PROMULGATED CONTRACTS

What is TRUE about real estate offers in the state of Texas?

All offers must be in writing

All of these are options in the Notice of Buyer's Termination of Contract EXCEPT:

Buyer elects to terminate by the purchasing of a different property under Paragraph 13 of the contract

All of the following are essential elements of a valid contract EXCEPT:

earnest money

All of the following are elements of a contract EXCEPT:

signatures of all the involved parties.

A law that requires real estate contracts to be in writing is the ______.

statute of Frauds

Which of the following is a bilateral contract?

leases

Agents must submit all offers to the seller _____.

until closing

Unilateral Contract:

A contract made between two or more parties in which only one of those parties makes a promise or otherwise accepts an obligation

Counteroffer:

A contract proposal submitted in response to a previous offer, modifying the terms of the original offer; considered a rejection of the original offer

Promulgated Contract:

A contract that has been approved and is required to be used by license holders

Void Contract:

A contract that has no legal effect

Executory Contract:

A contract that is not completely executed or performed

Statute of Limitation:

A law establishing a time limit for civil suits

Recourse Loan:

A loan in which the lender is allowed to seize the collateral property, and could also go after the borrower's other assets if the sale of the property doesn't cover the whole amount owed to the lender

Offer:

A promise made by one party requesting something in exchange for that promise with the intention that the offeror will be bound to the terms if the offer is accepted

Loan-to-Value Ration (LTV):

A ratio that represents how much of the sales price is covered by the mortgage loan

The effective date of the contract is the date that:

A written contract has been accepted, signed and communicated to the other party.

What is something that TREC does NOT provide?

ALL CHOICES ARE CORRECT (listing agreements, property management agreements, property representation agreements)

When filling out the One to Four Family Residential Contract, you'll need to include:

All choices (any repairs that the buyer wants included, whether the property was built before 19878, a legal description of the property)

Listing agents and buyer's agents are legally obligated to follow ALL instructions from their clients.

FALSE (Explanation: Listing agents and buyer's agents are legally obligated to follow all instructions from their clients if those instructions are lawful and ethical.)

TRUE or FALSE: License holders can always create their own forms to use in real estate transactions.

FALSE (License holders CANNOT always create their own forms for transactions. The Commission, however, does not prohibit a license holder from using a form that is prepared by the property owner or prepared by a lawyer and required by the property owner.)

TREC promulgated addenda are added to the contract AFTER it has been signed.

FALSE (Explanation: Addenda are added to the contract BEFORE the contract has been signed. Amendments are added afterwards.)

In a real estate sale, the license holder must use the appropriate TREC-promulgated form UNLESS another contract form is required by the buyer's lender.

FALSE (Explanation: In a real estate sale, the license holder must use the appropriate TREC-promulgated form UNLESS another contract form is required by the property owner. The buyer's lender has no influence over the sales contracts used in a transaction.)

An agent should record any notes they have on the transaction in Paragraph 11.

FALSE (Explanation: Paragraph 11 is sacred ground that can change the legality of a contract. An agent should not write anything in this paragraph unless they are absolutely positive it belongs. And still, consulting a lawyer is a good idea before adding anything.)

The Doctrine of Laches is the same thing as the Statutes of Limitations.

FALSE (Explanation: The Doctrine of Laches is based on common law, while Statutes of Limitations are written and codified.)

If a buyer is in the process of countering an offer, the seller cannot sell the property to anyone else.

FALSE (Explanation: While buyers are countering, license holders should let them know that the property is still available and the seller is free to sell it to someone else.)

Novation:

The substitution of a new contract for an existing contract, relieves the original party of liability

Which of the following is TRUE of mutual agreement?

There cannot be mistakes in the terms and conditions

An option to buy contract is a(n)_________________.

Unilateral Contract

If two people have a contract for one to sell illegal drugs to the other, the contract would be:

Void

What type of contract does not contain one or more of the essential elements of a valid contract?

Void

Subagency:

When an agent works with the buyer but is not representing the buyer

Legally Competent:

When an individual has reached the age of majority (18 years of age) and has not been declared mentally incompetent by a judge

Voidable Contract:

When one or more of the parties has the authority to rescind the contract

Alice needs a place to live. Barbara has an apartment but wants to move in with her boyfriend. They agree that Alice will move in and take over Barbara's lease. Later, Alice stopped paying the rent. Does Barbara have any liability if she can prove Alice has been living there?

Yes, an assignment does not relieve the original party of liability.

A broker listed a property for a bank that the bank had foreclosed on. The bank had their own contract form prepared by their attorney, and they wanted the broker to use it. Can the broker use the bank's form without violating the license act?

Yes, sellers can require a form written by their attorney.

The buyer wants to make sure they will get the table and chairs that are currently in the home. Does anything need to be added to the contract?

Yes, the items should be added to the Non-Realty Items Addendum

The buyer and the seller have agreed on everything in the offer except the closing date. Is the seller free to consider other offers?

Yes, the seller should withdraw their last counter offer to the first buyer before countering another.

By whom should the language "time of the essence" be added?

an attorney

To transfer contract obligations without necessarily relieving the original party from obligations, you need a(n) __________.

assignment

The difference between an executory contract and an executed contract is that the executed contract is _____.

closed

A license holder should ___________.

disclose all material facts to the client

What is NOT an element of a valid contract?

earnest money

Unenforceable Contract:

A contract that cannot be enforced by the courts

Contract:

A legally binding and enforceable agreement to do or not to do a specific thing

When filling out the nine checkable box options on the Amendment to Contract form, more than one box can be checked.

