TEXAS PRINCIPLES AND REAL ESTATE EXPRESS EXAM ( QUESTIONS AND VERIFIED ANSWERS 2024 2025, Exams of Real Estate Management

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TEXAS PRINCIPLES AND REAL ESTATE EXPRESS

EXAM ( QUESTIONS AND VERIFIED ANSWERS

2024 2025 ) A+ RATED ;; GUARANTEED PASS

What kind of professionals manage the legal aspects of a development project? - ANSWER Real Estate attorneys, title companies, surveyors, property insurance companies and government regulatory officials What types of professionals are involved in the transfer of rights and interest in Real Estate? - ANSWER Titles companies, Real Estate Brokers/ Sales Persons, Mortgage Brokers, Mortgage Bankers, Appraisers, Insurers Property is classified into what three types? - ANSWER Residential, Commercial, and Investment properties Real Estate Agents in Texas would benefit from belonging to which two trade organizations? - ANSWER NAR - National Association of Realtors Texas Assoc. of Realtors If a broker chooses to specialize by geographic area, how might the area be defined? - ANSWER Natural Barriers, Streets/ Highways, By a certain set of Sub Divisions What are some of the individual brokerage services that one might perform for a pre-set fee? - ANSWER Comparative price analysis, prospect screening, site analysis, Database search The laws most relevant to agents and brokers relate to what topics? - ANSWER Agency, Contracts, Disclosure, Environmental, Impact, Fair housing, What are the four sources of real estate law? - ANSWER FederalGovernment, State Government, Local Government, Courts

Members of NAR (National Association of Realtors) Are Known as?? - ANSWER Realtors What are the two types of Real Estate Managers? - ANSWER Property Managers and Asset Managers Which action is often used to define specific aspects of newly created law? - ANSWER Court Decision Market Equilibrium: - ANSWER a market tends toward a state of equilibrium in which supply equals demand, and price, cost, and value are identical. Absorption - ANSWER the amount of available property that becomes occupied over a period of time. What is the definition of value as it applies to real estate? - ANSWER The present worth of future benefits that would be gained from owning real property How do elements of supply, demand and price interact in the market? - ANSWER In a continuous manner What type of Real Estate User would be interested in the level of trade area competition? - ANSWER Retail User If Price Decreases? - ANSWER Demand is declining in relation to supply Types of Real Estate Users - ANSWER Residential, Retail Industrial, office Residential User: Retail User: Office: Industrial User: - ANSWER 1) Quality of life, neighborhood, amenities,price

2. Trade, area, sales, competition 3)Efficiency, costs of Occupancy, Functionality

4. Labor pool, availability, supplies, Distribution Channels How Many members in TREC ( Texas Real Estate Commission) - ANSWER Nine members - six licensed brokers and 3 members of the public How long are the terms of TREC commission Members? - ANSWER Staggerd 6 Year Terms, How long does the term of a commission member last and when does a term expire? - ANSWER Commission members serve staggered six-year terms with the terms of three members expiring January 31 of each odd-numbered year. When will a court order a payment to an aggrieved party from the Recovery Fund? - ANSWER If a licensee cannot pay the full amount of the judgment ordered by the court, the party may apply to the court in which the judgment was rendered for an order to pay the balance due from the real estate recovery fund. Three parties that don't need a license to sell Real Estate - ANSWER Attorneys at law, An Auctioneer, Receivers/ trustees of Bankruptcy working under court order Which of these persons would need a real estate license?

• A college graduate advertises he will sell properties of other students to raise tuition money for college.
• A person receives and delivers a $500,000 deposit to her principal broker from a buyer.
• A company vice president leases one of the company's warehouses to a storage firm - ANSWER A college graduate advertises he will sell properties of other students to raise tuition money for college. Which of these persons would need a real estate license?
• A homeowner advertises to lease his improved basement to a college student.
• A senior citizen charges an advance fee for referring an individual to her son who owns a leasing office in town.
• An attorney licensed in Texas advises a client about how to minimize liability in an upcoming Texas real estate transaction. - ANSWER A senior citizen charges an advance fee for referring an individual to her son who owns a leasing office in town

