Promulgated Contract Forms - Unit 5 - test

Which of the following statements may be included in the Special Provisions section of the residential purchase contract?

a. Request for rent rolls and copies of leases **b. All of the choices apply c. Pre-closing walk-through inspection d. Swimming pool equipment to be serviced during option period

Which of the following statements may not be included in the Special Provisions section of the residential purchase contract?

**a. All of the choices apply b. The contract is contingent upon satisfactory inspections to the buyer. c. The contract is in a second or back-up position d. The transaction is contingent upon the sale of another property

Oakes/Waters Case Study Open the case study data and read through it before you click Start. You will be given a list of 10 TREC promulgated contract forms. Choose the 4 contract forms that you should use for the Oakes/Waters Case Study. Once you have chosen the correct contract forms, you will be provided with blank PDFs of those forms in order to fill them in based on the Case Study. Print the forms. Complete the forms using the information in the case study. Once the forms are completed, click Next to answer a series of questions about the completed forms. Once you have successfully answered the multiple-choice questions, you will be provided with PDFs of the completed forms so that you can double-check your work.

1. Addendum for Seller's Disclosure of Information on Lead-Based Paint and Lead-Based Paint Hazards as Required by Federal Law (Lead-Based Paint Addendum) 2. One to Four Family Residential Contract (Resale) 3. Third Party Financing Addendum for Credit Approval 4. Environmental Assessment, Threatened or Endangered Species, and Wetlands Addendum _______________________________________________________________________ 1 What are the Lot and Block numbers for the property at 3864 Wayside Drive, and where is this information entered on the One to Four Family Residential Contract (Resale)? Points: 1 **Lot 4, Block A / Paragraph 2.A. Lot A, Block 4 / Section 1. Lot 4, Block A / Paragraph 2.D. Lot A, Block 4 / Section 24 Hint: Fred determines that the legal description for this property is Lot 4, Block A, of the Wayland Drive Addition, Large County, TX. This information is entered in Paragraph 2.A. on the One to Four Family Residential Contract (Resale). ________________________________________________________________________ 2 The Oakes will make the minimum FHA down payment and have an interest rate of 3.5%, fixed for 30 years, with only a 1% origination fee. They offer $145,000 for the Waters' property, with a $2,000 earnest money deposit and a $100.00 option fee for a 10-day option period. What is the amount of the loan and where is it entered? Points: 1 *****139,900.00 / Paragraph 3.B. of the One to Four Family Residential Contract (Resale) 145,000.00 / Paragraph 3.B. of the One to Four Family Residential Contract (Resale) 5,100.00 / Paragraph 3.B. of the One to Four Family Residential Contract (Resale) 139,900.00 / Paragraph 3.C. of the One to Four Family Residential Contract (Resale) Hint: The Oakes will make the minimum FHA down payment of 3.5% on the sales price of $145,000. If they make a down payment of $5,100.00 ($145,000 x 3.5% = $5,075 rounded up to $5,100.00), they will need to finance $139,900.00, which is entered in Paragraph 3.B. of the One to Four Family Residential Contract (Resale). ________________________________________________________________________ 3 The Oakes plan to pay $2,000 in earnest money, but no additional earnest money upon acceptance of their offer. This should be addressed in __________ of the One to Four Family Residential Contract (Resale) by _______________. Points: 1 **Section 5. / entering N/A in the final two fields. Section 3. / entering $2,000.00 in Paragraph A. Section 5. / leaving the final two fields blank. Section 5. / entering $2,000.00 in the final two fields. Hint: The Oakes plan to pay $2,000 in earnest money, but no additional earnest money upon acceptance of their offer. This should be addressed in Section 5. Earnest Money of the One to Four Family Residential Contract (Resale) by entering N/A in the final two fields. _______________________________________________________________________ 4 Prior to writing the offer, the buyers review the Seller's Disclosure of Property Condition and decide to purchase the property in its present condition. This is conveyed by checking which boxes in Section 7. Property Condition on the One to Four Family Residential Contract (Resale)? Points: 1 ****B.(1) and D.(1) B.(2) and D.(2) B.(3) and D.(1) B.(1) and D.(2) Hint: Prior to writing the offer, the buyers review the Seller's Disclosure of Property Condition and decide that they will take the property in its present condition. This is conveyed by check Box 7.B.(1) Buyer has received the Notice and Box 7.D.(1) Buyer accepts the Property in its present condition. ________________________________________________________________________ 5 The Oakes will ask the Waters to pay ________ of the closing costs, which is entered in ________ of the One to Four Family Residential Contract (Resale). Points: 1 ****$4,000 / 12.A.(1)(b) $500 / 12.A.(1)(b) $4,000 / 7.H. $500 / 7.H. Hint: The Oakes will ask the Waters to pay $4,000 of the closing costs, which is entered in 12.A.(1)(b) in the One to Four Family Residential Contract (Resale). ________________________________________________________________________ 6 Paragraph B of the Third Party Financing Addendum for Credit Approval has blank line to indicate the number of days that Tom and Susan Oakes have to obtain credit approval. What number should be entered in the blank line for the number of days within which to obtain credit approval? Points: 0 ***21 7 10 14 Hint: Michael Miller at Best Ever Mortgage Company assured Tom and Susan Oakes them that once they were under contract, they could get credit approval in 21 days. ________________________________________________________________________ 7 The Waters have no reports or knowledge of lead-based paint on the property. Which box(es) on the Lead-Based Paint Addendum should be checked to convey this information? Points: 1 ***B.1.(b) and B.2.(b) B.1.(a) and B.2.(b) B.2.(b) only B.1.(b) only Hint: The sellers have no reports or knowledge of lead-based paint, asbestos, or termites concerning their property. You should check both Boxes B.1.(b) and B.2.(b). ________________________________________________________________________ 8 The Oakes decide to waive their right to conduct a lead-based paint risk assessment. Which box(es) on the Lead-Based Paint Addendum should be checked to convey this information? Points: 0 ***C.1. only C.1.and D.1. C.1. and C.2. C.2. only Hint: The sellers have no reports or knowledge of lead-based paint, asbestos, or termites concerning their property. The buyers decide that they will take the property in its present condition, pending termite, mechanical and structural, and asbestos inspections and waive the opportunity to conduct a risk assessment or inspection of the property for the presence of lead-based paint and/or lead-based paint hazards. Box C.1. is checked. ________________________________________________________________________ 9 If asbestos is found in the property, how many days after the effective date of the contract may the Oakes terminate the agreement and where is this information entered on the Environmental Assessment, Threatened or Endangered Species, and Wetlands Addendum? Points: 1 ***10 / the blank in the final paragraph 21 / the blank in the final paragraph 10 / Paragraph A. 21 / Paragraph A. Hint: Because of the age of the home, Mrs. Oakes is concerned about asbestos, and would like an inspection completed for that during the option period, which is 10 days. This number is entered in the blank in the final paragraph of the Environmental Assessment, Threatened or Endangered Species, and Wetlands Addendum. _______________________________________________________________________ 10 The Oakes are concerned that the HVAC has been recently serviced and is in proper working order. This concern would be addressed: ****in Section 11, Special Provisions. by the inspector when the home is inspected during the option period. in Section 7.A ...buyer may have property inspected by inspectors selected by buyer... in the Seller's Disclosure of Property Condition. Hint: Although the home inspector will inspect the HVAC, the buyers will only know if the HVAC has been serviced by requiring proof from the seller which is addressed in Section 11, Special Provisions.

