Which of the following is NOT a TREC-promulgated addendum

1. A contract is described as:A. Mutually bindingB. Legally enforceableC. An agreement between two or more parties to do or not do something.

D. All of the above

The correct answer is D. A contract is an agreement between two or more parties to do or not do

something. It is mutually binding and legally enforceable.

2. In a real estate transaction, the legal description is NOT:A. Lot and blockB. Metes and boundsC. A street address

D. A description of the property from a surveyor’s field notes

The correct answer is C. The legal descriptions in Texas are: Lot and block, and metes and bounds

(sometimes also called surveyor’s field notes). A street address is NOT a legal description.

3. Earnest money:A. Constitutes the considerationB. Is used to make the offer more enticing to the sellerC. Is required in the contract

D. Always equals 1% of the sales price

The correct answer is B. Earnest money is a gesture of good faith and is used to make the offer moreenticing to the seller. It can be any amount that the Buyer wishes to offer, and the Seller is willing to

accept.

4. 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.

The correct answer is B. Standard TREC forms must be used in real estate transactions. However, a principal in the transaction can request a different form be used. A principal is considered to be either

Buyer, Seller, Landlord, or Tenant. Builders (as Sellers) typically use their own contact form

5. Any changes to the original contract once it is finalized and receipted must be done:A. At the title company on the original contractB. Using the AmendmentC. On the Third-Party Financing Addendum

D. On a real estate change form

The correct answer is B. Once a contract has been signed and agreed to by all parties, and receiptedby the escrow agent, any and all changes must be done using an Amendment. The original contract

stays with the escrow agent.

6. Time is of the essence means that certain items in the contract must be performed:A. As specified in the contractB. As verbally agreed between buyer and sellerC. As verbally agreed between the sales agents representing buyers and sellers

D. None of the above

The correct answer is A. Time is of the essence refers to any specific time that is inherent in the

contract – i.e. number of days in an option period or the specific closing date written into the contract.

7. Once a contract is finalized and receipted:A. It cannot be changed.B. It can be amended only one time.C. It can be amended multiple times if all parties agree.

D. It can only be amended by the buyer.

The correct answer is C. There is no limit to the number of amendments that can be used in a

transaction. A party can amend a previous amendment as well as the contract.

8. The TREC promulgated Seller Financing Addendum states that if the buyer does not furnish therequired qualifying documentation within the time limit allowed:A. Seller may terminate the contract and keep the earnest money.B. Seller may terminate the contract but must return the earnest money.C. Seller must tell Buyer why he is terminating.

D. Buyer will be liable for the cost of the credit report.

The correct answer is A. In a Seller Financed contract, the Seller acts as the bank. Seller can ask for the same qualifying documents to be provided that a bank or mortgage company requires. If the Buyeragrees to furnish these documents and fails to do so in the allotted time, the Seller can end the contract

is allowed to keep the earnest money (per the terms of the contract).

9. How does the Texas Real Estate License Act define the first face-to-face meeting which requiresagency disclosure?A. When a licensee first meets a prospectB. When a prospect is ready to sign an agreementC. Only when a specific property is being shown

D. When substantive dialogue about a specific real property occurs

The correct answer is D. Once a prospect enquires about a specific real property, the agent is requiredto inform the prospect who represents whom in a transaction (Agency law). The easiest way to do so isto use the Information About Brokerage Services form which describes the agency representation

available to each party.

10. In Texas:A. Dual agency is legal.B. An agent may represent both buyer and seller without any agreement from either.C. A Broker may represent both buyer and seller under signed intermediary agreements.

D. A Broker may not, under any circumstance, represent both Buyer and Seller.

The correct answer is C. There is no dual agency in the State of Texas. However, it is possible for aBroker to represent both the buyer and seller under intermediary. Agreement from the parties needs to

be in writing for Intermediary to be allowed.

11. Intermediary requires:A. Disclosure of who represents whom in a transactionB. Written agreement by both seller and buyerC. Involvement of only one company

D. All the above

The correct answer is D. Intermediary requires involvement of only one company with writtenagreement from all parties, and a disclosure of who represents whom in the transaction. Buyer and

Seller in a sales transaction; Landlord and Tenant in a lease transaction.

12. The Information About Brokerage Services (IABS) states the broker may represent:A. The ownerB. The buyerC. Both owner and buyer as intermediary

D. All the above

The correct answer is D. n a transaction the IBS (Information About Brokerage Services) states that a

Broker may represent the Owner, the Buyer, and both the owner and buyer in an Intermediary position.

13. According to The Real Estate License Act of Texas (TRELA), which one of the following actionsis a fair and impartial act for an Intermediary?A. Appointing associated licensees to work with the partiesB. Appointing subagents to work with the partiesC. Agreeing to represent only the owner

D. Agreeing to represent only the buyer

The correct answer is A. The Texas Real Estate Licensing Act states that to be fair and impartial theBroker may appoint a licensee associated with the Broker to represent the Seller and a different

associated licensee to represent the Buyer.

14. Chapter 531 Canons of Professional Ethics and Conduct includes:A. FidelityB. IntegrityC. Competency

D. All of the above

The correct answer is D. Fidelity, Integrity and Competency are all a part of Canons of Professional

Ethics.

15. In the Buyer Agreement, Intermediary is in Paragraph 8. The paragraph is the same in the BuyerAgreement and in the:A. Listing AgreementB. Sales contractC. Inspecting report

D. Seller’s Disclosure

The correct answer is A. The written agreements that allow intermediary are the Buyer/Tenant agency

agreement on the buyer’s side, and the Listing Agreement on the seller’s side.

16. A broker may not disclose any confidential information unless:A. The broker is given permission in writing by the client.B. It is required by law.C. Confidentially is not required in real estate.

