TEXAS PRINCIPLES OF REAL ESTATE 1 AND II FINAL LATEST
ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS
Lenders require a borrower to establish and maintain a reserve fund to ______. -
ANSWER: Pay any property taxes in case the borrower misses a payment
Brandon recently purchased an old warehouse building. This building will serve as a
hub for local deliveries of fruits and vegetables within the state. During its first week
in operation, one of the delivery drivers was involved in an accident that spilled
coconuts all over the road and shut down the interstate for hours. What type of risk
is this? - ANSWER: Static
Which entity enforces subdivision covenants? - ANSWER: The civil court system
What does the right of first refusal clause do when included in a lease agreement in
Texas? - ANSWER: Gives a tenant the option to buy the property they are leasing
before the property is sold to someone else
What does a CMA determine? - ANSWER: Market price range
Where do live auctions typically take place? - ANSWER: On the steps of the local
courthouse
Which term refers to the person receiving title, often called the "party of the second
part," in a deed? - ANSWER: Grantee
What's an affidavit as to debts and liens? - ANSWER: A sworn statement by the seller
that no unpaid bills remain for repairs or improvements to the property.
Which amendment to CERCLA says that "innocent landowners" aren't responsible
for clean-up of hazardous contamination? - ANSWER: Superfunds Amendments and
Reauthorization Act
The economic principle that tells us that when supply goes up, price goes down is
commonly referred to as what? - ANSWER: Supply and demand
Which of the following is most susceptible to a predatory lender? - ANSWER: A
borrower with poor credit
Who conducts the closing? - ANSWER: Closing agent
What could be a consequence if there were no secondary mortgage market? -
ANSWER: Lenders might not have funds available to make new loans to the public.
,For residential property managers dealing with prospective tenants, their
responsibilities include checking ______. - ANSWER: References
What's the term for a charge that a transactional party must pay at closing? -
ANSWER: Debit
Who usually pays the broker commission? - ANSWER: The seller
Which of the following statements is true about using utilities interruption as a
means of collecting rent? - ANSWER: It is illegal.
Which of the following is one benefit to business owners for leasing instead of
buying real estate for their business? - ANSWER: Monthly rent is a tax deduction as a
business expense.
Jerry's home has been in his family for nearly 75 years and sits smack dab in the
middle of where a public university wants to expand. A government authority has
made a fair offer for seizing Jerry's home as part of the process of taking someone's
property called ______. - ANSWER: Condemnation
What might Trina's mother have bequeathed to Trina? - ANSWER: Her jewelry and
fine china
A vacant lot that was purchased for $18,000 three years ago has appreciated 15%.
What would its value be today? - ANSWER: $20,700
Which of the following options describes principal as it relates to loans? - ANSWER:
Amount of payment that will be applied to the loan balance
With the cost approach to value, what is the reproduction cost? - ANSWER: Cost to
build an exact replica of the subject, with the same materials and deficiencies
A steel plant is an example of which commercial property category? - ANSWER:
Manufacturing
What does a balloon payment represent at the end of a loan term? - ANSWER: It
means that some principal remains at the end of the loan term.
When a real estate professional goes beyond a broad brushstroke approach to a
CMA and takes the time to research not only recent sales, but competition and
expired listings, what trait are they exhibiting? - ANSWER: Diligence
Voluntary alienation includes which of the following? - ANSWER: Kali intentionally
transfers her property to Sandy.
What section of the property management agreement states that the owner actually
owns the property, and it's not facing foreclosure? - ANSWER: Owner's covenants
, Why are residential properties popular with investors? - ANSWER: They're always in
demand.
Appraiser Jerry is looking past how a property is being used to determine a more
optimal function. What is he determining? - ANSWER: Highest and best use
When a mortgage is used as a security instrument, who holds the mortgage and the
promissory note? - ANSWER: The lender holds the mortgage and the note.
To whom would a 1031 tax exchange usually appeal? - ANSWER: Investors
Which of the following statements about zoning ordinances is true? - ANSWER:
Before zoning ordinances are changed, they must be examined for fairness and
reasonableness.
When a buyer assumes the seller's current loan, what is the purpose of an estoppel
certificate? - ANSWER: To show the balance due on the loan
Identify the seller's responsibilities at and before closing. - ANSWER: Supply the deed
conveying the property, title abstract, and the payoff statement.
Who is responsible for reviewing the Closing Disclosure before closing? - ANSWER:
The buyer and the seller
In Texas, leases have the implied covenant of quiet possession. What does this
mean? - ANSWER: Landlords must give the tenant actual possession of the leased
premises.
Which of the following requires property managers and landlords to protect any
sensitive personal information that they collect or maintain about their tenants from
unlawful use or disclosure? - ANSWER: Texas's Identity Theft Enforcement and
Protection Act
Commercial leases may contain an automatic renewal clause. If this is the case, what
happens after the lease's original term has come to an end? - ANSWER: The lease
continues on a month-to-month basis.
