Broker 1

Question 1

A broker found that he was short funds for a week in the firm’s
operations account. He deposited an earnest money check into the
account and then after a closing the following week put the earnest
money amount into the trust account. In this case, the broker:

Answer 1

is guilty of conversion.

Question 2

A broker would have the right to dictate which of the following
to an independent contractor?

Answer 2

Compensation the person would receive

Question 3

During a job interview, a principal broker tells a salesperson
that she will work for the brokerage firm as an independent
contractor. As an independent contractor, what can the
salesperson expect from her work with the broker?

Answer 3

At least 90% of her income will be based on sales production.

Question 4

MOST states require what be included on all real estate
advertising?

Answer 4

Brokerage firm’s name

Question 5

A broker on reconciling realized his office manager had
deposited operation funds into the earnest money account. This could be considered

Answer 5

commingling.

Question 6

A listing contract in which payment of the commission is
contingent on the broker’s being able to produce a buyer before the
property is sold by the owner or another broker is called a(n)

Answer 6

open listing.

Question 7

What action returns a contract’s parties to their positions before
the contract, including return of any deposit?

Answer 7

The answer is rescission. A rescission occurs when one party cancels or terminates the contract as
if it had never been made. Cancellation terminates the contract without a return to the original
position. Substitution is an appraisal principle of value. Subordination is used as place holder and
indicates a mortgage or other interest will not move in front of a newer recording.

Question 8

Which of the following is NOT required to create a valid sales
contract?

Answer 8

Earnest Money

Question 9

Which of the following BEST defines the common law of
agency?

Answer 9

The rules of law that apply to the responsibilities and obligations of a person who acts for
another

Question 10

The principal in a real estate transaction is

Answer 10

the client of the brokerage.

Question 11

One contract was substituted for another contract, and there
was a release of liability from the original contract. The term that
defines the release is

Answer 11

novation.

Question 12

In order for contracts transferring real property to be valid they
must include all of the following EXCEPT

Answer 12

earnest money must be given from the buyer to the seller as consideration for selling.

Question 13

All of the following are typically found in a listing contract
EXCEPT

Answer 13

the date the broker will schedule an open house.

Question 14

A salesperson who works for ABC Realty was the buyer’s agent
for a property that was listed by XYZ Realty. The seller agreed to
pay the commission. From whom will the salesperson receive her
commission check?

Answer 14

The principal broker of ABC Realty.

Question 15

The amount of commission that is paid to a salesperson is
determined by

Answer 15

mutual agreement with the client.

Question 16

A buyer in a fast selling market has written a number of offers
in hopes of getting at least two accepted. The buyer then plans to
terminate those the buyer does not want during the inspection period. The buyer can buy only one property and the broker
representing him as an agent knows this and is helping with the
process. In this case, the

Answer 16

buyer and broker are acting in bad faith.

Question 17

A listing salesperson acting as the seller’s agent is holding an
open house. The state does not allow dual agency. A buyer starts a
conversation about the property and tells the salesperson she is an
investor looking for a number of properties. The salesperson states
the seller of the property will take less and the salesperson can
represent the buyer in the purchase of this property and others. In
this case the salesperson

Answer 17

is an undisclosed dual agent who acted in bad faith.

Question 18

Good faith as applied to agency is BEST defined as

Answer 18

using honest and sincere intentions.

Question 19

The buyer’s salesperson states as they enter the home, “this
home is the best home on the block, has the nicest floor plan and
the best schools in the area.” The salesperson maybe guilty of

Answer 19

puffing which is not breaking the law.

Question 20

The listing broker learned, while he was out of town, there was
a large hail and rain storm that caused some flooding in the area,
of the property he is due to close on this week. The seller has not
called to report any issues with the property, even though many
properties in the neighborhood were damaged. The listing broker

Answer 20

should verify no damage has occurred to the property.

Question 21

Which of the following is a TRUE statement about interest on a
fully amortized loan?

Answer 21

The interest is paid in arrears.

Question 22

Federal income tax regulations allow homeowners to reduce
their taxable income by amounts paid for

Answer 22

real estate property taxes.

Question 23

A couple purchased a home for cash over 25 years ago. Today
they receive monthly checks from a lender that supplement their
retirement income. The couple MOST likely have obtained a(n)

Answer 23

reverse mortgage.

