TREC FINAL EXAM STUDY QUESTIONS
& ANSWERS
which element of a valid contract states that the contract cannot require any illegal activities? -
ANSWERSlawful objective
which of these is the best example of stigmatized property? - ANSWERShome where a notorious
convicted murderer once lived
A property owner has the right to tell other people that they cannot trespass on their property.
What is this right called? - ANSWERSright of exclusion
which type of listing agreement is most likely to cause a conflict of interest, and is therefor
discouraged? - ANSWERSnet listing
Which of these is n economic characteristic that makes land a distinctive commodity? -
ANSWERSsitus
Darla is suing Arlo for specific performance. If she is successful, what will happen? -
ANSWERSArlo will be required to perform according to the terms of the contract
What is the term for deliberate deception done with the intention of gaining something of value
or causing damage to another person? - ANSWERSfraud
Liability for others by mandate of law or by express agreement is called: - ANSWERSvicarious
liability
,who provides flood insurance to homeowners? - ANSWERSthe National Flood Insurance
Program (NFIP)
personal property MUST be transferred via: - ANSWERSbill of sale
when Shondra originally bought her house, she made a 30% down payment on the $600,000
purchase. Assuming that she has been paying towards her principal in the amount of $1,600
monthly for five years. How much equity does she now have in the house? - ANSWERS$276,000.
a buyer representation agreement establishes an agency relationship between a buyer and a: -
ANSWERSbroker
a debit to the buyer has what effect on charges made to the parties involved in the transaction?
- ANSWERSincreases the amount due from the buyer at closing
which of these is an easement that is attached to a piece of land, regardless of owner? -
ANSWERSeasement appurtenant
Joel was told by a lender the highest leverage he could achieve was a loan-to-value ratio of 75%.
His loan principal is $315,000. What is the total purchase price? - ANSWERS$420,000
what act is prohibited by the Sherman Antitrust Act? - ANSWERSprice fixing
suppose that a borrower has a gross monthly income of $3,000 and wants to qualify for
conforming loan (total debt service ratio of 36%) with a monthly PITI payment of $800. What is
the maximum amount of additional long-term obligations this borrower may have after PITI? -
ANSWERS$280
,Darleene is looking at an investment property. The annual net operating income (NOI) of the
property is $310,000. If the capitalization rate for this class of property in this area is currently
9%, what is the total value of this property? - ANSWERS$3,444,444.44
The term for when the client initiates the termination of the agency agreement is known as: -
ANSWERSrevocation
A married couple bought a home ten years ago for $400,000. Their neighborhood has rapidly
grown in popularity, and they were able to sell their home this year for $950,000. How much of
that money will hey be required to pay capital gains tax on? - ANSWERS$50,000
What type of listing provides a commission to the broker ONLY if their activities bring about a
sale? - ANSWERSopen
when you're talking about mortgages, what is another name for an origination fee? -
ANSWERSpoints
which federal law amended the comprehensive environmental response, compensation, and
liability act (CERCLA)? - ANSWERSsuperfund amendments and reauthorization act (SARA)
A Christian organization owns a fourplex. It wants to rent to only Christian tenants. Under the
federal Fair Housing Act, is this legal? - ANSWERSYes. Religious organizations which rent to
tenants for residential purposes are exempt from the Fair Housing Act?
All federally related loan programs require a property to have which of these? - ANSWERSan
appraisal
To be considered a legally competent party to a contract, a person must: - ANSWERShave
reached the age of majority and be of sound mind
, Most of the smaller, older homes on Ridgedale Street have been majorly renovated or torn
down and replaced with high-value homes. 15320 Ridgedale St. is now the smallest, shabbiest
home on the block, but it recently appraised for more than a similar home in a less-upgraded
neighborhood. What principle of value explains this? - ANSWERSPrincipal of progression
With intermediary with appointments, who would be considered the intermediary? -
ANSWERSthe broker only
What is an environmental impact statement? - ANSWERSa detailed written statement required
by the National Environmental Policy Act for a proposed action significantly affecting the
environment
The most common type of agency between brokers and their sales agents is: - ANSWERSgeneral
agency
What does it mean if a contract is executory? - ANSWERSThe terms of a contract have not yet
been fully performed by both parties
The statute of frauds states some leases must be in writing while others do not need to be in
writing. Which of the following is TRUE? - ANSWERSLeases lasting for a term of longer than one
year must be in writing
TREC's Consumer Protection Notice, which is to be displayed prominently in every broker's place
of business, serves to: - ANSWERSProvide Commission contract information for the purpose of
directing complaints from the public
Conventional loans are divided into two categories. They are: - ANSWERSConforming and non-
conforming
& ANSWERS
which element of a valid contract states that the contract cannot require any illegal activities? -
ANSWERSlawful objective
which of these is the best example of stigmatized property? - ANSWERShome where a notorious
convicted murderer once lived
A property owner has the right to tell other people that they cannot trespass on their property.
