Real Estate Lease and Sales Agreement Terms and Conditions, Exams of Business Systems

Download Real Estate Lease and Sales Agreement Terms and Conditions and more Exams Business Systems in PDF only on Docsity! 1 TEXAS PROMULGATED CONTRACTS-CHAMPIONS final exam QUESTIONS AND ANSWERS 2024 (A+) 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. 2 (a) Consideration (b) Mutual assent (c) A bribe (d) Legal subject matter - =A -The TREC-promulgated contract forms: (a) Are for optional use by real estate licensees (b) Are drafted by the Broker-Lawyer Committee (c) Are promulgated by the legislature (d) Are used in both commercial and residential transactions - =B -In a lease with a "right of first refusal" provision: (a) The price is set when the lease agreement is negotiated (b) The tenant has promised to buy the property (c) The TREC promulgated form must be used (d) The tenant has the right to match or better any offer the landlord receives to prevent the property from being sold to someone else - =D -TREC has promulgated forms for: 5 -___________________ occurs when a buyer assumes and agrees to pay the seller's existing mortgage. (a) Loan assumption (b) Seller liability (c) Seller lien (d) Credit approval - =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 - =B 6 -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 (c) Only the amount borrowed by the buyer (d) The loan amount minus the earnest money - =C -The sales price in 3.C. is always: (a) The loan amount plus the cash portion (b) 3.A. + 3.B. (c) The amount borrowed plus the down payment (d) All of the above - =D -The earnest money is: 7 (a) Always 5% of the purchase price (b) Set by TREC (c) Negotiated between the parties (d) Paid at closing - =C -The T-47 Residential Real Property Affidavit is not completed until ________________, in most cases. (a) Funding (b) Inspection (c) Closing (d) The listing is taken - =C -The __________________ ensures compliance with TRELA, which requires that license holders advise buyers to have an abstract of title examined or to obtain title insurance. (a) Title commitment (b) Notice to Prospective Buyer (c) Seller's Disclosure (d) Inspection report - =A -A Seller's Disclosure Notice is not required 10 (b) Not more than 5 days after the effective date of the contract (c) Within 7 days of loan approval (d) The number of days negotiated in the contract - =D -If a license holder is receiving compensation from a residential service company, the compensation is: (a) Reported to TREC (b) Disclosed to the parties using the appropriate TREC form (c) Never disclosed to anyone (d) Reported to the attorney general for action - =B -For a valid option to exist (a) The option fee must be paid directly to the seller or listing broker (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: 11 (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 - =B 12 -If not using a temporary lease, the buyer is entitled to possession of the property: (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 15 -Who is responsible for filling in the effective date of the contract? (a) The listing salesperson (b) The title companies (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 16 -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 (b) False - =A -If an overage is incurred 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 -At the closing the buyer should bring: (a) 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 17 (d) A cashier's check or wire transfer for the amount of closing costs and down payment - =D -Damage or destruction of a property under contract prior to closing: (a) Can result in termination of the contract (b) Will result in a lawsuit against the seller (c) Will result in a lawsuit against the broker (d) Is never a legal cause for delay of closing - =A -In a Farm and Ranch sale, the buyer will receive all of the following items except: (a) Windmills (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 20 (b) Seller reserves 50% of whatever mineral estate the seller owns as of the closing date - =B -A purchaser of property seaward of the Gulf Intracoastal Waterway must be given a disclosure notice that (a) Dangerous marine life poses a significant risk to swimmers (b) Beach erosion and movement of the vegetation line could cause an owner to lose the property (c) Serious rip tides are a constant danger (d) Wave action and strong winds are a danger in these areas - =B -If a home is to be sold, with lender's consent, at a price less than the outstanding balance on a mortgage, the sale is known as a (a) Deed in lieu of foreclosure (b) Foreclosure (c) Short sale (d) Distress sale - =C -Which of the following activities is specifically prohibited under the Civil Rights Act of 1968? 21 (a) Denying availability of property when it is available (b) Refusing to sell, or rent to, deal or negotiate with any person (c) Steering or blockbusting (d) All of the above activities are specifically prohibited under the Civil Rights Act of 1968 - =D -A building or community must not discriminate based on familial status, unless it qualifies as housing for older persons. (a) True (b) False - =A -The commission agreement between the broker and the seller is usually found in the: (a) Sales contract (b) Listing agreement (c) Buyer representation agreement (d) IABS - =B -_______________ occurs when a property is refinanced or resold immediately after purchase for an artificially inflated value. 22 (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 25 (a) write a paragraph describing the business in Paragraph 11, Special Provisions (b) disclose the day-care using a TREC Special Use addendum (c) specify the use as a day-care in Paragraph 6: Objections (d) not mention the day-care 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: (a) A party to the transaction (b) Not a party to the transaction (c) Liable for the performance of the parties 26 (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 27 (c) drafted a lengthy and complex provision in special provisions (d) any of the above - =D -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 is" - =A -The closing date: (a) is negotiated by the buyer and the seller (b) is an "on or before" date (c) may be extended in some cases (d) all of the above - =B -When a seller wishes to retain certain fixtures or accessories, these items are called: (a) personal property (b) problems 30 (a) the buyer is obtaining FHA financing (b) the buyer is obtaining seller financing (c) the buyer is obtaining VA financing (d) the buyer is obtaining any kind of third-party financing - =D -On a VA assumption, the veteran Seller automatically obtains a release of liability and restoration of entitlement. (a) True (b) False - =B -___________________ occurs when a property is refinanced or resold immediately after purchase for an artificially inflated value. (a) Chunking (b) Churning (c) Equity theft (d) Property flipping - =D -In the Farm and Ranch contract, if the Sales Price is adjusted based upon a survey, either party may terminate the contract if the Sales Price varies by more than: 31 (a) the amount entered in 3.C of the contracts (b) 5% (c) 10% (d) the amount entered in 3.A of the contracts - =C -If the Seller agrees to contribute to the Buyer's closing costs, the amount should be: (a) entered in Paragraph 11, Special Provisions (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 32 (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 (c) if the sale is for a vacant lot in a subdivision (d) if an attorney-prepared form is used - =D -During the time between execution and closing/funding, a contract is a(n): 35 (d) the number of days negotiated in the contract - =D -When should a licensee advise a client to consult an attorney: (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 (c) after the contract has been signed by all parties (d) a licensee should never advise a client to consult an attorney - =B -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 (b) False - =B -All of the TREC promulgated contracts provide that the Buyer is purchasing the property "as-is". (a) True (b) False - =A 36 -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 -54. A short sale is a transaction wherein: (a) the property is priced well below market so that it can be sold very quickly (b) the property, with the consent of the lender, is flipped 37 (c) the lender has agreed to accept less than the outstanding loan balance at closing (d) the lender has decided to proceed with action to foreclose the property due to the borrower's inability or unwillingness to pay - =C -A purchaser of property seaward of the Gulf Intracoastal Waterway must be given a disclosure notice that: (a) dangerous marine life poses a significant risk to swimmers (b) beach erosion and movement of the vegetation line could cause an owner to lose the property (c) serious rip tides are a constant danger (d) wave action and strong winds are a danger in these areas - =B -Federal law provides that, when selling a home built before 1978: (a) all lead-based paint must be removed (b) Buyer must be provided with the pamphlet "Protect Your Family from Lead in Your Home" (c) Buyer must have lead testing performed prior to closing