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Texas Real Estate Exam Prep Questions
And Answers
Which statement is TRUE of payment made from the Real Estate Recovery Trust Account? - correct Answers-The answer is the license may be revoked if payment is made from the recovery trust account. The commission, upon making a payment from the trust account, may revoke the license of the offending license holder until the recovery trust account has been reimbursed, plus interest. What is a legal proceeding brought by a party to a contract against another party to compel action called for in the agreement? - correct Answers-The answer is a suit for specific performance. A suit for specific performance is a legal proceeding brought by a party to a contract against another party to compel action called for in the agreement. A license holder maintaining a trust account must retain a documentary record of each deposit or withdrawal from the account for - correct Answers-The answer is four years. A license holder maintaining a trust account must retain a documentary record of each deposit or withdrawal from the account for four years. To act as an intermediary, a broker must have written consent from - correct Answers- The answer is each party being represented in the transaction. A broker acting as an intermediary under Texas law must have consent of each party in writing and disclose any source of expected compensation to the broker. Which statement BEST describes the role of an intermediary broker? - correct Answers- The answer is the broker is acting on behalf of both the buyer and the seller and must not disclose any confidential information to either party without written permission. An intermediary broker acts on behalf of both parties. When a spouse dies intestate, the deceased's community property passes to - correct Answers-The answer is the heirs, according to the law of descent. When a spouse dies intestate, the deceased's community property passes to the heirs, according to the law of descent. A real estate broker or sales agent may show an unlicensed person her appreciation for a referral by giving the unlicensed individual - correct Answers-The answer is a non- cash gift as long as the retail value does not exceed $50. The Texas Real Estate License Act prohibits a real estate license holders from paying a commission, fee, or other valuable consideration to a person who is not licensed as a sales agent or broker for services as a real estate agent.
Which of the following is TRUE regarding a test taker who fails one portion of the exam?
- correct Answers-The answer is they only need to retake the failed portion. If a test taker fails one portion of the exam, they only need to retake the failed portion. The maximum tenancy that may be addressed in a TREC Seller's or Buyer's Temporary Lease is - correct Answers-The answer is 90 days. The maximum tenancy that may be addressed in a TREC Seller's or Buyer's Temporary Lease is 90 days. Which of the following would generally be considered community property? - correct Answers-The answer is property acquired during marriage by purchase from income earned from separate property. Absent an agreement to the contrary, income earned from separate property is considered community property. Therefore, property acquired during marriage by purchase from income earned from separate property is considered community property. Real estate license holders are empowered to do which of the following for another and for a fee? - correct Answers-The answer is fill in forms promulgated or approved by the Commission. Which of the following is NOT treated as an addendum to a promulgated TREC contract form? - correct Answers-The answer is Information About Brokerage Services. The Information About Brokerage Services is not an addendum and should not be attached to or made a part of the offer/contract. Real estate brokers and sales agents may - correct Answers-The answer is complete a contract form if the form was promulgated by TREC. The minimum services requirement of the License Act dictates all of the following EXCEPT - correct Answers-The answer is a limited service broker may instruct another broker to negotiate directly with the client. The minimum services requirement of the License Act dictates a limited service broker may not instruct another broker to negotiate directly with the client. Which of the following remedies would NOT be allowed under the provisions of TREC- promulgated contracts? - correct Answers-The answer is receiving the earnest money and suing for money damages. If the seller receives the earnest money as liquidated damages, the seller cannot sue for money damages. A mechanic's lien claim arises when, on the owner's order, a general contractor has performed work or provided material to improve a parcel of real estate but has not been paid. Such a contractor has a right to - correct Answers-The answer is record a notice of the lien and file a court suit within the time required by state law. A general contractor who has performed work or provided material to improve a parcel of real estate but has not been paid has the right to record a notice of the lien and file a court suit within the time required by state law.
A broker may appoint one or more license holders to communicate with and carry out instructions for each party when the broker is acting as - correct Answers-The answer is an intermediary. A broker may appoint one or more license holders to communicate with and carry out instructions for each party when acting as an intermediary. Which of the following is NOT true of a trust account? - correct Answers-The answer is brokers may not authorize other persons to sign on the account. Brokers may authorize other persons to sign on the account. The Texas Real Estate Commission is composed of - correct Answers-The answer is nine members, six of whom are brokers and three of whom are lay members, each appointed by the governor with senate approval. The Texas Real Estate Commission consists of nine members appointed by the governor with the advice and consent of the senate as follows: six members who have been engaged in the brokerage business as licensed brokers as their major occupation for the five years preceding appointment and three members who represent the public. An unlicensed individual who engages in one activity for which a real estate license is required is subject to which penalty? - correct Answers-The answer is administrative penalty of up to $5,000 in addition to other penalties provided by law. Administrative penalties cannot exceed $5,000 per day unless the license holder has a history of previous violations. When no promulgated form meets the needs of a particular transaction, the license holder may use which of the following? - correct Answers-The answer is a form created and approved by a Texas licensed attorney. In a transaction for which no standard form exists, a license holder may use a form for the particular kind of transactions involved that is prepared and approved by an attorney-at-law licensed in Texas. All of the following are acceptable sources for reproduced copies of promulgated forms EXCEPT - correct Answers-The answer is handwritten copies that are similar to the mandatory forms. Numbered copies obtained from the Commission, photocopies obtained from the Commission, and computer-driven printed copies following Commission guidelines are all acceptable sources for reproduced copies of standard forms. Handwritten copies of a form are not an acceptable reproduction method. Which statement is NOT true? - correct Answers-The answer is Texas has a 180-day statutory redemption for deed of trust. In Texas; there is no statutory redemption for deed of trust. A married couple is selling their homestead, owned as community property. For the deed conveying the property to be valid, who must sign it? - correct Answers-The answer is both husband and wife. For the deed conveying homestead and/or community property to be valid, both husband and wife must sign the deed.
