ONE TO FOUR FAMILY RESIDENTIAL CONTRACT (RESALE)
Paragraph 21: NOTICES
Contact information for both the buyer and seller are entered into this paragraph.
Paragraph 12A1b: Expenses payable by Seller TREC 39-8 AMENDMENT
For the non- allowables for FHA/VA contracts, several lenders have agreed that if you put $1800 in the 12 A(1)(b) blank, it will more than cover the cost of non- allowables.
Paragraph 15: DEFAULT This paragraph would affect several other paragraphs such as the buyer's failure to secure or qualify for a loan or a party failing to close.
Governs what takes place should either the buyer or the seller fail to perform according to the contract. Several remedies are available to the parties depending upon whether or not they are at fault in the default. A suit for specific performance in this paragraph is defined as the ability to force either the buyer or the seller to perform on the terms of the contract.
Paragraph 19: REPRESENTATIONS TREC 11-7 ADDENDUM FOR EQUAL HOUSING OPPORTUNITY "BACK-UP" CONTRACT ?TREC 10-6 ADDENDUM FOR SALE OF OTHER PROPERTY BY BUYER
Here, the seller represents that all such interest against the property will be satisfied out of the sales proceeds except assumptions and Seller may continue to show the Property and receive, negotiate and accept back up offers.
Before The Contract Disclose Representation
IABS 1-0 In formation About Brokerage Services TAR-1101 RESIDENTIAL REAL ESTATE LISTING AGREEMENT EXCLUSIVE RIGHT TO SELLTAR-1501 RESIDENTIAL BUYER/TENANT REPRESENTATION AGREEMENT
OFFERS AND COUNTER OFFERS: it is important to advise both the buyer and the seller to decide what they are going to do and then do it! TAR-1926 SELLER'S INVITATION TO BUYER TO SUBMIT NEW OFFER
If a buyer makes an offer on a property and the seller counters the offer in essence, this is a rejection of the buyer's offer and the offer is not binding. Either party may withdraw their offer before it is accepted
Paragraph 12B Expenses payable by Seller
If any fees exceed what is stated in the contract, either party may terminate the contract, unless the other party agrees to pay the excess.
Paragraph 7G: ENVIRONMENTAL MATTER TREC 28-2 ENVIRONMENTAL ASSESMENT, THREATENED OR ENDANGERED SPECIES, AND WETLANDS ADDENDUM RECOMMEND WATER TESTING
If environmental hazards affect the intended use of the property by the buyer, he should use the TREC promulgated addendum to obtain an assessment report that he can use to make a terminating or proceeding decision
TREC 38-5 NOTICE OF BUYER'S TERMINATION OF CONTRACT
If for any reason the buyer does not want to continue with the contract, the buyer simply needs to notify the seller in writing of the termination and will receive the earnest money back.
Paragraph 9B5: CLOSING
If the Property is subject to a residential lease, Seller shall transfer security deposits and deliver to the tenant a signed statement acknowledging that the Buyer has acquired the Property and is responsible for the return of the security deposit, and specifying the exact dollar amount of the security deposit
Paragraph 10B1: Leases TREC 15-5 SELLER'S TEMPORARY RESIDENTIAL LEASE
If the buyer moves into the property prior to closing or if the seller stays in the property after the closing, there is agreement by the parties that they will ex ecute a "BUYER'S TEMPORARY RESIDENTIAL LEASE" or a "SELLER'S TEMPORARY RESIDENTIAL LEASE" to es tablish the terms and conditions
Paragraph 7H: RESIDENTIAL SERVICE CONTRACTS TREC RSC-1 DISCLOSURE OF RELATIONSHIP WITH RESIDENTIAL SERVICE COMPANY
If the buyer selects a residential service contract, such as a home warranty, the seller will reimburse the buyer or pay for the service contract at a cost specified in that paragraph.
