5. Closing, possession and more

IABS

At the first substantive dialogue with a client or prospect, always provide the information about Brokerage Services (IABS) statement, which contains the statutory information relating to brokerage services.

Owners association

Many HOAs will have websites where information is available or request for information can be made. For small or unfunded subdivisions it may be difficult to receive information on assessments and reserves, or even pending litigation. -Start with the title company and begin legwork quickly after contract if buyer is seeking information.

Mineral rights

Mineral Ownership grants the right to use the surface estate to the exact reasonably necessary for the exploitation, development, and production of minerals under the property.

Buyers termination of contract

Most common reason for a contract to terminate Is financing provision. Buyer cannot obtain financing approval or the property does not meet underwriting requirements set forth by the lender or the bank.

Minerals

Oil & Gas are further distinguished as fugacious minerals, which are migratory in nature and have the capacity to flow from one place to another.

possession

The date of the closing is normally also the date when possession of the real estate is transferred from the seller to the buyer.

subdivision/resale

The form ask for information on capital reserves, expenditures, association assessments and any association fees resulting from the transfer of the property.

What qualifies the house for a short sale?

The house simply needs to be worth less than what the seller owes on the property. -payments on the house are no longer being made.

Tax issues

Under a land contract for deed, who retains fee ownership of the property? Vendor

condition

When real property is the subject of the contract, the contract becomes a contract for deed or executory contract. The seller has a security interest and the buyer has an equitable interest in the property. The performance of specific condition (such as the sale of the buyers current property) may also start the clock on remaining contract obligations.

non-realty items

Whenever personal property is included in the transaction you will want to include the sale of goods in the non-realty items addendum.

contingency

a condition in a contract that requires completion of something before the contract will be binding. The buyer reserving the right to an option period is an example of contingency.

buyers selection

insert how long the buyer has to make any final choices regarding items or fixtures that are being included in the construction of the house.

inspections & access

inspectors are allowed access to the property for both initial and re-inspections

warranties

Any warranty offered by the builder will be attached to the contract, and the byer can also purchase a home warranty and have that attached to the contract (or be included outside the contract). The contract itself offers no warranties

Sellers lease

A case where the seller will remain in the property for a short term (less than a month) after the closing you will use a sellers temporary residential lease. -seller is responsible for utilities and a daily payment

Executing the contract

A fairly executed real estate contract means that all parties have signed the contracted signed agreement has been divided to all parties.

Short Sale

A short sale in RE occurs when (loans) against a property re greater than the price for which the property can be sold. Short sales are a way for homeowners to avoid foreclosure on their homes and still be able to pay off their loan by settling w/ the lender.

This addendum can work in conjunction with the resale certificate promulgated by TREC

Addendum for property subject to mandatory membership in an owner's association

regulation of public land

Bureau of Land Management (BLM) -general land office -responsibility for sale of united states lands to states and people interest and later took on duties of issuing leases and collecting fees and royalties from minerals.

Seller cancelation

If a seller wants to cancel their contract, it is going to be a stressful time. First be sure they're willing to sell before cancelling.

sale of other property

If buyer must sell their current property in order to purchase the new property they will include addendum for sale of other property for the buyer. -creates condition if buyers property does not sell then they cannot purchase new property.

leases

If the party in possession fails to surrender the property according to the lease than a tenancy at suffrage is created. -exist when a tenant wrongfully holds over after the expiration of a lease without the landlords consent.

The Farm and Ranch Contract

Includes a section that will allow as an option,a price per acre of land to be the purchase price instead of a pre-determined amount. this rpice includes a termination option for the parties.

promulgated resale certificate

It is a god idea to request in writing that at least 6 months of any association meeting minutes be provided to the buyer. Sometimes minutes will indicate discussions of future expenses that are not approved or accounted for yet.

