Promulgated Contract

Which TREC-promulgated form allows for the sales price to be adjusted because of the survey?

Farm and ranch contract The Farm and Ranch Contract is the only TREC-promulgated contract that allows for the sales price to be adjusted because of the survey.

A married couple is buying a property. Which is the BEST way to write their names in the contract?

Georgianna Serif and spouse Bryan Serif

According to the Addendum for "Back-Up" Contract, what happens if the first contract does not terminate by its deadline date?

The back-up contract will terminate, and the earnest money will be refunded to the buyer.

TRELA empowers TREC to require license holders to use certain contract forms. Which of these would NOT meet TREC's requirements?

a contract created by a license holder's sponsoring broker Brokers cannot create contracts. Only lawyers, sellers, and the Broker-Lawyer Committee (the people who create TREC's promulgated contracts) may do so.

Anthony changed the use of his land from farm land to residential before he sold it. According to TREC rules, who is responsible for any rollback taxes he might owe?

anthony Whoever changes the use of the property is responsible for paying the rollback taxes.

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 An offer becomes a contract when all parties have agreed to all terms of the offer, have signed the offer, and have initialed any changes that took place during negotiations.

What is special about the earnest option money section in the TREC promulgated sales contract?

it contain "time is of the essence" language

Agent Sarah knows her client wants to make the sales contract contingent on appraisal, so she adds a notation to that effect in the Special Provisions section of the contract. Why is that wrong?

it could be considered unauthorized practice of law The Special Provisions section can only be used to add factual statements or business details as desired by the principals to conform to the negotiations. It's a violation to include anything in the Special Provisions section that alters the parties' legal rights, because that could be considered the unauthorized practice of law.

What information does the Disclosure of Relationship with Residential Service Company form convey?

it is a violation of RESPA for a license holder to receive The Disclosure of Relationship with Residential Service Company form states that it is a violation of RESPA for a license holder to receive a referral fee for simply passing on a name to a service provider.

According to the Addendum for Property Subject to Mandatory Membership in an Owner's Association, how long does a buyer have to terminate the contract after receiving the Subdivision Information?

3 days

Agent Kara put in MLS that she would compensate a buyer's broker 3% if they sold her listing. When Will, the buyer's agent, prepared the sales contract, he listed 3.5% as the agreement between brokers. How much is Will entitled to? Is he within his rights?

3% and Will is guilty of a violation of MLS rules

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?

3rd party financing A buyer can decide to terminate by way of language in the Third Party Financing Addendum if financing is not approved within the proper time frame.

In Texas, what is the statute of limitations concerning fraud?

4 years

A back-up buyer's contract is executed on September 28 with a four-day option period. On October 4, the seller informed the back-up buyer that the first contract was terminated. When does the back-up buyer's option period end?

October 8, 5 p.m.

Which element of the TREC-promulgated contracts is the same across all contract forms?

Paragraph 1 identifies the parties to the contract

Title policy can be amended, at additional cost, to include coverage for "shortages in area" by checking box 6A(8) of the One to Four contract. What does this mean?

The buyer is now covered for discrepancies, conflicts in boundary lines, and any encroachments, protrusions, or overlapping of improvements.

What is one way that a homebuyer can locate any physical faults that may affect the safety or value of a home before purchasing it?

a home inspection

When a contract has been fully executed, it becomes:

closed An executed contract is a pre-existing contract in which all material terms have been fulfilled by all parties. It is, therefore, closed and fully performed. There are many kinds of contracts, but all contracts become executed contracts once all parties have completed their contractual obligations.

In which type of property does the buyer purchase rights to the unit and an undivided interest in the common areas?

condo When a buyer purchases a condominium, they are purchasing rights to the unit and an undivided interest in the common areas.

Which of these is a technique license holders can employ to avoid mortgage fraud?

disclose everything to the lender Documentation, disclosure, and double-checking documents for accuracy are all good risk management techniques.

Which of these must be delivered to the escrow agent within three days of a contract's effective date?

earnest money Earnest money must be delivered to the escrow within three days of a contract's effective date.

If a property is occupied solely by people over the age of 62 and qualifies as senior housing, it is exempt from:

fair housing act No, the Fair Credit Reporting Act is legislation that promotes accuracy, fairness, and privacy of consumer information in the files of consumer reporting agencies. The Fair Housing Act prevents housing discrimination against members of protected classes. In some circumstances, the Fair Housing Act exempts owner-occupied buildings with no more than four units, single-family housing sold or rented without the use of a broker, senior living communities that discriminate based on age or familial status, and housing operated by organizations and private clubs that limit occupancy to members.

