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Texas Pre-License - Law of Contracts Practice Exam Questions and Answers
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Texas Pre-License - Law of Contracts Practice Exam Questions and Answers
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Texas Pre-License - Law of ContractsPractice Exam Questions and Answers
Eduardo made several changes to his contract. WHAT are these changes called, and
WHO must receive a copy of them? - Correct Answers -Amendments are changes to
the contract as executed, and the title company must know about them.
What is novation? - Correct Answers -Novation is an alternative to assignment. It is the
act of substituting one contract for another. Legally, it is understood to be the exchange
of one contract for another.
What is a lease purchase agreement? - Correct Answers -A lease purchase agreement
is used when a tenant wishes to buy a property but cannot do so right away. With a
lease purchase agreement, part of a tenant's rent is applied to the purchase of the
property.
What is option money or the option fee? - Correct Answers -Option money, also known
as the option fee, is the money that a buyer pays a seller in exchange for the
unrestricted right to terminate the sales contract within a specified amount of days after
the effective date.
Alejandra is a seller and Joe is a buyer. During their transaction, Alejandra holds the
legal title to the property until Joe pays in full. Alejandra and Joe are using a(n): -
Correct Answers -contract for deed
How do lenders recover their money when borrowers do not pay their mortgages? -
Correct Answers -The way lenders recover their money is by foreclosing, taking title to
the property, and selling it to recover as much money as possible.
In which type of lease does the base rent change? - Correct Answers -variable
According to the TREC contracts, what will the title company (on behalf of the seller)
send to the buyer within 20 days after receiving the signed contract? - Correct Answers
-commitment for title insurance
, Regarding buyer and seller credits and debits, a seller is charged for taxes from
January 1st through closing. Who pays for the actual day of closing? - Correct Answers
-the seller
What is an estate for years? - Correct Answers -a leased possession of property for a
certain, specific period of time
WHAT must be delivered to the seller or the seller's agent within three days after the
effective date of the contract? - Correct Answers -option fee
A CLO: - Correct Answers -A CLO is a Computerized Loan Origination. It helps
consumers find a lender, fill out an application, and get loan approval all from their
computer.
What are addenda? - Correct Answers -TREC promulgates addenda. Addenda are
additional forms that need to be added to a contract in order to cover special
circumstances related to the sale.
To make a contract valid, someone may need to contract through the power of attorney
if they: - Correct Answers -are of unsound mind
The One to Four Contract would be used in the sale of a: - Correct Answers -The One
to Four Family Residential Contract (Resale) is the contract used for residential
properties that house up to four families. It is specifically for resale, not new
construction.
Majority laws protect minors from entering into agreements that they may not have the
experience or knowledge to understand. This means that: - Correct Answers -This is
incorrect because a contract with a minor is voidable at the option of the minor but NOT
the other party. It may still be performed legally, but it can be made voidable unilaterally.
A sale contract must include the minimum requirements for a valid contract as well as: -
Correct Answers -a legal property description
Land and everything growing on it or attached to it including sheds, buildings, trees, and
crops are identified as: - Correct Answers -real estate and real property
Which of the following contracts has no legal effect and typically involves an illegal act,
fraud, misrepresentation, duress, or undue influence? - Correct Answers -a void
contract
What is severance? - Correct Answers -separating mineral rights from surface rights
Which of the following forms is NOT promulgated by TREC? - Correct Answers -
Buyer/Tenant Representation Agreement
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