TRUE

Performance:

The responsibility of all the parties to carry out their part of a contract

The best way for any contract to terminate is to become _________________.

executed

Amendment:

Items that are attached to the original document and should never be changed after the document has been signed and accepted

5 essential elements of a valid contract:

1.Mutual assent (100% agreement) 2.Legally competent parties (18, sane, and sober) 3.Consideration (an exchange of something of value) 4.Lawful objective (the purpose of the contract must be legal) 5.In writing (a written and signed offer and acceptance)

How many members serve on the Broker-Lawyer Committee?

13

Dan wants to sell the equity in his home, and has found someone who will assume his loan. However, his lender will not release him from liability for the loan. What is this an example of?

Assignment

The process of counter-offering can continue until:

Both parties come to a mutually acceptable agreement

If the seller does NOT intend to leave the chandelier in the dining room, where should they list that information?

In Paragraph 2D, Exclusions

Four-Year Limitation Period:

Specific performance of a contract for the conveyance of real property, penalty or damages on the penal clause of a bond to convey real property, debt, fraud, or breach of fiduciary duty

In Texas, what are the two entities that promulgate contracts?

TREC and TAR

The Broker-Lawyer committee drafted a new promulgated form and TREC approved it for mandatory use beginning October 1st. An agent continued to use the old form after October 1st. The agent is guilty of _____.

a violation of the License Act

A buyer was to deliver several items to the seller within five days of the execution of the contract, including the option fee and earnest money deposit. Six days went by and the seller had not received any of the items from the buyer. The seller _____.

may terminate the contract and the earnest money belongs to the seller

The objections section of the sales contract is where the ______ lists their dealbreakers.

buyer

Since Texas is a community property state, the title company might want to know a couple's or person's _____.

marital status

Paragraph 23 gives the buyer the unrestricted right to terminate the contract if ________.

the buyer purchases the right to terminate

If a buyer has given the seller earnest money:

the buyer's credit will be applied at the closing of the sale.

Obligations often times must be completed within a certain number of days of _____.

the effective date

Consideration:

A valuable item that each party exchanges in order to demonstrate that they agree to the contract terms

If a contract says "time is of the essence," that means that it is due:

as soon as possible

A contract that cannot be enforced by the courts is _____.

unenforceable

What type of contract has all the elements of a contract but cannot be enforced by court due to a technicality of law?

unenforceable

Which of the following is NOT an exception to the rule requiring that promulgated forms be used by the license holder?

when the contract form has been prepared by the buyer's agent and is approved by the buyer

Executed Contract:

A contract in which all terms have been fulfilled by all parties

Bilateral Contract:

A contract in which one party must promise to do something for another party and that party must promise to do something for the first party

Randy is buying a home for $300,000. He obtained two loans (one for $200,000 and another for $40,000). How much will Randy need to have in the cash portion of the sales contract?

$60,000

If one of the parties defaults and the non-defaulting party accepts the earnest money as damages, they may also:

Do nothing more, as the contract is terminated.

The Broker-Lawyer Committee:

Drafts and edits forms

How does an agent obtain written consent from a buyer so that the agent can review loan documents or the closing statement?

It is included in the Third Party Financing Addendum

Valid Contract:

Legal agreement meeting all the essential, basic requirements of the law

Which of the following is TRUE?

License holders can compete a contract form prepared by the property owner

Which of the following is NOT true regarding what a license holder can do to help a client with understanding the sales contract?

License holders can give the client their legal opinion of what to do.

One-Year Limitation Period:

Malicious prosecution, libel, slander, or breach of promise of marriage not later than one year after the day the cause of action accrues

Addenda:

Materials added to and included in the initial contract that provide more information on the transaction

Which of the examples below is the BEST example of identifying a single purchaser?

Nancy Everett, a single person

Does the Broker-Lawyer Committee approve (promulgate) the forms?

No, the Texas Real Estate Commission approves and promulgates the forms

Broker Adam found there was no promulgated listing contract. He had his Texas licensed attorney draw up one that he liked. Is he violating the license act?

No, there was no standard form and he has a Texas attorney prepare it.

A seller is concerned about continuing to have liability for their mortgage after they sell the property and a buyer assumes the loan. The seller should attempt to get this document from their lender:

Release of Liability

The contract forms that are approved and promulgated by TREC are:

Required for license holder use

Statutes of Limitations vary in length depending on the type of lawsuit or crime.

TRUE

Effective date:

The final date of acceptance, when the contract becomes binding between the parties

Quitclaim Deed:

Transfers ownership of whatever the grantor owns but make no guarantee of ownership and no promise to defend

Two-Year Limitation Period:

Trespass for injury to the estate or to the property of another, conversion of personal property, taking or detaining the personal property of another, personal injury, forcible entry and detainer, and forcible detainer not later than two years after the day the cause of action accrues

Which of the following is required for a contract to become binding and effective?

acceptance of the contract must be communicated to the other party

An agent needed to add some information to a TREC promulgated contract form. She found a promulgated _________________ on the TREC website and will add that to the contract.

addendum

A contract that is "pending" is __________________.

executory

According to Texas state law, a contract for deed and a lease with an option to buy are considered ___________.

executory contracts

A license holder may _________.

explain the meaning of the factual statements

Which of the following is NOT a form that a license holder could use?

forms created by a licensed broker

A license holder should NOT _________.

give legal advice

A law that limits the amount of time within which a lawsuit can be filed is the ______.

statute of limitations

If the parties do not understand their liabilities under the Notices to Buyer and Seller on the Loan Assumption Addendum, the agent should _____.

tell them to seek legal advice.

In which situation would an amendment go into effect?

the parties sign to amendment

The seller is obligated to accept an offer _____________.

under no circumstances