Texas Promulgated Contracts-CHAMPIONS Exam 2024 100% Correct Answers New, Exams of Financial Management

Download Texas Promulgated Contracts-CHAMPIONS Exam 2024 100% Correct Answers New and more Exams Financial Management in PDF only on Docsity! 1 The TREC-promulgated contract forms: The elements of a valid contract are, competent parties, consideration, legal subject matter, in writing, and . (a) Default (b) Mutual consent (c) Property condition (d) Recording B A(n) contract is defined as a contract that is binding on the parties, with one or more of the parties having contractual duties that have not yet been performed. (a) Executory (b) Executed (c) Bilateral (d) Void A In the business of real estate, is defined as something given in exchange for a promise. (a) Consideration (b) Mutual assent (c) A bribe (d) Legal subject matter A (a) Are for optional use by real estate licensees (b) Are drafted by the Broker-Lawyer Committee 2 (c) Are promulgated by the legislature (d) Are used in both commercial and residential transactions B 5 In the Third Party Financing Addendum for Credit Approval: (a) The buyer has no incentive to obtain financial approval (b) The buyer has a definite time to notify seller of the inability to obtain financing approval (c) The buyer's earnest money will not be returned if the buyer does not obtain financing (d) The option period is explained C The Third Party Financing Addendum for Credit Approval cannot be used for: (a) VA guaranteed loans (b) FHA insured loans (c) Seller Financing (d) Texas Veterans Loans B According to the Seller Financing Addendum, the interest rate is: (a) Set at 6% (b) Negotiated between the parties (c) Set by TREC (d) Determined at closing A occurs when a buyer assumes and agrees to pay the seller's existing mortgage. (a) Loan assumption 6 (b) Seller liability (c) Seller lien (d) Credit approval 7 A Land, improvements and accessories are collectively referred to as: (a) The estate (b) The property (c) The listing (d) The homestead B According to the TREC contract, accessories include: (a) Refrigerators (b) Stoves (c) Washing machines (d) Gas dryers A Exclusions to the sale must be removed (a) Prior to delivery of possession (b) At the convenience of the seller (c) When the offer becomes a binding contract (d) Two days prior to closing A The loan amount in Paragraph 3.B. of the sales contract includes: (a) The amount of the mortgage insurance (b) The loan plus origination fees 10 (c) Seller's Disclosure (d) Inspection report A 11 A Seller's Disclosure Notice is not required (a) When the property being sold is a previously unoccupied new home (b) When the property is sold to an investor (c) When the property has an out of state owner (d) When the property is sold "as i" A If a buyer is concerned about the presence of endangered species, toxic substances or wetlands on a property, the agent should (a) Add the Environmental Assessment Addendum to the contract (b) Avoid the property at all costs (c) Add in Paragraph 11, Special Provisions, that the contract is subject to an environmental review (d) Explain to the buyer that environmental issues are rarely a problem A How long does a buyer have to object to defects, exceptions and encumbrances to title disclosed in the survey and title commitment? (a) Within 3 days of the effective date of the contract (b) Up to 5 days prior to closing (c) Within 7 days of becoming concerned (d) The negotiated number of days stated in the contract D Being within the extraterritorial jurisdiction of a municipality is an 12 indication the property will: (a) Be condemned in the near future (b) Possibly be annexed in the future 15 (b) All of the blanks in paragraph 23 must be filled in (c) The fee must be paid within three days of the effective date of the contract (d) All of the above D The special provisions paragraph of the contract allows licensees to insert: (a) Factual business details (b) Statements not addressed in the contract (c) Information for which there is no TREC promulgated addendum, lease or mandatory form (d) All of the above D Usual expenses of the seller as stated in the contract include: (a) Appraisal fees (b) VA loan funding fee (c) Release of existing lien (d) Copies of easements and restrictions C The process of dividing ongoing expenses between the buyer and seller at the closing is called: (a) assessing (b) prorating (c) collecting expenses (d) accounting 16 B If not using a temporary lease, the buyer is entitled to possession of the property: 17 (a) 24 hours before closing (b) When the seller has moved out (c) On closing day (d) Upon closing and funding D The Buyer and Seller Temporary Residential Lease forms are good for any period up to: (a) 14 days (b) 30 days (c) 60 days (d) 90 days D If a seller wants to continue to occupy the property for two days after the closing and the buyer agrees: (a) This can be written into the special provisions paragraph of the contract (b) The buyer and seller should