97+ Texas Real Estate Exam Questions and Answers Quiz (With PDF)

Disclaimer: This “Texas Real Estate Exam Questions and Answers” quiz provides likely exam-style questions for practice. However, we cannot guarantee their appearance on the actual test. Use this resource as a study aid alongside other materials for comprehensive preparation. Good luck! 🌟

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In this quiz, we’ve meticulously curated a collection of 100 thought-provoking questions – from foundational concepts to advanced scenarios – to challenge your understanding and prepare you for success.

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Here’s a sneak peek of what you’ll find in our comprehensive quiz

  • Crucial insights into the Texas Real Estate Commission (TREC) and its role in regulating the industry.
  • Deep dives into property ownership types, real estate contracts, and their significance.
  • A breakdown of essential legal and ethical considerations in the field.
  • Explorations of property valuation methods and financing options.
  • Insights into property tax exemptions, appraisals, and more.

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Texas Real Estate Exam Questions & Answers

What agency oversees the regulation of real estate activities in Texas?
Answer: The Texas Real Estate Commission (TREC).

What is the primary purpose of TREC?
Answer: TREC’s primary purpose is to protect consumers of real estate services and promote public trust in the real estate industry.

Which document is used to convey ownership of real property in Texas?
Answer: A deed.

What type of ownership is characterized by the right of survivorship?
Answer: Joint tenancy with right of survivorship (JTWROS).

What is the maximum allowable interest rate for a seller-financed transaction in Texas?
Answer: There is no maximum interest rate for seller-financed transactions in Texas.

What is the purpose of the Real Estate License Act?
Answer: The Real Estate License Act establishes the requirements for obtaining and maintaining a real estate license in Texas.

What is the difference between a broker and a salesperson?
Answer: A broker can operate independently and can supervise other licensees, while a salesperson must work under the supervision of a licensed broker.

How often does a salesperson’s license need to be renewed in Texas?
Answer: A salesperson’s license must be renewed every two years.

What is the purpose of the Consumer Protection Notice?
Answer: The Consumer Protection Notice informs consumers about their rights and the obligations of real estate licensees.

What type of listing agreement allows the seller to work with multiple brokers and only pay a commission to the broker who brings the successful buyer?
Answer: An open listing.

When must a broker provide the Information About Brokerage Services (IABS) form to a potential client?
Answer: The broker must provide the IABS form at the first substantive dialogue with a potential client.

In a real estate transaction, what is “earnest money”?
Answer: Earnest money is a deposit made by the buyer to demonstrate their seriousness about purchasing the property.

What is the homestead exemption in Texas?
Answer: The homestead exemption provides certain property tax benefits to homeowners on their primary residence.

What is the statute of fraud, and how does it relate to real estate contracts?
Answer: The statute of frauds requires certain contracts, including real estate contracts, to be in writing to be enforceable.

What does “adverse possession” refer to in real estate?
Answer: Adverse possession is a legal doctrine that allows someone who is not the owner to gain ownership of a property by using it openly, exclusively, and continuously for a specific period of time.

What is the purpose of the T-47 Residential Real Property Affidavit?
Answer: The T-47 Affidavit is used to clear up discrepancies in a property’s legal description when transferring title.

What is the Texas Veterans Land Board (VLB) and what services does it offer?
Answer: The Texas VLB provides low-interest loans to eligible Texas veterans for the purchase of land and housing.

What is the purpose of the Federal Fair Housing Act?
Answer: The Federal Fair Housing Act prohibits discrimination in housing based on race, colour, religion, sex, national origin, disability, and familial status.

How many days does a buyer typically have to terminate a residential contract using the Third Party Financing Addendum?
Answer: 14 days from the effective date of the contract.

What is the purpose of the Residential Lease Application?
Answer: The Residential Lease Application gathers information from potential tenants to assess their suitability as renters.

What is a “material fact” in a real estate transaction?
Answer: A material fact is information that could influence a reasonable person’s decision regarding a real estate transaction.

In a real estate transaction, what is “procuring cause”?
Answer: The agent who is the primary reason for a successful sale is known as the procuring cause and is typically entitled to the commission.

What is “tenancy by the entirety” and which type of property ownership does it apply to?
Answer: Tenancy by the entirety is a form of ownership available to married couples and provides rights of survivorship.

