TREC License Exam - Texas

Question 1

Which Canon of Professional Ethics requires that the broker or sales agent employ prudence and caution in the discharge of her duties to avoid misrepresentation?

a) competency
b) integrity
c) fidelity
d) accounting

Answer 1

b) integrity
The Canons of Professional Ethics and Conduct define integrity to include “…employment of prudence and caution so as to avoid misrepresentation…by acts of commission or omission.”

Question 2

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

a) joint tenancy
b) tenancy in common
c) condominium
d) tenancy by the entirety

Answer 2

d) tenancy by the entirety
Tenancy by the entirety is not recognized under Texas law, as Texas is a community property state. Tenancy by the entirety is a form of joint tenancy with rights of survivorship used in some non-community property states.

Question 3

Under Texas Deceptive Trade Practices Act a person who acquires goods and services is identified as a

a) customer
b) principal
c) client
d) consumer

Answer 3

d) consumer
Anyone who acquires goods and/or services for purchase or lease is identified as a consumer under the statutory provisions.

Question 4

An exclusive right-to-sell listing agreement requires a

a) sales agent’s full name
b) definite termination date not subject to prior notice
c) commitment for the owner’s title insurance coverage
d) seller’s property disclosure form

Answer 4

b) definite termination date not subject to prior notice
TRELA requires every representation agreement, except property management agreements, to include a definite termination date that is not subject to prior notice by either party. Failure to do so may not make the agreement unenforceable, but may subject the license holder to loss of license.

Question 5

In Texas, real estate brokers or sales agents

a) shall not disclose the terms of sale for the purpose of facilitating a listing
b) must disclose to a buyer’s agent that their client will accept a price less than the asking price
c) must disclose a known latent defect to prospective buyers
d) shall not disclose that they hold a Texas broker or sales agent license when selling their own property

Answer 5

c) must disclose a known latent defect to prospective buyers
A latent defect is one that is known to the seller, but not to the buyer, and that is not discoverable by ordinary inspection. As an agent of the seller, a broker is likewise responsible for disclosing known latent defects.

Question 6

In Texas, which of the following is required in order for a deed to be eligible for recording?

a) grantor’s signature must be acknowledged
b) grantor’s signature must be witnessed
c) grantee’s signature must be acknowledged
d) grantee’s signature must be witnessed

Answer 6

a) grantor’s signature must be acknowledged

Question 7

Before a license is revoked or suspended, the license holder is entitled to a

a) hearing conducted by the state office of administrative hearings
b) trial by jury in a state district court
c) hearing before the local association of REALTORS
d) trial by jury before the Real Estate Commission

Answer 7

a) hearing conducted by the state office of admin hearings
If the commission proposes to deny, suspend, or revoke a person’s license or certificate of registration, the person is entitled to a hearing conducted by the State Office of Administrative Hearings.

Question 8

A seller would most likely be required to give a buyer the written Seller’s Disclosure of Property Condition form required by the Texas Property Code in all of these transactions EXCEPT

a) if the seller has not resided on the property in the last year
b) if the buyer has lived on the property has a tenant
c) when the seller is not assigned by a licensed real estate agent
d) a sale of commercial property

Answer 8

d) a sale of commercial property
A written Seller’s Disclosure of Property Condition is required of sellers to be provided to buyers in the transfer of residential real property comprising not more than one dwelling unit even if the seller has not recently lived in the property or if the buyer has lived on the property as a tenant. The disclosure is also required in the case of a sale by owner not using a license holder. There is no requirement for a seller to provide the written notice for commercial properties

Question 9

An acknowledgement is a formal declaration before a notary public or other authorized public official that authenticates signatures on a document. A jurat is used when the signer is swearing to the content of the document. Which of the following statements is TRUE regarding acknowledgements and jurats?
A) In Texas, an acknowledgement and jurat is required for a valid deed.
B) In Texas, an acknowledgement is required for a valid deed; however, a jurat is not.
C) In Texas, either an acknowledgement or jurat is required for a deed to be eligible for recording.
D) In Texas, either an acknowledgement or jurat is required for a valid deed.

Answer 9

C) In Texas, either an acknowledgement or jurat is required for a deed to be eligible for recording.

Question 10

In Texas, who is authorized to draft deeds of trust and notes?
A) An attorney licensed to practice law in Texas
B) A licensed real estate broker
C) The title company clerk
D) The escrow agent

Answer 10

A) An attorney licensed to practice law in Texas

Question 11

A broker took a listing for a small office building. Because the property is in excellent condition and produces a good, steady income, the broker’s sales agent has decided to purchase it as an investment. If the broker’s sales agent wishes to buy this property, the sales agent must
A) resign as the broker’s agent and make an offer after the owner has retained another broker.
B) have some third party purchase the property on the sales agent’s behalf so that the owner does not learn the true identity of the purchaser.
C) inform the owner in writing that the buyer is a license holder and is a sales agent of the listing broker before entering into a purchase contract.
D) obtain permission from the Texas Real Estate Commission.

Answer 11

C) inform the owner in writing that the buyer is a license holder and is a sales agent of the listing broker before entering into a purchase contract.
The sales agent must inform the owner in writing that the sales agent is a license holder sponsored by the listing broker before making the offer and get the owner’s consent to proceed despite the conflict of interest.

Question 12

Which of the following is NOT true?
A) An enhancement in the value of the separate property came from community funds.
B) A nonowning spouse never has an equitable interest in the separate property of the other spouse.
C) Community funds are used to reduce unsecured debt by the separate property.
D) Community funds are used to discharge all are part of the debt secured by the separate property.

Answer 12

B) A nonowning spouse never has an equitable interest in the separate property of the other spouse.

Question 13

All of these are true regarding alternate names EXCEPT
A) a nickname is considered an alternate name and must be registered with TREC before using it in advertising.
B) a sales agent who uses an alternate name may use that name in advertising but must first register that name with TREC.
C) a sales agent who uses an alternate name may use that name in advertising.
D) a sales agent who uses an alternate name cannot use that name in advertising

Answer 13

D) a sales agent who uses an alternate name cannot use that name in advertising
A sales agent who uses an alternate name may use that name in advertising provided they register it with TREC first.

Question 14

A homestead is protected against judgments that result from
A) unpaid taxes.
B) unsecured creditors.
C) the refinance of a lien against a homestead.
D) foreclosure of a mortgage.

Answer 14

B) unsecured creditors.

Question 15

Which of the following statements is TRUE?
A) If a broker becomes the owner of monies held in trust, they must be removed from trust account within 10 days.
B) Trust accounts may contain sufficient brokerage/broker funds to open and operate the account.
C) With the broker’s full knowledge and consent sales agents are permitted to have trust accounts.
D) Trust accounts may contain operating funds

Answer 15

B) Trust accounts may contain sufficient brokerage/broker funds to open and operate the account.
Trust accounts may not contain operating funds. If a broker becomes the owner of monies held in trust, they must be removed from trust account within 30 days. Sales agents are not permitted to have trust accounts.

Question 16

A Texas homeowner may be allowed certain protection from judgments of creditors as a result of the state

a) police power rights
b) homestead laws
c) lien laws
d) equal credit laws

Answer 16

b) homestead laws
In Texas, the purpose of the constitutional protection vested in the homestead is to protect the family against eviction by general creditors.

Question 17

All of the following statements are true regarding the Statute of Frauds, for the sale or lease of real estate for more than one year, EXCEPT

a) when the property is the separate property of one spouse but is the homestead of both spouses the signature of both spouses is required
b) the signature of the parties to be charged is required
c) in order to release community property rights, the signature of both spouses is required
d) when sellers are co-owners, such as tenants in common or joint tenancy, only one owner must sign

Answer 17

d) when sellers are co-owners, such tenants in common or joint tenancy, only the one owner must sign.

Question 18

What type of deed is to be used at closing to convey the title to real property, which is the subject of an agreement to purchase based on a TREC-promulgated contract form?

a) quitclaim
b) bargain and sale
c) special warranty
d) general warranty

Answer 18

d) general warranty
General warranty deeds offer the grantee (typically a buyer) the greatest protection and are most commonly used for transfer of Texas property. All six TREC-promulgated contract forms call for title to be delivered by a general warranty deed.

Question 19

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

a) 100 maximum
b) 200 maximum
c) 50 maximum
d) an unlimited number

Answer 19

b) 200 maximum
A Texas rural homestead is limited to 200 protected acres for a family. By statute, a single person’s protection protects only 100 acres.

Question 20

A consumer prevails in a suit for a cause of action involving the Texas Deceptive Trade Practices Act. The maximum the consumer may be awarded by a court is

a) three times actual damages
b) actual damages plus $5,000 punitive and court costs
c) actual damages, court costs, attorney fees, and up to treble damages if the court finds conduct committed knowingly or intentionally
d) actual damages plus court costs and attorney fees

Answer 20

c) actual damages, court costs, attorney fees, and up to treble damages if the court finds conduct committed knowingly or intentionally
The amount of damages is determined by the court under guidelines set by statute and may not exceed treble damages. Treble damages are not automatic and apply only if the trier of fact finds that the conduct of the defendant was committed knowingly or intentionally.

Question 21

All of the these are true regarding the operation of a trust account EXCEPT

a) the broker is responsible for supervising the trust accounts
b) the broker is personally responsible for the funds in the trust account
c) the broker may not authorize other persons to sign on the account
d) the broker must use a high level of accuracy and care

Answer 21

c) the broker may not authorize other persons to sign on the account
The broker may authorize other persons to sign on the account but is responsible for supervising the trust accounts.

Question 22

If a broker tells a lender that the sales price on a property is something above its actual sales price in order to help the buyer obtain a larger loan, the

a) the broker faces loss of license and a fine
b) buyer can receive a higher mortgage amount
c) buyer is likely to receive an interest rate break
d) broker has done nothing wrong as long as the appraisal substantiates this price

Answer 22

a) the broker faces loss of license and a fine
Brokers are not to be parties to a dual contract for the purpose of obtaining a larger loan. Doing so may subject the license holder to charges of fraud.

Question 23

The Broker-Lawyer Committee

a) drafts and edits forms
b) promulgates forms
c) approves forms
d) approves and promulgates forms

Answer 23

a) drafts and edits forms

The Broker-Lawyer Committee drafts and edits forms, whereas TREC approves and promulgates forms

Question 24

Net listings are

a) permissible with approval of the Commission
b) permitted in Texas but discouraged
c) more profitable because no minimum is set on the amount of commission collectible
d) illegal in Texas

Answer 24

b) permitted in Texas but discouraged
Net listings are legal but discouraged because of a potential conflict of interest. Net listings are permitted by TREC only when the principal (1) requires a net listing and (2) where the principal appears to be familiar with current market values. Additionally, when negotiating any listing, net or otherwise, or even offering to purchase the property on the license holder’s own account as a result of a contact made while acting as a real estate agent, a “license holder is obligated to advise a property owner as to the license holder’s opinion of market value of a property.”

