TEXAS PROMULGATED CONTRACTS FORMS (TREC) 200
ACTUAL QUESTIONS AND CORRECT ANSWERS WITH
RATIONALE ALREADY GRADED A+ NEW!!!!!!!!!!!!!!!!!!!!!!!
This comprehensive 200-question practice exam is meticulously designed for
the Texas Promulgated Contracts Forms (TREC) course. It covers every
essential aspect of TREC-approved contracts, including the One to Four
Family Residential Contract, Farm and Ranch Contract, New Home
Contracts, and all major addenda (HOA, PID, Coastal Area, Financing, Seller
Disclosure, and more). Each question features a multiple-choice format with a
single correct answer and a detailed rationale explaining the legal basis,
TREC rules, or contractual provision at play. The content addresses option
periods, earnest money, title commitments, financing contingencies, inspection
rights, default remedies, brokerage duties, and statutory disclosures. With
zero repeated questions, this exam provides thorough, original preparation
for mastering TREC contract knowledge and passing the licensing exam with
confidence.
1. In the TREC One to Four Family Residential Contract, the seller warrants that
the property will be delivered free of liens except for those specifically assumed by
the buyer or otherwise stated in the contract. What is this warranty called?
A) Warranty of habitability
B) Warranty of marketable title
C) Warranty of fitness for a particular purpose
D) Warranty of quiet enjoyment
Correct Answer: B
Rationale: The seller warrants marketable title, meaning the title is free from liens,
encumbrances, and defects that would make it unmarketable, except as disclosed in
the contract.
2. When a buyer exercises the option to terminate during the option period, what
form is typically used to provide official notice to the seller?
A) Amendment to Contract
B) Notice of Buyer's Termination
C) Release of Earnest Money
D) Addendum for Termination
Correct Answer: B
,Rationale: The Notice of Buyer's Termination is the TREC-promulgated form used
to formally notify the seller that the buyer is terminating the contract during the
option period or for other allowable reasons.
3. The TREC contract allows the buyer to perform inspections. If the buyer
discovers a defect and the seller refuses to repair it, the buyer may terminate, but
only if:
A) The defect is structural
B) The defect exceeds $500 in repair cost
C) The buyer delivers a written notice of termination within the time specified in
the contract
D) The buyer has already waived the option period
Correct Answer: C
Rationale: The buyer's right to terminate after an unsatisfactory inspection is only
valid if the buyer provides written notice within the specified inspection or option
period. The amount or type of defect does not automatically grant termination
rights outside those deadlines.
4. In a TREC transaction, which party is responsible for ordering the title
commitment?
A) The buyer
B) The seller
C) The listing broker
D) The title company, upon direction from one of the parties
Correct Answer: D
Rationale: The title commitment is ordered from the title company, typically by the
seller or the seller's agent, but it is the title company that prepares and issues the
commitment based on the contract.
5. Under the TREC contract, the "special provisions" clause allows the parties to
add terms, but these provisions cannot:
A) Address repairs
B) Change the closing date
C) Conflict with printed TREC language or state law
D) Address financing
Correct Answer: C
Rationale: Special provisions must not conflict with the pre-printed TREC
language or any applicable state or federal law. They can add terms but cannot
override mandatory legal requirements.
,6. The TREC Addendum for Property Subject to Mandatory Membership requires
the seller to deliver copies of the association's governing documents to the buyer
within a certain number of days after the effective date. What is that time frame?
A) 5 days
B) 7 days
C) 10 days
D) As negotiated and written in the addendum
Correct Answer: D
Rationale: The addendum does not set a fixed statutory deadline; instead, it
provides a blank for the parties to negotiate and insert the number of days for the
seller to deliver the HOA documents.
7. If the buyer is using a VA loan, which additional clause must be included in the
TREC Third Party Financing Addendum?
A) The buyer must pay all closing costs
B) The buyer may terminate if the property does not appraise at the sales price
C) The seller must pay for the termite inspection
D) The loan must be assumable
Correct Answer: B
Rationale: VA loans have a specific appraisal contingency. If the VA appraised
value is less than the sales price, the buyer may terminate or renegotiate, and this
provision is included in the Third Party Financing Addendum.
