TREC TREC Contract Forms 1

Question 1

Which entity promulgates the standard real estate contract forms used in Texas?

Accepted Answer

Texas Real Estate Commission (TREC)

Answer

TREC promulgates mandatory contract forms that licensees must use when representing parties in real estate transactions.

Question 2

What is the name of the TREC form used for the purchase of a residential property with an existing structure?

Accepted Answer

TREC Form 1-4

Answer

TREC Form 1-4 (One to Four Family Residential Contract – Resale) is the standard form for purchasing existing residential properties.

Question 3

Under TREC rules, when is a licensee permitted to use a form NOT promulgated by TREC?

Accepted Answer

When an attorney-drafted form is provided for a specific transaction

Answer

A non-promulgated form may be used only when it is prepared by a licensed attorney and provided for a specific transaction.

Question 4

In a TREC contract, the 'Third Party Financing Addendum' is used when:

Accepted Answer

The buyer obtains a conventional, FHA, or VA loan

Answer

The Third Party Financing Addendum is attached when the buyer plans to finance the purchase through a conventional, FHA, or VA loan.

Question 5

What does the 'Option Period' in a Texas TREC contract allow the buyer to do?

Accepted Answer

Terminate the contract for any reason within an agreed timeframe

Answer

During the option period, the buyer pays an option fee for the unrestricted right to terminate the contract for any reason.

TREC - Texas Real Estate Commission Practice Test