Law of Contracts - CHAMPIONS TEST

The TREC residential contract forms are:

Drafted by the Broker Lawyer Committee

Wrongful or criminal deception intended to result in financial or personal gain is called:

fraud

Under the Deceptive Trade Practices Act, __________ are defined as tangible chattels.

goods

If a seller will continue to occupy the property for one month after the closing, the buyer and seller should:

Enter into a Seller's Temporary Residential Lease

The Buyer and Seller Temporary Residential Lease forms may be used for a lease period not to exceed:

90 days

A seller's disclosure notice is not required

at a foreclosure sale

The type of law that deals with the relationship between the parties to a transaction, sales agents and brokers is:

Law of Agency

__________ is the body of laws and regulations enacted by federal and state legislative bodies.

Statutory Law

__________ extend above the surface without limitation.

Air Rights

Any man-made addition to land that is permanent, and is considered to become part of the land is known as a(n) __________.

Improvement

A(n) __________ is an entity created for the benefit of another.

Trust

An option contract is:

Unilateral contract

__________ is not a requirement of a valid contract.

Earnest Money

If a person has been judged to be incompetent, a contract is __________ because the person never had the capacity to enter into a contract in the first place.

void

The five essential elements of a valid and enforceable contract are, Consideration, Offer and Acceptance, Legal purpose, In writing and __________.

competent parties

A(n) __________ is an agreement between two or more parties to do something or to refrain from doing something.

contract

When an individual owns real property, he or she is said to have a (n) __________ in that property.

freehold estate

If property violates zoning, the owners must request a __________, which is permission to violate the rules.

variance

An example(s) of an appurtenance would be:

easements

There is no upper limit on the value of a Texas homestead.

true

A(n) __________ is an area of land separating one land use from another.

buffer zone

The French term __________ means a life estate that is based on the life of another.

pur autre vie

In a residential lease with a "right of first refusal" provision:

The tenant has the right to match or better any offer the landlord receives to prevent the property from being sold to someone else

A __________ is an employment agreement between the seller and the broker.

listing agreement

A(n) __________ is one that combines some of the elements of a sale with a lease.

lease purchase agreement

Prior to closing, severe damage to or destruction of a property under contract:

Can result in termination of the contract

The four major types of listing agreements are, exclusive agency, net listing, exclusive right to sell and __________.

open listing

In a __________ lease, the tenant's rent is based, in whole or in part, on the receipts of his or her business.

percentage lease

A(n) __________ is a type of seller financing wherein the owner retains title to the property while the purchaser takes possession of the premises and pays on the principal.

contract for deed

Which of the following requires a contract for the conveyance of real estate to be in writing to be enforceable?

statute of frauds

If a broker receives more than one offer on a property:

All must be presented to the seller unless the seller has instructed the broker otherwise

a counteroffer is:

a rejection, a new offer, able to be withdrawn prior to acceptance

A seller choosing to receive a buyer's earnest money after the buyer defaults on a contract is an example of:

liquidated damages

The most common form of financing used by buyers is:

third party financing

The Special Provisions paragraph of the contract allows license holders to insert:

Factual business details, Statements not addressed in the contract, Information for which there is no TREC-promulgated addendum, lease or mandatory form

An offer by a prospective purchaser can be terminated prior to acceptance due to:

expiration of a specified time period, bankruptcy of either party, a change in the law that renders the contract illegal

A(n) __________ is a provision in a contract that requires that a certain act or event happens in order for the contract to be binding on the party.

contingency

The Lead-Based Paint Disclosure is:

A federal requirement for residential property built prior to 1978

The closing date specified in a contract is usually a(n )"__________" date.

on or before

In Texas, real estate contracts are subject to satisfactory inspections.

false

A(n) __________ to a contract is an attachment that adds or further describes the rights and duties of the parties.

addendum

The term __________ is synonymous with contingent.

subject to

Texas Veteran's Housing Assistance Program loans can be:

FHA, VA, and convential

The least common form of mortgage financing is

seller financing

Real estate agents play a role that includes arranging for the pre-qualification / pre-approval of buyers.

true

The __________ is the percentage of the lesser of the appraised value or sales price that the lender will loan.

loan-to-value ratio

If the loan factor is $5.53 on a $200,000 loan, taxes are $2400/year and insurance is $1800/year, what is the monthly PITI payment?

1,456

A __________ is a pledge of real estate as security for the repayment of a debt.

mortgage

A written history of all instruments and happenings that may affect title is called:

an abstract of title

When the title history of a parcel of land has been researched back to the original conveyance by the government, the history is said to go back to the __________.

