Texas Real Estate Exam Practice

Question 1 of 5

Closing & FinanceMedium

What generally happens at the closing of a Texas real estate transaction?

AThe property is inspected for the only time

BThe parties sign the purchase contract

CThe listing agreement officially begins

DTitle transfers and funds are disbursed

Explanation

Closing is when title actually transfers and money changes hands per the settlement statement — the purchase contract was already signed well before this point, inspections (if any) also typically happen earlier, and the listing agreement began even before that.

Question 2 of 5

Closing & FinanceMedium

What does a title insurance policy generally protect against?

APhysical damage from fire, storms, or flooding

BThe buyer's liability if a visitor is injured

CLoss from title defects predating the policy

DA decline in the property's market value

Explanation

Title insurance covers financial loss from title defects — like an undisclosed lien or an ownership dispute — that existed before the policy was issued. It has nothing to do with physical property damage, visitor liability (that's homeowner's/general liability insurance), or market value changes.

Question 3 of 5

Closing & FinanceMedium

What role does a title company typically play as the escrow/closing agent?

ADecides if the buyer qualifies for the mortgage

BRepresents the buyer's legal interests

CNegotiates the final sales price for the parties

DHolds and disburses funds once conditions are met

Explanation

The title/escrow company holds funds and documents neutrally and disburses them once all closing conditions are satisfied — loan qualification is the lender's decision, price negotiation is between the parties (or their agents), and the title company doesn't represent either party's legal interests.

Question 4 of 5

Closing & FinanceMedium

Why is a property survey often obtained before a Texas real estate closing?

ATo determine the property's exact market value

BTo show boundaries and any encroachments

CTo confirm the mortgage interest rate is accurate

DTo verify the buyer's identity before funding

Explanation

A survey shows boundary lines, structures, and any encroachments (like a fence crossing a property line) — it's a factual mapping of the land, not a valuation tool, an identity-verification step, or something that has anything to do with confirming a loan's interest rate.

Question 5 of 5

Closing & FinanceMedium

At closing, how are property taxes for the current year typically handled between buyer and seller?

AProrated by each party's ownership period

BPaid entirely by the seller, regardless of date

CPaid entirely by the buyer, regardless of date

DDeferred untouched to the following tax year

Explanation

Property taxes are typically prorated at closing, so each party effectively covers taxes only for the portion of the year they actually owned the property — not dumped entirely on one side, and not simply deferred untouched to next year.

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