What is a “deed restriction”?
Answer: A deed restriction is a private agreement that limits the use or occupancy of real property, often used by developers to maintain certain standards in a community.

Can a real estate licensee represent both the buyer and the seller in a transaction without the parties’ informed consent?
Answer: No, the dual agency requires informed written consent from both parties.

What is the purpose of the Seller’s Disclosure Notice?
Answer: The Seller’s Disclosure Notice is used to inform buyers about the condition of the property and any known defects.

What is the purpose of an option period in a real estate contract?
Answer: The option period allows the buyer to terminate the contract for any reason within a specified time frame, often in exchange for a fee.

What is the process of “escrow” in a real estate transaction?
Answer: Escrow is the process of holding funds, documents, or other assets in a secure account until certain conditions are met.

What is a “special assessment” in relation to property taxes?
Answer: A special assessment is an additional property tax levied to fund specific public improvement projects, such as road construction or sewer systems.

What is the purpose of the Texas Residential Construction Commission (TRCC)?
Answer: The TRCC was responsible for regulating the homebuilding industry in Texas and resolving disputes between homeowners and builders.

What is “vesting,” and why is it important in property ownership?
Answer: Vesting refers to how a property’s title is held by individuals or entities. It is important because it determines ownership rights and how the property can be transferred.

Can a real estate agent receive compensation from both the buyer and the seller without proper disclosure?
Answer: No, compensation arrangements must be disclosed to all parties involved.

What is the purpose of the Appraisal Contingency Addendum?
Answer: The Appraisal Contingency Addendum allows the buyer to terminate the contract if the property’s appraised value is less than the purchase price.

What is a “leasehold estate”?
Answer: A leasehold estate is a type of property ownership where a tenant has a lease agreement with the owner, granting the tenant possession for a specified period.

What is the main objective of the Real Estate Recovery Trust Account?
Answer: The Real Estate Recovery Trust Account provides a source of funds for consumers who have obtained final judgments against licensees for certain wrongful actions.

Can a minor (someone under 18) own real property in Texas?
Answer: Yes, a minor can own real property in Texas, but the property may be subject to certain restrictions until the minor reaches the age of majority.

What is a “metes and bounds” legal description?
Answer: A “metes and bounds” legal description defines a property’s boundaries by describing its perimeter using distances and angles.

Can a property owner use deadly force to protect their property in Texas?
Answer: Texas law allows the use of deadly force to protect property only in certain circumstances, such as preventing arson, burglary, or criminal mischief during the nighttime.

What is a “homestead” under Texas law?
Answer: A homestead is a primary residence that is protected from certain creditors and eligible for property tax exemptions.

What is “commingling” in the context of real estate transactions?
Answer: Commingling refers to mixing personal funds with client or escrow funds, which is prohibited for real estate licensees.

What is the purpose of the TREC-promulgated contracts?
Answer: TREC-promulgated contracts provide standardized forms widely used in Texas real estate transactions to ensure clarity and fairness.

What is the purpose of the Seller Financing Addendum?
Answer: The Seller Financing Addendum outlines the terms of financing provided by the seller to the buyer.

What is “quiet enjoyment” in relation to property rights?
Answer: Quiet enjoyment is the right of a property owner to use and enjoy the property without interference from others.

How does community property law affect property ownership in Texas?
Answer: Texas is a community property state, which generally means that property acquired during marriage is considered jointly owned by both spouses.

What is the purpose of the Residential Condominium Contract (Resale)?
Answer: The Residential Condominium Contract (Resale) is used for the sale of a resale condominium unit.

Can a real estate licensee give legal advice to clients?
Answer: No, real estate licensees cannot provide legal advice; they can only provide general information about real estate matters.

What is a “fixture” in real estate terminology?
Answer: A fixture is an item that was once personal property but has become permanently attached to the property and is therefore considered part of the real estate.

What is “usury” in the context of real estate financing?
Answer: Usury refers to charging an interest rate on a loan that exceeds the legal limit.

What is the purpose of the One-to-Four Family Residential Contract (Resale)?
Answer: The One-to-Four Family Residential Contract (Resale) is a comprehensive contract used for the sale of residential properties.

What is “eminent domain”?
Answer: Eminent domain is the government’s power to take private property for public use, with compensation to the property owner.

What is the purpose of the Addendum for Property Subject to Mandatory Membership in an Owners’ Association?
Answer: The Addendum for Property Subject to Mandatory Membership in an Owners’ Association informs the buyer about the property’s association membership requirements.

