When applying for a loan, what is a fixed rate?

1. A loan that has a predetermined repayment interest rate
2. A loan whose interest rates do not change throughout the life of the loan
3. A loan that accrues no interest
4. A loan that pays off the interest before the principal

According to Proper Education Group (4 Practice Tests): (WRONG!)

1. A loan that has a predetermined repayment interest rate

Commonly compared to floating rate, which is a loan that uses external factors as a benchmark for interest rates and is usually fluctuating based on the external market. 

According to Google:

A fixed interest rate loan is a loan where the interest rate on the loan remains the same for the life of the loan.

What act prohibits discrimination based on race or color?

1. Fair Housing Act
2. Civil Rights Act of 1866
3. Civil Rights Act of 1964
4. Civil Rights Act of 1974

2. Civil Rights Act of 1866

This act declares all citizens equal and under the protection of the law.  The law emphasized protecting all citizens of African descent during the Civil War.

What is the name of a transaction where both the buyer and seller are seeking the best deal?

1. Real estate transaction
2. Credit transaction
3. Arms-length transaction
4. Debited transaction

3. Arms-length transaction

This is a transaction where both the buyer and the seller are acting in self-interest with an aim of getting the better deal. The discrepancy is usually solved when both parties agree on a middle ground that fulfills the interests of both the buyer and the seller.

What is the set minimum amp for a new construction?

1. 100 amps
2. 150 amps
3. 200 amps
4. 250 amps

1. 100 amps

The minimum is 100 amps as anything below that may not be able to sustain the electric needs of a home.  Larger homes can have between 150 and 200 amps based on the type of electronic systems installed. Having a proper electrical distribution in the home will also avoid trips.

Who controls flood insurance?

1. FEMA
2. EPA
3. CERCLA
4. FHA

1. FEMA

The Federal Emergency Management Agency focuses on promoting the need to work together to support citizens and fast respondents.  Its goal is to ensure citizens build and sustain to prepare for and recover from calamities.

Which formal agreement gives an agent the sole right to sell a property? 

1. Purchase agreement
2. Floating rate
3. Fixed mortgage rate
4. Bridge loan

According to the Proper Education Group (which is Wrong)

3. Fixed Mortgage Rate

The answer should be: Listing Agreement

This is an agreement between the seller and agent conveying that the agent is eligible for commission on the sale of the property regardless of who found the buyer.  The terms of an agreement are only valid for a sale made within the time period of the agreement

What type of easement attaches rights to an individual rather than the property?

1. Easement appurtenant
2. Easement in gross
3. Prescriptive easement
4. All of the above

2. Easement in gross

The rights associated by the easement are irrevocable for the person granted.  A transfer of the property to another individual through sale or inheritance does not warrant an automatic transfer of the rights to the new owner.  This renders the easement of gross void.

An easement in gross is a legal right to use another person's land for as long as the owner owns that land or the holder of the easement dies.

Why was the Privacy Act of 1974 significant?

1. It required agencies to publicize records to the Federal Register
2. It required privacy of records
3. It required federal government to operate without transparency
4. It required credit information to be kept private

1. It required agencies to publicize records to the Federal Register

The Privacy Act of 1974 is an act that established code of fair information maintenance governing the collection, use and maintenance of individuals that is maintained by federal agencies.  The act required the agencies to publicize the records in the Federal Register.

What was the Civil Liberties Act of 1988 significant?

1. It granted all citizens equality
2. It granted reparations to Japanese Americans interred by the government during WW II
3. It passed rights to empower women in employment
4. It passed rights to ensure fair housing

2. It granted reparations to Japanese Americans interred by the government during WW II

The Civil Liberties Act of 1988 granted the Japanese Americans that had been interred by the government during World War 2 reparation.

Jack is trying to convince Mary to sell her property in her neighborhood because it is changing due to the influx of people of other ethnic backgrounds.  What is he doing?

1. Steering
2. Discriminating
3. Blockbusting
4. Convincing

3. Blockbusting

This is the act of trying to manipulate tenants to sell or rent their properties at lower rates due to an influx of minority groups in a once segregated neighborhood.

What is the name of an agreement that allows for conditions on a property?

1. Contract
2. Deed
3. Lease
4. Qualified fee estate

4. Qualified Fee Estate

This is an estate agreement that facilitates the grantor to propose a set of conditions. A Breach in the condition limitation may result in termination of the agreement.  A qualify fee estate can also be based on the occurrence of a predetermined event.

A fee simple qualified estate is a fee simple estate that is subject to limitations by the grantor. Examples: A church sells land provided that the grantee does not sell liquor on the property. ... A fee simple qualified estate is also called a base fee, a defeasible fee, or a fee simple determinable.

What is a form of co-ownership that involves a husband and wife having equal and undivided interest in the property?

1. Joint tenancy
2. Tenancy in common
3. Tenancy by entirety
4. Tenancy at will

3. Tenancy by entirety

Only married couples can enter this type of co-ownership where the property is jointly owned as a single entity.  It facilitates right of survivorship and can be terminated upon death of spouse or divorce.

Tenancy by the entirety is a type of concurrent estate in real property that occurs when the owners of the property are married. Each spouse has an equal and undivided interest in the property. ... In the event that one spouse dies, the full title of the property automatically passes to the surviving spouse.

What is the name of a transaction where a seller finances the whole sale or part of the sale of a property for the buyer?

1. Mortgage
2. Refinancing
3. Purchase money
4. Buydown

3. Purchase money

This is a mortgage issued by the seller as part of a real estate transaction. This arrangement is usually reached when the buyer is not eligible for the traditional mortgage down payment is usually placed on the property as an order of the financial transaction.

A purchase-money mortgage is a mortgage issued to the borrower by the seller of a home as part of the purchase transaction. Also known as a seller or owner financing, this is usually done in situations where the buyer cannot qualify for a mortgage through traditional lending channels.

What is the amount of space used to calculate the lease payments which includes the shared property's common and service areas?

