Texas Real Estate Practice Exam

10 sample questions, with answers explained

Every question above with its correct answer and the reasoning behind it. Read the explanations for the ones you answered correctly too. A lucky guess and knowing the rule look identical on a score report. These are sample questions from our larger bank.

1. 1. During her marriage, a Texas wife inherits a rental house from her mother. Under Family Code 3.001, how is the house classified?

   • ACommunity property, because it was acquired during the marriage
   • BHer separate property, because it was acquired by devise or descentcorrect
   • CHalf hers and half her husband's, as tenants in common
   • DCommunity property unless she records a schedule of separate property

   Why: Family Code 3.001 makes property acquired during marriage by gift, devise or descent the spouse's separate property, along with property owned before marriage. Acquiring it during the marriage does not make it community property when it came by inheritance. Recording a schedule of separate property under 3.004 affects notice to good faith purchasers and creditors, not whether the house is separate.

   Property ownership

2. 2. A Texas broker receives a buyer's earnest money as escrow funds. Under Occupations Code 1101.652(b)(30) and (31), what must the broker do with it?

   • AForward it to TREC, which holds it until the transaction closes
   • BDeposit it in the brokerage's operating account until closing
   • CDeposit it within a reasonable time with a Texas title company or in a trust or escrow account at a Texas bankcorrect
   • DHold the check uncashed in the file until both parties sign the closing statement

   Why: Occupations Code 1101.652(b)(30) requires escrow or trust funds to be deposited within a reasonable time in trust with a title company authorized to do business in Texas, or in a custodial, trust or escrow account at a bank authorized to do business in Texas. Subdivision (31) bars disbursing them before the transaction is completed or terminated. Using the operating account would also be commingling under 1101.652(b)(10).

   Practice of real estate

3. 3. Jordan's Texas sales agent license is inactive because he has no sponsoring broker. A neighbor offers him a fee to negotiate the sale of the neighbor's house to a buyer. What applies?

   • AHe may do it because the neighbor is a personal acquaintance.
   • BHe may do it if he discloses his inactive status in writing.
   • CHe may do it once a year without a sponsoring broker.
   • DHe may not, because negotiating for others requires an active license.correct

   Why: TREC: "An active real estate license is required to negotiate a real estate transaction between third parties." Brokerage on an inactive license is a sanctionable violation under TRELA 1101.351(c). Disclosure, friendship or a one-time exception does not substitute for active status with a sponsoring broker.

   Practice of real estate

4. 4. A Texas brokerage consists of a broker and one sponsored sales agent. The agent's buyer client wants a property the broker has listed. Which is true?

   • AThe broker may act as a dual agent because the firm is too small to appoint.
   • BThe broker may appoint the agent to the buyer and herself to the seller.
   • CThe firm cannot handle the sale and must refer one of the parties out.
   • DThe broker may act as intermediary, but without making appointments.correct

   Why: TREC says appointments are possible only if the company has a broker and two agents or associated brokers. With only the broker and one agent, the broker may still act as an intermediary, just without appointments. A broker appointing herself alongside one agent is the trap, and dual agency is never available in Texas.

   Agency

5. 5. A Texas sales agent never gave the buyer the written abstract or title policy advice, and the sale closed anyway. What does Occupations Code 1101.806 provide?

   • AThe commission is reduced by half and paid to the buyer
   • BNothing, if the title company issued a policy at closing
   • CThe buyer may rescind the sale within 30 days of closing
   • DThe license holder may not receive or recover the commissioncorrect

   Why: Occupations Code 1101.806(d): a license holder who fails to advise a buyer as 1101.555 requires may not receive payment of or recover any commission agreed to be paid on the sale. A title policy issued at closing does not cure the missing written advice, and rescission or a partial refund is not the remedy the statute names.

   Contracts

6. 6. A Texas sales agent decides to leave her sponsoring broker for another firm. What must she do under TREC rules?

   • AReturn her license certificate to TREC, which then reassigns it
   • BNotify the broker in writing immediately and end the sponsorship online or on the TREC formcorrect
   • CGive the broker 30 days' written notice before moving to a new broker
   • DAsk TREC to notify the broker, which it does automatically on request

   Why: Under TREC Rule 535.121(b) and (c), a sales agent who intends to terminate sponsorship must notify the sponsoring broker immediately in writing, and the sponsorship must also be ended online or on the TREC form. There is no 30-day notice period, and TREC does not send the notice for her.

   Practice of real estate

7. 7. The buyer and seller of a Texas home are using a TREC contract, and every statement in the contract's Paragraph 7 water-rights exception is true. What happens with the groundwater and surface water disclosure?

   • AIt must still be provided, because Property Code 5.008 requires it.
   • BIt must be filed with TREC instead of being given to the buyer.
   • CIt must be provided, but only after the sale closes.
   • DIt does not need to be provided under the contract.correct

   Why: Because no statute requires the groundwater and surface water disclosure, the only source of the duty is Paragraph 7 of the TREC contract, and that duty falls away when the paragraph's exception applies. Property Code 5.008 governs the Seller's Disclosure Notice, not this form.

   Contracts

8. 8. A Texas sales agent nearing the first renewal has not finished the Sales Agent Apprentice Education (SAE) courses and offers to pay the $200 CE deferral fee. What is the result?

   • AThe fee buys 60 more days to finish the SAE courses while staying active.
   • BThe fee converts the license to inactive status until the courses are done.
   • CThe fee waives the SAE requirement for that renewal period only.
   • DSAE hours cannot be deferred, so the license expires if they are not done.correct

   Why: TREC says of the first-renewal SAE hours: "These hours cannot be deferred, so if you do not complete them in time for your renewal, your license expires." The $200 deferral fee, which buys 60 more days, is for ordinary continuing education only. Treating it as covering SAE is the trap.

   Practice of real estate

9. 9. Maria has already filed her Texas sales agent application and now worries that an old misdemeanor might disqualify her. What does TREC say about requesting a Fitness Determination at this point?

   • AShe may request one at any time up to the date her license is issued.
   • BIt is too late to request one, because the application has already been filed.correct
   • CShe should request one now and pay for it together with her exam fee.
   • DShe must request one before she can schedule the state portion of the exam.

   Why: TREC states: "If you have already submitted your application, it is too late to request a FD." It also tells applicants not to request an FD at the same time as the application. The Fitness Determination is meant for people enrolled in, or planning to enroll in, qualifying education, before they apply.

   Practice of real estate

10. 10. A Texas sales agent places a For Sale sign in the yard of a house after the owner gave verbal permission on the phone. Under Occupations Code 1101.652(b)(18), what is the problem?

    • AThe owner or the owner's authorized agent must consent in writingcorrect
    • BOnly a broker, not a sales agent, may place a sign
    • CNone, because the owner agreed to the sign
    • DNone, as long as a listing is signed within 30 days

    Why: Occupations Code 1101.652(b)(18) makes it a ground for discipline to place a sign offering property for sale or lease without the written consent of the owner or the owner's authorized agent. Verbal permission is not written consent, and a later listing does not fix it. The rule covers any license holder, so a broker would need the same written consent.

    Practice of real estate