What is a “reversionary interest” in property?
Answer: A reversionary interest is the right of the original owner or their heirs to regain possession of the property after a specific event or time period.

What is the purpose of the Residential Lease Inventory and Condition Form?
Answer: The Residential Lease Inventory and Condition Form documents the condition of a rental property at the beginning and end of a lease term.

What is the purpose of the Addendum for Property Located Seaward of the Gulf Intracoastal Waterway?
Answer: The Addendum for Property Located Seaward of the Gulf Intracoastal Waterway informs buyers about the property’s location in relation to the Gulf Intracoastal Waterway.

What is “homestead protection” in relation to property taxes?
Answer: Homestead protection refers to the limitations on increases in property taxes for homestead properties in Texas.

What is the “market price” of a property?
Answer: The market price is the actual price at which a property is sold in the open market.

What is the “effective date” of a real estate contract?
Answer: The effective date is the date on which both parties have agreed to and signed the contract.

What is a “lien” in real estate?
Answer: A lien is a legal claim against a property that serves as security for the payment of a debt or other obligation.

What is the purpose of the Addendum Concerning the Right to Terminate Due to Lender’s Appraisal?
Answer: The Addendum Concerning the Right to Terminate Due to the Lender’s Appraisal allows the buyer to terminate the contract if the property does not appraise for the specified amount.

What is a “lease” and a “license”?
Answer: A lease grants exclusive possession of real property to a tenant, while a license grants permission to use the property but does not create a tenancy.

What is the purpose of the Addendum for Property in a Propane Gas System Service Area?
Answer: The Addendum for Property in a Propane Gas System Service Area informs the buyer if the property is within a propane gas system service area.

What is “hypothecation”?
Answer: Hypothecation is the pledging of property as collateral for a loan without giving up possession of the property.

What is the purpose of the Condominium Resale Certificate?
Answer: The Condominium Resale Certificate provides information about the financial and legal status of a condominium association.

What is “escrow disbursement”?
Answer: Escrow disbursement is the release of funds held in escrow to the appropriate party according to the terms of the contract.

What is a “tax lien”?
Answer: A tax lien is a claim by the government on a property due to unpaid property taxes.

What is the purpose of the Farm and Ranch Contract?
Answer: The Farm and Ranch Contract is used for the sale of agricultural or rural properties.

What is “steering” in real estate?
Answer: Steering is the practice of directing buyers or renters toward or away from certain neighbourhoods based on protected characteristics, such as race or national origin.

What is “specific performance” and “liquidated damages” in contract remedies?
Answer: Specific performance requires a party to fulfil the terms of a contract, while liquidated damages are predetermined monetary amounts that compensate for breach of contract.

What is the purpose of the Environmental Assessment Addendum?
Answer: The Environmental Assessment Addendum provides information about potential environmental hazards on the property.

What is a “seller’s market”?
Answer: A seller’s market is a situation where the demand for homes is greater than the supply, leading to rising prices and competitive bidding among buyers.

What is the purpose of the New Home Contract (Incomplete Construction)?
Answer: The New Home Contract (Incomplete Construction) is used for the sale of a new home that is still under construction.

What is “hypothecation”?
Answer: Hypothecation is the pledging of property as collateral for a loan without giving up possession of the property.

What is the purpose of the Condominium Resale Certificate?
Answer: The Condominium Resale Certificate provides information about the financial and legal status of a condominium association.

What is “escrow disbursement”?
Answer: Escrow disbursement is the release of funds held in escrow to the appropriate party according to the terms of the contract.

What is the purpose of the Addendum for Coastal Area Property?
Answer: The Addendum for Coastal Area Property informs buyers if the property is located in a coastal area and subject to additional regulations.

What is a “chain of title”?
Answer: A chain of title is the chronological list of owners of a property, showing how ownership has passed from one owner to the next.

What is the purpose of the Farm and Ranch Seller’s Disclosure Notice?
Answer: The Farm and Ranch Seller’s Disclosure Notice is used to inform buyers about the condition of agricultural or rural properties.

What is “agricultural exemption” in relation to property taxes?
Answer: The agricultural exemption provides property tax benefits to land used for agricultural purposes.

What is a “notice of default”?
Answer: A notice of default is a formal notification sent by a lender to a borrower when the borrower has failed to meet the terms of the loan agreement.

