[TEXAS REAL ESTATE LICENSE EXAM] – QUESTIONS AND
ANSWERS | VERIFIED AND WELL DETAILED ANSWERS | PLUS
RATIONALES | GUARANTEED PASS | LATEST EXAM UPDATE |
EXAM PREP | STUDY GUIDE | PRACTICE TEST
1. A licensed sales agent is showing a property to a buyer when the buyer asks whether a
nearby industrial site could negatively affect future property values. What is the MOST
appropriate response by the agent?
A. Guarantee that the area will appreciate because of future development
B. Advise the buyer to independently research zoning and environmental factors
C. Tell the buyer that environmental concerns are irrelevant in residential sales
D. Refuse to discuss any off-site conditions affecting value
════════════════════
Correct Answer: B. Advise the buyer to independently research zoning and environmental
factors
Rationale:
A real estate license holder should avoid making guarantees regarding future property values.
Advising the buyer to research zoning, environmental hazards, and surrounding land use
demonstrates professional responsibility and reduces liability exposure. Option A improperly
guarantees appreciation, Option C is inaccurate because external factors can affect value, and
Option D ignores the agent’s duty to provide reasonable guidance without misrepresentation.
════════════════════
2. A broker receives earnest money from a buyer on Monday afternoon. According to Texas
Real Estate Commission (TREC) requirements, when should the broker deposit the funds into
the escrow account?
A. Immediately upon receipt
B. Within one business day
C. By the close of business on Friday
D. By the close of business on the second working day after receipt
════════════════════
Correct Answer: D. By the close of business on the second working day after receipt
,Rationale:
Texas rules require brokers to deposit trust funds into an escrow or trust account by the close
of business on the second working day after receiving the funds. Option A is not specifically
required, Option B shortens the statutory timeframe, and Option C could exceed the legal
deadline depending on the day received.
════════════════════
3. A property owner grants a tenant exclusive possession of a commercial suite for five years
in exchange for monthly rent. This arrangement creates which type of interest?
A. Freehold estate
B. Easement appurtenant
C. Leasehold estate
D. Life estate
════════════════════
Correct Answer: C. Leasehold estate
Rationale:
A leasehold estate grants a tenant the right to occupy and use property for a specified period
without transferring ownership. A freehold estate involves ownership interests, an easement
grants limited use rights, and a life estate exists only for the duration of someone’s life.
════════════════════
4. A seller intentionally hides major foundation damage by covering wall cracks before listing
the property. This action is BEST classified as:
A. Puffing
B. Negligent omission
C. Innocent misrepresentation
D. Fraudulent concealment
════════════════════
Correct Answer: D. Fraudulent concealment
Rationale:
Fraudulent concealment occurs when a party intentionally hides a known material defect to
mislead another party. Puffing involves exaggerated opinions rather than deception,
,negligent omission lacks intent, and innocent misrepresentation occurs without knowledge of
falsity.
════════════════════
5. Which financing clause protects a buyer from being obligated to complete a purchase if
acceptable financing cannot be obtained?
A. Acceleration clause
B. Defeasance clause
C. Financing contingency
D. Alienation clause
════════════════════
Correct Answer: C. Financing contingency
Rationale:
A financing contingency allows buyers to withdraw from the transaction if they cannot secure
financing under agreed terms. An acceleration clause permits the lender to demand
immediate payment after default, a defeasance clause releases the borrower after
repayment, and an alienation clause addresses transfer of ownership.
════════════════════
6. A broker represents both the buyer and seller in the same transaction with written consent
from both parties. In Texas, this relationship is known as:
A. Subagency
B. Intermediary brokerage
C. Universal agency
D. Single agency
════════════════════
Correct Answer: B. Intermediary brokerage
Rationale:
Texas law allows a broker to act as an intermediary when representing both parties with
informed written consent. Subagency typically involves representation through another
broker, universal agency grants broad authority, and single agency involves representing only
one principal.
════════════════════
, 7. A homeowner fails to pay property taxes, and the county places a claim against the
property. What type of lien is this?
A. Voluntary lien
B. General lien
C. Specific involuntary lien
D. Equitable lien
════════════════════
Correct Answer: C. Specific involuntary lien
Rationale:
Property tax liens are involuntary because they arise by law without owner consent, and they
are specific because they attach to a particular property. Voluntary liens are created willingly,
such as mortgages, while equitable liens are imposed by courts under certain circumstances.
════════════════════
8. Which legal description method is MOST commonly used in urban residential subdivisions
in Texas?
A. Metes and bounds
B. Government survey system
C. Rectangular survey method
D. Lot and block system
════════════════════
Correct Answer: D. Lot and block system
Rationale:
The lot and block system is commonly used for platted subdivisions and references recorded
maps identifying lots and blocks. Metes and bounds are more common for irregular tracts,
while the government survey system is primarily used outside Texas and other public land
states.
