Texas Real Estate Sales Agent — All Questions

At closing, 'proration' refers to:

• a.dividing shared expenses such as property taxes fairly between buyer and seller as of the closing date✓
• b.the process of recording the new deed at the courthouse
• c.the lender's final approval of the buyer's mortgage loan
• d.the buyer's final walkthrough inspection before closing

Proration allocates ongoing costs like property taxes, HOA dues, and prepaid items between buyer and seller based on the closing date. Because Texas taxes are paid in arrears, the seller typically credits the buyer for taxes accrued during the seller's ownership.

A title commitment issued before a Texas closing is:

• a.a document showing the current state of title and the conditions under which the title company will insure it✓
• b.the deed that actually transfers ownership to the buyer
• c.a survey drawing that maps the property's boundary lines
• d.the buyer's loan application submitted to the mortgage lender

A title commitment (or commitment for title insurance) discloses the current condition of title, including liens, easements, and exceptions, and states the requirements to issue the policy. Buyers should review it carefully before closing.

After a Texas closing, the deed is typically:

• a.returned to the seller for the seller's own records
• b.filed with TREC rather than the county clerk's office according to the standard practice followed throughout the industry
• c.recorded in the county real property records to give public (constructive) notice of the new ownership✓
• d.kept secret and hidden away by the new buyer

Recording the deed in the county real property records provides constructive notice of the transfer and protects the buyer's priority against later claims. Recording is not required to make the deed valid between the parties, but it is strongly advisable.

When the buyer becomes entitled to take possession of the property is:

• a.specified in the contract, commonly upon funding and closing unless the parties agree otherwise✓
• b.a matter that is never addressed in the sales contract so long as the transaction is closed through a licensed brokerage firm
• c.whenever the buyer personally decides to move in
• d.always exactly thirty days after the closing date

Possession is a contract term; in Texas it is commonly delivered upon funding and closing, but the parties may agree to a temporary lease (leaseback or buyer possession before closing). The contract's possession provision controls.

A lender financing a home purchase will typically require the buyer to provide at closing:

• a.a flood certificate for the home regardless of its location
• b.a life insurance policy taken out on the seller
• c.proof of a paid hazard (homeowner's) insurance policy✓
• d.a written warranty covering the seller's used furniture

Lenders require evidence of a paid hazard (homeowner's) insurance policy to protect the collateral against loss. Flood insurance is required only when the property lies in a designated special flood hazard area.

In a Texas purchase with financing, two title policies may be issued. The distinction is that:

• a.title insurance mainly covers future physical damage to the home in essentially every residential and commercial transaction alike
• b.the lender's (mortgagee) policy protects the lender, while the owner's policy protects the buyer's equity✓
• c.the owner's policy actually protects the real estate agent
• d.both policies exclusively protect the seller of the property

A mortgagee (loan) policy protects the lender up to the loan balance, while an owner's policy protects the buyer's interest. Title insurance covers losses from covered pre-existing title defects, not future physical damage.

A Texas homeowner who believes the appraisal district has overvalued their home for tax purposes may:

• a.sue TREC directly to recover money damages for the error
• b.protest the appraised value before the county appraisal review board✓
• c.demand that the seller issue a brand-new corrected deed
• d.refuse to pay any property tax without facing any penalty according to the standard practice followed throughout the industry

Texas property owners may protest their appraised value to the county appraisal review board (ARB) by the statutory deadline. A successful protest can lower the taxable value and the resulting tax bill.

Compared with many other states, Texas funds local government by:

• a.collecting a high state personal income tax on residents
• b.charging a special statewide sales tax on every home sale according to the standard practice followed throughout the industry
• c.assessing a federal land tax on all real property owners
• d.relying heavily on local property (ad valorem) taxes, since Texas has no state personal income tax✓

Because Texas has no state personal income tax, local governments depend heavily on ad valorem property taxes to fund schools and services. This makes property tax rates and exemptions especially important to buyers.

To comply with fair housing law, a Texas property manager screening rental applicants must:

• a.steer families with children toward ground-floor units only
• b.reject applicants based on their national origin or religion
• c.apply the same lawful rental criteria to all applicants regardless of protected class✓
• d.prefer applicants without children to keep the property quieter

Fair housing law requires consistent, nondiscriminatory screening: the same lawful criteria (such as income and credit standards) must apply to everyone, regardless of race, familial status, national origin, or other protected classes.

A core duty of a Texas property manager to the owner is to:

• a.pay for all major repairs out of the manager's own pocket
• b.purchase the property outright if it fails to rent quickly
• c.personally guarantee that the property will never have a vacancy
• d.provide the owner with regular accounting reports of income and expenses✓

As the owner's agent, the property manager must account for funds and provide regular financial reports of income and expenses. The manager operates the property in the owner's best interest but does not guarantee results or pay the owner's expenses personally.

In a net lease, unlike a gross lease:

• a.the landlord pays every single operating expense of the property
• b.the tenant automatically becomes the owner after just one year
• c.no rent whatsoever is charged to the tenant during the term
• d.the tenant pays base rent plus some or all property expenses such as taxes, insurance, and maintenance✓

In a net lease the tenant pays base rent plus certain property expenses (taxes, insurance, and/or maintenance), which in a triple-net lease include all three. In a gross lease, the landlord covers most operating expenses out of the rent.

After applying the sales comparison, cost, and income approaches, an appraiser will:

• a.reconcile the approaches by weighing their reliability to reach a final opinion of value✓
• b.discard all three approaches and rely on the tax value instead
• c.use only the single highest of the three value indications
• d.simply average the three resulting numbers together every time in essentially every residential and commercial transaction alike

Reconciliation is the appraiser's analysis of the strengths and relevance of each approach to arrive at a final opinion of value. It is a weighing of reliability, not a mechanical average of the three figures.

Appraisers in the United States are generally required to follow USPAP, which stands for:

• a.the United States Property Assessment Program run by the IRS
• b.the Uniform Standards of Professional Appraisal Practice, the ethical and performance standards for appraisers✓
• c.the Universal Sales Price Adjustment Protocol used in closings
• d.the Underwriting Standards for Property Appraisal Lending by banks

USPAP sets the recognized ethical and performance standards for appraisers in the United States. Appraisals for federally related transactions must comply with USPAP.

A Texas sales agent prepares a comparative market analysis (CMA) primarily to:

• a.help the seller set a competitive list price using recent comparable sales✓
• b.determine the property's official tax assessment for the county
• c.serve as a legal substitute for the buyer's home inspection
• d.certify the property's value for a federally related mortgage loan unless the parties specifically negotiate a written exception beforehand

A CMA uses recent comparable sales and current market conditions to help an agent and seller choose a competitive list price. It is a pricing tool, not a certified appraisal or a substitute for an inspection.