Texas Principles of Real Estate 2 KGO| 158 Questions | With Complete Solutions

Texas Principles of Real Estate 2 KGO| 158
Questions | With Complete Solutions
 Course
 Texas Principles of Real Estate
Q1. A buyer delivers an earnest money check to the listing broker instead of the title company.
What must the listing broker do with the funds?
 A. Hold it until closing
 B. Deposit it in the broker’s operating account
 C. Deliver it to the title company by the close of the next business day
 D. Return it to the buyer
Answer: C. Deliver it to the title company by the close of the next business day
Solution: Texas law requires earnest money to be deposited with the title company or escrow
agent promptly, usually by the close of the next business day after the broker receives it.


Q2. Which of the following is TRUE regarding option contracts in Texas real estate?
 A. They bind both buyer and seller to complete the sale.
 B. They require additional consideration beyond earnest money.
 C. They automatically transfer title when signed.
 D. They cannot be used in residential sales.
Answer: B. They require additional consideration beyond earnest money
Solution: Option contracts must include separate consideration (often called option money) to
make the option enforceable.


Q3. Which type of listing agreement provides the greatest protection to the broker?
 A. Exclusive Right to Sell
 B. Open Listing
 C. Exclusive Agency
 D. Net Listing
Answer: A. Exclusive Right to Sell
Solution: This agreement ensures the broker receives commission regardless of who procures
the buyer, offering the strongest protection.

,Q4. A sales agent advertises a property without including the name of their sponsoring broker.
This is:
 A. Legal if the seller consents
 B. Permitted only for social media posts
 C. A violation of TREC advertising rules
 D. Acceptable if the property is FSBO
Answer: C. A violation of TREC advertising rules
Solution: All advertising must clearly identify the sponsoring broker. Failure to do so is a
violation.


Q5. A client gives their agent confidential information about financial difficulties. What is the
agent’s duty?
 A. Share with the seller if it helps negotiations
 B. Disclose to the title company
 C. Maintain confidentiality even after the agency relationship ends
 D. Reveal it to the lender immediately
Answer: C. Maintain confidentiality even after the agency relationship ends
Solution: Confidentiality is a fiduciary duty that survives the termination of the agency
relationship.


Q6. Which deed provides the greatest warranty to the buyer in Texas?
 A. Quitclaim Deed
 B. General Warranty Deed
 C. Special Warranty Deed
 D. Bargain and Sale Deed
Answer: B. General Warranty Deed
Solution: A general warranty deed guarantees title against all defects, past and present, providing
the most protection.

,Q7. Which of the following would terminate a listing agreement by operation of law?
 A. The property is taken off the market temporarily
 B. The seller dies before closing
 C. The broker decides to withdraw
 D. The property receives no offers
Answer: B. The seller dies before closing
Solution: Death of either party terminates the agreement automatically.


Q8. In Texas, which of the following would be considered a fixture?
 A. A free-standing refrigerator
 B. Drapes specifically fitted for windows
 C. A microwave sitting on a cart
 D. Patio furniture
Answer: B. Drapes specifically fitted for windows
Solution: Fixtures are items permanently attached or adapted to the property. Custom drapes are
fixtures.


Q9. What is the purpose of promulgated forms by TREC?
 A. To allow brokers to draft contracts freely
 B. To standardize real estate transactions
 C. To limit attorney involvement
 D. To replace addenda in all cases
Answer: B. To standardize real estate transactions
Solution: TREC promulgated forms provide consistency and reduce legal risks in transactions.


Q10. A license holder is found guilty of practicing law without a license if they:
 A. Fill in the blanks of a TREC-promulgated contract form
 B. Explain the difference between earnest money and option money

,  C. Draft language to modify a contract beyond filling blanks
 D. Provide general information about closing costs
Answer: C. Draft language to modify a contract beyond filling blanks
Solution: License holders may fill in TREC forms but may not draft or alter legal documents
outside that scope, as that constitutes unauthorized practice of law.

Q11. Which party typically selects the title company in a Texas real estate transaction?

 A. The seller, always
 B. The buyer, unless otherwise negotiated
 C. The broker
 D. TREC requires the seller to decide

Answer: B. The buyer, unless otherwise negotiated
Solution: In Texas, the buyer generally has the right to choose the title company unless another
arrangement is agreed upon in writing.



Q12. What happens if the option money is not delivered by the due date in the contract?

 A. The option period is void
 B. The contract is automatically terminated
 C. The earnest money doubles
 D. The buyer can still terminate at will

Answer: A. The option period is void
Solution: If option money isn’t delivered on time, the buyer loses the right to terminate under
the option clause but the sales contract itself remains valid.



Q13. Which of the following is an example of commingling?

 A. Depositing earnest money into a broker’s trust account
 B. Keeping a client’s funds separate from business funds
 C. Mixing client trust funds with the broker’s personal funds
 D. Transferring funds to a title company within one business day

Answer: C. Mixing client trust funds with the broker’s personal funds
Solution: Commingling is prohibited and occurs when a broker mixes client funds with personal
or business accounts.