Question 24

A home is purchased using a fixed-rate, fully amortized
mortgage loan. With this loan,

Answer 24

each mortgage payment amount is the same.

Question 25

Charging more interest than is legally allowed is

Answer 25

usury.

Question 26

All of the following are grounds for constructive eviction
EXCEPT

Answer 26

The answer is the nonpayment of rent by the tenant. Constructive eviction occurs when the landlord
breaches the lease by not maintaining the property at a level it can be inhabited. A tenant must give
notice of the issue and if they stop paying rent must move from the property. Each state will vary on
the rules for eviction.

Question 27

A couple lease a two-bedroom apartment from a management
company. Due to ordinary wear and tear, the dishwasher breaks
down. Typically, who would pay for its repair?

Answer 27

Landlord

Question 28

If there is a low vacancy rate, the property manager should
probably

Answer 28

Raise the rent

Question 29

The owner of real estate who leases it to another is called the

Answer 29

Lessor

Question 30

When the state or local government restricts the amount of
rent a landlord can charge, it is called

Answer 30

Rent Control

Question 31

Personal property includes all of the following EXCEPT

Answer 31

The answer is a custom built-in bookcase. The key word is built-in since the bookcase is attached it
is real property. Chairs, emblements, and trade fixtures are all examples of personal property.

Question 32

What else, in addition to the seller’s property disclosure, is
useful to reduce risk?

Answer 32

Supply inspections and evaluations by third-party experts

Question 33

A broker touring a house before taking a listing notices that the
floor is sagging in the living room. The seller has placed a large rug
over the floor. What should the broker do in this situation?

Answer 33

Ask the seller about the sagging floor to discover if there is a structural problem with the house

Question 34

Reconciliation is an appraisal term used to describe

Answer 34

the appraiser’s analysis and weighing of the findings of all three appraisal approaches.

Question 35

Before a buyer makes an offer on a property, the buyer should
have received and read the

Answer 35

seller’s property disclosure form.

Question 36

Mold is MOST likely to develop

Answer 36

With Humidity

Question 37

To protect the buyer, many states require a

Answer 37

seller’s property condition disclosure.

Question 38

Change, contribution, and substitution are some of the basic
principles that affect what aspect of real estate?

Answer 38

Value

Question 39

In general, when the supply of a certain commodity increases

Answer 39

price tends to drop.

Question 40

Who should fill in the blanks of the seller property disclosure
form?

Answer 40

Seller

Question 41

What is the intent of seller disclosures about property
conditions?

Answer 41

Helps the buyer determine what price to offer

Question 42

All of the following are true about asbestos EXCEPT

Answer 42

The answer is HUD requires all residential buildings be tested for asbestos-containing materials. The
federal government does not require asbestos testing in residential buildings. Asbestos was
commonly used as insulation prior to 1978. Asbestos is harmful only if it is disturbed or exposed as
can occur during remodeling or renovations. Tiny airborne particles when inhaled can cause a
variety of respiratory diseases. Federal government regulations establish guidelines for owners of
public and commercial buildings to test for asbestos-containing materials. The removal process,
though, requires state-licensed technicians and specially sealed environments.

Question 43

The primary purpose of E&O insurance is to

Answer 43

protect against catastrophic lawsuits.

Question 44

Eminent domain and escheat are two examples of

Answer 44

D. involuntary alienation.

Question 45

Make disclosures orally, not in writing, so as to avoid a paper trail

Answer 45

the purchase contract.

Question 46

When appraising a commercial property, the appraiser is
MOST concerned with the

Answer 46

income generated by the property.

Question 47

For land to be taken by the government under its right of
eminent domain, which of the following must apply?

Answer 47

The taking must be for a public purpose

Question 48

A property is owned by three cousins as tenants in common. If
one of the cousins dies without a will, to whom will his interest pass?

Answer 48

The answer is the deceased cousin’s heirs. Death of a tenant in common would usually cause
property to pass according to the decedent’s will. Because the cousin died with no will, his property
will pass to those persons identified in his state’s laws of decent as heirs. The property would not
pass on to the state. The other two cousins will retain their own fractional interests in the property
and remain tenants in common with the deceased cousin’s heirs.