Paragraph 3: SALES PRICE TREC 45-1 SHORT SALE ADDENDUM
A Comparative Market Analysis is a tool used by licensees to help sellers determine a realistic price for a property. A CMA is a useful source of information for both buyers and sellers, remember the list price is the seller's responsibility and the offering price is the buyer's responsibility.
Paragraph 6E4: TIDE WATERS TREC 33-2 ADDENDUM FOR COASTAL AREA PROPERTY TREC 34-4 ADDENDUM FOR PROPERTY LOCATED SEAWARD OF THE GULF INTRACOASTAL WATERWAY
A note is also made about property in coastal areas and the addendum that speaks to this issue
Paragraph 2C: ACCESSORIES
A thing that can be added to something else in order to make it more useful, versatile, or attractive such as draperies and rods, door keys, mailbox keys and more....
Paragraph 9B3: CLOSING
Additionally, the seller and buyer shall execute all of the required documents required by the contract at the closing
Paragraph 6D: OBJECTIONS
All of the buyer's objections are available here in this paragraph (commitment, exception documents and survey). Most commonly, the term"Residential Home" is entered here. If the objections are not cured within 15 days the buyer may receive a refund of the earnest money. Do not leave number of days blank, or your buyer will not have the ability to object.
IMPORTANT: DO NOT FORGET TO FILL IN THIS DATE.
An offer becomes a contract when all parties have signed and initialed all changes on the contract, indicating full agreement of terms.
Paragraph 6C: SURVEY TAR 1907 RESIDENTIAL REAL PROPERTY AFFIDAVIT T-47
The seller must provide BOTH the survey and the affidavit that the lender and the title company both agree to. If the seller does not furnish both items in the time specified and the lender requests a new survey, it will be the responsibility of the seller to pay for the new survey.
Paragraph 23: TERMINATION OPTION Common to today's market is $250 option money and 10 days but the option (fee and days) is basically whatever the buyer wishes t o of fer and seller is willing to accept
The termination option is only available to buyers if they complete both of the blanks and pay the option fee with the contract. It requires a fee for a specified period of time BY 5:00 PM. It can be credited to the Sales Price at closing .
Paragraph 9B4: CLOSING
There will be no liens, assessments, or security interests against the Property which willnot be satisfied out of the sales proceeds unless securing the payment of any loansassumed by Buyer and assumed loans will not be in default
Paragraph 13: PRORATIONS
This paragraph explains that taxes, interest, maintenance fees, assessments, dues, and rents will be prorated through the closing date for both the buyer and seller to pay their share of these items.
Paragraph 11: SPECIAL PROVISIONS TREC OP-M NON-REALTY ITEMS ADDENDUM TAR-1924 NON-REALTY ITEMS ADDENDUM TO CONTRACT TREC 39-8 AMENDMENT (9) Other Modifications
This paragraph is for "factual statements and business details" of the transaction where no addendum is required. Caution is advised here that lengthy additions to the contract could involve the agent in the unauthorized practice of law. Further explanation of negotiable expenses from Paragraph 12 may go here.
Paragraph 12A2 Expenses payable by Seller
This paragraph is provided to identify any of the buyer's expenses, the buyer wishes the seller to pay.
Paragraph 6E3: STATUTORY TAX DISTRICT
This paragraph requires the buyer to get from the seller the statutory notice from the MUD disclosing the tax rate, bonded indebtedness, or standbyfee of the district
Paragraph 12: SETTLEMENT AND OTHER EXPENSES
This paragraph specifies who will pay certain expenses, some of which may be negotiable. These expenses are grouped into seller's expenses and buyer's expenses
Paragraph 7F: COMPLETION OF REPAIRS AND TREATMENTS
This paragraph states that the seller will complete all agreed upon repairs by the closing date. All required permits must be obtained and repairs must be completed by qualified repair people.
Paragraph 18E: NOTICES
This section states that notices will be effective w hen sent in compliance with paragraph 21 NOTICES which describes where & how notices will be sent.
