Promulgated Contracts

The Broker-Lawyer committee drafted a new promulgated form and TREC approved it for mandatory use. An agent continued to use the old form. The agent is guilty of: a violation of the License Act a violation of contract law a violation of RESPA nothing (it was an honest mistake.)

a violation of the License Act

To transfer contract obligations without necessarily relieving the original party from obligations, you need a(n): contract transfer trade novation assignment

assignment *An assignment transfers contract obligations to another party, but does not necessarily release the original parties' obligations.

Unlike other residential purchase contracts, the Farm and Ranch Contract:

determines broker fees on the Broker Information page can have the sales price adjusted based on the survey addresses mineral rights

To protect themselves from future liability, the wise seller: discloses everything they know about the property only discloses things that will be discovered hides as many negatives about the property as possible supplies property information at the buyer's written request

discloses everything they know about the property

The best way for any contract to terminate is to become: a mutual termination invalid executory executed

executed *The best way for any contract to terminate is to become fully executed (closed).

According to Texas state law, a contract for deed and a lease with an option to buy are considered: bilateral contracts unenforceable contracts executory contracts executed contracts

executory contracts

A license holder may: offer legal advice explain the meaning of the factual statements practice law give advice concerning the status of title to real estate

explain the meaning of the factual statements

The mineral estate is comprised of all minerals including oil and which of the following? gas water limestone iron

gas

The buyer should review the restrictive covenants because they determine: if the taxes are current how many bedrooms the home must have how the property can or cannot be used if there are liens on the property

how the property can or cannot be used

If the seller does NOT intend to leave the chandelier in the dining room, where should they list that information? in Paragraph 11, Special Provisions in the Non-Realty Items Addendum in Paragraph 2D, Exclusions If it is listed in the MLS, it does not need to be in the contract

in Paragraph 2D, Exclusions

The best way to know the true legal description of a condo is to: copy the description from the listing agent copy the description from the tax rolls use the street address locate the deed

locate the deed

By how much must the loan balance at closing differ from the amount agreed upon in the Loan Assumption Addendum before either party can elect to terminate the contract? more than $250 more than $500 more than $1,000 more than $2,000

more than $500

In Texas, there are some contracts that a real estate agent should not prepare. Instead, the agent should tell their client to seek legal counsel for contract preparation. These contracts are:

option to buy that includes a residential lease lease with option to buy lease purchase contract contract for deed

Since Kamala's taxes on her home are paid in arrears, when she sells it in July, an estimate will need to be made as to how much of the full year's amount she and the buyer should each be responsible for as of closing day. Through what process will this be done? settlement conveyance proration provision

proration

The contract forms that are approved and promulgated by TREC are: required for license holder use suggested for license holder use recommended for license holder use available for voluntary use by license holders Correct!

required for license holder use

If any leased fixtures that are not assumed by the buyer damage the property when removed, who is responsible for repairing the damage? Both parties split the cost. It's negotiable. seller buyer

seller

The Unimproved Property Contract can be used for: properties with improvements ranches with windmills and pens personal properties small city lots

small city lots

A law that requires real estate contracts to be in writing is the: statute of limitations statue of real estate statute of frauds statute of written contracts

statute of frauds

If the seller chooses not to seek liquidated damages as a remedy for default, what other option do they have? press criminal charges against the buyer none of these sue the buyer's agent for misrepresentation sue the buyer for specific performance

sue the buyer for specific performance

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 assure them it's not a big deal tell them many people have assumed loans without a problem advise them on how to proceed

tell them to seek legal advice

Which types of loans can be used with the Third Party Financing Addendum? conventional and non-conventional loans non-conventional loans only seller financed loans only conventional loans only

conventional and non-conventional loans

A license holder should: disclose all material facts to the client employ a lawyer for the client practice law give legal advice

disclose all material facts to the client

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

true

Property taxes are paid: every other year daily in advance in arrears

in arrears *which means that the taxes are charged for the previous year.