What is the experience requirement for an applicant for a broker's license? - ANSWER At least four years of active experience in Texas as a license holder during the 60 months preceding the date the application is filed How many members in TREC Commission? - ANSWER 9 board members: 6 members from real estate industry, 3 members from general public

• Appointed by governor 6 year terms Payments from the Trust Account may not exceed? (For claims arising out of a single transaction)/ (Against a single Licensee) - ANSWER 50,000 and 100, broker - ANSWER an individual who performs certain real estate services for another party for compensation. The broker is The Education Standards advisory committee has how many members? - ANSWER 12, (appointed by the commission) Serve 2 year terms Payments from the trust account for claims based on judgements against a single licensee may not exceed a total of what amount? - ANSWER $100, A licensee applicant must provide fingerprints to the DPS within? - ANSWER 6 months of filing The TREC consists of? - ANSWER 9 members According to state law you need a real estate license if you.. - ANSWER If you buy/sell real estate on the behalf of others

Land - ANSWER The legal concept of land encompasses: the surface area of the earth, everything beneath the surface of the earth extending downward to its center, all natural things permanently attached to the earth, the air above the surface of the earth extending outward to infinity Parcel or tract - ANSWER A portion of land delineated by boundaries is considered a parcel or tract. Lands 3 Physical characteristics - ANSWER immobility, indestructibility, and heterogeneity Real estate - ANSWER • land

• all man-made structures that are "permanently" attached to the land Improvements - ANSWER permanently attached man-made structures to the land Property - ANSWER property is not only the item that is owned but also a set of rights to the item enjoyed by the owner. Real property: - ANSWER Real property is real estate and the bundle of rights associated with owning the real estate. Littoral rights - ANSWER these rights concern properties abutting bodies of water that are not moving, such as lakes and seas. Riparian rights: - ANSWER these rights concern properties abutting moving water such as streams and rivers. If a property abuts a stream or river, the owner's riparian rights are determined by whether the water is navigable or not navigable. Fixtures: - ANSWER Fixtures are real property converted from personal property by attachment to real estate. Trade Fixtures/Chattel Fixtures - ANSWER Trade fixtures are personal property items temporarily attached to real estate in order to conduct business. These items are designed to be removed at some point.

Emblements - ANSWER Emblements are plants or crops considered personal property since human intervention is necessary for planting and harvesting. Conversion: - ANSWER Conversion is the act of transforming real to personal property through severance, or personal to real property through affixing. simple definition of real estate - ANSWER is that it is air, water, land, and everything affixed to the land. Real estate in the United States may be owned privately by individuals and private entities, or publicly by government entities. Private ownership rights in this country are not absolute. What does the legal concept of land encompass? - ANSWER the surface area of the earth

• everything beneath the surface of the earth extending downward to its center
• all natural things permanently attached to the earth
• the air above the surface of the earth extending outward to infinity What are the three physical characteristics of land? - ANSWER immobility, indestructibility, and heterogeneity What does the legal concept of real estate encompass? - ANSWER land all man-made structures that are "permanently" attached to the land What are the two classifications of property? - ANSWER real property and personal property What are the four important rights associated with owning a parcel of real estate? - ANSWER Right to use ( Ex. Mine, Landscape, Build property) Right to transfer (Sell/ Lease) Right to encumber (Mortgage for debt) Right to exclude ( To keep others off) Land can be laterally divided into what classifications of rights? - ANSWER Surface rights