1. Rentable square footage
2. Usable square footage
3. Common areas
4. Service areas

1. Rentable Square Footage

Rentable square footage is inclusive of the usable square footage and common areas. The price per rentable square foot is usually calculated using a pro-rata calculation based on the size of the space being leased. 

Which of the following does liability insurance protect you from?

1. House fire
2. Injury incurred on property
3. Flood
4. All of the above

4. All of the above

Liability insurance covers everything from house fires, injuries incurred on the property, floods, injured domestic workers, falling trees, and more.

What is the measurement used to show the volatility of a market?

1. Absorption rate
2. Fluctuation rate
3. Inflation
4. Purchase deviation

1. Absorption rate

This is the ratio of the number of properties that have been sold against the number of properties that are available for sale within a specified area.

The absorption rate in the real estate market is used to evaluate the rate at which available homes are sold in a specific market during a given time period. It is calculated by dividing the number of homes sold in the allotted time period by the total number of available homes.

What is the law of agency?

1. Commissions that are collected from both parties
2. A set of laws that apply to a person who acts on behalf of another person
3. The ability to accept an offer on behalf of the seller
4. An authorized agency selling another's property

2. A set of laws that apply to a person who acts on behalf of another person

The law of agency is a set of duties that real estate professionals owe to their clients, including disclosures that must be made to the client.  These duties are set by each state.

____________ is the increase in value that occurs when combining two parcels into one large parcel.

1. Redlining
2. Plottage
3. Assemblage
4. Due diligence

2. Plottage

Plottage occurs when the total value of a combined parcel is worth  more than the sum of the individual parcels. The process of combining the parcel is called assemblage.

Texas requires earnest money to be deposited into a trust account within _____ days?

1. 10 Business days
2. 3 business days
3. 2 business days
4. 1 business day

3. 2 business days

TREC requires earnest money to be deposited within 2 business days of receiving the money

How long is the option period for real estate transactions conducted in Texas?

1. The option period is negotiable
2. 48 hours
3. 10 days
4. 7 days

1. The option period is negotiable

The option period is negotiable, but is anywhere between 1 and 10 days. The option period begins the day after the effective day of contract. i.e., A contract is executed on May 2nd, the opton period begins May 3rd.

How long does a broker need to keep real estate and financial documents?

1. 3 years
2. 4 years
3. 5 years
4. 7 years

2. 4 years

A broker needs to keep documents for a minimum of 4 years according to Texas law.  The time frame begins 4 years form the date of closing or termination of a contract and need t be readily made available to the commission.

How much errors and omissions insurance (E&O) does the state of Texas require a real estate broker to have?

1. E&O is not required
2. $500,000
3. $1,000,000
4. $750,000

1. E & O is not required

While E&O is not required, many clients, may require proof of this insurance.  It provides crucial protection to brokers and is required in some states.

When should a buyer have the survey pulled and get a title insurance property by the seller? TRICK QUESTION - SHOULD BE THE SELLER

1. Prior to the execution of the purchase and sale contract
2. The buyer does not need to do either
3. Within 20 days of the execution of the purchase and sale contract
4. Within 10 days of the execution of the purchase and sale contract

3. Within 20 days of the execution of the purchase and sale contract

Prior to 20 days after the title company receives a copy of the contract a seller needs to provide the buyer the survey and commitment for title insurance.

Which is not a layer of the Texas survey system?

1. Texas RRC district layer
2. Texas bay tracts layer
3. Texas coast layer
4. Texas land survey layer

3. Texas coast layer

The three layers are the Texas RRC district layer which contains the geographic boundaries for the 12 railroad districts, the Texas bay tracts layer represents the survey areas present in bays along the east coast and the Texa land survey layer which splits the state into areas which comprise of tracts, sections and labors

Texas law does not allow agents to be a _____________, which is when an agent represents both parties.

1. Dual agent
2. Subagent
3. General agent
4. Special agent

1. Dual Agent

Texas law does not permit dual agency. A license holder may not represent both principals as a dual agent under the revisions to TRELA. Under the current law, a broker must agree to act as an intermediary in accordance with the statute if the broker agrees to represent more than one party in a transaction.

What is the statute of limitations for a breach of contract in Texas?

1. 2 years
2. 3 years
3. 4 years
4. 5 years

3. 4 years

The statute of limitations applies to contractual obligations including certain transfers of real property and fiduciary duty claims.

If a real estate trust account collects interest, the interest is kept by?

1. The broker or the principal
2. The broker only
3. The principal only
4. TREC

1. The broker or the principal

The broker can keep the interest if the principal has a signed agreement authorizing the broker to keep the interest.  If the principal does not agree to the above terms, then the interest must be treated in the same manner as the deposited money.

Every brokerage firm shall retain for at least three years records of all trust funds which ... For interest bearing accounts, these same parties to the real estate ... or broker-in-charge shall keep any interest belonging to others in the trust fund ...

___________ states that when the words "grant" or "convey" are used in a deed, the seller promises the property is free from encumbrances.

1. Texas Real Estate Commission (TREC)
2. Texas Property Code
3. Texas Real Estate Licensing Act (TRELA)
4. General warranty deed

2. Texas Property Code

The code also states that a grantor has not transferred any part of the property to anyone else if the words "grant' or "convey" are used in a deed.

The Texas Property Code provides that any time the words "grant" or "convey" are used in a deed, the grantor (seller) promises 1) that the grantor has not transferred any part of the property to anyone else, and 2) that the property is free from encumbrances (Section 5.023). ... That is, they are not attached to the land.N

What is the statute of limitations for the Texas Deceptive Trade Practices Act?

1. 5 years
2. 1 year
3. 2 years
4. 10 years

3. 2 years

The lawsuit must be filed within two years after the date on which the deceptive act occurred.  If the act took place over time, then it is within two years of the date of the first action.

Which association represents title insurance?

1. American Land Title Association
2. CERCLA
3. Fair Housing Act
4. FEMA

2. CERCLA

This is a trade association that is aimed at trying to improve oversight by representing title insurance. It considers a mortgage a high risk and therefore title insurance must be taken to protect lender

What type of arrangement allows a borrower to negotiate a lower interest rate?

