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Real Estate Contracts Form and Addenda > Unit 8 > Flashcards

Unit 8 Flashcards

1
Q

Question 1
Question: Typically, where is the agreement for compensation between brokers if the property is listed in the MLS?

Answer Choices:
A. The last page of the residential contract
B. Paragraph 8 of the residential contract
C. There is no agreement for compensation
D. The subagency compensation blank in the MLS

A

Correct Answer: D – The subagency compensation blank in the MLS

Response Feedback: The answer is the subagency compensation blank in the MLS. When a listing broker enters a property in MLS and enters an amount under SAC or BAC, that is an offer to selling agents to participate in the sale and receive compensation of a certain amount. Learning Objective 8.2

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2
Q

Question 2
Question: Which of the following disclosures related to the sale of a house is prohibited?

Answer Choices:
A. Suicide on the property
B. Accidental drowning of a previous occupant in a hot tub
C. The racial breakdown of the neighboring high school
D. Accidental dismemberment with a power tool

A

Correct Answer: C – The racial breakdown of the neighboring high school

Response Feedback: The answer is the racial breakdown of the neighboring high school. Anything based on fair housing discrimination should not be disclosed. The remaining answers are optional disclosures. Learning Objective 8.4

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3
Q

Question 3
Question: A buyer asks the seller’s agent about the racial makeup of the neighborhood. Which of the following is the best way to deal with the question?

Answer Choices:
A. It is permissible for the agent to respond to direct questions about race.
B. The agent should ask the seller what the seller wants him to disclose about the racial makeup in the area.
C. The agent is required to disclose the information.
D. The agent should not disclose any information based on race.

A

Correct Answer: D – The agent should not disclose any information based on race.

Response Feedback: The answer is the agent should not disclose any information based on race. A good business practice is to never disclose anything about the most stringent fair housing protected classes. Learning Objective 8.4

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4
Q

Question 4
Question: What is the maximum civil penalty for a violation of the DTPA?

Answer Choices:
A. $15,000 per violation
B. $10,000 per violation
C. $20,000 per violation
D. $5,000 per violation

A

Correct Answer: C – $20,000 per violation

Response Feedback: The answer is $20,000 per violation. In addition to consumer compensation, the DTPA allows for civil penalties of up to $20,000 per violation, with an additional penalty of up to $250,000 for deceptive acts or practices that target the elderly. Learning Objective 8.1

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5
Q

Question 5
Question: What is HUD’s policy regarding a reasonable occupancy standard?

Answer Choices:
A. Three persons per bedroom
B. Two persons per bedroom
C. Four persons per bedroom
D. HUD does not have any recommendations on this issue

A

Correct Answer: B – Two persons per bedroom

Response Feedback: The answer is two persons per bedroom. In a statement of policy in 1998, HUD stated that two people per bedroom was a reasonable standard. Learning Objective 8.5

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6
Q

Question 6
Question: Which of the following is TRUE regarding a lawsuit filed under the DTPA?

Answer Choices:
A. Either party to a DTPA lawsuit may file a motion to arbitrate the dispute.
B. Only the defendant in a DTPA lawsuit may file a motion to mediate the dispute.
C. Only the plaintiff in a DTPA lawsuit may file a motion to mediate the dispute.
D. Either party to a DTPA lawsuit may file a motion to mediate the dispute.

A

Correct Answer: D – Either party to a DTPA lawsuit may file a motion to mediate the dispute.

Response Feedback: The answer is either party to a DTPA lawsuit may file a motion to mediate the dispute. The remaining answers are incorrect. Learning Objective 8.1

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7
Q

Question 7
Question: Which of the TREC contracts includes an agreement to pay the broker’s commission?

Answer Choices:
A. The last page of the One to Four Family Residential Contract
B. The last page of the Unimproved Property Contract
C. The last page of the Residential Condominium Contract
D. The last page of the Farm and Ranch Contract

A

Correct Answer: D – The last page of the Farm and Ranch Contract

Response Feedback: The answer is the last page of the Farm and Ranch Contract. Most of the TREC contract forms do not discuss the broker’s commission, except for the Farm and Ranch Contract. Learning Objective 8.2

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7
Q

Question 8
Question: A salesperson, while representing a buyer, engages in loan fraud. The buyer ends up suffering economic damages of $300,000 and mental anguish damages of $50,000 and sues the sponsoring broker and the salesperson. The broker may be held liable for which of the following amounts?

