Real Estate

Question 1

What word do we use instead of price reduction and why?

Answer 1

We use price adjustment because the word reduction carries too many emotions for the seller.

Question 2

What are two important reasons to price the sellers house correctly?

Answer 2

1. The longer the properties on the market the more likely buyers will perceive a defect in the property.
2. When an agent for the buyer sees multiple price adjustments on the properties history they will get really aggressive and asking for more concessions which results in the cellar getting less than their anticipated price.

Question 3

How should a seller’s agent suggest to price?

Answer 3

Seller’s agent will advise clients to list just below the comparative market analysis suggested value.

Question 4

By pricing sellers home just below the comparative market analysis, What could this create that would benefit the seller?

Answer 4

It could create a bidding war or multiple offer situation due to increased buyer traffic early on a listing.

*Could potentially get far more money by listing the home for less than an overpriced house from the start

Question 5

Who is an appraiser?

Answer 5

An independent decision maker who cast a professional judgment on the agreed-upon price.

Question 6

How will providing comps and CMA for the appraiser help the seller?

Answer 6

It will show you have done your homework and prevent large discrepancies from occurring.

Question 7

What will the lender usually require that the property appraises for?

Answer 7

At least the sales price outlined in the contract

Question 8

What does CMA Take into account?

Answer 8

Number of homes that are currently on the market in the local area, they are listing prices, and purchase prices of recent sales

Question 9

When realtors prepare opinions of real property value or price such opinions shall include: NAR Standard of 11-1

Answer 9

Identification of the subject property

Date prepared

Defined value or price

Limiting conditions including statements of purposes and intended user

Disclosure of weather and when a physical inspection of the properties interior was conducted

Conflicts of interest

Any present or contemplated interest including possibility of representing the seller landlord or buyers tenants

basis for opinion including applicable market data

If the opinion is not an appraisal, a statement to that effect

Question 10

Why would a mortgage company want a BPO?

Answer 10

The people in the home have asked to refinance the home and lender does not want to pay for the full appraisal but they do want to have some assurance that the home is valued at or above what the loan will be

The people in the house are about to be foreclosed on and lender wants an inexpensive estimate of value

Question 11

Who potential he receives funds in a sale?

Answer 11

The list of potential’s are seller, license holder, broker, title company, surveyor, home inspector, termite inspector, remodeler doing repairs, lender, appraiser, insurance agent, taxing entities, other

Question 12

Key terms -define

Misrepresentation
Party
Commingle
Promulgated forms
Approved forms 
Cloud on the title
Puffing

Answer 12

Misrepresentation is a false statement made unintentionally

A person involved in a contract for sale, lease, or agency- party

Commingle-an illegal act of a license holder who makes is their own money with the clients or customers

Promulgated forms are forms prepared and authorized by the Texas real estate commission that MUST be used by real estate license holders

Approved forms are forms prepared and authorized by the Texas real estate commission that CAN be used by real estate license holders

Cloud on the title is an encumbrance that keeps the title to the property from transferring easily

Puffing is the exaggeration of opinions about real estate

Question 13

What act was passed in 1939?

Answer 13

The Real Estate Dealer’s license Act

Later became Tx Real Estate Licensing Act

Question 14

What was the first note of the legislation requiring sales agents to be licensed called?

Answer 14

The Real Estate Dealer’s License Act

Question 15

The enforcement of the site of the real estate dealers license act that was passed in 1939 was initially handled by whom?

Answer 15

Texas Secretary of State

Question 16

When was the Tx Real Estate Commission established?

Answer 16

1949

Question 17

How often is the NAR Code of Ethic’s reviewers and updated?

Answer 17

Annually

Question 18

TRELA is reviewed and update how often?

Answer 18

Every two years when Tx legislator meets

Question 19

What licenses holders MUST do?

Answer 19

Keep their license up-to-date if it’s an active status

Keep the continuing education up to date

Stay current on off to the Texas real estate commission

The practice will stay under the sponsorship of an active broker

Always disclose agency relationships to customers and other license holders

Provide customers with information about brokerage services form when required

Be fair and honest with all parties, client and customer

Perform fiduciary duties for clients

Disclose if a license holder is involved in the transaction

Question 20

What license Holders SHOULD do?

Answer 20

Quote the source of all information you share

Give that info in writing or back up verbal statements in writing

Question 21

What licenses Holders CANNOT do?

Answer 21

Commit fraud/misrepresentation

Practice without a license or sponsoring

Fail to inform TREC of convicted felony

Fail to notify TREC of address/email change

Fail to do any of the items under what a license holder must do

Question 22

Through the license act and the minimum level of service, a Texas broker can offer their sellers?

(Under exclusive agreement)

Answer 22

a)A broker who represents a party in a real estate transaction or less real estate for sale under exclusive agreement for a party is that the parties agent.

Question 23

Cont sect 1101.557 acting as agent

The sole delivery of an offer to a party does not violate section 1101.652 if:

Answer 23

A party’s broker consents to the delivery

A copy of the offer sent to the parties broker and less a governmental agency using a sealed bid process does not allow a copy to be sent

The person delivering the offer does not engage in another activity that directly or indirectly violate section 1101.652

Question 24

Section 1101.558 representation disclosure addresses?

Answer 24

Need for license holders to properly disclosed representation when dealing with others

Question 25

What does section 1101.558 say?

Answer 25

License holder representing a party in a proposed real estate transaction must provide either oral or written disclosure of that representation upon first con tact with the party to the transaction for to another license holder representing another party to the transaction

It identifies content and format of written communication required when substantive dialogue relating to proposed transaction regarding real property occurs with a party.

It lists few exceptions to the written notice requirement

Question 26

What does IABS notice stand for?

Answer 26

Information about brokerage services notice

Question 27

Sect 1101.652 grounds for suspension or revocation of license

How?

Answer 27

Enters a plea of guilty or is convicted of felony or criminal offense including fry, and a time for appeal has elapsed or judgment or convection has been affirmed on appeal without regard to an order granting community supervision that suspends the apposition of the sentence

Procures or attempts to procure a license under chapter for the license holder by fraud, misrepresentation, or deceit by making a material miss statement of fact in an application for license

Fails to honor a check issued to the commission after the commission has sent by certified mail a request for payment to the license holders last known business address according to commission records

Fails to provide information requested by commission that relates to a formal or informal complaint to the commission that would indicate a violation of this chapter

Fails to surrender to the owner without just cause, a document or instrument that is represented by the owner and that is in the license holders possession

Fails to notify the commission not later than the 30th day after the date of final conviction or entry of plea of guilty, that the person has been convicted or entered a plea of guilty to a felony or criminal offense including fraud

Disregards our violates chapters

Question 28

What is incompetence?

Answer 28

Attempting to facilitate something in which you’ve never attempted

Question 29

How can you avoid getting into trouble for misrepresentation?

Answer 29

By stating the source of any information you provide

Question 30

As selling agent, who should be responsible for filling out the disclosure form on the property?

Answer 30

The seller’s agent should make sure that the seller feels out the disclosure form

Question 31

What is earnest money?

Answer 31

A deposit that is submitted along with the contract to demonstrate seriousness about the offer

Question 32

When the broker receives earnest money or a security deposit on a rental how should the money be handled?

Answer 32

First, it should be accounted for at all times and passed on to the appropriate party.

Secondly the law does allow brokers to hold the earnest money in an account as long as the brokers money is not in that same account

Brokers send clients checks to the title company for safekeeping

Question 33

What is nolo contendere?

Answer 33

A plea in criminal court in which the defendant accepts the punishment without admitting guilt.

Question 34

TREC acts as and monitors:

Answer 34

Actions of license holders to ensure compliance of Act

Maintains edu standards and records

Collects licensure fees and issues fines
And penalties for violation of TREC rules/License Act

Handles consumer compliments and complaints concerning license holders

Question 35

TREC rules on inactive license

a) The license of a salesperson immediately becomes inactive upon each of the following circumstances:

Answer 35

(1) the death of the salesperson’s sponsoring broker;
(2) the expiration, suspension, revocation or inactivation of the license of the sponsoring broker;
(3) if the sponsoring broker is a business entity, the dissolution of the entity or the forfeiture of its charter;
(4) if the sponsoring broker is a business entity, the expiration, suspension, revocation, or inactivation of the license of the designated broker of the entity, or the death of the designated broker;
(5) termination of sponsorship by the salesperson or sponsoring broker;
(6) failure to timely complete continuing education required under the Act and this Chapter; or
(7) receipt by the Commission of an application for inactive status.

Question 36

(b) If the broker intends to terminate the sponsorship, the broker must immediately:

Or

c) If the salesperson intends to terminate the sponsorship, the salesperson must immediately:

Answer 36

1) notify the salesperson in writing; and
(2) terminate the sponsorship:
(A) through the online process approved by the Commission; or
(B) on the appropriate form delivered to the Commission.

Question 37

to reactivate a license on inactive status, the license holder must:

Answer 37

provide the Commission with documentation that the license holder has satisfied all continuing education requirements under the Act and this chapter;

(2) certify, on a form acceptable to the Commission, that the license holder has not engaged in activity requiring a license at any time after the license became inactive;
(3) establish a sponsorship relationship with a broker:

(4) pay the appropriate fee.

Question 38

What’s really the Three levels of inspectors licenses?

Answer 38

Apprentice inspector (entry level)

Real estate inspector (intermediate)

Professional real estate inspector (highest level)

Question 39

What does TALCB stand for and when was it established?

Answer 39

Texas appraiser licensing and certification board

Established as an independent subdivision of TREC in 1991

Question 40

What is an appraiser

Answer 40

A real estate appraiser is An individual Who provides professional and Estimate of the current market value of the property

Question 41

What is Appraisal Management Company (AMC)?

Answer 41

an entity authorized to provide appraisal management services by TALCB. AMCs often act as the intermediary between the lender, borrower, realtor, mortgage broker and the appraiser.

Question 42

NAR Code off Ethics

Answer 42

Has higher standards than TREC laws

Question 43

What is BPO?

Answer 43

Brokers Professional Opinion

Question 44

Improvement define

Answer 44

Any permanent human-made addition to land

Question 45

Subsurface Right define

Answer 45

Ownership of the minerals, gas, or oil beneath the surface of a piece of real estate

Question 46

Surface Rights

Answer 46

The ownership of the land in a parcel or real estate but limited only to the plane

Question 47

Air Rights define

Answer 47

The right to use the airspace above the surface of land

Question 48

Water Rights define

Answer 48

The right to enjoy the water that borders a property

Question 49

Littoral Rights

Answer 49

Rights that govern lakefront or oceanfront property and usually allow the property owner to use the water bordering their property

Question 50

Riparian Rights

Answer 50

Rights that govern the use of flowing water, such as rivers and streams that pass through or border a property

Question 51

Land refers to

Answer 51

to more than a tract of earth. Land includes not only the natural resources seen on the surface of the land but the minerals below the surface and the air above the surface.

