Texas Real Estate Sales Agent Exam flashcards

A Comparative Market Analysis (CMA) prepared by a real estate agent must include a disclaimer that it is not an appraisal, as per TREC regulations.

• CMAs are prepared by real estate agents.
• Appraisals are prepared by licensed appraisers.
• The disclaimer prevents confusion about the document's purpose and legal standing.

Memory trick: Clarity Makes All Real Estate Documents Legally Distinct.

The Fair Housing Act prohibits discrimination in housing based on familial status, which protects families with children under 18, pregnant women, and people securing custody of children.

• Protects families with children, pregnant women, and those securing custody.
• Applies to most housing, with some limited exceptions.
• Prohibits discriminatory advertising, sales, and rental practices.

Memory trick: Remember 'FRSH CRN' for the seven protected classes under the FHA.

The Sherman Antitrust Act prohibits agreements among competitors to fix prices, which includes setting standard commission rates in real estate, as it stifles competition.

• Federal law designed to prevent monopolies and promote competition.
• Price fixing is a per se violation, meaning no defense is allowed.
• Also prohibits group boycotts and market allocation.

Memory trick: Antitrust: No fixing prices, no boycotts, no dividing territories!

A Texas real estate licensee has an ethical and legal obligation to refuse discriminatory instructions from a client, advise the client of the illegality, and terminate the relationship if the client insists on discrimination.

• Upholding fair housing laws is paramount.
• Duty of Fidelity does not override fair housing.
• Licensees must educate clients on legal requirements.

Memory trick: Discrimination's a no, ethics say go!

Texas Real Estate Commission (TREC) rules require real estate brokers to maintain records related to a real estate transaction for a minimum of four years from the date of closing or termination of the contract.

• Applies to all transaction records.
• Ensures accountability and allows for audit.
• Crucial for compliance and dispute resolution.

Memory trick: Keep your papers for four years, no fears!

Commingling is the illegal act of mixing client funds (earnest money, security deposits, etc.) with a broker's personal or business operating funds, which is strictly prohibited.

• Illegal practice for real estate licensees.
• Requires strict separation of client and personal/business funds.
• Trust or escrow accounts are used to prevent commingling.

Memory trick: Keep client cash clear, avoid the commingle fear!

All advertisements by a Texas real estate licensee must clearly and conspicuously contain the name of the broker or an assumed business name of the broker that has been filed with TREC and registered with the Secretary of State.

• Applies to all forms of advertising (print, online, signs).
• Ensures transparency and accountability.
• Protects consumers by clearly identifying the responsible party.

Memory trick: Advertise clearly, identify yourself yearly!

Real estate advertising must be truthful and avoid language that, even subtly, discourages or excludes protected classes, thereby violating the spirit and intent of fair housing laws.

• Avoids explicit and implicit discriminatory language.
• Focuses on property features, not demographic targeting.
• Ethical advertising aligns with fair housing principles to promote equal opportunity.

Memory trick: Ads should attract all, not just a chosen few, or fair housing will rue.

A real estate broker has an ethical and legal duty to refuse to carry out any discriminatory instructions from a client, even if the requested discrimination is not against a federally protected class, as such actions can violate state licensing laws and ethical standards.

• Broker cannot facilitate or participate in discrimination.
• TREC rules prohibit discriminatory practices beyond federal FHA.
• Duty to educate clients on fair housing and ethical practices.

Memory trick: Discrimination's call, broker must stall, and stand tall.

Price fixing occurs when competing real estate brokers agree to establish or maintain uniform commission rates or other fees, which is a per se violation of the Sherman Antitrust Act.

• Illegal agreement among competitors.
• Applies to commission rates, listing fees, etc.
• Per se violation, meaning no justification is allowed.

Memory trick: Brokers unite for a fair fight, not a fixed price!

In Texas, a licensed real estate broker may offer a rebate to a principal in a transaction, provided the rebate is fully disclosed to all parties involved and, if a loan is involved, to the lender.

• Must be disclosed to all principals (buyer and seller).
• Must be disclosed to the lender if there's a loan.
• Can be in the form of cash, gift certificates, or other incentives.

Memory trick: Rebates are fine in Texas, just disclose 'em to everyone involved!

Real estate advertising in Texas must be truthful and not contain any false promises, misrepresentations, or statements that are likely to mislead or deceive the public, including unrealistic guarantees.