Question 25

The Texas Real Estate Commission may suspend or revoke a real estate license for all of the following causes EXCEPT

a) falling to specify to definite termination date in a lease
b) offering real estate for sale through a lottery
c) placing a sign on real estate without written consent of the owner
d) receiving an undisclosed commission from the buyer

Answer 25

a) falling to specify to definite termination date in a lease
The requirement of the Texas Real Estate License Act regarding termination dates in contracts does not apply to lease agreements. The license, however, may be suspended or revoked for accepting an undisclosed commission; offering property for sale by means of a lottery; or placing a sale or lease sign on property without the written consent of the owner.

Question 26

A real estate license holder has signed a tenant representation agreement with a tenant who is looking for an apartment or a commercial building to lease. The license holder does not charge a fee to prospective tenants; rather, the license holder expects to receive a commission from a landlord. The license holder tells a landlord that the prospective tenant could probably pay a somewhat higher rent than the landlord is asking. Which statement is TRUE?

a) the license holder’s disclosure to the landlord was appropriate under these circumstances
b) the license holder is in violation because the license holder is not charging a fee to prospective tenants
c) the license holder owes the statutory agency duties to the landlords who pay the commission
d) the license holder’s disclosure violated the statutory and common law duties of confidentiality and loyalty owed to the tenant

Answer 26

d) the license holder’s disclosure violated the statutory and common law duties of confidentiality and loyalty owed to the tenant
The license holder’s disclosure violated the statutory duties and common law fiduciary duties owed to the tenant by violating the duties of obedience, loyalty, reasonable care, due diligence, and confidentiality to the tenant who employed the license holder as the tenant’s agent.

Question 27

A sales agent is the owner or president of a brokerage. Which of the following statements is TRUE regarding the use of that title in advertising?

a) the prohibition of using such a title in advertising, as it implies the sales agent is responsible for the operations of the brokerage, does not apply to email or website addresses
b) sales agent who holds such a title, is prohibited from using it in advertising as it implies the sales agent is responsible for the operations of the brokerage
c) a sales agent with the title CEO, COO, or other similar title, may use that title in advertising
d) a sales agent who holds such a title, may use it in advertising

Answer 27

b) sales agent who holds such a title, is prohibited from using it in advertising as it implies the sales agent is responsible for the operations of the brokerage
Even though the sales agent may hold such a title, using it in advertising implies the sales agent is responsible for the operations of the brokerage. Similarly, a sales agent cannot use the title CEO, COO, or other similar title in advertising. Remember, this extends to email or website addresses.

Question 28

Which would be considered acting in a lawful position as an intermediary?

a) appointed license holders communicating with and carrying out the instructions of different principals in one transaction
b) a broker acting as intermediary disclosing to the buyer the lowest price a seller with consider
c) a broker acting as an appointed license holder for both the buyer and seller
d) a broker obtaining verbal permission to act as an intermediary

Answer 28

a) appointed license holders communicating with and carrying out the instructions of different principals in one transaction
A license holder may be appointed to provide opinions and advice during negotiations to the party to whom the license holder is appointed. This requires the written consent of the parties. The broker is required to provide written notice of the appointment to all parties involved in the real estate transaction.

Question 29

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

a) leasing office space as a third-party property manager
b) selling Texas real estate to foreign investors
c) selling cemetery lots
d) locating apartments for lease

Answer 29

c) selling cemetery lots

Question 30

It is unlawful for persons to act in the capacity of or represent themselves as real estate brokers without first

a) registering with the Texas Real Estate Commission
b) obtaining an office in an area zoned commercial
c) obtaining a license from the Texas Securities Commission
d) obtaining a license from the Texas Real Estate Commission

Answer 30

d) obtaining a license from the Texas Real Estate Commission
Unless a person holds a license issued under this chapter, the person may not act as or represent that the person is a broker or sales agent or act as a residential rental locator.

Question 31

Which of the following is FALSE regarding trust accounts?

a) trust accounts are subject to audit at any time by the Commission
b) trust accounts are required anytime a real estate brokerage firm or broker is going to hold money that belongs to other people
c) trust accounts must follow specific rules established by statute and TREC
d) trust accounts may contains operating funds belonging to employed brokers or sales agents

Answer 31

d) trust accounts may contains operating funds belonging to employed brokers or sales agents

Question 32

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

a) no broker protection clause
b) a specified commission rate
c) a specific termination date
d) no definite termination date

Answer 32

d) no definite termination date

Question 33

In Texas, an 18-month lease must be in writing and signed in order to be enforceable due to

a) it is the traditional procedure in order to protect both lessor and lessee
b) a lease must be signed in order for a tenant to be required to pay rent
c) ) the lessor and lessee may otherwise forget the terms
d) it being required by the Statute of Frauds

Answer 33

d) it being required by the Statute of Frauds

Question 34

Six months after a buyer bought a house, the roof leaked during a rainstorm. When the house was listed, the seller told the broker that the roof leaked, but they agreed not to tell any prospective buyers. The broker claims that the buyer did not ask about the roof and also declined to have the property inspected. Under these facts, the buyer probably has a cause of action against

a) neither the broker nor the seller because the leaking roof could have been discovered by inspection
b) the broker and the seller for nondisclosure
c) the broker, but not the seller, for nondisclosure
d) the seller, but not the broker, who must obey the client

Answer 34

b) the broker and the seller for nondisclosure

Question 35

A taxpayer is delinquent in paying property taxes. Prior to foreclosure, the taxpayer may stop the foreclosure by paying taxes that are owed under the

a) statutory right of reinstatement
b) equitable right of redemption
c) statutory right of redemption
d) equitable right of reinstatement

Answer 35

b) equitable right of redemption

Question 36

Based on the Statute of Frauds, in Texas, contracts for the sale and purchase of real property must be

a) accompanied by earnest money and an option fee
b) on a TREC promulgated form
c) in writing and signed to be enforceable
d) initialized by a licensed real estate broker or sales agent

Answer 36

c) in writing and signed to be enforceable

Question 37

If a seller fails to provide the buyer with the seller’s disclosure of property condition after the effective date of the contract as required by the Texas Property Code, what is the status of the purchase contract?

a) the buyer may terminate and the seller will receive any earnest money
b) the buyer may terminate and receive any earnest money
c) void
d) valid and enforceable

Answer 37

b) the buyer may terminate and receive any earnest money
The contract allows for the buyer to terminate the agreement if the seller’s disclosure is not delivered as required. The seller is not in default, however, the seller has allowed the buyer an unconditional “out” of the contract. The buyer will receive their earnest money. Note: The only time a seller has rights to the buyer’s earnest money is if the seller chooses the earnest money as their liquidated damages due to the buyer defaulting.

Question 38

A broker or sales agent may perform all of these actions in preparation for a closing EXCEPT

a) maintain a time schedule and provide net data
b) explain closing procedures to both buyer and seller and anticipate decision making alternatives
c) conduct any title searches that might be required
d) coordinate inspections and deliver documents and escrow monies to the appropriate attorney

Answer 38

c) conduct any title searches that might be required
Conducting a title search for another person in connection with the license holder’s brokerage activity with that person may lead to charges of practicing law without a license if the license holder advises the person regarding the validity or legal sufficiency of an instrument or the validity of title to real property.

Question 39

Which of the following addendum contains the words time is of the essence?

a) Seller financing addendum
b) addendum for back-up contract
c) addendum for coastal area property
d) property condition addendum

Answer 39

b) addendum for back-up contract
There are five addenda that contain the phrase time is of the essence: Addendum for Sale of Other Property by Buyer, Addendum for Back-Up Contract, Third Party Financing Addendum for Credit Approval, Reverse Mortgage Financing Addendum, and Short Sale Addendum.

Question 40

In Texas, when a broker is listing a home and asks the seller to complete the Seller’s Disclosure of Property Condition, which statement is TRUE ?

a) an agent should give the seller advice regarding which property conditions to disclose and which to ignore
b) the standard disclosures cover a narrow range of structural conditions only
c) the disclosures are optional, so the seller and the broker may avoid liability by simply telling the buyer that since the property is being sold as-is, the seller is not required to disclose property defects
d) seller disclosure of known property conditions is required by state statute

Answer 40

d) seller disclosure of known property conditions is required by state statute
In Texas, written property disclosures must be made for the sale of most previously occupied single-family dwelling units, whether or not a real estate agent is used. There are 11 exemptions to providing the statutory disclosure. However, all sellers and brokers must disclose latent structural defects and other forms of material property deficiencies, if they are aware of them.

Question 41

In order to qualify for a Texas Veterans Land Board program an applicant must have served no less than ______ days of active duty service or training.

Answer 41

90

Question 42

Courses for the renewal of a sales agent license during the first year after licensing are referred to as
a) sales agent apprentice education sale (SAE)
b) ongoing license coursework (OLC)
C) mandatory continuing education (MCE)
d) sales agent licensing education (SLE)

Answer 42

a) sales agent apprentice education sale (SAE)
An applicant applying for the first renewal of a sales agent license must provide to the commission satisfactory evidence of completion of at least 98 classroom hours in core real estate courses including 4 hours in Legal I and 4 hours in Legal II for the first renewal of a sales agent license.

Question 43

Every Texas real estate brokerage firm is required to

a) maintain escrow accounts
b) display signage at the office location
c) keep transaction records for three years
d) have a licensed broker who is the broker for the firm

Answer 43

d) have a licensed broker who is the broker for the firm
Although a person would not have to be a licensed broker to own a real estate brokerage (provided they did not perform any activities for which a license is required), there would have to be a licensed broker who is the broker of the firm

Question 44

Regarding community property, which of the following is TRUE?

a) any real estate that is part of a married couple’s community property is held by spouses in a tenancy by the entirety
b) technically, one spouse owns two-thirds of a couple’s community property, whereas the other spouse owns one-third
c) upon the death of either spouse, and if the deceased left a will, all of the community property automatically belong to the surviving spouse, and the deceased’s separate property is distributed according to the deceased’s will
d) neither spouse may sell any real estate owned as part of their community property, unless both spouses sign the sales contract and deed

Answer 44

d) neither spouse may sell any real estate owned as part of their community property, unless both spouses sign the sales contract and deed
Because each has an undivided interest in the property, without a suit to partition, neither spouse may sell any real estate owned as part of their community property, unless both spouses sign the sales contract and deed, particularly for homestead property. This may not be entirely true in every case, but the exceptions will not be considered here or likely on any exam. Texas does not recognize tenancy by the entirety.