D. Both A and B

The correct answer is D. Confidential information received from a client to their agent may not be disclosed unless the agent has been given written permission to disclose, or if the disclosure is

required by law.

17. 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 expiresB. Share that information if the Client authorizes the agent to share itC. Never share the information with another client

D. Share the information, but only to another agent

The correct answer is B. An example of confidential information is when a Seller informs the agent thatthey are willing to accept any reasonable offer but asks the agent not to share it. The confidentiality

extends beyond the expiration of the listing agreement unless, at that time, the Seller gives written permission to share it.

18. A Buyer/Tenant Representation Agreement is:A. Only available through the Texas Real Estate Commission (TREC)B. Only available through the Texas Association of REALTORS® (TAR)C. Sometimes available through local REALTOR® Boards

D. Available to the public on the TREC website

The correct answer is C. The Texas Real Estate Commission does not have a promulgated form for Buyer/Tenant Representation Agreement. Those are available from TAR or also can be available

through the agent’s local REALTOR® board.

19. In Paragraph 3B of the sales contract, the ‘sum of all financing:”A. Includes the earnest money deposited at the time the contract is executedB. Includes the closing costsC. Excludes any loan funding fee or mortgage insurance premium

D. All the above

The correct answer is C. The sum of all financing applies to the amount of the loan. It does not includeany closing costs. The FHA mortgage insurance and the VA funding fee are part of the closing costs

and can be financed, but these are handled separately by the loan company.

20. The sales price in Paragraph 3:A. Is determined by adding the down payment (3A) and the loan amount (3B)B. Does not include closing costsC. Can be all cash

D. All the above

The correct answer is D. The sales price is the cash down payment plus the loan amount (which doesnot include any closing costs). 3A (down payment) + 3B (loan amount, if any) = 3C (sales price). If the

offer is all cash, then 3B will be zero because there will be no loan involved.

21. The Seller contracts to furnish the buyer an existing survey, but neglects to furnish an “affidavit”within the time specified. The lender requests a new survey be furnished. Who pays for the newsurvey?A. If the existing survey is rejected, then whoever is stated in the contract pays.B. The title company can approve the existing survey and override the lender.C. The buyer

D. The seller

The correct answer is D. When the Seller is furnishing the existing survey, the survey must beaccompanied by the Real Property Affidavit which is signed in front of a notary. The affidavit states thatsince the survey was performed (date on survey) there have been no changes. Any changes will benoted by the seller on the affidavit. If the Seller fails to provide the affidavit, then the Seller will pay for a

new survey.

22. Within ____ days after the title company receives a copy of the contract, Seller shall furnish toBuyer a Commitment for title insurance.A. 10B. 5C. 20

D. 30

The correct answer is C. On behalf of the Seller, the escrow office will issue a title commitment within20 days after receiving a copy of the finalized contract. The title commitment contains information about the property’s title, plus will list any issues that must be cleared before they can provide a title policy

insuring a clear title for the purchaser.

23. According to the TREC 1-4 Residential Contract (Resale), who is responsible for paying theowner policy of title insurance fee?A. The buyerB. The sellerC. The title company named in the contract.

D. The party stipulated in the contract.

The correct answer is D. The party stipulated means the party that is named in the contract to complete

the item required by the contract. In this case, it is the party who will pay for the owners’ title policy.

24. Which of the following is NOT promulgated by TREC?A. Unimproved Property ContractB. Residential Lease ContractC. Farm and Ranch Contract

D. New Home Contract (Complete Construction)

The correct answer is B. The residential lease contract is not promulgated by TREC. That means thetenant and landlord can use any form they choose to agree to the terms of the lease. A ResidentialLease Contract is available through Texas Association of REALTORS® and also many Boards ofREALTORS®. Also, a real estate attorney can draw up a lease agreement between Landlord and

Tenant.

25. When a “fixture” in a property does not remain for the buyer, how do we inform the buyer of thatfact and make sure the item does not convey with the property?A. List the item as not included in the Listing AgreementB. List the item on the “Seller’s Disclosure Notice”C. List the item on the “Residential Contract”

D. List the item on the “Amendment” form

The correct answer is C. Paragraph 2D of the 1-4 Family Residential Contract allows the Seller to list any items that are considered “fixtures” (attached to the property) to exclude those items from the sale.It MUST be listed on the contract itself to avoid any confusion about what doesn’t remain in the

property.

26. The Third-Party Financing Addendum allows the buyer:A. To finance his/her closing costsB. A certain number of days to obtain loan approvalC. The right to terminate the contract at any time prior to closing

D. To have automated underwriting for the loan

The correct answer is B. The Third-Party Financing addendum allows a certain number of days toobtain loan approval. If that deadline is passed, then the contract is no longer subject to the buyer

obtaining financing.

27. What is the status of a contract if the seller does not make the buyer aware of a property beinglocated within a municipal utility district?A. The contract is voidable by the buyer.B. The contract is void.C. The contract is voidable by the seller.

D. The contract is voidable by the buyer or the seller.

The correct answer is A. The Seller is obligated to inform the buyer that the subject property is locatedwithin a MUD (municipal utility district). MUDs have the power to impose taxes plus create certain

restrictions or obligations for properties within their boundaries. The buyer must be informed of such.

28. If there is an existing survey on the property, what does the seller take to the title company andthe lender?A. The existing surveyB. The existing survey and a notarized affidavit stating if there have been any changes inthe survey since the time the existing survey was completedC. A copy of the deed and the existing survey

D. The seller’s appraisal and a copy of the survey

The correct answer is B. Both the lender and the title company, as well as the buyer, need to know ifthere have been any changes since the provided survey was done (date on the survey). Any change to

the surveyed property may affect the loan and also the title and may delay or prevent the closing.