Subsurface rights Air rights How are air rights delineated? - ANSWER By imaginary vertical lines extended to infinity What do water rights concern? - ANSWER The rights to own and use water found in lakes, streams, rivers, and the ocean Growing plants may be either real or personal property. How are they differentiated? - ANSWER Plants and crops that grow naturally, without requiring anyone's labor or machinery, are considered real property. Plants and crops requiring human intervention and labor are called emblements which, despite their attachment to land, are considered personal property. Which government entity is the primary regulatory entity of the real estate business? - ANSWER State government How is a trade fixture different from a fixture? - ANSWER A trade fixture has been temporarily affixed to a landlord's real property in order to conduct business and may be detached and removed before, or upon surrender, of the leased premises The bundle of rights - ANSWER possession, use, transfer, exclusion, and encumbrance. Property is real or personal, tangible (physical) or intangible (abstract) Personal property - ANSWER ownership of anything that is not real estate, and the rights associated with owning the personal property item. Items of personal property are also called chattels or personalty. Differentiation criteria - ANSWER intention; adaptation; functionality; relationship of parties; contract provisions. Regulation of Real Property Interests - ANSWER Federal regulation- grants overall rights of ownership; controls broad usage standards, discrimination. State regulation- primary regulatory entities of the real estate business; establish real estate license laws and qualifications and sets regional usage standards.

Local regulation- levies real estate taxes; controls specific usage. Judicial regulation- applies case law and common law to disputes. What is is called when you convert personal property to real property by affixing it to the Real Estate? - ANSWER Attachment What right allows the property owner to keep others off of the property and to prosecute trespassers? - ANSWER Exclude What right concerns lakeside properties? - ANSWER Littoral Rights Who is the primary regulatory entity in the business of Real Estate? - ANSWER State Government Which Property right includes water rights? - ANSWER Surface Rights What right allows the property owner to sell, bequeath, lease, donate, assign ownership? - ANSWER The right to transfer interests Which describes personal property? - ANSWER Anything that isn't Real Property Why do people purchase property? - ANSWER Financial reasons Psychological reasons To live in As an investment Which type of housing is distinguished by its form of ownership rather than the style of architecture? - ANSWER Condominiums/ Cooperatives What is the major advantage of a Planned Unit Development (PUD)? - ANSWER Because it is designed to produce a high density of dwellings with maximum use of open spaces, it usually results in lower-priced homes and a minimum of maintenance cost.

What is the most important factor for a prospective homebuyer to consider in the decision to purchase?

• ANSWER Affordability Net Proceeds From Sale - ANSWER =sale price
• costs of sale amount realized Larry and Mary sold their home for $175,000. Their selling costs, including the commission they paid Broker Betty and amounts paid to inspectors, a surveyor, and the title company, amounted to ten percent of the selling price, or $17,500. The amount they realized from the sale was... - ANSWER $175,
• 17, 500 $157, Basis - ANSWER Basis is decreased by any amounts the owner received for such things as easements. is increased by the cost of capital improvements made to the property The basic formula for adjusted basis is: - ANSWER Beginning basis

• Capital improvements

• Exclusions, credits or other amounts received Adjusted basis beginning basis - ANSWER the cost of acquiring the property. the cost includes cash and debt obligations, and such other settlement costs as legal and recording fees, abstract fees, surveys, charges for installing utilities, transfer taxes, title insurance, and any other amounts the buyer pays for the seller. capital improvements - ANSWER putting on an addition, paving a driveway, replacing a roof, adding central air conditioning, and rewiring the home.

Looking again at our example from the previous screen, Larry and Mary originally paid $100,000 for their home. They spent an additional $5,000 on a new central heating and cooling unit. Their adjusted basis at the time of selling it is - ANSWER $100,

• 5, =$105, Amount realized (net sales proceeds)

• Adjusted basis - ANSWER Gain on Sale Selling price of old home $175,
• Selling Costs $17, = - ANSWER Amount Realized $157, Amount Realized $157,
• Adjusted Basis $105,000 - ANSWER Gain on sale $52, What did the Taxpayer Relief Act do with regard to capital gains? - ANSWER Reduced the top rate on profits from 28% to 20% for assets held at least 18 months, retroactive to May 7, 1997. Taxpayers in the 15% bracket now pay 10% tax. How does the IRS definition of a first-time home buyer differ from the standard definition? - ANSWER Technically, the person doesn't have to be purchasing his or her very first home. The person qualifies under the tax rules as long as that person did not own a principal residence at any time during the two years prior to the acquisition date of the new home. What is the difference between a realized and an unrealized capital gain? - ANSWER A realized capital gain is an investment that has been sold at a profit. An unrealized capital gain is an investment that hasn't been sold yet but would result in a profit if sold John and Grace Palmer bought their home in 1994 for $150,000. They just sold it for $550,000. How much will they pay in capital gains tax and why? - ANSWER They have no capital gains to pay. Their profit was $400,000 and they are eligible for a $500,000 exclusion.