Paragraph 7B: SELLER'S DISCLOSURE NOTICE PURSUANT TO §5.008, TEXAS PROPERTY CODE TREC OP-H SELLER'S DISCLOSURE NOTICE
When a property is listed, the listing agent should have the seller fill out the "Seller's Disclosure Notice". If the buyer does NOT receive the disclosure, buyer can terminate up until day of closing, or if buyer does receive the notice, they can terminate within 7 days of receipt.
Paragraph 6E2: MEMBERSHIP IN PROPERTY OWNERS ASSOCIATIONS, TREC 36-8 ADDENDUM FOR PROPERTY SUBJECT TO MANDATORY MEMBERSHIP IN A PROPERTY OWNERS 'ASSOCIATION TREC 37-5 SUBDIVISION INFORMATION, INCLUDING RESALE CERTIFICATE FOR PROPERTY SUBJECT TO
If the property is in a mandatory owner's association, the buyer is advised that he is obligated to be member and pay the required assessments. If he fails to pay the assessments, it could result in a lien on and the foreclosure of the property. Addendum for Property Subject to Mandatory Membership in a Property Owners Associations should be used.
Paragraph 6E5: ANNEXATION
If the property is located outside the limits of a municipality, the notice advises the buyer to obtain that information to determine the possibilities for annexation. http://www.nlc.org/
Paragraph 24: CONSULT AN ATTORNEY BEFORE SIGNING
If they do not understand it, they should consult the broker for factual and business details and consult an attorney before signing for legal advice.
Paragraph 9B1: CLOSING
If this contract is for a foreclosed property, the seller typically will change the "general' warranty deed to a "special" warranty deed conveying title to the Property to Buyer and showing no additional exceptions and showing no delinquent taxes on the Property
Paragraph 6C1: SURVEY
If using an existing survey, it would be best to use a short number of days so that we will know early on if the existing survey is acceptable for use. If the existing survey is not acceptable to the Title Company or Buyer's lender Buyer will order a new survey. A choice of who will pay for the survey is given.
Paragraph 9: CLOSING TREC 39-8 AMENDMENT
If you know the closing is going to be delayed beyond the closing date, it is our suggestion you get the buyer and seller to agree to an extended date and have them both initial the extension on the TREC promulgated "AMENDMENT" form.
Paragraph 2D: EXCLUSIONS ?TREC 44-2 ADDENDUM FOR RESERVATION OF OIL, GAS, AND OTHER MINERALS
Improvements and accessories that will be retained by the seller must be removed prior to delivery of possession to avoid problems. If the seller does not want to leave a fixture with the property, suggest they change it out before the property goes on the market. Exclusions must be on the contract
Paragraph 9A: CLOSING
In today's market, the lender is suggesting 45 days for closing, Note that there is no automatic extension for financing, etc. The only automatic extension in the contract is for something that needs to be cured in the title.
Paragraph 1: PARTIES
Is the naming of the principals. A good question to ask buyers is"how would you like to take title to the property? You want to get full, legal names of the parties. It is a good idea to make relationships known (i.e. single, married, joint tenants) and ownership interests clear
INTERMEDIARY RELATIONSHIP NOTICE
It is used to remind the buyer and seller that the broker will act as an intermediary and reaffirms their consent to the representatives.
Paragraph 18C: DEMAND Once demand is made for the earnest money, the title company must take certain steps before releasing the earnest money to either party
It is wise to advise the buyer that in the case of request of the return of the earnest money, the buyer should be prepared for a 10 day - 2 week period before the money is returned. When there is demand, then counter-demand, the title company will normally turn the earnest money over to attorneys
TAR-1928 For Your Protection: Get a Home Inspection TAR-2506 INSPECTOR INFORMATION
It is your responsibility to be an informed buyer. Be sure that what you buy is satisfactory in every respect. You have the right to carefully examine your potential new home with a qualified home inspector. You may arrange to do so before signing your contract, or may do so after signing the contract as long as your contract states that the sale of the home depends on the inspection.