Answer Choices:
A. $1,050,000 if the salesperson acted knowingly.
B. The broker would be proportionally liable for his or her own actions only.
C. $350,000 if the salesperson acted knowingly.
D. The broker would not be liable for any amount.

A

Correct Answer: C – $350,000 if the salesperson acted knowingly.

Response Feedback: The answer is $350,000 if the salesperson acted knowingly. The broker is fully responsible for the acts of the broker’s salespersons. Learning Objective 8.1

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8
Q

Question 9
Question: What must a consumer prove in a DTPA lawsuit?

Answer Choices:
A. The deceptive act did not cause the damage.
B. The deceptive act was caused knowingly.
C. The deceptive act was frivolous.
D. The deceptive act was the producing cause of damages.

A

Correct Answer: D – The deceptive act was the producing cause of damages.

Response Feedback: The answer is the deceptive act was the producing cause of damages. In a DTPA suit, the consumer must prove that the deceptive act was the producing cause of damages. Learning Objective 8.1

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9
Q

Question 10
Question: Which of the following is NOT a situation in which a defendant may be held jointly and separately responsible for all damages recoverable by the claimant?

Answer Choices:
A. If the defendant negligently caused harm to another
B. If the defendant’s percentage of responsibility is greater than 50%
C. If the defendant intends to harm a buyer and keeps the earnest money
D. If the defendant intends to harm a seller and forges a contract

A

Correct Answer: A – If the defendant negligently caused harm to another

Response Feedback: The answer is if the defendant negligently caused harm to another. A defendant may be held jointly and separately responsible for all damages recoverable by the claimant if (a) the defendant’s percentage of responsibility is greater than 50% or (b) the defendant, with specific intent to do harm to others, acted with another person to engage in a felony of the third degree or higher—including forgery, misapplication of fiduciary property, or securing execution of a document by deception. Learning Objective 8.1

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10
Q

Question 11
Question: An apartment complex manager is concerned about the complex’s liability because the stairs are very steep and it has no elevators. Therefore, it has a policy of refusing to lease an apartment to a clearly pregnant person. Which of the following is TRUE regarding the policy?

Answer Choices:
A. It is reasonable under the Fair Housing Act.
B. It is an exemption under the Fair Housing Act.
C. The Fair Housing Act does not apply to the policy.
D. It violates the Fair Housing Act.

A

Correct Answer: D – It violates the Fair Housing Act.

Response Feedback: The answer is it violates the Fair Housing Act. It is an example of discrimination on the basis of familial status. Learning Objective 8.3

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11
Q

Question 12
Question: Which of the following is NOT a required disclosure related to the sale of a house?

Answer Choices:
A. Foundation issues
B. Underground storage tanks
C. Leaking roof
D. Suicide on the property

A

Correct Answer: D – Suicide on the property

Response Feedback: The answer is suicide on the property. The remaining answers are required. Learning Objective 8.4

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12
Q

Question: Broker and buyer enter into a buyer representation agreement where the buyer agrees to pay the broker 3.5% only if the broker is not paid by the seller or the seller’s agent. The broker finds a property that is not listed in the MLS. How much will the buyer have to pay the broker under the agreement?

Answer Choices:
A. 7%
B. 3%
C. 3.5%
D. Nothing

A

Correct Answer: C – 3.5%

Response Feedback: The answer is 3.5%. If the property is not in MLS, even if the listing broker is a member of MLS, there is no offer of compensation. Learning Objective 8.2

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13
Q

Question 14
Question: A disabled person wishes to rent an apartment and renovate it with grab bars and ramps. Which of the following is TRUE under the Fair Housing Act?

Answer Choices:
A. The tenant may renovate and need not restore the apartment before he leaves.
B. The owner must renovate for the tenant.
C. The owner must renovate for the tenant as long as the tenant pays for the renovation.
D. The tenant may renovate as long as he restores the apartment before he leaves.

A

Correct Answer: D – The tenant may renovate as long as he restores the apartment before he leaves.

Response Feedback: The answer is the tenant may renovate as long as he restores the apartment before he leaves.

