Promulgated Froms
Seller Financing Addendum
Seller has to be debt free
Counter Offer: Acceptance:
When a party changes an offer in some way and communicates the change to the other party 2 Steps: 1) Rejection of original offer 2) New Offer must include full acceptance of entire offer without change, any change would be counter offer
Approval of Financing: 1) 2) Lenders have ____ days to tell approval of financing
1) Buyer 2) From Property You are trying to buy 20
Loan origination charges cannot exceed _____%of the loan****
3%
Lender requires repairs, Buyer may terminate contract if lender repairs exceed_____ will receive _____________ back
5% Earnest$
What is 5% of $300,000?? *****
5% x 300,000= $15,000 1% of 300,00= 3,000 x 5= $15,00 (in your head)
Which of the following correctly defines a counteroffer?
A rejection of the original offer coupled with a new offer.
3. A- B- C-
A- The down payment (Diff btw sale price and financing) B- The sum of all financing (loan) C- The Sale price ( sum of 3a and 3b)
Seller's Estimate of Net Proceeds
Estimate of the net proceeds to the seller, based upon offer being considered Encouraged to fill this out at every contract, help the seller to know, what is the bottom line, seller will look at all 6 contracts and see which they like the best, no matter what time they came in
The party to whom an offer is submitted is known as the _____________.
offeree
VA loan _____% down Funding fee: $_____ % of loan amount ( Due at closing) If Disabled ( 0%) Maximum loan amount: $
Federal Government is Guaranteeing the loan 0% 2% $417,000
Two checks: one to..... for .... and one to .... for .....
One to title company ( earnest money/ down payment), and one to seller (option fee)
USDA Loan:
Rural Buyers, 0 down, highlight bottom sentence. Has to be 30 years. Income limit for USDA loans, ( Can't make more than the average house hold income in that area)
A(n)_______ gives the buyer the unrestricted right to terminate the contract within a specified period.
Option
Paragraph 7H of the One-to-Four Family Contract concerns:
Residential Service contracts
FHA Loan: for people with... FHA_____ the loan****
Bad credit can have a score as low as 540 Insures ( you will have to buy both insurance policies UFMIP (upfront mortgage insurance Premium and MIP Mortgage insurance premium)
Both parties are obligated to perform ex. a contract between a buyer and a seller, promise for a promise only one party has a promise. ex. an option
Bilateral Contract
( Two Promulgated Lease forms) 1)Buyers Temporary Residential Lease 2)Sellers Temporary Residential Lease
Buyer occupies the property for no more than 90 days prior to closing Seller occupies property no longer than 90 days after closing
Environmental Assessment, Threatened or Endangered Species Whose choice to use this Addendum?
Buyers Choice
The five essential elements that must exist for a real estate sales contract to be considered valid and enforceable are: legal purpose, competent parties, mutual consent, consideration and .
In writing
Buyers Default: Several options 1 S P 2 M D 3 L D
Specific performance (Court Action) Monetary Damages (awarded by the court) Liquidated Damages (accept earnest money)
A license holder must use TREC Form___Disclosure of A relationship with residential service company (home warranty companies) to disclose to a party to a real estate transaction in which the license holder represents one or both of the parties (If receive $ from Residential Service company (referral) what form needs to be filled out??)
TREC Form RSC-2 (Agents_ Cannot receive ref-feral $)
A contract with Competent parties 18 years and above, no alcohol influence: Contract with someone who is mentally incompetent, never had legal possibility Promise for a promise, Meeting of the minds:
Valid Void Mutual consent
Contract is executed: Executory period Closing Fully executed:
signing, communication establish the effective date 45-60 days from the effective closing date buyer putting money together, if he is borrowing money, and appraiser goes out, 1- Buyer getting money together, 2) Looking at his credit worthiness, appraiser looking at property, when all parties have performed
Consideration: Unenforceable Contract:
something given in exchange for a promise (option fee) (promise or a promise) A contract that cannot be enforced due to some flaw or other issue in the contract
In a Farm and Ranch sale, the buyer receives all of the following items except ____________. Windmills Tanks Trucks Pens
trucks
When does an offer become a binding contract?
when it is signed by all parties, acceptance communicated to offering party ( notification)
The Origination charges from lender is ....% of loan amount. Buy down or discount rate: ( some lenders charge this) is ......% (These feeds are added together and multiplied by loan amount) Ex. (closing cost) Loan fee paid at closing for a $285,000 loan= Maximum conventional loan is: $
1% 1% $285,000 x 2%= $5,700 $417,000
If a contract has been entered into with a person who has been judged to be incompetent, that contract is considered_____ because that person never had the capacity to enter into it.