1. Buydown
2. Mortgage
3. Purchase money
4. Purchase price

1. Buydown 

(NOTE: Question asks interest rate, answer says payment rate)

This is a mortgage-financing technique that allows a borrower to negotiate lower monthly payment rates.  It usually involves the seller making payments to the lending institution to reduce monthly payment rate of the buyer. As a result, the purchase price goes up 

Which of the following is a lease break?

1. When a tenant breaks a rent prior to the date of expiry without a legal reason.
2. When a tenant terminates a contract once the lease has expired.
3. When a tenant breaks a lease with the agreement of the landlord.
4. When a landlord allows a tenant to sublease his residence.

1. When a tenant breaks a rent prior to the date of expiry without a legal reason.

As a lease is a contract, breaking a lease without a valid reason may result in being sued by the landlord. To avoid legal action, the individual breaking the lease must prove beyond reasonable doubt that the break was caused by a situation completely out of their hands.

Which entity performs the percolation test?

1. Department of State
2. Building Inspector
3. Homeowners Association
4. Department of Health

4. Department of Health

A percolation test (colloquially called a perc test) is a test to determine the water absorption rate of soil (that is, its capacity for percolation) in preparation for the building of a septic drain field (leach field) or infiltration basin.

If a property is taxed at 25% with a tax levy of $92,000, what is its assessed value?

1. $65,000
2. $115,000
3. $122,666
4. $368,000

4. $368,000

$92,000 / 0.25 = $368,000

What is the name given to a brief summary of the history of a title?

1. Abstract of title
2. Chain of Title
3. Deed chain
4. History of deed

1. Abstract of title

A summarized history of all title transfers and legal actions that have been connected with a certain property. It is beneficial in preventing home buyers from getting tangled in legal issues that are attached to a property.  This is because any loss made because of a court ruling on a property once a buyer has purchased will be incurred by the new tenant.

Which real estate metric is found by dividing cash flow by the deposit and settlement costs?

1. Cash out
2. Cash on cash return
3. Lock in period
4. Loan to value ratio

2. Cash on cash return

Cash on cash return that a proven metric used to calculate future cash returns on a cash investment. This metric is only true for a cash investment and does no take into account loan investments.

Which board committee is responsible for maintaining the aesthetic view of a town?

1. Architectural Review Board
2. Federal Government
3. Municipality
4. HOA

1. Architectural Review Board

The Architectural Review Board is given the responsibility of upholding the visual integrity of a town.  It is responsible for reviewing all exterior designs of all residential and commercial structures in a town,  All new structures and structures that are up for alteration are required to provide a blueprint of the exterior design for printing. They are also charged with ensuring commercial signs conform to the town's design.

What type of lease is taken on a loft?

1. Net lease
2. Gross lease
3. Percentage lease
4. Proprietary lease

2. Gross lease

A gross lease is a lease where a flat rent fee is paid. It includes rent and other utility fees such as taxes and insurance. A landlord is obligated to calculate a rate based on history or research. A negotiation between the tenant and landlord can also be reached on the services the tenant wants to be included in the lease.

What clause can prohibit having loud parties?

1. House rules
2. Regulations
3. Lease terms
4. Noise permit

1. House rules

These are rules that are given to tenants of a co-op or condo on the beginning of the contract regarding behavior within the complex.  They are put in place to ensure a comfortable living space for all occupants. Failure to adhere to the rules may result in eviction.

What is the name given to the long beams that span the piers of a foundation offering support to the floor or ceiling?

1. Eaves
2. Frames
3. Joists
4. Studs

3. Joists

These are horizontal structural members used to frame an open space.  They are often used in transferring loads to the vertical members of the structure. When used in floors, they provide stiffness in teh framing systems.

What conveys a grantor's interest in real property?

1. Agreement
2. Conveyance
3. Offering the loan
4. Title

2. Conveyance

A conveyance or sale deed is a legally binding contract that transfers all ownership rights from the seller to the buyer. It usually states the agreed-on price, the date of the transaction and the obligations of the parties involved.

What is an annual tax levied on the value of real property?

1. Capital gains tax
2. Real estate tax
3. Progressive tax
4. Regressive tax

2. Real estate tax

This is an ad valorem tax on the value of a property. It is levied annually on real estate by the governmental authority

Which air conditioning system facilitates both heating and cooling?

1. Forced air system
2. Cooling system
3. Heating system
4. Thermostat

1. Forced air system

A forced air system refers to any HVAC system that makes use of air ducts and vents to release temperature-controlled air into a building.  A forced air system released filtered and dehumidified cold air into buildings and runs at an affordable price. A central air system on the other hand uses vents in the forced air system to provide cool and conditioned air. 

What is the value estimating process that uses similar available properties to determine the value of land?

1. Mirror method
2. Sales comparison method
3. Allocation method
4. Abstraction method

4. Abstraction method

The Abstraction Method: start with known sale price and subtract value of building, leaving residual amount of site.

What kind of agent is a real estate agent?

1. Special agent
2. General agent
3. Dual agent
4. subagent

1. Special agent

A special agent is an agent whose services are only employed for a specific task.  Once the task is completed a special agent no longer has authority to represent the client.

What valuing method is Comparative Market Analysis not considered as?

1. Appraisal
2. Home valuing
3. Depreciation valuing
4. Tax returns valuing

1. Appraisal

An appraisal is a professional opinion value assessment of a property and is independent of the market values of similar properties based on the fact that all properties are unique and cannot be compared to each other.

A comparative market analysis (CMA) is an evaluation of a home's value based on similar, recently sold homes (called comparables) in the same neighborhood. A comparative market analysis is not the same as an appraisal, which is performed by a licensed appraiser. A CMA is prepared by a real estate agent.

What is a broker allowed to purchase for a real estate salesperson?

1. Phone
2. Medical Insurance coverage
3. Retirement plan
4. Company vehicle

1. Phone

This is because salespeople are considered independent contractors and therefore are not eligible for company benefits.