The Information About Brokerage Services form informs consumers. - correct Answers- The answer is regarding the various services a brokerage may offer. The Information About Brokerage Services form informs the consumer what it means if the broker represents the seller, what it means if the broker represents the buyer, and what it means if the broker acts as an intermediary. The statement "a broker must be employed to recover a commission for services" means that - correct Answers-The answer is the seller must have signed an agreement to pay a commission to the broker for selling the property. A person in this state may not sue to recover a commission for the sale or purchase of real estate unless the promise or agreement on which the action is based, or a memorandum, is in writing, and signed by the party against whom the action is brought or by a person authorized by that party to sign the document. Brokers may NOT split fees with - correct Answers-The answer is a sales agent sponsored by another resident broker. A sales agent may not accept compensation for a real estate transaction from a person other than the broker with whom the sales agent is associated or was associated when the sales agent earned the compensation. Therefore, brokers are not permitted to split commissions with a sales agent sponsored by another resident broker. Which of the following is TRUE about TREC-promulgated contract forms? - correct Answers-The answer is they must be used by real estate license holders in all transactions to which the forms are applicable unless one of four exceptions apply. If disciplinary action is taken against a sales agent, the Commission may also take action against - correct Answers-The answer is the sales agent's broker. If disciplinary action is taken against a sales agent, the Commission may also take action against the sales agent's broker. A broker may rebate a portion of the commission to the principal - correct Answers-The answer is if the rebate is not made for a real estate service. Under certain circumstances, it is legal for a broker to rebate a portion of the commission to the principal if the payment is strictly a rebate and is not made for a real estate service, such as a referral. The rebate may be in any form such as cash, gift certificates, appliances, frequent flyer certificates, et cetera. The initial disclosure of an agency relationship - correct Answers-The answer is may be oral or written. A license holder who represents a party in a proposed real estate transaction must disclose, orally or in writing, that representation at the time of the license holder's first contact with (1) another party to the transaction or (2) another license holder who represents another party to the transaction. When terminating the sponsorship of a sales agent, which of the following is required? - correct Answers-The answer is the broker must notify the sales agent in writing of the termination and immediately return the sales agent's license to the Real Estate
At what point must the license holder disclose to a potential buyer of a specific residential or commercial property that the license holder represents the seller? - correct Answers-The answer is at the time of first contact. A license holder who represents a party in a proposed real estate transaction must disclose, orally or in writing, that representation at the time of the license holder's first contact with (1) another party to the transaction or (2) another license holder who represents another party to the transaction. There is no distinction between residential and commercial properties for these purposes. To act as an intermediary, a broker must have written consent from - correct Answers- The answer is each party being represented in the transaction. A broker acting as intermediary under Texas law must have consent of each party in writing and disclose any source of expected compensation to the broker. Which of the following single acts, when performed within Texas for another and for a fee, does NOT require a real estate license? - correct Answers-The answer is negotiating for the sale of a business opportunity, where the sale of real estate is not involved. A business and its goodwill and assets are collectively referred to as a business opportunity. In Texas, a real estate license is not required in order to list and sell a business opportunity for another and for a fee. If the sale of real estate assets is included, then a real estate license is required. Which of the following is NOT true regarding the statutory redemption period after the foreclosure sale in Texas? - correct Answers-The answer is there is a 90-day statutory redemption period for deed of trust. In Texas, there is no statutory redemption for deed of trust. A licensed Texas broker may split fees and commissions with which of the following parties? - correct Answers-The answer is a nonresident broker. A nonresident broker may be compensated by a resident broker as long as the foreign broker does not conduct any negotiations in Texas. Which statement is TRUE about TREC real estate contract forms? - correct Answers- The answer is they are promulgated or approved by the Texas Real Estate Commission. The Broker-Lawyer Committee drafts and revises TREC real estate contracts, which are then either promulgated or approved by the Texas Real Estate Commission. A homestead may be foreclosed on for all of the following liens if the owner is in default or delinquent EXCEPT - correct Answers-The answer a judgment lien. In the event of default or delinquency, a homestead may be foreclosed on for (1) an ad valorem/property tax lien, (2) a mechanic's lien, (3) a mortgage lien, (4) a homeowners' association lien, (5) an owelty lien, (6) a home equity loan (reverse annuity mortgage), and (7) a federal tax lien.
