Section 8: Remaining Promulgated Forms in Texas
"How big is the laundry room, again?" Sally asked. Where would this information be available?
Construction documents
Rollback taxes are assessed whenever an agricultural property's _______ changes.
Use
Janet has signed an offer to purchase a parcel of unimproved property. In the property condition section of the offer, she stipulated that she accepts the property "as is." Which of the following is true?
She can inspect it and still negotiate repairs and treatments
Nancy is meeting with her agent to make an offer on unimproved land, which was previously part of a family farm. She is sinking every penny she has saved into the down payment on the property. Which of the following is a true statement?
She will be responsible for rollback taxes if she changes the use of the land.
Julie is making an offer on a condominium. Which of the following is a true statement?
She will not have fee simple ownership of the land beneath her unit.
Because Texas is a community property state, marital status should be identified. Which of the following is the correct way to name the parties in a contract?
Sheila Mae Drew, a single person
Cindy wishes to reserve the mineral rights for the ranch she is selling. Which of the following is true?
The TREC-promulgated Addendum for Reservation of Oil, Gas, and Other Minerals should be used.
Joe purchased 25 acres of land that used to be part of a large family farm. The farmer is still farming the rest of the land he hasn't sold. Joe isn't interested in farming, but he can't wait to build his own home on the property and open his own custom cabinet shop there. According to the Unimproved Property contract, if rollback taxes are assessed, who's responsible for paying them?
Joe
When a buyer purchases property "as is," which of the following is true?
The buyer can inspect it and still negotiate repairs and treatments.
In a condominium transaction, which of the following is true?
The buyer pays for a portion of the transfer fees up to a specific amount, and the seller pays the remainder.
When a casualty loss occurs in a condominium unit after an offer to purchase has been made and accepted, which of the following is true?
The seller must return the unit to its previous condition as soon as possible, and before the closing.
When a casualty loss occurs in a condominium property prior to closing, which of the following is true?
The seller must return the unit to its previous condition as soon as possible.
The ranch that Adam and Maria are interested in buying has a cotton crop already planted on it. Which of the following is a true statement?
The seller needs their permission to harvest the crop after closing.
Tom has purchased two acres of land from his Uncle Bob, who owns the family farm, and Tom has built two houses on the property. Sally and Jake are buying one of the homes from Tom. Because the use of the land is changing, rollback taxes will apply. Who changed the use of the land?
Tom
Martina is buying five acres of unimproved land on which to build a home. The property was part of a large family farm for the last 150 years. Which of the following is true?
A substantially larger down payment will be required than if there were structures on the land.
Buyer's Selections
Specify the amount of time buyers have to make selections
What's the purpose of the ESIGN Act?
To identify what can be used as an electronic signature
Condominium Contract
Connie is buying a home, but she won't own the land beneath it.
"I was wondering about was the type of insulation that will be used," Jake said. Is this information available in the contract?
Yes
Why are there so many promulgated forms in Texas?
Different property types require different terms.
The property section of the One to Four Family Residential Contract references the land's lot and block description. On the Residential Condominium Contract (Resale), what's referenced instead of lot and block?
Condominium unit, building, and condominium project name
The New Home Contract (Incomplete Construction) doesn't contain ______ in the property section, which is a key difference between this contract and the One to Four Family Residential Contract.
Improvements, accessories, or exclusions
Martin is selling his condo to Sheila. A fire has occurred and damaged the unit. Who's responsible for making the repairs?
Martin
One to Four Family Residential
-Improvements, accessories, exclusions -Lead-based paint disclosure
Chip is your developer client who's about to sell several lots in his new subdivision. He asks you what his disclosure requirements are. How do you answer him?
"You must disclose all known defects and issues that would impact a buyer's decision to buy."
Financing Unimproved Land
-A much larger down payment is usually required. -Land without a structure is less valuable to the bank for collateral purposes.
