PROMULGATED CONTRACTS PRACTICE EXAM
Buyer Raz goes into contract on a house in Texas. At the last minute, he is unable to obtain financing. What would he need to have in his contract to terminate it without penalty?
A Third Party Financing Addendum
In which of these scenarios would it be correct to use the Residential Condominium Contract (Resale)?
A client is buying a property where the land is not owned individually and the common areas are shared equally among the community's owners.
Agent Ralph has a buyer client that wants the seller to leave them the refrigerator, built-in microwave, and vent hood. Ralph notes this expectation in the Special Provisions section. What is wrong with this scenario?
It should be written in a Non-Realty Addendum, not in the Special Provisions section.
As outlined in the TREC promulgated sales contracts, what obligations does the seller have regarding the property condition at the time of sale?
Seller's obligations are a matter of negotiation with the buyer
Which of these is NOT something TREC has the power to do?
licensing developers and builders
Which MUST be disclosed to potential buyers?
prior flood damage that was repaired by the owner
What is the purpose of TREC form OP-C Notice to Prospective Buyer?
provides a notice to buyers using their own contract to obtain an Abstract of Title
Which of these is something TREC is empowered to do by TRELA?
require license holders to use contract forms for certain transactions
Which of these is NOT a protected class of people, according to Fair Lending Laws?
sexuality
Who is tasked with drafting and editing Texas's promulgated contracts?
the Broker-Lawyer Committee
If the seller is providing an existing survey during a real estate transaction, what must the license holder give to the buyer?
the T-47 Residential Real Property Affidavit
The Seller's Disclosure Notice is a requirement of
the Texas Property Code
According to the Environmental Assessment, Threatened or Endangered Species, & Wetlands Addendum, what happens if the buyer can provide the seller with a report proving that the use of the property is negatively affected by one of the noted factors (before the agreed-upon deadline)?
the buyer can terminate the contract and get their earnest money back
Why does the Notice of Buyer's Termination of Contract only have to be signed by the buyer?
the buyer's termination rights are outlined in the contract
A buyer and seller have been in negotiations. They have everything in writing, have agreed to all terms, the contract is signed and changes initialed. Today, the written acceptance of the final agreement has been communicated to the other party. What is today called?
the effective date
If legal action is required regarding a TREC sales contract, what will the non-prevailing party be responsible for?
the prevailing party's reasonable attorney fees and court costs
Which of these is an example of something that could go in Paragraph 12 of the One to Four Family Residential Contract?
the seller plans to pay some of the buyer's closing costs
A seller is renting back a property from a buyer using the Seller's Temporary Residential Lease. The seller damages the property while they are staying there. Who is responsible for the cost of the repairs?
the seller/tenant
When both parties mutually agree to terminate a contract, who provides the appropriate form?
the title company
What is special about the earnest money section (paragraph five) and the option money section (paragraph 23) in the TREC promulgated sales contract?
they contain "time is of the essence" language
Which is the purpose of the Information About Brokerage Services form?
to inform clients how a license holder can represent a party in a real estate transaction
What is the purpose of the Short Sale Addendum?
to protect a seller who is selling their home for less than they owe their lender
In loan fraud, the lender is usually the ________.
victim
What is the Addendum for Property Located Seaward of the Gulf Intracoastal Waterway for?
warns buyers that if their property become located on the beach area by erosion they can be required to remove the structure at their own expense.
When is it acceptable for a seller not to give a buyer a seller's disclosure notice?
when the buyer has indicated in the contract it isn't necessary
A Residential Real Property Affidavit Promulgated by the Texas Department of Insurance (T-47 Affidavit) must be furnished to the buyer _______________________.
when the seller provides the existing survey
Agent Aaron was drawing up a contract, and opted to use his brokerage's (lawyer-created) Seller's Disclosure Notice instead of TREC's. Is this allowed? Why or why not?
Yes, because the Seller's Disclosure Notice is not promulgated by TREC.
When all parties have agreed to all terms of an offer, have signed the offer, and have initialed any changes that took place during negotiations, what happens to the offer?
it becomes a contract
Agent Ted advises his client that the title to the property he is buying is clear — no need to do a further title search. Why is this inappropriate?
it may constitute unauthorized practice of law under TRELA.