A contract contains these elements: An attached hunting lease The provision that the sales price may be adjusted due to the survey A place for Exception Documents and Surface Leases to be listed What contract is this?

farm and ranch

According to TRELA, which of these does one NOT need to be a licensed attorney to do?

fill out a trec- promulgated form

What does Paragraph 7 (Property Condition) of the One to Four Family Residential Contract grant every buyer the right to do?

have the property inspected Paragraph 7A of the One to Four gives the buyer and the buyer's agent access to the property for any inspections as long as they are at a reasonable time.

What form must be provided to any unrepresented buyer or seller that a license holder talks to?

information about brokerage services form

The date in the Third Party Financing Addendum provides a deadline to buyers for:

informing the seller they didn't get the financing approved The date in the Third Party Financing Addendum provides a deadline to buyers for informing a seller they didn't get their financing approved. If the buyer fails to notify the seller within that termination time period that they did not receive buyer approval, the buyer forfeits their right to the earnest money.

Which of the following is TRUE regarding a contract to transfer real estate that contains no requirement of earnest money?

it is valid Earnest money is not a requirement for a valid contract. Yes, consideration is one of the five essential elements of a valid contract, but earnest money given at the beginning of a transaction is not the consideration. The promise of the entire sum is the consideration. Earnest money simply shows how sincere the buyer is about purchasing the property. A contract with no earnest money requirement is still valid (assuming everything else looks good).

Which of these must the broker maintain a copy of for three years following a sale?`

lead-based paint addendum The broker must maintain a copy of the signed Lead-Based Paint Addendum for at least THREE years following the sale. This differs from another major record-keeping requirement: A broker in Texas must maintain disclosure notices, listing agreements, buyer rep agreements, contracts, addenda, receipts and disbursements, CMAs, BPOS, appraisals, and sponsorship agreements, for at least FOUR years.

Buyer Javier sends a formal offer to Seller Joy: $250,000 and the appliances stay. Joy counters: $250,000, no appliances. She then reconsiders and accepts the first offer. Is Javier obligated to buy the home? Why or why not?

no because the first offer was terminated when Joy countered. Once an offer is countered, it is considered rejected and is terminated.

A buyer needs more option period time. They have asked the seller, who agreed, and signed TREC's Amendment to Contract. What else must they do to make the extension official?

pay an additional option fee The buyer can get more option time by paying an additional option fee and signing a mutual amendment agreeing to the additional option time.

What are brokers required to do regarding Consumer Protection Notice TREC No. CN 1-2?

post in each office The Consumer Protection Notice TREC No. CN 1-2 needs to be posted in each real estate office to inform consumers about filing a complaint, the real estate recovery funds held by TREC, and how the consumer can contact TREC.

Which MUST be disclosed to potential buyers?

prior floor damage that was repaired by the owner

What is the difference between contracts that TREC has promulgated and those that TREC has approved?

promulgated contracts are required and approved are optional

Brokers' fees are NOT included in the:

sales contract No, agreements to pay the broker can be found in listing agreements, buyer representation agreements, and through the MLS system. The correct answer is that brokers' fees are not included in the sales contract. The last page of most sales contracts simply confirms what the agreement between brokers is.

Alex is a licensed sales agent. Her client is selling her single-family home. In order not to violate TRELA contract law and run afoul of TREC, how should she create the contract?

she should use one to four residential contract License holders may only use promulgated contracts, contracts created by lawyers licensed in Texas, or contracts created by property owners. A broker license does not give brokers permission to create real estate contracts.

A buyer who discovers a defect that they believe was misrepresented has a certain time after discovery to make a claim for damages. This is known as the:

statute of limitations

If clients want to make an offer to the seller offering a "lease with option to buy," the buyer's agent should:

tell the client that they will need an attorney to draw up documents You should NOT use the TREC forms or other such standard forms to create lease-purchase, lease-option contracts, or contracts for deed. Neither TREC nor any real estate trade association in Texas drafts standard forms for writing executory contracts such as these. Instead, parties that want to have one of these types of executory contracts (that is, a lease with option to buy) will need to get in touch with an attorney to get advice and help them prepare the contract forms. The best advice the real estate agent can give the parties is not to enter into executory contracts without seeking the assistance of an attorney.

Who is tasked with drafting and editing Texas's promulgated contracts?

the broker-lawyer committee The Broker-Lawyer Committee creates promulgated contracts for Texas license holders.

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 contract and get their earnest money back. According to the Environmental Assessment, Threatened or Endangered Species, & Wetlands Addendum, the buyer can terminate the contract and get their earnest money back 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).

