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TEXAS REAL ESTATE EXAM 2024
EXAM QUESTIONS WITH VERIFIED CORRECT ANSWERS
"Linda purchased a fee simple interest for the private use of a residential property for one week every
single year. What did Linda purchase? - CORRECT ANSWER resort timeshare"
"What is the highest form of land ownership which includes the full and complete bundle of property
rights? - CORRECT ANSWER fee simple absolute"
"What type of ownership would allow two or more owners to have various unequal percentages of
ownership? - CORRECT ANSWER Tenancy in common"
"Tenancy in Severalty is best described as: - CORRECT ANSWER One property owner"
"Which of the following is NOT one of the four land use controls? - CORRECT ANSWER Intestate"
"What is the general purpose for cities to acquire building permits? - CORRECT ANSWER to require
a minimum level of construction standards" "Paul owns an older residential property in an area now zoned for commercial use. Paul decides to renovate the home into a laundry mat. The change in the properties functionality for Paul's financial gain
is an example of what: - CORRECT ANSWER highest and best use"
"Jon's Tire Store is being built across the street from Big Bob's Tires. What appraisal principle describes
this situation? - CORRECT ANSWER competition"
"Which one of the following loan types does NOT require a downpayment? - CORRECT ANSWER VA
loan" "Discount points are a way lenders are able to charge prepaid interest in order to lower the interest rate
over the life of the loan. What is the cost of the discount points based on? - CORRECT ANSWER the
loan amount" "FHA loans require that borrowers provide protection to the lender in case of loan default. What must the
borrower pay for to provide this protection to the lender? - CORRECT ANSWER mortgage insurance
premium" "Agent Anna has a home listed for sale and shows the home to the Quinns whom she does not have a
buyer's agency agreement with. The Quinns are: - CORRECT ANSWER customers"
"What duty requires a licensee to follow the principal's orders and requests as long as they are not
unethical or illegal? - CORRECT ANSWER obedience"
"Melissa went on a listing appointment and the sellers were asking legal questions. Questions she felt
certain she knew the answers to, what should Melissa do? - CORRECT ANSWER suggest they seek
legal counsel" "Agent Terry convinces an owner to list his property way under market value. Terry sells the property to his brother Mark without disclosing the relationship to the buyer in writing. Mark turns around and sells
the property for a profit to split with Terry. This is an example of: - CORRECT ANSWER Self Dealing"
"Kevin is leasing a storefront to open a Pizza Parlor. Any items he attaches to the property which he will
use to conduct his business would be: - CORRECT ANSWER trade fixtures"
"What is the accumulation of land caused by the natural flow of water called? - CORRECT ANSWER
accretion" "Donnie leaves his home to his third wife Trish with the clause that after her passing the home goes to his
first son Logan. What type of interest does Logan have in the property? - CORRECT ANSWER
remainder man" "New agent Matt is listing a home for sale which was built in 1965. What disclosure should Matt have the
seller complete due to the age of the home? - CORRECT ANSWER lead based paint disclosure"
"Part of agent Connie's listing packet includes a form for the seller to complete that covers the components of the home for sale and the seller's knowledge of the condition of such items. This form is referred to as:
CORRECT ANSWER seller's disclosure"
"All parties entering into a real estate contract must be doing so on their own free will and not under
duress. Which of the following is NOT a requirement to enter into a real estate contract? - CORRECT
ANSWER Parties must be US Citizens"
"A valid contract must contain valuable consideration which means: - CORRECT ANSWER
something clearly offered for something else in exchange"
"In order for a contract to convey ownership in a property transaction the contract must include: -
CORRECT ANSWER a legal description"
"Which of the following is NOT a requirement for a contract to be valid and enforceable? - CORRECT
ANSWER notarization"
"Personal Property can never - CORRECT ANSWER Become real property, Be hypothecated, Be
alienated" "Jones conveyed his ranch to Brown using a land contract. The ranch was serviced by a mutual water company, and Jones was a stockholder in the company. The stock which Jones owned was appurtenant to
the land. Does Brown have to enter into a separate contract for the stock of the mutual water company: -
CORRECT ANSWER No, because the stock was appurtenant to the land and therefore part of the real
property and part of the land contract." "The law permits a real estate licensee to act as an agent in the sale of some mobile homes. All of the following acts are grounds for discipline by the Real Estate Commissioner against a real estate
salesperson's license, except: - CORRECT ANSWER Selling, as agent, a mobile home which is greater
than 8 feet in width and 40 feet in length;"
"Which of the following is always required in joint tenancy ownership of real property: - CORRECT
ANSWER Equal shares of interest in the property by each of the joint tenants;"
"When a pest control company discovers no evidence of infestation of termites, but discovers conditions
which may lead to such infestation, the cost of correcting such conditions is paid by: - CORRECT
ANSWER The buyer only if he chooses to have the condition corrected."