Question 45

All of the following are true regarding the Texas homestead law EXCEPT

a) a single person may hold a homestead
b) homestead rights in property may be terminated by the death of a spouse
c) the homestead may be either urban or rural
d) the homestead is exempt from forced sale by creditors, with a few exeptions

Answer 45

b) homestead rights in property may be terminated by the death of a spouse
Homestead rights in Texas may be vested in a single or married person and may be either urban or rural. Regardless, the homestead is protected from forced sale by most creditors. Furthermore, a homestead may be selected from the community property or from the separate property of either spouse. Even if selected from the separate property of a spouse who later dies, the surviving spouse retains a conditional life estate in the homestead property.

Question 46

The DTPA does not apply to claims arising against real estate brokers and sales agents under certain circumstances. All of these are circumstances in which the DTPA does apply to claims arising against real estate brokers and sales agents EXCEPT

a) an unconscionable action or course of action that cannot be characterized as advice, judgment or opinion
b) claims arising from acts of omission by a broker or sales agent
c) a failure to disclose information concerning goods or services that was known at the time of the transaction if the failure to disclose such information was intended to induce the consumer into transaction into which the consumer would not have entered if the information had been disclosed
d) a misrepresentation of a material fact that cannot be considered as advice, judgment, or opinion

Answer 46

b) claims arising from acts of omission by a broker or sales agent
The DTPA does not apply to claims arising against real estate brokers and sales agents under certain circumstances. The DTPA does not apply to claims arising from acts of omission by a broker or sales agent.

Question 47

In Texas, a mechanic’s lien

a) is a general, voluntary lien, giving security to persons or companies that perform labor or furnish material to improve real property
b) can force the sale of homestead property, with a statutory right of redemption after the sale
c) can force the sale of a homestead property if there was a contract signed by both spouses and acknowledged prior to the time the work began or the materials were delivered
d) is available to owners as a protection against contractors who do not pay subcontractors

Answer 47

c) can force the sale of a homestead property if there was a contract signed by both spouses and acknowledged prior to the time the work began or the materials were delivered
A mechanic’s and materialman’s lien is a specific lien. The Affidavit Claiming a Mechanic’s Lien is an involuntary lien; the Mechanic’s Lien Contract is a voluntary lien. To perfect a mechanic’s and materialman’s lien against a homestead, the provider must have an express, written contract signed by both spouses. Its purpose is to provide protection for persons providing labor and material for improvements to real property. The statutory right of redemption applies only to liens foreclosed as a result of nonpayment of taxes or by some owner’s associations.

Question 48

When handling trust funds, all of these could result in disciplinary action against a license holder EXCEPT

a) keeping an account of all funds deposited and disbursed for four years
b) commingling funds
c) converting funds
d) failing to keep trust funds in a Texas bank or title company

Answer 48

a) keeping an account of all funds deposited and disbursed for four years

Question 49

Three weeks before a man begins his real estate prelicensing classes, he offers to help find a buyer for his neighbor’s house. The neighbor agrees to pay the man a percent of the commission. An offer is accepted while the man is taking classes and closes the day before he passes the examination and receives his sales agent’s license. The neighbor refuses to pay him the agreed commission. Can the man sue to recover payment?

a) yes, because the man was formally enrolled in a course of study intended to result in a real estate license at the time an offer was procured and accepted, so the commission agreement is binding
b) no, because in Texas, a real estate sales agent must have a license and be sponsored by a broker in order to collect a commission directly from a seller
c) yes, because while the statute of frauds forbids recovery on an oral agreement for the conveyance of real property, Texas law permits enforcement of an oral commission contract under these facts
d) No, because state law prohibits a person from maintaining an action to collect compensation for acting as a broker or sales agent, unless the person held a license was in effect at the time the act was commenced

Answer 49

d) No, because state law prohibits a person from maintaining an action to collect compensation for acting as a broker or sales agent, unless the person held a license was in effect at the time the act was commenced
The man cannot sue the seller. A sales agent may only receive compensation from the broker that sponsored them at the time the commission was earned. In addition, the man could face a fine and/or imprisonment as a result of his unlicensed activity. Unlicensed activity is a Class A misdemeanor punishable by a fine of up to $4,000 and/or up to a year in jail.

Question 50

A license holder must use the earnest money contract forms, addenda, and leases promulgated by the Commission unless

a) the forms do not fit the circumstances of the transaction
b) the agent is offering legal advice to the parties
c) the agent secures special permission from TREC
d) a Texas attorney prepares the forms and the property owner requires their use

Answer 50

d) a Texas attorney prepares the forms and the property owner requires their use

Question 51

Under community property, the co-owners

a) are joint tenants with right of survivorship
b) inherit the deceased spouse’s one-half interest upon the death of one co-owner
c) must own equal interests in all real and personal property
d) are spouses

Answer 51

d) are spouses
Community property is a system of property ownership based on the theory that each spouse has an equal interest in all property acquired during marriage; therefore, it is a form of co-ownership involving spouses.

Question 52

When a sponsoring broker’s license is suspended for two years, the licenses of the sales agents
A) must be returned to the Real Estate Commission, and the sales agents are prohibited from further activity as license holders until they have obtained a new sponsoring broker.
B) will be revoked, subject to reinstatement after one year.
C) will remain active as the suspension has no effect on the licenses of the sales agents.
D) will also be suspended for a two-year period.

Answer 52

A) must be returned to the Real Estate Commission, and the sales agents are prohibited from further activity as license holders until they have obtained a new sponsoring broker.

Question 53

Unless otherwise exempt, to renew a license in Texas a broker must
A)pay a fee and send back the expiring license.
B)have completed hours of acceptable continuing education in the last 2 years.
C)be actively participating in the real estate business.
D)have completed 18 hours of continuing education in the last 2 years, which include 4 hours in Legal I and 4 hours in Legal II.

Answer 53

D)have completed 18 hours of continuing education in the last 2 years, which include 4 hours in Legal I and 4 hours in Legal II.
Any license holder who is not subject to the annual education requirement of TRELA must show that she has attended during the term of the current license at least 18 classroom hours of acceptable continuing education. Brokers who sponsor sales agents must take a 6 hour broker responsibility course regardless of when they became brokers.

Question 54

When terminating the sponsorship of a sales agent, the broker must
A)give the sales agent an official letter of termination that the sales agent can send to the Real Estate Commission.
B)return the sales agent’s license, along with a letter of termination, to the Real Estate Commission.
C)do nothing as the sales agent is responsible for notifying the Real Estate Commission of the change.
D)notify the sales agent in writing of the termination and immediately return the sales agent’s license to the Texas Real Estate Commission.

Answer 54

D)notify the sales agent in writing of the termination and immediately return the sales agent’s license to the Texas Real Estate Commission.

Question 55

When the license of a sponsoring broker is suspended or revoked, the sponsored sales agents
A)must become employees instead of independent contractors.
B)may continue listing and selling during the search for a new broker.
C)must stop listing and selling.
D)post a public notice and obtain a bond.

Answer 55

C)must stop listing and selling.
When the license of a broker is suspended or revoked, the sponsored sales agent license become inactive. The sponsored sales agents must stop listing and selling until they re-activate their license under a new broker.

Question 56

All of the following are grounds for the Texas Real Estate Commission to revoke a license EXCEPT
A)failing to provide information requested by the Commission within 10 days of the request as part of a complaint or audit procedure.
B)commingling others’ money or property with the license holder’s own.
C)inducing someone into a purchase agreement by guaranteeing significant profit at the time of resale.
D)failing to disclose a death on a property listed for sale, if the death occurred due to a cause that is unrelated to the property condition.

Answer 56

D)failing to disclose a death on a property listed for sale, if the death occurred due to a cause that is unrelated to the property condition.
License holders have no duty to disclose that a death occurred on a property by natural causes, suicide, or accident unrelated to the condition of the property.

Question 57

It would constitute unauthorized practice of law for a real estate license holder to complete a contract prepared by
A)an attorney licensed in Texas.
B)the Broker-Lawyer Committee and promulgated by TREC.
C)the property owner.
D)the license holder using language from TREC as a guide.

Answer 57

D)the license holder using language from TREC as a guide.
It does not constitute the unauthorized practice of law to use a contract form that has been prepared by the Broker-Lawyer Committee and promulgated by TREC, an attorney licensed in Texas, or the property owner.

Question 58

At a license holder’s discretion they may make changes to a TREC promulgated form or other approved forms. By doing so they
A)may have fulfilled their fiduciary duty to their client provided the changes were in the best interest of their client.
B)have done nothing inappropriate TRELA permits a license holder to make such changes.
C)may be guilty of the unauthorized practice of law and could face disciplinary action.
D)have done nothing inappropriate provided the changes were in the best interest of their client.

Answer 58

C)may be guilty of the unauthorized practice of law and could face disciplinary action.

Question 59

A buyer who is a client of a broker wants to purchase a house that the broker has listed for sale. Which statement is TRUE?
A)If the listing sales agent and selling sales agent are two different people, there is no problem.
B)The buyer should not have been shown a house listed by the broker.
C)The broker should refer the buyer to another broker to negotiate the sale.
D)The seller and buyer must be informed of the situation and agree in writing that the broker may act as an intermediary between both of them.

Answer 59

D)The seller and buyer must be informed of the situation and agree in writing that the broker may act as an intermediary between both of them.
The seller and buyer must be informed of the situation and must give written consent before a broker may act as an intermediary between parties to a real estate transaction.

Question 60

All of the following types of agency are permitted in Texas EXCEPT
A)a broker employed to negotiate a transaction between the parties as an intermediary.
B)a broker employed to negotiate a transaction between the parties as an intermediary with appointments.
C)a broker employed to negotiate a transaction between the parties as a dual agent under common-law principles.
D)a broker employed to negotiate a transaction between the parties as an intermediary without appointments.

Answer 60

C)a broker employed to negotiate a transaction between the parties as a dual agent under common-law principles.
A real estate broker in Texas representing both parties in the same transaction must obtain an agreement in writing from both parties to act as an intermediary.