Question 49

An example of involuntary alienation of property is

Answer 49

The answer is condemnation. Condemnation is the operation of a government to take private
property for public use and is an involuntary transfer of the property. Property inherited or given as a
gift transfers voluntarily. A quitclaim deed voluntarily transfers the interest a grantor may have in a
property to a grantee with no covenants or warranties.

Question 50

A property description states, “Starting at the corner of Ash
Street so many feet to 2nd Street,” and so forth. This description is
most likely a

Answer 50

The answer is metes-and-bounds. This the only legal description which uses a starting point. The
rectangular survey system or government survey system divides land into rectangles and describes
those rectangles with principal meridians and base lines. The lot and block system uses lot and
block numbers referred to in a plat map and is often used in subdivisions.

Question 51

A property is now worth $117,978. If it has appreciated 6% each
year for the past 2 years, what was the original investment?

Answer 51

The answer is $105,000.
Year 1 $117,978 ÷ 106% (100% + 6%) (1.06) = $111,300
Year 2 $111,300 ÷ 106% (1.06) = $105,000

Question 52

Last month’s loan payment included $412.50 interest on a
$60,000 loan balance. What is the annual rate of interest?

Answer 52

The answer is 8.25%. To find the annual rate of interest, divide the annual amount of interest by the
loan balance. In this problem, to find the annual amount of interest multiply the monthly amount by
Your answer
A. 8.25%

v
$412.50 × 12 = $4,950 (annual interest amount)
$4,950 ÷ $60,000 (loan balance) = 8.25% (.0825) interest

Question 53

One lender charges 6.5% interest and the second lender
charges 7%. How much money will the borrower save the first year
on a $150,000 loan if he goes with the first lender?

Answer 53

The answer is $750. The first lender would charge $150,000 × 6.5% (.065) = $9,750. The second
lender would charge $150,000 × 7% (.07) = $10,500. $10,500 - $9,750 = $750.

Question 54

Two discount points cost a seller $3,300. What is the amount
of the loan?

Answer 54

The answer is $165,000. A discount point is 1% of the loan amount. $3,300 (costs of 2 discount
points) ÷ 2% (.02) = $165,000 (loan amount)

Question 55

What is the estimated replacement cost of a 65 x 30 building at
an estimated cost of $128.50 per square foot?

Answer 55

The answer is $250,575. 65 feet × 30 feet = 1,950 square feet × $128.50 per square feet =
$250,575. Square footage is found by multiplying length by width of the building, 65 feet × 30 feet.

Question 56

It is the policy of Texas to encourage the peaceable resolution
of conflicts rather than resort to litigation. Who has the sole
authority to compel conflicting parties to take a dispute to
mediation prior to being able to use litigation?

Answer 56

The answer is A JUDGE. While real estate license holders should encourage principals to attempt a
resolution through mediation before resorting to arbitration or litigation, parties may agree to commit
to take any dispute to mediation prior to resorting to litigation; however, only a judge has the power
to compel the parties to mediation. Real estate licensees should never instruct the principals to a
transaction as to whether to choose to mediate or not in the sales contract. To do so constitutes the
unauthorized practice of law.

Question 57

Regarding listing agreements in Texas, which of the following
might result in the suspension or revocation of an individual’s
license to practice real estate?

Answer 57

The answer is NO DEFINITE TERMINATION DATE. Listings must have a definite termination date
not subject to prior notice. State law does not address the issue of whether to include a broker
protection clause or the amount of commission to be charged (TRELA Section 1101.652(b)(12)).
However, to be enforced in court, the commission or fee must be agreed on in some writing and
signed by the party to be charged (TRELA Section 1101.801).

Question 58

In Texas, real estate commissions are

Answer 58

The answer is NEGOTIABLE BETWEEN THE CLIENT AND THE BROKER. Commissions are
always negotiable between the principal and the agent (TRELA Section 1101.155(c)(1)). The
commissions are not determined by law, the Real Estate Commission, or a group of local brokers.
Any attempt to set commission rates among competitors in the real estate industry would be
considered an antitrust violation. A broker does not commit an antitrust violation by requiring all the
broker’s own licensees to charge a specific rate or amount so long as the broker does not conspire
or agree with com peting brokers to do the same. All listings and buyer/tenant representation
agreements in the firm belong to the broker. Therefore, the broker is only prescribing a commission
amount for all the broker’s own agreements.