29. If the Buyer does not give notice to the Seller that he/she cannot obtain credit approval within thenumber of days stated in the contract:A. The contract will no longer be subject to the buyer’s credit approval.B. The contract will automatically terminate.C. The property is no longer subject to property approval by the lender.

D. The time limit automatically extends 5 days.

The correct answer is A. Buyer must give notice to Seller that they cannot obtain the loan they areseeking within the number of days stated in the contract. If they don’t, then the contract is no longer

subject to credit approval.

30. Failure on the part of the broker/sales associate to advise the purchaser in writing to have anabstract of title examined by an attorney or obtain a title insurance policy:A. Is not a violation of the Texas Real Estate License ActB. Is the normal practice in TexasC. May be cause to have the agent’s license suspended or revoked, and precludesreceiving any commissions or agreed fees associated with the sale

D. Is the correct action as this is clearly a legal matter

The correct answer is C. Broker/Agent must inform the buyer that they have the right to a title policy or

an abstract of title. Failure to do so has consequences.

31. If a Seller has furniture he would like to sell, and the buyer would like to purchase, how shouldthis be handled?A. This information should be written in Paragraph #11, Special Provisions.B. A list should be given to the title company and they will draw up a document to address thesale.C. Simply attach a list of the items and the price to be paid to the original contract.

D. Use the Non-Realty Item Addendum to address the sale.

The correct answer is D. Any personal property that the Seller intends to leave behind with or without

compensation from the buyer, should be listed in detail on the Non-Realty Item addendum.

33. In Paragraph #14 of the Residential Contract (Casualty Loss), if a seller cannot complete therepairs within the time limit, the buyer has the option of:A. Terminating the contractB. Extending the closingC. Accepting the property in the damaged condition with an assignment of insurance proceeds

D. Any of the above

The correct answer is D. If required repairs are not completed before closing, then the Buyer has theright to terminate, extend the closing, accept the condition of the property without the repairs, acceptany insurance proceeds if damage was insurable, or be able to come to an agreement for the repairs to

be done after closing.

34. Broker’s fees are:A. Included in the One to Four Family Residential Contract (Resale) between the Buyer and theSellerB. Determined by writing in the Information About Brokerage ServicesC. Determined by writing in the Listing Agreement

D. Both B and C

The correct answer is C. Broker fees are agreed in the listing agreement between the Seller and theBroker. The Broker has the ability to share those fees with an agent from an outside company who

works with a buyer.

34. Broker’s fees are:A. Included in the One to Four Family Residential Contract (Resale) between the Buyer and theSellerB. Determined by writing in the Information About Brokerage ServicesC. Determined by writing in the Listing Agreement

D. Both B and C

The correct answer is C. Broker fees are agreed in the listing agreement between the Seller and theBroker. The Broker has the ability to share those fees with an agent from an outside company who

works with a buyer.

35. If a Buyer wants the Seller to pay some or all their closing costs, it should be added to the One toFour Family Residential Contract (Resale) in:A. Paragraph #11 (Special Provisions)B. Paragraph #12 (Seller Participation in Buyer’s Costs)C. Third-Party Financing Addendum

D. All the above

The correct answer is B. Paragraph 12A.(1)(b) allows a seller to pay a portion of the buyers’ closing

costs.

36. 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. The Seller should retain it.

D. The title company should keep it.

The correct answer is B. If a Seller defaults on the contract, the earnest money should be returned to

the Buyer. The buyer also has the right to sue for specific performance or for compensatory damages.

37. All the following are covered by home warranty’s basic coverage EXCEPT:A. Exhaust fansB. Heating and electrical system componentsC. Roof

D. Sump pump

The correct answer is C. A Home Warranty covers the systems (HVAC, water heater, electric,

plumbing, etc.) but not the structure.

38. In the event of buyer’s default, the seller may:A. Terminate the contractB. Receive the earnest money as liquidated damagesC. Enforce specific performance

D. Any of the above

The correct answer is D. If Buyer defaults on the contract, the Seller has the right to terminate and

receive the earnest money, or sue for specific performance, or sue for compensatory damages.

39. When electing to use the option paragraph of the contract, the buyer may, within the timespecified in the paragraph, do any of the following EXCEPT:A. Complete the repairs himself before the end of the option periodB. Terminate the contractC. Do nothing and proceed to closing

D. Amend the contract waiving the right to terminate

The correct answer is A. The option money and time period give the buyer the right to terminate, to do

nothing and proceed to closing, or to amend the contract.

40. A voluntary dispute resolution is called:A. LitigationB. Mandatory arbitrationC. Mediation

D. Civil argument

The correct answer is C. Residential real estate contracts call for mediation (a voluntary dispute

resolution). If parties agree to mediation, it does not take away their right to sue.

41. A title commitment spells out:A. The terms and conditions on which the title insurance underwriter will issue the titleinsuranceB. The name of the underwriterC. The option paragraph

D. Both A and C

The correct answer is A. The commitment just says that if all these conditions and terms are met, then

we will agree to insure the title against any defects in the title

42. A suit for specific performance is:A. To force the buyer not to default on the contractB. To force the seller not to default on the contractC. To force either the buyer or the seller to perform on the terms of the contract

D. A lawsuit against the inspection company

The correct answer is C. Either a buyer or a seller may sue the other party to force performance under

the terms of the signed and agreed contract.

43. The right to terminate per Paragraph 23:A. Is available to the seller as well as the buyerB. Does not expire until the contract is closedC. Requires a fee for a specified time

D. Is not available in the Condominium contract

The correct answer is C. In order for the buyer to have the right to terminate under Paragraph 23, both

blanks must be filled out – dollar amount and number of days.