Question 52

Real estate includes

Answer 52

land AND and human-made improvements attached to it.

Question 53

Real Estate is also referred to as

Answer 53

Realty

Question 54

What is an improvement?

Answer 54

permanent human-made addition that is attached to the land. Buildings, fences, decks, and roads are all examples of improvements.

Question 55

Real property refers to

Answer 55

all that PLUS the set of rights associated with real estate ownership.

Question 56

Bundle of rights (interesting history) refers to

Answer 56

The ownership of real property includes a set of legal rights

Question 57

What rights are included in a bundle of rights?

Answer 57

Right of exclusion-The right to tell Aunt Sally that she can’t trespass on your property.

Right of possession-right to occupy/live/breathe on your property, no matter what Aunt Sally has to say about it.

Question 58

Personal property is anything that

Answer 58

someone can move and take with them from place to place, like a vacuum cleaner or a lawnmower.

Question 59

What are for ownership rights associated with real property?

Answer 59

Surface rights🌲

Subsurface rights ⛏

Air rights 🌬

Water rights 🌊

Question 60

What is subsurface rights often referred to?

Answer 60

Mineral rights

Question 61

When talking about air rights what is the sunlight right?

Answer 61

In some cases in the United States, if one has sunlight for a certain number of years they may be able to prevent construction of a taller project that would block light.

Question 62

What are two Types of rights associated with waterfront properties?

Answer 62

Riparian Rights

Littoral Rights

Question 63

What is riparian Rights?

Answer 63

Rights that govern the use of flowing water such as streams or rivers that passes through or borders the property.

Question 64

What is littoral rights?

Answer 64

Right that governs lakefront and ocean front and usually allows property owner to use water bordering the property.

Note* littoral use prohibits property owners to artificially change waters location.

Question 65

What is usually necessary to have water rights of lakefront or ocean front?

Answer 65

Surface ownership of a waterfront property

Question 66

Personal Property is known as anything that can go with you from place to place but also known as what?

Answer 66

Any item that’s not real estate, also known as personalty or chattel

Question 67

What is real estate?

Answer 67

Part of the surface of land to the center of the earth and upward toward space plus improvements made by man or nature.

Question 68

What is real property?

Answer 68

Land from the surface to the center of earth and upward into space, including everything attached by man or nature as well as the bundle of legal rights of the ownership

Question 69

What is fixture?

Answer 69

An object that was once personal property, but which has now been firmly attached to the land in such a way that it becomes part of the real estate

Question 70

What is trade fixture?

Answer 70

Personal property attached to real property that’s owned by Anna needed for a tenant’s business

Question 71

Adaptation define

Answer 71

use and modification of a particular item for a specific use in a property

Question 72

Fructus naturales

Answer 72

Trees, bushes, grass, and uncultivated plants, usually considered to be real property because of their permanence

Question 73

Define Fructus Industriales

Answer 73

Annually-cultivated crops generally considered to be personal property; also known as emblements

Question 74

What is Fructus Industriales also known as?

Answer 74

Emblements

Question 75

How is the way documents are transferred done differently between real property and personal property?

Answer 75

Ownership to a parcel of real estate is transferred by a recordable document such as a deed.

Ownership to personal property (chattel) transfers by a bill of sale.

Question 76

Define Bill of Sale

Answer 76

written agreement used to sell, reassign, or transfer one’s right to or interest in personal property, like furniture or appliances.

Question 77

What is a deed?

Answer 77

written instrument used specifically to transfer real estate, which the owner (sometimes called the grantor) uses to convey ownership in real property to the buyer (or grantee).

Question 78

What is a non-realty Items addendum?

Answer 78

special addendum that must be attached to the sale contracts when Someone purchases personal property such as washing machine or refrigerator.

Question 79

What is severance?

Answer 79

the act of separating some element of the real estate from the land.

Question 80

A fixture is

Answer 80

a chattel bound to real estate and refers to an object that was once personal property, but which has now been firmly attached to the land in such a way that it becomes part of the real estate.

Question 81

What question should agent ask a seller When discussing terms?

Answer 81

“Is there anything attached to the property that you will be taking with you when I sell your home?”

Question 82

What is trade fixture?

Answer 82

personal property that is owned by and needed for a tenant’s business. (For example, shelves that a store owner attaches to the wall when leasing a storefront in a strip mall.

Question 83

What is a accession?

Answer 83

The process of any trade fixture being left behind after the lease and becomes landlords property.

Question 84

When trying to consider if something is a fixture we can consider:

Answer 84

annexation, adaptation, and intention. Abbreviated as AAI.

Question 85

When determining if it is a fixture what is the first consideration?

Answer 85

Annexation which is the way the item is attached to the land.

Question 86

What is adaptation when considering if an item is a fixture?

Answer 86

It refers to the use and modification of particular item for specific use in a property

Question 87

When considering if an item is a fixture what does intention mean?

Answer 87

It means we consider annexation and adaptation. How was an item attached and used or modified for the specific use of the property.

Question 88

When talking about chattel a client might have certain concerns. What are they?

Answer 88

Are crops that are attached to the earth, which can be harvested and sold, personal property or real estate?

What about trees and decorative flora that one could remove — are they chattels or realty?

Question 89

What is a landman?

Answer 89

A professional searching for owners of mineral rights in attempt to obtain the lease on the rights that can be passed on to oil and gas companies

Question 90

What is one way to find out Who owns the mineral rights to the property?

Answer 90

for the seller or the buyer to hire a landman to help with the searching of records.

Question 91

Another way to learn who has the mineral rights would be?

Answer 91

to hire an oil and gas attorney who can research the issue and figure out the ownership situation.

Question 92

Mobile homes are mobile therefore they are considered?

Answer 92

Personal property

Question 93

What qualifies a mobile home to be considered as real property?

Answer 93

It must be connected to utilities and permanently attached to the land that the home owner also owns.

Question 94

What is a condominium?

Answer 94

A single unit in a residential complex, which may or may not share common walls with neighbors, in which the owner owns the unit and a share of the common elements, but not the land

Question 95

What are common elements when referring to condos?

Answer 95

Shared areas in a residential community, such as hallways, elevators, stairwells, pools, and recreational facilities

Question 96

What is cooperative(co-op) housing?

Answer 96

A residential building in which the title is held by a corporation, the residents are stockholders in the corporation, and the residents have a lease

Question 97

What is a planned unit development when referring to housing?(PUD)

Answer 97

A subdivision or development that includes single-family dwellings along with some common elements such as parks, pools, community recreational centers, or golf courses

Question 98

What is a timeshare?

Answer 98

Residence with multiple owners who share the right to possession for a specific period of time with the other owners

Question 99

Fun fact: in 2015 census data bureau, how many people live in owner occupied household? (Single fam)

Answer 99

65%

Question 100

Based on 2015 census data bureau how many rental homes or single-family homes? %

Answer 100

35%

Question 101

A condo offers freedom from what?

Answer 101

exterior maintenance responsibilities

Question 102

Condominium ownership typically provides ownership of what?

Answer 102

unit itself (from floor to ceiling and wall to wall), but not the land that it sits on.

Question 103

According to the 2016 Texas Condominium Mid-Year Sales Report by the Texas Association of REALTORS®, condominium sales increased in what for major metros?

Answer 103

Austin, Houston, Dallas, or San Antonio

Question 104

What is one thing cooperative and condominiums have in common?

Answer 104

They both have to pay assessments

Question 105

What is the major difference between condominium in town house?

Answer 105

the conveyance of the land with the residence by the deed.

Townhomes usually include the unit and the land.

Question 106

Why is it important to let buyer clients know upfront if there is any homeowners association fees?

Answer 106

Because it is a big consideration for buyers and they don’t want to fall in love with the property first then find out they have these monthly expenses.

Question 107

What makes the building qualify as commercial real estate when were furring to multifamily?

Answer 107

Buildings with more than four units

Question 108

Define Ad Valorem Tax

Answer 108

A tax calculated according to the assessed value of real estate

Question 109

Define Homestead Tax Exemption

Answer 109

Reduces the amount of ad valorem taxes assessed on a homestead

Question 110

What does prorate mean?

Answer 110

The dividing of expenses for items like taxes, interest, and rent at the closing between the seller and the buyer

Question 111

First time buyers may have options such as

Answer 111

Withdrawing from their individual retirement account up to $10,000 penalty free and tax deferred for their down payment.

First time buyers may find other programs through their state county or city and their city programs may include low income family programs.

Question 112

What is capital gains taxes?

Answer 112

taxes on the profit a person makes by selling principal home.

Question 113

What are the definitions of capital gains and capital loss?

Answer 113

Capitol gains is referred to the profit received from selling a capital asset

Capital loss is a loss incurred from selling a capital asset

Question 114

Capital assets include all taxpayers tangible property such as

Answer 114

Real estate, investment property, and equipment, but does not include property held for regular sale to consumers

Question 115

What determines Whether a capital gain is taxed as a short-term or long-term gain?

Answer 115

length of time the property is held (the amount of time between the day a property is bought and the day it is sold). This is called the holding period.

Question 116

A broker described by subsection (a)

may not instruct …..

Answer 116

b)A broker described by subsection (a)
may not instruct

…..another broker to directly or indirectly violate section 1101.652
Must inform the party if broker receives material information related to transaction to list, buy, sell, or lease the parties real estate including the receipt of an offer by the broker and,
At minimum answer the parties questions and present any offer to or from the party

Question 117

for the purpose of this section:
A license holder who has authority to bind a party to a lease or sale under a power of attorney or property management agreement is also a party to the lease or sale

True or false?

Answer 117

True

Question 118

An inquiry to a person described by section 1101.005 about contract terms and forms required by the person’s employer does not violate section 1101.652 if the person

Answer 118

does not have authority to bind the employer to the contract

Question 119

What Act created exclusions from capital gains?

Answer 119

The Taxpayer Relief Act of 1997

Question 120

What is capital gain exclusion eligibility for tax paying homeowner?

Answer 120

taxpayer must have owned and occupied the home as a principal residence for at least two of the five years preceding the sale.

Question 121

What are exceptions to the two year requirement to tax exemptions?

Answer 121

Property acquired in rollover transactions, which are transfers of funds to investments of the same type, used to defer the payment of taxes (i.e., 1031 exchanges)

Property transferred by a spouse

Property owned by a spouse, former spouse, or deceased spouse

Owners who have received care from a nursing home

Question 122

What is the 1031 exchange do?

Answer 122

lets an investor sell a property, reinvest the proceeds in a brand new property, and defer all capital gain taxes.

Question 123

IRC Section 1031 (a)(1) says:

Answer 123

No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment.”

Question 124

Ever since May 6, 1997, sellers of principal residences have been required to provide the government with a written assurance containing the following two items:

Answer 124

A statement that the entire gain made from the sale can be excluded
A statement that the property is the owner’s principal residence

Question 125

The 1997 law allows most people to avoid any taxes from gains on the sale of their primary residences because the exclusion can be used frequently. However,

Answer 125

these benefits do not apply to investment properties.

