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Principles Of Real Estate I Study Guide
Principles Of Real Estate I Study Guide
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Study guide for the TREC pre license course Principles of Real Estate I
Flashcards
100 cards
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Practice quiz
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Questions
100
Answers
1
Which statement BEST describes the relationship of supply and demand in the real estate market?
When supply goes up, price goes up
When both supply and demand increase, real estate prices rise
Demand and price move in opposite directions
Supply and price move in opposite directions
2
Which is generally NOT subject to ad valorem real estate taxes?
Senior Citizens
Banks
City Park Lands
Farms
3
When a complaint against a license holder is received, an investigation is conducted by
the Texas Bar Association
the Texas attorney general
the Texas Real Estate Commission (TREC)
the Texas Association of REALTORS
4
Which is the same as sole ownership?
Joint tenancy
Ownership in severalty
Tenancy in common
Tenancy at sufferance
5
How many acres would be contained in the following parcel of land: N1/2 of SW1/4 of NE1/4 of Section 3?
160
10
20
320
6
Real estate must be reappraised for tax purposes at LEAST every how many years in Texas?
Three
Five
Two
One
7
Datums and Benchmarks are terms exclusively used to describe
the originating point of an oil or gas pipeline
An elevation point for the purpose of establishing air rights
the headwaters of a river
the originating point of a circle or the originating point of a distance
8
A broker representing a seller would be what kind of agent?
Special
Informal
Formal
General
9
Which prohibits discrimination based on color, race, national origin, religion, gender, familial status?
Fair Housing Act of 1968
Civil Rights Act of 1964
Americans with Disabilities Act of 1990
Civil Rights Act of 1866
10
In what kind of contract do the parties show their intentions by words (either oral or written words)?
Bilateral
Express
Unilateral
Implied
11
States bordering Texas all permit which kind of legal description that Texas does NOT permit?
Rectangular survey system
REcorded subdivision
Metes and bounds
Texas Department of Interior map
12
An encroachment of long standing may result in an easement by
adverse possession
necessity
prescription
implication
13
The laws prohibiting monopolies, contracts or conspiracies that unreasonably restrain trade are
compensation laws
tort reform laws
antitrust laws
the Texas Deceptive Trade Practices laws
14
A grant from an owner to a school "on the condition that" the property be used only for educational purposes is
a fee simple subject to a condition subsequent
a determinable fee estate
a fee simple subject to a condition precedent
an indeterminable fee estate
15
The three requirements for a selling broker to be entitled to a sales commission include all of the following EXCEPT
the person held a valid real estate broker's license
the person advertised the property for sale
advise the buyer in writing they should obtain title insurance/abstrast
the agreement to pay was in writing and signed by the party to be charged
16
Which type of homeowners insurance policy provides the MOST extensive covrage?
Alternative policies sold with the approval of the Insurance commissioner
HO-B
HO-C
HO-A
17
When dwellings are designed specifically for persons with a handicap
the law does not prohibit occupancy exclusively to handicaped tenants
the law prohibits restricting occupancy exclusively to handicaped tenants
landlords may deny handicaped persons to make reasonable accomodations
persons with a drug addiction must be accepted as tenants
18
The License Act is administered by
the Texas Real Estate Commission
the Texas Legislature
the Texas Sunset Commission
the Texas Bar Association
19
The relationship between a broker and the broker's sales agent is usually that of
a single agency relationship
a special agency relationship
a dual agency relationship
a general agency relationship
20
When subsurface rights are sold seperately from surface rights
the mineral interest is considered dominant over the surface interest
the rights typically include minerals such as iron ore, limestone & gravel
the mineral rights owner isn't normally entitled to enter the property
the surface interest is considered dominant over the mineral interest
21
The method used to describe real estate by distance and direction is:
the rectangular survey method
the metes-and-bounds method
the recorded subdivision plat method
the lot-block-tract method
22
During the time between the signing of a real estate sales contract and the actual passing of the title, the contract is
an executory contract
an executed contract
an implied contract
a voidable contract
23
Which is a misleading or deceptive practice according to the DTPA?
All of these
Claiming that something is new when it is not
Advertsing a property with no intention of selling the property as such
Claiming that repairs have been made when they have not
24
A broker who intends to receive a commission from someone other that the broker's client must first obtain consent of
the local association of REALTORS
all parties to the transaction
the Real Estate Commission
the client
25
Is the owner of a sole proprietorship obligaged to file as a business with the secretary of state's office?