In a lease agreement, what consideration does the landlord give to the tenant? -
ANSWER: Right to occupy the property
How many parties does a deed of trust involve? - ANSWER: Three: borrower, lender,
and trustee
Xavier and Juanita Jenkins want to make a few improvements to their leased
apartment. The couple would like to rip up the carpet in the living room and have
the hardwood floors underneath restored. Which of the following statements about
ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS
Lenders require a borrower to establish and maintain a reserve fund to ______. -
ANSWER: Pay any property taxes in case the borrower misses a payment
Brandon recently purchased an old warehouse building. This building will serve as a
hub for local deliveries of fruits and vegetables within the state. During its first week
in operation, one of the delivery drivers was involved in an accident that spilled
coconuts all over the road and shut down the interstate for hours. What type of risk
is this? - ANSWER: Static
Which entity enforces subdivision covenants? - ANSWER: The civil court system
What does the right of first refusal clause do when included in a lease agreement in
Texas? - ANSWER: Gives a tenant the option to buy the property they are leasing
before the property is sold to someone else
What does a CMA determine? - ANSWER: Market price range
Where do live auctions typically take place? - ANSWER: On the steps of the local
courthouse
Which term refers to the person receiving title, often called the "party of the second
part," in a deed? - ANSWER: Grantee
What's an affidavit as to debts and liens? - ANSWER: A sworn statement by the seller
that no unpaid bills remain for repairs or improvements to the property.
Which amendment to CERCLA says that "innocent landowners" aren't responsible
for clean-up of hazardous contamination? - ANSWER: Superfunds Amendments and
Reauthorization Act
The economic principle that tells us that when supply goes up, price goes down is
commonly referred to as what? - ANSWER: Supply and demand
Which of the following is most susceptible to a predatory lender? - ANSWER: A
borrower with poor credit
Who conducts the closing? - ANSWER: Closing agent
What could be a consequence if there were no secondary mortgage market? -
ANSWER: Lenders might not have funds available to make new loans to the public.
,For residential property managers dealing with prospective tenants, their
responsibilities include checking ______. - ANSWER: References
What's the term for a charge that a transactional party must pay at closing? -
ANSWER: Debit
Who usually pays the broker commission? - ANSWER: The seller
Which of the following statements is true about using utilities interruption as a
means of collecting rent? - ANSWER: It is illegal.
Which of the following is one benefit to business owners for leasing instead of
buying real estate for their business? - ANSWER: Monthly rent is a tax deduction as a
business expense.
Jerry's home has been in his family for nearly 75 years and sits smack dab in the
middle of where a public university wants to expand. A government authority has
made a fair offer for seizing Jerry's home as part of the process of taking someone's
property called ______. - ANSWER: Condemnation
What might Trina's mother have bequeathed to Trina? - ANSWER: Her jewelry and
fine china
A vacant lot that was purchased for $18,000 three years ago has appreciated 15%.
What would its value be today? - ANSWER: $20,700
Which of the following options describes principal as it relates to loans? - ANSWER:
Amount of payment that will be applied to the loan balance
With the cost approach to value, what is the reproduction cost? - ANSWER: Cost to
build an exact replica of the subject, with the same materials and deficiencies
A steel plant is an example of which commercial property category? - ANSWER:
Manufacturing
What does a balloon payment represent at the end of a loan term? - ANSWER: It
means that some principal remains at the end of the loan term.
When a real estate professional goes beyond a broad brushstroke approach to a
CMA and takes the time to research not only recent sales, but competition and
expired listings, what trait are they exhibiting? - ANSWER: Diligence
Voluntary alienation includes which of the following? - ANSWER: Kali intentionally
transfers her property to Sandy.
What section of the property management agreement states that the owner actually
owns the property, and it's not facing foreclosure? - ANSWER: Owner's covenants
, Why are residential properties popular with investors? - ANSWER: They're always in
demand.
Appraiser Jerry is looking past how a property is being used to determine a more
optimal function. What is he determining? - ANSWER: Highest and best use
When a mortgage is used as a security instrument, who holds the mortgage and the
promissory note? - ANSWER: The lender holds the mortgage and the note.
To whom would a 1031 tax exchange usually appeal? - ANSWER: Investors
Which of the following statements about zoning ordinances is true? - ANSWER:
Before zoning ordinances are changed, they must be examined for fairness and
reasonableness.
When a buyer assumes the seller's current loan, what is the purpose of an estoppel
certificate? - ANSWER: To show the balance due on the loan
Identify the seller's responsibilities at and before closing. - ANSWER: Supply the deed
conveying the property, title abstract, and the payoff statement.
Who is responsible for reviewing the Closing Disclosure before closing? - ANSWER:
The buyer and the seller
In Texas, leases have the implied covenant of quiet possession. What does this
mean? - ANSWER: Landlords must give the tenant actual possession of the leased
premises.
Which of the following requires property managers and landlords to protect any
sensitive personal information that they collect or maintain about their tenants from
unlawful use or disclosure? - ANSWER: Texas's Identity Theft Enforcement and
Protection Act
Commercial leases may contain an automatic renewal clause. If this is the case, what
happens after the lease's original term has come to an end? - ANSWER: The lease
continues on a month-to-month basis.
In a lease agreement, what consideration does the landlord give to the tenant? -
ANSWER: Right to occupy the property
How many parties does a deed of trust involve? - ANSWER: Three: borrower, lender,
and trustee
Xavier and Juanita Jenkins want to make a few improvements to their leased
apartment. The couple would like to rip up the carpet in the living room and have
the hardwood floors underneath restored. Which of the following statements about