Charlotte was delighted to be closing on her new condo in a very trendy part of downtown. However, a few days before closing, she received a phone call informing her that a fire had damaged the unit. The unit couldn't be repaired by the date of the closing.
-Charlotte can terminate the contract and receive a refund of her earnest money. -Charlotte can give the seller 15 more days to make the repairs and also extend the closing date. -Charlotte can accept the property in damaged condition and have the seller assign her the insurance proceeds.
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.
New Home Contract (Incomplete Construction)
-Insulation -Construction documents -Cost adjustments -Buyer's selections
"The first big difference between this contract and the One to Four Family Contract is in the property section in paragraph two. Anyone see what's different?" Marsha asked. What do you think? How is the property section of the Unimproved Property Contract different from the One to Four Family Contract? Indicate whether each of the following statements is true
-On the Unimproved Property Contract, sales price and property description are in the same order on both forms. -On the Unimproved Property Contract, there are no improvements, accessories, or exclusions.
Rollback Taxes
-Rollback taxes are the result of a change in use. -A very low tax bill is a good indicator that an agricultural exemption has been in effect.
Crops
-Sellers have options when it comes to harvesting crops. -The Whitakers can reserve the right in writing to come back and harvest the crops when they are ready. -Items listed under exclusions are not part of the transaction, and must be removed prior to closing. -Unless otherwise agreed to in writing, the seller has the right to harvest the crops up until the time of closing.
Seller's Disclosures for New Homes - Completed Construction
-The property is the habitat of an endangered species. -The city is expanding the streets, and there will be a special assessment on the property to fund it. -Part of the property is in a designated wetlands area. -The subdivision was built on the site of a former landfill.
When There's No Executed Date
-There is no beginning date for the contract. -May cause issues with enforcing the terms of the contract. -It can cause a breach of contract. -The licensee responsible could be sued for incompetency.
Handling Construction Defects
-They must notify the contractor at least 60 days before they plan to file a lawsuit. -Tony and Brad must allow the contractor to fix the defects, if the contractor requests to do so. -The notice must be sent certified mail, return receipt requested. This provides proof that the contractor received the notice.
Condos vs. Townhomes
-Townhome owners own the land beneath their units, and condo owners do not. -Condo owners only own the air space in their units, not the exterior walls.
According to the contract, what's the maximum amount the sales price can be adjusted as a result of the survey?
10%
Chapter 27 of the Texas Property Code specifies that, in order to recover damages for a construction defect, buyers must notify the contractor ______ days before the date they file suit to recover damages.
60
Jamie's new home has multiple defects. He has tried repeatedly to resolve the issues with the contractor, to no avail. According to the New Home (Incomplete Construction) Contract, Jamie must provide notice to the contractor by certified mail, return receipt requested no later than ________days before the date he intends to file suit to recover damages.
60
Where in the sales contract should you indicate that addenda are being attached?
Agreement of parties
Chin is selling his ranch and has agreed to allow the contract to be adjusted after the effective date of the contract, based on the results of the survey, which has not yet been completed. According to the Farm and Ranch Contract, what is the amount by which the sales price may be adjusted?
A maximum of 10%
Jose is selling his condominium. He must provide ______ to the buyer which is no more than three months old.
A resale certificate
What is a rollback tax?
A tax assessed when agricultural property changes use
What does a condominium resale certificate provide?
Financial and legal information about the condominium association
Settlement and Other Expenses - Association Fees
According to the Residential Condominium Contract (Resale), the buyer is responsible for any and all association fees or other charges resulting from the transfer of the property, up to the amount indicated, and the seller pays the excess.
Amis is selling his condo. The closing is two weeks away, when a fire occurs and damages the unit. Which of the following is true?
Amis must return the unit to its previous condition as soon as possible, and before the closing.
When crops are excluded from the sale of a farm or ranch, by when must they be removed from the property?
Before closing
Bobbie is a licensee preparing the contract for her buyer client, who's purchasing a new home that's not yet complete. It will be complete at the time of closing. Which of the following is a true statement?