Who has to use promulgated forms? No one has to use promulgated forms. only the property owner only the agent both the agent and the property owner

only the agent

Whose responsibility is it to review and choose the coverage of the residential service contract? the buyer the title company the listing agent the seller

the buyer

An option-to-buy contract is a(n): unilateral contract unenforceable contract one-sided contract bilateral contract

unilateral contract

In Paragraph 10, possession is negotiated. The parties will check a box saying that possession of the property will be transferred either:

upon closing and funding according to a temporary residential lease agreement

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

void

If a buyer buys a property in a brand new subdivision, but their home hasn't been built yet, what contract will be needed for the transaction? Unimproved Property Contract One to Four Family Residential Contract (Resale) New Home Contract (Incomplete Construction) New Home Contract (Completed Construction)

New Home Contract (Incomplete Construction)

The only TREC contract that talks about construction documents and cost adjustments is the: Unimproved Property Contract New Home Contract (Complete) Farm and Ranch Contract New Home Contract (Incomplete)

New Home Contract (Incomplete)

The Special Provisions section of the One to Four Family Residential Contract provides space for the addition of contract terms:

that are factual statements or business details as desired by the principals that are not already included in the sales contract that negotiate new items of business for which a TREC-promulgated form does not already exist

The amount of earnest money to be paid in a transaction is agreed upon by: the lending institute the two brokers the appraiser the seller and the buyer

the seller and the buyer

If no temporary residential lease is required on a property, when is the seller required to deliver possession to the buyer? within 90 days after closing and funding within 7 days after closing and funding 90 days prior to closing and funding upon closing and funding

upon closing and funding

In which situation would an amendment go into effect? No party terminates the contract. The parties sign the amendment. No party refuses to accept the amendment within 3 days. One of the parties give verbal agreement.

The parties sign the amendment.

According to the TREC contract, the buyer will receive a copy of the restrictive covenants at whose expense? lender's title company's seller's buyer's

buyer's

How many TREC-promulgated contracts are there? four six five seven

six

According to the contract, can the seller refuse to let the buyer have the property inspected? Yes, if the seller does not want the property to be inspected. No, the buyer must be allowed to access the property at reasonable times for inspection. The seller can require inspections to be done after 8 pm when the seller is home. Yes, because inspections may not be convenient for the seller.

No, the buyer must be allowed to access the property at reasonable times for inspection.

Which party does escrow protect? the buyer the seller none both the seller and the buyer

both the seller and the buyer

Which of the following could be included in the Special Provisions section? changes to parties' legal rights things that are covered by TREC addenda business details desired by the principals information about mineral rights

business details desired by the principals

Who fills out the effective date on a contract? the buyer's agent the agent who finalizes the contract the seller the seller's agent

the agent who finalizes the contract

Who pays for an investigation of an issue related to an Environmental Assessment, Threatened or Endangered Species, & Wetlands Addendum? the buyer state and local environmental agencies the seller the buyer and seller

the buyer

Paragraph 5 gives the buyer the unrestricted right to terminate the contract if: the seller does not fill out a disclosure notice the buyer cannot get approved for financing the buyer finds a major issue during the inspection the buyer purchases the right to terminate

the buyer purchases the right to terminate

When is rent for a Buyer's Temporary Residential Lease paid? the day of the lease commencement upon moving out the original closing date as a daily payment

the day of the lease commencement

Since Texas is a community property state, the title company might want to know a couple's or person's: anniversary date marital status number of children birth date(s)

marital status

According to the One to Four Family Residential Contract (Resale), how much time does a buyer have to terminate the contract after having received the Seller Disclosure Notice? 7 5 3 10

7

Why are surveys often necessary for a farm or ranch sale? Surveys establish ownership of livestock. Surveys are necessary to capture the number and extent of hunting leases. A property may have been in the family for years, and not been surveyed for a long time. Mineral rights must be properly described by a survey.

A property may have been in the family for years, and not been surveyed for a long time.

The effective date of the contract is the date that: A written contract has been accepted, signed, and communicated to the other party. A written contract has been accepted, signed, and communicated to the title company. A written contract has been accepted, signed, and faxed to the other party. A written contract has been accepted, signed, and delivered to the other party.

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

When filling out the One to Four Family Residential Contract, you'll need to include: any repairs that the buyer wants included a legal description of the property All choices are correct. whether the property was built before 1978

All choices are correct.

