Texas Principles of Real Estate II (Final
Exam Study Guide GUARANTEED PASS!!
What is the name of the sworn statement in which the seller assures the title company (and the
buyer) that there are no liens, unpaid bills for repairs or improvements, or undisclosed defects in
the title? - (ANSWER)affidavits as to debts and liens
Tax incentives that cover the cost of energy-efficient improvements, EEMs, and Energy Star-
qualified homes are examples of: - (ANSWER)green initiatives
Which of the following borrowers would be MOST likely to use a graduated-payment mortgage?
- (ANSWER)young borrower starting their career, anticipating an income raise in the next
several years
Which type of loan is exempt from RESPA? - (ANSWER)loans on vacant land
Which TILA regulation requires a disclosure statement where lenders must make certain loan
facts known to borrowers? - (ANSWER)Regulation Z
The most common formal organization of a syndicate is that of a(n): - (ANSWER)LLC
Which of the following BEST describes why RESPA was passed? - (ANSWER)to ensure
meaningful disclosure of closing costs in a real estate transaction
Property manager William hires an HVAC specialist to repair a broken air conditioner in an
apartment.
This is an example of: - (ANSWER)corrective maintenance
Which of the following is TRUE? - (ANSWER)A Texas real estate license does NOT allow
agents and brokers to act as appraisers or home mortgage originators
A handwritten will created solely by the maker (and not witnessed) is called a: -
(ANSWER)holographic will
Ashley just bought a house. To purchase the house, she got a loan for $400,000 with 3 discount
points. How much did she pay for the discount points? - (ANSWER)One discount point costs 1%
of the loan amount; therefore, one discount point cost $4,000 in Ashley's case. Ashley paid
$12,000 for 3 discount points.
What is the difference between actual and constructive notice? - (ANSWER)Constructive notice
is the assumption that a diligent individual can search the public record to gain knowledge;
actual notice is direct or first-hand knowledge.
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, The investment strategy of taking on debt in order to realize a greater return is known as: -
(ANSWER)Leverage
What is an easement by prescription? - (ANSWER)An easement by prescription is granted after
the dominant estate has used the property in a hostile, continuous, and open manner for a
statutorily prescribed number of years. This type of easement is also called a prescriptive
easement.
A new $350,000 home is being built in a neighborhood of mostly $200,000 homes. Although the
home has many updates and is in better condition than the surrounding houses, its value is
significantly less than the price.
Which value principle of appraisal explains this? - (ANSWER)principle of regression, which
states that a subject property situated in the midst of lower-value homes will experience a
downward pull on its own value.
What is investment gain? - (ANSWER)Investment gain has to do with the increase in a
property's value due to active and purposeful development of a property.
How many feet are in a mile? - (ANSWER)5,280 feet
What is a quitclaim deed? - (ANSWER)A quitclaim deed provides the grantee with the least
protection of any deed, while putting the least liability on the grantor. It carries no covenants nor
warranties and conveys only such interest that the grantor may have when the deed is delivered.
Alexis owns a fried chicken restaurant, Tender Times. When her area is rezoned from
commercial to residential, Alexis is allowed to continue operating Tender Times in the same
location.
What is this an example of? - (ANSWER)While the use of the property originally conformed to
zoning, that was no longer the case once the rezoning took place. So the present (commercial)
use would be considered a nonconforming use, which is where a once-permissible-but-no-
longer-permitted use is grandfathered in.
Who is the representative of the title insurance company who reviews the title insurance
commitment, prepares the Closing Disclosure, and conducts the closing? - (ANSWER)closing
agent
Which of these scenarios would be most likely to result in the granting of a conditional-use
permit? - (ANSWER)A person wanting to build or establish a bed & breakfast in an area zoned
for residential use could seek a conditional-use permit from the zoning board as it could be
judged as marginally out of compliance with existing zoning.
When does the Interstate Land Sales Full Disclosure Act require the seller to give the report to a
lot purchaser? - (ANSWER)before a purchase agreement is signed.
