Law of Contracts

Unenforceable

A person approaches an owner and says, “I’d like to buy your house.” The owner says, “Sure.” And they agree on a price. What type of contract is this?

all parties to the contract exchange binding promises

A contract is said to be bilateral if

A bilateral contract

A legally enforceable agreement under which two parties promise to do something for each other is classified as

An express contract

When the parties agree to terms and show their intentions in words, whether orally or written, the agreement is said to be

Bilateral

A contract in exchange for a promise is said to be

Executory

After a real estate sales contract is signed but before title actually passes, the status of the contract is

A unilateral contract

A seller accepted money from a buyer for his unrestricted right to cancel the purchase transaction (option to terminate) within 10 days of the executed date of the sales contract. This agreement is

Agreement of the parties is demonstrated by their actions and conduct

A contract is said to be implied if the

An executed contract

Once a sales contract is completed with all parties fulfilling their promises, the ownership changing hands, and the seller receiving the sales price amount, the sales contract is

OLD CAR

What are an agent’s fiduciary duties to their client?

Obedience

Loyalty

Disclosure

Confidentiality

Accounting

Reasonable Care & Diligence

What does the acronym “OLD CAR” stand for?

HFD

Honesty

Fairness

Disclosure (only material facts)

What does the acronym, HFD stand for?

HFD

What do you owe to customers?

Possession

Interest

Time

Title

What does the acronym PITT stand for?

is a type of ownership in which more than one individual enters into an ownership agreement through a property deed

What is joint tenancy?

Joint tenancy

What is considered to be a “Poor Man’s Will”?

Police Power

Eminent Domain

Taxation

Escheat

What does the acronym PETE stand for?

PETE

What are the 4 central government powers?

4 old ladies driving 35 mph in a 60mph zone

43,560 sq ft/acre

Best way to remember square feet in an acre.

Annual Percentage Rate

The acronym APR stands for

Multiple Listing Service

The acronym MLS stands for

For Sale By Owner

The acronym FSBO stands for

Department of Housing and Urban Development

What does the acronym HUD stand for?

Fair Housing Administration

What does the acronym FHA stand for?

Close of Escgrow

What does the acronym COE stand for?

Agreement of the parties is demonstrated by their acts and conduct

A contract is said to be implied if the

9 members appointed by the governor for 6-year terms

Which of the following is the correct composition of the Texas Real Estate Commission?

National Association of REALTORS (NAR)

Which of the following groups of real estate professionals subscribes to a code of ethics?

Escheat

When an individual dies and leaves no will, any real property will transfer to the state through a process called

Texas Real Estate License Act (TRELA)

What law specifically prohibits licensees from practicing law?

Land at, above, and below the earth’s surface

Real estate is defined as

Unenforceable

A person approached an owner and says, “I’d like to buy your house.” The owner says, “sure.” And they agree on a price. What type of contract is this?

Land

The earth’s surface to the center of the earth and the airspace above the land, including the trees and water, plus permanent man-made additions is

The air rights

Which of the following may be leased?

Subsurface rights

A landowner sells his property but retains the rights to any oil and gas found beneath the property. These rights are called

Governor

Who appoints the TREC Commission?

Police power

The government’s authority to appoint local citizens to serve on boards to set zoning standards and building codes for their communities is an example of

The rules of the Texas Real Estate Commission have the full force and effect of the law

Which of the following is True?

State and local laws and ordinances

Air and solar rights are regulated by

Disposition

When an owner of real estate sells the property to some else, which of the sticks in the bundle of legal rights is the owner, as the seller, using?

Condemnation

The process whereby the government acquires privately owned property for public use

Void

A contract to perform an unlawful act is considered which of the following?

Fee Simple Absolute Estate (interest)

A purchaser of real estate learns that his ownership rights could continue forever and that no other person can claim to be the owner or have any ownership control over the property. This person’s interest in real estate is a

All real estate is taxed

In order to raise funds to meet the public needs, our government is authorized to collect taxes on real estate. Which of the following statements is FALSE regarding taxes?

“I’m not an attorney, but here’s what it means…”

A licensee representing a seller is asked by that seller, “What does paragraph 5 of this TREC-promulgated contract mean to me?“ What is the best answer by that agent?

The right to cultivate any plant

The bundle of legal rights includes all of the following EXCEPT

Bundle of legal rights

The ownership rights of real property are described as the

Staggered six-year terms

What is the term for a TREC Commissioner?

In writing to be enforceable

Under the statute of frauds, all contracts for the sale of real estate must be

Valid

When a contract contains all of the essential elements that make it legally sufficient or enforceable and is binding in a court of law, it is

The rules have the full force and effect of the law

What effect do the rules made by the commission have on licensees?