negotiate a periodic tenancy agreement (c) The Seller's Temporary Residential Lease form should be used (d) The TAR Residential Lease form should be used C When one party defaults under a contract, the other party is known as the: (a) Breaching party (b) Injured party 20 (a) At first contact with the client (b) Before signing the contract if the client does not understand the effect of signing the sales contract or the terms or conditions in the agreement 21 (c) After the contract has been signed by all parties if the party does not understand the contract (d) A licensee should never advise a client to consult an attorney B Who is responsible for filling in the effective date of the contract? (a) The listing salesperson (b) The title company (c) The broker (d) The selling salesperson C The sales contract identifies the agency relationships between the broker(s) and parties: (a) In paragraph 23 (b) In paragraph 17 (c) In the Broker Information section (d) In paragraph 9 C The condominium resale certificate must have been prepared within the previous: (a) 3 months (b) 6 months (c) 30 days (d) 60 days A 22 If the buyer is allowed to select certain items in the new home that is under construction, the builder (seller) may reject a selection if it adversely affects the market value of the home. (a) True 25 (b) Tanks (c) Trucks (d) Pens C In the Farm and Ranch contract, the Seller generally has the right to harvest crops: (a) for one year after closing (b) until delivery of possession (c) until closing (d) for no more than 90 days after funding B Reservations of oil, gas and other minerals will generally be inserted in: (a) Paragraph 2 (b) Paragraph 11 (c) TREC Addenda form (d) Paragraph 7 C The sales price may be adjusted based upon a survey. If the sales price is adjusted, . (a) The cash portion can be adjusted (b) The amount financed can be adjusted (c) The cash portion and amount financed can be adjusted proportionately (d) Any of the above are possible 26 D If the sales priced is adjusted based upon a survey, either party may terminate the contract if the sales price varies by more than: 27 (a) The amount entered in 3.C of the contract (b) 5% (c) 10% (d) The amount entered in 3.A of the contract B If the property is currently under an agricultural exemption, and the use of the property changes, the buyer may be charged a: (a) Fine (b) Penalty (c) Rollback tax (d) d. Change of use fee C The buyer may terminate the contract and receive a refund of earnest money if lender required repairs: (a) Seem really high (b) Exceed 5% of the Sales Price (c) Exceed 3% of the Sales Price (d) Exceed $10,000 B If in Paragraph B(2) is checked, and 50% entered in the Addendum for Reservation of Oil, Gas, and Other Minerals, (a) Seller reserves 50% of all of the mineral estate (b) Seller reserves 50% of whatever mineral estate the seller owns as of the closing date B 30 usually found in the: (a) Sales contract (b) Listing agreement 31 (c) Buyer representation agreement (d) IABS B occurs when a property is refinanced or resold immediately after purchase for an artificially inflated value. (a) Chunking (b) Churning (c) Property flipping (d) Equity theft C A state government entity created to encourage agricultural development in Texas is the: (a) Texas Department of Parks and Wildlife (b) Texas Agricultural Development District (c) Texas Farm Bureau (d) Texas Farm Aid B If a seller wants to continue to occupy the property for two days after the closing and the buyer agrees: (a) this can be written into the special provisions paragraph of the contract (b) because it is for only two days, the parties should just enter into an oral agreement (c) the buyer and seller should negotiate a periodic tenancy agreement (d) the Seller's Temporary Residential Lease form should be used 32 D A federal disclosure requirement for residential properties built prior to 1978 is: 35 TREC promulgated contracts allow the Buyer to have the property inspected: (a) by anybody selected by the buyer (b) by inspectors licensed by TREC or otherwise permitted by law (c) no more than three times (d) at any time by any person selected by their agent B Buyer Sarah is purchasing a residential property. She plans to live in the home and operate a daycare business in the home as well. Having mentioned this to her agent, the agent should: (a) write a paragraph describing the business in Paragraph 11, Special Provisions (b) disclose the daycare using a TREC Special Use addendum (c) specify the use as a daycare in Paragraph 6: Objections (d) not mention the daycare because the future use of a property is not an issue C If a property is under contract to a buyer, another buyer may use the to enter into a contract for the property if the first contract fails to close. (a) Addendum for Sale of Other Property by Buyer (b) Addendum for Back-up Contract (c) 1-4 Family Residential Contract (d) Notice of Buyer's Termination of Contract B The title company is: 36 (a) A