Champions Real Estate Exam Questions With 100% Correct Answers 2024.pdf, Exams of Business Systems

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Champions Real Estate Exam Questions With

100% Correct Answers 2024

brokerage - Correct Answer-the aspect of the real estate business that pertains to overseeing the needs of the parties and completing a transaction; a brokerage transaction may or may not involve agency relationships The role of a property manager - Correct Answer-Generally responsible for the day to day operations of the property, maintenance, and tenant relations How are home inspectors licensed? - Correct Answer-Home inspectors are licensed in Texas by TREC. Real Estate Development - Correct Answer-most often involves the acquisition of land for development into residential subdivisions, retail centers and other commercial uses. National Association of Realtors (NAR) - Correct Answer-the nationwide association is divided into state associations, and further divided into local associations or boards. The local associations or boards operate the MLS in markets throughout the US. The benefits of home ownership include: - Correct Answer-Pride of Ownership, Occupancy, Tax Benefits, Investment, Security: POOTIS=m Physical Characteristics of Land: Indestructibility - Correct Answer-Indestructibility refers to the fact that land cannot be destroyed. The other two characteristics are immobility and non-homogeneity (uniqueness) Demand for real estate is affected by: - Correct Answer-1. Growth in employment

2. Personal preference
3. Availability of credit as well as transportation systems and Federal government policy Common Law vs. Statutory Law - Correct Answer-Common Law was developed in England and based on common sense and local custom; under this system, a court looks to the findings of prior courts when rendering a decision Statutory law is enacted by federal and state legislative bodies What is the purpose of the Texas Real Estate Licensing Act (TRELA 1939)? - Correct Answer-The purpose of TRELA is to protect the public against unscrupulous brokers and sales agents.

What is TREC (1949)? - Correct Answer-TREC was created by the state legislature in

1949. It has 9 members who carry out the provisions in TRELA. TREC has been granted powers by the Legislature to: - Correct Answer--File actions against a license holder on its own notion

• Assess admin. penalties of up to $5k per day against offending licensed and unlicensed officials
• Promulgate forms which are mandatory for license holders
• Suspend or revoke licenses of violators
• Subpoena books, records, witnesses and file suit with the AG to enforce subpoena as well as issue licenses, enact rules and regulations, place a license holder on probation, require education Land - Correct Answer-the surface of the earth extending downward to the center of the earth and upwards above the surface extending to infinity; includes trees, crops and water Rights to land are considered "severable"... - Correct Answer-the ability for different individuals to own the different rights of the same piece of land Surface Rights - Correct Answer-The owner of surface rights has the ability to develop (improve) the surface, and to use resources extracted from or near the surface including stone, gravel, water, and limestone. Improvements are: - Correct Answer-any man-made addition to the land that is permanent and considered to become part of the land Personal Property - Correct Answer-things of a temporary or movable nature that are not part of the real property; known as personalty or chattel. If personal property is being transferred with real property, a bill of sale is used to accomplish the transfer Fixtures are: - Correct Answer-Personal property that has become attached to the land. The process of attaching personal property so that it becomes real property is called: - Correct Answer-Annexation Severance - Correct Answer-removing fixtures to create personal property The courts apply 3 tests to determine if something is a fixture. These include: - Correct Answer-1. The intention of the parties when the item was installed

2. The method of attachment and adaptation of the property

Emblements - Correct Answer-Annual crops; considered personal property and may be harvested by the owner of the crop; ensures that the tenant will be allowed to harvest even if they lose possession of the property prior to harvest time Rights that are associated with ownership of real property are referred to as the owner's: - Correct Answer-Bundle of rights ad valorem tax - Correct Answer-A tax levied according to value, generally used to refer to real estate tax. Property taxes create the highest priority lien against real property _________ is considered to be the best type of ownership as it places the least number of limitations and most rights on the owner - Correct Answer-Fee simple absolute ownership or fee simple ownership Categories of Leasehold Estates - Correct Answer-1. Estate (tenancy) for years: any lease with a specific starting and ending date

2. Periodic tenancy or estate: automatically renews itself for like periods for an undetermined period of time with no preset termination date, i.e month-to-month or week-to-week
3. Estate-at-will: "whatever"; loose agreement where the tenant or landlord may agree to terminate the lease at any time. THIS IS THE ONLY LEASE EASILY TERMINATED BY THE DEATH OF THE LANDLORD.
4. Tenancy at sufferance: occurs when a lease expires and the tenant remains on the property Requirements of a valid lease: - Correct Answer-Competent parties Let and take agreement Adequate consideration Legal purpose Description of the property (street address is sufficient) The law prevents the forced sale of the homestead for payment of all debts, with five exceptions: - Correct Answer-Non-payment of:
5. property taxes
6. mortgage lien
7. mechanic's and materialman's lien
8. property owner association fees or dues
9. home equity loan Easements may be created by prescription: - Correct Answer-continuous use of the land over some time without the permission of the owner may establish the right to use the land. (An encroachment is the unauthorized intrusion of another's property onto an adjoining property. An encroachment that is allowed to remain can eventually acquire the right to be there.) Prescription may also be called limitation.

