Contract Forms CH 6
PARAGRAPH # 6: SURVEY
6C. SURVEY: In the One-to-Four Family Residential Contract, paragraph 6C calls for the seller to provide survey to purchaser; however, there is no individual survey required in the condominium contract. Therefore, there is no reference to a survey in the Residential Condominium Contract.
The buyers have not received a Seller Disclosure. How soon, per contract, must the seller deliver one to buyer?
7 days
Is a survey required on Condominium Contracts?
NO. In a condominium purchase, there is no need for the buyer to have a survey.
Condominium Contracts
With a condominium, the buyer is buying the airspace within the unit and a percentage of the common area. In a condominium purchase, there is no need for the buyer to have a survey. However, it is very important for them to have the condominium documents explaining the rights and obligations of the purchaser as well as the financial stability of the homeowner's association. These types of differences are addressed in the Condominium Contract.
PARAGRAPH #12: SETTLEMENT AND OTHER EXPENSES
12A (3): This is the paragraph that limits the fees that the buyer will pay for Association transfer fees and states that the buyer will be limited to X and the seller will pay the remainder.
The Farm and Ranch Contract should be used with properties in excess of ________ acres.
15
PARAGRAPH # 2: PROPERTY AND CONDOMINIUM DOCUMENTS:
2 (A). Describes that the buyer is purchasing an undivided interest in the common area(s). **Note that where the 1-4 Family contract uses Lot & Block or a field notes (metes & bounds) description, the Condominium Contract will typically use Unit & Building. Membership in an HOA is addressed in the One-to-Four Family Contract in paragraph 6 because not all residential homes have HOAs. In the Condominium contract, this issue is addressed in Paragraph 2.
The Resale Certificate must be prepared no more than ________ before the date it is delivered to the buyer.
3 months
What other 'reserved elements' are covered in the property description?
Assigned parking
Farm and Ranch PARAGRAPH #2 PROPERTY
Both contracts have the same information for the legal description; however, the One-to-Four Family Residential Contract has additional paragraphs (B), (C) and (D), that list what specific fixtures are included with the property, what accessories are included and what, if any, exclusions there are. Since there are no improvements in the Unimproved Property Contract paragraph 2 contains only the legal description and property address.
What are "rollback" taxes?
Rollback taxes are taxes owed after the way a piece of land is used changes. If the owner had cattle on the land and was getting tax breaks for 10 years for that they would have roll back taxes to pay plus interest if they stopped having cattle on the land.
What documents need to be delivered to the buyers?
A. Declarations and Bylaws B. Resale Certificate C. Seller's Disclosure D. All of the above
A TREC promulgated New Home Contract (Incomplete) can include:
A. Landscaping B. Appliances C. Color choices D. All of the above
Who usually receives the earnest money once the property is under contract?
A. The title company
The buyer is given _______________ to object to the "documents" of the association.
A. Three days prior to closing
What happened to the earnest money at closing?
C. It is first credited toward the down payment and then buyer's closing costs and any excess be refunded to the buyer.
Are there any promulgated contract forms for new construction condominiums?
NOPE. There are no promulgated contract forms for new construction condominiums. However, the Texas Association of Realtors® has provided its members three contract forms that can be used. They are the New Residential Condominium Contract (Completed Construction), the New Residential Condominium Contract (Incomplete Construction), and a contract which can be used for condominium conversion (typically apartments that have been converted for residential sale).
3. Can a Condominium Contract include a description of the parking assigned to the unit?
OH YEA. The Residential Condominium Contract (Resale) addresses parking; number of reserved spaces, car port, garage
Farm and Ranch Contract Paragraph #2
PARAGRAPH #2. The legal descriptions of the two contracts are different in that the Farm and Ranch Contract includes things such as water rights, easements, permits etc. The One-to-Four Family Residential Contract lists what specific fixtures are included with the property, what accessories are included and what, if any, exclusions there are. It is highly recommended that an agent read the Farm and Ranch Contract carefully, especially paragraphs 2B and 2C, which clarifies what items convey and do not convey with the property. Farm and Ranch contracts include such items as improvements (any buildings such as sheds, barns, and houses), accessories and crops, "except for the exclusions and reservations" (for instance, mineral rights). It will be important for the buyer to ascertain what equipment and farm/ranch accessories convey with the property. The Farm and Ranch Contract contains specific items that are often concerns for farm and ranch transactions. These items include land rights, utilities, and zoning. The Farm and Ranch Contract includes items such as windmills, tanks, barns, pens, fences, etc. that would be considered fixtures or part of the farm and ranch that would convey with the property. It also includes a paragraph that speaks to the residential improvements on the property and what specifically will convey with to the buyer. Accessories for each contract are different. The One-to-Four Family Residential Contract includes items such as fireplace screens, swimming pool equipment, draperies and rods and mail box keys; whereas the accessories in the Farm and Ranch include such items as: hunting blinds, game feeders, corrals, chutes, livestock feeders and troughs... Quite different from the things to be considered in a residential property!! The Farm and Ranch Contract also has an additional paragraph that addresses crops and states that the seller has the right to harvest all growing crops until the property is delivered to the buyer.