Question 126

One of the advantages of homeownership is that the real estate taxes the owner pays and the dollar amount of the interest paid on the mortgage is

Answer 126

Tax deductible

Question 127

In Texas, a homeowner has state constitutional homestead rights on their owner occupied primary residence. Which is the right….

Answer 127

That’s automatic and protects homeowners from claims by creditors being made against their homes, preventing any eviction by these creditors.

Question 128

These facts pertain to what?

The person might be forced by the court to sell other assets and property, but not the home they live in.

protection does not apply to unpaid taxes or to specific liens, like mortgage debt where the property is the collateral.

Answer 128

Homestead Protection

Question 129

what’s assessed value?

Answer 129

Assessed value is the value placed on a property by a governmental unit for use in levying annual real estate taxes.

Question 130

What is exemption?

Answer 130

exemption removes a percentage or an absolute dollar amount from the assessed taxable value of the property.

Question 131

Examples of properties commonly exempted include the following:

Answer 131

Hospitals
School property
Property owned by religious organizations
Property owned by non-profit organizations
Property owned by municipalities, cities, and counties

Question 132

There is a homestead tax exemption (not to be confused with the homestead right mentioned previously) which will:

Answer 132

reduce the amount of ad valorem taxes paid on the homestead.

Question 133

An owner can only claim one homestead. The homestead exemption cannot be filed until the buyer has been in the home past

Answer 133

January 1st

Question 134

Texas law requires school districts to offer a $25,000 tax exemption

Answer 134

Residential homesteads

Question 135

Who is required to offer a $3,000 exemption if the county collects farm-to-market road taxes or flood control taxes?

Answer 135

Counties

Question 136

State and local governments also may reduce general real estate taxes for:

Answer 136

Senior citizens
Land used for agricultural purposes
Certain industries
Other possible reductions include those for homesteads and for persons with disabilities.

Question 137

For homeowners aged 65 or older, the appraised value of the property established by the county is

Answer 137

frozen, meaning the value will not go up any more on the home. (However, the tax rate might.)

Question 138

If someone owns acreage in a rural area, it is possible that the taxes could be

Answer 138

lowered with an agricultural exemption, due to any farming or ranching that takes place on the property.

Question 139

There is also a program for an agricultural tax exemption for

Answer 139

wildlife conservation.

Question 140

Texas law requires school districts to offer a $10,000 exemption for people who are

Answer 140

over the age of 65 or those who have a disability.

Question 141

advantage for Texas seniors is that when they file their senior exemptions, their school taxes are

Answer 141

Frozen

Question 142

the spouses of veterans who were killed in action are

Answer 142

totally exempt from property taxes in Texas.

Question 143

agents must be careful to quote the dollar amount that does not include

Answer 143

any exemptions, not the amount the current occupants of the home are paying.

Question 144

Federal income tax is assessed according to an individual’s

Answer 144

Net income

Question 145

Common deductions for homeowners include:

Answer 145

Real estate taxes levied on primary residences

Interest on mortgage payments for primary residences

Other costs associated with a mortgage, such as prepayment penalties, fees, and discount points

Question 146

Homeowners may NOT deduct the following expenses from their primary residence from taxable income:

Answer 146

The principal portion of a mortgage payment

Depreciation expenses

Insurance premiums

Escrow payments

Utility expenses

Question 147

At closing, the taxes for the property will be

Answer 147

Prorated

Question 148

Buyers also have the option to pay their property taxes (and homeowners insurance)

Answer 148

up-front in a lump sum, or in installments through an escrow account.

Question 149

Most homeowners’ insurance policies include coverage of

Answer 149

the dwelling and outbuildings, personal property damage or loss, liability for injury and medical bills for others who are hurt on the property if the homeowner is found legally liable, and loss of use.

Question 150

Loss of use provides for the expenses of

Answer 150

place to live if the home is rendered uninhabitable from damage covered under the insurance policy.

Question 151

most homeowners insurance policies will cover

Answer 151

loss or damage caused by fire or smoke, lightning, windstorms, hail, aircraft, vehicles, vandalism, theft, and explosions

Question 152

Most homeowners insurance policies will NOT cover

Answer 152

loss or damage from flooding, earthquakes, termites, freezing pipes, wear and tear, or lack of maintenance.

Question 153

only a licensed insurance professional should

Answer 153

discuss insurance coverage and homeowners policies with your clients.

Question 154

If an insurance question comes up, refer clients

Answer 154

To an insurance agent

Question 155

Most title companies DO NOT take care of cancelling

Answer 155

the insurance for the seller.

Question 156

The seller will need to cancel homeowners insurance after closing and any refund from the insurance company will come directly to the seller.
This is typically called

Answer 156

The return premium

Question 157

What is amortization?

Answer 157

The process of paying off the debt or mortgage in regular installments Based on a fixed payment schedule

Question 158

Define Arrears

Answer 158

Payment for an item or service after it is received

Question 159

Define CLUE reports

Answer 159

Stands for comprehensive loss underwriting exchange, a database used by insurance agencies that contains information on any claims made in the past five years by property owners on specific properties

Question 160

Define PITI

Answer 160

Stands for principal, interest, taxes, and insurance, which are the components of the most mortgage payments

Question 161

Define proration

Answer 161

The allocation and distribution of an annual expense across smaller chunks of time

Question 162

This type of insurance protects the lender in case the borrower defaults.

Answer 162

PMI

Private mortgage insurance

Question 163

The seller’s old loan company (assuming the house was not paid off in full) will want to collect interest through the day of closing. Interest paid in monthly payments is always paid in arrears, which means

Answer 163

it is paid after it’s received/issued.

Question 164

When talking about arrears, if a property closes on February 11th, the seller will owe interest for

Answer 164

11 days and that will be charged to him on the Closing Disclosure form at closing.

Question 165

The buyer’s new loan company will expect to collect interest

Answer 165

From the day is closing

Question 166

As buyer, when talking arrears, If we assume our February 11th closing date, the first monthly payment will probably be

Answer 166

April 1st

Question 167

When discussing arrears, If we assume our February 11th closing date, the first monthly payment will probably be April 1st. That payment will account for March’s interest. Interest for February 11th through February 28th will probably be collected from the buyer

Answer 167

At closing

Question 168

What subsidized flood insurance and requires land management and flood control programs.

Answer 168

National Flood Insurance Act of 1968

Question 169

The cost of flood insurance is based on

Answer 169

detailed flood insurance rate map

Question 170

The cost of flood insurance is based on a detailed flood insurance rate map issued by

Answer 170

Federal Insurance Administration

FIA

Question 171

Insurance companies keep a database containing information on any claims made in the past five years by

Answer 171

owners on specific properties.

Question 172

insurance companies use this database to determine the

Answer 172

insurability of the client and the specific property.

Question 173

The insurance report from the database is referred to as a

Answer 173

CLUE (Comprehensive Loss Underwriting Exchange) report.

Question 174

The CLUE report provides

Answer 174

dates of claims,
insurance company or companies involved,
the type of policy,
whether loss was related to a named catastrophe (hurricane, etc.),
location of the loss (on or off the property),
the amount paid,
cause of the loss.

Question 175

Define Agency

Answer 175

Relationship between a client and a broker

Question 176

Express Agency is:

Answer 176

Agency created by a clear, specific agreement

Question 177

Implied Agency is:

Answer 177

Created when an agent is given permission to act on behalf a client through conduct or communication, but the permission is not established orally or in writing. Does not have to be an action, but can be a statement that leads the principal to believe that the license holder is their agent.

Question 178

What is Agency by Ratification?

Answer 178

Created when a license holder acts on behalf of but without prior authorization of a principal and that principal accepts the license holder’s action after the fact

Question 179

Define Intermediary Broker

Answer 179

A broker who negotiates a contract between two parties that are both being represented by that broker

Question 180

Define Appointed License Holder

Answer 180

A sales agent license holder who was designated to work with a client during an intermediary transaction

Question 181

Special Agency is:

Answer 181

The relationship between a broker and a principal wherein the broker has restricted authority to act on behalf of the principal to achieve one specific objective

Question 182

The general public participates in real estate transactions under four types of roles:

Answer 182

Principal
Client
Customer
Third party

Question 183

An agency relationship is created when

Answer 183

an individual authorizes another party to represent them and act in their best interest.

Question 184

When talking about general public roles, A principal has two meanings:

Answer 184

A major party who is a part of a real estate transaction (buyer, seller, landlord, tenant).

An individual who authorizes an agent to represent their interests as a client in a real estate transaction.

Question 185

A client is an individual who has signed

Answer 185

an agency agreement with you or your broker to represent them in a real estate transaction.

Question 186

A customer is

Answer 186

a person on the other side of the transaction with whom the license holder does not have an agency relationship.

Question 187

A third party is

Answer 187

ANY person involved in a real estate transaction with you who is not your client.

Question 188

Any customer as well all real estate professionals in a transaction (inspector, title officer, loan officer) is a:

Answer 188

Third party

Question 189

An agent representing a seller is oftentimes known as

Answer 189

Listing agent

Question 190

an agent representing the buyer is known as

Answer 190

Buyers agent

Question 191

There are three different types of agency relationships:

Answer 191

Special Agency (broker-client)

General Agency (sales agent-broker)

Universal Agency (child-parent as executor of will)

Question 192

In a special agency relationship, the client grants their agent the authority to act on their behalf for specific actions. Specific actions such as…

Answer 192

Listing their home on the MLS

Representing their interests as a buyer at an open house

Question 193

Because special agency is created at the broker level, this means that not only does the broker owe the client (principal) fiduciary duties, but ALL

Answer 193

of that broker’s sponsored agents also owe that client fiduciary duties.

Question 194

Broker Natalie sponsors 15 sales agents. One of her agents, Audrey, gets a seller to sign a listing agreement. Who owes that seller fiduciary duties?

Answer 194

because agency is created at the broker level, broker Natalie and ALL of her 15 sponsored sales agents owe the seller fiduciary duties.

Question 195

Whereas special agency is limited, general agency:

Answer 195

Gives agents more power

Holds the principal (broker) responsible for actions performed by their agent

Question 196

general agency relationships are?

Answer 196

Principal: The broker is the principal of the agent.

Agent: The sales agent is the agent of the broker.

Question 197

Universal agency gives agents the power to

Answer 197

act on behalf of their principal and make decisions on behalf of the principal.

Question 198

Under universal agency, an agent is given

Answer 198

the general power of attorney — this means the agent has the actual power to sign legal documents on behalf of their principal.

Question 199

Express agency is created by a

Answer 199

written or oral agreement between the principal and the agent.

Question 200

Implied agency means there is

Answer 200

nothing in writing

Question 201

ratification is

Answer 201

“after the fact.”

Question 202

agency by ratification occurs when a broker or sales agent has done:

Answer 202

something on behalf of, but without prior authorization of, a principal.

