PROMULGATED CONTRACT FORMS FINAL EXAM REVISED VERSION 2023

When a "fixture" in a property does not remain for the buyer, how do we inform the buyer of that fact and make sure the item does not convey with the property? Paragraph 23 "termination option" of the TREC 1-4 Family Residential Contract: If a Buyer wants the Seller to pay some or all of their closing costs, it should be added to the contract in: If a Buyer chooses not to be represented by an agent, the Buyer must be made aware that any information they share can be communicated to the Seller. The sales price is determined in paragraph 3 by adding the down payment (3A) and the loan amount (3B). The Seller contracts to furnish the buyer an existing survey, but neglects to furnish an "affidavit' with the time specified. The lender requests a new survey be furnished. Who pays for the new survey? The Third Party Financing Condition Addendum is not used with: A) Conventional financing B) Seller financing C) FHA Financing D) VA Financing B) Seller financing On the Seller's default, what should happen to the earnest money? A) It belongs to the Broker B) It should be returned to the Buyer C) It should be retained by the Seller D) The title company should keep it B) It should be returned to the Buyer If the contract includes an option period for the buyer and the buyer does not tender the option fee to the Seller within the time limit (currently with 3 days from effective date of the contract) the Buyer no longer has an unrestricted right to terminate under the option. A) True B) False A) True Fraud is: A) A crime B) A civil law violation C) Both a & b D) Only b C) Both a & b A suit for specific performance is: A) To force the buyer not to default on the contract B) To force the seller not to default on the contract C) To force either the buyer or the seller to perform on the terms of the contract D) Is a lawsuit against the inspection company C) To force either the buyer or the seller to perform on the terms of the contract How does the Texas Real Estate License Act define the first face-to-face meeting with required agency disclosure? A) When a licensee first meets a prospect B) When a prospect is ready to sign an agreement C) Only when a specific property is being shown D) When a substantive dialogue about a specific real property occurs D) When a substantive dialogue about a specific real property occurs Brokers fees are included in the 1-4 Family Residential Contract (resale) between the Buyer and the Seller. A) True B) False B) False Standard forms of TREC must be used unless: A) A broker or salesperson wishes to use a different form B) A principal in the transaction requests a different form to be used C) The listing broker disagrees with certain language in the contract D) A lender requires a different form to be used Wrong A) A broker or salesperson wishes to use a different form wrong D) A lender requires a different form to be used According to the TREC 1-4 Residential Contract (Resale), who is responsible for paying the owner policy of title insurance fee? A) The buyer B) The seller C) The title company named in the contract D) The party stipulated in the contract D) The party stipulated in the contract The Information About Brokerage Services (IBS) states the broker may represent the: A) Owner B) Buyer C) Both owner and buyer as intermediary D) All of the above Wrong C) Both owner and buyer as intermediary What is the status of a contract if the seller does not make the buyer aware of a property being located with a municipal utility district? A) Voidable by the buyer B) Void C) Voidable by the seller D) Voidable by the buyer or the seller A) Voidable by the buyer A contract is described as an agreement between two or more parties to do or not do something. A) True B) False A) True Any changes to the original contract once it is finalized and receipted must be done: A) At the title company on the original contract B) On an amendment C) On the 3rd Party Financing Addendum D) On a real estate change form B) On an amendment A TREC promulgated (declaration)Farm and Ranch contract can include: A) Buildings B) Crops C) Equipment D) All of the above D) All of the above What must a Buyer's Representation Agreement have? A) Fair Housing disclosure B) An attachment from a mortgage company regarding buyer's qualifications for a loan C) A termination date D) none of the above C) A termination date Who is designated as responsible for promptly sending a copy of the contract to any attorneys that are named in the contract? A) The title company B) The lender C) The broker D) The buyer C) The broker According to the Real Estate License Act of Texas, which one of the following actions is a fair and impartial act for an Intermediary? A) Appointing associated licensees to work with the parties B) Appointing subagents to work with the parties C) Agreeing to represent only the owner D) Agreeing to represent only the buyer A) Appointing associated licensees to work with the parties When electing to use the option paragraph of the contract, the buyer may, within the time specified in the paragraph, do any of the following EXCEPT: A) Complete the repairs himself before the end of the option period B) Terminate the contract C) Do nothing and proceed to closing D) Amend the contract waiving the right to terminate A) Complete the repairs himself before the end of the option period A Buyer/Tenant Representation Agreement is only available through the Texas Real Estate Commission (TREC) A) True B) False B) False The financing paragraph will be used to indicate: A) Third party financing B) Assumption C) Seller financing D) Any of the above D) Any of the above Time is of the essence means that certain items in the contract must be performed: A) As specified in the contract B) As verbally agreed between buyer and seller C) As verbally agreed between the sales agents representing buyers and sellers D) None of the above A) As specified in the contract The Seller as well as the Buyer has the unrestricted right to terminate the contract under the option period. A) True B) False B) False A voluntary dispute resolution is called litigation A) True B) False B) False Steering is illegal and is described as channeling a minority to or away from an area to change the character of the neighborhood. A) True B) False A) True Federal Fair Housing Laws forbids discriminatory practices by parties including: A) Owners of properties B) Lenders C) Real estate brokers D) All of the above D) All of the above Intermediary requires: A) Disclosure of who represents whom in a transaction B) Written agreement by both seller and buyer C) involvement of only one company D) All of the above D) All of the above Use of the TREC promulgated (declaration)One to Four Family Residential Contract (resale) is allowed on the sale of a residential condominium. A) True B) False B) False If there is an existing survey on the property, what does the seller take to the title company and the