they are a couple, which is $250,00 per person exclusion ($500,000 exclusion coinsurance clause - ANSWER this clause requires that homeowners have insurance that is equal to 80% of the home's replacement value. (This does not include the price of the land) Clue Report: - ANSWER The report reveals major damage or repairs covered by insurance. In some cases, it reveals damages about which the owner contacted the insurance company but did not file a claim.the CLUE Report is not available to the insurer until AFTER closing.The buyers should request for the seller to order one so the buyer can review prior to closing. Homeowner's insurance policies for condominiums usually provide liability coverage for what types of losses? - ANSWER For injuries or losses that occur inside the unit. Outside events or damages to the building are not usually covered. Gary carries an insurance policy that equals 60% of the replacement value of his home. He suffers $8, in damage on his home after a windstorm. How will his insurance claim be handled? - ANSWER it will probably be prorated as follows to give him $6,000: 60% ÷ 80% = 75% x $8,000 = $6, What does an endorsement do to a policy? - ANSWER It modifies the policy in some way that is favorable to the insurance company. What is important to know (and tell your clients) regarding the CLUE Report? - ANSWER CLUE is a database of insurance claims against a property from the past five to seven years. It is not available to insurance companies until after closing (at which time the language in the insurance policy may allow them to reject coverage). Buyers should make their offer subject to receiving and approving a copy of the seller's CLUE report during their option period. CONDO units owners assessment - ANSWER if a unit represents a 2% share of the property value, that unit owner's assessment will be 2% of the property's common area expenses.

Cooperatives - ANSWER Own share in non profit or cooperative association, Share holders acquire a proprietary lease to occupy one of the apartment units How are condominium properties created - ANSWER By executing and recording a condominium declaration and a master deed What are a condominium owner's responsibilities relating to the apartment? - ANSWER Maintaining internal systems Maintaining the property condition Insuring contents of the unit What does a person own when purchasing a cooperative unit - ANSWER Shares in a non-profit corporation or cooperative association, which in turn acquires and owns an apartment building as its principal asset How is a cooperative resident's monthly assessment determined? - ANSWER The proprietor-tenant is responsible for the unit's pro rata share of the corporation's expenses in supporting the cooperative First-time homebuyers must - ANSWER Have enough money for a down payment.

• Have money for closing costs.
• Be eligible for a mortgage loan. As the owner pays down the mortgage, the .... increases. .... is defined as the paid-off share in the property that the owner actually owns. - ANSWER Equity Capital gain - ANSWER the amount by which an asset's selling price exceeds its initial purchase price. This Act allows a special exclusion on capital gains for homeowners selling their own home. A seller can exclude up to $250,000 of any capital gain on the sale. If the sellers are a married couple, they can exclude up to $500,000 in gain. This exclusion can be used once every two years.

What may be the result when a condominium owner fails to pay Assessment Fees? - ANSWER It can count as an enforceable lien against the homestead A coinsurance clause requires a homeowner to have what kind of insurance? - ANSWER 80% of a homes replacement value Which of the following is typically not covered in basic homeowners insurance policy? - ANSWER Damage from frozen pipes in a unoccupied property What document allows a co-op owner to occupy a unit? - ANSWER A proprietary lease Which of the following is FALSE for first time home buyers? - ANSWER Must have rented or leased for two years prior before purchase As an owner pays down a mortgage - ANSWER Equity increases John purchased a home in 1997 for $200,000 and recently sold it for $475,000. How much of his profit will be subject to capital gains tax? - ANSWER $250, Most basic homeowner policies are known as?? - ANSWER HO-2 policies Agency Law The duties that the agent owes his or her principal are: - ANSWER • Care (Reasonable care)

• Obedience
• Accountability
• Loyalty
• Disclosure or Notice What actions demonstrate exercising care when representing a buyer? - ANSWER Helping the buyer locate appropriate housing
• Evaluating property values and property conditions