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14
Q

Question 15
Question: Would a three-bedroom home leased to a single parent and five children be acceptable under the HUD standard?

Answer Choices:
A. No, because the age of the two persons per bedroom is a consideration.
B. No, because it discourages two-parent families.
C. No, because it is over the limit set by HUD rules.
D. Yes, because it allows two people per bedroom.

A

Correct Answer: D – Yes, because it allows two people per bedroom.

Response Feedback: The answer is yes, because it allows two people per bedroom. While two people per bedroom is a reasonable standard, the age of the two people is not a consideration. Learning Objective 8.5

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15
Q

Question 16
Question: A builder wishes to rebate 1% of the purchase price to potential buyers. Which of the following is the BEST practice for a broker representing the buyer?

Answer Choices:
A. Advise the buyer that rebating is lawful.
B. Advise the buyer to disclose all rebates to the lender.
C. Advise the buyer to withhold the information from the lender.
D. Advise the buyer to accept only cash rebates.

A

Correct Answer: B – Advise the buyer to disclose all rebates to the lender.

Response Feedback: The answer is advise the buyer to disclose all rebates to the lender. Any rebate to the buyer, either at or after closing, without the knowledge of the lender, is illegal. Learning Objective 8.1

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16
Q

Question 17
Question: The agreement between brokers referred to on the last page of the TREC sales contract is considered:

Answer Choices:
A. An affirmation of the agreement between brokers.
B. An agreement between brokers.
C. An offer to pay a broker.
D. A statutorily required statement.

A

Correct Answer: A – An affirmation of the agreement between brokers.

Response Feedback: The answer is an affirmation of the agreement between brokers. It only affirms what the agreement is, but it is not an agreement between the brokers. Learning Objective 8.2

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17
Q

Question 18
Question: Under the HUD policy statement regarding occupancy standards, what is the age limit for persons occupying any one bedroom?

Answer Choices:
A. One bedroom is strictly for two adults only.
B. Three people with an age difference of more than seven years in one bedroom is not permitted.
C. An adult may not share a bedroom with children.
D. The age of the people is not a consideration.

A

Correct Answer: D – The age of the people is not a consideration.

Response Feedback: The answer is the age of the people is not a consideration. In a statement of policy, effective December 18, 1998, HUD stated that two people per bedroom was a reasonable standard (and the age of the two people is not a consideration). Learning Objective 8.5

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18
Q

Question 19
Question: Which of the following disclosures related to the sale of a house is required?

Answer Choices:
A. Registered sex offenders in the neighborhood
B. Death by electrocution because of faulty wiring
C. Suicide on the property
D. Previous occupant with AIDS

A

Correct Answer: B – Death by electrocution because of faulty wiring.

Response Feedback: The answer is death by electrocution because of faulty wiring. Any death based on the condition of the property must be disclosed. Learning Objective 8.4

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19
Q

Question 20
Question: When a license holder suspects fraud, which of the following should the license holder NOT do to protect herself and the parties to the transaction?

Answer Choices:
A. Document everything
B. Disclose everything to all parties
C. Disclose everything to the lender
D. Verify the accuracy of items on the closing documents

A

Correct Answer: B – Disclose everything to all parties.

Response Feedback: The answer is disclose everything to all parties. The agent still has a fiduciary duty not to disclose confidential information to the other party. Learning Objective 8.1

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20
Q

Question 21
Question: Where is the specific rule addressing housing occupancy standards?

Answer Choices:
A. The Fair Housing Act
B. HUD rules
C. Both the Fair Housing Act and HUD rules
D. There is no rule

A

Correct Answer: D – There is no rule

Response Feedback: The answer is there is no rule. Neither the Fair Housing Act nor HUD has a particular rule regarding occupancy. Learning Objective 8.5

21
Q

Question 22
Question: Which of the following is NOT a defense to the DTPA?

Answer Choices:
A. A reasonable offer of settlement within specified time periods
B. A written notice to the consumer prior to closing that the broker is relying on written information prepared by someone else
C. It was impossible for the broker to know that the information was false
D. A written limitation of liability

A

Correct Answer: D – A written limitation of liability

Response Feedback: The answer is a written limitation of liability. The other answers are defenses to a DTPA lawsuit. Learning Objective 8.1

22
Q

Question 23
Question: What is the maximum civil penalty for a violation of the DTPA that targets the elderly?

