Exam Prep #1 Fail Flashcards
What is a legal description that uses longitude, latitude, townships and sections called? A. Metes and bounds B. A rectangular government survey C. A recorded subdivision plat D. Lot and block
Rationale: B is the correct answer. The rectangular government survey is also called the government survey system. This system uses latitude lines, longitude lines, standard parallels, and baselines to divide the earth into areas. These areas are called townships.
What is an example of a voluntary lien? A. Mechanic’s lien B. Income tax lien C. Mortgage lien D. Judgment lien
Rationale: C is the correct answer. A mortgage lien is put on the property voluntarily by the buyer. Mechanic’s liens, judgment liens, and tax liens are all INVOLUNTARY liens (put on by contractors, judges, and the IRS).
Of the following, what can't be assigned? A. A lease B. A real estate contract C. A mortgage D. A deed
Rationale: D is correct. A deed cannot be assigned. A mortgage can be transferred from the original lender or borrower to a third party. An assignable lease is the saleable remaining portion of a lease that a licensee wishes to sell. A real estate contract assignment cannot be done on all transactions.
What type of notice is it called when a notice is given directly to a person and received by that person? A. Constructive notice B. Actual notice C. Relative notice D. Improper notice
Rationale: B is the correct answer. Actual notice is given and received directly to a person.
What is the notice called when the title transfer of a property is publicly recorded? A. Appropriate notice B. Public notice C. Constructive notice D. Actual notice
Rationale: C is the correct answer. Recording doesn’t transfer title. It announces the transfer of the title. The purpose for recording the title is to give the public constructive notice of the ownership transfer.
Which approach to appraisal takes into account depreciation? A. Market data approach B. Income approach C. Cost approach D. Capitalization
Rationale: C is the correct answer. T
he cost approach is used for properties that 1. do not produce income and 2. are difficult to find comparable properties. These would be churches, schools, historic buildings, etc.
In 1993, the legislature created: A. Buyer’s agency B. Statutory dual agency C. Intermediary D. Subagency
Rationale: B is the correct answer.
In 1993, the legislature created Statutory Dual Agency. Specific guidelines were provided in the Texas Real Estate Licensing Act (TRELA) for licensees representing more than one party in the same transaction. TREC allowed dual agency but did not recommend dual agency. Statutory Dual Agency provided that a broker: 1. Representing both the seller and the buyer or a landlord and a tenant was not allowed to disclose that the seller or landlord would take less for the property unless the seller or landlord gave the broker permission to do so in writing. 2. Representing both the seller and the buyer or a landlord and a tenant was not allowed to disclose that the buyer or tenant would pay more for the property unless the buyer or tenant gave the broker permission to do so in writing. 3. Not disclose any confidential information or any information a party specifically instructs the broker in writing not to disclose unless otherwise instructed in a separate wiring by the respective party or required to disclose such information by law 4. Treat all parties to the transaction honestly and impartially, so as not to favor one party to the disadvantage of the other party.
According to the TREC One to Four Family Residential Contract (Resale), who is responsible for paying the owner’s policy of title insurance fee?
A. The buyer
B. The seller
C. The title company named in the contract.
D. The party stipulated in the contract.
Rationale: D is the correct answer. The title policy can be paid by either party.
John has entered a lease agreement with Anne, the owner of the property at 987 River Bend Road for a one-year term. This is considered to be what type of contract? A. Executory contract B. Unilateral contract C. Option contract D. Installment contract
Rationale: A is the correct answer. An executory contract is a contract that is fulfilled over time, such as a lease agreement. For example, when a person enters into a lease agreement, he is promising to pay the rent for a period of time. Until the term expires, the contract promises have not been fulfilled. A lease cannot be fulfilled in one single transaction, like buying a television. Since a lease is usually written for a period of one year, it is an executory contract, because it is fulfilled over time.
What type of agent is a court-appointed guardian? A. Special agent B. General agent C. Universal agent D. Dominant estate agent
Rationale: C is the correct answer. A universal agent is authorized to perform all acts or duties his or her principal is empowered to perform. Universal agents are appointed usually by a power of attorney.
What is the type of leasehold where the duration of the lease is unknown at the time it is created? A. Periodic estate B. Estate for years C. Tenancy at will D. Tenancy at sufferance
Rationale: C is the correct answer. The duration of the lease is contingent upon the will of the parties involved.
All lawsuits concerning the Civil Rights Act of 1866 (dealing with race) go directly to a federal court. Other fair housing complaints are handled by the:
A. Texas Workforce Commission Civil Rights Division (TWCCRD)
B. U.S. Department of Housing and Urban Development (HUD)
C. An administrative law judge (ALJ)
D. All of the above
Rationale: D is the correct answer. Any of these entities can hear civil rights complaints
A brokerage can register a contact person who will have access to the registry. The law allows calls to existing clients which are defined as someone you have a business transaction with in the last \_\_\_\_ months. A. Two B. Six C. 12 D. 18
Rationale: D is the correct answer. Existing clients are defined as someone you have a business transaction with in the last 18 months.
An effective way for agents to avoid violating fair housing laws is to:
A. Make sure there is always a witness present at all meetings with consumers.
B. Stay away from transactions involving public assistance housing.
C. Deal only with customers who do not belong to a protected class.
D. Obtain education in the content and intent of the law.
Rationale: D is the correct answer. Keeping abreast of current Federal, state, and local fair housing laws if the best way to avoid violating them!