Easements can be terminated by: - Correct Answer-1. Merger - If the two properties become one, the easement terminates.

2. Release - A written agreement can release the servient estate from the easement against it. For example, a property owner might want to negotiate the termination of an easement. If the parties are willing, a release may be recorded, releasing the easement. as well as abandonment and death Liens can be __________________ or __________________ as well as ______________ or _________________. - Correct Answer-Liens can be specific or general; A specific lien attaches to one or more specific or named properties (Example: a mortgage). A general lien attaches to all the property of the debtor, not exempt from a forced sale (Example: a judgment or IRS lien). Liens may also be categorized as voluntary or involuntary, and as statutory or equitable. A voluntary lien is one that is freely given, usually as collateral for a loan. A mortgage lien is a common example of a voluntary lien. An involuntary lien is one that is placed on the property against the wishes of the property owner. Common examples of involuntary liens include judgment and tax liens. encroachment - Correct Answer-the intrusion of one's property onto another's property Water Rights: Riparian Rights vs Littoral rights - Correct Answer-Riparian rights give an owner the right to use water from a river or a stream on or next to the property. Littoral rights give an owner the right to use water from a lake, ocean, or sea on or next to the property. Inverse condemnation - Correct Answer-when a landowner sues the government in order to force it to buy his/her land after it was taken by the government Tax exempt limits on capital gains: - Correct Answer-tax-exempt limits are

• $250,000 for an individual return
• $500,000 if married and filing jointly The home must have been the principal residence of the seller for at least two of the five years prior to the sale. Flood Insurance - Correct Answer-Since standard homeowners insurance does not cover flooding, it is important to have protection from flooding associated with hurricanes, tropical storms, heavy rains, and other conditions that impact the U.S. CLUE Reports - Correct Answer-The Comprehensive Loss Underwriting Exchange (CLUE) is a claims history database that enables insurance companies to access consumer claims information when they are underwriting or rating an insurance policy.

Tenancy in Common - Correct Answer-the first and most common type of co-ownership; ownership of real estate by two or more entities in undivided interests. Because these interests are undivided, all co-owners share the right of possession of the property. Joint Tenancy with Right of Survivorship - Correct Answer-"poor man's will" - the decedent's share passes to the surviving joint tenant(s); the unique aspect of joint tenancy is the right of survivorship of the tenants. When a joint tenant dies, his or her share is equally divided immediately among the surviving joint tenants. Community property vs. Separate property - Correct Answer-Under community property laws, most property acquired during the marriage is owned equally by both spouses and cannot be conveyed or sold without the signature of both parties. Property owned by a married person that is not community property is called separate property. Property acquired before marriage is separate, as is inherited property and property purchased with inherited funds. Any profit or income from separate property is considered community property. However, an increase in the value of a separate property is not community property, and the proceeds from the sale of separate property are separate cash. Agency Relationship - Correct Answer-agency relationship exists when one person (the agent) acts for or on behalf of another person (the principal). The principal is also known as the client. This relationship is a fiduciary relationship, which means that it is a relationship based on trust. While treating all others honestly, the agent places the interests of the principal or client first; the agent must always remain loyal to the principal. Three types of Agency: - Correct Answer-Universal agency General agency Special agency UNIVERSAL AGENCY - Correct Answer-universal agent has full authority to conduct business on behalf of the client. e universal agent can sign documents and bind (obligate) the client in the same manner in which the client would do in person. It is the equivalent of having unlimited power of attorney and is very rare in real estate. General Agency - Correct Answer-As a general agent, an individual has the right to represent a principal in a particular type of trans- action or business. One common example of a general agent in real estate is the property manager. e property manager is primarily responsible for preserving the value of an investment property while generating income as an agent for the owners. Special Agency - Correct Answer-special agency relationship is the most limited of all the agency relationships and is also referred to as "limited agency." In a special agency relationship, the agent may perform only limited duties for the principal. e special agent

is NOT able to bind the principal because he/she is not allowed to sign or accept any terms or conditions on behalf of the principal. An AGENT'S duties to his or her principal are: (OLD CAR) - Correct Answer-Obedience