• Determining financing alternatives
• Presenting offers and counteroffers with the buyer's interests in mind A seller's agent must disclose what kinds of things to the seller? - ANSWER Purchase offers
• Who the prospective purchasers are and if the agent has a relationship with them in any way
• Ability of the purchaser to complete the transaction
• Ability of the purchaser to offer a higher price
• Purchaser's intention to resell the property for a profit Estoppel - ANSWER is defined as a legal doctrine by which a person is prevented from asserting rights or facts that are inconsistent with a previous position or representation made by act, conduct or silence. ostensible agency - ANSWER because on the surface an agency relationship appears to exist. In the example above, once this type of agency is created, Charles is prevented by estoppel* from denying its existence. Documents of title for manufactured housing are called what? - ANSWER When must a buyer's agent provide a written statement about brokerage services to a party? - ANSWER At first contact with the seller, landlord, or either party's agent When must a seller's agent provide a written statement about brokerage services to a party? - ANSWER At the time of the first substantive dialogue with the party Most popular Contract - ANSWER The One to Four Family Residential Contract:(TREC NO 20-13) What is the difference between a void contract and a voidable contract? - ANSWER A void contract is an agreement that does not meet the tests for validity, and therefore is no contract at all. A voidable contract is one which initially appears to be valid, but is subject to cancellation by a party to the contract who is believed to have acted under some kind of disability.

What is the difference between an express contract and an implied contract? - ANSWER An express contract is one in which all the terms and covenants of the agreement have been clearly stated and agreed to by all parties, whether verbally or in writing. An implied contract is an unstated or unintentional agreement that may be considered to exist when the actions of any of the parties suggest the existence of an agreement. What are the five criteria of a valid contract? - ANSWER Competent parties

• Mutual agreement
• Lawful objective
• Consideration
• In writing What is a contingency and what is the most common contingency? - ANSWER A contingency is a condition that must be met before the contract is enforceable. The most common contingency concerns financing What does the escrow clause in a sales contract do? - ANSWER It provides for the custody and disbursement of the earnest money deposit, and releases the escrow agent from certain liabilities in the performance of escrow duties. What does a right of rescission clause set forth? - ANSWER The buyer's right under certain conditions to rescind the sale contract and re-claim their deposits if sellers fail to complete and deliver the property condition disclosure statement to buyers in a timely fashion. The buyer must follow certain procedures and meet certain deadlines in order to legitimately effect the cancellation. Dispute resolution. - ANSWER The parties agree to resolve disputes through arbitration, as opposed to court proceedings. What is the main difference between an option-to-buy contract and a sale contract? - ANSWER The option is unilateral-- only one party makes a promise. Both parties promise to perform in the sale contract.

In a contract for deed situation, what must a person do who wishes to convert his interest in the property into a legal title? - ANSWER Pay the seller the full amount due on the contract for deed, or deliver a promissory note equal to the balance due that contains the same due date, interest rate, and late fees as the contract. What two primary purposes does a contract for deed serve for a seller? - ANSWER It facilitates a sale that might otherwise be impossible. It may give the seller certain tax benefits. contract - ANSWER is an agreement between two or more parties who, in a "meeting of the minds, Statute of Frauds - ANSWER requires that certain contracts must be in writing to be enforceable. Real estate contracts that transfer an interest in real property fall in this category, with the exception of a lease with a term of one year. Statute of Limitations - ANSWER restricts the time period for which an injured party in a contract has the right to bring a lawsuit against the other party. A reformation - ANSWER is necessary to correct or modify the contract that has a mechanical or clerical error. Survival clause- - ANSWER sales contract parties continue to be liable for the truthfulness of representations and warranties after the closing CONTRACT FOR DEED - ANSWER also called a land contract or conditional sales contract. It facilitates a sale that might otherwise be impossible, and may give the seller certain tax benefits. This is a sale where purchase price is paid over time in installments; seller retains title; buyer takes possession; at end of period, buyer pays balance of price, gets legal title The guardian for a mentally incompetent party enters into an oral contract with another party to buy a trade fixture. What is true about this contract? - ANSWER It is possibly valid and enforceable

