Law of contract practice exam ACCURATE QUESTIONS AND DETAILED ANSWERS | GUARANTEED PASS, Exams of Law

Download Law of contract practice exam ACCURATE QUESTIONS AND DETAILED ANSWERS | GUARANTEED PASS and more Exams Law in PDF only on Docsity! Law of contract practice exam ACCURATE QUESTIONS AND DETAILED ANSWERS | GUARANTEED PASS | GRADED A | LATEST UPDATE 2024-2025 WITH 100+ QUESTIONS When a seller and a buyer wish to convey personal property, this is done with a: A) Deed B) Bill of sale C) Deed of Trust D) Nothing is required - CORRECT ANS-B) Bill of sale Law handed down by the legislature. A) Agency law B) Common law C) TREC D) Statutory law - CORRECT ANS-D) Statutory law Which is NOT a form of INVOLUNTARY ALIENATION? A) Escheat B) Will C) Adverse possession D) Eminent domain - CORRECT ANS-B) Will It is NOT possible to transfer title to property in Texas without recording the deed in public records. A) True B) False - CORRECT ANS-B) False The most widely used residential listing form in Texas is: A) Exclusive agency B) Exclusive right to sell C) Exclusive open listing D) Exclusive net listing - CORRECT ANS-B) Exclusive right to sell This is also called a non-freehold estate. A) Tenant estate B) Joint tenant estate C) Leasehold estate D) Statutory estate - CORRECT ANS-C) Leasehold estate A) Police power B) Encumbrance C) Statutory estate D) Joint tenant - CORRECT ANS-B) Encumbrance Which party is not involved on the DEED OF TRUST? A) Mortgagor B) Mortgagee C) Trustor D) Trustee - CORRECT ANS-C) Trustor A lease agreement must: A) Be typed or printed B) Be signed by the tenant only C) Both A & B D) Neither A nor B - CORRECT ANS-A) Be typed or printed Which of the following does not terminate a contract? A) Assignment B) Mutual consent C) Completion of purpose D) Default - CORRECT ANS-A) Assignment The transfer of property from one person to another and the document and or instrument by which that is effected defines: A) Recording B) Conveyance C) Escrow D) Closing - CORRECT ANS-B) Conveyance A thing added to the offer. A) Abstract B) Addenda C) Amendment D) Ad Valorem Next question - CORRECT ANS-B) Addenda Which statement is true? A) In a lease, the lessor will lease from the lessee. B) In a lease, the lessee will lease from the lessor. C) In a lease, the landlord will lease from the lessor. D) In a lease, the tenant will lease from the lessee. - CORRECT ANS-B) In a lease, the lessee will lease from the lessor Dividing of expenses between the buyer and the seller in proportionate shares is called A) Prorations B) Assignment C) Allotment D) Conveyance - CORRECT ANS-A) Prorations Which of the following is not one of the four elements of a valid contract? A) Legal representation B) Offer and acceptance C) Competent parties D) Consideration - CORRECT ANS-A) Legal representation Which deed has language that speaks to the warranty being limited to the grantor and not extended to previous owners? A) Special warranty deed B) General warranty deed C) Deed of trust D) Quitclaim claim deed - CORRECT ANS-A) Special warranty deed A) Deed B) Deed of trust C) Grant D) Title - CORRECT ANS-D) Title The lease agreement must contain all of the following EXCEPT: A) The amount of the security deposit B) A description of the landlords maintenance responsibilities C) Any late charge or fee charged for any service or facility D) Landlords home telephone number - CORRECT ANS-D) Landlords home telephone number Physical characteristics of the property does NOT include: A) Nonhomogenity B) Immobility C) Scarcity D) Indestructibility Next question - CORRECT ANS-C) Scarcity Sale of a property where the lender agrees to settle for less than the amount owed on the property. A) Short sale B) Foreclosure C) Acceleration D) Alienation - CORRECT ANS-A) Short sale An act or practice which, to a consumer's detriment, takes advantage of the lack of knowledge, ability, experience, or capacity to a grossly unfair degree is called: A) Fraud B) Unauthorized practice of law by the broker C) Conveyance D) Unconscionable action - CORRECT ANS-D) Unconscionable action A non-freehold estate is the same thing as a leasehold estate. A) True B) False - CORRECT ANS-True A list of lenders and their loan rates to consumers. A) CLO B) CEO C) COO D) ECOA - CORRECT ANS-A) CLO Which of the following is not a mission of TREC? A) Issues licenses for real estate brokers, salespersons, home inspectors and residential service companies B) Supervises brokers in the training of new agents C) Approves real estate schools, courses and instructors D) Certifies right-of-way agents and registers timeshare projects - CORRECT ANS-B) Supervises brokers in the training of new agents An individual who owns mineral rights has the right to enter land that is occupied by another and remove the minerals. A) True B) False - CORRECT ANS-B) Percentage lease This type of lease provides that if a tenant achieves a certain amount of gross sales in a given year, a percentage of such gross sales will be paid to the landlord as additional rent. A) Open lease B) Percentage lease C) Net lease D) No such thing exists Next question - CORRECT ANS-C) Eminent domain The right of the government or its agent to expropriate private property for public use with payment of compensation. A) Condemnation B) Foreclosure C) Eminent domain D) Adverse possession - CORRECT ANS-C) Voidable contract A formal agreement between two parties that may be rendered unenforceable for a number of legal reasons. C) Default D) Breach - CORRECT ANS-D) Breach Redlining is prohibited by: A) Regulation Z B) Fair housing act C) Equal credit opportunity act D) Community reinvestment act Next question - CORRECT ANS-D) Community reinvestment act Deeds can be divided into three major categories. Which of the following is NOT correct? A) Warranty deeds B) Deeds without