Texas Promulgated Forms/Contracts
The sales price may be adjusted based upon a survey. If the sales price is adjusted, ____________. (a) The cash portion can be adjusted (b) The amount financed can be adjusted (c) The cash portion and amount financed can be adjusted proportionately (d) Any of the above are possible
D
One to Four Family Residential Contract (Resale) - what is it not intended for?
- condominium transactions and residential properties exceeding 4 units
One to Four Family Residential Contract (Resale) Paragraph 6: Title Notices - what is this?
- must tell the buyer all the different facets of the property and different taxes and memberships that are required of them by purchasing the property
What is the different between TREC promulgated and TREC approved forms?
- promulgated are generally mandatory while approved may be used but are not mandatory
If the seller's disclosure is received after the contract is formed, what are the buyer's options?
- they can terminate up to 7 days after receiving the disclosure, or - terminate any time before closing if they never received it
If a licensee practices law even though unauthorized, what will the commission do?
- they shall suspend or revoke the license or certificate of registration of a license or certificate holder
According to a Financing Addendum, the interest rate is: (a) Set at 6% (b) Negotiated between the parties (c) Set by TREC (d) Determined at closing
B
Promulgated Notices
Notice of Buyer's Termination of Contract Notice to Prospective Buyer Texas Real Estate Consumer Notice Concerning Hazards or Repairs
Promulgated Contracts
One to Four Family Residential Contract (Resale) Residential Condominium Contract (Resale) New Home Contract (Completed Construction) New Home Contract (Incomplete Construction) Unimproved Property Contract Farm and Ranch Contract
How can forms be reproduced? (4)
(1) Numbered copies obtained from the commission (2) Printed copies made from copies obtained from the commission (3) Legible photocopies of such copies (4) Computer printers, following mandatory guidelines
What are the Texas Real Estate Commission promulgated contract forms? (6)
(1) One to Four Family Residential Contract (Resale) (2) Farm and Ranch Contract (3) Residential Condominium Contract (Resale) (4) New Home Contract (Incomplete Construction) (5) New Home Contract (Completed Construction) (6) Unimproved Property Contract
When is a seller's disclosure not required?
(1) Sale by court order (2) deed in lieu of foreclosure (3) new home sales (4) Sale from spouse to spouse (5) Sale where the value of the dwelling does not exceed 5% of the total purchase price (6) sale to/from government agencies (7) sale by trustee in bankruptcy (8) Real-estate owned (REO) sales (9) Sale from co-owner to co-owner (10) Sale between divorcing spouses (11) Sale by will, execution, guardianships, or trusts
What guidelines should real estate agents follow to avoid practicing law? (3)
(1) Try not to alter forms unless the client tells you to (2) Avoid specific statements you would not admit to in court (3) Do not discuss or define the following: - Rights - what a person is allowed to do - Remedies - tell them what the can do - Default - when someone is in this - Validity - void, voidable, valid
What must the seller's disclosure include? (6)
(1) flooding - which had a material adverse effect of use (2) pending or threatened litigation, condemnation, or special assessment affecting the property (3) environmental hazards that materially or adversely affected the property (4) dumpsite, landfill, or underground tanks or containers now or previously located on the property (5) wetlands, as defined by federal or state law (6) threatened or endangered species or their habitat affecting the property
What are the exemptions for using a promulgated contract? (4)
(1) licensee is functioning solely as a principal, not as an agent (2) agency of the US government requires that a different form be used (3) form has been prepared by a property owner or by an attorney and is required by the property owner (4) no standard form exists and the licensee uses a form prepared by an attorney or the Broker-Lawyer Committee
When are changes to forms allowed? (3)
(1) to add the business name or logo of the broker at the top of the form outside the border, (2) to insert the broker's name in any blank provided for that purpose, and (3) when parties instruct the licensee to strike or add to the contract form (be careful not to change contractual intent)
If a buyer is concerned about the presence of endangered species, toxic substances or wetlands on a property, the agent should (a) Add the Environmental Assessment Addendum to the contract (b) Avoid the property at all costs (c) Add in Paragraph 11, Special Provisions, that the contract is subject to an environmental review (d) Explain to the buyer that environmental issues are rarely a problem
A
If the buyer is allowed to select certain items in the new home that is under construction, the builder (seller) may reject a selection if it adversely affects the market value of the home. (a) True (b) False
A