• Prohibits false or misleading statements.
• Guarantees must be carefully worded and substantiated.
• All advertising is the responsibility of the broker.

Memory trick: Advertise with honesty, clarity, and no fantasy!

Interest earned on client funds held in a real estate trust account in Texas generally belongs to the client or must be handled according to specific written agreements, not for the broker's personal benefit.

• Broker cannot personally profit from interest on client funds.
• Interest may go to client, non-profit (IOLTA), or cover bank fees if agreed.
• Failure to comply can lead to charges of commingling or conversion.

Memory trick: Interest on client money? Not the broker's honey!

A false statement of a material fact, made with intent to deceive, upon which another party relies to their detriment.

• Involves an intentional act (false statement or concealment).
• The misrepresentation must be of a material fact.
• The intent is to induce another party to act.
• The relying party suffers damages as a result.

Memory trick: Disclosure done wrong, buyer's rights are strong.

In Texas, the sale of a new residential property that has not been previously occupied is exempt from the statutory requirement to provide a Seller's Disclosure Notice.

• Applies to 'new residence' and 'not previously occupied'.
• Found in Texas Property Code §5.008(e).
• Builder warranties typically cover new construction defects.
• Still subject to common law disclosure of known, latent defects.

Memory trick: New build, no old stories, no disclosure worries.

Local ordinances that set minimum standards for construction materials, methods, safety, and design of buildings to protect public health and safety.

• Require permits for new construction, additions, and major renovations.
• Enforced through inspections at various stages of construction.
• Vary by jurisdiction but often based on national models.

Memory trick: Building codes are like a recipe for safe construction, inspected at every step.

A document that outlines the rules, requirements, and limitations on the use and appearance of property within a common interest development or subdivision.

• Legally binding on all property owners in the development.
• Enforced by a Homeowner's Association (HOA).
• Designed to maintain property values and community standards.

Memory trick: CC&Rs are the Community's Contract for Rules.

Local or state laws designed to protect and maintain the architectural and historical character of properties, often within designated historic districts.

• Require approval for exterior changes and sometimes interior alterations.
• Aim to maintain the original appearance and integrity of historic structures.
• Can affect property values and renovation costs.

Memory trick: Public controls PROTECT how land is used and LOOKS.

Sellers must disclose known environmental hazards on or affecting the property that could impact health, safety, or property value, such as contamination, asbestos, or lead-based paint.

• Focus on hazards impacting health, safety, or property value.
• Includes past contamination issues (e.g., USTs, spills).
• Disclosure required if known to the seller.
• Agent also has duty to disclose known hazards.

Memory trick: Hidden dangers, health risks, property hits.

In Texas, an 'as-is' sale means the buyer accepts the property in its current condition, but it does NOT relieve the seller of their statutory duty to disclose known material defects.

• Buyer accepts property with all defects.
• Seller must still complete Seller's Disclosure Notice truthfully.
• Does not protect seller from claims of fraudulent misrepresentation or concealment.
• Impacts seller's obligation to make repairs, not to disclose.

Memory trick: As-is, no repairs, but known facts still shared.

Sellers must disclose past material defects and repairs, even if fully corrected, as this information is relevant to a buyer's decision.

• Disclosure applies to known 'conditions' and 'features'.
• Past damage, even if repaired, is a material fact.
• Provides transparency to the buyer.
• Includes details of the repair and remediation.

Memory trick: Old problems, new repairs, still show all the cares.

Federal law requiring sellers/landlords of pre-1978 housing to disclose known lead-based paint hazards and provide a warning statement.

• Applies to residential properties built before 1978.
• Sellers must disclose known hazards and provide a lead warning statement.
• Buyers have a 10-day period to conduct a risk assessment or inspection.
• Does not require sellers to test for lead-based paint.

Memory trick: Pre-78 paint, disclose what's known, sign the form, buyer gets 10 days.

A long-range, general plan for the physical development of a city or county, guiding future land use, infrastructure, and growth.

• It is an advisory document, not a regulatory one.
• Zoning ordinances are adopted to implement the goals of the comprehensive plan.
• Often includes elements like land use, transportation, housing, and open space.

Memory trick: The Plan is the MAP, Zoning is the LAW. You need the LAW to build on the MAP.

Real estate agents must disclose known material facts regarding environmental hazards and advise clients to seek expert opinions for issues outside the agent's expertise.