lender? A) The existing survey B) The existing survey and a notarized affidavit stating if there have been any changes in the survey since the time the existing survey was completed C) A copy of the deed and the existing survey D) The seller's appraisal and a copy of the survey B) The existing survey and a notarized affidavit stating if there have been any changes in the survey since the time the existing survey was completed When earnest money is deposited with an escrow agent, the escrow agent A) Is not responsible for the performance of any signatory B) Has the right to secure written release of all signatories C) Is not liable for interest on the money D) All of the above D) All of the above There are no TREC promulgated(declaration) contracts for new construction. All builders use their own contracts. A) True B) False B) False In the event of buyer's default, the seller may: A) Terminate the contract B) Receive the earnest money as liquidated damages C) Enforce specific performance D) Any one of the above D) Any one of the above The Texas Real Estate Commission (TREC) promulgates an addendum to be used in a short sale. This Short Sale Addendum is to be signed by: A) Listing agent B) Buyers' agent C) Lien holder D) Buyer and seller D) Buyer and seller If a Seller is to remain in the property after closing: A) This information should be written in Paragraph #11, Special Provisions B) The listing agent should not get involved C) This can be verbally agreed between buyer and seller and shouldn't be a problem D) A Seller's Temporary Lease Form promulgated by TREC should be completed and signed by buyer and seller and attached to the contract. D) A Seller's Temporary Lease Form promulgated by TREC should be completed and signed by buyer and seller and attached to the contract. In a real estate transaction, a street address is considered sufficient to described the property being conveyed. A) True B) False B) False In Texas, dual agency has been replaced with Intermediary A) True B) False A) True The Buyer's Agency Agreement allows an agent to show the same properties to competing clients A) True B) False Next question A) True Your buyers have signed a contract to buy a new home. The contract is subject to the sale of their present home. This is called a: A) Chattel B) Contingency C) Cooperation D) Coinsurance B) Contingency If an Agent receives confidential information from a Client while the agency agreement is in force, that agent may: A) Share that information once the agreement expires B) Share that information if the Client authorizes the agent to share it C) Never share the information with another client D) share the information, but only to another agent B) Share that information if the Client authorizes the agent to share it If a buyer and/or seller agree to mediate, they are giving up their right to pursue relief through the courts. A) True B) False B) False The TREC promulgated 1-4 Family Residential Contract (resale) states that if the cost of lender required repairs and treatment exceed _______% of the sales price, buyer may terminate the contract and the earnest money will be refunded to the buyer. A) 7% B) 1% C) 5% D) 20% C) 5% In Paragraph 3B of the sales contract, the "sum of all financing" A) Includes the earnest money deposited at the time the contract is executed B) Includes the closing costs C) Excludes any loan funding fee or mortgage insurance premium D) All of the above C) Excludes any loan funding fee or mortgage insurance premium If a property has a "Sale of Other Property" contingency contract on it, Seller: A) Cannot accept another offer B) Must take the property of the market C) Can ask the original buyer to remove the contingency if the Seller has accepted another offer as a back -up D) None of the above C) Can ask the original buyer to remove the contingency if the Seller has accepted another offer as a back -up Per Paragraph #16 of the Residential Contract (Mediation), If a buyer and/or seller agrees to mediate, they are giving up their right to pursue relief through the courts. A) True B) False B) False The Condominium Resale Certificate called for in paragraph 2 of the TREC Residential Condominium Contract (Resale) must have been prepared no more than _________ before the date it is delivered to the buyer. A) 7 days B) 20 Days C) 6 months D) 3 months D) 3 months If a property was built before 1978, what specific addendum is required? A) Walk Through and Acceptance addendum B) Addendum for asbestos inspection C) Disclosure of Lead-Base Paint Addendum D) Addendum for Inspection with Right to Terminate C) Disclosure of Lead-Base Paint Addendum If the Buyer does not give notice to the Seller that he/she cannot obtain credit approval with the number of days stated in the contract, the contract will no longer be subject to the buyer's credit approval. A) True B) False A) True Within ____ days after the title company receives a copy of the contract, Seller shall furnish to Buyer a Commitment for title insurance. A) 10 B) 5 C) 20 D) 30 C) 20 Earnest money: A) Constitutes the consideration B) Is used to make the offer more enticing to the seller C) Is required in the contract D) Always equals 1% of the sales price. B) Is used to make the offer more enticing to the seller The TREC promulgated Seller Financing Addendum states that if the buyer does not furnish the required qualifying documentation with the time limit allowed, Seller may terminate the contract and keep the earnest money. A) True B) False A) True Failure on the part of the broker/sales associate to advise the purchaser in writing to have an abstract of title examined by an attorney or obtain a title insurance policy: A) Is not a violation of the Texas Real Estate License Act B) Is the normal practice in Texas C) May be cause to have the agent's license suspended or revoked, and precludes receiving any commissions or agreed fees associated with the sale. D) Is the correct action as this is clearly a legal matter. C) May be cause to have the agent's license suspended or revoked, and precludes receiving any commissions or agreed fees associated with the sale. An addendum has been provided by TREC for voluntary use to provide for transfer of personal property (Non-Realty Items) A) True B) False A) True The Residential Condominium Contract allows a limit to the amount a Buyer will pay for Association transfer fees. A) True B) False A) True Once a contract is finalized and receipted it: A) Cannot be changed B) Can be amended only one time C) Can be amended multiple times if all parties agree D) Can only be amended by the buyer C) Can be amended multiple times if all parties agree In Paragraph #14 of the Residential Contract (casualty loss), If a seller cannot complete the repairs within the time limit, the buyer has the option of: A) Terminating the contract B) Extending the closing C) Accepting the property in the damaged condition with an assignment of insurance proceeds D) Any of the above D) Any of the above