Texas State Portion Practice — Texas RE PREP™

Question 1 of 10

TREC Rules & StandardsMedium

Can a licensed Texas sales agent operate independently, without a sponsoring broker?

AYes, after holding a license two-plus years

BYes, for transactions under a set dollar amount

CYes, with extra continuing education

DNo, a sales agent must always be sponsored

Explanation

A sales agent's license only permits them to practice under a sponsoring broker — there's no experience threshold, transaction-size exception, or amount of continuing education that allows independent practice. Only a broker's license allows that.

Question 2 of 10

Agency & BrokerageMedium

Under Texas law, what is an intermediary in a real estate transaction?

AA broker representing both parties, with written consent

BA lender's representative verifying financing

CA third party who inspects for the seller

DAn attorney who reviews the contract for errors

Explanation

An intermediary is a broker who, with the written consent of both parties, represents both the buyer and the seller in the same transaction while remaining neutral on material issues like price. That's distinct from an inspector, an attorney, or a lender's representative, none of whom are acting as a broker representing both principals.

Question 3 of 10

Contracts & AgreementsMedium

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

AThe buyer's lender until the loan funds

BThe listing broker's operating account

CThe seller, starting at contract execution

DA neutral title company, as escrow agent

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.

Question 4 of 10

Property DisclosureMedium

Which of these is a commonly recognized exemption from the Texas Seller's Disclosure Notice requirement?

AA sale where the buyer has an agent

BA transfer by foreclosure or trustee's sale

CA sale that closes within 30 days of listing

DA sale priced above the local median

Explanation

Foreclosure and trustee-sale transfers are among the recognized exemptions, since the seller in that situation typically isn't the prior owner with knowledge of the property's condition. Buyer representation, sale price, and how quickly a deal closes have no bearing on whether the disclosure requirement applies.

Question 5 of 10

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 the license holder has five-plus years of experience

BWhen the client found the form online and prefers it

CWhen an attorney prepared the form for that transaction

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 6 of 10

Closing & FinanceMedium

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

AThe listing agreement officially begins

BThe parties sign the purchase contract

CTitle transfers and funds are disbursed

DThe property is inspected for the only time

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 7 of 10

Landlord-Tenant & OwnershipMedium

What body of Texas law primarily governs the landlord-tenant relationship?

AThe Texas Real Estate License Act (TRELA)

BThe Texas Business and Commerce Code

CThe Texas Property Code

DTREC's Standards of Conduct

Explanation

Landlord-tenant relationships are primarily governed by the Texas Property Code — TRELA and TREC's standards govern real estate license holders' conduct, not the substantive landlord-tenant relationship itself, and the Business and Commerce Code covers different subject matter entirely.

Question 8 of 10

Agency RelationshipsMedium

Which of these is a recognized fiduciary duty an agent generally owes their principal?

AA promise the transaction closes by a certain date

BA guarantee the principal's goals will be met

CPersonal financial responsibility for the deal's outcome

DLoyalty to the principal's interests above all else

Explanation

Loyalty — acting in the principal's best interest rather than the agent's own — is a core fiduciary duty. An agent can't guarantee outcomes like a successful close, isn't personally financially liable for the deal's results, and can't promise a specific closing date, which depends on many parties beyond the agent's control.

Question 9 of 10

Agency RelationshipsMedium

How is an agency relationship generally created between a principal and an agent?

AOnly through a court order establishing representation

BAutomatically, the moment an agent shows a property

COnly when a commission has already been paid

DBy agreement, express or implied, between the parties

Explanation

Agency is created by agreement — which can be express (written or verbal) or implied by the parties' conduct — not automatically from an act like showing a property, not by a court order, and not retroactively because money changed hands.

Question 10 of 10

Real Property & OwnershipMedium

What does 'fee simple' ownership represent in Texas real property law?

AOwnership that expires after a set number of years

BOwnership contingent on another person's lifespan

CA leasehold interest, not actual ownership

DThe most complete form of ownership

Explanation

Fee simple is the most complete, unrestricted form of ownership recognized in real property law — it doesn't expire on a timer, it isn't a leasehold (a tenant's interest, not an owner's), and it isn't tied to someone else's lifespan, which describes a life estate instead.

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