Mutually rescind the contract

Party A agrees to purchase party B's house. Party a subsequently decides against proceeding with the purchase. Party A and Party B agree to cancel the contract, and party B returns an earnest money to party A.

addenda

TREC has promulgated addenda forms that cover almost every possible property type of situation. License holders need to be aware that the use of the proper form is critical & required. -contract addenda -contract termination -non-realty items addendum

insulation

The FTC requires disclosures of what insulation items are included in the property.

addendum for reservation

The best advice for a real estate professional when becoming involved in a transaction that includes mineral rights and reservations is to seek legal counsel.

New Home Contracts

The property conditions section of this form differs from all other TREC forms in that there are multiple subsections that cover a home under construction rather than a home that is already built.

Back-up contract

The seller and prospective buyers may select to accept the second contract on a back-up status. - back-up contract will need to include both earnest money, and if desired, an option fee. if first contract is terminated seller is required to give notice "immediately" to second place buyer.

What Qualifies a seller to do a short sale?

The seller must be at least 30 days behind on a mortgage payment. -The seller must have no intention of making any more payments. A short sale is basically a pre-foreclosure sale, making a payment can pull the file from the short sale mitigation system.

The Farm and Ranch Contract

The unimproved property contract does not have a detailed listing of fixtures.

If the buyer accepts the property as-is,

They must specify any needed repairs

arbitration

a form where parties and counsel present their positions before an impartial third party who renders a specific record.

Fracking

a process used to extract natural gas from shale rock layers underground. Allows for both vertical and horizontal drilling to create passages that can be filled w/ explosives that separate rock from natural gas.

Interest in rights

a royalty deed or royalty agreement transfers ownership of the royalty interest only and not the right to execute leases and reicive bonus payments.

Surface owner rights

basic rights of the surface owner may be provided for in regulations that improve liability for negligence or excessiveness and may be entitled to compensation for damage to land or loss of its use.

cost adjustments

if the buyer will be paying for construction upgrades or items that the builder is not including in the price of the home, enter those here.

mediation

designed to facilitate communication between parties and to promote reconciliation, settlement or understanding.

Special provisions

extensive re-writing of any of the language of the standard form is not advised and could be constituted as the unauthorized practice of law. -The contract can also specify which party pays for what closing costs

Amendment

if either buyer or seller wishes to make a change to the contract after it is executed, an amendment to contract should be used. -Extend a deadline -clarify or modify a condition from additional provisions in a contract -extend an option period -state repairs required by the lender and who/how those will be paid for.

the resale certificate must be in a form promulgated by TREC or required by the parties.

if inspectors find common area items need repair, the seller requests the repairs from the condo association to common (or limited common) areas

Does TREC have an improved commercial earnest money contract form?

no.

Buyers temporary lease

not recommended to allow the buyer to take possession of the property in advance of the closing due to the number of issues that may come up in any given transaction.

environmental matters

sellers disclosure forms are not required on new construction, so this contract includes common items that may be disclosed.

disclosure of agency representation

students need to be aware that real estate brokers are required to present the disclosure to the client at the first substantial discussion of real estate related services.

regulatory agencies

surface and mineral interest are created or transferred through private contracts. Authorities that did not create these legal relationships do not have statutory authority to alter these private property rights. Operations may only be stopped if activities are deemed irresponsible.

construction & documents

this may be plans or a list of additional work items. Items should be attached and signed by all parties.

completion

this selection will list the date that improvements will be substantially completed . This is when the property is "ready for occupancy" but is NOT the date the buyer will take occupancy. That will be found in the possession date

Settlement statements

upon signing the commission approved form, closing instructions, by seller, buyer, and the company, the broker or title company will prepare and deliver an accurate, complete and detailed closing statement to buyer and seller, which they must sign at time of closing.

buyer registration form

will reserve your right to a commission and also create an agreement for payment between you and the builder. If builder does not have a registration form, many REALATOR associations do

Addenda

will typically be referenced in the body of the contract. -Addenda will have the same force as the contract. It is binding on the party once signed and attached.

For investment property where there is reported rental income, the tax rate is 30% of income after expenses. Inform clients and customers of potential liability that may arise from disposition of real property or other assets.

withholding