Question 61

When a condominium is foreclosed on for nonpayment of condominium owner association (COA) dues, if the COA purchases the property, the statutory right of redemption is

Answer 61

90 days

Question 62

All of the following statements regarding the Texas Real Estate Commission are true EXCEPT
A)the Commission appoints an administrator and may designate an assistant administrator to carry out the daily activities of the Commission.
B)examinations that must be taken by all applicants for real estate licensing are currently administered by an independent testing company rather than the Commission.
C)the state association of REALTORS® selects the members.
D)the Commission makes and enforces the rules by which all real estate license holders must abide.

Answer 62

C)the state association of REALTORS® selects the members.
The Texas Association of REALTOR®(TAR) does not select the Real Estate Commission members. Commissioners are appointed by the governor and approved by the senate. The Commission is empowered to make and enforce rules. The examinations may either be prepared or contracted for by the Commission. Currently they are written under the supervision of the Commission and administered by an independent testing company. TREC must appoint an administrator and may designate an assistant administrator to carry out the day-to-day functions of the Commission. However, TAR does make recommendations to the governor for appointments to TREC.

Question 63

When a mechanic's lien is created under an expressed written contract it creates a(an)
A) voluntary general lien.
B) voluntary specific lien.
C) involuntary specific lien.
D) involuntary general lien.

Answer 63

B) voluntary specific lien.

Question 64

A seller’s listing agreement has expired, and the seller lists with a different brokerage firm. The original listing agent now has a buyer interested in the seller’s property. Based on this information, the original agent
A) cannot disclose to the buyer offers received on the seller’s property while it was listed with the original agent.
B) cannot represent the buyer.
C) is a dual agent.
D) cannot disclose to the buyer information about the physical condition of the property.

Answer 64

A) cannot disclose to the buyer offers received on the seller’s property while it was listed with the original agent.
Confidential information, such as information regarding previous offers, must remain confidential. However, the original listing agent is now free to represent the buyer since the original agent no longer has an agency relationship with the seller. Agents must always disclose known material facts about the property.

Question 65

Which of the following statements is TRUE regarding a broker rebating a portion of the commission to the principal?
A) It is legal for a broker to rebate a portion of the commission to the principal for a real estate service, such as a referral.
B) It is legal for a broker to rebate a portion of the commission to the principal.
C) It is legal for a broker to rebate a portion of the commission to the principal provided it is a cash rebate and shown on the closing disclosure.
D) It is illegal for a broker to rebate a portion of the commission to the principal.

Answer 65

B) It is legal for a broker to rebate a portion of the commission to the principal.
It must be strictly a rebate and cannot be made for a real estate service, such as a referral. The rebate may be in any form (e.g., cash, gift certificates, appliances, frequent flyer certificates, or any other form).

Question 66

In Texas, all of the following actions would be grounds for revoking a sales agent’s license EXCEPT
A) failure to identify the person publishing an advertisement as a licensed broker or agent.
B) agreeing to accept a listing on behalf of the broker for less than the broker’s normal commission rate.
C) failure of a license holder to notify the Commission within 30 days after being convicted of a felony involving fraud.
D) commingling money that belongs to another in the license holder’s personal checking account.

Answer 66

B) agreeing to accept a listing on behalf of the broker for less than the broker’s normal commission rate.

Question 67

A seller of residential real property that is subject to membership in a property owners’ association is required to give a prospective purchaser a written notice. All of the following are true regarding the written notice EXCEPT
A) the notice must state that the purchaser would be obligated to be a member of the association.
B) the notice must state failure to pay association assessments could result in a lien on and the foreclosure of the property.
C) the notice must be delivered to the purchaser before the effective date of the contract.
D) the promulgated Addendum For Property Subject To Mandatory Membership In A Property Owners Association.

Answer 67

C) the notice must be delivered to the purchaser before the effective date of the contract.
If the notice is not delivered to the purchaser before the effective date of the contract, the purchaser may terminate the contract for any reason within the earlier of seven days after the date the purchaser receives the notice or the date of closing.

Question 68

Income earned by separate property is presumed to be
A) separate property.
B) one half separate and one half community.
C) exempt from taxation.
D) community property

Answer 68

D) community property
Although couples can, through legal action, partition property and contractually arrange for certain income to be separate property, all earnings from community and separate property are presumed in Texas to be community property. The appreciation (value gain) experienced by real property is separate property of the one holding title to the separate property.

Question 69

A couple is engaged to be married. Any real estate that either owns at the time of marriage will remain that spouse's property in severalty, and property acquired after the wedding belongs to both of them equally. The form of ownership upon their marriage will be
A) joint tenancy.
B) cooperative.
C) tenancy in common.
D) community property.

Answer 69

D) community property.

Question 70

From whom may a real estate be compensated?
A) The seller or buyer
B) Only their sponsoring broker
C) The buyer and seller
D) Any licensed real estate broker

Answer 70

B) Only their sponsoring broker

Question 71

An executor for an estate tells the listing broker that his brother-in-law was found dead in the house after allegedly inhaling toxic fumes while manufacturing methamphetamine on the property. The broker must disclose
A) neither fact.
B) the methamphetamine lab, but not the accidental death.
C) the accidental death only.
D) both facts

Answer 71

D) both facts
The broker must disclose the use of the premises for the manufacture of methamphetamine. Although the broker would normally have no duty to disclose accidental deaths unrelated to a condition on the property, in this scenario, the danger posed by the presence of methamphetamine negatively impacts the physical health or safety of future owners and would likely have to be disclosed.

Question 72

TREC-promulgated contracts address all of the following EXCEPT
A) a purchase using seller financing.
B) an assumption of an FHA-insured loan.
C) the purchase of a fee simple town house.
D) a purchase for a commercial building.

Answer 72

D) a purchase for a commercial building.

Question 73

In Texas, real estate inspectors are licensed and regulated by the
A) Texas Department of Licensing and Regulation.
B) Texas Real Estate Inspector Commission.
C) Texas Real Estate Commission.
D) Texas Real Estate Inspector Committee.

Answer 73

C) Texas Real Estate Commission.
The Texas Real Estate Commission licenses and regulates inspectors. The Texas Real Estate Inspector Committee is composed of nine members and serves in an advisory capacity to TREC. The Texas Department of Licensing and Regulation does not have regulatory power over real estate-related matters.

Question 74

After real estate has been sold by the city or county to satisfy a delinquent tax lien, the defaulted owner of a homestead usually has a right to
A) file a judgment lien against the purchaser at the tax foreclosure sale.
B) redeem the property within a three-year time limit.
C) have the sale canceled by paying the back taxes and penalties.
D) redeem the property within a two-year time limit.

Answer 74

D) redeem the property within a two-year time limit.
Texas law provides for a statutory right of redemption (two years for homestead property) after the tax sale during which the defaulted owner may redeem the property by paying the amount paid at the tax sale, plus interest and other charges, including 25% of the purchase price during the first year and 50% during the second year.

Question 75

Which of the following requires a real estate license?
A) A person employed by a builder to sell the new homes
B) An onsite apartment manager who collects rent on behalf of the owner of the apartment complex
C) An executor selling a decedent’s building
D) A company that, for a referral fee, matches individuals from different parts of the country who want to exchange properties and assists them in doing so

Answer 75

D) A company that, for a referral fee, matches individuals from different parts of the country who want to exchange properties and assists them in doing so

Question 76

In Texas, licenses are renewed
A) on June 30 of each even-numbered year.
B) in the month issued.
C) biennially, in the month issued.
D) every two years in the month of the license holder’s birthday.

Answer 76

C) biennially, in the month issued.
Licenses are renewed every two years in the month issued. At the time of renewal, licensees must submit proof of completion of continuing education hours.

Question 77

Regarding the Real Estate Recovery Fund, payments
A) may result in the revocation of a license until the money is repaid plus interest.
B) are limited to $100,000 for claims against a single Texas real estate license holder and result in an automatic revocation of the license holder’s license.
C) are made at the request of a license holder who is unable to satisfy a judgment obtained by a member of the public against the license holder.
D) are limited to $50,000 for claims against a single Texas real estate license holder.

Answer 77

A) may result in the revocation of a license until the money is repaid plus interest.
No broker or sales agent is eligible to receive a new license until the license holder repays the money plus interest. Payments from the Real Estate Recovery Fund are limited to $100,000 for claims against any single license holder. TREC can take disciplinary action that might result in suspension or revocation of licensure privileges, but it is not automatic.

Question 78

If a real estate broker maintains a trust account, how many years does TREC require the broker to retain records of all deposits and withdrawals from the account?
A) One
B) Four
C) Two
D) No statutory limit

Answer 78

B) Four
A license holder maintaining a trust account must retain a documentary record of each deposit or withdrawal from the account for a period of four years for TREC purposes. The IRS requires a seven year period of time.

Question 79

In Texas, real estate commissions are
A) negotiable between the client and the broker.
B) determined by local groups of brokers.
C) set by law.
D) set by the Texas Real Estate Commission.

Answer 79

A) negotiable between the client and the broker.
The commissions are not determined by law, the Real Estate Commission, or a group of local brokers. Any attempt to set commission rates among competitors in the real estate industry would be considered an antitrust violation. A broker does not commit an antitrust violation by requiring all the broker’s own license holders to charge a specific rate or amount so long as the broker does not conspire or agree with competing brokers to do the same. All listings and buyer/tenant representation agreements in the firm belong to the broker. Therefore, the broker is only prescribing a commission amount for all of the broker’s own agreements.

Question 80

The License Act requires that every listing
A) be signed by the broker.
B) contain a notice to the seller about subagency.
C) be written.
D) has a definite termination date.

Answer 80

D) has a definite termination date.
All listings must specify a definite period during which the broker is to be employed and must have a definite termination date. Texas statute prohibits the use of automatic extensions of time in listing agreements.

Question 81

A buyer asks a sales agent with LMN Realty to show the buyer a house listed with XYZ Realty but does not wish to enter into an agency relationship. As long as the buyer is informed that LMN Realty represents the seller, the sales agent from LMN Realty may show the buyer the house, and the broker for LMN Realty may then act as a subagent of the seller if
A) LMN Realty has obtained the listing broker’s and the seller’s consent to subagency and the buyer is given the TREC Information About Brokerage Services form explaining the buyer’s right to be represented if desired and that compensation of the broker by a party does not necessarily determine that the broker represents that party.
B) this cannot occur.
C) the buyer signs a document stating that the buyer does not wish to be represented.
D) LMN Realty obtains XYZ Realty’s consent to subagency and the buyer is given the TREC Information About Brokerage Services form stating that both XYZ and LMN Realty represent the seller and that compensation of the broker by a party does not necessarily determine that the broker represents that party

Answer 81

A) LMN Realty has obtained the listing broker’s and the seller’s consent to subagency and the buyer is given the TREC Information About Brokerage Services form explaining the buyer’s right to be represented if desired and that compensation of the broker by a party does not necessarily determine that the broker represents that party.

