Real Estate Contract Fundamentals, Exams of Social Sciences

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PROMULGATED CONTRACT FORM PRACTICE EXAM

If a buyer decides to terminate a contract, the seller must agree to the termination. A) True B) False - Answers-B) False Which of the following, with written, consent, may act as an Intermediary? A) The Broker representing the seller and buyer B) The Broker cooperating with the listing broker C) The salesman working with the seller and buyer D) The salesman sponsored by a broker representing the seller - Answers-A) The Broker representing the seller and buyer An agent would use the same contract for new construction no matter if it was completed or incomplete. A) True B) False - Answers-FALSE Regarding mediation - the Buyer and Seller are obligated under the terms of the Residential contract to abide by the ruling of the mediator. A) True B) False - Answers-B) False A bilateral contract is: A) A promise in exchange for a promise B) A promise made only by the agent C) A promise made only by the seller D) No promise - Answers-A) A promise in exchange for a promise The option paragraph of the contract creates an executed contract. A) True B) False - Answers-B) False A unilateral contract only binds one party to perform. A) True B) False - Answers-A) True It is required by law that a seller disclosure any information they have regarding their property. They may use any form or notice that they wish.

A) True B) False - Answers-A) True The Non-Realty Items addendum form for transfer of personal property can include the following EXCEPT A) An agreed dollar amount between buyer and seller for the conveyance B) A place to list the personal property to be conveyed C) A representation by Seller that the items are owned free and clear of encumbrances D) A warranty and guarantee from the seller that the items are in working condition - Answers-D) A warranty and guarantee from the seller that the items are in working condition The Buyer/Tenant Representation Agreement must always be signed by the agent's sponsoring broker. A) True B) False - Answers-B) False An agent must provide the Information About Brokerage Services (IBS) notice at the time of the first substantive dialogue with the party to the transaction for all of the following EXCEPT: A) selling or leasing a commercial property B) Functioning as a tenant representative C) Leasing a residential property for a term of two years D) Leasing a residential property for a term of six months - Answer given - Answers-D) Leasing a residential property for a term of six months If a Buyer checks item 7D(2) under Property Condition, the buyer can only ask for specific repairs, and cannot use general terms such as "subject to inspection". A) True - Correct answer B) False - Answer given - Answers-A) True A Condominium Contract can include a description of the parking assigned to the Unit. A) True - Correct answer B) False - Answer given - Answers-A) True A survey is required on all Condominium Contracts. A) True B) False - Answers-B) False Once a contract goes to closing and is funded to the Seller, the Seller has no further liability for any representations the Seller may have made prior to the closing.

A) True B) False - Answers-B) False The legal description in a Condominium Contract includes the unit being conveyed along with ownership of the undivided interest of the land and common interests jointly owned by the condominium owners. A) True B) False - Answers-A) True A Municipal Utility District (MUD) is a political subdivision of the State of Texas authorized by the Texas Water Code to provide ____________ and other services within the MUD boundaries. A) Water B) Sewage C) Drainage D) All of the above - Answers-D) All of the above If a Seller counters a Buyer's offer, it is considered a rejection. A) True B) False - Answers-A) True A Back-Up contract to an existing contract can be terminated at any time under the termination option paragraph: A) Only if option money has been submitted to the seller at the time the Back-up contract is signed and agreed by all parties B) It has not moved to primary position, at which time the number of days in paragraph 23 (Option paragraph) dictates the 'time is of the essence" period C) The Back-Up Addendum form is attached to the contract D) All of the above - Answers-D) All of the above A contract must include all of these items except: A) Legal Description B) Sales Price C) Names of parties D) Type of loan - Answers-D) Type of loan Paragraph 4 (Financing) in the 1-4 Family Residential Contract is also used for cash transactions. A) True B) False - Answers-B) False