44. Even though a buyer and/or seller agree to mediate:A. They cannot do so within the promulgated contract.B. They have agreed to mandatory arbitration.C. They are not giving up their right to pursue relief through the courts.

D. The party who requested mediation will pay for the cost of the mediator.

The correct answer is C. In other words, if seller/buyer cannot come to terms in mediation, they still

have the right to sue.

45. Who is designated as responsible for promptly sending a copy of the contract to any attorneyswho are named in the contract?A. The title companyB. The lenderC. The broker

D. The buyer

The correct answer is C. It is the Broker’s responsibility to send a copy of the contract to any attorneys

named in the contract so that the attorney can accept or decline the job of reviewing the contract.

46. The statutory limit for statutory fraud is ______ years.A. 4B. 10C. There is no limit.

D. 20

The correct answer is A.

The limit for statutory fraud is 4 years.

47. In the Buyer’s Temporary Lease, who pays the utilities?A. Seller because it is still their home.B. The listing agentC. Buyer and seller will prorate at closing.

D. Buyer

The correct answer is D. TREC promulgated Buyer’s Temporary Lease prior to closing requires the

buyer-occupant to pay for the utilities.

48. Use of the TREC promulgated One to Four Family Residential Contract (Resale):A. Is allowed on the sale of a residential condominiumB. Can be used for a vacant residential lotC. Covers single family, duplex, triplex, and fourplex transactions

D. All the above

The correct answer is C. The TREC One to Four Family Residential Contract (Resale) covers single

family, duplex, triplex, and fourplex transactions.

49. The Residential Condominium Contract Resale:A. Allows a limit to the amount a Buyer will pay for Association transfer feesB. Can be used for new condominium constructionC. Can be used on a residence with a Lot and Block legal description

D. Does not address any parking assignments

The correct answer is A. The limit a buyer must pay for transfer fees in a condominium is limited in the

contract.

50. Your buyers have signed a contract to buy a new home. The contract is subject to the sale oftheir present home. This is called a:A. ChattelB. ContingencyC. Cooperation

D. Coinsurance

The correct answer is B. A Subject to Sale of Other Property addendum creates a contingent contract –in other words the contract cannot move forward until the contingency requiring the buyer to receive

funds from a house they are selling is removed.

51. The Texas Real Estate Commission (TREC) promulgates an addendum to be used in a shortsale. This Short Sale Addendum is to be signed by:A. The listing agentB. The buyers’ agentC. The lien holder

D. The buyer and seller

The correct answer is D. Even though a short sale requires the loan company’s agreement, they do notsign the actual purchase contract. The contract and the Short Sale Addendum are signed by the Buyer

and the Seller

52. Which contract cannot be used for new construction?A. TREC promulgated contract for New Home (Incomplete Construction)B. TREC promulgated contract for New Home (Completed Construction)C. Builder’s contracts

D. Residential Condominium Contract (Resale)

The correct answer is D. The TREC Residential Condominium Contract is used for resale only but notnew condo construction. The Texas Association of REALTORS® has a Condominium (NewConstruction) contract that may be used, or, in many cases, the builder furnishes the contract for newly

constructed condos.

53. If a property has a “Sale of Other Property” contingency contract on it, Seller:A. Cannot accept another offerB. Must take the property off the marketC. 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

The correct answer is C. The Sale of Other Property addendum allows the Seller to seek other offers,and if the Seller accepts one of the offers and signs it as a back-up, the Seller can ask the first buyer to

either remove the contingency or to terminate their contract.

54. A TREC promulgated Farm and Ranch Contract can include:A. BuildingsB. CropsC. Equipment

D. All the above

The correct answer is D. The Farm and Ranch contract can include a house, other buildings, farm

equipment, and crops, if applicable.

55. All are protected classes under the Texas Fair Housing Act EXCEPT:A. ReligionB. SexC. Age

D. National origin

The correct answer is C.

Age is not one of the protected classes under the Texas Fair Housing Act.

56. Fraud is:A. A crimeB. A civil law violationC. Both A and B

D. Only B

The correct answer is C. Fraud can be prosecuted as a crime. Fraud charges also can go through the

courts as civil law violation

57. Transfer of personal property in a real estate transaction:A. Is not allowedB. Should be agreed between buyer and seller outside of the saleC. Can be done on the Non-Realty Items Addendum

D. Can only be done if the personal property matches something in the real property

The correct answer is C. Any personal property that the Seller agrees to leave with the property can be

handled by listing it on the Non-Realty Items Addendum.

58. Federal Fair Housing Laws forbids discriminatory practices by parties including:A. Owners of propertiesB. LendersC. Real estate brokers

D. All the above

The correct answer is D.

Discriminatory practices are NOT allowed in any transaction.

59. Steering is:A. IllegalB. Described as channeling a minority to or away from an areaC. Usually intended to change the character of a neighborhood

D. All of the above

The correct answer is D. Steering, described as channeling a minority to or away from an area and

usually intended to change the character of a neighborhood, is illegal.

60. What is the number one reason for lawsuits with contracts?A. MisrepresentationB. Non-disclosureC. Property condition issues

D. Title problems

The correct answer is B. The largest number of lawsuits regarding contracts concerns non-disclosure,whether of something in the property or failing to disclose which party or parties an agent/broker

represents.

61. The Third- Party Financing Condition Addendum is used for all the following financing optionsEXCEPT:A. Seller financingB. Reverse mortgage loansC. Conventional loans

D. USDA government financing

The correct answer is A.

Seller financing and assumptions have their own addendums.

62. The option period allows buyers ___________________.A. The unrestricted right to terminate the contract within a certain time period.B. The right to terminate under certain conditions spelled out in Paragraph 23.C. 10 days to provide the seller a list of all repairs requested by the buyer.