In the business of real estate, ___________ is defined as something given in exchange for a promise. (a) Consideration (b) Mutual assent (c) A bribe (d) Legal subject matter
A
The __________________ ensures compliance with TRELA, which requires that license holders advise buyers to have an abstract of title examined or to obtain title insurance. (a) Title commitment (b) Notice to Prospective Buyer (c) Seller's Disclosure (d) Inspection report
A
The condominium resale certificate must have been prepared within the previous: (a) 3 months (b) 6 months (c) 30 days (d) 60 days
A
A federal disclosure requirement for residential properties built prior to 1978 is: (a) An energy efficiency audit (b) A lead-based paint disclosure (c) A seller's disclosure of property condition (d) A water district noticeAccording to the Seller
B
A purchaser of property seaward of the Gulf Intracoastal Waterway must be given a disclosure notice that (a) Dangerous marine life pose a significant risk to swimmers (b) Beach erosion and movement of the vegetation line could cause an owner to lose the property (c) Serious rip tides are a constant danger (d) Wave action and strong winds are a danger in these areas
B
A state government entity created to encourage agricultural development in Texas is the: (a) Texas Department of Parks and Wildlife (b) Texas Agricultural Development District (c) Texas Farm Bureau (d) Texas Farm Aid
B
An offer can be communicated by ___________________. (a) Phone (b) Hand delivery (c) E-mail (d) All of the above
B
Being within the extraterritorial jurisdiction of a municipality is an indication the property will: (a) Be condemned in the near future (b) Possibly be annexed in the future (c) Be unmarketable (d) Never be annexed by any municipality
B
If a license holder is receiving compensation from a residential service company, the compensation is: (a) Reported to TREC (b) Disclosed to the parties using the appropriate TREC form (c) Never disclosed to anyone (d) Reported to the attorney general for action
B
If an overage is incurred due to a change order, the excess is paid by: (a) The seller (b) The buyer (c) Splitting the overage equally between seller and buyer (d) The agent
B
If in Paragraph B(2) is checked, and 50% entered in the Addendum for Reservation of Oil, Gas, and Other Minerals, (a) Seller reserves 50% of all of the mineral estate (b) Seller reserves 50% of whatever mineral estate the seller owns as of the closing date
B
If the sales priced is adjusted based upon a survey, either party may terminate the contract if the sales price varies by more than: (a) The amount entered in 3.C of the contract (b) 5% (c) 10% (d) The amount entered in 3.A of the contract
B
In the Farm and Ranch contract, the Seller generally has the right to harvest crops: (a) for one year after closing (b) until delivery of possession (c) until closing (d) for no more than 90 days after funding
B
Land, improvements and accessories are collectively referred to as: (a) The estate (b) The property (c) The listing (d) The homestead
B
The Lead-Based Paint Disclosure is: (a) Required for all properties (b) A federal requirement for residential property built prior to 1978 (c) A TREC requirement (d) The responsibility of the buyer's agent
B
The T-47 Residential Real Property Affidavit is not completed until ________________, in most cases. (a) Funding (b) Inspection (c) Closing (d) The listing is taken
B
The TREC-promulgated contract forms: (a) Are for optional use by real estate licensees (b) Are drafted by the Broker-Lawyer Committee (c) Are promulgated by the legislature (d) Are used in both commercial and residential transactions
B
The Third Party Financing Addendum For Credit Approval is used when: (a) The buyer is obtaining FHA financing (b) Paragraph 4.A(2)(a) is checked in the contract (c) The buyer is obtaining VA financing (d) The buyer is obtaining any kind of financing
B
The Third Party Financing Addendum for Credit Approval cannot be used for: (a) VA guaranteed loans (b) FHA insured loans (c) Seller Financing (d) Texas Veterans Loans
B
The buyer may terminate the contract and receive a refund of earnest money if lender required repairs: (a) Seem really high (b) Exceed 5% of the Sales Price (c) Exceed 3% of the Sales Price (d) Exceed $10,000
B
The commission agreement between the broker and the seller is usually found in the: (a) Sales contract (b) Listing agreement (c) Buyer representation agreement (d) IABS
B
The deed of trust securing seller financing is always assumable by a future buyer without approval: (a) True (b) False
B
The elements of a valid contract are, competent parties, consideration, legal subject matter, in writing, and ___________. (a) Default (b) Mutual consent (c) Property condition (d) Recording
B
The process of dividing ongoing expenses between the buyer and seller at the closing is called: (a) assessing (b) prorating (c) collecting expenses (d) accounting
B
When one party defaults under a contract, the other party is known as the: (a) Breaching party (b) Injured party (c) Party to the suit (d) Liable party
B
Broker-Lawyer Committee - members? - what do they do with contract forms intended for use by licensees?
