REE Ch. 14 - Contract Preparation

What is the maximum reimbursement to be paid from the Lawyer's Fund for Client Protection for each client loss?

$300,000

In New York, an earnest money deposit can equal up to ________

10% of the property purchase price.

Lead-based paint is most likely found in homes built prior to

1978.

In what year did the New York legislature created the Lawyers' Fund for Client Protection to protect consumers from dishonest law practices?

1982

After a legal client discovers a loss resulting from an attorney's dishonest conduct, how long does the client have to file a claim for reimbursement from the Lawyer's Fund for Client Protection?

2 years

Agency disclosure forms were first required for 1-4 residential units as of

2008.

Agency disclosure forms were first required for cooperatives in

2011.

The buyer typically has ______ from the date the purchase contract is signed to obtain a loan commitment.

60 days

All new construction requires

A certificate of occupancy

What is a Certificate of Occupancy?

A certificate that the property is in proper condition to be occupied

Attorney Review Clause

A condition in the contract that says that the contract is subject to the approval of each of the client's attorneys.

What is an attorney review clause?

A condition in the contract that says that the contract is subject to the approval of each of the client's attorneys.

A document that makes changes to a contract and is included with the contract is called what?

A rider

If an attorney makes changes to an offer, what action should follow?

All parties to the contact must initial the changes.

Down Payments

Amount of money the buyer pays from cash on hand that is not part of the mortgage loan.

A broker may protect him or herself from appearing to practice law without a license by including what in a contract?

An attorney review clause

When does a buyer usually pay the down payment?

At the sales contract signing

How is the Lawyer's Fund financed?

Attorney registration fees

Broker Norm prints and completes lease agreements to which he is not a party. What can be said about Norm's actions?

Brokers may not complete leases to which they are not a party.

What is the purpose of the Lawyers' Fund?

Designed for law clients who are unable to get reimbursement from their lawyer who has caused them loss

The seller's attorney typically prepares the sales contract in what part of New York State?

Downstate

What is a lead-based paint disclosure used for?

Homes built prior to 1978

What does the mortgage contingency clause say will happen if the buyers cannot get financing?

If the buyers have cooperated with the lender and do not get financing, they can terminate the contract and get a refund of their earnest money deposit.

Under what circumstances would the parties need to sign a lead-based paint disclosure?

If the property being transferred was built prior to 1978.

Where must down payments be held?

In a separate escrow account

If the buyer defaults on the sales contract, what usually happens to the down payment already paid?

It becomes liquidated damages to cover the default.

Giving Legal Advice

It is against the law for a non-attorney to give legal advice

Why was the Lawyers' Fund for Client Protection created and what does it do?

It was created to protect consumers from dishonest law practices. The Fund may reimburse losses caused by the dishonest conduct of lawyers up to a maximum of $300,000 for each client loss.

Where can an agent obtain preprinted forms?

Preprinted forms can be obtained from the local Real Estate Board, MLS or bar association.

List the documents that an agent can gather that will help the settlement officer prepare the closing documents.

Prior deed Prior title insurance policy Survey Certificate of occupancy Personal data Tax bills

Landlord Lenny has asked Agent Al to complete leases for all rentals that Lenny owns. What should Al do?

Refuse to complete the leases.

Who typically prepares the sales contracts in downstate New York?

Seller's attorney

Who typically holds the down payment?

The broker

In downstate New York, who customarily holds the down payment?

The seller's attorney

What is the customary amount of an earnest money deposit?

Up to 10 percent of the purchase price.

In what area of New York are sit-down contract signings most common?

Upstate New York

Who Signs First?

Usually, the buyer signs the contract first.

Customary Down Payment

Whenever a buyer signs a binder or a sales contract, he usually puts down a deposit to demonstrate seriousness about the transaction..

In New York, the practice of law by a non-attorney is

a misdemeanor.

In upstate New York, the buyer's agent or broker fills in

a preprinted binder or sales contract.

mortgage contingency clause

allows the buyers to terminate the purchase contract and get a refund of their deposit if they cannot obtain adequate financing.

binder

also known as a receipt, a purchase offer or an agreement.

The down payment can be held by

an attorney or broker. The money must be deposited into a separate escrow account that is used ONLY for the purpose of holding money belonging to others

Brokers may prepare preprinted contracts without being guilty of practicing law, but they should be sure that all contracts include

an attorney review clause.

In downstate New York, the buyer's agent or broker typically fills out a

binder that outlines the fundamental terms of the agreement.

Street address

is the most common property description.

An agent should never

prepare a custom rider.

Lawyers' Fund for Client Protection

protects consumers from dishonest law practices.

brokers may complete

sales contracts, listing agreements, and agency relationship agreements

Brokers may not complete real estate contracts unless

the broker is a party to the contract

As a rule, a broker or agent who completes real estate contracts is engaging in

the unauthorized practice of law unless the broker is a party to the agreement.