Even if XYZ Realty routinely offers subagency to other brokers, XYZ’s seller client could decide to selectively reject a subagency relationship with LMN Realty for various reasons, including a perceived or actual conflict of interest; therefore, the consent of the seller should also be obtained. Even if the buyer allows, or declines to allow, LMN to act as his buyer agent, the license holder must still give the buyer the statutory written statement contained in the TREC Information About Brokerage Services form informing the buyer that the buyer has the right to be represented if the buyer so chooses.

Question 82

Who must notify a buyer in writing of the importance of getting an abstract examined by an attorney of the buyer's choice or obtaining an owner's title policy prior to closing?
A) Seller
B) Buyer's attorney
C) Title company
D) Broker or sales agent

Answer 82

D) Broker or sales agent
When an offer to purchase real estate is signed, a license holder shall notify each buyer in writing that the buyer should have the abstract examined by an attorney of the buyer’s choice or for the buyer to obtain an owner’s title policy. Failure to do so negates a broker’s ability to bring a civil suit for recovery of the commission. Failure to do so by the closing date is cause for suspension or revocation of a license. Note: All TREC promulgated forms already carry that written notice, and TAR has protected its members by including the notice in commercial sales contracts it provides for them. TAR also includes the statement in its buyer representation agreement form so that if a contract form is being used, such as a HUD contract, a builder’s contract, or a commercial owner’s contract, some of which may contain the statutorily required warning, the buyer broker will still have this base covered if he used the TAR buyer representation agreement. Non-REALTOR® license holders should take special precautions to ensure they give this written notice when using contract forms not promulgated by TREC. TREC has a separate optional (which is not promulgated) form for this purpose.

Question 83

A real estate sales agents’ licenses expires
A) December 31 of the third year of licensure.
B) March 31 of every odd-numbered year.
C) two years from the last day of the anniversary month of issuance.
D) June 30 of every even-numbered year.

Answer 83

C) two years from the last day of the anniversary month of issuance.

Question 84

The statutory right of redemption is the right of a defaulted to recover a property that has been foreclosed on. Texas does not have a statutory right of redemption when a property is foreclosed under a deed of trust. Texas does, however, have statutory right of redemption for properties foreclosed on for non-payment of taxes or HOA dues. What is the statutory period of redemption for property foreclosed on for non-payment of homeowner’s association dues?

Answer 84

180 days

Question 85

How long does a person have to pass the licensing examination?
A) Six months of making application
B) Three months of making application
C) One year of making application
D) One year of receiving eligibility ID number

Answer 85

C) One year of making application

Question 86

In Texas laws of descent, primary heirs of the deceased include all of the following EXCEPT
A) children.
B) spouse.
C) parents.
D) grandchildren.

Answer 86

D) grandchildren.

Question 87

An airline pilot told a broker about some friends who were looking for a new home. The broker contacted the friends and eventually sold them a house. May the broker give the airline pilot a gift for this valuable lead?
A) No, because only a thank-you note is permitted.
B) No, under no circumstances.
C) Yes, but not more than a combination of merchandise and cash exceeding $200.
D) Yes, as long as the gift was not prearranged, not cash, and the value does not exceed $50 retail value.

Answer 87

D) Yes, as long as the gift was not prearranged, not cash, and the value does not exceed $50 retail value.

Question 88

An exclusive right-to-sell listing agreement requires a
A) seller’s property disclosure form.
B) commitment for the owner’s title insurance coverage.
C) sales agent’s full name.
D) definite termination date not subject to prior notice.

Answer 88

D) definite termination date not subject to prior notice.
TRELA requires every representation agreement, except property management agreements, to include a definite termination date that is not subject to prior notice by either party. Failure to do so may not make the agreement unenforceable, but may subject the license holder to loss of license.

Question 89

Which of these statements is TRUE?
A) A lease for 15 months can be oral and still enforceable.
B) A lease for a term of more than 1 year must be in writing to be enforceable.
C) A lease for 1 year or more must be in writing to be enforceable.
D) A lease for less than 6 months must be in writing to be enforceable.

Answer 89

B) A lease for a term of more than 1 year must be in writing to be enforceable.

Question 90

A real estate license may be suspended or revoked for
A) specifying a definite termination date in a listing contract.
B) including “owner/agent” in an advertisement to sell the license holder’s own home.
C) publishing an advertisement that may create a misleading impression.
D) failing to properly account for the license holder’s business expenses.

Answer 90

C) publishing an advertisement that may create a misleading impression.
The commission may suspend or revoke a license if the license holder publishes or causes to be published an advertisement, including an advertisement by newspaper, radio, television, the internet, or display, that misleads or is likely to deceive the public, tends to create a misleading impression, or fails to identify the person causing the advertisement to be published as a licensed broker or agent.

Question 91

A real estate broker’s license is NOT required of persons who
A) agree to negotiate a trade for another for a fee.
B) advertise and lease their own properties.
C) attempt to negotiate the rental of real estate for another in exchange for one month’s rent.
D) offer to list real estate for sale.

Answer 91

B) advertise and lease their own properties.
A person acts as a broker or sales agent if the person, with the expectation of receiving valuable consideration performs or offers to perform for another person any act described by TRELA. Exemptions to licensing requirements include persons as onsite apartment managers, builder’s employees, and attorneys.

Question 92

As a result of a hearing, it was determined that a license holder had violated a provision of the licensing act. The maximum administrative penalty for the violation may NOT exceed
A) $1,000.
B) three times the damages incurred by the consumer.
C) $1,000 for each day the violation continued.
D) $5,000 for each day the violation continued.

Answer 92

D) $5,000 for each day the violation continued.

Question 93

A sales agent has developed a website to attract buyers and sellers. What, if anything, must the sales agent include?
A) Names of the sales agent on each page
B) Name of the home office of the company that holds the sales agent’s license and a list of states in which the company is licensed
C) Name of the sponsoring broker/company
D) Name and location of the office that holds the sales agent’s license and a list of states in which the sales agent is licensed

Answer 93

C) Name of the sponsoring broker/company

Question 94

A real estate license holder who receives an offer must
A) present offers from highest sales price to lowest price.
B) hold offers to make sure all buyers have a fair chance at the property.
C) present the offer as quickly as possible.
D) present any offers in the order they were received.

Answer 94

C) present the offer as quickly as possible.
All offers should be in writing and presented to the property owner as quickly as is reasonably practical. The TREC rules call for immediate presentation. No real estate broker or sales agent has the right to withhold an offer from a property owner.

Question 95

All of the following are included in the laundry list of 27 deceptive acts under the DTPS EXCEPT
A) advertising property with the intent of selling it as advertised.
B) making false statements of facts concerning the reasons for a property reduction.
C) representing that a warranty guarantees or confers rights or remedies which it does not include.
D) representing that something is new when it is not

Answer 95

A) advertising property with the intent of selling it as advertised.

Question 96

An unlicensed assistant may do all of the following EXCEPT
A) make calls to determine whether a person is interested in buying or selling property, or has property they wish to sell, and if so, make an appointment for a licensed agent to talk to them.
B) place newspaper advertisements as directed by the broker.
C) open a property or accompany inspectors.
D) place for sale signs.

Answer 96

A) make calls to determine whether a person is interested in buying or selling property, or has property they wish to sell, and if so, make an appointment for a licensed agent to talk to them.

Question 97

In Texas, if an owner defaults on her mortgage loan and the property is sold at a foreclosure sale, the owner may redeem the property
A) prior to the sale, under the statutory right of redemption.
B) after the sale, under the statutory right of redemption.
C) prior to the sale, under the equitable right of redemption.
D) after the sale, under the statutory right of reinstatement.

Answer 97

C) prior to the sale, under the equitable right of redemption.
The homeowner has the right of equity of redemption before the sale but there is no statutory right of redemption after the foreclosure sale takes place due to loan foreclosure.

Question 98

Upon obtaining a listing, a broker or a licensed sales agent is obligated to
A) place advertisements in the local newspapers.
B) give the owner signing the listing a legible, signed, true, and correct copy of the listing upon the owner’s request.
C) cooperate with every real estate office wishing to participate in the marketing of the listed property.
D) set up a listing file and issue it a number to be in compliance with the Texas Real Estate License Act and Commission Rules

Answer 98

B) give the owner signing the listing a legible, signed, true, and correct copy of the listing upon the owner’s request.

Question 99

The Texas Real Estate Commission may undertake an investigation of a license holder based on all these grounds EXCEPT
A) random selection of license holders.
B) written complaint submitted by a consumer.
C) its own initiative.
D) motion from the members of the Commission.

Answer 99

A) random selection of license holders.
The Commission may not initiate a random search for investigations of license holders. There must be some valid reason. TREC can undertake an investigation on its own initiative, a motion from the Commission members, or a submitted written complaint.

Question 100

A husband owns a rental property occupied by a tenant. The wife has no ownership interest in the property. If the husband wants to sell the property, who is required by law to sign the listing agreement?
A) Husband only
B) Husband, wife, and tenant
C) Husband as owner and the tenant in possession
D) Husband and the wife because they are a married couple

Answer 100

A) Husband only
Only the husband must sign the listing contract since the property is not the residence of the wife. To insure the title, a title company may require the wife to sign the deed or a separate document that declares that she has no ownership or homestead interest in the property.

Question 101

When a licensed broker changes his place of business,
A) TREC must be notified within 10 days of the move to the new location.
B) the new address must be approved by the Commission.
C) a new license will be issued for a full two year term.
D) a license will be issued by the Commission with the new address when the broker’s license comes due for renewal.

Answer 101

A) TREC must be notified within 10 days of the move to the new location.

Question 102

To be eligible for a real estate sales agent’s license all of these are required EXCEPT
A) be a citizen of the U.S. or a legal alien.
B) be a legal resident of Texas at the time of filing.
C) have at least an associate’s degree from a college or university.
D) be sponsored by a sponsoring broker.

Answer 102

C) have at least an associate’s degree from a college or university.
In order to have an active real estate sales agent’s license a person must be at least 18 years of age, a citizen of the U.S. or a legal alien, a legal resident of Texas at the time of filing, sponsored by a sponsoring broker, and complete 180 classroom hours of core education.