According to the One To Four Family Residential Contract (Resale), within how many business days of final execution of the contract, must the earnest money be deposited with the escrow agent?

2

At closing, what type of deed does the seller usually deliver to the buyer?

General warranty deed

At closing, what is the first application of the earnest money?

It is applied first to any cash down payment.

Seller Sam stayed in the home after closing without having a signed temporary residential lease. According to the One To Four Family Residential Contract (Resale), what type of tenancy did this create?

Tenancy at sufferance

According to the One To Four Family Residential Contract (Resale), how is the commission shared between the listing broker and the other broker?

The listing broker agrees to pay the other broker a percentage of the total sales price.

What is the commonality of taxes for the current year, interest, maintenance fees, assessments, dues, and rents?

They are items that are prorated in escrow.

Seller Turner accepts an offer from buyer Hunter but still continues to accept back up offers. When buyer Hunter finds out that seller Turner is still accepting offers, he tells his agent to ask Turner to stop. Seller Turner's agent states that Turner can continue to accept back up offers until he feels sure that the transaction will close. Which statement is most correct?

Unless expressly prohibited by written agreement, Turner can continue to show the property and accept back up offers.

The purchase contract between buyer Baker and seller Stone terminated, so the escrow agent sent a release for earnest money to each party. Buyer Baker signed the release and returned it to the escrow agent within the 7-day deadline; however, seller Stone refused to sign the release. Because of the refusal, does seller Stone have any liability?

Yes, seller Stone could be liable to buyer Baker for liquidated damages.

Section 18.D. discusses the amount of liquidated damages the party who wrongfully fails or refuses to sign a release of earnest money might have to pay. Liquidated damages are the sum of:

damages, earnest money, and reasonable attorney's fees, and costs of the suit.

In the Buyer's Temporary Residential Lease, the buyer indemnifies the seller from the claims of third parties. This indemnification includes all of the following, except:

the price of the property.

If the buyer fails to comply with the One To Four Family Residential Contract (Resale), what is the seller's recourse?

The seller may terminate the contract and receive the earnest money as liquated damages.

The Foreign Investment in Real Property Tax Act (FIRPTA) defines a foreign person as all of the following, except:

a domestic corporation.

Although the rental rate is negotiated in a Seller's Temporary Residential Lease, the buyer:

is entitled to fair market rent.

Section 11 allows both parties to add any factual statements or business details relating to the sales contract. If several provisions exist and they exceed the space provided on the form, the parties:

may need to seek legal assistance.

In a Seller's Temporary Residential Lease, the ________ occupies the property after closing, and is therefore the _________.

seller / tenant

Section 16 of the One To Four Family Residential Contract (Resale) states if mediation is selected to settle a dispute between buyers and sellers, the mediation costs are:

shared equally.

__________ refers to the date that the new owner will begin living on the property purchased, and it is usually the same as the closing date.

Possession

In the One To Four Family Residential Contract (Resale), which of the following expenses typically is paid by the seller?

Preparation of the deed

Which parties execute the contract on page 8 of the One To Four Family Residential Contract (Resale)?

Buyer and seller

According to the One To Four Family Residential Contract (Resale), the prevailing party may recover reasonable attorney's fees and all costs of a legal proceeding related to the contract. Which of the following would not be able to recover reasonable attorney's fees according to the contract?

Licensed home inspector

According to the One To Four Family Residential Contract (Resale), the buyer may not pay charges and fees expressly prohibited by all of the following, except:

licensed brokers.

According to the Notices paragraph of the One To Four Family Residential Contract, all notices from one party to the other:

must be in writing.