All properties built before 1978 require a Lead Based Paint Disclosure which is mandated by the federal government. Brokers must also sign this form. How long must a Broker keep a record of the Lead Based Paint Disclosure form? A. Ten years B. Seven years C. Three years D. Two years
Rationale: C is the correct answer. Brokers must keep a record of this form for 3 years. These forms are occasionally audited by the government and failure to have them or have them filled out properly carries with it stiff penalties.
What non-conventional loan program(s) is/are available to buyers purchasing their first home? A. FHA loans B. VA loans C. USDA loans D. All of the above
Rationale: D is the correct answer. These are government-insured loan programs with different requirements. available to first-time homebuyers.
In a lien theory state:
A. An individual who takes out a mortgage to buy a property holds the title to the property.
B. It is easy for the bank to foreclose on a property.
C. The buyer cannot be foreclosed upon.
D. The bank holds the title to the property until the mortgage is paid off.
Rationale: A is the correct answer. An individual who takes out a mortgage to buy a property holds the title to the property. In a lien theory state, it may be more difficult for a bank to foreclose on a property because the bank does not hold the title. On the other hand, in a title theory state the bank holds the title to the property until the mortgage is paid off.
A tract of land has been purchased containing 2.5 acres. 2/5 of the tract is too steep to be useful, ¼ is taken up by a stream, and 15% is reserved for an easement. How many square feet of land remain available for use? A. 23,800 sq. feet B. 21,650 sq. feet C. 21,780 sq. feet D. 78,100 sq. feet
Rationale: C is the correct answer. First, figure the total amount of square footage in the tract.
You must know that there is 43,560 square feet in an acre.
43,560 x 2.5 = 108,900 total square feet in the tract.
Then, you want to convert the fractions to decimals.
2÷ 5 = .4,
1÷ 4 = .25 and
15% = .15.
Add the three numbers: = .80 = 80% (that is the amount of land used.
The question asks, what is left for use? That would be 20% (100%-80%= 20%). 108,900 x .20 = 21,780 square feet that is available for use.
A home is currently appraised for $378,000. After having appreciated 6% per year for five years, what was the original price? A. $325,000 B. $189,500 C. $290,770 D. $236,800
Rationale: C is the correct answer.
Take 100% plus or minus the rate of appreciation.
5 years × 6% = 30% + 100% = 130%.
So, the current value of $378,000 ÷ 130% = $290,769.23
(or rounded off $290,770).
John owns a manufacturing company. He bought an assembly line which costs $45,000 with a life expectancy of 9 years. Using the straight-line depreciation method, what will be the value of the assembly line in one year? A. $40,000 B. $35,000 C. $45,000 D. $30,000
Rationale: A is the correct answer. $45,000 ÷ 9 = $5,000 depreciation each year. $45,000 - $5000 = $40,000 at the end of the first year.
Which of the following statements is true of payment that is made from the Real Estate Recovery Fund due to a licensee’s acts?
A. The license may be revoked and a new one will not be issued until the fund has been reimbursed, with interest.
B. The license will be revoked if the fund is not reimbursed within six months, with interest
C. The license is revoked automatically.
D. The license is suspended immediately but will be reissued upon reimbursement of the fund, with interest.
Rationale: A is the correct answer.
If an amount is paid on the licensee’s behalf, that license can be revoked or suspended. It cannot be reissued until the account has been repaid, with interest.
If a broker fails to properly safeguard and deposit earnest money, what is he guilty of? A. Misrepresentation B. Default C. Improper handling of trust money D. Felony
Rationale: C is the correct answer.
Improperly handling trust money is grounds for an agent or broker to lose their license.
A broker would be practicing the unauthorized practice of law if they:
Which of the following could cause an advertisement to be misleading?
A. Use of the term broker in advertising
B. Use of the brokerage logo in advertising
C. Inclusion of the brokerage license number on signs
D. Inclusion of “CEO” after the sales agent’s name
Rationale: B is the correct answer. Use of the brokerage logo in advertising could be considered misleading as it may give the impression that the agent is responsible for the operation of the brokerage business.
With regard to the licensees use of signs, what can licensees do within legal guidelines?
A. Real estate agents are not allowed to place signage anywhere.
B. They may place a sign on the owner’s property only with the owner’s permission.
C. If they are the listing agent on a property, licensees may put a sign on the property, with or without the owner’s permission.
D. They may only put signs on properties that are listed with an “exclusive right-to-sell” listing agreement.
Rationale: B is the correct answer. Agents must always obtain permission to put a sign on a property. This includes directional signs for open houses.
Which of the following types of ownership includes unity of time, interest, title possession, and marriage? A. Tenants in common B. Separate property C. Community property D. Ownership in severalty
Rationale: C is the correct answer.
Community property is similar to joint tenancy in that it has the right of survivorship which includes unity of time, title, interest, and possession. When you add “marriage” the best answer is community property.
In what way does the homestead laws of Texas protect Texas residents?
A. It protects the home from seizure by federal agents even if used for illegal purposes.
B. It protects against foreclosure by general creditors.
C. It keeps the homeowner from being foreclosed upon by the lender.
D. It protects the homeowner in all cases against lenders, creditors, and poachers.
Rationale: B is the correct answer.
The homestead laws of Texas protect homeowners from forced sale by general creditors and provides the right of occupancy for the surviving spouse, unmarried children, and children under 18.
