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Texas Promulgated Forms 130 Test Questions
How is paragraph 2 of the Residential Condominium Contract different from the One to Four Family Residential Contract? - Correct Answer ✔ ✔ It
provides the property description of the condominium unit.
In what way are the Condominium Contract and the Farm and Ranch Contract different from the other four contract forms? - Correct Answer ✔
✔ Paragraph 6 is different in both
Which of the following is NOT defined as a "Document" in the TREC Residential Condominium Contract? - Correct Answer ✔ ✔ resale
certificate
What information does the TREC Consumer Information Form contain? - Correct Answer ✔ ✔ Information regarding TREC recovery funds
Which of the following best describes the Information About Brokerage Services form? - Correct Answer ✔ ✔ It is approved for voluntary use
by licenseholders.
Who completes the promulgated resale certificate? - Correct Answer ✔ ✔
Homeowners association
Buyer enters into a short sale agreement with seller with an option to terminate seven days after the effective date using the TREC Short Sale Addendum. The effective date is January 2. The seller notifies the buyer that the lienholder has consented to the sale on January 10. What is the last day of the option period? - Correct Answer ✔ ✔ January 17
Under the Addendum for Reservation of Oil, Gas, and Other Minerals, what information must seller provide to the buyer if seller conveys all of seller's interest in the mineral estate? - Correct Answer ✔ ✔ Contact
information of any existing mineral lessee
Which of the following is TRUE regarding the information contained in the Texas Real Estate Consumer Notice Concerning Hazards or Deficiencies? - Correct Answer ✔ ✔ A Texas home inspector is not required to conduct a
code compliance inspection.
According to the Addendum for Property Subject to Mandatory Membership in a Property Owners Association, who may act on behalf of the parties to obtain the subdivision information? - Correct Answer ✔ ✔ The title
company
Under the TREC One to Four Family Residential Contract, how long does the seller have to provide the seller's disclosure notice to the buyer? - Correct Answer ✔ ✔ The time period is negotiated between the parties
What can happen if a buyer fails to pay for an option fee within three days of execution of a contract under paragraph 23 of the TREC One to Four Family Residential Contract? - Correct Answer ✔ ✔ The paragraph will not be
a part of the contract.
If the property is located outside the limits of a municipality, which notice in paragraph 6 of the One to Four Family Residential Contract provides notice about the extraterritorial jurisdiction of the municipality? - Correct Answer ✔ ✔ Annexation
Which of the following is TRUE under paragraph 7D of the One to Four Family Residential Contract? - Correct Answer ✔ ✔ Buyer's agreement
to accept the property as is under paragraph 7D(1) or (2) precludes buyer from inspecting the property under paragraph 7A.
A buyer promises to pay an option fee of $500 within three days of execution under paragraph 23 of the TREC One to Four Family Residential Contract to purchase a 15-day option to terminate. What happens if the buyer pays the fee
four days after execution? - Correct Answer ✔ ✔ The buyer will not
have the unrestricted right to terminate the contract.
The buyer wants to use her favorite title company to handle the purchase of an investment property. The seller's agent always uses a different title company. Who selects the title company? - Correct Answer ✔ ✔ It is
negotiated by the parties
Provided the seller will not incur any expense, how many days after their receipt does the seller have to cure the timely objections of the buyer or any third-party lender? - Correct Answer ✔ ✔ 15
A buyer and seller agree that buyer will buy the seller's home for $475, with no option to terminate using the TREC One to Four Family Residential Contract. The lender requires the roof to be replaced, the perimeter to be treated for termites, and the stucco on the back of the house to be repaired. The roof will cost $10,000, the termite treatment will cost $1,800, and the stucco repair is estimated to cost $8,000. Seller agrees to pay for everything. What are the buyer's options? - Correct Answer ✔ ✔ The buyer may
not terminate the contract.
___ is checked to indicate that the buyer has received the seller's disclosure. - Correct Answer ✔ ✔ 7B
Who issues the receipt for the earnest money under the One to Four Family Residential Contract? - Correct Answer ✔ ✔ The escrow agent
Buyer and seller enter into a contract for buyer to purchase seller's property using the One to Four Family Residential Contract. Seller wants to reference and attach the seller's disclosure notice to the contract. What should the seller's agent advise the seller? - Correct Answer ✔ ✔ Do not attach the
notice to the contract
What are unallowables under the TREC One to Four Family Residential Contract? - Correct Answer ✔ ✔ Lender fees that the borrower is
prohibited from paying so the seller pays them
How are smoke alarms dealt with in the TREC temporary lease forms? - Correct Answer ✔ ✔ Tenant expressly waives landlord's duties to inspect
and repair smoke alarms.