════════════════════
9. An agent advertises a property as having “the best view in the city.” This statement is MOST
likely considered:
A. Fraud
B. Puffing
ANSWERS | VERIFIED AND WELL DETAILED ANSWERS | PLUS
RATIONALES | GUARANTEED PASS | LATEST EXAM UPDATE |
EXAM PREP | STUDY GUIDE | PRACTICE TEST
1. A licensed sales agent is showing a property to a buyer when the buyer asks whether a
nearby industrial site could negatively affect future property values. What is the MOST
appropriate response by the agent?
A. Guarantee that the area will appreciate because of future development
B. Advise the buyer to independently research zoning and environmental factors
C. Tell the buyer that environmental concerns are irrelevant in residential sales
D. Refuse to discuss any off-site conditions affecting value
════════════════════
Correct Answer: B. Advise the buyer to independently research zoning and environmental
factors
Rationale:
A real estate license holder should avoid making guarantees regarding future property values.
Advising the buyer to research zoning, environmental hazards, and surrounding land use
demonstrates professional responsibility and reduces liability exposure. Option A improperly
guarantees appreciation, Option C is inaccurate because external factors can affect value, and
Option D ignores the agent’s duty to provide reasonable guidance without misrepresentation.
════════════════════
2. A broker receives earnest money from a buyer on Monday afternoon. According to Texas
Real Estate Commission (TREC) requirements, when should the broker deposit the funds into
the escrow account?
A. Immediately upon receipt
B. Within one business day
C. By the close of business on Friday
D. By the close of business on the second working day after receipt
════════════════════
Correct Answer: D. By the close of business on the second working day after receipt
,Rationale:
Texas rules require brokers to deposit trust funds into an escrow or trust account by the close
of business on the second working day after receiving the funds. Option A is not specifically
required, Option B shortens the statutory timeframe, and Option C could exceed the legal
deadline depending on the day received.
════════════════════
3. A property owner grants a tenant exclusive possession of a commercial suite for five years
in exchange for monthly rent. This arrangement creates which type of interest?
A. Freehold estate
B. Easement appurtenant
C. Leasehold estate
D. Life estate
════════════════════
Correct Answer: C. Leasehold estate
Rationale:
A leasehold estate grants a tenant the right to occupy and use property for a specified period
without transferring ownership. A freehold estate involves ownership interests, an easement
grants limited use rights, and a life estate exists only for the duration of someone’s life.
════════════════════
4. A seller intentionally hides major foundation damage by covering wall cracks before listing
the property. This action is BEST classified as:
A. Puffing
B. Negligent omission
C. Innocent misrepresentation
D. Fraudulent concealment
════════════════════
Correct Answer: D. Fraudulent concealment
Rationale:
Fraudulent concealment occurs when a party intentionally hides a known material defect to
mislead another party. Puffing involves exaggerated opinions rather than deception,
,negligent omission lacks intent, and innocent misrepresentation occurs without knowledge of
falsity.
════════════════════
5. Which financing clause protects a buyer from being obligated to complete a purchase if
acceptable financing cannot be obtained?
A. Acceleration clause
B. Defeasance clause
C. Financing contingency
D. Alienation clause
════════════════════
Correct Answer: C. Financing contingency
Rationale:
A financing contingency allows buyers to withdraw from the transaction if they cannot secure
financing under agreed terms. An acceleration clause permits the lender to demand
immediate payment after default, a defeasance clause releases the borrower after
repayment, and an alienation clause addresses transfer of ownership.
════════════════════
6. A broker represents both the buyer and seller in the same transaction with written consent
from both parties. In Texas, this relationship is known as:
A. Subagency
B. Intermediary brokerage
C. Universal agency
D. Single agency
════════════════════
Correct Answer: B. Intermediary brokerage
Rationale:
Texas law allows a broker to act as an intermediary when representing both parties with
informed written consent. Subagency typically involves representation through another
broker, universal agency grants broad authority, and single agency involves representing only
one principal.
════════════════════
, 7. A homeowner fails to pay property taxes, and the county places a claim against the
property. What type of lien is this?
A. Voluntary lien
B. General lien
C. Specific involuntary lien
D. Equitable lien
════════════════════
Correct Answer: C. Specific involuntary lien
Rationale:
Property tax liens are involuntary because they arise by law without owner consent, and they
are specific because they attach to a particular property. Voluntary liens are created willingly,
such as mortgages, while equitable liens are imposed by courts under certain circumstances.
════════════════════
8. Which legal description method is MOST commonly used in urban residential subdivisions
in Texas?
A. Metes and bounds
B. Government survey system
C. Rectangular survey method
D. Lot and block system
════════════════════
Correct Answer: D. Lot and block system
Rationale:
The lot and block system is commonly used for platted subdivisions and references recorded
maps identifying lots and blocks. Metes and bounds are more common for irregular tracts,
while the government survey system is primarily used outside Texas and other public land
states.
════════════════════
9. An agent advertises a property as having “the best view in the city.” This statement is MOST
likely considered:
A. Fraud
B. Puffing