No but a sole proprietorship must file with the Dept. of Business Licensing
Yes, a sole prioprietorship must file
Many sole proprietorships go out of business in 1 year so not till year 2
No, a sole proprietorship need not file
26
Loan discount points can be deducted in the year of the purchase if all of the following conditions are met EXCEPT
if the discount points are fees, not interest
if the mortgage is secured by the taxpayer's principal residence
if the points are paid in cash at closing
if they are a charge for the use of the money
27
After a property is sold to satisfy a judgment lein, the debor should receive
a writ of attachment
a deficiency judgment
a writ of execution
a release of judgment
28
While it is permissible to sell off pieces of a section, is it permissible to blend pieces of a section together?
In urban areas with populations over 1.5 million it is permissible
Yes, but only if the abutting pieces are at least 1/4 of a section each
No, under Texas law, sections must always maintain their boundary integrity
Adjoining sections may be combined if the legal description is accurate
29
A homestead may suffer a forced sale for payment of mortgages where the loan proceeds were used to do which?
Improe the residence
All of these
Refinance the residence
Purchase the residence
30
Which is co-ownership with right of survivorship?
Community Property
Joint Tenancy
All of these
Tenancy in common
31
Can a judgment lien be placed on both a real and personal property?
No, only against real property, not possessions
Yes, against both real and personal property
Yes, with exemptions for commercial properties
No, only against personal property
32
Notifications between the parties after the effective date of the contract
may be made orally
must be both of these
are none of these
must be in writing
33
Rules and regulations adopted by government agencies
are used to implement and enforce legislative acts
do not have the force and effect of legislative acts
are considered a precedent for future rules and regulations
may not preescribel penalties for violatiions
34
The economic term demand is defined as:
the amount of goods people are willing and able to buy at a given price
the amount of money people are willing to pay
the amount of meoney people are willing to borrow
the pent up consumer demand for specific goods in the marketplace
35
A homeowner has a property insurance policy with a coinsurance clause, what's the LEAST percentage of replacement cost?
80
75
50
100
36
Must salespersons working for builders or developers have a real estate license?
Paid employees of builders or developers do not need to be licensed
Yes, anyone involved in property sales in Texas must be licensed
Rules change from county to county so check with the county court
Anyone working for a builder needs a special license that's different
37
A homeowner's right to live in a newly purchased house is the right of
enjoyment
possession
control
disposition
38
All are tests for determining a fixture EXCEPT
intention of the parties
adaptation of the item to the real estate
method and permanence of attachment of the item
size of the item
39
When demand decreases, real estate prices
increase
remain stable
decrease
none of these
40
A period of renewed growth after a depression represents which stage of the business cycle?
REcession
Revival
Expansion
Depression
41
Naturally growing plants and trees that do NOT require cultivation are classified as which kind of property?
Personal
Fruits of industry
Fruits of labor
Real
42
An owner of a cooperative unit owns
the cooperative unit & a proportionate share of the undivided common areas
shares of stock in the cooperative
a proportionate share of the entire cooperative complex
the land under the cooperative unit
43
A builder does work on a client's lake house & isn't paid, can he file a lien against that property & his home?
Yes, On all of the client's properties
No, the builer may only file a specific lien against the lake house
No, only against the client's main homestead
No, a lake house is considered personal property, not real estate
44
Which is considered personal property?
None of these
Trade Fixture
Fixture
Permanently attached bathtub
45
The sum to be paid an aggrieved party from the real estate recovery trust account is determined by
the Court
the Broker-Lawyer Committee
the local association of REALTORS
the Texas Real Estate Commission
46
In a cooperative, any taxes, maintenance expenses, and mortgage liens are placed against
the individual units
the individual tenants
the building
the cooperative
47
Homes that are constructed with a large factory built wall and roof componets are known as
townhomes
modular homes
manufactured homes
mobile homes
48
For a specified amount of money, an owner agrees to give a prospective buyer the right to buy. This is
an option contract
a land contract
an installment contract
an escrow contract
49
A purpose of the US & individual state constitutions is to establish citizens rights & delineate goverments authority's
limits
rights
advantages
privileges
50
An agent's responsibility is
only to the principal
only to principals and third parties
to the principal, the customers, and third parties
only to the principal and customers
51
The term used for the process of developing an opinion of value for a parcel of real estate is
valuation
assessment
broker's opinion
appraisal
52
Fixtures are:
real property
removable by a tenant before the expiration of the lease
emblements
chattels
53
What is a net listing?
