Free Texas Real Estate Practice Exam

Q1.Which of the following is generally TRUE about occupancy standards under the FHA?

• A.Two-per-bedroom is a fixed federal rule
• B.Occupancy limits cannot be applied to families with children at all
• C.HUD's Keating Memo treats two-per-bedroom as a presumptive starting point, evaluated against bedroom size, configuration, age of occupants, and local codes
• D.Landlords must accept any number of occupants requested by a tenant

Q2.A Texas sales agent working for Broker Hernandez receives a $5,000 earnest money check from a buyer on a Friday afternoon. Broker Hernandez is out of town and unreachable until Monday morning. Under TREC rules, what is the agent's MOST appropriate course of action?

• A.Deposit the earnest money into the agent's personal bank account to keep it safe over the weekend.
• B.Hold the earnest money check without depositing it until the broker returns Monday and can handle it properly.
• C.Deliver the earnest money check to the title company named in the contract as escrow agent, if one is designated, or safeguard it and deliver it to the broker at the earliest reasonable opportunity.
• D.Deposit the earnest money into the brokerage's operating account since the trust account is only accessible by the broker.

Q3.A person who has never held a Texas real estate license is found to have performed multiple acts requiring a real estate license — specifically brokering the sale of another person's real estate for compensation — without first obtaining a license from TREC. Under Texas Occupations Code §1101.758 and related provisions of TRELA, which of the following penalties may apply to this unlicensed person?

• A.The person may only be required to return any compensation received; criminal penalties do not apply to unlicensed activity under Texas law.
• B.The person is subject to a civil penalty and may also face criminal prosecution, and any unlicensed person who acts as a broker or agent is additionally barred from recovering a commission for those services in a Texas court.
• C.TREC may issue a cease-and-desist order but has no authority to refer the matter for criminal prosecution.
• D.The person is subject to a fine but may still sue in Texas court to recover a commission earned during the period of unlicensed activity.

Q4.Under federal law, which statement about transfer taxes is most accurate?

• A.Transfer taxes are regulated by RESPA and must be disclosed on the Closing Disclosure
• B.Transfer taxes are a state and local matter, not regulated by federal law
• C.Transfer taxes are prohibited by the Truth-in-Lending Act
• D.Transfer taxes must be paid by the buyer under Fair Housing Act requirements

Q5.The Truth-in-Lending Act (TILA) requires lenders to disclose which of the following to borrowers?

• A.The borrower's credit score
• B.The property's appraised value
• C.The Annual Percentage Rate (APR)
• D.The loan officer's commission

Q6.A managing broker supervises a team in which one salesperson is designated as the buyer's agent and another as the seller's agent on the same transaction. The broker is aware of a material latent defect in the property that was disclosed to the broker in confidence by the seller's designated agent. Under the principles of designated agency, what is the managing broker's obligation regarding this information?

• A.The broker must immediately disclose the defect to the buyer through the buyer's designated agent, because material latent defects are never protected by confidentiality in any agency model.
• B.The broker may withhold the defect from the buyer because designated agency creates a complete firewall that protects all information shared within the brokerage from cross-disclosure.
• C.The broker faces a conflict: while designated agency is intended to limit imputed knowledge within the firm, material latent defects that affect health or safety generally must be disclosed to all parties regardless of agency designation, and failure to do so may expose the broker and brokerage to liability.
• D.The broker should withdraw from the transaction entirely because designated agency is prohibited when a managing broker has actual knowledge of a material fact affecting one party.

Q7.Under federal fair housing law, when a dual agent represents both buyer and seller in a transaction, which fiduciary duty presents the greatest legal challenge in maintaining compliance with the Fair Housing Act?

• A.The duty of confidentiality regarding financial information
• B.The duty of reasonable care in property inspections
• C.The duty of accounting for earnest money deposits
• D.The duty of loyalty when one party makes discriminatory remarks about protected classes

Q8.A real estate broker is also a licensed mortgage loan originator. The broker represents a buyer in a purchase transaction and refers the buyer to the broker's own affiliated mortgage company. The broker discloses the affiliated business relationship in writing and the buyer signs an Affiliated Business Arrangement (AfBA) disclosure. The broker then receives a $1,200 referral fee from the mortgage company after closing. Which statement MOST accurately describes the legality of this arrangement under RESPA?