- 6 brokers selected by the commission - 6 lawyers appointed by the president of the State Bar of Texas - 1 member appointed by the governor - draft and revise
Farm and Ranch Contract - what does it address? - if buyer changed zoning use who pays? - if seller changed zoning use who pays?
- addresses who will pay rollback taxes (taxes due when the zoning of a property is changed for previous years of it being different) for periods before closing - buyer - seller
Residential Condominium Contract (Resale) - when is it used? - when is it not used? - what does paragraph 2 address?
- after the builder builds and is selling to multiple owners - when seller owns fee simple title to the land underneath the unit - the declaration and the resale certificate (covenants, conditions, and restrictions - what owners can and can't do)
What type of form does TREC provide for the Seller's Disclosure of Property Condition?
- an approved form with minimum approved disclosure, but other more thorough forms can be used in its place
What will cause the commission to suspend or revoke a license due to unauthorized practice of law? (2)
- drafts an instrument, other than a form described by TRELA that transfers or otherwise affects an interest in real property, or - advises a person regarding the validity or legal sufficiency of an instrument or the validity of title to real property
When a licensee fills out promulgated forms, what kind of law are the practicing?
- this is not considered practicing law
What forms will not cause a license to be accused of practicing law? (3)
- those adopted by the commission for the type of transaction for which the form is used - those prepared by an attorney licensed intros state and approved by the attorney for the type of transaction for which the form is used - prepared by the property owner or by an attorney and required by the property owner
One to Four Family Residential Contract (Resale) Paragraph 6: Objections - items other than? - how many days does the buyer have? - other option the buyer has?
- title policy exceptions (C 1-8) - whatever is specified - to waive the buyer's right to object
Unimproved Property Contract - what is it used to transfer? - what transactions is it limited to? - what does it not address?
- unimproved land (vacant lots) - where the intended use of the land is one to four family dwellings - any structures on the property
One to Four Family Residential Contract (Resale) Paragraph 6: Survey - what are the survey options?
- use existing survey, buyer pays for a new survey, or seller pays for a new survey
One to Four Family Residential Contract (Resale) Paragraph 6: Commitment - how long does seller have? - how are documents to be delivered? - what is the possible extension? - if the seller defaults, what can happen?
- within 20 days - according to paragraph 21 - 15 days (if title company takes longer) - buyer can terminate
Damage or destruction of a property under contract prior to closing: (a) Can result in termination of the contract (b) Will result in a lawsuit against the seller (c) Will result in a lawsuit against the broker (d) Is never a legal cause for delay of closing
A
Exclusions to the sale must be removed (a) Prior to delivery of possession (b) At the convenience of the seller (c) When the offer becomes a binding contract (d) Two days prior to closing
A
***********___________________ occurs when a buyer assumes and agrees to pay the seller's existing mortgage. (a) Loan assumption (b) Seller liability (c) Seller lien (d) Credit approval
A
A Seller's Disclosure Notice is not required (a) When the property being sold is a previously unoccupied new home (b) When the property is sold to an investor (c) When the property has an out of state owner (d) When the property is sold "as i"
A
A building or community must not discriminate based on familial status, unless it qualifies as housing for older persons. (a) True (b) False
A
A(n) __________________ contract is defined as a contract that is binding on the parties, with one or more of the parties having contractual duties that have not yet been performed. (a) Executory (b) Executed (c) Bilateral (d) Void
A
According to the Seller Financing Addendum, the interest rate is: (a) Set at 6% (b) Negotiated between the parties (c) Set by TREC (d) Determined at closing
A
According to the TREC contract, accessories include: (a) Refrigerators (b) Stoves (c) Washing machines (d) Gas dryers
A
1 amendment
Amendment to Contract
When should a licensee advise a party to a contract to consult an attorney? (a) At first contact with the client (b) Before signing the contract if the client does not understand the effect of signing the sales contract or the terms or conditions in the agreement (c) After the contract has been signed by all parties if the party does not understand the contract (d) A licensee should never advise a client to consult an attorney
B
Which of the following activities is specifically prohibited under the Civil Rights Act of 1968? (a) Denying availability of property when it is available (b) Refusing to sell, or rent to, deal or negotiate with any person (c) Steering or blockbusting (d) All of the above activities are specifically prohibited under the Civil Rights Act of 1968
B
IRS statutes require a buyer to: (a) Purchase property only from U.S. citizens (b) Withhold 20% of the price from a foreign seller of U.S. property (c) Withhold 10% of the sale proceeds in excess of $300,000 when a foreign person has no social security card or green card (d) None of the above
C
If a home is to be sold, with lender's consent, at a price less than the outstanding balance on a mortgage, the sale is known as a (a) Deed in lieu of foreclosure (b) Foreclosure (c) Short sale (d) Distress sale
C
If a seller wants to continue to occupy the property for two days after the closing and the buyer agrees: (a) This can be written into the special provisions paragraph of the contract (b) The buyer and seller should negotiate a periodic tenancy agreement (c) The Seller's Temporary Residential Lease form should be used (d) The TAR Residential Lease form should be used