D. 15 days from the date of the end of the option period to close the transaction.

The correct answer is A. When there is a fee paid for a specific time period for the option, the buyercan terminate for any reason. All other rights of the buyer to terminate depend on something that has

been done, or not done, according to the terms of the contract.

65. Paragraph 6 of the Seller's Temporary Residential Lease gives information about:A. Term of the leaseB. UtilitiesC. Pets

D. Deposit

The correct answer is B. Paragraph 6 of the Seller’s Temporary Residential Lease (where the Seller
remains in the property after closing) deals with who pays for the utilities.

64. TREC is a nine-member commission. Six are brokers and three are not licensed by thecommission. The three unlicensed members must:A. Have experience in the real estate marketB. Have a degree in real estateC. Have no financial interest in real estate, except as consumers

D. All of the above

The correct answer is C. Of the nine-member TREC commission, the three unlicensed members must

not have a financial interest in real estate except as a consumer.

65. Paragraph 6 of the Seller's Temporary Residential Lease gives information about:A. Term of the leaseB. UtilitiesC. Pets

D. Deposit

The correct answer is B. Paragraph 6 of the Seller’s Temporary Residential Lease (where the Seller

remains in the property after closing) deals with who pays for the utilities.

66. The “Closing Disclosure” form replaces the ___________ and the ______________.A. Truth-in-Lending Act and the HUD-1 Settlement StatementB. Real Estate Settlement Procedures Act and the loan applicationC. loan application and the HUD-1

D. The appraisal and the credit report

The correct answer is A. The Closing Disclosure form replaces two forms previously used by the lender

and the title company – truth-in-lending and the HUD-1 settlement form.

67. The agent is not practicing law if the agent:A. Uses a form adopted by the Commission.B. Uses a form prepared by an attorney licensed in Texas.C. Uses a form prepared by the property owner.

D. All of the above

The correct answer is D. An agent is not practicing law if the agent uses a form adopted by the

Commission, a form prepared by an attorney, or a form prepared by the property owner.

68. In the sales contract, under Broker Information, the “Other Broker firm” is given a choice of whothey represent. What are the choices?A. Buyer only as Buyer's AgentB. Seller and Buyer as an intermediaryC. Seller as Listing Broker's subagent

D. Both A and C

The correct answer is D. On page 9 of the sales contract, the “other broker” (not the listing broker) ischecked that either the agent is representing the buyer as the buyer’s agent or representing the seller

as the listing broker’s subagent.

69. Closing costs could include:A. Origination Fee.B. Loan Application Fee.C. Discount Points.

D. All of the above

The correct answer is D. Closing costs can include an origination, loan application, discount points as

well as other lender fees and title company charges.

70. The language in the One-to-Four Family contract makes _____________ mandatory.A. MediationB. An amendment to the contractC. Leaving all fireplace tools

D. Conveying personal property with the real property

The correct answer is A. In the TREC contracts, mediation is mandatory. However, agreement to

mediate does not take away the right to sue.

71. A residential survey includes:A. An official and permanent official record of land placement, property lines, easements, andboundariesB. Protects against property line disputesC. Provides a point of reference in determining land value

D. All the above

The correct answer is D. A survey is different from a plat. A plat only shows the property lines. A surveyplaces buildings, if any, on the land. It will also show building lines, easements, fences, and contains

other information pertinent to the land

72. A license holder must disclose if he is a party to the transaction, or acting on behalf of a spouse,parent, child, business entity in which the license holder owns more than 10%. This is done inParagraph _____ of the One to Four Family Residential Contract (Resale).A. 4B. 7C. 19

D. 25

The correct answer is A. Paragraph 4 of the One to Four Family Residential Contract, allows the agentto disclose if they are a party in the contract (as required by law), or if they have any close family

relationship to the buyer (or the seller).

73. If a buyer makes an offer on a property and the seller counters the offer (makes changes), thecounter is considered to be:A. A reflectionB. A rescissionC. A rejection

D. A resentment

The correct answer is C. A counter offer is a rejection of the buyer’s offer. If the seller counters, the

buyer has no obligation to proceed with the contract.

74. A Municipal Utility District (MUD):A. Has the authority to impose taxesB. Is a political subdivision of the State of TexasC. Provides water, sewage, drainage, and other services

D. All the above

The correct answer is D.

A Municipal Utility District (MUD) has taxing authority, plus provides water, sewage, and other services to properties in its jurisdiction.

75. In Paragraph 2 of the standard residential contract form, which of the following would NOT beincluded in the sale unless otherwise provided for?A. Ceiling fanB. ChandelierC. Flat screen TV

D. Window shades

The correct answer is C. A flat screen TV is considered personal property and would not convey with

the sale unless otherwise agreed in writing.

76. If you understand all the facts, you can:A. Give legal advice to a clientB. Interpret a survey for the client showing setback and building lines and utility easementsC. Explain the real estate terms in a title policy

D. Advise the client they have the right to receive a title policy or abstract of title

The correct answer is D. This is something that is pre-printed on the TREC residential contracts;

however, the agent needs to be aware that it is their responsibility to tell the buyer

77. If there is no time limit specified in a contract, then the time limit would be:A. Determined to be “time is of the essence”B. Within a reasonable timeC. Determined by the lender

D. Three weeks

The correct answer is B. If a time limit is not specified in the contract, then the task must be performed

within a ‘reasonable time.’

78. A license holder who gives advice or opinion as to the legal effect of a contract or gives opinionsconcerning the status or validity of title to real estate:A. Is allowed to do this if they are a brokerB. Is practicing lawC. May give legal opinions to a client but not to a customer

D. May give legal opinions if they have been a broker for four years

The correct answer is B. You cannot give legal advice — period. If you do give legal advice to a buyer

or seller, you could have your license suspended or revoked.