Who is required to sign the Buyer's Notice of Termination of Contract?

the buyer only The Notice of Buyer's Termination of Contract needs to be signed only by the buyer. That's because the buyer has been given termination rights in the contract, so it's not necessary to get the seller's approval. The buyer is simply giving notice to the seller.

Before the Lead-Based Paint Addendum can be considered complete, which of these must happen?

the buyer, the seller and both brokers must sign The seller is required to disclose any knowledge of lead-based paint used in the home and provide any available reports. Unless an owner has conducted tests meant to detect lead-based paint, it is likely they will have no knowledge of its existence. However, inspections and removal are not required by the sellers, just disclosure. The correct answer is that the buyer, seller, and both brokers must sign the Lead-Based Paint Addendum.

Which of these is NOT true about a Seller's Temporary Residential Lease?

the buyer/landlord has no recourse if the seller/tenant overstays There is an agreed-upon charge for overstaying a Seller's Temporary Residential Lease.

Which of these is NOT necessary for a contract to be binding and effective?

the contract must be hand delivered to title company For an offer to become a contract, it must be signed by all parties, changes to the contract must be initialed, and acceptance of the contract must be communicated to the other party. There is no hand delivery requirement.

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 earnest money will be refunded to the buyer Paragraph D of the Short Sale Addendum contains a date by which the seller must get approval from their lender for the sale. If they do not get approval from the lender by that date, the contract will terminate and the earnest money will be refunded to the buyer.

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 The effective date is the date when everything is in writing, the parties have totally accepted all of the terms, the contract is signed and all changes are initialed, and the written acceptance of the final agreement has been communicated, by some method, to the other party or their agent.

When seller financing is being used, the seller becomes:

the lender Seller financing means that the seller becomes the lender.

According to the Short Sale Addendum, the effective date of the contract is amended to the date the Seller notifies the Buyer that the:

the lender has approved the short sale The contract's effective date is the day the lender has approved the short sale.

After agreement by both parties, one of their agents filled in the blanks in Paragraph 9 of the One to Four Family (Resale) contract so that it read: "The closing of the sale will be on or before May 7, 2023." What does this mean?

the parties can close on or before may7th but not after In Paragraph 9, the parties agree on what will happen at closing. One element is that they agree to an "on or before" closing date. This just means that they can close before this date but not after. If they need more time, the agents will need to help them complete and execute an Amendment of Contract.

A murder took place on a property. The crime was featured on a podcast, which made the property notorious. Should the seller disclose this crime?

the seller is required to disclose this crime Anything that has made the property notorious (such as a well-publicized murder or scandal) must be disclosed.

The T-47 Residential Real Property Affidavit is only required when:

the seller provides existing survey The T-47 Residential Real Property Affidavit is only required when the seller is providing an EXISTING survey during the real estate transaction. This is the Paragraph 6C(1) option listed in the One to Four. Paragraphs 6C(2) and 6C(3) in the One to Four Family Residential Contract are both used when obtaining a NEW survey. (The only difference between these options is that in C(2), the survey is done at the buyer's expense, and in C(3), it is at the seller's expense.)

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

What is the name of the law that requires certain contracts (for example, sales contracts) to be written down and signed?

the statue of frauds The statute of frauds requires that certain contracts be written down and signed.

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

What does the Residential Condominium Contract require in the legal description of the property?

the unit number The Residential Condominium Contract requires the inclusion of a unit number in the legal description of the property.

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 The Addendum for Property Subject to Mandatory Membership in an Owner's Association notifies the buyer of the HOA and gives them three days to terminate the contract.

In Paragraph 6C of the One to Four contract, the parties negotiate the number of days the seller has to give the buyer an existing survey and the T-47 form. However, if the seller fails to furnish the existing survey or T-47 within that agreed-upon number of days, the buyer will obtain a new survey at the seller's expense. This occurs no later than how many days prior to closing?

three In Paragraph 6C of the One to Four contract, the parties negotiate the number of days the seller has to give the buyer an existing survey and the T-47 form. However, if the seller fails to furnish the existing survey or T-47 within that agreed-upon number of days, the buyer will obtain a new survey, at the seller's expense, no later than THREE days prior to closing.

What contract language phrase is used to convey that a time period is inflexible?

time is of the essence Time is of the essence" is a phrase that is used in contracts to convey that the time period is not flexible. It should only be added by a lawyer, and appears in the option money section of the purchase contract.

A contract which courts cannot compel the parties to perform is:

unenforceable

In Paragraph 10 of the sales contract, the parties check a box saying that possession of the property will be transferred:

upon closing and funding or according to the temporary residential lease agreement In Paragraph 10 of the sales contract, the parties will check a box saying that possession of the property will be transferred either upon closing and funding OR according to a temporary residential lease agreement.