None of these
One that specifies the amount of the commission to be paid to the broker
One that specifies the amount the seller is to receive from the sale
One that specifies the total amount of the sale & the commission paid
54
The Texas Real Estate License Act was first passed in
1939
1947
1949
1919
55
Under the Texas Real Estate License Act, a broker who represents a party in a real estate transaction is
a dual agent
that party's agent
a principal
a buyer's agent
56
Fair housing laws allow any aggrieved party to file a discriminatory practices complaint any of the following EXCEPT
private litigation
in the court of appeals
attorney general litigation
in administrative proceedings
57
When a four-acre piece of property is offered at $3 per square foot, what is the asking price?
$436,360
$522,720
none of these
$624,860
58
When a four acre piece of property is offered at $3 per square foot, what is the asking price?
$436,360
None of these
$624,860
$522,720
59
Under community property laws, property owned before marriage is considered
jointly owned
seperate property
community property
none of these
60
If a partnership, as tenants in common, holding land in the partnership's name sells, how many partners must sign?
Just the senior partner
One signature by any of the partners
Just the attorney representing the partnership
All the partners
61
A homeseller's tax bills are especially useful for real estate agents because
they give both sellers & buyers agents an idea of the direction of value
they give potential homebuyers a negotiating strategy
they give a listing agent a target for setting the home price
they give a listing agent an idea of how much commission the seller can pay
62
Of the 13 members of the Texas Real Estate Broker Lawyer Committee how many must be appointed by TREC?
All
10
8
6
63
What might be the role of a real estate broker if a homeowner seeks to overturn a property appraisal?
A broker may leverage local lenders in keeping taxes low
A broker may offer the attorney from the local board of REALTORS assistance
A broker may testify about the current market conditions
A broker may offer actual appraisals & sales prices of comparable homes
64
An agreement in which the buyer and seller have agreed to meet specific obligations is called
an executory agreement
a nonvoidable agreement
an executed agreement
an anticipatory agreement
65
The reason a real estate license applicant must possess certain stated personal & educational qualifacations/pass a test
is to prove adequate knowledge of the business
is to be able to follow cert4ain prescribed standards of business conduct
is to be able to understand continuing education course material
is to qualify for the license renewal
66
Which action of a real estate license holder does NOT violate antitrust laws?
Telling prospects the commissions are in line with other brokers
Arranging with another broker for each office to operate in only one area.
Telling prospects the commissions charged are based on the services offered
Agreeing with another broker to deny access to listings to discount brokers
67
A manufactured home is generally considered
a fixture
real property
personal property
real estate
68
All of the following would be considered improvements to land EXCEPT
sewers
roads
utilities
annual crops
69
For an entrepreneur to set up a real estate brokerage as a sole proprietorship, they must first
have a valid broker's license
file an application with TREC so it can determine if more are needed there.
There are no preliminary regulations only after the 10th real estate sale
register with the Texas Association of REALTORS
70
The profits realized from the sale or exchange of real property are
investments
equity
capital gains
income tax deductions
71
Under the federal Fair Housing Act, real estate organizations, (MLS) may NOT do which if someone is in a protected class
All of the above
As the age of prospective clients
Refuse membership or put conditions on participation
Discriminate in the listing or sale of commercial properties
72
What is an example of discharge a contract because of impossibility of performance?
When the principals agree to fraudulently move boundries to claim more land
Whe the buyer conceals the fact that he does not have the funds to buy it
When one principal or the other dies before the contract can be signed
When the seller actually does not legally own the proprty being sold
73
Even if the owner sells the property without the help of the broker, the broker gets credit for the sale in
an exclusive right to sell listing
an exclusive agency listing
an open listing
a net listing
74
Which term refers to the study and description of a population?
Situs
Population review
Demographics
Nonhomogeneity
75
To avoid liability, should listing agents simply accept the sellers' word when they provide info about their property?
It's always best to verify from an independent source what a seller says
Checking details of the listing agreement is a buyer chore
The listing agent must challenge, for the record, every detail provided
It is important to have the seller fill out property info & agent not to
76
A federal judgment lien is effective for how many years?