79. The special warranty deed guarantees no liens or encumbrances against the property:A. From the sovereignty of the landB. During the seller’s ownershipC. From the Spanish land grants

D. Forever

The correct answer is B. A special warranty deed only guarantees that during their ownership there

have been no liens or other encumbrances placed on the property.

80. If there are unusual circumstances surrounding a transaction, the client should:A. Not close on the propertyB. Ask the owner to finance the propertyC. Seek the advice of an attorney

D. Make his agent responsible for removing any problems

The correct answer is C. An agent should suggest to their client to consult an attorney if there are any

unusual circumstances in a transaction. The agent cannot give legal advice.

81. If the property is subject to any lease to which the seller is a party, the seller will deliver the leaseto the buyer within 7 days after the:A. Purchasers submit the offer to the seller.B. Buyers have gone to loan application and have pending approval for their loan.C. Effective date of the contract

D. Survey is complete.

The correct answer is C. The seller must provide to the buyer any lease on the property, if applicable,

within 7 days of the effective date of the contract.

82. Leases for less than ____ days are exempt from security devices statutes.A. 30B. 60C. 180

D. 90

The correct answer is D. TREC promulgated leases where the buyer moves in prior to closing or theseller stays in the property after closing are effective for 90 days. If the rental lasts beyond 90 days,

then the lease must be converted to another type of lease.

83. By law, a Seller must disclose anything they know about the property. To do this, they must use:A. A TREC promulgated disclosure formB. A form provided by the local REALTOR® BoardC. The Seller Disclosure form from the Texas Association of REALTORS® or The Texas RealEstate Commission

D. Any form they choose

The correct answer is D. By law, a seller must disclose anything they know about the property. They do

not have to use any particular form to do so.

84. Under Property Condition (Paragraph 7 in the One to Four Family Residential Contract), if abuyer checks item 7D (1) accepting the property “As Is:”A. The buyer cannot negotiate for repairs.B. The buyer has opted not to have the property inspected.C. It does not preclude any rights of the Buyer including the right to amend the contract.

D. The buyer does not need to ask for a “Seller Disclosure.”

The correct answer is C. Accepting the property “as is” does not preclude the Buyer from having the

property inspected and amending the contract at a later time.

85. The “effective” date of a contract:A. Is filled in by the agent when the last person initials all changes and signs the contractB. Occurs when the contract and earnest money are delivered to the title companyC. Happens when the buyer has made the offer to the seller

D. Is when the transaction goes to closing

The correct answer is A. The person responsible for dating the contract to determine the effective dateis the agent who has the contract after the last party signs and initials the contract. However, that does

not prevent the other agent from dating the contract.

86. If either party withdraws their offer before it is accepted by the other party, it is called:A. RejectionB. RescissionC. Reflection

D. A withdrawal symptom

The correct answer is B. If either party withdraws their offer or counteroffer before it is accepted by the

other party, it is known as recession

87. An item that is attached to and remains with the property is called:A. A fixtureB. An improvementC. Permanently installed

D. All of the above

The correct answer is D.Any item that is permanently installed or attached to the property is called a

fixture or improvement.

88. An agent must provide Information About Brokerage Services:A. Even if the prospect is already under contract on the propertyB. Unless the prospect will be leasing a property for less than a yearC. At the time of the first substantive dialogue about a specific real property

D. At the first face-to-face meeting

The correct answer is C. An agent must provide the Information About Brokerage Services (IABS)when a member of the public wants information about a specific real property. The best and safest way

to provide this information is to use the form provided (but not required) by TREC.

89. The updated Information About Brokerage Services must list the following license holder contactinformation EXCEPT:A. Licensed broker’s firm nameB. Designated broker of firmC. Sales associate’s name and license number

D. Sales associate’s or broker’s website

The correct answer is D. On the updated IABS (Information About Brokerage Services) there areplaces to list the contact information (phone number, email, license number but NOT a web site) for the

Broker’s Firm Name, Designated Broker, Licensed Supervisor, and the Agent.

90. Items that must be completed in Paragraph 23 are:A. The dollar amount of the options moneyB. The number of days for the optionC. What happens to the option money at closing

D. All the above

The correct answer is D. Paragraph 23 covers the buyer’s option. In order for the option to be valid,both blanks in the paragraph must be filled out (requires a fee for a specified period of time) or thebuyer will not have an option to terminate during that period. There is also a check box to specify if the

option fee will be credited to the buyer at closing, or not be credited.

91. Failure on the part of the broker to advise the purchaser in writing to have an abstract examinedby an attorney or obtain a title policy:A. Is in no way a violation of the Texas Real Estate License ActB. Is the normal practice in TexasC. May be cause for an agent to have their license suspended or revoked, and precludesthe receipt of any commissions paid at the sale

D. Is the correct action as this is clearly a legal matter

The correct answer is C. Even though this is pre-printed in the TREC Residential contracts, an agentshould be aware that it is their responsibility to tell the buyer that they have a right to a title policy or an

abstract of title showing the status of the title on the property.

92. In Paragraph 6E (2) regarding Membership in a Property Owner’s Association, the buyers arenotified that they must pay the HOA assessments and if they do not, the HOA has the authority to________________.A. ForecloseB. Assess additional finesC. Assess late fees and fines

D. Not do anything. The HOA has no authority to enforcer HOA assessments.

The correct answer is A. A buyer must be made aware that if the property they are purchasing is in aMandatory Home Owner’s Association, the Association has the right to foreclose on the property for

unpaid dues and/or assessments.