• Agents are not environmental experts.
• Duty to disclose known material facts.
• Duty to recommend professional inspections/testing.
• Avoid providing opinions or guarantees on environmental conditions.

Memory trick: Know it, show it, tell them to test it.

A buyer's agent must disclose all known material facts, including potential environmental hazards in the vicinity, and advise the buyer to seek expert investigation.

• Agent's fiduciary duty to client (buyer).
• Disclose all known material facts.
• Even if seller is unaware, agent must disclose what they know.
• Recommend expert inspections/testing for hazards.

Memory trick: Known fact, client's protection, expert's direction.

Any fact about a property that could reasonably be expected to influence a buyer's decision to purchase or the price they would offer.

• Relates to the physical condition of the property.
• Can include legal or financial issues affecting the property.
• Must be disclosed if known by the seller or agent.
• Seller's personal motivations are generally not material facts.

Memory trick: If it changes their mind or money, it's material.

Any surface that prevents the absorption of water into the ground, such as buildings, concrete, asphalt, and compacted gravel.

• Zoning ordinances often limit the percentage of impervious cover allowed on a lot.
• High impervious cover can increase stormwater runoff and reduce groundwater recharge.
• Includes structures, driveways, patios, and sometimes even large decks.

Memory trick: Zoning rules are like a puzzle; fit your plans to the pieces or find new pieces.

An heir selling an inherited, unoccupied single-family home in Texas is generally NOT exempt from providing a Seller's Disclosure Notice and must complete it to the best of their current knowledge.

• Exemptions are specific (e.g., executors, foreclosures), not just non-occupancy.
• Seller must disclose all known material facts.
• Can mark 'unknown' if truly no knowledge exists.
• Agent cannot complete the notice for the seller.

Memory trick: Exemptions are few, knowledge is due.

Sellers must disclose if a property is located in a FEMA-designated flood hazard area, as this is a material fact impacting insurance and risk.

• FEMA flood maps determine hazard zones.
• Location in a flood zone is a material fact.
• Disclosure required even if the property has never flooded.
• Affects flood insurance requirements and costs.

Memory trick: Zone known, costs shown, buyer's choice grown.

The government's inherent right to regulate private property for environmental protection, falling under the broader scope of public health and welfare.

• Basis for federal, state, and local environmental laws (e.g., Clean Water Act, endangered species protection).
• Regulations may limit land use, development, or activities near sensitive ecosystems.
• Generally, no compensation is required for reasonable regulatory limitations.

Memory trick: Governments use their POWER to POLICE the planet for future PEOPLE.

The Comprehensive Environmental Response, Compensation, and Liability Act, a federal law enacted to address uncontrolled hazardous waste sites.

• Establishes a Superfund to clean up hazardous waste sites.
• Holds 'Potentially Responsible Parties' (PRPs) liable for cleanup costs.
• Applies to past and present owners, operators, generators, and transporters of hazardous waste.

Memory trick: Environmental laws CLEAN up and PROTECT our world.

A land use that was legal when established but no longer conforms to the current zoning ordinance due to a subsequent change in zoning.

• Usually allowed to continue, often with restrictions (e.g., no expansion, limited rebuilding).
• Cannot be re-established if abandoned for a certain period.
• Protects property owners from immediate hardship due to zoning changes.

Memory trick: Old uses are like old friends; they get to stay even if the party changes.

If a seller's disclosure notice is delivered after the effective date of a contract, the buyer has a statutory right to terminate the contract within 7 days of receipt, or prior to closing, whichever is earlier, without penalty.

• Applies if disclosure is delivered AFTER contract effective date.
• Buyer has 7 days from receipt to terminate.
• Or prior to closing, whichever occurs first.
• Termination is without cause or penalty.

Memory trick: Late disclosure, 7 days or close, buyer's choice, no woes.

An agent's fiduciary obligation to present all offers to their client promptly and objectively, regardless of the offer's terms, until the transaction closes or the agency relationship terminates.

• Applies to all offers, written or verbal.
• Must be presented promptly.
• Unless client provides written instructions to the contrary.

Memory trick: All offers are like urgent mail; the agent is the delivery person, not the censor.

A fiduciary duty requiring an agent to disclose all known material facts and relevant information to their client, whether beneficial or detrimental, that could influence the client's decision in a transaction.

• Applies to all information relevant to the client's interests.
• Includes both adverse and advantageous facts.
• Cannot be overridden by requests from the opposing party's agent.