What is steering?

1. When you knowingly provide inaccurate information
2. Guiding families with children into an apartment building with other families with children and away from other buildings
3. Discriminating against people due to socio-economic status
4. Failing to provide proof of continuing real estate education

2. Guiding families with children into an apartment building with other families with children and away from other buildings

Steering is an unlawful practice that violates the federal fair housing provisions. It is a practice in which brokers influence the choice of a prospective buyer or tenant

What is the term used to describe a building that is separate from the main house?

1. Supplemental structure
2. Accessory building
3. Secondary land
4. Shed

2. Accessory Building

This is a building that is built separately from the main structure in a property. It is usually put to use for a specific purpose such as a shed, workshop or garage.

What is a promissory note?

1. An agreement between the mortgage company and borrower that shows the terms of the loan
2. A document that states the buyers intention to buy a property for a specified amount
3. A note between the broker and buyer stating the exclusive-right-to-represent the buyer
4. An agreement between the seller and buyer providing a grace period for backing out of the sale

1. An agreement between the mortgage company and borrower that shows the terms of the loan  

[trick question]

Both contracts evidence a debt owed from the Borrower to the Lender, but the Loan Agreement contains more extensive clauses than the Promissory Note. Further, only the Borrower signs the promissory note while both parties sign a loan agreement. ... The Term is the time length of the note.

Which is not true about the Federal Fair Housing Act?

1. Prohibits discrimination in housing due to age
2. Protects people from discrimination when renting or buying a home
3. Prohibits refusal to sell or rent a house due to familial status
4. All of the above

1. Prohibits discrimination in housing due to age

The Federal Fair Housing Law prohibits discrimination due to race, color, national origin, religion, sex, familiar status and disability. This act prohibits discrimination when renting or buying a home, getting a mortgage, seeking housing assistance or engaging in other housing-related activities.

Who has the authority to issue or revoke real estate licenses?

1. TREC
2. Texas Governor
3. TRELA
4. Broker-Lawyer Committee

1. TREC

TREC regulates licenses brokerages, inspectors, residential service companies and entities that offer timeshare interests.  Prior to TREC licenses were issue and revoked by the securities division of the Secretary of State's office.

Which of the following will cause suspension or revocation of a license?

1. Guaranteeing future profits
2. Failing to specify a termination date in a buyer's rep agreement
3. Giving legal advice to a client
4. All of the above

When a factory causes pollution to a nearby house, the house suffers from___________.

1. Economic obsolescence
2. Technological obsolescence
3. Legal Obsolescence
4. Aesthetic obsolescence

What is the 90 core hour requirement that needs to be met within the first two years of licensing?

1. State licensing education
2. Salesman's annual education
3. Real estate licensee course
4. No core hour requirement is needed

2. Salesman's annual education  [actually for the first two year renewal - not ANNUAL]

Which of the following is a part of the broker licensing requirement?

1. 2 years of experience
2. 21 years of age
3. College degree
4. 900 classroom education hours

4. 900 classroom education hours  [270 for salesperson and 630 for Brokers; backelor's degree; four years active experience during preceding 5 years]

Texas law allows a minimum of ___________ days to cure a default of a foreclosed property before notice of sale can be given.

1. 20
2. 30
3. 60
4. 90

1.0 - 20 days

A notice of default and intent to accelerate must be sent to the borrower which notifies the borrower of the minimum of 20-day notice. Quasi-judicial law is required for foreclosures on home equity loans.

Which statement is not true about becoming a certified residential property manager in Texas?

1. Must be a registered member of the Texas Association of Realtors
2. Must take 30 hours of property management education
3. Must complete the Texas Residential Leasing Specialist (TRLS) certification
4. All of the above statements are true

2. Must take 30 hours of property management education

The property manager must take only 4 three-hour courses. The property manager must also complete an application which will include a verification of over 200-unit years of residential management experience over at least a 2-year period.

________ is not protected against loss on a standard title insurance policy.

1. Lack of capacity of the grantor
2. Forgery in the chain of title
3. Parties who have possession of superior rights at closing
4. Encumbrances of record

3. Parties who have possession of superior rights at closing

The title insurance company does not do a physical check of the property. They only check the public records, because of this, the insurance company does not insure parties in possession.

Which is an example of a reasonable modification?

1. Changing hardwood floors to carpet
2. Lowering kitchen cabinets
3. Adding windows
4. Repainting the kitchen

2. Lowering kitchen cabinets

Making structural modifications so disabled people could enjoy the units and installing grab bars are examples of reasonable modifications at the tenant's expense but must return the property to its original state if they affect a person's use.

A (an) ______ allows a landlord to adjust rent under specified economic conditions.

1. Escalation clause
2. Defeasance Clause
3. Safety Clause
4. Contingency Clause

1. Escalation clause

Typically tied into an increase in service or cost of living index.

What is the name given to a party that acts in conjunction with a lender to originate a loan?

1. Mortgage broker
2. Third party originator
3. Lender
4. Intermediate

2. Third Party Originator

This is any third party used to originate a loan. Lenders often employ the services of third-party moderator to underwrite and originate loans. They offer  no ongoing and lasting responsibility for the mortgage.

What is an unlawful detainer?

1. Forcing rent payments for tenants who have already moved out
2. Refusing to leave a property despite expiration or termination of lease
3. Listing a property whose lease has not expired
4. Subletting a property without permission from the landlord

2. Refusing to leave a property despite expiration or termination of lease

Commonly compared to an eviction, which is the legal removal of an individual from a lease due to violation of the terms of the agreement

What is the name given to an individual that acts as an intermediate form brokers and lenders?

1. Mortgage broker
2. Mortgage banker
3. Attorney
4. Intermediate

1. Mortgage Broker

This is an individual that services as an intermediate between lenders and brokers. A mortgage broker facilitates negotiations of interest rates and takes circulation of paperwork between the lender and the borrowers.

What is the notice given when a tenant has a pet in a complex that has no pets policy?