Question 59

The Commission receives a complaint that a licensee managing
a large apartment complex has been arrested and charged with
sexual harassment and assault on several female tenants. The
Commission may

Answer 59

The answer is EFFECT A TEMPORARY SUSPENSION OF THE PERSON’S LICENSE. A
disciplinary panel consisting of three Commission members has the authority to determine if a
person’s license to practice should be temporarily suspended. If the panel determines that the
licensee constitutes a threat to the public by continuing to practice or the licensee constitutes a
continuing threat to the public welfare, the panel shall temporarily suspend the license of that person
(TRELA Section 1101.662).

Question 60

The principal method of delineating property boundaries or
legal descriptions in Texas is known as the

Answer 60

The answer is SYSTEM OF METES AND BOUNDS. Texas uses the section measurement in rural
legal descriptions; otherwise, the rectangular survey system is normally not used in Texas. The
primary survey method in Texas is metes and bounds.

Question 61

The responsibility for preparing any promissory notes involved
in a closing belongs to the

Answer 61

The answer is LENDER’S ATTORNEY. The lender’s attorney is responsible for preparing any
promissory notes. Licensees are prohibited from preparing legal instruments such as promissory
notes (TRELA Section 1101.654; Rules Section 537.11(d)).

Question 62

The Texas Real Estate Commission may undertake an
investigation of a license holder based on all these grounds
EXCEPT

Answer 62

The answer is A RANDOM SELECTION OF LICENSE HOLDERS. The Commission may not initiate
a random search for investigations of license holders. There must be some valid reason. TREC can
undertake an investigation on its own initiative, a motion from the Commission members, or a
submitted written complaint (TRELA Section 1101.204).

Question 63

Two years ago, a homeowner obtained a 30 year mortgage loan
to purchase a home. The interest rate on the loan was 10.5 percent.
Today, the homeowner is prepared to pay off the loan early. Based
on these facts, which statement is TRUE in Texas?

Answer 63

The answer is BECAUSE THE HOMEOWNER’S INTEREST RATE IS GREATER THAN TEN
PERCENT, THE LENDER MAY NOT CHARGE A PREPAYMENT PENALTY UNDER TEXAS LAW.
Texas law prohibits a prepayment penalty on any note having an interest rate of ten percent or more.
Because the original interest rate was more than ten percent, the lender may not charge a
prepayment penalty. By federal law, prepayment penalties are not permitted on FHA and VA loans,
regardless of the original interest rate.

Question 64

Which qualification below is NOT required by TRELA for a
business entity to be licensed as a broker?

Answer 64

The answer is ALL PAPERS MUST BE FILED WITH THE SECRETARY OF STATE. For a business
entity to hold a broker license, a managing officer of the entity must be designated as the agent for
purposes of TRELA and must have an active broker’s license in good standing with TREC. The
business entity must have E&O insurance with a minimum of $1 million for each occurrence if the
designated agent is less than a 10 percent owner of the entity. Filing papers with the secretary of state is a requirement for incorporating, not for licensing as a broker (TRELA Section 1101.355;
Rules Section 535.53).

Question 65

Upon obtaining a listing, a broker or a licensed salesperson is
obligated to

Answer 65

The answer is GIVE THE OWNER SIGNING THE LISTING A LEGIBLE, SIGNED, TRUE, AND
CORRECT COPY UPON THE OWNER’S REQUEST. Upon the owner’s request, the license holder
is obligated to give the owner signing the listing a legible, signed, true, and correct copy (TRELA
Section 1101.652(b)(28)). Numbering or advertising the files is not required. TREC does not require
brokers to cooperate with other brokers; however, brokers are required to serve their clients’ best
interests. A better practice is to give the owner a copy immediately upon signing, whether or not a
copy is requested. The same is true of a buyer/tenant representation agreement.

Question 66

What happens to community property in a community
property state?

Answer 66

Neither spouse may sell any real estate owned as part of their community property unless both
spouses sign the sales contract and deed.
C.

Question 67

What is the maximum aggregate amount that can be paid from
the real estate license holder Real Estate Recovery Fund arising
out of the same transaction?