Paragraph 6E7: PUBLIC IMPROVEMENT DISTRICT
It notifies the buyer that if the property is in a public improvement district, there may be additional fees or taxes associated with the property.
Paragraph 6E6: PROPERTY LOCATED IN A CERTIFICATED SERVICE AREA OF A UTILITY SERVICE PROVIDER TREC OP-C NOTICE TO PROSPECTIVE BUYER
It notifies the buyer that if the property is in a utility provider service area there may be additional fees or taxes associated with the property.
Paragraph 6C2&3: SURVEY
It would be best if the number of days in 2 & 3 be closer to the closing date. Once the survey has been ordered and completed, someone will have to pay for it. It is best to make sure the loan has been approved before ordering the survey.
Paragraph 6E9: PROPANE GAS SYSTEM SERVICE AREA TREC 47-0 ADDENDUM FOR PROPERTY IN A PROPANE GAS SYSTEM AREA
Seller is also required to notify buyer in writing if the property is located in a propane gas service area
Paragraph 16: MEDIATION
Simply states that if the buyer and seller do not agree on some aspect of the contract, they can seek mediation before they sue each other. The agreement to mediate does not preclude a party from seeking relief from a court of competent jurisdiction and neither party is giving up the right to have a court review the dispute.
Paragraph 2B: IMPROVEMENTS
are man's additions to the land such as the house, garage and all other fixtures and improvements attached to the real property, including permanently installed and built-in items, buildings and landscaping.
Paragraph 7A: PROPERTY CONDITION ACCESS, INSPECTIONS AND UTILITIES TREC Form OP-I CONSUMER NOTICE CONCERNING HAZARDS OR DEFICIENCIES
States that the buyer has the right to inspect the property. The seller will permit the buyer and the buyer's agent access at reasonable times and the seller will pay for turning on existing utilities and keep them on during the time the contract is in effect. Buyer should have an inspection done.
Paragraph 4: LICENSE HOLDER DISCLOSURE
Texas law requires a real estate license holder who is a party to a transaction to disclose when a license holder has a personal interest in the transaction or acting on behalf of a spouse, parent, child, business entity in which the license holder owns more than 10%
CONTRACT AND EARNEST MONEY RECEIPT
The amount of the earnest money that is tendered with the contract should be inserted. Commonly the escrow agent is a title company and a cashiers check should be deposited and receipted by the end of the second business day after the date the last party has signed the contract or initialed the last changes.
Paragraph 6E1: TITLE NOTICES ABSTRACT OR TITLE POLICY
The broker must advise the buyer to have an abstract of title examined by an attorney or obtain a title policy.
Buyer's Attorney and Seller's Attorney
The buyer and seller should always read the contract thoroughly, and the broker should make certain they have no unanswered questions as to the factual and business details. This is very important in order to avoid misunderstandings at a later date.
Paragraph 7D: ACCEPTANCE OF PROPERTY CONDITION TREC 39-8 AMENDMENT
The buyer may accept the property "as-is" or ask for specific repairs that he feels are needed. At this point, the buyer has not had the benefit of an inspection, thus, the only items that could be listed here are items seen during the visit or visits prior to writing the offer. During the option period the buyer may submit an amendment to either 1 or 2. If the seller does not accept the amendment, the buyer may terminate the contract
TREC 39-8 AMENDMENT and waiver of the option fee
The buyer only has 3 days to get the option money to the seller or the listing agent and get receipted. If not, the buyer has waived their right to terminate the contract.
Paragraph 9B2: CLOSING
The buyer will close with "good funds" acceptable to the escrow agent.
Paragraph 8: BROKERS' FEES
The contract provides that the commission be paid as specified by separate written agreement the listing agreement and the buyer representation agreement. The closing officer of the transaction should be provided with a copy of this agreement in order to pay the commission.
