Texas Promulgated Forms Questions and Answers Test Bank 2023 with complete solution

Texas Promulgated Forms Questions and Answers Test Bank 2023 with complete solution Which of the following is TRUE for the statute of limitations for contracts for the sale of real estate and oral contracts for leases of less than one year? The statute of limitations is four years for the sale and two years for the lease. The voiding of a contract by a minor is an example of terminating a contract by operation of law. Which of the following would NOT be considered a competent party? A 30-year-old attorney under the influence of marijuana at the time she entered into an agreement A contract is classified as bilateral if all parties to the contract exchange binding promises. A contract to perform an unlawful act is considered which of the following? void 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 valid 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? unenforceable The main difference between an amendment and an addendum is that an amendment is a change to the existing content in the contract. If parties to a real estate contract in Texas are held to very strict deadlines for performance, the contract likely includes the phrase "time is of the essence" "Time is of the essence" in real estate contracts means that parties are held to exact performance of their duties within the time specified in the agreement. Under the statute of frauds, all contracts for the sale of real estate must be in writing to be enforceable. Once a contract has been agreed upon and signed by all parties changes must be addressed through the use of an amendment. TREC promulgates the Loan Assumption Addendum. In a transaction where a buyer is assuming a seller's loan TREC's Loan Assumption Addendum is required. Which of these addenda includes "time is of the essence"? all of these A valid legal contract must have legally competent parties One party cancelling or terminating a contract as though it had never been made is rescission In Texas, the statute of limitations is two years for oral contracts for a lease of less than one year. 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 a(n) executed contract A contract can be discharged or terminated by impossibility of performance According to the Texas legislature, a contract involving the sale of a residence that will take place more than 180 days after the execution of the contract is an executory contract In Texas, the statute of limitations is four years for a contract for the sale of real estate. A buyer and a seller enter into a contract using the Farm and Ranch Contract, which is one of TREC's six promulgated contracts. The effective date of the contract is June 20, and the buyer has 8 days to fulfill a duty under the contract. By when must the buyer complete the duty? June 28 at midnight A contract may be discharged under substantial performance when one party does not complete all the details exactly as the contract requires but has to a large extent performed on the contract, which may be enough to force payment. The statute of limitations is four years for which of the following? A contract for the sale of real estate An amendment is a change to the original agreement. A contract is said to be bilateral if ll parties to the contract exchange binding promises. Which of the following is TRUE regarding amendments and addenda? An amendment is completed after a contract has been executed, but addenda are completed at the same time as the sales contract. The essential elements of a valid real estate contract include all of these In Texas, the statute of limitations for an oral contract for a lease of less than one year is two years When is the effective date entered on the contract form? When the last party signs the form and the other party has been notified of the acceptance A contract with a person under duress is voidable A buyer and seller enter into a contract for the sale of a four-bedroom home. If either party defaults under the contract, the other party has how much time to file a lawsuit for damages? four years An addendum is additional information given in the offer. A seller accepted money from a buyer for his unrestricted right to cancel the purchase transaction (option to terminate) within ten days of the executed date of the sales contract. This agreement is a(n) unilateral contract A contract that exchanges a promise for a promise is said to be bilateral A legally enforceable agreement under which two parties promise to do something for each other is classified as a(n) bilateral contract Which of the following committees is responsible for drafting and revising contract forms? Broker-Lawyer Committee A buyer wanted to move in early before closing. Which TREC promulgated addendum should be used? Buyer's Temporary Residential Lease Which of the following is NOT a TREC promulgated addendum? Reverse Mortgage Financing Addendum A real estate broker modifies a 1992 TREC promulgated contract form and updates it to fit a particular transaction. Which of the following could happen? the broker could have his license suspended or revoked for practicing law. For which of the following actions may the Texas Real Estate Commission NOT suspend a licensee's licensee? The licensee explains to the principals the meaning of the factual statements or business details contained in the contracts. What type of committee is the Broker-Lawyer Committee? Advisory What does the Broker-Lawyer Committee do? draft contracts When should an offer be presented? immediately A seller wants to close using a contract for deed. Which of the following is MOST correct? The listing agent could continue helping the seller, but this type of contract must be drafted by an attorney. Which of the following forms of advice can a licensee give to an unrepresented buyer? Advice on having the abstract examined by an attorney Once the offer has been accepted, each of the parties are to receive a(n) copy of the final signed contract. Once presented an offer from a prospective buyer, the seller can do any of the following EXCEPT accept it after making a