Void
Paragraph 23 Requires a strict compliance with the time allowed for the option because of " ________" means that:
time is of the essence all requirements under this paragraph must be performed strictly on time
Earnest Money:
Deposit paid up front by a buyer to show seriousness of their intent to buy the property, often 1% of sale price, not a requirement of contract! 3,000 of Earnest money, pick top 5 title companies in your area to recommend to your buyer, the price is the same for all of them
Raul is Moises's father and real estate agent. What must Raul do when filling out the sales contract?
Disclose this relationship in paragraph 4
shows you are serious about a deal, but not required
Earnest Money
If buyer terminates a contract_____ Is returned ____ Isn't returned.
Earnest Money Option Money
policy of the state of Texas to encourage resolution of disputes through alternative dispute resolution Parties shall bear the __________ equally
Mediation mediation costs
Reasons for Termination
Mutual Agreement, Partial performance, substantial performance, impossibility, operation of law, breach of contract,
Five essential elements must exist for a contract to be considered valid and enforceable. They are: COLIC
Competent Parties Offer and acceptance (mutual consent) Legal Purpose In writing Consideration
VA guaranteed Financing*** Buy has option of....
IF a purchase price of the property exceeds it reasonable value, then it is established throughout, buyer has option of paying excess cash at closing (Highlight) ( VA financing)
Seller liability on an assumed loan*****
If the seller doesn't receive a release of liability on the loan, the buyer assuming the loan joins the original borrower, on the note leaving BOTH with liability. Seller would be liable if purchaser defaults
T-47 Affidavit ******
If the use of existing survey is anticipated , listing agents should have the T-47 completed when the listing is taken ( For a survey) States they are the owner of the property, any changes to property since survey
Addendum for Release of liability:
Let me get off the loan or you can't assume my loan All loans are assumable! wouldn't go beyond 5 days Takes about 60 days
Loan Assumption Addendum Benefits of:
Taking over someone loan, (loans that have an interest rate that are not available today) When a buyer assumes to pay sellers existing mortgage If you take over my loan balance of 40,000 and I take over your loan and your loan is 110 Need to assure that you can take over the loan Credit Documentation: B. Credit Approval E. Consent by note holder (lender) The buyer possibly assuming a loan at a rate that is not currently available The assumption of an existing loan is substantially less expansive than obtaining a new loan. Assumption fees are generally less than $500. The buyer pays none of the typical charges Even if the rate on the seller
The ______________ has promulgated eight exceptions to title insurance policies.
The Texas Department of Insurance
3 B on (1-4 family residential)
The sum of all financing is entered (the loan amount)
6D Objections: E- Title Notices 2) Membership in property Owners Association: 4) Tide waters
The intended use of the property Ex. Residential use/ childcare Abstract or title policy-The TRELA Act requires that license holder to advise the buyer to have abstract examined by an attorney or to obtain a tile insurance policy. ( Use an addendum), there could be liens agains the property, prior to purchasing property get an attorney get an abstract done to know ALL about the property. need to know if it is required,obligated to pay assessments, failure to pay results in a lien 4) Buyer signs the notice!! a notice regarding coastal area property,Buyer signs the notice, may lose land to wind or water,
The Seller's Disclosure Notice should be completed by:
The seller
18 Escrow The Escrow Agent is not____ Expenses: At closing the earnest money must be_______
a party to this contract, does not have liability applied first to any cash down payment, then to buyers expenses
1. Which of the following statements regarding the Addendum for Back-Up Contract is FALSE? a. An amendment to the first contract automatically constitutes a termination of the first contract b. The previous contract is known as the "First Contract" c. The intent of a back-up contract is that it is to be contingent on the failure of an existing contract to close. d. All of these statements are false
a. An amendment to the first contract automatically constitute a termination of the first contract
Prorations are generally calculated for taxes, maintenance fees and rents, if any, that the seller pays through the......
day of closing
23. Termination Option: Option: Option Period: Option fee must be paid within___ days
Gives buyer unrestricted right to terminate the contract with the option period ( for any reason or no reason at all) will receive refund of earnest money but not the option fee The time allowed for inspections that the buyer may want 3
Bertha, a law school dropout is a licensed real estate agent who wants to make sure that she is providing her buyers with the best representation possible, so she drafts an iron-clad purchase contract for them. Bertha's sponsoring broker is horrified because Bertha is guilty of ___________.