1. Notice to cure
2. Notice to quit
3. Notice of default
4. Notice of termination

1. Notice to cure

This is a notice given to a leaseholder by the landlord regarding participation in activities that are not allowed in the building. The tenant is given 10 days to correct the mistake. Refusal to make adjustment results in the tenant being served a notice of termination.

Right of way would be best defined as?

1. Escheat
2. Easement
3. Right of ingress
4. Encumbrance

2. Easement  (according to the practice test)

Google:  Easements and rights of way are property rights, in fact, that can grant others a right of use over your property. Easements describe general property rights by others over your land while a right of way describes a specific property right.

Which electricity conductor plays the same role as a circuit board?

Cell

Capacitor

Fuse

Switch

C. Fuse

A fuse is a small conductor that is designed to melt under high current to break the circuit. A fuse should always maintain a series connection to the component of the circuit.

What is an agent required to do if a client refuses to sign an agency disclosure form?

1. Terminate relationship
2. Create record of refusal in writing
3. Continue without record of the refusal
4. Take legal action against the client

2. Create record of refusal in writing

Int he case where a client refuses to sign a disclosure, the agent is required to clearly state the names of the client and the facts surrounding the refusal to sign the disclosure. An agent is also required to sign a declaration in the presence of a notary public and have it notarized.

What type of tenancy exists where property is owned by a single individual?

1. Joint tenancy
2. Ownership in severalty
3. Tenancy in entirety
4. Tenancy in common

2. Ownership in severalty

This is a situation where real estate is owned by a single person or entity providing the owner with the most control of the land. A sole owner is at will to take any action on the land such as selling or leasing.

What is the term used to describe the natural increase of land?

1. Expansion
2. Avulsion
3. Erosion
4. Accretion

4. Accretion

This is the natural growth of a parcel of land due to mother nature. It occurs due to accumulation of soil on the shoreline of a water body. A decrease due to erosion is also possible.

What is the term used to describe personal property?

1. Chattel
2. Investment
3. Possession
4. Real Property

1. Chattel

A chattel is a tangible property which is either mobile or immobile. However, this term cannot be used to describe real estate holdings.

What is the effect of a larger money supply on the interest rates?

1. They decrease
2. They increase
3. Remain constant
4. They have no relationship

1. They decrease

Money supply is influenced by supply and demand. An increase in the money supply will result in a decreased interest rate making it easier to borrow and vice versa. Therefore, money and interest rates have an inversely proportional relationship.

What is a homeowner's policy that covers two parts: property and liability?

1. HO1
2. HO2
3. HO3
4. HO4

3. HO3

A homeowner's policy is a property insurance that covers losses and damages done to the insured's house and assets within the home. It also provides liability coverage against accidents within the home.

What kind of lease agreement requires the landlord to pay for all expenses?

1. Gross lease
2. Ground lease
3. Net lease
4. Sublease

1. Gross Lease

This is a flat rent fee that includes all expenses associated with ownership. It is inclusive of incidental charges such as taxes, insurance and utilities. It is an uncommon lease as landlords are unaware of the utility charges that may be incurred by a tenant.

If a seller nets $442,000 from the sale of her home, and the commission is 5% how much did the home sell for?

1. $464,100
2. $420,952
3. $459,680
4. None of the above

4. None of the above

$442,000 / (1 - .05) = $465,263

Who is responsible for the rent in a sublease?

1. New tenant
2. Lessee
3. Lessor
4. Roommate

2. Lessee

The original tenant for rent as he/she is liable to the owner. In case of overdue rent by the new tenant, the original tenant is held accountable.

Besides the real estate agents, who is eligible for a license?

1. Attorney
2. Broker
3. Mortgage broker
4. Lender

This question and the answer do not make sense.

1. Attorney

This is a licensed broker that engages the services of other agents with intentions of splitting commission paid on the sale of a property.

What type of insurance is referred to as renters insurance?

1. HO1
2. HO2
3. HO3
4. HO4

4. HO4

This insurance is designed to protect the insured and belongings from the covered losses. It covers liability, personal property, additional living expenses and medical payments to others. The insurance covers against risks specified int he policy.

What is the definition of a syndication?

1. Income that is earned by a spouse prior to marriage
2. Land that is divided into smaller pieces of land
3. Mutual funds that invest in rental properties.
4. Real estate that is purchased by a group which includes at least one sponsor and several investors

4. Real estate that is purchased by a group which includes at least one sponsor and several investors

Syndication is a method investors can use to invest in properties. Investors pool their financial and intellectual resources together to invest in properties that they would not be able to invest in individually.

Which listing agreement allows the owner of the listed property to sell the property on their own and not have to pay commission to the listing broker?

1. Open listing
2. Option listing
3. Exclusive agency listing
4. Both 1 and 3

4. Both 1 and 3

Exclusive agency listing is an agreement between a real estate firm and seller which grants the firm the exclusive rights to sell the property but also allows the seller to sell the home without paying a commission to the listing agent. An open listing is a property listing using multiple real estate agents. This type of listing also allows an owner to list and sell the property without paying a commission to an agent.

What does TRELA regulate?

1. Code of ethics and standards of conduct
2. License expiration and renewal
3. Active license versus inactive license
4. All of the above

4. All of the above

TRELA regulates many things regarding Texas real estate from education, license requirements and client complaints.

Which survey system does Texas use?

1. Public land survey system
2. Meridian survey system
3. Texas survey system
4. Federal survey system

3. Texas survey system

This system is based on Spanish land grants. It is split into 12 railroad districts that follow the county lines. There are 3 layers of this survey systems the Texas RRC district layer, Texas bay tracts layer and Texas land survey layer

When must a real estate licensee disclose their license?

1. When they are applying for a mortgage
2. When they are acting on behalf of a spouse, child or parent
3. When they own more than 10% of the business
4. Both 2 and 3

4. Both 2 and 3

Texas law states the licensee must disclose their license when they are representing themselves, a spouse, child or parent or when they are a trustee of a beneficiary who is their spouse, child or parent. They must also disclose their license when they own more than 10% of a business entity.

