contract law chapter 2

Rescission

with draw offer

3 comps

: fidelity / integrity / competency

handlining multiple offers

• The decisions of how offers will be presented, how offers will be negotiated, whether counter-offers will be made and ultimately which offer, if any, will be accepted, are made by the seller, NOT by the listing broker. • Remember that decisions about how counter-offers will be presented, how counter-offers will be ne- gotiated, and whether a counter-offer will be accepted, are made by the buyer, NOT by the buyer's broker. • When taking listings, explain to sellers that receiving multiple, competing offers is a possibility. Explain the various ways they may be dealt with (e.g., acceptance of the "best" offer; informing all potential purchasers that other offers are on the table and inviting them to make their best offer; countering one offer while putting the others to the side; countering one offer while rejecting the other offers, etc.

Failure to Enforce Time Limitations

(10) Failure to Enforce Time Limitations. The only provision in the TREC contract for which time is of the essence is the Termination Option section. For all other sections, time is not of the essence. If a party fails to enforce the time limitations specified in the contract, they can be waived and no longer enforceable. There are three items that must be complete in Paragraph #23, TERMINATION OPTION: the dollar amount of the option money, the number of days for the option and what happens to the option money at closing. All three must be completed.

Inadequate Legal Description

(6) Inadequate Legal Description. This is most often a problem on un-subdivided, rural property. The legal description in the contract must be sufficient to identify the subject property as distinct from all other property. A description such as "10 acres out of the Jones Survey in Hays County, Texas" is not sufficient to do that. If the legal description is inadequate, the contract is not enforceable. The best practice for un-subdivided property is to always attach the full legal description obtained from the seller's deed as an exhibit to the contract.

Contracting to Provide an Existing Survey

(7) Contracting to Provide an Existing Survey. Contracting to provide an existing survey which the seller does not have or cannot find can result in the seller being required to pay for a new survey. Simply informing the buyer that the seller cannot comply with the agreement to provide a survey does not absolve the seller of the responsibility for providing a survey. Always make sure the seller has a survey before contracting to provide a copy. If using an existing survey, it must include the T-47 affidavit to be complete. Pay attention to the bold print. If the seller fails to furnish a current survey and a T-47 affidavit acceptable to the lender or Title Company, someone will have to pay for a new one. That person is identified here. If you are the seller's agent, you are required to let the seller know that if he does not provide an acceptable survey and T-47 affidavit, the buyer has the right to order a new one at seller's expense 3 days prior to closing.

Improper Use of Special Provisions Section

(8) Improper Use of Special Provisions Section. Be careful of the provisions inserted in Special Provisions. It is easy to over-step the boundary and slip into the unauthorized practice of law. The only provisions which a TREC licensee can insert in Section 11 of the TREC contract are factual statements and business details applicable to the sale. A licensee is specifically prohibited from using this section for any provisions for which TREC has promulgated a specific form

A license holder may not

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.

Multiple Offers

Honesty has to be a given. If you are not being honest with all parties involved in the transaction and that becomes your mode of operation, you will not have a long-term career in real estate. Period! Implicit in cooperation is forthright sharing of information related to cooperative transactions and potential cooperative transactions. Much of the frustration that occurs in multiple offer situations results from cooperating brokers being unaware of the status of offers they have procured. Listing brokers should make reasonable efforts to keep cooperating brokers informed. Similarly, buyer brokers should make reasonable efforts to keep listing brokers informed about the status of counter-offers their seller-clients have made. "REALTORS® shall submit offers and counter-offers

exclusionsRationale: special provision (paragraph 11)

If there is an addendum that addresses the issue of concern, then it should be used and not stated in the _____________________________ paragraph of the contract. exclusionsRationale: special provision (paragraph 11)

Listing agreements and Buyer Agency agreements are not promulgated by TREC

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. When an agent becomes a member of the Texas Association of Realtors and has access to all the TAR contracts, amendments, notification, and other forms, it would be wise to become familiar with the list of available documents.

TEXAS REAL ESTATE COMMISSION In 1949

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.

THE BROKER-LAWYER COMMITTEE

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 contract forms must contain safeguards adequate to protect the principals in the transaction. 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. In the late 1960s and the early 1970s, the Texas State Bar Association and the Texas Association of Realtors® attempted to resolve the dispute by agreeing to several earnest money contracts that would be acceptable for real estate practitioners to use in their daily business. However, any agreed-upon contracts would have been valid for only members of the Texas Association of REALTORS® and would not bind all real estate licensees in the state.

TREC has approved and promulgated six sales contract forms

TREC has approved and promulgated six sales contract forms: 1. One-to-Four Family Contract (Resale) 2. New Home Contract (Incomplete Construction) 3. New Home Contract (Completed Construction) 4. Unimproved Property Contract 5. Residential Condominium Contract (Resale) 6. Farm and Ranch Contract

rollback tax

The rollback tax is the difference between the taxes paid on the land's agricultural value and the taxes that would have been paid if the land had been taxed on its higher market value. Plus, the owner pays five percent interest for each year from the date that the taxes would have been due.

when contract becomes valid

The two signatures indicate a mutual agreement and therefore a binding contract. At this point, if the buyer decides to terminate for a reason that isn't covered in the contract contingencies, the buyer will for- 32 Promulgated Contract Forms Chapter 2: Laws, Rules, and Regulations © 1989 Vandiver-Morgan, Inc. dba The Real Estate Business School. All rights reserved. Except as permitted under the Copyright Act of 1976 this work may not be reproduced in whole or in part in any manner. Rev. 8.31.2018 feit 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. (This is typically satisfied when negotiations are made using promulgated forms.) 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.