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A series of questions and answers related to real estate contracts, focusing on key concepts and terminology used in the field. It covers topics such as void and voidable contracts, the statute of frauds, the parole evidence rule, earnest money, option money, the doctrine of laches, effective date, license act, paragraph 2d exclusions, non-realty items addendum, ltv ratio, recourse loan, title policy exceptions, residential real property affidavit, earnest money deposit, default, valid objections, temporary residential lease agreement, escrow protection, backup offers, property taxes, promulgated forms, new home contract, rollback taxes, unimproved property contract, and property description.
Typology: Exams
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correct answer ✅A contract that has no legal effect. VOIDABLE - correct answer ✅When one or more of the parties has the authority to rescind the contract. It appears to be valid, but one party may disaffirm because they are a minor, were subject to duress, or a victim of fraud or misrepresentation. STATUTE OF FRAUDS - correct answer ✅A law that requires real estate contracts be in writing is the ______________________? PAROLE EVIDENCE RULE - correct answer ✅Prevents a party to a written contract from presenting additional evidence that adds to the written terms of the contract. VOID - correct answer ✅If 2 people have a legal contract for one party to sell illegal drugs to the other party, this contract would be _______________?
correct answer ✅Paragraph 5 in a sales contract? OPTION MONEY - correct answer ✅Paragraph 23 in a sales contract? DOCTRINE OF LACHES - correct answer ✅Legal loss of a right with the thought that "if you don't use it, you lose it." EFFECTIVE DATE - correct answer ✅A written contract has been accepted, signed, and communicated to the other party. PAROLE EVIDENCE RULE - correct answer ✅Prevents a party to a written contract from presenting additional evidence that adds to the written PAROLE EVIDENCE RULE - correct answer ✅Prevents a party
correct answer ✅If a licensed agent uses an old promulgated TREC form, what is this in violation of? PARAGRAPH 2D EXCLUSIONS - correct answer ✅If a seller does not want to leave a chandelier where should they put this information in the 1-4 Family Residential Contract? NON-REALTY ITEMS ADDENDUM - correct answer ✅What addendum can you attach to the sales contract if your client wishes to have additional personal property to stay with the property (that is not listed in Paragraph 2B or 2C)? LTV RATIO - correct answer ✅Loan to value ratio that represents how much of the sales price is covered by the mortgage loan. RECOURSE LOAN - correct answer ✅Loan in which the lender is allowed to seize the collateral property and could go after the borrower's other assets if the sale of the property doesn't cover the whole amount owed to the lender.
correct answer ✅After a real estate transaction fails, both parties can't agree who gets the earnest money, what should a buyer's agent do? SELLER - correct answer ✅Who should the option money be delivered to? PARAGRAPH 23 - correct answer ✅What paragraph is used for option period? ENDORSEMENTS - correct answer ✅Amendments to the standard coverage in a title policy. RESTRICTIVE COVENANT - correct answer ✅Provision in a deed limiting the use of property and prohibiting certain uses.
correct answer ✅What are examples of exceptions of the title policy? RESIDENTIAL REAL PROPERTY AFFIDAVIT - correct answer ✅A form that is completed by the seller to assure the buyer that they haven't changed the boundaries of the property since the last survey was completed. BOTH PARTIES NEGOTIATE - correct answer ✅According to the 1-4 Family Residential Agreement who is responsible to pay for the owner's title policy, the seller or buyer? 2ND BUSINESS DAY, CLOSE OF BUSINESS - correct answer ✅When should an agent deposit an earnest money check with an escrow agent?
correct answer ✅If the buyer fails to deposit the earnest money on time, they will be in ____________? 15 DAYS - correct answer ✅How many days does a seller have to cure a valid objection listed by the buyer in Paragraph 6D? LIST IN PARAGRAPH 6D AS A VALID OBJECTION - correct answer ✅If the agent isn't sure of restrictions of the property, how can an agent protect the buyer and give them an out under the contract? TRUE - correct answer ✅T/F? If there is an active lease on the property when the property is transferred, the seller needs to supply the buyer with a copy of the lease and move-in condition form within 7 days after the effective date. EFFECTIVE DAY OF LEASE - correct answer ✅When is rent for a Buyer's Temporary Residential Lease Agreement paid?
