effective date but before closing, and the cost to restore exceeds 5% of the sales
price:
A. The buyer must still close and accept the property as-is
B. The seller must restore the property, and closing is extended
C. Either party may terminate the contract, and the buyer's earnest money is refunded
[CORRECT]
D. The seller's insurance proceeds automatically go to the buyer
Correct Answer: C
Rationale: Paragraph 14 (Casualty Loss) provides that if damage from fire or other casualty
exceeds 5% of the sales price, either party may terminate the contract by written notice within a
specified timeframe, and the earnest money is refunded to the buyer. If the cost is less than 5%,