In paragraph 2 of the standard residential contract form, which of the following items would NOT be included in the sale unless otherwise provided for? A) Mini-blinds B) Stove C) Ceiling fans D) Oriental living room rug - Answers-D) Oriental living room rug If there is no time limit specified in an offer, then the time will expire: A) 30 days B) As stated by the Broker C) As determined by the Seller D) Within a reasonable time - Answers-D) Within a reasonable time Why do lender required repairs take priority? A) Because lender repairs are the most serious repairs needed B) Because the buyer cannot get the loan without these being done C) Because FNMA sets the standards for what repairs are most important D) Because the seller and the lender work together to determine the priority of repairs - Answers-B) Because the buyer cannot get the loan without these being done A Condominium Contract can include a description of the parking assigned to the Unit. A) True B) False - Answers- FHA loans are government insured. VA loans are guaranteed by the government. A) True B) False - Answers-A) True The TREC promulgated Seller Financing Addendum states that if a Seller determines at Seller's sole discretion that the buyer's credit is unacceptable, the Seller may terminate the contract and return the earnest money to the buyer. A) True B) False - Answers-A) True A Seller, age 30, enters into a contract with a Buyer, age 17. The contract is: A) Valid for both parties B) Void for both parties C) Voidable by the buyer D) None of the above - Answers-C) Voidable by the buyer

For a Broker to act as Intermediary in a transaction, it requires written consent from only one of the parties. A) True B) False - Answers-B) False In a contract to purchase real property, what is the name of the clause that states that the buyer will NOT be held responsible to complete the purchase if the buyer cannot obtain sufficient financing? A) Acceleration clause B) Escalation clause C) Contingency clause D) "as is" clause - Answers-C) Contingency clause Implied agency is created by the actions of the agent. A) True B) False - Answers-True Federal Fair Housing Laws forbid discrimination based only on race. A) True B) False - Answers-B) False The "effective date" of the contract is: A) When the last person signs and initials all changes B) When the buyer submits the offer to the seller C) When the seller initials all changes D) When the earnest money is deposited at the title company - Answers-A) When the last person signs and initials all changes In the event of the seller's default, the buyer may do any of the following EXCEPT: A) Terminate the contract B) Enforce specific performance C) Seek such relief as provided by law D) Move into the property - Answers-D) Move into the property The biggest majority of lawsuits come from the issue of: A) Fixtures vs. personal items that convey with the property B) Misunderstandings between brokers C) Non-disclosure D) Repair items - Answers-C) Non-disclosure

Your buyers are considering consulting their attorney while you are preparing the offer. You should: A) Try to get them to sign the offer and call their attorney later B) Offer to deliver the contract to their attorney C) Advise them there is no need to consult an attorney since all real estate transactions are routine D) None of the above - Answers-B) Offer to deliver the contract to their attorney The "Special Provisions" paragraph (#11) of the Residential Contract is for: A) Naming all the additional personal items the buyer would like to have B) Excluding any other provisions of a contract that are not mutually agreed upon C) Inserting factual statements and business details where no addendum is required D) Name the parties involved in the transaction - Answers-C) Inserting factual statements and business details where no addendum is required Essential elements of a contract include: A) Competent parties B) Offer and acceptance C) Consideration D) All of the above - Answers-D) All of the above A TREC promulgated New Home Contract (Incomplete) can include: A) Landscaping B) Appliances C) Color choices D) All of the above - Answers-D) All of the above All the following fees will be prorated at closing EXCEPT: A) Taxes B) Rents C) Interest D) Credit report fees - Answers-D) Credit report fees An agent is required by law to cover the agency relationships described in the Information About Brokerage Services. A) True B) False - Answers- Per paragraph 9 (Closing) what type of deed is called for in a standard residential sale?

A) Special warranty deed B) Quit claim deed C) General warranty deed D) A deed of trust - Answers-C) General warranty deed An Agent must represent someone in a transaction. Therefore, if they do not represent the Buyer or Tenant through an expressed agreement, they are, by default, representing the Owner. A) True B) False - Answers-A) True The Seller must notify the Buyer to have the abstract of title examined by an attorney or obtain a policy of title insurance. A) True B) False - Answers-B) False In the 1-4 Family Residential Contract, any party to the contract wrongfully fails to sign a release acceptable to the escrow agent within 7 days of receipt of the request will be liable to the other party for liquidated damages in the amount of all the below EXCEPT: A) The earnest money B) All costs of suit C) Three times the amount of the earnest money D) Any expenses the title company incurred related to holding the earnest money - Answers-D) Any expenses the title company incurred related to holding the earnest money Under Property Condition (Paragraph 7), If a buyer checks item 7D(1) accepting the property in its present condition: A) The buyer has agreed to not inspect the property B) The buyer cannot negotiate for repairs C) Cannot terminate the contract under the option period D) None of the above - Answers-D) None of the above If a contract is amended, copies of the amendment should go to: A) The title company B) The lender C) Both buyer's agent and listing agent D) All of the above - Answers-D) All of the above Can there be more than one Intermediary in the same transaction?