Real estate brokers and sales agents may NOT offer legal advice, including - correct Answers-The answer is the best way to take title to real property. Advising a buyer on the best way to take title to real property constitutes the unauthorized practice of law. Which of the following additions may be made to a TREC-promulgated form? - correct Answers-The answer is the broker's name may be inserted in any blank provided for that purpose. The business name or logo of a broker may appear at the top of a form outside the border, and the broker's name may be inserted in any blank provided for that purpose. Under TREC rules, license holders shall make additions or deletions required by the principals. The Information About Brokerage Services form is - correct Answers-The answer is an informational form. The Information About Brokerage Services form is an informational form. It is not a disclosure of agency, a notice of an agency relationship, addendum, amendment, or agreement. It is not to be attached to the contractual sales form. Which of the following is NOT a remedy provided to the seller in the default paragraph of TREC contract forms? - correct Answers-The answer is sue for liquidated damages. If the buyer fails to comply with a contract, the buyer will be in default, and the seller may either (1) enforce specific performance, seek such other relief as may be provided by law, or both; or (2) terminate the contract and receive the earnest money as liquidated damages, thereby releasing both parties from the contract. Which of the following must be under the direct supervision of a professional inspector?
- correct Answers-The answer is apprentice inspector. An apprentice applicant must have been an apprentice for three months and performed 25 inspections under direct supervision, be a citizen of the United States or a lawfully admitted alien, be a resident of Texas, and be at least 18 years old. A broker acting as an intermediary may appoint - correct Answers-The answer is one or more license holders to each of the parties to communicate with and carry out instructions for each of the parties. If the parties consent, the broker may appoint to each party one or more license holders associated with the license holders to communicate with and carry out instructions of the parties. Placing escrow money in a license holder's operating account constitutes - correct Answers-The answer is commingling. Placing escrow money in a license holder's operating account constitutes commingling. Which of the following is considered community property? - correct Answers-The answer is income earned from separate property during marriage. Property acquired during marriage by gift or inheritance, property acquired during marriage by settlement or judgment for personal injury, and the sales proceeds from separate property sold during marriage are all considered separate property.
A real estate license holder may use a form other than one promulgated by TREC in all of the following circumstances EXCEPT - correct Answers-The answer is a transaction for which no standard contract form has been promulgated and the license holder uses a form prepared by an attorney-at-law licensed in any state. At what point must a license holder disclose to a potential seller of a residential property that the license holder represents a potential buyer? - correct Answers-The answer is at the time of first contact. A license holder must disclose representation, either orally or in writing, at the time of first contact in a proposed real estate transaction with another party to the transaction or at the time of first contact with the other license holder representing another party. A license holder, while acting as an agent for another, is a fiduciary and must act primarily to represent the interests of - correct Answers-The answer is the agent's principal. The Canons of Professional Ethics and Conduct for Real Estate license holders provides that a license holder, while acting as an agent for another, is a fiduciary and must act in the best interests of the principal, but must always treat other parties to the transaction fairly. Note that fairly in this context does not mean equally. According to the TREC One- to Four-Family Residential Contract (Resale), who is responsible for paying the owner policy of a title insurance fee? - correct Answers-The answer is the party specified in the contract. The TREC One to Four Family Residential Contract (Resale) provides that the seller furnish to the buyer an owner policy of title insurance at either the seller's or the buyer's expense. A sales agent may receive a commission from which party? - correct Answers-The answer is the broker who sponsored the sales agent at the time the commission was earned. A sales agent may only receive a commission from the broker who sponsored the sales agent at the time the commission was earned. When negotiating a listing, a real estate license holder is obligated to advise a property owner concerning the license holder's - correct Answers-The answer is opinion of the property's market value. When negotiating listings, license holders must share with property owners their true opinion of the property's market value. A license holder has no duty to inquire about or make a disclosure related to any of the following EXCEPT - correct Answers-The answer is a death that occurred on the property as a result of the condition of the property. If a death occurred on the property as a result of the condition of the property, that event must be disclosed to a buyer. Under what circumstance can a broker give an unlicensed person a gift to show appreciation for referring business? - correct Answers-The answer is it is a merchandise gift that does not exceed $50. Brokers may give merchandise gifts to unlicensed persons as long as the value does not exceed $50 retail value. Brokers cannot give cash in any amount.
The mandatory written statement contained in the Information About Brokerage Services form must be provided in all of the following situations EXCEPT - correct Answers-The answer is it need not be provided in any of these circumstances. Exceptions to the requirement to provide the written statement in a transaction include (1) an open house, (2) a party that is already represented by another license holder, (3) a meeting that takes place after a contract has been signed between the parties, and (4) a residential lease of one year or less in which no sale is being considered. Which of the following is NOT true regarding trust accounts? - correct Answers-The answer is sales agents are permitted to have trust accounts. Trust accounts must be in the broker's name. A sales agent is not permitted to have a trust account.
