Contract Law Part II

Question 1

The purpose of TRELA and the rules of TREC are to what?

Answer 1

Protect the public

Question 2

A license holder may help a party read the documents but must not offer what?

Answer 2

Legal advice or opinions

Question 3

If a licensee participates in the unauthorized practice of law, what may happen to him or her?

Answer 3

Suspension or revocation of the licensee’s license

Question 4

What actions if done to a contract by a licensee would be construed as the licensee acting as an attorney?

Answer 4

Drawing lines through words or adding words, phrases, or sentences to the contract

Question 5

In commercial real estate sales and leases, what is customary for both buyers and sellers and tenants and landlords to have?

Answer 5

Legal counsel throughout the transaction

Question 6

What committee operates today according to the Texas Real Estate License Act and under the jurisdiction of the Texas Real Estate Commission?

Answer 6

Broker-Lawyer Committee

Question 7

Explain what the Broker-Lawyer Committee does.

Answer 7

The Committee is an advisory body which drafts and recommends certain contract forms to TREC for use by license holders. The TREC directors review the Committee’s recommendations and then approve and promulgate the forms.

Question 8

During the time a new form is being introduced by TREC, which forms should licensees use?

Answer 8

Licensees can use either the old form or the new one.

Question 9

Define fraud.

Answer 9

An act of deception which was done deliberately by someone to get an unfair advantage over someone else

Question 10

Define Misrepresentation

Answer 10

Misrepresentation is created when a licensee made a misleading statement or a false statement that was accepted as fact from a customer or client and the person was damaged by relying on that information.

Question 11

What is the purpose of the Deceptive Trade Practices Consumer Protection Act?

Answer 11

To protect the public from deceptive, false, or misleading business practices

Question 12

Under the DTPA, the plaintiff must give the potential defendant 60 days warning about what?

Answer 12

The intention to file and an outline of the complaint and damages

Question 13

It is a direct violation of the license act to

Answer 13

write contracts or verbiage in a contract or addendum that in any way gives legal rights or remedies to the principals of the agreement.

Question 14

TREC contract forms are intended for use only by

Answer 14

licensed real estate brokers or salespersons trained in their correct use. Mistakes in the use of a form may result in financial loss or a contract which is unenforceable.

Question 15

Not only is a licensee forbidden to draft contracts….

Answer 15

but giving legal advice is forbidden.

Question 16

A licensee may not conduct the closing of a real estate transaction or give any opinions as to

Answer 16

the legality of any contract or document that has anything to do with title to real estate.

Question 17

A real estate broker or salesperson must never state an opinion as to….

Answer 17

who has rights of ownership to any form of real property.

Question 18

A licensee must never

Answer 18

draw lines through words or cross out portions of the contract or advise clients to do so. They must never add words, phrases, or sentences to the contract. This would be deemed ‘acting as an attorney’ and is prohibited.

Question 19

Eventually the Broker-Lawyer Committee was moved from a committee formed by the State Bar and TAR

Answer 19

and operates today according the Texas Real Estate License Act and under the jurisdiction of the Texas Real Estate Commission.

Question 20

The Texas Real Estate Broker-Lawyer Committee consists of 13 members appointed as follows:

Answer 20

Six members appointed by the commission
Six members of the state bar of Texas appointed by the president of the state bar
One public member appointed by the governor

Question 21

Appointments to the committee shall be made without regard to

Answer 21

the race, creed, sex, religion, or national origin of the appointee.

Question 22

The Broker-Lawyer Committee Drafts

Answer 22

contract forms for approval by TREC.

Question 23

TREC reviews, approves, and promulgates

Answer 23

contract forms for use by Texas real estate license holders.

Question 24

Fraud

Answer 24

is an act of deception which was done deliberately by someone to get an unfair advantage over someone else.

Question 25

Misrepresentation

Answer 25

is created when a licensee made a misleading statement or a false statement that was accepted as fact from a customer or client and the person was damaged by relying on that information.

Question 26

The Deceptive Trade Practices Consumer Protection Act

Answer 26

a federal law (which has a Texas version) that watches over business, not just real estate, to make sure that fraud and misrepresentation do not take place as companies provide products and services.

Question 27

The Texas Deceptive Trade Practices Act was created to protect consumers

Answer 27

This law is intended to “make consumers whole” after a consumer transaction has damaged them.

Question 28

Agents should state only

Answer 28

facts and when the facts are not known, the licensee should seek out the information from an expert.

Question 29

Many clients and customers will ask licensees to recommend everyone from a trash company to a lending institution

Answer 29

This is why it is so important for the broker to provide to the office a list of acceptable people who work in the auxiliary businesses that surround real estate

Question 30

Under DTPA, the plaintiff must give the potential defendant

Answer 30

60 days warning about the intention to file and an outline of the complaint and damages.