Within how many days after the title company receiving a copy of the contract will the buyer receive the title policy documents?
20 days
What is the statute of limitations to claim fraud or misrepresentation against a license holder?
4 years from discovery
An agent's buyer client wants to keep the curtains in the home they are buying, and the seller has agreed. What does the agent need to include with the contract to ensure this happens?
A Non-Realty Items Addendum
A potential buyer's current home is under contract. He has found a home he would like to make an offer on, but does not want to take a chance on being obligated to buy if his current home does not close. What form can help this buyer?
Addendum for Sale of Other Property by Buyer
A contract has an effective date of July 21st, with a seven day option period. What is the latest that contract can be terminated without penalty?
July 28 at 5 PM
Mary has a rental property with a two year lease on it. She collected a $500 security deposit at the beginning of the lease. Now she is selling the property. What will happen to the security deposit?
Mary will transfer the security deposit to the buyer at closing.
A seller is planning to convey a refrigerator through the Non-Realty Items Addendum. They financed the applianced purchase, and still have a few payments left. Is this allowed? Why or why not?
No, items conveyed through the Non-Realty Items Addendum must be owned fully by the seller.
Which element of the TREC promulgated contracts is the same across all contract forms?
Paragraph 1 identifies the parties to the contract
Where in the One to Four Family Residential Contract does it spell out what remedy the buyer has if the property is damaged after going into contract but before closing?
Paragraph 14
Agent Alicia is helping her client buy a newly built home. She does not use the New Home Contract (Completed Construction). What is the most likely reason why?
The builder required that she use their contract.
Paragraph D of the Short Sale Addendum contains a date by which the seller must get approval from their lender for the sale. What happens if the lender does not give approval by the date?
The contract will terminate and the earnest money will be refunded to the buyer
If a property is occupied solely by people over the age of 62 and qualifies as senior housing it is exempt from:
The familial status portion of the Fair Housing Act
If a buyer is sent an Addendum for Property Subject to Mandatory Membership in an Owner's Association and they don't like the terms, what remedy do they have?
They can terminate the contract within the first three days
Buyer Ashley is shopping for empty lots on which to build a home. She found a lot for sale that looks promising, but she's concerned its located on a wetland. What should her agent do?
Use the Unimproved Property contract and attach the Environmental Assessment, Threatened or Endangered Species and Wetlands Addendum.
Which of these constitutes a voidable contract?
a contract made with a minor
Per Paragraph 7D, what is it called when a buyer accepts the property, "with any and all defects and without warranty"?
accepting it in "as is" condition
How can an agent change a contract after it has been signed by both parties?
adding an amendment to contract
Which of the following would constitute unauthorized practice of law and/or be a violation of TRELA?
adding or striking things from pre-printed contract forms
According to Paragraph 6B: Commitments in the promulgated One to Four Family Residential Contract, what must be provided to the buyer along with the title policy documents?
any restrictive covenants
To be valid and enforceable, a contract must be in writing, represent a complete agreement, have acceptance communicated, and:
be signed by all parties
How can a license holder ensure that any relevant addenda or notices are officially included in a contract?
by checking the appropriate boxes in Paragraph 22
How can an agent help protect the earnest money of a buyer who is financing their purchase?
by submitting a Third Party Financing Addendum
In Paragraph 9 of the One to Four Family (Resale) contract, what must happen "on or before" the specified date?
closing
According to TREC rules, which of these must be delivered to the seller within three days of a contract's effective date?
earnest money
Additions to the standard coverage in a title policy can be purchased via:
endorsements
A contract that is fully performed is referred to as:
executed
Emily and Josh signed a real estate contract with each other. The contract is now fully executed. What does that mean that Josh and Emily have done?
fulfilled the material terms of the contract
If nothing is added in Paragraph 7D, the agreement says that the buyer is accepting the property:
in its present condition
The seller of an unimproved property would provide a disclosure about the property in what location?
in paragraph 7E of TREC Unimproved Property Contract
What is one exception to HUD's occupancy guidelines of two people per bedroom?
infants in a room with parents
What does the date in the Third Party Financing Addendum provide a deadline to buyers for?
informing a seller they didn't get their financing approved