party to the transaction (b) Not a party to the transaction 37 (c) Liable for the performance of the parties (d) Responsible for arranging suitable financing for the buyer B A(n) property is one where a particular event has affected the desirability of said property. (a) Stigmatized (b) Undesirable (c) Unsellable (d) Foreclosed A If an overage is incurred on new home construction due to a change order, the excess is paid by: (a) the seller (b) the buyer (c) splitting the overage equally between seller and buyer (d) the agent B A licensee might be guilty of the unlawful practice of law if he or she: (a) wrote a will for a client (b) advised the buyer regarding title issues (c) drafted a lengthy and complex provision in special provisions (d) any of the above D A Seller's Disclosure Notice is not required: 40 . (a) the cash portion can be adjusted (b) the amount financed can be adjusted 41 (c) the cash portion and amount financed can be adjusted proportionately (d) any of the above are possible D Any material changes to subdivision information require the to give notice of said changes promptly. (a) Buyer (b) Listing Agent (c) Seller (d) Broker C Rollback taxes would most likely be imposed when: (a) a property that has been used for agricultural purposes is no longer productive (b) a borrower rolls loan fees into a refinance (c) a property that has been under an agricultural exemption is developed into a subdivision (d) when the use of a property changes from residential to commercial C In Texas, the statute of limitations is for an oral agreement. (a) Four years (b) Two years (c) Eight years (d) Six Years 42 B The Third Party Financing Addendum For Credit Approval can be used when: 45 (b) paid in cash to the Buyer after closing (c) entered in Paragraph 12.A(1)(b) (d) added to the sales price in Paragraph 3 C A Buyer wishes to make an offer on a property, but is concerned that the rare and endangered fluted tree scorpion occupies the land. In preparing the offer, the agent should: (a) include in special provision authorization for the Buyer to conduct assessments of endangered species on the land (b) include that the Seller provide an affidavit stating that the land is free of all endangered species (c) insist that the Seller take immediate action to remove all fluted tree scorpions from the land (d) include the TREC Environmental Assessment, Threatened or Endangered Species, and Wetlands Addendum D The process of dividing ongoing expenses such as taxes and POA fees between the buyer and seller at closing is called: (a) assessing (b) prorating (c) collecting expenses (d) accounting B An exception to a license holder using a TREC-promulgated contract form would be: (a) if the broker does not want to use the forms (b) if the license holder prepared his or her own form 46 (c) if the sale is for a vacant lot in a subdivision (d) if an attorney-prepared form is used 47 At closing the buyer should bring a: D During the time between execution and closing/funding, a contract is a(n): (a) tentative contract (b) voidable contract (c) executory contract (d) fully executed contract C (a) personal check for the amount of closing costs and down payment (b) a promissory note for the amount of closing costs and down payment (c) cash for the amount of closing costs and down payment (d) a cashier's check or wire transfer for the amount of closing costs and down payment D When a party fails to perform according to the terms of a contract, the party is said to be: (a) in default (b) in avoidance (c) terminated (d) in violation A is defined as something given in exchange for a promise. 50 One possible issue with using the Seller's existing survey is that the Buyer may have no cause of action against the original surveyor in the event that an error is discovered. (a) True 51 54. A short sale is a transaction wherein: (b) False B All of the TREC promulgated contracts provide that the Buyer is purchasing the property "as-is". (a) True (b) False A According to the Third Party Financing Addendum for Credit Approval of a VA loan, if the purchase price or cost exceeds the reasonable value of the property as determined by the Department of Veterans Affairs the Buyer: (a) Can terminate the transaction without penalty (b) Can pay the excess amount in cash from a source which Buyer agrees to disclose to the VA (c) Can negotiate with the seller to have the seller lower the sales price to an amount equal to the VA reasonable value (d) All of the above D If in Paragraph B(2) is checked, and 50% entered in the Addendum for Reservation of Oil, Gas, and Other Minerals, . (a) Seller reserves 50% of all of the mineral estate (b) Seller reserves 50% of whatever mineral estate seller owns as of the closing date B (a) the property is priced well below market so that it can be sold very quickly 52 (b) the property, with the consent of the lender, is flipped (c) the lender has agreed to accept less than the outstanding loan balance at closing