Texas Principles of Real Estate I Final Exam|
Questions and Verified Answers| Grade A|
LATEST 2023/ 2024 Update
QUESTION
Which of the following is considered illegal under the Fair Housing Act…?
Refusing to show properties in neighborhoods based on racial criteria
Refusing to sell to a protected class
Refusing to show properties in neighborhoods based on religious criteria
All of the above
Answer:
Refusing to Sell to a Protected Class
QUESTION
HUD fair housing complaints can be filed in which of the following ways…?
Mail
Phone
Online
All of the above
Answer:
All of the Above
QUESTION
The laws governing fair housing are also referred to as…?
Federal Housing
Equal Opportunity Housing
Free Housing
Civil Rights Housing
Answer:
Equal Opportunity Housing
QUESTION
Which of the following is a means to prevent steering…?
Ask the client to describe where they want to live based on the racial make-up of the
neighborhood
Ask the client to describe where they want to live based on geographical boundaries
Ask the client to describe where they want to live based on the religious make-up of the
neighborhood
All of the above
Answer:
Ask the client to describe where they want to live based on geographical boundaries
QUESTION
Advertising that suggests that a particular home is not suited for couples with children is
considered a violation of this protected class…?
Gender
Race
Familial Status
Religion
Answer:
Familial Status
QUESTION
The prohibition of fair housing discrimination by a licensee is described in which of the
following Acts…?
Texas Civil Rights Act
Texas Fair Housing Act
Texas Real Estate License Act
Texas Discrimination Act
Answer:
Texas Real Estate License Act
QUESTION
Any medical disorder, condition, disfigurement or loss affecting one of the body systems is
known as a…?
Physical Impairment
Mental Impairment
Disorder
Handicap
Answer:
Physical Impairment
QUESTION
If an agent does not abide by the TREC canons of professional ethics, which of the following
may occur…?
The agent may be placed on probation
The agent’s license can be suspended
The agent’s license can be revoked
All of the above
Answer:
All of the Above
QUESTION
This form must be posted in brokerage offices…?
Purchase Agreement Form
HUD-1 Form
Consumer Information Form 1-1
All of the above
Answer:
Consumer Information Form 1-1
QUESTION
Exercising judgment and skill in the performance of an agent’s practice is also known as…?
Obedience
Loyalty
Fidelity
Competency
Answer:
Competency
QUESTION
The intricacies in marketing properties for others involves…?
Competency
Fidelity
Obedience
Loyalty
Answer:
Competency
QUESTION
Abby is a real estate agent. She knows that she must place her client’s interests above her own.
This is an example of…?
Fidelity
Competency
Accounting
Confidentiality
Answer:
Fidelity
Texas Principles of Real Estate I (2023/ 2024
Update) Exam| Questions and Verified
Answers| Grade A
QUESTION
The law of Texas allowing a specific time limit during which parties to a contract may bring
legal suit to enforce their rights is:
Answer:
Statute of limitations
QUESTION
Notifications between the parties after the effective date of the contract
Answer:
must be in writing
QUESTION
For a consideration of a specified amount of money, a present owner agrees to give a prospective
purchaser an irrevocable right to buy his real estate at a certain price withing a limited period of
time. This is called an
Answer:
Option contract
QUESTION
A deed conveys ownership to the grantee so longs as the existing building is not torn down.
What type of estate did this deed create for the grantee:
Answer:
A determinable fee estate
QUESTION
When subsurface rights are sold separately from surface rights, the
Answer:
the mineral interest is considered dominant over the surface interest
QUESTION
A manufactured home is generally considered
Answer:
personal property
QUESTION
The economic characteristic that refers to peoples choices and preferences for a given area is
Answer:
Situs
QUESTION
Which term refers to the study and description of a population
Answer:
Demographics
QUESTION
An owner of a cooperative unit owns
Answer:
Shares of stock in the cooperative
QUESTION
A subdivision that consists of common property and improvements owned and maintained by a
owners association for the benefit and use of the individual housing units within the project, with
automatic, nonseverable membership for each unit owner and mandatory assessments to
maintain the common area, is a
Answer:
Planned unit development
QUESTION
Homes that are constructed with large factory-built wall and roof components are known as
Answer:
Modular homes
QUESTION
The profits realized from the sale or exchange of real property are
Answer:
Capital gains
QUESTION
Which type of homeowners insurance policy provides the MOST extensive coverage:
Answer:
HO-C
QUESTION
Under the Texas Real Estate License Act, a broker who represents a party in real estate
transaction is:
Answer:
the party’s agent
QUESTION
The relationship between a broker and the broker’s salesperson (as an agent) is usually that of:
Answer:
general agency relationship
QUESTION
An agent’s responsibility is:
Answer:
To the principal , the customers, and third parties
QUESTION
A broker who intends to receive a commission from someone other than the broker’s client must
first obtain the consent of
Texas Principles of Real Estate I (2023/ 2024)
Exam | Questions and Verified Answers|
100% Correct
QUESTION
contract for deed/installment contract
Answer:
seller financing and buyer does not get deed until the property has been paid for in full
QUESTION
if property was built before 1978 seller must disclose
Answer:
that the property may contain lead based paint-Federal Law
QUESTION
An easement acquired by constant use is called easement by:
Answer:
prescription
QUESTION
A broker can indemnify herself against legal actions by those with whom she deals by
purchasing:
Answer:
errors and omissions insurance
QUESTION
How many acres are there in a section?