A contract is only valid if the parties have the capacity to enter into the contract. Capacity to contract is determined by legal age, mental competency, or legitimate authority to act on behalf of the party. According to contract law, every valid contract is also what? - ANSWER Enforceable or Unenforceable State laws declare that some contracts are enforceable only if they are in writing. Therefore a valid contract that is in writing is enforceable, however, a valid contract may be unenforceable if it is not in writing.) In what part of a sales contract would you find information regarding that a seller acknowledges that the buyer must withhold 10% of the purchase price at closing if the seller is a foreign person or entity, and forward the withheld amount to the Internal Revenue Service? - ANSWER Foreign Seller Withholding Which of the following contracts must be in writing to be enforceable? - ANSWER A Two Year Lease (Any contract that conveys an interest in real estate must; be in writing, contain a legal description of the property, and be signed by one or more of the parties. A lease with a term of one year or less is exempt from this.) What is the purpose of the Statute of Frauds? - ANSWER Require certain conveyance-related contracts to be in writing The Statute of Frauds requires that certain contracts must be in writing to be enforceable, including all real estate contracts to buy, sell, exchange, or lease interests in real property, but with the exception of a lease with a term of one year or less. estate in land, or familiarly, an estate. - ANSWER If the interest-holder enjoys the right of possession, encumbrance. - ANSWER The interest ,If a private interest-holder does not have the right to possess An encumbrance enables a non-owning party to restrict the owner's bundle of rights. Tax liens, mortgages, easements, and encroachments are examples. Eminent domain - ANSWER when the power of the government, or a public utility, takes private property for public use.

Examples would be to widen roadways, easements, or develop a highway. Escheat - ANSWER is when an owner dies and there is no heir to will the property to. Texas law states that ownership of this land would then revert back (or escheat) to the state. Feudal Title - ANSWER The conditions under which the government can force the sale of privately-owned real property for public necessity are established by eminent domain laws of either the federal or state governments, respectively. bundle of rights to real property - ANSWER • possess

• use
• transfer
• encumber
• exclude Undivided interest. - ANSWER An undivided interest is an owner's interest in a property in which two or more parties share ownership. The terms "undivided" and "indivisible" signify that the owner's interest is in a fractional part of the entire estate, not in a physical portion of the real property itself. Examples of interests include: - ANSWER • an owner who enjoys the complete bundle of rights
• a tenant who temporarily enjoys the right to use and exclude
• a lender who enjoys the right to encumber the property over the life of a mortgage loan
• a repairman who encumbers the property when the owner fails to pay for services
• a buyer who prevents an owner from selling the property to another party under the terms of the sale contract
• a mining company which temporarily owns the right to extract minerals from the property's subsurface Free Hold Estate - ANSWER (Free from hold) Free to use land for any of its purposes the duration of the owner's rights cannot be determined: the rights may endure for a lifetime, for less than a lifetime, or for generations beyond the owner's lifetime.

leasehold estate - ANSWER is distinguished by its specific duration, as represented by the lease term. Both leasehold and freehold estates are referred to as tenancies. The owner of the freehold estate is the freehold tenant, and the renter, or lessee, is the leasehold tenant. fee simple Free Hold Estate - ANSWER is the highest form of ownership interest one can acquire in real estate. It includes the complete bundle of rights, and the tenancy is unlimited, with certain exceptions indicated below. The owner of the fee simple interest is called the fee tenant Two forms of Free Hold Estate - ANSWER Absolute and Defeasible Fee Simple Absolute. The fee simple absolute estate is a perpetual estate that is not conditioned by stipulated or restricted uses. Fee Simple Defeasible. The defeasible fee estate is perpetual, provided the usage conforms to stated conditions. Essential characteristics are:

• the property must be used for a certain purpose, or under certain conditions
• if the use changes or if prohibited conditions are present, the estate reverts to the previous grantor of the estate The two types of fee simple defeasible are - ANSWER Determinable. The deed to the determinable estate states usage limitations. If the restrictions are violated, the estate automatically reverts to the grantor or heirs. Condition subsequent. If any condition is violated, the previous owner may repossess the property. However, reversion of the estate is not automatic; the grantor must re-take physical possession within a certain time frame. "undivided interest"? - ANSWER An owner's interest in a property in which two or more parties share ownership ex. 1/3 ownership as a tenant in common with other holders Estate At Sufferance: - ANSWER tenant occupies residence without consent/ Refuses to leave

