TEXAS REAL ESTATE BROKER EXAM
1. A broker is holding earnest money for a transaction that
fails to close because of a dispute between the buyer and
seller. What should the broker do with the earnest
money?
A. Release the funds to the seller immediately
B. Release the funds to the buyer immediately
C. Keep the funds as compensation for services rendered
D. Continue to hold the funds until both parties agree in
writing or a court orders disbursement
The Texas Real Estate Commission (TREC) requires brokers to
maintain disputed trust funds in the escrow account until the
parties provide written instructions or a court determines who is
entitled to the funds. A broker cannot unilaterally decide
ownership of disputed earnest money.
2. Which type of listing gives the broker the greatest
protection regarding commission?
A. Open listing
B. Net listing
C. Exclusive right-to-sell listing
D. Exclusive agency listing
An exclusive right-to-sell listing guarantees the broker
compensation regardless of who procures the buyer during the
listing period. This offers the strongest protection for earning a
commission.
3. A real estate license holder owes fiduciary duties to:
,A. Customers only
B. The public only
C. The client represented by the license holder
D. Both parties equally in all situations
Fiduciary duties such as loyalty, obedience, disclosure,
confidentiality, accounting, and reasonable care are owed
specifically to the client, not merely to customers.
4. Which legal description method is commonly used in
subdivisions?
A. Metes and bounds
B. Government survey system
C. Rectangular survey system
D. Lot and block system
The lot and block system is most often used in platted
subdivisions where lots are identified by lot number, block
number, and subdivision name.
5. What is the primary purpose of zoning ordinances?
A. Increase property taxes
B. Guarantee property values
C. Control land use and development
D. Regulate mortgage interest rates
Zoning ordinances separate land into districts and regulate
permitted uses, density, and building requirements to promote
orderly community development.
6. Which of the following is considered real property?
,A. A tenant’s furniture
B. A refrigerator not attached to the property
C. A built-in dishwasher
D. A parked automobile
Built-in appliances attached to the property are considered
fixtures and therefore part of the real property.
7. A broker who represents both buyer and seller in the same
transaction with consent is practicing:
A. Subagency
B. Designated agency
C. Intermediary without appointments
D. Intermediary representation
Texas allows a broker to act as an intermediary if both parties
consent in writing. The broker must remain impartial unless
appointed associates are assigned.
8. What is the statute of frauds?
A. A federal lending law
B. A law requiring certain contracts to be in writing
C. A law governing environmental hazards
D. A consumer protection disclosure form
The statute of frauds requires contracts involving real estate
sales and leases longer than one year to be in writing to be
enforceable.
9. Which type of estate lasts for an uncertain period and may
continue indefinitely?
, A. Leasehold estate
B. Estate for years
C. Life estate
D. Fee simple estate
A fee simple estate is the highest form of ownership and
potentially lasts forever unless transferred or inherited.
10. Which of the following best describes a deed
restriction?
A. A government zoning regulation
B. A tax assessment
C. A private limitation on property use
D. A financing contingency
Deed restrictions are private limitations placed in deeds or
subdivision documents that restrict property use beyond
governmental regulations.
11. A buyer defaults on a purchase contract after earnest
money is deposited. The seller keeps the earnest money as
compensation. This is known as:
A. Novation
B. Specific performance
C. Liquidated damages
D. Rescission
Liquidated damages are predetermined amounts, such as
earnest money, agreed upon in advance as compensation if one
party breaches the contract.
1. A broker is holding earnest money for a transaction that
fails to close because of a dispute between the buyer and
seller. What should the broker do with the earnest
money?
A. Release the funds to the seller immediately
B. Release the funds to the buyer immediately
C. Keep the funds as compensation for services rendered
D. Continue to hold the funds until both parties agree in
writing or a court orders disbursement
The Texas Real Estate Commission (TREC) requires brokers to
maintain disputed trust funds in the escrow account until the
parties provide written instructions or a court determines who is
entitled to the funds. A broker cannot unilaterally decide
ownership of disputed earnest money.
2. Which type of listing gives the broker the greatest
protection regarding commission?
A. Open listing
B. Net listing
C. Exclusive right-to-sell listing
D. Exclusive agency listing
An exclusive right-to-sell listing guarantees the broker
compensation regardless of who procures the buyer during the
listing period. This offers the strongest protection for earning a
commission.
3. A real estate license holder owes fiduciary duties to:
,A. Customers only
B. The public only
C. The client represented by the license holder
D. Both parties equally in all situations
Fiduciary duties such as loyalty, obedience, disclosure,
confidentiality, accounting, and reasonable care are owed
specifically to the client, not merely to customers.
4. Which legal description method is commonly used in
subdivisions?
A. Metes and bounds
B. Government survey system
C. Rectangular survey system
D. Lot and block system
The lot and block system is most often used in platted
subdivisions where lots are identified by lot number, block
number, and subdivision name.
5. What is the primary purpose of zoning ordinances?
A. Increase property taxes
B. Guarantee property values
C. Control land use and development
D. Regulate mortgage interest rates
Zoning ordinances separate land into districts and regulate
permitted uses, density, and building requirements to promote
orderly community development.
6. Which of the following is considered real property?
,A. A tenant’s furniture
B. A refrigerator not attached to the property
C. A built-in dishwasher
D. A parked automobile
Built-in appliances attached to the property are considered
fixtures and therefore part of the real property.
7. A broker who represents both buyer and seller in the same
transaction with consent is practicing:
A. Subagency
B. Designated agency
C. Intermediary without appointments
D. Intermediary representation
Texas allows a broker to act as an intermediary if both parties
consent in writing. The broker must remain impartial unless
appointed associates are assigned.
8. What is the statute of frauds?
A. A federal lending law
B. A law requiring certain contracts to be in writing
C. A law governing environmental hazards
D. A consumer protection disclosure form
The statute of frauds requires contracts involving real estate
sales and leases longer than one year to be in writing to be
enforceable.
9. Which type of estate lasts for an uncertain period and may
continue indefinitely?
, A. Leasehold estate
B. Estate for years
C. Life estate
D. Fee simple estate
A fee simple estate is the highest form of ownership and
potentially lasts forever unless transferred or inherited.
10. Which of the following best describes a deed
restriction?
A. A government zoning regulation
B. A tax assessment
C. A private limitation on property use
D. A financing contingency
Deed restrictions are private limitations placed in deeds or
subdivision documents that restrict property use beyond
governmental regulations.
11. A buyer defaults on a purchase contract after earnest
money is deposited. The seller keeps the earnest money as
compensation. This is known as:
A. Novation
B. Specific performance
C. Liquidated damages
D. Rescission
Liquidated damages are predetermined amounts, such as
earnest money, agreed upon in advance as compensation if one
party breaches the contract.