warranty C) Quitclaim deeds D) Deeds with mortgages - CORRECT ANS-D) Deeds with mortgages The state of the contract between the execution date and the closing. A) Fully executed contracted B) Executed contract C) Option contract D) Executory contract - CORRECT ANS-D) Executory contract This lease has a defined specific beginning and ending date. A) Estate at sufferance B) Estate at will C) Estate from period to period D) Estate for years - CORRECT ANS-D) Estate for years The TREC ONE-TO-FOUR RESIDENTIAL RESALE CONTRACT requires the seller to deliver__________ to the buyer at closing. A) Deed of trust B) General Warranty Deed C) Special Warranty Deed D) Quit Claim Deed - CORRECT ANS-B) General Warranty Deed A contingency added by sellers to provide a measure of protection against a house sale. A) Amendment B) Addenda C) Kick out D) Kick back - CORRECT ANS-C) Kick out What kind of listing is created when the owner wishes to receive a set amount of money from the sale of the property? A) Exclusive agency listing B) Open listing C) Net listing D) None of the above - CORRECT ANS-C) Net listing Sources of forms available for use by the Real Estate agent who has become a Realtor includes which of the following? A) TREC B) TAR C) Lawyers D) All of the above - CORRECT ANS-D) All of the above Paragraph 6 of the ONE-TO-FOUR RESIDENTIAL RESALE contract talks about the survey. In order to fully comply with this paragraph, the buyer must provide both the survey and the T-47. A) True B) False - CORRECT ANS-D) Closing The process that brings the note into legal existence. A) Execution B) Escrow C) Underwriting D) Closing - CORRECT ANS-D) Contingency Buyer's agency agreements can be created in which of the following ways? A) Express oral agreement B) Implied agency C) Both A & B D) None of the above - CORRECT ANS-B) Bill of sale Texas Veteran's Housing Assistance Program loans can be: - CORRECT ANS-all are correct The least common form of mortgage financing is: - CORRECT ANS-seller financing The __________ is the percentage of the lesser of the appraised value or sales price that the lender will loan. - CORRECT ANS-loan to value ratio If the loan factor is $5.53 on a $200,000 loan, taxes are $2,400/year and insurance is $1,800/year, what is the monthly PITI payment? - CORRECT ANS-$1,456 A __________ is a pledge of real estate as security for the repayment of a debt. - CORRECT ANS-mortgage A written history of all instruments and happenings that may affect title is called: - CORRECT ANS-abstract of title When the title history of a parcel of land has been researched back to the original conveyance by the government, the history is said to go back to the _________. - CORRECT ANS-sovereignty of the soil _______ occurs when an individual dies, leaving no valid will. - CORRECT ANS-intestate succession __________ is the process by which a lender exercises its power of sale under a mortgage that is in default. - CORRECT ANS-foreclosure A(n) ___________ description of property is a requirement for a valid deed. - CORRECT ANS- legal ___________ occurs when an individual acquires title from the rightful owner through hostile, actual, and continuous occupation of the land for the statutory period. - CORRECT ANS-adverse posession RESPA regulates closings on: - CORRECT ANS-1-4 family residential properties with federally related financing _________ of RESPA prohibits any person who, pursuant to any agreement or understanding, gives or receives a fee or a thing of value for the referral of settlement business. - CORRECT ANS-Section 8 _______ implements the Real Estate Settlement Procedures Act. - CORRECT ANS-regulation x Rule P-53 of the Texas Department of Insurance states that Title Companies: - CORRECT ANS-all are correct Ongoing expenses such as property taxes and property owner association feeds that are divided between the buyer and the seller at closing are called __________. - CORRECT ANS-Prorations A yearly tax bill is $2,400 and has not been paid. The property has sold and closing is July 30th. How much will be owed at closing for taxes? (Use a 365 day year, round to the nearest dollar and the seller pays for closing day.) - CORRECT ANS-$1,387 If a buyer's agent needs to deliver the option fee for a contract that has been executed, would it be a good idea for the agent to drop off the option fee at the title company? Why or why not? - CORRECT ANS-No because it's never a good idea to leave the option fee with the title company. If a buyer's agent needs to deliver the option fee by no later than Saturday, for a contract that has been executed, which of the following statements about the option fee is TRUE? - CORRECT ANS-The buyer's agent must find a way to deliver the option fee to the seller's agent or her broker within 3 days of the date on which the contract was executed. A buyer's agent needs to deliver the option fee by no later than Saturday, for a contract that has been executed. He delivers the check on the Sunday after, and the buyers then decide on Monday that they want to exercise their right to terminate the contract because the home inspection revealed that the roof will likely need some repairs. What potential problem do the buyers face? - CORRECT ANS-The sellers may decide that they will not allow the buyers to terminate the contract. The buyer and seller on a transaction decide to extend the option period, so the potential buyers can get some repair estimates on issues found during an inspection. The seller also agrees that he will lower his asking price by the amount of the roof repairs. The buyer's agent notes the new option period and the agreement to lower the sales price in Paragraph 11, the Special Provisions section of the sales contract. Did he handle this situation correctly? - CORRECT ANS-Changes to these details requires a contract amendment.