Answer 67

The answer is $50,000. Payments, including attorneys’ fees, interest, and court costs, are limited to
$50,000 on behalf of any one transaction, regardless of the number of claimants (TRELA Section
1101.610(a)).

Question 68

What penalties is an unlicensed person who performs one act
of brokerage, as defined by the Texas Real Estate License Act,
Chapter 1101 of the Occupations Code, subject to?

Answer 68

There is no statutory period; however, it must be disaffirmed within a reasonable time after
reaching majority
A.

Question 69

When do real estate salespersons’ licenses expire in Texas?

Answer 69

The answer is ON THE LAST DAY OF THE ANNIVERSARY MONTH OF ISSUANCE. Texas
licenses are issued for one-year or two-year terms and must be renewed prior to the expiration.
License expiration normally occurs on the last day of the month in which the license was originally
issued. Failure to renew timely can result in additional fees and a lapse of licensure privileges. New
licenses are issued for one year (TRELA Sections 1101.363(c)

Question 70

71. When should a real estate license holder provide the
    Information About Brokerage Services form or its statutory
    written statement equivalent to a party to a real estate transaction?

Answer 70

The answer is AT THE TIME OF THE FIRST SUBSTANTIVE DIALOGUE WITH THE PARTY
CONCERNING A SPECIFIC REAL PROPERTY. In Texas, a license holder must present the
Information About Brokerage Services (IABS) form, or its statutory written statement equivalent, at
the time of the first substantive dialogue with the party. Substantive dialogue is defined in
(1101.558(a) as “a meeting or written communication that involves a substantive discussion relating
to specific real property.” The term substantive dialogue does not include the open house exception
rule or if the parties have already signed a contract. An often overlooked situation in which the IABS
form or its equivalent must be presented is at the listing appointment before the listing agreement is
entered into or to a buyer before a buyer/tenant representation agreement is signed. It is important to
not confuse the time to provide the IABS form with the time to make a licensee’s disclosure of the

Question 71

Which statement is TRUE about Texas homesteads?

Answer 71

The answer is A HOMEOWNER WANTING TO TAKE ADVANTAGE OF THE HOMESTEAD
EXEMPTION FOR AD VALOREM TAXES MUST FILE THE HOMESTEAD DECLARATION FORM
WITH THE COUNTY APPRAISAL DISTRICT. Under Texas law, the protection against seizure and
forced sale of a homestead to satisfy most financial claims is automatic (TX Property Code Section
41.001). To take advantage of reduced ad valorem tax bills, a homeowner must declare the property
as a homestead by filing the appropriate form with the appraisal district of the county in which the
property is located. The over 65 homeowner benefits from a tax ceiling freeze; that is, school taxes
cannot increase as long as the homeowner owns and lives in the home and makes no major
“improvements,” but the school tax is not eliminated entirely (TX Property Code Sections 41.005(c),
(e); TX Tax Code Section 11.13).

Question 72

Which statement is TRUE regarding a competitive market
analysis or a broker’s price opinion?

Answer 72

The answer is IT MUST CONTAIN A PRESCRIBED STATEMENT THAT CLEARLY ESTABLISHES
THAT IT IS NOT AND SHOULD NOT BE REGARDED AS AN APPRAISAL. A broker’s price opinion
(BPO) or a competitive market analysis (CMA) can be offered by a broker (or salesperson in the
name of the broker) who may charge a separate fee for preparing either.

Question 73

Which term identifies a handwritten will?

Answer 73

The answer is HOLOGRAPHIC. Texas recognizes handwritten wills as long as they are written
entirely in the hand of the testator. At probate, two credible witnesses must be found who can
execute affidavits attesting to the identity and signature of the one who wrote the document (TX
Probate Code Section 84(c)).

Question 74

If a seller fails to provide the buyer with the Seller’s Disclosure
of Property Condition as required by Section 5.008 of the Texas
Property Code, what are the buyer’s options relative to the
contract?

