Texas Contracts & Forms Practice Questions

Every question explained

Prefer to study at your own pace? Here are all 15 questions. Read each one and pick your answer, then reveal the correct answer, the reasoning, and the trap that catches most candidates.

1. 1. A Texas sales agent is negotiating the resale of an existing single-family home for a buyer. No Rule 537.11 exception applies. Which contract should the agent use?

   • A.Any residential contract the buyer prefers
   • B.The current TREC One to Four Family Residential Contract (Resale)
   • C.The Residential Condominium Contract (Resale)
   • D.A contract drafted by the agent
   ▸Show answer and explanation

   Correct answer: B. The current TREC One to Four Family Residential Contract (Resale)

   Why B is correct: Rule 537.11(a) requires the contract form approved for mandatory use for the transaction unless an exception applies. Rule 537.28 adopts TREC No. 20-19 for residential resale.

   Trap: Match the transaction to the mandatory form before thinking about addenda.

   Source: 22 TAC §§537.11(a), 537.28

2. 2. Which fact points to the Unimproved Property Contract rather than the Farm and Ranch Contract?

   • A.Vacant land intended for one to four family residential use
   • B.A working ranch with agricultural improvements
   • C.A completed builder home
   • D.A resale condominium unit
   ▸Show answer and explanation

   Correct answer: A. Vacant land intended for one to four family residential use

   Why A is correct: Rule 537.20 adopts TREC No. 9-18 for unimproved property whose intended use is one to four family residences. Rule 537.32 separately adopts the Farm and Ranch Contract.

   Trap: Vacant does not automatically mean farm and ranch. Intended residential use is the key clue.

   Source: 22 TAC §§537.20, 537.32

3. 3. The parties want a custom cancellation clause that no mandatory TREC addendum supplies. What may the sales agent do?

   • A.Draft the clause in Special Provisions
   • B.Recommend wording copied from another transaction
   • C.Explain the legal effect and let the buyer choose
   • D.Advise the principal to consult an attorney and do not invent or recommend the clause
   ▸Show answer and explanation

   Correct answer: D. Advise the principal to consult an attorney and do not invent or recommend the clause

   Why D is correct: Rule 537.11(b)(5) prohibits a license holder from drafting or recommending language that defines or affects rights, obligations, or remedies, including cancellation and contingency language.

   Trap: A blank space is not permission to practice law.

   Source: 22 TAC §537.11(b)(3), (5), (e)

4. 4. A principal gives the agent exact written instructions to strike printed contract language. Under Rule 537.11, the agent may make the change only if it is

   • A.approved orally by the sponsoring broker
   • B.hidden in an attachment
   • C.made conspicuous, such as by striking through the deletion
   • D.explained to both parties as legally sufficient
   ▸Show answer and explanation

   Correct answer: C. made conspicuous, such as by striking through the deletion

   Why C is correct: Rule 537.11(d)(2) permits a conspicuous addition or deletion when a principal specifically instructs it in writing. The exception does not authorize the agent to originate the wording or advise on legal effect.

   Trap: Both facts matter: specific written instruction and a conspicuous change.

   Source: 22 TAC §537.11(d)(2)

5. 5. Under TREC No. 20-19, the buyer's earnest money and option fee are generally delivered

   • A.to the seller at closing
   • B.to the buyer's broker within seven days
   • C.to the escrow agent within three days after the effective date
   • D.only after the inspection
   ▸Show answer and explanation

   Correct answer: C. to the escrow agent within three days after the effective date

   Why C is correct: Paragraph 5A of TREC No. 20-19 requires delivery of both amounts to the escrow agent within three days after the effective date. If the last day is a Saturday, Sunday, or defined Legal Holiday, the deadline extends under Paragraph 5A(2).

   Trap: The three-day delivery clock and the negotiated option-period clock are different.

   Source: 22 TAC §537.28; TREC No. 20-19 ¶5A

6. 6. A buyer timely terminates under Paragraph 5 of TREC No. 20-19. Which statement is correct?

   • A.The seller must refund the option fee
   • B.The earnest money is refunded, while the option fee is not refunded
   • C.The buyer keeps both amounts and the seller receives nothing
   • D.The termination is effective only after the seller signs an amendment
   ▸Show answer and explanation

   Correct answer: B. The earnest money is refunded, while the option fee is not refunded

   Why B is correct: Paragraph 5B gives the buyer an unrestricted right to terminate within the stated option period. On timely notice, earnest money is refunded and the option fee is not.

   Trap: The option fee bought the right. It is not treated like refundable earnest money.

   Source: 22 TAC §537.28; TREC No. 20-19 ¶5B

7. 7. The seller already has a first contract. A second buyer signs a back-up contract. Under TREC No. 11-9, the back-up contract is

   • A.not binding until the first contract terminates
   • B.binding when executed, although most performance waits while the contingency remains
   • C.an unenforceable offer until closing
   • D.an amendment to the first contract
   ▸Show answer and explanation

   Correct answer: B. binding when executed, although most performance waits while the contingency remains

   Why B is correct: The Back-Up Contract Addendum says the back-up contract is binding upon execution. Except as the addendum provides, the parties do not perform while it remains contingent on termination of the first contract.

   Trap: Contingent does not mean unformed or nonbinding.

