Texas Promulgated Contract Forms

Which of the following is a real estate agent not allowed to do?

An agent acting properly should always include all names including nick names and fictitious names as well as full names for the parties of a contract.

What is it called when a buyer puts together the paperwork necessary to buy a house from a seller and that paperwork is presented to the seller?

An offer

Who is a "third party" to a contract?

Anyone listed on the contract that is not the buyer or seller

What is it called when a person listens to both sides of the situation and makes a decision. His or her decision is binding and court action cannot be pursued.

Arbitration

When should a licensee communicate the agreement of a buyer to buy and a seller to sell?

As soon as possible

Which of the following items would need to be disclosed by a seller prior to selling his or her property?

Asbestos Lead-based paint Mold

A competent party is one that is:

At least 18 years of age Mentally competent Cannot be temporary incompetent

When does a purchase agreement become binding if both parties have signed and both parties have been notified?

At that time

If the sale price is $278,000 and the cash portion is $65,000, what is the financing amount?

$213,000

Suppose a buyer was willing to offer a seller $285,000 on a property with a first lien of $200,000 and a second lien of $60,000, with $25,000 as a down payment. What would the licensee put in paragraph 3.B of the TREC One to Four Family Residential Contract (Resale)?

$260,000

When a seller carries a loan for a buyer, matured unpaid amounts will bear interest at the rate of ________ or at the highest lawful rate, whichever is lower according to the Texas Real Estate Commission promulgated Seller Financing addendum.

1.5% per month

What is the legal age in Texas to enter into a valid, binding contract?

18

A lead-based paint notification is required on all properties built prior to what year?

1978

Which FHA loan is typically the lowest down payment loan for a buyer?

203 (b)

Which one of the following is a TREC rule on filling in Paragraph 3 of the Texas Real Estate Commission One to Four Family Residential Contract (Resale)?

3.A. + 3.B. = 3.C.

For sellers who are carrying notes for buyers, Texas Real Estate Commission promulgated Seller Financing addendum requires a late payment fee of _________ for any payment made more than 10 days late.

5%

The Broker-Lawyer Committee is made up of

6 lawyers, 6 brokers, and one member of the public.

Buyer Dan wants to use the property to operate a home business. Where would he note this intent on the Texas Real Estate Commission One to Four Family Residential Contract (Resale)?

6D Objections

What is a legal agreement between parties to do (performance) or not to do (forbearance) a certain act for consideration?

A contract

The TREC One to Four Family Residential Contract (Resale) should be used in which of the following transactions?

A duplex

Which of the following is an exemption to a real estate agent using Texas Real Estate Commission promulgated forms?

A form directed to be used by a new home builder. A form directed to be used by a land developer. Commercial real estate forms.

Which of the following is true?

A real estate licensee may give advice to their clients

Which of the following is true?

A seller that has agreed to pay for both the owner's and buyer's title policy can require a buyer to use a specific title company.

Which of the following situations is NOT an exception to the use of promulgated forms?

A standard purchase agreement bought from a business supply store

What is the difference between a title policy and a title commitment?

A title commitment is issued prior to closing to describe the items on the title policy which will be issued after closing.

If a claim is made against the title as covered by the title policy. The issuing title company and or the Underwriter that issued the title policy on behalf of the title company protects the buyers by:

Bearing the cost of settling the claim if it proves valid, in order to perfect the title and keep the buyers in possession of their property.

Why might a buyer want to assume a note and not originate a new loan?

Both 1 and 2

How is the interest rate in the Third Party Financing addendum determined?

By negotiation between the buyer and lender

What is the least appropriate way to communicate the agreement of a buyer and seller?

By postal mail

When a change needs to be made to the TREC ONE TO FOUR FAMILY RESIDENTIAL CONTRACT (RESALE) TREC 20-14, what is the best way to handle it?

Changes should be made using the "Amendment to Contract" addendum.

What are liquidated damages?

Damages that are agreed to in advance.

How should the loan amount on the Texas Real Estate Commission contract One to Four Family Residential Contract (Resale) be entered into paragraph 3?

Dollar amount

When should the Third Party Financing Addendum be used?

If the buyer is applying for a loan with conventional, FHA, VA or other forms of financing?

How many days is the buyer allowed to get financial information to the seller in the Seller Financing Addendum?

It is dependent upon paragraph A of the Seller Financing Addendum

When should the Seller Financing Addendum be used?

It is used when the seller carries a note for a buyer for all or any portion of the sales price.

Using a TREC promulgated purchase agreement, who is required to pay for the title insurance?

It's negotiable

Who does the mortgagee's title policy protect?

Lender

What type of contract dispute results in going to court and usually involves attorneys and research?

Litigation

What damages could a seller possibly claim if the buyer is in breach of contract?

Loss of marketing time Any fees actually paid Mental duress

Which of the following would be an example of "good consideration"?

Love of a friend

What is an error in the meaning of words, laws, or facts which causes one or both parties to enter into the contract without fully understanding the outcomes or responsibilities implied by the contract?

Mistake

What is defined as a landmark that is used for a point of reference?

Monument

How many amendments are allowed on a valid contract?

Multiple

What is defined as agreement to all the terms by all the parties of the contract?

Mutual assent

According to the TREC promulgated ONE TO FOUR FAMILY RESIDENTIAL CONTRACT (RESALE), who is required to pay for lender-required repairs?

Neither party

Which of these forms is a Texas Real Estate Commission (TREC) promulgated form?

New Home Contract (Completed Construction)

What is the maximum amount of commission allowed by law?