What is TRUE about the Broker-Lawyer Committee and TREC?

Both members of TREC and members of the Broker-Lawyer Committee have six-year terms. Both TREC and the Broker-Lawyer Committee were created in response to TRELA. All of the Broker-Lawyer Committee's members are appointed by the governor, while TREC has members appointed by different people. The Broker-Lawyer Committee creates and revises the contracts, but TREC actually promulgates the contracts.

Which of the following is TRUE of seller financing? Closing costs are reduced by a large amount. Seller financing is a wrap-around mortgage. Only the buyer attains rights of ownership. The buyer cannot lease a seller-financed property.

Closing costs are reduced by a large amount.

Compare option money and earnest money. Both earnest money and option money are often refundable. Earnest money is often refundable, whereas option money is never refundable. Option money is often refundable, whereas earnest money is never refundable. Neither earnest money nor option money are refundable.

Earnest money is often refundable, whereas option money is never refundable.

An agent should record any notes they have on the transaction in Paragraph 11 (Special Provisions). true false

False *Paragraph 11 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.

Which of the following are bilateral contracts? Ron signs an option-to-purchase contract with Phil. Fran leases an apartment unit to Sylvia. Juan signs a buyer's representation agreement with Melvin. Broker Jessi offers a $1,000 bonus for closing three houses this month. Greg signs a listing agreement with Aliki.

Fran leases an apartment unit to Sylvia.

When using the addendum regarding residential leases, what is TRUE?

If Box B is checked, that means that the buyer will assume all leases that do not terminate before closing. The seller may not enter into a new lease for the property without the buyer's permission. Residential leases that are in effect at closing retain their original terms.

Marissa learns that the appraisal has come in too low for the lender to make the loan on the home she wants to buy. She finds this out four days before closing. According to the Third Party Financing Addendum, what is the status of the contract? Marissa is in default. Marissa may terminate the contract and earnest money will be refunded to seller. The contract will automatically terminate, and earnest money and any option money will be refunded to Marissa. Marissa may terminate the contract and have her earnest money refunded.

Marissa may terminate the contract and have her earnest money refunded.

Does the Broker-Lawyer Committee approve (promulgate) the forms? No, the Texas Real Estate Commission approves and promulgates the forms. No, the Texas Real Estate Commission approves the forms. No, the Contract Department approves the forms. Yes, it is their responsibility.

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

On all new construction homes, the Federal Trade Commission requires the builder to disclose the: R-value of the ceiling R-value of the heating system R-value of the hot water heater R-value of the insulation being used

R-value of the insulation being used

A buyer and seller agreed in negotiations that the seller would furnish the existing survey. When an existing survey is being used, the TREC contract also requires a seller to furnish a: mortgagee title policy title policy endorsement Residential Real Property Affidavit title insurance amendment

Residential Real Property Affidavit

A real estate transaction fail to close, and the parties can't agree on who keeps the earnest money. As the buyer's agent, what should you do? Send an email to the lender. Call the seller. Send a written demand to the title company. Call the escrow agent.

Send a written demand to the title company.

If an item is listed as an exception to the title policy, it means: That item is protected somewhere else. That item is protected under the title policy. That item is NOT protected under the title policy. There are no exclusions to the title policy.

That item is NOT protected under the title policy.

Which of the following is TRUE if the buyer finds problems during an inspection? The buyer can send an amendment to ask the seller for the repairs. The seller must make the repairs for the buyer. The buyer and their agent should make the repairs themselves. The contract would be terminated automatically if the seller disagrees to the repairs.

The buyer can send an amendment to ask the seller for the repairs.

A buyer is making an offer on a property, which she plans to use as a single-family residence. But when the title commitment comes back, she and her agent learn that the property is zoned for commercial use only. Fortunately, though, the buyer is able to get out of the contract and get her earnest money back. Why? The buyer's agent had listed "single-family residence" in Paragraph 6D as a valid objection. The agent had used the T-47 Residential Real Property Affidavit. The agent had used the Third Party Financing Addendum. The agent wrote an amendment once the problem was discovered.