Unauthorized Practice of Law
1-4 Family Residential Contract
(Not for Condos) You take the owners name, be very careful, which names goes first in the contract, whose name goes first, does not mean they have a stronger position Need legal address: ex. Lot 1 Block 1 Section 3, name subdivision, name of count and address, In Texas Refrigerator is viewed as furniture, Improvements: House, garage, attached to property, permanently installed and built in items, ask seller if they are leaving refrigeration?? Accessories: Added to house after it was built: Blinds, window shades, door keys, above ground pool, ( You must write it in exclusions)
Sellers Disclosure: (2 forms) Purpose is to:
(Sellers Disclosure of property condition) Owner of property to disclose all known facts and defects concerning the property. Good tool to use as defense in a DTPA lawsuit
TREC's promulgated Sales Contract Forms: (6)
1) 1 to 4 family contract (resale) 2) New home contract ( incomplete construction) 3)New home contract ( completed construction) 4)Unimproved property contract 5)Residential condominium contract (resale) 6)Farm and ranch contract
Texas Veterans Loan: Requirements: (2) ____% down Maximum: $
1) Need an Address in Texas 2) Need to show DD 214/ Letter of eligibility 0 Down $417,000 (3.25 They are a half point to a whole point under the market)
What year did the Texas Legislature create TRELA? (Texas Real Estate License Act), what does it do? What year was the TREC ( Texas Real Estate Commission) established How many members?? Primary purpose?
1939-(must follow three rules) license holders must use state specified contract forms and addenda in certain transactions 1949- 9 members ( 6 brokers, 3 public members all appointed by governor, approved by state senate), protect interests of general public, rule-making authority
Conventional Loan: Minimum down? You need to get........ if you put under 20% down You pay it as long as you don't have 20% Equity
5%, PMI ( Private Mortgage Insurance) also called Gap insurance
5. Deposit: If Lease is terminated before closing date, landlord may use deposit to satisfy tenants obligations , landlord shall refund any unused portion with itemized list of all deductions from deposit within 30 days of a) b) If this lease is terminated by the closing and funding of the sale of the property the deposit will be___________ at closing
A) Surrenders possession of the property B) Provides landlord written notice of tenants forwarding address Refunded to the tenant
transfers all of the rights related to the contract to another party known as an assignee. The assignee assumes primary liability for performance under the contracts, and the assignor, unless released, remains secondarily liable Ex. Tenant unable to finish lease term, looking for someone to take over lease term
Assignment ( Contracts for personal services are not assignable buyers representations / listing agreements not assignable!!!)
7. Property Condition ( Access Inspections and Utilities) Seller shall permit Buyer and buyers agents _________ D. Acceptance of Property Condition: AS IS means... E. Lender required Repairs/ Treatments: If the cost of lender required repairs exceeds ___% of the sales price, Buyer may terminate the contract and the ______ will be refunded
Access to the property at reasonable times ( Buyer may have property inspected by inspectors selected by buyer licensed by TREC) The present condition of the property with any and all defects and without warranty except for the warranties of title and the warranties in this contract. E. 5% Earnest Money
ETJ ( Extra territorial Jurisdiction) Utilities: 6E Public Improvement Districts: PID- Public Improvement Districts 6E Transfer Fees 6 E Notice of water Level Fluctuations
City can take the property Entitled to know which utility company, how much utilities will bring to your tract, Special Taxing Entitiy established by area property owners to enhance a neighborhood or commercial district. PID requires a 51% vote from property owners affected by the new tax, who help pay for fire, police, schools Private fee on some properties Addendum created telling buyer that water fluctuates, two possible cases, drought or flood conditions
In order for a buyer to purchase a property using VA Guaranteed financing, the buyer must receive a(n) ___________, which establishes the value of the property.