93. In the late 1960s and the early 1970s, the ___________ and the __________ attempted toresolve the dispute by agreeing to several earnest money contracts that would be acceptable forreal estate practitioners to use in their daily business.A. Texas State Bar Association ----- Texas Association of REALTORS®B. The Broker Committee ----- local boardC. Texas Real Estate Licensing Act ----- TARD. The Multiple Listing Service ----- State Association of Commercial Brokers

T

he correct answer is A. In the late 60’s and early 70’s these two associations agreed to severalearnest money contracts that would be acceptable for use by real estate practitioners. This was to

avoid those in the real estate business from practicing law without a license.

94. If a bonus is offered by an owner or owner’s agent, the Buyer’s broker:A. Must always share the bonus with the buyerB. May retain the additional compensationC. Does not need to disclosure to the buyer that there is a bonus offered

D. Must, by law, refuse the additional compensation

The correct answer is B. Since commissions are paid to the Broker, the Broker may retain any bonusthat may be offered by the owner or owner’s agent. Or they may split with their agent according to the

written agreement between Broker and Agent

95. What type of deed is used in a foreclosure sale?A. General warranty deedB. Special warranty deedC. Quitclaim deed

D. Deed of trust

The correct answer is B. When a buyer purchases a bank or HUD foreclosure, the buyer is typically

furnished a special warranty deed instead of a general warranty deed.

96. The Protect Your Family from Lead in Your Home booklet states that "Lead is especiallydangerous to children under the age of _____.”A. 6B. 8C. 10

D. 12

The correct answer is A. The Protect Your Family from Lead in Your Home booklet states that children

under the age of 6 are particularly susceptible to lead.

97. If a seller wants to remain in the property after closing:A. It can be agreed verbally between the buyer and the seller.B. A lease agreement sold by an office supply company can be used.C. A TREC promulgated temporary residential lease agreement should be used.

D. There does not need to be an agreement. The Seller can just stay in the home if they wish.

The correct answer is C. If a Seller wants to remain in the property after closing or a buyer wants tomove in prior to closing, the TREC promulgated temporary lease should be used. It is designed tocreate a legal relationship (Landlord/Tenant) between the buyer and seller and outlines the terms and

conditions under the lease.

98. Required attachments in a Resale Certificate are all of these EXCEPT:A. Rules of the AssociationB. Current Operating BudgetC. Certificate of Insurance for the common areas and facilities

D. Names of all the existing members of the Association

The correct answer is D. A Resale Certificate outlines the current health of the Association (budget,insurance, reserve funds, and other pertinent information) and should also include copies of the rules

and regulations of the Association.

99. Addendum for Lead-Based Paint Disclosure requires:A. That any home built prior to 1978 needs a disclosureB. Owner to check either knowledge of lead-based paint in the home or that he has no knowledgeof the existence of lead-based paintC. Buyer to acknowledge receipt of Protect Your Family from Lead in Your Home pamphlet

D. All the above

The correct answer is D. The addendum for Lead-Based paint is required for homes built prior to 1978,and discloses presence of lead, if any, any reports, if any, regarding this, and also the Buyer needs toacknowledge that they have received this information, plus receipt of the Protect Your Family from

Lead in the Home pamphlet.

100. If a contract has a correct street address but an incorrect legal description, the contract is:A. Legal and bindingB. IrrevocableC. Voidable

D. Irrefutable

The correct answer is C. A contract must include the correct legal description which can be lot and

block, building and unit, or metes and bounds. A street address is not a legal description.

101. If the seller backs out of a contract for a reason not covered by the contract contingencies, thebuyer has the option of:A. Suing for specific performanceB. Charging the sellers for any fees the buyer incurredC. Buying another home at a lower price and requiring the seller to make the down payment

D. The buyer is not allowed to sue.

The correct answer is A. A suit for specific performance forces either party to perform according to the

terms of the contract.

102. Earnest money must be deposited with the title company or attorney by:A. 24 hours from date of executed contractB. The end of the third business day after the contract is signed by all partiesC. One week after effective date

D. 72 hours after effective date

The correct answer is B. TREC requires that earnest money must be deposited with the title companyor closing attorney by the end of the third working day after the effective date of the contract. (This

was a change made with the new TREC contracts effective in 2018.)

105. All changes from the original contract once it is receipted by the title company are completed onthe _________________:A. Termination noticeB. AmendmentC. Third-Party Financing addendum

D. Original contract that agent requests back from the title company

The correct answer is B. Once the escrow company has receipted a contract, it remains in place. Any
changes must take place on an amendment, signed by all parties, and dated.

104. The Disclosure of Relationship with Residential Service Company is required if:A. The Seller orders a Home Warranty.B. The coverage is optional.C. The buyer has requested additional coverage above the standard.D. The agent and/or the agent’s company receives any type of compensation from the

Residential Service Company.

The correct answer is D. Any gift or compensation that an agent or broker receives from any vendor

(inspector, title company, lender, etc.) must be disclosed to the clients.

105. All changes from the original contract once it is receipted by the title company are completed onthe _________________:A. Termination noticeB. AmendmentC. Third-Party Financing addendum

D. Original contract that agent requests back from the title company

The correct answer is B. Once the escrow company has receipted a contract, it remains in place. Any

changes must take place on an amendment, signed by all parties, and dated.

106. The seller is providing the buyer notice that water adjoining the subject property fluctuates for allthe following reasons EXCEPT:A. Because an entity is lawfully exercising its right to use the waterB. Because diversions can occur with water flowC. Drought

D. Flooding

The correct answer is B. Seller will provide the Buyer a notice that water levels adjoining the propertycan fluctuate because of drought, flood, or because another party is exercising their right to use the

water.