Buyer and seller enter into a contract for buyer to purchase seller's house using the One to Four Family Residential Contract. Buyer wishes to purchase
a 10-day option to terminate the contract. How long does the buyer have to pay the option fee? - Correct Answer ✔ ✔ Three days
What is the purpose of paragraph 24 of the One to Four Family Residential Contract? - Correct Answer ✔ ✔ The parties may add contact
information of their attorneys.
Which type of loans have unallowable fees that a buyer is prohibited from paying under the TREC One to Four Family Residential Contract? - Correct Answer ✔ ✔ FHA loans
Which of the following is NOT an appropriate use for paragraph 11, Special Provisions, of the One to Four Family Residential Contract? - Correct Answer ✔ ✔ The contract is in a second or back-up position.
Which of the following may be included in paragraph 11, Special Provisions, of the One to Four Family Residential Contract? - Correct Answer ✔ ✔
The seller is unavailable by phone Tuesdays and Thursdays from 1:00 to 4:00 pm.
___ is different in each contract, describing the type of property that is covered. - Correct Answer ✔ ✔ Paragraph 2
A buyer and seller enter into an agreement for buyer to purchase seller's 150 acre ranch using the TREC Farm and Ranch Contract. The parties agree that the sales price is calculated at $6,000 per acre and that the sales price will be adjusted based on the survey. The buyer gets a survey done which indicates that the ranch is 135 acres. The buyer wants to adjust the sales price accordingly. What is seller's option under the contract? - Correct Answer ✔ ✔ Seller may not terminate because the variance is 10%.
Which TREC contract should be used to purchase a newly constructed home that has tenants residing in the house? - Correct Answer ✔ ✔ The One
to Four Family Residential Contract
A new home builder is selling a spec house that she briefly lived in before listing it in the local MLS. A buyer is interested in making an offer on the house. Which TREC contract should the buyer's agent advise the buyer to use to submit the offer? - Correct Answer ✔ ✔ The One to Four Family
Residential Contract (Resale)
Under paragraph 13 of the TREC Residential Condominium Contract, which of the following is TRUE? - Correct Answer ✔ ✔ Cash reserves from
regular condominium assessments for deferred maintenance established by the association will NOT be credited to seller.
How are cash reserves from regular condominium assessments for deferred maintenance and capital improvements established by the association addressed in the TREC Residential Condominium Contract? - Correct Answer ✔ ✔ They are not credited to seller.
Under the TREC New Home Contract (Incomplete Construction) how are change orders that result in a lower sales price addressed in the contract? - Correct Answer ✔ ✔ The amounts paid in cash and financed are reduced
proportionately.
Which of these promulgated forms does NOT include "time is of the essence"? - Correct Answer ✔ ✔ Loan Assumption Addendum
A couple starts celebrating the sale of their home after their listing agent calls them with the news that they've received an acceptable offer. The listing agent says he is coming over to get their acceptance and signatures. However, by the time the agent arrives the sellers are completely inebriated. The agent has them sign the contract and then takes it to the title company. This contract is - Correct Answer ✔ ✔ voidable
Which of the following is TRUE for the statute of limitations for contracts for the sale of real estate and oral contracts for leases of less than one year? -
The legal description of the property is in paragraph __ - Correct Answer ✔ ✔ 2
Earnest money is addressed in paragraph __ - Correct Answer ✔ ✔ 5
The names of the sellers and buyers, including marital status, are in paragraph __ - Correct Answer ✔ ✔ 1
License holder disclosure is addressed in paragraph __ - Correct Answer ✔
✔ 4
The amount of the cash down payment is in paragraph __ - Correct Answer ✔ ✔ 3
The Addendum for Release of Liability on Assumed Loan and/or Restoration of Seller's VA Entitlement allows ___ - Correct Answer ✔ ✔ the parties
to negotiate the time to complete their duties under the agreement
The buyer wishes to make an offer to buy a house for $185,000, with 70% financed through a first loan, 10% financed through a second loan, and a 20% cash down payment. How much is the down payment? - Correct Answer ✔
✔ $37,000. Twenty percent of $185,000 is $37,000. The first loan will be for
$129,500 and the second loan will be for $18,500.
If the buyer wants to be sure the fireplace screen stays with the property, the buyer's agent should - Correct Answer ✔ ✔ do nothing; it is already in
the contract.