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Exam Study Guide GUARANTEED PASS!!
What is the name of the sworn statement in which the seller assures the title company (and the
buyer) that there are no liens, unpaid bills for repairs or improvements, or undisclosed defects in
the title? - (ANSWER)affidavits as to debts and liens
Tax incentives that cover the cost of energy-efficient improvements, EEMs, and Energy Star-
qualified homes are examples of: - (ANSWER)green initiatives
Which of the following borrowers would be MOST likely to use a graduated-payment mortgage?
- (ANSWER)young borrower starting their career, anticipating an income raise in the next
several years
Which type of loan is exempt from RESPA? - (ANSWER)loans on vacant land
Which TILA regulation requires a disclosure statement where lenders must make certain loan
facts known to borrowers? - (ANSWER)Regulation Z
The most common formal organization of a syndicate is that of a(n): - (ANSWER)LLC
Which of the following BEST describes why RESPA was passed? - (ANSWER)to ensure
meaningful disclosure of closing costs in a real estate transaction
Property manager William hires an HVAC specialist to repair a broken air conditioner in an
apartment.
This is an example of: - (ANSWER)corrective maintenance
Which of the following is TRUE? - (ANSWER)A Texas real estate license does NOT allow
agents and brokers to act as appraisers or home mortgage originators
A handwritten will created solely by the maker (and not witnessed) is called a: -
(ANSWER)holographic will
Ashley just bought a house. To purchase the house, she got a loan for $400,000 with 3 discount
points. How much did she pay for the discount points? - (ANSWER)One discount point costs 1%
of the loan amount; therefore, one discount point cost $4,000 in Ashley's case. Ashley paid
$12,000 for 3 discount points.
What is the difference between actual and constructive notice? - (ANSWER)Constructive notice
is the assumption that a diligent individual can search the public record to gain knowledge;
actual notice is direct or first-hand knowledge.
Page 1 of 6
, The investment strategy of taking on debt in order to realize a greater return is known as: -
(ANSWER)Leverage
What is an easement by prescription? - (ANSWER)An easement by prescription is granted after
the dominant estate has used the property in a hostile, continuous, and open manner for a
statutorily prescribed number of years. This type of easement is also called a prescriptive
easement.
A new $350,000 home is being built in a neighborhood of mostly $200,000 homes. Although the
home has many updates and is in better condition than the surrounding houses, its value is
significantly less than the price.
Which value principle of appraisal explains this? - (ANSWER)principle of regression, which
states that a subject property situated in the midst of lower-value homes will experience a
downward pull on its own value.
What is investment gain? - (ANSWER)Investment gain has to do with the increase in a
property's value due to active and purposeful development of a property.
How many feet are in a mile? - (ANSWER)5,280 feet
What is a quitclaim deed? - (ANSWER)A quitclaim deed provides the grantee with the least
protection of any deed, while putting the least liability on the grantor. It carries no covenants nor
warranties and conveys only such interest that the grantor may have when the deed is delivered.
Alexis owns a fried chicken restaurant, Tender Times. When her area is rezoned from
commercial to residential, Alexis is allowed to continue operating Tender Times in the same
location.
What is this an example of? - (ANSWER)While the use of the property originally conformed to
zoning, that was no longer the case once the rezoning took place. So the present (commercial)
use would be considered a nonconforming use, which is where a once-permissible-but-no-
longer-permitted use is grandfathered in.
Who is the representative of the title insurance company who reviews the title insurance
commitment, prepares the Closing Disclosure, and conducts the closing? - (ANSWER)closing
agent
Which of these scenarios would be most likely to result in the granting of a conditional-use
permit? - (ANSWER)A person wanting to build or establish a bed & breakfast in an area zoned
for residential use could seek a conditional-use permit from the zoning board as it could be
judged as marginally out of compliance with existing zoning.
When does the Interstate Land Sales Full Disclosure Act require the seller to give the report to a
lot purchaser? - (ANSWER)before a purchase agreement is signed.
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