Answer 74

The answer is THE BUYER MAY CHOOSE TO TERMINATE THE CONTRACT, AND THE
EARNEST MONEY WILL BE REFUNDED TO THE BUYER. Since 1993, agreements for the
purchase of a previously occupied single-family residential property are voidable by the buyer if the
seller fails to deliver the notice on or before the effective date of an executory contract. If a contract
is entered without the seller’s providing the notice, the purchaser may terminate the contract for any
reason within seven days after receiving the notice (TX Property Code Sections 5.008(d), (f)).
Although the Property Code Section 5.008(f) does not mention the return of earnest money,
Paragraph 7.B.(2) of the TREC 2010 does include a provision that if the buyer properly and timely
terminates under 7.B.(2), the buyer’s earnest money is to be refunded.

Question 75

In Texas, licenses are renewed

Answer 75

The answer is IN THE MONTH ISSUED. Licenses are generally renewed in the month issued. Some
licenses are issued for one year; some are issued for two years; statute and rule determine the term
(TRELA Sections 1101.451(a)–(b)).

Question 76

A licensed salesperson may hold a concurrent license with
more than one Texas broker under which circumstances?

Answer 76

The answer is UNDER NO CIRCUMSTANCES. A salesperson may engage in real estate activity
under the sponsorship of only one broker. If TREC receives a request from a broker to sponsor a
salesperson already sponsored by another broker, TREC will notify the former broker to immediately
return the license to the Commission. (Rules Section 535.121(b))

Question 77

How must a landlord handle residential security deposits?

Answer 77

The answer is UNLESS THERE HAVE BEEN DAMAGES, THE LANDLORD MUST RETURN THE
SECURITY DEPOSIT TO THE TENANT WITHIN 30 DAYS OF THE END OF THE LEASE. Unless
there have been damages, the landlord must return the security deposit to a residential tenant within
30 days of the end of the lease provided the tenant has fulfilled the terms of the lease and provided a
forwarding address. Commercial security deposits must be returned within 60 days (TX Property
Code Section 92.103(a)).

Question 78

A tenant leased space in a warehouse and put down a two
month security deposit. What percent interest does the tenant’s
security deposit earn as long as the tenant does not pay rent late?

Answer 78

The answer is AS AGREED BY THE PARTIES. The deposit earns interest at a rate contractually
agreed upon by the parties.

Question 79

A broker intends to open a branch office in a neighboring
town. The broker applies for a branch office license, giving a name
that clearly identifies its relationship with the main office, and the license certificate for each branch office displays the address at
which the broker’s office is located. The broker names a licensed
salesperson who has completed six classroom hours of broker
responsibility education courses approved by the Commission (as
per TRELA Section (a)) as the branch office manager. In this
situation, will the broker receive approval for the branch office?

Answer 79

The answer is YES, THE BROKER HAS FULLY COMPLIED WITH THE REQUIREMENTS OF THE
LICENSE LAW. Each office must be under the direction of a licensed real estate broker; however,
brokers can have branch offices under the direction of a manager of the broker’s choice with the
broker’s retaining full responsibility for the activities of the branch office. The office manager must
hold at least a salesperson’s license if he directs or supervises other persons who perform acts for
which a license is required. Additionally, the sponsoring broker and the supervising license holder
must attend six classroom hours of broker responsibility education courses during the term of their
current licenses. See TREC Rules after September 1, 2011, for a course description (TRELA
Sections 1101.458, .552(c); Rules Section 535.112).

Question 80

A broker signs a listing agreement with a seller. The agreement
contains the following clause: “If the Property has not been sold
after three months from the date of this signing, this agreement
will automatically continue for additional three-month periods
thereafter until the Property is sold.” Based on these facts, the
agreement

Answer 80

The answer is PROVIDES GROUNDS FOR LOSS OF THE BROKER’S LICENSE. Listings must
contain a definite termination date not subject to prior notice or the licensee could face TREC
disciplinary action (TRELA Section 1101.652(b)(12)). However, the fact that the listing agreement
fails to have a definite termination date does not necessarily render it illegal or unenforceable.