Answer Choices:
A. $150,000
B. $250,000
C. $100,000
D. $500,000

A

Correct Answer: B – $250,000

Response Feedback: The answer is $250,000. In addition to consumer compensation, the DTPA allows for civil penalties of up to $20,000 per violation, with an additional penalty of up to $250,000 for deceptive acts or practices that target the elderly. Learning Objective 8.1

23
Q

Question 24
Question: Broker and buyer enter into a buyer representation agreement where the buyer agrees to pay the broker 3% of the purchase price only if the broker is not paid by the seller or the seller’s agent. The broker finds a property that is listed in the MLS with an offer of compensation of 3.5%. How much will the buyer have to pay the broker under the agreement?

Answer Choices:
A. Nothing
B. 3.5%
C. 7%
D. 3%

A

Correct Answer: A – Nothing

Response Feedback: The answer is nothing. If the buyer’s representation agreement says that the buyer’s broker will receive 3% and the MLS printout says the listing broker is offering the selling broker 3.5%, the buyer would owe nothing. In this case, the agreement between brokers is through MLS. Learning Objective 8.2

24
Q

Question 25
Question: What is the statute of limitations on a DTPA cause of action?

Answer Choices:
A. Four years
B. Seven years
C. Two years
D. Unlimited

A

Correct Answer: C – Two years

Response Feedback: The answer is two years. The suit must be commenced within two years after a false, misleading, or deceptive act or practice occurred—or within two years after the consumer discovered, or should have discovered, the deceptive act or practice. Learning Objective 8.1

25
Q

Question 26
Question: Which of the following is NOT an exemption under The Fair Housing Act?

Answer Choices:
A. Owner-occupied buildings with no more than four units
B. Single-family housing sold or rented without the use of a broker
C. Housing operated by organizations and private clubs that limit occupancy to members
D. Condominium sales to the elderly

A

Correct Answer: D – Condominium sales to the elderly

Response Feedback: The answer is condominium sales to the elderly. The Fair Housing Act exempts owner-occupied buildings with no more than four units, single-family housing sold or rented without the use of a broker, and housing operated by organizations and private clubs that limit occupancy to members. Learning Objective 8.3

26
Q

Question 27
Question: What is the term for purchasing a property and then quickly reselling it at a value that is artificially inflated by false appraisals?

Answer Choices:
A. Red flagging
B. Skimming
C. Flipping
D. Redlining

A

Correct Answer: C – Flipping

Response Feedback: The answer is flipping. When a property is purchased and then quickly resells at a value that is artificially inflated by false appraisals, it is called flipping. Learning Objective 8.1

26
Q

Question 28
Question: Which agreement for payment of broker’s fees is between the seller and the broker?

Answer Choices:
A. The consumer representation agreement
B. Paragraph 8 of the residential contract
C. The last page of the residential contract
D. The listing agreement

A

Correct Answer: D – The listing agreement

Response Feedback: The answer is the listing agreement. The listing agreement is a written agreement between seller and broker that addresses broker compensation. Learning Objective 8.2

27
Q

Question 30
Question: A broker, while representing a buyer, forges the buyer’s signature on a sales contract. The buyer ends up suffering economic damages of $100,000 and sues the broker. The broker may be held liable for which of the following amounts?

Answer Choices:
A. $300,000 if it was done knowingly
B. $300,000 if it was intentional
C. $100,000 only if it was intentional
D. $300,000 only if fraud is proven

A

Correct Answer: B – $300,000 if it was intentional

Response Feedback: The answer is $300,000 if it was intentional. If the defendant is found to have committed the act intentionally, the economic damages may be trebled. Learning Objective 8.1

27
Q

Question 29
Question: Which of the following disclosures related to the sale of a house is permitted but NOT required?

Answer Choices:
A. Foundation problems
B. Termites
C. Mold
D. Sex offenders in the neighborhood

A

Correct Answer: D – Sex offenders in the neighborhood

Response Feedback: The answer is sex offenders in the neighborhood. The remaining answers are required disclosures. Learning Objective 8.4

28
Q

Question 31
Question: When may an apartment complex manager discriminate based on familial status?

