LAW OF CONTRACTS PRACTICE ACTUAL
TEST PAPER 2026 COMPLETE QUESTIONS AND
SOLUTIONS GRADED A+
◉ A seller's homeowner's insurance policy is cancelled at the time of
closing. They will receive WHAT after closing for the part of their
premium that was paid in advance? Answer: a refund check
◉ What are the three parties to the deed of trust?* Answer:
Borrower, lender, and trustee
◉ Which of the following is NOT a right that comes with the power
of attorney? Answer: The right to make personal investments with
the principal's funds
◉ What is a method of withdrawing from a contract without actually
canceling it?* Answer: assignment
◉ Jasper and Aziz are engaging a real estate transaction. They want
to make sure the interest being conveyed is officially and accurately
recorded. What would they use to do that?* Answer: one of the sales
contracts promulgated by TREC
,◉ What does the title company do with the earnest money check?
Answer: They deposit it into an escrow account.
◉ What is a unilateral contract? Answer: a contract in which one
party (the offeror) makes a promise in exchange for a reciprocal act
on the part of the second party (the offeree)
◉ If a homeowner sells his home, he is said to be separated from his
home via: Answer: voluntary alienation
◉ How do lenders recover their money when borrowers do not pay
their mortgage?* Answer: The lender can foreclose, take title to the
property and sell it to recover as much money as possible.
◉ What does RESPA stand for? Answer: Real Estate Settlement
Procedures Act
◉ Liens, easements, deed restrictions, and encroachments are all
ways that WHAT can affect the use of real property?* Answer:
encumbrances
◉ A promissory note is: Answer: the borrower's personal promise to
repay the loan to the lender
,◉ A sale contract must include the minimum requirements for a
valid contract as well as: Answer: a legal property description
◉ A buyer and seller are parties to a sales contract. The buyer makes
several payments before the seller rescinds the contract. The seller
must: Answer: return all payments they received from the buyer
◉ Which of the following regarding fiduciary duties and transactions
with multiple principals is TRUE:* Answer: The agent owes fiduciary
duties to only the principal they are representing.
◉ Land and everything growing on it or attached to it including,
sheds, buildings, trees, and crops are identified as: Answer: real
estate and real property
◉ Eduardo made several changes to his contract. WHAT are these
changes called and WHO must receive a copy of them?* Answer:
These changes are amendments and the title company must receive
a copy of them.
◉ Lynn leases an apartment. She invites her mother and her friend,
Gaby, over for dinner. Of the parties present, Lynn is responsible for:
Answer: damages caused by all parties present (Lynn, Lynn's
mother, and Gaby)
, ◉ Protecting consumers of real estate services, enforcing the laws
the legislature passed in the License Act, and ensuring the
availability of capable and honest real estate service providers are
all responsibilities of the: Answer: Texas Real Estate Commission
◉ Jack and Jill own a property as tenants in common. Jack dies. What
happens to Jack's interest in the estate?* Answer: Jack's interest will
go to Jack's heirs
◉ Which of the following statements is TRUE if a license holder is
acting solely as a principal and selling her own home? Answer: The
license holder can use the promulgated form, but it is not required.
◉ What might express agency look like?* Answer: the principal
appointing the broker, and then the broker accepting that
appointment either in writing or orally
◉ What is an exclusive right to sell listing? Answer: a listing
agreement that gives the broker the right to the commission no
matter who sells the property
◉ Alejandra is a seller. Joe is a buyer. During their transaction,
Alejandra holds the legal title to the property until Joe pays in full.
Alejandra and Joe are using a: Answer: contract for deed
TEST PAPER 2026 COMPLETE QUESTIONS AND
SOLUTIONS GRADED A+
◉ A seller's homeowner's insurance policy is cancelled at the time of
closing. They will receive WHAT after closing for the part of their
premium that was paid in advance? Answer: a refund check
◉ What are the three parties to the deed of trust?* Answer:
Borrower, lender, and trustee
◉ Which of the following is NOT a right that comes with the power
of attorney? Answer: The right to make personal investments with
the principal's funds
◉ What is a method of withdrawing from a contract without actually
canceling it?* Answer: assignment
◉ Jasper and Aziz are engaging a real estate transaction. They want
to make sure the interest being conveyed is officially and accurately
recorded. What would they use to do that?* Answer: one of the sales
contracts promulgated by TREC
,◉ What does the title company do with the earnest money check?
Answer: They deposit it into an escrow account.
◉ What is a unilateral contract? Answer: a contract in which one
party (the offeror) makes a promise in exchange for a reciprocal act
on the part of the second party (the offeree)
◉ If a homeowner sells his home, he is said to be separated from his
home via: Answer: voluntary alienation
◉ How do lenders recover their money when borrowers do not pay
their mortgage?* Answer: The lender can foreclose, take title to the
property and sell it to recover as much money as possible.
◉ What does RESPA stand for? Answer: Real Estate Settlement
Procedures Act
◉ Liens, easements, deed restrictions, and encroachments are all
ways that WHAT can affect the use of real property?* Answer:
encumbrances
◉ A promissory note is: Answer: the borrower's personal promise to
repay the loan to the lender
,◉ A sale contract must include the minimum requirements for a
valid contract as well as: Answer: a legal property description
◉ A buyer and seller are parties to a sales contract. The buyer makes
several payments before the seller rescinds the contract. The seller
must: Answer: return all payments they received from the buyer
◉ Which of the following regarding fiduciary duties and transactions
with multiple principals is TRUE:* Answer: The agent owes fiduciary
duties to only the principal they are representing.
◉ Land and everything growing on it or attached to it including,
sheds, buildings, trees, and crops are identified as: Answer: real
estate and real property
◉ Eduardo made several changes to his contract. WHAT are these
changes called and WHO must receive a copy of them?* Answer:
These changes are amendments and the title company must receive
a copy of them.
◉ Lynn leases an apartment. She invites her mother and her friend,
Gaby, over for dinner. Of the parties present, Lynn is responsible for:
Answer: damages caused by all parties present (Lynn, Lynn's
mother, and Gaby)
, ◉ Protecting consumers of real estate services, enforcing the laws
the legislature passed in the License Act, and ensuring the
availability of capable and honest real estate service providers are
all responsibilities of the: Answer: Texas Real Estate Commission
◉ Jack and Jill own a property as tenants in common. Jack dies. What
happens to Jack's interest in the estate?* Answer: Jack's interest will
go to Jack's heirs
◉ Which of the following statements is TRUE if a license holder is
acting solely as a principal and selling her own home? Answer: The
license holder can use the promulgated form, but it is not required.
◉ What might express agency look like?* Answer: the principal
appointing the broker, and then the broker accepting that
appointment either in writing or orally
◉ What is an exclusive right to sell listing? Answer: a listing
agreement that gives the broker the right to the commission no
matter who sells the property
◉ Alejandra is a seller. Joe is a buyer. During their transaction,
Alejandra holds the legal title to the property until Joe pays in full.
Alejandra and Joe are using a: Answer: contract for deed
