Section 10: Common Mistakes Made in Texas Contracts
As the licensee representing the seller, what should you do when listing a property?
-Request a trio -Ask the seller if public records (tax records, tax maps, etc.) match the seller's understanding of the property -Determine if any outstanding liens exist
Title Issues
-Seller doesn't have the authority to sell the property -Liens aren't cleared -Errors in recorded documents
A common mistake made by buyers and sellers is that they don't read the default paragraph part of the contract. What is the purpose of the default paragraph in the sales contract?
It spells out what happens in the event of a contract failing.
What's an addendum in Texas?
A document that describes additions to the scope (or the terms) of a contract
What's a trio?
A report that shows the parcel map, owner of record, and property profile
What's a marketable title?
A title that is clear and free of encumbrances
Which of the following would be a factor that would cause a delay in closing?
An appraisal lower than the contracted price
Which of the following is an example of a clouded title?
Conflicting legal description
During which phase of the sales transaction do problems with real property and personal property most often become clear?
During the final walk-through
Misunderstandings between a buyer and seller regarding personal and real property are most often discovered ___________________.
During the final walk-through
Which of the following best describes a marketable title?
Ensures the title to property is free and clear of liens and only subject to loan payoff and any taxes owed.
Personal property includes which of the following?
Free-standing TV
Which is the correct way to describe a property on the Texas sales contract?
Lot 26 Block 05, Section 16 of Crystal Falls Addition, City of Leander, County of Travis, Texas, known as 1900 High Lonesome Street, Leander, TX 78641
As a licensee, what should you do if closing will be delayed?
Negotiate a new closing date
An oral offer is one that is ________.
Only spoken
Who must disclose the fact that a Texas transaction will be part of a 1031 exchange?
Party doing the exchange
A buyer just purchased a home, and the MLS listing stated that the washer and dryer were included with the home. Are the washer and dryer real or personal property?
Personal property
What is the correct way to list the buyer's name on the Texas sales contract?
Sheila Mae Drew, a single person
Examples of real property include which of the following?
Shelves attached to the wall with brackets
Where in the sales contract should you indicate that it's being used for a 1031 exchange?
Special Provisions
If a checkbox isn't properly filled out, what can happen to the transaction?
The transaction can be delayed
As a licensee, you're allowed to include certain types of information within the special provisions section of the contract. What is the purpose of the special provisions section of the contract?
To list terms that aren't otherwise covered in the sales contract
Which of the following would be a factor that would make a title marketable?
Unbroken chain of ownership
Is an oral offer presentable to the seller?
Yes
Who prepares the 1031 tax exchange language in the sales contract?
-Buyer's agent, in the initial offer -Seller's agent, in an addendum to the offer -Attorney, if used, by the investor
Because Texas is a community property state, marital status should be identified. Correctly identify which two of these show the correct way to name the parties in a contract.
-Chet K. Manning and Robert T. Louden, a married couple -Sheila Mae Drew, a single person
As a licensee, what four things should you do if a closing delay happens?
-Communicate the delay to your clients -Provide a new timeline estimate -Negotiate a new closing date -Clear up any obstacles
Electronic Signatures in Real Estate Contracts
-Electronic signatures are just as binding as hand-written signatures. -According to the ESIGN Act, a valid electronic signature can include a symbol or sound. -NCCUSL was responsible for passing the UETA.
Identify what type of information is contained in the trio or listing packet.
-Property profile -Deed -Parcel map -Legal description
When a buyer intends to purchase a property as part of a 1031 tax-deferred exchange, what should be made clear in the Special Provisions section?
-The buyer's intent is known. -There's no additional expense or delay for the seller.
Now that you understand what you can do to help your clients when closing is delayed, can you identify reasons a delay might occur?
-The title is clouded. -The appraisal is lower than contracted price. -The loan documents are stalled.
Even though a contract for the purchase of real estate must be in writing to be enforceable, it's sometimes appropriate to present the offer orally. When is it appropriate?
-To avoid the back and forth of amending documents. -To "fish" to see if the seller's agent thinks the offer might be attractive. -All offers must be presented.
If you are attaching an addendum or an amendment, be sure to note that in the contract. Where in the sales contract should you indicate that addenda are being attached?
Agreement of parties
When completing the One to Four Family Residential contract, the parties must be correctly identified. Correctly identify which of these is the correct way to name a party in a contract.
Breanna Mae Arthur, a single person
Because Texas is a community property state, marital status should be included when naming the parties. What is the correct way to name these parties on the contract?
Kathy Simone and John Simone, a married couple
When does an oral offer for a real estate transaction become part of an accepted contract?
When it's committed to writing and both parties sign the contract