Question 203

What are four steps to use to determine if agency by ratification has taken place:

Answer 203

The license holder must have done something on behalf of, but without the prior authorization of, a principal.

The principal learned of the act after the fact

The principal had capacity to contract at the time of the action

The principal accepts the action of the license holder after the fact

Question 204

There is another type of agency that license holders need to know about, and that i

Answer 204

is gratuitous agency.

Question 205

gratuitous agency means

Answer 205

means that the real estate agent worked for free and received no commission.
License holders do it sometimes to help a friend or relative. You’re the one giving the gratuity!

Question 206

In non-agency, the broker or the sales agent would have

Answer 206

a contract with someone (either a seller, buyer, tenant, or landlord) and would only give services that do not require fiduciary duties.

Question 207

The Sherman Antitrust Act is a law that was passed in

Answer 207

1890

Question 208

The Sherman Antitrust Act prohibits

Answer 208

trusts, contracts, combinations, or conspiracies “in the restraint of trade or commerce.”

Question 209

Texas, we have the Texas Fair Enterprise & Antitrust Act of 1983, a law that

Answer 209

investigates and prosecutes things like price-fixing, bid-rigging, monopolies, cartels, group boycotts, and anti-competitive mergers and acquisitions.

Question 210

If a meeting should take place between two license holders, brokers or sales agents, and one person said to the other, “Let’s stop showing that agent’s listings and let’s not let him show ours,” that would be a violating what law?

Answer 210

The Sherman Antitrust Act because it outlaws the practice of boycotting a competitor

Question 211

If two or more agents/brokerages talk about how they don’t like the prices of a place that does their advertising and decide not to use them anymore, that is a

Answer 211

group boycott and a per se antitrust violation.

Question 212

What is an example of the allocation of customers or markets.

Answer 212

You stay on the north side and I’ll stay on the south side,” or, “You take the listings over one million dollars and I’ll take the ones below that amount.”

Question 213

the broker could announce that the company will not take any listings with a commission rate lower than 3%, which isn’t actually considered price fixing as much as

Answer 213

setting a price floor.

Question 214

Disclosures come in two formats:

Answer 214

those made by consumers and

those made by the license holders.

Question 215

Seller disclosure means:

Answer 215

seller typically informs the buyer about any negative conditions concerning the property and its improvements

Question 216

License holders must disclose

Answer 216

their agency relationships at first meeting

Question 217

Agents must also disclose their agency relationships to

Answer 217

Other agents

Question 218

Agents must also disclose their agency relationships to other agents. For example,

Answer 218

a license holder might contact a listing agent for more information on a listing. The caller has to disclose whether they are working as a buyer’s agent or a subagent.

Question 219

This one is extremely important. If you as an agent notice something that should be disclosed on the Seller’s Disclosure Notice but isn’t,

Answer 219

it’s your job to advise the sellers they need to disclose the condition. If they refuse, you should stop working with them.

Question 220

The Law of Agency establishes a

Answer 220

fiduciary relationship

Question 221

(b-1) At the time of a license holder’s first substantive communication with a party relating to a proposed transaction regarding specific real property, the license holder shall provide to the party

Answer 221

written notice in at least a 10-point font

Question 222

(b-1) At the time of a license holder’s first substantive communication with a party relating to a proposed transaction regarding specific real property, the license holder shall provide to the party written notice in at least a 10-point font that:

Answer 222

(1) describes the ways in which a broker can represent a party to a real estate transaction, including as an intermediary;
(2) describes the basic duties and obligations a broker has to a party to a real estate transaction that the broker represents; and
(3) provides the name, license number, and contact information for the license holder and the license holder’s supervisor and broker, if applicable.

Question 223

A license holder is not required to provide the notice required by Subsection (b-1) if:

Answer 223

the proposed transaction is for a residential lease for less than one year and a sale is not being considered;

(2) the license holder meets with a party who the license holder knows is represented by another license holder; or
(3) the communication occurs at a property that is held open for any prospective buyer or tenant and the communication concerns that property.

Question 224

Brokers can act as an intermediary, representing both parties to a real estate transaction. This is okay as long as:

Answer 224

The broker gets written consent from each party.

(2) That written consent clearly says who’s paying for any compensation the broker will earn.
(3) The intermediary treats all parties fairly.

Question 225

A written listing agreement and a written buyer/tenant representation agreement that authorize the broker to act as an intermediary counts as written consent. The agreement needs to specify in bold or underlined print

Answer 225

the actions that are prohibited by law.

Question 226

A broker who complies with the written consent requirements of Section 1101.559 may appoint:

Answer 226

(1) a license holder associated with the broker to communicate with and carry out instructions of one party to a real estate transaction; and
(2) another license holder associated with the broker to communicate with and carry out instructions of any other party to the transaction.

Question 227

) A license holder may be appointed under this section (sec. 1101.560) only if:

Answer 227

(1) the written consent of the parties under Section 1101.559 authorizes the broker to make the appointment; and
(2) the broker provides written notice of the appointment to all parties involved in the real estate transaction.
(c) A license holder appointed under this section may provide opinions and advice during negotiations to the party to whom the license holder is appointed.

Question 228

6 fiduciary duties throughout this course is with the acronym OLD CAR: meaning?

Answer 228

Obedience
Loyalty
Disclosure
Confidentiality
Accounting
Reasonable Care

Question 229

Define Subagent

Answer 229

A license holder from one office who represents the seller through cooperation with the listing broker of another company

Question 230

Define Material Fact

Answer 230

Any fact that is significant or essential to the transaction

Question 231

What exactly is a “subagent”? TRELA §110.002 (8) gives the following definition:

Subagent” means a license holder who:

Answer 231

represents a principal through cooperation with and the consent of a broker representing the principal and
(B) is not sponsored or associated with the principal’s broker.

Question 232

Commissions are totally

Answer 232

Negotiable

Question 233

The broker can continue working in the transaction but it would be considered

Answer 233

intermediary without appointments.

Question 234

May a broker who works by themself and has no agents practice an intermediary relationship?

Answer 234

The answer is yes, but only as an intermediary without appointments.

Question 235

In order for a brokerage to be able to represent both the buyer and seller in a real estate transaction, the brokerage needs to have

Answer 235

the permission of BOTH PARTIES.

Question 236

What’s “floor duty”?

Answer 236

It’s a system by which each sales agent volunteers to be given a period of time in the office where they are the first person to answer the phone or grab the first person who walks in the door in an attempt to turn that person into a client.

Question 237

Remember: The agent works FOR

Answer 237

the principal and works WITH (but not for) the third party.

Question 238

Texas Real Estate License Act identifies particular pieces of information that are not properly considered material facts. Under this law, a license holder is not required to inquire about, disclose, or release information relating to whether:

Answer 238

A previous or current occupant of real property had, may have had, has or may have AIDS, an HIV-related illness, or an HIV infection as defined by the Centers for Disease Control and Prevention of the United States Public Health Service; or a death occurred on a property by natural causes, suicide, or accident unrelated to the condition of the property. (Sec. 1101.556)”

Question 239

substantive communication is

Answer 239

communication that involves a substantive discussion relating to specific real property.

Question 240

Broker Arnold was advertising his brokerage services in the newspaper while his license was inactive. Broker Arnold has held his license for five years and is working on making it active again. Is Broker Arnold violating any TREC rules by continuing to advertise his brokerage services during the inactive period?

Answer 240

Yes

According to Section 1101.351(b) of the Real Estate License Act:
No individual may sell, lease, advertise, or exchange real estate services without an active license. If the license holder is a salesperson, then he or she may only sell, lease, advertise, or exchange real estate while acting under his or her sponsoring broker. If that sponsoring broker’s license status is “inactive,” then all agents must stop providing real estate services until the broker renews his license.

Question 241

For those renewing license for the first time, the current education requirement is

Answer 241

three thirty-hour courses in SAE (Sales Agent Apprentice Education) plus two four-hour courses called Legal Update I and Legal Update II.

Question 242

For license holders, After the first renewal at the end of the second year, the education requirement is

Answer 242

18 hours of continuing education. Four of those hours must be Legal Update I and another four hours of Legal Update II. The rest of the hours can be any continuing education course.

Question 243

if the license holder is a broker who is responsible for sales agents, or if a sales agent is responsible for a team or an office manager, then a portion of the 18 hours must be a six-hour course called

Answer 243

Broker Responsibility.

Question 244

§535.93 Late Renewal Applications

a) Subject to the requirements of this section and §1101.451(e) of the Act, a license holder may late renew a license after the expiration date of that license if:

Answer 244

(1) the license has been expired for less than six months;
(2) the license holder files the application to renew on a form approved by the Commission for that purpose;
(3) completes all required continuing education for renewal of the license; and[…]
4) the license holder submits the required fees under §535.101

Question 245

Concerning late renewals, the license holder submits the required fees under §535.101, including:

Answer 245

(A) application fees for late renewal;
(B) a continuing education deferral fee if continuing education for the previous active license period was not completed by the expiration date of the previous active license period; and
(C) a continuing education late reporting fee if continuing education for the previous active license period was not completed by the 60th day after the expiration date of the previous active license period.

Question 246

To renew a salesperson license on active status after the expiration date of the license without any lapse in active licensure, a license holder must submit a Salesperson Sponsorship Form certifying that the license holder:

Answer 246

(1) was continuously sponsored by a Texas licensed broker from the date after the previous license expired to the date the renewal of that license will be issued; and
(2) will continue to be sponsored from the date immediately after the date the renewal of that license will be issued.
(d) The same broker may be the sponsor to the salesperson for both periods under subsection (c) of this section.

Question 247

If the license holder is unable to certify that the license holder was sponsored for the periods under subsection (c) of this section, the Commission will renew the salesperson license on

Answer 247

inactive status for the period(s) in which the license holder was not sponsored.

Question 248

A license renewed under this section is effective the day

Answer 248

following the expiration of the previous license.

Question 249

Working in real estate is a unique career for three reasons:

Answer 249

1) Real estate agents work with their competitors at other offices to share inventory and negotiate transactions to a closing.
2) Agents have fiduciary duties to their clients. Attorneys and medical doctors have a similar emphasis on fiduciary duties, but this commitment to always putting the client’s interests first is rare in many other industries.
3) The most amazing (and cute) robot teacher exists to teach you the important concepts.

Question 250

What is Fraud?

Answer 250

A misstatement made intentionally to deceive

Question 251

The Texas Deceptive Trade Practices Act (DTPA) was enacted in

Answer 251

1973

Question 252

The Texas Deceptive Trade Practices Act (DTPA) purpose is

Answer 252

to protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty.

Question 253

In 1995, the legislature amended the DTPA by adding an exemption for providing a professional service. Courts have not

Answer 253

applied the exemption to real estate license holders

Question 254

In reference to DTPA, In 2011, the 82nd Texas Legislature added

Answer 254

real estate brokerage as a specific exemption to the DTPA.