Sovereignty of the soil

__________ is the process by which a lender exercises its power of sale under a mortgage that is in default.

foreclosure

__________ occurs when an individual dies, leaving no valid will.

intestate succession

A(n) __________ description of property is a requirement for a valid deed.

legal

__________ occurs when an individual acquires title from the rightful owner through hostile, actual, and continuous occupation of the land for the statutory period.

adverse possession

RESPA regulates closings on:

1-4 family residential properties with federally related financing

__________ of RESPA prohibits any person who, pursuant to any agreement or understanding, gives or receives a fee or a thing of value for the referral of settlement business.

section 8

__________ implements the Real Estate Settlement Procedures Act.

regulation x

Ongoing expenses such as property taxes and property owner association fees that are divided between the buyer and the seller at closing are called __________.

prorations

Rule P-53 of the Texas Department of Insurance states that Title Companies:

Cannot provide food and beverages for a picnic for a single firm, Cannot provide an annual party for a single firm, Cannot provide continuing education classes unless they charge the market rate for those classes

A yearly tax bill is $2400 and has not been paid. The property has sold and closing is July 30th. How much will be owed at closing for taxes? (Use a 365-day year, round to the nearest dollar and the seller pays for closing day.)

$1,387

Bill is the buyer purchasing a property from Sally. All contingencies have been met and the parties are ready to close. One day prior to closing, Sally announces that she has changed her mind and is going to keep the property. Bill is determined to complete the purchase and acquire the property. The only default remedy in the contract that could result in Bill acquiring the property is___________________________.

specific performance

Elmer Fleckenfleck, an agent with After Hours Realty, was preparing a contract. The seller told Elmer that he wanted to stay in the property for at least a week after closing. Elmer said that would be no problem and entered the following text to Paragraph 11: "Seller and Buyer agree that Seller will remain in the Property for 7 days after closing and funding." In this case, Elmer has:

Engaged in the unlawful practice of law

The four economic characteristics of land are: scarcity, fixity, situs and ________.

modification

Joe is an agent at Tried and True Realty. He gets a $150,000 offer on a property that is listed for $199,500. In a recent phone conversation, the seller told Joe he would accept no less than $185,000 for the property. Knowing the seller's "bottom line," what should Joe do with the offer?

Joe should present the offer to the seller

An abstract of title is:

a complete written history of title

an option is:

a unilateral contract

A seller is going to continue to occupy a property for two days after closing. In this case, the parties should use the Buyer's Temporary Residential Lease form.

false

A contract in which only one party is obligated to perform is a________ contract.

unilateral

For tax prorations:

If taxes are not paid at or prior to closing the buyer shall pay for the current year, If taxes for the current year vary from the amount prorated at closing, the parties shall adjust the prorations when tax statements for the current year are available, The tax proration may be calculated taking into consideration any change in the exemptions that will affect the current year's taxes

________ is the right of the government to regulate and control the way land is used.

police power

A seller of coastal property abutting tidally influenced water must provide the ________.

Notice Regarding Coastal Area Property

RESPA prohibits ________, which is considered an abusive practice.

kickbacks

A claim, lien, charge, or liability attached to and binding real property is a(n) ________.

encumbrance

A(n) ________ is a provision in a contract that requires that a certain act or event happens in order for the contract to be binding on the party.

waiver

At closing, the contract is:

fully executed

FHA loans include two mortgage insurance premiums that must be paid by the borrower. They are the:

UFMIP and Annual Premium

________ are changes that are made to the original contract, such as changes to the closing date or changes to the sales price, down payment and/or the amount financed.

amendments

According to the Deceptive Trade Practices Act (DTPA), brokerage falls under the category of ________.

services

________ law is a body of law based on "common sense" and local custom.

common

Which kind of rights extend above the surface of property without limitation?

air rights

________ is the legal procedure whereby secured property may be sold to satisfy a borrower's unpaid promissory note.

foreclosure

The five essential elements of a valid and enforceable contract are, competent parties, offer and acceptance, legal purpose, in writing and ________.

consideration

The SAFE Act mandated the term ________.

Residential Mortgage Loan Originator

A(n) ________ occurs when a new contract is substituted for an existing one.

novation

A(n) ________ is a business venture that is owned by one individual.

Sole proprietorship

A(n) ________ is a listing in which the real estate broker's commission is the difference between the minimum net established by the seller and the price that the buyer is willing to pay.

net listing

The requirements for a valid lease are, competent parties, let and take agreement, in writing and ________.

description of the property

________ of an offer means that the accepting party does so with no change to the contract whatsoever.

acceptance

The ________ ensures that all consumers are given an equal chance to obtain credit

Equal Credit Opportunity Act

The formal judicial proceeding to prove the validity of a will and to distribute the assets of a decedent's estate is called:

probate

A ________ is a deed with no guarantees or warranties.

quitclaim deed

A ________ is the borrower's unconditional promise to repay the lender.

Promissory note

A "Section 502 Loan" is insured by the ________.

USDA

________ is evidence an individual has of his or her right to possess land.

Probate

A(n) ________ mortgage covers more than one piece of property.

blanket

Real property conveyed by will is called a ________.

devise

An offer may be withdrawn at any time prior to its acceptance by the offeree

true

The four categories of leasehold estates are: estate for years, tenancy at sufferance, tenancy at will and ________.

Periodic tenancy

Buyers' and sellers' marital status is not required in the contract.

true

Which of the following is a physical characteristic of land?

indestructability