107. In addition to the unrestricted right to terminate during option period, the buyer can terminate thecontract:A. If the property does not satisfy the lender’s underwriting requirementsB. If the Seller has failed to provide the Seller DisclosureC. If the property does not meet the buyer’s “use of property” requirements written in Paragraph6D

D. Any of the above

The correct answer is D. The buyer has many legal options to terminate and receive their earnestmoney back. Some of these are: a) the unrestricted right to terminate during the option period, b) theproperty does not satisfy the lender’s underwriting requirements, c) Seller has failed to provide

necessary disclosures on the property; plus, others.

108. A clock hour has been set for either the buyer or the seller to terminate the contract. What time isthat?A. Noon local time where the property is locatedB. 5:00 p.m. local time where the property is locatedC. Midnight local time where the property is located

D. 9:00 p.m. local time where the property is located

The correct answer is B. TREC has established a clock hour deadline for purposes of the ability to

terminate. It must be done before 5:00 p.m. local time on the due date.

109. Wetlands have many important functions that benefit people and wildlife including:A. Providing a habitat for a variety and number of wildlife and plantsB. Filter, clean, and store water and collect and hold flood waterC. Absorb wind and tidal forces

D. All the above

The correct answer is D. Functions of wetlands consist of providing a habitat for certain wildlife and

plants, filtering and storing clean water, collecting and holding flood waters, plus other functions.

110. Who is charged with the responsibility of promptly sending a copy of the contract to any attorneysnamed in the contract by buyer or seller?A. The brokerB. The title companyC. The buyer who named the attorney

D. The seller

The correct answer is A. If a buyer or the seller or both name an attorney in the contract, it is the

Broker’s responsibility to deliver the contract to the named attorney.

111. Which of the following would NOT be covered by title insurance?A. A mistake in the legal descriptionB. FraudC. Delinquent taxes

D. One of your trees falls through your neighbor’s roof

The correct answer is D.

Title insurance insures the title, not the property.

112. In Paragraph 3B of the sales contract, the ‘sum of all financing:’A. Includes the earnest money deposited at the time the contract is executedB. Includes the closing costsC. Excludes any loan funding fee or mortgage insurance premium

D. All the above

The correct answer is C. Although the VA funding fee and/or the FHA mortgage insurance premiumcan be added to the loan and financed, it is not included in the ‘sum of all financing’ in Paragraph 3 of

the contract.

113. In the Residential Condominium Contract (Resale):A. The Seller pays all fees associated with the transaction.B. The Buyer will pay a set amount for the transfer fees and the seller will pay the difference.C. The Seller will pay a set amount for the transfer fees and the buyer will pay the difference.D. If any expense exceeds the amount in the contract, the excess will be split evenly between

buyer and seller.

The correct answer is B. The Residential

Condominium Contract spells out exactly who pays for what in the transaction.

114. A Farm and Ranch Contract can include:A. Any buildings, including a house or barnB. Farm/ranch accessories such as equipmentC. Crops

D. All the above

The correct answer is D. A Farm and Ranch Contract can include buildings (farm house, barn, sheds,

etc.) equipment, crops and other items related to the property.

115. If a Buyer wants to write a “Back-Up” offer to an existing contract, the buyer will need to includeall of these EXCEPT:A. Option money as the buyer would like an option periodB. A “Back-Up” contract addendumC. A closing date

D. A buyer’s walk through and acceptance form

The correct answer is D. When a buyer makes an offer as a Back-Up, the buyer is required to includeoption money (if they desire an option period), a Back-Up addendum, earnest money, and an estimated

closing date. They would only do a walk-through if and when their contract moves into primary position.

116. If a buyer needs to receive the funds from the sale of another property, they will need to do all ofthese EXCEPT:A. Attach a “Sale of Other Property” addendum creating a contingency contractB. Attach a Non-Realty Items addendumC. Offer an additional earnest money amount that allows the buyer to waive the contingency

D. Place a closing date on the addendum that does not exceed the closing date in the contract

The correct answer is B. If the buyer needs funds from a home they are selling in order to complete asale, they would attach a “sale of other property” addendum, offer additional earnest money if theydesire to waive the contingency, and place a closing date on the addendum that does not exceed the

closing date in the contract.

117. Additional disclosures that may be required in a transaction include:A. An agent’s relationship with the prospective buyers or sellersB. Any deficiencies in the property not otherwise named on a seller’s disclosureC. The buyer’s intention to resell the property at a profit

D. All of the above

The correct answer is D. A contract may require several disclosures. Some of those would bedisclosure of property condition, a buyer’s intention to resell the property at a profit, agent’s relationship

with one of the principals in the transaction, among others.

118. Other required disclosures include all of these EXCEPT:A. Disclosure of possible annexationB. Any environmental hazards (mold, asbestos, etc.)C. Zoning ordinances

D. Non-smoking ordinances

The correct answer is D. A non-smoking ordinance, if any, is not one of the required disclosures in a

transaction.

119. What is someone buying when they purchase a condominium?A. Land and the unitB. Air space within the unit and a percentage of the common areaC. The interior and exterior of the unit plus a parking space

D. All improvements

The correct answer is B. A condo buyer is purchasing the air space within the condo unit (what issometimes referred to as ‘wallpaper to wallpaper,’ plus an undivided interest in the land and any

common areas.

120. The Non-Realty Items Addendum contains all of the following information EXCEPT:A. Seller shall convey to Buyer at closing the following personal property.B. Seller will receive payment for the items in 6 monthly installments.C. Seller represents and warrants that Seller owns the personal property clear of allencumbrances.

D. Seller does not warrant or guarantee the condition of the personal property.

The correct answer is B.

The non-realty items addendum includes the price, if any, the buyer is offering to pay for the items. Payment of such can be agreed between buyer and seller. If the seller plans to leave the items at no cost, then the amount in the addendum will be $-0-. The addendum clearly states that the seller does not warrant or guarantee the condition of the items.