Texas Real Estate Practice Exam
(Free Questions & Answers)

Explanation

The Texas Real Estate Commission (TREC) is the state agency responsible for licensing and regulating real estate sales agents and brokers in Texas.

Explanation

Texas law allows a broker to act as an intermediary—representing both buyer and seller in the same transaction—with the written consent of both parties. This is similar to dual agency in other states.

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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 Using unauthorized or outdated forms can be a license law violation.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.

Explanation

Texas is one of nine community property states. Property acquired during marriage is generally owned equally (50/50) by both spouses, regardless of how title is held or which spouse earned the income. This affects real estate transactions significantly.

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The Texas homestead exemption reduces the taxable assessed value of a primary residence, thereby reducing the property tax bill. For school district taxes, homeowners receive at least a $100,000 exemption (increased in 2023).

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Formal appraisals for mortgage lending must be prepared by a state-licensed or state-certified real estate appraiser under FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act). Real estate agents may prepare CMAs, not formal appraisals.

Explanation

Discriminating based on national origin violates the federal Fair Housing Act. In Texas, the Texas Fair Housing Act provides similar protections. Licensees must treat all clients equally regardless of protected class. The federal Fair Housing Act prohibits discrimination based on seven protected classes: race, color, religion, sex, national origin, familial status, and disability. Texas follows the seven federal protected classes without adding state-specific categories. The Texas Workforce Commission Civil Rights Division (TWC-CRD) enforces both federal and state protections under the Texas Fair Housing Act (Property Code Chapter 301). Texas mirrors the seven federal protected classes without adding state-specific categories. The Civil Rights Act of 1866 separately prohibits racial discrimination in all property transactions with no exceptions.

Explanation

Texas is one of the few states where title insurance rates are set (promulgated) by the Texas Department of Insurance. All title companies must charge the same premium for the same coverage, so price competition focuses on service.

Explanation

Combined tax rate = $1.10 + $0.65 + $0.45 = $2.20 per $100. Tax = ($425,000 ÷ $100) × $2.20 = 4,250 × $2.20 = $9,350.

Explanation

TCEQ is the state environmental agency in Texas responsible for protecting the state's human and natural resources by administering environmental regulations for air quality, water quality, and waste management.

Explanation

Zoning authority derives from the state's police power — the inherent governmental power to regulate for the public health, safety, and welfare. Texas has delegated this power to municipalities through enabling legislation.

Explanation

Under Texas Property Code § 92.103, a landlord must return the security deposit or send a written itemized statement of deductions within 30 days after the tenant surrenders the premises.

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Texas requires 180 hours of qualifying pre-license education before a candidate may apply for a sales agent license. This is among the highest requirements in the nation.

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An intermediary must treat both parties fairly and is prohibited from disclosing confidential information that could harm one party, such as advising a buyer to offer less or telling a seller the buyer will pay more than offered.

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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).

Explanation

Because Texas is a community property state, both spouses typically must join in or sign any deed conveying community real property. This requirement protects each spouse's ownership interest in jointly held marital property.

Explanation

Tenancy in common does not include survivorship rights. Each co-owner's share passes through their estate at death. Joint tenancy, tenancy by the entirety, and community property with right of survivorship all include survivorship.

Explanation

The principle of substitution is fundamental to all three approaches to value. It holds that a buyer will not pay more than the cost of acquiring or creating an equally desirable substitute property.

Explanation

Advertising that indicates a preference for or against any protected class is a Fair Housing violation, even if it appears positive. Stating that a property is 'perfect for a family with children' implies that other household types (singles, couples without children, seniors) are not welcome. The federal Fair Housing Act prohibits discrimination based on seven protected classes: race, color, religion, sex, national origin, familial status, and disability. Texas follows the seven federal protected classes without adding state-specific categories. The Texas Workforce Commission Civil Rights Division (TWC-CRD) enforces both federal and state protections under the Texas Fair Housing Act (Property Code Chapter 301). Texas mirrors the seven federal protected classes without adding state-specific categories. The Civil Rights Act of 1866 separately prohibits racial discrimination in all property transactions with no exceptions.

Explanation

An abstract of title is a compilation of all public records affecting title to a property—deeds, mortgages, liens, court judgments, tax records, etc.—presented in chronological order. An attorney then provides a title opinion based on the abstract.

Explanation

Taxable value = $350,000 − $100,000 = $250,000. Annual tax = ($250,000 ÷ $100) × $2.50 = 2,500 × $2.50 = $6,250.

Explanation

Federal law requires sellers and landlords to disclose known lead-based paint hazards in residential properties built before 1978, when the federal government banned consumer uses of lead-based paint.

Explanation

Houston is the largest U.S. city without a traditional zoning ordinance. Land use is regulated through deed restrictions, building codes, and other regulations rather than conventional zoning districts.

Explanation

Under Texas Occupations Code Chapter 1101, a person who manages property for others for compensation must hold a Texas real estate broker license or be a licensed sales agent sponsored by a broker.

Explanation

The Texas real estate sales agent exam consists of 125 questions (85 national + 40 state-specific). Candidates must pass both sections.