10
12
15
20
77
Pur autre vie life estates are what kind of life estates?
For the life of the grantor
Ordinary
For the life of the person in possession
For the life of another
78
The Texas law allowing a specific time limit during which parties to a contract may bring legal suit is
the discharge of a contract right
the statute of frauds
the breach of contract right
the statute of limitations
79
If Bill & John own adjacent properties, and Bill gives John an easement to cross Bill's land Bill's property is
none of these
the adjacent tenement
the servient tenement
the dominant tenement
80
Even if a name and number are on the do-not-call list, the individual may be contacted if
a person has had a business relationship with the company within 18 months
a person has had an affiliated business relationship within 6 months
a person has had a business relationship with a competing company
a person fits a statistical profile of a likelihood of being interested
81
What kind of estate establishes complete ownership and my be inherited, given away, or sold by the owner?
Fee simple
Defeasiblefee estate
Conventional life
Legal life
82
Wich shows only the location and dimensions of a parcel of land?
Loacation survey
Survey sketch
Dimension survey
Improvement survey
83
Which of the following is TRUE of a licensee who commits an act of housing discrimination?
They are subject to potential civil action but not TREC disciplinary action
They are subject to potential civil action, and TREC disciplinary action
None of these
They are not subject to potential civil action or TREC disciplinary action
84
The asking price for a property a broker has listed is now too low. Which duty requires them to inform the principal?
Disclosure
Obedience
Accounting
Loyalty
85
Which of the following is TRUE?
Regulations by Gov. agencies expand on law & don't have the effect of law
None of the above
Regulations by Gov. agencies are merely advisory & have no effect of law
Regulations by Gov. agencies expand on law & have the effect of law
86
Which is a physical characteristic of land?
Relative scarcity
Area preference
Permanence of Investment
Nonhomogeneity
87
The federal rules concerning lead-based paint require
removal
disclosure
testing
abatement
88
Must a broker or sales agent have a written listing agreement to sell a property in Texas?
No, many properties that do not involve listing agrements sell each year
No not necessary unless the license holder wants to assure a commission
Yes, only a written listing agreement can be used to transfer property
Yes, the listing & sales agreement are the only two documents needed
89
A mortgage lien is what kind of a lien?
General, voluntary
Specific, involuntary
General, involuntary
Specific, voluntary
90
Under Texas law, can a property be sold to someone who is NOT a U.S. citizen?
Noncitizens may purchase property only if the TDFR approves the sale
Yes, but noncitizens must prove their intent to remain in the United States
Citizenship is not listed as a required element for a valid contract
No, anyone buying a property in Texas must be able to prove citizenship
91
When a government entity transfers ownership of a home is a property disclosure required?
Yes, Texas law requires full disclosure
Government entities are not required to provide disclosures
Federal regulation is no disclosre for HUD properties, city owned yes
Disclosure is only required if destroyed by fire
92
Which of the following is TRUE?
TREC may only place on probabation a licensee who discriminates
TREC may suspend or revoke a licensee who discriminates
TREC may make a licensee pay punitive damages who discriminates
TREC may suspend but not revoke a licensee who discriminates
93
The economic characteristic that refers to people's choices and preferences for a given area is
permanence of investment
improvements
relative scarcity
situs
94
The Fair Housing Act provides for certain exemptions, but no exemptions apply when
commercially operated club-owned lodgings rented to its members
a real estate license holder is involved in a transaction
the rental of rooms in an owner occupied 1-4 family dwelling
a single family home rental when it is 1 of only 4 owned by a person
95
All would affect supply EXCEPT
population
the labor force
construction costs
government controls
96
A limited partnership includes
limited partners only
general partners only
special partners only
both general and limited partners
97
All are categories of the uses of real property EXCEPT
residential
industrial
agricultural
developmental
98
A neighbors child is hurt when a non-maintained swing set breaks in your yard, which kind of insurance will cover this?
Personal property
Liability
Property
Homeowners' warranty
99
What describes the surface, below to the center, above to infinity, natural things permanently attached & legal rights?
Property
Real Estate
Land
Real Property
100
Why does TREC approve or promulgate specific forms to be used by licensees?
Lenders require transactions to be recorded via computer
the federal Consumer Financial Protection Bureau ordered it
The vast majority of transactions are similiar & it protects all parties
So that it can collect a royalty each time a form is used