A buyer wishes to get a USDA guaranteed loan. Which form should the agent use to address that type of financing? - Correct Answer ✔ ✔ Third
Party Financing Addendum
The earnest money paragraph addresses all of the following EXCEPT - Correct Answer ✔ ✔ Title policy company
Which law requires that a contract have a proper legal description? - Correct Answer ✔ ✔ The Statute of Frauds
Which paragraph of the One to Four Family Residential Contract indicates if the buyer has received the seller's disclosure notice? - Correct Answer ✔
✔ Paragraph 7
What should a licensee do if the seller wishes to retain an item not specifically listed as an improvement or accessory in paragraph 2 of the TREC One to Four Family Residential Contract? - Correct Answer ✔ ✔ List the item
as an exclusion in paragraph 2D.
The owner's title policy is a contract between which two parties? - Correct Answer ✔ ✔ The buyer and the title company
What happens if no dollar amount is inserted in paragraph 23 of the TREC One to Four Family Residential Contract but the time period is filled in as 10 days? - Correct Answer ✔ ✔ The paragraph is not part of the contract.
Buyer must object not later than the closing date or within how many days after receiving the commitment, exception documents, and the survey? - Correct Answer ✔ ✔ An agreed-upon number
Which of the following is NOT a reason for providing earnest money? - Correct Answer ✔ ✔ It serves as consideration for the contract.
Which of the following promise exchanges is considered adequate consideration to create a legally binding contract? - Correct Answer ✔ ✔
The buyer's promise to buy and the seller's promise to deliver title.
A buyer and seller enter into an agreement for buyer to purchase seller's 2,000-acre ranch using the TREC Farm and Ranch Contract. The parties agree that the sales price is calculated at $2,000 per acre and that the sales price will be adjusted based on the survey. The buyer gets a survey done which indicates that the ranch is 2,400 acres. The seller wants to adjust the
sales price accordingly and buyer disagrees. What is buyer's option under the contract? - Correct Answer ✔ ✔ The answer is buyer may terminate
with written notice to the seller. Since the variance is more than 10% of the original sales price
How is paragraph 14 different in the Residential Condominium Contract? - Correct Answer ✔ ✔ Because the seller owns a single unit only, casualty
loss addresses that situation.
How is paragraph 7 different in both New Home Contracts, the Unimproved Property Contract, and the Farm and Ranch Contract from the residential contract? - Correct Answer ✔ ✔ There are different seller's disclosures
required depending on the type of property.
Which TREC contract should be used to sell or purchase a new condominium? - Correct Answer ✔ ✔ None of the TREC contracts
should be used.
What does the statement on page nine of the TREC Farm and Ranch Contract indicate regarding payment of brokers' fees? - Correct Answer ✔
✔ Brokers' fees or the sharing of fees between brokers are not fixed,
contract should the buyer's agent advise the buyer to use? - Correct Answer ✔ ✔ None of the TREC contracts are suitable for this transaction.
Why is the Seller's Disclosure of Property Condition form not addressed in the TREC Unimproved Property Contract? - Correct Answer ✔ ✔ It is
not required under section 5.008 of the property code.
A buyer and seller enter into an agreement for buyer to purchase seller's 3,500-acre ranch using the TREC Farm and Ranch Contract. The parties agree that the sales price is calculated at $5,000 per acre and that the sales price will be adjusted based on the survey. The seller gets a survey done which indicates that the ranch is 3,900 acres. The seller wants to adjust the sales price accordingly and buyer disagrees. What happens if buyer fails to timely terminate the contract? - Correct Answer ✔ ✔ The additional cost is
allocated as agreed in paragraph 3D.
Under the TREC Residential Condominium Contract, how old can the resale certificate be? - Correct Answer ✔ ✔ It must have been prepared no
more than three months before the date it is delivered to buyer.
A buyer and seller enter into an agreement for buyer to purchase seller's 200- acre ranch using the TREC Farm and Ranch Contract. The parties agree that
the sales price is calculated at $4,000 per acre and that the sales price will be adjusted based on the survey. The buyer gets a survey done which indicates that the ranch is 220 acres. The seller wants to adjust the sales price accordingly. What is buyer's option under the contract? - Correct Answer ✔ ✔ Buyer may not terminate because the variance is 10%.
How is paragraph 13 of the Residential Condominium Contract different from the One to Four Family Residential Contract? - Correct Answer ✔
✔ It addresses cash reserves from regular condominium assessments.
What law or rule requires disclosure of insulation R-Value? - Correct Answer ✔ ✔ Federal regulations
Buyer and seller enter into a contract for buyer to purchase seller's condominium unit using the TREC Residential Condominium Contract with an effective date of January 5. Seller delivers the condominium documents three days after the effective date. Assuming no option period, what is the latest date on which buyer may cancel the contract and still get her earnest money refunded? - Correct Answer ✔ ✔ January 13