correct answer ✅Who does escrow protect? YES - correct answer ✅Does the contract permit sellers to continue to show properties for back up offers before contract termination period? TAXES FOR PREVIOUS YEAR - correct answer ✅What does it mean to pay property taxes in arrears? SIX - correct answer ✅How many promulgated forms does TREC have? NEW HOME CONTRACT (COMPLETE CONSTRUCTION) - correct answer ✅Which contract would you use for a brand new constructed home? BUYER - correct answer ✅If a buyer wants to buy a property that was once zoned for farming, but wants to change to residential, who is
responsible for the rollback taxes charged for new zoning of property? 10% - correct answer ✅If a new survey is completed on a farm or ranch, at what percentage of the sales price INCREASE OR DECREASE of the property can either party of the contract terminate due to the price change? UNIMPROVED PROPERTY CONTRACT - correct answer ✅The seller of unimproved property provides a disclosure in the _____________________? UNIMPROVED PROPERTY CONTRACT - correct answer ✅Which contract should not be used for transactions that include land used for ranching or farming, and where surface leases and mineral estates may exist. UNIMPROVED PROPERTY CONTRACT - correct answer ✅Which contract could be used for commercially zoned land in urban areas or smaller rural tracts?
correct answer ✅Paragraph 2 is always used for what? FARM AND RANCH - correct answer ✅Which contract has a place for Exception Documents and Surface Leases? ONE TO FOUR FAMILY RESIDENTIAL CONTRACT - correct answer ✅Which contract would an agent use to sell a Townhouse? CONTINGENCY ADDENDUM / ADDENDUM FOR SALE OF OTHER PROPERTY BY BUYER - correct answer ✅What addendum do you attach to the 1-4 Family Residential contract if your seller client wants to buy a home before they close on their own home? TRUE - correct answer ✅T/F? If a buyer has a new offer and had an option to terminate, the right to terminate continues from the original effective date through the # of days starting from the new effective amended date.
correct answer ✅Do Mineral Estates include grave, limestone, and sand? BUYER - correct answer ✅Who signs the Notice of Termination Contract? 10 DAYS - correct answer ✅How long could it take for a buyer to get their earnest money refunded? 3 DAYS - correct answer ✅How many days does a buyer have to terminate a contract after receiving Subdivision/ HOA information? ON 2ND BUSINESS DAY AFTER ORIGINAL EFFECTIVE DATE - correct answer ✅In a Short Sale, when does the Earnest money need to be delivered to the Title co? WITHIN 3 DAYS OF THE ORIGINAL EFFECTIVE DATE - correct answer ✅In a Short Sale, when does the Option money need to be delivered to the Seller or Seller's Agent?
correct answer ✅When does the right to terminate begin in a Short Sale Addendum? NOTICE OF BUYERS TERMINATION CONTRACT - correct answer ✅If a buyer is exercising the unrestricted right to terminate the contract under Paragraph 23 of the contract, they are using what contract? HOMEOWNERS ASSOCIATION - correct answer ✅Who is meant to complete the Subdivision information? SHORT SALE ADDENDUM - correct answer ✅Which addendum is used when the transaction is contingent upon the approval of the seller's lender? OIL AND GAS ATTORNEY - correct answer ✅If there are questions about mineral rights, who should be asked the questions?
correct answer ✅Does the Notice of Buyer's Termination Contract address Earnest Money? Who signs this contract? ADDENDUM FOR BACK-UP CONTRACT - correct answer ✅Which addendum allows a seller to simultaneously negotiate with a second buyer in case the first one falls through? YES - correct answer ✅Are a landlord's rules against smoking on a property legal? LOCAL LAWS & HOUSING PROVIDERS - correct answer ✅Who creates occupancy standards? NO, ONLY SUGGESTED GUIDELINES - correct answer ✅Does HUD create official rules for occupancy standards?
correct answer ✅What is not considered when HUD reviews fair housing complaints?
correct answer ✅Which paragraph indicates repairs that must be completed by the seller before closing? 6B - correct answer ✅Which paragraph indicates that any restrictive covenants along with the title policy documents must be provided to the buyer? FAMILIAL STATUS - correct answer ✅If a property is occupied solely by people over the age of 62 and qualifies as senior housing, they are exempt from what? WITHIN 7 DAYS OF EFFECTIVE DATE - correct answer ✅If a seller is selling a property that is under lease, how long does the seller have to provide a copy of the signed lease to the buyer? CONDOMINIUM RESALE CERTIFICATE - correct answer ✅The name of the document prepared by a condo association to outline fees and rules?