8. In a TREC contract, the "closing date" is defined as the date on which:
A) The deed is recorded in the county records
B) The buyer receives possession of the property
C) The seller delivers the deed and the buyer pays the purchase price
D) The option period expires
Correct Answer: C
Rationale: The closing date is the date the seller delivers the deed and the buyer
pays the agreed-upon consideration, even if the deed is not recorded until later.
9. Which TREC form is specifically designed for the sale of a property that is
partially completed and has never been occupied?
A) New Home Contract (Completed Construction)
B) New Home Contract (Incomplete Construction)
C) One to Four Family Residential Contract (Resale)
D) Farm and Ranch Contract
Correct Answer: B
, Rationale: TREC promulgates a separate New Home Contract (Incomplete
Construction) for properties where construction is not yet complete at the time of
contracting.
10. If the buyer fails to deliver the earnest money within the required time, and the
seller does not terminate, what is the legal effect?
A) The contract is void automatically
B) The buyer has waived the right to object to title
C) The seller has waived the right to terminate for that specific default
D) The contract is still valid and enforceable
Correct Answer: D
Rationale: If the seller does not terminate after the buyer fails to deposit earnest
money, the seller waives that specific default, and the contract remains in full force
and effect.
11. The TREC contract requires the seller to provide a tax certificate at closing. If
the certificate shows unpaid taxes, who is responsible for paying them?
A) The buyer, as they will own the property going forward
B) The seller, before or at closing
C) The lender, as part of the escrow account
D) The title company, as a courtesy
Correct Answer: B
Rationale: The seller is responsible for paying all unpaid property taxes up to the
date of closing, as these are liens against the seller's ownership period.
12. In the TREC contract, the buyer's earnest money is held by the escrow agent. If
a dispute arises over who is entitled to the earnest money, the escrow agent must:
A) Decide who gets the money based on the contract
B) Interplead the funds into a court
C) Give the money to the seller
D) Give the money to the buyer
Correct Answer: B
Rationale: When a dispute arises, the escrow agent cannot unilaterally decide. The
proper procedure is to interplead the funds with a court or obtain a written release
signed by all parties.
13. What is the purpose of the TREC Addendum for "Seller's Disclosure of
Property Condition" in relation to the contract?
A) It replaces the buyer's inspection
B) It serves as a warranty that the property is defect-free
ACTUAL QUESTIONS AND CORRECT ANSWERS WITH
RATIONALE ALREADY GRADED A+ NEW!!!!!!!!!!!!!!!!!!!!!!!
This comprehensive 200-question practice exam is meticulously designed for
the Texas Promulgated Contracts Forms (TREC) course. It covers every
essential aspect of TREC-approved contracts, including the One to Four
Family Residential Contract, Farm and Ranch Contract, New Home
Contracts, and all major addenda (HOA, PID, Coastal Area, Financing, Seller
Disclosure, and more). Each question features a multiple-choice format with a
single correct answer and a detailed rationale explaining the legal basis,
TREC rules, or contractual provision at play. The content addresses option
periods, earnest money, title commitments, financing contingencies, inspection
rights, default remedies, brokerage duties, and statutory disclosures. With
zero repeated questions, this exam provides thorough, original preparation
for mastering TREC contract knowledge and passing the licensing exam with
confidence.
1. In the TREC One to Four Family Residential Contract, the seller warrants that
the property will be delivered free of liens except for those specifically assumed by
the buyer or otherwise stated in the contract. What is this warranty called?
A) Warranty of habitability
B) Warranty of marketable title
C) Warranty of fitness for a particular purpose
D) Warranty of quiet enjoyment
Correct Answer: B
Rationale: The seller warrants marketable title, meaning the title is free from liens,
encumbrances, and defects that would make it unmarketable, except as disclosed in
the contract.
2. When a buyer exercises the option to terminate during the option period, what
form is typically used to provide official notice to the seller?
A) Amendment to Contract
B) Notice of Buyer's Termination
C) Release of Earnest Money
D) Addendum for Termination
Correct Answer: B
,Rationale: The Notice of Buyer's Termination is the TREC-promulgated form used
to formally notify the seller that the buyer is terminating the contract during the
option period or for other allowable reasons.
