CH 1 Contract Law
When a seller and a buyer wish to convey personal property, this is done with a
Bill of sale
Paragraph 23 of the contract is called the Option paragraph. In essence, this paragraph gives the buyer the unrestricted right to terminate the contract for any reason within a certain time frame.
True
What is an act or practice which, to a consumer's detriment, takes advantage of the lack of knowledge, ability, experience, or capacity to a grossly unfair degree called?
Unconscionable Act
An act or practice which, to a consumer's detriment, takes advantage of the lack of knowledge, ability, experience, or capacity to a grossly unfair degree is called:
Unconscionable action
What does paragraph 23, The Option Paragraph, give the buyer the right to do?
Paragraph 23 of the One-to-Four Family Residential Contract (Resale) form allows the buyer to unilaterally terminate the contract without penalties. This is also allowed in other areas of the contract, (i.e. paragraph 7 titled Property Condition as well as the Addendum for Property Subject to Mandatory Membership in a Property Owners Association).
What addendum is used to explain the Jones' financing option?
Third Party Financing Addendum
In 2011, SB 1353 was passed
This bill adds real estate brokerage as a specific exemption to the act. The licensees can still be held liable if they: 1. commit an unconscionable act 2. misrepresent a material fact 3. fail to disclose information with the intention of inducing a consumer into a transaction
In a legal subdivision, legal descriptions are recorded in the county courthouse where the property is located
True
Listing contracts must include the verbiage that "commissions are negotiable."
True
When an offer becomes a contract, which step is NOT required?
Both agents must meet to review the contract.
Who must sign the contract?
Both the Buyer and Seller
What documents are licensed real estate agents legally authorized to draft?
Documents promulgated by TREC
A license holder may not:
(1) Practice law; (2) Offer, give, or attempt to give legal advice, directly or indirectly; (3) Give advice or opinions as to the legal effect of any contracts or other such instruments which may affect the title to real estate; (4) Give opinions concerning the status or validity of title to real estate; (5) Attempt to prevent or in any manner whatsoever, discourage any principal to a real estate transaction from employing a lawyer.
What are the only two promulgated lease agreements?
1. BUYER'S TEMPORARY RESIDENTIAL LEASE - for use when the buyer occupies the property for no more than 90 days prior to closing. 2. SELLER'S TEMPORARY RESIDENTIAL LEASE - for use when the seller occupies the property for no more than 90 days after closing.
What verbiage must listing contracts include?
A provision informing the parties to the contract that real estate commissions are negotiable
If the property address is correct but the legal description in a contract is incorrect, what is the status of the contract?
A. It is automatically voided. B. It is unenforceable. C. There is no change. D. The title company will check and correct it. NOT SURE
What would have happened if the Jones' (sellers) defaulted on the contract? What could the seller do?
A. Sue for specific performance B. Receive the earnest money as liquidated damages C. Both A and B
Which of the following practices could be considered practicing law by a real estate broker for the sale or lease of real property?
A. Use of a form prepared by the broker's company
Which practices could be considered practicing law by a real estate broker for the sale or lease of real property?
Drafts an instrument, other than a form described by Section 1101.155, that transfers or otherwise affects an interest in real property Advises a person regarding the validity or legal sufficiency of an instrument or the validity of title to real property There are certain exceptions to the unauthorized practice of law which include: (1) Filling out the forms adopted by the commission for the type of transaction for which the form is used. This means filling in the blanks of the TREC promulgated contract forms and addenda. (2) Contracts that are prepared by an attorney licensed in this state and approved by the attorney for the type of transaction for which the form is used does not constitute the unauthorized practice of law. a. Contracts prepared by the property owner or by an attorney and required by the property owner Statutes and case law define the practice of law.
An auctioneer is required to have a real estate license.
False
The Attorney General for the state of Texas protects consumers by?
Filing lawsuits under the Deceptive Trade Practices Act. The Attorney General cannot represent individual consumers, but if there are a significant number of complaints, the Attorney General's "consumer protection division" will file suit to enforce the state law. The best consumer protection is widespread public awareness of consumer rights and common scams.
Who does the Texas Real Estate Commission protect?
Governs the licensure and lawful behavior of real estate brokers and salespersons. The mission is to protect consumers' economic welfare by ensuring that licensees properly carry out their fiduciary responsibilities to clients, are qualified and competent, and adhere to professional standards. Through its programs of education, licensing, and industry regulation, the Commission ensures the availability of capable and honest real estate service providers.
Explain the objective(s) of the Joint Broker-Lawyer Committee.
The Texas Real Estate Broker-Lawyer Committee was created in 1983. It drafts and revises contract forms for use by real estate licensees. The purpose is to expedite real estate transactions and reduce controversies while protecting the interests of the parties involved. The committee is composed of six Real Estate Commission appointees (who are licensed real estate brokers) and six lawyers, appointed by the president of the State Bar of Texas, serving staggered six-year terms. There is also one public member of the Committee who is appointed by the governor. The objectives and functions of the Committee are to: 1. Draft and revise uniform types of standard contracts 2. Consider and promote changes in procedures and laws relevant to real estate transactions 3. Promote and encourage understanding between brokers and lawyers 4. Consider controversies between brokers and lawyers and, if necessary, to refer such matters to the Commission or the State Bar 5. Cooperate with the Commission and the State Bar, disseminating information and promoting joint education of brokers and lawyers Committee members serve staggered six-year terms, with the terms of two commission appointees and two State Bar of Texas appointees expiring every two years and the term of the public member expiring every six years
License is not required
Acting as a principal, a person may purchase, sell, lease, or sublease real estate for profit without being licensed as a broker or salesperson. (b) A person may acquire an option or contract to purchase real estate and then sell the option or contract, or offer to sell the option or contract, without having a real estate license provided the person does not use the options or contracts to purchase to engage in the real estate brokerage business. (c) A person who owns property jointly may sell and convey title to his/her interest in the property, but to act for compensation or with the expectation of compensation as an agent for the other owner, the person must be licensed unless otherwise exempted by the Act. (d) An individual employed by a business entity is not required to have a real estate license to buy, sell, or lease real property for the entity. An entity is an owner if it holds record title to the property or has an equitable title or right acquired by contract with the record title holder. An individual employed by a business entity means a person employed and directly compensated by the business entity. An independent contractor is not an employee. (e) Trade associations or other organizations that provide an electronic listing service for their members, but do not receive compensation when the real estate is sold, are not required to be licensed under the Act. (f) Auctioneers are not required to be licensed under the Act when auctioning real property for sale. However, a licensed auctioneer may not show the real property, prepare offers, or negotiate contracts unless the auctioneer is also licensed under the Act. (g) An answering service or clerical or secretarial employees identified to callers as such to confirm information concerning the size, price, and terms of property advertised are not required to be licensed under the Act. (h) A broker may hire an unlicensed person to act as a host or hostess at a property being offered for sale by the broker, provided the unlicensed person engages in no activity for which a license is required.
Who does the Texas Real Estate Commission protect?
Consumers
TEXAS REAL ESTATE LICENSE ACT
Is the law which established the Texas Real Estate Commission, who is responsible for its enforcement. It governs the licensure and lawful behavior of real estate brokers and salespersons. It is amended by the Texas state legislature, as is necessary.
Economic Damages does not include what?
The definition of "economic damages" specifically does not include damages for physical pain and mental anguish, loss of consortium, disfigurement, physical impairment, and loss of companionship or loss of society.
Who will fill in the date (the effective date) after the last party signs the contract?
The title company The broker The attorney The seller NOT SURE