C
If the property is currently under an agricultural exemption, and the use of the property changes, the buyer may be charged a: (a) Fine (b) Penalty (c) Rollback tax (d) d. Change of use fee
C
In a Farm and Ranch sale, the buyer will receive all of the following items except: (a) Windmills (b) Tanks (c) Trucks (d) Pens
C
In the Third Party Financing Addendum for Credit Approval: (a) The buyer has no incentive to obtain financial approval (b) The buyer has a definite time to notify seller of the inability to obtain financing approval (c) The buyer's earnest money will not be returned if the buyer does not obtain financing (d) The option period is explained
C
Reservations of oil, gas and other minerals will generally be inserted in: (a) Paragraph 2 (b) Paragraph 11 (c) TREC Addenda form (d) Paragraph 7
C
The State of Texas encourages the parties to resolve all conflicts and disputes through alternative dispute resolution procedures such as: (a) Arbitration (b) Going to court (c) Mediation (d) Termination of the contract
C
The loan amount in Paragraph 3.B. of the sales contract includes: (a) The amount of the mortgage insurance (b) The loan plus origination fees (c) Only the amount borrowed by the buyer (d) The loan amount minus the earnest money
C
The sales contract identifies the agency relationships between the broker(s) and parties: (a) In paragraph 23 (b) In paragraph 17 (c) In the Broker Information section (d) In paragraph 9
C
Usual expenses of the seller as stated in the contract include: (a) Appraisal fees (b) VA loan funding fee (c) Release of existing lien (d) Copies of easements and restrictions
C
Who is responsible for filling in the effective date of the contract? (a) The listing salesperson (b) The title company (c) The broker (d) The selling salesperson
C
Resale Certificates
Condominium Resale Certificate Subdivision Information, Including Resale Certificate for Property Subject to Membership in a Property Owners' Association
All written notices between the parties are effective when: (a) Mailed (b) Hand-delivered (c) Faxed or emailed (d) Any of the above
D
At the closing the buyer should bring: (a) A personal check for the amount of closing costs and down payment (b) A promissory note for the amount of closing costs and down payment (c) Cash for the amount of closing costs and down payment (d) A cashier's check or wire transfer for the amount of closing costs and down payment
D
For a valid option to exist (a) The option fee must be paid directly to the seller or listing broker (b) All of the blanks in paragraph 23 must be filled in (c) The fee must be paid within three days of the effective date of the contract (d) All of the above
D
How long does a buyer have to object to defects, exceptions and encumbrances to title disclosed in the survey and title commitment? (a) Within 3 days of the effective date of the contract (b) Up to 5 days prior to closing (c) Within 7 days of becoming concerned (d) The negotiated number of days stated in the contract
D
If a buyer makes an offer without having received the Seller's Disclosure Notice, how many days does the seller have to provide the notice? (a) Not less than 3 days prior to closing (b) Not more than 5 days after the effective date of the contract (c) Within 7 days of loan approval (d) The number of days negotiated in the contract
D
If a seller wants to continue to occupy the property for two days after the closing and the buyer agrees: (a) this can be written into the special provisions paragraph of the contract (b) because it is for only two days, the parties should just enter into an oral agreement (c) the buyer and seller should negotiate a periodic tenancy agreement (d) the Seller's Temporary Residential Lease form should be used
D
If not using a temporary lease, the buyer is entitled to possession of the property: (a) 24 hours before closing (b) When the seller has moved out (c) On closing day (d) Upon closing and funding
D
In a lease with a "right of first refusal" provision: (a) The price is set when the lease agreement is negotiated (b) The tenant has promised to buy the property (c) The TREC promulgated form must be used (d) The tenant has the right to match or better any offer the landlord receives to prevent the property from being sold to someone else
D
TREC has promulgated forms for: (a) lease purchase transactions (b) cooperatives (c) right of first refusal (d) residential transactions
D
The Buyer and Seller Temporary Residential Lease forms are good for any period up to: (a) 14 days (b) 30 days (c) 60 days (d) 90 days
D
The earnest money is: (a) Always 5% of the purchase price (b) Set by TREC (c) Negotiated between the parties (d) Paid at closing
D
The sales price in 3.C. is always: (a) The loan amount plus the cash portion (b) 3.A. + 3.B. (c) The amount borrowed plus the down payment (d) All of the above
D
The special provisions paragraph of the contract allows licensees to insert: (a) Factual business details (b) Statements not addressed in the contract (c) Information for which there is no TREC promulgated addendum, lease or mandatory form (d) All of the above
D
5 optional or approved forms
Disclosure of Relationship with Residential Service Company Notice of Buyer's Termination of Contract Notice to Prospective Buyer Property Inspection Report Seller's Disclosure Notice Texas Real Estate Consumer Notice Concerning Hazards or Repairs
One to Four Family Residential Contract (Resale) Paragraph 5 - what does it discuss? - what information about the escrow officer is included? does he have to be the same as the escrow agent for the title insurance policy? - what money amounts are included here? - how many days do you have to deposit additional money? - what is it not? - what can it be used as a remedy for? - what is it applied to?