Answer:
640
QUESTION
The Texas Real Estate Broker-Lawyer Committee consist of:
Answer:
13 members
QUESTION
Jane agreed to purchase real estate from Grant and gave her earnest money deposit at the time
the agreement was made. Which of the following constituted the consideration in this contract?
Answer:
the promise for a promise
QUESTION
Sally is selling her home and has listed it with a broker. She is required to give a Seller’s
Disclosure Notice form to the buyer. The most likely person to fill out this form is the:
Answer:
seller
QUESTION
In Texas, if two or more persons are named as owners and there is no specific indication as to
how they are taking title, they are presumed to be:
Answer:
tenants in common
QUESTION
The Americans with Disabilities Act deals primarily with:
Answer:
commercial property
QUESTION
The amount of commission to be paid the broker for selling a property is:
Answer:
stated in the listing contract
QUESTION
The day-to-day operation of a corporation is the responsibility of its:
Answer:
management
QUESTION
The relationship of a real estate broker to the owner of property listed for sale with the broker is
that of a:
Answer:
special agent
QUESTION
Which of the following would be considered to be a fixture because of the manner of its
attachment to the property?
Answer:
water heater
QUESTION
George hired a general contractor to build a addition to his house. The general contractor failed
to pay the electrical subcontractor for work that was subcontracted to him. May the subcontractor
secure a mechanic’s lien on George’s house?
Answer:
Yes, because the work was done on George’s property.
QUESTION
An attorney-in-fact derives his powers from:
Answer:
a power of attorney
QUESTION
Able, Baker, and Charles are going to purchase an investment property as co-owners and will
take title as joint tenants. Which of the following statements is incorrect?
Answer:
Each will receive a separate deed for his share.
QUESTION
The Texas Real Estate Commission consists of . The commission members serve for _ terms.
Answer:
9 members — 6 year
Texas Principles of Real Estate 2 Final Exam|
Questions and Verified Answers| Grade A|
LATEST 2023/ 2024 Update
QUESTION
Any financial institution with deposits that are insured by a federal government agency can sell
mortgages to which institution?
Answer:
Freddie Mac (FHLMC)
QUESTION
Appraiser Jamie is looking past how a property is being used to determine a higher value. What
is Jamie determining?
Answer:
Highest and best use
QUESTION
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
QUESTION
April was able to establish a day care in a residential neighborhood, where businesses would not
normally be permitted. This required approval of the planning and zoning commission and
_.
Answer:
A special use or conditional use permit
QUESTION
Assuming that the seller pays for the date of closing, if closing is July 7, how many days will the
seller be responsible for paying using a statutory year?
Answer:
187 days
QUESTION
At the closing table, who examines all documents for buyers and represents their best interests?
Answer:
Buyer’s attorney
QUESTION
Augustine wants to move to a different area of town. He doesn’t have a car; he prefers to walk or
take public transportation everywhere. He’s looking for housing near the subway. Communities
designed and developed around access to public transportation are known as what?
Answer:
TOD
QUESTION
Because these types of properties have both specific physical and complex operational
requirements, they are usually handled by more experienced real estate professionals.
Answer:
Industrial
QUESTION
Before development of its new zipper factory begins, XYZ Corp. finds out that a section of the
property it wants to build on is prone to flooding. It decides to dedicate this portion of the
property to the government for public use to get out of handling the maintenance and drainage
issues. The local government refuses. Why?
Answer:
The maintenance or cost to fix the problem might outweigh the benefits of its use.
QUESTION
Before Marvin’s legatees inherit, his will has to go through __.
Answer:
Probate
QUESTION
Before moving out, Texas tenant Adam failed to give sufficient notice to his landlady, Yolanda.
Yolanda is so happy the lease agreement included that provision in bold type about tenants who
fail to give sufficient notice and what that means with regard to the security deposit. Given the
situation, which of the following statements is true?
Answer:
Yolanda does not have to refund any of Adam’s security deposit.