Fee simple determinable

A person owned the fee simple title to a vacant lot adjacent to a hospital and was persuaded to make a gift of the lot to the hospital. She wanted to have some control over its use, so her attorney prepared her a deed to convey ownership of the lot to the hospital “so long as it is used for hospital purposes.” After completion of the gift, the hospital will own a

Advising a person regarding the validity of title to real property

According to the Texas Real Estate License Act, which of the following requires that a license be a practicing attorney?

Community property

According to some states, any real property that either spouse of a married couple owns at the time of the marriage remains separate property. Further, any real property acquired by either spouse during the marriage (except by gift or inheritance) belongs to both of them equally. What is this form of ownership?

Fee simple subject to a condition subsequent; this estate allows the original owner to reacquire the property but would need to go to court to assert this right

A property owner decided to give his property to the city with the condition that no alcohol consumption is allowed on the premises. The city developed the property as a golf course and made substantial investment in the development of the property. Over the years, to make up for a drop in revenue, the city allowed the club house to sell beer and wine to their customers. Which type of estate does the city have and what rights does the original owner have?

Condemnation

____ is the process by which the government exercises the right of eminent domain, by either judicial or administrative proceedings.

Condemnation

Which of the following is NOT a government power?

Annual crops

Real estate includes all of the following EXCEPT

9

How many commissioners are on the Texas Real Estate Commission?

Sewer

Which of the following is considered an improvement?

Remainder

An owner conveys ownership of her residence to her church but reserves for herself a life estate in the residence. The future interest held by the church is a

A deed

A seller sold his property and is now transferring title to the new owner. The instrument he will use is

Ownership of the land, including the owner’s bundle of legal rights and evidence of that ownership, by a deed.

Title, as it relates to real property means,

None of these

Which of the following is legal for the licensee to draw up?

-deed

-note

-contract

Dedication

Which of the following is NOT a governmental power?

-police power

-eminent domain

-dedication

-taxation

Advice on having the abstract examined by an attorney

An agent represents a buyer. Which of the following forms of advice can the agent give to an unrepresented buyer?

Voidable

When a contract appears to be valid, but may be rescinded or disaffirmed by one or both parties based on some legal principle, it is

An easement, water rights, and improvements

An example of an appurtenance is

The commission

Which of the following real estate-related entities has rule-making authority in the state of Texas?

Subsurface rights

A buyer purchased a parcel of land and immediately sold the mineral rights to an oil company. The buyer gave up which of the following?

Homestead rights

A homeowner may be allowed certain protection from judgments of creditors as a result of the state’s

All of these

What is one of the purposes of the Texas Real Estate License Act?

-regulation of residential service companies

-regulation of licensed real estate brokerage practitioners

-regulation of licensed real estate inspectors

Homestead

Which of the following is a legal life estate?

Police power

Local communities passing environmental protection laws is an example of

To protect the public

What is the main purpose of the Texas Real Estate Commission?

Void

When a contract lacks one of the essential elements of a legal contract, it is

Escheat

In order to prevent property from being ownerless or abandoned, the government acquires property through the process of

Buyer is notified that the seller has accepted the offer.

An offer to purchase by a potential buyer is considered accepted when the

All of these

Which of the following is a purchase agreement?

-offer to purchase

-contract of purchase and sale

-earnest money agreement

Buyer and the seller

A real estate sales contract contains the complete agreement between the

A list of registered sex offenders within six blocks of the property.

A sales contract may include all of the following EXCEPT

Contract of sale

The agreement of the buyer and seller in a real estate transaction is established in what document?

A history of previous owners of the property

Which of the following additional details will a sales contract NOT include?

A list of any personal property that is to be left with the property

A sales contract may include

One-to-four Family Residential Contract

What is the Texas Real Estate Commission real estate purchase agreement called?

There is no contract

A buyer and a seller agree to all of the terms of a contract EXCEPT for who the title company is going to be. What is the result of this disagreement?

Contract

Which of the following sets out in detail the agreement between the buyer and the seller and establishes the legal rights and obligations of both parties?

A valid contract

A buyer terminating the sale contingencies creates

A voidable contract

In general, contingencies in a sales contract create

A hazardous material inspection contingency

Contingencies that often appear as part of a standard sales contract include all of the following EXCEPT

A personal reason for requiring the contingency

A contingency should contain all of the following elements EXCEPT

An appraisal contingency or financing contingency

A contingency that particularly protects the buyer’s earnest money deposit is

The buyer

The property sale contingency protects

Testing for the presence of lead-based paint

An inspection contingency allows for

Contingencies

For a sales contract to be enforceable, one would need to address

Ensures clear title

A title contingency

Contingency

What type of clause requires a certain act to be done or a certain event to occur before the contract becomes binding?

a change to the original agreement

An amendment is

Both the buyer and seller

A loan contingency protects

Loan contingency

A contingency that particularly deals with financing issues is