What kind of obsolescence occurs when there is a loss in value due to functional inadequacies of an improvement?

1. Economic obsolescence
2. Technological obsolescence
3. Functional obsolescence
4. Legal obsolescence

3. Functional obsolescence

This occurs when there is a decrease in usefulness or desirability in real property due to an outdated design feature. There are two types of functional obsolescence, the super adequacy and deficiency.

Which of the following cannot be subpoenaed by TREC?

1. Books
2. Personal real property information
3. Witnesses
4. Records

2. Personal real property information

Books, witnesses and records can be subpoenaed by TREC. If the licensee does not produce the above, TREC can file a suit with the AG.

Which of the following is true about a suspended real estate license?

1. A suspended license cannot be reactivated until the licensee retakes the initial exam
2. A person can get back their license when they pay back the money the recovery trust account paid out for claims against them
3. A license cannot be suspended only revoked
4. The licensee will be on a probationary period or 5 years

2. A person can get back their license when they pay back the money the recovery trust account paid out for claims against them

If TREC had to pay a claim out of the recovery trust account, then a licensee will not get their license back until they pay back the claim to the trust account.

Property under the homestead exemption is not protected from foreclosure or certain debts. It is protected from ___________________.

1. Forced sale
2. Unpaid property taxes
3. Unpaid past-due child support
4. Missed mortgage payments

1. Forced sale

The homestead exemption protects from forced sales to satisfy creditors. i.e, payday lenders and debt collectors. It does not protect from defaulted second liens from home equity lines of credit and loans, unpaid IRS liens, past due child support, property taxes, government student loans and mortgage payments.

How does a broker terminate the sponsorship of a sales agent?

1. Provide written notice to the sales agent
2. Provide notice face to face to the sales agent and notify TREC
3. A broker cannot terminate the sponsorship
4. Notify TREC who will notify the sales agent

1. Provide written notice to the sales agent

The broker must provide notice o the sale agent in writing, return the license to TREC and notify the commission of the termination.

Which type of licensee does not have the authorization to practice in Texas but can collect a commission from a Texas broker?

1. Texas sales agent
2. Unlicensed broker
3. Foreign broker
4. None of the above

3. Foreign broker

A broker who is licensed in another state or another country, does not have the right to practice in Texas, but they can receive a commission from a licensed Texas broker. The foreign brokers' license needs to be active.

Which form is used to provide notice about flood hazard areas?

1. Information about special flood hazard areas
2. Addendum for coastal area property
3. Texas flood hazard form
4. None of the above

1. Information about special flood hazard areas

This form is used to provide notice to buyers about special flood hazard area. It provides information about flood risk area and flood insurance.

What is the definition of a gross lease?

1. A lease that states that the tenant is responsible for all operating expenses of the property
2. A lease that states the property is to be rented as is
3. A lease that states the landlord will pay the operating expenses of the property
4. A long-term lease that requires the tenant to pay all operating expenses

3. A lease that states the landlord will pay the operating expenses of the property

This type of lease states that even though the tenant is paying rent, the tenant is not responsible for maintaining the repairs or expenses. The landlord is responsible for paying for all expenses.

A broker is required to keep documents for 4 years. Which is not a document they are required to keep?

1. Property management agreement
2. Lease application forms
3. Move-in and move-out property condition forms
4. They are required to keep all the listed documents

4. They are required to keep all the listed documents

According the TREC regulations a broker is required to keep all of the listed documents for 4 years

1. Property management agreement
2. Lease application forms
3. Move-in and move-out property condition forms

___________ is not recognized by the state of Texas but it is a form of concurrent ownership between a husband and  wife.

1. Tenancy by the entirety
2. Community property
3. Unity of possession
4. Unity of marriage

1. Tenancy by the entirety

Not recognized by Texas, tenancy by the entirety only lasts as long as the couple is married. It states that each party has the right to survivorship over property and cannot be terminated without consent of the other.

Texas Property Code Chapter 221, also known as __________, governs and regulates timeshare interests.

1. Texas Investment Property Act
2. Teas Property Act
3. Texas Timeshare and Vacation Property Act
4. Texas Timeshare Act

4. Texas Timeshare Act

This act governs and regulates timeshare interest which are comprised of properties and estates. This act only applies to properties that are located in the state of Texas.

What type of lease would a tenant take when using a warehouse for the purpose of manufacturing and distribution?

1. Gross Lease
2. Net Lease
3. Percentage Lease
4. Proprietary Lease

2. Net Lease

This is a lease where the tenant pays rent and part of utilities fee and property taxes. The landlord is tasked with paying the utility bills and property taxes that are not covered by the tenant. This lease is common in commercial real estate.

What is a notice given on a pending lawsuit?

1. Lis Pendens
2. Statute of limitations
3. Notice of intent
4. Notice of default

1. Lis Pendens

This is a legal notice that a lawsuit concerning a real estate property is pending. Usually involves a property title or claims of ownership interest. Details of a property whose title is in question are required to be filed at the county record to notify future buyers and lenders.

How long are brokers required to hold onto property files?

1. One year
2. Three years
3. Five years
4. Never

2. Three years

Brokers are required by law to hold on to a copy of property files for a minimum of 3 years. This is to act as a proof in case of a dispute in the future. These include copies of all listings, deposit receipts, cancelled checks and trust records executed or obtained during the transaction.

TREC says:

When a broker maintains a trust account, documentary records of each deposit or withdrawal for that account must be retained for four years. [Rules 535.146((c)(6) and (e)] TREC requires a broker to maintain for at least four years from the date of a closing or termination of a contract eight specific types of records in a format that can be readily made available to the Commission. [Rule 535.2(h)]

What are outside amenities that maximize use of the property called?

1. Cosmetic improvements
2. Essential improvements
3. Offsite improvements
4. Supplemental improvements

3. Offsite improvements

Offsite improvements are amenities that are not within the premise of the structure but are necessary to maximize the use of the property and ultimately increase the value of the property.