Certificate of Reasonable Value
Amendments: Addenda:
Change something to the contract (Changes to closing date ( on or before date), sale price, repairs, removal or waivers of contingencies) add something to the contract, further describes the rights and duties of the parties ex. Financing Addendum, other Addenda may give authority to buyer to conduct additional inspections ( environmental, hazardous wasted, endangered species) Provision in Addendum Prevails over provision in main body of contract!!
1. Property includes: a. Land b. Accessories c. Improvements d. All of these are collectively referred to as property
D. All of these
20 Federal Tax requirements A seller who has no social security or green card is considered a foreign person the escrow agent will withhold from the __________ an amount sufficient to comply with applicable tax law and deliver same to IRS
Sales proceeds escrow agent supplies this service
Residential Condominium Contract: R____ S______ Certificate: NO CAP ON CONDO FEES!
Differences btw 1 and 4 families unit, building ex. #1, address with zip code, city, county lobby, business center, parking lot- common area, condominium owners, own part. Condominium fees ( Sometimes more than house payment) Parking 2301, 2302 ( Designated parking) I as a buyer entitled to a copy of a documentation: check box b1 ( if buyer got copies) give them within 5 days, after buyer has read over them, buyer can cancel within 6 days, need proof you sent them, get earnest money back re-sale certificate- all salaries of people who work for the condominium are on this document, tells why fees so high. NO CAP ON CONDO FEES!!! Warn Buyer!! You want the buyer to see line by line items,
Once all the terms of an offer have been agreed to and signed by the parties, and the acceptance communicated to the offeror,the contract becomes binding on the parties which a ................. Contract
Executory Contract
Paragraph***** 12 A-1 12 A-2 12-B
Expenses the sellers is willing to pay on the buyers behalf ( expenses the buyer is not allowed to pay on certain government loan programs/ expenses buyer/ seller have negotiated that the seller will pay on behalf of the buyer Include typical Buyer expenses (appraisal fees, loan application fees, adjusted origination fees) If any listed expenses exceed what the party agreed to pay the contract will terminate, UNLESS the other party agrees to pay the excess
Reverse Mortgage Financing (Home Equity Conversion Mortgage Loan)
For Seniors both must be 62 or above), (Buyer buying first property, must be 62 years of age to qualify, both must be, or above) 50% of sale price down, The senior never makes another payment for the rest of their life, there debt goes up at an interest rate, whatever is owed by growing debt is paid by heirs, or you can sell the property to repay the debt and whatever is leftover goes to heirs, the older you are, the less you put down, 70- 40%, 80 years old 30%, you never make another house payment. Need to know the age of the buyer, allows them to buy a new house
9B 1- Seller is to convey title with a________________ 9B 2-Buyer is to bring " good funds to closing"***** what is good funds?
General warranty Deed cashiers check/ wire transfer
Right of 1st Refusal All offers must be......... no matter how ridiculous they are!!
Gives the tenant the right to purchase the leased property by matching or bettering any offer before the property will be sold to someone else Presented
The two different types of Loans:*****
Government: (Guaranteed by US Government, FHA/ VA) Conventional: non Government loan
occurs when a new contract is substituted for an existing one. ( When a contract is replaced with a new clean contract, bc of so many changes on previous contract)
Novation
An agreement between a buyer and seller or landlord/ tenant, in exchange for some sort of consideration ( and option fee), Buyer right to purchase property at preset price in a preset period of time. Can exercise option but under no obligation to purchase
Option
Tammy is interested in Jolene's property, but wants to research the zoning laws before purchasing. She has and agreement in which she paid a fee of $10,000 to keep the property available for a preset price for 30 days, during which time Jolene cannot sell the property to another. Tammy, however, can change her mind if she likes. What kind of agreement is this?
Option
Paragraph 7 D Acceptance of Property Condition as is
Present condition with all defect, Most agents check #1, but she checks #2 name repair and the room: ex. to remove carpet pad, sanitize slab in family room (replace carpet pad,) See it/ Smell it
The process of dividing ongoing expenses between the buyer and seller at closing Calculated through the day of.....
Proration closing
Title Policy: Always equals:
Proves you are the rightful owner of property and have right to sell it, title companies job is to prove this and that you have right to sell it to the buyer. Title policy always equals sale price at the time of purchase.
1. According to Paragraph 12 of the One-to-Four Family contract, ______________ is a settlement expense payable by the seller.