Question 255

unless a license holder has committed an unconscionable act, misrepresentation of a material fact, or a failure to disclose with the intention of inducing a consumer into a transaction, the license holder can no longer

Answer 255

be held liable under DTPA.

Question 256

DTPA defines an unconscionable action as

Answer 256

one that “takes advantage of the lack of knowledge, ability, experience, or capacity of a person to a grossly unfair degree.”

Question 257

To sue for fraud, all of the following need to apply to the situation:

Answer 257

A material representation was made to the plaintiff by the defendant.

The representation was false.

The defendant knew the statement was false or made the statement not knowing whether the statement was true.

The statement was made with the intention the other person should act on it.

The other person relied on that representation and acted on it.

The other person was damaged in some way by the statement.

Question 258

It makes sense, then, that real estate license holders are more commonly accused of

Answer 258

misrepresentation rather than fraud.

Question 259

Overall, the DTPA lists 31 specific violations (commonly referred to as the laundry list). Of these 31 violations, the following are applicable to the real estate industry:

Answer 259

Representing goods as new or original if they are in fact reconditioned or used

Representing goods as meeting a certain standard, quality, or grade or as if they are of a particular style when, in fact, they do not fit these descriptions

Misrepresenting facts concerning the goods, services, or business of another in order to discredit that entity

Misrepresenting facts concerning the reasons for a reduction in price of goods or services
Representing an agreement as containing rights, remedies, or obligations that it does not contain

Concealing or misrepresenting the need for replacement or repair services

Misrepresenting the authority of the representative to negotiate the transaction

Claiming that replacement or repair services have been performed when, in fact, they have not

Failure to disclose any information at the time of the transaction that may have affected the outcome of the transaction

Question 260

A lien is

Answer 260

a type of security interest granted over a property to secure the payment of a debt or performance of some other obligation

Question 261

Damages under the DTPA refers to:

Answer 261

Economic damages (compensatory damages for pecuniary loss, including costs of repair and replacement)

Non-economic damages (exemplary damages or damages for physical pain and mental anguish, loss of consortium, disfigurement, physical impairment, or loss of companionship and society)

Question 262

When talking DTPA, Economic damages can include the following:

Answer 262

Costs of repair
Loss of use during repairs or due to damage
Diminution in value
Out-of-pocket expenses

Question 263

A common form of non-economic damages awarded in DTPA lawsuits are those resulting from

Answer 263

mental anguish.

Question 264

The courts often decide that not only are plaintiffs owed recovery for their economic losses, but also recovery

Answer 264

of their time and energy spent dealing with the misconduct of the agent or broker.

Question 265

In order for the Texas Real Estate Commission to revoke or suspend an agent’s license, that license holder’s violations of the DTPA must be coupled with

Answer 265

violations of provisions set forth in the Texas Real Estate Licensing Act.

Question 266

If a court finds that the conduct of the seller or the agent was committed “knowingly,” a court may award not more than

Answer 266

three times the amount of economic damages plus add damages for mental anguish.

Question 267

If a court finds the conduct of the seller or the agent was committed “intentionally,” a court may also award not more than

Answer 267

three times the amount of damages for mental anguish AND economic damages.

Question 268

Under the DTPA, knowingly means

Answer 268

actual awareness at the time of the act

Question 269

Under the DTPA, “intentionally” means

Answer 269

actual awareness of the falsity, deception, or unfairness of the act or practice, or the condition, defect, or failure constituting a breach of warranty giving rise to the consumer’s claim, coupled with the specific intent that the consumer act in detrimental reliance on the falsity or deception or in detrimental ignorance of the unfairness.

Question 270

Some of the infractions for which TREC may revoke or suspend an agent’s license – that is, violations of license law which are also violations of the DTPA – are the following:

Answer 270

Material misrepresentation or failure to disclose any known or latent property defects

Deceptive practices in the marketing, selling, or offering of real property False promises made to the consumer through advertising or directly through the agent

Failure to disclose which party is compensating the agent, or that more than one party is liable for compensation without the written consent of all parties involved

Request or acceptance of an undisclosed compensation, a.k.a. accepting money from a client because they want you to do something illegal

Acting as agent and undisclosed principal in a transaction

Question 271

most brokers carry errors and omissions insurance that covers

Answer 271

the entire office to avoid lawsuits whenever possible.

Question 272

The agent is to operate under a warranty of authority

Answer 272

guarantee that an agent gives (explicitly or implicitly) to a third party that establishes that the agent has the authority to bind a principal – i.e., that the agent has the authority to make contracts, agreements, and enter into similar arrangements on the principal’s behalf.

Question 273

In the event that a prospective buyer chooses not to have a property inspected, the license holder should secure

Answer 273

a signed written statement from the prospective buyer stating that they made this choice despite the license holder’s recommendation that the property be inspected.

Question 274

If repairs are required by the buyer after the inspection report is received, this information needs to be passed on to the listing agent and/or the seller. The owner should also be aware of

Answer 274

Paragraph 7F of the One to Four Residential Contract, stating that repairs should be performed by qualified and licensed (if applicable) workers.

Question 275

Paragraph 7F of the One to Four Residential Contract states that

Answer 275

repairs should be performed by qualified and licensed (if applicable) workers.

Question 276

an inspector might not have expertise in these two areas:

Answer 276

One is pools and

the other is foundation problems

Question 277

Broker Quinn and her client had a contract accepted for purchase of a single family home. In order to expedite the inspection process, Broker Quinn strongly recommended an inspector she has worked with in the past, and assured her client that the inspector would provide a thorough and comprehensive home inspection. Broker Quinn also stated that the inspection would include a wood-boring pest inspection.
Is this risky behavior for Broker Quinn?

Answer 277

Yes, Quinn made a risky move. A broker should think hard before steering her client in the direction of any particular service provider since she cannot truly guarantee the quality or effectiveness of the service.
TREC’s Canons of Professional Ethics require license holders to conduct themselves with integrity and competence, as well as to make their clients’ interests their foremost concern.

Question 278

It’s very important for an agent to abstain from

Answer 278

giving legal advice if they aren’t licensed to do so.

Question 279

What is a smart way of documenting your disclosures:

Answer 279

At the end of each day, send an email reminding the customer or client what documents you gave to them that day as well as restating in the email anything you disclosed verbally, such as who you are representing. Save that email. It is your proof that you did what you did.

Question 280

State law requires the seller to disclose what they know about the condition of the property, and this requirement cannot be replaced with

Answer 280

an “as is” clause

Question 281

As-is” language on an MLS listing typically signals to the buyer’s agent that even though all known defects are (hopefully) being disclosed, or will be discovered upon an inspection, the seller intends

Answer 281

to sell the home in its current condition, without making any repairs.

Question 282

give the buyer a list of topics to think about and ask questions about. An example of this type of form is the

Answer 282

Texas Association of REALTORS® General Information and Notice to a Buyer (TAR 1506).

Question 283

Civil Rights Act of 1866:

Answer 283

The first law that began to promise equal rights for all citizens regardless of race or color

Question 284

Fair Housing Act:

Answer 284

A federal law that prohibits discrimination in housing based upon race, color, religion, or national origin and was amended to include sex, disability, and familial status, a.k.a. the Fair Housing Act of 1968

Question 285

Disability

Answer 285

A physical or mental impairment that limits at least one major activity in someone’s life

Question 286

Steering is

Answer 286

An illegal act of channeling buyers or tenants to certain areas, either to keep the area demographically the same or to change the demography of the area

Question 287

Americans with Disabilities Act:

Answer 287

federal law enacted to remove barriers for individuals with disabilities

Question 288

Equal Opportunity in Housing:

Answer 288

The concept that everyone will have equal access to housing with no discriminatory actions taking place

Question 289

The Civil Rights Act of 1866 was essentially the first law to introduce a

Answer 289

protected class (in this case, race) and prevent housing discrimination based on this class.

Question 290

in 1962, President John F. Kennedy issued

Answer 290

Executive Order 11063

Question 291

Executive Order 11063 prohibited:

Answer 291

prohibited discrimination in the selling or leasing of property owned or funded by the federal government, including those properties relying upon Veterans Administration (VA) and Federal Housing Administration (FHA) loans. Because only a few transactions were done with federal involvement in those days, the law had few results.

Question 292

The Fair Housing Act is a federal act designed to

Answer 292

protect buyers and renters from seller or landlord discrimination.

Question 293

the Fair Housing Act says that it is unlawful to

Answer 293

refuse to sell, rent to, or negotiate with any person because of that person’s inclusion in a protected class.

Question 294

The Fair Housing Act introduced some pretty meaningful federal regulations and enforcements. Here’s what the act outlaws:

Answer 294

Refusal to sell or rent a dwelling to any person because of race, color, religion, sex, disability, familial status, or national origin

Discrimination based on race, color, religion, sex, disability, familial status, or national origin in the terms, conditions, or privileges of sale or rental of a dwelling

Advertising the sale or rental of a dwelling indicating preference, limitation, or discrimination based on race, color, religion, sex, disability, familial status, or national origin

Coercing, threatening, intimidating, or interfering with a person’s enjoyment or exercise of housing rights based on discriminatory reasons or retaliating against a person or organization that aids or encourages the exercise or enjoyment of fair housing rights

Question 295

there are two groups that a real estate license holder has the legal right to turn down in certain situations:

Answer 295

People too young to enter a legal contract

People who don’t have the means to obtain a home loan

Question 296

If a child is living with a person who has parental or legal custody designated in writing, then that household is also protected against

Answer 296

familial status discrimination.

Question 297

To maintain a protected familial status,

Answer 297

children must be under 18 years old.

Question 298

tenants are protected against familial status discrimination if they are expecting a

Answer 298

child to become part of their home. This means landlords cannot discriminate against tenants if they are pregnant or in the process of adopting a child.

Question 299

if an agent advertised a home as “perfect for a young couple,” they have effectively stated that a family shouldn’t have this home. This is an example of what violation?

Answer 299

Fair Housing Act Violation

Question 300

Agents should always seek to be inclusive rather than

Answer 300

exclusive in their promotion of properties.

Question 301

The real estate agent may steering based on:

Answer 301

assumptions about the client’s race, religion, familial status, or membership in any of the protected classes.

Question 302

a license holder could be in violation of the Fair Housing Act would be if they failed to make a reasonable accommodation for a person with a

Answer 302

Disability

Question 303

Physical or mental impairments can include: (when discussing disability)

Answer 303

Hearing
Mobility
Visual impairments
Chronic alcoholism
Chronic mental illness
AIDS
AIDS Related Complex
Intellectual disabilities

Question 304

When referring to disabilities, major life activities affected include:

Answer 304

Walking
Talking
Hearing
Seeing
Breathing
Learning
Performing manual tasks
Caring for oneself

Question 305

someone who is currently using illegal drugs is not

Answer 305

protected under the Fair Housing Act.

Question 306

When referring to Fair Housing Act, A few legal cases have decided that a recovering drug addict or alcoholic

Answer 306

is protected. And, of course, as mentioned earlier in this course, someone with AIDS or HIV is protected under this law.