Paragraph 18D: DAMAGES
describes what happens if a party wrongfully fails to sign a rele ase for the earnest money. That party would be liable forda mages in an amountequal tothe earnest money, plus the earnest money, plus any costs forrea sonable attorneyfees and all costs of suit
Paragraph 6A: TITLE POLICY TREC OP-C NOTICE TO PROSPECTIVE BUYER
explains that the seller will provide the buyer a policy of title insurance with eight listed exceptions. The agent MUST notify the buyer that he should have the abstract of title examined by an attorney or obtain a policy of title insurance.
Paragraph 3B: SUM OF ALL FINANCING TREC 40-7 THIRD PARTY FINANCING ADDENDUM a. TREC 39-8 AMENDMENT denial b. TAR-2508 INFORMATION ABOUT PROPERTY INSURANCE FOR A BUYER OR SELLER TREC 26-7 SELLER FINANCING ADDENDUM TREC 41-2 LOAN ASSUMPTION ADDENDUM TREC 39-8 AMENDMENT
gives the buyer option to choose the type of financing they plan to obtain by checking the appropriate box. Each type of financing has its own ADDENDUM
Paragraph 5: EARNEST MONEY
is merely a gesture of the purchaser's good faith and is used only to make the offer more enticing to the seller within a negotiated number of days after the effective date of the contract. There is no requirement that earnest money can be given to create a valid contract. If the buyer fails to deposit the earnest money as required the buyer will be in default.
Paragraph 7C: SELLER'S DISCLOSURE OF LEAD-BASED PAINT AND LEAD-BASED PAINT HAZARDS TREC OP-L ADDENDUM FOR SELLER'S DISCLOSURE OF INFORMATIONON LEAD-BASED PAINT AND LEAD BASED PAINT HAZARDS AS REQUIRED BY FEDERAL LAW
is required by Federal law for a residential dwelling constructed prior to 1978.
Paragraph 18A: ESCROW
The escrow paragraph establishes the rights of the escrow agent. Although the right to require receipt, release or authorization in writing isprovided, it is not mandatory of the agent
Paragraph 12A
The following expenses must be paid at or prior to closing
Paragraph 17: ATTORNEY'S FEES
The primary purpose of this paragraph is to discourage the type of lawsuit that includes suing everyone in sight, regardless of responsibility, with the hope of affecting some type of settlement.
Paragraph 6B: COMMITMENT
The seller is to provide the buyer a copy of the title commitment within 20 days after the title company receives a copy of the contract If the documents are not delivered within the time required the buyer may get a refund of the earnest money.
Paragraph 18B: EXPENSES
provides that before a buyer is entitled to a refund of earnest money, any actual expenses incurred or paid on his behalf shall be deducted and paid to the applicable creditors
Paragraph 6E8: TRANSFER FEES
requires the seller to notify the purchaser if there is a private transfer fee associated with the property.
Paragraph 3A: CASH PORTION TREC 39-8 AMENDMENT
specifies the down payment amount brought to closing.
DATE AND SIGNATURES The last provision is the effective date of the contract. The filling-in of this date is very important
the broker should fill in the date that the last party signs. This date would be the one on which the final signature issecured or on which the last initials to any changes are made
Paragraph 6E: TITLE NOTICES
the burden is upon the buyer of determining if either of these situations is the case. It is very important that these documents get to the buyer in a timely manner. If Buyer does not receive the documents within the time stated, buyer can terminate up to day of closing
OPTION FEE RECEIPT
the option money must be in the hands of the seller or seller's agent within 3 days from the time the contract is effective, all parties agree on all elements of the contract. If not, the buyer does not have a valid option and has accepted the property in its present condition. Recommend a cashiers check.
TAR 1907 RESIDENTIAL REAL PROPERTY AFFIDAVIT T-47
is to be used if the seller agrees to provide the buyer with a copy of an existing survey, the provision in the TREC contract forms requires the seller to also deliver the affidavit to the buyer and to the title company. The buyer needs this affidavit, and it is used by their lender and title company to figure out whether they are going to accept the survey the seller has provided, or if they require a new one. The listing broker may provide the form of the affidavit to the seller for the seller to complete, sign, and return.
multiple offer situation TAR-1935 SELLER'S ESTIMATED NET PROCEEDS
it is recommended that the listing agent prepare the presentation of the offers and prepare a seller's estimated net sheet for each of the offers.