What is the purpose of the Addendum for Property Subject to Oil, Gas, and Other Minerals?
Answer: The Addendum for Property Subject to Oil, Gas, and Other Minerals informs buyers about the presence of mineral interests on the property.

What is the “cost approach” in real estate appraisal?
Answer: The cost approach estimates the value of a property by calculating the cost to replace it with a similar property.

What is “imputed interest” in real estate financing?
Answer: Imputed interest refers to the potential interest that could be earned on the down payment funds that the buyer provides to the seller.

What is the purpose of the Addendum for Reservation of Oil, Gas, and Other Minerals?
Answer: The Addendum for Reservation of Oil, Gas, and Other Minerals allows the seller to retain ownership of mineral interests on the property.

What is “tenant at sufferance”?
Answer: A tenant at sufferance is someone who remains in possession of a property after the lease has expired without the landlord’s permission.

What is the purpose of the Addendum for Coastal Area Property, Including a General Addendum?
Answer: The Addendum for Coastal Area Property, Including a General Addendum, provides additional information for properties located in coastal areas.

What is “net operating income” (NOI) in commercial real estate?
Answer: Net operating income is the income generated from a commercial property after deducting operating expenses but before considering debt service.

What is a “quitclaim deed”?
Answer: A quitclaim deed is a legal instrument that transfers a person’s interest in a property to another person without making any warranties or guarantees about the title.

What is “rescission” in a real estate contract?
Answer: Rescission is the cancellation or termination of a contract, returning both parties to their pre-contract positions.

What is a “short sale”?
Answer: A short sale is a real estate transaction where the sale proceeds are less than the amount owed on the mortgage, and the lender agrees to accept the reduced amount.

What is a “curable defect” in relation to property condition?
Answer: A curable defect is a property condition that can be remedied or repaired.

What is the purpose of the Addendum for Coastal Area Property (TAR 1917)?
Answer: The Addendum for Coastal Area Property (TAR 1917) provides information about property located in a coastal area and the associated regulations.

What is “amortization” in mortgage financing?
Answer: Amortization refers to the gradual reduction of a loan balance over time through regular payments.

What is “proration” in real estate settlements?
Answer: Proration is the division of expenses, such as property taxes or utility bills, between the buyer and the seller based on the portion of the year each party owns the property.

What is the purpose of the Addendum for Property Located Seaward of the Gulf Intracoastal Waterway (TAR 1918)?
Answer: The Addendum for Property Located Seaward of the Gulf Intracoastal Waterway (TAR 1918) informs buyers about the property’s location in relation to the Gulf Intracoastal Waterway.

What is “estate tax”?
Answer: Estate tax is a tax imposed on the value of a deceased person’s estate before distribution to heirs.

What is “subordination” in relation to property liens?
Answer: Subordination involves allowing one lien to take priority over another lien in terms of repayment priority.

What is the purpose of the Texas Real Estate Broker-Lawyer Committee?
Answer: The Texas Real Estate Broker-Lawyer Committee reviews and drafts changes to TREC-promulgated contract forms.

What is “title insurance”?
Answer: Title insurance is a policy that protects property owners and lenders from losses due to defects in the property’s title.

What is “aesthetic zoning”?
Answer: Aesthetic zoning regulates the appearance of buildings and structures to maintain a specific visual character within a community.

Other Real Estate Exam Questions and Answers

What is the purpose of the Addendum for Property Subject to Agricultural Use Valuation? Answer: The Addendum for Property Subject to Agricultural Use Valuation informs buyers if the property is currently receiving an agricultural use valuation for property tax purposes.

What is “ad valorem” taxation? Answer: Ad valorem taxation is a property tax system where the tax amount is based on the assessed value of the property.

What is the “chain of command” in a real estate office? Answer: The chain of command in a real estate office refers to the hierarchy of supervision and authority, with brokers overseeing agents and potentially other staff members.

What is a “disclosure statement” in real estate? Answer: A disclosure statement is a document provided by sellers to buyers that outlines any known defects or issues with the property.

What is the role of the Texas Real Estate Political Action Committee (TREPAC)? Answer: TREPAC supports candidates and legislative initiatives that promote and protect private property rights and the real estate industry.

What is a “buyer agency” in real estate? Answer: A buyer agency is a relationship in which a real estate agent represents the interests of the buyer in a real estate transaction.