Question 307

Landlord Responsibility: Landlords must allow tenants to

Answer 307

make reasonable modifications so that people with disabilities can enjoy their properties.

Question 308

Tenant Responsibility: Landlords may require tenants (accessibility)

Answer 308

to pay for modifications and may require tenants to return the property to its unmodified condition at the end of the lease.

Question 309

Steering can be based on many factors:

Answer 309

predominant religion in an area, racial and ethnic demographics, or perceptions of areas being “family friendly” or not.

Question 310

disparate impact…

Answer 310

means that an action taken by a license holder could be adversely affecting a protected class.

Question 311

Many brokers will have a response for their sales agents to recite, such as:
“It is the policy of our company not to answer questions of that nature. If you have further questions or concerns on this topic, you are free to

Answer 311

do some research on your own.”

Question 312

The Americans with Disabilities Act (ADA) prohibits discrimination against people with disabilities in

Answer 312

employment, transportation, public accommodation, communications, and governmental activities.

Question 313

we don’t all speak the same language (life would be pretty boring if we did!), so some local real estate associations in Texas have a list of REALTORS® who

Answer 313

speak various languages

Question 314

The Texas Association of REALTORS® has all their forms translated into Spanish, including the lease agreement. The tenant is still required to

Answer 314

sign the English version, but at least the property manager has the Spanish forms to assist in helping the potential tenant understand what it is they are signing.

Question 315

When it comes to promoting fair housing, you should pay special attention to the words used in real estate advertising because

Answer 315

Some of the descriptive words commonly used in ads can be read and interpreted to be discriminatory against people.

Question 316

According to HUD, there are certain terms and phrases that should

Answer 316

be avoided altogether in advertising

Question 317

When referring to fair housing, Some of these phrases to be avoided include:

Answer 317

🚫 "Exclusive neighborhood" or "family neighborhood"
🚫 "Bachelor pad"
🚫 "Man cave"
🚫 "No kids allowed"
Also possibly,
🚫 "Desirable neighborhood"
🚫 "Mother-in-law suite"
🚫 "Master bedroom" or "master suite"

Question 318

find neutral, inclusive terms to use in property descriptions and ads. This shows that you have no preference for any certain group of people based on a protected class.
So what kind of words CAN be used in advertisements?

Answer 318

"Great view"
"Walk-in closets"
"Jogging trails"
"Bus stop"
"Non-smoking"
"Two bedroom"
"Bicycles allowed"
"Wheelchair ramp"

Question 319

The Fair Housing Act does not cover

Answer 319

non-dwelling buildings.

Question 320

A person is to be considered in the business of selling or renting if: (business investor)

Answer 320

That person has within the preceding 12 months participated as principal in three or more transactions involving the sale or rental of any dwelling or any interest therein.

That person has within the preceding 12 months participated as agent, other than in the sale of their own personal residence in providing sales or rental facilities or sales or rental services in two or more transactions involving the sale or rental of any dwelling or any interest therein.

That person is the owner of any dwelling that is designed for or intended for occupancy by or occupied by five or more families.

Question 321

Religious Laws

The law allows a religious group to

Answer 321

sell or rent to people only of their same beliefs.

There are some subdivisions in Texas in which this occurs.

Question 322

Housing for older persons is also exempt from the familial status requirements of the Fair Housing Act if one or more of the following three conditions apply:

Answer 322

The housing is occupied only by persons who are 62 years of age or older.

80% of the housing units have at least one occupant who is 55 years old or older.

The housing is provided under any state or federal program that the Secretary of Housing and Urban Development determines is designed and operated to provide assistance to the elderly.

Question 323

fair housing court cases and regulations.

On May 1, 2017, in the case of

Answer 323

Bank of America v. Miami

Question 324

According to a 2017 report from the National Fair Housing Alliance, “Fair Housing Trends Report: The Case for Fair Housing”, more than 4 million instances of

Answer 324

housing discrimination occur every year in the rental market alone.

Question 325

The report also shared that there were 28,181 complaints of housing discrimination in (year)

Answer 325

2016

Question 326

55% of 28,181 complaints in 2016 were based on disability, while race-based discrimination accounted for

Answer 326

20%of claims

Question 327

Texas Department of Housing and Community Affairs:

Answer 327

A department that administers assigned programs on Texas housing, invests resources strategically, and develops high quality affordable housing which allows Texas communities to thrive

Question 328

Reasonable Accommodation:

Answer 328

A change in rules, policies, or practices that may be necessary to afford a person with a disability an equal opportunity to use or enjoy a dwelling

Question 329

Texas fair housing laws include the same protected classes as the federal laws we went over in the last chapter, but TRELA does include the addition

Answer 329

of ancestry as a protected class.

Question 330

Texas fair housing laws include the same protected classes as the federal laws we went over in the last chapter, but TRELA does include the addition of ancestry as a protected class. And some Texas cities have additional protected classes, such as

Answer 330

sexual orientation.

Question 331

Landlords cannot forbid assistance animals even if

Answer 331

they have a no pet policy.

Question 332

A 2014 amendment to the REALTOR® Code of Ethics added

Answer 332

sexual orientation and gender identity as protected classes.

Question 333

To help protect and expand affordable housing, there’s the Texas Department of Housing and Community Affairs. Here are its three major functions:

Answer 333

Develop affordable housing

Regulate properties qualifying as affordable

Set and enforce standards on property maintenance for affordable housing

Question 334

Landlord-Tenant Law in TDHCA Properties

Owners of TDHCA monitored rental properties must:

Answer 334

Keep properties suitable for occupancy and in good repair consistent with Uniform Physical Condition Standards (“UPCS”) published by HUD.

Estimate utility costs at the property, annually review them, and make them available for inspection.

Provide residents with a certain number of property amenities and/or services.

Operate the property in accordance with its Land Use Restriction Agreement (“LURA”), whether or not owners or managers change.

Offer written leases with specific terms (usually six months for the HTC program and one year for HOME and other federal programs).

Provide tenants with written notice in the event of lease termination or non-renewal.

Provide reasonable accommodations for tenant’s disability at the Owner’s expense (except in some HTC properties awarded before 2001).

Question 335

Landlord-Tenant Law in TDHCA Properties (cont.)

Owners of TDHCA monitored rental properties are prohibited from:

Answer 335

Locking out or seizing property of tenants who have not paid rent (except by judicial process or as expressly allowed under Texas Government Code Section 2306.6738).

Charging rents in excess of program-specific rent limits that are published each year.

Using certain lease provisions that restrict tenant rights to court and appeals processes or decisions, excuse owners from responsibility, or require tenants to pay court fees if a proceeding is won against the owner.

Denying households for rental housing on the sole basis of the household’s participation in the Section 8, HOME TBRA, or other federal rental assistance program.

Evicting tenants for other than good cause under the lease, including retaliation for renters making discrimination complaints or assisting others in exercising their fair housing rights or rights to request reasonable accommodations.

Requiring households participating in the Section 8, HOME TBRA, or other federal rental assistance program to demonstrate a monthly income of more than 2.5 times the household’s share of the monthly rent (households with less than $50 of monthly income are not required to demonstrate more than an annual income of $2,500).

Question 336

Other than owners who are qualified to receive an exemption under HOPA, no owner is allowed to discriminate based on familial status. These protections cover all families in which one or more children under 18 live with:

Answer 336

A parent

A person who has legal custody of the child or children

The designee of the parent or legal custodian with the parent or custodian’s written permission

Pregnant women

Anyone securing legal custody of a child under 18

Question 337

TDHCA has proposed minimum occupancy standards in its draft Tenant Selection Rule based on the guidance offered in

Answer 337

HUD’s Keating Memo

Question 338

TDHCA recommends that occupancy standards should allow at least two persons per

Answer 338

bedroom in the absence of local code or ordinance stating otherwise.

Question 339

Examples of steering could include:

Answer 339

Families with children are not allowed to live on the top floor of the development

Being told that you should live in one building rather than another because you will be closer to other tenants of the same race or national origin

Students and families with children are assigned to units on one side of a complex while single and older persons are assigned to units on another side

Being discouraged from renting an available upstairs unit based on your status as a person with a disability

Question 340

Service animals are not

Answer 340

required to be certified.

Question 341

residents with a disability who have a service animal are not required

Answer 341

to pay a pet deposit or other associated pet fees and service animals are not subject to type, breed, weight, and size restrictions established by the property’s tenant selection and eligibility criteria.

Question 342

Eviction

TDHCA does not determine if

Answer 342

an owner has good cause or if a resident has violated their lease terms.

Question 343

Tenants who have received a copy of an eviction or non-renewal notice may contact one of th

Answer 343

Legal Aid offices listed on the “How To File a Complaint” page or access other legal help at TXLawHelp.org.

Question 344

Protected Classes:

Answer 344

Groups that are illegal to discriminate against, as defined by the Fair Housing Act

Question 345

Housing and Community Development Act:

Answer 345

A 1988 amendment to the Fair Housing Act that added familial status and disability to the list of protected classes

Question 346

Familial Status:

Answer 346

Protected class that applies to any family with at least one person under 18 years of age with at least one parent or legal guardian

Question 347

Blockbusting:

Answer 347

The illegal practice of causing owners to sell their homes by creating fear that minorities are moving into the area; also known as panic peddling

Question 348

it is NOT illegal to refuse housing to prospective tenants or to evict current tenants who have a physical or mental impairment that poses a

Answer 348

direct threat to other tenants.

Question 349

It would not be illegal, for example, to refuse to rent an apartment to an unmedicated schizophrenic with a history of

Answer 349

violence against others, even though the person has a documented mental impairment.

Question 350

Felons are not

Answer 350

in a protected class.

Question 351

The criteria that a property manager would use to decide who will or will not become a tenant not only has to be exact, it also has to be

Answer 351

available for others to view. If anyone is turned down for a lease and they ask for the criteria, it must be given to them.

Question 352

Some of the most common causes of denial of tenants are:

Answer 352

insufficient income, poor credit screening, and criminal history.

Question 353

To ensure that fair housing lawsuits regarding this issue remain reasonable, Congress passed the

Answer 353

Quality Housing and Work Responsibility Act of 1998.

Question 354

Quality Housing and Work Responsibility Act of 1998. This act required HUD to

Answer 354

set reasonable limitations on the number of occupants allowed in a dwelling. HUD concluded that a “two occupants per bedroom” rule — taking other factors into consideration — constitutes a good basic model.

Question 355

In 1991, HUD’s then-General Counsel Frank Keating issued a memo that provided a guideline: “…the Department believes that an occupancy policy of two persons in a bedroom, as a general rule, is reasonable under the Fair Housing Act… However, the reasonableness of any occupancy policy is rebuttable…” and nothing “implies that the department will determine compliance with the Fair Housing Act based solely on the number of people permitted in each bedroom.” This became known as

Answer 355

the Keating Memo.