Which form of ownership passes the shares of ownership upon death?

1. Life Estate
2. Severalty
3. Tenancy in common
4. Joint tenancy

4. Joint Tenancy

Joint tenancy is a form of ownership in which several people own a property together, each with equal shares and rights. If one of the owners in a joint tenancy dies, that owner's share in the property is automatically passed to the remaining owners.

[Severalty is when ONE person owns a property (being "severed" from others. Life Estate is when a person has the right to live or use a property during the life estate owner's lifetime or until his or her death. Someone else owns the property.]

What is the money available after deducting all expenses?

1. Cash out returns
2. Cash flow
3. Cash on cash return
4. Revenue

2. Cash Flow

The amount of profit retained after paying off all operating cost and repurposing amounts made in dividends fur use in future repairs. To be able to profit from an investment one must maintain a positive cash flow.

What is the term for commercial property depreciation?

1. 5 years
2. 29 years
3. 39 years
4. 40 years

3. 39 years

After 39 years a commercial property is eligible for applying for value loss by depreciation in order to reduce property taxes levied.

What is a statement that shows total revenues generated based on rent rolls and management styles?

1. invoice statement
2. Income statement 
3. Pro Forma statement
4. Operating statement

4. Operating statement

A financial statement that is done monthly and annually to document the expenses incurred and revenue gained. From the statement one can calculate the net profit or loss within the period.

[Pro Forma is an estimate or projection of revenues]

What type of building is divided into two condominiums where the first is the co-op residential units (80%) and the second is for professional/commercial unites (20%)

1. Condo
2. Condop
3. Co-op
4. Multi family home

2. Condop

This is a real estate building where the housing units are divided into co-op residential units and condos. They offer more flexible rules than a co-op. Condo units are retained or sold separately by the developer.  (Mixed-Use Building)

What is the relationship where agents work together in the best interest of their respective clients?

1. Dual agency
2. Single agency
3. Co-broking
4. Co-borrowing

3. Co-broking

Where two or more agents that are involved in the same transaction agree to work together in order to meet the needs of both parties and are legally required to act in the best interest o the clients.

What is the legal term for passing responsibility of your apartment onto another tenant?

1. Sub lease
2. Lease assignment
3. Leasehold
4. Lease break

2. Lease assignment

A lease assignment is a legal arrangement where the landlord allows a tenant to assign another tenant to lease the apartment. The tenant is responsible for paying rent and utility fees directly tot he landlord. In the case of a lease assignment, the previous tenant is held accountable for defaults in unpaid bills by the assignee. 

[A sublease is the renting of property by a tenant to a third party for a portion of the tenant's existing lease contract. Even if a tenant subleases a property, the original tenant is still liable for the obligations stated in the lease agreement, such as the payment of rent each month.]

What is the notice given when a tenant is in violation of the lease agreement and is up for eviction?

1. Notice to cure
2. Notice of intention
3. Notice of termination
4. Notice to quit

3. Notice of termination

This is a notice given to a tenant to end tenancy stating the reason for termination of tenancy, the date by which the tenant is required to vacate the premise and the legal implication of refusing to move.

What is the notice given when a squatter is accommodated without the landlord's consent?

1. Notice of default
2. Notice of intention
3. Notice to cure
4. Notice to quit

4. Notice to quit

This is a notice given by the landlord regarding someone living in the home as a squatter. The notice usually states that the tenant is required to vacate the property within 10 days and the implications of failing to do so.

What is the situation that arises when an individual that is legally required to make payments does not fulfill this obligation?

1. Delinquency
2. Defaulting
3. Escalation
4. Foreclosure

1. Delinquency

What is the name given to a real estate transaction where buyers outbid each other for the property?  [tricky]

1. Acceleration clause
2. Escalation Clause
3. Public auction
4. Tender

2. Escalation clause

A clause that allows a buyer to set a selling price but any offers higher than the stated price will automatically lead to an increase in the set price giving the buyers an option to outbid each other and help in making the decision for the sale price.

Who oversees that code restrictions are followed and construction/renovation are done by licensed professionals?

1. Contractor
2. Department of Buildings
3. Zoning board
4. Architectural Review Board

2. Department of Buildings

In order to ensure that building codes are adhered to and construction and renovations are done by professionals, a building permit is required for any building or renovation project. A building permit is a go ahead issued by a local government to a contractor to construct or remodel a building. It is issued to ensure that building code are adhered to and standards are maintained.

[in Texas it is the Building Code Enforcement]

Which type of estate has rights to the property for an indefinite duration?

1. List estate
2. Estate for years
3. Freehold estate
4. Less-than-freehold estate

3. Freehold Estate

An estate that has exclusive rights of the property for an undefined length of time. The three types of freehold estates  are fee simple absolute, fee simple defeasible and life estate.

 A fee simple represents absolute ownership of land, and therefore the owner may do whatever he or she chooses with the land. Fee simple defeasible is a legal term and type of property ownership, where the ownership is dependent on specific conditions. If the conditions of ownership are violated, the property may be returned to the grantor or to a specified third party.  A life estate is the vehicle by which the property owner, or the grantor, transfers legal ownership to another person or the life tenant. ... Almost all deeds creating a life estate will also name a remainderman, the person or persons who get the property when the life tenant dies.

What is the definition of a trust deed?

1. The owner of the real estate property who leases the property to another
2. A deed with limited or no warranties
3. A deed that transfers property to a family member
4. A document used when one party has taken out a loan from another party to purchase property

4. A document used when one party has taken out a loan from another party to purchase property

It represents an agreement between the borrower and the lender in which the property is held in a trust managed by a third party until the borrower pays off the loan.  The legal title of the property is transferred to the third party to hold Trust deed are used in place of mortgages in numerous states.

Which TREC form is used to report deficient conditions in a home?

1. Notice to prospective buyer
2. Property inspection form
3. Seller's disclosure notice
4. Public information request

2. Property inspection form

TREC requires inspectors to report certain hazardous conditions. The conditions may not have violated building codes at the time of construction, but TREC considers them as hazardous.