correct answer ✅What paragraph advises a buyer to get a lawyer to review the abstract of title? QUITCLAIM DEED - correct answer ✅A house is being sold by someone who inherited it, but there are others who contest to the will. What kind of deed is the best for a buyer to best protect themselves from any potential claims on a title? EXPRESS - correct answer ✅What type of contract has a specific type of offer and acceptance? UNIT NUMBER - correct answer ✅What does a Residential Condominium Contract require in the legal description of the property? EARNEST AND OPTION MONEY - correct answer ✅What two sections of TREC's promulgated contracts contain "time is of the essence" language?
correct answer ✅There is no mutual termination form for both parties, so who can provide each party with a form to sign that will go over earnest money. TRUE - correct answer ✅T/F? Once an offer is countered, it's considered rejected and dead. LEAD BASED PAINT ADDENDUM - correct answer ✅What must the broker keep a copy of for three years after a sale? YES - correct answer ✅Do changes to a contract have to be initialed? 7D - correct answer ✅What paragraph covers a buyer accepting a property "with any and all defects and without warranty"? Or an "as is" condition?
correct answer ✅What does paragraph 6A8 refer to? YES - correct answer ✅Is "receipt of public income" a protected class according to Fair Lending Laws? THREE DAYS - correct answer ✅How many days does earnest money have to be delivered by? 7A - correct answer ✅Which paragraph grants the buyer the right to an inspection? THREE DAYS - correct answer ✅How long does a buyer have to terminate a contract after they receive an Addendum for Property Subject to Mandatory Membership in an Owner's Association?
correct answer ✅How can buyers avoid paying extra prepaid interest to the mortgage company? SELLER - correct answer ✅Who does the Short Sale Addendum protect? C2 - correct answer ✅Which paragraph on Lead Based Paint Disclosure states that the buyer has 10 days to have the property inspected? ILLEGAL BUYER REBATE - correct answer ✅What is this an example of: An agent gives their buyer client half of their commission without disclosing it on the settlement statement? PROMULGATED ARE REQUIRED APPROVED ARE OPTIONAL - correct answer ✅What is the difference between TREC's promulgated and approved forms?
correct answer ✅If the agent's commission is set higher in the seller agreement than the buyer representation agreement, which would be used? THIRD PARTY FINANCING ADDENDUM - correct answer ✅If a buyer is unable to get financing, what would he need in his contract to terminate without penalty? TEXAS PROPERTY CODE - correct answer ✅A Seller's Disclosure Notice is a requirement of what? T-47 RESIDENTIAL REAL PROPERTY AFFIDAVIT - correct answer ✅What form should be used when a seller wants to use an existing survey but the affidavit is for assurance that the boundaries have not changed? YES - correct answer ✅Can an HOA force a lien on a property and foreclose?
correct answer ✅What paragraph says that a seller cannot execute any lease without the buyer's permission after execution date? PERSONAL PROPERTY THAT WILL NOT TRANSFER - correct answer ✅What is a stand a lone refrigerator considered? PARAGRAPH 12 - correct answer ✅What paragraph contains that the seller is covering some of the buyer's closing costs? NO - correct answer ✅Can a seller convey items that are not fully paid off yet into a Non-Realty Items Addendum? FINANCING CONTENGENCY - correct answer ✅What does the Third Party Financing Addendum outline? FOREVER - correct answer ✅How long does a murder/suicide need to be disclosed on a property?
correct answer ✅In what part of the Reservation of Oil, Gas and Other Minerals Addendum should a seller's percentage be provided if they decided to keep a part? PARAGRAPH 9 - correct answer ✅What paragraph in the 1-4 Fam Res Agreement does it note the "on or before" closing date? NO - correct answer ✅Is the Seller's Disclosure Notice promulgated by TREC? LAWYER - correct answer ✅Who should create the documents for a buyer who wants to present an offer "lease option to buy"? 3 DAYS - correct answer ✅How many days does the seller have to furnish a new survey to the buyer prior to closing?
correct answer ✅Where is a copy of the title notice found? ONLY TREC - correct answer ✅Are the members of the Broker-Lawyer Committee or members of TREC appointed by a governor? PRESENT CONDITION - correct answer ✅If nothing is added to paragraph 7D, the buyer is accepting the property in what condition? 4 YEARS - correct answer ✅What is the statute of limitations from the discovery date of fraud or misrepresentation of a license holder? SIGN A NOTICE THAT THEY WILL BE RESPONSIBLE FOR EXTRA TAXES
correct answer ✅What does a buyer have to do if the seller's property is in a special statutory tax district?
correct answer ✅Additions to a title policy are called what?