Question 356

Real estate agents and brokerages may be tested to make sure they don’t participate in any kind of discrimination. Here’s how it works: HUD has

Answer 356

testers who regularly visit offices to see how potential clients are treated.

A person or persons who belong to a certain protected class will enter an office, playing the role of speculative clients with a defined set of parameters.

Question 357

The best way to avoid accusations of discrimination is to

Answer 357

treat everyone who enters your real estate office exactly the same.

Question 358

Blockbusting came to be a few decades ago, as more minorities began moving into predominantly white neighborhoods. The homeowners in those neighborhoods were fearful that their new neighbors would result in their homes losing value. So, these people sold their homes and moved farther out into the country. This was known as

Answer 358

White flight

Question 359

Unlike the federal Fair Housing Act, there are no exceptions to the

Answer 359

Civil Rights Act of 1866. This means that you may never turn away a qualified tenant or purchaser because of race or color. Nor can you publish an advertisement that discriminates against someone on this basis.

Question 360

Any person who believes that they have been injured by the discriminatory practices of a real estate license holder, or who believes that they are being or will be injured, may file a complaint with HUD. They have

Answer 360

1 year from the beginning or end of the incident to file a complaint

Question 361

Fair Housing Complaints (cont.)

Complaints must be in writing and must contain the specific information that HUD requires, such as:

Answer 361

Date of the incident
Location where it happened
Name(s) of the party or parties involved
Any other pertinent details

Question 362

HUD Actions in a Complaint

In the situation of a complaint, HUD will consider the following items:

Answer 362

Testing studies on the company completed by HUD using the testers, a.k.a. HUD’s “secret shoppers”

Which properties were shown to the buyer or tenant? Which properties were the agent and client looking at?

Is an equal opportunity poster displayed in the office? Are they following the most basic aspects of the law?

Question 363

Sometimes, when discriminatory action requires an immediate solution, HUD will attempt to establish a temporary solution to the complaint, while it works on completing a

Answer 363

Full investigation

Question 364

A fair housing complaint that requires immediate action meets the following conditions:

Answer 364

Irreparable harm will more than likely result without immediate action.

Substantial, compelling evidence exists that indicates a violation of the fair housing laws.

Question 365

Sometimes complaints may be the result of a simple misunderstanding, or an investigation may reveal issues that require additional clarification. If HUD believes this is the case, then it can hold an informal meeting to help resolve the issue. In the federal Fair Housing Act, this type of informal conference is referred to as

Answer 365

conciliation

Question 366

Conciliation is an attempt to

Answer 366

resolve the issues raised by a complaint or an investigation through informal negotiations between the aggrieved person, the respondent, and the HUD Secretary.

Question 367

If an administrative hearing takes place and concludes that there has been a violation of fair housing law, then the person or group who violated the law can be ordered to:

Answer 367

Compensate the complainant for actual damages, including humiliation, pain, and suffering.

Provide injunctive or other equitable relief, for example, making the housing available to the complainant.

Pay the Federal Government a civil penalty. The maximum penalties are $10,000 for a first violation and $50,000 for a subsequent violation within seven years.

Pay reasonable attorney’s fees and costs.

Question 368

In any civil action, the burden of proof is on the person making the complaint. In order to have a legal basis for a case, a complainant must show that:

Answer 368

They are a member of a protected class.

They applied for and were qualified to rent or purchase the property but were rejected.

The property remained available after the rejection – i.e., the property was rented or sold to someone else after it was denied to the qualified person making the complaint.

Question 369

Equal Credit Opportunity Act (ECOA):

Answer 369

Law prohibiting credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or use of public assistance

Question 370

the Equal Credit Opportunity Act makes it illegal to:

Answer 370

Refuse borrowers credit if they qualify for it

Discourage anyone from applying for credit

Offer anyone credit on terms that are less favorable (example: higher interest rate) than terms offered to someone with similar qualifications

Close their account

Question 371

it is illegal for lenders to discriminate on the basis of:

Answer 371

Race or color
Religion
National origin
Sex
Marital status
Age (as long as they are old enough to enter into a contract)
Receipt of income from any public assistance program
Exercising in good faith their rights under the Consumer Credit Protection Act

Question 372

under ECOA, lenders may not deny a loan to an individual merely because that person is

Answer 372

divorced, widowed, or unmarried.

Question 373

The lender may not ask about the receipt of alimony or child support unless the borrower intends to

Answer 373

use that money to qualify for the loan, but may ask if a borrower must pay alimony or child support.

Question 374

A lender may not ask if an applicant is divorced or widowed, but may ask if a borrower is

Answer 374

married, unmarried, or separated.

Question 375

A lender may not ask about a borrower’s spouse unless that person will be

Answer 375

involved in the contract.

Question 376

A lender asks a loan applicant how much child support she, the applicant, is receiving, although she has stated that she doesn’t intend to use the money to qualify for the loan.
Is this legal?

Answer 376

No!

Question 377

A lender asks about the credit of a loan applicant’s husband, who is a party to the loan application.
Is this legal?

Answer 377

Yes It’s legal!

Question 378

Jim is 92 years old. (He doesn’t look a day over 90!) He is applying for a 30-year mortgage. Jim has good income, almost no debt, and his credit is excellent. (Do yo thang, Jim!) The lender forces Jim to purchase life insurance to cover the loan.
Is this legal?

Answer 378

No The lender cannot ask Jim to purchase life insurance unless they ask ALL of their borrowers to purchase life insurance. Otherwise, that would be age discrimination, and age is a protected class for lenders under the rules of ECOA.

Question 379

Community Reinvestment Act:

Answer 379

Helps commercial banks and savings associations meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods

Question 380

Redlining:

Answer 380

The illegal act of a lender denying mortgages in certain areas of town

Question 381

Home Mortgage Disclosure:

Answer 381

Federal act that requires lenders to disclose specific lending information, which HUD then uses to map lending patterns

Question 382

the Community Reinvestment Act aims at

Answer 382

reversing the abandonment and decay of residential property.

Question 383

the community reinvestment Act requires lenders to assist their local communities by

Answer 383

participating in community development projects.

Question 384

But to help prevent discrimination in lending, in 1975, Congress passed

Answer 384

the Home Mortgage Disclosure Act.

This act requires lenders to disclose specific lending information, which HUD then uses to map lending patterns.

Question 385

In addition to HUD’s efforts to promote fairness in lending, the Office of Thrift Supervision (a bureau of the U.S. Treasury) also passed

Answer 385

a regulation that bans redlining as part of the Community Reinvestment Act.

Question 386

Compliance with HUD’s Fair Housing Accessibility Guidelines is

Answer 386

Not mandatory

It is, however, a way to help ensure the equitable treatment of all potential clients and customers. Compliance can also provide evidence of non-discrimination in the event of a lawsuit.

Question 387

The Accessibility Guidelines only apply to covered multifamily dwellings, which are defined by the Fair Housing Act as “buildings consisting of four or more dwelling units if such buildings have one or more elevators, and ground floor dwelling units in other buildings consisting of four or more units.”

The guidelines ask landlords to ensure that:

Answer 387

Public use and common use portions of the dwellings are readily accessible to and usable by persons with disabilities

All doors within such dwellings that are designed to allow passage into and within the premises are sufficiently wide to allow passage by persons in wheelchairs

All premises within such dwellings include the following features of adaptive design:
An accessible route into and through the dwelling
Light switches, electrical outlets, thermostats, and other environmental controls in accessible locations
Reinforcements in bathroom walls to allow later installation of grab bars

Usable kitchens and bathrooms that can be navigated by an individual in a wheelchair

Question 388

It’s important to note that the Fair Housing Act governs

Answer 388

residential real estate and not commercial real estate.

Question 389

1975, Congress passed the Home Mortgage Disclosure Act. This act requires lenders to disclose

Answer 389

specific lending information, which HUD then uses to map lending patterns.

Question 390

Federal fair housing laws are enforced by the Secretary of the Department of

Answer 390

Housing and Urban Development.

Question 391

Texas Department of Housing and Community Affairs. Here are its three major functions:

Answer 391

Develop affordable housing

Regulate properties qualifying as affordable

Set and enforce standards on property maintenance for affordable housing

Question 392

REALTOR®:

Answer 392

A registered trademark designed for the sole use of identifying the members of a local board who are affiliated with the National Association of REALTORS®

Question 393

Code of Ethics:

Answer 393

A document created by the National Association of REALTORS® that their members pledge to abide by

Question 394

REALTORS® are different from other real estate practitioners because the Code of Ethics and Standards of Practice of the National Association of REALTORS®* requires a higher

Answer 394

standard than the law requires.

Question 395

There are two groups who are less likely to become REALTORS®:

Answer 395

License holders who work in a rural area where the board does not exist or is too far away 🌵

License holders who practice commercial real estate. They have their own methods of sharing listings with each other. However, the local board is available to them and some do join it.

Question 396

When someone wants to file a complaint because they believe a REALTOR® did something against the NAR Code of Ethics, that complaint does not go to

Answer 396

Not TREC. Because it is dealt with by the local board and the Texas Association of REALTORS®. It is also possible to file a complaint with TREC AND the local board over Code of Ethics violations AND also file a lawsuit.

Question 397

There have even been a few instances in which courts have used the NAR Code of Ethics as their guide to deciding the outcome for an accused party, even when the accused

Answer 397

was not a member of NAR.

Question 398

if the Code of Ethics and the law conflict, the law

Answer 398

takes precedence.

Question 399

The Code of Ethics consists of a Preamble (an introduction) and 17 Articles. These articles cover three main categories of duties:

Answer 399

The first nine Articles are Duties to Clients and Customers

Articles 10 through 14 are Duties to the Public

Articles 15, 16, 17 are Duties to REALTORS®

Question 400

The NAR Code of Ethics was adopted in

Answer 400

1913 to establish a widely held code for conducting business in a proper fashion.

Question 401

What three qualities best define a Realtor®? According to the the Code of Ethics’ Preamble:

Answer 401

The term Realtor® has come to connote competency, fairness, and high integrity.

Question 402

How to display competency:

Answer 402

Perform your duties as a real estate professional with expertise.

Question 403

How to display fairness:

Answer 403

Be fair and considerate in your dealings with others at all times.

Question 404

How to display integrity:

Answer 404

Always behave ethically in a manner consistent with the NAR Code of Ethics, as well as any laws and Rules of the Commission (TREC).

Question 405

Some license holders would consider it always in the best interest of the client to work with any other license holder. What is the license holder to do?

Answer 405

The most likely way you will convince a client to allow cooperation is by explaining that the more exposure their property has in the market, the better chance there is of meeting or exceeding the contemplated price.

Question 406

Farming means that the REALTORS® were trying to send out

Answer 406

seeds” in hopes of receiving a “harvest” of listings.

Question 407

when a REALTOR® writes ad copy, they are supposed to

Answer 407

put the word REALTOR® in the ad somewhere.