• adhere to given lawful instructions Loyalty - place the client's best interests rst Disclosure - reveal all known facts, give advice and opinions Confidentiality - protect the private information of the client Accounting - handle funds with care. Never engage in commingling or conversion Reasonable care - protect the property and legal interest of the client. express authority - Correct Answer-In real estate, license holders most often secure agency relationships with sellers via written listing agreements. e written document is evidence that the agency relationship exists and provides the agent with express authority. Express authority also comes from the specific oral instructions given to the agent by the principal. Implied agency relationships - Correct Answer-The behavior of the parties creates an implied agency relationship. If a license holder behaves in a manner that makes a party reasonably believe that he or she is being represented, an implied agency relationship may have been created. Ostensible agency - Correct Answer-exists when actions lead another person to assume that one is an agent. For example, if you had the key to your neighbor's home, and allowed a tradesperson to enter, it is reasonable for that tradesperson to believe you are your neighbor's agent. All transactions are said to have two "sides": - Correct Answer-A listing side occurs when the seller retains the services of a broker. A selling side occurs when the buyer retains the services of a broker. The agent working with the buyer is referred to as the selling agent. Subagency and its conditions: - Correct Answer-when one firm sells a property listed by another firm to a buyer it does not represent, the selling firm represents the seller in a subagency relationship. Two conditions must be met to have a subagency relationship: The sale must be a cooperative sale, AND the buyer must be an unrepresented customer. Intermediary - Correct Answer-To practice Intermediary, the broker must have the written consent of both parties, stating the source of any anticipated compensation. BOTH PARTIES ARE CLIENTS.

INTERMEDIARY WITH APPOINTMENTS - Correct Answer-Broker Bob will most likely appoint Sue to represent the seller, and Bill to rep- resent the buyer. e appointed associates will give advice and opinions (which means to negotiate) to their respective parties. INTERMEDIARY WITHOUT APPOINTMENTS - Correct Answer-Occurs when an agent sells his or her own listing, but cannot give advice or negotiate for either party IABS (Information about Brokerage Services) - Correct Answer-Information About Brokerage Services (IABS) provides consumers with necessary information regarding agency relationships with license holders. All potential parties to a transaction must be provided with the IABS at the first substantive discussion of a possible transaction. A discussion can become substantive during conversations via phone, e-mail, or other means of communication. DTPA (Deceptive Trade Practices Act) - Correct Answer-Goods — are defined as tangible chattels (real property is tangible when purchased or leased). Under DTPA, the sale of a house is considered a good. Services — Brokerage is a service. producing cause - Correct Answer-Any consumer can bring an action against a provider of services when the consumer can prove that the servicer was the producing cause; Producing cause requires proof that the act or omission was a significant factor in bringing about injury. e lawsuit brought about under DTPA has the potential for treble damages if the trier of fact, being a judge, or jury believes that the agent knowingly or intentionally meant to deceive the consumer. INTENTIONALLY means... KNOWINGLY means... - Correct Answer-Intentionally means actual awareness or flagrant disregard of prudent and fair business practices. Knowingly means actual awareness of a falsity, deception, or unfairness of an act. Who must be licensed for real estate transactions? - Correct Answer-if you are a real estate sales agent, an attorney participating in a commission split, an auctioneer selling real property for compensation, an apartment locator, or if you sell, exchange, purchase, rent, lease, offer, negotiate, list, appraise, auction, buy options, aid, locate, procure or assist in procuring properties, you should be licensed. Attorneys licensed in other states, but practicing real estate in Texas, business entities through which licensed individuals operate their brokerages, and individuals or entities who control the collection of rent from residents of a single-family residential property must be licensed. Exceptions to requirements for licensure: - Correct Answer-Attorneys licensed in Texas may represent clients in real estate transactions without a license. Out-of-state attorneys must have a real estate license.

According to Sec. 1101.157. SUBPOENA AUTHORITY. (a) e commission may request and, if necessary, compel by subpoena: - Correct Answer-(1) the attendance of witnesses for examination under oath; and (2) the production for inspection and copying of records, documents, and other evidence relevant to the investigation of an alleged violation of this chapter. Sec. 1101.204. COMPLAINT INVESTIGATION AND DISPOSITION The commission shall investigate the actions and records of a license holder if: - Correct Answer-a person submits a signed, written complaint; and (2) the complaint and any evidence presented with the complaint provide reasonable cause for an investigation. The commission may not conduct an investigation of a person licensed under this chapter... if complaint is not submitted by the fourth anniversary of the date of the incident that is the subject of the complaint. How long does someone have to file a complaint with TREC? - Correct Answer-4 years from the anniversary of the incident According to TRELA, a broker on inactive status: - Correct Answer-1) may not perform any activity regulated under this chapter; and 2) must pay renewal fees. Real Estate Recovery Trust Account - Correct Answer-- An account established to pay aggrieved persons who suffer a monetary loss due to unscrupulous acts of licensees.