Question 81

A licensed salesperson obtains a listing. Several days later, the
salesperson meets prospective buyers at the property and tells
them, “I’m the listing agent for this property, so I’m very familiar
with it.” Under these circumstances, the salesperson

Answer 81

The answer is HAS PROPERLY DISCLOSED AGENCY RELATIONSHIP WITH THE SELLER. In
Texas, a license holder must disclose an existing agency relationship at the first contact with another
potential party to the transaction or that party’s agent, which this salesperson has done by including
the term agent in the statement. However, had the license holder used the term salesperson or
broker, the disclosure might have been questionable. The salesperson also needs, at the first
substantive dialogue with a prospect, to give the prospect the TREC Information About Brokerage
Services form, or its statutory equivalent, to inform the prospects that they have the right to choose
to be represented by another broker or to function without representation. At this point it would not
be advisable to attempt to secure a buyer representation agreement with permission to be an
intermediary because doing so would merely deprive the existing seller client of having full fiduciary
services of the broker and still not give the buyer full fiduciary representation either, even if
appointments were later made under and intermediary relationship. Such action could be construed
as a breach of the fiduciary duty of loyalty to the seller and an attempt to place the broker’s interest
in obtaining an advantage with the buyer and a larger commission over the interests of the seller
client in having 100 percent loyalty, information, and advice (TRELA Sections 1101.557(a),

Question 82

A married couple’s community property includes

Answer 82

wages earned by either spouse.

Question 83

A prospective buyer delivers a written offer on a property to
the listing office. The offer includes an earnest money check for
$1,000 made out to the title company. While the offer is being
negotiated between the buyer and the seller, what should the
listing office do with the earnest money check?

Answer 83

Hold the earnest money check in a secure place in the broker’s real estate brokerage office until
the offer is accepted

Question 84

A real estate license is required for all of these activities
EXCEPT

Answer 84

selling cemetery lots.

Question 85

A realty company has entered into agency agreements with
both a seller and a buyer. The seller and the buyer have given
written authorization for the broker to function as an
intermediary. A salesperson with the realty company has
previously been working for, but not yet appointed to, the buyer.
The salesperson previously working for, but not appointed to, the
seller and the salesperson working with but not appointed to the
buyer may legally

Answer 85

The answer is PROVIDE COMPARABLE MARKET DATA (BUT NOT ANALYSIS) TO THE SELLER
AFTER THE BUYER REQUESTS AND RECEIVES SUCH DATA FROM THE SALESPERSON.
Legally, the salesperson carrying out intermediary duties on behalf of the salesperson’s broker (i.e.,
not yet appointed and still being impartial) may likely be able to provide raw comparable market data.
However, no analysis of that data or a CMA or even an opinion of value could be provided to either
party once an intermediary relationship has been properly authorized and commences until lawful
appointments are made. Supplying merely the raw data would likely be considered a fair and
impartial act under the intermediary role but not under a CMA. Even if both clients authorize the
appointment of associated licensees, the broker and the broker’s associates would be prohibited
from disclosing the buyer’s financial qualifications to the seller, disclosing to the buyer that the seller
will accept less than the listing price, or disclosing to the seller that the buyer will pay more than the
asking price. Giving the buyer the CMA which was done for the seller at time of listing would likely be
considered confidential information because it was prepared for the seller in the course of broker’s
full fiduciary relationship with the seller client. Since a CMA is by definition an analysis or an opinion
of value, a CMA could not be done on the property for the buyer without appointments being properly
made prior to the giving of advice or opinions or preparation of a CMA for the buyer. Even then, the
law is not clear as to the appointed licensee’s leeway for value opinions under the Act (TRELA
Sections 1101.651(d)(1)–(3)).

Question 86

A salesperson has developed a Web site to attract buyers and
sellers. What, if anything, must the salesperson include?

Answer 86

Name of the sponsoring broker/company

Question 87

A tenant is in default only for failing to pay rent on time. In
Texas, how much written notice is a landlord required to give the
tenant to pay overdue rent prior to filing an action to evict?

Answer 87

Three days

Question 88

A Texas homestead property is being foreclosed for
nonpayment of ad valorem taxes. How long does the homeowner
losing the property have to redeem it after the foreclosure sale?

Answer 88

24 months

Question 89

How many witnesses must sign in the presence of the person
making a will to fulfill the legal minimum?

Answer 89

2

Question 90

A Texas real estate salesperson may lawfully collect
compensation from

Answer 90

The answer is A SPONSORING BROKER ONLY OR WITH THE SPONSORING BROKER’S
CONSENT. A salesperson may receive compensation only from the sponsoring broker, or with the
written consent of the sponsoring broker (TRELA Sections 1101.651(b), (c)). In addition, the
salesperson may not pay a commission to another person except with the written consent of the
sponsoring broker (Rules Section 535.3).

