Contract Forms CH 2
UNAUTHORIZED PRACTICE OF LAW, EXAMPLES OF COMMON MISTAKES
SUSPENSION OR REVOCATION OF LICENSE OR CERTIFICATE FOR THE UNAUTHORIZED PRACTICE OF LAW (1) drafts an instrument, other than a form described by Section 1101.155, that transfers or otherwise affects an interest in real property; or (2) advises a person regarding the validity or legal sufficiency of an instrument or the validity of title to real property. A license holder may not: • practice law; • offer, give or attempt to give legal advice, directly or indirectly; • give advice or opinions as to the legal effect of any contracts or other such instruments which may affect the title to real estate; • give opinions concerning the status or validity of title to real estate; or • attempt to prevent or in any manner whatsoever discourage any principal to a real estate transaction from employing a lawyer.
THE BROKER-LAWYER COMMITTEE
The Texas Real Estate Broker-Lawyer Committee drafts and revises contracts that are capable of being standardized to expedite real estate transactions and minimize controversy. The Broker-Lawyer Committee has 13 members. Six members are licensed brokers appointed by TREC, and six members are licensed attorneys appointed by the president of the State Bar. One public member is appointed by the governor.
Regarding advice, what can an agent give legally to a buyer or seller?
The agent can give advice on real estate and how to get a better price but cannot practice law. No changing promulgated contracts or forms. No giving of legal advice about title.
What is the purpose of the Broker-Lawyer Committee?
To create forms and documents that ease the relationship between brokers and lawyers while making the process of real estate smoother.
The obligation to the client's interests is primary but that does not relieve Realtors® of the obligation to _____________________.
Treat all parties honestly
TREC does NOT promulgate listing forms and Buyer Representation Agreements.
True
The main purpose of the Broker-Lawyer Committee is to draft and revise contracts for use by the licensees in Texas.
True
What is true about the TREC promulgated contracts?
a. The contracts are available to any persons. b. TREC revises contracts every year. C. Only brokers must use the promulgated contracts. TRUE d. A licensee must be in the real estate business for three months before using the promulgated forms.
The effective date is determined by the final date of acceptance. All the following are elements of final acceptance EXCEPT:
a. The final contract must be in writing. b. Acceptance must be unequivocal. C. An email must be attached to the contract. <--- this is the answer d. The buyer and seller must sign the contract and initial all handwritten changes.
What year was the Texas Real Estate Commission created to administer TRELA?
1949
When was the Texas Real Estate Commission created?
1949
TEN COMMON CONTRACT MISTAKES
(1) Leaving Blanks in The Contract. (2) Failure to Date the Contract. (3) Failure to Complete Required Checkboxes. (4) No Address for Notice. (5) Times for Performance Too Short (6) Inadequate Legal Description. (7) Contracting to Provide an Existing Survey. (8) Improper Use of Special Provisions Section. (9) Failure to Include All Required Parties. (10) Failure to Enforce Time Limitations.
WHEN DOES THE OFFER BECOME A CONTRACT?
A contract is formed only when either the seller or the buyer accepts all the terms of the latest offer or counteroffer from the other, in writing and with a signature, within the time allowed. At this point, if the buyer decides to terminate for a reason that isn't covered in the contract contingencies, the buyer will forfeit any earnest money they deposited with the offer. If the seller backs out for a reason not covered by the contract contingencies, the buyer has the option of suing for breach of contract and damages or suing for specific performance and force the seller to meet the terms of the contract and complete the sale of the home. The effective date is determined by the final date of acceptance. The final date of acceptance is the date on which the contract becomes binding between the parties. The final date is the date that both buyer and seller have agreed to all terms of the contract and have executed the contract. Four elements must be satisfied for final acceptance to take place: 1. The final contract must be in writing. 2. The buyer and seller must sign the final contract, including the initialing of any handwritten changes to the initially drafted offer, if applicable. 3. Acceptance must be unequivocal. 4. The last party to accept must communicate acceptance back to the other party or the other party's agent, if applicable.