• A.The arrangement is fully legal because written AfBA disclosure was provided and the buyer was informed of the relationship.
• B.The arrangement violates RESPA Section 8 because any referral fee paid between affiliated entities is categorically prohibited regardless of disclosure.
• C.The $1,200 referral fee violates RESPA Section 8(a) because a referral fee paid for steering a consumer to a settlement service provider is prohibited even with AfBA disclosure, unless the payment reflects a return on an ownership interest and other RESPA conditions are met.
• D.The arrangement is legal because RESPA Section 8 exemptions apply whenever both entities share the same licensed broker.

Q9.A general contractor finishes remodeling a Texas homeowner's kitchen. The homeowner refuses to pay the final draw. Under the Texas Property Code Chapter 53, what is the deadline by which the contractor must file a mechanic's lien affidavit to preserve lien rights against the homeowner's property?

• A.Within 10 days after the work is completed
• B.Within 90 days after the 15th day of the month following each month in which the work was performed, or within 90 days after the work is completed
• C.Within 15 days after receiving a notice of non-payment from the owner
• D.At any time within one year from the date the debt became due

Q10.Under an Exclusive Right to Sell listing, the seller sells directly to a neighbor without the broker's involvement. Is the broker owed a commission?

• A.No — the broker only earns a commission if they procured the buyer
• B.Yes — under an Exclusive Right to Sell listing, the broker earns a commission regardless of who finds the buyer
• C.Only if the broker can prove they were the procuring cause of the neighbor's interest
• D.Only if the seller violated the safety clause provision

Q11.A seller is listing a single-family home that she has owned and occupied for three years. She is aware that the foundation has a known, material defect that was disclosed to her at the time she purchased the property. Under Texas Property Code § 5.008, which of the following best describes the seller's obligation regarding this defect?

• A.The seller must disclose the known foundation defect on the Seller's Disclosure of Property Condition notice because § 5.008 requires disclosure of known material defects, and awareness of a condition at purchase is actual knowledge.
• B.The seller is not required to disclose the defect because it was a pre-existing condition that she did not personally cause.
• C.The seller may satisfy her disclosure obligation by simply providing the buyer with the inspection report from her original purchase and is not required to complete the TREC Seller's Disclosure notice.
• D.The seller must disclose the defect only if a buyer's inspector identifies it during a formal inspection period.

Q12.Which of the following IS a federal protected class under the Fair Housing Act?

• A.Familial status (presence of children under 18 or pregnant occupants)
• B.Marital status
• C.Sexual orientation (under federal FHA)
• D.Source of income

Q13.Which of the following sellers is generally EXEMPT from the requirement to provide a Seller's Disclosure of Property Condition notice under Texas Property Code § 5.008?

• A.A homebuilder selling a newly constructed home that has never been occupied.
• B.A homeowner selling a 10-year-old single-family residence to a friend.
• C.A seller transferring a four-unit residential property to a buyer represented by an agent.
• D.A seller who has lived in the home for 25 years and is moving to a retirement community.

Q14.A broker is the designated broker of record for a large real estate firm. During a routine state audit, regulators discover that the firm has been operating a branch office for 14 months under a branch manager who allowed her individual license to lapse after month three. All transactions closed during the unlicensed period were supervised exclusively by the branch manager. What is the broker of record's MOST SIGNIFICANT potential liability in this scenario?

• A.The broker of record faces no liability because branch managers are solely responsible for maintaining their own licensure.
• B.The broker of record is potentially subject to disciplinary action—including suspension or revocation of the firm license—for failing to maintain a system of supervision that would have detected the lapse, because the broker's statutory duty of supervision extends to verifying the licensure status of all affiliated licensees.
• C.Liability is limited to an administrative fine assessed against the branch manager personally, since the transactions were completed and no consumers were harmed.
• D.The broker of record is liable only if the state can prove the broker had actual knowledge that the branch manager's license had lapsed.

Q15.A Texas sales agent working under Broker A refers a buyer to Broker B in another city. Broker B's sales agent ultimately closes the transaction. Broker B offers to pay the referring agent directly a referral fee of $500. Under Texas law, how may this referral fee be legally paid?

• A.Broker B may pay the $500 referral fee directly to the sales agent because referral fees are exempt from the prohibition on fee splitting between licensees.
• B.The $500 referral fee must be paid by Broker B to Broker A, and Broker A may then pay a portion to the sales agent in accordance with their written compensation agreement.
• C.The sales agent may accept the direct payment from Broker B as long as Broker A provides written consent after the fact.
• D.The sales agent may accept direct payment from Broker B only if the sales agent holds an independent contractor designation on file with TREC.