What is the purpose of the Addendum for Property Located Seaward of the Gulf Intracoastal Waterway (Resale)? Answer: The Addendum for Property Located Seaward of the Gulf Intracoastal Waterway (Resale) informs buyers if the property is located seaward of the Gulf Intracoastal Waterway.

What is “market analysis” in real estate? Answer: Market analysis is the process of evaluating current market conditions and trends to determine the value of a property.

What is the role of the Texas Veterans Land Board (VLB) in relation to loans? Answer: The Texas VLB offers low-interest loans to eligible veterans for the purchase of land, homes, and home improvements.

What is “capitalization rate” in commercial real estate? Answer: The capitalization rate (cap rate) is a measure used to estimate the potential return on investment for a commercial property.

What is the purpose of the Condominium Resale Certificate (TAR 1936)? Answer: The Condominium Resale Certificate (TAR 1936) provides information about the financial status of a condominium association for potential buyers.

What is a “realtor” and how does it differ from a real estate agent? Answer: A realtor is a real estate professional who is a member of the National Association of Realtors and adheres to a code of ethics.

What is “appreciation” in real estate? Answer: Appreciation refers to the increase in the value of a property over time due to various factors, such as market conditions and improvements.

What is the purpose of the Addendum for Property in a Propane Gas System Service Area (TAR 1922)? Answer: The Addendum for Property in a Propane Gas System Service Area (TAR 1922) informs buyers if the property is within a propane gas system service area.

What is a “principal” in a real estate transaction? Answer: A principal is a party in a real estate transaction who is represented by an agent, such as a buyer or seller.

What is “agency disclosure” in real estate? Answer: Agency disclosure is the process of informing clients about the agency’s relationship with their real estate agent.

What is the purpose of the New Home Contract (Complete Construction)? Answer: The New Home Contract (Complete Construction) is used for the sale of a new home that has been completed.

What is a “lien release” in real estate? Answer: A lien release is a document that acknowledges the satisfaction of a debt and removes a previously recorded lien on a property.

What is “inflation” and how does it affect real estate? Answer: Inflation is the increase in the general price level of goods and services. In real estate, it can lead to rising property values and rents.

What is the purpose of the Information About Brokerage Services (IABS) form? Answer: The IABS form provides information about the types of agency relationships that can be formed between a buyer or seller and a real estate agent.

What is a “tenant improvement allowance” in commercial leases? Answer: A tenant improvement allowance is a financial contribution from the landlord to the tenant to cover the cost of customizing or improving the leased space.

What is “subagency” in real estate? Answer: Subagency occurs when a real estate agent works under the supervision of another agent, often representing the opposite party in a transaction.

What is the purpose of the Residential Condominium Resale Information (TAR 2008)? Answer: The Residential Condominium Resale Information (TAR 2008) form provides important information about a condominium unit to potential buyers.

What is “due diligence” in real estate? Answer: Due diligence is the process of conducting thorough research and investigation before making a significant real estate decision.

What is the purpose of the Addendum for Back-Up Contract (TAR 1903)? Answer: The Addendum for Back-Up Contract (TAR 1903) allows a buyer to enter into a contract as a backup option if the primary contract falls through.

What is a “condemnation” in real estate? Answer: Condemnation is the legal process by which a government acquires private property for public use, often through eminent domain.

What is the purpose of the Notice to Prospective Buyer (TAR 2501)? Answer: The Notice to Prospective Buyer (TAR 2501) provides information about water districts, taxes, and special assessments to potential buyers.

What is “tenant at will” in real estate? Answer: A tenant at will is someone who rents a property without a fixed-term lease and can be terminated by either party at any time.

What is the purpose of the Termination Option Fee Addendum? Answer: The Termination Option Fee Addendum allows the buyer to pay a fee for the option to terminate the contract within a specified period.

What is a “time is of the essence” clause in a real estate contract? Answer: A “time is of the essence” clause stipulates that all deadlines and timelines in the contract are strictly binding.

Conclusion

Remember that these questions and answers are meant to assist you in your exam preparation, but it’s crucial to study the most recent and relevant materials provided by the Texas Real Estate Commission (TREC) and other reliable sources.

The real estate industry is ever-changing, so keep learning and growing.

Embrace your passion and excel in the dynamic world of Texas real estate.

Download the PDF version for easy reference.

Good luck with your real estate exam!