"To alienate title to property, one: - CORRECT ANSWER Conveys title"
"When real property is sold, a copy of the structural pest control report must be given, if requested, to: -
CORRECT ANSWER The buyer"
"Legally and technically, property is defined as: - CORRECT ANSWER Rights or interests which a
person has in the thing owned;"
"A deed: - CORRECT ANSWER Does not have to be recorded to transfer title."
"Of the following types of deeds, which one would contain no warranties, expressed or implied: -
CORRECT ANSWER A quitclaim deed"
"The main purpose of a deed is to: - CORRECT ANSWER Evidence the change in title or transfer of
an interest in real property;"
"When a valid grant deed is prepared, title passes when it is: - CORRECT ANSWER Delivered;"
"Which of the following persons would usually be in the weakest position against loss of property due to a
claim of title by an outside person: - CORRECT ANSWER The holder of an unrecorded quitclaim
deed who does not occupy the property."
"An easement could be created for what length of time: - CORRECT ANSWER all of the following:
Perpetuity, The lifetime of a person, A term of years;"
"The land that is benefitted by an easement is called the - CORRECT ANSWER dominate tenement"
"The requisites of grant deed when compared to a land contact of sale may differ with respect to -
CORRECT ANSWER Interest conveyed, Signatures of principal parties, Designation of purchase
price,"
"Land that is subject to an easement is said to be - CORRECT ANSWER Encumbered"
"Mr. and Mrs. Winters hired the Superb Construction to install a swimming pool on their residential premises. In event the construction company was unpaid and it was necessary for them to file a lien for
payment of the contract, the encumbrance created would be: - CORRECT ANSWER A specific lien"
"If there has not been an agreement to the contrary, all the following would qualify as a negotiable
instrument except: - CORRECT ANSWER A mortgage securing a promissory"
"A straight note, same term and interest rate would: - CORRECT ANSWER Involve more interest
than an installment note"
"Which of the following is not a true statement about easement - CORRECT ANSWER An easement
in gross is a right another land created for the benefit of adjacent land"
"An easement in gross - CORRECT ANSWER Burdens servient land"
"Easement are terminated by all of the following, except - CORRECT ANSWER Revocation be the
owner of the servient tenement" "A tenant in good standing under a valid five-year lease which makes no mention of assignment or sub-
leasing, may legally do which of following - CORRECT ANSWER May sublease or assign the
leasehold to anyone, since the lease made no mention of any restrictions on such action"
"A formal declaration, not oath, that statement is true or that or that the declarer will tell truth is -
CORRECT ANSWER An affirmation"
"Following proper action by the local authorities, the zoning on a vacant lot was changed from
"commercial to "residential". Such an action is called - CORRECT ANSWER Down zoning"
"Authorization to sell a parcel of real property in the event of a default is given by - CORRECT
ANSWER Trustor to trustee;"
"In order to operate a competitive, yet profitable business, a real estate broker needs to be concerned with
"desk cost." Which of the following most nearly represents the correct way to calculate desk cost -
CORRECT ANSWER Divide the total operating expenses of the firm, including salaries, rent,
insurance, etc., by the number of salespersons." "When a title company issues a California standard policy of title insurance, the policyholder is insured
against loss which occurs because of - CORRECT ANSWER Forgery in the chain of recorded title"
"Upon discovering that a salesperson in his office was receiving a referral fee from a local lender for every real estate loan the salesperson referred to the lender, the broker of record in that office took only two actions: He discharged the salesperson, and he warned all other salespersons in the office never to accept
such fees. Based only on the foregoing, which of the following is most nearly correct: - CORRECT
ANSWER Both broker and salesperson may be subject to disciplinary action by the Commissioner."