Bobbie should not use the New Home Contract (Completed Construction).
June and Joel are considering two properties. One is a townhome and one is a condominium. Which of the following is a primary difference between the two?
Condominium owners do not own the land beneath their units.
Farm and Ranch Contract
Connor and Lyla are buying a 100-acre farm, which has a farmhouse and three barns.
The major difference between these two contracts is that the New Home Contract (Incomplete Construction) contains information that isn't found in New Home Contract (Completed Construction). What's missing from the New Home Contract (Completed Construction)?
Construction documents, cost adjustments, buyer's selections, and completion information.
Unlike the One to Four Family Residential (Resale) contract, the New Home Contract (Completed Construction) contains no improvements, accessories, or ______.
Exclusions
It's important that crops and other assets be correctly entered on the ______ Contract.
Farm and Ranch
Joe's offer to purchase was executed on February 1. There is a 10-day contingency for the seller to remove an abandoned building on the site. In order to avoid a breach of contract, what is the last day this can be completed?
February 11
Joe Ferdinand's offer to purchase was executed on February 1. When does the clock start for contingencies on the offer?
February 2
Janet and Hank are buying a condominium from Shirley. Who's responsible for the transfer fees charged by the association, up to the amount specified in the contract?
Janet and Hank
Requirements to Recover Damages for Construction Defects
In order to recover damages for a construction defect,buyers must provide notice to the contractor by certified mail, return receipt requested, no later than 60 days before the date they file suit to recover damages. The notice must refer to Chapter 27 of the Texas Property Code and describe the construction defect. If the contractor requests an opportunity to inspect and fix the defect, they must allow him/her to do so.
Take a look at this list of items and identify whether each one does or does not appear on the New Home Contract (Completed Construction).
Insulation and Chapter 27 information (Texas Property Code)
Which of the following is a true statement regarding the resale certificate from the condominium owners association?
It must have been prepared within the last three months.
A common mistake made by buyers and sellers is that they don't read the default part of the contract. What's the purpose of the default paragraph in the sales contract?
It spells out what happens in the event of a contract failing.
New Home Contract (Completed Construction)
Jake and Annie are buying a home that no one has ever lived in before.
If a contract is executed on January 1, what is the first day of the contingency period?
Jan 2
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
One to Four Family Residential Contract (Resale)
LaRita is buying a townhome.
One main difference between condominiums and townhomes is that townhome owners have fee simple title to the ______.
Land beneath their units
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
Unimproved Property Contract
Mark and Francie are buying 120 acres of land where they hope to put a house someday.
"Okay, now we tackle the Farm and Ranch Contract," Marsha said. "Who can tell me what form of legal description is used on this contract?"
Metes and bounds
The _______________ method of property description is used for the Farm and Ranch Contract.
Metes and bounds
Jennifer and Adam are excited to be making an offer to purchase their new home. Their unit is attached to other units by a common wall, and when they purchase it, they will have fee simple title to the unit and the land on which it sits. Which contract should you use for their offer to purchase?
One to Four Family Residential Contract (Resale) -This is a townhome, because Jennifer and Adam will have fee simple interest in the land beneath their unit, as well as the unit itself. You would use the One to Four Family Residential Contract to write up their offer. The Residential Condominium Contract can't be used for townhomes.
Sally and Jake are getting antsy. They'd like to inspect the home to make sure things are going as planned. What part of the contract gives them the right to do this?
Property condition
Which contract is used for the purchase of townhomes in Texas?
TREC One To Four Family Residential Contract (Resale)
Buyers of newly constructed homes must follow the procedures established in Chapter 27 of the Texas Property Code in order to do what?
Recover damages for construction defects
Chapter 27 of the Texas Property Code requires that buyers follow certain procedures in order to ______.
Recover damages for construction defects
Which document that must have been prepared within the last three months must the seller of a condominium unit supply to a buyer?
Resale certificate
What's one key difference between the One to Four Family Residential (Resale) Contract and the New Home Contract (Incomplete Construction)?