What is the maximum payment a party can receive from the Real Estate Inspection Recovery Fund?

1. $25,000
2. $50,000
3. $12,500
4. $10,000

3. $12,500

$12,500 per transaction and $30,000 for all claims against one inspector

A ________ is responsible for negotiating easement for lands being sought for development.

1. Salesperson
2. Right-of-way agent
3. Broker
4. Lawyer

2. Right-of-way agent

An agent typically hired by a third party or government to acquire land. They negotiate easement sand eminent domain processes for third parties.

(Carpet bagger, LOL)

Which is not a canon of professional ethics and conduct?

1. Fidelity
2. Integrity
3. Illegal discriminatory practices
4. Honor

What must a person do prior to filing a claim for payment from one of the recovery funds?

1. A certified letter must be sent to the TREC license holder
2. A lawsuit must be filed against the TREC license holder
3. They must wait 90 days before filing a claim
4. Mediation  must occur between the client and the licensee

2. A lawsuit must be filed against the TREC license holder

A lawsuit must be filed, and the plaintiff must obtain a civil judgement from the court against the TREC license holder. This also must happen within two years of the events that triggered the complaint. An abstra.ct of judgement and writ of execution must also be obtained against the licensee

Before you file an application for payment from one of the recovery funds, you must file a lawsuit in court and obtain a civil judgment from the court against a TREC license holder. You must file your lawsuit in the court within two years after the events giving rise to your claim occurred.

TREC requires __________ in earnest money contracts.

1. Mediation
2. Concessions
3. Joint ventures
4. Trust deeds

1. Mediation

Mediation is required when the issues cannot be resolved through informal discussions. Parties must also find a mediation service and pay the cost for mediation.

Which is true about a real estate profession with an inactive license?

1. The licensee can still work on active contract but cannot seek out new contracts
2. The licensee cannot conduct any real estate transactions
3. The licensee will lose their license if they do not activate it within 30 days
4. The licensee must wait one year to reactivate the license

2. The licensee cannot conduct any real estate transactions

A license can be inactive for up to 6 months in the state o Texas. The licensee cannot conduct real estate transactions until the license is placed on active status.

The __________ is TREC's centralized customer service division.

1. Administration and management services
2. Reception and communication services
3. Education and examination services
4. Licensing and registration services

2. Reception and communication services

This division is responsible for receiving and responding the communications from consumers, license holders and applicants. The communications are in person, via email and telephone.

What happens when a property with a homestead exemption is sold?

1. The homestead exemption transfers to the new owner
2. The homestead exemption follows the seller
3. The homestead exemption becomes null and void
4. None of the above.

1. The homestead exemption transfers to the new owner

The sellers cannot keep the exemption and it transfers to the new owner. It is valid only when it is used as a primary residence by the owners.

[When you sell or buy a home, the taxes for the year will generally be prorated at the closing. ... If you buy or sell a home that has only a general homestead exemption on it, the exemption normally stays in place for that entire tax year. The final taxes for the year will reflect the exemption.]

The _______ is used to pay final judgments against licensed inspectors.

1. Agreed judgment review
2. Real Estate Recovery Trust Account
3. Public information request
4. Real Estate Inspection Recovery Fund

4. Real Estate Inspection Recovery Fund

This fund pays out judgements against licensed inspectors. TREC collects the fees for the fund from inspectors.

What is the statutory period for adverse possession?

1. 3 years
2. 5 years
3. There are a few different potential statutory periods
4. 10 years

3. There are a few different potential statutory periods

Texas has 3 different statutory periods which are dependent on the circumstance. The first is adverse possession after 3 years and must establish a color of title. The second is 5 years and the trespasser needs to show proof of cultivation of the land and payment of taxes. The third is 10 years and the trespasser must establish the standard elements of adverse possession.

Which is not a type of real estate inspector?

1. Professional inspector
2. Property inspector
3. Real estate inspector
4. Apprentice inspector

2. Property Inspector

The apprentice and real estate inspector need to be sponsored and indirectly supervised while the professional inspectors do not need sponsorship or supervision.

Which is not a type of homestead exemption?

1. School taxes
2. Low income exemptions
3. Disabled veteran homeowners
4. Option percentage exemptions

2. Low income exemptions

There are 7 different types of homestead exemptions. The different types are school taxes, county taxes, disabled veteran homeowners, optional percentage exemptions, optional 65 or older or disabled exemptions, and 65 or older and disabled exemptions.

__________ is when there is more space than the market demands.

1. Demand market
2. Buyer's market
3. Seller's market
4. Leasing market

1. Demand  Market

This type of market typically forces a landlord to lower rent because the demand is low. When the demand is high, the landlord may be able to increase rent.

TRELA does not apply to which of the following? [bad question]

it should be: TRELA applies to which of the following?

1. State licensed attorney
2. On-site management of an apartment complex
3. Licensed real estate brokers and salesperson
4. TRELA applies to all of the above

3. Licensed real estate brokers and salesperson

TRELA regulations only apply to licensed brokers and salespersons. TRELA is designed to provided guidelines for the licensed agent and protect consumers.

The owner of a residential property dies 2 weeks after signing an exclusive right-to-sell agreement. The broker finds a buyer for the property but the new administrator of the estate does not want to sell. Which statement is true?

1. The administrator is not required to sell the property or pay commission to the broker
2. The administrator can refuse to sell the property but must pay commission to the broker
3. The administrator is required to respect the wishes of the deceased owner
4. The agreement is between the broker and the residential property

1. The administrator is not required to sell the property or pay commission to the broker

Upon the death of a seller, the contract between a broker and the deceased owner is no longer valid. the same would occur if the broker were to pass away.

What are the four economic characteristics of land?

1. Scarcity
2. Permanence of investment
3. Area preference
4. All of the above

4. All of the above

1. Scarcity
2. Permanence of investment
3. Area preference
4. All of the above characteristics affect the value of the property as a product