Texas Real Estate MCQs

Personal property may become real property by the process of

devise.
reliction.
attachment.
alienation.

If a property generates a negative cash flow, in order to be an attractive investment to a prospective purchaser

there must be a substantial down payment.
there must be a large depreciable base.
there must be a substantial increase in property value.
there must be little deferred maintenance.

The closed sales price of an income property divided by its gross monthly rent equals the

estimated market value.
capitalization rate.
gross income multiplier.
gross rent multiplier

What is 75% of $250,000?

$187,500
$182,500
$62,500
none of the above

Racial discrimination under the Civil Rights Act of 1866 is enforced by

local jurisdiction.
state court.
federal court.
justice of the peace court.

Under eminent domain, if the parties cannot agree to property value, which type of lawsuit will be filed by a city to take the property for public ...

annexation
injunction
condemnation
specific performance

The term that describes the percentage of the appraised value of a property that a lender will finance is called

loan-to-value ratio.
ownerâ€™s equity.
certificate of reasonable value.
capital investment.

Abby is purchasing a home with a mortgage loan and is paying for an appraisal of the property. The appraisal is made to determine

if Abby got a good deal.
if the seller had the house priced right.
if the value of the collateral satisfies the lenderâ€™s underwriting guidelines for the loan.
whether the buyerâ€™s financing requirements meet the underwriting guidelines for the loan.

The best definition of a material fact is that it

reveals only information about the physical condition of a property.
is an agreed upon condition of the purchase agreement.
is a factor a builder considers when selecting building materials.
is anything important to any person making a decision.

Which of the following is a government right in land?

eminent domain by a retail center
eminent domain by a public utility company
inheritance by the state when a person dies without a will
taking a property by condemnation

Market data approach appraising may require adjustments of sold comparables by an appraiser for all of the following EXCEPT

sale date of comparable.
replacement cost of structure.
financing made available by seller.
lot size and location.

A contract that was signed by a minor is

voidable by the minor, but not by the other party.
voidable by either party.
void.
invalid and unenforceable

Under the federal tax code, a broker/salesperson agreement must contain all of the following EXCEPT

the commission arrangements between the broker and the salesperson.
that the salesperson must pay his or her own licensing fees.
that the salesperson is free to work on his or her own work schedule.
that the salesperson is responsible for paying quarterly federal income tax payments

Which of the following statements concerning an easement is true?

An easement is always appurtenant.
An easement is an estate at sufferance.
An easement can only be created by a deed.
An easement appurtenant runs with the land.

A comprehensive buyer representation agreement would address the

buyerâ€™s desired property description.
duties of the agent, termination date, and compensation agreement.
agentâ€™s contact information.
family contact names and numbers.

Which of the following phrases is NOT discriminatory in an advertisement to lease a nonexempt one hundred-unit apartment complex under the current Fed...

no handicapped alterations will be made
adults only, no children
no smoking on premises
females only

Which of the following is NOT an example of a public land use control?

spacing between residential and commercial properties
gas water heater exhaust system
percentage of brick veneer on home exterior
easements for wetland drainage

In an independent contractor agreement, the broker must make clear to the agent

his working hours.
all company policies and procedures.
the agentâ€™s responsibility for paying his own income taxes.
the agentâ€™s income tax rate.

The most accurate way to uniquely locate and bound a parcel of real property is to use

a topographical map.
latitude and longitude bearings.
the assessor parcel number.
a metes and bounds survey.

Broker A represents a seller. Broker B shows this same sellerâ€™s home to an unrepresented buyer. What kind of agency exists in this scenario?...

subagency
cooperating brokerage
cooperation
fiduciary agency

A loan in which the borrower pays interest only over the life of the loan and then pays the entire principal at maturity of the loan is called

a balloon loan
an amortized loan.
a term loan.
a package loan.

If a salesperson dies, his listings

remain intact with the broker.
continue.
belong to his family.
terminate with the broker

Commercial building site value is commonly quoted to a buyer by price per

square foot.
front foot.
acre.
parcel or tract.

Which is true of ownerâ€™s title insurance?

It guarantees ownership in perpetuity.
It is transferable to the next property owner.
It will reimburse for title losses up to the face amount of the policy.
It protects the lender against loss of lien rights.