The New Home Contract (Incomplete Construction) doesn't contain improvements, accessories, or exclusions.
Which of the following is a true statement about how Texas contracts must be used?
The Residential Condominium Contract (Resale) can't be used for townhomes.
When a condominium is sold, what's not part of the sale?
The land beneath the unit
Tony and Brad's new home is part of a new subdivision built on what was previously a 700-acre cotton farm. If rollback taxes are assessed, who's responsible for paying them?
The seller
When a casualty loss occurs in a condominium unit after an offer to purchase has been made and accepted, which party is responsible for the repairs?
The seller
Craig is selling his condominium. What document must he provide to the buyer that contains information on HOA financials, frequency and amount of assessments, and any pending lawsuits?
The resale certificate
Jane is interested in making an offer on a condominium. She's heard that the condominium owners association for the condominium development has several pending lawsuits for violations of the bylaws. Where can she verify this information?
The resale certificate
Jenny is buying a condo. She wants to find out the amount and frequency of regular assessments from the condominium association. Where could she find this information?
The resale certificate
According to paragraph 2D, unless specified otherwise in writing, what right does the seller have with regard to crops?
The right to harvest the crops up until the closing.
Sally and Jake's home is part of a subdivision being developed on 150 acres of land, which was formerly used for agricultural purposes. If rollback taxes apply, who's responsible?
The seller
When completing promulgated forms, licensees must ensure that the executed date is entered. What happens if it's left blank?
The terms of the contract are difficult to enforce.
If a checkbox isn't properly filled out, what can happen to the transaction?
The transaction can be delayed
Rollback taxes are assessed under what circumstance?
When the land's use is changed.
What is one major difference between condominiums and townhomes?
They each have different forms of ownership.
What is one reason that licensees must be able to distinguish between townhomes and condominiums?
They require different promulgated forms.
Kathy and Glen are considering two properties. If they purchase the townhome, which of the following is a true statement?
They will have fee simple ownership of the land beneath their unit.
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 is a requirement of a seller of new construction on what was formerly agricultural property?
To pay any rollback taxes due
New Home Contract (Incomplete Construction) Part II
Trevor has made an offer on a home that will be completed in two months.
Which of the following does the Residential Condominium Contract (Resale) reference?
Unit number
Bob and Mary Whitaker want to take some items with them when they sell the farm including: Custom draperies in the living room Three window air conditioners An above-ground pool, which they are giving to their grown daughter who lives next door Did Jerry correctly enter this information on the contract?
Yes
Jeanette is excited to have made an offer on her brand new home. After signing the contract, she stopped by the property to take some pictures. She was surprised to see that the back steps were damaged and that a light fixture in the kitchen wasn't working. She's concerned, because she distinctly remembers that when she signed the contract, she checked the box to accept the property as-is. What happens now? Can she still get these things repaired?
Yes
Lorrie and Sam have just moved into their new home. Their happiness is only marred by the fact that there are several construction defects that they've not been able to get the builder to resolve. They plan to file a lawsuit in order to recover damages. According to the New Home Contract (Incomplete Construction), can they do this?
Yes
Joe Ferdinand was purchasing 25 acres of unimproved land. In the property condition section of his offer to purchase, he checked the box, "Buyer accepts the Property As Is." A week after making the offer, Joe decided to walk every inch of the property to make sure he knew what he was getting into. Hidden behind a row of trees, he found that there was a makeshift junkyard with several automobiles, some old appliances, and scrap metal. He hoped he could convince the seller to pay to clean up the mess. Since he checked the "As Is" box on the Unimproved Property Contract, can he do this?
Yes The property condition section of the contract specifies that Joe can still ask for seller repairs or remediation, no matter which box he has selected. Other Texas contracts also have the same wording in this section.
What do you think? If a survey is required, does it have to be provided within a certain period of time?
Yes e. You'll need to check a box in the survey section, and enter the number of days, if applicable.
