Prepare for the Texas Real Estate Sales Agent exam with these practice questions and answers. This guide covers property law, contracts, TREC regulations, financing, and Texas-specific requirements.
Q: Texas Real Estate Commission (TREC)
Answer: -created in 1949-purpose: to administer the provisions of the License Act-authority to make rules and regulations-9 members (3 represent the general public, 6 are real estate brokers)-all appointed by the governor and approved by the Senate-serve 6 year terms-has the power to subpoena books, records, and witnesses-has the power to issue or revoke Real Estate Licenses
Q: Broker Lawyer Committee
Answer: -writes promulgated contract forms-13 members (6 are brokers appointed by TREC, 6 are lawyers appointed by the President of the State Bar Association, 1 is a public member appointed by the governor)
Q: Real Estate Recovery Fund
Answer: created by TREC to pay aggrieved persons who suffered a monetary loss due to unscrupulous acts of the licensees-persons can receive up to 3 times the amount of money lost-when an amount is paid out of it, the license of the individual is automatically revoked or suspended without a hearing (cannot be recovered until the fund has been repaid with interest)
Q: persons who must have a real estate license
Answer: 1.attorneys who participate in a commission split2.auctioneers involved in a real estate transaction3.apartment locators4.real estate salespeople5.the designated officer of a licensed real estate corporation or the designated manager of a licensed Real Estate Limited Liability Company (the designated one is a broker)1-4 MUST BE SPONSORED BY A BROKER AND RECEIVE COMMISSIONS ONLY FROM THAT BROKER
Q: steps in obtaining a real estate license
Answer: 1. meet the educational requirements2. submit an application with or without a sponsoring broker3. submit the required fees4. pass the state exam5. demonstrate integrity
Q: licensing requirements
Answer: -18 years of age-resident of Texas at the time of application-comply with legal residency requirements (not an illegal alien)
Q: educational requirements
Answer: 180 classroom hours with a minimum of 120 in core real estate courses-60 hours in Principles of Real Estate, 30 hours in Law of Contracts, 30 hours in the Law of Agency are mandatory
Q: TREC Consumer information form 1-1
Answer: -notifies the public of the recovery fund-applies to both real estate licensees and inspectors-must be displayed in the broker’s office-must be included in listing and buyer representation agreements, as well as any invoices for services
Q: Texas Real Estate License Act (TRELA)
Answer: -passed by legislation to protect the public against unscrupulous brokers and salesmen-rules and regulations are construed liberally with a view toward their purpose, and have the full force and effect of the law
Q: foreign broker
Answer: a broker from another state-must work through resident brokers-may collect commission from a Texas broker, as long as that broker does not negotiate in Texas
Q: advertising rules
Answer: -broker name must be on each page of the web site-licensee’s web site must include the name of sponsoring broker-when advertising listed property, broker or company name must be in the ad
Q: Senate Bill 489
Answer: allows the broker to act as an intermediary in a transaction where he represents both the seller and the buyer and has the written permission of both parties including how the broker will be paid-only a broker can act as an intermediary-appropriate for the broker to appoint associates to work with the parties in the transaction (may give advice and opinions to one party)-requires a licensee to give Information About Brokerage Services (IABS) to a prospect at the first substantive dialogue
Q: substantive dialogue
Answer: a face-to-face meeting where substantive dialogue of real estate takes place or any mailing with a substantial amount of information about a particular property
Q: subagent
Answer: a licensee who represents the seller while being sponsored by a broker other than the listing broker-working with a buyer customer rather than a buyer client
Q: Seller’s Disclosure of Property Condition
Answer: must be given to a buyer before he signs an offer to make that offer binding on the buyer-if the buyer does not have the disclosure before signing, he has 7 days to terminate his offer, after receiving the disclosure-disclosure required in most states, but not all (required in Texas)
Q: new listing
Answer: a licensee has 5 days to enter a new listing into the MLS
Q: contracts
Answer: -must use standard contract forms when available-TREC has promulgated sales contract forms for most residential properties (no forms for commercial transactions)-MUST use a TREC promulgated form unless another contract form has been prepared and is REQUIRED by the owner of the property-Broker Lawyer Committee writes forms, TREC promulgates them
Q: Seller’s Temporary Lease Addendum TREC 15-3 and Buyer’s Temporary Lease Addendum TREC 16-3
Answer: used when the lease period is 90 days or less
Q: backup offers
Answer: -all must be presented to the seller, order does not matter-to become effective the previous contract must be terminated and the backup buyer must pay any option fee, name any option period, and deposit any earnest money with an escrow agent-option fee must be paid independently of any other consideration
Q: party accepting the final change
Answer: the last party to sign a contract-broker is responsible for filling in the effective date- individual has four years from the effective date of a contract to file a complaint with TREC regarding the licensee involved (must be written and signed)
Q: contingency clause
Answer: a clause in a contract requiring a condition to be met
Q: earnest money deposit
Answer: if a broker accepts an earnest money deposit, and acts as an escrow agent, the money must be deposited in a trust account by the close of business of the 2nd business day after the execution of the contract-broker must keep records of this account for 4 years
Q: Statute of Frauds
Answer: requires that all contracts that relate to the transfer of any interest in real estate must be in writing to be enforceable-also applies to compensation agreements, such as listings and buyer representation agreements
Q: RE inspectors
Answer: must use promulgated forms for residential inspections
Q: mediation
Answer: a mediator hears both sides of a dispute and tries to help the parties come to an agreement
Q: arbitration
Answer: an arbitrator hears both sides of a dispute and tells the parties what to do
Q: community property
Answer: -a statutory estate in Texas-all property acquired during marriage, including property acquired with labor, is jointly owned by the husband and wife-income on separate property is community property-increase in value on separate property is not community property
Q: homestead
Answer: parcels of real estate owned and occupied by families (one per person or family)-a statutory estate in Texas-protected from forced sale by all creditors except: mortgage, property taxes, mechanics and materialmen’s liens, and homeowner associations-designated to protect the interests of homeowners-if foreclosed on for unpaid property taxes, the owner has 2 years to redeem the property (6 months for unpaid HOA fees)-max size: urban 10 acres, rural 200 acres-derive from the Texas Constitution
Q: Texas Deceptive Trade Practices-Consumer Protection Act (DTPA)
Answer: allows an aggrieved consumer to hold a seller of goods and services liable for damagesresulting from deceptive or unfair trade practices-allows for the recovery of triple damages-does not apply to commercial properties over $500,000-individual has 2 years from the discovery of the deception to file a complaint
Q: intestate succession
Answer: the laws that govern how property passes when a person dies without a will or with a will that makes only a partial distribution of his/her property-courts will appoint an administrator to settle the estate-property will be distributed according to the Laws of Descent and Distribution-heirs will have Title by Descent
Q: penalties for practicing an act of brokerage without a license
Answer: -guilty of a Class A Misdemeanor-subject to a fine of not more than $4000 and/or imprisonment in county jail for up to one year-persons guilty of a violation of the License Act and whoever profited there from are liable for additional civil penalties of up to three times the amount of money received
Q: salesperson’s sponsoring broker
Answer: responsible to the TREC, the public, and the clients for the acts of a salesperson