Memory trick: Your client gets the 'whole truth and nothing but the truth' from you.

An agent's fiduciary duty to reveal all known facts that are significant enough to influence a reasonable person's decision regarding the transaction, to their client.

• Applies to all information, not just what's in disclosures.
• Agent must actively seek out relevant information.
• Duty exists even if the other party is unaware or hasn't disclosed.

Memory trick: Disclosure is like shining a bright light on all important facts for your client.

An agent's duty to keep confidential any information learned during the agency relationship that could harm the client's bargaining position or interests, even after the agency relationship ends.

• Applies to all fiduciary agency relationships.
• Protects client's financial and personal information.
• Continues even after the transaction closes or agency terminates.

Memory trick: OLD CAR is how agents serve their clients well.

A type of agency relationship in Texas where a broker represents both the buyer and the seller in the same transaction, with written consent from both parties.

• Requires written consent from both buyer and seller.
• Broker must remain neutral.
• Can appoint agents to represent each party (appointed licensees).

Memory trick: Intermediary means a written handshake between ALL.

An agent's duty to place the client's interests above all others, including their own, and to act in good faith to promote those interests.

• Primary duty in an agency relationship.
• Requires avoiding conflicts of interest.
• Means working towards the client's best possible outcome.

Memory trick: Always put YOUR CLIENT FIRST, like a loyal knight.

An agency relationship where the real estate agent owes fiduciary duties exclusively to either the buyer or the seller, not both.

• Agent acts solely in the best interest of their client.
• Must not give advice to the unrepresented party.
• Required to treat the unrepresented party honestly and fairly.

Memory trick: An agent's loyalty is a shield, protecting only their client.

A mandatory written statement in Texas that explains the different types of agency relationships available to consumers and the duties of real estate brokers and sales agents.

• Required by TREC Rule 531.83.
• Must be provided at the first substantive dialogue.
• Explains agent's roles: seller's agent, buyer's agent, intermediary.

Memory trick: IABS is like a welcome pamphlet, given at the first serious chat.

A contract where a buyer hires a single real estate agent exclusively to represent them in finding and purchasing a property, guaranteeing the agent a commission if the buyer purchases any property during the agreement term.

• Provides maximum protection for the buyer's agent.
• Buyer agrees to work only with this agent.
• Agent is assured compensation regardless of who finds the property.

Memory trick: Buyer agreements are like dating contracts: exclusive is serious.

A Texas-specific agency relationship where a broker represents both the buyer and the seller in the same transaction, requiring written consent and specific limitations on providing advice.

• Requires written consent from both parties.
• Broker cannot give advice or opinions to either party (unless associates are appointed).
• Broker must treat both parties fairly and honestly.

Memory trick: Intermediary: One broker, two clients, no advice (unless appointed guides).

The obligation of a real estate licensee to reveal all known facts that could influence a reasonable person's decision to buy, sell, or lease a property, to all parties involved in the transaction.

• Applies to all licensees, regardless of who they represent.
• Includes defects, environmental hazards, and other relevant information.
• Promotes fair and honest dealings in real estate.

Memory trick: If it's 'material' and 'known,' it must be shown!

A situation where a real estate licensee interacts with a party to a transaction without establishing a fiduciary agency relationship, typically by providing only factual information and not advice or representation.

• Licensee represents another party (e.g., the seller).
• No fiduciary duties are owed to the non-client party.
• Licensee must still treat all parties honestly and fairly.

Memory trick: Think of agency as a spectrum: from no representation to full fiduciary duty.

The legal requirement that a real estate sales agent in Texas must receive all compensation for brokerage services through their sponsoring broker, not directly from clients or customers.

• Sales agents cannot receive direct payments from clients.
• All commissions must be paid to the sponsoring broker.
• Broker then disburses the agent's share.

Memory trick: Money flows through the broker's office, never directly to the agent's pocket.

A type of agency relationship in Texas where a single broker represents both the buyer and the seller in the same transaction, requiring specific written consent from both parties.

• Requires written consent from both parties.
• Broker may (or may not) appoint associates to work with each party.
• Broker cannot give advice or opinions to either party in a non-appointed intermediary.

Memory trick: Intermediary: Two clients, one broker, written consent is the key.

A fundamental obligation of all real estate licensees to disclose known material facts about a property to all parties in a transaction, regardless of whom the licensee represents.