All the following are true about the Texas Real Estate Commission EXCEPT:
A. There are nine members. <------- (12) b. All members are brokers with a minimum of 5 years' experience. c. Members of the Commission are appointed by the Governor. d. Members serve six years staggered terms.
APPROVED FORMS, NOTICES, AND DISCLOSURES
Disclosures and Notices are not part of the Contract and should not be listed in paragraph 22. Agents and brokers are required to use the TREC Promulgated Forms or one provided by a principal or his attorney. In either case, an agent or broker is not allowed to create one or add to the existing contracts. If there is an existing addendum that address the issue, then it does not go into paragraph 11 (Special Provisions). The Texas Real Estate Commission allows members of the public to use the promulgated forms because they are considered public record. However, they highly recommend that an individual seek the guidance of a real estate professional or an attorney to complete the forms. Listing agreements and Buyer Agency agreements are not promulgated by TREC. Agents who are members of the Texas Association of Realtors (the Realtors trade association) have access to TAR's listing and agency agreements, contracts for condominium new construction, seller disclosure forms, as well as many other helpful forms. Local Real Estate Boards such as the Austin Board of Realtors have listing and agency contracts, seller disclosure forms, and other documents available for use by its members. These can be added to the TAR Zip Form library under "Local Library" documents.
Rescission
Either party may withdraw their offer before it is accepted. For example, if the buyer makes an offer and the seller has not accepted the terms of that offer, the buyer can withdraw his/her offer. Withdrawing an offer before acceptance is called "rescission". The seller may do the same thing. If the buyer makes an offer and the seller does not accept the offer, the buyer may withdraw their offer at any time before acceptance. That is why it is important to advise both the buyer and the seller to decide what they are going to do and then do it!
TEXAS REAL ESTATE COMMISSION
In 1949, the Texas Real Estate Commission (TREC) was created to administer the Real Estate License Act (Senate Bill 28, 51st Legislature, Regular Session). The purpose of the Texas Real Estate Commission is to protect the public through regulation of licensed real estate brokerage practitioners, real estate inspectors, residential service companies, and entities offering timeshare interests. The policy-making body of the Texas Real Estate Commission is a nine-member commission appointed by the governor with the advice and consent of the senate for overlapping six-year terms. Six members must be active in real estate as full-time brokers for five years immediately preceding appointment. Three members must not be licensed by the commission and have no financial interest in real estate, except as consumers.
What forms does TREC not promulgate?
Listing agreements and Buyer Agency agreements are not promulgated by TREC.
All the following are common errors in the contracts EXCEPT:
NOT SURE a. Improper use of the Special Provisions section b. Terms for performance too short C. Not disclosing what stays with the property <---- answer d. Failure to date the contract
What are elements of a final acceptance?
The final date of acceptance is the date on which the contract becomes binding between the parties. The final date is the date that both buyer and seller have agreed to all terms of the contract and have executed the contract. Four elements must be satisfied for final acceptance to take place: 1. The final contract must be in writing. 2. The buyer and seller must sign the final contract, including the initialing of any handwritten changes to the initially drafted offer, if applicable. 3. Acceptance must be unequivocal. 4. The last party to accept must communicate acceptance back to the other party or the other party's agent, if applicable.
Chapter 531 Canons of Professional Ethics and Conduct
§531.1 FIDELITY §531.2 INTEGRITY §531.3 COMPETENCY §537.11 Use of Standard Contract Forms When negotiating contracts binding the sale, exchange, option, lease or rental of any interest in real property, a real estate licensee shall use only those contract forms promulgated by the Texas Real Estate Commission for that kind of transaction with the following exceptions: • Transactions in which the license holder is functioning solely as a principal, not as an agent; • Transactions in which an agency of the United States government requires a different form to be used; • Transactions for which a contract form has been prepared by a principal to the transaction or prepared by an attorney and required by a principal to the transaction; or • Transactions for which no standard contract form has been promulgated by the Commission, and the license holder uses a form prepared by an attorney at law licensed by this state and approved by the attorney for the particular kind of transactions involved or prepared by the Texas Real Estate Broker-Lawyer Committee (the committee) and made available for trial use by license holders with the consent of the Commission.