Question 103

A sales agent is not satisfied with her present real estate company and has decided to become associated with another real estate brokerage company. Before the sales agent may begin actively selling for the new company, the
A) new broker is solely responsible for notifying the Commission of the change and must send in the proper form.
B) first broker must transfer the sales agent’s license to the new office.
C) sales agent and the new broker must notify the Commission immediately and submit the appropriate fee.
D) sales agent is solely responsible for requesting the transfer of her license to the new office after paying all fees within 10 days of the transfer to the new location.

Answer 103

C) sales agent and the new broker must notify the Commission immediately and submit the appropriate fee.
The present broker is required to return the sales agent’s license to the Real Estate Commission upon notification by the sales agent that the relationship is being severed. The sales agent and the new sponsoring broker must submit the Salesperson Sponsorship Form and appropriate fee to the Texas Real Estate Commission. The sales agent may begin work immediately for the new broker as soon as the form and fee are electronically submitted or placed in the mail.

Question 104

All of the following activities, when performed for another person and for a fee require a person to be licensed as a broker EXCEPT
A) an attorney licensed in Texas acting on behalf of their client in a real estate transaction, but does not have a broker’s license.
B) a person procuring or assisting in procuring a prospect to affect the sale, exchange, or lease of real estate.
C) a person controlling the acceptance or deposit of rent from a resident of a single-family residential property unit.
D) a brokerage managing properties on behalf of several property owners

Answer 104

A) an attorney licensed in Texas acting on behalf of their client in a real estate transaction, but does not have a broker’s license.
An attorney licensed in Texas may act on behalf of their client, however the attorney may only receive compensation directly from their client. Unless the attorney is also a license holder under a broker or a licensed real estate broker, the attorney shall not be able to accept any part of the brokerage commissions. Note that any attorney attempting to obtain a Texas broker license must first qualify for and serve the required time with a sales agent’s license, sponsored by a broker, before being qualified to become a licensed broker. An attorney licensed in Texas is exempt from the requirements of the act, but cannot receive brokerage commission, sponsor real estate sales agents, or serve as the designated officer or manager of a licensed corporation or limited liability company, unless the attorney is also licensed as a real estate broker.

Question 105

In regards to rebates, all of the following are true EXCEPT
A) accepting an undisclosed rebate or profit on an expenditure for a principal demonstrates lack of ability to perform with honesty, trustworthiness, and integrity.
B) if a real estate license holder accepts a rebate or direct profit on an expenditure made for a principal, it must be disclosed to all parties in the transaction.
C) it is illegal for a broker to rebate a portion of the commission to a principal to a transaction.
D) title insurance companies are prohibited from paying rebates to real estate license holders.

Answer 105

C) it is illegal for a broker to rebate a portion of the commission to a principal to a transaction.
Under certain circumstances, it is legal for a broker to rebate a portion of the commission to the principal if the payment is strictly a rebate and is not made for a real estate service, such as a referral. The rebate may be in any form such as cash, gift certificates, appliances, frequent flier certificates, et cetera.

Question 106

An unmarried surviving spouse of a veteran is eligible for a loan from the Texas Veterans Land Board if
A) the veteran is missing in action.
B) the veteran died from service-connected causes.
C) the spouse was a resident of Texas when the veteran entered the military.
D) the veteran died in the line of duty.

Answer 106

C) the spouse was a resident of Texas when the veteran entered the military.

Question 107

Under the provisions of the TRELA, TREC may
A) adopt rules regarding advertising that restricts the person’s personal appearance or use of the person’s voice in an advertisement.
B) adopt rules regarding advertising to prohibit a false, misleading, or deceptive practice by the person.
C) adopt rules regarding advertising that restricts the person’s advertisement under an assumed or trade name that is authorized by a law of this state and registered with the commission.
D) adopt rules regarding advertising that restricts the use of any advertising medium.

Answer 107

B) adopt rules regarding advertising to prohibit a false, misleading, or deceptive practice by the person.
TREC may adopt rules regarding advertising to prohibit a false, misleading, or deceptive practice by the person. However, TREC may not adopt a rule which restricts the use of any advertising medium; restricts the person’s personal appearance or use of the person’s voice in an advertisement; relates to the size or duration of an advertisement used by the person; restricts the person’s advertisement under an assumed or trade name that is authorized by a law of this state and registered with the commission; or requires the term broker, agent, or a similar designation or term, a reference to the commission, or the person’s license number to be included in the person’s advertisement.

Question 108

The Texas Veterans Housing Assistance Program (VHAP) requires the veteran to occupy the property within how many days after closing?

Answer 108

60 days

Question 109

A seller told a broker that she wanted to net $50,000 when she sold her house. The broker accepted the listing and did not specify a maximum amount for the broker’s commission in the listing agreement. The broker sold the house for $160,000. The broker gave $50,000 to the seller and kept the rest. All of the following are true EXCEPT
A) the broker took unfair advantage of the client and failed to put the client’s interest above his own.
B) as the seller’s agent, the broker had a duty to sell the house for the best possible price for his client while limiting the broker to only a specified commission.
C) the broker should have given the seller his true opinion of the market regarding her house.
D) the broker’s commission exceeds statutory and NAR guidelines.

Answer 109

D) the broker’s commission exceeds statutory and NAR guidelines.
Texas statutes and NAR do not set guidelines for commissions. While net listings are legal in Texas, this example illustrates the conflict of interest that a net listing provokes. The broker was not working in the best interest of the client and failed to limit himself to a specified amount of commission as required by law.

Question 110

When should a real estate license holder provide the Information About Brokerage Services form to a party to a real estate transaction?
A) At first contact between the prospect and license holder
B) At the time of the first substantive dialogue with the party concerning a specific real property
C) At an open house
D) At the closing table

Answer 110

B) At the time of the first substantive dialogue with the party concerning a specific real property
In Texas, a license holder must present the Information About Brokerage Services form at the time of the first substantive dialogue with the party. Substantive dialogue is defined as “a meeting or written communication that involves a substantive discussion relating to specific real property.” The term substantive dialogue does not include the open house exception rule or if the parties have already signed a contract.

Question 111

A license holder who draws an earnest money contract instead of using a form promulgated for a specific purpose
A) is acting in the best interest of the seller if no commission is charged.
B) may do so provided proper disclosure is made to all parties.
C) may have the license holder’s license revoked or suspended.
D) will have the license holder’s license revoked or suspended

Answer 111

D) will have the license holder’s license revoked or suspended
The Commission shall suspend or revoke a license of a person who drafts an instrument that transfers or affects an interest in real property if the license holder is not a licensed attorney. Completing a contract form promulgated by TREC for use in a specific transaction does not constitute the Unauthorized Practice of Law

Question 112

A licensed sales agent obtains a listing. Several days later, the sales agent meets prospective buyers at the property and tells them, “Our office represents the seller for this property, so I’m very familiar with it.” Under these circumstances, the sales agent
A) has created an intermediary relationship in violation of Texas law.
B) is in violation of state regulations because the listing belongs to the broker.
C) has not properly disclosed agency relationship.
D) has properly disclosed agency relationship with the seller.

Answer 112

D) has properly disclosed agency relationship with the seller.
In Texas, a license holder must disclose an existing agency relationship at the first contact with another potential party to the transaction or that party’s agent, which this sales agent has done in the statement. However, had the license holder used the term sales agent or broker, the disclosure might have been questionable.

Question 113

Which is generally classified as community property?
A) Income earned from separate property
B) Inheritance after the marriage
C) Proceeds from the sale of separate property after the marriage
D) Settlement proceeds for personal injury

Answer 113

A) Income earned from separate property
Income earned from separate property is generally classified as community property. Separate property includes property acquired during marriage by gift, inheritance, purchase from separate funds, sale of separate property, settlement or judgment for personal injury, or written contract with a spouse.

Question 114

The difference between forms promulgated and forms approved by the Commission is that
A) promulgated forms must be used for commercial property whereas approved forms must be used for residential property.
B) the license holder must present the promulgated forms, whereas the license holder may use the approved forms.
C) the license holder may present the promulgated forms, whereas the license holder must present the approved forms.
D) there is no significant difference between the two.

Answer 114

B) the license holder must present the promulgated forms, whereas the license holder may use the approved forms.
A license holder may present a form that has been approved by the Commission. Once a contract form or addendum has been promulgated by the Commission, though, it must be the forms presented by a license holder for that particular contract situation. There are four exceptions to this requirement: transactions in which the license holder is functioning solely as a principal, not as an agent; transactions in which an agency of the U.S. government requires a different form to be used; transactions for which a contract form has been prepared by the property owner or prepared by an attorney and required by the property owner and transactions for which no standard contract form has been promulgated by the Texas Real Estate Commission, and the license holder uses a form prepared by an attorney-at-law licensed by this state and approved by the attorney for the particular kind of transactions involved or prepared by the Texas Real Estate Broker-Lawyer Committee and made available for trial use by license holders with the consent of the Commission.

Question 115

In order to have an active real estate sales agent’s license a person must be at least 18 years of age, a citizen of the U.S. or a legal alien, and a legal resident of Texas
A) at least 90 days prior to making application.
B) at the time of filing an application.
C) at least one year prior to making application.
D) at least 30 days prior to making application.

Answer 115

B) at the time of filing an application.

Question 116

Which of the following actions is required of a landlord of residential property?
A) Change the locks within seven days after a new tenant takes occupancy
B) Provide functioning smoke detectors by periodically replacing batteries
C) Change the locks prior to granting possession to a new tenant
D) Provide double-cylinder deadbolts on each exterior door

Answer 116

A) Change the locks within seven days after a new tenant takes occupancy

Question 117

A sales agent for a brokerage company obtained a written listing agreement with a seller authorizing the sales agent’s broker to act as an intermediary and to make appointments should the situation arise. Another sales agent for the same brokerage company has an oral agreement to represent a buyer. The buyer also agreed orally that the broker could act as an intermediary and make appointments should the situation arise. The broker may
A) not act as an intermediary or make appointments under this scenario.
B) legally act as an intermediary and make appointments to both the buyer and the seller because they are separate associates.
C) act as an intermediary but may not make appointments to either the buyer or the seller.
D) legally act as an intermediary but may appoint a sales agent only to the seller.

Answer 117

A) not act as an intermediary or make appointments under this scenario.

Question 118

An unlicensed assistant may
A) open doors for perspective buyers.
B) make telephone calls to FSBOS in an attempt at getting listing appointments for the license holder they work for.
C) host an open house.
D) set appointments to show listings.

Answer 118

D) set appointments to show listings.
An unlicensed assistant may not host an open house, open doors for perspective buyers, or make telephone calls to FSBOS in an attempt at getting listing appointments for the license holder they work for.