What is this right called? - ANSWERSright of exclusion
which type of listing agreement is most likely to cause a conflict of interest, and is therefor
discouraged? - ANSWERSnet listing
Which of these is n economic characteristic that makes land a distinctive commodity? -
ANSWERSsitus
Darla is suing Arlo for specific performance. If she is successful, what will happen? -
ANSWERSArlo will be required to perform according to the terms of the contract
What is the term for deliberate deception done with the intention of gaining something of value
or causing damage to another person? - ANSWERSfraud
Liability for others by mandate of law or by express agreement is called: - ANSWERSvicarious
liability
,who provides flood insurance to homeowners? - ANSWERSthe National Flood Insurance
Program (NFIP)
personal property MUST be transferred via: - ANSWERSbill of sale
when Shondra originally bought her house, she made a 30% down payment on the $600,000
purchase. Assuming that she has been paying towards her principal in the amount of $1,600
monthly for five years. How much equity does she now have in the house? - ANSWERS$276,000.
a buyer representation agreement establishes an agency relationship between a buyer and a: -
ANSWERSbroker
a debit to the buyer has what effect on charges made to the parties involved in the transaction?
- ANSWERSincreases the amount due from the buyer at closing
which of these is an easement that is attached to a piece of land, regardless of owner? -
ANSWERSeasement appurtenant
Joel was told by a lender the highest leverage he could achieve was a loan-to-value ratio of 75%.
His loan principal is $315,000. What is the total purchase price? - ANSWERS$420,000
what act is prohibited by the Sherman Antitrust Act? - ANSWERSprice fixing
suppose that a borrower has a gross monthly income of $3,000 and wants to qualify for
conforming loan (total debt service ratio of 36%) with a monthly PITI payment of $800. What is
the maximum amount of additional long-term obligations this borrower may have after PITI? -
ANSWERS$280
,Darleene is looking at an investment property. The annual net operating income (NOI) of the
property is $310,000. If the capitalization rate for this class of property in this area is currently
9%, what is the total value of this property? - ANSWERS$3,444,444.44
The term for when the client initiates the termination of the agency agreement is known as: -
ANSWERSrevocation
A married couple bought a home ten years ago for $400,000. Their neighborhood has rapidly
grown in popularity, and they were able to sell their home this year for $950,000. How much of
that money will hey be required to pay capital gains tax on? - ANSWERS$50,000
What type of listing provides a commission to the broker ONLY if their activities bring about a
sale? - ANSWERSopen
when you're talking about mortgages, what is another name for an origination fee? -
ANSWERSpoints
which federal law amended the comprehensive environmental response, compensation, and
liability act (CERCLA)? - ANSWERSsuperfund amendments and reauthorization act (SARA)
A Christian organization owns a fourplex. It wants to rent to only Christian tenants. Under the
federal Fair Housing Act, is this legal? - ANSWERSYes. Religious organizations which rent to
tenants for residential purposes are exempt from the Fair Housing Act?
All federally related loan programs require a property to have which of these? - ANSWERSan
appraisal
To be considered a legally competent party to a contract, a person must: - ANSWERShave
reached the age of majority and be of sound mind
, Most of the smaller, older homes on Ridgedale Street have been majorly renovated or torn
down and replaced with high-value homes. 15320 Ridgedale St. is now the smallest, shabbiest
home on the block, but it recently appraised for more than a similar home in a less-upgraded
neighborhood. What principle of value explains this? - ANSWERSPrincipal of progression
With intermediary with appointments, who would be considered the intermediary? -
ANSWERSthe broker only
What is an environmental impact statement? - ANSWERSa detailed written statement required
by the National Environmental Policy Act for a proposed action significantly affecting the
environment
The most common type of agency between brokers and their sales agents is: - ANSWERSgeneral
agency
What does it mean if a contract is executory? - ANSWERSThe terms of a contract have not yet
been fully performed by both parties
The statute of frauds states some leases must be in writing while others do not need to be in
writing. Which of the following is TRUE? - ANSWERSLeases lasting for a term of longer than one
year must be in writing
TREC's Consumer Protection Notice, which is to be displayed prominently in every broker's place
of business, serves to: - ANSWERSProvide Commission contract information for the purpose of
directing complaints from the public
Conventional loans are divided into two categories. They are: - ANSWERSConforming and non-
conforming