Paragraph 20: FEDERAL TAX REQUIREMENTS
points out that certain federal laws affect the brokers and signatories to the contract when a party to the contract is a foreign national. Should a broker not comply with the reporting rules for this withholding tax then the penalty is the amount of the tax due or of the commission and any other compensation from the sale
Paragraph 10B2: Leases TREC 16-5 BUYER'S TEMPORARY RESIDENTIAL LEASE
Explains that after the effective date the Seller may not execute any lease or convey any interest in the property without Buyers' written consent.
Paragraph 10A: POSSESSION
Explains when the seller will deliver the property to the buyer. Oftentimes, this is upon "closing and funding" because the funding of the loan may occur later than the closing and the seller normally does not want to give up possession until he has his money
Paragraph 7E: LENDER REQUIRED REPAIRS AND TREATMENT TREC 39-8 AMENDMENT
Lender required repairs take priority because the buyer will not get the loan unless they are done. If the lender requires certain repairs to be completed, this paragraph states that neither party is obligated to pay and allows buyer to terminate if repairs exceed 5% of the sales price. If the parties cannot agree who will pay for the lender required repairs, the contract will terminate and the earnest money will be returned to the buyer.
Paragraph 2A: LAND
Lot, block, and subdivision description is derived from a recorded plat.
Paragraph 18: ESCROW
Notice regarding dispute over earnest money shall be in writing and delivered by hand or ce rtified mail, return receipt requested
Paragraph 6E10: NOTICE OF WATER LEVEL FLUCTUATIONS
Property adjoining an impoundment of water including: reservoirs or lakes as defined by the water code. The water body must have a normal operating level storage capacity of at least 5,000 acre-feet. the notice must be delivered by the seller to the purchaser on or before the effective date of the contract. If the notice is not given, the buyer may have the right to terminate the contract for any reason within 7 days upon receiving notice.
BROKER INFORMATION AND RATIFICATION OF FEE:
Provides a place to name the Other Broker and state his amount of commission. As an antitrust measure the amount of the total commission is not revealed. The listing broker needs to inform the title company of the amount of the total fee by sending them a copy of the listing agreement.
Paragraph 14: CASUALTY LOSS
Provides that in case of a casualty loss, such as fire, flood, hurricane, etc..., the seller is to restore the property to its previous condition as soon as possible. Should the seller be unable to complete such repairs without fault within the time limit, the buyer has the option of terminating the contract, extending the closing, or accepting the property in the damaged condition with an assignment of insurance proceeds and receive a credit from the Seller for the deductible, if any, and is permitted by the Seller's insurance carrier.
Paragraph 22: AGREEMENT OF PARTIES where are contingencies addressed in the contract? ?TREC 10-6 ADDENDUM FOR SALE OF OTHER PROPERTY BY BUYER
Provides that the entire agreement of the parties is contained in the contract, plus any exhibits or addenda cannot be changed without the parties' written consent. There is a space to add forms not listed here, for example, "TREC OP-H SELLER'S DISCLOSURE NOTICE"
Paragraph 12A1a: Expenses payable by Seller
Releases of existing liens, including prepayment penalties and recording fees;release of Seller's loan liability; tax statements or certificates; preparation of deed; one-half of escrow fee; and other expenses payable by Seller under this contract
Paragraph 3C: SALES PRICE TAR-1926 SELLER'S INVITATION TO BUYER TO SUBMIT NEW OFFER TREC 39-8 AMENDMENT
Remember that 3A plus 3B must always equal 3C. The sales price includes the down payment plus the loan.
Paragraph 2: PROPERTY
consists of land, improvements attached to the land. Caution is given that the correct legal description is absolutely essential to a binding and legally enforceable contract.