What are the buyerâ€™s choices upon presentation of a counteroffer?

accept or reject
counteroffer or accept
think about it for a while
accept, reject, consider, or counteroffer

When money is escrowed each month to cover annual payments of insurance and taxes, the mortgage is called

a blanket mortgage.
a budget mortgage.
a graduated payment mortgage.
a growing equity mortgage.

When a broker represents a buyer, this means that the sponsored salesperson

represents the seller.
represents the buyer.
represents either the buyer or the seller.
is an intermediary between the broker and the buyer.

When dealing with a prospective buyer, the listing agent must reveal which of the following?

The previous owner had AIDS.
The property has been rezoned.
The principal of the nearby school has just been fired.
The previous owner committed suicide.

Steering prospective buyers to a certain area because of their national origin is also known as

less favorable treatment.
blockbusting.
channeling.
redlining.

Under Regulation Z of the TILA, which of the following must be disclosed when a â€œtrigger termâ€ is used in advertising a mortgage loan?

the exact monthly payment
the total amount of payback
the right of rescission
the APR

The Federal Housing Administration (FHA), which operates under the Department of Housing and Urban Development (HUD), encourages lenders to make ho...

lending money to private lenders.
insuring qualified loans.
purchasing loans from primary lenders.
guaranteeing a portion of the loan.

If there is some question about an item being real property or personal property, the best determinant is

the value of the item.
the agreement of the parties.
the appraiserâ€™s opinion.
the title companyâ€™s ruling.

A listing agreement should define the agentâ€™s obligations and the clientâ€™s

showing instructions
preferred closing date.
negotiating concessions.
representations regarding the sellerâ€™s right to sell the property

Which phrase in a lender advertisement to secure borrowers would be in violation of the Equal Credit Opportunity Act?

low interest rates and fast loan approvals
assumable note for future ease of selling
must be under 60 years of age for 30-year term loans
rates will be adjusted according to number of minor children

A lender is providing 90% of the financing for a new house. If the house appraises for $75,000, what is the buyerâ€™s down payment?

$7,500
$67,500
$9,000
$750

When an agent uses the word we when talking to a buyer, the buyer might believe that the agent

represents him/her.
represents the seller.
is just chatting.
understands what the buyer wants or needs in a home.

When dealing with third parties, whom the salesperson does not represent, which of the following is NOT owed to those third parties?

disclosure of repaired slab foundation
fiduciary duties
fair treatment
advice to have thorough home inspections

Property taxes are assessed annually at $4.05/100 of value. If the assessed value of a property is $100,000, how much are the taxes for the year?

$4,000
$5,040
$4,050
$405

A borrower can expect to pay a mortgage insurance premium (MIP) for

an 80% LTV conventional loan.
a VA (Department of Veterans Affairs) loan.
a graduated payment loan.
an FHA 203(b) loan.

A broker may define the sponsored agentâ€™s general duties and authority, but not

the scope of his activities.
the scope of his authority.
company policies and procedures.
how the agent does his business.

An encumbrance that states a monetary interest in someoneâ€™s property is called

an encroachment.
a deed restriction.
an estate at sufferance.
a lien.

Which of the following will terminate an agency relationship?

death of the customer
death of the salesperson
death of the client
divorce of spouses in a common agency

The Residential Lead Base Paint Hazard Reduction Act allows tenants to have prospective residential lease property inspected by certified profession...

1978
1980
1990
2001

Truth-in-Lending laws were created primarily to protect

the lenders.
real estate brokers.
consumers.
property owners.

Which of the following deeds provides the purchaser with the least protection in regards to covenants and/or warranties given by the seller?

trusteeâ€™s
special warranty
general warranty
quitclaim

Which of the following is NOT an annual operating expense used in income approach appraising?

real estate taxes
debt service to fund outstanding loan balances
property casualty insurance
property management and leasing fees

An accrued charge on a closing statement is paid

in advance.
in arrears.
always by buyer.
always by seller

A salesperson receives an offer on his listing from a salesperson with another broker representing a buyer who is a previous client of the listing ...