• $50,000 is the maximum per transaction, and $100,000 is the maximum on behalf of any one license holder.
• Each applicant for licensure pays $10 towards the Trust Account.
• If the amount in the account exceeds $3.5 million, the excess goes into the state's general revenue fund. Canons of Professional Ethics and Conduct - Correct Answer-Listed in Texas Real Estate Commission Rules of Commission...5 Articles (Fidelity,Integrity, Competency, Consumer Information, Discriminatory Practices) Article 1. FIDELITY - Correct Answer- attheprimarydutyoftherealestateagentistorepresenttheinterestsofhisorherclient,andhis or her position, in this respect, should be clear to all parties concerned in a real estate transaction, that however, the agent, in performing his or her duties to the client, shall treat other parties to a transaction fairly; at the real estate agent be faithful and observant to trust placed in him or her and be scru- pulous and meticulous in performing his or her functions; at the real estate agent place no personal interest above that of his or her client. Scrupulously vs. Meticulously - Correct Answer-scrupulously is defined as acting in strict regard for what is considered right or proper; punctiliously exact; painstaking.

Meticulously is defined as marked by extreme or excessive care in the consideration or treatment of details; careful. Article 2. integrity - Correct Answer-prudence and caution Article 3. Competency - Correct Answer-A license holder is obligated to be knowledgeable and competent as a real estate brokerage practi- tioner. e license holder must: be informed on local market issues and conditions a ecting real estate in the geographic area where a license holder provides services to a client; be informed on national, state, and local issues and developments in the real estate industry; exercise judgment and skill in the performance of brokerage activities; and be educated in the characteristics involved in the speci c type of real estate being brokered for others. Article 4. Consumer information - Correct Answer-Each real estate inspector or active real estate broker licensed by the Texas Real Estate Commission shall display Con- sumer Protection Notice TREC No. CN 1-2 in a prominent location in each place of business the broker maintains, Article 5. Discriminatory practices - Correct Answer-No real estate license holder shallinquire about, respond to or facilitate inquiries about, or make a disclosure which indicates or is intended to indicate any preference, limitation or discrimination based on the following: race, color, religion, sex, national origin, ancestry, familial status, or handicap of an owner, previous or current occupant, potential purchaser, lessor, or potential lessee of real property. If an alleged ethics violation is reported to the NAR®, a hearing panel will convene to hear testimony and presentation of evidence, decide whether a violation of the association's code of ethics occurred, and order any combination of the following actions: - Correct Answer-Disciplinary action could include:

• A reprimand,
• A fine,
• Probation,
• Suspension of membership,
• Revocation of membership, or
• Any combination of the above actions. A commission may suspend or revoke a license for - Correct Answer-guarantees future profits will come from resale of a property, places a sign offering a property for sale before obtaining owner consent, offers to sell or lease real property without the knowledge and consent of the owner of the real property or the owner's authorized agent; selling offers for the sale of real estate by means of a lottery

the Civil Rights Act of 1866 - Correct Answer-prohibited discrimination in housing based on race or color by affording all persons in the United States the right to make and enforce contracts. e act made it clear that the law protects all people, regardless of race or color Title VIII of Civil Rights Act of 1968 (Federal Fair Housing Act) - Correct Answer-It added protections that prohibit discrimination based on race, color, AND religion, and national origin. Sex was added as a protected class in 1974. Steering, also known as channeling - Correct Answer-taking buyers or renters to, or away from, a particular area based on the race, religion, etc. of the buyer or renter, and is the most common cause for complaint under the law ex: Directing buyers or renters to a particular neighborhood or a particular building within an apartment complex based upon a protected class would be an example of steering. Grouping families with children in one building in an apartment complex would also constitute steering and could subject the landlord and property manager to liability under fair housing laws. Blockbusting or Panic peddling: - Correct Answer-Any attempt to induce panic selling in a neighborhood for financial gain Federal Fair Housing Act penalties - Correct Answer-Judges may assess CIVIL penalties. familial status protections apply to: - Correct Answer-pregnant women and anyone securing legal custody of a child under 18. Housing for older persons is exempt from the prohibition against familial status discrimination if: - Correct Answer-It houses at least one person who is 55 or older in at least 80 percent of the occupied units and adheres to a policy that demonstrates an intent to house persons who are 55 or older. The Community Reinvestment Act was passed to ensure that banks would: - Correct Answer-serve the needs of the community in which they were chartered to do business. It prohibits redlining. Redlining - Correct Answer-a practice of refusing to provide financing in a particular area because of location. Only banks can be guilty of redlining under this law. one acre equals - Correct Answer-43,560 square feet Four realtors going down I-35 at 60 miles per hour