Answer Choices:
A. The community qualifies as housing for older persons
B. When families in which six or more children under the age of 18 live with a parent
C. When a person has only legal custody and is not the biological parent of the child
D. When a person who is merely securing legal custody of a child under the age of 18

A

Correct Answer: A – The community qualifies as housing for older persons

Response Feedback: The answer is the community qualifies as housing for older persons. The remaining answers are specific examples of familial status. Learning Objective 8.3

29
Q

Question 32
Question: A seller wishes to list his house with a broker and wishes to conceal the fact that his spouse died of AIDS. What should the broker advise the seller?

Answer Choices:
A. The law permits the seller to withhold the information.
B. The law requires the seller to withhold the information.
C. The law requires the seller to disclose the information.
D. The law is silent on this issue.

A

Correct Answer: A – The law permits the seller to withhold the information.

Response Feedback: The answer is the law permits the seller to withhold the information. The remaining answers are incorrect. Learning Objective 8.4

30
Q

Question 33
Question: An apartment complex that is occupied solely by persons age 62 or older gets an applicant from a 65-year-old tenant who has legal custody of her granddaughter. Management denies the application. Which of the following is TRUE regarding this action?

Answer Choices:
A. It violates the Fair Housing Act.
B. The Fair Housing Act requires that the apartment complex let the person live there temporarily until they secure a permanent residence.
C. The Fair Housing Act does not apply.
D. It does not violate the Fair Housing Act.

A

Correct Answer: D – It does not violate the Fair Housing Act.

Response Feedback: The answer is it does not violate the Fair Housing Act. Learning Objective 8.3

31
Q

Question 34
Question: A blind tenant with a helper dog wishes to rent an apartment in a complex with a no pets policy, and the landlord refuses based on its policy. Which of the following is TRUE under the Fair Housing Act?

Answer Choices:
A. It is not a violation of the Act as long as the policy is in writing.
B. It is not a violation of the Act as long as it is clearly posted near all access points.
C. It is a violation of the Act.
D. It is exempt under the Act.

A

Correct Answer: C – It is a violation of the Act.

Response Feedback: The answer is it is a violation of the Act. A building with a “no pets” policy must allow a visually impaired tenant to keep a guide dog. Learning Objective 8.3

32
Q

Question 35
Question: What can be a red flag for an illegal type of buyer rebate?

Answer Choices:
A. When the buyer is paid at closing and it is reflected in the HUD-1
B. When the buyer pays over the purchase price to the seller and the seller refunds that amount back to the buyer
C. When the broker refunds part of their commission to the buyer
D. When the contract calls for money to be paid to a certain vendor for improvements to be made after closing

A

Correct Answer: D – When the contract calls for money to be paid to a certain vendor for improvements to be made after closing.

Response Feedback: The answer is when the contract calls for money to be paid to a certain vendor for improvements to be made after closing. One of the common forms of rebates happens when the contract calls for money to be paid to a certain vendor for improvements to be made after closing. Learning Objective 8.1

33
Q

Question 36
Question: Would an apartment complex that limits one-bedroom apartments to only one person be acceptable?

Answer Choices:
A. No, because the one person would be an adult, eliminating children.
B. No, because that situation is specifically prohibited by TREC rules.
C. Yes, because it is silent about children.
D. Yes, because that situation is specifically permitted by TREC rules.

A

Correct Answer: A – No, because the one person would be an adult, eliminating children.

Response Feedback: The answer is no, because the one person would be an adult, eliminating children. The primary intention of HUD is to ensure occupancy standards are not so strict as to eliminate the protection of families with children. Learning Objective 8.5

34
Q

Question 37
Question: Which of the following is TRUE regarding DTPA lawsuits?

Answer Choices:
A. Consumers may not waive their rights to bring a suit under the DTPA.
B. Consumers may waive their rights to bring a suit under the DTPA.
C. Consumers may waive their rights for exemplary damages under the DTPA.
D. Consumers may not waive their rights for exemplary damages under the DTPA.

A

Correct Answer: B – Consumers may waive their rights to bring a suit under the DTPA.