The salesperson owes no duty to any previous client.
The salesperson owes full fiduciary duties to a previous client.
The salesperson owes only the duty of full disclosure to a previous client.
The salesperson owes the duty of confidentiality to the previous client.

When a property owner leases his property, at the end of the lease he has

a reversionary interest in the property.
a remainderman interest in the property.
30 days to terminate the lease.
a possessory right to the property

Ad valorem real estate tax is which type of lien?

specific/voluntary
general/voluntary
specific/involuntary
general/involuntary

Under the Truth-in-Lending Act, the cost of credit extended must be expressed as

the discount rate.
the prime interest rate.
the actual percentage rate.
the annual percentage rate.

Which method of foreclosure is used in a deed of trust mortgage lien?

non-judicial power of sale
judicial court ordered sale
sheriffâ€™s sale at the courthouse
deed in lieu of accepted by lender

If a seller receives multiple offers

he must consider the offers in the order in which they were received.
he must negotiate the first offer before he can see the others.
he may accept any one of them regardless of when it was received â€œin time.â€
he must disclose to all parties the existence of the other offers.

The entity that loses ownership through a deed of trust mortgage foreclosure is the

lender.
beneficiary.
mortgagee.
mortgagor

One advantage of condominium ownership over cooperative ownership is that

condominium owners pay no maintenance fees.
condominium owners can mortgage their units individually.
cooperative owners have no choice in which unit they occupy.
there is basically no difference in the two forms of ownership.

Unauthorized disturbance of established wetlands may result in

a suit for condemnation.
justice of the peace court fines.
county court civil actions.
federal felony charges

The form of ownership that would give an investor the greatest flexibility when selling his or her interest would be

a general partnership.
ownership in severalty.
joint tenancy.
a limited partnership

What is the indicated value of a home if the others in the neighborhood sold recently for between $160,000 and $167,000, and the subject house has ...

$168,000
$175,000
between $168,000â€“$175,000
between $160,000â€“$175,000

Commercial banks prefer to make short-term loans like construction loans and 90-day business loans. The reason for their preference is

the source of their funds is primarily from CDs (Certificates of Deposit).
the source of their funds is primarily from savings accounts.
the source of their funds is primarily from checking accounts.
the source of their funds is primarily from issuing bonds.

What is the difference between a competitive market analysis and a comparative market analysis?

sold comparables used
amenity differences between the comparables
adjustments for time of sale, such as location and property condition
properties currently for sale in the same market area

A signed sales contract generally can be cancelled between the parties if

fraud can be proved.
one party changes his mind.
other offers are received.
the seller is out of town on the closing date.

Under which federal law is â€œblockbustingâ€illegal?

Sherman Anti-Trust Act
Fair Housing Act
Equal Credit Opportunity Act
Community Reinvestment Act

If Bob and Sally own a property together and the deed to the property gives no indication as to what tenancy exists, they would own the property as...

tenants in common.
stockholders in a corporation.
joint tenants.
general partners.

What is the purpose of the Truth-in-Lending Act (TILA)?

The TILA enforces Regulation Z.
The TILA ensures disclosure of clear and full information regarding the true cost of credit.
The TILA regulates the APR.
The TILA ensures that lenders receive full disclosure of credit and income information from borrowers

For there to be a valid right to purchase or terminate, an option contract must contain

notice to terminate.
at least seven days to back out of the agreement.
dollar consideration.
a right of rescission

A listing agent wanting to give a seller maximum protection from subsequent claims by the buyer would strongly recommend

that the seller cover all obvious property defects with cosmetic treatments.
that the buyer have the property thoroughly inspected prior to closing.
that the seller offer the property â€œas is.â€
that the buyer sign a â€œhold harmlessâ€ agreement against the seller.

