LAW OF CONTRACTS PRACTICE TEST 2026
QUESTIONS WITH COMPLETE SOLUTIONS
◉ A seller's homeowner's insurance policy is cancelled at the time of
closing. They will receive WHAT after closing for the part of their
premium that was paid in advance? Answer: a refund check
◉ What are the three parties to the deed of trust?* Answer:
Borrower, lender, and trustee
◉ Which of the following is NOT a right that comes with the power
of attorney? Answer: The right to make personal investments with
the principal's funds
◉ What is a method of withdrawing from a contract without actually
canceling it?* Answer: assignment
◉ Jasper and Aziz are engaging a real estate transaction. They want
to make sure the interest being conveyed is officially and accurately
recorded. What would they use to do that?* Answer: one of the sales
contracts promulgated by TREC
◉ What does the title company do with the earnest money check?
Answer: They deposit it into an escrow account.
,◉ What is a unilateral contract? Answer: a contract in which one
party (the offeror) makes a promise in exchange for a reciprocal act
on the part of the second party (the offeree)
◉ If a homeowner sells his home, he is said to be separated from his
home via: Answer: voluntary alienation
◉ How do lenders recover their money when borrowers do not pay
their mortgage?* Answer: The lender can foreclose, take title to the
property and sell it to recover as much money as possible.
◉ What does RESPA stand for? Answer: Real Estate Settlement
Procedures Act
◉ Liens, easements, deed restrictions, and encroachments are all
ways that WHAT can affect the use of real property?* Answer:
encumbrances
◉ A promissory note is: Answer: the borrower's personal promise to
repay the loan to the lender
◉ A sale contract must include the minimum requirements for a
valid contract as well as: Answer: a legal property description
,◉ A buyer and seller are parties to a sales contract. The buyer makes
several payments before the seller rescinds the contract. The seller
must: Answer: return all payments they received from the buyer
◉ Which of the following regarding fiduciary duties and transactions
with multiple principals is TRUE:* Answer: The agent owes fiduciary
duties to only the principal they are representing.
◉ Land and everything growing on it or attached to it including,
sheds, buildings, trees, and crops are identified as: Answer: real
estate and real property
◉ Eduardo made several changes to his contract. WHAT are these
changes called and WHO must receive a copy of them?* Answer:
These changes are amendments and the title company must receive
a copy of them.
◉ Lynn leases an apartment. She invites her mother and her friend,
Gaby, over for dinner. Of the parties present, Lynn is responsible for:
Answer: damages caused by all parties present (Lynn, Lynn's
mother, and Gaby)
◉ Protecting consumers of real estate services, enforcing the laws
the legislature passed in the License Act, and ensuring the
, availability of capable and honest real estate service providers are
all responsibilities of the: Answer: Texas Real Estate Commission
◉ Jack and Jill own a property as tenants in common. Jack dies. What
happens to Jack's interest in the estate?* Answer: Jack's interest will
go to Jack's heirs
◉ Which of the following statements is TRUE if a license holder is
acting solely as a principal and selling her own home? Answer: The
license holder can use the promulgated form, but it is not required.
◉ What might express agency look like?* Answer: the principal
appointing the broker, and then the broker accepting that
appointment either in writing or orally
◉ What is an exclusive right to sell listing? Answer: a listing
agreement that gives the broker the right to the commission no
matter who sells the property
◉ Alejandra is a seller. Joe is a buyer. During their transaction,
Alejandra holds the legal title to the property until Joe pays in full.
Alejandra and Joe are using a: Answer: contract for deed
QUESTIONS WITH COMPLETE SOLUTIONS
◉ A seller's homeowner's insurance policy is cancelled at the time of
closing. They will receive WHAT after closing for the part of their
premium that was paid in advance? Answer: a refund check
◉ What are the three parties to the deed of trust?* Answer:
Borrower, lender, and trustee
◉ Which of the following is NOT a right that comes with the power
of attorney? Answer: The right to make personal investments with
the principal's funds
◉ What is a method of withdrawing from a contract without actually
canceling it?* Answer: assignment
◉ Jasper and Aziz are engaging a real estate transaction. They want
to make sure the interest being conveyed is officially and accurately
recorded. What would they use to do that?* Answer: one of the sales
contracts promulgated by TREC
◉ What does the title company do with the earnest money check?
Answer: They deposit it into an escrow account.
,◉ What is a unilateral contract? Answer: a contract in which one
party (the offeror) makes a promise in exchange for a reciprocal act
on the part of the second party (the offeree)
◉ If a homeowner sells his home, he is said to be separated from his
home via: Answer: voluntary alienation
◉ How do lenders recover their money when borrowers do not pay
their mortgage?* Answer: The lender can foreclose, take title to the
property and sell it to recover as much money as possible.
◉ What does RESPA stand for? Answer: Real Estate Settlement
Procedures Act
◉ Liens, easements, deed restrictions, and encroachments are all
ways that WHAT can affect the use of real property?* Answer:
encumbrances
◉ A promissory note is: Answer: the borrower's personal promise to
repay the loan to the lender
◉ A sale contract must include the minimum requirements for a
valid contract as well as: Answer: a legal property description
,◉ A buyer and seller are parties to a sales contract. The buyer makes
several payments before the seller rescinds the contract. The seller
must: Answer: return all payments they received from the buyer
◉ Which of the following regarding fiduciary duties and transactions
with multiple principals is TRUE:* Answer: The agent owes fiduciary
duties to only the principal they are representing.
◉ Land and everything growing on it or attached to it including,
sheds, buildings, trees, and crops are identified as: Answer: real
estate and real property
◉ Eduardo made several changes to his contract. WHAT are these
changes called and WHO must receive a copy of them?* Answer:
These changes are amendments and the title company must receive
a copy of them.
◉ Lynn leases an apartment. She invites her mother and her friend,
Gaby, over for dinner. Of the parties present, Lynn is responsible for:
Answer: damages caused by all parties present (Lynn, Lynn's
mother, and Gaby)
◉ Protecting consumers of real estate services, enforcing the laws
the legislature passed in the License Act, and ensuring the
, availability of capable and honest real estate service providers are
all responsibilities of the: Answer: Texas Real Estate Commission
◉ Jack and Jill own a property as tenants in common. Jack dies. What
happens to Jack's interest in the estate?* Answer: Jack's interest will
go to Jack's heirs
◉ Which of the following statements is TRUE if a license holder is
acting solely as a principal and selling her own home? Answer: The
license holder can use the promulgated form, but it is not required.
◉ What might express agency look like?* Answer: the principal
appointing the broker, and then the broker accepting that
appointment either in writing or orally
◉ What is an exclusive right to sell listing? Answer: a listing
agreement that gives the broker the right to the commission no
matter who sells the property
◉ Alejandra is a seller. Joe is a buyer. During their transaction,
Alejandra holds the legal title to the property until Joe pays in full.
Alejandra and Joe are using a: Answer: contract for deed