Response Feedback: The answer is consumers may waive their rights to bring a suit under the DTPA. There are strict requirements for a waiver to be valid and enforceable. Learning Objective 8.1

35
Q

Question 38
Question: A seller wants to tell potential buyers that the neighborhood is perfect for young couples without children. What should the broker advise the seller?

Answer Choices:
A. This type of disclosure is perfectly okay.
B. This may be a fair housing violation.
C. This type of disclosure, while permissible, is not advisable.
D. This type of disclosure is actually required by law.

A

Correct Answer: B – This may be a fair housing violation.

Response Feedback: The answer is this may be a fair housing violation. Any disclosure that indicates a preference based on familial status is prohibited by the Fair Housing Act. Learning Objective 8.4

36
Q

Question 39
Question: When may a defendant be held jointly and separately responsible for all damages recoverable by the claimant?

Answer Choices:
A. If the defendant’s percentage of responsibility is greater than 40%
B. If the defendant’s percentage of responsibility is greater than 50%
C. If the defendant’s percentage of responsibility is greater than 75%
D. Anytime

A

Correct Answer: B – If the defendant’s percentage of responsibility is greater than 50%.

Response Feedback: The answer is if the defendant’s percentage of responsibility is greater than 50%. A defendant may be held jointly and separately responsible for all damages recoverable by the claimant if the defendant’s percentage of responsibility is greater than 50%. Learning Objective 8.1

37
Q

Question 40
Question: Where is the written compensation agreement between a purchaser and a broker?

Answer Choices:
A. The last page of the residential contract
B. The buyer’s representation agreement
C. Paragraph 8 of the residential contract
D. The IABS form

A

Correct Answer: B – The buyer’s representation agreement.

Response Feedback: The answer is the buyer’s representation agreement. The remaining answers are incorrect. Learning Objective 8.2

38
Q

Question 41
Question: A buyer wants to make sure that the neighborhood is safe for their young daughters. He asks about whether there are any sex offenders on the street. The seller knows that the man that lives across the street is a registered sex offender but wishes to conceal this from potential buyers because he really needs to sell the property. What should the seller’s agent do?

Answer Choices:
A. The agent is required to disclose the information.
B. The agent should disclose the information despite the seller’s wishes.
C. The agent should say that there are no sex offenders in the neighborhood.
D. The agent is not required to disclose the information.

A

Correct Answer: D – The agent is not required to disclose the information.

Response Feedback: The answer is the agent is not required to disclose the information. While the agent is not required to disclose the information, they should not outright lie to the buyer. Instead, they should advise the buyer to investigate the issue themselves. Learning Objective 8.4

39
Q

Question 42
Question: Broker and buyer enter into a buyer representation agreement where the buyer agrees to pay the broker 4% if the broker is not paid by the seller or the listing agent. The MLS listing indicates a 3% compensation offer to selling broker. How much will the buyer have to pay?

Answer Choices:
A. 4%
B. 3%
C. 1%
D. Nothing

A

Correct Answer: C – 1%

Response Feedback: The answer is 1%. The buyer’s representation agreement usually contains a clause stating the buyer will pay a commission to the selling broker. Frequently, it also stipulates that the selling broker will first attempt to collect the commission from the seller or their agents. If the full commission is not collected, the buyer is responsible for the remainder. Learning Objective 8.2

40
Q

Question 43
Question: Broker and seller enter into a listing agreement where the seller agrees to pay the listing broker 7% of the purchase price if the house is sold. The property is not listed in the MLS but eventually sells. How much will the seller have to pay the selling broker under the agreement?

Answer Choices:
A. 3.5%
B. 7%
C. 3%
D. Nothing

A

Correct Answer: D – Nothing

Response Feedback: The answer is nothing. If the property is not listed in the MLS, even if the listing broker is a member of MLS, there is no automatic offer of compensation for a cooperating broker. Learning Objective 8.2

41
Q

Question 44
Question: Which of the following is TRUE under the Fair Housing Act?

Answer Choices:
A. Disability does not include those having a history of an impairment that substantially limits one or more major life activities.
B. Persons who have AIDS are not considered to be disabled.
C. Disability includes current users of illegal or controlled substances.
D. Disability includes those being regarded as having an impairment that substantially limits one or more major life activities.