The buyer's agent had listed "single-family residence" in Paragraph 6D as a valid objection.

A buyer with concerns about endangered species on the property will complete the Environmental Assessment, Threatened or Endangered Species, & Wetlands Addendum. How long does the buyer have to investigate the issue? until the stated closing date 10 days five days The number of days is agreed upon by the buyer and seller.

The number of days is agreed upon by the buyer and seller.

Under the Addendum for Release of Liability on an Assumed Loan and/or Restoration of Seller's VA Entitlement, what happens if the parties cannot obtain the release by the closing date? The parties agree they will close anyway. The parties either agree to close anyway OR agree to terminate the contract, refunding earnest money to the buyer. The contract terminates and the earnest money is refunded to the buyer. The parties split the earnest money.

The parties either agree to close anyway OR agree to terminate the contract, refunding earnest money to the buyer.

What is TRUE about presenting offers?

The seller has no duty to respond to the offers in any particular order. The seller has no legal duty to respond to any offer. Because of the statute of frauds, all real estate offers in Texas must be in writing. The listing agent's fiduciary duty is to their seller. The NAR Code of Ethics requires an agent to submit all offers to the seller until the first offer has been accepted.

Which of the following is TRUE of VA loans? The veteran is held liable if the person who assumed the loan after purchase defaults on it. A veteran will receive an automatic release of liability after the property is sold. A veteran can use the VA program again only when the original loan is paid off. VA loans are available to everyone.

The veteran is held liable if the person who assumed the loan after purchase defaults on it.

In which of these situations is the seller required to provide a seller's disclosure? Kate, a trustee, is selling a home in bankruptcy. Sarah is selling her home to her daughter. Candi is selling a home in a foreclosure sale. Tierra is selling an investment property, which she has never lived in.

Tierra is selling an investment property, which she has never lived in. *Investors still have to provide seller's disclosures. The rest do not.

Which of the following is TRUE of condo ownership and townhouse ownership? Both condo owners and townhouse owners own the building and the land it sits on. Both condo owners and townhouse owners own the building but not the land it sits on. Condo owners own the building and the land it sits on, while townhouse owners only own the building Townhouse owners own the building and the land it sits on, while condo owners only own the building.

Townhouse owners own the building and the land it sits on, while condo owners only own the building.

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? Those items would automatically convey and don't need to be listed. Yes, the items should be added to the Non-Realty Items Addendum. Yes, in Special Provisions. No, just a verbal agreement.

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 can go ahead and counter the 2nd offer and then decide what to do with the 1st offer. No, they are too close to quit now. Yes, the seller should withdraw their last counteroffer to the first buyer before countering another. No, the first buyer now believes they have the house.

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

The Seller Financing Addendum may require the buyer to furnish certain items to the seller to establish the buyer's creditworthiness. Those items include all of the following EXCEPT: credit report verification of deposit a history of medical records verification of employment

a history of medical records

Of the following properties, which would the Farm and Ranch Contract be used for? a home surrounded by a large field an empty lot with no improvements an empty lot in a city a ranch with animal pens, but no house

a ranch with animal pens, but no house

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 from their lender: a release of liability Assumption Certification non-liability affidavit copy of the buyer's approval

a release of liability

An agent needed to add some information to a TREC-promulgated contract form. What other promulgated form should she look for on the TREC website to add to the initial contract? disclosure addendum amendment notice

addendum *Addenda are materials added and included in the initial contract. An amendment changes or makes modifications to an agreed-upon contract.

By whom should the language "time of the essence" be added? the buyer the license holder the seller an attorney

an attorney

A contract that is "pending" is: bilateral executed executory extended

executory

While calculating escrow, the lender will estimate the amount that the borrower will owe over the next: 2 years 30 days 12 months 6 months

12 months

Marissa's twin sister, Mariposa, is also buying a home. However, she fails to obtain buyer approval from her lender. What happens next? Marissa loses her right to perform an inspection on the property. If Mariposa fails to notify the seller within the termination time period (established by the date in the Third Party Financing Addendum), she forfeits her right to earnest money. As long as Mariposa still gets property approval, she will be able to still buy the house. As long as Mariposa notifies the seller within three days of closing, she can get her earnest money back.