"The listing agent for a residential property can legally complete the entire Real Property Transfer
Disclosure Statement: - CORRECT ANSWER Under no circumstances;"
“An insurance policy which combines personal liability insurance and hazard insurance coverage for a
dwelling and its contents is called - CORRECT ANSWER homeowner's insurance"
"What is the status of a contract when all of the terms have been fulfilled and the transaction has been
closed? - CORRECT ANSWER fully executed"
"Surface Rights, Air Rights, and Subsurface Rights are all rights that can be sold by a property owner while
still retaining the property itself. These rights are known as: - CORRECT ANSWER severable rights"
"When an easement allows the use of a neighboring property which automatically transfers upon the sale
of either dominant or servient property, it is called what type of easement? - CORRECT ANSWER
Easement Appurtenant"
"The interest rate banks charge to their preferred customers is called: - CORRECT ANSWER the
prime rate" "The city of Brownwood plans to build a new water treatment facility but the land that is required is
privately owned. Eminent domain allows the city to: - CORRECT ANSWER Take possession of the
land against the owner's wishes, yet the owner must be compensated"
"When the appraised value of a property is given, it is based on: - CORRECT ANSWER Comparable
sales"
"Agent Brook is preparing for a listing appointment and has gathered information to prepare a report of recent market data for the seller to review. The report agents reconcile to obtain a reasonable list price for
a property based on current listings, recent sales, and expireds would be called: - CORRECT
ANSWER Comparative Market Analysis"
"Buyer Sam purchased a run down residential home in a neighborhood with many nice well kept properties. Sam intends to renovate the home and resell it for a profit. Considering the nicer homes in the
neighborhood help raise his property value, what appraisal principle is Sam leveraging? - CORRECT
ANSWER progression"
"During the appraisal process the appraiser will NEVER adjust the price of the: - CORRECT ANSWER
subject property" "While working on an appraisal report, appraiser Jake finds that the comparable property is superior to the subject property with more amenities. How will Jake make adjustments to arrive at a value of the
subject property? - CORRECT ANSWER subtract value from comparable"
"The beautiful town of Big Bear is experiencing a fast influx of new residents. There are few homes on the market and no new construction developments in the works. What will this do to the price of the existing
homes in the area? - CORRECT ANSWER The prices will increase"
"Homeowner Paul is selling his home without a real estate agent. He places an advertisement stating
"Owner Financing 3% down payment" is Paul's advertisement in violation of the Truth in Lending Act? -
CORRECT ANSWER No, property owners are not regulated by TRIL advertising requirements"
"Fair housing regulations apply not only to real estate agents but also lenders. When a lender denies a mortgage application solely based on the racial demographics of the neighborhood the property is located
in the lender is guilty of: - CORRECT ANSWER redlining"
"Terry received a conventional 30 year loan to purchase his home. Thanks to some large extra payments Terry will have his home paid for in only 17 years. Which of the following loan terms could charge Terry an
extra fee for paying off the home so soon? - CORRECT ANSWER prepayment penalty"
"Mark is not able to make his entire mortgage payment on time each month and has fallen behind on payments. Because of his failure to pay, his lender, ABC Home Loans, sent him notice that they are calling for the remaining mortgage balance to be pid in full in one lump sum immediately. This is an example of
a(n)? - CORRECT ANSWER acceleration clause"
"Some loans are structured where the Lender places a portion of each payment the borrower makes into a
special account to pay the property taxes at the end of each year. What is the account called? - CORRECT
ANSWER escrow account"
"Which of the following loan types would have the highest down payment? - CORRECT ANSWER
conventional loan"
"In compliance with fair housing regulations any deed restriction or covenant that would prohibit the
conveyance of the property to a member of a protected class is: - CORRECT ANSWER is not legal,
considered void, and unenforceable"
"A fiduciary who holds or controls property for the benefit of another is called a(n): - CORRECT
ANSWER a trustee"
"A contract between two parties both giving a promise for a promise is called a: - CORRECT ANSWER
bilateral contract" "Shane is offering an open listing on his home to all local brokers. Shane has offered to pay a 3% commission to the broker that brings him a ready, willing, and able buyer. What type of contract did Shane
offer? - CORRECT ANSWER unilateral contract"
"To be enforceable real estate contracts must be in writing according to the: - CORRECT ANSWER
Statute of Frauds" "In a real estate transaction, when someone is forced into a contract by intimidation or some other type of
coercion it is called: - CORRECT ANSWER duress"
"A contract that does not have all the necessary elements of a contract is: - CORRECT ANSWER void"
"LeAnn entered into a contract that called for $1,000 in monetary damages if the contract was breached.