A

Correct Answer: D – Disability includes those being regarded as having an impairment that substantially limits one or more major life activities.

Response Feedback: The answer is disability includes those being regarded as having an impairment that substantially limits one or more major life activities. The term also includes those with a history of such impairments. Learning Objective 8.3

42
Q

Question 45
Question: A buyer purchases a home for $350,000 and then resells it for $500,000 to a second buyer based on a fraudulent appraisal and then splits the $150,000 with the second buyer. The lender eventually forecloses after the second buyer fails to make any payments on the loan. This is an example of which of the following?

Answer Choices:
A. Redlining
B. Steering
C. Flipping
D. Shorting

A

Correct Answer: C – Flipping

Response Feedback: The answer is flipping. When a property is purchased and then quickly resold at a value that is artificially inflated by fraudulent appraisals, it is considered flipping. Learning Objective 8.1

43
Q

Question 46
Question: Which of the following disclosures related to the sale of a house is permitted but not required?

Answer Choices:
A. Previous occupant’s child died of lead poisoning from the paint
B. Faulty foundation
C. Familial status of the buyer
D. Suicide on the property

A

Correct Answer: D – Suicide on the property

Response Feedback: The answer is suicide on the property. Familial status is a prohibited disclosure, while faulty foundation and lead-related deaths are required disclosures. Learning Objective 8.4

44
Q

Question 47
Question: Which of the following is TRUE regarding occupancy restrictions?

Answer Choices:
A. Housing providers may not develop occupancy restrictions on their own.
B. Housing providers may not implement reasonable occupancy restrictions on their own.
C. Housing providers may develop but not implement reasonable occupancy restrictions on their own.
D. Both the Fair Housing Act and HUD allow for housing providers to comply with reasonable local, state, and federal occupancy restrictions.

A

Correct Answer: D – Both the Fair Housing Act and HUD allow for housing providers to comply with reasonable local, state, and federal occupancy restrictions.

Response Feedback: The answer is both the Fair Housing Act and HUD allow for housing providers to comply with reasonable local, state, and federal occupancy restrictions. Housing providers may also develop and implement reasonable restrictions independently in some cases. Learning Objective 8.5

45
Q

Question 48
Question: Would an apartment complex that limits two-bedroom apartments to only two adults and two children be acceptable?

Answer Choices:
A. No, because the limit is specifically prohibited by TREC rules.
B. Yes, because it allows two people per bedroom.
C. Yes, because it encourages two-parent families.
D. No, because the age of the two persons per bedroom is not a consideration.

A

Correct Answer: D – No, because the age of the two persons per bedroom is not a consideration.

Response Feedback: The answer is no, because the age of the two persons per bedroom is not a consideration. While two people per bedroom is a reasonable standard, the age of the two individuals is irrelevant under the Fair Housing Act. Learning Objective 8.5

46
Q

Question 49
Question: A broker, while representing a buyer, absconds with the earnest money. The buyer ends up suffering economic damages of $1,000,000 and mental anguish damages of $500,000 and sues the broker. The broker may be held liable for which of the following amounts?

Answer Choices:
A. $3,000,000 if the broker acted knowingly
B. $1,500,000 if the broker acted knowingly
C. $1,000,000 if the broker acted knowingly
D. $1,500,000 only if the broker acted intentionally

A

Correct Answer: B – $1,500,000 if the broker acted knowingly

Response Feedback: The answer is $1,500,000 if the broker acted knowingly. If a defendant is found to have acted knowingly, they may be held liable for both economic and mental anguish damages. Learning Objective 8.1

47
Q

Question 50
Question: Housing for older persons is exempt from the prohibition against familial status discrimination if any of the following apply EXCEPT:

Answer Choices:
A. It is occupied solely by persons age 62 or older.
B. It is occupied by at least one person 55 years of age or older per unit (where 80% of the units are occupied by individuals age 55 or older).
C. It adheres to a policy that demonstrates an intent to house persons age 55 or older.
D. It is occupied by persons 52 or older.

A

Correct Answer: D – It is occupied by persons 52 or older.

Response Feedback: The answer is it is occupied by persons 52 or older. The other options meet the requirements for exemptions under the Fair Housing Act. Learning Objective 8.3

Real Estate Contracts Form and Addenda (9 decks)

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