QUESTION
Bob just closed on his investment property. He’s already identified a replacement property that
he’ll be exchanging into by using a 1031 tax-deferred exchange. How many days does he have to
close on his replacement property?
Answer:
180
QUESTION
Boris is an appraiser working for the Smith family. They’ve hired him to perform an appraisal on
their six-bedroom house. What two types of data will Boris gather?
Answer:
General and specific
QUESTION
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
QUESTION
Brandy is going to purchase a strip mall. She is trying to determine exactly how much to borrow
for this purchase. She understands that the more she borrows, the greater her risk. What type of
risk is she evaluating?
Answer:
Financial risk
QUESTION
Brendan’s lender set him up with a loan in which the majority of Brendan’s early payments go
toward interest, his monthly payments remain the same, and he doesn’t start paying much toward
his principal until closer to the end of the loan. This is __.
Answer:
Typical amortization
QUESTION
Texas Principles of Real Estate 2 (2023/ 2024
Update) Exam| Questions and Verified
Answers| Grade A
QUESTION
The passive increase in the value of a parcel due to market forces.
a. Leverage
b. Capital Gain
c. Real Estate Investment Syndicate
d. Appreciation
e. Gross Scheduled Income
Answer:
D
QUESTION
Potential income of a property in the amount of rent that would be collected in a year.
a. Leverage
b. Capital Gain
c. Real Estate Investment Syndicate
d. Appreciation
e. Gross Scheduled Income
Answer:
E
QUESTION
Using borrowed money to make money.
a. Leverage
b. Capital Gain
c. Real Estate Investment Syndicate
d. Appreciation
e. Gross Scheduled Income
Answer:
A
QUESTION
Most investors invest in real estate to satisfy which of the following objective(s)?
a. Appreciation in the value of properties
b. Income derived from collecting rents
c. Investment gain
d. All of the above
Answer:
D
QUESTION
Investment in raw land is generally for appreciation only:
a. True
b. False
Answer:
A
QUESTION
The potential income of a property that is derived from rents collected in a year is called:
a. Gross Rent Multiplier
b. Gross Scheduled Income
c. Great Rental Income
d. Appreciation Schedule
Answer:
B
QUESTION
Under current IRS rules, a commercial property is depreciated over a 39-year period.
a. True
b. False
Answer:
A
QUESTION
A capital gain is:
a. taxed at a 17% rate
b. illegal in TX
c. realized when a property is sold
d. calculated by adding the adjusted basis to the net sales price
Answer:
C
QUESTION
Residential income property is depreciated over a 29-year period.
a. True
b. False
Answer:
B
QUESTION
Real estate investment syndicates:
a. Are a form of ownership
b. May be organized as limited or general partnerships
c. Are not under the jurisdiction of state and federal laws
d. Are very popular today because of favorable state and federal laws
Answer:
B
QUESTION
A _ allows for the indirect investment in mortgages through the sale of securities.
a. Real Estate Investment Syndicate
b. Real Estate Investment Trust
c. Real Estate Mortgage Investment Conduit
d. None of the above
Answer:
C
QUESTION
The two largest issuers of REMICs are Freddie Mac and Fannie Mae.
a. True
b. False
Answer:
A
QUESTION
All or part of the rental is based on the gross receipts of the tenant’s business.
a. Percentage rent
b. Term
c. Estate for years
d. Lessor
e. Expiration
Texas Principles of Real Estate 2 (2023/ 2024)
Exam | Guide with Verified Answers| 100%
Correct
QUESTION
Loan Origination Fee?
Answer:
The financing charge that a lender requires.
QUESTION
VA Loan?
Answer:
A loan made to qualified veterans for the purchase of real property wherein the Department of
Veteran’s Affairs guarantees the lender payment of the mortgage. Guarenteed Loan.
QUESTION
FHA Loans?
Answer:
Insured. 203b, 203h, Rehab loan – 203k
QUESTION
Texas Loan Program?
Answer:
TDHCA; two programs; Texas First-time Homebuyers program and Texas bootstrap program –
http://tdhca.texas.gov/overview. Texas Veterans loans
QUESTION
Federal Reserve System?
Answer:
The federal banking system of the United States under the control of central board of governors
(Federal Reserve System) involving a central bank in each of twelve geographical districts with
broad powers in controlling credit and the amount of money in circulation.
QUESTION
Discount Rate?
Answer:
The minimum interest rate set by the Federal Reserve for lending to other banks.
QUESTION
Bond?
Answer:
Written notice of an obligation given by a corporation or government entity. A surety instrument.
QUESTION
Primary Mortgage Market?
Answer:
The activity of lenders’ making mortgage loans to individual borrowers.
QUESTION
Secondary Mortgage Market?
Answer:
The buying and selling of existing deeds of trust and promissory notes.