Question 91

A woman successfully completed her prelicensing real estate
education requirement on November 1, 2011, but did not have her
education documents evaluated by TREC. What is the latest date
on which she may apply for a salesperson’s license?

Answer 91

The answer is AT ANY TIME IN THE FUTURE. Once courses are successfully completed, they may
be used to meet licensing requirements for an indefinite period. The evaluation of education
documents, however, is good for only one year. Once the application is filed, the applicant must
satisfy the examination requirement within one year (TRELA Section 1101.401(f); Rules Section
535.51(d)(1)).

Question 92

All of these forms of ownership are recognized under Texas law
EXCEPT

Answer 92

The answer is TENANCY BY THE ENTIRETY. Tenancy by the entirety is not recognized under
Texas law.

Question 93

All of these transactions are exempt from the duty to provide a
written disclosure of property condition under Section 5.008 of
the Texas Property Code EXCEPT

Answer 93

The answer is A SALE BY A REAL ESTATE LICENSE HOLDER OF A PREVIOUSLY OCCUPIED
SINGLE FAMILY RESIDENTIAL PROPERTY. With a few exceptions, the Seller’s Disclosure of
Property Condition applies to the transfer of most previously occupied single family residential
dwelling units. It does not apply to a duplex, triplex, and so on, even though they are residential. It
does not apply to commercial property, a foreclosure sale, a transfer between family members in the
lineal line of consanguinity of one or more of the transferors, new homes not previously occupied, or
a conveyance from one former spouse to another under a divorce settlement agreement. The
Property Code places on the seller, not the real estate licensee, the requirement to provide the
written disclosure notice (TX Property Code Section 5.008(e)). However, a licensee acting as the
agent of the seller has a fiduciary duty to inform his client about the requirements of the Property
Code Section 5.008 (Rules Sections 535.156(a), (c)).

Question 94

All real estate licenses, unless otherwise exempted

Answer 94

The answer is EXPIRE ON THE LAST DAY OF THE ANNIVERSARY MONTH OF ISSUANCE. Real
estate licenses are normally issued for either a 12 or 24 month period and expire on the last day of
the anniversary month in which they were originally issued. Statute and rule determine the term
(TRELA Sections 1101.451(a)–(b)).

Question 95

An airline pilot told a broker about some friends who were
looking for a new home. The broker contacted the friends and
eventually sold them a house. May the broker pay the airline pilot
for this valuable lead?

Answer 95

The answer is YES, AS LONG AS THE GIFT IS NOT CASH AND THE VALUE DOES NOT
EXCEED $50 RETAIL VALUE. The broker may say “thank you” to the airline pilot and give him a gift
as long as the value of the gift does not exceed a retail value of $50. The broker may not pay cash to
an unli censed person in any amount (TRELA Section 1101.651(b)(11); Rules Section 535.20(a)).

Question 96

General real estate taxes apply to which properties?

Answer 96

The answer is HOUSING OWNED BY AN INDIVIDUAL OVER 65. Senior citizens must pay property
taxes, although normally at a reduced rate. Exempt properties include cemeteries, federal
government buildings, and certain nonprofits such as private and public schools and churches.

Question 97

How is a person who acquires goods and services under the
provisions of the Texas Deceptive Trade Practices Act identified?

Answer 97

The answer is CONSUMER. Anyone who acquires goods and/or services for purchase or lease is
identified as a consumer under the statutory provisions (TX Business and Commerce Code Section
17.45(4)).

Question 98

How many acres are protected as a rural Texas homestead of a
family?

Answer 98

The answer is 200 MAXIMUM. A Texas rural homestead is limited to 200 protected acres for a
family. By statute, a single person’s protection protects only 100 acres (TX Property Code Section
41.002(b)).

Question 99

With respect to leases for terms in excess of one year, a
landlord may record, instead of the actual lease, a

Answer 99

The answer is MEMORANDUM OF LEASE. Many commercial leases in Texas are actually recorded
in the public record to serve notice of the tenants’ right of possession. Rather than record the entire
lease, the landlord may record a memorandum of lease.