Before you read
Test yourself first: 5 questions
Question 1 of 5
For standard residential transactions, Texas license holders are generally required to use:
Answer: B. Texas license holders must use TREC-promulgated (standard) contract forms for transactions those forms are designed to cover; they may not practice law by drafting their own.
Question 2 of 5
When preparing a standard residential sales contract, a Texas license holder is generally required to use:
Answer: C. Texas license holders must use the contract forms promulgated by TREC for transactions those forms are designed to cover, rather than drafting their own.
Question 3 of 5
In a typical Texas residential transaction using TREC-promulgated forms, when is the earnest money generally due to the escrow agent?
Answer: A. The TREC One to Four Family Residential Contract requires the buyer to deliver earnest money to the escrow agent within a specified number of days after the effective date of the contract.
Question 4 of 5
A Texas sales agent drafts a custom addendum from scratch to add unusual terms to a residential sale. Under TREC rules, what is the general restriction on a license holder preparing legal instruments?
Answer: D. Texas license holders must use TREC-promulgated forms when one is applicable to the transaction and may not engage in the unauthorized practice of law by drafting contract provisions. Complex or unusual terms should be prepared by an attorney; agents fill in the promulgated blanks.
Question 5 of 5
Which document gives TREC the authority to require licensees to use standard forms for residential transactions?
Answer: B. Under the License Act and TREC rules, the Commission promulgates standard contract forms that license holders must use in most residential transactions, subject to limited exceptions.
Keep the streak going with more questions like these, each with a full rationale.
What you need to know
Texas residential contracts commonly include a termination-option provision under which the buyer pays an option fee for an unrestricted right to terminate during a negotiated option period. Earnest money is placed with the escrow agent and held in a trust or escrow account. Because Texas is a community property state, marital property interests can affect how title and signatures on a transaction are handled.
Texas Contract & Transaction Specifics: FAQs
Is Texas Contract & Transaction Specifics on the real estate exam?
Yes. State License Law is a scored domain on the Texas real estate licensing exam, and this topic appears in the state license-law portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
Does Texas test this differently?
Texas applies its own license law on top of the national portion. This page covers the Texas rules specifically, which is what the state section of your exam tests.