counteroffer. Which of the following is an exception to the TREC rules on contract use? When the buyer requires another form to be used A licensee who drafts a contract for the sale of her client's property is taking part in the unauthorized practice of law. A licensee is representing a buyer in a transaction and creates an addendum for a purpose for which TREC has already promulgated an addendum. Which of the following is TRUE regarding the licensee's actions? The agent could face disciplinary actions because TREC has an addendum that would work in this transaction. An offer to purchase by a potential buyer is considered accepted when the buyer is notified that the seller has accepted the offer. Which of the following is TRUE? The Broker-Lawyer Committee develops forms and recommends their adoption, but it is the TREC that promulgates the forms for mandatory use. A real estate broker, acting only as a principal to a transaction (i.e., as a buyer or seller), is exempt from mandatory use of a TREC promulgated form. Which of the following is legal for the licensee to draw up? none of these (contract, note, deed) If no standard form has been promulgated by the Texas Real Estate Commission, a real estate broker or salesperson may do any of the following EXCEPT draft an instrument that transfers an interest in real property. What is the make-up of the Broker-Lawyer Committee? Six brokers, six lawyers, and one member of the general public If a seller gave a letter to the listing agent with instructions not to deliver any offers for less than $250,000 and the listing agent receives an offer for $249,500, should he deliver it? The TREC allows the listing agent to reject this offer because the seller has given written approval Which of the following is NOT a TREC promulgated contract? contract for deed 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? "I'm not an attorney, but here is what it means..." A licensee is purchasing property for himself. A TREC promulgated contract is appropriate for this purchase, but the licensee decides to be creative and draft his own contract from what he has learned in his real estate classes. Which of the following is most likely to be TRUE? The licensee has the right to draft his own contract. How many promulgated contracts does TREC issue? six Real estate brokers who are members of the Broker-Lawyer Committee become members by being appointed by the Texas Real Estate Commission. A licensee who completes a contract for the sale of real property is not engaged in the unauthorized practice of law if the licensee uses a form that is all of these A seller wants to use her own contract. What are the agent's legal options? The agent can use the contract because it is an exception. If the offer is acceptable to the seller, the offer is signed and dated and returned to the buyer. It is now a contract for sale. If the offer is rejected, the offer is returned to the buyer marked "rejected" Which of the following is NOT a promulgated TREC form? bill of sale An offer or counteroffer may be withdrawn at any time before it has been accepted Which of the following is an exception to using a TREC promulgated contract form? Transactions in which a United States government agency requires a different form to be used According to the Texas Real Estate License Act, which of the following requires that a licensee be a practicing attorney? Advising a person regarding the validity of title to real property What law specifically prohibits licensees from practicing law? Texas Real Estate License Act (TRELA) Which of the following concerns lead to the Texas Real Estate License Act prohibiting licensees from practicing law? Licensees giving counsel regarding the validity or an instrument that addresses real property rights Which of the following is a TREC promulgated form? Addendum for Sale of Other Property by Buyer Which of the following is an exception to using TREC promulgated contract forms? When the licensee is acting as a principal and not as an agent Which of the following is not included in paragraph 7 of the TREC One to Four Family Residential Contract? Who will pay for the title policy Which of the following is included in paragraph 2 of the TREC One to Four Family Residential Contract? the legal description of the property According to the Loan Assumption Addendum, if the buyer does not deliver the credit information within the required time, the seller has how many days to terminate after expiration for the time of delivery? 7 What information is NOT required to fill out paragraph 3 of the TREC One to Four Family Residential Contract? interest rate Which of the following is not included in paragraph 2 of the TREC One to Four Family Residential Contract? the marital status of the parties The down payment in a transaction is indicated in paragraph 3A of the contract. Which paragraph in the TREC One to Four Family Residential Contract deals with title issues? paragraph 6 Which of the following is TRUE regarding the Loan Assumption Addendum? The period for the seller to terminate under the Loan Assumption Addendum is seven days. What happens if buyer's credit is not approved under the TREC Third Party Financing Addendum, and the buyer gives timely notice to the seller? The contract will terminate and the buyer will get the earnest money. Which financing addendum is NOT included in paragraph 3B of the TREC One to Four Family Residential Contract? Reverse Mortgage Addendum Which of these is the best way to identify a party in paragraph 1 of the contract? James A. Johnson and wife Susan B. Johnson Which paragraph of the TREC One to Four Family Residential Contract provides a breakdown of sellers' and buyers' expenses? paragraph 12 The buyer wishes to obtain an adjustable rate mortgage. How should paragraph 1 of the TREC Third Party Financing Addendum be filled out? Per annum for the first year of the loan. A married buyer wishes to purchase a home as separate property. This will be indicated in paragraph 1 of the contract How long does the buyer have to give notice that the buyer is unable to obtain buyer approval under the TREC Third Party Financing Addendum? the time period os negotiable A buyer wishes to borrow $200,000 to purchase a $250,000 home with a conventional loan with two discount points and 1% origination fee. Under the Third Party Financing Addendum, what percentage should be inserted as not to exceed adjusted origination charges in paragraph A1(a)? 