Earnest Money - his address and name - earnest money amount and additional earnest money; no - no later than 5pm (business hours) on the second day after the effective date of contract - consideration of the contract or mandatory for a valid contract - default - a cash down payment on behalf of the buyer and does not benefit the seller unless default occurs
One to Four Family Residential Contract (Resale) Paragraph 4 - what does it discuss? - what are the 3 options for financing?
Financing (1) Third Party - conventional, FHA, VA - property approval - credit approval (is or is not subject to) - third-party financing addendum for credit approval (2) Assumption - addendum for release of liability on assumed loan and/or restoration of seller's VA entitlement (3) Seller Financing - seller financing addendum
Promulgated Disclosures
Information About Brokerage Services Seller's Disclosure of Property Condition Disclosure of Relationship with Residential Service Company Lead-Based Paint Addendum Non-Realty Items Addendum
One to Four Family Residential Contract (Resale) Paragraph 1 - what does it discuss? - what is it the first of? - what must be included about the buyers/sellers? - what types of interest can buyers take?
Parties (1) first contingency of the contract (2) promises of the parties - name(s) of seller(s) and relationship - name(s) of buyer(s) and relationship (LLP, Inc., martial status, & trust) (3) type of interest buyers wish to take - sole and separate, severalty - tenants in common (equal or unequal shares and heirs) - joint tenancy (right of survivorship - goes to other owners) - in texas, tenants in common unless otherwise specified
One to Four Family Residential Contract (Resale) Paragraph 2 - what does it discuss? - what does this include? - exclude? - how can items not listed in paragraph 2 be negotiated?
Property (1) Land - lot number, block number, addition, city, county, address, ZIP code (2) Improvements: permanently installed and built in items (3) Accessories: freestanding items that remain with the property (4) Exclusions - improvements and accessories - non-realty item addendum or a bill of sale
One to Four Family Residential Contract (Resale) Paragraph 3 - what does it discuss? - what does this include
Sales Price - cash down payment - total amount of loan(s) - sales price - sum of 1 & 2
Promulgated Addenda
Third Party Financing Condition Addendum for Credit Approval Loan Assumption Addendum Seller Financing Addendum Addendum for Release of Liability on Assumed Loan and/or Restoration of Seller's VA Entitlement Short Sale Addendum; Addendum for Sale of Other Property by Buyer Addendum for Property Subject to Mandatory Membership in an Owners' Association Addendum for "Back-Up" Contract; Addendum for Reservation of Oil, Gas and Other Minerals Amendment to Contract Seller's Temporary Residential Lease Buyer's Temporary Residential Lease Environmental Assessment, Threatened or Endangered Species, and Wetlands Addendum Addendum for Coastal Area Property Addendum for Property Located Seaward of the Gulf Intracoastal Waterway
One to Four Family Residential Contract (Resale) Paragraph 6: Title Policy - who pays for the title policy it? - what are title policy exceptions? - what are the options for discrepancies.. etc.?
Title Policy - either the seller or buyer - restrictive covenants, standard exceptions, liens, utility easements, contractual exceptions, marital rights, property abuts to water, and discrepancies, conflicts, shortages, boundary lines, encroachments, protrusions, or overlapping improvements - will not be amended or deleted or will be amended and paid for by the buyer or seller