No limit

If both the buyer and seller agree to have the real estate professional write a contract for their specific situation and will put this request in writing, can the agent then write the contract for the customers?

Not under any circumstances

Which of the following statements is FALSE regarding reformation?

One of the parties assigned his duties under the contract to a third party.

Where on the Texas Real Estate Commission One to Four Family Residential Contract (Resale) does the address get entered?

Paragraph 2

What rule in contract cases prevents a party to a written contract from presenting oral evidence that contradicts or adds to the written terms of the contract that appears to be whole?

Parol Evidence Rule

What is point designated in the description as an initial point for beginning a land description?

Place of Beginning

What is it called when two or more real estate brokers work together to conspire to charge the same commission?

Price Fixing

Which of the following groups does the Texas Real Estate Commission govern?

Real estate licensees

The seller must allow the buyer the right to have the property inspected during which times?

Reasonable times

What is another term for "rewritten"?

Reformation

What is another term for "cancellation"?

Rescission

According to the TREC promulgated ONE TO FOUR FAMILY RESIDENTIAL CONTRACT (RESALE), who is responsible for having the utilities turned on?

Seller

When a seller is contemplating a loan assumption, the seller must respond to the buyer within how many days or it is assumed that the seller has given approval according to the Texas Real Estate Commission promulgated Loan Assumption addendum?

Seven days

What law requires all contracts for real property to be in writing to be enforceable?

Statute of Frauds

What law requires any amendment or addenda used must be in writing and signed by both parties to be enforceable?

Statute of Frauds

Who are professionals that can determine the integrity of a building?

Structural Engineers

What is a professional analysis of a property and its location relative to other property?

Survey

What repairs might be noted on the Texas Real Estate Commission Amendment to Contract?

Swimming pool has missing tiles that are to be replaced. The sink in the main bathroom is cracked and is to be replaced. Fix leaky pipe in the laundry room.

What is a disclosure statement by the seller that states no changes have been made on the property that could affect the survey?

T-47 Affidavit

What law prohibits price fixing?

The Sherman Anti-Trust Act?

What entity promulgates real estate contracts for use by licensees?

The Texas Real Estate Commission

Which of the following statements is true regarding offers?

The buyer may withdraw his offer any time prior to acceptance by the seller.

What is an 80 - 10 - 10 loan program?

The buyer will borrow 80%, put 10% down and get a second lien for 10%.

With the Loan Assumption addendum, what happens if the seller does not respond to the buyer's creditworthiness after seven days?

The contract is valid.

How difficult was the real estate license to acquire prior to the 1930's?

There was no test.

Which addendum spells out the details of the loan and will be included on almost all contracts?

Third Party Financing Addendum

The termination option period can be used in which of the following ways?

To give a buyer time to fly an out-of-town spouse in to make a final decision. To give time for a seller to conduct repairs To give an investor a look at several houses at once without having to buy any.

What is the fee that is charged every time a property changes hands?

Transfer fee

Which of the following is the correct definition of the "Four Corners Doctrine"?

The interpretation of any disputed clause in a contract will be influenced by the document as a whole.

When one party may be in default but because of the nature of the agreement, the damaged party would not have the ability to sue the other party in court, this is what type of contract?

Unenforceable

In the Texas Real Estate Commission One to Four Family Residential Contract (Resale), where would you find down payment for the property identified?

paragraph 3.A

The Texas Real Estate License Act was formerly known as

the Real Estate Dealer's License Act.

A title search will not discover

the sellers motivation to sell.

When an offer is presented to a seller to purchase, the seller has all which of the following potential responses?

Accept it Fail to act on it Alter it

What does "ad valorem" mean?

According to value

All of the following are necessary to create a valid contract except which one?

Earnest money

Which of the following is not an example of good consideration for the sale of a house?

Earnest money

When all promises in a contract have been met, that contract is called what?

Executed

What is a contract called which defers material action by either party into the future?

Executory

For which of the following reasons could a contract need to be changed?

For repairs For financing For termination of the option

How long is the Statute of Limitations for a written contract in Texas?

Four years

How long is the Statute of Limitations for an oral contract in Texas?

Four years

Which of the following is a real estate agent allowed to do?

Give advice as to the pricing of an owner's property

What does the term "good and marketable" mean?

The property can be sold but may have encumbrances but those will not hinder the property from being sold.

What might be a reason for the necessity to change the closing date of a contract?

The repairs will take longer than anticipated. The seller needs more time to find another home. The buyer cannot get out of his or her lease.

What is duress?

Use of force

How should a licensee fill out a TREC One to Four Family Residential Contract (Resale) if the seller is willing to finance the transaction for the buyer?

Use paragraph 3.B and check the appropriate box for Seller Financing Addendum.

When a written agreement is legal and every item is completely agreed to, it is said to be which of the following?

Valid

When an essential element is missing in an agreement and the courts would not hold it as a contract, then the agreement would be:

Void

When one party could change their mind and exit a contract, it is said to be:

Voidable

Addendum for Release of Liability on Assumed Loan and/or Restoration of Seller's VA Entitlement is used for what type of situation?

When a seller wants to be released from further liability on the VA assumed loan and wants their VA entitlement restored.

The Texas Real Estate Commission regulates a licensee in which of the following situations?

When the licensee is selling a house for a client

Can a real estate agent use a contract drafted by a builder/owner of new homes?

Yes, it is an exception.

Should addendums be attached to the main contract?

Yes, under after being noted in Paragraph 22 of the One to Four Family Residential Contract (Resale).