, Question 1
Under the Texas Real Estate License Act, which scenario constitutes
unauthorized practice of law by a salesperson?
A. Explaining the meaning of a standard promulgated contract clause to a
client.
B. Drafting a special warranty deed for a client using a TREC form.
C. Negotiating a lease agreement for a commercial property.
D. Advising a client on the tax implications of a 1031 exchange.
Correct Answer: B - Drafting a special warranty deed for a client
using a TREC form.
RATIONALE
Drafting a deed is considered the practice of law, which salespersons
cannot do unless they are licensed attorneys. Explaining promulgated
contract clauses, negotiating leases, and advising on tax implications
(if not giving legal advice) are generally permissible under TRELA
and TREC rules.
Question 2
A broker receives a $10,000 earnest money deposit. The buyer and seller
dispute its return. Under TREC rules, what is the broker's required action?
A. Hold the funds until a court order is issued.
B. Return the funds to the buyer immediately.
C. Send written notification to both parties and deposit the funds with
TREC within 30 days if not resolved.
D. Divide the funds equally between the parties.
Correct Answer: C - Send written notification to both parties and
deposit the funds with TREC within 30 days if not resolved.
Page 2
, RATIONALE
TREC rules require the broker to send written notice to both parties
and, if the dispute is not resolved within 30 days, deposit the funds
with TREC. Holding indefinitely, returning to buyer unilaterally, or
splitting funds without agreement violates TREC rules.
Question 3
Which of the following best describes the legal effect of a lis pendens filed
against a property?
A. It transfers title to the lienholder.
B. It provides constructive notice of a pending lawsuit affecting title.
C. It automatically forecloses on the property.
D. It removes all existing liens from the property.
Correct Answer: B - It provides constructive notice of a pending
lawsuit affecting title.
RATIONALE
A lis pendens is a public notice that a lawsuit is pending that may
affect title to the property. It does not transfer title, foreclose, or
remove liens; it serves as constructive notice to potential buyers.
Question 4
A property is appraised at $300,000. The assessed value is 80% of market
value, and the tax rate is $2.50 per $100. What is the annual property tax?
A. $6,000
B. $7,500
C. $5,000
D. $6,500
Correct Answer: A - $6,000
Page 3
, RATIONALE
Assessed value = $300,000 × 0.80 = $240,000. Tax = ($240,)
× $2.50 = $6,000. Other options miscalculate the assessed value or tax
rate.
Question 5
Under the Texas Deceptive Trade Practices Act, which party may be held liable
for a salesperson's misrepresentation about a property's condition?
A. Only the salesperson personally.
B. Only the broker.
C. Both the salesperson and the broker.
D. Neither, if the misrepresentation was unintentional.
Correct Answer: C - Both the salesperson and the broker.
RATIONALE
Under the DTPA, both the salesperson and the broker can be held
liable for misrepresentations made during a real estate transaction,
even if unintentional, due to vicarious liability and the statute's
consumer protection provisions.
Question 6
Which of the following is a requirement for a valid Texas real estate contract
under the Statute of Frauds?
A. The contract must be notarized.
B. The contract must be in writing and signed by the party to be charged.
C. The contract must include a legal description and be recorded.
D. The contract must be witnessed by two adults.
Correct Answer: B - The contract must be in writing and signed
by the party to be charged.
Page 4
Under the Texas Real Estate License Act, which scenario constitutes
unauthorized practice of law by a salesperson?
A. Explaining the meaning of a standard promulgated contract clause to a
client.
B. Drafting a special warranty deed for a client using a TREC form.
C. Negotiating a lease agreement for a commercial property.
D. Advising a client on the tax implications of a 1031 exchange.
Correct Answer: B - Drafting a special warranty deed for a client
using a TREC form.
RATIONALE
Drafting a deed is considered the practice of law, which salespersons
cannot do unless they are licensed attorneys. Explaining promulgated
contract clauses, negotiating leases, and advising on tax implications
(if not giving legal advice) are generally permissible under TRELA
and TREC rules.
Question 2
A broker receives a $10,000 earnest money deposit. The buyer and seller
dispute its return. Under TREC rules, what is the broker's required action?
A. Hold the funds until a court order is issued.
B. Return the funds to the buyer immediately.
C. Send written notification to both parties and deposit the funds with
TREC within 30 days if not resolved.
D. Divide the funds equally between the parties.
Correct Answer: C - Send written notification to both parties and
deposit the funds with TREC within 30 days if not resolved.
Page 2
, RATIONALE
TREC rules require the broker to send written notice to both parties
and, if the dispute is not resolved within 30 days, deposit the funds
with TREC. Holding indefinitely, returning to buyer unilaterally, or
splitting funds without agreement violates TREC rules.
Question 3
Which of the following best describes the legal effect of a lis pendens filed
against a property?
A. It transfers title to the lienholder.
B. It provides constructive notice of a pending lawsuit affecting title.
C. It automatically forecloses on the property.
D. It removes all existing liens from the property.
Correct Answer: B - It provides constructive notice of a pending
lawsuit affecting title.
RATIONALE
A lis pendens is a public notice that a lawsuit is pending that may
affect title to the property. It does not transfer title, foreclose, or
remove liens; it serves as constructive notice to potential buyers.
Question 4
A property is appraised at $300,000. The assessed value is 80% of market
value, and the tax rate is $2.50 per $100. What is the annual property tax?
A. $6,000
B. $7,500
C. $5,000
D. $6,500
Correct Answer: A - $6,000
Page 3
, RATIONALE
Assessed value = $300,000 × 0.80 = $240,000. Tax = ($240,)
× $2.50 = $6,000. Other options miscalculate the assessed value or tax
rate.
Question 5
Under the Texas Deceptive Trade Practices Act, which party may be held liable
for a salesperson's misrepresentation about a property's condition?
A. Only the salesperson personally.
B. Only the broker.
C. Both the salesperson and the broker.
D. Neither, if the misrepresentation was unintentional.
Correct Answer: C - Both the salesperson and the broker.
RATIONALE
Under the DTPA, both the salesperson and the broker can be held
liable for misrepresentations made during a real estate transaction,
even if unintentional, due to vicarious liability and the statute's
consumer protection provisions.
Question 6
Which of the following is a requirement for a valid Texas real estate contract
under the Statute of Frauds?
A. The contract must be notarized.
B. The contract must be in writing and signed by the party to be charged.
C. The contract must include a legal description and be recorded.
D. The contract must be witnessed by two adults.
Correct Answer: B - The contract must be in writing and signed
by the party to be charged.
Page 4
