Law of Contracts

If the loan factor is $4.49 and the loan amount is $357,500, taxes are $7300/year and the insurance is $3103 per year, what is the monthly PITI payment?

$2,472.09 Rationale: $357,500 / 1000 = 537.5 357.5 x 4.49 = $1605.18 Loan Payment (P&I) $7300 / 12 = 608.33 Taxes (T) $3,103 / 12 = 258.58 Insurance (I) Total = $2,472

Texas Veteran's Housing Assistance Program loans can be:

(a) FHA (b) VA (c) Conventional (d) Any of the above D

The Special Provisions paragraph of the contract allows license holders 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 Correct answer: d

For tax prorations

(a) If taxes are not paid at or prior to closing the buyer shall pay for the current year (b) If taxes for the current year vary from the amount prorated at closing, the parties shall adjust the prorations when tax statements for the current year are available (c) The tax proration may be calculated taking into consideration any change in the exemptions that will affect the current year's taxes (d) All of the above D

An offer by a prospective purchaser can be terminated prior to acceptance due to:

(a) expiration of a specified time period (b) bankruptcy of either party (c) a change in the law that renders the contract illegal (d) all of the above D

The Buyer and Seller Temporary Residential Lease forms are good for any period up to:

90 days

An abstract of title is:

A complete written history of title

________ of an offer means that the accepting party does so with no change to the contract whatsoever.

Acceptance

If a broker receives more than one offer on a property:

All must be presented to the seller unless the seller has instructed the broker otherwise in writing

________ are changes that are made to the original contract, such as changes to the closing date or changes to the sales price, down payment and/or the amount financed.

Amendments

A(n) ________ is a provision in a contract that requires that a certain act or event happens in order for the contract to be binding on the party.

Contingency

Mortgage loan originators can be broken down into three categories: mortgage bankers, mortgage brokers and ________

Correspondent lenders

A claim, lien, charge, or liability attached to and binding real property is a(n) ________.

Encumbrance

Elmer Fleckenfleck, an agent with After Hours Realty, was preparing a contract. The seller told Elmer that he wanted to stay in the property for at least a week after closing. Elmer said that would be no problem and entered the following text to Paragraph 11: "Seller and Buyer agree that Seller will remain in the Property for 7 days after closing and funding." In this case, Elmer has:

Engaged in the unlawful practice of law

The ________ ensures that all consumers are given an equal chance to obtain credit.

Equal Credit Opportunity Act

. ________ is the legal procedure whereby secured property may be sold to satisfy a borrower's unpaid promissory note.

Foreclosure

At closing, the contract is:

Fully executed

Which of the following is a physical characteristic of land?

Indestructability

Joe is an agent at Tried and True Realty. He gets a $150,000 offer on a property that is listed for $199,500. In a recent phone conversation, the seller told Joe he would accept no less than $185,000 for the property. Knowing the seller's "bottom line," what should Joe do with the offe

Joe should present the offer to the seller

A buyer defaults on a contract and the seller chooses to receive the earnest money. This is an example of:

Liquidated damages

Damage or destruction of a property under contract prior to closing:

May result in termination of the contract

The four economic characteristics of land are: scarcity, fixity, situs and ______

Modification

A seller of coastal property abutting tidally influenced water must provide the ________

Notice Regarding Coastal Area Property

The four categories of leasehold estates are: estate for years, tenancy at sufferance, tenancy at will and ________.

Periodic tenancy

________ is the right of the government to regulate and control the way land is used.

Police power

A ________ is a deed with no guarantees or warranties.

Quitclaim deed

The SAFE Act mandated the term ________.

Residential Mortgage Loan Originator

Jake (Seller) and Sarah (Buyer) entered into a contract for the sale of Jake's personal residence. In the contract, Jake promised to deliver a seller's disclosure of property condition within 5 days of the effective date of the contract. Jake never delivered the disclosure as promised. Which of the following statements is true?

Sarah has the right to terminate the contract and receive a refund of earnest money prior to closing

According to the Deceptive Trade Practices Act (DTPA), brokerage falls under the category of ________.

Services

Bill is the buyer purchasing a property from Sally. All contingencies have been met and the parties are ready to close. One day prior to closing, Sally announces that she has changed her mind and is going to keep the property. Bill is determined to complete the purchase and acquire the property. The only default remedy in the contract that could result in Bill acquiring the property is___________________________.

Specific Performance

Earnest money is deposited in an escrow account when:

The contract is signed by all parties and acceptance is communicated

A loan assumption might be desirable because:

The loan assumption is generally less costly than a new loan

In a residential lease with a "right of first refusal" provision:

The tenant has the right to match or better any offer the landlord receives to prevent the property from being sold to someone else

The most common type of financing used in residential transactions is

Third Party Financing

FHA loans include two mortgage insurance premiums that must be paid by the borrower. They are the:

UFMIP and Annual Premium

A "Section 502 Loan" is insured by the ________.

USDA

A contract in which only one party is obligated to perform is a________ contract.

Unilateral

A counteroffer is:

a) A rejection (b) A new offer (c) Able to be withdrawn prior to acceptance (d) All of the above D

A(n) ________ to a contract is an attachment that adds or further describes the rights and duties of the parties.

addendum

Which kind of rights extend above the surface of property without limitation?

air rights

A(n) ________ mortgage covers more than one piece of property.

blanket

________ law is a body of law based on "common sense" and local custom.

common law

The five essential elements of a valid and enforceable contract are, competent parties, offer and acceptance, legal purpose, in writing and ________.

consideration

. A(n) ________ is an agreement between two or more parties to do something or to refrain from doing something.

contract

Real property conveyed by will is called a ________.

devise

A seller is going to continue to occupy a property for two days after closing. In this case, the parties should use the Buyer's Temporary Residential Lease form.

false

RESPA prohibits ________, which is considered an abusive practice.

kickbacks

Which disclosure is provided to comply with federal requirements for properties built before 1978?

lead based paint disclosure

A(n) ________ is a listing in which the real estate broker's commission is the difference between the minimum net established by the seller and the price that the buyer is willing to pay.

net listing

A(n) ________ occurs when a new contract is substituted for an existing one.

novation

The formal judicial proceeding to prove the validity of a will and to distribute the assets of a decedent's estate is calle

probate

A ________ is the borrower's unconditional promise to repay the lender.

promissory note

A(n) ________ is a business venture that is owned by one individual.

sole proprietorship

________ is evidence an individual has of his or her right to possess land.

title

An offer may be withdrawn at any time prior to its acceptance by the offeree

true

Buyers' and sellers' marital status is not required in the contract.

true

An option is:

unilateral contract

If a property violates zoning, the owners must request a(n) ________.

variance