Which of the following actions by a landlord is NOT discriminatory under the Federal Fair Housing Act?

refusing to lease in regards to age of children
refusing to lease based on the fact that the tenant has a pet
not showing property to tenants because of their country of origin
not leasing to people with certain physical handicaps

Every broker in town has a listing with the commercial property at the corner of Main and Elm. What type of agreements do they have?

exclusive agency listings
open listings
net listings
exclusive right to sell listings

A seller is not in possession of an inspection report from a buyer who recently terminated an option to purchase. However, the seller is aware that...

not obligated to disclose this information because the report belongs to the previous buyer.
not obligated to disclose this information because he does not actually have the written report in his possession.
obligated to disclose this information as a material fact.
obligated to disclose this information to his agent who will determine the necessity of disclosure

Regarding the landlordâ€™s duties under a residential lease agreement, current legal thinking holds that

only written agreements may be pursued in court.
the tenant is obligated to keep the premises in good repair.
the owner is obligated to keep the premises in good repair.
the owner is obligated to repair only those items required by law

When a buyer is your customer, which of the following services would you NOT provide him/her?

loyalty
honesty
fairness
material disclosures about the property

Accretions or soil deposits added to property adjoining a river may also be referred to as

avulsion.
alluvion.
allodial.
erosion

If a material fact concerning the condition of a residential property is known by the listing broker but intentionally not disclosed to the buyer, ...

guilty of fraud.
subject to litigation.
subject to license revocation.
all of the above

Which of the following commission schedules are illegal?

fee for service
hourly rate
percentage of sales price
none of the above

To qualify for innocent landowner status, a purchaser under federal law must have the property environmentally inspected

prior to taking title.
within 30 days of ownership.
in the first year of ownership.
when economically feasible.

A competitive market analysis usually contains all of the following EXCEPT

average price per square foot.
contract sales price of pending sales in market area.
closing date of sold comparables.
days on market of comparables

How may express agency be created?

only by written and signed agreements
by using state promulgated forms
by specific written or verbal agreements
by the actions of the agent

Fines for non-compliance under Regulation Z are imposed by which jurisdiction?

municipal court
county court
state attorney generalâ€™s office
Federal Reserve

If a homeowner has a first mortgage loan balance of $63,250, a second mortgage loan balance of $12,000, and unpaid taxes of $3,015, how much equity...

$25,000
$21,735
$100,000
$24,750

Which of the following instruments is used to transfer real property ownership?

conveyance
title
deed
devisee

Which of the following is the Texas Real Estate Commission NOT empowered to do?

suspend or revoke the license of a broker found guilty of giving legal advice
make a payment from the Recovery Fund to pay the legal fees of a salesperson that was found to be innocent
contract with a national firm to write and administer an exam to determine competency of a licensee applicant
publish forms for mandatory use by those to whom it issues a broker or salesperson license

Pamela, who lives in a suburb in which many homes are rented, decides to open a rental agency in order to assist her friends in finding suitable re...

acceptable because it is relatively small in scope.
acceptable because it involved only Pamelaâ€™s friends.
unacceptable because it involves an activity for which a real estate license is required.
unacceptable unless she makes a voluntary contribution to the Recovery Account.

A hairdresser told a broker about a client who was looking for a new house. The broker contacted the hairdresserâ€™s client and sold him a hom...

absolutely not
yes, but not more than $50
a gift with a value of not more than $50 may be given
only a thank you note is permitted

According to the provisions of the Texas Real Estate License Act, which of the following must be included in every listing agreement or buyer repre...

the marital status of the sellers or buyers
the geographic market area of representation
a termination date that is not subject to prior notice
a proposed sales price and description of settlement costs

What state agency is responsible for licensing and regulating professional real estate inspectors and their apprentice inspectors?

the Texas Department of Licensing and Regulations
the Texas Real Estate Commission
the Texas Real Estate Inspectors Agency
the Texas Attorney Generalâ€™s office

Upon obtaining the sellerâ€™s signature on a listing agreement, the broker or salesperson is obligated to

advertise the property in the local paper or on the brokerâ€™s website.
set up a listing file and obtain an identification number from the brokerâ€™s preferred title company.
cooperate with other brokers in the area who might have a ready, willing, and able buyer for the property.
provide the seller with a copy of the agreement that is legible, true, signed, and correct.

For a document to be eligible for recording at the county courthouse, the document must be

drafted by a Texas-licensed attorney.
witnessed by two persons with legal capacity.
in English and acknowledged in the presence of a public official.
in any language as long as it is witnessed by two lawful citizens and is notarized.

The rules of the Texas Real Estate Commission prohibit a licensee from creating language and entering it in contract forms that define the legal ri...