Release of an existing Lien
. _______________ are implemented when property operating under an exemption has its usage changed.
Roll back taxes
Survey: which type of property doesn't need a survey?
The title company orders the survey- must be done by registered professional land surveyor approved by title company and lender. Within 5 days, survey, Shows they did nothing to change the property Needs to be done in front of a notary Buyer can't sue surveyor if its wrong bc they didn't buy it If you are using sellers existing survey- not done for your buyer, can't go after surveyor if its inaccurate Many buyers will pay for their owns survey, so they can go after it if its wrong, legally to go after surveyor A condo!!
Doing business with someone under the age of 18, she can void the contract at any point, need to remind seller or landlord, on exam- look for work teenager or someone under the age of 18
Voidable
Paragraph 32 Buyers Remorse:
Wishing you hadn't bought it, changed your mind, you the buyer puts up a sum of money for a time period, $300, give to seller, for the right to the next ten days to walk away, you the seller gets to keep the money for those 10 days, it is a negotiable number as for the number of days,
Broker Lawyer Committee:
Writes residential contract forms, mandatory for license holders, then promulgated by TREC (draft promulgated contracts) 13 members, appointed by governor ( 6 licensed brokers ( appointed by TREC), 6 licensed attorneys ( appointed by president of state bar), 1 public member appointed by Governor)
How to terminate a contract: May be withdrawn anytime prior to... may include language such as: This offer is in effect until 5:00 pm month, date, year)
an offer may be withdrawn anytime prior to the acceptance of offeree Acts of the parties , Termination by Law: bankruptcy, death of either party prior to acceptance,) If there is not specified termination time, an offer should be withdrawn in withdrawn in writing,
Va/ VHA loans cannot (no loans can) If they do...
appraise for less than sales price you have to make up the difference in cash
n the case study titled "Conventional Case Study", the buyers applied for a 90% conventional loan for 30 years, at a fixed rate not to exceed ________. a. 3% b. 4.75% c. 3.75% d. 5%
b. 4.75%
Which statement regarding earnest money is INCORRECT? a. There is no standard amount prescribed, but is often 1% of the sale price. b. In Texas, earnest money is set at 6% of the sale price. c. Earnest money is not a legal requirement of a contract. d. Earnest money is a deposit paid up front by the Buyer to show seriousness in intent.
b. In Texas, earnest money is set at 6% of the sale price.
In the case study titled "VA Case Study" a 10-day _________ for $200 will be credited to the sale price. a. fee for earnest money b. option fee c. broker fee d. membership fee
b. Option Fee
Intermediary if the company represents________
both the buyer and the seller
3. Which of the following is NOT part of the mineral estate? a. Oil b. Gas c. Limestone d. Salt
c.limestone
According to the Addendum for Back-Up Contract, an amendment to the first contract: a. Waives all contingencies b. Gives the seller the right to keep the earnest money c. Constitutes a termination of contract d. Does not constitute a termination of the first contract
d. Does not constitute a termination of the first contract
In the case study titled "FHA Case Study" the exclusions, as stated in the listing agreement, include the statement that the seller would _______. a. retain the built-in ovens b. retain all the light fixtures, especially the chandelier c. retain the cabinet in the bathroom d. retain all the potted plants on the patio
d. retain all the potted plants on the patio
6. B Commitment within:
from title company) They are the only owner, when you get the property you know you are getting it debt free/ lien free. Usually within 5 days if you are in a major city. Supposed to be ( The title company has 20 days from the date that they receive the contract to furnish,to the buyer for title insurance) within 20 days.
An agreement that allows a tenant to purchase a property during the lease term The party making the offer
lease purchase agreement the offeror
Statute of Limitations:
limitation of time in which an individual may file suit in court for damages bc a party breached a contract 2 years for oral 4 years for written
unauthorized practice of law
not and attorney- don't try to write anything, if not addenda or amendment, they need to hire an attorney to write whatever needs to be added to a contract 1) License holder is engaging in the unlawful practice of law 2) The license holder is not qualified to craft such provisions, results often in dispute over meaning, disputes result in litigation
Non Realty Items Addendum (Bill of Sale)***
optional form used when personal property is going to be included in a sale Indicated price agreed between parties for the property ex. washer/ dryer $700, display location