Condo Contract 2 (C). RESALE CERTIFICATE:
This is a very important document because it provides the buyer with information about the Homeowner's dues, the amount of reserve for repairs, replacement of common elements in the project, i.e. roof replacement, resurfacing the swimming pool, painting the complex, etc. The resale certificate must not be more than 3 months old.
NEW HOME CONTRACTS
A new home contract will have basically the same requirements as a resale contract. It will state the projected closing date, the terms of contracts, who will pay which expenses, and the obligations to both parties. The New Home Construction (Incomplete) agreements could include such items as type of exterior (brick, stone, and wood), landscaping, etc. Interior choices might include types of appliances, special plumbing fixtures, interior paint colors, light fixtures, and any other selections chosen by the purchaser. The main difference between a new home contract and a resale contract is resale contracts are drafted by the Joint Broker-Lawyer Committee and are approved by the Texas Real Estate Commission. Builders have a series of inspections throughout the building process and walkthroughs to complete before the move in. These specific terms will be itemized in a new home contract. Keep in mind that new home contracts are not contingent upon appraisal. This means if the appraisal comes in at a lower price than contracted with the builder, the builder is not obligated to drop his price to match the appraisal. The buyer must pay the difference in cash. The buyer cannot back out just because the appraisal is lower without losing earnest money or potentially being sued by the builder.
The Legal Description of a condominium is described as:
Building and Unit
The legal description of a condominium is described as:
Building and Unit
What happens if the buyer of the property is a licensed real estate agent?
C. It must be disclosed in paragraph 4 of the contract.
Paragraph Condo Contract 2 B (1)
Check this box if Buyer has received the documents. Advise Buyer to read the documents before signing the offer. Declarations, Bylaws, and Rules cover such things as how the Association is governed, how officers are elected, terms of officers, how decisions of the association are made, what the owners can and cannot do. These are generally things that affect other property owners. An example would be to have a restriction that individual homeowners cannot paint the exterior of their unit or paint the front door (a different color) or change the look of the exterior of their unit. 2 B(2) Check this box if Buyer has not yet received the documents. Note: The Buyer is given only 5 days to object (the contract reads before the sixth day) after receipt of the documents. Do not confuse with the HOA addendum where buyer is given 3 days to object.
What are considered to be the "Documents" of the association?
Condominium documents explaining the rights and obligations of the purchaser as well as the financial stability of the homeowner's association.
Farm and Ranch Contract
Different from both the One-to-Four Family Contract and the Condominium Contract. This contract should be used for properties with fifteen acres or more of land. This contract also speaks to the transferring of outbuildings, stock tanks, machinery, and equipment that has nothing to do with residential properties.
What is included in the legal description in a Condominium Contract?
It is very important for them to have the condominium documents explaining the rights and obligations of the purchaser as well as the financial stability of the homeowner's association. These types of differences are addressed in the Condominium Contract.
How many days is the buyer given to object to the "documents" of the association?
The Buyer is given only 5 days to object (the contract reads before the sixth day) after receipt of the documents. Do not confuse with the HOA addendum where buyer is given 3 days to object.
NEW HOME CONTRACT (COMPLETE CONSTRUCTION)
The New Home Contract (Complete Construction) is used to purchase new homes that are already built.
NEW HOME CONTRACT (INCOMPLETE CONSTRUCTION)
The New Home Contract (Incomplete Construction) is used to purchase new homes not completed by the builder.
When is a Farm and Ranch Contract used?
Used for properties with fifteen acres or more of land. This contract also speaks to the transferring of outbuildings, stock tanks, machinery, and equipment that has nothing to do with residential properties.
The Residential Condominium Contracts (Resale)
Used only with the sale of a condominium. By definition a condominium is "the absolute ownership of an apartment or a unit (generally in a multi unit building) based on a legal description of the airspace the unit actually occupies, plus an undivided interest in the ownership of the common elements, which are owned jointly with the other condominium owners." The buyer should receive a Condominium Resale Certificate. The certificate is from the condominium owners association and should not be more than 3 months old.