3. The TREC contract allows the buyer to perform inspections. If the buyer
discovers a defect and the seller refuses to repair it, the buyer may terminate, but
only if:
A) The defect is structural
B) The defect exceeds $500 in repair cost
C) The buyer delivers a written notice of termination within the time specified in
the contract
D) The buyer has already waived the option period
Correct Answer: C
Rationale: The buyer's right to terminate after an unsatisfactory inspection is only
valid if the buyer provides written notice within the specified inspection or option
period. The amount or type of defect does not automatically grant termination
rights outside those deadlines.
4. In a TREC transaction, which party is responsible for ordering the title
commitment?
A) The buyer
B) The seller
C) The listing broker
D) The title company, upon direction from one of the parties
Correct Answer: D
Rationale: The title commitment is ordered from the title company, typically by the
seller or the seller's agent, but it is the title company that prepares and issues the
commitment based on the contract.
5. Under the TREC contract, the "special provisions" clause allows the parties to
add terms, but these provisions cannot:
A) Address repairs
B) Change the closing date
C) Conflict with printed TREC language or state law
D) Address financing
Correct Answer: C
Rationale: Special provisions must not conflict with the pre-printed TREC
language or any applicable state or federal law. They can add terms but cannot
override mandatory legal requirements.
,6. The TREC Addendum for Property Subject to Mandatory Membership requires
the seller to deliver copies of the association's governing documents to the buyer
within a certain number of days after the effective date. What is that time frame?
A) 5 days
B) 7 days
C) 10 days
D) As negotiated and written in the addendum
Correct Answer: D
Rationale: The addendum does not set a fixed statutory deadline; instead, it
provides a blank for the parties to negotiate and insert the number of days for the
seller to deliver the HOA documents.
7. If the buyer is using a VA loan, which additional clause must be included in the
TREC Third Party Financing Addendum?
A) The buyer must pay all closing costs
B) The buyer may terminate if the property does not appraise at the sales price
C) The seller must pay for the termite inspection
D) The loan must be assumable
Correct Answer: B
Rationale: VA loans have a specific appraisal contingency. If the VA appraised
value is less than the sales price, the buyer may terminate or renegotiate, and this
provision is included in the Third Party Financing Addendum.
8. In a TREC contract, the "closing date" is defined as the date on which:
A) The deed is recorded in the county records
B) The buyer receives possession of the property
C) The seller delivers the deed and the buyer pays the purchase price
D) The option period expires
Correct Answer: C
Rationale: The closing date is the date the seller delivers the deed and the buyer
pays the agreed-upon consideration, even if the deed is not recorded until later.
9. Which TREC form is specifically designed for the sale of a property that is
partially completed and has never been occupied?
A) New Home Contract (Completed Construction)
B) New Home Contract (Incomplete Construction)
C) One to Four Family Residential Contract (Resale)
D) Farm and Ranch Contract
Correct Answer: B
, Rationale: TREC promulgates a separate New Home Contract (Incomplete
Construction) for properties where construction is not yet complete at the time of
contracting.
10. If the buyer fails to deliver the earnest money within the required time, and the
seller does not terminate, what is the legal effect?
A) The contract is void automatically
B) The buyer has waived the right to object to title
C) The seller has waived the right to terminate for that specific default
D) The contract is still valid and enforceable
Correct Answer: D
Rationale: If the seller does not terminate after the buyer fails to deposit earnest
money, the seller waives that specific default, and the contract remains in full force
and effect.
11. The TREC contract requires the seller to provide a tax certificate at closing. If
the certificate shows unpaid taxes, who is responsible for paying them?
A) The buyer, as they will own the property going forward
B) The seller, before or at closing
C) The lender, as part of the escrow account
D) The title company, as a courtesy
Correct Answer: B
Rationale: The seller is responsible for paying all unpaid property taxes up to the
date of closing, as these are liens against the seller's ownership period.
12. In the TREC contract, the buyer's earnest money is held by the escrow agent. If
a dispute arises over who is entitled to the earnest money, the escrow agent must:
A) Decide who gets the money based on the contract
B) Interplead the funds into a court
C) Give the money to the seller
D) Give the money to the buyer
Correct Answer: B
Rationale: When a dispute arises, the escrow agent cannot unilaterally decide. The
proper procedure is to interplead the funds with a court or obtain a written release
signed by all parties.
13. What is the purpose of the TREC Addendum for "Seller's Disclosure of
Property Condition" in relation to the contract?
A) It replaces the buyer's inspection
B) It serves as a warranty that the property is defect-free
