Texas Real Estate Exam Practice

Question 1 of 5

Contracts & AgreementsEasy

Which TREC promulgated form is most commonly used for a residential resale in Texas?

AThe New Home Construction Sales Contract

BThe One to Four Family Residential Contract (Resale)

CThe Farm and Ranch Sales Contract

DThe Residential Condominium Sales Contract

Explanation

The One to Four Family Residential Contract (Resale) is the standard form for a typical existing-home resale. The other three forms exist for their own specific property types — farm/ranch land, new construction sold by a builder, and condominium units — not an ordinary resale.

Question 2 of 5

Contracts & AgreementsEasy

What is the 'Effective Date' of a Texas residential contract?

AThe date the listing agreement was signed

BThe date the buyer first views the property

CThe date the earnest money is deposited

DThe date the last party signs the contract

Explanation

The Effective Date is the date the contract becomes binding on both parties — typically the date the last party signs, as the parties confirm on the form. It is not tied to a showing, to when earnest money happens to be deposited, or to the earlier listing agreement.

Question 3 of 5

Contracts & AgreementsEasy

What does 'earnest money' represent in a Texas purchase contract?

AThe buyer's full down payment on the loan

BA non-refundable fee paid directly to the seller

CA good-faith deposit of buyer intent

DThe broker's commission, paid up front

Explanation

Earnest money is a good-faith deposit that shows the buyer's serious intent to complete the purchase; it's held in escrow and applied toward the purchase at closing. It is not the same as the down payment, it isn't the option fee (which does go to the seller), and it isn't commission.

Question 4 of 5

Contracts & AgreementsMedium

Under the Texas Real Estate License Act (TRELA), when may a Texas real estate license holder use a contract form that TREC has not promulgated or approved?

AWhen an attorney prepared the form for that transaction

BWhen the client found the form online and prefers it

CWhen the license holder has five-plus years of experience

DWhen both parties share the same broker as intermediary

Explanation

License holders must generally use TREC promulgated (or otherwise approved) forms. The exception is a form an attorney prepared for the specific transaction — an attorney drafting legal language is different from a license holder doing so. Client preference, years of experience, and shared representation don't create an exception.

Question 5 of 5

Contracts & AgreementsMedium

In a typical Texas residential resale contract, who most commonly holds the earnest money?

AThe seller, starting at contract execution

BThe buyer's lender until the loan funds

CA neutral title company, as escrow agent

DThe listing broker's operating account

Explanation

Earnest money is typically deposited with a neutral third party — usually the title company acting as escrow agent — rather than held by either party or their broker. That neutrality is the point: it can only be released according to the contract's terms or a mutual release.

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