• Applies to all known material facts, especially defects.
• Promotes honesty and fair dealing in real estate transactions.
• Supersedes confidentiality to one's own client regarding material facts.

Memory trick: Material facts are like a public service announcement for the property.

A principal (client) has the power to terminate an agency relationship at any time, even if it breaches the agency agreement, though they may be liable for damages to the agent for contract breach.

• Power to terminate vs. Right to terminate.
• Termination without cause can lead to liability for damages.
• Termination with cause (e.g., agent breach) may avoid liability.

Memory trick: Agency ends when the 'job' is done or 'broken'.

A fiduciary duty requiring an agent to promptly and efficiently obey all lawful instructions of the principal, even if the agent believes the instructions are not in the principal's best interest.

• Instructions must be lawful and ethical.
• Agent should advise on consequences, but must still obey.
• Overrides agent's personal judgment if instructions are legal.

Memory trick: LOACH: Loyalty, Obedience, Accountability, Confidentiality, Honesty.

A fiduciary duty requiring an agent to keep confidential any information about a client's motivation (e.g., emotional attachment, urgency to sell/buy, financial limits) that could weaken their negotiating position.

• Applies to all information that is not a material fact about the property itself.
• Protects the client's bargaining power.
• Continues even after the agency relationship ends.

Memory trick: Client's 'secrets' are locked away, especially their 'why' and 'how much'.

A listing agreement that grants the broker the exclusive right to sell the property and earn a commission, regardless of who procures the buyer, even if it's the seller.

• Most common and preferred listing agreement for brokers.
• Guarantees commission if property sells during listing term.
• Seller cannot avoid paying commission by finding own buyer.

Memory trick: Listings are like contracts: Open, Exclusive Agency, or Exclusive Right.

A non-intrusive investigation conducted to identify potential or existing environmental contamination liabilities on a property, typically involving review of records, site reconnaissance, and interviews.

• Commonly performed during commercial real estate transactions.
• Aims to satisfy 'innocent landowner' defenses under CERCLA.
• Does not involve physical sampling or testing of soil or water.

Memory trick: Environmental Safety Assessment: Check for Hazards, Plan for Action.

A document provided by a homeowner's association (HOA) to a prospective buyer, detailing the HOA's financial status, current fees, special assessments, covenants, conditions, and restrictions.

• Mandated by Texas law (Property Code § 207.003).
• Includes financial obligations and restrictive covenants.
• Allows buyers to understand HOA commitments before purchase.

Memory trick: HOA's Certificate: Your Key to Community Clarity.

A framework used by lenders to evaluate a borrower's creditworthiness: Character, Capacity, Capital, and Collateral.

• Character: Willingness to repay; credit history.
• Capacity: Ability to repay; income vs. debt.
• Capital: Financial reserves; down payment, savings.
• Collateral: Property securing the loan.

Memory trick: Character, Capacity, Capital, Collateral: The 4 C's of getting that loan!

A mandatory form in Texas where a seller discloses known material facts about the property, including significant repairs or conditions, to a prospective buyer.

• Must be provided for residential properties.
• Includes disclosure of past structural or foundation repairs.
• Protects seller from liability for disclosed items.

Memory trick: Disclosure is about knowing, not guaranteeing.

In Texas, sellers of residential property are generally required to provide a Seller's Disclosure Notice, which includes questions about known environmental hazards on or affecting the property.

• Mandated by Texas Property Code §5.008 for residential property.
• Requires disclosure of known material facts affecting the property's value or desirability.
• Includes questions about hazardous substances, toxic waste, and other environmental hazards.
• Seller's knowledge is key; they are not required to conduct inspections.

Memory trick: Known facts, no secrets, property truth, or consequences!

A right to use the land of another for a specific purpose that benefits an adjoining parcel of land and runs with the land.

• Benefits a dominant estate (the property receiving the benefit)
• Burdens a servient estate (the property granting the right)
• Transfers automatically with the sale of the dominant estate
• Requires two adjacent parcels of land

Memory trick: Appurtenant: APPartains to the Property, not just a person.

In Texas, sellers of properties located within a MUD must provide a statutory notice to buyers disclosing the district's taxing authority, bonded indebtedness, and other charges.

• Mandated by Texas Water Code §49.452.
• Informs buyers about potential MUD taxes and fees.
• Must be provided before contract execution.
• Buyer can terminate the contract if not received timely.

Memory trick: MUD means money, utilities, and disclosure, clear as water!