Estate at Will: No expiration Date Life Estate - ANSWER A freehold estate that limited in duration to the life of the owner or other named person. Upon the death of the owner or other named individual, the estate passes to the original owner or another named party. What are the major forms of legal life estate? - ANSWER Homestead Dower and curtesy Elective share What are the four types of leasehold estates and which of the four has no definite expiration date? - ANSWER Estate for Years Estate from Period-to-Period Estate at Will Estate at Sufferance Estate at will has no definite expiration date. Doctrine of Prior Appropriation, - ANSWER Water Rights-this position requires that property owners obtain permits for use of water. ( The state owns and controls all bodies of water) What rule does Texas follow regarding groundwater use and what does that rule mean? - ANSWER Texas follows the rule of capture regarding groundwater use rights. This rule allows a property owner to pump as much water as he or she wishes, even to the point of depleting the water supply Defeasible - ANSWER can revert to previous owner for violation of conditions. Fee estate - ANSWER passes to another upon death of a named party interest of a named party (called a remainderman) to receive estate after holder's death

• interest of previous owner or owner's heirs to receive estate after holder's death - ANSWER Remainder: and Reversion: In Texas, rural homesteads may not be - ANSWER more than 200 per family or 100 acres per person. Urban homesteads may not be more than 10 acres. Upon the death of the owner, a life estate passes to.. - ANSWER the original owner or other named person n Texas, how many days must a homestead owner live on a property to use the homestead exemption against bankruptcy? - ANSWER 1215 days Encumbrance - ANSWER is an interest in and right to real property that limits the legal owner's freehold interest The two general types of encumbrance are those that affect the property's use and those that affect legal ownership, value, and transfer. Most common types of encumbrances - ANSWER Easements and Liens Easement - ANSWER An easement, such as a utility easement, enables others to use the property, regardless of the owner's desires. This may be affirmative, allowing a use, or negative, prohibiting a use. Lien - ANSWER A lien, such as a tax lien, can be placed on the property's title, thereby restricting the owner's ability to transfer clear title to another party. Easement appurtenant - ANSWER gives a property owner a right of usage to portions of an adjoining property owned by another party. The property enjoying the usage right is called the dominant tenement, or dominant estate. The property containing the physical easement itself is the servient tenement, since it must serve the easement use. easement by necessity - ANSWER is an easement appurtenant granted by a court of law to a property owner because of a circumstance of necessity, most commonly the need for access to a property.

Party wall - ANSWER a common wall shared by two separate structures along a property boundary. A negative easement in a shared structure. Easement in gross - ANSWER a right to use property that does not attach to the real estate. Utilities or railroads are examples. Those employed to buy or sell easements in gross must be licensed or registered with TREC.

• Personal- not revocable or transferable; ends upon death of easement holder
• Commercial- granted to businesses; transferable Easements can be created by - ANSWER voluntary grant, court decree, by necessity, prescription, or eminent domain. If someone uses another's property as an easement without permission for a statutory period of time (the period of time in Texas .........) and under certain conditions, a court order may give the user the easement right by prescription, regardless of the owner's desires. - ANSWER 10 years encroachment - ANSWER is the unauthorized, physical intrusion of one owner's real property into that of another. If an encroached owner takes no remedial action over a prescribed number of years, the encroachment may become an easement by prescription. Liens - ANSWER are a creditor's claim against personal or real property as security for a debt of the property owner. If the owner defaults, the lien gives the creditor the right to force the sale of the property to satisfy the debt. This is what distinguishes a lien from other types of encumbrances: liens are attached to property because of a debt. Superior liens - ANSWER rank over junior liens. They are not ranked by recording date. They include liens on real estate tax, special assessments, and inheritance taxes Junior liens - ANSWER rank by recording date and include judgment, mortgage, vendors, utility, mechanic's, and other tax liens. Mechanic's lien priority "dates back" to when work or sale transpired Deed in lieu of foreclosure - ANSWER defaulted borrower voluntarily deeding property to lender to avoid foreclosure