Question 408

Canons of Professional Ethics and Conduct:

Answer 408

The Texas Real Estate Commission’s code of ethics for real estate license holders; contained in Chapter 531 of the Texas Administrative Code

Question 409

Integrity:

Answer 409

Firm adherence to a code of especially moral or artistic values; incorruptibility.

Question 410

In order to demonstrate competency, a license holder might ask themselves the following:

Answer 410

What are my strengths and deficiencies?

Do I attend classes to improve my services to my clients or customers? How often?

Which resources are available to help me maintain my competence?

Do I keep abreast of market conditions in the area in which I practice? How?

Am I aware of trends in real estate practices?

How do I usually find out about these trends?

Do I read TREC and trade publications? Which ones? How do they help me maintain my competence?

Can I identify local, state and national issues that are currently under development or consideration?

Question 411

The Consumer Protection Notice lets consumers know that TREC

Answer 411

regulates brokers and agents, and that there are options for anyone who wants to check the license status of a real estate professional or file a complaint.

Question 412

You’ll note that you have two font sizes you can use with your IABS Notice links online:

Answer 412

10-point if you spell out “Texas Real Estate Commission”

12-point if you use the abbreviated name “TREC”

Question 413

That’s the last of the six Canons of Professional Ethics and Conduct as contained in Chapter 531 of the Texas Administrative Code. Let’s review:

Answer 413

Fidelity
Integrity
Competency
Consumer Information
Discriminatory Practices
Information About Brokerage Services

Question 414

TREC regulates all of the following individuals:

Answer 414

Real estate inspectors 🔎

Easement/right-of-way agents 🛣

Education providers for real estate & inspection courses 📚

Developers of timeshares ⛱

Residential service companies 🏠

Real estate brokers and sales agents 🕵️

Question 415

Who exactly needs a real estate license?

Answer 415

Anyone who helps another party (such as a client) complete a real estate activity (such as buying, selling, leasing, or listing to sell) for a fee ($$$) must have a real estate license.

Question 416

For purposes of this chapter, “qualifying real estate courses” include:

Answer 416

(1) agency law
(2) contract law
(3) principles of real estate
(4) property management
(5) real estate appraisal
(6) real estate brokerage
(7) real estate finance
(8) real estate investment
(9) real estate law
(10) real estate marketing
(11) real estate mathematics

Question 417

Sec. 1101.004 depicts what constitutes as engaging in real estate brokerage. If a license holder, with expectation of receiving valuable consideration, directly or indirectly performs or offers, attempts, or agrees to perform for another person any act described by Section 1101.002(1), they are

Answer 417

engaging in real estate brokerage.

Question 418

Sec. 1101.005. APPLICABILITY OF CHAPTER.

This chapter does not apply to:

Answer 418

(1) an attorney licensed in this state;
(2) an attorney-in-fact authorized under a power of attorney to conduct not more than three real estate transactions annually;
(3) a public official while engaged in official duties;
(4) an auctioneer licensed under Chapter 1802 while conducting the sale of real estate by auction if the auctioneer does not perform another act of a broker;
(5) a person conducting a real estate transaction under a court order or the authority of a will or written trust instrument;
(6) a person employed by an owner in the sale of structures and land on which structures are located if the structures are erected by the owner in the course of the owner’s business;
(7) an on-site manager of an apartment complex;
(8) an owner or the owner’s employee who leases the owner’s improved or unimproved real estate; or
(9) a transaction involving:
(A) the sale, lease, or transfer of a mineral or mining interest in real property;
(B) the sale, lease, or transfer of a cemetery lot;
(C) the lease or management of a hotel or motel; or
(D) the sale of real property under a power of sale conferred by a deed of trust or other contract lien.

Question 419

Sec. 1101-006 provides that the commission is subject to the Sunset Act (Chapter 325 of the Government Code). The Sunset Act is a common state law, which, in Texas, requires the Sunset Commission to evaluate all state

Answer 419

agencies every 12 years with respect to their efficiency and the need for their continued services.

Question 420

Sec. 1101.052. PUBLIC MEMBER ELIGIBILITY. (TREC member)

A person is not eligible for appointment as a public member of the commission if the person or the person’s spouse:

Answer 420

(1) is registered, certified, or licensed by an occupational regulatory agency in the real estate industry;
(2) is employed by or participates in the management of a business entity or other organization regulated by the commission or receiving funds from the commission;
(3) owns or controls, directly or indirectly, more than a 10 percent interest in a business entity or other organization regulated by the commission or receiving funds from the commission; or
(4) uses or receives a substantial amount of tangible goods, services, or funds from the commission, other than compensation or reimbursement authorized by law for commission membership, attendance, or expenses.

Question 421

Sec. 1101.053. MEMBERSHIP AND EMPLOYEE RESTRICTIONS.

(a) In this section, “Texas trade association” means

Answer 421

a cooperative and voluntarily joined statewide association of business or professional competitors in this state designed to assist its members and its industry or profession in dealing with mutual business or professional problems and in promoting their common interest.

Question 422

Commission members serve staggered

Answer 422

six-year terms, with the terms of three members expiring January 31 of each odd-numbered year.

Question 423

The training program must provide the person with information regarding: (concerning commission membership)

Answer 423

(1) this chapter and other laws regulated by the commission;
(2) the programs, functions, rules, and budget of the commission;
(3) the results of the most recent formal audit of the commission;
(4) the requirements of laws relating to open meetings, public information, administrative procedure, and conflicts of interest; and
(5) any applicable ethics policies adopted by the commission or the Texas Ethics Commission.

Question 424

A member of the commission is entitled to quasi-judicial immunity from suit for an action that:

Answer 424

(1) is taken as a member of the commission; and

(2) is in compliance with the law.

Question 425

Real Estate Center:

Answer 425

Located at Texas A&M University to provide the results of research and education to license holders

Question 426

For every renewal of a broker/salesperson license, or certificate registrant, a fee is collected in addition to

Answer 426

the application or registration fee. This money goes towards the Texas Real Estate Research Center.

Question 427

Sec. 1101.152 TREC
The commission may not prohibit a license holder from using for the sale, exchange, option, or lease of an interest in real property a contract form that is:

Answer 427

(1) prepared by the property owner; or

(2) prepared by an attorney and required by the property owner.

Question 428

A listing contract form adopted by the commission that relates to the contractual obligations between a seller of real estate and a license holder acting as an agent for the seller must include:

Answer 428

(1) a provision informing the parties to the contract that real estate commissions are negotiable; and
(2) a provision explaining the availability of Texas coastal natural hazards information important to coastal residents, if that information is appropriate.

Question 429

the state legislature has stated that there are two things that have to be included in all listing contracts:

Answer 429

The first one is a line indicating that all commissions are negotiable.
The second one is to inform sellers about the special rules concerning anyone who lives along the coast.

Question 430

The commission may not adopt a rule restricting advertising or competitive bidding by a person regulated by the commission except to prohibit

Answer 430

a false, misleading, or deceptive practice by the person.

Question 431

The commission may not include in rules to prohibit false, misleading, or deceptive practices by a person regulated by the commission a rule that:

Answer 431

1) restricts the use of any advertising medium;
(2) restricts the person’s personal appearance or use of the person’s voice in an advertisement;
3) relates to the size or duration of an advertisement used by the person; or
(4) restricts the person’s advertisement under a trade name that is authorized by a law of this state and registered with the commission.

Question 432

By TREC, advisory committee is made up of

Answer 432

real estate license holders and instructors is created to assist with the development of identifying a situation that needs to be addressed.

Question 433

TREC’s main purpose is to enforce

Answer 433

the Texas Real Estate License Act (TRELA)

Question 434

remember these two dates. 1939 and 1949

Answer 434

TRELA was passed in 1939.

TREC was created in 1949.

Question 435

TRELA is a law passed by

Answer 435

the Texas Legislature to govern Texas real estate.

Question 436

TREC is a government agency created by

Answer 436

the Texas Legislature to enforce TRELA.

Question 437

Texas Real Estate Broker-Lawyer Committee:

Answer 437

A committee that creates and corrects contract forms to be used by Texas real estate license holders

Question 438

The Broker-Lawyer Committee consists of 13 members.

Break down:

Answer 438

Six members are brokers appointed by the Commission
Six members are lawyers appointed by the President of the State Bar Association
One member is a member of the public appointed by the governor

Question 439

The Broker-Lawyer Committee committee serves a staggered:

Answer 439

six-year term with two commission appointees and two Texas State Bar appointees expiring every two years. The governor-appointed public member term expires every six years.

Question 440

The primary duties of the Broker-Lawyer Committee are to

Answer 440

draft and revise contract forms for the approval and adoption by TREC.

Question 441

The TAR Intermediary Relationship Notice form is used by REALTORS® to

Answer 441

inform sellers and buyers that there is an intermediary relationship.

Question 442

you are not to practice real estate until

Answer 442

the license physically arrives at the broker’s office.

Question 443

A person residing outside of Texas may apply for a license under this section if the person:

Answer 443

1. is licensed as a foreign broker; or
2. was licensed as a Texas real estate sales person or broker no more than two years before filing of the application.
3. The commission may waive education and experience requirements if the applicant satisfies the conditions established by §535.56 or §535.55 of this title.

Question 444

There is not a requirement that a real estate office carry errors and omissions insurance as sole proprietor unless

Answer 444

the owners create a business entity

• Once creating a LLC or an S Corporation, however, it would be necessary.

Question 445

If a license has been expired for more than 90 days but less than six months, the person may renew the license by paying to the commission a fee equal to

Answer 445

two times the required renewal fee.

Question 446

If a person’s license has been expired for six months or longer, the person may not

Answer 446

Renew license

Question 447

right of way is a type of

Answer 447

easement used for passing through another’s land.

Question 448

Abstract of Title:

Answer 448

An abbreviated history of a property, including info on any transfers, grants, wills, conveyances, liens, and encumbrances

Question 449

All the license holder has to do to meet the requirements of this section is to tell the buyer that they should have an abstract of title and to

Answer 449

obtain a title insurance policy.

Question 450

For the title company to provide a policy, they have to create an

Answer 450

Abstract of Title

Question 451

exclusive single agency.

Answer 451

Some offices create a policy of only representing one party in a transaction

Question 452

Real Estate Recovery Trust Account

Answer 452

A fund managed by the Texas Real Estate Commission to provide payment to a party who has been damaged through the violation of The Real Estate License Act by a license holder

Question 453

The commission shall maintain a real estate recovery trust account to reimburse aggrieved persons who suffer actual damages caused by an act described by Section 1101.602 committed by:

Answer 453

(1) a license holder;
(2) a certificate holder; or
(3) a person who does not hold a license or certificate and who is an employee or agent of a license or certificate holder.

Question 454

A backup contract is

Answer 454

contract put in place in case the original sales contract (typically the One to Four Family Residential Contract) is terminated

Question 455

The law and the TREC Rules do not always use the word “commission” in situations like this. Instead, they might say

Answer 455

receiving valuable consideration