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 Residential Condominium Sales Contract

BThe New Home Construction Sales Contract

CThe Farm and Ranch Sales Contract

DThe One to Four Family Residential Contract (Resale)

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 earnest money is deposited

BThe date the last party signs the contract

CThe date the listing agreement was signed

DThe date the buyer first views the property

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

BThe broker's commission, paid up front

CA non-refundable fee paid directly to the seller

DA good-faith deposit of buyer intent

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

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

AA neutral title company, as escrow agent

BThe seller, starting at contract execution

CThe buyer's lender until the loan funds

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.

Question 5 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 the license holder has five-plus years of experience

BWhen an attorney prepared the form for that transaction

CWhen both parties share the same broker as intermediary

DWhen the client found the form online and prefers it

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.

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