What is it called when during the notice of default and notice of sale periods, the borrower pays the lender and terminates the proceedings? - ANSWER Reinstatement and Redemption A creditor who places a lien on a property is called the - ANSWER Leinor In Texas, what is the time period for granting a easement by prescription? - ANSWER 10 years How often does the local legal taxing authority places a real estate tax lien against properties? - ANSWER Every year For which homestead projects the following statement is correct? The owner must provide trust funds, which then must be deposited into an escrow account by the contractor at a bank. - ANSWER 5 Thousand or more A certain property has the following liens recorded against it: a mortgage lien dating from three years ago; a mechanic's lien dating from two years ago; a real estate tax lien for the current year; and a second mortgage lien dating from the current year. In case of a foreclosure, which of these liens will be paid first? - ANSWER Real Estate Tax lien lis pendens - ANSWER A lis pendens gives public notice that the mortgaged property may soon have a judgment issued against it. What three types of foreclosure processes enforce mortgage liens? - ANSWER Judicial, Non Judicial, Strict short sale - ANSWER occurs when a lender allows a borrower in default on mortgage loan payments to sell the mortgaged property for less money than necessary to satisfy the loan Strict foreclosure - ANSWER is a court proceeding that gives the lender title directly, by court order, instead of giving cash proceeds from a public sale. Writ of Execution: - ANSWER Court orders property to be sold

What is a municipal utility lien - ANSWER A municipality placing a utility lien against a resident's real property for failure to pay utility bills A court-ordered lien against all real or personal property of a parent who defaults on child support is an example of what kind of lien? - ANSWER Judgment Lien Home Equity Loan - ANSWER Using money paid for house towards, something you need, like a pool car Subordination: - ANSWER A lienor can change the priority of a junior lien by voluntarily agreeing to subordinate, or lower, the lien's position in the hierarchy. tenancy in common - ANSWER also known as the estate in common, is the most common form of co- ownership when the owners are not married. The defining characteristics are: (Each owns own share), hold separate titles to individual interests If die, share goes to heirs (children/ family) (Condo) Joint Tenancy: - ANSWER 2 Owns as if they were a single person. Must be created by written agreement, equal ownership, hold single title to property ( If 4 co tenants each owns 25% of property)Survivorship - In most states, joint tenants enjoy rights of survivorship. That means if a joint tenant dies, all interests and rights pass to the surviving joint tenants Unity of: Time, title, Interest, possession What are the three main forms of ownership? - ANSWER In severalty - Held by only one owner *In co-ownership - Held by two or more people *In trust - Held by a third party for the benefit of someone els What three types of co-ownership does Texas recognize? - ANSWER tenancy in common, Joint tenancy Community property

What happens to community property upon the death of a spouse? - ANSWER Half of the deceased's community property passes to the surviving spouse, and the other half passes to the decedent's heirs. What form of Ownership is a condominium? - ANSWER Fee Simple Interest and tenants in common A condominium is a hybrid form of ownership which combines ownership of a fee simple interest in the airspace within a unit with ownership of an undivided share, as a tenant in common, of the entire property's common elements. Syndicates - ANSWER a descriptive term for a group of two or more people who combine their financial resources to achieve certain investment objectives. In a limited partnership, what is the liability difference between a general partner and a limited partner?

• ANSWER Limited partners are liable only to the extent of their investment. General partners have unlimited liability. What type of lease is used in co-ops? - ANSWER Propietary Which of the following is a descriptive, non-legal term for a group of two or more people who combine their financial resources to achieve certain investment objectives? - ANSWER Syndicate A limited partnership must have how many general partners with unlimited liability? - ANSWER at least one All LLCs must have at least - ANSWER one member (john) What is it called when just a few people hold stock in a corporation? - ANSWER Closely Held What type of organization provides the liability advantages of a corporation, without the regulations corporations must deal with? - ANSWER LLC