Texas Contracts
Practice Questions & Answers (2026)
Contract law questions on the Texas real estate exam test both general contract principles and Texas-specific transaction requirements. Texas requires licensees to use state-mandated contract forms — you cannot substitute your own — and questions specifically test the provisions in those TX forms. Pay close attention to offer and acceptance mechanics, how counteroffers extinguish prior offers, and the specific timelines under Texas law for earnest money handling and contingency resolution. These are areas where candidates who studied nationally often apply the right concept but the wrong TX-specific timeframe or rule.
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Texas Contracts — Practice Questions & Answers
165 questions on Contracts from the Texas real estate question bank. First 10 are free — sign up to unlock all 165.
Q1. The TREC One to Four Family Residential Contract is:
Explanation
TREC promulgates standard contract forms that Texas licensees are required to use for covered transactions. Using unauthorized or outdated forms can be a license law violation. Attorneys (not licensees) may use non-TREC forms.
Q2. In a Texas residential contract, the option period gives the buyer the right to:
Explanation
Texas contracts include an option period (for a fee paid to the seller) during which the buyer has the unrestricted right to terminate the contract for any reason and receive a refund of the earnest money (not the option fee).
Q3. Under the Texas TREC contract, if the buyer fails to timely deposit the earnest money, the seller may:
Explanation
If the buyer fails to timely deliver the earnest money as required by the contract, the seller has the right to terminate the contract. The earnest money deadline in Texas contracts is typically 3 business days after the effective date.
Q4. In Texas, the effective date of a real estate contract is:
Explanation
In Texas, the effective date is the date the broker receives the final acceptance of the contract—when the last party has signed and the fully executed contract has been communicated back. Many deadlines in the contract run from the effective date.
Q5. A Texas contract addendum for property subject to mandatory membership in a Property Owners Association (POA) is used to:
Explanation
The TREC POA Addendum discloses HOA information and gives the buyer a period to review HOA documents (resale certificate, bylaws, rules). During this review period, the buyer may terminate the contract if they find the documents objectionable.
Q6. Which of the following is considered a 'material fact' that must be disclosed in a Texas real estate transaction?
Explanation
A property's history of methamphetamine production is a material fact that must be disclosed because it could present health and safety hazards and significantly affect the buyer's decision to purchase. Disclosing neighbor demographics would be a Fair Housing violation.
Q7. The Texas One to Four Family Residential Contract (Resale) is a TREC-promulgated form. 'Promulgated' means:
Explanation
TREC-promulgated forms are mandatory contract forms that Texas licensees must use in covered transactions. TREC promulgates these forms under Texas Occupations Code § 1101.155.
Q8. Under the Texas One to Four Family Residential Contract, the Third Party Financing Addendum is used when:
Explanation
The Third Party Financing Addendum is used when the buyer is obtaining new financing from a lender (conventional, FHA, VA, USDA). It allows the buyer to terminate the contract and recover earnest money if financing cannot be obtained.
Q9. In a Texas residential contract, the option period grants the buyer the right to:
Explanation
During the option period in Texas, the buyer has the unrestricted right to terminate the contract for any reason. The option fee is paid to the seller and is generally not refundable upon termination, but the earnest money is returned.
Q10. Under the Texas TREC contract, earnest money is held by:
Explanation
In Texas, earnest money is deposited with the escrow agent named in the contract, typically a title company. The escrow agent holds the funds until closing or proper termination.
Q11. The Texas Farm and Ranch Contract differs from the One to Four Family Contract primarily because it includes provisions for:
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