   Source: 22 TAC §537.22; TREC No. 11-9 ¶¶A, G

8. 8. Texas Business and Commerce Code Section 26.01 expressly applies the Statute of Frauds to

   • A.every residential lease, regardless of length
   • B.a contract for the sale of real estate
   • C.only transactions financed by a lender
   • D.only commercial property contracts
   ▸Show answer and explanation

   Correct answer: B. a contract for the sale of real estate

   Why B is correct: Section 26.01(b)(4) names a contract for the sale of real estate. The agreement or memorandum must be written and signed as subsection (a) requires to be enforceable.

   Trap: The rule does not depend on residential status or financing.

   Source: Texas Bus. & Com. Code §26.01(a), (b)(4)

9. 9. Which oral lease falls within the real estate lease provision of Section 26.01?

   • A.A month-to-month lease
   • B.A six-month lease
   • C.A one-year lease
   • D.A two-year lease
   ▸Show answer and explanation

   Correct answer: D. A two-year lease

   Why D is correct: Section 26.01(b)(5) applies to a lease of real estate for a term longer than one year. A two-year lease fits that wording.

   Trap: The statute says longer than one year, not one year or longer.

   Source: Texas Bus. & Com. Code §26.01(a), (b)(5)

10. 10. To satisfy the signature language in Section 26.01, the writing must be signed by

    • A.every witness to the negotiation
    • B.the person to be charged or someone lawfully authorized to sign for that person
    • C.the escrow agent
    • D.a TREC employee
    ▸Show answer and explanation

    Correct answer: B. the person to be charged or someone lawfully authorized to sign for that person

    Why B is correct: Section 26.01(a)(2) uses the person-to-be-charged test and also permits a lawfully authorized signer.

    Trap: Party to be charged means the person against whom enforcement is sought.

    Source: Texas Bus. & Com. Code §26.01(a)(2)

11. 11. Buyer and seller sign a resale contract, then orally agree to move closing by two weeks. What is the best exam response?

    • A.The oral agreement automatically changes the written contract
    • B.Use a written Amendment signed by the parties
    • C.Use a buyer termination notice
    • D.Have the sales agent draft an unsigned side letter
    ▸Show answer and explanation

    Correct answer: B. Use a written Amendment signed by the parties

    Why B is correct: Paragraph 22 of TREC No. 20-19 says the contract cannot be changed except by written agreement. Rule 537.46 adopts the Amendment form for changes to promulgated contracts.

    Trap: A later contract change is an amendment, not an addendum or notice.

    Source: 22 TAC §§537.28, 537.46; TREC No. 20-19 ¶22

12. 12. Which property is within the starting scope of Texas Property Code Section 5.008 before exemptions are considered?

    • A.A shopping center
    • B.Residential real property with not more than one dwelling unit
    • C.An apartment building with twenty units
    • D.Every tract of vacant land
    ▸Show answer and explanation

    Correct answer: B. Residential real property with not more than one dwelling unit

    Why B is correct: Section 5.008(a) begins with a seller of residential real property comprising not more than one dwelling unit in Texas, then subsection (e) lists exempt transfers.

    Trap: Start with property scope, then test the transfer exemption.

    Source: Texas Prop. Code §5.008(a), (e)

13. 13. A required Section 5.008 notice is delivered three days after the contract becomes effective. What statutory right does the purchaser receive?

    • A.A seven-day right after receipt to terminate for any reason
    • B.An automatic thirty-day option period
    • C.A right to force the seller to make every disclosed repair
    • D.Automatic title to the property
    ▸Show answer and explanation

    Correct answer: A. A seven-day right after receipt to terminate for any reason

    Why A is correct: Section 5.008(f) permits the purchaser to terminate for any reason within seven days after receiving a required notice that was not provided before contract formation.

    Trap: This statutory seven-day remedy is separate from the negotiated option period.

    Source: Texas Prop. Code §5.008(f)

14. 14. Which transfer is listed as exempt from the Section 5.008 seller-disclosure requirement?

    • A.Every cash sale
    • B.Every sale by a non-occupying investor
    • C.A transfer by a trustee in bankruptcy
    • D.Every sale above a stated price
    ▸Show answer and explanation

    Correct answer: C. A transfer by a trustee in bankruptcy

    Why C is correct: Section 5.008(e)(2) lists a transfer by a trustee in bankruptcy. Price, cash financing, and seller non-occupancy are not universal exemptions.

    Trap: An exemption turns on the transfer category, not the payment method.

    Source: Texas Prop. Code §5.008(e)(2)

15. 15. Which statement correctly separates TREC Form 55-1 from TREC Form 61-0?

    • A.Both forms are approved only for voluntary use
    • B.Form 55-1 is the Section 5.008 condition notice approved for voluntary use, while Form 61-0 is the separate mandatory Seller's Water Disclosure
    • C.Form 61-0 replaced Section 5.008
    • D.Form 55-1 applies only to groundwater and wells
    ▸Show answer and explanation

    Correct answer: B. Form 55-1 is the Section 5.008 condition notice approved for voluntary use, while Form 61-0 is the separate mandatory Seller's Water Disclosure

    Why B is correct: Rule 537.62 adopts Form 55-1 for voluntary use to fulfill Section 5.008. Rule 537.68 adopts Form 61-0 for mandatory use to disclose groundwater and surface-water information. They are separate forms with separate functions.

    Trap: A statutory disclosure duty and a form's mandatory-use status are different questions.

    Source: 22 TAC §§537.62, 537.68; Texas Prop. Code §5.008