Question 119

All trust funds received by a broker on behalf of the principals must be deposited in the broker’s escrow or trust account or with an escrow agent named in the contract by the close of business on the
A) third working day, or as agreed upon in writing by the parties to the contract.
B) second working day, or as agreed upon in writing by the parties to the contract.
C) tenth working day, or as agreed upon in writing by the parties to the contract.
D) fifth working day, or as agreed upon in writing by the parties to the contract.

Answer 119

B) second working day, or as agreed upon in writing by the parties to the contract.
TREC rules require that other people’s money, such as earnest money and security deposits, if held by the broker as escrow agent or trustee for the funds, must be deposited by the close of business the second working day the license holder receives the money as escrow agent in a real estate transaction after the agreement becomes a binding contract. That is unless another time has been agreed to by the parties in writing. Note: The TREC promulgated contract forms are worded such that neither broker is required by the contract to ever even see the earnest money check. The TREC promulgated contract forms state that “upon execution of this contract by all parties, Buyer shall deposit….” This contractual provision places the burden for deposit of the earnest money on the buyer and does not allow for a “close of business the second working day” provision. Under the terms of the buyer’s offer, if using a TREC promulgated form, the seller’s broker appears to have no contractual right to require that the earnest money or earnest money check be submitted with the buyer’s offer. Requiring photocopies of the buyer’s earnest money check to show to the seller is likely a meaningless and unnecessary gesture.

Question 120

Regarding a competitive market analysis or a broker’s price opinion, which of the following statements is TRUE?
A) It is illegal for a Texas broker or sales agent to charge a fee for preparing a broker’s price opinion.
B) It may be regarded as an informal appraisal.
C) It must contain a prescribed statement that clearly establishes that it is not and should not be regarded as an appraisal.
D) The only difference between a broker’s price opinion and an appraisal is the length of the report.

Answer 120

C) It must contain a prescribed statement that clearly establishes that it is not and should not be regarded as an appraisal.
A broker’s price opinion (BPO) or a competitive market analysis (CMA) can be offered by a broker (or sales agent in the name of the broker) who may charge a separate fee for preparing either. If charging a separate fee for the BPO or the CMA, and neither follows the Uniform Standards of Professional Appraisal Practice, TREC Rules provides (a) specific language be included to inform anyone reading the opinion that guidelines for development of an appraisal have not been followed. The TREC Rules use this language: “THIS IS AN OPINION OR COMPARATIVE MARKET ANALYSIS AND SHOULD NOT BE CONSIDERED AN APPRAISAL. In making any decision that relies upon my work, you should know that I have not followed the guidelines for development of an appraisal or analysis contained in the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation.”

Question 121

Which of the following may be submitted either at the time of application or subsequent to application?
A) Copies of course completion certificates
B) Required fees
C) Written application
D) Sales agent sponsorship form

Answer 121

D) Sales agent sponsorship form

The sales agent sponsorship form does not have to be submitted at the time of application.

Question 122

A realty company has entered into agency agreements with both a seller and a buyer. The seller and the buyer have given written authorization for the broker to function as an intermediary. A sales agent with the realty company has previously been working for, but not yet appointed to, the buyer. The sales agent previously working for, but not appointed to, the seller and the sales agent working with, but not appointed to, the buyer may legally disclose
A) buyer will pay more than the offering price.
B) the buyer’s financial qualifications.
C) seller will accept less than the listing price.
D) market data (but not analysis) to the seller and buyer.

Answer 122

D) market data (but not analysis) to the seller and buyer.
Legally, the sales agent carrying out intermediary duties on behalf of the sales agent’s broker (i.e., not yet appointed and still being impartial) may likely be able to provide raw market data. However, no analysis of that data, a comparative market analysis (CMA), or even an opinion of negotiation could be provided to either party once an intermediary relationship has been properly authorized and commences until lawful appointments are made. Supplying merely the raw data would likely be considered a fair and impartial act under the intermediary role, but not under a CMA. Since a CMA is by definition an analysis or an opinion of the market, a CMA could not be done on the property for the buyer without appointments being properly made prior to the giving of advice or opinions or preparation of a CMA for the buyer.

Question 123

In Texas, all of the following statements are true regarding the execution of corporate deeds EXCEPT
A) the authority of an officer must be granted by a resolution passed by its board of directors.
B) a corporation can convey real estate by authority granted by a proper resolution passed by its board of directors.
C) a corporation can convey real estate by authority granted by its bylaws.
D) the signature of at least two authorized officers is required.

Answer 123

D) the signature of at least two authorized officers is required.

Question 124

A broker or sales agent who fails to give the statutory title notice to the buyer at or before closing
A) must forfeit the entire commission on the subject transaction but in so doing is absolved of any other liability.
B) is required to show cause as to why such disclosure was not made.
C) will have the license suspended without reinstatement for five years.
D) may have the license suspended or revoked and cannot collect a commission on the subject sale.

Answer 124

D) may have the license suspended or revoked and cannot collect a commission on the subject sale.
Failure to advise a buyer in writing before the closing of a real estate transaction that the buyer should obtain title assurance is grounds for suspension or revocation of a license; specifically, the agent must advise the buyer to have the abstract covering the real estate that is the subject of the contract examined by an attorney chosen by the buyer or be provided with or obtain a title insurance policy.

Question 125

A broker’s unlicensed assistant worked late nights and weekends to help ensure the successful closing of a difficult transaction. The assistant’s extra work included making several phone calls to the prospective buyers, encouraging them to accept the seller’s counteroffer. Largely because of the assistant’s efforts, the sale went through with no problem. Now the broker wants to pay the assistant a percentage of the commission “because the assistant has really earned it.” Under Texas law, the broker may
A) not pay a commission to the assistant under the facts presented here. They are both in violation of rules regarding unlicensed assistants.
B) compensate the assistant in the form of a commission under the circumstances described here.
C) pay a commission to the assistant only if the assistant is an independent contractor of another broker.
D) not pay the assistant a cash commission, but is permitted to make a gift of tangible personal property.

Answer 125

A) not pay a commission to the assistant under the facts presented here. They are both in violation of rules regarding unlicensed assistants.

Question 126

In Texas, a defaulted borrower must be given how many days to cure the default prior to the lender accelerating the loan and calling it due?
A) 30 days to bring payments current (equitable redemption)
B) 60 days to bring payments current (equitable redemption)
C) 45 days to bring payments current (equitable redemption)
D) 20 days to bring payments current (equitable redemption)

Answer 126

D) 20 days to bring payments current (equitable redemption)
Borrowers in default must be given a demand for payment notice, which allows them 20 days to bring payments current (equitable redemption).

Question 127

A married couple’s community property includes
A) proceeds received as a beneficiary from a non-partnership life insurance policy.
B) property inherited by either spouse.
C) real estate acquired by either spouse as a gift.
D) wages earned by either spouse.

Answer 127

D) wages earned by either spouse.

Question 128

A person acting as a real estate broker, real estate sales agent, or a right-of-way agent without a license or registration is guilty of a Class A misdemeanor that is punishable by a fine of NOT
A) neither less than $3,000 nor more than $4,000.
B) more than $4,000.
C) neither less than $1,000 nor more than $2,000.
D) more than $2,000

Answer 128

B) more than $4,000
A violation of the License Act by an unlicensed person is a Class A misdemeanor, which is punishable by up to a $4,000 fine or imprisonment for a term not to exceed one year or both.

Question 129

All of the following are true of the Texas Deceptive Trade Practices Act EXCEPT
A) recovery of court costs and attorney fees is possible if the lawsuit was frivolous or harassing.
B) transmittal of written information prepared by others along with a written statement of reliance on such information is a defense.
C) recovery is limited to economic damages if the act is committed knowingly.
D) a reasonable offer of settlement made within specified time limits is a defense.

Answer 129

C) recovery is limited to economic damages if the act is committed knowingly.
Recovery under the Deceptive Trade Practices Act (DTPA) is limited to economic damages—costs of repair and replacement. However, if the defendant is found to have committed the act knowingly, then damages for mental anguish may also be awarded (and in some cases, up to three times the amount of economic damages). If the defendant is found to have committed the act intentionally, then the economic and mental anguish damages may be trebled

Question 130

All of these transactions are exempt from the duty to provide a written disclosure of property condition under the Texas Property Code EXCEPT
A) conveyance of a primary residence from one former spouse to another under a divorce settlement agreement.
B) sale by a father (co-owner) to his son (co-owner).
C) foreclosure sale.
D) sale by a real estate license holder of a previously occupied single-family residential property

Answer 130

D) sale by a real estate license holder of a previously occupied single-family residential property
With a few exceptions, the Seller’s Disclosure of Property Condition applies to the transfer of most previously occupied single-family residential dwelling units. It does not apply to a duplex, triplex, et cetera, even though they are residential. It does not apply to commercial property, a foreclosure sale, a transfer between co-owner to co-owner, new homes not previously occupied, or a conveyance from one former spouse to another under a divorce settlement agreement. The Property Code places on the seller, not the real estate license holder, the requirement to provide the written disclosure notice. A license holder, acting as the agent of the seller has a fiduciary duty to inform his client about the requirements of the Property Code.

Question 131

Who is responsible for filling in the effective date on the promulgated purchase contracts?
A) Seller
B) Both brokers
C) Buyer
D) Last party to sign

Answer 131

C) Buyer
The contract calls for the broker to fill in the date of final acceptance. TREC Rule 535.146 requires that unless a different time period is agreed upon in writing, any trust money, including earnest money received by the broker, must be delivered to an authorized escrow agent (or deposited in a trust account) within a reasonable time. The commission has determined “a reasonable time” to be not later than the close of business of the second working day after the date the broker receives the trust money.

A buyer who wants to deposit the money himself should remember Paragraph 5 of TREC contracts, which provides that the buyer shall deposit the earnest money upon execution of the contract. The deposit of earnest money is a buyer obligation once the contract is effective. Like most performance obligations in the contract, time is not “of the essence.” Therefore, the buyer has a reasonable amount of time after the contract is executed by all parties to deposit the earnest money. “Reasonable time” depends upon the circumstances and could be decided in court if there were a dispute over it.

Question 132

A broker signs a listing agreement with a seller. The agreement contains the following clause: “If the property has not been sold after three months from the date of this signing, this agreement will automatically continue for additional three-month periods thereafter until the property is sold.” Based on these facts, the agreement
A) is legal under Texas law because it contains a reference to a specific time limit.
B) provides grounds for loss of the broker’s license.
C) automatically receives a statutory six month listing period to this open listing in Texas.
D) is legal under Texas law because the list periods are for fewer than six months each.

