TEXAS REAL ESTATE TEST PAPER 2025/2026 QUESTIONS
AND SOLUTIONS GRADED A+
✔✔Amendment - ✔✔A form used to change the language in either the listing
agreement or the purchase contract. Not effective until all parties agree to the change.
✔✔Earnest Money - ✔✔Money deposited by a prospective buyer as evidence of good
faith under the terms of the contract, that is to be forfeited if the buyer defaults but is
applied to the purchase price if the sale is closed.
✔✔Commingling - ✔✔A broker or salesperson may not mix a client or customer's
money from an escrow account with their personal or business account.
✔✔Equitable Title - ✔✔Is the beneficial interest of one person in real property, although
the legal title is vested in another. Buyer has the right to buy the property. You have this
as soon as both parties sign the agreement.
✔✔Specific Performance - ✔✔When a principal is taken to court and is sued to perform
the requirements of the contract.
✔✔Option - ✔✔A contract in which a seller gives a potential buyer the right to buy the
property at a fixed price within a stated period of time.
✔✔Optionee - ✔✔Has no obligation to buy. he may decide to either exercise the option
right and buy or allow the option right to expire. Buyer must pay a fee for the option
right.
✔✔Option Contract - ✔✔Is not a sales contract. It merely gives that the optionee the
right to buy. The owner will be obligated to sell if the optionee decides to
✔✔Contract for Deed - ✔✔Under this form of contract, the SELLER RETAINS LEGAL
TITLE until the terms of the contract have been satisfied, and the buyer pays the debt in
full. The buyer has equitable title during the life of the contract. This is a type of seller
financing. Also referred to as a land contract.
✔✔Law of Agency - ✔✔A body of laws that govern the relationship between a principal
and his/her agent. It defines the right and duties of the parties in a real estate
transaction. These laws are based on common law.
✔✔Agency - ✔✔The relationship between a principal and an agent who acts for the
principal within the specified authority granted by the principal.
✔✔Single Agency - ✔✔The practice of representing either the buyer or the seller, but
never both in the same transaction.
, ✔✔Expressed Agency - ✔✔An agency created by specific agreement, whether written
or oral, of principal and agent. Those specific agreements are the listing agreement and
the buyer representation agreement.
✔✔Implied Agency - ✔✔Created by conduct, words, and acts of the agent. It is not an
expressed agency in writing, but leaves the assumption is that the agent is working for
the principal.
✔✔Ostensible Agency - ✔✔An agency created when a principal gives a third party
reason to believe that another person is his agent. For all appearances.
✔✔Agency by Ratification - ✔✔A relationship that is established after the fact.
✔✔Gratuitous Agency - ✔✔Can be created when an agent offers free advice usually to
friends or family. If the person acts on that advice and is damaged, the agent could be
liable.
✔✔Intermediary - ✔✔A way a broker can perform and in house transaction by assigning
a listing agent and a buyers agent.
✔✔Licensee - ✔✔A real estate broker or real estate salesperson.
✔✔Subagent - ✔✔A licensee who represents a principal through cooperation with and
consent of a broker representing the principal and who is not sponsored by or
associated with the principal's broker. If you don't have an agreement to represent the
buyer; you are representing the seller as a subagent. When you represent the client of
another broker other than your sponsoring broker; you act as a subagent. A buyer
customer.
✔✔Universal Agency - ✔✔Can conduct all business the owner himself can conduct. real
estate agents do not act as universal agents for their clients.
✔✔Special Agency - ✔✔Real Estate agents generally are appointed as this to buyers
and sellers.
✔✔General Agency - ✔✔Property managers are generally this type of agency.
✔✔Termination of Agency - ✔✔The following acts can cause this:
1. Closing of the sale of the property.
2. Destruction of the property
3. Expiration of the term of the agency
4. Mutual agreement to terminate the agency
5. Renunciation by the broker (firing the principal) or revocation by the principal.
6. Bankruptcy of the owner if title transferred to the receiver.
AND SOLUTIONS GRADED A+
✔✔Amendment - ✔✔A form used to change the language in either the listing
agreement or the purchase contract. Not effective until all parties agree to the change.