â€œThis transaction is contingent upon the sale of the purchaserâ€™s present home.â€
â€œBuyer reserves the right to terminate this contract for any reason within eight (8) days of the effective date.â€
â€œBuyer will do a walk-through inspection during the four (4) hours immediately preceding closing.â€
â€œThis contract is contingent upon satisfactory appraisal in the amount of the sale price.â€

What term identifies a broker who has written authority to represent both the buyer and the seller in a real estate transaction?

facilitator
mediator
intermediary
general agent

What state law requires leases for more than one year to be reduced to writing and to include a legal description of the property to be occupied by...

Truth-in-Lending Law
Hardness Tenant Act
Statute of Frauds
Sherman and Clayton Acts

Salesperson Judy Jones is employed by A to Z Realty, Inc. Judy learns that A to Zâ€™s broker of record missed her licensing renewal deadline. ...

acceptable because she was following the advice of her broker.
acceptable because the license at issue is not her own.
unacceptable because upon expiration of her sponsoring brokerâ€™s license, Judyâ€™s salesperson license is inactive.
unacceptable because Judy, as a real estate licensee, must conduct an independent investigation of any disputed fact

What must a broker do to comply with the Texas Real Estate License Act when placing a sign on a property offering it for sale?

have written authorization from the owner of the property before placing the sign
have an exclusive agency listing agreement from the owner before placing the sign
identify the broker as a licensed agent on the sign
both a and c

If the effective date on a contract was June 26, 2005 and it granted the buyer an option period of eight days, on what date at midnight did the opt...

July 4, 2005
July 3, 2005
July 5, 2005
July 2, 2005

May a broker decide to offer cooperation with other brokers through subagency when placing a listing in the Multiple Listing System (MLS) of the lo...

yes, always
no, never
yes, but only when the broker feels that it is in the clientâ€™s best interest
yes, but only upon receiving written authorization from the client to do so

Which of the following would be considered a part of community property owned by a married couple that are legal residents of the state of Texas?

two rent houses owned free and clear by the husband prior to marriage
the $200,000 settlement that the wife received from her employerâ€™s insurance company for an injury sustained last year at work
the interest income from the certificates of deposit owned by the wife and purchased with the proceeds of her personal injury settlement
a $500,000 inheritance received by the husband from the estate of his grandmother

Which of the following is NOT an addendum promulgated by the Texas Real Estate Commission?

Addendum for Sale of Other Property by Buyer
Sellerâ€™s Temporary Lease
Addendum for Sellerâ€™s Disclosure of Information on Lead-Based Paint and LeadBased Paint Hazards
Release of Liability on Assumption of FHA, VA or Conventional Loan, Restoration of Sellerâ€™s Entitlement for VA Guaranteed Loan

Salesperson Sidney failed to complete his Mandatory Continuing Education (MCE) prior to the expiration date of his current license. On the fifth of...

Even though Sidney sent his license fee to the state before the expiration date of the current license, he committed an illegal act because he had not completed the required education.
Fortunately, Sidney paid his license fee before the deadline and was issued a new license with a requirement to pay an additional $200 and complete the education within 60 days.
Sidney committed an illegal act and is subject to a fine and denial of an ability to reapply for a new salesperson license.
None of the statements are true

Which of the following actions could leave a broker open to a charge of practicing law without a license?

advising a seller that property is overpriced and therefore unlikely to sell
advising a seller that, in the brokerâ€™s opinion, title to the subject property is not valid
advising a purchaser to obtain a lawyerâ€™s opinion of title or a title insurance policy
adding factual statements and business details requested by the principals to standard forms promulgated by The Texas Real Estate Commission

Parties can be compelled to take a dispute to mediation prior to being able to initiate litigation by

a judge.
The Texas Real Estate Commission.
a broker.
either party

A real estate salesperson decides to sell his own property without using a broker. In offering his property for sale, what must the salesperson do? ...

He must disclose the name, address, and telephone number of his sponsoring broker.
He is prohibited by law from selling his own property without using his broker.
He must disclose to the buyer that he holds a real estate license.
He is exempt from the need to disclose anything since he is acting solely as a private citizen.

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Texas Real Estate MCQs