A) Yes, if the seller and buyer are represented by different companies, brokers from each company may be Intermediaries. B) Yes, if both the Seller and Buyer agree C) No. One Broker must be a subagent of the other. D) No. - Answers-D) No. If a bonus is offered by an owner or an owner's agent, Buyer's broker: A) May retain the additional compensation B) Is always obligated to share the bonus with the buyer C) Is required by law to refuse the additional compensation D) Can only accept the bonus if it is a part of a standard commission - Answers-A) May retain the additional compensation Attachments required in a Resale Certificate for Property Subject to Mandatory Membership in an Owner's Association includes: A) Restrictions B) Current operating budget C) Rules and bylaws D) All of the above - Answers-D) All of the above You can give legal advice to a buyer or seller if you understand all the facts: A) True B) False - Answers-B) False If Paragraph 4(B) is checked under the Financing Paragraph, the following are true EXCEPT: A) The contract is not subject to financing approval B) the contract is not an FHA or VA contract C) The third Party Financing Addendum is not used D) The Buyer has the right to terminate and have earnest money refunded if they cannot obtain a loan - Answers-D) The Buyer has the right to terminate and have earnest money refunded if they cannot obtain a loan If a buyer elects 8-B (No Intermediary Status), in the Residential Buyer/Tenant Representation Agreement, the client will: A) Not be shown any of the broker's listings B) Show buyer only the broker's listings C) Be a customer of the broker D) Be appointed to another company as a subagent - Answers-A) Not be shown any of the broker's listings

The clause in a contract stating that "time is of the essence" would indicate: A) The contract must be finalized immediately B) The contract must include the time of day the contract was executed C) Strict performance of a certain act within the time stated in the contract D) Monetary penalties will be incurred if the provisions are not met by certain times - Answers-C) Strict performance of a certain act within the time stated in the contract Fraud is defined as a deliberate act of deception made for personal gain or to damage another individual. A) True B) False - Answers-A) True When completing the finance portion of the contract, the number of days you select to get the buyer's loan approved should not exceed: A) The 20 days the seller has to deliver the title commitment to the buyer B) The closing date C) The time to deposit the earnest money D) The option period - Answers-B) The closing date An expressed agency cannot be orally agreed but must be in writing. A) True B) False - Answers-B) False The Texas Association of Realtors (TAR) Residential Buyer/Tenant Representation Agreement allows all the following EXCEPT: A) The Broker can show the same properties to more than one prospective buyer B) Confidential information acquired by the agent can be shared with the seller if the buyer client gives permission C) The term of the agreement can automatically renew D) The broker can seek a commission from the Buyer is the Seller or seller's agent does not agree to pay. - Answers-C) The term of the agreement can automatically renew An agent must provide Information About Brokerage Services even if the party is already under contract to purchase the property. A) True B) False - Answers-B) False

During the option period in the 1-4 Family Residential Contract (resale), the Buyer has the unrestricted right to terminate the contract if they find a different house they would like to buy. A) True B) False - Answers-A) True ialogue with the party to the transaction for all of the following EXCEPT: A) selling or leasing a commercial property B) Functioning as a tenant representative C) Leasing a residential property for a term of two years D) Leasing a residential property for a term of six months - Answers- Federal Fair Housing Laws forbid discrimination based only on race. A) True B) False - Answers- It is considered illegal for a contract to include any discriminatory provisions. A) True B) False - Answers-A) True There are no promulgated forms for a lease for temporary occupancy for a buyer prior to closing. A) True B) False - Answer given - Answers-B) False