✔✔Earnest Money - ✔✔Money deposited by a prospective buyer as evidence of good
faith under the terms of the contract, that is to be forfeited if the buyer defaults but is
applied to the purchase price if the sale is closed.
✔✔Commingling - ✔✔A broker or salesperson may not mix a client or customer's
money from an escrow account with their personal or business account.
✔✔Equitable Title - ✔✔Is the beneficial interest of one person in real property, although
the legal title is vested in another. Buyer has the right to buy the property. You have this
as soon as both parties sign the agreement.
✔✔Specific Performance - ✔✔When a principal is taken to court and is sued to perform
the requirements of the contract.
✔✔Option - ✔✔A contract in which a seller gives a potential buyer the right to buy the
property at a fixed price within a stated period of time.
✔✔Optionee - ✔✔Has no obligation to buy. he may decide to either exercise the option
right and buy or allow the option right to expire. Buyer must pay a fee for the option
right.
✔✔Option Contract - ✔✔Is not a sales contract. It merely gives that the optionee the
right to buy. The owner will be obligated to sell if the optionee decides to
✔✔Contract for Deed - ✔✔Under this form of contract, the SELLER RETAINS LEGAL
TITLE until the terms of the contract have been satisfied, and the buyer pays the debt in
full. The buyer has equitable title during the life of the contract. This is a type of seller
financing. Also referred to as a land contract.
✔✔Law of Agency - ✔✔A body of laws that govern the relationship between a principal
and his/her agent. It defines the right and duties of the parties in a real estate
transaction. These laws are based on common law.
✔✔Agency - ✔✔The relationship between a principal and an agent who acts for the
principal within the specified authority granted by the principal.
✔✔Single Agency - ✔✔The practice of representing either the buyer or the seller, but
never both in the same transaction.
, ✔✔Expressed Agency - ✔✔An agency created by specific agreement, whether written
or oral, of principal and agent. Those specific agreements are the listing agreement and
the buyer representation agreement.
✔✔Implied Agency - ✔✔Created by conduct, words, and acts of the agent. It is not an
expressed agency in writing, but leaves the assumption is that the agent is working for
the principal.
✔✔Ostensible Agency - ✔✔An agency created when a principal gives a third party
reason to believe that another person is his agent. For all appearances.
✔✔Agency by Ratification - ✔✔A relationship that is established after the fact.
✔✔Gratuitous Agency - ✔✔Can be created when an agent offers free advice usually to
friends or family. If the person acts on that advice and is damaged, the agent could be
liable.
✔✔Intermediary - ✔✔A way a broker can perform and in house transaction by assigning
a listing agent and a buyers agent.
✔✔Licensee - ✔✔A real estate broker or real estate salesperson.
✔✔Subagent - ✔✔A licensee who represents a principal through cooperation with and
consent of a broker representing the principal and who is not sponsored by or
associated with the principal's broker. If you don't have an agreement to represent the
buyer; you are representing the seller as a subagent. When you represent the client of
another broker other than your sponsoring broker; you act as a subagent. A buyer
customer.
✔✔Universal Agency - ✔✔Can conduct all business the owner himself can conduct. real
estate agents do not act as universal agents for their clients.
✔✔Special Agency - ✔✔Real Estate agents generally are appointed as this to buyers
and sellers.
✔✔General Agency - ✔✔Property managers are generally this type of agency.
✔✔Termination of Agency - ✔✔The following acts can cause this:
1. Closing of the sale of the property.
2. Destruction of the property
3. Expiration of the term of the agency
4. Mutual agreement to terminate the agency
5. Renunciation by the broker (firing the principal) or revocation by the principal.
6. Bankruptcy of the owner if title transferred to the receiver.