Answer 132

B) provides grounds for loss of the broker’s license.

Question 133

Which statement BEST describes the role of a broker acting as an intermediary in Texas?
A) The broker is paid by the seller and must not disclose any confidential information to the buyer.
B) The intermediary cannot remain impartial to the interests of both parties and must maintain confidentiality with both parties.
C) The broker represents both the buyer and seller and may disclose confidential information unless specifically instructed not to do so.
D) The intermediary’s duties are more restricted than a true agent’s duty to one principal.

Answer 133

D) The intermediary’s duties are more restricted than a true agent’s duty to one principal.
The intermediary must remain impartial to the interests of both parties and must maintain confidentiality with both parties. A real estate broker acting as an intermediary is a limited agent of both parties and is specifically prohibited from disclosing confidential information unless instructed in writing or the information materially relates to the condition of the property.

Question 134

A buyer contacts a real estate broker and indicates an interest in purchasing a home listed by the brokerage. Without entering into a buyer agency relationship with the buyer, a sales agent from the real estate office can do all of the following EXCEPT
A) provide the buyer with information on properties for sale in the area.
B) give the buyer information on mortgage interest rates and terms.
C) explain to the buyer about buyer agency, seller agency, and acting as an intermediary.
D) disclose the motivation for selling of a seller represented by the broker as their agent.

Answer 134

D) disclose the motivation for selling of a seller represented by the broker as their agent.
A license holder working with a customer must always keep the client’s personal information confidential. Such confidential information could include the motivation to buy or sell.

Question 135

An unlicensed assistant may
A) make telephone calls to FSBOS in an attempt at getting listing appointments for the license holder they work for.
B) host an open house.
C) set appointments to show listings.
D) open doors for perspective buyers.

Answer 135

C) set appointments to show listings.
An unlicensed assistant may not host an open house, open doors for perspective buyers, or make telephone calls to FSBOS in an attempt at getting listing appointments for the license holder they work for.

Question 136

In any real estate sales transaction that a broker negotiates, the broker would be well advised to do all of the following EXCEPT
A) keep copies of all documents involved in the transaction in the broker’s files for five years after the year in which the transaction was closed.
B) provide the buyer the broker’s personal opinion of the condition of the seller’s title to the property.
C) make sure that the closing disclosure is accurate and that a copy of it is delivered to both the buyer and the seller.
D) make sure that the written purchase and sales agreement includes all of the terms of the parties’ agreement

Answer 136

B) provide the buyer the broker’s personal opinion of the condition of the seller’s title to the property.
Offering an opinion of title is a legal opinion and would constitute the Unauthorized Practice of Law. It is not the responsibility of the brokerage to correct or deliver the closing disclosure.

Question 137

The Texas Real Estate Commission has all of the following powers EXCEPT
A) compose the examination questions on the state exam.
B) make and enforce the rules by which all real estate license holders must abide.
C) administer the exams given at the testing sites.
D) enact the laws that govern real estate license holders.

Answer 137

D) enact the laws that govern real estate license holders.
The Real Estate Commission is authorized to adopt and enforce rules that have the force of law. Only the legislature, however, may enact law.

Question 138

A sales agent engaged in activities that constitute violations of the Texas Fair Housing Act, including blockbusting and discrimination on the basis of disability. The sales agent also cashed a $25,000 earnest money check from a prospective buyer and used the proceeds to buy a new car. The sales agent’s sponsoring broker was unaware of these activities. In the event a complaint is filed with the Texas Real Estate Commission, the sponsoring broker
A) will be required to pay any fine imposed against the sales agent out of the broker’s personal funds.
B) might not have his license revoked as long as the broker was not negligent in supervising the activities of the sales agent.
C) is legally responsible and must receive the same disciplinary action as the sales agent, regardless of whether the broker knew the violations had occurred.
D) will be held liable for the Texas Fair Housing Act violations only.

Answer 138

A) will be required to pay any fine imposed against the sales agent out of the broker’s personal funds.
A broker is liable to the Commission, the public, and the broker’s clients for any conduct engaged in by the broker or a sales agent associated with or acting for the broker. By rule, however, TREC mitigates the responsibility of the broker by stating that the broker is responsible only for the authorized act of the sales agent. A strong training program and/or a well-written office policy manual prohibiting such activity would probably result in TREC not suspending or revoking the broker’s license if the broker could show that the broker was not aware of the sales agent’s actions and the sales agent exceeded the scope of the authority delegated to the sales agent by the broker. That said, a broker could face disciplinary action for “acting negligently or incompetently by failing to monitor and properly supervise the brokerage activities of a sponsored sales agent.”

Question 139

TREC recognizes two levels of real estate licensing broker and
A) appraiser.
B) sales person.
C) broker associate.
D) sales agent.

Answer 139

D) sales agent.

Question 140

In Texas, a broker’s license may be suspended or revoked for all of these actions EXCEPT
A) employing an unlicensed person to perform acts of a broker.
B) helping another person cheat on the licensing examination.
C) depositing trust funds into the broker’s escrow account.
D) displaying a For Sale sign on a property without the owner’s written consent.

Answer 140

C) depositing trust funds into the broker’s escrow account.

Question 141

What is the last thing written on the TREC-promulgated contract form to execute the contract?
A) Listing broker's signature
B) Date
C) Buyer's signature
D) Seller's signature

Answer 141

B) Date
After all parties have agreed on the terms, the executed date is entered on the form by the real estate license holder. The parties are now in an executory contract.

Question 142

A consumer files a written complaint with the Texas Real Estate Commission regarding a license holder. TREC must investigate the complaint based on
A) assigned priorities, using a risk based approach regardless of date received.
B) the date received, with the most recent complaints investigated first.
C) whether the complaint involves a sales agent or broker license holder.
D) the date received, with the oldest complaints investigated first.

Answer 142

A) assigned priorities, using a risk based approach regardless of date received.
The Commission must assign priorities and investigate complaints using a risk based approach. Under this system, the Commission takes into consideration the degree of potential or immediate harm to the consumer, the severity of the allegation, and the complaint history of the license holder.

Question 143

A Texas homestead property is being foreclosed for nonpayment of ad valorem taxes. How long does the homeowner losing the property have to redeem it after the foreclosure sale?
A) 6 months
B) 24 months
C) 60 months
D) 3 months

Answer 143

B) 24 months
The statutory right of redemption period is 24 months for a homestead or agricultural property and only 6 months for non-homestead property.

Question 144

In Texas, an unlicensed real estate assistant may perform all of these activities EXCEPT
A) compute commission checks.
B) explain simple contract documents to prospective buyers.
C) prepare and deliver flyers and promotional materials.
D) assemble legal documents required for a closing.

Answer 144

B) explain simple contract documents to prospective buyers.
Only a licensed person may explain simple contract documents to prospective buyers as this would be considered an act of brokerage. An unlicensed person may perform bookkeeping such as computing commission checks, performing secretarial work such as assembling legal documents for closing, and writing advertising under the direction of a license holder. These activities are not considered to be acts of licensure.

Question 145

A seller has no knowledge of any plumbing system problems on the property the seller is selling. In actuality, however, the pipes are seriously corroded and will need to be replaced soon. On the Seller’s Disclosure of Property Condition, when responding to whether the seller is aware of plumbing system problems, the seller should enter
A) “Unknown.”
B) nothing because the seller is not required to respond to this question.
C) “No.”
D) “Yes.”

Answer 145

C) “No.”
The notice “shall be completed to the best of the seller’s belief and knowledge as of the date the notice is completed and signed by the seller. If the information required by the notice is unknown to the seller, the seller shall indicate that fact on the notice and by that act is in compliance….”

Question 146

If the seller chooses not to allow intermediary status,
A) the seller agrees that the broker will not show the property to any of the broker’s buyer clients.
B) the broker may show the property to his clients but must reclassify them as customers.
C) the broker will facilitate the sale between the seller and any of the broker’s buyer clients.
D) the property may only be shown by cooperating brokers.

Answer 146

A) the seller agrees that the broker will not show the property to any of the broker’s buyer clients.

Question 147

When terminating the sponsorship of a sales agent, which of the following is required?
A) The sales agent is responsible for notifying the Real Estate Commission of the change.
B) The broker must notify the sales agent in writing of the termination and immediately return the sales agent’s license to the Real Estate Commission.
C) The broker must return the sales agent’s license, along with a letter of termination, to the Real Estate Commission.
D) The broker must give the sales agent an official letter of termination that the sales agent can send to the Real Estate Commission.

Answer 147

B) The broker must notify the sales agent in writing of the termination and immediately return the sales agent’s license to the Real Estate Commission.

Question 148

When a spouse dies intestate, the deceased’s community property passes to
A) the child or children of the surviving spouse.
B) the heirs, according to the law of descent.
C) the parents of the deceased.
D) the individual or individuals named in the deceased’s will.

Answer 148

B) the heirs, according to the law of descent.

Question 149

Which of the following is TRUE in filing a court action to collect unpaid fees?
A) A broker must have a written and signed agreement showing how the fees were to be paid.
B) A broker must have a written and signed agreement showing when fees would be owed.
C) A broker must prove they were licensed at the time the fees were due.
D) A broker must advise buyers to obtain a title opinion of any abstract or a title insurance policy.

Answer 149

D) A broker must advise buyers to obtain a title opinion of any abstract or a title insurance policy.

Question 150

Which statement is TRUE of payment made from the Real Estate Recovery Trust Account?
A) The license is revoked automatically and a new one will not be issued until the trust account has been reimbursed, with interest.
B) The license will be revoked if the trust account is not reimbursed within six months, with interest.
C) The license may be revoked if payment is made from the recovery trust account.
D) The license is suspended immediately but will be reissued upon reimbursement of the trust account, with interest.

Answer 150

C) The license may be revoked if payment is made from the recovery trust account.

Question 151

The minimum services requirement of the License Act dictates all of the following EXCEPT
A) a limited service broker may not instruct another broker to negotiate directly with the client.
B) a limited service broker must inform the client if material information related to the transaction is received by the broker.
C) a limited service broker may instruct another broker to negotiate directly with the client.
D) a limited service broker must answer the client’s questions and present any offer to or from the client.

Answer 151

C) a limited service broker may instruct another broker to negotiate directly with the client.

Question 152

A broker may rebate a portion of the commission to the principal
A) if the rebate is a non-cash rebate.
B) if the rebate is for a referral.
C) for performing a real estate service.
D) if the rebate is not made for a real estate service.

Answer 152

D) if the rebate is not made for a real estate service.