The $1,000 in the contract is referred to as: - CORRECT ANSWER liquidated damages"
"After the offer and acceptance, when the terms of a contract are in the process of being completed, and
prior to closing, the contract is said to be: - CORRECT ANSWER executory"
"A person makes an offer to purchase a property that was shown to them by their broker, but then waits to present the offer to the seller until later that day. In the meantime, two more offers were submitted on the
property. Under the rule of agency, the offer: - CORRECT ANSWER Must be presented alongside the
other offers to allow the seller to make a fair choice" "Sharon made an offer on her dream home and to show the seller she was a serious buyer she offered a sum of money to be held in escrow that she will forfeit if she does not fulfill her end of the deal. What is the
sum of money to be held in escrow as a good faith deposit called? - CORRECT ANSWER Earnest
Money" "Once all terms of a contract have been fulfilled and the transaction has closed the contract status is said to
be fully: - CORRECT ANSWER executed"
"John signs a six-month lease on an apartment beginning January 1st and ending June 30th. His lease does not automatically renew and no notice is required on his part to vacate on the expiration date. What type
of lease did John sign? - CORRECT ANSWER Estate for years"
"Sally wants to transfer the title of her property to her granddaughter. Which of the following are ways to
voluntarily transfer title to a property: - CORRECT ANSWER will, grant, deed"
"When someone passes away with a valid will in place it is referred to as: - CORRECT ANSWER
testate" "A title search revealed a lien on a property which creates a cloud on the title. How may the landowner go
about resolving this title issue? - CORRECT ANSWER Paying the debt and filing a stratification of
judgment" "Liens on a title may be voluntary or involuntary. Which of the following is an example of a voluntary lien?
- CORRECT ANSWER mortgage" "Donnie's neighbor Paul has an easement to cross Donnie's property to get to his own. The easement is recorded and transfers with the land if either Donnie or Paul sell their property. When an easement is on a
title it is an example of an - CORRECT ANSWER encumbrance"
"Escrow agent Emily will use what legal instrument to transfer real property from the seller to the buyer
on closing day? - CORRECT ANSWER deed"
"What type of title bears the most protection for the property owner: - CORRECT ANSWER
warranty deed"
"On closing day who signs the deed to transfer the property from seller to buyer? - CORRECT
ANSWER the seller"
"When agents get together and have a discussion on regarding setting a fixed commission rate so that they
are all charging the same rate, this conversation violates what act? - CORRECT ANSWER Sherman
AntiTrust Act"
"What duty requires an agent to place the clients best interest above all others? - CORRECT
ANSWER loyalty"
"Describing the property would be acceptable in advertising, however, describing the type of buyer
desired would be considered - CORRECT ANSWER discriminatory"
"Betzy is working with buyers under a written buyer's agency agreement. The buyers decide they want to purchase a home that Betzy has listed. If Betzy does not obtain permission in writing from all parties to
represent both parties she would create: - CORRECT ANSWER undisclosed dual agency"
"David, a broker, has recently finalized a deal for the purchase of one of his listings. The buyer has given
him earnest money. What must David do next with the earnest money? - CORRECT ANSWER
deposit the money in an escrow account"