QUESTION
Fannie Mae?
Answer:
The shortened name for the Federal National Mortgage Association (FNMA), a privately owned
corporation that purchases FHA, VA, and conventional mortgages.
QUESTION
Freddie Mac?
Answer:
A nickname for the Federal Home Loan Mortgage Corporation (FHLMC), a corporation wholly
owned by the Federal Home Loan Bank System that purchases FHA, VA, and Conventional
mortgages.
QUESTION
Ginnie Mae?
Answer:
A nickname for the Government National Mortgage Association (GNMA), a U.S. government
agency that purchases FHA and VA mortgages.
QUESTION
Truth in lending?
Answer:
The name given to the federal statutes and regulations (Regulation Z) which are designed
primarily to insure that prospective borrowers and purchasers on credit receive credit cost
information before entering into a transaction.
QUESTION
Real Estate Settlement Procedures Act (RESPA)?
Answer:
A federal law requiring the disclosure to borrowers of settlement (closing) procedures and costs
by means of a pamphlet and forms prescribed by the United States Department of Housing and
Urban Development.
QUESTION
Creditor?
Answer:
A person to whom a debt is owed.
QUESTION
Annual Percentage Rate?
Answer:
The relative cost of credit as determined in accordance with Regulation Z of the Board of
Governors of the Federal Reserve System for implementing the Federal Truth in Lending Act.
QUESTION
Adjustable Rate Mortgage (ARM)?
Answer:
A mortgage loan which bears interest at a rate subject to change during the term of the loan,
predetermined or otherwise.
QUESTION
Subsidy Buydown?
Answer:
Texas Principles of Real Estate 2 Exam|
Complete Guide with Questions and Verified
Answers| Already Grade A| 2023/ 2024 New
Updated
QUESTION
What does a buyer receive until the debt is fully paid in case of installment land sales contract?
Answer:
Equitable title
QUESTION
What type of loan is considered an expandable one?
Answer:
Open-end
QUESTION
When a buyer borrows from the seller in addition to the lender, this is known as what?
Answer:
Purchase money mortgage
QUESTION
What are some of the risks included in construction loans?
Answer:
Inadequate protection against mechanics’ liens
Financial failure of contractors or subcontractors
Potential delays in construction completion
QUESTION
Which type of mortgage usually includes all the personal property and appliances that are
installed on the property?
Answer:
A package mortgage
QUESTION
Making home improvements, paying college tuition, paying medical ex- penses, and/or taking a
vacation would be all good reasons to utilize what type of loan?
Answer:
Home equity loan
QUESTION
Primary mortgage market lenders.
Answer:
Professionals who originate loans which means they make the money available directly to
borrowers.
QUESTION
Savings and loan association.
Answer:
A financial institution whose primary function is to promote thrift and homeownership. They
also invest at least part of the deposits made by their customers in residential mortgage loans.
QUESTION
Commercial bank.
Answer:
. A financial institution that is designed to act as a depos- itory for funds and as a lender for
commercial activities, usually short-term loans.
QUESTION
Demand accounts.
Answer:
Personal and business checking accounts that allow mon- ey to be withdrawn at any time by a
depositor. The bank rarely uses these funds for mortgage lending.
QUESTION
Credit unions
Answer:
Nonprofit financial institutions that can offer higher interest rates on deposits because they don’t
pay income tax.
QUESTION
Real Estate Investment Trusts (REIT).
Answer:
A method of pooling investment mon- ey using the trust form of ownership if certain tax
requirements are met which allow the avoidance of corporate tax.
QUESTION
Judicial foreclosure.
Answer:
The sale of the mortgaged property under the supervi- sion of the court. Proceeds go first to
satisfy the mortgage, then other lien holders, and finally the borrower.
QUESTION
Non-judicial foreclosure.
Answer:
The process whereby the lender gives the borrower a notice of default (NOD) and the intent to
sell the property in a form prescribed by that state’s statute. Sometimes referred to as a “powerof-sale” foreclosure.
QUESTION
Deed in lieu of foreclosure.
Answer:
The voluntary transfer of the deed from a default- ing borrower to lender transferring legal title.
This does not terminate any existing liens on the property.
QUESTION
Right of redemption.
Answer:
The right to reclaim a property that has been foreclosed by paying off amounts owed to
creditors, including interest and costs. Also called equity of redemption.
QUESTION
Deficiency judgment.
Answer:
Court order sought by lender if property sale does not yield sufficient funds to cover the
amounts owed which enables the lender to attach and foreclose a judgment lien on other real or
personal property the borrower owns.
QUESTION
Points.
Answer:
Fee charged by lender at settlement that results in the lender’s effec- tive yield on the money
borrowed. One point equals one percent of the loan amount.