Texas Real Estate Exam Practice

Question 1 of 10

Contracts & AgreementsEasy

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

AThe broker's commission, paid up front

BA non-refundable fee paid directly to the seller

CA good-faith deposit of buyer intent

DThe buyer's full down payment on the loan

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 2 of 10

Contract Law BasicsMedium

What does the Statute of Frauds generally require for real estate contracts?

AThat they be renewed every 90 days to stay valid

BThat they be reviewed by a judge before signing

CThat they be in writing to be enforceable

DThat they include a handwritten legal description only

Explanation

The Statute of Frauds requires certain contracts — including those for the sale of real estate — to be in writing to be enforceable, precisely because real estate deals are significant enough that a verbal agreement isn't considered reliable proof. It doesn't require judicial pre-review, a handwritten-only format, or periodic renewal.

Question 3 of 10

Federal Real Estate LawMedium

How many protected classes does the federal Fair Housing Act generally recognize?

AThree

BFive

CSeven

DTen

Explanation

The federal Fair Housing Act, as amended, recognizes seven protected classes: race, color, religion, sex, national origin, familial status, and disability. Undercounting or overcounting the list is a common exam trap, so the exact number is worth memorizing precisely.

Question 4 of 10

Property DisclosureMedium

What is the Seller's Disclosure Notice generally required for in Texas?

AOnly new construction never occupied

BEvery real estate transaction, no exceptions

CMost residential sales, with statutory exemptions

DOnly first-time homebuyer transactions

Explanation

The Seller's Disclosure Notice applies to most residential sales but has specific statutory exemptions (such as certain foreclosure or court-ordered transfers) — it isn't truly exception-free, and it isn't limited to first-time buyers. New construction is actually one of the more common exemptions, not the requirement's main target.

Question 5 of 10

Federal Real Estate LawMedium

What is 'blockbusting' under federal fair housing law?

ARefusing to show a buyer any homes above their budget

BOffering a discount for buying more than one property

CBuying up multiple adjacent lots to build a much larger development

DInducing sales by suggesting a protected class is moving into an area

Explanation

Blockbusting is the illegal practice of persuading owners to sell, often at a lower price, by suggesting that a protected class moving into the neighborhood will hurt property values — it isn't about assembling adjacent lots, budget-based showing decisions, or a bulk-purchase discount.

Question 6 of 10

Real Property & OwnershipMedium

Which form of ownership gives a property owner the most complete bundle of rights, with the fewest limitations?

AA leasehold estate

BA life estate

CFee simple absolute

DAn easement interest

Explanation

Fee simple absolute is the most complete form of ownership recognized in real property law — a life estate ends with a measuring life, a leasehold is a tenant's possessory interest rather than ownership, and an easement is only a limited right to use land someone else owns.

Question 7 of 10

Real Property & OwnershipMedium

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

AThe most complete form of ownership

BOwnership contingent on another person's lifespan

CA leasehold interest, not actual ownership

DOwnership that expires after a set number of years

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.

Question 8 of 10

Real Estate CalculationsMedium

A buyer is purchasing a $250,000 home with a $50,000 down payment. What is the loan-to-value (LTV) ratio?

A20%

B25%

C80%

D100%

Explanation

Loan amount is $250,000 − $50,000 = $200,000. LTV = loan ÷ value = $200,000 ÷ $250,000 = 80%. Common errors: dividing the down payment by the loan amount instead of the price ($50,000 ÷ $200,000 = 25%), or calculating the down-payment percentage (20%) instead of the loan-to-value percentage — the two are complements of each other.

Question 9 of 10

Federal Real Estate LawMedium

What is 'redlining' under federal fair housing and lending law?

ADenying services to an area based on its racial or ethnic makeup

BA lender's standard process for reviewing a loan application

CMarking a property boundary in red on an official survey

DA local zoning classification restricting an entire area to residential use only

Explanation

Redlining is the illegal practice of denying or limiting services — historically mortgages and insurance — to a geographic area because of the racial or ethnic makeup of its residents. It has nothing to do with marking survey boundaries, ordinary loan underwriting, or residential zoning classifications.

Question 10 of 10

Closing & FinanceMedium

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

AThe property is inspected for the only time

BThe listing agreement officially begins

CThe parties sign the purchase contract

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.

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