3% of the loan Under the TREC Seller Financing Addendum, the seller has the right to terminate under each of the following conditions EXCEPT if the property fails a home inspection. Under the TREC Loan Assumption Addendum, who pays to provide buyer's credit report to seller? buyer The buyer wants the free standing bookshelves in the study to be included in the sales price. How should the agent handle it? Use the Non-Realty Items Addendum What information is required in paragraph 12 of the TREC One to Four Family Residential Contract? Seller's contribution to buyer's expenses When is the best time to clarify which accessories the sellers wish to take with them in the TREC One to Four Family Residential Contract? at the listing appointment Why is the marital status of the parties required to be disclosed in the TREC One to Four Family Residential Contract? Because Texas is a community property state The buyer wishes to make an offer to buy a house for $220,000, with 80% financed through 30-year fixed-rate mortgage and a 20% cash down payment. How much is the down payment? The answer is $44,000. Twenty percent of $220,000 is $44,000. Which law requires that a contract have a proper legal description? The Statute of Frauds Under paragraph 2 of the One to Four Family Residential Contract, items such as window air conditioning units, curtains and rods, and door keys are considered accessories and are included in the sale unless specifically excluded. The seller wants to keep the built-in, high-end stovetop. How should the seller's agent note that? List the stovetop in paragraph 2, Exclusions. If the buyer wants to be sure the fireplace screen stays with the property, the buyer's agent should do nothing; it is already in the contract What should a licensee do if the seller wishes to retain an item not specifically listed as an improvement or accessory in paragraph 2 of the TREC One to Four Family Residential Contract? List the item as an exclusion in paragraph 2D. The seller wishes to convey the washer and dryer, but the buyers wish to pay a nominal price for them and the sellers agree. What should the agent do? Use the Non-Realty Items Addendum Which of the following is included in paragraph 2 of the TREC One to Four Family Residential Contract? Excluded fixtures and accessories A seller wishes to keep an item listed as an accessory. How should the TREC One to Four Family Residential Contract be filled out? list the item under Exclusions Which TREC form should be used if the buyer wishes to include personal property such as a piece of furniture displayed in a home in the purchase price? The Non-Realty Items Addendum The seller wishes to sell to the buyers all of the flower pots on the patio. What should the agent do? Use the Non-Realty Items Addendum The sellers want to sell the refrigerator to the buyers. How should it be noted in the contract? Use the Non-Realty Items Addendum The earnest money paragraph addresses all of the following EXCEPT title policy company Six days after executing a contract to buy a house, the buyer has been unable to get approved for a loan. Under the TREC Third Party Financing Addendum, he has seven days to get buyer approval. What is his best course of action if he is uncertain about getting timely approval and wants to get the earnest money back? Notify the seller before the close of business on the seventh day that he was unable to get approval. What information is NOT needed to complete paragraph 23 of the TREC One to Four Family Residential Contract? buyer required repairs The legal description of the property, improvements, accessories, and any exclusions to improvements or accessories are in paragraph 2 What information is NOT needed to complete paragraph 23 of the TREC One to Four Family Residential Contract? whether the option fee is refundable If the sales price is $375,000, earnest money is $5,000 and the amount financed is $300,000, how much is filled in as the cash payable at closing? $75,000 The buyer wishes to make an offer to buy a house for $240,000, with 70% financed through 30-year fixed-rate mortgage and a 30% cash down payment. How much is the down payment? $72,000 What information is required to fill out paragraph 3 of the TREC One to Four Family Residential Contract? sales price Under the TREC Loan Assumption Addendum, the seller has the right to terminate under all of the following conditions EXCEPT if the note holder requires payment of an assumption fee in excess of the negotiated amount. A married buyer wishes to purchase a home as separate property. Which of the following is an appropriate way to identify him on the contract? John Doe, as separate property A buyer wishes to cap the interest rate on a loan to finance the purchase of a home at 3%. Where is the interest rate inserted in the TREC One to Four Family Residential Contract? There is no blank line for interest rate in the TREC One to Four Family Residential Contract. Under the Seller Financing Addendum the seller may terminate the contract and receive the earnest money if the buyer fails to provide credit documentation within the negotiated time period. The seller wants to have the buyer assume his existing VA loan and restore his VA entitlement. Which form should the agent use to achieve this goal? Addendum for Release of Liability on Assumed Loan and/or Restoration of Seller's VA Entitlement In paragraph 3 of the One to Four Family Residential Contract, the sales price is the sum of the cash portion of the sales price and the sum of all financing Under the TREC Loan Assumption Addendum, the seller has the right to terminate under each of the following conditions EXCEPT if the property fails a home inspection. In which case may the seller terminate the contract and receive the earnest money under the TREC Seller Financing Addendum?