If Mariposa fails to notify the seller within the termination time period (established by the date in the Third Party Financing Addendum), she forfeits her right to earnest money.

Who appoints which members of the Broker-Lawyer Committee?

Six licensed real estate brokers are appointed by TREC. Six lawyers are appointed by the president of the State Bar of Texas . One public member is appointed by the Governor.

In Texas, what are the two entities that promulgate contracts? FDIC and NAR FHA and TREC Fannie Mae and REMICs TREC and TAR

TREC and TAR

What are the risks for the agent and/or their broker if they do not give the required title notice? The broker could never sue for commission. The agent and their broker could be penalized by the Real Estate Commission. The agent and their broker are in violation of the License Act. All choices are correct.

All choices are correct.

Which of these forms satisfies the written property disclosure requirement? seller's disclosure forms provided by brokerages and associations that contain all of the disclosures required by law TREC's Seller's Disclosure Notice All choices are correct. TAR's Seller's Disclosure Notice

All choices are correct.

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. Sue for both specific and other damages. Sue for specific damages. Sue for other damages.

Do nothing more, as the contract is terminated.

The statute of ?? generally requires certain types of contracts to be set out in writing and written contracts to be signed by all the parties bound by the contract. The statute of ?? establishes a time limit for civil suits. All claims must be filed before the deadline. For example, in Texas, claims on a misdemeanor bad check (for an amount less than $1,500) must be made within two years.

The statute of frauds generally requires certain types of contracts to be set out in writing and written contracts to be signed by all the parties bound by the contract. The statute of limitations establishes a time limit for civil suits. All claims must be filed before the deadline. For example, in Texas, claims on a misdemeanor bad check (for an amount less than $1,500) must be made within two years.

The difference between an executory contract and an executed contract is that the executed contract is: pending closed dead in default

closed

The essential elements of a valid contract include mutual, written agreement; competent parties; lawful objective; and: earnest money trust money consideration verbal agreement

consideration

Which of the below is the BEST example of identifying a single purchaser? Nancy Everett, a single person Everett Nancy Everett Nancy Everett, MD

Nancy Everett, a single person

A buyer furnishes their credit report to the seller and the seller determines that it's not acceptable. The seller doesn't want to do seller financing for this buyer. What can the seller do? The seller is under contract and cannot do anything. terminate the contract and keep the earnest money talk with the buyer to determine their attitude about this loan terminate the contract and refund the earnest money to the buyer

terminate the contract and refund the earnest money to the buyer

Which TREC-promulgated contract form allows for the sales price to be adjusted because of the survey? the One to Four Family Residential Contract the Farm and Ranch Contract the Unimproved Property Contract the New Home Contract (Completed Construction)

the Farm and Ranch Contract

If a seller wants to restore their entitlement, the VA is not obligated to approve restoration, the seller must pay for fees associated with release and/or restoration, and: the buyer must be active military personnel the buyer must be an eligible veteran/qualified buyer the seller is ineligible if they have missed more than two consecutive loan payments the buyer must agree to a higher sales price to offset the entitlement

the buyer must be an eligible veteran/qualified buyer

Where does "time is of the essence" appear in the TREC promulgated sales contract? the legal description section the closing and possession section the purchase price section the earnest money and option section

the earnest money and option section

Obligations often times must be completed within a certain number of days of: the closing date the effective date the possession date none of these

the effective date

If the seller furnishes the existing survey to the buyer, but it is not acceptable to the buyer's lender, the cost of a new survey will be at whose expense? the lender the buyer the seller the party chosen through negotiation

the party chosen through negotiation

Paragraph 3, regarding sales price in the TREC contract forms, is: the same in five of the six contracts different in every contract only different in the Unimproved Property Contract different in both New Home Contracts

the same in five of the six contracts

When is the Buyer's Temporary Residential Lease terminated? 7 business days after the closing and funding of the sale 90 days after the closing and funding of the sale upon the closing and funding of the sale 7 business days after signing the lease agreement

upon the closing and funding of the sale