Monument - Correct Answer-A permanent marker installed on the land by a surveyor metes and bounds system - Correct Answer-provides a legal description of the property. most commonly used descriptions in states that do not use the Government Survey System. lot and block method - Correct Answer-Lot and block is the most common type of property description used in subdivisions. Refers to recorded map or PLAT. When a developer acquires a tract of land for subdividing, the developer will design the new subdivision and lay out the streets, lots, utilities, common areas, and easements. a plat will be filed in the county in which the subdivision is located. Restrictive covenants are also referred to as: - Correct Answer-deed restrictions or Covenants, Conditions, and Restrictions (CC&Rs). 1 mile = ____ feet - Correct Answer-5,280 feet Land surveying is defined as - Correct Answer-the technique, profession, and science of accurately determining the terrestrial or three-dimensional position of points and the distances and angles between them, com- monly practiced by licensed surveyors and members of various building professions. Surveyors in Texas are licensed by the Texas Board of Professional Land Surveying. What situations necessitate a survey? - Correct Answer- "Beginning at a point.." - Correct Answer-metes and bounds Listing Agreement - Correct Answer-An employment contract between a seller or landlord and the broker. The listing agreement creates a special agency relationship between the broker and the client. four major types of listing agreements are: - Correct Answer-Open listing Exclusive agency Exclusive right to sell: benefit of the exclusive right to sell listing agreement is that it helps to avoid the problem of procuring cause lawsuits because the listing broker is the only one with the right to sell the property. Net listing: The real estate broker's commission is the difference between the minimum net established by the seller and the actual seller's net. Procuring Cause of Sale - Correct Answer-the individual who, through a series of uninterrupted activities or actions, brought about the completion of a contract. ELEMENTS OF A VALID AND ENFORCEABLE CONTRACT - "COLIC" - Correct Answer-Competent parties, Offer and acceptance (mutual parties), Legal purposes, In writing, Consideration

Contracts may be valid, void, voidable, or unenforceable. - Correct Answer-A valid contract is one that meets all of the requirements of law. A void contract is invalid from the beginning and does not affect on the parties. A contract to perform an illegal act is a void contract. A voidable contract is one that cannot be enforced against one or more of the parties. Most contracts entered into with minors are voidable at the option of the minor. An unenforceable contract is one that cannot be enforced due to some flaw in the contract, passage of time, or other issues that make enforcement impossible. Under DTPA, a person has ___ years to report - Correct Answer-2 years Exceptions to the requirement for completion of a Seller's Disclosure Notice: - Correct Answer-- pursuant to a court order or foreclosure sale

• by a bankruptcy trustee
• to a lienholder by the owner of a property
• by a mortgagee (lender) who has acquired the property through a foreclosure or a deed in lieu of foreclosure
• by a fiduciary (e.g., an executor, trustee or guardian) in the course of administration of a decedent's estate, guardianship, conservatorship or trust
• from one co-owner to one or more other co-owners
• to a spouse or a person in the lineal line of consanguinity (e.g., parents, grandparents, chil- dren) of one or more of the transferors between spouses resulting from a divorce decree or a property settlement agreement inci- dent to a divorce decree
• to or from any governmental entity of a new residence which has not previously been occupied for residential purposes where the value of the dwelling does not exceed five percent of the value of the property All sellers, including those listed above, have an obligation to disclose any known material defects to a buyer. Remedies for Breach of Contract - Correct Answer-Liquidated Damages Monetary Damages Specific Performance Easement by prescription (prescriptive easement) - Correct Answer-"squatter's rights". when someone has used another's land for a certain time, in Texas, 10 years. The use must be open (non - secretive), visible, and without the owner's approval. Ex. Open Beach Law Easements can be created by - Correct Answer-- grant
• reservation

• implication
• necessity
• prescription Listing agreements can be terminated by: - Correct Answer-death of either party, abandonment, mutual agreement. The Broker-Lawyer committee WRITES the forms that TREC _________ - Correct Answer-promulgates Timeshare ownership - Correct Answer-any rights to occupy a unit of real property during five or more separated time periods, usually consisting of one or two weeks, over a period of at least five years. This permits multiple purchasers to buy interests in real estate with each purchase or having a right to use the facility for a specific time period.